IS OTTAWA A BENEFIT?

Evening Post, Volume CXV, Issue 31, 7 February 1933, Page 5

IS OTTAWA A BENEFIT?

AN ADVERSE VIEW?

LOSS ABROAD SEEN

'A report prepared for the American Foreign Policy Association by Maxwell S." Stewart holds it doubtful whether: agreements reached by the Imperial Economic Conference at Ottawa last summer will ultimately benefit the British Empire, and says a, final valuation of the Conference will depend/on. the effects it may have on the world economic conference in April, reports the "New York Times." Mr. Stewart declared that in many instances the benefits supposed to be derived from the Imperial agreements were largely illusory, and that even after preference had been granted to Great Britain by the Dominions the existing tariffs in many eases remained so high that the British producer was still unable to compete profitably in the Dominion markets. "The most that can be hoped for," said Mr. Stewart, "is a transfer of Dominion purchases from foreign countries, such as the United States, to Great Britain, and the diversion of a ■ certain ■ amount of British purchases from Europe and America to Empire countries. . ■ "The opponents of the pacts Insist, moreover,-that the total trade will not be increased, for when the' reductions in the British preference rate are set against the higher duties imposed by both the Dominions and the United ■ Kingdom, the mass of tariff barriers is greater than it had been previously." As a result of the Signer barriers imposed by the Empire, it was pointed out, competition will be intensified in world markets, and will react principally against British and Dominion exports because costs of production within the Empire will tend to be pegged at a relatively higher level. ' DECLINE ABROAD. ' A "The reduction of the British purchases in foreign ' countries must inevitably lead to a, similar decline in the amount of British products sold abroad," Mr. Stewart continued. ■ , "Further trade losses may result, moreover, if, as a result of Ottawa, foreign nations no longer accord to Great -Britain • most-favoured-nation treatment. " The Empire countries can scarcely -expect other nations to continue to, grant them unconditional most-favbur-ed-nation treatment, while they 'are developing, a system of Imperial preferences." The report described as meaningless the provision in the British agreement that duties on copper, wheat, zinc, and ■lead could be removed "if at any time ■the Empire producers are unable or unwilling to offer these commodities at prices not exceeding the world prices." "With respect to this provision, which was intended as a protection against higher costs in Great Britain, the report said:— \ "If. these products only brought world prices in the British market no jbenefit wouia be obtained by producers from Ottawa agreements, for it is inconceivable that the imposition of jfcariff barriers in England would raise prices on the world market, except ,where the market, as in the case of popper, may be controlled. "Similarly, the. provision that Dominion duties will be adjusted 'to give [United Kingdom producers full opportunity of reasonable competition on the basis of. relative cost of produc-tion-is dangerous,.in principle and unworkable in practice. ."If logically carried out, the principle of 'equalising costs' wbuld destroy the entire basis of international firade." As to the direct effects of. the conference agreements on the United States ithe report declared:— , '.'"While it is generally admitted that ,tho;gains in inter-Imperial trade will in many cases be at the expense of American exports, attempts to divert trade py artificially imposed barriers are frequently not as effective as expected. NEW METHODS NEEDED. "In many instances British industry frvould have to change production methods to _ meet Canadian requirements, and in other cases it might not jbe "difficult for the American producers to adjust prices sufficiently to continue to undersell British competitors." It was considered doubtfuj, in view <bf these limitations, if the results of Ottawa would aid in the solution of problems to come before the world conference next year. The report presented the observation 'of some authorities that the Ottawa agreements represented a theory of , trade development which lay midway between the extreme of economic, nationalism and that of international economic co-operation. "Inviewof the fact that the nation has in most instances proved to.be too small to be developed as a.1 self-con-tained unit;" said Mr. Stewart, "it is suggested that groups of nations linked either by political or regional ties be combined to form such a unit. "This conception is, of course, fundamentally opposed to the traditional theories of. free trade and the interdependence of nations. As worked out at' Ottawa, it seems to have increased rather than reduced national tariffs. "Whether it will be possible at the forthcoming world conference" Jo reconcile, the development of regionalism and the realities of. international interdependence is, of course," unknown. "It would seem clear, however, that the final answer to this question depends on whether these regional or political associations can effect a reduction an existing trade barriers, and bring about an increase in the volume of !*vorld economic activities."