As I understand the position, negotiations are going on regarding the funding of the outstanding sterling balances, but the moment they are funded certain current payments will become due and we undertake that those current payments will be freely convertible. I am prepared to give way if any hon. Member disagrees with what I say.
If I may continue and leave the right hon. and gallant Gentleman, I should like to make it quite clear that in my view the discussions into which we are entering, and those which have already taken place, in no way commit us to giving away Empire preference. I agree with the Liberal point of view that in theory world Free Trade is desirable, but we have reached the stage over a number of years where tariffs have been created and Imperial Preferences formed, and it would be quite unthinkable at the present time to do away with all of them at one moment. In my view it is a question of knocking down a series of unequal brick walls. It is not a question of flattening all those walls by blowing another trumpet, as it were, to lay flat the walls of Jericho; it is a question of cutting down the height of the walls by mutual agreement. Any bargains we make with the United States or any other country must be fair in terms of Empire trade, and full employment in this country and the other countries of the Empire. All that this country is committed to is to enter into negotiations on these matters, and I would not for one moment suspect the Government of intending to give away at one fell swoop the whole of Imperial Preference in return for some diminution of tariff walls on the part of the United States. It is a matter for bargaining and negotiation.
I would like to make a few points in connection with our export trade. While I agree with a good deal of what was said by my hon. Friend the Member for Wednesbury (Mr. S. N. Evans), I do not think it is entirely a matter of increasing the physical output of the workers of this country. There are other matters which must be borne carefully in mind, and I hope that they are being kept in mind by the Board of Trade. Mere volume of exports will not achieve the target we have set ourselves. You cannot call upon the workers of this country, by their physical exertions, to step up our export trade to 175 per cent., and in my view before very long it will have to be 200 per cent., of what it was before the war. We must pay great attention to quality in our export trade. It must surely be apparent to hon. Members that if we can send abroad goods which are of high quality and are at the top of the price ranges we can increase the monetary value of our exports, thereby helping us to increase our imports.
Again, I suggest that we must have great regard to the manpower content of our exports. To use a technical term, we must have regard to their conversion values. It is true that at the present time coal as an export would be very acceptable to many countries in Europe, but in the long run I put it to the House in this way: If we had to choose between exporting a ton of coal at a value of £5 or £10 or so, and a ton of wireless sets whose value would run into several thousands of pounds, obviously we should choose the wireless sets. In that connection, to those hon. Members who criticise the policy of the Board of Trade in concentrating upon the export of motorcars, for instance, I would point out that the conversion value of motorcars and motorcycles is as high as 60 per cent. Mechanical engineering equipment runs at 57.5 per cent., and electrical engineering equipment 53.2 per cent., whereas textiles run at only 35 per cent., and tinplate also at 35.7 per cent. In other words, if we are to succeed in achieving our export targets we must concentrate upon those products which have the highest manpower content, because they are what will provide full employment in this country with the minimum amount of effort.
Similarly, we must have regard to the coefficient of imports. This small island, if it is to increase its exports, must necessarily increase the amount of its imports, because we have to import the raw materials from which we manufacture the finished products to export. Here again there are differences between the different industries. Pottery, I am told, has the lowest coefficient of imports, running at 5 per cent., and all engineering products are relatively low at between 9 and 11 per cent. Such things as textiles, however, need a relatively high proportion of imports in order to step up our exports.
There are one or two other points which I am sure the Board of Trade are bearing in mind in considering our export drive. It is not a simple question of increasing our physical production; there is plenty of room for planning and scientific management if we are to achieve our target. What is likely to be the position in a few years' time? I estimate that by 1951 or thereabouts our imports, provided there is a satisfactory situation, will be running at somewhere between £1,700 million and £2,000 million per annum. That means that our exports, less any services, or interest we get from abroad, which I would not put at more than £100 million, will have to cover those imports plus £104 million a year which represents payments on the loans we have already received. Calculations have been made regarding the American and Canadian loans and the outstanding sterling balances, and if we succeed in funding those balances satisfactorily it will still mean that, starting in 1951, we shall have to pay away some £104 million a year for which we shall get nothing back in return. Provided that things go all right, I would not regard that as unsatisfactory because it would mean that our earlier loans would be costing us some 5 or 6 per cent. of our exports, which is not a heavy burden.
We have, however, the gap of the next two or three years to cover, and that is why I was pleased to note that an hon. Member raised the question of the convertibility of the sterling balances outstanding in this country. I would like to ask whether the Government have considered the possibility of applying to the United States for permission to defer the time when we undertake that free convertibility which, as hon. Members know, is at present fixed for July of this year. There are provisions for doing so under Article 7 of the Loan Agreement, while Article 14 of the Bretton Woods Agreement also makes it possible for us to break the arrangement whereby we undertook to make them freely convertible starting in July of this year. If we were able to defer that, say to 1951, when we start repayment of the American loan, that would give us another breathing space of some three or four years in which to get to work on our export drive without being saddled with the added responsibility for paying away valuable dollars on account of the sterling balances which accumulated during the war.
Finally, whatever the situation may prove to be in the next few years, whatever may be the financial and trading difficulties, I am quite sure that despite what the hon. Member for Oxford (Mr. Hogg) had to say in the recent economic Debate, and despite what the right hon. Member for Woodford had to say, to the effect that we were not entitled to appeal for the Dunkirk spirit, I know sufficient of the ordinary working-class people of this country to know that they will face the future with calmness and fortitude, and I know that they will accept the challenge to their economic security in the same spirit as they accepted the earlier challenge to their spiritual and political freedom.