EXPORT CREDITS

Evening Star, Issue 23372, 15 September 1939, Page 10

EXPORT CREDITS

FACILITATION OF TRADE STATEMENT BY FINANCE MINISTER fFuosi Odr Parliamentary Reporter.) WELLINGTON, September 15. In the course of his statement on Now Zealand’s contribution to war, the arrangements for facilitation of trade between New Zealand and Britain under the Export Credits system were referred to by Mr Nash. “ While in London,” he said, "I entered into negotiations with the United Kingdom Government for export credits of £5,000,000 in respect of New Zealand Government imports, and £4,000,000 for New Zealand commercial imports. The Government portion of the credit arrangements has been working satisfactorily for some time, but, in regard to the £4,000,000 commercial credits* there has been a little delay on account of the Government's desire to vary the normal export credits procedure, and simplify it. I am now able to announce that an amendment to the agreement has been reached in these matters, and the United Kingdom exporters of goods to New Zealand are now able to take full advantage of the £4,000,000 credit which has been provided.

“ The procedure to be adopted by those wishing to make use of the scheme is a comparatively simple one. By producing the necessary documents to the Export Credits Guarantee Department, No. 9 Clement’s Lane, London, E.C. 4, the United Kingdom exporter is able to obtain the department’s guarantee. This guarantee ensures that, provided the amount of any debt to which the agreement relates is paid in due course to a banker in the Dominion in New Zealand currency, the exporter will receive payment in sterling of 75 per cent, of that amount at the expiration of three months from the date of payment in New Zealand, or at June 30. 1940. whichever is the later. _ The total amount of the guarantee is limited to £4,000.000 sterling, of which not more than £1,000,000 sterling will be in respect of licensed imports falling due for payment later than June 30, 1940. Under" these arrangements, in cases where remittances from New Zealand are deferred, the United Kingdom exporter can obtain the guarantee of the United Kingdom Government, and with this he should have no difficulty in securing immediate finance from his bankers against shipments of goods to New Zealand. ■ “ In New Zealand the uncertainty , as to when remittances can he made in individual cases has been removed by the issue of remittance authorities by the Reserve Bank. These authorities specify the particular months in which remittances may be made, thus placing importers in a position to make definite arrangements for payments overseas. To this end the Reserve Bank has authorised the trading hanks to enter into forward sterling exchange arrangements in respect of deferred payments for licensed imports from any country for the period ending June 30. 1940 provided (1) that the relative goods have either arrived in New Zealand or have been shipped; (2) that the importer has, in respect of the transaction, paid into an irrevocable deposit account at a trading bank in New Zealand'for eventual remittance by telegraphic transfer or otherwise, or by cover pay--ment the relative draft at or before the maturity; or has established with his banker an irrevocable letter of credit, or paid a sight draft, or accepted a term draft, in, which case the bank may stipulate that the arrangement is conditional on the draft being paid in due course. This forward arrangement can be availed of by an importer regardless of whether or not the exporter takes advantage of the export credit facilities, and provides means whereby the importer is able to safeguard himself against any variation in. New Zealand of the rate of exchange on London between the date of his making the arrangements and the date of the relative defened remittances. “Under these combined arrangements the importer of goods from the United Kingdom can rely upon making overseas remittances at specified times, and is able to protect himself against exchange variations by buying sterling forward, at the normal rate for remit-ta-CThe United Kingdom exporter at his end can obtain immediate finance against deferred remittances, utilising tlTo export credits guarantee procedure With both the importer and the exporter able to protect their interests fnllv trade between the United Kingdom and New Zealand should be facilitated, which is the aim and object of all these arrangements.