Unions unite against New Zealand trade ties

Release date: 30/10/2012

UNIONS have launched a rearguard action against proposals for a new round of trade liberalisation between Australia and New Zealand that will slash tariffs, loosen restrictions on trans-Tasman direct investment and review the foreign ownership caps on Qantas and Air New Zealand.

By Annabel Hepworth, The Australian, 30 October 2012

The ACTU and the New Zealand Council of Trade Unions have mounted a rare united push against plans to further integrate the two economies made by a review commissioned by prime ministers Julia Gillard and John Key.

Draft proposals by the Australian and NZ Productivity Commissions include cutting duties of $12,000 when second-hand cars are shipped into Australia and cutting tariffs that still apply to certain textiles, clothing and footwear goods.

The draft also recommended further liberalisation of air services to drive down airfares - including by reviewing ownership restrictions and allowing foreign airlines to serve more destinations - reviewing restrictions on competition for coastal shipping, and expanding an investment protocol signed by the prime ministers last year but yet to be enacted. But the unions have written to their nations' productivity commissions declaring they are opposed to key planks of the plan.

In a new joint submission to the commissions, the unions have declared that policies that could be described as "trade barriers" have a positive effect and that the rules on trans-Tasman foreign investment should be tightened not loosened.

The move sets the scene for a showdown with business as companies that have businesses operating in Australia and NZ have been calling for a more seamless economy between the two nations.

The unions say that further removing restrictions on airlines will threaten NZ and Australian jobs if external carriers increase their capacity, and say that Jetstar and Virgin already provide cheap options for consumers.

The unions also say the liberalisation of trans-Tasman air services that started with the creation of a single aviation market in 1996 has "just created an Australian 'special economic zone' called New Zealand" as Qantas already has a call centre, pilots and flight attendants operating out of NZ on cheaper wages and conditions.

There are more than 40,000 flights across the Tasman each year.

While Qantas wants restrictions on foreign ownership removed, the unions are resisting this.

"We oppose open-skies agreements, including abolition of cabotage and removing ownership requirements, because we believe that it is important that the countries have their own national carriers in order to ensure good national and international freight connections, take an active role in marketing the countries for tourism, and maintain services off the main domestic air routes," the unions say.

The Australian government's aviation white paper proposed retaining the 49 per cent foreign ownership cap on Qantas, but dropping requirements that a maximum of 35 per cent can be a foreign-owned airline with any individual limited to 25 per cent.

The union groups flatly reject proposals to cut all tariffs that exceed 5 per cent - such as the duty on second-hand cars - down to that level by 2015 unless there is a full public inquiry into the impact on jobs.

They also oppose axing trans-Tasman "rules of origin", which allow some goods to qualify for preferential trade concessions.

Click here to read the original article at The Autralian.

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