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Eec Trade Deficit

Volume 884: debated on Monday 13 January 1975

The text on this page has been created from Hansard archive content, it may contain typographical errors.


asked the Secretary of State for Trade what is the trade deficit with the EEC for 1974 to the last convenient date.


asked the Secretary of State for Trade what was the trade deficit with the EEC in 1974 up to the latest date available compared with the equivalent period in 1973.

The Secretary of State for Trade and President of the Board of Trade
(Mr. ]]]]HS_COL-3]]]] Peter Shore)

On a balance of payments basis, the visible trade deficit with the EEC in the first nine months of 1974 was £1,368 million, seasonally adjusted, compared with £768 million in the corresponding period of 1973.

Will the Secretary of State tell us, on a balance of payments basis again, what percentage that represents of our total non-oil deficit on trade? If the figure is somewhat similar to what it was last month—that is, 96 per cent.—may I ask how long this country can go on at such a rake's progress before the myth is finally exploded that it was to our trading advantage to go into the Common Market?

The proportion of our non-oil deficit on trade, accounted for on a balance of payments basis by our deficit with the EEC, is 96 per cent.

I did not mislead the hon. Gentleman last time. With my usual and characteristic understatement, I used a slightly different basis of figures which gave a more favourable result.

The whole matter of the EEC and our continued membership will, as I am sure the hon. Gentleman will be glad to know, be brought to the people of this country, I hope, within the next few months.

Will my right hon. Friend explain why he misled the House, no doubt unwittingly, a few weeks ago? This point was emphasised in the Observer which gave my right hon. Friend a chance to reply to its counterproposal, which he refused. Why did he do that and why did he mislead the House in the way that he did?

I have not misled the House either wittingly or unwittingly, except in this one small particular when I understated the reality of the situation. Frankly, it is no use my hon. Friend's seeking to bolster his case by drawing upon the statistical department of the Observer newspaper—

—when Her Majesty's Government have rather better statistics at their command.

On the subject of myths, will the Secretary of State lay the myth that joining the EEC has somehow been detrimental to our overall visible balance of trade pattern? Does he acknowledge that for many of the products that we wish to import, particularly foodstuffs, the EEC now represents a cheaper market for us than the rest of the world, and therefore it is only prudent that our imports from that market should increase?

Finally, does the right hon. Gentleman regret the lowering of tariff barriers which has taken place between us and the remainder of the Community?

Whether or not the membership of the EEC has been detrimental to our trade is something which can be judged only by the actual outcome of our trading relations with the EEC. The onus of analysis and explanation certainly lies upon the advocates of membership rather than on those who have persistently warned against the dangers to this country's economy that could follow from our own membership of the Community. As for foodstuffs, it is true that during 1974 some foodstuffs in the EEC were cheaper than world prices—and that has been true, I should think, of about one other year in the past 30 years. But what we have to consider, surely, as a House—and certainly what the Government will consider—is not the advantage that there may or may not be in one particular year but what the expected advantages are over a longer period.

If we take selective restrictive measures to try to put right this disastrous deficit and the Common Market takes umbrage at that, will my right hon. Friend ensure that less strong-willed members of the Government do not retreat from that situation if it should make our renegotiation that much more difficult?

I do not think that my hon. Friend need be concerned about this. This is a matter of judgment, of where our interest lies. If we did come to such a view, we should of course act accordingly. But, as the House will know, my view and that of my colleagues is that we must, in this very difficult year for international trade, be guided by the pledge that we gave at the OECD not to restrict trade in any artificial way

Is the right hon. Gentleman aware that he has certainly given the impression consistently that it is his view that the overall deficit is significantly larger as a result of EEC membership and that we are therefore very glad to have his retraction this afternoon and his statement that we cannot draw that conclusion from the figures? Does he further accept that, contrary to what he has said in correspondence, it is not the case that his officials' views and the official statistics support the view that the overall deficit is greater as a result? If he has any evidence to that effect, will he publish it as early as possible?

I was invited by the right hon. Member for Down, South (Mr. Powell) to draw just such a conclusion when this matter was raised on the last occasion. What I said was that I remained genuinely puzzled at the extent of our trade collapse in relation to the EEC, but I have also said that I should be surprised if, at the end of the day, when we have analysed these things thoroughly, there were not some obvious relationship between membership and the trade out-turn.


asked the Secretary of State for Trade what estimate he has made of the effect of United Kingdom membership of the EEC on the deterioration in our visible trade balance at current prices between the first half of 1973 and the first half of 1974.

The crude trade deficit doubled between these six months' periods from £481 million to £964 million, a development brought about by a number of factors. I do not wish to reach any hasty conclusion about the effects of membership, but I am greatly concerned at the magnitude of the deterioration in our trade balance with the EEC.

Is the right hon. Gentleman aware that in the House on 18th December his right hon. Friend the Foreign Secretary expressed the view that our membership of the EEC had made very little difference to our trading deficit with the EEC countries, one way or another? Does he agree with that view? As I understand that his own preference is for a free trade area, what improvement would that make in the position?

I think that the hon. Gentleman is entirely right to emphasise that whether our future relationship with the EEC is that of member or one of free trade association, we have to improve very considerably on our economic performance in relation to trade with the Community. Of that there can be no doubt whatever.

The essence of the difference is simply that whereas under the EEC membership arrangement we have what I consider to be the ongoing and general disadvantages of having to import EEC food at the expense of food which is normally available at a lower price in other parts of the world, this would not be the case if we had a free trade area arrangement. Secondly, we should not have the same problem, about which we are now renegotiating, of having to make a large net contribution to the EEC budget and also to sustain very unwelcome capital flows.


asked the Secretary of State for Trade what was the visible trade deficit of the United Kingdom with the previous EEC Six in 1974.

Estimates on a balance of payments basis are not available. The "crude" trade deficit—that is, the difference between exports value fob and imports value cif—in the first 11 months of 1974 was £1,914 million, or £2,088 million at an annual rate.

Is my right hon. Friend aware that this huge deficit with the EEC, accounting for almost the whole of our trade deficit in 1974, contrasts with a negligible deficit with the Commonwealth preference area for the same period, and that this result is wholly contrary to the wild promises we had of a great trade surplus with the so-called great home market of the EEC?

I hope the House will take note of what the figures really are. We can have disagreements among ourselves about the way in which we interpret these figures and about the explanation of the figures, but we shall get nowhere unless we face the facts. The facts are as I have given them to the House and as my right hon. Friend has stated them. They account not for the whole of our non-oil deficit but really for by far the greater part of our non-oil deficit in our trade with the whole of the world. This is, therefore, a matter of the greatest concern to the Government, as it should be to the whole House, regardless of what view one takes on the wider question of membership.

Does the Minister appreciate that in a recent survey taken by the CBI amongst its members, 84 per cent. believed that they would gain long-term advantages by our being in the EEC, but—what is more significant—78 per cent. believed that it would be disastrous if we were to pull out?

While we should take seriously the views of business men—and I think it was the views of business men which the hon. Gentleman was quoting—and listen to them, as indeed we do on many occasions, we should bear in mind that in matters of this kind those views are not necessarily correct. Let me give the hon. Gentleman an example. Businessmen generally in Norway and Sweden were in favour of those two countries joining the EEC. I think the hon. Gentlemen will agree with me that the present outlook of both those countries is very strong indeed—and they have pursued policies of dealing commercially with the EEC but without membership.

Is my hon. Friend aware that when the discussions about entry into the EEC were going on, those who were in favour of our so doing said that membership would be immediately to our benefit? That has now been forgotten. Will my right hon. Friend ask Sir Christopher Soames, who is acting as a Tory propagandist and is holding a series of meetings—paid for by Brussels—in his propaganda drive, to ensure that these facts and figures are truly put over, instead of the false propaganda from Brussels and the Tory Central Office?

I have already made clear to Sir Christopher, and publicly, my own views on his participation in the internal debate in this country. I do not believe that in the longer-term sense, even from the point of view that he takes, he will add to the prestige of being a Commissioner by taking part in what is going to be a very strong and vehement debate in this country, and I very much wish that he would desist.

Is the right hon. Gentleman aware that while, of course, we accept the figure which he provides, we object to the superficial selection of statistics in order to draw certain conclusions? Will he study very carefully what his right hon. Friend the Foreign Secretary said when answering Questions just before Christmas, which gave a totally different impression from the one which the Secretary of State himself had given a few days before? Will the right hon. Gentleman ask his right hon. Friend who asked the original Question not to go round making wild unattributable remarks as to what was claimed before entry but, rather, to consider what was said in this House and by responsible commentators outside, which gives a very different picture?

The Foreign Secretary and I are in very close touch with each other. We study each other's speeches and remarks with the interest and attention that the House would expect.

I am afraid I have forgotten the other point in the hon. Gentleman's supplementary question.

The right hon. Gentleman who asked the original Question quoted statements alleged to have been made before the debate took place. Will the right hon. Gentleman discourage this approach—because the statements made in this House and outside by responsible commentators did not reflect the views which are now being stated?

The hon. Gentleman knows that I myself played some part in the debate. My recollection is that people whom we thought were very responsible on the then Government Front Bench gave very clear indications that, in their view, prosperity and security were secure only if this country joined the EEC. If the hon. Gentleman wants to look at the most authoritative statement of all, let him read what was said in the White Paper of July 1971—the key document which was put to this House in the debate in the following October—and see what it said about the effects upon members and their prosperity.


asked the Secretary of State for Trade whether he has any proposals designed to improve the United Kingdom's balance of trade within the EEC.

Her Majesty's Government's economic and commercial policy is directed to the improvement of United Kingdom's total balance of trade including trade with the EEC. The British Overseas Trade Board has the advice of the European Trade Committee and provides a wide range of services, in addition to those of ECGD, to assist British exporters. Particular proposals designed to improve our trade balance with the EEC would, of course, have to be consistent with our international obligations.

As the Government proposals appear to be singularly ineffective in relation to the EEC, and as the Secretary of State has agreed this afternoon that the food deficit is over 50 per cent. of the balance of trade deficit, would it not be in the interests of this country to have some specific proposals geared to the EEC very much along the lines of the suggestion that the hon. Member for Sheffield, Heeley (Mr. Hooley) made earlier?

The question of specific proposals, in terms of proposals that might directly operate upon exports and, indeed, upon imports in trade with the EEC, as the hon. Gentleman must know, are inevitably limited by the terms of the Treaty of Accession and, in turn, by the Treaty of Rome. Therefore the room for manoeuvre may not be as great as the hon. Gentleman expects.

Is it not a fact that the main reason for the increased deficit with the EEC is that we are now able to obtain from the EEC food and raw materials much more cheaply than from anywhere else? Is it not also a fact that the alternative which has been widely proposed by those who are opposed to membership of the Common Market—that is, a European free trade area—would leave us with exactly the same deficit with the Common Market as we have today?

My hon. Friend may have missed the reply that I gave a few minutes ago to a similar question. I will make just one essential point to him, namely, that the difference between a free trade area and membership of the EEC is that the ability to buy food in the markets of the world would be far greater than it is now. Further, we should not have the balance of payments burdens of the Community budget contribution, together with certain obligations in respect of capital movements.