ANGLO-CANADIAN TRADE

HC Deb 21 November 1950 vol 481 cc253-96

6.6 p.m.

Mr. Russell (Wembley, South)

The subject I want to discuss on the Adjournment tonight is Anglo-Canadian trade. It may sound a rather ambitious subject for a back bencher to raise, particularly as the last time it was discussed in the House it was my right hon. Friend the Member for Aldershot (Mr. Lyttelton) who raised it. It is now nearly seven months, however since the House discussed, specifically at any rate, the question of Anglo-Canadian trade, and therefore no harm will be done if it is raised once again.

When I found myself lucky in the ballot for the Adjournment tonight I hoped that we might be able to have more than the usual half-hour which the Adjournment normally allows, but I did not expect that we should start quite as early as this. I hope that many other hon. Members who are interested in this subject will take part in the debate. This is a vitally important subject, and even if nothing else is achieved the debate will give an opportunity for the Minister who replies to say what progress has been made in developing greater trade between this country and Canada since the House last discussed this subject.

I want tonight to bring to the notice of the House instances of where we are not paying enough heed to the Canadian point of view in Anglo-American trade and also to give some examples of where we on our side are not doing as much as we might do to stimulate greater trade between this country and the Dominion of Canada.

In the first eight months of this year, according to the Trade and Navigation Accounts, our exports to Canada totalled £79 million. That was a great improvement on both the first eight months of 1949, when they were only £52 million, and the corresponding period of 1948, when the total was still less at £44 million. Some substantial progress, therefore, has been made.

In imports, however, a different story has to be told. In the first eight months of 1948 our imports from Canada totalled £150 million. In the corresponding period of 1949 they were down by £10 million to £140 million. In the first eight months of 1950 they fell still further to £120 million. I know that that may be a way of reducing the dollar gap between ourselves and Canada, but the Canadians are a little resentful about this because they feel that as they are taking more from us, we at least should not reduce our purchases from them but should try to keep them at the same level.

There is also great bitterness in the three prairie provinces because we are buying grain from Russia when Canada could supply much of it. When I say there is bitterness, I am speaking of three or four weeks ago, when a distinguished Canadian paid a visit to those prairie provinces. In the first nine months of this year—and I am again quoting from the "Trade and Navigating Accounts"—we bought from Russia 6½ million cwt. of barley and 1½ million cwt. of oats. Incidentally, I am sorry that the Trade and Navigation Accounts do not give quantities in tons much more than cwts. I am sure it would save a great deal of cost in printing if at least one figure could be dropped in each of the numerous groups of figures in these accounts.

In the same period—the first nine months of this year— we bought no barley or oats whatever from Canada, yet, if one goes back to the pre-war period and takes the corresponding period of 1938, one finds that we bought from Canada roughly the same quantity of these two cereals—barley and oats—as we have bought from Russia in the same period of this year. Indeed, we have bought no barley from Canada since the war, and no oats since 1947. I agree that Canada cannot support herself with maize, which is the other important coarse grain which we get from Russia. Canada also used to supply us with more bacon than she is doing at the present time. She also used to supply us with hams, which are now not coming at all, yet we are going behind the Iron Curtain for bacon and getting some of it from Poland, when we might be getting it from Canada.

Mention was made in the last debate that we had on this subject, which was about two years ago, of the fact that the Government of Nova Scotia had asked their apple growers to uproot their apple trees and would pay five dollars each for the uprooting of trees which grew apples of a type suitable for the British market, and that was despite the fact that many of Nova Scotia's orchards had been planted specially to cater for our market. In 1948 and 1949, we obtained no apples at all from Canada, but, happily, this year we have again had some substantial imports, mostly from British Columbia. We have also had substantial imports of apples from Australia.

It was the clumsy handling of our trade two years ago which stopped the imports of apples and caused Nova Scotia to take that very drastic action—which always reminds me of the action taken in regard to swollen shoot disease in Africa—in paying a subsidy of five dollars per tree for every tree uprooted. That action obviously overlooked the fact that one cannot plant a new tree in place of one uprooted and get apples from it for at least four or five years.

Yet, this year, up to 30th September, in addition to the apples which we are importing from Canada and other Dominions—and everybody is glad that that is the case—we are importing something of the order of 4,000 or 5,000 cwt. from foreign countries, largely the United States and Italy. In fact, according to figures which I have obtained from the Ministry of Food, we have spent £659,000 on imports of apples in the first nine months of this year. I wonder whether apples were available from Canada in preference to the United States, and whether there were not apples available in other parts of the Empire. It does seem to be a mistake to spend £659,000 worth of American dollars on apples which we might have got from other parts of the Empire, and, possibly, from Canada in particular.

Then, I understand that we are buying 50 million lb. of Cheddar cheese from the United States. I am sorry to have to chop about from cwts. to tons and pounds, but it does show that we ought to have some more standardised system of measurement for these quantities of goods. After all, most of them are indicated in cwts., though some are shown in tons, and tea and rubber are usually shown in pounds. Concerning this 50 million lb. of Cheddar cheese from the United States, I want to ask if there was not some cheese available from Canada. We are buying a certain amount from Canada in any case. Was no more available from New Zealand or any other parts of the Empire? Again, in the first five months of this year, we have bought 287,000 cwt. of dried eggs from the United States and, again, one would like to ask whether none was available from Canada, which has supplied us with dried egg in the past.

May I pass from these subjects, none of which are within the supervision of the hon. Gentleman's Department, to one that is, and that is timber? I believe that at the moment we are getting all the timber we can from British Columbia, but not from the eastern part of Canada. In fact, there has been a steady decline in the last three years in our imports of timber from Canada. What has been Canada's loss has been gained by Russia, Poland, Yugoslavia, France, Brazil and other unspecified foreign countries. I have taken the information from the Trade and Navigation Accounts.

Another vital commodity on which we have fallen down very badly in regard to Canada is newsprint. I do not intend to say much about that, because we have discussed it before and I believe we are to discuss it again next Friday. I hope that any hon. Gentlemen opposite who think that the newsprint situation has been well handled in the last four years would do what I did last night—browse through 10 or 12 German newspapers—which are taken day by day and placed in the Library. They would be surprised at the number of pages in these newspapers, in comparison with those which we have at present. When I say German newspapers, I mean newspapers produced in the British and American zones of Germany, and in which the average number of pages is considerably higher than anything we enjoy over here today. I think that Germany has some domestic source of wood pulp which may help her a little more than we are able to be helped at present, but it does seem rather ironical that the Germans, whom we defeated only five years ago, should now be better off in this way than we are.

I turn to the subject of exports, and, again, I want to begin with some remarks on the Canadian angle, which I feel we must watch. Our chief exports at the moment, so far as value is concerned, are motorcars and textiles. I believe that we are exporting cars at the rate of about 70,000 a year, and, in the first nine months of this year, we earned £16 million worth of Canadian dollars by our exports of motorcars. That has had one unfortunate effect in Canada; it has knocked the bottom completely out of the secondhand car market. I understand that the Canadians now buy a British car as their first car instead of a secondhand Canadian car because we are exporting so many cars to Canada. Therefore, the secondhand market in Canadian cars has been rather severely hit. I begin to wonder whether this can go on for ever, and whether we can expect to go on exporting cars to Canada at the rate of 70,000 a year without soon reaching saturation point. Regarding textiles, I gather that some of them at any rate are competing very severely with Canadian textiles and causing unemployment and part-time working in the industry.

The Canadians would like us to broaden our exports very considerably instead of concentrating so much on those two main items, motorcars and textiles. For instance, there are machine tools. In the first nine months of this year we exported to all parts of the world £12 million worth of machine tools. Of that amount, only £678,000 worth went to Canada, whereas £1,250,000 worth went to countries behind the Iron Curtain, and £1,333,000 worth to other countries in various parts of the world.

I suggest that what Canada received of our total exports—only £678,000 out of £12 million—was not a very fortunate share. I imagine that nearly all these exports must have taken place before we had the debate on machine tools during the emergency Session of this House, and that therefore the situation may improve without any further steps being taken. However, I gather that Canada could take a much greater quantity of machine tools than she has been getting from us up to the present moment.

Then there is electrical machinery, particularly dynamos and generators, which the Canadians are very anxious to have—especially the heavy types used in connection with hydro-electric power—in greater quantity than they are getting at the moment. Our total exports of generating sets and generators under the classification given in the Trade and Navigation Accounts for the first nine months of this year amounted to £12 million, of which Canada's share was only £467,000, whereas more than £4 million worth went to Russia. I fully appreciate that the type of equipment which we are sending to Russia may not be suitable for Canada, and that, indeed, it is probably not even suitable for this country, but could not some of our factories be persuaded to manufacture a type suitable for Canada so that we could send the Canadians more of this valuable machinery instead of sending it behind the Iron Curtain.

I am told on very good authority that Canada could take all the steel we can spare at the present moment, that is, since the rearmament programme started. It may be that six months ago that was not possible, but I understand that owing to the terrific demand for steel created by the rearmament programme Canada could now take all we could let her have. Our tinplate exports to Canada do not appear to have been very great because in the Trade and Navigation Accounts for September she is not even separately quoted. As a result of the shortage of steel, brought about more particularly, perhaps, by the rearmament programme, Canada is now forced to buy steel from Belgium and Luxembourg, yet the Trade and Navigation Accounts for September show that out of £113 million worth of iron and steel manufactures exported to all parts of the world, only £5,750,000 worth went to the Dominion of Canada.

Under the 1949 agreement with the Argentine we are due to send £7 million worth of iron and steel manufactures to that country every year. I have not had time to calculate whether, in fact, in the first year of that agreement—1st July, 1949, to 30th June, 1950—we were able to send £7 million worth of such exports to the Argentine, and perhaps the right hon. Gentleman will be able to enlighten us on that point later on. What I wish to point out is that those exports will do nothing towards helping the rearmament of Western Europe, Canada and the United States of America, and from that point of view it would be much better if they were going to Canada.

Again, Canada needs nonferrous metals, but under this agreement with the Argentine we have undertaken to send £2,500,000 worth of such metals to that country every year for the duration of the agreement. I understand also that Canada could take certain chemicals, oil refining machinery and domestic products, such as cutlery, pottery, glassware and china, and also cement. But out of our total exports of cement, which amounted to £6,750,000 in the first nine months of this year, only £390,000 worth went to Canada, and a slightly larger quantity to the Argentine. There, again, I wish that a larger quantity could have gone to Canada and less to the Argentine.

There are many things which Canada is importing from the United States which she would like to take from this country instead. They comprise machinery and parts of machinery, and domestic electrical appliances. I know the difficulty over the type of appliances made, specifications, and that sort of thing, but, surely, it is not beyond all possible hope to overcome that difficulty. So great is the amount of trade between Canada and the United States at the present moment, as was pointed out on the last occasion we discussed this subject, that if only 16 per cent. of Canada's imports from the United States was transferred to the United Kingdom it would double Canada's imports from this country. If we were able to transfer that amount of imports from the United States, it would obviously not damage the American trade to any very great extent.

The point arises, of course, in what other way can we make dollars avail- able. Last week I tabled a Question to the Chancellor of the Exchequer—I know there is nothing new in it; it has been suggested before—asking if he would allow exporters of British goods to Canada to retain 10 per cent. of their dollar earnings for their own use, the idea being that that 10 per cent. might be some sort of an incentive to firms to export more of their goods to Canada in preference to other countries. The Economic Secretary to the Treasury, who replied, said: Proposals of this kind have been very carefully examined, but I am satisfied that the objections are too great to justify their adoption. When I asked him a supplementary question on the point of incentives he said: … there is a great risk that such a scheme would cost more dollars than it would earn. He went on to say: It would be difficult to ensure that those people who had worked to earn dollars and those whose work enters at an early stage into the production of goods for export would receive a fair share of the reward. He added: I think the difficulties are quite insuperable."—[OFFICIAL REPORT, 16th November, 1950; Vol. 480, c. 1900.] I suggest we ought to try that method. I do not believe we shall ever solve difficult problems in this country without doing a little experimenting. If we experiment and it is a failure, nobody is going to be worse off, and, at least, we would have tried. I understand that certain foreign countries are using that method to stimulate exports. I am very glad that the right hon. Gentleman, the President of the Board of Trade, nods his head. Cannot we try it? Are we, at least, examining the results of methods employed by foreign countries with a view to using them for our own benefit? I hope the right hon. Gentleman will impress upon the Treasury, who, I suppose, are responsible for deciding this point, to try and examine methods used by foreign countries. I believe they might stimulate exports to Canada still further and, in that way, they would be valuable.

In passing, I might say that if I ask the Secretary for Overseas Trade a number of questions of which I have not given notice, particularly on the subject of food, I shall appreciate it perfectly well if he cannot answer them in detail.

Lastly, I believe we have to pay attention to what, for lack of another word, I call the sentimental angle in approaching this question of Anglo-Canadian trade. I make no apology. After all, as the "Financial Times" had in a headline the other day, "Blood is thicker than dollars." I should like to see His Majesty's Government in the United Kingdom say to His Majesty's Government in the Dominion of Canada, "We will stop making contracts for grain with Russia or with countries of Eastern Europe, or contracts for bacon with Poland, if you, the Canadian Government, can help us to overcome our dollar difficulty by some other means, such as allowing us to pay in sterling or to balance our dollar account over a number of years."

I am open to correction, but I understand that Holland is buying, or has been buying recently, canned salmon from Canada and is paying for 90 per cent. of it in sterling and only 10 per cent. in dollars. Is it not possible for this country to come to some similar arrangement with the Canadian Government? At least, if we approached them on this subject, obviously any suggestion like that would be received with the greatest possible sympathy.

I understand that Sweden will not let us have any more timber unless we let them have more coal—and I read that before the announcement yesterday that we shall have to import coal. That is going to be a very difficult hurdle to surmount. In contrast with that attitude on the part of foreign countries—and I make no complaint against any individual country—the Canadians are out to help us. On the other hand, countries of Eastern Europe from which we buy bread and bacon are out to smash the British Empire and all that it stands for. The Argentine stayed neutral in two world wars, and one cannot put it otherwise than say she has taken a certain amount of advantage of the shortages of various commodities to extract high prices from our Government bulk buyers. It is only fair to mention, however, that she also has had to pay high prices for some of our exports, noticeably coal.

Canada, on the other hand, has helped us all along. There is no need to mention the very magnificent war record of the Canadians, nor their loan afterwards, which was three times as generous as that of the United States, taking into consideration the difference in population. Then there are the gifts of various kinds sent to this country from time to time. I should like to ask whether those who are concerned with developing Anglo-Canadian trade remember these things when they cancel an allocation of dollars without very much warning, as, unhappily, has been done in the past. Do they ask what can be done to overcome these dollar difficulties, and have they the urge to buy as much as possible from Canada? In other words, are they Canada-conscious? I believe we must adopt that attitude if we are to develop more trade between this country and our second Dominion. Surely it is much wiser to increase our trade with Canada, if necessary at the expense of trade with Russia or the Argentine or any country behind the Iron Curtain. Surely this essential trade with the Empire countries must have priority over trade with foreign countries.

6.37 p.m.

Mr. Norman Smith (Nottingham, South)

I listened with sympathetic interest to what the hon. Member for Wembley, South (Mr. Russell) said. I came in intending to agree with him, so far as I could; and let no one decry what he said about sentiment entering into these things. I remember serving in a battery, early in the First Word War, alongside two Canadian gunners. Sentiment does mean something. Canada came into the First and Second World Wars with us. This sentiment is not to be decried.

I have no political spite or malice whatever in my make-up. I am always prepared to listen to any view from the other side, objectively and sympathetically, but I could not understand from the hon. Member's speech what exactly he wanted the Government to do. If he wants my right hon. Friend the President of the Board of Trade to be Canada-conscious, then I am all in favour of it. But, it seemed to me, that the remedy in the cases he has mentioned lies very much more with private enterprise than with the Government.

I belong to a section of the community which is the most important section so far as the economic world is concerned, namely, the consumer section. That is about my only interest in business. If it were not for us consumers, business would have no reason to exist. It is we who have to take the product, whether Canadian or British. All the time that the hon. Member for Wembley, South, was speaking, I had a feeling that the root of the matter is the failure of business people, on both sides of the Atlantic, to study what the consumer requires.

The hon. Member mentioned Canadian bacon and cheese. I have been eating bacon and cheese for 60 years, and I know the difference between good bacon and bad bacon, between good cheese and bad cheese, from the consumer's point of view. I am not in the least ashamed of confessing to being what the French call a gourmet. Apropos Canadian cheese, a few weeks ago I was on the island of Achill, off the west coast of Ireland. I stayed in a little hotel where, sometimes, they brought me bacon for breakfast. One day I said to the maid, "This bacon has come straight from Heaven." She replied, "Indeed, no Sir, it is after coming in from Castlebar." But I have never felt like that about Canadian bacon.

There is something about the North Americans—I do not know what it is—that they cannot produce succulent bacon and either cannot or are not willing to produce good cheese. The only thing I can say about Canadian cheese is that it is better than New Zealand cheese. I wish the hon. Member for Wembley, South, could induce his Canadian friends to study the market and see what people in Denmark or Ireland, or in my own county of Wiltshire, can do about bacon. I think the Canadians have something to learn.

The hon. Gentleman then referred to the very large Canadian imports from the United States and said that he would like to see these substituted by imports from Great Britain. So would I; so would most of us on these benches. We are all in favour of it. But I wonder why Canada looks to America. For many years I got my living as a journalist, and when in Canada I was impressed by the extent to which American magazines and newspapers, with all their advertisements, circulated in that country. I believe that nine-tenths of all advertising is meretricious, thoroughly bad, suggestio falsi, of no intrinsic worth; and although American advertising makes the Canadians think they want American goods, I doubt whether they really do.

I see the hon. Member for Birmingham, Edgbaston (Sir P. Bennett) in his place. I think Birmingham can make quite as good stuff as any American town. The trouble with the people of Birmingham and, very largely, with the people of our country, is that they do not make their wares sufficiently known. They should employ somebody like the hon. Member for Nottingham, South to make their wares known and to counter the effect of American advertising in Canada. I am not sure that the hon. Member's speech should have been addressed to my right hon. Friend the President of the Board of Trade. I think it should have been addressed to private enterprisers, on whom both England and Canada very largely rely for this trade.

I can assure the hon. Member that the House is very much obliged to him for having raised this important question and, on the whole, I think that right hon. and hon. Gentlemen on both sides of the House would agree with him, although we want to be a little careful before we say we are determined to reduce to the absolute minimum our trade with countries behind the Iron Curtain. Nobody detests Communism more than I do; I loathe the bare thought of it; but I do not think the way to get on with the world behind the Iron Curtain is to say that we shall have nothing to do with it. The hon. Member made a useful speech and I shall await with great interest my hon. Friend's reply.

6.43 p.m.

Squadron Leader Burden (Gillingham)

I listened with very great interest to the hon. Member for Nottingham, South (Mr. Norman Smith). I could not help thinking that he should turn to his right hon. Friend the Minister of Food, and ask him to bring into this country some of the manna from Heaven which he tasted in Ireland. We, also, should like to taste some of the wonderful Irish bacon. I was delighted that my hon. Friend the Member for Wembley, South (Mr. Russell), raised this subject on the Adjournment because I regretted that during the extremely important Debate on Canadian trade, which took place recently, the Government benches were so sparsely occupied. At no time was I able to count more than 17 hon. Members on those benches. I believe that to be a very sad thing, in view of the importance of Anglo-Canadian trade.

Sincere though the hon. Member for Nottingham, South, obviously was, I felt that he missed the boat, particularly in his remarks that British manufacturers had no idea of how to put their stuff over in Canada, and also in that part of his speech in which he blamed private enterprise. His right hon. Friend the President of the Board of Trade paid a visit to Canada not so long ago to see what could be done to improve Anglo-Canadian trade. If the criticisms of the hon. Member for Nottingham, South, are well-founded, then the right hon. Gentleman should have come back to this country and called attention, through the Press and through this House, particularly when he had the opportunity in the recent Debate, to the shortcomings of English manufacturers. In view of the fact that the right hon. Gentleman did not do so, I can only assume that he is fairly well satisfied with the manner in which British manufacturers, British private enterprise, are approaching the Canadian market, and with the support he is receiving in what I hope is his drive to capture more Canadian trade for this country.

We in this country should realise the tremendous opportunities which now exist, and which are likely to expand in the near future, for Anglo-Canadian trade. Of all our Dominions Canada probably has the most tremendous natural resources and she has, too, that which is not so evident in some of our Dominions—a healthy climate. The white population of Canada is about equal to that of the other three white Dominions and the purchasing power of Canada is as great as, or greater than, these other three Dominions. In 1948–49 the population of Canada was 12.9 million. In the United Kingdom, as we know, the population was 50 million. Yet the purchasing power of Canada, per capta, was even then 25 per cent. above that of this country. The population of Canada is expected to rise to 13½ million by 1951 and the purchasing power to 34 per cent. higher than that of this country.

I suggest that that is an indication of the tremendous opportunity which exists for Anglo-Canadian trade. In 1948–49 Canada was the third greatest external trading nation, and she is the biggest importer of manufactured goods in the world. On a per capita basis the capital development programme of Canada is the greatest of any country in the world. Her 13½ million population have a consumption of electric power which is the same as that in this country. Further, there are great schemes in hand for the expansion of hydro-electric power in Canada.

When we discuss the question of trade we have always to consider the aspect of stability. Because of her resources and because of the character of her people I believe that Canada is one of the most stable and sound countries in the world today. This is made amply clear by the very considerable flow of American capital which has gone into Canada and which is still going into Canada. I believe that Canada has reached a dynamic stage in her industrial development and will demand big markets for her raw materials and farm products, and I believe that the rapid expansion of Canada will pay amply for any attention which His Majesty's Government may now give to that country not only to develop an immediate trade with her but also to lay the foundations for a steady expansion in the future, as the expansion of Canada takes place.

In 1938 the exports of the United Kingdom to Canada amounted to 339½ million dollars. In the same period France's exports were a mere nine million dollars. Defeated Germany was exporting 18 million dollars worth of goods. In 1948 there was a large increase in our own exports and in the exports of France and there was a recession in the exports of Germany. In 1949 our exports to Canada had risen to the very large figure of 705 million dollars, although I believe that figure to be capable of very considerable expansion.

I turn to the question of imports which, at this stage, is of far more importance to this country, so far as our own trading position is concerned. In 1938, in the case of the United Kingdom, imports amounted to 119 million dollars. In 1948 the figure had risen to 299 million dollars and in 1949 to 307 million dollars. There had been a very considerable slowing down between 1948 and 1949. Although the figures for France were very small, they were 6.7 million dollars in 1938 and 13 million dollars in 1948–49. The reason I have given these figures is to show that Canadian imports were running at a figure less than half of that for exports in the same period. I know that that is a difficulty with which the Government are faced today. Despite this figure, it pro- bably represents a greater increase in the volume of exports than in the volume of imports.

I believe that, particularly in the next five years, we must very carefully watch the competition we are likely to have from ex-enemy countries. The 1949 figures for Germany, for instance, small as they are, show a four-fold increase of exports. What are the manufactures which are going from Germany to Canada, and why are they going there? Is it because of price, because of quality, or because of delivery? Are we to experience an intensification of competition from other ex-enemy countries? Will Japan come into the market and try to capture Canadian trade because she can give better quality or lower prices? Is this situation arising because the Canadians are beginning to think of British goods in terms of high prices and not, as was the case in the past, in terms of high quality?

We must consider this question and it must always be in the forefront of the Government's mind. I know that the Government are concerned with endeavouring to reach a balance of reciprocal trade; this their chief concern, and they are undoubtedly and rightly concerned at the fact that at the moment the figures are running in Canada's favour. But in the present state of development in Canada I believe this to be inescapable. Although the greatest importer of manufactured goods, the potential purchasing power of her 13½ million people is obviously much less than that of our 50 million people. Quite clearly, that is one of the difficulties with which the Government are faced in endeavouring to strike a balance, and I believe it reinforces very strongly my hon. Friend's request that some efforts should be made to reach agreement for the excess, the over-purchase, in the case of this country to be paid for in sterling or by some other means. Of course, per capita, Canada buys twice as much from us as we buy from her.

We should co-operate with Canada to lay the foundations for the future. Canada's attitude towards us in the future depends upon our understanding now, and I believe that every effort must be made to maintain our exports. At the same time, we must strive to import from Canada the farm produce and the raw materials which she has so that Canadian employment may be maintained at the highest level, and may be maintained at the highest level because of her close trading link with this country.

There is a danger in cutting down imports from Canada because it may well undermine the good will which has always been evident in Canada towards this country. I believe that if we cut down imports now, we may abolish the desire to buy British in the future. That cutting down of that desire to buy British would certainly be followed by an intensification of foreign competition in the market which I believe to be the greatest potential market for British goods and British trade in the future.

Competition is a natural cycle of events. Competition will increase. Already, the sellers' market is ended. Manufacturers—and here I agree with the hon. Member for Nottingham, South to a certain degree—must pay attention to market requirements. They must pay great attention to quality; they must pay attention to delivery dates; and they must give firm prices. I believe that that is absolutely essential. Canada is a country with great good will towards us, for she is a country comprised very largely of men and women of British stock—of British descent—who would prefer, all things being equal, British merchandise to merchandise coming from any other country.

To maintain this we must ensure that there is a very high level of emigrants from this country to Canada. I have been very concerned at the fact that in the past few years the tide of immigrants into Canada from this country has been overtaken by the tide of people from other countries of Europe, and particularly from Eastern Europe. I believe that it is essential that there should be, at this stage in Canada's development, a constant infusion of British blood into the Canadian stock, in order that the desire to maintain the links that have existed so long with us shall be perpetuated for the benefit of Canada's trade and ours, Canada's industry and ours, and Canada's future and ours. During this time of Canada's adolescence the Government and the people of this country must show good will and every effort to help her, so that there may be forged during this vital period still stronger links and bonds between us; and I believe that these associations will reach full maturity when Canada reaches her full stature, as I am convinced she will, as a great trading nation and first-class Power in the world.

6.57 p.m.

Mr. Malcolm MacPherson (Stirling and Falkirk Burghs)

I came to the Debate intending to listen rather than to take part, but I found myself making a number of notes when the hon. Member for Wembley, South (Mr. Russell), was speaking, and, although I have nothing particularly new to add, I think it may be as well to draw attention to one or two particular points.

I am in considerable agreement with many of the things the hon. and gallant Member for Gillingham (Squadron Leader Burden) has put before us. One of his points—and one of the points of my hon. Friend the Member for Nottingham. South (Mr. Norman Smith) also—was that there is a great deal of good will between this country and Canada. That cannot be too much stressed. There is. I should like hon. Members to remember, however, when we are talking about Canadian trade with the United States, that there is also a very great deal of natural good will between Canada and the United States. When my hon. Friend stresses the influence of advertising through glossy American magazines circulating in Canada I think he should remember that a great part of the American influence in Canadian life is due to the fact that most Canadian families have members on the other side of the international border. There is a very close connection there.

The hon. and gallant Gentleman stressed also the fact that Canada is now in a period of great expansion. I think he is quite right. The developments in the economic scene in Canada were fairly fully referred to in the debate a few months ago, and I need not go over them again, but I think we should do well to remember in this country that Canada is on the verge of becoming one of the really great Powers of the world. I think a large number of the younger generation of Canadian leaders in both industry and politics have that conviction themselves. I think if one looks at the beliefs and sayings and careers of some of the younger men in Canadian public life today one finds a complete absence of any sense of national inferiority to the major Powers, or anything of that sort, but rather, on the other hand, the presence of a feeling that Canada is on the way to greatness. I believe there is no doubt that she is.

On the economic side of the development of Canada I think we have a great part to play, and, here, I would agree with the hon. and gallant Gentleman that Canada, in her economic life, is on the verge of a tremendous expansion. I think we could assist very materially in that expansion. We are in the difficult position just now that our traditional trade—trade in manufactured goods—is tending to shrink. As countries all over the world develop their own manufactures we cannot carry on with our traditional 19th century lines of exports. However, at the same time that that is happening there is a tremendous amount of capital development going on in various parts of the world, and it seems to me that with our strong manufacturing tradition and manufacturing skills it is now possible for us to develop a very considerable trade in capital goods, and, in that way, to make something of a change-over from our 19th century part in world trade to a new and equally important part in 20th century trade.

I believe that Canada provides a very striking, immediate illustration of the possibilities in that particular field. Canada cannot rely on her own possibilities of capital equipment to make full use of her natural resources, and we can quite definitely help. For that reason I am inclined to agree with an hon. Member opposite—I forget which one it was for a moment—that the export of cars should not be the "be all and end all" of our export trade with Canada. It seems to me a slightly unnatural development. It does, however, show something—the tremendous resiliency and resource of our manufacturing trades in the export markets, that we can put into the Canadian market the really astonishing proportion of motor vehicles that we are doing. But it does not seem to me to be a completely permanent line of export activity, and I should like very much to see developed the export of iron and steel products, engineering goods, and, generally speaking, of capital equipment, which Canada will need so much in the future.

I think it is worth while reminding ourselves that we are doing that. Our exports of iron and steel manufactures to Canada have been considerably increased this year over those of last year, according to a written answer I have just received today from my hon. Friend's Department. There has been, in fact, a general tendency towards increase. It is not an increase merely of a temporary nature. We can, I think, keep on with it. By doing that we shall strengthen the bonds between Canada and ourselves in the human and social spheres, and in the political and broader, national spheres, as well as in the economic sphere.

I should like to note one point in that connection, and a point of some considerable importance. The hon. and gallant Gentleman referred to the visit of my right hon. Friend to Canada earlier this year. One of the results of that visit was announced just the other day—the establishment of what are called the "Athlone scholarships," by which Canadian engineering graduates will be able to come to this country for their further post-graduate training—not necessarily, I hope—and I trust that my right hon. Friend and my hon. Friend will note this—in universities and technical colleges only—but also in industrial concerns. That, I think, will have a long term effect that will enable us to build up our connections with Canada in the engineering industry—in the supply of capital goods; because these people, going back to Canada, will know our makes, our methods, our standards, our firms, just as today Canada's technicians and technologists know those on the southern side of the international border. There, we have the beginning—and it seems to me a very sound beginning—of a long range movement to bring our heavy engineering—indeed, all our engineering—industries more closely into touch with the needs of the Canadian market.

One last point. I think, too, that in recent months in trade in consumption goods there has been a remarkable improvement in some respects about which, a year ago or so, there was good deal of quite justifiable criticism—in methods of marketing, of advertising, of packaging, of delivery times, and so on. I think there are reports from all sides that there has been a lot of improvement in that way. However, I feel very strongly that our economic connection with Canada should mainly be in the sphere of capital goods, rather than in the sphere of consumption goods, as it still is at present.

7.7 p.m.

Sir Peter Bennett (Birmingham, Edgbaston)

I am very glad that my hon. Friend the Member for Wembley, South (Mr. Russell), has raised this question. Anything that we can do to bring ourselves and the Canadians closer together is most valuable. I agree with all that has been said about the great future there is in front of that country and the need that there is for us to consider very carefully Canadian views and doubts. They are trying at present to tread a very difficult path—to maintain and develop their agriculture and natural sources and, at the same time, to industrialise. Well, we know how troublesome that is.

I happen to be a member of the Canadian-British Committee, and I am very glad that my hon. Friend mentioned such things as agricultural and forestry products and apples. The same things were discussed when we were in Canada last year and again when the Canadians were over here this year. These matters were put forward to the Board of Trade. I know quite well what tre Canadians said about them, and I am delighted that they have been aired in the House tonight. I am particularly delighted because I shall be able to send the reply of the Secretary for Overseas Trade to the debate to Canada so that the Canadians will realise not only that we are doing all we can, but what is the Government's view.

On the other side of the question I am not quite so happy. The hon. Member for Nottingham, South (Mr. Norman Smith), with whom I have a great deal in common, talked about the failure of the business men. He was only "pulling our legs," I know, because he was throwing the ball back to us, but I should like him and all hon. Members to know that we do not admit this failure. Not a bit of it.

A couple of years ago—the Secretary for Overseas Trade will correct me if I am wrong—the President of the Board of Trade called us together at a meeting at the Board of Trade and put to us the difficulty of finding dollars to pay for the goods we wished to import from Canada, and asked us whether we would take the job on.

We undertook to form an organisation which was known as the Dollar Exports Board. We took it out of the Government's hands, and said, "Will you please leave this to us?" We provided the money and we ran the job. There were Sir Graham Cunningham and Sir Cecil Weir working with us on this side, and a number of very public-spirited Canadians, led by Mr. Duncan. That body has devoted itself to doing all it can to help in pushing British manufactures in Canada. The efforts which have been made and the success which has attended those efforts are, I think, worth putting on record as a wonderful performance.

It is rather hard for us in the motor industry to have it suggested that we are doing too much and more than our share. It is rather like being in church and listening to the parson lecturing us because there is such a small congregation—as though it were our fault. I think that we are doing our share, and I am certain that the Board of Trade do not want us to lessen it. I can assure hon. Members that they have only to give the British motor trade the hint that they are doing too much in Canada and they will soon put that right. They are robbing others to do it. They are cutting prices to get in, and we thought that we were winning medals by doing it.

My organisation has established an organisation in Canada. It is buying premises and building premises and putting stocks of spare parts all over Canada to help this business forward. I do not regard this as a temporary business, and I do not see why we should not be able to hold the market there. Why should the Canadians think that they have always to do exactly the same as the Americans. It is not the same country. In many ways it is different. They are finding the British motor car satisfactory we believe that there is a permanent market there, and we are seeking money. I do not think that I would shed any crocodile tears over the poor second-hand motor car dealer there. If he is anything like as well off there as he is here, he is on velvet.

My friends in the textile industry feel much the same. They are expecting medals for what they are doing. I do not think that we ought to suggest that the industries which have done so well are taking rather more than their share. It is a difficult market. As my hon. Friend the Member for Nottingham, South, pointed out, it is only an imaginary line that is drawn across the country. The people there go to and fro. As has been said, they are inter-married; they change jobs; they read the same magazines and they ask for what the Americans produce. Canada, up to a little time ago, largely thought and bought American. We are trying to educate them to a different way of thought, and it is not an easy job.

My hon. Friends here could probably tell us something about machine tools. When it comes down to electrical machinery, we have to remember that the Americans are there. The Americans own the capital in a great many of these organisations, and they are insisting upon their machinery and their designs going into Canada. We have lost business because American machines are already there on the job, and they want to pair up with them. As regards domestic electrical appliances, they find that ours do not suit and they say that we are out of step with them. That is not so. In many cases we were first in the field and our ideas have been Americanised; then they come back and say, "Why are you out of step?"

It is rather like the rule of the road in America. They say that we always drive on the wrong side of the road, but it is they who are driving on the wrong side of the road and not us. In the days of the horse-drawn vehicle, the driver used his right hand to whip forward. He could not use the other side of his vehicle because the hedges were there. When we took them over to America, they had no hedges, and they said that we were on the wrong side of the road. We cannot change over quickly because our home market is valuable, and we cannot make our people have something different because the Americans and Canadians have it.

It was only a few months ago that they did not want our steel. Now they do want it, and they are importing steel for rearmament. We certainly have not enough of the non-ferrous metals which have been mentioned. In many organisations we are slowly coming to a stand- still for need of them. There is a world shortage of these things. I think the British manufacturers have done a splendid job in Canada, and I wish that more goods could go there. We have got to get every motor car and every bit of textile to Canada. We need to export all classes of consumer goods, and it is not going to be easy. To convert Canadian public services to our methods and models will be a slow and laborious job. Our manufacturers are tackling the job well, and, in the meanwhile, let us get all the consumer goods that we can, including motor cars, into that country.

7.16 p.m.

Mr. Braine (Essex, Billericay)

I did not intend, in the first instance, to take part in this Debate. I listened to two-thirds of the speech of my hon. Friend the Member for Wembley, South (Mr. Russell), and I think that he is to be commended, not only for raising this subject, but for dealing with it in such great detail. I was prompted, however, to rise to my feet by some of the remarks made by the hon. Member for Nottingham, South (Mr. Norman Smith). I could not but help feel that he laid overmuch stress upon material considerations. I for one do not accept his strictures on Canadian cheese and Canadian bacon. All I know is that during the war I was very glad to eat both.

I also know that when this country was plunged into conflict, the Canadians were not far behind, that not only were Canadian soldiers soon fighting along side us, but Canadian farms were harnessed quickly to serve the needs of British consumers. Frankly, I derive more satisfaction from eating bread and butter produced by my brothers in Canada, or for that matter in Australia, Rhodesia or New Zealand than I would eating bread and butter produced by some foreign country. At least, I would have the knowledge that in time of difficulty I was not likely to be cut off from my sources of supply.

I would suggest that the Government's policy in switching trade from Canada and the source of supply of so many vital commodities to countries east of the Iron Curtain has placed this country in an extremely vulnerable position. It is for that reason that I consider that nothing has been more disturbing in recent years than the deterioration which has taken place in Anglo-Canadian trade relations. That deterioration has been paralleled by a considerable Canadian investment in the United States. How can 13 million people, stretched out in a long narrow belt along the American frontier, resist the economic pull exerted by the 150 million people of the United States?

I think that it was the hon. Member for Stirling and Falkirk Burghs (Mr. M. MacPherson)—and one expects wisdom from a Scot—who said that Canada was on the fringe of tremendous expansion. That, of course, is true, but it all depends on what moment in time we are starting our argument. It is not inappropriate to recall that Canada ended the Second World War, when Germany and Japan were prostrate, as the fourth industrial power of the world. It was Sir Wilfred Laurier who said that the 20th century would belong to Canada. That may be an exaggeration, but I think that the 21st century certainly will belong to Canada, if she can get the population to match her tremendous natural resources. But the diminution of the volume of Anglo-Canadian trade since the war, and the restrictions on emigration from this country are likely, I suggest, to force Canada—an unwilling Canada—more and more into the arms of the United States.

Trade is the cement that binds the constituent parts of the British Commonwealth together. The policy of the Government has done a great deal to weaken these ties during the last few years. There was the indecent haste with which contracts were terminated, and the still more indecent haste with which the President of the Board of Trade sent British steel, tools and other industrial equipment to the Russians. I think I am right in saying that the United Kingdom Mission which went out to Canada in 1948 reported that Canada offered a market for just those things which, in 1948 and 1949, as well as in the early part of this year, we were sending to the Soviet Union.

Surely one of the ways to overcome the difficulties between our two countries is to manufacture in this country goods which are suitable for the Canadian market but which hitherto the Canadians have bought in the United States. I do not wish to bandy any names across the Floor of the House, but I have it on very good authority that, since 1945 quite a number of Canadian firms who have wished to establish subsidiaries in this country, with the object of manufacturing goods which they have been importing from the United States, have encountered such difficulties in the matter of permits, licences and so on that they have preferred to set up their plants in Belgium and in France. I am perfectly willing to let the Board of Trade have the details. I understand that some of these firms have established subsidiaries in this country.

If what I say is true, I suggest that there has been considerable lack of business drive and imagination on the part of the Government. Quite naturally, the North American is brought up in an atmosphere of freedom, and he resents restrictions which the Government have thought fit, in their wisdom, to impose on industry of this country.

Mr. William Ross (Kilmarnock)

Can the hon. Member give us any idea of what these restrictions are? Are they restrictions that factories must be built in the former distressed areas?

Mr. Brain

One obvious restriction is that no firm can establish a plant in this country without obtaining a licence, which in many cases involves considerable delay. The North American is accustomed—I am not saying whether it is a good or bad thing—to make quick decisions. He is probably unfamiliar with the conditions that have obtained here since the end of the war, which require other than purely economic considerations to enter into these matters. However, I do not think it would be wise to pursue the matter. But I do suggest that where Canadian firms wish to establish subsidiaries in this country, with the object of increasing sterling exports to Canada of goods which have hitherto been bought by Canada with dollars in the United States, they should be given the maximum encouragement.

Mr. Ross

Surely it is not fair to make this allegation, when many of us know that firms have been established in this country? A Canadian firm has been established in my constituency. It spends a lot of money and does a lot of good work for us. I remember Mr. Duncan mentioning at the opening of the factory that, from the inception of the idea to the opening of the factory, it had taken no longer than 18 months. That, surely, contradicts what the hon. Member has been saying?

Mr. Braine

I am grateful to the hon. Member for emphasising the point I was trying to make in regard to North American business men. I am not prepared to argue whether 18 months is too long without having particular knowledge of the firm concerned. True, some Canadian firms have established subsidiaries in this country, but others have been so discouraged by the restrictions obtaining in regard to British industry that they have been persuaded to look elsewhere to establish their new factories.

The British Commonwealth would be relatively poor without Canada. Canada is the natural bridge between us and the great English-speaking Republic across the Atlantic. Canada has been at our side in two world wars. She possesses resources which will enable her, in a comparatively short space of time, to become a great power and exert great influence in world affairs. This is the crucial moment in her development. She is on the verge of so many great things, with her iron ore resources being opened up in Quebec, with her vast new oil discoveries in Alberta, and when the Americans are turning more and more to her for dairy products and other foodstuffs.

At such a moment Canada might have the chance to hold aloof from American economic sovereignty and so absorb British capital and emigrants. But if she is not given a chance she will become the 49th State of the United States. That is as inevitable as night follows day. We owe it to ourselves, to Canada and to the world, to speed by every possible means the expansion of trade with our Commonwealth partner in the Western Hemisphere.

7.28 p.m.

Mr. Jack Jones (Rotherham)

I listened with great interest to the speech of the hon. Member for Edgbaston (Sir P. Bennett), who speaks from a vast fund of knowledge drawn from his industrial experience. He, like me, does not claim to be a politician; otherwise, he would be nearer to his Front Bench. We all listen with respect to the views he puts forward, because we know that they are based on his knowledge of what is really going on.

I intervene in the Debate for the sole purpose of making it clear that no one on these benches wants it to be known, or thought, that the Government do not fully recognise the work that has been done by private enterprise, particularly on the engineering side, in getting exports into Canada. Those of us who are practical people know something about the difficulties. This is not a job for politicians. They do not get the goods into the market. It is their duty to decide policy, and those of us who have been in the House during the last few years know what the Government have done. The Gilpin Mission did a very fine job. Canada is not a very easy market. Anyone who knows Canada will realise that there is no clear-cut line of demarcation between the greatest producer on cheap production lines, with her vast source of geological wealth, and Canada. We cannot sell just for patriotism and sentiment; it has to be a business proposition.

If there is one thing for which the Opposition and those who support private enterprise deserve a pat on the back it is the work they have done in the last four or five years in the export markets generally. I know something of the Government's difficulties. They want people to buy from us so that we shall have dollars to spend elsewhere. That is a difficult proposition at any time, to get someone to support by giving us dollars, knowing that our intention is to spend the dollars somewhere in the East. Canada, like Britain, is full of people who want to spend their money to their own advantage. That makes the problem all the more difficult.

The vast continent of Canada, for that is what it is, is in many respects an unexplored market, although the Gilpin Mission has done excellent work in this direction. It is hard enough to get orders for goods, but then we have to get the goods in the right place and see that they are serviced in the right manner. Private enterprise has sent out a lot of people to set up service depots, which involves a vast amount of capital. Those who know something about what has been done will want to pay their tribute, and it is only fair that that tribute should be paid from these benches.

I know that the Government Front Bench can put up a good case for making the best possible use of our production to increase our income in dollars, foodstuffs and raw materials, but the Canadians and the Americans, like everyone else, believe in charity starting at home; if there is any benefit to accrue, they expect it to accrue to themselves. I know that this is a difficult proposition, but it would be wrong to let this debate pass without someone from this side, with knowledge of what goes on in private enterprise and nationalised industries, paying a tribute to those who are doing this work. As one who has been a junior Minister, I should like to place that tribute on record.

7.32 p.m.

Mr. W. Shepherd (Cheadle)

The House will be grateful for the sentiments expressed by the hon. Member for Rotherham (Mr. J. Jones), and for the tribute he has paid to private enterprise for its quite remarkable activities in the export field during the last few years. Many of us would not have regarded these achievements as being a possibility some three or four years ago. Our exports have exceeded all expectations, and our manufacturers are to be congratulated on their results.

I should like to emphasise what my hon. Friend the Member for Billericay (Mr. Braine) has said about firms wishing to come here from Canada and the United States having been refused facilities. The Board of Trade have, in fact, refused many licences to build factories for firms that originate from Canada and the United States. The Board of Trade will be the first to admit that. There may be reasons which determine this refusal, but it is not a question of location.

Mr. Ross rose—

Mr. Shepherd

If the hon. Member doubts that, perhaps he will ask his right hon. Friend for the details of the number of American and Canadian firms that have been denied licences.

Mr. Ross

If hon. Members opposite are contending that the Board of Trade have done something that is dangerous, they should go a little further and give us the cases, so that we may be able to judge. After all, the hon. Member is making the assertion. I know that there may be cases where licences have been refused, but I rose to ask where the factories were to be built.

Mr. Shepherd

The hon. Member must not put words into my mouth. I did not say it was dangerous, but merely stated the fact that this has been done. There may be room for the view, which I understand is the view the Board of Trade takes, that there are other projects likely to be of greater potential value to the community. I am not in a position to judge whether or not that is so, but the hon. Gentleman must not try to put words into my mouth.

Mr. Jack Jones

I am sure that the hon. Member would agree with me that there are cases where permits to build are withheld. In some cases there are good reasons why. For instance, it would be foolish to grant licences to build factories only to find, when the factories were built and the labour and machinery were available, that raw materials already being used in other factories had to be diverted to the new factories and that as a result people in the other factories were put out of work.

Mr. Shepherd

I agree that there may be many reasons. Defence factors might have to be considered. It might be that a home product had a greater export potential than one from Canada. I was not saying that the Board of Trade were doing us a grievous disservice; I was saying that my hon. Friend was right when he stated that licences to build factories had been refused to firms resident in Canada or the United States who wished to establish subsidiaries here.

On the issue of Canadian trade I do not take quite the same view that some of my hon. Friends take. Much disservice is done to Anglo-Canadian trade if we merely say that all the fault is on the side of Great Britain and all the good will on the other. The pattern of trade between Canada and Great Britain was established in an era when we could draw upon a very substantial invisible export and that time will not recur. The war shattered all the vast reserves we had in the form of invisible exports and it was obvious, after the war, that there would have to be a very painful readjustment of our relations.

There has been a failure on the part of some Canadians to face up to the realities of the situation. I visited Canada late in 1945. I said to the Canadians, "You must forget what happened in 1939 in terms of trade." They scoffed at my view that the old pattern could not possibly return. They said they had established big industries and they must carry on as they did before the war. Nevertheless, the old pattern cannot return.

Some of my hon. Friends give the impression that we do not buy enough from Canada, but the figures do not bear that out. In 1938, we bought from Canada goods worth £78 million and we sold Canada goods worth £22 million. In 1949, we sold to Canada goods worth £79 million and bought from Canada goods worth £224 million. It is true that we were able to buy these large quantities through the generosity of our Canadian friends, and to some extent they were the result of purchases on Marshall Aid account. So the pattern has not changed. We cannot carry on with that pattern because we cannot depend for all time on the generosity of the Canadians and the Americans.

There have been faults on both sides in our trade relations. The harshness of some of our decisions has struck the Canadians as being most unfair. We were particularly at fault during the period of the all too easy optimism during the last Parliament, when Sir Ben Smith promised the Canadians that we would buy all that they could produce. He has now gone to another sphere to radiate his optimism, but the damage done to our trade relations remains. I do not know what the President of the Board of Trade said when he went to Canada, but he left a very unfortunate impression there.

I want to disabuse the minds of some hon. Members of the idea that Canada is a wonderful market and an easy one for British manufacturers. That conception is the most naïve of all. If as a manufacturer I wanted to tackle either the American or the Canadian market from the point of view of ease, I know which one I should take. The Canadian market has been incredibly difficult for our people. There have been more complaints about price and quality from Canada than from any other market. Canada wants to buy British quality and variety at the same price as she pays for standardised American goods. We cannot possibly meet that demand.

Also, it is very easy to tread on Canadian toes. A short time ago I heard complaints from Canada that we were putting Canadian textile mills on short time. We must face up to these difficulties and not imagine that Canada has wide open arms and is seeking our goods. Another thing is that the duties on some of our goods to Canada do not compare favourably with those to the United States. The duty on men's leather footwear going to Canada is 25 per cent., less Imperial Preference, but in the case of the United States it is only 5 per cent.

It is essential that we sell more to Canada. I am pleased to think that in the last six months we have done extraordinarily well. I hope the Secretary for Overseas Trade will be able to confirm the prevailing figures. I find that whereas, in 1949, we exported to Canada only £79 million worth of goods and imported £225 million worth, in the first 10 months of this year we have been exporting to Canada at the rate of £120 million worth of goods per annum and have reduced imports to £176 million worth of goods.

That is a remarkable achievement upon which, as the hon. Member for Rotherham said, private enterprise is to be congratulated. We can increase our exports to Canada still further. We still do only a small percentage of the machine tool trade. We are still bemused by the idea that the Americans have something over us in the matter of machine tools, but that is not true. Although we have doubled our exports of machine tools to Canada since the Gilpin Mission went there, we still have a long way to go.

I have made these observations on the difficulties of the situation bearing in mind all the time the fact that we must achieve good trade relations with Canada and also the sentimental ties which bind us together. However, there can be no real answer to the problem short of two things. One is convertibility and the other is the development of production in the Eastern hemisphere in order to remove the disparity between the productive capacities of the Eastern and Western hemispheres. I am not sorry that we have had this difficult and trying period. There had to be a readjustment of our position in relation to not only Canada but all the nations with whom we trade because we have to make good in some fashion or other the markets which we previously had in the form of invisible exports. During this period, in which there have been faults on both sides, we have brought about a very considerable readjustment of our trade and I believe that we are now on lines which will determine the pattern of our trade with Canada.

I hope that the hon. Gentleman who is to reply to the Debate will make it clear that the Government are most anxious to do all they can to increase trade with Canada and to be sensitive to the difficulties in which the producers, particularly of agricultural products, have been put by the constant changes in policy. We want to see trade restored in harmony with our Canadian friends, but it must be clear that the difficulties and faults are not all on the side of this country and that the Canadians, as well as ourselves, have to look at the problems in the light of the conditions prevailing after the war.

7.46 p.m.

Mr. Watkinson (Woking)

I do not differ from anything that has been said by my hon. Friends. I wish to deal with a practical engineering problem which was touched upon by the hon. Member for Edgbaston (Sir P. Bennett). Also, I agree very much with what has been said by the hon. Member for Rotherham (Mr. Jack Jones).

Here is a matter on which the Board of Trade can do something to help the engineering industry. Undoubtedly, the further development of our exports must depend very largely on the further development of our exports of machine tools and engineering products generally. At the moment the Canadian user is largely tied to American engineering standards. The difficulty which we had in the machine tool industry when we tried to break into the Canadian industry, with its standards of electrical equipment which were quite foreign to us, will be well known. I wonder if more could be done to bring the Canadians over to our side so that they would accept more British standards and British engineering specifications instead of the American ones. If the Government could help in this direction it would be of the greatest assistance.

British private enterprise, which, despite some of the suspicions of hon. Gentlemen opposite, is going out to Canada, is doing a frightfully difficult job extremely well. It would be a profitable partnership between the Government and private enterprise if the Government would do all they could to encourage the acceptance of British engineering standards in the Canadian market. It is not an easy job. It would be helpful if we could bring more Canadian technicians over here and have them in our industries and our technical institutes. I stress this because it would enable us to do more business fairly soon in Canada instead of it being a long-term and very expensive job for the manufacturer who may send goods out and find them rejected because they are not of the required standards.

An hon. Member spoke about supplying capital goods to Canada first and all the time. We must realise that in the long run Canada will be a highly efficient and well developed industrial country and will become a formidable competitor to us in the export field. It is a difficult problem to decide the right course to adopt. I see the hon. Member for Rotherham smiling. He knows the problem just as well as I do. Although I realise we must do business with British machine tools in the Canadian market, it sometimes makes one wonder if one is not making more efficient a very powerful future competitor. What we must try to do is merely to take away business which is at present placed in the American market. On that basis, I do not think this country will be loosing anything at all.

I hope that our pattern of trade, when it develops, will also include a substantial component of consumer goods so that they will be used to demand even more goods, and we shall get repeat orders again and again. After all, power station equipment is a very valuable export, for which repeat orders are not given in five minutes. I agree with my hon. Friend the Member for Cheadle (Mr. Shepherd), that we should maintain our car exports, for as a result repeat orders will come to this country.

May I return to my first point? I hope that this matter will be borne constantly in mind. I must apologise to the Secretary for Overseas Trade who, I understand, is to reply to the Debate, because when I conclude these few remarks I must leave as I have an appointment to keep. I hope he will forgive me, and that the matter will be borne in mind.

7.52 p.m.

Mr. Harrison (Nottingham, East)

I intervene only because of something that was said by the hon. Member for Cheadle (Mr. Shepherd) regarding the convertibility of our currency and overseas balances. If that is to be a condition of the full blossoming of our trade with Canada, we shall have to be very careful and weigh the position for some considerable time before such a condition of international trade is established. It would be far better if we developed the already extensive trade between this country and Canada by loosening some of the import and export restrictions.

If we could permit a greater liberty on importing Canadian products to this country and also negotiate for freer exportation of our goods to Canada, it would result in a more profitable line of trade development than by seeking further reliefs and increase of trade in the direction of the convertibility of the pound sterling. We had a rather unhappy experience in that direction some two years ago, and if we are desirous of increasing valuable trade between this country and Canada, we should look in the direction of easier exchange and imports than for a greater amount of convertibility of sterling.

Mr. Shepherd

I am sorry that I did not make myself clear in the short reference which I made. I take the view that we should approach this problem in two stages. Firstly, we should, as a result of the improvement in our gold and dollar position, buy more from Canada and certainly they would buy more from us. From that stage we might aim at convertibility, because the whole problem of world trade will not be solved until we get convertibility. I do not see how we can get convertibility without some export and import restrictions, although much less rigorous than at the present time. It would be foolish to rush into convertibility and abandon all export and import restrictions. That would indeed be disastrous.

Mr. Harrison

I am grateful to the hon. Member, because I misunderstood completely his reference to convertibility, which was probably due to the fact that he was sparse in his comment on the subject. I agree with the sentiment which he has just offered, that we can aspire to convertibility ultimately, and that the way to it is along the road of increased inter-trade between this country and countries like Canada, Australia and New Zealand. I hope, too, that the Minister will say something about the position of the triangular trade between this country, Canada., and the Caribbean possessions. That trade was important prewar and must become so again.

7.55 p.m.

Mr. Peter Smithers (Winchester)

The point that I was anxious to raise with the Minister was the point briefly mentioned by the hon. Member for Nottingham, East (Mr. Harrison)—the triangular trade between this country, Canada and the Caribbean possessions. I listened with great interest to the speech of my hon. Friend the Member for Cheadle (Mr. Shepherd) who pointed out that the prewar pattern of trade with Canada has ceased to exist, that some of our invisible exports have disappeared, and that the disappearance of the pre-war pattern is certainly one of our main troubles in trading with Canada today. My hon. Friend mentioned the harshness of some of our decisions, and I think that nowhere is that statement more applicable than to the currency restrictions imposed on one of the triangular links with Britain, the trade between the Caribbean Colonies and Canada.

It might be thought at first sight that this is a problem for the Secretary of State for the Colonies, but I do not think that that is the case. He does not need persuading in favour of facilities for trade between the Colonies, for which he is responsible, and Canada, on whom they so much depend. This is really a matter for the Board of Trade and the Treasury, and I should like to make to the Minister some suggestions, which I think are worthy of consideration, and which lead me to feel we ought to ease up considerably on trade between Canada and the West Indies if we are to secure a proper place in the Canadian market. Particularly is that the case in view of the difficulties of the Canadian market. It is by no means an easy market in which to maintain ourselves, and if we can also maintain a footing there through the West Indies trade that will be a considerable advantage to us in our trading relations with Canada.

It is worth remembering that, in the system of imperial preference upon which our own trade is largely dependent, the preference on trade between the West Indies and Canada was one of the first, if not the first, to be established. It became a kind of prototype for later agreements and one of the corner stones of the trade between this country and the western hemisphere. The disappearance not so much of preference but of dollar products in the West Indian market has had a very serious slowing up on the whole economy of the West Indian Colonies, and that, in turn, is choking the channel of trade between this country and Canada through the West Indian triangle.

Anybody who has visited those Colonies will realise how deeply dependent British Honduras is on Canadian and for that matter American trade; and likewise are Barbados and Trinidad, to select two more Colonies which are particularly affected by the dollar problem. It will thus be realised how desirable it is that we should increase as much as possible their trade with Canada. The reduction of dollar imports in these Colonies has caused a considerable rise in the cost of production, and in consequence has made it more difficult for goods to be exported from those Colonies to the Canadian and other dollar markets in which they used to play unimportant parts.

I suggest to the Minister that we cannot consider Anglo-Canadian trade simply as an isolated problem, or a bilateral trading position, and if we want to make the most of our trade with Canada we have to regard our West Indian Colonies as in many respects in the same position as ourselves and on our side of the fence. If we wish to play a fully effective part in our trade with Canada I think the restrictions on dollar trading with them must be considerably eased. I have in my hand a Press release which gives, not the text, but a kind of foresight of a proposed relaxation in this dollar trade. It suggests that in certain groups of commodities dollar trade will be permitted between these Colonies and Canada and the United States at 50 per cent. of the amount annually exported in 1946 to 1948; and then there is a second group in which the figure is 33⅓ per cent.

The amounts there are, of course, a quite considerable restoration of this link in our trade with Canada through our Colonies. But, from the point of view of the Colonial economies, they are not enough, and I would point out how the continued paralysis of the trade between the West Indies and Canada costs us dear in the Colonies in the long run. We have to make good deficiences, if not directly from this country in the form of subsidies, social welfare grants and so forth, then by asking a higher price for Colonial exports and in the long run I believe our exchange position is damaged. I hope that in any future action in this field of Anglo-Canadian trade the Board of Trade will bear in mind the important part our Carribean Colonies used to play in it, and ought to play once again.

8.2 p.m.

The Secretary for Overseas Trade (Mr. Bottomley)

I join in the general appreciation paid to the hon. Member for Wembley, South (Mr. Russell) for raising this subject on the Adjournment and I express personal thanks to him also for giving me advance notice and information to enable the debate to take a better form. It can be said that the debate has certainly not run on party lines, and neither should it. My hon. Friend the Member for Rotherham (Mr. Jack Jones) made some comments which I am sure could equally have been made from the other side of the House, and the hon. Member for Edgbaston (Sir P. Bennett) showed his normal practical common sense on these subjects and might equally have made the reply from the Government benches.

Substantially, the core of the discussion has been that we are now selling more to Canada and therefore we ought to buy more from Canada. But that ignores the fact that in recent years expenditure in Canada has exceeded our earnings and we have only been able to bridge the gap by getting Marshall Aid, Canadian credit and other assistance. I need hardly recall to the House that when the dollar gap was acute the then Chancellor of the Exchequer called a conference and the whole of the sterling area decided they would limit imports. To a large extent that has put us in a favourable position today.

So if we have an improvement in our balance of payments situation today, we have to be very careful before we consider how we shall let up. Our dollar expenditure is not worked on a bilateral basis with Canada and I am sure that would not be suggested. The sterling area as a whole is the trading unit and I imagine it would be the wish of us all that that is how it should be. I am bound to say that the Chancellor last week emphasised, and secured the agreement of the Commonwealth countries in this, that we must build our reserves to an adequate level and maintain strict economy in dollar expenditure. As hon. Members will know, the hon. Member who led for the Opposition fully supported that statement and I think it must be the united desire of us all to do all we can, consistent with our economic well-being.

We must recognise, as I am sure we all do, that this market is of long-term importance to Canadian producers and manufacturers. Particularly must we remember how liberal they have been in assistance to us and, therefore, we have a special obligation to assist as much as we can. The Government policy is therefore to obtain as much of our requirements from Canada as we can afford to pay for in dollars, always with the proviso that as good businessmen we must take care that the goods are supplied at competitive prices. Having accepted that, as a result of our improved conditions we have been able to resume and increase our purchases from Canada.

I will give some illustrations. Our purchases of most of the raw materials—I mention softwood, wood pulp and newsprint—are limited by the Canadian ability to send us what we want. Of raw materials, for 1951 we shall import a good deal more than we did in 1949, or than we have been able to import so far this year. We are purchasing substantial amounts of softwood. I think one hon. Member asked if that included the East Coast and if I would make mention of that. I can say that supplies will come from the East as well as from the West and we are also expecting shipments of softwood from Canada in 1951 to be comparable with the peak post-war year of 1947. We have also resumed the purchase of iron ore and pulp wood.

Supplies of manufactured goods are limited because of the principle that we can only buy what the amount of dollars we have enables us to buy. But in this field we have been as helpful as we can. Hon. Members will know of the token import scheme to which we are giving further consideration. It is hoped in a short time to make an announcement of our programme for 1951. I give the assurance that we shall do as much as we can consistent with that economy necessary to meet our present position.

The hon. Member for Winchester (Mr. Peter Smithers) made a point about the West Indies and Bahamas market in particular. What has been foreshadowed in the Press will in fact happen. Relaxation on these goods is not best for us in our own narrow, selfish interest, but the Canadians have asked us to do it and we have met their wishes. In this respect we are limited because what we are enabled to do for the Canadians we are compelled under international obligations to do for the Americans. We are doing what we can in purchasing manufacturing goods.

As far as Governments are concerned, the closest relationship and understanding exist between the Canadian Government and our own. The United Kingdom-Canada Continuing Committee which has been established deals with trade and economic affairs and meets periodically to consider economic and commercial matters. I have taken a special interest in Canadian trade. Indeed, I think that I am nearly a member of the Canadian Chamber of Commerce. I go to their meetings as often as I am invited, which, I am very pleased to say, is frequently. By that personal association much information can be gathered and many of the difficulties smoothed out. Relations between the United Kingdom and Canadian Governments are very happy and both sides are anxious to pursue the right policy in the common interests of each country.

It has been suggested that we should stop buying agricultural products from Eastern Europe. If we were to do that, and to accept the suggestion which has been made from the other side of the House, that we should ask for payment in sterling or for deferred payment in dollars, it must be recognised that this would mean in effect asking for another credit from the Canadian Government. I am sure that that was not the intention of the hon. Member who made the suggestion.

As the hon. Member for Wembley, South, said. I cannot answer with complete authority some of the questions he has put because they are not within the purview of my Department, but for the purpose of this Debate I have obtained as much information as I could following his earlier intimation of the subjects which might be mentioned. On the question of foodstuffs, let me refer. for instance, to bacon and cheese, about which a point was raised. Our contracts in 1950 will absorb all that Canada can supply. We are entering into discussions about our future supplies. From British Columbia we have bought tinned salmon, on which we have spent 5 million dollars, which is a rather large amount, considering the comparatively meagre amount of available dollars.

I was asked about apples, for which the Canadians have a market and in which we should like to encourage them. It is only shortage of dollars which prevents our buying more. We have, nevertheless, made provision to spend 2,500,000 dollars on apples. In reply to the query about whether we would take some from Nova Scotia, I give the assurance that we will do so. This will help that part of Canada, which, like the rest of the Dominion, has been so generous in its help to the United Kingdom.

So far as wheat is concerned, the greatest part of our wheat supply comes from Canada, and all the dollar flour which we buy comes entirely from that country. It is true that for coarse grains we have turned to Eastern Europe. It must be recognised, first, that Canada is not a traditional supply market for this kind of grain, and it is doubtful whether, because of transport difficulties and other considerations, Canada could meet the supplies which we need. Even if they could, the problem would arise that because of our shortage of dollars we could not be provided at the same time with the wheat and flour which, after all, is the prime interest of the Prairie farmers. Therefore, the extent to which we are able to obtain coarse grains from elsewhere releases a reserve of dollars to enable us to buy more of the essential foodstuffs which Canada has and wants to supply to us.

The hon. Member for Wembley, South, was supported by other hon. Members in wanting to know about steel. The hon. Member for Edgbaston (Sir P. Bennett) said that some time ago we had plenty of steel and that not all of it was taken up. That is in part true, but, as he rightly said, the position today is that everybody wants steel. We have recog- nised, however, that in the case of Canada we have a special obligation. Let me give figures to illustrate what is happening in the export of iron and steel and manufactures to Canada. In 1950 these exports are running at an annual rate of 209,000 tons, or more than twice as much as in the previous year. The figures of these exports to Canada over the last few years are as follows. In 1947, we exported 17,200 tons, or a value of £796,280. In 1948, 30,859 tons, or a value of £1,403,048. In 1949, 65,728 tons, to a value of £2,629,250. In 1950 the exports for the first 10 months were 174,096 tons, or a value of £6,908,000.

Mr. Russell

Of all kinds?

Mr. Bottomley

Yes. Those figures represent an approximate annual rate of 209,000 tons, which indicates a very substantial advance, and shows that private enterprise, the Government, and everybody concerned with exports, have done a magnificent job. I ought perhaps to add that I have not included steel tyres, wheels and axles, which accounted for an additional 9,141 tons.

I was asked whether we could not have an incentive scheme. I assure the House that the greatest care has always been given to the question of dollar incentives. The Treasury and industry have been consulted time and time again. We have found it difficult to come to any decision. It is even more difficult now, when rearmament takes an equal place with our exports to dollar markets. Would it be right to say that those engaged on rearmament should be deprived of an incentive? We are continually giving consideration to this difficult question and shall continue to do so, but at present I can say nothing more.

The hon. Member referred also to the export of heavy electrical plant and other equipment. The deputy-chairman of one of the greatest electrical concerns in this country has recently been on a tour to Canada, and I am very glad to have had a letter from him in which he said how efficient and valuable were the services of the United Kingdom Trade Commissioners in Canada. I appreciate his remarks. I ought also to say that as a result of the efforts of electrical manufacturers, large orders running into several millions worth of dollars have been placed in the last few weeks. They include schemes in connection with public utilities such as the Ontario and Quebec hydro-electric authorities, as well as others. Orders and work of this kind provide the kind of continuing development which will bring great value. Other engineering products, particularly since the Gilpin Mission, also have gone ahead.

As Sir Harry Gilpin rightly said, we cannot neglect a market for 30 years and then expect it to be an easy one. It is, in fact, a difficult market and I join in the tributes which have been paid to all those who are doing their best to retain their place in it in spite of the hard struggle.

The export figures show that in 1948 our exports reached a monthly rate of 24.4 million U.S. dollars. There was a slight increase in 1949, but in the third quarter of 1950 the figure rose to 30.6 million dollars. For October, it was running at the rate of 33.7 million dollars. That shows that we are pushing exports as much as possible, and the hon. Member for Edgbaston is entitled to say that pride of place goes to the motorcar industry, though near to it come the wool industry and steel. They are all to be congratulated. There are many other things that might go into the substantial market of Canada—clothing, coal, pottery, cutlery, cement, glassware, agricultural tractors, whisky, electrical generating equipment, printing machinery and the like—all show a steady increase.

I recall that a Canadian farmer came to see me recently. I make a practice of seeing any Canadians who want to see me because I regard it as part of my job to do so. This farmer refused to believe that he could get into a Government Department so easily. He told me that on his farm he had roughly 60 articles in use, and that only about a dozen of them came from this country. Some of the things he mentioned are included in the list I have given, but there are still many other goods that can still be sold in the Canadian market. That is not in any way to discount the admirable work done by industry generally, but there are some industries which could do a little more, and, if they would make an effort like that of the motorcar industry, we should be well on the way to providing the extra dollars needed in order to import those goods that we require.

One hon. Gentleman mentioned trade with Argentina, and said that if we stopped our trade there and did more with Canada, how good it would be. As a matter of fact, in part, that is what is happening. Exports to Argentina fell from £52.5 million in 1948 to an annual rate of £36.7 million in 1950, whereas in the corresponding period our exports to Canada have increased from £72.8 million to £118.7 million. I think we could say that dollar exports are being pushed ahead in the way that we would wish, and I repeat that the Government give dollar exports equal priority with defence.

There was a little discussion between one of my hon. Friends and two hon. Gentlemen opposite about the limitations placed upon Canadian industry or its subsidiaries in coming here. Let me say that the special control is exchange control, and I think everybody will agree that we cannot allow unlimited investment in this country which would involve us in a liability to transfer back to the dollar area the profits and dividends earned. Therefore, the control has to be judged by the extent to which it is likely to increase our own capacity to produce essential commodities or to save dollars, and I am quite sure that it would not be right for us to agree that, while industry should be checked on the basis of what contribution it can make to the national economy in this country, outside industry should be able to break through these regulations, which have been so helpful in enabling us to overcome our economic difficulties.

Another hon. Gentleman raised the question of Japanese and German competition. Exports from Germany to Canada are running at the rate of less than one million dollars a month. It is not so much, but we have to keep a watch on it. Exports from Japan to Canada are at the rate of less than two million dollars a month. Exports from the United Kingdom are running at the rate of nearly 34 million dollars a month, and any action to be taken must be taken by the Canadians or by our own manufacturers. We must keep in step with those other countries which are able to compete successfully with us, and, in that way, make our contribution. The Government will give whatever assistance it can to industry to enable it to meet competition with other countries.

Finally, I think the hon. Member for Woking (Mr. Watkinson) asked what we are doing about standards and making sure that others in Canada are acquainted with our methods of production and our supplies generally. I am sure the House will be pleased to note—it has been mentioned before, I believe—that the Government have a scheme of fellowships whereby engineering students are encouraged to come to this country. They are called the Athlone Fellowships, and it is hoped by these means to make the Canadian engineers aware of our products, their potentialities and the standards we have set.

I hope I have been able to cover all the points mentioned, and I will conclude by saying that I speak not only on behalf of the Government, but also, I think, on behalf of all hon. Members when I say that I realise the importance of our trade relationships with Canada and that we all genuinely desire to see them strengthened and will do all we possibly can towards that end.