I congratulate my hon. Friend the Member for Cheadle (Mr. Shepherd) on selecting this subject. He is quite right to say that this is, within a difficult trading world, a particularly difficult trading problem. I am not going to try to fool him by pretending that I have a perfect and simple solution to offer him tonight. But I hope that I may reassure him to this extent; we are concerned at the problem and are seeking, in collaboration with Canada, ways of overcoming it. From what my hon. Friend has said it is clear that he knows that the pattern of our trade with Canada is very intricate. It is not a simple bilateral matter. It is particularly for this reason, as he said, that the difficulties belong as much to Canada as to us.
The first point that I must make is that the crude adverse balance is not as great as it looks, because exports are valued f.o.b. and imports c.i.f., My hon. Friend knows this, but perhaps others do not always know it. Much of the difference in these costs, f.o.b. and c.i.f., is expressed in sterling earnings. In addition, we have a surplus of invisibles with Canada. It is notoriously difficult to assess with accuracy the value of these two elements—the invisibles and the difference between f.o.b. and c.i.f.—and to attribute precise values to each separate country with which we trade. This is because services such as insurance and freight are generally of a comprehensive kind which cover several countries simultaneously and are not tied to one point of destination, as is a direct export.
I know from what my hon. Friend says that he appreciates this fact, but I hope that he will not mind my making this point in the interests of those who may not do so. The second point that we must bear in mind, if we are to go along with the Canadians in finding, a solution which is in our joint interests, is the changing nature of the Canadian economy. No country, including the United States and Britain, is a fully-developed country. The point to be borne in mind by all our people and by all Canadians is that Canada is a particular example of a developing nation. It is inevitable, therefore, that the pattern of Canadian imports and exports must be subject to change. Exactly the same considerations apply to our own economy. On both sides of the Atlantic changes in the economic pattern are inevitable, and I personally welcome them. If there are not these changes, we have a static economy, better referred to, I think, on occasions by right hon. and hon. Members opposite as a stagnant economy. Therefore, I welcome the fact that these changes are there.
All I want is for both sides of the Anglo-Canadian equation to accept change and to benefit from it. It is unlikely in the extreme that the two sets of changes will dovetail neatly into one another so that we can, even in any one decade, achieve a neat bilateral trading balance, and I am sure that my hon. Friend is not after that. But I agree with him that a truly chronic and large-scale imbalance in trade creates difficulties as fundamental for Canada as they are for us. This is the first thing to be agreed between ourselves and any Canadian Government. I believe that successive Canadian Governments have been very much aware of this. They have undoubtedly wished to see, in Canada's own continuing interest, an increase in our exports to them.
The facts of our particular trading equation are as follows: between 1958 and 1961 an increase was being achieved. Our direct exports to Canada—not our exports of invisibles and so on—rose from £188·1 million to £221·8 million. In the same period our imports from Canada rose by even more, from £308·6 million to £349·4 million. This, as I indicated earlier, is not so adverse as the crude figures suggest. One could say that in that period of time, from 1958 to 1961, there was some healthy two-way stretch in the fabric of Britain-Canadian trade.
But 1962 was a wholly different story. In that year, one of economic crisis for Canada, our imports remained about the same—£349·3 million—but our direct exports went sharply down to £187·9 million. I think it is this fact that has drawn my hon. Friend's attention to the general problem.
It was the intention of the Canadian Government that their imports overall should be reduced in 1962 because of their balance of payments problems while their exports were at least maintained. The combination of devaluation of the Canadian dollar with the imposition of surcharges was designed to produce this result, and it did for Canada's own peculiar, particular national reasons. Because of the nature of our trade with Canada the weight of the surcharges fell especially heavily on us. The Canadians assured us that these surcharges would be purely temporary and, as my hon. Friend will know, we have energetically sought their removal, and in addition the Canadians have gone quite a long way towards removing them. I hope very much that the rest will go very quickly. The Canadians, in other words, were faced with a particular and sharp variant of our own general continuing problem over balance of payments. This really was the situation. They took their own local action to correct their particular immediate problem, and we, who have the continuing problem, were, so to speak, the real recipients of the effects of Canada's own local action.
Having said that, I would just like to say a word, if I may be permitted to do so, to our own exporters, because they have a rôle to play in this, too. Canada in the true sense of the word is a developing country, both in the range and in the volume of the things she needs to import if she is to grow year by year. She is, thus, a market of present and future interest which we must cultivate. But she is also a very difficult market. The Canadian market is sophisticated and, therefore, exacting. There are, as my hon. Friend has already said, huge competitive supplies available immediately across her border with the U.S.A., and she has, in addition, the inevitable problems associated with a relatively small population in a relatively huge area. All these factors make her a very hard market—and I have some personal experience of trading in the Canadian market—but in wealth per head of the population, she is a rich market and, therefore, one worth entering.
My conclusion is that only the highest quality of goods, backed by tip-top service, will do in Canada. We in this country can, and generally do, provide that combination of quality and service. Also, I believe that it is a real Canadian interest, perceived by many Canadians, to buy that combination from us to an extent greater than she has been doing. I think that this is truly a Canadian interest, but it is up to us to provide that worth-while combination—worthwhile for the Canadians to buy.
So I suggest that what is now required is two things—final removal of the extra protective barriers erected by Canada to fend off her crisis of last year, accompanied by a renewed thrust from British exporters of goods and services to the Canadian market. This is the sort of thing that I hope to put simultaneously to the Canadian Government and to our own exporters, because this is a simultaneous operation and somebody has to do it, and it happens to fall to me at this particular moment in time to try to do this.
Finally, I should like to assure my hon. Friend that in the near future I very much hope to go to Canada. I believe that if I do go, even I will be welcomed in going there. My aim and object certainly is to go there as soon as I possibly can in an effort to achieve these two things—to encourage British exporters and to encourage the Canadians to accept British products.