HC Deb 23 June 1976 vol 913 cc1772-84

Motion made and Question proposed, That this House do now adjourn—[Mr. Snape.]

12.25 a.m.

Mr. Eric Moonman (Basildon)

I have called for this Adjournment debate on the Arab boycott of British firms because I believe that this House should know what is happening and how it affects this country, and because I believe that it is time the Government came into the open and condemned the boycott.

Many Members may think that the Arab boycott is hardly a matter for this House. It is, they may say, directed against Israel, and, although regrettable, not our business. But it is our business, and for three reasons. First, it is affecting employment prospects in British industry. Secondly, it is playing an increasing role on our trade policy, which will ultimately have an effect on our foreign policy. Thirdly, it is producing situations which directly contravene the Government's race relations policy.

First, on the employment situation, to cut unemployment and promote growth in the economy we need to expand existing import—exports and find new markets. In the Middle East our opportunities for doing this are being severely limited by the boycott.

At first sight the effect of the boycott might appear insignificant since ostensibly it is directed only at firms which engage in commercial or financial transactions which promote the economic development of Israel, but as a result of extensive inquiries which I and others have undertaken recently, it is clear that the extent of the boycott has been considerably enlarged. One reason for this is that the opportunities for exercising the boycott have increased. As a result of the oil price increases more and more British firms are interested in redressing the trade balance by engaging in trade with the Arab countries. In response to this increased interest Arabs are now "blacklisting" not only those firms which trade direct with Israel, but companies which carry on business with firms doing business in Israel.

Companies not already trading with Israel are being asked to promise, as a precondition of developing business links with the Arabs, that they will not seek business in Israel. The process has gone so far that there are now many corporations actually volunteering to fulfil the Arab Boycott Office's demands. The huge Saudi Arabian and other Arab development schemes have given the Arabs leverage in their dealings with some of the largest industrial, chemical, communications and other corporate groups.

Let me be more specific. This month, four leading British construction companies have turned down an invitation to tender for a £9 million project on behalf of the Israel Ports Authority at Haifa, and three others have failed to reply. The firms which refused—Leonard Fairclough, Costain International, Taylor Woodrow International, and John Mowlem—said that they could not take on any new work at this time or that they were not operating in the territory. The total project is for about £140 million over five years. This is a large and important opportunity for British industry.

Can the responses of the companies really be true? Are the building and engineering trade unions satisfied that their members are so over-employed that they cannot even look at this project? Can this country really turn down the prospect of earnings from abroad on a project of this size? Is it not too much of a coincidence that a similar invitation to more than a dozen British firms last year to tender for two tugboats for the same authority was received in the same way? Thirty international companies bid for the contract but not one of them was from Britain. The total order was worth £5 million.

There are other firms which have told me that they cannot risk jeopardising their existing Arab trade by accepting contracts with Israeli customers. Johnson-Richards H. R. Tiles Limited told the Anglo-Israel Chamber of Commerce in connection with a "know-how" agreement that it considered it most inadvisable to become involved with Israel in any way whatsoever. CETEC Systems Limited, a subsidiary of an American company, said it did not consider it in our interest to appoint an Israeli representative or send supplies to Israel. There are, of course, many others. I have not come here to condemn individual companies or individual executives for cowardice or even to judge their choice. It is up to the Government to give them a clear lead by denouncing the boycott and recommending British businessmen to take full advantage of the excellent trade opportunities being offered by Israel. They should point to the lead given by British Leyland, which has continued to trade with Israel and hopes to go on doing so, yet has not been required by the Arab Boycott Office to give any contrary undertaking.

In general, I have found that, whenever the Arab countries are interested and involved in a company's product and the company refuses to yield to the boycott, the Arabs blink. When the company is prepared to act resolutely and it is given some encouragement, the Arabs respond.

It is up to the British Government to act, because we cannot afford to lose ground in our trading relationship with Israel. This is one of the most critical things for our balance of trade. In 1975, our trade surplus with Israel—£146 million—was the third largest we had with any country, but the most recent available figures show that our exports to Israel, which increased by 8 per cent. in value in 1975, are now 5 per cent. down on last year.

There must be an answer to this. I suggest that the Minister should give some attention not only to the general aspects of the boycott but to what it must mean in terms of trade between this country and Israel.

With our economy in its present condition we simply cannot afford to let this potential market slip away. We need the boost to the economy and our people need the jobs which this trade would bring. The nub of the issue is that we ought not to have to choose between the Arab and the Israeli markets. If our products are good enough, they will be bought by both, regardless of politics, if we stand firm for equal trading rights.

Secondly, submission to blackmail in our trading practices may change the way in which we approach the Middle East in our foreign policy. It would be a very naÏve politician who did not recognise the relationship between those two aspects. But giving into trade blackmail also makes us more vulnerable to political blackmail. Have we not already had enough of that with oil? We must stand firm at some point.

But there is another aspect of foreign policy which the Government should consider—that is, whether the blind eye which they turn to the operation of the Arab boycott in Britain is compatible with our international obligations, and especially our membership of the European Economic Community. The answer is a clear "No". The General Agreement on Tariffs and Trade, to which we subscribe, prohibits such practices under Articles 11, 13 and 20. Articles 85 and 86 of the Treaty of Rome proscribe actions such as those which make up the Arab trade boycott and prohibit the kind of "supplementary obligations" imposed on companies by the boycott offices. Further, Article 90 stresses that nationalised industries specially shall not act in contravention of the treaty.

Those Arab countries with which the EEC recently concluded trade agreements—Algeria, Tunisia and Morocco—and another four which are negotiating such agreements—Egypt, Lebanon, Syria and Jordan—are required to accept a provision in these treaties not to discriminate between nationals of the EEC countries. But unless the Governments of the Nine stand united in their opposition to the boycott, loopholes will be found. The Arab countries have already declared that they would not adhere to the non-discrimination clauses where their essential security interests are involved. The EEC rejects this.

It is not enough that the EEC Commission should make declarations against the boycott. It has done so on several occasions in reply to questions about the boycott in the European Parliament. Declarations from individual Governments are also required. The British Government must make their position clear.

The third aspect of this delicate and urgent matter is that of race relations. I have had many tragic letters from British men and women who have applied for jobs only to be told that because of the firm's trade, or hopes of trade, with Arab countries they do not employ Jews. Many firms find that the existing employees cannot be promoted to jobs which would mean their travelling to Arab countries because their Jewish origins would prevent their being allowed entry.

That is a monstrous situation. We do not tolerate discrimination against black people or women—we have legislation to prevent it. Why should we allow discrimination against people on religious or ethnic grounds? It is hardly surprising that I have the written support of hon. Members—Catholic, Protestant and Jew—who want to see the Government take efficient action to prevent such discrimination.

That is the situation. What needs to be done? Three steps must be taken. First, I want a clear statement from the Minister which shows that he is aware of the anxiety felt by many people in this country about the way British interests are being damaged by the Arab boycott and which will give confidence to those companies which are confused about the proper response to suggestions that they should exercise discrimination in the companies with which they deal and the people whom they employ.

In the United States real headway has been made by Congress this month. A report is almost ready giving directions on how to deal with the boycott which operates there as in most of Western Europe. Indeed, the United States has added to its armoury in dealing with this kind of abuse. The 1969 Export Administration Act provides muscle so that when companies want guidance, so as to work with parameters of confidence, there is someone to whom they may turn.

Secondly, I urge the Government to set up a confidential and high-level inquiry to sift through the documents and to assess the extent to which representatives from one or other of the Arab embassies in Britain have used monstrous means to intimidate British management into withdrawing from trade with Israel. The question of influence on and intimidation of staff in Arab embassies in London should be investigated.

The questions raised by the Arab boycott need answering. It is the Government's responsibility to answer them. To date the Government have found it expedient to turn a blind eye and to let the Race Relations Board deal with discrimination brought about by the boycott. But the extent of this discrimination which was revealed by the detailed evidence produced two months ago, demands a clear statement of Government policy. This House demands that.

At the end of the day it is not just a Jewish issue or a trading issue. The Arab boycott is really a test of the meaning of democracy and of the Government's dedication to the freedom of the individual to trade, to employ, or to be employed. The Arab boycott is affecting that freedom adversely for many of our citizens and the companies for which they work.

Freedom, as Solzhenitsyn has reminded us, is one and indivisible, and one has to take a moral attitude. What is the Government's moral attitude to the Arab boycott? British pride will deal harshly with any Government who yield to blackmail in whatever form, and that needs answering.

12.36 a.m.

Mr. Tim Sainsbury (Hove)

I am grateful to the hon. Member for Basildon (Mr. Moonman) for providing me with this opportunity to express support from the Opposition side of the House for the concern that he has so ably demonstrated at the increasing activities of the Arab Boycott Office. Attempts to enforce a boycott against a friendly Power or individuals on the ground of race or religion is a detestable practice which, like any form of blackmail or threat, depends for its success on promoting uncertainty about the consequences that might result if any person or company ignores the threat.

It is for that reason that there would be particular value in a clear and unequivocal declaration from the Government that they will, directly or indirectly, in no way co-operate with the odious objectives of the Boycott Office. If the Government make it quite clear that any company that co-operates will incur their severe displeasure, they will give great strength to those who might otherwise succumb to bullying. If, on the other hand, the Government were to give any sign of condoning the boycott, how could others be expected to resist?

As the hon. Gentleman said, efforts are now being made to introduce what is referred to as a tertiary boycott of those who do business with those who do business with Israel or have Jewish or Zionist, as the boycotters call them, directors. That will be the next demand, and it will be encouraged and widened if we fail to make our attitude clear. That further demand will inevitably prejudice the growth of trade with the Arab world—a growth of trade that we all wish to see. If we make clear our resistance and objection now, that trade will be able to grow.

The Government have an opportunity—and now is the moment for them to take advantage of it—to give a clear lead in resisting and condemning this odious practice.

12.38 a.m.

Mr. Greville Janner (Leicester, West)

I am obliged to my hon. Friend the Member for Basildon (Mr. Moonman) for giving me the opportunity to express my total agreement with what has been said from both sides of the House.

The Arab boycott is a reprehensible and disgraceful practice which should be denounced by the Government. The Government now have the opportunity to advise British businessmen how to deal with what is neither more nor less than an attempt to blackmail those who wish to deal with the State of Israel, which, in its turn, is the only democratic country in that area, and with which this country has had excellent and friendly trading relations since its foundation.

Apart from that, the dangers of creeping discrimination leading out of the boycott are too obvious to need stressing. Once people are to be discriminated against, once companies are not to be dealt with because they have people on their boards who are Zionists, friends of Israel, or Jews, we have the beginning of a practice which could lead to the kind of discrimination which this country has been so proud to avoid in the past.

I hope that the Minister will give a clear lead to industry, to commerce, and to the British people on this subject of boycott, which is becoming more serious the more that the Arab nations take over our cities and industries.

12.40 a.m.

The Under-Secretary of State for Trade (Mr. Michael Meacher)

My hon. Friend the Member for Basildon (Mr. Moonman) has, as always, presented his case very lucidly and very forcibly. I am very glad to have the opportunity to discuss this issue tonight because there can be no doubt that there is a very great deal of feeling in this country about it. In some quarters I think that it has generated some misunderstandings, which I hope to have the chance, briefly, to clear up.

As has been repeatedly stated by Ministers, in the House and elsewhere, Her Majesty's Government are opposed to and deplore all trade boycotts other than those that are sanctioned by international support and international authority. We wish to see our commercial relations expanding in all markets, but we recognise that our exporters have to deal with a situation in which certain countries require certain special formalities and documentation.

It would not be for the Government to direct or instruct firms to supply specific markets or to prevent exporters from providing whatever documents or declarations are required in respect of goods shipped to a particular country. To direct firms not to comply with requirements which are often part of the import regulations of the importer's Government could clearly bring to an end our export trade with those countries. This could be dangerous for this country's future economic policies, and it would be damaging to employment at home. We cannot ignore these realities.

Thus I think that it must be for exporters to decide how they deal with the situation which they currently face in doing business with the Middle East. If choices have to be made, firms must decide their policy in the light of their own commercial interests.

Similar principles must govern any consideration of this question by the EEC, of which my hon. Friend made mention, as this would require the agreement of all the member States. It is relevant here that the EEC has signed or is in the process of negotiating a network of commercial agreements with many Mediterranean States, including both Israel and her Arab neighbours. The principle underlying these agreements is one of improving the flow of trade. The boycott is clearly inconsistent with this. While I do not rule out discussing the problem with our trading partners, the first priority must be a peaceful solution to the fundamental political problem.

As far as I am aware, Article 85 of the Treaty of Rome, to which my hon. Friend explicitly referred, concerns restrictive agreements between undertakings and decisions by associations of undertakings which may affect trade between member States. It has no application to steps taken by individual firms as a result of external pressures. Article 85 concerns abuse of market powers by undertakings in as far as they affect trade between member States. Again, it has no application to steps taken as a result of external pressures.

No facts have been brought to our attention to show that any relevant articles of the Treaty of Rome have been breached in this country. Of course, if an individual firm has reason to believe that there has been an infringement of Article 85 or 86 and can claim a legitimate interest, it is open to that firm to request that the suspected infringement be investigated by the Commission of the EEC.

My hon. Friend also referred to American legislation on the boycott. Her Majesty's Government see little purpose in adding to the already heavy burden of documentation placed on our exporters by requiring them to report their dealings with the boycott authorities. After all, the United States' legislation does not appear to prevent American exporters from providing declarations required by Arab importers. It is merely the reporting of their dealings with the boycott authorities that is required. Again, we judge that it is best to leave it to the commercial judgment of our own traders.

Apart from these broad principles, however, there are considerable misunderstandings in some quarters over this issue. For example, it is not always understood that Iran, for example, has nothing to do with the boycott. It is not always understood that merely exporting non-military goods to Israel is in general compatible with a flourishing trade with Arab countries.

In that context I emphasise that officials at the Department of Trade are available to discuss with individual firms any problems that they encounter and to offer them their knowledge and experience. It is perhaps surprising that we often discover that firms have been about to act on the basis of a misunderstanding of the boycott.

I can place before the House a copy of a note for exporters which the Department has prepared and which has been circulated to member chambers by the Associated British Chambers of Commerce. In addition, the publication on Israel in the "Hints to Businessmen" series reminds readers to consult the Department if they have any doubts about the boycott.

My hon. Friend drew attention to the trade prospects with Israel and suggested that Government encouragement or inducement was necessary to ensure that it was fully exploited. Neither he nor other hon. Members need fear that British companies are unaware of the opportunities for exports to Israel. Last year, when Israel's total imports fell, our exports to that country increased to £237 million and we regained our position as Israel's second largest supplier after the United States. This year we have supported a mission to Israel of the London Chamber of Commerce and today has been British Day at the International Consumer Goods Fair in Tel Aviv where we have an official British pavilion.

There have been regular contacts between British and Israeli Trade and other Ministers. But for the current suspension of the normal arrangements for pairing, the Under-Secretary of State responsible for civil aviation and shipping would tonight have hosted a reception at our pavilion at the Tel Aviv Fair. We are in the final stages of setting up a United Kingdom-Israel joint committee to examine further ways of promoting exports in both directions. Neither the Government nor British exporters can be accused of neglecting this important market.

My hon. Friend also referred to the contracts for the Port of Haifa. Various firms that he mentioned have explained their lack of interest by existing heavy commitments abroad and my hon. Friend begged leave to doubt that reason. But it is substantiated by the reports reaching the Departments of Environment and Trade from many of the larger companies which are having to refrain from pursuing certain overseas projects, particularly in countries where they are not already well established. The loading of particular businesses, bearing in mind all the circumstances of their prospects in a particular alternative market, is a matter for a firm's own judgment. It is not an area in which the Government have the right or ability to interfere.

However, in that context I know that the House will be pleased to learn that earlier this week the National Coal Board signed a consultancy contract with the Israel Ports Authority covering the coal handling facilities to be installed as part of the development of Haifa port. In addition to being a valuable and important contract in its own right, the NCB's initiative goes some way to counter the criticism that British firms will not bid for Israeli business for fear of the Arab boycott.

There is a further point on the subject of misunderstandings, which also touches on the racial discrimination to which my lion. Friend referred. Newspaper articles which sometimes confuse the implementation of the boycott by the boycott authorities with the operation of the entry visa regulations of some Arab countries serve only to increase the misunderstanding and fears of British exporters. I advise firms with specific problems to discuss them in confidence with Department of Trade officials.

Mr. Moonman

Will my hon. Friend give attention to my suggestion that it is necessary to go beyond private consultations with the Department and consider an inquiry, which can go into more detail and sift the evidence? In no other way would some of the people who approached me make the evidence available. There are misunderstandings because the Government did not adopt a moral posture. Despite what my hon. Friend said, there are still grave misgivings that companies should be in the forefront of war when the Government should be taking the lead. An inquiry might help.

Mr. Meacher

I am prepared to give a positive response to what my hon. Friend said, and to consider in depth the weight of the evidence, to see whether and how that might enable us to assist firms which might otherwise have difficulties, or whose fears might discourage them from proper trade relations.

Mr. Greville Janner

Meanwhile, will my hon. Friend make a clear statement that the Government condemn compliance with the boycott?

Mr. Meacher

My hon. and learned Friend made this point very strongly in his brief speech. I said at the outset that the Government strongly deplored and objected in every way they could to all trade boycotts not sanctioned by international support and authority. countries is not a trade question. The United Nations Declaration on Human

The issue of visas to British business personnel wishing to enter certain Arab Rights does not apply to the criteria for entry into a country, and it would not be appropriate for the British Government to comment on entry visa regulations of another sovereign State. But a number of Arab States do not in any case require visas for British citizens. Most of the other Arab States simply require visa applicants to state their religion on the application form. Therefore, in most cases there is nothing to prevent a British Jew from travelling to most Arab countries if he wishes.. The final decision must rest with the individual in the light of the urgency of his business in the country concerned and his assessment of any risk he may believe to be involved.

My hon. Friend also raised the question of racial discrimination. We have seen statements by the boycott authorities that the boycott is directed not against Jews or firms owned or managed by Jews but against Zionists.

Mr. Greville Janner

There is no distinction any more.

Mr. Meacher

I admit that it is a very fine distinction.

Although it appears unlikely that discrimination of the latter kind falls into the strict category of racial discrimination, any complaint of discrimination in this country on grounds of race or ethnic or national origin will, if lodged with the appropriate authority, be investigated under the Race Relations Act. This is—

The Question having been proposed after Ten o'clock on Wednesday evening, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at five minutes to One o'clock.