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Exports (Eec)

Volume 889: debated on Monday 24 March 1975

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2.

asked the Secretary of State for Trade how many firms have, in the calendar years for 1973 and 1974, sought his Department's advice concerning new exports from Great Britain to the EEC.

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

I regret that this information is not available.

Will the Secretary of State at least confirm that the EEC took one-third of all British exports during 1974? Has he any reason to believe that if we were to leave the EEC our ex-Community partners would be willing to sign a free trade agreement with us? if they were so willing, why should this have any good effect on our trade deficit?

I certainly confirm that our present trade with the EEC is roughly one-third of our total trade. On the second question, about whether or not a free trade agreement would be concluded if we left the EEC, I have expressed the view previously at this Box that I think this is a very likely outcome of the fact of our withdrawal. [Interruption.] I have said it before and I say it again. I think it is a likely outcome. It so happens to be in the interests of both sides, and perhaps, if anything, marginally more in the interests of the countries of the Eight, which are exporting to us more, unhappily, than we are exporting to them.

On the last part of the hon. Gentleman's question, as to whether I believe that this would be better, I repeat what I have already told the House—namely, that if we had a free trade agreement with the Eight instead of a Common Market agreement, we should not be obliged to buy food from the EEC when it was cheaper elsewhere, nor would we be obliged to contribute to the budget more than we ourselves got back.

Why are we exporting less to Europe than we might be? Is it the fault of private industry, or what are the reasons for it?

Many factors are involved. I recall very well from the debates that preceded entry that many of us took the view that the general effect of joining —that is to say, the change-over in the pattern of trade preferences that membership of the Common Market would bring—would be an adverse situation for our visible trade. That was the position we assumed. In addition to that, there was a countervailing argument, which my hon. Friend will recall, that it could be that certain dynamic effects might be produced which would offset this alleged impact effect. But the dynamic effects, so far at any rate, have not emerged, and the effect has been a far greater deficit in our trade than I think anyone in the House realised. There are other factors, including depreciation of the pound and changes in the relevant exchange rate.

As the Question refers to the narrow matter of exports, may I ask the Secretary of State why the export of motor cars to the Common Market declined by 25 per cent. in 1974 when the Common Market was supposed to be such a great benefit and as there are so many cars awaiting export?

What is clear is that the manufacturers of motor cars on the Contient of Europe were much better prepared to take advantage of the enlarged market than was British industry which had been pressing on successive Governments so strongly the advantages, as British manufacturers saw it, of our membership of the Common Market.

On a point of fact, where is food cheaper elsewhere? It will not be cheaper in New Zealand for much longer.

That is a matter of judgment. [Interruption.] There are two factors involved. The judgment is about what is the medium-term probability of price increases in the Common Market and in the rest of the world. That is a very important factor.

As for the immediate situation, I remind my hon. Friend that there has been a ban on imported beef into Europe for the past nine months. The reason for that ban is that the beef elsewhere is undoubtedly in good supply and is cheaper than it is in Europe. in addition, as my hon. Friend must know, the taxes and the prices we have to pay on imported butter and cheese indicate that those commodities are far cheaper outside the European Community than they are within.

Does the Secretary of State for Trade accept that, if the answer he gave a few minutes ago to my hon. Friend the Member for Mid-Sussex (Mr. Renton) was correct, we should have to negotiate new terms for trade with the EFTA countries and that any new terms we might negotiate might not be favourable?

I should be very happy to undertake the task of negotiating new terms with the EFTA countries. I have been in touch with them for some time. I have no reason to believe that there would be any interruption in the long-established free trade arrangement between Britain and EFTA.