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Tuesday, 30 April 1957

Mr CREAN (Melbourne Ports) . - When the Minister for Trade (Mr. McEwen) tabled the United KingdomAustralia Trade Agreement, he indicated that it was to replace the Ottawa Trade Agreement of 1932 In fact, it is the first substantial change that has been made in the trade arrangements between Australia and the United Kingdom since 1932. There has been considerable criticism iri this country of the Ottawa Agreement, the criticism being directed largely to the fact that Australia gives more than it gets under that agreement. I suggest that if we wish to ascertain whether the agreement now before lis is an improvement upon the Ottawa Agreement, we need to examine more thoroughly than did the honorable member for Darling Downs (Mr. Swartz) what is involved as far as Australia is concerned.

The Minister, during his speech in support of the motion, referred to four advantages which he said would flow from the new agreement. He said - it preserves security in the United Kingdom market for a number of our important' primary industries.

In other words, it merely holds what, already exists under the Ottawa Agreement. He further said -

It secures a significant new arrangement for wheat exports.

My colleague, the honorable member for Lalor (Mr. Pollard) indicated that the new arrangement for wheat exports was a very belated attempt by this country to recapture a market that has been declining for a considerable number of years. The honorable member for Lalor also stressed that all that is involved is a rather airy-fairy agreement about quantities without any detailed commitments regarding the price. Referring to the agreement, the Minister also said -

It offers scope for Australian manufacturers to obtain many of their imported requirements more cheaply.

I emphasize the words " many of their imported requirements more cheaply ", because I suggest that we need a great deal more information in this direction than has been given by the Minister. Finally, he said -

It gives the Commonwealth Government new room to secure new export trade benefits in foreign countries by trade negotiations.

I suggest that the agreement must be examined from two viewpoints - first, from the viewpoint of Australian exports to the United Kingdom, which, to my mind, are not very well secured by the agreement; and, secondly, from the viewpoint of Australia's imports from the United Kingdom and also indirectly from other parts of the world. It is mainly to the second aspect of the matter that I intend to devote my time. Quite a number of questions need to be directed to the Minister and I hope that he will pay some attention to what is said here, because this House, as well as the country as a whole, is entitled to a lot more information than has been given by him in his' speech. He took a long time to deliver this speech and he did refer to the kind of difficulties which were experienced by Australia iri negotiating the new agreement; but he was particularly silent about the likely aggregate of economic benefits that will accrue to Australia after the agreement is approved by the House.

The Minister indicated that under the old Ottawa Agreement the United Kingdom enjoyed varying rates of preference in the Australian market ranging from 12£ per cent- up to 15 per cent, and even 17i per cent. I understand that there was a number of special categories in relation to which United Kingdom preference was as high as 20 per cent, and even 25 per cent. But what the Minister did not indicate was the categories of goods which came within the various preference margins. Unless we know the aggregate amount of this trade, it is impossible to assess what are the likely benefits of the changes. As the honorable member for Darling Downs has indicated, prior to this arrangement Australia suffered from a great deal of rigidity in relation to its tariff structure. At one end, minimum duties were imposed under the old Ottawa arrangements, and, at the other end, maximum duties were imposed under the General Agreement on Tariffs and Trade, now more generally known at Gatt. There were an upper and a nether millstone, as it were, between which Australian secondary industry was forced to negotiate.

I think that the degree to which Australia's economy is what the economists call a dependent economy is sometimes forgotten. We are still largely dependent upon primary products for our export trade. Wool, wheat - which is going through the doldrums on the world's markets - meat, dairy produce, and a few other primary products comprise the bulk of Australia's export trade. The volume of our imports is determined largely by the income from those exports. The main problem that confronts most of the primary-producing countries is that there is no stability either in the quantity of primary products in any one year or the prices that are received for those commodities. Indeed, the agreement that we are considering contains no price formula for wheat.

Looked at from the viewpoint of what we buy from other countries, the agreement now before us restricts, in effect, the amount of preference that is available to the United Kingdom. Those imports fall, broadly, into two categories - a 7± per cent, category and a 10 per cent, category. Again, the Minister has not given any indication about how much of Australia's import business with the United Kingdom will fall into the 71 per cent, category and how much will be in the 10 per cent, category. I suggest that, to get a proper appraisal of the agreement, we need those facts before us. There will be a considerable difference in the final result if the bulk of the trade consists of lower average duty items rather than of higher duty items. Apparently the new agreement gives to Australia a certain amount of mobility in the lowering of preferences to foreign countries in certain circumstances, and possibly also in raising, in certain circumstances, the minimum protective duty that is applied in Australia at the present time. Previously, we operated under the old Ottawa Agreement, to which the Minister referred in his speech. Under that agreement, the degree of United Kingdom preference was determined according to the most favoured nation level of duty. For example, if the Tariff Board in Australia decided that there should be a tariff of 10 per cent, on imports from the United Kingdom, that meant that a rate of tariff as high as 27i per cent, could be imposed on goods of the same kind which came from countries outside the United Kingdom. When the General Agreement on Tariffs and Trade came into operation it was no longer possible for Australia to raise this level of duty above 271 per cent., nor, at the other end, was it possible vincrease the minimum rate of duty, because if that had been done, the effect would have been to narrow the gap between th - Ottawa preference, which we are under a legal obligation to observe, and the ceiling which is set under the General Agreement on Tariffs and Trade arrangement. Non presumably, because we have lowered \\. preference advantage that is given to the United Kingdom, we have a mobility, as it were, of li per cent., so that we may either increase the minimum to 171 per cent, or lower the maximum duty from 27i per cent, to 20 per cent.

I suggest that what was required on this occasion was a carefully prepared memorandum for the information of the House, indicating the total volume of Australia'.trade, not only with the United Kingdom but also with other parts of the world. It should have indicated, too, the variouslevels of duty attachable to different kinds of goods coming into this country, so tha! we might be able to see that nature of the benefits that will flow from this new agreement. There is a great deal of difference between lowering the average . tariff by 2-£ per cent, and lowering the minimum tariff by 7i per cent. The matters to which 1 have referred are of considerable concern to the Australian people, as consumers on the one hand, and as wage-earners, industrialists and producers of goods on the other.

Although Australia may be a great primary producing country, basically the majority of its people depend for employment on industry.

The Minister for Trade has stated that the new arrangements will not bring about any great dislocation. He has said that the changes are not being made " in any wholesale or ill-considered way ". Nevertheless. I suggest that the Australian community deserves a little more comfort than that. The right honorable gentleman pointed to two matters in this respect. First, he said that the new arrangements could result in a significant reduction of costs, meaning, apparently, that goods from the United Kingdom and other countries will come to this country more cheaply than they did previously. Insofar as they are what the Minister has called producer goods, or goods used here as a part of the processes of industry, that should have some effect on costs, although the Minister was careful to point out that the effect may not be so great as might be thought because, after all, imported goods represent only a part of the costs of manufacture. There is not likely to be a wholesale reduction of costs. The maximum possible reduction would seem to be approximately £7 10s. in every £100 of some imported goods. The Minister pointed to that as one kind of advantage that may flow from the new arrangements, although he has been completely silent concerning the likely value of this advantage.

The second matter to which the Minister pointed was that, because we are in a position to lower tariffs in respect of certain goods which are likely to come here in the future, that gives us a bargaining point with other countries, particularly those of Europe, and will enable us to expand our markets in those countries. He apparently considers that that will be of some significance. I suggest that it is more difficult to assess the possible advantages in that respect than it is in relation to reduction of costs, because after all, we do have statistics of the volume of imports into this country. The details would be listed by the customs authorities, I should think, according to the levels of duty chargeable. Duty has to be computed and collected, and it should be possible for the Minister for Trade to produce, for the enlightenment of this Parliament, a carefully prepared schedule which might help us to make an assessment of the likely impact of these changes.

The matter with which the House is now dealing represents an important factor in the economic destiny of the Australian people. In the last day or so. we have seen the Commonwealth Conciliation and Arbitration Commission increase the basic wage that is payable to a large number of people in the Australian community. One of the factors which the commission indicated that it took into account in arriving at the increase was what it called " the economic capacity of industry to pay". I suggest that the commission was presumptuous in asserting that it is easy to measure that factor. Be that as it may, because Australia's export income has been so buoyant during the last twelve months or so and has been more than £100,000,000 greater than it was in the previous year, the commission has decided that there is capacity in the Australian economy to pay increased wages. In the course of its adjudication, it has tried to give some attention to what the Tariff Board is doing.

The agreement that we are considering at the moment embodies certain clauses of the old Ottawa agreement. For instance, Article 9 provides that -

1.   The Australian Government undertake that -

(a)   protection by tariffs shall be afforded only to those industries which are reasonably assured of sound opportunities for success;

(b)   the Australian Customs Tariff shall be based on the principle that protective duties shall not exceed such a level as will give United Kingdom producers full opportunity of reasonable competition on the basis of the relative cost of economical and efficient production, provided that in the application of such princple special consideration may be given to industries not fully established or to industries essential for defence purposes;

Finally, the article suggests that the Tariff Board shall determine all questions of this kind. Here, we are reaching into the very centre of the economic framework of the Australian community, a section of the economy that is responsible for employing, directly, more than 1,000,000 people and, indirectly, a great many more. The rather cavalier fashion in which the Government has approached this matter, and the very vague and scanty information that has been given to the Parliament, is no way to deal with such an important subject. The honorable member for Darling Downs (Mr. Swartz) suggested that many years ago -I think in 1929 or 1930 - an investigation was conducted into the Australian tariff and its effects. I suggest that now, more than 25 years after that event, the time is ripe for a further expert examination of this allimportant field. I suggest, also, that when the Parliament is considering the enactment of legislation of this kind, it should be in possession of much more accurate information, so that honorable members may be better able to appraise the position and decide whether or not such arrangements are likely to be for the greater good of the Australian people and, in the present instance, whether Australia will benefit under the new agreement more than it did under the Ottawa Agreement of 1932.

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