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Wed, Oct 01, 2003 - Page 12 News List

New Zealand to resume tariff cuts from July 2006

AP , WELLINGTON

New Zealand will resume a policy of cutting tariffs on all imports from July 1, 2006, seven years after freezing the plan to protect vulnerable domestic industries, the government said yesterday.

The move mainly effects import tariffs on clothing, footwear and carpet -- currently at 17 percent to 19 percent -- which will be reduced to 10 percent by July 2009, Commerce Minister Lianne Dalziel said in a statement.

All other tariffs, which range from 5 percent to 12.5 percent, will be cut to 5 percent by 2008.

New Zealand's import tariffs are already among the lowest in the developed world.

Earlier tariff cuts triggered major restructuring in some industrial sectors as they were exposed to greater competition from imported goods.

Trade unions pressed the center-left Labor government for the freeze in 1999, fearing further reductions in tariffs would mean job losses in vulnerable industries.

Dalziel said previous tariff cuts had produced "significant productivity and welfare gains," especially for consumers.

"The government has recognized the need for firms to ... become more innovative and internationally competitive," she said.

The government also recognizes that previous tariff reductions had "imposed significant adjustment pressures on industries and particularly in certain regions," she added.

Trade Negotiations Minister Jim Sutton said the government had decided not to cut tariffs to zero because of uncertainty over how much international trade will be liberalized in the future.

But Sutton didn't rule out such a move in the future, saying that the decision to retain some low tariffs would give New Zealand leverage at future trade negotiations.

A review in 2006 will decide tariff rates after July 2009, he said.

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