OTTAWA AGREEMENTS BILL.

§ THE SECRETARY OF STATE FOR WAR (VISCOUNT HAILSHAM)

My Lords, it is just a fortnight since your Lordships' House had under consideration a Motion which was in effect a Vote of Censure upon His Majesty's Government in regard to the action they were taking in the Ottawa Agreements. That Motion, after full debate, was withdrawn, because the mover and such supporters of it as were present were conscious that there was an overwhelming superiority of opinion in the opposite direction. Tomorrow I shall have an opportunity at the close of this debate of replying to such criticisms as may emerge during our discussion, and I have thought that the most useful way in which I could try to help your Lordships this afternoon in moving this Second Reading would be not to indulge in a violently partisan speech, but to try as far as I can to state fairly to your Lordships what were the Agreements which were reached at Ottawa, and then to explain how the Bill which is the subject of discussion carries those Agreements into statutory effect.

The Ottawa Conference was the outcome of the Imperial Conference of 1930. At that time, as your Lordships will remember, the whole of the Dominions there represented were anxious to bring about a form of co-operation in trade matters by means of Imperial preferences within the Empire, but the Government of that day felt itself precluded by its political pledges and allegiance from giving effect to such a policy, and accordingly the Imperial Conference of 1930, failing to reach any conclusions upon this question of economic co-operation, passed a Resolution in which it declared that: Inasmuch as this Conference has not been able, within the time limit of its deliberations, to examine fully the various means by which inter-Imperial trade may 1116 best be maintained and extended, it is resolved that the Economic Section of the Conference be adjourned to meet at Ottawa on a date within the next twelve months to be mutually agreed upon, when that examination will be resumed with a view to adopting the means and methods most likely to achieve the common aim… There was a proviso that this adjournment must not be construed as modifying the views which had been expressed by the various members of the Conference.

The Ottawa Conference, therefore, held in July last, was held for the purpose of examining the various means by which inter-Imperial trade might best be maintained and extended. That was the commission which the Delegation from this country had in their hands when they went to Ottawa. But between the Conference of 1930 and the meeting at Ottawa in July, 1932, two fresh factors had emerged both of which were very material to the discussions there embarked upon. In the first place, at the beginning of this year the United Kingdom came into line with the whole of the rest of the Empire—for that matter with the whole of the rest of the civilised world—in adopting the principle of Protection for home manufactures. That obviously afforded opportunities for the extension and encouragement of inter-Imperial trade which were lacking in 1930. Secondly, although already in 1930 there was a grave state of depression in the economic world, that depression had extended and deepened to an extent which, I suppose, no one contemplated when the Conference adjourned in October, 1930. That increased stress of the world economic depression emphasised the urgency of finding some effective means to save the Empire as far as possible from the effects of that depression. It is impossible to have a prosperous British Empire whilst all the rest of the world is getting further and further into economic disaster. It emphasised also the importance of finding, if possible, a means of extending Imperial trade which would encourage the world to look for similar means for curing its own economic ills.

It was in those conditions that we met in July last. Very broadly, the purpose—or one main purpose—of our discussions was to devise means, if possible, of securing a market for Dominion produce in the United Kingdom and securing 1117 a market for United Kingdom and Colonial products in the Dominions. We set up a Committee for the promotion of trade of which I had the privilege of being Chairman. It very soon became apparent that it would not be possible to reach a fruitful conclusion within any reasonable space of time if we tried to get multilateral agreements which should cover the whole area of our deliberations. The particular interests of one or other Dominion which did not equally affect the others were so different that an attempt by eight different Delegations with some fifty or sixty members to discuss at the same time one agreement which should embrace all these matters, would have certainly led to failure. We did set up committees which were charged with the duty of investigating those matters in which more than one Dominion had a common interest—such matters as meat products, cereals, minerals, fruit and the like. But we decided that the best method of dealing with the problems which we had to solve was by a series of bilateral agreements, between the United Kingdom on the one hand and the several Dominions on the other, which should have regard in each case to the particular circumstances of the trade with that Dominion but which, at the same time, should all be consistent with certain common principles which your Lordships, I think, will find embodied in all the Agreements.

As a result of that method of approach, within five weeks from the time when we first met we were in fact successful in negotiating Agreements with every one of the Delegations with whom we were in discussion. For myself I think that the fact that we were able to reach agreement with each of those Delegations is something of a tribute, not merely to the United Kingdom Delegation, but to the spirit which animated all the Delegations in the discussions upon which we were engaged. The general principle which is found in all these Agreements is set out in the Resolutions recommended by the committee and adopted by the Conference which appear on page 10 of the Blue-book which summarises the Ottawa proceedings. Perhaps it is well worth while to quote one or two phrases: That by the lowering or removal of barriers among themselves provided for in 1118 these Agreements, the flow of trade between the various countries of the Empire will be facilitated, and that by the consequent increase of purchasing power of their peoples, the trade of the world will also be stimulated and increased; Further, that this Conference regards the conclusion of these Agreements as a step forward, which should in the future lead to further progress in the same direction, and which will utilise protective duties to ensure that the resources and industries of the Empire are developed on sound economic lines. The Agreements which carry out and embody these principles are seven in number. The main features which are included in each one of them may, I think, be stated quite conveniently without troubling your Lordships to go through each separate Agreement in detail. The first great principle which every Agreement includes is the principle of free entry for Dominion products into the United Kingdom wherever a protective duty has been imposed. Your Lordships will remember that in February of this year a General Tariff, in most cases 10 per cent. ad valorem, was imposed on manufactured and some other goods, on a wide range of goods imported into this country, and by that Act the Dominions were granted exemption from the duties until November 15. The first step of agreement which we reached was that that exemption from duties should be extended beyond November 15 throughout the currency of the several Agreements. When we hear, as we are sometimes told, that these Agreements tend to raise tariff barriers and interfere with the free flow of trade, I would like your Lordships to reflect that the first thing these Agreements do is that with regard to the trade between this country and the whole of the Dominions, trade covering in area something like a quarter of the globe, the Agreements provide that that trade shall be free of duty; and that can hardly be said to be very inconsistent with the principles even of the most rigid Free Trader.

The Agreements in the second place deal with a certain modified list of articles, not very extensive, with regard to which the Dominions were anxious to receive an increased margin of preference beyond that which they were at that moment enjoying. There were a few articles on the free list with regard to which the Dominions desired the 10 per cent. preference they had on the general 1119 range of imports, and there were a few more—fresh fruits, dairy products, a short list—with regard to which they asked that the margin of preference should be increased from 10 per cent. to 15 per cent. and stabilized in many cases in the form of a specific duty which roughly gave a 15 per cent. margin in their favour. Those preferences could not be given by a reduction of duties because the Dominions were already coming in free and therefore the only way in which they could be given was by increasing the duty on the foreign articles. Accordingly, we have in those cases a raising of the duty from 10 to 15 per cent. or whatever the figure is, and an assurance to the Dominions that they will enjoy that margin throughout the currency of the Agreements. There were a few articles with regard to which they requested an assurance that the existing 10 per cent. margin should be maintained during the period of the Agreements. Obviously it would have been unreasonable to suggest we could not modify the whole wide range of import duties without Dominion consent, and obviously it would have been unfair to the Dominions to ask them to give a definite margin of preference and to deny them a similar assurance in regard to those particular commodities in which they were specially interested. Accordingly a list was provided of articles with regard to which we agree to maintain the 10 per cent. margin of preference during the period of the Agreements.

Thirdly, there came the question of meat. As your Lordships know, this country is the one great market for the export of meat and unhappily, owing to over-production, the market has been so glutted that the price has fallen to a figure far below the economic cost of production in any part of the world. That was a matter which, in the opinion of the Dominions and of this country, required regulation and an Agreement was negotiated under Which we arranged that for the next eighteen months, from January next till June, 1934, there should be a progressive reduction in the percentage of frozen mutton and lamb imported from foreign countries, and there should be a stabilization of the quantity of chilled beef imported from foreign countries; and, further, that during that period steps would be taken to negotiate some 1120 more permanent arrangement which would secure the position of the meat market.

It has been alleged that this arrangement is against the interests of the United Kingdom consumer because it tends to raise the wholesale price of meat. Let me say frankly that it is intended to raise the wholesale price of meat. If your Lordships look at the Schedule which is contained on page 54 of the Blue-book and which appears also in the Agreements scheduled to the Bill on page 53, you will find that the Schedule takes the form of a Declaration by the Government of this country. I would like to quote two or three paragraphs because it indicates the view of the Government and the purpose we set out to attain: The present wholesale prices of frozen meat are at a level which has resulted in grave depression in the livestock industries of the United Kingdom and the Dominions. This depression is likely, if continued, to bring about a serious decline in production and consequent ultimate injury to the consumer. Such a position is so serious that it is essential to take whatever steps may appear feasible to raise the wholesale prices of frozen meat in the United Kingdom Market to such a level as will maintain efficient production. Then, in paragraph 4: The policy of His Majesty's Government in the United Kingdom in relation to meat production is, first, to secure development of home production, and, secondly, to give to the Dominions an expanding share of imports into the United Kingdom. That was and is the deliberate policy of His Majesty's Government, and we take our stand on that policy not merely in the interest of the producer, but just as much in the interest of the consumer.

So far as the producer is concerned we regard the present state of meat prices as one which is imperilling the whole agricultural situation in this country, and we do not regard it as possible for any Government to allow unchecked this steady fall in prices to a level at which no farmer in this country can hope to produce meat and which is bound, if allowed to continue, to land him in bankruptcy and ruin. But it is not only the producer who is injured by that state of affairs. If the fall is allowed to go on and no steps are taken to check the glut, the price falls—indeed has fallen—to such a level that the producer is unable to go on producing meat and is obliged to give 1121 up that particular enterprise. Even in the days when we were meeting at Ottawa, there were instances in which the prices realised by the Australian producer were not sufficient to pay the cost of getting the meat into the market, so that the producer was actually receiving less than nothing for the carcasses. We cannot go on like that. The necessary result has been that the producer, sooner or later, is driven out of business, and when you have got him driven out of business, by the painful process of complete financial exhaustion, then those who have survived find themselves with a shortage of supplies, with the result that prices go up to famine prices, which lands the consumer in an ultimate expenditure far higher than if prices had kept at a reasonable level throughout.

Therefore it is that we have entered into the arrangements set out in that Schedule, by which we hope that the undue increase and fall of prices shall be checked and a more stable and regular level of prices secured. It is perhaps some testimony to the foresight of those who had to negotiate these Agreements that the method which we were able to adopt at Ottawa has enabled His Majesty's Government, within the last few days, to take a step which the agricultural community welcome and recognise as likely to prove effective in checking the fall which has happened since the Ottawa Agreements—an arrangement which it would not have been possible to make with any possibility of success but for the Ottawa Agreements.

Those then are the main concessions, if you like so to call them, which we give to the Dominion producer. What, on the other hand, do the Dominions give to the United Kingdom producer? In the first place, an increased preference over a very wide range of goods. Comment has been made, I know, on the fact that it could not have been possible at Ottawa to discuss the merits of all the long list of articles with regard to which there has been an alteration in the tariff; but, my Lords, it would be a complete mistake to suppose that that consideration, and those negotiations, only happened at Ottawa. Months before the Ottawa Conference commenced we had been in negotiation with the various Dominions, and in touch with the various exporting interests in this country, and we have been able to 1122 ascertain where best we could obtain help in the Dominion markets, and we have been able to discuss with the Dominions how far they could meet our wishes in various regards.

When we were at Ottawa we had the assistance of most valuable industrial advisers, men of world-wide reputation and wide experience, chosen by industry and agriculture for themselves and not chosen by the Government, who were always willing to give us the benefit of their experience and advice, and who were in turn in touch with a number of unofficial representatives of various interests, from whom they were able to obtain any particular trade information of which they happened at any moment to be in need. Accordingly we have reached in these Schedules a number of increased preferences for the products of the United Kingdom in Dominion markets, which the trades themselves, at any rate, believe will very materially improve their prospects and increase their prospects of obtaining substantial sales. None of us at Ottawa thought that our measure of success or failure was to be ascertained by calculating the exact amount of preference that we were able to gain on this, that or the other article. None of us thought that our success or failure at Ottawa was to be measured by calculating on the one side how much the preferences which we gave to the Dominions were worth in money, and how much, on the other side, the preferences which we were given in the Dominion markets were worth in money to this country. I do not think that that calculation could be made with any measure of accuracy, and if it had been made it would only touch the fringe of the question, because the things done at Ottawa were to lay down the general principles regulating trade between the United Kingdom and the Dominions, and to lay down principles which would form an enduring basis for an increasing share in the Dominion markets.

In that regard we had in the Ottawa Agreements a series of principles laid down which, in the view of those engaged in those negotiations, and I hope presently in your Lordships' view, are matters of great public importance. We have, first of all, accepted by the two great high tariff Dominions, Australia and Canada, the principle that in giving any protection in the Dominion markets 1123 against the products of the United Kingdom only those industries shall be given such protection as are reasonably sure of sound opportunities for success. That means to say that in future, in determining whether protection shall be given against United Kingdom production, only those industries which have "reasonable assurance", to use the words of the Agreements, of establishing themselves on a commercial basis in the Dominions, shall be given protection at all. Secondly, where that condition is satisfied, where a protection is to be granted, the measure of protection is to be such as to put the United Kingdom producer on a fair competitive basis with the Dominion producer—the protective duty shall not exceed such a level as will give the United Kingdom producer full opportunity of reasonable competition, on the basis of relative cost of economic and efficient production; with the proviso that, in the case of Dominion industries, they shall be given reasonable protection until they have a reasonable chance of establishing themselves.

The matter does not rest there. Having laid down those two principles then, both in Canada and Australia, there is express provision made for the setting up of a tribunal before which United Kingdom producers are to have full right of access, which shall examine the facts and find out what protection is necessary to satisfy that condition, and the report of that tribunal is to be laid before Parliament and therefore becomes a public document, open to the inspection of the United Kingdom producer and also of the Dominion consumer. There is, further, an express provision that no protection is to be increased against United Kingdom production except after an investigation and report by that tribunal. It is, of course, possible to sneer at the tribunal and to say that you cannot trust a Dominion tribunal to be impartial and unbiased. It was not from that point of view that we approached these negotiations. We believed that we were just as much entitled to trust to the fairness of an Australian or Canadian tribunal as we should have been to trust to the impartiality of a United Kingdom tribunal. We believe that in setting up a tribunal before whom there should be full right of audience, whose report should be public 1124 property, and whose duty should be the investigation of the facts, we were providing a very real safeguard and a very great advantage to the producers of this country.

Then it so happened that, in addition to the protective duties which at present exist, many, or at least some, of the Dominions, owing largely to the economic disturbances of the last two or three years, have set up a series of extra charges on foreign goods. There are different names—exchange duties, dumping duties, primage duties, surtaxes, sometimes even prohibitions. And we felt that it was of the greatest importance to the free flow of trade between this country and the Dominions that those extra charges should, as far as possible, be removed, and that, wherever they existed, there should be an opportunity of some certain knowledge as to how much was going to be charged. We have achieved, first of all, a general acceptance by all the parties represented at the Conference of these principles with regard to Customs administration: that the aims which were to be kept in view should be:

1. "(i)The avoidance of uncertainty as to the amount of duty which would be payable on the arrival of goods in the importing country;
2. (ii) the reduction of friction and delay to a minimum;
3. (iii) the provision of facilities for the expeditious and effective settlement of disputes relating to all matters affecting the application of the Customs tariff."

And I believe that there is hardly any concession to the manufacturing and commercial interests of this country that they would value more highly than certainty and impartiality in deciding upon the duties to which their goods are to be exposed. In fact, there is a series of clauses in the different Agreements giving effect to these aims; and I am glad to be able to tell your Lordships that, even since the date of the Agreements, the Dominions have begun to take steps to carry out those arrangements.

In Canada there was a system of arbitrary valuation which caused the greatest irritation and resentment and created a very great feeling of ill will. There has already been introduced into the Canadian Parliament a Bill to repeal Section 43 of the Canadian Customs Act, which gives that arbitrary power, and to give a certainty to, and an impartial 1125 investigation to, our traders on those matters of valuation. In New Zealand there was in existence a surtax of nineteen-fortieths, I think, in most cases on all goods subject to Customs and a primage duty of 3 per cent. on all other goods. Already New Zealand has abolished the whole of that surtax in respect to British goods, and there remains only the primage duty on the balance, which we hope will be removed as soon as the finances of the country permit. In Australia there were prohibitions, surtaxes of something like 50 per cent. and, in addition, primage duties of 10 per cent. extending over almost the whole range of dutiable goods. On August 31 the whole of the prohibitions and surtaxes were swept away so far as British goods were concerned, and two days afterwards the 10 per cent. primage duty was also removed with regard to no less than 35 classes of goods in the Australian tariff, including a number of the greatest importance to this country.

Then there is a provision in the Canadian Agreement which has excited a certain amount of controversy. We were determined to set up preferences which in our judgment would enable Dominion products to have a fair chance in our markets and would enable our products to have a fair chance in Dominion markets. If, owing to the lack of enterprise of the British or Dominion manufacturer or producer, he was unable, inspite of those preferences, to secure his share in the market, that was a matter of his own commercial ineptitude, which the Government could not help. But we were conscious that there was another form of defeating those preferences with which no business enterprise could possibly cope. It was suggested to us that, apart altogether from the legitimate play of competition, there might be State action taken by some country which was determined to destroy the effective flow of inter-Imperial trade which these preferences were designed to create, that it could by State action, especially in a case in which the State happened to be the actual seller of goods, deliberately depress prices to such a level that no producer, however efficient, could hope to compete with them; and in that way the preferences which these Agreements set up could be defeated and the intentions of the Agreements set at nought. We were determined that that should not be 1126 allowed to happen, and accordingly there is provision made expressly, which is carried into effect in the Bill, that if State action by some foreign Government should take place which is designed to frustrate the effect and the intention of these Agreements, then the country whose markets are affected will take such measures as may be necessary, by prohibiting those goods from that State from coming in, to see that the Agreements are not defeated by any such unfair means.

There was also the question of time. We have been criticised because the Agreements last for five years in every case except in the case of India. In the case of India, as your Lordships know, great constitutional changes are at any rate under discussion, and it would be obviously improper that a Legislature elected under existing conditions should bind for any long time in advance a completely different form of sovereign power. But with regard to all the other Agreements it was obviously desirable that they should be operative for a sufficiently long time to ensure that the producer should have a fair chance to establish himself in the market which was designed for him, and to take such steps as were necessary to produce the supplies for which there was a reasonable opportunity of finding a market. We thought, for instance, that the United Kingdom manufacturer required a reasonable opportunity for getting the merits of his goods known, for establishing a good will, for building up trade connections, and for capturing markets which were invaluable for him if he possessed them, but which were not worth much if he were liable to be dispossessed at the end of a few months after the Agreements had been made. And similarly we were desirous that the Dominion producer, on his side, before he made such arrangements as might be necessary to produce sufficient quantities to satisfy our markets, should have a reasonable assurance that when his preparations were complete, and when the production took place, he would not find that the market had been taken away from him, and that the preferences on which he relied had been destroyed. Accordingly the Agreements operate for a period of five years in every case, except in the case of India.

I do not know whether anybody will have the temerity to repeat in this House 1127 the so-called constitutional arguments which were advanced at the beginning of the debates in another place. They were so completely pulverised when they were last produced that I doubt whether they will see the light, at any rate in the same form, up here. But if they should be brought forward I shall be very happy to deal with them when my opportunity arises to-morrow evening. For the time being I will only say that it seems to me that a reasonable time limit is an essential feature of this or of any other commercial agreement between two countries.

Those are the main provisions of the Ottawa Agreements. I have expanded them, I am afraid, at greater length than I had originally intended. I should like, if I may, just for a few minutes—and I will not detain your Lordships more than I am obliged to do—to run through the actual Bill and to explain, as far as is necessary, how that Bill gives effect to the Agreements to which I have called your Lordships' attention. Clause 1 of the Bill begins by setting up the Customs duties which, as I have told your Lordships, we agreed to impose at the instance of the Dominions. Subsection (2) of that clause not only gives power but imposes a duty on the Treasury to get rid of those duties whenever it is not necessary to maintain them in order to satisfy the Agreements. That might happen either because an Agreement was cancelled or because, in the case of some particular articles, a condition of the duties had ceased to be performed. For instance, in the case of wheat, zinc, lead and copper there is a condition that the duties shall be operative only so long as the commodities are supplied from Empire sources at world prices; and there has to be provision made for power to deal with that situation by taking off the duties if the condition is not fulfilled. Then there is a provision in subsection (4) that the duties are to be in substitution for and not in addition to the Import Duties Act duties.

Clause 2 gives the preference to the British Empire in respect of all these duties and the Import Duties Act duties. Subsection (3) deals with the position of the Irish Free State and provides that, so long as there are special duties imposed under the power which already exists on Irish Free State goods, these Ottawa duties shall not be imposed in 1128 addition. As your Lordships know, certain special duties have been imposed under the legislation of last July, and on the 15th November the Import Duties Act 10 per cent. duties will become operative in regard to the Irish Free State; but to impose these extra Ottawa duties in addition would seem to us to be unnecessary and really to defeat the object of the special duties, which are calculated with reference to the capacity of the Irish Free State produce to bear the charges imposed.

In subsection (5) there is a provision with regard to copper which I should like to mention. The copper duty is the only one in the whole range of the Ottawa duties which is intended to be prohibitive. Your Lordships probably know that the United States is the great source of copper outside the Empire. The United States has a duty on all foreign copper going into that country, with the result that British Empire copper is in effect excluded from the United States America. We arranged that we should put the same duty or a corresponding duty of 2d. per lb. on copper coming from foreign countries into this country, but we coupled with that the condition that the British Empire producers should be able to supply the whole of the requirements of the copper consumers of this country at world prices, so that no increase of price was involved to the consumers in this country.

It happens that there are two ways of refining copper; what is called the fire-refined copper and what is known as the electrolytic copper. In the case of fire-refined copper there is no difficulty, but in the case of electrolytic copper there are not at present refineries in the British Empire sufficient to supply the requirements for electrolytic copper, and accordingly Rhodesian copper has to go very largely to the United States to be refined there, if it is going to undergo the electrolytic process. Subsection (5) provides that, for the next three years, copper produced in the British Empire and refined outside it shall still be treated as British copper; that is to say, shall still be free of duty for the next three years, which will afford an opportunity for the creation of a refining industry adequate for the requirements of the Empire within the bounds of the British Empire. There is already one 1129 electrolytic factory of substantial dimensions in Canada, and it is hoped that under the stimulus of this clause it will be possible to satisfy completely the requirements for electrolytic copper by copper refined, after three years, in this country. There is power given to the Treasury and the Board of Trade to extend that time on certain conditions; and it is satisfactory to be able to tell your Lordships that the copper consumers and the copper producers have, within the last few days, reached an agreement with regard to the supply and production of copper which enables both sides to be satisfied, the one that the copper will be available, the other that it will be supplied at world prices and that the conditions of the Agreements will be fulfilled without any cost to the users of copper in this country.

Subsection (6) deals with the Port of Beira. The reason that has to be specially dealt with is that a great portion of the produce of Nyasaland and of Rhodesia is exported through Beira and it would not be fair to allow that fact to deprive the producers in those parts of the Empire of the preference which the Agreement is intended to give them.

Clause 3 deals with the duty on light wines and gives an increased preference to Empire wines. Clause 4 deals with tobacco and coffee, stabilises the preferences and increases them in the case of coffee. Clause 5 is the clause which deals with that unfair State competition to which I have already drawn attention. Clause 6 includes in the free list which is set up under the Import Duties Act certain articles which at present are not in the list but which, under the Indian Agreement, are entitled to be placed there. Clause 7 gives power to regulate meat in the way which I have already described. Clause 8 deals with the importation of Canadian cattle, a matter which I am afraid sorely offended the pride of the Canadian agriculturist, who resented the imputation on the quality of his cattle; it is one which our Department of Agriculture is satisfied can safely be accepted. It has, of course, as your Lordships see, provisions against unsuitable breeding cattle being introduced.

Clause 9 deals with the duration of the Agreements and says that the Treasury is to determine when the Agreements cease to be in force. Clause 10 1130 provides for Orders made with regard to Customs duties to be laid before the House of Commons and Orders made with regard to other matters to be laid before both Houses and to require the approval of affirmative Resolutions of each House of Parliament. Clause 11 gives power to refer to the existing Advisory Committee certain matters. Clause 14 deals with the duration of the Act and provides that the Act is to go on as long as any of the Agreements continue in force. The reason for that provision is that, as your Lordships appreciate, the Agreements are for five years, but they can then go on after five years unless they are denounced by one party or the other. There is also, as I should have reminded your Lordships, a provision in the Agreements that if before the five years there are found to be matters which turn out to press unduly upon one party or the other, there is to be opportunity of consultation between the Governments affected. The purpose of that is that always, in detailed agreements of this kind dealing with a very wide range of subjects, something may arise which had not been foreseen and which may create a hardship. The purpose of the provision as to consultation is to make it plain on the face of the Agreement that it is not intended, if that should happen, that either Government affected should be accused of any attempt to escape or evade its obligations if it brings to the notice of the other party the difficulties which have arisen. There cannot be an alteration of the Agreement without the consent of both parties, but it is desired to make it quite clear that it is the right of either party to bring to the notice of the other any matters of that kind which may arise.

I think that concludes my analysis of the provisions of the Agreement. It was my privilege to be one of the Delegation which went from this country to negotiate those Agreements. We represented every party in the State; we worked throughout with the greatest harmony, the greatest loyalty and the greatest trust in one another. The conclusions which we reached were in every case unanimous conclusions. We do not believe that any arrangement made at Ottawa is necessarily a perfect agreement, a flawless plan, which cannot be improved upon. The actual Resolution to which I called attention indicated 1131 that the Conference itself regarded these Agreements as a step forward which should in the future lead to further progress in the same direction, but we believe that the Agreements which we negotiated, and of which we ask your Lordships to approve, do mark a real advance in Empire co-operation and Empire unity, and do, in the words of the Resolution of 1930, afford the best means for maintaining and extending inter-Imperial trade. It is in that belief that I commend these Agreements and this Bill to the favourable consideration of your Lordships' House. I beg to move that this Bill be read a second time.

§ LORD SNELL

My Lords, I listened with great attention to the speech which has just been made, and if I understood it correctly it would appear that the noble Lord moved the rejection of this Bill not on the ground of strict Free Trade principle, but rather because the accommodations given to the farmer were not sufficiently satisfying. I have always admired the ability with which the Liberal Party manages to live in a state of uncertainty concerning fundamental principles and I cannot help wondering whether they will be able to substantiate the declaration that has been made. The noble and learned Viscount who moved the Second Reading has everyone of us at a serious disadvantage, for he alone among the members of the House had the advantage of being present at Ottawa and, we may be sure, taking a very vital part in the decisions arrived at. The noble and learned Viscount began his speech by telling us that he was not going to make a partisan speech and I felt he was thereby placing upon himself a self-denial which we were all prepared to appreciate; but I was not surprised that at the end he failed to live up to his 1139 intention and stated that at Ottawa every Party in the State was represented on the Delegation. If His Majesty's Opposition constitutes a Party then every Party in the State was not represented, and I cannot help thinking that in that the noble and learned Viscount—I am sure he was not intending to be offensive —was undoubtedly provocative. It requires an act of faith and generosity on our part to allow that to go by without further discussion.

I envy the noble and learned Viscount his capacity to disentangle involved threads of argument and to reduce to simplicity abstruse problems. If I felt quite as sure of his willingness sympathetically to understand the hesitations and difficulties of those of us who cannot accept his conclusions, I should feel happier about this debate. As a preface to the few remarks I desire to make I would like to explain in a few phrases the spirit in which I approach the subject. It so happens that the greater part of my Parliamentary life has been devoted to furthering reciprocal relations between the Mother Country and different parts of the British Commonwealth of Nations, and I have tried to do something within my own Party to develop an enlightened Empire outlook and purpose. I have always understood that conferences were one of the methods by which that might be attained. When a conference meets I have no objection to frank discussion. Such discussion frequently clears the air and makes subsequent understandings more easy. But conferences with that desire in their minds must wish to achieve a common end. There must be no concessions forced from any of its members which tend to leave a sense of injustice behind them. There must be no hard bargaining. There must be mutual give-and-take in order to develop a common good.

I confess, my Lords, that there are those of us who sit in this House, and in other places, who ask ourselves very seriously whether Ottawa meets that test. I had not the advantage of being present, but I have talked to people who were and whose business it was to estimate the flow of thought and the results obtained, and we cannot help feeling that those results, as presented in the Bill before your Lordships' House, are highly disturbing. So far from uniting the British 1140 Empire and fostering that common aim which we all of us desire, it seems as though Ottawa was the occasion for stubborn bargaining, each section of the Empire being for itself and almost none being for the Motherland. One result of these Ottawa engagements would seem to be that the overtaxed and overburdened people of this Island will undoubtedly have an additional burden to bear. Lord Beaverbrook, speaking in this House the other day, seemed to make light of the fact that our food might cost us more. The noble Lord was not able to realise the difference that a shilling makes one way or another in a poor man's home, and I was surprised that the noble Lord did not seem too pleased with the results of Ottawa. I have never known a case where a parent looked with such disfavour upon his offspring, as the noble Lord, Lord Beaverbrook, did the other day.

With regard to the general question, I begin to have something like a superstition that there is something inimical to British bargaining on the American Continent. Remembering our past experience at Washington, and thinking of Ottawa, I cannot help feeling that there is something in the air of the American Continent which deprives British statesmen of their usual powers of defence in the interests of their country. The rôle of the benevolent uncle is one that we all like to play, but the concessions which have been made at Ottawa seem to some of us to do more credit to the hearts than to the heads of those who were our representatives, and I cannot help remembering that no such abounding generosity is shown at home when the suppliants are the half-starved victims of our own economic disorder. Then the generous uncle becomes the stern economist, and reminds us of the inexorable laws of supply and demand.

The noble Viscount, in introducing this Bill to-day, said it was a great tribute to the Conference that they were able to make arrangements with each separate Delegation. My Lords, it is not so difficult to come to an agreement if you concede everything that the other side asks for. We were told, secondly, that they had achieved the giving of free imports to the Dominions, but that is not an achievement. It always existed. The real achievement was the raising of taxes 1141 on foreign goods by 10 to 15 per cent. That was the only result; but we have yet to prove that that is going to be the benefit that it is alleged to be. I understood the noble Viscount to say that the arrangements that have been made would not increase wholesale prices, but the whole point to me is, will they raise the retail prices to poor people who have to buy food?

We are to-day in the very difficult position of having to take or leave what these Seven Wise Men have brought to us from the Golden West. We may not modify, and we dare not reject. This sovereign Parliament has got the limited duty of signing on the dotted line. We are helpless in the matter before our people who may, as we fear, be grievously injured in the result. My admiration for the National Government has always been under strict control. I understood that it was to have a doctor's mandate to deal with a sick patient, and its carrying out of that mandate seems to be the transfusion of blood—the taking of blood from the weaker patient and the giving of it to the stronger, whose chances of recovery are at any rate greater. It seems that there is only one course left to us who take the view which I am trying to put before the House. It is to say quite frankly that whenever the time comes we shall reserve to ourselves the right to deal with this matter on its own merits and in the light of such experience as we may gain. We do not intend to be bound for ever by what has taken place at Ottawa, and by what we are at present unable to resist. It is just as well that there should be no sort of misunderstanding on that point.

I am afraid there is a great deal of anxiety and general disappointment outside the ranks of the Party to which I belong, and that the coerced congestion of the approving Lobby in another place is no indication of what people are actually thinking. One reason for the disappointment is that His Majesty's Government boomed the Ottawa Conference rather too incautiously. We were told it was going to be the gateway to prosperity, it was to be the blessed Opportunity for our country, it was to be the thing that would re-start prosperity in mill and mine and field; and now that it is over there is to be a postponed 1142 felicity until the World Economic Conference takes place, and after that there will be further postponements still.

The test for me is whether what has been done at Ottawa will unite the people of the British Commonwealth of Nations more closely together. Will it give to us an increasing strength and a common purpose, or will these arrangements reduce Imperial relations to mere economic convenience, and turn the Empire into an Imperial Rotary Club? The well-being of this country depended upon the Imperial barriers to the free exchange of goods being lowered, and the existing barriers to foreign trade not being raised. That, as I understood it, was the purpose in the minds of the seven representatives or delegates who went West, before they came under the hypnotic influence of Ottawa. What caused them to retreat from so sane a position? If it was not the whispering modesty of Mr. Bennett, it must have been the fear in their minds that the Conference would be a failure. A failure of the Conference would have been regrettable, but it would have been a failure that could have been amended.

But has it not indeed failed? If the desired end was to bring the Empire closer together and to intensify the spiritual relationships which exist between its separate parts, then that, I fear, is precisely what has not happened. I listened not long ago to a distinguished statesman who said that not only were there stiff rows (I am using his words) between the delegates and the representatives of this country, but there were stiff rows between the Dominions themselves. I am concerned for what the reaction is likely to be upon the workers of my own country. I ask your Lordships to understand that we in the Labour party were the heirs of the anti-Colonial bias of past generations. Labour audiences disliked both the name of Empire and what it implied. During the last twenty years we have gradually changed that into a friendly interest in the development of proper relations between ourselves and the Dominions, on the understanding that it was going to be for the general good, in which the workers of this country would participate. That plant is not deeply rooted. Any adverse wind or bitter frost might destroy it altogether, and it will be difficult to make the workers of our country who are earning 1143 £3 per week, if they are fortunate, understand why they should have an additional burden put upon them on behalf of people who are earning £5 or £6 per week.

Before I close I want to ask whether anybody really knows what has been agreed upon. We have been told that Parliament does not in fact lose its control over these issues that are before it. Mr. Lyons, the Prime Minister of Australia, within the last few days spoke in Parliament at Canberra as follows (I am quoting from The Times report): With regard to the statement that Great Britain gave nothing, Mr. Lyons said, Schedule D showed that a tariff was imposed in Great Britain on a long series of goods which could not be altered without reference to Australia. Great Britain was giving something more definite and more binding than Australia was giving.… There had been no tariff reductions as a result of Ottawa. If there had been no Ottawa Conference reductions would have taken place just the same. Really the nation has a right to know where it stands in this matter. It surely is possible to give an authoritative statement as to whether we are in fact bound irrevocably for a given number of years or whether, if the occasion merits it, we can make a change. I do not want to belittle in any way the importance and value of Dominion trade. It is already very considerable, and I believe that it will grow. But there is very little likelihood of our receiving from the Dominions under these arrangements what we shall lose in foreign trade. We have a population of 468 to the square mile, and it seems to me the most dangerous of all games to gamble with the food of the people of this country.

I desire to close by saying that under these arrangements the welfare of the Empire would seem to be reduced to the hazards of commercial convenience. What if those hazards fail? Great Britain cannot for ever be giving more than she receives. The old idea of Empire, it seems to me, was on surer grounds. It was not trade balances that led the fine flower of Dominion manhood to participate in the agony of Flanders and Gallipoli, it was the sense of a deep, abiding spiritual conception of a common good; and it is because we believe that the arrangements made at Ottawa may endanger that for ever that we feel unable to support this Bill.

§ VISCOUNT SNOWDEN

My Lords, every speaker who takes part in this debate must feel, I think, as I feel, the difficulty of saying anything new on a topic that has been so exhaustively discussed during the last few weeks. I had hoped that the noble and learned Viscount who moved the Second Reading of this Bill would have been more controversial and provocative, so that he might have provided me with some fighting material which would have raised the temperature of this debate. But I suppose the noble and learned Viscount is reserving a speech of that character till he closes the debate to-morrow, when there will be no opportunity for reply. I have another feeling which was expressed by my noble friend who has just sat down, that is, the futility of a debate upon a Bill when we have been told before-hand that we shall not be permitted to alter it by one comma or by one dot. I think that one of the most serious features of this question is that the House of Commons, under the compulsion of the Dominions, has surrendered its authority over fiscal policy.

I said to your Lordships just now that I felt a difficulty in trying to contribute anything new to the discussion of this question. I shall confine my observations, in the main at least, to putting another side to the interpretation of the Ottawa Agreements which has been put before your Lordships in the speech of the noble Viscount. Before I proceed to do that I want to make a brief comment upon the observations which were made by the noble Viscount at the opening of his speech—namely, in regard to the origin and the purpose of that Conference. The noble Viscount, speaking to your Lordships a fortnight ago, appeared to be anxious to disclaim, on behalf of the present Government, all responsibility for that Conference, and to place the responsibility for it upon the shoulders of the Labour Government. The Labour Government had, no doubt, a great many sins to answer for, but the responsibility for that Conference certainly cannot be laid to their charge. The account that was given of the genesis of that Conference by the noble Viscount was in the main correct; but I want to associate what he said in regard to the purpose of that Conference with some strange remarks that were made upon the same subject by the Prime 1145 Minister in the House of Commons some days ago in an attempt—a very futile attempt—to rebut the charge of broken Election pledges. The Prime Minister then said that if a Labour Government had gone to Ottawa they would have gone there knowing full well that, if the Conference were to be successful, it would involve the acceptance by the British Government of a tariff upon food-stuffs. With all respect to the Prime Minister, I beg to say that there is no justification whatever for that statement.

The noble Viscount read a part of a Resolution which was passed near the end of the Imperial Conference of 1930, in which it was said that the Conference would reassemble to continue the discussions which could not be finished, for want of time, at that Conference of two years ago. If your Lordships are so far interested in this point, will you take the trouble to look up the Report of the Imperial Conference of 1930? You will find on page 43 and following pages the Resolutions of the Conference, which set forth quite clearly the subjects which had been discussed by that Conference and the discussion of which was to be continued at the adjourned Conference at Ottawa. What were they? They were not tariffs, because the Government of that day made it perfectly clear at the opening of the Conference. Following Mr. Bennett's remarkable opening speech, the Government made it perfectly clear that they would be no party to any arrangement which involved the institution of a system of tariffs or Protection in this country. That was accepted, quite unwillingly I admit, by the Dominion Deputations, and they asked us: "What other suggestions have you to make for improving and extending Imperial trade?" We put forward a number of suggestions to which we were not definitely committed, but we put them forward as providing material for very useful and possibly profitable discussion and decision. Tariffs were excluded by common agreement.

What were the questions which were reserved for consideration at the Conference to be held at Ottawa? They were these: The United Kingdom Government suggested for examination certain methods of increasing Imperial trade —namely, quotas, import boards, direct exchange of commodities, promotion of 1146 agreements between industries, important machinery for Commonwealth consultation on economic matters. That was the reference which, had the Labour Government remained in office, they would have sent forward to the Conference at Ottawa. The Prime Minister the other day said that we knew quite well that we should have to begin at Ottawa where we left off, and he conveyed the inference that that meant that we should begin by discussing the question of tariffs. That, as I have told your Lordships, had been ruled out, and these were the questions at which the beginning would be made in the adjourned Conference at Ottawa. The Prime Minister had no justification whatever for saying that the Labour Government had given the slightest countenance or encouragement to the Dominion Delegations that we would at the Ottawa Conference make any change in the position we had definitely stated of hostility to the tariffs on foodstuffs. The Prime Minister said that that was in our minds. If that were so, if he knew that at the adjourned Conference the British Government would have to agree to tariffs if success were to be achieved, why did he not say so at the Election, instead of telling the country, and especially the electors of Seaham to whom he was speaking, that he would be no party to any proposals or schemes which involved an addition to the cost of the food of the people? I apologise to your Lordships for having dealt at such length with this question, but I think it was necessary to do so, in view of the matter having been raised by the noble Viscount. I felt also that some reply was necessary to the statement of the Prime Minister.

I turn now to the Agreements which are embodied in this Bill and for which the support of your Lordships' House is now asked. The purpose of the Conference, as declared by the British Delegation, was to promote inter-Imperial trade. Whatever may be our opinion about these Agreements there is no difference of opinion as to the importance and the need for stimulating, encouraging and increasing inter-Imperial trade. The second purpose of the Conference was to lower tariffs and to set free the choked channels of world trade. As a matter of fact we had a very definite assurance from the British Delegation that nothing 1147 would be done at Ottawa which would interfere, at the forthcoming World Economic Conference, with the freedom of the British Government to fight for, and to endeavour to secure, a general reduction of world tariffs. The noble Viscount said that since the Conference of 1930 there had been a change of government in this country—a Government which was committed to the policy of Protection, the protection, he said, of home industries. It does seem to me a strange inconsistency on the part of those who believe in Protection as a principle and as a policy that they should at the same time be advocating a lowering and, the noble Viscount said, the removal altogether of tariffs. If they succeed in doing that, what is to become of the home industries which, according to their philosophy, can only exist if they are protected by tariffs?

One would have believed from the closing sentences of the noble Viscount's speech that the Conference at Ottawa was a gathering of brothers met together in the closest friendship, and that nothing occurred there to impair the harmony and the pleasantness of the gathering. I wish that the members of the Delegation Would say in public what some members of the Delegation are very freely saying in private. Every Dominion was obsessed by the idea of economic nationalism. Every Dominion then was looking only to what it could get and how much in particular it could get from the Mother Country. The harmonious proceedings at the Conference were on the point of breaking up at two o'clock in the morning of the day when the British Delegation was due to leave Ottawa, and the break-down would have come if further concessions had not been made by the British Delegation. In 1930 Mr. Bennett —we know something of Mr. Bennett—threatened us that if we would not agree to his demands he would make an arrangement with foreign countries. The noble Viscount said the same thing in his speech a fortnight ago, that if the Conference had broken down then the Dominions would have turned to foreign countries. Mr. Bruce said the same thing only a week or two ago—"We should have to go outside to foreign countries and we should take away the preferences from you."

1148 It is no wonder that Mr. Chamberlain said that he found the bonds of Empire had worn very thin, and those bonds could only be strengthened by the British Government, the people of this country, making fresh concessions to the Dominions. The Conference came to an end, and the British Delegation, weary and tired, went to the boat, and I can very well understand what took place there. They said: "Well, we are out of it, and we shall have to make the best of it. We cannot admit failure. We shall have to describe it" (in the words of the noble Viscount) "as having done big things. We shall have to describe it" (in the words of Mr. Chamberlain) "as the greatest achievement in a year of wonderful endeavour. We shall have to say" (in the wording of the manifesto the Delegation issued on their arrival in England) "that what we have achieved is far greater than our expectations."

I turn to the consideration of the Agreements and I want to apply four tests to them. Do they lower tariffs? Will they increase inter-Imperial trade? What is the effect of them on Great Britain? How will they affect world trade? First, the question of tariffs. Have they lowered tariffs? They certainly have not lowered tariffs in this country. The noble Viscount admitted that the Delegation had been obliged to agree to an increase in certain of our new tariffs to meet the demands of the Dominions. They have certainly not lowered British tariffs. They have raised duties on the old ones and they have imposed new duties. Let me give your Lordships one or two instances of what has been secured in the way of reducing Dominion tariffs. The noble Viscount the other day, like his colleagues in the House of Commons, made great play about the Schedule E. They have reminded us that that contains a list of 217 articles upon which duties have been reduced, or an increased preference granted to this country. Two hundred and seventeen articles!

Do your Lordships know how many articles there are in the Canadian Tariff Schedule? A statement appeared in the Press at the time of the Conference—I do not vouch for its accuracy—that Mr. Bennett had presented to the British Delegation a list of eight thousand items upon which he was prepared to make 1149 some concession, declaring that that would mean an increase of trade between this country and Canada of about £12,000,000 a year. I doubt if there are so many items on the Canadian Tariff Schedule. I understand that that list was exhaustively swollen by the same thing three and four times over. There was, for instance, an item "Micky mouse game." This appeared under "Micky" and it appeared under "Mouse" and it appeared under "Game." There was billiards cue chalk. It appeared under "Billiards" it appeared under "Cue" and it appeared under "Chalk." There are, I believe, 1,500 items on the Canadian Tariff Schedule, and 217 of these are included in this revised schedule, in Schedule E. What about the other 1,300? The other 1,300 apparently have not been touched. The duties upon those remain the same.

We have heard a great deal about the free list. The noble and learned Viscount referred to certain charges above the tariff imposed. Most of those charges are not at all affected or changed by the alterations to which the noble and learned Viscount referred. For instance, the exchange duty—the dumping duty as it is sometimes called—is not taken off. I know of no proposal to take it off. What does this mean? It means that; the few articles—only 70 of them—on the so-called free list have to pay this exchange duty. Then in addition they have a special duty of 3 per cent. Whether that is to be taken off I do not know. That makes 17 per cent. impost on those articles which are said to be on the free list. That exchange duty is not charged upon imports from the United States of America, because the American exchange has not fallen, so we have this curious result: that where the preference on British goods as against America does not exceed 10 per cent. the American goods enter Canada at a lower rate than the goods on the British free list. The noble and learned Viscount did not tell your Lordships that when he was speaking about the advantages of this free list a fortnight ago.

I admit that in that Schedule E you will find a reduction of duties, but if you examine them very closely you find that where Canada does not produce the goods they are on the so-called free list. Where the goods are not to a great ex- 1150 tent competitive with Canadian manufactures the duty is not so high; but in every case where the goods are in competition with Canadian manufactures the duty is of a prohibitive character. May I ask the question put by Mr. Joseph Chamberlain 30 years ago when speaking to the Dominion leaders? He said: "What is the use of your preference? What is the use of your high duties against the foreigners and a lower duty to us? It is no satisfaction to us to know when you prohibit the import of our goods by a tariff that you have a still higher tariff against the foreigner."

I will trouble your Lordships with only one instance. I take it from a large list, and I quote it because it is a case of particular interest to the constituency which I represented in the House of Commons—the Colne Valley division of Yorkshire, a wool and worsted manufacturing district. When Mr. Bennett raised the duties on the Dunning tariff two years ago the duty on worsted goods was made prohibitive and hundreds of factory workers were thrown out of employment in the Colne Valley division of Yorkshire. What are the duties now? I take a class of woollen tissue which was the staple export from that district to Canada at the time when the duty was only 16 per cent. It is a half-crown cloth, 32 ounces weight to the square yard. Before this revised Schedule, this great reduction of tariffs took place, the duty apart from additions was 97¾ per cent. In this Schedule it is reduced to what? 20? 30? 50? It is reduced to 90. Cases like that can be multiplied almost ad infinitum by a close examination of this Schedule E. That 90 per cent. is to be imposed under this Agreement. It does not include the so-called dumping duty, which would raise the duty to 100 per cent.

Now, my Lords, Mr. Bennett could very well afford to reduce this duty. Are your Lordships aware of what Mr. Bennett did in anticipation of the Imperial Conference of 1930? Just before he came here he raised the existing duties three and four times over. Duties of 16 per cent. were raised to 80 and 90 per cent. Then Mr. Bennett came here and said: "If you will agree to tax foreign imports, then I will give you a reduction of 10 per cent. in your preferential rates." I repeat to your Lordships that that is simply mockery. And 1151 that is what has been perpetuated under the Agreements which your Lordships are now asked to approve.

Take Australia, to which the noble and learned Viscount referred. In September textiles were rated for import duties as high as 185 per cent. They have been reduced to 105 per cent. My noble friend who spoke before me gave a very striking extract from a recent speech by Mr. Lyons, in which Mr. Lyons, the Prime Minister of Australia, said that their duties had not been removed. Speaking on October 17, Mr. Lyons said: "We have increased the duties against the foreigners on 400 items and reduced the duty on twenty classes." Twenty! Twenty out of a thousand ! Twenty classes of British goods! Mr. Bruce said in this country only a few days ago that there will probably be a number of increases in the Australian Tariff to enable an improved margin of preference to be given. Under this Schedule you will see that the maximum reduction of preferential rate is fixed at 5 per cent.

May I give your Lordships one or, perhaps, two cases to illustrate the way in which Australia treats British manufacturers under this so-called preferential system? On August 16 last the British manufacturers of hosiery sent a letter to the Australian Government and pointed out that the duties on hosiery goods in foreign countries were moderate compared with those in Australia. If this was strictly appropriate, and if time permitted, I could show that the levies in foreign countries on British goods are far lower in a great many cases than the preferential British rates under these Agreements. The hosiery manufacturers pointed out that in many cases the duty amounted to 400 per cent. and in some cases to 600 per cent., and the result, they said, had been that whereas in 1925 they sent £1,500,000 worth of socks and stockings to Australia, in the first six months of last year the total value was £2,500. In the course of the debate in another place, two Ministers said that the Dominions had abandoned their Protectionist policy. Well, my Lords, the only thing I can say to that is that I hope the Avenging Spirit will be merciful to them when they appear before the judgment seat.

The noble and learned Viscount referred to Article 11 of the Agreement 1152 with Canada, which says that the duty shall not exceed such a level as will give United Kingdom producers a fair chance of competition, and then there is a proviso—which is usually for the purpose of rendering what goes before wholly ineffective and inoperative; a proviso as to special consideration to industries not fully established. Do the duties I have mentioned give the British manufacturer a fair competitive chance? They do not. And what is the meaning of "industries not fully established"? What manufacturing industries in the Dominions are fully established? Every industry there is struggling to establish itself; it is doing that under the protection of a tariff, and the instructions to the Tariff Board in Australia have always been to give a tariff which would be protective in order to enable these industries fully to establish themselves. The noble and learned Viscount said that it was easy to sneer at the Tariff Board, to say that its decisions would be biased and might not be free from political influence. Well, Mr. Bennett in 1930 evidently thought that the Canadian Tariff Board was somewhat biased, but not in the direction that he would have wished, for he sacked that Board because it was not sufficiently protective. The noble and learned Viscount a fortnight ago said that under the Agreement it would not be possible for Canada to increase the duty on British goods, though I admit he added "so far as I can understand the Agreement."

§ VISCOUNT HAILSHAM

The noble Viscount is not quite right. I said it was not possible to raise the duty without a reference to the Tariff Board.

§ VISCOUNT SNOWDEN

If the noble and learned Viscount will permit me one moment I will refer to what he said.

§ VISCOUNT HAILSHAM

I can give the noble Viscount the actual Article.

§ VISCOUNT SNOWDEN

Oh, I could recite it from memory, but perhaps the noble and learned Viscount would find the reference more quickly.

§ VISCOUNT HAILSHAM

I can give the reference to the Articles in the Agreement, but I have not the whole of the speeches.

§ VISCOUNT SNOWDEN

It is Article 14, and the noble and learned Viscount's 1153 statement a fortnight ago appeared to be based wholly upon Article 9. I will not detain your Lordships longer about it, but it is the fact, as the noble and learned Viscount now states it, that there can be an increase of a tariff on British goods if it is recommended by the Tariff Board. I wonder who attaches the slightest importance to the provision that the United Kingdom producers shall be entitled to state their case before the Tariff Board. Of course they can state their case, and so will the Canadian manufacturers who to such a large extent dominate at least one political Party in Canada. In regard to Australia, the gentleman who is, I believe, the Attorney-General and the Assistant Prime Minister said the Ministry was not bound to accept the Tariff Board's report irrespective of its own opinions and those of Parliament.

I will now give the second case that I said I would quote, and then I think I have finished quoting cases. This is to illustrate the work of a Tariff Board. There is in this country a very popular wringing machine. By the expenditure of many thousands of pounds in advertising they had established a market in Australia and were doing a considerable trade. Seeing this an Australian manufacturer went to the Tariff Board and said: "If you will give me a duty of 45 per cent. I will copy this model and manufacture it." Well, the Tariff Board did not give him 45 per cent., but they gave him 40 per cent., with the result that the tariff is now prohibitive and 500 men in the British factory are deprived of work for a fortnight a year which they formerly did to supply the Australian market with this article. That is only one instance, but it is typical of the working of a Tariff Board.

I will not say much about meat because the details of that arrangement have apparently already broken down and the Government have announced that there is to be a restriction of meat, including bacon, beyond figures given in the Report. I wonder if your Lordships have noticed two considerable contradictions in these Agreements. Meat is to be the subject of a restriction of imports, in order to raise the price, but wheat—and I suppose that corn-growing in this country is in about as parlous a condition as the 1154 stock-raising industry; I saw a statement in a paper the other day that wheat was now at a lower price than it had been since the days of Queen Elizabeth—why is the Government so anxious to raise the price of meat and yet insert a provision in the Agreement that if there be an increase in the price of wheat beyond world prices then the Agreement shall be cancelled? The noble and learned Viscount tried to draw a distinction between raising wholesale prices and retail prices. I dare say your Lordships have seen in the newspapers, to-day, that following the announcement made in the House of Commons two days ago, retail prices of meat have already risen. You cannot raise wholesale prices without retail prices also rising, and very often to a far larger extent than the rise in wholesale prices. The Government are now embarked upon a policy of restricting output to raise prices, which would have led to the hanging of an individual in mediæval days.

May I turn to the last of my points, and that is the effect of these Agreements upon world trade and our own foreign trade? It seems to me, my Lords, that the British Delegation never for a single moment considered the effect of these Agreements upon world trade, and our world trade is, of course, far more important to us than Dominion trade. As a matter of fact, world trade is more important to the Dominions themselves than is inter-Imperial trade. The Dominions have to find markets in foreign countries for a very large part of the things that they can export. I believe that in 1929 half the exports from Australia went to foreign countries, and, as Mr. Thomas said the other day, if Great Britain were to derive the whole of her supplies of meat and wheat from the British Empire, the Empire countries would still have to dispose of a large part of their production in foreign markets. Why! the value of domestic produce in 1930 exported by countries of the Empire to foreign countries amounted to the colossal figure of £672,000,000. Did the British Delegation ever consider what was going to be the effect upon this huge foreign trade of ours, and all other countries of the Empire with perhaps the single exception of New Zealand, which finds a market here for a large part of her exports? Did they ever consider what was going to be the effect 1155 of these arrangements upon foreign trade?

The object is, we are told, to increase the imports from the Dominions, and correspondingly to increase our exports to the Dominions, but the extent to which this can be done—that is, the increase of British exports to the Dominions—is very small, so far as the white population is concerned. The natural increase of the white population of Australia is only 2 per cent. a year. I believe that as a British possession it has a history of something like one hundred years, and yet that vast Continent at the end of a century has only a population of 6,000,000. I do admit that there are vast possibilities for an increase of trade amongst the coloured population of the British Empire, and I think that if attention were given to raising the standard of life amongst those hundreds of millions, rather than concentrating all our attention in trying to get what will be at the best a paltry increase of trade amongst the white population of the Empire, there are vast and untold possibilities of hundreds of millions of additional trade with the coloured population of the Empire. So far as Great Britain takes more of her food and raw materials from the Dominions, to the same extent she must diminish her purchases from foreign countries, and what is the result of decreasing purchases from foreign countries? The result is that they decrease their purchases from us, because, in spite of the economic heresies which have been so popular in recent years, I think it is still true that if we would sell we must buy.

Take the case of Canada. There is no Dominion so dependent upon foreign trade as Canada. Canada exported to the United States in 1930 nearly double her exports to Great Britain, and £30,000,000 more than the value of her exports to all the countries of the Empire. Does anybody mean to tell me that Canada is going willingly to sacrifice one dollar's worth of that trade? No! do not tell me that.

§ VISCOUNT ELIBANK

If the noble Lord will go to Canada he will find many people to tell him that that is the case.

§ VISCOUNT SNOWDEN

Then I do not think much of the business capacity of those men. I can well understand that 1156 they need protection to prevent their businesses from going into the bankruptcy court. Another result of this policy will be that we shall provoke foreign countries into reprisals, and that has taken place already. I had sent to me a Canadian newspaper a few days ago, in which there was reported a statement, a terrible statement, by Mr. Bennett. He said they were going to make the foreigner pay tribute to the British Empire. Is that likely to promote world trade? Is that likely to foster friendly international relations? I can imagine no statement more provocative and more disastrous than that statement, reported to have been made by Mr. Bennett. Then what of competitive markets? These tariffs will increase the cost of raw material and food to our people, and that is going to have the result of increasing cost of production and lessening our competitive power in the world markets. Further, if by these Agreements we can succeed in keeping foreign goods to a greater extent out of Dominion markets what is going to happen? Are the foreign countries going to stop producing those things? Not at all. What they are going to do is to cut into markets where the British exports now hold the field. If you take all these facts into consideration the results of these Agreements are likely to strike a most serious blow at the huge foreign trade of Great Britain and of course of the Dominions.

Just a word about the dumping clause to which the noble and learned Viscount referred. Although that clause is in general terms we all know quite well that it was aimed at Russia, although it can be applied against any country where it is alleged or proved that by State action, direct or indirect, any of the preferences are likely to be frustrated. But how are you going to prove State action indirectly? Why, there is not a State in the world, including our own, which does not by its policy either directly or indirectly influence the cost of production. And therefore if—I think that this is a point of some importance—if a foreign country through great efficiency, fine organisation, is able to come into the British markets at a price which will cut away the preference on Dominion products, then this clause is going to be invoked to stop the people of this country from getting the benefit of those cheaper 1157 goods. Why, what is the purpose of foreign trade? The whole purpose of foreign trade is to be able to buy things cheaper than you can make them yourselves. And this dumping clause, in so far as it is not actuated by spite against a particular Government, shows a lamentable ignorance of the whole theory and practice of foreign trade.

In conclusion, may I say this? We had, I said, an explicit undertaking that nothing would be agreed to in Canada which would limit the freedom of the British Government to ask for a reduction of world tariffs at the forthcoming World. Economic Conference. I submit that we have tied our hands, and that we have not that freedom. A great deal of play is being made about foreign countries coming here anxious to enter into negotiations with us for revised trade agreements. But what is there new about that? Whenever did foreign countries not come to this country, or we go to foreign countries, in order to negotiate reciprocal trade arrangements? But we have tied our hands. Are you, for instance, when you have a 35 per cent. duty on iron and steel, going to Belgium—a country which treats our imports far better than our Dominions do—are you going to Belgium and say: "Now, if you will reduce some of your tariffs against us still further, we will reduce our iron and steel duties" You cannot say that. You have tied yourselves for two years in order to give the steel industry an opportunity to put itself into an efficient condition.

I have not dealt with the point which was treated so very effectively by my noble friend who preceded me, and that is the effect of these sordid bargains upon Imperial sentiment and Imperial unity. The bonds, we were told, wear thin; they do not appear to have been made much. thicker, judging by the statement made by Mr. Bruce a fortnight ago to which I have already called the attention of your Lordships. I suppose the nominal unity of the Empire will be maintained so long as the Dominions are permitted to exploit this country for their own benefit. But I would warn your Lordships that we lost our greatest Colony by taxing the colonists for the benefit of this country, and you are in real danger of losing your Empire by taxing the people of this country for the benefit of the Dominions.

1158 Well now, what does it all amount to? It is no use the members of the Government pretending that Ottawa was a success. They must have a very poor opinion of the intelligence of the British people if they think they are going to be deceived by this patent bluster. Why, a cat would not be deceived by it. You cannot fool the people. The facts are too patent. But at least we have had one honest declaration from a member of the Delegation. Mr. Baldwin said in the House of Commons a few days ago: What have we got out of all this? What does it mean in trade? I answer quite frankly, I do not know. "It is something great" the noble and learned Viscount said; "the most wonderful achievement of a wonderful year," says Mr. Chamberlain. "I do not know," says Mr. Baldwin.

§ VISCOUNT ASTOR

My Lords, the noble Viscount, Lord Hailsham, when he was addressing your Lordships' House just now, said that in the speech with which he would wind up the debate to-morrow he intended to reply to the criticisms made against the Bill which is before your Lordships' House. That being so I shall not attempt in any way to reply to the charges and the criticisms made upon the measure by the noble Viscount who has just spoken; nor shall I attempt to deal with the charges that the sentiment or the atmosphere at Ottawa was bad. I was not there, so I am not able to speak, as the noble and learned Viscount could, from personal experience. But I should like to say this, that we surely frequently find feeling running high in your Lordships' House or in another place in arguments, controversies, discussions, and debates, and, when it is all over, we are able to go and settle down for the national benefit. And the fact that there may have been controversies and arguments between the representatives of different parts of the Empire does not mean that when they separate they are not able to work with greater strength than before for Imperial unity.

During the whole of my public life over a period of 23 years I have always worked for closer Imperial economic unity. Taking the Bill as a whole I believe that it does give effect to that. I believe that it will do a great deal to stimulate inter-Imperial trade and inter-Imperial co- 1159 operation. But, when I have advocated this policy in the past, I have always advocated it through an instrument called tariff duties and Imperial Preference. In the few observations which I propose to make I want to examine a new instrument which, for the first time, this country is being asked to adopt—namely, the quota. This is the first time that the quota is going to be used, because the so-called Wheat Quota Act of 1932 was a Quota Act only in name. In fact, that Act imposes a duty or tax on all flour whether home made or imported. It was not a Quota Act. So this is the first time that your Lordships' House or Parliament has been asked to deal with this new instrument. As I shall try to show, I believe that it is a very dangerous instrument. I believe that it has all the disadvantages that may be associated with tariff duties, as well as many disadvantages of its own.

Since the Ottawa Conference ended there has been, as was agreed here the other day, a big slump in prices. As the result of that, the other day, the Chancellor of the Exchequer, speaking in another place, indicated that the Government were contemplating reducing the quotas; that is to say, increasing the restrictions by reduced quotas on the foodstuffs which we import here in this country. The Minister of Agriculture, I think, speaking in another place, has also announced that the Government have been engaged in negotiations with representatives of other Governments with a view to a voluntary restriction of foodstuffs brought into this country. The object of both those things, whether voluntary agreements or quotas, is to diminish the quantity of food-stuffs being brought in here. I am apprehensive of informal private negotiations. I would far rather that these reductions were done through Parliament. I believe that there is a risk in that, but I understand th