DRASTIC CHANGES

Evening Post, Volume CXXI, Issue 128, 1 June 1936, Page 10

DRASTIC CHANGES

AUSTRALIAN TARIFF "POOR CUSTOMER" COUNTRIES BOLD EXPERIMENT (From "Th 3 Post's" Representative.) SYDNEY, May 27. The Commonwealth Government in the new tariff schedule announced in the House of Representatives last Fri|day seems to be making the boldest | experiment yet made in Australian fiscal policy. Tariff secrets are generally well kept, but usually a straw j comes to show which way the wind I is going to blow. Not a wisp indi- ! cated that last Friday the Government 'was going to startle the world with drastic and far-reaching tariff changes. 1 By prohibiting the importation of a number of goods except by licence and i by the imposition of higher duties, the ■ Ministry hopes to stimulate trade with (Great Britain and other countries I which are good customers of Australia. The adoption of such a policy/ 'follows the investigations abroad last j year of Sir Henry Gullett, Minister in Charge of Trade Treaties. Repercussions are expected in foreign countries. Japan will be affected by higher duties on textiles, and the United States by the determination of the Ministry to establish the motor chassis manufacturing industry in Australia. Altogether the total volume of the trade diversion will probably be more than £6,000,000. British textile and motor-car industries will benefit immensely. All will be at the expense of the Australian consumer. ( CONTROL OF IMPORTS. By prohibiting the importation, except by special licence, of 83 classes of foreign goods, the Federal Ministry's tariff proposals aim at diverting £2,290,000 worth of Australia's import trade to Australian and British manufacturers. Under this system, licences will be granted freely for imports from all countries with which Australia has a favourable trade balance, or from countries whose purchases from Australia satisfy the Ministry. Motor vehicle chassis and piece goods, of artificial silk are the most important goods whose importation is prohibited except by licence, and on which the tariff has been increased. It is apparent that the United States : and Japan are the countries which will suffer most. All goods of British origin, apart from motor chassis, will be exempted from the licensing proposals, and motor chassis from the ' United Kingdom will be exempted from the restrictions. Australian manufacturers are expected to benefit by increased output to the amount of about £845,000, while United Kingdom manufacturers should benefit by £1,310,000 and nations whose trade balance is favourable to Australia by £135,000. The manufacture of motor chassis in Australia will be subsidised from funds raised by a special duty of 0.7 d a lb on all chassis imported. The restriction of the importation of motor-car chassis will mean, ultimately, a diversion to Australia of motor manufacturing worth £4,000,000. The new schedule will permit free entry of unassembled British car chassis, except for the special duty of 0.7 d a lb to subsidise Australian manufacture. The rates for Canadian chassis are higher than the British rates, but less than half the foreign rates. INCREASES IN DUTIES. The new tariff schedule provides: General increase in duty on imported tobacco and tobacco products; substi- ' tution of specific duties for ad valorem ' duties on artificial silk and cotton piece 1 goods to give British goods substantial preference; increase in duty on foreign I lubricating oil; increase of duty on un- ' sawn Oregon logs, and the substitution of specific duties for ad valorem duties on motor-car chassis. | The tariff on artificial silk piece goods will be lid a square yard (British preferential tariff); 8d (intermedi'ate tariff), and 9d (general tariff), with (primage duty on foreign imports only. Under a bylaw lower rates will be I applied to most artificial silk ordered before March 15. 1936, and entered by November 30. Primage duty has been removed from various British goods and decreased on the corresponding foreign goods. PRIMARY PRODUCTION MUST INCREASE. In an explanation of the measure, Sir Henry Gullett said that Australia's dependence upon the market of the I United Kingdom had increased in the j four years - since the Ottawa Agreement. At the moment there was no prospect of, recapturing Australia's old position for primary products in foreign markets. Unless Australia was t.o come to a national standstill, primary production must be increased, and the only way it could be increased was by selling more of the rural output to the United Kingdom. Circumstance compelled Australia reluctantly to follow the policy adopted by a large number of countries, and divert a certain amount of import trade from countries which were indifferent purchasers of 'Australian exports. The Leader of the Federal Opposition (Mr. Curtin), in denouncing the changes, expressed the opposite view. He said that the Government should have dealt with the restriction of imports as a whole and not discriminated against particular countries, and that the proposals left too much to the discretion of the Minister of Customs. To the extent that trade was diverted to Australian manufacturers the nation would probably gain, but it was of little value to change the source of imports. The Government should have treated the world as an entity with preference to the United Kingdom. It appeared to be unwise to quarrel with either the United States or Japan. It would have been far better to have put forward a general fiscal policy. The licensing procedure threw on the Minister of Customs and his Department enormous beureaucratic authority, and Parliamentary authority should have I been secured for its exorcise. J BUSINESS MEN'S REACTIONS. I Representatives in Australia of Brij tish industrialists expressed pleasure at j the prospect of obtaining a larger mea- [ sure of Australia's oversea purchases. I Firms dealing in foreign products affected by the new duties were amazed at the sweeping changes made, particularly those which will affect countries like Japan, which buy more in Australia than they sell here. Con- : cern was expressed at the probability ; oil higher prices having to be charged j for motor-cars, and it was emphasised ! that the industry ranked high among j Australia's secondary industries. At ' the samp time it was acknowledged that the defence aspect of the manufacture of motor engines in Australia I was important because the machinery could be used for the making of aeroI plane engines. The fear of retaliation against Australian exports was the keynote of comments oti the new duties in so far as they affect Japanese exports to Australia. Wool, wheat, and flour were mentioned as the commodities most likely to be affected. I There is no doubt that complete vehicles can be manufactured in Australia, but there is considerable doubt whether it will be economically sound

at present. It will entail an immense i amount of organisation and preparation : and the training of hundreds of highlyskilled artisans. Because of the veryhigh cost of preparing the necessarytools and the small volume of cars j which can be consumed in Australia, I and which will probably have to be ] split up among several manufacturers, a closer investigation may reveal car manufacture to be uneconomic. EFFECT ON AMERICAN TRADE. Importations of United States and Canadian car chassis will be restricted to under 50,000 chassis a year. There will be no restriction of Japanese rayon. Japan, being a good customer country, will be granted permits for entry into Australia of any shipment of the.se goods, rayon having been placed in the licensed list to shut out American rayon. By the licensing system, .car chassis will be restricted to the number admitted in the year ended / t il 30,1936, and typewriters to 15 per Lwdt. of the number. Licences for all her goods on the prohibited list will be refused. The object is to refuse the admission of any of these goods from the United States and from non-buyers of Australian goods. Restrictions of motor chassis imports from the United States and Canada will be based on numbers and not on values. The effect will be to give Britain, in addition to the 13,000 chassis already being imported annually, the benefit of all expansion in the Australian motor market until local chassis manufacturing is established. The United States will lose almost its entire Australian trade in refrigeration plant, fashion goods, toilet preparations, machinery, boots and shoes, paper, and other manufactured products. Former purchases from the United States of refrigerators will be diverted to Australia, toilet preparations to France, machinery to Britain, and boots and shoes to Australia and Czechoslavakia.