The Press TUESDAY, OCTOBER 6, 1936. Ottawa and Empire Trade

Press, Volume LXXII, Issue 21906, 6 October 1936, Page 8

The Press TUESDAY, OCTOBER 6, 1936. Ottawa and Empire Trade

-Mr Neville Chamberlain’s assurance that his Government’s trade policy will continue to be based on Imperial preference is welcome and understandable; his proclamation of faith in the Ottawa agreements is a little puzzling. For although the next few years will probably witness an expansion of intra-imperial trade and a more extensive application of the principle of Imperial preference, it seems unlikely that the method of organising Empire trade devised at Ottawa will be persisted with. Certainly there is little enthusiasm for the Ottawa agreements among industrialists and exporters. The Ottawa agreements are based on two principles, the first being that, in granting preferences, Great Britain will not discriminate between one Dominion and another, and the second being that the Dominions will reduce their protective duties “to such a level as will place the United “Kingdom producer on the level of a domestic “ The first of these principles has become an impediment to the growth of Imperial trade, since it ignores the great differences in economic structure and policy between one Dominion and another. New Zealand, for instance, sets a higher value on her trade with Great Britain than Australia does and is prepared to make greater concessions in order to retain that trade. According to the Ottawa plan, however. New Zealand goods must receive the same British preference as Australian goods. Apparently the unwisdom of this arrangement has been recognised by the British Government, since, according to a recent announcement by Mr Malcolm Mac Donald, Secretary of State for the Dominions, the Ottawa agreements will be revised by negotiation with the Dominions individually and not collectively. The application of the second principle has caused widespread and legitimate dissatisfaction among British exporters, who feel that, whereas at Ottiawa the British Government made substantial concessions, it received in return a promise of tariff revision which has been indifferently kept. In New Zealand the undertaking to place the United Kingdom producer “on the level of a domestic competitor” has been interpreted as a reasonable man would interpret it. The Australian Tariff Board, on the other hand, has interpreted the undertaking to mean that the duty on British goods should be high enough to raise landed cost to a level sufficient not only to compensate the Australian manufacturer for the higher cost of Australian labour, raw material, and overhead charges, but also to provide a marginal advantage in his favour. In some cases the tariff protection afforded to Australian-made goods against British goods is as high as 50 per cent. The position seems to be that Australia is not willing to expose her manufacturing industries to the degree of competition contemplated in the Ottawa agreements and that, in any case, she cannot increase her present volume of imports without seriously upsetting her balance of trade. For these and other reasons it can fairly be said that the Ottawa agreements, regarded as a method of regulating intra-imperial trade, have not been a success.