BLOW TO JAPAN

King Country Chronicle, Volume XXIX, Issue 4746, 14 September 1935, Page 8

BLOW TO JAPAN

LARGE IMPORTS BARRED. EGYPTIAN DECISION. The Egyptian Government has repudiated its commercial agrement with Japan as the result of a Note submitted to the Cabinet by the Minister of Finance, Abdel Wahab Pasha (says the Manchester Guardian's Alexandria correspondent.) He pointed out that one of the most important objects of the Egyptian Government in imposing a new Customs tariff in 1930 was to protect young national industries. The new tariff had been increased from time to time for varying reasons connected with the departure from gold of some countries and the depreciation in the currency of others, actions which tended to disturb the trade balance. Some countries, however, continued to depreciate their currencies to such an extent that Customs duties were insufficient to protect national industries from foreign competition. Japan was the most conspicuous example, and by the depreciation of the yen the dumping of cheap Japanese goods was possible. Despite the repeated increase of Customs duties on commodities competing with locally produced goods, it was not found possible to meet this Japanese competition. The Government had received many complaints from local firms pointing out that continued Japanese competition would ruin their business, in which a large amount of Egyptian capital was invested, and throw out of work a considerable number of Egyptian labourers. An examination by the Minister of Finance and the Minister of Commerce and Industry had showed that Japanese cotton textiles had two advantages over Egyptian products. The first was that they were made of ' eheap Indian cotton, which was not allowed to be imported into Egypt, and so was not used by local firms, and, secondly, the depreciation of the yen.

Essential Act. In the Minister's view it was essential to take measures to protect local industries since, despite the commercial agreement on the most-favoured-nation principles, the trade balance was always in favour of Japan. Since the agreement calls for three months' notice of termination by either side, and since it is feared that speculators would take advantage of the delay to import huge quantities of Japanese goods, the Egyptian repudiation draws attention to a stipulation that the quantity of goods to be imported into Egypt meanwhile is not to exceed the corresponding three months of the last three years. The denunciation, though not entirley unexpected, caused a profound stir in the business world here, as trade with Japan has developed considerably during the last few years and a larg*e number of shippers specialise in the importation of Japanese goods. They are naturally asking what effect this step is going to have on the Egyptian market selling Japanese products. Important contracts drawn up some months ago goods to be delivered have not yet been executed, and importers thus risk heavy losses. Some merchants state that the denunciation and the threatened imposition of an exchange dumping duty are most regrettable, especially as, Japan has increased her purchases of Egyptian cotton, which has resulted in the Egyptian-Japanese trade balance for the first five months of 1935 showing an unfavourable balance of 8,000,000 yen for Japan as compared with the favourable balance of 15,000,000 yen for the corresponding- period last year. As soon as the news of the denunciation of the treaty became known Japanese textiles went up from 5 to 10 per cent. Moreover, a number of merchants refused to sell until they could make sure of the exact effects of the Government's step. The general impression in Cairo, however, is that the Government's decision will undoubtedly increase the local textile trade by at least 20 per cent.