The Australian chemical industry is opposed to further reductions in import tariffs being proposed by the government here as part of a national economic reform.
Australian Chemical Industry Council President George A. Lefroy warned that any new program of across-the-board tariff cuts would lead to a drastic drop in investment in the industry, the closure of some chemical plants and the loss of many jobs.The industry made this clear in reaction to proposals being suggested in government circles that a reduction in tariffs should be included in a package of economic measures expected to be introduced by the government in May.
Mr. Lefroy said he found it ludicrous that the government should be considering even lower tariffs for our industry which is already undergoing a radical reduction in tariffs.
The resistance follows already successful cuts in such tariffs. As a result of recent government action, tariffs on imported chemicals are being reduced over the next three years from 25 percent to 10 percent.
Latest statistics show that total sales of the Australian chemical industry - which consists of about 60 major manufacturing companies - are running at close to the equivalent of $1.9 billion, with about 10 percent representing exports. Profits industry-wide as a share of sales are 9.5 percent.
Mr. Lefroy stated: If it is argued that such an approach will give us the moral high ground in the GATT round, then I would simply comment that international trade discussions are to do with economic power and advantage, not morality. If it is argued that the approach will lead to increased investment, then I would flatly state that in our industry the opposite would be the case.
Mr. Lefroy, who is also general manager of Shell Chemicals Australia, a subsidiary of the Dutch oil major, said that governments in most parts of the world were becoming more protectionist. He added: In this context, it is hard to see any benefit for Australian industry or consumers from even lower tariffs for the chemical industry.
Mr. Lefroy claimed that this new government outlook was particularly serious because the chemical industry, which was notoriously cyclical, was finally enjoying an upturn in fortunes after what he described as long periods of stress.
He said Australian chemical companies were already introducing economies to reduce production costs to meet the increasing threat of imports because of the current tariff reduction policy. Investments were being increased to take advantage of improved technologies, marketing costs reduced, work practices adjusted to eliminate excess handling and staff reduced, he said.
According to ICI Australia managing director Michael Deeley, Australia's tariff level will be below the OECD average for chemicals when the present three-year reduction program is completed.
In an address to a General Agreement on Tariffs and Trade meeting in Geneva in October 1987, Australian Prime Minister Robert J. Hawke said his government was prepared to negotiate a broad package of measures to reduce overall levels of effective assistance to Australian industry, including tariffs, as part of a broad-based multilateral approach to counter rising protectionism.
Mr. Hawke stated: In this context we are prepared to eliminate, over an appropriate implementation phase, all quantitative import measures designed to protect domestic industry.