EXPORT GUARANTEES BILL (Hansard, 3 April 1952)

§ VISCOUNT SWINTON
My Lords, I am sorry to have to trouble the House again. And once more it is with a Bill relating to a matter with which I have had a considerable and ancient connection. If I wrote every word of the original Cinematograph Films Bill myself—which I did—I cannot say I was the real parent of export credits, although I certainly was one of the first foster-parents of the scheme, because I took charge of it as far back, I think, as 1920. The Export Credits Guarantee Department has certainly grown enormously since those clays and it now conducts a vast volume 1355 of business. There are two classes of transaction which are financed by the Export Credits Guarantee Department. First of all, there are the commercial guarantees, under which the vendors, the exporters, can insure their contracts and insure against the insolvency of their customers. The exporters can also ensure that the currency will be available and the necessary transfers can be made. These credits are short, medium and long. They are very widely used to-day. The volume of business which is insured in these commercial schemes at the present time is over £500,000,000, and since cover may be as much as 90 per cent. of the contract, your Lordships will see that the present limit of £500,000,000 under the existing Act may very probably be exceeded in the immediate future—indeed, I hope it will. Therefore, I come to the House with this Bill to ask that the existing limit for commercial transactions may be increased to £750,000,000, an extra £250,000,000.
Then there are special transactions, which cannot be treated as reasonable commercial risks, and which do not fall within the scope of the commercial credits with which your Lordships have been familiar under the Export Credits Guarantee Department for more than thirty years. They are transactions which are, in the words of the Bill, "desirable in the national interest." They cover rather a wide field. There are enterprises such as sales promotion and advertising in new markets. A great deal has been done in North America in that way. A firm, or group of firms, trying to expand or develop an export market there may find it necessary to have a new sales organisation, or to make arrangements with an existing sales organisation, or to conduct a large advertising campaign. All this is valuable but, of course, the returns may take a long time to come in.
Then there is what I might call a "job lot" of other enterprises. There was a sale of buses to Cuba, which no doubt will be paid for—and paid for, ultimately, in dollars. That was insured. There has also been a good deal of trade with Poland and Yugoslavia, which I am sure the House would want to encourage. These are not like the self-liquidating hills that we get in the ordinary commercial side of business. They are transactions for which it may take a very 1356 considerable time to obtain repayment. Therefore, the liability which the Government undertake may be a very long-term liability and may not be liquidated for quite a time. The present limit for these is £100,000,000 and it is proposed under this Bill to raise it by £50,000,000 to a figure of £150,000,000. At a time when to export is so important to this country and is becoming increasingly difficult, I am sure your Lordships will want to give approval to these two well-tried types of credit transactions, which have in the past proved of so much assistance to our export trade and which will, I hope, be used increasingly and equally successfully in the future. That is the object of the Bill, the Second Reading of which I now beg to move.

LORD PAKENHAM
My Lords, once again it is my duty and pleasure to support the Government and to express my agreement with the noble Viscount, Lord Swinton. My noble friend Lord Strabolgi will again be addressing us on this subject, and I make my remarks subject to his observations. One could, of course, take this opportunity to discuss the export trade, in which we are all equally interested, at great length, but I do not think that your Lordships would regard this as a suitable occasion for such a discussion. I therefore confine myself to supporting the measure.

LORD STRABOLGI
My Lords, so far the debate on the two Bills is being conducted by a triumvirate, and I hope the House will permit me to make a few observations in my turn on this second Bill. As the noble Viscount has reminded us, the original Act came before another place as a Bill in 1920, and I remember it very well. It then had a different title—it was the Overseas Trade Credit and Insurance Bill—but it had the same object to meet very similar conditions, conditions of political unsettlement, the effects of revolutions and war and of uncertainty in markets. I remember that some of the old-fashioned pundits raised their hands in horror at the amount of money then asked for, which was £26,000,000. Now we have these very substantial figures. Yet the £26,000,000 1357 Was the beginning of a great experiment in helping exporters and in removing some of the risks in certain markets for British merchandise. And that experiment has been a great success. As both noble Lords have said, it has proved beneficial to British trade, and the very fact that Parliament is asking for this still further sum shows that its use has expanded and has been most valuable to the trading community. The curious thing is that, in spite of all the prophecies of woe when the original Bill came before us, in spite of all the gloomy forebodings then uttered, very little money has been lost. A great tribute should be paid by Parliament to the staff and advisers and experts who have carried on this colossal work. I am told that the dossiers of foreign buyers are approaching 250,000 in the archives of the body which administers these funds.
What is troubling a number of us, however, is whether a political bias is going to be brought into the operations of these credit insurances. The noble Viscount mentioned Yugoslavia and Poland as desirable markets. Well, Poland is on the other side of the iron curtain, and if I heard him aright the noble Viscount said that it was desirable to encourage trade with both these countries. I should have thought so, too, and I should have thought it advisable to encourage trade with all these countries. The difficulty facing the economic recovery of this country, and of other trading countries, is that we have not one iron curtain, but two. There is the iron curtain (I think the name originated with the present Prime Minister) surrounding the European satellites of Russia and Russia herself, and the curtain in the Pacific cutting off a great part of Asia from normal intercourse and commerce. So long as these two curtains remain as obstacles to trade we shall have increasing troubles and losses in our economic system.
At present, the textile industry in this country is giving a great deal of anxiety. I am sure that every member of the Government is aware of this and is troubled at the gathering clouds of depression and unemployment over Lancashire and Yorkshire and at the undoubted difficulties of the textile industries. We see the greatest potential market in the world for textiles in China. I know the difficulties. I know that we 1358 have not been able to re-establish full diplomatic relationships there; I know the difficulties about the absence of consuls, and of persecution (I use the word advisedly) of foreign business interests in the Treaty Ports, and in Shanghai in particular. Nevertheless, there is this immense market, and I should have thought that it was to the advantage of everyone in this country to try to reopen it and to re-establish our past commercial interests in China.
Therefore, I should particularly like to ask whether there is to be any political discrimination in the way of trade beyond these two iron curtains. I do not desire to be misunderstood. I am not suggesting for a moment that munitions of war should be exported from this country anywhere. But there are two distinct policies which are at present in conflict. It is no use burking these facts. There is the United States policy, which apparently is to try to destroy Communism, or to weaken Communism, by a complete blockade, or by an economic boycott. We could not follow that policy ourselves without risking grave injury. The other policy is that followed by the late Government, and which I hope will be continued by this Government, of preventing the export of munitions and weapons of war while at the same time allowing as free trade as possible in all other articles, and particularly in manufactured goods.
But let us see how it has worked out I have here an extract from the Trade and Navigation Returns which show the immense falling off in our exports to Russia—apart from re-exports. In 1949, in round figures, we exported £8,500,000 worth of goods; in 1950, again in round figures, we exported £11,500,000 worth. In 1951, however, we only exported £3,500,000 worth. At the same time, the imports into this country from Russia—and this is the curious feature—have gone up steadily. In 1949, in round figures, there were £16,000,000 worth; in 1950 there was £34,000,000 worth; and. in 1951 there were £60,000,000 worth. The goods we obtained from Russia were strategic materials in some cases, because the two principal imports from Russia were grain—mostly coarse grain—and timber; and timber is certainly a strategic article. We had been stockpiling timber as a strategic material until the present 1359 Chancellor of the Exchequer began to raid the stocks. We are getting a great deal of timber from Russia. How are we paying for this vast excess of our imports from Russia over our exports to Russia? The answer is in re-exports, mostly of rubber. We sold to Russia nearly £20,000,000 worth of rubber in 1951. Even then, there is a great gap between our imports from Russia and our exports to Russia.
One of the reasons for the falling off in the direct exports, and for the gap, is that there has been an almost total cutting down of exports of capital goods to Russia—machinery and the like. This, I presume, is another example of the so-called "cold war" in action. If that is the case, I think it is a very foolish business. After all, why should water tube boilers be particularly discriminated against? Are they a munition of war? It may be said that every piece of machinery, and all raw material, can be used for munitions. I remember that in the First World War it was not convenient, for strategic reasons, to declare a close blockade of Germany, so we cut off her trade through our contraband lists. Amongst other things, it was not so difficult to act through a contraband list with the United States. Remember that we ended up that period of contraband when we introduced the complete blockade after the United States entered the war. Some of your Lordships will remember the great controversy over cotton. We extended our contraband lists until the only articles not included were ostrich feathers and oranges. And then somebody found out that oranges could be used for the refreshment of the German troops in France and Flanders, and we cut off oranges, leaving only ostrich feathers on the free list.
Why should water tube boilers be refused to Russia? As I say they are not a munition of war. Why should electric machinery, generators, and sets be refused? It is true that they could be used in munition factories, but their main use is for civilian purposes. In fact, the total of machinery sent to Russia, including excavators, digging machinery and the rest, has gone down—again in round figures—from £6,500,000 worth in 1949 and nearly £10,000,000 in 1950 (this refers to all kinds of machinery) to £2,800,000 in 1951. Why is that? I 1360 understand that there is a great demand for such machinery in Russia. I should like to know whether restrictions and obstacles have been placed in the way of such trade by the Government, and whether this will affect the workings of the Bill we are now discussing.
I repeat that if we lend ourselves to an ever-increasing blockade of the countries between the two Iron Curtains—that is, the Eastern Iron Curtain and the European Iron Curtain—we shall only injure ourselves. This so-called "cold" war may go on for five or ten years. What then will happen to our trade? The signs of recession have begun with the serious falling off in demand in the textile industries of Yorkshire and Lancashire. They are the first signs, and they will spread. The answer is, by all means to reopen the channels of trade. I welcome this Bill, because it removes from the ordinary merchant and manufacturer some of the risks inherent in the present situation. But I hope that we are not going to add to the difficulties of the ordinary merchant and manufacturer for political reasons. We have been a trading nation for centuries, and have built up our trade because we carried on commerce only on the principle of whether the customer was likely to pay for the goods. We did not bother whether a customer was under a dictatorship, a democracy, a Tzar or a Shah: we reckoned only on the credit-worthiness of our buyers, and in that way built up the great prosperity of this small Island. I suggest that the sooner we get back to that principle the better. This Bill is an aid, if it is properly used. It can be a tremendous help, as it has been in the past, if there is not this artificial discrimination. But I think it is necessary to stop what apparently has been going on; and I hope that the Government will return to the policy of their predecessors and keep the contraband list, if I may so call it, as short as possible.

§ VISCOUNT SWINTON
My Lords, with your Lordships' permission I will speak again. Both noble Lords have welcomed this Bill. I assure your Lordships that it is not intended to be an obstruction to trade but an assistance to it. The noble Lord, Lord Strabolgi, properly said that it would be wrong to send munitions to countries behind the Iron Curtain. I venture respectfully to 1361 agree with him. We are using both the elements of this Bill—the ordinary commercial credits and the special credits—to send things into countries behind the Iron Curtain, and also into China. Therefore, subject to the principle that we should not send munitions to places where it would not be satisfactory to have them, the principle we in Government apply is that which I have always myself applied in business—trade wherever you can get paid.