HC Deb 25 October 1971 vol 823 cc1221-2
30. Mr. Bruce-Gardyne

asked the Secretary of State for Trade and Industry what representations he has made to the United States Government regarding the incompatibility of its new system of tax credits on manufacturing plant restricted to plant of United States fabrication with the rules of the General Agreement on Tariffs and Trade.

Mr. John Davies

I would refer my hon. Friend to the Answer given to my hon. Friend the Member for St. Marylebone (Mr. Kenneth Baker) on 18th October.—[Vol. 823, c. 22–4.]

Mr. Bruce-Gardyne

That is a very satisfactory answer. Will my right hon. Friend tell the House whether he has yet received a reply from the American Government to his aides-mémoire? As these tax discriminations are an outrageous breach of G.A.T.T.—even worse than those perpetrated by the last Government in this country—will he point out to the American Government that British manufacturers of capital goods would at present benefit appreciably from a decision to exclude goods of American manufacture from our own system of investment allowances?

Mr. Davies

I appreciate the point made by my hon. Friend. Indeed, as he knows, representations in the firmest terms have been made on the subject. I have had no official response as yet to those representations.

As to the benefit which could be given to this country by, in some sense, seeking a reprisal, I deplore such a development because, if such reprisals were undertaken, we might begin in serious downward spiral in international trade.

Mr. Mason

Will the right hon. Gentleman explain that he has protested not only about the tax credits and the 10 per cent. import surcharge, but about the whole protectionist package which is now causing some trade harm, is certainly causing trade reaction, and is likely to develop into a trade war?

Mr. Davies

I hope not. I hope that, with flexibility on all sides, we shall reach a satisfactory conclusion in this difficult matter. I do not believe that rather sharp comments at this stage will materially help.

Mr. Kenneth Baker

Has the Minister seen the estimate that, if these measures are continued by the American Government, unemployment in Western Europe as a whole will rise by 300,000? Will he take firmer action with Mr. Connally and make clear that British industry cannot withstand these discriminatory measures for much longer? Will he also suggest to Senator Kennedy that the text of his next speech should be the iniquitous and harmful trading policies of the American Government?

Mr. Davies

I have certain sympathy with what my hon. Friend says, but I shall restrain myself from making too barbed comments.