145 Views of New Zealand Manufacturers' Federation

Wellington, 26 February 1981

O.WL76561

CER: NZ Manufacturers' Federation stance on relationship

As reported earlier today, latest issue of 'The Manufacturer' carries part of a MANFED2 resolution on CER. We have now managed to obtain a copy of resolution which reads as follows:

'The New Zealand Manufacturers' Federation favours a controlled and progressive expansion of trans-Tasman trade.

Any arrangement must incorporate adequate safeguards to deal with any threat of disruption of the New Zealand market and damage to individual industries.

The Federation is opposed to the apparent government objectives of CER with Australia of full free trade which envisages the progressive but ultimate elimination of import licensing and tariffs on all goods.

The Federation believes that disparity in market size and New Zealand's vulnerability because of its narrow economic base are critical factors which must be taken into account.

The Federation believes that disparity in market size and New Zealand's vulnerability because of its narrow economic base are critical factors which must be taken into account.

New Zealand manufacturers suffer a greater burden of lnfrastructural costs than do Australian manufacturers. Examples include freight, taxation and energy. These disadvantages must also be taken into account.

Many constituent trade groups and members have had difficulty in committing themselves to a position on CER because of uncertainty about various aspects of what might be the final trade arrangements.

We now take the opportunity of summarising major points of concern. We are concerned about:

  1. The disparity in market size and New Zealand's vulnerability because of its narrow economic base.
  2. An agreement which involves the progressive elimination of all import licensing and tariff quotas in trans-Tasman trade on all goods produced in either country.
  3. Any agreement which does not:
    1. Retain the current system of export incentives until March 1985.
    2. Maintain the present level of assistance from export incentives after 1985 and thus continue Government encouragement for industry involvement in trans-Tasman trade.
  4. The potential for injury by concentration of import licences on an item or small number of items within the item code. Aggregation over an item code represents potential for an unpredictable and significant disruption of manufacturing activity.
    1. The increased costs which would occur if manufacturers ability to source their inputs on third countries were restricted as a result of mechanisms introduced to overcome the intermediate goods problem.
    2. The need to retain the fifty percent area content rule.
  5. An agreement which does not:
    1. Include adequate safeguards to alleviate any serious injury to manufacturers which may be identified.
    2. Ensure that a full review takes place no later than five years from the commencement of the agreement. The agreement should have a renewable duration of seven years.
  6. Companies operating national pncmg who will face substantial price disadvantages at the port of entry in comparison with imported items. National pricing has been encouraged by Government and its abandonment, which would be the logical outcome of freer trade, would have unfavourable repercussions in regional areas.
  7. Industries currently under study or those operating under industry study plans. We believe that industries should be placed in the deferred category while they are under study and until policy decisions have been made. CER arrangements should be accommodated within industry plans emerging from studies.
    1. The need for manufacturers to have priority access to import licences issued under any arrangement.
    2. The appropriateness of the access formula which is best judged through an intensive and comprehensive consultative programme with industry sectors.
    3. The situation where Australian imports already enjoy a reasonable proportion of global imports. In these cases no special allocation is considered necessary.
  8. The maintenance of the current margins of preference for New Zealand in the Australian market. This is an essential ingredient in assessing the balance of advantage.
  9. Government procurement policies in Australia, especially as they relate to the States.
  10. Protection against dumping which must be an integral part of any agreement.
  11. Non tariff barriers to trade such as standards and approval codes which can vary significantly between States and between local authorities in Australia.

Reservations can only be dispelled when the nature of final agreement is known and when firm assurances on the interpretation of its provisions and on the method of its implementation have been given.

Whilst CER should ensure mutual benefit to Australia and New Zealand we are concerned to see that the agreement promotes the continuing development of New Zealand industry. We believe that CER can lead towards these objectives provided manufacturers' concerns outlined in this document are fully taken into account.'

  1. There is no doubt this resolution would have been one of several reports which caused Muldoon to issue his statement on 24 February, reported in WL7633.3

[NAA: A1838, 370/1119/18, xxi]