Trade And Finance
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.
At what rate.
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.
Naturally all the details will be in the White Paper.
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?
We shall have to keep that very much under review.
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.
With permission, I should like to tell the House how this Agreement will affect our meat supplies. In doing so, may I also add my congratulations to my hon. Friend the Economic Secretary, and the other members of his Mission, on the successful outcome of these difficult negotiations?The Agreement provides for a minimum supply during the next 12 months of 200,000 tons of carcase meat and offals, and 30,000 tons of canned corned meat. The drought in the Argentine during the latter half of 1950 has reduced the amount available in the immediate future, but I am confident that this new settlement will encourage production in the Argentine and lead to greater supplies. The House will be glad to know that the Agreement provides for a resumption of chilled beef shipments. Because of technical and shipping considerations it will be a little while before shipments are resumed, but during the next 12 months we hope to receive about 23 per cent. of our beef shipments in chilled form. We have, however, advised the Argentine Government that we shall be prepared to accept all the chilled beef they can ship us. The Argentinos are eager to restore this trade, and I am satisfied that they will send us as much chilled beef as they can of top quality and in first-class condition. The great value of the Agreement to us lies in the fact that we have now been able to get precise arrangements for the shipment of the various types and quantities of meat. These are the quantities and prices agreed for the main types of meat in the 200,000 tons:
- Frozen beef "A"—73,000 tons at £126 a long ton.
- Frozen beef "B"—34,000 tons at £118 a long ton.
- Lamb—36,000 tons at £130 a long ton.
- Manufacturing Meat—8,000 tons at £95 a long ton.
- Offals—14,000 tons at £140 a long ton.
We shall have to look into this matter with care and attention. May I ask the right hon. Gentleman when he gave the prices, whether they are f.o.b. or c.i.f., which makes a difference?
Am I right in concluding from his reference to the need for increasing the prices of meat very shortly, that in fact there will not be any increase in the amount of the meat ration to housewives until some time in the late summer?
I said that when we knew the amount of the supplies, we would try gradually to make improvements; and I hope that it will be possible by mid-August to reach the estimate which I gave to the House last week.
Has my right hon. Friend made any estimates at all as to how much better a bargain he might have made but for the clamour from the Opposition during the whole course of the negotiations to buy as much as he could, as quickly as he could, at any price he was asked to pay?
Having got a settlement, I do not want to probe these wounds. What my hon. Friend has suggested is very relevant to this situation.
As the price to which the right hon. Gentleman appears now to have agreed seems to be £16 a ton more than the price which he refused in December and there are 100,000 tons less in quantity, would he publish in the White Paper the terms which he refused last December and the terms which he has accepted today?
I am afraid that the hon. Gentleman's figures are widely erroneous. There is no such difference. In fact no precision was ever given to the alleged offer of £120 a ton. That is rather a mythical figure. The difficulty was to get to know precisely what it meant in terms of supplies. If that figure had meant a large amount of poor quality meat, obviously the average would have been much higher. The price asked for chilled meat at that time was £156 a ton, and we have now settled at £148 a ton.
Are the Opposition to blame for that?
Indeed, we have now been able to effect, which was the whole cause of the difficulty earlier in the year, precise estimates of the kind of meat we hope to get. On the whole, I think that the statement is one about which we should be happy.
Will the Minister say in what parts of the country he anticipates being able to distribute the chilled beef component of the ration under the present rationing system?
We are quite confident that we can handle, will handle, and are making very special arrangements to handle the chilled beef on the ration. In the early stages it will mean that large industrial areas nearest our main ports will have the main advantage. London, for instance, is going to have rather a better deal than she has had for some time. That is in the immediate stages. But, as we set up the machinery, the whole country will share in the new improved quality of beef.
Will my right hon. Friend take note of the fact that not one Member opposite has paid any tribute to or congratulated the Economic Secretary?
In view of the retrospective fine of £6½ million to which the Minister has been willing to subject himself, will he give us some assurance that next time there are any negotiations we shall not again have a surcharge beyond the figures he has given? Secondly, will he not admit openly now that he missed an opportunity some months ago which he will never catch up with again?
In reply to the second part of the question, that is a matter of judgment. In reply to the first part of the question, this demand was always inherent in the old Agreement. We had to arrive at a settlement on it, and I think that the present settlement of £6½ million is a fair one.
Will my right hon. Friend give some comparisons between the prices he has paid and the prices prevailing for spot buying under private enterprise today?
If I did that it would cause a good deal of interest in the House. If a Question is put down, I shall be glad to give comparative figures.
Is not the right hon. Gentleman a little petty in trying to blame the Opposition for the difficulties of the late negotiations? Will he not be the first to admit that if he had appealed to the Opposition in the national interest to refrain from criticism, they would have done so?
I do not want to be petty, and I do not try to be. I do not think anything I have said has sought to place the responsibility on the Opposition. What I said, and I repeat it, was that the attitude taken by certain organs of opinion, including the Opposition in the House, has not helped us in these negotiations.
I understood that the right hon. Gentleman's contention was that he has made a much better bargain than before. Therefore, he cannot have it that way and at the same time throw the blame on the Opposition. We may run short of meat, but need we run short of logic?
I did not claim that this was a better bargain, nor do I claim it is; but I claim that it is a good bargain in the circumstances, and those circumstances include the attitude of mind exhibited by the Opposition.
Will my right hon. Friend indicate how the prices under this Agreement compare with the prices for similar purchases by other countries from the Argentine?
I should like to have notice of that question.
Are there any penal clauses in this agreement in the event of the Argentine not supplying the amount of beef they have contracted to supply?
I do not know myself of any such clauses, but perhaps it would be as well to await the White Paper.
I think my right hon. Friend said that offal was to cost £140 a ton. Is not a smaller figure being paid for prime beef? Is that not rather unusual?
I am afraid that the word "offal" is rather misleading. It is an awful word which leads people to assume it means something rather dreadful, when in fact it does not. It means such pleasant things as sweetbread and chilled tongue. These offals are meat of high nutritive value. In the late Agreement the price of offal was the second highest, and this price compares favourably with the old price.
Can the right hon. Gentleman now answer the question, which he no doubt inadvertently failed to answer, that was put by my hon. Friend the Member for Thirsk and Malton (Mr. Turton): whether he will publish in the OFFICIAL REPORT the terms of the proposals which he refused last December in view of the fact that he has given at the Box one selected figure?
I am quite prepared to give all the detailed information possible. There is no reason to hide the facts. That information will be given so far as it can be safely given.
Is the right hon. Gentleman prepared to admit, in view of the additional prices being paid per ton, that this is a further addition to the increasing cost of living?