GENEVA TARIFF AGREEMENT

HC Deb 29 January 1948 vol 446 cc1210-333

Mr. Speaker

Before I call on the Secretary for Overseas Trade (Mr. Bottomley) to move his Motion, I wish to tell the House that I have considered the Amendment in the name of the right hon. Member for Aldershot (Mr. Lyttelton) and although it may put emphasis somewhat slightly on one aspect, I think it is so wide that the whole subject can be discussed at large after the Amendment has been moved. I propose, therefore, to let the discussion range over the whole sphere in addition to the Amendment, including also the Import Duties Agreement, which hon. Members may want to touch on also, at the same time.

3.49 p.m.

Mr. Bottomley (Secretary, Overseas Trade)

I beg to move, That this House approves the action taken by His Majesty's Government at the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment. The Conference which took place last year at Geneva really had two spheres of work. A preparatory committee appointed by the Economic and Social Council was at this, its second, session working at the final draft of a charter to be submitted to a World Conference on Trade and Employment. At the same time the countries represented on the committee were taking advantage of the opportunity themselves to negotiate a General Agreement on Tariffs and Trade. There is no need to recall in detail how we came to negotiate at Geneva. The idea of an International Trade Organisation and a General Agreement on Tariffs and Trade is in line with the policy of the Atlantic Charter, the Mutual Aid Agreements and Bretton Woods. They are all part of an international policy designed to avoid some of the mistakes made in the period between the wars.

It was a formidable undertaking to combine discussion of the draft Charter of an International Trade Organisation with the negotiation of a General Agreement based on the principles of the Charter to come into force in advance of it. The commercial future of the various countries concerned was difficult to judge. But there was a universal feeling that me opportunity had to be seized before restrictive arrangements, however necessary in present conditions, came to be accepted as the normal pattern for postwar trade. Bearing in mind what happened after the first world war, it was a remarkable achievement for so many countries to produce a General Agreement with very lengthy schedules of undertakings about tariffs. Not everyone will be satisfied on every particular, but there can be no question about the magnitude and significance of the general result.

The General Agreement on Tariffs and Trade, therefore, grew out of the discussions of the draft Charter. An agreement on tariffs alone would have been liable to frustration had it not included provisions to regulate the use of other barriers and devices to restrict trade. The General Agreement, therefore, repeats many of the provisions of the draft Charter. The parties to the Agreement undertake to observe to the fullest extent of their executive authority the general principles of the draft Charter, and provision is made for certain parts of the Agreement to be superseded, when the Charter comes into force, by the corresponding provisions of the Charter.

The General Agreement will not enter into force finally until it has been accepted by signatories accounting for 85 per cent. of the total external trade of the countries participating in the Final Act at Geneva. A number of countries, however—United Kingdom, United States, Canada, Australia, France and the Belgium-Luxembourg-Netherlands Customs Union—agreed at Geneva to apply the General Agreement provisionally as from 1st January, 1948. Cuba has since joined this group. Some of these countries, including the United Kingdom, have also in fact, though not as a matter of right, given effect to the tariff concessions negotiated at Geneva with the other participating countries who have not so far agreed to apply the Agreement on a provisional basis.

This treatment may not, however, be continued indefinitely unless the other countries concerned come into the Agreement and play their part. It will be possible for any of the countries who apply the Agreement provisionally to withdraw such application on 30 days' notice at any time before the Agreement comes into force finally. It is also provided that countries which apply the Agreement pro- visionally need do so, so far as most of the general clauses of the Agreement are concerned, only to the maximum extent consistent with existing legislation. This proviso does not, of course, apply to the tariff concessions embodied in the Agreement, which are to be implemented at once.

The Agreement will remain in force from the date when it is applied finally until 1st January, 1951, after which date any party will be free to give six months' notice of withdrawal. It will also be open to any party to the Agreement, after 1st January, 1951, to negotiate for such modification as it may find necessary, in the schedules of tariff concessions negotiated by it.

The General Agreement is the operative agreement which resulted from the Geneva Conference. But since the general clauses of this Agreement reflect the draft Charter it will, perhaps, be better to deal with the general clauses of the Charter and General Agreement together and the tariff concessions thereafter, remembering that the two are closely connected. The Charter is now under discussion at Havana, and the House will no doubt agree that a detailed debate at this stage on the precise point reached in the ebb and flow of that discussion would be premature. A greatly widened circle of nations is now examining the Charter. New points of view are being expressed and a great many old arguments being gone over again. It will perhaps be sufficient for the moment to sketch the outline of the draft Charter as it stands, paying particular attention to those points which are most important to this country.

The main principles of the draft Charter were debated on 24th March, before the Conference at Geneva opened. My right hon. and learned Friend the then President of the Board of Trade there stated the argument for the multilateral approach which is the foundation of the Charter and set out the view which the Government took about the forthcoming negotiations. Briefly, he explained the Government's support of the general line of the draft Charter and of a multilateral trading system on the following lines. This country is faced with the need for a vast expansion of export trade. That trade depends on a great diversity of articles and a great diversity of markets. The general problem can only be affected by a general rise in the volume of our exports, but since before the war we did 20 per cent. of the total world trade in manufactured goods, then if world trade remained static, we should have to secure 35 per cent. of the total world trade in manufactured goods; which is obviously ridiculous. Moreover, within the general problem there is the problem of hard currency areas, and although there is a large field for expansion of mutual trading relations between the United Kingdom and other Commonwealth countries, there is no hope that by concentrating on that alone we can entirely do without trade with the rest of the world.

For all these reasons he pointed out that to us, perhaps more than any other country, it was essential that the countries of the world should adopt the right trading habits and avoid restrictive methods, whether by tariffs or other means, of protecting their own trade and canalising that of others. He went on to say that obviously we in our turn would have to make some contribution to the general freeing of world markets. There can be no question but that that view is the right view, and everything that has happened since March last year underlines its importance.

In general, the discussions at Geneva followed the lines set out in the first draft of the Charter, but there were naturally changes and among other things, important further safeguards for our balance of payments position are now included. It is necessary, however, to get both the draft Charter and the General Agreement into perspective. They are not in themselves a cure for our present troubles; they are part of a framework within which we feel that the permanent well-being and stability of this country can best be found. That framework may also help to prevent, during the period of transition, the revival of the restrictions and impediments to trade which proved so harmful between the wars.

The Charter is not in itself sufficient for this; it is only part of the framework; it will contribute to the desired end, but its contribution will be fulfilled only if other policies operate fully. Conspicuous among these are the policies exemplified by the International Bank, the International Monetary Fund, and the Food and Agriculture Organisation; all of them being based in turn on the fundamental policies of securing proper development of the economic resources of the world, and particularly the full employment of labour. Finally, the full operation of the Charter will be prevented if the present unbalance in the world is not put right. Insomuch as the Charter will help even in the transitional period to expand multilateral trade, it will itself, of course, contribute to rectifying that unbalance.

In the course of the Debate last year, my right hon. and learned Friend gave certain undertakings as to the conduct of the negotiations and the objects we were pursuing. The House may like to recall these and to judge how far they were honoured. It will be seen that in fact they were scrupulously observed. In the first place he emphasised that while we had pledged ourselves to include Imperial Preferences in the bargaining process, we were under no one-sided obligation to eliminate or reduce preferences, and that we, together with other Commonwealth countries, were the judges as to whether the counter-concessions offered to us were sufficient to induce us to modify Preference margins in return. He saw no prospect of the elimination of all Preferences but agreed some might be eliminated. He emphasised that in respect of the preferences which we accord to the Dominions it was for them to say whether their removal was justified, and added that we should certainly not agree unilaterally to their elimination without the agreement of the other Commonwealth Governments. Whatever was given up would have to be part of a mutually satisfactory bargain.

When we come to look at the result of the tariff negotiations it will be seen that these conditions were carefully observed. My right hon. and learned Friend also emphasised that we had to secure our freedom to engage in bulk buying under commercial considerations and to plan our imports so as to use our limited exchange resources to the best advantage. The provisions which emerge from Geneva adequately safeguard both these freedoms.

The draft charter has three main themes, first, the reduction of barriers to trade; second, the establishment of a multilateral system; and third, the encouragement within that system of economic developments. It is no academic scheme, however, and where rigid insistence on absolute principles would have made the charter unworkable it will be found that, with proper safeguards, suitable relaxations and adjustments have been introduced. The traditional barrier to trade is the tariff. The draft charter provides for negotiations for the reductions of tariffs, and we shall look at the first group of that policy in the Geneva Agreement. Tariffs are only one form of barrier. For us, a greater danger lies in the unrestricted use by other countries of other cruder and more drastic methods, and both the draft charter and the general agreement contain provisions directed at these.

The general acceptance of these provisions may well contribute, more than anything else of this sort, to our ability to expand and maintain our export trade. Among the most important of them is that quantitative restriction or quotas shall not be used as a method of protection. Rules, however, are laid down which provide that, with the approval of the International trade organisation, such quotas may be used for the purpose of economic development provided it can be shown that they are likely to be less damaging to other members than any alternative means. There are also certain exceptions relating to special circumstances such as the enforcement of Governmental measures for regulating the marketing or production of agricultural or fisheries products. It is recognised, moreover, that quantitative restriction may be necessary to safeguard the balance of payment. That is of particular importance in present conditions and introduces very necessary flexibility into the general rule.

In principle, restrictions used to safeguard the balance of payments must be non-discriminatory, but again provision is made for certain important exceptions, which I shall mention later. Subsidies are permitted but must be notified to the organisation with an indication of their estimated effect, and a country using subsidies must consult with others if the organisation determines that a subsidy is causing, or threatens to cause, serious detriment to their interests. Provision is made for co-operation with the International Monetary Fund, and members will undertake not to frustrate the intent of the provision of the charter by exchange action.

There are a number of miscellaneo[...] provisions dealing with freedom of transit, anti-dumping and countervailing duties, valuation for customs purposes, customs and other formalities, marks of origin and the publication and administration of trade regulations. They are designed to establish a code of commercial conduct and to prevent hinderance to trade and the frustration of tariff concessions by these various indirect methods. There would be nothing to be gained by going into any details on this, but the matters covered are of importance in the context of securing more easy exchange of goods, and their abuse in the past has often impeded our trade.

Mr. Leslie Hale (Oldham)

Before the hon. Gentleman leaves the question of discrimination, could he answer a question of importance with regard to cotton? Does Article 17, relating to trading, apply to the whole of our production of raw cotton in view of the existence of the Centralised Buying Control organisation? If it does, is the whole range of raw cotton—America, Egypt and Europe—treated as a single commodity for the purpose of Article 13, and, if so, is there not already, so far as we are concerned, a fundamental and widespread disequilibrium with the meaning of Article 14?

Mr. Bottomley

The President of the Board of Trade, who will wind up the discussion, will deal with details of this nature a little more fully.

When we turn to the multilateral theme, in the first place provision is made for countries to accord most-favourednation treatment to one another, and provision is also made for national treatment in respect of internal taxation, that is to say, that internal taxation must apply with equal force to the domestic products as to the imported articles. As regards State trading enterprises, it is provided that such enterprises shall act in accordance with commercial consideration in a wide sense.

Moreover, this theme of equal treatment for all is applied also to the use of quantitative restrictions which, as has been noted, are permissible to safeguard the balance of payments and may, with the approval of the organisation, be used also for purposes of development in certain cases. I have already mentioned that there are exceptions to this general rule. They are necessarily complicated, since the subject is difficult, as we have found in attempting to work out with the representatives of other countries a generally acceptable set of rules. As matters stand, the general effect of the rules is as follows. Until the end of 1948 the non-discrimination provisions are in abeyance for all parties to the agreement. After that date, individual countries may secure an extension of this freedom, provided that it is agreed by majority vote to the contracting parties. In any event, they will be allowed, until March, 1952, to discriminate if by doing so they can obtain more imports than under a system of rigid non-discrimination, provided that they do not do so as part of arrangements involving deliberate diversion of exports in a way which would result in a net loss of hard currency.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

If non-discrimination is so desirable, why have so many exceptions, provisions and safeguards against it?

Mr. Bottomley

I am bound to say that this is a long-term lead. May I go on? Hon. Members will appreciate that on a technical subject of this kind one cannot let one's eloquence flow and use the rhetoric which would be more suitable when appearing for the first time at the Front Bench. I am trying to keep as close as I can to what I consider are the facts.

The exercise of this freedom is at the option of the country concerned and no previous sanction for such policies is required. It can, however, be challenged after the event, if other members of the organisation have reason to believe that the right to this freedom is being abused. There are other safeguards designed to ensure that countries do not use these provisions at the cost of an unduly high disparity between the prices which they pay and those which they would have to pay in the cheapest market, but these provisions are flexible and are mainly designed to emphasise the fact that discrimination is a bad thing for the country which discriminates if it means that it has to pay an unnecessarily high price for its supplies.

After March, 1952, countries will not have the right to discriminate without approval, though they will still be entitled to apply to the Organisation for this right. The Organisation will then judge on the general economic position of the applicant country and decide whether the grant of this right would enable it to improve its position. The Organisation will not in any event be entitled to prohibit individual transactions. Its determination will be confined to the general right of a member to adopt discriminatory restrictions.

We have therefore, three stages which it is hoped will correspond with the adjustment of the present clisequilibrium between the old and the new world. During 1948, countries can discriminate more or less unconditionally. From the beginning of 1949 until March, 1952, countries have the same right to discriminate at their discretion, but they may be called to justify their actions before the tribunal of the trade organisation. After 1952, the general assumption is that countries will not need to discriminate, but they can apply for the general right to do so, which will be decided by the organisation.

From the beginning of 1949, therefore, freedom to discriminate will, to some extent, be subject to the concurrence of the Organisation, but until 1952 a country can go ahead without any form of permission unless a complaint is upheld by a majority vote of the Organisation. We are confident that it is most unlikely that any action which we would feel it necessary to take would conflict with these provisions. We consider that the non-discrimination provisions of the General Agreement, as now drafted, should not conflict with any of the policies which we are likely to wish to pursue during the next few years. The only type of transaction which they would disallow would be discrimination in imports as part of arrangements which would, in effect, result in a net loss of hard currency earnings because of a deliberate policy of steering exports away from markets where such currencies could be earned, and reserving them for other markets in return for specified quantities of supplies.

We are satisfied that, unless our main assumptions about the course of events during the next two years are completely falsified, it will not be necessary for us to adopt policies of this kind, to which there are obvious objections in any case, and that our needs will be met to the greatest extent possible by making a special effort to build up our exports to hard currency markets in which we may earn gold or convertible currencies which can be used in any part of the world. Moreover, any extension of a general right for countries to conclude what would in effect be barter arrangements, would be calculated to prejudice our own ability to obtain our essential imports, since countries which would normally supply those imports to us might well, especially in the immediate transitional period, find it possible to extort better conditions from other markets than we could afford to concede.

The third theme in the draft Charter is economic development. It is sometimes observed by criticis of the Charter that it is in effect an instrument for the protection of the interests of the major-developed countries and is directed against the possibility of economic development by the less industrialised countries. As far as His Majesty's Government are concerned this is most emphatically not the case. Quite apart from the British practical record in all fields of overseas development within the Commonwealth and Empire and elsewhere, the Charter itself bears all the evidence to the contrary. A whole new chapter has been written into the Charter dealing specifically with the problem of the position of countries seeking to develop their economies. There is nothing grudging or half-hearted about our approach to this chapter, and we hope that this will become abundantly clear when the Trade Organisation is set up and operations begin under its provision.

Here again, the Trade Organisation cannot possibly cover the whole field. Other agencies associated with the United Nations have clear and specific responsibility in this matter, and no legal rights written into a document of this kind could make any major contribution to the problem of the development of the world's latent resources. The Charter contains a clear recognition that all countries have a common interest in the productive use of the world's resources, and that the industrial and general economic development of all countries, and particularly of those in which resources are as yet relatively undeveloped, will improve opportunities for employment, enhance the productivity of labour, increase the demand for goods and services, contribute to economic balance, expand international trade and raise levels of real income everywhere.

It is in this spirit that His Majesty's Government view the problem of economic development, and it is in this spirit that they have co-operated in working out the articles of the development chapter of the Charter. These impose upon members the obligation to take action designed progressively to develop industrial and other economic resources, and to raise standards of productivity. Members are also obliged to co-operate with one another, with the Economic and Social Council of the United Nations, with the Trade Organisation and with other inter-governmental organisations in promoting industrial and general economic development. The Charter contains further provisions for expert advice and assistance to countries desiring to embark upon programmes of development. It provides for access to supplies of capital, materials, modern equipment, technology and technical and managerial skill necessary for large-scale development.

The Charter also contains articles providing that exceptions may be made to the general rules of commercial policy embodied in the Charter if the Organisation agrees that such exceptions are necessary in the interests of the programme of economic development or reconstruction of a member country. The relevant article does not, of course, permit any country to take advantage of its provisions without the approval of the Organisation, because to do so would clearly involve abandoning the rules altogether as far as any country was concerned which could plausibly claim that it was carrying out a programme of economic development.

In the view of His Majesty's Government, economic development must be carried out in an orderly and considered manner and with due regard for the interests of others, particularly in the early stages of such development. It is for this reason that we have taken the line rather strongly that exceptions to the general rules laid down in the Charter should only be made in the case of infant industries with the prior approval of the Trade Organisation. This is most emphatically not a device for securing that development of this kind shall not take place, but merely to ensure that actions, which may, particularly in the short-term, have considerably adverse effects upon the interests of members at large, are not taken without discussion before the forum of the Organisation.

It is our firm view that such procedure will normally be in the interests of the applicant member as well as of others, and that for the Charter to take the alternative course of recognising the right of countries to take their own decisions as to whether the rules of the Organisation should apply to them in particular cases, would not be a contribution to the promotion of economic development, which does not rest on any such legal basis, but a step away from the ordered progress which is the basic concept underlying the whole approach to the International Trade Organisation.

At the present time it may appear a far cry to refer to the problem of surpluses, but there is no doubt that the existence of such surpluses of agriculture and raw material products during the inter-war years was one of the major problems affecting world economy, and particular attention has, therefore, been paid in the Charter to this problem. Great care has been taken to work out the most effective machinery for dealing with problems of this kind as they arise, with the twin objectives of ensuring as far as possible that needed foodstuffs and raw materials are not wasted, but also that excess capacity to produce such goods is not kept in existence after a period necessary to effect adjustments. The whole concept underlying the commodity policy chapter of the Charter is that problems of surplus are a common difficulty affecting producers and consumers alike, and that there must be close study of such problems as they arise with a view to advising the most equitable solution based on the principles of ensuring that needed goods are used and that, subject to the necessary provision for readjustment, supplies are increasingly drawn from the most efficient sources of supply. We have avoided any cut and dried schemes involving regulation of output with a view to keeping up prices in the interests of producers. The texts adopted represent a fair compromise between the interests of producers and consumers, and set the stage for a recognised approach to each such surplus problem as it arises.

There is no need to emphasise the importance of this part of the Charter to world economy and particularly to the future prosperity of the primary producers in the Commonwealth. We must not underestimate its importance to the United Kingdom, both as a consumer and as an exporting country which depends on the prosperity of primary producers overseas.

We have now covered the field common to the draft Charter and the General Agreement. The House will be particularly interested, however, to have some account of the tariff negotiations which are reflected in the Agreement; though, as I have said, they are to be regarded as the first fruits of the policy that has led to the Charter. Before proceeding to analyse the results of these negotiations, I should like to refer briefly to the arrangements made to keep in close touch with industry during the discussions in regard both to tariffs and to the general matters. During the negotiations the President of the Board of Trade had the benefit of a number of discussions in London with a Consultative Committee for Industry, set up for this purpose. On this Committee were representatives of the Association of British Chambers of Commerce, the Federation of British Industries, the National Farmers' Union, the National Union of Manufacturers and the Trades Union Congress.

In taking this opportunity to acknowledge the valuable assistance provided by this Committee, I should like to make it clear that neither the Committee nor its individual members carry any responsibility for the decisions taken in the course of the Conference, nor for consultation with individual industries. As regards individual industries, the Board of Trade and other production Departments took all possible steps before the Conference began to ascertain their views about all questions affecting their tariff position in the United Kingdom and other markets. It will be obvious that no general agreement of the scope of this one could be concluded without our making concessions which particular industries might prefer us not to have made. These contacts with industry, however, ensured that our representatives were fully appraised of the measure of risk involved in the various concessions requested and enabled to preserve an overall balance.

There is one other general point I should like to deal with before turning to the details of the tariff negotiations. It is the general provision, in respect of pre- ferences, that established preferences shall be excluded from the operation of the general rule about most-favoured-nation treatment. Such preferences are, however, limited for all countries to such margins as may be settled by negotiation, or where no negotiations have covered the point, to margins existing on the 10th April, 1947, when the Geneva Conference began, or such earlier date as may be agreed.

The effect is that all existing preferences within the Commonwealth may be continued, save in so far as they may be modified from time to time by negotiation, but it is not consistent with the Agreement or the Charter to introduce new or increased preferences. This applies, of course, with equal force to the preferences accorded to each other by the United States and Cuba, or by France or the Benelux Union to their overseas territories. The acceptance of this limitation of future action was part of the general bargain.

It would be tedious to take the House through the details of the various schedules. There has been time and opportunity now both for hon. Members and for interested industries to examine what they contain; though it is, indeed, a massive task, for the schedules are so lengthy that, as is well known, we had to wait for copies to be made by the United Nations rather than reprint them ourselves. But a brief account may help to illustrate what has been done.

The Command Paper analyses in statistical terms the concessions made by the United Kingdom and the concessions made by other countries from which the United Kingdom might expect to benefit. The only convenient method of comparison is to take the latest representative year of normal trading—1938—and compare the fields covered by concessions given and received in terms of the prices and pattern of trade then prevailing. On this basis and in broad summary figures, we have agreed reductions, or the equivalent of reductions, in our own tariff on goods of which our imports in 1938 from the foreign countries parties to the Agreement were valued at a little over £30 million; we have suffered a contraction in the system of Commonwealth preferences for our exports on goods in which those foreign countries had a trade in 1938 with the Commonwealth countries concerned worth £37 million; in return, we have obtained tariff reductions affecting United Kingdom exports valued in 1938 at £48 million. A crude comparison of these figures would suggest that we have made a poor bargain, but a closer scrutiny will show that that is not so.

We have obtained concessions in the form of reductions of duty, from which we should stand to gain on export trade which before the war amounted to £48 million, and, in addition, on about £46 million we have secured our export trade against interruption by any future increase of tariffs. Moreover, it is important to note that the General Agreement on Tariffs and Trade provides that we shall receive most-favoured-nation treatment from the other parties to the Agreement and therefore enjoy as of right any concessions made by them to third parties. It will be found that for most of the main exporting industries we have obtained some reduction or binding of tariffs and in particular that on some of the more characteristic United Kingdom exports to the United States we have secured appreciable reductions.

Some special reference to the reductions of the United States tariff is necessary in any general balancing of gains and losses. Two points, in particular, may be emphasised. The first is that the effect of the United States concessions will be felt immediately, since there is no restriction on imports into the U.S.A. The second is that we have never earned our dollars mainly by direct sales to the U.S.A., and the United States concessions to other countries indirectly help us also by facilitating the flow of dollars to finance the favourable balance of trade that we are seeking to build up with these countries.

Mr. Walter Fletcher (Bury)

In speaking of imports, as far as America is concerned, has the hon. Gentleman included the Crawford Act?

Mr. Bottomley

May I look into that? I cannot give the answer at once, but I will ask my right hon. Friend to reply later in the Debate.

I was saying that the Agreement helps us by facilitating the flow of dollars to finance the favourable balance of trade that we are seeking to build up with certain countries. For example, although we do not export meat, butter and wool to the U.S.A., the reductions of duty on these goods for the benefit of the Southern Dominions are of the greatest interest to us also, and it was right that we should play our part in facilitating the negotiation of such reductions. It is necessary for this reason to have regard to the new United States tariff as a whole, and not merely to abstract from it the items of direct interest to us. In total, the U.S.A. have made concessions on some 3,400 items, of which in 1939 their total imports were valued at 1,800 million dollars, or 78 per cent. of the total of United States imports in that year. This general revision of the United States tariff is plainly an important contribution to the restoration of normal international trade, and full account must be taken of it as well as of the concessions made by other countries in measuring what we have gained against what we have given up.

Apart from these important, though indirect gains, we obtained substantial concessions in the U.S. tariff. The major items of United Kingdom export trade which stand to benefit are linen piece goods, where a 50 per cent. reduction was almost uniformly given; woollen piece goods, where a substantial reduction of about 30 per cent., varying for different categories, was offered; whisky, where the specific duty was reduced from 2.50 dollars to 1.50 dollars per gallon; earthenware and chinaware, where less substantial but useful reductions were obtained. But a large part of our export trade with the U.S.A. consists of a great miscellany of specialities which individually do not attain a large volume, though in the aggregate they are very important. On these smaller individual items, the United States offers were, in general, very satisfactory, many being the full 50 per cent. reduction. By and large, it may be said that the United States offers were satisfactory and as large as could be expected.

Sir A. Salter (Oxford University)

Speaking of the general measure or extent of the United States reductions, would it be true to say that the total effect of them was approximately to reduce the general American level of tariffs to what it was at the lowest point in modern times?

Mr. Bottomley

Yes, Sir. I think it would be approximately true to say that.

So much for the United States; may I now deal with the French? The French had been recasting their tariff, changing over from specific to ad valorem duties. In spite of this complication we obtained a good many adjustments of duty and as far as goods are concerned in which this country is chiefly interested, the tariff is now fairly comparable with our own. The tariff of the Belgium-Netherlands-Luxembourg Customs Union had just been worked out with very great labour. It would have been too much to expect radical alterations in what must have been a delicate compromise. We, therefore, did not obtain much by way of reduction of duties but in the result a good deal of the new joint tariff is bound against increase; some of it, for example, cotton piece goods at comparatively low rates.

With the other foreign countries, there was less scope for negotiation, either because, on the whole, their duties have not seriously impeded trade, or because it was not possible for us to make significant concessions to them on the few commodities which they send to us. The extreme example of this is Cuba, whose exports of rum, sugar and cigars are all items in which the revenue aspect of the duty is paramount, and with whom, therefore, mutual reductions of duty were not possible. Nevertheless, the concessions we have obtained, scattered like our trade over many small items in many countries, were, in total, well worth while.

Vice-Admiral Taylor (Paddington, South)

Could the House be informed whether the American preferences on Cuban goods at the present time have been reduced, or is that matter sacrosanct and to stay as it is?

Mr. Bottomley

There, again, I think an answer has already been given in this House. A question was put to the President of the Board of Trade and an answer given. I have nothing to add to that.

Vice-Admiral Taylor

Can I have an answer to an important question?

Mr. Bottomley

Let us now turn to the question of preferences.

Here it may just be noted that Canada bound or reduced a very great part of her most-favoured-nation tariff, and, wherever she did so, also bound or reduced the preferential rate of duty. The old preferential rates were, on the whole, not high; but useful, if small, reductions have been obtained for such goods as rayon piece-goods, some cotton piece-goods, linen towelling, chocolate and other confectionery and also toilet soap. In Australia we have secured reductions of duty—though sometimes the new duty is still high—on a very wide range of goods including electrical apparatus, motive power machinery, tools, woollen piece-goods, linen goods, apparel, hats and hosiery. There is, in fact, a general scaling down of the Australian preferential tariff. We have also obtained in the other principal Commonwealth countries, where the possibilities were more limited, bindings or reductions on a number of useful items, and in South Africa, India, and Pakistan where, in many cases, we are subject to the most-favoured-nation rates of duty, we benefit also by concessions made to third countries.

To secure concessions for the United Kingdom we had, of course, to make counter-concessions ourselves. These fall into two parts—what we did on our own tariff, and the scaling down of preferences. Before analysing these it should first be noted briefly (a) that some of the concessions we made on the United Kingdom tariff affect commodities, such as dried fruits, which are more a concern of other Commonwealth countries than of the United Kingdom; and (b) that some of the reductions which we agreed to in the preferences we enjoy were to assist other Commonwealth countries in securing concessions from others and have to be set against the substantial benefits which we obtained in return from them.

To take our own tariff reductions first, we have agreed to reduce current ad valorem rates of duty affecting imports from the foreign countries parties to the general agreement, valued in 1938 at just under £20 million, and to bind against increase, in respect of a further £10 million, a number of specific duties which, owing to the higher level of postwar costs and prices, have lost a material part of their prewar effect. The combined result is that, in terms of 1938 prices and the 1938 pattern of trade, foreign countries parties to the agreement stand to benefit in respect of about £30.4 million worth of their trade with us.

The average level of the United Kingdom tariff was never high, and the con- cessions we have made on it go some little way to reduce the protection it can afford to our industries. But the concessions have all been negotiated, after full consultation with production departments, in the knowledge of the views of manufacturers and producers, and they ought not, generally speaking, to result in any serious prejudice to the position of our industries in the domestic market. Many of the reductions are relatively small; many others are selective, and relate only to particular items which should not need the full level of protection accorded to the general class or description of goods to which they belong under the present tariff.

Again, in a number of cases, care has been taken to reserve from reduction of duty the cheaper end of the trade where tariff protection may, in the event of a slump, be most necessary. In some of these cases, higher specific duties have been agreed to deal with this, as part and parcel of the reductions conceded in the ad valorem duties applicable to the higher-priced ranges. To take a few illustrative examples: the general level of reduction in the important field of textiles is from 20 to 17½ per cent. ad valorem for piece goods and from ro to 7½ per cent. for yarns, but the specific duties which may be charged on cheap silk and rayon piece goods are increased to keep them in line with postwar costs and prices; on machinery, there is no general reduction of duty for machinery as such, but particular products have been selected for a reduction of the order of 2½ or 5 per cent. ad valorem.

We have also agreed to the reduction by other Commonwealth countries of a good number of the margins of preference accorded by them. The White Paper gave figures to show the scope of these reductions, and there is no need to repeat them now. These figures provide a rough method of assessing the possible gains of foreign countres, but do not serve so well to estimate the possible disadvantage to us, for our interest and theirs often lie in different fields. In some cases, the reduction in the preference resulted from a reduction in the protective tariff, which was the main objective of the foreign country which negotiated it. There is one other point. It will have been noted from the White Paper that half the trade covered by preference concessions is accounted for by items in which a rela- tively small part of the preference has been surrendered.

It is easy to be misled, however, if one looks simply at statistics of past trade in considering these questions of preference. In common with the other Commonwealth countries, we made it clear from the start that any foreign country that wished to secure the reduction of a preferential margin would have to negotiate for it in the same way as the reduction or binding of a Customs duty, and that the Commonwealth country enjoying the preference would have to be compensated for any concession made. In this way, both preferences that we accord to other Commonwealth countries and those which they accord to us were reduced in a number of instances, in return for benefits in the way of reductions orbinding of low duties —in the tariffs of the foreign countries to which the concessions were made.

There has been no question of dismantling the preferential system, but, rather, of making concessions in it as part of the general bargain. And, as the country enjoying the preference had to be satisfied, we can be pretty sure that the bargain, as a whole, is reasonably sound. We do not wish to suggest that none of the concessions which we made in respect of preferences matters. We believe we paid in good coin for what we secured from other countries. It is very difficult, however, to say just where the concessions will affect the prospects of our trade. Everyone has a different opinion about that. We believe, on the whole, however, that we have given no more than was reasonable.

Perhaps it may be useful to describe how we went about this business. In the first place we attempted, as far as was practicable in the multitude of negotiations which were going on, to spread the gains and losses among industries in the most advantageous way, although, naturally, some of the more important industries were attacked from all quarters. We could have tried to get away with a number of spectacular reductions or eliminations of preference, but, if we had tried that, we may have been in difficulties. We chose, rather, to widen the field, and to limit the depth of the reductions. It would be invidious to pick out particular cases, but a study of the schedules will show how far we were successful in these aims.

It must be remembered that some of the margins which we had were very large, and, even although substantial reductions have been made, we are still left with very fair margins, as, for example, in New Zealand, where, on some of the drapery and haberdashery items, our margin of preference has been reduced from 35 to 20 per cent., and on motorcars, even after reduction, is still 35 per cent.

Mr. Gallacher (Fife, West)

Pay attention over there.

Mr. Bottomley

Further, the reduction in our margin has frequently been coupled with a reduction in the preferential rate, which should do something to offset the effect. For example, in Canada, we had a margin of 1 dollar per gallon on whisky, and a duty of five dollars. The margin is now 50 cents, but the duty, also, is reduced to 4 dollars, 50 cents.

I must apologise for keeping the House so long, but I am sure hon. Members would rather have the fullest possible statement in order to let the Debate take place with full information.

In some cases, we have acquiesced in the reduction of our margins in order to enable the Commonwealth country concerned to get an agreement with one of the other negotiating countries. A conspicuous example—this case concerns two Commonwealth countries—is the reduction of our cotton piece goods preferences in Australia for the benefit of India, which was important in bringing India into the Agreement. It was also important in justifying the considerable reductions of duty which Australia has accorded us in other items. Then there were cases, for example the elimination of our preference on anthracite in Canada, where the governing factor was the need of the Commonwealth country concerned. The Canadians prefer our anthracite, but the existence of a tariff against anthracite from the United States when we cannot supply has meant increased costs to the Canadian consumer.

Somewhat similar is the case of industrial machinery in South Africa, but there, in spite of the obvious advantage to South Africa of complete free entry for important capital equipment, we were able to maintain a preference of 3 per cent, as against the old 5 per cent. Finally, it may be of interest to the House if we take one commodity and examine what has happened to it in the agreement as a whole. I do not choose one which is particularly favourable to us. The motor car industry had little to gain by tariff concessions. Its chief concern was to hold such advantages as it had. Because of the importance of the industry it was inevitable that concessions should be sought by foreign countries in practically every tariff and that Imperial Preference should be strongly attacked wherever it existed. The United Kingdom tariff remains unchanged, but some narrowing of the preference margin has had to be conceded in the most important Commonwealth markets where a preference existed.

In Australia, the most important concession has been the narrowing of the preference margins on chassis by 1d. per lb. We have secured some useful reductions in the preferential duties on motor car bodies and panels. Reductions have also been made in the effective preferential rates on parts and engines; these latter have been accompanied, however, by a moderate narrowing of the preference margins. In New Zealand, the margins of preference on motor cars, assembled and unassembled, have been reduced to 35 per cent. There has been no compensatory advantage, but the remaining margin is of course considerable. In India, the margin of 9 per cent. is to be progressively reduced, until, in six years' time, it disappears altogether. Again, there is no compensatory advantage, but only private cars are affected, not commercial vehicles, on which we retain the preference of 9 per cent.

In South Africa, there is no preference and ad valorem ceilings have been fixed for cars within the different value classes. These caused misunderstanding among United Kingdom motor car manufacturers who assumed, not unnaturally, that the existing specific duty of £1 3s. per 100 lb. weight for cars up to £400 value would be changed to 20 per cent. ad valorem, the ceiling for cars up to £600. Far from this being the case, the Union Government have not only left the duty at £1 3s. but have recently extended its application to cars above £400 and up to £600 which hitherto have been dutiable at 25 per cent. ad valorem. The United Kingdom industry should gain by this change, and by the reduction of the duty on cars valued at £600–£800 from 30 per cent. to 25 per cent. ad valorem. In Canada, the preference has been maintained. Reductions in the tariff for Czechoslovakia and in the new French tariff may be of some advantage.

Now may I refer to the wider issue? Quite apart from all these prewar figures of tariff and preference reductions which might or might not be presented in a manner to suggest that we have made a good bargain, it is, of course, essential to keep the broader context of these tariff negotiations in full view. We did not go to Geneva simply to get reductions in tariffs. Tariff reductions are but one of the many necessary factors to achieve our real objective. That objective is to ensure that once countries have got over the transitional difficulties of the post-war period, the way will be open—and unprejudiced—for the restoration of a multilateral system of international trade, instead of the host of import restrictions, financial clearings and exchange controls with which international trade was being gradually checked before the war and which could only make for the increasing impoverishment of a country like ours, which lives on free and flourishing conditions for import and export business.

Faced as we are with the imperative need to increase our exports, we stand to lose more than ever from any revival, on the longer term, of high tariffs and trade barriers. The essential value of the Geneva Conference is that it has defined this objective clearly and has lined up the major trading countries of the world to set about its achievement as soon as each of them individually can recover from the present economic consequences of the war. Naturally, it has been necessary for everyone to take some risks, for the future is full of uncertainty and the assumption of any long term obligation must involve some leap in the dark, but it is a measure of mutual confidence that so much was in fact agreed. It would have been a strange thing if the United Kingdom, of all countries, had hung back in such a trial of confidence; we have played a leading part as a country with a leading interest.

4.46 p.m.

Mr. Oliver Lyttelton (Aldershot)

The hon. Member told us that this was the first important speech he had made from the Front Bench. When he goes to bed tonight I think he will have the satisfaction of knowing that he has discharged a very difficult task on a technical subject without losing the good will of the House. At the same time, and in the friendliest spirit, might I suggest to the senior Ministers that they should allow their Parliamentary Secretaries a little more latitude and that when the Front Bench requires to put up some barrage balloons those ballons should be of a less captive nature? I do congratulate the hon. Member, however, on having dealt with the subject in such a workmanlike manner.

I would like to deal with the subject on the very broadest lines and to devote only a very few sentences to discussing the details of the bargain. I confess that I did not follow the hon. Member's figures. I hope to give the House some of my own. If they are incorrect, I hope that the hon. Gentleman will interrupt me. On the "Give" side of the account I make out that we bind—that is the new technical term for an undertaking never to increase and it is better than most new inventions—duty free or ad valorem duties covering £63.1 million of our trade, and we agree to reduce rates on £19.8 million. In addition, we bind rates which, owing to rises in prices, amount to a reduction—they are tantamount to a reduction—of about £10,500,000, or a total of £93,500,000. Then there is the sum of £37 million to which the hon. Gentleman referred, of reductions by Commonwealth countries, granted to foreign trade, against which sum £29 million are by bindings and £36 million are by reductions on the other side. On the "Give" side of the account that covers £130,500,000 of our trade, or about 10 per cent. of our total exports.

On the "Receive" side of the account, bindings and deductions by foreign countries cover a total of £65 million. Similar concessions by Commonwealth countries cover £27 million, a total of £92 million. Therefore, on the surface, we have made concessions covering £130,500,000 and received concessions on £92 million. It is fair to say that on £37 million of that sum the reductions are not all at our expense. The document which we have before us is no more than apologetic on this point. There is the usual official jargon at the top of page vi. Hon. Gentlemen will see, if they look at it, that the Department is not very confident about what it says. I admit also that the calculations are rough and ready, because they just cover the amount of trade without going into details.

What conclusions are we to draw from these figures? I do not think the hon. Gentleman the Secretary for Overseas Trade would deny—in fact, I think he confirmed—first that there is every sign that a nicety of balance has been sought in the bargain; and, secondly, that the bargain is, if anything, not particularly in our favour. In the present state of the world and in our present plight, trying to recover from the effects of two world wars in which, taking the two together, we have certainly borne the lion's share and not disgraced our national emblem, a nicety of balance or an arrangement which, if anything, is weighted against us, surely must serve to freeze or stereotype the essential inequalities and differences which exist today. Moreover, these factors will delay rather than hasten the time when we shall get on to our feet again.

I beg the new President of the Board of Trade, also in no carping spirit, not to get negotiator's fever, if he has not already contracted the disease. No one on this side of the House will give any credit to anyone for coming to an agreement about anything. We can all buy and sell things quite easily, but the price is what matters, and, although this sounds a resounding platitude, it is one which it is necessary to enunciate from time to time, because all of us who have been in negotiations know how easy it is to reach agreement by leaving vague what is difficult and by eliminating or discarding what very often it is essential to retain. That is all I have to say on the details of the bargain, and the House will be very glad to hear that I shall not refer to those details again.

The document contains a number of Clauses, to which the hon. Gentleman referred, concerning such dusty subjects as marks of origin, consular invoices, formalities connected with importation, publication of trade regulations and so forth. Dull though these may be, and whatever the fate of the main part of the document, I do not think that to have got 23 nations to sign a code of rules about these subjects is an achievement which the House ought to under-rate. They will be useful things to cite on future occasions concerning the mechanism of international trade.

I now want to deal with the subject on the broadest possible lines and in the simplest possible terms. To understand a document of this kind which sees the light at such a very untimely moment, it is necessary to look back at its history. The original source from which it sprang was Clause 7 of the Mutual Aid Agreement or, in other words, Lend-Lease, which was signed in February 1942 during the height and in the deadliest grip of the war. I need not remind the House that at that time there was an exchange of letters between President Roosevelt and my right hon. Friend the Member for Woodford (Mr. Churchill), which expressly reserved the subject of Imperial Preference, and that affirmation has been repeatedly reaffirmed by His Majesty's Government in reply to numerous questions as various times which have been addressed to them and from this side of the House.

At that time in 1942, up to 1944, all of us here, whatever our political complexion, and the Americans in particular, had an idea—or, if one likes to be more high-sounding, an ideal—of trying as soon as the war was over to restore the free flow of goods, of trying to prevent what we were pleased to call the growth of economic nationalism, to prevent the competitive depreciation of exchanges—that is, depreciation not caused by balance of payments difficulties. I confess that at that time we were thinking much more of the problem of unemployment which we thought might hit us after the war, than of the scarcity of labour which is our problem today. The panorama of destruction, and destruction on a scale which even the authors and the makers of the weapons could hardly imagine, kept on unrolling itself. Then one day silence fell on the rubble and the smoking ruins of Western Europe; vast armies of starving men, women and children moved across the face of Europe, and the chance of even the discussion of the free flow of trade had long ago been buried under the ruins of the world which originally conceived it.

This document, which has been under discussion since 1942 or 1943, bears all the marks of those long years and of the greatly changing scene of the background against which these negotiations have been carried on. We can all see the old core of the building—the period part, if I may so call it. We can distinguish here and there the bricks of 1942 to 1944, but, as times have changed, on to these bricks have been built a number of very ugly modern concrete extensions, fire escapes, emergency exits and all the rest, which are wholly and totally incongruous and out of character with the original building. The core of the document, of course, is a rather jejune exposition of the creed of multilateralism or, as I should prefer to call it in my rough Tory way, manysided trade. I hardly think it necessary to develop the argument that no country stands to benefit more from the restoration of many-sided trade than our own. It will be another relief to the House to know that I do not propose to develop that argument.

The growth of our population from 6½ million in 1750 to about 27 million in 1850, and what may well be 50 million in 1950, is in great measure due to the multilateral nature of the trade which we carried on. I suppose if we had to support our population on our natural and indigenous resources we could support a population of about 15 million. In fact, we support about 50 million. I think that is some measure of the part which multilateral and international trade bears in sustaining our population. It is notable that no one stresses the value of manysided trade more than the Chancellor of the Exchequer, provided always, of course, that that multilateral aspect is confined to foreign trade. The kaleidoscope and the mosaic must only apply to foreign trade, and it is one of the curiously illogical—and if I were not so polite I should say nonsensical—dogmas of Socialism that, with this belief in a manysided foreign trade, they manage without difficulty to swallow and combine a belief in nationalisation, bulk buying and State monopoly at home, all of which are the antithesis of many-sided trade. If these doctrines were not held by gentlemen so intelligent as the President of the Board of Trade and the Chancellor of the Exchequer, I should have described them as the last infirmities of feeble minds.

However, without going any further into this subject, I suppose we should all agree that if foreign trade could be many sided, and truly many sided, we in Great Britain should greatly benefit and would probably benefit more than any other great nation in the world. Let us occasionally try to find some common point of departure. I think that it would be universally conceded. But can it? The answer must be that today, and for some years to come, it cannot. The reason is due to what the economists—and I hope there are none in the House at this moment—and their parrots are pleased to call, "Grave disequilibrium in the international balance of payments." If I may take the House into my confidence for a moment, I would like to say that when I was discussing my overdraft with my bank manager the other day I told him that I considered the term "overdraft" to be highly offensive, that he must know my only trouble was a certain disequilibrium in the domestic balance of my payments.

The two greatest exporting nations, the United States and Great Britain, have much more than changed the position of debtor and creditor which they occupied at the beginning of the century. We have in Britain today an unfavourable trade balance of £600 million a year in relation to the United States, and the United States, on the other hand, have a favourable trade balance with the world at large of £3,000 million sterling. That is disequilibrium with a vengeance.

May I give the House another piece of advice? If a man falls down a well he will not thank the person who looks over the edge and says, "There is a disequilibrium between you and the bucket swinging on the surface." As I say, we have £600 millions of unfavourable trade balance on the one side, and £3,000 million of favourable trade balance on the other. I should have thought it was transparently clear that if every concession, which is made with the object of increasing and expanding British export trade, has to be balanced by an exactly similar concession to American export trade, the position of the two trading accounts must become frozen. If somebody goes to a fair, puts the giant on one side of the scales and the midget on the other and says, "The two sides of the scales must balance, but there must be no discrimination," the giant remains with his feet on the ground and the midget with his in the air, until some- body sees that the theory of non-discrimination between the two is untenable. The very nature of non-discrimination makes it the father of the status quo. It is these obvious arguments, which to me appear almost axiomatic, that have led to modern extensions, fire escapes, and concrete conditions being grafted on to the old building.

One reason why we on this side of the House have put down this Amendment is to bring out into the cold light of reality the fact that multilateral trade and the doctrine of non-discrimination—themselves highly worthy objects—are today just illusions. This document has the wrong emphasis. While announcing principles in which, I think, we are all prepared to believe, it proceeds to list a number of exceptional circumstances in which these principles can be set aside. All, or nearly all, of the so-called exceptional circumstances are exactly those which are the rule today. If Members think I am exaggerating I must trespass on their patience to read some of the jargon of this document. Article XI states: No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party. I will say "Hear, hear" to that. Article XII, which deals with restrictions to safeguard the balance of payments, states: Notwithstanding the provisions of paragraph 1 of Article XI"— which I have just read, and had to applaud myself— any contracting party, in order to safeguard its external financial position and balance of payments, may restrict the quantity or value of merchandise permitted to be imported subject to the provisions … That is where the cement comes on to the Elizabethan part of this Agreement. The emphasis is exactly wrong. We certainly fear that our adherence to these rules of conduct in international trade will be taken to mean that in the next few years we think they will rarely be broken, whereas exactly the opposite is the truth. Our preferences, our bilateral arrangements—which, I have no doubt, the President is negotiating at this moment—our quantitative restrictions on imports, our desire to reduce imports from hard currency countries and increase imports from soft currency countries, our attempt to build up more Empire and Western European trade, are things which we have to put in hand now. Those are not principles which are set down in this document; they are the exceptions.

I am most sincerely anxious that Great Britain should not be held up later as having put her name to a series of principles which are to be observed only in the breach. We recognise that, on long term, these principles have validity but, in the state of the world as it is today, they can only be observed in the breach. I must say, in passing, that one of the fundamental errors in thought on these subjects today, not least in the mind of His Majesty's Government, is to imagine that the vast differences in debits and credits which exist between the great trading nations can be adjusted in terms of current trade, that normally workaday imports and exports will adjust these disparities. These disparities have not been caused in the normal course of trade; they are the cataclysmic result of the incidence of two world wars. It is like a man who has lost £50,000 on the Stock Exchange trying to get his money back by playing ha'penny bridge with his friends in the train. If he has all the cards, and all the luck, he may calculate that within 1,000 years he may come out all right, but that is extremely small consolation either to his relations or to himself. In terms of trade, that is what we are trying to do.

I would emphasise that a normal, private, uninspired, unapproved by Congress, movement of capital, seeking profitable investment in stable conditions, is necessary from West to East if these adjustments are to make any progress in our lifetime. It is in creating the conditions where this might happen that His Majesty's Government have so signally failed. They have not only failed to build up any international confidence in the stability of sterling, and the purchasing power of sterling, but are daily, and in every way, announcing their complete loss of faith in their own currency. I see that the hon. Gentleman indicates dissent, but if proof were wanted is he aware that a married woman going abroad can take, out of all the jewellery she possesses, only her wedding ring? Why? Because women are very intelligent, and allow the force of reason, much more than we do, to govern their actions. The Government know well that any intelligent lady, if it was not outside the law, would sell her jewels and turn them into dollars, so they confine her to taking only her wedding ring with her when she travels.

I ask them what would have happened if, at the end of the last century, when we were the great creditor nation, we had found that we could only invest our money in the United States or the South American Republics at a rate of exchange which we thought false or too high—if, all the time we were trying to seek an outlet for our surplus money, we were told by the Argentine Government or the American Government that whatever happened on no account should we ever be allowed to draw our capital out again, and if, at the same time we were doing all this, we learned that no American or Argentinian or Chilean could travel to Europe with more than £5 and a wedding ring. I ask, would the money then to finance the railways upon which the development of the U.S.A. and those South American countries so much depended have flowed from the Eastern to the Western Hemisphere? Of course, it would not.

However, I do not want to digress further on that point. I want to get to the next. I state categorically, first of all, that the Marshall Plan is incompatible with the fundamental doctrine of multilateralism and non-discrimination, since it seeks by aid, by bilateral, trilateral or quadrilateral arrangements, to build up trading entities which will later proceed and progress towards many-sided trade. Mr. Amery, in his recent book, expresses it in this way: That Europe constitutes a group of nations whose misery is due to want of organisation and can only be cured by mutually agreed co-operation, implies an outlook fundamentally irreconcilable with the whole policy of keeping the world broken up into small non-co-operating units by the rule of non-discrimination. Later he says: Such a plan is stultified from the outset if every arrangement for mutual trade is to be liable to be dislocated by the requirement of price 'non-discrimination,' and if no quantitative restrictions on imports of any kind are possible unless imposed simultaneously by the European nations on each other. The Marshall Plan is, however, perfectly compatible with the building up of European trade and the expansion of Empire trade; but that plan aims at objects which are contrary to those which are so pompously announced in this document and so quickly withdrawn afterwards. The Marshall Plan is contrary to the principles of this document.

I must say, that I suppose no one in this House requires convincing of the supreme importance of developing our Empire trade. I really do believe that it is the key, or the principal key, to our prison. If I may be forgiven for introducing a personal note, I would say that I think I have some right to claim expert knowledge of the subject, because, for nearly 20 years, I devoted my working life to the task of developing the metal resources of the Empire, and played some part—I have no doubt it was a small one—in making us self-sufficient in non-ferrous metals. For example, in the 1914–18 war the copper which we had to buy was paid for in dollars; it was a dollar metal. In the last war, however, as a result of the conscious pursuance of this policy of expansion, copper was a sterling metal, in the main, and paid for in sterling.

I have been concerned myself in the mining and smelting of metal in Australia, in Burma, India, Malaya, and Canada. I think it is just as well to remember that very great developments took place in the Empire and Commonwealth between the wars. But naturally it was the things which could readily find a market which were first developed, and the development was often held back of those colonial products which we found it very hard to market between the wars. Hon. Members will think of the soft fruit industry, and so forth. Do not let us forget that between the wars we added hundreds of millions of pounds of capital resources to the British Empire by a conscious scheme of development.

I do not think that anybody who has visited the principal territories of the British Empire could fail to be impressed by the unrivalled possibilities which they provide of building up particularly the raw materials of the world—and, I must say, quite frankly, at the same time of building up the comfort and prosperity and standards of life of the inhabitants; for these things should never be stated in isolation: they go together. To these unrivalled possibilities must be added another advantage, which is man-made and not natural, and that is, that in developing these resources we have the advantage of carrying on businesses with our countrymen who speak our own language. We have the advantage of having our contracts, our leases and agreements, construed in accordance with British law; and, in a large number of those territories, we express our profits and losses either in sterling or in currencies which are allied to sterling.

Last Thursday or Friday, in the foreign affairs Debate, I think that nearly every quarter of the House gave approval to the idea of forming an economic alliance in Western Europe. But to believe that is largely to reject—not permanently, but for the time being—the main theme of the Geneva Agreements. Not the least important part of that Debate, I thought, was the subject—I think originally discussed by the hon. Lady the Member for Epping (Mrs. Manning)—that the expansion of Empire trade is in no way exclusive or destructive of the expansion of trade in Western Europe, and that they are rather complementary.

I think on this point it is wrong to regard the expansion or greater unity of Western European trade as a merely European affair. Not by chance, but by the march of history, these countries, Holland, Belgium, France, and, if she is included, Portugal happen to be those countries which command almost all the colonial territories of the world, and it is by building up this idea of a Western European trading entity, and by the interchange of colonial trade, that we can see, I think, a way out of our economic difficulties. I can imagine that we could, within quite a short time, look forward to building up an entity by this combination which could live and breathe without gifts and loans and doles from the United States. To build up these entities demands discrimination now. It demands it now. What is the good of a document which says exactly the opposite? It sets up the principle of multilateralism and then knocks it down. What is really required is to set up the principle of preferences now and then to build up a financial equilibrium. Then we can proceed to freer and fuller trade.

So we on this side of the House cannot but view with concern the erosion of Imperial Preferences. One of the necessary methods of developing the resources of the Empire is by the judicious application of Imperial Preferences. The United States have very drastic preferences for some of their overseas affiliations. The Phillipines are an instance. I do not think we should be asked at this time to describe as discriminatory preferences which apply amongst countries bound together by historical or legal or social or ethnographical ties. I do say that too much insistence now upon the distant objective, too much lip-service to what we all know is impracticable in the next few years, will prevent us from doing the thing which can make the wider objective which we see attainable. Never was it truer to say that the best is the enemy of the good, and, today our minds must be concerned chiefly with le sens du, praticable—a policy which is designed upon practical lines, and which is not so firmly fixed on the distant objectives, however agreeable they may be to our eyes.

Having said all this, we on this side of the House no less sincerely wish to see one day many-sided trade the rule and not the exception. We do not believe that restriction in the exchange of goods is the goal at all. We believe that for the time being discrimination must be used, first of all, to adjust the vast differences which exist in the trading accounts of the great nations; and secondly, to build up large areas which one day could live without doles from the United States. While we are taking these immediate measures, we must keep our eyes fixed far ahead and realise that discrimination is the road and not the end towards the fuller and freer trade which, if we can only keep at peace, will bring not only ourselves but the rest of the world back to conditions of abundance and prosperity. I think I have covered the whole of the ground expressed in the Amendment which I will now move.

I beg to move, in line 1, to leave out from "House" to the end of the Question, and to add: while welcoming practicable measures for increasing the volume of international trade, regrets that His Majesty's Government should have placed a limit on Imperial Preferences and urges them not to subscribe prematurely to the principle of non-discrimination: and calls upon His Majesty's Government, whilst participating at the Havana Conference in measures directed towards the expansion of multilateral trade, to follow a realistic policy on the lines of the Marshall Plan and to develop trade both within the Empire and with the countries of Western Europe and their overseas territories, as a first step towards the expansion of international trade.

5.23 p.m.

Mr. M. F. Titteringtan (Bradford, South)

In making one or two observations upon the matter before the House, it will be quite obvious that I propose supporting the Motion moved by my hon. Friend in his very comprehensive and informative speech. I should like to follow the speech of the right hon. Member for Aldershot (Mr. Lyttelton), but I am precluded from doing so by circumstances, together with a sense of fairness to other colleagues who wish to speak in the short time at our disposal. Summarising his observations, it would appear that the right hon. Gentleman looks before and after and pines for what is not. I epitomise his speech in those terms, leaving the rest to my more competent colleagues.

When this matter was mooted some time ago, I was rather struck by the very extensive nature of the matter which came under review, and to refresh my memory I referred to a question put to the President of the Board of Trade on 17th November last, by the hon. Member for the Isle of Wight (Sir P. Macdonald), who asked whether we should be supplied with the minutes of the meetings, conferences, deliberations and negotiations which followed so that we might have before us the evidence upon which the ultimate agreement was likely to be made. I was more than astonished when I read that my right hon. Friend said: I do not know whether the hon. Gentleman is talking about the several hundred meetings we had in this country with the representatives of different industries first, or the several thousand meetings which took place in Geneva in preparation of the Agreement?"—[OFFICIAL REPORT, 17th November, 1947; Vol. 444, c. 826.] I must say, I was staggered by the volume of work, the capacity, patience and infinite resources of those colleagues, who have been called upon to accept responsibilities in these negotiations, which those hundreds and thousands of meetings must have demanded. I make a point of that, because the report before us indicates that it is a statistical monument, both in weight and in survey of the matters under review. It is a very wide-reaching document, and Mr. Speaker has indicated that in order to ventilate the matter thoroughly the whole range of the subject under review forms a legitimate object for our interchange of opinions.

I shall be rather modest in the content of my speech and confine my remarks to observations on one of our major industries. In discussing the Geneva Agreement and its relation to the wool textile industry, it is as well to make one or two general comments to give the background. There has never been any question of the supremacy of the United Kingdom in its fully-manufactured exports, of woollen and worsted tissues and the like, especially in men's wear. The United Kingdom sets the standard for the world, and if there were no tariffs there would be no export problem. Even with the tariffs, our average exports of wool tissues during the years 1934 to 1938 were equal to the combined exports of our principal competitors—France, Germany, Japan, Belgium and Czechoslovakia. During the past 40 years our exports have shown a declining tendency, but that has been due to a reduction in the volume of international trade.

After the 1914–18 war, the growth of the wool textile industries in other countries showed a marked expansion. For example, we practically lost the Australian market; and Italy, from being an importing country, became an exporting country. The Japanese industry showed a marked expansion, and the same phenomenon is showing itself after this second world war—India being a case in point. So far as the export targets are concerned, the wool textile industry has been allotted one of the largest percentage increases, and is of special importance owing to the large proportion sent to hard currency markets. Perhaps the House will forgive me if I read a quotation from the "Board of Trade Journal" of December, 1947, under the heading "Importance of Textiles": You have heard a great deal recently about coal and power, iron and steel and transport, but not enough attention has been paid to the contribution which the textile industries can and must make to our economic recovery. Our economic supremacy in the 19th century was based more than anything else on a high output in the coal and textile industries. If we could produce and export as much coal and textiles today as we were doing before the 1914–18 war, we should be in a very much better position to import food and should have sufficient clothing for ourselves. Our influence for peace would be greatly re-enforced. I think most of us concur in that. At the present time our exports of wool tops—that is, combed wool—are in excess of prewar exports—all these comparisons, of course, being in quantity—despite the lack of normal trade with Germany and other European countries. Exports of yarns are damped down because we must retain sufficient yarn to feed our own looms and knitting machines.

There is a bottleneck in the spinning section, which is only gradually being remedied. Exports of woollen and worsted tissues are about three-fourths of the prewar volume, reckoned on 1938, which was a poor year. Apart altogether from tariffs, the export trade is handicapped by various financial and exchange difficulties. Taking the exports of tops, yarns, tissues and carpets together, in the last quarter of 1946 the exports, on the basis adopted by the Chancellor of the Exchequer for calculating his targets, were 89 per cent. of a poor prewar year. The target for mid-1948 is 146 per cent., and for the end of 1948, 182 per cent. So far as woollen and worsted tissues are concerned, the orders in hand, if they are fully taken up, will reach the target for mid-1948.

One has to look further ahead than present abnormal conditions, however, in assessing the effects of the Geneva Agreement. Of our six best prewar customers for wool piecegoods, two have not signed the Agreement, namely, Denmark and the Argentine. Denmark used to be our best customer per head of population, and far exceeded in importance many vastly greater countries. Her import duties, however, are comparatively light, and will be no obstacle to trade once financial matters have been straightened out. This year, we have sent to Denmark only about one-half the prewar exports of woollen and worsted tissues.

Exports to the Argentine are also affected by financial difficulties and are only a fraction of the prewar exports. Before the war, the Argentine was bracketed with Canada as our best customer of worsted tissues. Taking woollens and worsted together, Canada was our best prewar customer. At present, our exports to that country are not far below the prewar level. The reductions in tariffs in the Geneva Agreement are comparatively slight, and it is doubtful whether they will have any appreciable effect. To put it in another way, other factors will be of more importance than the reduction in tariffs. On the principle category of wool tissues, the prewar duty was 22½ per cent. ad valorem, plus 12 cents per lb.; the Geneva duty is zo per cent. ad valorem, plus 12 cents, per lb.

With regard to South Africa, there is no change in the tariff, but as it is only 5 per cent., there is no problem. Exports to South Africa are already nearly double the prewar figure. Our exports to New Zealand are about one half the prewar exports. The Geneva Agreement does not vary the tariffs, because they are reasonable—20 per cent. on the main items. There is a useful reduction in Australian duties, from 9d. per square yard, plus 20 per cent. ad valorem, to 6d. per square yard, plus 17½ per cent. ad valorem. When conditions become more normal, this should help us to regain partially a market which has been largely killed, but at present the Australian domestic manufacturer gets a subsidy on his wool purchases which is of considerable importance. It amounts to over 10d. per lb. of wool bought.

As a hard-currency market, the United States is of great importance. She was our fifth best customer for woollens before the war, and the sixth or seventh for worsteds. There would be an almost limitless market but for her very heavy tariffs. The import duty on raw wool has been reduced by 25 per cent. under the Geneva Agreement. In addition to carrying forward this reduction to the tariffs on manufactured goods, there has been a further lowering. In the main category, the new rates are 37½ cents per lb., plus 25 per cent. ad valorem, against 50 cents per lb. and 35 to 40 per cent. ad valorem. This is a very acceptable reduction which should stimulate trade. It should be remembered, however, that the lowered duty is still very substantial, and that there is a proviso which allows the United States to increase the ad valorem duty to 45 per cent. on any fabrics which exceed by weight 5 per cent. of the average domestic production. While this leaves room for approximately a doubling of present exports, it sets an upper limit on expansion. At present, our exports are about the same as before the war. Some importers in the United States are expecting that the quantity of British wool piece-goods imported in 1948, will be double the quantity imported in 1947.

In this connection, a most valuable report on the United States market has been issued by the British Wool Textile Mission, headed by Mr. Munro, which has recently returned from the States. This gives some extremely useful information and guidance to the British exporter. I need only quote two sentences: British woollen and worsted cloth receives nationwide acknowledgement from both sexes and all classes of society as the world's best—and this in a country which enthuses in superlatives. This reputation has been achieved, not by advertising, but by sheer merit and honest trading, and is the sheet-anchor of our trade in the United States. One may sum up the position by saying that whilst the Geneva Agreement is welcome as a move in the right direction, it is not likely to be of great benefit to the export trade in wool textiles. One must be thankful for small mercies, however, and for that reason the Geneva Agreement is a Godsend. Between the two wars, the industry was more concerned about resisting increases in tariffs, and the turn in the tide is significant. The important point is that though the benefits are not substantial, the trade has been presented with reductions in tariffs, whereas its prewar problem was to prevent increases in tariffs.

The general statement which was given today covered a wide field of endeavour and achievement, together with a declaraticn of aims and intentions. The immediate practical issue is to keep the maximum amount of international trade going. The whole commercial position of this country over the last 150 years has been built up on the supposition that trade would be multilateral and that we should not have to bother whether our trade with each country exactly balanced. If we cannot re-establish that position in the long run, the outlook for us is very serious. We hope to establish a completely multilateral system.

Mr. Boothby

Can the hon. Member say how he expects to conduct that multilateral trade with the Soviet Union?

Mr. Titterington

The hon. Member has asked a very far-reaching question, and it is open to him to make his contribution to the Debate. So far as I am concerned, there is no barrier of race or clime to the textile trade. The textile trade does not carry with it any warlike activity and it is not contrary to international relationships. I am talking in Yorkshire phraseology. Had time, opportunity and courtesy permitted me to range round the subject already intimated in my hon. Friend's speech, no one would have been more delighted than I to have taken the opportunity. But I have regard to the fact that other hon. Members have to make their observations on other aspects of the Geneva Agreement.

May I finish on an idealistic note? We are now striving to resume cross-fertilisation of cultures and civilisation that man's achievements represent over the raw materials of nature, over social forces and over technical and scientific obstacles. The strivings of those who are responsible for the Geneva Agreement must be approved, and, in the symbolism associated with Geneva, I hope that it will be an action to heal the wounds of a war-stricken world.

5.41 p.m.

Mr. Odey (Howdenshire)

In the 1601 Parliament, it is recorded, one, Zachariah Locke, rose to speak and for very fear stood still, and after a time sat down. While I fully share Zachariah Locke's apprehension, I will do my best, with the kind encouragement which this House always gives to those endeavouring to make a maiden speech, to avoid following his example, at least not before I have made a few remarks on this Motion.

As a subject for my maiden speech, I naturally looked for some matter upon which I had some slight knowledge. I selected the Geneva Agreement because in 1944, I happened to be one of the representatives of the British National Committee of the International Chamber of Commerce. The hon. Member for Edgbaston (Sir P. Bennett) was also a representative, and we attended the International Business Conference in Rye in the State of New York. This was not a Government conference, but was sponsored by various leading trade organisations in the United States. So far as the other countries which came from overseas—and there were 52 of them represented at the conference—were concerned, most of their representatives were selected by the International Chamber of Commerce. Although it was not a Government Conference, it was quite certain that the United States Government took a very keen interest in its deliberations. It is fair to say that most of the subsequent negotiations that have led up to the Geneva Conference have been influenced by the discussions that took place at Rye.

I mention this because it was already apparent at that conference that among informed American opinion there was a growing realisation in the United States that trade is a two-way traffic, and that, if the United States was to embark upon a great postwar expansion of its export trade, it would be necessary, if American exports were to be paid for, that imports into the United States should be stepped up, and that the easiest method of achieving this object was for the United States to agree to a general lowering of their tariffs. The American business man, who has a very great influence with the United States Government, is not unnaturally given to seek for any concession a quid pro quo. In return, therefore, for a reduction in the United States tariffs, many of which were very high, the United States Government pressed for two things. One was that other countries should agree to make a simultaneous reduction in tariffs, not necessarily pro rata, but, nevertheless, in a general downward direction; and the second was—and this is the important point so far as we are concerned—that the British in particular should be asked to agree to a reduction in Imperial Preference.

In 1944, we could not foresee how immeasurably worse our economic position would become in 1948. We knew that the whole question of our balance of payments would be very acute when the war was over, but we could not foresee that the hon. Members opposite would be sitting where they are today, nor could we foresee that the energies and the whole attention of His Majesty's Government during the vital two years immediately after the war, would be almost entirely devoted to schemes for nationalisation, while the economic position of our country steadily deteriorated. The point therefore, which puzzles hon. Members on this side of the House is that this insistance by our American friends on a reduction in Imperial Preference has come at a time when, owing to our economic difficulties, it may well be desirable both from our own and, indeed, from the United States point of view, not to reduce, but actually to increase Imperial Preference. We must remind our American friends that they have in the United States the largest and most highly-protected trading area on the face of the earth, and it is the very essence of a satisfactory system of multilateral trade that the nations participating in that trade should have recovered their economic strength, so that there will be general confidence in trading conditions and in the ability of each and every one of these countries, to pay for the goods which they buy. The whole point is that at the present time there is no such confidence.

The first requisite is that we should build up in the British Commonwealth, and, indeed, in the whole of the sterling area, a trading area which has at its command sufficient natural resources to enable us to trade with the United States on reasonably level terms. The Foreign Secretary in one of those flashes of inspiration which come to great men has suggested a customs union for the Commonwealth. It is a suggestion that might very naturally come to anyone approaching a problem of this kind with an entirely fresh mind. Those who have watched the Dominions nurse their secondary industries behind high tariff walls over a number of years will know full well that such a plan is impracticable, or at any rate, unacceptable. The only instrument that we have to achieve our purpose in this matter is Imperial Preference, and the great objection to the Geneva Agreement is that by committing ourselves to a policy of reducing Imperial Preference, we are weakening one of the chief means lying to our hand by which we may achieve our economic recovery.

If I might make one final point, it is this. In the 19th century—and as a dutiful back bencher on this occasion I might repeat some of the arguments which my right hon. Friend the Member for Aldershot (Mr. Lyttelton) has already made, and I am sure the House will bear with me as I do so we led the world in international trade. We were, and indeed still are, the world's largest importers. In spite of that, in the 19th century we had a large favourable balance of trade. We spent that favourable balance by exporting our capital which we used to develop and fructify every country in the world where our trade penetrated.

Today it is the United States which has the largest favourable trade balance that any country has ever had. The United States are not large importers, and with their great natural resources and their great productive capacity, it is difficult to see that they ever will be. In consequence, we shall never arrive at a condition satisfactory for multilateral trade until the way has been made clear for the private American investor to invest his capital overseas. At present there is practically nowhere where he can invest his money with any confidence. Until that day dawns when capital can once again flow freely, Members on this side of the House will cling to Imperial Preference which has served us so well in the past, and pursue bilateral agreements which, while more limited in scope, are nevertheless more productive of immediate results and more in line with the realities of our present position.

May I thank the House for their kind indulgence to one who is not only new to this House but, indeed, new to politics? I trust the House will forgive my intrusion into the Debate on this weighty subject, which might better have been left to the experts, but it does enable me to dispose of my maiden speech. I can now follow Zachariah Locke's example with some relief and sit down.

5.51 p.m.

Mr. Ronald Mackay (Hull, North-West)

It falls to my lot, and a very pleasurable one it is, to offer my congratulations to the hon. Member for Howdenshire (Mr. Odey) for the very excellent maiden speech we have just heard. I am sure I express the views of everyone in this House when I say we look forward to listening to him on many other occasions because of his experience, for we know that it will be well worth while listening to what he has to say. My pleasure is added to by the fact that he happens to represent a constituency which adjoins my own, and that I went to the utmost trouble to make certain that he was not returned. However, Howdenshire and certain parts of Yorkshire saw to it that our efforts were not successful, and I am glad to have the opportunity of being here to hear the hon. Member's maiden speech.

Having said those few congratulatory remarks, I should like to offer my congratulations to the Secretary for Overseas Trade, because of the way in which he has dealt with the document which we are considering this afternoon. Having said that, I want to follow the example of the right hon. Member for Aldershot (Mr. Lyttelton) and try to raise the issue which we have to consider into a much wider sphere. I hope by the time I have finished I will have convinced hon. Members on this side of the House that the Government should think again and withdraw this Motion. I say that not altogether for the reasons which are actuating hon. Members opposite, but for reasons which I am going to put fonvard in a moment. I hope the Government will reconsider the position in the light of some of the things that have been said recently, and will realise how contradictory their whole policy on this subject is.

The Motion stands on the Order Paper in the names of the Foreign Secretary and the Chancellor of the Exchequer, and they should be here because this is the most serious Debate that this House could have. It is ridiculous to spend two days debating foreign affairs and a short time on the equally important international economic foreign policy of this country without which nothing that was said last Thursday and Friday could ever be implemented. I feel very strongly on this matter, because there was never such a serious economic period as the present. We are losing probably £10 million worth of gold a week and the economic position of this country is tied up with the whole issues raised in this Motion. That economic position is a serious one and one which we cannot get through with the measures that the Government are suggesting at the present time.

I want, for reasons which I am going to put shortly, to ask the Government to reconsider their whole position in this matter. It is sheer hypocrisy for Members on the Front Bench—and I wish the senior Members were there because they are the people whom I wish to indict—to say that we are going to get out of our troubles with a successful export drive, when everyone knows that the export drive cannot succeed to the degree or extent necessary to balance the gap or even put us on a proper way to recovery. It is on those lines that I ask the House to reconsider this matter. We were told in the old days by Bacon—the great Bacon as F. E. Smith would have said—that the trouble with politicians and statesmen is in their minds, in that their minds are so full of contradictions. Here we have a Government which on Thursday and Friday of last week asked us to think in terms of a Western Union and on the following Thursday asks us to ratify an agreement which destroys the whole basis of a Western Union and the conception on which their foreign policy is to be based.

I want to raise other matters in this Debate. I am sorry I cannot continue to please my Friends opposite because one of the illusions that they must face is the colossal illusion of Imperial Preference. I am not arguing—and I hope hon. Gentlemen opposite will not think of trying to argue—against increased Empire trade, for the more trade we get with the countries in the Dominions the better. Is it not time we looked at the facts and realised, in the first place, that more than half of Britain's investments are in countries outside the Empire and that more than half of our trade goes outside the Empire and has done for the last 30 years? It is ridiculous to go on arguing that by Imperial Preference we will increase the production or the productivity of the world.

I know hon. Gentlemen opposite will tell us of the great things which have come to Britain and the Empire since the Ottawa Agreement. I ask them sincerely to face the issue, because unless we get down to the realities of the fundamental economic problems comprised in Empire trade, we will not make an adequate contribution to the solution of the problem. Professor Hancock, in a three-volume study of Empire and Commonwealth trade, has spent about 400 pages analysing the development of British trade as a result of the Ottawa Imperial Preference Agreement, and in doing so he has made it crystal clear that the Ottawa Agreement had no effect in increasing the trade of the world or in providing greater trade even for Great Britain. I will just mention one or two facts and then pass on, because the subject is so big that a lot has to be said—

Vice-Admiral Taylor

Surely the hon. Gentleman will agree that in the six years after we adopted the policy of Imperial Preference in the Ottawa Agreement, unemployment in this country went down by 1,500,000? Therefore, it is incorrect for the hon. Member to say that Imperial Preference did not increase the trade of this country, for only by increasing the trade could we have had a reduction in unemployment.

Mr. Mackay

I appreciate the question, but I would ask the hon. and gallant Gentleman and other hon. Members to listen to the reply. It is true that trade went up after 1931, but the trade of the world went up at a higher rate. The trade of this country did not go up as a result of Ottawa at such a high rate as world trade. Therefore it cannot be argued on that fact alone—[HON. MEMBERS: "Look at the figures."] Hon. Gentlemen should bear these facts in mind. If they take the trade figures from 1929 onwards, they will see that the rate of increase in Britain's trade and the Empire trade was greater prior to Ottawa than afterwards. The rise had already started. Hon. Gentlemen opposite shake their heads, but if they look at the facts they will see that the greatest increases after Ottawa were in the non-preference items.

I have taken the trouble to go through the whole of the Ottawa schedules with the different countries of the world. We may write a letter to "The Times" and set out the figures of Empire trade and of Great Britain in relation to the Dominions after Ottawa, but if we add the trade of the Empire together, which no one does, we see that Britain lost in trade in the years following the Agreement. British Scandinavian trade increased. Australian trade with Japan increased. Whereas in the depression years she took a large number of the cheaper, in the monetary sense, and smaller horse-powered motorcars from this country, when Australia was rising out of the depression she took the American cars. Hon. Gentlemen should consider the problem of Canada. Does anyone suggest that Imperial Preference will get any more trade with Canada? Canada gets 70 per cent. of her imports from the United States. Let us take 1938 as against 1937. The trade of Great Britain with Canada went down 20 per cent. and has been going down since the war. Why must we go on with this illusion? One understands patriotic motives. Words have certain connotations which people are apt to accept without thinking about them, and we go on talking about Empire trade without analysing the position. If hon. Gentlemen look at the Australian and New Zealand positions and see the growth of industrialisation there, they will see no future for the economic position of this country in terms of Imperial Preference.

The second factor I must deal with, because it is becoming so much talked about, is the problem of the two-way traffic bilateral agreements. Many people think we can solve our problems by bilateral agreements with other countries. I will not deny that if we can make arrangements with the Russians on the lines that we are doing, that is so much the better—one does not deny that for one moment—but if hon. Gentlemen will look at the figures, they will see that if we were to go through with bilateral trade to its logical conclusion, which means to 60 or 70 per cent. of our trade, we should lose two-fifths of our trade. Mr. McDougall went into the position in the "Economic Journal" some months ago, taking the figures for 1930. He had two tables. He showed what our trade was with the countries with whom we had favourable balances and with the countries with which we had unfavourable balances. He came to the conclusion that £250 million of our trade in that year depended on multilateral trade, the whole of which we must lose. I do not deny that if we go in for bilateral agreements some trade will be increased—that is true—but it is the conception I want to get at.

I now come to the third factor. I will not read the document, but it asks this country to go back to multilateral trade. I ask the President of the Board of Trade to tell us whether he really thinks multilateral trade can ever be a success again in the 20th century. The Government have one foot in the 19th century and one in the 20th century if they think multilateral trade will ever be a success again. It will not be a success because the trading conditions have so enormously changed. We had that from the hon. Member for Howdenshire in his maiden speech. America has two-thirds of the manufactures and three-quarters of the investment of the world. We have been speaking this afternoon about the fact that we are losing trade in other parts of the world.

In the days when we were a country with a surplus of exports over imports, we were able to invest abroad to an extent to which the United States is unable and unwilling to do it today. If we compare the British position in 1914 with the American position in 1948, we find that the British export trade was greater than British savings, but today American savings are infinitely greater than her exports. The American economy is in competition with ours. With her enormous production, she is in a position to compete with us in a degree to which we can never stand up in the future. The facts are that if we put both our imports and our exports at 100 before the first world war in 1913, then by 1939 our imports are 125 and our exports 62. The reason is the growth of industrialisation in other parts of the world.

The hon. Member for Ipswich (Mr. Stokes), who is unable to take part in the Debate, gave me some figures which I will quote because they are so terribly interesting at this time. He has taken the trouble to write to a lot of agencies in 50 countries of the world. He grouped the different kinds of goods this country could sell in those places, and asked them to say whether the market was good or bad for those goods. In the field of capital goods, particularly machinery, engineering equipment and rolling stock, which is obviously a field where we would expect things to be fairly good, we found the market closed in one place and quite all right in 34. In the field of coal the market is good, but we shall probably not be able to get the coal in sufficient quantities. In motorcars, 20 countries closed down on us. Only the other day I saw a Standard motorcar with left-hand drive. I made inquiries and was told that it was one of the cars which had gone to the docks for export, but the country which had ordered it did not now want it and therefore it had come back to the home market, which in one way is a good thing. In the case of the cheap ordinary consumption goods, in most of the countries to which the inquiry was directed it was found that there was no market or that the market was hardening. That is the problem we have to face.

Hon. Gentlemen have been discussing the question from the angle of international trade. I wish they would split it into its proper components. Does the President of the Board of Trade really consider that we have any reason to think that in the next 10 or 15 years world trade in manufactures will increase? The whole tendency of the 20 years before the war was to decrease. The figures are clear. Between 1900 and 1939 the production of manufactures in the world went up 100 per cent. and the trade in them went down. It was built up in the most industrial countries of the world, America, Britain, Holland, Belgium, Switzerland and Sweden. The trade went down 20 per cent. These are the facts. Obviously the trade in food and raw materials will go up, but, with the development of industrialisation, the trade in manufactures will not.

It is useless to come along with a bagatelle of a document like this and say that we will snip off something here and something there in trade and to think that that will reorganise industry, international trade, or the economic position of this great country. If we look at the figures, it is quite obvious that the amount of subject matter involved is very small both in America and here. I ask the Government really to reconsider this matter. We are living in a changing world. In the nineteenth century trade flowed because Britain ran the world. She ran the world with money, with police, with goods, and because there was free movement of population, without which we cannot trade, with all those things she was able always to see that the countries who wanted to buy from her had the money with which to pay. We did not realise in those days that if we equipped all the countries of the world with capital goods and other things, the time would come when they would want to make their own and not bother about us. Nor did we realise, which is much more important in many ways, that as time went on, this position must inevitably change.

That is the position with which we are confronted today. It is interesting to note that the term "balance of pay- merits" does not appear in economic literature prior to 1914. It is not there for the reason that there was never a problem, because there was one monetary system for the world. That has broken down. I do not think any serious economist today will suggest that America can take the part Britain played, partly because of her enormous size, strength, power and productivity. It is not a question of making a lot of countries trade with themselves, one being perhaps the senior or a bit bigger than the others. America is a Colossus but, for reasons I have given before, cannot take this part.

Therefore, we are in a completely changing world in which multilateral trade, bilateral trade, Imperial Preference, tariff bargains and tariff agreements have no part whatsoever, and it is about time that the Government woke up quite seriously and gave up this complete hypocrisy and humbug of trying to base their economic international policy on a series of ideas and doctrines that are completely out of date. We want to increase international trade, we want to lower trade barriers, but there is only one way to do it in the twentieth century, and that is by extending the area in which we trade because it is a century of mass production and large areas of trade. The future for us is in Europe, but it is with the British Commonwealth and the Empire too. Yet this afternoon it has been said, "If you would only develop Empire trade and raw materials, you could solve Britain's problem." Yet the Colonial countries do not provide more than 2½ per cent. of the raw materials of the world.

Europe is the biggest trading area in the world. In the five years before the war, out of a world trade of 10 billion dollars, Europe provided seven billion dollars in manufactures. If you list the raw materials of Western Europe, of the 16 countries plus Western Germany which came to Paris, and compare them with those of the United States of America, in the main Western Europe plus the British Commonwealth has as great resources in raw materials as has the United States of America. However, she has not got the markets of the United States because there are 17 barriers; she has not got mass production because there are 17 different countries. International Harvester came over the other day to establish factories, one in the Berlin area, one in France and one in Britain, when one factory would have reduced considerably the cost of production.

So I ask the Government in all earnestness to reconsider the economic policy indicated in this Motion. I ask them to realise that Britain's changing position in the 20th century, of which the war is only a part factor, means that we must adopt an entirely different economic policy, that the principles on which 20th century economics will be determined are mass production and standardisation in large areas of trade. Everything said last Thursday and Friday is sheer empty rhetoric unless specific attempts are made to bring the nations of Western Europe together, not only into a customs union but into a real federation. When will we learn that economic problems and conditions as they exist now require different political forms? When you go to your tailor because your suit does not fit, he does not say, "You are too fat for your suit, you must cut your body down." You say, "Please cut the suit." In the same way we have to change our political organisation. The old conception of the sovereign state has gone. That conception is as dead as the dodo, as is the policy contained in this Motion. That has gone for good, and I suggest that we tackle national sovereignty properly.

The right hon. Member for Warwick and Leamington (Mr. Eden) said the other day that he welcomed everything the Foreign Secretary had said because he had advocated it ever since M. Briand put it forward. The Lord help us if that happens. M. Briand's memorandum, if the right hon. Member will refresh his memory of it, excluded customs unions to start with because that would be in conflict with the principles of the League of Nations. It went further and said that in no conditions must there be any interference with the political sovereignty of any country. It is tragic if, in times like these, after two world wars, we find that the Government have not learned the lessons that those two wars should have taught us. It is tragic if we have to continue trying to live with economic institutions such as this Motion provides for, which are completely out of date. It is tragic if, after all the suffering that has taken place, and after all the magnificent rhetoric we heard during the war about the things for which we were fighting, we cannot get our minds clear enough to analyse the economic problems with which we are confronted in the 20th century and take drastic and urgent steps to solve them.

I implore the Government to reconsider this matter. It is just not good enough to go on with these out-of-date ideas. People in this country who support the Labour Party will not support the Geneva Agreement as being the best this Government can do. The Government have shown great imagination in India and Burma and elsewhere, but in this respect we are suffering from an enormous hangover from the Coalition Government, a hangover in which, because of the articles in the Lend-Lease agreement, there has not been sufficient consideration of the economic factors determining the 20th century. It is idle to talk of Western union if it means the Briand plan. It is equally idle to talk of a United Europe if it means a getting together with peoples within the United Nations but not really tackling the problem of sovereignty and not building up a federation of Western Europe in a proper way. It is completely contradictory to come down to the House and say that now we are going into a Western Union, and at the same time say that we are continuing the ideas of multilateral trade and so on.

At the present time we have a Minister going over to Washington to take part in the United Nations talks. An hon. Member on this side of the House earlier today paid tribute to the amount of time spent in preparing the Agreement which we are discussing today. I wish the time of these gentlemen was being better spent. The times are too serious. The likelihood that within the next three or four months this country may be facing external bankruptcy is far too serious for us to have Ministers trotting off to the United Nations Organisation, which is quite out of date, as shown in the International Fund and Bretton Woods schemes.

We have to take much more drastic steps. We have to get our minds much clearer in order to build a trading area within which we can live. The trading area which I commend to the Government is a real attempt at a federation of Western Europe. Let the Foreign Sec- retary show the imagination he showed when Mr. Marshall made his offer in the first place. Let him recall the Paris Conference, with a specific proposal for a federation of Western Europe, giving them power over customs and currency, external affairs and industrial matters. We would not have had the terrible episodes of last week-end if only this Government had given the lead to the countries of Europe to come together and form a currency for Western Europe. However, we shall not get that, unless we have a common Government. That is the lesson Washington taught the Americans at the time of the American War of Cession, the lesson which any student of political science knows.

The suggestion I want to make in all seriousness—at a time when our economic problems are what our military ones were at Dunkirk, at a time when every Cabinet Minister must be worried about the balance of payments and the dripping away of gold, and the sure knowledge which must be common to all of us, that this cannot go on beyond two or three months—is that we take steps at once to get a political federation of Western Europe in which we can plan the resources of that great continent. The Marshall Plan can tide us over for about three years provided we plan and organise the resources of Western Europe. By doing that in a federation of Western Europe, and not by a bauble of the kind given us today, this country will show the way to prosperity.

6.20 p.m.

Mr. Boothby (Aberdeen and Kincardine, Eastern)

The House has listened to what all will agree has been a very brilliant speech, very brilliantly delivered. I agree with some parts of it; but, as the hon. Member for North-West Hull (Mr. R. Mackay) will anticipate, not with others. He said that the Government were suffering from a hangover from the Coalition Government. I think they are suffering from a hangover from Lord Snowden much more than the Coalition Government, and from the mediaeval nonconformist, Liberal tradition, which has done us such unlimited harm in the past; and, if they do not slough it off, will do us such unlimited harm in the future.

I do not know who wrote the long, and to my mind ridiculous, rigmarole which the Secretary for Overseas Trade read out at the beginning of this Debate. But, I will do him the credit of saying that I think he could have had little part in it, as he is much too intelligent for that. As an old Parliamentary hand, I may perhaps be allowed to give him the tip to tell the boys not to pull that one over him again. It is not good enough. He must do better next time; and be much shorter. I felt very sorry for him at the end of his speech, because I began to realise that he was himself realising how boring it was; and I do not think that, towards the end, he believed a word of it himself. We all wish him well and I hope he will not allow anything of that kind to happen in the future.

I wish to say a sentence or two about the Geneva Trade Agreements, which we are by way of discussing although the hon. Member for North-West Hull did not refer to them at all. I do not blame him for that, because they are a very dull affair and he made a much more interesting speech. The concessions involved do not amount to very much, 60-odd millions on our imports, and 40-odd millions on our exports, in both cases less than 10 per cent. of the total trade before the war. The total gain to us on the dollar-earning concessions cannot conceivably amount to more than a fortnight's dollar deficit, at the present rate; an estimate which is confirmed by all economists. It is on the whole very small beer. The implications of the Agreements worry me much more than the actual concessions which have either been given or obtained. The Secretary for Overseas Trade gave the impression in his speech that they were designed to maintain full employment in the various countries. On the contrary, it is rather significant that this full employment business in the general agreement is nowhere mentioned in these Geneva Tariff Agreements. The House should be aware of that.

However, there are certain things which are very definitely mentioned. First of all long-term reciprocal trade agreements are definitely ruled out. We are only allowed to make short-term agreements, subject to review every year. Secondly, preferential arrangements of every sort and kind are ruled out. We can, of course, have a total Customs Union; but where are we going to get a complete and total Customs Union in the next 10 years anywhere in the world? The only way of ultimately getting a complete and total Customs Union is by preferential arrangements in the first stage; because no national economy could make all the necessary adjustments in a short time. Therefore, the only method of approach to total Customs Unions is preferential arrangements. Finally, and in this I agree with the hon. Member for North-West Hull, all regional trade agreements are absolutely ruled out; and that is the most disastrous and tragic feature of the whole business.

One or two things have not been outlawed by these Agreements. Discrimination in favour of primary products has not been outlawed; and neither have general subsidies nor tied loans been outlawed. Some of us, I think, can hazard a guess why they have not been outlawed; but do not let us be under any illusion, all these things will aggravate, rather than tend to remove, the existing disequilibrium between the new world and the old. Accompanied by the Bretton Woods ban on rciprocal payments agreements, which would automatically have provided the finance for international trade, these Geneva agreements prevent, absolutely, any attempt to establish the trading areas, which the hon. Member for North-West Hull so ardently desires, capable of development on the basis of long-term plans. I challenge the hon. Member to deny that.

This Geneva Agreement absolutely rules out the creation and development of trading areas of any kind. Anyone who wants a trading area had better not vote for them, but join us in the Lobby tonight. I hope the Labour Party will, for once, be honest in its own beliefs. All possibility of increasing our exports by the mutual exchange of goods with a group of nations in a given area has been rendered impossible; and I defy anyone, including the President of the Board of Trade, to deny that fact. Thus the appalling disequilibrium between the new world and the old has, for the time being, been perpetuated.

This Geneva Agreement is another faltering step along the road back to the international anarchy of the 19th century, which we first took at Bretton Woods, and along which we have been remorselessly driven ever since by the stick of poverty, and the carrot of dollars. That is the road on which this Government has been driven. I cannot say that they have led us along it, because they have not led us anywhere. It is called multilateralism; but is in fact, and was intended to be, the establishment of absolute economic domination by the United States of America in the trading areas of the British Empire and of Western Europe. Once again we have abandoned the substance of planned reciprocal trade in terms of goods for the shadow of free multilateral trade in terms of dollars.

Mr. Warbey (Luton)

If the hon. Member is opposed to multilateralism, why is he supporting the Opposition Amendment in favour of it?

Mr. Boothby

If the hon. Member for Luton (Mr. Warbey) will allow me to develop my argument, he will see what I am getting at. If anyone doubts it, let him look at what Mr. Clayton said in March, 1946: Britain will withdraw from Bretton Woods if she does not get the Loan. She will then expand her agreements all round the world. If I were sitting in that position of power in Britain, that is exactly what I should do. The other day Mr. Clayton said he now saw not only an all-round reduction, but the total elimination and abandonment of the whole Imperial Preference system, quite soon. The hon. Member for North-West Hull does not believe in Imperial Preference very much, although he was good enough to include the Empire in the trading area he had in mind. I do not agree with him; and will not go into the facts and figures he quoted, because I think he distorted them.

I want now to address an argument to hon. Members opposite, quite a serious argument. Apparanetly they are reluctant to face up to the fact that the economic conditions which gave rise to the existing nation-states of Europe, including Great Britain, have gone for ever. The era of cheap food, dear manufactures, empty spaces and free migration, is over; and, as the hon. Member truly say the era of mass production and large economic units has arrived. We cannot escape from that fact. Year by year the volume of our imports has steadily overtaken the volume of our exports. That process is still going on. It is a terrifying process, unless some very drastic steps are taken to alter it. We used to produce 30 per cent. of the world's manufactures, but we produce today only a tenth. We used to have two-fifths of the world's trade in manufactured goods, and today we have less than one-fifth. Our industries, by and large, are obsolescent; largely the fault of the war, but not entirely, because in any event we are no longer, in isolation, an effective economic unit in the modern world. That is what both sides of the House have to face up to. We are not an effective economic unit in a world which demands large economic units.

Finally, and this is another matter to which we are reluctant to face up, we are no longer a creditor, but a debtor nation. It is rough, if one has been not only a creditor nation but a very rich one for a couple of centuries, to wake up one morning and find that one is "bust." We have not yet adjusted ourselves to that fact. The truth is that we are, at the moment, a wholly artificial economic community created by circumstances which no longer exist. To a greater or lesser degree that goes for every other nation in Western Europe. The President of the Board of Trade and other hon. Members know as well as I do that neither Britain nor France, Belgium, Holland, Portugal and Norway can hope to stand up in isolation and compete on level terms in free world markets with the modernized mass production of the United States of America.

Three alternatives confront this country today, and the President of the Board of Trade must face up to this issue: Either a gradual economic strangulation brought about by the enormous disequilibrium between the new world and the old, with blocked currencies, passports, visas, tariff restrictions and the rest of it; or, secondly, the absorption of Continental Europe into the suffocating totalitarian unity of the Communist closed economy; or, thirdly, as the hon. Member for North-West Hull said, the creation in Western Europe and the Colonial Dependencies of Western Europe, a trading area large enough to enable us all to breathe and live in the modern world. There are the three alternatives which, in the next 10 years, confront this country. There are no others. I want the last. I am the first to admit that it involves the planning of production and trade; but I say also that it involves discrimination; and I suggest that hon. Gentlemen opposite have to face up to that.

Some intellectual Socialists have yet to discover a valid intellectual basis for their present position, and for the things they say and do. The party opposite and the Government have gone far to abolish competition in this country; and they proclaim every day that they want to go much further down that road. They have also greatly increased, to a large extent by the nationalisation of industry, the rigidity of the wage structure in this country, because in these great nationalised industries wages are decided not by the pull of the market, the urge to profit on the one hand and fear of bankruptcy on the other, and the power of organised labour, as they used to be. There is no limit to the wages that can now be paid to the workers in the nationalised industries except the total ruin and bankruptcy of the country as a whole. In these circumstances, we are bound to have a much more rigid wage structure than under the old competitive system of free enterprise.

But in order to get dollars at any cost, and spend them as quickly as possible on "tobacco for the boys," the Government have deliberately tied the British national economy to the greatest deliberately unplanned economy in the world; and have subjected this country to the brutal test and fearful rigours of ruthless competitive international trade. At the same time as they have been abolishing the competitive system inside this country and tying up the wage structure, they have flung us into the icy seas of ruthless, competitive, international trade; and, in spite of the warnings some of us gave, for a brief and embarrassing moment, of free convertibility—but that did not last long.

I ask hon. Members opposite, and on this side of the House, too, to face up to the rather unpalatable fact that this country is no longer competitive in free markets in the world of today. They have helped to make it so. Yet in this vital field of international trade, of all others, they have taken us back to the price system which at home they condemn so much. We have to produce cheaply or starve. That is the policy and the philosophy to which, In their desperate search for dollars, they have committed us. I say it is absolute insanity—I have said it before. I saw that "The Times" this morning, in a leading article, quoted with approval a sentence from a pamphlet called "Design for Recovery"; Empire trade will depend on Britain making the goods which the Empire wants at a price which the Empire is prepared to pay. Naturally, my friends who are responsible for that pamphlet would not expect me to agree altogether with them on that point. I cannot help quoting, in answer, from a Socialist newspaper, the editor of which I see sitting opposite me. It is called "Tribune." A little time ago, "Tribune" said: This is the Gradgrind philosophy, which recognises no bonds between men beyond the 'cash nexus,' with its all-exclusive morality of 'buy in the cheapest and sell in the dearest market.' A philosophy which aims at a business system without friendship, loyalties, or any common purpose—a system in which money power counts and nothing else. On this issue, I am on the side of "Tribune." But are hon. Gentlemen opposite? Are the Government? One would not think so from the way they are carrying on at the present time. Take G. D. H. Cole, quite an intelligent chap, who is a great friend of hon. Members opposite. He said the other day: It is impracticable to plan for really cheap production under modern conditions except on the foundation of a home market much larger than single European States can command. I think he is right. The need is for unified planning, over the widest possible supra-national area, both of production and of exchanges between the combined industrial area and the countries which are mainly primary producers. … Trade, as well as the planning of production, will have to be organized trade. What does the Geneva Tariff Agreement do to organise trade? Finally, I quote the hon. Member for North-West Hull himself. Does he remember this? The ideas of multilateral trade belong to the nineteenth century. The ideas of bilateral trade belong to the autarchy between the two wars. What we have got to do is to find and organize a large enough trading area within which we can live. I anticipate his speeches before he makes them, by reading what he writes—and he writes in a number of papers. That is a compliment. I study the minds of hon. Members opposite—so far as it is possible. I never find that the things that they think are easily translated into action.

I suggest to them that, if they really believe what they write and say, they cannot go on paying lip service to this ideal of free multilateral trade in the twentieth century. It is hypocritical humbug, and profound intellectual dishonesty. It is also crazy to preach that, at the very moment when the United States are at last beginning to realise the kind of world in which we live—and which they will have to lead—just at the moment when all this is dawning upon them. It is most significant that the Marshall Plan comes forward without any conditions attached. That is highly encouraging. Yet hon. Members opposite go on paying this lip service to these ridiculous and antediluvian ideas. The Chancellor of the Exchequer went so far as to say, the other day, that our first and most important objective in 1948 is "to earn more dollars." I say to the Chancellor that the first and most important objective for 1948 is for this island to produce more food, more coal and more steel; to bring our industries, which are obsolete, up to date; and to free ourselves from abject and permanent economic bondage to the United States, by developing the limitless resources of our Colonial Empire, and by expanding reciprocal trade both with the Dominions and with Western Europe.

To sum up. So long as any major currency like dollars remains in short supply the adoption and application of non-discrimination by other countries must involve a contraction in the total volume of international trade, and aggravate the grave disequilibrium between the New and the Old Worlds. That is what is now happening; and, as a result of the agreement we are discussing tonight, will continue to happen. The continuing pressure of the over-balanced American export surplus must force the industrial exporting countries outside the United States either into competitive deflation, or competitive devaluation, or both. That has already begun. It started in Paris the other day. It is the inevitable result of Bretton Woods, the Loan Agreement, and the Geneva Agreement which we have just signed. Do not blame the French. They are practical realists. They know they have got to do this to save their economy. If they kick Bretton Woods down the gutter I am delighted, because it is ridiculous. It is like putting a thermometer into the sea in the hope of changing the temperature.

The day of the small nation has gone, politically, strategically and economically. Our only hope lies in the development of closer economic relations with the Empire and with Europe. We need not ask in this Debate about the exact method. It is sufficient to assert that regional economic organisation and integration is essential if any country is to survive in the 20th Century, outside the United States of America and the Soviet Union. This involves preferential arrangements covering not only tariffs, but also reciprocal payments agreements; and we have once again specifically pledged ourselves not to make them. The breakdown of the international political order, the new found supremacy of the primary producer—one of the most important developments since the war—and the development of international industrial economies of world-wide scope, have produced a crisis of Western civilisation. It will not be solved by an attempt to go back to the economic system of the 19th century.

6.42 p.m.

Mr. Norman Smith (Nottingham, South)

This Debate has taken the form of a procession of misfits. I am a misfit myself, because I find it necessary, not only to speak, but also to vote against my Government. The hon. Member for East Aberdeen (Mr. Boothby) is not more happy than I am. He voted for the Second Reading of the Bank of England Bill. He, too, has no use for multilateral trade. He had to listen this afternoon to the right hon. Member for Aldershot (Mr. Lyttelton) who, when he led up to his climax, could think of nothing better than to look ahead a few years to a period of multilateral trade and in the interim to encourage the United States capitalists to go in for wholesale capital export. The right hon. Member for Aldershot did begin his speech very well—I am still hopeful of getting his attention. He began by expressing contempt for economists. That is a contempt which I share.

Mr. Lyttelton

The hon. Gentleman is going to get me into serious hot water. What I did express contempt for was the language of economists, and I hoped there were none there to hear that contempt expressed—but not for them, oh, not for them.

Mr. Smith

The right hon. Gentleman is on firmer ground there. He made a speech in language of a robust and healthy type which it did me good, as a journalist, to listen to. If only his economics were as good as his business ability, he would be an ornament to his Front Bench, to this House and to the nation. I owe a great debt to the right hon. Gentleman for some of the speeches he used to make during the war, which gave me great encouragement during the long nocturnal hours in the warden's post. He used to make speeches like this—when no Tories were listening. When he was not in the arid atmosphere of Tory politics he was brilliant. I quote. This was in 1943: When peace comes, we shall be confronted with the problem of turning over to peace uses all our vastly increased capacity to produce. The condemnation of our prewar world was that it permitted resources to be unemployed. It takes a good man to see a world richer today in the means of production than it was before, but he knows and I know, and that is the sort of intelligent thing I used to put out to the boys in the warden's post—turning Tory voters into Labour voters as the night wore through.

I am indebted to the right hon. Gentleman also for another speech, which I will give to the House because it does dispel this fantastic superstition that unless the old volume of exports can be maintained or even increase substantially, no one is going to get anywhere. Again I quote: Our industrial production has reached the highest point in our history, and it has been achieved on imports from overseas which are less than one-half of what we imported before the war. When I was first given these facts by my Department"— that is, the Ministry Of Production— I took leave to doubt them, because they seemed like a fairy story or conjuring trick. But these figures cannot be upset. The trouble with His Majesty's Government—I do not like to turn against my own Front Bench—is that there are hon. Gentlemen on that Front Bench who would have been quite at home in the Liberal Parliament of 1906. Then there is the right hon. and learned Member for Montgomery (Mr. C. Davies), the Leader of the Liberal Party. He is not looking as if he had won the Derby. He ought to have made that first speech explaining and defending and rejoicing in this preposterous Geneva Agreement. What is this Geneva Agreement? It does not purport to be anything less than a return to the 19th century. It includes the two conditions attached to the American Loan which I opposed—and rightly so—in 1945; Bretton Woods, which is the international gold standard up to date, and multilateral free trade. There is nothing new about it. It is mid-Victorian. In the reign of Queen Victoria the stage coach did run on four wheels. There were two other wheels besides the world gold currency and world free trade. In those days there was the free migration of labour and free movement of capital. The right hon. Member for Aldershot wants to get back to the free movement of capital. He can do that on one condition—if he will have a certain financial system which I will recommend and explain to him.

All this Geneva stuff was described very objectively and fairly in "The Times" leading article this morning, which gave the essence of the whole thing. I quote: Countries should export the goods and services they are fitted and well prepared to produce; they should import the things which others are better fitted to supply. The time has gone by when that could happen any more as the hon. Member for North West Hull (Mr. R. Mackay) and the hon. Member for East Aberdeen pointed out. Does any Member of this House really suppose that Eire, or Portugal, or even Great Britain, will be able to run an industrial economy based on atomic fission? I and other hon. Members saw a film in Westminster Hall the other day, An atomic fission plant on the laboratory scale would very nearly fill this Chamber. What the hon. Members for North West Hull and Eastern Aberdeen said was quite true. Modern technology demands the very largest possible economic unit. What does our Front Bench give us? An unholy pact of 23 nations, that is to say, the United States and 22 others. It reminds me of an elephant and 22 chickens in the chicken run. The elephant said: "Each one for himself and God for us all." We are the chickens. The United States, with their tremendous resources, are the elephant. We have about as much hope of getting anything out of this as the chickens had of getting any satisfaction whatever in competition with the elephant in the chicken run.

There is another false assumption behind this multilateral system—what "The Times" calls countries exporting the goods and services they are fitted for and buying from others those they are more fitted for. The false assumption is that a firm is in business to meet peoples' needs: it is not. A firm is in business to achieve a financial result—just that. All business is the exchange of goods, not for goods, but for money. The whole fallacy underlying the right hon. Gentleman's hopes that the United States capitalists will be able to go in for capital export on a big scale is simply this: they are in no position to draw the interest on any capital which they might export. This country throughout the 19th century, though it is true that we reinvested much of the interest overseas, did take imports of food and raw materials. We had to, because however much we might have developed our agriculture—we did in fact sacrifice it—we should always, in any circumstances whatever, for reasons of soil, climate, and all the rest of it, have to import much food and many raw materials.

The United States do not need to do that to anything like the same extent. Because a firm is in business not to provide for people's needs but to achieve a financial result, anything which brings goods into a country like the United States injures that firm. Therefore, the United States will never put up with a large surplus of imports such as would be necessary to make work the system on which the right hon. Gentleman the Member for Aldershot and his friends pin all their hopes. They could make it work if they would let me devise their fundamental system. I will explain in a few words how they could do it.

Mr. William Shepherd (Bucklow)

The price would be too high.

Mr. Smith

This morning "The Times" said, quite rightly, that: … many Americans now see that a creditor country must be prepared to import more and more largely as production and trade elsewhere revive— They cannot do it for the reason which "The Times" also explains when it says: … the view of Congress often seems to be that the only legitimate tariff concessions are those which can be made without hurting any domestic interest. If the United States would have a financial system which, instead of being based upon the idea that money may come into existence only after being created by bankers and lent to producers; if the United States, and we also, would have a different money system which would say that money shall come into existence created by the Government and, if necessary, be given away free to consumers, then we would be able to make overseas investment from the United States work. I cannot for the life of me understand why the party opposite, which wants to preserve private enterprise—of course it is the policy of this party also that there shall always be much private enterpris: there is a lot of good in it—I cannot for the life of me understand why it is that they will not take seriously the attempts of people like myself who want to have a different financial system rather than the outmoded one which has brought so much trouble and misery upon the world. Being businessmen, they say, "Oh, but you cannot give anything away." I ask, why not? What is the Marshall Plan but a tremendous act of give-away?

One of the bank chairmen said this week that the Marshall Plan was an unparalleled act of national magnanimity. No such thing. The bank chairman did not know his history. This country gave away any amount of money during the 19th century. A large proportion of our overseas investments were irretrievably lost. There are plenty of authorities for that. The late Lord Mancroft who used to sit in this House as Sir Arthur Michael Samuel and was at one time Financial Secretary to the Treasury—

Sir A. Salter

Is there any real difference between an involuntary loss and a gift?

Mr. Smith

The effect of the involuntary loss is precisely the same as the effect of a gift, because the parting country has parted with that which it lends overseas by way of capital investment in the one case, or Marshall Plan aid in the other. It is precisely the same. Sir Arthur Michael Samuel used to put the figure at £2,000 million. The right hon. and gallant Gentleman the Member for Scottish Universities (Lieut.-Colonel Elliot) has put at £4,000 million the amount of dead loss of overseas investments before 1914. All through the 19th century, Great Britain was giving away wealth on a wholesale scale.

The Marshall Plan is an act of giveaway. It is no use letting business notions dominate this thing. Modern technology has placed into the hands of men and women such immense productive powers that we must acquiesce in a system whereby much of that production shall, in fact, be given away. I stand for the Marshall Plan, because I believe in giveaway. My trade union constituents—the more sensible types—stand for it, provided always that there are no political strings. It is giving away. I opposed the American loan two years ago because of its political strings, when the Communist Members of this House, and their fellow travellers, supported it. They had not had their orders from Moscow. I do not take orders from Moscow. I take my own orders and use my own sense; and my own sense tells me that we must have a system of give-away economics.

I am in a great fix tonight. I will not vote for a policy of Geneva Agreements which is Liberal free trade and an attempt to go back to the 19th century, which falsifies every piece of Socialism that I have given the whole of my political life, 41 years, to achieve. I cannot vote for that. It is not I who defy the Labour Party conference, it is not I who go against Socialism; it is the Front Bench. What can I do? I have no use for the sort of cowardice which allows a man to sit on these Benches ostentatiously abstaining. I do not do that. If I must oppose the Government, I am going to oppose them, and I am going to go into the opposite Lobby, little as I like doing that.

I would not give a hoot for the Amendment which is on the Paper. The parentage of the Amendment is enough to condemn it. I do not know why the hon. Member for Chippenham (Mr. Eccles) has his name on this Amendment, which rebukes the Government and tells them not to subscribe to the principle of nondiscrimination. The hon. Gentleman voted for the American Loan two years ago. He voted for non-discrimination: now he has turned round. It will be interesting to hear what he has to say presently. I do not like to go into the Lobby with a bunch of Tories. Toryism is odious to me, Communism is more odious still; but unless we carry into effect what the Foreign Secretary said last week, unless we seek to build a huge economic agglomeration, unless we will apply modern methods of Socialist planning plus an intelligent system of money creation which will develop the wealth of Africa and the skill of our own country and of the Dominions for the benefit of the inhabitants of all these countries—unless we do that, setting up an economy comparable in size and power with the economy of the United States or the Communist slave state of Russia, we are not going to carry into effect the things for which I have worked for 41 years.

I shall vote against the Government because I object to this appalling policy, which was never endorsed by any Labour Party conference, never endorsed even by any Labour Party meeting. I hope that others among my hon. Friends will have the courage to do the same. My last word is that it is no use telling me that my ideas about money must be wrong because no other hon. Member agrees with them. The mere fact of a man being in a minority does not make him wrong. It is no use telling me that the monetary system for which I stand has proved a failure in Alberta. It was never tried because the attempted legislation by the Alberta Government was overruled from Ottawa. I know, as a journalist, that nobody in this country is ever allowed to get into print with these ideas. Sooner or later that barrier will be broken down. I pray God that it may be sooner and not later.

7.0 p.m.

Sir Arthur Salter (Oxford University)

This is a curious Debate. It started with a witty and entertaining speech from the Front Opposition Bench which showed, I think, that the speaker was apparently willing to wound but very reluctant to strike. We have just had two speeches of vehement attack on the Government from two of the Government's supporters. We have had another speech from an hon. Member on these benches which showed that he was in violent opposition to his own Front Bench. As for the speech to which we have just listened, the hon. Member tried very hard to detach himself from any odium that might attach to economists, and, in that, I think, he has been quite successful. His economics seem to me to be the economics of "Alice in Wonderland." I do not mean that to be an insulting remark, because there is some economic sense in that work, illumined by wit and disguised by fantasy. I was unable to discover what it was that the hon. Gentleman was proposing, and therefore I make no further comment on his speech. With regard to the hon. Member for North-West Hull (Mr. R. Mackay), his was a very eloquent and impressive speech, and I found myself in agreement with almost everything he said except the close, which seemed to bear very little relationship to what he said before.

I am indebted to the hon. Member for East Aberdeen (Mr. Boothby) because he has put, not only in eloquent but in emphatic terms, what seems to me to be the real broad issue before this House and the country at this moment, which is much wider than anything indicated in the Opposition Amendment. I do not know whether I can vote for or against that Amendment, because I really do not know what it means. It is not only broadly, but also ambiguously worded. As an old official, I am inclined to surmise from its phrasing that there must have been a good deal of difference of opinion behind its drafting. It seems a compromise, reflecting the highest common denominator, but not a very high common denominator, of opposing opinions.

The real issue was raised but not rightly described by my hon. Friend. The issue is not between a free and anarchic multilateralism on the one hand, and a wise planning of trading areas on the other. The issue is between a regulated and controlled multilateralism on the one side, and a competitive, and, I think, anarchic bilateralism on the other. That is the issue to which we have to bring our minds. Three successive Governments have been building up a system of controlled multilateralism. The present Government have continued the policy of their predecessors, and have done so, I think, with the support of the vast majority of hon. Members on all sides of this House.

In that structure, the International Fund is one part, the International Bank another, this Geneva Convention is a third, the International Trade Organisation, which is now being negotiated in Havana, is a fourth, and there is, supporting and surrounding it, the whole of what is associated now with the Marshall Plan. This whole system that has been in course of such painful and slow construction is now, I confess, in danger. Some of these dangers are indicated by certain difficulties which have been experienced in Havana. Some are reflected, though largely disguised, in the phrasing of the Opposition Amendment, behind which, I suspect, there are some forces outside this House which aim at wrecking the whole of this new system, forces which found their expression not so much in the phrasing of the Amendment as in the speech of my hon. Friend.

We all of us know, too, what has happened in France in the last week constitutes another danger to the system if it spreads and has wide repercussions. We may take what is being done with the franc either as an indication to us that the whole of the system of controlled multilateralism is destined to be wrecked, and the sooner we get out the better—which my hon. Friend might wish—or we may take it as a stimulus to try at once to repair the damage that has been done and give another chance of success to the efforts of the last few years. On the French position, I would only say this. Hoping as I do very sincerely that the second course will be taken, I would, in line with what the Chancellor suggested the other day, sincerely trust that France will realise that, as far as her purpose may be to encourage dehoarding of gold and the repatriation of expatriated gold and currency, she will have a much better chance of increasing and accelerating her results if she decides upon an early time limit for the free market operations. I propose to say nothing more on the French position, having indicated that that, in my view, is one of the dangers to the whole of the system of which the Convention now before us is a part.

I am going to indulge this evening in the privilege which I do not often nowadays enjoy, of supporting the Government. While, however, I support the Government in their main position, there are certain respects in which I agree with the critics. In particular, I regret the strength of the emphasis on the unconditional most-favoured-nation clause in the first part of this Charter, and the inadequacy of the exceptions that are provided in the later clauses. After some years of experience at Geneva in trying to get a reduction and stabilisation of tariffs, I came to the very definite conclusion that the unconditional most-favoured-nation clause, in the form in which it was then being applied, was both unjust and also a real impediment to the reduction of tariffs. I am sure that we and America made a great mistake in 1932 in opposing the Ouchy proposal of Belgium and Holland. I am sure the recommendations of the following year at Monte Video were much wiser.

I believe, as several speakers have said today, that as the European side of the Marshall Plan begins to get into operation, it will be realised more and more clearly both by Europeans and by Americans that anything like a single jump to a Customs Union will be impossible, and that some halfway stage, which really means preferences being admitted as a legitimate exception to a most-favoured-nation clause, will be essential. I should, therefore, think it a very good thing if the Government were able, at the present stage of the Marshall Plan development, to find an opportunity when the Havana Conference meets again to secure arrangements on this matter which are rather more elastic and flexible. Having said that, and having to choose between the main courses which we are to follow, then I say that I am entirely on the side of the Government, and for two reasons. The first is the difficulties and dangers of the alternative proposal, and the second is the positive merits of the Draft Charter and the other conventions associated with it, such as Bretton Woods.

Our real problem is, of course, not to secure a balance in our international payments. That we cannot avoid. The question is to what extent that balance is secured by means of loans or gifts and the level of imports which we shall be able to secure when those resources are no longer available. Our problem is to secure a balance at a level which ensures our essential imports of food and raw materials. We all know that, in order to do that, we need an increase of something like 70 per cent on the volume of our prewar exports. If we look realistically at the number of markets throughout the world, does anyone think that can be done simply by increasing our fraction of an unincreased world trade? I think there is no doubt whatever that it can only come about by means of a relatively modest increase of our proportion of a very considerably expanded world trade.

With that in mind, how do we think, on the alternative proposal, if we adopt the course suggested by my hon. Friend, that we are going to export enough to secure the imports of food and raw materials which we must have?

Mr. Boothby

May I ask my right hon. Friend one important question? Where, under his scheme, does he expect to find the markets? I have at least suggested Western Europe and the British Empire, but where, under a multilateral trade arrangement, which would not include the Soviet Union, is he going to find them?

Sir A. Salter

Partly in the same places as suggested by my hon. Friend, and partly in the rest of the world, including North and South America. I will not overstate my argument by quoting present figures, but if we look back to a time when we were making our imports and exports roughly balance, how did we do it? Between one-half and one-third of our total exports went to countries which sold much less to us than they bought from us. Under a system of competitive bilateralism, such as my hon. Friend contemplates, we should lose a great many of those markets. Secondly, we must remember the weakness of our bargaining position if any kind of competitive sterling grouping is attempted. On the whole, the things we sell to other countries are less essential to them than the things we import from them are to us. With that in mind, supposing we start a competition between a sterling area and a dollar area, and force a clean-cut choice, what countries are we, in fact, going to bring within our own system?

People talk about the Commonwealth and Empire, but, if it comes to a compulsory choice, which way, in fact, will Canada go? Where, in fact, will South Africa go? Where, in fact, will India go, apart from the fact that we may, of course, sell her a great many exports—unrequited—paid for out of the sterling balances which she holds of ours? Where will Malaya go? I have mentioned four parts of the Commonwealth which cover a good half of the total of our Empire trade. We can obviously only hope to bring them within our system if we imagine that they can be largely moved by non-economic measures.

The hon. Member talked about a Grad-grind philosophy, the extremely painful necessity of having to make things cheaply, and at competitive prices. But those are the facts of life, and we are not going to escape them by attempting to make an Imperial arrangement with Dominions who are perfectly free to refuse, if they see that their economic advantage is elsewhere. They might prefer to trade with us, but will certainly not come into our system at great and continuing economic loss to themselves. If we attempt to exploit sentiments of friendship to secure that they do so, nothing is likely so seriously to weaken the bonds of our Commonwealth. If we turn, then, from the self-governing Dominions—who can decide things for themselves—to the dependent Empire, do we think we can find in the dependent Empire, whose economic policy we can determine from here, a sufficient substitute for what we shall be losing? It is quite true that, ultimately, the resources of the dependent Empire, in Africa and elsewhere, will be very great, but how soon can they be developed? With what expenditure of capital, and where is sufficient capital to come from, unless there are, in addition to what we can afford, the resources of other capital exporting countries like America? Obviously, it is an impossible thing.

Then we come to Europe. The hon. Member for North-West Hull—who, I am sorry to see, is not here now, and who made such an eloquent speech—seemed to think that the solution was a federation with Western Europe. He did not apparently contemplate any complete Customs Union. But, supposing we go in the direction of that union, do we think that the necessities of this country, which are food and raw materials, can possibly be met by economic arrangements, however good they may be, and however good a contribution they may be to a general system, with Western Europe? It seems to me to be perfectly fantastic. Therefore, I think that the alternative proposal—

Mr. Hale

In defence of my hon. Friend the Member for North-West Hull, I must point out that he made it quite clear that he did not regard Western Europe as completely exclusive, and he particularly said that it included the whole of the Colonial territories of the various constituent lands, and, indeed, the Common- wealth nations too, in so far as they relate to Western Europe.

Sir A. Salter

I was very much impressed by the hon. Gentleman's speech, up to the last part, when I could not really follow what he was proposing, apart from a federation of Western Europe. I do not see how, or by what methods, he was hoping to get more, or as much, from the rest of the world as the present Government proposals would Secure. But apart from the restricted possibilities of the bilateral scheme, look at some of the dangers there will be to us and others if all countries have a completely unregulated freedom to make special bargains. Look at the enormous danger to ourselves of restrictive schemes in food producing or raw material producing countries, schemes based upon quotas, and so on. We shall be in very great danger if there is no international system in any way restricting or regulating that kind of either national or competitively bilateral arrangement.

I base my support of the Government, however, not only upon the defects of the alternative, but upon the positive merits of this scheme. I agree with the right hon. Member for Aldershot that, at a time when the exceptions must be more prominent than the principle, it might have been a tidier thing to have changed the phrasing, but one has to bear in mind the historical origin of these conventions. The important fact is that while these conventions do lay down the general goal towards which they hope the world will be making, they fully recognise the special circumstances of the time and provide safeguards against the dangers which would result from the premature application of the full doctrine.

The convention does not preclude, although it limits, Imperial preference. It does not preclude, although it controls and regulates, import restrictions. It does not preclude, although it controls and regulates, discrimination in purchases. It does not preclude, although it regulates, adjustments in the exchange rates. Above all, it makes these exceptions and provides these safeguards for precisely the case which is our greatest problem and the greatest problem of the non-dollar world, the fundamental disequilibrium in the balance of payments. I apologise to my right hon. Friend, but I cannot find another phrase at the moment.

That means, in effect, that countries with a surplus balance of payments, like the United States, so far from using this complex of agreements in order to dominate the world, have voluntarily under these agreements, waived a great part of their superior power. They are imposing upon themselves restrictions from which we are specifically exempt while we are in the position in which we are and shall for a long time be. That is why I support the Government, not only because of the defects of the alternative scheme but because of the positive merits of this scheme.

It has been said that the Marshall Plan will prove to be irreconcilable with some of the provisions of this draft convention. But the convention is, to a large extent, adjustable at the discretion and under the control of authorities, set up for the purpose of agreeing upon exceptions from the main principles. I believe that, as time goes on, experience of the fundamental problem of the world for this next decade, at least, the disequilibrium between the West and the East, will result in the whole of these controlling and regulating authorities acting in such a way as to be to our advantage. We shall be helped to solve the inescapable problem of increasing, not necessarily our proportion of world trade, but our total bulk of exports, and therefore our total ability to import from the rest of the world.

The Marshall Plan has already represented, as hon. Members who compare it with the commercial documents attached to the American Loan will, I think, agree, a very remarkable evolution of American opinion. As it stands, and as it has now been presented by the American Administration to Congress, it is quite as much without precedent, in its foresight, in its constructive political purpose and in its generosity in peacetime, as Lend-Lease was in wartime. I am sure that after the Marshall aid period, as America gradually faces her problem of the balance of payments after Marshall aid has come to an end, she will realise that there should be, from that balance of payments position, an immense impulse towards a constructive investment policy which I trust will cover the present British Colonies, as well as other countries whose economic and political conditions make them ripe for rapid development. Consideration of her balance of payments will also encourage every form of commercial policy which will help her customers to increase their purchasing power, for there is no question that for a long time the limiting factor to American exports will be the ability of America's customers to find the dollars to pay for her goods.

For all those reasons I am entirely opposed to the alternative put forward to us this evening of a bargaining and competitive bilateral policy. We have not sufficient bargaining power to make it succeed; and we should abandon and lose altogether the very great advantages of a system such as is now put before us which gives us, in many respects, the best of both worlds. We have a considerable measure of safeguard against the danger of commercial policies and practices which other countries might impose to our very great detriment. At the same time, we have a certain flexibility and elasticity in the safeguarding provisions to help us to overcome the essential and fundamental problem of our balance of payments. For that reason, I propose to support the Government tonight.

7.25 p.m.

Mr. Maclay (Montrose Burghs)

I am more than glad that the right hon. Member for Oxford University (Sir A. Salter) has brought the Debate back to the Charter and to the agreements which are a part of the Motion before the House. Earlier speakers had taken the Debate into most fascinating and interesting directions, and with many things which were said one agreed. Nevertheless, we are dealing now with something we have got, and have got as a result of two and a half years of very hard work. I am told that no fewer than 1,000 meetings have taken place. If 23 nations can survive more than 1,000 meetings and still, agree upon anything at all, it is a most encouraging sign in an age when agreement is not very easy to get.

Considering the general dislocation of the world today, and the difficult conditions which exist in the various countries which took part in the discussions, it is not at all surprising that the document which we are discussing this evening should show signs of compromise, in fact, so many signs of compromise that it must be open to attack from almost every side. It seems impossible at this stage accurately to assess where the balance of advantage lies, as regards the tariff agreement itself. Have our concessions in Imperial Preference been fully balanced by corresponding concessions elsewhere? I would suggest that it is quite possible for what appears to be very substantial tariff reductions still to have a level of duties which could prevent the movement of goods.

There is no telling, for a period of years, whether they will actually be effective. All through the early discussions on this subject during the last few years there was far too much talk about "substantial" reductions in tariffs. The word should really have been "effective," if the language was to mean anything. Even on the information given us tonight we have no way of judging whether the concessions which have been granted in return for what we gave up in Imperial Preference will actually be effective in promoting the movement of goods.

Accordingly it would have been very much better if it had been possible to debate this subject in some other way than we are doing, possibly upon an Adjournment Motion. The tariff agreement, important as it is, is only part of a whole whose shape we shall only see at the end of the Havana Conference. If the hon. Member for South Nottingham (Mr. N. Smith) were here, I would inform him frankly that I am going to sit on the fence. I am not prepared to back the Government unrestrainedly in what they have done. If the Motion were purely upon the Geneva Agreement I think I would do so, but the Motion asks the House to approve the action taken by His Majesty's Government at the second session of the Conference on Trade and Employment. It is very loosely and widely worded.

We are not discussing merely the Tariff Agreement but everything that is going on at Havana. Remarkably little has been said today of what is going on at Havana. I am not prepared to give my support either way. It is almost the only time since I have been in Parliament that I have taken that line. There was one other occasion. But that was at five o'clock one morning on the Motion for the Adjournment, when I abstained deliberately. I shall abstain deliberately again tonight. This is not a Motion upon which one can vote without committing oneself to something that one does not understand and which has not been fully explained.

It is, perhaps, the most interesting aspect of the Agreement and of the draft Charter that in the last few months I have heard it attacked equally savagely on the one hand by ardent multilateralists, and on the other hand by others who think multilateral trade is too distant an objective to be worthy of serious consideration in present conditions. The real fault of the document, when it reached Havana, lies in the fact that in its present form it contains a confusion of principles and exceptions which must inevitably lead to argument and difficulty. Looking at the Charter as it is at present drafted, one can well argue that the principles are so qualified by exceptions as to lose meaning; or, alternatively, those who are obsessed by the present state of chaos of world trade might equally argue that it is misleading to subscribe to principles when in the immediate future it is the exceptions which must be operative.

The document would have been better drafted, and we should have avoided some of the arguments which we have heard this evening, had it been set out clearly in three parts; the first part containing a statement of long range principle of national policy in international economic relations, followed by another part which could have dealt with provisions for the transition period, followed by a third part which would have been the permanent emergency measures which could be taken if things went wrong. One would then have had a document which would have let nations know, when they were acting, on what part of the Charter they were acting. If they were taking exceptional measures they would know that the exceptional measures were taken in exceptional circumstances and there would be some hope that what they did would not tend to become the permanent economic practice of the nation.

With the Charter as it stands, it would be possible to argue marginal cases indefinitely, and there are many who feel that it is almost dishonest to subscribe to a document which contains principles, which we can only accept because we know there are also escape clauses which we can use. Nevertheless, I am convinced that for Britain of all nations, the objective of multilateral trade is all-important. No nation stands to gain more from multilateral trade in the long run, and no nation stands to lose more if we find that other nations are repeatedly and progressively taking unilateral action which will prevent the free flow of trade about the world. I would add to what has been said before to the enthusiastic bilateralists, that this country of all countries enters bilateral negotiations in a singularly weak position because we have to sell goods which are only semi-essential while we have to buy goods which are absolutely essential in a period when the supply of essential goods is singularly limited.

At this moment, however, everything we are doing is completely over-shadowed by the disastrous fact that world production is hopelessly out of balance, and I suspect that that factor will dominate almost everything we do in years to come. It is a pity, too, that we go on talking about dollar shortages and financial disequilibrium and all the other jargon, because it is important that the man in the street should understand that the conditions in which he is to live and the question whether the British standard of living can be maintained will be determined by whether we can quickly enough get the productive ability of the whole of the world other than the Americas back to the point where we can achieve anything like a balance. There seems to be a remarkable unanimity of view on this subject in this Debate, which is not surprising, because it is the obvious truth, but I wonder how many people in the street realise that that is the ghastly problem which faces this country and which overrides almost everything we are worrying about today and in the future.

If that is so, I suggest that the most enthusiastic multilateralist must see that it will be necessary to build up trade wherever we can. I would expand on that, but I do not wish to do so in detail, because previous speakers have done so fully. Throughout the Debate there seems to have been a confusion which I cannot understand. People argue that multilateral objectives are wrong. I do not know whether it is because they are too distant or because people believe that fundamentally they are wrong. At the same time, people argue in favour of bigger trading units. Of course, one agrees that bigger trading units are essential. I would have thought that the whole point was that in increasing the size of trading units, whether by bilateral agreements or regional agreements or various systems of preference, the ultimate objective is to increase trade within these areas so that ultimately it flows into multilateral trade. I do not see that there is any real quarrel on that account between the multilateralist and the bilateralist.

It is difficult to see why one should object fundamentally to the draft Charter as it stands at the moment. The only point is that it puts a lot of emphasis upon principles and it gives the exceptions; but how else could it be drafted? It would be almost as illogical a document if it were drafted as a document of fundamental exceptions with ultimately a fundamental principle. It can be done in whichever way one likes. Its present confusion arises because the two are mixed up in the same chapter, and when reading the Charter one never knows whether one is reading about principle or exception. That is a great objection to the document.

I now come to some hard and practical things which we can do now under the Agreement already signed. The right hon. Member for Aldershot (Mr. Lyttelton) referred rather unkindly to the "dusty" articles which dealt with subjects such as formalities connected with importation and exportation. I would draw the attention of the House, and particularly of the President of the Board of Trade, to Article VIII where these words appear: The contracting parties also recognise the need for reducing the number and diversity of such fees and charges, for minimising the incidence and complexity of import and export formalities, and for decreasing and simplifying import and export documentation requirements. Trading today is cluttered up with endless pieces of paper. I would like to refer to a paper which came to my hands this morning. It sets out the documents required by the Brazilian Consul in Cardiff in order to clear a ship with crew and passengers. The documents he required are: Ship's articles, bill of health, ship's register and customs clearance, five copies of the crew list for each Brazilian port, five copies of the passenger list, two copies of the manifest, two copies of bill of lading and master's declaration, and a subsequent request for another eight copies of the passenger list and landing cards, six copies of passenger transit list, seven copies of the crew list and two copies of the store lists. That was not all. The ship had to have 40 duplicates of other documents in order to cover transit passengers going through the Brazilian ports. That only touches some of the troubles. The question of the formalities concerning goods themselves would make one shudder.

Here is one substantial achievement in this Agreement for which the Government could claim credit if they had noticed it; they can do something about this matter to which I have just referred under the Agreement. I urge them to get on with it as hard as they can. If they do that, despite this welter of confused objectives and ideals, they will have done something useful for the country.

7.38 p.m.

Mr. Warbey (Luton)

Like the hon. Member for Montrose Burghs (Mr. Maclay), I find it extremely difficult to support the Motion because it is almost impossible for us to know to what we are being committed. It refers to the action taken by the Government at the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment. We are dealing not merely with the Agreement signed on trade and tariffs, but also with another document—the draft Charter for the International Trade Organisation which was drawn up at Geneva but which is now under discussion at Havana.

We have been told nothing at all about the Havana discussions, and we have had very little information indeed in the British Press about them. In fact, there is probably not one person in a million in this country who knows anything about what is happening at Havana and who really knows what this country is being committed to by its negotiators, or what will be the outcome, if there is any outcome at all. Even on these grounds alone, I find it rather difficult to support a Motion of this kind, I find it even more difficult in view of what is actually contained in the Agreements to which we have already put our signature.

But that does not mean to say that I find it possible to support the extraordinary Amendment which has been moved by the Opposition. If there was ever a case of backing the horse both ways, of trying to have the cake and eat it at the same time, it is certainly illustrated in their Amendment. First, it urges the Government not to subscribe prematurely to the principles of non-discrimination; then it goes on to give support to the conception of multilateral trade; and, finally, it seeks to encourage a policy of developing trade both with the Empire and countries of Western Europe and their overseas territories. If that third point means anything at all, it is that the Government are to be encouraged to direct our trade in certain directions—in other words, that there has to be some planning of our trade, some special development of our trade with the Empire and countries of Western Europe.

It is impossible to plan our trade, to organise its special development, without some form of discrimination. The meaning of "discrimination" is to make a choice; "non-discrimination" means that a choice does not have to be made, that everything is left to chance, or to the result of the actions of hundreds of thousands of isolated people. I am glad to say that the Opposition appreciates that non-discrimination and planning do not go together. They are now awakening to the idea, which has been put forward from these benches for some time, that planning and non-discrimination are an antithesis, that by planning internal economy a deliberate choice is made by one against another, and that in planning foreign trade there must be discrimination in favour of certain products and certain exchanges against other countries.

At the same time, the Opposition are asking us to support a conception of multilateral trade to which the Government have paid lip service by some of the speeches of their spokesmen. There is a good deal of confusion about the use of the word "multilateral." If the word is used simply in the sense that we desire to have trade with all countries, that is a doctrine to which, I am sure, every Member of the House would subscribe. Nobody, even the most ardent advocate of a series of bilateral pacts, would suggest that we should deliberately try to exclude trade with any other country in the world.

We are all in favour of the maximum degree of trade with all countries, but that is not the meaning of "multilateralism" in the sense in which the word is usually employed by present day economists, nor is it the meaning understood by United States representatives who are most ardent in advocating multilateral trade. They understand multilateral trade as meaning the free exchange of commodities between one country and another, according to the principle of purchase in the cheapest market and sale in the dearest—good, old-fashioned, 19th century principles, which have been described by other speakers—coupled with a lack of consideration for the special balance of payments position arising between any two countries. That is the conception of multilateralism towards which the United States Government are seeking to move this and other countries, and to which His Majesty's Government are apparently also committed to move.

It is about time that this Government made up their minds as to the direction in which they intend to develop our trade policy for the future. We have had a remarkable dichotomy in the speeches and actions of the Government and their different spokesmen about our international trade. The President of the Board of Trade at Geneva, when this Charter for multilateral trade was discussed, said, according to "The Times" of 25th August: The Preparatory Committee must face the fact that methods may have to be used in the intervening months and years which might appear to be opposed to the principles and methods of the draft charter. The right hon. Gentleman said that they would certainly have to assist their position by agreements with particular countries. On other occasions, the Chancellor of the Exchequer has stated that we are intending to work, as soon as possible, towards a system of multilateral trade. In our recent discussions about the release of the remaining part of the American Loan we stated that we were hoping to restore, as soon as possible, the convertibility of our currency and get back to the principles of non-discrimination in trade. We were informed by "The Times" correspondent at Geneva, on 8th August, that: The British Government seeks exemptions only from the provisions of the General Agree- ment which will come into force at an early date, and for an interim period of short duration. The Secretary for Overseas Trade said today that even by the end of this year we shall be in a position in which the majority of other countries who are signatory to the interim Geneva Agreement can prevent us from engaging in discriminatory trade. In other words, it appears that the Government are already planning to get back, within a year or two, to the principles of multilateral trade and non-discrimination to which the United States have been trying to move us ever since we signed the American Loan Agreement. It is quite clear that we must make up our minds, and soon, about the direction in which we are going.

We find that, once again, as in the case of the Bretton Woods Agreements, we have been forced prematurely to join a club which other people are not joining until later, or are joining on different conditions. We entered the Bretton Woods Agreements, as the result of the American Loan Agreement, under particularly unfavourable conditions for this country. Whereas the club arrangements were that countries were to be given a five-years transitional period before subscribing to the full terms of the club, we were given only a one-year transitional period. All the difficulties which we have been experiencing since July of last year have flowed from the fact that we were forced prematurely into that club. Now, once again, we are prematurely entering the Havana club. We have entered the Havana club long before the Havana discussions have been completed, and we have entered it, not on good terms, but with some of the most favourable aspects of the terms of the Charter omitted from the Geneva Agreements.

It has always been stated by the Government—and it was stated again today—when discussing our general trade policy, that one of the conditions to which we attached the greatest importance was that every country should seek to maintain full employment and that no country, if it got into economic difficulties, should seek to export its unemployment to other countries. I believe that we have made an attempt to incorporate into the draft Charter certain provisions, certain escape clauses, which would restore our freedom of action in the event of one country or another acting in such a way as to injure our own economic position as the result of its failure to maintain full employment. I am not at all satisfied that those escape clauses are sufficiently clear; and still less am I satisfied that the obligations of all participating nations to maintain full employment, and particularly in regard to the appropriate means by which full employment can be maintained, have been sufficiently clearly stated in the draft Charter of the International Trade Organisation.

But what particularly concerns me tonight is that none of these provisions regarding full employment appears in the Interim Agreement of Geneva, to which this country has already committed itself. In other words, we have accepted the principles of non-discriminatory trade without at the same time insisting upon acceptance of the complementary principles regarding the maintenance of full employment. That I regard as a very serious dilemma with which this country has been presented by the decision of the Government to sign this Geneva Agreement.

What will happen if the Havana Conference breaks up without any agreement being concluded? There is certainly no assurance that agreement is to be reached as Havana. Indeed, from what I have seen in the very scanty reports in the Press, there has been a great deal of disagreement at Havana. The discussions are not going at all well. It is by no means certain that a Charter will eventually emerge from those discussions, or that any significant number of nations will agree to subscribe to a Charter. We may then find ourselves landed in the position of having subscribed to the doctrines of non-discriminatory trade and having got none of the protection which was designed to appear in the other parts of the draft Charter. I hope that the Government may be able to give us some assurance before tonight's Debate is finished, that we are more carefully, more fully protected in this matter than I believe we are at the present moment.

Then, considering the draft Charter itself, and the application of the doctrine of non-discrimination, I am disturbed to find that there are a number of forms of discrimination which do not make any appearance or which are not adequately covered in the draft Charter. What, for example, is being done about the form of discrimination which exists through tied loans? What is being done about that in the draft Charter? What is being done about the form of discrimination which exists in compulsory shipping agreements—the kind of agreement which the United States Government tried to force the Norwegians to accept about a year ago, when they made a loan to Norway, and then insisted that the goods carried from the United States to Norway should be carried solely in American bottoms—a condition which, for one of the leading maritime nations of the world, is really almost an insult. Clearly, that is a form—a very excessive one—of discriminatory trade policy. I should like to know—because, after all, we, too, are very much concerned, as a leading maritime nation, with a matter of this kind—whether we have endeavoured to protect ourselves against discrimination of that kind.

Then, what is the form of protection against dumping? I understand, from looking at the documents, that the draft Charter allows countries to protect their own interests against dumping by other countries. But is there any safeguard against the effect of dumping in third countries? That is, after all, a serious danger that may face this country in the event of an American depression. If a slump comes in the United States—and even the President of the United States himself has admitted that that is a serious possibility—then we shall be faced in all the countries which are our principal markets with the competition of dumped American goods. What protection is there in the Charter against that form of dumping in countries other than our own?

Then, there have been some interesting discussions at Havana in regard to the control of international investment. It appears that, largely at the insistance of the United States, certain clauses are being written into the Charter which would seek to ensure what is described as non-discriminatory treatment of foreign investment. I use the words of somebody writing in "The Times" on 22nd August last year. The writer said that the draft Charter: Applies to investment the most-favoured-nation principle, in that members undertake not to impose, either directly or indirectly, any requirements on the investments of non- nationals which are appreciably more onerous than those imposed on their own nationals or upon the nationals of third countries. They are also required to make just compensation for such interests taken over by the State or placed under State management or occupation. In the course of the Debate we have heard about encouraging the Americans to export more capital, and to invest in other countries. It may well be that certain countries, our own included, wish to protect their industries and national resources against being bought up by rich and powerful States, or being put in pawn to private investors in rich and powerful States. That is a form of protection against the abuse of the power of money which all Socialist Governments introduce in their own countries. We, as Socialists, subscribe to the principle that the power of money to control capital and natural resources should be restricted. Equally, certain countries—and our own may be included—may well want to have the right to protect themselves from having their industries put in pawn to private persons in other countries. I want to know whether we are taking a stand against this non-discriminatory treatment of foreign capital.

Also, are we subscribing to the principle, which I understand the Americans are now trying to introduce, that when compensation is paid to foreign investors in property which is nationalised, the compensation shall be in the currency of the investor? In other words, if American citizens have invested in dollars in a European country, the compensation would have to be paid to them in dollars instead of in the local currency. If we accept that principle, what shall we be doing? We shall be making a god of money, and a god possibly of the dollar, instead of basing ourselves upon the sound principle of the exchange of goods for goods. If the loan takes the form of the transfer of capital goods from the United States to, let us say, European countries, why should not the return of the loan take the form of a flow of goods from that country to the United States? That would be the case if the repayment compensation were made in the local currency, which could then be used by the Americans for the purchase of goods from that country.

I am concerned, too, about the clauses dealing with State trading. How far does the draft Charter, and particularly Article 30, leave our Government free to continue their established food procurement policy?—a policy based upon the import of food from abroad at reasonable world market prices, coupled with the purchase of food from home producers at normally higher prices, in order to provide a reasonable standard of living for British farmers and farm workers, with a price for the consumer which is either averaged between the two prices or specially subsidised. How far do the terms in regard to state trading allow us to continue a policy of that kind? How far do the terms allow us to continue with our policy of bulk purchase? How far do they allow us to make a further development of state trading or state control, and of foreign trade, than we have so far made in this country?

I was concerned to hear the Parliamentary Secretary say that under the terms of the agreement we have made we should not be able, even if we wanted to do so, to steer our exports away from hard currency countries in order to secure the import of things we needed from soft currency countries. Does that mean we are building our hopes for the future trade of this country on some speculative market in the United States? Does it mean we are to forgo the possibility of building up reciprocal longterm trade agreements with other European countries and the Empire, which would give some stability to our trade? Those are the kinds of questions I should like to hear answered this evening.

After all, the argument is not between rigid multilateralists and rigid bilateralists. The argument which some hon. Members are trying to put forward is for planned trade as against unplanned trade. That is what we want. There are certain elements essential to planned trade—which, after all, is the Socialist conception of international trade. One of those elements is that it should be possible to make reciprocal long-term agreements with other countries, thus ensuring the import of goods needed, such as food and raw materials, with at the same time, assured markets for goods exported. It may well be that in future years, when international trade competition becomes more fierce—and particularly if a slump develops from the United States—we shall have a great need to have our trade buttressed upon the sure foundation of agreements with other countries, provid- ing us with safe markets for the goods we have to export.

That does not mean we have to make such long-term agreements with all countries; nor does it mean that all our export production is to be mortgaged in the form of long-term trade agreements. But there ought to be a section for which we are sure we have markets; and there may be another section which is, as it were, free to enter into a multilateral circulation with countries not willing to enter into long-term planned trading agreements. That is the kind of flexible conception of our international trade which we must develop, and which should not be restricted by the kind of conception put forward by my hon. Friend the Member for North-West Hull (Mr. R. Mackay)—much as I agree with a great deal of his analysis.

We must recognise that in Western Europe alone, markets satisfactory either to this country or to the other Western European countries, cannot be created. The economies of the Western European countries are not complementary but are, mainly, competitive. All of them are planning to expand their steel production in the coining year. Who will decide, first, how much steel is to be produced in each country; and, secondly, where that steel and the goods manufactured with that steel are to be exported? The markets for those goods will be largely, not only in Africa and the Empire, but also in Eastern Europe and the Soviet Union, and in other predominantly agricultural countries.

We must develop our planned trading arrangements, not merely with Western Europe, but throughout Europe as a whole and throughout the Empire. That is the kind of conception which makes sense to me, because it is based upon Socialist economic principles. But there is no sense at all in the kind of hotchpotch of a half conception, and rules which are made to be broken by other rules, in their turn made to be broken by yet further rules, which we have in these agreements and I hope the Government will look at the matter again.

8.10 p.m.

Mr. Peter Thorneycroft (Monmouth)

I will not take up the time of the House, in reply to the rather long speech to which we have just listened. I will come straight to the main principles with which we are concerned in this Debate upon the Geneva Agreement. I think that the Government were right to sign the Agreement. I propose to subject it and them to certain criticisms, referred to specifically in the Amendment standing in the name of my right hon. Friend the Member for Woodford (Mr. Churchill). There has been a lot of criticism of this Amendment, but I think that it is a good one. There are three questions which we have to decide. The first is whether nations should agree to any rules to govern their international trade relations. I fancy that the hon. Member for East Aberdeen (Mr. Boothby) thinks that there ought not to be any rules at all, and I think that one or two speeches have been made from hon. Members opposite in the same vein. The second question we have to decide, if we want some rules, is whether these are the right ones. Thirdly, having decided upon the system, we have to make up our minds whether we are doing the right things to carry it into effect.

I agree that whatever else you do in international trade policy, you have to relate your policy for international trade to the policy which is being pursued for your domestic affairs at home. The answer to the first question must be an unqualified "yes." The existence of some limitation upon the right to impose tariffs, quotas, discriminations and all the rest is obviously in the interests of Great Britain and her Dominions. I am not going to elaborate the case which was made by the senior Burgess for Oxford University (Sir A. Salter). Look at what Britain buys. She buys food, without which she would starve, and raw materials, without which she would have mass unemployment. Apart from coal, Britain sells manufactured articles which other countries can very often do without, and so, obviously, there must be some limitation on the right to exclude exports. I do not think we are in a strong position because we happen to be a large purchaser. The purchaser is only in a strong position when he has money in his pocket and there are plenty of things to buy. It is facile optimism to imagine that we can dictate to the markets of the world because once we were buying from a great number of nations.

I do not rest the case solely on the interests of Great Britain. I rest it on the interests of our Dominions as well. All of us, and particularly the Conservative Party, should hesitate before pursuing a trade policy which is in direct conflict with the wishes of our Dominions. I should like to take the case of Canada. I take Canada for two reasons; firstly, because I have just been there, and, secondly, because in terms of trade with the United Kingdom she is the largest customer. I do not claim that I can represent Canadian opinion, but while I was there I met men of different political parties, economists, civil servants, industrialists and workers, and I found an overwhelming body of opinion in favour of the Geneva Agreement. Opinion was in favour of the Agreement for a very good reason. Canada has got a balanceof-payments difficulty herself. Before the war, Canada very largely bought from the United States and sold to us. She balanced her account by converting sterling into dollars. But she cannot do that any longer, for reasons which are familiar to all of us. There are only two choices open to her. Either she has to stop selling to the United Kingdom and sell to the United States, or she has to stop buying from the United States and buy from the United Kingdom. To our immense advantage, she has adopted the latter course.

What Canada has done is, by a quota system, to put a virtual barrier on a whole range of United States imports into Canada. She has shut out American goods, and has thrown her markets wide open to the manufactures of Britain. That is a situation which is of immense advantage to us, and it is of long-term advantage to Canada. I wish to make it perfectly plain that this policy was only made possible because the Geneva Agreement was in existence. The Canadian and American economies are very closely interlocked. America is a great market for Canada. There is American capital in Canadian industries, and the two countries are linked up through cost of living and price indices, which move up and down together. They cannot cut off from one another.

I can assure the House that any Government in Canada of any political party could not conceivably have done this type of discrimination, which is to our immense benefit, unless it had been done in agreement with the State Department at Washington, and in agreement with the rules and principles laid down at Geneva, as understood and approved by both countries. Not only from our point of view, but from the point of view of our Dominions, there is a strong case for having laid down some agreed rules and principles. I could say the same kind of things with regard to Australia, but I will rest my case on Canada.

The next question is whether these are the right rules. I find some difficulty in talking about principles in foreign trade matters, because the protagonists of the various schools of thought hold their views with religious fervour and do not c[...]nsider what makes economic sense and what makes economic nonsense. I believe that the old issue which divided the Liberals and the Tories, the issue of Free Trade and Protection, is dead. I believe that the issue in its modern form, namely, multilateral trade as against discrimination, is also very nearly dead. I do not believe that anyone who looks at the world today, with all the upheavals, civil war, destruction and so on, can seriously suggest that we could return to the 19th century conception of multilateral trade. I do not believe that anyone with Britain's interests at heart could imagine that that was the right course. I do not believe with our position incredibly weakened economically, that it would be a good thing for us to enter a period of economic anarchy, during which time we struck such bargains as we could.

The issue here is not Free Trade or Protection, or multilateral trade or discrimination, but whether we are have a limit to nations imposing quotas and discriminating just as they will, and whether we are to trade with our Dominions and the United States according to the same rules of the game. We ought to lay down the rules of the game. The principle which underlies Geneva is a good one. It is that a nation that is in a weak position or in trouble with her balance of payments can discriminate. A nation which is in a strong position and has the right balance of payments cannot retaliate. A situation like that seems wholly to the advantage of the United Kingdom. I spent some time in the United States, and I do not think there is any doctrinaire belief in multilateral trade which is sometimes represented to exist there. They recognise perfectly well that the world can only get from the United States what the Americans are prepared to give or for which they expect payment.

I am an advocate of Imperial Preference. It has done a great job for the British Commonwealth in the past, and it will do a great job for it in the future. The case for Imperial Preference has suffered from two things: It has been grossly overstated by Lord Beaverbrook, which I think has weakened it, and I do not think it has been sufficiently praised by His Majesty's Government. It is obviously not true that Imperial Preference is the only or even the main basis of Empire trade. Empire trade depends on being able to sell goods that the Empire wants at a price which the Empire can afford to pay. That is not a materialistic conception of humanity; it is common sense. We have had plenty of things from Canada, Australia, New Zealand, and South Africa which have not been based on economics or on materialism. When we are demanding Empire trade, we cannot expect the Empire to exclude the goods which she wants from the United States, in order to buy goods which she does not want from Britain. I believe that Imperial Preference is going to play a very large part in the future development of international trading relations, not only in the British Empire, but in the application of the Marshall Plan, and in the integration of Europe. Surely, some kind of preferential system is to be the next step.

Perhaps the right hon. Gentleman will tell us what the Government have in mind. They have made a statement about a united Europe, and the bringing of various countries more closely together. The same thing is being said on the other side of the Atlantic. What does it mean? It will not mean a federation of Western Europe; everyone knows that. Nor will it mean a customs union. The next step will be a preferential system. Is it not reasonable for the Government, in the light of this Debate, to go to Havana and say, "How does this fit in with the Marshall arrangements?" I agree that the Marshall arrangements have not gone through, but the State Department must have some idea of the kind of set-up which they want in Europe. The Americans are always saying that they want something sensible done in Europe. I hope that the right hon. Gentleman will indicate in this matter of preference not only within the British Empire but in the Western European field, that the Government will think again and argue their case afresh.

I support the main principle of this Agreement. I hope that the great bulk of opinion in this country will also support it. Rejection of the Geneva Agreement will find satisfaction in very limited circles in the U.S.A. Those who rejected it would be applauded in the Chicago "Tribune," but a rejection of the Agreement would go contrary to those who want co-operation in international affairs, not only in the United States, but in Western Europe, in this country and throughout the whole Commonwealth. They want it, and Canada wants it.

It is all very well laying down documents for international trade, but, in the last resort, our international trading position will depend, not upon international documents, but upon ourselves. We ought to remember that. There are only two kinds of world in which we can live. One is the world of Soviet Russia and her satellites, and the other is the free world outside. If we are to live in the free world, we have to adopt the methods of the free world. What, after all, is the doctrine of the Geneva Agreement? It is not the sort of bilateralism and barter which the hon. Member for Luton (Mr. Warbey) has talked about. It is not the sort of subsidised export world which Dr. Schacht broadcast in Germany before the war; nor is it the Communist system The doctrine of the Geneva Agreement is that prosperity should go to those nations which rely firstly on their native wit and only secondly on governmental action. Wealth should go to the men of nations which invent new processes and find new markets, and not to those who manage to foist their goods by economic trickery on everyone else.

At one time Britain held the key position in a free trading world, and I use those words in their non-political sense. I am certain that America holds the key position in that world today. I observe, as a matter of history and not of argument, that both in the case of Britain, when she was in that position, and in the case of America today, the principal feature of their domestic economies was the price mechanism and the profit motive. There seems to be some strange inconsistency in the Government asking for relatively free world economics and wanting an overplanned economy at home. I cannot see how the two stand together. It is blatant hypocrisy to talk about a system based on price mechanism to govern our export trade, and then talk about planned economy at home.

The Geneva Agreement is only a machine, but it is a machine which has to be used. I support the main principle of it, but I want to see the Government take steps which will make it possible for manufacturers in this country to use that machinery. What is being done to attract American capital to the Commonwealth, to this country or anywhere else? What incentive or inducement is there for risk capital to come in to develop those great resources? There is a lot of talk about capital being necessary, but what are the Government doing about it? The risk is not a commercial risk. It is not a risk based on sterling. It is a political risk that deters it, the fact that at any moment someone may decide to nationalise groundnuts to satisfy doctrinaire beliefs. Who will put money into schemes of that kind?

We want steps taken to restore the price mechanism. What is the good of adopting a trading system when there is inflation in the domestic economy? How are we going to find exports when we have that amount of inflation? Those are the kind of things that want to be done. We criticise the Government not for signing the Agreement, but for failing to take steps which will enable manufacturers and adventurers in this country to put their plan into full effect.

8.30 p.m.

Mr. Clement Davies (Montgomery)

This has certainly been a most interesting Debate and also one of the most extraordinary heard in this House. There have been as many opinions as there have been speakers. Those opinions have differed on both sides of the House, and there does not seem to be, as there usually is, running through the Debate some kind of common measure of agreement on the one side as against a common measure of disagreement on the other.

May I begin with the speech of the Secretary for Overseas Trade, who moved this Motion? He seemed to me to be taking up the position of Touchstone introduce- ing his best girl—I believe the modern jargon is "pin-up" girl—by saying, "A poor thing, Sir, but mine own." There was running through his speech a leaning on one side to the main principles and, on the other to the great and many exceptions. It seemed as if he had written up for his guidance a simple creed something like this: "I believe in multilateral trade, in the removal of all restrictions, in the expansion of trade and in nondiscrimination." Those are perfectly simple principles which everybody can understand. He seemed to go on to say, "Those are the principles to guide me." Then someone says, "How are you going to work this?" and he replies, "Wait a moment, I have underneath here a vast book of exceptions to that general rule." What I am wondering is what weighs most with the Government—the general principles or the exceptions? Which are they going to follow?

The trouble with regard to this is that once a system of restrictions is started, one is led on from restriction to restriction. Once one rule is laid down to stop something, a new problem is created and another restriction is wanted to offset the new problem. We have had an experience of that already in our home affairs in this country. Issue one Order in Council to deal with one set of circumstances and that gives rise to another set of circumstances, until you have some thousand of general orders, as is the case today.

I should like to turn for a moment to the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton). He was rather like the hon. Gentleman who opened the Debate. He expressed a belief in these general principles, but having expressed that belief, he said, "Of course, they cannot be applied in the modern world with which we have to deal. You have got to deal with the situation as you find it. Men are tough." It is just the same thing as one so often hears with regard to religion, "Of course, Christianity is all right, but you cannot apply it in the modern world to these tough people." So the right hon. Gentleman says, "We will have to abandon that and we must stick wholly to our restrictions, tariffs and quotas as we did before the war." It reminds me of the speeches I have heard before from him and his friends, "We are looking forward to this wonderful promised land when there will be freedom for all, with all trading together." As I said on another occasion, it is not really at the promised land that the right hon. Gentleman and his colleagues are looking. It is only that they are holding up a view of a promised land in front of the people, whom they have hitherto deceived.

The hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) accuses the Government of hyprocrisy. He says, in effect, "Look at your policy at home. You are pursuing a restrictive policy, but with the rest of the world you want to open up your trade with everybody and invite everybody to trade with you." But what is the attitude of the right hon. Gentleman the Member for Aldershot and the hon. Gentleman the Member for Monmouth? They want a free-for-all situation at home, but restrictions as far as the outside world is concerned. It is a case of the pot calling the kettle black. I cannot see any difference between two sorts of hypocrisy.

Let us see what is the position today. Many of the hon. Members who have addressed the House during this Debate have thanked heaven that they are not as their ancestors were, that they have learned wisdom, that they have rid themselves of the old shibboleths of the past when that foolish doctrine of the weak minded, Free Trade, operated. Nevertheless, the very men who are using that argument were boasting of the great position which this country had built up in the world. The right hon. Member for Aldershot pointed out, quite rightly, that 200 years ago only seven million people resided here. By 1950 we shall be 50 million. How has the population of this country grown to that extent? Largely because we did not restrict our communications with the rest of the world. We did not close our gates to anyone. We were ready to trade and help, not only with benefit to ourselves, but with benefit to others also. Today they are reaping that benefit, and in no way do I regret it or am I envious of it.

This was the system by which we were able to buy food and raw materials which enabled this country to grow and hold a population which it could not feed itself, and which it cannot feed today. This was the policy which enabled us to give other countries railways and harbours and to build roads and factories as well as give them plant and machinery. Some people seem to regret that today others are in a position to compete with us. I rejoice that the standard of life in every part of the world has risen because of that policy. By opening their gates to us and our gates to them we have, by our own efforts, helped to improve the conditions in the world. That is not a matter for regret. In the main that was done in a period of Free Trade.

What is the position today? Except for ourselves, pretty nearly every country has gone in for restrictive practices. They did what we only began to do in 1914—stop entry across their borders of people who did not happen to be born within their borders. Until that time these shores were open to all, to the benefit of this country and to the salvation of humanity. They, on the other hand, were all the time, by restrictive barriers, trying to live a selfish, isolated life. Because we had expanded in the way we had, and helped our own Dominions, w[...] were able to take a noble and definite part on behalf of democracy in two of the greatest wars in history. Compare the size of this land with any other land in Europe, and compare what this land has done for the rest of the world by going in for a policy of expansion.

That policy is now derided by some hon. Members. Who are they deriding? Not merely the past, not merely the men who used to be in this House, who professed a belief in these doctrines and carried them out, but they are actually deriding more recent people, such as the right hon. Gentleman the Member for Woodford (Mr. Churchill) and the late President of the United States of America. After all, these principles, about which it is today said, "Thank Heavens, they are dead and we have departed from them, for they belong to the eighteenth century and have nothing to do with the modern world," were in paragraphs 4 and 5 of the famous Atlantic Charter Declaration which thrilled the world and brought all democracies together to fight for an ideology. AD our troubles which have since ensued have occurred because of a departure from that ideology. It is only right that I should remind the House of them: Four, they will endeavour with due respect for their existing obligations to further the enjoyment by all States, great or small, victor or vanquished, of access on equal terms to the trade and the raw materials of the world which are needed for their economic prosperity. They desire, fifthly, to bring about the fullest collaboration between all nations in the economic field with the object of securing for all improved labour standards, economic advancement and social security. Will they sneer at that, which inspired democracy in its greatest moment, and pour contempt upon it? What has happened since? As the right hon. Gentleman the senior Burgess for Oxford University (Sir A. Salter) very rightly says, efforts have been made by the nations of the world to translate that into realities. That is why I supported Bretton Woods. I would like the right hon. Gentleman the President of the Board of Trade, who will be replying soon, to tell me whether they intend to go on with that, to do their best to uphold it and to bring it into actual being throughout the world. Not only did I support that, but I supported also the American Loan because that was also a part of this idea that we should be helping one another in order to advance our standard of life. I see no harm in having done so. Very rightly an hon. Gentleman opposite called attention to the fact that we had given in the past century and a half, and given willingly, a sum which has come to anything between £3,000 million and £4,000 million, for which we have had the best of all returns, an indirect advantage and the knowledge that the standard of life in those countries has improved.

I turn to what took place at Geneva. It is good to know that 23 countries came together there from the five Continents of Australiasia, Asia, Africa, America, and Europe, and that 23 nations of all types and all races, from the Chinese to us in Britain, could agree upon the words which appear as a preamble to Appendix A. Those I presume are the principles which will guide them and which have brought them together into a common building to see how they can assist one another and to try to benefit the world: Recognising that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding the production and exchange of goods. Will anybody quarrel with that? That is the main principle underlying this— Being desirous of contributing to those objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce. Who dare say in the face of that, that non-discrimination is a past shibboleth and dead?

In this shrinking world the population is multiplying rapidly, and standards of life are rising, except in devastated, torn Europe. We cannot expect it there with people starving after having come through a devastating war of six years. Take the East. Take America. Even here the population still rises. Even if the standard of life is not rising, there is still a strong urge to see it increasing. What does that mean? It means that there is a greater demand than ever for food, and a greater demand than ever for materials and for the goods those people desire. What is also happening at this moment is that the amount of food that can be spared by countries which used to be able to spare it is getting less and less, and the struggle for that food will became more and more intense. We in this country are in the position that, do what we will, under our modern system of agriculture we can only feed half our population. [Interruption.] I said our modern method of agriculture. Before the hon. Member for Leominster (Mr. Baldwin) and I are dead, I hope there will be changes in that method of agriculture in order to increase the quantity of food which can be raised here.

That is our present position. What, therefore, is wanted? Not restrictions on trade, which underlie this Agreement all the time—not quotas—but an expansion everywhere of that trade so that we can, as we have done in the past, enter into contracts with all and sundry the world over. That, and not a policy of restriction, ought to be the basis. What else do we want? We want, without a doubt—that is why I am so anxious about Bretton Woods—a monetary exchange whereby we can, in our trading with one another, find out easily and fairly what the values are that we are giving and exchanging. Those are the two things we want.

Those are the principles which guide me, subject, of course, to this, that today with the position of the world as it is, we cannot have unregulated trading; we must bring the nations together, as 23 of them were brought together at Geneva. We have to learn, in order that we may gain greater freedom, to surrender part of our sovereignty; and to surrender it to some great authority in which we have all got confidence that it will look after not only our own interests but the interests of everybody else. That is the true meaning of these Agreements, and those are the things I want to see carried out.

I want to ask the President of the Board of Trade this: what part did our own people play at Geneva? We should have been the first to press forward for this, urging it with all our efforts, with all the sincerity that was in us. Rumour has it that we played not a driving part but a braking part, holding back, and that but for the enthusiasm of the Dominions—but for Canada, Australia, South Africa and India, this conference might have been a failure and a disaster instead of accomplishing what it has accomplished. Is that true? If that rumour is true, that the delegation from this country was not helping, and certainly not leading in an endeavour to get a world agreement upon these matters, not prepared to give up certain of its rights in order to gain more, then it is time that that policy was changed on the Front Bench opposite and by His Majesty's Government. I think it is untrue, for it is only in this way, by getting a general world agreement, that I can see prosperity coming back not only to this country but to the world and, the ending of those jealousies which have been created by barriers too narrow and national, so that they created envies and jealousies that ultimately led to war. What we want is fair play and justice for all, peace and propserity for the world.

8.52 p.m.

Mr. J. S. C. Reid (Glasgow, Hillhead)

It is plain that this has been a bad day for this Agreement. I have not detected unqualified support in any part of the House except perhaps in the Liberal Party, and even there I doubt if their support is unqualified. There is no doubt that In all other quarters there has been very closely reasoned opposition to some of the provisions in these Agreements—

Mr. Mikardo (Reading)

What about the hon. Member for Monmouth (Mr. P. Thorneycroft)?

Mr. Reid

The hon. Member for Monmouth was perhaps as favourable as most in this House, but he made it clear that his objections would make him vote for the Amendment, and I am not surprised.

All, however—except, again, perhaps the Liberal Party—must start from this obvious, inescapable fact, that the prosperity and, indeed, the very existence of this nation is in the greatest peril, that a rapid and large increase in our overseas trade is the only way out, and that the main question before us tonight is: how far, if at all, do these documents help us to achieve that rapid and immediate increase in our trade? It is plain that the state of trade of this country is unprecedentedly difficult and complex. I shall not inquire on this occasion how these difficulties have arisen, or whether they could have been avoided by better management. That can be left to another occasion. The fact is that they are there and we have to try to see how we can overcome them.

On these matters I think we must always put before ourselves two questions: first, what kind of a world do we hope to see when we emerge from the shadows; secondly, what can we do now, or in the immediate future, to alleviate our present troubles? As things become darker and more difficult, of course the second question becomes more urgent and the first question becomes more difficult to answer. Nevertheless we must try to answer it. We must try to see what objectives we are endeavouring to reach. Do let our objective be something we can reasonably expect to reach within a measurable period.

My first objection to these documents is that they set out an objective which, however desirable it may be, certainly cannot be fully accomplished within any reasonable period. We ought not to overdo the precision and detail of the picture we draw of the future. I do not believe that anybody can predict with any certainty how things are going to develop. If we put in too much precision, it will simply cause unnecessary difficulties and adjustments when we find things turn out rather differently from what we anticipated. There is an even more serious objection to over-elaborating the picture. It undoubtedly tends to create the impression that the sunshine is not far away, that this objective will be reached within a comparatively short time and with comparatively little difficulty. Of course, there is nothing here so crudely misleading as the story of "rounding recovery corner," but, on the other hand, this document will be taken seriously, and we must try to see that it does not afford grounds for people being misled.

A great deal of the document is very good, and a great deal of the machinery is good. I am in no position to express an opinion in detail about the concessions which have been given or obtained in the course of the negotiations. I am quite willing to believe that we have had a square deal, I do not know; but I say that the other provisions in the agreement, in particular Article I and Articles XI to XIV, are in the long run more important than any immediate results of bargaining as to reductions of tariffs to one country and another. I hope the proceedings at Havana will be influenced by the fact that most of these provisions have been riddled in the course of this Debate. This document takes the form of certain general principles, coupled with escape clauses. My right hon. Friend the Member for Aldershot (Mr Lyttelton) explained how that had come about historically, but it is extremely unfortunate. It would be an appropriate method of framing an agreement of this kind if we expected that we need only make use of the escape clauses for a comparatively short time, but it is bound to lead at last to disappointment, if not to a certain coolness, or even ill will, if we go on relying on these escape clauses year after year.

I pass to examination of what we have to achieve before we can give them up, and we have to achieve a great deal. Admittedly on the face of the document we have to achieve equilibrium, in itself a very long way away, and a very hard goal to attain. That means that there will be no more hard or soft currencies in the world. There cannot be equilibrium so long as there are exchange controls. It means, therefore, that the Government must anticipate that not only are we to reach an era when all currencies are hard, but that we are to reach an era when we can dispense with all these exchange controls. If that is so, I believe that all other detailed controls will go with them because one cannot stand without the other. I believe that there is an immensely long road to travel before we can achieve real equilibrium. I am not at the moment touching upon the fundamental problem of how we are to balance our payments. That comes before anything else. We cannot pretend to have equilibrium until we have solved that problem.

The Government have put time limits in these escape clauses. The Secretary for Overseas Trade told us that after next year there will be provisions for examination and review. After four years there will be provisions under which we cannot act at all unless we have the concurrence of the majority of the contracting parties. Do the Government really think that we shall reach true equilibrium within that period along the lines they have adopted at the moment? It may be that if they mended their ways and adopted some other economic policy we might be able to reach the goal within that period. I do not think that any one can reach the goal on present lines within the period set down in this Agreement.

I will give one simple illustration. There is a very detailed examination and report by the Committee of European Economic Co-operation which lays down extremely detailed figures right down to 1951, figures which do not take into account the dollar shortage because they are all put forward on the footing that there are plenty of dollars. They do not indicate much equilibrium. I should have thought it was extremely difficult to reconcile those figures with this conception. Of course, if the Government think that we can really reach equilibrium, that we can really reach a balance of payments, that we can really abolish restrictions of all sorts which hamper both trade and the passage of money across frontiers—that we can really reach that position within four years—then it is intelligible that we should have the particular form of this Agreement. However, it is much more likely that there is a pretty long struggle ahead of us, and that a good deal of organisation will have to be done before we reach that desirable day when each nation can stand economically on its own feet, and when it is not necessary to have any association of nations or States for economic purposes, because any such association is rendered wholly ineffective by the provisions of these Agreements.

I should have thought that we ought to be looking forward to an ordered sequence of progress from our present sad state to something—if you will—like the picture in this Agreement, but this Agreement does not help us to get there. All this immense amount of work which we shall have to do, all this immense amount of struggle in which we shall have to engage before we reach this Agreement, we shall have to do without any help from the Agreement. We shall have to have a much more flexible arrangement than this Agreement would permit.

I do not like an undue amount of discrimination, but I think that, not only in the present troubled state of the world, but in any reasonable period of years in the future, it is impossible to be certain that there will not be conditions under which some measure of discrimination is necessary. Nobody wants discrimination as a whole to increase, indeed, we wish it to decrease, but it may well happen that while one form of discrimination goes clown on the one side, there may be very good reasons for raising, for the time being, some other form of discrimination in some other direction. That is forbidden. Therefore, the flexibility—which is essential if we are to be ready to meet all manner of circumstances which we cannot foresee—is denied to us.

There are two systems, one in being and one in prospect, which are, if not prevented, at least very seriously hampered by the terms of this Agreement. I refer to the economic system of the British Commonwealth—Imperial Preference—and the system which I think all quarters of the House hope will he established in one form or another—co-operation or association between the Powers of Western Europe and their overseas dependencies. This agreement makes nonsense of the second, and seriously hampers the first. I do not believe that these two systems are in the least bit exclusive of each other, or of others who do not belong to either. I believe it is perfectly possible to work the Imperial Commonwealth system along with the Western European system—the two working into each other—and that it is possible to work both of them without in any way excluding those outside. There may, and there will probably have to be, a considerable measure of discrimination, one way or another, in the working of both of these systems, if they are to [...] effective.

It has been said that small economic units are out of place in the modern world. I am not sure I take quite such a gloomy view as that, but it is quite clear that most of them will want a good deal of rehabilitation before they can stand on their own feet. This agreement excludes any such rehabilitation, otherwise than by direct aid through the Marshall Plan. We are not allowed to help ourselves by association with our neighbours and by planning some sort of economic association short of a customs union. For some reason a customs union, which is very exclusive and discriminatory against those outside, is all right, but a looser form of union is all wrong. That is a thing which I cannot understand.

I should hope that discrimination will be confined within moderate limits. I think, referring to the Commonwealth, our system of Imperial Preference has always been confined within moderate limits. If the words are used not in any narrow or technical sense, but in a broad and popular sense, there is nothing whatever inconsistent between the British system of preference and multilateral trading. If multilateral trading means we are going to trade, not perhaps on exactly the same basis, but effectively, and in a large volume in all parts of the world, then the Imperial Preference system has not been inconsistent with multilateral, trading, and will not be so in the future.

Therefore, the statement that it is necessary to abolish all forms of discrimination in order to reach multilateral trading is founded upon a technical and narrow meaning. I would like to look for a moment at this foul thing, discrimination, and to see just what it amounts to. I fear—and I plead guilty to doing this myself very often—that many of us begin using a word and we get some specific meaning of it into our heads. Somebody else uses the word and we do not realise that they are using it with a different meaning. Then we get at loggerheads, whereas if we tried to express the thing in a number of shorter words, instead of relying on one tag, we might perhaps come nearer to agreement.

I would like to explain what I mean by discrimination, and what I believe is the best meaning to attach to it. I think that, whenever we have a Government who, by their actions, make it more difficult for trader A to trade with trader B, than it is for him to trade with trader C, that is discrimination. It does not matter where B and C are. Therefore, if trader A is, let us say, in New York, trader C is in California, and trader B is in Britain, then the American tariff system is discrimination against B in Britain. I do not object. It is for the Americans to settle their own affairs. I see nothing to criticise in the least in the fact that they discriminate against persons outside the 48 States of the Union. Why should they not do that if they wish? There are very good reasons why they should.

But, in the same way, why should not we, trading with either the Colonies or the Dominions, have discrimination as between that trading link and trading between this country and, it may be, America, South America or any other part of the world? It would be a great pity, and it would injure both parties, if in either case the discrimination was too great; and it may be that the ideal is that there should be no discrimination at all, neither tariff, preference, protection nor regulation. That may be so, but in this imperfect world of ours—and it will be imperfect for quite a time to come—I should have thought that it was visionary, to say the least, to suppose that we should reach that result within any measurable time. Indeed, this Agreement does not contemplate that. Therefore, we must take it that there are circumstances where a moderate discrimination is beneficial. There may be circumstances where it is vital, but it should take a moderate form.

I agree that we want to get rid of prohibitions and quotas, and that kind of thing, as soon as we possibly can. It cannot be done immediately but I would not dissent from the statement that we should do it as soon as we can. I consider that this Agreement contemplates too rigid a timetable, and I doubt if it will work. But, at the end of the day, prohibitions are bad, whether they be by direct Government action or by having so large a tariff that it cannot be got over—it does not matter very much because, in either case, trade is prevented. Quotas are not much better. We must wait until we have the circumstances in which these things can be abolished, and those circumstances involve an immense change in the present economic outlook not only of this country but of many others. We must be careful how we make our plans dependent on the abolition of these matters.

I pass now to the matter of Imperial Preference, and I think that one ought to start by saying that the position of the Mutual Aid Agreement, as explained by the covering letter, if I may call it that, is the furthest that we ought to go. Elimination of all forms of discriminatory treatment, reservation on Imperial Preference and reduction of tariffs and other trade barriers seem to me to be the right objective, provided we do not try to achieve it at a time when economic conditions make that impossible. But these documents do not appear to reserve Imperial Preference in the sense that, if certain circumstances arise when that Preference should be increased in one direction and perhaps reduced in another, we cannot do it.

It is a one-way traffic, and, if Imperial Preference is a suitable method of acting in our circumstances, something similar—I do not say the same thing at all, but something of that kind—may be wanted when we come to think out a system for Western Europe. I would never say that I thought our system of Imperial Preference was sacrosanct and never to be touched. That would be foolish, but I do say that both that system and a system of tariffs, and, indeed, all other discrimination, ought to move as the times require, and that there ought not to be discrimination against Preference as in a question with tariffs. I say so, for this reason.

Let us consider the relative position of the United States and the British Commonwealth. Politically, the 48 States are united under a central Government with a fairly rigid constitution; economically, they are surrounded by a ring fence with tariffs at the gate, which goes well with their political set-up. That is perfectly all right, and nobody objects or criticises: it is an admirable scheme suited to their conditions. We, on the other hand, have a much looser political organisation, and, therefore, we have a much looser economic organisation. We do not have a ring fence round the British Empire, but we do have a system of preferences as between different parts of the Commonwealth. It seems to me, in the different political and physical circumstances of these two great associations of English-speaking people, that these two methods of economic defence correspond with the other factors in the situation, and we simply cannot accept a document which does not recognise that our method is as valid as anybody else's. We think that this document may very well hinder the economic development of the Commonwealth, because it does not allow for the emergence of possible, and even probable, circumstances in which some switch will be necessary of our present methods of discrimination.

We agree—at least, all my hon. Friends who have spoken have agreed—that it is going to make extremely difficult any political integration, on the lines discussed last week, if we are forbidden to accompany that by any measure of economic integration, short of a customs union. Therefore, on both these grounds, that it is hampering the development of the British Commonwealth and the establishment of a Western Union, we think that this is a bad Agreement. We agree that there are good parts in it, but we hope that, in the light of this Debate, when matters come to be further pursued in Havana, the Government will see that they do not enter into any further commitments there which make more difficult, in this already difficult world, the development of either the British Empire or Western Europe.

9.21 p.m.

The President of the Board of Trade (Mr. Harold Wilson)

I think it is always a sign that the Tory Party is more than usually bankrupt in policy, and more than usually divided in its ranks, when they put up the right hon. and learned Gentleman to wind up, because—

Captain Crookshank (Gainsborough)

Most offensive from a new boy.

Mr. Wilson

—he has a genius for covering up division in its ranks. I think he has done so in the speech we have just heard. He was helped in this by the Amendment on the Order Paper. It is almost a self-contradictory formula, and one which seems to be capable of bringing under its umbrella, first of all, the right hon. Member for Aldershot (Mr. Lyttelton), whose approach to the problem was one at which no one could grumble, and, secondly, the hon. Member for East Aberdeen (Mr. Boothby), who took an entirely different line from that taken by the right hon. Gentleman. The right hon. Member for Aldershot said he thought the multilateral approach was ultimately right, but that it was far too early to be moving towards it. The hon. Member for East Aberdeen said that it was never right, and could not be right, and put forward a scheme which is entirely different from that contemplated by the right hon. Gentleman.

Then the hon. Member for Monmouth (Mr. P. Thorneycroft), bearing out what he has recently been writing, seemed to support, in general, the lines of the Geneva Agreements, though he had one or two reservations to make. The Debate, which one has to admit, on both sides, has cut right across party lines, has dealt mostly with the Charter, with the General Agreement, and with the general principles of the Charter and the General Agreement, rather than with the tariff deal and with the concessions granted by one side and another at Geneva on tariffs or on preferences. I want to say a word or two about tariffs and preferences because they were raised by the right hon. Member for Aldershot, and mentioned by one or two other hon. Members.

The right hon. Gentleman quoted figures from the White Paper and said that the total amount of trade involved in the concessions given by ourselves amounted to £130 million, whereas the total amount of trade on which we gained concessions amounted only to £92 million. He also said that this would suggest, prima facie, that we had had the worst of the deal, though he said it was never possible to be very sure about that. I entirely agree. We cannot use these figures to prove whether we have made a good or a bad deal. For instance, it is a fact that the figure he used includes a substantial amount of trade in raw materials and food which was coming into this country duty free, and we have bound the rates of duty on them. I am quite sure the right hon. Gentleman would agree that it would be very much to the disadvantage of this country to contemplate increasing the rates of duty on, for in- stance, the basic raw materials which we need for our manufactures.

Another reason why it could never be more than rough and ready, and why it is completely misleading, is that these are the figures of trade set at risk, not the figures of trade which is lost. It would include a certain amount of trade, for instance, in motor cycles in Australia; on which we have given up our preference. I do not think it is likely, having given up our preference in Australia, that we are going to lose trade there, because we do actually sell motor cycles in the United States without much difficulty. It does not follow at all that there is going to be no loss at all on items of that kind, but I think there has been, perhaps, too much of a feeling tonight that the concessions we have given on our preferential trade with other Commonwealth countries really represent a serious inroad into Imperial Preference.

The concessions given relate to about 30 per cent. of our preferential trade with other Commonwealth countries, or 16 per cent. of our total trade—the total figures on which we have made any concessions at all. But if we take the figures on which we have agreed to eliminate preference, they cover only 5 per cent. of our preferential trade and only about 2½ per cent. of our total Commonwealth trade. I think, therefore, that one must be using one's imagination to pretend that a limitation of 2½ per cent. represents a serious inroad into Imperial Preference.

Mr. Lyttelton

Will the right hon. Gentleman discuss the items in the areas in which Imperial Preference is bound?

Mr. Wilson

I am not sure whether the right hon. Gentleman is referring to our own tariffs or Commonwealth tariffs. If the right hon. Gentleman is talking about our own tariffs, they are preferences granted to Commonwealth friends, with their agreement, at their request, and that is part of the deal they were concluding with other countries. I do want to make it plain that right through these Conference discussions we had the fullest consultation with the Dominions; and in fact, in the last few weeks of the Conference, when we were dealing day by day with tariff deals, we did actually go through them with all the other Commonwealth countries concerned, line by line and item by item, and their complete agreement on every item and every line was obtained before any offer was made.

On the other hand, we have gained concessions in a number of markets—none of them spectacular, I would readily admit right away. But on the United States tariff there has been a concession on 3,400 items covering trade valued at 1,800 million dollars in 1939, 78 per cent. of the total trade. It is too early to say whether that has been a major concession in terms of the trade we can hope to gain. We are certainly getting help in our linen and woollen trades. I hope we shall get the benefit later on for our worsteds, china ware and whisky, when supply catches up with demand, which it has not yet. There are substantial concessions given to other members of the sterling area; particularly the concessions on wool, meat, butter, and so on, concerning some of the Dominions.

Hon. Members who have been in touch with a large range of British industry, as many hon. Members on the opposite side of the House have, I know, in connection with the Geneva Agreement, will already be finding in quite small industries how very useful the concessions are in opening up new markets abroad. In many cases, they are finding them of real help getting into the North American markets for the first time. I can give one example. I have had a letter from one of the firms concerned in the worsted and woollen industry. They have received from New York the full details of the new tariff agreement on worsted and woollen piece goods. They write that the firm had been critical of the Board of Trade as being unable to handle our export trade, but seeing how the job has been done, they intend to be among the first to congratulate us. They say: We congratulate all concerned who have taken a share in that job. On the new basis, though still high, there is a long-term prospect of reasonable trade in the American market on high-class and specialist lines. We should like to congratulate the negotiators on the results of their labours, and to thank them. This is the first time that we have felt that real support has been given to us in our export drive. Before leaving that subject, I say that it would be wrong for any of us to discuss this as though the concessions given, and the attacks made on preference or on our tariffs, have been simply a battle between ourselves and the United States. A large number of countries was represented at Geneva, and attacks on individual items in our tariff, and certainly on individual items in our preference list, came, to a very considerable extent, from the nations of Western Europe, with whom hon. Members on both sides of the House wish to see us developing our trade.

I would be the first to admit that the Charter, whether in its wording—to which the right hon. Member for Aldershot referred—or in all its content, is certainly not perfect; but it does represent the best level of agreement we were able to get after a very long-drawn-out and difficult conference. There are a number of points in it, referred to by my hon. Friends, about which no one can feel completely happy. For instance, I am not happy about the provisions on tied loans, which were referred to by the hon. Member for Luton (Mr. Warbey) and the hon. Member for East Aberdeen; but we were not able to gain our point on that, and did not regard it as something we should push to breaking point. Certain others, such as the very necessary escape clauses on non-discrimination during the transitional years which lie ahead, we should have had to push to breaking point in the conference. Similarly, had there been an undue attack on our preference, such as would destroy the basis of a fair deal on both sides, we should have had to resist that to breaking point.

The main criticism we have heard tonight has been that the agreements drawn up at Geneva, now being discussed at Havana, are long-term, and have no relevance to present conditions. There has been particular criticism that we are tied down prematurely to obligations on non-discrimination, and that nothing is being done to restore the fundamental unbalance of world payments. I do not disagree with that point of view. However, this is essentially a long-term scheme; it is an attempt to legislate in advance for buyers' market conditions. It is an attempt which we must make now, or we may entirely miss the opportunity of seeing that end achieved; it is an attempt now to see that the world does not drift back into the vicious spiral we had in prewar days, of protective quotas, unilaterial self-frustrating measures, rising tariff barriers, competitive currency devaluation, and similar measures. I would be the first to agree that the Charter will not work or solve the problems of the world on its own. It certainly will not work unless we can find some solution to the world dollar problem; and that is why the various other measures—the Marshall Plan, measures for various international agencies, schemes for world development, the work done by the International Fund, by the Food and Agriculture Organisation, the International Bank, and, above all, any measures that can be taken by individual nations, groups of nations, or by international agencies for the restoration and production of the old world—are absolutely essential. I agree, therefore, with the views expressed by many hon. Members that this scheme will not, of itself, solve the problems of world trade.

That is what I said at Geneva in the Plenary Session, that unless we could solve these other problems much of the work done at Geneva would have been wasted. I went on to relate the measures we ourselves propose to follow, and would have to follow as a condition of our survival, which include many of the measures dealt with in the Opposition Amendment. I want to make it quite clear that what happened at Geneva has not tied our hands and prevented us from doing just those things we need to do in the immediate months and years ahead in order to ensure our own national survival.

Let me tell the House why we think this is the right solution to the world problem and to our national problem as a long-term measure. Certainly no country was worse hit than this country in the interwar period—in the 1930's—by protective quotas, competitive currency devaluations and all these other things. It is too easily forgotten that our trade is made up of a very large number of separate consignments to a very large number of destinations. It is not true to suggest that a large part of our trade is necessarily concentrated in any one part of the world. For instance, in 1947, our export trade was made up of something like 3 million separate packages of trade. It is perfectly obvious that quotas and discriminatory action taken by overseas governments can have the most serious effect on our exports.

The second reason why we support this as a long-term measure is because it provides limited assistance for increasing exports to dollar areas. Thirdly, it is very important in that it provides an organisation for the nations to get together and discuss world-trade problems. As the hon. Member for Monmouth said, it provides a set of rules—and these rules may have to be amended as we go forward—instead of individual countries slapping on quotas and new tariffs without reference to the effect on other nations. We now have an organisation whereby any country thinking of acting in such a way, has to prove its case before the other nations, many of whom will be affected by its actions.

We had, up to 1931, as many hon. Members have said, what was virtually an automatically working gold standard, a system which, with all its faults, did work. That went in 1931, and in its place we had nothing. The postwar problem is to set up, by international conferences and organisations, something to take its place, because there is no hope and no desire of going back to the old pre-1931 gold standard. Certainly this method of the 1930's failed so far as this country was concerned. Let us take the case of the cotton industry, to which many hon. Members have referred in this Debate. In spite of the preferences, Colonial quotas and one thing and another, the export of cotton piecegoods in 1938, after seven years of trying to save that industry from the worst effects of overseas discrimination, were the lowest for any year since 1850, that is to say, for Nearly 90 years.

It is too often claimed by hon. Members opposite that the policies they introduced in lieu of the gold standard looked like solving the problem of our export trade. They have said several times that preferences really saved the trade so far as our Empire is concerned. I ask them not to say that too often, because they may come to believe it. It does not happen to be true. There was an improvement in trade from 1932 to 1937. It was an improvement in world trade, due to the trade-cycle recovery over that period. If we compare 1930, which was a year of depression, with the year 1938, we find that the volume of British export trade was actually 17 per cent. less 1938. It is certainly not true that the measures taken solved the problem over that period. It is not even true to say that these measures increased our exports to the Commonwealth, because our total value of Commonwealth trade in 1938 was less than in 1930.

Therefore, we have to look to other things, not entirely to supplant, but certainly to supplement some of the measures which hon. Members opposite were supporting in those days. I have already said that the Geneva draft is still, from our point of view, in no sense perfect. I think many hon. Members have agreed that it is a great improvement, from the British point of view, on the earlier draft that has been debated in this House. Some of the struggles at Geneva to free our hands in the very difficult years ahead on the question of non-discrimination have certainly improved this measure from our point of view.

We have now three suggestions in front of us, so far as non-discrimination is concerned. Under the general agreement, we have freedom in the matter of discrimination up to the end of 1948. At the end of 1948, it is hoped that we shall have a somewhat clearer idea of the world balance of payments position. So long as any country has a balance of payments difficulty up to 1952, the right of discrimination is accorded, subject to the right of other countries to complain and subject to a fair hearing and agreement in the Organisation.

After 1952—which the right hon. Gentleman said, not unfairly, seemed to be an arbitrary date—action of this kind requires the prior approval of the International Trade Organisation. We think that is right. We have to think in this matter not only about our own rights, and impose conditions on our imports; we have to think too of our position as an exporting nation. Unless, after 1952, we can be pretty certain that our exports will be sold abroad, and not frustrated by any of these measures of import restrictions and other things all too prevalent at the present time, no amount of freedom in respect of our import trade will save the day for us if we are unable, because of Government action abroad, to see our exports.

It has been suggested today that the Agreement envisaged at Geneva prevented us from taking a whole series of measures immediately necessary for our survival. As the right hon. Member for Aldershot has said, it was important to develop a sense of the practical. It has been suggested that we were prevented from entering into necessary bilateral agreements which we need in the next year or two. The hon. Member for Monmouth seems doubtful about the value of some of these, and was afraid that they might frustrate our long-term multilateral needs. I think that, after some of the work on which I have been engaged during the last two or three months, no one will accuse me of being a doctrinaire multilateralist, nor one who will shrink from bilateral dealings with any country in the world prepared to enter into a reasonable deal with us.

There is nothing in the letter or spirit of the Geneva Agreement which would deny us, or any other nation in similar circumstances, from making bilateral arrangements. At Geneva, we warned the other nations that we would regard that as necessary to our economic policy. We have not been slow in entering into such a policy. I think that the best answer to the fears expressed is the facts of our policy in bilateral matters since the end of the Geneva Conference. Last week, I gave details to the Press of some 17 trade negotiations which we have had with individual countries since August—since the preparation of this Charter. In fact, we have actually concluded agreements with 22 countries since August. We have talks now going on, or which will soon be going on, with a further 10 different countries. We are, in fact, prepared to have talks with any country that has useful goods to send us, and which is prepared to take our own goods, and work out with us appropriate means of payment.

The Amendment has referred to Western Europe, in which we have a special interest. Our willingness to conduct trade talks is not limited to Western Europe. It has extended already to many countries in Eastern Europe, and to countries in North and South America. This policy is not inconsistent with the Agreement drawn up at Geneva. These agreements were enabling manufacturers to return to buyers' market conditions. These bilateral agreements are designed to increase the total flow of trade between world countries in a period of shortage. There are many things we have got which we would not willingly export in ordinary times, and we only export them now because, in return, we get something which we need more.

Mr. Warbey

I do not quite follow my right hon. Friend's point that these bilateral agreements are only required under sellers' market conditions. Surely, it is later on when buyers' market conditions prevail that it will be most important for us, as for every country, to have guaranteed markets for exports.

Mr. Wilson

The kind of bilateral agreements concluded now are appropriate solely to sellers' market conditions because they bring into the world markets the goods which would normally be consumed in the country of origin. I would warn my hon. Friend that these are not patterns for long-term agreements in conditions of a buyers' market. There were a number of rather exclusive bilateral agreements concluded by His Majesty's Government before the war. Generally the form of them was that the Government said to some countries, like Denmark, "If you will take not less than a certain proportion of our coal we will take not less than a certain proportion of your butter." One result of that was to drive the Polish coal and other coal to the Mediterranean, making our export position there worse.

I feel that much of our trade, spread as it is over such a wide range, is not capable of being progressed through bilateral trade agreements. As I have already said, our exports last year were made up of three million separate packages of goods, and I cannot conceive of any bilateral technique—and I have some experience of it in recent months—in which it is possible to include in the trade agreement that wide range of goods which we shall be wanting to sell.

There is another important part of our bilateral agreements, and it is that we are leading the way, and preparing the way, for the kind of trading system we want to see. An important part of each agreement we make is that it is an attempt to remove or relax some of the strangling import restrictions placed on our trade by other countries. We have had a fair measure of success in this in Sweden, and I hope in the case of many other negotiations we shall see our trade freed from these restrictions. Giving these facts is the best answer to the argument that our freedom is limited in these critical days in the matter of bilateral agreements.

The same is true of what has been said about the Marshall Plan and economic co-operation in Western Europe. It has been suggested that what is being proposed for Western Europe is completely inconsistent and incompatible with what has been laid down in this Charter and Agreement. At least, Mr. Marshall and the United States Administration do not think they are inconsistent, because they are supporting both proposals at the present time. I feel that, perhaps, hon. Members opposite tend to think of economic co-operation, whether for Western Europe, the Empire or anywhere else, purely in terms of tariffs, tariff agreements and preferential agreements. The modern outlook on this economic co-operation between nations or groups of nations goes far beyond such considerations.

That, of course, is the mainspring of the Marshall Plan and of the work that has been and is being done in Western Europe. Certainly we have seen no inconsistency between the long-term proposals of Geneva and the short-term proposals which have been worked out in Paris. His Majesty's Government made a practical approach to this problem last summer and the Secretary of State for Foreign Affairs has certainly taken a lead in these matters. He has given evidence of the very firm intention of the Government to develop, in the closest co-operation with other Western European countries, the enormous opportunity offered to us in Western Europe generally by this Plan. Indeed, in the work done at Paris, with the good will of all the countries there, one of the main aims was to set up, both as between the 16 participating countries and the rest of the world, a sound and balanced multilateral trading system based on the principles which guided the framing of the draft Charter at Geneva. Certainly we agree that, in the conditions in which Europe finds herself today, it is not possible to run before we can walk, but the cooperation that we have seen in the past few months shows that we are at least helping one another to learn to walk and also that we are walking in the right direction.

The main line of attack on these Agreements has been the suggestion that the concessions made at Geneva on preferences virtually mean the end of the British Empire. That particular statement has not been made here today, although it was made in certain sections of the Opposition Press about the time of the publication of the Geneva Agreement. We on this side have never believed that the bonds which have kept the Commonwealth together have been based on the cash nexus of Imeprial Preference. The common traditions of this country and the Empire go far beyond the introduction of Imperial Preference.

Some of the things I have heard at various times about the wrangles at Ottawa and elsewhere about preferences seem to have done more to endanger the Empire than to cement it together, but to say that the bargains entered into at Geneva represent a weakening of the links of Empire is fantastic and just hysterical. When, as I have said, we have eliminated preferences on the total volume of trade amounting to only two and a half per cent. of our pre-war Imperial trade, we can see how completely unfounded that suggestion is. Yet we can read in the "Daily Express" in big capital letters: The Big Bad Bargain is sealed. The Big Bad Pact is made. The citadel of Imperial Preference is breached. The suggestion is that the Empire is rapidly dissolving. Whatever may be thought by the Opposition Party in this connection, the Empire certainly does not think so. The hon. Member for Monmouth mentioned the very keen interest of Canada in what is being done at Geneva. If there was more time, I would have liked to have a discussion with the hon. Member for East Aberdeen to ask him whether in the area of economic unity he envisages, Canada would form a part, because if Canada would form a part he would have to approach this matter with a very different economic philosophy from the one he propounded today.

Let us take what has been said in the Commonwealth Parliaments in this connection. Mr. Walter Nash, a very great friend of this country and a member of a Government whose friendship and whose practical help in the past few years goes far above and beyond any considerations of tariffs and preferences, said, when he was challenged on the matter in the New Zealand Parliament: Where preferences have been amended or altered in any way, they have been amended or altered after discussion and by agreement with all the countries in the British Commonwealth, and although it is not good to say this, they have been beneficial, and if anyone has got the best of the bargain, I think we have got it. He meant the Commonwealth countries. In answer to a supplementary question, he said: There is not a chance of anything being done by this Government that will breach the relations of New Zealand with the old country. We ourselves subscribe to that. If there were time, could give similar quotations from other Commonwealth Ministers.

What hon. and right hon. Gentlemen have failed to see this evening is that our economic links with other Commonwealth countries now and in the period since Geneva are far stronger than they have ever been before. At the concluding plenary session at Geneva, I gave clear notice that we should find it necessary to strengthen our economic links with other Commonwealth countries and I can quite faithfully tell the House that in the last five months there has been more concrete evidence of close and really effective Commonwealth economic co-operation than in the whole of the 20 years of the inter-war period.

Let us look at some of the facts. First, there was the Sterling Area Conference in which the various sterling area countries got together as a team to work out combined methods of dealing with the dollar problem because it was a problem common to them all. [An HON. MEMBER: "There is no sterling area."] With the co-operation of the Dominions concerned we have pushed up our rate of food purchases from the Dominions to the absolute limit set by our available supplies. We bought 7 million cwt. of meat from New Zealand last year compared with less than 5½ million cwt. in 1938, and if there were any more available I am sure my right hon. Friend would have been the first to go for it. Our agreements with South Africa and Australia, our trade negotiations with Canada at a time of great economic difficulty for Canada, should give the lie to the idea that, as a result of Geneva, we have weakened our links with the Empire.

Next, take the case of Rhodesian tobacco. This has been quoted very much in relation to Preference concessions. It is true that we have made a concession on Rhodesian tobacco. The present preference falls from 1s. 6½d. to 1s. if the revenue duty is reduced to the level prevailing before April, 1947—and we hear moans that we have sold the Rhodesian tobacco producers down the stream, breaking another link of Empire. What are the facts? Our tobacco manufacturers have just concluded a long-term development and purchase agreement for Rhodesian tobacco covering 5 years ahead—the biggest thing we have ever done in the Rhodesian tobacco trade—providing that we purchase two-thirds of Rhodesian tobacco exports on an expanded production. Before the war we were importing about 18 million lb.; this year we shall hope to get about 29 million lb.; next year, if all goes well with the production, about 37 million lb.—double the prewar rate.

Let us take timber, hardwoods. The House knows our dependence on dollar sources for hardwoods—[An HON. MEMBER: "Where is it?"] We have turned from dollar sources to our Colonies in Africa. From Nigeria our prewar imports were 1,100,000 cubic feet; this year they were 2.8 million cubic feet. From the Gold Coast they were 413,000 cubic feet before the war; 3¼ million cubic feet this year. Where we have not been able to get more out of the Colonies because of the deficiency in rail and port facilities, we have actually gone in and done our best to improve those facilities.

I need not say what my right hon. Friend the Minister of Food is doing in food development in West Africa—[Interruption.]—more than ever the Tory Government did. [An HON. MEMBER: "Ask the housewife."] It will be realised that we are having to do this at a time when the rails, the locomotives, the wagons, all the equipment and machinery required for developing these areas, are in a state of acute shortage, when we need them at home, when we are criticised by the Opposition for exporting any of them and yet, because these were not exported in the spacious days before the war when these things were in surplus, when the workers who could make them were unemployed—because of that we are having to export them now and, even so, we are doing more development than was ever done by the Party opposite.

So I leave this question to be judged on facts and not on theory—whether the Geneva Agreement is in fact preventing us from having the Empire development, the bilateral trade agreements, co-operation with Western Europe, which this country has set as its programme for the imme-

diate future. On all those facts I am sure the House will agree it is not the narrow consideration of Imperial Preference that we shall be pursuing, but the full programme of Imperial development, because His Majesty's Government believe that in that we hold the key to the future.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided: Ayes, 256; Noes, 111.

Division No. 65.]	AYES.	[10.0 p.m
Adams, Richard (Balham)	Dugdale, J. (W. Bromwich)	Levy, B. W.
Allen, Scholefield (Crewe)	Dumpleton, C. W.	Lewis, A. W. J. (Upton)
Alpass, J. H.	Dye, S.	Lipson, D. L.
Anderson, F. (Whitehaven)	Ede, Rt. Hon. J. C.	Lipton, Lt.-Col. M.
Attewell, H. C.	Edwards, John (Blackburn)	Longden, F.
Attlee, Rt. Hon. C. R.	Edwards, N. (Caerphilly)	Lyne, A. W.
Austin, H. Lewis	Edwards, W. J. (Whitechapel)	McAllister, G.
Ayles, W. H.	Evans, A. (Islington, W.)	McGhee, H. G.
Ayrton Gould, Mrs. B.	Ewart, R.	McGovern, J.
Bacon, Miss A.	Fairhurst, F.	McKay, J. (Wallsend)
Barnes, Rt. Hon. A. J.	Farthing, W. J.	McKinlay, A. S.
Barstow, P. G.	Fernyhough, E.	McLeavy, F.
Barton, C.	Field, Capt. W. J.	MacMillan, M. K. (Western Isles)
Battley, J. R.	Fletcher, E. G. M. (Islington, E.)	McNeil, Rt. Hon. H.
Bechervaise, A. E.	Foot, M. M.	Macphersen, T. (Romford)
Belcher, J. W.	Forman, J. C.	Mathers, Rt Hon. G.
Bellenger, Rt. Hon. F. J.	Fraser, T. (Hamilton)	Medland, H. M.
Berry, H.	Gaitskell, Rt. Hon H. T. N.	Mellish, R. J.
Beswick, F.	Ganley, Mrs. C. S.	Messer, F.
Binns, J.	George, Lady M. Lloyd (Anglesey)	Middleton, Mrs. L.
Bottomley, A. G.	Gibson, C. W.	Mikardo, Ian
Bowden, Flg.-Offr. H. W.	Gilzean, A.	Millington, Wing-Comdr. E. R.
Bowles, F. G. (Nuneaton)	Glanville, J. E. (Consett)	Mitchison, G. R.
Braddock, Mrs. E. M. (L'pl, Exch'ge)	Greenwood, A. W. J. (Heywood)	Monslow, W.
Bramall, E. A.	Grey, C. F.	Moody, A. S.
Brook, D. (Halifax)	Grierson, E.	Morley, R.
Brooks, T. J. (Rothwell)	Griffiths, D. (Rother Valley)	Morgan, Dr. H. B.
Brown, George (Belper)	Guy, W. H.	Morris, Hopkin (Carmarthen)
Brown, T. J. (Ince)	Hairs, John E. (Wycombe)	Morrison, Rt. Hon. H. (Lewisham, E.)
Bruce, Maj. D. W. T.	Hale, Leslie	Moyle, A.
Buchanan, Rt. Hon. G.	Hamilton, Lieut-Col. R.	Murray, J. D.
Burden, T. W.	Hardman, D. R.	Nally, W.
Burke, W. A.	Hastings, Dr. Somerville	Naylor, T. E.
Butler, H. W. (Hackney, S.)	Haworth, J.	Neal H. (Claycross)
Byers, Frank	Henderson, Rt. Hn. A. (Kingswinford)	Nichol, Mrs. M. E. (Bradford, N.)
Carmichael, James	Henderson, Joseph (Ardwick)	Nicholls, H. R. (Stratford)
Castle, Mrs B. A.	Herbison, Miss M.	Noel-Baker, Capt. F. E. (Brentford)
Chamberlain, R. A.	Hobson, C. R.	O'Brien, T.
Champion, A. J.	Holman, P.	Oldfield, W. H.
Chetwynd, G. R.	Holmes, H. E. (Hemsworth)	Oliver, G. H.
Cluse, W. S.	Hoy, J.	Paget, R. T.
Cobb, F. A.	Hudson, J. H. (Ealing, W.)	Paling, Will T. (Dewsbury)
Collick, P.	Hughes, Hector (Aberdeen, N.)	Parker, J.
Collindridge, F.	Hughes, H. D. (W'lverh'pton, W.)	Parkin, B. T.
Collins, V. J.	Hutchinson, H. L. (Rusholme)	Paton, Mrs F. (Rushcliffe)
Colman, Miss G. M.	Hynd, H. (Hackney, C.)	Paton, J. (Norwich)
Comyns, Dr. L.	Hynd, J. B. (Attercliffe)	Pearson, A.
Cook, T. F.	Irvine, A. J. (Liverpool)	Perrins, W.
Cooper, Wing-Comdr. G.	Irving, W. J. (Tottenham, N.)	Popplewell, E.
Corbet, Mrs. F. K. (Camb'well, N.W.)	Isaacs, Rt. Hon. G. A.	Porter, E. (Warrington)
Corlett, Dr. J.	Janner, B.	Pritt, D. N.
Crossman, R. H. S.	Jay, D. P. T.	Proctor, W. T.
Daines, P.	Jeger, G. (Winchester)	Pursey, Cmdr H.
Davies, Clement (Montgomery)	Jeger, Dr. S. W. (St. Pancras, S.E.)	Randall, H. E.
Davies, Edward (Burslem)	Jones, D. T. (Hartlepools)	Rees-Williams, D. R.
Davies, Ernest (Enfield)	Jones, Elwyn (Plaistow)	Reeves, J.
Davies, Harold (Leek)	Jones, P. Asterley (Hitchin)	Reid, T. (Swindon)
Davies, Haydn (St. Pancras, S.W.)	Keenan, W.	Richards, R.
Deer, G.	Kenyon, C.	Robens, A.
de Freitas, Geoffrey	Key, C. W.	Roberts, Emrys (Merioneth)
Diamond, J.	Kinley, J.	Roberts, Goronwy (Caernarvonshire)
Dobbie, W.	Lawson, Rt. Hon. J. J.	Rogers, G. H. R.
Dodds, N. N.	Lee, F. (Hulme)	Ross, William (Kilmarnock)
Donovan, T.	Leslie, J. R.	Royle, C.
Salter, Rt. Hon. Sir J. A.	Thomas, D. E. (Aberdare)	Wigg, George
Sargood, R.	Thomas, I. O. (Wrekin)	Wilcock, Group-Capt. C. A. B.
Scott-Elliot, W.	Thomas, John R. (Dover)	Wilkes, L.
Segal, Dr. S.	Thurtle, Ernest	Wilkins, W. A.
Sharp, Granville	Tiffany, S.	Willey, O. G. (Cleveland)
Shawcross, Rt. Hn. Sir H. (St. Helens)	Titterington, M. F.	Williams, D. J (Neath)
Silverman, J. (Erdington)	Tomlinson, Rl. Hon. G.	Williams, J. L. (Kelvingrove)
Silverman, S. S. (Nelson)	Turner-Samuels, M.	Williams, Rt. Hon. T. (Don Valley)
Simmons, C. J.	Ungoed-Thomas, L.	Williams, W. R. (Heston)
Skeffington-Lodge, T. C.	Vernon, Maj. W. F.	Willis, E.
Skinnard, F. W.	Viant, S. P.	Wills, Mrs. E. A.
Smith, S. H. (Hull, S.W.)	Wadsworth, G.	Wilmot, Rt. Hon. J.
Sorensen, R. W.	Walker, G. H.	Wilson, Rt Hon. J. H.
Soskice, Sir F.	Wallace, H. W. (Walthamstow. E.)	Wise, Major F. J.
Stamford, W.	Webb, M. (Bradford, C.)	Woods, G. S.
Steele, T.	Wells, P. L. (Faversham)	Wyatt, W.
Stewart, Michael (Fulham, E.)	Wells, W. T. (Walsall)	Yates, V. F.
Strachey, Rt. Hon. J.	West, D. G.	Younger, Hon. Kenneth
Sylvester, G. O.	Westwood, Rt. Hon. J.	Zilliacus, K.
Taylor, H. B. (Mansfield)	Wheatley, J. T. (Edinburgh, [...].)	TELLERS FOR THE AYES:
Taylor, R. J. (Morpeth)	White, H. (Derbyshire, N.E.)	Mr. Snow and
Taylor, Dr. S. (Barnet)	Whiteley, Rt. Hon. W.	Mr. George Wallace.
NOES.
Agnew, Cmdr. P. G.	Headlam, Lieut.-Col Rt. Hon. Sir C.	Prior-Palmer, Brig. O.
Amory, D. Heathcoat	Hogg, Hon. Q.	Raikes, H. V.
Baldwin, A. E.	Hollis, M. C.	Ramsay, Maj. S.
Beamish, Maj. T. V. H.	Hulbert, Wing-Cdr. N. J.	Reed, Sir. S. (Aylesbury)
Birch, Nigel	Hurd, A.	Reid, Rt. Hon. J. S. C. (Hillhead)
Boles, Lt.-Col. D. C. (Wells)	Hutchison, Lt.-Cm. Clark (E'b'rgh, W.)	Roberts, H. (Handsworth)
Boothby, R.	Jeffreys, General Sir. G.	Ropner, Col. L.
Bossom, A. C.	Jennings, R.	Ross, Sir R. D. (Londonderry)
Bower, N.	Joynson-Hicks, Hon. L. W.	Shepherd, W. S. (Bucklow)
Boyd-Carpenter, J. A.	Keeling, E. H.	Smiles, Lt.-Col. Sir W.
Braithwaite, Lt.-Comdr. J. G.	Kerr, Sir J. Graham	Smith, H. N. (Nottingham, S.)
Bromley-Davenport, Lt.-Col. W.	Langford-Holt, J.	Snadden, W. M.
Buchan-Hepburn, P. G. T.	Law, Rt. Hon. R. K.	Stewart, J. Henderson (Fife, E.)
Bullock, Capt. M.	Legge-Bourke, Maj. E. A. H.	Stoddart-Scott, Col. M.
Clarke, Col. R. S.	Lennox-Boyd, A. T.	Strauss, H. G. (English Universities)
Clifton-Brown, Lt.-Col. G.	Linstead, H. N.	Studholme, H. G.
Crookshank, Capt. Rt. Hon. H. [...]. C.	Lloyd, Maj. Guy (Renfrew, E.)	Taylor, C. S. (Eastbourne)
Crosthwaite-Eyre, Col. O. E	Lloyd, Selwyn (Wirral)	Taylor, Vice-Adm, E. A. (P'dd't'n, S.)
Crowder, Capt. John E.	Low, A. R. W.	Teeling, William
Digby, S. W.	Lucas, Major Sir J.	Thomas, J. P. L. (Hereford)
Dodds-Parker, A. D.	Lucas-Tooth, Sir H.	Thorneycroft, G. E. P. (Monmouth)
Donner, P. W.	Lyttelton, Rt. Hon. O.	Thornton-Kemsley, C. N.
Dower, Lt.-Col. A. V. G. (Penrith)	McCorquodale, Rt. Hon. M. S.	Thorp, Lt.-Col. R. A. F.
Drayson, G. B.	Macdonald, Sir P. (I of Wight)	Touche, G. C.
Drewe, C.	Maitland, Comdr. J. W.	Wakefield, Sir W. W.
Dugdale, Maj. Sir T. (Richmond)	Manningham-Buller, R. E.	Walker-Smith, D.
Eccles, D. M.	Marples, A. E.	Watt, Sir G. S. Harvie
Eden, Rt. Hon. A.	Marsden, Capt. A.	Wheatley, Col. M. J. (Dorset, E.)
Elliot, Rt. Hon. Walter	Marshall, D. (Bodmin)	White, Sir D. (Fareham)
Fleming, Sqn.-Ldr. E. L.	Molson, A. H. E.	White, J. B. (Canterbury)
Fletcher, W. (Bury)	Moore, Lt.-Col, Sir T.	Willoughby de Eresby, Lord
Foster, J. G. (Northwich)	Neven-Spence, Sir B.	Winterton, Rt. Hon. Earl
Fox, Sir G.	Nicholson, G.	York, C.
Fraser, H. C. P. (Stone)	Nield, B. (Chester)	Young, Sir A. S. L. (Partick)
Fyfe, Rt. Hon. Sir D. P. M.	Noble, Comdr A. H. P.	TELLERS FOR THE NOES:
Galbraith, Cmdr T. D.	Odey, G. W.	Major Conant and
Gammans, L. D.	Orr-Ewing, I. L.	Brigadier Mackeson
Grimston, R. V.	Peto, Brig. C. H. M.
Harvey, Air-Comdre, A. V.	Poole, O. B. S. (Oswestry)

Question put, and agreed to.

Resolved: That this House approves the action taken by His Majesty's Government at the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment.