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Trade And Finance

Volume 487: debated on Tuesday 24 April 1951

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With permission, Mr. Speaker, I should like to make a statement on the recent negotiations with the Argentine Government on trade and financial matters.

The negotiations between the Argentine Government and the U.K. Mission led by my hon. Friend the Economic Secretary have, as the House will be aware, resulted in a general agreement covering the whole range of our commercial and financial arrangements with Argentina. I had hoped that it would have been possible to make a full statement to the House yesterday, but this could not be done because of the late hour fixed for signature of the Agreement in Buenos Aires. The authentic text of the Agreement will, of course, be published as a White Paper as soon as it is received.

The Agreement takes the form of a Protocol valid for 12 months, modifying and supplementing the current 1949 five-year agreement. My right hon. Friend the Minister of Food will deal with the settlement which has been reached in respect of meat and I shall, therefore, confine myself now to a brief summary of the financial and commercial provisions of the Agreement.

On the financial side, we had, in the first place, to clear up two long-standing matters of dispute between the two Governments. One was the question of the amount due to be paid to Argentina under the exchange guarantees provided in the 1949 and other agreements on account of the devaluation of the pound in September, 1949. The other question related to the arrears of financial remittances due from Argentina to this country.

These two points have been settled in the following way. We have agreed to pay £10½ million as a compromise settlement of the exchange guarantees. For their part, the Argentine Government have undertaken to allow the transfer of the arrears of remittances. The Agreement provides, as a matter of mutual convenience, that the sum of £10½ million which we pay shall be put into a special account and used only for the payment of arrears of remittances.

In the second place, we have reached agreement with the Argentine Government on the financial arrangements which are to be the basis of trade and payments between the two countries during the period of the new Agreement. In order to rebuild trade and maintain it at the highest possible level, we have agreed to make sterling credits available to the Argentine, if required, up to a limit of £20 million. The precise way in which any such credits should be given will be settled by discussion between the two Governments. We have also agreed that if, on the other hand, the Argentine tends to accumulate sterling we shall have discussions with her and agree on measures for keeping her sterling balances within a limit of £20 million.

If these measures prove ineffective to restore a balance in the level of trade and payments between the two countries, and the sterling balances rise above £20 million, we have undertaken to be prepared to convert the excess at the Argentine Government's request into third currencies including, in the last resort, dollars. It is provided that any dollars we make available on this account can be repurchased by us, if the Argentine sterling balances fall again below £20 million within 18 months from the date of signature of the Protocol.

On Anglo-Argentine trade generally, there was a full review of the prospects, and the results of this review will be considered further by the Mixed Consultative Committee which was set up in Buenos Aires under the 1949 Agreement. We have, however, informed the Argentine of the quantities of oil, coal and tinplate which we expect to be able to supply.

In conclusion I should like to pay a tribute to the skill and patience with which my hon. Friend the Economic Secretary has conducted these difficult negotiations. The discussions have taken place in a most friendly spirit, and I believe that their successful outcome will do much to improve economic relations between the Argentine and ourselves.

The right hon. Gentleman will understand that to follow the detailed trade and financial arrangements is hardly possible until the White Paper is available to us, but I must say that at first sight this new arrangement does seem to put some pretty heavy additional obligations upon this country. For instance, dealing with the financial and economic arrangements and not with the meat, as I understand it, our own accepted claims for the payment of arrears of remittances due to us from the Argentine are only to be paid to us out of the money we propose to pay to the Argentine for their claim in respect of devaluation and the results of that to them. If I may say so, that does not seem a very satisfactory arrangement. As regards the sterling credits, the right hon. Gentleman says that there is to be a limit of £20 million. Apart from that nothing seems to be agreed at all. How those credits are to be used is yet to be discussed between us and the Argentine.

I would not agree with the right hon. Gentleman that the arrangement made, under which we have reached a compromise settlement about the exchange guarantee on the one hand and, on the other, that Argentina has agreed to remit the blocked balances over there, is in any way disadvantageous. It happens to be convenient that, since we have agreed that we would pay them £10 million in settlement of the whole claim, we should ensure that that £10 million is in fact paid by them, or the appropriate amount of it in respect of the remittances. I think, if I may say so, that there is nothing unsatisfactory in that from our point of view. As regards the credits, it is quite true that the exact arrangements have not been made, but there is, after all, nothing unusual in our making arrangements of this kind. Indeed, trade would be impossible without them.

Does the £10½ million we are paying in compensation represent the full amount of the devaluation on their sterling balances from 4 to 2.80, and, if so, will the right hon. Gentleman now tell the country what the amount of the sterling balances were?

One of the points in dispute was precisely as to how much was owing under this. The figure of £10½ million is substantially less than the Argentine originally claimed.

In view of the very considerable quantities of sterling which appear to be going to be made available under this arrangement, has the right hon. Gentleman satisfied himself, and if he has not will he satisfy himself, that that sterling will be made available to the Argentine for purchasing British consumer goods, and that the liberalisation of trade with the Argentine, which has been very much interfered with by the Argentine Government, will now be eased and ameliorated?

The question of the commercial arrangements—that is to say, the supply of different types of goods from this country to the Argentine and vice versa—still remains for further discussion.

Will the amount the right hon. Gentleman says is to be sent to us by way of remittances be exchangeable into sterling at the normal rate or at the penal rate now in force in the Argentine; and is the 500,000 tons of coal to be supplied only being supplied if we can do so from this country, or are we under any obligation to buy it from a third country if necessary and sell it to the Argentine as part of our normal export trade?

As regards the coal, we have simply indicated what we hope to supply. As regards pesos, there will be no pesos in this; they will pay in sterling.

Does the right hon. Gentleman remember that the House was assured that the utility companies in the Argentine which have been confiscated, at considerable loss to British holders, were to be included in the negotiations; as we have been told that something further is going to be done about it, will he also remember that this was promised after the last agreement and that nothing was done; and can he tell us what is the position in respect of that matter.

The question of the utility companies was certainly discussed in the course of the negotiations, and I understand that the Argentine Government have promised to use their best endeavours to reach an early settlement.

If a White Paper on the trade agreement is put before the House, will my right hon. Friend be able to inform the House fully of the oil agreements that are in existence? I understand that this country made a very honourable and favourable oil agreement with the Argentine, and I believe that the House should be made fully aware of the agreement.

In this arrangement, has anything been arrived at so that import licences which are granted in the Argentine are on the basis of the proper rate of change and not the penal rate of exchange?

As I have already explained, discussions will have to take place on the question of import licences and the supply of goods from this country generally.

Can we have an assurance that the tinplate we are going to send to the Argentine will not further denude the vegetable and fruit canning industry at home?

Can the right hon. Gentleman say whether it was his predecessor's fault or the fault of the Minister of Food that a far lower figure was not accepted for meat last summer, when the Government are prepared to accept this figure now?

Will the Chancellor of the Exchequer explain to the House why no commercial agreement was reached at this stage of the negotiations, because, surely, unless a commercial agreement is reached on the stopping of import restrictions with the Argentine, it will mean we shall not only have to pay very high prices for our meat but that we shall probably have to pay in dollars?

I cannot agree with that conclusion. The negotiations have already taken a long time, and it seems very satisfactory that a large number of the points at issue have now been disposed of.

Will my right hon. Friend indicate how the prices payable by this country under the new Agreement compare with the prices paid to the Argentine for similar supplies to other countries?

I think that question probably relates to meat, and had better be addressed to the Minister of Food.

Will the right hon. Gentleman make clear at what rate the remittances to be paid by the Argentine out of this £10½ million are to be credited to this country? Is it at the normal rate of 20 pesos to the pound or at the penal rate of 40 pesos to the pound?

Perhaps the hon. and gallant Gentleman will await the publication of the White Paper. I have not all the details of the Agreement before me at the moment.

Is my right hon. Friend aware that we would be more likely to get a commercial agreement if the Opposition would not persist in putting down petty Questions about a demonstration of military strength on absurd little islands off the Argentine coast?

May I ask the Chancellor of the Exchequer if this £10½ million comprises compensation and on what basis it has been arrived at? If it does not take the full amount of the devaluation from four to 2.80, on what basis has it been arrived at?

I have already explained that there was a dispute about exactly how much was due. The £10½ million has been settled as a result of negotiation.