HC Deb 23 May 1963 vol 678 cc649-55
The President of the Board of Trade (Mr. F. J. Erroll)

With permission, Mr. Speaker, I would like to give the House an account of the meeting of Ministers of the Contracting Parties to the G.A.T.T. which has just ended in Geneva. The purpose of this meeting was to consider measures for increasing world trade under three distinct but related heads:

  1. 1. the trade of less-developed countries;
  2. 2. trade in agricultural products; and
  3. 3. the reduction of tariffs and other barriers to trade.
We had the advantage of useful preliminary talks with the Commonwealth.

Under the first head, the meeting adopted, though with reserves on the part of the E.E.C. and their Associates, a programme of action for expanding the trade of less-developed countries. It approved the establishment of an Action Committee to secure early progress and to consider further measures to promote the trade of these countries. Meanwhile, as an earnest of our intentions, we and the E.E.C. are working on the details of arrangements for suspending our tariffs on tea and tropical hardwoods.

Under the second head—agriculture—it was agreed to reconvene the Special Groups on cereals and meat to negotiate arrangements for these commodities, and to set up a similar group on dairy products. Rules and methods for dealing with agriculture in the negotiations have still to be worked out.

Under the third head, we reached agreement on a statement of principles to govern the trade and tariff negotiations which are to begin in May, 1964. These will embrace tariff and non-tariff barriers to trade both in manufactures and in agricultural and primary products. A committee will work out a plan for the negotiations and supervise their conduct. It is to produce its plan by 1st August of this year.

As regards tariffs, the object will be to make a substantial cut across the board with a minimum of exceptions. As a general rule the cuts will be of equal depth, though in special cases where differences in the levels of national tariffs have significant effects on trade, special rules are to be devised. The Government's intention will be to obtain equivalent advantages for our exports in return for reductions in our own tariff. We shall not, however, expect to receive reciprocity from less-developed countries.

These arrangements, which were not agreed without difficulty, will allow the preparations for the trade negotiations to proceed with the prospect of a substantial reduction in barriers to trade of all kinds. Much detailed work remains to be done, but a good start has been made. Her Majesty's Government will continue to do their utmost to ensure a successful outcome of this great and imaginative undertaking which holds so much promise for the increased prosperity alike of the industrial nations, the agricultural producers and the developing countries.

Mr. Callaghan

First, when the President of the Board of Trade refers to suspending our tariffs on tea, to what duties is he referring?

Secondly, with regard to the Action Committee, do I take it from what he said that the next few months will be taken up in preparing a plan to decide how we shall start the negotiations that we hope will begin at some time after 1st August?

Thirdly, has the right hon. Gentleman any idea yet when we can expect to see some practical results? What timetable is likely to be set?

Fourthly, what has the right hon. Gentleman in mind for increasing the purchasing power of the under-developed countries, either through commodity agreements or in some other way, so that the flow of trade will not dry up?

Finally, while we are all glad that the right hon. Gentleman has got over the initial hurdle and that the negotiations have not broken up before they have started, as seemed likely at one stage, and while we want international solutions to the problem, may I ask the Government, through him, not to get into the position in relation to these negotiations that we got into in the earlier Brussels negotiations—having a breakdown without alternative plans being ready?

Would he not think it worth while having a study group to examine the effects of the G.A.T.T. on the position of the Commonwealth and the underdeveloped countries in particular and starting studies now so that in the event of a calamitous failure of the negotiations we can be ready to embark on other courses of action which will be appropriate to our position?

Mr. Erroll

I will try to answer the points raised by the hon. Gentleman in the order in which he put them.

The tariff on tea is the tariff we impose on non-Commonwealth supplies in order to provide Commonwealth suppliers with a preference.

The Action Committee is that in respect of the action programme which was put forward by the less-developed countries and which was generally approved by the G.A.T.T. This programme is being referred to its own Action Committee. The other committee to which I referred, which will be drawing up its plan by 1st August, is dealing with the rules for the negotiations on tariffs as distinct from the items in the action programme. There are two separate committees.

It is impossible at this stage to say when we shall see practical results, because not only is it an immensely involved and intricate subject but we have still to agree the rules under which the negotiations shall proceed. But we are hopeful that, if the rules are agreed, the full tariff negotiation will be able to begin on 1st May next year, which is the earliest date on which the Americans can take part. Thereafter, progress can be measured only as we go along.

With regard to the Brussels negotiations and their breakdown, we are not in the same position here, of course. We are one of the Contracting Parties to the G.A.T.T., and I do not think that we need consider, at any rate at this stage, what would be the likelihood of a breakdown in the negotiations, which are of a long-term nature and also cover a number of different fields. It would be very unlikely that there would be a general breakdown. But where the matter concerns particularly the Commonwealth countries, we are, of course, in very close touch with Commonwealth Trade Ministers, following upon the successful two-day meeting of such Ministers in London. Some of the under-developed countries not in the Commonwealth told me afterwards that they appreciated the lead which Britain had given at the G.A.T.T.

Mr. Turton

Under the second heading of the marketing of agricultural produce, can my right hon. Friend say whether our policy in this respect met with the complete approval of Canada, Australia and New Zealand, and, if that was the case, can he tell us whether there will now be close Commonwealth consultation so that we can get an agreed plan from the Commonwealth before the next stage in the proceedings?

Mr. Erroll

Agriculture was, of course, discussed at the meeting of Commonwealth Trade Ministers in London, over which I presided, and I think that the general view was that our proposals were sound, although they did not commit themselves fully because at that stage we ourselves were not able to put forward our own proposals in sufficient detail. Our proposals were well received in the G.A.T.T. generally and resulted in the special groups, which I mentioned in my statement, being set up forthwith to go into the details of the negotiations. We shall, of course, keep in the closest touch with the three Commonwealth countries which my right hon. Friend mentioned.

Mr. Grimond

May I ask the President of the Board of Trade two questions? First, can he say something about the significance to the producer countries of the arrangements for suspending tariffs on tea and tropical hardwoods? Is it not the case that many countries impose an internal duty on tea? Have they agreed to reduce or suspend it? Also, what is the significance of the suspension of the tariff on hardwood?

Secondly, does the fact that the special groups are empowered to negotiate arrangements in respect of meat and cereals mean that they are empowered to conclude commodity agreements, or have we not got as far as that?

Mr. Erroll

Where there is a tariff in respect of tea or hardwood, its elimination will, of course, be a help. Revenue duties are a separate item in the action programme, on which certain countries which have high revenue duties made certain reservations.

It is too early to say how far the special groups can go. They would have no power to impose any international agreements, because all these matters are done by the consent of the Contracting Parties. But we certainly hope to use the two special groups as far as we can in the evolution of the agricultural policy announced by my right hon. Friend the Minister of Agriculture yesterday afternoon.

Mr. Russell

Will my right hon. Friend explain how the elimination of the tariff on tea by this country will help India and Ceylon? Did he have any consultation with the Governments of those two countries before agreeing to it?

Mr. Erroll

I am glad to tell my hon. Friend that I had consultations with the two countries. The advantage to India and Ceylon is that it gives them improved access into the markets of third countries, more than they could hope to get by the natural increase in tea drinking in this country. Therefore, it is of net benefit to them.

Mr. Warbey

Would the right hon. Gentleman agree that the essential outcome of the conference is that the actual playing of the Kennedy Round is deferred until the end of the decade and that when it is played it will probably be only a nine-hole one?

Mr. Erroll

No, Sir. I think that the Kennedy Round has a good chance of making progress. If the hon. Gentleman had studied the subject more carefully, he would have seen that it will not be a nine-hole one and will not take until the end of the decade.

Mr. Hirst

In congratulating my right hon. Friend upon the more hopeful trends secured at Geneva than at one time we thought possible, may I ask him to bear in mind the point of view of British industry about the possible dangers in cuts across the board applied percentage-wise in the light of the fact that in countries which have very high tariffs—100 per cent., and so on—the 50 per cent. cut may still leave a very high degree of protection and that in countries of low tariffs, such as in ours, the 50 per cent, cut will be of real significance.

Mr. Erroll

The Contracting Parties agreed that the essential thing to go for was an across-the-board cut whereby those tariffs which were highest would come down by the greatest amount. This was one of the points which took up a great deal of time of the Ministers concerned. It was recognised that there were certain cases where there were substantial tariff disparities between contracting parties and that where these could have a significant effect on trade they could be made the subject of special treatment. This is one of the matters which the trade negotiating committee will examine with a view to working out rules to keep to a strictly limited number of exceptions.

Mr. Snow

While one must not be pessimistic in any sense of the word, does the right hon. Gentleman accept that the general proposals themselves do not guarantee an increase in exports for this country? Has he taken the opportunity of discussing the growing apprehension about the unavailability of international credit, sometimes referred to as liquidity?

Mr. Erroll

International liquidity was not discussed in plenary session. I fully agree with the hon. Gentleman that this meeting will not of itself increase trade. It will be a long haul. But we have taken a necessary first step.

Mr. Leavey

With regard to the across-the-board proposal and the principle which has been apparently accepted, my right hon. Friend stated that Her Majesty's Government and others will not press for reciprocity from the less-developed countries. I do not expect my right hon. Friend to go into detail, but can he give some general indication of what the Government have in mind about the position of the cotton textile industry, having regard to the fact that 40 per cent. of our home market is already taken by imports, a substantial proportion of which come from the less-developed countries from whom reciprocity is not to be requested?

Mr. Erroll

I am grateful to my hon. Friend for not expecting me to reply in detail to the very important point that he has raised. However, a large proportion of the imported textiles from the less-developed countries come from the Commonwealth countries and such imports are already free of any tariff. There is, therefore, no question of giving them a cut in tariff because none exists.

Several Hon. Members

rose—

Mr. Speaker

Order. We must exercise sufficient self-restraint to enable us to get to the Orders of the Day, which the Clerk will now read.