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Argentina (Trade)

Volume 21: debated on Monday 5 April 1982

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3.31 pm

(by private notice) asked the Secretary of State for Trade what advice, instructions or regulations he is giving or introducing to cover those companies or organisations which are trading or which have contracts with Argentina.

It was announced on 3 April that the Government had frozen all Argentinian financial assets held in this country, that ECGD would not provide new export credit cover for Argentina, and that exports of military equipment and arms to Argentina had been prohibited. Other economic measures are being urgently examined, and we are consulting our European Community and other allies. British citizens are advised not to travel to Argentina, and British companies to withdraw their non-essential British staff. British firms must decide what action they should take in relation to existing commitments in the light of the present circumstances, the measures which have so far been announced, and the terms of their own individual arrangements with Argentinian firms. They are advised not to enter into new commitments.

Meanwhile, right hon. and hon. Members will recall that the Prime Minister told the House on 3 April of the Government's intention to despatch a substantial naval task force to the Falkland Islands. I should like to take this opportunity to announce to the House that Her Majesty assented to an Order in Council enabling the Government to requisition any vessels that may be needed, under the long-standing contingency plans available to meet national emergencies of this kind. The P & O liner "Canberra", whose captain is an officer in the Royal Naval Reserve, is being transferred to naval control this afternoon. Other ships will be requisitioned and chartered as necessary.

I thank my right hon. Friend for his reply. May I ask him two questions? Is he suggesting that firms which have existing commercial contracts with the Argentine should continue delivery under those contracts? Secondly, what action does he consider should be taken where, obviously, the Argentine will attempt to obtain spare parts for equipment made in Britain from third or fourth countries? Will the Government look very carefully at that position, especially where military equipment is involved?

Replying to the first of my hon. Friend's questions, no general ban currently exists on exporting to the Argentine.

As for my hon. Friend's second question, of course, there is a ban on the export of arms and supplies from this country, and undoubtedly we shall do our utmost and shall expect our allies to assist us in that prohibition.

Is it not the case that, apart from the obviously necessary ban on arms exports, other sanctions on or interruptions in trade are inevitable and must be proportionate to the dispute which the United Kingdom has with Argentina? Will the right hon. Gentleman describe what he thinks those further sanctions or interruptions should be?

Can the right hon. Gentleman describe to the House what compensation, protection and support will be afforded to British firms and workers who suffer loss and injury from the interruption of trade with Argentina? Can he say expecially that the losses on the Export Credits Guarantee Department will be borne by the Government and not be exporting firms? The trading consequences of losses ought to be borne by the Government because these matters flow from their conduct of these proceedings.

May I ask the right hon. Gentleman about the EEC and our other trading partners? Our trading arrangements with the EEC have not always been favourable in international terms. On this occasion, will he have immediate consultations with our trading partners in the EEC, and will he confirm that they will support us to the full in those trading sanctions, whether they relate to arms or other matters, which may be necessary to support and further Britain's cause in this matter? Can the right hon. Gentleman say what other trading support he will get from members of NATO and other defence pacts to which we belong?

Perhaps I may answer the hon. Gentleman's questions in reverse order. We are in consultation with our European Community partners with a view to co-ordinating as far as possible and making economic response to the present situation.

Dealing with the hon. Gentleman's second question, it is true that any interruption of trade which derives from a conflict such as this results in losses to a very large number of companies and people. This has always been true historically, and no doubt it will be equally true on this occasion. The same convention will apply on this occasion as applied within the lifetime of previous Parliaments.

As for our taking economic action, of course, this is a matter under careful review. We shall take account of the hon. Gentleman's aspirations that it should be proportionate to the dispute.

Order. This is an extension of Question Time, but I propose to call two hon. Members from each side of the House before moving on.

With regard to contracts entered into by British firms and companies with Argentine interests, will not the British concerns be entitled to pray in aid the doctrine of frustration, well known in commercial and international law, and would not they be well advised so to do?

Obviously that is a factor which will be borne in mind when the Government consider the next development in economic reactions.

Given that the last full trade statistics were published in 1978, can the Secretary of State confirm that an embargo, taking total proportions of trade, would still be about 10 times more injurious to the Argentine than to us?

I am not sure that I want to take up the hon. Gentleman's statistics, but I can tell the House that our exports account for about 3 per cent. of the Argentine markets and that we account for 3 per cent. of their exports.

Although I welcome what my right hon. Friend said about the cessation of arms sales from this country, will he make urgent representations to the Heads of Government of France, Italy and the United States, whose ground support in Argentina not only made the invasion possible technically for the Navy and Air Force of the Argentine but would also make it possible for the Argentine to sustain a counter-attack against our own forces?

I am certain that any helpful economic response in this dispute can best proceed if we are supported fully by our nearest allies in the European Community.

Is the Secretary of State confident that our trading relationships with other Latin American States will not be disrupted by them as a result of the continuance of this dispute?

No one can be confident in replying to such a question, but I hope very much that the dispute can be localised and that the mutual good interests that lie between this country and other Latin American States can be sustained.