HC Deb 01 April 1953 vol 513 cc1193-5
18. Mr. Gaitskell

asked the Secretary of State for Foreign Affairs whether he will make a statement on the recent meeting of the Council of the Organisation for European Economic Co-operation.

The Chancellor of the Exchequer (Mr. R. A. Butler)

I have been asked to reply.

The recent meeting of the Council of O.E.E.C. was described by the Secretary General of the Organisation as one of the most successful in its history; a judgment in which H.M. Government concur. A statement has already been made to the House about our decision to make certain relaxations of our import restrictions and to increase the tourist allowance. The German Government followed this lead. The Council recommended that other member countries, and particularly those in a creditor position, should make a special effort to increase still further their liberalisation measures.

It was decided to continue the operation of the E.P.U. for a further year from 1st July, 1953, with any modifications that might be agreed. This decision was subject to the proviso that the question might be re-examined at any time before the 30th June, 1954, if any Member country felt that this was necessary to enable progress to be made towards a system of freer trade and payments, including convertibility of currencies.

The Council welcomed the initiative taken by the U.K. in presenting their views on these matters, and decided that arrangements should be made for studying how and under what conditions an orderly transition from the present form of the European Payments Union to a wider multilateral system of trade, payments and credit can be achieved.

Mr. Gaitskell

While thanking the Chancellor for that statement, may I ask him two questions? First of all, was it made clear when the announcement was made about the lifting of restrictions here, that we would not return to full liberalisation until we had regained the £ 100 million of gold which is still outstanding in our debt to E.P.U.? Secondly, does the Chancellor expect that some of these creditor countries, in particular Belgium, will soon take action to increase imports so as to relieve strain on the Union? Thirdly, may we take it that no independent action on convertibility will now be taken by Her Majesty's Government, but that the matter will be proceeded with only with the concurrence of other nations in the E.P.U.?

Mr. Butler

The answer to the first point is that we certainly made it plain that we intended to try our very best to earn back our £ 200 million debt, and also to recover the £ 100 million of gold from E.P.U. We made that clear. On the second point, about creditor countries, I find it difficult to give an answer on behalf of another Government, but I can say that there were indications that the other creditor countries, including Belgium, are ready to look at their position again with a view to following the lead of the United Kingdom. I do not think it would be unfair to the Governments concerned to say that.

In regard to convertibility, the position remains as it has just been expressed quite sincerely to the House; namely, that there are certain pre-conditions that must be fulfilled and which concern not only our own internal position but the position of strength which we are in, and the position and the pattern of world trade. There is certainly no question of making a move towards convertibility, either before consultation has taken place and we have the views of the European Governments, or before the pre-conditions are fulfilled.

Mr. Nabarro

Could my right hon. Friend reconcile his statement in regard to the progressive liberalisation of Western European trade with the fact that France has announced in the last 48 hours a severe curtailment of imports, particularly coal, from this country, together with a number of manufactured goods?

Mr. Butler

Yes, of course I am well aware of that statement. I am also aware that in the statement the French Minister for Economic Affairs was kind enough to pay tribute to the example we have given. I agree that it would have been pleasanter if the tribute had been accompanied by action of a slightly different character. Nevertheless I am satisfied that these measures were not designated with a desire to hurt the United Kingdom, and I am satisfied from close examination that they will not do us infinite harm. However, any measure of this sort which goes back on liberalisation is to be regretted.

Mr. Bottomley

Can the Chancellor say that the action taken by France is in opposition to the suggestions made by the meeting of the Members of the O.E.E.C.?

Mr. Butler

It is quite clear that one of the resolutions passed by the Council definitely requested the French Government to proceed to a further measure of liberalisation, and to that extent it is disappointing to see this move.

Mr. Boothby

Is not this action by the French Government an argument in favour of the closest association of this country with the Coal and Steel Pool at the earliest practicable moment?

Mr. Gaitskell

Is it not the fact that, in view of the French deficit in their balance of payments, it was inevitable that they would take steps to restrict their imports, and does not this show, too, that the real need in E.P.U. is for a considerably greater extension of credit in relation to gold, so that we do not get continual chopping and changing and import restrictions being imposed and lifted?

Mr. Butler

It is quite clear that Her Majesty's Government understand the reasons, as described by the right hon. Gentleman, which prompted the French Government to make these cuts; and, of course, any step that restores the economy of a country should be welcomed by all. In the case of the future of E.P.U., there are some schools which say that it should be softer and some which say that it should be harder, so I think we had better steer a course, as we are doing, between those two.