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Wednesday, 28 October 1970

Mr McEWEN (Murray) (Minister for Trade and Industry) - by leave - Last night the Chancellor of the Exchequer announced the intention of the British Government to introduce a system of levies on the imports of a number of agricultural commodities. I received advance notice of this late on Monday. The products concerned are beef and veal, mutton and lamb, cereals and milk powders, condensed milk and cream. These products now all enter the United Kingdom free of duty as a right under our trade agreement with Britain. The Trade Agreement is terminable by 6 months notice by either side. The British say that the main objective in imposing a levy system on imports is to reduce the claims on public expenditure caused by their present subsidy system for supporting their agricultural industry. It is clear to me that this is a deliberate move to adapt their arrangements in view of their prospective membership of the European Economic Community when they would be adopting the Common Agricultural Policy of the EEC. Indeed the British have said that this is one of the reasons for the introduction of the system of levies.

I need not remind the House of my views on the variable levy system of the Common Agricultural Policy as a disruptive element in international trade. The British have asked us to join with them in talks on the commodities of interest to Australia. I have arranged for a Deputy Secretary of the Department of Trade and Industry, suitably supported, to go to London immediately to attend these talks. The British Government will introduce the new measures when their discussions with overseas suppliers have been completed. In any case the objective is to bring them into operation at least by 1st April next year.

The British proposals have very important implications for our future trade and trading relations, so I will briefly describe them as I understand them. The British Government proposes to impose variable levies on imports of fresh, frozen and chilled beef and veal. In the case of mutton and lamb, it is the British intention to impose a specific rate of duty. The final impact of these new levies on trade will, of course, not be known until the details of the British proposals have been worked out and are in operation. In the case of cereals initially it is proposed that the present minimum import prices will be raised as soon as possible by some 25 per cent.

Under the present arrangements any individual country which supplies wheat below the specified minimum prices attracts a levy. However, it is also now proposed by the British that on 1st July next their cereals system will be brought into line with the variable levy mechanism of the EEC Common Agricultural Policy. This will mean that all wheat landed in Britain after that date will attract a levy based on the lowest price on offer for sale in that market irrespective of the country of origin. In other words, our wheat could attract a levy as a result of the marketing policies of countries such as those in Eastern Europe, or other minor producers, which come into the market only periodically to dispose of surplus production. In the case of the powdered and condensed milks and creams, the British intend to set up minimum import prices supported by variable levies. Our present trade in these products is small but the British proposals represent a further restriction on the already difficult dairy produce market.

There is one thing which stands out starkly when looking at the British proposals. This is that for the first time the Australian products concerned will be faced with real barriers to trade in this traditional market outlet. The British action will cut across the trade agreement that Australia has with Britain. This agreement is the very basis of the trade relations between us. Under this agreement, first negotiated in 1932 and reviewed in 1957, the British Government undertakes to give free entry to imports from Australia for these and most other products. As soon as a duty - be it fixed, as will be the case of mutton and lamb, or variable, as will be the case for the other products - is struck against imports from Australia this will be a breach of the undertaking for free entry.

The Australian Government will be carefully studying the implications of the British proposals as we now understand them and as they are elaborated during the forthcoming talks in London. We will, of course, be taking a hard look at the balance of benefits under our trade agreement with Britain. We will assess at the appropriate time what adjustment to Australia's obligations under the agreement is required to restore the balance of advantage. I present the following paper:

United Kingdom: Levies on Imports of Agricultural Commodities - Ministerial Statement, 28th October 1970.

Motton (by Mr Snedden) proposed:

That the Mouse take note of the paper.

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