Evening Post. WEDNESDAY, JUNE 7, 1933. PREFERENCE AND EXCHANGE

Evening Post, Volume CXV, Issue 132, 7 June 1933, Page 8

Evening Post. WEDNESDAY, JUNE 7, 1933. PREFERENCE AND EXCHANGE

More than nine months have passed since the first'lmperial Economic Conference closed its proceedings at Ottawa, and its general results as substantially but not completely disclosed by'cable were hailed in this country with ' great satisfaction. It was generally recognised that .the New Zealand delegation, ably led by Mr. Coates and Mr. Downie Stewart, had done its work well, but there was: also a general- recognition that the chief credit lay elsewhere.' Suc-cess,-as the Prime Minister very .properly'acknowledged, had only been "rendered possible by the broad Empire view taken by the British delegates and adopted by the Conference as a whole." Britain had, indeed, as usual, been generous and unconditional in her concessions,,and she had left the reciprocal concessions that she was to get substantially to our honour. The obligations to which the Dominion was definitely committed were trivial, almost ludicrous, in comparison with the benefits that it was getting. . Three of them involved nothing more than, ante-dating by a few months tariff reductions which had already been decided upon. ■ The most important of the other three was.the reduction of the duty on confectionery from 30 per cent, to 27-J per cent. ' The measure of the solid benefit that Britain was to receive was left for New Zealand herself to fix. It was to this feature of- our Ottawa Agreement' that Mr: Forbes referred when he reminded us that the valuable preference that our produce was getting x would entail some sacrifice on our part, and expressed his confidence that the sacrifice would be cheerfully accepted by the people of New Zealand, regarding the matter from the broadest possible viewpoint and not with any narrow spirit oi sectional interest. ' The testing time for the Prime Minister's confidence has begun in earnest today. It is to the inquiry, promised by Article 8 of the Agreement that Britain is looking for the concessions that will make its operation equitable. His Majesty's Government in New Zealand undertake to institute an mr quiry into the existing protective duties, and, where necessary, to reduce them as speedily as possible to' such a level as will place the United Kingdom producer in the position of a domestic competitor. Such an inquiry is obviously a complicated, delicate, and difficult task, and one for which the politicians have neither the detachment nor special knowledge and experience to qualify them for undertaking themselves. The Government must be congratulated for entrusting the work to a Commission which commands the public confidence not merely because political considerations have obviously had no influence in the appointments but because of their intrinsic merits. What the two experts on the Commission do not know of both the practical and the theoretical sides of the New Zealand tariff is doubtless not known to anybodyelsej and the two lay members may be regarded as the equivalents of the assessors.in the Arbitration Court but less,, likely .than they to develop the! litigious, spirit which appointment >by: '• election, continuous service, .and/the atmosphere of a court makes-almost inevitable; in the case of these* assessors. \ • So wise, has been the action of the Government in this matter that we have heard rio objection at all to the personnel 6f,>the Commission and only one to~ the order of reference; ,and that one does not seem to us well-founded;'-;It has been said that there is ho.reference to the revenue aspect of. the tariff; —a remark which is formally correct, but substantially, in bur opinion, incorrect since it overlooks the effect of the general words. The Commission is given a much wider scope than the inquiry prescribed by the Ottawa Agreement, which is limited to protective duties. It is appointed to conduct a general inquiry into the tariff arid make recommendations ■ thereon j and the. requirement, of the Agreement is only one of the tilings to which,its atten-: tion is specially directed. Two of the other ■■ things, .are (1) "the financial, economic, and industrial conditions in the Dominion," and (2) "all other relevant considerations." Surely the needs of the revenue are of the most intimate concern to the financial conditions of-the Dominion, and if it could conceivably be ruled

out it must clearly be brought in again among the "other relevant considerations." A point of far greater practical importance is whether the exchange rate is among the "relevant considerations" to which the Commission is to have regard. The point was stated as follows by Mr. R. D. Westmore in a review of. the Ottawa Agreement which appeared in the December number of the "Australian Quarterly":— Is the Tariff Board to take into account the protective incidence of • exchange? If not, and. it would very definitely appear from recent recommendations that they ■will not, then if they make a recommendation, again, say, of 25 per cent., as being the duty •which is necessary to conform to the above quoted clauses of tho Ottawa Agreement, tf what value will that duty be to the British manufacturer when there is added,to it 25 per cent, exchange? ■That; the effect ,of the exchange in such circumstances would be to nullify the preference had been plainly indicated by no less an authority than Sir Henry Strakosch in a speech at Ottawa. After a reference to the course that New Zealand has since taken, he said:— The effect of such development would be to give the country which, lias allowed its currency to depreciate a definite advantage in the coat of production, and thus in its competitive power over producers in other parts of the British Commonwealth. A depreciation of currency in these circumstances is equivalent to an extra tariff against the rest of the Empire. It would tend to restrict trade, to cancel preferences already, agreed, and abnormally to stimulate some- of its industries. Such a development is clearly contrary to tho whole spirit of Empire co-operation, and the surest way of destroying it. There are, however, two reasons why these arguments apply with even greater force to New Zealand than to Australia/ New. Zealand's depreciation of her currency, unlike Australia's, has been voluntary and artificial, and unlike Australia she has taken this step after signing the Ottawa Agreement, whereas Australia had done so before. Is the Commission to ignore the fact that the New Zealand tariff has been virtually raised against Britain to the extent of 15 per cent, since the Ottawa Agreement was signed? And whatever the Commission decides is the Government going to say that it is playing the game and obeying the spirit of Ottawa if, with one hand, it offers Britain, a preference and with the other takes more than the equivalent away ?