§ The President of the Board of Trade (Mr. Anthony Crosland)With permission, Mr. Speaker, I wish to make a statement. On 1st January, the United States Government announced certain measures to restrain overseas investment and some other forms of external expenditure in order to safeguard their balance of payments. We accept the actions which they have so far taken. But the Administration also have under consideration the possibility of other measures, notably in the field of trade, which we should find hard to accept, both because of the threat to our own trade and the danger of wider repercussions that might jeopardise the development of world trade.
In the light of the overwhelming importance of maintaining the expansion of world trade and of avoiding a possible chain-reaction of restrictive measures, Her Majesty's Government, after consultation and in agreement with our fellow members of E.F.T.A., have informed the United States Government 1639 that we are willing to implement the United Kingdom's Kennedy Round tariff cuts in full by 1st January, 1969, provided that, first, other E.F.T.A. countries, the E.E.C. and Japan do the same; secondly, the United States Government do not introduce measures in trade such as an export rebate or an import surcharge; and thirdly, the United States Government proceed at least as quickly as hitherto contemplated with their own Kennedy Round cuts and with legislation to abolish the American selling price system for chemicals.
This would mean that, in addition to the 40 per cent. of the Kennedy Round reductions already agreed for 1st July, we should propose to make the remaining 60 per cent. of the cuts on 1st January next, instead of in three annual instalments over the years 1970 to 1972. We have been in touch with other Commonwealth countries.
We have noted with satisfaction that the E.E.C. Commission is studying the possibility of a similar move by the E.E.C. We have informed the Governments of the E.E.C. countries, and the Commission, of our proposals. We hope that they and the Japanese Government will join us and our E.F.T.A. partners in this enterprise, which, we believe, will strengthen the principle of international co-operation at a crucial moment and enable the United States to deal with their current problems in a manner that will increase rather than restrict world trade.
§ Sir K. JosephOn the face of it, this looks like a constructive initiative in the face of a growing threat to world trade expansion. There are, however, three questions which I should like to put. From the wording used by the right hon. Gentleman, it would seem as though adherence by the Japanese to an accelerated reduction of tariffs is not one of the conditions but is merely a hope. We on this side would have thought that adherence by the Japanese should be as firm a part of the conditions as is adherence by the E.E.C. and E.F.T.A. countries. Will the right hon. Gentleman tell us about this?
Secondly, since our trade balance is far weaker than that of America, are we really to understand that by the 1640 Government's proposals the United States of America is to be rewarded merely for sticking to its undertakings while we and others improve upon ours?
Thirdly, while we welcome fair competition, some of our industries were, presumably, counting on several years in which to adjust themselves to the Kennedy Round obligations. Does the Minister have it in mind that there are any industries which will find this accelerated reduction, if it comes about, very damaging?
§ Mr. CroslandI am grateful to the right hon. Gentleman for his opening comment. In reply to his first question concerning Japan, he will find that the point is covered by the statement which I have made.
In reply to the right hon. Gentleman's third question about the effect on particular industries, as always in these matters some industries will lose and others will gain. That is all that one can say. That was true of the Kennedy Round negotiations as a whole.
On the second and crucial point of whether we are wise to do this in view of our own balance of payments, the fact seems to be this. Of course, we take a risk by associating ourselves with any such suggestion as I have mentioned today, but it is clear that we would be taking a far greater risk, not only to our trade, but to world trade as a whole, if the Americans were to go ahead with, say, a 5 per cent. import surcharge, with all the risks which that would carry, and other countries then retaliated, with the result that we would get into what we have avoided ever since the end of the war: that is, a downward spiral due to an endless series of retaliatory measures.
Mr. J. T. PriceWhilst I believe that most hon. Members are, theoretically at least, in favour of a liberalisation of world trade, may I ask my right hon. Friend what steps have been taken to give special consideration to those industries of our own native land which are especially vulnerable to inordinate, large imports from other parts of the world?
I refer specifically to the textile industry, which already has to accept far more imports than the country needs and which would be still further exposed if no special consideration were given by our 1641 Commonwealth and E.F.T.A. partners to our special position in these matters, particularly as neither the E.E.C. countries nor our E.F.T.A. partners are taking anything like the same amount of imports from the underdeveloped parts of the world that we in this country are having to endure, with all the social consequences which that entails.
§ Mr. SpeakerOrder. Questions should be reasonably brief.
§ Mr. CroslandMy hon. Friend and I have debated the problems of textiles before, and, no doubt, will do so again. The problem of the textile industry goes far wider than the decision which I have announced this afternoon. I must, however point out to my hon. Friend that even if, as a result of the action which I have announced, there were any threat of larger imports—which does not necessarily follow—there would be compensating opportunities for larger exports by British textile manufacturers. Here is scope for action by the best firms in the industry.
§ Sir D. Walker-SmithDoes not the right hon. Gentleman think that both the progress and the problems which appear from his statement suggest the desirability of a closer and more constructive study by Her Majesty's Government of the possibilities of an Atlantic free trade area, which might simultaneously accelerate the progress and ease the problems?
§ Mr. CroslandAgain, that is a much longer-term question. The position on that possibility is, as the right hon. and learned Gentleman knows very well, that it is at the level of private discussion. It has not yet got into the realm of serious political possibility, although we will all have been made aware of the large amount of private discussion of it which is in progress.
§ Mr. LuardWhile welcoming my right hon. Friend's statement and the liberal attitude towards trade problems which it represents, may I ask whether he would agree that if we are to gain the same advantage as other countries which the Kennedy Round was intended to give, it is equally essential to ensure the abandonment of many non-tariff restrictions on trade, particularly in the case 1642 of one or two of the countries mentioned in my right hon. Friend's statement, otherwise the achievement of the true advantages of the Kennedy Round will be prevented?
§ Mr. CroslandAgain, the problem of non-tariff barriers is a much wider question. But nobody could say that this country was wholly innocent in that respect. Every country has a certain amount of non-tariff barriers. I think that we would all like, perhaps in some other G.A.T.T. round, attention to be paid to non-tariff barriers. For the moment, however, my announcement is concerned simply with the reductions which have been made in the Kennedy Round. In what I have suggested, there is complete reciprocity between this country and the other major industrial countries.
§ Mr. BessellIs the President of the Board of Trade aware that my right hon. and hon. Friends on this bench will welcome this step towards a speeding-up of the Kennedy Round tariff cuts and of the negotiations with the E.F.T.A. countries, E.E.C. and Japan? Has the right hon. Gentleman had any success in discussion with the United States concerning restrictions on tourism to this country?
§ Mr. CroslandThe position concerning the proposed tourist restrictions by the United States is that the Administration in that country has made certain proposals to the Ways and Means Committee of the House of Representatives. I understand that that Committee has considered those proposals once and has deferred further considerations. We are, therefore, so uncertain of what may transpire that we cannot make detailed representations.
§ Sir A. V. HarveyWill the President of the Board of Trade clarify what he said about other countries making use of import surcharges? That coming from a Government that made use of them for two years seems rather extraordinary.
§ Mr. CroslandI do not quite see the relevance of that, but the import surcharge, as the hon. Gentleman knows very well, was one of two measures which this Government adopted, both of which we know from the right hon. Gentleman the Member for Barnet (Mr. Maudling) he 1643 had very seriously considered and would probably have adopted if his party had won the 1964 General Election. The fact is that, supposing that some offer of international co-operation had been made to us at that time like the one that I am proposing now with other countries to make to the United States, we might never have had to do that.
§ Mr. Alfred MorrisIs my right hon. Friend aware that there has recently been discussion not so much about a North Atlantic Free Trade Area but on a much wider International Free Trade Area? Can he comment on what he sees as the next step forward after the completion of the Kennedy Round?
§ Mr. CroslandThat question goes so much wider of the subject that, without starting a general debate which would last for hours, I prefer not to comment.
§ Mr. SpeakerOrder.