CANADA-NEW ZEALAND TRADE

Wanganui Chronicle, Volume 74, Issue 192, 15 August 1931, Page 12

CANADA-NEW ZEALAND TRADE

BOTH SIDES OF THE CONTROVERSY

MR. FORBES RELEASES CORRESPONDENCE

NEW ZEALAND MADE SEVERAL APPROACHES.

WELLINGTON. A :vr 15. t The Prime Minister (the Kight Hon i J. Jr. Forbes') this day released for publication the telegrams which have passe i between the Government of New Beaiand and the Government of Canada. Mr. Forbes asserts that the Ganadi Br Government has been unwilling to home to grips with the subject and cla ims that the New Zealand Government have ‘’intimated to the Canadian Gov •mment on not less than seven distinct •evasions their desire to enter into dire Irt conversations.” but no worth while •pporeunifies have been afforded by th • Government at Ottawa. MB. FORBES’ TELEGRAM. Telegram of 9th .Tune, 1931, from the j Prime Minister, Wellington, to the, Prime Minister, Ottawa: — . Your telegram May 29. ’ 1. 1 regret very much that the Ne"w *

Zealand Government have been unable to defer longer the action indicated in mv telegram May 26 last and adumbrated. in numerous former communications. 2. 1 note your statement that you Bre unable to regard the summary contained in my telegram of the May 26 •$ making adequate recognition of the endeavours of the Canadian Government to come to a satisfactory agreement and that since assuming office you have nought every opportunity to confer with the New Zealand Government. Will you allow me to say in reply that >nv such efforts have not been apparent to the New Zealand Government, who retain the impression that the Canadian Government having in effect prohibited the importation of butter from New Zealand have been in no haste to enter into definite negotiations. His Majesty’s Government in New Zealand have not failed to note that two occasions on which they were f.»r these conversations, namely at Ottawa and at London, were allowed to pass without any attempt on the part of the Canadian Government to give detailed and effective consideration to the matter. Further your telegram of May 14 indicated no prospect of imir-

•riiate negotiations and indeed it would appear that the Canadian Government, notwithstanding the New Zealand* Government’s anxiety to dispose of the! {question at an early date, contemplated I the possibility of deferring conversations until the meeting of the proposed Economic Conference which at. its earliest would have rendered impossible the implementing of any consequent agreement until the meeting of the New Eealand Parliament in June, 1932. 3. 1 note with pleasure the indica- j tion which may, I think, be inferred, from the second paragraph of your tele- 1 gram, that the Canadian Government do j not now regard themselves as precluded : from making a concession on New Zea-, land butter. Neither at Ottawa nor at London, nor indeed at any time subse-j T m.-nn anv ilplinitl- indi- ’

quently, was I given any definite indi ration” that such a concession could be made and though my telegram of the 13th March last specifically notified the Canadian Government that the action now taken could be postponed only if the Canadian Government found such a concession to be possible, your reply of 14th May gave no indication of anything beyond a “continuance’’ of preference. The New Zealand Government will, of course, be happy to learn whenever the Canadian Government consider the time appropriate what concessions they propose to make. 4. His Majesty’s Government in New Zealand cannot agree that an abnormal trade situation was created by the im- 1 portations of New Zealand butter into Canada in 1929-1930, or that the butter was. as vou suggest, being rushed into Canada to take a [vantage of the prevailing low rate of one cent. The figures for that year indicate merely the progressive annual increase since New Zealand butter was placed upon an equal footing with Australian butter in 1925. Even, however, if the situation could be regarded as abnormal the Canadian Government will no doubt have noted: (a) that the importations in no way amounted to dumping; New Zealand butter entered into normal competition with other (including domestic) butters on the Canadian market after paving all freight and incidental charges from New Zealand and without any subsidies or bounties obtained or granted in New Zealand; (b* that notwithstanding the importations of New Zealand butter in 1929-1930 Canada still enjoyed a balance of trade over New Zealand. a. I note your contention that the Canadian action in respect uf New Zealand butter cannot properly be regarded as penal. You must all‘*w His Majesty s Government in New Zealand to retain their belief that the imposition of a prohibitive tariff duty on New Zealand butter which was not imposed gene rally on all batter importations and which has had the effect of terminating the importation of New Zealand butter, wnile stimulating the importation of butter from another source, may rightly be regarded as a penal measure. It may well be that Canada, as you state, i* to-dav granting to New Zealand its British preferential rate on all pro ducts. Where, however, the British preferential rate is not the lowest rate, •nd is in itself prohibitive, it is a matter of little moment what higher rates mar be fixed. As you have already been •dvised the New Zealand Government ten attach importance to the preferential treatment of their products only if •nd so far as this preferential treatment ia capable of leading to actual trade, and as a further indication of the attitude of the Canadian Government towards New Zealand trade I unJarstand that in the new Canadian Mriff an increase of four cents a lb has

been imposed on New Zealand mpat. i 6. The New’ Zealand Government’s r action has not been taken as you assume on any special grounds of reciprocity, r but as I have already explained on the • ground that the New Zealand Governi ment are not disposed and indeed can--1 not afford to make remissions of taxa--1 tion without corresponding advantages. f It is their policy to encourage the im--7 porta tion of goods from those countries ■ which themselves are prepared to pur- - chase New Zealand products. The New - Zealand Government have, however, at--1 tempted to retain a ’true reciprocity i with Canada by providing for a remission of customs duties on Canadian , goods estimated to be at least equal to . I the Canadian remission of customs > 1 duties on New Zealand goods. : 7. I have noted with interest your ‘ comments with reference to Canadian ■ purchases of wool and I trust with you

>|that the outlook in respect of this com- • . modify is promising. I have observed, . I however, that even on your suggested . potential importation of twenty-four ■ million lbs. of wool and even assuming , i a price of 9d a lb. (which is consider- , . ably above the present market price) , , the value of that trade would be less ■ ; ’han £1,000.000 per annum. This would ..scarcely seem to confirm your state- . . ment that direct Canadian purchases of ( New Zealand wool will, in the near . future, equal New Zealand’s former butter trade with Canada, which as you are aware reached nearly three times t . that value in 1929-1930. 8. I appreciate the difficult position ( • created between the two Dominions. It - ; is the view of His Majesty’s Govern- j • ment in New Zealand that this diffi- ( culty is due solely to the action of the ( Canadian Government in taking drastic ( . steps against the New Zealand butter ( , trade before any possibility of negotia- 4 [ tions was afforded to the New Zealand Government and to the Canadian Government’s reluctance to enter into effec- , five conversations. The difficulty is . . one which the New Zealand Government . . for their part are entirely willing to ( attempt to remove as soon as the Can- ’ adian Government find it possible to

undertake definite negotiations to that end. and as already advised His Majestv’s Government in New Zealand ■ would welcome an early visit by a Can- ’ adian Minister for that purpose. 9. Finally, may I point out that the ; session of the New Zealand Parliament which open** at the end of this month will certainly be adjourned by November next and probably at an earlier j date and that therefore the implement- , ing of anv agreement not completed in j time for action at this session would : necessarily be delayed until the session I which should normally commence in • June, 1932. I 10. I have no objection to the publication of this telegram and I propose ■to publish here should circumstances ' render it desirable at a later date.

MR. BENNETT’S REPLY. Telegram of 28th July, 1931, from the ■ Prime Ottawa, to the Prime 1 Minister, Wellington: — (1) 1 four telegram of the 29th June received. W e regret that it was not found possible to admit Canadian goods under contract at rate of duty obtaining before your latest tariff increase, ‘ but appreciate concession as regards 1 goods in transit. (2) With reference to your concluding enquiry as to prospects of early negotiations with a view to completing satisfactory trade arrangements, we may repeat that our Government is prepared now as at all times since ’ assuming office to undertake negotia ‘ tioas to this end, but we must frankly ’ answer your question by stating further that prospects do not appear promising 1 if vour Government maintains the atti- • tude taken in recent telegrams and ' recent policy. . 1 (3) We should iike to state concisely • our views on the chief points you have ! raised in recent telegrams, and partieu--1 larly as to strong criticism of Canadian : policy vou have voiced. (4) In your telegram of June 9 you [ referred to impression of your Government that the Canadian Government has been dilatory in entering upon ■ negotiations for a comprehensive agreement. I am sure you will agree thnt the fundamental difficulty not only during the past months but for some years past has been the absence of a direct agreement between New Zea1 land and Canada based upon full con- j sideration, of market opportunities and f producers’ interests in both countries. In 1925 the Canadian Government, in i addition to continuing British preferential rates, extended to New Zealand ’ without seeking any special advant tages in return, the concessions granti Australia under the trade agrec- ■ ment with that Dominion. It was i obvious that concessions of this un- > ilateral character, dependent on fortunes of agreement with another Dof minion, did not afford a permanent basis of trade, and that in its own interests New Zealand might have been expected to seek a distinct agreement. i Aside from a suggestion in 1928 which was not followed up by New Zealand. • this does not appear to have been done . until the sudden expansion of butter exports complicated the situation. Tli p , present Canadian Government on assuming office in August last year was faced with announcement of your intention to imnose the former general tariff rates on Canadian motor-cars in • consequence of notice given in Apr! I of termination of extension of Aus- : tralian Trade Agreement to New Zea- ■ land. Whilst indicating obvious in- ■ adequate one cent rate on butter could i not be revived, wo did everything pos- ; sible to provide for a personal dis-

cussion and negotiation of comprehensive direct agreement in which provision as to butter would find an appropriate place. Wo regret on your journey through Canada to London and in London our discussions did not yield definite results, but so far as this was due to any factor other than lack of adequate time we must decline to accept more than a reasonable share of that responsibility. We suggested that your delegation should return through Canada, as was done by the Australian Minister of Commerce, in which case a comprehensive agreement might have been reached in time for action by both our Parliaments this session, and regret you could not adopt that course. The telegrams which have been exchanged since have been an inadequate substitute for personal discussion. (5) Your further objection that Canada extended during the past year more favourable rates on butter to Australia than to New Zealand overlooks the essential factor that in Australia’s case these rates were part of a definite agreement, the extension of which to New Zealand terminated on October 12. In view of the fact that from October 1, 1925, to October 1, 1930, inclusive, total Canadian importation of butter from Australia to which a low tariff rate had been accorded in return for Australian concessions on Canadian goods amounted to only slightly more than five million pounds, whilst importation from New Zealand, which had made no agreement, and received concessions only indirectly, exceeded 96 million pounds, it is apparent that if anv Do-

minion has ground for complaint it is not New Zealand. (6) As to butter, it is essential to bear in mind that Canada is itself a dairy country, and a pioneer in Government assistance towards improvement in quality, in co-operative marketing and in development of overseas markets. The circumstances which led to change from an exporting surplus of 24 million pounds in the fiscal year 1926 to net importation of more than 40 million pounds in 1930, including lessening of dairy production and diversion to other forms than butter, were clearly abnormal and could not continue. Quite aside from tariff rates New Zealand could not reasonably have expected continuance of huge exports of this period. As a result of development during the past year Canada is again on export basis. It is our policy to foster this natural and -essential industry and we anticipate normally Canadian producers will supply the home market, but it is probabl« winter shortage will recur and in any case so far as imports are necessary it is our desire to give preference to supplies from reciprocating Dominions. Canadian preferential tariff rate of 4 cents which led to your cancelling of

preference on motor-cars was in many i ways less than New Zealand rate on Canadian butter. Present tariff accords New Zealand a preference of six , cents and we have already - indicated . willingness to consider the question t further as part of general agreement. The new trade agreement with Ausi traiia provides for 9 cents preference. J (7) Canadian Government is also , prepared tn consider extending prefer- , ence on other New Zealand products; t and has in fact made careful survey ! of fields. In any case, weTiave always been prepared to receive any specific . suggestion as to products on which . preference was specially desired. We s have hitherto continued to grant New Zealand our full British preferential tariff in spite of the fact that your

Government not only cancelled preference on motor-cars In consequence of ' withdrawal of butter preference, but has since in addition cancelled greater part of British preferential tariff act corded to other Canadian exports. (8) As to the basis of preferential relations, we take no exception to policy set forth in your telegram of May 26 of increasing duty on products which New Zealand can easily supply herself and of increasing duty to . meet revenue needs. We must, however, take exception to views in your telegram of June 9, that a true reciprocity would consist in cutting down . preferences or remissions of duty on I Canadian exports to New Zealand to - equal Canadian remissions on New ’ Zealand goods. We do not consider r any such meticulous balance of advan- ’ tages or any endeavour to insure that ] one Dominion will not export to another more than it imports would be , in true spirit of Imperial co-operation. , We feel confident you will adhere to ’ views expressed by the representatives , of both New Zealand and Canada at the Imperial Conference of 1930, that j subject to primary duty of considering interests of our own producers we should each seek to direct as much of our import trade as possible into Empire channels. (9) You will recall informing the Imperial Conference of steps which your Government have taken to divert part of its import trade from the United States to the British Empire. I am sure you will, therefore, regret I to learn that the .direct result of your j Government’s recent action has been to divert a large trade from Canada to the United States, much of which may be permanently lost. (I) It is, however, not our wish to spend further time in assessing responsibility for the unfortunate situation which has developed. Canada sets a high value on a close trading connection with New Zealand, both because of the value of the market for our producers and because of special friendliness which has always ma.’ked our relations. You are about to enter upon a general election; we assume it would not be appropriate or possible to enter upon negotiations at the present time. (II) We assume that you will give same publicity to this despatch vhich you have given to your own recent telegrams under reference. MB. BENNETT’S FURTHER TELEGRAM. Telegram of August 5, 1931, from the Prime Minister, Ottawa, to the Prime Minister, Wellington: “Press despatches state you have announcer receipt of my telegram of July 28, and are making a statement concerning it shortly. I assume you would therefore have no objection to its being made public here.” MR. FORBES’ REJOINDER. Telegram of August 12, 1931, from the Primo Minister, Wellington, to the Prime Minister. Ottawa: Your telegram July 2t. (1) I note your statement in paragraph 2 that the Canadian Government, are prepared now as at all times since assuming office to undertake negotia tions for a trade agreement with New Zealand and a similar statement in paragraph 4 that the Canadian Government have done everything possible to provide for a personal discussion and negotiation of a comprehensive di- ‘ rect agreement in a provision

as to butter would find an appropriate place. It it with extreme regret that I find myself unable to concur with this statement of the position. (2) During the course of telegraphic correspondence since April 12, 1930, timated to th eCanadian Government on timated to the Canadian Governent on not less than seven distinct occasions their desire to enter into direct conversations. The Canadia'n Governfnent for their part not only declined to postpone their drastic action against New Zealand butter until such time as negotiations could take place, but in point of fact before conversations were possible actually the prohibitive rate originally proposed, and during a period of sixteen months they have taken no definite steps to accede to our repeated requests for h conference to discuss in detail the questions at issue.

(3) Indeed on two occasions when New Zealand Ministers actually put themselves in personal touch with Canadian Ministers the results entirely failed to convince the New Zealand Government of any desire on the part of the Canadian Government to enter upon effective discussions. On the first occasion, on the day of my arrival at Ottawa (where I had been invited by the Canadian Government to discuss the matter) I was met with a heavy additional increase in the duty on New Zealand butter, while the Canadian Government were unable to enter into any detailed negotiations whatever; and on the second occasion, at London, an abortive exchange of views took place but no suggestion was communicated to me then or on any subsequent date that I should return to New Zealand via Canada for the purpose of participating in yet a third series of conversations.

(4) I am unable to agree that th fundamental difficulty has been the qb sence of a direct agreement betwee: New Zealand and Canada (though sue: an agreement was suggested by us i: 1928 and since April, 1930, the Nei Zealand Government have fruitless!; made every effort to enter into the ne gotiations necessary to arrive at suci an agreement). Notwithstanding th

fact that the balance of trade between the two Dominions was heavily against Now Zealand the New Zealand Government raised no objection to the arrangement existing prior to Canada’s termination of the extension to New Zealand, butter of the rates accorded to Australian butter, though it would seem plain that if either Dominion had ground for complaint owing to thp absence of such a trading agreement it was not Canada. Even now I must repeat that New Zealand continues to grant remissions on Canadian goods to a_ greater estimated value than Canadian remissions upon New Zealand goods and that Canadian, motor caron admission to New Zealand are stil] accorded a preference of at least 18 per cent ad valorem over foreign motor cars. (5) The New Zealand Government share your view that telegrams are ’in inadequate substitute for personal discussion. and with you thev appreciate the futility of spending further time in assessing the responsibility for the unfortunate situation that has developed, though they must be allowed retain the views they have already expressed in this connection. They not* 1 with regret however that the Canadian Government regard the forthcoming general election in New Zealand ns necessitating a further delay in the initiation of conversations. The New Zealand Government do not share this view and they must accordingly reiterate their continued willingness to receive a Canadian Minister at the earliest possible date and their desire to enter into negotiations with the least, possible delay. They hove however, no option but to await a notification from the Canadian Government as to when a definite date for the contemplated discussions can be fixed. (6) With reference to your telegram of the stb August I have no objection to your publishoing any of my communications to you—indeed I should ne grateful for your concurrence in the publication of the whole of our telegraphic correspondence on the subject. In any case I propose on the 15th August, to publish this telegram, your telegram of the 28th July and my telegram of the 9th June (which has not yet been published here).