HC Deb 31 March 1955 vol 539 cc556-60
The Economic Secretary to the Treasury (Mr. R. Maudling)

With your permission, Mr. Speaker, and that of the House, I should like to make a short statement.

A new Trade and Payments Agreement between Her Majesty's Government and the Government of Argentina was signed in Buenos Aires today and will remain in force until June, 1956. The previous Agreement expired last June.

The new Agreement is the outcome of negotiations which have been proceeding for some months on the basis of the conclusions reached in the discussions with Argentine Ministers held last May in London. It takes account of the changes which have taken place since the last Agreement was signed in 1949, and particularly the progress that we have made towards freer trade and payments. In this country, most Argentine exports are now admitted on open licence and trade in all of them has been returned to private hands.

On the trade side of the new Agreement, the two Governments have agreed to use their best endeavours, within the limits of the powers which they normally exercise in these matters, to facilitate trade in accordance with agreed estimates of trade in various categories of goods. This undertaking is subject, in the case of Argentina, to sterling being available.

So far as the export of capital goods to Argentina is concerned, the export credit facilities which are already available in the United Kingdom have been explained to the Argentine authorities. It is estimated that, with the help of the normal facilities available to exporters, including those of the Export Credits Guarantee Department, orders up to a value of £25 million may be placed during the term of the Agreement.

The Argentine Government have undertaken to facilitate the export of all types of meat to the best of their ability. Apart from residual shipments under the Ministry of Food contracts which formed part of the old Agreement, meat, with the exception of pork, is now being imported in the ordinary course of private trading under open licensing arrangements.

So far as payments are concerned, the new Agreement renews the credit and dollar point facilities which have been available since 1951 under the supplementary Protocols to the last Agreement. As regards credit, this means that, whenever the Argentine sterling balance with the Bank of England is insufficient to meet Argentina's commitments to the sterling area, the Argentine Government can make drawings up to £20 million. Any advances outstanding at 30th June, 1956, are to be repaid by 31st December, 1956.

These facilities have not previously been utilised by the Argentine Government. The renewal of these facilities will involve the presentation of a Supplementary Estimate in next financial year for the Vote of Foreign Office Grants and Services—Class 11.2. If the credit is drawn upon by the Argentine Government before the Supplementary Estimate has been approved by Parliament the money required will be provided from the Civil Contingencies Fund.

As regards financial remittances, I am glad to say that the Argentine Government have agreed to make special arrangements to meet, on a limited scale, our request that financial remittances should be resumed. It is expected that about £1½million of arrears of interest, profits, dividends and other income will be transferred between now and 30th June, 1956. This figure includes remittances in respect of pensions, which have been the subject of arrangements with the Argentine Government over the last three years outside the scope of the discussions on trade and payments.

The Argentine Government have also agreed to transfer before 31st July next the funds required for settlement of the sums due to sterling area holders of the 4 ½per cent. Province of Buenos Aires Loan of 1910.

As regards shipping, the agreement contains a clause under which the two Governments undertake to refrain from discrimination in the trade between the two countries.

The full texts of the Trade and Payments Agreement, together with the trade estimates, will be published as soon as possible.

Mr. Gaitskell

Could the hon. Gentleman throw a little more light on the implications of this Agreement? Am right in supposing that, while we appear to allow Argentine imports into this country freely, the Argentine still continues to maintain severe restrictions on exports from this country to Argentina? Is not this a very unsatisfactory situation? Can the hon. Gentleman also say what proportion this payment of arrears on interest, dividends, and so on, bears to the total amount outstanding? Are current remittances now to be allowed? Can the hon. Gentleman throw light on those points?

Mr. Maudling

Certainly. The Agreement envisages that trade between Argentina and the sterling area shall be balanced at a level of about £85 million either side and, subject to the availability of sterling, the Argentine Government will issue the necessary licences, in total, to cover that figure.

Dealing with financial remittances, this is a start on what until now, with the exception of pensions, has been completely blocked, and, of course, arrears will be dealt with in chronological order. I agree that a sum of £1½ million is not a very large sum relative to the amount which is blocked at the moment, but it is a beginning and it is more than the Argentine has done for any other country.

Mr. Gaitskell

Could the hon. Gentleman say what will be the net effect of all this on British exports?

Mr. Maudling

I hope that the effect will be to maintain the level of British exports and, in fact, to give further opportunities, particularly for capital goods, but it will depend on the competitive position of British exports in that market.

Mr. Osborne

In this Agreement was any consideration given to a promise which has been made by the Argentine Government to facilitate the export of consumer goods from this country to the Argentine, especially of textiles? In the last Agreement a specific promise was made that about £3 million worth of consumer goods would be imported by the Argentine, and that that would include a considerable quantity of textiles. That promise, I believe, was never honoured. Is anything being done this time to help our consumer exporting industry?

Mr. Maudling

My hon. Friend will see, when the Agreement and trade estimates are published, that in the list there are details of the various goods to which he has referred. In the case of textiles —which are particularly important at the moment—the Argentine does not permit the import of textile piece-goods from any country, but we have been assured that if imports from anywhere are permitted we shall be accorded most-favourednation treatment. There is in the list an estimate for cotton yarn to the extent of £700,000.

Mr. H. Wilson

Does the hon. Gentleman recall that in the debate on the Anglo-Argentine Agreement on 3rd July, 1950, and in questions after another statement on 24th April, 1951, bitter criticisms were made by hon. Gentlemen opposite on the ground that the Argentine Government have given many assurances about both remittances and import licences and that these assurances have not been honoured? What has been done on this occasion to get a better guarantee that the assurances given in the new Agreement will be carried out?

Mr. Maudling

In this case we have, for the first time for a long time, received categorical assurances on the subject of remittances which I regard as of great importance.

Mr. Holt

Is the hon. Gentleman aware that the Government have recently been under severe criticism on account of appearing to encourage flag discrimination as a result of Government contracts of a certain sort with America? Does he realise that the fact that he has, in this new Agreement, put in a clause to prevent such flag discrimination will meet with general satisfaction?

Mr. Maudling

I am glad to reiterate this Government's firm adherence to the policy of no flag discrimination in matters of trade.

Mr. E. Fletcher

Can the hon. Gentleman say what is the proportion of the total British assets frozen in the Argentine that will be released under the Agreement?

Mr. Maudling

The figure I gave for releases to June of next year is Eli million. I think I am right in saying that the present amount frozen is about £7 million, but the hon. Gentleman will find the figures in the paper.

Mr. Collins

Among the difficulties in trading with the Argentine in certain commodities have been the arbitrary valuations put on Argentine currency which vary between commodities and the abrupt changes which have been made. In the discussions, has any effort been made to produce some order out of that chaos?

Mr. Maudling

We have never concealed our dislike of multiple exchange practices, but I will certainly examine that point.