Free Trade Association (Stockholm Discussions)

– in the House of Commons at 12:00 am on 23rd July 1959.

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The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory):

I will, with your permission Mr. Speaker, now make a statement about the Stockholm discussions.

The Paymaster-General and I attended a meeting at Stockholm on 20th and 21st July to which, together with Austrian, Danish, Norwegian, Portuguese and Swiss Ministers, we had been invited by the Swedish Government. As the House knows, this meeting was called to consider whether these seven countries should set up a Free Trade Association among themselves. The object of such an association would be to create a single market of nearly 90 million people by abolishing tariffs and other barriers to trade. Our partners in this group enjoy a high standard of living. Their imports amount to over £3,000 million a year. Freedom of trade within this group must help us all to increase our production, raise our standard of living and maintain full employment.

We decided unanimously at the Stockholm meeting to recommend to our Governments that such an Association should be created. A Convention is to be drafted, and we hope that this will be ready for submission to Governments by the end of October. We aim to establish the new Association in time for the first tariff reduction to take place on 1st July, 1960.

The draft plan for a European Free Trade Association which we had before us was made public in Stockholm last night and, for the convenience of hon. Members, I am arranging for this, together with the agreed statement with which we concluded our meeting, to be published as a White Paper as soon as printing can be completed. I hope that this can be done by next Monday afternoon.

It was agreed that there should be a special agreement on agriculture, setting out the agreed objectives on agriculture and food policy, providing for consultation where appropriate, and designed to facilitate expansion of trade between members, having regard to the need to achieve a sufficient degree of reciprocity between them. This objective is satisfied in the case of the United Kingdom by the terms of the bilateral agreement which we have made with Denmark.

There will be further discussions on fish and fish products. The draft plan sets out in detail the proposals made by the Norwegian Government and the position taken by other delegations to them. The United Kingdom made clear that it could not contemplate removing the tariff on fresh or frozen fish. But we said that if there were an agreement on fish generally satisfactory to us we would be prepared to treat preserved and processed fish—broadly, canned fish and fish meal—as industrial products.

The purposes of Her Majesty's Government in taking part in this decision to set up a European Free Trade Association were broadly two. In the first place, these arrangements will be advantageous in their own right to the United Kingdom and to all the other members. The Ministers meeting at Stockholm were unanimous in their conviction on this. Secondly, we, and all the other Governments, believe that this is the best way to advance towards a single European market, free of tariffs and other restrictions.

We have repeatedly indicated the importance we all attach to a Europe-wide agreement for freer trade. The detailed arrangements—as will be seen when the White Paper is published—have been shaped to facilitate subsequent negotiations with our partners in O.E.E.C., both the members of the European Economic Community and those who are members neither of the Community nor of the new Association. We have made arrangements for the question of relations with other members of O.E.E.C. to be kept under continuous review; we have each of us indicated our desire to accredit representatives to the Community.

On many occasions, this House has indicated the widespread support there is for trading and economic arrangements which will embrace the Six and all other members of O.E.E.C., I can assure the House that all the Governments with whom we have been negotiating at Stockholm hold this view no less strongly.

I am confident that this agreement at Stockholm this week will prove to be a historic step forward in European economic co-operation, both in its immediate purposes and in the prospects it opens for the future.

Mr. H. Wilson:

Is the Chancellor aware that we on this side very much welcome the agreement, not least because the suggestion for this Outer Seven agreement first came from these benches? [HON. MEMBERS: "Oh."] It is on the record; 20th November, 1958, column 1318, if hon. Members wish to look it up. Is the right hon. Gentleman further aware that we welcome the fact that, as far as we can understand from his statement, this is to be a commonsense trading agreement on O.E.E.C. lines without being subjected to too many supranational authorities and bodies of that kind, and that we very much welcome the method of association?

Are we to understand from the references made by the Chancellor to the other parts of Europe that the Government will continue with all possible vigour to do what can be done by arrangement, both bilaterally and with the Community, to ensure that there is the minimum possible discriminatory damage to British export trade in the area of the Economic Community?

Mr. Amory:

I appreciate the welcome given by the right hon. Gentleman. I assure him that our wish and the wish of all our partners in this area is that the institutional machinery should be kept as simple as possible. There was absolute agreement about that. Secondly, I assure the right hon. Gentleman that on the part of the United Kingdom no opportunity will be lost of ensuring that any discrimination which arises from the Treaty of Rome as at present drafted shall be kept to the absolute minimum.

Photo of Mr Frederick Bellenger Mr Frederick Bellenger , Bassetlaw

The right hon. Gentleman will realise that, rather late in the day, what the Government have done is to succeed in dividing Europe into two parts, the Seven and the Six. It is not entirely their own fault, I agree. As however, the Chancellor told me recently, when I put a Question to him, that the Government would take the initiative in trying to arrange a wider area than the limited one which he has just announced, may I ask the right hon. Gentleman what definite steps Her Majesty's Government propose to take to call the Six and the Seven together, rather than leaving it to bilateral trading agreements?

Mr. Amory:

The view put by the right hon. Gentleman that this action creates a division in Europe is not one with which I could agree. As far as that has happened, it has happened through actions other than this. As I said, our hope and intention is to ensure that, on the contrary, this should be a bridge and not a source of division within the O.E.E.C.

In reply to the second part of the right hon. Gentleman's question, the way that we and our partners envisage the future would be that, first, we must get our arrangements completed. As soon as that has been done, no opportunity will be missed by members of the organisation to try to see that negotiations are resumed. As a matter of practical politics, the timing should be, first, to get our arrangements clear so that we can see how they may be dovetailed in with the arrangements of the European Economic Community and then to lose no opportunity of pursuing such negotiations. It would, however, be impossible at this stage to foresee exactly the kind of negotiations for which there will be an opportunity.

Photo of Mr Hendrie Oakshott Mr Hendrie Oakshott , Bebington

While welcoming warmly my right hon. Friend's assurances regarding his intention to widen the agreement to cover the whole of the membership of O.E.E.C., may I ask him this question? As Finland is not a member of O.E.E.C., does my right hon. Friend see any risk in the widening of the Association to cover the whole of O.E.E.C. if Finland joined the new Outer Seven?

Mr. Amory:

It would be quite premature to form a view on the point raised by my hon. Friend. The Finnish Government have explained to us in Stockholm that at this stage they could not foresee whether it would be possible for them to have some form of association with our Association and, if so, how close it would be It was for that reason that it was agreed at their request that Finnish representatives should be afforded facilities to keep in touch with the measures that we and our partners would be taking to draw up our convention and then they will tell us in due course what opportunities they see and what form of association they would like to have. Then it would be for our partners and for ourselves to decide whether such form of association would be possible and desirable. We, and, indeed, all our partners, welcome the interest that the Finnish Government have shown in our plans.

Mr. T. Williams:

May I ask the right hon. Gentleman to see that when agricultural questions are discussed the Minister of Agriculture, Fisheries and Food, or his representative, will always be available for those discussions if special arrangements are to be made? Can he guarantee to the House that an ex-Minister of Agriculture who is now the Chancellor of the Exchequer, the Paymaster-General, and the President of the Board of Trade will not be too unkind towards the Minister of Agriculture?

Mr. Amory:

Yes, I most gladly give that assurance. I think that I can also assure the right hon. Gentleman that, from my experience, my right hon. Friend the Minister of Agriculture will not allow me to move many steps forward without his close attendance on me.

Photo of Mr James Hutchison Mr James Hutchison , Glasgow Scotstoun

The right hon. Gentleman for Huyton (Mr. H. Wilson) has already expressed the welcome with which this announcement will be received by members of the party opposite. Is he aware that the successful outcome of what must have been extremely difficult and delicate negotiations will be welcomed in a much wider area than merely the benches opposite, perhaps in a wider area than even this country?

Mr. Amory:

I should like to say that, as usual, we feel extremely grateful for the very great ability with which our officials have participated in the negotiations over recent years, and, if I may personally say so, the great skill with which my right hon. Friend the Paymaster-General has presided over their discussions.

Photo of Mr George Chetwynd Mr George Chetwynd , Stockton-on-Tees

To ensure closest cooperation between the Seven, on the one hand, and the Common Market countries, on the other, before the formal setting up of the treaty and the subsequent negotiations, is it intended to invite a representative of the Six to be an observer while these negotiations are going on?

Mr. Amory:

No, but special arrangements have been made whereby the Official Committee will be keeping under continuous review any opportunities of reopening negotiations with the Six, and every opportunity will be taken to ensure that the Six are kept fully informed of the way our plans are developing. I think that is the most that we can do at this stage. I should also like to refer to what I mentioned in my statement, that each country at the conference wished to accredit a representative to the European Economic Community.

Photo of Hon. Patrick Maitland Hon. Patrick Maitland , Lanark

Reverting to the fishier aspects of this project, can my right hon. Friend elucidate his remarks about fish products being treated as industrial products, bearing in mind the Scottish interest in this matter, namely, the production of fish meal, and, secondly, the United Kingdom imports of Canadian canned salmon? Can he say how far these arrangements might lead to increased competition either with home production or Commonwealth production in that field?

Mr. Amory:

I think that any arrangement for providing for the removal of tariffs and for free trade are extremely likely to accentuate competition. In this case it is limited, but in accordance with the broad division of categories that we have adopted it has been thought right, as part of a general satisfactory settlement on the fishing side, to treat canned fish and fish meal as an industrial product. I think that that fits sensibly into the categories which are generally being applied in this context.

Mrs. White:

Can the right hon. Gentleman tell me whether the term "agriculture" includes forestry? Is he aware that there is concern in Wales, where the rural areas are increasingly dependent on forestry, at the possible outcome of any agreement with the Scandinavian countries?

Mr. Amory:

No. Timber is included, and always has been, in these free trade discussions as an industrial and not an agricultural product.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

Can my right hon. Friend say whether this agreement makes any arrangement for expanding Commonwealth export trade to the countries concerned?

Mr. Amory:

Not directly, because the Commonwealth countries are not participants in this plan. We hope that the effect of the plan will be to contribute towards a general rise of the level of prosperity and, therefore, the level of trade within Europe; and if that is the result, I would hope that indirectly it would benefit Commonwealth trade.

Mr. H. Wilson:

Further to the question of the right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton), which I think all of us will feel is very practical and realistic, would the Chancellor study for the future the development of this and put our trading partners on notice of the proposal we made on this side of the House on 12th February last, when we suggested that there should be, quite apart from this proposal, a closer identification of the Commonwealth with the outer Free Trade Area, not necessarily excluding exchange of materials and Commonwealth Preference?

Mr. Amory:

I apologise to the right hon. Gentleman that what was said on 12th February is not as prominent in my mind at the moment as I would wish. I will refresh my memory on that point. I should like to say that, in general, we have kept the Commonwealth countries continuously in touch with every move we have made on this front and shall continue to do so.

Photo of Mr Mark Bonham Carter Mr Mark Bonham Carter , Torrington

Will the right hon. Gentleman help me with two points? First, will the arrangements being made between the Outer Seven make it impossible for any individual member of the Outer Seven to make an approach to the Six with a view to joining the Community? Secondly, in view of the very great importance of the subject which his statement raises, will it be possible to debate this matter at greater length before the House goes into recess?

Mr. Amory:

I do not think that the hon. Gentleman's first question has arisen. As far as I know, no member of the Seven is contemplating an approach to become a member of the Six in the present circumstances. If it did so, that member would have to show how far its obligations would conflict. I would expect that they would conflict.

The second part of the hon. Gentleman's supplementary question, is, of course, a matter for the House.

Photo of Mr Michael Hutchison Mr Michael Hutchison , Edinburgh South

Can my right hon. Friend say what protection there is in these arrangements for the home paper industry, particularly the paper industry in Scotland?

Mr. Amory:

The effect of this would, of course, be that if the arrangements mature there would be a gradual removal over ten years of the tariff protection which the paper industry enjoys. I would say there that there will be rules dealing with fair competition and equality of access to raw materials, and I would not think that the resulting competition would be beyond the capacity of our paper industry to meet.

Photo of Mr Roy Jenkins Mr Roy Jenkins , Birmingham Stechford

Will the Chancellor keep in mind that although seven is a greater number than six, that is a very inadequate substitute for arrangements with the Six, partly because the population is only one-quarter and partly because these are already low-tariff countries and, therefore, entry into their markets is less valuable than entry into the high-tariff countries' markets? If this is to be a bridge for arrangements with the Six, the arrangements must be put through quickly, because nothing could be worse for British industry than to adjust itself for arrangements with the Seven and have to re-adjust itself to an entirely different arrangement in the future?

Mr. Amory:

I see the importance of the point which the hon. Gentleman has raised. I hope that the House will not get the impression that I regard this as a substitute, as it were, for the wider association. I look on it as a step towards a wider association. In the meantime, I should like to emphasise that, in our opinion, this proposed Association is perfectly viable and likely to be beneficial to this country and all the other members of the Seven by itself.

We are endeavouring to shape our arrangements so that it would be as feasible as possible to make a transition to a wider association without frustration of the steps that may already have been taken.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Kidderminster

Did my right hon. Friend remember to mention in Stockholm that we have 30 million tons of surplus coal that we should like to sell in those traditional markets? Can we now gel on with the coal debate, Mr. Speaker?

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

To pursue the question of the paper industry——

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Kidderminster

On a point of order. My point of order, Mr. Speaker, is to inquire what is the Motion before the House? Are we on the Consolidated Fund (Appropriation) Bill yet?

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

The answer to the hon. Gentleman's last question is, "Certainly not." I am waiting to see if I can get there, but I think that when a statement of this length and importance is made it is necessary to allow a certain number of questions. I am sorry if the hon. Member for Kidderminster (Mr. Nabarro) is getting impatient. I cannot get impatient as easily as that.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

Is the Chancellor of the Exchequer aware that there are very grave apprehensions in the paper industry, particularly in Scotland, about the outcome of these negotiations? Can he say what new steps and policies the Government intend to initiate, in the event of the paper industry losing its competitive position, to safeguard the employment of the people who might thereby be thrown out of work?

Mr. Amory:

I did say, I think, that it is premature at this stage to forecast what the additional competition the paper manufacturing industry may have to meet will amount to. But there are provisions in the plan for certain steps which could be taken which would be appropriate where disastrous consequences affected a particular industry. I must say that it was envisaged that such provisions would be only very exceptionally used, but they relate to the point where the effects on a particular industry might be disastrous from the national point of view, in the form of consequences on employment.

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

The Clerk will now proceed to read the Orders of the Day.

Photo of Mr John Hynd Mr John Hynd , Sheffield, Attercliffe

On a point of order, Mr. Speaker. May I draw your attention to the fact that on numerous occasions during the past eight or nine months representations have been made to the Prime Minister and the Leader of the House that there should be a debate on these developments of the Common Market and the rest before any definite steps were taken, and that we have been promised over and over again that there would be?

In these circumstances, may we now ask that a debate be held before anything further is done? Many of us feel, as my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) does, that all is not quite as nice as it looks. Much of the policy behind this represents the attitude of mind of Members like the hon. Member for Kidderminster (Mr. Nabarro), who is not interested in these things but wants to get on with any subject in which he is particularly interested, irrespective of its importance.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Kidderminster

Further to that point of order——

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

It was not a point of order. The agreement is still in a very incomplete stage. As I understand, nothing has been definitely concluded yet. There will be plenty of opportunity for the hon. Member for Sheffield, Attercliffe (Mr. J. Hynd) to make a speech on the subject at a later stage. I understand that the first tariffs are not to be removed till 1960.