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New Zealand, The Ten, and future market strategies

McCarthy, Owen
Discussion Paper
Fields of Research
Britain, along with Ireland, Denmark and Norway will become a full member or the European Economic Community (EC) in January 1973. Thus the original signatories of the Treaty of Rome of 1957 (France, West Germany, Italy, The Netherlands, Belgium and Luxembourg) which set up the EC will become what is popularly called The Ten. In fact this is a misnomer because a number of countries are associate members of long standing (Greece. Turkey) or entered as a type of associate under the Yaounde Convention (former French colonies in Africa and African nations still members of the British Commonwealth) or are currently negotiating for associate membership (Austria, Sweden, Spain). In passing, it is suggested that it is this unwieldy expansion of the original inward looking Six which offers the best hope for freer world trade to the benefit of New Zealand, among others. The main aims of the 1957 Rome Treaty were to eliminate customs duties and other trade barriers between member states; to establish a common external tariff (CT) and commercial policies towards outsiders; to inaugurate a common agricultural policy (CP) and to encourage the free movement of people among group members. These measures together were to achieve the grand design of improving living standards and encouraging closer political ties. In practice, most progress to date has been made on the customs union or common market. At the end of a 12 year transition period (1957-1969) all trade barriers between the individual countries within the group had been eliminated. Political union is more contentious and little effort is being made in this area at present. The implications of a group of Ten, plus minions are profound. Already the Six alone are the largest trading bloc in the world in terms of both imports and exports. For example, of total world imports of food and agricultural raw materials, the Six account for 25 per cent. The Ten would be even more important traders with a population in Western Europe alone of 255 million compared with Russia 240 million and U.S.A. 201 million. It might be thought that as 10-15 per cent of New Zealand exports go profitably to the Six already, the application of the CT and the CP to Britain should not affect New Zealand unduly. Unfortunately this is not true. Current exports to the Six are mostly wool which enters duty free as an industrial raw material. Our other major products, meat and dairy, will be greatly affected by the existing and proposed CT and CP relations (in spite of temporary concessions for our dairy produce). Briefly the crux of New Zealand's problem revolves around the degree to which Britain will become self sufficient after EC entry by increases in her internal production plus other EC country transfers and the changed patterns of demand EC entry will force on the U.K. consumer. Higher prices to U.K. producers under CP will increase output. However, higher prices will also be paid by U.K. consumers under CP so that existing patterns of demand are likely to change. The question of where New Zealand could, or will be forced to fit into this entirely new set of circumstances, or how she could beset adjust to it is discussed further below.