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European Community (State Liner Fleets)

Volume 951: debated on Friday 9 June 1978

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2.24 p.m.

I beg to move,

That this House takes note of EEC Document No. R/829/78 on the activities of certain state trading countries in cargo liner shipping.
The document is to be debated at the EEC Transport Council on Monday and it will be of value to me, as the Minister representing the United Kingdom, to hear the views of hon. Members who desire to speak on what is undoubtedly an important topic. The Commission document has been submitted for parliamentary scrutiny and the Scrutiny Committee has recommended that it should be considered by the House.

At the outset I congratulate the hon. Member for Wirral (Mr. Hunt) on his maiden appearance on the Opposition Front Bench. I wish him many happy years on that Front Bench. I am sure that he will bring it an almost unique distinction.

As I have said, this is an extremely important issue. In the liner trades the United Kingdom flag is fifth in the world. In containerised tonnage we are second. The United Kingdom fleet is modern, well equipped and well managed. It has done well in maintaining its competitive presence in world trades in the changing circumstances of the past few years.

Unquestionably, the activities of the Soviet merchant fleet have certainly given rise to difficult problems and represent a serious threat to Western merchant shipping interests. I know that, as is not uncommon, the USSR will complain that this is to engage in just another fashionable anti-Soviet diatribe, that we are exaggerating, and that all this is borne out of a desire to give undue protection to our shipping interests. It is none of these things, as I hope I can establish by identifying and illustrating some of the main problems and effects.

First, today the Soviet merchant fleet is the sixth largest in the world, containing some 3 per cent. of the world's tonnage. It has quadrupled since 1960. Much of the fleet expansion took place between 1960 and 1970, motivated by a surge in Soviet seaborne foreign trade beginning in 1969, which increased the Soviet Union's dependence on foreign ships for transport. After a temporary cutback in 1971–72, the Soviet Union resumed its vigorous acquisition of merchant ships, adding about 1 million tons to its fleet each year. Since 1975, in the liner fleet the Soviet Union has put prime emphasis on the build-up of its roll-on roll-off capacity.

In 1977, the rate of additions to the Soviet merchant fleet appeared to be keeping up to the pace set in recent years. The amount of new tonnage added in 1977 was approximately 1·2 million tons. The rate of acquisitions, which was kept high by additions of bulk and combination carriers, was all the more striking in the face of a general cutback in world ship construction. During the current five-year plan we can expect the Soviet fleet to increase considerably, and I shall refer to that later.

Secondly, the great majority of Soviet cross-trading takes place outside scheduled liner services. Although, up to the present, Western interests have not been unduly concerned about Soviet bulk-trading or tanker activities there is, most certainly, acute anxiety about Soviet carriage in the liner cross-trades. Despite the fact that, within the total Soviet cross-trading activity, this is still small in tonnage terms, between 1965 and 1976 it has increased ten-fold and considerable trade has been captured from certain world shipping conferences, and notably from the East African conference and the North Atlantic and trans-Pacific trades. If pressed I could provide the House with further and better particulars of these basic facts.

Thirdly, the Soviet Union unquestionably has a problem in filling its ships. The reason is that, in volume terms, Soviet exports greatly exceed imports and, therefore, if ships were used solely to carry the Soviet's own bilateral trade a large number of them would be unladen, or only partly laden, on their return voyages. Thus, there are obvious attractions for them in picking up third party cargoes, and even greater attractions if payment is made in convertible currency for a country which desperately seeks to earn foreign exchange. Indeed, it is that which leads directly to the Soviet predatory rate cutting.

The fourth point relates to the means of competition in which the Soviet Union engages. Undercutting by Soviet liners is supported, among other things, by subsidy, direct or indirect; by policies determined by central planning authorities which only in part relate to commercial factors; by amortising capital costs of ships over 25 years instead of 15 or even less, as is usual in the West; by the State covering hull and cargo insurance and the cost of training crews; and, not least, by Soviet foreign trade organisations buying fob and selling cif.

The fifth point is that Soviet expansion is beginning to take effect in the carriage of containerised cargo, as I indicated earlier. Our estimate is that the USSR will have a total container capacity of 30,000 units in 1981, of which at least 19,000 units will be used on international trade routes. This sector of shipping will have the largest growth rate and represents the major competitive threat to western liner operators.

The sixth point is that the issues of penetration into the liner trades must be viewed in the light not only of direct loss of revenue to Western carriers because of rate cuting, but of countervailing rate cutting by Western carriers which has to be done to match Soviet competition.

Since a number of liner conference carriers may operate on a small margin of profit, even a limited incursion into the market by an outsider results in lost revenues and leads to a lowering of rates to keep vital business. This can be vividly illustrated by the Europe-East African Conference, where some $35 million to $40 million was lost in countering the Soviet rates, which were some 30 per cent. lower. Now fair competition is one thing, and can be said to keep conference shipping on its toes, but low rates, buttressed by hugh subsidies, is quite another matter.

The seventh point is that another increasingly important element in this is the Trans-Siberian land bridge. Although Western shipping companies do not appear to have suffered too adversely up to the present, there is no room for complacency, because this represents the largest potential threat of all. There is strong evidence that the Soviet Union is seeking to attract cargoes by offering rate advantages of 40 per cent. to 50 per cent. on some goods —for example electrical goods westbound for Japan. The only fortunate feature is that the efficiency of the operation leaves considerable room for improvement. But I think that will improve. Therefore, we can certainly expect this threat to grow.

The eighth point is that one cannot dismiss from these considerations the longer-term strategic value of all these developments to the Soviet Union—the auxiliary support for the Soviet Navy on a global scale and the wider support for Soviet political ambitions.

I recognise that the Soviet Union denies that it has any expansionist role in shipping. I have from time to time read a number of speeches by Mr. Guzhenko, the Soviet Minister concerned. I know that the Soviet Union asserts that the growth of its fleet is related only to its cargo-generating capacity, on both its domestic and foreign trades. Frankly, this is just a smokescreen. The evidence is overwhelmingly the other way.

These are some of the salient facts which provide the back-cloth to this debate.

We appreciate that the Soviet Union, as a major world Power, is entitled to have a substantial merchant fleet. No one can possibly object to that. We do not fear genuine competition. Our objection is to its grossly unfair shipping practices.

Notwithstanding that, I believe that it is better to try to resolve these difficulties amicably. Thus, over the course of the last 18 months it has been made manifestly clear to the Soviet Union by the United Kingdom, at both ministerial and official level, that our objective is to seek not a confrontation with the Soviet Union but a policy of accommodation if —I underline the word "if"—the Soviet side is prepared to meet problems of genuine concern to us.

I made that plain to Minister Guzhenko when I met him in London in June 1977. I said that I hoped that, by the time that I saw him again in Moscow in October 1977, to which city he had invited me, some real progress in achieving an equitable solution could have been made.

It is true that, even before June, the Soviet Union had conceded that in our bilateral trades British ships should be able to acquire a fairer share of carryings. At the June meeting Minister Guzhenko went further and said that he would support a movement towards parity in this regard. Welcome though this was, it dealt only with a peripheral problem. The fundamental question affected Soviet rate cutting on the liner trades, and here, regrettably, there had been no real progress at all.

It has always seemed to me, having been involved in this dialogue for some little time, to be profitless to debate with the Soviet Union its contentions that its shipping companies are operated profitably with no element of subsidy. We do not speak the same language in assessing "profitability". There is no starting point of understanding. Therefore, the debate on those grounds is rather meaningless. Facts are what they are, not what some might pretend they are. Soviet depredations have been and are practised in the liner field. Their rates cannot be justified on commercial grounds and they are injurious to Western shipping. That is the view not only of the Government but of the employers and the unions, too, with whom the Government have consulted closely.

It must be said that at the June meeting the Soviet Minister asserted that he, too, wanted to arrive at a fair accommodation and to establish a reasonable modus vivendi for Soviet liners either within or outside the conferences, and it was agreed that Britain and the Soviet Union would try to work out a draft of acceptable guidelines for participation in maritime trades which would be acceptable to the Soviet side and to the West. I stated, however, that it was useless just to talk of principles and that we required proof that progress could be made at the same time in individual problem cases. I considered that the negotiations between the East African Conference and Besta Line represented the best test of Soviet intentions, since it was here, albeit on a limited scale and, indeed, because of that, that the USSR could most easily demonstrate a clear willingness to reach a rapprochement.

In the intervening period, before my visit to Moscow in October, efforts were made to produce draft guidelines. The finest principles were enunciated, but these, I regret, were unaccompanied by any movement on the Soviet side. Therefore, when I was in Moscow, I decided, because of that lack of progress, to put the guidelines exercise into cold storage.

At the EEC Transport Council in October 1977, I warmly welcomed the decision to call for a proposal for a programme of defensive measures on a Community basis. That decision in October 1977 on the part of EEC Ministers was unanimous. It was recognised by all that effective preparation of our defences against the Soviet Union would have to be co-ordinated internationally. In broad terms, we welcome the Commission's proposals which have been prepared in response to this remit from Ministers. We believe this to be a sensible approach.

My understanding is that next Monday we shall be asked to endorse a framework decision which will institute a community-wide monitoring system designed to obtain and record information on all maritime practices deemed to be detrimental to the shipping interests of member States, whatever their source, for example, presumably, flags of convenience. This would be accompanied by provision for the Council to decide on a joint application by member States using their national powers of appropriate countervailing measures to deal with identified threats. This would be accompanied by a specific decision immediately bringing the monitoring system into effect vis-à-vis the liner shipping activities of the Soviet merchant fleet.

These are pretty modest proposals. It surprises me that they may not have found general favour with all member States—something that I would deeply regret. I believe that a weakening of resolve will be damaging in the long term not only to shipping interests but to those of shippers, too. The conflict of interests that some claim to exist between shippers and the shipping industry is illusory.

Eventually an erosion of Western shipping interests in consequence of Soviet depredations can only put shippers under the dominion of those who act in this way. This is well understood by the British Shippers Council. It fully recognises that the Soviet Union is not the Freddie Laker of international shipping. But it surprises me that this simple point is not starkly evident to all our colleagues in Europe.

Accordingly, at the Council of Ministers we shall continue to press for the sort of measures proposed by the Commission. We must be prepared to defend our legitimate maritime interests. If this is the position of the nations of the EEC, it also provides the best assurance of achieving that accommodation which we have always sought. I believe that the Soviet Union would be concerned to arrive at an agreement if the EEC showed itself to be united and resolute.

There is a possibility that other member States will seek to place action against the Soviet threat in a broader context, which would involve giving the Community, as I touched on a moment ago, the ability to monitor all maritime practices deemed to be detrimental to the shipping interests of member States, whatever their source. I have mentioned briefly flags of convenience as an example.

I say at once that we shall look sympathetically at any such proposals, but is it not absurd to suggest, as some might, that the two matters are mutually exclusive? Is there not more urgency about one than the other? It would be absolutely wrong for us to be deflected from our contention that the immediate focus of Community concern should be the Soviet maritime threat, both actual and potential. Inaction now could well result in this threat being extended to the bulk trades, since we are convinced that there is an avowed Soviet intent to continue to build up its shipping behind a curtain of preference and subsidy.

I do not conceal from the House the fact that if, despite all our efforts, member States are unable to demonstrate a concerted will to act, this will represent a serious setback to the interests of shipping, of shippers and of wider interests in Europe. For this reason I hope that the hon. Member for Wirral, who will speak for the Conservative Party in this matter, will support the line that I have outlined.

Only a few days ago Mr. Guzhenko said in a long speech about shipping that the Soviet merchant marine interests would never agree to inequitable relations. I think that he is looking at the matter from a somewhat jaundiced point of view. I am not looking for inequitable relations with the Soviet Union. I want the situation to be rendered fair and just. There should be accommodation, but it has to be on reasonable terms. If the Soviet Union decides that it is not prepared to reach that form of accommodation, I believe unhesitatingly that it is the job of the EEC to demonstrate its determination fully to take the matter into account.

2.45 p.m.

I appreciate the Minister's kind and generous words at the start of his speech, as I also applaud his new-found aggression, to which I shall return in a minute. I must however point out that the Conservative Party protests at the short notice given by the Government of this vital debate on the Soviet maritime threat. Document R 829/78 was included by the Lord President in his announcement of business on 25th May, but only by reference to a debate on liner conferences. It was only yesterday, after Opposition protests, that the Government seemed to realise that they had misunderstood the subject matter and announced a separate debate.

Even the hot line which seems to exist between the Minister's Department and Lloyd's List seems to have failed, because in yesterday's edition mention was made of this debate taking place some time before the end of July. For a subject as vital as this, we should have had a debate much earlier and on a more important day, when I know a number of my colleagues would have wished to participate.

We in the Conservative Party have been growing increasingly impatient with the Government's lack of action to counter the economic and strategic threat posed by the Soviet maritime expansion. We therefore welcome the new-found aggression of the Minister this afternoon. However, on any assessment, his attitude and the Government's attitude until now have been feeble and weak.

Since the early 1960s, and in particular since the early 1970s, there has been a rapid expansion of the cargo liner fleets of the State trading countries of Eastern Europe and of Russia in particular. It has been a matter of deep concern to the shipping industry for at least four years. It is now over two years since the General Council of British Shipping published "Red Ensign versus Red Flag"—a very informed leaflet which pointed out the potential consequences of Soviet expansion.

The Minister recognised today that even since then there has been a continued dramatic increase in the Russian merchant fleet. He mentioned that the Russians have concentrated on roll-on roll-off ships in service. The indications are that they will have 40 by the end of 1980. Already, as he admitted, it is the sixth largest world fleet. All the signs are that in their next five-year plan the Russians will be seeking a further substantial increase in their fleet. We have too much to lose to delay any longer.

The Minister has at last mentioned the substantial contribution of British shipping. The industry contributes in gross earnings £2,500 million to our balance of payments, with gross import savings of just under £500 million. The Soviet maritime expansion therefore poses a major threat to our economy.

One aspect with which the Minister did not spend much time dealing is that the threat is not simply economic. It represents a serious strategic threat. Those who study Soviet expansion can see a clear political motive of seeking to control important shipping routes with an apparent objective of destroying the economic health of Western shipping lines.

Most Soviet merchant ships are equipped with advanced naval equipment with interchangeable crews. The Soviets have therefore been devoting vast resources to the creation of a large modern ocean-going fleet with considerable military potential. They have in fact gone so far as to admit that their goal is to
"utilise the World oceans in the interests of building Communism".
I was very glad to hear from the Minister his recognition of the danger commercially and strategically of the increase in traffic using the Trans-Siberian land bridge. With an annual carrying capacity which has now reached 150,000 containers, this will increase to 300,000 by the end of 1980 and could double again by the end of 1985. The land bridge is, of course, under full Soviet physical control and is no doubt an important part of what appears to be a clear plan to gain a stranglehold on world shipping.

The Russians have already met with considerable success. Already in the bilateral trade Soviet shipping carries 85 per cent. of imports and exports between this country and the USSR. However, the major anxiety is over the activities of the Russians in the cross trades where our shipping industry is so strong. The Russians have been concentrating on the main trade routes by undercutting freight rates charged by the liner conferences by up to 30 per cent.

For instance, in the conference traffic in sectors of North Atlantic trades the Russians have already been extremely successful and carry up to 28 per cent. eastbound and 25 per cent. westbound. COMECON liners have captured a market share of 35 per cent. already of the cargo transported between Northern Europe and the Mediterranean. In the important United Kingdom-East African trade, the losses in which were mentioned by the Minister, the Russians have already pushed up their share to 20 per cent. from nothing a comparatively short time ago, which share is over and above the liner conference share of the Poles and the East Germans.

I return to my initial question. What have the Government been doing while all this has been going on? My answer is—too little. It was 12 months ago that the Minister said when answering Questions:
"We have made it plain to the Soviet Union that we prefer a policy of accommodation rather than confrontation. Nevertheless, as the Soviet Minister well knows, there is provision in Part III of the Merchant Shipping Act 1974 for us to introduce countervailing measures … the picture is not always as bleak as the hon. Gentleman suggests. There has been some improvement in the bilateral trades in that the Soviet Union has agreed that an additional ship should be available to serve those particular interests. Of course that is not enough, but it is a sign of improvement."
A little later my hon. Friend the Member for St. Ives (Mr. Nott) asked:
"It is correct that there are to be two further meetings on this matter in August? Are not all the facts known about Russian activities in this matter? What are these further meetings intended to discuss? Is it perhaps time that the Government showed a little of their muscle in this matter?"—[Official Report, 27th June 1977; Vol. 934, c. 25–6.]
The Government have shown as much muscle, unfortunately, as a jaded blancmange, until today.

I welcome the brave words, the real response and the pugnacious attitude of the Minister.

The hon. Gentleman is going on a bit with this nonsense. I do not expect the hon. Gentleman to read all my speeches. That would be too much to expect of anybody. However, I must point out that there is nothing at all new in the way in which I have been speaking about this issue. Is not the hon. Gentleman aware that it was precisely this point that I and my German colleague at the EEC rammed home in October of last year? Is he not aware that there has been the most constant discussion with the GCBS and the unions to get an identity of view on this and that what must be done is to get concerted action? This has been our ambition. It would be appropriate, if the hon. Gentleman would be a little more fair.

I am, perhaps, not as critical as the Minister is about his speeches, but I think it is fair of us on this side to expect action and not words. He refers to a debate in the Council last October. We would say that the indications were already there long before October and the Government should have adopted a more aggressive attitude much earlier.

Instead, what did the Government do? Nothing. Instead they have done a great deal to damage our shipping industry. They proceeded to enter into shipping deals with Poland and started the damaging practice of providing our competitors with ships on highly favourable terms and even giving ships away, thus making our industry even more vulnerable in this highly competitive world. We have tried to point out to the Government the error of their ways. At the end of last year, at last—I pay tribute to the Minister for this; perhaps he should have waited for these kind words—the Government seemed to wake up to the situation, prompted very much by the General Council of British Shipping, and they asked for action to be taken by the European Community, a request which, as I have said, should have been made much earlier.

In his comments to me just now the Minister mentioned the West Germans. In an article in the Financial Times on 23rd February 1977 it was reported that
"West Geman shipowners have called for cargoes to he allocated on a quota basis to East European merchant fleets unless they take 'a fairer line'."
Those are very strong words, but there was no response from the Government until October.

There is at last this EEC proposal which is to be discussed on Monday by the Transport Minister. We must make the best of a bad job and do now wish the Minister every success in the discussions. The proposal is, however, only for a monitoring system to be instituted with information to be forwarded by each member State every six months. We believe that this is just not good enough. Surely we already have sufficient information on the activities of the Soviet fleet to take the necessary decisions now. We need a promise of tough action within a specific time limit unless the Russians are prepared to stop their non-commercial practices and compete on a basis of fair competition.

As I have said already, we recognise that this proposition is at least a step in the right direction. However, we now learn with regret from what the Minister said today, that there is some new-found reluctance on the part of some members of the Community to endorse even this proposal. This is very difficult to understand, bearing in mind the unanimous initiative of the Council of Ministers when it asked last October for practical proposals to be prepared
"for dealing with the situation arising from the increasing non-commercial activity of certain State trading country liner fleets."
This draft proposal has unanimous support from Community shipowners and European shippers' councils. It is also supported by the European Parliament. Apparently, in the face of this firm European line, some member States, especially France, wish to widen the debate to cover flags of convenience and other issues. The Minister confirmed this today, and I agree with him that there is no fundamental objection to wider discussions at another time and in another place.

But such issues must not be allowed to weaken our resistance to the Soviet maritime threat. The Soviet Union seems to believe—and the Government have done nothing to dissuade it from its view—that the West will not take any serious action to protect its shipping in the present political climate, and, consequently, it sees no advantage in controlling the activities of its lines. The Russians will respect only strength, and within the Community we must show that we are prepared to def end our legitimate interests in world-wide seaborne trade against these practices of a noncommercial and aggressive kind.

Does not the hon. Gentleman agree that the position which my hon. Friend has outlined would require possibly greater response then purely that from the EEC? One thinks, for example, of Commonwealth countries such as Australia and New Zealand which have very strong shipping interests. Would not this be better done on a wider than EEC basis? Will he also say what measures he thinks should be taken, whether or not they are provocative in his view, other than the monitoring which is now suggested?

I am grateful for that intervention from the hon. Member for Newham, South (Mr. Spearing), who has considerable experience in European debates. The Opposition believe that this country must set an example by taking the initiative and leading other countries to a much more definite approach. One way to do this would be to consider the call of the West German shipowners. We could announce that, within a certain specific time limit, quotas and penalties will be imposed on the Soviet Fleet unless they agree to seek accommodation. We believe that we should take that sort of initiative within the Community and ask the Community to follow us.

I accept that there may be a wish on the part of some Community countries first to have a monitoring system. My objection to that, which I have already tried to outline, is that I believe that we already have sufficient information. But what I am proposing now is, I believe, what the Minister is proposing once that monitoring has taken place if there is no Russian response. I am proposing that a clear, decisive attitude should be taken to show the Russians that we mean business and that we are determined to protect the interests of the free world in this important matter. The Russians respect only strength, and we have to show that strength now.

I give every support to the Minister to go from this debate to the Council on Monday and provide that clear and strong leadership I have advocated so that the Community will demonstrate that it has the necessary political will to take concerted action in this vital area. If a little is achieved on Monday, there will, rightly, be strong pressure on the United Kingdom and other nations to take combined action outside the Community. That would be a sad and regrettable step back from the move towards a European shipping policy.

I am afraid that the Government have done little to promote our shipping industry—in fact, rather the opposite. They have failed to bring forward the Merchant Shipping Bill, they have failed to introduce a proper rationalisation of the shipbuilding industry, taxation policies harm shipping interests, and there are many other examples of similar damage. British shipping represents the finest form of free enterprise. Our shipping industry thrives on competition, but only on fair competition.

Let the Government and the Community wake up to the existing dangers and remove the threat to the industry which represents and provides a vital economic lifeline not just for us in this country but also for the Community as a whole. Let the Minister fight hard on Monday for the European action which is so urgently needed by the European shipping industry before it becomes too late to impose any meaningful control on Soviet maritime expansion.

3.4 p.m.

With the leave of the House, perhaps I may say a few words in response to the undoubtedly aggressive speech to which we have just listened from the hon. Member for Wirral (Mr. Hunt). I know the difficulties which he is undergoing from the leader of his party. He is under very firm instructions on anything to do with the Soviet Union, and he has to make the right sort of aggressive noises. But unfortunately, if he becomes too agressive, he, and his party, will tend to lose sight of a more sensible way of trying to achieve the sort of constructive goals that I sought to set out in my speech at the beginning of the debate.

Time and again, the hon. Gentleman—I suppose that it must have taken up at least half of his speech—asserted that the Government were guilty of inaction or doing too little. "Why had we not taken action before October 1977?": that was the sort of question that came during the whole theme of his speech. Let me tell the hon. Gentleman some of the facts of life.

It was not in October 1977 that the Government began to react to this situation. I myself and my right hon. Friend the Secretary of State visited virtually every shipping Minister amongst our allies in Western Europe in order to try to obtain a concerted cohesive point of view about dealing with the threat.

The hon. Member is essentially a very reasonable and liberal Member and, therefore, perhaps he is an uncharacteristic member of his party. He will recognise that it is no good shouting out this sort of thing from the housetops, particularly if one is not successful in getting that concerted and cohesive approach.

Unhappily, up to shortly before the October Transport Minister's meeting, there was very little interest on the part of others in Europe. It is true that the West German ship owners had indicated their consternation. It was later that the West German Government, in perhaps a more reasonable way than the West German shipowners, echoed a similar point of view. They were not first in the field, by any manner of means. Therefore, I believe that it was right to see whether we could achieve a consensual approach, even though, as I say, in the long run, up to about October 1977, it appeared not to work.

Then the situation changed. There seemed to be more concern on the part of the European nations about the threat. They seemed to be more alive to the isssue. It was in response to that position that at the October meeting the Commission was instructed to deal with the position along the lines that it has done. Therefore, what I say to the hon. Gentleman is that fools rush in where wise men fear to tread.

I do not want in any way to appear to be patronising—that is not my intention—but I genuinely believe that when one is dealing with these matters on a day-to-day basis and trying to achieve a certain goal it is no good shouting out from the housetops in a way that an Opposition is free to do.

It would be a great help to the Opposition in understanding the extent of the action that the Minister has been taking if he would indicate when he first made approaches to other Community Governments. When did he first invite them to take concerted action against the Soviet maritime threat?

What I was doing was undertaking bilateral meetings in the first place to try to drum up support for this cohesive action. I think that it was about two years ago that I first saw my opposite numbers. I cannot specifically recall who it was, but, as I say, I visited virtually every shipping Minister—other than the shipping Minister in Italy, because at the material time it was very difficult to determine who he was. However, I think that I saw virtually every other Minister from time to time.

I know that at that time and throughout that period French Ministers have been reluctant to engage in this exercise, but in October nobody dissented from the proposition; so we thought that we were making progress at that time. Having said that, I repudiate the charge of inactivity and inertia that the hon. Gentleman has made—albeit in a most attractive speech.

May I pursue with my hon. Friend the point that I pursued with the hon. Member for Wirral (Mr. Hunt)? Is it not a fact that, because of Britain's maritime history and strength, the United Kingdom perhaps of all the members of the EEC is the one most properly sensitive to this situation and that it is right that my hon. Friend should have been taking the lead that he has described? But is it not a matter for the countries I mentioned — particularly India, New Zealand, Australia and possibly shipping and Government interests in Japan in respect of the land bridge? What proposals do the Government have in those connections, as well as in the rather more limited but similar ones within the EEC?

The best is the enemy of the good. One has to aim at a step-by-step process. It looks as if it will be difficult enough getting these fairly modest proposals through, let alone the highly ambitious ones that my hon. Friend was hinting at.

The hon. Member for Wirral said, following up the point I have just made, that he wanted more radical steps undertaken within Europe, but I repeat that it is no good just fancifully thinking about this. One has to be able to carry others with one. Unless that can be done, radical steps cannot be taken. Although we have certain powers in the Merchant Shipping Act 1974, the Commission and most other people, including the whole of our industry, are realistic and understand that it is no use taking a unilateral line. If we were to do so, Soviet ships would simply not use our ports; but they would have plenty of others to use. So I do not think that is a very positive line of approach.

The hon. Member went on to say—I think wrongly—that this Government have given little help to the shipping industry. What he was saying was not that the shipping industry wanted more help, because he did not identify the sort of help it wanted; it was a negative that he was asserting. He was saying, in effect, that the Government should not have entered into the Polish deal.

I see that that is the proposition that he affirms. I must tell him that there is little doubt that the Poles would have bought elsewhere on very similar terms and in those circumstances it would have been manifestly irresponsible for the Government to deprive our shipyards of this deal at this specifically critical time and our shipyard workers of the many jobs that were available as a result. The threat would have remained, so it made no difference. I believe, therefore, that the Government were right to proceed.

I want to put a question to the hon. Member. If he is so emphatic about giving the shipping industry this unspecific aid, how does he square that with the assertion made by his right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)—I hope I am not doing the right hon. Gentleman an injustice because I am trying to remember his words off the top of my head—that all subsidies and aid to industry are harmful? Would he then have taken the action which my right hon. Friend announced to assist certain shipping com- panies only two or three weeks ago? I suspect the answer would be in the negative; that would have been a grossly irresponsible attitude to have taken.

We seem, with respect, to have got somewhat sidetracked. Certainly, the aid to which the Minister refers was normal financial practice on the part of good banking houses—to extend or to announce a moratorium on loans. The Minister sought to defend the Polish deal and would, no doubt, seek to defend the new Polish deal for at least five ships. Does he defend the Indian deal whereby ships were given as part of the foreign aid programme—a deal which was immensely damaging to the British shipping industry?

I am glad that, though belatedly, the hon. Gentleman has applauded what the Government have done in relation to our own domestic shipping industry. I think that those are the first such words uttered in the House, but belated acknowledgement is better than none at all. As to the wider issues of other deals, one has to look at each case on its merits. One has to see the nature of the threat. In any case, we are not in this debate talking about India or any other countries. We are talking about the situation in relation to the Soviet Union and the Eastern bloc.

As I said a little time ago, I believe that it is still right to seek an accommodation with the Soviet Union, but speaking from a position of realism and strength. I did not hear whether the hon. Gentleman also, from the Opposition's point of view, felt that in the long term an accommodation was more desirable than confrontation, but I shall assume that that is what he wants, too.

Therefore, welcoming that assertion on the hon. Gentleman's part and the support that he offers, I shall do everything I can on Monday to try to carry my colleagues with me. Things may not go right. I hope that others will recognise the longterm problems here, but I cannot be sure. But that does not mean that we should not go on striving, and we have to strive on the basis of concerted action. I think that that is the will of the Opposition behind the peripheral debating points. I believe that that is their will, and it is most certainly, and has been for some considerable time, the will of this Government.

Order No. 3, "Liner Shipping". The Question is—

On a point of order, Mr. Deputy Speaker. This confusion raises exactly the point which I made earlier, to which the Minister did not respond, namely, that the subject matter of the first debate was never appreciated —or seemed never to be appreciated—by the Government, and this has undoubtedly misled many of my hon. Friends who would have wished to speak on the subject with which we have just dealt.

On the Order Paper, Motion No. 3 is entitled "Liner Shipping", and Motion No. 4 also is entitled "Liner Shipping".

Question put and agreed to.


That this House takes note of EEC Document No. R/829/78 on the activities of certain state trading countries in cargo liner shipping.