Trade and Commerce (Japanese Competition).

Adjournment (Whitsuntide). – in the House of Commons on 2nd June 1933.

Alert me about debates like this

2.41 p.m.

Photo of Mr Thomas Levy Mr Thomas Levy , Elland

When, on Monday last, I said I would raise to-day the question of Japanese competition, I was not speaking in any unfriendly spirit towards my hon. and gallant Friend the Secretary to the Overseas Trade Department, and I am sure he realises and appreciates that that is the case. Nor am I raising this matter in any unfriendly spirit towards Japan as such. But we have to realise that here we are up against an economic peril, an economic menace, and, after all, self-preservation is the first law of nature. Let me try to put the matter in its true perspective, to give a correct picture of it. There are two things which count with me as a business man—on the one hand, facts, and, on the other hand, the results. In approaching this problem we have to diagnose what is the cause, what is the effect, and what is the cure.

I would ask my hon. and gallant Friend not to deal with this matter from the point of view of money value; the problem has to be approached from the point of view of volume. To give an elementary illustration of what I mean, if in one year you import 50 horses at £10 each, their value will be £500, and if in the next year you import 500 horses at £1 each, the value is still £500. The ministerial point of view is that the imports are £500 in either case, and, therefore, there is no difference, but, while in the first year the imports may not necessarily affect, say, the horse-breeding industry, in the subsequent year they might materially affect, and even close down, that industry if they continued at the same rate.

Although Japan is an Eastern country, we have to recognise that it has adopted Western methods. Let us admit at once that the Japanese people are highly skilled, highly developed, highly industrialised, hard-working, thrifty people, and are also exceedingly intelligent. They work exceedingly long hours for very little pay. They work 60 hours a week, six days a week; there is no half-holiday, but simply one day's rest on Sunday. They work their machines in two shifts, so that their machinery is going 120 hours a week. Their standard of living is very low. I am not complaining. It is, if I may say so, nothing to do with this country what is their standard of living, what are their hours of labour, or what is their pay. But we must recognise the competition that we are up against, and we must take some measures to prevent this menace, which is going to jeopardise the various industries in this country.

Furthermore, there is the depreciation of the currency in Japan. The yen today is worth 14d., whereas the normal price is 2s., or 25d. My hon. and gallant Friend may say that, when the currency gets back to normal, it will help to alleviate this competition, but such an argument reminds me of the old saying that while the grass grows the cow starves, and, when the grass has grown, the cow is dead. It we wait until the currency gets back to normal, our industries in the interim will surely suffer, and may well become extinct. It does not only apply to this country. No European country can compete with the conditions that now exist. Furthermore, Japan is not only entering into competition with this country, but is taking away our markets, not only in the Dominions, Colonies and Protectorates but also in other parts of the world. I understand that the Minister is in negotiation with the Japanese Ambassador. I want him to enter into negotiations with the Dominions and Colonies and other countries at the World Economic Conference. Something has got to be done. It is urgent. One method that could be applied is that of quantitative restriction, and I suggest that we should start on the 1930 basis. The year 1929 was one of our peak years, but, with regard to the cotton trade, we have to remember the boycott in India, where English manufacturers were kept out and the Japanese got a very much stronger hold than they ordinarily would have done.

The arguments and figures that I am going to give apply to all Japanese industries—to rubber goods, to toys and particularly to textiles. In 1930, Great Britain exported to all parts of the world, including Empire markets, 59,750,000 square yards of rayon pieces. Rayon is a commodity which is taking the place of our cotton goods because of its cheapness. In 1932, we only exported 46,250,000 square yards. Compare that falling off of 20 per cent. with the alarming Japanese increase. In 1930 Japan exported to countries in the Empire market alone 45,250,000 square yards, and in 1932, 76,250,000 square yards, an increase of nearly 70 per cent., while to the whole world in 1932 she exported 152,638,000 square yards. She is relentlessly crushing us out of markets which used to be especially our own customers and, what is more significant, the markets of our own kith and kin. The rapidity of this onslaught can be gauged by these few figures. Japan exported to India in 1930 24,750,000 square yards, in 1931 42,500,000 square yards, and in 1932 50,750,000 square yards; to East Africa 716,000 square yards in 1930, 1,942,000 in 1931 and in 1932 over 3,000,000 square yards; and to South Africa 973,000 in 1930, and 6,133,000 in 1931 and a similar quantity in 1932. To other parts of Africa in 1930 they only exported 69,000, but in 1931 343,000 and in 1932 5,250,000 square yards. To Australia and New Zealand the figures are practically the same. They are claiming all our markets, whereas our trade is decreasing.

I want to give the House something which I consider extraordinary, because there is no reciprocal treatment in the illustration that I intend to give. Jamaica used to be one of our markets. In 1930 Japan exported to Jamaica only £8,000 of goods, in 1931 £23,000, and in 1932 £83,000. The total Japanese exports of goods and commodities to Jamaica in 1932 amounted to £183,000, while the only purchases that Japan made from Jamaica were £140. Those we can imagine to be what travellers bought to take home, and they cannot be considered as real export figures. These figures are reported in the issue of the "Daily Gleaner" of the 21st February and were quoted by a deputation from the Jamaica Imperial Association to the Governor General at an interview granted by him. In 13 countries of the Empire the balance of trade is visibly in favour of Japan. In 1929 they exported £26,000 worth of goods to Jamaica and there were no exports from Jamaica to Japan. In 1930 Japan exported £34,000 worth, and only £225 worth were exported to Japan. In 1931 Jamaica took £52,000 worth of goods from Japan, and there was no export to Japan. In 1932 they took £183,000 worth from Japan and only exported £144 worth to Japan. Jamaica used to be one of our markets. Is it fair that we should take their goods when Jamaica buys goods from Japan and nothing from us? There is something wrong somewhere. I would also call attention to Trinidad. I only mention two of the countries, but in regard to the other countries the position is similar. In 1929 Trinidad took from Japan £24,000 worth of goods, and there was no export to Japan. In 1930 they took £28,000 worth and again there was no export to Japan; and in 1931 they took £47,000 worth from Japan and only exported £350 worth to Japan.

The total imports into United South Africa from Japan in 1933 amounted to £2,500,000, and United South Africa only exported to Japan £101.000 worth of goods. These figures are fantastic. They are amazing. I call the attention of the hon. and gallant Gentleman the Secretary to the Overseas Trade Department to those figures because something really has to be done. In an earlier speech which I made on the floor of the House I called attention to the damage which was being done to the silk manufacturers in this country, and showed how the Japanese came over here, copied our designs, took them to Japan, reproduced them and sold them to us at very considerably less than the cost price here. I will give some details as to how Japan is affecting this country, apart from the Dominions and the Colonies, in the markets of the world. In 1931 the Japanese export of rayon to this country was only 18,000 square yards. In the first half of 1932 it was 16,000 square yards, in the second half of 1932, 240,000 square yards, and in the first three months of 1933 it was 157,500 square yards, or at the rate of 600,000 square yards per annum. I think I have said enough to show that this economic peril is real and progressive. It has to be tackled. Unless it is tackled our manufacturers will have to close down. It is impossible to compete. It is no use waiting until the yen appreciates in value or until Japan has decided to work shorter hours and give her workpeople more money and raise the standard of living.

The matter is urgent and has to be tackled now. The opportunity is here with the World Economic Conference, and, unless our Ministers can come to some arrangement to the material advantage both of Japan and this country, there can be no alternative but to put a quantitative restriction upon goods coming into this market, and certainly with regard to the Dominions and the Colonies. If the Dominions and Colonies intend to follow out the spirit of the negotiations which took place at Ottawa, I say to them with all respect and with diffidence, that they are not playing the game with this country if they expect us to take their goods while they buy the goods they require from Japan, because they are cheaper and because they are studying the consumers of their particular countries. I had an opportunity a short time ago of asking a question of the Prime Minister of Australia. I said to him, "You have given us a 15 per cent. preference. Can you tell me if that preference will put one extra yard upon our looms in England?" He was bound to admit that he had studied the consumer, and, if I may say so without being disrespectful, he rather evaded the question. But the fact remains that, while the preferences which we obtained on these commodities may be all right and applicable to the ordinary competition of European countries, they certainly have no bEarlng at all upon the very cheap goods which are produced in Japan.

3.2 p.m.

Photo of Sir Hamilton Kerr Sir Hamilton Kerr , Oldham

I should like briefly, without any undue repetition of what my hon. Friend the Member for Elland (Mr. Levy) has already so ably stated, draw attention to the bare facts of Japanese competition in the Cotton Trade. I need not stress the importance of Lancashire and its staple industry to Members of this House. Hon. Members know that during last year Lancashire exported one-sixth of the total visible exports of the country; a total of some £62,000,000 out of £365,000,000. Hon. Members know likewise that out of some 12,000,000 insured workers in this country no fewer than 518,000 of these find their livelihood in the cotton trade. Hon. Members likewise know that a sum of no less than £500,000,000 or more is invested in the various enterprises scattered throughout Lancashire. It can therefore be seen that the prosperity of England cannot be thoroughly restored unless this most important lynch pin in its economic structure can be brought back to some form of prosperity.

The prosperity of Lancashire has been seriously shaken during the last quarter of a century by what I might call the rocket-like outburst of Japanese economic activity. Only a quarter of a century ago Japan exported some 40,000,000 yens' worth of goods, and to-day she exports 1,200,000,000 yens' worth. It was only in 1853, some 80 years ago, that Commander Perry of the United States Navy first entered the harbour of Tokio. From that date Japan has been steadily forging ahead, especially in the cotton trade, where a quarter of a century ago she only had some 750,000 spindles, and now has 6,750,000.

It was during the War, when our manufacturers were concentrating upon fulfilling the needs of our troops on the Western and Near Eastern fronts, that Japan launched her big economic offensive and snatched from us our most potential Eastern markets but, unlike the tailor of Hong Kong, who, when asked to copy a pair of trousers, included the patch as well, the Japanese avoided many of the mistakes which we may possibly have made in our Lancashire cotton industry. They have followed a severe system of rationalisation and centralisation. If we look at the bare facts of the position we see that 70 per cent. of the raw cotton imported into Japan is manipulated by three big firms. We see that the Japanese Cotton Spinning Association controls no less than 97 per cent. of the spindles in the whole of Japan, while the export of 40 per cent. of the finished yarn is controlled likewise by three big companies. I understand that negotiations are now proceeding with Mr. Matsuoka, the Japanese Ambassador. If so, I presume they will fall within the structure of the World Economic Conference. I presume they will centre round the stabilisation of currencies. The stabilisation of the yen might certainly do something to check Japanese competition, but it can of itself do nothing to check those longer hours and lower wages which place the Japanese in a position of advantage against the skilled and experienced Lancashire workers.

If an agreement cannot be reached—and I see enormous difficulties in its way —is it too much to ask that the Empire should take a united stand against this frontal attack? At Ottawa a new idea was formed, a new economic cement was cast between the British-Speaking nations in the four corners of the globe. This new idea was to pool their resources and to pull together for the common good. If we realise that throughout our Empire there are numerous rich and splendid Dependencies which rely upon us both for Aerial and Naval defence in time of need, is it too much to ask of them that, in consideration for what we give to them, they should give preference to our goods? I will quote only the case of Ceylon. I know that numerous difficulties stand in the way of my right hon. Friend, but when we realise that Ceylon exports to us 112,000,000 rupees worth of goods and takes only 42,000,000 rupees worth in return, while Japanese goods, especially cotton goods, are mounting rapidly month by month in that market, is it too much to ask that the people of Ceylon should give some better consideration to the great Power which protects them and looks after their welfare?

The Lancashire cotton industry, which I say without hesitation or flattery is the most skilled in the world, cannot stand this Japanese onslaught of longer hours, lower wages and reduced standards of living. In this country, throughout 100 years, we have struggled to maintain humane conditions for our workers. We have struggled, often with bitter industrial strife, to maintain a fair ratio of remuneration, but all these advantages obtained after so much effort and striving will be bound to go by the board if we cannot do something to resist this Japanese competition.

3.9 p.m.

Photo of Mr Samuel Hammersley Mr Samuel Hammersley , Stockport

The question of Japanese competition is not only a matter of overwhelming preoccupation on the part of the business people of the world but it is also a matter of grave concern to all Governments. As far as our own Government is concerned they have ample information in respect of the volume and character of this grave menace. I drew the attention of the Government nearly 12 months ago to the growing menace of Japanese competition, and there has been given to the House and the country almost day by day increasing evidence of the character of the competition with which the Western world is now faced.

The information which has been given to-day by the hon. Member for Elland (Mr. Levy) requires no expansion on my part. It is sufficient to say that the gravity of this problem cannot be exaggerated and that the scope and extent of it cannot even now be estimated. This is not ordinary business competition. It is an attack on foreign markets in accordance with a national creed; a national creed of economic penetration in which every instrument is co-ordinated to one end. It is a national creed which does not reject the use of a deliberate inflation of the currency, or a piracy of trade marks. It is a policy which results in the clear aim being shown that Japan is aiming at an over-lordship of the East which will rest on a secured and dominant position in many of the markets of the world. Whilst there is a certain amount of truth in the suggestion that we may be pursuing a policy which may result in our losing an Empire, there is no doubt that the policy of Japan is aimed at securing an Empire.

The disquieting part about this competition, this low priced competition based on a low standard of labour, is not that it provides the world with additional quantities of goods which may be given to people who in the past were unable to pay the higher prices; it is not additional goods that are given to the world for its consumption and benefit, these are goods which are displacing existing goods. The trade is what I may describe as a replacement trade, not an additional trade. It has been suggested with a great deal of truth that these products of low price labour are not finding new markets but are being dumped into markets which are already saturated. There is no export market in the world which is not jeopardised by this abnormal competition. Indeed, home markets, too, are affected. I do not want to give further evidence but I have here a shirt which comes from, Japan, in which the raw material has to be spun and woven, a colour stripe put in it, and a lining, the material has to be cut and stitched and a neck band and buttons put on; it has then to pay a duty, and it can be sold in this country at 1s. including the duty. The weight of the cotton alone is ¾ lb., and if you assume that all the workpeople people in this country engaged in this occupation are working without wages, that no money is provided for Capttal and that the only overhead costs are the payment of rates, it would then cost something like 1s. 6d. to make in this country. We have them dumped in this market at the price of 1s. What are we going to do?

I want to impress on the Government the view that this problem must be taken as a whole. There are four aspects of it. There is the problem of the home market, the aspect of the markets in the Dominions, the aspect of the Colonial markets, and then there is the aspect of those markets which we may describe as the free markets of the world. All these aspects must be considered together and a policy evolved which will deal with all of them. In my view it would be a great mistake to advance a policy which dealt with the problem purely in the home market and failed to deal with it in the Dominions, or which dealt with it in the Dominions and home markets but omitted to deal with it in some way in the free markets of the world. All the aspects of this great problem must be considered. Take the home market first. The figures indicate that the mere putting on of tariffs will not deal with the problem. We must have some system of quantitative restriction. We must possibly deal with the matter in the way that Switzerland deals with it. The aspect of the British markets abroad controlled by the Dominions is another side. When I speak of the Dominions I include India, because, whether or not in law, India has in fact got fiscal autonomy.

It appears to me that the best way to co-ordinate our policy in respect of the Dominions would be to try to see that the Dominions implement the existing Ottawa Agreements, that by legislative as well as administrative action they make the Agreements reached at Ottawa more fruitful, and we might ask the Dominions in respect of those goods on which we ourselves consider it necessary to have a quantitative restriction, to have a quantitative restriction in the Dominion markets in exchange for our giving to the Dominions an agreement not to include their products in the particular quota scheme which we may put forward in this country—a reciprocal agreement in respect of their goods between ourselves and the Dominions as to quotas.

Then there are the Colonial markets. Here it is necessary, first of all, to free the ground from the impediments and the encumbrances of old treaties which prevent the practical application of the principle of preference. Already the Government have given notice, in respect of West Africa, that the West African colonies will withdraw from the Anglo-Japanese trading agreement. That is so much to the good. But there are many other aspects of the problem which cannot be dealt with in that way. There is the question of markets other than the great. markets of Africa, such markets as Jamaica, Mauritius and so forth. It appears to me that we can with advantage pursue a policy of endeavouring to have some reciprocal arrangements with such countries as France, Belgium and Italy, whereby we could share that great African market, we obtaining from those countries possessions in Africa advantages, in return for our giving advantages to them.

I have had given to me in connection with one of our Colonial markets a letter which I feel it incumbent to quote. It comes from a firm of West Indian merchants. They say— I feel sure that if the British Government were to ask the West Indian colonies to place a substantial duty on Japanese piece goods, they would do so. In fact I would go further and say that we were very surprised, when the tariff was changed last year at the request of the English Govern- ment, that while they asked for an increased duty on Japanese shoes, they did not press for an increased duty on Japanese piece (goods. As far as I can make out the request for the increase in the duty on shoes came from Canada who, of course, are not-very much interested in the export of piece goods to the West Indies. It is quite evident that the English Government on this occasion were oblivious of the interest of their own people and did not take the trouble to ask increased protection, as the Canadian Government did. To the extent that that is true it is a grave charge against the Government—that they are neglecting the interests of this great section of English production. Careful consideration must, and I feel sure will, be given to the question of how we can deal in the Colonial markets with Japanese competition. The fourth aspect of this problem concerns the neutral markets of the world, and there, it seems to me, we could effect a better arrangement by carrying out our existing policy of trade agreements and at the same time freeing ourselves from the embarrassment of the most-favoured-nation clause. By so doing, we could arrange reciprocal advantages with individual countries, which advantages would not of necessity have to be passed on to other countries. As I have said already, we must deal with this problem as a whole and if we look at it in that way it involves the abrogation of the Anglo-Japanese Trade Agreement. It involves giving notice of abrogation now and considering all the details of the problem during the 12 months which must elapse before the abrogation could become effective. It involves, perhaps, a new orientation of British policy and a closer link with the United States.

Conversations with Japan have been started and I believe, although I have no official information, that the Japanese will endeavour to force us to make some proposition, in connection with the problem of competition, to deal with it in piecemeal fashion. I hope the Government will resist any such invitation. It must be dealt with as a whole and procrastination can be of little good. It is not as though the economic war had not started. The economic war is on, and it is high time that we took up a position which will enable us to translate into action the phrase "Empire economic unity." It is high time that we set ourselves to orient our policy so as to enable us to protect and preserve this great national industry.

3.23 p.m.

Photo of Major Henry Procter Major Henry Procter , Accrington

I am sure every Member who comes from the great county of Lancashire is conversant with the seriousness of this problem. Not long ago Lancashire was in a position to say to the world "We do not fear any sort of competition." With the large hearted generosity which is characteristic of her people she invited students of textile production from all over the world to learn from her how to weave the cloth and how to make the machinery. Students from Japan had free access to our mills where they were taught the art of weaving and the manufacture and use of textile machinery. To-day those whom we taught are our greatest competitors. Lancashire does not complain of competition as such. But we seriously protest against a form of competition which is unfair, which is not founded upon any economic principle except that of destroying for the time the great oversea market for textile goods and supplanting our production by inferior productions.

We Lancashire Members speak for a district that is the most highly industrialised in England. The country within a radius of 40 miles round Manchester is the most densely populated area in these islands. More people live in that area than in London, and we ask, therefore, that the Government should devote their serious attention to this question. There was a time when Lancashire thought that no country could beat it because of its climate, but science has made artificial humidification possible in any climate, and you can now weave textiles in any country in the world. It was thought that the ancestral inheritance of skill that descended from mother to child, from factory worker to factory worker, made the Lancashire cotton operative so skilful that no other nation could compete with her on account of her skill. To-day science has given the automatic loom, and Japan, not having any trade union restrictions that she observes, utilises the automatic loom to destroy all that trade unionism has built up for the workers in this country.

This is a problem that touches the very lives of our working-class people. I have an under-garment here. It can be delivered into the shops in my constituency of Accrington, duty paid, freight from Japan to London paid, and the nail freight to Accrington paid, and sold at a profit of 7d. per pair. I have a pair of socks here that can be sold retail for 2d. We cannot preserve the standard of life of the Lancashire working man if the Government of this country permit the entrance of these goods. I recognise full well that on a purely Free Trade theory Japan should be permitted to sweep the Lancashire products out of existence, but we cannot deal with the problem purely from the Free Trade point of view, because if the Free Trader is true to his convictions, he must say, "We are not the best fitted for this kind of work. It does not matter if Lancashire industry, if Darwens cotton trade goes out of existence, Japan should cut us out if she will, because she is better fitted than we are. Let Free Trade principles continue, even though the industry dies."

I suggest that the Government should tackle the problem of Japanese competition along four different lines. First, notice should be immediately given for the abrogation of all the Treaties that we have made, including the most-favoured-nation clause, that permit Japanese entrance into our Colonial markets. I know that some of these Treaties are bound up with the very title deeds on which we hold great expanses of territory, but as it takes 12 months for these treaties to be abrogated, we should give notice at once. Lancashire cannot wait for 12 months before the Government do something to kill this competition, which we regard as unfair. The second line of approach is through the Economic Conference. Why do not the Government try to preserve a high standard of living for civilised people, to secure that every nation that sends its goods to another nation should have a certain minimum standard of life for the people who manufacture those goods? The third line is to get the voluntary curtailment of Japanese imports into India. This can be done by co-operation with the Indian Government. The fourth line is to put a ring fence clean round the Empire so that until Japan pays its operatives more than 2d. an hour and works them for less than 10 hours a day and seven days a week, and until Japan gives her people a standard of life comparable to our own, Japanese goods should not be allowed to enter the territories of the British Empire at all.

3.31 p.m.

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

The subject which hon. Members have raised to-day is a very important one, and one which is giving eoncern to His Majesty's Government at the present time. Hon. Members have raised the question of Japanese competition in only artificial silks and cotton goods, but the problem is a wider one even than that and covers a wider range of products than those mentioned.

Photo of Mr Thomas Levy Mr Thomas Levy , Elland

I mentioned a number.

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

Hon. Members, at any rate, have stressed particularly those products with which they were most familiar, and the cotton industry is the one which has suffered the most from this particular competition. I want to make it plain that that competition is not confined only to the two types of goods of which we have heard most during this Debate. It is very important to remember not only the wide range of products, but the wide range of markets in which this competition is felt. It is most serious in the case of textiles, cotton and artificial silk. Complaints are also made of Japanese competition in such things as pottery, rubber foot wear of certain types, of cement and other things which I could name. The difficulty has naturally risen most acutely in the markets of the East—in China, East Indies, India, East Africa and many other places, and it is not restricted to those markets, but includes also the United Kingdom market. So my hon. Friend the Member for Stockport (Mr. Hammersley) was quite right in dividing the problem, as he did, into four heads—the home market, Dominion markets, Colonial markets and foreign markets. Those who talk lightly about immediate action and drawing a ring fence round this and that must remember that the width and complexity of the problem make it impossible to deal with it in that way.

Let us examine the details of the problem. Why is Japanese competition so intense and what gives them their advantage? The advantages of Japanese exporters over their competitors are usually ascribed to the low cost of labour in Japan. When one makes all allowances for other factors, as I am going to do, I am bound to express the view that that factor enters very largely into their competitive power. Something is also due to the organisation of Japanese industry and their efficiency of production. It is right that that should be said. Hon. Members have already stressed that point about Japanese industry, and it would be a mistake to imagine that it is in any way inefficient in its conduct. It is exceedingly efficient. There is also the fact that the heavy depreciation of the yen has recently given a considerable competitive advantage to them. It has been suggested in some quarters that Japanese competition is greatly assisted by Government subsidies in Japan. That is a matter into which we have made full inquiries, of course, but I am bound to say that, so far as the evidence that we have goes, there is no information that Government subsidies are on a scale sufficient to make any great difference to the price.

Photo of Sir Wilfred Sugden Sir Wilfred Sugden , Leyton West

Would the hon. and gallant Member suggest that there is no preferential rating of any kind in regard to the industrialists and the manufacturers in Japan?

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

I suggest that the examination of the particular question of Government cash assistance shows that that is not the cause of the real competition. Certainly we have evidence that the Government do spend some money in facilitating organisations for export, but that is done in other countries too, and the extent to which it is done in Japan is not what gives them their real competitive advantage by comparison with these other factors, the low cost of labour and the depression of the yen. As I have said, their very efficient production ought to be recognised by those in this House and the people in the country. The hon. and gallant Member for Accrington (Major Procter) suggested that it was a pity that we had ever taught them their craft in our mills and factories. There I cannot agree with him, because people who are out to learn a craft will learn it in any case, whether in this country or another.

At any rate, we must face the facts as we find them, and I have given the principal causes which make Japan so highly competitive at the present time in all these markets—home, foreign, dominion and colonial. The growth of Japanese exports to markets in which United Kingdom manufacturers are vitally interested have naturally led to demands for counter measures either in the form of high duties or quantitative restriction. Particularly has it led to a demand for discriminatory action against Japan by the abrogation of the Anglo-Japanese Treaty, which would enable special duties to be applied. It has also been mentioned in the House to-day, and is well known, that the Government of India have taken action. The action they have taken has been to give notice of the determination of the Treaty with Japan, which will enable them to take special measures in regard to Japanese imports if they so desire when the Treaty runs out.

Photo of Mr John Slater Mr John Slater , Eastbourne

Has the hon. and gallant Member any news of the Japanese buying up Indian mills—we hear a lot about that —as a consequence of the tariff? It is just what they did with the Shanghai mills.

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

I must ask my hon. Friend to allow me to develop my speech. I have not got that news. If he cares to bring the matter before me I will look into it with him. I have said that the Government of India are taking action, but the problem which faces them is quite a different one from that which faces this country. They are concerned only with the preservation of the Indian market, and we are concerned with helping our manufacturers in all markets overseas, whether colonial, dominion or foreign, and at the same time helping them in the market at home. The decision of the Government of India was a simpler one than that which hon. Members are asking His Majesty's Government to take, because our problem is wider.

So far as the home market is concerned, the machinery under the Import Duties Act provides an opportunity for British industry to obtain additional Protection by tariff where it can be shown to be necessary. Although it has been said that tariffs have been quite ineffective for dealing with this situation, so far there is nothing to show that the measures taken under the Import Duties Act in the case of rubber boots and shoes, for instance, are inadequate to deal with the competition in that particular range of goods. The silk and artificial silk duties are Budgetary duties, and hon. Members will probably have noticed that there is a Clause in the Finance Bill giving power to increase the duties by Treasury Order on the recommendation of the Import Duties Advisory Committee.

Photo of Mr Thomas Levy Mr Thomas Levy , Elland

They are no longer Budgetary duties. We are waiting for the reports of the Imports Advisory Committee.

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

Yes, that had to be regularised by putting a Clause in the Finance Bill. To return to the foreign markets, there is obviously no direct action that the Government can take. Any action that is taken must be by agreement, and that has been stressed already. As regards the Dominions, hon. Members are aware that, as the result of the Ottawa Conference, the Dominions have given this country certain ranges of preference, and there, again, the fiscal autonomy of the Dominions has to be recognised. I might add that our exports to Australia, New Zealand and India have increased during the last 16 months, and we are very anxious to increase that rate of improvement if we can.

Photo of Mr Herbert Samuel Mr Herbert Samuel , Darwen

How much is the increase?

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

I have not the figures before me, but I have the impression that the increase is very substantial. As regards the Colonies, in most of the Colonies British goods already enjoy the advantage of Imperial Preference, and, in particular, the Majority of Colonies have recently amended their tariffs with a view to assisting British exports, and British cotton exports particularly. In East and West Africa it is not possible, owing to international obligations, to introduce Imperial Preference. That brings me to what action has been taken by the Government in regard to West Africa, In West Africa the Lancashire trade up to the present time has not been seriously affected by Japanese competition, but it is very evident that that competition might become more intense.

I now come to the action which the Government have taken up to the present in this matter. It is not the lack of appreciation of the serious nature of the problem that causes the Government to move cautiously. It is because it is an immensely complex problem, and it is desirable that it should not be treated other than as a wide problem. Therefore, at the end of April the President of the Board of Trade saw the Japanese Ambassador, and frankly placed before him the gravity of the position. During that talk it was made quite plain to the Japanese Ambassador that His Majesty's Government viewed the position as one of grave difficulty especially for our textile industry, and the suggestion was made that an endeavour should be made in the first place to arrange a conference between the Japanese industries and the United Kingdom industries with a view to the mutual allocation of markets throughout the world; that is to say, that His Majesty's Government were to use their good offices to bring together the industries of the two countries to discuss this matter. But before doing so, to show the importance which the Government attach to that Conference, the President himself had this talk with the Japanese Ambassador, assured him of our views in the matter and asked his Government to consider and give a reply as to the calling together of such a conference, and to outline the end in view.

A reply has now been received from the Japanese Government, and that reply is at present under consideration. I am not able to discuss it in the House to-day as it was only received a very few days ago, and it is under close consideration at the present time. After that meeting was held, the President of the Board of Trade, through the usual channels, gave notice that the West African Treaty must he abrogated. I referred to that before in my speech.

I should like to give our reasons why we took that action. The West African market is of great importance to Lancashire, and Japanese competition has made Lancashire particularly anxious that action should be taken immediately. The position of the larger West African Colonies, Nigeria and the Gold Coast, differs from that of our other Colonies, in that the operation of the Anglo-French West African Convention of 1898 precludes the imposition of any preferential rates of duty. The Japanese were entitled to most-favoured-nation treatment in those West African territories, under the Anglo-Japanese Commercial Treaty of 1911. Notice has now been given of the withdrawal of those West African. Colonies from the Treaty, and this action leaves those Colonies free, at the end of one year from 16th May, the date of notice, to impose special rates of duty upon Japanese goods. That notice was given as a sign that we feel it necessary to take preliminary action to show that we are gravely disturbed on the question, and that we intend to take such action, in the case of this market, to give better security to our exporters. That has been stressed throughout during the Debate.

The question is not one of that market merely, but is a much wider one. That is why the Government feel that, in the first instance, the move to take is to make an earnest attempt to obtain an understanding between the industries of the two countries as to the allocation of the market. Hon. Members may say that that is a very difficult thing to do. I agree that it is, but it is with the knowledge that understanding and agreement are better than compulsory methods, that the Government are attempting to get an understanding and a conference on this matter. As I have said the reply of the Japanese Government to our suggestions has been received, and is under very close consideration. If the Conference can be brought together—and we shall lose no time in our attempts to bring it together—His Majesty's Government will follow the discussions with the closest interest and attention, and will endeavour to facilitate the negotiations in any way they can.

Hon. Members have referred to the World Economic Conference which is assembling here shortly. Earlier in this Debate the Chancellor of the Exchequer made it quite clear that the question of overproduction was one which would be very prominently before the Conference. Overproduction may take place, not only in agricultural produce, but in other pro- ducts as well. It will be remembered that all the nations attending this Conference —I think there are some 61 nations—are not interested in selling in the same trades, and an attempt to get a general agreement among all these nations on a subject of this complexity, and upon which there is bound to be controversy, is a difficult undertaking. None the less, the broad question that has been put forward by the Chancellor of the Exchequer, in regard to overproduction, is one which is prominently before His Majesty's Government, and that will be remembered during the conduct of the Conference.

That does not mean that we should not try to make an immediate start to face this particular problem of Japanese competition in. all parts of the world. I think that His Majesty's Government has given evidence of the importance which they attach to this problem. They have given evidence in their contact with the Japanese Government, by showing how gravely they fear for the future of those industries which may be affected by that competition unless an understanding is arrived at. We wish that understanding to be arrived at by voluntary means. We are anxious that the industries of the two countries shall come together and face this problem in such a way as may result in an equitable solution. They made it plain, however, that they do not intend to cease to take an interest in it at the point when the discussions start, but that they intend to watch them closely and to give all support that may be proper and necessary to the reaching of a solution which may be helpful to our industries. I cannot say more than that at the moment. Hon. Members would naturally have been pleased if I could have given them the gist of the Japanese reply, and of the reply, now in preparation, which we shall be sending to Japan, but, obviously, I cannot do that while the discussions are going on. I can only say that His Majesty's Government are fully impressed with the gravity of the question, and will lose no opportunity of pursuing their policy, which they believe will lead to a solution of the difficulty.

Photo of Sir Wilfred Sugden Sir Wilfred Sugden , Leyton West

May I ask my hon. and gallant Friend a question? Will the organised manufacturers, spinners and operatives be made aware of the decision, so that they can consider it among themselves before the World Economic Conference meets?

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

Yes, Sir; I can assure my hon. Friend that the Government will keep in close touch with the organised trade in connection with the discussions on Japanese competition which are, of course, to be carried on quite distinctly from the World Economic Conference. Important meetings were held of representatives of the cotton trade at the Board of Trade earlier this year, to discuss the various aspects of the problem, and the Government will keep in close and active touch with the trade in this matter.

Photo of Mr Thomas Levy Mr Thomas Levy , Elland

My hon. and gallant Friend stressed, very properly, the question of over-production, but I want to emphasise, not so much the over-production, but the low production costs, against which no European country can compete.

Photo of Mr John Colville Mr John Colville , Midlothian and Peeblesshire Northern

I think I have made it plain that we are aware that low production costs are one of the main features which make this competition so difficult to meet.

3.53 p.m.

Photo of Sir Harold Sutcliffe Sir Harold Sutcliffe , Royton

The House will have heard with pleasure the statement of my hon. and gallant Friend that the Government are keeping this matter very much before them, and intend to do all that they possibly can at the earliest possible moment to come to voluntary agreements on the whole matter of Japanese competition. I agree with my hon. and gallant Friend that the best, and, in fact, the only way is to come to an agreement by voluntary co-operation. I should like to direct the attention of the House rather to the Japanese competition in China, about which we have not heard so much to-day. There are very large British interests in Manchuria, and there is a great hope that those interests will expand more and more as time goes on. Manchuria is one of the coming countries of the world. It has a vast and growing population, 95 per cent. of whom are Chinese, and there is a great danger of losing this market altogether unless a firm line is taken as quickly as possible.

China ranks next to India as the greatest country receiving Lancashire cotton piece goods. In 1932, we exported 72,500,000 square yards of cotton piece goods to China, and, in the three years before 1932, we increased our trade out there by something like 80 per cent., getting back a great deal of the trade that we had lost in previous years owing to the disturbed state of the country. There is a very good market there for a really first-class article, in fact, just such an article as the Lancashire cotton mills turn out. The population consists largely of agriculturists who have good markets for their produce and, therefore, can afford a really good article, and could buy exactly the sort of article that we could sell. But our trade there has suffered greviously ever Since Japan extended her influence. Many firms have closed down, and even some of the banks are now closing down because of the ending of the open-door policy of equal trading.

Do not let us make the same mistake that we made with India. We made a fatal mistake soon after the War when we granted fiscal autonomy to India and gave away our market. There is a certain danger of this happening, but I am sure the Government is alive to the situation from Replies they have given to Questions during recent months. The Foreign Office has told us that it made representations about the evasion of Customs Duties. We could not compete with people who were evading Customs Duties when British traders were paying full duty, but to a certain extent that has been remedied. Japan has now complete control over Manchuria and great care will have to be taken to ensure that the British market there is not entirely lost. Japanese competition is based on the cheapest of cheap labour and is backed by militarism and force, which makes it more difficult than ever for the British trader to hold his own. The economic problem is to keep open these markets where they exist. There are very few left and I hope this one will he saved while there is yet time. We are only asking for what we are entitled to. Japan, amongst other Powers, agreed to the open door in Manchuria, just as we ourselves did. There is not the least reason why we should modify our attitude, and I ask the Government to show a firm hand, because such a great deal depends upon the volume of trade which we can get in China to keep our cotton mills going.

Question, "That this House do now adjourn," put, and agreed to.

Adjourned accordingly, at One Minute before Four o'Clock, until Tuesday, 13th June, pursuant to the Resolution of the House this day.