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Friday, 18 November 1938

Sir EARLE PAGE (Cowper) (Minister for Commerce) . - by leave - The Commonwealth Government is very gratified at the successful conclusion of the lengthy trade negotiations between the United Kingdom and the United States of America. It hopes that the agreement which has just been signed will greatly benefit the trade between those two countries, and that Great Britain and the United States of America may now find it possible to exert joint efforts to establish more liberal conditions of trade throughout the world.

The fact that two such highly industrialized countries have found it possible to conclude a comprehensive agreement demonstrates what can be done when there is on both sides a will to succeed. It is an example, moreover, of the best form of economic collaboration between Empire countries. Australia, Canada, India, Now Zealand, South Africa, and other Empire countries have contributed towards the success of the negotiations, by reconsidering some of the preferences they have enjoyed in the United Kingdom market since the Ottawa Conference was held in 1932.

The commodities affected by the agreement which are most significant in respect of the Australian export trade are fresh apples and pears, canned pineapples, and wheat. The changes of preferences agreed to in respect of these items will not adversely affect the industries concerned.

In regard to apples and pears, Canada, South Africa, New Zealand and Australia have all agreed to a modification of the preference provided for in the Ottawa Agreement. Australian apples and pears, in common with those from other southern hemisphere countries, are marketed in the United Kingdom during the period from the 1st April to the 31st July in nach year. The principal northern hemisphere suppliers are Canada and the United States of America. The reduction of the duty on apples between the 18th August and the 15th April, and on pears between the 1st August and the 31st January, from 4s. 6d. per cwt. to 3s. per cwt. will assist the marketing of fruit from the United States of America. The Australian industry still retains adequate protection. Fruit imported into the United Kingdom from the United States of America, or from any other foreign country, between the 16th April and the 15th August, will continue to pay duty at the rate of 4s. 6d. per cwt.

The position of Empire apple producers in the southern hemisphere is, in fact, improved, because the Government of the United States of America will draw the attention of American apple exporters to the desirability of cooperation with Empire fruit organizations, with the object of avoiding undue fluctuations of supplies and prices.

The alteration of the duty on canned pineapples entering the United Kingdom from foreign countries is from 15 per cent, ad valorem to a specific rate of 5s. per cwt. The specific rate is an added deterrent to the importation of cheaper varieties, and is an increased protection against them. It is, therefore, preferable to an ad valorem rate of 15 per cent. Attempts by the Commonwealth Government to secure specific duties on other canned fruit were not successful. Apart from the market in tho United Kingdom, Australia enjoys preferences on canned pineapples in Canada and New Zealand, as follows: Canada, 3 cents per lb.; New Zealand, 25 per cent, ad valorem.

Since the Ottawa Agreement was concluded, Australia's production of pineapples did not increase up to 1937, and the export actually declined from 62,000 cases in 1932 to 37,000 cases in 1937. This year both the production and the export have increased. The export has been to the United Kingdom, Canada, and New Zealand. Australia still supplies less than 1 per cent, of the market in the United Kingdom, and about 2 per cent, of the markets of Canada and New Zealand. There is room in those three markets for the existing volume of Australian export, provided that Australian pineapple producers can compete with the help of the substantial protection they enjoy.

Wheat is in a different category from the other commodities mentioned. It is a world commodity, and the price received by the seller is determined solely by the relationship that exists between the total export surpluses, and the total import demand of all importing countries. Under the agreements concluded at Ottawa in 1932 between the United Kingdom on the one hand, and Australia, Canada, and India on the other hand, the United Kingdom agreed to admit Empire wheat free of duty, and to impose a duty of 2s. a quarter on wheat imported from foreign countries. This duty is now to be removed. The Ottawa agreements with Canada, India and Australia stipulated that the continuance pf this preference' was conditional on Empire producers continuing to offer wheat on first sale in the United Kingdom at prices not exceeding the world price. Quite apart from this proviso, the force of competition amongst Empire producers would always keep the price in the United Kingdom in conformity with the world price. "Wheat exports from Canada and Australia are, of course, dependent upon the crops harvested. In the last seven years, which have included some years of very low harvest in Canada, the average yearly exports have been over 260,000,000 bushels, whereas the imports - of the United Kingdom have never exceeded 210,000,000 bushels. The excess of Empire supplies over Empire demand must keep United Kingdom wheat prices at world parity. The removal of the duty of 2s. a quarter will, therefore, have no influence whatever on the Australian wheat producer. The problem of the wheat-grower is epitomised in the existing excess of world supplies over the prospective import demand. Available world export supplies are nearly 950,000,000 bushels, whilst anticipated world import demand for the current cereal year is only 550,000,000 bushels. No Empire preference can have any remedial effect on that position.

These changes of the Empire preferences enjoyed by Australia were concurred in by the Commonwealth Government after the fullest consultation with the Governments of the United Kingdom and the other dominions. That consultation was commenced during the Imperial Conference held in London in May, 1937, and has continued without interruption ever since. The Commonwealth Government recognized the great influence which would be exercised on world economic affairs by a comprehensive trade agreement between the United Kingdom and the United States of America, and fully realized its responsibility to assist in the conclusion of such an agreement, provided the vital interests of Australian industries were preserved. This dual objective has been attained.

The Australian action in this matter is an example of the kind of co-operation visualized by the Governments of the United Kingdom and Australia, as expressed in paragraph 4 of the Memorandum of Conclusions resulting from this year's discussions in London. The United Kingdom will similarly co-operate with Australia in its future trade negotiations.

The alterations of formerly existing preferences agreed to by Australia are as' follows : -

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