HC Deb 01 July 1935 vol 303 cc1615-34

7.55 p.m.


I beg to move, to leave out the Clause.

I am sorry to trouble the House again with this question of the import of paddy, that is rice in the husk, but, after many hours of investigation and of conference with the interests concerned, I have come to the conclusion that our case against the imposition of this duty of two-thirds of a penny per pound remains as strong as it was when we began our opposition to this Clause. There is one Parliamentary difficulty in connection with this Clause which ought to be mentioned. The House will observe that the Chancellor of the Exchequer is now about to leave, presumably for dinner, and I think he deserves it. This Clause, although it is in the Finance Bill is not a Treasury Clause. I am informed that it is a Board of Trade Clause—that the Board of Trade is responsible for it, that the Board of Trade representatives must defend it and that, if I want the Clause withdrawn, I must persuade the Board of Trade first and the Treasury will then reconsider the matter. But when I approach the Board of Trade on the matter they tell me, in effect, "We cannot argue the Clause on its merits. The Government of India have asked to put on this duty and we feel bound to comply with their request because it is implementing the Ottawa Agreement."

I wish, shortly, to give the history of the Clause. Apparently, the Government of India asked the Board of Trade for this duty. The Board of Trade in turn asked the Treasury who at their request included this Clause in the Finance Bill. I have made prolonged and deep inquiries but I find it difficult to fix the responsibility for the Clause, and I am most grateful to the President of the Board of Trade for being in his place to-night. Without wishing to disparage the status of the Parliamentary Secretary, he is not a Cabinet Minister and cannot decide matters of policy. I think the President of the Board of Trade now that he is here will agree that the case which I am putting forward is unanswerable. The Parliamentary Secretary in his speech on the Budget Resolution referred to the importation of paddy as "undermining preference" and as "threatening preference," and as "frustrating preference," and used other terms to that effect. I have here figures which are not disputed and which do not bear out the hon. Gentleman's statement.

As a consequence of the Ottawa Agreements, a duty of one penny per pound was put on clean white foreign rice imported into this country. There are two kinds of rice and here may I say that I do not wish to be caught up on any small points. I know all the details but I am trying to put the case broadly before the House. Of these two kinds of rice one is called foreign rice or the Japan type of rice, which is produced in foreign countries. For the purposes of this Debate I may refer to it simply as foreign rice. The other kind is Empire rice which is produced in the Empire, a great proportion of it coming from India and Burma. These two kinds of rice are distinct products. The foreign rice commands approximately double the price of the Empire rice. The Empire does not and cannot yet produce this kind of more expensive rice. In the report issued by the Government of India dated Simla, 27th June, 1934, on the working of the scheme of preference, the following statement is made: The factors militating against a greater increase of imports into the United Kingdom may be briefly explained. The most important factor is the present inability of India and Burma to provide in a sufficiently increasing measure the quality of rice required by the consumers in the United Kingdom. The point has to be clearly noted that even the most expensive rice is relatively a very cheap article when compared with other foods. In consequence, the price element does not wholly determine the purchases of the consumer. It is the flavour and the easier cooking properties, as well as the finish and polish, that determine the choice of variety of rice by the consumer in the United Kingdom. As Burma rice is inferior to foreign rices in some of these respects, its consumption suffers. So, in their own report, the Government of India acknowledge in broad outline that foreign rices are of a superior quality to anything that the Empire can produce. The demand of India to have this two-thirds of a penny on imported paddy, which is rice in the husk, before it is milled and converted into clean rice, has no foundation whatever. As someone put it to me, rather vulgarly, shall I say, "India has got the wind up for no reason whatever." The Ottawa Agreements are working according to plan. I know it is very difficult, in a Debate of this kind, to follow figures, but I am compelled to give certain figures which show that, because of the Ottawa Agreements, the importation into this country of Empire rice has enormously and increasingly increased, and the importation of foreign rice into this country has enormously and increasingly decreased.

I will take the four complete years 1931 to 1934. The importation of Empire rice in 1931 was 31 per cent.—I leave out the decimal points—and in 1934 it was 60 per cent. That is to say, in the four years the importation of Empire rice had doubled. Now we happen to have the figures for the first five months of this year. I know that the figures for five months cannot be taken as confidently as those for a whole year, but these figures show that that definite trend to increased Empire imports persists. For the first five months of this year the percentage has gone up from 31 per cent. in 1931, and from 60 per cent. in 1934, to 80 per cent. To take the imports of foreign rice, in 1931 they were 68 per cent. of the total; they went down to 39 per cent. in 1934, and for the first five months of this year they were down to 19 per cent. I contend that those figures dispose completely and absolutely of the case that India is trying to make, that the Ottawa Agreements are not working and that her rice trade in this country is being threatened.

I want to be brief, and I cannot do better than quote a few lines spoken on the Committee stage by my hon. Friend the Member for Colchester (Mr. Oswald Lewis), who, if I may say so with respect, did not know much about this Clause till he came into the House, but who, having followed the Debate intelligently, made this remark: The Parliamentary Secretary has sought to convince the Committee that this importation undermines, or threatens to undermine, the agreements made at Ottawa. It seems to me that to support that contention, he must be able to produce certain figures showing that the importation of foreign paddy constitutes an addition to the total importation of foreign rice of all kinds. As I understand the case put by many Members on both sides, it is that the importation of this paddy is merely a substitution for foreign cleaned rice and not an addition to the total importation of foreign rice of all kinds. Seeing that the figures of the total importation of foreign rice of all kinds are still falling, it would at first sight seem as if the argument rests with those who are opposing the Clause rather than with the Parliamentary Secretary."—[OFFICIAL REPORT, 18th June, 1935; col. 269, Vol. 303.] I could quote other hon. Members who listened to the Debate or who read the OFFICIAL REPORT of the Debate, and who said to me afterwards, "You completely made out your case." Out of the 10 or 11 speeches made during the Committee stage Debate, the only speech, with the exception of a short intervention by the hon. and gallant Member for Bournemouth (Sir H. Croft) in favour of the Clause was that of the Parliamentary Secretary himself. The truth is that on the merits of the case there is no answer to the arguments which I have ventured to put forward.

There is another point that I want to make. This foreign rice cannot be sold in competition with Empire rice. Between 35 and 40 per cent. of the rice consumed in this country comes from foreign sources, and from the figures that I have given it will be seen that, owing to the Ottawa Agreements, the trade has swung tremendously in favour of the Empire, and, Burma and India being by far the greatest producers in the Empire, they have benefited proportionately. We seem to have come to the point where the British public say, "We want this luxury, this higher priced type of rice, and we are willing to pay for it; we are willing to pay double the price for it." It comes into this country over the 1d. per lb. duty which is imposed on foreign clean rice, and the demand still persists for 35 to 40 per cent. of the consumption of this country. It is true that the Empire, little by little, is learning to produce this higher grade rice. I understand that it takes from eight to ten years to hybridise, cultivate, and produce this higher type of rice. The buyers in this country, the millers, tell me that they have bought every bag that has been offered of the type of rice which can in any way compete with what I call the foreign higher priced rice, but even that amount is by no means equal to the higher priced rice that comes in, principally from Spain, but also from Italy and other countries.

There is, however, a bigger point at issue here. The Government, by accepting the request of the Indian Government, are setting up a precedent, and I should like to ask the President of the Board of Trade if he is going to accept every request from any Dominion without proper examination, and without vetting the reasons that prompt that Dominion to ask for that concession. I will quote a few words from the speech of the Parliamentary Secretary in the Debate on the 18th June, and I call attention to this because I think a very dangerous precedent is being set up. When speaking about this demand of the Indian Government, the Parliamentary Secretary said: I am not arguing the reasons which the Government of India had for coming to that conclusion, but I am telling the Committee as a fact that the Government of India have come to the conclusion"— I ask the House to mark those words"— on what appear to them to be good evidence and satisfactory grounds, that this sudden growth of an unlooked-for import, not taken into account at Ottawa, has, in their judgment"— not in the judgment of His Majesty's Government— constituted a new factor which in their mind seriously threatens the preference of a penny a pound which it was the contractual obligation of the United Kingdom to give them as a result of the Ottawa Agreement. The figures I have just given, which show how the importation of rice from foreign countries has fallen from 68 to 19 per cent., and how the importation of Empire rice has risen from 31 to 80 per cent., prove that the Government of India have no justification whatever to complain that the importation of this foreign paddy is in any way a menace to the Ottawa Agreements. The Parliamentary Secretary also said on the 18th June, when he was referring to the importation of paddy: The 2 cwt. in 1932 became 20,000 cwt. in the following year, became 333,000 cwt. in 1934, and in the first five months of this year has increased to the rate of 500,000 cwt. in the course of a year."—[OFFICIAL REPORT, 18th June, 1935; cols. 261–2, vol. 303.] I agree. It is because a penny a pound duty was put on imported clean foreign rice, and it is because only 10 per cent. duty was placed on the importation of the raw material, that the millers of this country were able to start a business and make a very small profit of approximately a farthing a pound. Instead of importing clean foreign rice, they were able to import the rice in the husk, the raw material, and mill it in this country, and, because paddy is double the weight, double the bulk, of clean rice, it gives double the work, not only in milling, but in transport, in port dues, harbour dues, market dues, and all the other subsidiary interests that are involved. The Parliamentary Secretary to the Board of Trade said, in his speech on the Budget Resolution, that this Clause had been introduced in the spirit of Ottawa. I ask the House to ask themselves what could be more against the spirit of Ottawa than to introduce a Clause which, as I submit, I have conclusively proved will not in any way help India. The only effect will be that it will stop the milling of paddy in this country, put out of work those who are engaged in the industry, and do away with at least one-third of the business of the millers. I will not develop the arguments further because we had a good Debate on this question on the Committee stage, but I want to ask the Parliamentary Secretary what he has done during the past 10 days to implement the pledge which he gave on the Committee stage. He said: Of course, I give the Committee the assurance that everything that has been said will be most carefully taken into consideration between now and Report. He also said: But between now and Report stage I will examine with the officials and with everybody else concerned the speeches and arguments which have been put forward."—[OFFICIAL REPORT, 18th June, 1935; cols. 271–2, Vol. 303.] Neither I nor the millers for whom I am speaking have received one word from the Parliamentary Secretary. We waited until almost the end of last week, and in desperation I went to see the President of the Board of Trade, and I was received most kindly by him. I asked four specific questions during the Committee stage. The first question was how this demand arose in India and what is the demand from the Rangoon millers. The point I wished to make was that the Rangoon millers are, so to speak, farmers and do not understand the market conditions in Great Britain or what the public demands in Great Britain. I asked, again, whether the Government would consider the withdrawal of this Clause for one year in order to see whether the figures I gave continue in their trend and whether it was indeed true that India's fears were unjustified. My third question was whether the Government would agree to some statutory or gentleman's agreement to limit the importation of paddy. The last question was whether, if the Government wanted to be logical, they would prohibit altogether the importation of foreign rice and let the Empire have the home market, and, if they were not prepared to prohibit the total importation of foreign rice and paddy in whatever form, they would allow the foreign rice to come into this country to be milled there. It cannot matter to India in what form the rice comes into this country.

I have been to see the Trade Commissioner for India, and he does not dispute my figures, which show a continual decrease in foreign rice imports and a continual increase in Empire rice imports. All I am asking the Government is that, so long as they allow foreign rice to come into this country, they should allow it to be milled here. If this Clause is passed, it will kill the milling of foreign paddy in this country, but it will not stop the importation of foreign clean rice. The only effect will be to make a present of the milling operations to the foreign miller. I know that the Parliamentary Secretary has a big majority behind him. Those who heard my arguments on the Committee stage told me that, if only those Members who went into the Division Lobby for the Government had heard the Debate, I should have won my case. I am faced with the same difficulty tonight, but I am convinced that the case I have put forward cannot be assailed at any point on its merits. It may be said that we are in a difficult position with India at the moment, and that, if we do not pass this Clause India may retaliate in some other way, but on the merits of the case there is no controverting the arguments which I have put forward. I ask the Government to own up to the fact that there has been a misapprehension in putting this Clause into the Bill, and I ask them earnestly to post-date the operation of the Clause for one more year in order to see if the trend of the imports of foreign rice which are going down, and of the imports of Empire rice which are going up, persist.

8.19 p.m.


I beg to second the Amendment.

I do so because it seems to me that the case put forward on behalf of the Board of Trade on the Committee stage amounted in substance to this: The Indian Government have asked for this further duty, and we are bound under the Ottawa Agreements to give them the duty if they ask for it. That is a most extraordinary argument to put forward. The Parliamentary Secretary who used it admitted that the question of the importation of paddy was not present to the minds of either the representatives of the Government of India or of the negotiators on behalf of this country at Ottawa. If it was not present to the minds of either negotiators, how can we be said to be bound to put on the duty at the mere request of the Government of India without ourselves considering whether it is or is not a proper thing for us to do? I submit that there are really only two questions which we have to ask ourselves on this matter. The first is, have we imposed the duty which we undertook to impose at Ottawa? The answer to that question is, yes, a specific duty was mentioned, and that duty has been imposed. The second question is, has the duty that we have imposed had the effect that it was hoped it would have? The answer again is, yes.

The Parliamentary Secretary to the Board of Trade admitted frankly that since that duty has been imposed the importation into this country of Indian rice has continuously gone up and that the importation of foreign rice has continuously gone down. If we have imposed the duty which we said we would impose, and if it has had the effect which we all hoped it would have, why should the Government ask us to impose a further duty, which, it can be shown, will be in some respects a harmful duty? There is a trade—it is true that it may be a small trade—which has grown up, admittedly by chance, out of the operation of the duty which we imposed. Representatives of the Board of Trade come to the House and ask us to help them to kill that trade because of a request on behalf of the Government of India. The Parliamentary Secretary categorically said on the Committee stage that he was not examining the arguments on which the Government of India came to that conclusion; it was sufficient for him that they had, as a fact, come to that conclusion. Since when has the Government of India been the taxing authority for this country? I am one of those who think that when the Parliamentary Secretary to the Board of Trade has a good case he makes the very best of it. Having listened carefully to his two speeches on the Committee stage, I think that, unless he was gravely out of form on that occasion, the weakness of the case which he put before us must have been due to his own consciousness that it was a case that could not be sustained in argument. He has had time for consultation and reflection. I hope that if he is not now going to give way he will, in justice to the House, produce some better arguments than he did on the last occasion.

8.24 p.m.


I was very impressed by the tremendous earnestness of my hon. Friend the Member for Chislehurst (Sir W. Smithers) who moved this Amendment and by the amount of labour and trouble he has taken to ascertain the facts which led him to move it. Although I am, no more than he is, an expert in the production or the marketing of rice, I have perhaps some slightly greater knowledge of its production abroad, and I have, as he has, been in touch with those who are interested in this question. It is not quite such a one-sided matter as my hon. Friend who moved the Amendment would have the House believe. I agree with what the hon. Member for Colchester (Mr. Oswald Lewis) said, that this is not a very great matter, that it does not affect any very large part of the United Kingdom trade, but that does not alter the fact that if I were convinced either that we were doing a grave injustice to the millers in this country or doing something we should not otherwise do merely because the Government of India had asked us to do it, I should entirely agree with the views put forward by both my hon. Friends. But I am afraid the matter goes a little deeper than that.

I have taken some trouble to ascertain the position as I see it and as it was put in the statements made by my hon. Friend who moved the Amendment both to-night and in his previous speech on the Committee stage. I heard most of that Debate in Committee, and I remember that my hon. Friend made it a special point that the imposition of this duty would confer no benefit at all upon India. I think it would be advisable for us to take the views of those most interested, and if we refer to what India herself said, long before this discussion arose, I think we shall be satisfied that she feels quite definitely that she will be benefited by the imposition of this duty. It is probably known to the House that considerable efforts have been made for the production of better qualities of rice in Burma and other parts of the Empire, but I want to put to the House, as an illustration of the view which India herself holds, an extract from the report of the Advisory Board of the Imperial Council of Agricultural Research which is dated from Simla, September, 1934: In view of the fact that the grants received from the Empire Marketing Board for rice research schemes in Bengal and Burma were expressly given for the production of rites equal to the highest quality required in the United Kingdom market, and the fact that the omission of foreign paddy from the specific duty gravely reduces the value of the Ottawa preference on Empire rice, the Council desires to endorse the opinion expressed by the recent Indian Crop Planning Conference that His Majesty's Government should be required at an early date to impose a specific duty of three-farthings per lb. on all foreign paddy imported into the United Kingdom. That, at any rate, does not look as though India were indifferent as to whether the duty is imposed or not. Again, a subcommittee of the Legislative Assembly in Simla, on the 24th August, 1934, stated: We would invite the attention of Government to the necessity of ensuring that the effectiveness of the preference is not diminished by the invasion of the United Kingdom market by foreign paddy which is subject to a duty of 10 per cent. ad valorem as compared with a specific duty of one penny per lb. on cleaned rice. I quote those extracts because I think we ought to get away from the idea that India has not taken the trouble to ascertain what is in her own interest. She has very definitely put forward the view that the imposition of this duty is very much in her own interest. Then I come to the point, which appealed to me very much as made by my hon. Friend, that if this duty is imposed it will put British millers out of business altogether.


That is true.


I think I am right in saying—I am informed that it is true, though I have no actual knowledge—that practically all the luxury rice which is imported or could be imported from India requires a process of reconditioning and remilling which takes practically the same amount of labour as is required in the case of paddy. In fact, information given to me is to the effect that most of the extra labour in paddy milling is purely mechanical and that, roughly, two men per mill represent the only difference in the amount of labour required in the working of imported paddy and of rice which requires reconditioning.


I tried to point out in my speech that paddy is double the bulk, double the weight and required a great deal more work put into it than is the case in the finishing operations on imported rice, and I am informed that it is undoubtedly a fact that if this Clause goes through the milling of paddy in this country will be completely finished.


What may finish is the milling of imported foreign paddy, but that work would be replaced very largely by the reconditioning of Empire and Indian rice. My hon. Friend says that his information is that imported paddy calls for much more labour. My information is that it is a very small amount more. Neither of us is an expert in this matter, and I can only give the information which has been given to me; but it seems to me clear that British millers could, if they liked, substitute for imported foreign paddy the raw material which they could get from Empire sources. Another point which my hon. Friend made and which he dealt with at considerable length was that this luxury rice could not be produced in the Empire. There, again, I think the statement goes too far. I will give him such information as I have from official sources on that subject also. At the meeting to which I have referred of the Imperial Council of Agricultural Research at Simla the director of agriculture in Burma made it abundantly clear that Burma can and does produce the most expensive grade of rice. I do not want to go into long quotations, and I will give the House what was said as shortly as I can. He said that two or three years ago the Empire Marketing Board and the Imperial Council of Agricultural Research made large grants for rice research. So far as Burma was concerned they had largely succeeded, as even before they got a grant from the council they were engaged in producing types of rice which would some day capture the European market. He took the opportunity to contradict several misstatements which had appeared in the Press from, time to time that Burma and Bengal could not produce types of rice suitable for the market in the United Kingdom. Lastly, I want to point out to the hon. Member that his statement that rice coming from India is almost all—all, I think he said—sold at the lower price for what he called Empire rice as against foreign rice is, again, not quite correct, because the best types of Burma rice have been sold in the United Kingdom continuously since early 1933 at from 22s. 6d. to 24s. per cwt.


Will the hon. Member tell the House the quantities of that higher quality rice from Burma which have been sold? I am informed that it is true that a few hundred tons of this higher quality rice have been sent, but that only proves that the Empire is beginning to grow the higher quality rice. The only request I make is that as long as foreign rice comes into the country from Spain and elsewhere it should be milled in this country.


I know that my hon. Friend is convinced that rice of the kind of which he is speaking cannot be produced except outside the Empire, but it is quite evident to me that information goes to show that a great deal more can be produced within the Empire, but it will not be produced so long as we allow the foreign grower to get his paddy into this country without the extra duty. The moment you put the duty on you give a tremendous impetus, if my information is correct, to the importation of luxury rice from Burma where it can, I believe, be grown at the present time.

It is very difficult for any one who is not an absolute expert to speak with certainty on this matter. I speak with considerable diffidence because I know what a lot of trouble my hon. Friend has taken over this matter. If he would go a little further, he might find that India is firmly convinced that she will not get the trade in luxury rice until this duty is on to prevent the foreigner sending his paddy here. Taking what the hon. Member said in his interruption as the lowest basis, it shows the steady growth in production of the luxury class of rice in the Empire. It should be clear that, as soon as the duty is put on, the miller will be able to buy Empire rice, and that that growth will continue to an increasing extent. There is a great deal of evidence that the duty would be of much advantage to India. I am not convinced that the millers of this country would suffer seriously, if at all, by the adoption of this Clause.

8.37 p.m.


I want to emphasise the enormous importance to Burma of the rice crop. The economic slump which took place there was simply due to the entire falling away of her market for rice. That market enabled her to spend on imports, be it in the way of cloth or manufactured articles from this country, the sum which was available when she had a prosperous market for her rice. I was in Burma during the last year of the War and a year or two afterwards. We had to control rice in Burma partly in the interests of this country and partly in the interests of the non-rice-producing inhabitants in Burma itself. In the course of that control, prices rose so high that in other countries, not only in Asia but in Europe, wherever the climate admitted, there was a large push forward in the production of rice for home consumption and for export if they could. In that way Burma lost her market. There were large increases in rice cultivation in other countries in Asia; for example, in Siam, in French Indo-China, to some extent, I believe, even in Java and to a large extent to Korea.

I am speaking mainly of Burma because her export is very much larger in proportion to her production than is the case with India, where large quantities of rice of low varieties occupy the ground for the short time and are chiefly consumed in that country. India exports a small quantity of fine rice and imports simultaneously from Burma a large proportion for her own consumption. It is a great mistake to talk about Indian or Burman rice as a special or peculiar kind of rice, because their rice ranges over a number of varieties. You can always have a cheap rice, or a really fine rice which occupies the ground for a long time and which requires much constant and careful irrigation. To the best of my recollection the export of paddy to this country was infinitesimal and no doubt for that reason the necessity for putting a duty on paddy was overlooked in the case of Burma. The rice which was sent to Europe went very largely to Germany at one time in the form of husked rice—not rice in the husk—cleaned to various degrees. There are several processes of cleaning, until you arrive at the very highly polished rice.

I do not think the export of rice in the husk existed, because you had to carry away a large weight in pure husk and pay freight, and the husk was of no value when you had husked the rice. At the same time it was much more bulky. Consequently, no one from Burma would export paddy to this country if they could send cleaned rice, which could be reconditioned by milling in this country. Maybe the processes were not so fine in Burma, or in the course of the voyage over the tropical seas the rice got out of condition and had to be reconditioned in this country. Nobody heard of Spanish or Italian rice being sent in the form of husked rice until the accident was discovered that if you brought the paddy in for the lower rate of duty and husked it in this country you could cut out cleaned rice from other countries, and you had the benefit of the cheap paddy. A small industry has sprung up recently in the milling of paddy as distinct from the reconditioning and polishing of milled rice. I do not think that small advance should stand in the way of our doing what undoubtedly would be a good turn to Burma. It is all-important for prosperity in Burma. She exports a much larger proportion of rice than India, and she has a vital interest in maintaining her market for paddy throughout the world. It would be a rather scurvy trick against Burma if we cut her out in respect of the small contribution that she sends to this country. For the reason that I have given I hope the Government will not accept the Amendment.

8.44 p.m.


We have had a number of Debates on paddy and the House will have noted the tenacity with which the hon. Member for Chislehurst (Sir W. Smithers) has taken up an eager opposition to the Clause. As a lawyer, I know that those cases are the most dangerous to which you never see that there is any possible answer. The hon. Member for Chislehurst said time and time again on the Committee stage that he thought his arguments were incontrovertible, that he had made out a case that could not be answered, that nobody could ever discuss it on its merits, and a number of similar phrases. I am afraid it is precisely when that type of expression is used that the mind is not always open to a very obvious answer. I would like the House to assume that this matter has been looked into on its merits—that it is not merely a question of the Government of India asking and ourselves obeying, although I would point out that, when we speak of the Government of India, we always mean His Majesty's Government in India, and are not referring to a foreign Government.

When this matter was discussed in Committee there were a number of speeches against the Clause. Some of those speeches, I think, in fairness to the hon. Members who made them, were probably made extempore, without any very deep study of the matters underlying the points discussed. I gave, at the end of the Committee stage, a very full assurance that all the arguments used would be examined by the Government, and every relevant consideration taken into account. The hon. Member for Chislehurst says, "How have you spent the last 10 days? How have you implemented that assurance? What have you done?" I have done exactly what I said I would do. Every argument used, every figure put forward, every suggestion made, has been tested properly and effectively by the officials, and the hon. Member for Chislehurst himself has been received by the President of the Board of Trade and has put his case very fully to my right hon. Friend. The hon. Member for Chislehurst appeared to be in some doubt as to whether India really required this duty, and himself interviewed, as he said to-day, the Trade Commissioner for India, from whom, I have no doubt, he received a very direct assurance on the point on which he consulted him. Having had an opportunity of making this examination and of weighing all these considerations, I can only say to the House that it is the intention and desire of His Majesty's Government that this duty should be imposed.


I have not a copy of the OFFICIAL REPORT at hand, but the burden of what the Parliamentary Secretary said in Committee was that he would communicate with, or see, or consult all the parties concerned. The people vitally concerned are the millers, but it was not until the end of the week that we felt we could wait no longer, and the President of the Board of Trade kindly saw me on Friday and was most helpful.


I cannot believe that the millers previously received by me in deputation would have wished to add anything to the very, full and elaborate statement which they made to me. Had they made such a request, they would have been instantly received. I cannot believe that anyone speaking for the millers would suggest that there has not been the fullest opportunity for consultation in their case. The interview with the leading millers was a very exhaustive one, and I cannot believe that there is any other point that could have been added. Certainly, the hon. Member himself, in his speeches at his interview with the President of the Board of Trade, at his deputation, and here to-day, has not put forward any fact that has not been present to the minds of the officials who have re-examined this matter.

Let me now, for the benefit of those Members of the House who are listening to this Debate and who want to deal fairly between the parties, try very briefly to explain the matter. I would address myself particularly to the hon. Member for Colchester (Mr. Oswald Lewis), who said that there are only two questions—have we put on the import duty that we undertook at Ottawa to put on, and has that duty had the effect anticipated? If that is the case, he says, our contractual obligation is at an end, and were those the facts I should, of course, agree with him. Let me explain, however, that India is a great producer and exporter of rice, and one of the matters on which at Ottawa she asked for special treatment was her rice trade. The form of special treatment for which she asked was a preference of 1d. per lb. as against foreign rice. Rice can be imported into this country either cleaned or in the form of paddy. Foreign rice coming into Great Britain cleaned is subject to a duty of 1d. per lb., and to that extent India has her preference, because her rice comes in free. But paddy, from which a proportion—the hon. Member for Chislehurst says it is one-half—


Fifty-five per cent.


—from which 55 per cent. of foreign rice can be obtained by husking in the United Kingdom, is subject to a duty of only one-tenth of 1d. per lb. The whole rice, therefore, which comes in from foreign countries in the form of paddy and which is husked in this country, represents, so far as India is concerned, cleaned rice on which a duty of one-fifth of 1d. per lb., if it be regarded as consisting of one-half of the unhusked paddy, is paid. At Ottawa we gave India the undertaking to give her a preference as against foreign rice of 1d. per lb., and we have done that in the case of the cleaned rice, but not in the case of the paddy. We did not do it in the case of the paddy for the simple reason that no one ever thought that anyone was going to import paddy for the purpose of husking it in order to obtain foreign rice from it. That trade has grown up since 1932—I do not complain of it—in circumstances which amount to an evasion of the preference we granted to India. Starting from nothing, it first reached 20,000 cwt., then grew to 300,000 cwt., and this year, at the rate of 500,000 cwt., is obviously eating into India's preference of 1d. per lb. which we undertook contractually to give her.

The hon. Member for Chislehurst says that it cannot be having any effect on India because the Indian exports of rice are going up and the imports of foreign rice are going down; but that is not the end of the argument. How do we know that, if there were this duty on foreign paddy, the exports from India would not go up and the imports of foreign rice would not go down much more quickly? It is not an answer to say that India has already had a substantial benefit under the Ottawa undertaking, and therefore we need not implement the remainder. We are all delighted that India has had such a substantial benefit, and we want that benefit to continue. This House has said time and again, either in connection with the import duties or with the Ottawa Agreements duties, that, if you put a duty on, and then find some practice growing up which evades that duty, the House would desire, if it be within its power, to prevent that evasion.

Let us look at the matter again. A duty is intentionally put on foreign rice of 1d. per lb., and all the rice that comes in cleaned from Spain would be subject to that duty of 1d. per lb., which gives a preference in favour of India. The result is an expanding Indian export rice trade. Then comes, first a trickle, next greater quantities, and finally enormous quantities of rice from Spain, not in the form of cleaned rice paying 1d. per lb., but in the form of paddy, from which the rice has to be extracted, and which pays a duty, not of 1d., but of about one-tenth of 1d. per lb. That gives just the margin by which the miller is enabled to import this paddy, extract the rice from it, and, in view of the duty of only one-tenth of 1d. per lb., can manage to hold his own. India says that this very substantial ballooning up, if I may use the Minister of Agriculture's not very picturesque but informative expression, is "biting into someone," and India takes the view—and there is evidence to support it—that it is "biting into" her possible exports of cleaned rice. The result is that, on a certain quantity of rice imported into the United Kingdom, the duty guaranteed at Ottawa is not being charged. India asks us to implement our undertaking to make the charge of a penny a pound effective.


Is the hon. Gentleman aware that, when it is put through the various operations of milling and cleaning, the two-thirds of a penny a pound is equal to twopence a pound on cleaned rice?


No, I am not aware of that fact and my experts came to a different conclusion. We are at difference as to the amount of the duty. I am advised that the two-thirds of a penny proposed by this Clause is the approximate mathematical equivalent of a penny a pound on cleaned rice, and it is so calculated. There is a good deal of argument which shows that the calculation is exact. I can state three cardinal facts. Firstly, the expansion of the Indian rice trade which has already occurred shows that there is room for a great increase in the consumption of rice from India; secondly, that the expansion has very largely been due to the difference in favour of Indian as against foreign rice, and, thirdly, that India, recognising Great Britain's preference for certain types of special rice, has paid a good deal of attention to the growing of those particular kinds.

The hon. Member for Kidderminster (Sir J. Wardlaw-Milne) is entirely right in the information that has been given to him that not only are all those different grants that he refers to made by the Indian Legislature, but there were grants actually made by the Empire Marketing Board. We actually sanctioned public money being utilised by the Empire Marketing Board for the express cultivation of the very rices that we are discussing. The export of those kinds is increasing, but, of course, unless there is an increase of the duty on paddy, the increase of these better kinds of rice is not likely to be so considerable and in the view of the Government of India the increase of the growing of the rices for which Great Britain has a preference will be hindered. The Indian Government have set aside money for research. The Burma Government have done the same. All these attempts to produce the type of rice which the British consumer requires are evidence of the interest that India takes in the expansion of her rice trades. In the interests then of the Ottawa Agreement, to prevent what is plainly an evasion of the spirit of the agreement, the Government must insist on this Clause being maintained and, as I have said, the two-thirds of a penny is the equivalent of a penny a pound on cleaned rice.