13 July 2004

Continuing fallout from free trade failure

National Party Foreign Affairs and Trade spokesman Lockwood Smith is sure Electrolux won't be the only business opting to take advantage of better trading conditions across the Tasman.

Electrolux is moving its Christchurch plant to Adelaide, with the loss of 159 jobs and $10 million in lost salaries and spending in the local economy.

"Many Australian-based businesses are now counting on better access to the lucrative US market after getting a foot in the door with the recent free trade agreement," Dr Smith says.

"As well as offering lower corporate tax rates and the absence of a millstone like the RMA around the neck of business, Australia offers huge opportunities of trade with the United States, and right now that is beginning to hurt New Zealand.

"A Treasury report last year forecast a negative effect on the economic welfare of whichever country missed out on an FTA with the US, and we now starting to see that bite.

"The current policies in New Zealand send a message to investors that if they want to expand into North America then they have to go to Australia.

"A free trade agreement with the US was Labour's single biggest foreign policy objective, and though many have criticised the Australian deal, the most recent estimates are that it will be worth more than $6 billion a year to Australia.

"We are not even in the queue for an FTA with the US. The longer that continues the more Kiwi businesses will be forced to look across the Tasman," Dr Smith says.

ENDS

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