HC Deb 21 July 1969 vol 787 cc1446-58

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Concannon.]

2.12 a.m.

Mr. Patrick Wall (Haltemprice)

On 19th March I suggested in an oral Question to the President of the Board of Trade that our trade with South Africa was declining and that there was evidence to show that one of the causes was the Government's policy in refusing to allow the supply of defensive arms to the Republic of South Africa in accordance with the spirit of the Simonstown Agreement. The object of the Adjournment debate is to put forward evidence to substantiate this case and ascertain what action the Government will take.

In his reply the President of the Board of Trade said that our exports to South Africa in 1968 were slightly more than in 1967. He denied my assertion that the refusal to sell arms had adversely affected our trade. He said: The answer I gave shows clearly that in 1968, as against 1967, contrary to what has been constantly prophesied by hon. Gentlemen opposite, the British share of South African imports actually increased."—[OFFICIAL REPORT, 19th March, 1969; Vol. 780, c. 488.] The right hon. Gentleman was supported in that view by his hon. Friend end the Member for Kingston upon Hull, North (Mr. McNamara).

I had at that time in my possession figures for the British imports into South Africa showing that in 1967 they were £257.6 million or R.497 million and in 1968 they were £260.7 million, or R.449.5 million. The figures quoted in rands show clearly that our trade in 1968 was R47.5 million less than in the previous year, and the discrepancy was caused by the fact of British devaluation in November, 1967, which fact was conveniently omitted from the Board of Trade's reply.

On 30th April, I again challenged the right hon. Gentleman on those figures. My challenge was taken up by my hon. Friend the Member for Oswestry (Mr. Biffen). The President of the Board of Trade replied: there was virtually no change in the value of our exports to South Africa between 1965 and 1968, or between the first quarters of 1968 and 1969."—[OFFICIAL REPORT, 30th April, 1969; Vol. 782, c. 1427.] And he went on to say: Our share of South African imports in 1968 was 24 per cent. This was less than in 1967, and not greater, as I inadvertently stated on 19th March. In other words, the right hon. Gentleman admitted that the information he had given the House was wrong and that his castigation of myself and my hon. Friend on 19th March was unfounded. I note, however, that he did not apologise for this remark.

Finally, on 18th June, in answer to a Written Question, the right hon. Gentleman stated that our exports to South Africa in 1968 were £261 million compared with £258 million in 1967. Again, he made no mention of devaluation, which clearly affects the picture. So much for the actual value of our exports to South Africa. What is perhaps of greater importance is the balance of our trade with South Africa and the position we occupy compared with other major industrial nations which supply the South African market.

The position here shows a much more dangerous trend. South Africa had been Britain's second largest trading market, second only to the United States. At the end of 1968, she became our third market after the United States and Australia. Not only this, compared with 1964, British exports to South Africa fell from 29 per cent. of the market to 24 per cent. That is a drop in four years of 5 per cent. But, in the same four years, West Germany's exports there increased by 3 per cent. Japan's by 2 per cent. and Italy's by 1 per cent. I understand that the latest figures for the quarter ending last April show that South Africa has now fallen to ninth place and that the percentage of British exports to that country continues to fall.

In addition, the balance of trade during 1968 has been in South Africa's favour to the tune of about £10 million, whereas, in most previous years, it was in Britain's favour. In 1965, we had a favourable trade balance of no less than £80 million with South Africa. I suggest that devaluation, which the people of this country was told would increase our trade with our overseas markets because it would make our goods comparatively cheaper, has, at least so far as South Africa is concerned, been a failure.

I believe that the figures I have given cannot be challenged and that they show a picture of our trade with South Africa, which is a growing and vitally important market, indicating a downward trend—a trend which shows no sign at the moment of being reversed. It is of considerable importance to investigate why this should be so. The right hon. Gentleman, on 30th April, said: The trend is broadly in line with our exports in overseas sterling area markets generally. It seems to me that this is a somewhat pessimistic statement and not very encouraging for the future of our economy.

The right hon. Gentleman denies that this trend is in any way bound up with our decision to abrogate the spirit of the Simonstown Agreement and denying defensive arms to South Africa. He restated Government policy on 30th April: Our policy … is to maintain the arms ban but, subject to that, to increase trade."—[OFFICIAL REPORT. 30th April, 1969; Vol. 782, c. 1427–8.] That, I believe, is the position today. I suggest that this policy is complete hypocrisy.

If the Government believed that South Africa's policy was so outrageous that we should have nothing to do with South Africa. I would disagree but I would understand their attitude. But they do not say that. I understand their point of view is to say to South Africa, "We will not supply you with arms, even those that could not possibly be used for internal purposes, although we are jointly responsible for the defence of the Cape route; yet we expect you to bunker and restock our ships at your ports now that the Suez Canal is closed and to buy everything you possibly can from us. But we cannot trust you with arms for your self-defence.' This is the picture that has gone out to South Africa.

I want to underline this by quoting a letter which I received from a man who is the chairman of a small company in South Africa. He is an English-speaking South African who should be sympaethetic to our cause, and he comes from Capetown. I sent this letter to the Board of Trade when I received it about a year ago. I should like to quote two paragraphs. I ought to explain first that it followed an exchange which I had with the then Minister of State, Board of Trade.

One paragraph says: I cannot but draw the conclusion that the latter is as abysmally ignorant as the rest of his Government on affairs in South Africa. The denial of arms to this country on grounds that are so patently stupid as not to merit comment is a factor that has created a dislike and contempt that will take years to overcome. He went on: If the Minister has 'no indication that business has been lost' he must be extraordinarily ill-informed. Mine is not a large company, but I who bought 'only British', now stipulate that we buy only when we cannot obtain it elsewhere. The result shows a rough figure of plus or minus £100,000 over the last five years. My company is merely one of thousands spread over this country. The Government's excuse is that they must obey the orders of the United Nations. I suggest that this is merely an excuse because, on the one hand, the French, who are also members of the United Nations, supply arms to South Africa which were traditionally supplied by us and, on the other, the Government, quite rightly, refuse to accept United Nations demands about Gibraltar.

There are certain items which fall between those which may be termed arms or military exports and normal commercial trade. Here, too, the Government's action prejudices certain British firms. I refer, first, to the supply of spare parts for certain civil aircraft for which, I understand, it takes a long time to obtain export licences from this country, so much so that the South Africans are now going to other European suppliers where they can obtain spare parts immediately.

There is, secondly, the story, which I admit to be pure hearsay, that Her Majesty's Government have actively discouraged British shipbuilding firms from participating in a consortium based on Durban which will initiate the new South African shipbuilding industry on the ground that this company may receive orders from the South African Government for warships. I wonder whether the Parliamentary Secretary will deny that report. I raised it in a Question some time ago.

I turn to the sale of arms themselves. It is estimated that over a five-year period the South Africans would be prepared to spend about £300 million in this country. They need anti-submarine frigates, they want the Seacat, maritime reconnaissance aircraft, the Nimrod; and they want surface-to-air guided missiles, and so on. Obviously, none of those could be used for internal purposes. They also wanted submarines, but they have ordered those from France.

It is essential that the maritime defence forces of South Africa should be fully re-equipped as the Soviet navy extends its influence in the Indian Ocean. I believe that the time will come when Anglo-South African maritime forces will jointly operate from South African ports and so defend what has become the world's most important trade route, certainly the most important trade route in the western world.

I want briefly to refer to three specific examples of lost orders. Some years ago, the Government prevented a follow-up order for South Africa of Buccaneer aircraft, which are made in my constituency. This caused serious alarm and a number of redundancies which were checked only when the Government, having cancelled the TSR2 and the F111, put through a follow-up order for Buccaneer aircraft for the R.A.F. Incidentally, I may tell the House that I tried to secure this order by the R.A.F. 10 years ago, when it would have made far more sense than it does today.

Secondly, two years age, I asked the Government why they had refused an export licence for Nimrod maritime reconnaissance aircraft to South Africa. I was told that no export licence had been asked for, which was true, but the Government know only too well that no foreign Government will place an order in this country, or officially ask for an export licence if it has been made clear to them that it would be refused; it would only be to invite an international snub.

Thirdly, and perhaps most important because it is the most immediate, is the question of Jaguar aircraft. We are informed that the British Government have approached the French Government to prevent South Africa obtaining this new Anglo-French aircraft. This was confirmed by a Written Answer to my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) not long ago. As the French Government have not accepted the Security Council's Resolution 191 of 1964, France is presumably entitled to supply these aircraft to South Africa. Does this, therefore, mean that it is the intention of Her Majesty's Government to embargo those parts of the Jaguar aircraft which are made in Britain? Otherwise, they seem to have got themselves into an impossible position. France is supplying all forms of arms to South Africa at the moment, and I have no doubt that they are perfectly willing, in fact would like, to supply Jaguar aircraft. Have the British Government made a recommendation, or are they trying to impose a veto? If so, on what grounds and on what authority?

Already the Government's policy of not supplying arms to those countries with whose internal policy they do not agree, for example, South Africa, Spain, Portugal and now possibly Greece, has had disastrous effects on the British armaments industry, and has been one of the factors which has caused countries such as Australia, India and Pakistan to order their ships and aircraft from other countries when, in the past, we have been the traditional supplier.

Aattempts to embargo British-made weapons for use in Vietnam have had a similar effect. When the British Government supplied a frigate to South Africa and then refused to supply ammunition, a precedent was created which is known all over the world and this gravely damages the future of the British armaments industry. Have the Government ever estimated the total value of lost British trade through these party political decisions?

I would like to conclude with a tribute to organisations such as the United Kingdom South Africa Trade Association and the B.N.E.C. South Africa Export Committee for the excellent work they have done in spite of the difficulties created by the British Government.

Only history will show the true cost of the Government's mistaken policies over South Africa, and the associated problems of Rhodesia and the Portuguese provinces. For example, the blockade of Beira, which the Royal Navy carries out apparently on behalf of the United Nations in an attempt to stop a country getting petrol, when petrol is as plentiful and considerably cheaper than it is in Britain, only makes us look rather ridiculous in the eyes of the world.

The Government have closed their eyes and their mind to the widespread resentment which their policies are creating in a rapidly expanding area which is probably one of the most profitable in terms of trade and investment in the world today, an area where South African trade with independent African countries is increasing and where relations with these countries are improving.

I know that it is too much to expect the Government to change their mind, but I hope that the people in South Africa will appreciate that the policy of the Government in the supply of defensive arms is a matter for the Government and not for the British people, and that it will be reversed at the next General Election when the Conservatives come to power.

2.14 a.m.

Mr. Kevin McNamara (Kingston upon Hull, North)

I am grateful to my hon. Friend the Parliamentary Secretary for giving me a few moments in which to reply to some of the points made by the hon. Member for Haltemprice (Mr. Wall).

The hon. Gentleman spoke about the Government not supplying arms as being dirty work, as though it had never been done before, but if we take his logic to a conclusion it would mean that we should sell arms to Russia and missiles to Cuba, and go cap in hand to every country where there is political oppression, asking them to buy a few atomic warheads. The argument is not political, but moral, and concerns our basic values.

As the hon. Gentleman has mentioned petrol in Southern Rhodesia, I should like to know from my hon. Friend the Parliamentary Secretary why we should be trading at all with a country which, we know, supports a rebel régime in Southern Rhodesia, whose forces are in that country and which is helping to support a régime which is in rebellion against our liege lady the Queen.

Secondly, I would like to know to what extent these figures would have been lower if there had not been such a leak in sanctions. How many cases like the South African breweries case, for example, exist?

The hon. Gentleman tried to build up an artificial distinction between modern sea defensive weapons and weapons for use internally, but any weapons which we supplied would not only create a bad impression on the native population in Southern Rhodesia, but would bolster up a Fascist dictatorship of the worst kind. Any demonstration of strength that could result would be terrible.

The régime there is a denial of everything that is sacred to our Western liberal and Christian civilisation. It denies individual dignity, that man is made in the image and likeness of God. It denies equality before the law, as recent events have shown. It denies equality of opportunity. It has been described as a "bastion of Christian civilisation". If that is the case, I suggest that we in this. House and in this country want no part in it. Individual dignity is there repressed. Racial discrimination is there practised.

I would say this to the hon. Gentleman—he might care to ponder on it: It is still an obstacle to collaboration among under-privileged nations and a cause of division and hatred within countries whenever individuals and families see the inviolable rights of the human person held in scorn, as they themselves are unjustly subjected to a régime of discrimination because of their race or their colour. We are deeply distressed by such a situation which is laden with threats for the future That is from paragraphs 63 and 64 of "Populorum Progressio".

I suggest that we in this House reject everything that the hon. Member has said. It is completely alien to all the traditions of our great country.

2.32 a.m.

The Parliamentary Secretary to the Board of Trade (Mrs. Gwyneth Dunwoody)

The hon. Member for Haltemprice (Mr. Wall) has waxed slightly synthetically indignant this morning, even given the rather unusual hour. He has dragged in as a witness from time to time things which he himself has begun by castigating as hearsay. He will understand that I have been long enough in politics never to confirm or deny something which he himself has raised as hearsay.

Let us talk about the facts of trade with South Africa. South Africa has traditionally been one of our largest export markets, and it still is. Last year, she was the fourth largest market for British exports. The value of these exports has varied over the years but the trend has been upward. For the year 1963, our exports exceeded the £200 million mark for the first time. Continuing expansion led to record exports of over £261. million in 1965. In 1966, total South African imports were reduced and our own exports there fell short of the 1965 peak Nevertheless, 1966 was the second highest figure recorded up to that time.

An advance on this figure was made in 1967, and in 1968 the sterling value of our exports was again over £260 million—only about £½ million below the 1965 record.

Mr. Wall

rose—

Mrs. Dunwoody

I must, with the hon. Gentleman's permission, point out that he has taken a considerable time in this Adjournment debate and that he must allow me to attempt to reply.

So far, I have been talking about the sterling value of our exports, but we also have to study the size of our share in the South African market. The South African economy has been growing, as the hon. Member has said, and despite considerable variations from year to year, the long-term trend has been for total South African imports to increase. We would prefer Britain to have maintained or improved its share in this expanded trade but, as the hon. Member for Haltemprice has indicated, our share in the trade has been reduced.

This is not a new development. In 1958, we held about 34 per cent. of the market. By the early 1960s our share had fallen to 29 to 30 per cent. This trend has continued in recent years and in 1968 our share was about 24 per cent. The amount of our trade continues to be large, as the figures which I have given show, but we now have a smaller share of a much larger total trade. In the face of increasingly severe competition we still supply more goods to South Africa than any of our competitors.

The hon. Member for Haltemprice referred, also, to our imports from South Africa which increased from £220 million in 1967 to £271 million in 1968, and noted that the balance of trade in 1968 favoured South Africa. This was the first year in which the balance has not been in our favour. The hon. Member has made great play with a genuine mistake which my right hon. Friend made in giving an Answer to Questions. I would have thought that the hon. Member had been long enough in the House to have known that when a Minister is prepared, as my right hon. Friend was, to correct his own mistake later in the House, it would be a very self-confident Member of the House who would be prepared to say that in no circumstances would he, the hon. Member, ever have made a similar mistake.

Mr. Wall

I did not say that.

Mrs. Dunwoody

Most of our imports from South Africa are raw materials for our industries, and food, although the largest single item is diamonds, which account for 35 per cent. of the total. The largest element in the 1968 increase in imports was a £20 million increase in diamond imports caused by higher prices arising from devaluation and increased demand. Our diamond imports are practically all re-exported after initial processing, and considerable sums are earned for Britain in this way. The increase in other imports is derived from devaluation and the maintained high demand for all imports. In the case of maize, there were increased South African supplies on the market.

It is not essential that our trade with South Africa should balance, and in terms of balance it is our trade with all countries which is important. Food and raw materials have to be imported from one source or another. In any case, nearly all our large diamond imports are re-exported and, as I noted earlier, we have very considerable earnings from our direct investments in South Africa.

There is no single reason for the change in our share in the market over the years. The hon. Member for Haltemprice has laid great stress on effects of the embargo on the supply of arms to South Africa, but the fall off in our share of the South African market was in train long before the embargo was introduced, and I do not agree that the embargo is a significant factor in this context. If I have time I should like to deal with that in detail later, but I would, first, like to draw attention to other factors.

In the first place, other countries have developed their export trade. Competition in the South African market has become intense, and South Africa has diversified, to some extent, its sources of supply. Secondly, the emphasis of our own export trade has been shifting from the Sterling Area as a whole towards the industrial countries of Europe and the U.S.A. Thirdly, in 1968, our share in the market in terms of South African Rand was particularly affected by the change in the exchange rate arising from sterling devaluation.

There is another factor. Besides being South Africa's largest supplier, Britain's investment in South Africa is larger than that of any other country. Many British companies have established manufacturing subsidiaries or other manufacturing interests in South Africa. This is a natural development in our long-standing relationship with South Africa, which has been further encouraged by South African measures designed to promote the development of local industry.

Manufacture in South Africa by British companies often cuts out or changes the nature of exports from Britain, but our investment produces a return in invisible earnings. Net earnings from our direct investments in South Africa are around £60 million a year and South Africa is the second largest source of such earnings.

Lastly, there is the question of the arms embargo upon which the hon. Member for Haltemprice has chosen to lay such great stress. I am sorry about this, because talking about the embargo and its supposed bad effects on our trade itself damages our trade. On the one hand, our exporters and potential exporters are deterred. On the other, in South Africa, where anything said about the embargo is always news, buyers can conclude that our embargo may extend or might be extended to the civilian field.

The Government have given assurances that deliveries are not at risk, but this point, and the fact that most other Western countries apply the embargo is often discounted or overlooked. The arms embargo is not peculiar to the United Kingdom. Our embargo is in line with a resolution of the Security Council which is followed by the majority of the members of the United Nations, and it affects a specific and limited field.

Obviously, the embargo is not liked in South Africa, but we have no reason to believe that South Africa wants the embargo to have effects on a wider area of trade. I am, of course, aware that there is some talk of non-military trade being lost over our arms embargo, but our inquiries have disclosed little hard evidence—as opposed to hearsay—of this. South Africa remains one of our largest customers and we continue to gain orders in both public and private sectors. We also continue to be the largest customer for South African exports.

All the usual official services are available to help exporters to all parts of Africa. But competition is fierce and our exporters will need to exert effort. The Board of Trade have assisted over 130 British companies to participate in four trade fairs in South Africa in the last 15 months and are planning to give assistance for five exhibitions in the next 12 months. The Board have also helped with special promotions of British goods in South African department stores. With the assistance of the Board of Trade, the British National Export Council sponsored 11 trade missions to South Africa in 1968. This year the number is likely to be 14.

It has been suggested that our trade with South Africa should be curtailed. The Government are opposed to racial discrimination—as their record clearly testifies—but we do not believe that Britain should stop trading with countries because we disagree with the views of their Government. Our policy on South Africa has been made plain enough in the past and the Government have stated on a number of occasions that we do not intend to contemplate economic confrontation with South Africa.

I do not think that the hon. Member has even begun to make out a case.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Three o'clock, a.m.