THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, MAY 25, 1939. TRADE WITH BRITAIN

New Zealand Herald, Volume LXXVI, Issue 23355, 25 May 1939, Page 10

THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, MAY 25, 1939. TRADE WITH BRITAIN

A hint that the British Government may shortly ask Australia to reduce exports of butter to the United Kingdom has been dropped by the Commonwealth Minister of Commerce, Mr. G. McLeay. Nothing by way of confirmation or denial has yet been issued in New Zealand. That offers no criterion, however, because producers have had re pea tj edly, since the advent of the Labour j Government,' to look overseas for j first advices on developments in their main market. Mr. Nash's policy seems to be to keep them in the dark. To quote a recent instance, their first intimation of the quota on mutton and lamb was given by an announcement in the House of Commons. It would be of great value to farmers to be informed now —between productive seasons —whether Britain contemplates applying restrictions to dairy imports as well as meat, but, to judge by past experience, any inquiry would be met in official circles by denial or evasion until the information was published in Britain or Australia. As matters stand at present, New Zealand's trade with Britain is still (or should be) governed by the provisions of the Ottawa agreement. So far as butter and other dairy produce are concerned, the agreement does not now debar Britain from imposing either a quota or a levy on imports. It does require, however, that any quota shall be applied universally —discrimination is thus excluded—and that any duty or levy shall be so devised as to preserve existing preferences for Empire produce over foreign. Empire produce is still admitted free by Britain, while foreign butter must pay a duty of ]os per cwt. and cheese 15 per cent ad valorem. Valuable preferences also apply to meat, apples, pears, eggs, preserved milk/and honey. Cracks have begun to appear in both the British and New Zealand sides of the Ottawa agreement in the last year or two. That has probably been unavoidable, because an instrument fabricated in 1932 cannot be expected to cover all the contingencies of 1939, especially when it has to do with a dynamic quantity like trade. Actually the pact was originally signed for five years and had run its full course by August 20, 1937. Since then it has remained in force by tacit consent, being subject to denunciation at six months' notice by either party. The present temporary arrangement is clearly and definitely unsatisfactory to a country like New Zealand, dependent so largely on export trade and transacting four-fifths of that trade with Britain. Such a huge business should be based on a longer tenure than six months' notice. What is urgently needed is a revision of the Ottawa agreement and its extension for a fixed and reasonably long period, restoring the good measure of trading stability and security negotiated by Mr. Coates in 1932. That was the main object of Mr. Nash's unsuccessful trade mission to London in 1936-37. No doubt he added to the difficulties by trying to persuade Britain to accept a system that amounted to bulk barter. On the British side, obstacles to agreement were several. Agricultural policy was in a state of flux; the Government still paid some respect to the principle of treating all the Dominions alike, eschewing bilateral pacts; and, above all, it wished to keep its hands free for the negotiation of the Anglo-American trade treaty, i Mr. Mackenzie King, with his freer j ideas on trade and his great political skill, was able to overcome all these obstacles, and to obtain for Canada a three years' extension of a revised Ottawa agreement. Mr. Nash was not as accommodating nor as successful.

It may be hoped he will try again on his present visit and enjoy better fortune. The obstacles of 1937 have all been removed; Mr. King has even established for him the precedent of a bilateral trade pact between Britain and a Dominion. It is unfortunate that Mr. Nash may have embarrassed his own negotiations by the effect on British exporters of his import restrictions, and by last year's revision of the tariff by which Britain was also affected, although in much smaller degree. The British Government can certainly maintain that these actions contravene New Zealand's undertaking to give the United Kingdom producer "full opportunity of reasonable competition." Mr. Nash can plead economic necessity —a patent lack of means—and also point to the mutton quota, which does not accord with Britain's undertaking to increase progressively the share of the Dominions in the British meat market. Should

i such a charge and rejoinder be i made, the exchange of dialectics should serve to convince both parties that the 1932 pact needs revision to meet the changed circumstances of 1939. All the Dominions have found it difficult, if not impossible, to satisfy British manufacturers on their interpretation of the clauses covering the degree of protection to be afforded local industries, and Canada has already disposed of/ a recurring problem by substituting a well defined procedure that ends ambiguity. Mr. Nash might well seek a similar solution from an embarrassing and ( badly drafted obligation. At the same time he should press for a new agreement governing New Zealand exports, an agreement providing for a more stable tenure in the British market, while preserving existing preferences,.