HC Deb 18 November 1974 vol 881 cc871-5
7. Mr. Jay

asked the Secretary of State for Trade what was the visible trade deficit of the United Kingdom with the previous EEC Six in 1974 to date at annual rate, compared with the corresponding deficit in 1970.

22. Mr. Biffen

asked the Secretary of State for Trade what is the current balance of trade between Great Britain and the original six members of the EEC for the most recently available six months; and how this compares with the corresponding period before British membership of the Common Market.

Mr. Shore

The "crude" trade deficit—that is, the difference between exports valued fob and imports valued cif—in the first 10 months of this year was £2,075 million expressed at an anual rate compared with £69 million in 1970. In the six months ended October the deficit was £1,076 million compared with £246 million for the corresponding period in 1972.

Mr. Jay

Does not this enormous swing into deficit throw a remarkable light on the promise that this great home market would solve all our economic problems? Is not our trade deficit with the EEC this year equal to, if not greater than, the whole of our non-oil current balance of payments deficit?

Mr. Shore

It accounts for the greater part of the non-oil deficit in trade with the rest of the world. On the first point raised by my right hon. Friend, the answer is that those who so misguidedly believed that there would be benefits to Britain's trade from entry into the EEC cannot possibly have had their hopes more massively ruined than they have been by the figures that have emerged since 1st January 1973.

Mr. Powell

Are not these figures evidence that the general pattern of British trade as a whole is likely to be less favourable to the interests of this country inside the EEC as it is at present than outside it?

Mr. Shore

This is a very serious question, which has certainly been giving me a great deal of anxious thought. I cannot yet say. Part of the difficulty in dealing with the situation is that one has had only about 22 months or, if one allows for the pre-accession year, 34 months, to be certain about what the facts themselves purport to show.

Mr. Roper

Does my right hon. Friend accept that part of the reason for the deterioration of the trade balance with the Community has been the diversion of cereal purchases from North America to the European Community and that this has represented a net benefit to our balance of payments?

Mr. Shore

It is a little difficult to establish that this is so. It might be so exceptionally in the case of cereals, for which, as we know, world prices have been above Community prices. On the other hand, it also reflects a diversion of trade in terms of dairy products. I know that my hon. Friends would not wish me to pretend that dairy products are not more expensive inside the Community than they are outside it.

Mr. Adley

Does the Minister think that people on the Continent work a little harder, perhaps, than we do? Has that anything to do with the figures?

Mr. Shore

I do not accept that at all. But if that was what the hon. Gentleman and his hon. Friends thought two or three years ago, perhaps they should have warned the British people of it.

16. Mr. Marten

asked the Secretary of State for Trade what is the current rate of trade deficit with the Common Market.

21. Mr. Moate

asked the Secretary of State for Trade what is the current rate of trade deficit with the Common Market; and what percentage this represents of our total non-oil deficit.

Mr. Shore

The trade deficit with the other members of the EEC, on a balance of payments basis and seasonally adjusted, was £1,368 million in the first nine months of 1974. Excluding trade in oil, the deficit with the EEC was 63 per cent. of our total non-oil deficit.

Mr. Marten

I acknowledge that exports to the Common Market have risen marginally since we entered, much in line with the way they rose before we entered, but how long can Britain continue with a trading deficit like this? Is there any unilateral action which the Government could consider in order to put right this terrible state of affairs, or would it offend the mandarins of Brussels if we were to do so?

Mr. Shore

I assure the hon. Gentleman that no concern about giving offence to the mandarins of Brussels, as he puts it, will dictate my attitude towards this question. I remind him—it is a serious point—that in May, for the widest pos- sible reasons, we subscribed as a Government, under the auspices of the OECD, to a declaration not to interfere in the direct regulation of imports for at least the next 12 months—that is, from May onwards. That is an extremely important pledge, because I should greatly fear in the present climate of world trade that one action by us, however much the figures might on the face of them justify it, would lead to a chain reaction which none of us would wish to see.

Mr. Raphael Tuck

In the light of these staggering deficit figures, and since M. Chirac stated publicly last Friday that it would be impossible to renegotiate such a young treaty and that if Britain did not like it she must make other arrangements, does my right hon. Friend think that there is any point in trying to renegotiate the treaty?

Mr. Shore

I think that renegotiation as such has only just begun. It has only just begun because of the uncertainties in the Community about whether there was a continuing Government to deal with, and that matter could not be made certain until the voters made their decision clear in October. Now, however, we are entering a serious period of renegotiation, and I would only say to my hon. Friend on this matter that I expect we shall have the answer quite clearly and unmistakably in a few months.

Mr. Moate

Are not the figures so bad for Britain and so good for the Six that, if in the context of renegotiation it were to be proposed that Britain should leave the Community, it would plainly be advantageous to the Six to continue some form of trading arrangement with this country? Would the presentation of such an alternative be part of the renegotiation package so far as the British people are concerned?

Mr. Shore

It is a little early at present to think about the alternatives, although I have never disguised from the House or anyone else interested my own view that the most acceptable alternative would be a form of free trade area agreement with the countries of the EEC. But, of course, the hon. Gentleman scores a perfectly fair point. The British market has always been of considerable value to the countries of the Six, just as we also have a great interest in their market, and I should not imagine that they would be prepared to take action which would lead to their loss of access to the British market.

Mr. Luard

Does my right hon. Friend agree that it is misleading to compare the figure of deficit in this year with the figures for 1970, as he did a few moments ago, when to do that is to compare what is happening at a time when we are in grave deficit—£4,000 million in total—with what happened in 1970 when we had a considerable balance of payments surplus? Is it not, therefore, a misleading comparison? Will my right hon. Friend acknowledge also that it is not true to assert, as he did just now, that many people have stressed that there would be short-term trading benefits from our entry into the Common Market when what most of us have always argued is that there would be a difficult period of readjustment, after which we should find ourselves in the long term in a more favourable trading position?

Mr. Shore

I understand what my hon. Friend says. I do not think that he was in the House when we had our long and detailed debates about entry into the EEC. I remind him that a large part of the case which was argued by the present Opposition in favour of the proposition for entry was the immense gains which would accrue to Britain straight away in terms of membership of the Community, with a home market of 250 million people, as they used to say. Indeed, I remember that during the White Paper campaign in the country it was actually put to the British people that the decision to go in was worth about £5 a week on the average wage. [HON. MEMBERS: "Seven."] As always, I understate my case I did not deliberately choose the year 1970 for comparison with 1974. That was embodied in the Question I was asked. I direct my hon. Friend's attention to the major point in my reply, which is that of our non-oil trade our deficit this year with the EEC accounts for 63 per cent. of the total, while our trade with the EEC is no more than about 30 per cent. of the total.