Trading Partners

Good neighbours make good business partners but there are problems to be solved. By Jack Kelleher

ENTREPRENEURIAL and manufacturing energy is having more effeet on trade between the Pacific islands and New Zealand than planning by governments and commissions. The forces combine, however, in the response of New Zealand garment manufacturers to the establishment of a new tax-free zone in Fiji.

Fiji has a need to encourage industry now more than ever and the New Zealand Government has just instituted a pohey of allowing Fiji-made clothing into the country duty-free, without licence. Put these factors together, add the cost of lahour in Fiji (attractive in comparison with labour costs in New Zealand) and it is easy to see why New Zealand manufacturers should transfer, mothball or try to dispose of their plants, open factories in Fiji and ship their goods home. ... lsn 1 a " B°°d news for Fiji, however: Fijians m New Zealand are among workers losing jobs through factory close-downs m Gisborne, Auckland and Whangarei.

Women, who make up 97 per cent of this workforce, are the most affected by the drying up of work in New Zealand, and the

prospect of their employers setting up op erations in Fiji.

Manufacturers setting off on this trail need to beware of a rule requiring 50 per cent of the total cost of production to be sourced in Fiji which would limit the origin of materials. And when the finished product is brought back to New Zealand, it must be competitive with imports arriv ing under reduced protection during the next three years.

Forestry is moving in the same direc tion, with Forest Products (Fiji) Ltd, a new joint venture between New Zealand and Hong Kong companies, gaining approval to operate a tax-free factory at Lautoka, to manufacture prefabricated houses for export to New Zealand. It is the first en tirely overseas-owned company to take advantage of the scheme. Forest Products, a New Zealand giant, claims to have a process that can make use of timber un suitable for other purposes. It plans ini tially to employ 72 people and to export 200 houses, earning more than $F600,000 in its first year.

Trade between the islands and New Zealand has languished in recent years in

spite of the reduction of NZ trade barriers and the establishment of programs to aid the production and marketing of island goods. There are no trade barriers in New Zealand that are not already in the process of being dismantled; in fact, the last two items on the list of dutiable goods coconut cream and passionfruit juice will be duty free by July 1. Australia will still have a few products left on-quota, specifically in the areas of textiles, clothing and footwear.

New Zealand has worked positively to achieve the aims of the South Pacific Region Trade and Economic Co-operation Agreement (SPARTECA); in the assistance area a $lOO,OOO fund is available to help island companies employ consultants to examine markets in New Zealand, The aid program, administered through the Ministry of Foreign Affairs rather than Trade and Industry, already has marketing studies and promotions under way.

There are plans to help Samoans establish that their honey is disease-free in order to satisfy the German market. Another study aims to improve the canning of food, and a third will examine the bottling of fish for export.

New Zealand provides only a tenth of

the economic aid that flows to island communities, but from New Zealand’s point of view it is now the main part of its international aid commitment. NZ imports from the islands have decreased, mainly because they were concentrated in value on a couple of products and countries: the collapse of Nauru’s phosphate and decreased use of Papua New Guinea coffee had a disproportionate effect on total trade figures. When the Fiji sugar harvest was in jeopardy, after the coup, SPARTECA looked to be undone.

In fact, SPARTECA was needed as never before. Imports to New Zealand decreased from the 1983 figure of SNZBO million to the 1987 mark of SNZ6S million. Reduction in phosphate use had much to do with that, as Nauru battled problems unlike any other community s: its exports of phosphate plummeted from a value of SNZ42 million in 1983 to just $l5 million in 1987.

PNG’s SNZ9 million worth of exports in 1983 almost doubled by 1986 and dropped to SNZB million the following year as coffee prices fell.

In the same period, Fiji increased its production of manufactured items and became a promising platform for research

assistance. To a lesser extent the same ap plied in Samoa and Tonga: Melanesian countries continued to rely heavily on ex port uses for sawn tropical timbers.

Fijian imports to New Zealand have been more stable than most; only $lOO,OOO down in the year to December 1987, from SNZI9.S million the year before. Sugar alone earned more than SNZII million, Cook Islands has averaged SNZS mil lion export earnings in the past five years; Western Samoa has earned SNZ9.B mil lion, Tonga SNZ4.2 million, Vanuatu SNZBOO,OOO, Niue SNZ 187,000 and Kiri bati SNZ7I,OOO.

Exporters may have a new major com petitor in New Zealand if all trade barriers are to fall. They will need to sidestep prod ucts from Taiwan, Korea and Indonesia.

SPARTECA s architects believe they have prevented items from these countnes in filtrating areas such as Fiji s tax-free zone with their 50 per cent requirement for lo cal cost.

Trade between the islands and New Zealand, as everywhere, still has room for the initiative and imagination on the part of the individual: New Zealand s partici pants in SPARTECA are trying to encour age that.