Temporary Import Charge

Part of the debate – in the House of Commons at 12:00 am on 29th November 1965.

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Photo of Mr Edmund Dell Mr Edmund Dell , Birkenhead 12:00 am, 29th November 1965

I will try to keep within your Ruling, Mr. Deputy Speaker. All I attempted to say was that any form of industrial protection such as an import charge should be conditional on individual industries and firms being prepared to meet certain targets and, in the case of the chemical industry, being prepared to make the necessary investment in order to achieve a better export-import balance.

I am aware of the great objections which there are to measures of import control such as I was attempting to suggest, or to these charges. There is the objection that they reverse the trend towards freer world trade which has taken place since the war. The hon. Member for Wycombe (Mr. John Hall) asked what effect my proposals would have on negotiations for the Kennedy Round. I hope very much that those negotiations are successful. If they were rapidly successful they would ease the path in getting rid of these additional forms of import control. But the fact of the matter is that the Kennedy negotiations are not making great progress, and we have to face the possibility that the trend towards freer world trade is not making further progress at the moment.

Although I wish to see this country taking part in all attempts to create freer world trade and to increase the flow of goods, in the last resort we have to make sure that our own country's situation is under control. In introducing the Order the Chancellor of the Exchequer said that the level of world trade would be likely to be higher if we controlled imports by methods such as the import charges rather than by means of a credit squeeze alone. He said that the latter is far more likely to reduce the level of our own contribution to world trade. This is true. In this country we have had a policy since the war of controlling imports by means of generally controlling the level of demand, by credit squeezes and by general economic measures, and it cannot be said that this country's contribution to world trade has been remarkably great since the war. If we were prepared to experiment with this new method we might in the long run make a much greater contribution to world trade than we have made in the past.

I accept the argument about the danger arising from cutting out the spur of competition, but the use of the import charges or any similar methods of imports control could be made conditional on firms taking a much more active part in exports. The competition which they will find in exports is much tougher and more educational in many ways than the competition at home. We could make any protection given to an industry in this country conditional on their promoting exports. If they failed, I should be happy to remove any import barrier by which they were being protected.

One of our difficulties at the moment is that we are not in a position to give firms this additional incentive to increase exports because of our balance of payments situation. If the balance of payments were more under control, we should be in a much better position to say to firms which were not going sufficiently into exports, "If you do not fulfil the plan or meet a reasonable target in respect of exports, we shall remove the import barriers which are protecting your home market."

There are many other arguments which could be used in connection with industrial protection and import control, but at the end of the day the Government must balance the arguments, and in this case the balance of the argument is in favour of giving industry, in co-operation with the Government, a period in which the structure can be changed so that the relationship between exports and imports may be drastically changed, too, once and for all. This must be done so that we do not continually face the problem that every time we take the lid off the economy and permit the rate of economic development to increase, we immediately face a balance-of-payments crisis.

Whether we like it or not, the problem of imports is, next to the problem of overseas military expenditure, the greatest immediate economic problem facing this country. The Government must face the fact that additional import controls may be required longer than they at first imagined. The Government must prepare themselves to ensure that if there is a need for such additional measures they can introduce them in ways which reduce to the minimum the harm to the national economy arising from the kind of defects in principle of import controls which I have indicated while outlining the main theme of my argument.

I hope that everything the Government are doing will have the effect sufficiently rapidly of avoiding the need for a continuation of special import controls beyond the period of the import surcharge. I also hope that the Kennedy Round negotiations as well as those to increase international liquidity will achieve success, as will, I hope, the various export aids which the Government are introducing. I am sure that these efforts will help to make the problems which I have advanced more easily soluble. However, if they are not solved before this temporary Measure expires—if, at the end of 1966, we still face the same sort of problems which we faced in 1964—then the Government must be ready to deal with them rapidly by having to hand continuing methods of import control.