THINKING AHEAD

Te Awamutu Courier, Volume 81, Issue 7273, 6 November 1950, Page 5

THINKING AHEAD

NEW ZEALAND’S RELATIONSHIP WITH GREAT BRITAIN DEPENDENT ON TWO THINGS (By a Special Correspondent concerned with British and Dominion Affairs.) Relationship's between Britain and New Zealand are customarily so equable that they are taken for granted. It is almost too simple for politicians in either country, when referring to the other, to win a round of applause by trotting out those wellknown platitudes about New Zealanders calling Britain “Home,” and about British people finding New Zealand more British than Britain. Like mast platitudes, neither of these statements will stand up to very close examination and, like most things that are taken for granted for too long, there is a danger that frictions and irritations may develop even in the relationship between the Mother Country and the most British of her Dominions.

The point at w’hich some of these irritations and frictions may create difficulties may well be clo.ser than many people suspect; but whether imminent or not, it would perhaps be well to give them some consideration before that point is reached. It is always easy to be wise after the event but, to amend Sir Norman Angell’s dictum, it is better to be wise before it. Basis of Relationship The relationships between Britain and New’ Zealand depend chiefly upon two things: firstly, common race, language, history and tradition and, secondly upon economic interdependence. The first-named are unquestionably the most important, but they are not all-sufficient. The British Government discovered this, to take an extreme case, when it quarrelled with its American colonies. It is unnecessary to labour the strength of the.se traditional ties. They have endured and, indeed, grown stronger throughout New Zealand’s development from an almost forgotten and unwanted colony to a self-gov-erning, independent nation. What frictions develop from them are those common to all family relationships. It is in the second category that trouble is most likely to occur. The economic interdependence of Britain and New’ Zealand is not, unfortunately, evenly balanced. New Zealand buys roughly 53 per cent, of her total imports from Britain, but New Zealand’s total exports to Britain represent only a little over five per cent, of this country’s enormous intake. British exports are distributed all over the world, but nearly threequarters of all that New’ Zealand sells is sold to Britain. This lack of balance in distribution is, of course, inevitable in the relationship between any large manufacturing and exporting country and a small (in terms of population) agricultural and exporting country. But it implies certain things, and not all of them are to New Zealand’s advantage.

Bargaining Positions It implies that Britain is in a good deal stronger bargaining position vis-a-vis New Zealand (except in times of war), than is New Zealand vis-a-vis Britain. It also implies that in times of common danger considerations of sentiment will influence the trade relationships between the two countries. What is not so implicit is that these may not always survive in times of peace. It is a catchery that it is unwise to mix sentiment and business. But it is difficult not to do so when the business is betw’een peoples who are members of one family group, who fight in each other’s wars, and who are interdependent for their common protection. The danger arises when one or other of the dealers decides that the time for strict business has arrived, and the other still assumes that it will be given preferential treatment. There are some grounds for believing that in their trade dealing Britain and New Zealand find themselves in this position to-day. The people of New Zealand were rationed in their use of their own butter and meat during the war, and for .several years after the war, in order to step up their exports to Britain. At the same time, influenced by very generous human emotions—though it snould be recognised that not all the emotions behind food parcels wrere generous—they sent vast quantities of private gifts of food to their relatives and friends in Britain. Until comparatively recently it is fair to say that the great majority of them still believed that there was a food shortage in Britain. What they did not realise was that these shortages were disappearing and that those that remained were imposed by official policy and not by insufficiency. To-day they are suddenly realising that Britain is not only well supplied with food, but that she is in a position to bargain about how much she buys, where she buvs it from and what she pays for it. They may also suspect that the need for the bulk despatch of food parcels to Britain had disappeared before many of them realised it. At this stage they are informed that the negotiators whom they sent to London to arrange the prices at which Britain vrould buy their butter, cheese and meat for the next 12 months have returned home, for the first time since the war, with no increases to distribute. They may not have been informed, but may have been left to infer, that in the case of butter and cheese, at least, .some sections of British opinion consider they are being paid too much already. They may also not have been told, though again they may have been left to infer, that there is a good deal more butter and cheese in the world than the" had suspected. Is There Hard Bargaining In these circumstances, it will be unusual if there is not a tendency in ■New Zealand to claim that Britain has applied the w’ell-known rules of hard bargaining to them without sufficient and adequate warning. This is a dangerous frame of mind and one which is likely to be exacerbated by the knowledge that, while Britain is refusing to pay more for New Zealand’s exports, the goods she is selling to New Zealand are still rising in price and have, indeed, risen considerably more, proportionately, than has the price of New Zealand exports to Britain.

This, of course, is only one side of the picture. The British side is that

New Zealand has received increased prices for her products every year since the end of the war; that she is given .guaranteed markets by Britain, at least until 1955; that the British taxpayer is already paying over £383,COO,OOO a year in food subsidies, a substantial proportion of which goes into the pockets of the overseas producers; that if New Zealand did not realise the facts of the world food situation, it was because she did not take enough trouble to find them out and finally, that it is in the common economic interests of all to do something to reduce prices. There is a great deal to be said for all these arguments. The danger is either that it will not be said, or that it will be said in such a way that it will disturb rather than improve the situation. In trade dealing.?, as i|i so many other things, it is not only necessary for justice to be done, but to show that it has been done. A Period of Trade Dickering It would, of course, be foolish and irresponsible to suggest that the tried and proven relationships between Britain and New Zealand cannot survive a period of trade dickering. It is not, however, irresponsible to suggest that it w/ald be to the benefit of both countries to take a number of these matters out of the realm of speculation and rumour and examine them in the light of day. In Britain, the policy pursued by the Ministry of Food towards the public is one of masterly impassivity. It is extremely reticent about quantities, prices or reserves and still more reticent about the official arguments used by the British in their bargaining. In New Zealand the official policy is little different, though, there more information is vouchsafed than is the case in Whitehall. It would be useful and salutory if both governments would agree to summarise their trade dealings since the end of the war and explain certain facts to their respective publics. One of the most important, from the New Zealand point of view, is why she is being paid pre-devalua-tion prices for her exports and forced to buy British goods at post-devalua-tion prices. One of the most important, from the British point of view, is to demonstrate that New Zealand is not—as many New Zealanders suspect—being paid less than foreigners for produce of comparable value. The Danger of Import Quotas Another important matter, from the British point of view, is to reassure New Zealand that if, as now seems probable, Britain is able to enjoy the benefits of a buyers’ market, she will not arbitrarily rearrange her overseas buying, as she did with the Canadians, and leave New Zealand confronted by the danger of import quotas. New Zealand, as part of the sterling area, has not the Canadians’ dollar problems in dealing with Britain but, on the other hand, she has not the alternatives the American market offers to Canada.

These are only some of the points of difference which may emerge at any moment in the relationships between New Zealand and Britain. Unfortunately, there are others, though considerations of space make it necessary to postpone dealing with them more fully until later in this series. To summarise them briefly, however, there is the inevitable lack of compatibility between an anti-Socialisjt administration in New Zealand and a Socialist administration in Britain; the inadequacy of the official exchanges of opinion between the two countries; the inevitable extent to which New Zealand must pass under American protection and influence because of geography and economic circumstances; and the advisability, to put it no higher, of New Zealand doing something to rearrange her markets so that so many of her valuable eggs are not all in one basket. •None of these problems is insoluble; some of them may even disappear, but it is as well to recognise that they exist and to be prepared for them. 1955 a Testing Year

The testing year—if it comes no sooner—will be 1955 when all the current bulk purchase agreements between Britain and New Zealand expire. By that time, if no war intervenes, New Zealand farmers may have to face the fact that Britain will not renew the.se agreements on the present terms—that they may not be able to obtain either the prices or the guaranteed markets they are enjoying now. In the meantime they will also have to face the probability that, if world surpluses of dairy products continue to accumulate, they may have to take price reductions without the prospect of being able to find any considerable alternative market. The prospects for meat are better than for dairy produce, but even they cannot be considered immutable. Wool, alone among New Zealand’s major exports, is at present in an as.sured position on a sellers’ market—but even here a potential dispute exists in the failure of the United Kingdom and the wool exporting Dominions to agree upon a suitable arrangement to replace the joint wool disposals organisation set up during the war.