PEACE BY TRADE, BUT NOT BY TRADE ALONE

Evening Post, Volume CXXIV, Issue 122, 19 November 1937, Page 8

PEACE BY TRADE, BUT NOT BY TRADE ALONE

Formal opening of negotiations for an Anglo-American reciprocal trade agreement —announced .from Washington in today's cablegrams—has been anticipated by the critics of Australia's "trade-diversion policy." In Australia it is considered that the moral and material effects of this policy in the United States are perJ haps the greatest obstacle to an American trade agreement so far as the Dominions are concerned. Under the "trade-diversion policy" Australia imposed restrictions on imports from, the United States, and the States then withdrew their "most-favoured-na-tion" treatment of goods from Aus-j tralia. These two steps are*described] by Australian critics of "trade-diver-sion" as "definite obstacles" to the trade agreement which Mr. Cordell Hull has been talking of for years, and which now seems to be coming nearer to the range of practical politics. The moral effects of "tradediversion" on the country that loses the trade—whether it be the United States or Japan—are obvious. 'The material effects are not so clear. For the July-August-September quarter of this year Australia's imports from U.S.A. were valued at £4,378,000 sterling, as compared with £3,622.000 sterling for the corresponding period last year; So possibly the diversion of trade aimed at by Sir Henry Gullett (who later resigned from the Commonwealth Cabinet) will not be real to the extent he estimated.

The increased imports for the quarter quoted were "mainly machinery and motor chassis." This raises again the question whether, and to.'what extent, Australia is to manufacture her own motor vehicles. The "Sydney Morning Herild" lias its doubts:

In spite of the advantages of extending our motor-car manufacturing from the broader viey of defence, it is extremely debatable how far such local manufacturing i» an economic proposition.

Australia's defence problem to some extent cuts across Mr. Cordell Hull's general argument that freer trade will be a bulwark of peace. Assuming that it is economic that the United States should enjoy in peacetime a profitable market for motor vehicles in. Australia and New Zealand, is it conducive to peace for Japan to know that in war-time, thanks to the present neutrality policy of Congress, the Japanese navy might cut Australia's vital motorisation and oil supplies, and a neutrality Congress would not object to interference with ships? In fact, Congress might press the President, under the neutrality laws, lo stop supplies lo an Australia at war, just when she is most in need of them. While the economic side of the Australian argument may be purely economic, the defence side covers not only manufacturing efficiency but also the risks of war. Therefore what Mr. Cordell Hull says 'about a trade-drive for peace must be bracketed with what America does for peace (or does not do) in the Brussels Conference. Will it help peace if Australia and New Zealand buy goods (necessary in war) from a j country that believes in Mr. Hull's peace-by-trade, but which may also be found, in a crisis, to believe in a neutrality that deprives «11 belliger- j ents of necessary supplies? j Nevertheless, it is not desirable at the present stage to put undue emphasis on any inconsistency between the peace-by-trade drive and the American isolation and neutrality policies. But Washington's attitude to the world's present undeclared wars is quite as relevant to the subject as is Mr. Cordell Hull's consistent appeal for a trade rapproche'meut. , ■