TARIFF POLICY.

Auckland Star, Volume LXVII, Issue 128, 1 June 1936, Page 12

TARIFF POLICY.

AUSTRALIAN MOVE.

TRADE BALANCE SOUGHT.

GREAT BRITAIN TO BENEFIT.

(From Our Own Correspondent.) SYDNEY. May 27. . As was generally expected, the Senate last week reversed the decision of the House of Representalives in the matter of the cement duties. The Government ■was in favour of the Tariff Board's recommendation to admit British cement duty-free, because, in its opinion, to ignore the Tariff Board in this matter would be a breach of the Ottawa Agreement, but the Lower House, defying the Government, voted in favour of |.a duty, many Nationalists crossing the floor to oppose their leaders.

Than the question went to the Senate, where the Government can usually command a decisive majority—and Ministers made no secret of their anxiety to secure a. favourable expression of opinion- in the Upper House. They impressed on the Senate that it was the duty of Parliament to endorse the Ottawa Agreement by admitting British cement. duty free, and after some pardonable hesitation a majority of the members voted as the Government desired. Having got its way, however, the Government, realising the strength of the opposition, and swayed no doubt by the weight of legal opinion to the effect that the action of the • Lower House in insisting upon a duty was not a breach of' the Ottawa Agreement, decided to offer a compromise. When the question came before the Lower House again, Ministers amazed and bewilderedi members by announcing that the duties over which so much trouble had arisen would not be abolished till December I, 1930, so as to allow the Australian firms concerned time to adjust themselves to the new conditionsThis half-hearted attempt at evading responsibility was greeted with shouts of derision from the Labour Opposition, who hastened to remind Ministers that in the Upper House the Government leader had rejected, this very proposal when it was suggested by Senator Fall (Queensland)-on the ground that it was just as much a breach of the Ottawa agreement as the decision of the Lower House that duties must be imposed on cement. Government "Bluffed"? On the whole, therefore, the Government has come out of this controversy badly. While many 'critics maintain that" it lias made a grievous mistake in fiscal policy and that it has been "bluffed" by the British Government into adopting a course injurious to an important" Australian industry, many more complain that it has shown very little judgment and very little moral courage in handling a delicate political situation. However, the turmoil stirred tip by the dispute about cement duties has been altogether eclipsed by the storm now raging over the new tariff policy announced by the Government at the end of last week. . Sir Henry Gullett, as Minister of Trade Treaties, and Mr. White, as Minister of Customs, explained to the House that the Government has decided that our adverse balance of trade with certain countries must be redressed, that this result, .will M attained by a new tariff schedule including increased duties, quotas and* envr. bargoes; and that the new system ill be arranged as far as possible to-duett to Britain mucli of the trade lost by her commercial and industrial rivals. The countries which profit most through their trade with Australia at our expense are the United States and Japan. Si& H. Gullett pointed out that for many years Australia's adverse balance of trade with America has averaged £18,000,000 a year. In spite of repeated approaches, Australia has not been able to induce the American Government to do anything to rectify this unsatisfactory position, and it is now proposed to limit imports from the United States under a system' of licensing—the obvious effect being to give Britain a chance of securing the place in Qur markets vacated by the Ameri-

cans. No Trouble Expected. As regards- Japan, the competition o1 cheap Japanese . textiles with Britisl goods has aroused'.much anxiety both al home and throughout the Empire; and though our balance of trade with Japan is largely favourable, it is proposed tc henefit British industries by raising oui duties on Japanese textile goods imported into Australia. Ministers have not forgotten that Japan is a highly valued customer and that her purchases of Australian wool give welcome support to our greatest industry, but it is not anticipated that the new duties will affect our purchases of. Japanese rayon, and as the new duties are not discriminatory and hostile, but merely preferential, for the benefit of Britain, it is not expected that they will cause any trouble between Australia and Japan. It is estimated by the Federal authorities that the total value of the trade thus diverted from Japan and America will be about £3,000,000 a year, and of this Britain will gain more than half. Our trade with "friendly" countries — those that have already made trade concessions to Australia —is to be regulated by a system of licenses which will enable us to benefit those States which have shown a desire to reciprocate our advances. In general terms we are told that "licenses will be granted freely in respect of goods from countries with which Australia has a favourable balance." An interesting feature of the new trade policy is the proposal to employ part of the additional from higher duties in the form of subsidies to strengthen Australian industries —for example, to encourage the production of motor chassis and engines in this country. The objects of the new tariff schedule are thus to redress adverse trade balances to benefit British trade, to make better terms for ourselves with friendly countries, and to encourage the growth of Australia's own industries.

Britain's Gain. It is hardly necessary to say that these sudden and unexpected developments cannot yet be appreciated at their true value —at all events it is too early to estimate their probable or possible consequences. So far, Britain, which is likely to benefit more than any other country, seems unable to realise the importance of the concessions offered her, and Dr. Earle Page has made 110 attempt to conceal his disappointment at the failure of British journalists and politicians to understand what it all means: In Australia, opponents of the new policy at once predicted that any attempt to exclude American or Japanese o-oods would convert the United States and Japan into dangerous enemies, but in the United States the general feeling , coins to be that the Australians have -; g right to regulate their trade in their i,wn way, and there is no suspicion of hostility toward us on that account.

As to Japan's threat of retaliation, at the time when an increased duty on rayon goods was first suggested, it has been pointed out by "The Times" and other British authorities that Japan's talk of retaliating against Australia is mere bluff, because the Japanese could not refrain from buying our wool without reducing their whole manufacturing system to chaos. Of course, our primary producers resent the bare suggestion that anything should be done that could possibly estrange or alienate one of their best customers, but on the whole most people realise that Japan has too much at stake here to antagonise Australia seriouslv.

As to the effects of the new policy upon our secondary industries, there is some alarm among the manufacturers who depend largely on imported goods to be finished here for the Australian market —as in the case of motor eliasses and engines. It is only a matter of time, however, for them to adapt themselves to the new conditions, and the direct benefit promised to our secondary industries by subsidy and by increased control of the local market will more than outweigh any temporary loss. It is fair to conclude that on the whole the new policy seems likely, without any serious contingent disadvantages, to attain the ends and purposes that it was designed to secure.