TRADE WITH ITALY

Evening Post, Volume CXXII, Issue 68, 17 September 1936, Page 8

TRADE WITH ITALY

SANCTIONS VANISH

BUT POLICY UNCHANGED

Persons who thought—if indeed anyone did think so—that the repeal of sanctions would mean a return pure and simple to the status quo ante in Italy's trade relations must be beginning to realise they were mistaken, writes Ernaldo Cortesi from Rome to the "New York Times." The Italian discriminatory measures known as ccunter-sanctions are dead, it is true, but Italy shows not the. slightest inclination to abandon or even to abate her present commercial policy, which is based on the exclusion of all foreign goods not absolutely indispensable, irrespective of the country of origin. All signs indicate that the effort to make Italy economically independent will be pursued in the future even more vigorously than in the past. It cannot be said that sanctions arc exclusively responsible for this trend. Many months before the Italo-Ethiopian controversy Italy's adverse balance of international payments had grown to such proportions that the Government was forced to adopt severe measures to preserve the nation's gold reserve by cutting down imports drastically. The traditional policy based on the most-favoured-nation clause was discarded in favour of a new policy based on strict reciprocity. It was felt thai the regime of managed currencies and planned economies that had been almost universally adopted interfered with the free play of economic forces to such an extent that the only defence lay in buying only where one could sell. . GAVE A NEW SHOVE. Sanctions merely served to push Italy further along this road. One of the principal lessons the Italians have learned from their experiences in tjie past few months, according to a statement by Finance' Minister Paolo Thaondi Revel, is that the gold reserves must not be regarded as funds available for settling trade deficits resulting from unregulated commercial transactions. They must serve political, not commercial, ends, and are a war chest" that must be preserved intact for the hour of need. They are, therefore, to be jealously guarded or even added to whenever the opportunity arises, and this can be done only by reducing Italy's adverse trade balance to the vanishing point. Nor must it be forgotten that suspension of trade relations during the sanctionist period profoundly altered Italian economy. A careful survey of Italian needs and resources revealed that many articles formerly imported could be produced at home, resulting in large capital investments, construction of huge industrial plants, transfer of labour to new industries, and negotiation of agreements that cannot be rescinded at short notice. A new and permanent situation has been brought about. Italy therefore believes it would oe contrary to her best interests and, indeed, impossible for her to turn back now. She has no alternative but to go on inflexibly with her present policy of economic nationalism. ' REVISION OF TRADE PACTS. Application of this programme 'will necessitate thorough revision of Italy's tariffs and her commercial treaties. The necessary studies to this end already are well under way. Italy has not cancelled her commercial treaties with sanctionist States, though she believes sanctions were contrary to thenspirit and letter. Now that the countries that applied sanctions wish to resume trading, Italy feels she has the knife by the handle and can oblige them to adapt themselves to the new situation that they themselves were instrumentalin bringing about. Certainly all negotiations for new commercial treaties that Italy henceforth undertakes will be based on the premise that Italy will import only the things essential for her needs that she cannot produce. And she will buy only as much as she sells. How far any country can become economically independent in the true sense is debatable, especially in the case of a country like Italy that lacks several essential raw materials. Italians, however, look to Ethiopia to help them towards attainment of their goal. Not only do they hope their new colonial possession will be found rich in some, if not all, of the raw materials rieeded at home, but they intend to develop it in such a way a» tp make 'it complement Italian economy.