Editorial: Competitive answer to 'buy Aussie' campaign

New Zealand Prime Minister John Key, right, is greeted by Australia's Prime Minister Tony Abbott. Photo / Getty Images

A buy-Australian campaign in two Australian supermarket chains is a sobering lesson for the Green Party and anyone else in New Zealand who advocates the same thing here. The unfairness to suppliers from this country is exactly the effect a buy-New Zealand campaign has in other countries, though the scale of our market diminishes the impact on most of them and increases the damage to us.

The smaller a population, the less it can afford to favour its own suppliers - unless it wants to settle for a more limited range of goods and services, at higher prices, than the rest of the developed world enjoys. That is precisely the reason New Zealand is in the vanguard of global efforts to liberalise trade.

A world in which all markets are accessible to the most competitive suppliers, no matter where they live, is much more important to New Zealand than to, say, the United States or France, though they stand to benefit too. It is also important to Australia which would reduce its living standard severely if the buy-Australian principle was applied to all products.

It is a short-sighted contest between Coles and Woolworths across the Tasman to be the "most Australian" supermarket. It may be against the spirit of Closer Economic Relations, as John Key complained to his counterpart Tony Abbott at the weekend, but there is not much either government can do about it. Free-trade agreements are made between free states, they are not binding on private enterprise or consumers.

The agreements commonly require the signatory governments to allow foreign suppliers to compete fairly for government purchases, but that is as far as they can go. Private companies can take advantage of free-trade agreements but they are not obliged to apply the same rules to themselves.

Mr Abbott could issue a public criticism of the two supermarkets and try to explain the folly of their campaign to Australians. But with his polls so low and his economy so ill, he probably fears to take a position that would be called unpatriotic by those with a short-sighted view of their national interest.

He has gone as far as to suggest New Zealand suppliers take a case to the Australian Commerce Commission, which is probably unrealistic. The commission's role is to maintain sufficient competition in its domestic market; it probably cannot stop shops from excluding foreign products if they wish. Shops are free to specialise in whatever way they want.

Ultimately the best response of excluded suppliers is to make their products doubly attractive and competitive on the same market. Quality, taste, price and brand reputations can trump the country of origin in consumers' decisions. But it takes a sustained marketing effort, preferably before a threat of this sort comes along.

Consumers in New Zealand may be inclined to retaliate by joining a boycott of Woolworths' supermarkets in this country. It is a threat the Australian headquarters will have heard by now, and it will cause it to weigh up the real value of patriotism in a commercial promotion. Woolworths Australia should think better of its image and leave this nonsense to Coles.

The campaign will pass, of course. As soon as the supermarkets sense consumers going elsewhere for familiar items they no longer stock, the non-Australian brands will be quietly restored. But the lessons should not be forgotten when we are urged to buy on country-of-origin labels. Compulsory labelling is a fine principle of consumer information but if the labels are used for an exclusive purpose, fair competitors somewhere will suffer.

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