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Tuesday, 23 October 1973
Page: 2547

Mr EDWARDS (Berowra) - The activities of which the Minister for Overseas Trade (Dr J. F. Cairns) gives an account in this statement arose in connection with the Minister's visit to Tokyo for the initial meeting in connection with the next round of negotiations of the General Agreement on Tariffs and Trade. I am bound to say that the Minister's account contains much of dogma and prejudice tempered, as one would expect of the Minister, with a little idealism and of unreal expectations. For example, it expresses the idea of this country moving into products and processes out of which the Japanese have moved what products and processes are these? The statement contains much wishful thinking for example, that there can be effective or beneficial entry by the Japanese into motor car manufacture here. The statement includes also contradiction and some self-congratulation.

At the outset I should say - this also is a disappointment - that there is very little in the statement about the great matters which - or a beginning to which were to be the focus of the Tokyo meeting. I refer to negotiations to reduce non-tariff barriers and agricultural protectionism as well as industrial tariffs as barriers to the growth of international trade, and the future systems of safeguards and adjustment assistance in the event of real progress towards a reduction of barriers. In the statement the Minister speaks in a way typical of this Government, as if his side of the House has a monopoly of concern for the potentially adverse social consequences of change and adjustment with a freer flow of international trade. I refer to the need for employees to find and train for new jobs, and for firms to turn to new avenues of production and investment. This matter was well canvassed in the discussions and preliminary papers preceding the meeting in Tokyo. So concern for these matters is hardly the monopoly of the Minister, although a casual listener to his statement might have gathered that impression. As a matter of passing interest, the Japanese have had an adjustment assistance law in being since 1 971 .

The Minister made no reference at all to the problem of the so called link between the reduction of barriers to international trade, tariffs and non-tariffs, and an effectively functioning and adaptive pattern of relatively stable exchange rates - in short, an adequate international monetary system. The reduction of barriers to international trade and the development of an adequate international monetary system go hand in hand in promoting an expanding, balanced and equitable flow of world trade - one that is mutually beneficial to developing and developed countries alike. This problem of the 'link' has been widely acknowledged in the world's financial Press as being perhaps the most tricky issue facing the Tokyo conference. But there was no reference to that in the Minister's statement. Perhaps it would have been appropriate for the Treasurer (Mr Crean) to have joined with the Minister in making a joint statement, or do they belong to different wings of the Government party? At all events the Treasurer made such a statement before the suspension of the sitting for dinner.

Rather than focussing on the great if frustratingly difficult issues of trying to find constructive ways to make the world trade and financial system work better, the Minister early in his statement adopts the typically Anti'-prejudice, if I may call it that, that the developing economies have gained little from past trade and aid programs. He says that they have not achieved much and that we need to look more realistically at the major issues - with the presumption that this is not being done. The Minister takes a swipe at the developed economies of the world when he refers to 'the usually non-competing enterprise system which characterises the developed countries and which operates to the disadvantage of the economically weak economies and less well-organised and more highly competitive enterprises of the developing world'. To say that the enterprise systems of the developed economies are usually noncompeting is just plain factually incorrect. I am set to wondering just how close the Minister has ever got to the problems of making sales of manufactured products in the shifting conditions of modern trade and variable exchange rates. He ought to talk to some of the developed European countries about the difficulties of competing effectively with a new undervalued United States dollar. I hope that the Minister for Minerals and Energy (Mr Connor) takes some note of that in the light of some of his earlier statements.

The sort of stance that is taken at this point in the paper - of the disadvantageous impact of the developed economies on the developing - is no doubt influenced by hoary arguments, such as the extent to which the prices of manufactured goods are held to have increased much more favourably relatively to the prices of primary commodities which figure so heavily in the trade of the developing countries. This particular bit of folk lore in fact is not proven, even over the long stretch prior to the rises in commodity prices that we have witnessed in recent years. Be that as it may; what I stress is that in the very process of competition between the developed, the advanced countries, the development of secondary industry in the developing countries is assisted. The fact is that increasingly firms from the industrialised developed countries have shifted into the developing economies, and this has helped the expansion of the developing - that is the poorer - economies' trade in manufactures. It is this indeed which has been a major factor in making enterprises in the developing economies more competitive in international markets and has fuelled the increased rate of growth of their exports of manufactures. And as I stressed in a recent speech in this House, the thrust of the overall expansion of world trade is the growth of trade in manufactures as between the advanced industrial countries of the world, as well as between them and the developing economies.

If, even so, progress in development is too slow for the Minister's liking as well as for my own, what we have to recognise is that one of the present facts of life is that the quantum of trade in manufactured goods by the developing economies is quite small. However, it is also a fact that those economies have been growing more rapidly than those of the developed countries and the socialist countries when it comes to manufactured goods. That has to be recognised. The trouble is the small base - so that even with a relatively high rate of growth, the impact on the development and overall trade of the developing economies can only be small. Realistically this situation will remain for the rest of the decade. But it is wrong to imply that the operations of the developed countries screw down on, necessarily operate to the disadvantage of, the developing economies.

What I would like to put as strongly as possible is that we also should increasingly be part of the process I have described - that is, participating in the development of secondary industry in the developing countries. In his statement the Minister makes a passing reference to discussions with Nissan and Toyota and to the fact that the Government welcomes them to engage in the manufacture of motor vehicles in Australia. I note that there was no reference to the key problem in this industry of too many separate motor vehicle plants in this country, and to the problems of achieving economies of scale and efficiency which would be exacerbated by the simple addition of Nissan and Toyota to the list. What is essential is that policy with respect to Nissan and Toyota should be combined with some trade within the East Asian region, involving Australia exporting components and parts as well as importing other components and parts from the developing economies or from Japan, to mutual benefit in the realisation of economies of scale and thereby lower end prices.

In general terms, what I am trying to say is that what the Government should be seeking to foster as part and parcel of promoting world trade and development is our own overseas investment; investment by Australia in foreign countries, particularly in the south and east Asian regions. To assist in and foster the activities of Australian enterprises in this process is, I suggest, a proper role for the Australian Industry Development Corporation - even an expanded AIDC - but not, I believe, the potential cancerous incubus that was proposed by the Bills before this House last week. I am led to make that reference to the AIDC because the Minister himself referred to it in his statement, in connection with overseas investment in this country. I can only say that I am gratified by the drift of the Minister's statement just prior to that reference where he welcomed overseas investment as a vehicle of new technology and know-how in this country.

I am greatly in favour of the fostering of our own overseas investment, so that as one of the rich countries of the world we contribute - and I would hope on an increasing scale - to the growth of living standards, particularly in the developing world. I noted, therefore, with particular interest the Minister's words when discussing his visit to South Korea - 'the Republic of Korea. He declares it to be Government policy that we would welcome investment by Australian firms in that area. I cannot quote the statement precisely, but that was the effect of it. However brief, we have there a statement relating to the requirements as the Government sees them for Australian foreign investment - something which, as I have said, I should like to see more of.

I had proposed to refer to the Minister's statement in relation to his' visit to North Korea. The possibilities referred to there are the exchange of Australian mineral products for North Korean manufactures. There are then possible difficulties for our own manufacturing industries that that could give rise to in the future. It is the sort of problem that we have foreseen in relation to our trade with Japan. I think that is indicative of the sort of troubles that the Government is likely to get itself into in trade problems with this personal and ad hoc - not to say ideologically directed - approach, country by country, of the Minister.

To return to the main theme, the Tokyo meeting was the beginning of a round of negotiations which is to be the successor of the earlier and very successful Dillon and Kennedy rounds. I wish the Minister a successful participation in what I hope will be a successful round of negotiations. If they succeed, the end result will most likely be a never-ending round of negotiations designed to combat barriers to trade between nations, with permanent machinery to deal with specific problems. If they should fail, there is a strong chance that the world would break up into rival protectionist groupings to the detriment of the whole world and not least of the developing world which is close to the interests of both the Minister and myself.

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