TRADE POLICY

Otago Daily Times, Issue 26043, 5 January 1946, Page 7

TRADE POLICY

BRITAIN’S ATTEMPT TO ASSURE SUPPLIES A REGIONAL SURVEY From a Correspondent of The Times The urgent task of closing or, at least, of reducing the large gap in the British balance of merchandise trade has to be performed in conditions very different from those before the war, which has brought great changes to the areas with which Britain’s trade in peace-time was carried on—the British Commonwealth, the sterling block, the dollar countries, and. above all, Europe. These changes must influence considerably the directions in which British trade can flow in the coming critical period, The following table shows the way in which that trade was distributed in a normal pre-war year. British Foreign, Trade, 1937

The following are the countries covered in the various categories:— North-western and Western Europe. —Holland, Belgium, France and their dependencies, Norway, Sweden, Denmark, Switzerland. . Southern Europe— Portugal. Spain, Italy and their dependencies, Greece, Turkey. Central Europe.— Germany, Austria. South-eastern Europe. Hungary, Czechoslovakia, Jugoslavia, Bulgaria, Rumania. Eastern and North-eastern EuropeSoviet Union, Poland, Estonia, Latvia, Lithuania, Finland. North and Cbntral America.—United States, Philippines. Cuba, Haiti. Mexico, Central American States, Columbia. Panama. Middle East.—Egypt, Iraq, Iran. Far East.—China, .Japan. Eastern Turn Suggested Eastern and South-eastern Europe, then, accounted for some 5 per cent, of total British exports and for 9 per cent, of total imports. Much time will elaose before the economic and political relations of these countries with the outside world are sufficiently stabilised to allow forecasts of the extent and character of their future trade with Britain. Recent trade agreements with Soviet Russia suggest a marked eastwards orientation. Germany was Britain’s best customer in Europe’ before the war. Now German national income hens catastrophically declined and Britain has at present access to only one part of Germany. Textile yarns and manufacture, coal, non-ferrous metals and metal scrap, raw wool, furs and skins accounted for almost 60 per cent, of British exports to Germany. German shipments to Britain consisted mainly of manufactured goods, such as machinery, chemicals and drugs, apparel, paper and cardboard, iron and steel products, pottery and .glass, scientific and electrical equipment, silk yarns and piece goods, and toys. Now these may partly be received as reparation and partly be replaced by home production. Other countries now entitled to reparation payments received in 1937 some 45 per cent, of German exports. Almost half the German exports, which were comparable in total amount with those of Britain, went to countries which will now have to obtain a large part of their purchases from industrial Powers other than Germany. It is conceivable that new outlets for British exports may considerably compensate for losses in British-German trade. European Exchange British trade with Europe other than Germany was chiefly with France, Denmark, Sweden, Belgium, and Netherlands. Coal accounted in 1937 for £16,000,000, or over 20 per cent, of British exports to these countries, in spite of the fact that Belgium, France, and Holland reduced their purchases of British coal from 20,000,000 tons in 1929 to 10,000,000 tons in 1937 (and Italy from 7,000,000 tons to 2,000,000). Exports of textile yarns and manufacture accounted for 13 per cent, of British exports to these countries, the other main items being machinery and iron and steel manufactures, though France, Belgium, Spain, and Italy had sharply curtailed their purchases of these commodities in Britain. Trade with Belgium and France consisted largely in an exchange of specialised industrial goods, while Denmark concentrated on the export of three commodities—butter, eggs, and baconrepresenting almost 90 per cent, of her total exports to this country. The Netherlands, too. exported mainly agricultural products, especially butter, eggs, bacon, milk, vegetables, and plants, and Sweden sent above all timber and timber products- Under conditions of full employment and expanding activity there would clearly be room for extensive mutual trade relations with European countries. Some 42 per cent, of British trade in 1937 was conducted with countries belonging to the Empire and Commonwealth. The commodities listed in Table II cover over two-thirds of total British imports from all sources, and show that the share of Empire countries in British purchases was greatest

in tea and raw wool, and that it considerably increased between 1929 and 1937 in sugar, metal ores, and scrap metal. United Kingdom Chief Imports Percentage

It was on the basis of the distribution of imports before the war that the system of bulk purchase and longterm contracts was applied so successfully during the war. and a continuation of this practice could contribute to a stabilisation of agricultural prices. New Zealand sent mainly butter, cheese, mutton and wool; Australia exported, in addition, lead, wheat and sugar; Canada shipped chiefly nonferrous metals, wheat, timber, bacon and ham: South Africa sent fruit, maize, sugar and wool; and India tea, flax, jute, leather, cotton and wheat. British exports to Empire countries before the war consisted largely of textile yarns and manufactures, machinery, iron and steel manufactures, road vehicles, and. to a lesser degree, of electrical goods and chemicals. Especially affected were the exports of cotton goods to India, which declined from £30.000.000 to £5.000,000, and of iron and steel manufactures to India and Australia, which fell from £16.000,000 to £6.000.000. Canada’s Position Canada bought not only a large part of hei requirements of food and raw materials from the United States, but also 80 to 90 per cent, of her imports of machinery, motor cars and printed matter, and over half of her imports of manufactured iron and steel. At the same time the United States provided a market for more than twothirds of Canadian exports of cattle, asbestos, copper ore. abrasives and fertilisers; she took over 80 per cent, of Canada's largest export item—news-print—one-half of Canadian timber exports, which ranked third, and over one-third- of Canadian nickel ore exports. In spite of the importance of the American market for certain commodities, however, the United States absorbed only one-third of the exports of Canada, while providing over 60 per cent, of her imports. On the other hand. Canada bought only 18 per cent, of her imports from Britain, although she found an outlet here for 40 per cent, of exports. Altogether, the dominions and British India covered not more than one-third of their imports by purchases from Britain, and their trade with Britain amounted to only 40 per cent, of their transactions with all countries; the respective figures for the colonies and protectorates are even lower, 26.5 per cent, and 30.5 per cent, respectively. The 11 bilateral agreements signed among the Commonwealth countries at Ottawa contained no provisions for a balance of trade between the contracting parties. Empire and Foreign Countries (£ million) 1929 1931 1932 1933 1936 1937 Imports from British countries .. .. 359 247 248 249 332 405 Exports to British countries .. .. 348 187 177 174 228 264 Import sur- , plus .... 11 60 71 75 104 141 Imports from foreign countries .. .. 862 614 454 426 515 623 Exports to foreign countries .. .. 492 268 239 24!) 274 332 Import surplus .. .. 370 346 215 183 241 291 The increase during the year 1933-7 in British trade with the Empire resulted mainly from growing imports to Britain; British exports to Empire countries in 1937 amounted to only 74 per cent, of the pre-Ottawa peak of 1929, and had declined little less than exports to foreign countries. The surplus of imports in trade with Empire countries increased continuously in spite of the Ottawa agreements and in 1937 the import surplus was 13 times as big as in' 1929. Britain and Canada remained the best customers of the United States, absorbing about one-third of her exports. Between 1929 and 1937, that is, between the two peak years of business activity before and after the Ottawa agreements, the share of Britain, the dominions, and British India in United States exports declined only from 39 per cent, to 37 per cent., while the share of other prominent customers of American goods—Argentina, Italy, China, Soviet Russia, Spain—fell from 18 per cent, to 13 per cent. Britain purchased in the United States some 70 per cent, of her imported tobacco, 42 per cent, of raw cotton. 48 per cent, of “ other ” machinery, and 38 per cent, of fruit and vegetables. Readjusting the Balance

If Britain were now forced to shift some of these purchases to other countries she could do it partly by replacing Germany as a customer for tobacco grown in Greece, Turkey, Dutch Indies, and Brazil, partly by further expanding production in Empire countries. Raw cotton could be obtained in greater amounts from ir.dia and Egypt which in 1937 exported 460,000 tpns to Japan compared with 237,000 delivered to Britain. An alternative solution, entirely dependent upon the course of United States policy, would be an increase of American purchases in Britain above the small share of 7 per cent, in total American imports. If Britain does not succeed in balancing her merchandise trade with individual countries or groups of countries io the degree necessitated by the

shrinkage of her invisible exports, she will be short not only of dollars but of sterling and other currencies as well. The’effect of a continuous rise in the foreign indebtedness of Britain would in the end be much more detrimental to world trade than reciprocal trade agreements helping to maintain the purchasing power of the world's largest buyer. Some 70 per cent, of British exports went to 14 countries each with a yearly import of British manufactures amounting to more than £10,000.000 and 12 of these countries were either situated in the western half of Europe or were members of the Empire. Non-European countries outside the Empire absorbed only 20 per cent, of British exports. It is plain in what directions the opportunity for ample and regular trade arrangements could be sought. -

(in £ millions) 2 Vj 0 a a e X w hO North-western and Western Europe 185 100 85 Southern Europe .. .. 25 17 8 Central Europe 37 22 15 South-eastern Europe 17 6 Eastern and North-eastern Europe 69 20 49 Total Europe .. • • 333 165 168 North (excluding Canada) and Central America 118 40 73 South America (excluding Argentina) 29 15 14 Argentina 58 20 38 Middle East 26 14 12 Far East 18 10 8 Total Foreign Oversea 249 99 150 British Empire and Commonwealth (excluding Canada) 281 224 57 Canada 84 28 56 Total British .. •• 365 252 113 Grand total 953 521 432

Total from Imports in British £ million. Countries. 1929 1937 1929 1937 Meat 78 87 p.c. 36 p.c. 40 Wood and timber r>i 85 14 16 Grain 51 82 43 47 Blitter, cheese, eggs, “ Other " metals and manufactures (excluding iron and steel) 32 00 80 52 Wool raw 37 51 84 80 Cotton raw .. 37 49 19 2H Petroleum oil 34 ' 48 6 6 Fruit and vegetables 42 39 43 51 Ores and scrap metal 17 32 29 38 Tea 28 30 92 90 “ Other " machinery (excluding electrical and agricultural) .. 12 22 a 5 Sugar 13 20 54 70 Tobacco 18 18 11 17