Orders of the Day — Japanese Trade Agreement

Part of the debate – in the House of Commons at 12:00 am on 10th February 1954.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 10th February 1954

Then it seems strange that they should issue a statement to say that they have not been told. Perhaps the President will sort that out with them.

The plain fact is that this Government do not believe in consultation with industries. We know that where certain vested interests are concerned they consult them very favourably; they dance to every tune they play. But among that list of interests which they consult we do not find Lancashire or the Potteries. We ask, "Why not? "Did they not contribute enough to Tory Party funds at the last Election? We have seen in debate after debate that the cotton industry is the Cinderella of this Government's economic policy. The trouble is—I am sorry to say—that the Government think they know it all as regards the cotton industry. We have to tell them that they do not.

The President himself scarcely ever visits the great industrial centres. I should think that few, if any, Presidents of the Board of Trade have spent so little time in Lancashire as the right hon. Gentleman has done since his appointment. His hon. and learned Friend, the Parliamentary Secretary, usually does not come to our cotton debates, and although he no doubt has great qualities he is utterly useless in an industrial Department. We welcomed the appointment of the Minister of State, Board of Trade, and we welcomed his visit to South America until he interrupted it to come back and cause disruption on the further proceedings of the Cotton Bill.

The President has more than, once shown his contempt for consultations with the cotton industry. I cannot quote the proceedings of the Standing Committee on the Cotton Bill as that Committee has not reported to the House, but we know from an answer which he has given to the House that there was no Ministerial consultation with the industry about the Cotton Bill. We know that he is unwilling to consult the industry about future events in connection with raw cotton. It is fair to say—if the President disagrees he willno doubt say so—that no Government have had less Ministerial consultation with these industries than this one has had.

I have no doubt that as we have raised the question of consultations there will have been intensive Government researches going on into the record of the Labour Government and my own record in particular because whenever the Government get into a mess or do anything they should not do their only reply, apparently, is to do a lot of intensive research into telegrams and cock a Parliamentary snook across the Table and say "You're another. "I should not be surprised to find that there has been more Board of Trade time spent in the last week trying to find evidence of my failure to consult industries than Board of Trade Ministers have spent in consultation with those industries in the whole of last year. I shall not be at all surprised if the President gets up and tells us that on the occasion of the Anglo-Ruritanian Agreement of 1948 we failed to consult the humbug manufacturers. Obviously, there will be such cases; I do not for a moment deny them. What I do say is that where major industries were prejudiced by Governmental action, particularly by bilateral trade agreements, where there was any question of a major reversal of trading policies there was consultation with those industries. In some cases markets had been closed by foreign Governments and we tried time and time again to get them reopened.

I would not say that in every such case we had consultations but where there was to be a new decision involving a major change I think we can claim that there were consultations, with the exception, fairly mentioned by the hon. Gentleman a week ago, about the liberalisation of trade in Western Europe. When going into a major policy of liberalisation affecting literally thousands of industries and products it would have been physically impossible to consult them all. What we did do was to say that if any industries were prejudiced they could make their case to the Government for an increase in tariffs. That was the main point involved in the case of horticulture. We started the machinery that made that possible, machinery which the President has continued to use during the past few weeks.

I know that the Government spokesman will throw up the question of the so-called "Black Pact" with Cuba, about which the "Daily Express" got into a state of apoplexy again last week. The trouble about the "Daily Express, "when commenting on the Cotton Agreement is that it supports Commonwealth trade but combines that with an entirely incompatible support for the Conservative Party and opposition to long-term contracts. I wish to save the time of the House, but I know this will be thrown up if I do not deal with it. The "Daily Express" went so far as to say that we did not consult the sugar growers. But they were not prejudiced; sugar imports have continued to increase since then, and my right hon. Friend the Member for Rochester and Chatham (Mr. Bottomley) flew 8,000 miles to consult the sugar growers of Cuba before a decision was taken. The Board of Trade Ministers cannot even board a train to go to Manchester to see the cotton industry, a train which, if they chose the right one, stops at Stoke-on-Trent. Where there was any major change in policy it was our policy to consult, especially where Japan was concerned. We were under frequent pressure from a number of countries to give most-favoured-nation treatment to Japan. We were in constant consultation with the industries, and, I say this in fairness, like the President and the present Government we refused to give that most-favoured-nation treatment.

We had constant consultation with Lancashire whenever the problem of Japan came up—[An Hon. Member: "What about the Peace Treaty?"] There was consultation on the Peace Treaty. The hon. Member knows perfectly well that certain guarantees were written into the Peace Treaty. Our problem tonight is to try to find out how far they have been honoured. We realised that memories of Japanese competition and its effects have burned deep into the hearts of every Lancashire worker. The same is true of the workers in the Potteries.

The second point in our Motion refers to unfair practices. We say that this Agreement should not have been concluded until there were effective guarantees against the revival by Japanese exporters of unfair practices. I do not wish to wory the House with details of the kind of practices in which Japan used to indulge before the war, but it is important that the House should realise that these practices have not stopped at the end of the war but have been revived again. I would refer hon. Members to the Overseas Economic Survey, published by the Board of Trade,—the report by the Commercial Minister in Tokyo—in which he says: a number of cases of imitations of United Kingdom textile and pottery designs by Japanese manufacturers have been reported in the post-war period. He went on to say: There will, no doubt, continue to be many cases of infringement of foreign industrial designs in the textile and pottery fields. Much of the industry is in the hands of small 'family' units who are not members of the relevant trade associations and as often as not transgress through ignorance rather than from intent. We can produce a great deal of evidence to show that particularly in the last few months the pirating of industrial designs has increased to an alarming degree. For instance, I can quote from a letter sent to an hon. Member of this House by one of the leading figures in Lancashire dealing with overseas trade. He states: I must tell you that we are far from satisfied with the position about design infringements by Japan. In some markets it has become as bad as pre-war, and unless we can get their Government to force their calico printers into a gentleman's agreement to refrain from deliberate copying, we shall, for technical reasons, never stop it by mere design registration, as the Board of Trade suggest. This seemingly minor matter can affect us enormously; our best designs and fastest colours on good quality cloths are killed by the entry a couple of months later from Japan of the identical designs but printed in loose fugitive colours on low filled finish cloths selling at half the price. The dealers who import our British fibres even suffer by losses in 'selling off,' and thus is created the loss of confidence which cuts out our trade so much. That is from one of the leading figures in the Lancashire textile industry.

What protection has there been? I gather that there was a proposal some time ago, following the President's reference to registration of designs, for a conference with the Japanese and a conference was held in Manchester. The Japanese proposed to the Manchester Chamber of Commerce that the way to deal with it would be for every new design registered in Lancashire to be made known to the Japanese who would then take 300 copies of these designs and send them to their manufacturers and ask them not to copy them. What the Japanese did not realise was that they were dealing with hard-bitten Manchester merchants—they must have thought they were dealing with the Economic Secretary—and, of course, the proposal was turned down.

We have not, so far as this market is concerned, even the protection of the utility standards which we had two years ago. Where are those quality standards which the President told us were to be worked out? He told us that two years ago. He said they would be worked out within a few weeks. For the greater part they have just not been worked out, but they would have provided some protection against poor quality imports. I do not wish to develop the question of Purchase Tax tonight because that has already been debated this week, but I wish to point out that the cheaper Japanese production coming in escapes the D level and gets a double advantage compared with the British home-produced material.

I wish to say a word about unfair practices more generally. We admit, and I have said, that Lancashire must face fair natural trade in the Colonies. I do not intend to say anything tonight about low wage standards in Japan, because we know there has been some improvement in trade union organisation there since the war. But only yesterday the "Manchester Guardian" had a headline—"Japanese Government hits at trade union." The paper went on to say: The Japanese Government has struck another blow at trade union freedom which the legislation of American occupation has tried to ensure. It would be unkind to remind the Government of the leading article in tonight's "Evening Standard. "I am sorry if hon. Gentlemen opposite have not seen it—about wage standards in Japan in relation to this very Agreement. I wish to ask the House, having said that Lancashire must be prepared to face fair and natural trade, whether the trade we are likely to get in the Colonies will be either fair or natural.

I do not need to make much of the point that Japanese exports to the Colonies will be abnormally and unnaturally virulent in this period because they are being denied access to their normal market in China. We know that the United States have always put a lot of pressure on other Governments to accord favourable treatment to Japanese imports, but will hardly allow any Japanese goods into the American market ac all.

The result of the closed markets in other areas will be that competition will be more violent in the colonial markets. It will not only be abnormally strong. When water is dammed up in one area it will rush with all the more force through any narrow channel into which it has been forced, and similarly this, competition will not only be stronger but will be actively unfair, in that the Japanese exporters are at present dumping their products in other markets, including the Colonies, and, as was said in the "Economist," masked by a dual price system. They have a separate exchange rate for exports from their normal official exchange rate. I do not know whether this surprises the President, but those are the facts.

I do not know what guarantees the Government have against this sort of dumping, because at the present time, for reasons I will give in a moment, the costs between the two countries are not all that out of line. On the official exchange rates Japanese costs are not all that below Lancashire costs. Some people say they are actually higher. But so long as they can use special exchange rates they can always get under the Lancashire price with export subsidies and we must expect them to do so ruthlessly. We know how close is the tie-up between the Japanese manufacturing and export interests on the one hand and the Japanese Government on the other.

One has to deal with the motive of the Government in entering into this Agreement. We have had the statement of the Economic Secretary, and last week-end, when he was opening the North-Western Conservative Party area headquarters, in Manchester, Lord Woolton had something to say about this Agreement. One result of the Agreement is that the headquarters will not find any customers. But his statement, and that of the Minister of State, Board of Trade, who also spoke about the Japanese Agreement when in the Midlands, were described in the "Manchester Guardian" as "soothing syrup." That paper said: The trouble is that both of them made the dose too strong. Indeed, it tasted suspiciously like whitewash. It went on: Listening to Lord Woolton one might suppose this Agreement to be a wonderful thing, hardly less important in history than the Ottawa Agreement of blessed memory. In that connection, we notice that the hon. Gentleman the Member for Preston, North (Mr. J. Amery) has actually signed the wishy-washy Amendment which has been put down by Conservative Members representing Lancashire constituencies.

So far, we will agree that the motive is to maintain Japanese purchasing power for sterling area commodities. But what is the reason for the deficit? The first reason is the monstrous inflation in the Japanese economy resulting from, to some extent at any rate, American military expenditure in Japan to the tune of 500 million dollars in the last three years. This inflation has allowed a spending spree on consumer goods. The "Economist" noted that this emergency sustenance has enabled and encouraged the Japanese, in 1953, to import luxury goods and now Lancashire is in a mess as a result.

Then, again, there has been the relations between Japan and Australia. We all know that the present Australian Government removed controls and that imports from Japan have risen several times above the previous level. Then Australia faced a balance-of-payments crisis and cut down her imports from Japan. One result was that Japan ran into a serious deficit with Australia. I believe that in the first nine months Australia sold £52 million worth of imports to Japan and Japan sold only £2 million worth to Australia.

There have been very large wool purchases by Japan. I do not know whether the Government have satisfied themselves about those purchases, which, in pounds weight, were 76·6 million in 1951, rising to 91· 9 million in 1951–52 and to 154·3 million in 1952–53. I think that those figures were actually published earlier this week in a rather dull Sunday newspaper which is sometimes enlivened by contributions from the hon. Member for East Aberdeenshire (Sir R. Boothby). We cannot understand why these large wool purchases are continuing. Are they speculative? Is it true, as some people say, that what Lancashire cotton is facing today Yorkshire will be facing tomorrow, in virulent Japanese competition in wool?

One of the serious things about this matter is that the Economic Secretary, finding this deficit, sets out to conclude a sterling area payments agreement, but not a sterling area trading agreement, as has been done by Australia, South Africa, India, Pakistan and other self-governing territories. One of the serious aspects of this, as has been pointed out by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell), is that the Sydney Conference seems to have made no real attempt to get a Commonwealth trading policy which would have been capable of looking after this problem, and because of its inability to plan a trading policy the whole brunt of this deficit falls on Lancashire and the Colonies. We must make certain assumptions in regard to Dominion trading. Obviously, we cannot control the acts of Dominion Governments or importers. Those are pious aspirations. Control, in the Colonies, of their trade is exact and can be very harsh, It is fixed and done by licensing.

What, in fact, are the Government doing, with this Agreement? The Economic Secretary has tried to solve the problem, with which we agree he is faced, by creating or reviving an artificial system of Free Trade in an un free world, in which a large part of the trade is held up either by strategic restrictions on the Chinese market, by American Protection or by the unpredictable acts of the self-governing territories in the Commonwealth. Nevertheless, he still tries to inject a self-balancing Free Trade system within this very narrow area of trade between Japan and the sterling area, and so we get his new Conservative Party doctrine of Free Trade, Manchester school and all the rest of it, along with trade based on export subsidies and dumping, which is not assumed to be part of the classical Manchester Free Trade tradition.

The Japanese put this plan up to the Economic Secretary, and he fell for these proposals. If George Tomlinson had been with us tonight he would have said, "They saw him coming." Certainly, the Japanese have been overjoyed by this Agreement. They have been surprised by it, because it is a far more generous Agreement than they expected. The "Manchester Guardian "has made that clear. Let me give one more illustration about our trade in raw cotton.

During the war, and for some years after the war, this country bought practically the whole of the Uganda cotton crop on a bulk-buying arrangement. Japan got very little of it. In 1951, for instance, we bought nearly £10 million in the sterling area and Japan bought £360,000 In 1952, when the President of the Board of Trade started his policy of private buying, we got £8 million worth and the Japanese got £3 million worth of Uganda cotton. This year, of course, with the situation thrown wide open by private buying, we shall probably buy very little cotton from Uganda in this country. Uganda is having to look to Japan to sell her raw cotton, so we get his fantastic situation: Japanese textiles, under this Agreement, are being imported into Lancashire so that the Japanese should have the money to buy Uganda raw cotton which is no longer coming to this country because the Government have wound up the Raw Cotton Commission.

That is the situation which will go on and will save Japan dollars, of which Japan had an abundance, while we are spending more dollars on American cotton instead of getting our cotton from Uganda. That is the kind of mess that Government policy has got into. Trade within the Commonwealth is being reduced to bear the brunt of this Agreement. There is talk about increased shipments to Japan, and oil has been mentioned. How far, we would like to know, is this Agreement a sell-out to world oil interests at the expense of Lancashire, the Potteries and the rest?

The "Manchester Guardian" said the other day: The main criticism against the Government is not that they are trying to keep up the level of trade between Japan and the sterling area but that the Government have displayed an astonishing ineptitude in making the Agreement. I do not think that the hon. Gentleman would disagree with that for a moment.

Let me give him another illustration. Japan is freely supplied with dollars. Before the Japanese Peace Treaty and before the Payments Agreement of August, 1951, balances were settled in dollars. Surely what ought to be happening now is that the hon. Gentleman ought to have asked the Japanese to give up some of their dollars to pay for the deficit. The Payments Agreement of 1951, about which I know the hon. Gentleman is to make a long speech, never envisaged vast deficits like £110 million to be supplied by the kind of method that the hon. Gentleman has in mind. As the "Economist" said: It is high time that they (Japan) called in the currency of the New World to restore their deficit with the Old. Trade will depend on an exact balance of accounts between Japan and the sterling area. I made a reference to the Manchester school a few minutes ago, but I hope that the Liberals here tonight—and I see the right hon. and learned Gentleman, who was very pleased with the Government and their policies—