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East-West Trade (Anglo- American Talks)

Volume 530: debated on Tuesday 13 July 1954

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With the permission of the House, I should like to make a short statement on the talks which I had in Washington last week with Mr. Harold Stassen, the Director of the Foreign Operations Administration. The subject of these talks was the strategic controls on trade with the Soviet bloc in Europe. Our objectives in this matter have been stated on a number of occasions and, in particular, by my right hon. Friend the Prime Minister on 25th February last.

Briefly, what we want is to prevent the supply to the Soviet bloc of goods which would significantly strengthen their power of aggression, but subject to this limitation we want to develop commercial contacts with the bloc and to expand trade in non-strategic goods. With this end in view, we, together with the United States and other friendly Governments, have been examining the existing Control Lists, item by item, with a view to drawing up a revised list. It has been my conviction throughout that a shorter list combined with tighter enforcement is likely to prove more effective.

These discussions with the 14 countries concerned have been proceeding for some time now in Paris. Progress has been slower than we would have wished, and this has been due in part to certain differences of view between us and the United States Government. It was in these circumstances that Mr. Stassen invited me to visit Washington and discuss some of these problems with him.

I am happy to inform the House that we reached a large measure of agreement and in particular that Mr. Stassen and I were able to agree on the lists which both of us would be ready for our part to support in discussion with the other countries concerned. There remain the problems of enforcement and timing. On the question of enforcement, Mr. Stassen and I are agreed on certain additional measures which we consider desirable and which we are prepared to recommend for general adoption. As regards timing, we in the United Kingdom consider that the sooner the agreed changes are implemented the better. A decision on this point has been deferred, but it will be discussed further in the near future with all the countries concerned.

Talks with these countries on all these points will now proceed, and I am sure that the House will share with me the hope that full agreement will be quickly reached.

I think it is right to thank the right hon. Gentleman for the frankness of the statement he has just volunteered to the House, but since it is now nearly five months since the Prime Minister made his statement on the Government's objective on East-West trade, and since the President shortly afterwards said he hoped to be able to announce an agreement, will he say whether this disagreement on timing means we cannot now expect an early announcement of what the changes are to be? Is it likely that the right hon. Gentleman will be able to make an announcement before the House adjourns for the Recess?

I should certainly hope to say where we are getting to before the House rises for the Recess. I think that probably the right hon. Gentleman will put a Question down to that effect. On the question of the disagreement on timing, I cannot anticipate the discussions that are to go on now.

There is some confusion here. The right hon. Gentleman said there was disagreement over the timing of the implementation of an agreed revised list, but does he not realise that there are some very important orders, running into tens of millions of pounds, which are being held up for an announcement as to whether in due course those goods can be shipped? Can he say, in particular, as a test of what this agreement means, whether there will be any improvement in the matter of the orders relating to machine tools?

On the matter of timing, I think my statement was quite clear. We have not reached agreement about the timing, and we are going to have discussions with the United States and other countries during the next week or 10 days. Until those discussions are concluded, it will obviously be impossible for me to give a firm answer as to when the alterations in the list can finally be approved. It must await the discussions.

Did the discussions with Mr. Stassen take in the question of the resumption of trade between Japan and the Chinese mainland? Can my right hon. Friend assure the House that if that trade takes place the Japanese will not enjoy any advantage that will not be available to British business concerns?

The discussions I was having with Mr. Stassen, and indeed the discussions going on now, are limited to trade between the West and the Soviet bloc in Europe, which does not include China.

Are similar discussions with regard to China contemplated? If not, do we propose to improve our own trade relations with China? When the shorter list of strategic goods is agreed, will it be published so that knowledge of what is in it and of what is not in it will be available to those who wish to know?

The question of trade with China is quite separate from that which I have been discussing here, and I should not like the two things to become confused. The question I have been discussing is trade between the West and the Soviet bloc. As to the question of publication, that is a matter for discussion, and it is probable that some publication of the list in some form or another would be bound up with the question of more effective enforcement.

On the question of enforcement, and the possible dangers in such a practice, did the right hon. Gentleman devise some new method of enforcement of the list?

As the hon. Gentleman will probably know, we in the United Kingdom, for example, have had enforcement through trans-shipment control since 1951, but a number of other countries have not got trans-shipment control. I think the House would agree that it is in everybody's interest that the controls should be universally enforced. Parallel with the question of trans-shipment control by other countries is the question whether we should have some form of transaction control here. Of course, I cannot go into the details of that now, but our aim is a more effective enforcement of a shorter list, which will be satisfactory to all concerned.

Will "Co-com.," the Co-ordinating Committee in Paris, still have the powers it has had hitherto, or are those powers now to be modified, because British manufacturers apparently were submitting specifications, which our competitors in Germany and elsewhere did not, and our orders have been turned down, and our competitors have got them?

On the question of powers, the countries that meet in Europe are a consultative group without executive powers. Allegations are often made that other countries are more lax than we are in the enforcement of the control. While I am quite willing to look at any evidence of that, I have no evidence of that in front of me at present.

Is the right hon. Gentleman aware that in his Department at the moment are nearly £27 million worth of orders for machine tools for Russia alone that are awaiting licence, and that this figure exceeds that of our total export of machine tools to the whole world in any one year; that Switzerland and Sweden are able to manufacture those machine tools; that Switzerland and Sweden are not parties to any such arrangement; and that it is an open secret that these things are being exported from Western Germany? In all these circumstances, does not the right hon. Gentleman think that these discussions should be hurried on? Otherwise, those orders will disappear.

Without accepting any of the implications of the hon. and learned Gentleman's statement, I would say that I thoroughly agree that these discussions should be hurried on, and I think it is an important step towards that end that I should have had these discussions with Mr. Stassen, and that we should have agreement between ourselves and the United States as to the scope of this Control List.

Business Of The House

Proceedings on Government Business exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House).—[ The Prime Minister.]