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Dollar Restrictions (Sterling Area)

Volume 480: debated on Tuesday 14 November 1950

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83.

asked the Chancellor of the Exchequer whether he will make a statement on the report made by the International Monetary Fund that dollar restrictions in the United Kingdom and certain other sterling area countries should be relaxed.

Yes, I welcome the opportunity to make the position clear.The House will recall that in 1949, in view of the drain on the central gold and dollar reserves, the Sterling Area Governments concerned agreed in effect to reduce dollar imports to 75 per cent. of their value in an earlier year. In accordance with the General Agreement on Tariffs and Trade the other parties to the agreement were informed and consultations with them are now taking place at Torquay. The International Monetary Fund has, by invitation, sent a representative to take part in these discussions, and the report referred to by the hon. Member is, I understand, the material which the Fund prepared for the use of their representative.While I have no wish to anticipate or prejudice the proceedings at Torquay, I must emphasise that these consultations do not require either any determination by the Fund or any conclusion by the Contracting Parties on the justification for the restrictions under review. Decisions on such matters must be taken by Governments—in the light, of course, of their international obligations.The policy of His Majesty's Government in this matter is perfectly clear. Like other Commonwealth Governments concerned with the strength of sterling and with the stability of the sterling area, we must have regard to our assessment of our own position and also to the interests of the sterling area as a whole.During the informal Commonwealth Economic talks which were held in London in September of this year, it was realised that the 75 per cent. formula as such had been rendered out of date by price increases, by stockpiling needs, and by the deterioration in the international situation. While, therefore, it was agreed that this particular formula could not be continued, nevertheless there was also unanimous agreement on the need to rebuild reserves to an adequate level, on the need to increase dollar earnings by the export of goods and services, on the importance of the part played in our recovery by the 1949 decision to reduce dollar imports, and on the need to maintain strict economy in dollar expenditure. These considerations will continue to govern the policy of His Majesty's Government.