TRADE BREAKDOWN FEARED

Evening Star, Issue 26138, 27 June 1947, Page 6

TRADE BREAKDOWN FEARED

GENEVA CHARTER MUST PERMIT MORE PRODUCTION

(Special.) WELLINGTON, June 27. ‘‘There are already portents of a breakdown in international trade and hence world production because of 4 the inability of European countries to command the means of payment for their imports while undeveloped countries are unable to make their full contribution tov their own means of payment for their imports because of their retarded capital development.” This statement was made in the House of Representatives to-day by the Minister of Finance, Mr Nash, when he made his report on the Geneva Conference on trade and employment. • (Mr Nash discussed five fundamental principles which he considered must be adequately reflected in the trade charter if the Geneva Conference were to Bucceed in laying the foundation of a world production and trading system. “ There, is some urgency much urgency—that Geneva should succeed at an early date,” he declared. World employment and the trade charter must have as its justification not an abstract faith in the efficiency of unfettered market forces and the machinery of multilateral exchange, but a positive undertaking by all tipvereign states to develop their territories to the full to raise to the maximum their production and make available to others all that they did notthemselves consume, said Mr Nash. POSITIVE OBJECTIVE.

Accordingly, the charter should be concerned not so much with the negative objective of removing obstacles to free access of private traders to the markets as with the positive objective of creating conditions in which organised communities, could obtain access to the productive resources necessary to maintain and raise their' living standards. Wide variations in;’: economic systems—which were really the means with which particular communities attacked _ the economic problem—must be admitted and accommodated in the international employment and trade charter. “The free market system with, its faith in interaction, of supply and demand as expressed by the decisions of private traders is appropriate to certain communities at a certain stage of development and should, therefore, be provided for, said Mr-Nash. At the other extreme, the completely State-operated system. such .as obtained in (Russia should also be provided for. Perhaps more important 'etill. it was' necessary to provide for economies which fall between the two extremes —that 'was economies wherein market tforces were modified by a substantial. degree of public enterprise, public planning and public regulation. The right of Sovereign States to modify the most-favoured-nation principle "and employ domestic protective devices must be frankly acknowleged and assisted so long'as the policies of the States.. in question were expansionist and hot . restrictive in their effect oh production, trade, and living standards. Consequently, said Mr. Nash, the charter should go beyond tariffs and subsidies, and concede the right of countries to .use intelligently 6uch measures as quantitative regulation of prices, service charges, etc., and control of volume and use ’of money. BALANCE OF TPADE.

With .the, exception of countries which required loan capital for development, all countries must buy approximately as much as they sold in order to Create conditions for practical operation of the multilateral clearing system. If countries did not buy as much as they sold'they should lend the -difference, Moreover, the current of such international .lending snould not be such as merely to substitute one source of supply for another, thereby knocking out areas of production and trade and breaking down the multi-lateral trading system, hut should in all cases provide for the expansion of production. Under-developed countries must be provided with capital equipment and raw materials on terms which would enable them to develop their resources as quickly and efficiently as possible. countries with developed capital structures and skilled populations must be provided withdraw materials “that would enable them and the world to-reap the benefits of their abilitv, experience, and technology. “Since the period of. industrial revolution, areas where industrial plant has been established have attracted raw materials and'population to them and world production and trade are still dominated by this bias,” said Mr Nash. “ The* international trade or--ganisation’s: success might well be measured by the extent to which it is based on the recognition of the fundamental fact that world progress demands that a way must be found of taking plant and raw materials to populations as well as populations and raw materials to the plant.”