HC Deb 29 June 1948 vol 452 cc2009-18
Sir S. Cripps

I have to announce to the House that an agreed text has been arrived at between H.M. Government and the Government of the U.S.A. for the Bilateral Agreement which is to be entered into in connection with our receipt of aid under the European Recovery Programme.

As has already been stated to the House by my right hon. Friend the Lord President a full opportunity will be provided for the House to discuss this agreement before it is signed. The text of the Agreement will be published this afternoon in the form of a White Paper and a Motion will be put on the Order Paper in appropriate terms approving the form of agreement which will be discussed on the first two days of next week. As, however, there will be some delay before that discussion takes place it would, I think, be for the convenience of the House if I were to indicate the main lines of the Agreement at once. Any questions as to its form and content will no doubt be conveniently left over till the discussion next week.

I would remind the House very shortly of the background to the Agreement. On 16th April last a convention for European Economic Co-operation was entered into by this country in the form set out in Cmd. 7388 which laid down the general plan for European co-operation in the light of E.R.P., and it contained in Part I certain general obligations to ensure that the participating countries took the action, both individually and collectively to make a success of the joint recovery programme.

The Economic Co-operation Act which was passed by the Congress of the United States of America on 3rd April last which gave legislative power to the generous offer of assistance made by Mr. Marshall last year, laid down that in order to become eligible for aid each country would be required to enter into a bilateral agreement with the U.S.A. which would provide for adherence to the general purposes of that Act and which should, where applicable, make appropriate provision for the matters specifically set out in Section 115 (b) of that Act. For the convenience of the House, I am having that Section reproduced in the OFFICIAL REPORT.

Under Section 115 (c) of that Act provision was made whereby, notwithstanding the requirements of Section 115 (b), during the first three months after the date of the Act (3rd April, 1948) the Administrator could perform any of the functions authorised under the Act that he considered necessary with respect to any participating country, provided:

  1. (i) Such country had signified its adherence to the purposes of the Act and its intention to conclude a bilateral agreement thereunder, and
  2. (ii) he was satisfied that such country was complying with the applicable provisions of the Act.
On the 30th April, H.M. Government signified by letter their intention of adhering to the purposes of the Act and of concluding a bilateral agreement. Copies of the correspondence will be found in HANSARD of 11th May last, col. 198.

It was decided that the most convenient and speedy form of arriving at the various bilateral agreements would be to have a joint negotiation of a common form or master form agreement. These negotiations have been carried out in Washington between the United States Government and a small body representing the countries participating in O.E.E.C., each country retaining the right to express its own views. In the form of agreement that has resulted there are therefore parts which will be more applicable to the conditions in certain participating countries and less applicable to those in others. This fact must be borne in mind in examining the terms. There are in addition a series of interpretative notes and a letter which are annexed to the Agreement.

The Agreement itself consists of 13 articles, preceded by a preamble which sets out the general co-operative intentions of the parties. Under the first article the Government of the U.S.A. undertakes to make assistance available to the United Kingdom in accordance with the provisions of the Economic Co-operation Act and any subsequent amendment thereto.

The Government of the U.K. states that it will itself and in co-operation with the O.E.E.C. exert sustained efforts to attain the purpose of E.R.P.; that is to achieve independence of extraordinary outside assistance within the period of E.R.P. It likewise reaffirms its intention to carry out its obligations under the O.E.E.C. convention and to continue to adhere to the purposes and policies of the Economic Co-operation Act.

The Government of the U.K. also states that it will co-operate with the Government of the U.S.A. to see that E.R.P. dollars used in purchases in third countries (offshore purchases) are used to the best advantage and in accordance with any arrangement entered into by the Government of the U.S.A. with such third country.

Article II incorporates certain of the principal provisions of Section 115 (b) of the Economic Co-operation Act. There-under H.M. Government states that it will use its best endeavours to adopt or maintain—in our case it is, practically, to maintain—certain measures calculated to achieve the maximum recovery by the use of the assistance received from the Government of the U.S.A., and of its other resources. This provision makes it quite clear that H.M. Government is the sole judge of how it shall use its best endeavours and as to what measures it shall adopt.

There are two interpretative notes under the first paragraph of this article. The first to assure that the commodities provided by the U.S.A. will not be misused, by for instance being allowed to go into the black market; and the second to explain a matter which occurs in sub-paragraph 1 (c). Under this sub-paragraph H.M. Government undertakes that it will use its best endeavours to stabilise its currency, establish or maintain a valid rate of exchange, balance its Governmental Budget, create or maintain internal financial stability and generally restore or maintain confidence in its monetary system.

These are all, of course, sound objectives that we are already carrying out and which it is highly desirable that other countries should carry out in accordance with Article 7 of the O.E.E.C. convention. But to avoid any doubt on the matter the second interpretative note makes it clear that the balancing of the Budget does not preclude an annual deficit provided the policy is to maintain a balance in the long run. A further sub-paragraph deals with dollar assets of the participating countries and we agree to use our best endeavour to the extent practicable to put into appropriate use, in furtherance of E.R.P., United Kingdom assets in the U.S.A.

The paragraph states specifically that there is no obligation upon us to dispose of such assets, and I am authorised to state it to be the view of the Government of the U.S.A., that the measures now in effect in the United Kingdom adequately fulfil the obligation of the United Kingdom under this paragraph, relating to the mobilisation of United States assets of United Kingdom nationals, and that the clause is directed to the maintenance of existing measures rather than to the adoption of new ones.

Paragraph 3 of Article II together with the two relevant interpretative notes follows essentially the provisions of the Havana Charter for the I.T.O. in dealing with restrictive practices which might have the effect of interfering with the E.R.P. It calls for action only after appropriate inquiry and leaves to His Majesty's Government the choice of measures should any action be found to be necessary.

Article IV deals with the necessary provisions for setting aside in a special fund at the Bank of England the sterling equivalent of the grant aid. The commodities received under the grant provisions will of course be sold by His Majesty's Government for sterling in this country and those sterling receipts are to be paid into the special fund. Drawings on this will be made for the U.S. Government's expenses in this country in administering the aid. Under the recent provision made by Congress up to 5 per cent. of the fund may be expended for this purpose and upon materials required by the U.S.A. for stock piling and other purposes. Apart from this the fund will be expended by His Majesty's Government for purposes—such as the reduction of the floating debt agreed with the Government of the U.S.A.

Article V relates to the supply of materials required by the U.S.A. for stock piling and other purposes subject to the reasonable requirements of the United Kingdom. It is general in its terms and subsequent specific arrangements will have to be agreed for its implementation. An interpretative note is attached to this article to clarify the reservation as to the reasonable, requirements of the United Kingdom and makes it plain that such reasonable requirements include stocking requirements. It also makes provision for the case of such stock piles being liquidated by the U.S.A. Government.

Article VII provides for consultation between the two Governments as to the application of the terms of the Agreement and for the communication of necessary information to the Government of the U.S.A. An interpretative note explains that H.M. Government will not be asked to furnish detailed information as to matters of lesser importance or information the disclosure of which would injure legitimate commercial interests.

Articles III, VI, VIII and IX deal with matters such as guarantees on transfer risks which the administrator is authorised to give to U.S. Nationals undertaking projects in the United Kingdom; travel facilities and relief supplies from the U.S.A.; publicity on E.R.P.; and co-operation with the Special U.S. Mission. Article X is an arbitration clause to cover nationals of either country complaining of their treatment by the other country and article XI deals with definitions. Article XII defines the meaning to be given to United Kingdom and thereby the area of application of the Agreement.

Provision has been made for the accession of Colonial territories to the Agreement. A number have already signified their willingness to accede, others will no doubt also do so. A provision will be incorporated in an exchange of letters which would entitle the Government of the U.S.A. in the event of the non-accession of the more important colonies to consider a modification of the form or continuance of assistance to the United Kingdom in the light of such circumstances and in consultation with H.M. Government.

Article XIII provides for the term of the Agreement. It becomes effective upon signature and will remain in force till 30th June, 1953. It can be terminated on that or any subsequent date by six months' notice by either side. If however either Government at any time considers there has been a fundamental change in the basic assumptions underlying the Agreement there is to be consultation. If then there is not within three months agreement either Government can give notice to terminate within six months. If the Agreement was so terminated then certain of its provisions run on for a limited period to complete their operation.

There is one other matter that I should mention. Concurrently with the signature of the Agreement an exchange of letters is proposed to deal with the position of Germany and Trieste. It is proposed that for those zones of Germany and Trieste in which the U.S.A. and the U.K. are occupying or controlling powers that the Government of the U.S.A. and H.M. Government should give most favoured nation treatment for a period of two and a half years in accordance with the rules of the General Agreement on Tariffs and Trade that was entered into at Geneva. This treatment will be reciprocal. A separate paper setting out these letters will also be available in the Vote Office this afternoon.

Mr. Eden

I am sure that the right hon. and learned Gentleman will understand me when I say that we on this side of the House would rather reserve comment and judgment until we have a chance of studying the White Paper, which I understand will be available this afternoon. I want to put only one point, and that is on how this matter is to be handled in the Debate. If I understood aright, the Government propose to put down a Motion of their own, which will, I suppose, mean that the opening speech of the Debate will be made by a Government spokesman.

Sir S. Cripps

Yes, Sir.

Mr. Gallacher

And then sing, "Land of Hope and Glory."

Mr. John Paton

Can my right hon. and learned Friend elucidate a little more the provisions of the most-favoured-nation clause? It has been reported in reputable newspapers that other nations concerned in E.R.P. have accepted a clause which applies also to Japan and Korea. Is that or is not that the case?

Sir S. Cripps

I am afraid I cannot state what the agreement of any other nation is, but, as far as this Agreement is concerned, it has nothing to do with either Japan or Korea.

Colonel J. R. H. Hutchison

Can the Chancellor of the Exchequer say whether an undertaking has been given that this Agreement will be signed by any particular date?

Sir S. Cripps

No undertaking has been given, but it will obviously be convenient if it can be signed by 6th July, which is now the date and not 3rd July, after which aid will not be available unless it is signed.

Mr. Ronald Chamberlain

Can my right hon. and learned Friend make it clear whether these proposals have the support and co-operation of the Dominions?

Sir S. Cripps

There has been no direct consultation with them, but they have of course been informed of the progress.

Mr. Chamberlain

Will that be followed up in some convenient way?

Mr. Paton

May I press my right hon. and learned Friend on the point I have already put to him? If, in fact, it is the case that the others of the 16 nations have accepted a most-favoured-nation clause which includes the products of Japan and Korea that may have the very gravest consequences for British world trade.

Sir S. Cripps

I am afraid I have nothing to add on that point to what I have already said.

Following is Section 115 (b) of the Economic Co-operation Act:

(b) The provision of assistance under this title results from the multilateral pledges of the participating countries to use all their efforts to accomplish a joint recovery program based upon self-help and mutual co-operation as embodied in the report of the Committee of European Economic Co-operation signed at Paris on September 22. 1947, and is contingent upon continuous effort of the participating countries to accomplish a joint recovery program through multilateral undertakings and the establishment of a continuing organisation for this purpose. In addition to continued mutual co-operation of the participating countries in such a program, each such country shall conclude an agreement with the United States in order for such country to be eligible to receive assistance under this title. Such agreement shall provide for the adherence of such country to the purposes of this title and shall, where applicable, make appropriate provision, among others, for—

  1. (1) promoting industrial and agricultural production in order to enable the participating country to become independent of extraordinary outside economic assistance; and submitting for the approval of the Administrator, upon his request and whenever he deems it in furtherance of the purpose of this title, specific projects proposed by such country to be undertaken in substantial part with assistance furnished under this title, which projects, whenever practicable, shall include projects for increased production of coal, steel, transportation facilities, and food;
  2. (2) taking financial and monetary measures necessary to stabilise its currency, establish or maintain a valid rate of exchange, to balance its governmental budget as soon as practicable, and generally to restore or maintain confidence in its monetary system;
  3. (3) co-operating with other participating countries in facilitating and stimulating an increasing interchange of goods and services among the participating countries and 2017 with other countries and co-operating to reduce barriers to trade among themselves and with other countries;
  4. (4) making efficient and practical use, within the framework of a joint program for European recovery, of the resources of such participating country, including any commodities, facilities, or services furnished under this title, which use shall include, to the extent practicable, taking measures to locate and identify and put into appropriate use, in furtherance of such program, assets, and earnings therefrom, which belong to the citizens of such country and which are situated within the United States, its Territories and possessions;
  5. (5) facilitating the transfer to the United States by sale, exchange, barter, or otherwise for stock-piling or other purposes, for such period of time as may be agreed to and upon reasonable terms and in reasonable quantities, of materials which are required by the United States as a result of deficiencies or potential deficiencies in its own resources, and which may be available in such participating country after due regard for reasonable requirements for domestic use and commercial export of such country;
  6. (6) placing in a special account a deposit in the currency of such country, in commensurate amounts and under such terms and conditions as may be agreed to between such country and the Government of the United States, when any commodity or service is made available through any means authorized under this title, and is furnished to the participating country on a grant basis. Such special account, together with the unencumbered portions of any deposits which may have been made by such country pursuant to Section 6 of the joint resolution providing for relief assistance to the people of countries devastated by war (Public Law 84, Eightieth Congress) and Section 5 (b) of the Foreign Aid Act of 1947 (Public Law 389, Eightieth Congress), shall be held or used within such country for such purposes as may be agreed to between such country and the Administrator in consultation with the National Advisory Council on International Monetary and Financial Problems, and the Public Advisory Board provided for in Section 107 (a) for purposes of internal monetary and financial stabilisation, for the stimulation of productive activity and the exploration for and development of new sources of wealth, or for such other expenditures as may be consistent with the purposes of this title, including local currency administrative expenditures of the United States 2018 incident to operations under this title, and under agreement that any unencumbered balance remaining in such account on June 30, 1952, shall be disposed of within such country for such purposes as may, subject to approval by Act or joint resolution of the Congress, be agreed to between such country and the Government of the United States;
  7. (7) publishing in such country and transmitting to the United States, not less frequently than every calendar quarter after the date of the agreement, full statements of operations under the agreement, including a report of the use of funds, commodities, and services received under this title;
  8. (8) furnishing promptly, upon request of the United States, any relevant information which would be of assistance to the United States in determining the nature and scope of operations and the use of assistance provided under this title;
  9. (9) recognising the principle of equity in respect to the drain upon the natural resources of the United States and of the recipient countries, by agreeing to negotiate (a) a future schedule of minimum availabilities to the United States for future purchase and delivery of a fair share of materials which are required by the United States as a result of deficiencies or potential deficiencies in its own resources at world market prices so as to protect the access of United States industry to an equitable share of such materials either in percentages of production or in absolute quantities from the participating countries, and (b) suitable protection for the right of access for any person as defined in paragraph (iii) of subparagraph (3) of section 111 (b) in the development of such materials on terms of treatment equivalent to those afforded to the nationals of the country concerned, and (c) an agreed schedule of increased production of such materials where practicable in such participating countries and for delivery of an agreed percentage of such increased production to be transferred to the United States on a long-term basis in consideration of assistance furnished by the Administrator to such countries under this title; and
  10. (10) submitting for the decision of the International Court of Justice or of any arbitral tribunal mutually agreed upon any case espoused by the United States Government involving compensation of a national of the United States for governmental measures affecting his property rights, including contracts with or concessions from such country.