HC Deb 28 October 1946 vol 428 cc268-74
40. Mr. Sydney Silverman

asked the President of the Board of Trade whether he is now in a position to make a statement as to the future of Japanese textile and other industries.

24. Mr. Hale

asked the President of the Board of Trade whether he is now in a position to make a statement with reference to the future control of the Japanese textile industry.

Sir S. Cripps

I would ask my hon. Friends to await the statement I propose to make at the end of Questions.


Sir S. Cripps

I am glad to have the opportunity of making a statement on this subject. The economic conditions to be applied to Japan are now being worked out by the Far Eastern Commission sitting in Washington. This, as the House will know, is the Allied organisation responsible for policy towards Japan and consists of the II countries who possess interests in the Far East. His Majesty's Government are represented on the Commission and have a full voice in all discussions which take place in it. Since the Commission is still at work on these matters I can naturally make no final statement at this stage. Decisions in detail have not yet been arrived at. I can, however, make certain general observations which will indicate to the House the considerations which have weighed with the Government in their approach to this problem and in framing instructions to their representative on the Far Eastern Commission. Consideration of the economic conditions to be imposed on Japan must, of course, be governed by the commitments which the Allies have undertaken in Article II of the Potsdam Declaration, which reads as follows: Japan shall be permitted to maintain such industries as will sustain her economy and allow the exaction of just reparations in kind, but not those industries which will enable her to re-arm for war. To this end access to, as distinguished from control of, raw materials shall be permitted. Eventual Japanese participation in world trade relations shall be permitted. Japanese economic power will ultimately emerge weakened as the result of two operations, neither of which is directly related to any commercial considerations. In the first place, restrictions will be imposed on Japanese industry with the purpose of rendering Japan permanently incapable of waging another aggressive war. These restrictions will include a rigorous pruning, and where necessary the total elimination, of those industries which can contribute directly and substantially to a war-making potential. The necessary measures for this purpose have yet to be agreed in detail, but it is certain that the Japanese steel, heavy engineering, chemicals, shipping, aircraft and metals industries will, on security grounds, undergo at least severe reduction. Adequate precautions will certainly be introduced to see that these industries are not re-built to their former levels. Second, there will be reductions in other industries consequential on the above, so as to leave Japan with a balanced economy. Finally, all Japanese physical economic assets abroad will be taken away. The surplus equipment thrown up by these operations will be available as reparations to those countries which have suffered at the hands of Japanese aggression.

When these measures have been taken the Japanese economy, already dislocated by the war, in which plant and equipment suffered severe damage from the air, will be in a gravely, if deservedly, crippled state. Japan, like ourselves, is an industrial country, ill-endowed with raw materials and fundamentally dependent upon its export trade. It has lost its overseas assets and Empire, and its total population of 80 million will henceforward be concentrated in the home islands. The economic recovery of the country will therefore be beset by acute difficulties. His Majesty's Government are fully aware of the damaging effects which low-priced Japanese competition had on our export trade in many fields before the war. This competition derived much of its effectiveness from low labour standards and from Government manipulation of exchange, subsidies and other methods which can be regarded as inconsistent with proper commercial standards. It will be His Majesty's Government's policy to endeavour to eliminate such unfair competition, not only in Japan but wherever it arises, by international agreement and in any way that offers. His Majesty's Government will also make all efforts to ensure that any international agreement or general understanding which can be arrived at on these matters is accepted and carried out by Japan. It is in any case to be hoped that Japan herself is in course of being set on to new economic paths and that the forcible breaking up of the oligarchic corporate system of industry which previously held power there will clear the way for the development of the country on more democratic lines, with the rising standards of wages and living that that implies.

The Government do not, however, consider it practicable to reduce or eliminate Japanese competition in export markets by yet another surgical operation on those of her export industries which have no direct war potential. Japan must be left, after the peace settlement, in such a position that she can become and remain internationally solvent; otherwise, she will require permanent foreign support in the form of direct or indirect subsidies. It is highly improbable that any nation will be prepared to contribute continuously to Japan's support in this way and His Majesty's Government for their part, having regard to our own foreign exchange difficulties and the urgent need for us to become solvent ourselves, could not contemplate undertaking to share in such a burden. To balance her payments, Japan must export, and, after the severe curtailment which will be imposed, for security reasons, on her heavy industries, she will have to concentrate her efforts on her lighter industries, including textiles. This conclusion is inescapable if Japan is to become self-supporting. While, as I have said, we hope that Japan's economic recovery will be accompanied by the achievement of better labour standards and the elimination of the artificial subsidization of exports, we cannot afford to stifle Japanese competition in export markets by means which would merely impose on us a corresponding, if not greater, burden. For the solution of our export problems we must look rather to the efficiency of our own production and to a greater total volume and increased flow of international trade in which all can effectively share.

Mr. Silverman

While I thank my right hon. and learned Friend for his informing and lucid statement, might I ask him, with regard to the reconstruction of the Japanese textile industry, whether it is proposed to await international agreement before imposing on Japan, in those circumstances, standards of labour which do not amount to the unfair competition which his statement condemns?

Sir S. Cripps

We hope that, as part of the reconstruction of Japan, such standards of labour will be introduced.

Mr. Silverman

Are we doing anything to impose conditions of that kind, or are we to await such time as there is international agreement over a wide field for that purpose?

Sir S. Cripps

It is not the intention, at the present time, at any rate, so far as any decision has been taken, to impose any particular wage standards in Japan. The intention is to try to develop a Japanese Government such as will itself impose certain standards.

Mr. Oliver Stanley

Are we then, to understand that the export of Japanese textiles will be allowed to be resumed before anything has been done to raise their standard of wages?

Sir S. Cripps

We hope that Japanese textiles will be available very shortly, because there is such a great dearth of them throughout the Far East, which can be supplied from nowhere else.

Mr. Driberg

With regard to reparations, can my right hon. and learned Friend say whether we can take it that a separate and specific claim will be made on behalf of Burma, pending the constitutional changeover to self-governing status for that country?

Sir S. Cripps

Perhaps my hon. Friend will put that question on the Order Paper.

Mr. Walter Fletcher

Will the right hon. and learned Gentleman say whether, in the purchase of raw materials, such as cotton for use in making textiles in Japan, the same system of purchase as we now have here will be employed, or whether they will have access to free markets, which manufacturers here no longer have? Further, will he say whether, in the light industries which are already beginning to export and are harming our export business, some step will be taken before the slow process of raising wages has had its true effect?

Sir S. Cripps

No steps can be taken until the Japanese economy can be balanced in some way or other. As regards the first part of the question, if the Japanese are as sensible as we are, no doubt they will adopt the same method.

Mr. Warbey

Are the Government proposing, as in the case of Germany, that certain Japanese industries shall be placed under public ownership?

Sir S. Cripps

That is a matter which has not yet been decided by the people who are responsible.

Mr. Walkden

Can my right hon. and learned Friend arrange with the Leader of the House that on some early day the House shall discuss the whole problem of how he proposes to reconcile the decision, on the one hand, of extracting reparations from Japan, and, on the other hand, of protecting the livelihood of our textile workers against exploitation by the Gentlemen above the Gangway, who really ran Japan in prewar years?

Viscount Hinchingbrooke

In view of the fact that we have only a limited responsibility for what happens in Japan, could the right hon. and learned Gentleman say whether what he has read is a forecast of the way events are to develop economically in Japan in agreement with the United States, or is it a plain statement of the policy of His Majesty's Government towards Japan?

Sir S. Cripps

It is a statement of the policy and instructions which we have given to our representatives on the Commission.

Major Bramall

Is my right hon. and learned Friend satisfied that the views of the British Government receive sufficient weight in these discussions on the future of Japan, or indeed on the present policy of the Government of Japan?

Sir S. Cripps

I am satisfied that our representatives do their best to see that their voice carries.

Mr. Erroll

Does the President realise that the proposed resuscitation of Japanese textiles will cause profound dismay in Lancashire? Will he give an assurance to the House that Japanese exports will be only in low grade textiles and not high grade textiles?

Sir S. Cripps

I cannot give any such assurance.

Mr. Rees-Williams

Will my right hon. and learned Friend inform the House as to what extent Japanese industry has now been tied up with the American economy?

Sir S. Cripps

That is another question. Perhaps my hon. Friend will put it down.

Mr. Scollan

In spite of the fact that we have given these instructions to our representatives, is it not the case that the cotton trade of the United States of America is very likely to supply raw cotton and then set up cotton mills of its own for export purposes?

Mr. Silverman

May I press my right hon. and learned Friend on a further aspect of the protection of Lancashire from unfair competition in the matter of wage standards? Will he bear in mind that Lancashire, too, has an export industry to reconstruct, which is most important in the economy of this country? Is it not a little dangerous to leave the question of unfair competition by low wage standards in Japan either to the slow development of political life in Japan or the problematical international agreement to which he refers?

Sir S. Cripps

The present situation is being dealt with on a security basis. The questions of the re-establishment of the industry of Japan, and the other matters, are still under consideration. At the present stage we cannot use preventions on Japan for the purpose of protecting British trade.

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