HC Deb 12 December 1935 vol 307 cc1185-92

6.13 p.m.

Mr. PETHICK-LAWRENCE

I beg to move, in page 1, line 18, to leave out "Part I of."

The Committee will appreciate that the three Amendments to this Bill in my name on the Order Paper operate together. The object is to omit all references to the Debts Clearing Office and Import Restrictions Act, 1934. I have taken the course of putting down my Amendments not because we necessarily desire a recision of this Act, but because it is the normal procedure and enables us to put certain questions to the Minister in charge, who, I understand, is the Secretary for the Overseas Trade Department, relating to this Act. It will be within the recollection of hon. Members who were in the last Parliament that this Bill originally took the form of a permanent Bill, and that there was a good deal of criticism and debate on the Second Reading and during the Committee stage. As a result of those debates, an Amendment was inserted limiting the duration of the Act to two years. That is why it comes before us to-day in the form of a Measure which it is proposed to continue by means of the Expiring Laws Continuance Bill.

The Act consists of two essential Sections. The first Section was introduced specifically to deal with a certain state of affairs prevailing in Germany. Originally it was called a Reprisals Bill, but the second Section, on the other hand was not to deal with Germany but with other countries, and was for the purpose of enabling the Government to make quota arrangements in certain circumstances. That, I believe is a correct interpretation of the two Sections of the Act. With regard to the first Section of the Act, the clearing office envisaged under the Act has never been set up and therefore, the first question which I put to the Minister is: Why has this clearing office not been set up? His answer may be that it was unnecessary to do so and, if that be the answer, I put the further question: Why, then, is it necessary to continue the Act? It may be said that the existence of this power in reserve—the right to set up a clearing office—is what the Government have in mind and the Minister, no doubt, will tell us whether that is the case or not. If it be the case, there is a third question which I would put to the Minister. Does he contemplate the necessity of this Act being continued indefinitely or does he only wish to continue it for a year? Can he give us any encouragement to believe that it will be possible to bring the Act to an end at the end of the year? If it is intended to continue these powers ad infinitum would it not be better to bring in a permanent Measure instead of including this Act in the Expiring Laws Bill?

Similar considerations arise on the second Section of the Act. I do not know to what extent the powers given to the Government under this Section have been used and I shall be glad to hear from the Minister on that point. If these powers have been used I would ask him to give us specific instances so that we may know where we stand in this matter. If they have not been used. I hope he will give us reasons for the continuance of this provision and also tell us how long he thinks its continuance will be required. These are points on which the Committee is entitled to information and we shall judge of our attitude towards the proposal largely by the Minister's answer to our questions.

6.19 p.m.

Captain EUAN WALLACE (Secretary, Overseas Trade Department)

No one representing the Government could possibly complain of the raising of this matter by the hon. Member for East Edinburgh (Mr. Pethick-Lawrence) and certainly nobody could complain of the tone or the manner in which he has raised it. I was glad to observe from his opening sentences that his Amendments are exploratory rather than destructive and I do not think I shall have any difficulty in satisfying him, his hon. Friends and the Committee as a whole, that this Act, which we propose to continue for another 18 months under the Expiring Laws Continuance Bill, is well worth keeping on the Statute Book. It consists, as the hon. Gentleman has pointed out, of two main Sections, the first of which gives the Government power to set up a clearing office and the second to restrict imports under a licensing system.

Section 1 of the Act gives us power to set up a clearing office in any case where a foreign country restricts, prohibits, or discontinues payments or transfers of debts to persons in this country. The setting up of such a clearing office would be done under a Treasury Order. To put it very briefly, all debts specified in such an order—it would not necessarily apply to every debt—due by persons in this country to the foreign country would have to be paid into the clearing office and the fund so collected would be distributed by the clearing office to pay the debts due from that foreign country. In view of the terms in which the hon. Gentleman has raised the question I do not think it is necessary for me to go into the provisions made for the furnishing of necessary information or the charges which might have to be made on the moneys disbursed to cover the cost of the clearing office. I am able to answer the hon. Gentleman's first question by telling him that we have not in fact had to set up the clearing office and probably he, in common with most hon. Members, will be glad to hear it.

The Government have strong objections on general grounds to any clearing house system. Clearing houses artificially direct trade into certain channels and tend to canalise it. They interpose a cumbrous machinery of payment between the debtor and the creditor. The ease with which importers in the weaker country can, under this system, pay for foreign goods in their own currency rather encourages imports into the weaker country instead of restricting them, thus having precisely the opposite effect to that intended, which is reaching something like an approximate balance of trade between the two countries. Similarly, the existence of such a system encourages exporters in the stronger country to believe that their payment is assured and that they need not exercise reasonable caution in their commitments. For those reasons, the Government regard the clearing house system as something not to be applied if it can possibly be helped. I am glad to say that, thanks in some degree to the existence of this Act, we have been able to resolve our difficulties as to commercial payments in practically every case, and notably in the case to which the hon. Gentleman referred, that of Germany. In that case there is a Payments Agreement, signed on 1st November last year, which, according to my information, has succeeded up to the present in liquidating £4,250,000 out of £5,000,000 of frozen debts.

I now come to the second question, which is: If this clearing office has been found unnecessary, why continue the Act? We want to continue it for much the same sort of reason as people continue to carry umbrellas in this country during the winter months. Like my hon. and learned Friend the Financial Secretary to the Treasury, I am temperamentally inclined to take the optimistic view and I hope that it may not be long before we shall be able to allow this Measure to lapse. But I am advised, and personally persuaded, that it would be the greatest possible mistake to deprive ourselves in the immediate future of the potential advantages which this weapon in reserve, if I may so describe it, gives us. The Committee will observe that we propose to continue the Act, not for a year as is usual but for 18 months. The reason is one of administrative convenience. The Act is due to expire on 30th June next year if we do not take any action and I thank the Committee will agree that it is better either to continue it for six months and so bring it into line with other Measures under this Bill, or else continue it for 18 months. The view of my right hon. Friend is that it is unlikely that we shall be able to do without it after 31st December, 1936, and it seems unnecessary to make two bites at a rather small cherry. For that reason we ask that it shall be continued for 18 months. Almost everything I have said about Section 1 of the Act applies also to Section 2.

Mr. PETHICK-LAWRENCE

Before the hon. and gallant Gentleman leaves Section 1 will he say whether he expects that the Act will be continued indefinitely?

Captain WALLACE

I thought I had made that clear. I do not take such a gloomy view of the situation. I do not think that there will be any necessity for the Government to do what the hon. Gentleman himself suggested and ask for power to put this Act permanently on the Statute Book. We believe that the particular circumstances of this time can well be met by continuing the Act as we propose under the Expiring Laws Bill. I think the House of Commons would probably resent the introduction of a Measure which was not to come up for review, precisely on the lines of one which we had not so far been obliged to use. What I have said on Section 1 applies also to Section 2 as regards the point under discussion, namely, the advisability of keeping the Act in being. Section 2 gives power to the President of the Board of Trade to apply import prohibitions or restrictions on goods from countries which impose quantitative restrictions in a discriminatory sense against our products. This power to restrict imports from foreign countries corresponds to powers which the great majority of foreign countries in fact possess and there is nothing very extraordinary in the Board of Trade taking such a power. We have indeed found that the existence of this power has been extremely useful, notably in the case of trade with Holland. In one sense it is over-ridden by the existence of commercial treaties and it may interest the Committee to know that at this moment we could only apply the section to China and Peru. On the other hand the Government can always denounce a commercial treaty, most of them can be determined in a year and some in a much shorter period, and even if the letter of a commercial treaty precluded the use of the powers in Section 2 I think there is very little doubt that in certain circumstances we might have a moral right to use them.

The fact that we possess these powers strengthens our hands in dealing with any attempt at definitely discriminatory terms against our trade. The situation in this respect has not improved since the Act was passed. There are to-day 36 countries which have power to apply discriminatory restrictions, and 16 of them have acted upon it for the first time or taken additional action subsequent to the passing of the Act. The powers under Section 2 are strictly comparable to those which have been taken under the Import Duties Act, 1932, which enables us to meet discrimination by discriminatory import duties. The Section was applied with consider- able success in one particular case, and the Government felt at the time, and feel now, that it might in certain cases be more appropriate to reply to discriminatory import restrictions by this Section than by putting on additional duties. Therefore, we regard Section 2 of the Act as a very desirable complement to Section 12 of the Import Duties Act, 1932. I hope I have said enough to convince the hon. Gentleman that although we have been fortunate enough to have avoided invoking the powers under either Section of this measure, it would, in all the circumstances of the world to-day, be unwise to deprive ourselves of this modest reserve; and when I say, in conclusion, that the existence of this Act on the Statute Book is not costing anybody a penny, I hope the Committee will agree with me that it would perhaps not be very wise to take off our overcoats in the middle of December. I hope in those circumstances the hon. Gentleman will be good enough to withdraw his Amendment.

6.32 p.m.

Sir JOHN WARDLAW-MILNE

I support the passing of this Bill, but I hope my hon. and gallant Friend who has just sat down will forgive me if I say at once that while I admire his optimism, my complaint is not that the Government propose to continue this Measure, but that they have not put it into operation. My hon. Friend over and over again, and I have no doubt quite correctly from his point of view, expressed the desire that he should he able to continue with an Act of this kind merely, I understand, as a measure of protection in the future, but in the hope that it would never be put into operation. My complaint, however, is that the Government have not put it into operation. It seems to me that a continuation of this Measure every year is not fulfilling its purpose merely as a protection or as a possible threat. On the contrary, it must be well known to the Government that there are traders in this country suffering very severely owing to the restrictions in other countries, which make our trade with them in some cases almost impossible. I do not want to go into long details. It is sufficient to say that the position of those who have to trade, for example, with Spain is almost impossible to-day, and if this Measure is intended, as I understand is the case, to be a substitute for some system of import restrictions, then I suggest that it is high time the Government seriously considered putting this Measure into real operation.

I drew the attention of the President of the Board of Trade yesterday to the position in which traders in this country find themselves in connection with the export of British manufactured goods to Denmark. We have a trade agreement with Denmark under which they are supposed to take, speaking very roughly, an equivalent quantity of our goods, but it is found in practice that they are taking almost entirely raw materials from us and manufactured goods in very large quantities from Germany. That may not be a legal evasion of our agreement with Denmark, but it is in fact an operation under the agreement which is making the position of our manufacturers almost impossible. These are matters which, it seems to me, are not being dealt with merely by holding over other nations a threat that a clearing house can be established, and I wish to point out to the Government that some of us complain, not that the Government have done something, but that they have not done something. I think it is worth their consideration, in continuing this Measure, which I support, whether they should not now begin seriously to think, in cases such as I have mentioned, of putting it into operation, because it seems to me perfectly clear that we are not getting a fair deal with several countries. I have mentioned two only, because I do not want to detain the Committee, but something more than the threat of a clearing house is required, so that British manufacturers shall be able to have a fair field with those of other countries in such circumstances as I have stated.

6.36 p.m.

Mr. PETHICK-LAWRENCE

Without agreeing with all that fell from the lips of the Minister, and still less with what fell from the lips of the hon. Member for Kidderminster (Sir J. Wardlaw-Milne), I view this proposal as fairly harmless and ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.