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Tariff cuts must stay aligned with Australia's

Media statement Wednesday, August 20th, 2003

Tariff cuts must stay aligned with Australia's

Any tariff cuts in advance of Australia will seriously undermine our manufacturers' export competitiveness especially in Australia and the domestic market, warns the Employers & Manufacturers Association (Northern).

An announcement on the future tariff reduction programme is expected imminently. EMA is concerned New Zealand will lead the way to zero tariffs by 2010 though all our major trade partner countries retain them.

"Any move to cut tariffs unilaterally again will do more harm than good," said Bruce Goldsworthy, EMA's Manager of Manufacturing Services.

"The strategy whereby unilateral tariff reductions were to have delivered a trade advantage to New Zealand has failed at WTO and APEC levels.

"Even Trade Negotiations Minister Sutton has acknowledged this.

"Any move to take our already low tariff levels to zero faster than Australia after 2005 would impact negatively on investment and jobs.

"If our manufacturers are to lose their tariff margins faster than Australia's we guarantee the export of our manufacturing jobs across the Tasman will escalate well before 2005.

"The way that the rules of origin of goods interact with tariffs under CER will see to that.

"If New Zealand drops its tariffs to zero before Australia, under CER Australian industry would gain a major advantage by no longer having to meet rules of origin when exporting here while New Zealand exporters to Australia would have to keep doing so.

"Australia has signalled its tariffs applied to textiles, clothing and footwear (TCF) will reduce to 10% by 2010; ours may be zero.

"Under WTO commitments New Zealand does not have to reduce tariffs further. Any move to do this would be solely to gratify our agricultural exporters facing added costs from the way the EU and US subsidise food production.

"In fact any tariff cuts we make won't make any difference at all either to them or here. Their impact on the economy overall is now tiny though they remain significant for the few sectors where they are still applied.

"New Zealand is one of the most open economies in the world with 95% of imports entering the country free of all tariffs or quotas.

"Far more important for Government than tariff cuts is the building of a broad commitment to developing a strategy for economic growth.

"We urge Government to retain present tariff levels and only reduce them when other countries make reciprocal reductions, and to keep our tariffs aligned with Australia's."

ENDS

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