MEDIA STATEMENT

11 June 1999

FOR IMMEDIATE RELEASE

Trade Minister Launches APEC Wine Liberalisation Study

Trade Minister Lockwood Smith will launch an APEC Study on the impact of liberalisation on the New Zealand Wine Industry today at Kumeu River Wines, in West Auckland.

The study was prepared under contract from the APEC Secretariat, and shows that trade liberalisation in the New Zealand Wine Industry since the mid-1980s has benefited both producers and consumers of wine in New Zealand.

"Twenty years ago the New Zealand wine industry was heavily protected by tariffs in order to encourage domestic production," said Dr Smith.

"The result, as we know too well, was high production of a limited range of low-quality wines, leading to a glut of cheap 'Chateau Cardboard' wine.

"Today, tariffs have all but been removed, and we've seen a real renaissance in our wine industry. Total production has risen by around fifty percent since 1988, and exports have risen from 2.7 percent of production in 1987 to 29.1 percent today. In 1990 we exported $21 million of wine, which constituted 0.14 percent of our exports. Contrast this with 1998, where we exported $117 million dollars of wine, constituting 0.52 percent of our exports.

"The success of the wine industry has occurred because the removal of taxpayer funded incentives caused both producers and consumers to adjust their choices. Producers abandoned production of cheap mass produced wines, and started producing better quality wines at premium prices, aimed at the world market," said Dr Smith.

"Despite the success of liberalisation, the removal of Government support was not without its critics in the 1980s. As an example, one prominent industry spokesperson in 1983 warned that liberalisation would lead to 'chaos' in the wine industry, with 'too many brands available'. Government was warned that consumers would be so confused that they wouldn't know what they were buying.

"These arguments are now in the past for all but the dull parties in opposition, who even yesterday were responding to trade statistics with talk of the need for new Government intervention to promote export growth.

"This study shows that the best thing Government can do for producers, consumers and export growth is to get right out of regulating industries," Dr Smith concluded.

Dr Smith will launch the study with Ross Spence, President of the New Zealand Wine Institute, over a light lunch and wines from New Zealand's Kumeu River at the Kumeu River Wines at 550 Highway 16, Kumeu. All media are welcome.

ENDS

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