HC Deb 25 May 1933 vol 278 cc1346-75

7.24 p.m.


I beg to move, in page 9, line 14, to leave out from the beginning to the second word "the" in line 19.

I desire to ask your guidance as to this and the next Amendment,"which is to leave out Sub-sections (2), (3), (4) and (5) of the Clause. I do not know whether it would be for the convenience of the Committee to discuss the two Amendments together. They deal with two distinct points, and perhaps they ought to be taken separately.

The DEPUTY-CHAIRMAN (Captain Bourne)

This Clause, which comes into the Finance Bill consequent upon a Financial Resolution in Ways and Means, authorises a reduction in certain duties which were embodied in an agreement between His Majesty's Government and the German Reich. The Amendments really deal with two different points. The first Amendment is to omit the words which are almost a preamble to the Clause, and I think raises the terms of the Treaty between His Majesty's Government and the German Reich. If hon. Members desire a discussion on that Treaty it should be made on the first Amendment. The second Amendment really raises the point as to whether the House should alter the duties or whether it lies within the power of the Treasury to do so. We can take a discussion on the merits on this Amendment, and on the second a discussion on the question of machinery.


If the words of the preamble are left out we shall be bringing about a reduction in the rates of duty, and, accordingly, when the German Agreement expires, it will not be automatically the duty of the Government to restore these duties to their old level. Two separate points are raised in leaving out the preamble. It is not a question as to whether the German Treaty is desirable, but what will happen when the agreement comes to an end.


The object of this Clause is to reduce the duties now in operation which came into existence under the Finance Act of 1925; and, in order that they may be reduced, some reason must be given. The Government say that in consequence of a Treaty made with the German Reich an alteration is to be made in the Finance Bill. In the Finance Act of 1925 uniform rates of duty were laid down to apply to a variety of manufactured articles, ranging from motor cars and accessories to all kinds of musical instruments, gramophones and so on. That flat rate of 33| per cent has been in force Since 1925 on all imported commodities coming under these categories, but in consequence of the agreement with Germany which was approved a short-time ago, a lower scale of duties were authorised; the Germans were given a form of preference in our markets. The general duties were lowered in consequence of that agreement, and the rates of duties will vary from 20 to 25 per cent. Instead of a uniform rate of 33⅓ per cent. there will be lower rates on certain kinds of articles. This is an innovation, a precedent, which we should do well to avoid, or at least to examine carefully. Here is an agreement made with Germany which is intended to be followed up by agreements with other countries, for the purpose of achieving a control over imports and encouraging our own exports, according to a plan which is in the mind of the President of the Board of Trade but which has not yet been revealed to the House.

These agreements, while they may have advantages, bring serious complications to our fiscal system, and on this occasion it has been found necessary to make special provision in the Finance Act for the agreement made with Germany, without any declaration that this will be the only occasion on which special provision of this kind may have to be made. It may not be possible to reduce these duties without a declaration in the Finance Bill, but even so we do not think it is necessary to have these words in the Clause. We think it could be stated in the form we propose, and that the Clause should commence with the words: The duties of Customs charged under Section 3. down to the end of the first Sub-section. We want some explanation as to why this is necessary in the Finance Bill, and whether next year there will be another such qualifying condition. We want to know whether our import duties are to be subject not to the financial or trade requirements of our own country, but conditional upon agreements which may be made by the President of the Board of Trade, with other foreign Governments. We have put our objections to the Clause and have made a request for information, and we shall be grateful to have that information.

7.30 p.m.


The hon. Gentleman has moved the first Amendment and has couched his speech practically in the form of a request for information. It would perhaps be convenient that I should give an explanation at the earliest possible moment. The words referred to in the Amendment were described by you, Mr. Deputy Chairman, as something in the nature of a preamble. The Committee, of course, appreciates that there is also a very considerable limitation implied, because the object of the Clause is to enable effect to be given to a particular trade agreement. I do not think it necessary to discuss the whole principle on which the Government are entering trade agreements with other countries. I prefer to give to the hon. Gentleman an explanation of the Government's reason for the introduction of these words and the effect of the Amendment if carried. The Subsection of which these words form a part confirms a Financial Resolution passed by the House of Commons on 4th May, reducing as from 8th May certain duties charged on the articles specified in the Fourth Schedule under Section 3 of the Finance Act of 1926. The reason for that Financial Resolution was to enable the trade agreement recently reached with Germany to be implemented.

That trade agreement is itself subject to a power of termination. It may be ended at three months' notice, and if the agreement were denounced and these Amendments were carried, the Government would find their powers restricted; there would be no power to put back the duties. It is desirable to have power to deal with these duties and to restore them to the former level if the agreement were determined, or if, as we shall see on the next Amendment, it was desired to withdraw the most-favourednation clause from a particular country. The words are necessary, first, because they implement the Financial Resolution, and, secondly, because if the words were cut out fresh legislation would be required to restore the duties to their former level. With that explanation I hope that the hon. Member will see that the Amendment is not necessary.

7.35 p.m.


I rise, not to follow the point raised by the hon. Member who moved the Amendment, but to take advantage of your Ruling, Captain Bourne, in order to protest briefly once more against the genera] character of this trade agreement. I am not proposing to enter again upon the detailed criticism of the terms of the agreement. I have done so on previous occasions, and I hope it may be possible for the House to have a better opportunity than we have had so far for discussion of this and all the other agreements which have been entered into Since then. I do realise, however, that at this moment the Chancellor of the Exchequer must be naturally anxious to get through the Finance Bill and to have time to prepare himself for the arduous labours that lie in front of him at the World Economic Conference. Therefore, without entering upon the details of this agreement at all, or attempting to make any comparison between the possible advantages secured by it and the possible and indeed probable sacrifices which it may involve, I shall detain the Committee for only a minute or two while I make certain observations of a quite general character on the agreement.

The agreement seems to me to have been based on somewhat loose thinking, and to show evidence in many of its features of unnecessary hurry, if not scamped work. It seems to me that the failure to consult any of the industries who axe to lose a measure of protection under the agreement, was unnecessary and was in a sense a scamping of the work which the Board of Trade ought to have done before going as far as they have gone. Again, when it comes to the question of undue haste, was it really necessary to rush through agreements on the eve of the World Conference, out of which may emerge an entirely different situation with regard to the mostfavoured-nation Clause? We may be giving now on a large scale what it may, after the World Conference, not be necessary to give at all on such a scale. Again, after the conference we may know somewhat better than now what the future currency position is to be, and that position may profoundly affect both the extent of the concessions we are receiving under this agreement and the concessions that we are giving.

Lastly, I submit that whether a general agreement with Germany is desirable or not, an agreement on this specific and minor issue was not necessary. We are securing some portion of what the President of the Board of Trade a year ago regarded as our undoubted right, and taking into consideration the whole relative position of German trade in this country and British trade in Germany, it seems to me that the question was not a case for an agreement but for the effective application of economic pressure. It was not candy but the stout stick that was required to gain us this very limited concession. As to the thinking that underlies this agreement, naturally we have always assumed that one of the advantages of a tariff system would be the opportunities that it would give us for bargaining. How those opportunities were exercised however, would depend upon a good many factors. They would depend, for one thing, an the relative trade position of the two countries concerned, which might in certain cases make it desirable to reduce our tariffs and in other cases make it simpler and more effective to indicate that we would raise our tariffs unless the necessary concessions were made.

Further, behind any question of bargaining must always lie the Major object for which a tariff system is instituted, namely, the security of our industry. The whole criticism that we have always made against Free Trade is that it leaves our whole position insecure, leaves our standard of work and wages insecure. That does not appear to have been the view with which the President of the Board of Trade entered upon these negotiations.


Clause 11 deals strictly with the agreement between this country and Germany. It seems to me that the right hon. Gentleman is now anticipating the Debate that will arise on Clause 12. That is the Clause which will give His Majesty's Government power to make or alter tariffs in any commercial agreement. Discussion of the general question will be more appropriate on Clause 12.


I had not intended to enter upon the general question. I am dealing with the particular defence which the President of the Board of Trade made on the German Agreement, namely, that he regarded the duties imposed as "bargaining material", to be taken off for the purpose of securing equivalent concessions; and in connection with that agreement I ventured to say at the time, and I repeat now, that if that is the point of view from which this agreement was framed, then the Advisory Committee has no real meaning or function at all and should never have been instituted. Under these conditions it is a fraud and a very dangerous fraud calculated to mislead the whole industry of the country. In connection with one of the items in the agreement the President of the Board of Trade said that any pledge which the Advisory Committee had made was something which they made only as "speaking for themselves." That is the most serious issue which this particular agreement has raised, and it is vital that to it the Government should give some sort of answer.

Are the recommendations of the Advisory Committee and the pledges which they gave things of no weight or authority with the Government? Are they nothing more than the academic opinions of the individuals who made them, or do they in some measure affect the action of the Government? If we could have some assurance that in the main those pledges and recommendations will stand good, and that it is only after very serious consideration, and after consultation with the Advisory Committee and the industries concerned, that they will in future be modified, then it will be possible for industry to have some renewed confidence in the tariff policy of the Government. If we can get no further assurance than that which the President of the Board of Trade gave us in connection with this agreement, I can only say that its terms are calculated to cause the gravest anxiety and most serious discouragement to British industry.

7.44 p.m.


I want to impress upon the Government that they should not be unduly influenced by the speech of the right hon. Member for Sparkbrook (Mr. Amery). I consider this Clause and Clause 12 to be two of the bright spots in this otherwise drab Finance Bill. They offer a message of hope to the traders of the country, who are looking for markets for their exports; to shipowners, who see their ships laid up; and to the miners and the coal industry, who have been feeling the full brunt of the world trade depression. If the Government listen to the ingenious and persuasive arguments of the right hon. Member for Sparkbrook I am afraid that the energies of the President of the Board of Trade will be tremendously handicapped. If he is to negotiate with foreign countries he must do so with a free hand and with confidence that the House of Commons will implement the agreements.


I think the hon. Baronet's argument is now being directed more towards Clause 12 than towards the Clause under discussion.


I appreciate the fact that this Clause is limited to the German Agreement. I think the President of the Board of Trade deserves the gratitude of this Committee for his courage in carrying through these negotiations. The right hon. Gentleman knew the kind of House of Commons he had to face but if various interests in the country such as the jewellery interest and the gramophone interest are to be allowed to say to him: "Because you have given some concession you are to be thrown over," then the labours of the right hon. Gentleman in future will not be effective. The only way to get a bargain from a foreign country is to give some concession. The right hon. Gentleman has to some extent justified his position in the Cabinet. I have been a constant critic and I am only too glad now to pay him my tribute for this contribution even though it is a small contibution to the restoration of world trade and economic liberty.

7.47 p.m.


The history of this matter goes back to a day which was of some importance in my life because it happened to be my birthday, in 1924, when the current German commercial treaty was entered into.


The anniversary of your birthday.


Under that agreement we extended to Germany most-favoured nation terms, but there was also a clause, the exact phrasing of which I cannot quote, to the effect that we should not discriminate against Germany either in substance or in form. That is to say, we were not to select articles for protection which came mainly from Germany. It happened that at that time the McKenna Duties were not in operation, having been suspended by the Labour Government in the Finance Act of 1924, but an Election had taken place and a Conservative Government had come into office and, having regard to their attitude towards the McKenna Duties, it was in the minds of most people that those duties were likely to be restored. Accordingly the agreement was negotiated in these circumstances— though probably nobody said anything about it—that there was the anticipation that the McKenna Duties which we are now reducing, or some of them, would be restored. Therefore, I do not think the Germans could have alleged that the restoration of the McKenna Duties were to be regarded as in any sense discrimination against them merely because a considerable proportion of the goods effected normally came from Germany.

Then the Safeguarding of Industries White Paper was published in January, 1925. Applications were received by the Board of Trade, and in the following Budget there was, I think, a duty on lace, and in the following December there were duties on leather gloves and three or four other commodities all of which were drawn in considerable quantities from Germany. The Germans, I think, protested that it was our Safeguarding of Industries policy which represented a measure of discrimination against them. When we began to protest against the German coal quota, and when they said, "We want you to look into your duty discrimination against us, not discrimination merely because you have put on duties but discrimination because you have put duties on products which are of particular interest to us"—I cannot understand why, at that time, when these negotiations were taken up, the Government should have been in the slightest degree impressed by that argument, because it had then lost its validity. When arbitration was pressed for in respect of quotas, and when the Germans said that we must arbitrate on the whole matter, their real ground of complaint, if they ever had any, had passed away as a result of the definite change in the policy of this country.

It seems to me that our Government entered into these negotiations not from the point of view of strength, as they could quite properly have done, but from the point of view of weakness. The President of the Board of Trade, in a vigorous speech, said if it was thought, that anybody else could make a better bargain than he had made, then somebody else could be got to do it. I thought he was taking a rather unwise attitude. It was not a question of whether he had bargained well or not, but of whether or not he had equipped himself with the proper tools before he started to bargain. I always thought that that was the weakness of the position. Actually if we had liberated ourselves from the German commercial agreement or certainly the most-favoured-nation clause in it—and some of us have expressed the view that we ought to have done so not only in respect of Germany but in respect of many other countries—our position would have been one of overwhelming strength because we buy far more German goods than Germany buys from us.

The cards were all in our hands, and we could have dealt them out, without any of the improper dealing Sometimes indulged in by those who play cards with great skill. We had everything in our hands if we had chosen to equip ourselves properly, and the grievance felt by many hon. Members is that the Government entered into these negotiations before we were free to use all the economic power which was in our possession. It is deplorable that industries, built up under the protection of these duties, are now to he exposed to unnecessary competition in return for a totally inadequate reward. I did not take any part in the previous discussion on this subject other than the silent part of voting in opposition to the proposals, but I feel distressed that we have made such a poor ineffective start with the new bargaining power which we have obtained of a protective policy, and I wish to add my protest to the others which have been made.

7.54 p.m.


I wish to register my protest against the timing of this German Agreement. The Committee will notice that the articles included in the Schedule referred to in this Clause are all articles which were protected under the Safeguarding of Industries Act. They had a protection of 33⅓ per cent. Now by this German Agreement those duties are reduced in varying degrees to from 10 per cent. to 25 per cent. We have never had any evidence that the duties were too high to effect their purpose. On the contrary, the musical instrument industry, for example, had been slowly establishing itself here under the 33⅓ per cent. duty. What security has that industry or any other safeguarded industry for the future? On each occasion when Safeguarding Duties were imposed they were imposed for a period of five years. Twice they were allowed to lapse under Socialist Governments. At that time those engaged in the industries had a prima facie right to assume that they would have a run of five years from the commencement of the imposition or reimposi-tion of the duties. Now they do not know whether the duties will run even for five minutes.

This sudden reduction under the German Agreement was a bolt from the blue to these industries. Not one of them was consulted and my first point is that this new protection policy which the Government have undertaken coupled with this system of treaty-making without notice to the industries concerned, instead of giving additional security has rendered the position of all industries in the country—because nobody knows what industry will next be the subject of an agreement of this kind—infinitely more insecure than it was before. My second point has already been touched upon by the hon. Member for South Croydon (Mr. H. Williams). When it was first indicated that the Government intended using the tariff as a negotiating instrument and making these agreements, it was assumed by everyone with any knowledge of treaty-making and tariffs, that the first thing the Government would do if they were going to make specific agreements with countries like Germany, would be to get rid of the most-favoured-nation clause. How could they negotiate with a specific country on specific lines if every concession which they gave was open to every country which had that clause in its treaty? In the case of the clock industry, for instance, in return for what most of us think is a very inadequate concession by Germany in regard to coal imports, we have given away our whole case as regards the development of the industry in this country. We have given it away to Switzerland, from whom we have not even commenced to ask for anything in return. When we come to ask something from Switzerland, they will say if they are honest,"Thank you, you have already given us everything in exchange for nothing in regard to the matter in which we are specially interested. You have reduced the clock and watch duties to such an extent that we can now ride roughshod over your market."

There is another point. We set up the Import Duties Advisory Committee. We adopted the general principle of a minimum tariff largely as a revenue tariff, and up to a few months ago there was no talk of doing anything definite in the way of making these new agreements. Therefore, all alterations were made in relation to the 10 per cert. duty. I have already given the illustration of the Safeguarding Duties. The duties imposed after the inquiries held before the Import Duties Advisory Committee were all at a rate which had no relation to bargains with and concessions from foreign countries Therefore, the policy of the Government is not only misconceived but it has no real method. The result is, as the right hon. Gentleman the Member for Sparkbrook (Mr. Amery) very well put it, the President of the Board of Trade, with nothing in his hands to bargain with, has had to make these agreements with Germany and other countries.

Can anybody wonder that our trades and industries are horrified at the result? Not only have they lost any vestige of security which they had, but the direct promises made as to the conditions under which the duties were imposed are proved to be valueless so far as the Import Duties Advisory Committee is concerned. Therefore, I felt, as this was the first Clause in the Bill having reference to the German Treaty, that this was the appropriate occasion on which to register a protest against this haphazard procedure, in what, I will frankly admit to the Opposition or to anybody else, is a vital matter to the trade and industry of the country. I say that we ought to have had a definite plan, when we got a new Government with a definite viewpoint, and that the whole thing should have been worked out first, instead of which we have had a procedure which is not correct in timing and of which consequently, the effect it is producing on industry is quite other than would be the effect produced by any rational tariff policy.

8.1 p.m.


I should like to know what were the exact instructions to the Import Duties Advisory Committee when they were fixing these tariffs. I understand that they were told to go through a trade very carefully, and to find out what was the tariff with which it could compete with Germany, or whoever it might be, if its markets were to be secured. The Advisory Committee have all my sympathy. I should have hated to be one of them, and then, having taken all the trouble to find out exactly what was the correct tariff to put on, without being consulted in any way, to have a "bolt from the blue" which entirely changed that tariff.

I have been talking to people interested in steel in Sheffield, who, Since they saw that tariffs were coming, have taken a great deal of trouble to improve their production. They were telling me to-day that this extra cut in the tariff will make all the difference to them, and they wonder now whether they will make a profit. These are the people for whom I am sorry, these people who have got their chance of doing well cut away from them. I agree with my right hon. Friend the Member for Sparkbrook. (Mr. Amery) that there has been far too much haste about making these agreements. These treaties could have been made at any time whatever. The Government might have waited, at any rate, until after we had seen whether anything was going to come out of the World Economic Conference in June. They ought to have waited until they had got the mostfavoured-nation clause put into a proper position.

Whenever the other countries thought we were going to put on a tariff, they at once shoved up their tariffs, and surely the wise thing to have done would have been to go to the Import Duties Advisory Committee and say, "We are going to make bargains in the near future. Be very careful that we have something with which to bargain." It may be that, being a Scotsman, I like a good bargain, but I should never have given these big businesses the very minimum tariff that would safeguard them. It all seems to have been done for the sake of coal, but, as the Minister knows very well, while I am all for coal, if you stop making a ton of steel, you have done away with a great many tons of coal, and all that we shall get from Germany to help the coal miners is nothing like what we should get from our own people at home if we had the steel and shipbuilding trades going well. I hope there will be no more of these treaties made until we have far more stable conditions, until we know where we are and have some idea of how things are going to move.

8.5 p.m.


I wish to associate myself with those who have protested against this German Agreement. Having special opportunities of hEarlng what has happened in the trades affected, I wish to tell the Committee that a feeling almost of consternation and distress has been created by this "bolt from the blue," which has taken away from them the possibilities of development and reduced them to a position which is worse than that in which they thought themselves secure. It has been contended, of course, by the President of the Board of Trade that the duties were only small, but against that, surely, if the duty is satisfactory to Germany, no matter how little the reduction may be, Germany will be able to export her goods to this country, for otherwise the treaty would be useless. Before the recent reduction in the duty on imported clocks, Germany was in possession of 65 per cent. of the trade in clocks imported into England. The reduction will therefore certainly put her in a position to entirely control the British market, which is a very great hardship to the British Clock manufacturers who have expended very considerable sums in plant for this comparatively new industry.

Further, surely there is some reason to think that when a duty has been put on some time must be given in which it can operate. There must be some security of tenure. What would be thought if a council were to pass the plans for the building of a theatre, and then, when you had put on the roof and it was completed, they refused to issue a licence? That would be similar to what we are facing to-day. I think the zeal of the President of the Board of Trade has outrun his discretion, and I would like to enter my protest and to express the view that this is an agreement for which he cannot take much credit and which certainly needs very grave revision.

8.7 p.m.


My right hon. Friend the President of the Board of Trade needs, I am sure, no defence at my hands. He has himself spoken in this House on the German Agreement three times, in the Debates of the 1st and the 4th May, and has given the facts. I need not repeat the arguments that he has used, but I think the Committee has been led a little astray by some of the speeches made in connection with Clause 11. May I point out to the Committee that many references have been made to the recommendations of the Import Duties Advisory Committee and to an alleged feeling of insecurity? Whether or not any such feeling exists, it is not germane to anything that is dealt with in Clause 11, because this Clause does not deal with any duty ever recommended by the Import Duties Advisory Committee. I do not want to make an excessive point of this, but this Clause deals with duties that have never come under the purview of that Committee at all.

My purpose in rising was to deal with questions put by my right hon. Friend the Member for Sparkbrook (Mr. Amery). He asked what weight is to be given to a recommendation of the Import Duties Advisory Committee. That is a matter of such importance that I could not allow this Debate to come to a finish without some word from the Government Bench in answer to that question, and I want to assure him as fully and amply as is possible that any recommendation from the Advisory Committee is regarded as having great weight and is taken very fully and actively into consideration by His Majesty's Government. We shall debate on a subsequent Amendment whether the Import Duties Advisory Committee are to have the power to advise, but the decision must rest with the Government. I should like it to be clearly understood, however, that full weight is given to any recommendation by that Committee and that only some Major consideration of policy would induce the Government to take a contrary view.


But is the weight such that industry can afford to put Capttal into an undertaking on the strength of a recommendation of the Im port Duties Advisory Committee?


I cannot,of course, give that assurance, but the information which reaches me is very different from that to which we have been treated this evening. The general attitude of industry towards the Import Duties Advisory Committee is one of unfailing gratitude, very handsomely expressed.

8.11 p.m.


Nobody has reflected upon the Import Duties Advisory Committee this evening or upon the way in which they have discharged their duties. What my right hon. Friend and others have been anxious to secure was that, when that Advisory Committee advised a duty, and a duty was imposed, it should not be lightly abandoned, and that when the Com- mittee, in advising a duty, advised that they did not intend to recommend an alteration for five years, attention should be paid to that request, if the Government exercised their power of revision.

8.12 p.m.


I am much obliged to my right hon. Friend for making the position so clear. I had replied perhaps too cryptically. I am quite aware of the fact that no reflection has been made on the Import Duties Advisory Committee, but I can only again give, and give consciously, the assurance that no recommendation of the Committee would under any circumstances be lightly set aside. The matters which we are discussing with regard to the German Agreement have been dealt with by the President of the Board of Trade himself, and I do not propose to go over them again, but in dealing with the general matter, I give the unqualified assurance that recommendations of the Import Duties Advisory Committee are not under any circumstances lightly departed from.


The hon. Member says that the recommendations of the committee are not lightly turned aside, but can he say if, after the revision of those recommendations, the recommendations which may be revised go to the Import Duties Advisory Committee for their further consideration?


On a point of Order. Are we discussing on this Amendment the attitude of the Import Duties Advisory Committee? I thought that that came on Clause 12.


That is so. Unfortunately, I was not here at the beginning of the Debate, but I understand that certain references have been made to the Import Duties Advisory Committee, in connection with the German Agreement, under which certain duties recommended by the committee were altered. Be that as it may, I do not want this to develop into a Debate on the position of the Import Duties Advisory Committee, because, as the hon. Member speaking from the Treasury Bench has just said, that will come more appropriately on the next Clause.


I understood from the hon. Gentleman that no duty under Clause 11 could possibly go to the Import Duties Advisory Committee—that it does not deal with such duties.


If I may reply to the question put to me, if the Import Duties Advisory Committee made a recommendation and the Government, for reasons of policy, desired to make some different suggestion, the Import Duties Advisory Committee would undoubtedly be informed and have an opportunity of submitting observations, but the ultimate decision lies with the Government and with the Government only. The hon. Baronet the Member for Barnstaple (Sir B. Peto) said, "What is the use of negotiating with a country with the most-favoured-nation clause?" He suggested that before making an agreement with Germany, it would have been sufficient to put an end to our treaty with that country in order to be unfettered from the most-favoured-nation obligation. The hon. Member, of course, knows that there are 42 treaties, and it is not the treaty with Germany that would have to be abandoned, but the whole of the other 41 treaties, if one wanted to use the most-favoured nation argument in a different form.


That is not exactly what I meant. I assumed that you would clear the decks before you went into action.


If one is to embark on the policy of giving notice in respect of 42 treaties, it would be a long time before any trade agreement came before this House, and I cannot believe that, on consideration, that is desired either by industry or by any section of political opinion.


Would it be possible to raise this question of the most-favoured-nations clause at the World Economic Conference and to get some general settlement among the nations?


No doubt the whole policy of the most-favoured-nation clause can be discussed at the Conference, but that would not prevent Great Britain being bound by the 42 agreements which are at present in force, the terms of which would have to be preserved in giving notice. There will be other opportunities of discussing the most-favoured-nation clause on other Amendments this evening.

8.15 p.m.


I only rise to emphasise to the Committee that some of us who have been supporters of tariffs all our lives differ from those who criticise the Government on this point and heartily support the German Agreement. I should not have occupied the time of the Committee but for the fact that every Member who has spoken, except the Minister, has condemned the agreement. [An HON. MEMBER:"NO!"] Well, criticised the proceedings attached to the agreement, except, of course, one particular Free Trade Member whom we always expect to be different from the party to which I have the honour to belong. Some of us heartily approve the actions of the Government. Surely the Government must have the power at all times either to accept or to reject the recommendations of the Advisory Committee. That power must rest with the executive Government, subject, of course, to the final approval of the House. If we are not to have any bargaining power in regard to international agreements, surely the attraction of tariffs to a good many people would fade away. I should have thought that the last person who would have complained about the short-term policy of the Advisory Committee would be the hon. Member for Barnstaple (Sir B. Peto) who pressed the matter of fabric gloves a week or so ago. I hope that I shall not be ruled out of order if I mention the question of the selective tariffs that were agreed on at the Ottawa Conference, and which we hope will be extended at the World Conference. We look upon the German Agreement as a preliminary in that direction. I want to add my testimony to that of others who have been lifelong members of the party who support this agreement and think that the President of the Board of Trade has done the right thing in the policy which he has adopted.

Amendment negatived.

8.20 p.m.


I beg to move, in page 9, line 28, to leave out from the beginning to the end of the Clause.

The Chairman told us when we moved the previous Amendment that he would expect us to approach the question on a different line on this Amendment. I endeavoured to keep to the subject of the Amendment and did not allow myself the luxury of wandering over so wide a field as other Members. The hon. Member for South-West Bethnal Green (Sir P. Harris), with a pardonable and laudable desire to enliven the proceedings, referred to his pleasure and satisfaction at this concession to his life-long views from his old colleague who has for the moment departed from the true faith and is responsible for the tariff system of this country. The hon. Member can derive some satisfaction from the first part of the Clause, and, so far as we have gone, we on this side of the Committee have found no fault, because there a reduction in duties is contemplated. In the present Amendment we express our apprehensions because, having made arrangements in conformity with the German Agreement to reduce the rate of duty from a uniform standard of 33⅓ per cent. to varying rates of 25 per cent. and upwards, the Clause now gives power, without the consent of Parliament, to restore these rates to a higher figure. That would indeed be a sorry circumstance and would reduce the satisfaction felt by the hon. Member for South-West Bethnal Green at the action of his old colleague the President of the Board of Trade in contributing to the gaiety of London and the country in general by not only providing lower tariffs against Germany, but making a contribution of world tariffs as well.

He has specified that musical instruments, for example, are to come into this country cheaper so that those of us who have musical proclivities may amuse ourselves and those who accept our sociability with the aid of musical instruments of all kinds. The one thing that has not been stressed in this discussion so far is that, while we impose a tariff of 33⅓ per cent., which is now to be reduced in consequence of the German Trade Agreement, the reduction is not to apply only to German goods, but to goods produced in Switzerland. It is to apply to Swiss clocks as well as German clocks, and to Italian musical instruments as well as to German musical instruments. The hon. Member for South-West Bethnal Green and the Liberal party, who find so much joy and satisfaction in this, with the aid of cheaper Italian mandolines and guitars, and the auxiliary aid of the sparkling wines which have been referred to to-day, will be able to have a night out in celebration of their great triumph.

Our objection to the Clause is a constitutional one. We wish to safeguard the House and the country against what appears to be the power to tamper and to juggle with tariffs. The House has already decided in favour of permitting a reduction of tariffs from 33⅓ per cent. to lower rates on certain specified articles. Now we are coming to the possibility of a reversal of that procedure, and it is likely that action will be taken without consultation with this House, and indeed without an appeal to the Advisory Committee or any body properly constituted to examine the merits of any possible change. It is laid down that that change shall be upwards and that the duty shall be restored to 33⅓ per cent. by order of the Treasury or the Board of Trade. I do not know the intricacies of the most-favoured-nation clause, but I should imagine that in this Clause 11 as it stands there are possibilities of a great deal of confusion and apprehension arising not only in the minds of those in this country who would like to know 12 months in advance what the rate of duty on these particular imports is likely to be, but also in the minds of traders in foreign countries who supply us with them and who do not know when it may occur to the Treasury or the Board of Trade to terminate the new arrangement and restore the duty to 33⅓ per cent. We have never been very much enamoured of the Import Duties Advisory Committee. Time and time again we have said that it is not a perfect organisation for the assessment of Customs duties in the interest of so-called protection, but here there is no provision for calling in even the Advisory Committee. It is subject only to the caprice of the Treasury—nobody knows exactly who the Treasury are, though the Treasury is something of which every Department goes in fear and trembling—or the Board of Trade, acting in circumstances known only to them and outside of the control of this House.

We do not believe that the Parliamentary Secretary requires the latter part of this Clause for the purposes which he has so clearly explained to us. Surely he can do what he wants to do for 12 months without creating the perplexities and disturbing conditions which may arise under Sub-sections 2, 3, 4 and 5. He has told us that there are 41 nations with whom we have most-favoured-nation clause agreements, and we do not know to what extent an alteration in these duties, without publicity or previous notice, may create difficulties for us with those nations. The Clause is one which it is difficult to follow and to understand in its details, and there are many points which we would like to have explained, but I will not pursue those points further because some things about which I now feel apprehension may be more clear to me after the Parliamentary Secretary has made his speech. We find, however, in Sub-section (3), this statement: (3) For the purpose of an order made under this section which is expressed to apply to any particular countries, the Board of Trade may make regulations prescribing, either generally or in relation to articles of any particular description, the conditions which must be fulfilled in order to prove that articles have been manufactured in any of those countries, or partly in one and partly in another of those countries, and the Commissioners may in any case require an importer to furnish, in such form as they may prescribe, proof that the conditions so prescribed by the Board have been fulfilled, and if such proof is not furnished to the Commissioners' satisfaction, the articles shall be deemed not to be articles so manufactured. That sounds very involved. It may be that it is a necessary provision, but I would like to know how it works. If all this inquiry is to take place in regard to articles which come under this very specific and clear instruction we apprehend that the difficulties of the Government may be considerably enhanced. Further, we would like to know the Government's policy. Are they really working for a lowering of the tariff walls, are they hoping for a reduction in tariffs, or are they waiting and balancing their opinions day by day watching the possibilities of successful negotiations with this country and with that and not certain whether they want the tariff to remain at 33⅓ per cent. or at the lowest possible figure which may result from negotiations? We shall welcome a statement by the Minister, and we hope he will be able, if not to agree to the deletion of these parts of the Clause, to give us an assurance that our apprehensions are exaggerated.

8.33 p.m.

Lieut.-Colonel J. COLVILLLE (Secretary, Overseas Trade Department)

The hon. Member who moved this Amendment and the hon. Member for South-West Bethnal Green (Sir P. Harris) approached this question of tariffs from a rather different angle from that taken by us on these benches. They Halled with joy the reduction of tariffs on certain commodities which has taken place under the German Agreement as being something good in itself. We, however, look on tariffs as a necessity for the country at the present time, and the reductions made are the minimum reductions necessary to secure certain particular benefits under this agreement. Therefore, if we do not continue to get those benefits, it is only right that we should have the power to revert to the existing rates of duty, and, if the Government were to accept this Amendment, which they certainly cannot do, it would take away the power given under Subsection (2) to restore the duties, or any of them, to their former level. This agreement with Germany, which is the one under discussion, can be terminated at three months' notice. If it were found that we were not getting what we had expected under that agreement it could be denounced, and if this Amendment were accepted we should then require new legislation to restore the duties to their old level. That is a position which the Government cannot accept; they must have the power to act quickly in such an event, and so they ask for this Clause, which enables the duties to be restored by a Treasury Order.

There is another reason why we ask for this power, and it has a relation to our policy of negotiating with foreign countries. As my hon. Friend the Parliamentary Secretary to the Board of Trade has explained, it is not our policy to proceed with a general abrogation of our treaties with foreign countries in which we have the most-favoured-nation clause—that applies to 42 countries at the present time—but the President of the Board of Trade has very clearly stated that we could not continue to afford unconditional most-favoured-nation treatment to the countries which give unfavourable treatment to our goods, if, when we negotiate with them, they do not give us satisfaction. We must therefore take power to act, and to act decisively, in regard to the reinstatement of the duties, if the occasion arises that commercial relations with a country break down.


May I ask the hon. and gallant Gentleman how long it takes to denounce these treaties?

Lieut.-Colonel COLVILLE

[will come to that. The hon. and learned Gentleman has noticed that we are bound by certain treaties at the present time. That is provided for in the proviso at the bottom of page 9 of the Bill, which reads: Provided that no order shall be made under this Section unless the I reasury are satisfied that it can be made without contravention of any agreement regarding commercial relations which is for the time being binding on His Majesty's Government in the United Kingdom. A period of notice would, of course, be necessary before any discriminatory duties could be applied to a particular country. Some agreements require three months, some six months, some a year and some longer, but the Majority of them require six months or more. The application of duties that are non-discriminatory would not require the abrogation of an agreement under the mostfavoured-nation clause. We might want to reimpose a duty, and we wish to have power to do that without undue delay. I can assure the hon. Member for Gower (Mr. D. Grenfell) that these powers will not be exercised in a spirit of caprice, but when, in the judgment and knowledge of the Government, any such change of duty is essential, and we ask for those powers confident that we must have them in order to carry out our trade policy with foreign countries.

8.37 p.m.


I am very much obliged to the hon. and gallant Gentleman for his explanation. May I ask him one or two questions, in order to get the position clear? A great many people in the country do not quite appreciate what the most-favoured-nation clause, and these duties under the German Agreement, are. As I understand the matter, every remission given in respect of these duties to Germany, automatically applies to every nation with whom we have a most-favoured-nation treaty. Those countries are automatically entitled to get those remissions, so long as the most-favoured-nation clause exists, and the remissions given will be cumulative for all the nations. That is to say, if some agreement is made to-morrow with another nation, Germany will, in the same way, get the benefit of those re- missions, and each remission made with each succeeding nation will be spread over the whole area of all the nations.

People are anxious to know whether that is the permanent policy of the Government with regard to the most-favoured-nation treaty clauses, and whether, when the Government are negotiating individual treaties, they are going into the negotiations on the basis that whatever they negotiate with a particular country will automatically apply to all the other countries who come within the most-favoured-nation clause. The hon. Gentleman will see that it is very important that people should understand one way or the other. It is generally thought at present that a treaty, for example with Germany, merely affects German trade, and that a reduction of 20 per cent, will be a reduction of 20 per cent., for instance, on clocks coming only from Germany. Of course, it will mean a 20 per cent, reduction for all clocks. If that system is to be followed out, it will have the very desirable effect of making a general reduction on the whole of the tariff of the country, instead of in respect only of the particular agreement that is being made. We may hope after a time, as a result of successive agreements with different countries, to get a general lowering of the tariff wall, rather than a specific lowering of the tariff wall as against specific countries.

8.40 p.m.

Lieut.-Colonel COLVILLE

I will reply to the point that the hon. and learned Gentleman has raised. It is true, generally, that any concession given in a tariff agreement would be shared automatically by the countries with which we have most-favoured-nation rights in their treaties with this country, but, when the Government are not satisfied, in endeavouring to make agreements with countries which receive benefits from other trade agreements that that country is not prepared to make concessions to help our export trade, most-favourednation treatment will not be unconditioNaily continued. The hon. and learned Gentleman is perfectly right in his idea that there will be a widening of trade, but that will only take place if we receive fair treatment. That is our policy in regard to the most-favoured-nation clause.

Amendment negatived.

8.42 p.m.


I beg to move, in page 10, line 7, to leave out from the word "description" to the word "been" in line 8, and to insert instead thereof the words: that articles which fulfil such conditions as may be specified in the regulations shall be treated as having. This is a Government Amendment to insert certain words which are necessary, in the opinion of the draftsmen, when one comes to lay down conditions as to proof of origin of manufacture. The Committee will appreciate that, by the two sub-sections in Clause 11 with which we have already dealt, we have contemplated that goods manufactured in a particular country might conceivably be dealt with on a different footing from goods manufactured in another country. It is requisite therefore to have very carefully prescribed in the Act of Parliament a method of determining whether or not goods have been manufactured in a particular country.

Sub-section (3) of Clause 11, as printed in the Finance Bill, is concentrated upon the method of proof, rather than upon the conditions themselves. This Amendment merely adds that, in addition to prescribing conditions for proof of manufacture, the Board of Trade shall be the authority to lay down what conditions have to be fulfilled in order that the regulations may be regarded as having been complied with. Origin of manufacture is a difficult matter to decide. "Empire content" will spring to the minds of hon. Members at once. The Board of Trade desire not merely to be satisfied in a matter of proof, which is a mere matter of evidence, but they want to be given the power themselves to stipulate the conditions which shall exist, before goods said to be described as from a particular country can be so described, for the purposes of this Clause. The Amendment might be regarded substantially as a drafting one. Its object is intended to be covered by the printed words of the Clause, but it is put forward in order to make the object clearer.

8.44 p.m.


The hon. Gentleman, in moving this Amendment, has failed the Committee in one respect. I thought that he took it for granted that every Member of the Committee had in mind the case of Canada, whence articles coming to this country, as from within the Empire, are, by surreptitious methods, actually manufactured in the United States and only assembled in Canada. The hon. Gentleman spoke about regulations to be made by the Board of Trade to ensure that an article coming to this country from Canada shall have beenactually manufactured, and not merely assembled, in that country. I am thinking, for purposes of illustration, of typewriters, lenses, photographic instruments, and so forth, and I think it would be well if the hon. Gentleman or his colleague could give us some idea of how regulations can be drafted at all to meet cases of that kind. I have an impression that, in spite of all the machinery that could be set up against commodities travelling over those frontiers, no scheme can ever be devised that will prevent them from coming into this country, via Canada, from the United States of America. It would be well, therefore, if the hon. Gentleman would give us one example of how he can formulate regulations to make every Canadian dealer so honest that, when hed eclares that a typewriter has actually been manufactured in Canada, the Board of Trade in this country will be absolutely satisfied, when the article arrives here, that every piece of it has been actually made in Canada. Let me pursue the point a little further. Are we to be told in these regulations, or are the Canadians to be told, that not only must the machine have been assembled in Canada, but it must have been manufactured in Canada—


On a point of Order. Does not this relate to Clause 13?


I was only taking a point which the hon. Gentleman himself had introduced. The hon. Member for South Croydon (Mr. H. Williams) is not the Chairman of this Committee. Otherwise, he would not allow me to speak at all—I suppose as one Welshman to another, as it were. This is a very important point. Is it to be laid down in these regulations that not only is the machine to be assembled in Canada, but manufactured in Canada? Is the steel, the ironwork, the metal work from which the machine is actually made in the first instance, to be produced in Canada; or will it be possible for the metal work to be produced in the United States of America, sent into Canada, and then turned into a machine ready to be received in this country under the regulations which the hon. Gentleman is now proposing? I wish he would take, for the enlightenment of the Committee, a specific article, and tell the Committee how these regulations are going to meet the case of that article when it comes through the Customs into this country.

8.50 p.m.


The hon. Gentleman has taken a rather unfortunate question, the question of the honesty of the Canadian manufacturer. I hope that the Committee will not be led aside by discussions of that sort. The hon. Member for South Croydon (Mr. H. Williams), who raised the point of Order that this matter might come under Clause 13, was, of course, recollecting that Clause 13 deals with Imperial Preference, while Sub-section (3) of Clause 11 deals with foreign countries. I have assumed that the hon. Gentleman was asking for an example, and that the country was geographically of little consequence.


I always understood that the United States of America was a foreign country, and not within the British Empire. It was once.


The greater part of the hon. Gentleman's speech dealt with Canada, and not with the United States of America. However, I want to answer fairly the point that has been put. Practice makes perfect. The hon. Gentleman asks, how can one ever, by Regulations, be sure that one is going to achieve the object aimed at? That is a very good matter for Debate, but it is not the point of this Amendment. In connection, for instance, with the Russian embargo, questions of the meaning of the term "manufacture" and "country of origin" are questions of daily concern to the Board of Trade, and a good deal of experience is being gained as to what type of matter it is necessary to investigate in seeking to show that goods emanate from a country, not in the physical sense of having been shipped or despatched from that country, which is a matter of easy proof, but whether they have been manufactured in that country with a view to making that country the source or origin of the goods. What percentage of raw material, what percentage of labour, what percentage of overhead charges, is sufficient to give the article in question a geographical origin? In the trade and industry of the world today, almost every article if composite. A log felled in Russia may have its branches trimmed off in one place, its bark in another; it may be measured in a third place, and cut into planks in a fourth. What is the country of origin of the sawn plank when it reaches the Surrey Commercial Docks?


Where the tree grew.


The hon. Member says, "Where the tree grew," but he will find that the growing of trees is not a process of manufacture. I take the point about which I was asked. I was asked to trace an article, and say what we were going to do by regulation. I do not mind what article is taken, but the type of regulation which the Board of Trade is going to lay down will be as to the minimum conditions to localise the finished article reaching this country with the country of origin in regard to which the regulations are made. The whole of this Amendment will only come into operation at all if one is seeking to discriminate against a particular country. Otherwise it can never be used. It will only be used when one is going to say that the most-favoured-nation provisions have been withdrawn from country A, so that goods coming from country A are to be dealt with on a separate footing. What is the minimum requirement which goods must possess in order to be labelled geographically as of manufacture and origin in country A? That is the point to which the regulations will be directed.


Will not all this cumbersome process require the presence of a representative of the Board of Trade on the spot where the article is manufactured, in order to secure all that the regulations are implemented?


If that were required, the regulation would say so. The hon. Gentleman is, I think, making a mountain out of a molehill. It is not at all difficult, certainly not for the Board of Trade, to make regulations about anything. The Board of Trade is confronted with the problem: How are we to tell that particular goods are manufactured in a particular country? This Clause says that the Board of Trade shall have the power themselves to answer that conundrum, that they shall make regulations in such form as stipulates minimum requirements to give the geographical label to the goods. I can assure the hon. Gentleman that in a great many countries regulations of this kind are in constant use and practice. I myself have handled a great many of them, but not Since I have been a Minister. The power is really an enabling power, which I think this Committee will desire to give, and perhaps they may now be able to see their way to let us have it.

8.54 p.m.


I do not think it is generally realised in the Committee that the items in the Fourth Schedule with which we are dealing are items that do not enter this country duty free when they come from Empire countries. They are all goods which are subjected to import duties, when they come from Empire countries, at two-thirds of the rate applied when they come from foreign countries. Accordingly, in the case of pianos, for example, we reduced the duty on foreign pianos from 33$ to 20 per cent, and pianos coming from Canada, if any happened to come from there, from 22|y Per cent, to whatever is two-thirds of 20 per cent. Having regard to this Amendment, the matter is a little more complicated than the Parliamentary Secretary has realised, because it is one thing if an article is made in part in one foreign country and in part in another when we are discriminating against one country and not the other, but, if you have the case of an article coming from Canada made largely from American parts, and if it happened, for the sake of example, that we were free to treat American goods differently from German goods and we restored the duty on American goods to the McKenna Bate of 33$ per cent, and, in addition, some of these goods, having been partly manufactured in the United States came through Canada, there would be the question of the labour content which arises in Clause 13. But if, on the other hand, they were goods that had been manufactured in a foreign country with which we still have most-favoured- nation relations and were in part manufactured in an Empire country, a new rate of duty might arise. I want to know precisely how goods of Empire origin are going to be treated, having regard to the fact that these are not goods of Empire origin which are entitled to enter the country duty free, but would enter at a preferential rate.

8.57 p.m.


The Government will be faced with conundrums of this kind so long as they have a tariff policy. How are the Government to know that an article which is produced in the Empire, where preferential consideration has to be given, is not produced by foreign Capttal? It is admitted by most people that Capttal, as such, is international, although we talk of the Bank of England and the joint stock banks. Consequently articles which have come from any of the Dominions in consequence of the Ottawa Agreements may have been financed by the Capttal of the United States.


I do not think any part of this Clause deals with articles produced by foreign Capttal.


Surely the Board of Trade will be able by regulations to know exactly where the articles are produced, by whom, and whether they have been produced by foreign Capttal.


No, not foreign Capttal. That does not come into the Clause.

Amendment agreed to.