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Tuesday, 30 April 1957

Mr HOWSON (Fawkner) .- Members of the Opposition who have spoken in this debate so far have tended rather to try to minimize the effects of the trade agreement that is under discussion, yet in their own speeches they have shown what narrow margins for manoeuvre were available to the Minister for Trade (Mr. McEwen) and his colleagues in the bargaining and the negotiations that have taken place. I believe that the results that have been achieved by the Minister in this agreement are something of which every citizen of Australia should be proud. We should pay a tribute to the Minister for the striking results he has achieved in the difficult circumstances in which he negotiated.

As has already been pointed out, those negotiations were the climax to a very long period of bargaining. An agreement such as this has been required by the people of Australia for very many years. Articles in the press and speeches by responsible leaders of both primary industry and secondary industry all have referred to the need for re-negotiation of the Ottawa Agreement. Here at last, after very many months of hard bargaining, we have achieved an agreement that definitely shows on balance that we shall benefit.

Nothing that the Opposition has said so far has denied the fact that we shall benefit as I have said, and that we have achieved something that the Opposition was unable to achieve when it was in office as the government. The honorable member for

Lalor (Mr. Pollard), when he was Minister for Commerce and Agriculture, was not able to obtain any increased benefits under the Ottawa Agreement, although the need then was just as great as it is to-day.

Judging by the difficulties that have always been encountered, I think a tremendous lot has been achieved. First, let me refer to Article 1 of this agreement. I think it is right and proper that we should reiterate once more that both the United Kingdom Government and the Australian Government wish to preserve the principle of mutual preference because this, after all, is an agreement between friends. It is an agreement between two nations both of whom do their largest volume of trade with each other. The United Kingdom exports its largest volume of goods to Australia. Similarly, our largest exports are those to the United Kingdom. It is wise, therefore, that at the start of this agreement, we should reiterate that principle. Let us realize once again that it is extremely important to both nations.

In addition, the Minister for Trade has been able to widen the whole field of trade relationships between the two countries under this agreement. No mention has been made by the Opposition of the increased benefits that have been obtained by the Minister with regard, first of all, to the admission under by-law of various imports. This will enable the Australian Minister for Trade to make the relevant decision rather than having to refer it to the United Kingdom. That will make a great difference to the importation of certain goods for our own industrial undertakings. Then there are arrangements dealing with restrictive business practices and, particularly, the dumping of goods by foreign nations. In this agreement, we have recognition that these things actually take place. For the first time we have been able to put everything on paper and get the United Kingdom Government to realize that these matters are important and of much concern to both governments. I think, therefore, that it is wise that we should put on record yet again the many benefits that will flow from this agreement.

However, I should like to deal in detail with one question that has been posed: Will the agreement increase our trade with the United Kingdom? Very certainly, the answer must be " Yes ". First, let us consider the wheat agreement. The honorable member for Lalor has spoken at length on this matter, but let us examine the one sentence in the agreement to which he referred at length. It is to the effect that if negotiations on wheat break down, either government may call for a renegotiation of the terms of the agreement. Who, at the moment, gets the greatest benefit from this agreement - the United Kingdom or Australia? As the honorable member for Darling Downs (Mr. Swartz) has pointed out, United Kingdom goods coming to Australia get a preference of 14 per cent., whereas Australian goods going to the United Kingdom get the benefit of only 9 per cent, preference. It is perfectly obvious that if there were any danger of the wheat agreement breaking down, the United Kingdom Government would be worried at the prospect of losing the other benefits that accrue to it through this agreement. Therefore, I feel absolutely certain that the United Kingdom Government would honour the terms of the agreement relating to wheat as laid down in Article 3. In addition, there are other benefits relating to our exports of currants, egg pulp, jam, fruit juices and coco-nut oil. I am certain that our export trade to the United Kingdom will receive additional help under this agreement.

Secondly, there is the other factor to which the honorable member for Melbourne Ports (Mr. Crean) referred; that is, the reduced cost of imports that will flow from reduced duties. Anything that can reduce costs of goods coming into Australia which form part of our manufacturing and industrial capacity must be of great benefit to this country.

Thirdly, there are the bargaining concessions that we shall obtain to enable us to increase our trade with other nations. I believe we should ask ourselves at this stage: Will we increase our trade as the result of this agreement? Definitely, all indications are that our exports will be increased and that we shall receive greater benefits under this agreement than we received under the old one. Nothing that the Opposition has said has shown that that is not the case. Certainly, the Opposition has not indicated that it will oppose the agreement in any of its major forms. 1 turn my attention now to the effect that will flow from the agreement in connexion with bargaining concessions with foreign powers. Particularly, we must have in mind certain aspects of the trade we do with countries in Western Europe. We should look, therefore, at the effect that may occur for Australia from the proposed development of the European common market because if there is to be one market among the six nations of Western Europe instead of six markets, the direct effect of the bargaining concessions that accrue from this agreement will be more difficult to obtain.

For a few moments, I want to look at some of the proposals that are being examined now by the six nations who are concerned with the proposed European common market - West Germany, France, Belgium, the Netherlands, Luxembourg and Italy. Some of the headings were contained in a draft treaty that was considered by the Foreign Ministers of those countries in January, 1957. That treaty concerns, in brief, a report that was prepared by a committee headed by M. Spaak. In his report he sets out four needs of such a common market. They involve such radical rethinking that, if they come about, they must affect this country vitally. This plat would involve common national economic policies, common market rules, a European commission, a European court of justice, and a European common assembly similar to the assembly representative of (he European coal and steel community, which is already in operation. If this common market came about, there would be four objectives that it would desire to achieve. It would strive for the abolition of trade barriers between the six countries, the abolition of internal tariffs - which, it is understood, would take place in three stages - the abolition of both import and export quotas between any of these six countries and any countries with which they traded, and the establishment of a customs union. 1 say again that if these proposals are carried into effect they will vitally affect our country and our trade with the countries of Western Europe. Even now there is being considered the need for a common European policy on agriculture. The Minister. I am sure, has already given a tremendous amount of thought to these matters. They will certainly arise within the next few months and they will be o1. great importance to Australia.

The export and import of primary and secondary products between Australia and the countries of Western Europe are likely to be affected directly by this common market, but what is more important to us is whether the United Kingdom will join the common market, either directly or in the milder form of a free trade area. These matters are already being considered. They can be only the subject of speculation, but certainly there are reasons why the United Kingdom should consider joining the scheme. About 25 per cent, of the United Kingdom's trade is with Western Europe. A reduction of tariffs in Europe for West German goods but not for United Kingdom goods would be a great handicap tothe United Kingdom. Luckily, there are several reasons why the United Kingdom should not consider joining such a common market. The most important of them i*. the principle of Commonwealth preferences. Added to that is the fact that the United: Kingdom is the banker of the sterling area.. We understand that there is a chance of a reasonable compromise and that the United' Kingdom will consider joining a partial free trade area, in which there will be no> change in the duties relating to foodstuffs. Therefore, our major export trade with the United Kingdom is unlikely to be affected by any proposals relating to a common market in Europe.

However, the whole question must be examined extremely closely, because Australia's position must be safeguarded. Particular attention must be paid to our imports of manufactured goods from the United Kingdom and the effect on our industrial product. The free trade area in Western Europe would represent, to any country that joined, a potential home market of up to 300.000,000 people. As the Federation of British Industries points out, this could be an opportunity for or a threat to British production, and the United Kingdom would have to concentrate on its relatively efficient industries. That is all well and good. We must welcome any move that will reduce the cost of some of our imports. But we must not fail to realize that many industries now established in Australia are producing for a home market of only 8.000,000 people. They could not hope to compete with industries producing for a home market of 300,000,000, even if we ignored the wage differentials of the two countries.

All this adds up to the fact that, almost certainly, we shall have to face a challenge from the effects of this European common market. We shall have to meet it by the industrial growth that will take place in the two countries. I was glad that the Minister, in his speech, referred to the three problems. He said that this Government has encouraged a forceful programme of development allied with a vitally significant immigration programme. He pointed out that the Government has tried to maintain the tempo of our national development and that there must be a stable economic basis. He added that where protection of Australian industry is an issue, the Government regards the Tariff Board as the established instrument for this purpose.

I agree entirely with the need for industrial development. I am glad indeed that the Minister mentioned the great need of industry in Australia for a period of stability. I am particularly pleased that he referred to the importance of the Tariff Board. However, I believe that, recently, import licensing has created a danger of reducing the effectiveness of the Tariff Board and may possibly have led to the growth of uneconomic industries. I believe that there is a need for a review of the relations between the two, so that the Tariff Board can play its principal part in promoting the growth and development of Australian industry.

Looking at the wider picture of the need for industrial development, experience gained from what is taking place in Europe and the United Kingdom at the moment underlines the need for close relations between industry and government. The United Kingdom and Western European countries are likely to concentrate on those industries in which they have a relative degree of efficiency. This should teach us two lessons. If we cannot expand our home markets as Europe is doing, we shall be bound to meet very fierce competition. Therefore, we must endeavour to concentrate our industrial production in those industries where we are most efficient. We have already shown that we can produce steel cheaper than anywhere else in the world. The Government and the Tariff

Board must guide our industrial growth so that we can meet the challenge of these moves overseas.

A long-term policy of industrial development is needed for Australia. I believe that this agreement that we are now discussing is extremely important. It is a great achievement, but the tasks ahead of us are even greater, when we consider the effect of this proposed European common market. However, I feel certain that with the skill which the Minister for Trade has already shown in negotiating the trade agreement with the United Kingdom, he is well equipped to handle the even greater problems that are likely to arise in the near future and that every citizen of Australia will be grateful for the efforts that he will exercise on our behalf.

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