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European Community

Volume 931: debated on Monday 9 May 1977

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8.

asked the Secretary of State for Trade whether he is satisfied with the United Kingdom's trade with the EEC.

No, Sir. I am looking for a further improvement in our visible trade position with the Community, following the reduction of some £270 million in our deficit with it in 1976.

Is the Minister aware that since we joined the Community in January 1973 we have accumulated a total trading deficit of over £8,300 million and that this figure is now running at an annual rate of £2,500 million? Is he further aware that our trade with the Common Market represents 38 per cent. of our world trade yet 57 per cent. of our total trade deficit? Since we cannot allocate invisibles to trade areas, does he not agree that this terrible deficit must in some part be the cause of the decline in the value of sterling last year?

The hon. Gentleman has spelt out the size of the total trade deficit since 1973, and I agree that it is far too large. But it is also true to say that since 1973 our trade has deteriorated in respect of our other main industrialised partners, namely, the United States and Japan—marginally in one case but significantly in the other.

The hon. Gentleman should be fair in taking account of some offsets that exist, partly in terms of monetary compensation amounts, which at the lowest point of devaluation were worth £400 million a year. In terms of invisibles we have had a surplus in the EEC of £350 million in one year and of £150 million in the next. Those figures are very much lower than the deficit on invisible trade, but they are not insignificant.

Is my hon. Friend aware that our trade deficit with the EEC is now four or five times greater than our trade deficit with Japan?

In view of what has been said in other replies about our trade with Japan, will the Minister confirm that the EEC offers a vast assured home market if only this Government would make it possible for the goods to be produced?

The question of whether it is an advantage that there is a mutual reduction of tariffs must be seen in the context of the changing pattern of trade and the size of the deficit or surplus. I do not think that the existence of that assured market has yet quite produced the results which some hoped to see from it.

Does my hon. Friend recall that, as an anti-Marketeer, he argued on platforms against British entry into the Common Market on the basis that we should not be able to supply this 250 million population-type market with our consumer durables even though we should be buying its food? Second, does my hon. Friend know that at the county council elections in my constituency of Bolsover the other day several anti-Marketeers stood on the platform of still being against the Common Market, that every one of them was returned and that we made a Labour gain as well?

Many conclusions have been drawn from the anti-Common Market stance taken by candidates at the recent elections. Whatever be the truth about that, however, there is no alternative in the short term but to improve our competitiveness and our productivity and to reduce the margin which separates us and the EEC, since there is no reason why, in terms of manufactures, we cannot further reduce the deficit considerably.

Is there any evidence whatever to show that, if we had not entered the Community and we still had a substantial tariff barrier against our goods into the EEC, and vice versa, our deficit would not be even greater than it now is?

The evidence on that point is conjectural, but I shall allow it to the hon. Gentleman that interest rate differentials and differentials in domestic inflation rates are considerably more important in modern trading conditions than are relatively small changes in tariffs.