HC Deb 26 March 1959 vol 602 cc1539-49

12.56 p.m.

Mr. Reader Harris (Heston and Isleworth)

I am grateful for this opportunity, before the House rises for the Easter Recess, to put to the Government once again the overwhelming case which I believe exists for ending the Common Embargo List, which prevents this country from exporting certain goods to Eastern European countries.

This subject was last debated in the House on 13th June, 1958, and there has been a considerable change in the world situation since that date. I believe that it is the duty of hon. Members to be continually pressing the Government for the total abolition of the Common Embargo List, and that is the main purpose of what I shall say today.

I am glad to note that on this occasion the Minister who will reply to the debate is the Minister of State, Board of Trade. On a previous occasion it was the Minister of State for Foreign Affairs. I hope that this change means that the British Government regard the problem of the Common embargo list as one which relates directly to the trade of this country. That must be a good thing, because the sooner that we can remove it from the realm of international politics, the better.

When he replied to a debate on 13th June. 1958, the Minister of State for Foreign Affairs said: We want to expand East-West trade. The relaxation of the artificial barriers would be a contribution to full employment and to the expansion of world trade, and also, I am sure, would contribute to world peace."—[OFFICIAL REPORT, 13th June, 1958; Vol. 589, c. 635.] I imagine that that was and still is the Government's policy.

Since then, many things have been said about the list by many distinguished people in industry and elsewhere, and everything that I have ever heard said about it has been to the effect that the sooner the list is abolished the better. My right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft), a former Chancellor of the Exchequer, gave an interview to the Financial Times on 6th March, 1959. He is reported as having said: Whatever may have been the original arguments in favour of a tight, strategic list of prohibited exports, it is hard to see that such a list has served much useful purpose. The resources and skills of the bloc are clearly adequate and will be made available for any specialised defence purposes. The forward surge of production could not be hampered, even if it was desirable to hamper it, more than very marginally by denying exports. The main effect of strategic controls appears to have been to encourage a rather greater and faster degree of specialisation than might otherwise have taken place. That statement in itself is an overwhelming case for the abolition of the embargo list. There are many other reasons why the list should go. Since the last debate in the House on this subject something very serious has happened. There has been a deadlock over our negotiations in respect of the European Free Trade Area. It is, I am afraid, a fact that British industry is already beginning to feel the effect of our exclusion from any European Free Trade Area arrangements and our exclusion from the European Common Market.

British industry has already suffered. It is beginning to lose its markets in Europe and it is essential that we should get fresh markets elsewhere. It must surely be obvious that we are fools if we do not exploit to the best of our ability the enormous markets to be found in Eastern Europe and the Far East. This area covers one-quarter of the world's land mass, and has a population of about 900 million people. We need those markets, and we need them quickly, and we should remove all obstacles to our trading with them.

The embargo list is an insult to the intelligence of the leaders in Eastern Europe. It is hard to see why they should buy anything from Britain at all, or from the West, if we say to them that they can have somethings and not others. I am told that Mr. Khrushchev, a few months ago, told my hon. Friend the Member for Louth (Mr. Osborne) that it would not be long before Russia had its own embargo list. There are some things, such as turbo drills, which the Russians make and which we do not make. I do not say that a Russian embargo list would affect us very much at first, but it might in the end.

Another reason which I want to put forward, and which I believe to be very powerful, is that there is a strong feeling among businessmen in this country that we are being "taken for a ride" by other countries, notably America, France and Western Germany. I believe that businessmen in those countries are conducting sub rosa a substantial trade with the Eastern European countries. I believe that the things which they are selling are on the embargo list, but they somehow manage to get round it, which is not very difficult if one chooses to make a personal trip to West Berlin and make private arrangements with the Eastern European countries which are not far over the border.

I believe that many N.A.T.O. countries have not nearly such high scruples as we have in this country. I think that when our representatives go to the co-ordinating committee in Paris, or anywhere else, they are simply being bamboozled by the officials who attend from those other countries. They have always expressed the view that the embargo list is being observed most strictly by their own countries, but, in practice, that simply is not so. I think that we are missing an enormous number of trade opportunities.

Turning to some specific details, particular annoyance has been caused by the inclusion in the embargo list of such items as aeroplanes and aeroplane engines. As the Minister knows, I wrote to him recently about the possible export of some Armstrong-Siddeley Viper engines to Poland. These are engines which could be used for military purposes and also for civil purposes. I would have thought that if the Poles were willing to buy these engines from us, it would be to our advantage to sell them, for two reasons. The first is that if we do not sell them these engines they will get similar engines from Western Germany. Secondly, if these engines should be used for military purposes, surely, in the event of hostilities breaking out, the Poles would be cut off from any source of spares. No engine can run for long without a ready supply of spares and they would, therefore, be useless in the event of war.

I have had in the last week or two enormous deputations here at the House of Commons from workers in aircraft industries in and around Heston and Isleworth. I have had them from the Hawker-Siddeley works, at Kingston, from Napiers, and other factories whose workers live in my constituency and they have told me that they are faced with redundancy and that there are prospects of the factories closing. If that is the case, surely we are crazy not to seize every opportunity of selling aeroplane engines to Eastern Europe.

I turn to the subject of scientific instruments. The countries of Eastern Europe are willing to buy scientific instruments on a very wide scale, not because they cannot manufacture these things, but because it is more convenient in conditions of full employment which exist there for them to import them. Clearly, they have the ability to make all the instruments that we can make in the West. or at any rate, almost all, as evidenced by the fact that there are Sputniks circling the globe, but the Eastern European countries have not the ability to make these things in any great numbers at present.

If we deny them these exports, these countries will build up their own factories and, in due course, be able to manufacture these things and never want them from us. The possibility is that these Eastern European countries will build up their own products to such a point that they will be trying to export them to us, perhaps at a very much lower price than that at which we can make them. It would seem to me that if the Eastern European nations are potential aggressors, we are helping those countries to become less vulnerable in the event of war, because they will become more self-sufficient.

Before finishing my speech, I must disclose that I have a personal interest in this matter. I am export director and consultant of companies that are endeavouring to promote East-West trade. Many other hon. Members are endeavouring to do the same thing, and all of us have the same interest.

I am worried because I have heard it said fairly recently by Government spokesmen that, in their view, there is not much left on the embargo list, as a result of the alterations made in August. 1958. I would say two things about that I think that there is a lot left on the List. First, it still covers metal working machinery, chemical plant, up-to-date aircraft and engines, electronic equipment, scientific instruments and apparatus. Secondly, if the Government think that there is very little left on the list, why not abolish it altogether? There seems no case for keeping it in existence.

I have had representations made to me by very reputable companies which are trying to export their materials to Eastern Europe, and I will give one or two instances which seem to me to be anomalies. A firm called Wayne Kerr came to me recently, a reputable, medium-sized firm making high quality scientific instruments, which wanted to export scientific measuring equipment and, in particular, radio frequency bridges for measuring transistors and testing radio and electronic apparatus. Up to 1951 this firm -used to export these very things to Russia, but now they are embargoed. I cannot see the point of that when Russia can get all these things through Switzerland, and we are now forcing her to make her own.

Another very reputable firm, Southern Instruments, which is in the same line of business, have made big efforts to export transient recorders, sometimes called oscilloscopes. These have no military significance, but they are embargoed if their accelerating potential is more than 5,000 volts. China wants these to measure the electrical surges in her electrical power stations. She cannot get them from this country, so she is getting them from other sources.

The same firm tries to export oscillographs, another form of electronic recording equipment. None of the parts going to make one instrument is embargoed, nor is there an embargo if the separate parts are put together in a box, so long as there are only one or two cathode tubes. If there are more than two cathode tubes, the instrument is embargoed. Of course, it is perfectly easy to get round the restriction by sending the bits separately. They can be put together at the other side.

These anomalies are merely irritating, both to the United Kingdom and to the Eastern European countries. When we want to get trade, there is every case for removing causes of irritation. I know that the embargo list was altered in August, 1958. There were some relaxations, but a number of other things were added to the list, particularly that issued on 5th August, 1958.

The Prime Minister has done absolutely wonderful work in trying to bring the nations of the East and West together, and we now hope that there will be a Summit Conference in the next few months. I want to stress my belief that a Summit Conference cannot achieve any success as long as the embargo list is in existence. I do not, of course, say that if the list were immediately swept away everything would be lovely and that the Eastern European countries would immediately agree to everything we want.

I appreciate, for one thing, that even if the list were removed there would still be many things that could not be sent to Eastern Europe because they are under patents held either in Britain or the U.S.A. Nevertheless, if these items did not go, the onus would be on the owners of the patents. It would be normal business, and there would be no politics in it.

I maintain that if the embargo list is not swept away it forms a dark cloud in the background which ruins all attempts at easing tension, and I believe that it will stultify any efforts to happy solutions of our present difficulties with the Eastern European States. I believe that a hundred years ago trade followed the flag—it followed in the wake of peace. Today, it is the other way round. In this mid-twentieth century we have reached the stage when peace will follow trade. If there is to be a Summit Conference in the summer, its best hope of success would be, as a start, to sweep away the embargo list forthwith.

1.15 p.m.

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

My hon. Friend the Member for Heston and Isleworth (Mr. Reader Harris) was kind enough to write to me about the matter, in which he has a personal interest and which he has, of course, disclosed. As this debate was pending, I hope that he will excuse me for not having written to him. Nor, I am afraid, shall I have very much to add in my letter after I have finished speaking now.

I must say that I thought he slightly exaggerated his case at points, and I hope now to deal with all the matters he raised. He cited one or two anomalies, as he considered them. They are new to me, and I will look at them. But he gave scant credit to the relaxation that took place in August last.

Simply stated, the strategic embargo merely prohibits those exports to the Sino-Soviet bloc that we and our Allies together need to control in the interests of security. Every Government has a clear duty to control exports that could be used against its own citizens, and I have never yet heard anyone arguing in favour of complete free trade either in armaments or in these goods. Let us have no illusions about it. The Government of a country whose export is completely State-controlled is in a splendid position to operate an embargo without even announcing the fact.

Incidentally, there is a very respectable and long historical background to these controls. I understand that the first Act imposing an embargo in this country was the Assize of Arms, 1181. This illustrates the antiquity of the practice.

Today, true armaments are only part of the goods which directly and importantly contribute to a nation's ability to wage war. The embargo must take this fact into cognisance, and so covers goods which, while they have a strategic significance of a nature that cannot always be disclosed, may also have, on the surface, perfectly innocent peaceful uses. This, frankly, is one of our major sources of difficulty, and I am sure that many of the instances given by my hon. Friend are covered in this way. It is inevitable that this sort of thing should arise, and great difficulty is caused in drawing the line between those goods that are strategic and those that are of arguable importance.

We have to balance two interests. On the one hand, there is the standpoint of the trader who, wisely and sensibly, wants to sell abroad—and, goodness knows, that is important to us as a trading nation. On the other hand, there are our defence interests as a member of N.A.T.O.; and, like our Allies, we cannot ignore the unhappy facts of the present-day world, and our common interest with them in maintaining a strategic embargo on what is now a strictly limited range of goods.

When the embargo was first set up in 1949 its net was cast much wider than today. There have since been two major reviews, one in 1954 and one last year, in which we played a very large part. The common list that we have agreed with our partners in Cocom has twice been brought up to date. It has been very much pruned, and the actual number of headings that remain is not really significant. The fact is that many general headings have been greatly narrowed and made more specific.

I think that my hon. Friend did less than justice to what has been done. Many of the items he mentioned fall into a group the vast majority of which have already been released. Thus, in general, chemical plant, and most metalworking machinery are now free. The last review reduced the number of industrial headings from 181 to 118, and, of the 118, 81 were narrowed in coverage. Of course, in print, the revised list may not look any shorter than the old one, but that is because it takes more words to define closely what is strategic in order to eliminate everything else. It is true that 12 items were added—but only 12.

Frankly, one can argue about the details of the list, but no one will expect that such a list, which 15 nations have to agree—and agreement is essential to ensure uniformity and effectiveness of control—would be exactly, in every particular, what any individual member might or might not want. Even today that is the position as far as we are concerned. But others of our partners have their points of difference, too, and we all have to compromise. However, last year we substantially achieved our aim of retaining only the minimum controls necessary for our national security.

I say in all seriousness to my hon. Friend that we do not believe that the list is a grave impediment to expanding trade between West and East. It affects only a tiny part of the vast range of goods which we have to offer. It is notable that, despite all that was said before the relaxation last year, there has not been a great rush to buy the goods that were formerly embargoed, with the one exception of copper.

My hon. Friend mentioned the Viper engine, and I should like to deal with that. In general, all types of aircraft and engines specially designed for military purposes and those that are not in normal civil use, are embargoed for export to the bloc by all members of Cocom. The Viper engine was designed for and is at present used in military trainer aircraft and target machines, and on this basis we and others are bound to regard it as a military engine and, therefore, subject to embargo.

Of course, circumstances might change. For example, if the Viper engine came into general civilian use in this country or elsewhere in the West it would be a very different matter, and it might become possible for its export to be freed. If this were so, some way might be found in Cocom to allow such exports later, but I must emphasise the word "might". It would be wrong for me to hold out any real hopes in that direction. The inescapable and conclusive fact is that no such civilian use has been found for this engine in the West.

I now turn to the point about competition from other countries, to which my hon. Friend referred. All the leading industrial countries in this sphere, including the United States. France and Western Germany, apply rules which are no less stringent than ours. Indeed, the whole idea of having an international list is to ensure uniformity of practice between ourselves and our Allies in respect of such strategic goods. Here, my hon. Friend made some allegations, and I very much deprecate the use of such words as "bamboozled" in respect of those who are our Allies and the officials serving Allied Governments. I know that that is not true, and I think that such language can only help to exacerbate the relations between us and our Allies in implementing these arrangements.

My hon. Friend made various remarks which I think even he would agree were based on hearsay. We are always willing to consider evidence. I make that quite clear to him and to anyone else who may approach us on these matters. However, the evidence is very seldom, if ever, forthcoming. If my hon. Friend wishes to bring any further matters to my notice, I shall be only too glad to consider them, but until that time and until he is able to produce substantial evidence other than the kind of remarks which he made today, I think that his case is definitely not proven.

This kind of system of international controls is absolutely necessary and we cannot think of abandoning it so long as international tension continues. If the relations between the West and the bloc become more relaxed, I have no doubt that the controls would "wither away." Do not let us forget, however, that we are dealing on the one hand, with free nations, where an agreed strategic control has to be imposed and operated, and, on the other, as I have said, we are dealing with the Sino-Soviet bloc, where it is not necessary for them to disclose to the world that there is such an embargo or such an embargo list. We have these difficult arrangements to maintain, and I do not think that any good is done by suggesting that the wool is pulled over our eyes by our Allies, or vice versa.

I think that in Cocom we have the machinery for keeping the list up to date. We hold periodical reviews as may be necessary. There are also week-by-week consultations. No system which unites the purpose of 15 nations can be entirely perfect, but we are always trying to keep the system as streamlined and as up-to-date as possible. I hope that my hon. Friend and anyone else who is interested in this subject will accept that we made a revision in August which has removed a very wide range of industrial items from the embargo list, and I hope that the House will accept the assurance that we shall, as soon as we can, abolish such few restrictions as remain.

Let me give the House an example. In the August relaxation, we took the following items away from the embargo. First, most civil aircraft and civil aero-engines. I have made the point about military equipment. We also took out of embargo the vast majority of machine tools. Another item which was taken out was petroleum refinery and oil well equipment. We also took out almost all chemical and petro-chemical plant. Almost all industrial types of bearings; all electrical generating machinery, except large mobile generators; all civil vehicles and diesel engines are now off the list. Another class which is exempt, and about which there has been a great deal of talk, is ships, except for fast vessels, and those with certain warlike characteristics. I have mentioned copper in all forms. Also excluded are most Petroleum products, a range of chemicals, and finally, in answer to my hon. Friend, almost all scientific instruments and a great deal of electronic equipment.

I do not think that, in the face of that great relaxation, which we hope it will be possible to continue later, it is right to suggests, as my hon. Friend did, that we are in any way neglecting the trade interests of this country if we maintain such an embargo for purely strategic purposes.