§ Motion made and Question proposed, That this House do now adjourn.—[Mr. Finlay.]
§ 11.44 p.m.
§ Mr. John Howard (Southampton, Test)
I have sought to raise this subject on the Adjournment for some time and it is perhaps opportune that it has been selected for debate at a moment when the attention of the Press and the public has been focussed on the latest menace to British and foreign shipping, namely, the regulations implementing the amendments to the United States Shipping Act, 1916.
The welfare of shipping and its important contribution to the United Kingdom economy as an earner and saver of foreign currency is all too frequently overlooked. Perhaps because this vital industry is too seldom in our thoughts too little time is devoted to debates on shipping in the House of Commons. We still have the largest ocean-going merchant fleet in the world and a merchant navy of approximately 150,000 officers and men. This is a priceless asset and we must see to it that when we compete for the world's freight the dice are not heavily weighted against us.
Tonight, I wish to draw attention to the twin problems of flag discrimination and the recent shipping legislation introduced by the United States. It is important to distinguish between these two forms of Government interference in 400 international shipping. Flag discrimination relates to cargo preferences imposed by Governments for the benefit of their own shipping, while recent American legislation seeks to impose unilateral control over liner shipping and liner conferences. Both are contrary to the interests of British shipping.
There are other forms of Government interference with normal commercial considerations, such as payments by certain Governments, including the United States, of subsidies in the form of contributions towards the building and operational costs of their own merchant fleets, but I am not proposing to deal with that tonight.
Flag discrimination is the most serious and intractable of our problems. It arises from a wide variety of Acts and pressures by governments designed to direct cargoes into ships of the national flag, regardless of commercial considerations. This particular form of nationalism arises for several reasons—for defence considerations as in the case of the United States, considerations of national prestige, as in the case of India, Burma, Brazil and Ceylon, and also balance of payments difficulties. Nevertheless, whatever the reason, the result is that liberalisation and co-operation so evident elsewhere in the free world's trading policies are notably absent from shipping.
The move towards national goods in national ships has produced undesirable results. For example, the free competitive field must continue to contract since efficiency alone in the operation 401 of ships is no match for new entrants who are supported by discriminatory practices and subsidies. Cross-trades will be progressively eroded and it is on these trades that the economic working of the shipping industry and, in turn, cheap world freights depend. Ultimately, this could lead to the elimination of ships of the genuine maritime countries whose owners have to cost their operations. This clearly cannot be for the benefit of world trade at large.
The United States looms large in this problem created by flag discrimination and subsidies. I recall that on a visit to the United States in 1959 I talked to a number of American audiences on flag discrimination and subsidies. These Americans were surprised by the existence of the problem and, moreover, all expressed sympathy on a matter which was clearly of vital importance to Great Britain.
Flag discrimination varies from bilateral trade treaties which reserve the whole or much of the trade to ships of the two flags concerned—that largely embraces the Communist countries, the South Americas, Japan, Pakistan and Portugal—through the manipulation of import licences, customs duties and exchange controls for the same purpose, to more easily identifiable discrimination, namely, direct legislative controls.
For example, apart from aid cargoes, the United States by Public Law 664 stipulates that in any case where the United States gives defence funds, credits or guarantees convertibility of currency in respect of goods shipped abroad, 50 per cent. of those shipments must be in United States ships. These examples give some indication of how rife and diverse flag discrimination has become.
Countries looking to the West for liberal trade and generous aid are amongst those adopting shipping policies which are harmful to those from whom they seek help. International organisations such as O.E.C.D. should be induced to give support to the proposition that the same principle of liberalisation should be applied to the provision of shipping services as to the exchange of goods.
The maritime nations which operate commercially have enough to contend with, as, I hope, I have demonstrated. They now have these new regulations, 402 which have been brought in by the United States to give that Government control over all common carriers plying to and from the United States regardless of the nationality of the flags of the carriers. In the case of Great Britain, it is almost as though the United States sought to extend its territorial waters into Southampton Docks and to extend its jurisdiction into the forwarding agents' offices. The new law is aimed at freight rates. It seeks unilateral regulation of the liner conferences and the liner trade generally. It requires the production of documents relating to contracts executed outside the United States.
The International Chamber of Shipping, at a meeting last April, had something to say about this problem. It mentioned that if policies similar to those of the United States were adopted by other countries, nothing short of chaos in international trade and shipping would follow and this would cause serious harm not only to the foreign commerce of the United States, but also to countries trading with her.
I appreciate that strong anti-trust views are prevalent in the United States, but the regulations based on the new law get the whole system completely out of hand. The interpretations and investigations of the Federal Maritime Commission are so elaborate that they have been described as bureaucracy gone mad. I appreciate that these cases are being disputed in the courts, but, nevertheless, there is no reason why they should not be raised here.
The anti-trust aspect of shipping charges was subject to discussion at the International Chamber of Commerce in July, 1961, when it was found that the conference system was to the advantage of the users of sea transport services. It supported stable freight rates, which were inherent in the conference system. More recently—only yesterday—the International Chamber of Commerce held a further meeting in Paris because it felt that developments were extremely grave in relation to the basic principle of the International Chamber of Commerce on the liberalisation and the freedom of commercial enterprise from governmental interference.
As a result, the International Chamber passed a resolution, which on this occasion specifically referred to the United 403 States legislation. Among other things, the resolution referred to thebasic principle that the free circulation of goods and services is of paramount importance to the orderly development of a healthy world economy".It recorded its "gravest concern" because of the difficulties that would arise from theincreased and wide powers … to intervene in the domestic and commercial affairs of the shipping and trade of other nations".It concluded by stating thatactions by any country attempting to … control … international shipping are so serious to the free movement of world trade and the efficiency and economy of international shipping services as to require the urgent review of the whole situation and justify the need for a revision of … the U.S. shipping legislation.The question of Her Majesty's Government taking powers to retaliate has been raised both in this House, by Questions to my right hon. Friend the Prime Minister today, and in the Press. This certainly ought to be considered, but we must accept that other nations are involved besides Great Britain and that we ought to carry the genuine maritime Powers with us in any action that is taken. Certainly, in other spheres of international affairs, pressure of world opinion is supposed to count. There is little doubt about the opinion of the free nations in regard to this legislation of the United States. Eighteen of the shipping nations expressed themselves as being gravely concerned and only one dissented—needless to say, the United States representative, who abstained from voting. I hope that this pressure of opinion will lead to consultations with the Americans and eventually to conciliation. I know that my right hon. Friend the Minister of Transport chaired a meeting of ten shipping nations as recently as 3rd May when collective action was discussed. May I ask when he anticipates that a final decision will be reached?
May I remind my right hon. Friend of a speech he made in July, 1961, when he referred to the fact that the prosperity of shipping depended on close co-operation between the Government and the industry. He described the job of the industry as being efficient and competitive, and that of the Government as holding the ring and enabling the Indus- 404 try to operate under conditions of free and fair international competition. That was an admirable sentiment and tonight I seek a progress report from my right hon. Friend on the job of the Government in holding the ring. May I ask what progress is being made towards the prohibition of hitting below the belt in international shipping trade?
§ 11.58 p.m.
§ Mr. R. G. Mellish (Bermondsey)
I congratulate the hon. Member for Southampton, Test (Mr. J. Howard) on his good fortune in being able to raise this important issue tonight. By his appearance in the Chamber the Minister of Transport has emphasised the importance of the matter and I will not stand in the way of the right hon. Gentleman in answering the debate for more than a few moments.
My hon. Friend the Member for Southampton, Itchen (Dr. King) would have intervened to support what has been said by the hon. Member for Test, but may I get on the record on behalf of the Opposition our appreciation of the fact that the situation we face is that our merchant fleet is being discriminated against by an ally and a friend. It is too much to ask that we in this House should take that lying down. The majority of hon. Members are the friends of the American alliance. We recognise that the friendship of America is important in the field of foreign affairs and that without it there is no hope for the survival of the free world.
But the Americans must recognise that we have certain economic problems to overcome. We do not ask for preference from them and we never have done. We are prepared to stand on our own feet and fight our own battles. But we do ask for a chance to compete in a fair and honest manner. Legislation has been introduced by the Americans which has the effect of causing us to be treated as a foreign nation. We are being discriminated against in order to support what are called American shipping interests and certain American trusts. It may be that President Kennedy is unhappy about this and is against it, but we are asking that action be taken.
The American law is such that we are not being allowed to compete fairly 405 and honestly. I know the problems facing the Minister. It is easy for me to tell the right hon. Gentleman what he ought to do, but I recognise his difficulties. Questions have been put to the Prime Minister and I appreciate the delicate balance which the right hon. Gentleman has to hold. But there are times when Britain must speak out loudly, whether it be to the Americans or to the Russians or anybody else. There is a limit beyond which we shall not go, and if the Americans continue this course of action we shall have no alternative but to consider discrimination against them, in conjunction with other nations of Europe. That would be disastrous for us all and the situation would be exploited by our enemies. If the Minister can assure us that he is doing all he can to defend the interests of our shipping fleet, we shall be satisfied. If he cannot, we as an Opposition intend to raise the matter at the earliest opportunity in a full-scale debate.
§ 12 m.
§ The Minister of Transport (Mr. Ernest Marples)
I should be most grateful to the Opposition if they could raise this subject in a full-scale debate, because an Adjournment debate does not afford me sufficient time to deploy my case. I am grateful to my hon. Friend the Member for Southampton, Test (Mr. J. Howard) for raising this question, and to the hon. Member for Bermondsey (Mr. Mellish) for being so kind as to make his points so lucidly.
Frankly, the Government have no wish to conceal their deep anxiety over the present difficulties of our shipping industry. Those difficulties are numerous and varied, and include interference by foreign Governments. I do not for a moment suggest that that is the only, or, indeed, the most serious of the industry's troubles, but it is certainly one that arouses widespread and justified indignation.
There are two distinct kinds of interference, and I want to say a word about each. First, there is what is usually called flag discrimination. Secondly, there is the attempt by other countries to regulate the operations of freight lines and their conferences. May I stress to the House and to the country that those are two separate and distinct issues, and each should be discussed quite 406 separately from the other. To treat them as one issue only is to confuse and muddle any discussion. So I repeat—they are two separate issues, and should be treated as such. I will deal first with the interference which is called flag discrimination, referred to by my hon. Friend, and then I shall deal with that interference that consists of other countries attempting to regulate the operation of freight lines and their conferences.
In modern times, flag discrimination takes many different forms. The first example is that many countries reserve their coastal trade exclusively to their own ships. That is a relatively simple device. The second example is that many countries reserve for their own shipping the whole or part of any import or export traffic which is owned, financed, or otherwise controlled by Governments. The cargo preference system of the United States is the best known example of this, but it is not necessarily the most important.
Discrimination of this sort is exercised by Statute, and is therefore open for everyone to see, but there are other forms of discrimination that are less obvious and not easy for everyone to see. For example, both import licensing and exchange control can be used to give concessions in respect of port duties or other charges, and many fertile minds concentrating on methods to bring other pressures on shippers have no difficulty in finding all sorts of possibilities of concealed pressures.
How do we deal with this type of flag discrimination? The General Council of British Shipping has pressed the Government to take new powers, but it would not be in order for me to speculate on what those new powers might be. Perhaps I might repeat what I have said in our last two debates on shipping, which is that before we move we should first be clear about what precise action we could take in particular cases, and secondly we should be sure whether or not such action would be advantageous to our shipping generally and to the national interest as a whole. We must never forget that although our merchant fleet is not such a large percentage of the world fleet as it once was, it is still very large. We carry not only more than half of our own trade but a good 407 deal of the trade between other countries. It is vital that we should consider very carefully whether we might not have more to lose than to gain from retaliation.
The first point I mentioned is to be clear what precise action we could take in a particular case if we had the powers. I therefore asked the General Council of British Shipping, which asked me to take powers, to furnish me with full details of what powers we should take in a particular case. Naturally, the Government must have details of how any power would be used. I realise that it will take time for the General Council to reply, but when it lets me have its answer I shall be able to make a precise assessment of what the country stands to gain or lose by taking action. Remember, I have to take into account not only the gains and losses to shipping in particular but the gains and losses to exports and imports in general as well. I await the General Council's answer with interest. So much for flag discrimination, which is the first form of interference.
I now turn to the second form of interference, which is absolutely separate from flag discrimination—the attempt by foreign countries to regulate the operation of freight lines and their conferences. The most notorious example of such regulation is that now being attempted by the United States of America in their Public Law No. 87–346. I should like to say three things about this American legislation. First, we cannot accept the principle that any one country, however powerful and however friendly, should unilaterally regulate international shipping. I have stated this before and I state it again, and it is a view which is shared by the leading maritime European nations and also by the Japanese Government.
Secondly, while we recognise that there may be a risk of conferences becoming unduly restrictive, we consider that the dangers are greatly exaggerated in the American mind. The real safeguard against conferences offending in this matter is that their trade would be taken away from them by enterprising tramp line owners and also by more efficient lines outside the conference. American tramps could always step in and steal 408 the traffic if they could give better terms and service. But could they give them? If they could, why do not they do so? It is very interesting that even the Americans have not taken the view that conferences should be abolished.
Thirdly, we are disturbed by the fact that although the American law is ostensibly aimed at possible abuses by shipping conferences, the Act itself provides that the regulation is to be carried out in the interests of United States commerce. Why only the interests of the United States? What about the interests of the United Kingdom? What about the interests of the European countries? Are they to be sacrificed? Indeed, statements made by members of Congress and by United States officials also imply that it is to be used in the interests of United States shipping. What about our shipping? What about the shipping of other countries? Is that to be sacrificed? What about efficiency? What about free enterprise? What about service for the customer? These are not mentioned. But what is mentioned is that the regulations are to be carried out in the interests of the United States.
How do we deal with this problem? It has been suggested that sooner or later the leading maritime nations will be obliged to arm themselves with powers comparable with those already taken by the American Government, with the object of exercising a degree of control and thus bring all countries, including the Americans, to the conference table.
Against this, on the other hand, there is the strong possibility that such a course of action would lead eventually to some form of international control over liner conferences and eventually perhaps over all international shipping. It would indeed be ironic if the United States, that bastion of free enterprise, were responsible for laying the foundations of an international, Government-controlled, Socialist shipping policy. And if the result proved to be higher freight costs for the customer plus a more inconvenient and inefficient service, then, alas, we should have struck a blow at the philosophy of private enterprise. State regulation on this scale does not seem believable in a land of free enterprise. It may well be that history will record that the United States will have 409 been responsible for the birth of a world socialised shipping industry.
But one thing is clear to me from the several meetings of the leading European maritime nations. If we can hammer out a collective policy between us, we shall be in a stronger position to act. I shall strive in Europe for a united front and a collective policy. I hope and pray that we shall succeed. Our last meeting on 3rd May leads me to think that we shall. If we in Europe succeed, we shall be backed by massive strength and great bargaining power.
I have already dealt with flag discrimination and with the American attempt to regulate the operation of freight lines and their conference. I turn to my last point, which is entirely separate from the first two. I refer to the clash between the demands by the United States Federal Maritime Commission for documents located in the United Kingdom and the requirement of the Minister—myself—to the British lines concerned not to produce those documents. The United States Federal Maritime Commission demanded the production of documents which were located not in the United States but in the United Kingdom. Therefore, in a letter dated 9th March I told the shipping lines concerned that the documents in question related to transactions effected wholly within the United Kingdom and as such they were not within the substantive jurisdiction of the United States. Consequently, I went on to say that the production of such documents would be contrary to the public interest of the United Kingdom.
This issue is solely and starkly one of jurisdiction. Of course, the matters in the documents may be complicated or they may be simple, but what is crystal clear is that the narrow issue of principle is whether the United States can demand documents relating solely to transactions effected wholly within the United Kingdom and not within the substantive jurisdiction of the United States.
The issue is purely one of jurisdiction. But this case brings out the issue very clearly, and it is only one aspect of the whole set of problems raised by the American legislation about the liner conferences. Whatever the outcome of this case, it will not solve all the wider problems.
410 Perhaps I may now say a word about the narrow aspect of the matter. This case of jurisdiction may be referred to the courts. Therefore, it would not be proper or appropriate for me to comment on the substance of the matter at issue between the British lines and the Federal Maritime Commission, and it would not be advisable to say how the case may be handled or decided.
But leaving the narrow point of jurisdiction, I would mention that the practice of paying forwarding commissions on shipments to certain selected United States ports, to which objection is now taken, has a history going back to shortly after the First World War. But in any event, the fundamental issue for Her Majesty's Government is one of jurisdiction.
Despite all the difficulties and hesitations which I have mentioned, there are many who have reluctantly come to the conclusion that the growth of flag discrimination on the one hand and of regulation by foreign Governments on the other hand is bringing to an end an era of freedom in international shipping. It may be right, or it may be wrong, but I believe it is being brought to an end by the intervention of Governments overseas. Nevertheless, we feel strongly that the prospects of preserving liberal policies in international shipping depend upon those who believe in them—that is to say, the leading maritime nations acting in concert.
My Parliamentary Secretary and I have done our best to bring the European nations together. We have striven hard both here and on the Continent, and we shall continue to strive to bring them together so that we act in concert, because I believe that if we act alone we shall be weaker than if we act collectively. If the European maritime nations act together, we shall have greater strength and bargaining power, and we may ultimately prevail with our views on shipping.
One thing is clear, that my Parliamentary Secretary, who has devoted himself to this cause, and I will lose no opportunity to make sure that our views are known in the United States, however unpopular we may be in developing and 411 forwarding those views, because we believe that no single nation can dictate to the rest of the world how its shipping—
§ The Question having been proposed after Ten o'clock on Tuesday evening 412 and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at fourteen minutes past Twelve o'clock.