“Wood manufacturing matters – especially in the regions” was the title of the Wood Processors and Manufacturers Association (WPMA) one-day conference held in Christchurch last Thursday, April 4th. One of its aims was to develop strategies for the future in the face of highly inflated log export prices.
While high prices were good for forest owners in the short term, the WPMA is concerned that this will bring serious, long term, repercussions across the NZ manufacturing sector and the communities that depend upon it for jobs .
Senior economist and trade expert John Ballingall of Sense Partners acknowledged these challenges, warning that a large distortion between theoretical and observed export prices of logs speaks for itself. He suggests it will be up to the New Zealand Government to decide what regulatory actions must be taken to remedy the situation.
While this situation is bad for manufacturers of wood products, exports of radiata pine logs especially to China have been fetching record prices, he explained. In that country, evidence suggests our logs are effectively subsidised into their market and this will have the effect of skewing log prices upwards here.
Andy Glenie of Glenie Legal Ltd specialises in commercial dispute resolution and matters relating to competition and regulatory law in New Zealand. He acknowledged that overcoming the industry’s challenges from overseas subsidies under existing free trade agreements is not working and gave several examples of how domestic wood processors may be able to use NZ competition law to protect themselves.
Current inflated prices have occurred even though we have free trade agreements suggesting the agreements are being broken or at least “massaged,” agreed WPMA Board Member Doug Ducker.
“We believe that wood processing and manufacturing is a major driver of economic growth in a carbon-constrained world, and a significant feature of the country’s diverse and high value export profile of the future,” he told delegates. However, with competitors not always sticking to the rules we need new thinking to underpin growth across all manufacturing sectors. He supported Rt. Hon. Winston Peters’ view that New Zealand is too small to do anything other than insist on fair play in international trade.
“Logs also take energy, fibre and jobs offshore when they’re exported,” he said. “New thinking on trade must underpin future growth!”
Speakers from major manufacturers and exporters in the dairy, food and engineering sectors shared their own expertise in facing similar challenges, allowing delegates to consider what is happening in other important manufacturing sectors.
WPMA Chief Executive Jon Tanner referred to a NZ Wood Council 2016 report that clearly showed how our international competitors have been shifting the trade goalposts. This has decimated the local manufacturing base. He said, “it is a matter of urgency that New Zealand Inc. pulls all policy levers necessary to enable our manufacturers to compete fairly”.
For further information, please contact:
WPMA CEO, Dr Jon Tanner on 021 0283 1098
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