Export Credits (Hansard, 18 November 1974)

§ 12. Mr. Stanley
asked the Secretary of State for Trade whether he is satisfied that the export credit terms made available through the Export Credits Guarantee Department are comparable with those made available by our trading competitors.

§ Mr. Deakins
The facilities of the Export Credits Guarantee Department stand comparison with those of any other country. The Government's policy is that the Department should continue to match the credit terms available from our competitors.

§ Mr. Stanley
I welcome the reply by the Secretary of State last week that there are currently only two countries for which the ECGD facilities are being denied—namely, Rhodesia and Ghana—but is the hon. Gentleman aware that British exporters of heavy plant are experiencing considerable difficulty in competing successfully for fixed price contracts in respect of heavy plant because of the lack of availability through the ECGD of a system of insurance against inflation, such as is available through the French export credit agency? Will he take energetic steps to bring ECGD practice into line with that of France?

§ Mr. Deakins
A number of representations have been made to us on this and we have had a number of meetings with the manufacturers concerned, but the problem of inflation is common to exporters in all countries. If we were to support cost escalation it would constitute a subsidy which is not generally available, to our competitors. Where it is available, as in France, and perhaps in Italy with the newer scheme, we are doing our best to press for withdrawal or modification of such schemes. We do not want to get involved in wasteful subsidised international competition in protecting exporters against inflation.

§ Mr. Mikardo
On that point, is it not a fact that what the Department is doing is what we always do when we find our competitors breaking or bending the rules of the game? We go to them and say "You naughty fellows, you should not 881 do this. We want you to stop it." Does not my hon. Friend agree that meanwhile, until our competitors stop the practice, our exporters are greatly disadvantaged by the fact that their West European competitors get facilities which they do not have? Is it not time that the Government pressed the French and the Italians to withdraw their scheme and told them that until they do so we shall provide similar facilities for our exporters?

§ Mr. Deakins
The difficulty is that if we were to introduce such a scheme there would be a heavy cost to public funds because it would involve massive subsidy. That would be completely contrary to our international obligations in OECD. In addition, if the ECGD gave cover in these circumstances all our major international competitors would follow suit and, therefore, our last state would be no better than the first. Last but not least, it would encourage overseas buyers to seek fixed-price contracts, and at the moment there is some leeway for our firms in international competitive markets to bargain for cost inflation.

§ Mr. Warren
Will the hon. Gentleman consider that the ECGD is already tending to bend the rules of its own game by seeking to impose credit limitations before they have been internationally agreed and certainly before those limits have been put before the House and agreed by the Government?

§ Mr. Deakins
The hon. Member had a Question down to my right hon. Friend the Chancellor of the Exchequer on 11th November. I remind him of the answer that we are not proposing to act in the way suggested. International discussions are at present in progress. I would not want to reveal the stage which they have reached because they are still going on and are obviously confidential until we can make a public announcement about them.

§ Mr. Dalyell
On the subject of international obligations in terms of credit, could the French and Italians be reminded of their obligations? There is a good deal of evidence, as my hon. Friend knows, that the present difficulties and the redundancies in Honeywell involving 1,500 people are related to the assistance 882 given by their Governments to Honeywell factories in France and Italy.

§ Mr. Deakins
Where one of our international competitors, in a particular market for a particular project, wishes to give excessively subsidised terms, the policy is that we should try as far as possible to enable our industrialists here to match those terms. But there must be a limit to what we can do, and this is not a desirable policy overall.