Trade with China

Part of the debate – in the House of Commons at 12:00 am on 13th December 1960.

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Photo of Mrs Barbara Castle Mrs Barbara Castle , Blackburn 12:00 am, 13th December 1960

The question I want to raise is one which is of quite serious importance to this country's export trade and which has arisen out of the crisis in our car industry, associated with the recent acquisition of the total holding by an American company of Fords, of Dagenham. But the question goes wider than that: it is the question of how far the increasing penetration by the United States into British industry will import into this country the restriction on exports which arises out of purely American policy.

I am raising this matter because I think the consequences of the present situation could be quite serious to us. I think the President of the Board of Trade will be the first to agree that we are not in a position at present to be complacent about our export trade. There has been a steady fall in our exports in the first three-quarters of this year, and the alarming fact is that since 1955 this country's share of world trade has been shrinking and that it has fallen from 19·7 per cent. in 1955 to 16·8 per cent. in the first half of this year. That means we are not in a position to sit back complacently while any of our industries are denied access to export markets of any kind anywhere.

Yet as a result of American policy in relation to exports to China, and the steps which the American Government are taking to impose that policy on American owned or controlled firms in this country, we have a situation in which an artificial and unnecessary barrier is being placed between British firms and a new and expanding export market. It is rather ironical that at the very moment when the Government are making sermons to manufacturers about the need to expand the export trade, the Government should be refusing to do anything to remove this barrier.

What is the exact position about this American intervention? I will quote here from one of the documents of their Department of Commerce, "Highlights of U.S. Export Controls": There is a total embargo on commercial shipments to Communist China and North Korea. And this embargo applies not only to companies in the United States, but to exports from any United States controlled business here.

The Minister has admitted it and the United States Embassy confirms it, because the position is that any person subject to the jurisdiction of the United states is prohibited from exporting any goods to China without a licence from the United States Treasury. In the Foreign Assets Control Regulations anyone subject to the jurisdiction of the United States is defined as follows: Any partnership, association, corporation, or other organization wheresoever organized or doing business, which is owned or controlled by persons specified … This, first and foremost, means that a very important point of principle is involved—that we are compelled as a result of the operation of these regulations over certain firms in Britain to surrender control over our own export policy. The President of the Board of Trade himself, in answer to Questions in the House the other day, said that he did not know of instances in which problems had arisen under these regulations, but their practical effect is this. China is interested in importing tractors from this country, and since 1956 two English firms, Massey-Ferguson and David Brown, have shipped about £2 million worth of tractors to China. As a result of the American majority holdings in the firm, Fords cannot and have not participated in that export trade. Nor has another firm which specialises in the manufacture of tractors, International Harvesters, in which there are also American majority holdings.

Let us take the example of passenger and commercial vehicles. Since 1953, three English firms—Standards, Austins and Rootes—among them have exported about £1,300,000 worth of passenger and commercial vehicles to China. This is clearly a vital export range which should be developed by other firms, but if they are firms in which the United States obtains a majority control those exports will no longer take place.

There has recently been a rumour that Chryslers were to make a bid for Standards. That has since been denied but, as the Financial Times pointed out today that kind of denial is becoming a little suspect and it may well be that before we know where we are that bid will be resurrected and we shall have Chryslers buying Standards, in which case Standards' export markets in China will dry up.

Let us take the example of chemical plants. American controlled companies here, Kellog International, for example, had inquiries from China about this matter, but as soon as it was found that those inquiries came from China that was an end of the matter, because the firm concerned knew that such exports were contrary to Washington policy.

We know that there is a growing penetration of United States business into English companies. What will the consequences of that be to our export policy if the present regulations obtain? We know that China is very interested in the development of automation. Firms in this country like E.M.I. and Elliott Automation, which make electronic controls, computers and instrumentation for automation, are the sort of firms which could develop exports to China, and E.M.I. has already supplied colour television cameras for medical and industrial purposes.

Those are the types of industry in which the United States is beginning to invest. They are the sort of modern, forward-looking industries in which American capital is interested. That investment could go on steadily, sub rosa and through the Stock Exchange in the normal way, without any of us in the House being aware of the developing danger until we suddenly found that majority control had got into American hands and that interference with our trade with China had suddenly become a reality.

I think that the President of the Board of Trade himself is one who has always been interested in developing that trade with China, which has grown encouragingly. In value, our exports to China have risen from £11 million in 1956 to a rate of about £30 million in the current year. This is a developing market which we ought not to ignore. But there is a danger that in time, as a result of its quarrels with other countries and some of the accusations of being Communist that it makes against them, the United States will extend this embargo to cover those countries.

Recently, for instance, it has embargoed all its trade with Cuba. The Financial Times today has a most interesting report about the bad feeling which is now growing up between the United States and Canada because Canada is not prepared to observe the United States embargo on exports to Cuba. We all know that Canada is one of those countries which has suddenly awakened to find that about 50 per cent. of its industries has passed into American hands and it is no longer economic master in its own house.

In this connection, the report in the Financial Times today is a warning for us. It says: Mr. Herter, United States Secretary of State, says he has failed to get Canada's co-operation in the American embargo against Cuba, but will keep trying for it. Then it adds this sinister phrase: American statements suggest that if Canada trades with Cuba the United States will look less kindly upon products from Canada. When I raised this matter in the House the other day the President of the Board of Trade said: The regulations have been in force since 1951, and we have not so far found any reason to make representations about their operation."—[OFFICIAL REPORT, 28th November, 1960: Vol. 630, c. 197.] The right hon. Gentleman added that he would look into any particular point that was made about them. That misses the whole point, because the present position is that United States subsidiaries in this country dare not make an official protest against this embargo. They just accept it. These facts obviously do not come to his attention. He does not seem to be aware that in 1957 Remington Rand, in England, received an order from Shanghai for typewriters and actually signed a contract, but that the American parent company then got to hear of it and raised the legal issue with the result that it was confirmed by the American Embassy here that it was within the embargo and the contract was cancelled.

The American Embassy cannot give me any example where American manufactured goods have ever been exported ] to China. We know that this intervention is not only operated here, but in Canada. The Chanceller of the Exchequer said in answer to a Question by my right hon. Friend the Member for Huyton (Mr. H. Wilson), who asked about American interference with a Canadian car deal with China, that he did not think my right hon. Friend had got his facts right. Her Majesty's Government do not know what is going on in the world.