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Tuesday, 30 April 1957

Mr SWARTZ (Darling Downs) . - Perhaps, one of the greatest tributes paid to the Minister for Trade (Mr. McEwen) has been the lack of any real argument by the honorable member for Lalor (Mr. Pollard), who was Minister for Commerce and Agriculture in the Chifley Labour Government, who has spent half an hour on a rather rambling discussion on particular clauses of the new agreement, but has not brought forward any specific argument to show that he does not completely favour the agreement. I wish to deal with a few specific points that he raised. First, he complained about the time allotted for the debate. I merely ask him how much time was allotted for debate when in 1948 the previous Government submitted for acceptance the General Agreement on Tariffs and Trade, which was something probably more comprehensive than this agreement. He also complained that a number of years of work had been put into the preparation of this agreement. Of course, we agree with that to some extent because, always at the back of the mind of the Government, has been the thought that at some time in the future the Ottawa Agreement would have to be revised. But it is a fact that the bulk of the work in relation to this new agreement was done last year, first, by the Minister for Trade and, later, by officers of his department. That is a matter to which I shall refer later.

The honorable member for Lalor also made the extraordinary claim at the outset of his speech that there were no advantages for Australia in the new Canberra agreement. Let me direct his attention to some specific facts in answer to that claim. First, there are the new arrangements regarding the wheat agreement. I shall pass over that for the moment. Then there is the fact that Australian manufacturers will obtain many of their imported materials much more cheaply. That is important to the general economy. Thirdly, there is now room to secure new export trade benefits in foreign countries, which did not exist previously. These are only particular points that I am raising in direct answer to the points raised by the honorable member for Lalor. The fourth point is the positive contribution to our balance of payments situation that this agreement will make, and the assistance it will give in relation to our present costs situation. I have merely referred to these points now to answer the honorable member for Lalor, and I hope to refer more specifically to some of the other points in the agreement later.

The honorable member for Lalor spent considerable time dealing with the wheat clause of the agreement. I think the whole basis of his argument was that that clause was too loose, and that there would be no means of implementing it and achieving the objective aimed at. Perhaps, the honorable member does not know that already some representatives of United Kingdom millers have been visiting Australia. They came here primarily at the request of the United Kingdom Government, which informed them of this new agreement with Australia and advised them that they would be expected to take annually in the next five years a specified quantity of Australian wheat. Also there has been a number of United Kingdom millers out here to discuss with the Australian authorities and the industry itself the problems associated with the shipping of wheat in future, and with particular reference to the quality of wheat they require.

Far from this agreement being a nebulous understanding, it is already an established fact. A rather extraordinary statement made by the honorable member for Lalor was that the United Kingdom was already bearing the burden of the existing Ottawa Agreement, and that the people of the United Kingdom would not agree to accept any new burdens that the new agreement would place on them. I think that was just a phrase that he used in passing, but, perhaps, I should point out some facts in answer to him for the benefit of people listening to the debate, and in case other honorable members refer to the matter later. It is, of course, known that under the Ottawa Agreement the preference Australia has granted to the United Kingdom in recent years was on the basis of approximately 14 per cent, by value, whereas Australian goods have received preference in the United Kingdom on the basis of only 9 per cent, by value. That is the first point, which is quite significant in relation to the point raised by the honorable member for Lalor. Another point is that for the five years ended June, 1939, Australia enjoyed an annual trade surplus with the United Kingdom of £24,000,000, whereas in the five years ended June, 1956, we incurred an average annual deficit of £67,000,000. Those figures do not show any particular burden that the Ottawa Agreement has placed on the British people. Also, during the period of the agreement, the volume of exports from the United

Kingdom to Australia has almost doubled whereas our exports to the United Kingdom have decreased considerably. Those facts are sufficient answer to the points raised by the honorable member for Lalor when he claimed that the new agreement would not be acceptable to the people of the United Kingdom. On top of them, however, we have the statements of the United Kingdom Government, the industries concerned, commercial organizations in the United Kingdom and the press generally, which has expressed itself in favour of the provisions of the agreement.

The honorable member for Lalor referred, finally, to shipping. He suggested, in a broad way, that the Australian Government should issue an ultimatum to the shipping authorities regarding freights to the United Kingdom. I direct his attention to the fact that the present negotiating instrument, the Australian Overseas Transport Association, which represents the interests of the parties on both sides in negotiations with United Kingdom shippers and the Conference line was established by the government of which he was a member. That authority, brought a little up to date, is the authority which is continuing the negotiations to-day. I raise that particular matter merely because the honorable member has suggested, in a vague way, that the Government should step in and take action, ignoring the organization established by the government of which he was a member.

I want to refer briefly to a few substantial facts about the new agreement. I feel that in the rambling dissertation we have listened to, with only fleeting references to some clauses of the agreement, we have missed some of the essential points. 1 should like to try to bring the debate back on the rails, for the benefit of people like the honorable member for East Sydney (Mr. Ward), who would probably find it difficult to understand. I should like to explain a few of the principles of, and some facts associated with, the new agreement. First, I think we should have a brief reference to the history of the Australian tariff. The uniform Australian tariff was introduced in 1 902 shortly after federation. At that time the duties introduced afforded a moderate level of protection to Australian industry. The tariff wall was steadily built up until in the 1930's it compared favorably with similar structures in other leading protectionist countries.

The policy of protection that has been applied throughout the 56 years of federation has been agreed to and supported by all governments and by all parties in the Parliament on all occasions since federation. Up to the time of federation, the Australian economy was predominantly an agricultural economy, but after federation national aspirations called for a balance between primary and secondary industry. Although Australia is still dependent on primary industry for 85 per cent, of its export income, nevertheless on the grounds of national and economic security the tariff policy that has been adopted throughout the years has been fully justified. In my opinion, it has given us certain well-defined advantages. I think they can be broadly classified in the terms that I shall mention.

First, it has led to the establishment of secondary industries - manufacturing and processing - and this has presented greater opportunities for employment, thus permitting of an increase* of population to an extent which would not have been possible otherwise. It has also led to a far higher national income than would have been possible if some other policy had been adopted, and it has raised our living standards. The tariff policy that has been pursued has assisted us in two world wars considerably in the production of war materials.

Finally, the tariff system has freed Australia from the fear of international trade exploitation, and has given us some additional bargaining power in overseas markets. The vital importance of primary industry to the Australian economy has been recognized by governments throughout our history since federation. This has been borne out by the efforts of various governments to achieve some definite stability in international trade. In following this policy, Australia has entered into a number of important international trade agreements. One of the two most important of the agreements is that which we are discussing to-night. It is the United Kingdom-Australia Trade Agreement which, following the discussions between the various dominion countries at Ottawa, was assented to on the 2nd December, 1932, and has since become known as the Ottawa Agreement. The second important agreement is the General Agreement on Tariffs and Trade, the multilateral agreement, which was assented to under an act known as the International Trade Organization Act on 17th December, 1948. This was an act to approve " acceptance by Australia of the General Agreement on Tariffs and Trade and the Havana Charter for an international trade organization, and for other purposes ".

Those are the two principal international agreements to which the governments of recent years have subscribed. They indicate the emphasis that Australian governments, in the last few years, have placed on the importance of a stable international trading situation. However, since the Ottawa Agreement was signed there have been some great changes in the Australian economy. They can be briefly categorized into a number of separate divisions. First, there has been a very substantial population increase in Australia, from approximately 6,500,000 in 1932 to somewhere about 9,500,000 to-day. That has, of course, brought with it a great increase of the work force. The work force during this period has practically doubled. At the same time, substantial development of both primary and secondary industries has occurred during this period. These factors have created a tremendous upsurge in the demand for imported materials. At the moment, they have produced a balance of payments problem, which is one of the major problems facing the Australian economy.

In order to deal with these problems the Government on the one hand has introduced import restrictions and, on the other hand, has engaged in a vigorous trade promotion drive overseas, particularly on the United Kingdom market, our main market, in an endeavour to establish a better balance than had previously existed. Associated with our economy, also, is a cost factor problem, which is super-imposed on the problems associated with our export drive. In view of these considerations that I have briefly mentioned, the Government believes that it is important to review the international structure for export trade and for imports. The first approach in this policy has been a review of the Ottawa Agreement, the agreement with the United Kingdom which provides our greatest reciprocal market. The review that took place last year took many months. It was conducted in two stages, and covered all aspects of trade relationships. In the first place, the Prime Minister (Mr. Menzies) and the Minister for Trade (Mr. McEwen) commenced discussions in the United Kingdom. When it was seen that certain principles had been established as a result of very difficult early negotiations, the second phase was introduced whereby the officials of the Australian Department of Trade engaged in discussions with the United Kingdom Board of Trade, and consideration of details of a comprehensive agreement based on the earlier principles was commenced.

The guiding principle in negotiations was that the exchange of mutually advantageous preferences would be of direct benefit to both countries, each of which was th. principal outlet for the other's exports. At this stage, this Parliament and the whole of the Australian people should pay a direct tribute to the Minister for Trade and the Secretary of the Department of Trade for the splendid work that they undertook under very difficult circumstances. As time goes on, history will show us that the tremendous advantages which have been gained by this trade agreement for the future cannot possibly be assessed at the moment. The new agreement, as has already been stated, was signed in Canberra on 26th February, 1957.

The British Empire preferences, which were the basis of the original Ottawa Agreement, were born in a time of world depression, and were designed to meet conditions that existed at the time. However, due to changed conditions since 1932, Australia has for some years been giving preferences to the United Kingdom on the basis of 80 per cent, of the United Kingdom imports, and has received in exchange under this agreement preference on about 40 per cent, of exports to the United Kingdom. Also, many of our preferences on the United Kingdom market were expressed in pre-war money values, whereas preferences to the United Kingdom in Australia were mainly in percentage, terms. That has been a very significant factor in the adverse balance of payments problem that has arisen over the last few years.

The new agreement is based on the principle of mutual preference. I refer honorable members to the quotation that T made a few moments ago. It is interesting to note that the conditions of the Ottawa Agreement, whilst unfavorable to

Australia over the last few years, have been fixed by the super-imposition on them of the General Agreement on Tariffs and Trade, which is a multilateral agreement signed by a number of countries, including the United Kingdom and Australia. That meant that the conditions which were set out in the original Ottawa Agreement could not be varied unless all the countries concerned agreed to the variation. So in 1954, Australia, pursuing the rather hopeless task of endeavouring to get other countries to agree to an amendment of the General Agreement on Tariffs and Trade rules, raised the matter at the Geneva conference with a view to having the United Kingdom preference values restored to something approaching the values which exist to-day. However, for obvious reasons, countries which would have lost some advantage if they had supported an amendment, did not agree to an alteration of the rules.

Mr SPEAKER - Order! The honorable member's time has expired.

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