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Tariff Decision Positive for Growth

Tariff Decision Positive for Growth

"The announcement of a plan to reduce tariffs to maximum rates of 5 and 10 percent by 2009 is a small but positive step in the right direction", the executive director of the New Zealand Business Roundtable, Roger Kerr, said today.

"The government's earlier decision to postpone tariff reductions was inconsistent with its goals of faster economic growth and greater global connectedness."

Mr Kerr said that New Zealand 's tariffs were a tax on exports, protected jobs in less competitive industries at the expense of more productive jobs elsewhere, and hit lower income consumers hardest. Unilateral reductions were superior to distorting preferential trade agreements.

It made no sense for New Zealand to wait for other countries to make similar moves. A policy to refrain from taxing our own consumers and misallocating resources only if other countries did likewise made no sense.

The Business Roundtable had recommended a faster programme for the removal of all tariffs, noting that the most protected industries had had 25 years to adjust to import competition.

"To help affected industries compete and improve resource use further, the decision should be complemented by moves to facilitate labour market adjustment, reduce domestic costs and prepare the ground for a move to full free trade", Mr Kerr concluded.

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