Tariff review puts 20,000 clothing jobs under a cloud

By SIMON COLLINS

About 20,000 jobs in the textiles, clothing and footwear industries are at risk as the Government begins a review of import duties after 2005.

The three industries, the only sector still protected by tariffs of up to 19 per cent, employed 20,611 people in 1999, including 7467 in Auckland.

The Labour-Alliance Government froze tariffs at their July 1999 levels until July 2005, cancelling a decision by the previous National Government to axe all tariffs by 2006.

But the Ministry of Economic Development is now seeking submissions by April 30 on what should happen after 2005.

The move coincides with a crucial stage of negotiations over a free trade deal with Hong Kong. The deal is critical to the sector's future because Hong Kong is part of China, the biggest source of textile, clothing and footwear imports.

Trade Minister Jim Sutton will meet Hong Kong Commerce and Industry Secretary Chau Tak Hay in Hong Kong on Friday for talks which may settle the two outstanding issues - defining goods made in Hong Kong and access for services.

New Zealand's Apparel and Textile Federation has dropped its earlier position that Hong Kong-made goods should be defined as having at least 40 or 50 per cent local content, as in existing New Zealand trade agreements with Singapore and Australia.

Federation spokesman Kerry Harding said the industry now accepted that a product would be counted as made in Hong Kong, even if its raw materials were imported from China, as long as its tariff category changed in Hong Kong - for example, from "fabric" to "shirt".

But the two countries still disagree on access to Hong Kong for New Zealand service providers such as postal companies. Hong Kong has a postal monopoly.

Harding said the tariff review and the Hong Kong deal would have little effect on the export-oriented fashion end of the local clothing industry.

But they could hit "a large chunk" of the sector which makes "basic garments".

"The real problem for the industry is whether the export-driven side can survive without the infrastructure the other side provides," he said.

"It provides the necessary volume to have spare parts and suppliers and training and all the other infrastructure which we all rely upon."

He said the tariff review should be delayed until it could take account of a strategy for the whole textile, clothing and footwear sector which is being commissioned this month by a steering group of the industry, unions and state agencies. It is due to be completed by September.

The union representative on the steering group, Robert Reid, said starting the tariff review before the strategy was finished was "just absolutely stupid".

The sector was "in continual crisis": another clothing factory had closed just last week in New Plymouth.

"Our view is that tariffs are already too low and we shouldn't even be looking at them until we work out a sustainable path for the industry."

The terms of reference for the tariff review include assessing "the social, employment (including gender and ethnic issues) and regional impacts of tariff policy".

After initial submissions close on April 30, officials are instructed to consult widely, including "all stakeholders and sectors of the economy" and ensuring that "Maori, women and Pacific Island business groups are effectively consulted".

The review is due to be completed by March 31 next year.

Post-2005 Tariff Review