HC Deb 31 May 1968 vol 765 cc2378-88

2.3 p.m.

Mr. A. H. Macdonald (Chislehurst)

I wish to bring forward the subject of Turkish transport tolls. This is possibly a rather abstruse subject, and I concede at once that there are not many people in this country who are particularly concerned, but those few who are concerned are suffering very grievously indeed.

Let me begin by taking a moment or two to go over the background to the present situation. In July last year the Turkish Government published a decree which imposed a levy on all foreign commercial vehicles entering into or passing through that country. I have here a copy of that decree—or, rather, a translation— and I will quote from it. It is headed: Decree No. 6/8458 of 4th July 1967". It says: The following fees will be collected in order to meet the supervision and administrative expenses connected with the transport by trucks and/or trailers entering into Turkey or passing in transit through Turkey: (a) 15 Kurus (or 0.15 Turkish lira) per ton kilometer on the distance to be covered in transit by trucks and/or trailers; (b) a lump sum of 2,000 Turkish lira separately from each truck and/or trailer entering into Turkey. In English money that was equivalent to approximately £300.

There is a loophole in the decree. Clause 4 reads as follows: After coming to an agreement, or even de facto, such fee may be partly or not at all collected from trucks and/or trailers belonging to countries who do not charge inspection fees, transit fees, or any other fee similar to that which is referred to in paragraph 1 above from Turkish licence plate trucks and/ or trailers entering into their country or passing in transit through their country. It is not absolutely clear, but the effect in general is that Governments must obtain exemption for their hauliers. It is not possible for an individual haulier to obtain exemption from the Turkish decree. It is the Government of his own country which must do this.

The professed object of the Turkish authorities in imposing this substantial levy is set out in the first paragraph, where they say "in order to meet expenses" but the size of these levies seems to me rather large for such a purpose and I am wondering if there is some other reason. It is, of course, the case that a Turkish truck entering into this country, or, for that matter, into any of most other countries of Western Europe, has to pay a fee, which is a proportion of the normal rate of the road fund licence tax applicable to it, that proportion corresponding to the length of time that the truck will stay in this country. I rather suspect that the Turkish authorities imposed the levy in order to have a bargaining counter to secure for their trucks coming into this country, and other countries of Western Europe, exemption from paying the relatively small levies which are currently imposed.

I found some support for that view in an Answer to a Question which I set down on 25th October last year. It was Question No. 89, and the Under-Secretary of State for Foreign Affairs replied to that Question: Exemption for British hauliers requires the agreement of the Turkish Government on the basis of reciprocity."—[OFFICIAL REPORT, 25th October, 1967; Vol. 751, c. 505.] In other words, to obtain exemption from the effects of this decree for British hauliers the British Government have got to offer some sort of quid pro quo.

The same situation applies to other Governments in Europe but other Governments were able to reach agreement fairly speedily with the Turkish Government. The Dutch Government, for example, obtained exemption for their hauliers in September, and other European Governments followed not long after. It appears that in those countries the respective Ministers of Transport were able to reach agreement with the Turkish authorities simply by, as it were, a stroke of the ministerial pen. In this country, however, the position is somewhat different. The Minister of Transport here is not empowered on his own authority to reach an agreement for lifting a levy off Turkish vehicles coming into this country. Before he can do that it is necessary for him to place an affirmative Order before both Houses of Parliament. I would quote here from a letter addressed to me by the Undersecretary of State for Foreign Affairs, dated 30th November. He said this: Under the Motor Vehicles (International Circulation) Act, 1952, we are able to waive taxation on foreign vehicles where we are committed by international agreements to do so. But this can only be done by Order in Council which requires affirmative resolution of both Houses of Parliament. Indeed, that is so. I have here a copy of that Act and it certainly appears that an Order in Council may be made for this purpose, but it requires an affirmative resolution of both Houses before it can come into effect.

In this situation there was a certain deadlock between the Turkish authorities and ourselves. This House would not consent to an affirmative Order without being satisfied that the Turks were lifting their levy, but the Turks were not willing to lift their levy until they were satisfied that we had lifted our levy. Negotiations were, therefore, necessary between this country and the Turkish authorities. The first question I wish to put to my hon. Friend who is to reply is, why did it take so long for these negotiations to come to a conclusion?

The decree in Turkey was published on 17th July, 1967. The Board of Trade knew about it on 1st August; I have a letter from them saying so. But the Foreign Office, it appears, did not know about the decree until 31st August. Again, I will quote from an Answer to a Question which I put down on 23rd October 1967. The Reply of the Undersecretary of State for Foreign Affairs said, among other things that: my right hon. Friend first received information about its"— that is the decree's— effects on British hauliers on 31st August."— [OFFICIAL REPORT, 25th October, 1967; Vol. 751, c. 505.] I still pressed on with the matter and put down yet another Parliamentary Question to which I received the reply that a formal case for exemption was prepared and put to the Turkish Government at the end of September."—[OFFICIAL REPORT, 20th November, 1967; Vol. 754, c. 924.] There does not seem to have been a great deal of zip in this matter. I am advised, however, that the Turks did not reply to our request until 8th November, so perhaps the delay is not all our fault. Nevertheless, negotiations dragged on. I asked a further Question on 22nd January, and received the reply that: Considerable progress has been made with a draft agreement embodying reciprocal waivers of the relevant taxation."—[OFFICIAL REPORT, 22nd January, 1968; Vol. 757, c. 15.] Still things drifted on, but at last, on 2nd April, an agreement was reached, and I have a letter saying this from the Parliamentary Under-Secretary which is dated 4th April: We have now heard from our Embassy that after some further delays, the Exchange of Notes finally took place on 2nd April. That was a long, long time. All the time that these negotiations were going on, British hauliers entering or passing through Turkey had to pay this substantial levy.

It will be understood that not many firms are engaged in haulage between this country and Turkey, in fact I know of only two. One of those, a firm called Asian Transport Ltd., is based in my constituency, and it is for that reason that I am raising the matter today. The business of Asian Transport Ltd., as its name implies, is direct haulage between this country and the Middle East, in fact between this country and Teheran. For that purpose, their vehicles must go through Turkey. There is no other way of getting from here to Teheran other than by a madly uneconomic detour through Russia and down through the Caucasus, or an even more expensive detour across the Straits of Gibraltar and across North Africa. These two routes are quite impossibly uneconomic, and the only practical way is to go through Turkey.

Every time this firm sent a vehicle through Turkey since the decree was published they have had to pay £300 until the date of devaluation, and after that date they had to pay £340, and no firm can possibly sustain such a drain on its resources.

The situation is not too bad for outward loads, as the cost can be recovered in the charges made to the customers, but in negotiating for return loads the firm is placed in an uncompetitive position vis-a-vis its European competitors, who can obviously quote much lower terms to firms in Teheran for return loads, since those European competitors are not now subject to the levy and any Turkish firm engaged in haulage between Turkey and this country need pay only a relatively tiny proportion of the Road Fund licence duty.

In this situation it was a great relief to my constituent firm, and to me, to learn that on 2nd April, 1968, agreement had been reached. This pleasure was short-lived. I was most surprised to receive a letter on 11th April, 1968, from my hon. Friend who is to reply, in which he said: We have put in hand the preparatory work on the necessary Order in Council. My next question is this. Why were the Ministry of Transport not keyed up and ready to go immediately agreement was reached with the Turkish authorities on 2nd April? How is that the Order in Council was not tabled before the House on 3rd April? I have had a suggestion that the exchange of Notes had to be examined. I cannot understand this. Surely our people must have known what we were negotiating about; after all, they had months and months in which to find out about this. I should have thought that, once agreement had been reached, there would be no difficulty in tabling the requisite order straight away.

Asian Transport Ltd. still went on paying the levy of £340 every time a vehicle went through Turkey, and they are still having to pay the levy now. This they find very frustrating, and I will quote from a letter which they have addressed to me: It really is incredibly demoralising and frustrating for a small company like ours, working as hard as we possibly can for British exporters, to see how slowly the departmental wheels turn in this country compared to those on the Continent. … Clearly, we now have no alternative but to move … we have no choice but to establish ourselves in a foreign country, taking our assets and our earning power with us. This would be a tragedy for a firm actively engaged in assisting our export drive. What could be of more direct benefit than a firm engaged in direct haulage moving goods from this country to the recipient country abroad? Yet it appears that this firm which is doing such good work will be forced to go abroad. My third question to my hon. Friend is, when is the requisite Order in Council to be laid before the House and in the other place for an affirmative Order to be approved? There are still no signs of this, as far as I can tell, upon the Order Paper of the House.

My fourth question is about the financial burden that Asian Transport Ltd. have had to incur. I received a letter from them on the day before yesterday in which the firm said: Turkish Transport tolls paid by us—

  1. (a) From the start till 2nd April 1968, £6,000,
  2. (b) From 2nd April 1968 to date, £1,600."
I therefore ask, are negotiations going one with the Turkish authorities for the recovery of sums that have been paid by way of this levy, since agreement with the Turks has now been reached? If no negotiations are going on for the recovery of these sums, may I ask, why not?

My final question is this. If we do not succeed in recovering the sums paid by Asian Transport Ltd. to the Turkish authorities will the Government be prepared to make any reimbursement to my constituent firm? I hope that it will never be said that I ask for too little. I would like to ask for reimbursement of the whole amount, that is to say £7,600; but if that is considered too substantial a sum, at the very least I submit that there is a serious and genuine case for the reimbursement of the £1,600, which is the amount of the impost which has been paid since 2nd April. Although it might be argued that it was not the fault of the authorities in this country that the impost was paid from last July until April, the blame for the delay after 2nd April in rectifying this situation can rest nowhere else except upon the shoulders of the Government, and I respectfully submit that there is a substantial case for reimbursement, if not of the whole sum, definitely for the reimbursement of all tolls paid after 2nd April.

I will summarise the five questions to which I should like replies. First, why did the negotiations with the Turkish authorities take so long? Secondly, why was the necessary Order in Council not laid before the House instantly that agreement was reached, on the first possible day, which was 3rd April? Thirdly, when, even now, is the appropriate Order in Council to be laid before the House? Fourthly, are we making any attempt to recover from the Turkish authorities the sums which Asian Transport Limited have paid? Finally, if we are not, or if these negotiations are unsuccessful, what offer can the Government make to my constituent firm to reimburse them for the expenditure to which they have been put? I look forward eagerly to my hon. Friend's reply.

2.22 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Bob Brown)

I should like to begin by offering my regret that the Turkish system of taxation on foreign goods vehicles bears so heavily on the constituent firm of my hon. Friend the Member for Chislehurst (Mr. Macdonald). I certainly share his concern and realise the need for something to be done to ease this financial burden on British road haulage to or through Turkey.

My hon. Friend has written to me several times on the matter. To my knowledge there is one other British haulage firm, presumably the one which my hon. Friend has in mind, which trades regularly to and beyond Turkey. The action of the Turkish authorities has borne very harshly upon these businesses, and it is only right that the House should know the course of our dealings with the Turkish Government and the efforts which Her Majesty's Government made from the outset to get this handicap removed.

The extra tax on foreign goods vehicles was introduced by the Turkish Govern-men in a decree published in mid-July last year. As far as we know, the tax was introduced without prior notice to those who would have to pay it. Certainly, we received no notice and no immediate copy of the decree. A translation of the decree was examined in this country as soon as it could be obtained. It said that the new tax would be collected on foreign goods vehicles entering Turkey or passing in transit through Turkey. But it also stated that by agreement or arrangement —and I emphasise the word "arrangement"—the tax would either not be collected or not collected in full in the case of vehicles belonging to countries which did not charge inspection fees, transit fees or similar fees on Turkish vehicles.

At this; point, I should outline the United Kingdom's system of taxation on goods vehicles. A vehicle excise tax, graded according to unladen weight, is levied without distinction upon British and foreign vehicles alike. Moreover, by comparison with the Turkish tax it is very modest in scale. We impose nothing which we could recognise as falling within the Turkish description of "inspection fees, transit fees or similar fees", and we concluded that we had a good case for approaching the Turkish authorities in the terms of their decree and asking for exemption from this new tax. This, we thought, would be an "arrangement" of the kind visualised by the Turkish authorities, and should be capable of fairly easy settlement.

The sequence of events, however, is that on 16th August the Ministry wrote to the Turkish Ministry of Communications, with whom we have occasional contacts, suggesting that an arrangement should be made whereby this extra tax on foreign vehicles would not be collected from British vehicles travelling into or through Turkey. At the end of August, we received a reply to the effect that negotiations could not take place at that level. The British Government, said the reply, must approach the Turkish Ministry of Foreign Affairs. The Foreign Office were, therefore, asked to take on these negotiations.

Naturally, we were extremely disappointed with that response, which seemed likely to delay a settlement considerably, if only because on neither side would the Ministries principally concerned be in direct contact. Negotiations had to be conducted by our Embassy in Ankara who were obliged to refer back to London for advice on all points of difficulty as and when they arose—and, of course, difficulties did arise. There was a regular exchange of telegrams between the Embassy and London following the approach to the Turkish Ministry of Foreign Affairs in September, 1967,

The Embassy, as advised, put forward our case for exemption by arrangement, but it soon became apparent that we were to be involved in protracted discussions. Our negotiating partners surprised us by introducing the subject of the British carriers' licensing system, which had nothing whatever to do with the subject of our discussions—namely, taxation. In any case, our carriers' licensing system had been very much simplified in its application to foreign visiting vehicles. This was probably due to some misunderstanding on the Turkish side. Nevertheless, it took some time to dispel.

At the end of October, the Turkish authorities were still considering our request for an exemption arrangement, which, they led us to think, would be granted within a few more days. Again, our hopes were dashed. Notwithstanding continuous pressure by the British Embassy, our Turkish friends were, in November, still finding fresh topics for discussion. And then, for the first time, our Embassy was faced with a definite refusal to grant exemption for British vehicles by arrangement—or, for that matter, by agreement—unless we agreed to grant tax exemption on Turkish vehicles.

As my hon. Friend knows, it is not possible under our law to grant any tax concessions to foreign vehicles by the stroke of an administrator's pen. It can be done only by an Order in Council made under the Motor Vehicles (International Circulation) Act, 1952. The Act says, in effect, that an Order can be made for the purpose of implementing an international agreement which is in force for the United Kingdom.

My hon. Friend will, therefore, understand that by November all our earlier negotiations with Turkey for an arrangement under their decree had failed to bring about the desired result. They could, at best, be regarded as paving the way for what must, in the light of events, be a formal agreement between the two countries. A draft agreement to give our negotiating partners what they now wanted was quickly prepared and despatched to Ankara. But, again, we encountered yet another obstacle. We were told that in Turkey the negotiation of an agreement in that form would be a very protracted business, requiring the approval of their Council of Ministers. An exchange of Notes, they said, would be a much quicker procedure.

The Note was drafted with all possible speed. It was the subject of further queries by the Turkish authorities and resulting telegrams between London and the Embassy. Finally, the formal exchange of Notes took place in Ankara on 2nd April this year—seven-and-a-half months after we first took up the matter, and after a great deal of correspondence and of frustration.

I have dealt with this extremely tedious sequence of events at some length, because I do not want my hon. Friend or the House to gain the impression that the Ministry, or, indeed, the Government, has been dilatory or inert in this matter. From its inception, considerable time and trouble has been devoted to trying to get the lot of British hauliers who trade to Turkey alleviated. Difficulty after difficulty was overcome with as much speed and flexibility as we could command. I think that it must have taken our Turkish friends some considerable time to understand that Britain really was negotiating from an already liberal position—in other words, that we had no discriminatory taxation to forgo in the exchange.

My hon. Friend has also raised the question of the reimbursement of his constituent. This matter was raised in the course of the negotiations with Turkey. I would point out to my hon. Friend that at one point in time we had to make a clear decision whether we further pursued what we thought were to be finally abortive discussions and consequently to be a further financial burden on his constituent, or to get on and get an agreement concluded. I very much regret that there appears to be little chance of success with this aspect of the negotia- tions, and we are not aware of any power whereby the British Government may reimburse the money that has been paid in Turkish taxation. I know that this will disappoint my hon. Friend, but I have to make this point clear.

Now that we have the exchange of Notes, I should like to assure my hon. Friend that we are doing all we can to accelerate matters. We are not, for example, resting on any "normal procedures", if it is within our competence to do otherwise. In the normal course of events an international agreement is printed in the treaty series for presentation to Parliament before legislative action to implement it. However, on this occasion, because of the urgency of the matter, we shall lay a preliminary certified copy of this exchange of Notes together with the Order in Council.

I fully understand my hon. Friend's anxiety that we should press on with the Order, and indeed I am investigating urgently any possibility that seems to offer an earlier completion of remaining necessary procedure. We had hoped to include in the Order in Council agreements with Belgium, the Netherlands and Sweden, in addition to Turkey. But, in view of the pressure from my hon. Friend for action on Turkey, we are pushing on on the basis of two agreements so far as they are concluded now with Turkey and Sweden. This has the extreme disadvantage, from the Government's point of view, of causing an added burden on parliamentary time.

My hon. Friend has asked precisely when the Order will be laid. I am not in a position to give a precise time, but I can assure him that the officers of my Ministry are giving urgent consideration to this problem. I hope that, even during the Recess, the Order may be laid. I certainly hope that, as early as possible after the Recess, it will be brought before the House.

Having said that, even when the necessary Resolutions have gone through this House and the other place, there will still need to be a meeting of the Privy Council to confirm the Order.

Mr. Speaker

We are a little ahead of time. I remind hon. Members who were not here earlier that the next debate will finish promptly at 3.45 p.m.