RANSORIPT OF * 1R 4SS CONFE3RENCE BY THE DEPUTY PRIME MINISTER AN'D
MINISTER-FOR TAEADIUTR( * A'SD p
133 JUN 1967
Question: Mr. Mci~ wen has emerged as something of a hero after the
recent Kennedy Round talks, yet Australia was forced to
accept a rather reduced price in wheat than she was
negotiating for, how does this work out?
Answer: Well, the answer is quite simple. What I was talking
about before I went was the price that we would
receive for our wheat. What we were arguing about in
Geneva was the minimum price below which we would not
sell our wheat nor below which anyone would ask to buy
our wheat. What we did in the finish was to reach an
agreement, which is technical in certain aspects. The
end result is that the minimum price now is 19 American
cents higher than the minimum price of the previous
prevailing agreement. This itself, is a very big
improvement. Raising the minimum price doesn't mean
that you sell at that price. It means that you don't
ever sell below that price and no one seeks to buy below
that price. All the experts in Geneva believe that
raising this minimum will raise the actual average
market price. It will fluctuate, but the estimate
there between all the experts is that it will raise the
average market price, above that prevailing now, by
from 8 cents some say, 16 cents others say, up to
cents. If wie are going to get our minimum, that
is 19 cents above the price which previously prevailed,
and a market price that, if you take the
average of these estimates, would be 12 cents above
that which is currently ranging, then this is an
enormous increase. Last year we harvested a crop of
about 460 million bushels of wheat and will export
nearly 370 million bushels. But on a 300 million
bushel export, every cent that you increase your
return is worth $ US 3 million to Australia. So if the
average price increase turns out, as the experts
estimate it to be, 12 cents above the present prevailing
price, that would be, on that calculation,
$ US3 36 million a year for Australia. If anyone
can satisfy themselves that that is a defeat then
he is a difficult fellow to argue with.
Questi on:
An sw er:
Quest-ion,;
Answer:
Question:
Answer: Mr. McEwen, pushing this a bit further, with millions
of people starving, is it right and good for the world
that the price of wheat should be increased?
Well the real point is that you can't produce wheat
in the wheat-producing countries and sell it to the
affluent countries at a figure that is related only
to the price which starving people can pay because
taking it literally, starving people can't pay
anything and they don't pay anything for much of their
wheat which is given to them. So what we have done
now is to arrange that the commercial transactions of
wheat will be at a price satisfactory to Australia.
An argument that I first introduced more than
years ago is now accepted. That is, for those
people to whom wheat must be given, the responsibility
should not only be with those countries which grow
wheat in surplies to their own requirements, but that
all the affluent countries of the world should
contribute either in wheat or in money to buy wheat
and this is now part of the wheat scheme.
On the European Common Market, Mr. McEwen, which of
the primary producers are going to come off worst in
Australia when Britain joins.
Well, you say when Britain joins. I think it would be
better if you said if Britain joins. I can't answer
that until I know the terms on which Britain joins
if she does join. Britain has said bravely that she
will not join unless she can defend the vital interests
of the Commonwealth countries and that is a very
heartening statement; but it is a very broad
indefinite statement. I can't answer your question.
Mr. McEwen, it has been said in some quarters that the
real result of this agreement will be merely that the
rich get rich and the poor get poorer. How confident
are you that the Kennedy Round will fulfil its aim
to boost all world trade and not just benefit the big.
trading nations.
I would like to feel that you didn't invent that
because I have never heard anyone say this.
Question: Answer: Question:
Answer: Question:
Answer: Questi on: This was reported in Italy, Sir
It's a long way away, Ilve never heard of it. I don't
believe it's true. I dont think anyone responsible
has said it, but the truth of the matter is that none
of the poor countries has been required to accept any
obligations for the benefits it will receive under the
Kennedy Round discussions. If all the rich countries
were to do what Australia has done give special lowtariff
entry for certain products of the underdeveloped
countries they would get a tremendous
boost.
Well Sir, all reportage to date on the Kennedy Round has
been particularly vague on what Australia has agreed to.
There has been some mention admittedly of Australia
excluding herself from some of the tariff cutting
agreements. i-n-what fields are we committed to tariff
cuts, and briefly, in what fields are we excluded.
Well you haven't been reading what I have been saying.
What I have said is that three years ago from now I got
Australia excluded from the linear cuts on tariffs. I
said whatever benefits we turned out to get in the end
we would pay for. That has been accepted, not three
years ago but four years ago, and we liva up to it.
No, but in what fields sir?
In the fields where we can give tariff cuts without
impairing the protection to Australian manufacturing
Industry. What I was getting at Sir, was, what particular fields
in manufacturing have been submitted to these tariff
cuts and in which ones are we remaining protective?
The answer I just gave you was that no fields of Australian
manufacturing industry which are protected
have had any essential tariff protection reduction at
all. There are a number of imports that carry tariff
duties which are not protecting Australian industry;
it is in this case that duties will be reduced.
Well as the major markets in Europe and North America
are reducing their tariffs by one third on industrial
goods, will this help our manufacturers in any way?
For example, can we sell them Holdens without buying
Toyotas or in fact do these manufacturers miss out
because of our own exclusion?
Answer: I don't follow the question at all.
Question: Well what I was driv-ing at Sir, is will this
agreement by North America and Europe to cut their
tariffs by one third help our industries in any way?
Wlnswer,: Well, we have a modest export of manufactured goods.
I think about œ 150 or œ 200 million worth of goods
have been exported and to the extent that these items
will now have lower tariff barriers to get over in
some countries and we actually export some
manufactured goods to Europe we would be helped.
Question: Is there any outcome yet, Sir, on the discussions that
were being held on meat? Is Australia likely to
increase her share of the meat market?
Answer,: Yes, it is but these discussions are not yet complete.
The position is that America has had to have her
discussions completed by now, that has been done. The
other countries are not under exactly the same
pressure of time and we are still in the late stages of
some discussions about meat, particularly with the
European Common Market and Japan. I have complete
confidence that in each case there will be a
satisfactory outcome for Australia.
uestin: What about agreement relates to hard
winter wheat whereas Australian wheat, of course, is
soft. Do you expect our market price to rise as a
follow through to this agreement?
Answer: Yes. The position is that the price is not to be read
as the price at which we will sell our wheat. This is
the price below which we will not sell our wheat nor
anyone seek to buy our wheat. It is a floor. This
floor compared with the hard winter wheat that you
refer to is 19 American cents higher than the
previous prevailing floor price for that quality of
wheat. That is a very, verj substantial increase.
The estimates of the experts, both of the importing
countries and the wheat selling countries at Geneva
was that this higher floor price would raise the
current average actual market selling price by,
according to different experts, from 8 cents a
bushel to 15 or 20 cents a bushel. I take a figure
of an average of 12 cents a bu3hel increase, which on
Question: Answer: Question,: Answ er: a 300 million bushel export would give us an
additional income in wheat of $ US 36 million a year.
On this question of wheat or grain. On the food aid
programme giving 4-21 million tons of grain free a year
to hungry countries, how is this going to be financed
and what is Australia's share in it?
Australia's share is 225,000 tons a year. In the last
three years we have, without any agreement at all, given
150,000 tons a year. So our record is pretty straight.
It is going to be financed by a country like Australia
contributing in wheat which the Government will lbuy
from the Wheat Board 5C/ o of the 41-million tons.
Other countries that have wheat will give their share
in wheat and other countries such as Japan which haven't
any wheat to give away will provide the money and they
will buy the wheat to give it away.
Well,, going, across to the Common Mvarket problem now
Mr. McEwen. H-ow do you rate Britain's chances of
entering the Common Market? If she does, how * i& ng do
you think it will take?
I don't really feel confident to form an assessment of
her chances of getting in. Tn-ere is not the slightest
doubt that Mr. Adilson has made it very clear that
Britain is going to make a determined effort to get in
and there is not going to be niggily about the
conditions. I hear people in Europe who are knowledgable
on this say that well, it would take at least six
months before it was clear whether this was a real
goer and perhaps a couple of years before a decision
is reached. That's not my opinion, it is the
opinion of others, / 64 a.
question: Answer: Quest ion:
Answer: Answer: Britain's Foreign Secretary, Mr. Brown, has been
quoted as saying that Britain's application
contains no conditions or stipulations. In the
light of' this how serious are our key exports to
Britain likely to be affected?
I don't know what Mr. Brown says. If You quote
him correctly and I don't doubt that at all
it would not be consistent with what Mr. Wilson has
said. He has said that in entering the Comnmon
Ma,-rket, Britain would require that essential
Commonwealth interests should be safeguarded.
Along this line, the Cha. irman of the Aastralian
Dairy Produce Board said this week that it would be
impossible for Australia to find an immediate
replacement market for her dairy products if
Britain's entry into the E. E. C. was swift.
This is completely right. There is only one big
importer of butter in the world and that is Britain.
If Britain's entry into the E. E. C. it impossible
for her to buy our butter in the quantity she has
been buying it, then frankly I don't know where
else we could turn to find a market for butter. The
problem with cheese and dried milk and other dairy
products is not so bad. The truth of the matter is
that you can't make dried skim milk powder without
producing butter.
Well, what practical steps have been, or are going to
be taken in any way to protect these export industries
by the Government.
Well, just by trying to diversify our markets which
I have been engaged in for years now, by stressing to
Britain and to the European Common Market, the practical
problems of the Australian dairy industry; and New
Zealanders are doing it, of course, because they would
be more desparately affected than even we would'be. / 7
GENERAL PRESS CONFERENCE
Question: How long before the tariff cu~ ts come into effect?
Answer: When the various Governments ratify the agreements
and sulfLicient Governments have ratified it for it to
be quite clear that the agreement is going to live.
Question: Would you put a point of time on it? Would it be a
year or so?
Answer: I couldn't guess. I would hope it would be a shorter
time than that. Can I point ou~ t something so that
this is understandable. There are two instances in
history of this kind of thing where an agreement has
been reached. First the League of Nations after the
First World War. America agreed and then the American
Congress threw it ou~ t and they were never in it. More
recently in 1947, the A~ mericans convened a great trade
conference from which was established an international
world organisation which, for example, oa~ r Government
said we would join as soon as itmerica and Britain
joined. America never joined it and America not joining
the organisation which they had proposed, no one else
joined it and it never came into existence. That
illustrates that when you reach an agreement, it isn't
automatically in existence but I would mislead you
completely if I led any of you to construe from this
that I think that could happen on this occasion. I
state it in relation to a timetable only. Is that
clear?
-Question; Mr. McEwen, what influence would the Kennedy Round
Agreement have on the British Commonwealth trade talks
that you are going to come u~ p with.
Answer: It will have a quite substantial influence on it. The
United Kingdom/ Auastralia Trade Agreem/' nt, which is
the technical description of the system of preferences,
is an agreement designed to give a balance of advantage
to both countries. Now when the Keniedy Round was
first mooted there was a conference of Commonwealth
trade ministers in which I, speaking for my Government,
said that wve wculd prefer to stay with the known
the preferential reciprocal arrangement with Britain
rather than go into a Kennedy Round. The British
Government of the day said well, we have decided that
we will go into the Kennedy Round and we will go in
and offer tariff cuts. We said right'o, we'll take
it from there. What this meant, and this is the
answer to your question, is that on going into the
Kennedy Round the British offered to cut nearly all
of their tariffs by 50%. Giving us a preference means
that they have a tariff on somebody else where they
don't have one at all on us, and offering to cut
their tariffs by 50%, they were in fact offering to
cut our preferences by 50 o. Now, in the course of
the negotiations they went through with a cut of
on many items and withdrew and didn't go through with
the cut on other items. SoI said at that time, which is
now about five years ago, well, when the KEonnedy
Round is finished we'll get together then and have a
look at what would represent an agreement which
would have a balance of advantage for both parties.
I have now reached agreement with the British in
London that as soon as the Kennedy Round is over,
and it is now over, our officials will start to
examine the change in trade relationship. They
will be doing this within a month or two months.
As soon as that study has gone on sufficiently, then
no doubt the Governments and Ministers will, get
to-gether and have a look at it. It would be the
objective of Australia and the objective. of Britain
to write another trade treaty which, having regard to
what had been altered, established a trading
relationship which had a balancing advantage to
both parties.
Question: Mr. McEwen, I would have thought that you could'nt
have a floor price for wheat unless you had some
know quantities of wheat involved.
Answer: No, that's not so.
Question: You can have a price without worrying about quantities?
Answer: Well, you can worry about quantity but nature, more
than anything else, determines the quantity. You
really can't commit yourself to a quantity. The
concept here is that, in relation to transactions
Question:
Answer:
Answer: Question:
Answer: Question:
Answer. Question., in wheat between countries which are parties to the
agreement, no one will be willing to sell at less
than the floor price and no one will seek to buy at
less than the floor price.
If you have a glut then how are you going to maintain
it? Isn't someone going to go out the back door?
Isn't someone going to break the agreement, because
that's really what your suggesting; I don't mean
you are proposing it, but it would only not stand up
if someone did break the agreement. Wheat is not
like chocolate, if I could make a comparison.
Excepting the very hungry people, most people don't
eat more wheat because it is a little cheaper. They
do eat more mieat and they may eat more butter,
they certainly eat more chocolate if it is cheaper;
but the whole trading history shows that the price
of' wheat has very little relationship to the
consumption amongst those who have the capacity
to buy wheat.
Will this price be reviewed from time to time?
Yes, it can be reviewed from time to time.
Under some sort of Kennedy umbrella or under G. A. T. T.?
Well the whole Kennedy Round is part of G. A. T. T.,
it is conducted under the G. A. T. T. and at some period
of time it will be reviewed. If a great surplus
developed without this agreement then obviously price
cutting would commence and the whole benefit of the
agreement is to have a lot of countries committed by
contractual obligations not to engage in price cutting
or not to attempt to induce others to engage in price
cutting. The tariff cuts.,. will they affect cars?
No. No. I want to emphasize that there will be no
tariff reductions here on items which are necessary
to protect Australian industry. Wie have our g; roat
motor car manufacturing industry; our tariff is
designed to protect it. This w. 1as the fight I
won in 1963 where I got Australia excluded. The
only three countries excluded from the obligations
to make linear tariff cuts were Australia, New
Zealand and South Africa.
Mr. McEwen, the wheat aid, is to be held somehow or
other by this international -pool, just to be given
11.
Answer. Question:
Answer. Question:
Answer for emergencies, or cavn vie use it as capital aid?
Wie have used wheat as capital aid in the past,
havn't we?
We never have
say India they raise capital with it locally.
. ell, let me see if I can answer the question.
Thffen we have given wheat we have never a'utached any
condition to it at all. If asked for wheat vie have
given it to them finish and they no doubt ive
it out to those who need it. On the other hand some
countries and America is a great example when
America gives wheat aid what she does is to sell the
wheat at a price but for payment in the currency of'
the country, the currency of India in that particular
case, Its a cLu-rrency that's understood that can't
be converted to dollars or sterling. So the United
States, under Its ublic Law 480 sells the wheat to
India. It's not going to receive payment in America,
but it will receive or be due for payment in India.
Then the kAmericans may attach a condition. They may
say the understanding is that you iill use some of
this money to build an irrigation dam or they may
say we will draw some of this money to pay for the
expenses of our Embassy. If they say well, you
must use some of the money that you are due to pay
us to build an irrigation dam, well, that's capital
aid, In all the aid that we give, whether we give
money or tractors or technical assistance, or food, we
give it and rule off the book. . ie attach no
conditions, no repayment.
Mr. Mc~ ven what reasons do the Americans give for
imposing their duty on wool?
On wool? Well, the reason they advance is that they
have a woollen industry of their own and they must
protect it, and that is the simple reason. There are
related reasons which may be at least as important
and maybe more important and this is, that under
their law they have a certain relationship between
the protective duty on raw wool and the protective
duty on imported woollen textile piecegoods or
garments and under the existing law to alter one
automatically alters the other and this might
be the milk in the coconut.
Quesion: Speaking about the Common Market, a while ago you
seem to stress the word Is there an even
money chance that Britain will get in?
Answer; W~ ell, talking to the people that I met in Geneva.
and they were a pretty well-informed group of
people on this I don't think you wiould have got
a bet at much better than even money and that's not
my opinion. You askfl me my opinion and I just say
I'm sorry I don't know. President De Gaulle's
press interview wasn't very encouraging but our
Australian Government's attitude is quite olear.
If the British Government feels that it is in
the important interests of Britain to join the
Common Market, then wie would regard it as quite
improper for us to try, directly or indirectly,
to prevent her from joining. This is in balance
with our resentment if anyone tried to interfere
with what we thought was a necessary policy in the
interests of Australia. Having made that principle
clear, then it's legitimate to point out where your
owm interests are and say to someone who said
I will look after your interests, to say well,
here, this is what our interests are.
Question Do you see any benefits to us if Britain enters the
Common Market?
Answer, I think there is only one benefit which has been
canvassed and I can't evaluate it, and that is that
it will be good for the strength of the British
economy I'm not offering my view now, I'm
quoting that it will be good for the strength
of the British economy and for the prosperity of
Britain if she joins and that therefore as a
country which is a trading partner, it must be good
for us if she becomes stronger. I can't evaluate
that at all.
Question: , Phat is our position in respect of butter?
Answer: Our position in respect of butter with Britain has been
that we had a preference of 15/-a cwt. over' nonpreferential
supplies. Notwiithstandinig that, two
or three years ago the price was extremely low.
This was not only hurting us it was hurting the
British Government who had to bridge the ap from the
Treasury between the market price and the guaranteed
S 13.
Question: Answer: Question:
An-swer: price to their own producers and this was
becoming very costly. From this they suggested
and we agreed, that instead of the duty to protect
us, to give us preference, that they should
introduce a system of quotas to prevent an excess
of butter and therefore lift the price. We agreed
to this, New Zealand agreed to this. It was put
into operation. It did lift the price. N~ ow that
has not been an issue under discussion in the
Kennedy Round, therefore butter in our principal
market has not been affected one way or another
by the Kennedy Round, and it has'nt in respect of
the E. E. C.
Mr. McEwen
Just let rme add a sentence to this. We have a wheat
agreement. ? 7e -had hoped not only Australia,
but all those interested we had hoped to have
a dairy agreement. The Kennedy Round set up a group
to study dairy products in the direction of a world
agreement. It was discovered that there was. no* V'
hope of an agreement and that just dissolved.
11r. MoEw-en, in London you viere quoted as saying that
Britain's decision to seek entry into the Common
Market meant that she was obliged in the Kennedy
Round to press for world commodity agreements that
safeguarded Australia's agricultural exports. Did
Britain press for that?
Well, can I just state the position. W1hen Britain first
contemplated joining the Common THarket I think
this was 1961/ 62 there were discussions between
Britain and the Common Market countries before Britain
had applied, where Britain pointed out how her
joining would have repercussions on Commonwealth
countries and other trading partners unless spegial
provisions were made to cover them. Out of those
studies the conclusion reached was that if Britain
joined the Common Market, the best way to protect
the interests of these people, which include Australia,
would be not to deprive them of their preferences
overnight, but to phase them out over a period of
years and this was one proposal. The other
proposal was that in respect of items such as
14.
wheat, where no preference exists, world agreements
were the best solution of the problems of these
countries. Britain subscribed to that and Britain
has said that she will protect the interests of
Commonwealth countries. So it was against that
background that I said from Geneva that Britain
was more obligated than any other country to support
world commodity agreements because she had agreed
that this was the most direct way of protecting
the interests of countries which might be impaired
by her joining the Common Market. I also said that
a meeting of Commonwealth Trade Ministers in June
last year had again confirmed as the general
poliQy the whole Commonwealth including Britain,
support for world commodity agreements which would
give satisfactory prices. So you can see there the
grounds on which I said Britain was obligated
and more obligated than any other country to support
them. Well, she supported this agreement she's a
member of it did start out by suggesting
a price of about 160 cents for wheat.
Question: Mr. IMIcEwen, was it agreed at all at the Kennedy
Round whether the wheat price would come up for
any periodic review or discussions?
Answer: The period for reviewing the price that we discussed was
three years. iIy memory won't permit me to say whether
this is written into the final understanding
it's just a slip of my memory. They contemplated
three years and I think it will probably turn out
that this is the point of review.
Question. Mr. Mc-hven, would it be possible to say whether
the talks with Britain over the trade agreement will
come up this year or in a matter of weeks?
Answer6 Well, what I have said is that talks between officials
will comrence in the quite near future. I would think
within a couple of months talks bet-ween their officials
and our officials will commence. They will be
studying what has happened within the Kennedy Round
and outside the Kennedy Round to change our trading
relationship. Their reports will go to higher
officials and their reports will go to Governments
and so on and I expect before we reach the end of
1
Question:
Answer: Question:
Answer,-Question:
Answer: this year the picture will be clear enough to warrant
the Governments getting together. That's my
estimate of time.
Was sugar raised at all?
No, sugar was not raised at all, on the ground that
there has been an International Sugar Agreement which
is in suspension; that the International Sugar
Council is still functioning and that the overwhelming
percentage of the countries which export sugar are
less developed countries and the venue to which the
less developed countries are looking for trade
discussions is not the G. A. T. T. but UNCTAD United
Nations Conference on Trade and Development and
there has been one or two ministerial meetings on
sugar in UICTAD and there will be another ministerial
meeting on sugar. It is expected well inside a year
from now. The exporters of sugar who are not to be
classified as developing countries would be such
countries as Australia and South Africa. All of the
others, the est Indies, India, Mauritius, Fiji
a colony, of course are all developing countries and
I think they would resist the discussion being removed
from UNCTAD.
Mr. McEwen, on the Conon Market, has the Australian
Government been kept fully informed on the British
application? Is there any arrangement whereby we
will be told what is going on in the negotiations.
Yes, the British Government has told us privately
and stated the same thing publicly that as they get
into negotiation, they will keep us informed and
consult closely with us.
Mr. -cEwient, o use an Australianism, do you think
they are " fair dinkum"?
Of course I've got to take the British Government's
statement as bona fide. On the meat side, I have
said in this written press statement that apart from
wheat, this is the big area of gain to us. We've
secured, in the very final stages, a reaction from te
Common Market countries to a request that we have been
pressing, that vie have access to their markets for
our frozen meat on better terms than have existed
and better terms than they were proposing. The
relationship between the Argentine and Australia and
the Common Market countries is not bound to the
16.
same timetable as the American. I mention the
Argentine with Australia because wie, with the
New Zealanders, are the principal suppliers of
meat. So when I left Geneva to go to Romania
these discus-' ions hadn't been completed in detail.
I have been travelling, I think they are completed
now but I'm not qaite sure, but my written statement
says I am confident of the outcome. Now that's in
that area. The other next important meat market
for us is Japan. Again we are not under the same
pressure of timetable as with America and again I've
got to say words that sound unsatisfactory
I'm confident of a good outcome. That isn't just
double talk, I am just confident that there will be a
satisfLactory final position with both Japan and the
Common Market countries. The importance of this is
that we have only had two really assured markets for
meat 13ritain and the United States and if you
get a difficult marketing situation in one or both
of those countries if you get it in one, you're
trying to force all your meat into the other
remaining market and this is always embarrassing
to the country that's under pressure to receive it.
If we can look forward to say four important
markets, then the meat trade is a lot safer than if you
have only two.
Que-stion: Do you envisage any new markets for meat?
Answer: Oh yes, wie are keeping on pressing, We have developed
a quite good market for sheep meat in Greece,