AMERICAN TRADE

New Zealand Herald, Volume LXXIII, Issue 22401, 23 April 1936, Page 18

AMERICAN TRADE

ACTION BY AUSTRALIA MEETING ADVERSE BALAN-CE PROPOSALS FOR RESTRICTIONS [from otto own correspondent] SYDNEY. April 18 Important developments are expected in trade between Australia and the United States as a result of decisions of a sub-committee appointed by the Federal Cabinet to report on methods of correcting the Commonwealth's unfavourable balance. The sub-committee has established a basis on which imports from the United States will be restricted. Officers of the Commerco and Customs Departments are working out a system of quotas and high duties for consideration of the sub-com-mitteo. Strict secrecy is being kept about the proposed methods of correcting the adverse trade balance, because they involve wide tariff amendments, and no details will be known until Parliament is informed at the end of the month. The sub-committee is meeting in Canberra to complete recommendations for the Cabinet. So urgently is the rectification of the adverse balance regarded by the Cabinet that some action will be taken soon after 1 arliament meets, at the end of the month. The Principal Imports The sub-committee will report on the quantity and value of goods imported which compete with similar goods manufactured in Australia and Britain, the classes of imports which may be regarded as luxury items, and also on those imported commodities which are essential to Australian industry. The sub-committee has also considered the possible effect of action against the' United States on employment in Australia. The principal imports from the United States include petrol, lubricating oils, machinery, motor-car chassis and parts, tobacco, undressed timber, films, drugs, chemicals and printing machinery. Since 1923-24 the _trade balance has favoured the United States by more than £2OO 000 000. For the five years between 1 J2o-~6 and -■ Australia's adverse trade balance with the United States reached,an average of about £25,000,000 a year. Horn 1931-32 to 1934-35 it reached an average of £7,250,000, and for the ten years ended 1934-35, the average was £18,000,000 a year. ' For the first seven months of the current financial year the from the United States were £7,800,000 and the exports £3,200,000. Latest estimates show that the adverse trance for the full year will be about £10,000,000, in spite of the fact that the United States has bought more Australian wool, owing to a America. The Government fears that the present trend is toward the predepression figures. Largest Import Items Motor-cars, petrol and oils, and unmanufactured tobacco are the largest items in Australia's irnporte from America. Cars represent £2,000,000 a vear oil and petrol £1,360,000, and tobacco £1,250,000. The difficulty about any action tending to curb the importation of American cars is that it would interfere with the chassis-assembling and bodv-building industries in Australia. Purchases from Australia by the United States are principally hides, skins and wool, tallow, concentrates and sausage casings. In correcting the adverse balance, the Government will take every precaution to safeguard Australian employment now provided by American trading. Ine gravest problem is to strike out chassis imports without endangering employment in Australian industries. Action may be gradual to enable Britain s replacement of American cars to develop without dislocation of local industries. Oil and petrol can be replaced by the ample competitive supply from British sources. The film industry may not be affected, since, except by a drastic quota, it would hot be vulnerable in the tariff field. Tobacco may present a delicate problem. Penalty duties may cause a serious upset in a trade which gives not only vast local employment, hut also creates a market for the growing industry in Australian tobacco — used chiefly for mixture. The Government will also take account of the valuable contribution which tobacco makes to excise revenue. Government's Viewpoint The appointment of the Cabinet subcommittee followed a statement in the House of Representatives by the Minister in charge of trade treaties, Sir Henry Gullet, who said the adverse balance was a menace to Australia's economic position. He expressed the hope that the United States Government would recognise that Australia was compelled to take action by her economic and financial position. The Government's decision had been reached only after repeated efforts during the last two years to induce the United States to enter into trade treaty negotiations had met with continned refusals. The one note of warning uttered in discussions on the Government's probablo action was that of the eminent Melbourne economist, Professor D. B. Copland, who said no action should he taken to disturb the good relations of the two great nations by tariff and trade controversies