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Thursday, 19 August 1920

Mr BRUCE - If one thinks for a moment he must see that if the statement of Mr. Guthrie is correct the exchanges of the world are never to be regulated again, but every country with a depreciated exchange will have to pay a licence duty on its imports into Great Britain equivalent to the depreciation in the exchange. I was so startled when I read that statement that I cabled to London -

Stated here Great Britain has imposed licence duty countries where exchange depreciated equal amount such depreciation. Is there any truth in this statement?. If so, what?

To that I received the following reply: -

Referring to your telegram Kith Secretary Customs interviewed has no knowledge of licence duty.

Thinking, however, that there must be some basis for such a statement I continued my inquiries, and at last discovered to what Mr. Guthrie was apparently referring. It is not at all surprising to me that the Secretary of Customs knew nothing at all about the licence duty, because the duty had obviously never been imposed, and it would not be known to an ordinary man dealing with the commercial customs of Great Britain to-day. The Act to which he was referring is an Imports and Exports Regulation Act, designed to prevent dumping into Great Britain, and affording protection to key industries. There are a number of safeguards around the authorities in Great Britain in their administration of the measure which must be taken into consideration. A Trade Regulation Committee is established, which exercises control over the most important provisions of the measure. Part II. gives power to prevent dumping, and Part III. contains the provisions for safeguarding the key industries, and counteracting any possible flooding of them by imports from countries with an abnormal depreciation of exchange - these are the significant words employed - which are not adequately compensated by increased cost of production. Thismeans that the Act can l e enforced in respect to a country with a depreciated rate of exchange, which can producs on the pre-war basis of production, but not when the cost of productionhas increased in that country. From the exchange point of view, the measure is confined absolutely to imports from countries where therehas been no compensating increase in the cost of production, but the principal point to bear in mind in considering the matter is that no action can be taken except with the authority of a Trade Regulation Committee of seventeen members, ten of whom are chosen by the House of Commons. It is this Act which is the sole basis for the suggestion that Great Britain has done anything in the matter, and it has simply included in an anti-dumping Act designed to safeguard key industries a provision that a Trade Regulation Committee of seventeen members, including tenmembers of Parliament, may prevent imports from a country with a depreciated rate of exchange, where there has been no corresponding increase in the cost of production. It is a very small measure, in no way applicable to what is occurring in Australia.

The other point is what is being done in other countries. America has been faced with exactly the same set of circumstance!, as apply here, or rather the position has been more accentuated there, because to-day the dollar is the highest currency in the world. Recognising the difficulty of the position, America appointed a committee of commercial lawyers to investigate it; and as the result of that committee's inquiries the principle of the rate of exchange of the day has been accepted and put into operation.

Dr MALONEY (MELBOURNE, VICTORIA) - What does that mean?

Mr BRUCE - I can explain it in this way: Before the war, the Italian lira was worth19 cents ; in other words five lire equalled one dollar. To-day the dollar isworth 10 lire, and when goods are boughtinItaly they are purchased on the basisof 10 lire to the dollar. But if an American buyer purchases $500 worth of Italian goods in lire the American Customs charge him duty on the basis of$500 worth of goods. Under the system operating here, and operating in America until this committee of commercial lawyers effected a change, he would have been called upon to pay duty on the basis of$1,000.

Another country which, perhaps, is on parallel lines with Australia is New Zealand, which hasnow accepted the bank rate of exchange and abandoned the gold basis, which Australia is still following.

Mr GREENE (RICHMOND, NEW SOUTH WALES) (Minister for Trade and Customs) - New Zealand has made it optional to take oneor the other. They allow the importer to pay duty on whichever basis favours him.

Mr BRUCE - There is not much doubt as to what the importer will do.

Mr GREENE (RICHMOND, NEW SOUTH WALES) (Minister for Trade and Customs) - They take the mintage rate of exchange in one case and the commercial in the other, whichever ismore favorable to the importer.

Mr BRUCE - I would be prepared to accept the same arrangement here.

Mr GREENE (RICHMOND, NEW SOUTH WALES) (Minister for Trade and Customs) - That would not suit the Trade and Customs Department.

Mr BRUCE - Whichever method we adopt it should be the fairest to the importer in the sense that he docs not overpay what is due, but we need not go so far as New Zealand. The Government is entitled to collect Customs duty on the cost of goods.

There is another side of this question which ought to be brought under the notice of the House, particularly in these times when we are experiencing such extraordinary financial difficulties and are in such trouble about our revenue. Under the system adopted by the Trade and Customs Department, goods from America and Japan pay less duty than we would actually be entitled to collect on the sterling value paid to those countries for the goods; and on goods purchased in France and Italy we get rather more duty than we are entitled to collect.

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