COMMONWEALTH HOPES; WEST EUROPEAN FEARS

Press, Volume XC, Issue 27303, 20 March 1954, Page 6

COMMONWEALTH HOPES; WEST EUROPEAN FEARS

BRITAIN’S TRADE PROSPECTS—VI

[By RICHARD DENMAN, of the •*Economist’l)

Energetic and imaginative British exporters should do quite well An the Commonwealth and in Western Europe this year. A fall of about 13 per cent, in United States factory production as e result of the 1949 recession reduced United States imports from the overseas sterling area by about 15 per cent, within a year. Thereupon a number of Commonwealth countries appiied severe and indiscriminate import cuts. But restrained optimism in the face of the current American recession is justified. American purchases of sterl-ing-area raw materials are not. as high as they were before 1949; American stocks are unusually low; the Dominions are more likely to discriminate against dollar goods if restrictions on imports have to be tightened—in fact, . they may even further ease those on sterling area imports; in any case, a. cut-back in American production of no more than 10 per cent is expected. 1116 outlook in South Africa is not good. Britqjn, still its largest supplier, has been losing ground to the United States and to Germany. The 1954 quotas have cut many imports and are unlikely to be increased if reviewed. Development in the private sector of industry is being curtailed. Protection in Australia?

Wool exports have been keeping Australia’s export earnings above the increasing expenditure on imports. Although.further relaxation of import restrictions, from which Britain should benefit, are possible, it is unlikely that British exports will expand at the recent rate. The promise of riches from oil and uranium finds must not obscure two facts unfavourable to British exports: Australia, now that the comfortable long-term Ministry of Food contracts have gone, may not get such good prices from private British trailers for its agricultural produce; and second, its home industry is finding it increasingly difficult to sell abroad because its costs are high, and there are many demands for protection against cheaper British imports. British exporters could have a good year in India. Its economic situation has greatly improved in the last few months, and the recently announced import policy, while not as liberal as expected, should enable Britain’s exports at least to regain 1952 levels. But British exporters will have to watch the efforts of their German and Japanese competitors, and better them. Britain has already lost its traditionally exclusive and highly lucrative Indian market for rolling stock. Seventy per cent, of available foreign exchange in Pakistan will be used to buy capital equipment. Consumer goods imports are not likely to increase this year. Germany and Japan are successfully increasing their share of the market—mainly at Britain’s expense. Increased imports from France, Italy, and bther West European countries may be expected also. Strenuous 'efforts will be needed it ''Britain- is to retain its position as Pakistan’s most important supplier of capital goods. Prospects in Cofylon are not bright, but this year’s exports from Britain should reach last year’s levels. British prospects in New Zealand are quite good. Import restrictions may be further reduced. Competition from Japan, particularly for some capital goods, must be expected. The Colonies Exports to the colonies may increase as a whole.-Only in Malaya are conditions positively unfavourable. Kenya

and British Guiana (with its £15,000,000 five-year developmSi plan), despite unsettled general ditions, should maintain, even increase their purchases. The Rhodesias, Nva«J‘ land, British West Africa, and tu British West Indies are all reasonably prosperous. Hong Kong’s entrenot trade is declining. Germany,. especially! in drugs and chemicals, is providing an increasing share of exports tn China. The recently-signed agreement by which the colonies will be able to- resume substantial imports from Japan will put British exporters! particularly of cotton and rayon goods’ on their toes.

Western Europe Slightly more than 75 per cent of West European trade on private account between O.E.E.C. members has now been liberalised. Demand for capital and consumer goods in Sweddn Denmark, and Norway remains steady 'Despite German competition, Britain has increased its share of the market in Sweden; it should certainly maintain its position in Sweden and Norway in 1954, but will have great difficulty in meeting German competition inDenmerk. Finland’s export earnings remain at so low a level that imports from Britain, its main trading partner are most unlikely to increase materially in 1954. y

Prospects for all kinds of British exports to Italy are very good provided it can maintain its present liberal import policy. France is an unstable market. No substantial liberalisation of imports can be expected. certainly not until after the franc has been devalued once more—a step against which there are many potent arguments. The Belgian market for British exports, particularly consumer goods, should be' an expanding one, but only if- our goods are competitive with those offered energetically by Germany rind the Netherlands. Britain has done quite well in Holland in the last few years and our exports will continue to be helped by strong pro-British sentiment.

Whose .Fault? Although Britain may get some of the x sub-contrgcts for the American bases to be built in Spain, German interests have been far more active in the search for orders. Prospects for British consumer goods are not bright Britain’s exports to Portugal may be expected to expand a little, but here, too, Germany is increasing its share

of trade, particularly in engineering goods.

Germany has liberalised its import policy, but much of its surplus sterling ; earnings are more likely to be spent outside Britain. Any marked expansion of British exports is not psobable, therefore. On a smaller scale, the situation in Austria is much the same. t Despite Switzerland’s substantial payments surplus, there is little chance that imports from Britain can be greatly increased. Immediately after tnh war British exporters did well in Greece, but Germany has now regained its former importance as a supplier. If this article makes dreary reading, whose fault is it? The Germans, the Japanese, and the Americans are squeezing us hard in many of our traditional markets. In part, this disastrous fact is due to the expected return to pre-war world trade patterns. In part, the British Government can be blamed for not helping exporters enough. But for most of our failures we must blame our too often complacent and unenterprising businessmen. [Concluded]