TRADE AGREEMENT WITH RUSSIA.

HL Deb 06 March 1934 vol 91 cc2-48

LORD PHILLIMORE moved to resolve, That this House, taking cognizance of the Trade Agreement recently negotiated between His Majesty's Government and the Union of Soviet Socialist Republics, desires to press upon His Majesty's Government that this opportunity should be taken to make representations to the Russian Government for a wide amnesty of political prisoners and the return to their homes of those in forced labour camps.

The noble Lord said: My Lords, I rise to draw attention to the recent Temporary Commercial Agreement entered into with the Soviet Government and to move a Resolution. It is an unusual thing for this House, or for Parliament, to have the opportunity of discussing anything in the shape of a treaty before it has received ratification. I hope your Lordships will agree with me that we appreciate this concession by His Majesty's Government, and I think we may attribute it to the great interest that is taken in the country, if not in this House, in all commercial agreements or treaties entered into with Russia. The departure is a novel one and there are certain features in this Agreement which are in themselves very novel and very important. There has been a considerable lapse of time since the denunciation from our side of the last Commercial Agreement. That time has no doubt largely been spent in hard bargaining. I think I may say at the outset that I, for my part, should like to congratulate the Government on the result of that bargaining as being at any rate a great improvement on the Agreement that preceded it.

It was as long ago as July 20 that the noble Lord, Lord Mount Temple and I drew the attention of your Lordships to this question. We are here to-day to sing our little duet on the same theme. At that time the noble Marquess, Lord Londonderry, answered for the Government, and we tried to put to him certain conditions regard to which we thought extremely important in the negotiations for the new Treaty, and as to which we were representing a very considerable body of opinion. In the first place we asked that the Soviet Government should recognise the private and public debts owed to our nationals. I regret that no advance can be recorded in this matter. In the second place we asked that the diplomatic immunity with which the Soviet Trade Delegation in this country was privileged should be withdrawn, if only on the ground that it was of no use and that there was no necessity for it, unless it was to cover up propaganda which in its nature was hostile to the institutions of this country. There is no advance to be recorded there.

In the third place we drew attention to the undertaking against propaganda which was contained in the former Agreement. I must confess that I am somewhat relieved to see that there is no mention of this undertaking in the present Agreement. In fact, my Lords, it has plainly come to be regarded as in the nature of what in the Army is called "eye-wash." I think none of us need feel that its omission makes much difference to the situation either one way or the other. At any rate there is no such undertaking in the present Treaty. Then we asked whether export credits were again to be made available for our exports to Russia. They are. I raise no objection to that. If we are to trade with Russia there seems to be no reason why, under the guidance of the Export Credits Advisory Committee, such credits should not be granted. I am thankful that at any rate there is no question of any loan to Russia, but I am astonished that no lien has been placed on Russian property in this country similar to the lien which was arranged in the case of the recent Franco-Soviet Agreement. There it was provided that, whilst the maximum of credit should be 22 months throughout, exporting firms were to draw bills against the Soviet, and those bills in their turn were to be accepted by the Soviet commercial representative in Paris, and secured by a bond on the assets of the Soviet Petroleum Trust. My Lords, if there is a Petrofina in France, there is an R.O.P. in this country, and that company has very considerable pledgable assets.

How was it that we did not obtain the same protection as the French? This is one of the matters to which I particularly drew the attention of the noble Marquess during that debate last July, and I trust that the noble Earl, who is going to reply for the Government, will afford some explanation to-day. I hope he may be able to tell us that paragraph (8) of Article 5 of the Treaty will, in fact, give our exporters the right to have attached—if that is the right word—such property of the Soviet Government as R.O.P. assets, for instance, or other assets in this country. Even if this is so, it will be well for our exporters to be expressly warned that no action will lie in British Courts unless and until the signature of a mysterious person, whose residence in all probability is in Moscow, is first of all obtained to the transaction. It seems that the neglect of any precaution of a financial nature is somewhat odd when one considers the present financial position of the Russian Government. That Government is, if my information is at all correct, I will not say bankrupt, but verging on bankruptcy. It has, I believe, at the present time a debt of some billions of marks to German creditors, with which it has had the greatest difficulty in dealing. Then, as your Lordships are aware who have studied the figures, it has enormously contracted its purchases abroad during the last year, as I am told and have every reason to believe, because it could not afford to pay for larger purchases.

I come next to what we are going to export. Are we going to export the products of our Lancashire and Yorkshire looms, or Northamptonshire boot factories? Are we going to send over to the Russian peasant the bare necessities of domestic use, for which he has been hungering for years? No! my Lords, there is no provision in this Agreement, I regret to say, to give us any more access to the market for consumers' goods in Russia than we have had before. Once again we have allowed the buyer to be dictated to by the seller, because on balance we are very largely the buyer. That is very unusual in business. As a rule it is the buyer who dictates the terms, if anybody does. In this case it is not so. It is said that you cannot dictate to a Government. Then why can the Russian Government dictate to us the terms and methods on which we should trade? I must say it is a great disappointment to me that in this respect there is no advance whatever to be recorded. The Soviet Government can sell to the individual British buyer in this country petrol from its own pump. We have no such contact with the Russian buyer. We have no opportunity of building up good will in the market represented by the huge Russian public.

This Agreement again repeats in almost identical terms the most-favoured-nation clause, a clause which by its very terms is inapposite where a State has a complete monopoly of its foreign trade. There is in addition, unfortunately to my mind, a concession which is rather tucked away at the back of the Agreement, which provides that any country which has entered into a Customs union with the Soviet Government can have this Agreement applied to it; in other words, the Soviet claims freedom to deal outside the most-favoured-nation clause with any country within its Customs union. At the moment that is not important, but it is one-sided, and there seems to be no reason why the same concession should not be given reciprocally to Great Britain. I know it will be said that the most-favoured-nation clause has been modified by the concessions which have been made for the first time in this Treaty. It is true, and I admit it, that the effect of the most-favoured-nation clause has been very much modified by these new terms. At the same time, I fail to see that there was any necessity for including it in the Agreement as it stands.

So far we have not much to be thankful for, but I am grateful that the Agreement is definitely stated in the preamble to be a Temporary Agreement, and subject to six months' notice. In the debate last July the noble Marquess promised very definitely, and we were glad to hear it, that one of the main objects of the negotiations "will be to redress as rapidly as possible the balance of payments." In this respect Article 3, together with the Schedule, provides for a most notable and marked advance. It is satisfactory also to find that British shipping will rank as an export and in that ingenious way obtain the advantages which will accrue through the Russian Government increasing its purchases in this country. But whilst I am on the subject of shipping I should be glad if the noble Earl who is going to reply will tell me whether or not the reservations in the Agreement with regard to coastal trade operate to bar our ships from making voyages and picking up cargoes? I think they are called continuous voyages, but I am not a shipping expert. The sort of case I am thinking of is one in which one of our ships calls in the Sea of Azov and then wants to pick up another cargo at Odessa, and I am not clear whether or not the Russian provisions as to coastal trade debar that,

Lastly, I turn back to Article 2 and the provisions as to dumping. I believe that there is not universal satisfaction at the length of time that must elapse before protests against dumping can take effect. The provision is for a period of three months. It is true that within that period an imminent restriction or prohibition can lead to a good deal of forestalling of the market; but I personally am too thankful that that new principle has been laid down and that practical effect has been given to it, to quibble very much about the length of time, and I am glad to see that the Preferences accorded at Ottawa are in the same way safeguarded. However, though the position of our Dominions and our own position are safeguarded against dumping, no provision has been made to safeguard those foreign countries who most suffer from under-cutting by Russian products, and I refer particularly to that group of northern countries with whom we are doing an important and expanding trade, and whose products are in natural competition with those of Russia. Here I think it is regrettable that we have been able to do so little to protect those friendly countries.

No doubt other speakers will raise other points upon this Agreement. I would pass, if I may, to the Resolution which I have put down, and which deals with an amnesty to the political prisoners, and particularly to those interned in the forced labour camps. You will have seen that I have asked if our Government cannot find it in its heart to make representations to the Soviet Government of a friendly character, representations which I hope may induce them to afford a wide and generous amnesty to their political prisoners, and more particularly to those in the forced labour camps. I am anxious on this occasion to say nothing that is the least provocative, but I am convinced in my own mind—and I wish that I could convince your Lordships and the Government—that this opportunity should be taken. We have, after all, entered again into friendly relations with the Soviet Government, and it is a friendly representation that I am asking for. We have only a few weeks ago made representations for a policy of conciliation and appeasement to the Austrian Government on behalf of their citizens taken with arms in their hands, actively prosecuting warfare against the forces supporting their Government. In the face of that, is it possible for us to say that what is not an unfriendly action in the case of Austria is an unfriendly action in the case of Russia? It passes my imagination how those two positions can be maintained at one and the same time.

This is no small question. I do not think it will seriously be disputed that there are in Russia and Siberia to-day some hundreds of thousands, if not millions, of political prisoners, for the most part condemned to forced labour under the severest possible conditions. It is known to your Lordships that much of the White Sea timber trade is conducted by these means. It may not be so well known to your Lordships that all the recent railway construction and all the railway construction in the Soviet Republics that is now going on is also being carried on by huge camps of forced Russian labour. It is said that in one camp, although I can hardly believe it—we will say one series of camps—alone, the stretch by the Baikal-Amur Railway now being built, there are no fewer than 450,000 prisoners at work. It is a whole nation, or what is the equivalent of a whole nation, that is condemned to prison.

If your Lordships would be good enough to read the Slavonic Review of January, 1934, published by London University, you would see there an article by a Professor Chernavin, a distinguished scientist who lately escaped from Solovetsk Prison Camp, in which he works out, as far as his knowledge goes, the figures of those in camps, and he can account roughly for 1,300,000 prisoners in those camps, and these, to quote his own words, are "undoubtedly much less than the actual figures." These are appalling figures. And it must be remembered that these men are not men who have been caught for the most part with arms in their hands opposing their Government. They are not men—and women too—who have been taking any active part in opposing the present régime in Russia. At the most they are passive resisters of that régime, and the great bulk of them are peaceful peasants whose crime is that they were, shall I say out of sympathy, and perhaps a little bit more, with the agrarian régime laid down by their Government. I do not want to elaborate their piteous tale of suffering to-day. I am sure that there is not one of your Lordships who would not be thankful to see these men and women released. But I would call your Lordships' attention to another and very dangerous and rather gruesome fact, and that is that gradually the economy of Russia is being built up on forced labour. How grateful was the world when Alexander I released the serfs, who, after all, lived peacefully in their own villages. How far back have we gone since that time? Are we going to recognise a state of affairs in the world in which many millions of people are habitually undergoing forced labour as part of the national economy, divorced from their homes, in some cases thousands of miles from their homes?

I have dealt with the point as to whether or not it is open to us to make these representations. The next question is: Will it help the prisoners if we do make these representations? I know many people honestly say it will do them no good. If you have any doubts on this point, my Lords, you will perhaps allow me to read half-a-dozen lines from the same article by Professor Chernavin, who was a prisoner in the Solovetsk Camp. One page is headed "A New Policy": The second period began about May,1930. By an Order of Ogpu from Moscow the policy in the concentration camp was radically changed … The campaign— I am omitting much of it— The campaign which broke out against forced labour in the timber trade, which was the principal work of the camp, deprived Ogpu of its chief advantage, currency … but the interest shown abroad in the camps was too strong and too continuous, and the policy of extermination of prisoners was impossible. Later on, he says: Since the spring of 1930 prisoners are no longer beaten, or tortured, or killed for not carrying out their allotted tasks. Let us be thankful that the Russian Government is apparently susceptible to public opinion as expressed in this country. My Lords, put yourselves in the position of one of these prisoners. Would you think that you would have anything to lose if such representations were made in the friendliest possible fashion by His Majesty's Government? I beg to move.

Moved to resolve, That this House, taking cognizance of the Trade Agreement recently negotiated between His Majesty's Governmenat and the Union of Soviet Socialist Republics, desires to press upon His Majesty's Government that this opportunity should be taken to make representations to the Russian Government for a wide amnesty of political prisoners and the return to their homes of those in forced labour camps.—(Lord Phillimore.)

LORD MOUNT TEMPLE had the following Notice on the Paper:—To move to resolve, That in the opinion of this House no commercial agreement, temporary or otherwise, should be concluded between His Majesty's Government in the United Kingdom and the Government of the Union of Soviet Socialist Republics, till that Union has taken some steps to liquidate its debts to the British Government and British nationals.

The noble Lord said: My Lords, I am sure we were all very much touched by the moving appeal of Lord Phillimore that His Majesty's Government should do something to lighten the lot of the political prisoners in Russia, and I hope and trust that the noble Earl, Lord Stanhope, when he replies, will be able to say that the Government will consider whether something can be done; but I must ask your Lordships to go back to the far more prosaic hut equally important facts which are embodied in this Agreement. May I first of all, before dealing with the Agreement generally, say a few words on the aspect of the Agreement with which my Motion deals, and with your Lordships' permission I shall read the Motion: That in the opinion of this House no commercial agreement, temporary or otherwise, should be concluded between His Majesty's Government in the United Kingdom and the Government of the Union of Soviet Socialist Republics, till that Union has taken some steps to liquidate its debts to the British Government and British nationals. It seems to me that this question divides itself into two parts: First, what, if any, are the obligations of the Government of this country to look after the interests of our nationals? Secondly, even if they think they can do nothing or ought to do nothing, is it better policy to go ahead for better trade between this country and Russia or to concentrate first of all on trying to get some of the money owing to this country and to British citizens repaid by the Government of the Socialist Republics of Russia?

As to the first point, it seems to me quite obvious that no Government can possibly stand up and say: "We consider we have no duty imposed upon us to try to compel a foreign country to pay its debts to the taxpayers of this country. We will take no responsibility when the property of our nationals is stolen, and we will practically do nothing at all." Yet that is exactly what all Governments in this country have done since the Great War. None of them have ever had any backbone. None of them have really said to the debtors of this country: "Unless you do this we shall be obliged to retaliate upon you." The only exception to that was the present Government's action with reference to the engineers who were imprisoned in Russia. There, swift action was taken, and in the end that resulted in the release of the prisoners; but the Government seem now to have sunk back into the laissez faire policy, and all they have done is to write a rather pompous Note to the Russian Government, which was delivered in the spring of last year, saying, in effect: "Remember, we are now going to make a Temporary Agreement with you in which no question of debts arises, yet if and when we ever make a permanent Agreement then you must consider whether you cannot pay us something." Is it likely after that communication to the Soviet Ministers and Ambassadors and Delegates before the negotiations took place—is it likely that the Russian Government are going to pay the slightest attention to any efforts of ours to make them pay their just debts to the taxpayers and private individuals in this country?

The Government having failed to do anything—and they seem rather pleased about it—we are now driven back to consider, and I ask your Lordships' attention for a moment to this, whether it is better policy from the point of view of pounds, shillings and pence for this country to make a Trade Agreement with Russia or to say to Russia: "We will make no Trade Agreement with you until at any rate you have done something, you have paid some small sum, you have made a beginning at liquidating the debts you owe to this country." I submit that the Government are wrong. From the purely commercial point of view—I am not talking about ethics—it would be far better if we concentrated on getting something done in the way of these debts rather than giving them the go-by. What are the sums involved? They are enormous. The Soviet Government at the present moment owe this country over £1,000,000,000 in respect of moneys which the British Government lent to the Russian Government under the Tsarist régime. The Soviet Government said: "We are not responsible for these debts because there has bean a change of régime, and therefore we cannot take on the liabilities of the Tsarist Government." Did your Lordships ever hear a thinner or more absurd argument? We might just as well, se I mentioned a year ago in this House, turn ourselves into a Republic and, because we have changed from a Monarchy to a Republic, repudiate all our public debts. It is absurd. Of course, they are liable.

May I remind your Lordships that Viscount Snowden, when Chancellor of the Exchequer, in another place in 1930 said, in answer to a question, that the taxpayers of this country are now paying £45,000,000 per annum because we have to shoulder the responsibility of £1,000,000,000 of debts which should be shouldered by the Russian Government. I would also remind your Lordships that £45,000,000 per annum roughly represents 1s. of Income Tax. We are, therefore, at present paying is. of Income Tax more than we ought to pay because no successful effort has been made to get some of this money from the Russian Government. As to Governmental debts, you may say: "Other countries have repudiated; we ourselves are not free from blame as regards repudiation: and therefore there is something to be said for the Russian Government." I do not say something could not be said for them, but, at any rate, you can understand it is not a clear-cut issue. But the private debts owed to individuals in this country are on a very different footing. There are at the present moment registered at the Board of Trade, no fewer than 5,000 claims of British subjects who had all their property in Russia stolen when the Soviet Government took office. There is no other word for it than "stolen"; they simply appropriated anything that belonged to a British subject, whether it was a company or an individual, in that country.

There is there a clear-cut issue. It may well be that the estimate of £300,000,000, the amount of the claims made by those companies and gentlemen, is an inflated one. I do not know, though it could be ascertained by a duly-appointed Commission of Russian and British delegates. Those hundreds of millions of pounds worth of property was stolen from our nationals and from our companies by the Soviet Government. That is known to everybody; it is not disputed. Surely the Government might, at any rate, have concentrated upon trying to get some redress for these wretched people, many of them reduced to beggary. The Government should have done something for them when they were making this Temporary, which is really a permanent, Agreement, and not given the whole thing the go-by.

Then there is the last item, the Lena Goldfields Concession, small, I admit, in comparison with the other claims, but here there can be no dispute of what the Soviet Government should pay. What is the history? I will give it in half-a-dozen sentences. In 1925 the Russian Government gave a gold mining concession to a company called the Lena Goldfields Concession, which gave that company mining rights over large areas in the Urals for a, great number of years, and included in the provisions of the grant was a statement that any matters in dispute between the two parties should be settled by a neutral tribunal. The nature of that tribunal was indicated. Everything was laid down that could possibly be laid down. Between 1925 and 1930 that company sank £4,000,000 in developing the properties. Directly it became likely that a dividend would be paid the usual thing happened. The Russian Government stepped in and stole the whole thing, imprisoned the Russian employees, and turned out those of foreign birth. The company took the matter to arbitration, as agreed upon by the Russian Government, and the Russian Government refused to appear. An eminent Englishman, an ex-member of the House of Commons, was on that tribunal, and after an exhaustive hearing it awarded £13,000,000 damages to the company. What did the Soviet Government do? It added insult to injury. It offered £1,000,000 to settle all claims when this tribunal, to which the Soviet Government had themselves agreed and which they had outlined in their agreement, had awarded £13,000,000.

Therefore what we have is a liability of round about £1,300,000,000 which the Soviet Government owes to the taxpayers of this country, or to private individuals in this country, and at the present moment—I must stress this fact; I am not saying it on my own authority, I am saying it on the authority of Viscount Snowden as Chancellor of the Exchequer—in addition to being out of that money, we pay £45,000,000 a year, equal to 1s. of Income Tax, because the Government have made no effort to try to get the money which ought to come to the taxpayers in this country. We have that on the debit side, and on the credit side we have a nebulous offer of £1,000,000. That is the debit side of what I call the Commercial Treaty question—we are out of that vast sum of money.

What do the Government hope to gain as a set-off against this vast sum? I use the word "hope" because that is about the only thing at present which is not taxed in this country. We are able to indulge in hope, even though the hope may never materialise. The Government hope that in five years' time the balance of trade with Russia will be practically equal. A very good thing if that can be done; but will it happen? The President of the Board of Trade last Thursday in another place said, that in the five years—I beg your Lordships' attention to these figures, because they are important—ending 1932 the imports from Russia into this country were of the value of £124,000,000 and that our exports to Russia were of the value of £50,000,000. Therefore, we were £74,000,000 to the bad; on an average during those five years, £15,000,000 a year to the bad. That is to say, our trade to Russia for the five years averaged £15,000,000 less than the amount sold by Russia to us. Suppose that this Agreement does what is claimed for it, and that we have the adverse balance removed in five years' time. Taking exports to Russia as £10,000,000 a year for the five years, multiply that sum by two and a half, then our exports to Russia will be £25,000,000 by 1938, and parity is reached—that is to say, in order to attain what the Government want, we have in the next five years to raise our exports to Russia from £10,000,000 to £25,000,000.

I would draw your Lordships' attention to the speeches of Mr. Runciman and Colonel Colville, of the Department for Overseas Trade, last Thursday in the House of Commons, They were not enthusiastic that this was going to happen. Colonel Colville, indeed, said nothing about it. He explained a great number of points in the Agreement but did not express an opinion as to whether it was going to be a success or not. What did the President of the Board of Trade say? Mr. Runciman said: The development of Russia is sometimes chequered,"— that is true— but, on the whole, it appears during the last two years to have gone ahead. It is possible, as far as we can tell from such in formation as we have, that there will be a considerable extension in the amount and character of the purchases made by the Soviet Government in this country. Later on he said: If the past is an indication of the future, I trust that we shall see considerable extensions of our sales in Russia without any detriment to the importing interests of this country. In view of what the President of the Board said, I think I may say that if we take the exports of goods from this country as increasing two and a-half times in the next five years, the most enthusiastic advocate of the Trading Agreement can only claim that in five years' time the adverse trade balance will be wiped out by increased exports to Russia.

I turn to another source of information to see whether that is likely to eventuate or not—the Soviet Press. I do not know whether your Lordships have read this, but I think it came from the Riga correspondent of The Times and other sources. He said that the Soviet Press was recently congratulating itself that the decreased imports in 1933, to which Lord Phillimore referred in his speech, proved that there was no longer urgent need for imports, nor was the Soviet Union so dependent on foreign markets as previously. But admit for the sake of argument that exports to Russia will increase two and a-half times; that is only £15,000,000 more than at present. If we get £15,000,000 more export trade, which is the utmost that we can possibly get on the figures officially given, how much of that will be profit? I do not know, but I assume that I shall not be far off if I say that one-third of the amount of money received for the goods sold will be profit. If you take one-third of £15,000,000, what is the possible gain from this Agreement in net profit to this country? Only £5,000,000. I should like the noble Lord who answers for the Government to deal with that, because after all that is the material point. This is a Commercial Agreement, and if it is not going to bring much profit to the people of this country, is it worth having at all?

I shall not keep your Lordships very much longer, but I want to deal with one or two items in the White Paper which contains the Agreement. I am profoundly glad—or rather I was very glad until I read the report of the debate in another place—to find that there is no clause in this Agreement about propaganda. In every Trade Agreement since the War there has been inserted, at the instance of the Government of this country, a clause in which the Soviet Government declared that it would not carry on any subversive propaganda in this country against the Constitution and against the Monarchy. Of course they have always carried on a great deal of propaganda, and though we knew that they did carry on propaganda, as we had no means of enforcing the Agreement none of our Foreign Secretaries went any further than writing rather rude letters to the Soviet Minister, which did no good and only made us the laughing-stock of the world. To insist upon a clause being inserted in an Agreement and then frankly to acknowledge that you cannot punish a person who does not carry out that clause, is not good policy and makes one look ridiculous.

But I was very much struck—and I should like the noble Earl who answers to give me information upon this point—by what occurred at the very end of the debate in another place last Thursday. In the OFFICIAL REPORT I read the following: SIR N. STEWART SANDEMAN: Will the hon. and gallant Member"? that is the Secretary of the Overseas Trade Department— say a word on the question of Russian propaganda? LIEUT.-COLONEL COLVILLE: The Agreement, which is a purely Commercial Agreement, does not include propaganda, but we have an undertaking on the subject of propaganda which holds good, and we think that we have sufficient power to see that the undertaking is regarded. That just happened to come out by chance, and I am rather surprised that more publicity has not been given to the fact that the Government have an undertaking from the Soviets that they will not carry on propaganda and that the Government think that they have power to see that it is carried out. That is most interesting. I most strongly press the noble Earl when he answers to tell us what the undertaking is. The House, I think, is entitled to know what the understanding is, and how, if the undertaking is broken by the other side, we are going to punish them for breaking that undertaking.

Then a sop was thrown to the taxpayers of this country—to those wretched people who have lost their all in Russia. "This is only a Temporary Agreement; when we come to a permanent agreement we will see that your interests are safeguarded and that your money is paid hack to you." I wonder how long this Temporary Agreement will go on? It must obviously go on for five years, because we shall not get to our parity of imports and exports until five years have passed; and if we look at the temporary Trade Agreements in the past, we find that we rather seem to think that a hundred years may well pass before this Agreement is denounced, for this reason. There are two French Treaties, and Commercial Treaties too, one made in 1826 and the other made in 1882. There was provision for three months' notice on either side in both of those Treaties—Treaties of 1826 and 1882; and when were those Treaties denounced? They were denounced only in February of this year. So that we have two Commercial Treaties with our next-door neighbour, one of 1826 and the other of 1882, which were not denounced until one was over a hundred years old and the other was over fifty years old. Therefore it is hardly diplomatically honest to put up the defence that this is only a Temporary Agreement when it cannot be denounced in ordinary circumstances for five years, and when we have the precedents that temporary Treaties containing provisions for three months' notice have lasted for a hundred years and for fifty years.

There is also the clause with reference to diplomatic immunity, which I was glad my noble friend Lord Phillimore also denounced. I am perfectly unrepentant in my opposition to this diplomatic immunity to the Trade Delegation. Of course if you have a Russian Ambassador here he and his staff must have diplomatic immunity, but why in the name of common sense should you give to these delegations, which are trading delegations and nothing else, diplomatic immunity for their chief and for his two chief assistants? It is a well-known fact—it is not and it cannot be denied—that at any rate in the past, until the Treaty was put an end to, substantial sums of money were brought in through diplomatic channels from Russia and other places to carry on propaganda against law and order in this country. In fact the noble Lord, Lord Stonehaven, in 1921, when he was Under-Secretary of State for Home Affairs—Irecollect it because I was in the House of Commons at the time—stated that in the opinion of the Home Office, or in the opinion of the Government, there was coming into this country for propaganda no less a sum than £250,000 every year. Those were the official figures. We all know that the amount is now less, not because the Russians have changed their minds, but because they have not got so much money to send abroad for propaganda purposes.

If noble Lords will kindly turn to the bottom of page 4 of the White Paper containing the Trade Agreement, they will see that there is very considerable danger in giving diplomatic immunity to the Trade Delegation, because it will undoubtedly facilitate sending money into this country to carry on propaganda. In paragraph (4) of Article 5 your Lordships will read: In view of the fact that the Trade Delegation is acting in respect of trade for and on behalf of the Union of Soviet Socialist Republics, the Government of the latter assume responsibility for all transactions concluded in the United Kingdom by the Trade Representative or either of his two deputies. That is to say, the Soviet Government will take responsibility for all that the Trade Delegation does. But the paragraph goes on to say this: The Government of the Union of Soviet Socialist Republics will not, however, accept any responsibility for the acts of State economic organisations which, under the laws of the Union of Soviet Socialist Republics, are exclusively responsible for their own acts… I confess I do not quite know what State economic organisations are, but evidently they are organisations which are going to operate in this country, or they would not have been put into the Agreement. Of course what will happen when money is wanted to be sent into this country for propaganda, is that the money will go in the ordinary trade operations of the Trade Delegation and the actual propaganda will be carried on by the State economic organisation. If the Government of the day then ask: "What about your promise?" the Soviet Government will reply: "Oh, we have no responsibility for State economic organisations. They, under the laws of the Union, are exclusively responsible for their own acts." It seems to me that a little more explanation should be given by the noble Earl who replies as to these economic organisations and how he is going to deal with them if they act in the way I suggest.

Finally, I will invite those of your Lordships who have the White Paper in your hands to turn to page 2 because I think a protest ought to be made against the involved language in the first paragraph. I will read it to your Lordships and I would like to prophesy that not one of you, unless yen have read it carefully several times before, can make head or tail of what it means. There are sixteen lines and seven commas before you come to a full stop. This is how the first sentence of that paragraph reads: For the purpose of developing and strengthening trade relations between the United Kingdom of Great Britain and Northern Ireland and the Union of Soviet Socialist Republics, the Contracting Parties agree that, without prejudice to any other provisions of this Agreement according more favourable treatment, all facilities, rights and privileges, which in the United Kingdom and the Union of Soviet Socialist Republics respectively are or may be accorded with respect to trade to the subjects or citizens of any other foreign State or to juridical persons including companies constituted under the laws of such State or to the preperty of such subjects, citizens or juridical persons including companies shall be extended to citizens of the Union of Soviet Socialist Republics or juridical persons including companies constituted under the laws of the Union of Soviet Socialist Republics and to British subjects, British-protected persons or juridical persons including companies constituted under the laws of the United Kingdom respectively and to their property. Is it not really an insult to this House, and to the House of Commons, that such a sentence should be flung at our heads? Is it really necessary that we should have a very highly-paid and highly-trained and highly-examined Civil Service to turn out such things over the signatures of John Simon and Walter Runciman? I do think it might be made more easy for us to understand these very complicated trade agreements, and that it is not necessary to introduce these long sentences for our mystification and to bother us.

LORD PONSONBY OF SHULBREDE

My Lords, I have listened to the two speeches introducing two Motions that have just been delivered by the noble Lord, Lord Phillimore, and the noble Lord, Lord Mount Temple. As I listened to them I tried to visualise the two noble Lords conducting negotiations for a treaty in the Foreign Office with Soviet representatives. I wondered what they would make of it and if they would ever arrive at any sort of conclusion whatsoever. I do not think there is anything more fatal in diplomacy than trying to introduce extraneous subjects when you want to concentrate your attention on a particular matter that is under negotiation. I think the Government have been very wise in avoiding all these side issues and devoting themselves to the conclusion of a Commercial Agreement which was so very badly needed. The only criticism I feel inclined to make—for we on this side of the House welcome this Treaty—is the fact that it has been rather long delayed. If we could investigate behind the scenes the reason of that delay, I think it might be found there that it was caused by the introduction of certain extraneous matter.

The noble Lord, Lord Phillimore, by his appeals and the noble Lord, Lord Mount Temple, by his threats, want to make the Soviet Government do what they wish them to do. I will take first the argument of the noble Lord, Lord Phillimore, with regard to the Motion he has on the Paper. I do not intend to discuss the Treaty itself except on one point which I shall come to later. The Motion of the noble Lord clearly suggests that we should make an appeal to the Soviet Government on this occasion with regard to their prisoners and the so-called "forced labour." The noble Lord made a very moving appeal on the subject and we may all certainly wish that conditions of that sort did not exist. But in the world as it is to-day, if we are going to set ourselves up as an agency for appealing to the various Governments of the world not to treat prisoners with severity and brutality, not to have concentration camps, not to have imprisonment without trial, not to have torture, not to have absolutely unmerited punishment, I am afraid we shall find ourselves very busy. Not only that, but we should be in the very unenviable position of placing ourselves in the world on a pedestal and saying: "What a pity it is you are not all of you more like ourselves." I do not think that attitude of mind is conducive to good relations between nations. I feel convinced, my Lords, that any approach to the Soviet Government at this time with regard to practices that may be going on there—I personally do not know about them—would be the greatest possible mistake, and I do not think any good purpose would be served, just when we have come to an amicable arrangement on a matter-of-fact commercial subject, by the introduction of any extraneous matter of this sort.

With regard to the noble Lord, Lord Mount Temple, his Motion, as he recognises, is a little out of date because an Agreement has been concluded.

LORD MOUNT TEMPLE

It has not been ratified.

LORD PONSONBY OF SHULBREDE

No, but it has been concluded and "concluded" is the word in the Motion. The noble Lord wishes that something should have been put in with regard to debts and claims. If the Government had been so ill-advised as to put in, either by way of a clause in the Agreement or by way of a declaration when affixing their signatures, any declaration that these debts and claims must be settled before the Agreement is made permanent, they would have invited inevitably the reply of the Soviet Government that they also regard their counter claims against us as still binding and that they also should be settled. The result of these two declarations would have been very likely to nullify the goods effects of the Agreement. This question of claims and debts, both private and national, in One with which I had very close acquaintance at one time. It is nearly ten years ago now, and they are still outstanding, but I do not think that the method which the noble Lord, Lord Mount Temple, would adopt in negotiating a treaty would be successful. There are people, and from the opinions voiced in another place in the debate on Thursday I am inclined to think they are not far wrong, who say that private individuals who invest money in foreign countries, or who have property in foreign countries, must take the risk that if a revolution occurs they may lose all.

LORD MOUNT TEMPLE

This is very interesting. Do I understand the noble Lord to stand for the fact that if I engage in trade in France, and the French Government steal my goods, he would do nothing to protect me?

LORD PONSONBY OF SHULBREDE

It depends on what has happened in France. lf, as happened in Russia, a Government comes into being with surprising rapidity, which nationalises the whole country and takes over everything in that country as its own property, one is apt to suppose that the repudiation of liabilities will follow. However that may be, I would like to see the noble Lord, Lord Mount Temple, try to conduct these negotiations with the Soviet emissaries, and I think he would make perhaps a worse failure than any of those who have hitherto tried. I claim that the method that I adopted while I was conducting negotiations in 1924, and which was eventually turned down, was not so unwise as was supposed at the time, because I held out an inducement not in the shape of a loan, or even in the shape of a guarantee of a loan, but in the shape of the fact that the Government would go to Parliament to get a guarantee for a loan, if arrangements were made which were satisfactory to the claimants of the debts. I think that was a good arrangement. It was turned down at the time, in the heated animosity against the Soviet Government. But times have changed, and I should not be surprised one of these days, if these negotiations linger on, if my method were to be adopted again.

At any rate I do not blame the present Government for not having reached a satisfactory arrangement with regard to these debts. It is a difficult question, because we are always confronted with the counter-claims of the Soviet Government, and we also have to take into account their reluctance to pay any of the debts which were incurred under the Tzarist régime. I am very glad that this subject has not been mixed up with the Commercial Agreement. Anything more foolish or undiplomatic, or more calculated to endanger the relations, which are improving, between this country and Russia, cannot be imagined, and I am only thankful that Lord Mount Temple is not at the Foreign Office.

With regard to the Agreement itself, I do not take the disappointed view taken by the two noble Lords who have spoken with regard to the prospect of trade in the future. On the contrary, I think the Agreement will give a great fillip to trade between the two countries, and it is obvious that these vast areas are in need of the very articles that we can best manufacture here. Transport in Russia is in a deplorable condition. It has not been developed, and rails and locomotives are needed, and can be supplied in this country, not to speak of agricultural implements and all the machinery that we can best manufacture. I think the prospect is good, and I more especially welcome the Treaty because I think that it is gradually putting an end to the animosity which has existed for so long between this country and Soviet Russia. You get just a voice or two like that of Lord Mount Temple, that seems to carry one back ten years, but most other people who have thought this question out have come to the conclusion that, however much we may disapprove of the régime in Russia, they are endeavouring, in a great experiment, to rehabilitate their country, and that therefore it is as well that we should be on friendly terms with them.

You have only to compare the articles which appeared in the leading newspapers in this country in the days when the first Agreement was concluded—I think in 1921 between Mr. Lloyd George and Mr. Krassin—the tremendous outbreak of abuse there was in those days and the demand that no intercourse should be carried on with the Soviet Government at all, with the language used in the last few weeks with regard to this Agreement, and you will note a very great improvement in the tone adopted towards Russia in this country. My Lords, it is not often that I am in a position, on behalf of those with whom I am associated here, of being able to congratulate the Government, but I certainly think they have been wise in concluding this Agreement, and that it will be advantageous to the peace of the world.

There is only one other point, which I thought the noble Earl might be able to say a word about in reply. It is an important point, because it is closely connected with the Agreement and the trade between the two countries. It is the excessive cost of guaranteeing credit on goods exported to the Soviet Government; that is to say, under the export credits scheme. I still do not quite understand, although I read the discussion in another place very carefully, why it is that the present rate of premium for the insurance of these facilities is in this country 6 to 7 per cent., which is more than two or three times as much as that charged in other countries on their export credits to Russia. That is one point which I would ask the noble Earl to take into account. Otherwise, I regard this Agreement as a great step forward, and one which I hope will lead to an improvement in trade, and a fall in the unemployment figures in this country.

THE MARQUESS OF READING

My Lords, I desire to detain you for only a few minutes, but I cannot let this opporunity pass of expressing on behalf of those with whom I am associated on this side of the House, some views in regard to both the Resolutions which are now before your Lordships. I will deal first with the speech of Lord Phillimore, leaving aside for a moment his observations with regard to the Agreement, which have not, as it seemed to me, any real bearing upon the purpose of the Motion which he was putting, however relevant they may be to other considerations. We naturally sympathise very much with the observations which he made with regard to political prisoners and the forced labour camps. Anything that can be done in the direction of alleviating the misery of those persons would be welcomed by us, as I am sure it would be by all your Lordships. The difficulty I see is how representations of this character are to be made, and what precedent there would be for us to make representations of the kind desired to the Soviet Government.

I do not think that the case of Austria is quite analogous, indeed I do not think there were representations, in the correct sense of the term, to Austria. But obviously there are opportunities of expressing to representatives of a foreign country views that may be heard here that do not take the form of representations to the Government. If any means could be found of bringing home to the Russian Government that a wide amnesty of political prisoners and those in the forced labour camps should be granted, and that it would make a good impression in this country, and if that could have any effect with the Russian Government, I am sure we should all be very pleased, but I cannot see how this formal Motion could be made in any sense effective. That, however, is a matter with which no doubt the noble Earl who replies for the Government will deal in a more official way than I can do.

With regard to the Motion of Lord Mount Temple, I confess I have been puzzled, as I listened to him, to understand exactly what it was that he wanted your Lordships to affirm. As the Motion stands, it would mean that we should have no dealings with Russia until it has paid its debts, or rather come to a settlement with regard to the debts, because I do not suppose any human being imagines that it will pay the debts, or anything like the amount, to which the noble Lord referred. What is it that he wants? Are we to stand still and boycott a country for the purpose of enforcing the payment of debts? That is a very ineffective course unless it is made general, and even then I doubt whether it succeeds in getting the payment of debts. And it must be remembered that when the noble Lord says we should not make an agreement until there is a settlement of the debts, that means that we shall suffer, as we have suffered for some time in our trade, through not having the ordinary relations with Russia. What we have to consider in the present condition of things is: Have we anything to gain? How can we get Russia to come to terms with us on these very large debts, mostly Governmental debts? The noble Lord included private debts as well, but the large amounts are Governmental debts. How can he expect that we should be able to arrive at a settlement of that kind if we adopted the course he advocates, and said: "We will make no agreement with you and will keep away from you entirely until you settle these debts"?

I understood the noble Lord to say that we should retaliate. I do not quite know how we could retaliate. We should have been very glad if we could retaliate in such a way as would result in payment of even a small portion of the debts, but we have no means of retaliating. The whole question is whether we are to make an agreement with Russia by means of which we increase the trade of our country, and redress the adverse balance of trade when we get the opportunity, subject to certain conditions, or are to say: "We will have nothing whatever to do with you and we will allow this trade to pass by us and go to other countries."

LORD MOUNT TEMPLE

I should act in the same way as we did—and very effectively—in the case of the Metropolitan-Vickers engineers.

THE MARQUESS OF READING

The noble Lord takes me into another field in which I should be very glad to meet him at an appropriate opportunity. But it seems to me there is absolutely not the faintest analogy between that case and this. That was a case of some of our nationals in Russia with regard to whom we took certain action, as we ought to do, for the purpose of insisting that they should get a fair trial according to the procedure of the country, and of bringing all the pressure that we could to bear upon the Soviet Government. But it is a totally different thing when you are talking about the payment of £1,300,000,000 of debts and questions of other claims, like that of the Lena Goldfields Company. How is it proposed to get debts from countries that cannot pay them for the moment? How can you enforce them? To say that because of that you will not trade with them, and will hot enter into better relations with them, which is the effect of trading, seems to me rather an absurd attitude for us to take. The Government have not given up any rights of enforcing a settlement of debts. The Government have not even in the slightest degree failed to adopt the best attitude they could. They have made their declaration and reserved all rights with regard to the debts; and in order to enforce the settlement of the debts they have refused to make more than what is called a temporary or transitional Agreement, because it cannot enter into a permanent Agreement until some settlement of those claims has been made. The noble Lord says, and I think with justice, that, after all, there is nothing very much on the face of the Agreement to show that it is not permanent, judging from the experience of other Treaties. It is true it is made for a certain number of years, but there is in it a clause which enables you to put an end to it at the expiration of six months, if necessary. It is declared to be purely temporary, and for that reason. I agree with the noble Lord in saying that that is not very effective, but at least it is, I think, as much as the Government could do, if they wanted to enter into trade relations and at the same time to preserve such rights as they had against Russia.

In regard to the Lena Goldfields Company, of course that is a very real difficulty. There have been attempts at settlement, and I think, as a result of the discussions which have taken place, the offer which has been made to the Lena Goldfields was double that which had originally been made before there was any question of the Agreement. At the present moment, as I understand—I speak only from what I see in the newspapers—there are some further negotiations going on between the Soviet Government and the Lena Goldfields. I cannot see why it should be more difficult for the Lena Goldfields to settle with the Soviet Government because we have come to an Agreement as a result of which we enter into better relations with Russia. I should have thought it would have made it better and easier for them to come to a settlement than it would be if the two countries remained at arm's length.

The whole position is this. During the five years from 1929 to 1932, inclusive, there has been a trade in which Russia has exported to us £124,000,000 worth of goods, and all that we have been able to export during those years is £50,000,000 worth. The noble Lord is quite right; with the invisible exports it amounted to £50,000,000. If that is so we want, if we can, to redress the balance. That is what we are attempting to do, and in the present condition of things throughout the world, where balance of trade is so important, I should have thought it was eminently practical, and that the Government are quite right, in trying to arrive at a solution of this question, to enter into this Agreement. I do not wish to go into the details of the Agreement, but the intention is to proceed to approximate year by year the exports from this country to Russia to the exports from Russia to this country, so that by 1938 what is hoped for and what is provided by the Agreement is that the ratio of trade shall be one as against one and one-tenth—that is to say, that in 1938, if everything goes well, Russia will be sending us one and one-tenth as against one, which is the nearest approximation you can get to equality.

I think for my part that the Government are to be congratulated on arriving at a solution of this character. I know that there are provisions in the Agreement which may be difficult, for instance with regard to 7½per cent. in one year being made up in another year; but, whatever the provisions are, there is the object of the Agreement and, given as we may hope and I think expect, that there is good will and good faith on the part of Russia in carrying out this Agreement, I cannot but think it will be an advantage to this country, it will be an advantage to our trade, it will be an advantage to the recovery of trade, and consequently to the economic revival which we are all seeking. It would be lamentable if the Government, for the sake of the questions which have been introduced by the noble Lord, Lord Mount Temple, were to abstain from making an Agreement of this character. I consider it is a right step, and I trust that steps of this character may be continued, because as far as I can see it is the only way of redressing the adverse balance of trade.

EARL PEEL

My Lords, I regret to say that I find myself in the rather unusual position of differing to some extent from both my noble friends on this side of the House who have addressed your Lordships. But I think it rather hard of the noble Lord, Lord Ponsonby, who so vigorously attacked them and said that neither of them, or both combined, were capable of making an agreement with Russia. I do not know the ground for that attack. If my memory serves me—it may be faulty —the noble Lord himself was once dealing with a Treaty with Russia. I think he told us he is rather proud of that Treaty. I am very glad he is proud of it, because I do not remember anyone else who was proud of it, and it had an exceptionally unfortunate effect on the fortunes of his Party; but that is a painful incident which he has long forgotten, and he has now idealised the Treaty after ten years. I want to refer to one other observation made by the noble Lord because it represented a very interesting doctrine. It was the question of the right of a State to repudiate its debts. He gave the instance of France, and said that we may expect repudiation when there has been a very rapid revolution in a country. The right of repudiation seemed to depend on the rapidity with which the revolution was effected. I do not know whether that is a correct interpretation, but I think it is exactly what he said. I think that on reflection the noble Lord will probably be more convinced of the "inevitability of gradualness."

The question which has been raised by Lord Mount Temple is an important and serious one—namely, whether or not, considering the position in which Russia has left us as regards debts, we are wise in concluding a Temporary Trade Agreement with that country. I sympathise with a great deal of what the noble Lord said about Russian treatment of these large debts on capital account, but I do not feel quite so confident that until these debts have been recognised we should not make an arrangement on trading account with Russia. I doubt whether our refusal to make an agreement on trading account would have the required effect of making Russia pay up on these debts. If you want to exercise any pressure on that country I should have thought it is much more important to say there shall be no trading with Russia because, of course, trading is going on at the present time, and what this Agreement does is not much more than (shall I say?) to regulate the trade already going on, and to try and introduce some improvement into the arrangements for that trade.

The noble Lord suggests further that we may be in some sense condoning the repudiation of these long-term debts by Russia if we make this arrangement on trading account, but I think their position is safeguarded, because it has been laid down, according to the statement made in another place, that we have directly reserved that right, and we by no means give up any claim that we have on capital account if we make this trading arrangement with the Russian Government. I am not sure it is not rather the other way. Hitherto we have been told: "What is the good of trying to obtain payment of these large sums from Russia? The country is positively bankrupt, ruined—it cannot pay." Now we hear, and I hear, from many political friends of the noble Lord opposite that Russia, far from being unprosperous, is becoming very prosperous. We are told that the five-year plan has been extraordinarily successful, and that they have reached a greater degree of prosperity than was ever attained in that unfortu- nate Tsarist régime which has long gone and that the next five-year scheme is going to be even more successful still. I think then, as regards the repayment of debts, that Russia will no longer be able to plead poverty if the statements of their own newspapers and statesmen are true. There were in the past two pleas put forward. First, dishonesty and then poverty. The old plea of poverty has now fallen away, and if this Agreement has the results hoped for by the noble Marquess, and if it really results in a considerable development of trade with Russia, we shall be strengthened rather than weakened in our power of urging that in the interests of international trade some payment or recognition should be made of these Governmental debts.

But I do wish, if I may, very strongly to press this point on the Government. It is not, of course, a light thing that these international debts should be repudiated. What is the cause of the present suffering in international trade? What is the reason why our shipping trade, as we discussed it the other evening, is in such a deplorable condition? It is because of the lack of international trade. And what is at the bottom of that misfortune? It is that, contrary to the time before the War, you cannot now get investors to put their money into foreign loans, because they see these loans are repudiated; and we know that unless you do have these foreign loans you cannot get the same amount of international trade as before, because you cannot develop those countries which are in need of capital and which produce raw materials which they export to manufacturing countries. Therefore it is not merely a question of saying to Russia: "You pay your debts." It is a matter of great importance, lying at the root of a great many of our international trading troubles. There is no doubt that if you could restore the confidence of investors, which has been lost here, in France and in America, if you could restore some confidence, that the interest would be paid and the capital be repaid, it would do more than all your trade treaties to restore something of that international trade on which we in this country are so immensely dependent. I will add that nothing would give more confidence to the investor than if a country like Russia, which has been notorious for repudiation and has led the way in repudiation, were to come to an agreement about the recognition or payment of debts. That, therefore, is one of the reasons why I am a supporter of this Trade Agreement. I think it may make the way easier rather than harder to get some recognition of that kind from Russia.

Before I say a word about the Motion of the noble Lord, Lord Phillimore, may I put one or two questions to the noble Earl who is going to reply? There is one question that I think has been asked already, but I wish to put it in a slightly different form. It is with reference to these people for whom only under some circumstances will the Government of Russia take responsibility. They will not take responsibility for the acts of State economic organisations which, under their laws, are exclusively responsible for their own acts. I think, in the interests of traders, it is extremely important to know what those bodies are. Everybody who is in trade studies this Agreement carefully, but it may well be that they will make a mistake, and think that they are dealing with the Russian Trade Representative or his two deputies when really they may be dealing with these State economic organisations for which, under the laws of Russia—which nobody can be expected to understand here—the State has no responsibility and for which the Government of Russia is in no way responsible. I think it would be extremely useful if my noble friend could make that point clear.

I was going to raise another point to which I did not necessarily want an answer, but I will leave that and go on to my next point. I should like an explanation, if I may have one, from my noble friend about what is called the three months' period of notice for the dumping clause. That has been criticised, and it has been suggested, I think with some justice, that that is rather a long period, because, when you have the whole of the trade in the hands of the State, it can make preparations and organise a raid on the trade of another country, getting ships, accumulating goods, and then hurling a tremendous attack on another country in a way that private traders would find it quite impossible to do. I looked at the answer given by the Minister in the other House, and it seemed to me that if it was satisfactory as regards the three months it was unsatisfactory as regards the point he was trying to make. He said, in effect, that you must have three months, otherwise the time is so short that people cannot make contracts. I quite agree that three months is not a very long period for the contract to run, but I think it is inevitable that you will have to make some arrangements about contracts running at a time when notice is given.

What is the procedure here? It is this, that when any of this dumping takes place on a serious scale you give notice and begin conversations. If the conversations fail, then, as it were, you withdraw the privileges from that particular article. But it is quite obvious nobody can know how long those negotiations are going on or whether they are going to fail. They may go on for a couple of months, and then notice may be given, but the Agreement says expressly that the notice dates from the time when the conversations begin. Therefore the time may he very short and contracts will be upset. The answer that was given by the President of the Board of Trade as regards shortening that period seems to me to apply just as much to his own scheme as to the other which he criticised.

One other observation I would like to make is about the Agreement itself. It is rather a peculiar kind of Agreement, because it is really a treaty of barter, a sort of equivalent of goods on one side exchanged for goods on the other. I recognise that, as dealing with a country like Russia, where the whole of the trade is under the power and control of one unit, the State, they could switch off their trade to any other country, and use credits in this country to purchase goods. In a way it may be a useful thing to try to establish equality of trade, but it is not a good principle for most of our trade agreements that you should get absolute equality of trade between two countries. It might to some extent injure third-party trade, but I support it as useful in the particular conditions under which it is made with Russia.

May I ask a further question as regards the export credits? I am not really quite sure what the Article exactly means. It says, as regards export credits, that in considering any given transaction regard should be had to financial and commercial considerations. I am not quite sure whether that is an alteration of the existing situation, whether credits have been given to Russia in the past on purely financial and commercial considerations. I quite agree with the provision, but in reading it I am not sure whether it is in reduction or increase of the rates that Russia already has, or alters the practice as regards Russia followed by the Export Credits Committee. I think, but I am not quite sure I am right, that in many of these transactions with Russia there was a longer credit granted than was granted to some other countries. I dare say the noble Earl will be able to tell me what exactly that provision does mean.

There are one or two small points of criticism on detail I wish to make. It is rather remarkable to notice the extraordinary reduction in the scope of the most-favoured-nation clause in Russia. We were told at one time that the most-favoured-nation clause was the sheet anchor of our trade. There has been a good deal of contempt or criticism poured upon that clause during the last few years. If you look at the clause you will see that the arrangements made by a great many countries with Soviet Russia diminish the value of that most-favoured-nation clause. Those countries include China and Japan and Esthonia and all the countries that ring Russia around. You have a pretty good list of big countries, running from Czechoslovakia round to Japan. I only mention that to show what a slippery thing that most-favoured-nation clause is.

The other point of detail I should like to submit to my noble friend is this. There is an elaborate method in the Schedule of trying to compute the amount of the trade we do with Russia and Russia with us. I am not quite sure how that operates. At the end of the year is the sum made up, and is the statement presented, as it were, to the Soviet Government to show the extent to which they have fallen short of the amount of trade that should be done with this country? I am not sure from reading the Schedule what happens or what the procedure is under it. The last point I would mention on this Agreement is this. We are very much too fond, I think, in this country of making treaties and forgetting all about them—that is to say, we do not enforce them. I will give an example. At present we have a Treaty with Turkey on the most-favoured-nation clause, but other countries are getting the advantage of that most-favoured-nation clause, and we are being shut out. The Board of Trade does not seem to have the power of enforcing our Treaty in Turkey and giving us the advantages of that most-favoured-nation clause. I would urge on the Government to look to the enforcement—it is not an idle piece of advice—as well as to the making of the Treaty itself.

Just one word, if I may, about the Motion of my noble friend Lord Phillimore. The noble Lord, Lord Phillimore, asked me to say a word in support of his proposition. The support I can give is, I am afraid, of a very feeble character, because I am very doubtful about the wisdom of the advice. I sympathise entirely with him in the feelings he has about the treatment of these unfortunate people, but on the whole I support the idea that it is much better for us to look after our own affairs, and our own affairs are so extensive that it is rather unwise to make representations or to give advice to Governments of other countries. I am to some extent reinforced in this view by the experience of the last thirty or forty years. After all, we have to consider whether we are going to do good or not to the unfortunate people on whose behalf these representations are made. We were extremely unsuccessful in Turkey, because when we made any representations about the Armenians there was almost immediately a massacre of Armenians. I know well, having been a good deal in that country, with what eyes these representations were regarded by the unfortunate people for whose benefit they were intended. I doubt also whether unofficial appeals, such as that made I think by the noble and learned Marquess in the Albert Hall, about the treatment of Jews in Germany, have the effect intended.

That is really the question we have to keep in mind. I am against giving vent to one's own generous emotions at the expense of other people, and I would not advise our Government merely to express our feeling of indignation at the cruelties perpetrated in Russia. I agree that there may be cases where that can be done, and my noble friend gave one or two such instances. All I would say is that if the Government themselves think, with all the circumstances before them, that it would be either right or advisable or in the interest of these un- fortunate people to make representations, then certainly let those representations be made. But unless the Government feel assured of that, then, as we cannot enforce any of our complaints by sanctions, I think the Government would probably be wise to be very careful in any representations of that kind that they make to the Government of Russia.

THE UNDER-SECRETARY OF STATE FOR FOREIGN AFFAIRS (EARL STAN-HOPE)

My Lords, once again I find myself only in part representing the Department in which I am working. As your Lordships are aware the greater part of this Agreement has been the business of the Board of Trade, and although the Foreign Office has of course been consulted at every turn, nevertheless I cannot pretend to have a very great knowledge of the subject from an inside point of view. I think the best thing I can do is to deal briefly with the Motion on the Paper of my noble friend Lord Phillimore, and then to run through the Temporary Agreement dealing with the points which have been raised as I come to each Article.

My noble friend Lord Phillimore moved that the Government should press the Government of the Soviet Republic to give a wide amnesty to political prisoners. As several of your Lordships have already remarked, that of course is quite contrary to normal international usage and contrary to the general practice of this country. My noble friend referred to the personal representation made by our Minister in Austria and suggested that that was an instance which might be copied. Conditions, however, were entirely different with regard to Austria and the Soviet Republic. As regards Austria, there was a case where there had been a sudden outbreak which was dealt with with great severity by the Government of the day—presumably it was necessary—when feeling would of course run high. It was at that moment, when people in Austria were likely to forget that the whole world was looking at them, that it was thought that our Minister should be authorised to make representations. In the case of the Soviet Republic the situation is entirely different. As my noble friend knows very well, it is a condition which has been going on for a number of years in Russia. Therefore neither the Soviet Government nor anybody in the Soviet Republic can be un- aware of the feeling held by many people in this country in regard to their form of government and the way in which they treat their citizens. No representations from our Ambassador in such circumstances would be anything but interference which this country would be the last to deem proper.

As regards the Agreement itself, my noble friend Lord Mount Temple found fault straight away with the first paragraph. The Foreign Office is not responsible for drafting this kind of arrangement. I think that is the business of the legal profession, and as my late chief is looking at me with some severity I am not prepared to make any remark on that matter. The phraseology of Article 1 is the common form of the most-favoured-nation-treatment clause. I agree that the sentence read by my noble friend is particularly long, but at any rate he made no pretence that he did not understand it after having read it two or three times.

LORD MOUNT TEMPLE

May I interrupt my noble friend to say that the only way I got to understand it was by getting the education director of our county council to construe it for me?

EARL STANHOPE

I find that is welcomed in another part of the House. As regards Article 2, that is an entirely new Article such as we have never had in any arrangement made previously. The noble Lord, Lord Ponsonby, seemed critical of the length of time which it has taken to get this Agreement approved, but I think he will realise that there are several things in this Agreement which are absolutely contrary to anything the Soviet Government had ever agreed to before. He will recognise that it took a great deal of negotiation before we were able to get them to approve the suggestions we put forward. Here is one of them. It cuts right through the whole of the most-favoured-nation treatment which the Soviet Government had been accustomed to receive before. Your Lordships will remember the last Agreement we had with Russia. It was made in 1930 and it went on until October, 1932. We denounced it in 1932 chiefly for two reasons. The first was that when trading with a State monopoly the State can merely refrain from buying goods from another country, and therefore make the most-favoured-nation clause entirely valueless, simply because they turn off the tap of the trade. That leaves the country concerned in the position of being no longer able to sell its goods but with no right to make any representation, no grievance, no possibility of saying that the most-favoured-nation clause has been not fairly operated. Therefore something different had to be done. The result is that we have Article 2.

There was a second reason for Article 2. Noble Lords know that at Ottawa we made arrangements with Canada that where goods were sold at a price that was so low as to compete unfairly with articles sold by Canada, we should make arrangements to limit the sale of those goods. Your Lordships will recognise as regards this second point that all we need really have done would have been to make arrangements by which, if the price of goods coming from Russia was reduced by the action of the Soviet Government, then we should be entitled to stop those goods if they competed unfairly with Canadian goods, and with Canadian goods only. We have gone a great deal further than that in this Article. We have taken power to stop goods coming in where such prices are being created or maintained by either the Soviet Government or its State economic organisations as are likely to frustrate the Preferences not only to Canada but to the whole of the British Empire, and also to stop goods coming in which detrimentally affect the production of such goods in the United Kingdom itself. That is a provision of very real value, and I think your Lordships will agree that the Board of Trade is to be congratulated upon having succeeded in getting it agreed to.

Several noble Lords raised a point with regard to the three months' notice. The reason for that is this. Obviously the Soviet Government would not get any security for their trade if at any moment we said that the trade in a certain article is to be stopped. Lord Peel suggested that the negotiations would very likely be going on for the greater part of the three months. That is very likely true. We put in "three months," to run from the notice given, in order that the conversations should not be unduly prolonged. Otherwise, as he knows, they are likely to be dragged on interminably, and goods will be coming in all the time.

EARL PEEL

They lasted fifteen months the last time.

EARL STANHOPE

In this case they can only last three, and the trader is to take the risk if the Soviet Government fails to come to an agreement. With a very short notice everything tends to get the conversations reduced to the very shortest possible time, and also to encourage the Soviet Government to come to an agreement with us, in order to prevent our taking action which will stop their goods being sold in this country.

EARL PEEL

Will the noble Earl allow me to ask an additional question on that? It is with regard to consuls. Are you going to take steps to increase our consuls in the big towns?

EARL STANHOPE

We have two consuls in Russia, one in Petrograd and one in Moscow. When you get down to the other parts, I think called the "Federated States of Russia," there we cannot have consuls unless we give a right to the U.S.S.R. to have consuls in other parts of the Empire. We think it is not desirable that they should have consuls in other parts of the Empire, or that we should have consuls in the Federated territories, and so at the present moment we have not the right to have a consul in Odessa. With regard to Article 3, that is an important Article, to which many have drawn attention, as to the balance of trade between our-selves and the Soviet Republic. I think that if you will reduce the balance of trade, as it has been in the last five years, to what it is now, your Lordships will see what an improvement the Article is. The figures have been quoted: In the past five years the balance of trade has been twenty-five to Russia and ten to ourselves. Now it comes down to seventeen to Russia and ten to ourselves, and eventually it will be eleven to Russia and ten to ourselves. As the exports from Russia last year were £17,000,000, we have hopes of selling £10,000,000 of goods and services to Russia this year.

I do not want to mislead your Lordships about that. As you will remember, the figures are made up partly by goods sold to Russia and partly by credits for goods sold previously. With regard to 1934, a very large sum is due to this country on credits for goods previously sold, and therefore when you come to look at the export figures for 1934, I am not going to suggest that it will amount to £10,000,000 this year. The trade has to balance out. If there is a shortage of goods sold in any one year it has to be made up in the year following, and next year, 1935, some £12,000,000 of goods and services will have to be bought from this country, supposing that the imports from Russia stop at the same figure as in 1933, and unless they are going to pay in cash a very large amount of goods will have to be ordered this year and paid for in 1935 under the export credits scheme.

EARL PEEL

Before leaving that point will the noble Earl say how that is maintained? Is the bill, as it were, made up at the end of each year, and then presented?

EARL STANHOPE

That appears in the end of the Schedule on page 11 of the White Paper, which says that the Soviet Government will give us information with respect to it at the end of each year.

EARL PEEL

We complain if the figure is not enough?

EARL STANHOPE

Yes, and we are then justified in reducing the imports which we take in the following year, if they do not make it up. Article 4 deals with export credits. I think Lord Ponsonby asked why the premium was put so high with regard to the Soviet Government, as compared with the premium charged by other countries. The reason is that some other countries have schemes of their own which guarantee the export of goods to the U.S.S.R. We have no such special fund here to guarantee exports to Russia, and therefore we have to go on the figure which is the commercial risk for that trade. That is assessed by the Advisory Committee, which is not a Government body but merely an advisory one.

Noble Lords complain with regard to Article 5 that diplomatic immunity is given to the Soviet trade representatives in this country. Of course where representatives are commercial attachés, and therefore part of the Embassy or Legation, they invariably receive the ordinary diplomatic immunity, but those are cases very different from this. They are attachés, like military and other attachés, and they are there to report on the conditions of trade in the country where they are serving. As regards the Trade Delegation of Russia, of course, they are actually traders and are doing trade, and they are in an entirely different category to any of the representatives attached either to our own Legations or Embassies abroad, or to foreign Embassies or Legations in this country. Of course it is part of the bargain—I make no pretence about it—that we should give diplomatic immunity to the Soviet Trade Representative and his two deputies, and those only as being the men responsible for doing the whole of the trade of Russia in this country.

My noble friend Lord Peel raised the question as to what was meant by the State economic organisations. They are organisations such as Arcos; and what will happen is this, that if anybody chooses to sell goods to Arcos or to some similar organisation they will see to it that the arrangement is approved of by the trade representatives and countersigned by the person specially authorised in the U.S.S.R.

EARL PEEL

Is there a list of these organisations?

EARL STANHOPE

Yes, there will be a list published, I understand, in the Board of Trade Journal. So I understand it will be perfectly clear to anybody doing trade with Russia what these organisations are. I think those people will readily understand that they must get any arrangement they make with these organisations countersigned by one of these representatives in England, and also by the Soviet representative mentioned at the end of Article 5 (4).

EARL PEEL

The countersigner does not have immunity, does he?

EARL STANHOPE

No, he does not. The diplomatic immunity is confined solely to these three people.

LORD MOUNT TEMPLE

The noble Earl said, I understand, that if a trader in this country sells to Arcos he must get the acceptance of a member of the Trade Delegation?

EARL STANHOPE

Yes.

LORD MOUNT TEMPLE

But then, I think that is not quite so. If the noble Lord will read paragraph (4) he will see it states: The Government of the Union of Soviet Socialist Republics will not, however, accept any responsibility for the acts of State economic organisations which, under laws of the Union of Soviet Socialist. Republics, are exclusively responsible for their own acts, except in cases …. where responsibility is taken. It is clear from this Agreement that there will be cases in which no backing by the Trade Delegation is carried into effect.

EARL STANHOPE

Of course, if anybody likes to take a risk of that kind he can, but he will not get any backing under this Agreement if he chooses to gamble in that way. All he has got to do, if he chooses to make an arrangement with Arcos or somebody else, is to see that it is approved of by one of the U.S.S.R. representatives, the Trade Representative or one of his deputies, and to see that he countersigns it.

LORD MOUNT TEMPLE

Can he sue Arcos in the English Courts?

EARL STANHOPE

Then it is accepted by the Soviet Government and comes under the ordinary arrangements of the Agreement.

EARL PEEL

Then it is not countersigned by this specially authorised person in that case; it is final?

EARL STANHOPE

I think it has also to be signed by the special representative.

LORD PHILLIMORE

The special representative is hardly the designation, is it, of the counter-signer? The counter-signer may be a person resident in Moscow, I suppose?

EARL STANHOPE

I think so. I am not quite clear about that point.

LORD PHILLIMORE

At any rate he is not included among the three representatives?

EARL STANHOPE

Oh, no, he is not. I think it has to be somebody specially appointed, probably in Russia, to countersign it there. As regards Article 6, I think I told your Lordships some time ago that we hoped as a result of having something to sell in the British market we should be able to get better terms for our trade and also for our shipping. And in addition to what actually appears in this Article, as noble Lords know, a letter was written to the President of the Board of Trade promising to use British shipping more extensively than it has been used in the past. In regard to coastal trade, the point raised by Lord Phillimore, I understand that our ships will be treated on an equality with foreign ships. The law of continuous voyage, I think, does not apply in regard to Russia. I believe I am right in saying that a reservation of the coastal trade does not affect the law of continuous voyage and prevent ships picking up goods at various ports and then going on. Of course, the coastal trade in Russia, where it goes definitely from one Russian port to another Russian port only, is normally confined to Russian ships, but there are occasions when there are no Russian ships available, and then we get the advantage of the most-favoured-nation clause for British ships, enabling them to compete with other ships for that trade, and we hope to get it.

With regard to Clause 7, this enables the United Kingdom to give Preferences, and exclusive Preferences, to Empire countries. That is our side of the question—that we are allowed to give our Empire Preferences without interfering with the most-favoured-nation clause. On the other side the U.S.S.R. are allowed to give special rates to the Baltic Succession States and to any country which is in a Customs union with them. My noble friend Lord Peel suggested that there was not very much of the world left, because, by the time we had put in Japan and China and Persia and Afghanistan and so on, we were left with very little of the world's surface with which to trade. But I think if he reads the Agreement a little more carefully he will see that that is not so, because in Article 7 (2) (c) the right of the Soviet Republic there is limited merely to border States; it relates to local trade between the inhabitants of the frontiers only, which is a very severe limitation.

EARL PEEL

I do not understand what a frontier zone is?

EARL STANHOPE

It is not put with extreme definiteness, but the reference is obviously to trade which goes across the frontier.

EARL PEEL

Merely small transit trade?

EARL STANHOPE

Merely small traffic across the frontier. Then Article 8 extends reciprocal most-favoured-nation treatment to the Empire, but the Dominions are excluded from the whole of this Agreement because they are separate Members of the League of Nations and can make their own arrangements; therefore they are excluded from that reciprocal most-favoured-nation treatment in Russia.

Several noble Lords referred to the fact that this Agreement is only a temporary one, and may be terminated at the end of six months, and Lord Mount Temple suggested that there were Temporary Agreements with France, one of which had lasted a century and another for some fifty years. It looks as if those Agreements had been rather satisfactory to have lasted that length of time. If he thinks that this Agreement is going to last as long as that, I think he ought to have congratulated the Government on having made such a very good Agreement.

Then my noble friend Lord Mount Temple raised the whole question of Governmental and private debts. I listened to him with great attention, and I hoped he was going to tell us how those debts were going to be paid, because I was at a great loss to understand how it could be done. After all, he surely does not imagine that these debts—I think he said £1,300,000,000 was due to this country—could be brought in boxes of gold and deposited in the vaults of the Bank of England. It could only be done by further imports from Russia and by using Russian services, Russian ships instead of British ships, buying Russian goods instead of Empire goods or instead of actually manufacturing our own. I hoped that the noble Lord was going to tell us something about that.

LORD MOUNT TEMPLE

May I ask the noble Earl why, if it is so impossible to get your debts paid, the Government have said that in a permanent Agreement they will insist on their being paid?

EARL STANHOPE

On the contrary, we shall insist on their being recognised, and we hope that over a period of years —obviously it will have to be a very long period of years—these debts will get paid. But to say that we can get them recognised when Russia is in a position of having to take goods on credit in order to buy goods, seems to me to raise difficulties in regard to the Trade Agreement which really mean we should have to give up any chance of a Trade Agreement at all. I was not quite clear in my mind as to whether the noble Lord wanted a Trade Agreement or not, or whether he thought this was a way of stopping a Trade Agreement being brought into existence. If he wishes to have a Trade Agreement and to sell more to Russia than we have done since the War, then I think, unluckily and unfortunately, we have to postpone the settlement or recognition of the debts due both to private individuals and to the Government in this country by the Soviet Republic.

I forget whether it was Lord Mount Temple or Lord Phillimore who said that the terms of this Agreement had really been dictated by the Soviet Republic. I hope I have shown that to some extent the terms of this Agreement are such that they were not dictated to us. I can assure both my noble friends that the Agreement is different from anything which the Soviet Government have agreed to with any other country. It was by no means easy to arrange, and they took a great deal of persuasion before they would agree to our proposals. As regards the lien on actual articles, such as oil in France, I am informed that we take the view that this Agreement is very much better from the point of view of this country than is the French Agreement. We have always a chance of taking their imports as they come, and whereas we do not think that the security given by the lien in the French Agreement is a very valuable one, we think that our arrangement, which spreads over a period of years, has very much more value than has the French Agreement. In the French Agreement Russia takes £3,000,000 of goods in return for £6,000,000 taken by France, and the Agreement lasts for one year. Your Lordships will recognise from what I have said that we start off with a proportion of seventeen to ten and come down to eleven to ten. That is a very much better agreement from the British point of view than the French have been able to obtain. Then I was asked with regard to the statement made in another place concerning propaganda. I understand that is an undertaking which has existed since 1930 and was made to Mr. Henderson. It has never been abrogated and is therefore still in existence.

LORD MOUNT TEMPLE

May we hear what the undertaking is?

EARL STANHOPE

I am afraid I cannot tell my noble friend that. As he knows it is a long way outside the terms of the Motion on the Paper, and I was not aware the matter was going to be raised. I hope I have answered most of the points raised by your Lordships, and I apologise for any I have left unanswered. This is a matter for the Board of Trade rather than the Foreign Office, and as your Lordships know I am a very new recruit to the Foreign Office and do not pretend to know all about that Department. In conclusion may I express the hope that neither of my noble friends will press his Motion?

THE EARL OF ONSLOW

My Lords, may I ask one question to clear up a point which arose in the middle of the noble Earl's speech when Lord Peel asked him a question about consular representation? As I understood him it has not been thought desirable to ask the Russian Government to agree to consular representation outside Petrograd and Moscow because it would be necessary to accord consular representation everywhere to them. Is it not possible to have a consul appointed, say, at Odessa on the understanding that one additional consular representative should be allowed to them here? It is not necessary if you appoint one to appoint others. After all, the exequatur has to go through and be granted by the Government to which the consular representative is accredited, and each case has to be judged on its merits. I am not sure whether I was right in interpreting the noble Earl when he referred to the British Empire. It does not include the Dominions. I think that is expressly stated in the Agreement.

EARL STANHOPE

There is nothing about consular representatives in the Agreement. If the question of consular representation is going to be raised it will be outside this Agreement. It has nothing to do with the balance of trade. I am the first to acknowledge that consuls are an immense value to our trade, but there is nothing in this Agreement regarding them. I cannot answer my noble friend further on this matter, but, if he wishes, I will look into it and communicate with him later.

LORD PHILLIMORE

My Lords, I have to thank the noble Earl for the fullness and courtesy of his reply to the many questions which have been showered upon him, but I am very disappointed with the official reception of my Motion. I understand that the noble Earl rests his case on precedent and that he draws a distinction between making representations in the case of long-continued revolution and hat-foot rebellion. It is a distinction which I fail to understand and, I may add, I hope I shall always fail to understand. I would like to remind your Lordships that the only reason why my Motion is, as it were, tacked on to the consideration of this Treaty is in order to take advantage of a favourable opportunity of entering into friendly relations with this country—that is the connection. I was not at all disappointed with the speech of the Leader of the Opposition. I should never have expected that he would have the same measure to apply to a case like this. From his point of view it was far more important that we should sell the rails which these prisoners would have to lay in the Russian swamps than that the prisoners should be benefited. I am not at all surprised that that is his attitude. I have long suspected that the Labour Party were only interested in the suffering of those who supported them.

LORD PONSONBY OF SHULBREDE

I should like to interrupt the noble Lord. In the first place, I think that on this Motion there is no right of reply, and as he is taking advantage of the last few moments to make an attack on the Labour Party I must protest that it is irrelevant.

LORD PHILLIMORE

I do not know why the noble Lord should protest. He spoke in the name of the Labour Party. With regard to the speech of the noble Marquess, Lord Reading, I should like to express my gratitude to him for his very sympathetic remarks and to assure him on the point where he did differ from me that I should have been only too pleased to modify my Motion in any terms which would have been more acceptable from the point of view of diplomatic intercourse, and should only be too grateful if the Government could, in any shape or form, represent to the Russian Government that the time had now come when some hand- some step of this kind could be taken by them. It would be useless for me to press the Motion to a Division. I will, therefore, withdraw it with many thanks again to the noble Earl for the fullness of his reply.

Motion, by leave, withdrawn.

House adjourned at twenty minutes before seven o'clock.