HONG KONG (PHARMACEUTICAL IMPORTS) (Hansard, 7 April 1952)

§ Mr. John Tilney (Liverpool, Wavertree)

I am grateful to my right hon. Friend the Minister of State for Colonial Affairs for the consideration which he has given to a matter which, at first sight, appears to affect very few people in this country, though I suspect that later many of us will find that we have been indirectly affected. It has some bearing, too, on matters which this House has been discussing earlier today.

In Liverpool not many people have lost their jobs, because Hong Kong pharmaceutical importers are forced to apply for essential supply certificates before they can bring in any pharmaceuticals from the United Kingdom. I have seen letters from three very well-known pharmaceutical manufacturers—household names throughout the world—who have been complaining of this practice, but I suspect, too, that in the cities where they manufacture, employment has so far not yet been affected.

There is in this matter an over-riding principle of importance—nothing less than a matter of equality in treatment in trade among the partners of the North Atlantic Treaty, by Article 2 of which The Parties … will seek to eliminate conflict in their international economic policies and will encourage economic collaboration between any or all of them. On 19th June last year the then President of the Board of Trade, following a resolution passed by the United Nations on 18th May, informed the House that the Government had decided to impose an export licence control on all goods to be sent from the United Kingdom, to China and Hong Kong, and that an Order had been published that day giving effect to that decision. The Order came into operation on 25th June.

Very rightly, thereafter it was necessary for importers in Hong Kong to apply for essential supply certificates before they could import from this country certain pharmaceuticals. Those pharmaceuticals were drugs such as antibiotics, the sulphur drugs and the anti-malarials, which are so well known since the last 2450 war—and the House will know that the success of any military campaign is to some extent dependent on those drugs. Australian experiences in New Guinea and the vast importance of anti-malarials in the last war will be well remembered.

My right hon. Friend the President of the Board of Trade, on 20th March, in reply to a Question, referred to the series of drugs as "a very limited range of pharmaceutical products," but the range includes some of the most important of drugs, and their export represents a very substantial part in value of our total export turnover in pharmaceuticals.

These E.S.C.s, as they are called, are applied for by sole or bona fide joint agents in Hong Kong. The importer has to make a statutory declaration on each E.S.C. and after that he has to say that supplies will only be sold to doctors or hospitals who have been approved by the Department of Commerce and Industry of the Hong Kong Government, and then only in small quantities. Large quantities can be sold by permission of that Department, and the importer has to render a return of all sales and make monthly returns to the Department, but not if the imports come from countries which so far have not demanded E.S.C.s.

At present, therefore, it is possible for importers in Hong Kong to buy from many countries other than the United Kingdom, so that if the purpose of these E.S.C.s is to hurt the enemy in Korea, to withhold essential drugs from him—thereby diminishing his power to hurt us and to damage our troops—and to shorten the war, then its high purpose is being defeated, because the regulations apply only to the United States of America, the United Kingdom, Canada, Australia and New Zealand.

Surely it is human nature to avoid form-filling and monthly return if a product can be purchased without so doing, especially as a fee is charged on each E.S.C. My right hon. Friend the Secretary of State for the Colonies, on 3rd April, gave the House detailed figures of the pharmaceutical imports into Hong Kong, from which the House will see that the imports into Hong Kong from the United Kingdom fell from £348,000 in January, 1951, and £347,000 in June, 1951, to £195,000 in January, 1952. During that period imports into Hong Kong from Italy rose from only £8,000 in 2451 January, 1951, and £18,000 in June, 1951, to as much as £81,000 in January, 1952. My right hon. Friend was good enough, though not so asked, to provide a table showing the value of imports allocated to that section of pharmaceuticals which he had previously referred to as a very limited range.

The House will see from that table that the trade in these antibiotics, sulphonamides, and anti-malarials, both in value and in proportion, is substantial. The November figures show no less a percentage than 155 attributed to these special drugs, which makes one wonder whether there can be other mistakes in the table. The House will also see that in January the imports into Hong Kong from France of those pharmaceuticals which, had they been imported from the United Kingdom would require E.S.C.s, represented no less than 92.78 per cent. of the total imports from France, and that the percentages of Germany and of Italy were as great as 74.38 and 89.5. In February, the imports from Italy of those special drugs amounted to no less than 98.4 per cent. of their total pharmaceutical exports to Hong Kong.

What is the position of the Government of Hong Kong in all this? I should like to quote a letter from the Director of Commerce and Industry to one of the importers in Hong Kong: I have to advise you that the problem raised by you is one which is fully appreciated here and in the United Kingdom; the United Kingdom Trade Commissioner in Hong Kong has raised this issue on several occasions with the Board of Trade. The existing regulations by which certain types of pharmaceuticals can be exported to Hong Kong from the United Kingdom only under E.S.C. were brought in at the request of the Board of Trade. As the exporting authorities, only they can abolish this E.S.C. requirement. The application of your proposal that the E.S.C. requirement should apply to pharmaceuticals regardless of the country of origin would be a misuse of the E.S.C. system which is intended to guarantee to exporting countries that goods imported there under are for consumption in Hong Kong. These exporting countries which do not insist upon E.S.C.s know that their pharmaceuticals are for re-export to China, and for this Government to suggest that they should insist upon E.S.C.s would be most damaging to Hong Kong's trade. Let me also quote another letter which was sent officially to the Chairman of the Export Executive of the Association of 2452 the British Pharmaceutical Industry at the end of last month by the Director of the Hong Kong Government Office in London: The Government of Hong Kong endeavours to promote British interests wherever possible, but it can only do so when such interests do not conflict with local requirements. The difficulties with which your industry is faced at present are due to restrictions imposed by the Board of Trade, and for that reason representations should be addressed to that Department. This seems to conflict with the reply which I received today from the Secretary of State for the Colonies, when I asked which countries had applied to the Government of Hong Kong for the issue of Essential Supplies Certificates for pharmaceutical products. I received the reply: Applications for such certificates are not made to the Government of Hong Kong by the Governments of the countries from which the drugs are supplied, but by importers in Hong Kong. Those importers, if they are agents of the United Kingdom Government, are the very people who are now complaining.

There are two minor effects of these regulations. The first is that it is very difficult to re-export our pharmaceuticals to the possession of our oldest ally and partner in N.A.T.O., Macao, for the benefit of the local population there, and the other point is that our own antibiotics, sulphur drugs, etc., are finding their way to Hong Kong through other countries—Continental countries for the most part—which are re-selling them to Hong Kong at high prices with their own profit added; and the goodwill of our manufacturers thereby suffers, and their agents are powerless to intervene.

I fully realise that it was a difficult decision for the late Government to make and for the present Government to uphold. There is a huge Chinese population in Hong Kong, and on humanitarian grounds no one wishes to cut off their supplies, but surely international collaboration could be such that strong pressure could be brought on our colleagues in the United Nations, and especially our partners in N.A.T.O., to ask the Hong Kong Government to apply essential supply certificates to all pharmaceuticals imported into Hong Kong.

Such pressure, I submit, is much more likely to be successful if, temporarily, the Hong Kong Government dispense with 2453 E.S.C.s for all pharmaceuticals, and we could then start again equally and, at any rate, our manufacturers, who are constantly exhorted to export more, would not feel themselves unfairly penalised.

§ The Minister of State for Colonial Affairs (Mr. Alan Lennox-Boyd)

We are all grateful to my hon. Friend the Member for Wavertree (Mr. Tilney) for the way in which he has raised this most important issue. It deals, of course, with the difficulties placed in the way of British exporters, and highly important products which are destined either for Hong Kong or for China through Hong Kong. We recognise the difficulties in which these exporters are placed, and we very much sympathise with them.

I think my hon. Friend is quite right to bring this most important matter to the attention of the House of Commons. Through the Government we are trying to do our duty in Korea, not only by contributing much valued lives to the war there, and materials, but also by the honourable observing of those other aids to our Armed Forces, and to the intentions of the United Nations in Korea, which, we think, may still help to bring the terrible war in Korea to an early end.

We had great difficulties in arriving at a fair solution of this most difficult problem in deciding whether to allow unrestricted exports of these very important drugs, which have both military and civilian purposes for which they can be used, or whether to continue the restrictions that had been laid down. We came to the conclusion that, particularly in view of the present situation in Korea, whatever other nations might do, we could not relax control over our own exports to China. As many goods of all kinds go to China through the great port of Hong Kong, the shop window of the free world in the Far East, it was, unhappily, inevitable that these restrictions should also apply to exports to Hong Kong.

We are grateful to my hon. Friend for having raised this most important matter, in which I know he is deeply and rightly concerned, in so temperate a fashion. I know that he and hon. Members on both sides of the House would agree with me in saying that we are grateful, also, to the Governor of Hong Kong and those who are working with him for the readiness with which they have understood the 2454 difficulties of Her Majesty's Government in the United Kingdom and, though they are themselves playing a part of immense importance in the defence of the free world in particular local difficulties, for the way in which they have loyally played their part in implementing decisions which have been arrived at here in Westminster.

The United Kingdom and other nations who feel as we do, as my hon. Friend knows, have been watching for some time, and, where necessary, taking proper action, the exports of strategic war materials to the Soviet bloc of nations. It was only after the open and almost unavowed intervention of China in the war in Korea towards the end of 1950 and when His Majesty's then advisers saw large imports of drugs of this kind going into China that the limitation on the export of drugs to the Soviet bloc was first applied.

The then Government were particularly concerned, as my hon. Friend has mentioned, about one or two particular drugs—the antibiotics, the sulphonamides and the anti-malarial drugs—which, though they have a most important civilian purpose which we are very anxious not to disturb, also play a most important part in modern war as many of them are necessary to maintain armies in the field. It appeared to the then British Government, and it now appears to us in the same light, that it is a proper part of the discharge of our duties as one of the United Nations now at war in Korea that we should, as far as possible, limit the supply of drugs without which modern armies might not be able to wage war.

Therefore, in June of last year the then Government applied severe limitations on the export of these drugs to China, which was then actively intervening in the war in Korea, and, as much of the trade to China passes through Hong Kong it was necessary also to limit exports there. So the Hong Kong Government and ourselves had to agree a fair yardstick by which to judge what the imports into and through Hong Kong ought to be. It was taken as a fair yardstick that the domestic consumption of Hong Kong or of China should be as it was before the war in Korea started.

Now this, as the House will realise, takes account of the fact that since 1936 the population of Hong Kong has 2455 doubled, and at the present moment is well over two millions. Exporters from the United Kingdom have been allowed to send up to the figure that they previously sent—this being the yardstick for domestic consumption — before the Korean war, but over and above this figure they must get from the importer in Hong Kong an Essential Supplies Certificate which shows that the extra imports are strictly needed for local purposes of consumption, and without this certificate no exporter can send the extra products.

This action, which was taken by, as it was then, His Majesty's Government, was independent of any action taken by the countries which joined in the United Nations' resolution in May, 1951, but the result of the two actions together is that exporters from, at the present moment, the United Kingdom, Australia, Canada, New Zealand and the United States of America must get first from the importers E.S.Cs. before they can send over and above what they were in the practice of sending before the Korean war started, and the importers get these certificates from the Government of Hong Kong. As I say, we are very grateful to the Government of Hong Kong, with their great local problems and difficulties, for the readiness they have shown to fall into line with the action of the Western World.

We recognise that the effectiveness of this control is much impaired. My hon. Friend said the high purpose is limited by other countries not following our example, and he has suggested, both in correspondence, in Questions and tonight, that the Hong Kong Government should impose the same limitations on imports from everywhere as they impose on the imports from the countries that I have named. But I know he will appreciate that the restrictions of the Hong Kong Government have been imposed in every case at the direct request of the Governments of the countries concerned. Import limitations imposed in Hong Kong on exports from the United Kingdom, Australia, Canada, New Zealand and the United States have been because each of these sovereign Governments has requested that it should be done. It would, I think, be extremely difficult for the Hong Kong Government to take its 2456 own action in this matter, in view of its many difficulties and its own position, unless there were a request of this kind.

It is our belief that much the best way to bring to an end exports that must be distasteful to all who are anxious to call a halt to the frightful war in Korea lies in international agreement to limit these exports. Her Majesty's Government will use every effort—and I do not mean this in any conventional sense, but in a sense of firm intention to try to get something done about it—to persuade other nations to follow our example. I should not like to put the case too high, but it may well be that people are now engaged in warfare against our troops and those of the other nations who subscribe to the U.N.O. resolution, by means of drugs that are being sent to China from countries whose own troops are taking part in the war which, we hope, will be an example to all who break the peace in future.

There is no reason why other nations, if they wish, should not recommend the same restriction that we, to the disadvantage of our own trade, have imposed on our own exporters. There is no reason whatever why the exports from any of the foreign countries who are undoubtedly, in some cases, taking trade which hitherto may have been enjoyed by Her Majesty's subjects should not be subjected to precisely the same control. As my right hon. Friend the Secretary of State for the Colonies said in the House on 28th March, in reply to one of the many Questions which my hon. Friend has quite rightly asked, these E.S.C.s can be issued in respect of imports from any country which requires—or, in reply to another Question, my right hon. Friend said "demands"—them.

That is the present situation. We hope that other nations will follow our example, and that this may be one of the contributions which will help to bring to a speedy end a war which causes such infinite distress and the triumphant conclusion of which is an essential prerequisite to a return for all of us to a civilised world.