§ 71. Mr. CARYasked the President of the Board of Trade whether he can now make any statement with regard to arrangements for the conduct of trade and payments between the United Kingdom and Italy and for the liquidation of the arrears of debts due from Italy to British exporters?
§ Mr. RUNCIMANYes, Sir. A Clearing Agreement and a Commercial Agreement were concluded with the Italian Government in Rome on 6th November. I am circulating a summary of the provisions of the Agreements in the OFFICIAL REPORT, and the texts will be published on 11th November. The negotiations have been long and complicated, but I hope that the Agreements now reached will enable the trade between the two countries to be satisfactorily re-established on a basis which will promote a progressive return to normal conditions.
§ Mr. H. G. WILLIAMSMay I ask whether, in the negotiations, any steps were taken to safeguard the interests of British nationals engaged in commerce in Italy who had to leave the country in great distress as the result of the policy of sanctions?
§ Mr. RUNCIMANI am afraid that I could not answer that question without notice.
§ Mr. MAINWARINGAre the terms of the Agreement made with Italy so defined as to enable Italy to have a balance of trade favourable to herself? Is the position such that, in effect, this country is expected to purchase from Italy a 494 greater quantity of goods than Italy will purchase from us, in order that Italy may be able to pay somebody else in this country?
§ Mr. RUNCIMANWhen the hon. Member sees the text of the Agreement, which will be published on 11th November, he will be able to form an opinion on that subject.
§ Following is the summary:
§ The Clearing Agreement provides that all debts in respect of the price of Italian goods imported into the United Kingdom shall continue to be paid to the Anglo-Italian Clearing Office, and that this sterling shall be allocated as follows:—
- (i) 70 per cent. to current trade, i.e., debts in respect of United Kingdom goods imported into Italy after 14th July, 1936, and freights (which here and throughout this summary means freights for the carriage between the two countries in British ships) on goods imported into either country after 14th July, 1936. The debts in respect of freights have priority.
- (ii) 27 per cent. to commercial arrears, namely:
- (a) 18 per cent. to "Agreement Debts" (i.e., debts in respect of imports into Italy from the United Kingdom or freights for the period after 17th March, 1935, and before 18th November, 1935, which were covered by the Payments Agreement of April, 1935); and
- (b) 9 per cent. to "Pre-Agreement Debts" (i.e., imports into Italy from the United Kingdom or freights for the period before 18th March, 1935) and "Extra-Agreement Debts" (i.e., imports into Italy from the United Kingdom or freights after 17th November, 193,5, and before 15th July, 1936: imports into Italian colonies from the United Kingdom, freights in respect of trade with Italian colonies, and imports into Italy or Italian colonies from third countries before the coming into force of the Clearing Agreement).
- (iii) 3 per cent. to Financial debts and remittances.
§ Any balance available and not required for commitments in respect of current trade at the 31st December, 495 1936, and at the end of each subsequent quarter is to be used for "Agreement," "Pre-Agreement" and "Extra-Agreement" Debts and Financial Debts in the above proportions.
§ The sterling collected by the Anglo-Italian Clearing Office from 15th July, 1936, to the 15th November is to be allocated as to 50 per cent. to current trade and as to 50 per cent. to arrears. The debtor in Italy is responsible for the payment of sterling debts to the creditor in the United Kingdom up to the full sterling amount due, except as regards the "Pre-Agreement" and "Extra-Agreement" arrears in respect of which the debtor in Italy has paid a deposit in lire and received a full discharge under the Italian Decree of 20th November, 1935. In these cases lire deposited in respect of sterling debts will be re-converted into sterling by the Italian authorities and will be paid in sterling at the fixed rate of 64.46 lire to the pound.
§ Debts owed by persons in Italy in respect of codfish and stockfish exported from Newfoundland to Italy will be dealt with in the same way as debts in respect of United Kingdom goods exported to Italy.
§ Outstanding trade debts due to United Kingdom creditors will be liquidated through the clearing (within the three classes, current trade, "Agreement" arrears and other arrears) in the respective chronological order of the deposits in Italy relating to debts of each class and within the limits of the sterling available in the respective accounts.
§ It will not be necessary for creditors to submit claims to the Clearing Office; but they should endeavour to ensure in correspondence with their Italian debtors that the latter have deposited or will deposit the full amounts in lire that will be required to discharge their debts in accordance with the Clearing Agreement.
§ As the exact amount of the arrears has not yet been ascertained and as the future volume of trade between the two countries cannot be predicted, it is not possible to form any reliable estimate of the time which will be required to liquidate the arrears.
§ When debts due to creditors in Italy expressed in lire have been paid by debtors in the United Kingdom in sterling before the devaluation of 496 the lira, the exchange profit consequent on the devaluation of the lira will be refunded by the Clearing Office to the debtors in the United Kingdom.
§ Under the Commercial Agreement the Italian Government undertake, in effect, that they will authorise imports into Italy of United Kingdom goods and codfish from Newfoundland to a total quarterly value of lire 97 million. Restriction of current trade to this level has been arranged in order to ensure that there will not be any fresh accumulation of untransferred arrears. For coal and coke the quarterly quota will be lire 43.5 million, which is estimated to be roughly equivalent to between 450,000 and 500,000 metric tons.
§ The Agreements will come into force on 16th November, 1936, and will continue in force until 30th June, 1937, and thereafter from quarter to quarter subject to the provision that the Clearing Agreement will remain in force until all arrears of trade debts have been liquidated.