§ 4.49 p.m.
§ The Minister of State, Board of Trade (Mr. A. R. W. Low)
I beg to move,That this House approves the action taken by Her Majesty's Government in the 1956 tariff negotiations at Geneva as reported in Command Paper No. 9779.This Motion enables us to discuss the outcome of the 1956 tariff negotiations held at Geneva. These negotiations were fourth in the line of multilateral tariff negotiations held under the aegis of the General Agreement on Tariffs and Trade. The earlier three were held in the time when right hon. Members opposite were in office, at Geneva in 1947, at Annecy in 1949 and at Torquay in 1951. The initials of these places form the first three letters of the G.A.T.T., and it was, I am told, a matter of regret to some people that the 1956 negotiations did not take place at a city beginning with the letter "T", such as Toronto, or Taormina in Sicily, which had been suggested.
We took part, along with twenty-one other countries, in the 1956 negotiations, because it is our policy to help our exporters by seeking mutual reductions of tariff barriers and by creating more stability in the level of tariffs they have to face in foreign countries. The inclusion of the rates of duty in the schedules to the General Agreement, which is one of the results of negotiations like this, as the House will see in paragraph 1 of the Appendix to the White Paper, has that stabilising effect.
We have no doubt that tariff negotiations held with these objects in view are better carried out on a multilateral basis than by a series of bilateral agreements. When we make a concession on our tariffs, the benefit goes to more than one country because of the most-favoured-nation rule, and so it is easier to take advantage of that benefit if negotiations are proceeding at the same time with the countries mainly concerned. Likewise, concessions made toy other countries in favour of third countries may have some benefit to us. In short, multilateral negotiations can cover a wider area of tariff concessions than bilateral negotiations, and they can take place more quickly with fewer men.
982 The immediate occasion for the 1956 negotiations was the passage through the United States Congress in the summer of last year of legislation empowering the United States administration to reduce Customs duties in three annual instalments. If we were to take full advantage of this, we should have to complete negotiations so that the first instalment could be effective on 1st July, 1956. That legislation of the United States provided that their Government could reduce to 50 per cent. any rate of duty which was greater than 50 per cent., and that in any other case they could reduce by 15 per cent. the rates in force on 1st January, 1955.
That necessarily set strict bounds to the general level of reduction in tariffs that these negotiations could bring about, but it did allow some important advances to be made and it gave hope of useful agreement between ourselves, the United States and other countries.
We had not been able to reach any agreement with the United States in the Torquay discussions in 1951, as the right hon. Member for Rochester and Chatham (Mr. Bottomley) will remember. Indeed, since 1947 there had been no reductions in those of their import duties that mainly affected us. It is right, I am sure, to keep up the impetus of the move to lower trade barriers everywhere in the world, and we have always been anxious, as I think were right hon. Gentlemen opposite, to seize every opportunity offered to us of negotiating reductions in the United States tariff. All this explains why we joined in these negotiations and also why they were held early this year.
Before the negotiations could begin we, like the other countries taking part, had to decide what concessions we wanted from other countries. We drew up lists of these after consultation with industry, In some cases we asked for a reduction of duties; in other cases we asked for an undertaking not to increase the duty above the existing level. That is called "binding" a duty. It is a recognised principle in these negotiations that from the bargaining point of view an agreement to bind a low duty is equivalent to an agreement to reduce a high duty.
Then we had to decide what concessions on our tariff we would be prepared to offer in response to requests received in order to obtain the concessions which we wanted from others. We could not 983 expect to gain benefits if we did not pay for them. This required even closer and more thorough consultation with a number of our industries. All the trade associations concerned were written to, and if there was no trade association concerned, letters were sent to representative firms.
A large number of meetings were held—I think 100 meetings in all—attended in virtually every case by a member of our negotiating team. The object of our consultation was to ascertain the degree of risk involved in a small reduction in our tariff; I have myself studied the records of a great many of these meetings and I know the careful consideration that was given to advice received from industry. Industrial members of the Board of Trade Consultative Committee for Industry have expressed their appreciation of the way in which this consultation was carried out. The final list of concessions on which we decided, and to which the various Orders to be considered later give effect, embodies no reduction, so far as I am aware, that should do serious harm to any of our industries.
During the course of this consultation some industrial associations expressed their fear of dumping, but these fears and the danger of dumping, which of course I acknowledge, should not affect the general level of our tariff or, indeed, the concessions that we are discussing today. The way to deal with these years is through anti-dumping and countervailing duties, for powers to impose which we are about to ask the House.
Throughout the negotiations and the preparation for them, we were in constant touch with the Commonwealth Governments who might be affected by any concessions on our tariff. Several valuable concessions were, in fact, withheld because Governments of Commonwealth countries most concerned attached particular importance to our not granting them.
Negotiations started in January, 1956, and lasted in all nearly four months, and at the end we had made successful agreements with the United States, Western Germany, Norway, Sweden, Finland, the three Benelux countries and Italy.
In the outcome, as the White Paper explains, we gained benefits from tariff concessions covering in terms of 1954 984 trade about £104 million worth of our exports into the countries taking part in the negotiations with us. Of this, some £79 million represents items on which the duties now levied are to be reduced, and £25 million is represented by bindings. In return, we granted concessions on our tariff covering imports from the countries who negotiated with us to a value of about £94 million in terms of 1954 trade. Of this, £70 million represents a reduction of duties and £24 million represents bindings of existing duty-free entry or current rates of duty.
The House will see that paragraphs 10 to 12 of the White Paper refer to the effect on Commonwealth preference of these negotiations with various countries. The important points are these. First, there is no significant Colonial interest in items in which the United Kingdom tariff has been reduced. Second, for certain products which are not admitted free of duty here from Commonwealth sources—for example, motor cars and certain artificial silk products—the existing ratios of preference have been retained when the duties have been reduced. Third, and most important, no margin of preference enjoyed by the United Kingdom has been reduced below its contractual level and no margins of preference guaranteed by us under existing trade agreements with other Commonwealth countries have been affected by any reductions in our duties.
It may be said about these figures that a bare statistical comparison of concessions given and received is open to objection. I agree that that is so, but I do not think there is a better way of estimating the overall advantage or disadvantage of such negotiations. This statistical comparison which I have given is based upon the same principles as those applied in the comparisons made by the right hon. Gentleman opposite in the earlier Agreements.
Nevertheless, it would be wrong for me to shirk the shortcomings of the comparison, and the right hon. Gentleman never did. The pattern of trade, has, of course, changed since 1954, as has the relative importance of the goods concerned. Due weight is not given in the comparison to the extent of the reduction in individual duties, nor is account taken of the nature of the goods involved—for example, whether they be manufactured goods or raw materials. Taking these 985 factors into account, it could be argued that a greater balance of advantage may lie with the United Kingdom than the figures quoted in paragraphs 5 and 7 of the White Paper, and which I have quoted, would indicate. Though we have always stressed that the result of these negotiations could not, by reason of the United States legislation to which I have referred, be more than modest, I do. say that the results, from the point of view of our exporters, are not as meagre as some had expected that they would be.
Before I comment further on the gains I should remind the House, as is mentioned in the White Paper, that the concessions we have gained from the United States include compensation due from them in respect of the increases made by them in their duties on bicycles; increases which were introduced in August, 1955. They had undertaken not to increase these duties on bicycles and so had to pay us compensation by reductions elsewhere in their tariff.
There is one other thing I ought to say before I talk about the gains and benefits. Since we are dealing with the implementation of the negotiations, hon. Members should know that the Orders for reductions of duties, which are before the House, include some items not directly covered by the commitments made in the negotiations. They are included—indeed they have to be included—'because it is impossible for administrative reasons to give them in the tariff a different rate of duty from the items covered by the commitments entered into in fine negotiations.
In previous negotiations it had always been found necessary to include in the Orders implementing the commitments made in the negotiations items not covered by the commitments themselves, but reduction of whose duties was consequential on the commitments. I am satisfied that no negotiating advantage would have been secured by including these miscellaneous "fringe products"—if I may be allowed to call them so—in our offers to other countries; and it is quite clear that the problem is not of sufficient account to upset the balance of the negotiations.
Now I wish to say something about the gains. A fairly full summary of the gains to our exporters resulting directly from 986 the negotiations to which we were a party is given in paragraph 8 of the White Paper; and the House will see that many of our important exporting industries will gain from the reductions in duties, slight though a reduction of about 15 per cent. of the rate of the duty may seem to be. In the case of the United States, motor cars, aeroplanes and parts, most electric motors, certain manufactures of linen, some leather footwear, some wool clothing, china clay and whisky are among the United Kingdom products benefiting from the concessions; and the total amount of imports from the United Kingdom into the United States in terms of 1954 trade covered by these concessions was, as the White Paper says, about £59 million. That covers 39 per cent. of our exports to the United States in 1954 terms.
We also gained valuable concessions from Western Germany, including concessions on motor cars and other things, among them some textiles, and also from the Scandinavian countries, the Benelux countries and Italy. I will not repeat what the White Paper says about that. I do not think that we shall be found to have paid too dearly for these gains for our exporters.
I now turn to the concessions which we gave. I cannot, of course, attempt to cover this subject in detail. Indeed, the House would not like it if I did. I propose to pick out some of the important sections of our imports which are mentioned in paragraph 6 of the While Paper. If questions are asked on those or other points during our debate, I will, with the permission of the House, attempt to answer them at the end.
First, agricultural commodities. Ws had a number of requests for concessions on cereals, meat, cheese and eggs, but we refused them all except for two. We agreed to bind the duty-free entry of maize in grain except flat white and we agreed to bind the 10 per cent. rate on grain sorghums. The concession on maize was regarded as an important concession by some countries.
In horticultural products we refused about a dozen requests for concessions, but we agreed to two reductions of duty. The first one relates to horse-radish root unprepared, which is reduced from 10 per cent. to 5 per cent. The second is on Azalea Indica shrubs which comes down from 10 per cent. to duty free.
§ Mr. Low
Then we come to a more important field, that of machinery and tools. We agreed to make slight reductions over a wide range of machinery and tools. In the main, the reductions are from 20 per cent. to 17½ per cent. which is a reduction of 12½ per cent. on the rate of duty. There are some exceptions. Goods on which duties were not affected include, for example, ball bearings, knives and fully-fashioned hosiery machines. Very few reductions were agreed to on machinery bearing lower rates of duty than 20 per cent., but milking machinery and parts is an example of a reduction from 15 per cent. to 12½ per cent.
Now I come to motor vehicles. The agreed reduction on our duties on motors and motor vehicles is from 33⅓ per cent. to 30 per cent. and was an important concession in our negotiations with the United States and Germany; which negotiations resulted in reductions of the same order in their duties on motor cars. We also were able to get reductions in the Italian duties on agricultural tractors from 36 per cent. to 32 per cent. The preferential ratio enjoyed by Commonwealth motor vehicles has been retained; that is, they pay two-thirds of the most-favoured-nation rate of 20 per cent.
We agreed to make a number of reductions in the duties charged on imported paper, but not on board which remains mainly at 20 per cent. These concessions were made in our negotiations with the Scandinavian countries. Indeed, without them we should not have secured any agreement with those countries.
Then we come to silk and artificial silk duties which were originally revenue duties but have, of course, afforded substantial protection, and will continue to do so. These duties embody both specific and ad valorem charges. Their effect varies between type of product and price of product. Until the new Order took effect the maximum ad valorem incidence on yarns and tissues of silk or artificial silk was about 75 per cent. and the minimum about 23 per cent. The average incidence was 26 per cent. for yarn and 40 per cent. for tissues. The concessions we have given reduce the maximum incidence to about 70 per cent., from 75 per cent., but only lower the average 988 incidence very slightly. The reductions included in the Silk Duties No. 2 Order, 1956, cover raw silk, silk yarns and artificial silk yarns and artificial silk tissues but not silk tissues.
They also cover discharged silk waste, cocoons and noils. The two latter were not covered by commitments, but reductions were necessary in order to safeguard the interests of our silk-using trades. The Commonwealth preferential rate is at five-sixths of the most-favoured-nation rate, the same ratio as it has always been. The reductions will be found to be small, but our ability to make these reductions was critical in securing an agreement with Italy, and it was helpful in our agreement with Benelux.
There is before the House a Safeguarding of Industries Order which affects the Key Industry Duty. This Order includes a number of reductions from high, or relatively high, levels of duty to slightly lower levels. Examples are: still projectors from 50 per cent. to 42½ per cent.; a few precision gauges and measuring instruments from 33⅓ per cent. to 25 per cent., and most other precision gauges and measuring instruments from 30 per cent. to 25 per cent. The reduction in key industry duties is not a new thing. The right hon. Gentleman the Member for Rochester and Chatham negotiated reductions in 1947, and, indeed, took power under the Finance Act, 1948, to make reductions in the duties, following tariff negotiations, by Order. There was no power to act by Order before.
There are, of course, a number of other reductions which I have not mentioned, but I should like to mention two increases in duties which were previously bound, increases which we have been able to negotiate at the same time as the other negotiations. These increases are covered in the Additional Import Duties (No. 3) Order, and relate to fruit stocks of Mailing varieties and to Kentia palms.
The House may like to know what all those things are. The fruit stocks of Mailing varieties are descended from stocks which were approved, as to their horticultural qualities, by the Mailing Research Station in Kent. They consist almost entirely of fruit tree stocks-apples, pears, plums and cherries—and are used for budding or grafting with commercial varieties. They include little, if any, soft fruit.
989 The Kentia palm is the name applied collectively to four species of plants, namely, cocos weddelliana, howea belmoreana, howea forsteriana, and phoenix canariensis. The adult palm is a tree of considerable height, but, so far as is known, there is no trade in the adult palm. The import trade is in the juvenile plant, up to eight years old. A characteristic of this tree is that the growth of the trunk is delayed, so that, when young, it lacks a tree-like stem and bears some resemblance to an aspidistra. It is imported in pots of earth and is used solely for decorative purposes; for example, in palm courts in hotels. It is not usually found in private houses, for which it tends to grow too high.
§ Mr. John Rankin (Glasgow, Govan)
Will the Minister of State tell us why the bramble is not included in the group which he has just read out? It is not exactly a soft fruit. He said that soft fruits were excluded, but the bramble does not come exactly within the category of soft fruits. Perhaps he could tell us why it has been left out.
§ Mr. Low
I will try to satisfy the hon. Gentleman's curiosity later on, but these things are very complicated—as he would know if he had to examine our tariffs. Perhaps I can say this. The Order is to make the new duty on these things £2 5s. per cwt. in each case, which is the rate applicable to trees, shrubs and bushes generally. I think that I had better find out if the item mentioned by the hon. Member is covered by the same rate or not.
§ Mr. Low
The rate on the Kentia palms, yes. We were inhibited from introducing that rate because of the binding introduced by the right hon. Gentleman in the 1947 tariff negotiations.
The tariff reductions about which I have spoken earlier are implemented by the three Orders before the House. The three Orders are necessary because three groups of Acts are concerned; the Import Duties Act, 1932, the Finance Acts of 1925 and 1933 for the Silk Duties, and the Safeguarding of Industries Act, 1921. Two of the Orders require Affirmative Resolution, because they contain an increased maximum rate—as in the case of steel tubes—or adjustments in the duty 990 which may amount to an increase. For example, there are new alternative specific rates to which I have referred in the case of artificial silk dresses, and a revised structure of duties on handbags chargeable under the Import Duties Act, 1932.
The last point that I want to make is this. The commitments into which we are now entered will last as long as the General Agreement lasts. There are provisions in the G.A.T.T. for re-negotiation, but withdrawal of any of our concessions could be made only at the cost of offering compensating reductions of equivalent value. As I said at the beginning of my speech, it is our view that it is in the interests of the United Kingdom to seek the maximum amount of stability in the tariffs of other countries, and we would, therefore, hope to set an example not to make alterations in rates covered by negotiations, except in the most exceptional circumstances.
This greater element of stability in the tariffs of foreign countries is, we think, of real value to the exporters. That we have gained stability over a wider range of our trade, even though only a relatively small part of our exports, is a real advantage gained from these negotiations. In addition, as I have tried to show, in gaining that advantage and in gaining the further advantage of a reduction in tariff barriers, we have agreed to reductions in our rates of duty which, when compared with the benefits we have gained, represent a fair deal.
It is for those reasons that I commend the Motion to the House and it is against that background that I hope that, later today, the House will agree to those Orders which require an Affirmative Resolution.
§ Mr. Arthur Holt (Bolton, West)
Does not the Minister intend to offer any explanation of why there are these two or three increases in duty, in what way the public interest is involved, and why it is necessary to put up the duties?
§ Mr. Low
I am sorry—I had to cut short my speech otherwise it would have lasted all night. It has gone on long enough as it is. The increase in these; duties was decided upon after a very full inquiry. The House will remember that a number of horticultural items were the subject of inquiry, and increases in duty 991 about two years ago. The inquiry covered a wider range than the duties then raised, and these two matters were amongst them. It was found to be in the national interest that the duties should go up. We could not put them up then because of the binding, but we have now been able to do so.
§ Mr. H. R. Spence (Aberdeenshire, West)
Will my right hon. Friend be good enough to tell the House whether these negotiations were concerned solely with percentage rates of duty, or whether, in the case of imports from America—where the control may also rest with a quota—the amount of imports was taken into consideration, as well as the rate of duty? I ask because that would have a very direct bearing on what he has been able to do.
§ 5.20 p.m.
§ Mr. A. G. Bottomley (Rochester and Chatham)
It affords us some comfort on these benches that the Conservative Government have at last given support to something started by the Labour Government. Perhaps they have done it because they know that we cannot altogether claim credit for it. The original idea occurred during the wartime Coalition Government when, as we know, there was a conference at Bretton Woods in 1944 which sought to establish some stability in the world by creating an international monetary fund and an international bank for reconstruction and development—means whereby the countries which had been devastated by war could be placed on their feet again and given long-term loans. We also sought an international trade organisation with the object of the reduction and simplification of tariffs and other restrictions on imports.
As we know, that international trade organisation has not effectively come into being. The work which we hoped it would do is done by the General Agreement on Tariffs and Trade. Our discussion is to take place on Command Paper 9779, which is a report on the negotiations under that Agreement.
The document which gives all the details of the changes which have taken place extends to 450 pages. At one time 992 I was a little alarmed by the thought that the right hon. Gentleman intended to go through it for, as he said subsequently, had he attempted to do so we should have been here all night. I am quite sure that we do not want to enter into all those details, and it is certainly not my intention to do so at the moment, but I hope the Government will note that at some time we should like to debate a wider Motion in order that we may discuss what is happening as a result of the comprehensive review of G.A.T.T. which has been carried out.
I gather that the Motion put down today will not confine us narrowly to the details of this document which has been presented with the Command Paper, and I hope that with that acknowledgment it will be possible for me to widen the debate a little further than merely discussing whether the tariff on this or that article should have been increased or decreased by x amount or not.
It is estimated by authoritative people that as a result of the negotiations which have recently ended, United Kingdom trade to the value of £700 million will get some benefit either by lower or bound tariffs. As the right hon. Gentleman rightly said—and I can well understand it, having taken part in earlier negotiations—there had been full consultation with industry generally. I am sure that, as on earlier occasions, the contracting parties to the General Agreement on Tariffs and Trade exchanged their lists of products in which they were interested to receive tariff concessions and that these had been provided by their principal industries. I can imagine the bargaining which went on to make it possible to carry out these negotiations.
As the right hon. Gentleman said, the first, second and third rounds of these negotiations were conducted during the period when a Labour Government were in office, and I had an opportunity of being closely associated with those developments. On this occasion, the fourth round, which has taken place during the period of this Government, was to take advantage of the powers given to the President of the United States under the renewed Reciprocal Trade Agreements Act. As we know, this Act permitted the reduction of any rate of duty which was in excess of 50 per cent. ad valorem down to that figure. On other rates the President was given power under this Act for 993 reductions to be made up to 5 per cent. of their January, 1955, level in each of the next three years. I think it was agreed that they would try to cover all the negotiations at this one time rather than spread them over the three years.
These deliberations took four months, and I am sure that nobody can say emphatically that the results have been a great achievement. More ought to have been done. The Tariff Negotiations Committee had been given extended powers, I gather. I am not sure what this means, but if, after having given it extended powers, this is all that has been achieved, I think it is a very poor effort.
Some of the authorities who have calculated what has been gained in this respect or what trade the changes affect, say that the negotiations will make hardly £5 million worth of difference to trade in any year for the United Kingdom. They consider the possibility of helping our export trade at about 3 per cent. at most. We are fiddling with the problem, and we have not tackled it as we might have hoped if it were to be a successful round of negotiations.
I do not deny that the United States carries the main responsibility for this. On this occasion the United States could negotiate only within the limits laid down by Congress, and I believe it is true that the negotiators did not feel able even to go to those limits. There may, of course, have been an association with elections which were going on, and certainly with the pressure of vested interests of manufacturers, not only in the United States but in all the countries—manufacturers who are against making tariff concessions of any kind, a feeling which we can perhaps understand. It is not only the United States which is responsible, although, as I have said, the United States has the main responsibility, for not allowing these tariff negotiations to be much more valuable than has been the case; the blame also applies to others—to manufacturers in this country and other countries who seek to get protection for their industries by high tariffs.
Clearly, if we are to remove obstacles to trade all nations must accept substantial limitations of their freedom to restrict the trade of others. All that we and the general public know is what has been published in the new tariff rates in the document which is laid before us. I had 994 hoped that the right hon. Gentleman would tell us on what basis the tariff cuts were decided, and perhaps he will later seek an opportunity to do so. I have in mind the example of whisky. We can sell whisky and there is no need for a tariff reduction on it when we have to make a cut equal to this so-called concession. We need not count that as a great gain; it is a commodity which has a ready sale.
I was most gratified to hear the mastery with which the right hon. Gentleman was able to deal with those excellent plants—I will not try to emulate him by naming them—which come from the part of the world where my constituency is situated. But I should like to know why these things had to be brought into the negotiations at all. They are not of great value. I also noticed that tariff concessions were made on horse radish. I do not know who pressed that claim; I should not have thought that it had any great value.
Perhaps the right hon. Gentleman will tell us exactly how these negotiations were conducted in this country. Were they in agreement with industry? Did industry or particular interests in this country press upon the Government that action should be taken in these matters? Did the Government initiate them? Was there arbitrary action on the part of the Government? The general public and the House are not aware of the answers to these questions from the right hen. Gentleman's statement—except that he said there had been full consultation with trade associations and industry. Did tile Board of Trade themselves suggest that these ought to be matters for negotiation, and how and by what means were they put forward? I find it hard to believe that trade interests would have pursued some of the items to which I have referred.
As a result of what I said earlier, we have some idea of the annual general value of trade and the benefits to the export drive resulting from these tariff negotiations. I wonder whether the right hon. Gentleman would give an indication of the effect which the new tariff rates will have on particular importing and exporting industries. We ought to be given some idea whether we shall have a great export drive as a result of these concessions or whether we shall have a flood of imports. I am sure that my right 995 hon. Friend the Member for Smethwick (Mr. Gordon Walker) will be anxious to know what will be the result of the loss of tariffs on the Budget revenue. Perhaps later the right hon. Gentleman will develop this point and give us a satisfactory answer.
The results of the negotiations certainly are not satisfactory, although I do not deny what the right hon. Gentleman has said, that, as far as one can assess them, they are a fair bargain. We acknowledge, as obviously the Government do, too, that the General Agreement on Tariffs and Trade has been a contributor to increased world trade. Nobody would claim that it alone has contributed to that. There are O.E.E.C. and the International Bank for Reconstruction and Development and other agencies which have also helped, but since G.A.T.T. was formed in 1948 world trade has gone up by 40 per cent.
§ Mr. Bottomley
However, I think it would be fair to say that the General Agreement on Tariffs and Trade, judging by this last round of negotiations, is beginning to lose its momentum. I may not now develop this thought, although I wish I could. A new organisation is being formed, and I imagine it is to take over the duties of the General Agreement on Tariffs and Trade. I imagine that the old interim Commission provided by the International Trade Organisation will now become the permanent administrator of the General Agreement on Tariffs and Trade.
Although we cannot debate today the Comprehensive review of the General Agreement on Tariffs and Trade, I think we ought to know where we stand on policy. The President of the Board of Trade at the Ninth Session of the General Agreement on Tariffs and Trade said that the Government's policy was to strengthen and reaffirm the General Agreement. Nothing so bold has been said in this House about it.
As the result of a little research I have found that when hon. Members opposite were pursuing the President of the Board of Trade to learn what the attitude of the 996 Government was to be to G.A.T.T., the President replied:The question of His Majesty's Government's attitude to the General Agreement on Tariffs and Trade as a whole is under consideration."—[OFFICIAL REPORT, 31st January, 1952; Vol. 495, c. 333.]Some months afterwards, on 8th May, 1952, when there was again pressure from Conservative back benchers upon the Minister, my right hon. Friend the Member for Huyton (Mr. H. Wilson) joined in, and the reply by the President to my right hon. Friend was:I have only been in office six months, and he and his hon. and right hon. Friends were in power for six years."—[OFFICIAL REPORT, 8th May. 1952; Vol. 500, c. 530.]The Conservatives have been in office for more than five years now and still we have not had any firm declaration of their policy about G.A.T.T. It is not enough to produce a White Paper and say, "We are going to join the new organisation for trade co-operation." They should come clean and tell the House what is their considered policy.
We ought also to be told by the Government today what they are doing at the Eleventh Session of the General Agreement on Tariffs and Trade now being held. May be they have committed us completely. Perhaps we can be told something about that. What we do know is that the General Agreement on Tariffs and Trade was negotiated in 1948, that it ran until January, 1951, and that it was possible for any country to give six months' notice that it would come out.
We have not done that, but from the last round of negotiations it appears that many countries are discontent. The low tariff countries who feel that their bargaining power has gone have been expressing disagreement, and, indeed, using very strong language on occasions. The primary producing nations such as Ceylon and Australia—indeed, the Commonwealth countries in particular—have been saying that the General Agreement gives advantages to the highly industrialised countries, not to the primary producing nations. I could go on giving other illustrations of how countries are becoming discontented. Brazil has proclaimed herself in favour of further multilateral trade but has no wish to weaken the General Agreement. I think we can all say that. However, what Brazil has said is that her existing tariff system is decades old and 997 no longer capable of safeguarding the legitimate interests of her economy.
When Brazil is saying that, and when at the same time other countries are raising grievances, I should have hoped that we would have asked the committee considering these matters to have given further thought to the question of Imperial Preference. Little has been said about Imperial Preference by the right hon. Gentleman today. Let me remind the right hon. Gentleman that the then President of the Board of Trade, my right hon. Friend the Member for Huyton, is on record as saying that, although in order to get agreement within the group of nations bringing about the establishment of the General Agreement on Tariffs and Trade, and also to avoid destroying the Commonwealth free entry principle, agreement had to be reached on Imperial Preference, when ratification of the General Agreement came about we were free to review Imperial Preference.
At this conference, unfortunately, not all Commonwealth countries took part. I am not one of those who is as full blooded as some hon. Members opposite are in pursuit of an Imperial Preference policy, but I do say that we on this side of the House are keener on that than the Government. We are realists in our approach. I had to be because I was the one, unfortunately, who had to negotiate to bring about the Anglo-Pakistan Trade Agreement. I should really have said "fortunately" because of the pleasure of meeting many good friends. I said "unfortunately" because I was thinking of the tough bargaining there was to bring about the trade agreement. Most of the agreement was on the basis of Imperial Preference.
I recall that on that occasion the Pakistani Minister said to me, "We do not blame you. When you were the paramount Power it was for you to look after your interests, and what amazes us is that you were reasonably fair. You were not unduly selfish. However, you are now more selfish than you ought to be on the basis of an agreement between two independent parties." I remember how we got agreement in due course.
What is true of Pakistan is true of India, true of Ceylon. They accept Imperial Preference as long as it suits their interest. Then there is Australia. This is a tempting subject, but I see you 998 looking at me, Mr. Deputy-Speaker, and so I cannot bring in the Australian Trade Agreement. What we know of Australia is that Australia has a very good tariff fence apart from anything else. It is my belief that more often than not the calculation there is, "Let us put Imperial Preference high enough to keep out all other goods, and then let us put on a tariff a little higher than that."
It is a sad thing that the Imperial Preference system in Australia has been whittled away in the last few days, when it could beneficially have been used, in the arguments going on in recent months, to bring about advantages to both Australia and ourselves at the—
§ Mr. Low
On a point of order. If the right hon. Gentleman raises this matter I shall have to develop it rather fully in reply to him. It seems to me that the right hon. Gentleman is drawing rather a long way from the tariff negotiations held at Geneva. As he said, the Australian Trade Agreement is an interesting subject, but it is not anything like the same subject as the tariff negotiations at Geneva. The trade agreement with Australia was outside those negotiations.
§ Mr. Deputy-Speaker (Sir Charles MacAndrew)
I thought the right hon. Gentleman said he knew that, and he prefaced his remarks on the subject by saying that he saw me looking at him. I thought he was going to leave the matter in a moment. I hope he will now.
§ Mr. Bottomley
I was not going to say anything more upon the subject, Mr. Deputy-Speaker, beyond the final point to which I was leading up. I said I was not going to speak of the Australian agreement, but as a result of it there are preference reductions which, I was suggesting, ought to have taken place at the recent tariff negotiations, where we could have got some bargain for them, which now we have not got. I leave it at that. It is not necessary to say more. I was only leading up to that observation. The right hon. Gentleman jumped in prematurely. I think it shows how nervous he is about the Australian agreement.
Canada has been whittling away preferences. For these reasons I cannot share wholeheartedly the feelings of some hon. Members opposite, particularly of 999 the hon. Member for Wembley, South (Mr. Russell), but I think I have been able to show that on preferences generally we on this side of the House seem to take a stronger view than the Government. My right hon. Friend the Member for Huyton safeguarded our position and the Government has not taken opportunity of this advantage. We, of course, take the even stronger view—that if we want Commonwealth trade developed properly it must be done by means of long-term trade agreements and bulk purchase in addition to preference.
It is not enough for Ministers to give the House the results of the deliberations over many months by very zealous and often over-worked officials. If we are to tackle this job and remove impediments to trade, it must be done by bolder methods. I had hoped that we might have seen the Government calling together all the Commonwealth countries, including those who did not take part in the latest round of tariff negotiations, to consider the possibility of presenting a united policy on preference for consideration by G.A.T.T.
I remember the Government presenting the House in 1952 with a wonderful scheme, during the sunshine period, when they said that industry, finance houses and commercial concerns were being organised and were going to develop the Commonwealth. We have heard nothing about that since then. It followed the Commonwealth economic Ministers' conference. Private enterprise has failed, and I hope that the Government will now consider calling together the economic Ministers to discuss tariffs and trades fully and effectively. As The Times has said,The results of the four months tariff bargaining under G.A.T.T. announced yesterday were inevitably slight in substance.The United States is a high-tariff country. It can be compelled to see that it must reduce those tariffs only by strong Commonwealth action. I am not turning against G.A.T.T. It is an essential and worthwhile organisation, but although the negotiators are to be complimented on very ticklish, delicate and prolonged negotiations, something bolder and sounder is wanted if we are to play our part in expanding world trade.
§ 5.42 p.m.
§ Mr. Ronald Russell (Wembley, South)
When documents like the one which we are now considering are brought before us—and this is about the fifth or sixth G.A.T.T. negotiation that we have considered since G.A.T.T. was formed—the considerations we have in mind are whether the results will damage our home industry in any way and our Imperial Preference system and what effect they will have on our export trade.
My right hon. Friend the Minister of State, Board of Trade, made clear that we had consulted the home industries about the effect on them. Presumably, industry can look after itself, and I agreed with my right hon. Friend when he said that no significant concession had been made on Imperial Preference. I should like to ask a question about the concessions made on imports into the United States from two Colonies, Hong Kong and the Bahamas. I wonder what concessions have been given by those Colonies in return and how far imports, presumably from the United Kingdom and other Colonies, into these two Colonies will be affected. Presumably, we have had to give way on something in order that these two Colonies may get more imported into the United States.
My right hon. Friend said that maize was free-entry bound at the request of several countries. It is already bound by the double effect of the Import Duties Act and the Ottawa Agreement Acts. Therefore, all that we have been doing has been to put a second tie and lock on the door, and make it more difficult to unbind maize if in the future we bring forward some sort of policy for developing its production and that of other feeding-stuffs in the Commonwealth in order to save dollars and other currency.
Again, there is the mutual exchange on motor cars with certain countries, which my right hon. Friend mentioned in some detail. It does not seem to me to mean very much. We are giving away rather more than we receive, because our duties are higher than those of the United States. The White Paper on the subject does not make it clear. Paragraph 8 (a) and 8 (b) of Cmd. 9779 list the manufactures which benefit from a reduction of the United States tariffs in the first instance and German tariffs in the second. They do not make it clear that every 1001 other country that exports the same manufactures also gain from these reductions. Although the duty on motor cars imported into the United States from this country may go down—and if the car is worth £600 it goes down £3 a year for the next three years from £60 to £51—the same applies to German, French, Belgian and other makes of cars, and we still have to compete with those other countries in that market. Again, this concession is not anything like as large as it would appear from the White Paper.
I appreciate that the entry of aeroplanes and parts depends upon quality entirely, and we have been able to sell Viscounts and their parts against any competition. But we would not be able to sell types like Constellation and Stratocruiser parts in that market. Therefore, the concession is quite meaningless. Again, there is the reduction in duties on paper, which largely benefits Scandinavia. Sweden is probably the chief beneficiary. I hope that in return Sweden will take more of our exports, because she is one of the countries with which we have an unfavourable balance of trade. We imported nearly £105 millions worth of goods from Sweden and sold only £77 millions of exports to her in return in the first nine months of 1956. That is an unfavourable situation. I hope that we shall see an improvement as a result of the concession in the case of paper which we have made to that country.
It is difficult to judge what will be the effect of these negotiations. My right hon. Friend takes as his yardstick the value of the trade that will benefit from them, but now we should be considering what has been the benefit, if any, to our trade, and to our Commonwealth trade in particular, from previous negotiations under G.A.T.T., starting from the beginning. We should consider whether we are better or worse off as a result.
I have gone into the problem very carefully. The right hon. Member for Rochester and Chatham (Mr. Bottomley) said that there had been a gain of 40 per cent. in volume of world trade as a result of G.A.T.T. coming into being, but the Commonwealth proportion of world trade has not increased. It has gone down, and that is why I bring into question the whole of this G.A.T.T. policy. For example, whereas in 1950 the Commonwealth proportion of world exports was 32.1 per cent., in 1955 it had gone down 1002 to 27 per cent. There has not been quite such a fall in imports. The corresponding figures are 31.3 per cent. for 1950 and 30.8 per cent. for 1955.
The greatest drop has been brought about in exports from the United Kingdom and from the Colonies. I do not want to weary the House with a large number of figures, but whereas in 1950 our proportion of world exports was 11 per cent., in 1955 it was 9.9 per cent., and in the case of the Colonial Territories it was 6.8 per cent. and it is now 4.6 per cent.
Again, our share of imports into certain Commonwealth countries has gone down. That is worrying, and I cannot but make the point that it was as a result of whittling down to a certain extent the Imperial Preference system. For instance, in 1950 Australia took nearly 52 per cent. of her imports from this country. Last year she took only 44 per cent. On the other hand, the United States' share, small though it was, was 8.2 per cent. in 1950 and has gone up to 11.9 per cent. The same has happened in the case of New Zealand, of Canada and of South Africa. In each case our proportion has gone down, whereas the United States' proportion has gone up.
Perhaps even more striking is the United Kingdom share of the world export of world manufactures. That has gone down from 25.5 per cent. in 1950 to 19.8 per cent. in 1955. Whereas the volume of United Kingdom imports over the six years from 1950 to the first half of 1956 has gone up by 27 per cent., the volume of our exports has gone up by only 14 per cent. and our imports of manufactures have gone up by no less than 57 per cent. I should have thought it was against all sound commercial policy that we should have increased our imports of manufactures, whereas our imports of basic materials have gone up by only 6 per cent. and our exports of manufactures by only 11 per cent.
There is something wrong when that has been the result of our participation in the General Agreement over nearly nine years and of the series of tariff negotiations which have taken place in the intervening period. As the right hon. Gentleman said, the General Agreement may have brought about an increase in the volume of world trade, but it has 1003 not brought us our due share of that world trade, either as the United Kingdom alone or as the Commonwealth as a whole, in either imports or exports. So there is something wrong.
In the Gracious Speech there appears a phrase at the foot of the first page which I was glad to see. It refers to the Government's intention to foster the Imperial Preference system.
§ Mr. Bottomley
It is true that of recent years we have not been gaining the same proportion of trade that has developed, but that is because of the failure of Government policies. If the previous policies had been carried on, the trade would have developed just as rapidly as it did earlier.
§ Mr. Russell
By that intervention I take it that the right hon. Gentleman means that it has happened because we have abandoned the system of bulk purchase and, to a certain extent, long-term trade agreements?
§ Mr. Russell
We have, of course, made other long-term trade agreements in respect of citrus and bananas since the party of the right hon. Gentleman was in power. My point is that we should be able to use the tariff weapon. As the right hon. Gentleman knows, I believe in the system of tariffs and Imperial Preference to regulate trade, rather than the clumsy system of bulk purchase. I appreciate that there is a lot to be said for long-term trade agreements, but those are not the same as bulk purchase. So I was glad to see in the Gracious Speech the phrase about fostering the traditional system of Imperial Preference.
§ Mr. Russell
The word "foster" has not been in every one. It means feeding or nurturing or supporting or causing to grow, according to the dictionary. If it means helping to grow, I welcome it heartily. I hope that the Government intend to foster Imperial Preference to that extent because, as I have tried to show in the figures I have quoted, what is wrong with our trade position is that we have departed from the system of giving, first, priority in the home market 1004 to our home production and, secondly, to the commodities of the Commonwealth.
It is because I hope that the words in the Gracious Speech mean that we shall do something about this, that I welcome what has been said this afternoon. I hope that the agreement will promote the development of Commonwealth and United Kingdom trade instead of the decline which those figures reveal has taken place during the last six years.
§ 5.55 p.m.
§ Mr. Cyril Bence (Dunbartonshire, East)
I am surprised at the attitude of the hon. Gentleman the Member for Wembley, South (Mr. Russell) over the percentage of United Kingdom and Commonwealth trade. The hon. Gentleman said that we were not getting a sufficient percentage of world trade, and seemed to have the idea that by the imposition of tariffs, and by other manipulation, we could assure ourselves of an increasing percentage. I have never believed that. I have always taken the view that if any individual wants to increase his business he must do something about it by working harder. The fact is that we have adopted a tariff system after years of free trade. We had the Ottawa Agreement. Tariffs were put on to increase trade and we negotiated from time to time in an effort to equalise them, so that we have liberalised trade to some extent. But if all countries negotiated successfully over all the commodities entering international trade, including for instance, horse-radish, the final result would be all countries trading in all commodities on an equal basis, and the world would then be back to free trade through tariffs.
Neither Britain nor the Commonwealth has any right to imagine that it is entitled, by some natural law, to enjoy a certain percentage of world trade. We can impose tariffs but, if we do not supply commodities of the type and quality desired, in spite of all the tariffs and manipulations, we shall fail.
We are all aware that some time ago, the Americans put a higher tariff on bicycles. British exports of bicycles to the United States were at a high level because of their popularity there. We negotiated with the Americans and obtained a concession from them. What was the concession? The concession was 1005 given for whisky which is the best selling product in the United States. Indeed, many of my friends in Scotland take the view that whisky is dear here because the Americans buy it so fast. Yet the increased tariff on bicycles hits the Midlands and it hits Nottingham. If at the same time as the tariff on whisky is reduced, the price charged by the exporter from this country goes up in the same proportion, there might be something in it, but I do not think that is the case. However, I do not know what is the price of whisky in the United States or, indeed, here, because I never buy it.
Then there is china clay. It is common knowledge that on the American market British china clay is a best seller for its quality. It is no concession to have a lower tariff on china clay to balance the increased tariff on bicycles, because the clay will sell in America whatever tariff is put on it, whereas the tariff on bicycles really hits us. Then there is wool clothing. All the best people in the United States are now wearing tartans woven in Scotland. The Scottish weaving industry is burdened with orders from America for Scottish wool cloth. It is no concession in that instance. The same applies to footwear and to Irish linen.
We are accepting a concession in the form of a reduction in tariff products which sell easily because of their quality, and yet the Americans hit us with a tariff on our bicycles, in which there is a tremendous trade with the United States. We talk about concessons and about negotiating, and then the right hon. Gentleman introduces the subject of horse-radish. When he negotiated about horse-radish, did he consult the horseradish users' association? Will he tell us whether the tariff on horse-radish has any effect upon the mustard or chutney industries?
Then there is the tariff upon guaranteed Mailing certified root stock. I understand that this tariff has risen. It is a tragedy. The fruit growing industry of Great Britain is a very important one and it was making progress. All our best fruits are grown on grafted stock. Yet we are now to have an increased tariff upon the Mailing stock which is certified by the agricultural station at West Mailing, Kent, as being free from virus diseases.
I forget whether the tariff on horseradish was increased or decreased.
§ Mr. Bence
The concession was on horse-radish in the root only; that is, only if we import it in root form. I presume that if it is made up into horse-radish sauce the duty remains on it. I take it that the reduction in duty when it is in root form is to encourage the horse-radish shredding and manufacturing industry' in this country. I do not know where it is located. I believe that the firm of Coopers of Oxford is a big manufacturer of horseradish sauce, and I think I have had some of its horse-radish sauce in the Dining Room. It is very nice with beef. Maybe the National Farmers' Union had made an appeal to the Government to encourage the consumption of home-killed beef, and so the Government reduced the duty on horse-radish because horse-radish is the traditional sauce to go with beef. Perhaps it was thought that that might help our beef industry and our farmers and might also help the Government to reduce the subsidy on fat cattle. All these things may be interrelated.
Then we have the aspidistra. This is the first time that I have realised that that peculiar plant is a commodity which is an instrument of serious negotiation in the trade of the world. I am sure that the old ladies of the Victorian age would have glowed with pride to know that they had in their windows a plant which was an important negotiable instrument in international trade.
There is also the subject of machine tools. The Government ought to negotiate for the complete abolition of duty on machine tools. There is need for high capital investment, and machine tools cost a great deal of money even without duty, and the development of British industry must go on much faster than at present. We use financial techniques to give concessions to industry in respect of investment, encouraging industry to reinvest, and yet at the same time we place a tariff on the importation of articles which are absolutely essential to those using engineering equipment.
When I visited a machine tool exhibition in this country, I saw many British, Continental and American machine tools together, and I found that many of them were complementary. Many machine tool manufacturers in Britain, United States, Italy and Sweden are not manufacturing competitive machine tools. On stand 1007 after stand one found that multiple machine tools made, say, in this country incorporated other machine tools made in Italy, Sweden, France, Switzerland or the United States. The situation is that machine tool manufacturers in this country have certain plant turning out a first-class product and they do not bother to manufacture another part already manufactured abroad which can be integrated with their product. The situation is that we have a tariff on so-called machine tools when very often, sometimes by agreement, the products of manufacturers in various countries are complementary to each other. This applies to such firms as William Asquith Limited and Craven Brothers (Manchester) Limited.
The machine tool industry is of great importance to us. There is a great need for new design and new technology. Machine tools are not mass-produced products, except for the small ones; they are, in the main, specialised products, and they are becoming increasingly specialised. Machine tools should be completely removed from the field of tariffs.
At the exhibition I saw a machine tool which sold at £800 before the war and now costs £6,000. Another machine, a terrific one, was ahead of it in design. It had an electronic computer and controller and it could be worked by a girl pressing a button. It did in four hours work which the other machine, by manual manipulation, took fifteen hours to do. This machine cost £22,000. One machine costing £22,000 was sold for export, and six of the old-fashioned machines were sold on the home market. The credit squeeze had some influence upon that.
If countries are to impose tariffs on items like these, it means that the amount required for investment in engineering industries will be driven higher and higher, and that in itself is seriously inflationary. The Government ought to try to get the nations of the world to take out of the tariff system all the basic commodities, including machine tools and other items which enter into the general economic and productive processes of the world.
I hope the Government will use all their power and influence to this end. I have no doubt that in terms of trade the Government still have a good deal of influence left. Other issues may have 1008 weakened our position, although I hope not. I am sure the whole House hopes that our influence in the world, if it is not quite what it used to be not long ago, will in the near future recover and that we shall be in a position to give some lead. I hope we shall give a lead in breaking away from the tariff system, which is defeating the objective of scientists and engineers.
Scientists, engineers and agriculturists are trying to produce the most efficient and economical commodities in the geographical locations or environments where production is most economical. Yet financiers and politicians are trying to devise a system whereby they can override the principle of the division of labour and resources, for strategic and other reasons which the hydrogen bomb has made out-of-date, rather than ensuring that various parts of the world produce most efficiently the things which can be produced in those areas.
I know that hon. Members opposite and even some of my hon. Friends may say that this is old-fashioned Liberalism, but really it is not; it is what every business man does. Every industry, every factory and every production engineer does it. It is surely natural. Every farmer does it on his 300 acre farm. He does not try to grow turnips where they will not grow. A system of tariffs does not do what bulk buying does. Bulk buying gives a long-term contract to a nation which is in a physical position to satisfy that contract, and so gives it security, but when we start using tariffs we do not achieve the same objective.
The same thing applies in industry. If we want to get a safe supply from a manufacturer of a small commodity which enters into our industry we give him a long-term contract. We have done this in the motor industry. We get a small manufacturer of studs or badges and give him a five-year contract to produce them at Is. a gross, or whatever it may be. If Britain needs 3,000 quarters of beef or 5 million bushels of wheat per month it is good business for her to go to the people who can produce these commodities economically and give them a long-term contract to provide them. That is far better than fiddling about with Imperial Preferences or tariffs. It is far better to give a man a long-term contract to supply a certain unit of production.
1009 I suppose that this fiddling about with tariffs will go on for many years, but I am convinced that many of us will see this policy so worked out that we shall almost reach a position of a free trade system, with tariffs imposed on all commodities. I hope that when the next Agreement is brought before the House horse-radish and aspidistras will not be factors in international trade.
§ 6.13 p.m.
§ Mr. H. R. Spence (Aberdeenshire, West)
It seemed to me that the hon. Member for Dunbartonshire, East (Mr. Bence) was accusing the Minister of increasing tariffs on our imported goods and applying even higher tariffs against our exports, but the record of this White Paper is one of diminishing tariffs, and that is the whole object of the exercise.
§ Mr. Bence
The hon. Member must get my argument right. What I am complaining about is that other countries are raising tariffs on commodities in regard to which there is some competition in the export market and giving concessions by a lowering of tariffs on commodities where there is little competition.
§ Mr. Spence
It is always easy to argue a particular case but, knowing a great deal about this trade, I congratulate the Minister on having brought down the general level of tariffs. That can only result in good to trade over the whole range of our productive work.
In a sense it is a foreshadowing of what we have been talking about recently—a free trade bloc in Europe. This is a first step towards it. I know that in the list of countries on page 1 of the White Paper several countries outside Europe are included, and they do not come within the scope of our considerations when we have to deal with this problem of a European free trade market. For that reason I think that this is an encouraging step in the right direction.
I now turn for a moment to the question which I asked the Minister, namely, whether quotas were considered at the same time as tariff levels and percentages were arranged. That is a very cogent point, because in the case of our importations from hard currency countries some very rigid limits are laid down by the Treasury as to the permissible amount of goods which may be 1010 imported, particularly in the case of consumer goods, in respect of which dollars are very sparingly handed out by the Treasury.
I was particularly pleased to see from the White Paper that the Minister has been able to obtain a reduction in the tariff levied upon our importation of whisky into America. That is an enormous trade for us; it amounts to about £26 million a year. I know that a few months ago a very strong effort was made in the Senate to draw attention to this free and large importation of Scottish whisky which was going on while, at the same time, there was a very rigid restriction on the importation of American whisky into Britain. I believe that position remains today.
§ Mr. Spence
I offer my thanks to the Minister, and I would say how grateful I am to him for that additional piece of information.
I now return to the general principle which I have been trying to make, that the question of quotas should be brought in. I hope the Minister will consider this because it would help him in negotiating with our customers overseas if he could indicate increases not only of preference in tariffs but also in the quantity of their goods that we can take. I suggest that in future he might consider the quotas on foreign produce at the same time as the tariff level. I am sure that the House welcomes this Report, and I hope that it will approve it.
§ 6.16 p.m.
§ Mr. Gordon Walker (Smethwick)
My right hon. Friend asked a number of questions, to which I want to add a few of my own. I am sure that the Minister will seize this opportunity to restore the good and traditional practice of this House that Ministers do answer the questions put to them—a practice that has been sadly tarnished by the Lord Privy Seal and the Chancellor in the last few days.
I want to look at the figures in this White Paper. The hon. Member for Aberdeenshire, West (Mr. Spence) said that this was an encouraging step towards the freeing of trade and the opening up 1011 of avenues for our exports, but it is really a very small mouse after the mountainous labours which have gone on. If we take into account the salaries paid to all the high-powered people who have negotiated for so long, and measure against that the actual achievements, we see that they are really very unimportant.
All this stuff about aspidistras and horse-radish—I do not know whether it is really worth going through all this to achieve so very little. When one looks at these figures in the White Paper and the Orders one feels no doubt that the impetus behind G.A.T.T. is dying, and we must face it. As my right hon. Friend said, low tariff countries are now beginning to find that they have no bargaining power at all—only high tariff countries have any bargaining power—and they are losing interest, because they cannot get anything out of these talks. Even more serious is the position of the primary producing countries, who find that G.A.T.T. is really a club for the industrial countries, which is certainly increasing the trade between them but is not really contributing in any important degree to encouraging trade between industrial and non-industrial countries. The last annual I.T.O. Report makes that point very clearly, with some very striking figures.
We now have to face the rather alarming fact that countries like Ceylon are openly attacking G.A.T.T. and saying that it is of no use to them and that they will soon have to consider going over to bilateral arrangements instead. Australia, another primary producing country, has said much the same thing. I would ask the Minister whether the Australian Trade Agreement will have any effect upon the various figures set out in the White Paper and the Orders. I take it that it will not.
The real trouble about the position is that although the United States launched G.A.T.T.—it was said to be a most wonderful thing, that was going to create complete free trade all over the world—she did not follow it up. There cannot be any success for G.A.T.T. unless America becomes a real free trading country. All these figures are, in fact, determined by the decision of the United States to make no more than a 15 per cent. reduction in its tariffs spread over 1012 three years. That is what has determined the pattern of the figures laid before us today and they represent an extremely small amount.
The White Paper is really very misleading on this. This way of talking about the amount of trade covered by the concessions, and about it reaching enormous figures, is really totally misleading. It gives not the slightest idea of the actual impact. Indeed, in some cases nothing has happened at all. All that has happened is that tariffs have been bound, so that there is to be no effect on this great field of trade.
My right hon. Friend quoted from the Financial Times, which worked out that the concessions in this can scarcely make £5 million worth of difference to British trade in a year. Is that an accurate figure? Would the right hon. Gentleman question that that figure represents the actual impact on our trade—about £5 million a year? That is really what we want to know when we are judging what is happening. It is no good saying that tariffs have been bound for £100 million of trade. What we want to know is what difference it will make to our trade, and how much of it is in dollars.
As regards dollars, db we gain on balance? As far as the Minister can calculate, are we to gain more dollars even in these very small sums with which we are dealing here? If he could tell us, it would be interesting to know what we actually get out of the United States in exchange for its breach of promise over bicycles. The Minister has just said that it was put into the general account on both sides. What is the difference here between what we should have got if the Americans had not broken their word on bicycles? This tariff on bicycles has hurt our industry very gravely. In my constituency and in many others the bicycle industry has been gravely hurt. What have we got to make up for that sudden change of American policy?
I take it that because America has said that she cannot reduce tariffs by more than 15 per cent., spread over three years, we shall not have another of these glorious get-togethers of G.A.T.T. for three years. I imagine that we shall be likely to meet till 1958 When we may produce another £5 million worth of difference, in which case G.A.T.T. is 1013 losing its impetus and the dream which I and many others shared of a really mutually advantageous advance towards a multilateral trading world has, after a certain amount of progress in that direction, come to an end. That is the lesson of this White Paper.
That being so, we really must find some new impetus towards enlarging world trade. Ceylon and other countries who are worried about G.A.T.T. have said that we must really re-approach the problem of international agreements, and I must say that they would be of immense aid to the sterling area and to countervailing somewhat the American price support programmes which are a very distorting factor in world economy.
I now come to the point made by the hon. Member for Wembley, South (Mr. Russell). Although I did not go all the way in agreement with his speech, none the less I thought that it was a very important point. He gave us facts and figures to show that Commonwealth trade has been rather immobile during this period, although Western European trade is going up fairly fast. Of course, nothing in this is going to help Commonwealth trade at all. I must say to the hon. Member for Wembley, South that I do not believe that Commonwealth preferences will either. They cannot be increased under G.A.T.T. and, therefore, cannot be used as instruments for stimulating Commonwealth trade. That being so, we must do things he does not like. Of course, Commonwealth preferences are of some value, but I do not agree that they are as valuable as he thinks they are.
I am sure that we must have long-term and bulk purchase agreements. I do not doubt that the right hon. Gentleman will tell me that Article 17 of G.A.T.T. prohibits that. But we have somehow managed to get the Commonwealth Sugar Agreement through, and, if we can do that, I do not doubt that Her Majesty's present Government, or the next Labour Government, will contrive ways of getting these Commonwealth long-term agreements. I see no other way of stimulating the growth of intra-Commonwealth trade which is stagnating in an alarming way.
Because of the present Government's attitude towards this, the simple fact is that the only country in the world which is offering long-term agreements to the primary producing countries is Russia.
1014 She is doing so because we have left a vacuum which is having a considerable effect on countries like Ceylon and others. The Russians are prepared to offer long-term agreements. They do not trade very honestly, they chop and change, but they offer these agreements which are proving very attractive to people in the primary producing countries who cannot get rid of their products.
On balance, we support the White Paper for what it is worth. We do not think that it is worth very much. It is good that multilateral trading should be mutually introduced. What has been achieved in the past by G.A.T.T. is, I think, to be defended, and certainly the point made by the right hon. Gentleman in his opening about stability in foreign tariffs is, of course, a great advantage to our exporters. But if the Government rest on their great achievement, this aspidistra-horseradish achievement, as their main contribution, or, indeed, if they fail to do anything to increase world trade, then they will be very gravely neglecting their duty to develop British trade.
The right hon. Gentleman may not be in order in replying to some of these last questions I have put to him about other means of enlarging world and British trade, but on that head I want to say that it really is time that we had a proper debate in which we could develop our various ideas without being inhibited by the narrow rules of order—a real debate about G.A.T.T. and Commonwealth preference. We have not had such a debate for a long time and I hope that the Government will be able to give us time for such a real debate which, I think, would be very valuable and to which hon. Members of both sides of the House would make some very important contributions.
§ 6.29 p.m.
§ Mr. Low
I will, if I may, try to answer the many questions that have been put to me in the course of this short debate.
I should, first, like to thank right hon. and hon. Gentlemen on both sides of the House for the general support they have given to the Motion. The right hon. Gentleman the Member for Rochester and Chatham (Mr. Bottomley) seemed to think that there was some doubt about the Government's position towards the General 1015 Agreement as a whole. There really is no doubt, if the right hon. Gentleman will think back, and it really is not correct to charge us with not having made our position quite clear.
Not only are we asking for support for these negotiations, the value of which I have stressed, but we did, at the time of the conclusion of the revision session of G.A.T.T., issue a statement of policy in the form of Cmd. 9449. In that White Paper, we made our attitude quite clear, and in answering Questions in the House both my right hon. Friend and I have made our attitude plain. I think the right hon. Gentleman must have forgotten some of his "prep." for this debate, if I may say so.
§ Mr. Bottomley
I should not like to be unfair to the right hon. Gentleman. Of course, I am aware of that and I acknowledge it immediately. The point I was making is that the General Agreement on Tariffs and Trade is losing its momentum. The Government are aware of that, and I said that we ought to have a debate in the House so that the Government might state clearly, as they have promised to do, their position as regards the G.A.T.T. and commercial policy generally.
§ Mr. Low
I quite understand that, and I will try to be not so controversial during the rest of my reply.
The right hon. Gentleman then made the point that in four months our negotiators ought to have been able to do more. He paid tribute to the work of the negotiators, and I join with him in that. He is right, of course, in saying that to a certain extent the result of these negotiations is a "mouse." Nobody has ever suggested that there would be really substantial gains from these negotiations. We made that clear right from the outset, even before they started. The reason for that was United States legislation rather than anything else. To take up one of the remarks of the right hon. Member for Smethwick (Mr. Gordon Walker), it is right that we could not expect more negotiations with the United States until the end of this three-year period, unless, of course, American policy changed in the meantime.
To say that we ought to have been able to do more is going further than I can go. Surely the right hon. Gentle- 1016 would not argue that we ought to have done more unilaterally. The advantage of this method of tariff negotiations is that we can use our tariffs to bargain down other people's tariffs to help our exporters. What I think we can say, as I have claimed in my speech, is that there is an advantage in extending the area of stability of tariffs, and there is an advantage, too, in keeping up the impetus. The impetus has been kept up in moving towards lower barriers throughout the world.
The right hon. Member for Rochester and Chatham mentioned Commonwealth Preference. I really think that he was a little unfair in saying that I did not cover that subject in my speech. The White Paper makes the position quite clear, and I should like to repeat that no guaranteed margins of preference on either side, either here or in the Commonwealth, were disturbed by these negotiations. He tried, rather cleverly, to bring in the question of the Australian Trade Agreement. I must take up this one point, if I may, Mr. Speaker, because he conveyed the imputation that I was nervous about having to argue the merits of this Agreement. I will willingly defend this Agreement at the proper time as a good Agreement in the circumstances now prevailing, and I shall not be ashamed to do so. I will stand up and argue the case with right hon. Gentlemen opposite. Tonight, however, is not the proper time to do it.
As to the argument that we ought to have negotiated reduced margins of preference at Geneva, that is going a little too far. To say that we ought to have gone to Geneva and asked the Australians to reduce their margins of preference, which are now in our favour, before they had ever indicated that they wanted those margins of preference down, is really to ask us to do something which I do not think the right hon. Member for Rochester and Chatham will, on reflection, consider would be very sensible.
My hon. Friend the Member for Wembley, South (Mr. Russell) asked me about the Colonies, and his first question related to the last paragraph in the White Paper; perhaps I might give an answer to that in a moment. He complained about the binding of the duty on maize; but he rightly said that, to a certain extent, our freedom to move that duty is 1017 already fixed by other international obligations. I do not see why he complains because we were able to take advantage of what amounts to putting a second lock on that door. When he makes the point that the concessions we made are "most favoured nation" concessions and, therefore, they apply everywhere, I would ask him not to underestimate the effect of keeping up the move to reduce duties.
His main point was the point which he and one or two of his hon. Friends make from time to time against the G.A.T.T. in favour of Imperial Preference. He argued that, since these tariff negotiations began under the G.A.T.T. and since the operation of the G.A.T.T., we had lost. He was basing his argument, I think, rather on a post hoc analysis of the situation than on a propter hoc analysis of the situation. He prefers a system in which we would have not fewer preferences or lower preferences or even stable preferences, but higher preferences. That, unfortunately, is not the view of the Commonwealth. We know that even in these recent negotiations with Australia it was not we who were pressing for the Australians to reduce their preferences but it was they. I think that we have to face the facts in these days.
Our position is that we wish to maintain the system. We are maintaining the system, and, indeed, the recent Agreement with Australia does maintain the preferential system over the whole of our trade previously covered by preferences. Otherwise, we maintain that it is in our interest to seek and extend a system of wider trade and payments throughout the world.
My hon. Friend questioned the wisdom of a system which had appeared to result in a greater increase in our imports than in our exports. He will, I am sure, recall that quantitative restrictions have been removed; and that is a thing which, I think, we all regard as a wise action so long as we can afford it. This is bound to have some effect on the level of our imports. Let us not fall into the mistake of belittling the increase in our exports, which has been quite considerable over years of increasing competitiveness in the world.
Hon. Members on both sides have referred to world trade, our share of which, it is true, has fallen since 1950.
1018 Our share of this trade depends most of all upon our relative competitiveness with other nations. Taking the figures in 1950, we had 25½ per cent. of the trade; last year we had 19.7 per cent., and we have about that figure this year. But most of this fall took place between 1950 and 1951, and right hon. Gentlemen opposite should remember that. Of course, that was due to a number of considerations, as has been the fall over these six or seven years, one of the most important of them being the return of Germany and Japan to full production.
The hon. Member for Dunbartonshire, East (Mr. Bence), who made an interesting and rather robust free trade speech to begin with—though it was rather spoilt by some illiberal observations on bulk purchase, and so on, at the end—appeared to be debunking the whole of this operation of reducing tariffs. Of course, because of the introduction of some lighter elements in the negotiations—horse radish and other things.—there has been room for humour. But it would really be wrong to underestimate the value to us of even the smallest reductions in the United States tariffs affecting our exports. The reduction on whisky, of course, is not of very great importance, but it is something that we would not wish to refuse. I can assure the right hon. Gentleman that we did not pay much for it. The reduction in the United States duty on china clay was one to which our industry attached some importance and I am glad we have got it.
I am sorry that the hon. Member for Dunbartonshire, East is not here. He raised the question of our duty on machine tools and seemed to want to get rid of it altogether. He has omitted to remember that quite a substantial part of the imports of machine tools come in duty free because of licensing arrangements which we are empowered to adopt by Section 10 of the Finance Act, 1932. In fact, since the beginning of 1955 about 30 per cent. of the machinery imports have had this concession. This is a special concession which has been suspended from time to time.
I hope that the hon. Member for Dunbartonshire, East will be able to explain to his right hon. Gentlemen as forcefully as he explained it to the House the argument that people like the Australians 1019 sometimes use about preferences on capital goods, because what he said about the Agreement respecting duties on machine tools applies in that field, also.
I thank my hon. Friend the Member for Aberdeenshire, West (Mr. Spence) for his congratulations. He was interested in whether this Agreement should cover quotas, which, as hon. Gentlemen opposite know, are covered in other parts of the General Agreement on Tariffs and Trade. We do not negotiate in the G.A.T.T. on quotas and quantitative restrictions.
The right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker) started by being over-sensitive about the speech last night of my right hon. Friend the Lord Privy Seal, but I will forgive him for that. He then made another point which I will group under two main heads, if I may. First, I will take the dollar balance. The gains we got from the United States amounted, as the White Paper shows, in concessions over trade, in terms of 1954 trade, to £59 million. Our concessions, in the same terms, covered trade of £48 million. Those figures are comparable.
Of course, the right hon. Gentleman is right in saying that the statistical comparison does not tell us everything we want to know. I said that in my speech, and I admit it frankly. It is the same comparison as his own colleagues in the Government of which he was a member used on three occasions, so I do not think he need have attacked it quite so hard. I say frankly that we have not found a better way to illustrate the effect of these negotiations.
The right hon. Gentleman tried to draw me on the figure—was it £5 million?; I do not know—relating to extra trade which we would get. I simply do not know, and I do not think that the exercise of trying to estimate what we would get is worth anything. These negotiations have given a better opportunity over a very wide field of trade to our exporters. So long as they are competitive they will be so much better able to export more to the world. That is as far as one can go and is as far, incidentally, as the right hon. Member for Rochester and Chatham went when the same sort of point was taken up with his Government.
§ Mr. Gordon Walker
Our negotiators must have had some figure in mind of what we were likely to gain or lose. Otherwise, there was no balance at all but only guesswork, and I do not know why they took so many months about it. There must have been some figure in mind of the totality to be aimed at.
§ Mr. Low
There is the balance. The best statistical way of drawing the balance between gains that we get from other countries and the concessions which we give is the statistical balance which is in the White Paper, and about which I spoke.
The right hon. Gentleman was on another point: are we really right in using these big figures to illustrate our gains? Ought we not to take much smaller figures to show the gains in each area of trade, because we want to know what comes into the balance of payments? I ask the right hon. Gentleman to believe that there is no better way of striking the balance of payments. On the question of how much we have gained, there is no way, as I have already said, of quantifying it. No attempt was made by the right hon. Member for Rochester and Chatham to do it when he spoke to us on the first Agreement and I think he was quite right and wise in what he did. We gained because we had better opportunities to trade.
Before I come to the other points which the right hon. Gentleman made I am now able to answer the questions asked by my hon. Friend the Member for Wembley, South about Hong Kong and the Bahamas. Hong Kong bound the existing free entry of meal and flour of wheat and spelt, certain citrus fruits, fresh grapes, cotton seed oil, gave guarantees regarding the duties on proprietary medicines and toilet preparations. AU she did was to bind existing free entries, and obtain concessions on furniture, rattan and bamboo and certain compounds containing spirits. The Bahamas reduced the duties on certain meats. That was the main concession we gave from the Bahamas.
I noted the seriousness of the way in which the right hon. Gentleman put the matter to us when he said that this sort of tariff negotiation under the G.A.T.T. was not suiting the interests of the whole world. He said that primary producers were complaining about this and other 1021 aspects of the G.A.T.T. I am not sure whether he was right that they are all complaining.
§ Mr. Low
He is right that some of them are. I reply that primary producing countries, just as manufacturing countries, gain by an increase in world trade in manufactured goods.
Our policy is, just as the aim of the G.A.T.T. is, an expansion in world trade. There may be other ways to get it, and one of the ways of which we are all conscious, and which is being debated in the newspapers, is embodied in certain proposals about European free trade. The House knows, from the statement made by my right hon. Friend the Chancellor of the Exchequer, that it is hoped that we shall have a day's debate on that matter quite soon.
We are always considering how we can help to increase world trade. I would ask the right hon. Gentleman not to exaggerate the meagreness or the mouse-like nature of these negotiations, or to build up a picture of a moribund G.A.T.T. That would be quite wrong. At the same time, I give him the assurance that we are always thinking of what action can be 1022 taken to increase world trade and, of course, to increase our own trade.
§ Question put and agreed to.
That this House approves the action taken by Her Majesty's Government in the 1956 tariff negotiations at Geneva as reported in Command Paper No. 9779.