WOOL PROBLEM

Press, Volume LXXXII, Issue 24896, 8 June 1946, Page 6

WOOL PROBLEM

IMPORTS TO UNITED

STATES

EXPANSION OF WORLD TRADE Reviewing preparations for international meetings, where “traomg & s neighbours and friends” would.be discussed, the united States Minister to New Zealand (the Hon- Avra M. WarScaid, in a lunch addrpsa *9 the »rbury Chamber of Commerce yesy, that the many problems to be solved were exemplified nowhere more Clearly, perhaps, than m the case of wool, a commodity of universal im«Utea Oth In a commentary on the American wool position and efforts being made to reconcile the production, consumption, and import difficulties ip it, he said that over a long period the United States had been one of the world’s largest importers of wool- It had also beep one of the world’s largest producers of WOOL In 1939, It produced 428,000,0001 b and imported 243,000,0001 b. For comparative purposes United States imports in 1939 wore equivalent to 80 per pept, of New Zealand's entire production m tfie 193940 season. Of the 243,000,QQ01b of wool imported in 1939, 145,000.0091 b were the so-called carpet wools which, under the Tariff Act of 1930, were duty free. They were bound qn the free list by the trade agreement made with Argentina. The remainder of the 1939 imports were apparel wools which, under the 1930 tariff, were dutiable at rates varying from 22 to 37 cents, per lb. according to Kind apd condition. Trade 3fi r ?ements negotiated between X£Hl and 1944 reduced tariffs on wools not finer than 44’s to rates varying from 11 to 20 cents per lb, according to kind a*i.d condition. Thus the initial steps in the lowering of barriers to United States wool imports had already been taken. Under the principle of ponrdiserimination between nations,-these reductions in wool tariffs were extended to imports from all nations, including New Zealand and other nations not parties to the agreements. He also emphasised that substantial wool imports had been effected throughout the tariff period and had found a ready market after paying duty, “The war introduced new problems in the wool trade,” said Mr Warren. “Under war-time disruptions of normal uses and channels of trade there ac*i cumulated a substantial surplus of wools, mostly in Empire countries. The United Kingdom, Australia, £lew land, and the Union of South Africa, after conferences in London a year ago, formed the Inter-Governmeptal Joint Wool Organisation for the twofold purpose of protecting prices to producers in Empire countries and of disposing of the accumulated surplus of Empire wool.” It was to the advantage of woolgrowers in the United States to have wool prices stabilised in the major producing countries abroad- Par-» ticularly was this true in the light of events which occurred within the United States during the war.

Duty-paid Imports Cheaper In the United States early in the war contracts for woollen goods for the armed services provided a premium for the use of domestic wool. At that time the danger was that Aus? tralia and New Zealand might he cut off as a source of supply, and it was considered wise to stimulate domestic wool production. Prices of domestic wool, as a consequence of these prem? ium payments, rose above the dutypaid import prices of foreign wool. Ceiling prices on domestic wool were established in 1942, after this spread between the price of domestic and duty-paid foreign wool had developed. In the United States sheep numbers had been reduced 25 per cent, in the last four years. That reduction had resulted from higher production costs, difficulties in obtaining labour, and the fact that many sheep raisers had found prices of sorqe other farm products to be at more remunerative levels. To alleviate the situation confronting growers, the Commodity Credit Corporation, a United States Government agency, had been purchasing domestic wool at ceiling prices since April, 1943. However, foreign wool was being sold duty-paid in the United States at prices materially be? low those at which the corporation was buving from domestic nroducers.

‘Accordingly, our mills have turned largely to imported wool and. although our consumption in recent years has been the largest in history, the Commodity Credit Corporation has accumulated stocks in excess of one year’s domestic production,” said Mr Warren. “Since November the corporation has been selling wool at a loss as a means of moving it into consumption in competition with imported wool. There is general agreement that the United States Government must protect the incomes of woolgrowers on a level comparable with that afforded nroducei-6 of other agricultural products.” Major Proposals Basically, the major proposals for dealing with the wool problem fell into two groups: (1) those under which the prices of foreign wool in the United States might be raised, either through higher tariffs, import fees, or import quotas; and (2) those under which the selling prices of domestic wool would be lowered sufficiently to make domestic wool competitive with duty-paid imported wool. The Administration rejected the first group of proposals on the ground that they were inconsistent with efforts to expand trade through the elimination of just sych barriers. Alternatively, on March 11, 1946. President Truman made proposals for special wool legislation, which should provide that wool prices in the United States should be put on the same parity basis as prices for other farm products; that the Government should support incomes to wool oroducers either through purchase and loan programmes, or through income payments which should compensate for reductions in prices below parity levels: that the Government be authorised to continue to sell wool at prices competitive with imoorted foreign wool; a research and develonmental programme be provided for the purpose of improving the quality of domestic woo] and wool marketing practices. President Truman had said: “In addition to such legislative programme, it would seem desirable to have executive agencies undertake the development of an international wool agreement in collaboration with the various interested foreign governments. to provide for co-ordinated action and more unified supervision of world won] market and nrice policies from the standpoints nf producers, consumers. and international trade. I am asking executive tn determine the willingness of fo’-eirm governments tn participate in such UpHe»-+a’ri n rT j n the meantime, it is hnned that consul tations can he with f nreic*n woo l agencies which will provide for a mu tual understanding n* nhieotives and activities in selling polices.”