Shoppers' perception 'more important than climate-change policy'

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Consumer views about the sustainability of Kiwi-made products are a greater threat to exports than the risk from a soft New Zealand policy on climate change, according to an economic report.

The New Zealand Institute of Economic Research says some countries are talking about "border taxes" to protect their industries from imports from countries with no, or soft, policies to tackle climate change.

NZIER said it seemed unlikely New Zealand exporters would be the target of punitive taxes from other countries if our climate change policy was seen as weak. But there was still a risk of such taxes and environmental trade barriers being used between big players such as the United States and China.

Such potential trade wars were expensive to resolve and could damage the international trade system and dim the prospects for further freeing up of world trade.

However, "even if no border taxes are imposed, consumer preferences matter", NZIER says.

That was evident with the recent debate about "food miles" in Europe, with concerns about the impact of shipping or air freighting products from New Zealand, as well as criticism of meat-intensive diets.

"Overseas shoppers are being buffeted with suggestions about how green their shopping baskets are," NZIER says. Over time consumers may start buying what they think is a more sustainable product.

"If New Zealand's agricultural exports are perceived as being unsustainable, even if in reality they are energy efficient, then our market share in key export markets is at risk." So New Zealand firms needed to keep watch on overseas consumer trends and spend money on showing their sustainability credentials.

NZIER says recent government policy decisions about the emissions trading scheme and future emission reduction targets had raised concerns from some groups who think New Zealand should do more to tackle climate change.

The possible result of an "allegedly soft" climate change policy was the risk New Zealand exports could face environmental trade barriers such as border taxes, NZIER says.

Such a tax would aim to create a "green and level playing field" making up the difference between domestic and overseas carbon pricing systems.

Such border taxes would aim to keep firms internationally competitive against firms in other countries that do not face a carbon price and stop consumers switching to products made in countries without a carbon price. It would also close the door on consumers buying imports direct to avoid a domestic carbon charge.

But it would be hard to impose a border tax in practice, mainly because of determining how big the tax should be.

Both countries needed to have a carbon-pricing system and the foreign country would need to impose carbon pricing on the products New Zealand exported at a higher rate than New Zealand. Few countries would fall into that category and if their carbon charge was lower than New Zealand it would make no sense to try for a border tax, NZIER says.