UNITED KINGDOM—AUSTRALIAN TRADE AGREEMENT (Hansard, 12 November 1956)

§ The President of the Board of Trade (Mr. Peter Thorneycroft)
With permission, Mr. Speaker, I would like to make a statement about the outcome of the discussions which, as the House knows, have been in progress for some months with the Australian Government covering trade arrangements between Australia and the United Kingdom.
The Australian Minister for Trade, Mr. McEwen, and I have now signed the heads of the new Agreement which will replace the United Kingdom—Australia Trade Agreement of 1932. The heads of the Agreement will be circulated in the OFFICIAL REPORT, and the new Agreement will be drawn up early next year.
The new Agreement will operate initially for a period of five years, but both Governments will review its operation and future application before the end of that period.
The initiative for a new Agreement came from the Australian Government, on the grounds that the substantial changes since the war in the pattern of world trade and in the economic circumstances of both countries made a review of existing arrangements opportune. The Australian authorities placed particular emphasis on the desirability of an increase in the sales of traditional Australian exports here, especially wheat, and of their need to have greater freedom to reduce their preference commitments towards the United Kingdom in the interests both of lowering domestic costs and of facilitating increased Australian trade with other countries. At the same time, they reaffirmed their desire to preserve the principle of mutual preference, which has been so valuable to both countries.
In pursuance of this, the United Kingdom has agreed to maintain tariff preferences on a wide range of agricultural products and to continue the duty-free entry enjoyed by Australian goods. The Australian Government have agreed to continue to give tariff preferences for all those United Kingdom goods at present receiving them, subject to the right to reduce the levels of preference to new guaranteed minimum margins of 7½ per cent. on capital goods and 10 per cent. 560 on most other goods. They do not intend to make early reductions in existing margins except where there is no domestic production in Australia.
The United Kingdom Government recognise the importance attached by the Australian Government to increased sales of wheat in this market. They welcome the existing arrangements for periodical negotiation between the representatives of the United Kingdom flour millers and the Australian Wheat Board. It is their desire and expectation that sales of Australian wheat and flour in the United Kingdom made on commercial terms will be at an annual rate of not less than 750,000 tons over the next five years.
The heads of Agreement also deal with arrangements for consultation between the two Governments on other matters affecting trade, including measures against subsidised imports, and the disposal of surpluses.
It is, I know, the joint hope of both our Governments that the new Agreement, which preserves the basic principle of mutual preference, will provide a firm basis for strengthening the ties between Australia and this country.

§ Mr. Bottomley
In the absence of the heads of the Agreement, which are to be circulated in the OFFICIAL REPORT, it is difficult to put specific questions. May I, first, however, make the comment that it is quite clear that the Australian Government would prefer long-term trading agreements and bulk purchase? It is the opinion of us on this side of the House that that should have been accepted and that the Australian Government, in those circumstances, would not have been forced to seek a cut in Imperial Preference.
May I put a question to the President of the Board of Trade concerning the traditional export from Australia of beef? What will happen now to the 15-year Agreement whereby a guaranteed price is given for Australian beef exported to this country?

§ Mr. Thorneycroft
The Meat Agreement is unaffected by these arrangements; it is separate from them.
With regard to the position on Preference, I should make it plain that the Australian Government, when they initially approached us, expressed their 561 desire to lower the preferential margins, for the reasons I have described in my statement. It is a source of gratification to all of us, however, that the new Agreement preserves the principle of mutual preference and preserves over the whole range—which is 90 per cent. of our trade with Australia—guaranteed minimum margins of 7½ per cent. on producer goods and 10 per cent. on most others.

§ Mr. J. Amery
While I welcome what my right hon. Friend had to say on wheat, may I ask whether he is aware that the reduction of preferences contemplated by the Australian Government is the direct and inevitable result of the policy, pursued first by the party opposite and later, by himself, in contradiction of our Election pledges, of accepting the American veto on the raising of preferences?

§ Mr. Thorneycroft
That may be the view of my hon. Friend, but it is not the view of the Australian Government. Their view is that, particularly when duty-free capital goods are coming in, it is unreasonable that we should continue to ask for as high a preference as we asked for before. Therefore, for quite practical reasons of their own—a desire to get their producer goods rather more cheaply—they proposed to us a lowering of their preference margins.

§ Mr. Holt
The right hon. Gentleman mentioned new minimum preferences of 7½ and 10 per cent. What were they before?

§ Mr. Thorneycroft
On capital goods, the preference was 12½ per cent. On other goods, it ranged between 10 and 17½ per cent.

§ Mr. Russell
Is my right hon. Friend quite satisfied that this Agreement will help British export trade and that it will not suffer the same fate as exports to Pakistan have suffered since the Pakistan Agreement was made?

§ Mr. Thorneycroft
I believe that British exporters to Australia should be sufficiently competitive to hold the market with an advantage of 7½ and 10 per cent. preference margins.

§ Mr. Jay
As the greater freedom allowed to Australia over preferences is presumably a concession by the United Kingdom to Australia, can the President of the Board of Trade say what are the 562 counter-concessions from Australia to the United Kingdom in this Agreement?

§ Mr. Thorneycroft
There is no doubt that in recent years it has been the view of Australia that the Trade Agreement of 1932 was balanced rather against Australia's interest, and the new Agreement is more favourable to her. There is support for that view from a study of the trade figures, which, on the balances, undoubtedly have been swinging against Australia in recent years.

§ Mr. Bottomley
Is the President of the Board of Trade aware that two years ago I raised the question of the unsatisfactory state of Australian trade with this country? The Australian Prime Minister and Minister for Trade, not once but on several occasions, drew attention to this, I have never once got a satisfactory answer from the President of the Board of Trade. Does he not carry a heavy responsibility for this adverse decision, which will affect British trade, particularly as it gives greater benefits to our competitors?

§ Mr. Thorneycroft
If the decision is adverse, I do not know that I would have done much better to have arrived at it three years earlier. My own belief is that while the new Agreement is, perhaps, rather more favourable to Australia than the original Agreement, it is an Agreement which carries substantial benefit to both sides and, I believe, may provide a long-term basis for our future trade relations.

§ Mr. Speaker
Order. We had better postpone the debate until we see the heads of the Agreement, which are being circulated.