OTTAWA PACT.

Auckland Star, Volume LXIV, Issue 181, 3 August 1933, Page 14

OTTAWA PACT.

LETTER AND SPIRIT. REMOVAL OF DUTIES. TWO COURSES OPEN. Expressing confidence that the proper interpretation would bo given to the letter and spirit o£ the Ottawa agreement, the Auckland "branch of the United Kingdom Manufacturers and New Zealand Representatives' Association presented in general terms to the Tariff Commission to-day the case for the reduction and abolition of duties on imports from the United Kingdom in ■which its members were directly concerned. The spokesman was the chairman of the association, Mr. John Hislop, who said that one of two courses was open to New Zealand. She could adopt the policy of artificially building up secondary industries by the application of high tariffs, or the policy of devel&pment that would direct her ingenuity, scientific knowledge and research, labour and capital into close alliance with the country's natural resources and aim at the scientific development of the primary industries, which in the face of world competition had held their own in the markets of the world, providing New Zealand with the necessary credits to purchase the commodities which she could not economically produce. For the full development of her agricultural and pastoral industries the Dominion must extend to them the assistance which a free importation of manufactured goods would give, thus giving to her producers in turn the full purchasing power of their incomes. For a variety of reasons New Zealand was an ideal country for primary production, -while the smallness of her areas and limitation of population far removed from the densely populated markets of the world made the development of secondary industries, except those closely associated with primary products, an uneconomic venture. The Ottawa Pact.

Mr. Hislop said his association based its case for the abolition of the tariff on many lines on Article 7 of the Ottawa Pact, which, according to his interpretation, did not mean that certain industries had been privileged by special legislation protecting them from outside competition. It was the market of New Zealand, and not individual industries, that was protected. Therefore, to goods produced in the United Kingdom the protection by a tariff was not to apply unless it could be shown that those goods were being produced in New Zealand and the production could be assured of sound opportunities for success. When there was such an assurance, Article 8 became applicable, the effect being that only such protection would be afforded the market as to allow United Kingdom goods a reasonable opportunity of competition on the basis of relative costs of economic and efficient production. "Under Article 7, therefore," Mr. Hislop argued, "the market of New Zealand shall be free to the' imports of the Uniced Kingdom where it can be shown for the lack of opportunity no local industry has developed." Woollen Trade Profits. Dealing further with the interpretation of Article 8, Mr. Hislop said that what might be termed economic and efficient production in New Zealand might be classed as extremely uneconomic and inefficient when applied to British products. Strangely enough, New Zealand allowed cotton piece goods for the manufacturing of shirts to be admitted free, although cotton was the staple product of foreign countries. A tariff of 20 per cent was applied to woollen materials for the production of a suit of clothes, yet wool was the staple product of New Zealand. The protection of the New Zealand market against the importation of worsteds was an interference with the development of the wool industry in the Dominion. Massed production means had been most successfully applied by the primary producers, who rightly complained that it could not be done by the secondary industries. That statb of affairs could be due only to inefficiency. "This is doubly so when applied to the woollen and boot industries, where we have the raw materials for both the staple products of this ciuntry," Mr. Hislop declared, "and if the raw materials can pay a freight of 26,000 miles, with all the necessary handling charges at each end, then surely such provides sufficient protection for the industries in New Zealand. In this connection I would suggest an investigation into the balance-sheets and profit and loss accounts, of the woollen mills where large dividends have been paid right through the period of depr-«sion. In view of the position of primary producers and importers, it is evident that such businesses are deriving their prosperity through unnecessary, high tariffs." "Lose No Sleep." "The question has been asked from what source will we receive our revenue if we discontinue the Customs tariff," Mr. Hislop continued. "We need lose 110 sleep over where this revenue would come from, for if -we were to do away with tariffs in their entirety the revenue would come from the same source as it c'omes at the present time—the "pockets of the community. According to Mr. Mander's evidence, this is a very trifling amount— £4,200,000. Unfortunately for the people, however, this small amount increases considerably before they are called upon actually to pay it. We maintain that revenue requirements cannot be taken into consideration if the requirements of the Ottawa agreement are to be carried out, and therefore it seems as if it is beyond the province of the commission to permit revenue to influence the decision, as this' might lead to a breach of the Ottawa agreement. The question of revenue can be brought before some other commission set up to consider this important question, and no doubt such commission would lead us into many fresh fields and pastures new."

Referring to the British preferential duties Mr. Hislop.said: "In short, we can find no satisfaction, as British importers, in being assured we are being drowned in 20 feet of water instead of 40 feet. We prefer not to be drowned at all. Great Britain never originally asked for it, and under its camouflaged preference the tariff against her has been increased." Identical Formula. Mr. A. E. Mander, secretary of the New Zealand Manufacturers' .Federation: You are aware that the formula enumerated in article 8 was used in connection •witli a high-tariff Dominion like Australia and a low-tariff Dominion like New Zealand. Mr, Hfetops .....

Mr. Mander: You agree that the Ottawa agreement did not require lis to lower the tariff unconditionally, but only to lower it if, after investigation, it was proved to be too high to satisfy the formula ? Mr. Hislop: If you bring your tariffs down to give effect to that formula, you have done all Ottawa asked you to do. Mr. Mander: If it is found that our tariff is below the level of that formula we have done all that is required of us. Mr, Hislop: Yes. Mr. Mander: Do you contend that Great Britain is dissatisfied with our present tariff? Mr. Hislop: Most emphatically I do. Quoting from recently published cablegrams, Mr. Mander said the Prime Minister, the Rt. Hon. G. W. Forbes, had indicated that the 'treatment by New Zealand of British manufactures so far as the tariff was concerned was considered to be fully satisfactory to the British authorities. Did not that conflict with Mr. Hislop's evidence? Mr. Hislop: How so? My answer is that the British people honestly believed New' Zealand would faithfully carry out the Ottawa agreement and the British Government is prepared to wait for the findings of this commission.