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Free trade agreement not to blame - Cullen

New Zealand Herald, Auckland

Free trade agreement not to blame - Cullen

18 April 2008

By Audrey Young

The Government was stung by suggestions yesterday that its much vaunted free trade agreement with China was linked to the loss of 430 jobs in Fisher and Paykel’s Mosgiel dishdrawer plant and hit back at the company.

It hit back at the Government.

The link with the FTA was made by Fisher and Paykel chief executive John Bongard.

Delivering the news yesterday, Mr Bongard said that as well as an "unhelpful" high exchange rate fuelled by high interest rates, "free trade agreements with low cost labour countries like China and Thailand have created a playing field we are unable to compete in".

Deputy Prime Minister Michael Cullen said Mr Bongard’s claims were "extraordinary given that tariffs on Chinese goods entering New Zealand in the whiteware area were already down to 5 per cent".

"Manufacturing jobs of this sort have, sadly, been moving to Third World countries around the world for any number of years."

Trade Minister Phil Goff said the company itself had said last year that a China FTA was "not going to make any difference to Fisher and Paykel’s production and sourcing plans".

Mr Goff was quoting from notes taken in March last year during a Ministry of Foreign Affairs and Trade briefing of stakeholders about progress in the FTA negotiations.

However Mr Bongard, reacting to the "no difference" quote, said: "I’d suggest Phil didn’t hear correctly."

The job loss blow was followed by announcements that the Dunedin knitwear firm Tamahine is to close in July, with the loss of 50 jobs, citing cheap imports from Asia, and that ANZ National will shed 500 data processing jobs through outsourcing to Bangalore, India - though it says it can redeploy the New Zealand staff.

New Zealand First leader Winston Peters, who opposed the FTA, said yesterday he was sure New Zealanders could "join the dots up here".

National supported the China FTA but finance spokesman Bill English tried to sheet home some blame to the Government by referring to Dr Cullen’s previous warnings to Cabinet colleagues that overspending in the 2007 Budget would lead to an interest rate response from the Reserve Bank and the exchange rate would stay high for longer.

"The Cabinet then went ahead and overspent by more than $1 billion. Everything he predicted has actually happened, and 430 people lost their jobs."

What Mr English wanted was a low-wage economy "so we can compete with Chinese workers", said Dr Cullen.