§ 3.38 p.m.
§ LORD DERWENTMy Lords, my right honourable friend the President of the Board of Trade has this afternoon made a statement in another place about the Treaty of Commerce, Establishment and Navigation between the United Kingdom and Japan. This is the statement in my right honourable friend's own words:
"The Treaty was signed this morning. Copies of the text are available to the House, together with a Command Paper summarising the history of the negotiations and explaining the effect of the Treaty and associated arrangements.
"The essence of this Treaty is the exchange of most-favoured-nation rights and, in some cases, national rights between the two countries as regards the treatment of persons, companies, shipping and goods. Safeguards against disruptive competition are provided in the associated arrangements. The safeguards are: first, continued control of a number of specially sensitive items by export restriction in Japan or import restriction in the United Kingdom: and, second, a general safeguard for use in the event of disruptive competition developing in any sector of trade. When the Treaty comes into force, Britain will cease to invoke Article XXXV of the General Agreement on Tariffs and Trade, thereby entering into relations with Japan under the General Agreement.
"Since the rapid expansion of Japan's economy was first accompanied, some two years ago, by real progress in the liberalisation of her import trade, the conclusion of a Treaty on these lines has been a major objective of Government policy.
"To enable our exporters to reap the full benefits of the expanding market it was necessary to obtain guarantees that our trade would be as well treated as that of countries, such as Germany and the United States, who were in G.A.T.T. relations with Japan; and to provide a normal and settled basis of commercial relations 626 for trade between the two countries to replace the annually negotiated trade arrangements. The need for a Treaty has been equally recognised by representatives of industrial opinion with first-hand knowledge of developments in Japan.
"The rate of expansion of the Japanese economy in the last few years has far exceeded that of other industrial free-enterprise countries. Our exports to Japan have increased by about two-thirds in the last two years. Liberalisation of imports by Japan goes steadily forward. With relations now on a sound basis, I believe that our exports to Japan will continue to grow and there should be increasing opportunities for the profitable exchange of know-how between the two countries.
"Some sections of industry have, I know, been doubtful whether the general safeguard is an effective protection. I firmly believe that their fears are exaggerated. Under this safeguard we may consult the Japanese Government if there is an increase in imports of any product under conditions which cause or threaten serious injury to our manufacturers. In an emergency we can impose import restrictions at any time after consultation has begun, retaining them as long as they are needed. But we may hope that the necessity for this will rarely, if ever, arise, since it is reasonable to expect that the Japanese Government will readily co-operate with us to avoid a situation in which we would be compelled to reintroduce restrictions on Japanese trade.
"The Treaty is likely to be ratified and come into force in April or May of next year. The current trade arrangement has been renewed to cover the interval. During this period there will be some relaxations on our side, not affecting textile goods. Relaxations on the Japanese side will offer substantially increased opportunities to our exporters of wool cloth, whisky, cars and machine tools."
My Lords, that is the statement.
§ VISCOUNT ALEXANDER OF HILLSBOROUGHMy Lords, I am much obliged to the Minister for giving us this statement. I understand that the actual 627 terms of the Treaty will be laid on the Table and that we shall have a limited period in which we can raise certain questions. I note the safeguards referred to in the statement, and I just wonder whether the noble Lord can tell me in advance if, in cases of commodities which are already restricted by voluntary agreement in the case of Hong Kong, India and Pakistan, the same conditions will apply from the beginning of this Treaty in respect of Japan.
LORD REAMy Lords, may I just add that I think this agreement will be welcomed by all the House, but that I would call it a rather nervous and tentative Treaty? On the other hand, we are glad to see that, after all these years, the Government are reducing tariffs and abandoning protection, and aiming towards the target of free trade. As regards the noble Viscount's question on what he calls the voluntary restriction of commodities from Hong Kong, I rather trust the same principles will not be applied in this case.
§ LORD DERWENTMy Lords, I am not sure that I can answer the noble Viscount. As I understand it, the arrangements under this Treaty are temporary arrangements, and eventually we shall come into full G.A.T.T. relationship with Japan. The Treaty will lie for 21 days, I think, and the details of the safeguards will be attached to it and will be able to be seen. I do not think I can quite answer offhand the point put by the noble Viscount.
VISCOUNT ALEXANDER OF HILLS-BOROUGHI should have thought that that information would have been readily available to the Minister from his Department. You know what the actual arrangements are at present in respect of Hong Kong, and how much they have been debated, from one side or another, by manufacturers in this country. I should have thought we ought to be able to know straight away. We will examine the facts themselves when the Paper is laid, but we ought to have been able to know this afternoon on this one vital point.
§ VISCOUNT HAILSHAMMy Lords, I myself felt a certain amount of difficulty 628 as to the exact point which the noble Viscount was seeking to put to my noble friend, and I know he felt under the same difficulty. For that reason, I hope the noble Viscount will be able to put it down on the Paper so as to give him a chance of considering it. On a matter of this kind it is very much more important to be accurate than it is to be quick in one's answers. I would therefore ask the noble Viscount to bear with us and to toll us precisely what it is he has in mind, in order that we may be quite sure to give a right answer.
§ LORD KILLEARNMy Lords, I wonder if I might ask whether there is in this Treaty a ratification clause. Is it subject to ratification?
§ LORD DERWENTYes, it is; and, as I said, it is likely to be ratified next April or May.
§ LORD KILLEARNThat bears on the point which the noble Viscount made.
LORD HAWKEMy Lords, I had precisely the same point in mind as the noble Viscount opposite. Perhaps I can explain it to my noble friend. Hong Kong, India and Pakistan are at the moment voluntarily restricting their exports of cloth, and made-up garments to some extent, to this country to avoid ruining the Lancashire industry. Is the Japanese cotton industry going to be allowed, from the beginning, to export cotton goods freely to this country, or is there going to be some corresponding restriction on them?
§ VISCOUNT HAILSHAMMy Lords, I think that inevitably answers itself, if arrangements are voluntary in one case and are regulated by what my noble friend has just said in another. I should think that the correct course would be to read carefully what my noble friend has said, and to compare it with the nature of the voluntary arrangements; but they are clearly not quite in pari materia.
LORD REAMy Lords, whilst this point is, of course, important to manufacturers, I hope the Government will remember that the consumer is much more important than any manufacturer.