Why N.Z. must tread carefully in trade battle

Press, 7 May 1987, Page 16

Why N.Z. must tread carefully in trade battle

Staff writer Stuart McMillan urges caution-in the farm subsidies war

‘On the whole Australia is more condemnatory ... but Australia has little to lose, N.Z. has a great deal’

JOHN PRYDE’S article yesterday provided an admirable and authoritative summary of the effects on New Zealand of agricultural subsidies in Europe, the United States, and Japan. There is not much to argue with in that part of the article. The figure Mr Pryde gives, based on Lincoln College calculations of the annual loss to New Zealand of $1.25 billion because of European Economic Community subsidies, is striking. Similarly his succinct treatment of the justifications given for the outrageous subsidy policies and his explanation of the way in which the policies work in practice are admirable. The extent to which subsidisation is carried startles the imagination. The case he cited of an American farmer who received $l5 million in subsidies seems only the most extreme example of the systems of heavily subsidised agriculture. He is also surely right in arguing that the policies persist partly because their true costs are not revealed to the citizens of some of the countries. It is when Mr Pryde pushes the argument to say that New Zealand should itself undertake the role of informing the citizens of those countries of the true costs to them and others of the policies that I differ with him strongly. He makes the point in several ways. “We must plan and embark on an ‘operation transparency’ to ensure that the non-farm sectors in the major offending countries are made aware of the enormous costs of agricultural protectionist policies of their Governments and of the serious harm being done to the cause of international trade.”

“Transparency” in this context is a term used to refer to the process of making subsidies obvious.

A little later Mr Pryde writes: “My conviction is that the time is overdue for New Zealand to make still greater efforts to reveal to those who also suffer effects of these policies the very serious harm they inflict on them and us.”

The article does not spell out the mechanics of making the case against agricultural sub-

sidies more robustly. There would appear to be three obvious methods: 1. New Zealand could be more confrontationist in its dealings with the countries which subsidise agriculture. 2. New Zealand could join other countries in condemning the offending countries. 3. New Zealand could use the consumer groups in the offending countries to bring pressure to bear on their Governments to change policies of supporting agriculture by subsidies. Before New Zealand embarked on any significant change in course in dealing with other countries over trade matters, the question needs to be asked whether the new method would be more effective than the present methods. The achievements of the present methods are not negligible. After all, New Zealand has continued to export butter to the European Economic Community when the E.E.C. has a surplus of staggering proportions. Similarly, when the E.E.C. decided to include sheepmeat in its Common Agricultural Policy, New Zealand negotiated an access agreement which meant that the market was secure. New Zealand’s style in dealing with the E.E.C. is sometimes contrasted with that of Australia. On the whole Australia is more downright condemnatory, particularly of the E.E.C. But Australia’s position is different It has been virtually excluded from

Europe. New Zealand has not Australia has little to lose; New Zealand has a great deal to lose.

If the aim of any campaign is to bring pressure to bear on the Governments of the offending countries, then it is improbable that any more condemnatory stance by New Zealand in international meetings would have any effect on consumers. Some might be aware that New Zealand was criticising the E.E.C., or Japan, but most would not focus on the content of the New Zealand argument On the other hand, the Governments would notice and resent it In trade negotiations the move might be counter-productive. The second method, of aligning New Zealand with other countries, is already employed to some degree or other. At all international trade meetings, countries group together to pursue common interests and support policies which are of mutual benefit A new recent grouping, the Cairns group, which includes New Zealand, Australia, and a number of South American and Asian countries, appears to have become an effective lobby in the preparatory talks for the new round of talks under the General Agreement on Tariffs and Trade. The New Zealand Minister of Overseas Trade and Marketing, Mr Moore, has publicly acknowledged the value of that group and that the formation was inspired by Mr Pryde.

But again, the effectiveness of that group appears to me to lie in expressing its views with a certain degree of circumspection. It would be counter-produc-tive for the group as a whole, or one member of K the group, New Zealand, to take a very high profile in bringing world attention to the infamy of, say, the Common Agricultural Policy. This leaves the encouragement of consumer groups. There is some reason to doubt whether this would be effective, even if it could be done. During the last few years, there have been moves within the E.E.C. to reform the Common Agricultural Policy. The pressures for reform have not been from consumers, but budgetary, as farm subsidies dominate the total E.E.C. Budget So there is the possibility that an effort to bring about reform by a concentration on consumer groups would be misdirected in any case.

In Europe it is only in Britain that a consumer movement is well developed. Therefore the method of using consumer groups would not simply be one of encouraging existing active consumer organisations to bring pressure to bear on their Governments but encouraging the very formation of consumer groups and perhaps even attempting to bring about an orientation of European thinking towards the consumer point of view.

That would be a dannting undertaking even if it were-ac-rentable to the Governments in , whose wuntries this weald be taking piece. But there; is no any SSw or more recently Britain, *ould ' influence public opinion in New . Zealand. It is improbable that European countries would accept with equanimity the act!ve_ promotion by New Zealand of the view that those GoveranMUs tad deliberately misled their citizens on a fundamental economic matter. /■ ' - r -‘’- In 1985, the (Australian) Bureau of Agricultural Economics brought out a study of the effects of the agricultural poll-, ties of the E.E.G when it held a seminar in Brussels to discuss the findings of the study, the European Commission sent representatives which disputed the BjLE.*s findings dn the effects within the E.E.C. Of course a certain amount can be done in an acceptable way. For instance i the British National Consumer Council has a working party which is examining the effects of the Common Agricultural Policy on consumer prices. New Zealand and Australia have both made submissions to that working party. Similarly, the Dairy Board has been advertising widely, clearly aiming at the British consumer. No New Zealand diplomat is likely, in normal circumstances, to refuse to address "a consumer group if he or she is invited. None of these actions is likely to invite the accusation that New Zealand is deliberately intervening in the internal .affairs of another country. All of which does not lead to the conclusion that everything that can be done is already being done. Opportunities present themselves from time to time and require a formidable array of facts and arguments, to many of which Mr Pryde has been an untiring contributor. But a balance has to be struck ■ between New Zealand hiding its light under a bushel and setting the house on fire. t