THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JUNE 22, 1935 EMPIRE TRADE RELATIONS

New Zealand Herald, Volume LXXII, Issue 22142, 22 June 1935, Page 12

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, JUNE 22, 1935 EMPIRE TRADE RELATIONS

In speaking on the Dominions Office vote in the House of Commons, Mr. Thomas improved the occasion by making a general survey of Empire relations. As was natural in his position, (he Dominions Secretary diplomatically made the most of the favourable features and glossed over others that cannot be regarded with equanimity. It is sometimes wise, however, to acknowledge unsettling tendencies, so long as their disclosure is made the preliminary to an attempt to remove the causes. Mr. Thomas seized on the jubilee celebrations, and the presence thereat of all the Dominion leaders (save only Mr. de Valera), to exemplify "the family spirit and the ■sense of unity of the British Empire." Nor could relations be happier than in this aspect of Imperial associations. In their common allegiance to and affection for the King, the units of the Empire are unanimous. It is when they leave the jubilee celebrations for the trade conference chamber that differences begin to emerge. A harder complexion then spreads over Empire relations, the family spirit is lost, the sense of unity is overcome by the desire for individual advantage, the whole idea of the Commonwealth of Nations becomes obscured. It was just such a development that Lord Bledisloe had in mind when he likened the bond of Empire to a silver thread. "I ardently hope," he said, "that too great a strain will not be placed on this silver thread by too much of the huckstering spirit." The strain is already heavy and for the very reason Lord Bledisloe foresaw. The close bargaining at, the cohference table sets up the initial tension, which unfortunately tends to communicate itself among all those affected by the subjects of negotiation. Thus it has come about that while in politics the units of the Empire have achieved a remarkable accord, in economics they are at sixes and seven's. It need hardly be said that economic friction. if it be allowed to continue, leads on, regrettably but inevitably, to political division.

The disquieting feature is that, since Britain adopted a protectionist policy and joined the Ottawa agreements with it, too many points of friction are being uncovered. The principle of Ottawa was simple and in itself excellent—to increase trade within the Empire. Moreover, as Mr. Thomas' figures show, it has been justified by results. The trouble is that the principle has been expanded into such elaborate formulas, and worked out in such detail, that endless disputes have arisen, not only upon interpretations, but on the application by the Dominions and Britain herself of particular articles and provisos. The most notorious of these, and it is obviously the one referred to by Mr. Thomas when he speaks of Article X., is that stating the principle of what has been called the "compensatory" tariff. The complexity of the Ottawa agreements is illustrated by the fact that this article is numbered XI. in the Canadian and VIII. in the New Zealand agreement, while it is X in the Australian, which shows the party Mr. Thomas had in mind. As stated in the Australia pact, the article reads: The Commonwealth Government "undertakes that during the currency of this agreement the tariff shall be based on the principle that protective duties shall not exceed such a level as will give United Kingdom producers full opportunity of reasonable competition on the basis of the relative cost of economical and efficient production, provided that in the application of such principle special consideration may be given to the case of industries not fully established." Obviously such a provision contains many seeds of trouble and these have germinated freely, especially between Britain and Canada and Australia. That may be the worst, but it is only one, oE the disturbing complications arising out of the complexity of the Ottawa agreements.

Some simpler means of applying the excellent principle of Imperial trade preference and reciprocity must be devised, if troubled economics are to be prevented from colouring Empire politics. A method is required so well understood by the parties that it will be far less liable to create misunderstandings than the present conglomerate of articles, provisos, gentlemen's agreements, quotas, levies, "compensatory ' tariffs, bounties, subsidies and all the rest. The- responsibility for many of these expedients really rests with the British Government, which devised them in order to avoid the open imposition of food taxes. Now Britain seems prepared to show the way out of the maze by accepting the preferential tariff method. Mr. Baldwin opened the subject at Liverpool three months ago when he belittled the

quota policy, and said the tendency would be for the Government to turn away from it and rely on import duties. Since then Mr. Baldwin has become Prime Minister and it may be 'Supposed that he will be in a better position to impress his view, one which he has held since he unsuccessfully submitted it to the electorate J2 years ago. Support for that view is contained in Mr. Thomas' statement to the Commons, as published this morning, that his Government, instead of having to find heavy subsidies for British farmers, aimed at reaching an ''agreement enabling a tariff to be applied, with substantial preference to the Dominions." This important declaration was greeted with cheers from the Government benches and cries of "Three years too late." The interjection is a significant commentary on the compromises reached at Ottawa tin •ee years ago. The Dominions •should give tho new proposal as warm a welcome as did the Commons. A reciprocal, preferential tariff, formulated on agreed principles and admitting of graduation to express degrees of preference, would represent an instrument at once flexible and permanent that should serve the Ottawa principle far more smoothly than the present temporary arrangements.