BUTTER DUTY IN CANADA.

Press, Volume LXVII, Issue 20316, 15 August 1931, Page 16

BUTTER DUTY IN CANADA.

* — TRADE RELATIONS. NEGOTIATIONS BETWEEN GOVERNMENTS. CORRESPONDENCE BY CABLE. Correspondence between tho Prime Minister of New Zealand and the Prime Minister of Canada, concerning trade relations between the two countries, has been forwarded to Tire Press by the Prime Minister, the Rt. Hon. G. W. Forbes. The telegrams—for the correspondence was carried on by ..telegraph—refer especially to the Canadian duty on Now Zealand buttor, and more generally to trade between the two countries. There are also passages in the telegrams which discuss the question as to which Government was to blame for tho present unfriendly trade rolations between the two Dominions. Following is ibe leu o" tho telegrams: — Telegram of June 9th, 19S1, from the Prime Minister, Wellington, to tho Prime Minister, Ottawa. Your telegram, May 29th. 1. I regret very much that the New Zealand Government have been unable to defer longer the action indicated in iuy telegram, May 20th last, and adumbrated in numerous former communications. 2. I note your statement that you aro unable to regard the summary contained in my telegram of May 26th as making adequate recognition of the endeavours of the Canadian Government to como to a satisfactory agreement. and that since assuming office you have sought every opportunity to confer with the New Zealand Government. Will you allow mo to say in reply that any such efforts have not been apparent to the New Zealand Government, who retain tho impression Ihat the Canadian Government, having in effect prohibited the importation of butter from New Zealand, have been in no haste to enter into definite negotiations. Ilis Majesty's Government in New Zealand have not failed to note that two occasions on which they were prepared for these conversations, namely, at Ottawa and at London, were allowed to pass without any attempt on the part of the Canadian Government to' give detailed and effective consideration to the matter. Further, your telegram of May 14th indicated no prospect of immediate negotiations, and, indeed, it would now appear that the Canadian Government, notwithstanding the New Zealand Government's nnxicty to dispose of the question at an early date, contemplated the possibility of deferring conversations until the meeting of tho proposed Economic Conference, which at its earliest would have rendered impossible the implementing of any consequent agreement until the meeting of the New Zealand Parliament in June, 1932 Ho Definite Indication. 3. I note with pleasure the indication which may I think be inferred from the second paragraph of your telegram that the Canadian Government do not now regard themselves as precluded fro in making a concession on New Zealand butter. Neither at Ottawa nor at London, nor indeed at any time subsequently, was I given any definite indication that such a concession could be made, and though my telegram of Maroh 18th last specifically notified the Canadian Government that tho action now taken could bo postponed only if the Canadian Government found auch a concession to be possible, your reply of May 14th gavo no indication of anything beyond a "continuance" of preference. The New Zealand Government will of courso bo happy to learn whenever the Canadian Government consider the time appropriate what concessions they propose to make. 4. His Majesty's Government in New Zealand cannot agree that an abnormal trade situation waß created by the importations of New Zealand butter into Canada in 1929-1930, or that the butter was, as you suggest, being rushed into Canada to take advantage of the provailing low rate of one cent. The figures for that year indicate merely the progressive annual increase since Now Zealand butter was placed upon an equal footing with Australian but' ter in 1925. Even, however, if the situation could be regarded as abnormal the Canadian Government will no doubl have noted—(a) That the importations in no waj amounted to dumping; New Zealanc butter entered into normal competi tion with other (including domestic} butters on the Canadian market aftei paying all freight and incidental charges from New Zealand, and with out any subsidies or bounties ob tained or granted in New Zealand. (b) That notwithstanding the im i portations of New Zealand butter ii 1929-1930 Canada still enjoyed a bal ance of trade over New Zealand. Prohibitive Tariff. 5. I note your contention that th< Canadian action in respect of New Zea land butter cannot properly be regardc< as penal. You must allow his Maj esty's Government in New Zealand ti retain their belief that the impositio] of a prohibitive tariff duty on New Zea land butter which was not imposed gen erally on all butter importations am which has had the effect of terminatin; the importation of New Zealand buttei while stimulating the importation o butter from another source may rightl; be regarded as a penal measure. It ma; well be that Canada, as you state, i to-day granting to New Zealand it British preferential rate on all products Where, however, the British preferei tial rate is not the lowest rate, an is in itself prohibitive it is a matte of little moment what higher rates ma bo fixed. As you have already bee advised the New Zealand Governmer can attach importance to the preferei tial treatment of their products onl if and so far as this preferential trea ment is capable of leading to actu: trade, and as a further indication c the attitude of the Canadian Goven ment towards New Zealand trade I u: derstand that in tho new Canadia tariff an increase of four cents a ) has been imposed on New Zealaiid mea 6. The New Zealand Government action has not been taken as you a sume on any special grounds of reci rocity, but as I have already explaiuc on the ground that the New Zealan Government are not disposed and i deed cannot afford to make remissioi of taxation without corresponding a vantages. It is their policy to encou ag« good# fro

] those countries which themselves are 1 prepared to purchase New Zealand pro- s I ducts. Tho New Zealand Government ( 1 have, however, attempted to retain a i | true reciprocity with Canada by pro- e j viding for a remission of customs duties j ! on Canadian goods estimated to be _ at 1 least equal to the Canadian remission | of customs duties on New Zealand goods. Canadian Purchases of Wool. 7. I have noted with interest your comments with reference to Canadian purchases of wool and I trust with ] you that the outlook in respect of this 1 commodity is promising. I have ob- ' served, however, that even on your sug- < gested potential importation of twenty- < four million lb of wool and even assum- < ing a price of 9d a lb (which is consid- - orably above the present market price) ! the value of that trade would be less ] j than £1,000,000 per annum. This would scarcely seem to confirm your statement ] j that direct Canadian purchases of New < j Zealand wool will, in the near future, J j equal New Zealand's former butter i | trade with Canada, which, as you are | aware, reached nearly three times that i j value in 1929-1930. ] S. I appreciate the difficult position 1 created between the two Dominions. It ; is the view of his Majesty's Government in New Zealand that this difficulty is 1 due solely to the action of the Canadian 1 Government in taking drastic steps ' against the New Zealand butter trade i before any possibility of negotiations ; was afforded to the New Zealand Gov- ■ eminent, and to tho Canadian Government's reluctance to enter into effective conversations. The difficulty is one which tho New Zealand Government for their part are entirely willing to attempt to remove as soon as the Canadian Government find it possible to undertake definite negotiations to that end, and as already advised his Majesty's Government in New Zealand would welcome an early visit by a Canadian Minister for that purpose. 9. Finally, may I point out that the session of the New Zealand Parliament which opens at the end of this month will certainly bo adjourned by November next, and probably at an earlier date, and that thereforo the implementing of any agreement not completed in time for action at this session would necessarily be delayed until the session which should normally commence in June, 1932. 10. I have no objection to the publication of this telegram, and I propose to publish here should circumstances render it desirable at a later date. Telegram of July 28th, 1931, from the Prime Minister, Ottawa, to the Prime Minister, Wellington. (!) Your telegram of June 29th received. We regret that it was not found possible to admit Canadian goods under contract at tho rate of duty obtaining beforo your latest tariff increase, but appreciate the concession as regards goods in transit. (2) With reference to your concluding enquiry as to the prospects of early negotiations with a view to completing satisfactory trade arrangements, we may repeat that our" Government is prepared now, as at all times since assuming ofdee, to undertake negotiations to this end, but Ave must frankly answer your question by stating further that prospects do not appear promising if your Government maintains the attitude taken in recent telegrams and recently policy. (3) We should liko to state concisely our views on tho chief points you have raised in recent telegrams, and particularly as to strong criticism of Canadian policy you have voiced. (4) In your telegram of Juno 9th you referred to impression of your Government that the Canadian Government has been dilatory in entering upon negotiations for a comprehensive agreement. I am sure you will agree that the fundamental difficulty not only during tho past months but for some years past has been the absence of a direct agreement between New Zealand and Canada based upon full consideration of market opportunities and producers' interests in both countries. In 1925 the Canadian Government, in addition to continuing British preferential rates, extended to New Zealand without seeking any special advantage in return, the concessions granted to Australia under the Trade Agreement with that Dominion. It was obvious that concessions of this unilateral character, dependent on fortunes of agreement with another Dominion, did not afford a permanent basis of trade, and that in its own interests New Zealand might have been expected to seek a direct agreement. Aside from a suggestion in 1928 which was r.ot followed up by New Zealand, this does not appear to have been done until the sudden expansion of butter exports complicated tho situation. The present Canadian Government, on assuming office in August last year was faced with the announcement of your intention to imposo the former general tariff rates on Canadian motor-ears in consequence of notice given in April of termination of the extension of the Australian Trade Agreement to New Zealand. Whilst in- ! dicating that the obviously inadequate one cent rate on butter could not be revived, we did everything possible to provide for a personal discussion and negotiation of a comprehensive direct i agreement in which provision as to but- ; ter would find an appropriate place. Wo regret on your journey through Canada to London and in London our dißcus- ' sions did not yield definite results, but 1 so far as this was due to any factor ■ other than lack of adequate timo we ' must decline to accept more than a " reasonable share of that responsibility. I We suggested that your delegation • should return through Canada, as was ■ done by the Australian Minister for Commerce, in which case a comprohen- ■ siye agreement might have been reached i in time for action by both our Parliaments this Session, and regret that you could not adopt that course. The telegrams which have been exchanged since have been an inadequate substitute for 3 personal discussion. j Tho Australian Agreement. (5) Your further objection that Can--3 ada extended during the past year more a favourable rates on butter to Australia _ than to New Zealand overlooks the es- _ sential factor that in Australia's case j these rates were part of a definite agreeT ment, the extension of which to New ? Zealand terminated on October 12th. In f view of tho fact that from Octobor y Ist, 1925, to October Ist, 1930, inclusive, y the total Canadian importation of but- „ ter from Australia to which a low tariff s rate had been accorded in return for 5< Australian concessions on Canadian l ". goods amounted to only slightly more jj than five million pounds, whilst imporr tation from New Zealand, which had _ made no agreement, and received concessions only indirectly, exceeded 9G t million pounds, it is apparent that if [. any Dominion has ground for complaint it is not New Zealand. y Butter in Canada* (6) As to butter, it is essential to !_ bear in mind that Canada ia itself a j. dairy country, and a pioneer in Governn ment assistance towards improvement b in quality, in co-operative marketing, t. and in development of,overseas markets, 's The circumstances which led to change s . from an exporting surplus of 24 million p. pounds in the fiscal year 1926 to net im,d portation of more than 40 million pounds j in 1930. including lessening of dairy q. production and diversion to other forms is than butter, were clearly abnormal, and d- could not continue. Quite asido from r- tariff rates New Zealand eould not reasm onably have expected. eonloßMaas* &»-

huge exports of this P ori ° * ear suit of development during . b „ j ß> jt Canada is again on an exp * is our policy to foster this natural and essential industry, and we an icip . normally Canadian pr°d u cers_ b^blo tho home market, but it i a the winter shortage will recur, and » zny ca., .. ..tag.? It is our desire to give pr™-«» supplies from reciprocating ■ The Canadian preferential tariff rat 4 cents which led to your cancelhng o£ preference on motor-cars was ways less than the New Zealand rate on Canadian butter. The present tariff ac cords New Zealand a Preference of 6 cents, and we have 1 our willingness to consider the further as part of a general_ ag • The new trade agreement with Australia provides for 9 cents preference. _ (7) The Canadian Government is also prejiared to consider extending pre er once on other New Zealand products, and has in fact made a careful survey of fields. In any case, we have always been prepared to receive any speci ic suggestions as to the products on which preference was specially desired. e have hitherto continued to grant New Zealand our full British preferential tariff in spite of the fact that your Government not only cancelled preference on motor-cars in consequence of the | withdrawal of butter preference, but has since in addition cancelled the greater part of the British preferential tariff I accorded to other Canadian exports. "Balance of Advantages." (8) As to a basis of preferential relations, we take no exception to tho policy set forth in your telegram or May '26 th of increasing duty on products which New Zealand can easily supply herself and of increasing duty to meet revenue needs. We mußt, however, take exception to the views in your telegram of June 9th that a true' reciprocity would consist in cutting down preferences or remissions of duty on Canadian exports to New Zealand to equal Canadian remissions on New Zealand goods. We do not consider any such meticulous balance of advantages, or any endeavour to insure that one Dominion will not export to another more than it imports, would be in the true_ spirit or Imperial co-operation. We feel confident you will adhere to the views expressed by the representatives of Jbotli New Zealand and Canada at the Imperial Conference of 1930, that subject to tho primary duty of considering the interests of our own producers we should each seek to direct as much of ur lm- ! port trade as possible into Empire channels. , r (9) You will recall informing the Imperial Conference of the steps which vour Government has taken to divert part of its import trade from the United States to the British Empire. I am sure you will therefore regret to learn that the direct result of your Government's recent action has been to divert a large trade from Canada to the United States, much of which may be permanently lost. , (10) It is, however, not our wish to spend further time in assessing responsibility for the unfortunate situation which has developed. Canada sets a high value on a close trading connexion with New Zealand, both because of the value of the market for our produccrs and. because of special fnendlinoss which has always marked our relations. You are about to enter upon a General Election; we assume it would not be appropriate or possible enter upon negotiations at the persent time. (11) We assume that you will give the same publicity to this dispatch which you have given to your own recent telegrams under reference. Telegram of August sth, 1931, from the Prima Minister, Ottawa, to the Prime Minister, Wellington. Press dispatches state that you have announced the receipt of my telegram of July 28th, and are making a statement concerning it shortly. I assume you 'would therefore have no objection to its being made public here. Telegram of August 12th, 1931, frem the Prime Minister, Wellington, to the Prime Minister, Ottawa. Your telegram of July 28th. (1) I note your statement in par*' rrraph 2 that the Canadian Government are prepared now, as at all tunes iuwe assuming office, to undertake negotiations for a trade agreement with New Zealand, and a Bimilar statement in paragraph 4 that the Canadian Goveminent have done everything possible to provide for a personal discussion and negotiation of a comprehensive direct agreement in which a provision as to butfer would find an appropriate place. It is with extreme regret that I find myself unable to concur with this statement of the position. (2) During the course of telegraphic correspondence since April 12th, 1930, tho New Zealand Governmnet have intimated to the Canadian Government on not less than seven distinct occasions their desire to enter into direct conversations. The Canadian Government for their part not only declined to postpone their drastic action against New Zealand butter until such time a 9 negotiations could take place, but in. point of fact before conversations were possible actually doubled the prohibitive rate originally proposed, and during a period of 16 months they have taken no definite stepß to accede to our repeated requests for a conference to discuss in detail the questions at issue. No Effective Discussions. (3) Indeed on the two occasions when New Zealand Ministers actually put themselves in personal touch with Canadian Ministers, the results ® n " tirely failed to convince the New Zealand Government of any desire on the part of the Canadian Government to enter upon effective discussions. On the first occasion, on the day of my arrival at Ottawa (where I had been invited by the Canadian Government to discuss the matter), I was met with a heavy additional increase in the duty on New Zealand butter, while the Canadian Government were unable to enter into any detailed negotiations whatever; and on the second occasion, at London, an abortive exchange of views took place, but no suggestion was communicated to me then or an any subsequent date that I should return to New Zealand via Canada for the purpose of participating in yet a third series of conversations. (4) I am unable to agree that the fundamental difficulty has been the absence of a direct agreement between New Zealand and Canada (though such an agreement was suggested by us in ' 1928, and since April, 1930, the New Zealand Government have fruitlessly made every effort to enter into the negotiations necessary to arrive at such an agreement},. Notwithstanding the fact that the balance of trade between the two Dominions was heavily against New Zealand, the New Zealand Government raised no objection to the arrangement existing prior to Canada's termination of the extension to New Zealand butter of

the rates accorded to Australian butter, though it would seem, plain that if either Dominion had ground for complaint owing to the absence of such a trading agreement it was not Canada. Even now I must repeat that New Zealand continues to grant remissions on Canadian goods to a greater estimated value than Canadian remissions upon New Zealand goods, and that Canadian motor-ears on admission to New Zealand are still accorded a preference of at least 18 per cent, ad valorem over foreign motor-cars. X»-«r Zealand's dwuw to W«gottata. (5) The New Zealand'' Government share your view that telegram# are an inadequate substitute for personal discussion, and with you they appreciate the futility of spending further time in assessing the responsibility for the unfortunate situation that has developed, though they must be. allowed to retain the views they have already expressed in this connexion. They note with regret, however, that the Canadian Government regard the. forthcoming General Election in New Zealand as necessitating a further delay in the initiation of eonr versations. The New Zealand Government do not share-this view, and they must- accordingly reiterate their continned willingness to receive a Canadian Minister at the earliest possible date, and their desire to enter into negotiations with the least possible delay. They have, however, adoption but to await a notification from the Canadian Government as to when a definite date for the contemplated discussions can be fixed. (6) With reference to your telegram of August sth I have no objection to your publishing any of my communications to you—indeed, I should be grateful for your concurrence in the publication of the whole of our telegraphic correspondence on the subject. In any ease, I propose on August 15th to publish this telegram, your telegram of July 28th, and my telegram of June 9th (which has not yet been published here).