John Knight: Australia seeks unfair advantage

Australia's new agriculture minister, Peter McGauran, seems to need educating about the spirit and intent of the CER agreement. Perhaps our Government should send him a possum-skin-covered copy for bedtime reading.

Mr McGauran has been quoted this week as going "on the offensive" over McCain Foods supplying McDonalds in Australia with New Zealand potatoes. Furthermore, he warned of a "disturbing trend for the two dominant supermarkets (Woolworths and Coles Myer) to use cheap imports for their house brands rather than Australian products".

Does Mr McGauran not realise that Australian-owned Progressive Enterprises has a 45 per cent market share of the New Zealand supermarket sector? New Zealand supermarkets are brimming with Australian produce, which is reflected in the enormous trade imbalance between the two countries.

According to Australian figures, Australia exported A$3.563 ($3.912) billion more to New Zealand than it imported from New Zealand last year. This shows the gross unfairness of Mr McGauran's "Buy Australian" calls, which amount to a non-tariff trade barrier.

Under CER there is supposed to be free trade in goods and services between the two countries. Since 1990 there have been no tariffs or quantitative restrictions on goods. However, this is still not a level playing field, and the new minister appears bent on tilting it even more unfairly.

Australian processing company Simplot Australia's managing director Terry O'Brien, complaining about imports of New Zealand potatoes, has said (NZ Herald, July 4): "New Zealand is our biggest threat. They have lower farm-gate prices, they have lower labour rates and they have a foreign exchange advantage."

The irony is that the so-called "Australian processing company" appears to be a wholly owned subsidiary of American-owned JR Simplot Corporation. According to that company's website: "The J. R. Simplot Company is a privately held food and agribusiness corporation based in Boise, Idaho. We employ approximately 10,000 people in the United States, Canada, China, Mexico, and Australia."

The Australian ban on importing New Zealand apples under the pretext that they constitute a threat of fireblight disease is a prime example of unfair trade practices on the part of Australia. In 2003 the US (with New Zealand as a third party) took Japan (with Australia as a third party) to the WTO Dispute Settlement Body regarding this disease.

The WTO ruled that "the scientific evidence suggests a negligible risk of possible transmission of fireblight through apple fruit".

Despite this, Australia has maintained its ban. "Australians cheat in matters of biosecurity, and the concept of honest science has no meaning there," says Minister of Agriculture Jim Sutton. Our Government has lodged a complaint at the WTO Phytosanitary Committee.

Australia has claimed to be a champion of free trade, leading the Cairns Group of agricultural exporting nations. But Alan Oxley, the former Australian Ambassador to Gatt (the predecessor of the WTO), who played a key role in founding the Cairns Group says: "Australia's trading partners believe that Australia officially politicises quarantine management to protect the domestic market for Australian producers. This undermines a reputation Australia once had. It also creates a hostile environment for Australia to pursue its international trade interests."

* Dr John Knight is a lecturer in marketing at the University of Otago School of Business. He has a paper about to appear in the Journal of Public Affairs: Advance Australia Fair? The Anatomy and Pathology of an 84-Year Trade Dispute.