§ 4.15 p.m.
§ LORD BESWICKMy Lords, with permission I should now like to repeat a Statement on the Kennedy Round made by my right honourable friend the President of the Board of Trade in another place.
"On 1st January the United States Government announced certain measures to restrain overseas investment and some other forms of external expenditure in order to safeguard their balance of payments. We accept the actions which they have so far taken.
"But the Administration also have under consideration the possibility of other measures, notably in the field of trade, which we should find it hard to accept both because of the threat to our own trade and the danger of wider repercussions that might affect the development of world trade.
"In the light of the overwhelming importance of maintaining the expansion of world trade and avoiding a possible chain-reaction of restrictive measures, Her Majesty's Government, after consultation and in agreement with our fellow members of EFTA, have informed the United States Government that we are willing to implement the United Kingdom's Kennedy Round tariff cuts in full by January 1, 1969, provided that:
"First, other EFTA countries, the E.E.C. and Japan will do the same; 381 second, the United States Government do not introduce measures in the field of trade such as an export rebate or an import surcharge; and, third, the United States Government proceed at least as quickly as hitherto contemplated with their own Kennedy Round cuts and with legislation to abolish the American Selling Price system for chemicals.
"This would mean that in addition to the 40 per cent, of the Kennedy Round reductions already agreed for July 1, we should propose to make the remaining 60 per cent. of the cuts on January 1 next, instead of in three annual instalments over the years 1970 to 1972.
"We have been in touch with other Commonwealth Governments. We have noted with satisfaction that the E.E.C. Commission are studying the possibility of a similar move by the E.E.C. We have informed the Governments of the E.E.C. countries, and the Commission, of our proposals. We hope that they and the Japanese Government will join us and our EFTA partners in this enterprise, which we believe will strengthen the principle of international co-operation at a crucial moment and enable the United States to deal with their current problems in a manner that will increase rather than restrict world trade."
§ THE EARL OF DUNDEEMy Lords, I thank the noble Lord for repeating the Statement, with the purpose of which I think we ought to agree. I am glad to hear that the Government have decided to advance the date of implementing the Kennedy Round from 1972 to next January, provided that the other parties agree; and I am glad to hear that EFTA have agreed. I hope that the E.E.C. will not hold up this implementation. With regard to the Commonwealth, may I ask the noble Lord whether he could say anything about consultation, because I am quite sure that the Government would not wish to give the impression that we are unduly anticipating Commonweath consent, since this would clearly affect Commonwealth preferences for the next three years.
With regard to the first part of the Statement, about the measures taken by the United States which the Government 382 have already accepted, I hope Her Majesty's Government would agree that both American restrictions on foreign investment and also our restrictions on foreign investment are profoundly to be regretted, and that if every big trading country tries simultaneously to achieve a favourable balance of payments there is bound to be a very heavy trade depression with high unemployment everywhere. I wonder whether the noble Lord can say, although I have not had a chance to give him much notice of this, what has happened about the proposals which were made at Rio, at the conference attended by Mr. Callaghan last September, whether there is any chance of their being implemented, and whether, even if they were implemented, the Government would not agree that they are very much less than needs to be done?
LORD REAMy Lords, I do not propose to follow the noble Earl in detail. He has a great knowledge of the detail in this sort of matter. But I think it will come as no great surprise to the House to learn that we on the Liberal Benches are very pleased to see this very clear inclination towards more free: trade, as was the case fifty years ago when the Liberals were at the helm.
§ LORD BESWICKMy Lords, may I thank the noble Earl, Lord Dundee, and also the noble Lord, Lord Rea, for the general welcome which they have given this Statement. First, may I say that I agree with the noble Earl that it would be a mathematical impossibility for every nation simultaneously to have a surplus on their overseas trading account, and that if they attempted to achieve it catastrophe could follow. He asked me about the Rio Agreement. I understand that work is going forward well on the outline liquidity scheme agreed in September last, and Her Majesty's Government's view is that this special drawing rights scheme is the best way forward in dealing with the question of international liquidity. We are making progress; and I think before we can say that that is inadequate, it would be as well to see how it works out in practice.
The noble Earl also asked about consultation with the Commonwealth. I agree that there has not been very much time to have adequate consultations. We 383 have informed them, and we have asked for their views. The difficulty is that pressure is building up both in the E.E.C. countries and in the United States for action; and it is essential that we take some lead in this matter.