Imperial Preference

The theory underlying the old British empire, with its Navigation Laws, was that colonies existed for the benefit of the Mother Country. The Mother Country had a monopoly of colonial markets. Colonial products, on the other hand, sometimes received a preference in the markets of the Mother Country; and this policy reached its culmination in the famous Corn Laws of 1842. The policy, however, was reversed in 1846, when Great Britain adopted the principle of free trade in corn; and by 1860 free trade had come into full operation in Great Britain, and the last preferences on colonial goods had disappeared. In 1859, on the other hand, Canada adopted a protective tariff which operated even against the Mother Country; and by the National Policy of 1879 the principle of protection was carried still further in Canada. The development of intra-imperial trade by means of imperial preferences was a favourite theme with the imperial federationists of the period from 1884 to 1904; but the loyalty of the Mother Country to the ideal of free trade placed an insuperable obstacle in the way of this project. The only way in which Great Britain could give a preference to colonial goods was by abandoning free trade and setting up a tariff wall against foreign countries. In these circumstances, Sir Wilfrid Laurier made the first move in the direction of imperial preferences in 1897 when he brought into effect a budget remitting 25 per cent. of the Canadian import duties when goods were of British origin. This “imperial preference” was increased to 33 1/3 per cent. in 1900; and it was the intention of the Laurier government to increase it to 50 per cent. when it was defeated in 1911. A similar preferential tariff on British goods was adopted by New Zealand in 1903, by South Africa in 1904, and by Australia in 1907. In no case were these preferences dependent on concessions made by the Mother Country; but in 1903 the Right Hon. Joseph Chamberlain resigned from the British cabinet, and undertook a campaign in favour of “tariff reform” by which was meant the adoption by Great Britain of a protective tariff which would enable it to grant a trade preference to the Dominions. Though he gained widespread support, his programme, however, failed to win the support of a majority of the British electors; and ill-health ultimately compelled him to desist from his campaign.

It was not until the period of the World War that Great Britain was forced to abandon, in fact if not in principle, the theory of free trade. Once import duties were re-established in the Mother Country, it became possible to grant a preference to goods from the overseas Empire; and in the British budget of 1919, introduced most appropriately by Joseph Chamberlain’s son, the principle of an imperial preference was at last adopted. A preference of 33 1/3 per cent. was granted on cinematograph films, on clocks and watches, on motor-cars; and on musical instruments imported from the overseas Empire, and half this preference on tea, cocoa, coffee, and tobacco. These preferences were not of much value to Canada ; but it was important that the way was opened for the adoption of reciprocal imperial preferences. A system of recip rocal imperial preferences was finally arranged at the Imperial Economic Conference held at Ottawa in 1932. These included not only preferential tariffs between Canada and the Mother Country, but also between Canada and other parts of the Empire. These preferences were not so extensive as they might have been if they had been arranged a third of a century earlier, for in the meantime many industries had grown up in the Dominions which could only exist behind high tariff walls. But a beginning was made, with results advantageous both to Canada and the Mother Country; and the principle of reciprocal tariff preferences among the component parts. of, the British Empire is now, established in practice.

Source : W. Stewart WALLACE, “Imperial Preference”, in The Encyclopedia of Canada, Vol. III, Toronto, University Associates of Canada, 1948, 396p., pp. 254-255.

See Also

Corn Laws
Free trade
National Policy
Reciprocity
Tariffs

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This entry was last updated: November 5, 2014