COMMONWEALTH PREFERENCE AREA (Hansard, 19 May 1972)

§ Sir Ronald Russell (Wembley, South)

I beg to move, That this House urges Her Majesty's Government, notwithstanding any reorientation of policy towards Europe, to make every effort to expand our trade with the Commonwealth Preference Area, and to stimulate investment in these countries, especally in view of recent discoveries of minerals, oil and natural gas in and around the shores of the older Commonwealth countries, which hold out possibilities of vast expansion and growth. I am glad that even a quarter of an hour has been left to debate this Motion. I am grateful to my hon. Friend the Under-Secretary—to whom I wish great success in his new post—for being here this afternoon and showing considerable patience waiting for the debate to begin. I shall try to put as much as I can into a number of questions.

My hon. Friend will be aware that in 1971 nearly 30 per cent. of our imports came from the Commonwealth preference area—which includes South Africa, Eire, and Burma, as well as the countries of the Commonwealth—and 31.per cent. of our exports went to that area. It therefore has an important share of our export trade, and we must do everything we can to maintain it, despite the possible reorientation of our trade towards Europe.

If we enter the EEC, will steps be taken to negotiate tariff quotas on certain commodities, especially those from the Commonwealth which do not compete with commodities grown in the EEC countries? Examples already exist. Bananas which come into the EEC are subject to tariff quotas. Germany gets her bananas from Ecuador; Italy gets hers from her former Italian colonies, and France from her former colonies. I gather that the EEC also gives tariff preference to citrus products from California.

I suggest that the United Kingdom could easily be allowed a tariff quota in respect of apples and pears from the southern hemisphere—Australia, New Zealand, South Africa, and possibly Argentina—whose produce comes to this country between March and July and does not compete with European produce.

952 The EEC has also made tariff preference arrangements outside GATT to give tariff quota preference to citrus products from Israel and Spain. I suggest that a commodity that is ripe for a tariff quota is Commonwealth and South African wine. Commonwealth wines, as the House knows, come from Australia and Cyprus. If we are to avoid the disaster that occurred in 1860, when the Empire preference given to wines was abolished, we must do something on the lines that I suggest. In the 10 years between 1860 and 1870 imports of wine from the Empire fell from 600,000 gallons a year to only 40,000 gallons a year, and then even lower, to 10,000 gallons, in 1896.

I suggest, possibly through arrangements with the EEC, that we could try to keep that trade so as to help the wine growers of the Commonwealth countries.

I also hope that if we go into the EEC the common external tariff will be recalculated on the basis of the Ten and not the existing Six. I cannot understand why that was not insisted on in the negotiations. The United Kingdom, Norway, Denmark and Eire form a considerable section of world trade, and calculations should be based on the average of the Ten, and possibly even on the weighted average of the Ten, bearing in mind the quantity of imports and not merely the arithemetical average.

I suggest that a particularly valuable example is to be found in canned fruit. At the moment, the EEC rate of duty is 24 per cent., whereas the highest United Kingdom duty on foreign canned imports is about 12 per cent. and Commonwealth canned fruit comes in free. This kind of thing should have been thought about and negotiated while the other negotiations were going on. It will make a considerable difference to the imports of canned fruit from Australia. South Africa, Malaysia and even Commonwealth countries. The whole range of EEC tariffs should be recalculated on this basis.

I hope that thought is being given to the effect on Australia. I gather that Mr. Douglas Anthony, the Deputy Prime Minister, has again asked for the talks to be re-opened on the transition period when imports from Austrialia will be phased out. I hope an assurance will be 953 given that those negotiations will be reopened. The way things went in Brussels caused a great deal of unhappiness in Australia.

I now turn to United Kingdom exports which will obviously be vital. Two years ago a Commonwealth expert calculated that if Commonwealth preference on United Kingdom exports into Canada, Australia and New Zealand on certain classes of goods were abolished, we should probably lose about £200 million of exports to those three countries. If one adds the invisible exports as well, it might easily amount to £250 million or £300 million. That was after estimating only three classes of exports: machinery, electronic and transport equipment. I hope that matter will be looked at.

I remind my hon. Friend, if he needs any reminding at all—I am sure he does not—that this export trade has a long history. It goes back further than 1932. It has been part of our traditional trading history for 250 out of the last 300 years. It was re-introduced by the old Commonwealth countries at the beginning of this century before we reciprocate. It was not until about 1932 that Britain reciprocated in giving preferences on imports from Commonwealth countries. That has built up a great traditional trade with those Commonwealth countries which we should preserve.

Lastly, over recent years there have been tremendous discoveries of minerals, oil and natural gas, in and around the shores of the older Commonwealth countries, including South Africa and, of course this country. I suggest there is a terrific potential for selling sophisticated machinery and equipment of different kinds to develop those resources. That is the trade we should be concentrating on. I am sure it will bring a great future if we can do so. In view of the shortage of time I will not detain the House longer. I should like my hon. Friend to answer some of these matters.

§ The Under-Secretary of State for Trade and Industry (Mr. Cranley Onslow)

I am grateful to my hon. Friend for his kind remarks. I know he has had a long interest in the matter which he has outlined very briefly to the House. Owing to the shortage of time, I could do better justice to the questions my hon. Friend 954 has asked if he would allow me to write at some length and give him constructive and carefully reasoned answers rather than attempt to rush through and answer them in the few minutes available.

Regarding the talks with Australia, I can tell my hon. Friend that the commodity-by-commodity talks were helpful, and there are to be more talks. However, I can hold out no hope that the settlement at Luxembourg is open to renegotiation. He must understand that the position is a fixed one on that basis.

The broad tone of the Motion to which my hon. Friend has spoken is one to which the Government respond in a positive way. Whatever changes there may have been in the long years during which this country has dealt with those overseas territories that now go by the name of the Commonwealth, there is no diminution of interest in the Commonwealth because of the developments which have brought us closer to Europe at the end of that long story.

It may be appropriate in a way that we are debating this subject in this fortieth anniversary year after the Economic Conference at Ottawa, and perhaps it is even more appropriate that we are debating it on a day when my right hon. Friend the Prime Minister has made a flight in Concorde because my hon. Friend may, like me, see in the technological progress which Concorde embodies the way in which this country and the rest of the world will be brought closer together and the way in which we are best placed to exploit our skills and maximise our trading opportunities with our partners in various parts of the globe.

Perhaps it would help my hon. Friend if I were to mention briefly the statistical background to the situation to which he draws attention. As he said, in 1971 our imports from the Commonwealth Preference Area amounted to £2,460 million, or 25 per cent. of our total world imports. Those figures omit the Irish Republic with which we have a Free Trade Agreement which largely supersedes Commonwealth Preference. In the same year, exports to the Commonwealth Preference Area totalled £2,413 million, that is to say 26 per cent. of our exports world wide. We cannot afford to lose exports of that magnitude, 955 and I am certain that industry understands and shares the Government's view that it would be in nobody's interest, least of all in the national interest, to neglect markets which account for so large a proportion of our export earnings.

It is true that these markets are no longer cosy and protected—if ever they were. Our success in trading with them depends perhaps on the historic goodwill which we can still enjoy, and which may occasionally tip the balance in our favour, but basically it depends on our ability to compete. It is technology, quality, price, delivery and marketing skill which will count in many cases. The crucial factor may be a different one in different places. It may be technological sophistication in some places, in others delivery, and in yet others after-sales service. But we must understand that in the Commonwealth Preference Area we have something which extends over the globe, and marketing in it, including services and visits to and from that market, is as essential as in other markets, even if they are nearer at hand.

My hon. Friend urges the Government to make every effort to expand their trade with the Commonwealth Preference Area. I assure the House that the entire range of Government export services is available to exporters and potential exporters to the Commonwealth Preference Area. About one-third of United Kingdom-based commercial Diplomatic Service officers are in Commonwealth Preference Area countries. The assistance and activities under the control of the British Overseas Trade Board are regularly used by exporters to Commonwealth Preference Area markets.

My hon. Friend expressed anxiety about the effect of our entry into the 956 Common Market on imports of wine from Cyprus. Having been lucky enough to pay two visits to the Limasol Wine Festival to sample—in an abstemious fashion, of course—the excellent products of that country, I believe that they will command a growing market here on the basis of their quality. I see on the benches opposite at least one hon. Gentleman who was lucky enough to be with me on one of my visits.

We have to accept that we can use a whole variety of techniques in promoting our trade with Commonwealth countries. In Canada we participated successfully in the British Columbia International Trade Fair last year. In Singapore there was a British Industrial Exhibition which attracted influential people from all over Malaysia. Next October a British Industrial Exhibition is to be staged in Hong Kong.

Coming back to the subject of Concorde, I hold the view—and I hope that the House shares it—that the tour to Australia which Concorde is to embark upon shortly will be a magnificent opportunity to promote a British-French achievement—at least 50 per cent. British—and show that we have the most powerful of all interests in promoting this great achievement in the context of the Commonwealth.

My hon. Friend also drew attention to the mineral resources of the older Commonwealth countries in particular. I am sure that he knows of some of the more important examples of participation in this respect, including the Mount Goldsworthy and Hamersley iron ore operations, the Queensland bauxite-alumina complex, and the Bougainville copper project in Australia.