EAST-WEST TRADE (DEVELOPMENT)

HC Deb 24 April 1961 vol 639 cc38-100

3.43 p.m.

Mr. G. B. H. Currie (Down, North)

I beg to move, That this House, being conscious of the necessity for the expansion of the exports of the United Kingdom of Great Britain and Northern Ireland to countries overseas, urges Her Majesty's Government to give every encouragement to those firms who endeavour to increase their exports to the countries of the Planned Economy Group, and asks Her Majesty's Government, when negotiating trade agreements with these countries, to have particular regard to the contributions that can be made by the Northern Ireland shipbuilding, heavy engineering, textile and electrical industries. I have no personal financial interest of any sort in the outcome of this Motion, nor, indeed, have I any financial interest other than the interest of an ordinary back bench Member of Parliament in moving the Motion. Having cleared that out of the way I should like to say that my interest in the subject matter of the debate is solely that of the development of trade, of securing, so far as possible, a steadily improving friendly relationship in international affairs through trade, and in furthering the interests of this country not only in trade, but in international affairs.

I hope that when this Motion has been fully discussed we shall be able to go away with the feeling that at least some of the problems have been brought out into the open for discussion and that the relationship between the countries of the West and those countries to which I refer as the countries of the planned economy group will have been brought closer together.

In opening the debate, I realise that I am by this Motion raising not only great questions of international trade, but problems of a political nature as well. It may be argued by some right hon. and hon. Members that an increase in the flow of trade between East and West would be likely to undermine the security of the Western nations. Indeed, it may be argued that it would be likely to undermine N.A.T.O. itself against the advance of Communist ideology from behind the Iron Curtain. In considering that possibility, I think that it is wise to bear in mind what was said by Mr. Diefenbaker in the Albert Hall as recently as 4th November, 1958, when he is reported as having said: Trade has become a major weapon in the Communist world offensive. First, it was the U.S.S.R., and now Red China has joined in an Asiatic trade onslaught intended to capture markets and with and through them the minds of free men. The views of such an experienced and such an astute politician as Mr. Diefenbaker, expressed so recently in this country, must, I think, make us pause and make us give very weighty consideration to the problems before we pass this Motion in this House this afternoon.

We must also, I think, when we are discussing this Motion, have in mind what Lenin wrote in his memorandum on the "Basic Considerations for Setting up a People's Commissariat for Foreign Trade." Let me just remind the House of what was said in some of those memoranda. I would quote this extract: The governing classes, the financial aristocracy, the bourgeoisie and the democratic idealists are deaf mutes ideologically and all plans must take this into account. He went on to say: In order to conquer these countries we must express our eagerness, our very great eagerness, to set up friendly trade relations with the capitalist countries on a basis of complete non-intervention in their internal politics. The deaf mutes will believe this. They will be delighted to open their doors wide. Through them the Comintern agents will speedily find their way as our trade representatives. The deaf mute capitalist money makers will be so eager to conquer the Soviet market that they will shut their eyes to the truth. They will grant us credits which will be used to supply with funds the Communist organisations in their countries. Meanwhile, by supplying all kinds of products they will strengthen and perfect our war industry, which will be essential for our future attacks and victories over our suppliers. That is the extract, but he went on to say—and this may be an illuminating portion of his speech— Telling the troth is a bourgeois prejudice. In so far as they are effective, lies are justified. That is the background against which we must look as we discuss this Motion. Bearing in mind what Lenin said in his memorandum, and the warnings given recently by Mr. Diefenbaker in the Albert Hall, we must consider whether, since Mr. Khrushchev took over the reins of office in the Soviet Union, there has been a change of outlook and a change in the strategic plans of the Eastern bloc of nations. We must also decide whether it would be safe for us to engage in any further degree of trade with the nations of the East, or whether we would be committing a dangerous act of folly to trade further than we are at present.

Although I am not convinced that there has been any substantial change in the general strategic plan of the Communist countries, the matter cannot rest there. We must look further as we discuss this Motion.

Consequent on the tragic and costly blunders of American statesmen which were made towards the end of the last war, a number of once free, once independent and once proud States found themselves behind the Iron Curtain. They found themselves no longer free men, able to practice their democratic way of life, but committed to the Communist system. How different it might have been if, in 1620, the Plymouth rock had landed on the Pilgrim fathers, instead of the event having happened the other way round. That, however, is the position today, with many once free nations behind the Iron Curtain.

Some of them, particularly in matters of trade, are looking towards the West. We must, therefore, consider whether, if we refuse to trade or to increase our trade with them, we would be driving them irretrievably behind the Iron Curtain. Having considered that point, we must then decide whether we would not, in refusing to trade with them, be closing a door which we can to some extent throw open by trade, and thus keep alive the possibility that some day they may once again become free States.

I have little difficulty in coming to a decision on this problem. I strongly advocate that we should encourage the flow and development of trade between Britain and what are known as the satellite countries. I pose this question with regard to Russia and Communist China: are we to withhold our trade from them, and so perpetuate the tension that has existed since 1945? If we withhold our trade on the grounds that we have a different form of Government, a different outlook on life, and a different approach to the freedom of the individual, surely we are shutting the very door through which we can talk, through which we can show them our way of life, and through which, eventually, we may be able to persuade them that the best interests of their people are very similar to the interests of the people of the free Western nations.

Through trade, sporting events and the development of cultural approaches between the peoples of different countries, we may find the best method of preserving peace. With knowledge of the Lenin plan, we must accept the challenge and the fact that we must trade for peace. There can be no one in any country who, voluntarily, would commit his nation to the devastations of a nuclear war. Therein lies the distinction between events as they are today and events as they were at the time when Lenin wrote his memorandum. In those days, war did not adopt that look of utter desolation which it adopts today.

By trade—and I use a quotation that has been used many times in this House— Out of this nettle, danger, we pluck this flower, safety. I was glad to learn that my right hon. Friend the President of the Board of Trade is going to Moscow next month to open the British Trade Fair there. I am told that this fair has been organised as a result of information already given as to the type of equipment required by the industrialists in Russia and in the Eastern countries. The fair will be a great shop window for Britain in Moscow, but it is also to be, I am told, a shop window showing those goods which manufacturers in this country know to be in demand in Moscow and in the Russian States.

In my speech I shall confine myself to the development of trade between the United Kingdom and the German Democratic Republic and Hungary, and I must refer to the part that the Northern Ireland industries might be able to contribute towards the development of this trade. I have very little particularised knowledge of the potentialities of trade with Russia or Communist China, but I am hoping that some right hon. and hon. Gentlemen who have more profound knowledge of this subject will be able to inform the House of its potentiality.

At the beginning of March this year I was privileged—with my wife, I am glad to say—to go out to the Leipzig Spring Fair, held in the German Democratic Republic. It was my first visit to the fair which, I believe, is the largest in the world. It was also my first visit to the German Democratic Republic. I was astonished by the magnitude of the fair and by the number of firms from all countries which were showing at it with a view to obtaining orders for their products. Almost every manufacturing nation was represented.

The United States, despite McCarthy-ism, was represented by the cream of the American steel industry. France—that unhappy country today—was represented by numerous exhibitors, and so was West Germany. Great Britain was represented by exhibits of tractors, motor-cycles, machinery, textiles, steel, electrical goods and numerous other manufactures. I am glad to say that Northern Ireland was also represented by the firm of James Mackie, which manufactures some of the best textile machinery in the world and which has supplied continental needs for a great number of years now.

I found it difficult to understand how it came about that some Western countries which had done their best to prevent this country from developing its trade with the German Democratic Republic came to be showing their products at the fair, which they had tried to proscribe as far as we were concerned. It has been said that example is always more efficacious than precept and I should have thought that when they were trying to persuade us to keep away from the fair they might have stayed away themselves, but the contrary was the case.

Since I tabled this Motion, Cmnd. Paper 1329, United Kingdom Balance of Payments, 1958–60, has been published and we have also had the Chancellor's most remarkably able Budget speech. I shall not weary the House by repeating the figures given in the White Paper, or in the Chancellor's speech. They are sufficiently fresh in the minds of right hon. and hon Members for it to be unnecessary for me to repeat even the figures for the balance of trade. But those figures emphasise again to us all the importance of our balance of payments and the great necessity that we should increase our drive for exports and increase our productivity. I do not think that any of us are in conflict on those morals which we must draw from the White Paper and the Chancellor's speech.

I believe that the Budget proposals will prove to be a great stimulus to our export drive, though I have some reservations about what my right hon. and learned Friend had to say on the imposition of a tax on the number of persons employed in an industry and also on the powers which he has retained in his own hands to impose a discriminatory additional form of Purchase Tax. Those two proposals could be quite devastating to our situation in Northern Ireland, and I greatly hope that in the near future we shall have a statement made on behalf of the Chancellor to the effect that neither of these financial proposals will be employed in respect of any of our industries in Northern Ireland; and certainly as long as we have anything like the much too substantial unemployment that exists there at present.

As a country living by its foreign trade, Britain must be continually searching for world markets where the possibilities are growing and, as a result of industrialisation, the type of manufactured goods in which Britain excels are likely to be in increasing demand. At present, industrial growth in Russia, China and Eastern Europe is estimated to be about 10 per cent. per annum. In some countries it is more and in some rather less, but that is the general overall figure behind the Iron Curtain. The pattern of their trade is moving in the very direction in which this country, as an exporter of highly technical manufactured goods, should particularly welcome. I am certain that there are vast potentialities for the expansion of our trade in those countries.

In 1960, according to figures which I obtained today, the total of all exports from all Western countries to the planned economy countries amounted to £792.2 million. Britain's share of this vast figure was a miserable £107.8 million. The figure for Western Germany was £272.2 million or more than one-third of all the trade. If, as I suggest, the markets of the planned economy group are expanding at such pace, we should offer the same import facilities into this country as we allow to our competitors in Western Europe, including the countries of the European Common Market which are raising tariff barriers against us.

We impose a highly discriminatory system of import licensing against the goods of the Eastern bloc and, at the same time, farcically enough, by that very action denying them the possibility of earning the necessary sterling to finance the substantial orders for British engineering and other goods which they wish to place in this country. It is a most ludicrous situation. In addition, is it not absurd that we should have a greater restriction on travel by buyers from the German Democratic Republic to this country than there is on their travelling to the German Federal Republic?

Surely, also, it is a calculated insult to the citizens of the German Democratic Republic that, although we know where they come from, we should st11 insist on their being described on their travel documents as "presumed to be German." They are Germans. We know that they are Germans. We know the places there. Surely, their travel documents might describe them as being German.

Under the existing quadripartite machinery by which temporary travel documents are granted, our trade rivals in the other Western countries can block the travel of any prospective customer whom they know wishes to come to this country to place an order. It is the easiest thing in the world to get the order oneself by blocking the travel or a customer's to one's trade rival. Nothing could be simpler.

It is absurd, also, that British European Airways should not be allowed to fly a service from here to Eastern Germany—if we like to call it by that name, or the G.D.R.—whereas other Western European countries can run services not only to Eastern Germany, but to Great Britain as well. This was made appallingly obvious at the time of the Leipzig Trade Fair, when one could fly from Eastern Germany to another Western country and then from that Western country to London, but one could not fly in a B.E.A. aeroplane for that journey.

For the past two years, trade between Britain and Eastern Germany has been regulated by an agreement entered into between the Federation of British Industries and the Chamber of Foreign Trade of the German Democratic Republic. That is, of course, consequent on the fact that the German Democratic Republic does not exist! This year the agreement was greatly delayed as a result of difficulties that arose between Eastern and Western Germany. It was concluded only on the eve of the Leipzig Trade Fair.

I am glad to say that that was a rather better agreement than the previous year's agreement, but the effect of this great delay was that when our exporters got out to the fair they discovered that the trade agreement had just been concluded and that their competitors had "pinched" nearly all the trade and our people, the export drivers, were left to take what they could get of what was left.

It is useful to contrast the way in which these matters are conducted by this country with the method used by certain other countries. I am told that in France, Belgium and Italy there are special Government bodies on which sit representatives of all their various economic Ministries for the purpose of negotiating trade with the German Democratic Republic. Each of the bodies set up by these countries has its own representative in West Berlin for the purpose of dealing directly with the East German Trade Ministry that is concerned with whatever may be the particular product about which they are negotiatting. I am sure that we could give consideration to setting up a similar sort of organisation which would have its representative on the spot. Last year, our trade with Eastern Germany amounted to £14 million; this year, as I have said, the negotiated figure has gone up to £18 million.

While I was in Leipzig, with Lord Boothby and a number of my hon. Friends—I do not know why those concerned were from this side of the House only, although I did notice some hon. Members opposite in Leipzig at the time—we had an intimate interview with Herr Ulbricht, the Chairman of the Council of State of the G.D.R., and with two of his Ministers. We had to make it clear to him that we were in Leipzig as private Members of Parliament, and that nothing we said in any way com- mitted Her Majesty's Government—indeed, that our views would not necessarily be anything like the views of Her Majesty's Government. Nevertheless, it was interesting to have the discussion. Herr Ulbricht spoke of his country's desire for peace—and anyone who has seen Dresden, and the devastation of many parts of Eastern Germany, can well understand the desire for peace of the Eastern German people.

Herr Ulbricht spoke of their wish that we should engage in trade with each other and of his desire to enter into not merely an annual agreement, but a trade agreement that would last for twenty years. When we look at the picture it is easy to see why he wanted such a long-term agreement. There were discussions some months ago about the purchase, by East Germany I think, of a steel strip mill. The order was worth about £60 million.

That order went to another Western country, but it is obvious that such a valuable article, such an immense machine, could not possibly be constructed within one year, and Herr Ulbricht's obvious desire that was that where large plant is required it should be possible to spread the negotiations so that he would not find, for example, that when one-tenth of the mill had been constructed the trade agreement closed down and he was left without the other nine-tenths. I believe that that was the sort of thing he had in mind when he said that he would like to be able to arrange a trade agreement for a period of about twenty years.

Herr Ulbricht also visualised—and now I realise that I am getting on to dangerous ground—that Germany would be divided for a very long time. I must confess that I share his view, and that I would have the greatest trepidation were I to learn tomorrow, or in a week or a month or a year hence, that the two parts of Germany had been brought together again, either in the West or behind the Iron Curtain.

I have already said that the volume of trade done between this country and the planned economy countries last year was £107.8 million. What a very insignificant trade agreement this is that has been entered into between this country and Eastern Germany; but, if I may, I should like to leave it to others to develop the more intimate and more particularised figures of East German trade, and turn to trade with Hungary.

Exports last year from this country to Hungary amounted to £4.3 million. West German trade with Hungary amounted to £188 million. France exported £6.7 million worth of goods to Hungary, and Italy's trade with Hungary came to the value of £7.6 million. Here again, we were left far behind when compared with these other countries. Our balance of trade with Hungary was exactly even. We imported and exported exactly £4.3 million worth of goods, so it cannot be said that this balance is an argument against the increase of our trade with Hungary.

To return for one moment to our trade with Eastern Germany, I was told that the East Germans had bought their maximum amount from this country, but we had not purchased to our maximum amount from them, so this country was left in balance of trade with Eastern Germany.

Just over a week ago, I had the privilege of meeting a group of Hungarian industrialists who came to this country with a view to exploring the possibility of placing orders for engineering and other machinery which, hitherto, they had purchased from Western Germany. I am glad to say that, in all probability, one order at least will come from Hungary to a Northern Ireland firm manufacturing textile machinery. There is, of course, the qualification, and one which we have to look at in all these trade discussions, that our price must be competitive with the price quoted by other nations.

At the outset, I disclaimed any financial interest in East-West trade. My interest lies in the fact that at present in Northern Ireland 36,338 persons are registered as being out of work. I recognise the valuable work which has been done by the Government of Northern Ireland, under the inspired guidance of Lord Brookeborough, to create jobs for those who are unemployed. Already, the new Minister of Commerce, Mr. Andrews, is showing fresh drive in that Ministry, in the efforts being made in the Province to obtain new industries and new orders.

I recognise, also, the assurances of sympathy and desire to help which Her Majesty's Government have given to us all in Northern Ireland and also the financial help which has been afforded to Northern Ireland. But the problem requires more than expressions of sympathy. It requires even more than that of making available about £8¾ million a year over the next five years. The number on our unemployment register rose last year by 6,000. We have the highest birth rate and the lowest death rate in any part of the United Kingdom, so one can understand the rise in unemployment. That number of new jobs must be created before we can begin to attack the unemployment problem. We have to fill 6,000 new jobs before we get back an unemployed man into a job.

In the very near future, I am sorry to say, my information is that about 3,000 men will probably find themselves out of work additionally at Harland and Woolf, as soon as a vessel which is almost completed sets sail. These will be most of the men engaged and helping in the finishing trade in the shipbuilding industry. We have a shipyard second to none in the quality of its work. It is, I believe, the largest in the United Kingdom, if not in the whole of the world. If we cannot get orders for ships, as seems to be the position in the United Kingdom at present, our shipbuilders must see whether they can get orders from abroad.

I am not convinced that some of our older directors in the shipbuilding industry—and this applies not only in Belfast, but elsewhere—are giving sufficient energy and drive to getting orders for ships from other countries. Indeed, I know of at least one inquiry made from behind the Iron Curtain which got no further than the inquiry stage. Having said that concerning management, I should also like—and I think that it is within the framework of this debate—to say that demarcation is another matter which will have to be looked at if we are to compete successfully with the shipbuilding yards abroad and get orders for our ships. Victoriana in management and Luddite trade unionism must both go and we must make a fresh approach to obtain orders for ships from abroad.

In Northern Ireland, we have many go-ahead firms, like James Mackie, which, over the years, have built up a big reputation on the Continent, and also firms like Davidson and Company, which manufactures industrial fans and allied equipment. Short and Harland manufacture not only aircraft, but computors. Belfast Ropeworks do an export trade in ropes. We have our linen and textile factories, but I recognise that there is a special linen problem in respect of our East-West trade. We have in Cyril Lord carpets the largest carpet factory in Europe, fortunately in my constituency. We have many other firms whose names could be given by the Belfast Chamber of Commerce to industrialists who are anxious to get in touch with them.

We in Northern Ireland are anxious to increase our contribution to United Kingdom exports. As an integral part of the United Kingdom we would benefit greatly by an increase in the export trade. We think that we could reduce our unemployment figure to some extent by exports. Like the rest of the United Kingdom we are anxious to work for a better understanding between the nations of the world. We believe that trade is one way in which we can help in that direction. Surely it is worth the effort. We would welcome in this debate the encouragement, if nothing more, of Her Majesty's Government in our endeavours to develop East-West trade.

4.30 p.m.

Mr. Arthur Lewis (West Ham, North)

I should like, first, to congratulate the hon. Member for Down, North (Mr. Currie) on selecting this Motion for debate and the admirable way in which he moved it. I think that most, if not all, of the back benchers on both sides of the House will agree with What he has said, and I hope that even the Minister will be able to do so as well.

Like the hon. Member, I, too, wish to declare an interest. For many years I have been attempting, in my small way, to extend East-West trade generally and with East Germany in particular. Long before the hon. Member went to Leipzig I was in the habit of going there—incidentally, at my own expense, with no question of financial gain. The hon. Member for Louth (Mr. C. Osborne) laughs, but not only did I pay my own expenses, but I was out of pocket. I had no means other than my Parliamentary salary, and in those days there was no question of companies meeting one's expenses.

For some years I have done my utmost to help to sell Britain and British products. I think that it was at the Spring Fair, in 1959, that I had the pleasure—some may say the undoubted honour—of conducting Mr. Khrushchev around some of the exhibits at the British Pavilion. On that occasion, without any personal, direct or indirect interest, I took the opportunity of saying to Mr. Khrushchev, "This is made by the X company, which is one of the finest companies in the world to make these products." Not only did Mr. Khrushchev show an immense interest in our exhibits, but I found, with respect, that he knew much more about the products, who made them and where they were made, than many people in this country.

As I have said, I have done everything possible for some years to encourage East-West trade generally and with the German Democratic Republic in particular. The reason is that I knew the Deputy Minister for Trade in East Germany very well, and I tried to get him to agree to give more export opportunities to Britain than had hitherto been the case. The hon. Member for Down, North said that when he was at Leipzig he was surprised to notice the size of the fair and the large number of Western countries exhibiting there. The truth is that this has been going on for years. Most, if not all, of the Western countries have been exhibiting, but one of the major exhibitors has been West Germany.

Whatever the Minister may say, the West Germans have for years been opposed to Britain doing trade with East Germany and have put every obstacle in the way of this trade, allegedly because they claim that if Britain were to trade with East Germany it might lead to political recognition of East Germany, though the real reason is that they know that if Britain were to trade with East Germany on a bare competition basis, Britain might place with East Germany orders which otherwise would go to West Germany.

Unfortunately, we have fallen for this approach by the West Germans, and I think that the Board of Trade and the Foreign Office are to blame for this. Whenever the West Germans have objected, the matter has gone through the usual channels to the Foreign Office, or to the Board of Trade, and every difficulty has been raised. As the hon. Member has said, towards the end of last year there were to have been discussions on the new trade agreement between the F.B.I, and the East German Chamber of Commerce. It is also a fact that towards the autumn of last year the West Germans broke off their trade agreement.

Strangely enough, we found the same difficulties encouraged here. The East Germans wanted to come to this country to discuss placing large contracts with such reputable companies as Pye, but we found that the East German technicians and businessmen were unable to come here. They were unable to get travel permits. Strange as it may seem, because East Germany is not recognised in diplomatic channels, East Germans have to get a travel document, and, although they may have the necessary permission to travel, they are not allowed into this country without a travel document.

It would appear that when the West Germans did not want Herr Schmidt or Harr Braun in East Germany to come here, they did not come because they could not get their travel documents. They would end up in West Germany, in Hanover, or in Hamburg, and discuss with the West German industrialists the same type of contract which they wanted to discuss in Britain. That is stupid and ludicrous. It is no good the Board of Trade saying that this did not happen. The hon. Member for Skipton (Mr. Drayson) will recollect that on one occasion he and I tried to raise this matter as a general principle when somebody wanted to come to this country to attend an agricultural exhibition and to place an order, but was prevented from coming. This order was not placed with us, but a few weeks later we read in the Press that an almost identical order was placed with the West Germans.

The hon. Member for Down, North referred to a steel strip mill contract. The position is rather strange, because a Board of Trade spokesman recently said that we had not lost the contract and that it was still open. I would like to get the matter quite clear. Is it true that this contract is still under negotiation, or is it true that the French have obtained it? There has since been the Government's statement about extended credit facilities, but is it true that when this matter was first raised, and the East Germans wanted long-term credits, which British manufacturers were willing to obtain for them through the Export Credits Guarantee Department, the British manufacturers came up against a brick wall so that the contract finally went to the French? There are dozens of such cases, where, if there had been Government help and assistance, this country could have obtained large contracts with East Germany.

The hon. Member for Down, North said that when he was at the Leipzig Spring Fair he found trade representatives from various Western countries present. I pay tribute to the exhibits of the British exhibitors, but the hon. Member will agree with me that, excellent as was our steel pavilion, for instance, it did not compare with what Britain could and should have been able to do. Compared with the Soviet pavilion, the Czech pavilion, or the French pavilion, it was if not shabby then somewhat inferior, especially in view of what could have been done with assistance from the Board of Trade.

The Board of Trade says that this is because we do not recognise East Germany. For many years, I have asked the Board of Trade to send representatives officially or unofficially to fairs of this kind. Almost every other country sends official or unofficial representatives. At the Leipzig Fair, West Germany had its Minister for Trade, Dr. Lemmer, who had discussions with the East German Minister of Trade, as he then was, to whom the hon. Member for Down, North spoke, His Excellency Minister Rau, who has since died, and to whose work I pay a sincere tribute. He tried in every way possible to establish better relationships, political and trading, between his country and Britain. During those negotiations there were discussions in Berlin between him and Dr. Lemmer, although the West Germans say that we should have nothing to do with East Germany and even though the Board of Trade does not send representatives to these fairs because we do not recognise East Germany.

That is a stupid approach. It may be that the President of the Board of Trade would not like to go himself, or to send the Parliamentary Secretary, but it is not impossible to arrange for someone from his Department to have a look at these fairs without committing Britain or the Government. It is not impossible to arrange for such an official to have a holiday in March, so that at least he could have a look around. British exhibitors need to have someone to whom they can turn and need to know that help and support are being given. British exhibitors have great difficulty about putting on a show which is worth seeing, for their efforts are nothing in comparison with what could and should be done if help and assistance were given by the Board of Trade.

I am pleased to see that the President of the Board of Trade is to go to Moscow on 19tlh May. He is officially to open the British Fair in Moscow. I wish him every success and I congratulate him. While he is in Moscow, he will see Ministers and Deputy Ministers, businessmen and industrialists and technicians from Russia, China, Bulgaria, Hungary, Roumania and the German Democratic Republic. Is he to say that he will speak to the Russian technicians and Ministers and other Communist representatives, but not the Minister from the German Democratic Republic? Of course, he will not. If he talks to the East German Minister about trade and commerce while he is in Moscow, why should he not go to Leipzig and talk to him there?

The question of official recognition is a red herring which the West Germans have drawn across the trail. I hope that in the months ahead the Board of Trade will take the opportunity of helping British businessmen to extend their trade with East Germany. There is an enormous potential for the sale of almost every type of British goods and machinery in East Germany, if encouragement is given.

The East Germans need foreign currency and, obviously, cannot import unless they can earn the currency to pay for the goods. I do not see why long-term credit should not given to them. The hon. Member for Down, North said that 36,000 people were unemployed in Northern Ireland. They will have to get help from National Insurance and National Assistance. If that costs £x a week, as it will, would it not be better to work out a system of giving the East Germans credit to that equivalent to allow them to place a few orders for ships and textile machinery in Northern Ireland? It is better to have British and Irish workmen working at the bench than drawing unemployment pay and National Assistance. With the right help and encouragement and long-term credits, long-term trade could be established with East Germany.

The same is true of China, which I visited in 1954, when I met various Ministers. They said that they were anxious to trade with Britain, even in preference to Russia in those days. They thought that British machinery and plant and equipment was better and more advanced than Russian, and hence they wanted a trade agreement with Britain. We did not encourage that trade and since then plant has been set up in China, with Russian aid, and the Chinese would now be in difficulties about switching trade to this country, even if they wanted to do so. On a long-term basis, we would have nothing to lose by assisting those countries which are in the process of industrialising their economies. The same is true of Hungary or Roumania.

Only last Friday, addressing the Russian Section of the British Chamber of Commerce at a luncheon, a Russian trade representative said that the Russians wanted to sell more oil and petrol to Britain, but that we would not allow those products to come in. He said that if the Russians could earn sterling by the sale of oil and petrol exported to us, they could buy from us ships and textile machinery and other products. It is ludicrous that we should be short of dollars and yet insist on spending dollars on importing American oil and petrol in preference to what we could get from Russia. It would be impracticable to try to get all our oil and petrol from non-dollar markets, but I see no reason why we should not allow the Russians to earn the sterling with which they could buy plant and equipment from British firms.

Before the war, a fair amount of Russian oil products were sold in this country. I do not see why the Government should go out of their way to help the present petrol and oil monopoly here. They say that they are in favour of competition. If so, when the President of the Board of Trade goes to Moscow, let him agree to help the Russians to export oil and petrol to us, so that they will be able to earn the sterling to buy the many products of which I understand there are to be excellent exhibits in Moscow.

The strategic embargo list is stupid and it is time that the Ministers concerned—the Board of Trade, the security Ministries and others—got down to discussing it with the Americans. It does not make sense. It covers categories of goods which are held to be of strategic value. I am connected with the semiconductor industry, which deals with such things as electronics, diodes and transistors. The list covers such equipment. This industry is not allowed to export its equipment to a number of planned economy countries, but the Russians have sent a man into space in a sputnik loaded with transistors and semi-conductors, many of which are far more advanced than those which we produce. They have the plant and equipment to make high frequency mesa types of transistors which we do not have.

I do not have permission to quote his name, but I will reveal his name privately if I am required, but the other day I was speaking to a noble Lord who is one of the biggest industrialists in this country. He said that about eighteen months ago he had attended a lecture given by senior Russian scientists from the Moscow Academy of Scientists.

After the lecture a printed hand-out of the lecture was provided. I was told, "After hearing the lecture, and reading it, I still did not understand much about it and I put it on one side. About twelve months afterwards I received something marked, 'Top Secret, not to be disclosed'. It came from one of our security departments. It struck me that I had read this before and I turned up the hand-out from the lecture which the Russians had given twelve months previously. It was almost word for word the same as the document which I had just received from the security department marked, 'Top Secret'".

That is the situation. In many spheres the Russians are further advanced than we are, but we will not allow our manufacturers to supply plant and equipment to them, although in many cases the Russians are making the same plant and equipment as well, if not better.

I ask the Minister to try to get the Americans to see the wisdom of removing some of these items from the strategic embargo list because the way in which the list works at present is ludicrous. As the Minister knows, frequently a big contract for a complete line, costing perhaps £250,000–£750,000, would be placed but for the fact that one machine, essential for the whole line, is on the strategic embargo list and the Ministry—I do not blame the Minister—cannot agree to the export of that one item. As a result, the whole contract is lost. Yet in the country which would place the order they have the same kind of machine, or a similar machine, operating, and they say, "If we cannot have all this line exported to us and if we have to make one piece of it, we might as well do the whole job ourselves".

Hon. Members may ask why they do not make these things themselves in any event. The reason is that they do not want to concentrate on some of these jobs when they have other important developments to carry on and lines to expand.

I wish the Moscow Trade Fair every success and I wish the Minister every success in his endeavours. I feel that he has done and is doing a very good job. I have met many British businessmen, and I know that they and some of our top industrialists and company executives will be there. This fair will do nothing but good. I ask the Minister whether, between now and the next Leipzig Spring Fair, he will give some active assistance to enable the same British exhibitors to exhibit at the Leipzig Fair, which is the centre of East-West trade. The British Fair in Moscow will be limited perhaps to one or two countries, whereas at Leipzig all the East-West countries will be assembled. The Americans, the French, the Germans, the Italians and, of course, all the countries of the Eastern bloc will be there. If we want to get into these Eastern markets it is imperative that we should give more assistance in the future than has been given in the past.

4.58 p.m.

Mr. John Rodgers (Sevenoaks)

I am sure that we are all agreed that my hon. Friend the Member for Down, North (Mr. Currie) has done us and, incidentally, his constituents in Northern Ireland a great service in choosing this subject for our debate this afternoon. To my mind, we give insufficient attention in this House to the problems of industry, commerce and trade, which, after all, are the foundations of our progress and prosperity. If things were going swimmingly there would be some excuse for this, but we all know that the problem which faces the country most urgently at the moment is that of our exports. I am certain that this is a subject, very much the concern of my right hon. Friend the Minister of State, which we ought to debate.

There is an idea prevalent in parts of the House and the country that the Government are not interested in trying to further an increase in trade between the East and the West. I believe that nothing could be further from the truth. My right hon. Friends the Minister of State and the President of the Board of Trade do all they can to expand trade between our country, the Soviet bloc and China. They pay personal visits, they receive deputations and delegations, they encourage groups to go to the various countries, and they receive groups of industrialists in this country—and they are having considerable success. Anything which adds to our physical exports from this country and helps in our balance of payments problem is a matter to which they give the greatest attention, and it is not true to suggest, as the hon. Member for West Ham, North (Mr. A. Lewis) seemed to suggest, that the Government are dragging their feet in the matter of East-West trade.

There are difficulties, and I shall come to them. Practically every week hon. Members who read the excellent publication, the Board of Trade Journal, which is not exactly exciting but is full of good information, will read of new orders which have been gained for British exports to countries behind the Iron Curtain. In this current issue there is reference to a £3 million contract for a paper mill to Yugoslavia—I mention that in particular, because the Motion refers to countries "of the Planned Economy Group", and not specifically to the Sino-Soviet bloc; a dust-collecting plant for Soviet Russia, worth £500,000; diesel engines worth £150,000; recording equipment for Roumania; life rafts for Russian ships; and various other goods of that nature. These are export orders recently secured for this country in large part as a result of the efforts of the Ministers and the servants of the Board of Trade in the policy which they are pursuing.

Obviously, we should all like to increase the flow of East-West trade and I do not think that we are inhibited from doing so by any ideological differences. These exist, but they are not the inhibiting factor. We ought to realise that there are serious difficulties in making a great increase in trade between Britain and the Sino-Soviet bloc. Basically, the Soviet bloc follows a policy of self-sufficiency, which means that trade with the United Kingdom is secondary to trade with the other Socialist countries. Continually one reads of the Soviet Russia urging the satellite countries to increase their trade with the other Socialist countries to the detriment of Western Europe, including this country.

The Soviet bloc normally trades through the medium of bilateral trade agreements. The objective is that, country by country, they shall balance their imports and exports. As an earnest of our desire to co-operate with the Soviet bloc we have concluded bilateral arrangements with all the countries of the Soviet bloc with the exception of Albania, and we have even an unofficial trade agreement with East Germany, between the F.B.I, and the East German Chamber of Trade. The agreement has been made in that form because we do not recognise East Germany.

Those who have given serious thought to the problems of the export industries appreciate without my having to argue the point that there would be a tremendous boost to East-West trade if we could replace the bilateral agreements with a multilateral trading system, if only the Russians would subscribe to this policy. There would then be a far greater expansion of trade between this country, on the one hand, and Soviet Russia, the satellite countries and China, on the other.

Even without this multilateral trading, it is as well to ask ourselves how trade progresses between the United Kingdom and the Soviet bloc. Until we were supplanted by West Germany in the 1950s we had the biggest share of East-West trade. I admit that it was still considerably smaller than pre-war trade. Today, it is true, West Germany has about twice as much trade as we have in this sector. In reply to a Question last July, the Minister of State said that Britain's total direct trade with the Sino-Soviet bloc had increased by 15 per cent. in 1959 compared with 1958 and by 43 per cent. in the first five months of 1960. Those are the most up-to-date figures I have. When the Minister replies perhaps he will give the most up-to-date figures of trade between the United Kingdom and the Soviet satellites.

Mr. A. Lewis

The hon. Member said that one of the reasons why we have not increased our trade was that the Russians will not agree to multilateral trading. At the same time, the West Germans have doubled their trade with the Soviet Union, as he rightly said, whereas we have fallen behind. Can he explain the reasons for this? How have the Germans doubled their trade when we have not?

Mr. Rodgers

I shall talk in a few moments about a visit I made to Poland, when I saw what the West Germans are doing there. I hope that that will partly answer the question.

What prevents an increase in trade between Britain, on the one hand, and the Soviet Union and the satellite countries, on the other, when all of them genuinely desire to buy more from this country? First, one reason is the very existence of the bilateral trading arrangements. Last June, I had the privilege of paying a visit to Poland, as a guest of the Polish Government. I met the Deputy Prime Minister, the Minister for Foreign Trade, the Deputy Foreign Minister and others. They were most anxious to impress upon me that they would like to buy a great deal of our manufacturing machinery and the like in preference to buying from Western Germany, if only we would make more sterling available to them.

I am sure that my Polish friends, who, incidentally, treated me with the utmost warmth, friendship and courtesy—in fact, I have seldom had a warmer welcome in any country in the world than I had in this short visit to Poland—were sincere in their desire and the statement of their desire to buy more from Britain. But there are difficulties, as I tried to explain to them. In spite of these difficulties, the extent of our trade with Poland is not so bad. In 1957, United Kingdom exports to Poland decreased by 2 per cent., but in 1958 and 1959 they increased by 15 per cent. and 47 per cent., while United Kingdom imports from Poland increased by 10 per cent. in 1958 and by 26 per cent. in 1959.

I should point out that our trade with Poland represents about half the trade with the satellite countries. Next in order of trading, following Poland, is Czechoslovakia, followed by East Germany, Hungary, Roumania, and Bulgaria, in that order, with Albania nowhere.

Why cannot we buy more from Poland and from the other satellite countries to enable them to buy more machinery, making tyres, textiles and plastics, for example, new machine tools, electric generating stations, industrial "know-how"—which they are very anxious to purchase—and even more consumer goods, such as Irish linen, in which my hon. Friend the Member for Down, North is interested? The difficulty is that in the main the satellite countries have only agricultural goods to offer us in exchange.

When I was in Poland all that the Poles could offer us was more bacon. They asked for an increase in the bacon quota. We all know the complications of the bacon market in this country. Frankly, this is a non-starter. Roumania is another country with which we want to do more trade, but all she can send us is pulped raspberries suitable only for canteen purposes. There is a limit to the amount of pulped raspberries which we can import into this country. Obviously, we cannot extend credit from this country to these satellite countries unless there is some hope of repayment in the future. I am coming in a moment to a method in which I think trade could be greatly increased, but not along the lines which have so far been urged.

Russia itself, as the hon. Member for West Ham, North said, is anxious to purchase more from this country and is urging us all the time to purchase more of its oil. I do not pretend to be an expert on the oil industry, but, with all respect, I think that the hon. Member was a bit muddled in what he said about it. There is a net world surplus of oil, and, obviously, Russia would like us to take some of its oil.

What would be the effects of our doing that? Leaving out of account altogether the possible effects on our strategic situation if we became dependent even in part on Russian oil, we must not forget our immense holdings in the Middle East. What would happen to our Middle East concessions if we had to decrease the amount of oil which we took from those countries and took it from Russia instead? The hon. Member knows what the answer to that would be. This is simply a non-starter, as the hon. Member himself ought to recognise.

There is another thing which Russia could sell us which she does not yet do and which would increase East-West trade. We are all very interested in finding a method of increasing trade between this country and the Soviet Union. Reference has already been made to the British Trade Fair which is to be held in Moscow next month. Tributes have been paid to the fact, to which I wish to add mine, that my right hon. Friend the President of the Board of Trade is going there personally to open the British Exhibition. I understand, also, that he is to stay a fortnight to have trade talks with the Soviet Ministers, a fact which is also greatly to be welcomed.

Then, of course, there is to be the Soviet Trade Fair in London, from 7th to 29th July, which should do much to foster East-West trade. The British Trade Fair, I understand, is to be the biggest ever held. Over 650 firms will be exhibiting with emphasis on engineering, chemicals, electronics, electric power and structural steels. We should not forget that last year in Moscow there were exhibits of British plastics and scientific instruments.

I think that I am right—and if I am wrong my right hon. Friend the President of the Board of Trade can correct me when he replies—in saying that already there are Board of Trade officials in Moscow doing the preliminary work and advising on negotiating new quotas within the framework of the Anglo-Soviet trade agreement before my right hon. Friend arrives. This, again, is just an earnest of our desire to find ways of improving trade between Soviet Russia and this country.

There are four specific suggestions which I wish to make to my right hon. Friend. When I was in Poland it was represented to me, and, I think, rightly, that it was difficult to place orders for capital equipment when the quota period for imports under these bilateral trade agreements only covered one year at a time. I should like to urge the Board of Trade to consider whether these quotas could not be fixed for a minimum of at least three years in advance, so that these satellite countries could have a better idea of how much sterling they would be able to count on in the three-year period.

Mr. Douglas Houghton (Sowerby)

Did the hon. Gentleman try to alter this when he was at the Board of Trade?

Mr. Rodgers

I did not, but I should point out, perhaps, that my duties were confined to the home side of the Board of Trade work and that it was my right hon. Friend who dealt with foreign matters.

If my right hon. Friend cannot make it three years, then perhaps at the very least he could make it two years, although I would strongly urge that we should make the period three years. If we do not, I think that the matter will be pressed by the Russians, who will urge us to make even greater concessions by way of longer credits or most favoured nation treatment. This would be ridiculous.

Secondly—and here I join forces with the hon. Member for West Ham, North—are we satisfied that the strategic list could not be further modified for the benefit of all concerned? I wonder whether my right hon. Friend has seen the suggestion made by Sir George Bolton, Chairman of the Bank of London and South Africa, in the speech which he made in February last in London to the American Chamber of Commerce, that with the advent of the Kennedy Administration the time was ripe for America to liberalise its thinking on trade with Russia and that there was a genuine feeling among friends of the United States of America that the continuance of the present policies would prove harmful to American interests in the long run.

I believe that this is true, and, therefore, I hope that the views of such an experienced person as Sir George Boston, and the views of experienced hon. Members in this House, will be given further consideration by the Board of Trade.

Thirdly, is my right hon. Friend satisfied that we could not do more to encourage the Russians and the satellite countries to try to sell to us more of those goods which are on open general licence? I know that there has been a steady increase in the import of goods in this category which is not affected by-quota restrictions. Since 1958, I believe that there has been a rise of about £30 million sterling worth of trade, mainly with Russia. Are we satisfied that we are doing all we can to encourage Russia, Poland and the other satellites to diversify their exports to us and not to rely so greatly on agricultural produce? We are continually urged to educate our manufacturers to appreciate how the State trading systems work. I wonder whether we are doing all that we could to try to educate the Russians and the satellites about the facts of our own private enterprise system.

Fourthly, I come to the question which has not so far been mentioned, that of tourism. I will not touch on the question of visas for East Germans, because I am not an expert on the subject. Tourism between the Eastern bloc and ourselves has made practically no contribution to foreign exchange earnings from invisible trade transactions between the United Kingdom and Eastern Europe. There have recently been introduced direct routes from London to Moscow, Warsaw and Prague. Could not attempts be made to step up this traffic in both directions?

In 1959, only 9,500 visitors came from the Soviet bloc. Of these, 6,200 came from Poland and only 1,400 from Russia itself. I am wondering whether my right hon. Friend could suggest to the British Travel and Holidays Association, as the Government's chosen instrument, whether it could not hold conversations with the representatives of Soviet Russia and the satellite countries to see whether this two-way traffic could not be stepped up to our mutual advantage.

Finally, I should like to make this suggestion. Of course, the biggest stimulus to increase East-West trade would occur if Russia would bring her influence to bear on substituting multilateral for bilateral trading between the two groups. The Soviet Union is loud in its protestations about wishing to raise the standard of living of its people and the satellite countries by enabling them to have more consumer goods and the like. The Russians could revolutionise the situation and assist the growth of two-way trade if they made available some of their gold supplies to the satellite countries which they now store in their own country.

If only the Russians would stop talking about exporting oil to us and talk about exporting a little gold metal, the whole situation would be changed overnight. After all, with all its faults, America has been behind the International Monetary Fund, which applies to what we call the Western countries. Why should not Russia initiate a similar movement behind the Iron Curtain and act as creditor to the other countries which come under her influence, so that they could make long-term purchases which would raise the whole level of trade between East and West? I do not understand the preoccupation of the Russians with this hoarding of their gold. It is so old-fashioned of them. If only they would add to the basis of world credit, as they easily could do and from which they are benefiting, the Russians could make a tremendous contribution not only to world prosperity, but also to world peace.

I urge hon. Members on both sides of the House who have Russian contacts to keep driving home this point to the Russians themselves. There is undoubtedly a great demand for more British goods in Russia and in the satellite countries. There are things that we would like to buy from them. A simple way of making this accounting problem soluble would be for Russia to pay in part in gold and to start some form of international bank which the satellite countries could join. I believe that this is the only immediate and long-term solution that is likely to give to East-West trade the big lift that we all so earnestly desire.

5.20 p.m.

Mr. J. J. Mendelson (Penistone)

I entirely agree with the last point made by the hon. Member for Sevenoaks (Mr. J. Rodgers). I disagree with some of the points that the hon. Member made, but we certainly should not lose sight of the fact that it is not only on our side that insufficient efforts are being made to increase East-West trade. The point made by the hon. Member is an important one. There are other ways in which the Soviet Government could help and could co-ordinate some of the trade between the smaller countries in Eastern Europe and ourselves.

On the other hand, I disagree with the point made earlier by the hon. Member for Sevenoaks when he said that the Soviet Union was for ever pressing the countries in Eastern Europe, including East Germany, to have more trade among themselves. That is not entirely correct. On examining the facts, particularly with his great knowledge of matters concerning trade, the hon. Member will probably find, to quote merely one example which comes to mind quickly, that eighteen months ago the people who organise trade in East Germany were much concerned to increase some of their orders in this country and in West Germany, but that, as has been rightly pointed out by the hon. Member for Down, North (Mr. Currie), to whom we are all indebted for introducing the Motion, because of political difficulties—again, caused not merely by one side, but by both sides with each other in Germany—some of those orders could not be placed.

This cannot be blamed upon the Board of Trade alone. It was a matter in which the Foreign Office was primarily involved. Nor could the orders be placed for a time in West Germany. As a result of those two difficulties, some of the foreign trade of the East German Republic was recast and more of it will now be done with countries of the Eastern bloc. That was not done, however, on the instructions of the Soviet Government as the hon. Member implied. It was done as a result of the inability to place the orders either in the United Kingdom or in West Germany, which is a completely different story.

When we approach the problem of East-West trade in a more general way, it should be said at the outset that we must not exaggerate the possibilities of what might be achieved, even if we did a great deal more. That, however, is no reason for not making greater and stronger efforts than we are now making. It does not follow that within the next few years East-West trade can be extended to such a degree that it would replace on a considerable scale trade that we are carrying on with other countries. When we try to encourage and to urge the Board of Trade and the Foreign Office to do more in favour of East-West trade and reputable people belittle our effort by asking whether it is all that important to raise our percentage of trade with the East from 3 per cent. to, say, 5 or 7 per cent., it must be pointed out that that is a profoundly mistaken view.

We have just been presented with a Budget in which, we are told, all sorts of things must be done to encourage individuals, who, it is implied, have not been doing their fair share, to do more for our exports. I do not want to be too controversial on this occasion, or to go into detail, but it is certainly true that if it were possible to push up our exports by encouraging East-West trade to even a limited extent we should be doing far more than we are ever likely to do by giving those so-called incentives in the Budget, regardless of whether people in a certain income group are involved in the question of exports. Therefore, the fact that we are hoping for only a modest increase in our exports to these countries does not mean that it is not very much worth while.

Although the debate has concentrated mainly on trade relations with East Germany, I should like to make one or two points about other countries which are associated with the Soviet Union industrially and in trade relations and which come within the scope of the Motion. I begin with the case of China. My view is that we are not doing half enough and that the Board of Trade is to be blamed for not making larger efforts to improve trade with China. Particularly as one travels around Europe and meets some of the people who are engaged in international trade, one hears peculiar stones. I know, for example, that some Swedish importers are buying certain commodities in [his country, including a small quantity of steel, and that Swedish exporters are exporting some of the same commodities to China. That is fantastic. All of this trade should be done directly by us.

It may be argued that we sell our products to other countries, that we do not know what they do with them and that they are perfectly free to do as they like. Of course they are. Neither I nor anybody else suggests that the Board of Trade should impose conditions of sale upon people in Scandinavia or elsewhere who import from us. What I do urge, however, is that the Board of Trade and the Foreign Office together should encourage greater efforts to secure exports by our own exporters and potential exporters, particularly some of our prosperous firms who are not particularly concerned with going into difficult markets like China because they are already doing a fairly good job; they find that the balance sheet is all right at the end of the year and they do not see why they should bother. That is where the Government have to step in.

This is not a particularly controversial question between the two sides of the House. We are all agreed that, whatever view we take about the ownership of our export industries, the Board of Trade has a job to do in encouraging people to go into different markets. My view is that when people in Scandinavia can sell some of these commodities to China, our people should have been on the job beforehand. If they have not done so, the blame must be left with the Board of Trade.

Mr. Harold Davies (Leek)

I do not want my hon. Friend to be unfair to the Board of Trade, because those of us who, over the years, have watched this matter and the establishment of Chincom know that the Foreign Office has a lot of control over the Board of Trade and that often, when the Board of Trade might have liked to go ahead, the Foreign Office had the final say.

Mr. Mendelson

I am obliged to my hon. Friend. I have referred advisedly to the Foreign Office in about three instances, but I thought that as this was mainly a Board of Trade debate, it would not be right to create the impression that we were putting all the blame upon the Foreign Office. Under our Cabinet system, the President of the Board of Trade is not a poor orphan who cannot speak up for himself. Therefore, it is quite right that on this occasion, when, I assume, a representative of the Board of Trade will reply to the debate, we should put the blame where it is due. I agree with my hon. Friend that politics comes very much into this matter, as I intend to show.

Still on the question of general trade relations, which are governed mainly by industrial considerations, I cannot understand the policy concerning our airlines. When going to East Germany, for example, one has to go by Sabena, or K.L.M., and the money has to be paid in foreign currency, which is supposed to be scarce. The result is that perfectly good trade which should accrue to our own companies is accruing to other companies which are owned abroad. This is a fantastic situation. I do not attribute the blame entirely to the Foreign Office. My view is that the whole Government are responsible for this state of affairs in letting opportunities slip. Air transport is a new industry. It is establishing itself all over Europe and all over the world.

Obviously, because of the policy that we are pursuing, many other people are getting a foothold and other airlines are being established. One cannot find a reasonable defence for such a policy. I did not know the answer on one occasion when I got out of an aircraft in East Berlin on my way to an international conference at Warsaw. In transit at East Berlin, I was asked by somebody, "Why have you not come in a British aircraft"? It was difficult to search for a reasonable answer. Many other similar examples could be quoted, but I know that other hon. Members wish to speak.

Therefore, I turn briefly to three other subjects, the first of which is the problem of bilateral trading with the countries in the Eastern bloc. There is, of course, a preference by the Eastern countries to make bilateral rather than multilateral arrangements, but we should not put too much weight on this difficulty. Although it might make matters easier if a multilateral arrangement could be made more often in certain industries for certain products, from a commercial viewpoint a good number of commodities lend themselves readily to bilateral arrangements.

The hon. Member for Sevenoaks said that he had discussed these matters with people in Poland. At a far lower level, and as one who has not held the high position formerly occuped by the hon. Member, I, also, have discussed these matters with people in Warsaw, not long ago, and I had similar answers to those described by the hon. Member. I also heard complaints, however, about the difficulty of including credit facilities in the agreements. I heard the same view expressed in other Eastern European countries.

Obviously, it might be extremely difficult to advance hundreds of millions of pounds to a number of countries in the Eastern bloc. Sometimes, however, the sums involved are much smaller. Therefore, as a matter of Government policy, it is important to incorporate the granting of credit in agreements with these countries. There is nothing new about this. It has been traditional trade policy over the years.

The hon. Member for Sevenoaks said that it is extremely difficult to see what we might get from those countries immediately. If we pursue a trade and investment policy with a number of countries which are building up their own industries, as all these countries are doing, we shall be investing for the future and it may well be that if we buy some of the items that they are beginning to produce there might well be a better chance of repayment from these countries than if we were merely to sit back and say that we could do nothing. This is the traditional kind of trade policy which we have followed for many years.

I turn now to some of the political difficulties, without which the picture would not be complete. The picture that we sometimes see—that these matters must always be governed by strategic and political considerations—is not, I suspect, very dear to the heart of the Government. I believe that in the last five years the Government have been very much under American pressure in these matters. There is, I am certain, a great deal of evidence to prove that there has not always been complete agreement concerning the items on the strategic list and that the Government have sometimes been rather unhappy about the extent of that list.

This is a situation in which a good deal of political courage is required. Some of the items on the strategic list are so obviously absurd and now so completely out of date that, simply by reason of recent technological developments in the Soviet Union, some of the items should be thrown out of the window and the Government should attempt strongly to reduce the list to the barest minimum. The result might well be a top secret arrangement between Government Departments, but it would eliminate most of the restrictions to the further extension of East-West trade.

I cannot, however, agree completely with the political aspect as described by some hon. Members who have spoken in the debate. The criticism of the Foreign Office as being entirely and completely unreasonable throughout the recent business of providing visas for people from East Germany is exaggerated. In fairness to the Government, it should be recalled that the whole business was started by a decision of the East German Government to prevent their own nationals in the Federal Republic from having free and unlimited access to East Berlin. The West German Government took exception to that. The reason given by the East German Government was that a number of neo-Fascist and militaristic organisations had held meetings in West Berlin. I, for one, fully understood the decision of the East German Government whilst such meetings were being held in West Berlin. My view was that the Lord Mayor and the Government of West Berlin should have prohibited any such meetings from taking place in West Berlin and that the East German Government was quite entitled to say that, whilst the meetings were being held, nobody could go across to the other half of the city.

Ten days later, however, the East German Government did something else. They passed a regulation which prevented their own fellow citizens from coming over from the other half of Germany without a permit, even when no undesirable meetings were being held in West Berlin. All the West German political parties—the Social Democrats, the sister party of the Labour Party in West Germany, agreed with the Government— legitimately objected to such a measure. They then called upon Her Majesty's Government and the American and French Governments, as being jointly responsible for the administration of Berlin as a city under Allied control, to do something to bring home to the East German Government the necessity not to proceed in a manner which, on our side, was regarded as a violation of an international treaty in Berlin.

These facts should be stated in fairness to the British Government, although I do not believe that they took the happiest of steps in registering their objections and in the measures they took to show the East German Government that it was a matter in which they had to deal with all of us and that they should be careful about the measures they took.

The great mistake occurred, however, when the West German Government extended their counter measures to a trade boycott by breaking off trade discussions with East Germany. That was a foolish move, as was discovered twelve weeks later, when the West German Government completely revised their policy and hurriedly began new trade negotiations. What was even more absurd was that people from this country who wanted to extend East-West trade should have been involved in this absurd policy. Nobody in this country can do anything about advising the Adenauer Government when they want to mount a limited trade boycott against East Germany; that is their own affair.

But when they came to London and said to the representatives of Her Majesty's Government, "We want you to join in this. We do not want you to grant visas to people from Eastern Germany, which will prevent them from coming to London to negotiate trade", it was the job of the Foreign Office, or of the Foreign Office and the Board of Trade together if the Foreign Office did not do it on its own, to say "No" immediately and to tell the Adenauer Government that we had to make our own decisions and that no one could interfere with what we did. It is absurd to ask us, an exporting country which lives by trade, to implement a policy which will prove absurd and against our own interests in a short time.

Unfortunately, that was not the attitude taken by the Government. We therefore had this absurd policy of niggling and of keeping waiting for five weeks a man who wanted to come here to negotiate an agreement involving £1½ million until he gave up trying and never reached this country. We had the absurd policy of people being actively discouraged and told unofficially, "Because of the official policy, do not come in the next three months. Come in a year or so." In the strictly organised industrial community of Eastern Germany—it is far too strictly organised for my taste—when a person is told, "Come in a year's time", it is tantamount to his being told not to come at all, because, obviously, his superiors will instruct him to search for trade elsewhere.

While I am on the political aspect, as I have criticised the Government and urged them strongly to change their policy, I should say that I dissent from the point made by the hon. Member for Down, North concerning his interview with Herr Ulbricht. The hon. Gentleman said that Herr Ulbricht, having spoken about trade, then turned to the general problem of Germany and said that he did not hope for the reunification of East and West Germany. The onus of whether Herr Ulbricht had been correctly reported must rest on the hon. Gentleman, but, as reported this afternoon, he said that he thought that there would not be reunification for a long time, and the hon. Gentleman agreed with him. Speaking for many of my hon. Friends, I do not think that we would accept such a notion and such a policy. It is for the Germans in East and West Germany to decide whether they want to get together. I would not support a policy designed to keep them apart.

We need not get involved in all these highly inflammable subjects. We should not take sides on the question whether it is desirable to encourage the ultimate reunification of Germany. No matter what pressures there might be from Dr. Adenauer in the West or from Herr Ulbricht in the East, we ought to confine ourselves to matters of trade, the exchange of goods, the financing of agreements, and things of that kind.

I am certain that there are considerable opportunities in relations with the Soviet Union, Poland, Eastern Germany and China. Three things are required. First, the recognition that there is an obligation on the Government, the Board of Trade and the Foreign Office together, to do much more than they have done in the last twelve years to encourage East-West trade by encouraging the granting of credit, doing certain jobs for private industry where it is not willing to do them itself and by having urgent discussions with those industries which might be potentially involved and which do not wish to initiate matters because they find it easier to supply the home market and do not want the expense and trouble of venturing into new and difficult markets.

Secondly, we should reject any pressure from other Governments, including the Federal Government, which would limit our own policy in extending trade with Eastern countries. We should tell those who say that the growth of industry in some of the Communist countries is a political threat to us that they are mistaken. I am by no means indifferent to the general desire that we all have that there should ultimately be the emergence of more liberal régimes in the Eastern countries. I am convinced that the surest way of preventing that development is to cut ourselves off in an industrial and trade sense from those countries.

I am sure that the best way to help that development is to have more and closer industrial and trading relations with them to make it possible for those working for their own country and cooperating in trade and other ways with us to say to their fellow countrymen, "We have co-operated with these Western countries. This has helped in building up our own industries. It has brought no harm".

In this way, the diehards and Stalinists on the central committees in these countries will be proved wrong when they try to hold back the development of relations between East and West. On every count, if we want to see modest advances and later greater advances in good relations between East and West politically, as well as industrially, it is in our own best interests that we should encourage and have more of these trading contacts.

Thirdly, it is very important that the Government should reintroduce the spirit of adventure in establishing new contacts even in countries in the Eastern bloc where the prospects of huge reimports from them are not as good as they should be. The argument that a credit of one year is not enough for some of the things that we want to buy from those countries should not be a final barrier to a policy of credit extension. As we have done in the past in our relations with other overseas countries, we should take courage and grant credits. We will then find that, by helping to build up the industries of some of those countries, many of whom are very poor from the point of view of industrial development, we shall have created possibilities of importing more from them in future and we shall also have made an investment in political good will as no other way can provide, we should not always think that those countries have closed minds.

We are encouraged and instructed in our contacts with people in those countries who know that we are opposed to their political systems and critical of many of their foreign policies to see how eager and keen they are in having good relations, in particular, with representatives from this country. We should make use of this and make it the basis of a further extension of our trade relations with them.

5.48 p.m.

Mr. Cyril Osborne (Louth)

As Chairman of the Anglo-Soviet Parliamentary Group in this House, I very much welcome the Motion and give it my wholehearted support. I believe that every time we trade with the East we build a bridge across which peace can be built. Where the politicians have failed to bring about understanding between East and West, the business men may well succeed. We should do our best to make it easier for business to be conducted between East and West. By so doing it will be easier to get understanding between the nations and therefore achieve the peace that we all want.

The hon. Member for Penistone (Mr. Mendelson) was unfair to my right hon. Friend the Minister of State, Board of Trade, in blaming the Board of Trade for not doing half enough, as the hon. Gentleman has put it, to help trade with China. On two occasions in the last eighteen months I have taken delegations of British businessmen who were intimately interested in trade with China to see my right hon. Friend. He has listened to them most courteously. He has answered their questions and has done largely what they asked. They went away satisfied and grateful to him for what he had done. The quite unjustified blame which the hon. Gentleman laid on my hon. Friend should never have been laid on the Board of Trade or on him.

Furthermore, when I was in China last year, I visited the fair at Canton and the exhibitions at Shanghai and Pekin. I had the pleasure of being conducted round and helped by our trade commissioner and charge d'affaires. We are lucky in the good type of men that we have abroad to represent us. The hon. Gentleman does our country a great disservice by saying that the Board of Trade is not doing what it should. Obviously he does not quite know what he is talking about.

Mr. Mendelson

The hon. Gentleman will remember that I quoted a case where certain goods were being bought from this country and Scandinavia and re-exported to China. I wanted the Board of Trade to search out these opportunities. I did not say that it was not doing anything. I said that it was not doing half enough.

Mr. Osborne

It was a very unfair criticism, and I reject it utterly.

The only point on which I half agreed with the hon. Gentleman was when he said that we should not be unduly influenced by the Americans in our policy with the Eastern countries. I think that, to some extent, that is fair when we remember that 30 per cent. of our production must be exported in order that we may live, whereas the Americans have to export only 3 per cent. of their gross national product in order to live. Therefore, other things being equal, any embargo on the trade with Eastern countries hurts us ten times proportionately heavier than the Americans, and I think that from time to time that ought to be borne in mind. As many of my hon. Friends and other hon. Members wish to speak, I will cut down what I have to say to asking one or two questions.

Last week, the Russo-British Chamber of Commerce—which is doing and has for 45 years been doing a fine job on Anglo-Russian trade, and which represents 600 big firms in this country—had its annual general meeting, at which the chairman made three points. The first was that he would welcome the growth of our trade. Our imports from Russia least year were nearly £75 million against £53 million the previous year, but this is only toying with the issue. This is only 2 per cent. of our total exports. Here is a nation of 200 million people taking only 2 per cent. of what we export. We are only scratching the surface.

What is more important is that our exports to Russia were £37 million and re-exports £16.1 million. These re-exports were largely rubber and other commodities. The balance of £21 million sterling which the Russians earned in direct trade with the United Kingdom—they sold to us nearly £75 million worth of goods and we sold to them only £53 million worth—is too large a proportion to be spent on raw material imports, which carry practically no labour content at all. I think that we ought to talk to the Russians to see whether some of that could not be used in importing consumer goods and highly manufactured goods which would provide more employment in this country. I think that is a legitimate point to make to them, and I hope that my right hon. Friend will do that for us.

Colonel Sir Tufton Beamish (Lewes)

That is an old point.

Mr. Osborne

It is a good point, and a good point can never be made too often. That is why I am making it now.

Sir T. Beamish

It is not new.

Mr. Osborne

I am not saying that it is new. I am saying that it is a good point, and I would rather make a good point twice than a bad one once. I leave that to hon. Gentlemen below the Gangway.

The second point—and these are all practical points—was that the trade agreement that we arranged with the Russians last year included for the first time £4 million for consumer goods. That was an enormous increase upon the previous agreement, but £4 million per annum on consumer goods for a nation of 200 million people is, as I have worked it out, about 5d. per person in Russia per year. It is ridiculous. If I may have the attention of my right hon. Friend the Minister of State, because I am trying to make points which I want him to answer, I think we should insist on a larger proportion. Of the total trade that we did with them last year of nearly £130 million, only £4 million represented consumer goods, and it is consumer goods which we in this country manufacture so largely and which find work for so many of our people. In these circumstances, it is ridiculous that only £4 million out of £130 million of the total trade should be in consumer goods, and I should like my right hon. Friend to press for a considerably greater share for the consumer goods industries the next time an agreement is reached.

The third point that was made at the meeting last week was equally important. They are wanting more and more Russian-speaking people to help at the trade fair. I have been to Russia many times and to other countries, and I have to confess that I speak only English and I have always felt it a great disadvantage. Is the Board of Trade doing all it can to influence the Ministry of Education to see that Russian is taught as widely as possible in the schools and universities in order to meet the needs of trade?

Mr. Rodnov, the Deputy Chairman of the Russo-British Chamber of Commerce, made two complaints. First, he said that imports of oil and petroleum products into this country were entirely prohibited. Some years ago, when the present Minister of Education was President of the Board of Trade, I pressed him about extensions of licences for importing Russian oil into this country. I understand that the difficulties are that we as a nation receive about £200 million a year in royalties, to help to maintain our Welfare State, from the Anglo-American-Dutch oil concerns. We would not readily throw that £200 million a year away, but I want to put this to my right hon. Friend. The "invisible" income in the Economic Survey last year shows that the amount was down from £229 million two years ago to £22 million this year, and, in answer to a Question which I put to the Economic Secretary to the Treasury, I was told that that was largely due to the loss of our oil earnings. I put this question to my right hon. Friend. If these oil earnings are no longer coming to this country, surely, the old argument that we could not allow a small proportion of Russian oil to come in because of those earnings is no longer valid?

Mr. Harold Davies

That is a good point.

Mr. Osborne

The other point is that oil consumption in this country is increasing by about 15 per cent. per annum. The Russians are asking that they should have 5 per cent. of that 15 per cent. increase, not touching the basic imports from the Anglo-American-Dutch group. It seems to me a reasonable request, and, as I understand it, they have suggested that if they could have that 5 per cent., they would spend the money either on machinery or consumer goods. Here is a way in which we can help, especially, the shipping industry of our country, in which there is unemployment. We should do a barter agreement with the Russians and say, "Very well, we will take that £40 million worth of oil from you as part of our normal increase in the use of oil in this country, but you will have to use the money with which to buy what we think would help us in our unemployment problem," and so on. From what I gather, I think that they are willing to do that.

Next, on the capital goods side, I understand that the Russians have been asking for seven-year credits to help some of their big purchases of heavy industrial equipment. I do not see how far that can be justified when they are earning £20 million a year in direct trade with us. I think we should first say to them that they must use that £20 million extra which they are earning from us before we grant long-term credit. I must warn my right hon. Friend that Japanese industrialists are not only providing long-term credits, but are supplying electrical equipment and ships in exchange for oil. We find that when we have dealings with the Soviet Union, we always come back to oil.

May I say to hon. and right hon. Gentlemen opposite that this is a point which they have to bear in mind? It not only concerns the Anglo-Dutch oil group but the National Union of Mine-workers in this country, who are saying "We do not want Russian oil in increasing quantity coming into this country to put miners out of work in Britain." That is a very good point which must be borne in mind, and it is not an easy issue to overcome.

I would ask my night hon. Friend if the strategic list could not be abolished except for direct weapons of war. Nearly four years ago, I was lucky enough to see Mr. Khrushchev on the very day when the first sputnik went up, and he was obviously immensely proud of that achievement. Since then, the Russians have shown even further what they can do, and Mr. Khrushchev has said that this is a simple thing to do. He told me that while the strategic list no longer hurt their country industrially, it hurt their pride. He said, "Why should I come and buy from you what the Americans graciously allow you to sell to me?" That is an issue which should be looked at. It is a very important factor in their attitude to trade.

I hope to be in Moscow for the trade fair which the President of the Board of Trade is to open on the 19th of next month. The Russians are very keen on making important announcements on special occasions. This they would regard as an important occasion in Anglo-Soviet affairs. If the President of the Board of Trade has some announcements to make, either about the strategic list or oil imports to this country, will he please do so at the Soviet trade fair? He would get the maximum of good will and publicity for it if he did so.

This Motion mentions Northern Ireland especially. Northern Ireland is suffering more than any part of the country from unemployment. Its only real hope is to increase shipbuilding, for that is the main industry in Northern Ireland. In 1954 people came from the Soviet and offered to place orders in this country for a hundred ships costing about £1 million each. At the time our shipyards were so full of orders and people were so little interested that only one small yard accepted any orders. I feel confident that if the Government would do whatever lies in their power to help in this matter quite big orders for medium-sized ships could be placed in this country. One of my best industrial friends, who spends most of his life trying to further East-West trade and who is well known to my right hon. Friend, wrote in a letter to me: On a recent visit to Poland I was staggered to find the tremendous orders now running into four years delivery which had been placed by Sudoimport with the Polish authorities. One order alone was for 56 timber-carriers of 5,000 tons each, all exactly the same. What a godsend that would be for British shipbuilding yards. Can nothing be done to get some of these orders which we refused to accept in 1954?

I gratefully acknowledge the opportunity to support this Motion.

6.3 p.m.

Mr. Harold Davies (Leek)

I am pleased to be able to follow the hon. Member for Louth (Mr. C. Osborne). Although he may not agree with me, I consider that he has made a constructive stand over the years for what I term an intelligent approach to the problem of trade. We cannot live if we have this dichotomy in the world dividing it into saints and sinners. After all, the free world has its own history or background. There have been the troubles in Malaya and the Congo and there is Cuba and Guatemala. So let us forget that, and not think that we are all white and the other side are all black.

Another thing we must remember is that this little country of ours cannot live unless we are exporting our skill and goods. The more British skill that can be put into every ounce of exports, the higher will be our earning capacity. It is the same as in the case of Switzerland, where each watch or piece of jewellery represents a high standard. For this reason we need a better technical education system. That is absolutely essential for this country. It shocks me that the Bow Group should even suggest that we should go back to the days when £1 a term had to be paid for a child's education. In a country like this, struggling to earn grub stakes, how can intelligent, dynamic young Tories even suggest that £1 a term should be paid for education when we are living in the space age and the age of technology?

A point was made by the hon. Member for Louth about invisible exports and the question of oil. Some of us who over the years have taken an interest in the old Anglo-Persian Oil Company remember the saying of Clemenceau during the First World War, "A drop of oil is worth a drop of blood." We know that the conference tables of the world have been stained with oil. That is true of Shell and South-East Asia.

Mr. C. Osborne

Not stained, but sustained.

Mr. Davies

Today there is no reason why a constructive policy should not be adopted by which it would be possible, looking at the balance of our economy and the question of oil versus coal, to save some of our hard-earned dollar currency by having an intelligent policy over oil imports from the Soviet Union.

As my hon. Friend the Member for Penistone (Mr. Mendelson) said, we must not pretend that East-West trade will solve all our economic problems. I have never said that; neither has anyone on either side of the House who knows what he is talking about ever said that. All we are after is a share of the market wherever we can get it. I have no interest in the sense of getting any money out of it, but I was one of the pioneers of East-West trade when I attended the Moscow Conference in 1952. We heard then all the epithets suggesting that we were Communists, but now there is an all-party committee which is trying to make a really constructive approach to the problem of buying each other's goods. Through trade we can get to understand each other in the same way as we can improve relations through sport and cultural activities.

There are, however, other parts of the world where we can get into markets besides the Soviet Union, East Germany and China. I visited the whole South-Eastern peninsula including Laos and North Vietnam, which is struggling to build up its standard of living. It needs things like bicycle tyres, machinery and consumer goods. There is some of the finest opencast coal at Haiphong. I have been round the mines there. They used to supply the whole of South-East area, but, because of the tragedy of the war, then the Indo-China War and the cold war, artificial barriers have been created, people go hungry, goods cannot move, tempers run high and propaganda flourishes.

We should release the springs of trade in that area. Then the hot water might begin to thaw the ice of the cold war. Strangely enough, the little country of Vietnam has goods to sell. When the Korean War was at its height, I with my colleagues protested, and on one occasion voted, against the limitation of East-West trade. The United States of America insisted on our breaking off trade with China. The famous Committee, known as Chincom, was set up in Paris. There were 400 items put on the strategic list. The Soviet Union could get some goods which China could not get, and could move on.

We had these two old fuddy-duddy committees in the space age—Cocom and Chincom—preventing the intelligent development of trade. The wiseacres of the Tory Party—and sometimes of other parties—nodded their heads in an assumed sort of halo of high intelligence and said, "We have to do this to prevent the spread of Communism." Is the word "damn" a Parliamentary phrase, Mr. Deputy-Speaker? Because I want to say that they are "damn fools." This is how they have spread Communism. I know what I am talking about. I have seen this happening, and I have seen the bitterness it has created in South-East China and elsewhere.

When China wanted penicillin for her sick and diseased, the wiseacres said, "That is on the strategic list." I was in China at the time and I know that no penicillin got there from this country. But the Czechs made it and showed the Chinese how to make it, and we have lost that market. While we were acting in this way dear old Sweden was rolling in burnished ball-bearings faster than one could run round a skating rink. The Swedish ball-bearing industry captured the Chinese market while our wiseacres were saying that we could not do it because ball-bearings were on the strategic list—and also the strategic list for a nation which could make lenses, which could make transistors, which could put a sputnik into space and photograph the back of the moon.

I recall an occasion in 1952, when my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) and myself, together with an hon. Member opposite, were in a room in Moscow, and we could have secured an order for 400 steam railway engines which the Chinese wanted to buy from a British firm. We were unable to make a deal. We were unable to get into the market. Two years later I found myself rolling along by train from Pekin to Hanoi. I travelled that way on purpose in order to see the countryside. And what did I roll along in? Hungarian rolling stock—first-class rolling stock. In order to get this statement in balance, I must add that I am not saying that at that period we could have produced at once everything that was wanted. But we could have "gotten in", as the Americans say. Since the advent of television and American films everyone uses American language, and we might as well occasionally produce a bit in the British House of Commons.

We have the reputation of having been a nation of merchant adventurers and there is no need for us to be ashamed about that. I think that the Board of Trade should help the little men who do not know how to conduct a deal on the barter system. They do not know how to deal with someone from Hungary, or East Germany or Vietnam who asks for £20,000 worth of bicycle tyres in return for 20,000 tons of coal. The little man says, "Yes, I could supply the tyres if I knew where I could sell the coal." Or it may be oil or cloves, or whatever is offered, because, like it or lump it, that will be the pattern of trade in the future. I hope that the Minister will look into this matter. I am delighted that three firms in my own constituency have had the courage to exhibit at the Moscow trade fair. I hope to get to Moscow on that occasion, and, although he is a teetotaller, I hope that the hon. Member for Louth will buy me a glass of vodka.

Mr. C. Osborne

I will buy the hon. Member two glasses.

Mr. Davies

Three firms in my constituency have had the courage to make this pioneering move and the Government should find a way to help them if they encounter a barter market. I had better end my speech now because I am becoming interested in this matter, and I could go on for a long time. Among hon. Members opposite there are enthusiastic supporters of East-West trade.

I congratulate the hon. Member for Down, North (Mr. Currie) on moving the Motion, which I hope will be accepted.

6.15 p.m.

Colonel Sir Tufton Beamish (Lewes)

I thoroughly enjoyed the speech of the hon. Member for Leek (Mr. Harold Davies) although I was not entirely clear about its message—

Mr. Harold Davies

The message was, "Trade, brother, trade".

Sir T. Beamish

The importance of East-West trade can be exaggerated and that is what I propose to talk about. We are all agreed on the need for more British exports. There is no doubt about that. It was the central theme of the economic White Paper. I am not sure how much more the Government can do to assist British exporters. One hears a good many suggestions, but in my opinion the Government have gone about as far as they can to create the right climate in which private enterprise can export more. I think it a mistake to do as some hon. Members have done, to keep saying that the Government must do this, that and the other. It is the British exporters who must find the markets, and provide the right after-sales service, and be competitive.

The Board of Trade is able to do a great deal to help, and I think that it has gone most of the way. However, I should like to suggest that it could go a little further in what it calls "matching" the best credit terms of our foreign competitors. Although E.C.G.D. says that it will match the best terms offered by others, very often by the time it has agreed to match them the contract has been lost. It is when the tender is being put in that exporters want to know the terms offered. We have lost many contracts, particularly in shipbuilding—which much concerns my hon. Friend the Member for Down, North (Mr. Currie)—through not being able to match the credit terms of our competitors. Had we been able to obtain evidence of those terms earlier, we might have got the contracts. That is my only serious criticism of the Government in that respect.

I think that the Motion errs slightly in implying that this House would like to see special measures taken to encourage exporters to what my hon. Friend calls countries of the Planned Economy Group. I do not see why any special measures should be taken to encourage exporters to those countries. I like to see exports going to those countries, but I do not see why exporters to Hungary or to East Germany should receive greater encouragement from the Board of Trade than exporters to Chile or to Timbuktu. To that extent I do not agree with the terms of the Motion although I should add that in moving it my hon. Friend did not ask for special terms.

As I have said, although I am in favour of East-West trade, which has positive advantages from many aspects, I think that its importance can be greatly exaggerated. The markets are not big and we have unfavourable balances with nearly all the Communist countries. It is all very well for my hon. Friend the Member for Louth (Mr. C. Osborne) to talk about buying Soviet oil. I am not sure whether my hon. Friend talked about 5 per cent. of 15 per cent., or about 5 per cent. of the total British imports—

Mr. Osborne

Five per cent. of the 15 per cent. is the only increase for which the Soviets are asking.

Sir T. Beamish

I am grateful to my hon. Friend. That is about 1 per cent. of the total British imports which my hon. Friend tells me means another £40 million, or something like that.

It is very easy to say that we want the Soviet Union to buy our consumer goods. We have been asking the Soviet Union to do that year in and year out, but they will not buy, and that is the trouble. It is all very well to talk about barter agreements. They make promises and say that they want a terrific amount of consumer goods, but when the time comes they do not buy them. That is what we are up against.

The House must realise that for the Communist countries exporting is a luxury. It is clear that the Soviet Union and the Communist bloc aim at being completely autonomous. They do not have to export one nut or bolt to live. For all practical purposes they are self-sufficient. That is one of our difficulties, and one of the reasons why exports from the Soviet Union, and from some of the occupied countries of Europe, and from China, have an important political content.

For the Communist countries trade is politics. To us trade means largely that we have to trade to live. We believe that by the freer flow of trade we will get to know people better and improve our economy. We believe in trade for its own sake, and as a means of raising standards of living throughout the world. I do not believe that any of those things animate the Communist countries when they are exporting. To them exporting is not a necessity and it has an important political content which is one of the reasons why they are so selective in the countries to which they send their exports and their aid.

I have been into this very thoroughly and I have some knowledge on the subject. There are solid grounds for more than a suspicion that the Soviet Union is more interested in buying "know-how" than in regular trade. That is why it so often buys expensive, technically complicated complete plants, and that is why transactions of that kind are so often apt to be once-and-for-all transactions. There is no reason why we should not provide them with that type of plant if we can do it competitively, but we should realise that in many cases there is unlikely to be a follow-up or a regular flow of trade in plant of that kind.

We should also remember that for political reasons the Soviet Union sometimes cuts off trade completely. The House obviously remembers the Petrov trial in Australia: as that trial advanced it was clear that Petrov was going to be exposed. At that time the Soviet Union was buying Australian wool. For political reasons the Soviet Union cut off dead its trade agreement with Australia and refused to buy another inch of wool from that country. That is another risk which must be borne in mind.

Ask Marshal Tito what he thinks about being cut off with a knife the moment one falls out politically with the Soviet Union. Yugoslavia was practically starved as a result of the economic blockade and the ending of the trade agreement with Russia when Marshal Tito fell out with Marshal Stalin. The standards of living in Yugoslavia fell desperately, and now Yugoslavia is trading on a large scale with the West although I hear that it has signed, or is about to sign, a substantial trade agreement with the Soviet Union. That again must be borne in mind. It shows that there are disadvantages as well as advantages in East-West trade.

There are particular disadvantages for countries whose economies rest on one product. For example, the Egyptians could tell us a good deal about what happened to the Egyptian cotton which the Soviet Union was buying. I was in Germany a month ago, and I was told by a leading politician in the equivalent of the Board of Trade in the Bonn Government that Egyptian cotton was being sold not long ago in Eastern Germany and Czechoslovakia at about half the normal world price. It was being sold inside the Soviet bloc at prices which heavily undercut those of the Egyptian Government itself. The Egyptian Government were extremely angry about this, but it is the kind of risk which people run when they allow their economies to get into the hands of a country which looks on trade as politics.

I hear that Ghana may be having difficulty in selling her cocoa crop. She would be well advised to look extremely carefully at any barter arrangements which may be suggested by the Soviet Union, bearing in mind the Egyptian experience with cotton.

That raises in my mind a rather important point from the point of view of the British Government. When it became clear to the United States Government that the Castro régime was moving to the Left and that well-known Communists in Cuba were gaining influence in that country, and when American industry was sequestrated without compensation, they decided that they would not continue to buy a large part of the Cuban sugar crop. Within less than twenty-four hours it was announced in Moscow that the Russians would buy the sugar, and that the major deficiency in Cuba, which was oil, would be met by the Soviet Government whose tankers were already at sea. The Russians acted like lightning.

How quickly did we act after the Posnan riots in Poland in 1956 when it became clear that Poland had a chance of loosening the Soviet economic grip on her country? There were months of negotiations throughout the free world, resulting in the end in a rather unsatisfactory American loan agreement which did not go more than halfway to do what the Poles hoped for and thought was reasonable. The response from the United States and from the British Government was very disappointing, thereby showing that we have not realised that in the world struggle which is going on trade is politics and that sometimes one has to move quickly for political reasons.

I have two more points to make. First, another possible disadvantage of trading with some of the Communist countries is that they are likely sometimes to try dumping their products in this country. If one were to go into the markets and shops one could buy large Polish eggs of good quality for half the price at which they are being sold in Poland. The quantity of Polish eggs coming into this country is about five or six times what it was during the corresponding months last year, and they are being sold at absurdly low prices. I have the figures, but I will not weary the House with them. The quantity coming in is about six times higher than it was, and the price is so absurd that there must be a major element of subsidy in it. Rumanian eggs too are being sold at similar prices, though in smaller quantities.

If I had time I would give the House details, because I have been checking on the prices and qualities of Polish eggs. According to the newspapers the three Farmers' Unions and the British Egg Marketing Board have submitted an anti-dumping application to the Board of Trade in respect of these eggs. I need not, therefore, go into further details, but this stresses another risk in trading with Communist countries, that when it suits their purpose they are likely to dump their products in this country.

My last point is a rather serious one. I hope that the House will acquit me of trying to lecture it in some way; that is something which I hope I shall never do. When business men, particularly business men who are politicians, go behind the Iron Curtain for business or commercial reasons, they must be extremely careful about what they say and do, so that what they say and do cannot be used by régimes, which are only kept in power behind the Iron Curtain by Moscow, to try to make themselves, that is the régimes, look respectable, which they are not. When I was in Germany I spoke to the Mayor of Berlin and to leading members of the Bonn Government about this. I was told that several people from this country—I have no wish to name them; they are not hon. Members of this House anyhow— recently made remarks in Eastern Germany which caused the utmost offence in Western Germany, and quite understandably too.

People out there for business reasons, who had political connections, said that they did not believe in German reunification, that Eastern Germany should be recognised immediately, and admitted to the United Nations, that the Oder-Neisse line should be recognised immediately, and that the Nazi movement started in Munish and not in Dresden or Leipzig. They made remarks of that kind; some of them, perhaps, tenable from certain points of view; but one could not resist the suspicion that some of those remarks were made by people concerned to ingratiate themselves with the régimes in order to try to get more business. One can understand the annoyance of the West German Government.

This is especially important in the present delicate state of our diplomatic relations with those parts of the world. Everybody who goes behind the Iron Curtain should remember to be very careful indeed not to say or to do anything which can be used by the Communist régimes and others to damage the free world's interests.

As I promised to sit down by half-past six, I conclude simply by saying that I am not in any way opposed to a greater flow of East-West trade, but there are a good many disadvantages to this trade which often are not sufficiently well recognised.

6.31 p.m.

The Minister of State, Board of Trade (Mr. F. J. Erroll)

I am glad that, thanks to the Motion moved by my hon. Friend the Member for Down, North (Mr. Currie), the House has been provided with an opportunity today of discussing the very important subject of East-West trade. The Motion urges the Government to give every encouragement to those firms who endeavour to increase their exports to the countries of the Planned Economy group… The House may like to know that the Government will gladly accept this Motion if it is agreed to by the House. I should like to spend my time in making a contribution to what has been a most interesting and instructive debate and in saying something about our general trade policy. I should also like to try to answer some of the very interesting detailed points which have been put forward.

I should like to say to my hon. Friend the Member for Sevenoaks (Mr. J. Rodgers) that I very much appreciate his remarks about the Board of Trade and about our policy generally. It is the Government's policy to encourage expansion of trade in both directions to the highest possible level, but that is subject to three main considerations. First of all, we must avoid excessive dependence on the Sino-Soviet bloc countries for particular products. I think that that was well brought out by my hon. and gallant Friend the Member for Lewes (Sir T. Beamish) in his very striking and interesting speech. Secondly, we must not allow trade—and here we have in mind particularly imports from the bloc countries into Britain—to lead to the disruption of British industries or of markets in the United Kingdom. My hon. Friend the Member for Down, North referred in passing to linen, which is a very important Northern Ireland industry. He knows as well as I do how sensitive that industry is to any large-scale imports of linen goods from the bloc countries. My hon. and gallant Friend the Member for Lewes also referred to eggs, about which I may have time to say a word later.

Thirdly, we obviously have to avoid exports of particular types of equipment which are of strategic importance to us and our allies. I may refer to that subject, too, later.

I should like to tell the House how we apply that policy in practice. It is important that we should all understand and agree with this policy because it does determine the way in which our trade exchanges are conducted and, indeed, expanded.

On the import side, most raw materials and basic foodstuffs are admitted freely from all the bloc countries. Imports of manufactured goods, however, and agricultural commodities most likely to cause difficulties in the United Kingdom market are limited by quotas.

The proportion of total imports which is unrestricted in the case of any bloc country depends on what each of them has to offer and upon what amount of quota goods we are prepared to take. In 1960, the proportion of unrestricted goods varied from 95 per cent. in the case of the Soviet Union, whose exports to us are traditionally of raw materials and grain, to only 20 per cent. in the case of Hungary, whose exports to us are mainly manufactured goods and foodstuffs. That may help my hon. Friend the Member for Down, North to understand why the trade figures with Hungary are, in his view, rather disappointing.

In the field of restricted imports, we negotiate quotas annually. This is usually within the framework of three- or five-year trade arrangements with each country. We use the import quotas which we grant to secure in return an entry for as wide a range as possible of United Kingdom exports to the bloc countries. This is a particularly important feature of our trade arrangements, because we use our import quotas as a means of securing more openings for our exports and thus expanding our export trade.

I should just mention in passing that China is the exception to this. We have no trade arrangement with China covering imports of quota goods, and we have, therefore, to decide ourselves what these quotas should be.

Exports to the bloc countries are very much in our minds particularly in the Board of Trade, and in our negotiations we aim to get the maximum opportunities for our exports. A number of factors affect the final result. We have to assess what industries in Britain are likely to be able to sell or to want to sell. We want the quotas which we obtain, often after much hard bargaining, to be as fully used as possible by British exporters.

I mentioned that we have annual negotiations. Before the annual negotiations start we consult established trade organisations both directly and through a special body called the Consultative Committee for Industry. In the Board of Trade we aim at informing ourselves fully in advance of the export contributions which British industries can and are willing to make. Then armed with this information we make our requests at the start of the negotiations for quotas for our exports. This is an essential part of the process in order to get openings for our exports.

Mr. Houghton

Can the right hon. Gentleman give any instances where they have not been fully taken up?

Mr. Erroll

Yes, there are instances in both directions in the degree of quota fulfilment, to use the jargon we have in the Board of Trade. These are always discussed in negotiations, because obviously we want to make the quotas as realistic as possible.

We have to recognise, on the other side, the willingness or otherwise of the bloc countries to buy particular classes of goods from abroad, and we have to recognise that their present needs are chiefly for raw materials and capital goods and that it may not always be possible to persuade them to open their markets as much as we should like to products, often consumer goods, to which they attach a much lower priority. Of course, we should like to sell more consumer goods to the bloc countries if only they would buy them, particularly to the Soviet Union. That is why we have a separate heading in the trade agreement with Russia for consumer goods. We are finding it very difficult to raise the figure to as much as we should like, and this is because the Russians will only buy consumer goods from us with the proceeds of consumer goods which they have previously sold to us. So that makes it a very slow business. They buy consumer goods from us only in proportion to what we have already bought from them.

I think that I must make particular reference to a detail of the Motion, although it was hardly touched on during the debate, because it rather suggests that we should make quota arrangements for Northern Ireland industries in particular. The House will appreciate from what I have already said about the procedure that it would not be possible—nor, indeed, would it be desirable—for export quotas to be limited to the products of any particular region of the United Kingdom such as Northern Ireland, or Scotland or Wales for that matter. I am sure that the bloc countries would never accept such a restriction upon their freedom to buy from the United Kingdom. However, I should like to say, to reassure my hon. Friend, that in our negotiations on quotas for exports we keep very much in mind the goods which are produced in Northern Ireland. The industries of Northern Ireland are well represented for the most part on the trade associations we consult, and we also keep in close touch with the Ministry of Commerce in Belfast.

Shipbuilding was mentioned by my hon. Friend the Member for Down, North and one or two other hon. Members. The plain fact of the matter is that the bloc countries have not shown very much interest in buying ships from us, although, apart from two very specialised classes, they can now be exported without restriction.

We must recognise a number of other factors in these negotiations, such as the overall trading position of the bloc countries.

In general, we import more from them than we export to them. The situation differs from country to country, but we do not try in our negotiations to balance precisely the United Kingdom's visible trade with each country. We believe that the growth of trade is best promoted by the present arrangements, in which the sterling earnings of the various members of the bloc are freely convertible and, although the bloc countries are free to use their sterling earnings in any part of the world, the surpluses earned by some of them in their trade with the United Kingdom are used for expenditure on invisibles, repayment of debts owed to us and purchases of commodities from the rest of the sterling area, largely in the form of raw materials or foodstuffs. The sterling area is a net gainer of gold and convertible currencies from trade with these countries.

My hon. Friend the Member for Seven-oaks, referred to Russian gold. Russia sells gold regularly. We do not know the total of Soviet gold production, but we have no reason to believe that they are adding to their gold stocks. They probably export their current gold production to pay for the excess of their imports over their exports on a world wide basis.

Having negotiated the trade arrangements, the Board of Trade does not sit back and leave all the rest that has to be done to the businessmen. We have our commercial officers in the countries concerned and they are very active. I am grateful to my hon. Friend the Member for Louth (Mr. C. Osborne) for referring to the work done by our Commercial Counsellor in Peking, and our other overseas officers. When an exporter goes abroad these officers endeavour to help them in every way, including assisting them in making contacts with trading organisations and individuals.

The Board of Trade's Export Services Branch in London and Board of Trade regional offices provide useful and up-to-date information of individual trading opportunities.

As to the results, I consider that our policy has been successful. The total volume of trade has increased remarkably during the last three years. I can give the House one or two figures which may be of interest, particularly in response to questions asked by my hon. Friend the Member for Sevenoaks. Our imports from the Sino-Soviet bloc have increased from £121 million in 1958 to £164 million in 1960. On the other side, our exports and re-exports rose from £103 million to £129 million in that period. This represents an increase in exports of 25 per cent., and compares with a figure of 11½ per cent. for the increase in our exports to the rest of the world in the same period. Our policy has thus been successful, is successful and, I suggest, is the right one to continue to pursue.

There has been a great deal of discussion this afternoon about Eastern Germany. This is a big subject and one which could occupy the whole of my time, so I shall deal briefly with the points raised by the mover of the Motion and by the hon. Gentleman and Member for Penistone (Mr. Mendel-son) who referred to B.E.A. services, or the lack of them, into Eastern Germany. This question was dealt with at Question Time, on 13th March and again on 20th March. The Minister of Aviation, in reply to a Question, said: There is no such prohibition as far as Her Majesty's Government is concerned."—[OFFICIAL REPORT, 13th March, 1961; Vol. 636, c.599.] A week later, my right hon. Friend the Lord Privy Seal was asked a Question about the West German Government and, in reply, he said: The Government of the Federal Republic of Germany have placed no restriction on the provision by British European Airways of flights to the Leipzig Fair."—[OFFICIAL REPORT, 20th March. 1961; Vol. 637, c.21.]

Dame Irene Ward (Tynemouth)

As that reply referred to a Question asked by me after my return from Leipzig, would my right hon. Friend explain exactly what is the position and why the difficulty arose?

Mr. Erroll

There always are difficulties for an airline in negotiating new routes to any part of the world, and it is for them to get on with their negotiations. My hon. Friend will be aware that the point I am making is that no restriction was placed by either the British Government or the West German Government in this matter.

Mr. Mendelson

If that is the position—and I do not dissent so far as the legal position of prohibition is concerned—is it not possible for the right hon. Gentleman to go further and to give an assurance that Her Majesty's Government will encourage that extension of routes? The right hon. Gentleman is not without influence on the airlines.

Mr. Erroll

The fact that we place no restriction in the way should be sufficient to make clear our attitude in the matter. It would be wrong to start pushing the nationalised airlines about and saying that they should have services here or there. That is a temptation I have resisted in my desire to see trade extended with other countries. It is surely best to leave it to the nationalised airlines to make their own assessments of the proper commercial opportunities.

On the question of offices, there is a trade information office of the East German authorities established in London called K.F.A. Ltd., and full information about East German trading opportunities can be obtained from that office. The mover of the Motion claimed that the East Germans had fulfilled their quotas, while we had not. My information does not agree with that of my hon. Friend because, according to my figures, for 1960 our export quotas were fulfilled as to 57 per cent. and our import quotas were fulfilled as to 58 per cent.

The hon. Gentleman the Member for West Ham, North (Mr. A. Lewis) and the hon. Gentleman the Member for Penistone referred to the restriction on visitors from East Germany. This is not primarily a trading matter and I would refer this subject to my hon. and right hon. Friends at the Foreign Office. It is possible to do business through the post and it is not essential always to visit Britain, although I realise that travel restrictions are a hindrance. However, restrictions have now been removed and trade should be able to continue without hindrance.

A steel works order was referred to by the hon. Member for West Ham, North. This order was supposed to have been lost, but has, in fact, not been placed. What actually happened was that an order was placed for some other steel works equipment. This order was of a much smaller size and was confused with the larger project. We shall consider any application for cover for the £40–£50 million order on its merits and in the light of the financial position of the East Germans, so far as this can be established.

On the other side of the world, our trade with China is going up satisfactorily. This matter was referred to by the hon. Member for Penistone, by my hon. Friend the Member for Louth, and by other hon. Gentlemen. In 1959 our exports to that country were running at £24.4 million and in 1960 they had increased to £31.4 million—a substantial increase. At the same time, imports from China in 1959 were £19.7 million, and in 1960 they were £24.9 million.

My hon. Friend the Member for Louth made some kind references to my meetings with groups of business men who came to discuss Sino-British trade, and in this connection I would remind the House of the existence of the Sino-British Trade Council which exists for the specific purpose of promoting Sino-British trade. There are other bodies which make a special feature of promoting trade with the bloc countries, including the Russo-British Chamber of Commerce, the Association of British Chambers of Commerce and the Federation of British Industries, which is particularly helpful.

There is also an organisation called the British Council for the Promotion of International Trade, and Her Majesty's Government are often asked about their views on the activities of this Council. I have therefore consulted my right hon. Friend the Lord Privy Seal and, with his agreement, I can confirm that there has been no change in the attitude of Her Majesty's Government towards it. This is an organisation of Communist origin formed as a result of the Moscow International Economic Conference, itself initiated by the World Peace Council, one of the principal agencies of international Communism.

As Sir Anthony Eden said in the House on 8th November, 1953, it is public knowledge that members of the Council have been either members of the Communist Party or closely associated with bodies which are generally recognised to be Communist "front" organisations.

Although the B.C.P.I.T. claims to act in the interests of promoting trade between Great Britain and all other countries, in practice the Council is solely concerned with Communist bloc countries, and its publications and activities show that it has a strong bias in favour of Communist international economic policy.

The decision to use the services of any particular organisation must be left, of course, to the judgment of each firm or individual, but traders will no doubt wish to consider carefully whether they should arrange their business through an organisation which has political tendencies when there are alternative independent and non-political organisations or channels available to them.

Another important subject to which reference has been made in the debate is the matter of strategic controls. I know that there are some who would say that they are a lot of hocum-cocom, but I can assure the House that these controls are still necessary. It is true that they stop the sale of certain commodities which may have a military use, but I do not agree that they are a significant factor in our total trade with Communist bloc countries. When the China list was brought into line with the Soviet bloc list, it did not lead to a great upsurge in trade with China in items which had been previously banned.

Controls are operated in agreement with our allies and are being constantly reviewed to keep the list of controlled items up to date and as short as possible. The number of goods affected has been very considerably reduced during the last two or three years. At present the controls prohibit only a very limited range of goods apart from actual munitions of war and atomic energy materials, and surely we are right to keep those goods under control. The countries of Eastern Europe keep a very strict control over their exports to the West. Although they do not publish their own list of strategic goods, as we do, we certainly know that they would not supply to us munitions or other goods which have a military use.

Mr. Douglas Jay (Battersea, North)

Although there may be a case for some sort of list, surely we can remove from the list equipment which we know exists in Soviet bloc countries or which is manufactured by them.

Mr. Erroll

That is a matter which we discuss with our allies and we move in agreement with them. Although those countries may have some of this equipment they may still want ours. Although they may make or have one unit, that does not mean that they do not want more.

The hon. Member for West Ham, North who raised the question of oil supplies was very ably answered by my hon. Friend the Member for Sevenoaks. My hon. Friend the Member for Louth also referred to the subject. Our exports to Russia, of course, could be increased considerably if we agreed to take several million tons of Russian oil and thus enable the Soviet authorities to earn the money necessary to pay for British equipment. I am bound to say that this presents very great difficulty for us. As a country in which two of the major oil companies are located, we are in effect oil producers and we have to face the fact that there is a world surplus of oil at present. Most of our crude oil comes from the under-developed countries of the Middle East who are also important customers for our exports. It is not a matter of "invisibles" as my hon. Friend the Member for Louth seemed to suggest. He should remember that these countries are already an important market for our exports. It would certainly not help them if we were to reduce our takings of oil from them. They would have to reduce their purchases from us and so our exports would not benefit overall.

Mr. C. Osborne

What the Soviet authorities are asking is not that we should reduce our imports from the Middle East but that they should have a small share of the annual increase that we are taking.

Mr. Erroll

I appreciate that point, but in view of the real need for the Middle Eastern and other countries to develop as fast as they possibly can and the great investment that has taken place of their technicians and their labour as well as our resources, I think that it would be wise to remember their considerable interests.

In the few minutes left to me I must come to the final point underlying the Motion which is before the House. It is the question whether our trade with the bloc countries can be increased in the years to come. We believe that there is scope for a measured but not a dramatic increase. We hope, for instance, to be able to give added impetus to this trade by increasing the quotas for the import of goods from these countries whenever this can be wisely done without exposing our markets to risks of disruption. I should like to remind the House of what was said by my hon. and gallant Friend the Member for Lewes about eggs, which is quite a serious matter for British egg producers at present. It would make life much easier for us at the Board of Trade if we could bring in all the bloc eggs and thus assist our exports, but we have to remember the position of the domestic producers for the home market.

In all recently concluded negotiations it has been possible to raise the targets of trade in 1961 by modest amounts. But I do not think that we can discuss future plans in detail because under the system which I have already described, whereby we have these annual negotiations it will be clear that it would prejudice our success in forthcoming negotiations if I gave away our hand in advance. In these negotiations we always aim to achieve the maximum level for our exports under the policy which I have described. We shall continue to help United Kingdom exporters by means of all the facilities of the Board of Trade and our commercial offices abroad and through the credit insurance facilities of the E.C.G.D., which are available to our exporters to bloc countries under conditions which are roughly similar to those for exporters to other countries.

The countries of the Sino-Soviet bloc can also do a lot by earning more sterling with which to pay for their purchases. They can do this by developing their exports to us of goods which we freely admit under open licence. They can increase their earnings by filling more completely the many quotas for their imports which they now use only in part or not at all. They can also help by diversifying the type of goods which they hope to sell in this country and so reduce the risk of disrupting our domestic markets, and incidentally helping to improve conditions for a two-way growth of trade.

Hon. Members have been kind enough to refer to the forthcoming visit of my right hon. Friend the President of the Board of Trade to Moscow to open the great British Fair there. I know that he will appreciate those kind remarks. He will also be having discussions with the Government of the U.S.S.R. and incidentally will be going to Poland for a day or two where he will also have discussions. He will hope, with those discussions in mind, to create conditions for a further expansion of trade and I hope that he will bear in mind the suggestion made by my hon. Friend the Member for Louth.

Her Majesty's Government will certainly continue to seek every opportunity to urge the bloc countries to co-operate so that the trade of the United Kingdom as a whole with the Sino-Soviet bloc countries can be expanded to the highest possible level.

As to long-term quotas or trade arrangements, which have been suggested by several hon. Members as being a means of increasing our trade, we feel that we must reserve the position which we have adopted of negotiating annual quotas for the import of goods in the controlled sphere. Some of these imports fluctuate violently according to crop seasons, and rigid quotas for a long period ahead might lead to considerable difficulties. I assure the House that we shall carefully study all the points raised in the debate and will continue unabated our work in this important field of Britain's trade relations with the rest of the world.

Question put and agreed to.

Resolved, That this House, being conscious of the necessity for expansion of the exports of the United Kingdom of Great Britain and Northern Ireland to countries overseas, urges Her Majesty's Government to give every encouragement to those firms who endeavour to increase their exports to the countries of the Planned Economy Group, and asks Her Majesty's Government when negotiating trade agreements with these countries to have particular regard to the contributions that can be made by the Northern Ireland shipbuilding, heavy engineering, textile and electrical industries.