HC Deb 13 April 1972 vol 834 cc1569-78

10.32 p.m.

Mr. Frank Judd (Portsmouth, West)

This week the fight for economic justice for the developing world will come to a head in Santiago, Chile. For five weeks starting today representatives of Africa, Asia and Latin America will be locked in confrontation with representatives of the industrialised world at the third United Nations Conference on Trade and Development. There will be some 2,000 delegates there from more than 130 countries. It is a sad reflection on our parliamentary system that in the midst of our insular pre-occupations no time has been found to debate what British policy should be at this conference, which is so vital for humanity. Once more, just as happened with Ireland in the past, we are in danger of failing to take seriously a major problem of the future until it overtakes us.

Already in the developing world outside China there is an overall unemployment rate of some 30 per cent. During the next 10 years the population of working age in those same countries will increase by a further 25 per cent., or 225 million. This increase cannot be prevented. The people are already born. It represents a gigantic potential social and political explosion which could literally engulf us all. Few countries are more dependent upon their economic, political and social links with the rest of the world than Britain. It is, therefore, as foolish and dangerous as it is immoral for the House to ignore the major challenge.

Despite the efforts of economically advanced nations to push the world monetary crisis well down the agenda at Santiago, there is little doubt that the spokesmen for the so-called third world see it as fundamental to their struggle for progress, and that, therefore, they will wish to ensure that it receives priority attention. Support for their cause has been forthcoming from Manuel Perez Guerrero, the Secretary-General of the United Nations Conference on Trade and Development. In his report to the conference, referring to the crisis he stresses that for the developing countries the most pressing need in the reform of the international monetary system is how to provide for an adaptation of that system that would make it more responsive than it has been hitherto to the problem of development. Guerrero emphasises the magnitude of the task. He says: It is a crisis not only of individual countries or groups of countries, but of the system itself. It demonstrates that the arrangements drawn up at Bretton Woods a quarter of a century go no longer provide a fully adequate framework for the further expansion of the world economy. Nor is the crisis confined to the international monetary system alone; it encompasses the entire range of international trade and finance as well as world output and employment. Those are the thoughts of the Secretary-General as the conference assembles.

In recent months there has been a series of meetings at places like Lima, Addis Ababa and Bangkok where representatives of the third world have assembled to prepare their case for the Santiago Conference. When one examines what has gone on at these preparatory assemblies it is clear there will be a demand that so much of the initiative in organisation of the world monetary system with its far-reaching consequences for the less developed countries can no longer be left to the Elitist Group of Ten alone. There is no doubt that for the developing world this management of the world economy by the Group of Ten smacks of economic imperialism. A direct presence for the majority of mankind at these deliberations in future will almost certainly be sought.

In support of this proposal, which I suggest deserves our support, it will be argued that the degree to which the world trading and monetary system is weighted against poorer countries is illustrated by the disastrous decline in the producing power of their export earnings. In 1950 their exports were 30 per cent. of world trade. By 1970 they were only 19 per cent. Where it took one ton of cocoa exported by Ghana in 1960 to buy a tractor, today it would take five tons. More recently the depreciation of the dollar may have added some 950 million dollars losses to the producing power of dollar reserves held by almost 100 developing countries.

It is not only on this front that the real commitment of the industrial countries to development will be tested at Santiago. Ninety-five developing countries have collectively prepared a further list of priorities. These include the international taxation of multinational companies, with the revenue devoted to development; the immediate implementation of aid targets, involving 1 per cent. of gross national product from industrialised countries, with 70 per cent. of that 1 per cent. passing through official governmental and intergovernmental channels; more commodity agreements similar to the Commonwealth Sugar Agreement; greater emphasis on multinational rather than bilateral trade; and loans on softer terms. In that latter connection it is no exaggeration to say that soon the developing world as a whole may be paying back more to the rich world than it receives in aid.

The developing world also demands the untying of aid, the linking of the special drawing rights system to development finance, increased regional co-operation between developing countries, preferential shipping rates, reversal of the trend to intercontinental trading blocs and the dismantling of the common agricultural policy of the European Economic Community.

If we are serious about development, all these demands should receive our attention and support. Yet there has not been a detailed statement to the House on the position of Her Majesty's Government, let alone any opportunity to debate the matter in detail.

Now the conference has begun, and for Britain and her potential partners in an extended E.E.C. the uncompromising request for the end of the common agricultural policy will come at a sensitive time. It inevitably undermines the high moral claims of those who like to argue that membership of the Community will strengthen the base from which to make a worthwhile contribution to solving the economic and social problems of the wider world, for nobody will deny that one non-negotiable cornerstone of the Community has been its common agricultural policy.

On the same score, those who care for the future of the Commonwealth Sugar Agreement and question its chances of long-term survival within the E.E.C. will be tempted to smile wryly at the call for more commodity agreements. The pressure for speedy fulfillment of aid targets also comes at an intriguing time for countries like Britain. At this very moment the British Government are pushing through Committee their Overseas Investment and Export Guarantees Bill, which is designed to strengthen the rôle of private investment in Britain's approach to the developing world, and Ministers are at pains to explain that they do not accept the 70 per cent. official aid target urged first by the Pearson Commission and subsequently by the developing countries in their preparatory deliberations for the present session of U.N.C.T.A.D. As we are now the only major industrialised country which rejects this part of the aid target, it is incumbent on the Government to spell out in more detail why they take this view.

Santiago will provide one of those all too rare moments of truth in international politics. The inescapable logic of a policy genuinely designed to secure the emancipation of the developing world will be pitted against the stark reality of economic power politics as they really operate. The bluff and hypocrisy of the industrialised West and Communist world will be called.

The tragedy is that if the history of the first and second United Nations Conferences on Trade and Development is repeated when confronted with the unyielding selfishness of the wealthy world, the unity of the third world, which is essential for effective long-term progress, will rapidly fragment.

Faced with the dire struggle literally for life or death, one developing country after another may begin to compete with its allies in a scramble for short-term—and, therefore, probably counter-productive—self-interest. There is no shortage of cynical opportunism in the industrialised world waiting to exploit just such a development.

It is perhaps appropriate to recall that the present Prime Minister, in a former capacity, at the first U.N.C.T.A.D. established a very positive reputation. It is, therefore, all the more profoundly disappointing that there has as yet been absolutely no evidence that the Government have taken on board the real significance of the third session of U.N.C.T.A.D. for the developing world and, in the long run, for the industrialised world, of which we are a part.

10.44 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Anthony Grant)

The House will be grateful to the hon. Member for Portsmouth, West (Mr. Judd) for the opportunity which he has given us to discuss this important occasion. I have sat with him in the Committee to which he referred and I know that he takes a very great interest in this matter. We look at what he says with very careful scrutiny. Certainly he may rest assured that the Government regard the problem to which he has drawn attention tonight as one of the great challenges of the world today.

In explaining that he could not provide time for a debate before Easter, my right hon. Friend the former Leader of the House said that he regretted all the more because it would be good for the House, for the country and, perhaps, for the world to know how much the Government and the country are doing in such matters. Tonight we are able to repair this omission thanks to the success of the hon. Gentleman in securing the debate. It is indeed an appropriate time, because in a few hours the conference will begin its work in Santiago.

I have listened with interest to the views of the hon. Member on the policies that he would like us to adopt. If I may say so, one must have respect for his views on this matter. But he would not expect me to agree with every single stricture that he has made. I cannot but feel some concern at the pessimistic light in which all developments seem to be seen. If world trade expands—even though the trade of the developing countries has grown, too—we are told that it has done so at a reduced rate. The implication is that it is to the disadvantage of the developing countries that France and Germany, or the United Kingdom and the United States, are exchanging more manufactured goods than before. But the U.N.C.T.A.D. Secretariat has pointed out that the faster growth in the developed world has been a major cause of the success that the developing countries have had in accelerating their rate of growth in the past decade. Similarly, the developed countries were criticised for exporting inflation, but recent attempts to damp down demand in certain countries to lessen the inflationary processes have led to complaints of their effect on developing countries.

Again, the Lima Declaration suggests that the gap in income per head between developed and developing countries has widened. But how can it be otherwise when the number of heads increases so much faster in most developing countries than in the developed world? We can help solve major health hazards, but the developing countries themselves must help solve population problems.

I mention these points only in order to bring out that complex matters are involved, and to find ways forward we must look at the good side as well as the bad. The record of recent years has many welcome features in it. The average growth target for developing countries was, for example, more than achieved.

I turn now to some of the major issues which will be before the conference, and I shall say something about our policies.

First, international monetary issues have an important bearing on the problem of trade and development and should rightly be discussed at Santiago, even though the body within which decisions will have to be taken will be the International Monetary Fund. The Fund is now considering the question of international monetary reform. The Government recognise that the developing countries must know that their views on reform are being heard, and some way must be found to fill the gap between the ordinary meetings of the I.M.F. board and the full meeting of the governors. We hope that some machinery will be found for a group to meet at ministerial level which will provide adequate representation for developing countries. It will not be easy to get a body at once sufficiently representative and compact for this purpose, but we shall work to find a way.

The proposal that special drawing rights should be linked with development finance is of great interest to many developing nations. The Government believe that, within the context of international monetary reform, this subject should be studied, and they have supported such a study by the I.M.F. But, while this study is being made, our view is that more traditional efforts of sustaining both multilateral and bilateral aid flows must be continued and improved.

Next I should like to say something about aid. Britain has accepted the target of total net financial flows to developing countries of 1 per cent. of gross national product, and we have undertaken to do our best to reach it by 1975. I am glad to say that we did, in fact, reach this target in 1969 and 1970.

But we have been unable to accept the subsidiary target of 0.7 per cent. of gross national product for official aid flows. This is not because we undervalue official aid. Indeed, we consider official aid to be of great importance because of its continuity, its concessionary terms and its availability for purposes for which private capital is not readily forthcoming. But we believe that a subsidiary target is inappropriate. In a country such as Britain in which private investment plays a major rôle in the economy it is natural to expect that a substantial part of the financial flows will be in the form of private investment.

Our own record in providing official aid is, however, a striking one, and we have announced our intention to increase this programme. Over the five financial years 1971–76 an annual increase in constant price terms averaging 7.6per cent. Per annum is planned. This proposed increase exceeds that of Government expenditure in almost every domestic sector of the economy.

We shall also continue to encourage the acceptance of the need for soft terms in aid loans which are appropriate to the circumstances of the individual recipient.

The hon. Member for Portsmouth, West touched upon the problems of indebtedness of developing countries, and I do not have time to deal with it. But I can assure him that we are seriously concerned over this.

I should also like in the short time available to mention the problems of the least developed. We have been giving practical effect to our sympathy for the plight of these countries by directing over 13 per cent. of our bilateral aid to countries on the hard core list. But their problems are diverse and complex, and any general measures to assist them will need to be applied flexibly. But this is not to say that we do not believe that general measures can be found, and we shall join with others at the conference in the search for some common and effective policies to help them.

We have always pursued liberal policies towards primary products, recognising their importance to developing countries, over three-quarters of whose export earnings are still dependent on them. We have joined all the existing commodity agreements, and we are active participants in the many other less formal bodies which exist to deal with the problems of individual commodities. We favour international agreement for tea and cocoa and have recently taken the lead in negotiations in Geneva on cocoa in trying to find solutions to outstanding difficulties. We shall pursue this vigorously.

I should also like to refer to the question of the E.E.C. and Britain's entry. The Community has already shown itself outward looking and has the interests of the developing countries well in mind. Our negotiations for accession were very much concerned with safeguarding the Commonwealth developing countries. There is no reason to fear that the enlargement of the Community will adversely affect the trade to developing countries.

Before I close I should like to say a few words about trade in manufactured goods. Here again the United Kingdom has an exceptional record, springing from the Commonwealth preference system, as an importer from the developing countries. The percentage of our goods met by imports from these countries is higher than that of any other major developed market. Now preferences have been extended to developing countries through the generalised system of preferences, a step which we have advocated since 1964. Our own scheme came into effect on 1st January and it is, we believe, a generous one. We have excepted only textiles and petroleum, and we consider that our scheme and the schemes which other developed countries have introduced offer great potential advantages to the developing countries.

It will, of course, be necessary to maintain some balance between the interests of employment in our own industries and those of the developing countries. But we hope that these schemes will enable the developing countries to achieve a faster growth in their export earnings and in their Industrialisation on a competitive basis. The hon. Gentleman's anxieties in this respect were expressed without his having, perhaps, full regard to schemes which have only recently come into effect.

In the short time available to me I have only been able to mention briefly some of the very many matters of concern to the developing countries which will be discussed in Santiago over the next five or six weeks. I think I have shown that the approach of the United Kingdom delegation, which is led by my right hon. Friend the Minister for Trade, will maintain our record of making positive and constructive contributions to the advancement of the developing countries. The conference has a great rô1e to play in examining the needs of the developing countries and of ways of fulfilling them. Progress will, I feel sure, be made, but I could not, I hope, be accused of pessimism if I suggested that it is difficult to see that progress will be made on every item.

Development is inevitably a slow process but, I stress, a continuous one. I do not, therefore, subscribe to the view that U.N.C.T.A.D. III represents make or break for the developing world. It is natural that the regular sessions of this conference should be regarded by many as an opportunity for making faster progress than has been achieved so far, but we cannot expect the work of U.N.C.T.A.D. to be punctuated by spectacular advance at each session. Major changes of policy cannot come about according to a mechanical timetable. The function of these sessions is, I believe, to sharpen the world's awareness of the problems of the developing countries and to redirect our work into more effective channels. We shall play our proper part in this.

10.57 p.m.

Rear-Admiral Morgan-Giles (Winchester)

By coincidence, I was in Santiago a couple of weeks ago and I saw the building being prepared and completed for the conference.

I should like to add one point to this interesting and brisk debate. I agree with many of the points made by the hon. Member for Portsmouth, West (Mr. Judd), but there is one point he did not make that should be made loud and clear at U.N.C.T.A.D. It is that many countries which we have been discussing need above all capital for development, but they must understand that they cannot expect to attract capital if they scare it away by nationalisation of foreign assets, so often without compensation. We should not be ashamed to make that point loud and clear at U.N.C.T.A.D. for the good of all concerned.

Question put and agreed to.

Adjourned accordingly at two minutes to Eleven o'clock.