WHEELS WITHIN WHEELS

Evening Post, Volume CXVI, Issue 102, 27 October 1933, Page 6

WHEELS WITHIN WHEELS

—■■;.. ■» A novel provision is included in the'Australian-New Zealand trade agreement. If, since March 31 last, there has been a substantial diversion of New Zealand's import trade from the United Kingdom to Australia the necessary steps will be taken under this part of the agreement to check such diversion. The New Zealand Minister of Customs describes this as a provision to safeguard United Kingdom trade; the Australian Minister of Customs has presented it to the Commonwealth as obviating exchange and dumping duty. Clearly the Commonwealth Minister would have to say something in explanation of an agreement which, .on the face of it, declares that certain of its articles may be applied to prevent Australia from deriving overmuch benefit. The whole business raises from exchange differences, and while we heartily approve the desire of Mr. Coates not to see United Kingdom ti^de penalised, we are not at all sure that the correction proposed is in the most desirable form. When Australian exchange was at 125 and New Zealand at 110 on London, Australia had a big selling advantage. Using approximate figures, £110 New Zealand money would buy £125 of Australian goods, but only £100 of English goods. There was £25 buying difference, unless this was absorbed in a higher price. To correct this New Zealand imposed an exchange dumping duty where this was considered necessary. This had the effect of partly counteracting the favourable exchange, but it also deprived New Zealand consumers of the benefit of oheap purchases in Australia. ' , When the New Zealand rate was raised to the Australian level the Australian selling advantage as against Britain remained the same— £25; But whereas formerly Britain's disadvantage arose partly from Dominion and partly from Commonwealth depreciation, now New Zealand became as great an offender as Australia. The buying difference was as great as formerly. There was equal need for assistance to Britain, but it would have looked rather Gilbertian to levy a dumping duty on Australian goods to offset our own depreciation. We had not done that previously. The duty had been according to the difference between our own pound and the Australian pound, with nothing for the 10 per cent, difference between the New Zealand and English pounds— though this was equally a barrier to trade. Now the dumping duty has been abandoned. The Federal Minister of Customs interprets this as a gain for Australia; Mr. Coates presents the 'understanding to apply a check (in place of the former definite duties) as evidence of the Dominion's care for the United Kingdom trade interests. Probably the difference in presentation is due to the Federal Minister's expectation that the agreement check will not be so definite and effective as the duty. Still the New Zealand Government' is interested in making it work. TJie Minister of Customs (Mr. Coates) who favours United Kingdom buying on general principles, is strongly supported by the Minister of Finance (Mr. Coates) who has surplus credits to dispose of in London—but not in Sydney or Melbourne. However the distribution of trade may work out through ihe substitution of a regulative check (in a form yet to be devised) for a definite duty, there seems to be one fact on Avhicli the consuming public may rely—they will not obtain a benefit from it. |