ANGLO-GERMAN DISCUSSIONS (TRADE AND FINANCE) (Hansard, 11 May 1954)

§ Mr. Gaitskell
(by Private Notice) asked the Chancellor of the Exchequer whether he has any statement to make in regard to his recent conversations with the West German Government.

§ Mr. Bellenger
On a point of order. Would you kindly advise the House, Mr. Speaker, what is the procedure when a similar Question appears on the Order 1018 Paper? I thought you ruled the other day that Private Notice Questions are not to be accepted. I do not want to prejudice the information being given, but I think we should have some consistency.

§ Mr. Speaker
I was not aware that another Question was on the Paper; I must have overlooked it. Otherwise I should not have allowed this in the form of a Private Notice Question. I should instead have asked the Chancellor of the Exchequer, if he so desired, to make a statement. If there is another Question on the Order Paper, it is purely an oversight that the Question has been allowed in this form.

§ The Chancellor of the Exchequer (Mr. R. A. Butler)
I had a series of frank and friendly discussions with the German Ministers concerned with economic and financial questions and a general conversation on the problems affecting our two countries with the Federal Chancellor. I found that the views of the German Government on these important subjects were close to our own. We were thus able to establish a basis of common interest and understanding on which to build in the future.
There was full agreement between us on the objective of securing an expansion of world trade by moving forward towards a freer system of trade and payments. It was in this spirit that we reviewed the discussions that had taken place in O.E.E.C. about the extension of E.P.U. We were also able to agree in outline the bilateral arrangements under which we might settle part of our E.P.U. debt.
I also hope that as a result of our exchange of views progress may very shortly be made with the removal of artificial incentives to exporters, both in the trade affecting our two countries and in the general framework of the O.E.E.C.
We had a very useful discussion about the problems involved in a return to convertibility, and about the establishment of satisfactory world trading conditions on which the successful achievement of convertibility—we were fully agreed on this—must depend. These matters will, of course, be carried forward under the arrangements made at the O.E.E.C. Council for a special Ministerial Group to examine these problems and their European aspects. But I am sure that 1019 these wider discussions will be all the more fruitful if there is a common approach by Germany and the United Kingdom.

§ Mr. Gaitskell
In the course of these discussions, which touched upon our debt to the European Payments Union, was there also brought into the picture the repayment of Germany's debt to us, which was negotiated under very different conditions? Secondly, can the right hon. Gentleman say whether in the circumstances he now anticipates that the European Payments Union will continue with the present rules for at least another year?

§ Mr. Butler
The answer to the first part of the question is, "Yes, Sir," but I do not think it will be necessary to revise the terms and conditions of the London understanding of 6th December. 1951. It did, however, come fully into the discussions. The answer to the second part of the question is also, "Yes, Sir." It is almost certain—in fact, it was agreed—that the European Payments Union should be continued for another year. The reason that I do not give an absolutely final answer is that the matter was referred by Ministers of the European countries to the managing board of the official council for final ratification.

§ Mr. Bellenger
How is it proposed in the future to reduce the wide unbalance between Germany and this country? Is it proposed that Germany should import more, that a better settlement should be made of debts owing to this country on various grounds, or that a larger amount of currency should be disbursed so that these debts can not only be paid off quicker, but that the unbalance should right itself?

§ Mr. Butler
The unbalance refers to the wider question of West Germany's surplus within the European Payments Union in general. We heard statements from the German Ministers about their intention so to regulate their affairs that it was hoped that their surplus would not put them too much out of balance with the other countries. In this respect, the right hon. Member's reference to a greater import programme for Germany came prominently into the picture. That may be helped by the Finance Minister's recent proposals, which involve an increase 1020 in consumption within Germany. The right hon. Gentleman, therefore, is on the right lines.
As regards the bilateral negotiations on our debt vis-à-vis the West German Government, this must be regulated on the basis of a term of years under the O.E.E.C. general agreement, which, I hope, can be balanced in some way by the return debt which we have on the other side.

Mr. Smithers
In view of the importance of maintaining employment in this country and also of maintaining employment in Germany for internal political reasons, can my right hon. Friend say whether the subject of employment was discussed in the course of the discussions on industrial policy?

§ Mr. Butler
It was, naturally, discussed, and in so far as our conversations may result, as I believe they will, in the removal of the export incentives which are imposed by the other side, that will improve our export chances and, therefore, our employment chances in this country.

§ Mr. F. Lee
Has the Chancellor of the Exchequer a firm assurance from the West German Government that they will cease the practice of hidden subsidies to their exporters? If the right hon. Gentleman cannot get agreement with them on these lines, how long is he to wait before he gives our own industries the like type of preference that the Germans are getting?

§ Mr. Butler
I cannot speak for the West German Government, who must announce their own policy; that is why I cannot go further today. But I should not have gone as far as I did in saying that we were on the eve of reaching an agreement—I hope, an agreement endorsed within the general European framework—if I were not aware that the intention of the German Government was to free rather than to restrict their export effort and to do away with these practices.

§ Mr. Holt
Did Dr. Erhard complain to the Chancellor of the Exchequer about the difference between the prices of home-sold coal and steel and export prices? Is the right hon. Gentleman giving consideration to this matter, and what does he propose to do about it?

§ Mr. Butler
This subject of the alleged differentials in our coal prices was raised, including many other alleged practices within this country, but we were able to assure the West German Government that there was nothing sinister in our intentions and that we believe as much as they do in the freeing of our exports and the non-introduction of special subsidies.

§ Mr. Nicholson
Do my right hon. Friend's remarks regarding subsidies include also shipbuilding subsidies?

§ Mr. Butler
It depends how one defines subsidies. There is nothing in our practices that I am aware of that is unfair in regard to this matter. That, I think, was accepted after discussion by those with whom we were discussing.

§ Mr. Albu
Do I understand from the right hon. Gentleman's first statement that there is no possibility of the Germans offsetting against our E.P.U. debts the very substantial debts which they owe to us for our keeping them alive in the first years after the war?

§ Mr. Butler
It would be wrong to say that there was no chance of offsetting them. It may well be that when the final settlement is made, the amounts are approximately the same. That would amount to an offsetting. As the final conclusion of the agreement is not yet made, however, I could not give a final answer. I can only assure the hon. Member that this matter came prominently into the discussions.

§ Mr. Gaitskell
Will the Chancellor give an assurance that he will press this matter? In the conversations, did he insist that before we reach any agreement about paying our debt to E.P.U. and, therefore, to Germany, the West Germans would, for example, speed up the repayments of their debt to us?

§ Mr. Butler
I could not do that without consultation with the other Governments concerned; as the right hon. Gentleman knows, the London understanding of December, 1951, was made with other Governments besides our own. It was also made upon what I think are fair terms. I am anxious to see that no undue liability is laid upon the British taxpayer. When the final arrangement is made, I think I shall certainly be able to indicate that the settlement is fair to all concerned.

§ Mr. Jay
Has the Chancellor made an agreement on the United Kingdom's debt to Germany more favourable to the creditor than that on the previous debt owing by Germany to the United Kingdom?

§ Mr. Butler
As usual, the right hon. Gentleman is rather premature in this matter.