Commonwealth And Europe PROSPECTS FOR WOOL AND RUBBER EXPORTS

Press, Issue 29236, 21 June 1960, Page 14

Commonwealth And Europe PROSPECTS FOR WOOL AND RUBBER EXPORTS

I4n artteta RaM WBOO' the forthoomtn® book, “The Cowtmowwealfh and V* Economist” In tell .pence

Wool and rubber are tifa ! two moat important single Commonwealth export*. other fibres they accomtett tog over 15 per cent of total exports ■ 1956. But European integration has no direct effect en Commonwealth trade in these commodities; natural fibres and natural rubber Other factors sre much more important, emdally the impact of num-made fibres and rubber and, to f£“woSi producers integration is certainly a welcome innovation. They have good reason for feeling that anything which will raise Alving standards will help wool Furthermore, since the Cbmmonwealth produces some twothirds of the world’s supply, it win gain a large proportion ot the benefits that do arise. Incomes in the E.E.C. will be rising to the point, already reached in the United Kingdom and much ot the EJ’.TA, where consumers switch from cheaper fibres to wool, and wool consumption in the Bix countries rises between a quarter and a third between IKB and 1979. There is less room for expansion in the United Kingdom where consumption may rise by only 10 per cent;, but the United Kingdom wool industry should benefit from the opening of E.F.T.A. markets to the Bradford textile producers.

Synthetic Fibre Threat Outride Europe the rate of Increase will be faster, and Japan may increase its consumption by 60 per cent. The exact extent of these increeses will depend on relative prices of wool and its competitors. Terylene, the acrylic fibres, and orlon are replacing wool in some uses; and at the cheaper end of the market, rayon has made inroads. But direct substitution is less important than the tendency towards wool-synthetic mixtures, which are and have been selling well. The only way in which European integration affects this competition is by creating the possibility that the wide E.E.C. market will attract United States capital and know-how in synthetic fibres. The effects of such investment should not be exaggerated; wool producers can look forward to reasonably prosperous times if prices can be kept competitive.

Cotton is similarly little affected by the moves in Europe. Cotton is much less a Commonwealth fibre than is wool; the Commonwealth accounts for only 5 per cent, of world exports, principally because India is so large a consumer. And Europe's role as an importer from the Commonwealth is smaller than it is in most commodities. In 1954 well over half the Commonwealth's raw cotton exports came to Europe; but in recent years the proportion has dropped to nearer two-fifths. Trade patterns in cotton never have been set by tariff preferences. Almost all countries buy their long-staple cotton from Egypt and the Sudan; but for the rest they buy from accustomed suppliers of the types required. European integration will not alter this. Nor will it do much to help consumption, especially since the centre of gravity of the cotton textile industry is still moving eastwards. But it may be that cotton is over the worst of its troubles; United States estimates suggest a 30 per cent increase in world trade in cotton between 1955 and 1970. Commonwealth cotton producers generally are geographically well placed to share in this, although Nigeria is less happily situated. It still depends on the European market which may grow by only 15 per ■cent between 1955 and 1970. However, there is no reason why Nigeria, too, should not turn its attention elsewhere. Jute and Sisal Jute is a monopoly of India and Pakistan and again faces no tariffs. But jute will continue to suffer from advances in bulkhandling and competition from paper and other materials, and integration cannot help the fibre To the extent that demand for jute does expand—and this will probably be in the less developed areas—Pakistan will benefit more, while both Pakistan and India will enjoy the market for jute manufactures.

Hard fibres, sisal, henequen and manila, are differently affected.

Hera Ahe E.EC. makes no difference to Commonwealth produces, (mainly British East African sisal growers) but the E.F.TA. may well do so. Portugal imparts all th* sisal it needs from in colonial territories. With lower labour costs than other EF.TA. members, Portugal might well increase* its share ot the cordage market, thus bringing more rapM expansion to Portuguese Africa and some losses to British East Africa. These should not, however, be exaggerated, and B.EA. sales should grow by 30 or 40 per cent between 1955 and 1970. For fibres as a whole, then, the progress of European integration may Mt ss a minor fillip; it wifi hardly damage Commonwealth exporters. Much more important is the slow growth ot demand in Europe (partly balanced by a more rapid growth elsewhere) and the impact ot the man-made fibres. Iff* For natural rubber, integration is similarly a relatively minor factor. The Commonwealth produces nearly half the world’s natural rubber. It is vital to Malaya, and of importance to Ceylon. Borneo,, and Nigeria. But natural rubber meets no tariffs; nor will the E.E.C. or E.F.TA. < make any changes in this. The E.E.C. placed synthetic rubber on list G and a tariff might have been expected. In the event, there will be none; and the only real effect of integration will again be the possibility that both the size of the area and ix attractions for United States capital will hasten the development of synthetic rubber production faster than would otherwise have bein the case. The level of rubber consumption is closely tied to a leading growth industry—motor vehtelaa The world motor industry may bo producing twice as much in MM as in 1955; and other rabberusing industries may not do ruth less well Hence, world rubber consumption may rise by 4 to ♦i per cent-a year between IMS and 1970. This would bring tote! demand in Europe to about 11 million tons in 1970. Synthetic rubber accounted far 7 6 per cent of Untied Kington consumption in 1955, Ita pafesat in France, and J4fl in Germaey; but it had readied 299, MX and 29.6 per cent respectively by MM This share will increase, especially as productive capacity, MMN tons at the end of 19M, win probably be about 500,000 tons or more by 1970. This leaves 800,095 tons for imports, not all of it necessarily natural. The growth in demand may well be eaually slow in other major countries, although natural rubber may retain its hold in the rest of the world. There could thus be an increase of, at the outside. 30 per cent in the demand for natural rubber between 1955 and 1970. This would not be too promising for the Common wealth producer were it not tor the fact that Indonesia, still the largest producer. Should not long mMr this position. Replanting has* Wen discouraged by political developments, and the estates are unlikely to raise output; the larger the supplies of synthetic rubber available, the lower the price and the less likely the smallholders are to Increase its output. Bo Commonwealth producers have room to expand theirs by 40 or 50 per cent But prices must be kept within bounds or synthetic rubber may emend stUl more rapidly than suggested. Two tilings are, therefore, deSri, the bort and most expanding markets far rubber will be found outside Europe, and integration makes little or no difference, since, if it encourages synthetic rubber production, it also stimulates demand.