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Applications Under Article 7 Of The Trade Agreements Extension Act

Volume 499: debated on Thursday 24 April 1952

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In recent months there has been a most disturbing increase in the number of applications for relief under Section 6 of the Trade Agreements Extension Act of 1951. Among those which directly affect important United Kingdom export trade are those relating to motor bicycles and parts, bicycles and parts, certain chinaware, tobacco pipes and wood screws.

2. These cases, and others which affect the United Kingdom less, are still at the stage of investigation or hearing. Recommendations have not yet been made by the Tariff Commission. It is obviously premature to assume that relief will be granted in the cases now under review but, in the light of the decisions reached in respect of fur felt hats and hatters' fur, there are obviously grounds for anxiety, and it may, therefore, not be too early to bring the following considerations to the attention of the State Department.

3. The United States market has never been an easy one for the goods of other countries. Large as it is, it is extremely well supplied in most cases by domestic producers who pride themselves on being among the most efficient in the world. Since the last war a great deal of effort has been expended, both by the Government of the United Kingdom and indeed by the United States Administration, to persuade exporters in the United Kingdom to cultivate the United States market. It has appeared, both to the United Kingdom and to the United States Governments, that it was essential, for both economic and political reasons, that the dependence of the United Kingdom on external aid should be ended as rapidly as possible. It has long been clear that deplorable restrictions on international trade could be avoided only if the United Kingdom were able greatly to increase its dollar earnings. It has been clear, also, that the power of the United Kingdom to be an effective ally, strong both militarily and economically, was threatened by the difficulty in balancing its external, and particularly its dollar, account.

4. In earning dollars the United Kingdom, more perhaps than any other country, must rely on increasing sales in the United States of manufactured goods in direct competition with United States industry. British manufacturers and exporters, in spite of the temptation of higher profits in easier markets, have responded to the challenge. They have neither sought nor been given assistance which would render "unfair" the competition they offer the United States producers and such success as they have had has been hard won. They are perturbed by the mounting evidence that any marked success in selling their goods in the United States will be countered by applications from United States industry for further protection and the fear that some at least of these applications may be granted. This feeling is not confined to the trades in which applications have already been made, but is very widespread so that it becomes a question whether, should the fears prove to be justified, the United Kingdom effort to pay its way by earning dollars on a fair competitive basis can be maintained. Should it fail, the economic policies of the United States as well as of the United Kingdom would be frustrated, and the ability of the United Kingdom to play its necessary part in the Western alliance would be weakened.

5. These considerations, although they apply with particular force to the United Kingdom, apply also to other European countries. In their memorandum of January, 1952, the Italian Embassy argued this matter among others with great force and conviction, and the United Kingdom would endorse what was said on it there.

6. It is not disputed that the withdrawal of tariff concessions under an "escape clause" procedure may very occasionally and in certain special circumstance he justified; and it is, in fact, recognised in Article XIX of the G.A.T.T. that participating countries are free to withdraw tariff concessions included in the schedules to the G.A.T.T. if, as a result of unforeseen developments and of the effect of obligations under the G.A.T.T., products are imported in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers.

7. If, however, the purpose of the tariff negotiations conducted under the G.A.T.T. is not to be defeated, it is of the greatest importance that the provisions of Article XIX should be invoked only in cases where increased imports are causing or threatening undoubtedly serious injury to domestic producers and where the other conditions laid down in the G.A.T.T. are also satisfied. Moreover, while this applies to action taken by any contracting party, it applies with special force to any suggestion that the U.S. Government should have resort to Article XIX. This is so far two reasons. First, if the contracting party which is the major creditor country in the world were to set an example of withdrawing tariff concessions whenever they revealed their effectiveness through more vigorous competition between the imported and the domestically produced product, it would be politically impossible for the governments of debtor countries—which have their own internal vested interests to contend with—to withstand pres- sure to have recourse to Article XIX in order to free themselves from tariff commitments which were proving embarrassing. Secondly, if any suggestion were to get about that the U.S. Government were prepared to apply any but the most rigorous standard of judgment to escape clause applications, the reliance which exporters in the United Kingdom and other countries could place on the continued application of United States tariff concessions would be so undermined that their will to make the special efforts and to take the added risks that are frequently necessary to increase their dollar-earning exports would be seriously impaired. In such circumstances, the difficulties of the Governments concerned in playing their part in what must be a co-operative endeavour to redress the present unbalance in payments between the dollar and non-dollar areas would be gravely increased. That in turn could not but affect the ability and willingness of those Governments to co-operate with the United States in commercial and other policies.

28.

asked the President of the Board of Trade if, in view of the memorandum issued on 18th April to the United States of America on the increase of applications for protective tariffs, Her Majesty's Government will give a lead by removing import duties into Great Britain.

Her Majesty's Government are prepared now, as in the past, to negotiate tariff concessions with other countries on a mutually advantageous basis.

Does my right hon. Friend realise that the only way to avert world economic collapse, and, indeed, a third world war, is to remove all barriers to international trade as quickly as possible?

Is not the hon. Member for Orpington (Sir W. Smithers) now becoming infected with Liberalism?

On a point of order. I want to ask you, Mr. Speaker, if I may say that I am not infected with Communism.