European Trade Policy

Part of the debate – in the House of Commons at 12:00 am on 26th November 1956.

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Photo of Mr Harold Wilson Mr Harold Wilson , Huyton 12:00 am, 26th November 1956

I entirely agree. The Messina proposals, in so far as they relate to the scheme for the six Powers, do involve something in the nature of a common market and free trade area; but the Chancellor said, at the very beginning of his speech—and I think we agree with him—that we are not contemplating adherence to the Messina scheme or to the Messina six-Power "club".

For the reason I have given, the positive advantages are much more limited and much more speculative than might have been thought by those who have been misled by such terms as "common market" and "free trade area." There may, however, be considerable positive advantages, and, as I shall go on to say, this country must enter into the negotiations fully and frankly with a desire to find a solution to the problems we are facing. We must certainly go into them, as the Chancellor quite rightly said, not in any mood of obstruction or delay, but positively, in the hope of working out a helpful European arrangement.

Apart from such political advantages as there may be stemming from the greater unity of Western Europe, I hope we shall not go into this with excessive hopes of what it will achieve economically. For instance, there is a view held by some, and the Chancellor at one point tended to lend support to it, that certain industries, finding a large market open to them, will substantially expand, perhaps double or treble, their industrial capacity because they will now have the whole of this Western European market open to them. I am not sure that any British industry is likely to do that, merely with a promise of a removal of tariffs over a period of twelve or fifteen years in the Western European market.

The reason why I say that is to be found in a fact mentioned by the Chancellor in his speech. He said that in order to protect this nation and the sterling area from a balance of payments crisis, we must reserve the right to impose quantitative restrictions—quotas. I agree that that is an absolutely essential defence for the sterling area. Nevertheless, if there is that threat of the quota axe falling at any moment in any of the countries in Western Europe—for this is not a concession we could keep to ourselves—then I doubt whether many British industries will feel sufficiently confident to lay down capacity themselves purely on the expected increase in demand in Western Europe.

I notice that the Chancellor today did not produce an argument, which, I think, attracted him a few weeks ago, that the Western European market would provide a source of capital for the underdeveloped areas of the world. He did not make very much of that today. I am glad he did not, because I think it is illusory. I do not believe that this scheme is likely to build up a capital surplus for investment; indeed, there is no hope for the attack on world poverty and the problems of the under-developed areas unless—I know this may possibly upset hon. Gentlemen opposite—that job is tackled seriously by the Specialised Agencies of the United Nations. It is not a job for the Western European market.

The Chancellor did put more than once in his speech the main and immediate question facing this country, can we afford to stay out? I am sure the answer is that we cannot afford to stay out. Western Europe, referring here to the O.E.E.C. countries who may be expected to join and not purely to the Messina Powers, represents a market for something like 25 per cent. of our total exports and rather less than 25 per cent. of our total imports. In 1955, £700 million of our total exports went to these O.E.E.C. countries. I am assuming for this purpose that we might expect Scandinavia, Austria and Switzerland to join the scheme. Against the £700 million exported, we imported about £870 million.

Many people will say immediately, of course, that we already have an adverse trade balance with the area. But I would remind hon. Gentlemen that if we exclude agriculture, there is then a substantial trade surplus. Taking manufactured goods alone, there is a surplus on 1955 figures of about £200 million in trade between this country and the countries who might be expected to join a wider free trade area.

The real issue which is in the minds of all hon. Members is, can we leave this market free to German industry to overrun? Already competition from Germany is formidable and growing. We must ask ourselves what would be the position if we had to pay tariffs in this area and German industry entered the market duty free. For this reason, if for no other, it would, I submit, be the duty of this House to advise the Government that they cannot reject the opportunity to go on with the examination of this scheme.

Now I should like to come to the positive attitude that I feel the Government ought to adopt. First of all—and I put it first, as I am sure all hon. Gentlemen would wish to do—we must consider the position of the Commonwealth in all this. If Western Europe accounts for 25 per cent. of our trade, the Commonwealth accounts for 50 per cent. of it. Certainly the Commonwealth is much more complementary to us than many of the countries of this free trade area, which are largely competitors.

The Chancellor, in some well-chosen passages, referred to his attitude to the Commonwealth. We had the usual graceful genuflection in the direction of the ideal of Commonwealth trade. But, as we all known from the experience of the last five years, the party opposite is the Commonwealth party no more. [HON. MEMBERS: "No."] Certainly. This Government have done very great harm to Commonwealth trade. They have been so anxious to free the commodity markets that they have broken up most of the trading links with the Commonwealth. We recently had the discussions with Australia conducted by the President of the Board of Trade, and we saw how the Australian Ministers feel about all this. What they are interested in is not all these ingenious schemes, not even, I think, preferences, but firm orders for their products, and that is what they have not been getting under this Government.

The Chancellor referred to the Colonial Territories. One has only to look at the effect of the Government's doctrinaire abolition of the Raw Cotton Commission and the establishment of the "phoney" Liverpool Cotton Futures Market to see what has been the result as regards long-term contracts enjoyed by the Colonial Territories with Lancashire for the sale of Commonwealth cotton.

Speaking on behalf of the party which does not talk so much about Commonwealth trade, but does a great deal for it—[HON. MEMBERS: "Oh."]. We did, in fact, propose something which this Government have never proposed, namely, a Customs union within the Commonwealth. That proposal was put forward by the late Ernest Bevin and the late Sir Stafford Cripps. It was unfortunately turned down by other Commonwealth countries.