Labour Breaks Promise - Importers Pay
Import News from the Importers Institute
29 March 2000 - Labour Breaks Promise - Importers Pay
Dr Cullen confirmed in December that clothing tariffs would be reduced from 19% to 15% in July 2000. Importers who relied on Dr Cullen are now facing substantial losses.
Labour's pre-election promise was to "freeze remaining tariffs at year 2000 levels for at least five years, or until key trading partners match those levels while promoting transitional measures to allow industries to prepare for the tariff reduced environment."
The tariff levels are set yearly in July. The speech from throne said only that "The costs and benefits of the progressive tariff reduction will be properly examined. A more considered and balanced approach to tariff reduction will be taken."
Why did the government change its mind? The president of the Apparel & Textile Federation asked Mr Anderton to freeze tariffs at the levels set in 1999. Mr Anderton agreed, even though tariff policy if nominally the responsibility of Mr Paul Swain, Minister of Commerce. Mr Swain has been ill and Mr Mallard was acting for him.
When we asked Mr Mallard what his government's intentions were, he told us that they would become clearer over the next month.
On the same day, Mr Anderton's office was telling journalists that the tariffs would be frozen at 1999 levels, on the grounds that those tariffs were still in place during the first half of the year 2000 and they were therefore 'year 2000 levels'.
The Importers Institute considers Mr Anderton's reasoning to be disingenuous. Mr Mallard has since defended Mr Anderton's decision publicly.
We are at a loss to understand why the Apparel & Textile Federation would want its members, virtually all of whom are clothing importers, to pay higher tariffs. The fact is that the low-quality end of clothing manufacture, which would be sensitive to tariff protection, as long since ceased to exist in New Zealand.
If Mr Anderton wants to take us back to the days when New Zealanders choices were limited to either buying overpriced merchandise made here or do their shopping in Sydney, he would have to increase tariffs to 40% and bring back import licences.
Not a single job will be saved or created by this decision. The Alliance and the Greens are ideologically opposed to free trade and favour tariff protection. Labour, on the other hand, says that it is in favour of the open economy.
The biggest losers, as usual, will be lower income New Zealanders, who will have to pay more for their clothing and shoes. Importers who relied on the word of our Minister of Finance will also suffer substantial losses as a result.
For further comment please contact Daniel Silva, Secretary of the Importers Institute, Tel 021 877 015.
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