WORLD FINANCE AND TRADE

Press, Volume LXXXII, Issue 24896, 8 June 1946, Page 4

WORLD FINANCE AND TRADE

PROBLEMS TO BE SOLVED ADDRESS BY U.S. MINISTER "That problems in international trade exist and must be solved if a lasting peace is to be made is generally recognised,” said the United States Minister to New Zealand (the Hon. Avra M. Wdrren) in an address to the Canterbury Chamber of Commerce yesterday. The highly important subject of BritishAmerican trade relations was such a problem, he said, before discussing some general aspects of overall American economic policy. The wheat, wool, and lamb of Canterbury were by-words in the agricultural history of New Zealand and world trade, said Mr Warren. They figured prominently in the recent war effort. But of equal importance in the war effort was the exhibition of adaptability to new demands shown by New Zealand agriculture. Vegetable products in type and volume, new to the country were produced and contributed immeasurably to the success of Allied arms in the P.acific. That demonstration of flexibility should be cause for considerable assurance that New Zealand would be able , to adjust itself to any changing conditions which might develop in post-war production and trade'relations.

The essence of American economic policy was expressed in Article VII of the Mutual Aid Agreement of February 23, 1942, with the United Kingdom and in similar agreements with other Allies in the war. In it, 4 they jointly recognised their common need for the post-war expansion of production and employment, and the exchange and consumption of goods. Following a carefully studied programme, developed progressively through the war years in consultation with its allies and the American legislative bodies and the people of the country, designed to achieve the aims of the declared eco-nomic-policy, the United States Government had acted at various world conferences. Momentous agreements between representatives of Great Britain and the United States covered the questions of financial assistance from the United States to the United Kingdom, the demobilisation of war-time trade and monetary restrictions, the settlement of lend lease, the disposal of surplus war property in the .United Kingdom owned by the United States, and long range commercial policies in the broad sense, embracing the fields of trade barriers and discriminations, policies in respect of commodities in world surplus, cartels, an international trade organisation and international

aspects of domestic measures to maintain employment. Final action on the agreement—"the key to our entire ; foreign economic policy,” as AssistantSecretary of State Clayton had said—would be of permanent interest to trading nations throughout the world since so much depended on that outcome with respect to moulding of the large pattern for future economic relations and developments. Tariff Barriers Progressive steps had been taken to l bring before an international conferi ence for discussion and implementa- ; tion the understanding on commercial ; policy subscribed to by the two Gov- ; ernments. Hundreds of tariff items

were being considered in the United States preparatory to the negotiations for the reduction of* trade barriers at the meeting of the 15 nations scheduled this. year. The United States’ part in the negotiations would be conducted under the authority of the 1934 Trade Agreements Act and amendments. This must be preceded by public notice and regular hearings before the interdepartmental Committee for Reciprocity Information under the act. Tariff concessions to be offered by the United States would be carefully considered from the point of view of the whole national interest, in the light of whatever might be developed at the hearings. The proposals on world trade and employment were designed to dovetail with and supplement the Bretton Woods Agreements. By the middle of March, 37 Governments had signed and accepted the International Bank for Reconstruction and Development agreement. The International Bank would soon begin operations to assist as was contemplated by its designers in the rehabilitation of the war torn countries of Europe, supplementing the immediate measures for relief being conducted by UNRRA. The monetary fund and the trade proposals provisions, when effected, would work hand in hand in regard to exchange controls. At one time or another in the last two decades al-

most every government had exercised some kind of control over the purchase and sale of foreign exchange. For some, like the United States, exchange control had been principally a war-time measure, and in any case would, in all probability, largely disappear as post-war conditions became more settled. But for other countries

exchange control had become, before the war, an important element of foreign economic policy which, in the absence of international agreements to the contrary, would probably be continued after the war. The control of payments to foreign countries was necessarily closely related to the control of foreign trade. Exchange Control

The International Monetary Fund Agreement took detailed account of exchange control problems. By providing funds for stabilisation purposes it reduced the need for exchange control. The fund agreement, therefore, provided for the elimination of exchange controls after a transitional period, except in specified circumstances. It also set up standards to ensure that when exchange controls did exist they should not be used to discriminate against any member country after a transitional period. With the fund agreement in existence it seemed unnecessary to incorporate elaborate exchange control provisions in the trade proposals. Yet, because of the great influence of exchange control policies on world trade, the subject, could not be entirely omitted from the proposals, and assurance was necessary that the principles of the International Monetary Fund would be adhered to so that the multilateral trading principles would not be nullified by national exchange control policies and practices. Therefore, the simple provision that members of the International Trade Organisation should abide by the exchange principles of equal treatment for all members of the organisation in the administration of such exchange controls as might exist was reaffirmed.

“By these simple provisions an important link is established between two international organisations in related but distinct fields,” sdid Mr Warren. “Such interlocking is a good demonstration of the several approaches necessary to the goal of an expanding, multilateral world economy. At the time the Bretton. Woods proposals were being discussed, spokesmen for the United States and other governments made it clear that the fund was not being proposed as a single, separate instrument that should alone solve world monetary problems. Now that the trade proposals have been made public the role of the fund can be seen in greater perspective, and the intimate relation between the two is perhaps most clearly demonstrated in the exchange control provisions of the trade proposals.” The exchange facilities to be afforded by the Bretton Woods agreements were, of course, international in scope.

The narrower, but most important, exchange relation between sterling and the dollar was susceptible to settlement at an earlier date. The AngloAmerican financial agreement provided for the restoration of the pre-war convertibility of sterling into dollars or gold or anv other currency for all sterling earned from trade and other current transactions. The loan to Britain of three and three-quarter billion dollars made this convertibility posr eible.

“I have brought to your attention certain highlights on the thought and action being devoted to the plans designed to enhance world security and welfare.” concluded Mr Warren. "A vast amount of adjustment in every country is entailed in nutting these plans into practice: some of the approaches to this adjustment in the United States have been outlined. You have your own snecfal problems to solve in meeting the changes which

face ua all in forwarding the common cause.” Mr Warren had been tactful not to mention Australia, New Zealand, and Russia, which were the only countries to date which had not ratified the Bretton Woods agreement, said Mr S. E. Mair, proposing a vote of thanks.