Consumers pay cost of tariffs

March 13, 2018

USA President’s decision to impose tariffs on some imported goods could start trade wars.

That appears to be something of which Foreign Minister Winston Peters approves:

What’s Donald Trump’s biggest complaint? It’s that countries shouting out ‘free trade for America’ don’t practise free trade themselves. In fact it’s New Zealand First’s and my complaint that the countries we deal with apply tariffs against us whilst we’re giving them total and unfettered access to our country. It’s simply not fair.

It might not be fair but imposing tariffs on goods from other countries in retaliation is simply stupid.

It might protect inefficient local industries but local consumers will pay for that in higher prices and less choice.

 


Why not make it permanent?

July 1, 2014

Import tariffs on a range of building products will be temporarily suspended from today – a measure which is expected to reduce housing costs and increase competition in the residential construction sector, Housing Minister Dr Nick Smith and Commerce Minister Craig Foss.

“The building materials covered by the tariff suspension comprise about 90 per cent of the cost of the material in an average new house. Currently, these materials attract tariffs and duties that add an estimated $3500 to the cost of a new home. These will be cut to zero per cent tomorrow for at least the next five years,” Dr Nick Smith says.

“The scheme includes a comprehensive list of materials such as roofing, cladding, framing, windows, doors, insulation, plumbing and electrical components, fixed cabinetry, paint and builders’ hardware and fixings,” Dr Smith says.

“New Zealand is a small market for building materials. While we would prefer as much content as possible is locally manufactured, we need the competitive pressure of imported products to ensure we are getting best value for money,” Mr Foss says.

“It is through competition and choice for consumers that we keep costs down.”

The tariff suspension comes off the back of the Budget 2014 initiative to temporarily remove anti-dumping duties for building materials, for which legislation was passed under Budget urgency in May. The temporary suspension of tariffs on building materials will reduce Crown revenue by $5.5 million each year, which was provided for in Budget 2014.

“Suspending import tariffs on building materials is consistent with this Government’s strong public commitment to address housing affordability, particularly given the need for building materials for the Canterbury rebuild and increased construction activity across the country,” Dr Smith says.

“There is no single magical solution to improving housing affordability. We are freeing up land supply, reining in development contributions, cutting compliance costs and investing in skills and productivity in the construction sector. It is about making a whole lot of changes like removing tariffs and duties that aggregate together to make homes more affordable.”

I have just one problem with this – that the removal of tariffs is temporary.

When we spend a lot of time and energy extolling the benefits of free trade to other countries we have to be open to imports ourselves.

Tariffs protect inefficient producers and add costs to everyone who builds something new or repairs something old.

Why not make the suspension of tariffs permanent?


$40m tariff savings

December 2, 2013

Primary Industries Minister Nathan Guy is welcoming major cuts in tariffs for many exporters, as the Economic Cooperation Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu (Chinese Taipei) comes into effect.

“From today tariffs are removed from milk powder, cheese, butter, apple, cherry and wine exports to Chinese Taipei,” says Mr Guy.

“This will mean tariff savings of nearly $40m on current trade. It’s great news for our exporters.

“Tariffs on beef will be eliminated in two years, and tariffs on kiwifruit in three. In four years, sheep, honey and most fish product tariffs will be eliminated and 99% of New Zealand trade to Chinese Taipei will be tariff-free.

“In total, tariffs will be eliminated on 100% of New Zealand’s current exports in a staged programme over 12 years.”

Mr Guy visited a cherry orchard in Blenheim today that is now harvesting and packing for export.

“Cherryland will be one of the first exporters sending products to Chinese Taipei under the tariff free conditions. This is a great Christmas present for them, their employees and other businesses throughout New Zealand.

“Chinese Taipei is New Zealand’s largest market for cherries. Before today, these exports were charged a tariff of 7.5%, and apples faced a tariff of 20%.

“This is a grassroots example of how free trade deals benefit New Zealand, and particularly the regions. It emphasises the importance of other free trade agreement negotiations, including the Trans Pacific Partnership (TPP), which could have major benefits to New Zealand.

“Once the Chinese Taipei agreement is fully implemented tariff savings will reach $75m, based on current trade. But given trade can be expected to increase, those savings are likely to be even higher,” says Mr Guy.

Chinese Taipei is New Zealand’s 6th largest market for agricultural products and our 11th largest overall export market.

The benefits aren’t one-way.

Consumers in those markets will enjoy more choice and lower prices.

Tariffs are a tax which benefit politicians and bureaucrats while protecting a few of their producers at the expense of consumers and other producers.


Consumers pay price for protecting producers

May 8, 2012

The Canadian commitment to dairy farmers to continue protection is putting the interests of the minority ahead of those of the majority.

It’s consumers who pay the price of tariffs on dairy products of up to 300% . The cost isn’t only a monetary one, they also pay the price of fewer choices.

Most New Zealand farmers resisted being dragged into the real world but now, nearly three decades on, it would be difficult to find any who would want to go back to subsidies and tariffs.

The process of losing subsidies was painful but the result is worth it.

Forcing us to meet the market has made us much better at what we do. We think about, and act on, what people want to buy rather than what the government is going to pay us to produce. Consumers here and overseas have benefitted from that.

The only fair trade is free trade apropos of which Anti-Dismal shows how it started.


Food crisis might bring free trade

June 4, 2008

The growing world shortage of food might achieve what years of diplomacy and lobbying haven’t: a reduction in, perhaps even the elimination of, tariffs on food.

 

UN Secretary General Ban Ki-moon has called for an immediate suspension or elimination of price controls and other trade restrictions in an effort to bring down soaring world food prices.

 

Adam Smith  links to a Financial Times article by World Bank head Robert Zoellick who makes a similar call. His 10 point plan includes a need to boost agricultural supply and research spending; increase investment in agribusiness; and remove subsidies and tariffs on food and bio fuels.

 

New Zealand farmers were dragged into the real world when Roger Douglas removed subsidies on farm produce in 1984. We didn’t like it at the time but that was partly because tariffs remained on imports and the labour market was highly regulated so costs stayed up while prices dropped; and we were also battling high interest rates, high inflation, a high dollar and drought.

 

However, while a few farmers were forced to sell most hung in and eventually adapted to the new order and are more secure because of it. Those downstream weren’t so fortunate. Thousands of jobs were lost on farms, in stock firms, shearing gangs, freezing works, and other businesses which serviced or supplied us or processed what we grew. The lesson from this was clear: the subsidies hadn’t helped producers or consumers, it had just feather-bedded those who take their cut between the farm gate and the kitchen table.

  

A good season for cropping and dairy farmers makes it easy for them to spurn calls for a return to subsidies but even though they’ve had a horror season I’ve yet to hear a single sheep or beef farmer wanting to go back to the bad old days of when politicians controlled our income. 

Many of our trading partners have yet to understand the harm that subsidies do and New Zealand farmers, processors and the wider economy pay the price for that. This lesson is lost on some in New Zealand including the Greens and NZ First; and as David Farrar  points out it is ironic that free trade advocates are with the UN and Oxfam on this issues while the Greens are siding with the US in supporting tariffs and biofuels.


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