ADVERSE BALANCE

Press, Volume LXX, Issue 21082, 6 February 1934, Page 15

ADVERSE BALANCE

, TRADE WITH GREAT BRITAIN REDUCTION IN TARIFFS ADVOCATED New Zealand was at the cross-roads at the present time, and would have to decide which way she would go, Mr W. Goodfellow, a member of the New Zealand delegation to the Ottawa Conference, told a representative gathering of Christchurch business men at a luncheon arranged by the New Zealand Producers' * and United Kingdom Manufacturers' Reciprocal Trade Federation yesterday. The Dominion would have to decide on closer trade relationship with the United Kingdom, or maintain the existing tariffs and face reduced exports, he said. The present high tariffs worn bolstering up uneconomic .secondary industries at the expense of about 90 per cent, of the people of the country, Mr Goodfellow declared, and he urged his listeners to consider closer relationship with the United Kingdom for the purpose of trade, finance, and protection. Closer relationship could be gained, he said, only by a reduction of tariffs, and the aim should be for free trade with the United Kingdom within the next live years. Now Zealand must look to the United Kingdom to purchase the bulk of her produce, and if that market was to remain open more goods would have to be taken in exchange. Mr W. Machin presided, and introduced Mr Goodfellow, who is chairman of the Auckland branch of the federation, and Mr .1. Hislop. of Auckland, who represents the United Kingdom manufacturers on the executive of the federation. They were all proud to think that Britain's method of dealing with trade and finance during recent years had gone a long way towards rehabilitating the United Kingdom, Mr Machin said. New Zealand was concerned with what, had already been done, and was more concerned with future developments, because what was being done in Britain would benefit the dominions and the world generally. Free Market Needed. In his opening remarks, Mr Goodfellow explained that the federation had opened about 3. r > branches and sub-branches throughout New Zealand, and sufficient finance had been collected to make the position easy. The federation had been established because a number of men had considered that there was a great need for a free market for New Zealand produce in the United Kingdom, and the only way to hold that market, was by taking British manufactured goods in exchange for the primary products required to feed and clothe the British workers. New Zealand was almost entirely dependent on the United Kingdom for trade, finance, and defence. As to trade, New Zealand was far more dependent on the Motherland than cither Australia or Canada, and Britain was the only place where New Zealand produce could be marketed in-any quantity. New Zealand had to look to London for finance because that was the only place where cheap money could be secured, and who else would protect the Dominion from foreign invasion? he asked. Trade Balances. The trade figures for the first nine months of 1933 showed that New Zealand was almost entirely dependent on the goodwill of the United Kingdom. Mr Goodfellow continued. During that period sales of primary produce to Great Britain were:— £ Australia . . 34,000,000 New Zealand .. .. 31.500.000 Canada .. .. 32,000.000 India .. .. 24,000,000 South Africa .. .. 10,000,000 In return for that trade purchases from the United Kingdom were: Australia ■ ■ 15.000.000 New Zealand, about . . 6.900,000 rnnada •• 12,000,000 ?nd£ •• 24,000.000 South Africa . . . . 16,000,000 South Africa had a favourable trade balance, India balanced her exports and imports, Canada and. Australia had an adverse balance of about £2O 000,000, and New Zealand an .adverse balance of about £24,500,000. He had been told that he should take into consideration such items as interest payments and shipping, Mr Goodfellow said, but those figures would apply about equally to all of the countries referred to. Part of the unsatisfactory trade position between New Zealand and Australia was due to the one-way trade carried on by New Zealand and Australia and Canada. Both of those countries sold more to New Zealand than they purchased from her, and in many cases the trade secured by them was diverted from the United Kingdom- away from the people who bought New Zealand's produce. Britain's Trade Policy. It should bo remembered that the United Kingdom had completely changed her policy from one of free trade to protection, Mr Goodfellow added, and referred briefly to what had led up to the Ottawa Agreement, which had seen Britain discard free trade and agree to tax food and rctrict importations for the benefit of the Home farmers. Britain had carried out her undertaking, but New Zealand had not made any serious attempt to carry out her share. Alter quoting from statements made hy British statesmen to show that the object of the Ottawa Agreement had been to encourage reciprocal trade, Mr Goodfellow said that it was clear that Britain was earnestly endeavouring to adjust adverse trade balances. There seemed to be a feeling in New Zealand that the Government had done well and there was no Jiped to worry about the matter. New Zealand had agreed to adjust her tariffs, but the general idea appeared to be that there was no need to hurry about it. The opinion of the federation was that New Zealand had not done very well Tariffs were certainly a little lower than in Australia, but the adverse trade balance was worse New Zealand depended on the United Kingdom for the sale of 88 per cent, of her produce, and at the same time was buying a very unsatisfactory amount from Britain in return. Future Agreements. It had been said that New Zealand ] was not likely to make any better agreement at the end of the throc-year oeriod but the federation believed that that was a mistake. It was considered bv some that Britain would treat all of the colonies the same but Britain had made nj) commitments regarding the future, and it appeared unlikely that the British Government would penalise a country like New Zealand if she carried out her agrcem There was no uniformity of treatment at the present time. Mr.Goodfellow continued, and he referred to the difference in treatment given to Northern and Southern Ireland. On October 20, Lloyd's Monthly had published an article showing the fallacy and stupidity of treating all of the colonies alike, and had put forward a plea for preferential treatment on a basis of what was being done. Referring to the effect of Britain s changed trade policy, Mr Goodfellow said that it made a great difference to New Zealand. The New Zealand producers had always depended on Britain as a market, and had sent their produce Home without thinking much I about how it was to be disposed of. Now there was a possibility that they 1 jvould be met by an import duty or a

quota. "It appears," he said, "that we will have to face either a quota or. as as alternative, an import tariff/' Britain had imposed a 10 per cent, import tariff before the Ottawa agreement was made, he added, and as soon as the Ottawa agreement expired that tariff could operate. At The Cross Koads. '•We are at the cross roads and will have to decide which road we are going to take: whether we are going to adopt closer trade relationship with Great Britain, or maintain existing tariffs and reduce our exports." The latter course would mean maintaining high costs with ultimate reduction m the standard of living, while the former would mean a reduction in costs and an improved standard of living. If Now Zealand adopted the former course she would have to link up with Australia, and in his opinion the wisest course was to slick to Britain. The United Kingdom had the population to consume New Zealand's products, the money to finance the development of the Dominion, and a navy capable of protecting trade routes. There was a great deal to be gamed by keeping a close trade relationship with Britain, Mr Goodfcllow added. There was a feeling in New Zealand that, the United Kingdom was out of date and he had to a'.hnil that lie h;"1 held that opinion himself, but he was now convinced that the British were the best businessmen in the world. The trade revival in Britain was proof of that. It was not a flash in the pan, but was a steady improvement Hint would be maintained. Some very important changes would probably take place during the next. 12 months. America had stabilised the dollar and everyone should be thankful for that. Britain had previously been 35 per cent, ofl gold and America had been pressing for stabilisation at 40 per cent, off, and he believed Britain would agree to 40 per cent, if America would agree to all debts bring written off to the extent of 00 per cent.

Effect of War Debts.

Britain had been paying 10 percent, of her debt to America, Mr Goodfcllow said, and consequently he considered that it was probable that 00 per cent, would be written off, and if that amount were written off all war debts the European markets would be reopened to the British manufacturers. If was because of the war debts that the European countries had put vi\ hi"h tariffs and quotas, and if the war debts could be wiper! out Europe would get bad; to business and when business was resumed the United Kingdom would be ready to supply 1 he market. Apart from the benefit that would accrue to the dominions if Great. Britain could sell her goods on the Continent, the reopening of the European markets would open up scope for the- sale of butter, etc. It the tariff walls were taken away Germany would buy Do.ji.oo tons more butter than she was buying at the present, time, and that would mean the diversion of a great deal of the Continental butter, with a consequent relief on the British market. For the reasons he had quoted New Zealand should cling to Great Britain and secure some of the benefit of her increasing trade, Mr Goo.d'ellow said, and to do that she would have to carry out her part of the Ottawa Agreement and reduce tariffs. Two objection, had been raised to reduced tarifi . One was that unemployment would be increased, and the other was that the country had to have the revenue derived from Customs duty.

Revenue from Sales Tax. i The answer to the second objection I was that the revenue could be securcn j from a sales tax on ail commodities, and such a tax would be a fairer wa;. of collecting 1 lie revenue than the pv - sr it dutv, because instead ot the revenue being derived from a few selected articles, goods produced in the country would pay their share and the burden would be spread more equitably. A studv of the actual position in New Zealand showed that the importation of British goods would have very little effect on the employment situation. New Zealand's population was composed of 550,000 workers and 1 000.000 dependents. Of the workers, 25 per cent, were on the land, 15 per cent, were engaged in secondary industries, and 00 per cent, were engaged in trade and were non-pro-ducers. Jf New Zealand adopted free trade with Great Britain the 60 per cent, and the men on the land would benefit, and a careful analysis of the position of those engaged in secondary industries showed that 5 per cent, would benefit, G per cent, would not be affected, and 4 per cent, would be adversely affected. It followed that the development of free trade would benefit 00 per cent, of the workers, while 4 per cent. rn'Kht possibly have to change their occupations if they could not compete with Ihfl> British manufacturer by improved methods of | production.

*jtt««aiwmio Indus'., it's

' 1* trie capital invested in secondary industries in New Zealand were considered. Mr Goodfellow continued, it would be found that of the £00.000,000 invested about £49,0.00,000 was invested in industries that would not be affected by competition with Great Britain, while £0,500.000 was invested in industries subject to competition. "Is it worth sacrificing the £49.000,000 !o bolster up the £6.500,000?" he asked. 'lf we keep the tariffs on to bolster up the uneconomic secondary industries of the country a small number will gain but the majority will suffer." In moving a vote of thanks to the guests, Mr P. L. Porter said that ecunomic nationalism wes rrurmant in the world at the present time, and Mr Goodfellow had shown how it affected New Zealand. He did not expect thai everyone present would agree with the views expressed, but they would

■-■ II agree that they should look to the Motherland and consider her interes'--with their own. Mr Machin said that Mr Goodfellow had given his audier.ee some matter for serious thought, and arrangement,'; would be made for those present io meet later to give the subject serious consideration.

Tn returning thanks. Mr Goodfellow said that he and Mr Hislop had accused of acting because they had secured some English agencies, and said that he could give that an emphatic denial, and add that, he could <r't accept agencies if they were offered to him, because he had far too rnanv 'lungs to occupy his lime without them.