HC Deb 05 December 1956 vol 561 cc1411-8

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Godber.]

11.27 p.m.

Mr. J. K. Vaughan-Morgan (Reigate)

The matter which I wish to raise is cognate with and apposite to the subject we were discussing earlier. It is the question of our dollar imports from the United States. This country has to find more dollars to pay for its oil, and it seems to some of us that the Board of Trade should seize this opportunity to review our present dollar expenditure.

Accordingly, I put down two Questions to my right hon. Friend the President of the Board of Trade on 27th November, 1956. I draw the attention of the House now to one remark in the Parliamentary Secretary's reply. He said: We do not wish to pursue a policy of further discrimination in the realm of trade."—[OFFICIAL REPORT, 27th November, 1956; Vol. 561, c. 214.] I think he was very surprised at the loud bellow, "Yes, we do," which came from the benches behind him. It is clear to most of us on this side of the House that in the present circumstances of stringency it is vital that we should immediately review our dollar expenditure and discriminate against those items which, as far as possible, can be replaced from Commonwealth sources.

The two Questions I put down related to two groups of commodities which, from the knowledge at our disposal, we believe can immediately be replaced from sources within the Commonwealth. The argument which I am putting forward can, I know, be applied to many other commodities. The first Question to the Parliamentary Secretary was whether he would suspend further licences for dollar expenditure on items such as fruit and canned fruit which can be replaced from Commonwealth sterling sources. I received from the Parliamentary Secretary the very unsatisfactory reply: No, Sir."—[OFFICIAL REPORT, 27th November, 1956; Vol. 561, c. 213.] The Parliamentary Secretary added—quite frankly, rather irrelevantly to my question—that most of the imports came in free under the Mutual Security Act, which, I may explain, is part of a very-generous programme under which the United States gives away—not against payment of dollars—the surpluses of its home production which have been subsidised by the Government. My hon. Friend omitted entirely to note that my Question referred to expenditure and that the fund made available under the Mutual Security Act can be diverted from one commodity to another. It therefore, is not an answer to say, as he did, that the licences already issued cover fruit from the United States under the Aid Programme. I was referring to those items for which actual cash has to be found.

My second Question raised the matter of our tobacco imports from the United States, an even more glaring example of where economies in dollar expenditure could, in my view, be immediately made. The Question I put did not ask my right hon. Friend to cut down drastically the importation of dollar tobacco. It asked what steps he was taking to promote the substitution of Commonwealth grown tobacco for tobacco of dollar origin.

Here again the Answer was very unsatisfactory indeed, in fact, it was a confession that no steps are being taken by the Board of Trade at present to promote that substitution. Once again, in parenthesis, may I explain that the present dollar content of the United Kingdom manufactures is about 61 per cent. The House should visualise that figure against the background that in 1939 the dollar content was 100 per cent. and on the margin of between virtually 100 per cent. and 61 per cent. there has been built up a very flourishing Rhodesian tobacco industry and tobacco industries in other parts of the Commonwealth.

At a time when we are conscious of this dollar stringency, it is rather tragic to see that the President of the Rhodesian Tobacco Association has appealed to producers to reduce their crop next year in order to avoid over-production. I feel it is probable that when he replies my right hon. Friend will refer to the fact that we cannot overnight, or very quickly, change the composition of tobacco which goes into a popular brand of cigarettes. I fully appreciate that argument; we cannot change it all at once, but, as in the past half generation, we can make gradual changes. In fact, the dollar content which now is 61 per cent. at certain times has, I believe, been as low as 55 per cent., which only shows what can be done if we really try. If we made a change in the dollar content of 2 per cent. per annum it should be remembered that in one year this country would be saved 3½ million dollars. That would give a further very satisfactory fillip to the Rhodesian tobacco industry at present.

I do not propose to go through the whole range of our dollar imports, and I do not propose even to give further details about the commodities I have mentioned. That would be inappropriate, but I—and, I think, many of my hon. Friends—feel the Board of Trade should at present and in present circumstances review very carefully what we are buying from the United States of America and set itself the task of trying to divert as much of our expenditure as possible to those in the Commonwealth who are and always have been our staunch friends.

11.34 p.m.

The Minister of State, Board of Trade (Mr. A. R. W. Low)

I should like to thank my hon. Friend the Member for Reigate (Mr. Vaughan-Morgan) for the clarity with which he has put his points. He is, of course, well versed in the great possibilities there are in developing the production of Commonwealth natural resources. I think that we should all like to thank him for his activities in encouraging the development of Commonwealth natural resources, and for the close interest which he shows.

In the course of my speech, I will try to answer the points my hon. Friend has made, both on this occasion and when he asked Questions of my hon. Friend the Parliamentary Secretary, to which he referred. I should like at once to say that I do not accept—and I hope that my hon. Friend will forgive me for saying so—his criticisms of my hon. Friend the Parliamentary Secretary, and, as he will see, everything I am now about to say supports the line which the Parliamentary Secretary then took.

I want, first of all, to deal with the general points which my hon. Friend the Member for Reigate has raised about dollar imports. I think he really bases his case for stricter import licensing of some dollar goods on the need to conserve dollar resources—he is anxious to save our foreign exchange. That is recognised internationally, as he knows, as a proper use of import restrictions, and he also knows, I think, that it is not consistent with our general obligations, or our policy, to use quota restrictions to give our home producers protection, or to give Commonwealth producers a preference. The proper method of protection is the tariff, and the preference is secured by Commonwealth duty free entry.

The question which my hon. Friend asks us to consider tonight is whether, because of present conditions, it is wise further to restrict certain imports from the dollar area, for balance of payments reasons. My right hon. Friend the Chancellor of the Exchequer, in the course of his statement yesterday, used these words: …we must do everything possible to maintain and increase the volume of world trade on which we, perhaps more than any other country, depend. For this reason, apart from any others, I would regard it as wrong to extend import controls in present circumstances."—[OFFICIAL REPORT, 4th December, 1956; Vol. 561, c. 1054.] Those general considerations to which my right hon. Friend referred are paramount. They are just as operative in our trade with the United States or Canada as in our trade with any other part of the world. The United States is our second largest market, and provides a good expanding market for our manufactured goods. But the soundness of that market depends on the progress of the more liberal trade policies to which both our Governments are pledged. We must, both of us, keep up the steady momentum of the reduction of trade barriers. A move backwards would do harm. And though we here are free to impose greater restrictions if our balance of payments forced us to do so, we should not lightly set our foot on the restrictive path.

Canada would be affected by any tighter restrictions we had to impose on dollar imports. Our exports to Canada have run this year at about 30 per cent. above last years' rate. No one would wish, I am sure, to restrict beyond the present level Canada's opportunity to sell her products to us. In fact, I think that, in general, we all want to see fewer, not more restrictions upon our trade with Canada, and on our trade with the United States. We cannot afford to relax now, and we have not been able, generally, to do so since 1954, but, when we can, we shall take another step forward.

Those are the general considerations, and I should like now to turn to tobacco and then to fruit.

As my hon. Friend has said, the North American tobacco content of our cigarettes has been steadily reduced. In fact, since the war it has come down from 90 per cent. to 61 per cent.—in 1954. This reduction saves us now about 50 million dollars annually, and that, of course, has been made possible because of the satisfactory development of Commonwealth growths. I agree with what my hon. Friend said about that. The dollar content still stands at 61 per cent., and the dollar allocations are given on that basis. There is nothing sacrosanct about the figure of 61 per cent. but there is a strong risk that a further reduction would change the character and flavour of the cigarettes and that would almost certainly result in a reduction in the smoking of cigarettes. The United Kingdom Revenue would suffer, but so would Rhodesia to whom the knowledge that their tobacco was a slightly higher proportion of our cigarettes would be poor consolation for an actual reduction in the quantity of tobacco being sold to us.

Mr. Vaughan-Morgan

Can my right hon. Friend confirm that the dollar content has, in fact, at one time been down to 55 per cent.?

Mr. Low

I was just coming on to that point. I understand that 61 per cent. is the lowest that the dollar content has ever reached, but I do understand that the United States content—there is also some Canadian content—has been lower than the 61 per cent. I cannot confirm exactly whether it is 55 per cent. or 50-something else per cent. I think that clears up the point.

The United Kingdom takes between 50 and 60 per cent. of the Rhodesian tobacco crop. In theory, by paying higher prices United Kingdom manufacturers could get more at the expense of Rhodesia's other customers, chiefly Australia and South Africa, but that would add to our costs and also it would drive Australia and South Africa to replace with dollar tobacco.

Mr. Vaughan-Morgan

No.

Mr. Low

My hon. Friend says "No", but I understand that allowing for these purchases, United Kingdom manufacturers are, in fact, buying all the available non-dollar tobacco, of reasonable quality, and therefore if they are to get more tobacco of reasonable quality from Rhodesia somebody else has got to get less.

Mr. Vaughan-Morgan

I do not think that is true, with respect. When I was in Rhodesia only a few weeks ago the President of Rhodesia Tobacco Associated appealed publicly to producers not to produce less in this year but to produce no more. They could produce more. There is more land coming into cultivation.

Mr. Low

It is a question of quality here. I can only give my hon. Friend and the House the information that I have available. I think he knows that our manufacturers have an arrangement with the Rhodesian growers to furnish them each year with an estimate of their requirements for each of the three years ahead. There is, therefore, this close liaison. As he knows, the Government do not buy tobacco. The arrangements for purchase are between the manufacturers here and the growers. In fact, nearly all the money to be spent on this year's allocations covering the period ending July, 1957, is fully committed and no significant saving could, therefore, be secured now by any change of policy, even if we were minded to make it.

Now I will come on to the question of fruit. In the course of his Questions to the Parliamentary Secretary, my hon. Friend referred to fruit and soft fruit, and in the course of one of his supplementaries I think he was referring to apples when he called them soft fruit. As I understand it, apples are not soft fruit, and that may account for one of the differences of opinion which he had with my hon. Friend the Parliamentary Secretary.

The position about our imports of fruit from the United States is that it is only imports of apples from the United States which actually cost dollars. Dealing with apples first, our total imports of apples are considerable. In the first ten months of this year their value was £13⅓ million. Over three-fifths of that comes from the Commonwealth sterling area, in the Southern Hemisphere. Slightly under one-fifth comes from Europe and slightly under one-fifth comes from Canada and the United States.

Of the North American apples, some are allowed in before Christmas. Before the war, most United States and Canadian apples arrived at this time of year. Now, only about one-fifth of the total quota are imported during the period 16th November to 31st December. These arrangements take account of our need to spend our dollars in such a way that the bulk of the North American apples arrive when we need them most, that is to say in the period January to March, when other supplies are not available in sufficient quantities.

For this season, that is, the 1956–57 season, Aid funds were not available for United States apples. They had been available for the two previous seasons. Last season our total dollar expenditure on apples was £1 million, which was solely for apples from Canada. The £700,000 worth of apples from the United States cost us no dollars, because they came in under Aid.

This season we have increased the dollar expenditure to £1¼ million, but since there is no Aid the total quantity of apples imported from North America will in fact be lower. It is not practicable to have an import quota for Canadian apples and refuse a quota for United States apples. To do so would be contrary to our obligations under Article 13 of the G.A.T.T., and it would be a great mistake to think that the Canadians would thank us for it, for they firmly believe in the principle of nondiscriminatory use of dollar import licences when we have to impose them for balance of payments reasons.

The licences for this season's apple imports have already been issued, and contracts will have been made on the strength of them. I do not think that, even if my hon. Friend considers the arguments in favour of our current policy are not convincing, he would wish to cause the dislocation and hardship involved in the cancellation of the licences. What we shall do next season will be decided in the summer.

The only other item remaining to be dealt with is canned fruit. Our total canned fruit imports in the first ten months of this year have in fact been higher than they were in the same period last year, just under £35 million against £29½ million last year, an increase of over £5 million. Of this year's total, the Commonwealth imports account for £23,200,000, which is an increase of £1,100,000. Imports from the United States account for £2,700,00, an increase of £1,900,000; but all the United States imports of canned fruit were under Aid and cost no dollars at all.

Mr. Vaughan-Morgan

May I refer again to that fact, which I mentioned in my speech? Under the M.S.A., it is possible to apply for the allocation to be switched to other commodities, and I would suggest that it would be of far more use to import maize, which we need, than apples and canned fruit, which we can get from Commonwealth sources.

Mr. Low

These matters are carefully considered and discussed and plans are made, and I do not think it is possible to alter them now. We make the best use of the very generous aid that we get from the United States, and I assure my hon. Friend that the kind of point he has mentioned, as to how we should best make use of the aid that we are given, is always in the minds of the Government. It is, however, fair to say that the giver of the aid himself must have some say in exactly how it is used.

I hope that having been given these facts, my hon. Friend will accept that we have paid close attention to the points he has put to us and that we are acting rightly in what is, after all, an important matter affecting our trade as well as our balance of payments.

Question put and agreed to.

Adjourned accordingly at eleven ninutes to Twelve o'clock.