MARKED IMPROVEMENT

Otago Daily Times, Issue 27291, 18 January 1950, Page 5

MARKED IMPROVEMENT

European Trade With Dollar Areas . THIRD QUARTER OF LAST YEAR New Zealand Press Association—Reuter—Copyright Rec. 7.10 p.m.' GENEVA, Jan. 17. The United Nations Economic Commission for Europe today disclosed “ a marked and unexpected improvement ” in European trade with the dollar area immediately before devaluation. The commission’s bulletin for the third quarter of 1949 said that Europe’s trade deficit with the United States was smaller than at any time since the end of 1946. On September 18 sterling devaluation “ set in motion a chain of consequences which will take a long time to work out and cannot be foreseen,” the bulletin commented.

It added: “ The general picture emerging from the trade r figures of the third quarter may be summarised by saying that Europe's exports developed much more favourably than United States exports. The figures for 10 countries showed a halt in the decline of Europe's exports to the United States which had been going on during the first naif of the year. Some nations, including Britain, even increased their trans-Atlantic sales. Nearly all European countries reduced their imports from the United States during the quarter." The commission said that Europe’s trade deficit with America thus shrunk by about £121,000.000 from £357,000,000 in the second quarter to £236,000,000 in the third. The volume of Europe's overall exports remained virtually constant, while United States exports fell no less tnan 17 per cent, below the previous quarter. “The more favouraole development in European exports than in United States exports is obviously the result of Government efforts in overseas countries to curtail dollar expenditure,” the bulletin continued. “ Given the decline which has already occurred in the prices of foodstuffs and raw materials, as well as in manufactures in the United States market since early in 1948, and the prospect of some further decline during next year, it is possible that Europe’s terms of trade after devaluation will be no more unfavourable than they were two years

ago. Compared with Europe’s terms of trade immediately before devaluation, however, export prices will almost certainly have declined in relation to import prices. Exports must be increased still more if devaluation is to produce the intended effects on Europe’s balance of payments, and home supplies will be further reduced unless compensated by increased production.” The bulletin reported a 25 per cent, decrease in imports from the United States by overseas countries of the sterling area in the third quarter of 1949.

In a special article in its bulletin, the commission condemned high coal export prices, declaring that if they continued, importing countries might look for substitute tuels. The commission warned Europe that it was failing to “ make use of the one major raw material with which it is most adequately endowed. The commission also said that if trade between East and West Germany continued at its present restricted level the economic effects would be similar to those produced by the erection of a national boundary. The two areas Were trying to build up economic independence to replace their pre-war industrial and agricultural interdependence, and- the resulting greater dependence of Western Germany on foreign supplies would mean that she would be competing increasingly with foreign countries on a similar industrial structure.