Mr Prebble waits for reaction from O.E.C.D.

Press, 19 April 1986, Page 3

Mr Prebble waits for reaction from O.E.C.D.

NZPA staff correspondent

Paris Reaction to New Zealand arguments in favour of liberalising world agricultural trade is expected today from O.E.C.D. Finance Ministers. The Associate Minister of Finance, Mr Prebble, backed by the Australian delegation, criticised protectionism when the Ministers began their annual meeting in Paris yesterday.

Mr Prebble told the forum that protectionist measures not only had a disastrous effect on developing nations looking for export markets but harmed the countries which imposed them. After the meeting, Mr Prebble used the European Community’s Common Agricultural Policy (C.A.P.) as an example.

The E.E.C. suffers from an oversupply of products such as butter, beef and wine as a result of the subsidised production policy. It has caused problems

for exporters such as New Zealand by increasing pressure within Europe for a ban on imports and producing surpluses which are dumped at cut rate prices on other markets.

Mr Prebble said he wanted the Organisation of Economic and Cultural Development to study the costs of protectionist policies such as C.A.P.

"Our own material indicates that it will reveal to the European electorate that the true cost of C.A.P. is not the dollar amounts but the opportunities that are lost, which are just mirid-boggling,” he said. It was possible to speculate what the effects would have been on areas such as economic growth and unemployment had the “billions” spent on C.A.P. been invested in more productive areas.

Even conservative estimates suggested much greater growth and lower unemployment. Australia had said European unemployment would have been halved, Mr Prebble

said. He likened the E.E.C. to a person who entered a race arrying a knapsack full of rocks and who could not understand why opponents ran faster. The Government’s record on removing agricultural subsidies gave New Zealand credibility in the debate, he said. “When other countries say such moves are not politically possible we can say New Zealand has done it, New Zealand has bitten the bullet — now it is your turn,” Mr Prebble said.

It was too early to gauge the reaction to the New Zealand arguments but there might be an indication today, he said. The meeting has resulted in optimistic forecasts for the world economy based largely on falling oil prices and reductions in inflation in most of the 24 member States. While he thought the optimism was valid for large industrial countries,

•he had pointed out it would not necessarily benefit developing nations which have suffered huge cuts in commodity export receipts. The fall in commodity prices far outweighed the benefit of cheaper oil, he said. Referring to protectionism, he said the disturbing thing about commodity price falls was that in many areas they occurred not because of market forces but as a result of subsidised production. “It is really hypocritical to preach trade liberalisation to Third World countries while at the same time not only refusing to remove barriers but also making the situation worse by dumping surpluses on to other people’s existing markets,” Mr Prebble said.