1. During the war it became necessary to arrange production within
Australia of many new types and lines of goods Australian
requirements of which were previously met by importations.

Speaking generally these new industries lack tariff protection.

2. The increasing availability of supplies of the same goods from
overseas is calculated to result in importations sufficient in
volume to destroy some of these new industries which the
Government will desire to foster as permanent additions to our
industrial development.

3. The Tariff Board has reported that under existing conditions
the Board is unable to assess reasonable and adequate duties by
the means used before the war. The Board expresses the view that a
long period may elapse before prewar methods of dealing with the
matter of protecting industry can be resumed. There is also the
fact that Tariff Board procedure is such that the number of cases
which the Board could thoroughly investigate and report upon
during the period of one year is limited so long as it is
necessary to observe prewar procedures.

4. The Government has considered the suggestion made through H.M.

Senior Trade Commissioner in Australia [1] that until
circumstances are more normal consideration of tariff adjustments
might be deferred. Agreement to follow this course would in the
opinion of my Government result in the destruction of a number of
industries which it would be the policy of my Government to
encourage. For that reason we are unable to accept the suggestion
as a satisfactory resolution of the problems confronting us.

5. The Tariff Board has recommended the initiation of
consultations with the United Kingdom Government with a view to
reaching some temporary arrangement under which worthwhile
Australian industries may be protected until reviews in accordance
with the principles and procedures of the United Kingdom -
Australia Trade Agreement [2] again become possible.

6. I repeat below certain recent observations by the Tariff Board
outlining the Board's views in the matter of protecting industries
developed during the war and in encouraging the establishment of
new industries:-

'Although in the next few years it will be impossible to measure
the merits of Australian industries by comparisons of their costs
with those of other countries, the Tariff Board considers it
essential that Australia's postwar reconstruction should be on the
lowest cost basis attainable. Such a basis should of course be
sought as a means of maintaining and improving living standards
and not at their expense. Reduction of waste in industry or, in
other words, increased efficiency, offers the only means of doing
that. The Tariff Board desires to stress its opinion, based upon
long experience in prewar years, that the greatest discrimination
should be exercised in dealing with industries developed during
the war, that may require abnormally high protection to survive
the return to peace conditions. The same care should be taken in
the future in encouraging the establishment of new industries.

High levels of protection may be justified temporarily in the
cases of industries not fully developed, that show good prospects
of reducing their costs to levels that should in a few years make
lower protection sufficient. Also it may be necessary to burden
the community permanently with high protection for industries that
are essential to national security or that promise exceptional
social benefits. In all such cases the cost of protection to the
community must be kept prominently in mind and every care taken
that the expected benefits will be worth the cost.'
7. My Government agrees with the Tariff Board that circumstances
exist which necessitate a variation in the terms of the United
Kingdom Australia Trade Agreement to the extent necessary to cover
the abnormal situation which now obtains.

8. In the circumstances my Government finds it necessary to seek
the concurrence of the United Kingdom Government in an interim
arrangement whereunder-pending a return to conditions which permit
reviews in accordance with the principles and procedures of the
Agreement of 1932-those industries which are recommended for
protection by the Tariff Board may meanwhile be afforded such
degree and form of protection as the Tariff Board considers
appropriate as an emergency measure.

9. As the formulation of definite plans with respect to industries
is a matter of considerable urgency in connection with
rehabilitation we would appreciate a reply as early as possible.