Evening Post. FRIDAY, JUNE 4, 1937. TRADE BASIS FOR PEACE

Evening Post, Volume CXXIII, Issue 131, 4 June 1937, Page 8

Evening Post. FRIDAY, JUNE 4, 1937. TRADE BASIS FOR PEACE

The Imperial Conference is considering (or has considered, for we do not know the exact stage reached in discussions) two methods of agproach to peace. One is a Pacific pact as suggested by Mr. Lyons which would be a regional understanding between the several Pacific nations, two of which are not in the League of Nations. This is the direct approach to pacification on a regional basis. The other approach is indirect, by way •of what is termedeconomic appeasement, through an Anglo-American trade treaty. Both forms of pacification are partial and lend themselves to extension. A Pacific pact could be supplemented by other regional agreements, and a trade treaty would prepare the way for other forms of co-operation and possibly other trade agreements. In Great Britain the trade treaty approach to peace appears to be regarded with more favour, as being within the sphere of present practical politics and also as .offering greater prospects of immediate and visible results. It is commended, especially, because its benefits would not be confined to the actual participants but would spread in an everwidening circle of trade improvement.

The difficulties lying in the way of both Pacific pact and Anglo-, American trade treaty are great," though not insurmountable. At this stage the trade treaty obstacles appear most formidable, but that. is mainly because the Imperial Con-, ference passed rapidly from general approval of the principle to contemplate the practical considerations/ With the Pacific pact all that has been, done is to say, in effect: "It would be splendid If it could be arranged." With the trade treaty consideration has gone a stage further by asking the question: "How can we arrange it?" This is where the first major difficulty is encountered. It was stated by "The Times" in a comment on the desire of the United States for a modification of the Ottawa Agreements. "It remains to be seen," said "The Times," "whether it is possible or desirable to consider the Empire as a unit for the purpose of talks.and to agree to mutual concessions which aim at the liberation of the flow of American trade with the Empire." In matters of trade it is, in fact, impossible to regard the Empire as aj unit. Such a possibility passed out of the scheme of practical politics when the Dominions and Britain made independent trade arrangements j and built up their own tariffs. But it is yet possible for. the Empire, which is not a trading unit, to agree upon a measure of unity for the purpose of an agreement with a foreign State. ~ According to the "Morning Yost (on June 1) the Imperial Conference -is considering two possibilities, first a grand-scale commercial understanding between the Empire and America, and secondly, a series of bilateral pacts between England, the Dominions, and the United States. "The outcome," the "Morning Post" said, "will probably be a comproimise constituting a series of bilateral pacts based on and interlocked by a common understanding and agreement on certain major principles." This seems to be the most practical and desirable course. Independent bilateral pacts would present a grave danger of the destruction of the existing trading unity of the Emrjire, based on the Ottawa Agreements, through unequal concessions for American trade favour. If, however, Britain and the Dominions first agreeamong themselves what they can respectively offer, they can proceed to negotiation with the United States without the fear of discovering afterwards that they have bought American trade, friendship at the cost of new intra-Empire trade rivalries. Even this method, nevertheless, abounds in practical difficulties. These may be illustrated by the practical problem which is reported to confront the New Zealand representatives at the Imperial Conference. A message on June 1 stated:

The Australian Associated Press Agency understands, in connection With the Anglo-American trade ' pact discussions, that New Zealand will not agree to any proposals if they threaten to reduce New Zealand sales to Britain while simultaneously increasing American sales to Britain. However, provided an agreement can be reached which is satisfactory to New Zealand it is understood that the New Zealand Prime Minister, Mr. M. J. Savage, unlike the Prime Ministers of the other Dominions, together with the Finance Minister (Mr. W. Mash) would. be ready to intimate New Zealand's attitude before they leave England.

This would seem to mean that New Zealand's representatives wish to retain all their outward trade with Britain. Trade with America must be supplementary, not in substitution for dealings with Britain. This is, of course, the ultimate aim of all meas-

ures to broaden the basis of trade. The argument, indeed the whole meaning, of economic appeasement is that it will increase world trade. But it may not be possible to achieve this at the outset. To make a beginning, the nations may have to accept a theory with some faith in its operation. New Zealand, for inI stance, may be asked to agree to sell a little less to Britain at the start so that later she may sell more—to Britain and other nations. New I.Zealand, as represented by Mr. Nash, has accepted this as a theory. It is the basis of Mr. Nash's* scheme of "regulated expansion" as a means of return to freer trade. Other Dominions have not gone so far as to accept even a theory. If New Zealand's representatives now appear to hesitate in putting the theory to the test, what is their fear? Is it a doubt whether the theory will work and the anticipated trade benefits be realised, or is it a doubt of their ability to convince New Zealand exporters that the scheme is sound? And if New Zealand, comparatively advanced in economic theories, hesitates in practice, it is evident that the other Dominions will be equally hesitant. That is the prime difficulty with all the trade bargaining: to convince the parties that* a plan which they all commend will work so well that they are justified in risking initial sacrifices to bring it into being.