THE PRESS MONDAY, AUGUST 15, 1988. Clothing without protection

Press, 15 August 1988, Page 20

THE PRESS MONDAY, AUGUST 15, 1988. Clothing without protection

The Government’s decision on tariffs and import licensing for the clothing industry is consistent with many of its other policies. It amounts to the removal of protection and drives towards greater competition in the industry. It is also thorough-going in its application of the principle of avoiding protection — no share of the New Zealand market will be reserved for New Zealand manufacturers.

Characteristically enough, the Government is in a hurry to get things done. A number of the measures will take effect at the beginning of 1989 and import licensing on clothing will be abolished by 1992. The Australian clothing industry is in a position not dissimilar to that of New Zealand, but it has been given three more years to adapt. Also characteristically, the Government is making a series of leaps of faith in its move. One is in the whole approach to reform: this lies in the belief that, if the economy has not yet responded by expanding, the failure is because the process of . cutting away protection has not yet been completed. Taking that view certainly provides a justification for continuing the process of change; but it is by no means certain that what is hampering the development of the economy is that some aspects have not yet been changed. It will always be possible to find something else that needs changing. The problem with a Government that is reformist could be that it will never know when it is time to stop.

A further leap of faith is being taken about employment. How many of the 17,000 who now work in the clothing trade will continue to be employed by it is impossible to estimate. It would seem optimistic, even for a Government greatly given to public optimism, to consider that anything like that number would continue to be employed. One of the very important features of the clothing industry is that so many women are employed by it. The prospects for many of these women would seem very bleak indeed. If sunrise industries were waiting to snap up any people no longer needed on the cutting tables or on sewing machines, there might, be good reason to accept change as inevitable. No such industries are evident. The Government is once again forcing the pace of change without any idea of where these people will go. Even if the general thrust of the Government’s policies over the

clothing industry can be said to have a degree of sense, the timing of a move which has a fair chance of throwing a lot more people out of work, particularly women, seems incredible.

The Minister of Trade and Industry, Mr Caygill, believes that the clothing industry can survive by exporting and by catering for the top end of the market. The value of clothing exports was down in the last trade year. The high value of the New Zealand dollar has had an adverse effect on exports of clothing. It would seem that Mr Caygill relies more on hope than on something more solid. It is a further act of faith to believe that a clothing export industry can survive without a reasonable domestic market. If the Government is prepared to take the risk of destroying the clothing industry, there is a further important point to consider. Only about 25 per cent of New Zealand wools are made into knitwear, but it does mean that New Zealand is able to process one of its basic raw materials. Merinos, whose fine wool can be made into top-quality clothing, make up about 3 per cent of New Zealand’s total sheep numbers. The possibility of further processing would seem to need preserving. There will undoubtedly be huge volumes of clothing imports from cheap-labour countries in Asia and the Pacific. There may even be end-of-season exports, or overruns, from Europe or North America. Although New Zealand has anti-dumping laws, it is notoriously hard to monitor such falsely cheap imports and the quantities available will be such that smaller New Zealand manufacturers could be wiped out rapidly. Worse, the consumer may not benefit much because the importers, wholesalers and retailers can easily take higher profit margins. Many suffer; a few get richer. Mr Caygill reconciles his approach to the clothing question with his Labour principles by arguing that everyone in the country should not have to pay higher prices to protect the few. The point has some validity and, in other times, it might be even more persuasive. But the cost to the country of losing the industry and the jobs of the people who work in it may also be borne by everyone in the community if only by way of having to provide more dole money. All these factors need to be part of the calculation on how far to go down the path of removing protection.