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Thursday, 19 November 1936

Senator A.J. McLACHLAN (South

Australia - Postmaster-General) [9.8] . - I move -

That the bill be now read a second time.

I propose to give the Senate a brief outline of the trading position of Australia with Belgium, and details of the agreement, and to refer briefly to the economic condition and foreign commercial policy of that country. Geographical limitations, pressure of population, and the natural and acquired aptitudes of its people over a long period have forced Belgium into the position of becoming One of the most highly industrialized States of the world, with large-scale manufactories producing a diversified range of commodities. The principal export manufactures are plate and window-glass, metallurgical products, textiles and chemical products. The main imports consist of fuel, foodstuffs, and raw material for the metallurgical and textile industries. Under such conditions, and until recent years, it has suited Belgium's economic policy to obtain raw materials and foodstuffs, such as Australia can supply, at the lowest price. Generally, these goods have been admitted free or at low rates of duty. An important consideration of government policy at the present time, however, is the pressure which has been brought to bear on Belgium to import the necessary primary products from countries which buy largely from it. There are obvious limits to the extent to which that policy can be applied, but even a modified application of the principle would prove detrimental to our export commodities, which have hitherto enjoyed a valuable and unrestricted market in Belgium. So far as Australian products are concerned, Belgium has refrained from applying import restrictions on the grand scale adopted by its neighbours. Circumstances beyond its control, however, in the rapidly developing economic conditions in Europe, have recently forced Belgium to adopt a policy of opportunism in its commercial relations with other countries in order to secure the best possible market for its manufactures.

With a trading balance in the ratio of about 10 to 1 in our favour, it is evident that Australia should make a stout endeavour to consolidate its still very favorable, but precarious, position. The Belgian market is highly valued by all countries which export primary produce, because it absorbs many commodities which are difficult to sell elsewhere. As the Belgian Government has repeatedly pointed out, the absence of a comprehensive commercial agreement with Australia has on more than one occasion prejudiced the continuance of our fortunate position in the Belgian market. In the absence of a commercial agreement with Australia, the Belgian Government has no grounds on which to counter the pressure towhich it is subject from its Parliament, industrialists, and the people generally, to discriminate against non-treaty countries which have a favorable trade balance with Belgium, and to favour those which have concluded commercial agreements that offer some opportunity to Belgian manufacturers. The only protection which Australia has had against tlie application of restrictive measures to its vulnerable products in Belgium concluded in November, 198-1. .'.lent concluded with Belgium in November, 1934. As the result of rep.resentations made to the Belgian Government during the visit to Brussels of the Minister directing negotiations for trade treaties (Sir Henry Gullett) in October, 1935, the existing arrangement was extended for a further period, subject, however, to termination at two months' notice. The provisional arrangement, made between the two countries at an emergency and temporary nature, was based on the expressed understanding that a comprehensive agreement would be made in 1934,- which was merely of an early date. Notice of its intention to terminate the provisional arrangement was given by the Belgian Government on the 1st June last, to take effect as from the 1st August, but this was subsequently withdrawn to give a limited extension of time for negotiations.

The agreement which is now before the Senate Avas negotiated in a spirit which reflected the cordial atmosphere that has long marked the economic relations between Australia and Belgium. The goods that are to be exchanged between the two countries furnish an outstanding example of complementary trade, and there is every reason for the belief that the agreement will provide a firm foundation for the further development of reciprocal trade on a mutually satisfactory basis. This treaty goes far beyond the exchange of Belgium glass and Australian barley and beef.

Unlike wheat, which we export to more than 30 countries, our barley is limited to some half a dozen overseas markets, and of these, Belgium has been by far the most important customer. Other barley exporting countries, particularly Poland, Argentina, Chile, Turkey and Germany, compete strongly with Australia in that market, and if we are to obtain freedom of access for our barley in Belgium, this agreement is essential.

Our wool exports to Belgium are the most valuable single item of our trade with that country. According to our statistics in 1935-36, the value of that item alone was £5,000,000 sterling. The large carbonizing works which are situated in Belgium treat most of tlie wool imported in the grease for re-export. and it is estimated that approximately 51 per cent, of the total greasy wool imported thus finds its ultimate destination among other European countries. Belgium is, therefore, a valuable intermediary in the marketing of our wool, and the goodwill established by close commercial relations with Belgium is a vital factor in maintaining the price of the Australian staple.

In addition to barley, the value in sterling of Australian primary exports to Belgium for the year 1935-36' included wheat, £336,000; silver and base metals,. £228,000; meat, £4',400; and fruit, £14,400.

With regard to window glass, Belgium had been for many years our main foreign source of supply. The establishment of an Australian factory, however, foreshadowed a choice of two course?. Either a high protective duty would be required, with a consequent increased price for both the local and the imported product, or a division of the market was necessary, by means of a quota arrangement, between local manufacturers and British and foreign suppliers. To ensure continuity of supplies, and to discourage increases of price, the latter course was adopted and incorporated in the arrangement with Belgium has been the provisional agreeOn the whole, this arrangement has proved most satisfactory, and the minoralterations now included are those which have been found necessary in the light of the last two years' experience, and which have been actually in effect duringthe latter part of that period,

The whole range of commodities in which Belgium is interested can be appreciated by an examination of schedule A, which shows the items on which the intermediate tariff rate has been granted. When it is recalled, however, that the total value of the imports from Belgium in 1935-36 amounted to only £568,000 sterling, and that, of that total, £300,000 was represented by six items, it will be seen that the total value of the concessions accorded is a low price to pay for the maintenance and probable expansion of a market worth £6,000,000 Sterling in the same year.

Apart from the existing glass arrangement, the agreement provides for -

(1)   Reciprocal most-favoured-nation treatment.

(2)   The grant of intermediate tariff to Belgium in respect of 53 subitems ; an undertaking not to increase the duty on seven nonprotective items; primage concessions ona number of items; remission of the revenue duty on outside packages operating on goods covered by nine items; an undertaking to refer a limited number of items to the Tariff Board for inquiry and report; and reclassification of certain sheet glass not manufactured in Australia.

(3)   Consolidation of the present dutyfree entry into Belgium of Australian wool, sheep-skins, hides, and tallow, and consolidation of the fresh apple and pear duties.

(4)   An undertaking by Belgium that Australian barley, wheat, and frozen beef will not be prohibited.

(5)   A provision that, should either party to the agreement adopt any measures in respect of any goods specifically mentioned in the agreement, which, in the opinion of the other party, have the effect of nullifying or impairing the advantages conceded by the agreement, the other party shall be at liberty to take any action which it considers proper to re-establish the equilibrium of the agreement.

I commend the agreement to the approval of honorable senators.

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