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The Press Friday, February 5, 1932. British Tariffs.

The DttUy Express's prediction of the British Government's tariff policy is confirmed iu substance by an Australian Press Association message this morning; and the recent accounts of Cabinet's agonies of constitutional innovation, issuing in a decision to remain united in disagreement, showed that some such announcement might be expected very soon. Since it will not be necessary to wait more than a few hours for its exact terms, it is not w /rth while to examine the variants suggested in the cables. It is sufficient to note the broad principles of a 10 per cent, general tariff on foreign imports, with a few exceptions, and of free entry for Dominion and colonial goods; principles which are of course much more complex in origin than in form. The Express's greeting of the " great- " est day of Empire .-jubilation since " 1918 " places the heaviest emphasis, in explanation of the new policy, on the desire to promote Empire trade by fiscal means; but it is difficult to believe that this desire would have produced any such result, had the Government not much more earnestly hoped by fiscal means to ease the Budget and tp correct the balance of trade, and perhaps even to cure by shock the madness of the protectionist countries. If policies were to be judged by their intentions, this would have to be warmly approved and welcomed. If other standard? aye applied, it is pot so easy to join the Express in jubilation. It is true that the Dominions may rejoice in the offer of 4 free market, where tbelr competitors will ba handicapped, and Canada and Australia may in different degrees be pleased by a wheat quota scheme; but few things are more likely than that the 1 British representatives at Ottawa 'will | plainly suggest that, one side of the bargain being drawn up, the Dominions had bettw draw up and sign the other, equivalent side. Mr J. H. Thomas recently said in the House: " From our " point of view the important and only "factor is what they [the Dominions] " will do with regard to our mapufac- | " tured articles." The danger is not that Great Britain will abruptly declare the bargain off, if the Dominions do nothing or Jittlo; it is that disillusion and discouragement may be too great to permit another and better start to be made, and even bitter enough to be dangerous. As for the influence of a general tarifl on the Budget and the trad® balance, analysis in the first respect is difficult, until the range of exemptions and of draw-backs on reexports is known; in the second, it indicates that a tariff is an unnecessary precaution. The general assumption ha# been that the adverse trade balance for 1931 must work out at not less than £100,000,000, a total large enough to frighten many people into accepting any policy of correction, whether in faet a necessary and effectual one or not; bnt the Economist, which in September roughly estimated an adverse balance of £50,000,000, on December 12th published a much fuller study, furnished with the latest figures, and reached the conclusion that the adverse balance of payments would lie between the approximate limits of £24,000,0000 and £84,000,000. If the debit balance lies between £20,000,000 and £80,000,000, perhaps midway between, "the alleged neces- " sity for malting through measures of " trade contraction," it was urged, " in " strangely unconvincing." Arguments for tariff correction of the debit balance overlook the facts, first, that it is " relatively small"; second, that it 3s largely due to the deelina in income from overseas investment, interest on . which would be -still harder to pay over a tariff wall; third, that the da- ! preciation of sterling is itself the natural and efficient corrective of the trade balance; fourth, that a country less able than before to obtain short credits and suffering from a loss of investment income scarcely needs to be persuaded by a tariff to buy less. But misgivings equally serious arise from the real though obscurer danger of Great Britain's entering actively into the tariff warfare which is exhausting the economic world. The measures of self-defence and retaliation with which other countries answered Great Britain's moves in leaving gold and introducing the Abnormal Importations Act, and the " Greengrocery" Act make it hard to believe that the answer to a general tariff will be of any but the same kind. In other words, trade will be further contracted and exhaustion deepen; and in an atmosphere of intensified suspicion and hostility the nations are to sit down and solve their problems of debts and armaments like friends. On the other hand, it is entirely to the good that a Cabinet so largely composed of tariffists should not have been rushed by an immense and restless majority into measures more extreme. The great virtue of a general tariff is | that it is easier to take off .than an I elaborate 1 system of special protective tariffs, and the particular virtue of a low general tariff is that it is low. If other countries are wise enough to interpret the sign, Great Britain, when she declares her tariff policy, will signal to them that she is not yet a protectionist country.

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Permanent link to this item

https://paperspast.natlib.govt.nz/newspapers/CHP19320205.2.49

Bibliographic details

Press, Volume LXVIII, Issue 20463, 5 February 1932, Page 8

Word Count
873

The Press Friday, February 5, 1932. British Tariffs. Press, Volume LXVIII, Issue 20463, 5 February 1932, Page 8

The Press Friday, February 5, 1932. British Tariffs. Press, Volume LXVIII, Issue 20463, 5 February 1932, Page 8