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European Community Countries

Volume 894: debated on Monday 23 June 1975

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10.

asked the Secretary of State for Trade what plans he has for improving the balance of payments position in relation to other members of the EEC.

11.

asked the Secretary of State for Trade what steps he is taking to promote exports to the EEC countries.

33.

asked the Secretary of State for Trade what steps he has taken to promote exports to the EEC countries.

It is primarily for British industry to respond to the opportunities of this large and increasingly tariff-free area. As for all major markets, the full range of my Department's services for exporters are available to them and they are being used on an extensive and increasing scale.

I have the benefit of the advice of the European Trade Committee of the British Overseas Trade Board in the development of export promotion programmes in these markets.

Now that the referendum is behind us and there is no point in trying to make political mileage out of the worrying deficits in this area, does my right hon. Friend agree that the National Institute's opinion that the effect of our membership of the EEC on this matter was marginally probably a more correct interpretation of the figures than those adduced by my right hon. Friend?

I do not wish at present to go over the ground of the causes of our trade deterioration with the EEC. However, I am very glad that my hon. Friend acknowledged that this was indeed a very worrying deficit. I emphasise that it is extremly worrying, and, of course, we shall be doing our utmost about it. Indeed, the problem would have been substantially the same, although not totally the same, if we had had a free trade area. As I have often made plain to the House on previous occasions, the problem of our manufacturing industries' trade with the EEC was one which under either outcome of the referendum would have been a matter for us to concentrate upon and on which to seek to find a major improvement.

Does the Secretary of State agree that neither import controls nor any other form of protectionism will improve the productivity or efficiency of British industry, but rather the reverse? Will he confirm that the Government have firmly set their face against import controls as a means of eliminating our present trading deficit with the EEC countries?

I do not believe that import controls are the right way to proceed, and that is the Government's policy. We want to improve trade or change the trade deficit through the encouragement of our own exports. One point which I believe deserves to be stated here, as it was stated on behalf of the Government at the Paris meeting of the OECD, is that the opportunities that we and other countries have of exporting depend very much upon the kind of policies which are being pursued by major industrial countries. It is very necessary that countries which are in surplus in their balance of payments should not be running restrictive policies in respect of demand management.

On the EEC dimension, why has it been apparently impossible for successive Governments over the years to bring pressure on Denmark, with which we have had a deficit running over many years and which totalled £150 million last year?

I do not believe that our trade deficit with Denmark, certainly in the past year, has caused us particular concern. It has been much more even. However the pattern of our trade with Denmark has always been greatly influenced by the fact that we have been Denmark's major agricultural customer.

Will my right hon. Friend give us the export and import figures for the Common Market and compare them with the rest of the world? Do they not show that, although there was all this promise about our membership of the Market, it has to date benefited our partners in Europe more than ourselves?

I shall not give the precise figures because that would be to anticipate another Question on the Order Paper. My hon. Friend is quite correct. The magnitude of our deficit with the EEC stands out in sharp contrast to the progress that we have been making in reducing deficits with other areas of the world.

Is the right hon. Gentleman aware that if the current account of this country is brought into balance, it will be impossible for this country to borrow net from abroad? Does he view that prospect with equanimity?

I do not believe that that is a question that should be directed to a Trade Minister. It would be better directed to the Chancellor of the Exchequer.

16.

asked the Secretary of State for Trade what is his latest estimate of the balance of trade for the current year between the United Kingdom and the eight members of the EEC.

17.

asked the Secretary of State for Trade what is his latest estimate of the balance of trade in the current year between the United Kingdom and the rest of the EEC.

In the first five months of this year our crude balance of trade with the EEC, on an overseas trade statistic basis, was in deficit by £938 million. While I cannot forecast the outturn for 1975, the annual rate based on the first five months would produce a deficit of £2,250 million.

Does the Secretary of State envisage a substantial improvement in the balance of trade between the United Kingdom and other members of the Community over the next five years? Will he confirm that the question of import controls is no part of the policy of Her Majesty's Government, and neither would it accord with the policy of the EEC?

I have already dealt with import controls on an earlier Question. The hon. Gentleman rightly says that import controls are extremely difficult within the context of the EEC Treaty. As for his other question, I cannot anticipate the future course of Britain's trade with the EEC. As far as I am concerned, the present situation is very unsatisfactory. British firms must make an all-out effort to improve their trade balance with the EEC.

Despite the difficulties relating to the EEC Treaty, is it not quite clear that the time has come for the Government to negotiate a system of selective import controls with the EEC countries? This is preferable to a growing level of unemployment in industries which are badly affected by the present situation regarding imports. Is it not clear that the Government will have to think again about this matter, whether they like it or not, despite the vote which took place on the Common Market?

I thought that the earlier questions dealt with import controls across the board, and what I said previously applies. In view of what my hon. Friend has said about selective import controls, I should point out that there is provision, both within the Treaty of Accession and, indeed, under GATT, for certain uses of import controls relating to particular market disturbances and regional problems. We are prepared to consider particular cases on their merits.

Now that the referendum is over, will the Minister admit that the trade gap with Europe will not improve until the Government start to do something about inflation, allow the country to live within its means and stop the import of goods which the country cannot afford by curbing inflation rather than trying to make excuses in other directions?

I am quite certain that inflation is a very serious problem for the whole country and, indeed, the whole of our exports regardless of the markets to which they are directed. I should, however, point out, in case the hon. Gentleman gets carried away with the point, that we have managed to make a substantial improvement in our trade with virtually all other markets. Therefore, some very special effort is required, particularly by British industry, to deal with the trade deficit which now exists with the EEC.

Will the Secretary of State acknowledge the important role that the Development Corporation for Wales has played in developing exports from Wales to EEC countries? Will he, in conjunction with the Chancellor of the Exchequer, consider extending aid to the development corporation to enable it to increase the number of its full-time representatives in EEC countries?

I shall certainly consider any measure which would be of assistance to exporters in any part of the United Kingdom relating to the EEC market.

Will my right hon. Friend confirm that he is responsible for national policy on import substitution, and has he any policy or plan for assisting the development of specific British industries, such as footwear, which have the capacity to produce goods which are at present being imported in increasing quanties from Common Market countries?

I am equally concerned, because the other side of the coin of our balance of trade involves import substitution, and that applies not only to existing British industries but perhaps to the possibility of developing new British industries. Wherever possible, we shall encourage import substitution as well as giving assistance, and continuing to give assistance, to our export drive.