§ 6.32 p.m.
§ LORD BARNBY rose to ask Her Majesty's Government whether, in view of the action of the United States of America in meeting the growing malpractice of variable exchange rates to assist the exporting country to defeat import tariffs of other countries, as evidenced by the imposition of countervailing duties equal to the net amount of any bounty or grant paid upon their exportation from Uruguay, they now intend to afford industrial wage rates in this country similar relief against countries invoking comparable practices. The noble Lord said: My Lords, in putting the Question which stands in my name on the Order Paper, I would say that dangerous practices of a character aimed at giving a particular advantage to exporters are well known to the Government. They have been the subject of much conference between the Federation of British Industries and the Board of Trade, and, I understand, are still the subject of continuous attention. But the practice to which I draw particular attention is of a different kind. Here a 584 country is employing different exchange rates to furnish its exporters with the opportunity of intentionally defeating the tariffs existing in other countries. The difficulty about this is that there is no foretelling what arbitrary action of a novel character may be taken by countries that resort to this type of malpractice.
§ I have raised this matter because my connections with the United States have caused me to be particularly familiar with the effects of this action in that country, and the United States have now decided to take retaliatory action of a clear and vehement kind. It seems likely that the effect of that will be that the deflection of exports so penalised will spill over into other directions and may well cause serious harm to British exports. The action of the United States recognises that organised labour is entitled to protection against this kind of, I repeat, malpractice. For that reason it seems urgent that the matter should be raised. I am well aware that other types of export subsidies and assistances, greatly varied in kind, have been the subject of much international representation, but it is because the action the United States are taking is a precedent which recognises the actual danger in the United States—and from that I deduce its latent danger to industry in this country—that I think it would be opportune for a statement to be made. I hope my noble friend Lord Mancroft will be able to give me a reply of a reassuring character, and one which will help to relieve the extreme concern which is felt amongst traders in this country. I beg to ask the Question standing in my name on the Order Paper.
§ 6.34 p.m.
§ LORD MANCROFTMy Lords, Her Majesty's Government are grateful to my noble friend Lord Barnby for raising this important matter. They have considerable sympathy for the natural anxiety which underlies the remarks he has just addressed to your Lordships' House. Her Majesty's Government have repeatedly made clear their opposition to the use of multiple exchange rates. They regard their use as undesirable, both in principle and, more particularly, when they are used as a form of subsidy for exports.
Multiple exchange rates constitute, in effect, a partial devaluation of the currency concerned, as the noble Lord has 585 just said. In consequence, they give a special advantage to the exports to which they apply. United Kingdom exporters, I know, have expressed their strong objection to the stimulation of exports by these devices. They have said that they regard them as a form of unfair competition, and it is clear that there is considerable justification for that view, and that the noble Lord's apprehensions are justified. For their part, Her Majesty's Government are working as hard as they can for the eradication of multiple exchange rates and similar practices. Action is proceeding in the International Monetary Fund and the Organisation for European Economic Co-operation. Her Majesty's Government will use any other suitable opportunity which may present itself for pursuing the matter, and the assistance and suggestions of the noble Lord, Lord Barnby, will be warmly welcomed.
Recently, the International Monetary Fund reached the decision that countries should remove currency retention schemes and similar practices as soon as feasible. This decision was announced by the Fund as recently as May 12. The question is still under discussion in the O.E.E.C. The noble Lord is no doubt aware that economic talks with German Ministers have just been concluded in London. The communiqué issued at the conclusion of the talks records that it was agreed that the stimulation of exports by artificial incentive schemes distorted the pattern of trade and impaired free competition. Accordingly, the two Governments agreed to consult further together and to cooperate with other Governments, with a view to securing the progressive elimination of such schemes on an international basis.
As I have already explained, the policy of Her Majesty's Government is directed towards removing at the root the use of multiple exchange rates as a form of subsidy for exports. Any success which Her Majesty's Government may have will thus alleviate the matter, both as regards the competition experienced by United Kingdom exporters in overseas markets and as regards competition in the United Kingdom itself. However, it is at present in overseas markets, rather than in this country, that the United Kingdom is being affected by the practices to which the noble Lord, Lord Barnby, has drawn attention. So far as imports into this country are concerned, my information is 586 that the question raised by the noble Lord seems at the moment not much more than hypothetical. Competition from Uruguayan wool tops in the United Kingdom, to which the noble Lord drew particular attention, is really insignificant. If, however, the question raised by the noble Lord were to become more significant, then, of course, Her Majesty's Government would have to consider what action they should take, consistent with their international commercial obligations and policy.
I should draw the noble Lord's attention, however, to this fact: legislation would be needed in order to impose antidumping or countervailing duties against goods from particular sources. What is more, their imposition would raise administrative problems. For example, in some cases it would be difficult to determine the appropriate level at which to impose the duty. In some cases, it would not be easy to gauge the precise effect of the multiple currency practices on the prices of goods offered by foreign exporters. I mention these facts not to raise obstructions but to draw the noble Lord's attention to some of the difficulties which might face us.
I hope that I have satisfied the noble Lord, Lord Barnby, and the House, that Her Majesty's Government are taking all the action open to them to secure the abolition of these undesirable multiple currency practices. They fully realise the importance of persuading other Governments not to stimulate exports by artificial methods. On the evidence before them, Her Majesty's Government doubt whether the use of these methods is having serious effect sat present by unduly stimulating competition with the domestic market. If the noble Lord, Lord Barnby, or any other noble Lord, has further information on this aspect off the problem, I shall be grateful if he will let the Government have it. I think I have said enough to make the noble Lord realise that the Government treat this matter seriously and wish to do everything they can to prevent the difficulties to which the noble Lord has properly drawn attention.
§ 6.40 p.m.
§ LORD WILMOT OF SELMESTONMy Lords, before the noble Lord sits down, I wonder whether I may ask for some additional information upon an important matter. First, has he any in- 587 formation as to the extent of these artificial methods of stimulating exports, and which countries are employing them? Secondly, can he give us any idea of what the Government propose to do about an aspect of this problem upon which he did not touch—namely, the effect, not only upon the domestic market but upon British exports? It is the overspill of these subsidised exports into markets where British exports are thus unfairly forced to compete which constitutes the serious aspect of the problem.
§ LORD MANCROFTMy Lords, I fully appreciate both of those points, and I am grateful to the noble Lord for raising them. I am afraid that I have only the information with regard to the Uruguayan wool tops, to which Lord Barnby specifically addressed himself. The figures are long and complicated, and if the noble Lord, Lord Wilmot, will put down on the Order Paper a Question Not for Oral Answer I will give him all the informa- 588 tion he wants. On the other questions wider than the Uruguayan points raised by the noble Lord, Lord Barnby, I am afraid that I must ask for notice.