§ LORD TEMPLEMOREMy Lords, in moving that the Clearing Office (Italy) Amendment Order, 1938, be approved there are a few words of explanation which I will give to your Lordships. It may be remembered that in July, 1936, when sanctions against Italy were raised, very considerable arrears of trade debts were owing to United Kingdom creditors in respect of goods imported into Italy before sanctions were imposed. It was decided to set up an Anglo-Italian Clearing Office with a view to ensuring that the sterling derived from Italian exports to the United Kingdom was used to meet Italian liabilities to the United Kingdom. The Clearing Office (Italy) Order, 1936, made by the Treasury on the 10th July, 1936, provided that the sterling received by the Clearing Office should be placed to a reserve account pending the conclusion of negotiations with the Italian Government. Subsequently, on the 6th November, 1936, a Clearing Agreement was concluded with Italy providing for the distribution of the sterling received by the Clearing Office. This Agreement was put in force by the Clearing Office (Italy) Amendment Order, 1936, made by the Treasury on the 11th November, 1936.
The main provision of that Agreement was that the sterling collected by the Anglo-Italian Clearing Office in London was to he distributed as follows: 27 per cent. for the transfer of commercial arrears; 3 per cent. for the transfer of financial remittances; and 70 per cent. for current trade debts. The arrears of trade debts, which were outstanding when the 1936 Agreement was concluded, have now been practically all settled. It was necessary, therefore, to reallocate the 27 per cent. of the sterling receipts collected by the Anglo-Italian Clearing Office which 655 previously were earmarked for liquidation of the old debts. Negotiations were opened for this purpose and resulted in the signature on the 18th March, 1938, of an Agreement between the Italian Government and His Majesty's Government modifying the Agreement of 6th November, 1936. The new Agreement, which came into force on the 28th March, 1938, provides that the sterling receipts of the clearing will be allocated in accordance with the following percentages: The allocation for payments in respect of current exports to Italy is increased from 70 per cent. to 87 per cent.; the allocation for financial transfers is increased from 3 per cent. to 6½ per cent.; and the remaining 6½ per cent. is allocated in the first instance for the transfer of any remaining old trade debts. Provision is also made for the settlement within six months of the old trade debts due from Italy to Burma, Newfoundland and the Colonial Empire, and for the adoption of a system whereby the Italian Foreign Exchange Institute may undertake to secure the transfer of the sterling equivalent of the deposit made by the Italian debtor, thus obviating the necessity for supplementary lire deposits to cover exchange variations. The present Order contains the necessary legal provisions for giving effect to this Agreement. In accordance with Section 4 of the Debts Clearing Offices and Import Restrictions Act, 1934, the Order must be approved by each House of Parliament within 28 days from the making of the Order.
Before I sit down there is just one remark I should like to make which may forestall any criticism which might be made. I would point out that this does not in any way grant credits to Italy. It is a purely machinery arrangement for the advantage of both countries. Your Lordships will understand that payments for exports to Italy, in common with most other countries, are eligible for a guarantee of the Export Credits Guarantee Department, and that is not affected in any way by the Order which we are discussing. There is of course no question of granting to Italy export credit facilities through the Export Credits Guarantee Department.
§ Moved, That the Special Order, as reported from the Special Orders Committee on Thursday last, be approved.—(Lord Templemore.)
656VISCOUNT ELIBANKMay I ask whether this Agreement applies to the Dominions and Colonies as well as to the United Kingdom; or whether the Dominions and Colonies are excluded; or whether the Colonies themselves are included with the United Kingdom?
§ LORD TEMPLEMOREYour Lordships will see, if you turn to the Note at the end of the Agreement, that provision is made for the settlement within six months of the old trade debts due from Italy to Burma, Newfoundland and the Colonial Empire.
§ LORD MARLEYCould the noble Lord tell your Lordships' House whether the 6a per cent. which is now retained for the settlement of old debts, including presumably the old Colonial debts, in any way applies to debts which have not been paid other than the pre-1936 debt?
§ LORD TEMPLEMOREI think there are practically no debts previous to 1936 which have not been paid.
§ LORD MARLEYAll the other debts then are current debts which have been settled?
§ LORD TEMPLEMOREThat is so.
§ On Question, Motion agreed to.