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Tuesday, 30 September 1958

Mr MENZIES (Kooyong) (Prime Minister) . - Mr. Speaker, the Leader of the Opposition (Dr. Evatt) has, I fear, got himself into a rather complicated state of mind on this matter, as clearly appeared in the last five minutes of his speech. It turns out that what is vexing him is not trade in lead and zinc, but the recognition of red China.

Dr Evatt - Australian export trade.

Mr MENZIES - The right honorable gentleman should not run away from it. He has already showed his concern about the recognition of red China. The most powerful and expressive passage in his speech was about the recognition of red China - and, of course, in conjunction with that recognition, exports to red China. It is a great mistake to say that the right honorable gentleman was contemplating trade with red China. He kept his eyes on exports to red China, and said not a word about what we were to import from red China. Is he so simple as to believe that trade runs all one way? If, indeed, we managed, or were disposed, to make an arrangement with red China in the form of a trade treaty or trade agreement which included imports into Australia as well as exports from Australia, would the Australian Labour party, which, to a man, opposed such an agreement with non-Communist Japan, support such an agreement with Communist China?

This is a great complexity in which the right honorable gentleman has involved himself. I invite everybody to recall - as I hope the people will recall - that, when this Government negotiated an agreement with Japan which protected over £100,000,000 worth of the business of this country with Japan, and that agreement was presented to the Parliament for approval, every Labour member, from the Leader of the Opposition down, supported an amendment and voted against the agreement. In other words, they said, " We will have no trade treaty with Japan ". If that meant anything, it meant, " We do not want to have trade with Japan ". We were criticized then for wanting it and to-day, because red China is a Communist country, we are criticized for not pushing on with the making of a trade treaty with a country which at this very moment is pumping shells on to civilians in Quemoy.

Members of the Opposition show by their interjections that they do not care for this, but I am enjoying it myself. As a monument of timing, I commend this to the attention of the public. At the very moment when' we have this problem of naked aggression being used by Communist China against Quemoy in alleged enforcement of legal claims, we have the right honorable gentleman, apparently with the backing of his party, saying that this is the time to recognize them and to push out and make trade bargains with them, so long, of course, as the trade bargains involve only exports from us and no imports from them.

I should like to remind any one who is interested in the export trade of Australia that this Government has devoted more attention to that problem than has any other government in the history of Australia. This Government, through trade commissioners, through many trade missions, through its export payments insurance scheme, through the encouragement of production, by the great loans that we have raised in the United States for capital purposes - loans which Labour was not even game to try to get - through vastly increased expenditure on the Commonwealth Scientific and Industrial Research Organization, through extension services, through special research into special industries and by very notable tax concessions to primary producers, has done more than has any other government in our history to encourage production and exports from Australia.

Mr Edmonds - Tell us what the trade balances are!

Mr MENZIES - If the honorable member for Herbert, who is from Queensland, is unaware of the fall in the price of wool, to take a simple example, I am sorry but I will not expect to see him in this House after the next election.

All this flim-flam about red China disposes of itself; let Opposition members mumble in their corners about their attitude as between Japan, which is not Communist, and red China, which is Communist; it will be a superb illustration for the people to have in their minds. Before I sit down - we have only fifteen minutes, as my right honorable friend realized - I just want to say a word about lead and zinc, because the right honorable gentleman's enthusiasm on this subject is newly born. I cannot remember him saying" anything about lead arid zinc or, indeed, about any of these other problems except the recognition of red China, until the last few days. Therefore, perhaps I should tell him something that I thought was well known. The tariff commission in the United States - I forget its precise name - investigated the question of lead and zinc and brought in a report months ago. The very moment it appeared that some action was likely to be taken, we made our representations. We made it quite clear, through diplomatic and other channels, that this was something that seriously concerned us because it affected a not unimportant export industry. The Administration of the United States of America, being a little reluctant to go in for some steep tariff accommodation, then began to investigate and to discuss what became known as the Seaton plan, which was designed, as I recall it, to include some stabilization on a basis of limited production.

All this, I thought, was very well known. It was freely discussed around this place. The right honorable gentleman had not heard of it, but other people had. The matter finally went before the President, and the President himself came down, within his powers, in favour of a quota. We instantly made our representations on that, first against the imposition of a quota and, secondly, pointing out that the year which was the basis of the quota was a very unfavorable and unrepresentative year as far as Australia was concerned. All those representations have been made and, of course, they have been considered. We are not in command of American policy, nor do we need to become too passionate about this matter. After all, the basis of the whole argument about lead and zinc is that for some time there has been a world over-production and this has had a depressing effect on prices. One of the great things that my distinguished colleague, the Minister for Trade (Mr. McEwen), has been hammering at the Montreal conference is the necessity for having multilateral commodity arrangements which will tend to give stability to the prices of these base metals. All that he has been pursuing with his usual vigour, while other people have just been waking up for the first time to these simple facts of life.

It may be said - and this is the last thing I will have time to say - that we have not put our representations in the right quarter. In those circumstances, I hope that the House will bear with me if I say that the Australian Ambassador has cabled me the full text of a personal letter, which will be formally delivered to me later to-day, from the President of the United States on this very matter. He says this -

My Dear Prime Minister: -

T have given careful consideration to the strong representations of the Australian Government through your Ambassador concerning the recent import quotas on lead and zinc. From the beginning of our common study of this whole problem I have tried to avoid any solution thai would bear too heavily upon any of our valued friends.

The cause of the current industry crisis is world overproduction of lead and zinc. No one country is responsible for this. The imbalance between production and consumption became so acute in 1938 that the United States mining industry reduced its production by about 25 per cent. In addition, the domestic industry, in an attempt to stabilize the market, accumulated very large inventories. Imports nevertheless continued at very high levels. The result was a steady decline in price.

It was to avoid chaotic conditions in the world industry that my Government and yours made strenuous efforts to agree with other lead and zinc exporting nations on a course of action for restoring order and stability in the industry throughout the world.

This is good proof of the activities that have been going on. The letter continues -

These consultations, while promising, revealed that there was no early prospect of obtaining unanimous agreement to deal with the emergency. It was only then that I reluctantly decided that prompt action by the United States was necessary.

There is apparently some feeling on the part of the Australians that the quota is designed to transfer the burden of readjustment to other countries. - This is not so. According to our estimates, the quota represents an equitable approach to the burdens of readjustment upon both domestic and foreign producers.

I recognize that the base period of the last 5 years happens to operate with particular severity against the Australian economy. This is a matter of concern to me. My Government stands willing to discuss with your Government and other interested Governments possible alternative arrangements. In this connection, I am hopeful that the multilateral discussions, which we expect to continue, will result in agreement of all on a > formula for equitably sharing the burden of readjustment and at the same time lay the basis for enduring stability in the world industry. If, contrary to our expectations, it should not be possible promptly to reach a multilateral agreement, the United States also stands ready to review with Australia and other interested Governments on a bilateral basis, the most equitable way of dealing with the problem.

I appreciate very much your Government's cooperation in endeavouring to work out this problem on an orderly basis and look to a continuance of that co-operation in the future consistent with our intimate relations generally.

With warm personal regards, I am,

Dwight Eisenhower President, United States of America.

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