FEELING THE WAY.

Auckland Star, Volume LXIX, Issue 165, 15 July 1938, Page 16

FEELING THE WAY.

TARIFFS AND QUOTAS. FUTURE OF WORLD TRADE. DIFFICULTIES OF FARMERS. "The relative importance of the international market appears to-day to be as great as ever; its margiml influence is , real and powerful; whatever may lie tlie role of tlie home market, the fostering of international trade must remain an element of capital importance for economic prosperity within national frontiers." This statement is made by M. van Zealand, ex-Prime Minister of Belgium, in his report to tlie Governments of the United Kingdom and France on the possibility of obtaining a reduction of the obstacles to international trade. He continues: "We must assume that these views 'are, in the long run, shared practically Unanimously■ by all statesmen of the present day. In fact, tlie preliniiu iry consultations which I undertook enabled me to take note that everywhere the mission with whom 1 hid been entrusted met with a most sympathetic reception. On the. principle of collaboration. ' in order to reduce the obstacles to international economic relations, not a single discordant voice w is heard. '■The attitude in all the capitals was so sympathetic that it betokened something more than a mere polite, but platonie interest; it took the form of active interest ;in an effort, the results of which could tiot fail to be beneficial. | "Statesmen Hesitate." j "But if this (first reception was so encouraging, the positive reaetions were less eo. I was anxious to elicit some concrete suggestions and to collect some practical proposals in order to place them side by side, to compare them, and to evolve the rudiment* of a general solution. But once the first and eminently, favourable stage had been passed, the attitude, almost everywhere, beck me qualified by a very marked reserve. It seemed that nobody wanted to commit himself in advance in any direction before being certain that the path had'been taken, or, at any rate, mapped out by several others.

[ 'One can understand that statesmen hesitate to take a step forward without knowing whether others will make their contribution, and if eo, in yhat form. However, initiatives have been taken whicli emphasise the general will to advance , ."' „ , M. van Zeeland says the factors which most seriously hamper international trade are tariffs, indirect methods ■ of- • protection and quotas; 'excessive , •• exchange " variations, hindrances, to': capital movements and restrictions on payment. /*._. Tariffs, lie states, have repercussions on internal prices, and especially von costs, of production. In time a measure of equality is established bet,\\#en home and foreign • producers,- but • during the period of adjustment they undoubtedly Act as a kind of brake, which in liable 'to disturb normal or regular cqmmeraal currents. If tariffs are above the average they constitute a pe/manent barrier to the extent to which they exceed the average. Practical Proposals. "There is no doubt that a general movement for the reduction of tariffs would acquire a symbolic significance," he continues, "and would have a powerful moral effect, but unfortunately a gesture of this kind, does not at present come with the range of possibility. "Ify however,--a policy, consisting from now onward of a progressive reduction J of tariff duties, cannot be entertained in existing conditions, other measures could be applied which would suffice to achieve that object at which we are aiming, within the limit* of a more modest but more flexible plan." He states that it would be necessary and sufficient for Governments to undertake not to raise or widen the range of their tariffs, and to undertake a gradual reduction of such duties as were of an exceptional character and were above the average level., .It would be desirable also, he says, that an undertaking should be given providing- for the suppression of duties, taxes, prohibitions or restrictions affecting the export of raw materials. ■'■ In his view an undertaking to, file down the- number of, sharp points of a tariff, could he epVead over a number of yeare, and the level finally reached could be avowed .to renfain above "the average rate of il tariff, provided -it did not retain /its prohibitive character. Also, the exports.need:not proceed to a point where , the. general* economic int«reet£ of a-"country might be injured. "Mo*t Favoured lUtion" Treatment. . BUt£>"by jtfde With these undertakings of a general' character the negotiation of, bilateral commercial agreements, based on most favoured nation treatment,' remained one of the most effective methods. oi reducing tariff barrier*. This method bed been consistently applied for' several year*; liy certain countries, ;and the .benefits ,were beyond dispute. ■; A* eorae times applied, however;, most favoured nation treatment tad.,acted} itbt aß ..*;.W.ctoi i in reducing tariffs, but as a rigidity.- Therefore, it* ,"' "pessary that more respect shotiW ,n thw a «,pe«t of tradei ■ Uifler indirect protective measures, M. van Zeeland the abuse of reguhaye completely shutout the agricultural products of countries. Another method has Aeen diecrimfnation agamst a particular ;.countries, an#the invoking of a/ ,, "?!'*"?" Provisions a* a pretext to ■*r»V«»t eitteringi.. : ■-? spf ' [

Against these methods, he considers bilateral agreements are most likely to produce rapid results, and there may be instances in which interested Stat?e may with advantage seek the mediation of an arbitral body. Quotas "Most Formidable." Quotas he describes as one of the most formidable obstacles to the development of international trade. As the years go by, their arbitrary and artificial character becomes more and more evident. Even when they have become fixed and steady, they * remain harmful by preventing* desirable development and adjustments. He recommends the suppression of industrial quotas, and reliance on "{lumping" duties where these are reasonable. A State which suppressed its quotas would be entitled to demand the reduction or suppression of any duties imposed by other States as a reprisal. Agricultural Countries. Agricultural quotas, he says, have a special character of their own. Seasonal conditions or the perishable nature of the products may be dominating factors, and quotas may be , aimed not go much at the exclusion of imports but at orderly regulation throughout the year. Besides, agricultural "production is unable to adapt itself to market changes with the same elasticity as is possible in industrial production* Often farmers increase their production': to meet a fall in prices, and a considerable surplus has to find outlets abroad. At the sain., time free markets mav diminish. Special efforts; should be made to deal with such, a position. J Quotas affecting seasonal or perishable products might be retained, he concludes, but they should be made ■nor,, flexible to spread importations not restrict them absolutely. Also because of the conditions 'peculiar' to agriculture, particularly the difficult v f>t restricting production, transitional measures may be necessary