DAIRY TRADE

Dominion, Volume 29, Issue 151, 21 March 1936, Page 4

DAIRY TRADE

Denmark’s Treaty With Germany MARKET IN BRITAIN Reasons For Collapse Of Negotiations The collapse of trade negotiations between Great Britain and Denmark, as a result of which the British Government contemplates giving the Dominions, particularly Australia and New Zealand, a larger share of the imports of dairy products into the United Kingdom, has aroused been interest throughout the dairying industry. The breakdown in the AngloDanish discussions was reported in a cable message from London published in “The Dominion” yesterday. The dairy produce trade in Wellington has no information in its possession beyond thab mentioned in the cable. Wrapped up with the collapse of the discussions between the British and Danish Governments was stated to be the trade treaty recently concluded by Denmark with Germany, whereby the Danes are to purchase an additional £3,500,000 worth of German manufactures in exchange for which th_e Germans will buy an extra £3,500,000 worth of Danish produce. Overseas newspapers just to hand show that this treaty between Denmark and Germany was signed on January 31. A paragraph from the Copenhagen correspondent of “The Times,” London, published in that journal on February 1, states that the treaty falls into two parts, of which the first secures to Denmark an increase in her exports of butter, eggs, cheese, horses and cattle of from 35 to 50 per cent., and the second .promises her eventually a still further increase. Denmark, for her part, is obliged to buy more industrial products from Germany. Extra 12,000 Tons of Butter. The monthly circular received by the New Zealand Dairy Board from its London office, dated February 13, states that so far as can be learned in London, the increase in the quantity of butter which Germany has undertaken to import from Denmark is around about 12,000 tons. On a basis of £lOO a ton this would represent £1,200,000, leaving the other commodities and live stock mentioned in the treaty to make up the remaining £2,300,000. According to the weekly dairy produce notes issued by the Imperial Economic Committee, Denmark exported to Germany last year 25,000 tons of butter. An extra 12,000 tons would therefore represent au increase of 48 per cent. Exports of eggs from Denmark to Germany during 1035 amounted to 2,212,000 great hundreds. Cheese statistics for last year are not available, but in 1934 Germany imported 33,250 tons of cheese, and of this 3450 tons was supplied by Denmark. The Netherlands is at present by far the most important source of Germany’s cheese imports, and accounted for two-thirds of the total in 1934. The Anglo-Danish Treaty. Negotiations for the renewal of the trade agreement between Great Britain and Denmark, due to expire at an early date, were to have commenced in London on February 10. In the light of yesterday’s cable, a special article from the Copenhagen correspondent of "The Times,” published in that journal ou February 7, is of particular interest, for it refers to factors which no doubt ■have caused the present breakdown of negotiations. The article states that the treaty urgently needs amendment, for its interpretation has given rise to much petty friction. At the root of the trouble is the paragraph in the .treaty which provides that “in administering the provisions of the agreement the contracting Governments will keep in view the balance of trade between the two countries.” Many British exporters feel that the high hopes it aroused have not been fulfilled. The Danes hold that they have done more • than could be expected of them. “Knowing that Great Britain would ultimately be compelled to take steps to reduce her heavy adverse balance of trade with foreign countries.” states the article, “the Danes began to increase their purchases of British goods some time before the treaty was signed. The chief purpose of the treaty : was to accelerate this movement and so diminish the gap between Danish sales to Great Britain and Danish purchases from Great Britain. While ad'mitting that some improvement may still be possible, the Danes declare that they have done more than was thought possible in the time limit set by the ■treaty, and that to go faster would be to risk grave economic dislocation and ’at the cost of antagonising other countries, particularly Germany, which are also important buyers of Danish agricultural produce.” Decreased Purchases. After analysing the trade statistics of Danish imports of British goods and manufactures, the article says: "The fact remains that since 1934 Denmark has decreased her purchases of British piece-goods, British boots and shoes, motor-cycles and machinery, pig iron and earthenware products. . . , The decline is not due to any falling-pff in the Danish demand, but to the arbi; teary curtailment by the Foreign Exchange Control of the licenses issued for the importation of British manufactured goods. Tlie control in the past has greatly benefited British trade by switching over Danish imports into the channels required by the Anglo-Danish Trade Agreement. “But it seems that the control has now altered its aim and that its first objective, after preventing an excess of imports from imperilling the stability of the currency, is to safeguard Danish industry and to protect Danish wage rates. And. while allowing total imports from and through Great Britain to expand gradually, it achieves its purpose- by giving the preference to raw materials required by Danish industry, at the expense of such British manufactures as are competitive with local Industries. British exporters feei Unit this is contrary to the spirit of the treaty and that (apart from the tariff rates conventionalised in the agreement) there should be no restric tion whatever on the flow of British manufactures so long as the AngloDanish trade balance remains heavily in Denmark’s favour. . . . British Quota Policy. “Since 1932 British imports of Danish bacon have been nearly halved. The financial yield, however, has fallen by only about 30 per cent., so that the Danes do not for the moment complain of British quota policy. Though farmers at first opposed the quota, they admit that it has so raised the price of bacon that Danish agriculture has beqfl .saved frpm <U.sast.er« aijAAllfiZ

would not now object to the introduction of a quota on butter, with the aim of raising the price of that commodity also. But they have no guarantee the present bacon policy is going to be maintained. “They have heard with dismay the British suggestion that the present quota might be raised and a small duty imposed on imports. This would reduce their incomes from the industry, and unless it were compensated in other directions might plunge the Danish farmer into ruin. In this uncertainty it is not surprising that the Danish Government tries to build up industries to provide alternative economic activities against the day when the British market again shrinks. Nor is it surprising when the Government gets an offer from Germany to buy more agricultural produce, that it should embrace the opportunity of easing the farmer’s lot at the cost even of disappointing the Dritisli merchant.”