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Iran (Trade Agreements)

Volume 885: debated on Friday 31 January 1975

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11.5 a.m.

With permission, Mr. Speaker, I should like to make a statement on the outcome of my visit to Iran this week.

I went to Iran for the Third Session of the Joint Ministerial Economic Commission of which the Minister of Commerce and I are joint chairmen. The occasion enabled me to have wide-ranging talks with the Iranian Prime Minister and other leading Ministers in the Iranian Government. At the conclusion of these markedly cordial and positive exchanges I was able to sign agreements offering valuable business and many new job opportunities for this country.

First, we established a new programme of joint ventures between British and Iranian firms in the agricultural and industrial spheres. Second, we agreed a number of major new areas of co-operation, including railway electrification, housing, hospitals, distribution of goods, and training. Third, we have agreed to supply Iran with ships. Fourth, Iran has affirmed its intention that its national airline, Iranair, should be one of the first airlines to operate Concorde. Fifth, we have agreed to examine possibilities for joint ventures not only in Iran but also in this country and in third countries. Sixth, we have agreed to negotiate a double taxation agreement. Seventh, we have agreed to hold a financial conference in Tehran in the spring which my right honourable Friend the Chancellor of the Exchequer has said he will attend.

Iran is one of the fastest growing economies in the world. With its ability to transform its oil wealth into major development of its industry, agriculture and infrastructure, it represents a market of first importance for Britain. We already enjoy a strong position with a firm base of economic and industrial partnership. I am convinced of the immense economic importance of Iran. The Iranians are convinced of this country's technological achievements and of its underlying industrial strength, reinforced by our imminent entry into the ranks of oil producers. What we now need is a vigorous response from industry, both public and private sector.

Is the right hon. Gentleman aware that, unlike a number of hon. Members opposite, who a year ago were critical of the discussions which my right hon. Friend the Member for Worcester (Mr. Walker) and the then right hon. Member for Altrincham and Sale, Mr. Anthony Barber, had with the Iranian authorities, we shall support the Secretary of State's efforts to promote British exports? Is he further aware that we are reinforced in this view by the need for Britain to pay its way instead of living beyond its means, as the latest figures for prices and incomes show we are doing, by international borrowing? Is he still further aware that this statement, in which he says that the agreement will create many more jobs, will refute the contention of Mr. Jack Jones and others that wage restraint would create unemployment? In fact, it is essential if we are to increase exports and employment.

What is the precise nature of the agreement? The right hon. Gentleman has referred to the agreement "offering valuable business". To what extent is the agreement firm? Will the Government themselves be negotiating individual contracts, or is it proposed that the firms concerned should negotiate those contracts? If the latter, how firm are the contracts which have been negotiated? It is difficult to avoid the impression that what the right hon. Gentleman has given us this morning is a declaration of intent rather than a specific set of contracts which have actually been signed and sealed.

According to reports in the Financial Times, the right hon. Gentleman took part in discussions about the EEC, which the right hon. Gentleman did not mention today. If he did discuss the EEC, was this a seminar on the Government's new attitude of collective irresponsibility or did it relate to specific EEC statements? Also, are any further meetings of this committee to be held to continue the trend of increased exports from Britain to Iran, which we most certainly believe would be in the interests of the country as a whole, both with regard to the overall interest and with regard to the creation of employment?

Order. This is Private Members' day and I rather deprecate a barrage of questions raising all sorts of wider issues. I hope that the Secretary of State will not be tempted too far.

I shall not respond, Mr. Speaker, to the general points with which the hon. Gentleman prefaced his remarks, except to say that this was not an oil-for-goods deal. It was a straight commercial and industrial trade agreement.

The hon. Gentleman asked me about the nature of the agreements reached. They cover two categories—contracts which have been entered into and signed between British firms and Iranian partners; and, secondly, agreements between our two Governments that business will be placed with United Kingdom firms. In some cases, we have been able already to agree which British firms are to be partners; in other cases the matter is yet to be established and worked out. But in principle there is agreement to do business with this country in the defined areas and defined projects.

The question of the EEC was mentioned in the discussions, and I made plain to the Iranian Government the position of Her Majesty's Government.

Is the right hon. Gentleman aware that this is heartening news? We congratulate him on the part he has played in making the agreement possible. I should like to ask him three questions.

First, what is the value likely to be? There have been conflicting figures about that. Secondly, without casting any reflection on existing Personnel, does the right hon. Gentleman feel that the commercial section of the embassy in Tehran should perhaps be strengthened? Thirdly, since the concept of joint economic ministerial commissions is a totally new departure but does not appear to be unsuccessful in its outcome, can the right hon. Gentleman tell us the next country he has on the list for similar discussions, and does he accept that this might be one of the most valuable and constructive ways in which he could devote the rest of his time?

I thank the right hon. Gentleman for his kind remarks at the beginning and his courteous reference to my future at the end.

I am always reluctant to put firm figures on deals, but I was asked, and therefore we did our best, to aggregate. Because I am cautious by nature, I chose the lowest figure which it was reasonable to give—£500 million. It does not include a number of deals in which it has been agreed that business should be steered towards British firms but in which we have not agreed the British partner firms. That includes hospital and housing projects in Iran, both of which are potentially on a large scale.

The commercial section in Tehran is doing a first-class job. It is a very good section. But I am conscious of the need to strengthen our commercial representation throughout the Middle East—in Iran and other places.

On the right hon. Gentleman's last and, in my view, most important point, the House will perhaps at some other time have the opportunity to debate the new structure of trade which is developing not merely with East European countries but with planned or semi-planned economies in the Middle East, in Latin America, to some extent, and elsewhere. This calls upon us to make an entirely different response in terms of our trading effort.

I add my congratulations to my right hon. Friend on his trading efforts. He mentioned one area of co-operation as being railway electrification. Is the public sector in this country, such as British Railway workshops, involved in these trading arrangements and, if not, can my right hon. Friend encourage its involvement? Secondly, will he confirm that Iran is only the third country, in addition to this country and France, which is prepared to buy Concorde?

In the Tabriz-Iran railway link electrification programme the British lead firm is GEC, but working in partnership with British Railways. I have no doubt that as the details of the contract are worked out the possibility of a contribution from British Railways, not only in the consultancy sense but in the hardware sense, will be considered.

On the question of Concorde, a continuing series of negotiations is going on with countries. My belief is that once the aircraft is in the air we shall find a very considerable difference in the attitude of other airlines to this remarkable achievement.

Do the ships mentioned by the right hon. Gentleman in his welcome statement include naval vessels?

The matters which I discussed with the Iran Government were concerned wholly with civil trade.

On a point of order, Mr. Speaker. I am most anxious not to encroach on Private Members' time, but the Secretary of State's statement could perfectly well have been made yesterday when he was in the House to answer Questions.