HC Deb 23 November 1959 vol 614 cc33-9
The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)

With the permission of the House, I should like to make short statement.

We have now reached an important stage in a striking and valuable development of our trade policy. On Thursday and Friday of last week, my right hon. Friend the President of the Board of Trade and I attended a ministerial meeting in Stockholm at which the Governments of Austria, Denmark, Norway, Portugal, Sweden and Switzerland were also represented. The purpose of the meeting was to approve and initial the text of the Convention establishing the European Free Trade Association.

Hon. Members will already have seen the Press communiqué which was issued after the meeting, and also the resolution referred to in it, but for the convenience of the House I am arranging for both these documents to be circulated in the OFFICIAL REPORT.

An unofficial summary of the Convention, prepared in Stockholm for the Press, is available in printed form in the Library and further copies will be available in a day or two. It is hoped that the full text of the Convention will be issued as a White Paper at the beginning of next week.

The House will remember that last July the Governments of the seven countries adopted a draft plan for the establishment of the European Free Trade Association. This was published as a White Paper (Cmnd. 823). The Convention which has now been approved translates the draft plan into a formal Agreement between the seven Governments concerned. They intend to sign it at the beginning of next month and it will then be subject to the various national procedures for ratification. It will come into force when ratified and the first round of tariff reductions will be made on 1st July next year.

The Convention closely follows the draft plan. I do not propose to go into details this afternoon. No doubt, Mr. Speaker, the House will wish to have a full discussion when the White Paper is published. There has been one new development relating to quick-frozen fish fillets which Her Majesty's Government have agreed should be included as an industrial product during the interim 10-year period, at any rate. This is subject to qualifications which in our opinion will safeguard the interests of our fishing industry.

It is a notable achievement that in such a short space of time the Governments of the seven countries should have been able to agree upon this Convention. It will present our exporters with new and growing opportunities for increasing their sales in the markets of the member countries and I am sure that they will be quick to seize them. It will, of course, involve more competition in our market here, but I am confident that this will be a challenge which our industries will be able to meet as the tariffs come down over the years.

This is a bold and forward-looking enterprise which will be in the interests both of this country and of our partners in the Association, and from which we all stand to benefit. But I want to emphasise that the purpose of the Free Trade Association is not simply to reduce obstacles to trade between its own members. It will be our policy to look outward beyond the confines of member States. Throughout the discussions we have kept in close touch with the other members of the Commonwealth. Copies of the Convention will be sent to them and also to the members of O.E.E.C. and the G.A.T.T.

It is the wish of all the Governments of the countries comprising the Free Trade Association to enter upon discussions with the Governments of the European Economic Community, as soon as the latter are ready to do so, with a view to some form of economic association between the two areas. We regard the setting up of our new Association as a step towards a wider agreement between all the members of the Organisation for European Economic Co-operation. We are convinced that it will have a significant contribution to make towards freer trade at a higher level throughout the world.

Mr. Jay

While we on this side of the House welcome this Convention, which we have supported throughout these negotiations, may I ask, first, whether it would not be wise now for the members of this new Association positively and publicly to invite the members of the European Economic Community to discuss an early association between the two groups? Secondly, can the Chancellor assure us that in so far as the new Association may adversely affect particular areas or industries in this country, the Government will press on even more vigorously with bringing new industries to these areas, particularly in Scotland?

Mr. Amory

We are very anxious that no opportunity should be lost of joining in fruitful discussions with the Governments in the European Economic Community. I am absolutely certain that that will be the policy of all Governments of the new Association.

As to the second part of the right hon. Gentleman's supplementary, I am sure it is right, that we must regard our industrial economy as a flexible one. There must be changes from time to time, but it is very important that the Government, for their part, Should do everything they can to ease those transitional difficulties that arise and allow such changes in the pattern of our production as are required to take place with the minimum damage to the economy as a whole or to the particular areas where industrial concerns are located.

Mr. Holt

I wish that I could equally warmly welcome this Convention, but as it is born out of failure to obtain greater unity in Europe, that is not possible. May I ask the Government what steps they intend to take—because the initiative is with them—to get this greater unity in Europe? Does not the right hon. Gentleman agree that possibly the greatest contribution towards obtaining this unity would be to bring Imperial Preference to the bargaining table?

Mr. Amory

I do not agree with the first part of the hon. Gentleman's supplementary. This, in our opinion, is definitely a step forward in the direction towards which we are all trying to work, for the widest possible Free Trade Association.

As to the last part of the hon. Gentle. man's supplementary question, I think I made it clear that we have remained in close consultation with the Commonwealth on these difficult questions, but at present, at any rate, it has been a question of a European negotiation for a step forward in European free trade, and we have been mainly concerned there to see that any fresh commitments that we take on should be reconciled with our commitments to the Commonwealth.

I am sorry that I have forgotten the second part of the hon. Gentleman's supplementary question.

Several Hon. Members

rose—

Mr. Speaker

Order. The Chancellor of the Exchequer was asking the hon. Member to repeat the second part of his question.

Mr. Holt

The second part of my question related to the Imperial Preference system. Would not the Chancellor agree that one of the great difficulties has been that Europe has thought that we wanted to get the best of both worlds? If we really want to work in co-operation with European countries, had we better not bring them into our arrangements?

Mr. Amory

I would say, once again, that from the beginning of these negotiations we have been at pains all the time to ensure that any fresh commitments we take on do not conflict with commitments that we carry, and are glad to carry, to the rest of the Commonwealth.

Sir A. V. Harvey

Having arrived at this provisional agreement, it would appear that Britain has gone a long way with respect to the import of fish fillets. Can my right hon. Friend say when there is any likelihood of Norway easing the limits of territorial waters to the benefit of British trawlers?

Mr. Amory

I think that we must keep this matter in perspective. The lengths that we have gone are these. Frozen fish fillets will be treated as an industrial product up to a limit of 24,000 tons, which has to be set against total landings of fresh fish of 900,000 tons. We have reserved the right that if the imports to this country from Scandinavian countries reach that figure—and they are at present about one-third of that figure—and if we believe that serious damage is being done to our fishing industry, we can reserve the right to restore such reductions in the duty as have taken place.

We have further reserved the right to take the same action if any decisions that are reached as a result of the forthcoming conference on the rights and limits of fishing should prove adverse to this country. Those two things together really safeguard the interests of our fishing areas.

Mr. Monslow

While welcoming the agreement, may I ask the right hon. Gentleman what positive steps he has in mind to safeguard industries which will be affected by the agreement?

Mr. Amory

Again, we must keep the matter in perspective. We do not think that any of our industries will be severely hit by this. We have to remember that these reductions in tariffs will take place gradually over ten years, and, also, that one or two of the industries that have been mentioned, such as trade in frozen fish fillets and paper making, are both trades that are going ahead and whose turnover is steadily increasing. So we believe that any changes that are forced on those two industries will have only very limited effects on their prosperity.

Mr. Burden

Will my right hon. Friend give an undertaking that, although the members of the Community will progressively reduce their tariffs against each other, no commitments will be made that will interfere with our rights to impose duties on countries that are outside the Community, and that we shall retain complete and absolute flexibility to exercise Imperial Preference and, in fact, to adjust tariffs to countries outside the Community as may be in the interests of our country?

Mr. Amory

Broadly speaking, I think that I can give my hon. Friend the assurance that he desires. There are one or two changes here which have some relation to bound preferences, and in two or three cases that will involve negotiations with the Commonwealth countries concerned. But, in general, it is a characteristic of this Free Trade Association that there is no common external tariff. The external tariff is a matter for the judgment and decision of the individual country concerned. That reserves full power over that field.

Mr. Hoy

Is the right hon. Gentleman aware that when he talks of 24,000 tons of frozen fish, that is equivalent to landings of 50,000 tons of fresh fish? Therefore, the matter must be considered in that perspective and not in the light of the comparison that the right hon. Gentleman used. Secondly, may I ask whether the question of industrial fishing is being raised, because this, also, is a very serious problem and it arises in that part of the world.

Mr. Amory

To the first part of the hon. Gentleman's question the answer is "Yes". What he says is perfectly true. Weight for weight—and I was careful to say frozen fish, on the one side, and fresh fish, on the other—it is true that 1 1b. of frozen fish is the equivalent of nearly 2 1b. of fresh fish. On the question of industrial fish, I take it that the hon. Gentleman is talking about fish meal?

Mr. Hoy

Yes.

Mr. Amory

That has been taken into consideration. We do not believe that there will be a risk of serious damage to that industry.

Mr. Crosland

While I agree with the right hon. Gentleman that we must keep frozen fish in perspective, is he aware, first, that this concession has aroused very considerable anxiety on the part of the industry and the trade unions? Secondly, on the question of fishing limits, can he give us a little more detail on what he means when he says that we have reserved our position in the event of an adverse decision at the next Geneva conference? Will he say exactly what he means by "adverse decision"?

Mr. Amory

I know of the anxiety that this proposal has caused to the fishing industry, but it is my belief that when the industry has fully examined and understood the exact provisions and safeguards which we have put in, and which are very considerable ones, its anxieties will be allayed. I should like to say how unhappy it would have made me, as an ex-Minister of Agriculture, Fisheries and Food, if I thought that I was doing something which would be unfair to that very important national industry of ours.

I should like to make clear that the judge as to the damage that is caused will be ourselves. If the hon. Gentleman looks at the Convention, he will see that there is a provision which deals with a change in competitive conditions in the industry. We, by a settlement which is on record and which will be in print, have given notice that we should regard any change in fishing limits which was adverse to ourselves as a change in competitive conditions which would entitle us, if we wished to do so, to restore some or all of the cuts in the tariff that had been made. It leaves us the judge in that important matter of what would amount to damage.

Several Hon. Members

rose—

Mr. Speaker

Order. We really cannot debate this matter now. There is no Question before the House.

Following are the documents: