THE PRESS WEDNESDAY, SEPTEMBER 11, 1985. Approval of C.E.R.

Press, 11 September 1985, Page 16

THE PRESS WEDNESDAY, SEPTEMBER 11, 1985. Approval of C.E.R.

The annual meeting of the Australia-New Zealand Businessmen’s Council, held in Canberra last week, was more remarkable for the spirit which prevailed than for any decisions. One of the outcomes of the Closer Economic Relations agreement has been that both New Zealand and Australia have found that trade has increased with the other faster than trade has increased with the rest of the world. The process of C.E.R. is that an automatic trade liberalisation is set in motion. Some trade has been excluded from this automatic process, but in items of trade where the process has begun there is talk of an acceleration of the process. On the whole the two Governments would be sympathetic to such an acceleration and would no doubt be prepared to attend to any formal and legal work to see the trade freed more quickly. The present Governments of both Australia and New Zealand have been elected since C.E.R. was negotiated. By one of those parallel circumstances which characterise New Zealand and Australia, both countries now have Labour Governments and both countries are in the mood to have the Governments stay out of economic planning as much as possible. By an even stranger parallel, the two Labour Governments are of a mood to be involved as little as possible in the running of the economies. They want to provide a context for the economies to run freely and to stay out of the way. There are important changes taking place in both New Zealand and Australia, including rationalisation of industry. Under such circumstances there is a temptation for countries to want to direct some of the rationalisation; but to do that, countries have to begin making decisions about the development of industries based on criteria other than that of the market place. Governments have to start “picking winners.” There is little evidence to show that Governments are well fitted to decide what will sell, either immediately or in the long term. One paper was read to the meeting about the Governments taking a more central role in planning the economies of New Zealand and Australia. It might as well have been in a language no-one at the meeting understood. Everything appears to be going so swimmingly over C.E.R. that the president of the New Zealand Manufacturers’ Federation, Mr Earl Richardson, wondered in his paper where it would all end. He did little more than

raise the question, but said that in his view “there is a definite optimum limit to the rationalisation and integration of our two economies.” What was not at all clear was whether Mr Richardson was raising real concerns within New Zealand industry or whether they were his own view. When the formal review of C.E.R. takes place in 1988 New Zealand and Australia will have to consider where they go from that point. Mr Richardson said that it could be an extension of the free trade area or some other form of relationship. The text of the statement issued after the Canberra meeting talked of the Confederation of Australian Industry and the New Zealaand Manufacturers’ Federation examining “differing assistance levels.” The wording is curious. It could be assumed that if the two countries were looking at the tariff levels applied to other goods entering the countries or at other forms of trade protection, or at Government assistance to industries, then the least that was being talked about was a customs union. The wording was more cautious than that. There was obvious enthusiasm for C.E.R. but not so much that the meeting could be accused of rashness. The meeting agreed that tourism should properly be recognised as an industry under C.E.R. There would seem to be important ways in which New Zealand and Australia could cooperate in promoting tourism. Certainly tourism is recognised in both countries as an important earner of overseas currency and it creates new jobs. However, experience has usually shown that the two countries work best in tourist promotion when they direct their efforts at countries which are far away. If someone is coming from Europe the idea that his or her tour would take in both New Zealand and Australia is more likely than if someone is simply coming from say Indonesia or Malaysia, or even Japan. The way in which the automatic removal of quota restrictions or tariffs can apply to tourism is not immediately obvious. Nevertheless, C.E.R. is a wide-ranging agreement. What is immediately obvious is that there would be a great deal more travel between New Zealand and Australia if the air fares were lower. Whether that is achieved under C.E.R. or in some other way, the benefits of reduced fares to the consumer would be marked. An air of approval, such as characterised the Canberra meeting, would be apparent among the consumers in the C.E.R. countries.