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Twine, cordage, rope and cables



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4/1s7

FOR PRESS No.423

L_92 _ROPE AND CABLES (Statement by the Deputy Prime Minister and

Minister for_Trade and Industry^ Mr. J._McEwen)

The Deputy Prime Minister and Minister for Trade

and Industry, Mr. J. McEwen, announced today that the Special

Advisory Authority's report on twine, cordage, ropes and

cables had been received.

Mr. McEwen said that the Government had accepted

the recommendation in the report that there should be no

change in the existing rates of duty.

The reference to the Special Advisory Authority

arose from the situation in the industry following the recent

devaluation of Sterling. The Special Advisory Authority found

that although there has been some deterioration in the Australian

industry's competitive position in relation to the United Kingdom,

this has not resulted in injury to the local industry nor is it

likely to cause injury in the short term.

Copies of the Special Advisory Authority's report,

which will be tabled in Parliament, are available from the

Department of Trade and Industry, Canberra, and Collectors

if Customs in all States.

CANBERRA. A.C.T. 19th June, 1968. 48/68T

1968

COHMONWEALTH OF AUSTRALIA

REPORT OF SPECIAL ADVISORY AUTHORITY

UNDER

PART V OF THE TARIFF BOARD ACT 1921-1966

ON

TWINE, CORDAGE, ROPES AND CABLES FILLING WITHIN PARAGRAPH 59. 04. 99

11th JUNE, 1968

I

TWINE, CORDAGE, ROPES AND CABLES

FALLING WITHIN PARAGRAPH 59.04.99

The Right Honourable the Minister for Trade and Industry

The following report is submitted in response to

your reference of 13th May 1968 on the question of whether it

is necessary that urgent action be taken to protect the

Australian industry manufacturing twine, cordage, ropes and

cables in relation to the importation of twine, cordage, ropes

and cables falling within paragraph 59.04.99 in the First

Schedule to the Customs Tariff 1966-1967.

The full terms of the reference are set out in

Appendix A attached to this report.

Paragraph 59.04.99 of the Customs Tariff together

with current operative rates of duty is shown in full in

Appendix B. The existing duties may be summarised as follows .:-Rates of Duty General Preferential

Twine, cordage, ropes, etc. not being tyre cord and not being of cotton or of man-made fibres

Reaper and Binder Twine 17*% 10%

Other 30% 10%

Reaper and Binder Twine from New Zealand is dutiable at 10% or $0.005 per lb whichever is

the lower.

These duties have been in operation from 6th January

1968 and follow recommendations by the Tariff Board in its

Concluding Interim Report on the General Textile Reference dated

21st September 1967. Before 6th January 1968, the Preferential

duty on reaper and binder twine was the equivalent of about 10^'

per cent ad valorem while the Preferential duty on other goods

covered by the present reference was 172 per cent ad valorem.

0

TWINE, CORDAGE, ROPES AND CABLES FALLING WITHIN PARAGRAPH 59.04.99

In recommending new duties the Board stated that it 1I had been constrained to recommend continued assistance because

it believes that the industry should be given an opportunity to

reorganise itself along more efficient lines.. ...`' While -questions of efficiency are outside the scope of my inquiry, it

is not inappropriate to note that the Australian manufacturers

have already taken steps to rationalise the industry. The

industry believes that, through improved efficiencies in

production and marketing, this action will result in reduced

costs and prices.

During the course of my inquiry on this subject discus-sions were held with Kevin J. Cremen and Associates Pty. Ltd.,,

with representatives of The Australian Rope, Cordage and Twine

Association, and with representatives of M. Donaghy & Sons

Pty. Ltd., A. Forsyth & Co. Pty. Ltd., Geo. Kinnear & Sons Pty,

Ltd. and James Miller & Co. Pty. Ltd., Australian manufacturers

of twine, cordage and rope. Written representations were.

received from Melbourne Rope Works Pty. Ltd. Discussions

were also held with representatives of The Australian British

Trade Association, The National Farmers Union of Australia and

Victorian Country Group Buyers. Written evidence was received

from Atlas Agencies Pty. Ltd.

The terms of reference for this inquiry are those

normally used in an emergency protection case. However, the

Australian industry maintained that, having regard to the

events which led up to the inquiry, the reference should be

interpreted as applying solely to the effects of the 14.3 per

cent devaluation of the British currency in November 1967

on the competitive position of the Australian industry.

92

TWINE, CORDAGE, ROPES AND CABLES FALLING WITHIN PARAGRAPH 59.04.99

The industry submitted evidence that the landed duty

paid prices of British goods covered by the reference had been

lowered as a result of the reduced value of sterling. It

claimed that, as a result of these lower prices, the protection

afforded the industry by the Customs Tariff had been nullified.

Apart from the problem of devaluation, the industry claimed

that its competitive position had already been rendered diffi-cult because of the reduced duties operating as a result of the

Board's report of September 1967. The industry however stated

that; at this inquiry, it sought only to restore the protection

it had lost as a result of devaluation.

Information supplied by the Australian industry

related to a number of products covered by the reference and

showed the different rates of duty needed on the various

products to restore the competitive position lost through

devaluation.

The most important single product under reference, in

terms of volume and value, was sisal baler twine and the infori7ia-tion submitted largely related to this product. In order to

avoid fragmentation of the Customs Tariff, it was suggested th` ,t

the duty needed on sisal baler twine be applied to all goods

covered by the reference. Consequently, the industry requested

a duty of $53 per ton on imports of rope, cordage and twine, falling within Tariff Item 59.04.99.

The price of British sisal baler twine quoted in

sterling at the present time was claimed to be very much the sane

as the price ruling prior to November 1967, and the local industry

submitted detailed calculations to show that, in terms of

Australian currency, sisal baler twine could now be landed in

TWINE, CORDAGE, ROPES AND CABLES

4.

FALLING WITHIN PARAGRAPH 59.04.99

Australia below the price operating prior to devaluation.

The information set out the position, before and after

devaluation, in respect of sisal fibre prices, the British

export prices for sisal baler twine, sisal rope etc., the

landed duty paid prices for these goods and the Australian

costs and selling prices for similar goods.

The Australian industry also submitted information

claiming that, following devaluation, the cost of freight and.

insurance per ton of sisal baler twine, expressed in Australian

dollars, had been reduced.

The Australian British Trade Association representa-tive and importers furnished evidence of the domestic prices'

for sisal baler twine in Britain and c.i.f. prices applying

before and after devaluation. In addition, they supplied

details of increases in freight and insurance charges applying

between Britain and Australia and arising from both devastation

and closure of the Suez Canal. These details were taken from

shipping documents and advance documents covering orders for

this year.

On the information made available to me, it is clear

that, as a result of devaluation, there has been some

deterioration in the Australian industry's competitive position

in relation to the United Kingdom. For various reasons I have

not been able to isolate, with any great accuracy, the direct'

and indirect effects of devaluation in this general calculation.

I have, however, been able to calculate the landed duty free,

price of sisal baler twine which will shortly be arriving in

this country for the 1968 crops. A comparison of this figure

5.

TWINE, CORD^GE, ROPES AND CABLES FILLING WITHIN P IR^GRAPH 59.04.99

with the Australian manufacturers' present cost to make

and sell baler twine shows that the Australian industry

will have an apparent disability against imports from

Britain in excess of the present Preferential Tariff rate

of 10 per cent ad valorem, The disability calculated in

this way, however, is less than that suggested by the

industry's request.

The Australian industry claimed that this inquiry

should be concerned solely with the restoration of any

protection which it might have lost as a result of

devaluatioLl. If this was accepted as the sole purpose of

the inquiry a temporary duty in addition to the existing

Preferential rate could be justified. In my view, however,

before any additional protection could be recommended it

would be necessary to determine whether, as a result of

devaluation, the industry has suffered or is likely to

suffer injury from imports.

The following table shows the volume of imports

of the goods under reference and compares sales of these

goods by Australian manufacturers. Sisal baler twine is

not separately recorded in the official statistics and

the first section of the table includes sisal rope and

binder twine as well as sisal baler twine. The evidence

submitted to me on behalf of importers indicates that a

very high proportion of these imports would be sisal

baler twine.

TWINE, CORDAGE, ROPES AND CABLES

FAILING WITHIN PARAGRAPH 59.04.99

Twine, Cordage, Ropes & Cables Imports Cleared for Home Consumption and Sales by A.R.C.T.A. members

Products 1965-1966 1966-1967 1967-1968

Nine Months

Tons % Tons % Tons

Sisal rope, cordage etc. including reaper and binder twine Imports -

United Kingdom Total Imports Australian Sales

Total Sisal

Manila hemp rope cordage etc. Imports -United Kingdom

Total Imports Australian Sales

Total Manila

225 2.0 363 2.6 230 2.3

256 .3 - 42 3.1 261 2.6

10,800 97.7 13,300 96.9 9,900 97.4

11,056 100.0 13,726 100.0 10,161 100.0

7 1.0 6 1.0 6 1.0

15 2.2 27 3.3 30 4.1

800 97.8 800 96.7 700 95.9

818 100.0 827 100.0 730 100.0

I was informed that the demand for sisal baler twine

is seasonal and in Australia practically all sales are made in

the period August/December each year. For this reason, importers

usually place orders before the end of May and, even in good

seasons, additional orders are small compared with initial

purchases. Imports usually arrive between August and early

November. It can therefore be assumed that all baler twine

for the year 1967-1968 has already been imported. The imports

recorded in the above table are predominantly sisal baler twine

and for that reason total imports for 1967-1968 are not likely

to show any great increase on the figures shown in the table

for the first nine months of 1967-1968.

7.

TWINE, CORDAGE, ROPES AND CABLES FALLING WITHIN PARAGRAPH 59.04.99

Statistics relating to the Australian industry's

sales of sisal baler twine are usually given in crop years.

As these sales are mainly confined to the period August/

December I have taken the figures for the 1967 crop year as

representing the whole of the Australian indus -pry's sales

for the 1967-1968 financial year.

An examination of the table shows clearly that up

to the present the Australian manufacturers have not suffered

any injury as a result of imports. The industry acknowledged

this fact but claimed that devaluation had made import prices

more attractive and in the absence of additional protection

imports were likely to increase heavily in the 1968 season.

There was some evidence that the 1968 harvest of

baled fodder will be in excess of the 1967 harvest and in

fact there was optimism that it would be a bumper crop. If

this is so, there will be an increased demand for sisal

baler twine both locally producedand imported. In regard

to imports the representative of The Australian British Trade

Association submitted a statement showing the total imports

ordered or to be ordered for the 1968 season by each of the

principal companies or organisations now engaged in importing

sisal baler twine. This evidence was supported by written

statements by each importer and by the two principal British

exporters of the goods under reference. On this basis,imports

for 1968 should not exceed significantly that proportion of

total demand which has been supplied by imports in recent years

TWINE, CORDAGE, ROPES AND CABLES

FALLING WITHIN PARAGRAPH 59.04.99

and illustrated in the above table. If, however, sales by

Australian manufacturers also increase (which is a reasonable

expectation) the share of the market supplied by imports could

show little or no variation.

Importing interests also maintained that there were

very real limitations on their ability, firstly, to finance

and, then, to market and sell in one season quantities of sisal

baler twine much in excess of those already notified to me.

There was a risk, particularly if the harvest fell short of

expectation, that repeat shipments would arrive too late and

would, at some cost, have to be held in stock until the

following season.

Devaluation has not had any effect on Australian

manufacturers' sales during the 1967 harvest. There is

sufficient information to show that in the 1968 season

competition from British imports should remain virtually

unchanged. The season commencing August 1969 is relatively

far away and it is more difficult to predict what share of the

total market for sisal baler twine will be supplied from imports.

Generally speaking it can be said that by 1969 the

inflationary effects of devaluation on British production

costs will have resulted in some upward trend in prices for the

goods under reference. This comment is underlined by the

circumstances under which British manufacturers fixed their

current price for sisal baler twine. The most important raw

material in twine production is sisal fibre which is purchased

by both British and Australian users at world prices.

a

TWINE, CORDAGE, ROPES AND CABLES FALLING WITHIN PARAGRAPH 59.04.99

These prices had been falling gradually in recent years, but

rose by about 8 per cent following devaluation in November

1967. Early in December 1967 the British twine manufacturers

fixed the price of sisal baler twine for the Northern

Hemisphere season. This price would have reflected in the

main the cost of pre-devaluation stocks. It may be expected

that the future British price for sisal baler twine will reflect

the continued higher price of raw materials including freight

increases.

The Australian industry submitted that this case was

concerned only with devaluation and that I should recommend

that whatever protection was lost as a result of devaluation'

should be restored by additional protection. In arriving at•.

my conclusions in this case, however, I have had regard to

my terms of reference and have considered the two main points

arising out of the inquiry, viz:-

1. Has any of the protection afforded the Australian''"

industry been nullified as a result of devaluation,

and

2. Has the Australian industry suffered or is it

likely to suffer as a result of any loss of protection

brought about by devaluation.

As indicated earlier in this report I have not been

able to calculate precisely what protection the industry has,

lost solely as a result of devaluation. There is no doubt,;'

however, that because of devaluation, and some other factors,

the Australian industry's price disadvantage against Britain

10.

TWINE, CORDAGE, ROPES .A.ND CABLES FALLING WITHIN PARAGRAPH 59.04.99

at the present time is greater than that which would be

indicated by the present. Preferential Tariff rate of duty.

On the other hand, I am of the opinion that the

Australian industry has not suffered injury as a result of

imports up to the present and that during the 1968 season no

urgent action is required to protect the Australian industry

in relation to imports.

It is possible, after the close of 1968, that imports

of sisal baler twine, as a percentage of total demand, could

increase but such increase would need to be substantial, in

my opinion, before urgent protective action was required.

There was no information available to me to suggest that

British imports would cause injury to the Australian industry

in the short term. In reaching this conclusion, I have taken

into account the fact that Australian manufacturers of sisal

baler twine have traditionally dominated total local sales and

that the most recent action by the industry to rationalise

its production and marketing should ensure that future import

competition is minimised.

While this conclusion has been based on the

competitive position of sisal baler twine, I regard the

findings as applying generally to all the goods under

reference.

11.

TWINE, CORDAGE, ROPES AND CABLES FALLING WITHIN PARAGRAPH 59.04.99

In answer to the question raised in the Minister's

reference I advise that at present there is no necessity for

urgent action to be taken to protect the Australian industry

manufacturing twine, cordage, ropes and cables in relation

to the importation of twine, cordage, ropes and cables

falling within paragraph 59.04.99 in the First Schedule to

the Customs Tariff 1966-1967.

N. V. Watson

SPECIAL ADVISORY AUTHORITY

CANBERRA, AUSTRALIlN CAPITAL TERRITORY .... 11th JUNE, 1966.

APPENDIX A

TWINE, CORDAGE, ROPES AITD CABLES FALLING WITHIN PARAGRAPH 59. 04. 99

Whereas it appears to me, IAN SINCLAIR, Acting Minister of State for Trade and Industry, that urgent action may be necessary to protect the Australian industry manufacturing twine, cordage, rope and cable, I, IAN SINCLAIR,

in pursuance of the powers conferred upon me by Section 18A of the Tariff Board Act 1921-1966, do hereby request the Special Advisory Authority, Mr. N. V. Watson

(I) to undertake an inquiry under Section 18B of the aforesaid Act, on the following questions:

(a) whether it is necessary that urgent action be taken to protect that industry in relation to the importation of twine, cordage, ropes and cables falling within paragraph 59.04.99 in the First Schedule to the Customs Tariff

1966-1967;

(b) if such urgent action having regard to the protection can appro: means of a temporary

so provided, whether provided '-

is necessary - whether, public interest, the priately be provided by duty, or if it cannot be

it can appropriately be

(j) by means of the temporary restriction of the importation of these goods.; or

(ii)• by means of'a combination of both a temporary duty and the temptrary restriction - the importation of these goods;

and

(c) whether an. r2go1ended temporary duty, t 14 oi'ary 'Ves$ription of sports Qr ombinatiori both .ehdu-.d apply to goods in chix ect transit At they date of this reference; arid (2) to report, ih accordance with 6ection 18D.of the

aforesaid Act. on these questions.

•.IAN SINCLAIR

ACTING MINISTER OF STATE FOR TRADE AND INDUSTRY

13th May, 1968.

APPENDIX B

TWINE, CORDAGE, ROPES AND CABLES FALLING WITHIN PARAGRAPH 59. 04. 99

OPERATIVE RATES OF DUTY

Customs Tariff 1966-1967

Rates of Dut y

Item Goods General Preferential

59.04 TWINE, CORDAGE, ROPES

AND CABLES, PLAITED OR NOT:

59.04. 1 - Tyre cord as used in the Not under reference

manufacture of pneumatic rubber tyres:

59.04. 9 - Other

59.04.910 - - Of cotton Not under reference

59.04.920 - - Of man-made fibres )

59.04.99 - - Of other materials:

59.04.991 - - - Reaper and binder

• twine 172 16f

N . Z:ld%, or

• if lower,

$0.005 per lb.

59.04.999 - - - Other 30% 10%