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Wednesday, 1 May 1957

Mr HAWORTH (Isaacs) .- The subject-matter before the House is a statement made by the Minister for Trade (Mr. McEwen) concerning a trade agreement between the United Kingdom Government and the Australian Government, which will have the effect of replacing the Ottawa Agreement. There can be no doubt that the Minister and the Government are to be congratulated on the terms of the new trade treaty with Great Britain. There is now a general measure of agreement that, howaver welcome the old agreement may have been in the dismal days when it was negotiated, and however valuable some of its principles may have been, for some years it has been a millstone round our necks. Let us be quite frank about it: We are well rid of it. 1 am sure that all honorable members will be interested to know how the New Zealand Government fares now that it is seeking the same kind of revision of its trade relationships with Great Britain as we sought. The Australian negotiators must be given the credit for taking a lead in working out the basis of this entirely new type of Commonwealth agreement. I believe that this is a step forward in the development of greater unity between British peoples and British countries.

The most significant thing about this treaty is that the operative factors in Australian trade are now controlled right here in Australia, where they should be controlled, and not at Whitehall. It is increasingly true, I think, that Great Britain is no longer concerned with our economic circumstances to anything like the degree with which she was concerned with them, say, 25 years ago, when the Ottawa Agreement was signed. Let no one think that this is due to a change of heart or a change of sentiment. I think it is one of the hard facts of life that Great Britain can no longer afford to be vitally concerned with our welfare while she is struggling to find a new level of survival for her own people.

It is interesting to note that informed opinion in London was just as pleased with the revision of the treaty as we were in this country, but for very different reasons. The British comment was that Great Britain herself could no longer afford to have on hand a relatively " soft " market area, such as she had in Australia, since that meant the generation of export trading arrangements suitable only for a " soft " area. Far better it is for Great Britain to have in Australia an area where, although the export market is competitive, there are special facilities available to her. In other words, we have gained some room for manoeuvre in our trade negotiations with foreign countries, and the British expect us to use that gain to sharpen competition in trading generally.

I should like to remind the House of how the atmosphere has changed even in the short time since this new treaty was negotiated. When the Prime Minister (Mr. Menzies) and the Minister for Trade opened the talks in London, they did so against a background of falling wool prices and a struggle to keep imports at a reasonable level, while the overseas balances were dwindling away. To-day, wool prices are at a level surpassed only in the record peak periods. Import licensing has been relaxed and our overseas balances are increasing daily. There is generally a relaxed economic atmosphere in this country. However, at the risk of usurping the privilege of the Leader of the Opposition (Dr. Evatt), who is usually the forecaster of woe, I wish to comment on the ease with which the pleasant feeling that exists now could be disturbed. Sir John Teasdale has recently directed attention to the serious position facing wheat exports, although, as the Minister has pointed out, the new provisions of the United Kingdom Trade Agreement will provide an underpinning of the wheat trade generally. Even with that, the outlook is disquieting. Our wool prices are considerably influenced at this moment by heavy operations by Japan. Japanese mills arc doing a big business in re-exporting to America, and it may be that the terms of this business do not have the sound base that we might wish for. We have already learned, from bitter recent experience, what a slide in wool incomes means to our balance of payments.

One of the less satisfactory provisions of the United Kingdom agreement is that dealing with sales of subsidized farm products. The fact that the United Kingdom Government declined to enter into any mutual arrangement to deal with subsidized products contains, of course, a clear implication that we may have to fight alone on this issue. The same situation throws into sharp relief the somewhat unsatisfactory position of our own subsidized products - sugar, butter, wine, and, to a less extent, wheat. Besides all of these, of course, there is the possibility of a dry season. Ali of theseare what might be termed internal possibilities, but there are also external possibilities of fairly rapid change. Three things particularly spring to my mind.

First, there is the position of Great Britain in relation to the newly formed European Common Market. Mr. Macmillan. and his Government have decided to stand outside the customs arrangement made by the six central nations of Europe, but the United Kingdom Prime Minister has indicated that he does envisage some arrangement of limited free trade in which the United Kingdom would take part. The announced plan for the common market, which could be of great concern to Australia, provides for a gradual reduction of tariff barriers to a common level, but even Australian exports to Britain could be seriously embarrassed if the. United Kingdom is going to be a full-blooded partner with the free trade area nations, in which the Scandinavian nations are included. It is worth noting, in this connexion, that if the European plan is successful, it is quite likely to be a factor in providing sharpening competition with British manufactured goods in world markets generally.

The second thing that we in Australia cannot ignore is the unresolved Middle East crisis. With our greatest trading partner on the other side of Suez, developments in that area may well have momentous consequences, particularly to a country like Australia which is dependent on satisfactory arrangements with the canal authority for lower transportation costs, to say nothing of the 5 per cent, increase in shipping freights now mooted in some quarters. Thirdly, we must take into account developments in India and Asia. Already Australia is developing a thriving export market in India for wool tops, competing with Bradford on a significant level. Australian businessmen who have visited India recently have all returned convinced that there is a huge potential in that country, growing almost as one watches it. The influence of Japan upon our present wool prices has been noted, and, of course, Japan's potential must be measured in any attempt to see an Australian market for manufactured goods in SouthEast Asia.

All of these things mean that this is a time for extreme care in formulating our trade policy - care as never before. The shift of so much of the measure of control from Whitehall to Australia as a result of this new agreement means also that we carry a greater responsibility than ever before. The Minister has already referred to the circumstances in which the Department of Trade was formed, and I now urge him, in view of the deepening importance of the Ministry generally, to agree to a further step. This step is the formation of a parliamentary committee on trade. A great many thinking men in both primary and secondary industry, and in financial circles, are frankly perturbed about one aspect of the creation of the Department of Trade. That is, that the department is at once a fact-finding body, and a policy-making body and, in all, a bureaucracy of the greatest magnitude. One of the soundest precautions against error that can be taken is to provide for some measure of separation between these two. More than that, it is vital that there should be, in finance and industry, the complete confidence in the Department of Trade that its most able officers have earned. This confidence would be given with far fewer reservations than at present if the making of policy could be influenced by some more open method than at present. In the last century, the use of parliamentary committees on great social questions of the time was general. To-day, however, in Britain and in most countries that model their administration on hers, the use of such committees has declined; not so in the United States and France, where parliamentary committees have tended to come to the forefront. I believe that the time has come for us in Australia to consider following the United States's example in some degree - I do not say we should go the full way - and that this problem of keeping the terms of our trade constantly under review is a case in point.

The Minister has made it clear that the operation of the Tariff Board will continue in all cases where there is any doubt whether an individual Australian industry may suffer by a variation in tariff policy; but this board is not empowered to undertake the very general surveys needed to meet public confidence, and, in any case, I do not consider it proper that it should. There is a special circumstance also in which a parliamentary committee on trade could be invaluable. There is nothing in the Minister's statement to indicate what future policy may be regarding import licensing, save the comment that the balance of payments problem is, in the Ministers' words, " more than a passing phase ". But it is well recognized that import licensing has side effects quite apart from the direct influence on the balance of payments, and some industrial development in Australia to-day has, in fact, been fostered under what might be termed the artificial protection of the restrictions. Relaxation of restrictions must, therefore, be checked against tariff policies; otherwise there is a possibility that the market will be divided in too many directions. If this were the case, the costs of manufacture might rise to the point that the export possibilities of manufactured goods would be limited. Again, any one of a number of the external circumstances that 1 have already referred to could bring about again a need for new restrictions, in which case a parliamentary body to work in association with the Administration, but with an independent right of investigation, could be invaluable.

It is almost true to say that over the past ten years the great expansion of secondary industry in Australia has been in spite of the Ottawa Agreement and of the trade policies that were previously dominated by Whitehall. Now, however, this agreement with the United Kingdom changes the picture. Our trade policy is now in our own hands, and we have more flexibility than ever before in our dealings with our partners in the General Agreement on Tariffs and Trade. At the same time, we have to remember that a firm trade policy is the only instrument bv which we can continue our immigration programme, as I believe we should, and, further, to give industry a much-needed opportunity to plan ahead, and still keep our balance of payments and costs structure within bounds.

In matters of such immense importance as these. I believe that there should be some clear channel of parliamentary inquiry quite separated from that inside the Ministry. Only by such a method will there be a wide measure of public confidence that our new responsibilities are being met. After all is said and done, public confidence is really the key to progress. I do not see anything to criticize in the new trade agreement, although Australia has not been able to secure all the benefits originally sought. I believe that the new agreement should be of great benefit to this nation. It will afford a degree of stability in the export of our primary products and, at the same time, it should ensure lower costs to the consumers by reducing the cost of certain essential imports from countries other than Great Britain.

It will be vital that tariff duty should not be reduced where such reduction could be detrimental to any Australian manufacturing industry. The Minister has given assurances that there will be safeguards against this, and that in a doubtful case a Tariff Board inquiry will be held before any action is taken. That is very reassuring to many manufacturers.

There is nothing in the statement about future import licensing policies, but if, as a result of the implementation of the new trade agreement, Australia's balance of trade improves to such an extent that import restrictions can be greatly eased or eliminated altogether, it will be vital that the import tariff be such as to ensure efficient Australian production levels, adequate to make it possible to manufacture at an economic cost. If the market were divided in too many directions, the cost of manufacturing in Australia could be such as to strictly limit our potential export markets for manufactured goods.

I support the agreement. I believe that it is the most substantial step forward since 1932 that Australia has made in trade agreements with the United Kingdom. I believe that the feeling of the community generally to-day is one of great approbation towards the Minister and the department for the important part they have played in bringing this agreement to fruition. I congratulate the Minister. I trust that he will give serious consideration to setting up a parliamentary committee of trade. A body such as that would help materially in dealing with the matters that I have mentioned and also could exercise some control and ensure that the policy which the Minister has outlined and has endeavoured to bring into operation in this country will be implemented.

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