GATT'S 2d-a-Pound

Will Not Be Enough

A Survey of Papua's Rubber Industry

WHEN Papua’s rubber industry began sinking into another period of doldrums about two years ago, it was understood that the main obstacle to Australia’s easing the burden by remitting Australian import duty, was that somewhat mysterious organisation called, for short, GATT (or General Agreement on Trade and Tariffs).

GATT is one of those post-war international organisations to which Australia gives its support—its purpose being, theoretically, to assist in boosting world trade. As this of Rim Rnost Restricted Rvorld* trade 6 ft can R?arcelv be said to have achieved that obiect Nevertheless Australia had to To Sirouah the form of asking l oermission of the

organisation to g waive? If wished

import duty on primary products from Papua-New Guinea. In relation to rubber—which comes from Australia’s own Territory of Papua, which is as much a part of the Commonwealth as the Northern Territory or Thursday Island—this seems quite unrealistic. But at the end of this October, GATT graciously gave Australia the required waiver in order to allow the “economic development of P-NG.”

So far, so good; and presumably there was considerable rejoicing among rubber planters in Papua, But before any real benefit can be gained by this GATT decision it appears that planters now have to jump through another hoop. In recent letters to interested parties, and in answer to a question in the House in November, Mr. Hasluck, Minister for Territories, has stated that “any additional assistance for the Papuan rubber industry can only be granted after inquiry by the Commonwealth Tariff Board.”

The Pinters’ Association of Papua doubtless has the matter in hand.

When they do a PP Iy to the Board ’ however ’ the inquiry will be open to all shades of opinion and it is certain that Australian rubber ?Jp^ facturers will P resen t their

views -

These views are believed to be that the duty—at present 2d per pound—and all primage (10 per cent. ad valorem, which is already waived in the case of Papuan rubber) should be removed on all rubber entering Australia, no matter what its source, in the interests of Aus tralian consumers. If this view should prevail, then there would be

no advantage in it for Papuan rubber interests—to the contrary Just what advantage Australian consumers have gained from the fall in price of raw rubber from the high levels reached just after the commencement of the Korean war —up to 6/- and 7/- per pound—is doubtful. There has recently been

a I Slight fall in the price of tubes and tyres for motor vehicles, but rpost other rubber goods have re mained at the same high price they became when raw rubber was three times the price it is to-day.

Back in the Depression days of the early Thirties, when the Papuan rubber industry was on the brink of disaster, the then Lieut.-Gov ernor, Sir Hubert Murray, was in strumental of having a duty of 4d. put on Papuan rubber entering Aus tralia —the money then being paid back to the rubber planters in the Territory as a bounty. Some months later this benefit was cut to 2d, per pound and it appears that' when the industry had sufficiently re covered, sometime towards the end of the decade, the bounty was dis continued altogether, j Something of the same scheme is envisioned now; the money col lected by the Commonwealth Customs Department on Papuan rubber entering Australia would be paid back to the producers. Even this .aid would do no more than &eep rubber planters financially afloat until better times come.

COST of production varies in the Territory according to the loca tion and age of the plantation and probably is somewhere between 1/9 and 2/- per pound. Present selling price is 1/10 for Number ,1 sheet —but Australian manufac turers generally will not pay Number 1 sheet price, and the

Papuan producer must take a lesser grade price, no matter what kind of rubber he supplies.

It is calculated that to-day it costs £2OO per acre to bring rubber into bearing—a figure that is prob ably four times higher than plant ing-up costs of 20 years ago. To

plant up 500 acres and wait until they are producing in eight or 10 years, would therefore mean an out lay of £lOO,OOO. An investor who was prepared to wait this time for a return, no doubt is deserving of 10 per cent, return on his money— on that capital outlay, a profit of

£lO,OOO per annum. To achieve this (supposing an acre of rubber will produce 400 pounds of raw rubber per annum) it would require a re turn of 1/- per pound above cost of production, that is, on present rates, a return of from 2/9 to 3/per pound. As we have said, the Papuan planter to-day is lucky to get 1/10 per lb. for his rubber.

Against this background of hard economic facts, it is hard to see why the Australian government con tinues to plug the “grow more rubber” line in Papua. Yet it does; scarcely a week goes by without some reference in press or radio to the vast potentialities of the Territory; that it can, amongst other things, supply ah Australia’s requirements of rubber, instead of, as at present, less than one-tenth of her annual requirements.

Even on those modest propor tions, however, for one period of six months last year, Australian manufacturers would not take any Papuan rubber at all; they had, they said, all their requirements for the time being, and stopped buying.

But apart from brave words, the Australian Government has done virtually nothing practical to help the rubber industry. They say that they cannot force Australian manu facturers to buy Papuan in prefer ence to other rubber; nor is it their policy to bolster industries with subsidies and bounties.

And most people will agree with this, in principle. The ideal is a ivorld of free trade where each in dustry must stand upon its own feet or go under. But so many re strictions have been now placed dn ;he free flow of trade, in Australia md overseas, that it is impossible my longer to subscribe entirely to hat theory of “an open go for everyone, and devil take the hind nost ”

The slump in the rubber industry s not, of course, peculiar to Papua, [n proportion to its total produc ;ion, Papua is very small beer com jared with the enormous losses be ng sustained by rubber producers n Malaya. But Papua is Australia’s concern and apart from the economic ingle, a rubber industry there is of itrategic importance as was dis covered during the Pacific war, vhen supplies from Malaya were mtirely cut off. During the darkest lays of that period, rubber capping continued around Sogeri even when the Japs were only a ew miles away. r[E price of rubber is a world price and that price is dictated by the United States of America. [The synthetic rubber factories vhich were set up in the States luring the Pacific war when sup >lies of natural rubber were cut off lave been carried on into the peace nd, in order to preserve them, all übber goods manufactured in the IS must contain a certain proper ion of their products. As synthetic übber cannot be produced as

cheaply as natural rubber, the Federal Government subsidises the production of synthetic and, as a resuit of lobbying by powerful consumer interests, it is at present beke P‘ f jery lo" level-so ow rabber to comp P e°f on a pricrbas?s When the Republicans came to office in the United States, it was expected that these governmentowned synthetic rubber factories would be disposed of to private enterprise. But, not unnaturally, private enterprise has not been interested in taking over industries which function profitably only with a subsidy that could be withdrawn on the whim of the particular goveminent in office At the same time as this artifici-

ally low price level is maintained, the United States has urged upon its Allies the prohibition of the sale 0 f natural rubber to Communist china and other countries behind the Iron Curtaln . It was the em bargo on this sale which first started the decline in the price of rubber, Should, on the other hand, there be free trade with Russia and satellite countries, then it is obvious that there would not be sufficient natural rubber to meet the demand, What America is doing, in effect, is to keep the world rubber price at an artificial, low level by sub sidismg her own synthetic plants, and forcing manufacturers to use this product j und, ut the Scime time, seeking to close the only other pro

fitable mar k e t—the Communist countries—to producers of natural rubber.

Ceylon, which is the only rubber producing country not in economic difficulties over the industry, was regarded as somewhat of a traitor when she undertook to supply Red Chma with rubber at a price far above the present ruling rate.

It is academically interesting to speculate on how long the US will co w nu ™ h^ve t J lings both wa ys —but maddening to planters who are human and must live. No one right maintain ner synthetic factories as an insur ance against being cut off again from supplies of natural rubber in the event of war. The grudge comes when it is realised that the present price of rubber is not the true one f? rc eci down to that level at the instigation of domestic consumers in the United States It is obvious that matters cannot continue indefinitely as they are at present People do not go ?n for rubhPr lo n! investm ents as rubber planting represents for ?n^h ly H£o triotl L reas ° ns: and until as . th ere is some secure lutme for the industry, the oft repeated phrase that Papua should of°AiistraU rubbe r requirements of Australia, is mere beating of the ciir.

In summary it can be said: * The repayment of the 2d per PflSmn du y U now S eing coveted on r Ss ber , b y Australia, to Papuan rubber planters would afford n J? 0 K ta i n - measur e of immediate re lief but in most cases would bring Sf a productfon rnS ° nly Up t 0 price

industry Stulurti ttaf as

P ermits the world price to find its true level, or alternately, tb! K Q A^st J aI . ia subscribes to what the US is trying to do in relation to restricting trade with Com- Sii2iS? C fv, CO, U ltries ' Australia - itself qJlJ 16 * dom cstic policy of the United States and provides a buffer for its rubber industry in Papua by guaranteeing for say, the next 10 a re JiP r . n above cost of pro toi^ 10n sufficiently encouraging to a£in Sont Producers in business field br ng new P r °ducers into the 1 Jhe Rev. D. N. McDiarmid, MBE, BA, formerly of St. Andrew’s Pres- CI JF c - h ’ Suva, was elected Moderator-Designate of the Pres bytenan Church of New Zealand at rbiSSfS?* Church Conference at Christchurch, N.Z. He will assume office in a year’s time.

I Government figures covering Colnnv rS ICles re pstered in the Colony last year show that one in Tb 6 prp S 1 n X rp CarS T the road iS a taxi - There are no less than 376 taxis as compared with 1,712 private 155 of the taxis are con centrated in Suva.