Optimism about Britain

Press, 30 September 1983, Page 16

Optimism about Britain

The talk given by Mr Ray Whitney, Parliamentary Under-Secretary for Foreign and Commonwealth Affairs in the British Government, to the British Trade Association in Christchurch yesterday had an optimistic ring about it. Trade between New Zealand and Britain had increased last year by more than $2OO million, and the stern measures taken by the British Government were having their effects, he said. The effects included an inflation rate down to 4 per cent, an increase in productivity of 18 per cent per person over three years, and a growth rate in the economy of 3 per cent. He interpreted the return of the Conservative Party to govern after the last election as a return to a pragmatic sense in the British population. He was sure that the good feeling between Britain and New Zealand, helped by the dispatching of the New Zealand frigate during the Falklands war, would mean that there were increasing trade opportunities. When it came to specifics, the picture had to be modified somewhat. One questioner asked him about cars. Mr Whitney considered that the British motor industry had- improved remarkably and he had himself taken delivery of a new car, a Rover, last Friday, before he left for New Zealand. The cost had been under $20,000. He did not know how much such a car would cost in New Zealand and appeared faintly startled when someone told him it would cost $45,000. He considered that Britain, for various reasons, had become a leader in information technology. He considered that for a long time Britain had seen its opportunities to lie in Europe, but he expected an increasing emphasis on countries such as New Zealand. Mr Whitney did not say, and could not have been expected to say, that Britain would choose trade with New Zealand rather than trade with Europe. No country is really in a position to choose a country of 3 million as a preferred export market to the market of 200 million that the European Economic Community represents. On New Zealand’s exports to Britain, Mr Whitney expected that Britain would increase as a proportion of New Zealand’s export markets, though, he hastily added, not to the level of more than 50 per cent at which it once stood. He was not sure about the extent to which Britain would become self-sufficient in lamb, but he gave a warning that New Zealand could not expect to increase its sales of lamb marked by. In spite of the recovery that Mr Whitney sees in the British economy, his information and his estimates did not seem to

mean a startling growth in trade between Britain and New Zealand.

Britain was New Zealand’s third largest export market and fourth largest supplier of goods in the year ended June, 1983, according to provisional figures from the Department of Statistics. The United States and Japan were both bigger export markets for New Zealand and, with Australia, were bigger suppliers of goods. The export trade with Britain represented 9.14 per cent of New Zealand’s total trade and the imports from Britain represented 9.14 per cent of New Zealand’s total imports. Britain thus represented both a major market and a major supplier. Some of the comments and questions addressed to Mr Whitney showed a feeling that Britain had turned its back on New Zealand. If the British market is examined as a share of New Zealand’s total export markets, there has been a clear shrinkage. In 1960, for instance, Britain took 52.4 per cent of New Zealand’s exports by value. By 1970, this was down to 35.5 per cent. By 1980, after Britain had joined the European Economic Community in the early 19705, the British share of the New Zealand export market was down to 14.4 per cent. It is thus clear that even though the British share dropped heavily during the 19705, it was dropping before Britain joined the E.E.C. New Zealand had already been at pains to ensure that other markets were found to absorb growing output and to provide a hedge against Britain’s entry to the E.E.C.

Similar falls are to be seen in the British share of New Zealand’s imports. In 1960, 43.4 per cent of New Zealand’s imports came from Britain; by 1970 the figure was down to 29.5 per cent; by 1980 it was down to 14.4 per cent (a figure which happens to match the British market share of New Zealand’s exports that year). The figures demonstrate that although New Zealand and Britain are important trading partners, the days when New Zealand was hooked firmly into the British economy, are gone forever. To the extent that Britain is one of the top four of New Zealand’s export markets and suppliers of imports, the importance of Britain to New Zealand can hardly be overstated. Similarly, in negotiations with the rest of the E.E.C., New Zealand relies to a very large extent on the good will of Britain. But Mr Whitney was right to add hastily that Britain would never again take 50 per cent of New Zealand’s exports.