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Wednesday, 30 November 1938

Mr PERKINS (Eden) (Monaro- Minister for Trade and Customs) . - I move -

That the bill be now read a second time.

I do not think it necessary to recapitulate in detail the considerations which led the Government to enter into negotiations for the conclusion of trade agreements with foreign countries. These considerations were stressed by the then Minister directing negotiations for Trade Treaties (Sir Henry Gullett) in his speech in this chamber on the 29th October, 1936, when introducingthe agreements with Czechoslovakia and Belgium. Honorable members will agree as to the desirability of expanding the overseas demand for Australian goods in every direction, and by every means possible.

I propose to refer briefly to the economic conditions and foreign commercial policy of Switzerland, and to give the House a brief outline of the trading position with that country. To enable it to purchase abroad supplies of raw materials and foodstuffs on which it is so largely dependent, Switzerland has developed highly specialized industries to a remarkable degree. Its industries are in their turn largely dependent upon foreign markets. Of its imports during 1937, foodstuffs represented 27 per cent. in value, raw materials 37 per cent., and manufactured products 36 per cent. Manufactured products represented86 per cent. of the value of all its exports for that year.

Switzerland normally has an adverse balance in its total merchandise trade. The excess of imports over exports is, however, usually offset by " invisible exports ", principally tourist trade, and interest on foreign investments. The contraction of international trade in 1930 and 1931 resulted in the institution in Switzerland as from the beginning of 1932 of a quota system limiting imports of a large number of commodities. The avowed objects of the quotas are -

(a)   to protect national production against foreign competition,and

(b)   to adjust the visible trade balance and to prevent its becoming increasingly unfavorable.

Quotas are allotted to supplying countries on the basis of total imports from those countries duringa specific year, but this basis may be departed from when questions of commercial policy arise. For example, as the result of treaty negotiations, a much larger quota may be granted to any country.

Switzerland has a single-column tariff and tariff concessions obtained by any one country apply equally to all other countries. Its tariff is one of the lowest in the world. Switzerland accords mostfavourednation tariff treatment to all countries. There are no restrictions on foreign exchange operations in Switzerland.

Australia accords most-favoured-nation treatment to Switzerland, although there is no treaty obligation on either country to accord such treatment to the other.

Tables showing the trading position between Australia and Switzerland are annexed to the explanatory memorandum which has been made available to honorable members. It is the accepted practice in trade treaty negotiations to adopt the import figures of the negotiating countries as the measure of trade between them. Indirect purchases by Switzerland of Australian goods make the Australian export statistics unreliable for the purpose of arriving at a trade balance, but a comparison of the import statistics of both countries for the last three years seems to indicate that the balance has been in favour of Switzerland since 1936.

Switzerland's main import from Australia is wool, of which Australia is its principal supplier. This has over the last seven years averaged over 8,000,000 lb. out of average total annual imports of 19,000,000 lb. In 1937, imports of Australian wool amounted to 5,700,000 lb., of a value of approximately £A564,000 out of a total of 13,000,000 lb. imported. Wool represented 89 per cent. of the value of all imports from Australia in 1937. The reduction of wool imports is attributable to the factthat thewool manufacturing industry in Switzerland has been in a depressed condition since the end of 1936. Imports in 1937 were the lowest for many years, but there are indications that the imports in 1938 will substantially exceed those in 1937. Under the agreement there will be a reduction of the Swiss duty on wool from 50 centimes (7¼d. in Australian currency) per metric quintal of 220½ lb. to 15 centimes (2¼d. Australian). The reduction will apply to wool from all supplying countries, but, as Australia is the chief supplier, the corresponding benefit to Australia will be greater than that enjoyed by other countries. There is no quota restriction on the import of wool into Switzerland, and the reduction should result in wool being placed in Switzerland in a more advantageous position as compared with other fibres.

The quota of Australian apples and pears for 1938 was fixed at 15,000 bushel cases. Under the agreement the annual quota of apples and pears has been increased to approximately 82,000 bushel cases, with provision, in letters annexed to the agreement, for favorable consideration of supplementary quotas if Australian exporters are able to sell a greater quantity. Such supplementary quotas have in the past been granted to other countries with which Switzerland has commercial treaty relations. The Swiss concessions on fresh apples and pears are only effective in respect of apples imported between the 1st April and the 15th July each year, and pears imported between the 1st February and the 15th J uly. Thus our apples enter Switzerland at a timewhen there is an absence of local fresh apples.

The principal items of Australian imports from Switzerland are set out in a table annexed to the explanatory memorandum. The increase of imports from Switzerland in 1937-38 by £A330,000 from £A751,500 in 1936-37 to £A1,092,000 in 1937-38 was principally due to imports of piece goods not competitive with Australian products, and of watches and watch movements, the movements being for fitting into cases made in Australia.

Briefly the agreement provides for the following : -

(1)   Reciprocal most-favoured-nation treatment.

(2)   The grant of an intermediate tariff rate and primage duty concessions in respect of a limited number of Swiss products.

These are set out in schedules A and B to the agreement.

(3)   The reduction and consolidation of Swiss duties on certain Australian products.

These are set out in schedule C to the agreement. Reductions are on wool - from 50 centimes to 15 centimes per metric quintal - and on sandalwood oil - from 80 francs per metric quintal to 10 francs per metric quintal. Consolidations are on apples and pears, raisins and currants, canned fruits, lead, eucalyptus oil and starch.

(4)   Minimum annual quotas of certain Australian products (barley, apples, pears and' timber).

These are set out in scheduleD to the agreement. The quota on barley is the present annual quota, 84,000 centals. The only imports of Australian barley into Switzerland in the last four years occurred in 1936, when 8,000 centals was imported. The timber quota is increased from 560 metric quintals to 10,000 metric quintals.

(5)   Mutual undertaking that quantitative restrictions on imports shall not be discriminatory.

(6)   Mutual right to withdraw concessions if other countries obtain the major benefits.

(7)   Liberty on the part of either party to take any action it thinks proper to re-establish the equilibrium of the agreement, should either party adopt any measures considered to nullify or impair the advantages of the agreement.

The agreement will not come into force until after approval by Parliament. The proposed customs duty changes are indicated in the explanatory memorandum, but it is not proposed to make them opera- tive until the agreement comes into force. I feel sure that honorable memberswill agree, after they have considered the terms of the agreement, that the concessions which Australia is granting will not in any way harm Australian secondary industries. The intermediate tariff rates will, of course, be extended to all those countries which are receiving mostfavourednation treatment. The total loss of revenue resulting from the agreement will not be appreciable, and will be more than compensated for by the undoubted advantages conferred on the Australian primary producer under the agreement.

It has been the policy of this Government to do everything possible to expand, or at least conserve, existing markets for Australian primary products. Every step in this direction is of undoubted benefit to Australia. This agreement represents another such step and I commend the bill for its approval to honorable members.

Debate (on motion by Mr. Curtin) adjourned.

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