CLEARING OFFICE (ITALY) (Hansard, 8 November 1948)

§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)

There is a short explanatory note on the back of the Instrument itself, but in response to the invitation which has been extended to me perhaps I might elaborate on it.

In July, 1936, when sanctions against Italy were raised, considerable arrears of trade debts were owing to U.K. creditors in respect of goods imported into Italy before sanctions were imposed. An Anglo-Italian Clearing Office was set up under Section I of the Debts Clearing 1290 Offices and Import Restrictions Act, 1934, into which was paid, in sterling, money due by U.K. debtors for goods of Italian origin imported into the U.K. In November, 1936, an agreement was reached with the Italian Government which provided for the distribution to U.K. creditors of the sterling received by the clearing; this was modified by a subsequent agreement made in 1938.

The agreement, so modified, automatically came to an end when Italy became an enemy, but the Treasury orders giving effect to it did not similarly terminate. No further distribution of sterling to U.K. creditors took place, but the paragraphs of the orders providing for payment for Italian goods to be made to the clearing remain in force in respect of the debts arising from Italian goods imported before Italy entered the war; in anticipation of the resumption of trade with Italy, a Treasury order was made in October, 1943, exempting Italian goods imported thereafter from the operations of the clearing. The clearing balances in hand in June, 1940, and its subsequent receipts became subject to Section 8 of the Trading with the Enemy Act and have accordingly been paid to the Custodian of Enemy Property up to the 15th September, 1947. On that day the state of war with Italy came to an end, and Section 8 ceased to apply to the clearing receipts.

The U.K. debtors, to whom the clearing orders still apply, are thus bound to pay their debts to the Clearing Office. There remains a number of such debts which, for various reasons, mainly connected with the stoppage of Anglo-Italian trade during the war and the effect on the traders of wartime conditions, are still outstanding—most of them are being paid by instalments. The Clearing Office is unable to apply the receipts so obtained in accordance with the voided clearing agreements, and as it cannot now pay them to the custodian a means had to be found of disposing of them.

The powers given by the Act restrict the use of clearing funds to distribution to creditors; (a) under specific Treasury instructions, or (b) by agreement with the foreign Government concerned. The first of these two methods has never been used in U.K. clearings, and the amount still to be received from debtors of Italy on clearing account is too small for it to be 1291 effectively applied in this way now. The second method open to use, namely, by agreement with the foreign Government concerned, has therefore been taken, and the Italian Government was approached with the suggestion, to which it has agreed, that the receipts of the Clearing Office after 15th September, 1947, shall be remitted to the Italian creditors through the ordinary channels for current payments.

The order now before the House is required to give effect to the agreement made with the Italian Government, that is, to enable the Clearing Office to pay its receipts to current Italian account for transfer to the Italian creditors. The necessity of retaining the Debts Clearing Offices and Import Restrictions Act on the Statute Book is being considered, and if its retention is found to be unnecessary the House will be asked in due course to repeal it, but for as long as it remains operative in the case of Italy, and there are debts outstanding to them to which it has been made to apply, it is necessary for the Clearing Office to have the means to dispose of the money it collects. The debts due from Italy to the United Kingdom which, but for the war, would have been paid through the clearing, would have been dealt with as claims against Italy by persons in the United Kingdom under the provisions of the Peace Treaty, in conjunction with all other claims against Italy.

The order has, under Section 4 of the Debts Clearing Offices and Import Restrictions Act, 1934, to be laid before Parliament, and must be approved by a Resolution passed by each House of Commons within 28 days, so that it may continue to be effective.