Some Problems of British-Canadian Trade

CHAIRMAN:

A product of Charterhouse and Trinity College, Oxford, where he was an Honours graduate in Chemistry, Peter Runge joined Tate & Lyle at the age of twenty-two and is now Vice-Chairman.

We know Tate & Lyle better through Canada & Dominion Sugar of which Mr. Runge is a Director. However, as Tate & Lyle is one of the world's largest sugar complexes, Mr. Runge has extensive interests in all parts of the world. This breadth of outlook is enhanced by his appointment as President of the Federation of British Industries, which has representatives in over ninety countries.

The largest National Trade and Industrial Organization in Britain, the advice and counsel of this group has a marked and important influence on government decisions.

We are delighted that Mr. Runge is visiting Canada and is able to join with us today. Gentlemen -Mr. Peter F. Runge.

MR. RUNGE:

It is always a great pleasure to visit Canada, and particularly so on this occasion because of the opportunity you have so kindly afforded me of enjoying your generous hospitality and of speaking to this distinguished gathering. I confess that on hearing that amongst those who have recently addressed you were people no less eminent than the Archbishop of Canterbury and our present prime Minister, I had a momentary qualm. But you will not be looking to me for spiritual comfort or political wisdom. Plain speaking, yes; common sense, I hope; we shall see.

I stand before you as an industrialist -I nearly said pure and simple, but modesty forbids the one and self-assurance the other. Self-assurance, I may add, powerfully reinforced by my pride that as President of the Federation of British Industries I can speak not just for myself but for British industry as a whole.

I am happy to tell you that things are going well in Great Britain. We are of course in the midst of an election year, and the political temperature is rising daily. At 4,000 miles distance I was almost tempted to say that I was glad to be

"Far from the noise, the fever and the fret" until I recollected that the next line goes on "Here where men sit and hear each other groan"

and I feared for the reception this address might well invite in consequence!

We are at the moment in an expansionary phase. Both output and demand have been rising at something like six per cent a year. Our leading industries' order books make good reading. In the vitally important engineering and electrical goods industries for example, new home orders were up by a quarter in January last over a year earlier. There are similar stories elsewhere. Exports too have been gaining steadily: they were up by eight per cent last year and topped the £4,000 million mark for the first time. That's over 30 million dollars worth a day.

We have had a marked success in the first stage of what we set out to do a year or so ago. We aimed you may remember at a four per cent annual growth rate for the economy as a sustained long term objective. The missile is off the ground; in the second stage it has to be put into orbit. This is the tricky bit, but given good management--and a modicum of good luck--I'm confident it can be done.

It is generally accepted at home that while a long-term rate of four per cent is something we can maintain, six per cent with the very narrow limits in which we are forced to work seemed likely to extend the economy too much, and that is why the Chancellor of the Exchequer chose in his recent Budget to apply a mild corrective, dividing his efforts, rightly I think, between curbing consumption and encouraging savings. You will not expect me to enlarge upon the Budget, and I do not propose to do so, save naturally to wish the Chancellor success in his aim. The outcome will depend as much on the prudence and good sense of the ordinary citizen as it will on the exactness of his calculations.

People at home have been developing a most enquiring frame of mind and are displaying a great willingness, indeed even anxiety, to accept change. Recent months have seen a spate of acutely penetrating reports embodying proposals for the radical transformation of many of our existing institutions. The creation of a unified Diplomatic service, for example, with special emphasis on commercial work: proposals for the setting up Of new management schools in Britain: detailed projects and plans for improving education, technical training, research, engineering design, transport and so on. And these reports are not being pigeonholed. They are being acted on swiftly and with vigour. The strenuous reappraisal of our domestic affairs has been matched by an equally strenuous reappraisal of our overseas position. The bewildering and rapid changes of the past few years, not least the emergence on our doorstep of the European Economic Community, have forced us to look again at where we stand as world traders.

In the past two decades we have had to face some prodigious upheavals in the structure and pattern of our trade, greater perhaps than any other major nation has had to cope with. The process of readjustment has been complicated by our constant preoccupation with the level of the Sterling Area reserves and the need to protect them against speculative attack. The new found independence of former colonies and the rise of often heavily protected secondary industries in former markets has cut markedly across the traditional exchange of manufactured goods for foodstuffs and raw materials on which we were, and still are, heavily dependent.

As world traders in every sense we have been forced to look again at our relationships with the rest of the world as a whole, and not piecemeal, country by country or area by area. We have to go for trade wherever we can find it. In the hard business of earning a living, tradition, sentiment, differences--even sharp differences of political outlook have to take second place. And since we live by trade we have a vested interest in its expansion the world over and in the removal of obstacles to it. This we believe means putting into practice in the trade field the concept of interdependence which we have already come to accept in the political field. It involves in particular a conscious recognition that prosperity, like peace, is indivisible.

This has been the reality at the heart of all the efforts made since the war to bring the nations closer together for their mutual economic benefit--in the United Nations, in the G.A.T.T., in the World Bank and the I.M.F.; it was the reality that inspired the Marshall Plan and the Organization for European Economic Co-operation and continues to inspire the work of the O.E.C.D. It will, I trust, find a deep echo in the twin Conferences this year in Geneva: the U.N. Conference on Trade and Development, now in its fifth week, and the Kennedy Round in G.A.T.T. For the problems they are tackling are quite literally vital.

We have heard much in recent weeks of the pressing need to narrow the gap between rich and poor nations, and to provide the less developed countries with the stable and expanding markets they need for their produce and manufactures. You may, like I have been, in turn diverted, perplexed, perhaps alarmed at some of the more ill-considered suggestions about what the richer countries ought, it is said, to be doing about this. But we must not be seduced by these emotions into indifference. It would clearly be nonsensical if in seeking to help others we merely enfeebled ourselves, for in our own prosperity lies one of the surest guarantees for the improvement of both demand and prices for the developing countries. Equally we should be wrong to try and combat one set of distortions in world trade by creating others of an artificial and very possibly pernicious character. But we can, and should, be prepared to open our markets more widely to imports of special interest to developing countries.

For their part I am convinced that one of the ways in which the developing countries can best help themselves is by creating and maintaining conditions that will attract private investment from abroad. Overseas investment, soundly based and properly managed, benefits both parties--the country providing the capital and the country receiving it. The investor takes with him not only his capital, but his know-how and experience. Out of sheer self-interest he is bound to ensure that proper management, proper technical advice and proper training facilities go along with his investment. I wish this was more generally recognized.

Britain's thinking on all these matters is naturally deeply coloured by long experience in Empire and Commonwealth, still a source of pride, inspiration and strength. It is fashionable at present in some quarters to play down the Commonwealth. I can only ascribe this to ignorance or envy. Ignorance at home in refusing to recognize that new Commonwealth is not old Empire writ small, but exciting and vital in its own right.

The days are long gone when the Empire was ruled from Whitehall; when Britain was the sole repository of manufacturing skill, and its trade was based on the simple ex change of manufactures for raw materials and foodstuffs. Modern developments have negated the concept of the Commonwealth as a unified trading bloc. But of the importance of the Commonwealth as a force in world affairs, particularly in the field of economic and social progress I have no doubt at all. In this the senior members of the Commonwealth and not least Canada can and must take a lead.

What is important about the Commonwealth is in fact its essential unity in diversity. It contains members of all races, colours and creeds at all stages of political, social and economic development. At the same time, for us in Britain it is very much a family affair. There are very few of us who haven't relatives or friends scattered about the Commonwealth somewhere.

This brings me to the final section of this brief address; relations between Britain and Canada. Trade-wise at least, these have been giving us all some concern of late. Last year our imports from Canada totalled close on S-370 million ($1,110 million); our exports to Canada at just over £ 170 million ($510 million) were less than half that figure, and £50 million ($150 million) down from what they had been two years previously. Now I know that there are certain special reasons that account for part of that drop, but the minus sign against Canada does stand out very sharply against a fairly impressive row of plusses in other markets.

We are not, I can assure you, looking at this problem from any narrowly bilateral angle. We in British industry believe in multilateral trade and we are traditionally accus tomed to setting off deficits in one area against surplusses in another. Even so I don't think any of us can be happy about the present situation, with our exports falling off in spite of the preferential tariffs we enjoy, and the trade imbalance getting steadily bigger. Nor is it good enough to suggest as some Canadians do that British exporters are just not good at selling to other countries. The record speaks for itself. Our exporters have recently been notching up some spectacular successes in some of the hardest markets in the world, particularly in Europe.

It's fairly obvious there's something very wrong here but the difficulty is in defining it. Most of it quite frankly seems to be psychological. There is a widespread impres sion in Britain that Canada is just about the most difficult of all our markets. There is a cumulative feeling of frustration that has grown up dating back to devaluation and the surcharges. Your extremely stringent valuation and antidumping legislation doesn't help in this, particularly the latter which is quite the toughest in the world and but for a technicality would be banned by G.A.T.T. (You may think this is "old hat" but you would be surprised by the amount of feeling it generates.)

There is in general an impression that there exists a thicket of administrative difficulties to be Overcome in trading with Canada. We are naturally concerned about this state of affairs and I think it has begun to worry your Government too. Certainly we were very glad to welcome Mr. Mitchell Sharp, your Minister for Trade and Commerce when he visited London recently and we were particularly honoured that he found time during his very crowded stay in London to visit the F.B.I. and talk to us freely and frankly about our mutual problems. He gave us a most sympathetic hearing and I think went home with a fuller understanding of the kind of things that are worrying us.

I think the meeting left us all with the feeling that whatever the rights and wrongs of the matter, there is this psychological barrier to be overcome, and that it is up to all of us to do something about it. I will be frank and say that my and other people's efforts in this would be made a good deal easier if we could see some overt gesture from Canada itself in recognition of the special difficulties we sometimes face. Perhaps I can take as a very happy augury the recent Budget concession on whisky bottle sizes, which removed a minor but persistent irritant to our exporters of Scotch! When I reflect that our own budget increased the tax on Scotch by ten per cent I can't help feeling there is a moral here somewhere.

We are not going just to sit still of course. Mr. Sharp gave us some very sensible advice on the Canadian market that will not go unheeded. We shall certainly be active in doing whatever we can to reinforce the links between Britain and Canada. Next fall, for example, will see the second in a series of bilateral exchanges initiated by the Federation of British Commonwealth Chambers of Commerce. The F.C.C.C. is doing an immensely useful job on these lines throughout the Commonwealth; and those of you, and there must be many, who know our Western Hemisphere Exports Council (to whose work under Lord Rootes' inspired leadership let me pay a warm tribute) will see it also take on a new look in the months to come. What we have in mind is to make a single co-ordinated effort of all our world wide export promotion activities, within which our work in particular countries or areas, beginning with those formerly dealt with by the Western Hemisphere Exports Council, will be closely integrated. A new Committee will be created under a well-known and active Chairman, specially to deal with Anglo-Canadian trade problems. Final arrangements are now in train. I cannot yet mention names; but I predict you will soon be hearing, and seeing, a great deal of the new Chairman and his colleagues.

To conclude, although Canada is a difficult and highly competitive market, Canadians are still some of Britain's best customers. We know that there is in Canada a great warmth of feeling for Great Britain and we are sure that you have as great a desire as we have to expand trade between us. We perfectly recognize that there is no sentimentality in business and that we cannot look to our blood relationship with Canada to sell our goods for us. We are certainly not despondent about our prospects and particularly now that your economy is entering a new phase of expansion, we look forward to doing valuable business with our senior partner in the Commonwealth.

Thanks

Thanks of this meeting were expressed by President-elect, Hon. D. Roland Michener.