HL Deb 30 July 1958 vol 211 cc505-13

3.30 p.m.

LORD B.ALFOUR OF INCHRYE rose to move to resolve, That this House is of the opinion that the greatest possible expansion of inter-Commonwealth trade should be the first objective of Britain's overseas economic policy and welcomes all steps necessary to attain this end. The noble Lord said: My Lords, there is on the Order Paper a positive Resolution instead of the normal Motion asking for Papers. The reason I have put down a positive Resolution is that I think the subject requires a declaration which I trust your Lordships will support. I trust it will be a declaration endorsed by Her Majesty's Government—a declaration of effective faith in the priority of Commonwealth trade expansion as the first objective of our economic overseas policy.

As a densely populated, small island to the north of Europe, depleted as we have been of men and of treasure through two world wars, Britain might be said to count little materially, when compared with the great empires which have grown up of the United States, of Russia, and now of China. But as the political and economic centre of the British Commonwealth and Colonial Empire, bound together, as we are, by ties of tradition, political interest and economy. Britain can be the dominant partner and leader of the greatest single force in the world for things which we know to be good against the things which we know in the world at the present time to be evil. Therefore, accepting this proposition, I would submit that the consolidation of our economic ties is vital, and that in their extension lies the hope of the future of our land. Far be from me to be so stupid or impertinent as to say that much has not been done in the vast in the way of Commonwealth and Colonial development by all Parties of the State. But I believe that in the past we could have done more, and in the future I am convinced that we should do more. The opportunity presents itself at Montreal at the forthcoming conference for Britain to lead in Commonwealth economic expansion and to respond to the calls from our partners to meet them in their particular and pressing needs.

The reason we could have done more but have not done more is, I believe, a clear and deliberate: it is that our economic and our financial post-war policies have been based on an almost fantastic belief in complete nondiscrimination in international trade. It has been based on a worship of G.A.T.T., wide-eyed at all its claimed benefits, and blind-eyed to all its obvious drawbacks, and on a reliance on international multilateralism as the mainspring of economic policy. There is a beloved slogan of the Liberal Party—beloved with great respect in the past—which says that all expansion of world trade must automatically be of benefit to the United Kingdom. I think that that is something which should be challenged. It seems to me that just to swell the streams of international trade is of no benefit to this country unless we can enjoy the strength of some of the streams. Better a lesser stream with some channelled to us than a torrent out of the reach of this country.

It is in the interests of this policy of non-discrimination that we have deliberately pulled our punches in possibilities for Commonwealth trade expansion. If I say that, your Lordships are entitled to ask for some supporting argument. I can give your Lordships one or two examples of how we have deliberately pulled our punches in the interests of international multilateralism. Last year this country imported a total of £32 million worth of maize, and of that £32 million we spent no less than £26 million in the United States, with hard-earned, scarce dollars. Why not have more maize from the sterling Commonwealth area? Why not a Commonwealth maize policy? Why should Southern Rhodesia have a surplus of maize which she is having to get rid of in Central Europe? What justification do we get, except the interests of international multi-lateralism, in spending £26 million out of £32 million in dollars on United States maize?

Under the latest arrangement with the United States we are importing various fruits from that country, while there is a surplus production of the same fruits in Commonwealth countries. Let us take, for a moment, the West Indies' citrus industry, with a new preferential position as regards West Indian imports into this country which amounts virtually to nil because of our inability—one might say, our unwillingness—to initiate revaluation of preferences in terms of modern money. The United States industry is heavily protected in its own home market. It exposes our West Indian citrus industry to a terrible competition. We can do nothing for them because of what is called the Colonial waiver of G.A.T.T., which says that no action can be taken if it would also afford material benefit, either in the domestic or in export markets, to industries or branches of agriculture of the United Kingdom or of any territory other than the dependent overseas territories. That means that because of our exercise of the Colonial waiver which might benefit the home industry, which would in fact benefit South African and other Commonwealth fruit industries, we cannot do anything to help the West Indies.

Let me give another example. The Commonwealth wheat producers have been doing increasingly worse over the last two years. There are mounting surpluses. In Canada to-day the surplus is something over 20 million tons. Yet this year we took more wheat from France than from any other country except Canada. We took 11½ million hundredweight of wheat from France at an average price of 20s. 9d. per hundredweight, which is 5s. lower than the price from Canada or Australia. Yet for this same wheat the French farmers are paying 38s. 9d. If that is not dumping at the cost of Commonwealth and British trade, I do not know what is.


My Lords, if my noble friend will allow me to interrupt, I would point out that this wheat has always been known as soft wheat and does not in any way compare with Canadian wheat.


But it does compare with Australian wheat.


Yes, but we have made an agreement with Australia in regard to wheat.


The noble Earl is giving me my point in relation to international multilateralism. We are deliberately pulling our punches with regard to inter-Commonwealth trade. I thank the noble Earl for conceding entirely my point.


I did not want the point stretched too far, to cover Canada.


Unfortunately, it covers the whole of the Commonwealth. For the last six months imports of Argentine beef and veal have been increasingly heavy, whilst imports from New Zealand and Australia have been steadily decreasing. As a result of this policy inter-Commonwealth trade is showing a significant and a fairly continuous decline, as does the Commonwealth share of world trade, taking figures of money values.

I am fully aware of the soporific effect on your Lordships' House of a bombardment with any such thing as figures. Nevertheless, I must give one set of figures. They are these: that Commonwealth imports into the United Kingdom in 1957 were £928 million; in 1958 they were down to £781 million—a decrease of £147 million, which I think supports the point I have submitted to your Lordships, that Commonwealth trade is in a condition of serious and steady decline. Whatever may be the reasons for the decline in inter-Commonwealth trade, if it is allowed to continue it can have only one result: it must weaken both the Commonwealth and our own world position. I believe that our task is to stop this decline in inter-Commonwealth trade and to grasp the chance for Commonwealth expansion which is now before us. That seems to me the task of Montreal. I suggest that action is called for under several headings at Montreal if we are to arrest this decline.

First, we must be prepared to switch some of our purchases from foreign to Commonwealth sources and at the same time require the Commonwealth to carry out similar action in favour of British interests. We have already seen Mr. Diefenbaker proposing the 15 per cent. switch in Canadian purchases. I should like to make perfectly clear that in suggesting such a switch I am not suggesting that we should switch from its traditional channels more of our trade than can be arranged bilaterally with the Commonwealth; but it is possible to make a balanced switch with a carefully prepared list. That has, indeed, been done authoritatively by the Expanding Commonwealth Group and submitted to Her Majesty's Government. It is possible to make such a list amounting to some £300 million as a target of primary products from the Commonwealth, including foodstuffs, tobacco, rubber, skins and hides, fruits, sugar, cotton and metals.

There are various possible ways by which this switch could be effected within the framework of G.A.T.T., but I believe that that would be difficult. It would be evasive and could be done partially only under the umbrella of G.A.T.T. I believe that it would be wiser and much more honest to admit that any major switch must be carried out by a major policy change, that policy change being the abandonment of the strict doctrine of non-discrimination, renegotiation of G.A.T.'T. and many of the most-favoured-nation treaties and aid agreements. I would urge that we should give notice to G.A.T.T. that we either leave it or amend the "no new preference" rule and revise the most-favoured-nation clauses. In that way the out-of-date specific preferences could be replaced by ad valorem designed to achieve the two-way switch.

To do this would, of course, mean a new outlook and to a large extent a reversal of the policy hitherto pursued by Her Majesty's Government. Here I must touch for a moment on the position of this country, the Commonwealth and the European Free Trade Area project. The long negotiations for the E.F.T.A. must really sadden its most ardent advocates, for after all they have written, spoken and eaten it for the last six months; and if only half the energy which has been put into the E.F.T.A. project in the last year had been devoted to expanding Commonwealth trade, there might indeed have been no need for this debate to-day. What was, we were told, vital by 'he end of July is now postponed until October; and it may or may not revive then—I do not know. One has considerable sympathy with the reasons which have caused France to hesitate to join the project. But whether something does or does not eventuate should not affect the priority of a Commonwealth expansion policy.

We read that Australia and Canada are anxious that this country should join the E.F.T.A. project. That may well be so, but they have never said they are anxious that we should join it at the expense of our ability to expand Commonwealth trade. I believe that we have too long been told that Commonwealth expansion and the European Free Trade area can run alongside each other in double harness, with no side-kicks, no bites, in the same shafts and always pulling in the same direction. I do not believe it. We may compromise and do our best to serve both interests, but we cannot have two first priorities for one thing at the same time. I should say that it is much more likely that we could have two horses in tandem, with the Commonwealth horse leading the European horse, rather than the two trying to run in the same shafts. I submit that in policy and thought we must decide at Montreal which comes first, and the second must then give way right through to the attainment of the first. To go to Montreal serving the cause of Commonwealth expansion with reservations, limitations and restrictions based on hopes of a European Free Trade Area project would, I believe, be a betrayal of true Commonwealth trade prospects.

The fall in world commodity prices now confronts Commonwealth countries with grave new situations. As the noble Earl, the Minister, knows better than I do, the fall in copper prices has seriously hit the Central African Federation's finances. Social works and industrial development have had to be slowed down. There was a deficit of £21 million on the Budget instead of a surplus of £22 million. India is in a critical position. The last figure I had of her sterling balances was £160 million, melting away at the rate of £15 million a month; and Australia and New Zealand have been badly hit by the fall in wool prices and in agricultural products.

It is not appropriate to deal in this debate in your Lordships' House to-day with the issues of world commodity prices and their stabilisation at economic levels, and I bring the point forward only for one reason: that in this new and critical situation these primary producing countries may well look with new minds on a lead from the United Kingdom to remodel G.A.T.T. so as to allow advantageous preferential trading for primary producers. They may look at it in a way in which they would not have looked at it, say, a year, eighteen months or two years ago. It is a new situation, and I believe that if Her Majesty's Government take a lead in this they will find a new form of reaction compared to that with which they say they have met in the past.

The next question for consideration at Montreal is the vital one of Commonwealth investment. The financial institutions of the Commonwealth are very limited and have not been added to since the new commonwealth, as we know it now, has come into being. My noble friend Lord Barnby will no doubt be dealing with this aspect in greater detail, but it seems to me that there is one institution which might be formed now. The suggestion is one which might gain a wide measure of support in Commonwealth countries, and one which I hope Her Majesty's Government may favourably consider. That is, the formation of a Commonwealth Economic Secretariat to plan the development and allocation of resources, marketing agreements, tariff adjustments and multilateral and bilateral negotiations. Membership of such a Secretariat would, of course, be open to all Commonwealth countries and, I hope, to Colonies in process of evolution. We could have something like a Commonwealth "Colombo Plan" with Ministerial conferences priodically giving to the Secretariat directives based on common Ministerial decisions. I believe that the old bogy of economic imperialism and control at the centre is dead and gone. We are now all equal partners in the Commonwealth, and I do not believe that there need be any hesitation based on the old objection to Her Majesty's Government taking the initiative in this matter.

Against the background of Montreal there is, for the Commonwealth, the task of countering Russia's economic growth and her economic attack on the Western World. It is formidable to realise that Russia's economic empire to-day produces one-quarter of the world's steel, one-third of the world's coal, and one-fifth of the world's electric power. Russia is the third largest producer of crude oil, and already outstrips United States production of wheat, sugar, and timber. The promise of these riches to his own people by Mr. Khrushchev and other Soviet leaders, and the economic menace to those outside the Russian empire, is, by the very magnitude of Soviet resources and their effort, alarming, unless we take positive steps now to counter it; and I believe that we can do so. Positive steps, however, can be taken only by the combined action of Britain and members of the Commonwealth and Colonial Empire.

Having given your Lordships that picture of the might of the Russian economic effort, I would add this. Do not let us underrate our own Commonwealth resources, actual and potential. India and Pakistan produce four-fifths of the world's jute; Canada four-fifths of the world's nickel. Sterling members of the Commonwealth produce three-quarters of the world's tea requirements; one-half of the wool, rubber, chrome and cocoa requirements. I could give your Lordships a list of world commodity requirements of which the Commonwealth produce the major part. Our strength is there, if we will but unite to use it. "Close the ranks and unite" should be the clear message going to Montreal and the clear result coming out of Montreal. I urge that Her Majesty's Government go to Montreal with this one purpose in mind and with a willingness to accept freedom of economic action to achieve that purpose. I beg to move.

Moved to resolve, That the House is of the opinion that the greatest possible expansion of inter-Commonwealth trade should be the first objective of Britain's overseas economic policy and welcomes all steps necessary to attain this end.—(Lord Balfour of Inchrye.)