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Ussr And China (Uk Trade)

Volume 499: debated on Tuesday 22 April 1952

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Motion made, and Question proposed, "That this House do now adjourn."—[ Brigadier Mackeson.]

10.54 p.m.

It is my duty tonight to raise a matter that has received a great deal of publicity over the past fortnight, and which is causing a good deal of bewilderment and intense interest in the county, one of whose representatives I have the honour to be. This is the account we have had of large so-called trade agreements being signed in Moscow for the sale of textiles both to the U.S.S.R. and China. The textile industry is, of course, suffering at the moment and when it sees these large sums mentioned and the language of contract being used, the thirsty mouths look upward.

My first point is that it would be a very wicked thing, when the textile industry is in the state it is, for anybody to raise hopes of orders for an industry which is thirsting for orders when there is no serious intention of them being fulfilled. I beg my hon. Friend who is to reply to give as much up to date information as Her Majesty's Government may have as to how seriously these reports are to be taken.

That the motives on the part of the other contracting parties may not be the ordinary commercial motives is, I think, quite clear from the fact that they have not used the ordinary trade channels for the purchase of British textiles, channels which have been wide open for some time and practically unused. On the other hand, I do not think we should dismiss lightly that fact or that we should write off orders or contracts merely because the agency through which they have come is unusual. My hon. Friend made a speech on Friday in which he stated that those who went to the Moscow Conference were amateurs disporting themselves. With great respect I suggest that sometimes amateurs can get further than professionals. There is no harm in seeing if we cannot do so this time.

It may well be that the motives of the Russians and the Chinese are purely those of publicity and propaganda. If we can sell textiles to satisfy those motives and can get something worth having in exchange that does not worry us. Surely we are strong enough and firm enough in our own cause to risk a little propaganda from the other side of the Iron Curtain if we can get orders for textiles and get the wheels of trade turning again in this vital commodity.

Apart from the motives of publicity and propaganda it may well be that this is another of those cases in totalitarian societies where either the right hand does not know what the left hand is doing—an example in Government agencies not unknown even in this country—or that the right hand is trying to trump the left hand and that some agency behind the Iron Curtain is trying to steal a march on another Government agency. The workings of these things are bewildering and obscure but do not let us, on account of that obscurity, take up the position that this is a lot of nonsense and can be ignored.

Sometimes, to take the Russians for example—in the past they have conducted trade contracts, which have been very beneficial to both sides, in a blaze of publicity. Sometimes they have gone to the opposite extreme and have shunned all publicity at any cost. In the 1930's, I am told, quite a considerable trade in textiles was done with Soviet Russia through the unexpected agency of a vicar residing in Hull, and it would be difficult to think of a less likely agency than that example. The unexpected in the case of dealing with the Russians, or the Chinese for that matter, is often the most successful. I therefore ask that the matter should not be written off on that account.

There is another and perhaps more sinister motive and, here again, we must weigh it carefully. It has been said in the "Economist" that in the case of prospective sales to China, at any rate, the object of the Chinese is to cut out our trade channels in Hong Kong, with the intention of ruining Hong Kong. There, of course, we have an experienced and skilled organisation which knows the Chinese market in textiles very well. The "Economist" suggests that this is an attempt by the present Government of China to squeeze out Hong Kong, and from that concludes that we should reject offers on that account.

Is that right? If these offers from Chinese buyers of textiles come direct, or from agencies other than those of Hong Kong, is it right to refuse them simply because we do not like to see our traders in Hong Kong suffering? I do not understand the logic of that argument. It means, presumably, that not only must Hong Kong suffer, but Lancashire also. I do not see how it benefits Lancashire if Hong Kong is to be ruined, or how the ruin of Lancashire will benefit Hong Kong. Although this serious argument deserves serious consideration, I suggest that, on balance, it would not be right to compel the channelling of these orders through Hong Kong.

I want to be brief, so as to give my hon. Friend adequate time to reply, because I am sure that he would wish, if he can, to allay public anxieties, and public hopes, as both are growing in the textiles areas, which are having a bad time now. I have no doubt that there will be a temptation to try to do something for the textile areas at the expense of the strategic ban which has been rightly placed upon the export of strategic materials to countries behind the Iron Curtain. I am sure that it would be wrong to whittle away that ban merely on account of the present plight of the textile manufacturers of this country. Either that ban is strategically right, or it is strategically wrong. The plight of the textile industry of this country cannot logically have any effect on that decision.

I have no doubt that the export of strategic, or of so-called strategic, materials has been examined by the Government as a whole and by all the Departments, and that it would be wrong for the Service Departments to be pressed to modify their opinions upon what is, or is not, strategically valuable merely on account of the plight of the textile areas. If this were put to the workers and managements in the textile industry I am sure that they would not want to sell the strategic peace even for trade orders; because one could get a lot of orders for the industry of this country if one were prepared to give with textiles in exchange or—to use perhaps a controversial case—a lot of jet engines.

I do beg the Government not to weaken on that point, but to view the strategic question of the export of minerals and manufactured metal goods objectively and, although I say this perhaps against the immediate interest of my constituents, not to take into account the plight of the textile trade. If these matters were put to them I am sure they would agree that these considerations must be divorced. I am sorry that this matter has to be raised at this late hour, because there is great public interest in it. If it could have been raised earlier I believe there would have been a larger attendance and greater opportunity for hon. Members to express their views. I beg my hon. Friend not to write off what has been done because they were done by amateurs.

Many surprising things happen in Moscow and they are not always to our disadvantage. I therefore beg the Secretary for Overseas Trade to treat this subject seriously and give us as far as possible such information as he can, because Lancashire is crying out for information on the subject—and not only Lancashire.

11.6 p.m.

I am sure that the House will be grateful to my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) for providing us with an opportunity of discussing this matter this evening. I can assure him that I certainly have no desire to treat it as nonsense. I used the expression "amateurs" in my speech the other day because I was comparing those attending the Conference on that occasion with the highly experienced British businessmen in China who, at this moment, are being forced out through lack of trade and other difficulties put in their way.

I certainly do not intend to treat this as nonsense, but I think it would be equally wrong to let those engaged in the textile industry believe that these proposals will provide a solution to all their present difficulties. In view of conditions in Lancashire and Yorkshire the export of British textiles is of paramount importance and we must neglect no opportunity of fostering this trade.

In these circumstances, sensational reports of offers emanating from the Moscow Economic Conference have, naturally, aroused the greatest interest. It was a meeting of private persons—economists, industrialists and trade unionists and others and—on the side of the Iron Curtain countries—of officials. I do not propose to go into the motives of those present. Some of them were there undoubtedly for ideological reasons and others with a genuine desire to get business. Others, equally, were certainly there from a desire to improve international relations. Her Majesty's Government were not invited to take part and it is significant that Soviet visas were refused for all non-Communist newspaper representatives who wished to report the proceedings.

On 4th February my right hon. Friend the Foreign Secretary in reply to my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) stated that it was clear that the true purpose of the Conference was to organise popular pressure in non-Communist countries against the present restrictions on the export of strategic materials to Russia, and against the defence programme of the Western Powers.

In addition to seeking to influence Western exporters to press for the removal of our strategic export controls, the Russians undoubtedly wished to appear as the champions of increased East-West trade. It was, I may say, the theme of almost every speech made by the delegates of the Soviet Union and the Eastern European countries at the meeting of the United Nations Economic Commission for Europe which I attended at Geneva in March. When, at that meeting, I made an appeal to the Eastern European countries to buy more of our textiles and consumer goods, I received no encouragement at all.

Nevertheless, the Soviet delegate, at any rate, must have known, or should have known, that in September, 1951, the Board of Trade had officially handed to the Soviet Trade Delegation in London a long list of textiles and other consumer goods which the United Kingdom was anxious to sell to Russia. It was not until the Moscow Economic Conference that any indication was given that the Russians would be willing to consider buying our textiles.

Let me say at once that Her Majesty's Government are perfectly ready to take advantage of any genuine arrangements for exporting more of our textiles, no matter how unorthodox the method of negotiation may have been. We still have no full report of the conference, nor have we received any proposals from the Governments of the U.S.S.R., the other Eastern European countries, or China as a result of it. The Board of Trade has received reports from certain individual members of the British delegation, but there is still a good deal of doubt exactly what exchanges of goods are contemplated.

Before dealing with the arrangements as they are known to us, I must say one thing to bring the offers coming from Moscow into perspective. The maximum value of the orders for textiles is, according to our calculations, about £12 million. That would be very useful, but it must be remembered that the total United Kingdom exports of textiles in 1951 were worth £578 million. Furthermore, there seems to be very little doubt that a large proportion of any Soviet bloc purchases would be what I might call textile raw materials, such as wool tops, staple fibre, and yarns, which they already buy to a certain extent from us.

In this connection, I might mention that the value of our textile exports to the Soviet bloc in 1951 was about £3,500,000, of which all but £46,000 represented wool tops and raw materials. The actual increase, therefore, would be very much smaller than would appear to be the case, and the only significant development which we can foresee so far may be Russian purchases of piece goods and clothing. I understand that they were interested only in woollens.

According to the rather scrappy information at present available to us, the following agreements were signed by the members of the United Kingdom delegation. As far as I know, no contracts at all have been signed. First, there was a deal with the Soviet Union to buy textiles to the value of between £2–3 million, in return for non-essential Russian products. We have had a number of inquiries about this Russian offer since the various reports came in, and we have advised exporters to get in touch with the Soviet Trade Delegation in this country, making it clear to them that both before and since the conference we have strongly recommended the desirability of selling textiles to the Soviet Union.

Second, there are agreements of which we have information only from the Press, relating to deals with Bulgaria, Roumania, and Eastern Germany. In each case we should apparently export textiles, and we should take in return various imports from these countries. Lastly, there was an agreement on trade with China. This we know rather more about, because the chairman of a group of British delegates, who actually signed an agreement with the manager of the China National Import-Export Corporation, deposited the signed English and Chinese original texts with the Board of Trade on his return to England.

No, this was not Mr. Perry; it was Mr. Lorimer. He made it quite clear to the Chinese that he had signed solely as a private individual, and on his return he submitted it to us so that we might decide how best to implement it. The details of the agreement are as follows: The United Kingdom and China will sell to one another goods to the value of £10 million on or before 31st December, 1952. The United Kingdom sales to China would consist to the extent of 35 per cent. of textiles, 30 per cent. of chemicals, and 35 per cent. of metals. The Chinese sales to the United Kingdom would consist of coal, bristles, and hog casings amounting to 25 per cent., eggs in various forms, amounting to 20 per cent., and certain agreed Chinese produce, which was not defined, amounting to 55 per cent.

According to reports from a variety of sources only the textiles would be British products. The chemicals and possibly the metals would, according to unconfirmed reports that we have received, be supplied from Eastern Germany for sterling payment. There is some doubt whether the coal, which would be supplied by the Chinese, would be bunker or coking coal. The Chinese also, apparently, among the agreed Chinese products, undertook to supply soya beans and tung oil. There is nothing in this agreement further to indicate whether the trade contemplated would be additional to the present trade, or whether it would form part of the regular pattern of trade.

I should perhaps here inform the House, to put the matter in proper perspective, that the total value of textiles exported to China in 1951 was under £400,000, consisting almost entirely of wool tops. It is difficult to assess the the total Anglo-Chinese trade, because of the re-exports from Hong Kong, which cannot be calculated, but, in 1951, we think that it balanced at roughly about £20 million each way.

As in the case of Soviet Russia and the Eastern European satellites, we welcome any prospect of increased business in textiles in any of the forms mentioned in the agreement. None of them is regarded by us as of strategic importance, but, as regards the chemicals and metals, we must reserve judgment, because many kinds of chemicals and practically all metals are not available on both strategic and supply grounds. Even if the exports were to take place from Eastern Germany, we could certainly not approve any agreement which involved shipment of prohibited goods.

The House will wish to know what action the Board of Trade is taking on these agreements. When the reports first appeared in the Press of contracts signed in Moscow, my right hon. Friend the President of the Board of Trade wrote personally to the Head of the Soviet Trade Delegation offering the assistance of the Board of Trade in the whole matter. My right hon. Friend the Foreign Secretary also telegraphed to our Chargé d'Affaires in Pekin instructing him to inform the Central People's Government that Her Majesty's Government had noted the decision reported from Moscow to increase substantially China's trade with the United Kingdom, and, in his telegram, he expressed the hope, that they would receive an early intimation of the nature of the Chinese proposals and of the channels through which it was intended to pursue the suggestions outlined in Moscow. At the same time, the Chargé d'Affaires was instructed to point out that there were numerous established British merchants in Shanghai and Hong Kong who were well qualified to carry out such arrangements with the Chinese People's Government or its representatives.

This brings me to the crux of the whole matter. Although the Government will very gladly take advantage of any openings for extending the export of our textiles to the Soviet Union, to Eastern Europe or to China which may arise as a result of the Moscow Conference, it must be borne in mind that there was no need for these international deals to await the Moscow Conference before they could be arranged. They could at any time have been negotiated through the Soviet Trade Delegation in London, through the Embassies of the Eastern European Powers over here, through our Chargé d'Affaires in Pekin, as the case may be, or through the normal commercial channels.

Even when it is asserted that satisfactory results have only been achieved in Moscow because businessmen were able to meet businessmen in Moscow, as I have seen it asserted, we must ask ourselves these questions: Who has prevented meetings of businessmen in such matters as these? Who, at the present time, is seeking to strangle the activities of British traders in China? Every day the difficulties of British merchants in Shanghai and elsewhere in China have been becoming greater. The Chinese Government's object now seems to be to squeeze our businessmen right out of China.

In regard to Hong Kong, I am not in a position to comment on that particular point, but all the signs point in that direction. Only yesterday, my right hon. Friend the Foreign Secretary referred to the Note which he has been obliged to address to the Chinese People's Government about the detention incommunicado of British subjects and other foreigners, which method is used as one of the means of bringing pressure to bear upon them to discourage their trading activities.

Having regard to the size and volume of these agreements, to the difficulties involved, and, above all, to the needs of Lancashire and Yorkshire, we gladly welcome, of course, the prospect of increased trade. We shall do everything we can to further it and we hope it will materialise, but it is a matter for speculation whether, in view of the considerations to which I have referred, there will be any practical results.

Question put, and agreed to.

Adjourned accordingly at Twenty-one Minutes past Eleven o'Clock.