HC Deb 13 November 1952 vol 507 cc1110-2
28 Mr. K. Thompson

asked the President of the Board of Trade (1) at what price in sterling and in cruzeiros the cotton taken from Brazil in the recently negotiated compensation deal was valued; and how this price compares with prices quoted at the latest convenient date for similar American cotton;

(2) what representations were made to him before negotiations were completed for the sale by Hawker-Siddeley Aircraft Limited of jet aeroplanes to Brazil on a compensation basis in return for the sale to Britain of Brazilian cotton; and what conditions or qualifications accompanied his approval of the deal;

(3) to what extent his Department has varied its attitude to compensation trade with Brazil; and how far consideration is being given to negotiating a settlement of Brazil's indebtedness to this country using the cotton stocks of Brazil as a basis.

35. Mr. Erroll

asked the President of the Board of Trade to make a statement on the barter deal with Brazil whereby the Raw Cotton Commission is accepting Brazilian cotton in exchange for British jet-fighter aircraft which are being exported to Brazil.

Mr. P. Thorneycroft

I welcome the opportunity of making a statement on this matter. While the problems which have arisen in our trade with Brazil are serious and we are giving them anxious thought, they need in our view more fundamental remedies than compensation deals.

This proposed deal which, as far as I know, has not yet been concluded, is not a transaction between Governments. The point I was asked to decide was whether, if the Hawker Siddeley Group could dispose of aircraft to Brazil on suitable terms, and if the Raw Cotton Commission could agree terms for the purchase of Brazilian cotton, I would take steps to stop the transaction.

There would only have been two ways of intervening. Either Her Majesty's Government would have had to refuse an export licence for the sale of aircraft to a friendly country to which no security objections apply, or else a direction would have had to be issued to the Raw Cotton Commission interfering with their freedom to buy when and where they think it commercially desirable.

Both of these steps would have been very difficult to justify, if, indeed, a direction to the Raw Cotton Commission in this case would have fallen within the provisions of the Cotton (Centralised Buying) Act, 1947. While, as I have said, barter deals are no solution to our trade problems, I did not think that the disadvantages of this particular transaction were such as to justify intervention.

Mr. Thompson

Leaving aside the merits or demerits of barter or compensation transactions, is my right hon. Friend aware that this deal has been negotiated in terms which imply that it is possible to get agreement on the rate of exchange between Brazil's currency and Britain's currency? Does not that suggest that the Board of Trade might do something on the same line on a larger scale, to free all channels of trade?

Mr. Thorneycroft

If my hon. Friend is suggesting that I should take this deal as an example and go out and try to get barter and compensation deals all over the world, the general criticism which has been directed to this isolated and rather defensible deal is my best answer to him.

Mr. Erroll

Does my right hon. Friend realise that, by countenancing this deal, he is permitting a very important and considerable change to take place in this country's system of exchange control [HON. MEMBERS: "Why not?"]—thereby allowing any exporter to decide how his foreign exchange earnings may be handed over to a would-be importer? If this is to be the policy of Her Majesty's Government, I hope that the widest publicity will be given to it.

Mr. Thorneycroft

There is no change in the policy of Her Majesty's Government. As I said in answer to the Question, it seems quite clear to me that barter and compensation deals in general will not provide a solution to our problems. The point I had to decide here was a much more limited one. It was whether, in this case, we should either refuse an export licence for some aircraft or give a very special and hardly defensible direction to the Raw Cotton Commission as to how it should buy its cotton. In all the circumstances, I considered that, on balance, and in this case, I should not be justified in taking that course.

Mr. G. R. Strauss

Will the right hon. Gentleman consider another aspect of the deal? In view of the Prime Minister's criticism of the late Government for permitting the export from this country of military planes to South America and elsewhere—[HON. MEMBERS: "To Russia."]—will he draw the attention of his right hon. Friend to the fact that Her Majesty's present Government are pursuing exactly the same policy?

Mr. Thorneycroft

It rather depends on what one means by "elsewhere."

Mr. Strauss

Is the right hon. Gentleman aware that the criticism was that we were doing something wrong by allowing any military planes to leave the country, whereas, as a result of that, our aircraft industry has been built up? Now Her Majesty's Government are pursuing exactly the same policy.

Mr. Thorneycroft

It does not seem to me that there is any very clear comparison between the two.

Mr. Erroll

In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.