§ 3.58 p.m.
§ Captain Crookshank (Gainsborough)
We have asked on this day for a debate on the subject of the Protocol to the Argentine Agreement. I had hoped that perhaps the Government would have opened the discussion and explained this rather complicated matter to us. If the Committee has to listen to my explanation instead, it is not particularly my fault, but the speech I make will be really one large question mark.
This Protocol was signed on 23rd April, and reported to the House the next day, and I then said that we would have to look at the matter with care and attention. That is just what we have done and we have deliberately. delayed the debate for two and a half months because at first sight it did not seem a very good Agreement. There were so many clauses and paragraphs left open for further talks, further negotiations, mixed commissions and all the rest of it that we thought it might be better to see whether the Government were making any headway with the outstanding problems, even if they did not conclude them before we brought the matter before the House. Two and a half months have gone by and 2505 we have heard nothing further, and we think it is time to do a bit of probing.
The purpose of a trade agreement, I imagine, is that the two parties want to buy and to sell between themselves, and to bring this about, if there are financial arrangements to be made, they should be agreed upon. The object of the exercise is, to use the modern jargon, "operation mutual trade." The Economic Secretary to the Treasury went out to the Argentine in April to see what could be done.
Incidentally, it was a most inept time to have chosen because it was just before Easter, when everybody takes a holiday and in some countries longer holidays than in others. Secondly, it was at a time when there was no ambassador there, Sir John Balfour having just left his post on transfer and the new ambassador was not yet functioning. However, the hon. Gentleman certainly, according to Press reports, had to work very hard and had many late-night sittings, a fitting preparation for his later experiences on the Finance Bill.
But he came back, and the Chancellor and the Minister of Food both made statements on 24th April, because the Agreement covered two different fields. On that occasion one of the hon. Gentlemen behind the Government complained that we had not offered any congratulations to the hon. Gentleman. I thought we had better wait to see whether congratulations were deserved before we started issuing the bouquets. I am not yet quite certain whether they are. All praise to the hon. Gentleman for his own hard work; that I concede, and thank him for what he did personally. But hard work by the Economic Secretary does not necessarily get translated into a good agreement for Great Britain.
This Protocol we are discussing—that is the technical name for it—is really a supplement to the Agreement of 27th June, 1949, and that itself was the third trade agreement between this country and the Argentine since the war. I must just go over the background as briefly as possible. There was the Eady-Miranda Agreement which lasted from September, 1946, to February, 1948; the Andes Agreement from February, 1948. to March, 1949, and further negotiations, and the third Agreement of June, 1949, 2506 to which this document, of April, 1951, is the Protocol. The Eady-Miranda Agreement failed in the end, because it was hopelessly shaken by the convertibility crisis of 1947. That really wrecked it and led to the next negotiation, which ended with the Andes Agreement.
That Agreement failed for two reasons. Although the Argentine got the goods we had promised to help her to get under that Agreement, she fell into arrears of something like 70,000 tons in her meat contract and claimed the right to cancel it. We were in a very weak position because we had paid for this meat in advance. That was a very foolish thing to do, and the Opposition have criticised it in the House before. When they failed to fulfil the contract, we were in some difficulty in the argument, but eventually the Andes Agreement was replaced by the 1949 Agreement. Here we got the arrears of 70,000 tons with which we had not been supplied, but of course at an enhanced price.
Later on, during the currency of that Agreement, which was going along fairly well, we complained that the Argentine were not honouring the financial clauses and that the import licences for the import into that country of British goods were not being given on a reasonable scale. I hope I am not wearying the Committee with this background, but I am sure the Government will take me up if I fall into any error. In reply, the Argentine said, "Oh, but look at the result of devaluation." So there was a deadlock. Then, in July, just a year ago, all shipments of Argentine meat stopped. And there the matter rested. It was taken up again, and the upshot of that is this Protocol.
I will deal with three points separately. There is the financial part of the Agreement, there is the question of what we have undertaken to send to the Argentine, and there is the question of what the Argentine have undertaken to send to us. On the financial point—and, after all, finance is the lubricant of trade, if nothing else—I quote from the statement of the Chancellor on 24th April:We have agreed to pay £10½ million as a compromise settlement of the exchange guarantees. For their part, the Argentine Government have undertaken to allow the transfer of the arrears of remittances. The Agreement provides, as a matter of mutual 2507 convenience, that the sum of £10½ million which we pay shall be put into a special account and used only"—that is to say by the Argentine Government—for the payment of arrears of remittances.That, of course, has been one of the matters in dispute, that they have not been sending to this country the money owing to it. That is settled, but it must be understood that, as a result of this settlement, we have conceded the argument about the £10½ million. We find that the £10½ million, and, in fact, the remittances, are not, in effect, being paid by the Argentine at all but by the British taxpayers. But that is one of the points of the settlement.
On the question of future trade, another settlement was made, and again I quote from the Chancellor:…we have agreed to make sterling credits available to the Argentine, if required, up to a limit of £20 million."—[OFFICIAL REPORT. 24th April, 1951; Vol. 487, c. 217–8.]But, if the limit rises above £20 million, the Argentine have the right to be paid the excess over the £20 million, should they so desire it, in other currency, including dollars. I do not wish to expand this argument, because it might not be entirely tactful to do so, but that seems to me to be a dangerous proposition, as it looks a possible way by which they could get dollars. I am sure that is not intended, but I can imagine ways and means by which it could be used for that purpose. That is all that was settled on the financial side.
Now I come to what was not settled, and here I must quote something which we heard in the debate on 8th February about meat. The Minister of Food defended himself about the negotiations not having fructified by saying:We went into these negotiations not merely to settle the price of meat but also to clear up a number of important points of dispute between our two countries. For example, there were the Argentine undertakings about certain financial remittances to British citizens —does not the Opposition care about that?"—I do not know why that uncalled-for remark was made—obligations such as pensions to British ex-railway employees; the very important question to private traders of the import of British goods in the less essential class."—[OFFICIAL REPORT, 8th February. 1951; Vol. 483, c. 1968]2508 and so on. If at that time the Minister thought those things very important, one would have expected that when the April negotiations took place they would have been settled; but, far from being settled, some of them are not even mentioned at all. The right hon. Gentleman speaks about wanting to clear up the obligations, such as the pensions to British ex-railway employees. There is not a word of that anywhere. Article 13, it is true, says that the Argentine intention is to promote a settlement as soon as possible of various problems arising out of the transfer to the Argentine of public utility companies, that is to say, gas and tramways. That is all; we hear no more.
The other business about permits for British private traders for the import of British goods into the Argentine again is left by the Agreement completely in the air. All that Article 9 says is that a mixed consultative committee is to do what it can about it. That is why we have waited two and a half months to see whether anything has happened. Has anything been done about the moneys for the gas and tramway undertakings? Has anything happened to increase the import licences for British trade? I and my hon. Friends are anxious about that, because we find that other people are getting anxious. Only last week the financial writer in the "Manchester Guardian" was saying, on 26th June:British exporters are beginning to tear the worst about the recent trade … agreement with Argentina…Now that Argentina has been promised a sterling credit if its balances run down and the facility of changing sterling into dollars if they grow too large, it is difficult to understand what is causing the delay.There is still no sign of the licences being issued. I hope the Government can tell us something about that, because that is a very important part of the financial problem.
So, on the purely financial consideration of this—I will speak later on about the price we had to pay for the meat—only two things were settled, and everything else was left in the air. What was settled was, first of all, that we should find the £10½ million out of which the payments were to be made, and the sterling balances of £20 million may or may not turn up to our ultimate advantage. That is the financial side.
Now I come to the question of what we undertake to do by the Agreement. Under 2509 Article 9 and the Schedule we propose to make available—that is a pretty firm commitment—4,000,000 tons of oil. As things have turned out since with regard to British oil, that may be rather difficult, but I am sure that every endeavour will be made by the Government to see that that is implemented. Secondly, in the letter attached to this document the Government intend to use their best endeavours to make available a quantity of 500.0000 tons of coal. I hope that will be within the capacity of the Government to fulfil.
It must be rather galling, of course, to the Argentinians when they remember that before the war they used to get from us 2 million tons of coal. Not only that, but I remember well when I was at the Mines Department, the trade, under the aegis of that Department, was constantly sending people out to South America to try to induce them to buy more coal. What is more, in those days they were getting the coal at a quarter of the price they have to pay today. In those days we were exporting a million tons a week. It is a very different picture now. I therefore hope that it will be within the capacity of the Government to fulfil that.
§ Mr. Paget (Northampton) rose—
§ Captain Crookshank
No, I cannot give way.
My third point concerns tinplate. Here the Government have undertaken, again using their best endeavours, to send 27,000 long tons of tinplate. Now that is one of the scarce materials, and we can only hope that that undertaking on our part is linked up with the imports of 30,000 tons of canned corned beef that we hope to get during the year. Here I might as well remind the Government that two years ago the Argentine got, I think I am right in saying, 16,000 tons of tinplate from us. For the first six months of last year, we did not get a single pound of meat from them, although they took from us 32,500 tons of tinplate—a great deal more than we are undertaking to give them this year. It is also a fact that last year a record amount of corned beef was exported by the Argentine to the United States, so that our tinplate was no doubt instrumental in earning them dollars.
Fourthly, there will be such other exports from this country as can be 2510 brought within the system of the export licences of the Argentine. But, as I have said—and I have quoted the "Manchester Guardian" supporting me—there is very little sign of anything happening yet, and I hope the right hon. Gentleman will be able to help me and the Committee on that problem.
That is our part of the bargain. What is theirs? Well, the two vital things are feedingstuffs and meat. Here we come, as so often, to a very curious fact. Feeding-stuffs do not seem to have been mentioned anywhere at any time. Or if they were, it was behind closed doors. There is nothing about feedingstuffs in the Protocol. There was nothing about feeding-stuffs in the speech of either the Chancellor or the Minister of Food. Yet that was one of the most important parts of the previous Agreement, because we used to depend to a considerable extent upon Argentine feedingstuffs, especially maize.
Let me again remind the House—I am sorry to be so expository, but on this occasion I am taking the place of the Minister—that under the 1949 Agreement, in the first year we were to receive from the Argentine £20 million worth of maize, £3 million worth of barley, oats and other grains, and £10 million worth of oilcake. That was the Agreement. We certainly did not get anything of the kind.
It is very hard to find out what we did get, but according to the best of my researches, during the first year of the Agreement—that is to say, from July, 1949, to July, 1950—in the first six months we got no maize at all—nought; in the second six months we got £4,300,000 worth. That is to say, we got £4,300,000 instead of the £20 million in the Agreement. I think that must be right, although I admit that the Trade and Navigation Accounts are very confusing, because for the first six months of 1949—that is to say, before the Agreement—according to those accounts we imported in value £13,766,663, whereas for the whole year we are shown as getting £13,766,267—£396 worth less than we are shown as getting in the first six months. I cannot reconcile those figures in any way. The fact remains that during the last six months of 1949 we got nothing, and we got under £4½million in the first six months of 1950. That was a very different result from the promised £20 million worth.
2511 As for barley, oats and other grains, we got nothing at all: nought, nought, nought, every single month. As for oil-cake, there again the Trade and Navigation Accounts do not help us—although possibly they help the Government—because they do not break up the imports into different countries, so we do not know what we got from the Argentine as compared with what we got from anywhere else. But they do give the grand total for those 12 months as just over £10 million, and I think it is extremely doubtful that we imported all of that from the Argentine and not £1 worth from anywhere else. If the right hon. Gentleman has any idea what we did import from the Argentine of the £10 million worth promised in the 1949 Agreement, we should like to know. I am quite certain that we did not get £10 million worth, because that is all we got from everywhere.
Now this is a very serious matter from the point of view of British agriculture—very serious—and we should like to know what, if anything, is in view about it. So far, we have had no evidence that the matter was raised, and certainly not that any agreement was reached, because there is nothing about it in the Protocol. We do know from the trade information that there are something like 2,000,000 tons of maize available for export. Let us hope that we get some of it, although we know that other countries are also in the market.
The other important thing we hoped to get out of this Agreement was meat. [HON. MEMBERS: "Hear, hear."] Yes, but we shall not get as much in tons as we expected in 1949, because the Agreement gives us 200,000 tons of carcase meat and 30,000 tons of corned beef, plus what may be offered. That is only rather more than half the 1949 figure, because then there was a firm figure of 300,000 tons and an optimum of 400,000 tons. Of course, it is true that the Argentine are eating more meat in their own country; that their export last year was only 19 per cent. of their production of meat, whereas before the war it was 30 per cent.
But we on this side of the Committee are still of the opinion, as we have said many time before, that if we had a more efficient buying system it is more than 2512 likely that more meat would be extracted out of the Argentine home market into the export trade, because there is plenty of evidence to show that, while the consumption in that country has gone up enormously, a lot of it is what, at any rate by European standards, is very wasteful consumption. So much for quantity. We shall not get anything like as much as we should have got under the Agreement of 1949.
Then we come to the price story. This is one of the most tangled bits of the jungle I have had to make my way through in the last few days; I hope that the Committee will excuse me if I give what I think is the correct version. Certainly, if it is not correct, it is not through any lack on my part of trying to get it right. Under the 1949 Agreement the price was to be £97 10s. Last summer the Argentine thought that they could get more and they started negotiations, and they began them by asking for £140, but—and this is a very important "but" —and I take all this from information given by the Chancellor of the Exchequer on 8th February—they were prepared to go on receiving £97 10s. pending an Agreement.
What did the Government do? There were rising prices; the Argentine were asking a very large increase. The Government calmly said, "Oh, no, we are not going to pay £97 10s. We will offer you £90"—much less than the Argentine were already getting, and much less than, at any rate they thought, they were entitled to. The result was that the Argentine cut off shipments; and they cut off shipments not because we were refusing to pay £140—that was a negotiable figure—but because we declined to go on paying £97 10s., which was the figure of the 1949 Agreement. Well, that was a rather difficult thing for the Government to get away with.
Later on, the Chancellor said:We were prepared to go up to £97 10s.To go up to ! But that was where it was supposed to be. On that I do not think it was surprising—I am looking at it as impartially as I can, as a matter between people who wanted to negotiate —that the Argentine stiffened. They got rather bored with us, for all I know. Anyhow, they still said "No meat," and all the summer went by.
2513 In the winter the Government thought they had better do something about it. so they started tentative negotiations. They had only two meetings, but—and I am again quoting the Chancellor—on 27th December the Argentine came forward with an offer of £120 per ton. The Chancellor said:Nothing less than an average price of £120 was open to discussion."—[OFFICIAL REPORT: 8th February, 1951; Vol. 483, c. 2061]That was the Argentine's offer on 27th December, and the Government, of course, refused it. Indeed, in the debate of 8th February the Minister of Food was very loquacious on the subject, saying that of course we could not possibly accept anything like that; that our negotiations with Argentina covered only one sector of the cost of living; that it was a battle and a battle the Government had been fighting; that it was the house- wives' battle; £120 a ton, indeed! Quite out of the question. And straight away the Labour Party began their pamphlets and all their propaganda. and here is a summary:We refuse to pay more than £104.I do not know where that figure came in quite.Argentina refuses to yield and asks £120. There is no just reason for asking prices as high as she does. It would he wrong to give in. It is only by holding out, even if it means going without meat for a time "—well, we have gone with pretty poor rations for a considerable time—that we can improve prices for the future.There it was. The Government were pinning to the mast the statement, "No £120 a ton—shocking."
Then what happened? Out goes the Economic Secretary to the Argentine, and he makes an Agreement, and anybody can work out for himself from the Report that the average price that we are now going to pay is £128 12s. That was against £120, which was the subject of the "battle of the housewives." That was against the £120 which was offered on 27th December. Presumably we need never have had this miserable small ration if we had clinched the Agreement then. But no, the Government were not going to concede anything. Now the Government who were not going to concede anything have to pay £128 12s.
2514 When my hon. Friend the Member for Thirsk and Malton (Mr. Turton) cross-examined the Minister of Food on 24th April about this discrepancy, the right hon. Gentleman made the most extraordinary statement of many odd ones in this jungle when he said:In fact no precision was ever given to the alleged offer of £120 a ton. That is rather a mythical figure."—[OFFICIAL REPORT, 24th April, 1951; Vol. 487, c. 225.]And he still wags his head and agrees. Of course, £120 appears in this Labour propaganda. Of course, if the right hon. Gentleman likes to tell me that I can describe all Labour propaganda as being a myth, I should be inclined to agree with him, but I find it very difficult to do so if he tells me that I have got to consider the Chancellor of the Exchequer as a myth; because it was the Chancellor of the Exchequer—no one else—who told us that the offer of £120 was made.
So there it is. Anyhow, the result of the expedition to the Argentine by the Economic Secretary is that that offer of £120 has gone, and we have closed at £128 12s.—nominal.
§ Mr. Paget rose—
§ Captain Crookshank
Oh, no. I am nearly through the jungle now, and I do not want to get into any other difficulty until I get out of this gloomy purview—because it is gloomy for the supporters of the Government. I say £128 12s. nominal for the reason—
§ Captain Crookshank
But still nominal. That is what I am talking about, because Letter No. 1 attached to the Protocol says that the Government agree to pay to the Argentine a sum of £6,250,000. That is the total and final adjustment of prices for meat shipped earlier. We have got to add that £6,250,000 to something some time somewhere. Obviously, the people who bought and ate the meat shipped earlier are not going to be called upon to make little bits of contributions towards the £6,250,000. This £6,250,000 has got to be paid some time in the future, and, of course, it is directly connected with the meat episode.
I must say that no commercial transaction, as opposed to purely political transactions, would ever have considered such a suggestion as this enormous back 2515 payment. I want to know how it is going to be paid. Unless some wonderful amortisation plan is in the mind of the Government, it can only be paid—and it has got to be paid—by this country as taxpayers or meat eaters. If it is added to the other expenses of meat secured at £128 12s. nominal under this Agreement, that brings the actual figure up to the region of £160 a ton. I think we must take it into account. I presume it will come into the trading accounts of the Ministry of Food. If it is not added to the price of the meat, it has presumably to be taken off some part of the food subsidies on something else; some other commodity is going to cost more because meat is going to cost £6,250,000 more for devaluation.
That £128 12s. nominal, or £160 per ton if we take account of this devaluation payment, compares with £97 10s. two years ago, and the fatuous offer of £90 at this time last year by the Government and an offer of £120 in December—
§ Captain Crookshank
Plus absolutely nothing. Perhaps the hon. Gentleman will go and do his plussing in Birmingham instead of here. It is amazing; but if the hon. Gentleman charges his memory, he will remember that last time I spoke about meat on 8th February I produced facts and figures equally amazing to him; but they were also equally true.
Now, I do not say, of course, that present conditions are such that we could possibly have hoped to have had the same price as two years ago. The whole basis of world prices has altered. I am not saying anything of the kind. But I do say this, by means of a quotation from "The Times" at a time just after the Government made their statement:Not often does a trader after the breaking off of negotiations pay so much more money for so much less meat.We are to get a great deal of meat, I have no doubt, in the immediate future. I have a quotation here from a letter of a manager in the Argentine, who said, in May:The meat agreement has at last been signed. So far prices have dropped mostly 2516 because everybody is scared of the winter and are selling off as hard as they can go.I imagine that we shall get fairly soon a large proportion of the 200,000 tons of carcase meat expected during the year.
I have a question to ask the Government. Have they—it seems hardly likely but one must ask in a matter of form —taken any precautions should that occur, because in the winter of 1949–50 we had to hire 15 ocean-going vessels for the storage of Argentine meat and meat from other countries because there was not enough storage here. That cost us £609,208, just through lack of foresight. I hope that that lesson has been learned and that perhaps in between times something has been done to increase the storage capacity should we have a great rush of carcase meat.
Of course, we ought to be getting a lot of canned meat because the Government said some time ago that they were very anxious to increase our strategic reserves, but according to the Press all that we are getting at present is carcase meat. The next thing that will happen is that the meat ration will increase considerably. That is bound to occur because if we have all this meat coming from the Argentine coinciding with the flush of home-killed meat, we should obviously be able to get back at least to the ration of a year ago, but it will not be at a price of 1s. 8d. for the same amount of meat. I do not know whether it will be 2s., 2s. 3d. or what the figure will be, but it will obviously be more expensive But it may be that we shall get as much meat as we did 12 months ago.
On the farms quite soon the people will be thinking of fattening up the geese for Michaelmas, a season when goose is a very popular form of food. Likewise I must warn them that the Government are probably thinking of fattening up the electors for the Michaelmas election, but they will find that that trick will not work. The housewives have far too vivid a memory of what they have to put up with on that subject.
That really is the story about meat so far as I have been able to disentangle it. I am not saying for a moment that we could have hoped to have got the meat we wanted at the price of two years ago, but I do not think that the Government have made a very good Agreement here.
2517 At the time that the "housewife's battle" was being fought about £120 per ton, the battle that is now lost, we were told—in February—by the Minister of Food, that:Our fault, if it be a fault, is simply that we believed that the great and proud country of Great Britain was prepared to stand up to Argentina."—[OFFICIAL REPORT, 8th February, 1951; Vol. 483, c. 1977.]So did everybody. We hoped that they would, but they collapsed like a pack of cards.
So, unless the Government can in the end make out a good case for this Agreement, we shall continue to say that it was not one of the best solutions of the problem, because while the latter part of my speech has been about meat, I hope that the Committee will not forget what I said about feedingstuffs—about maize and oil cake—and about the financial provisions. We in this country all wish to have good relations with the Argentine. We want to restore our mutual trade to the fullest possible dimensions, and we want to sweep away such obstacles as there are on both sides, should they be on both sides.
The point is whether this Agreement will do it. I have grave doubts. The financial part is still unsettled. If all the bits are tidied up nicely according to the way we should like them to be, that will be an improvement, but our people's grievance about feedingstuffs and meat will not have been fully met. On the other hand, we pledge ourselves to send out scarce things. I do not think it is remarkable that the summing up of this agreement, published by the "Economist," was as follows—I think it was right. They said of the Agreement:As a monument to the miscalculations, political vanities and sheer administrative follies of government trading, the AngloArgentine agreement of 23rd April, 1951, will be hard to excel; let the proponents of government trading advance, if they can, a single point of advantage that this country has gained from it.Can the proponents of State trading—the Government—today expound to us such points as they think are an advantage which we have gained from this Agreement? I shall be interested, as will my hon. and right hon. Friends, to hear the explanation which Ministers are to give. But I am afraid—I cannot help it, because I have had previous experience—that we shall find that it is just one more case of inefficiency and muddle.
§ 4.36 p.m.
§ The Economic Secretary to the Treasury (Mr. John Edwards)
I am very glad to have this opportunity today to report to the Committee on the Mission to the Argentine which I had the honour to lead, and which resulted in the Protocol now before us, which I signed on behalf of the Government on 23rd April. I think that it was on the whole right that the right hon. and gallant Gentleman for Gainsborough (Captain Crook-shank) should open this debate, because the field is a vast one, and it is more convenient that I should deal with the matters that appear to him to be of the greatest concern rather than that I should have tried to forecast what he wanted to know.
This was the first time that a Member of the Government had visited the Argentine for many years, certainly since long before the war. One result of that was that a good deal of the negotiation was done in private session, particularly between myself and the Minister of Economy (Dr. Ares), to whom I would now pay a very great tribute for his unfailing courtesy and the courtesy of his officials to all our Mission.
I should also like to express in public my gratitude first to the members of the Mission, who all worked very hard, and to the representatives of the Bank of England, who attended the Mission as well as the officials of the Ministry of Food and the Treasury: to our permanent food mission in Buenos Aires: and to His Majesty's Ambassador and the whole of the staff of the Embassy, who serviced us so well during the whole of these discussions.
This Agreement is often described as a Meat Agreement indeed the right hon. and gallant Gentleman so described it. It is, of course, a much wider affair, and as I approached this task it seemed to me that the pre-eminent requirement was that we should do everything we could to improve the climate of economic and political opinion in which our trade with the Argentine was conducted. If I had any doubt about that in prospect, I certainly had no doubt when I had met the leaders of the British community in the Argentine, which I believe is the largest British community in the world. I must say that I formed a high opinion of those who led them, and I am grateful to them for their help.
2519 It seemed to me that if we were to avoid our trade with the Argentine degenerating into nothing much more than the exchange of meat for oil, it was imperative that we should try to dispel the fog of past misunderstanding and try to resolve as many as possible of the outstanding disputes. To do this meant a radical revision of the 1949 Agreement and the suspension of some of its clauses.
I understand the current anxieties to which the right hon. and gallant Gentleman referred. I share the anxieties about the delays that have been occurring, but I would put on record my own opinion that this is not to be attributed to ill will on the part of the Argentine Government, but solely to the fact that they have a highly centralised machine. Its administrative working is very slow, and, as I shall explain in a few moments about import licences, they have a system which really means that they have to try to settle the whole programme before they issue any licences. It may be wrong for them to have such a system, but I believe that that is the explanation.
I shall now say something about meat, although my right hon. Friend the Minister of Food will deal with that matter in more detail. Naturally enough, meat loomed large, and it was very much the matter to which public and Parliamentary interest was directed. First of all, it was quite clear that no business could be done at all unless the outstanding dispute about the price to be paid in settlement of the meat shipped under provisional invoices during the period January to July, 1950, were cleared up, and we finally settled it by the payment of £6,250,000 in full and final settlement of those provisional invoices.
§ Mr. Thornton-Kemsley (Angus, North and Mearns)
Was it only for the period "January to July, or was it from the time of devaluation, 18th September, 1949, to July, 1950?
§ Mr. Edwards
I think that it was substantially for the period I have mentioned, but there may have been provisional invoices from before that time.
There has been a good deal of discussion about average prices. While I have every sympathy with the right hon. and gallant Gentleman in going through this tangle of figures, I would say that we really must compare like with like if we 2520 are to reach any valid conclusions. As I understood it, he was comparing the average price of £120 with the figure of £128, which I think was mentioned by one of my right hon. Friends on 24th April. But clearly we are not there comparing like with like.
§ Mr. Edwards
The right hon. and gallant Gentleman says, "Why were we not?" I do not believe we are in a position to compare like with like because the £120 offer was on a basis which was never thoroughly elucidated owing to the fact that the negotiations broke down after the second meeting.
The figure of £128 was on the basis of the minimum quantities laid down in the Agreement. But I would say to the right hon. and gallant Gentleman and to the Committee that those of us on both sides who negotiated in Argentina were agreed that the conception of an average price which had dominated earlier negotiations was no longer suitable, and that it would be better to negotiate basic or pilot prices for the meat. The average price will depend on how much meat and what type of meat we get. If we get a higher proportion of chilled beef, we shall have a higher average price.
While I understand the right hon. and gallant Gentleman's desire to make these comparisons, I cannot accept them as valid because, in order to have a valid comparison, we should at the end of the year have to work out the average to see what it was in respect of those parts of the contract which could be related to the old contract—namely, the frozen meat and other parts, but excluding chilled beef—and see what the result was.
I think that the proposal to resume the traditional trade in chilled beef is most significant and important. Our offer to take as much chilled beef as Argentina could supply for the whole of the remaining period of the 1949 Agreement did, I am sure, excite the imagination of all those concerned with the matter in Argentina. The detailed technical discussions have now been concluded, and it is our hope that at least something like a quarter of the beef received under the Protocol will be in the form of chilled beef.
2521 I believe that the resumption of this trade in chilled beef at the highest possible level is of the first importance. It has manifest advantages to the Argentine, and I am sure that on our side it is worth while paying a premium for this type of meat if by so doing we can return more nearly to pre-war standards and have a larger proportion of better quality and more palatable meat on the ration. We are anxious, therefore, to receive as much chilled beef as possible.
I concede that the overall quantities of meat guaranteed to us under the Agreement are lower than we would have liked and less than we received in the years immediately, after the war The reduction, as the right hon. And gallant Gentleman pointed out, is in part due to the fact that the Argentines them selves are eating more of the meat they produce. But it is also very largely due to the very severe drought which occurred in 1949–50 and which led to a decline in the cattle available for the meat trade, and, to some lesser extent, to the not un-natural desire of the Argentine Government to sell some of their meat to other countries at higher prices than we are paying. The quantities are, however, minimum quantities, and I hope that they will be exceeded both in respect of carcass and canned meat during the period of the Protocol.
The Argentine negotiators wished, first of all, to sell to us on a spot basis, but we finally persuaded them to have a fixed minimum figure put into the contract which should run for one year. I am sure that was the right thing to do in all the circumstances. It has given an element of stability and confidence which, coupled with our undertaking to accept chilled will, I hope, stimulate production and result in increased supplies in future years.
It has been suggested that if we had a different system of buying, all would be well. I find that hard to accept. May I remind the hon. and gallant Gentleman of what his right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler) said in the debate on 8th February? He said:We must recognise that this very day if we want to trade with the Argentine we have to trade through a bulk selling agency, known as I. A. P. I., and, whether we like it or not, that bulk selling agency exists."—[OFFICIAL 2522 REPORT, 8th February, 1951; Vol. 483, c. 2052.]And with those words he dismissed the remarks made from this side of the House about the attitude of hon. Gentlemen opposite to bulk trading.
Even if we had a system of private purchase of spot amounts, short contracts, and the like, it would still be State selling on the part of Argentina. Whatever form of trade we had, the Argentine Government would, I am absolutely certain, always insist that they should negotiate quantities of meat against quantities of oil and other things which they need. The needs of Argentina are quite clear, and in my view—and I am in some position to say this, I believe—I think it extremely unlikely that they would ever give up what, after all, is their very strong suit when talking about essential supplies.
As I have said, my right hon. Friend' the Minister of Food will have more to say about meat, and I must now turn to the other matters raised by the right hon. and gallant Gentleman. First of all, may I take the question of financial agreements, the matter dealt with in Article 10? This really falls into two groups. First, there are the remittances which should have been cleared in 1949 and then there are the remittances which accumulated between June, 1949, and August, 1950, in which month the Central Bank issued a new circular under which current remittances are merged. The first group of remittances, up to 1949, amounted to something like £7½ million. This is a kind of progress report and I am able to tell the Committee that almost all those remittances—that is the pre-1949 remittances—have been cleared.
For the second group, the Central Bank invited applications by 4th June. Those applications are being examined and my information is that the Bank expect to begin to issue the first permits in respect of the second lot of remittances in a week or two. It should be noted, in passing, that these remittances are not subject to the 5 per cent, limitation on profits which applies by the Central Bank circular of August, 1950,. to all remittances by any nationals.
§ Mr. Hugh Fraser (Stafford and Stone)
Can the Minister tell us what is the total sum of the second lot of remittances?
§ Mr. Edwards
I am sorry, but I do not know it. I cannot really give a figure. but in some days' time I may be in a better position to give some sort of figure. My case is that the total amount of remittances involved is in fact higher than the sum paid in respect of the revaluation guarantee but I cannot give the precise figure.
§ Mr. R. S. Hudson (Southport)
As I understood, the pre-1949 arrears amounted to £7½ million and there is only £6¼ million to meet this. Where are the post-1949 payments to come from?
§ Mr. Edwards
I think the right hon. Gentleman is thinking in terms of the £6½ million and not the revaluation guarantee. I shall have more to say about it in a moment and I will give some details. The current arrears are not dealt with in the 1951 Protocol.
As I said, the Central Bank circular of August, 1950, placed a 5 per cent. limitation on the remittable profits of all companies. I pointed out during the negotiations, on a number of occasions, that I thought this restriction was incompatible with the Argentine's desire to attract foreign capital and that in their own interests they would be well advised to permit unrestricted remittances of all invisible payments as soon as their foreign exchange position made it possible for them to do so. I am sure that is right, and I hope that an improvement in the Argentine's sterling position will in due course make it so, and that we shall get a further lifting of restrictions which at the moment apply to all nationals in respect of the circular to which I have referred.
There was one particular point about arrears, to which the right hon. and gallant Gentleman the Member for Gains-borough referred, and about which I ought to say something. That is the position of the pensioners. There was nothing about which I felt more keenly and which roused my emotions more during the whole of the negotiations than this matter. The amount of money involved was trifling—not more than £150,000 a year. It was not really a foreign exchange matter because the position was that, in order to draw their pensions, the ex-employees of the railways and of certain other undertakings had to have a permit to reside abroad and those were issued at two-year intervals and had to be renewed.
2524 This meant that, because the Argentine in October, 1949, had stopped renewing permits, we had pensioners here in England in difficult circumstances because they could not draw their pensions, and pensioners in the Argentine who could not come here to spend the evening of their lives because they could not obtain a permit, and if they could get home could not get their pensions. I am sure the Committee will agree that this was an issue on which we should all wish to make our views emphatically known. Therefore, I went into this matter with great care. Some of the hon. Friends of the right hon. and gallant Gentleman the Member for Gainsborough have been in communication with us and long before this date I passed on to his hon. Friends full information about this matter as well as to the pensioners and their associations and everybody else concerned.
It was one of the primary objects of my negotiations to secure redress for these railwaymen, and I secured from the Argentine Government their undertaking to consider, as they put it, favourably, a periodical renewal of permits that had expired and the issue of permits to retired employees who had not received them. All the relevant information has been collected by the Embassy. It has all been put to the Minister of Labour in Buenos Aires and I heard only today that it was expected very soon now that the permits would begin to flow out to the pensioners. That is a small matter, but I think one of some importance and significance.
I should like to say a word about commercial arrears, although they are not dealt with in the Protocol. A good deal had been done in respect of commercial arrears before negotiations started. I think something like £3½ million had been paid out. However, I did receive assurances that all necessary steps would be taken by the Ministry of Transport and the Ministry of Public Works so that the remittances should be effected at the earliest possible moment. The Ministry of Transport arrears are now practically up-to-date. That is to say, since we came back there have been clearances. But there are still some arrears outstanding on behalf of ships and dredgers which I hope will be cleared before long. I understand there is no foreign exchange problem here. It is a problem of the Department concerned instructing the Central Bank to make remittances.
2525 Mention was made of public utilities. I should make it clear to the Committee that we are here concerned with highly complicated matters concerning two companies, the Primitiva Gas Company and Anglo-Argentine Tramways. One of these matters is before the courts and the other involves considerations concerning the liquidation of the Transport Commission. It would have been quite impossible to attempt to settle the matter; nor was it, I think, expected of me by anyone concerned in the course of the negotiations which I conducted. My business was to try to improve the atmosphere and to get the Argentine Government to move and, in the nature of things, I could not have done anything else.
That is why I thought it important to get the clause in the Protocol in order that the Argentine Government should be on record in this matter as really trying to get something done. But I do not think the companies themselves ever expected that this matter, which had not been raised in the 1949 discussions, should be really settled inter-governmentally. I saw representatives of the companies concerned and I did my best to help the negotiations.
I am sorry that this is perhaps a little turgid, but this document covers such a wide field and I must spend a little time talking about the revaluation guarantee. Under Article 11 of the protocol we agree to pay, and the Argentine Government agree to accept, a sum of £10½ million in full and final settlement of all claims under the guarantee. This matter, I think, was attacked by the right hon. and gallant Gentleman, and there has been sonic comment about it in the Press. Perhaps, therefore, I ought to make our position plain.
We were advised by our legal advisers that they would expect a domestic tribunal, a tribunal such as a high court or an experienced commercial arbitrator, to find in our favour, but that there were certain ambiguities in the language of the documents and we could not be certain to win before a tribunal of our own choice, let alone before the sort of international tribunal which might have been acceptable to the Argentinians. They therefore advised that we should be justified in entering into a compromise settlement.
In spite of this legal advice, we could have fought the case before an indepen 2526 dent tribunal and paid whatever sum, if any, was awarded by the tribunal. It was clear to me, however, that in the absence of the settlement of the guarantee dispute, we could not have hoped to have secured a settlement of other questions, particularly financial remittances, commercial arrears and railway pensions, in which we had claims against Argentina. We might have been able to negotiate a fresh meat contract because that would have been in Argentina's interest as well as ours. We could certainly not be prepared to wait for a resumption of trade at the higher level by settling all the major disputes between the two countries. In other words, although we could have fought this, although it could have been a matter for legal dispute, if we had dealt with it in that way we would not have been able to settle any of the other things. The effect on our trade would have been to depress it and for the stagnation to have continued.
I admit that £10½ million was more than I originally thought would be sufficient to compromise the case, and it was certainly more than we would have liked to pay. On the other hand, considering everything that was involved—nothing less than the future of our trading relations with the Argentine—I think the compromise settlement was not unreasonable.
The right hon. and gallant Gentleman implied that there was a connection between the amount of the revaluation guarantee payment and the arrears. It is perfectly true that we have had the revaluation guarantee payment put into a separate account, but it is purely a matter of mutual convenience that the revaluation guarantee payment is to be used for the payment of arrears. The total of financial arrears—I cannot be precise—I think is in excess of the figure of £10½ million. Therefore, there are no grounds for supposing that the settlement figure was determined by the amount of financial arrears.
I turn now to Article 12. The payments provisions of the 1949 Agreement follow the usual sterling payments agreement model. In the 1951 negotiations the Argentine objectives were, first of all, to try to obtain facilities for temporary borrowing of sterling to see her through those months when, owing to the seasonal nature of her export trade, she 2527 tends to be short. In support of this the difficulties experienced in the past from seasonal shortages were pointed out to us, and it was argued that just as Argentina had held large sterling balances during the war, so now the United Kingdom should reciprocate by lending sterling to meet Argentina's seasonal need.
Their second objective was to secure some safeguard against the risk of again accumulating not fully convertible sterling. In support of this she argued, I think perfectly reasonably, that in present conditions of shortage she had no alternative but to use her exports to buy essentials in those markets where they could be obtained, and that she could not afford to accumulate balances of not fully convertible sterling. I accept that view. I think it is essential that Argentina should be able to spend what she earns, and I think it is inevitable that if she cannot buy what she wishes from us, at some point in order to avoid accumulating sterling balances one must provide for the possible contingency of the need to go out into other currencies.
The result of the discussion was Article 12, and the provisions of this Article, together with Articles 9 and 2 of the 1949 Agreement, are to be looked upon as a regulating convenant. The two Governments re-affirmed the objective of the balance in sterling payments. If the net balance rises above £20 million the United Kingdom agrees to transfer the excess either to third countries agreeable to the Governments concerned, or, failing the agreement, into dollars. When the net balance falls below £20 million the United Kingdom is entitled to recapture any dollars so transferred. At the other end of the scale, when Argentine sterling balances are insufficient to meet payments due to the scheduled territories, the United Kingdom Government will make sterling available to the Argentine up to £20 million.
I think these provisions will allow greater flexibility in trade and in payments between our two countries. It should be unnecessary, for example, for the Argentines to cut import licences or to restrict remittances on the ground that they are temporarily short of sterling, because by this arrangement they can draw under the credit facilities provided for. On the other hand, it is unnecessary 2528 for us, subject of course to the probability of a balance over the year as a whole, to refrain from making urgent purchases at the appropriate time in the fear that the net working balance will be temporarily exceeded.
I hope we shall be able to achieve and maintain general equilibrium, but there is no advantage to either country to be out of balance in this field of payments. That leads me to point out the very great need in that connection for doing our best to expand our exports to Argentina of the things she needs. I must come to grips with the right hon. and gallant Gentleman on one point where I thought he was less than fair. It is no use looking at this Procotol without reference to the Agreement of 1949. Under the Agreement of 1949 we undertook to facilitate the supply in 1949–50 of all the commodities covered by schedules 2 and 4 in that Agreement, and, subject to previous annual review, to continue to facilitate as far as we could supplies to Argentina of at least the annual amount put down in those schedules.
Except in the case of meat there was no similar obligation on the part of Argentina. We suspended for 12 months the trade schedules, and we provided that the Mixed Consultative Committee set up under the 1949 Agreement should continue the review of the Anglo-Argentine trade which we had started while we were there; but pending that review both Governments agreed to give all facilities for the continuance of traditional trade.
Here is the point that I would like the right hon. Gentleman to take. Our commitments now are very much less than they were under the 1949 Agreement. When I see comments, as I have done, in the Press about these onerous obligations that we have undertaken, I can only suppose that those who make them can have no kind of sense that there is an Argentine point of view at all. After all, what is the position? Under the Agreement we have a best endeavours clause for 4 million metric tons of oil in the year covered by the Protocol. Under the 1949 Agreement, which was originally to have applied to the whole five years, the commitment was 5½ million tons; so it is 4 million compared with 5½ million tons.
The commitment which we have entered into in respect of coal is half a million tons; the commitment under the 1949 2529 Agreement, which was to run for five years, was a million and a half tons. The commitment in respect of tinplate is 27,000 tons, compared with 30,000 tons in the 1949 Agreement. The 1949 Agreement had commitments over a whole range of other things. Frankly, the shortage of essentials of this kind was the greatest disadvantage under which we laboured during the negotiations. [Interruption.] Did the right hon. Gentleman wish to intervene?
§ Mr. Edwards
But there is no doubt about the figures. The figures which I have given are taken either from the Agreement or from the Protocol.
I have been seeking to maintain, I hope successfully, that our commitments are much lower than they were and that to talk about these great concessions is to misunderstand the whole character of our trading relations with the Argentine. I am, of course, sorry that it was not possible for us to settle all the trade prospects before the Mission left, although I think there is some advantage in letting the Mixed Consultative Committee have the job to do for which it was set up under the 1949 Agreement.
We cannot have a permanent Mission from here negotiating with the Argentine. In the Agreed Minute of Instruction which the Minister of Economy and I left with the Consultative Committee there was an Argentine proposal that they should issue import licences for the less essentials to the extent of 10 per cent. of the total volume of their other trade—that is to say, of oil and fuel and such essentials. Ten per cent. was to be the figure which they would use for the licensing of less essentials.
As I said earlier, I am disturbed by the fact that not very many import licences have been issued hitherto and I wish it were possible for something to be done about it. I can think of nothing more important from the Argentine point of view than they should issue import licences with the least possible delay. I know what they want to do, I know what they have in mind; they will survey the whole of the trade for the year and then do what they have nearly always done in the past—issue bulk licences. But I hope 2530 that very soon all that preliminary work, all the exploring of the mutual needs of our two countries, will have finished and that the Argentine will be able to issue their licences in the way I have described. For that, more than anything else, will give our manufacturers the necessary confidence to re-establish their connections and to seek orders in the Argentine markets. I hope, also, that as the sterling position improves the Argentine will come increasingly to realise the importance of bringing in consumer goods as a counter-inflationary measure.
I have talked rather longer than I intended, but even so I have omitted a number of matters which are covered by these negotiations. I hope, however, that I have been of some help to the House in elucidating the Protocol and in dealing with the points put to me, except, of course, the two other points with which I think my right hon. Friend can more conveniently deal.
May I say this in conclusion? There was a wider aspect to this Mission. There was an opportunity to meet the President of the Argentine Republic and his Ministers and to meet the leaders of the British community in the Argentine; and I am quite sure that that was most valuable, and I hope we shall go on doing it. The potentialities of South America and the potentialities of the Argentine are enormous, and I am quite certain that we can and should find ways of helping one another in such a form as to increase the volume of trade between us.
I would not submit this Protocol as a perfect document, but having regard to all the circumstances—the economic circumstances of both our countries—I think it to have been the best we could have hammered out between us, and I trust and hope, and indeed believe, that it will be some help in the furtherance of Anglo-Argentine economic relations.
§ 5.14 p.m.
§ Mr. Hugh Fraser (Stafford and Stone)
The speech of the Economic Secretary has been most revealing. He has gone at great lengths into the Protocol which he succeeded in signing during his prolonged stay in the Argentine, but if one of the assets which he places in the balance is an acquaintance with General Peron, and even with some of the Argentine Ministers, then I think his journey 2531 was scarcely necessary, because when a Minister of the Crown goes abroad we expect that he should be properly received by foreign Powers and by foreign Governments.
When I look at the Agreement which he has brought back, I must say that I regard the Minister as being most optimistic in his belief that all those things which are not tied down in the Agreement will be achieved without any pressure from this country. I have had a certain amount of business experience in South America, on a very small scale —but enough to know that when a Minister tells you he will buy your cow or your bull or your machine tomorrow, or next week or in three months' time, you know that it is likely that no sale whatsoever will be effected.
Reading through the document, and listening to the Minister's speech, one almost got that impression—that here is an hon. Gentleman who is in danger of being taken for a ride on the back of a bull. I hope our worst anticipations are not realised, but there are certain things upon which hon. Members on this side of the House must comment. The hon. Gentleman said he knew that one of them would be that the Argentine were slow working on the administration aspect. But the slow, cumbersome movement of the Government machine seems to have been too quick for some of his Treasury advisers. In fact, they succeeded in being very quick off the mark in several terms of this Agreement.
I have not much time, as there are many other hon. Members who wish to speak, but there are two points upon which I want to question the Minister and the Chancellor of the Exchequer, who I see in his place. First of all, there is the £10½ million which we had to pay to the Argentine Government for the loss they suffered through the devaluation of the £.
The first question I would ask is this: Was there not some agreement—we know there was a sort of secret agreement in 1949—to see that we were protected against the devaluation of the Argentine peso, which took place only a few months after the devaluation of the British £? It seems amazing to us that there should have been no agreement between the British and Argentine Governments to see that this question of the devaluation of 2532 currencies cut both ways; if we were to suffer, then the Argentine should suffer also. But there seems to have been no agreement of that sort whatever.
The second question is: On what was this sum of £10½ million exacted? It was exacted on those sterling balances which were outstanding to the Argentine Government at a time of devaluation. On a fairly close investigation it seems to us that those outstanding sterling balances were almost entirely bogus. They consisted, I believe, of two sources. First of all, there was £10 million of remittances which, under the 1949 Agreement, should have been paid off within 60 days of the signing of that Agreement. I want to know why they were not paid off.
That accounts for £10 million. A similar sum is accounted for by the fact that £10 million worth of goods, which the Argentine call the secondary or tertiary class of goods—non-essential goods—were guaranteed by the 1949 Agreement; and that sterling should have been made available for their purchase. It was held and created, in the same way, another large addition to the so-called sterling balances.
Next, we know—it is only a matter of consulting the larger companies, such as oil and coal companies—that the Argentine were being especially slow in making their payments. They were, therefore, building up sterling balances which, over all, should not have existed, if the Argentine had discharged their British debts. Therefore, from that point, it seems that large sums, amounting to £26 million or £30 million, have built up these so-called sterling balances which only existed because the Argentine had not discharged their debts, and the British taxpayer has to pay £10½ million. There may be a very slow and rambling central machinery in Argentina, but it certainly seems to have hoodwinked the Ministers on the Treasury Bench.
This is rather frightening, when we look at the conversion clause of the 1951 Agreement. In this Agreement, there is a conversion clause which says that, if the Argentine build up sterling balances of more than £20 million, those sterling balances may then be converted, not into dollars immediately, but into specific currencies and eventually to dollars, should no other agreement be reached. 2533 Surely, after what we have seen has happened in the past over sterling balances, that is an extraordinarily dangerous clause.
Hon. Members from Stoke-on-Trent know what is happening in the pottery industry today. No licences are being granted. and I am informed that, at the latest meeting of the joint committee set up in Buenos Aires, one question at issue has been the payment for large quantities of agricultural machinery which are absolutely essential to the Argentine economy. I am told that a recommendation is coming through from the Argentine Government, or whoever is responsible for purchases, that these should have effect for three years.
If they are to be allowed to buy tomorrow several million pounds' worth of machinery, and yet may only effect payment over three years, that is precisely the sort of thing which sets up an adverse balance against us. This sort of thing must be watched, not with the placid eye of an animal which roves the Pampas, but with the eye of an eagle, on the part of the British Government, yet that is precisely what seems not to be happening. That is the first thing which strikes one about this Agreement.
The more general point which strikes one is that, so far as meat goes, it is only 25 per cent. of our total trade with the Argentine. I am sure that everyone agrees with what my right hon. and gallant Friend said in his opening speech, that the important thing is to increase Anglo-Argentine trade, which should be running at a total of something like £125 million a year. Argentina is potentially one of the richest countries in the world, but it has been bedevilled for a long time with a thoroughly bad Government, in the same way as we have been bedevilled for a short time with a fairly bad Government, though we hope to be able to put that matter right.
The whole level of Anglo-Argentine trade should be at a much greater rate, and that is precisely what we maintain this Agreement fails to achieve. It fails to do so chiefly, I think, because the Government went there in terror of being blackballed by the electorate, rather than being blackmailed by Peron, and, therefore, forced through the meat Agreement at any price, at any cost, and also forced on us the loss of enormous quantities of 2534 British interests which should have been properly safeguarded.
I do not believe that these interests have been properly safeguarded. The hon. Gentleman well knows that, for the Argentine, our oil, our coal, and our tinplate are just as important, if not more important, than Argentine meat is to us. It is just as strong a bargaining point as is meat with the British public, because in the Argentine there is no free Press and there is no propaganda. We believe that our Government should have extracted from the Argentine Government some concession by way of saying to them, "We will not send you oil, coal and tinplate unless you agree to an overall settlement which is satisfactory to this country," and the present financial settle-men is not satisfactory to this country.
§ Mr. Mellish (Bermondsey)
Would the hon. Gentleman have adopted that attitude if the Argentine Government had refused to send us any meat, and the ration had gone below 8d.?
§ Mr. Fraser
My reply is that at the time Argentina had cut off meat supplies to this country, we should simultaneously have said to them that we would cut off supplies of oil, coal and tinplate; but we were not getting the meat at that time, anyway.
This Agreement does none of the three things which I have mentioned which an Agreement should have done. It does not establish proper exchange values, which are a most important point in the trade of any country. We should know where we stand in regard to exchange rates. I think there are four different rates of exchange, and that many of the remittances to this country are being paid at fanciful rates. If we buy from the Argentine, we pay at 14.5 pesos to the£but, if they buy from us, the pesos accruing to the British trader have to be changed into pesos at 40 to the £. Something like £10 million a year should flow into this country at a rate of 40 pesos to the £ instead of 14.5 which means that what, in fact, is coming to this country is valued at less than £5 million in terms of Argentine pesos. We find, right away through all these arrangements. that this basis is not satisfactory to us.
The hon. Gentleman talked about the Primitiva gas holdings, which has been outstanding for 11 years, and the question 2535 of their settlement. There was nothing in the 1949 Agreement about it, and there is nothing in the 1951 Agreement. The hon. Gentleman said that many of these things would work out slowly and satisfactorily, but, at the moment, we see no indication of the working out in that direction whatever. All the way through, according to all the information which one can get, there is a total clamping down on import licences from this country into Argentina, and that, of course, will have a most unfortunate result, and might lead to balances accruing in favour of Argentina which they could transfer into dollars.
The Economic Secretary said that the dollar clause, which, I think, is probably the most vicious and dangerous in the Agreement, was one which had to be agreed to. I think that, if we look at the agreements which Argentina has concluded with Western Germany, with France and with Italy, we shall find that there is no such clause. In the event of sterling balances, or mark balances or francs balances being built up, there is no question of dollar transferability, and, if the Western Germans, the French and the Italians, who, after all, have not been such good friends of Argentina as we have, can achieve that settlement, then the British Government should have been able to achieve it.
Looking back over the last five years, and at this Agreement, which I hope will be the last to be carried out with the Argentine Government by this Government, the point which stands out clearly is that what this country needs, vis-à-visthe Argentine, is a proper trade agreement which is in the broadest terms and is not bedevilled by issues of bulk purchase or inter-State trading. The hon. Gentleman said that it was impossible for us to get away from State trading with Argentina.
Statements have been made in this country by leading Argentinians in the meat trade, acting for the Argentine Government, saying that they are prepared to abandon these things. Our first object must be to raise the whole balance of trade between the Argentine and this country. We must not let the question be bedevilled by meat or by one Government trying to call the bluff of another Government, thus making the people suffer through lack of meat, and the taxpayer suffer because of the ridiculous price which is paid.
§ Mr. A. Edward Davies (Stoke-on-Trent, North)
The hon. Gentleman says that some of the Argentine meat traders have said that they would revert to this individual trading?
§ Mr. Davies
But are they in a position to do that? One was under the impression that it was not within their power.
§ Mr. Fraser
I am talking of a senior Government official who made that statement. What is more, in a speech four or five years ago, Mr. Miranda said that the reason that the Argentine Government introduced I. A. P. I. was to counteract British bulk purchase.
The question of meat is obviously one of immense importance. but the question of Anglo-Argentine trade is of greater importance. It is most important that we should satisfactorily settle the question of the import of foodstuffs from the Argentine and the sale of our products in the Argentine. Our economies are complementary. The people of the Argentine are, I believe, naturally friendly towards this country; but our relations have been bedevilled by the two Governments—the Government of Peron and the British Labour Government —who have insisted on this system of State trading and bulk purchase.
I believe that we can soon do something to rid the country of our theoretical planners who, far from being brilliant Schachtians, have clearly got the dirty end of the mouth organ. They thought that they had been clever and Schachtian when they had been trading with all the incompetence of Bulgarians before the war when they traded with Hitlerite Germany. When we have rid the country of this Government, we will be able to send out a proper trading mission to negotiate a wide agreement for trade between our two countries. Until then, I can see nothing but dangers and ills in the document we are discussing today.
§ 5.32 p.m.
§ Mr. Mellish (Bermondsey)
The speech of the hon. Member for Stafford and Stone (Mr. H. Fraser) was extremely well delivered. He has the happy knack of saying very nasty things very pleasantly. I would only say that he indicated some of the difficulties which this Labour Government have faced in dealing with the 2537 Argentine. He talked a great deal about the Argentine Government. He made some fearful remarks about them which, knowing his point of view, was not surprising.
It is all very well for him to say that the Argentine Government would welcome private buying. In fact, as we all know, they have a State organisation of their own. It is grossly unfair to put out the idea that all we have to do is to send a lot of little private buyers out there and that, as a consequence of their negotiations, the Argentine would then allow much lower prices to these small buyers. That is not possible. Everybody knows that, if it were possible, this Labour Government would have taken advantage of it.
I do not think that we want bulk purchase merely for the sake of bulk purchase. We want it because we believe that, in the long run, it gets us food for our people much more cheaply. That is a point of view which has been supported not only by experts in this country, but by the Economic Commission of the United Nations which is made up of people who are independent of our own Labour Party point of view. They have agreed that bulk purchase by our Government has resulted in Britain getting very many foodstuffs much more cheaply than otherwise would have been the case.
I do not mean it personally when I say that the hon. Gentleman was very dishonest in his form of propaganda when he said that all we had to do was to get a Tory Government back into power and then we could send over a trade commission and automatically everything would be very much better. The hon. Gentleman completely ignored that today, at the time of this meat shortage, we face a war situation and that there has been an overwhelming demand for meat with stockpiling by the Americans. All these factors have put the Argentinians in a handsome position, because they are one of the greatest countries exporting meat.
One cannot blame them for trying to get the highest possible price. That is inevitable under the system under which we live. It is most unfair if the Tory Party say, "We ought to fight these Argentinians. We ought to cut their oil and this that and the other. We should then get a lot more meat, because it is only the Labour people who are respons 2538 ible for the shortage." Obviously, if the policy of the hon. Member for Stafford and Stone were adopted, there would be no prospect of getting any meat for years to come. We might even have a war.
The attitude of hon. Gentlemen opposite in dealing with foreign countries is fantastic. The first thing they want to do is to send a battleship or cut off supplies, and so on. They do not want to negotiate with any country which attempts to make matters difficult. All they want to do is to use the old methods which we think have been dead for a very long time. Unfortunately, we have been short of meat. We have been the victim. We offered the Argentinians £90 a ton at a time when prices were failing.
§ Mr. Mellish
I say that we did. That price was refused by the Argentinians. Then we had the war in Korea and our offer was raised to £97 10s. The Argentinians wanted £140. The "Daily Express", which is not a Socialist paper, said at the time that this Labour Government were doing the right thing in holding out against the Argentinians. They said that it was a very fine policy and that they admired us for it. The "Daily Express", like the Tory Party, shifted its ground very much later on when it saw how unpopular this was because it stopped people from getting more meat.
Then, of course, they joined in the general Tory cry, saying that it was entirely the fault of the Labour Government and that, if only they had paid the extra price earlier on, they could have got a lot more meat. [Horn. MEMBERS: "They could."] That is all very well. We made the extra offer of £97 10s. a ton, and we did that bearing in mind that the rate we were paying to our Dominions was much lower.
We on this side are concerned to keep down the cost of living. Hon. Gentlemen opposite wasted a day in this House in which they said the most scurrilous things.
§ Mr. Mellish
Anyone who reads that debate will see that some most shocking remarks were made about the Argentinians. Also, hon. Gentlemen opposite said that we ought to pay whatever price we could to get more meat. It was said 2539 that it did not matter what price we paid so long as the people could have nice big grilled steaks. There was all this stuff and nonsense to show that it was only the Government who were holding up the meat. It was a sorry story. I think that everybody regrets the atmosphere in which this question has been debated. There has been no mention of the Korean war in any of the Tory Party propaganda.
I should like to make another comment about private buying. As we know, before the war meat in the Argentine was bought privately. Here again is a piece of typical Tory Party misrepresentation. What do they mean by private buying? Ordinary people think in terms of small companies going out there and arguing with each other and eventually getting the lowest possible price. That is the sort of free competition and free enterprise which the Tory Party talk about.
It is a lot of nonsense to suggest that private buying up to 1938 was free competition. The people who went out to the Argentine to buy meat were the same people who had interests out there. It was a first-class racket, and everybody knows it. Vast profits were made by them and the lower cost was never passed on to the public. The right hon. and gallant Member for Gainsborough (Captain Crookshank), in opening this debate, made reference to the "Economist." What does it say about them? Talking about the committee that investigated this business in 1938, they say:Although the profits of the company vary from year to year there have been several years in which they have taken advantage of the Argentine producers poor competitive position without passing on to the British consumer any of the reductions in price thus exacted.There were only six companies engaged in the purchase of meat from the Argentine in this country, and those six companies all had vested interests interwoven with similar interests in the Argentine itself. This is the private enterprise about which the Conservative Party talk. This is solely a private monopoly. I can quote the Committee of Inquiry, which was jointly set up by the British and Argentina Government in 1938. They said: 2540The great bulk of the Anglo-Argentina trade, and in recent years 85 per cent. of the total, is in the hands of six companies, each of which represents essentially the same financial interest as the exporting concern whose product it handles.This is the small private enterprise—and here I make a criticism of the Minister of Food—whose vested interests are still in control of Smithfield Market, and we are paying them huge sums for doing practically nothing.
§ Colonel J. R. H. Hutchison (Glasgow, Scotstoun)
Has not the hon. Gentleman just said that the six concerns were in the main the same identities as the producers of the goods; does he mean the same identities as the producers of Argentine meat?
§ Mr. Mellish
I mean that they had financial interests in the Argentine, in the sense that they owned many of the companies which were exporting meat. There is a financial tie-up between them and the Argentine companies exporting meat. In other words, it was one gigantic family, all getting a good profit and rake off, bearing in mind that at the time the consumption of meat and the production of meat was vastly different to what it is today. Indeed, the Argentine have not forgotten some of the problems that went on as a consequence of this racket, and they are making quite sure that that son: of thing does not happen again.
I am one of those who recognise that if there was a General Election in the near future one of the first things that the Tory Party would come out with would be the shortage of meat. They would make it one of the important points in their programme. They issued thousands of pamphlets in which they said, "Your Labour M. P. voted for a cut in meat; did you?" or something of that kind, implying that we on this side are thrilled to death because the housewife today gets only 10d. worth of meat and that the Tory Party are the only ones who really consider the needs of the housewife. Thai; sort of propaganda is extremely dishonest because it never takes into account why that cut was necessary. The whole matter has been further complicated by debates in the House and the saying of things which have made more difficult the negotiations in regard to which I should have thought the Economic Secretary was to be congratulated.
§ Sir Arthur Salter (Ormskirk)
Has anything been said by any Member on this side that has had a more adverse effect on negotiations than a single word used by the Minister of Food?
§ Mr. Mellish
Yes, Sir. I will prove it. In the last debate we had on meat—I do not think the right lion. Gentleman was then in the House—the Tory line was that we should pay any price in order to get what meat we could for our people; so that they could have rump steak. When the Opposition expressed the view, before we entered into negotiations, that they were prepared to pay any price for meat, I do not think that can be said to have been helpful to any Government negotiations that were going on.
This has come from a party which claims patriotism as their own sole right and claim that they more than anyone else are the true defenders of our country, and so on. They are prepared to do anything so long as they can bring down the Labour Government and to sacrifice any and every principle to get the Leader of the Opposition into Downing Street. We have seen again and again the goodwill of the country and the interest of the country secrificed in order that the Tories may get back to power.
This debate has been initiated purely for the purpose of trying to make further difficulties between the Argentine and our own country. I believe that we did right to hold out as we did, and that the present price, in the main, has been due to the skilled negotiations of my right hon. Friend; and that if the Tory party had been in power and allowed private enterprise to go in and negotiate, the price would have been considerably higher.
I want to quote some figures, which I think should go on record, of prices in other countries where a good deal of private enterprise operates. In France, they are paying 2s. 5d. per lb. for beef as against our ls. 8d.; Switzerland, 4s. 6¼d.; Denmark, 2s. 6¾d. We are paying for mutton in this country 2s. per lb. In France it is 6s. 2d. per lb. and in Switzerland 5s. 2d. per lb., and so the story goes on. Prices everywhere else for almost every commodity, including meat, are very much higher than in this country. I believe in the policy of the party which has in the long run given the people cheaper food and more of it.
§ 5.48 p.m.
§ Colonel J. R. H. Hutchison (Glasgow, Scotstoun)
Most of the arguments which the hon. Member for Bermondsey (Mr. Mellish) has just used were devoted to the question of propaganda. He was determined to make as much propaganda as he could, and I am not going to be led into that field, except to say that if he is going to talk about dishonest propaganda, some of the stuff that I had to put up with at the last election about cutting children's allowances, and so on, would be very hard to beat.
I want to come back to the much more useful and constructive speech made by the Economic Secretary. He told us, quite rightly, as, I think, the whole country realises, that he was in a very difficult negotiating position. He told us that he had to compromise. He told us that results were not yet flowing from the Protocol, that discussions were still going on, and I think he practically said that the Agreement had, in some measure, been a disappointment. It certainly has been a disappointment so far to the industrial community of this country, and it is on the industrial side and the financial side that I want exclusively to speak.
Debates on anything to do with the Argentine have all tended to rotate round meat. I might say, if I may use such a simile in a meat debate, that the tail tends to wag the dog. There has been lost from view the fact that a very much larger interest was obscured by the meat question. For example, exports in 1948 from this country to the Argentine totalled £52 million. They fell in 1949 to £51 million and in 1950 to £38 million and, as the hon. Member for Stafford and Stone (Mr. H. Fraser) said, our exports in normal times ought to be much higher than any of the figures I have quoted.
Every form of obstruction has been put in the way of the trader from this country by the Argentine Government. Marine insurance now has often to be effected with an Argentine company for goods going both into and out of their country. There is the blocking of exchange and the non-granting of import permits. First, there was the ban on the importation of whisky and then the release, provided that it was only imported in bulk and not in bottles, so that it could be tampered with and perhaps adulterated on the other 2543 side. All these things have been going on. All this has resulted in bedevilling the situation that arises from the meat problem. The meat problem has exacerbated the international situation, and it had these secondary effects.
Talks are going on in the consultative committee at the present time. Exports from this country are, broadly, divided into four classes. First, there is the class of raw materials like fuel, oil, tinplate and prime essentials. Then there are other essential goods, in which the Argentine tend to classify capital equipment, such as transport, and so on. Thirdly, there are the less essential goods, and, finally, there are the non-essential goods.
Now we come to some hair splitting as to the meaning of essential goods. Where I see the danger is that our idea of what is essential is very different to that of the Argentine. Our essential exports, if they are to be divided into those sorts of categories, are not the things which have been provided for under the Protocol. These we want to keep. What we want to send, and what from our point of view are essential are finished products. I think it was announced today that 10 per cent. of our fuel commitments would be agreed to, as representing the non-essential class. Here we are fighting a battle on an extremely unfavourable battleground, because the Argentine have got what they want.
We have an unfortunate committee struggling to get promoted into categories of essential commodities, something which the Argentinians do not want to have in the category, while something which we consider vital to ourselves they want. I have in mind certain articles, and I will give a few figures. In 1948, we exported bicycles and motor cycles to the value of £2 million. That has fallen to £117,000 according to the latest figures. In cutlery one firm alone had orders for £250,000, but import licences were granted for, only a fraction of that. In 1947 we were exporting whisky to the value of something like £350,000, but we send not a drop today. But those are the kind of things which it is valuable for us to export, not tinplate, fuel, and so on, which we need at home.
The consultative committee is in a shockingly bad negotiating position. I have the greatest sympathy with them, but the pass has been sold. largely under 2544 duress, because the Economic Secretary was himself in a difficult negotiating position. The Argentine has reduced its meat commitments by something like 50 per cent. I listened carefully to the figures which were given, and I understood that our exports of tinplate and oil show a much less reduction. The bargain there is much more favourable to the Argentine. Further, they are being paid £10½ million as a compromise on devaluation, but it is a most curious process of thought to allow the Argentine, who, I am informed, had at that time a debit balance, to get any compensation at all for devaluation. If we take their sterling balances and set them against the remittances and liabilities, I am told that they were, in fact, in debt.
I should now like to come to a point which I consider to be extremely important, and that is the floating balance of £20 million sterling. Anything in excess of £20 million sterling automatically becomes transferable into dollars. The Argentine is short of dollars, as I am sure the Economic Secretary knows, but I got a bit of evidence only the day before yesterday which shows how hungry for dollars they are. I got it from a British buyer of hides from the Argentine, who brings them to this country but he did not buy them direct from the Argentine, because he got them cheaper in New York.
Argentinians were so short of dollars that they were prepared to accept a lesser price for hides to sell in New York and get dollars. The New York merchant who bought them was able to sell those same hides to Great Britain at a lesser price for sterling than a British buyer would have paid direct from the Argentine. It is juggling with exchanges, but it shows how desperately hungry for dollars the Argentinians are.
If that is so—and I would be glad to hear that I am wrong—then what, in effect, is going to be the result of Article 12, which deals with the excess of over £20 million? Surely if dollars are wanted as badly as that, the Argentinians will go to almost any means to get them. What means are open to them under this Protocol? To buy as little as possible from Britain and to sell as much as they can as quickly as possible in order to reach the £20 million. I know that the Economic Secretary thinks that would be disastrous to this country. He used the 2545 words, "There would be no advantage to either country to be out of balance." That is what we would like to think, but I think the Argentinians will want to be out of balance as much as possible. Again, I will be delighted to hear that I am wrong.
The Economic Secretary had a difficult task to do. He met a master on his own court and if, I may use a Wimbledon analogy, played him into the sun. I am afraid that he was beaten 6–0, 6–0, 6–1. The "one" was that this will be reviewed again in 12 months' time.
§ 5.56 p.m.
§ Mrs. Jean Mann (Coatbridge and Airdrie)
I have listened with very great interest to this debate and I have compared it with the debate we had on 8th February. The tone is entirely different, the weather is entirely different, and the meat ration is likely to be even greater in its difference. In February the benches opposite were crowded and the tenor of hon. Members' remarks was that we ought to give in at all costs to the Argentine. Today, it is entirely different. We are not standing up enough to the Argentine.
On 8th May the housewives' name was on the lips of every Member who stood up. Today, there is not a word about the housewives, not even about the 100,000 who call themselves the Housewives' League, that kindergarten class of the Tory Party who send in petitions against bulk purchase. The tone in February was remarkably exultant and made it very difficult for our negotiators to go from that atmosphere and get a good bargain.
The tone was influenced by the fact that the ration was at 8d. and the housewife was miserable about it; indeed, not more miserable than the Government themselves. The Tory Party thought that now was their chance to harry the Government and force a General Election. They pointed out to the housewife how bulk buying had completely failed. But why did not private enterprise step in at that particular juncture? There was their chance. The negotiations with the Argentine had broken down.
Our meat ration was 8d. and here was a great opportunity for private enterprise to come to the rescue. Of course, they did not, but they showed 2546 us for all time the difference between bulk buying and private enterprise. They knew we were short of butchers' meat so they charged us 11s. per lb. for gammon. They knew we were short of butchers' meat so tins of chops from France appeared in the shops at 7s. 6d. a lb. We had Irish ham, and we still have it, at 8s. 6d. a lb. How could any woman in her senses, standing in a butcher's shop and seeing the price of private enterprise against her good, solid, roast beef at the cheapest price in the world, have two opinions about bulk purchase and private enterprise? When the negotiations broke down, we missed the solid beef of Argentina, at the cheapest price in the world.
The average price is now £128 10s. per ton. How does that compare with private enterprise? We were told on 8th February by the Chancellor of the Exchequer that America was paying £300 per ton. That is why the Opposition are silent on how this agreement with Argentina affects the housewife. They have said that Argentina would prefer a great number of buyers, if we went back to private enterprise. Of course they would. Would it not be nice if we were the sellers, waiting in Argentina for 60 buyers coming from England?
Argentina knows perfectly well that if 60 buyers came from England to negotiate the price on one occasion, they would never come out again as 60 buyers. On the way across they would get rid of 59 of them even if they dumped 30 of them in the sea and included the other 29 in a merger or a ring. We have had an illustration of how the Opposition hate bulk buying when the Government are doing it, but themselves indulge in mergers. One of the mergers is now taking place, the greatest of all time, in Oxford Street. Do they believe in bulk buying, or do they give the consumer the benefit of competition?
Argentina knows perfectly well that she might get the benefit of high prices once in a lifetime, but that before there could be any more agreements one man would come over from England representing all the combines and rings. What did Senor Hogan, speaking at a reception for the British and Argentine missions say? It was:No one forgets the days when meat cost 23 centavos here and 83 centavos in Britain. The firmness of our position is not under 2547 stood. Argentina is now of age and nothing will deflect…(us) …from (our) …purpose to get an equitable solution.Hon. Members may think that those were the good old days, when free private enterprise was arriving to purchase cheaply and pass on to the people of Britain the great reductions that they had achieved. That is how they passed it on, by making more than 400 per cent. profit. The housewife knows that the same thing would happen again today.
The Opposition must know that we have achieved a very good settlement for the tables of our country. Can any of them deny that our butchers' meat prices, even at 3d. per lb. extra, will still be the cheapest in the world? The right hon. and gallant Gentleman who opened the debate will probably, out of the kindness of his heart, put out another leaflet this time, pointing out to the women of England that, under the Labour Government's bulk buying, our beef is the cheapest in the world.
I should like to address a remark to my right hon. Friend the Minister of Food. When we get this good Argentine beef into the shops—I understand that the chilled beef will also be very good —with it we shall be getting our own killings. It is very awkward for a woman like me to understand from the notices that hang up in the shops, a good many yards from the counter, what is an "uppercut" or an "end cut," what is "second quality" and what is "first quality." I have sometimes studied the notices, much to the chagrin of my butcher, but I think he knew perfectly well that no matter how closely I stood to that notice which must hang up in every butcher's, I still could not tell whether I was getting first or second quality, or which breed I was getting.
I ask the Minister, on behalf of the housewife, to ask the butchers—and if they do not comply to order them—to put tickets or labels on the meat and on the counter. Every time I go into my butcher's I see that remark of his own:"'Don't blame your butcher; blame me.' —Maurice Webb.The butchers have not been slow in putting up that notice "Blame Maurice Webb," so I ask my right hon. Friend not to be slow in insisting that they put the correct ticket on every piece of meat they sell to the housewife.
§ 6.6 p.m.
§ Mr. Thornton-Kemsley (Angus, North and Mearns)
The hon. Member for Bermondsey (Mr. Mellish) and the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) both spoke about the prewar system of buying. The hon. Member for Bermondsey called it "monopoly" but the hon. Lady did not go quite so far. If I understood her aright, she called it a "merger." May I remind the hon. Lady, and, through the OFFICIAL REPORT, the hon. Member for Bermondsey, that the meat that we used to get from Argentina before the war arrived in regular shipments. There was no finer meat in the world, including the chilled beef of which we have heard so much this evening, and it was so cheap that our own farmers were always in the greatest alarm and despondency about it.
Both hon. Members spoke about bulk buying. I always prefer to call it "State trading" because many private enterprise buyers purchase in bulk. It is a good thing to do, and a good many people will not quarrel with that system. Surely there has been no greater condemnation of the system of Government trading than the fact that for nine months we had no meat at all from the largest of our prewar suppliers.
I have been one of the greatest critics of Government policy in not arriving at an agreement with Argentina during the whole of those nine months. I have spoken in debate after debate on the subject, so it would be churlish of me if I were not to stand up now and, speaking solely from the point of view of the supplies of meat, say that I welcome this Agreement. I do not think that the price for the current supplies of meat is too high, in view of world conditions. My quarrel with the Government is rather that they failed to secure agreement far earlier than they did.
Let me look at the facts of the situation. They have been given before, but there is no harm in looking at them again. In June, 1949, we concluded the Anglo-Argentine Agreement, as a result of which we secured supplies of meat at an average of £97 10s. a ton. On 18th September, 1949, we devalued the £. In the summer of 1950 the Korean war broke out. When we came to negotiate the terms for the second of the five years under the Anglo-Argentine Agreement, what would one have expected in these circumstances? 2549 Would one have expected to pay a lower price or a higher price.? In the meantime the £ had been devalued and war had broken out.
As regards devaluation, we have the unquestionable fact that the Argentine was having to pay more for many, if not all, of the goods that she was buying from us; as always happens when war breaks out, there was a great and rising demand for meat for the Services; and, moreover, the background to the whole of the negotiations was a picture of world underproduction of meat and of rising prices. The Minister of Food knew that, and he told us about it in the debate of 8th February. Those who wish to read what he said will find it in column 1965 of the OFFICIAL REPORT.
What did we do about it in those circumstances? Did we offer to buy at £97 10s. a ton plus a percentage in respect of devaluation? We did not. Did we offer to buy at the old price of £97 10s. a ton? We did not. We reduced our provisional price to one of £90 a ton. What a ridiculous thing that was, following closely, as it did, upon the Minister's charges of blackmail and all the talk about holding a great and proud country to ransom. There is little wonder that the negotiations with the Argentine were embittered from the very start. In them we saw one of the most unhappy facets of Government-to-Government trading in that it generated, as Government-to-Government trading always does, bad feeling between countries which ought otherwise to be friends.
The Chancellor told us on 8th February, according to column 267 of the OFFICIAL REPORT, how, on 27th December last year, the Argentine reduced its price to an average of £120 a ton, including chilled beef. It is very easy to be wise after the event, but I believe that we ought unquestionably to have accepted that offer. Yet, speaking in the House of Commons on 25th January, the Minister of Food said about the price of £120 a ton, including chilled beef:"…we believe that their demands are quite excessive, quite unreasonable and quite unfair to this country. We really cannot keep the cost of living down if we are to yield to every demand of this sort."—[OFFICIAL REPORT, 25th January, 1951; Vol. 483, c. 442.]As my right hon. and gallant Friend the Member for Gainsborough (Captain 2550 Crookshank) pointed out, the pamphleteers of the Socialist Party took up the cry and it was not until April that we were able to arrive at an agreement on the basis of £128 12s. a ton, a higher price than we could have obtained three months, six months or, I believe, nine months earlier, and a price in excess of the one which the Minister had said was excessive, unreasonable and unfair.
That is not all. There is also the question of the side payment of £6,250,000. I believe that that ought to be spread over the deliveries of the last year of the Anglo-Argentine Agreement, because it was in respect of devaluation that the side payment was made. If we spread it over, it adds an extra £20 to the £97 10s. a ton which we were paying under the agreement, making £117 10s., which makes the provisional offer of £90 even more indefensible than it was before.
I want now to say a word about tinplate. We undertook to make available during the first year 27,000 tons of tinplate, I am credibly informed that each ton of tinplate will can four tons of corned beef. With the tinplate that we are providing we might have expected to receive over 100,000 tons of corned beef; but all we can expect to receive under the Argeement is 30,000 tons in the year. The position is even worse if the figures for the first four months of this year are studied, for in those months we supplied the Argentine, from our own limited and valuable resources of tinplate, with enough tinplate to can 47,000 tons of meat and we received from her in that period only 90 tons of tinned meats of all kinds.
As to the quantity of meat that we were to receive in the three years 1947–49—I disregard 1950, because in that year we received only six months' supply—we received an average of 314,000 tons of carcase meat from the Argentine. The Anglo-Argentine Agreement of 1949 laid down that the Argentine Government should use its best endeavours to deliver and that the United Kingdom Government would undertake to ship in each year not less than 400,000 long tons of carcase meat and offals. But now all we are to be guaranteed is 200,000 tons, and so we are to pay more money for considerably less meat.
Speaking only in regard to the meat aspect of the Agreement, I believe that the price for current supplies is not too 2551 high, that we ought to have been guaranteed more carcase meat and more corned beef, and that we would have done better had we faced the realities of the situation earlier and denied ourselves whatever satisfaction we may have derived from insulting our traditional suppliers.
§ 6.18 p.m.
§ Mr. A. Edward Davies (Stoke-on-Trent, North)
Time does not permit a detailed examination of the case advanced by the Opposition, and, even if it did, I am not competent to go into details. But it seems to me that much political propaganda, as distinct from attention to the facts, has been made today.
The hon. Member for Stafford and Stone (Mr. H. Fraser) sought to indict the Government for its trade in bulk purchase and said that this was the general cause of our present difficulties about food. I should have thought that in the case not only of the Argentine but also of the Commonwealth. and particularly Australia and New Zealand with whom we have made long term contracts, it has been of very great advantage, not only to us but also to the people in those countries. I am sure that our friends in Australasia would agree with that, because it is impossible to plan production unless some attention is given to the years ahead so that men will know where they will be when they are laying out their capital and making their plans.
What is true of meat in the Commonwealth is also true of other commodities which have been bought by the Ministry of Food and other Departments. I have in mind particularly cocoa and coffee which are necessary for the lives of the people of this country. In reference to coffee, which we are not examining today, the world price has risen enormously over the last few months. In fact, we have been able to make some profit out of that and to share it with the producing country.
I do not share the view, therefore, that bulk purchase is an evil in itself. In all the circumstances it was inevitable that the Government should take upon itself this obligation. Moreover, as we have seen in the case of the Argentine, there are difficulties in exercising free trade. There is no such thing as far as the Argentine is concerned. The hon. Member for Stafford and Stone was at pains to tell us that they were prepared to free the trade 2552 in some way so that the traders could sell direct. We should need greater evidence of that before we could accept it.
In the circumstances of the case the Economic Secretary did a very good job of work when he went to the Argentine. He inherited a difficult situation where, in a world which was short of food, the Argentine was largely independent of our trade and could get better prices elsewhere. My hon. Friend had to patch up the arrangements at some expense. The £10½ million in respect of the devaluation of sterling outstanding was, of course, a very heavy bill. But, in the circumstances. he did a very good job.
Our exporters had hoped that it would have been possible to do more trade with the Argentine arising from this Agreement than has been found possible. It was hoped that after April the mixed consultative committees would have been able to arrange their terms of trade and the terms of exports and imports, especially in respect of textiles, motorcars and pottery. But there has been great delay and, therefore, disappointment amongst our manufacturers.
I hope our friends in the Argentine will believe that we want to do the maximum amount of trade with them and that we want all the meat they can provide, but that they, in their turn, have an obligation to the traders of this country, and that it must be a mutual undertaking. I hope that what has been so well begun will go on from success to success, and again I congratulate my hon. Friend on his good work.
§ 6.23 p.m.
§ Mr. Turton (Thirsk and Malton)
I agree with the hon. Member for Stoke-on-Trent, North (Mr. Edward Davies), on two things. We have had a most candid speech from the Economic Secretary to the Treasury. When he said that he was not producing a perfect document I found myself in considerable agreement. I also agree with the hon. Member for Stoke-on-Trent, North, when he said that the Economic Secretary had come into a very ugly inheritance. That is a fair description, when the Economic Secretary considers that his neighbour on his left, the Minister of Food, described those with whom he was negotiating as ugly blackmailers. That cannot have helped his negotiations.
2553 But, giving the hon. Gentleman full credit for those difficulties, I find some parts of this Agreement unsatisfactory. I also regret to say that some parts of it, even after that very clear speech, are still not absolutely clear. So, if I may, I will confine my remarks to what I think are the salient points which have not been fully explained during this debate by the hon. Gentleman or by his colleagues behind him who, incidentally, have not added much in detail to the value of this debate.
Although the hon. Lady the Member for Coatbridge and Airdrie (Mrs. Mann) was glad that her table would be filled by increased quantities of Argentine meat, that, unfortunately, is not the case. As my right hon. Friend said, we have had a long succession of agreements. In the 1946 Miranda Agreement we were promised 83 per cent. of Argentine output. That was followed by the 1948 Andes Agreement which promised us 400,000 tons a year. That was followed by the Balfour Agreement of 1949 which promised us 300,000 tons a year.
Now we have come down to the present Agreement—perhaps I may call it the Edwards Agreement or the Edwards Protocol—which promises us only 200,000 tons a year. Whatever arguments hon. Members opposite may use in favour of this method of state trading, it is obviously resulting in our getting from the Argentine less and less meat every time a negotiator—whether he is a Minister or a diplomat—tries to deal with this question in the Argentine.
Another side of the question which is important is the production of the Argentine, which has gone up during the same period. Her pre-war figure of meat production was 2,010,000 tons. In 1949 that figure has risen to 2,340,000 tons, and in 1950 the production was 2,360,000 tons. Those figures were published by the Food and Agriculture Office. As the hon. Gentleman said, in the early part of the year there was a drought. His colleague the Minister of Food, however, explained some of the difficulties of the Argentine by putting that drought at the back-end of 1950, but it really came at the beginning of 1950. Therefore, it would appear that by successful negotiation, without any fogs and misunderstanding, more meat could have been got and, I hope, will be got from the Argentine.
2554 Next let me turn to one Article of the Agreement which I have found a little dangerous. Under Article 8 the hon. Gentleman agreed with the Argentine Government that the whole of these negotiations on meat, as far as I understand it, will be reviewed not later than 28th February, 1952, both as regards price and other arrangements for meat shipments for the period between April, the end of the Agreement, and thereafter.
This seems to me to open up a possibility that when we get to January and February, a time when home meat supply is short, we may again have the position bedevilled by disagreements between the Argentine and ourselves. This is a dangerous Article, and I am sorry that the Economic Secretary inserted February. It would have been better if he had inserted a later date.
§ Mr. J. Edwards
I entirely agree with the hon. Gentleman. I should have liked to have an agreement that ran for 15, months, which would have got us back on to the years of the old 1949 Agreement. As I explained in my speech, however, it was with some difficulty that we persuaded the Argentinians to agree to a year's contract. In the end I was persuaded that we had to agree to the 12 months, which was the best we could do.
§ Mr. Turton
I was only pointing out the weakness, which the hon. Gentleman has admitted. There is the danger that after seven months we shall again have these long negotiations from which he suffered and, if they are unwisely handled, as they were in July, 1950, and again in December, 1950, there may again be a stoppage of meat, with all its consequences to hon. Members in all parts of the House and their constituents.
The next point with which I wish to deal is the question of price. I hope that the Minister of Food, who I understand is to wind up the debate, will clear up this matter. So far as I can understand the position, the Economic Secretary takes a different view from the right hon. Gentleman, because the Minister of Food told us on 24th April that the average price of £120 per ton offered in December was a mythical figure and gave us figures on which we could base an average price of £128 12s. per ton for the present Agreement.
2555 Now the Economic Secretary comes along and says, "Oh, yes, the average price in December was in fact £120, but it is quite wrong to describe the average price as £128 12s. because I never negotiated on average prices; I negotiated only on pilot prices." I ask the Minister of Food whether he now wishes to correct the figures which he gave in HANSARD of 24th April, in column 223, when he gave the quantities of each grade of meat that would be imported and the price at which it would be imported; because the whole country has been led by the Minister of Food to believe that that was the Agreement.
Not a word of this comes in the Protocol that is published. Until the Economic Secretary told us today that he did not negotiate an average price but only negotiated on pilot prices we had all been led to believe that the Minister of Food was speaking accurately when he gave those figures. I hope that when he replies he will deal with that point because it is of vital importance.
After all, what we were told today was that the guarantee we gave was that we would take at least one quarter of the imports of beef in the form of chilled beef but that we would, if necessary, take more chilled beef than that. That is the note I took of the Economic Secretary's speech, and if I am misquoting him I hope he will interrupt me as we are anxious to get the facts of the position.
We must bear in mind that Article 7 which he has signed says that we will buy the total quantity of chilled quality that may be offered for sale by the Argentine Government, and that if we do not take it as chilled quality but, presumably, take instead some other quality we shall still pay the price of chilled beef of £146 per ton. That is what Article 7 says. It does appear therefore that the average price is not £128 12s. per ton, but is likely to be a much higher price than that.
§ Mr. J. Edwards
I do not think that there is anything inconsistent in what I have said. First we fixed the pilot prices which are put down in the Protocol. Second, over and above that we said that we will take whatever quantity of chilled beef Argentine can send us for the rest of the period of the 1949 Agreement. What I said was that there were minimum 2556 quantities—200,000 tons, but that I expected and hoped that we would get more than that. I did not know, and I do not think anybody knows, what proportion will be chilled. I expect it to be not less than a quarter, but, until we really know how much there is in total and the composition of it, a firm average cannot be arrived at. Figures however could be given of the sort that were given in the original statement, figures based on the best assumptions that could be made at the time.
§ Mr. Turton
That makes that point clear. We are not to pay over much attention to the figure given by the Minister of Food on 24th April; it is likely that the quantity of chilled meat will be larger, and therefore the average price will be higher. We know that the lowest average price will be £128 12s. and that it may be a great deal higher. My only comment is that it is a great pity that the Minister of Food did not advise His Majesty's Government in December, when Argentine negotiators were here, to accept their figure of £120 per ton. If he had done that we should have got the meat and be paying a good deal less.
I now leave the question of meat for a moment and turn to that of feeding-stuffs. I was very disappointed with what the Economic Secretary said on that. The most disappointing part of his speech was when he reached the question of maize and feedingstuffs and said "I shall not deal with that, I shall leave it to the Minister of Food." I hope that we shall receive from the Minister of Food an accurate description of what is being done about making arrangements for the supply from the Argentine Republic of essential feedingstuffs for agriculture. We have been unfortunate in the last few years in getting diminishing quantities of feedingstuffs—exactly the same story as we found in meat.
Under the Andes Agreement, it was undertaken that we would get 1,270,000 tons. Under the Balfour Agreement we undertook to spend, as my right hon. and gallant Friend said, some £23 million on maize and barley, which would mean, at the then prevailing prices, round about 700,000 tons. Under this Agreement there is not only no mention of feedingstuffs, but the hon. Gentleman went out of his way to suspend the Schedules. I found his explanation of why he had agreed to 2557 suspend these Schedules of the Balfour Agreement very hard to understand. He said that except in the case of meat there was no similar undertaking on the part of the Argentine to ship quantities or values.
Under Article 5 (b) of the Balfour Agreement it is stated:In accordance with Article 5 (a) the Argentine Government agree to sell or to facilitate the supply to the United Kingdom, in the first year, of goods to the values or quantities detailed in Schedule I to this Agreement…As a farmer who is anxious to see the British farmer raising a greater quantity of meant in this country, whether beef, pork or even eggs, it is vital that that Schedule should be observed by the Argentine. In the course of negotiations the Economic Secretary has allowed that to be dropped. In view of the much better harvest prospects in the Argentine, and the fact that Continental countries are very keen to get hold of these feeding-stuffs, I hoped that the Economic Secretary had come to some agreement on feedingstuffs. Perhaps we shall hear more about that when the Minister of Food speaks.
I wish to say a few words on the other parts of the Agreement. The point was put extremely ably and brilliantly by my right hon. and gallant Friend. What the problems other than meat and feeding-stuffs really boil down to in the Economic Secretary's explanation is that he has put up £10½ million of the taxpayers' money and that has been the only way of solving the outstanding financial difficulties. He has not aided the British exporter because in that £20 million balance there is an inducement on the part of the Argentine to forgo taking British goods in order to buy dollar commodities. I believe that to be the great weakness of that part of the Agreement.
Finally, I come to the last statement of the Economic Secretary when he said that he was not so wedded as all that to State trading but that if we had our way and we went back to private enterprise trading we would still face the Argentine Government with their method of State selling—in other words, we could do no better. That is where I believe the big issue comes in this debate. I believe this debate has shown all along the folly of mixing up meat procurement with commercial transactions and financial tram 2558 sactions. Why the housewife has not got the meat is because this has been mixed up with high finance, diplomacy and commerce.
The Economic Secretary will correct me if I am wrong, but I believe he did not have at his side in the Argentine skilled negotiators in the meat trade who had been handling the business before the war, but he had to go along with advisers no doubt from the Ministry of Food.
§ Mr. J. Edwards
I confined myself to negotiating prices—pilot prices—and quantities of meat. All matters concerning specifications and the like I left to people competent to deal with it—our permanent meat mission there who are a number of people highly competent and perfectly able to undertake that task.
§ Mr. Turton
I asked whether the hon. Gentleman had by his side to advise him those who had known meat buying before the war and those who had known the meat trade and I understand him to say that he had the permanent officers from the Ministry of Food. It will be corrected by the Minister of Food later if I am wrong.
May I remind the House that the chief meat buyer of the Ministry of Food, Sir Henry Turner, expressed himself perfectly clearly by saying that the system of Government trading had outlived its usefulness, and only as recently as last year we had a clear statement by one of the senior meat negotiators. Senor Derisi, telling the British, "We are prepared to abandon the bulk selling system immediately and to allow our meat to go into private trade provided Britain will reopen Smithfield." That is what we believe should be done in this situation in order to divorce these meat negotiations from commercial negotiations which should be handled by diplomats.
§ 6.44 p.m.
§ The Minister of Food (Mr. Maurice Webb)
This debate has been something in the nature of an anti-climax. It has certainly not been the vivid, exciting occasion I had apprehended and feared and which we have been led to expect. It has certainly not shown any great demonstration of interest on the Opposition benches, since the attendance has not been very large. But I am glad we have had the debate because it has enabled us at least to clear one point out of the way 2559 and I am grateful to the right hon. and gallant Member for Gainsborough (Captain Crookshank), who opened the debate, for his co-operation in making it clear that we are not just talking, and have not been talking and negotiating, about meat but have been ranging over a very wide and comprehensive field of trade and commerce with Argentina.
This Agreement and the difficulties associated with it were not really primarily the concern of the Ministry of Food. At least we have been able to show, and the right hon. and gallant Gentleman showed it more vividly than anyone else, that it did involve very comprehensive problems of a very complex nature that were not really tuned to the inability of the Ministry of Food to estimate the value of meat at any particular time. That is a change and a variation of approach to this problem and I welcome it. It shows that we are getting somewhere.
Before dealing with the points to which I want to reply in the time at my disposal, I would say that I suppose we would all feel that in the end what the ordinary person, the housewife, wants to know about this debate is what is the result of this Agreement in its effect on her meat ration. I suspect that she will be wondering tonight what is coming out of the debate in the way of news about the meat ration. We shall be able to make some almost immediate improvement in the ration and there will be an increase to take effect from some time between two or three weeks from now.
I want to make this clear from the outset, because on the last occasion, when I had to make a more disagreeable announcement, I did not do so in time. All I can say tonight is that there will be an increase in the meat ration to take effect between two and three weeks from now and that until we know, as we shall know over the next week-end, the exact amounts of entries of home-killed meat in the next few weeks, I cannot make a specific announcement as to date and time. The first improvement will take place about the middle of this month and will be followed by others, and about the end of August, and later, there should be a meat ration in this country which will be broadly double in size, quite apart from price, of that which is now the present ration.
2560 Having made that clear—I think we are entitled to say that ordinary persons will want to know something more specific than the academic debate about price; they will want to know about the ration, and I have given that information—I ask: Was it wrong to resist the demands of the Argentine? After all, the only specific figure we ever had from them was £140 per ton and now we have settled even allowing for all the differences of view about interpretation, an average overall price of £128 per ton.
Therefore, there has been some point in resistance and I cannot understand the complaint of the Opposition about our resisting the original demand of the Argentine because the only price we ever had to consider that was hard, specific, understandable and measurable, was £140 per ton. We said that was unreasonable, unfair, and we could not accept it.