611.47H31/63

Memorandum by the Chief Economic Analyst of the Trade Agreements Section (Hansen)

Mr. Campbell5 came to my office with Dr. C. C. Taylor of the Department of Agriculture, and discussed the question of a very limited and [Page 72] temporary agreement with New Zealand. It was Mr. Campbell’s thought that in view of rising prices, notably of meat products, in the United States, and the beginning of unfavorable reaction of consumers thereto, it might be possible to admit, for a temporary period at reduced tariff rates, meat products from New Zealand including lamb, beef, veal, arid pork. His concrete suggestion was merely that possibly the State Department might wish to ask the American Consul General in New Zealand to investigate the possibilities of any quid pro quo which New Zealand might give in exchange for such temporary and restricted concessions.

It appeared from the conversation that probably the only concessions which New Zealand could make would be in the tariff on oranges, raisins, and possibly lemons. In the case of oranges, we now supply slightly less than Australia, the principal supplier, and in the case of raisins, we supply about a third of the total New Zealand market. Australia enters the New Zealand market duty free, whereas the tariff against the United States is high. It appears that should the duty be lowered on these products the probability would be that in view of our more favorable position relative to our chief competitor, Australia, we could export more oranges, raisins, and lemons to New Zealand, but that such increased exports to New Zealand would very likely amount to a diversion of some of our present trade from the United Kingdom to the New Zealand market. In other words, Australia might very likely, were tariffs in New Zealand reduced against our products, divert her exports more heavily to the United Kingdom and thereby encroach upon our market there. In all probability any such restrictive and temporary arrangement as Mr. Campbell mentions would not result in any larger export of our fruit products but would only tend to divert some of our trade from the United Kingdom market to the New Zealand market. Such diversion might indeed have permanently a bad effect upon our trade, in that some temporary loss in the United Kingdom market might be difficult to regain.

It thus appears that New Zealand would have nothing to offer in exchange for any concessions made in meat products. Should it prove desirable to admit more meat products we could very likely get greater concessions from other countries for reductions on these items. In the case of Canada, we could easily get a larger importation of live animals which, for our market, would amount ultimately to the same thing as importation of meats.

It seems to me that there is no likelihood of any preliminary exploration by our Consul General in New Zealand proving sufficiently fruitful to warrant initiating the investigation. Certainly it does not seem desirable to start any such investigation until we have concluded our agreement with Canada.

  1. R. B. Campbell, High Commissioner for New Zealand in London.