ENGLISH POLICY

Evening Post, Volume CXVIII, Issue 94, 18 October 1934, Page 21

ENGLISH POLICY

DISCUSSIONS URGED

LOOKING TO FUTURE

EMPIRE SUPPLIES

The place of New Zealand in the economy of the British Empire is touched upon by tho Commission which recommends that the Government of the Dominion should initiate the discussions on the quota proposals which are foreshadowed.

"The- Government- of the United Kingdom may be satisfied, without attempting to regulate the volume of imports, to continue to levy duties on foreign dairy produce and to impose duties on Empire dairy produce, and to apply the proceeds towards subsidising the British producer," states the report. "By this means tho British consumer will be able to buy cheaply, and tho British producer will bo protected. On the other hand, tho Government may take the view that its trade relations with Empire and foreign countries cannot bo maintained on a sound basis if those countries are allowed to mako themselves bankrupt in an endeavour to sell, for an indefinite, period, increasing quantities of their produce in the United Kingdom market at a heavy loss. In so far as debtor countries are concerned, it is necessary to conserve their. ability to pay interest and accumulate' sinking furtds in respect of their loans, and the United Kingdom, as a creditor country, is vitaily interested in this respect. Further, the Government of-.the United Kingdom may'.seekto place British farmers on a sounder economic basis, without their haying to rely on. the indefinite continuance of subsidies. It iff therefor© not improbable that the Government .of the United Kingdom will impose a limit on imports of dairy produce, with <>r without the levying of differential. duties, and will; in fixing quotas within that limit, have regard td the relative claims of Empire and foreign countries. FAVOURABLE ATTRIBUTES.

"In so far as New Zealand is r coneernod, it may be claimed that she is, for climatic and other reasons, best fitted for the economic production of but tor and cheese of the highest quality, and that most of the land now used for dairying cannot profitably be

diverted to other purposes. The Dominion's export trade in dairy produce has been built up"in reliance on the markets of the United Kingdom being always open to it, and the loan moneys borrowed from the United Kingdom have been borrowed in the faith that interest and principal payments would, be made from the. process of the sales of our primary products therein. Apart altogether from the wider aspects-of loyalty to the Empire,- New Zealand has consistently given a greater measure of her trade- to the United Kingdom than has any other Dominion, and has maintained the lowest scale of tariffs against tho products of the United Kingdom. In fact, it is not exaggerating the position to say that New Zealand is economically almost a part of the United Kingdom,' for she imports more largely per capita than any other country from tho United Kingdom, exports almost exclusively to the United Kingdom, makes the fullest possible use of British-owned ships for her trading requirements, and pays to. British shipowners over £8,000,000 a year in freight charges on goods shipped to and. from the United Kingdom. . ■: . ■". EMPIRE PREFERENCE. "It has been said that there can be no discrimination within the Empire, but we think that this statement, -in the bald form in'-which it is usually made,'is misleading and ambiguous. We agree, as a broad statement of principle, that New Zealand cannot "claim any arbitrary discrimination in her favour; but should not the principle of nondiscrimination be based on equality of reciprocity? There can be no injustice in giving to other Empire countries equal preference to that accorded to New Zealand, provided they accord to the United Kingdom the same preference as Now Zealand does. Ecjually, there is no injustice in according to New Zealand preference for preference. In this connection, we have not endeavoured to counter the Britisli milkmarketing subsidy by subsidising our producers, and consequently we cannot bo fairly charged with using the United Kingdom market as a dumping ground for our surplus produce. In addition to any scheme of differential treatment as between Empire and foreign countries that may be, adopted by the United Kingdom Government, we may fairly claim that an equitable scheme of differential treatment of Empire countries should be devised, which would give preference, as to both quotas and impoit duties (if the latter be imposed), to those Dominions that maintain low tariffs against goods exported from the United Kingdom and do not dump their produce in the United Kingdom under the shelter of subsidies. . "In.the early stages of what is termed 'the depression,' it was commonly thought that the general fall in prices was of a temporary nature, and that the depression period would be snort. In fact, it is still.held by many people that 'something' is just round the corner, and that the unexpected thing will happen, which will once again send prices of primary products to a remunerative level. The general acceptance of this doctrine has resulted in the adoption of temporary expedients to meet an anticipated temporary crisis. It is still argued that importing continental countries will soon grow tired of paying high retail prices for butter and cheese, and will be forced by their own consumers to remove quotas and prohibitory duties, and thus open their markets to foreign produce, even though their action will reduce the prices of dairy products at present enjoyed "by their own farmers. It is still argued that Governments at present subsidising the production and marketing of dairy products will be forced through economic stress to discontinue this form of assistance, and that their countries will then no longer be serious factors in the British supply position. There are still some who look to droughts *to reduce the production of competitive exporting countries, and others again have in mind the possibility of wars as a means of again establishing an . artificial position of supply and demand. Again, hopes are held that the recovery of trade in Great Britain will be reflected in such an increase in the purchasing-power, of the workers as will enable the increasing supplies to be cleared at substantially higher prices. "In the face of the actual position as it exists, and in tho absence of any indication of a change from the general policy of national economic selfsufficiency, it appears to the Commission that the grounds for theso views and hopes are shadowy and unsubstantial.. ADVISABILITY OF DISCUSSIONS.

"3?or this reason, and because of the still less favourable outlook in so far as dairy produce prices are concerned, we are of the opinion that the possibility of quota restrictions as. a means of relief to producers.in the Dominions as well as in the United Kingdom should be considered, more especially as in 1935 the United Kingdom will be in a position to levy Customs duties-on Dominion imports, and in 1936 will be in a position to deal comprehensively with the matter of quantitative regulation of imports both from the Dominions and from those foreign countries with which trade treaties are:now in force. Accordingly wo recommend that, when a convenient opportunity offers, a full discussion of'the question with the Government of the United Kingdom should be initiated by the Government of New Zealand. It is suggested that such a discussion ' would make I clear an important issue—the extent to which it is desired that the dairying industry, in the United Kingdom should expand. We assume that the principal economic value of the industry to the United Kingdom is that it is necessary to provide fresh milk and cream for human consumption. It is consequently necessary that the seasonal surplus should bo available for the manufacture of cheese at payable prices. The manufacture of butter is not carried on on r, large scale, and it is probable that tho surplus cream that is not required for consumption- in its raw state represents a substantial portion of the cream that is used in the manufacture ot butter. We assume, also, that tho Government of the United Kingdom does not desire to foster the expansion of the dairying industry to an uneconomic extent. It is, of course, possible to expand the industry almost indefinitely, but this can be achieved only at an increasing and uneconomic cost. A preliminary discussion, with the Government of the United Kingdom- would enable the Government of New; Zealand to discover the extent to which it is desired that the British dairy farmer should be assisted. When an understanding has been arrived at on tnis and other preliminary matters, we sug•cest that the Government of the United Kingdom should be ■■' requested to arrange a conference of all Empire .and foreign exporting • countries, with a view to' reaching a final settlement.

' 'It is desirable that finality should be reached, for there seems to be. no "immediate prospect of .a, reopening of the continental European markets.front which Northern : European production, •has, .been diverted to the tJnited Kingdom; and, in the. absence of the reopening of those markets, financial disaster and a more serious reduction of production than any.system of quotas would impose appear to be the only possible outcome of the present uneconomic competition in the TJnited Kingdom market. In such an economic struggle, victors and vanquished alike must suffer severe losses, from which the process of recovery will be slow. In our opinion nothing is to be gained by adopting a policy of inactivity and drift: and-much may be lost by it" adoption."