Producers fear double whammy of US attack and Ansett fallout

By PHILIPPA STEVENSON

Exporters are wary of what the double whammy of terrorism in the US and troubles at Air New Zealand will spell for trade and the New Zealand economy.

The Export Institute warned yesterday that its members were already starting to see the door to Australia closing, because of the ill-will created by the collapse of Ansett and called for New Zealand to take whatever action was necessary to heal the rift.

Exporters are also on alert for signs of a global slowdown, sparked by the impact of the attack on the US, which many say will hit commodity exports first.

And companies reliant on air transport to ship products including flowers, fish and eggs are worried by the more immediate possibility of the demise of the national carrier.

Major export industries including dairy, meat, apples and forest products are keeping a keen eye on developments from the US.

Apart from air-freighting delays for some chilled meat and eggs destined for the US during the airline grounding last week there have been few reports of direct effects from the terrorism in New York and Washington.

But Meat Industry Association executive director Brian Lynch said Middle East trade could be hit - depending on the focus of American retaliation for the attacks - and world markets would suffer should a US downturn precipitate a global recession.

"A slowing-up globally pulls down commodity prices first," he said.

The events had come at the quietest time of the year for meat exporting but the industry would be keeping a watching brief as business cranked up from October.

Major apple marketer Enza also hoped any disruption to markets would have settled by the time of resumption of exports to the US. They have almost finished for this season. Enza's American trade is worth around $132 million, or 20 per cent of the company's total exports.

Graeme Carrie of the Free Range Egg Company, which air freights weekly to Los Angeles, said a shipment prevented by the terrorism from going on Sunday was instead going today.

The company had a 20 per cent export increase after it switched to organic egg production around a year ago and was now shipping tonnes rather than kilograms of eggs each week.

But Mr Carrie said there would be serious consequences for the company if Air New Zealand no longer existed to take the consignments it had transported for a decade.

The Export Institute was also concerned at the deepening rift between Australia and New Zealand over the Ansett-Air New Zealand affair.

The Closer Economic Relations trade agreement had been the cornerstone of New Zealand's export earnings growth over the past 19 years, particularly in the manufacturing and services sector, it said. Australia was now by far the largest recipient of New Zealand's manufactured exports, accounting for half the $20 billion annual return.

"Of even greater significance is that the vast majority of New Zealand's small to medium manufacturers sell only into Australia and have spent many costly years trying to secure a foothold," said institute president Bob Fenwick.

The exporting community was already starting to feel the door closing and New Zealand had to do whatever was necessary "to draw us back from this abyss".

The Export Institute also said any suggestion that Air New Zealand be allowed to sink was untenable.

As an island nation it was important for national security, let alone economic prudence, that New Zealand have its own airline, no matter the cost.

"To have all arrivals and departures from our shores controlled completely by foreigners is unthinkable," said Mr Fenwick. "The disappearance of Air New Zealand could truly turn us into an isolated little island."