Sterling Area (Closer Co-Operation)

Part of the debate – in the House of Commons at 12:00 am on 22 February 1952.

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Photo of Mr Ronald Russell Mr Ronald Russell , Wembley South 12:00, 22 February 1952

I will not cavil at that, but I am glad to see a greater sense of unity now in the House on this matter than has been the case in the past.

As to the sentence: …in particular, to resist any attempt to make permanent any commitments which are designed to weaken Imperial preference or other Commonwealth ties… we should have liked it a little stronger. I did not put down an Amendment to that, because I know that Her Majesty's Government are now considering the whole question of our future commitments under the General Agreement on Tariffs and Trade.

As my right hon. Friend the President of the Board of Trade indicated in an answer to a Question I put on 31st January, this is a difficult problem. I know that it requires a good deal of consideration and consultation with various Commonwealth Governments as well, but I hope we shall not have to wait long until we have some information on this point. We want to rid ourselves of the shackles imposed by the General Agreement on Tariffs and Trade, and regain the freedom, which we enjoyed in the inter-war years, to regulate our Imperial trade in whatever way we think fit between ourselves and the other members of the Commonwealth.

It was, of course, the late Government which committed this country to this General Agreement on Tariffs and Trade, when Sir Stafford Cripps was President of the Board of Trade. I am glad we are to have the support of his successor, the right hon. Member for Huyton (Mr. H. Wilson). The right hon. and learned Member for St. Helens (Sir H. Shaw-cross) attended a recent Geneva conference, and I am glad to see that now we have not only got the report of that conference, but also his support in taking the view that we must not make any of these commitments permanent. It is worth drawing the attention of the House to the speech made by the right hon. and learned Gentleman at Geneva last September, which I do not think has ever been quoted in this House, because there was a General Election and a change of Government before we had any further sittings at which it could have been used.

The right hon. and learned Gentleman, at that meeting of the contracting parties to the General Agreement on Tariffs and Trade at Geneva, and said: So far, the United Kingdom Government, like other Governments, has not felt able to commit itself finally to the General Agreement, and we shall need to consider how far its present provisions, with the undoubted restrictions which they impose on us in such matters, for example, as preference between Commonwealth countries, and with their unsatisfactory bearing on the relations between the contracting parties and the International Monetary Fund, are counterbalanced by tangible advantages in the promotion of world trade. We certainly do not disagree with a statement like that. I understand it caused a certain amount of consternation among the other delegates to the conference of contracting parties. I hope that my right hon. Friend the Minister of State for Economic Affairs and his friends will take courage from the support which has been given by the right hon. and learned Gentleman, at any rate to the extent of not making permanent any of these commitments.

There is also support for a policy, I do not say of Imperial Preference but of tariff arrangements from the Council of Europe, because at the meeting of the Assembly of the Council of Europe last December the Assembly passed two rather important resolutions. They both deal with the same point. One of them directed the Organisation for European Economic Co-operation to study methods to achieve closer co-ordination between the economies of the member States of the Council and their overseas territories. I am paraphrasing the resolution, but that is, in substance, what it means. It was passed by the Assembly on 8th December last.

Three days later the Assembly passed another very similar resolution, instructing the Secretary-General of the Council of Europe to prepare a study of these methods. In other words, O.E.E.C. has been asked to study this problem and so has the Council of Europe. I know from my own knowledge that there are officials of the Council of Europe engaged on that study now. So the whole of the Council of Europe is obviously coming to the conclusion that this preferential system is worth studying. At any rate, they are asking for a study of closer methods to establish better coordination between member States and their overseas territories. I hope that Her Majesty's Government will take note of that, and that it will re-inforce our plea for ending our commitments under the General Agreement on Tariffs and Trade.

I want to give one example of the damage already caused by our committing ourselves to the General Agreement on Tariffs and Trade. That was revealed by a trade agreement which this country entered into with Pakistan last year. When the partition of India took place four years ago it meant the partitioning of all trade arrangements as well, and it was found by the Pakistan Government, after they had gone into the matter, that there was a great unbalance between the preferences granted by Pakistan and the preferences granted by this country to Pakistan. Pakistan was giving tariff preferences to this country on goods to the value of about £16 million a year. We, on the other hand, were only granting preferences to Pakistan goods to the value of about £4 million a year.

Naturally, Pakistan felt that this was a little unfair and they tried to arrive at a better balance. If it had not been for the General Agreement we could have extended our preferences on some of the Pakistan goods and achieved a balance that way, but we could not do so because we had pledged ourselves under the General Agreement. We were forbidden to increase our preferences or introduce any new ones.

The only way that the balance could be rectified was for the Pakistan Government to wipe out or reduce some of their preferences on our goods, and that is what happened. Agreement on those lines was reached between the late Government and the Pakistan Government. The Pakistan Government were satisfied with the results, under which they gave preferences on our goods to the value of about £9 million a year and we gave preference on Pakistan goods to about £4 million a year. The unbalance was reduced from about 4 to 1 to about 2 to 1.