FOREIGN TRADE.

Auckland Star, Volume LXV, Issue 162, 11 July 1934, Page 10

FOREIGN TRADE.

SEVERE HANDICAP. "PROHIBITIVE DUTIES." EXAMPLES OF EFFECTS. "Generally the Government' is to be commended on reducing the duties under the British schedule on a number of items items affecting the cost of production and the cost of living," .said Mr. Cainor Jackson. "The reductions in the British duties are pursuant to the Ottawa agreement. Unfortunately, the foreign duties have not been correspondingly lowered, and the widening of the preferential margin that results in favour of British goods remains excessive. At Ottawa Britain asked for a preferential margin of 20 per cent against foreign goods. In most cases this is now ."58 per cent to 40 per cent against foreign, as the surtax on all foreign goods has been retained, whereas British goods are exempt. Where the rate of duty on British goods is 20 per cent ad valorem free of surtax, the foreign rate is 45 per cent, plus surtax. In other words, the British duty payable is £22 per cent and the foreign duty payable £00 12/9 per cent, a preferential margin in favour of Britain of £38 12/9 pe.r cent. In die schedule of items dutiable at 25 per cent British, 50 per cent foreign, the total duty payable on British good is £27 10/ per cent and oil foreign goods £07 7/0 per cent, a preferential margin in favour of Britain of £39 17/0 per cent. '■The Minister states that the surtax is being retained on foreign goods for bargaining purposes. It is more likely <o result in duty reprisals on New Zealand produce entering foreign countries. While the rales of duty on foreign goodare thus left at an unduly high level, Ihe position is further aggravated in (lie case of gold countries by the retention of the method of converting foreign invoice values for duty purposes at the bank rate of exchange instead of the .Mint par rate. Trade With Gold Countries. "As the currencies of gold countries are appreciated in terms of sterling by approximately 4.1 per cent, the duties payable on import- from these countries are further increased by 45 per cent, so that the 45 per cent ad valorem duties on goods from gold countries such as France, Belgium and Germany in effect amount to 85 per cent, and the goods under the 50 per cent ad valorem schedule i in reality amount approximately to 90 per cent. In the circumstances it is little wonder that our trade with gold countries, both imports and exports, lias greatly diminished over recent year.-, and this at a time when alternative markets for out* exports were never more needed. With such prohibitive duties, imports from gold countries must continue to diminish, with the result that Germany, France and Belgium will have no credits available overseas for the purchase, of our products. If our peruiciouc system of prohibitive duties on foreign goods continues, we can expect a further diminution of our exports to European countries remaining on the gold standard, in the case of France, the dumping duty of 2/ per lb on our butter is a direct result, and in the case of Germany the prohibition of imports of wool and the drying up of available foreign credits for the purchase of foodstuffs and raw material is the direct result of prohibitive duties in Germany'..erstwhile markets- overseas. New Zealand is not free from blame in this connection. Effects of Surtax. "It was hoped that in the Customs amendments the Government would have removed the duty surtax on goods from Canada, India, South Africa and from foreign countries, and would have expressed the British preferential rate in the tariff schedule rather than by the system of the penalising duty surtax, which can only result in misunderstandings, resentments and reprisals in those countries whoso goods are still subject to faTs unfortunate levy. This is hardly the way to build up good will ami alternative markets."