Import reprieve for clothing industry

Press, 15 July 1985, Page 13

Import reprieve for clothing industry

By

MICHAEL HANNAH

in Wellington The clothing industry has won a reprieve from unlimited competition from imports until it gains free access to export markets in Australia.

The decision, announced last evening, by the Minister of Trade and Industry, Mr Caygill, delays the day when consumers have a wider, and in some cases cheaper, variety of textiles, fabrics and clothes from overseas and local suppliers.

It does so in the interests of employment and the long-term security of the textile industry, according to Mr Caygill. Mr Caygill announced that the Government had rejected a proposal from the Industries Development Commission that import licences be granted on demand for a wide range of apparel. “The main reason for this decision is the lack of access for apparel to Australia,” he told the Textile and Garment Manufacturers’ Federation conference in Queenstown.

“In the Government’s view it is not reasonable to expect the garment industry to cope with substantially

increased competition from imports without a market opportunity of your own to aim for,” he said.

Mr Caygill noted that every other industry restructured by industry studies had access to Australia. The Government would take its case for free access to next month’s Ministerial talks in Australia on the progress of C.E.R., to be attended by Mr Caygill and the Minister of Overseas Trade, Mr Moore. Their aim would be to bring clothing within the terms of the C.E.R. treaty, he said.

“The Government’s objective is to eliminate the current Australian tariff against New Zealand-made clothing, and to obtain quota-free access for New Zealand clothing into Australia,” he said. The Goverment had not been prepared to go as far as the I.D.C. proposed. It also had not been prepared to extend a blanket cover of protection to the industry as some “more extreme” submissions had advocated.

An economic study submitted by the federation had suggested that to allow imports of Asian clothes at about half the price charged

by New Zealand producers would bring down the consumers’ price index, or inflation rate, while allowing nominal wages to remain constant.

“In other words, it had real wages rising as protection fell,” Mr Caygill said.

Unemployment would have risen.

The Government recognised that the textile and garment industry, which employed 30,000 people, was one of New Zealand’s biggest employers.

“The Government wants you to be able to offer real job security on a long-term basis. That security cannot depend on coddling or protecting your industry,” he said. “Rather it must come from providing it with opportunities to expand. That is our reason for rejecting the approach put forward by the 1.D.C.” The Government considered a phased annual increase in licence access to tendering was the best way to assist producers and consumers, Mr Caygill said.

It had decided to confirm the interim level of tendered global access for apparel at 10 per cent for 1985-86. For 1986-87 and until the question of Australian access was resolved, licences to be tendered would increase each year by 2 per cent of production for the domestic market, that is less exports. Once negotiations with Australia were concluded, but not until then, the matter of protection against third-country imports would be reviewed, Mr Caygill said.

The Textile Review Committee would consult the industry on another I.D.C. proposal, that if alternative specific duties for apparel remained for any period, special account should be taken of children’s sizes. Mr Caygill said this recognised a concern of consumers with which the Government agreed. For yarns and fabrics, the Government had decided, with one exception, not to move to exemption or to create licence on demand, as the I.D.C. had recommended. The exception was wool carpet yarn.

“If New Zealand cannot compete in the production of wool carpet yarn, then we really are in trouble,” Mr Caygill said. Wool carpet yarn would become subject to licence on demand immediately, with a view to exemption from July 1, 1986. With the exception of wool tops, licence tendering would also apply for all non-apparel products in line with the general global licence tendering programme. The allocation in the first year would be the difference between current basic licence access levels and 10 per cent of production for the domestic market. Where existing access was already at a level of 10 per cent or more, additional licence would not be tendered in the first year. In the second and succeeding years, additional licence equal to 5 per cent of production in the domes-

tic market would be offered. This was the same access as for manufactured products generally, Mr Caygill said. For wool tops, the initial tender allocation would be 15 per cent of domestic production, less exports, rising to 20 per cent in the second year. Wool tops would be considered for global exemption from July 1, 1987. The Government had deferred a decision on the I.D.C.’s package of proposals for the household textiles sector. “We have done this because we consider that the full implications of doubling the present duty on plain household linen need further investigation,” Mr Caygill said. He hoped this matter could be resolved in time to enable any change to take place from January 1, 1986. All textile machinery, new or used, except carpet tufting and carpet weaving machinery, would be exempt from import control, he said. The Government had also approved the I.D.C.’s proposed 25 cents a square metre specific duty concession on certain lightweight knitted fabrics. It had also agreed to create a separate tariff for stitch bonded fabrics. These would be subject to a minimum rate of duty and exempt from import control. Two other general decisions included the agreement that tariff concessions should be based on whether there was local manufacture, rather than on end-use declaration; and that bursaries should be provided for students to study textile technology at overseas universities. Decisions were also made regarding sacks and bags, ropes and cordage, woven polypropylene and polyethylene fabrics. These are available from a complete list of decisions from the Government.

The secretary of the Clothing Workers’ Federation, Mr Frank Thorn, said from Wellington that the Government’s decision appeared to be along the lines of submissions made by the federation and manufacturers. The I.D.C. report had been a “shocker.” The secretary of the Canterbury Clothing Trades Union, Mr Hugh McCrory, said that in the short term the decision was pleasing. However, he was concerned that the Government might be removing licences “by stealth” in that from 1986-87 licences to be tendered would increase each year by 2 per cent of production.