The Dominion. THURSDAY, JULY 6, 1944. EXPORTS, IMPORTS AND PRICES

Dominion, Volume 37, Issue 239, 6 July 1944, Page 4

The Dominion. THURSDAY, JULY 6, 1944. EXPORTS, IMPORTS AND PRICES

It has already been stated that the Australian and New Zealand Governments had accepted in principle a proposal to sell their surplus supplies of meat and dairy produce to Great Britain until June, 1948 This evidently was the basis of the decisions reached by the members of the National Party, in caucus, approving of an agreement “covering a reasonable period of time,” but laying particular stress on. the need for establishing an equilibrium between import and export price levels. It apparently was assumed by the National Party caucus that the negotiations which have been going on in London practically ever since Mr. Nash went there from Washington early in the year were concerned with these proposed contracts, but there seems. to be. a widely held opinion that they may have also been concerned with adjustments of a retrospective order, involving the payment to this Dominion of a very substantial sum. In the initial negotiations between the New Zealand and the British Governments the question of price adjustments was considered, and it was agreed that “prices and other terms of purchase should be considered only for the ensuing season’s exports.” The strong impression gained from a study of the official reports is that the New Zealand authorities obtained an opening to have prices, reviewed at least annually, and were in a position to press for a revision if prices of ■goods imported from Great Britain showed any marked increase. The Prime Minister, on at least one occasion, contended that if., despite increases in prices in the United Kingdom, payments to New Zealand remained on the basis of the prices included in the various agreements under negotiation, a position of considerable difficulty, would arise and might seriously affect the financial and economic position of New Zealand.” That, to a certain extent, is exactly what has happened, but it has not been the growth of a clay. Ihe trend has spread over a lengthy period, and the Government seems to have been either very lethargic about the matter or averse to reopening the question with the British authorities. Whether the present negotiations concern only future contracts, or whether, as later events seem likely to show., they also cover the price movements of the last few years it certainly is. important that machinery should be provided for the equitable adjustment of prices. Ihe year-to-year basis of purchase has sii tually disappeared, making it the more essential that adjusting provisions on an equitable basis should be included in any long-term contract. The primary producer has had a very bitter experience of his price returns being stabilized while his costs were free to move lapidly upward, and he does not want any repetition of that process. The difficulty that has been created can be attributed to the Government’s failure, deliberate or otherwise, to maintain its original position. This was clearly stated in one of its first communications to the British authorities as follows:

Prices to be fixed on a yearly basis but adjustable witbin this period if the index of export prices in the United Kingdom rises by 10 per cent, or more. This is important to New Zealand since this country .will depend on sterling funds to purchase imports which possibly may increase rapidly in price.

That position was abandoned for some reason and in the following year the Minister of Finance told the farmers in conference that '‘they had to send their goods to the United Kingdom and there was no argument that they could not ask for more.” If British price movements indicated the’trend which the Ministry had itself regarded as probable, threatening, as the Prime Minister had predicted, the financial and’economic position of this country, they could have reasonably asked for adjustments. The result of the failure to do this is that today tlie overseas resources of this Dominion have changed, very little while those of other Dominions have increased rapidly. They have reduced their overseas indebtedness while New Zealand has had. to Convert small maturing issues in order to protect London funds. The National Party caucus did not overstate, the case when it. characterized the position as '‘the results of mishandling of the sale of our produce overseas.” ■