The Most-Favoured-Nation Clause
By STEPHEN KING-HALL.
THE harsh and hideous phrase which stands at the head of this article, and soils the pages of The Spectator with the crudeness of a tin advertisement in an English field, is a revolting piece of jargon, but its un- lovely contours conceal a policy whose value to Great Britain demands consideration at this critical moment in our history. It is a moment of crisis because the opportunity is at hand when our statesmen will be able to give the world that lead out of the waste places of economic desolation into which the nations have foolishly wandered in these past years. I doubt not our competence to take the lead ; I feel assured of our desire to do so in a lazy, English, Baldwinesque style, but I doubt our ability to act so long as we have this M.F.N. Clause hanging like a leaden life-belt around our international neck. What is this thing ? THE harsh and hideous phrase which stands at the head of this article, and soils the pages of The Spectator with the crudeness of a tin advertisement in an English field, is a revolting piece of jargon, but its un- lovely contours conceal a policy whose value to Great Britain demands consideration at this critical moment in our history. It is a moment of crisis because the opportunity is at hand when our statesmen will be able to give the world that lead out of the waste places of economic desolation into which the nations have foolishly wandered in these past years. I doubt not our competence to take the lead ; I feel assured of our desire to do so in a lazy, English, Baldwinesque style, but I doubt our ability to act so long as we have this M.F.N. Clause hanging like a leaden life-belt around our international neck. What is this thing ?
It is a clause which secures that tariff concessions made by one country to another shall automatically be extended to all countries which receive "most-favoured- nation " treatment from the country giving the con- cession. Thus treaties between Great Britain and most Foreign countries provide that articles produced or manu- factured in British territories "shall not be subjected to other or higher duties or charges than those paid on the like articles produced or manufactured in any other foreign country." The wording differs from treaty to treaty, but the result is the same. If we have a M.F.N. arrangement with country X, which then sees fit to give special tariff concessions to country Y, then we also automatically enjoy the benefit of such concessions.
When Great Britain stood as a rock of Free Trade amongst the shifting currents of tariffs, the most-favoured- nation clause brought us advantage. We received con- cessions though we had none to give. We were reaping the advantages of being a Free Trade country in a tariff- guarded world, since other countries, enjoying free access to our markets, could hardly refuse to give us the benefit of as favourable terms as they were giving to our non- Free Trade competitors. But now that we are ankle- deep in the sea of tariffs the benefits of the clause seem less apparent, for we must now extend any, tariff con- cessions that we give to all countries with whom we have Most-Favoured-Nation agreements, without being able to discriminate between them. We cannot give a special concession to country X in return for a special con- cession from her without also extending these con- cessions to country Y, even though country Y gives us nothing in return.
It is part of the explanation of the tariff policy of His Majesty's Government that British tariffs are intended for use as bargaining weapons. It is said that as the greatest single consuming market of overseas products in the world we should, by using the lever of tariffs, be able to knock a few bricks off the sky-high foreign tariff walls which stand up on all sides. But it is clear that the existence of the Most-Favoured-Nation Clause severely reduces the value of any special concessions we might feel disposed to offer to particular countries whose tariffs are at present especially harmful to our inter- national trade. The first point to be decided is expressed in the question : "Are there any nations before whose economic noses we might profitably dangle a few carrots in the form of British tariff concessions ? " . If the answer to this question is " Yes " (as I believe it to be) then we had better take immediate steps to place ourselves in the position of being able to dangle carrots, and this will mean denouncing various treaties which cannot be ter- minated under six or twelve months' notice. Whilst these treaties are in force the British carrots have to be thrown into the International manger, to which all animals have access. What we need to do is to be able to discriminate between donkeys willing to carry British exports and donkeys who buck and roll their eyes at this proposal. I have long ago abandoned hope of any all- round tariff reduction by general agreement, but there are signs of possibilities of reduction through regional and special arrangements, and I wish to see Great Britain free to act as a centre of attraction for States whose economic activities could be complementary to ours.
Planning schemes for trade have crept out of their pigeon-holes and are strutting up and down Ministers, desks. Laissez-faire is as dead as the Dinosaurus. We must plan nationally, and in so doing keep one eye on the ultimate need of fitting our plan into an international plan, and by the word " international " I include, of course, the British nations overseas, but I do not exclude the Argentine and the Scandinavian nations. I hope to see the words "Made in Great Britain "'stamped across such a plan, but if it is to be a modern plan and an imaginative scheme it must be drawn on clean paper from which have been erased the fading outlines of pre- War commercial policies ; amongst these relics of a pleasant but never to be revived past the most-favoured- nation clause seems to occupy a prominent position.
It is argued that the disappearance of the M.F.N. clause "might result in a chaos of complicated and differentiating tariff systems and innumerable occasions of friction" (Recovery, p. 176: Salter), but even if this be true, and my own view is that of my cook who, seeing me in considerable pain, observed : Cheer up, Sir: everything in the world gets worse before it gets better," yet Sir Arthur Salter is entirely in favour of adapting the M.F.N. clause to existing circumstances. The clause has in fact been " adapted " in the past, one of the most striking examples being the preferential system in the British Empire. This particular "adaptation," which presumes that the Dominions are not "foreign," has long been regarded by real foreigners as a peculiarly neat example of the British habit of making the theories fit the facts, and to the real foreigner, with his absurd belief in logic, it seems odd, to put it mildly, when the British Government opposes the proposed regional agreement between Luxemburg, Belgium and Holland by invoking the M.F.N. clause.
Let us therefore give this thing a further dose of British common sense. Enough of the medicine will ensure a painless death to a conception which is out of place in the present world.
Previous page
