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European Community

Volume 941: debated on Monday 12 December 1977

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10.

asked the Secretary of State for Trade when he expects to have a balance of trade surplus with the EEC.

Within the improvement in our overall trading position during this year, there has been a further reduction in our visible deficit with the EEC. But I cannot predict future trends.

Now that we have been in the Common Market for five years, is not the Secretary of State deeply concerned that the balace of trade has been running at about £2,000 million a year plus or minus a little, particularly in manufactures, which must be extremely worrying? Would it not help the overall balance of payments if we were now to purchase more of our food, which comes into the balance of trade, on the world maket?

As I have already indicated, we are certainly concerned to achieve radical reform of the CAP, to move nearer the objective that the hon. Gentleman raised at the end of his question. The latest figures we have in the past year show that our visible trade with the EEC fell by £239 million, whilst our visible trade deficit with the rest of the world rose by £219 million. Therefore, the ratio of United Kingdom exports to the EEC as against our imports from the EEC rose from 72 per cent. in 1975 to 88 per cent. in the third quarter of this year, which is the highest point since 1971. I think that this indicates a considerable improvement.

If I may comment briefly on the important point that the hon. Gentleman raised about the £2 billion trade deficit, this is based on our statistics. The Eurostat statistics, which are based on country of origin and not country of consignment, suggest that the deficit may be considerably smaller if that method were used.

Does not my hon. Friend agree that, if we take the Eurostat figures and eliminate the change that was made in 1974, there has nevertheless been during the past five years an annual deterioration in the trade in manufactures, which is what matters and to which he was referring, of £1,200 million per year? Does he not agree that that is a disastrous trend, and will he tell us what are the dynamic benefits that so many people promised us as a result of entry against that disastrous trend?

It is certainly a very serious trend. The point I was making is that, if this alternative series for calculating the size of the deficit were used—I am saying not that it is the right method but that it is an alternative method—the trend would be not only smaller but also becoming smaller in the past three years as compared with the British Government's methods of statistics.

On the general point, it is a very serious trend, but the answer to it lies partly in the Government's industrial strategy and partly in the fact that the results of joining the EEC in the form of full integration will take several years to have effect.

If the Minister wants to make some improvement in this position, will he give far more encouragement to small businesses and industries, which would help to clear unemployment and increase productivity and exports to the EEC?

It was precisely for that reason that the Government recently introduced the market guarantee entry scheme, particularly for small businesses.

Does my hon. Friend realise that all he has demonstrated in his answers so far is that things are getting worse slower than they were before? It is still a disastrous position. Does he realise that he does not have to defend everything at the Dispatch Box? Can he tell us one good thing in the sphere of trade that has come out of the Common Market?

One result has certainly been that we have in the past had a surplus on our invisible trade. I admit that that is less at present than it was a few years ago, but the net effect is certainly that during the past four years there has been a surplus. Also, one of the other offsets lies in monetary compensation amounts, which are worth up to £400 million a year. My hon. Friend is wrong in saying that things are getting worse slower. They are slowly getting better.

Will the Minister be kind enough to tell the House exactly what he meant in replying to my hon. Friend the Member for Banbury (Mr. Marten), when he seemed to indicate that the Government were turning their attention to buying more foods from the world market? Will he say which place he has in mind?

I am saying, as has been said by several other Governments, that we are concerned to achieve radical changes in the CAP, in particular to prevent a further growth of surpluses and a further prevention of the distortion of trade with third countries, which is certainly very bad from the points of view of the Departments of Trade and Industry.