TRADE ANOMALY.

Auckland Star, Volume LXVI, Issue 307, 28 December 1935, Page 17

TRADE ANOMALY.

AUSTRALIA-N.Z. AN UNUSUAL POSITION. INDUSTRY RETARDED ? (Fron. Our Own Correspondent.) SYDNEY, December 19. New Zealand's new Prime Minister, the . Hon. M. J. Savage, has already stated that he intends to do everything in his power to promote trade between Xew Zealand and Australia. This declaration has been welcomed here, and the hope has been expressed that when the Dominioirs first Labour Prime Minister comes to review the trade relations between the Dominion and tile Commonwealth he will do what lie can to correct certain anomalies that exist under the present system. One of these was discussed last week by a special correspondent in the "Sydney Morning Herald." For the purposes of the present trade agreement, which, came into operation on December 1, 1934,' goods are accepted as the produce or manufacture of Australia if they conform to the regulations in force in New Zealand which apply to such goods when imported under the British preferential tariff. But there is one exception to this general rule. Goods which have been only partially produced or manufactured in Australia are not classed as Australian goods, unless the expenditure on material produced in Australia and for labour employed in Australia in each single article is not less than oneha.lt of the factory cost of such article in its finished state. All goods partially produced or partially manufactured in Australia which do not fulfil these requirements are subject to duties on the "general tariff" scale.

45 Per Cent Duty. Now, certain secondary industries in Australia import from Britain rawmaterial which is not produced in Australia and work it up into articles manu. faetured in Australia for export to New Zealand. The cost of some. of the imported material, however, represents more than half the factory cost of the finished article, and it follows that, in accordance with the above regulation, such articles on being jmported into NewZealand pay duty under the '•'general" tariff. In one special case to which the correspondent refers, "notwithstanding that the major portion of the cost of the article is of British origin and the balance of Australian origin, the rate of duty is 45 per cent, plus surtax, which is the rate applied to similar articles of foreign origin—while the corresponding British rate is 20 per cent." All this means that an Australian industry employing British material not produced in Australia, employing Australian labour and nsing bottles and other packing material made here is in New Zealand deprived of preferential treatment because the finished work costs are more than 50 per cent British. In such a ease as this, it is considered, the New Zealand-Australia trade agree ment, instead of promoting Australian industry, has had the opposite effect. For this regulation has made it necessary to import the finished articles from Britain to be re-exported again to New Zealand, so as to get the. benefit of the prefe'rential scale there. This is not a matter of mere theory—it has actually been done. - And all the time identically similar goods can be and are being produced in Australia from materials cf British and Australian origin and Australian labour. Clearly it was never intended that the regulation to which | reference is made should work out in this way, and it. is to be hoped that Mr. i Savage will direct his attention to it ! when he makes his promised re-survej' : of the trade agreement.