– in the House of Commons at 12:00 am on 5th December 1962.
Mr. Speaker, before you pronounce on the Amendments that you propose to call with regard to the next item of business, the discussion of the Anglo-Japanese Treaty, would you be good enough to consider whether you could accept a manuscript Amendment. at the end to add:
and of the urgent need for the implementation of international fair labour standards suggested by the Trades Union Congress, the United States Trade Unions and the International Metalworkers' Federation"?
I am obliged to the hon. Member for allowing me an opportunity to look at his manuscript Amendment during previous proceedings this afternoon. I considered it with great care, as I do all matters submitted by him, but I would not think it right to select it.
At the same time, I had better say, because I think that it is for the convenience of the House, that I do not think it right to select either of the Amendments tabled to the Motion standing in the name of the Prime Minister and other right hon. Members.
I beg to move,
That this House takes note of the Treaty of Commerce, Establishment and Navigation between the United Kingdom of Great Britain and Northern Ireland and Japan (Command Paper No. 1874).
The Treaty of Commerce, Establishment and Navigation between the United Kingdom of Great Britain and Northern Ireland and Japan marks a constructive change in our commercial relations with a friendly Power. The signature of the Treaty is therefore an important event, of which it is right that the House should be asked to take note.
In their statement on the Treaty, published as Cmd. 1875, the Government have already summarised the provisions of the Treaty itself, explained the background to the negotiations, and described the arrangements which are associated with it. The Treaty has been widely commented on by industrial leaders and in the Press. It has been in general welcomed, though there are sections of industry which have some anxieties about the possible outcome. My right hon. Friend and I appreciate the way in which hon. Members have put forward their anxieties. They have helped towards a clearer understanding of those anxieties and of the points of view involved.
The Government are glad to have the opportunity of this debate to explain the arrangements further and to hear the views of the House, and in so far as those views reflect the anxieties to which I have referred my right hon. Friend the President of the Board of Trade will, I know, be ready to deal with them in his reply.
I would like to begin by emphasising the need for a treaty on the lines of that now concluded. The discrimination that we have practised against Japan has become increasingly undesirable on general grounds, and is no longer necessary on grounds of commercial policy. We have been willing to grant to almost every other country outside the Communist bloc firm guarantees of mostfavoured-nation treatment through the G.A.T.T. It would be wholly inconsistent with what we proclaim our general policy to be if we were to continue to discriminate in general terms against Japan and she against us. Our policy, as the House will recall, is to promote international trade and not unnecessarily to circumscribe it. This is a general interest in the pursuit of which all right hon. and hon. Members will, I am sure, actively join.
The special features which on commercial policy grounds may have justified discrimination in the past are no longer present to anything like the same degree. Japan's wage levels have risen rapidly over recent years and in many production units are comparable with those ruling in some of the countries of Europe. The Japanese Government and the leaders of Japanese industry have made persistent and successful efforts to raise the trading standards of Japanese exporters.
In the cotton textiles and pottery industries, for instance, both of which were once notorious for the copying of foreign designs, there has been co-operation with British industry and control organisations have been set up which have virtually disposed of this nuisance. Japanese manufacturers co-operating with important British firms in joint ventures have won the firm respect and, indeed, admiration of their British partners.
The policy of discrimination has, in fact, become out of date. But there has also been a positive reason why we should get rid of it in our own economic interest. The growth of the Japanese economy over recent years has been phenomenal. Apart from occasional short-lived set-backs and pauses perhaps for regaining equilibrium, the expansion has gone steadily forward and has brought with it a great upsurge in the demand for industrial plant and for a constantly widening range of imports. With import liberalisation also progressing rapidly according to plan this has opened up great opportunities for countries, such as ours, which can supply an immensely wide range of goods.
Public utilities and services in Japan are also expanding and have provided us with a market for a full-scale atomic power reactor built in conjunction with Japanese manufacturers, and for aeroplanes and aeroplane engines, which I hope we shall be supplying in increasing quantities over the years to come. As Japan develops her roads and her ports, both lagging at present behind the pace of development in other sectors, there should be more opportunity for us to supply equipment.
Finally, the standard of living in Japan is rising very rapidly indeed, and the demand for high-class consumer goods therefore increases from year to year. In this, we still come up against restrictions on imports, but they are being relaxed and we are already doing very well in some lines. We must seek to do much better in the future. The history of the last decade shows that it is trade between industrialised countries which expands most rapidly and there is every reason to expect that this will prove true of trade between this country and Japan.
With our exports to Japan already up by about two-thirds in the last two years, and with these opportunities to expand them in future, it has become urgently necessary to ensure that our exporters are in the best possible position to take advantage of the market. We have, therefore, needed a settlement which would normalise our relations with Japan and fulfil three requirements in particular.
First, we required a permanent guarantee of most-favoured-nation treatment for our goods in the Japanese market. Our most active competitors, the Germans and Americans, have been for many years in G.A.T.T. relations with Japan and we have been under constant threat of discrimination against our own products in our negotiations with the Japanese in recent years.
Secondly, we had to do away with the system of annually negotiated trade agreements, which caused anxiety and inconvenience to all concerned in trade with Japan and was a quite unsuitable framework as hon. Members will appreciate for exporters planning to develop their share of the Japanese market.
Thirdly, Japan is much less well known to British industry as a whole than other industrial markets of comparable importance, and our competitors have cultivated it much more actively than we have. The conclusion of a longterm treaty covering establishment and all commercial matters might be expected to encourage British industrialists to commit themselves to this market by export, sale of "know-how" or establishment of joint ventures, whichever means might be the most profitable.
The need for a treaty has been appreciated for some time by British industrial leaders who have first-hand knowledge of Japan. Both the Director-General of the Federation of British Industries, who visited Japan last year, and the London and Birmingham Chambers of Commerce Trade Mission, which toured Japan this year, reported that it was essential to the full development of our export potential that the present trading arrangements should be superseded by a Commercial Treaty. Now that the Treaty has been concluded, it has, in general, been welcomed by the Press and industry, and will, I trust. be welcomed by the House.
The terms of the Treaty and the associated arrangements have been summarised in Cmnd. 1875, but it may be helpful to the House if I draw attention to the salient features. The Treaty is in the normal form of a treaty of commerce, establishment and navigation. It contains a number of provisions dealing with the activities of nationals and companies. Generally speaking, our aim has been to ensure that, in Japan, British nationals and companies are treated at least as well as those of any other foreign country. In some cases, such as access to and treatment in Japanese courts of law, and in the protection of industrial property, we have considered it appropriate to secure equality of treatment with Japanese nationals and companies; and in one or two important provisions, such as compensation for expropriation, absolute standards of treatment are laid down.
The principal provisions dealing with navigation are in Article 20 of the Treaty. Japan is an important maritime nation, whose approach to international shipping problems is much like our own. Article 20 provides for the exchange of national and most-favoured-nation rights in shipping matters and, in particular, provides freedom for ships of either country to compete for traffic. When so many countries are following discriminatory policies in shipping, we think that the inclusion in the Treaty of these liberal provisions is a matter for satisfaction.
The provisions of the Treaty which relate to goods cover Customs duties and anti-dumping and countervailing duties, quotas and internal taxes and charges, and are based on the most-favourednation principle. They are broadly similar to the provisions of the G.A.T.T., which will, of course, normally determine the treatment to be exchanged so far as goods are concerned, but in one or two respects they amplify the G.A.T.T. provision.
The Treaty includes the normal reservation to allow the continuance of Commonwealth preferences, and there is also a provision for preferential treatment to be given by either party to third countries by virtue of a customs union or free trade area such as, for instance, an enlarged European Economic Community.
The Treaty can be extended to United Kingdom dependent territories, subject to certain conditions. It comes into force 30 days after ratification and will remain in force thereafter for six years, after which it can be terminated on twelve months' notice being given by either party. Ratification by Japan is not expected before April of next year. When the Treaty comes into effect the two countries will enter into G.A.T.T. relations with each other.
Do we assume that the Treaty will have been ratified by the United Kingdom on or by that date?
I have been careful to hazard a guess as to when the Japanese will ratify the Treaty, and I trust that we shall have ratified it by that date.
There are special safeguards against disruptive competition. These consist, first, in the maintenance of restrictions on certain products by one of two methods. Export control by the Japanese Government will be the method for textile and radio items and, as from 1st January, 1968, for domestic pottery. The details of these arrangements are shown in paragraphs 10 and 11 and in Appendix B of Cmd. 1875. Import control will apply to other items and, until 1st January, 1968, to domestic pottery also, since the Japanese Government are not at present able to regulate exports of these items.
The hon. Member mentioned domestic pottery when speaking of voluntary control by the Japanese. Would not that also include ceramic toys and parts thereof?
I am glad to be asked that question. I need notice of the exact definition to cover the hon. Member's point, and I shall try to obtain it for him during the course of the debate.
The details are given in paragraph 12 and Annex C of Cmd. 1875. There is, in addition, a general safeguard applicable to any product. This is contained in the First Protocol concerning trade relations between the United Kingdom and Japan, which will be found on page 25 of Cmd. 1874. Its provisions are summarised in paragraphs 7 and 8 of Cmd. 1875.
The anxieties which I mentioned at the beginning of my speech have centred on the difference between these two forms of safeguard, and doubts about the effectiveness of the second. I do not wish to anticipate in detail what may be said by hon. Members on this point, or by my right hon. Friend in his reply, but there are two general considerations which should be borne in mind if a fair judgment is to be reached on this matter.
First, this is a Treaty to promote the expansion of trade between the two countries. That is our main purpose, and, while we have insisted on, and obtained, a very wide measure of protection against disruptive competition, there are limits to the exent to which it would be reasonable or desirable, in our own interests, to provide for the maintenance or reimposition of restrictions. If hon. Members will study the lists of products to be retained under restriction and the quota arrangements made for them I think that they will agree that we have obtained from the Japanese Government a real degree of understanding for our anxieties about disruption.
Hon. Members will also be aware of the firm promise of the Japanese Govern-to accept the G.A.T.T. declaration banning export subsidies on industrial goods and not to renew their present tax remission legislation which expires in March, 1964.
Secondly, the Government have been criticised because the exact method of operation of the general safeguard and the precise circumstances in which it might be invoked are not set out in black and white. I believe, however, that the Government should be congratulated on the broad terms in which the safeguard is drawn and on the freedom which, in consequence, this will give us to invoke it in case of real need.
In conclusion, I wish to say a word about the immediate advantages to be obtained from this settlement. As a result of the liberalisation measures undertaken by the Japanese Government on 1st October and on the conclusion of our negotiations, we shall have substantially increased opportunities for the sale to Japan of machinery—in particular, machine tools—and, in the consumer goods field, of motors cars, razor blades, carpets, whisky and wool cloth.
Everybody knows that industry and commerce in Japan tend to be organised in large units, each covering a very wide range of activities. This fact, I realise, raises apprehensions lest the sale of one product be promoted out of the profits secured at home on other products. Such a form of organising trade is not confined to Japan and the real answer to it lies in furthering the mutual liberalisation of trade. This Treaty takes a very good step towards that objective. The Government hope and believe that as time goes on an ever wider range of manufacturers, both of capital and of consumer goods, will benefit from the settled basis established for our future trade with Japan by the conclusion of this Treaty.
Most hon. Members will agree with the Minister in welcoming the fact that this country and Japan are signing a trade Treaty which will put our trading relations on a more liberal, or at least a more normal peace-time, basis. We are both very great trading nations and Japan's population is, I think, now nearly 100 million. It is absurd, if one looks at this from a general world point of view, that we should not be trading rather freely together. I think that everyone will agree with that.
I believe that on the whole the best way to secure these aims is to make full use of the G.A.T.T. and its mostfavoured-nation clauses. The virtual recognition by ourselves of Japan now as a full member of G.A.T.T. may point the way to even wider progress in opening up world trade. It is worth noting, in passing, that under President Kennedy's Trade Expansion Act, which has now been passed into law, any tariff cuts made reciprocally by the United States with the European Economic Community would automatically be extended to the United Kingdom, the rest of E.F.T.A. and Japan as G.A.T.T. members. We would be expected to make similar reciprocal cuts and I think that we would be wise to do so. Along the road of reciprocal cuts by the great trading groups in the world there are immense possibilities for developing world trade, always provided that we secure reasonable expansion and credit policies on a world scale at the same time.
The Treaty, as the Minister conceded, is also important because Japan's economic problem is perhaps more like that of the United Kingdom than that of any other country and also because she has been infinitely more successful in dealing with it in the last ten years than we have. Therefore, I think that her experience has some lessons for us.
That is also because Japan's wages have been much lower. I am sure that the right hon. Member would not wish for that here, or that our social services should have to be cut.
I agree, not relative to ours.
Japan also finds herself with a huge crowded population on a moderately small island with a deficiency of raw materials, and for that reason she has to import from abroad. Yet in the last ten years, as the Minister mentioned—although he did not give any figures, which are striking—the rise of production in Japan has far exceeded, not merely ours, but that of the United States, of Europe and even of the Soviet Union. If we look at the figures we find that from 1953 to 1961 the United Kingdom's production rose by 28 per cent. while Japan's rose by 217 per cent. The United Kingdom's exports rose by 42 per cent., and Japan's by 232 per cent.
It is a solemn thought for us that since the American bankers departed in 1951 and ceased preaching to the Japanese the horrors of inflation, and how to run their economy on Western lines, the Japanese decided to put expansion of production first. They increased Government expenditure and cut taxes every year, disregarding the tangles of inflation, vicious spirals and balance of payments which had hypnotised the old-fashioned West and their economy has gone forward at a rate which all well-informed people in the outside world had declared was physically impossible.
As a result, the Japanese are coming near to the achievement of a Western standard of living at present. I will not go into how far this astonishing success has been due to the fact that Japan started with all the advantages of a nation defeated in a great war—which are economically very considerable nowadays—but she has been successfully subsidising her exports during the last ten years. That has been more or less tolerated up to now by the rest of the World on the ground, I suppose, that as a defeated nation with a shattered economy Japan was bound to use emergency methods to build up her strength, but I do not see why she should be allowed to use those methods any longer.
If Japan's economic situation is now sufficiently normal for us in effect to accord her most-favoured-nation rights in the G.A.T.T. I do not see why Japan should not also, from the same date, conduct her export trade on normally accepted lines. It is my main criticism of the Government that in this Treaty they are, in effect making our economic concessions to Japan as from the date of ratification—which I take to be April, 1963, although the Minister was a little indefinite, perhaps the President of the Board of Trade can tell us definitely this evening—while Japan's concessions to us in ending these unfair trade practices are not to be made until at least a year later, if then.
Once again, I fear that the country may be about to suffer from the Government's predilection for unilateral disarmament in these economic trading matters. No one denies that the Japanese are subsidising their exports lavishly at present. Income Tax, I understand, is remitted as to 80 per cent. of the tax on profits earned by exporting. The curious mixture of feudal paternalism and highly efficient large-scale industry which prevails in Japan somehow allow profits earned in industry to be distinguished in a way in which we are told it is impossible to distinguish them here. By this somewhat mysterious method, special low interest rates, regardless of the level of the Bank Rate, are charged by the Japanese banks to exporters.
As the Minister virtually admitted, the system of dual prices prevails, particularly in the wool industry, with high prices for sales at home and much lower prices for exports. The President of the Board of Trade told us last week, and the Minister told us today, that the Japanese legislation which permits these export subsidies will lapse in March, 1964, and that Japan will renounce export subsidies not later than that date. Why should she not do so as from the same date on which we are making our trading concessions to Japan? If, for some reason bound up with the Japanese Constitution, she cannot do that, why should we not wait to make our concessions when she makes hers, some time in 1964?
I cannot see the justification, and we have been given none today, for the differentiation in the dates. Does the President of the Board of Trade think that 1963 will be economically so good a year for British industry and employment that we should expose our industries, particularly the textile industry, to a special risk of unemployment at that time? With one voice the Government tell us that they are doing their utmost in every way to combat the unemployment situation, with which the country is faced, but then the right hon. Gentleman brings forward a Treaty framed in such a way as to maximise that risk in the twelve months ahead.
On dual prices, the President of the Board of Trade has held out no hope of anything being done even as far ahead as 1964. The right hon. Gentleman said in answer to Questions last week that he sees only a vague possibility of something being done in "the coming months and years". That sounds very remote. He says that dual pricing is not banned by G.A.T.T., but is a matter for the industries and firms, not for the Government. The right hon. Gentleman must know enough about Japanese industry and the methods of the Japanese Government—if not he had better get my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes) to explain it to him —to realise that these matters are effectively under the control of the Government in Japan. Indeed, that is why the Japanese are building what they call "voluntary export control" in their country. I am convinced that the President of the Board of Trade could perfectly well have insisted that this practice should cease by the time the Treaty comes into force.
What does the right hon. Gentleman mean to do about export subsidies by way of specially low interest rates? I understand that these are not covered by the undertaking of the Japanese to desist from strict tax subsidies by March, 1964. Will the right hon. Gentleman tell us whether that is right and whether we have any assurances that this form of subsidy will be terminated in 1964? If he says that subsidy by way of interest rates is not contrary to the G.A.T.T., and that nothing can be done about it, would it not be a good idea if we adopted the same practice?
The President of the Board of Trade has maintained, and the Minister of State maintained today, that he has two other lines of defence of specially threatened industries from possible disruptive imports to our country. Those are the list of specially sensitive items and, secondly, the general power to insulate against disruptive competition. These, no doubt, are worth something, but they still do not seem to justify this unilateral disarmament on our part one year at least ahead of the Japanese.
The sensitive list on which the Government rely so heavily is a very odd one, particularly when we look at the textile items. I hope that the President of the Board of Trade will tell me if I am wrong, because it is rather crucial. I understand that in the case of cotton, man-made fibres, silk yarn, cloth and the majority of garments are all included on the list, but in the case of wool, tops and yarns are excluded, and also made-up garments, while only cloth is included. Why should there be this discrimination against wool? It does not appear to have been explained. Why should wool not be treated on the sensitive list in exactly the same way as cotton and man-made fibres?
It is not surprising that this discrimination against wool compared with other textiles should be arousing keen resentment, not simply in the Yorkshire wool industry proper, but also among the making-up firms, which are widely spread. I can assure the President of the Board of Trade that I have had letters of protest not merely from the Wool Textile Delegation, but one from a clothing firm on Tyneside. That is hardly an area where the President of the Board of Trade would wish to promote unemployment in the years ahead. He would not wish to add textile unemployment to unemployment in steel, shipbuilding and coal.
This letter from a clothing firm on Tyneside points out that by putting woollen cloth on the sensitive list and keeping made-up clothes off the President of the Board of Trade is encouraging the Japanese to export to the United Kingdom the wool cloth in the form of made-up garments. I think that this is a justifiable argument, and we have had no answer to it so far from either of the Ministers on the Treasury Bench. Even assuming the general safeguards, which I know stand behind all this, I do not see why woollen goods should not be included on the sensitive list in exactly the same terms as cotton and synthetic fibres.
When we come to the general safeguards, may I ask for more explanation from the President of the Board of Trade about how they will work? The anxiety in the woollen industry, naturally, is that there may be too long a delay and that by the time the emergency defences come into force, and there has been a period during which the Board of Trade has meditated on the Trade Returns, for example, a great deal of damage will already have been done. I am sure that the industry has put this point to the President of the Board of Trade already but it is still anxious about it, and it seems to me to be a point which, even if he has heard it, he has not yet met.
Does my right hon. Friend agree that it is illogical not to put woollen piece goods on the list when wool cloth is on?
That is the point which I have been making. Wool cloth is on the list, but garments and yarn are not. The point is now appreciated on both sides of the House.
But, altogether, the President of the Board of Trade seems to me to have spoiled a splendid opportunity for a great expansion in our trade with Japan, which we all want, first by discriminating in this Treaty against the wool industry and, secondly by dismantling our defences a year in advance of the time when Japan is to dismantle hers. However enthusiastic one may be about increased trade between this country and Japan, I do not see why the dice should be thus loaded against our traders and our workers in this unfair fashion.
I should like to say how much I agree with the greater part of the speech made by the right hon. Member for Battersea, North (Mr. Jay). I have a few difficult things to say, probably a little more difficult for me than for him. Above everything else there should be no doubt—and I am sure that in due course my hon. Friend will confirm it—that there are no "jitters" in Bradford about this Treaty.
That is precisely what there is in Bradford. I cannot understand my hon. Friend making a remark like that.
My hon. Friend is very anxious to accept the assurances given by the President of the Board of Trade and I am not, but perhaps he will allow me to make my own speech and have a little patience. It requires patience to listen to him.
I said that there are no "jitters" in Bradford. There are not. It is a clear word, and I mean what I say. There is a strong fear and a very strong annoyance and considerable anger with the Government. Perhaps my hon. Friend will listen to what I am saying. I shall take all the longer for his interruptions.
I want to say straight away that I recognise that my right hon. Friend the President of the Board of Trade is absolutely sincere in his belief in this matter. I do not question that. I have known him for many years and I think that I can say that we have been very good friends. I shall say some hard things, as he knows only too well from correspondence, but I respect his sincerity. This is a mater of judgment, mutual trust and confidence. He thinks one way and I think another.
Without a shadow of doubt, 14th November was a very nasty day for the wool textile industry. A month before that, the Yorkshire Post, in a leading article, said:
British wool textile business men are justified in their fears. They do not believe that the situation is fully appreciated in Whitehall.
That is a serious statement. Years have gone by, over this long period of tentative negotiations, during which the Government have been left in no doubt whatever, time after time, of the views of the wool textile industry. My colleagues and myself have many times mentioned this in the West Riding. I recall the President of the Board of Trade, in his relatively early days as
Minister of State, making a speech at Bradford more or less indicating the way in which the Board of Trade were then thinking in this matter, the way which has substantially been followed by the Treaty. I had a good deal to say about it on that occasion.
Detailed controversy in public necessarily began with the brief which the right hon. Gentleman produced about 23rd September, which was in effect, the first time that the negotiators on the part of the industry had their lips unsealed, as it were. The Gospel according to St Frederick, as it has been called, has been well thumbed since then. Minister after Minister has made a journey up to the north of England in various different causes and has thumbed through this brief. I expected another version of it today, and I want at once to say that, although my hon. Friend the Minister of State touched on one aspect of it, I was extremely grateful that he managed to make an interesting speech without thumbing through that miserable brief once again. But he could not avoid saying something—these are my words, not his—about continuing to treat Japan as an outcast.
Japan has only herself to blame if, by her trading malpractices, she has cut herself off from various multilateral benefits such as we are now conferring. While these unfair practices exist, the need for discrimination must remain. But so gilded has become the Japanese lily in the Government's eyes that they ignore the evidence. Only a Government quite blind to all normal reason could ignore it. One obvious factor which has been drummed in again today is that of the Japanese attitude over tax remissions. It is shocking that the British Government did not insist on Japan ending the remission of taxation as a condition for the Treaty, and, frankly, it is intolerable, even at this stage, that these remissions should remain after the Treaty, and substantially after that. If she refused to do this, then I suggest that she was unworthy as yet of the signing of this form of treaty. Her present action of continuing these powers in force into 1964 are the sort of actions that one expects from someone who is elected to a club, but who says, "I will join the club, but I will not obey the rules for a year".
I want to turn to the discrimination between textiles. Cotton and man-made fibre products will have a "sensitive" classification and, thus, quantitative limitations of imports. But similar products, as the right hon. Member for Battersea, North said, made wholly or substantially from wool, will not have this protection. The painful inferences which can and are likely to arise from this should be made clear. They will be felt in production, marketing, selection and concentration, and above everything else there will be a strong inclination towards switching from quota to non-quota categories across the field, and that includes the clothing industry's fears, too.
This brings me to the general safeguards procedure. We are told by the President of the Board of Trade that under the first protocol, Her Majesty's Government, if they find that any Japanese product is being imported into the United Kingdom in such increased quantities and under such conditions as to cause or threaten serious injury to producers of like or competitive products in the United Kingdom, may invoke the safeguarding clauses of the Treaty. I should like to ask my right hon. Friend, when he winds hp the debate, to give an interpretation of this.
The governing phrase appears to be "increased quantities". Is that so? What about price differentials and what about concentration in particular categories? What about dumping, and what about subsidisation? Will these be material reasons for invoking the safeguard provisions?
Then we come, at any rate in words, to the phrase
serious injury does not have to be caused.
But is this the whole truth? The Government say that the threat of injury is sufficient, but does not the threat have to arise from increased imports? Is that still the case under this Treaty? Does not this aspect show, if it is so, how hollow is their argument and how callous they are towards the wool textile industry? They deny this. Or am I wrong? I should like to be wrong, if it were for my own reasons, but I am unconvinced.
Moreover, there is another sentence in Cmind. 1875 which I do not like. It will be found in paragraph 7:
Counteraction may be taken by the party whose goods are restricted in so far as the
restricting Government has not been able to offer any compensation for its action.
As far as I am aware, the Minister of State did not touch on that, but it is an extremely important matter. It is very important to know what it means.
The main point is to clear up where precisely the threat exists and what elements the Government need to operate the safeguarding Clauses. In fact, the threat can be a loss of confidence. There is not exactly a very high confidence at the moment. There is already an implied threat. The threat undeniably takes place in a very substantial degree when the orders are placed, long before the goods are landed. I think very little of the Government's hand-out of this subject unless it takes account of these factors.
I should like to ask the Government to take this to heart. I hope that they will not think me too rude if I say that they clearly have not taken it into their heads. Because of the forward-buying system in the wool textile industry, serious injury can begin many months before imports can arrive in the United Kingdom. I am told that it is beginning now. This is a point which the Federation of British Industries made all too clear in its appreciation of the Treaty.
The greatest danger to the wool textile industry is clearly in yarn. Japan has huge stocks. What for? I know not. There are huge stocks on tap, convenient to unload while the Government are indulging in an all-time record argument with the Foreign Office whether to be unpleasant to the Japanese. I have had some experience of that in the past. The Board of Trade is not always master in its own house. We should bear that in mind.
I pray that the Government will look at the facts. The first is that the President of the Board of Trade advises us that
in general the criterion which has been applied for deciding that an item is sensitive is that there should be a strong presumption…
Why has yarn been left out of that clause? The Board of Trade will perhaps answer—I have read their brief very well—that exports have been relatively small. This has been substantially true in the past, but knowledge
of present facts and a gleam of imagination should come into the Government's trading policies in this regard. Do they not know the vast stocks, to which I have referred, in Japan, amounting to about 50 million lb.?
That is good enough for me.
Of this, worsted yarn represents about four-fifths. What is all this for? To sustain a mere 7 million lb. per annum into the United Kingdom as in the last year? I say to the Government, "Not on your life!" What about the immense number of spindles immobilised? I understand that the figure is about 50 per cent.
I accept the correction. The figure is high enough for me.
Let the Government take a look at the potential in this country as a yarn consumer, add those facts together and use a little imagination. Lot them take a look at the existence of the very flexible system to subsidise exports out of the home trade. Does anyone really believe that this will all stop or that the dual price system will stop? No doubt, under Eastern ways, the dual price system will go and something else will take its place.
The mentality is there. The moral outlook there on this matter is totally different. What is unreasonable in this country, unforgivable, unclub-like, is not so regarded by the Eastern mind. The Eastern businessman does not think that he is doing wrong and taking advantage by getting round the agreement. If all this does not all add up to presumptions, I will eat my hat.
Do Her Majesty's Ministers really think that the Zaibatsu organisations of Japan will play the game according to the rules of the Eton playing fields? Do not the Government appreciate the perils from some of these Zaibatsu combines, which have a foot in a mass of Japanese industrial interests? They have power and they can switch the action from one thing to another according to what they want. They have powers of barter and they are prepared to use these powers to the maximum, and all sorts of methods of indirect subsidisation, perhaps not in the old pattern, can be achieved through this organisation.
May I interrupt my hon. Friend? I have been, and am, connected with a company which has had an agreement with a Japanese company for twelve years. It has been perfectly carried out. The Japanese have been absolutely correct in everything that they have done, and the agreement has been of great benefit indeed.
My hon. Friend has been extremely fortunate, and I hope that he will continue to be so.
Eastern ingenuity will make mincemeat of Western club-like rectitude. A flood of investigation and questionnaires has already been sent to various British firms from the Zaibatsu organisation, asking what material they are using, what colour it is, what is the price and how much reduction they want. Any hon. Member can, if he wishes, see the papers which I have in my hand.
I have said nothing like as much as I intended to say, but a lot of time in this debate has been taken up on this subject on other occasions. However, I have said enough to make my point clear, and I now wish only to sum up. I suggest that the Government should have a care regarding what they are doing. There is a danger now in uncertainty. There is loss of confidence—it may not be great, but it is there—among wool-combers, to mention only one section of the trade.
Does my right hon. Friend really think that firms will continue to spend heavy capital sums on plant, etc., and how can such a loss of investment do other than lower efficiency and close avenues for high and consistent levels of employment? The Government, having done their best to upset and create imbalance in the industry, now say that the industry should have conversations with the Japanese on trade quotas, etc. I know the industry fairly well. It will refuse nothing to help the Government whatever it thinks of them, and it will refuse nothing to help itself. But why should it be asked to pull the Government's miserable chestnuts out of the fire?
It is also a streak of bad luck, miscalculation or, more simply, "appeasement" to Japanese wishes that sections of the trade, where there is surplus productive capacity, are put at additional risk through being excluded from the sensitive list? The Board of Trade says, in effect, "Let any section ill-affected by the Treaty go along to the Japanese exporter and ask him voluntarily to reduce his imports into the United Kingdom." Let my right hon. Friend try and sell that in the Ridings of Yorkshire and to hard-headed Yorkshire business men. All such a person has to do, apparently, is to go to the Japanese businessman, and say, "I am being hurt. Will you cut down your imports"?
I feel I need make no apology for speaking so strongly about something which I feel so keenly and deeply. I am sorry that the nature of the Question before the House does not usefully permit me to add my vote to my voice, since, as I warned the Prime Minister in my long letter to him of last September on the wool textile case, I cannot support the Government in this treatment of an industry which, over the passage of years, has come to mean as much to me as to anyone who serves within it.
I want to do only one thing today and that is to speak up for an industry which has a fine export performance, splendid industrial relations, first-rate and forward-looking management and good performance at all levels. The industry does not ask for favour. It has faced, and always will face, fair competition from all parts of the globe, but unfair trading practices are another matter. It complains about that, but it complains no less that the united voice of the industry so long respected and valued has been seen to be of so little account in these transactions. For that, my right hon. Friend has much to answer for.
The Wool Record and Textile World, the leading trade paper, concluded an editorial on 16th November last with the following words:
The Wool Textile Delegation has been abundantly right from the start in maintaining that the United Kingdom textile industry,
despite the horizontal nature of its construction, is a complex structure of mutually dependent bricks. The British Government, in signing this cynical treaty, have knowingly knocked out some of the keystones.
I agree with this penetrating comment.
I pray that Her Majesty's Government will now, in the difficulties before us, turn once more and heed the advice and listen to the voice of the Wool Textile Delegation which, in the past, has served them, the industry and the country so well.
I hope that the hon. Member for Shipley (Mr. Hirst) will forgive me if I do not immediately comment on his speech, acid though it was at times, though probably well-informed.
I think that the House will agree with the general proposition that our job is to view this Treaty not only from the point of view of our constituency interests, but from the point of view of the national economy as a whole, which I propose to do. I am sure that my right hon. and hon. Friends, if they catch the eye of the Chair, who will be talking either on the wool, pottery or any other industry will be as well-informed as the hon. Gentleman to whose speech we have just listened and will put what they have to say not only from the manufacturers' point of view, but also from that of the workers in those industries.
I feel critical of the Government on several scores in the matter of this Treaty. First, why has it taken so long? Why has the Board of Trade been so slow in getting the Treaty? Why has Western Germany been allowed to get away with it for so long? At present, the United States of America does about fifteen times the amount of trade with Japan that we do. That, in a way, is understandable for historical reasons, but what is not easy to understand is why Western Germany is currently doing about 40 per cent. more trade with Japan than we are.
I suppose that the answer to that is because Western Germany anticipated the potential before we did, and also, I suppose, it is part of the price we now pay for the decision taken in 1955 by the present Government to invoke Article 35 against Japan. But there are, thank goodness, some forward-looking British industries. Many of my right hon. And hon. Friends will be speaking about their industries and their constituencies, about which they feel great concern. Similarly, I have the honour to represent a Midlands constituency. I feel that credit should be given to those Midland industries which have had such remarkable success in the last few years.
Take, for example, machine tools. This year, we have sold Japan over £2,300,000 worth of machine tools, an increase of 53 per cent. over previous years. Three major Coventry firms and one Halifax firm are amongst the industries which have achieved this remarkable success. Taking machinery as a whole, we have sold so far, in 1962, £10½ million worth, an increase over 1961 of 27 per cent. We are selling tractors, industrial furnaces and even shirts to Japan. We are supplying Japan with steering gear for the world's largest Japanese-built tanker—the Nissho Maru III. As the Minister of State said, we have built a nuclear generating plant in collaboration with a Japanese subsidiary company, and Staffordshire, my own constituency county, has just sold Japan automatic moulding systems, glass pipelines and other fittings for a distillery, and items like that.
I wish to say to the President of the Board of Trade that, although I think our intentions regarding the recent International Trade Fair at Osaka were good, they were not very happy in the result. I think that there was a record of a ship which was damaged and in which some of our exhibits were damaged and which never turned up. I hope that the Government will put their backs into seeing that our exhibition at the Tokyo International Trade Fair next year is properly mounted and efficiently put over. I am told that it is now that potential exhibitors should get their names in, because there is such a run on space at that fair.
I now want to say a few words on Germany. I was rather interested to read some months ago that no fewer than 1,500 Japanese miners are working now in the Ruhr. This may be rather uninteresting economic exercise to look into. I am told that they are probably there to examine German mining techniques, but there seem to me to be great advantages in our own mining machinery industry investigating why the Germans have been able to get in ahead of us.
If we take the question of selling to Japan technical "know-how" agreements, in November, 1961, the President of the Board of Trade, in answer to a Question which I put down, stated that at that time the United States had completed 947 such agreements, Western Germany had 141, Switzerland 112 and the United Kingdom 51. Although I have not been able to obtain more recent figures, my information is that the position has hardly changed at all. This is very important, because whereas the Japanese Government have recently eased the restrictions on the repayment of the agreements, they are exercising a harsher scrutiny on new ones in order to estimate whether they are necessary from the point of view of the Japanese economy. I hope that we have mot "missed the bus" where these agreements are concerned.
I now want to digress for a moment on the subject of Japanese trade with China. This may not, at first sight, seem to be relevant to this debate, but I would point out that Japan is selling steel and whale oil to China and generally trying to solve certain problems with which she has to cope in increasing her trade with China. This may not necessarily be to the disadvantage of this country. To begin with, the pattern of trade in the Far East is becoming more apparent. The distribution of goods is becoming more rationalised, and we should do everything we can to encourage trade with China, for the reasons which I have explained. They are working under difficulties in that they are restricted by their understanding with the United States, and because of the political conditions imposed by the People's Republic of China.
It is not necessarily to our disadvantage to see this trade occurring. The trade between Japan and the United States of America is a subject of very real consideration by Japan at present. The recent visit of the Prime Minister of Japan lends colour to the general proposition that Japan is now looking more to Europe for her export trade. I do not see any chance ever of replacing the United States, but there is some reason to believe that we ought to get a far greater share. There are many of us who feel that the time has now come when the old alliance between this country and Japan, which was abrogated in 1923, on the proposal of the United States for purely selfish reasons, should now be reconsidered.
The hon. Member for Shipley and his hon. Friend the Member for Bradford, North (Mr. W. J. Taylor) have made reference twice recently to malpractices governing design and trade marks by the Japanese. I read the speech of the hon. Member for Bradford, North recently, and I would have hoped that he would have had reason to modify the remarks he then made about the numerous cases of design stealing and pattern infringement. I think that we have to regard Japan—and I hope that I am not indulging in wishful thinking—as a country which has reformed itself in its international relations where trade is concerned since the war, and I will try to give some reasons why I think so.
It was on the advice of the Director-General of the Federation of British Industries that all manufacturers and designers in this country have been implored to register their designs and trade marks in Japan. Unless they do so, they have no protection under the law in Japan. Those companies which have taken that precaution have received equitable treatment in the courts of justice in Japan on terms with which we can have no quarrel. I am advised, for instance, that E.M.I. had a recent action against a Japanese electrical company, and that the judgment in that case awarded very substantial damages to E.M.I. I understand that there is another case affecting wool which is going on at the moment.
It seems logical to suppose that if the procedure of registration in Japan is carried out, the defence which is offered to companies exporting to Japan will be of an efficient nature. Apart from that, I cannot see that Japan is likely to jeopardise its export industries by malpractices of the serious nature which the hon. Member for Bradford, North mentioned the other day. I hope that he will be able to catch your eye, Mr. Deputy-Speaker, and I believe that he may have reason to modify what he then said. The Japanese Ministry of International Trade and Industry is just as keen as the Government of this country to see that its export trade is not jeopardised.
Reference was made by the Minister of State to Japanese labour costs, and it is very difficult, objectively, to consider Japanese costs, because they have certain social customs which seem rather illogical to our paint of view. Their pay rates are low by British standards but, when we come to earnings, including fringe benefits, there is a slightly different picture, for not only do they receive these fringe benefits, which I should have thought it should not be within the province of industry to provide—namely, housing, medical attention and things like that—but there is this all-important national practice of paying bonuses twice a year which has a considerable effect on the overall eranings of the Japanese workers.
As I think the Minister of State said in initiating the debate, it is not unfair to say that the overall earnings of a Japanese worker in the major exporting industries are now becoming more like those existing in certain European countries, for instance, Italy. I shall come back to the Japanese labour position in a few moments, because it is a matter on which we on this side feel very sensitive. In 1961, the summer benefits alone amounted to £61 per head on the average in the national context.
The success of this Treaty will depend upon the efficiency with which the Board of Trade can operate two main safeguards. In answer to a Question put to him the other day, the President of the Board of Trade said that he would depend on the Wool Delegation to provide him with market information, which would enable him to judge the importance of orders placed in Japan for importation into this country. I hope that that sort of machinery will be effective. However, it will not refer only to wool. It will refer just as much to pottery, made-up garments, etc. The threatened disruption of our industry can be prevented by these two safeguards only if the right hon. Gentleman has up-to-date information.
How will he obtain it? He will depend on information gleaned, I suppose, by the wool or other industrial exporting organisations from the importing organisations in this country. The other day one of my hon. Friends reminded me that this country has an extremely sophisticated importing organisation and market—not only the banks, not only the ordinary straight-forward traders operating between the countries, and not only the confirming houses, but the main principal retail stores. I cannot see how the United Kingdom exporting interests will substantially or effectively secure information regarding orders placed in Japan. If they do not obtain it, on what basis can the President of the Board of Trade exercise his powers under the two general safeguards?
I do not want to talk too much about wool, because my right hon. and hon. Friends know a great deal more about that industry than I do. I am thinking in particular, of my hon. Friends the Members for Bradford, East (Mr. McLeavy), Ashton-under-Lyne (Mr. Rhodes), and others. However, I feel justified in pointing out that even at present Japan is reputed to be the fourth largest customer of Bradford and the wool-producing areas of this country. We must realise that, just as those areas are worried about the effect of the Treaty, 30 are the Japanese merchants themselves worried. We simply must try to be objective about this and try to bring about a general increase in trade between the two countries.
I realise that this is a generalisation, but it might put the position in a better perspective if it were more generally appreciated, for instance, that Mr. Douglas Hood, who is about to go to Japan, I think—for all I know, he may be already on his way—to discuss the matter directly with the industry, is seized of this point and will come to some sort of understanding with the Japanese on this matter.
As my right hon. Friend the Member for Battersea, North (Mr. Jay) said, what we do not understand is why the Japanese could not have found some way of introducing their dual price legislation amendments earlier than by March, 1964. This is a point which should be further probed.
I hope that the House will appreciate that Japan fundamentally is no longer a copyist nation. I believe that its desire is to export the best and maintain a prestige of honesty in the international market. I do not quite understand the fear of goods being dumped. I should have thought that goods will be delivered to this country only if there is a market proven to the satisfaction of importers.
My hon. Friend would better understand what people's fears are based on concerning dumping if he had lived in Lancashire. Three-quarters of the Lancashire cotton textile industry has been destroyed by the practices that are now explained and amplified by the hon. Member for Shipley (Mr. Hirst). It is a matter of experience, as distinct from vague theorising, that we are concerned about in this House.
I am obliged to my hon. Friend for that intervention. I hope that he will acquit me of not merely theorizing about this question. I myself have experience of this, though in another industry. What I am basing my case on is this. There are too many out-of-date ideas about Japan and we should give her the opportunity of proving her honesty in the international market.
Substantiating this point, I am reminded of a remark made by Sir Norman Kipping recently, that of the world's important markets we know the least about Japan. We cannot tolerate this position any longer. This country is dependent upon exports and has an economy which is jeopardised and in a bad state in certain respects. Therefore, we must review dispassionately every opportunity of increasing our trade. Our sister nations in the Commonwealth—Australia, New Zealand and Ghana—have already ceased to invoke their powers under Article 35 of the G.A.T.T. Australia does an extremely good trade with Japan, but so do we, and we can do better. The whole pattern of this international trade should be to increase our existing two-way trade of about £100 million a year to a trade each way of £100 million a year. I believe that this is absolutely possible.
I said earlier that I would refer again o the speech of the hon. Member for Shipley. He was on an inadequate point when he referred to our export trade. One of the great things about our export trade is not so much our exports to Japan as our exports to other countries—for instance, the Dominions —which are affected by their bilateral trade agreements with Japan.
The hon. Member is quite right, but he is crediting me with something I did not say. I should have loved to have talked about third markets, but I did not get on to the subject. That is probably where our biggest danger lies, but the hon. Gentleman must not put words into my mouth.
I apologise to the hon, Member. I thought that it was implicit in what he said. However, there is the danger. I have reason to believe that my hon. Friends who represent Stoke-on-Trent will have something to say about the trade with Australia.
I strongly believe that the important thing is for industries to get in direct contact with their opposite numbers in Japan. I believe that Japan will not be slow in coming forward and arriving at a reasonable agreement.
Lastly, I want to refer to the labour situation in Japan. This may be considered to be essentially a domestic issue for the Japanese Government, but we cannot eradicate it from our consideration. During the post-war period the International Labour Office has examined the general conditions under which Japanese labour operates. As I said earlier, the social customs and traditions of Japan are in many ways so strange to us that we cannot apply our rules.
The hon. Member for Shipley said that the Japanese do not accept our rules. I think that the hon. Gentleman made a most introspective speech on the general proposition that the world should run according to our rules. The world just is not like that. Ideas of fairness are comparative. We should do much better to direct ourselves to trying to encourage Japan to organise its labour according to our own standards. However, that cannot be done by rude and acid speeches. I should have thought that it should be done by (the community of nations and by using existing agencies, such as the I.L.O.
I feel strongly about this matter. On my visit to Japan, two years ago, I did not like some of the things I saw. I frankly admit that. Some things I saw in modern well-organised industries I thought strange and, in many ways, did not like. I believe that the position of the people in the less organised small rural industries is something which, if it had an important effect on exports, which I do not think it has, we should encourage Japan to have another look at.
I hope that notwithstanding the anxieties in certain industries the House will give general agreement to the Treaty.
I am very glad to follow the hon. Member for Lichfield and Tamworth (Mr. Snow), because he and I were together in Japan about two years ago. I remember standing with him at the entrance to our hotel —the Imperial Hotel, in Tokio—during the latter part of our delegation's business there and watching the rain pour down as it does in Manchester—not Bradford, but Manchester.
We were surprised, because opposite the hotel a new office block or a new hotel was being built. The work did not stop, as it does in our country. It went on. The men who worked on the site were provided with special capes and hats, from which the rain cascaded. Work went on irrespective of the weather, all day and all night, through the pelting rain.
I am not making a case against those employed in the building trade in this country. I am merely giving a small illustration of the different attitude that there has been during the last few years in Japan in the thrust to expand, the thrust to build, the thrust to trade, and the thrust to grow.
It is a very good thing that you invited me to address the House, Mr. Deputy Speaker. Others may speak for Bradford, but I am the only authentic voice of Bradford in the House. I was born there. There are smaller places alongside our great city which have benefited from the great textile trade which we have built up in Bradford. I never thought that I should be in London this afternoon, and longing for my lungs to be filled with Bradford air. When I think of the stuff being breathed outside, I think that we should be given danger money. My city has provided all these wonderful services to facilitate the growth of this great textile business at home and throughout the world.
Another reason why I am glad to be asked to speak is that I should have been at the Western European Union meeting with my colleague my hon. Friend the Member for Halifax (Mr. Maurice Macmillan) this week. He and I decided that I would represent him and his constituency of Halifax here and that he would look after my interests in Paris. It is right that the people of Halifax should know that their Member's thoughts are with us here today.
I am glad that the Treaty has been broadly welcomed on both sides of the House, because we are a great trading nation and our export problems match those which Japan has. As a great industrial Power, seeking to export, we cannot afford to neglect masses of population anywhere in the world, especially if it is thriving and expanding and in a position to pay. During the last few weeks I have been a little frightened sometimes when I have heard people say, "Keep out of Europe"—with 200 million people to sell to! Now they are saying, in effect, "Do not make a treaty with Japan. Keep out of Japan"—with 100 million people to sell to! Where are we to sell our goods if we are supposed to ignore the great, expanding masses of industrial populations who are waiting to buy from us?
There have been complaints in the past that the Board of Trade has not taken enough interest in our international agreements, and has not protected us sufficiently from the trade barriers raised against us, especially in textiles, but if my right hon. Friend had not pursued this plan, he would have been the President of the Board of no Trade, not the President of the Board of Trade—
Will my hon. Friend agree that while he has been a Member of the House all his constituents' difficulties have arisen over quotas, monetary restrictions, exchange regulations, and the like, as they have done in my own constituency?
I am glad to confirm what my hon. Friend says, and I shall touch on it later.
There is a lack of confidence in the negotiating machinery over which my right hon. Friend presides. This present Treaty could have grievous consequences for my city, and my hon. Friend the Member for Shipley (Mr. Hirst) was right to point to the great dangers to the textile trade inherent in its terms. The chief dangers are to wool combing and yarn spinning. Bradford is by far the largest centre in the world for those two processes. In this area of the West Riding, there are 42 wool-combing mills and 72 spinning mills, and they employ nearly 30,000 people.
Lest anyone should think that Bradford fears fair competition and that she is not equipped to deal with it, I would remind the House of the millions of pounds worth of exports which have been achieved by this great industry since the end of the war. At the moment, we are sixth in the "league table" of exporters. I believe that we have earned more hard currency—dollars —by our textiles than even whisky has. In spite of the manifold difficulties, with country after country raising barriers, and each of them creating its own textile industry, the initiative and enterprise of the West Riding, led by Bradford, has produced this great income from our export markets, which is now almost £170 million a year.
Lest anybody think that we are afraid of competition, and are either badly led or badly equipped, I can tell Members of a large plant in my constituency which is the most up to date in the world. It is at present spending £½ million on maintenance each year, and has spent £½million annually on new plant over the last five years.
I live in Bradford—I am not a foreigner, or an "offcomer", as they say in Lancashire. I have lived amongst these people all my life, so far, and no one in this House has a greater right to speak for the textile workers than I have. I have never seen those men, in their unions, at the benches in the mills, in the Wool Exchange or in the executive branches, so bitter as they now are about the effects this Treaty will have on certain of our textile products. It is a great pity that things should have been allowed to get to this stage, because too much time, thought and energy have been expended on it over the last few months by the very men who should have been seeking export orders instead of conducting acid negotiations with my right hon. Friend.
My right hon. Friend appears to resent some of the opposition from the textile districts of the West Riding and Bradford to his methods, but it is not surprising that there is this lack of confidence. My hon. Friend the Member for Bradford, North (Mr. W. J. Taylor) pointed to some of the things about which we have complained in recent years, and I will give two examples. As my hon. Friend the Member for Shipley knows as well as I do, in every single negotiation with the United States over textiles in the last four or five years, we have come off worse than Japan. The figures prove that.
Further, I have here a wonderful publication dealing with British Wool Textile Exports in 1960–61. It refers to negotiations carried on by my right hon. Friend's officers. It states:
During the negotiations we reported to the Board of Trade rumours that the Japanese authorities were intending to sub-divide the quota as between woollens and worsteds and to restrict the quantity of woollen cloth which could be taken. We were repeatedly assured by the Board of Trade that the Japanese negotiators were not intending to make this subdivision, therefore it came as somewhat of a shock to hear at the end of July that the Japanese authorities had indicated to the importers that the import of woollens was to be kept to about £1 million out of the £3·15 million. Representations through the British Embassy of Tokyo resulted in this instruction being quickly countermanded…
That is another proof of the lack of confidence in the negotiating machinery.
No wonder businessmen are sensitive and bitter. This is not public money. There are vast businesses in the West Riding, but there are also scores of small businesses still in the hands of families. These men are not sitting in London shuffling money around—they are producing. It is on the wealth and production of industry in my city and in the West Riding that all that goes on in the city depends. These men have a stake in our country, not just books, records, desks and figures. They have buildings and plants, and supply work to thousands of operatives.
More than that, they have millions of pounds worth of wool in their own warehouses. I wonder whether the civil servants who negotiate these treaties, or my right hon. Friend, know what it means to have a £1 million worth of wool, bought in Australia today, knocked down by the hammer at the auction, and paid for in seven days, brought home at the buyer's risk, and processed. A period of six or nine months must elapse before a man gets back the money he has paid out at auctions in Australia during the last few days. No wonder people are sensitive, suspicious, and sometimes bad tempered. These are the men whom we have to support, because it is on the strength of these industries that our strength as a country depends.
We just want some proof of Japanese integrity, and some proof that she has put behind her the malpractices referred to by one of my hon. Friends in an Adjournment debate, and by the hon. Member for Lichfield and Tamworth (Mr. Snow). The hon. Member for Ashton-under Lyne (Mr. Rhodes) will remember the moment in the textile trade a few years ago when the price of wool in Australia was 360d. a lb., but had dropped in a week to 180d. Every bale of wool, bought at the top price, was paid for and brought into our city—nobody welshed. These are the men who have built up a tradition, and have set an example—aye, to America also—and we want to know that the people who have signed this Treaty will observe the same high standards.
Throughout the whole of the textile industry there is a very fine trade union influence. Our textile unions have been ably led, and it is more than fifty years since the trade had a strike. With this record, all this work, all this honest sweat and toil, who are we to believe as to the future? Is it to be the politicians, or the civil servants, or the practical man who is getting the orders. There is need for more consultation. More and more great trading agreements are coming away from our industrial offices into the Ministry in London, and there is all the more need for more and more consultation, and more and more people will want to see my right hon. Friend.
As my hon. Friend the Member for Shipley said, we are tending to destroy the balance in our textile industry by making some items sensitive and others not. We introduce a rivalry, because in our textile businesses we have more of the horizontal construction than the vertical. There should be an arrangement whereby, until the Japanese bring into operation the fair-trading rules that they have promised to bring in in March, 1964, a joint agreement is made as to the quota that might apply to the items now left outside the quota safeguard. It is not much to ask that we should defend the interests of our textile manufacturers and exporters in the period to March, 1964, during which Japan has asserted that she is not able to make the fair-trading rules effective.
I should like to comment on the wages position. It is all very well to point to the equalisation of wage rates, but I understand that 80 per cent. of the labour in the Japanese wool textile industry consists of girls under 20 years of age. The proportion is much less here, and that fact upsets the whole balance of comparisons between wage rates.
I should like my right hon. Friend to bear in mind, also, that in our textile industries the average wage for the men is about E2 10s. 0d. a week less than is earned in the rest of our manufacturing industries. Those figures come from the Board of Trade. There is, therefore, no slack to be taken in. Indeed, there is need for bringing all our great textile businesses up to the same wage levels as exist in other manufacturing industries.
Another point to be borne in mind is that Brad ford is giving happy employment to about 20,000 coloured people, nearly all of them in transport and in the wool-combing industry. One can imagine the problems that will arise if there is a threat of dislocation of our textile trade.
In my view, the Government have served the national interest by pursuing this Treaty, but their responsibility does not finish there. Our textile trade feels that it has been thrown into a rough sea without a lifebelt, and with its hands and feet tied. I hope that between now and April men of very great experience will be constructively considering the problems which the Treaty presents to Bradford, and that they, along with the trade unions, will be joined in consultation by the President of the Board of Trade.
I have before me the Wool Textile Delegation circular to all interested in the subject, and I am sure that my right hon. Friend has received a copy. The last paragraph makes several constructive suggestions as to how these matters can be resolved. I implore my right hon. Friend to consider those suggestions, and to assure us that we shall adopt the methods outlined. The circular contains no destructive criticism. Neither Bradford nor the West Riding has ever said that we must not pursue this Treaty. They accept it, as they will accept the competition from the Common Market.
I hope that my right hon. Friend will join the men who know best, and construct the future on the basis of the suggestions they have made in this circular, so that we shall be effectively safeguarded. The Treaty with its safeguards is of no value if those safeguards are not only made effective now, but can be used quickly enough to be effective in the event of a great upheaval taking place in this great exporting industry in the months ahead.
I would prefer to follow the line taken by the hon. Member for Shipley (Mr. Hirst), because I feel somewhat critical of this Treaty. I remember that in 1951 a treaty with the Japanese was signed at San Francisco and in the years following it we found that the cotton textile industry was suffering considerably. Although one should not carry this kind of thing over for too long, I have some fears of the risk that we shall be running with the Japanese under the present Treaty.
I thank the President of the Board of Trade for the interview he gave me a few weeks ago when I heard then, and the House has heard today, that the Treaty is an attempt to liberalise trade with the Japanese. I am sure that we all believe in the liberalisation of trade, but from our past experience with the Japanese I see no reason why we should liberalise trade with Japan in order to make Yorkshire a distressed area. I say that because of what happened in Lancashire.
Whatever is done, must be done with equality and justice for both sides. In my considered judgment there is little hope for this country unless we continue the process of international trade. It may be that the Treaty provides the beginnings of international trade, but in future I should like to see the prin- ciples of international trade established at international level in such a way that we shall be able to work and trade together not only for business purposes but in order to preserve peace. I am therefore not enthusiastic about the Treaty, just as I am not enthusiastic about the Common Market which creates barriers against the rest of the world. I should like to see greater freedom obtained by the extension of responsibilities under G.A.T.T. so that the whole world can get together.
I confess that to me there was something rather sinister about the speed with which this Treaty was concluded. When the House rose in July, none of us seemed to know anything about what was going on. In August the Treaty is mooted and we find all the business houses in Bradford and district, throughout the heavy woollen industry, concentrating upon Members of Parliament and asking why all this was going to happen. They had every right to make inquiries. They have done a very good job, and 150,000 employees in the area are involved. I think that the whole House wishes to see the guarantees under the Treaty carried out, and it is particularly in respect of these guarantees that I feel concern.
I understand that if there happens to be coming into the country certain material which becomes extremely competitive with similar material on the home market we are to write to the Japanese a nice letter and to expect a reply within seven days. If they do not reply within seven days then, at the end of 30 days, we can apply restrictions on them. It seems to me that that indicates that the door is open to allow a certain amount of dumping. The Protocol is not tight enough, because there seems to be a clear indication that dumping in the first place can take place and only then is there machinery to try to correct it.
I want to know precisely how this will work. It seems to me that two months would elapse before any figures would be available in the Trade and Navigation Returns. This would mean that, with the 30 days which will have already elapsed, it would be three months before any steps could be taken to deal with the situation. I hope that the Minister will be able to answer this point, because if we are going in for liberalisation there should not be this distinct possibility of a large amount of material being imported into the country in strong competition with the home trade.
In view of the steps which are being taken and the fact that international trade will grow and grow, I cannot understand why the Minister did not have a debate in the House in the first place. I see no reason why we should not have known what was in the Treaty before it was signed. It may be that these things have happened over the years, but I cannot see why the House of Commons should not have been notified in detail of a commercial treaty which it was hoped to sign in a matter of days or weeks. I trust, therefore, that we shall consider these matters and do what we can to protect our own trade.
We are bound to have an extension of treaties, but we in Bradford are concerned in particular about the business element in them, because some of the trading arrangements in past treaties have been very unsatisfactory. I hope that all this will now be changed and that the President of the Board of Trade, in reply to the debate, will say what can be done to reduce the period of time between the arrival in this country of a surplus of imports competing with the home market and the moment when that fact can be dealt with adequately.
I do not think that the President of the Board of Trade could have had any doubts at all about the feelings of those who are engaged in the wool textile industry, and particularly those in the West Riding of Yorkshire. What my right hon. Friend has heard tonight will merely confirm that the fears which were aroused in their minds when the Treaty was published are still there. We are all most anxious to have answers to the questions which have been asked, and particularly to the question just posed by the hon. Member for Bradford, South (Mr. George Craddock).
I do not propose to go over the arguments which have been so well deployed during the debate. I take as my starting point the Preamble to the Treaty which says that it is intended to secure fair and equitable treatment between the nationals and the companies of the two countries. That is precisely what the wool textile delegation is asking for, nothing more than fair and equitable treatment. I hope that we shall have from my right hon. Friend tonight a little more assurance on the points which have been raised about export subsidies, dual pricing and malpractices.
I suppose that little good can be done by enumerating what the malpractices are, but, since the hon. Member for Lichfield and Tamworth (Mr. Snow) seemed to suggest that they did not exist, I will mention one. I believe that there is still woven into the selvedges of cloth from Japan the words "Made as England", not "Made in England"". The word "as" is woven in such a way, imperfectly, I believe, as to be less obvious to the eye than the other two words "Made" and "England". The President of the Board of Trade and his Department still have a good deal to do to ensure that the Japanese are prepared to observe fair practices and cease the others.
Not only the trade and those employed in it but the textile Press is greatly concerned about the consequences of the Treaty. My hon. Friend the Member for Shipley (Mr. Hirst) referred to the Wool Record, a journal which, I believe, enters the office of every firm engaged in the textile trade. The Wool Record has described the safeguarding procedures in the Treaty as "tenuous, even derisory" adding that the United Kingdom wool industry has been betrayed for political reasons in order to secure other advantages in the Japanese Treaty. Those are harsh words, but they express views widely held among people in trade.
What can we do now to ensure that our worst fears prove groundless? At what stage will my right hon. Friend's Department take the action provided for in the safeguards? Will it be when the order is taken? I cannot understand how that could be because I do not know at what stage the President of the Board of Trade or his Department will know when orders are being placed. Will action be taken when the goods are shipped in Japan? Here, too, there is doubt about whether my right hon. Friend or his Department will know when goods have, in fact, been shipped in Japan.
The third possibility—the most likely, I imagine—is that the Department will know only when the documents arrive in this country and are presented to the bank for settlement. Will that be the earliest moment at which the Department will know about what may well be very large shipments? At a time like this, when wool prices have been stable for a long time, or just tending to rise a little lately, the trade would be very likely to grasp the opportunity of buying large quantities of the cheap Japanese yarn which are being offered to us now.
Should that sort of thing happen, millions of pounds might be bought and absorbed by the weaving and knitting industry in this country. That is the moment when a tremendous amount of damage could be done to the wool combing and spinning industry here. My right hon. Friend will appreciate why we urge the Government to give us some satisfaction now to ensure that it does not happen.
It seems to me that it would probably be a good idea to set up at once a joint committee of those engaged in the textile industry consisting of representatives of the employers and trade unions together with officials of the Board of Trade. Let this committee operate in such a way that the general safeguards Protocol provided for in the Treaty will be able to operate. You should let it have under its concern everything which is relevant to Japanese competition as it can work under the Treaty. I urge you to heed the plea—
I regret having to interrupt the hon. Gentleman, but he should not address his requests to me.
I apologise, Mr. Speaker. You will realise that I am not a very experienced speaker here. I am so anxious that the President of the Board of Trade shall know the fears of the industry that I forgot the correct procedure.
My final plea is simply that the President of the Board of Trade should agree to continue to co-operate with the wool textile delegation and the unions so that the possibility of the disruption or destruction of the trade is never allowed to develop.
I shall make a reasoned, constructive and analytical case against this trade Treaty. In my view, those of us who represent the organised industrial workers should have made our attitude quite clear in a more definite manner earlier. In support of my case I shall produce evidence from the trade union movement in Britain, America and other countries. I shall provide evidence from employers, the banks and the Press and from Parliamentary replies given by the President of the Board of Trade.
We who represent the North Staffordshire pottery industry, which is mainly situated in the City of Stoke-on-Trent, are bound to be concerned about a trade treaty of this kind, having regard to our past experience. One of my weaknesses as am individual is that I am apt to be too ready to forgive. Although I look upon that as a good quality in a person, I feel that, when we speak as representatives, we should adapt a stiffer attitude.
Our country has been through two world wars and our people have suffered. There have been times when they have been treated very badly as a result of the malpractices and unfair trading methods of competition which existed before the war and since the war, as I shall show. Although we may as individuals have qualities of the kind I have referred to, when we act in a representative capacity on behalf of our fellow countrymen, with so much at stake, we should speak as representatives, not as individuals. I speak tonight not only on behalf of the pottery industry but on behalf of all the industries which will be vitally affected by the Treaty.
Our concern is increased by a letter dated 29th November which was sent by the secretary of the British Pottery Manufacturers' Federation, Mr. Turner, to the Chancellor of the Exchequer. I want to use my time to the best advantage and so I shall not take up time by reading the whole of this letter, but there is no doubt about it that anyone who reads it will see the uneasiness, which is expressing itself in an organised way, of the manufacturers and of the workpeople in the pottery industry in North Staffordshire.
Then the local newspaper of 15th November had an article which said that
great concern exists over the Japanese pottery trade treaty. It went on to say:
There were signs … that an 'unknown quantity' in the new Anglo-Japanese commercial treaty was becoming the subject of growing speculation, if not apprehension
in the North Staffordshire pottery area. It went on to provide more evidence of the correctness of that statement, which, I should think, would be generally accepted.
My hon. Friends the Members for Stoke-on-Trent, Central (Dr. Stross) and Stoke-on-Trent, North (Mrs. Slater) and for Newcastle-under-Lyme (Mr. Swingler) have been very active in this matter while I have not been here. My hon. Friends the Members for Stoke-on-Trent, North and Stoke-on-Trent, Central had a number of Questions on 27th November to which I intend to direct the attention of the House. The Questions were answered by the present Minister of State, Board of Trade, who has had great experience in industry. I would remark here that, unlike some previous speakers, I have no doubt about his sincerity or capacity, or that of the President of the Board of Trade, in dealing with matters of this kind. What I am being critical of is the policy which is being applied. What I have said about the Minister of State and the President of the Board of Trade applies equally to their advisers who are responsible for carrying out their policy.
My hon. Friend the Member for Stoke-on-Trent, North asked the President of the Board of Trade
what consultation he had with the Pottery Manufacturers' Federation and the Society of Pottery Workers before or since the signing of the Japanese trade agreement.
My hon. Friend the Member for Stoke-on-Trent, Central followed that up with a similar Question. The answers established facts which I am bound to put on record in speaking in a debate of this kind. The Minister of State replied:
There has been no direct consultation with the National Society of Pottery Workers.
Therefore, the facts are these: first, that no consultation with the trade union responsible for catering for pottery workers has taken place in connection with this trade Treaty; second, that frequent meetings have taken place with the pottery manufacturers; third, that the democratically elected Parliamen-
tary representatives of the people representing the pottery industry area have known nothing about the meetings for the last eight months or the meetings which have been taking place during the last two years. My hon. Friend the Member for Stoke-on-Trent, Central asked a further Question of the President of the Board of Trade:
whether he will state as fully as possible what are the articles of traditional Japanese design which it is proposed shall, under the terms of the Anglo-Japanese Commercial Treaty, be exempted from quota restriction.
The President of the Board of Trade replied as follows:
It has been agreed between the two Governments that the British and Japanese industries should consult together in order to determine what articles may properly be regarded as of traditional Japanese design.
Does any hon. Member believe that that can be operated satisfactorily? Time after time the industry for which I am speaking in particular has been asked to maximise its exports. It has responded every time. Now this industry, with others in which I am vitally interested, has been asked to sit down with an unfair competitor and enter into legal quibbling about what are its traditional designs. Can we be told this afternoon, when the President of the Board of Trade replies to the debate, what consultations took place with the pottery manufacturers before that kind of reply was given? Did consultations take place at all on the procedure? If so, can we be told what was said and what kind of procedural machinery it is proposed to set up?
My hon. Friend the Member for Stoke-on-Trent, Central put a further Question, to which the Minister of State replied as follows:
The arrangement is that on the 1st January, 1968, control of imports by H.M. Government will be changed for control of exports by the Japanese Government. operated in accordance with the understandings set out in paragraph 10 of Cmnd. 1875."—[OFFICIAL REPORT, 27th November, 1962; Vol. 668. c. 24.]
If I have time I shall refer to that Command Paper later on. Our concern is expressed in the White Paper itself, in paragraph 9. So part of our case within these particular limits is already given to us by those who prepared the White Paper.
How can there be satisfactory voluntary export controls between a country with relatively high standards and a country with relatively low standards? How can there be satisfactory controls when it is urgently necessary for us to maximise exports in order to keep things as good as they are, when we have to keep our eye on our balance of payments, and work towards even higher standards than we have at present? Therefore, if it were not so tragic this would be laughable. It may be that we shall be proved wrong, and ii we are, nobody will be more pleased than I, but I have no confidence in voluntary arrangements of this kind, judging by the past record of the people with whom we are dealing.
The Treaty specifies complete liberalisation of Japanese pottery exports to this country from 1st January, 1968. The Treaty includes the voluntary arrangements to which I have already referred. Even if hon. Members agree with the need for a treaty of this kind —and let me make it quite clear that, while I stand for expansion in world trade, I am an uncompromising opponent of doing it by this method—all should have been opposed to this Treaty, because there are too many uncertainties in it, too many qualifications, too many words within brackets and too many voluntary controls which will create quibbling and speculation about their interpretation. Had my late right hon. and learned Friend Sir Stafford Cripps been making the kind of speech I am now making he would have torn this document into shreds for the reasons I have already given.
After ratification of this Treaty, if I understand it correctly, the quota will allow imports of pottery from Japan to this country to the value of £400,000. In 1961 the figure was £162,000. When we consider figures of that description, after the way our industry has responded to appeal after appeal for increased productivity, for an increased volume of output, and for increased exports, we must say it is a tragedy that it should be faced with a situation of this kind.
I am not overstating but understating the case when I say that because of the Treaty the Japanese will be able to export to this country £400,000 of pottery, plus pottery of traditional Japanese design and ceramic toys. What is traditional Japanese design? What are the ceramic toys which are mentioned? Do they include the jugs of which we export thousands of £s worth? Do they include the musical jugs which form a large part of our exports and which are admired throughout the world? Do they include the pottery cigarette boxes and cases, or the hundreds of animals made in pottery which are admired in America and other countries? We should be told all this before we accept this Treaty, because this is an occasion when we exercise our Parliamentary rights and speak on behalf of the people and we must understand the Treaty before we agree to it. It must be explained so that the people outside the House can understand it.
What limits have been imposed on imports of Japanese pottery and ceramic toys and Japanese pottery of traditional designs? How can there be a satisfactory voluntary export control when Japanese prices are approximately one-third of ours? When I heard an hon. Member talking about men working in the pouring rain, it reminded me that we have not easily established our high standards in this country. We have come along a hard road and our people have had great struggles and have made great sacrifices to achieve these standards, which we should not now throw away as seems to be suggested.
Is the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) seriously suggesting that Japanese pottery imported into this country is only one-third of the price of the home-made product? Is that typical? I have a certain experience of some other trades and although some products are a little cheaper, I cannot believe that the figure of one-third is typical of the whole range of products.
I thank the hon. Member for Twickenham (Mr. Gresham Cooke) for that intervention. I have been very careful about these figures, which come from reliably informed sources. If the hon. Member has any doubts about them I hope he will pursue his doubts so that we can find who is right and who wrong.
In reply to Questions put by my hon. Friend the Member for Stoke-on-Trent, North earlier this year, the Parliamentary Secretary gave an indication of the serious situation with which we shall be confronted. He set out the details for the years 1948 to 1961 showing that in 1948 £16,000 worth of manufactured pottery was imported from Japan, while in 1961 the figure was £162,000. He also gave details of American imports of Japanese pottery. After all this country has done in two world wars and after all they owe to this country, the Americans have permitted these pottery imports from Japan—£80,000 worth in 1950 and £384,000 in 1961.
The same situation is occurring in our colonial possessions. I have the facts and I could give them for each Colony. I am sure that the Parliamentary Secretary will understand my growing concern when I find that the Treaty might be applied to the Colonies, for that will intensify the seriousness of the situation. Quite rightly, this country has poured thousands if not millions of £s into the development of our Colonies which in many cases are now to give priority to Japanese pottery and other manufactured goods over ours. Those who support the Treaty must consider that.
Has the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) seen Article 29 which deals with Colonial Territories?
Has he seen Article 29 which deals with Colonial Territories, to which the Treaty can be extended, although not necessarily, and the number of Colonial Territories which have been itemised?
I will come to that later.
Is it the case that the Japanese impose more controls on foreign trade than most other countries? If so, is it logical that we should agree to a Treaty of this kind? Is it the case that the Japanese control imports more than any other industrial country? I have evidence that the Japanese have been producing an enormous amount of goods which they have sent in parts to Hong Kong where they have been made up and from where they have been exported as having been made in the Commonwealth.
Is it the case that a company in Australia imports china blanks from Japan which are decorated and glazed in Australia and which are then admitted into Britain duty-free under Commonwealth Preference? For manufactured goods to qualify for that concession, a minimum of 50 per cent. of the factory value has to be added in the exporting Commonwealth country. Because of the low price of Japanese china blanks and the relatively high Australian wages, more than 50 per cent. of the factory price comes from the Australian part of the production, and so the goods qualify for duty-free entry to Britain. Are those the facts and has the President of the Board of Trade been informed about them? Why have not the Stoke-on-Trent Members been consulted? Is it the case that what is taking place is on a larger scale than with other industries? If so, should not our attention have been drawn to it long ago?
I asked if I could move a manuscript Amendment to the Motion, but Mr. Speaker ruled that no Amendments were to be called. However, included in the Treaty are some very serious statements on which we are bound to take cognisance. I want to quote from an article written by a research officer of the Trades Union Congress so that I can make my case as official as possible. It says:
The United Kingdom's exports and imports each amount to nearly a quarter of its gross national product. British trade unionists are therefore vitally concerned not only that world trade should expand quickly but also that trade between nations should be conducted along fair lines.… We are also very conscious of the fact that sub-standard wages and associated conditions are inconsistent with the principle of fair competition in international trade, and can threaten standards that have been won by workers in home industries. To this end the T.U.C. is at present conducting a survey among its affiliated unions …".
At several recent international conferences of metal workers' trade unions, where some of the most highly skilled men in this country have been present and where others have been represented, there have been well informed discussions of what is at stake in this trade treaty. Informed people have been unanimous in their view of what action should be taken to protect us from the kind of low slave conditions existing in countries like Japan.
Among the strongest supporters of this view are the trade unions of the United States. I will quote a few extracts from the 1961 minutes of the International Metalworkers Federation. Mr. Walter Reuther, whose political outlook is accepted by most hon. Members, was speaking for the United States trade unions. The minutes report:
He thanked Brother Graedel for an excellent presentation of the problem of Fair Labour Standards … The IMF must recognise that while this is an old problem, its dimensions are new and compelling, because this is the first time in history when workers throughout the world have access to the same tools, are making the same basic products, competing for the same world markets and, in many cases, are working with the same international corporations. This problem will become increasingly difficult, because of the acceleration in technological development and the growing concentration of international capital.
Therefore, if I had not tried to get an Amendment of that kind down at the time I did—I am not complaining: I am very grateful for the way in which it was dealt with—or had not tried to speak in this way, I would not have been worthy to quote a man who knows the facts. Mr. Walter Reuther goes on:
The Amalgamated Clothing Workers, one of the most advanced groups, whose early leadership had a Social Democratic philosophy, because most of it came from the European labour movement, a union which has historically had an international point of view, at its last congress passed a resolution that its members would not cut any more Japanese produced cloth. The reason is that the Americans are losing their jobs. The electrical unions passed a resolution to boycott electronic items made in Japanese industry, because the industry with which they have collective agreements shut down their factories in America, lay their workers off and built new factories in Japan, then use those factories, not to raise Japanese workers' living standards, but to dump those products in America.
Mr. Reuther goes on to say:
The problem by which the clothing and textile workers are all worried is not a theoretical, but a real, practical, tangible human problem, because 6 per cent. of all American workers are unemployed, many of them because their industry shut down a plant in America, to build a new plant in a low-wage area, then use that plant to satisfy the American market.
I only wish that I had time to quote more of that kind of speech which was made at that conference.
An international industrial conference was held in San Francisco in 1961. It decided to make a study of comparative costs between the United States, the United Kingdom and the European Common Market. It has been found that this kind of situation which we are facing in Japan attracts investment like a magnet attracts pins on a table. The logic of that is that the lowest cost countries can eventually become the most modernised and mechanised on a three-Shift system with a serious effect on established standards of living in a country like ours.
If anyone doubts one word of what I have said, then I invite him to read the Sunday Times' latest publication on Japan and, in particular, to read pages 62 and 63, 68 and 69. I invite him to read reports of the kind that I have just quoted. Here let me reiterate that the strongest support of the line that I am taking this evening will be found among well-informed American trade unionists who are faced with an unemployment problem and lowering standards as the result of the dumping of low priced goods manufactured in Japan. It has been said by the plausible representatives of Japan that industrial productivity has risen.
I know where all this started. It started in Downing Street at a private reception between two previous Prime Ministers. I know exactly what was said, but I shall not repeat it because of the regard that I have for one of the previous Prime Ministers. This is the kind of thing that is taking place, this new evening dress plausibility diplomacy is seeking to undermine our standards by modern Japanese methods. The Japanese are trying to avoid the antagonism that existed between the two wars. I take second place to no one in my regard for working together with people of other countries, but before we do that we have to live ourselves, and our standards are already none too high. Therefore, rather than be a party to undermining them, we are bound to speak and take the kind of action that we are taking this evening.
It is true that Japanese industrial productivity rose by 55 per cent. between 1955 and 1960, but during that same period real wages rose by only 25 per cent. Gross investment amounts to 30 per cent. of the gross national expenditure, and it is no wonder that the Japanese Government propose to double their national income by 1970, to carry out further economies in imports and to increase to a large extent the present figure of exports.
If anyone is in any doubt about any of those figures, I invite him to read the Three Banks Review of September, 1962, where he will find more evidence and figures to prove the correctness of what I have been saying. In addition, if he reads Barclay's Bank Review he will find set out very clearly in another form all that I have been saying this evening, and for those and other reasons my hon. Friends and I are bound to take the line that we have been taking this evening.
Our country is now one of the most vulnerable countries in the world from a military point of view. For generations we were saved because of our geographical position. We had a powerful Navy which protected us, and we owed a lot to it, but we also owed a great deal to our geographical position. We were in the field first in regard to industrial development and expansion. For many years the world was our market, but we have now reached the stage when economically also we are one of the most vulnerable countries in the world. It therefore behoves us all to adopt a constructive, positive, reasoned and responsible approach to these problems. This is why I support increased output, increased productivity and expansion of our markets, together with the demand for an expansion of world trade and the lessening of world tensions. But until this comes about we have to be on our guard and not support anything which might undermine our standards.
I hope that the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) will forgive me if I do not follow his argument, but I was very interested to hear what he said.
I realise that this Treaty is fairly widespread in its coverage, but this evening I hope that the House will forgive me if for a short period I refer to the fishing tackle industry. This industry in this country is largely centred on the town of Redditch in my constituency, though there are factories all round the countryside. For some time this industry has been going through a not very happy time, through no fault of its own. There has been a large amount of imports into this country from various parts of the world, including a large amount, which they intensely dislike, from behind the Iron Curtain.
It would not be in order this evening to pursue that matter, but for some time fishing tackle makers have been extremely worried about imports of fishing tackle, and in particular fishing reels from Japan. In the past there have been restrictions on the amount of fishing tackle that could come into this country, but for some reason—I cannot think why—in 1957 fishing reels, which, let us face it, are possibly the most sophisticated piece of fishing tackle manufactured in this country, were enabled to come into this country under an agreement whereby spools, bobbins, and reels came in.
I do not understand why this was done. Was it a blunder, or was it done deliberately? If it was a blunder, surely it should be remedied, and the industry felt that this new Treaty provided the ideal opportunity to remedy the position, but I am afraid that the reverse is the case. It has now been put down in black and white that fishing reels, whether made of metal or wood, will not be protected under the safeguard clause.
I received a letter from the chairman of the Association of Fishing Tackle Makers. He said:
I am sure you will have taken note that as far a; the new Anglo-Japanese Treaty is concerned, fishing tackle has been classed as a 'sensitive item', and a quota has been established for 1963 of £50,000 and 1964 £100,000, with liberalisation on 1st January, 1965, but again the Board of Trade have excluded fishing reels either of wood or metal from the quota and these are free from any import control under the new Treaty.
As by far the larger share of Japanese fishing tackle, imports consists of fishing reels, the effect of this is to completely negative the sensitivity which have been granted the Industry.
I was particularly interested to see from the Parliamentary answer by Mr. Green that he claims that it is an international definition, but as far as we are able to tell as an Association this is the only instance where fishing reels are not classed as part and parcel of fishing tackle.
I think that that really sums up the whole question. Why was this done? Can it not be remedied? This is an extremely sensitive item to this industry.
The men who make these fishing reels are highly skilled. A great deal of labour goes into the manufacture of these reels, and, as we have heard on many occasions from hon. Members on both sides of the House, wages in Japan are much lower than they are here, though not as low as some people have put them, and these fishing reels are coming into this country at about half the cost that we can make them here.
My hon. Friend the Minister of State in his opening speech said that copying by the Japenese was rather dying out. I am sorry to say that it is practically impossible to distinguish one fishing reel from another until one has used them for some time. I am informed that the metal used in the manufacture of Japanese fishing reels is not as good as we produce in this country, but it is very tempting to the British public to see in the shops these cheap reels which look the same as those manufactured here, and I hope that my hon. Friend will be able to do something about this and see that they are included in the sensitive list.
I believe that even my hon. Friend agrees that there was some confusion in this definition, because in a letter he wrote to the hon. and learned Member for Kettering (Mr. Mitchison), and of which he had the courtesy to send me a copy, he said:
We have not been able to trace the exact origin of the definition 'reels and spools' under which fishing reels were liberalised in 1957. But we know that it first appeared as an import licensing definition in 1951. We can safely assume that it was drawn up in conjunction with the Ministry of Supply at that time and that its intention was to cover reels and spools of all types.
Again I ask, is that really so? Surely the reels, spools and spindles concerned were for the textile industry? Surely they were not meant to include these highly specialised reels such as fishing reels?
I assure my hon. Friend that the industry is very worried and perturbed about this matter. I hope that when my right hon. Friend replies to this debate he will be able to give some help, some ray of sunshine, to this industry, which, though not a very large one, is highly skilled and employs fine men.
I am very much afraid that if something is not done these men will not send their children into this industry. They will send them elsewhere, and the industry will be undermanned. They are getting very down-hearted. They have gone through a bad time. I sincerely hope that my right hon. Friend will be able to provide a ray of hope and consolation for these very hard-working and efficient people, who are employed in an industry which in the past has carried on quite a large export trade and will continue to do so in the future if it is given the help and support that it deserves. If it is not, it may go under.
I should like to discuss this important Treaty in its widest aspects but, as time is limited, I shall confine my remarks to its t feet on the wool textile industry. I do not regard this as an issue between protectionists and those who favour more liberalisation of trade. The question is: how shall we achieve greater liberalisation without the disruption and the reaction that can so easily follow?
It is only fair to say that the wool textile industry is not always crying out for protection; it has a very good record in this respect. It has faced stiff competition both at home and abroad, and its export trade, which runs into £160 million a year, is of great value to the economy. But the Treaty creates a new situation. It raises the whole question of the methods of carrying on international trade. In this respect the fears expressed by representatives of the industry are justified. They are based on experience of Japanese trading practices. We have seen the massive dumping of wool yarns into Hong Kong. That dumping and the subsequent action can be presented in different ways. It can be regarded as an example of voluntary limitation by Japan. But it was only after strong protests from the Hong Kong spinners that the Japanese agreed to limit their exports.
In the years between 1956 and 1961 Japanese-subsidised exports to the United States market had a very adverse effect upon British sales to America. The representatives of the wool textile industry know what they are talking about when they criticise Japanese trading policy.
This is not primarily a case of a low-wage economy operating under very low production costs. Japanese wage rates have risen considerably, although there are still some major differences between Japan and this country. Because the industrial set-up in Japan is so different from that in Britain, her whole attitude towards what I call the mechanics of conducting international trade is also fundamentally different. The Japanese industry is largely dominated by a small group of powerful combines which are able to control importing and exporting, and dictate policy in practically the whole of Japanese industry. Dual pricing is therefore comparatively easy to operate, even without direct Government export subsidies.
As hon. Members acquainted with it will agree, the British wool textile industry, on the other hand, is carried on by a large number of independent firms, which are not in a position to subsidise exports at the expense of the home market even if they wished to do so. We know that at present Japanese exporters are being assisted in various ways. They enjoy a remission of taxes on the value of their export contracts, they are financed at specially low rates of interest, and the profit margins in the Japanese home market are kept artificially high in order to subsidise exports.
The first question to consider is to what exent these practices will continue, and what will be the effect of the assurances that have been given. We are told that the legislation providing tax incentives is to lapse—but not until March, 1964. We are also told that Japan will be expected to act in conformity with the provisions of the G.A.T.T. But it seems to me that dual pricing will still be able to continue. In other words, although there is no direct Government subsidising of exports, commercially-arranged subsidies may continue. This possibility is of major concern to the British textile industry.
The secretary of the Huddersfield Chamber of Commerce has written to me, and in one paragraph of his letter he says:
As regards subsidies, it seems we are even expected to help to bolster the means of providing them—one of our cloth exporters was only this week asked by his Japanese customer to invoice at 2s. 9d. per metre above the actual price he was charging.
The implication of that is that it would help the subsidisation of exports at the expense of the home market.
Yet the Board of Trade apparently accepts no responsibility for influencing policy in respect of commercially-provided subsidies.
I raised this point when the President of the Board of Trade made his statement on 14th November. I said:
May I press the right hon. Gentleman a little further on the subsidisation of exports? He will be aware of the concern felt by the wool textile industry over the dual pricing system by certain large trading concerns in Japan. Is there anything in the terms of this Treaty, or has any statement been made by the Japanese Government, which provides a firm assurance that the dual pricing system will cease, or are we to assume that the dual pricing system may continue?
The President of the Board of Trade replied:
Dual pricing is not one of the export arrangements banned by the G.A.T.T. declaration. It is a matter for individual industries and firms to decide their export prices, and there are price differentials in respect of British exporting industries too."—[OFFICIAL REPORT, 14th Novemmer, 1962; Vol. 667, c. 381.]
It is true that some British exporting industries operate price differentials, but that does not make the danger from Japan any the less serious. It is all a matter of degree. If dual pricing continues, as I fear, it may amount to a contravention of Article VI of G.A.T.T., which deals with anti-dumping; but it is all a matter of degree, and it is not always easy to prove that this practice amounts to dumping.
As I understand it, the G.A.T.T. does not rule out dual pricing, and if it continues the British and Japanese industries will be operating under different rules of international trade. Other hon. Members have already made the point about different rules. It is not so much a question of our asking everyone to observe British rules; what we are striving for is that there shall be similar rules operating among different countries carrying on international trade.
This may not be a good analogy, but if, in a game of football, the two sides were allowed to follow different sets of rules, it would not be much consolation to the home team to know that, in the last resort, the referee could blow his whistle and impose a "quantitative restriction", whereby the visiting team would not be allowed to score more than one goal every five minutes. But that will roughly be the position, and this is much more important than a game—even a game of football. The future of a great industry is affected, together with the livelihood of those engaged in it.
There may be overriding political reasons for entering into this Treaty, and serious embarrassment to the wool textile industry may be the price that we have to pay. But if that is so the Government would have been more frank if they had said so from the outset, and had admitted that the industry might be faced with serious consequences. It is unrealistic to suggest that there is nothing to worry about.
Coming to the safeguards, I think it is clear that there are two major points to be stressed. In regard to products not on the sensitive list it is obvious that the time factor in introducing any antidumping measures is vital. Owing to the forward-buying system in Britain, serious injury can begin many months before imports actually arrive in this country. The damage may be done as soon as offers are made, that is if the Japanese prices are substantially below United Kingdom prices. Perhaps the President of the Board of Trade will correct me when he is winding up the debate, but it would seem that the Protocol provides no safeguards against disruption of price levels. A great deal depends on the procedure which is eventually adopted.
The other main criticism—and perhaps the most serious of all—is the failure to deal with all wool products in the same way. Here I agree with some of the observations made by the hon. Member for Shipley (Mr. Hirst) and the two Bradford hon. Members, the hon. Members for Bradford, South (Mr. George Craddock), and Bradford, West (Mr. Tiley). This point is stressed in a memorandum from the Clothing Manufacturer's Federation which says:
With regard to wool garments the position has been worsened by the proposal to include
wool piece goods on the sensitive list. This is illogical as the free importation of garments would nullify the restrictions on piece goods by encouraging the Japanese to export to the U.K. their wool cloth in the form of made-up garments. This will be to the detriment of both the clothing and wool textile industries.
The distinction that has been made between sensitive and non-sensitive items may in itself have serious repercussions. Here I quote from the latest statement of the Wool Textile Delegation:
The influences which can arise out of this discrimination so far as production, marketing, selection and concentration are concerned and the encouragement towards switching.
I emphasise that—
from quota to non-quota items will be readily obvious, and this discriminatory treatment has the very serious effect not only of driving a division between the wool, cotton, man-made fibre and clothing industries but of disrupting the relationships between different sections of the wool textile industry.
For these reasons I think that the whole procedure should be reconsidered. It may be that we are faced with a fait accompli. Be that as it may, I understand that discussions are still going on. I hope that the President of the Board of Trade will consider the suggestion made by the Wool Textile Delegation already referred to, that:
The Board of Trade may be requested to participate in a joint committee of employers, trade unionists and Board of Trade officials with the task of making further arrangements regarding the operation of the general safeguard Protocol and of keeping the position relative to Japanese competition under constant review.
That is a good idea, but in any case I hope that the President of the Board of Trade will pay very serious attention to the representations still being made, for there is no doubt that this industry is deeply concerned.
I listened with great interest to the hon. Member for Huddersfield, West (Mr. Wade), but I do not think that he had a very clear view of the safeguards which have been provided by this Treaty.
The first protocol and general safeguard applies to all products, whether they are listed or not. That is followed by a second protocol which covers two categories, those which are checked out from Japan and certain items which are checked into the United Kingdom. I should have thought that these safeguards in their totality would provide the answer which we seek.
I appreciate, however, the argument put forward by my hon. Friend the Member for Shipley (Mr. Hirst), that it is one thing to have a Treaty and another to have it implemented in the terms of the text. In the Treaty there is provision for disputes to be referred to the International Court of Justice. If there are any difficulties or defects in interpretation they could be considered in that Court.
Another matter which is dealt with, and which has been mentioned by several hon. Members is that of dumping. I refer to the protocol of signature, paragraph 10, which reads:
The provisions of paragraph (1) of Article 16 shall not preclude either Contracting Party from imposing a countervailing or anti-dumping duty in the circumstances and subject to the conditions laid down in the provisions of the General Agreement on Tariffs and Trade which govern the imposition of such duty in relation to the trade of contracting parties to that agreement.
That, I should have thought, would be tight enough. It is making full use of the machinery of the General Agreement on Tariffs and Trade which has been invoked for the purpose of this Treaty. My only anxiety is that one has to produce evidence to the Board of Trade that dumping is going on. If I have a general criticism, it is about the type of machinery which has to be gone through to bring these matters into operation. If we could for a moment discard the question of the timing, I think that the provision in the Treaty is enough. This is a predicament in which I think my right hon. Friend was placed. Either he had to go ahead under the cover of Article 35 and the discrimination thereunder, or be prepared to regularise the trade between Britain and Japan by putting it on the basis of a treaty.
This agreement not merely covers trade, but a number of matters which range from navigation to safeguarding the rights of property, confiscation, and the like. None of those could have been dealt with in any other manner than by a bilateral arrangement. Further, the number of subscribers to Article 35 has rapidly dwindled and now we are left with Belgium, France and Austria in Western Europe.
Is the hon. Member satisfied that the Treaty as it stands will govern the Japanese trade which comes to us through America?
I think that the hon. Member will find that Japanese trade coming through America is an entirely different matter. It is exports from the United States from American resident companies which have been utilising what may be termed Japanese capital. I put forward the argument to the hon. Member that Americans in the United Kingdom have invested here and they produce £250 million worth of exports a year from resident companies. If we are to complain about Japanese exports from the United States, the argument can be put on the other foot and there could be legitimate complaints about American exports from the United Kingdom. One has to be careful about that argument.
I think the Japanese are treating this Treaty as putting their first foot forward in Europe. It was important to negotiate this Treaty with the United Kingdom preparatory to our entry into the Common Market.
I think that we can be sanguine about these matters. It is perfectly right that we should be. Hon. Members, may refer to the protocol of signature 14, which reads:
With reference to paragraph (3) of Article 29, a contracting party shall, before entering into any Customs Union, free trade area or agreement designed to lead thereto, inform the other of its plans in so far as they are relevent to the Treaty and give adequate opportunity for consultation about the effect of the terms of entry on the benefits which the other Contracting Party might expect to gain from the Treaty. The former Contracting Party shall also, after its entry, keep the latter informed of developments …
Also, it is provided under Article 29 that any advantages secured in the Customs union or free trade area would not be extended under the Treaty in question. Maybe a calculation in the Japanese mind was that they might get an introduction to Europe through the United Kingdom. They have been extremely agile in approaching France and Italy.
Before the intervention by the hon. Member for Glasgow, Govan (Mr. Rankin) I wished to refer the hon.
Member to the Financial Times of today, which says:
The French Government today announced the removal of further quantative import restrictions for G.A.T.T. countries other than members of the O.E.C.D.
The new list includes 15 tariff headings and is designed to make concessions to third countries notably Japan.
Among items which will enter without restrictions into France are cork, certain artificial and synthetic textiles, steam generators and tractors.
It would appear that the French are also departing from Article 35 of the G.A.T.T. It may be that the lifting of certain restrictions in Western Germany and Italy will follow. My right hon. Friend must keep in line and regularise what has been proceeding.
There is another matter which we should consider carefully. The general structure of the industry in Japan which has been valuable in enabling that country to go ahead. The Mitsui, Mitsubishi and Sumitomo groups, which were well known before the war, have come to the fore again. They appear to have ready access to the banks or money which is needed. The right hon. Member for Battersea, North (Mr. Jay) mentioned Japan's phenomenal record in exports. Between 1953 and 1961 exports advanced 232 per cent. compared with 42 per cent. in the United Kingdom. Production rose 217 per cent. compared with a much smaller figure here.
That does not put this country in a very good light. I underline, however, that while 40 per cent. of the gross national product in Japan was invested this occurred during a period of extremely high interest rates. During the summer the Bank Rate was 7·3 per cent. and the banks were lending to industry at something like 10 per cent.
I am sure the hon. Member knows that at the same time as these extremely high interest rates were being paid Japan had an extremely rapid expansion.
Yes, it had an extremely rapid expansion and that has been facilitated in some way by having high interest rates and a very high rate of saving. Also, although Japan had a balance of payments problem, a lot of money was attracted to Japan by the high interest rate prevailing. We cannot discount the position of Japan and cannot afford to turn aside from such an important market. The Japanese seem to be altering the structure of their export trade. In 1959, the percentage of exports assignable to the light industrial products was 47 and to heavy industrial products and chemicals about 42. In Britain, the relative figures were 18 per cent. and 66 per cent., and in Western Germany, which is the best example of all, they were 15 per cent. and 74 per cent. The Japanese are following the British example. Being a very important industrial country, it will be suicidal for us to keep out of the Japanese market.
I am sorry that the hon. Member for Govan is not now in his place, but I should say this in reference to his question. The Australians have made an advantageous contract with the Japanese covering the export of steel, coal and, I understand, iron ore. The New Zealanders have also made a rather satisfactory arrangement. This would lead eventually to the curtailment in some way of goods proceeding from the United Kingdom to Australasia. Another factor in reply to the intervention is that many Colonial Territories and separate sovereign States are safeguarded by Article 29, but when we consider the territories in Africa we find that there is no protection there for the United Kingdom because of the operation of the Congo Basin Treaties.
In other words, we should look at the situation well ahead in Europe. If we do, we see that we must deploy our resources successfully to get into this very important market. I do not know whether the right hon. Member for Battersea, North pointed this out, but production in Japan rose by 217 per cent. between 1953 and 1961, compared with a much lower figure in the United Kingdom. There is a possibility that it will not continue at that rate, but a growth rate between 9 per cent. and 10 per cent. per annum is very significant. It has been suggested by some economists that the standard of living in Japan may well be equal to our own in five or ten years.
The prospects have to be considered on a much broader front than was suggested by my hon. Friend the Member for Shipley (Mr. Hirst) and my hon. Friend the Member for Bradford, North (Mr. W. J. Taylor). Perhaps I should declare an interest in the matter. I am connected with the Machine Tools Trade Association, and I should be obscuring the issue if I did not point out that machine tools might do well out of a treaty of this nature. Chemical machinery and other engineering goods should also do remarkably *well. While textiles may come fourth, fifth or six in the United Kingdom export list today, in 1914 they were at the top. The heavy industries have taken pride of place in our exports. The Japanese are looking well ahead to the growth industries, and we must be very careful to see that we do not miss the opportunity of ensuring that our growth industries are helped.
The hon. Member for Willesden, East (Mr. Skeet) asked us to take a broad view of the problem, and I am in general sympathy with him. I am not a protectionist, and I welcome any agreement which will have as a consequence the increase of international trade. I accept the fact, too, that this agreement though it contains features which I intensely dislike, should benefit wide sectors of British industry by providing them with a new and growing market in Japan—and I hope that that goes for the British wool textile industry, too.
I realise that there is a corollary to this. There will be growing Japanese imports into this country, which we must accept. I recognise, too, that this will mean some growth in Japanese wool textile imports into this country.
Having said that, I must declare that such a treaty creates problems in a constituency such as mine—perhaps even more than Bradford, which has been mentioned—where a third to 40 per cent. of the labour force are in the wool textile industry and where the Board of Trade, despite the travails through which we have passed in the wool textile industry and the heavy woollen industry locally—in 1952, again in 1958 and again at present—have steadfastly refused to undertake measures of industrial diversification. I should therefore be failing in my duty if I did not put this agreement under very careful scrutiny indeed. Here I am sure I am echoing the feelings of my colleague the hon. Member for Batley and Morley (Dr. Broughton), whose constituency reflects similar problems to those of my own.
This scrutiny is the more merited because the conduct of the Board of Trade in recent months towards the wool textile industry, and, I regret to say, towards hon. Members, has been far from admirable. I do want to pitch it too high, but there has been what I can only describe as an almost indecent haste to rush this Treaty through compared, say, with the Government's handling of the Common Market negotiations. The latter has been creditable compared with the rush which has taken place over the Anglo-Japanese Trade Treaty. Letters which I have in my possession from Ministers in the Board of Trade, even from the same Minister, give a divergent picture of what has been going on. The President made a helpful offer to discuss the problems of the wool textile industry with hon. Members. This offer, I regret to say, was conveniently forgotten in the hurry. I hope that it will be taken up at some point.
Because of this sorry chapter, I will only say that between now and the entry into force of the Treaty next year the President should take the opportunity of holding talks with people in the industry who understand the problem, and also with hon. Members who are intimately affected, to see what can be done to mitigate some of the hardships and anxieties whichh this treaty has occasioned.
In recent months I, and I imagine other hon. Members, advocated two courses of action to the President, which were rejected but which I think nevertheless should be placed on record. First, it was urged upon him—it is regrettable that he did net do this—that there could be a general global quota for all wool textile imports from Japan into this country. This global quota could have been extremely generous from the Japanese point of view. It could have been similar to the voluntary arrangements which the Board of Trade have entered into on cotton textiles with India, Pakistan and Hong Kong. The reason I urged a global quota is that a quota of this kind, stretching over a few years, would have given the industry some degree of certainty in which it could have planned its operations.
This brings me to the second course of action which was advocated to the Government and rejected. This quota need not have been an indefinite feature of our relations with Japan. The issue could have been reopened when the Common Market negotiations were concluded. Reference has been made today to the Common Market negotiations, and these affect not only the issue of Italian wool textile competition in this country, which is a very serious problem in my locality, but also the whole question of wool and cotton textiles from the Asian countries of the Commonwealth. I stress the prior obligation, which I believe everyone in the House would echo, which we have to India before Japan, and the fact that if certain Japanese discriminatory practices are not wholly abandoned—I say this in measured terms—there is already some evidence that India in the area of wool textiles could embark on a policy of artificially cheap wool textiles for export markets. This would be a very retrograde and undesirable development.
I want to say a few words about Japanese trade practices, which we think are undesirable. The general practice of remission of corporation tax on export profits applies to all Japanese industries. The Japanese say that this will lapse in 1964, but I agree with my right hon. Friend the Member for Battersea, North (Mr. Jay) in asking why the Japanese do not abandon this practice immediately on ratification of the treaty. It is not very much to ask, if the whole apparatus is to be dismantled anyway, and apparently dismantled not only in respect of this country but in respect of all countries concerned, even those with which Japan has not reached special trade agreements. Apart from that practice, with which the House is familiar, there is a whole range of other general and specific discriminatory Japanese trade practices, some of which have been mentioned today and some of which have not. The F.B.I. Report refers to discriminatory practices relating to credit and to interest rates and to depreciation.
I come to special measures affecting wool textiles. In correspondence which I have had with the President of the Board of Trade there was a specific denial in one of the letters which was sent about the existence of special discriminatory measures in Japan on wool textiles. I hope that when he replies the right hon. Gentleman will give us a frank explanation of these points. In particular, I should like him to comment on two things which I think are of great concern. The first is the high internal profit margins which exist in the Japanese wool textile industry, assisted by fantastically high import duties, and this enables Japan to export her products extremely cheaply.
Serious as that point I regard even more highly the immobilisation of Japanese capacity. My hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), in an interjection, said that 40 per cent. of the Japanese productive textile capacity is immobilised by order of the Government, and this capacity may be put back into production in order to get profits on the home market on the basis of the export performance of the Japanese wool textile industry. Both these groups of discriminatory practices are serious, and before we part with this matter the House is entitled to some explanation of them.
I turn to the question of the sensitive list and of disruption. For better or worse the President rejected the proposal of a global quota. He created instead a limited list of sensitive items. It is worth quoting the World Wool Digest, which is produced by the International Wool Secretariat, which I assure hon. Members is impartial between various national industries. The Secretariat is as keen on the Japanese wool textile industry as on the British industry. Its article on the Treaty includes the phrase,
The cotton and man-made fibre industries have fared better than the wool textile industry.
As my right hon. Friend said, only wool fabrics are on the sensitive list. All the rest, including the waste trades and blankets, an important feature from the point of view of my constituency —the blanket industry is centred in Dewsbury and the neighbourhood—must rely on the general safeguards against disruption if difficulties occur. I hope that I shall receive some approval—with apologies to my hon. Friend the Member for Sowerby (Mr. Houghton)—if I say that Dewsbury produces some of the best blankets in the world. The President knows of the anxiety about the possible import of Japanese blankets into this country, about which I have already written to him.
Despite the anxiety which we have about blankets—and I do not minimise it—the greatest anxiety is in the woollen cloth section, and particularly that section which supplies cloth for women's wear. In the area which I represent and that of my hon. Friend the Member for Batley and Morley, five major firms in the wool cloth industry have closed down in recent years. It may be—and I should like confirmation from the Minister on this—that ladies' woollen cloth is on the sensitive list, but garments, as the hon. Member for Huddersfield, West (Mr. Wade) pointed out, are not. It is relevant to the discussion that Italian imports of woven woollen cloth have already increased very substantially in recent years.
That is not all. I expect that these Italian imports are bound to go up next year, should there be an upturn in the demand for wool textiles. This demand will increase even further if this country goes into the Common Market. As long as this competition with Italy is fair, we have, in the words of my constituents, to "take this on the chin".
When I wrote to the President of the Board of Trade, he said in reply:
As regards your point about imports from Italy, in considering the composition of the sensitive list for the Japanese Treaty, we have taken into account the vulnerability of the various sections of the industries to competition from Japan, and, as explained in paragraph 6 of the note, it is the intention that the list should include those categories of wool goods where the risk of disruptive imports is greatest. There will, of course, be quotas for the products included in the sensitive list.
I have argued, as the hon. Member for Huddersfield, West has argued, that the restriction which has been imposed on the imports of woven woollen clothing is not adequate if garments are to come in unrestricted, because that, in itself, will disrupt the industry.
One other thing must be said about disruption. The industry has explained the difficulty which exists in detecting disruption quickly along the lines of the production chain. It takes a long time in manufacture before the lack of orders affects the intermediate stages of production. I hope the Minister will study this month's World Wool Digest of the International Wool Secretariat, because he will learn something which will bear this out. I refer him to page 205 to an article, not on the Anglo-Japanese Treaty but on the position today in wool textiles and the situation created owing to lack of demand.
This study refers to the possibility of an upturn in the industry at the present time, and it states that it is already statistically just visible in that section where the gap between the raw materials and the retailer is shortest—in other words, for example, in the knitwear section. It is pointed out that it is not yet visible where there is a long process of production. The extraordinary thing about the Government is that knitted fabrics, where the distance from the raw materials to the retailer is comparatively short, and where I should have thought disruption was quickly detectable, are on the sensitive list, whereas there are many other sections such as I have mentioned in the wool textile industry as a whole, where disruption takes far longer to detect, but which are not on the list.
What about the future? I have on previous occasions harried the President of the Board of Trade, and I shall on perhaps other and more suitable occasions continue to harry him, about his neglect of the heavy wollen district and its industrial problems. On the Anglo-Japanese Treaty, I conclude by saying, firstly, that the safeguards that we have are not good enough. Secondly, I urge the right hon. Gentleman to seek even now an extension of the sensitive list and to examine the possibilities of including in it the importation of woollen garments. Thirdly, I urge him to improve his technique for identifying disruption and unfair competition. Here, I think two points can be made. First, in regard to our Embassy in Tokyo, there is a need for fuller reports on Japanese commercial practices and the speedy evaluation of them. Perhaps the Minister could tell us when he replies the number of the staff in the Embassy in Tokyo to deal with this matter, and whether there are economists and statisticians who can report to the Board of Trade.
May I tell my hon. Friend that When I was in Tokyo in connection with my own constituency, I had the greatest help from the Commercial Attaché, who, I think, was absolutely first-class?
There is nothing in what I have said which is an attack on the British Embassy in Tokyo. What I was asking, and what I think it is legitimate to ask, is that we should be sure that there is an adequate staff to give the Board of Trade the sort of information about economic practices in the Japanese wool textile industry which will enable us here to judge whether unfair competition is taking place. That is essential, but it is essential to do another thing, which is necessary to assist the wool textile industry. It is that we require much quicker figures about the disruption that is taking place at home. The President of the Board of Trade may remember—and this goes for his predecessor, too—that on many occasions I have urged in Questions that the picture of the net new orders for clothing and textiles should be broken down separately as for cotton and wool. Cotton and wool and clothing should be shown separately. This has been rejected, now it is quite clear that this refusal was perfectly ridiculous.
Will the Government, if necessary, convene a meeting between the experts of the industry, the Board of Trade and Customs and Excise, which is intimately involved in this matter, to produce, at least for the next few years, a special series of figures which will reflect, to the satisfaction of hon. Members and their constituents, the sharp changes in the situation? It is not very much to ask. The President ignored the interests of our constituents in hurrying this Treaty through. Let him now at least burn some midnight oil in order to relieve unnecessary anxiety.
The hon. Member for Dewsbury (Mr. Ginsburg) started by saying, and in this he was echoing what many other speakers in the debate have said, that in general he supported this Treaty, and I am in agreement with him on that. I am sure that it would be disastrous if those of us with strong wool textile interests in our constituencies allowed the impression to get around that, at the expense of other industries, we want to put a spoke in the Treaty. We realise clearly enough that even in the West Riding, there are many other industries which will benefit enormously. For instance, my own constituency has machine tools and my hon. Friend the Member for Willesden, East (Mr. Skeet) has listed that industry as one that might particularly benefit.
It is not the general issue of the Treaty on which we are criticising the Government. Without doubt, the general economic case has been made. The hon. Member for Huddersfield, West (Mr. Wade) talked rather as if this was a political case and as if the economic effects would be bad. I do not believe there is anything in that. I think that the general economic case for a commercial Treaty with Japan, is made without any possibility of doubt, but on the details there are many of us in the West Riding who are still unconvinced that, in many cases, the problem has been fully understood. I hope that when my right hon. Friend winds up the debate, he will have more to say on quite a number of issues that concern us. I hope he will begin by explaining why in the whole field of textiles only wool yarns and wool tops are not on the sensitive list. Will he explain why these should be singled out from the general textile field for exceptional treatment? That is the justifiable way of looking at it.
My hon. Friend the Member for Willesden, East said that the proportion of our exports in textiles had fallen. Maybe he is right, but if he will break down the figures as between wool and other textiles, he will find there is a very wide difference. It seems to be very strange that the Government could single out that section of the wool industry with the best export record and should not give it, by putting it on the sensitive list, the treatment which it might reasonably expect.
I hope that my right hon. Friend the President of the Board of Trade will have much more to say about the working of the general safeguards. Paragraph 7 of the general safeguard contains everything which could possibly be expected or hoped for in a safeguard of this type. Within seven days action can be taken. In general terms, I do not think that I shall be challenged if I say that no treaty of this sort has ever had such a strong safeguard, but there are many questions as to its operation to which we have not yet had satisfactory answers.
The essence of the strength of this safeguard lies in the fact that a threat of serious injury is sufficient cause for action. There is no need to wait until injury has been caused. If this is the teeth of the safeguard, everything depends on realising when a threat is in the offing. We have heard nothing from the Government about how a threat is to be diagnosed before its happens. This is what we want to know about. Whatever else the Government say, I hope that they will not say that this is purely a matter for the industry itself to find out. The safeguard has been devised by the Government, and it is up to them to identify the means by which it is to be worked.
I want to refer to Japanese practices, to which the hon. Member for Dewsbury referred. It has been made clear by West Riding Members that the West Riding wool textile industry is ready for competition with the rest of the world, welcomes it, and knows that it can defeat it. What people in the West Riding are not satisfied about is that many of the practices which the Japanese used in the past, which are against either the spirit or the letter of G.A.T.T., will end. We do not understand why the greater part of a year has to elapse between the coming into force of the Treaty and the ending of this enormous tax concession from which the Japanese exporter benefits.
The hon. Member for Lichfield and Tamworth (Mr. Snow), in a most interesting speech, said that the Japanese were anxious to be thought of as a reformed trading nation. I am sure that he is right, but it is a very funny start to being a reformed trading nation, in the eyes at least of the West Riding of Yorkshire, that nine months must elapse between our accepting Japan as a member of the club and its adopting the club rules.
This I do not understand. Still less do I understand the apparent agreement of the Government to the proposition that the signature of the G.A.T.T. Declaration on Export Subsidies can also be delayed for nine months. There may be technical tax reasons which cannot be overcame in the case of the tax concession. I should very much like to know what they are. There can be no technical reasons for not insisting that the G.A.T.T. Declaration on Export Subsidies is signed by the day we ratify the Treaty.
I made the same point. I myself was surprised. However, it is fair to point out from the Japanese point of view that, just as we are raising this point at present, they could equally well raise with their Government the fact that they themselves are not demanding a sensitive list. They have not got one.
I am grateful to the hon. Gentleman. I quite understand that there are two sides to the issue. However, the hon. Gentleman said—it is a perfectly valid point—that the Japanese are interested in being thought to be a nation trading by Western standards. My point is that the nine months gap, which can be of no read value, looks bad from our point of view. It would be such a useful step by the Japanese if they were to say that they would bring it forward to the date of the signing of the Treaty.
I am very concerned about the question raised by the hon. Member for Dewsbury of the sealing of machinery. It has not yet been made clear by the Government whether this proceeding is contrary to the letter of G.A.T.T. It is clearly absolutely contrary to its spirit. Have the Government taken steps to see whether the Japanese will stop this practice? This is a straight export incentive. These looms are sealed under Government control. They are released in keeping with export performance. This is so clearly against the whole idea behind the G.A.T.T. Declaration that the Government should take action to persuade the Japanese that we cannot accept this. I understand that it may be outside the letter, because this is a very peculiar method of export incentives which I do not suppose anybody else has ever thought of. If we are to be persuaded that Japan is a country which is working to international standards in trading, we must also be satisfied that the Japanese do not think up bright little ideas to get round the letter of the G.A.T.T. Declaration. We must be persuaded also that the Government appreciate the urgency and importance of a movement in this direction.
These are my main points. I repeat that we in the West Riding are not attacking the idea of a Treaty. We think that a Treaty is a good thing. However, at the moment we remain quite unconvinced about very many of the details and we expect in the winding up speech tonight much more flesh to add to the bare bones which we have so far heard of the working both of the safeguards and of the provisions about trading practices to which I have referred.
The debate has very much in common with the debates we have had on the Common Market and which no doubt we shall have in future. Time and time again, during the course of our discussion this afternoon, the question of safeguards has arisen. When dealing with the liberalisation of trade it is inevitable that the question of safeguards should arise. We ask ourselves how efficient they are likely to be and whether they will be adequate. I have very much sympathy with those hon. Gentlemen who have grave doubts and profound anxieties about the effect of the Anglo-Japanese Treaty on the interests of the woollen industry which they represent.
For my own part, if I speak only from the point of view of a constituency Member, I must declare straight away that Coventry will certainly benefit greatly from the Treaty. Our machine tool industry will benefit to a very great extent. Our motor car industry will benefit from the increased quota. Above all—we have great hopes for this, particularly in the difficult times through which we are passing—the aircraft industry hopes very much that Japan will buy British aircraft and will indeed become one of our leading customers.
I cannot help feeling that in considering the Treaty we have not only to rid ourselves of any parochial considerations but, even more, we must try to associate the commercial aspects of the Treaty with its political aspects. I do not think that those can be readily brushed aside.
One of the major questions is what place Japan is to have in the world of tomorrow. I was there only a month ago and I discussed some of these questions with Japanese politicians, industrialists and representatives of trade unions. I came away with the feeling that at this moment in history we have a great opportunity to establish relations with Japan which will, in fact, be of the greatest mutual benefit.
For many years after the war Japan was sustained by American investment and American interests generally. The phenomenal rise in Japanese production is not entirely due to Japanese talent. It has much to do with the fact that, like the Germans, the Japanese had no burden of defence. They were sustained to a great extent by foreign capital. Much of their industry had been demolished or destroyed by fire. The result was that the Japanese were able to re-equip their industry, in many cases from scratch, and so become one of the most advanced industrial countries not only in the East, but in the whole world.
After seventeen years or so the American interest is beginning to flag. The Americans, no longer regarding Japan as purely their own domain, are beginning to feel that the cost of supporting Japan is something which the Japanese must begin to bear on their own. For this reason, they have been encouraging the Japanese to look outwards in order to reinforce their economy.
For these reasons, Mr. Ikeda has visited both Britain and the Common Market countries. Japanese delegations have gone to China to see what trade can be done with China. These explorations by the Japanese must be associated with the tremendous pressure of population in Japan. One of the most striking things about any Japanese city is the tremendous build-up of population. During the course of the industrialisation of Japan, farmers and peasants have moved into the cities. The result is that today Japan has probably one of the highest densities of population in the world. Whereas Japan has an area only two thirds that of France, its population is about 93 million.
We must also recall one fact which I personally regard as tragic. In the last few years the Japanese have had their so-called eugenics law, which legalises abortion and which has kept down the rising population. One of the appalling things one notices on a visit to Japan is that this great, vigorous and dynamic nation is contained in a small island like we are. They are a people who, to preserve their place in the world, have to resort to such remarkable efforts as the introduction of an abortion law, with legalised abortion, plus the free issue of contraceptives, and so on. We must consider these facts in the context of the world as it is today. Countries around Japan will not admit Japanese immigrants. The moment has come when, if Japan is really to be kept within the area of Western influence and interests, something must be done to reaccept Japan as an equal partner in the comity of nations. One of the first things to be done to achieve that is to give the Japanese the opportunity of trade.
Very properly, reference has been made to the pre-war Japan which made itself notorious for copying, for imitating, and for unfair trade practices. I can well understand the anxieties of my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), who referred to that period and those practices and expressed his doubts about them. But we must consider whether the Japan with which we are dealing today is the identical Japan with the Japan of which we complained yesterday.
During my observation, limited though it was, I got the impression that the Japanese are making a tremendous effort to correct the errors and malpractices of the past. I think that they are conscious of it. I believe that in the discussions the Board of Trade has pointed out how public opinion here has been outraged by the fact that the Japanese have imitated and copied, have abused our patent law, and so on—
Certainly, in North Staffordshire we have found over the past eight years hardly any case at all of the copying of our designs.
I welcome my hon. Friend's intervention, because it tends to confirm that there is a new mood in Japan, and that it is a mood that may well make the safeguards incorporated in the Treaty more effective than would be safeguards that had to be exercised, metaphorically, at the point of the pistol.
When I was in Japan, I was received by the Foreign Secretary, and I spoke to members of the Diet. All of them seemed absolutely conscious that if they were to renew their trade links with Europe—and, above all, with this country—it was absolutely necessary for them to do away with those practices of the past that caused so much justified resentment in this country; and that they would have to apply themselves to accepting the rules of the club incorporated in the Treaty.
That, alone, is not enough if we are to make this Treaty of mutual advantage. The question has always been whether it is possible for two highly-sophisticated industrial countries to engage in complementary trade. When we consider this Treaty entirely in the image of the past, we think of the sweated labour of young girls earning wages far below even the lowest paid in this country, and see a sort of nightmare of a mass entry of cheap Japanese goods, produced by unfair practices, which will damage our own legitimate interests. In fact, I believe that the whole pattern of Japanese trade—and certainly the intention in regard to exports—is changing. The whole pattern of Japanese industry is changing. The emphasis is now being put on much more highly developed products than were made in the past.
I was interested when my hon. Friend the Member for Stoke-on-Trent, South referred to Mr. Walther Reuther, quoting the case of the garment workers of America, who are concerned about unfair Japanese competition. Mr. Reuther, of course, made no reference to his own trade, the motor car industry, the reason being that in the metal-working trades in Japan the rates of pay are very much nearer those of Western Europe, although I would not say the same in relation to Coventry.
In many allied industries, where high skills are required, the average labour cost is much nearer that of Western Europe than, certainly, to the wages paid in the low-priced textile industries. That is already an advance, and if the emphasis of our trade with Japan is to be laid on the more highly sophisticated products, there is a good chance that we will expand our commerce in motor cars, machine tools and, as I have said, aviation—
In quoting, or requoting, what Mr. Reuther thinks on the subject, my hon. Friend will no doubt also remember that it was not so many years ago that certain American industrialists were complaining against British competition because of the allegedly lower wage rates here as compared with America. Surely the whole thing should be viewed in the perspective of the cost of living and social customs of each country.
I think that if we are to trade, we cannot demand absolutely that every foreign country we trade with shall have a standard of living identical with our own.
That brings me to the Common Market. I found the Japanese greatly concerned with the possibility that they might be excluded from the benefits of the Common Market. I was constantly asked, "Will the Common Market be an inward-looking body? Will it exclude us from Europe? What are our chances?" I believe that, on balance, the British interest is against going into the Common Market, because the safeguards are inadequate. On the other hand, I believe that the balancing advantage is for accepting the Japanese Treaty, because it contains not only very powerful safeguards, but controls.
I do not want to talk at length about the Common Market, but it seems to me that some of the safeguards apparently written into the Treaty of Rome are safeguards to the extent that they may be safeguards which can be determined by bodies outside our own influence. With the Japanese Treaty, we have a completely different situation. We have a situation in which the safeguards are to a very great extent controlled by ourselves. They depend on a mutually smooth development out of the Treaty, as I hope will be the case, and I believe that the general result will be a wider extension of trade between the two countries than ever before.
I have just recently been reading the report of the London and Birmingham Chambers of Commerce. It is an excellent and comprehensive report, which I recommend to every business man who is concerned with trade with Japan. It sets out very fairly and accurately both the cost of production in Japan and the cost of production of the particular commodities in which there might be expansion. Above all, it seems to be a well-written and profound document, by which any one reading it would find himself convinced of the value of our prospective trade with the Japanese.
One thing that has not been mentioned today is the Japanese ten-year plan. That plan is of great interest, because it shows the relative increases in imports which the Japanese hope to undertake within the next ten years. It seems to me that these must inevitably be to our advantage. I shall not give a lot of statistics, but perhaps I may give one or two instances. It is intended to expand imports of finished products into Japan from £168 million worth in 1959 to £832 million worth in 1970. It is intended to raise the importation of semi-finished products from a value of £111 million in 1959 to £390 million in 1970.
These are substantial figures. It is never possible to be sure that the intention of doubling the standard of living, which is as much a Japanese intention as a British purpose, can be achieved, but if we consider the rate of expansion we have seen in Japan in the last ten years there is no reason to believe that it will not continue to develop in the coming ten years.
I believe that liberalisation can be highly dangerous if it leads to the cutthroat competition about which hon. Members on both sides have complained, but liberalisation, if accompanied by division of labour, can be something of the greatest value. While, at the outset, I referred to whether it was possible for two highly-industrialised nations to do mutual trade to their advantage, perhaps I can now say that it is possible, provided that there is some kind of consistent plan by which the two countries can decide what are the complementary aspects of their trade on which each can put emphasis.
In that connection, perhaps I can refer to a suggestion made by the hon. Member for Huddersfield, West (Mr. Wade). I believe that this Treaty can be made to work really effectively only if there is constant supervision of the safeguards. It is not enough to incorporate safeguards in the Treaty and for the Board of Trade then to go to sleep. It is absolutely essential that there should be a joint standing committee, consisting of representatives of the trade unions, the British employers, the Japanese employers, the Board of Trade and the Ministry of foreign Trade in Japan.
The committee should not necessarily be in permanent residence, but should exercise a constant watching brief over the operations of the Treaty. I believe that any manufacturer here or in Japan should be able at any time to advance an objection in the event of the Treaty being abused, and if such an objection were able to receive immediate attention we would have a most effective safeguard.
I think that this Treaty will be of the greatest advantage to Britain, whether or not we go into the Common Market. I believe that, commercially, it will provide substantial advantages not only to the metal-working industries but, I hope, eventually even to the textile industries. It will be of great benefit to our economy as a whole, and it must also provide advantages to Japan which, both politically and commercially, will be of benefit. For these reasons, I warmly welcome the Treaty.
I was glad to hear further words of welcome for this Treaty from the other side of the House, because I think that it would be very improper if our friends in Japan, and we have many, got the impression from this House that the whole country was against the Treaty. I have the greatest respect for the West Riding of Yorkshire, having lived there for ten years, but we have heard half a dozen hon. Members representing West Riding divisions, as well as Stoke-on-Trent, expressing their fears and doubts about it. I would only say that the West Riding and Stoke-on-Trent do not represent England.
We have to throw over some old habits of thought, and some of the phrases that may have been used in the 'thirties. Today, it is no use passing resolutions about slave labour in Japan. The basic wage rate there may be low, but bonuses bring the general rate of pay to quite a high level. We must also remember that, on the whole, companies in Japan employ many more people than we do—I should say that, broadly, they are over-staffed. There has also been an amazing difference in the atmosphere between Australia and Japan. Two countries at daggers drawn only a few years ago now have the closest relations, and Australia has more trade with Japan than she has with this country. The patterns of trade in the Eastern Hemisphere have absolutely changed in the last ten years.
I am a great enthusiast for Anglo-Japanese trade, and I think that it can be much improved in the future. My interest was aroused two years ago when I attended the Inter-Parliamentary Union Conference and spent a day or two after the Conference looking into the question of the import of British machine tools into Japan on behalf of a company which I represented. I was surprised to find that British machine tool prices were highly competitive with the Japanese, and, in some cases, under them. I also found that we could give better delivery than either Germany or Sweden, whose machine tools were also being imported. A great number of European countries are now sending machine tools to Japan, so there must be a market for them there. There is a great opportunity in Japan for this industry, and a company with which I am associated is only waiting for further liberalisation to get more Japanese orders for machine tools.
I am sorry that over the last ten or fifteen years the British nation, as a whole, has not entered into these technical agreements that could have been entered into had a little more initiative been shown. The U.S.A. has entered into 900 such agreements, and it is a great pity that we have taken up only about 50. I interrupted my hon. Friend the Member for Shipley (Mr. Hirst) to mention an agreement of which I knew something in a company with which I am connected. For the last twelve years, the Hillman Motor Company has had an agreement with the Izuzu Company for the manufacture of Hillman cars. Not only is the Izuzu Company making some 8,000 to 10,000 ears a year, but is making them very well—just as well as they are made in Coventry. They have been paying scrupulous attention to the specifications of the cars and have even made suggestions for their improvement, and they have paid their royalties on the dot, which has helped the Hillman Motor Company. The interesting point is that the Hillman car made in Tokyo is considerably more expensive than when it is made in Coventry. This therefore leads me to think that there is room for British motor cars to be exported to Japan if we have the opportunity so to do.
It is perfectly obvious that Japan is in for an era of great expansion. If the curves of our expansion and Japanese expansion are carried up the graph, I believe that by 1970 the Japanese will have as high a standard as we have, and presumably by 1971 a higher standard. It would be madness in our policy not to take pant in and share in this prosperity that is happening in the Pacific. We should play our part in it. None of us wants to see the wool textiles industry in this country hurt. The industry has had such a wonderful production and export record in the last few years that I believe in the end its fears will be dissipated. But if the industry Chas to take the rap to some extent, we must make up that hurt by more exports in engineering and machine tools. I believe that that can be done.
Just as in the last few years Lancashire has become predominantly an engineering county rather than a textile county, so I suppose engineering goods will have to take the place of woollens. But I have great hopes that the loudly voiced fears of the West Riding will not be justified and that the Government will be able to take action if required to safeguard our friends in the woollen industry. I am absolutely convinced that the Treaty is right and 'that we should share in the growing prosperity of Japan.
It is natural for the hon. Member for Twickenham (Mr. Gresham Cooke) to feel very optimistic about the working of and the ultimate benefits to be obtained from the Anglo-Japanese Commercial Treaty. The reason why he can feel optimistic and have little anxiety is that he speaks about machine tools, engineering and the motor car. These are the recent products of the modern part of our Industrial Revolution and the latest products associated with the second, electronics, revolution. But the hon. Member must understand why we who represent constituencies where the old industries are located, whether in the West Riding or parts of Lancashire or North Staffordshire, are naturally anxious at first sight.
I know that the President of the Board of Trade will take note that this does not mean that we are not anxious to see general world liberalisation of trade or that we are not anxious to trade with Japan and have reciprocal benefits as a result. But we cannot hide from ourselves that we must be anxious about what will happen in the immediate future. If we could replace certain old-fashioned factories in Stoke-on-Trent, see them closed down and our workers overnight retrained and used fully by the most modern forms of industry, my colleagues and I would be delighted. But when the hon. Member for Twicken-ham talks of this happening gradually in Lancashire he must remember that it is a painful process and does not happen overnight.
I am delighted to see the President of the Board of Trade in his place. I want to ask him a few questions. Could he give us any idea of what he would think would be a disruptive element by way of imports? Would it be 20 per cent. of our total manufacture in this country being displaced, or 30 per cent. or 10 per cent.? Or does the right hon. Gentleman feel that he has to wait and see and listen to the protests of the industrialists concerned and of hon. Members who represent them and the workers in the area?
I wonder why the right hon. Gentleman did not in any way directly have discussions with the trade union known as the National Society of Pottery Workers of Great Britain? I should have thought that it merited some consultation. It may be that the right hon. Gentleman, by using the word "indirectly", or assuming that there had been indirect consultation, knows something which I do not know. I am sure that my colleagues as well as myself would be glad to hear of it.
When the right hon. Gentleman looks at the quotas for the next few years, does he bear in mind that although they do not look significant in terms of cash, when it comes to terms of volume they must be multiplied by three? The hon. Member for Twickenham did not think it possible that the Japanese would be able to send into this country pottery at a third of the price at which we sell it here. But that is true, and therefore these quotas must be multiplied by three to appreciate their volume.
As the right hon. Gentleman knows, at present we are importing the equivalent of about 10 per cent. of the pottery manufactured and sold on the home market, that is about £2 million worth, in terms of volume. Are these quotas to be in addition to that? Does the phrase "ceramic toys" include the sort of fancy statuettes and other fancy goods which the Japanese tend to export, which we have been importing for quite a long time and against which we cannot compete on price? If they are included in what is already the quota, there will not be apparently a much greater addition, but if this is a fresh impost and another burden it would be most serious. If the right hon. Gentleman feels that he cannot answer me in this debate I should be happy if he would write to me and let me know what is the true situation.
These ornaments and figurines, as they are known in the trade, are very susceptible indeed to competition of this kind. It may be that some of our smaller factories will have to close as a result of this Treaty, and that is not a pleasant fact to face. If in 1965 there is to be a total quota of £400,000, which should be multiplied by three to get the volume in comparison with our own prices, it seems to me that an extra 10 per cent. at least will be imported of tea sets, dinner services and figurines, leaving us with at the most three-quarters of our former market at home in Britain.
Then there is the strange phrase that there is to be complete freedom for the importation of Japanese ware of traditional Japanese type. Could the President of the Board of Trade give us information about this tonight? Is he intending to ask the industry to find out by discussing the matter with the Japanese industry? That might be the best way, of course. Will our manufacturers go over to Japan to find out what the Japanese mean by voluntary control after 1968? What is the Japanese view today about how it will work? Perhaps the right hon. Gentleman has a very clear picture of how it will work.
I know that the Japanese have machinery by which they can decisively control whatever they wish, and I know that our Government think that they use it quite fairly and that they keep their word about it. If that be true, and if regular agreements can be made between the two industries, I can see the possi- bility of avoiding absolute catastrophe in our own industry. If they were to fail, however, and there were not a rescue operation of the type envisaged in the White Paper, then, of course, we should be destroyed or sustain a most severe blow.
I accept at once that the way the safeguards are worded and the fact that pottery has been put on the sensitive list indicates that there is machinery for rescue, but when the Minister of State opened the debate he made clear, I thought, that the Government will not look at any representations unless we are being really hurt. That was the impression I gained when he spoke, and I think that my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) will agree with me. We want to know what is the point at which something will be done. What have we to do? Will the Government themselves watch to see what is happening? Will there be machinery, apart from what is envisaged in the White Paper, by which they will have regular returns and know what is going on?
I hope that the President of the Board of Trade will forgive my asking him all these questions. He must understand, as his hon. Friend rightly said in opening, that there are industries which are extremely anxious. Any words of comfort which he can give we shall be very glad to have. The workers in North Staffordshire are extremely skilled and adaptable. If there is to be any contraction in our age-old industry, the President of the Board of Trade will expect us to urge him, as we shall with great vigour, to bring new industries of the most modern type to us so that we may take advantage of the skilled labour in our area.
I have listened to most of the debate, and, at this time of the evening, after we have had some very good speeches from both sides of the House, it would be an impertinence on my part if I were to detain the House for very long. Many things have been said which I should have wished to say, and, perhaps, they have been said in language more eloquent than I could command. The Government should be grateful to hon. Members on both sides of the House of Commons for the candour and forthrightness of some of the speeches which have been delivered expressing the anxieties and fears of hon. Members in all parts of the House about the Treaty.
Nothing could better illustrate the dilemma, which faces us than this debate. On the one hand, we agree in an abstract sort of way with the ideal of the unity of mankind and the desirability of creating a world in which trade barriers are swept away and national animosities melt into nothing. On the other hand, when we try to construct the machinery for bringing about those desirable aims, we immediately run into difficulty. This Treaty is a classic illustration of the dilemma.
When I first came to the House nearly 12 years ago, one of the first pieces of business which confronted me as a new Member was the Treaty with Japan which had then been signed in San Francisco, after all the dislocation of the world war which had ended not very long before. I confess now to my colleagues in the House that I committed then what has, I think, been the only act of insubordination during my period here to which I can plead guilty. Even in those days, 12 years ago, I had very serious doubts and inhibitions about the wisdom of that Treaty. I refused to vote for it.
I do not suppose that this Treaty will go to the vote tonight, so perhaps my embarrassment will thereby be somewhat relieved. Twelve years ago, I felt that it was a perilous step for a British Government to take, and I registered my objection to it in the only democratic way open to me as a Member of Parliament.
Was there not another democratic way open to my hon. Friend, namely, to move the rejection of the Treaty and vote against it, as I and my hon. Friepd the Member for Stoke-on-Trent, South (Mr. Ellis Smith) did?
I accept what my hon. Friend says, but, of course, in those days I was just a novice who did not know the ropes. I have learned a good deal about the ropes since then, and I do not like some of them very much. Neverthelss, I feel that we have to take them into account.
I regret having to say that, cherishing, as I always have, the ideals of the brotherhood of man and the need to promote a better society throughout the whole world, I found that the results of that other Treaty with the Japanese were not only oppressive but were, indeed, disastrous to the people I represented in Lancashire. During the intervening years, as the President of the Board of Trade knows, he and his predecessors have been good enough to receive me with various delegations which have gone to him to protest against what has been coming from Asiatic sources and what has been happening to our native textile industries in Lancashire which have been three-quarters annihilated by the unfair competition under the previous arrangements which we have had to face.
It is all very well to look at the matter in an abstract academic way and talk blandly of the liberalisation of trade. If anyone were to ask me whether I believed in the liberalisation of trade, I should reply that I definitely did. I regard it as a desirable end in itself. Nevertheless, when I see the results of the partial liberalisation of trade between a country with a low-wage economy which has not attained the standard of wages or conditions which we have here as the fruit of 200 years of struggle—and which have been not only disrupted but three-quarters destroyed ass a consequence—then I am critical of any further dose of that sort of medicine.
I am advised by my hon. Friends who have spoken in this debate, some on the technical aspects of the Treaty as it affects particular trades, that, taken by and large, if Britain ratifies this Treaty —and I assume it is the intention of the Government to ratify it—in 12 months' time we shall have freer access to this large market which undoubtedly exists in the Far East, and in a country with 100 million population, a country which has made immense progress, particularly in the post-war years, a country which up to 50 years ago had a closed door to the rest of the world. It is a strange irony of history that this Asiatic country, which has vastly increased its population, and has shown such tremendous industrial progress, by ingenuity, enterprise, and by sheer merit, I would admit, and which had a closed door to the world until only a few decades ago, today wants an open door to the world. Frankly, I do not like the results of that open door. The President of the Board of Trade knows my view on this, because I have expressed them to him on many occasions.
I wish to say a few words about my own part of Lancashire where we still have the remnants of a cotton textile industry, which is very much smaller, much more contracted, and very much less likely to provide a livelihood to many people. However, we also have a making-up industry. One or two hon. Members have drawn the attention of the President of the Board of Trade to what is a vital question, because this making-up industry is not situated only in the West Riding of Yorkshire, where some of the finest wool cloth in the world is fabricated and made up; it is diffused in various centres all over the country. In my part of Lancashire there are firms of the highest reputation and integrity, long-established firms, which are in the greatest state of anxiety about whether they will be able to carry on their making-up industry at all once the Treaty comes into operation. I do not think these anxieties are felt because of conclusions reached lightly, but I believe they have been arrived at after close, professional, scientific evaluation of the factors likely to apply.
Perhaps it would be as well if someone in this debate said—if it has not been said during my absence—that, for instance, if I make a contract with anybody, in any connection, whether it be a civil contract or a contract in public life or in any other connection, I want to be reasonably sure that the other party who makes the contract with me is going to keep the terms of that contract. All our experience in the past has shown that, however skilfully devised the treaties may have been, in treaty arrangements with Japan the Japanese have always found an ingenious way of getting round them.
I say quite frankly and without apology that my difficulty in this debate is not so much the difficulty of understanding the technical and the trade possibilities which may open to us in the future, but my difficulty is the feeling, how far I can trust the agreement, as at present arrived at, being kept by the Japanese, when the President of the Board of Trade's colleague in the Ministry has not given us any clear indication at all—I hope that he is going to improve on this—as to what is the intention of the Board of Trade in pulling down the trade defences of Britain. After all, we are British Members of Parliament representing British capital and British workers and British industry.
When I remember the ingenious devices which have been employed in the past by the Japanese to subsidise exports, such as by the double-pricing system, and by preferential rates of interest, and to give subsidies by way of tax remissions if export quotas reach more than a certain ceiling, and when I am told that all these devices have been discussed, no doubt by the officials in the Ministry, I wonder, where do we get to? We seem to keep having a sort of vague undertaking only, that after the end of 12 months it may be the intention of the Japanese Government to discontinue these practices. Why do they want 12 months? I Should imagine that this is in line with the usual Oriental approach to these questions.
After all, I heard one hon. Member say tonight, rather naively, that we did not think in the same terms as the Japanese, that they do not take the same view of treaties as we do. Of course they do not. The Oriental mind is something quite different from the Western mind. The codes of commercial probity and integrity and honesty which we try to respect here are not respected by everyone. I am not saying that is right or wrong. It merely happens to be so. Are we to rely on undertakings of that kind? They are about as legally binding and reliable as such undertakings as one Minister has been receiving in the negotiations during the past 12 months—and I refer to the Common Market.
Unless we can have a clearer picture of the likely effect of this Treaty on the textile industry in particular—what is left of it—it cannot be justifiable policy for any Government to enter into trade negotiations by which, in the name of liberalisation of trade, one section of the population in one part of the country already hard hit is asked to bear the main burden of that liberalisation.
I have said on many occasions that for 10 years the cotton textile industry has been regarded by the Government as an expendable factor in international trade. It has been sacrificed to the demands of the capital goods industries who have wanted to allow a flood of cheap Oriental imports into this country to pay for their exports. It is significant that although the process has gone to extreme limits in the case of cotton textiles, it as now being followed by exposing the whole textile industry to the same kind of unfair competition which ruined, frustrated and dislocated the cotton textile industry. The fears of hon. Members from the West Riding are fully justified, and I support them.
I have risen at this stage of the debate merely to give my support to those who have spoken of the Treaty critically and to say that anything which in the final result has the outcome of reducing the employment of our people or of threatening their standard of living is bad business for the British people. There may be compensating advantages, but I am by no means persuaded by anything which has been said from the Treasury Bench today that the final outcome will be to the advantage of the British people.
I must confess that I am sceptical and hostile. While I am liberal-minded enough to confess that certain things might be desirable in the long run, it is no doubt desirable to go to Heaven, but it is for those who are experts in theology to explain the route by which we go to Heaven. I am not sure what is the right way of getting complete liberalisation of trade throughout the world, and perhaps the hon. Member for Shipley (Mr. Hirst) can help me.
I must not be dragged into that. I ask the President of the Board of Trade for some answers to the people who have raised the vital questions. How far can we trust the Japanese to keep the Treaty and what are likely to be the results in terms of employment and trade for our own people in our native industries?
I have found it amusing today to know that I should be called whether I liked it or not, for tomorrow or next week I shall be bobbing up and down on the back benches and not being called at all. The opportunity now presents itself to patronise my right hon. and hon. Friends and to say that there have been many good speeches today, but I shall not start on that game because many of the speeches today have probably been a jolly sight better than that which I shall make.
To the hon. Member for Dewsbury (Mr. Ginsburg), who mentioned blankets being on the sensitive list—I notice that he is not in his place—I would say that as far as I am concerned blankets are top of the list for sensitivity. I spent last night in the Palace of Westminster lying on a bench having been dished out with two of the tattiest Army blankets which it has ever been my privilege to see, even when I was a private soldier. I recommend the hon. Member for Dewsbury to go in for a little home trade and get a few contracts for blankets from the House of Commons, so that when hon. Members are fogbound they can at least have a good blanket to cover them, even if they have to lie on a bench all night.
I would not say that.
Hon. Members opposite are keen on some aspects of trade, but I would advise them not to be too cock-a-hoop. Something is coming out of Japan which will cause them a little apprehension before the next Parliament is finished. I well remember hon. Members from cotton areas trying to elicit the support of other hon. Members when the cotton trade was going through a bad spell. We could not get it from the Coventry Members, who told us that they belonged to a very up-to-date industry. But two years later the Coventry Members were asking us for our support—as was the hon. Member for Twickenham (Mr. Gresham Cooke).
This Treaty is the logical outcome of six years of keen negotiation. It is not acceptable to everybody, as must be clear to anyone who has heard the debate. Members with constituency, trade union, or business interests have all expressed their apprehensions about the Treaty's possible consequences. In the main, the voices which have been heard today have been northern voices, the North which is so much in our minds today because of the growing unemployment in both old and new areas, the voices of those who have known the heart-aches of a generation ago, the voices expressing the fear of possible disruption, the voices of men who know these things only too well from bitter experience.
It has all been expressed to anyone who has cared to hear. What has been said has needed to be said—to put on record the honest, deep feeling which people all over the world respect, whether Japanese, Chinese, Russian, or anyone else. That has been expressed in the House today in no small measure. We put on record that deep feeling so that the Japanese nation may know that the signing of the Treaty and its ratification is not the end of this matter. It is as well, too, that the Government, whose Ministers have signed the Treaty, and the civil servants who will be called upon to implement it, should know what the House feels.
We believe that to negotiate a treaty with Japan was the right thing to do. It would be wrong to deny access to a country with the only consumer economy in the Far East, whose income per capita is still only two-fifths of ours, a country which is the pivotal centre of 100 million people whose standard of living is not more than one-fifth of ours. On my way to Japan, in August, I spent ten days in Malaya. I felt that this time I wanted to study the implications of Japan from as far away as Malaya, and I found them. The Malayan leaders told me that although they had been cruelly treated by Japan during the war, as they were, they looked upon Japan as the local boy making good.
Japan is blazing the industrial trail which will lead to more prosperity for them, too. They believe that wealthy industrial nations, by trading with other industrial nations, can increase their wealth still more. That has been the lesson of the world to such people as the Malays and those in the under-developed territories, and they want to join in. They believe that if Japan can help in achieving this it is a good thing to support Japan, and they in turn are getting the sympathy of the Japanese. These people in Malaya also believe that if Japan can loosen the economic and political ties which have tied Japan to the United States of America, it will be a good thing for them.
The first time I visited Japan she was down and out. Men, women, and children in burnt-out factories were polishing bits of rusty material with pumice-stone in the hope that these bits of machinery could be reassembled and that they would then be able to work. General MacArthur was in charge then, and when I asked how he would get the Japanese out of the mess they were in he said, characteristically, "I have sent James G. Killan back to America to consult with the best brains there. When he comes back I expect him to produce a plan which will create a perfect balance between labour, capital, and the consumer"—shades of Adam Smith and Karl Marx—but galloped on to say, "Who knows? We may have something here that will astonish the world."
I thought that he was being optimistic about the perfect balance between labour, capital, and the consumer, but he was prophetic about having something there which would astonish the world, when we consider the progress which the Japanese have made during the last fifteen years. I will not overwork this aspect of the matter, because it has been mentioned so often this afternoon. As a workshop near Korea, Japan gained a foothold and has made strides ever since. I will condense it like that.
Prime Minister Ikeda, when he came to power in 1961—and it is as well that the House should understand this—laid down a growth programme for Japan for ten years at a growth rate of 10 per cent. per annum. Exports at that time were running at £1,400 million per annum, so a simple arithmetical sum gives a figure of £3,300 million in 1970 if the plan succeeds. The Prime Minister was forced to do this by the political explosion that took place in Tokyo which forced the resignation of his predecessor. The riots in Tokyo were aimed at the removal of economic and political dependence on the U.S.A., so Japan looked round the world to see where she could sell her wares. Hence the pressure which has been applied on the Embassy, the Consulate, and the Government here during the last twelve months, resulting in the Treaty now before us. Japan believes that if we cease to discriminate and revoke Article 35 of the G.A.T.T. the rest of Europe may be persuaded to do the same.
Japan's position with the rest of the world is that fifteen countries including France, Belgium, and the Netherlands invoke Article 35 of the G.A.T.T. to avoid trading on equality with Japan. Although, up to now, I have never believed in Japan's capacity to reason about the effects of her behaviour on other pepole, I have come to the opinion that the strongest protocol is not in the Treaty but in the fact that if she slips up with this Treaty, and disruption in any trade occurs in this country, she will be unable to sign another treaty with any other country in Europe.
I want to say a word about liberalisation. The first page of the Government statement on the Japanese Treaty refers to the Japanese Government's declared intention to liberalise. What does this mean? It is a very vague phrase. The only definition that I have seen, either in Japan or at home, is to the effect that Japan is prepared to liberalise up to 90 per cent., at some time. I ask: 90 per cent. of what? I say categorically, with the knowledge in my possession, that this 90 per cent. is on the basis of trade in 1959. Since 1959, Japan's trade has increased by 30 per cent., and we can draw our own conclusion. My conclusion is that the 1959 value is decidedly unrealistic.
This subject of liberalisation, naturally, caused much anxiety and argument in Tokio when I was there. Industrialists were worried, and it so happened that during the first week of my stay in Japan there was a television broadcast of a discussion between Prime Minister Ikeda, some large-scale industrialists, and a critic. This discussion took place on the evening of Monday, 17th September, and was reported in the Japan Times of 18th September. I have obtained a copy of that newspaper for the purpose of greater accuracy.
The Prime Miinster was discussing the question of liberalisation with the industrialists, before a large and critical audience. The slant was, therefore, slightly different from what it would be in London, had there been the same discussion of liberalisation. That would happen with any Prime Minister faced with hostile critics in his own country,
so we must make a few allowances. Nevertheless, there is enough in what he says. The newspaper report says:
But Ikeda added the 90 per cent. liberalisation should be taken as a 'tentative target', indicating that chances of the oft-repeated transfer of the bulk of Japan's import items to a free list were now rather slim.
I tackled the Japanese on this. They were very worried, but they did not answer my questions. I did my best to get the matter cleared up in order that I could understand whether they were really in favour of this, that, or the other, but I failed to get an answer. Perhaps inquiries could be made by the Government about that.
There was another item in the Prime Minister's conversation with industrialists which was rather important. He pointed out that Japan has made it her trade policy to direct more energy to the development of the underdeveloped countries of South-East Asia, Latin America and Africa by means of engaging in more trade with them. To my colleagues who are highly critical of the Japanese I would point out that the belief is genuinely held in Japan that to encourage the under-developed countries is a good thing for international trade. It is a matter of degree all the way down.
Some hon. Members have spoken about competition with low-wage countries, but the Japanese are getting out of the cotton industry as fast as they can. They are doing that because they want to substitute new exports for the old type. Are we to hang on to some of our old ideas about this matter until we are too late to join in? When they enumerate such countries as Spain, Brazil, Taiwan, Hong Kong, they are doing no more than stating a fact. Instead of moaning about the disappearance of the cotton industry, the Japanese are getting as busy as they can with an automatic plant, which I saw—the most marvellous piece of engineering I have ever seen.
I leave the subject of liberalisation to turn to a question about paragraph 5 on page 4 of the Government statement. The paragraph says:
there is provision for the Treaty to be extended to United Kingdom dependent territories subject to certain conditions.
What are the "certain conditions"? As the President of the Board of Trade is to
answer the debate, can he tell us about the position of people in dependent countries such as Hong Kong and their ability to travel to Japan without visas, as that country is on their doorstep? More people travel as tourists to Japan from Hong Kong than even from the Americas or Australasia. The Japanese do more business with Hong Kong than is generally believed here. They do business which is building up Japan. I shall say something later about why it is being built up.
I want also to question the President of the Board of Trade about paragraph 7 of the Treaty. The terms of the general safeguard are there and I shall not bother to read them. I should like the right hon. Gentleman to say categorically whether there is anything in it or not. There was an article in the 22nd November issue of the Far Eastern Economic Review which was entitled, "Japan in the Club". It was by the editor, and it said this:
Britain reserves a disruption clause allowing action to be taken if a British industry is threatened with injury, though there is a gentleman's agreement that this would never be used, as Australia has never used her similar safeguard.
That might appear to be ridiculous, but this is no light statement. These people are in touch with folks in the Far East and gossip gets around. If it is just a matter of gossip, and the President of the Board of Trade will categorically deny it, I shall be pleased, but it is most disturbing to think that it has even been suggested that there is that type of thing between Japan and Australia. I hope that it is not so.
Why has the woollen trade figured so prominently since the negotiations for the Treaty began? I should like to clear up one or two misconceptions about surplus spindles, and so on. The history of the prominence of the woollen trade goes back fifteen years to the time when General MacArthur decreed that the textile industry should be the spearhead of future exports, short-term. That meant cotton, and afterwards the woollen trade.
Technique in the cotton trade is simple, but the manipulation and manufacture of wool is not. Much of it is a craft which has been handed down from one generation to another. However much the industry is automised, skilled craftsmen are the most important factor in the finishing of woollen goods. The Japanese know this very well. It is a technique which is difficult to acquire. The Japanese have mastered this technique, and all congratulations to them. They are clever people. We used to say that about the Chinese.
The industry in Japan has been developed to play a large part in the export drive in the next ten years. The old textile plan which I have mentioned has been largely superseded, but the wool plan remains as important as ever it was. Now decisions are taken by the Japanese Economic Planning Agency on every industry in Japan. It knows exactly what it wants, from each industry where it wants each individual industry to go in future export drives.
We might compare that with some of the futile and stupid investment in capital equipment which takes place in this country during a boom—equipment which becomes surplus to capacity in the first recession afterwards. The Board of Trade should not be misled by the Japanese insistence that they have spare capacity and spindles sealed. The sealing of spindles in Japan is not a cutting back of production, but a protection to ensure that the home market is not flooded. This is the answer to my hon. Friend the Member for Dewsbury, who put it the other way round. It is to ensure that the home market is not flooded through the use of spindles intended for future export production.
It must be noted, in this connection, that the take-off of wool from all over the world was higher in Japan than ever before, and yet they had 40 per cent. of their spindles stopped, which supports my argument that the export planning agency determined that the capacity should be put in so that when a time arrived which was propitious they would be able to export. Time and again I asked industrialists in the trade about this; I met them and went round their factories. They said that in a world subject to inflation one must be ready to take advantage of the next boom and then hope to hold the trade when the recession occurs. Owing to a cut in American imports and a recession elsewhere, the Japanese have accumulated stocks of 52 million lb. of yarn which, as the hon. Member for Shipley pointed out, is in itself a potential threat to markets overseas.
It is vital to understand the structure of their export-import organisation. Five very large firms and about ten of smaller size—although still large by world standards—control the whole of the import and export trade of Japan. The ramifications of these firms through banks, finance houses, the insurance world, industry and Government are immensely powerful. They are the modern version of Zabutsi. They have offices in every important commercial and industrial country throughout the world. Some of these firms handle as many as 5,000 commodities. They have no compunction whatever about selling a commodity very cheaply indeed if it means gaining entry to a new market. What they lose on the export roundabouts they make up on the other import or export swings.
Those in the woollen trade fear that large stocks of worsted yarns may be dumped at give-away prices, hence their disappointment that yarns are not in the sensitive list in the treaty. We cannot blame them. So tight is this arrangement that is exercised by the big firms that anybody thinking in terms, "It would be a nice little business if we could only get in touch with a company in Japan to supply a particular commodity which we could sell", should try it and see the result. There is one company which has broken loose of the shackles—the Cannon Camera company, which has some remarkable achievements. This company has an agency in Geneva, which distributes all over the world and an agent here.
The woollen trade does not oppose this Treaty. It is an industry with a record of £160 million exports every year. Its expert knowledge was cradled in medieval times and its wisdom has grown in an industry which the Board of Trade, the Treasury and everybody else may neglect at their peril. But it demands to be assured that the expansion of world trade through a treaty like this is on a fair basis. It would consider a fair basis to be the removal of all export incentives which operate in favour of the Japanese exporter.
First on the list is the 80 per cent. remission of tax on net export profits, which in itself is an incentive to dump, because one of the conditions for remission is that even if a loss is sustained on exports, the firm which sells 50 per cent. of its products at home and 50 per cent. for export is deemed to qualify for remission of tax on the export content of its trade. One would have difficulty in persuading anybody to recommend that type of export incentive, but it exists in Japan. I did not get this out of the newspaper, but went to a very reliable source—the biggest chartered accountant in Japan, who is handling this every day. I did this before I started my investigation.
Secondly, the Japanese exporter can discount his bills in Japan for subsequent rediscount by the Bank of Japan at the very low rate of 2·55 per cent. Thirdly, the Japanese exporter can obtain pre-shipment finance at rates very much below the normal market on producing evidence of export orders or continuing export performance. Fourthly, he can obtain long-term credit for six months, but that is not only insured but financed up to 70 per cent. Let hon. Members think about that when the next round of increases for the Export Credits Guarantee Department come along, and we are arguing the insurance side of it. Let them think what it would mean if we were backing the export trade of this country to the extent of 70 per cent.
These exporters are loaned this money —for a 70 per cent. advance—at 4 per cent. The hon. Member for Willesden, East (Mr. Skeet) mentioned in an interjection—I did not hear this speech—dear interest rates, but 4 per cent. is very cheap indeed, when we compare the rate of bank interest that has had to be paid over the last ten years, which is over 9 per cent. A further advantage which the Japanese importer has is that he is also the purchaser of goods for use in Japan, and can discriminate accordingly.
This fits in very well with the dual price system, mentioned by many speakers today, which operates in Japan, where prices are kept high on the home market, because of this control and the 20 per cent. ad valorem duty, plus 4s. 9d. per yard which was imposed on 1st June, 1961, at the time when the negotiations leading to this Treaty were hotting up.
This list seems very formidable, but I believe that the objections of our woollen trade would be met if, first, the export incentives outside the terms of the G.A.T.T. conditions could be removed by the time when we ratify the Treaty. That has been suggested many times today, and it is nothing new. Secondly, orders given by British firms to Japanese firms to be registered when these orders are placed, in the case of industries likely to be seriously affected, so that the Board of Trade will know, when the orders are placed what the impact is likely to be at the time of delivery. This is done with other elements of finance in the Treasury, though they sometimes go wrong, but all their assessments are made and on them they base their budget calculations. This is far simpler than any of that.
I suggest to the President of the Board of Trade that he should accept this idea, however it may work, but I would also suggest to him a way to do it. Seeing that Japanese firms are highly organised, and that no more than 15 firms are represented in this country, will he ask the Japanese Wool and Linen Exporters' Association if it will gather this information so that, at any rate, people in the Board of Trade and the Treasury will not be behind events when disruption takes place?
Thirdly, the safeguards must be diligently applied when required. The Board of Trade sent out a handout containing this interpretation of what happened in Hong Kong. I will give my interpretation in a few moments. This is the Board of Trade's interpretation:
The Japanese Government are very conscious of the need to avoid charges of disruptive competition, and they have successfully exercised control in recent years over exports of many types of goods, particularly textiles, to many destinations. A recent example is the restriction which they imposed on the acceptance of fresh contracts for delivery of wool yarn to Hong Kong when there was a substantial increase in exports to that market.
This is absolutely wrong. When I was on my way to Japan I called in at Hong Kong. I was given all the information. The Board of Trade should not send lads out on errands. It should send men who are prepared to get down to things and find out the background. What happened was this without any question. The Hong Kong spinners have a capacity of
700,000 lb. of worsted yarns. A knitting industry has been built up in Hong Kong which has exceeded the capacity of the spinners to supply it. The Japanese saw this, so they sent in their yarns in excess. Last year they sent them in at the rate of 1,600,000 lb. per annum. The spinners in Hong Kong objected.
The Japanese, with the consideration and understanding about which the Board of Trade has been "kidded", said, "Apparently, we must be very careful about this". Therefore, they cut it all off. This caused the knitters in Hong Kong to grumble. The Japanese then decided that they really wanted Japanese yarn, so instead of sending in 1,600,000 lb. in September they started delivering 3 million lb.
Some of the fears may be groundless. For instance, the fears that they are technically in front in Japan are just not true. One reason why I went to Japan was that I wanted to look for the technical advance. It is not there. They have a large number of technical people, more than we have, but their quality is not as good. There is no question that the woollen trade people have picked on the unfair aspect of this. If they can have this aspect resolved and if the safeguards are exercised, there is no question but that they will make their way and will not grumble as they have in a dozen similar situations in the past.
I must say this to my hon. Friends who have spoken about the low-wage competition from Japan. Japan will not be a low-cost country any more. There have been movements in Japan over the last two years which have surprised me. It was four years since I visited Japan with the Minister of State. There is a new demand on the part of the Japanese to go further in the process of Westernisation. They are making demands all the time now, and wage rates are rising all the time. The employers, the industrialists and the remnants of the old regime are worried stiff about this trend. Therefore, we must not talk any more as if the conditions which obtained twenty years ago still obtain. If we do, we shall be twenty years out of date.
Another reason why costs will not be low any more is the small amount of public expenditure going on in Japan. The people who will have to find the money in the future are very worried about this. There is no question but that at present they are making quite a show, especially in the main streets of Tokyo, because the politicians have decided that they must put on the best face they can for the Olympics next year. The Japanese people will demand these improvements. There are large cities with no sewers, libraries, etc. Public investment of a size Which the world has never seen before will take place in Japan before long.
I want to know what Her Majesty's Government are doing to improve facilities for exporters from this country to Japan. Can the Minister be more specific. I can in one respect. The present consular and information services are inadequate. This statement does not mean that there is any reflection on the personnel there. The reverse is the case. It is respect for the magnificent job they are doing in difficult circumstances which prompts me to raise the matter. Accommodation in back rooms in an upstairs office in Osaka, with a small branch office in Kobe, is not good enough to cover the Whole of the Kansai, the most thickly-populated and highly-industnialised area in the world.
The staff are rushed off their feet by domestic inquiries. They should be given help. If we are asked to sign a treaty of this sort because of Japan's increasing importance, we are entitled to expect that when British industrialists try to export to Japan they will receive proper service when they get there. We must build up the staff so that they can be on top of their job of selling Britain to Japan.
It is exactly sixty years since this country signed a famous treaty with Japan—the first. That treaty's object was to keep the open door, and respect the integrity of China. I actually remember it being signed, because my father used to keep us up to date with the news. The circle is now complete. Japan is coming to Europe, seeking a treaty with us, the object of which is the open door in Europe. Let us hope, as well, that they respect the integrity of Britain.
I am sure that the whole House has enjoyed, amongst many other speeches, the particularly interesting, and at times extremely eloquent, speech of the hon. Member for Ashton-under-Lyne (Mr. Rhodes). It was a very moving speech, practical and very realistic. If I may presume to say so, the hon. Gentleman speaks at his very best from the Dispatch Box and we therefore hope to see him there in future—as long as it is the Dispatch Box on the Opposition side of the House.
If I may record my general impression of the view of the House, I would say that there has been a general welcome for the Treaty but, as I fully expected, a number of my hon. Friends and hon. Gentlemen opposite have quite properly expressed anxieties on behalf of particular industries, or particular aspects of the Treaty as explained in the White Paper.
I was very much interested in the wholeheartedly favourable speech of my hon. Friend the Member for Twickenham (Mr. Gresham Cooke) and the particularly interesting speech of the hon. Member for Lichfield and Tamworth (Mr. Snow), whose knowledge of up-to-date Japan was clearly expressed. Although I was not able to hear the whole of the speech of the hon. Member for Coventry, North (Mr. Edelman), I was told about its theme, and I found what I heard at the end most interesting.
I fully appreciate the anxieties expressed by the Yorkshire Members, and particularly those of my hon. Friends. It was suggested that I was, perhaps, a little tetchy at the representations made. That is quite untrue. I have been very glad indeed that they have taken the trouble to keep me acquainted with opinion and feeling in the Yorkshire constituencies they represent, and an hon. Member opposite, who is not now present, was also good enough to do me the same service. I feel that the Yorkshire Members of Parliament have been upholding the best traditions of the House in voicing the anxieties of their constituents, and making sure that the Government were fully aware of their problems.
I am grateful to them for all they have said to me, for all they have said at meetings and in letters, and for their speeches today, laced, as in many cases they were, by a generous appreciation of other aspects of the Treaty. I should particularly acknowledge what my hon. Friend the Member for Shipley (Mr. Hirst) said about my personal sincerity. I was also glad that on this side the speeches were not confined to Yorkshire Members, and I particularly liked the brief but effective intervention of my hon. Friend the Member for Bromsgrove (Mr. Dance) on the subject of fishing reels, and the well-balanced speech of my hon. Friend the Member for Willesden, East (Mr. Skeet).
I shall not spend time on the good points of the Treaty, because those have been well dealt with, particularly by my hon. Friend the Minister of State in opening the debate. I think that the House would prefer me to deal with some of the criticisms that have been made, and I will try to answer some of the queries about the way in which we intend to implement the safeguard provisions and other features of the Treaty. While, in doing so, I shall be dealing to a certain extent with general questions, I shall probably find myself dealing more with the examples drawn from the wool textile industry than from any other, so I shall be dealing with wool and general matters at the same time.
I have, of course, been in close touch with representatives of the wool textile industry directly, as well as through Members of Parliament, and I have been made well aware for some considerable time of their anxieties—and of the anxieties, too, of the clothing manufacturers who use wool cloth. A further meeting with the Wool Textile Delegation is being arranged at the Board of Trade, so I do not wish anything that I say tonight to be regarded as closing the door to further discussion with that industry—or, indeed, with any other industries which may wish to make representations. I hope that, as a result of such discussions with my officials at the Board of Trade, the fears of the wool industry will be allayed.
Before dealing with the situation in detail, I want to develop a point made by my hon. Friend the Minister of State towards the end of his speech. There is no doubt that a number of industries would feel happier if they knew that they would be able to continue to be indefinitely protected from Japanese competition by the maintenance of quotas. We all talk about vigorous and free competition, but we all like a soft, cosy life if we can get it. I do not blame any industry wanting to get protection if it can manage to pull it off, but in some industries from whose goods quota protection was removed during the annual trade reviews, it has been particularly interesting to see that, while they faced the prospect of liberalisation with complete misgiving, in most cases the misgivings were not justified in the event.
We must remember that this is a Treaty for the expansion of trade between the two countries and for the removal as fan as possible of discrimination. It was therefore only possible to justify the inclusion of a product in the sensitive list if there was a strong presumption that imports on a disruptive scale would follow immediately on liberalisation. How generously this criterion has been interpreted—and it has been interpreted generously—is clear from the number and variety of products included in the list of items on which control will be maintained either at the export end or at the import end.
The hon. Member for Lichfield and Tamworth said that we had taken a very long time to conclude the Treaty. One reason why it has taken such a long time has been that the negotiation of the sensitive list has been a very tough piece of negotiation and the final selection of the items and exact quantities was finally decided only a matter of a few days before signature.
It may be. I am dealing with the Treaty with which we are concerned tonight, and it would be useful if the hon. Member could have a word with the hon. Member for Dewsbury who said that we had rushed the Treaty.
If the two hon. Members get together they may decide in the end that we have taken perhaps just the right amount of time.
My hon. Friend the Member for Shipley, and one or two others, suggested that all textiles except wool were on the sensitive list. If I may be allowed, I should like to correct that point, because there are a number of other textiles also not on the sensitive list. These include man-made fibres, continuous filament man-made fibre yarns, silk yarns, certain silk fabrics, flax yarns and linen fabrics. Each case has been judged on its merits. The test has been immediate risk of disruptive competition if restrictions were removed. As regards wool products, all wool woven cloth has been included The very damaging competition from the Japanese with our trade in certain types of cloth in North America was for us solid and firm evidence of our industry's acute vulnerability at those points.
Here I should like to pat myself on the back and say that we should be congratulated on getting agreement with the Japanese on the inclusion of the whole range of wool cloth on the sensitive list, because they effectively compete with us only in the lighter range and we still have very little to fear in respect of the heavier cloths. Nevertheless, we have secured that all woven wool cloth shall be on the sensitive list.
Certain hon. Members and some of my hon. Friends have complained that we have not also included tops and yarns and garments of woven wool cloth. The reason for this is simple. There has been no substantial evidence that our industry is vulnerable on these products. As regards tops and yarns, our industry is the world's biggest producer and exporter of tops. Japan's total exports of tops in 1961 were less than one-tenth of ours. Our production of yarn is game two-thirds greater than Japan's, and our exports in 1961 were no less than three times as much as hers.
It is true that Japan's exports of tops and yarns were pushed up in the earlier part of this year, but the increase appears to have been mainly in sales to neighbouring countries in the Far East. I admit that there have been occasional reports of under-cutting on tops, but there is no evidence that tops makers and yarn spinners have suffered on any significant scale from Japanese competition in third markets. They both do an excellent trade in Japan itself.
Our imports of tops from all sources are under 1 per cent. of our production. Imports of yarn are under 2 per cent. of production. Therefore there is no question of the combing and spinning industry being already under pressure from large quantities of low-cost imports or indeed from imports from any sources. The circumstances are entirely different from those obtaining in Lancashire and therefore there was no case for special treatment.
In speaking of Lancashire, the right hon. Gentleman was, presumably, referring to cotton. Could he say why he included synthetic fibre yarns on the sensitive list and not wool?
Because there was a special case for including those items.
I do not wish to go into that in detail now because I have quite a number of other points to deal with in the few minutes which remain. The case in respect of those particular fibres was clearly justified.
I was just coming to woollen garments, if I may be allowed to get on.
Will the right hon. Gentleman give way? There is plenty of time. Having regard to all the publicity which has been given to the argument between the wool trade and the Board of Trade, why cannot the right hon. Gentleman give the House of Commons some information about the discussions which took place between the manmade fibre industry and the Board of Trade before the decision he has just disclosed was reached?
Because all the detailed discussions are confidential, as are the detailed discussions with the wool textile industry.
As regards woven wool clothing, we have been told that Japanese slacks, for example, are on sale in the United States at prices lower than those of similar articles made in this country, However, there is nothing to show that Japan has made any inroads into our trade in woven wool clothing in the United States. On the contrary, the value of Japan's sales to the United States appears to have dropped substantially more than ours between 1959 and 1961. We have no evidence of damaging Japanese competition in other markets, and our wool clothing industry is, of course, one of the most highly developed and efficient in the world. There is, therefore, no case for putting woven wool clothing on the sensitive list. For that industry, as for many others, the general safeguards Protocol is the proper measure of defence.
If employment in St. Helens and other areas in Lancashire is affected, will the right hon. Gentleman take the matter in hand and examine it and make a statement to the House?
Of course, any industry which thinks that it has a case to present to the Board of Trade under the general safeguards provision will be entitled to make that case. As the Board of Trade will be the Department responsible, if the House so wishes, we shall be prepared to make a statement or answer Questions on the subject, provided that the confidential nature of discussions between the firm or the industry and the Board of Trade can be protected.
Will the right hon. Gentleman, before he leaves the sensitive list, make a comment about blankets? He has mentioned everything else. What about Japanese blankets?
I do not think that I can. I am aware that, in my temporary absence from the chamber, the hon. Gentleman referred to blankets. In view of what the hon. Member for Ashton-under-Lyne said, I think that it is about time that we got a few new blankets in this building.
I have explained that there were no adequate grounds on which we could press for the inclusion in the sensitive list of tops, yarns and woven wool clothing. I know that some hon. Members have argued that we should have kept every wool textile product under control and that, by giving them different treatment, we have added to the complexities and risks of disruption. There is really no logic to that. Wool tops, worsted clothing and wool suits are all quite different products and each must be considered on its own merits. The fact that they all happen to contain wool does not mean that they must all necessarily receive the same treatment any more than all articles containing, say, steel must have exactly the same treatment.
As I have said, where it is clear, in the case of wool cloth, that Japanese competition might be immediately disruptive, the product has been kept on the sensitive list. Where this was not so, we have agreed to liberalise and rely on the safeguards procedure.
Now, a final word about yarn. We have heard a good deal today about huge stocks of yarn in Japan apparently just waiting to flood into the British market. I think that this is an unreal bogy to raise. The Japanese could have been sending us wool yarn into this country already. There was a quota for wool products to the value of £150,000 for the year ended 30th September, 1962, and although £150,000 worth could have been sent in from those great stocks overhanging the market the fact is the Japanese sent under £200 worth of yarn and £3,000 worth of tops—which just shows how dangerous this great stockpile is. Furthermore, in regard to the stockpile which they have got, why do not they sell more of it in other markets open to them, namely, the United States of America and Canada, which they are not in fact doing? I think it would be a great mistake to assume that they are holding it back in order to invade the United Kingdom market.
Would the right hon. Gentleman realise that the Japanese cannot possibly sell worsted yarn in this market in small lots? The amount they are allowed to send into this country under licence at the present moment is very small and would be token only. There would be big quantities.
Well, I should have thought that £150,000 worth would have been quite a big quantity, but they did not take advantage of it. That I regard as a very specious argument indeed. If I were a keen Japanese seller I would take advantage of every opportunity I could.
This is the great argument which I think has to be exploded, that the Japanese will look round to find an unprotected spot, switching from quota-ed to unquota-ed products, and then concentrate a flood of imports on to it. There is no 'evidence to show this is their trade practice in dealing with the United Kingdom or other Western European countries.
Of course, if the Japanese are going to increase their sales to us, as we hope to extend our sales to them, they may well develop a trade in liberalised items as well as those remaining under control, but where I do not agree with certain hon. Gentlemen who have spoken on this subject is that there is any strong presumption that trade in wool products will prove disruptive. I think that in the first place our industry is very strong in this field. Quite apart from this I believe with the hon. Gentleman the Member for Lichfield and Tamworth, who has gone now, that the Japanese will be extremely anxious to demonstrate their readiness to trade in an orderly way in the British market.
The Japanese Government are well aware of the views of the British Government about disruptive trading and of the Government's determination to protect British industry from it. I am sure that they would not readily allow a situation to develop in which we would be compelled to reimpose discriminatory restrictions on Japanese products.
In the few moments which are left to me I want to say a word about the effectiveness of the general safeguard. This can be a very powerful weapon if we need to use it. I was asked about the time which could be taken. One hon. Member for Bradford—nearly everybody from Bradford has spoken—suggested that the arrangements under the Protocol would be very slow to operate, but in actual fact, under paragraph 3 of the Protocol we can put on quota restrictions as soon as consultation has begun, that is to say, at the end of seven days after formal notice has been given and can act very quickly should the situation necessitate that.
The hon. Member for Bradford, South (Mr. George Craddock) and also the hon. Member for Huddersfield, West (Mr. Wade) expressed anxieties about the general safeguard. The situation is that we must be sure that serious injury is taking place or is threatened.
Of course, the best and surest evidence of all is evidence of actual imports. If at the time of certain imports taking place an industry considers that it is threatened, it will be alert to these imports. If there is also evidence of extensive ordering in the pipeline, we will take that into account as evidence of the threat of serious injury. I do not feel that it would be proper to try to lay down fixed criteria in advance, because there are so many factors which might differentiate one case from another. For example, an industry already suffering from under-employment or falling sales might be more easily injured than one whose markets were expanding, and price differentials could be more important in one industry than in another.
The same flexible approach must be adopted in regard to the evidence of serious injury. It would be a mistake to try to lay down absolutely firm and precise requirements in advance. It would, naturally, plainly be necessary for the Government to take account of the extent of the increase in imports and the sharpness of that increase and the question of whether prices were substantially below prevailing market prices. Equally, we could not rely just on rumours of intended orders. We should want evidence more positive than that, although we would not expect to be able to receive absolutely precise and factual evidence.
These and other matters we will discuss with the industries concerned. My hon. Friend the Member for Bromsgrove mentioned the fishing-reel problem. I shall be glad to see discussions initiated with the industry concerned if that would be its wish.
While I have concentrated on the anxieties of certain industries and certain hon. Members, the fact is that the Treaty represents a fine deal for Britain. Dual pricing is a dangerous subject for us to raise, as we ourselves go in for a great deal of dual pricing. There was an article in the Financial Times only a few days ago quite openly listing some of the products in which Britain goes in for dual pricing.
As regards export subsidies, it is only a matter of a few months before the arrangements come to an end and the legislation lapses. The Japanese have undertaken to sign the G.A.T.T. arrangement before, or not later than, when the export subsidies come to an end. The important thing is that these export subsidies have not been such a very powerful incentive in securing an increase in Japanese exports of manufactured goods to this country.
I am dealing with Britain and I want to make plain what matters to Britain.
The United Kingdom imports of manufactured good from Japan have not gone up. Manufactured goods have remained stationary at about £12 million per annum. The main increase has been in canned fish and fish products. The Japanese export drive with their export subsidies has not been nearly so successful as our export drive to Japan with no export subsidies. I did not consider it worth making this a breaking paint over the Treaty when there was only a matter of a few months of the export subsidies, which are not proving so very successful in Japan's own export drive to this country. The greater prizes of the Treaty should not be thrown away just because of a matter of a few months of an export subsidy arrangement which is not proving particularly effective and which in any case will be a dead letter within a few months of the Treaty being ratified. That is why it is so important that we should obtain the Treaty now so that it can be ratified in April or May and come into operation in June, for the export subsidy arrangements will be at an end by the following March.
Trading practices and designs and so on are matters for the industries themselves to take up, and the Board of Trade will be glad to give any assistance needed. In the moment that remains to me I commend the Treaty to the House and the opportunities thereby opened up to all British exporters.