HC Deb 29 November 1957 vol 578 cc1526-36

3.31 p.m.

Mr. Ronald Russell (Wembley, South)

I beg to move, That this House welcomes the decision of the Commonwealth Governments to hold a trade and economic conference next year as a valuable opportunity to strengthen the economic ties which bind their countries together principally by an expansion of their trade; and seeks a positive assurance from Her Majesty's Government that the terms upon which the United Kingdom finally declares her readiness to enter the European Free Trade Area do not hamper in any way efforts to secure an expansion of Commonwealth trade. I wish to thank the Minister of Health for what he said a few moments ago and for helping to make it possible for us to have a brief debate on this Motion. Also, I wish to thank any hon. Member opposite who has been kind enough not to intervene in the discussion on the previous Motion.

I do not know whether the Minister of State, Board of Trade, will have time to intervene. If not, I shall quite understand and I hope he will find it possible to study the points I make in my speech. I am grateful to the Under-Secretary of State for Commonwealth Relations for being present also. I thank both Ministers for spending a lot of time waiting here for a short debate.

This Motion is topical at the moment because, as everyone knows, we have a Canadian Trade Mission in this country. It is a very high-powered mission, which I think is doing much good and seems to be working on the basis of trying to buy more United Kingdom exports. It is not often that we have a mission over here trying to buy from us without expecting something in return. As understood the speech of Mr. Gordon Churchill, at the luncheon given to the mission by the Dollar Export Council last Monday, it is on the basis of enlightened self-interest that the mission hopes that more exports from us will eventually result in our buying more from Canada. Let us hope that both those hopes will be realised. I am sure that if my hon. Friend intervenes he will wish the mission all success in the task set for itself in visiting this country.

My Motion calls attention to the forthcoming Commonwealth Trade Conference, which will be mainly the result of the proposal made by the present Prime Minister of Canada a few months ago. I do not know what policy the United Kingdom Government intend to put forward at that Conference, or whether it would be possible to announce any such policy at present, but I hope that wholehearted support will be given to whatever reasonable Canadian proposals are put forward at the Conference, as I imagine they will be, for expanding Commonwealth trade. I do not think anyone can say more than that at the moment, but I am very glad that such a Conference is to be held. I think it high time that regulations and rules and tariffs governing Commonwealth trade since the end of World War II were reviewed.

There is another matter which should be considered. I do not know whether it would be in order in debate on the Import Duties Bill on Monday to discuss Commonwealth tariffs as distinct from our own tariffs, but I mention that matter now. One system which I think needs overhaul is the structure of the tariffs of many Commonwealth countries. I hope that representations can be made to Commonwealth countries to go into that problem. What I have in mind is that, whereas our tariff is complicated enough in some respects in that some duties are on an ad valorem basis and some on a specific basis—I will mention a disadvantage in regard to that in a moment—Commonwealth tariffs are even worse in that there are so many different rates of duty, especially in Canada, Australia and South Africa.

Altogether I have reckoned, perhaps not absolutely accurately, that the Canadian tariff consists of about 480 different rates of duty of which only 28 are on an ad valorem basis.

The Australian scale is even worse. It has well over 800 different rates of duty of which only 25 are on an ad valorem basis. In Australian tariffs one finds complicated duties. On rubber boots the duty is 9d. per pair plus 12½ per cent. ad valorem—a mixture of ad valorem and specific duties. The duty on lawn mowers, on the other hand, is 40 per cent. ad valorem or £4 each, whichever is the higher. There are even complications caused by the alternatives of a mixture of specific and ad valorem or ad valorem, or whichever is the greater. It would be much simpler from the point of view of encouraging more Commonwealth trade if some of these tariffs could be simplified and brought on to the basis of the French tariff, which has about 60 rates of duty, the majority of which are on an ad valorem basis.

That brings me to one of our difficulties at the moment in connection with Imperial Preference. Why are we told, as we are often told, that Commonwealth countries do not want to seek a waiver of G.A.T.T. in order to increase or extend Imperial Preference? One of the reasons is the decrease in the value of money which has taken place since most of these tariffs were arranged in Ottawa over 25 years ago. The preferences that we enjoy in Commonwealth countries are mostly on an ad valorem basis. If they are not purely ad valorem they are a mixture of ad valorem and specific.

On the other hand, most of the important ones the Commonwealth countries enjoy in the United Kingdom are on a specific basis only. For instance, the rate for butter is 9s. 4d. a cwt. and for tobacco it is 1s. 6½d. a lb. One of the preferences on wines is 10s. a gallon. That for chilled beef is ⅔d. per 1b. and that for chilled mutton is ¾d. unless I have them the wrong way round. Those are specific duties which have not increased in value in the slightest degree. They have decreased in proportion enormously since before the war. That is one of the reasons we find a lack of enthusiasm in Commonwealth countries for Imperial Preference at the moment. If we were able to revise the system and put it on a completely ad valorem basis, that would enable it to keep pace with any change in the value of money, if it changes as it has done in the past.

I cannot help feeling that, in the light of the fact that we had another gold and dollar crisis only two months ago, we ought to look at our external economic policy to see whether it is on sound lines. We have been suffering continuously since the war from crises in the £ and a drain on our gold and dollar reserves, but they have been less often and less severe since the present Government came into power. That is due in part to the fact that we have been spending too many dollars on importing foodstuffs from the dollar area.

In the first ten months of this year we spent over £50 million on the import of cereals from the United States and £12 million on the import of cereals from the Argentine. We spent over £9 million on the section called "Fruits and Vegetables" in the Trade and Navigation Accounts, imported from the United States, and over £1 million on fruits and vegetables from the Argentine. We spent £50 million on meat from the Argentine. We have even spent £3 million on butter. I was surprised to find that we were buying butter from a foreign country as far away as the Argentine.

We buy things like fish and fish preparations from the United States and from Peru. Altogether, out of that important section of miscellaneous fruits and vegetables, on which we spent nearly £200 million in the first ten months of this year, about half came from the Commonwealth. The actual figure is less than half, but that does not take into account the fact that we receive oranges from Israel and that these came from within the Commonwealth before Israel became independent.

About 12 per cent. of that £200 million came from such countries as the United States, the Argentine, Chile, Brazil and Japan. With all those countries except Japan we have an adverse balance of trade. It is an adverse balance of two-to-one with the United States and four-to-one with the Argentine. Only towards the end of last year did we cease to have an adverse balance of trade with Japan.

Do we need to buy all these goods from the dollar area and other hard-currency areas, particularly South America? Need we go to the United States and the Argentine for hides, skins and apples? I know that we buy them from the Commonwealth, too, but are we buying all that the Commonwealth can supply? Do we need £6 million of rubber, presumably mostly synthetic rubber, from the United States? Are we obtaining all the rubber that Malaya or Ceylon can supply? In the light of the adverse balance of trade which we have, particularly with the United States and with the Argentine, and in the light of the fact that we have had a drain on our gold and dollar reserves, can we afford to spend all that money on goods of that kind from those countries?

I know that under the present arrangements we cannot discriminate against the dollar area or those other countries. I think that that is one of the main causes of our difficulties, and I am sorry that we cannot do so. That is why I have always advocated that we should seek a waiver of the General Agreement on Tariffs and Trade to enable us to do so.

This brings me to the Amendment of the right hon. Member for Rochester and Chatham (Mr. Bottomley), which suggests that the way out of this difficulty is to resort to Government bulk buying. I do not like that method of trading, and I do not like any rigid restrictions such as quotas, exchange controls and licensing systems, which place difficulties in the way of importers and place a rigid ban on them importing goods if the quota has already been exceeded. A tariff, on the other hand, is a flexible weapon which allows goods to be imported provided that the duty is paid. That is why I think that that system is very much better than either State trading or the system of licences and quotas which we have had in the past and which caused us such difficulty when we were trying to revive our trade after the war. I would use the method of State trading only as a very last resort and if there were no other method of trying to increase inter-Commonwealth trade.

There is another point about the preferential system which is important, particularly in the light of what is taking place in Europe at present. The adoption of a preferential system in Europe would be a means of overcoming the difficulties which we face at present in trying to bring about a closer association of our trade with Europe as well as an expansion of our trade with the Commonwealth. I wish that we could return to the plan put forward at the Council of Europe five years ago known as the Strasbourg Plan, which suggested setting up a preferential area in Europe which could have been dovetailed into our preferential system in the Commonwealth.

It would have enabled the Commonwealth countries to give preference first to one another and second to Europe, and would have allowed European countries to have given first preference to one another and second preference to the Commonwealth countries. That would be the simplest way of overcoming the difficulties in the way of that closer trade association that we all want to see between the Commonwealth, Europe and ourselves.

This was not pursued, and the reason was that it was rejected by O.E.E.C. One of the main reasons for that rejection was that that organisation thought that that action would be regarded as discriminating against the dollar bloc. It is perfectly true that it would so discriminate, but I suggest that that argument is not now valid because the Treaty of Rome set up the European Economic Community, a complete common market that, because of its rigid internal free trade, discriminates against the outside world far more than a preferential area would.

To me it has always been one of the world's unsolved mysteries that the United States State Department, whose policies have played so great a part in the settlement of post-war trade problems, should regard a common market area or a customs union or a free trade area as something to be welcomed, whether set up in Europe or elsewhere, but should regard even the suggestion of a preferential area—which involves less discrimination against the United States or anywhere else in the outside world—as being almost a crime.

That is the difficulty facing us now. It was because of pressure from the United States all along, and all through the war, that G.A.T.T. was eventually forced on the world—I will not say completely unwillingly, but without any enthusiasm on the part of those who took part in the negotiations, as I saw for myself, in Geneva in 1947. I cannot understand why there is that difference in outlook on the part of the United States State Department on those two methods of conducting trade.

In this House we are all pledged to do our utmost to develop the Commonwealth. If we are to do that, surely we must be able to ensure markets for its produce. How are we to do it if we are not free to regulate Commonwealth trade as we think fit? Ensuring a market means giving some kind of priority to Commonwealth produce, whether we do it by tariffs, as I believe we should, or by State trading as is the belief of the right hon. Gentleman opposite. We have to do one or the other.

I hope, therefore, that this Commonwealth Conference which is to meet in Ottawa, probably in the middle of next summer, will very seriously consider how we are to develop the Commonwealth and its trade, what means can be found of giving priority to Commonwealth produce—and, indeed, to Commonwealth industries as well—and how to help to solve the problem of our closer association with Europe.

I, for one, would like to see the development of trade between this country and Europe as well as between the United Kingdom and the Commonwealth, and also an increase of trade between Europe and the Commonwealth. I believe that the preferential system is the best way of doing that, but if it is not possible, I should like to be told at some time—I appreciate that my hon. Friend may not be able to answer today, because there is so little time left—how it is to be achieved.

3.50 p.m.

Mr. Nigel Fisher (Surbiton)

I beg to second the Motion.

I am grateful for the opportunity of seconding this Motion so ably moved by my hon. Friend the Member for Wembley, South (Mr. Russell), and I know that he will forgive me if for lack of time, I do not follow him in detail. I think on both sides of the House we agree in welcoming the decision to hold the Commonwealth Trade and Economic Conference next year; but I want to make one small practical suggestion which may be of value.

Like many other hon. Members, I have long thought that Commonwealth conferences, whether they are concerned with political, economic or defence matters, or all three, would be much facilitated if there were in existence here in London a permanent secretariat, the personnel of which would be furnished by all Commonwealth countries, a secretariat which could prepare the ground for these conferences in advance and which would also assist the Commonwealth Ministers during the course of the conferences from a practical point of view.

I believe that machinery of that sort would be of practical value, and I would urge the Government to take the initiative in this matter and suggest it as a concrete proposal for other Commonwealth countries to consider. I believe that there would be a good response. I think machinery of that sort would assist the objectives that we have all got in mind on both sides of the House, namely the translation into practical action of many hopes and ideas for the improvement of Commonwealth relations and Commonwealth trade which are, from time to time, advanced and which in some cases, I have no doubt, have failed to come to fruition simply because of the lack of time and lack of mechanics for working them out in detail and translating them into action.

There would be one advantageous by-product of such a secretariat, namely that the civil servants from Commonwealth countries, through serving on such a body, would gain valuable experience to take back to their own countries when in due course they returned. I hope the Government will agree at least to give consideration to this point.

There is one other suggestion that I wish to make. My hon. Friend's Motion relates mainly to an increase in Commonwealth trade, but it is a fact that trade often follows upon capital investment, and I am concerned to know whether our capital investment in the Commonwealth is in all respects being made in the right way and through the right channels. I am not referring to private investment at all at the moment. We know that much private investment of great importance has been made in recent years, and this year's Finance Bill will give the Overseas Development Corporations much incentive to further expansion, and the Commonwealth Development Finance Company has also done valuable work as a new channel of private investment.

What I am thinking of today is more on the subject of Government capital. We all know that Governments, like private companies, can only invest a surplus. It is, indeed, remarkable in these difficult times how much money has been invested in the Commonwealth in recent years, and I think that some of us sometimes overlook that. But I sometimes wonder if we always invest in the right way. Part is invested through the World Bank. I wonder if a Commonwealth bank would be advantageous for financing some aspects of capital development in the Commonwealth.

I appreciate that the World Bank has done very valuable work indeed, and recognise, too, that a multiplicity of international financial institutions do not of themselves, create new capital for investment. But the World Bank, of course, makes its advances in dollars and those dollars do result in export business in dollars to the United States because loans come back in the form of orders for capital goods and capital equipment. Last year, 1955–56, the World Bank paid out 332 million dollars. This year there will be twenty new loans to fifteen countries amounting to about 388 million dollars or about £138 million. Australia and India have been two of the beneficiaries. Since 1946, 3,108 million dollars have been advanced in 170 loans to forty-five different countries.

Electric power projects, railways, roads, industry, agriculture and forestry—all have benefitted and have received help in this way. But a breakdown of the World Bank loans indicates that the borrowing nations have used their loans in ways which have benefited United States industry to the tune of 44 per cent., German industry to the amount of 18½ per cent., and British industry to the extent of only 11 per cent. The Bank loans are in fact being used as to almost half in order to finance United States exports.

I must say, and I think that hon. Members will agree, I should like to see a lot more of this money coming back to Britain. Of course, we cannot finance all or anywhere near all the Commonwealth requires; much money has to come from outside, as we all recognise. We welcome it, because it benefits the Commonwealth. I doubt if the Minister will have time to reply, but I should like him to consider whether he thinks a Commonwealth bank would be helpful to the Commonwealth and advantageous to us. He may take the view that we would be the only contributors to such a fund, but I do not really believe that that would be so, because Mr. Diefenbaker has himself made the same sort of proposal, and it is surely unlikely that the Prime Minister of Canada would propose the setting up of a Commonwealth counterpart to the World Bank unless Canada herself was willing to contribute to such a fund. In the White Paper on the United Kingdom's Role in Commonwealth Development, published in July, I see there these words: …for historic as well as economic reasons the United Kingdom is the keystone of the Commonwealth economic structure. I agree with that.

Mr. A. G. Bottomley (Rochester and Chatham)

Twelve months ago to the day there was a debate on the subject which the hon. Member has mentioned now, and the Government accepted the Motion. It is to be hoped that the hon. Member for Wembley, South (Mr. Russell), who deserves the thanks of us all for moving this Motion today, gets far better consideration than his colleagues did.

Mr. Fisher

I appreciate that this matter has been debated in the House before on many occasions in various forms, and I think that the more we debate it the better, because the more pressure that is brought to bear on my right hon. and hon. Friends on this matter, the more likely perhaps that they may eventually yield to our pleas from both sides of the House. It is not really a party matter at all, as my hon. Friend. I think, will be the first to say.

Mr. Bottomley

There is an Amendment.

Mr. Fisher

I do not want to be drawn into controversy. As the right hon. Gentleman's intervention was not unfriendly, I do not want to be unfriendly in replying.

"The keystone of the Commonwealth economic structure" are, I think, words with which we would all agree in relation to our own contribution to Commonwealth development. But the White Paper does not actually suggest any very positive methods of implementing the conception that the Government themselves posed in the second paragraph of their own report.

I suggest that a Commonwealth bank might possibly be one aspect of a positive plan, and I ask my hon. Friend to consider that along with the suggestions made by my hon. Friend the Member for Wembley, South when he comes to consider the debate at a later time.

3.58 p.m.

The Minister of State, Board of Trade (Mr. J. K. Vaughan-Morgan)

I have only a very brief moment to say that we welcome very warmly the Motion of my hon. Friend the Member for Wembley, South (Mr. Russell) on this subject; as warmly as we welcome the suggestion to hold an Economic Conference made by Canada and discussed at Mont Tremeblant earlier this year. I think that if my hon. Friend studies the communiqué issued on that occasion, he will see that the nations gathered at Mont Tremeblant were very well aware of the need to discuss most of the subjects he has mentioned today. I, therefore, welcome his Motion in that spirit.

Question put and agreed to.

Resolved, That this House welcomes the decision of the Commonwealth Governments to hold a trade and economic conference next year as a valuable opportunity to strengthen the economic ties which bind their countries together principally by art expansion of their trade; and seeks a positive assurance from Her Majesty's Government that the terms upon which the United Kingdom finally declares her readiness to enter the European Free Trade Area do not hamper in any way efforts to secure an expansion of Commonwealth trade.