HC Deb 13 December 1949 vol 470 cc2615-21

8.12 p.m.

Mr. John Paton (Norwich)

I wish to open a subject that has no connection with the one we have just been discussing but is of great importance to this House and to this country. I refer to the nature and scope of the powers being exercised by General MacArthur, the Supreme Commander of the Allied Powers in Japan. This is a subject which has aroused at different times during the last year or two great interest on all sides of the House, because it is well understood by hon. Members of all parties that the economic policies being pursued in Japan may have grievous consequences upon the trading position of this country and of the other Western countries unless they are carefully and closely watched.

Before I proceed to my argument, Mr. Deputy-Speaker, there is one point I should clear up. Mr. Speaker was in some doubt as to whether this subject could properly be raised since he was not certain that there was any Ministerial responsibility for the powers and policies pursued by General MacArthur. I think I can convince you, Sir, as his Deputy, that we have an absolute and a direct responsibility. I believe that the doubt in the mind of Mr. Speaker arose from the fact that there are two bodies concerned with the direction of policy in Japan. One of them is a body called the Allied Council in Tokio, which is in its nature an advisory body and on which the British representation is not direct but through an Australian representative. The overriding authority with the fullest responsibility for the conduct of affairs in Japan is the Far East Commission sitting in Washington, consisting of direct representatives of all the 11 Allied Powers and including one direct representative of the British Government and, therefore, the responsible instrument of the Foreign Office. I hope, Sir, that in putting those facts before you, I have resolved any doubts there may be as to this subject being completely in Order.

I have raised this matter at different times in the House both by question and, occasionally, in speeches. It assumed a new importance last month when, in answer to a series of Questions and supplementary questions, the Under-Secretary of State for Foreign Affairs gave replies which filled with dismay most of us who understand the Far Eastern position. He seemed to make the case, which I have complained about in this House on numerous occasions, that the Foreign Office either believed it had no power to assert itself in Japan in relation to the policies being pursued by the Supreme Commander, or was unable to assert itself. If that, indeed, were the position, I should have the gravest disquiet as to the ultimate outcome for the trading affairs of this nation, because the importance of this subject arises from the possible consequences of the actions of the Supreme Commander upon our own trading concerns.

On 14th November I asked the Under-Secretary of State for Foreign Affairs about the recent decision of General MacArthur, which was the combination of a long series of similar economic decisions, to abolish what are known as "floor" prices for Japanese exports, and it was from those Questions that this alarming situation was revealed. The term "floor prices" is applied to a system, which has obtained until recently, of applying minimum prices to Japanese exports for sale throughout the world, an attempt, of course, to protect the Western nations from the completely unfair competition with which we were faced before the war. The importance of this most recent decision of General MacArthur lies in its almost immediate consequences upon the trade of this country and the other Western trading nations.

Without pursuing that at any length, I ought to put the House in possession of at least two quotations which will illustrate how grave may be the possibility of unfair competition with our industries. The first is from a letter which appeared in the "Manchester Guardian" written by Mr. F. S. Winterbottom, who has an extensive knowledge and experience of the Lancashire textile industry. This is what he said: Two months ago substantial stocks of grey cloth (U.S. cotton) from Japanese mills were being freely offered all over the world at prices averaging per pound of cloth approximately the calculation cost of only the yarn content to a British weaver…. Recalculation to allow for devaluation shows on an average Japanese cloth prices packed, made up, and delivered f.o.b. Kobe to be 10 per cent. above the United Kingdom manufacturer's cost of yarn only. No wonder there was an immediate reaction of great anxiety, not only in Lancashire but also in the United States textile markets, as a result of that decision to abolish floor prices.

Now we know the explanation of prices of that kind, which no Western nation can ever hope to compete with no matter how we reorganise, no matter how much we may improve the efficiency of our industries. The explanation, of course, as most hon. Members probably know, is comparatively simple. Despite all that has been done in Japan since the surrender, despite the whole new apparatus of democracy, of welfare, of trade union and labour conditions and so on, the living costs of the Japanese are immensely below the living costs of his counterpart in Western industrial nations. No matter how he improves them from the low level of existing Japanese standards, they will remain in any event considerably below the standard of the Western peoples because of the wholly different pattern of Japanese traditional life.

The "Economist" put the point very well on 15th October last when it calculated that the wages of Japanese workers in the textile industries averaged £3 per month. Whatever qualifications may be necessary to arrive at a figure of that kind—and there are a number—nevertheless it shows very vividly exactly what this kind of thing may mean to us unless we take the necessary measures to ensure that it does not happen. It is in that context, therefore, that this latest decision of General MacArthur to abolish "floor" prices has its great importance.

I do not want tonight to discuss the merits or demerits of the decision to abolish "floor" prices. What I am concerned about is 'something which is even more important; that is, to try to put the House in possession of the facts as I see them with regard to the powers and authority being exercised by the Supreme Commander for the Allied Powers, General MacArthur. If we were to take at face value the answers to the Questions which are given in HANSARD of 14th November last, the House would be asked to accept the position that this country, which, as everybody knows but as often needs to be re-stated, poured out as much blood and treasure in the World War as did the United States, had no power whatever to affect fundamentally important policy decisions of the kind to which I have been referring.

In reply to a Question which I had put down, the Under-Secretary of State for Foreign Affairs told the House on 14th November: The Supreme Commander for the Allied Powers has wide discretionary powers to deal with matters not specifically covered by Far Eastern policy decisions. The original decision to impose ' floor' prices was not a Far Eastern Commission decision, and it was within the discretion of the Supreme Commander for the Allied Powers to abolish it. I challenge entirely that statement. I am perfectly well aware that I am guilty of tremendous temerity in challenging what was, in fact, an answer drafted in the Foreign Office to a Question of this kind; but I make the challenge deliberately because, so far as the facts available to an ordinary Member are concerned, I think I am on unchallengeable ground. I do not accept for one moment this considered reply of the Foreign Office that this decision on "floor" prices was in its nature, or in the specific decision itself, one on which the Far Eastern Commission did not have authority and on which the Far Eastern Commission had no power to do anything.

In his reply to a supplementary question, the Under-Secretary took the matter even further. I do not, of course, want to pin him down too much on a spot reply to a supplementary question, but the importance of the supplementary reply comes from the fact that it continues the argument adduced in the prepared reply which I got in answer to my first Question. This is what the Under-Secretary said in the supplementary reply: The Far Eastern Commission is not in a position to give directives to the Supreme Commander, nor has it given them, on this point. Until it did give such directives, he would be free to act on his own initiative."—[OFFICIAL REPORT, 14th November, 1949; Vol. 469, c. 1686–7.] Well might the right hon. Member for Warwick and Leamington (Mr. Eden) get up at that point and call the attention of the House to the very great importance of this reply. If it were true, it would mean that on all matters on which General MacArthur had not been specifically directed by the Far Eastern Commission, he would be in a position to exercise a completely arbitrary and unchallenged authority. I cannot accept that position for one moment, and I am sure that the Government or the Foreign Office cannot possibly try to sustain an impossible situation of that kind.

I propose now—with great daring, I know—to try to assist the Foreign Office to come to a correct conclusion, as I see it, on this very important matter. The real reason I have chosen at this point to intervene is to get upon the record of the House the nature of our objections to the actions of the Supreme Commander and to try to establish the authority by which we challenge him.

The first point to be considered is that the instrument by which the Far Eastern Commission was established was, of course, the Moscow Conference of December, 1945. I quote here from the communique issued from that Conference on behalf of the Allied Powers to show what was the nature of the powers of the Far Eastern Commission which it was setting up and to show further, not only the nature and scope of the powers of that Commission, but the limitations of the United States State Department, and to show, therefore, the limitations and restrictions applying to the actions and conduct of the Supreme Commander himself.

The second Moscow Conference decisions with regard to the Far Eastern Commission, say in Article II with regard to functions: 1. To formulate the policies, principles and standards of conformity with which the fulfilment by Japan of its obligations under the terms of surrender may be accomplished. That, of course, shows at once that the Far Eastern Commission was the authoritative policy-making body for the conduct of affairs in Japan until a peace treaty had been drafted and agreed between the various Powers. Then follows paragraph 2: To review, on the request of any member, any directive issued to the Supreme Commander for the Allied. Powers or any action taken by the Supreme Commander involving policy decisions within the jurisdiction of the Commission. Here, again, is demonstrated not only the authority of the Far Eastern Commission itself, but the right of any member nation in that Commission at any time to ask for a review of any policy adopted by the Supreme Commander.

In paragraph 1 of Article III is a statement of the powers of the American State Department to give directions to the Supreme Commander. It says: The United States Government shall prepare directives in accordance with policy decisions of the Commission and shall transmit them to the Supreme Commander through the appropriate United States agency. In that paragraph, again, it is clearly established that the United States Department, in its contact with the Supreme Commander, General MacArthur, acts as the agent of the Far Eastern Commission, and only in certain matters defined in paragraph 3 of the same Article has the United States any power to initiate direct action with the Supreme Commander. It says: The United States Government may issue interim directives to the Supreme Commander pending action by the Commission whenever urgent matters arise not covered by policies already formulated by the Commission… So that here, surely, we have in these paragraphs of the instrument which I have been quoting of the second Moscow Conference, the proof positive that the authoritative control over all policies in Japan operated through the Supreme Commander of the Allied Powers reposes in the Far Eastern Commission composed of the representatives of all the Allied Powers, and nowhere else.

Turning to economic policy matters, I wish to bring to the attention of the House another instrument which again clearly establishes the responsibility of the Far Eastern Commission for the nature of the policies being conducted by the Supreme Commander. A basic economic policy for Japan was defined by the Far Eastern Commission in a document which is dated 19th June, 1947, and entitled "Basic post-surrender Policy for Japan." In Part IV of that document, entitled "Economic," we have in Article VI a section dealing with international trade and financial relations. In paragraph 2 it is stated: Control is to be maintained over all imports and exports of goods and foreign exchange and financial transactions. The Far Eastern Commission shall formulate the policies and principles governing exports from and imports to Japan. The Far Eastern Commission will formulate the policies to be followed in the exercise of these controls. I suggest to the House that it is completely impossible for the Foreign Office, in face of these instruments, to which all the Allied Powers are party, to continue to maintain that our powers in relation to General MacArthur are so limited and truncated that we cannot even challenge a policy like the "floor" prices policy which so gravely menaces our national trading interests.

I am very sorry that it has not been possible to have in the House tonight the Under-Secretary of State for Foreign Affairs, who was responsible for the the answers I have quoted of 14th November. I got in touch with him and he explained to me that because of the regrettable indisposition of the Foreign Secretary, an indisposition which I know all sides of the House will deplore, he was unable to come here tonight at short notice owing to the extra duties thrown upon him. We must at once accept that, but it is a little unfortunate that he has not been here to listen to the attack which I have been making on statements for which he had such a direct responsibility. I hope, however, that all I have said on this very important matter will be conveyed to him by my hon. Friend, who I understand is likely to say a word or two in reply, in order that this matter which I have taken the opportunity to raise tonight may again be reconsidered by the Foreign Office and decision taken that will lead to a drastic and effective change of policy.