HC Deb 01 February 1954 vol 523 cc31-8
Mr. H. Wilson (by Private Notice)

asked the Chancellor of the Exchequer whether he will make a statement on the trade agreement signed with the Japanese Government on Friday, 29th January, 1954.

The Economic Secretary to the Treasury (Mr. R. Maudling)

As I have been in charge of these negotiations on behalf of my right hon. Friend during his absence, he has asked me to make a statement.

Negotiations with representatives of the Japanese Government were concluded on 29th January when the Sterling Payments Agreement between the U.K. and Japan was renewed for one year until 31st December, 1954.

At the same time, there was a review of trade between Japan and the sterling area, in the light of Japan's heavy balance of payments deficit and acute shortage of sterling, which, in the absence of any action, would have compelled Japan to impose heavy restrictions on her purchases of sterling area goods. Her Majesty's Government considered it important to prevent a further intensification of these restrictions on trade, which were already having serious effects on a number of U.K. exports, visible and invisible.

As a result of this review, the value of British and colonial exports to Japan in 1954 should now be maintained at the 1953 level. The Japanese have also given satisfactory assurances on their imports of certain commodities of special interest to the U.K. and colonial exporters, on the treatment to be accorded to her imports of sterling oil and also on certain aspects of her shipping policy. For our part, having regard to Japan's shortage of sterling, we recognised that if this level of purchases were to be maintained, Japan must have further opportunities of earning sterling from her own exports.

While we were in balance of payments difficulties with Japan, Colonial Governments assisted us by restricting their purchases of Japanese goods to a level below what they would otherwise have imported. Now that such balance of payments difficulties no longer exist, and in view of the Japanese assurances on trade, we have informed the Colonial Governments that there is no longer, on these grounds, any need to restrict their imports of Japanese goods. In 1954, they will, therefore, be able to import up to their own estimated requirements (as previously notified to us), both for internal consumption and for the entrepôt trade where that exists.

We are also establishing limited import quotas in the U.K. for certain Japanese exports of a traditional character. These quotas are very small and are for one year only. In addition, there will be an import of £3 million worth of Japanese grey cloth for processing here and re-export. This figure itself is substantially below the quantities imported for 1950 and 1951.

I should like to make it clear that the tariff position generally, and Imperial Preference in particular, are in no way affected by this Agreement. Her Majesty's Government consider that this Agreement will be to the benefit of United Kingdom trade as a whole and of the sterling area generally.

Mr. Wilson

Since this Agreement is not merely a renewal of previous Agreements, but contains entirely new principles, I should like to ask the hon. Gentleman two questions. First, in view of the acute anxiety with which this Agreement is regarded, not only in Lancashire but in the Potteries and in other export districts, will he tell the House why there has apparently been no consultation with those areas, despite the fact that under the Labour Government we consulted all those interests before making any of these Agreements, especially where Japan was concerned? Secondly, while I am sure the whole House would not wish to use our position with the Colonies to force them to buy British goods if they did not want to, will the hon. Gentleman tell us why there has been this abrupt reversal in relation to colonial imports from Japan, instead of easing the situation by a gradual in-increase of quotas at a time when Lancashire is attempting to alter her marketing methods to meet colonial needs and at a time when Japanese competition is likely to be particularly virulent because she is denied her natural market in China?

Mr. Maudling

I am grateful to the right hon. Gentleman for giving me the opportunity to deal with those points, which, I know, are of importance and are causing some concern. On the first point, there is no change of principles either in the Agreement or underlying the Agreement. Secondly, on the point of consultation, I am informed that it has not been the principle either of this Government or of our predecessors to consult whole industries before increasing import quotas—for example, in the case of the liberalisation of European imports, I am sure that consultation did not take place. However, I understand that the President of the Board of Trade, on 21st January, informed the Consultative Committee for Industry, on which both sides are presented, of the probable course of the negotiations.

The right hon. Gentleman referred to pottery. To get this matter into perspective, I should say that the quota for this year for pottery imports represents rather less than one three-hundredth part of the total home sales of pottery.

So far as the Colonies are concerned. I know that there is considerable concern here and that this is a very important matter, but Her Majesty's Government had to face the situation that there are no longer any balance of payments reasons for asking the Colonial Governments to import fewer Japanese goods and more Lancashire goods. We know that the Colonial Governments will understand that it is in their interest to maintain their long-term connection with Lancashire, but we did not feel that in these circumstances—of no balance of payments difficulties remaining—we could ask the Colonies, on those grounds, to restrict their imports of Japanese goods. We have, therefore, felt it right to leave it to them to fix their import quotas.

Mr. Assheton

Is my hon. Friend satisfied that this Agreement, which is designed, no doubt, to improve the trade of the whole Empire, has not sacrificed the interests of Lancashire to any degree?

Mr. Maudling

I am certain that this Agreement will improve the trade prospects of the Empire as a whole and of the United Kingdom as a whole. We shall have a substantial surplus on our trade with Japan from the United Kingdom. So far as Lancashire is concerned, I understand that the grey cloth to be imported is a type of cloth which, on the whole, it will be useful for the finishing end of the trade in Lancashire to have. As my right hon. Friend will have noticed from the announcement, all of this grey cloth is being re-exported, and if it were not processed and re-exported by this country it would probably be done by some other country.

Mr. Anthony Greenwood

In view of the repercussions that this pact may have, not only on the export prospects of Lancashire but also upon the export prospects of Dominion countries like India, could the hon. Gentleman say what consultations took place with the Dominions and whether they agreed to this arrangement being made?

Mr. Maudling

We were not negotiating, of course, on behalf of the independent sterling area countries in the matter of trade, but they furnished us with estimates of the likely course of trade. The actual Agreement is a payments Agreement, not a trade Agreement.

Mr. H. Hynd

Whatever the precedents may have been about consultation, because of the special effect on Lancashire in this case why was not the Cotton Board, at least, consulted?

Mr. Maudling

As a matter of fact, my right hon. Friend informed the cotton industry leaders, and particularly Sir Raymond Streat, on a confidential basis of the probable outcome of the negotiations. [Hon. Members: "Informed?"] This, in fact, was information, not consultation. As the hon. Gentleman particularly asked me about the Cotton Board, I think he should know that Sir Raymond Streat was informed of the process of negotiations.

Mr. Wilson

Is the hon. Gentleman aware of the very clear statement by Sir Raymond Streat and other cotton trade leaders that they were not consulted? Is he further aware that, whatever the practice on European liberalisation, it was the invariable practice of the previous Government to consult the cotton industry and other industries concerned in the negotiation of a bilateral agreement, as this is a bilateral Agreement?

Mr. Maudling

I understand that Sir Raymond Streat has given authority for the remarks which I have just made. As to consultation, I think that what I have said is adequate. Her Majesty's Government have many contacts in Lancashire and they are well aware of the view that Lancashire would take on cotton. The import of grey doth is the type of textile import which would do the least harm in Lancashire, and the type which some section of the industry would in fact welcome.

Mr. Fort

Can my hon. Friend say what representations he has had from the Colonial Governments asking the British Government to make such an Agreement so that they can obtain cloth, which they think might be cheaper from Japan than from Lancashire?

Mr. Maudling

In our dealings with Colonial Governments we were concerned to safeguard particularly their exports to Japan—in the case of the Uganda Government cotton is very important. We obtained an estimate of the amount of Japanese goods which they would wish to import when there were no balance of payments difficulties. We have informed them that as balance of payments difficulties do not exist any longer it is up to them to decide their own requirements.

Mr. S. Silverman

Does the hon. Gentleman appreciate now that the information which he communicated to the chairman of the, Cotton Board, and which he has now given to the House, has been received by the cotton manufacturing and export interests with consternation? Does he not consider that it would have been much better to have taken them into his confidence at an earlier stage and not simply faced them with anaccomplished fact by way of confidential information?

Mr. Maudling

I see no reason why this announcement should be received with consternation. I was in Manchester recently and had the opportunity of talking with leading members of the industry who gave their views. I am sure that all responsible people recognise that where there are no balance of payment difficulties it is impossible for this country to say to the Colonies, "You must restrict the import of Japanese goods in favour of Lancashire." I am sure that Lancashire people appreciate that.

Viscount Hinchingbrooke

Can my hon. Friend give an estimate of the amount by which Japanese exports to the Colonial Empire are expected to increase in 12 months?

Mr. Maudling

I could not give it off hand, but of the figure the larger element, possibly the major element, is entrepôt trade. Hong Kong, for example, will be buying goods from Japan in order to sell them to other territories.

Mr. Wilson

Mr. Speaker, I beg to ask leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely, The conclusion of a trade and finance Agreement with the Government of Japan which, for the first time since the war, permits the entry of a wide range of Japanese consumer goods into the United Kingdom.

Mr. Speaker

The right hon. Gentleman asks leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a definite matter of urgent public importance, namely, The conclusion of a trade and finance Agreement with the Government of Japan which, for the first time since the war, permits the entry of a wide range of Japanese consumer goods into the United Kingdom. I understand that this Agreement has been made and, therefore, I find it impossible to bring this Motion within the Standing Order on the ground of urgency. The Agreement has been signed and there is nothing that the House can do about it now, except possibly to dismiss the Government who have made it—[Hon. Members: "Hear, hear."]—if that be the will of the House. That is a process which can take place just as well on some future day as it can today, and I do not feel that in those circumstances I should be justified in interrupting the Orders of the Day or finding this Motion within Standing Order No. 9.

Mr. Silverman

On that point, Mr Speaker, while it may be true that signatures have been put to the Agreement, is it not equally true that the Agreement would require ratification before being implemented and therefore it is urgent that the opinion of the House should be taken on it now?

Mr. Speaker

I do not think that that is the case. If hon. Members are interested in this important subject, arrangements should be made in the usual way for a proper debate upon it, but it is not within Standing Order No. 9.

Mr. Bowles

May I put a point to you, Mr. Speaker? [Hon. Members: "Oh."] Hon. Members opposite can have their private row in the 1922 Committee later this week. The point which I should like to submit is that the Agreement was only signed on 29th January and it is now 1st February and it is quite possible that contracts have not been entered into. Would that not make it a matter of urgency?

Mr. Speaker

That is all very hypothetical. I cannot accept that.

Mr. Attlee

In view of the statement made by the Economic Secretary to the Treasury, will the Leader of the House give time for a debate on this very important matter of Japanese trade?

The Lord Privy Seal (Mr. Harry Crookshank)

I must ask that that should be discussed through the usual channels.