Govt to lessen protection disparities

Press, 12 August 1985, Page 17

Govt to lessen protection disparities

By

MICHAEL HANNAH

in Wellington Importers have been given an assurance that the Government was not intending to remove import protection immediately, but only aiming for a uniform level of protection. However, a single level of protection, such as the 25 per cent tariff proposal, would still mean significant reductions in protection for some industries, said the Under-Secretary of Trade and Industry, Mr Neilson.

In an address to the Metal Casting Association’s annual meeting in Wellington, Mr Neilson said the Government’s main immediate concern was to lessen the wide disparities in present levels of protection. He said that absolute protection given by import licensing was not a good alternative, as it protected producers from the international pricing constraints which governed the decisions of exporters. New Zealand industries should rather be looking beyond their own small home market to grow through export.

The Government preferred tariffs to import licensing as a means of protecting domestic industry. Tariffs imposed a finite limit on the level of protection and enabled the community cost of protecting a given activity to be readily measured.

Mr Neilson then referred to the substantial overnight cut in protection for Australian foundries in 1974. Several foundries had suffered greatly then, he said.

“The difference between the situation in Australia and in New Zealand is that our Government plans an adjustment that will take place over a number of years,” Mr Neilson said.

He noted that manufacturers of steel castings were already protected by a 25 per cent tariff, so the proposed dropping of tariffs to 25 per cent would have little direct effect on them.

“On the other hand, I can appreciate the concern of copper and aluminium foundries, whose protection presently includes respectively a 35 per cent and 40 per cent tariff,” he said. He urged the industry to adjust to a uniform tariff level by developing a more co-ordinated marketing strategy to maintain market share. The threat lay not in the importation of raw castings but of finished products.

Mr Neilson suggested more liaison with engineers, users of products, and quality control were crucial in the endeavour to adapt to a changing market.