The Auckland Star WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. THURSDAY, JUNE 18, 1936. JAPAN'S REPRISAL.

Auckland Star, Volume LXVII, Issue 143, 18 June 1936, Page 6

The Auckland Star WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun.

THURSDAY, JUNE 18, 1936. JAPAN'S REPRISAL.

For the cause that lacks For the icrong that needs resistance For the future in the distance, And the good that we can do.

The second application of Japans fiade Safeguarding Act appears imminent, lhis law gives the Government wide powers to increase or reduce import tariffs, and to prohibit or restrict- imports or exports in proportion to the measures resorted to, or about to be resorted to, by countries with ■which Japan deals. The law was first applied against Canada, and, as the "Bulletin' recently remarked, "it was the Canadians who backcd out." Now it is reported that, as a direct consequence of the raising of the Australian tariff against certain Japanese goods, the law is to be invoked against Australia.

In the first half of .1935 the trade balance between Japan and Canada was about nine to one in Canada's favour, and the Japanese Government in consequence asked for a reduction of the numerous surtaxes imposed on Japanese goods. Canada replied that the surtaxes were imposed on nil foreign imports, and that in addition to her direct imports from Japan, Canada bought large quantities of Japanese raw silk through the United States. Further negotiations failing, the Japanese Government imposed 50 per cent additional ad valorem duties on Canadian goods. This was the action taken against Canada, and Australia can expect nothing less severe.

Did the Federal Government, when it decided to increase the tariff, count the cost? In their public utterances Ministers professed to believe that Japan would continue to be Australia's principal supplier of rayons and a substantial supplier of cottons. Even when there were threats of Japanese reprisal Ministers professed confidence that when the new duties were fully understood Japan's fears would prove groundless. If these beliefs were genuine, they were mistaken. The Japanese obviously are not willing, while the balance of trade is heavily against them, to have their exports to Australia curtailed. But whatever the Government believed Australia in effect took the risk of what her Minister in Charge of Trade Treaties has since admitted would be "a substantial blow" —the curtailment of her wool exports to Japan. The effects of that blow will be not only economic in character, but political also, for Australia's greatest industry, which does nQt and cannot enjoy Government protection, is likely to bring extreme pressure to bear upon the Government which has injured it.

There is, however, reason to believe that the Federal Government counted the possible cost of its actrion, and decided to risk it. As Sir Henry Gullett explained, Australia's dependence upon the United Kingdom markets has increased, she must sell more of'her rural output there, and she can do that only by displacing foreign supplies. The inference, of course, is that Britain will not allow foreign supplies to be displaced in favour of Australian unless Britain is assured of a larger share of the Australian market in return. .This assurance Australia has sought to give her. And what of New Zealand? Her dependence upon the United Kingdom markets is even greater than Australia's. Mr. Nash is reported to have said yesterday that "New Zealand could take all her cotton goods from Britain willingly and profitably on a basis of reciprocal trade, and not bother about importing those goods from Japan." In view of the experience of Canada, and that which seems likely to be Australia's, the implications of Mr. leash's statement should be pondered long and earnestly.