CTU welcomes delay in tariff cuts

5 May, 2008

The Government announced has announced import tariffs will be held at their 1 July 2009 levels until 30 June 2011.

The announcement means manufacturing operations currently protected by tariffs of 5% or 10% will have these frozen for two years - a welcome relief for a manufacturing industry struggling with a high dollar and competition from countries with cheap labour.

CTU economist Peter Conway says a number of unions had raised concerns with the Government about any further unilateral reductions in tariffs.

"One of the problems New Zealand faces is that severe reductions in tariffs on a unilateral basis have not only damaged industry but reduced any negotiation leverage in subsequent trade negotiations.

"The CTU campaigned against the removal of tariffs in the post-2005 review. The announcement of a deferral of any consideration of a review to mid-2009 is an effective freeze and is good news."

However, Conway says tariffs alone will not support a strong manufacturing sector in New Zealand.

"What is needed now is continued investment in skills and technology to underpin value-added manufacturing, and a monetary policy framework that does not result in excessively high interest rates and speculation on the dollar driving up exchange rates."