UNITED KINGDOM AND JAPAN (COMMERCIAL TREATY) (Hansard, 14 November 1962)

§ 74. Mr. HIRST
To ask the President of the Board of Trade whether he will make a statement about the Treaty of Commerce, Establishment and Navigation between the United Kingdom and Japan.

§ The President of the Board of Trade (Mr. F. J. Erroll)
With permission, I will now answer Question No. 74.
Yes Sir. The Treaty was signed this morning. Copies of the text are available toy the House. together with a Command Paper summarising the history of the negotiations and explaining the effect of the Treaty and associated arrangements.
379 The essence of this Treaty is the exchange of most-favoured-nation rights and, yin some cases, national rights between the two countries as regards the treatment of persons, companies, shipping and goods. Safeguards against disruptive competition are provided in the associated arrangements.
The safeguards are, first, continued control of a number of specially sensitive items by export restriction in Japan or import restriction in the United Kingdom; and, second, a general safeguard for use in the event of disruptive competition developing in any sector of trade. When the Treaty comes into force, Britain will cease to invoke Article XXXV of the General Agreement on Tariffs and Trade, thereby entering into relations with Japan under the General Agreement.
Since the rapid expansion of Japan's economy was first accompanied, some two years ago, by real progress in the liberalisation of her import trade, the conclusion of a treaty on these lines has been a major objective of Government policy. To enable our exporters to reap the full benefits of the expanding market it was necessary to obtain guarantees that our trade would be as well treated as that of countries, such as Germany and the United States, who were in G.A.T.T. relations with Japan; and to provide a normal and settled basis of commercial relation's for trade between the two countries to replace the annually negotiated trade arrangements. The need for a treaty has been equally recognised by representative's of industrial opinion with first-hand knowledge of developments in Japan.
The rate of expansion of the Japanese economy in the last few years has far exceeded that of other industrial free-enterprise countries. Our exports to Japan have increased by about two-thirds in the last two years. Liberalisation of imports by Japan goes steadily forward. With relations now on a sound basis, I believe that our exports to Japan will continue to grow and there should be increasing opportunities for the profitable exchange of know-how between the two countries.
Some sections of industry have, I know, been doubtful whether the general 380 safeguard is an effective protection. I firmly believe that their fears are exaggerated. Under this safeguard we may consult the Japanese Government if there is an increase in imports of any product under conditions which cause or threaten serious injury to our manufacturers. In an emergency we can impose import restrictions at any time after consultation has begun, retaining them as long as they are needed. But we may hope that the necessity for this will rarely, if ever, arise, since it is reasonable to expect that the Japanese Government will readily co-operate with us to avoid a situation in which we would be compelled to reintroduce restrictions on Japanese trade.
The Treaty is likely to be ratified and come into force in April or May of next year. The current trade arrangement has been renewed to cover the interval. During this period there will be some relaxations on our side, not affecting textile goods. Relaxations on the Japanese side will offer substantially increased opportunities to our exporters of wool cloth, whisky, cars and machine tools.

§ Mr. Hirst
I thank my right hon. Friend for that important statement, which the House will want to study. At this juncture, may I ask him whether his right hon. Friend the Leader of the House has had the conversations, which I was promised during business questions on 1st November, with a view to a debate which we desire before signature of the Treaty and which is still necessary in this important matter?
Does my right hon. Friend seriously consider that signature to a measure of great trust and mutual confidence is desirable at a time when Japan still retains the right to subsidise exports for at least a year after ratification? Does he appreciate that his unwillingness to accept the united advice of both employers and employees in the wool textile industry means that selective protection as given in the Treaty will of itself disrupt the very careful balance of this industry and might itself do harm?

§ Mr. Erroll
The question of a debate will be decided through the usual channels, should that prove to be necessary.
As for the Japanese arrangements for subsidising exports, my right hon. Friend 381 the Prime Minister said in answer to a Question a few days ago that the Japanese have given an undertaking to allow their present legislation to lapse and to sign the general declaration on export subsidies in the G.A.T.T. at a date no later than the date on which the legislation lapses. That means that Japan will be coming into line with other major industrial countries——

§ Mr. Hirst
When?

§ Mr. Erroll
Not later than March, 1964, and it may well be earlier. The Japanese have given the latest date before which they must have signed this arrangement.
I have been having conversations with the Wool Textile Delegation, as a result of which I think that the delegation now sees that the arrangements which we are proposing for the wool textile industry are likely to be more effective than they at first feared.

§ Mr. Jay
While hon. Members will no doubt wish to study these arrangements further before commenting an them in detail, is the President of the Board of Trade satisfied that the agreement is fair to British textile industries, the wool textile industry in particular?

§ Mr. Erroll
I am satisfied that it is entirely fair to both the cotton and wool textile industries.

§ Mr. Wade
May I press the right hon. Gentleman a little further on the subsidisation of exports? He will be aware of the concern felt by the wool textile industry over the dual pricing system by certain large trading concerns in Japan. Is there anything in the terms of this Treaty, or has any statement been made by the Japanese Government, which provides a firm assurance that the dual pricing system will cease, or are we to assume that the dual pricing system may continue?

§ Mr. Erroll
Dual pricing is not one of the export arrangements banned by the G.A.T.T. declaration. It is a matter for individual industries and firms to decide their export prices, and there are price differentials in respect of British exporting industries, too.
The Japanese dual pricing of wool cloth is partially made possible by the present high rate of duty, but the 382 Japanese have always explained that this high duty was temporary and that they intend to reduce it in the coming months and years. There is no import duty at all in respect of wool tops, so that in that important respect there is no element of dual pricing.

§ Mr. W. J. Taylor
In view of the period of several months which will elapse before the Treaty is ratified by the Japanese Diet, will my right hon. Friend agree to continue his discussions with the representatives of the wool textile industry with a view to ensuring that the safeguards which he has introduced into the Treaty are workable and adequate to give the protection which the industry undoubtedly needs?

§ Mr. Erroll
I am glad to tell the House that I had a most useful discussion with the Wool Textile Delegation last week and that we have together decided that we will keep in the closest possible touch in order to work out whatever arrangements may appear to be necessary when the delegation has had the opportunity of studying the details of the Treaty.

§ Mr. Rhodes
The right hon. Gentleman will be aware that until we see the exact terms of the Treaty, we shall not know much about it, but that what little we know we do not like. Are the Government prepared to give time to debate this important Treaty? Is the right hon. Gentleman aware that the liberalisation which he mentioned is on 1959 figures and products only and that when the Japanese got to the point where ratification was likely they put on a swingeing tariff which could possibly cancel out any effects of liberalisation? Will the Government give time for a debate, out of which many useful and protective ideas could emerge?

§ Mr. Erroll
As I have said, the question of debating time is a matter for discussion through the usual channels with my right hon. Friend the Leader of the House.
As regards the suggestion that the Japanese might impose swingeing duties a few days before ratification, I think it is unlikely that they would wish to do that because on ratification we would enter into full G.A.T.T. relations with the Japanese and they would in any 383 case wish to move in that part of the field in conformity with their present and existing membership of the G.A.T.T.

§ Mr. Tiley
My right hon. Friend has said that one of the safeguards for the wool textile industry is that it can take action in the event of disruption being threatened, not actually occurring. Is my right hon. Friend taking further steps to make sure that he has the information in time to take that action?
May I also press my right hon. Friend for a debate, because this Treaty, which concerns our constituents, has been signed outside the House and we should have the opportunity to discuss it. We are very anxious that the Japanese should not be allowed to pull the wool over our eyes.

§ Mr. Erroll
A goad deal of the wool will probably be British woollen exports to Japan, which are running at a high level at the present time.
As regards the threat of disruption, what my hon. Friend has said is correct. It is not only actual "serious injury", to use the words of the Treaty, but the "threat of serious injury" which can be covered by the Safeguards Protocol. One of the things which I am discussing with the Wool Textile Delegation is the means whereby the Board of Trade can be rapidly informed in the event, unlikely though it may be, of such a situation developing.

§ Mr. S. Silverman
Is the right hon. Gentleman aware that nothing in his record so far gives the cotton textile industry any confidence whatever in his capacity to assess what is fair and what is not fair? While we appreciate that it is not for him alone to allocate time for a debate, can he at least undertake that this agreement will not be ratified 384 or put into operation until the House has had an adequate opportunity of considering and discussing it?

§ Mr. Erroll
As regards this Treaty, the normal precedents have been followed, of signing a treaty and then laying it before the House for a period of 21 days after which the Government are free to ratify it. There has been no departure from the normal precedents.
I think that when the cotton textile industry comes to study the details of the Treaty and the protocols it will realise yet again what a great deal the Government have been doing for the industry.

§ Mr. Speaker
Order. We cannot debate this without a Question before the House.