Published by EH.NET (January 2004)
John Singleton and Paul L. Robertson, Economic Relations between Britain and Australasia, 1945-1970. Basingstoke, Hampshire and New York: Palgrave Macmillan, 2002. xiv + 289 pp. $79.95 (cloth), ISBN: 0-333-91941-6.
Reviewed for EH.NET by Jonathan Pincus, Productivity Commission, Melbourne, Australia.
This scholarly and well-written volume is in the Cambridge Imperial and Post-Colonial Studies Series. John Singleton is Senior Lecturer in Economic History at Victoria University, Wellington, New Zealand; Paul Robertson is Professor of Management at the University of Wollongong, Australia.
According to Angus Maddison’s data, reported by Singleton and Robertson, in 1950 New Zealand enjoyed a per capita product 89 percent of that of the United States; Australia, 76 percent. By 1970, both were at 76 percent (calculated from Table 1.4, p. 10). Some scholars, including Mancur Olson, have taken these kinds of estimates to indicate the high cost of protectionist policies (as opposed to “outward-looking,” non-discriminatory economic reform, whether pursued unilaterally or multilaterally).
However, Singleton and Robertson argue against the (historical) relevance of such comparisons — neither country then set as its paramount economic goal the maximization of per capita growth; and, in any case, especially via food agreements, valuable insurance against the effects of a possible world slump was provided by the Commonwealth economic and financial arrangements. The defensive economic network, centered on Britain, served the two countries well until the mid-1950s, they argue; thenceforth, “Australia and New Zealand were dealt poor hands and played them badly” (p. 25). The emphasis of their account, however, seems more on poor deals than on poor policies.
The first of the poor deals was that the postwar American vision of a multilateral regime of free trade and unrestricted payments was not sufficiently realized and not sufficiently attractive for Australia and New Zealand to hasten to abandon their development strategies structured around special export deals in which Britain paid above world prices, and agreed to the imposition of industrial tariffs against British exports (albeit, with margins of preference: chapter 2), but retained some control over the disposition of their dollar earnings.
Secondly, the Commonwealth economic relationships gradually ceased to satisfy Britain (even when considered in broader political and security context). Singleton and Robertson focus on policy events leading up to and following the pivotal British policy move of concern to the two former dominions, the decision to apply for admission to the European Economic Community in the early 1960s. Although the application failed, it signaled the imminent end to the special British Commonwealth trade relationship associated with the Ottawa agreements of the 1930s and the provisioning agreements of World War II, as well as the associated Sterling Area arrangements.
For Australia, the difficulties of transition were lessened on the export side by the prospect of Japan’s becoming the major market for its mineral and rural products. There were two major obstacles, however. First, Australian public opinion was against selling strategic raw materials to Japan; and second, industrial jobs were to be preserved not only in Australia (and New Zealand), but also in Britain. Australia was tardy in normalizing trade relations with Japan, and it was only in the mid-1960s that Japan-Australia trade exceeded Britain-Australia trade. Extensively using antipodean and British official archival sources, Singleton and Robertson provide a fuller understanding of the shifts in Australian trade policy than is found in J.G Crawford, Australian Trade Policy, 1942-1966 (University of Toronto Press, 1968) and other, later, works. (Interested readers should also see Stuart Ward, Australia and the British Embrace: The Demise of the Imperial Ideal (Melbourne University Press, 2001)).
New Zealand lacked Australia’s mineral endowment; and Japan was eager for wool but restricted mutton imports. Consequently, New Zealand was more desperate than was Australia for the preservation of the advantages of the status quo ante. So it negotiated a free-trade agreement with Australia (NAFTA) in 1965, chiefly to secure an export market for its pulp and paper industry (p. 200). However, its greater economic salvation seemed for a while to swing on its securing its own special relationship with the EEC. Any such arrangement would have offended U.S. trade policy prescriptions — President Kennedy “hectored” Prime Minister Macmillan in 1962, that Britain could not take care of everyone in its wake as it joined the EEC; and besides, claimed Kennedy, ultimately there would be more security in world community agreements than in Commonwealth preferential arrangements. Macmillan could not do much to help war veterans who had settled in New Zealand and learned to grow pineapples (p. 180).
In the event, New Zealand had a decade’s notice of the severing of the special tie with Britain; and it achieved a kind of informal agreement of association with the EEC in relation the dairy products (p. 212). How wisely Singleton and Robertson think that it used that period of grace is not fully clear to this reader. They agree with but understate the common interpretation, that “To some extent, Australia and New Zealand compromised their case on agriculture by their maintenance of high levels of industrial tariffs” (p. 120). The mercantilist view of the primacy of export markets, adopted by most the policy makers in the two ex-dominions, is not seriously challenged by Singleton and Robertson. They also accept at face value the contemporary claims that the maintenance of full employment required checks on imports from all sources (p. 216). In the Australian instance, that involved the use of quantitative restrictions on imports for much of the 1950s — the operation of the competitive price mechanism was suspended for much of foreign trade, as well as for currency, with long-lasting consequences for micro-economic policy generally.
(I suggest to the series editor that, for future volumes, the chapter number and brief title be a running head for the end notes.)
J.J. Pincus is Principal Adviser Research with the Productivity Commission (an independent microeconomic policy advisory agency of the Australian government).