DRASTIC TARIFF

New Zealand Herald, Volume LXXIII, Issue 22433, 1 June 1936, Page 12

DRASTIC TARIFF

AUSTRALIAN CHANGES IMPORTATION LICENCES " POOR CUSTOMER " COUNTRIES [from our own correspondent] SYDNEY, May 27 The Commonwealth Government, in the new tariff schedule announced in the House of Representatives last Friday, seems to be making the boldest experiment which has yet featured Australian fiscal policy. Tariff soorcts are generally well-kept, but usually a straw comes to show which way the wind is going to blow. Not ft wisp indicated that last Friday the Government was going to startle tlio world with drastic and far-reaching tariff changes. By prohibiting the importation of a number of goods except by licence and by the imposition of higher duties, the Ministry hopes to stimulate trade with Great Britain and other countries which are good customers of Australia. The adoption of such a policy follows the investigations abroad last year of Sir Henry Gullett, Minister in charge of trade treaties. Repercussions are expected in .foreign countries. Japan will be affected by higher duties on textiles, and the United. States by the determination of the Ministry to establish the motor chassis manufacturing industry in Australia. Altogether the total volume of the trade diversion will probably bo more than £6,000,000. British textile and motor-car industries will benefit immensely. All will be at the expense of the Australian consumer.

Eighty-three Classes of Goods By prohibiting the importation, except by special licence, of 83 classes of foreign goods, the Federal Ministry's tariff proposals aim at diverting £2/290,000 worth of Australia's import trade to Australian and British manufacturers. Under this system, licences will be granted freely for imports from all countries with which Australia has a favourable trade balance, or from countries v/hose purchases from Australia satisfy the Ministry. Motor vehicle chassis and piece goods of artificial silk are the most important goods whose importation is prohibited except by licence, and on which the tariff has been increased. It is apparent that the United States and Japan are the countries which will suffer most. All goods of British origin, apart from motor chassis, will be exempted from the licensing proposals, and motor chassis from the United Kingdom will be exempted from the restrictions.

Motor Manufacturing Australian manufacturers are expected to benefit by increased output to the amount of about £845,000, while United Kingdom manufacturers should benefit by £1,310,000 ; and nations whoso trade balance is favourablo to Australia by £135,000. The manufacture of motor chassis in Australia will bo subsidised from funds raised by a special duty of .7d per pound on all chassis imported. The restriction of the importation of motor-car chassis will mean, ultimately, a diversion to Australia of motor manufacturing worth £4,000,000. The new schedule will permit free entry of unassembled British car chassis, except for the special duty of .7d per pound to subsidise Australian manufacture. The rates for Canadian chassis are higher than the British rates, but less than half the foreign rates. The new tariff schedule provides:—A general increase in duty on imported tobacco and tobacco products; substitution of specific duties for ad valorem duties on artificial silk and cotton piece goods to give British goods substantial preference; increase in duty on foreign lubricating oil; increase of duty on unsawn Oregon logs; and the substitution of specific duties for ad valorem duties on motor-car chassis. Artificial Silk Qoods

The tariff on artificial silk piece goods will be lid a square yard (British preferential tariff); 8d (intermediate tariff); and 9d (general tariff), with primage duty on foreign imports only. Under a by-law lower rates will be applied to most artificial silk ordered before March 15. 1936, and entered by November 30 Primage duty has been removed from various British goods and decreased on the corresponding foreign goods. Importations of United States and Canadian car chassis will bo restricted to under 50,000 chassis a year. There will be no restriction of Japanese rayon. Japan, being a good customer country, will bo granted permits for entry into Australia' of any shipment of these goods, rayon having been placed in. tho licensed list to shut out American rayon. By the licensing system, car chassis will bo restricted to the number admitted in tho year ended April 30. 1936, and typewriters to 75 per cent of the number. Licences for all other goods on the prohibited list will be refused.

The object is to refuse tho admission of any of these goods from the United States and from non-buyers of Australian goods. Restrictions of motor chassis imports from the United States and Canada will bo based on numbers and not on values. The effect will bo to give Britain, in addition to the 13,000 chassis already being imported annually, the benefit of all expansion in the Australian motor market until local chassis manufacturing is established.

Blow to United States The United States will lose almost its entire Australian trade in refrigeration plant, fashion goods, toilet preparations, machinery, boots and E.hoes, paper, and other manufactured products. Former purchases from the United States of refrigerators will be diverted to Australia, toilet preparations to France, machinery to Britain, and boots and shoes to Australia and Czechoslovakia. In an explanation of the measure, Sir Henry Gullett, Minister directing trade treaties, said Australia's dependence upon the market of the United Kingdom had increased in the four years sinco the Ottawa Agreement. At the moment there was no prospect of recapturing Australia's old position for primary products in foreign markets. Unless Australia was to come to a national standstill, primary production must be increased, and the only way it could be increased was by selling more of tho rural output to the United Kingdom. Circumstance compelled Australia reluctantly to follow the policy adopted by a large number of countries, and divert a certain amount of import trade from countries which were indifferent purchasers of Australian exports. Opposition Viewpoint The Leader of the Federal Opposition. Mr. Curtin, expressed tho opposite view in denouncing tho changes. He said the Government should have dealt with the restriction of imports as a whßle and not discriminated against particular countries, and that tho proposals left too much to the discretion of tho Minister of Customs. Representatives, in Australia of British industrialists expressed pleasure at the prospect of obtaining a larger measure of Australia's oversoa purchases. Firms dealing in foreign products affected by the new duties were amazed at the sweeping changes made, particularly those which will affect countries like Japan, which buy more in Australia than they sell here.