By J Pryde and R Johnson
Recent discussions of ‘food miles’ and recent news from Tesco on environmental labelling suggest that overseas consumers are getting more and more sensitive about the environmental foot print of New Zealand export products. There is a considerable body of thought that the environmental or social costs of food products should be taken into account in setting so-called social prices that these products would sell for. This could be achieved by sanctions on their use or by carbon type taxes on international trade. If this comes about, New Zealand trade in agricultural products could be seriously affected.
Environmental footprints, as they are called, reflect the energy consumed in production and transport. Using up energy contributes to the accumulation of certain gases in the earth’s atmosphere from man's production activities including international transport systems. From a climate change point of view the accumulation of these gases is a social bad which should be curbed if the environment is to be protected. If accumulation of these gases is bad, it is but one step to stating that trade in goods should be subject to an environmental social cost assessment to ascertain the real ‘cost’ to consumers. From that step it is but another step to imposing sanctions or carbon taxes on New Zealand exports!
Recent discussion of ‘food miles’ is an example of this kind of social cost assessment. ‘Food miles’ are a measure of the energy used and carbon and other greenhouse gases emitted from transport to consumer destinations. Such assessment would particularly affect New Zealand producers of primary products sold overseas as this country has one of the greatest distances to cover to bring its exports to market. However, with our natural advantages in production systems, it has been shown by the Lincoln University study that most of our primary products have fewer ‘food miles’ incorporated in them than the comparable products produced in Europe.
It is worrisome to New Zealand that influential people in the United Kingdom, like the Stern report and The Guardian have embraced the notion of ‘food miles’. The Lincoln report has fortunately allayed fears that New Zealand products have an unduly high environmental footprint even when ‘food miles’ are taken into account.
Sanctions on New Zealand exports in the name of environmentalism would have to be imposed by our dominant customers off shore. It seems to us that there would have to be concerted action possibly through multilateral agencies like the World Trade Organisation to bring this about and such multilateral action would affect other distant producers as well as New Zealand.
In addition, there was scope in the GATT and in more recent agreements under the Uruguay Round for countries to introduce restrictionist measures in the environmental area if thought justified for good domestic reasons. Article XX stated that no country could be prevented from taking measures necessary for the protection of human, animal or plant life and health, or the environment, provided the measures did not constitute an arbitrary or unjustifiable discrimination between countries. This provision has stood New Zealand well in the area of quarantine and health certification.
There is thus a broad possibility that our customers, unilaterally or multilaterally, could in time proceed to impose carbon taxes or other sanctions on New Zealand exports. If such sanctions have a transport component then New Zealand is likely to be one of the countries most affected by their imposition if they come about.
New Zealand thus has a vested interest in avoiding unilateral or multilateral imposition of taxes on carbon emissions whether in the productive process or in the transport system we use. Therefore we are probably right to reject the concept of ‘food miles’ as these would certainly lie behind any system introduced to try and even up the social costs of imported and domestic primary products. On the wider front, New Zealand would have to be careful not to exacerbate matters by ill-prepared taxes and sanctions on our own export industries. We should seek other methods to contain global warming and avoid jeopardising the very export base on which our standard of living depends. As the Stern report shows, there is a build-up of analyses and policy propositions going on overseas that could see some international political action to reduce climate change emissions whether we like it or not.
John Pryde is a former Secretary of Federated Farmers and Robin Johnson is a former economist at the Ministry of Agriculture.