Govt adopts wait-and-see injury’ test position

Press, 12 March 1985, Page 3

Govt adopts wait-and-see injury’ test position

By MICHAEL HANNAH in Wellington The Government indicated yesterday that it was prepared to wait for United States producers to challenge New Zealand exports under the “injury” test, after the removal of protection on April 1. The Minister of Overseas Trade, Mr Moore, told a press conference that this course of action was favoured by the majority of exporters and manufacturers. It would mean that the Government would take no immediate action in response to the lifting of protection from the injury test next month. Other options were still being considered by the Government, however, Mr Moore said. This would suggest that although the Government is prepared to wait for an American producer to challenge a New Zealand export before the United States Commerce Department, it has a course of action open to it should the case go against New Zealand.

These alternatives included the earlier removal of export incentives, Mr Moore acknowledged. He added that this course did not commend itself to him because New Zealand’s trade with countries other than the United States would also be affected. Mr Moore also said that he did not consider exporters could yet rely totally on the exchange rate without the additional benefit of export incentives. This argument was put last week-end by the Minister of Finance, Mr Douglas, who said the exchange rate was the best incentive for exporters. It was thought that Mr Douglas was either putting across his own personal view, or possibly “softening up” exporters for the earlier removal of export incentives, should a significant export trade to the United States, such as lamb or wool be affected by the injury test. Yesterday, Mr Moore confirmed that the United States Administration would not budge from its declared intention of removing New Zealand’s protection from the injury test. This meant that, from April 1, an American producer may claim that a New Zealand export, carrying an export subsidy, was damaging his returns, and take this case to the Commerce Department, where lawyers would argue both sides.

“The United States position was unchanged just as it was predictable,” Mr Moore said.

He denied that the previous National Government

had a secret undertaking from the United States Government that the protection from the injury test would remain, adding that the American Special Trade Representative with whom he had talks last week, Mr Bill Brock, also denied this. The United States had only agreed that the issue would not be raised last year while elections were taking place, he said. Mr Moore also confirmed that casein exports to the United States, accounting for 20 per cent of export trade to that country, were not affected, as there was no American producer of casein. These exports could have been affected, however, by a Congressional Bill supported by the Administration, but Mr Moore came back with reassurances from Mr Brock that he would personally fight any such move “with vigour.” It would be uneconomic, and contrary to the principles espoused by the Reagan Administration, Mr Brock had said. Mr Moore said he had tried to get an extension of the protection, but the reality was that this policy was being applied not only to New Zealand.

“We have not been singled out,” he said. “They’re moving the same on Indonesia, the Philippines, and elsewhere. To Sve a developed country ;e us more time would mean that other agreements with Third World countries would have to extend.” He had asked whether the United States attitude was a result of New Zealand’s disagreement with the United States over nuclear policies, and he had been told they were separate issues. The Government was now going through the options, one of which was to do nothing, he said. “That is, they (export incentives) are being phased out anyway; that, with the strength of the American dollar and with the phasing out of export incentives, if any injury' test was to be made against New Zealand or a New Zealand product, most manufacturers would think it’s probably best to fight it out in the courts, in the Commerce Department,” he said. Asked when the Government would make its decision, he replied: “We may not have to, if we take the advice of the majority of manufacturers and exporters.”

Lamb and wool exports were particularly affected by the protection against the injury test, Mr Moore said, and talks would be held with producers and exporters.