TRADE BARTER.

Auckland Star, Volume LXVII, Issue 57, 7 March 1936, Page 13

TRADE BARTER.

WHAT GERMANY ASKS. AUSTRALIA SAYS "NO." SIR HENRY GTJXLETT SPEAKS. (From Our Own Correspondent.) SYDNEY, February 24. For some months past there have been references in the newspapers to negotia-

tions which were supposed to be pending between Australia and Germany for the exchange of quantities of our wool for manufactured goods —more especially for motor parts. It was announced a few weeks ago that the Federal authorities having considered this project had decided against it and last week the Berlin correspondent of the Australian Associated Press informed us that "there is disappointment in official circles" at Australia's refusal. The Germans point out that "similar deals between Germany and other countries are being negotiated to the extent of hundreds a week," and they really cannot see why the Australians should object to an arrangement that would certainly be beneficial to them. This rather ingenuous comment seems to have annoyed the Federal Minister in charge of trade treaties (Sir Henry Gullett), and last week he circulated officially a series of comments on the whole matter which, unlike most Ministerial pronouncements on such subjects, is clear, informative and from the Australian point of view, convincing. British Rates Wanted. Sir Henry Gullett explains that the German proposals meant a great deal more than a request for the exchange of goods on. a £ for £ basis. In reality they amounted to a request for the British preferential rate of duty, or, failing that, "a reduction of the preferential margin." If Australia agreed to this proposal, similar requests would at once be put forward by other nations anxious to buy our wool, and the result must be that "the Ottawa agreement would automatically cease, and with it our preferential position in the United Kingdom market." Apart from all other considerations, we cannot aftord to damage our position there, for the United Kingdom absorbs 90 per cent of all onr primary exports except wheat and wool and is the largest individual buyer of these products as well. But the Germans have further requested that in adjusting values for dutiable imports the exchange rate should be fixed "as between Australian currencv and gold." But this, as Sir Henrv Gullett shows, would mean the complete recasting of our tariff, thus destroying the British preferential system, and it would also violate the most-favoured-nation clause in many of our trade treaties. These difficulties certainly seem from the Australian standpoint insuperable. But Sir Henry has pointed out in conclusion that on the statistics available he can see 110 good reason for any suoli artificial experiment to bolster up our trade with Germany For during the last 15 months Germany sold goods to Australia to the value ol £3,566,000 (Australian currency), anc bought from us goods, including wool only to the value of £2,056,000. Tlni means that for this period Germany liac an unexpended credit of over £1,500,001 on which she could operate, if she chose: and in view of this it is difficult tc understand what the Germans meai when they tell us that unless we maki them special concessions they can buj no more of our wool. Surprise Not Understood. These arguments may explain Sii Henry Gullett'a rather cynical commen that he "could not understand Germany': surprise" at our rejection of proposal which would undoubtedly prove advan tageous to the Germans, but might b gravely injurious to us. In the venjioi of the Minister's statement whicl appeared in the "Sydney Mornin Herald," he dwelt at length on tli disastrous consequences that must ensu if the form of barter suggested by tli Germans became general. "Australia," he said, "would have t choose between the alternatives of bavin on its hands 60 or 70 per cent of it unsold wool or the closing or cripplin, of half of its secondary industries." O this aspect of the problem Sir Henrj who is recognised here as a leadin authority—both political and journal istic —on the land, speaks with grea emphasis. "There are possibly," h says, "a few people still remaining i Australia who would look without cor cern on a serious blow at our secondar industries. Xo thoughtful pastoralis however, can take such a view." H reminds the farmers and graziers' tha for every live sheep and lambs slaugl tered in Australia, four are consumed b the Australian people, and that of ever four head of cattle slaughtered three ar locally consumed." Sir Henry might, if he chose, hav cited even more impressive figure regarding the demand for wool another primary products in our local markets. But he is content to close with the remark that "our primary producers generally, including the woolgrowersj are to-day far more dependent than is generally recognised upon local markets created very largely by secondary industrial development," and the inference is plain that it would be a mistaken policy to buy a slight and temporary advantage for some of our primary producers by sacrificing our secondary industries.? Do Germans Understand? But on the whole question of a special commercial arrangement with Germany along the proposed lines the Minister is even more explicit and decisive. "Oversea buyers of wool, with the single exception of Germany, freely recognise that their purchases cannot be balanced by sales of manufactured goods to Australia. The trade treaty policy of the Government aims, while preserving Australian industry and maintaining British , preferences, to take' all possible steps to promote good will with our best customer countries by giving them access to our markets. More than this," he concludes emphatically, "we cannot do." ■ Sir Henry is certainly to be congratulated on this exposition of Australia's commercial policy. Among other things, it contains the suggestion that the Germahs might take the trouble to understand what our system of protection and our system of Imperial preference really mean, and it involves also the reminder that the Germans are not members of the British Empire, and they will not be admitted by us within its charmed circle. Of course, if. the Germans do understand these things, then they are only bluffing, and Sir Henry in that case deserves our best thanks for adroitly preventing our astute friends from "putting one, over us."