Anglo-American Offset Purchaseagreement (Harbour Tugs) 44. Mr. Bruce-Gardyne asked the Secretary of State for Defence, in the light of Government policy set out in the Defence White Paper with regard to the agreement offsetting the foreign exchange cost of British purchases of United States aircraft, what representations he has made to the Government of the United States of America regarding the rejection of a British tender to build harbour tugs for the United States Navy. The Secretary of State for Defence (Mr. Denis Healey) None, Sir. There are no grounds for such representations. Mr. Bruce-Gardyne Why not? How does the Secretary of State for Defence think that he will get fulfilment of the undertakings in the White Paper about recovery of the cost of the F111A aircraft and other American purchases if these tenders cannot go through? Mr. Healey We have no intention of asking the American Government to subsidise British exports. Under the offset agreement, we are allowed to compete without discrimination against American firms. This was a small order which altogether would have totalled less than £1 million, and factors such as transport costs and lower productivity in British yards prevented us from beating American prices. Mr. Powell Does not the right hon. Gentleman now realise how misleading it was for the Government to talk about ensuring that the costs of the F111A would be offset? Is it not a fact that further invitations to tender have now been withdrawn? Mr. Healey There was nothing whatever misleading. As I told the House the other day, we have already been invited to provide assault tracking to twice the value of the tugs mentioned in the Question. Invitations to bid for two other kinds of ships are now coming in. One invitation to bid for ships was withdrawn because the American specification was about to be changed, but that bid will he renewed in a few weeks' time.