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East-West Trade (Strategic Controls Agreement)

Volume 531: debated on Monday 26 July 1954

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With the permission of the House, I should like to make a statement on the discussions we have been having with the United States and other countries about a revision of the strategic controls on exports to the Soviet bloc, as distinct from exports to China. As hon. Members are aware, the object of these talks has been to narrow substantially the area of control, consistent always with national security, while improving the methods of enforcement.

I am glad to say that we have now achieved substantial results. There are a few technical problems outstanding and we have not yet reached agreement on controls over the sale of ships; but discussions on these will continue. We have, however, reached unanimous agreement on a considerable reduction in the control lists. In brief, what we have agreed is that, as from 16th August, the present embargo list will be reduced by one-third from about 250 to 170 items and the quantitative control list will be drastically cut from 90 to 20. A further 60 items will be kept on a watch list so that we can follow the trend of these exports. Included in these lists are a few items which have been added for security reasons. The overall result will be a substantial increase in the area of permitted trade, which will, at the same time, be fully compatible with the needs of national security.

Agreement has also been reached on improved methods of enforcement. The other countries concerned already apply financial controls or controls on merchanting transactions, and it has now been agreed that those which have hitherto freely permitted the transit of goods will take steps to introduce controls in line with the transhipment control which we ourselves have operated since 1951. For our part, we shall supplement this action by imposing control over merchanting transactions with the Soviet bloc. An Order to establish this control will be laid before the House in due course.

I hope to be able to publish the revised control lists, but some problems of definition remain to be worked out, and this will have to be considered with the other interested countries. Meanwhile, any interested exporter who wishes to know whether a licence would be granted in respect of a particular product will be able to obtain all necessary information and advice from the export licensing branch of the Board of Trade or from the production department.

The right hon. Gentleman will realise that nearly six months have elapsed since the Prime Minister made his encouraging statement about East-West trade and stated that these discussions would take place. It is still not clear from the statement of the President whether these are sweeping reductions or not. It seems as though they are not. Will the right hon. Gentleman tell the House—since these figures may mean nothing or very little—whether, as a case in point, machine tools will now be more freely exported to the areas that have been under control? Further, will he tell the House when he expects to be able to announce the decision of the Government, first about ships, and secondly, about what is now the quite meangingless boycott on exports to China?

On the last point, exports to China are a quite separate question, and I hope that the right hon. Gentleman will put it on the Order Paper. On the question of the time which this has taken, I make no apology for the fact that this matter has been under serious consideration for two or three months. It has been an important matter in which some 14 other countries are involved, and I think it is right that we should have discussed the matter carefully with them. On the question of the items which are included, I cannot go into details in the House until the lists are eventually published, but I can say that some machine tools are included.

The right hon. Gentleman, quite rightly, asked me about ships. I referred to the matter in my original statement. The position, as he probably knows, is not altogether satisfactory and discussions are still going on. I hope to be able to make an announcement later.

My right hon. Friend gave the figure of the reduction in the number of items as about one-third. May I ask whether that would represent roughly about a one-third reduction in value?

It is difficult to compare volume, or the number of items, with the value because, besides reducing the number of items, there has been some redefinition of those which remain subject to embargo, which will, of itself, be of considerable assistance in our trade. The effect of these rearrangements will be of substantial benefit to the trade of this country, and will still be consistent with national security.

With regard to shipbuilding, is the right hon. Gentleman aware that at this moment we are in danger of losing very considerable orders to other countries, including an order which would go to a firm very near to the right hon. hon. Gentleman's own constituency? Will he take note of the fact that even those ships that are allowed at the present time under the present control list are not all the subject of orders, because of some strange reluctance on the part of the British shipbuilding industry, which complains about lack of orders, to accept the Soviet orders that are open to it? Will the right hon. Gentleman press the shipbuilding industry to take some of those orders?

The right hon. Gentleman will appreciate that this country is under the same restrictive control, so far as the rules of the Co-ordinating Committee are concerned. My right hon. Friend the First Lord of the Admiralty has direct responsibility in this matter, and I believe that he is prepared to examine any inquiry or order for ships which comes forward at the present time, and we will look at it on its merits.

Will my right hon. Friend bear in mind that the international agreement arrived at will be warmly welcomed by British industry, because the present position is entirely unsatisfactory, chaotic and unrealistic?

To what extent is the differentiation in control over the export of goods to countries in the Soviet bloc and to China resulting in abnormal increase in the re-export of goods from the countries in the Soviet bloc to China?

These particular discussions have been the result of the work of the Co-ordinating Committee in Paris. As the hon. Gentleman knows, the restrictions upon China work under a completely different system, under a resolution of the United Nations.

While appreciating the value of my right hon. Friend's statement, may I ask him whether he cannot reply in most general terms to the supplementary question asked by the right hon. Member the Member for Huyton (Mr. H. Wilson), since it is quite meaningless to apply an embargo to China which we cannot apply to Soviet Russia?

I think that the right hon Member for Huyton has a Question down on Wednesday next about exports to China. It is difficult to deal with that subject in the context of this statement, because all our discussions have been restricted solely to exports to the Soviet bloc. If we start confusing China with the Soviet bloc we shall get into difficulties.

Although what the right hon. Gentleman has said is perfectly true, does he not realise, nevertheless, that the approach to the Soviet bloc side of the matter has been an international approach and is useful for that very reason? Many of us would like to know whether the Government propose to take any initiative to deal with the China situation along the same lines?

The hon. Gentleman is trying to draw me, on this statement, into a very much wider field than the question with which we are concerned here of the effect that the strategic control will have on the Soviet and its European satellites.

I recently put a Question to the First Lord of the Admiralty on the supply of ships to the Soviet Union, and he told me that responsibility rested with the President of the Board of Trade. The President now says that that is not so. Can we be told who is responsible?

If the right hon. Gentleman will see me afterwards I will try to sort it out.

In view of the anxiety in the locomotive industry in Glasgow among both employers and employed about unemployment, and as they would like to see an increase in the trade in locomotives with the Soviet bloc, can the President of the Board of Trade tell us anything about that position?

If the local industry have orders which they wish to send, and have any difficulty about definition or the like and if they will get into touch with me or with the production department concerned they will get the information that they require.