TRADE IN PACIFIC.

New Zealand Herald, Volume LXVIII, Issue 21067, 29 December 1931, Page 9

TRADE IN PACIFIC.

NEW ZEALAND'S POSITION

QUESTION OF TARIFFS. PAPER BY MR. DOWNIE STEWART. A paper on "New Zealand's Pacific Trade and Tariff," by the Hon. W. Downie Stewart, Minister of Customs, was presented at the fourth general session of the Institute of Pacific Relations, held at Hangchow, China, two months ago, and has now been published in pamphlet form hv the New Council of the Institute. Interesting under any circumstances, it is particularly so at the present moment, when the. Minister is engaged in conference with the Canadian Minister of Customs in an endeavour to arrange a trade agreement. "The causes which prevent our Pacific trade from bulking more largely in our commerce are fairly obvious," says Mr. Stewart. "In the case of many Pacific countries tlie population is small, as compared with Great Britain, and consequently their power to buy or sell is proportionately restricted. But/ even where the population is large, as in America and Canada, high tariffs are a barrier to trade. In the case of our nearest neighbour, Australia, both these factors exist —a comparatively small population and a high tariff." Limiting Factors. Under the heading of "Limiting Factors" he refers to the common argument that Australia and New Zealand, having so much in common, closer cooperation should exist as a. matter of course. He quotes Mr. J. L. Schmitt, New Zealand Trade Commissioner to Australia, as having said in Auckland that the fact that both countries were 98 per cent. British in population, that they both produced similar exportable commodities, that both were competing in the same market and both had financial institutions in common were reasons why the countries should work in closer friendship.

"But," says Mr. Stewart, "a little reflection will show that these reasons often operate in exactly the opposite direction. In fact, the more dissimilar two countries are in their products and manufactures, the easier it is to exchange, goods and develop commerce. It is the similarity of our production in so many lines that makes trade difficult. Nor is distance in itself any obstacle to trade having regard to the shipping lines that now encircle the world. If England wants our primary products and we want her manufactured goods, trade is easy. So long as Canada wanted our butter and cheese and we wanted her motor-cars, trade ran smoothly." Natural Advantages Nullified.

Mr. Stewart contends that difficulties of exchange between countries producing similar exportable'commodities is a factor, even if with regard to one particular commodity one country may have advantages over the other, either permanently or in certain seasons of drought or flood. "In such a case, if there were no tariff barriers, the country with the advantage would normally export to its neighbour. For example, both Australia and New are well suited to produce wheat and flour, but Australia can do so more cheaply than IX ew Zealand. Hence - she can undersell the New Zealand farmer in the absence of customs duties. Contrariwise, as regards butter, hops, rope, twine, potatoes and othei items, New Zealand has the advantage, and could undersell the Australian producer. " But as each country in varying degrees is well suited to produce these goods and for reasons of national policy desires to produce them, tariff barrieis spring up and all the arguments in favour of goodwill and mutual co-operation will not prevail against them. "No mere theoretical demonstration that one country can produce the article more cheaply than the other will prevail if in fact the other country can also produce the same article although under slightly less favourable conditions and the interests concerned are politically strong enough to secure a protected market. Each party must take cognisance of the fact that the two countries are not making contact for the first time —that they are not writing trade policy on a clean slate—and that, rightly or wrongly, the same industry has grown up in both countries and vested interests have come into existence." From Bevenue to Protection. No Pacific country, proceeds the Minister, grants New Zealand an open door and to no Pacific country does New Zealand grant free entry. It was important to remember that in New Zealand and most other Pacific countries tariffs were originally created not in pursuance of any clearly-defined national policy of protection, but for revenue purposes. When these communities were first settled there was no other substantial source of revenue. Rut it was natural that under the shelter of a reyenue tariff industries of various sorts came into existence. "As they became more numerous and powerful they became of sufficient importance to raise the question of protection as a definite political issue and in this haphazard way our tariff has grown to its present dimensions.

Coming to Canada in particular,_ Mr. Stewart says:—"Neiv Zealand s interchange. of trade with Canada is to a great degree complementary—each country selling to the other the goods she is best equipped to raise or to manufacture. Thus the imports from Canada are chiefly motor vehicles arid parts, wrapping and newsprint, rubber boots and shoes, electrical machinery and equipment, fencing wire, tinned salmon, soft timber, and soft, goods, mainly in the shape of pure silk hosiery and a broad range of highly manufactured goods. " Exports to Canada are mainly agricultural and pastoral—first and foremost being butter—(until the recent increase in duty), then sausage casings, wool, skins and meats as well as seeds, phormium tenax and kauri gum. Factor of Transportation.

" The largest factor in Canada's shipments to New Zealand has been transportation of any kind. The largest factor in building up New Zealand's exports to Canada lias been transportation also, but of a. specialised kind, in other words, refrigerated space for perishable foodstuffs." The writer here devotes some space to a historical review of shipping facilities between the countries, discusses at some length the points in dispute which ended in tariff retaliation measures, and concludes:—"lt. remains to be seen whether this attack and counter-attack will pave the way to a satisfactory agreement. But the prospect seems poor as the forces behind the new duties at each end are strong and vital. But unless the effect of any new agreement is to restore the status quo, trade between the two countries must be seriously affected. Approximately half our imports from Canada in recent years have been in motor vehicles and our export of butter constituted the bulk of our trade with Canada. For in 1929 it was worth £2,707,669 out of a total export to Canada of £3,353,975.''