HC Deb 29 March 1935 vol 299 cc2254-78

2.47 p.m.


I beg to move, "That the Additional Import Duties (No. 5) Order, 1935, dated the 12th day of March, 1935, be annulled."

May I express my gratitude and the gratitude of my colleagues to the Whips of the Government and of the Opposition that arrangements were made whereby this Motion could be discussed during the hours of daylight instead of being taken after 11 o'clock at night, which would have been the ordinary procedure. The power of making treaties is the power of the Crown, and, therefore, in the ordinary way is an administrative act on the part of the Minister. Treaties, therefore, do not automatically come before us, unless, as in this case, it happens to involve legislation, because, strictly speaking, the statutory Order is a form of legislation; or unless, on account of the nature of the treaty, the Opposition happen to table a Vote of Censure; or, in the other case, where by general and voluntary agreement an arrangement is made for discussion. This is one of the cases where the Order has to receive the sanction of the House or, at least, where it must be brought before the House if the Order is challenged. I challenge the Order, not that I wish to defeat it, but in order that the matter may be discussed.

I think that the Polish Agreement, taking all the circumstances into account, is by far the best agreement that has yet been concluded, and I would like to congratulate my hon. and gallant Friend, the Secretary to the Overseas Trade Department, who, I believe, took an active part in the long and difficult negotiations. I am certain it was no easy task to settle that very extensive schedule of duties on British goods entering Poland. It represents a considerable number of concessions, although it is not easy for any of us to interpret their full significance. Nevertheless, I am going to assume from what I have read of it that we have, in fact, obtained a substantial number of concessions. On the other hand, let us realise that Poland, like most other countries, is a party to a considerable number of trade agreements containing the most-favoured-nation clause, and accordingly, every concession that Poland has given us she will presumably extend to every other country in the world. I am one of those who are of the opinion that it is very doubtful if, now we are entering into this kind of trade agreement, it is on balance a good thing for us—and, in fact, for other nations—to continue to be bound by the most-favoured-nation clause so long as it remains in the unconditional form in which it appears in most treaties. I understand that as a sequel to this agreement there has been entered into an arrangement among the commercial people concerned affecting coal, which will probably have very good results, because it has unfortunately been true that the trade agreements which we have concluded in the Scandinavian countries, whereby we apparently got new markets for our coal, did not work out as well as we thought they would work, because the Polish coal which we pushed out of the Baltic countries was pushed into some other countries.

I hope that the agreement entered into by the various business interests will do something to create more fortunate results than the Baltic trade agreements. In the Polish Agreement we apparently get all our concessions without paying very much for them, because the short schedule of our concessions—or our apparent concessions—preserves with one exception the duties as they are. In fact, we are merely guaranteeing to continue to Poland those advantages which Poland automatically got as a result of the Most Favoured Nation clause under the provisions of our trade agreements with Denmark, Norway, Sweden and the other countries in whose agreements there appeared the same commodities, very largely agricultural, that were covered by our trade agreement with what I call the Baltic countries.

I want to say a few words about carpets. The hon. secretary of the tariff committee of the carpet industry happens to be a constituent of mine, and I have heard from him a good deal of the problems of that industry. I think when a trade agreement is entered into, if that trade agreement is conceivably going to prejudice some other industry, that industry ought to be given an opportunity of expressing their views. I do not say that we have not to sacrifice one industry for the sake of other industries. The Government have a clear right in certain cases to say that from the broad national point of view it is a good thing if a particular industry suffers a little under this agreement because the consequential results as a whole are to the national interest. We accept that position. We understand that that is the essence of bargaining. But when the carpet industry is made a party to an agreement they should have an opportunity of saying what they think the effect on it would be. I am told that there was no reference at all to the carpet industry, which happens to have a definite tariff committee before this agreement was signed. Throughout I have taken the view that the Board of Trade have made a mistake in carrying through trade agreements without reference to those affected.

That is not the practice of other countries. When the Swedes came over it was by no means the case that they made no reference to their trade commission. The head of their trade commission, Mr. Prytz, had the advantage of being born in London and educated at Dulwich, and he could think and speak in English and Swedish. There was constant contact in the whole of the negotiations between the trade delegation and their industrialists. On the other hand, in this country we appear to have pursued the course that whatever the Government do is done in secret, and the industry have no knowledge of what is done until the document is published. That form of negotiation is a mistake. There is just one purely technical point I want to ask about carpets. On page 34 of the trade Agreement it is said that hand-made carpets, if they are not knotted, are to be treated in a particular manner. In other words, the carpets as specified in the Agreement, which are hand-made carpets, are not to be treated as hand-made carpets for the purpose of our tariff. I should have thought, reading the words on page 34 of the Agreement, that that would have meant that they would have been treated in the ordinary way as machine-made carpets, on which the duty is 30 per cent., but, when I come to read the Treasury Order—if I have understood it aright—instead of treating this class of carpets as machine-made carpets, which is what the Agreement appears to imply, they have been treated as if they were not liable to any additional duty at all, but only liable to the 10 per cent. ad valorem duty.

I do not know whether I am correct in my interpretation, but it certainly appears to me that the Order does not strictly follow the wording of the Agreement, though it is conceivable that- the Order follows what was the intention of the Agreement. Perhaps the hon. and gallant Gentleman when he replies will clear up that point. The curious thing is that carpets are not a very important matter so far as Poland is concerned. I am told that in 1934 we imported only 1,255 square yards and the value was only £327. I consulted the annual statement of trade in the library in order to find figures for earlier years, but the imports from Poland are so trifling that they do not appear to be separately classified. I am therefore a little surprised that this apparently most unimportant item appears in this Polish Agreement. Again, there may be an explanation, but what we give to Poland we give to the rest of the world. I am wondering how many ingenious people are now busy thinking out how they are going to make carpets which will comply with this Agreement. It is amazing the extent to which human ingenuity is stimulated when you can make something out of it, and, if you can make something out of it by making your carpets in a new way so that they acquire this exemption under the Agreement, I should not be at all surprised if we did not find flowing into us from all sorts of Oriental countries large numbers of handmade carpets which in some mysterious way qualified for the new concession. We want to watch that very carefully.

The new Agreement deals with a number of agricultural items. It follows the Danish arrangement in respect of bacon and ham, and it also provides for a limitation of duties on eggs and butter. These provisions are all reproduced precisely from the Danish Trade Agreement. I am going to suggest that if the Danish Trade Agreement were brought before this House to-day the House would not assent to it. I do not think it would have a single chance. I do not think the innocent people who run the National Farmers Union could be now-induced to give the assent they were induced to give in respect of the Danish Agreement in the summer of 1933, and I do not think my right hon. friend the Minister of Agriculture—

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

On a point of Order. If the hon. Member is going to raise an agreement other than the Polish Agreement, I take it that, in reply, it would be possible for me to deal with the various trade agreements in some detail.


I understood the hon. Gentleman was using that as an illustration, but he must not go too far.


I realise the difficulty. May I put it this way. The Danish Trade Agreement runs until 20th June, 1936, and under that Agreement, through the most favoured nation clause, Poland will in fact get its advantages, even, if this Agreement is not made; but, if this Agreement is made and ratified, it will then run on to 31st December, 1936, and on acceptance of the most favoured nation clause what we give to Poland under this Agreement will be extended to Denmark for six months and 10 days longer than would otherwise be the case. That is a matter of some substance. It is not only under this Agreement. There are a number of other trade agreements all expiring on or before 31st December, 1936, providing the necessary six months' notice is given prior to that date. We have got to think this out. We are definitely tied up. I rejoiced beyond measure when I read that in Liverpool the other day the Lord President of the Council addressing the Liverpool Chamber of Commerce expressed the view that he, and I presume the Government, has come to the conclusion that tariffs were better than quotas. I rejoiced, but they can only give effect to that policy if they can persuade some 13 foreign countries by separate agreement to modify the terms of the existing agreements. If we ratify the Polish Trade Agreement, there is still one other country to be converted. In other words, we are at this moment doing something which makes it more difficult to give effect to the policy the Lord President of the Council declared only on Monday at Liverpool.

Therefore, this Debate is of some significance. Actually, I rejoice that my hon. and gallant Friend has entered into an Agreement which does not bind us for a longer period than any of the others. On the other hand, if we were to denounce the Most Favoured Nation Clause in our Treaties, which we could do, we should be liberated in respect of all the world except those countries with which we have specific trade agreements, and liberated also in respect of Poland, but, on the other hand, if we make this Agreement we are bound to Poland to 31st December, 1936. There are a great many other things that I should like to say, but I know how unfair it would be unduly to trespass further on the time of the House.

3.5 p.m.

Brigadier-General CLIFTON BROWN

I beg to second the Motion.

It is a public service to bring this Agreement to the notice of the House, in order that we may discuss it and understand the effect it may have on various branches of industry here. My hon. Friend suggested that the industries which have been made the subject of bargaining in this Agreement ought to have been consulted before-hand. We, shall be told, no doubt, that the agricultural industry, which has, as usual, been made the chief bargaining factor—I see here references to butter, eggs, poultry, beet-sugar and other agricultural produce—was consulted, because the Ministry of Agriculture approve of the Agreement; but when I read through the Third Schedule and see that most of it refers to forestry—logs of pine, wooden telegraph poles and so forth—I wonder whether the Board of Trade have consulted the timber industry in this country. Are they aware that within the last month a marketing organisation has been formed in the timber industry, with the growers of timber on the one side and the merchants on the other and the Forestry Commissioners forming the coping stone, as it were, of that organisation. The Commissioners are giving money, and the growers and the merchants are also subscribing their share towards this experiment to see whether a better marketing organisation cannot be brought into existence.

This agreement will not help the forestry industry to organise itself and it is very unfortunate both for agriculture and for forestry that it should come along at this particular moment. I have no doubt that the country gets a substantial quid pro quo, but at least those industries which have to pay for all these agreements—agriculture and forestry—ought to have an opportunity of hearing that their interests were considered when the bargain was being made. I notice on page 36 of the Memorandum the statement: In any discussions that may take place with foreign supplying countries with a view to voluntary co-operation they will do '"hat they can to ensure that due consideration is given to the special position of the export trade of the Polish Customs Territory in agricultural produce generally in view of its very recent development. I should have thought it was particularly unfortunate that at a moment when we have a glut of our own agricultural produce in the markets the recently developed agriculture of Poland should have an opportunity of adding to that glut. Like my hon. Friend, I do not want to weary the House with details of this agreement, but I want the Government to realise plainly that the agricultural industry—as, no doubt, will the forestry industry also when they understand it—feel that they have been unfairly used, not only in this Agreement, but in the Danish and other Agreements which went before.

What is the policy of the Government? They say, "We know that agriculture has been 'done in' here, and so we will give it a subsidy." Agriculture does not want the subsidy. Agriculturists are getting tired of subsidies, because they know that subsidies make them unpopular with the other industries and with the taxpayers. We are doing a great deal of harm to agriculture by "fobbing it off" with a subsidy every time we want to do something to help other industries under trade agreements. It is time the Government looked into this problem. If they want to deal with unemployment by settling people on the land they must make the agricultural industry and the forestry industry able to stand on their own legs, with the same form of protection as is given to iron and steel and other industries. Part IV of this particular Agreement, of course, relates to shipping, which, we know, is a very depressed industry. Why should other industries be favoured at the expense of the agricultural and forestry industries, as usual? I hope that the Board of Trade will give us some satisfaction by explaining.

3.11 p.m.


Like the hon. Member who moved the Motion, it is not our intention on this side of the House to vote against the Agreement or to attempt to defeat it. I feel sure that the House will join in congratulating the hon. and gallant Member who negotiated it, after a very long and strenuous time. He must realise now that, notwithstanding that he had the weapon of tariffs to bring about the Agreement, it is not an easy matter to enter into agreements with other countries. The discussion on this Agreement commenced as far back as June of last year and continued for seven or eight months. The articles upon which it was negotiated cover 22 pages of the Agreement, and one would expect to find that they represented a very considerable sum in value, but the total imports into Poland from this country last year amounted to less than £3,000,000. I do not for one moment minimise the importance of that sum, but it is possible to try to regard it as very much more important than it really is. It must also be remembered that there is a heavy trade balance against us and in favour of Poland, as heavy as in the case of almost any other country with whom we trade. I think there are 20 foreign countries taking from us goods of more value than does Poland.

While a good deal of importance is to be given to the Agreement, I do not think the importance ought to be overestimated. Some of our trade competitors are very much more favourably treated than we are, in trade with Poland. I especially refer to America. As is customary in all such agreements, the agriculturists complain that the Government give too many concessions and we, representing some of the coal districts of the country, complain that not as much has been done for the coal industry in them as should have been done. The hon. Member for South Croydon (Mr. H. Williams) referred to the fact that a commercial agreement was negotiated between representatives of the coal industry in this country and of the coal industry of Poland. Those negotiations were not entered into in any way under the control of the Government, but I have no doubt that the Government gave them their blessing. We welcome also that agreement.

It is not my intention to go fully into the matter this afternoon. The difficulty has been to ascertain what was really contained in that commercial agreement. I understand that the Polish coal-owners have agreed that there shall be a certain limitation of exports, but I think the most important part of the agreement is the attempt to arrive at the control of prices, and I hope that that will be the beginning of negotiations between the coalowners of this country and the representatives of the coal industry in other countries, or between the Governments of this and other countries, so that we may have an international agreement dealing with the export of this very important commodity. It is true that certain advantages were given to the coal industry in the Scandinavian agreement, but, as the hon. Member for South Croydon rightly said, while we pushed Polish coal out of some markets, the Polish coal has pushed Welsh coal, very largely, out of other markets. Italy was a very important market of ours, and South Wales especially has suffered grievously as a result of the very heavily subsidised Polish coal which has been imported into that country.

It should be recognised that, while there is some complaint about the concessions which have been given on the import of certain manufactured goods into this country, it is true to say that such imports of manufactured goods are almost infinitesimal. They consist almost entirely of bacon, ham and timber, as was rightly pointed out by the hon. and gallant Member who has just sat down. Taking the position last year, of the £7,000,000 worth of goods imported into this country, £6,250,000 represented bacon, ham, eggs, butter and timber. It must be remembered, however, that this agreement provides for a limited quota of these agricultural goods, and the agricultural industry has that control over the import of bacon and eggs. A very interesting story could be told about the import of bacon into this country, for in 1934 we paid almost as much for 7,000,000 cwts. of bacon as we paid for 11,000,000 cwts. of bacon in 1932 as a result of this policy. It is not, however, for me to deal with that matter this afternoon. All I would say is that we certainly shall not oppose the Agreement. I think the Government have entered into these negotiations in a proper spirit, and some concessions have been given; but at the same time, in my opinion, the futility has been proved of relying almost entirely upon the tariff weapon to bring about trade agreements between this and other countries.

3.19 p.m.


It seems extraordinary that the hon. Member for South Croydon (Mr. H. Williams) should have framed this Motion for the purpose of expressing, apparently, a loss of confidence in the policy of this country regarding the tariff system generally towards its various neighbours. This Agreement has not been ratified. The Government and the Polish representatives held no fewer than 140 meetings to arrive at the Agreement, and if the agreement runs its full course, it will only run for about a year and a half. Yet, before the Agreement is really ratified, the hon. Member is suggesting that it should be scrapped, and, by implication, that a straight tariff system should be set up in its place.

I do not think much of the argument with regard to carpets; it seems rather small and puny; but I attach more significance to the agricultural statements of the hon. and gallant Member who seconded the Motion. In this House, on several occasions recently, Fridays have been given up to the farmers, and the farmers have, I think, secured a lot of advantage from the debates which have been held on Friday afternoons. The farmers are not satisfied at present. The hon. Member on the opposite side of the House suggests that we are still importing foreign foodstuffs in greater quantities than they ought to be imported. Therefore, even if you use these agreements as a negotiating weapon and method to persuade other people to surrender a little more, it does not satisfy protectionists who are protectionists pure and simple.

Protection to-day has so many names, but one would have thought, in examining this Agreement, which, we all agree, is the best of its kind the Government have yet made, that at least protectionists would have been prepared to have given this new negotiating weapon a trial when one realises that the temporary arrangement was made about a fortnight ago, the condition being that the Government could withdraw if they liked or that it could run for the whole period, which is only a year and a half. Surely not very much danger could be done in that time. The trouble is that what we may call the reciprocal arrangements which follow agreements of this kind have never been fully accepted by the protectionist party. It is not very long ago that we used to be told that a tariff would at least, whatever else it did not do, bring in revenue, that if goods went out of the country revenue would come, and that if goods were kept out and no revenue was forthcoming from abroad we should have more work at home. There are signs that the Government has as little belief in protection as hon. Friends have on this side of the House. The predictions which we have always made are working out. [Laughter.] Hon. Gentlemen opposite may laugh, but they are.

It used to be said, at the beginning of the protectionist campaign in pre-war days, that all they wanted was a little tariff for a start, and I believe that the late Mr. Joseph Chamberlain himself would shiver in his grave if he could hear these proposals now. It used to be said that if we had a small tariff weapon and brandished it in the face of our competitors overseas they would speedily come to heel and tumble over each other to make commercial arrangements with us, and that most of our industrial problems would be settled by that process. These protectionists, having been started on their way, are now yelping round the heels of the leaders of the Government and saying, "The weapon you are using is no use. You are not hitting these competitors of ours nearly as hard as you might hit them. Give us a bigger weapon."

We on these benches are standing by in these days and smiling. We are going to see the policy which we have advocated and for which perhaps we have lost a good deal of the credit. At the present moment we are not inclined to support the supporters of the Government who are yelping at their leaders to scrap this Agreement over which so much public money and time has been spent, and in regard to which 140 meetings have been held, before it has been given a chance. If it runs until the end of next year, surely it will not have had too long a run to demonstrate the validity or otherwise of this bartering weapon, of which the Minister, a short time ago, was very proud. We do not think that it will be a wise policy for the Government to surrender to the blandishments of the supporters who sit behind them who would denounce this Treaty and in its place set up a tariff policy which they could continually press to be increased until we had a protectionist system doing even more damage to the country than is being done at the present time. I hope the Minister will not surrender to the renegade members—I use the word in no offensive sense—of his party, who are not willing that the policy which they supported a short time ago should continue.

Brigadier-General BROWN

We have not asked the Government to denounce the Treaty, but only to explain in detail what it means.


If hon. Members do not wish to denounce the Treaty, why are we having the debate? The details are set out very comprehensively.

Brigadier-General BROWN

We do not want to be accused of asking the Government to tear up the Treaty. My hon. Friend the Member for Croydon South (Mr. H. Williams), who moved the Motion said that he did so for the purpose of discussion.


The terms of the Motion are: That the additional Import Duties (No. 5) Order, 1935, dated the 12th day of March, 1935, be and hereby is annulled. It is a Treaty which has only been framed about a fortnight and if it runs to its full length it can only be for a year and a half. The Government have the power to withdraw the Treaty inasmuch as it has not yet been ratified, but they wish that it should proceed to its full course of a year and a half, when it will end unless it is re-ratified. Surely, the Government ought to have an opportunity of demonstrating the value of this bargaining weapon, of which they have been so proud, but others who have supported the Government in the making of these agreements are moving that the Agreement be annulled.


The hon. Member suggests that we have supported the Government on this and other agreements. I would remind him that when the first Agreement with Germany was made some of us opposed it very vigorously because we did not agree with the methods adopted.


If the hon. Members opposite had throughout opposed the policy of the Government in regard to the making of these agreements they would be perfectly consistent in taking up their attitude to-day, but one would have thought that during the process of time while the 140 meetings were taking place between representatives of the Government and Poland, we should have heard a good deal more protest in the meantime from them. It will be interesting to see whether the supporters of the Government are willing to follow the hon. Member for South Croydon into the Lobby in his effort to obtain the annulment of the Agreement. We believe that this is the best Agreement that has been made and that it should be given a chance and we shall support the Government against their more perfervid Protectionist supporters, who believe in Protection but not in this particular form of Protection which the Government have brought forward in this Agreement with Poland.

3.29 p.m.


The hon. Member opposite seems to be entirely unaware of the custom by which a Motion to negative an agreement is put forward in order to have discussion and to elicit information. The hon. Member who moved the Motion made it quite clear that it was not his intention to annul the Treaty, but merely to draw attention to certain points in it. All who have spoken have congratulated my hon. and gallant Friend the Secretary of the Department of Overseas Trade on the great and I think in many respects the most successful efforts that he has made in connection with this Treaty. I should like in particular to congratulate him on certain features in the Agreement which bear upon the development of our Colonial Empire.

There are three features in particular which are very valuable precedents in this Treaty and in one or two of the latest Treaties. The first is that we include a clause by which tariff favours are secured for the products of the Colonial Empire. Sisal, palm oil and certain other Colonial products get a definitely favourable rate of entry into the Polish market. Further, in another clause it is provided that in estimating the balance of trade as between Poland and this country, Polish imports from the Colonial Empire are reckoned together with United Kingdom imports, which has undoubtedly given to Poland an inducement to buy from British Colonies rather than from the world outside. Thirdly, in Article 11, the definition of "foreign country" has been so worded as to exclude all mandated territories. In that way we are getting rid of that rather absurd anomaly in respect of Palestine. This, no doubt, will be embodied in all future agreements until we can gradually get in this respect a better situation.

There are, however, certain aspects of this Agreement and of others about which, I think, we are bound to say a word or two of criticism. One is the habit—because it is becoming a habit—of giving concessions with reference to some British industry without consulting that industry. That does put the producer for the home market and the exporter on an entirely different footing. The producer for the home market cannot secure favourable conditions in this market except as the result of a preliminary inquiry before the Import Duties Advisory Committee—an inquiry in which all who have objections to state have the opportunity of stating those objections—an inquiry in which the point of view of the consumer as well as that of the producer is carefully considered. On the other hand, an export industry can, apparently, go to the Board of Trade, and by representing the importance—no doubt genuine importance—of its industry, secure the abrogation of whole or part of the protection given to another industry, after much inquiry with meticulous fairness. That seems to me to be based on prejudice in favour of an export industry as against the home industry.

After all, from the point of view of the employment of our people, it is no more important to sell the same volume of goods abroad than to sell it at home. The thing is to secure employment and production, and it is on that subject, above all others, that we want to get a re-orientation of the point of view. The whole conception of the last century was that the only trade that mattered was the export trade. It is not so. Export trade, except in so far as it is required to secure the essential raw materials and foodstuffs which we cannot produce, is in no sense preferable to the home trade, and, in so far as it is less secure, it is less to be desired.

There is also another point, and that is that there is no proper correlation between the functions of the Board of Trade in making these treaties and the Import Duties Advisory Committee as to the proper level at which duties should be imposed. The Import Duties Advisory Committee, by its very terms, is precluded from having what I may call a bargaining margin. It imposes just that amount of duty which is desirable in the interests of the home industry. If that conclusion be correct there is really no advantage in lowering a duty in order to displace certain workers and to give certain other people a little more work. If we are going to use a tariff for bargaining purposes—we are all agreed that that is one very useful way—we ought to have something like a margin to spare which we can give away and still leave the necessary element of protection, or else we should confine bargaining to mere threatening to impose higher duties unless we get concessions.

Lastly, I want to say something in support of my hon Friend regarding the most-favoured-nation Clause. It may be that this little concession in connection with carpets will open the door to a large inrush of foreign carpets from all sorts of new sources. On the other hand it may not. But it is the principle of the most-favoured-nation Clause that really stands in the way of satisfactory arrangements of all sorts. Who would have thought that the concession on cheap jewellery made in the German Treaty two years ago was going to flood this country with effigies of Their Majesties the King and Queen on Jubilee medals, and not only from the country with which we made that agreement but from other countries? We do not know what we may get under these concessions. We may be giving far more than we ever secure. Conversely what security have -we, when we have got a large list of tariff reductions in another country, that those reductions will inure to our benefit rather than to that of our competitors?

I have looked through the long list here, and there are items which, even under the most-favoured-nation conditions, we shall do well under, such, for instance, as herrings. When you come to textiles and other articles, while we may benefit under the reduction of the Polish duty, it may be that Germany, or Belgium, which is now coming off the gold standard, or Japan, will benefit. Surely the time has come when, if we are to secure advantages to this country at bargaining, in a world in which the whole of the old Free Trade traditions have gone, we ought to get rid of the most-favoured-nation Clause and get definite agreement and give concessions in return for definite concessions.

3.38 p.m.

Lieut.-Colonel COLVILLE

I recognise that my hon. Friend who moved this Amendment was at pains at the start to say that he had no desire that it should be accepted, for the very good reason that he recognised that there is a very considerable value in this agreement. So far as tariff reductions are concerned, for one tariff reduction that we are making we are securing 340 from the Polish Government. My hon. Friend will agree that the bargain that we have made, in so far as it relates to tariff rates, undoubtedly is a good one. Some doubt was expressed as to the meaning of the concession in relation to a special kind of carpets, kilims. So far as I can ascertain the total value of kilims that came to this country from Poland in 1933 was £34 sterling. Practically no kilims or rugs of this nature came from any other source at all. My hon. Friend expressed anxiety lest the change in the tariff might mean that from all parts of the Orient carpets of this type may now come flooding in, but I can assure him that that apprehension is not entertained by those who have been studying the question. In any case the effect of the order we have made is to remove these kilims, or rugs, from the tariff applicable to hand-made carpets and place them on the tariff applicable to machine-made carpets. But the tariff applicable to machine-made carpets is not a consolidated rate, and in the event of increased competition in these carpets it can, by an application to the Advisory Committee, be altered. I feel that as far as any criticism of this agreement is directed to the concession about carpets the hon. Member must preserve a sense of proportion. The carpet industry in this matter is in no way endangered. The effect of the British tariff on the carpet industry has shown how beneficial it can be to an industry, but as this was a matter on which Poland showed some special interest we felt able to place this type of carpet from the hand made list to the machine made list.

Before I deal with the Agreement itself I should like to reply to one or two observations which have been made by hon. Members. They have referred to the effect on the Agreement of the most-favoured-nation clause. I fear that if I were to enter upon a discussion as to the effect of the most-favoured-nation clause in our commercial relations the question might be so widened that I should hardly be able to deal with the Agreement. Yet I feel that I must re-state the Government's attitude towards the most-favoured-nation clause. We consider that the right to most-favourednation treatment in our market must be conditional on countries with which we trade giving us fair treatment in their own markets, and we are not prepared, unconditionally, to grant most-favourednation treatment to countries which do not give us fair treatment. But that does not suggest that we should embark on a wholesale denunciation of those treaties which contain such a clause, as has been suggested by some hon. Members. I would ask them to consider the degree of uncertainty and disturbance which that would cause. Our trade is cast over a wide area, and it is of great importance to our traders to know that in no country with which we have such an arrangement will they suffer discrimination. Moreover, the most-favoured-nation clause covers them not only against tariff discrimination but also against discrimination in respect of quotas and restrictions. While we are not bound to the use of the most-favoured-nation clause, and shall not hesitate to refuse most-favoured-nation treatment to countries which treat us unfairly, I must emphasise that a widespread denunciation of treaties which contain this clause would cause much disturbance and grievous damage to our commerce at the present time. It is sometimes forgotten that we not only give but receive most-favoured-nation rights as well.

Passing to the agreement itself, I feel bound, in the first place, to answer some observations made by hon. Members with regard to agriculture. The hon. Member who moved the motion said quite plainly and fairly that he recognises that in point of fact we are not giving Poland, in agricultural matters, any more than she is getting through her most-favoured-nation rights. That is correct. Had we failed to reach an agreement with Poland she would have lost her (most-favoured-nation rights and there would have been disturbance of our trade with Poland but she has handsomely qualified for a retention of most-favoured-nation rights in the Agreement she has given. As regards the period of the Agreement, the hon. Member was not correct in saying that, as the Danish Agreement runs out in the summer of 1936 and this Agreement was for a further six months, we were necessarily tied in these agricultural matters for six months longer. There are in existence treaties which run for the very period of this Polish Agreement so that our agricultural policy is tied for no longer period than that to which our existing engagements would hold us in any case.

My hon. Friend has said that he is not happy about the quantitative method of regulating agricultural supplies. I am bound to say that that method was chosen at the outset, not out of any desire to be soft-hearted to particular supplying countries, but deliberately in order to have more accurate control of the supplies to" this country while the home trade was being reorganised. We have not said that it is necessarily our policy for all time. We shall examine it as we go along. I cannot say more than that today. The policy is always under examination and this agreement in no way ties us any further than our present engagements in that matter. As hon Members who represent agricultural constituencies know, there has been a very marked measure of protection for a number of agricultural products within the scope of these Agreements and we shall not turn back on the policy on which we have embarked of assisting our agriculture by such measures of protection as we can reasonably apply to it.

To turn to the other side of the Agreement, I should like to enumerate some of the provisions which affect British trade with Poland. The Polish Government have accorded tariff reductions on no less than 340 rates of duty in the Polish Tariff. In the schedule 450 rates of duty have been fixed, of which 340 are actual reductions. To give the House a better view of what that means in regard to trade, I would like to add that in 1933 there was a new Polish tariff. That revised Polish tariff, in general, increased the duties in that country and this fact was kept fully in mind in our negotiations. It is estimated that about 60 per cent. of the reduced rates of duty provided for in the tariff schedule to this Agreement are on a level lower than those in force in 1930, or three years before the higher rates of duty were put on, and about 40 to 50 per cent. of our trade with Poland in, the year 1930 now enjoys lower rates of duty than the rates in force in that year. I would stress that point to the hon. Member who spoke from the Opposition Front Bench and expressed the view that the tariff weapon was not proving quite so effective as we had hoped. The result which I have mentioned has been achieved directly as a result of our negotiations and I know of no other way in which we could have secured a reduction of the Polish rates of duty than that of negotiating with the tariff weapon. It will be remembered that the President of the Board of Trade in the late Government made strenuous efforts to secure a tariff truce but, with the best will in the world and the best efforts which he could make, he was not able to secure a reduction or even a stabilisation of any of the rates of duty. In this one Agreement we have secured reductions of duty on over 340 tariff rates, and I suggest that that is proof that, rightly used, the tariff can be a lever to reduce the tariffs in other countries.


Can any hon. and gallant Friend tell us about the mostfavoured-nation clause in this connection?

Lieut.-Colonel COLVILLE

In so far as Poland has most-favoured-nation treaties with other countries—and there are some with which she has not—these rates of duty will be applicable to them also, and I am glad my hon. Friend has raised that point, because in the examination of the tariffs and during our negotiations, in which we were fully in consultation with our industries concerned, we chose those items in which we believed that we would have a good chance to compete.


Can the hon. and gallant Member tell me—

Lieut.-Colonel COLVILLE

This is a very complicated question, and I must ask to be allowed to develop my argument. Let me give some examples of rates of duty which have been secured. The most important reductions of duty are those upon herrings, textile goods, and motor cars, also on various classes of machinery and chemicals not made in Poland. Nobody will deny that the herring industry is one of which we have heard a good deal in the last few years and one which we should make every effort to assist. The Polish Market is valuable for herrings, but we have been handicapped by the high rate of duty on the very type of herring which we exported. We find that the duty on fresh herring imported by sea is reduced by half, from 2 zlotys to 1 zloty per 100 kilograms. As regards salt herring, the duty is again halved on the smaller herring, the type we send, from 24 zlotys per barrel to 12 zlotys. I understand that already these reductions are proving very beneficial to the herring industry of this country. If any hon. Member could tell me how by any other means we could have halved the duty on herring in Poland, I should be glad, because I contend that it could only have been brought about by these negotiations.

With regard to textile goods, the Polish duties on cotton yarns over No. 29 count, as they are called, are reduced by varying amounts, the largest reductions being for the finer counts. The duties on various classes of cotton piece goods are also reduced, and the reductions are of varying amounts—in the case of some of the wide prints amounting to over 40 per cent. I think that is a very considerable reduction to have achieved in the tariffs on cotton piece goods. The negotiations in regard to cotton piece goods were greatly facilitated by the visit to Poland of a delegation from the Lancashire industry. We were able to secure a visit to Poland of a representative delegation from Lancashire, which very much helped us in our negotiations, and we were able to get for them some valuable reductions of duty. The negotiations for the Polish agreement were at the outset preceded by a mission to Poland, which went out under the chairmanship of the hon. Member for North Bradford (Sir E. Ramsden), who conducted a mission to Warsaw before the negotiations commenced, accompanied by representatives of several important British industries. In my experience during the negotiations I found that the value of that mission, which surveyed the ground beforehand, was considerable, and that it enabled us to get some valuable concessions. I should like to pay a tribute to the hon. Member for North Bradford in that regard.

When it comes to woollen goods, reductions are made in the duties on worsted yarns, and the duties on worsted cloth are reduced by from 6 to 15 per cent. and a large reduction of about 50 per cent. has been obtained for worsted cloths with woollen warp or weft. Coming to motor cars, the duties in Poland on passenger motor cars of a cylinder capacity not exceeding 2,300 c.c. and on all commercial chassis were very considerably reduced. Prior to the trade agreement the Polish duties on motor cars were practically prohibitive, and it was almost impossible to sell motor cars in Poland. I understand that the United Kingdom industry is of the opinion that the new duties will give a fair chance to enable them to compete in the Polish market. There are reduced duties granted for certain classes of machinery. An arrangement has been made for the importation at only 10 per cent. or 20 per cent. of the second column duties in the Polish tariff of numerous classes of textile, agricultural, metal-working, woodworking, and electrical machinery, not made in Poland. Other reductions include glacé kid leather, sewing machines, whisky and beer, various kinds of cycle parts, circular saws, gramophones, records, and a number of other items, all of which we are qualified to supply at competitive prices now that the tariff is reduced to enable us to compete. In addition to the reductions in duty, there were consolidations of duty at levels at which we can compete.

The right hon. Gentleman the Member for Sparkbrook (Mr. Amery) mentioned an important feature of the Agreement relating to Colonial trade. There has been much complaint as regards the compensation trade regulations in Poland, which have affected this trade, and under the Trade Agreement we have secured exemption of United Kingdom and Colonial goods from the application of the compensation trade arrangements. It was recognised that the balance of trade as between Poland and this country, including her balance of trade with the Colonies, was so considerably in her favour that the enforcement of the arrangements was hardly fair. So we asked that imports from the Colonies should not be required to have a compensating export from Poland. This arrangement will be of great benefit to those of our Colonies which are trading with Poland.

With regard to purchasing arrangements, as in the case of other agreements negotiated lately, we have secured a number of valuable purchasing arrangements between the supply organisations in this country and purchasing organisations in Poland. These cover cotton yarns, wool tops, textile machinery, agricultural and dairy machinery, leather, chemicals, jute, and also machinery and saws for the Polish woodworking industry. These are actually undertakings by the purchasing organisations of Poland to purchase supplies from this country. There are similar undertakings in several of the Scandinavian agreements which are securing direct trade to the tune of many hundred of thousands of pounds for this country, and such an arrangement will help us in our trade with Poland. With regard to shipping, we have for years been in trouble with Poland in regard to the treatment of our ships. This agreement gives our shipping a fair chance, not only with the emigration trade, but also with the direct liner trade between this country and Poland. The Agreement has taken account of the special difficulties of the British shipping lines in their dealings with Poland, and has placed them on a much more equitable basis. Time has been too short to refer to all the details of the Agreement, which took more than a hundred meetings to complete, but I have been able to let the House know some measure of its value.


I greatly regret that the Debate has been so curtailed owing to lack of time, but I should like to say that the advantages to the trade of this country which have been enumerated have all been gained at the expense of British agriculture.


In view of my hon. and gallant Friend's statement, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.

The remaining Government Orders were read, and postponed.

Whereupon Mr. SPEAKER adjourned the House without Question put, pursuant to Standing Order No. 2.

Adjourned at One Minute before Four o'Clock until Monday next, 1st April.