§ 9. Mr. Peter Morrison
asked the Secretary of State for Trade what are his latest projections for the balance of trade for the year ending 31st March 1977.
§ 29. Mr. Neubert
asked the Secretary of State for Trade what is his latest estimate of the balance of trade for the current year.
§ Mr. Dell
The latest external trade figures show that, under the impetus of renewed export growth, our visible trade balance continued to improve in the first quarter of this year following the marked reduction in the deficit between 1974 and 1975. The prospects for our exports in the coming year are very favourable and provide a strong expectation that the improvement in visible trade will be maintained.
§ Mr. Morrison
How have the original projections been affected by the fall in the £ sterling? As a result, how much will be added to our import bill?
§ Mr. Dell
There are two such effects. The first is the well known "J-curve" effect, which increases the values of one's imports. The second effect is that there is likely to be a stimulus for exports. As I said in my answer, we think that over the years the balance between those two effects will be to continue the favourable development of our visible trade position.
§ Mr. Madden
Does my right hon. Friend accept that the textile industry, for instance, has suffered, and is suffering, a great deal from cheap imports in terms of both volume and price? Can he say 896 what policy the Government will pursue in the renegotiation of the Multi-Fibre Agreement and in other international agreements towards defending the British textile industry to a greater extent than is the case today?
§ Mr. Neubert
Will the Secretary of State confirm that the British aircraft industry is making an outstanding contribution to our export achievement? Does he agree that it would be helpful to its trading position if he were to persuade his Cabinet colleagues to drop the nationalisation Bill?
§ Mr. Cryer
Does not my right hon. Friend agree that in order to maintain and improve the balance of trade we shall have to make use of selective import controls? With the Labour Government believing in a balanced economy, is it not foolish to ignore selective import controls and allow free entry of many goods which are wiping out parts of our industry, particularly manufactured and semi-manufactured goods?
§ Mr. Dell
The position of the Government in respect of selective import controls was stated clearly by my right hon. Friend the Chancellor in his Budget Statement. If anything, the reasons for the position he then instanced have strengthened and not weakened since that time. Regarding the use of selective import controls, we have never ruled this out in particular cases but it would be absurd at this moment, when we have a major opportunity of expanding our exports, to put that possibility at risk.
§ Mr. Dykes
Will the Secretary of State realise that his answer to my hon. Friend the Member for City of Chester (Mr. Morrison) was characteristically feeble and unsatisfactory? He did not answer the question at all. Will he now say clearly 897 by what specific mathematical ratio he would expect the terms of trade this year to deteriorate, and by what amount, as a result of the fall in sterling over the past fortnight?
§ Mr. Dell
I am afraid that the hon. Gentleman must expect another feeble reply if he expects me to give specific mathematical ratios to calculate the effect of the depreciation of sterling on our balance of trade. Obviously there are a number of uncertainties in this situation, but I think that overall the effect will be beneficial.
§ Mr. Higgins
Will the right hon. Gentleman inform his hon. Friends that the effect of the massive depreciation of sterling recently has been to give a considerable degree of protection to domestic industry? Will he confirm—will he, indeed, reassert as strongly as possible—that the Government rule out import controls, because on top of the fall in the value of sterling they would undoubtedly create a situation which would be likely to lead to a trade war and "beggar my neighbour" policies—a situation from which Britain would lose more than anyone?
§ Mr. Dell
It is certainly true that the depreciation of sterling gives greater protection to domestic industry and should make easier both import substitution and the expansion of exports. The Government have always made it clear that we ruled out generalised import controls, but in December we took certain specific steps which we thought were justified in those particular cases. But we have always ruled out generalised import controls.
§ Mr. Hooley
Does my right hon. Friend agree that the statement by the hon. Member for Worthing (Mr. Higgins) is only partly correct, since in terms of imports of raw materials we shall have to pay substantially more because of the depreciation of sterling? Is he aware that the chemical industry alone will find an extra £300 million on its bill in the next three months?
§ Mr. Dell
Yes, I have seen a statement by the chemical industry. My hon. Friend will have seen that the Chemical Industry Association, by which it was made, also said that it expected this £300 million increase in imported material 898 costs to be far more than compensated for by the additional exports.