NEW ZEALAND AND GERMANY

Timaru Herald, Volume CXLIII, Issue 20851, 6 October 1937, Page 8

NEW ZEALAND AND GERMANY

TRADE AGREEMENT SIGNED

MARKET FOR BUTTER AND FRUIT

BRITAIN APPROVES

By Telegraph—Press Association

WELLINGTON. October 5

When the House resumed this evening a series of customs resolutions and a Bill was introduced ratifying the trade agreement and payments agreement between this Dominion and Germany. It was explained by the Hon. W. Nash that the primary object of the agreement which was signed on September 30 by Mr Savage and Dr Hellenthal, consul for Germany in New Zealand, was to gain admission into Germany for those New Zealand products for which there was a market in Germany, particularly butter and fruit, but which during recent years had been precluded from entry into that country owing to the restrictions imposed on the use of foreign exchange. Mr Nash outlined the figures of trade between New Zealand and Germany over the last eight years and for the first six months of this year. Germany, said Mr Nash, was a large importer of b itter, the figure in 1936 reaching more than 75.000 tons, imported principally from Denmark, Sweden and Netherlands. She was also a large consumer of imported apples, more than 131.000 tons being imported in 1936. Italj’ France and the United States being the main suppliers. “Under the payments agreement (which is ancillary to the trade agreement). Germany undertakes to make v rilable for the purchase of New Zealand products the full amount of foreign exchange accruing to Germany from exports to New Zealand,” continued Mr Nash. “In this respect the agreement is along the lines of that concluded last year between Canada and Germany. An arrangement also

has been made under which Germany undertakes to allocate a considerable portion of such credits for the purchase of New Zealand butter and apples, the amount so allocated to be based on the percentage of credits accruing to Germany from exports to New Zealand d ring the preceding year. In respect of butter purchases shall amount to 25 per cent, of such credits up to £400,000 sterling pl’i- 50 per cent, of the credits in excess of that figure. In respect of apples th-' allocations shall represent 5 per cent, of the credits up to £400,000 sterling plus 20 per cent, of credits in excess of that figure with a maximum purchase of apples from New Zealand i" any one year of £60.000 sterling.”

"An important provision of the payments agreement is a requirement that the existing procedure of aski accounts through which the export trade has been carried out with that country shall be immediately terminated. This means that in future trade between New Zealand and Germany will be conducted through the ordinary commercial channels. The payments agreement comes into force on January 1, 1938, and is binding for two years, but unless notice of termination has previously been given it is to continue in force thereafter subject to three months notice of withdrawal by either party.”

"The trade agreement provides for the extension by each party of the most-favoured-nation treatment to the goods of the other. Special provision is made for safeguards against dumping by Germany where New Zealand industries or the preferences accorded to British countries are adversely affected. Provision also is made for the granting by New Zealand of concessions in customs duty to certain classes of German goods, the list of which is as follows. —

Kalsomine and distempers in powder form free 35 25 The figures in the first column represent the British preferential tariff, in the second the general tariff, and in the third the tariff on German goods. German goods of the classes mentioned will be exempt from the surtax

of 9-40ths of the duty payable in respect of goods liable to the general tariff.

“In the special consideration, of items in respect of which concessions could be made, care has been taken,’ said Mr Nash, “to avoid a conflict with New Zealand industries. The preferential margins also have been maintained in accordance with the Ottawa agreement. Any increase in of German goods by New Zealand will immediately be reflected in increased purchases of New Zealand products by Germany, and there is good reason to anticipate that the agreement will operate to the benefit of this Dominion.” Mr Nash added that he had secured the sanction of the British authorities for the agreement, and they were anxious to see other agreements of that type concluded. Under the agreement Germany would buy New Zealand butter at a price on a parity with that ruling for our butter on the London market at the time of purchase, and Germany was to go on the market during the three months of the year when New Zealand supplies were in major quantity there. The position was not quite the same as regards fruit, but the German Government would issue certificates to their dealers for this commodity. The Rt. Hon. J. G. Coates (Nat, Kaipara) asked when the agreement would come into effect. Mr Nash: On Tuesday of next week. Mr Coates: It has been reported to me that after the agreement becomes effective, German invoices in reichsmarks will be converted into pounds sterling at the rate of 20.46 to the £1 sterling.

Mr Nash: The hon. gentleman apparently knows more about the agreement than I do. Mr Coates: A number of businessmen have asked me if reichsmarks will be valued at 20.46 to the £1 sterling for purposes of buying duty. If, for instance, 12.40 is the basis upon which the duty is levied, British exporters will be definitely at a disadvantage compared with importers from Germany on the pasis of 20.46. Mr Coates went on to say that there was nothing to prevent other foreign nations being included on the basis arranged, and he asked if the British 20 per cent preference provided u..der the Ottawa agreement would be effected.

Mr Nash stated that it was hardly possible to answer Mr Coates's question. There was nothing in the agreemen regarding the value of the reichsmark. They had agreed to look into the correct value of the reichsmark as compared with the New Zealand pound. There was no commitment whatever. He was atonished at Mr Coates's suggestion. Nothing would interfere with the 20 per cent preference to British goods.

Mr C. A. Wilkinson (Nat., Egmont) asked if Mr Nash had tried to get a trade agreement with France. There was a scarcity of meat in France, he added. Mr W. A. Bodkin (Nat., Central Otago) contended that the agreement was definitely in favour of Germany, and that Germany would buy our butter when it was at its cheapest rate on the London market. Mr W. J. Polson (Nat., Stratford) expressed a fear that the agreement with Germany might tend to misplace our butter markets in England.

Mr Nash stated that he had visited France and discussed the possibilities of a trade agreement with that country. We had not sold a pound ot butter to Germany for the last three years. He reiterated that the proposed agreement provided that 25 per cent of the first £400,000 should be spent by Germany on butter, and dealt at length with the Opposition's contention that the* agreement made for a diversion of trade and not an expansion of it. World trade had increased by 20 per cent and the Government was aiming to expand the volume of trade with Germany and New Zealand. Mr S. G. Holland (Nat., Christchurch North), said the concern of the Opposition was to see that agreement did not have any ill-effect on Britain.

The Hon. R. Semple: An assurance to that effect has been given a dozen times.

Mr Coates contended that the agreement would mean the purchase of German goods at the expense of the British manufacturer. As to the purchase of butter, the agreement was all to the good. It might or might not mean increased production.

Mr Nash stated that trade with Britain would not be affected in any way. The British authorities had been consulted concerning the agreement and had given it their full approval. Mr W. J. Polson said the Opposition was always seeking to expand trade, but not at the expense of Great Britain. If New Zealand bought German goods she was not giving her own manufacturers an opportunity of expanding their output. The proposed agreement required a much closer scrutiny than it could be given that evening, having been sprung upon them without warning.

Mr H. Atmore (Ind., Nelson), contended that under the present ridiculous monetary system the Minister of Finance was entitled to sell our produce to any purchaser offering. Mr W. P. Endean (Nat., Parnell), asked if German or British shipping would carry the trade between Germany and New Zealand. Mr A. S. Richards (Lab., Roskill) said the Opposition would not dare to vote against the agreement because it meant an extended market for our dairy products. It was the best agreement that ever had been made in this connection.

Mr Coates retorted that in all his experience in the House he could not remember a Customs resolution beingvoted against. The Government was eifeitled to its resolutions, but when the Bill ‘itself came before the House it would be a different matter.

At 11.15 p.m. the Customs resolution making provision for alterations in the duties necessitated by the agreement was carried, and the trade agreement (New Zealand and Germany) Ratification Bill was introduced by GovernorGeneral’s message and read a first time. The Minister of Finance announced that the second reading of the Bill would take place at 2.20 p.m. tomorrow. The House rose at 11.30 p.m.

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