RETALIATION

Evening Post, Issue 12, 14 July 1936, Page 17

RETALIATION

TARIFF DISPUTE

JAPAN AND AUSTRALIA

A WAIT FOR DETAILS

(From "The Post's" Representative.) SYDNEY, June 24.

As predicted in previous articles, the drastic tariff changes made by the Federal Government several weeks ago have led Australia into a peck of trouble, the end of which is not in sight and may yet involve the whole system of Empire preference in trade. Japan, has been brought into angry dispute with this country. She has ceased to buy wool. She has brought retaliatory measures to bear on Australian wheat arid flour. In short, Australia has destroyed in one blow a favourable trade balance of about £6,000,000 a year, without receiving one assurance of compensating benefits from Britain, in whose favour the changes were made.

Now it is being cynically recalled that when the tariff changes were announced in the House of Representatives, the Minister in charge of trade treaties (Sir Henry Gullett) stated unequivocally that "Japan would be in no way adversely affected."

Australia is indubitably wedded to the system ol! Empire preference, and now that the Federal Government has constructed Japan's iotaliatory" measures as being aimed at that system, a serious international conflict seems to be in prospect. A statement by the Prime Minister (Mr. Lyons) "that Australia will not be dictated to by Japan in her tariff policy" shows to what length the dispute has already gone. An obviously-inspired statement from the Canberra correspondent of the "Sydney Morning Herald" was that "the Federal Government made a serious effort to preserve friendly trade relations between Australia and Japan, offering generous concessions, but Japan replied virtually challenging the whole system of Empire preference and rejecting any compromise. The Federal Cabinet took a strong stand, refusing to accept dictation regarding its tariff policy." NO JAPANESE DICTATION. The position now is that the Cabinet has decided to await full details of Japan's proposed retaliatory action against Australian goods before deciding upon the course of action that Australia will pursue if Japan's proposals are put into effect. It is understood that Australia's communication in reply to the formal notification that the Japanese Government intended to take action that would affect goods imported from Australia, contained an intimation that, in no circumstances would Australia alter its tariff policy at the request of Japan. No further steps are likely to be taken by the Federal Cabinet until Japan discloses the extent of its retaliatory action. The view in Canberra is that if action had not been taken to check the great increase in imports of .Japanese cotton-piece and artificial silk goods, the displacement of British imporls by progressive price-cutting would not long have been confined to British goods, but Australian industry would have suffered by the same class of penetration. In recent years the Australian general tariff level has been dictated by the increasing competitiveness of Japanese goods brought.' about by depreciated currency, and heavy and continuous price reduction. Such a situation, it is held, not only threatened British imports, and, consequently, it is claimed, Australian exports to the United Kingdom, but is to some extent responsible for Australia's diminishing export trade in practically all commodities, beyond wool and wheat, to foreign countries. Other countries besides Australia have found themselves faced with the same problem, and nearly all have taken the action which the Australian Government has taken in sharply increasing textile duties or placing textiles upon a quota. A CONSULAR STATEMENT. The feeling in Government circles in Canberra is that if Japan, because •of the-heavy.purchases of wool, is dis-posed-to claim.: the right to dictate Australian tariff levels, that tendency will grow, as her purchases of Australian, wool increase. ■ As Australian imports from Japan further increase, it is felt there would be larger interests in Japan to support the Government there, if.it at any time demonstrated against Australian tariff changes. These are among the reasons which fortify Federal Ministers in their be-lief-that the Government has taken the right step in declaring at this stage that its tariff policy must be a matter exclusively for its own decision. The Japanese Consul in Sydney (Mr. K. Nihro) said that if there was further retaliation by the Commonwealth Government, following the Japanese tariff ordinance against Australia, it would harden the attitude of the Japanese Government as well as of public opinion in Japan, and would make a satisfactory settlement of the trade matter a remote possibility. "Japan is still quite prepared to negotiate," said Mr. Nihro. "It is a wish that an agreement shall be reached in a short period. The Japanese Government came to a decision regarding the ordinance because it was necessary to place Japan on an equal looting with Australia, following the actions of the Australian Government. The new tariff increases are already affecting Japan seriously. It is to be hoped that Australia will refrain from taking such a measure as is suggested." board displacing the code authority. A "consumers' protection label" was introduced instead of the Blue Eagle and it is said that manufacturers of 91 per cent, of the nation's coats and suits participate in the board's activities. The budget of 300,000 dollars (£60,000) is obtained from the sale of labels. In case Federal regulation is renewed, in what direction is it likely to proceed? Nobody can give the answer to that question. Those who are considering the problem in administrative circles speak of amending the AntiTrust Laws so that open-price reporting for the protection of buyers and sellers may be sponsored by .the Government on condition that it be not used as a device for price-fixing. Such an amendment would also remove the jeopardy attendant on affirmative action when competitors, by co-operation, seek to eliminate destructive competition.

The "saucers and miners" burrowing among possible schemes for stabilisation of industry insist that to establish wage minima and hour maxima no such elaborate machinery as the late N.B.A. would be necessary. The similarity of the basic terms of N.R.A. codes, it is held, indicates that a broad lawsetting forth the fundametnal terms for all industry but permitting adjustment and modifications for specific conditions would not infringe on the individual initiative o£ the business man and would be easy to administer.

The formula for a proposal to the foregoing effect is the goal towards which those who arc cognisant with Ihe problem are now striving.