TRADE WITH EASTERN GERMANY

HC Deb 10 February 1958 vol 582 cc152-70

Motion made, and Question proposed, That this House do now adjourn.—[Colonel J. H. Harrison.]

9.35 p.m.

Mr. Ian Mikardo (Reading)

I am very glad that this Motion has come before the House at an hour somewhat earlier than it might have done, because that will perhaps enable us to do more justice than we might otherwise have been able to do to what is a very important subject for many British manufacturers and exporters, namely, the problem arising out of trade between the United Kingdom and Eastern Germany.

This subject is important because we are here dealing with a country which, as well as being a supplier of things we need and, in some cases, cannot easily get from other sources, is also potentially a very important market for this country, important not only because it is substantial in itself but important because, one day, the two parts of Germany will be reunified and it will be a good thing, when that day comes, if British products have established a place and a goodwill over the whole of that unified country.

At present, as I understand, there is a British trade mission in Western Germany precisely for the purpose of seeing how our exports to Western Germany can be increased. It seems to me that it will be a mistake if we do not do everything we can to make our goods well known all over Germany in order to take the best advantage of all the demand which there can be for our products. Yet although we are working so hard, and quite rightly, and I am glad to see it, on trade with Western Germany, our trade with Eastern Germany is very poor indeed.

Not counting re-exports—and most of our trade figures are of re-exports, which are only marginally of value to us, though I admit they are of some value—our deliveries last year were, I understand, under £1½ million. Although that figure was £400,000 higher than in 1956 it is still chicken feed both intrinsically and compared with what our competitors are selling there and what we might be selling there if we went about it the right way. The reason why it remains at chicken feed level is that, unlike all the countries with whose manufactures we are competing, we have not any sort of trade and payments arrangement with Eastern Germany.

Of course, while the Government do not recognise the East German Government they say—and we can understand their saying, whether we agree with it or not—that there can be no question of a Government to Government agreement; but that has not stopped the West Germans from having an official agreement with Eastern Germany. The West Germans, in the same way as we do not, do not recognise the Government of Eastern Germany. Not only that, but they put the utmost pressure on all their friends and allies not to recognise the Government of Eastern Germany. Indeed, there was a real, first-class rumpus with Yugoslavia because Yugoslavia did recognise the Government of Eastern Germany. Yet in spite of that the West Germans have entered into an agreement with Eastern Germany, the last renewal document of which is signed by an official of their Ministry—which gives it an official status—and not by an unofficial body like a State bank or a chamber of commerce.

Most of the other N.A.T.O. countries, whose Governments also do not recognise the East German Government, have nevertheless permitted and, indeed, encouraged unofficial agreements between bank and bank or chamber of commerce and chamber of commerce, or both, in order to maximise trade between those countries and Eastern Germany. Some of these agreements have subsisted for seven or eight years, and a large and growing volume of business has been done within their framework.

By this country nothing was done along these lines until last year. I regret that I must weary the House for two or three minutes to explain what has happened since proposals were first mooted for an unofficial agreement along these lines between this country and Eastern Germany. I must go through this to make clear where the difficulties have arisen and why Her Majesty's Government ought to do something about it.

In June and July of last year, a delegation from the East German Chamber of Foreign Trade visited London and had discussions with the Federation of British Industries, which is the nearest equivalent body in this country. These discussions went on for a while, and very successfully. As a result, the two parties agreed to conclude a trade arrangement for 1958 and to meet again in October to finalise the text of this trade arrangement and the list of goods which it would cover. The Germans then handed in their idea of a draft text for this agreement and, in August, the F.B.I., having considered the German draft text, sent to Berlin a note of the amendments which it proposed to it.

In September, the F.B.I. went a little further and put in a revised draft of its own, which the Germans accepted as a basis for negotiation. Our side, therefore, could certainly not complain. Up to that point it was getting its own way all along the line. In October, the Germans sent the F.B.I. their proposed list of goods to be exchanged under the agreement. On receiving the list, the F.B.I. replied by inviting a German delegation to come to London in the second half of November to review the negotiations. It will be seen that so far, up to that point, the interchange had gone exactly according to the usual practice in these trade negotiations between one country and another and, as far as we were concerned, along the most favourable lines.

Then, suddenly, without any warning or anything to indicate what had changed people's minds, a fortnight after the F.B.I. had sent its invitation to the German delegation, it suddenly cancelled the invitation by cable and broke off the negotiations. What is more, it has not even replied to letters since sent to it by the other party with whom it had been negotiating. That seems to me well below the standard of courtesy which is normally a feature of British commercial behaviour.

I hope that the Minister will not try to tell us—because we are not babes in arms—that this was a decision made by the F.B.I. independently and without any influence exerted by Her Majesty's Government. Nobody would believe that that was so. Indeed, it would be grossly improper if it were so. It would be grossly improper if an important trade association, in which rests the confidence of a great many people in the country took upon itself to carry out commercial negotiations that were not in accord with the policy of Her Majesty's Government—and it could find out whether it was in accord with that policy only by consulting the Board of Trade about it. That is why I say that it would be wrong if any trade association went along independently in that way. I do not believe that a responsible body like the F.B.I. would act in that way.

It is obvious to me that it would not have begun the negotiations without getting the green light from the Board of Trade and it is obvious that it would not have broken off negotiations without having cleared the action of breaking them off with the Board of Trade. Anyone suggesting anything to the contrary would do so only on the basis of imagining that his listeners were babes in arms, knowing nothing about the way in which these things are done.

This sudden rupture of negotiations in October leaves us in a situation in which British exporters must continue to struggle against unnecessary handicaps in their sales to Eastern Germany while their competitors in other N.A.T.O. countries are given a fair wind by the trade and payments arrangements under which they work. What is the use of the Government continually exhorting British firms to sharpen up their export flow when the Government themselves put every possible obstacle in their way?

Let me tell the House what our competitors are doing. Western Germany made an agreement with Eastern Germany as long ago as 1949 and it was formalised in 1951. When I said that this agreement had been signed by an official acting under the authority of a German Ministry, I thought that the Minister was expressing some disbelief—I do not know whether I misread his face. In fact, I have complete details of this agreement which is carried out by a trust which is not like the F.B.I., an independent body, but an instrument of a Government Department. Indeed, the signature to the document is that of an official of a Government Department.

Before this agreement existed, trade between Western Germany and Eastern Germany amounted to only £2½ million a year. In the first six years of that agreement trade has gone up by leaps and bounds and last year amounted to £153 million. How happy British exporters would be with only one-tenth of that figure, especially as it includes some of the things which we most want to export, such as engineering products and chemicals!

I go to Western Germany a good deal, not just as a tourist, but because I have some industrial and business connections there. I get a good look at what is going on and I can tell the Minister, in case he does not know, that manufacturers in Western Germany are laughing at us fit to burst. They are delighted with a situation in which their Government help them to build up their export trade while their British competitors are held back by our Government. They think that we are fools and they say so; and they are right.

The last time I went to Dusseldorf I went to a dinner party given by a prominent industrialist and I happened to be sitting next to him when an American visitor asked him why he thought that Western Germany industry had done so well. He replied that it had been done by a combination of German enterprise and British gullibility. Every German round the table nearly laughed his head off.

In recent times we have had a bang up-to-date example of German enterprise and British gullibility in that the German Federal Government have refused to pay up anything to cover the cost of keeping British troops in Germany. Presumably, the £40 million to £50 million which they will save in this way will go to help German manufacturers still further to compete against our exporters. But this complacent Government of ours goes on behaving like a cuckolded husband, letting the West Germans get away with it and make a laughing stock of us.

The Minister may argue that, trade agreement or no trade agreement, Western Germany would be in a specially favourable position to trade with Eastern Germany. In case he proposes to put forward that argument, I want to show the House what is being done by some other N.A.T.O. countries, who cannot claim to have anything like the special position vis-à-vis Eastern Germany, that the manufacturers of Western Germany may be thought to have. France has had a trade and payments agreement with Eastern Germany since 1951. In this case, it is a non-Governmental agreement between the two State banks and the two State chambers of commerce.

Before that agreement was in operation, trade between the two countries was about £1½ million a year. Since the agreement was signed it has risen to £5½ million a year. Belgium is doing even better, with a trade of £7 million a year under an agreement concluded in 1952 by the Federation of Belgian Industries, which seems to have done a lot better in this matter than the Federation of British Industries. Holland has an almost identical arrangement, and did £15 million worth of trade under it last year. Turkey's unofficial trade agreement with Eastern Germany has raised her trade in the last three years from £4½ million to £12½ million per annum.

I could give many other examples, but do not wish to weary the House, and those that I have quoted will perhaps be sufficient to make my point. I would add that Norway, Denmark and Italy all have these unofficial trade agreements, under which the Eastern German authorities have purchasing missions in Frankfurt, Paris, Brussels, Amsterdam, Rome, Ankara, Oslo and Copenhagen. Only London is left out.

Some of the best and most enterprising of our exporting manufacturers have shown themselves to be keenly interested in developing this trade and have put in a lot of hard work and spent a lot of money on it. I will not take up time by giving a great catalogue of them, but perhaps I may mention a few names to show what a large and important sector of British industry is adversely affected by what has been going on.

Among vehicle manufacturers there are Standards, Rovers, the Rootes Group and Leyland Motors; among machinery manufacturers are Aveling-Barford, the Brush Group, Rolls-Royce and the Massey-Harris-Ferguson Company; among steel producers are the Guest, Keen, Nettlefold Group, Armstrong-Whitworth, Thomas Firth and John Brown, and John Summers and Son; among radio and television are Pye, Marconi and E.M.I.; in chemicals there are I.C.I., B.X Plastics and Erinoid; among textile firms are the Lancashire Cotton Corporation and Fine Spinners and Doublers.

This is a vast catalogue of some of the best and most enterprising of our manufacturers, and all of them will say that they could do much more business if they had the advantages provided by even an unofficial trade and payments agreement with Eastern Germany.

Over one hundred British manufacturers are exhibiting at the Liepzig Fair next month—a larger number than in any year since the war. Anyone talking to them—as I have -will find that they are resentful and frustrated because they cannot obtain the advantages of trying to build up their trade which are given to their competitors in other countries. I urge the Minister to get the F.B.I. to re-open these negotiations. He is supposed to promote our overseas trade and not put a brake on it. Here is a chance for him to do something for our manufacturers. I hope that he will rise to the opportunity and take the chance.

9.55 p.m.

Mr. G. B. Drayson (Skipton)

I am glad to demonstrate that there is just as much interest in this problem among hon. Members on this side of the House as there is among those on the benches opposite. This debate arises from a Question put by the hon. Member for Reading (Mr. Mikardo) to the President of the Board of Trade on 21st January when the Minister of State, Board of Trade, replied, regarding trade with Eastern Germany, that Exporters enjoy the same facilities for trade with Eastern Germany as for trade with other countries in the Soviet bloc, within the limits, set by the fact that Her Majesty's Government do not recognise the present East German authorities as a Government."—[OFFICIAL REPORT, 21st January, 195.8 Vol. 580, c. 884.] In a recent economic debate, the President of the Board of Trade said that we want all the East-West trade we can get. He referred to a particular item of apparel as being one obviously in demand in the Soviet Union, but I think that the possibilities go much wider than that. As the hon. Member for Reading has said, Eastern Germany as it is called is the largest trading community in the Soviet bloc outside the Soviet Union itself. As one would expect, it is largely industrialised and its people are efficient and capable.

The question of eventual unification which the hon. Member touched on is a matter which could be more properly dealt with in a foreign affairs debate. The fortunes of war, or the misfortunes of peace, have decreed that 18 million Germans are at the moment on what some would consider the wrong side of the line. All that is accepted. What are we to do about it?

Whether we recognise the Government or not, we cannot fail to recognise that there are 18 million people who are endeavouring to trade with us and to raise families and improve their standard of living. Any hindrance to normal trade between the two communities must be regarded as being directed against those ordinary men and women in the position and predicament to which I have already referred. As I have explained before, one reason why a trade agreement or arrangement, or some category of different kinds of groups, is essential where we are dealing with a controlled economy is that it has to be fitted into a plan. Whether we accept the plan as being correct or not, the fact remains that some sort of agreement is necessary or business tends to stagnate and goes to those countries who have concluded agreements which can be fitted into an over-all plan. Whether the plan is likely to be successful is none of our business.

I have put my position on record many times on this subject. All I ask is that there should be no advantage to other N.A.T.O. powers or to Western Germany which is not enjoyed by businessmen in this country. But, as the hon. Member for Reading has explained, all these other countries have concluded official or unofficial agreements with Western Germany and are doing substantial business. We are left out in the cold. The hon. Member said he could give names of the persons involved in a particular agreement, but he did not do so. I should like to do so. What happened so far as Western Germany is concerned, in spite of the fact that they had an agreement going back to 1949–51, was that on 17th November, 1955, Dr. Kurt Leopold was in possession of two letters, one sent by Herr Westrick, Secretary of State for Trade in Dr. Erhardt's Government.

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Motion made, and Question proposed, That this House do now adjourn.— [Colonel J. H. Harrison.]

Mr. Drayson

There was a similar letter signed by Otto Suhr,the Burgomaster of West Berlin. Those letters authorised Dr. Leopold to conclude an agreement with the East German authorities for trade between the two zones and they were the credentials he carried stating that he was authorised to make that agreement. It has since been said that the letters were not addressed to anybody, but were handed to Dr. Leopold so they did not in fact in any way represent recognition by Western Germany of Eastern Germany. When Dr. Leopold had those letters in his possession he immediately walked into the Soviet Zone and started trade negotiations. Towards the end of 1955 he concluded a trade agreement for 1,000 million marks for trade between Eastern and Western Germany. That agreement was fully reported in the newspapers of the day. On 29th December, 1955, I wrote to the Foreign Secretary about the position of trade with East Germany and said: The point that interests me in all this is that West German business firms would appear to reap advantages through these official contacts which are denied to British trading concerns. I went on to say: On a number of occasions I have sought an assurance from Ministers that British business firms should not be placed at a disadvantage compared with Western Germany and N.A.T.O. countries as far as East West trade is concerned, and in view of the above … the agreement concluded by Dr. Leopold— I should be very glad to have your assurance that this is in fact so. The Secretary of State replied to me in July, 1956, nearly seven months later, by which time he had completed his inquiries. There was rather a revealing term confirming what the hon. Member for Reading said about the official position of Dr. Leopold. Although I made my inquiries in December, in July seven months later, I was told: Although Dr. Leopold formerly held an appointment in the Federal German Ministry of Economics as head of the Trustee Office, he is not a member of the staff of that Ministry … He had resigned from that position and was responsible for inter-zonal trade.

On 23rd January I asked the Minister of State, Board of Trade, if he would give me details of the various trade agreements concluded with other countries in Eastern Europe, and the present Minister of Health, then the Minister of State, Board of Trade, said: Although we do not negotiate formal agreements with any of the countries in Eastern Europe; what we do do is to sign informal trade arrangements which, for the most part, amount to little more than an undertaking on bath sides to permit the import of an agreed list of commodities up to agreed values That is all that is being asked for today.

The Minister sent me a very long and comprehensive list, which I much appreciated, of agreements or undertakings which had been entered into with the Soviet Union, Bulgaria, Poland and Czechoslovakia. Finally, at the end, he dealt with the Eastern Zone of Germany, and I found that Her Majesty's Government do not recognise the present authorities as being the competent Government of the territory and no diplomatic relations exist. We knew that and were quite prepared for it, but we felt that in order that we should not be at a disadvantage compared with our competitors, we should at least have a list on which to work.

Later I was told by the Minister of State that the initiative must rest not with the Government but with the representative trade organisations. That is what we are discussing tonight—an agreed list of goods to be exchanged. About that time my hon. Friend the Member for Belfast, North (Mr. Hyde), the hon. Member for Lincoln (Mr. de Freitas) and myself had a discussion with the Minister of State at the Board of Trade asking for the position to be clarified to show how this credit arrangement was to be brought about. That is what we are asking tonight, two years later.

I wrote to the Minister of State at that time, on 15th April, as follows: What to my mind is required is to appoint a professional but independent person who would act in a similar capacity to Dr. Leopold in Western Germany, someone who is acceptable to your Department and who would maintain contact with the East German authorities. His function would be merely to agree lists of categories of goods to be exchanged, and thereafter be informed by both sides of the licences issued and business completed. I went no further than that. That is all that I thought was necessary and all that I thought was consistent with the fact that the Government are in certain diplomatic difficulties with Eastern Germany.

In August I heard from the Minister of State as follows: I understand that the Federation of British Industries are still in touch with representatives of the East German Chamber of Foreign Trade and you may care to have another word with the Federation…. The hon. Member for Reading has gone through all the details which I, too, have in my possession of the discussions which have taken place with the Federation of British Industries and which have subsequently been broken off.

I do not think this is a function which the Federation is competent to discharge. It is not at all happy about the situation and it has told me, quite rightly, that it regards its function as being that of protecting British industry and of promoting British exports. Any arrangement which, as the Federation sees it, involves an increase in the exports from another European country or area it feels to be outside the scope of its operation.

There are those of us who are concerned with the general volume of trade and who feel that what is desirable is to increase the whole volume of trade rather than merely to increase the exports from any section of industry. The F.B.I. is perfectly entitled to its view. At the moment, it is holding a very uncomfortable baby which it would like to get rid of and, no doubt, that is why these negotiations have been broken off. It would be better if we had a single individual who was acceptable to both sides.

This problem is of special interest now because, as has been said by the hon. Member for Reading, a number of prominent British firms, including such firms as Rolls-Royce and Massey Harris Ferguson will, during March, be exhibiting at the Leipzig Fair in Eastern Germany. All of us who go there will be made aware of the problem by the British exhibitors. We know that they will come up to us and say, "Cannot you do something about this agreement? We see the West Germans, the Dutch, the French and the Scandinavians all getting business, and we are unable to compete." I am sure that we will find at that Fair what one might call a lot of frustrated exporters, and I hope that tonight the Minister will give us some encouragement that this matter will be dealt with.

A further point is that there is evidence of discrimination against East German products at the present time. I have a letter here. I do not know who the firms are that are referred to in it. I understand that proposals were recently put forward for the import into this country of East German cinematograph film worth £100,000 to £150,000. The importers were told that this was not an essential import, but that the film could be bought from America or from Western Germany, in the former case at a cost of dollars.

I believe that the same thing applies to chemicals, and that a number of firms that have been importing chemicals from Eastern Germany at prices competitive with those of other European countries have been refused import licences, and that our manufacturers have thus been denied the opportunity of buying raw materials in the cheapest markets.

I hope that the Minister will assure us that there is no discrimination against this territory at the present time. As I said earlier, my concern is that British traders should not be placed at a disadvantage as compared with other European countries, and that we should be able to buy our raw materials on a competitive basis. I welcome any action that brings nations together, and as trade is, perhaps, the most satisfactory and least controversial medium in this respect, I hope that this present difficulty will shortly be overcome.

10.14 p.m.

Mr. Arthur Lewis (West Ham, North)

I realise that the time is getting on, and I thank the Minister for telling me that he would sacrifice two or three minutes of his time to allow me to support my hon. Friend the Member for Reading (Mr. Mikardo). For some years now, I have, by Questions in the House, tried to get a move made in this matter by the Board of Trade. I do not think that the fault lies at the door of the Board of Trade, but at that of the Foreign Office, and that really we should have a representative of that Department to reply to this debate.

I am convinced that if the Board of Trade could have its way it would do all in its power to get a trading agreement, but that it is the Foreign Office that says, "We must not do anything to help, because we do not recognise the East German Government." The West German Government are putting pressure on our Foreign Office. As my hon. Friend the Member for Reading has said, while they can do lots of trade they do everything possible to prevent British manufacturers from doing any trade. Our manufacturers are being compelled to buy elsewhere chemicals and other commodities which they could get cheaper—and they would be better—from Eastern Germany. All the time the Bonn Government are saying to our Foreign Office, "Do not do any trade with Eastern Germany, or come to any agreement, because we do not recognise them."

If you were to go to the Leipzig Fair, Mr. Speaker, with my hon. Friend the Member for Reading, the hon. Member for Skipton (Mr. Drayson) and myself, you would find that 80 per cent. of the industrialists there were from Western Germany. There would be Government representatives, if not in their official capacity, observing what was going on. This is history repeating itself. Congratulating my hon. Friend the Member for Reading takes my mind to the time when he came back from China. We had the same thing in that case. Month after month and year after year we campaigned to get trade going with China. After industrialists had got in and cornered the Chinese market, the Board of Trade agreed, reluctantly and belatedly, saying, "We can now do trade with China." We had lost markets.

Eventually, we shall be able to press the Board of Trade and the Foreign Office to take action in this matter of Eastern Germany, but I am afraid that it will be too late. We cannot blame the East German Government; whether we recognise them or not, they are there. America did not recognise the Chinese People's Republic, but the Chinese Government were there and almost every country in the world is doing trade with China. Almost every European country, certainly every country in N.A.T.O., is now doing big business with the East German Government, which our Government do not recognise.

Another difficulty is that although we do not recognise the East German Government we now trade with them. We can go into any shop in the West End of London and see that some of the most expensive scientific instruments have come from Eastern Germany, but they have come in through West Germany. We are allowing the West German Government to cripple our trade with Eastern Germany, while West German industrialists actually trade with Eastern Germany. They bring goods into Western Germany and export them to this country, so that we lose both ways. We are paying more for commodities—I see that the Minister is signalling me to stop—so I will ask him to bear these questions in mind. We shall return to them if we do not get a satisfactory answer from him this evening.

10.18 p.m.

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

The hon. Member for West Ham, North (Mr. Lewis) was abusing my kindness a little too far. He has left me with very little time.

As for the hon. Member for Reading (Mr. Mikardo), I make no complaint about the very able way in which he deployed his arguments, but he did not give me any notice of the points he was going to raise. I can only say that the statistics which he gave—I do not know the source—are quite unrelated to those which I have. I have examined them very carefully. If the hon. Member will give me the source in one or two cases I shall be glad to correlate them, but the picture from my statistics is quite different.

We have to remember that this kind of problem arises only in the case of the comparatively few countries in the world whose authorities we do not recognise, and they are actually only three. Otherwise, we have liberalised our trade to a very considerable extent throughout the world. As regards the Iron Curtain countries, we extend the facilities of the open general licence to imports from those countries, including East Germany, to goods for which there is a real need in this country. The obvious example is chemicals, and particularly potassium carbonate, sodium chlorate and ammonium sulphate, which we need, as do our allies.

But the range of these products is restricted, and for the rest of our imports from these countries specific import licences are necessary. For these quotas are needed, which are normally agreed by trade agreements in which the other country also undertakes to provide the facilities for buying goods of ours which otherwise it would not admit. My answer to my hon. Friend the Member for Skipton (Mr. Drayson) is that experience has shown that the lack of a trade agreement has in no way inhibited the growth of trade with Russia. We cannot negotiate such a trade agreement with the East Germans, because, as the House knows, we do not recognise their authorities as a Government.

What alternative arrangements are possible? Three years ago, we showed our willingness to consider the issue of licences for imports from East Germany of goods not on open general licence—a sort of barter system, which has certain advantages in this case although we should not in the normal way think of administering our import controls for such purposes. However, by our strict administration of the import licensing system, we see that we get our full "pound of flesh" in the way of exports from this country—exports, be it said, of goods such as fish and cotton textiles for which, for obvious reasons, we are naturally anxious to find additional markets. These barter arrangements are by no means ideal, but they are beginning to yield a tidy sum, despite the fact that we are limiting the barter arrangements to those products for which additional export outlets are particularly needed.

The barter system has a number of disadvantages. Possibly, the only advantage is that it helps to increase exports of those difficult items I mentioned. But as well as those there are many goods and raw materials which the East Germans buy here because we have the best or the cheapest supplies. But—and this is the issue—between what they have to buy here and what we should like them to buy there is still a wide range of goods for which no trade facilities apparently exist. Surprisingly—and this is a great tribute to the enterprise of exporters—the East Germans do, in fact, buy a substantial amount of our products in this middle range. If there were an agreement, it might well be that the value of their purchases under those headings would rise—

Mr. Mikardo

Of course.

Mr. Vaughan-Morgan

—although perhaps at the expense of other exports such as cotton textiles and fish. Another serious disadvantage in our present barter arrangements is that the trade tends to be concentrated in a few hands, because the arrangement of the deals is so very complicated. This is not a healthy state of affairs, but I understand that it is one which is fostered by the rather dubious payment arrangements in which, I am told, the East Germans like to indulge. Nevertheless, though I do not suggest that it is an enormous figure, the House should know that our exports rose to £1½ million last year—

Mr. Mikardo

Chicken-feed.

Mr. Vaughan-Morgan

—which is nearly up to the record figure of 1954, when the East Germans bought a large number of things from us and went on a buying spree in this and many other European countries which has not subsequently been repeated.

Our entrepôt trade with the East Germans, which we should not undervalue, has risen even more steeply. These figures are enough to show that there has been an increasing trade.

I have been looking at the figures, and this is where I join issue with the hon. Member for Reading, for our total trade with East Germany, since 1953, compared with the corresponding figures for the main Western countries, other than the Federal Republic of Germany, which is in a very special position—

Mr. Lewis

Why?

Mr. Vaughan-Morgan

Because they are neighbours and one nation.

Mr. Lewis

We do not recognise the other part.

Mr. Vaughan-Morgan

All these figures are small, but two interesting points emerge: first, the increase in our total trade with East Germany compares very favourably with the trade of our main competitors; secondly, the movement in our competitors' figures is influenced more by the purchasing policies of the East Germans than by the conclusion of informal trade arrangements.

The hon. Gentleman referred to trade between the Federal Republic and Eastern Germany, but the position is not comparable. The Federal Republic is part of what should be, and will we hope, one day be, a reunited Germany. It is not trade between two foreign countries, and, therefore, is not a relevant comparison. It will still be pointed out that we are out of step with other countries who equally do not recognise the regime, but where arrangements for unofficial trade agreements have been made.

In many European countries representative trade bodies have made these agreements with the East German Chamber of Foreign Trade. It is no secret that the Federation of British Industries, in consultation with other national trade associations, has been having discussions with the East German Chamber. I understand that in these discussions the possibility of informal trade agreements have been fully covered. Proposals were put forward by the East German body. The United Kingdom considered them one-sided and unacceptable, but, as far as they are concerned, the negotiations have not been broken off. My guidance on general trade questions is always available to the F.B.I. and other national trade associations.

As I have said, the initiative rests with the trade associations. The hon. Member's version of recent negotiations between the F.B.I. and the East Germans does not tally with that given me only this morning by a senior official of the F.B.I. It is untrue to say that there has been an intervention by the Board of Trade which could jeopardise the prospect of agreement being reached.

Mr. Lewis

What about the Foreign Office?

Mr. Vaughan-Morgan

I am here to answer the debate. If the hon. Member wants to question the Foreign Secretary, it is up to him.

Because we do not recognise the East German régime and cannot negotiate with it, the decision whether or not to pursue the negotiations rests with the national trade associations. It is wrong to suggest that anyone is being obstructive in this matter except, perhaps, the East Germans in putting forward one-sided proposals. Negotiating trade agreements is not simple. My hon. Friend the Member for Skipton suggested that we should find one wonderful man to negotiate. We must look at it more carefully. I do not see how we could find anyone but the national bodies who could take into account the enormous and immense repercussions which any agreement must have throughout our economy. I am sure that only the national trade associations can do it. If they reach a satisfactory agreement, we will then willingly make the arrangements to allow it to be implemented. The Government cannot and will not do this until it is certain that full account has been taken of the effects of any agreement.

There has been talk also of the wish of the East Germans to establish a trade office in this country. Our attitude has been referred to and was expressed by the Foreign Secretary on 27th May last year, when he pointed out that this was a consequence of our not recognising those authorities. I do not consider that it is by any means necessary to the development of trade between this country and East Germany that such an office should be established here. As we have seen, trade can develop without one.

If the hon. Member will look at the figures, he will see that the establishment of a trade office has no relevance to the progress of trade. I referred to that at an earlier stage. The position remains the same. Her Majesty's Government will do what is necessary to implement a trade agreement. It is not for us to interfere in the negotiations which have been going on and which, I hope, will in due course be resumed between the F.B.I. and the East German Chamber of Trade.

I cannot help thinking that some of the enthusiasm which has been put into this debate might possibly have been employed in persuading the other party to put forward proposals that were not, from the point of view of this country, quite so one-sided.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.