INTERNATIONAL TRADE

HC Deb 24 March 1976 vol 908 cc421-75

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

4.23 p.m.

Mr. Terence Higgins (Worthing)

I do not believe that anyone in the House would dispute that international trade is of vital importance to the economic survival of the United Kingdom. There is no doubt whatsoever that we as a country live by trade, and it was for this reason that the subject was chosen by the Opposition for debate today. The extraordinary thing is that, as far as I can establish, there is no precedent for debating this subject, despite its overwhelming importance. Certainly I cannot recall an occasion on which we have debated it, and the Library has been unable to establish any precedent, so that we are faced with a wide-ranging debate which raises a tremendous number of complex and diverse issues.

It is interesting to contemplate why this House has not previously debated this subject in its broader context. No doubt pressure of legislation of various kinds under successive Governments has had something to do with it, and perhaps a desire by the Executive of both parties to keep the matter off the Floor. But there is, I believe, no lack of interest in the House itself. It is true that we have from time to time debated exports, export credits and the problems of the textile industry. We have had one debate on monetary reform in the context of trade in the last 12 years and, of course, we have debated the European Economic Community in most general terms. But we have not looked at the whole range of subjects covered by international trade and it is this that I should like to do in my opening remarks.

The situation in other countries varies a great deal. Following the passage recently of the United States Trade Act, that country in addition to having, in effect, a presidential negotiator, has subcommittees, both of the Senate and the House of Congress, which are in effect monitoring the proceedings of multilateral trade negotiations as they go along, which is a very interesting innovation. The degree of parliamentary control varies quite a bit between various countries, both in the EEC and outside.

I believe that, despite the risk that this could be an occasion for particular pressure groups to exercise influence on the Government, none the less it is right that these issues should be ventilated, and I am glad that we have an opportunity to do so this afternoon. The time we have available is very short—only half a day, with a cut-off at 7 o'clock following a statement and a ruling by yourself, Mr. Speaker, a Standing Order No. 9 application and a Ten-Minute Rule Bill with a Division.

I very much hope that, bearing in mind the obvious importance of these matters, the Government will find the time necessary for a further debate on this subject, and I hope that it will become a regular feature of parliamentary debates. We become too obsessed with legislation in this place and are not sufficiently preoccupied with debating major issues which are of vital importance to the country.

That having been said, I would stress that we want today to press the Secretary of State for Trade to take a lead in these matters. It is, of course, the case that we now operate within an EEC context, but we very much hope that the right hon. Gentleman's well-known antipathy to the EEC will not be a disadvantage but in this respect will in some ways be an advantage because there are a number of aspects of EEC policy which require reform and a number of areas in which we hope to add the weight of the EEC to a specific British viewpoint.

One of the main points I want to stress, therefore, is the importance of getting the Secretary of State for Trade to play a rôle in the EEC and, I hope, to take a lead as far as the EEC is concerned. Obviously there are many subjects we could discuss. I suggest that none of those which we have already covered—for example, textiles—although important, should be the centre-piece. I shall suggest a fundamental approach to what the trade policy of this country should be, touching upon some specific problems in respect of invisible trade—invisible exports and imports—and East-West trade; some comment on the very important United Nations Conference on Trade and Development—the fourth UNCTAD—which is to take place very shortly; and, finally, some comment on multilateral trade negotiations.

First, it is important that we should turn to our fundamental approach to trade policy. Here, on the 200th anniversary of the publication of The Wealth of Nations, I am bound to say that I believe that Adam Smith was right and that we ought to press for freer trade, because that is the foundation for expanding world trade. That is extremely important if the prosperity of this country is to be advanced. Having said that and having spoken out against protectionism, we must face the fact that the matter is not all that simple. I want to say something about the growing pressure for import controls. Personally I believe that the main, fundamental case for free trade remains overwhelming. There are, of course, more theoretical viewpoints. Professor James Meade, in a two-volume work with appendix, pointed out the difficulties of proving that case, and there has been a great deal of talk lately about the Cambridge New School's view on the case for import controls. There, again, I am totally unconvinced. I find that the assumptions on which the arguments are based would be likely to be invalidated by the policies they are advocating on the basis of their analysis. At all events, the point needs to be argued.

I do not think that this is a partisan point between the two sides of the House. There is broad agreement on this side and among the bulk of hon. Members opposite on the danger of this country going in for protectionism. It is important that we should resist pressures to go into protectionist postures and the kind of double talk that we have had from a number of people on this issue, whether the argument starts off as one for selective import controls and gradually broadens out into wider advocacy, or whether it is one for more general import controls.

I do not want to get involved in any particular polemical matters which may be a matter of dispute between right hon. Members, as much as hon. Members, opposite. I seek to persuade hon. Members opposite to take the view, which for example, has been put by Mr. Ron. Hayward, the General Secretary of the Labour Party, and a number of others—and I distinguish import controls carefully from dumping, because the crucial distinction is between fair and unfair competition—that the advocates of import controls are mistaken in believing that there is any case for the kind of import controls for which a number of people in the Labour Party have been arguing.

I find it very difficult to understand how they do not realise the dangers of going back to the 1930s—the very great danger that we could turn what is now a world depression into a world slump in precisely the same way that protectionism and beggar-my-neighbour policies in the 1930s turned that world depression into a world slump.

Mr. Douglas Jay (Battersea, North)

Is the hon. Gentleman opposed to protection and restrictions on agricultural and food products as well as manufactures?

Mr. Higgins

I shall come to that point when I speak about the multilateral trade negotiations.

The fundamental points are very simple on the idea that there should be more general import controls. First, general import controls would invite retaliation. I beg hon. Members opposite to appreciate that the protectionist pressures overseas are very great. I have travelled abroad, particularly to Washington, and I have no doubt that the danger of starting a trade war of the kind which I have described is very great. Even the very small measures announced by the Chancellor of the Exchequer in December produced a pronounced reaction in Washington, and, of course, many of the protectionist lobbies in the United States and elsewhere would welcome a move of this kind as a chance themselves to promote protection for their own industries in their own countries.

If that were to be so, world trade would shrink, and no one would lose more than the United Kingdom from such a shrinkage. I have no doubt that that is the fundamental argument, but there are others.

The second argument is that general import controls would reduce consumer choice, and that is not an unimportant matter. Many hon. Members even today have stressed the importance of maintaining consumer choice. In addition, such controls would reduce the competition that imported goods have exerted as a downward pressure on prices, which, in turn, tends to ameliorate inflationary pressures. That is an extremely important aspect.

The third argument concerns the idea that import controls would somehow give a breathing space to this country in which economic recovery could take place. I do not believe that it would create a breathing space in which British industry was regenerated. I believe that it would reduce competition and lead to degeneration. It would increase costs and add to the unemployment, not ameliorate it—the unemployment that those advocating these measures are themselves also anxious to ameliorate. It is very important that we should take an impartial and unbiased view and not press for a solution which would make our problems a great deal worse than they are—and they are bad enough.

Finally, there is the question of the floating exchange rates. We have recently seen a major change in the sterling parity. This itself in many ways is a form of protectionism in one sense, because it means that imports are more expensive and it makes our exports more competitive. I was disturbed when the Secretary of State for Trade, when he last answered Questions in the House, said that this was a matter for the Chancellor of the Exchequer. It is also very much a matter for the Secretary of State as well, because if we get reaction from abroad from those who believe that we are engaging in competitive exchange depreciation—again of the kind we had in the 1930s—that will be a very dangerous situation.

I hope that the Secretary of State will be able to make it clear, because the Chancellor failed to do so after the meeting on the Continent a few days ago, that such policy forms no part of the British trade policy, because once we got into that position we would once again be in danger of falling back into the old postures of the 1930s which have proved so dangerous in the past. I hope that the right hon. Gentleman will be able to make it clear that it is not the Government's intention to get into that position. If that is so, the exchange rates were badly managed and the cut in the minimum lending rate, made immediately after we went through the psychologically important $2 barrier, was a sad event. The point should be taken in the context of our basic approach.

That having been said, the fact is that one can justify the position I have outlined only if we take effective action against dumping and unfair competition. I have discussed these matters with many trade associations, and my experience, particularly with the most sensitive industries, such as textiles and footwear, is that they are not convinced that recent voluntary agreements are adequate to deal with their problems. My impression is that all these industries would much prefer effective and faster action against dumping rather than a general relapse into protectionist pressures and a general system of import controls, which would be likely to damage them in their overseas markets.

I hope that the right hon. Gentleman will find himself able to take a more flexible attitude towards the problem of dumping. When he last answered Questions, he seemed to be adopting a more flexible attitude. He assured us that he was prepared to help complainants about dumping to find the data. Certainly, Government Departments are in a better position to do that than are individual industries and firms.

Mr. Robert Boscawen (Wells)

Would not my hon. Friend agree that we want more than simply flexible reaction from the Secretary of State and that we need adequate reasons why he cannot stop dumping? We never get a fully adequate reply, particularly about the onus of proof.

Mr. Higgins

I hope that we shall get an explanation from the Secretary of State. Many hon. Members are particularly concerned about the problem of the onus of proof, which is difficult. There is the old adage in trade circles that "You dump and I price competitively". I think that there is always a problem with the onus-of-proof argument. But industry should be helped in the collection of data.

We also need to consider whether it is a sensible arrangement that a reference is made on dumping only if an industry as such complains. One sometimes gets divergent views between different industries and different firms about whether anti-dumping action is required.

One must take a balanced approach. I believe that a more flexible attitude on this matter, consistent with our international obligations, is much more what our industry wants than anything of the more general sort advocated by some who would perhaps like to see us slowly decline into a protected market—in effect, a siege economy.

I want to deal now with export credits. There has been controversy as to whether this matter falls within the competence of the Secretary of State in terms of signing agreements or within the competence of the EEC Commission. There is, however, growing concern that the extension of export credit may be getting too large. The Under-Secretary said in reply to a Question: The current value of outstanding fixed-rate export finance made by the banks and guaranteed by the Export Credits Guarantee Department is £3,021 million."—[Official Report, 10th March 1976; Vol. 907, c. 243.] Although there is the Berne Union arrangement, which is supposed to prevent excessive competition in credit terms, my impression is that this has been unsuccessful in preventing the situation where the developed countries, particularly in their trade with the less-developed countries, come out more and more in favour of extending export credit, on which they seem to have no unified position, but become more and more unified over rescheduling the debts subsequently incurred. I am far from sure that this is a desirable situation.

Our trade in invisibles is tremendously important. We have had debates recently on insurance. We appreciate, of course, the importance of the commodity market, the Baltic Exchange for shipping and other contributors to invisible exports. I am somewhat concerned about whether Lloyd's Register of Shipping and classification societies in other countries are getting freedom of access to the United States market. There is some indication that non-tariff barriers have been erected to their competing as regards the classification on both ships and oil rigs. In contrast, the American classification society is able to compete freely in our market, for example on oil rigs. I hope that the Department will be prepared to look into this matter.

My other question on this point concerns our national merchant marine. It has always been tremendously important in terms of both the invisible earnings which we obtain from it and the benefit to our balance of payments. It is very much an industry where historically we have been and, I believe, still are remarkably competitive. As I said at Question Time recently, however, the growth in the Russian tonnage operating on a subsidised basis and at cut rates is placing in jeopardy our position not only in the direct trades but on the cross trades from which much of our revenue comes.

For example, container ships, in which a lot of investment has taken place, are affected by the combination of the growth in the Soviet merchant marine and the Trans-Siberian Railway which has led to rates being cut far below what seem to be economic levels, and this may have serious implications for the balance of payments. This is clearly an area in which some degree of communal representation needs to be made in terms of the OECD countries. I hope that the Secretary of State will give his attention to this very important matter for the sake of both our economic life and perhaps, within the wider context, of security.

I come now to Anglo-Russian trade generally. Just over a year ago the Prime Minister returned from Moscow with what he described as a tremendously important deal. We know that in the event comparatively little—by the Prime Minister's standards, very little—trade has developed. This may be due to the timing of the Russian five-year plans. But my feeling is that the Russians' need for grain and other agricultural produce may well encourage them to buy foreign exchange effectively at a very big premium, which will mean that their exports to us will grow fast.

Hon. Members in many parts of the House have expressed concern about the dumping from centrally-planned economies of particular consumer goods. Hon. Members from both sides have particularly mentioned footwear and textiles. The Government took action in that respect in some ways a few days ago, but we have no indication of the criteria by which they decide on the figure to be selected in the negotiations. In fact, there appears to be no criterion whatever. It is purely an arbitrary figure which is plucked out of the air. Many of those in the textile and footwear industries feel that the arrangements which have been made are inadequate and that the definitions—for example, showing the difference between sandals and ordinary shoes—are open to abuse. We have not so far managed to take sufficiently effective action on that.

On export credits between this country and Russia, the Russians, admittedly because of our interest rates, but perhaps also because of international interest rates, are able to purchase textile equipment at far better repayment terms and at far lower interest rates than our own industry is able to do. That appears to be the case, but we have not been given the information on the actual terms extended to Russia. I see no reason why it should not be made available to the House, and I hope that the Secretary of State will take the opportunity to do that this afternoon. Overall, the policy which the Government are pursuing on Russian trade, on both imports and exports, is in serious need of reappraisal. It is not operating to the advantage of this country, and we need to look at it very carefully.

I come now to the United Nations Conference on Trade and Development, which is a matter of passionate concern to the right hon. Member for Lanark (Mrs. Hart) and to many of my right hon. and hon. Friends. Following the traumatic increase in oil prices, the position of the less-developed countries, particularly the poorest of them, has been very seriously eroded. The impact on them has been far greater than anything which has happened to the developed countries. That point is worth stressing and it lends added weight to the need for us to take an effective position in the UNCTAD in a few weeks' time. We must bear in mind that 60 per cent. of the Third World's earnings comes from trade in primary commodities, and it is upon this that the Secretary-General of UNCTAD, Dr. Corea—I had the privilege of meeting him yesterday—places a great deal of weight. I hope that the Secretary of State will give us some indication of his position on that.

I hope that at UNCTAD IV we can make progress by consensus. A lot of passion has been aroused by the situation in the United Nations and its organs where the growing number of members from the Third World have the voting strength to carry particular resolutions. We should recognise that at the end of the day they end up with a resolution which the majority has carried, but that is all. It would be far better to reach a consensus arrangement which is worth something than merely to make political gestures.

We shall be interested to hear how the Secretary of State regards the proposals for commodities in the light of the Prime Minister's proposals at the Commonwealth Prime Ministers' Conference last year. They do not seem to fit in very well. After the dramatic and damaging way in which commodity prices went up in 1972–73, with the frightful effect on inflation for this country at that time, all of us would recognise the case for moves which would lead to greater stability in prices. The Secretary-General of UNCTAD is pressing for an integrated programme of commodity agreements covering 10 products. He makes the centre-piece of his proposal a fund which would not operate the schemes but would provide finance by various means. We would be interested in the Secretary of Slate's reaction to that. The important thing is that these measures should be to stabilise prices, but there is always the danger that instead they will try to affect the long-term trend.

I doubt whether that is in the interests of countries which depend on such commodities. If the long-term trend is downwards, it is important that those countries should diversify. We would be still more concerned if arrangements were made which had the effect of creating a series of OPEC-type bodies for different commodities which were positively designed to alter the trend and make it upwards. That, again, is not an effective way of giving assistance to developing countries. I know that there is a great diversity of opinion on this matter. Mr. Fred Bergsten of the Brookings Institution, for example, argues that there is a danger of the creation of numerous OPEC-type organisations for many commodities. Mr. Bergsten is too fearful of that happening. However, there is a danger that we might create institutions which would tend to bring about that kind of situation.

Despite the difficulties which the Lomé Convention appears to be running into if Press reports today are to be believed, I think that we need to consider whether we can move towards a more general system of preferences, perhaps based on Lomé, which would not be restricted to countries which had formerly been associated with EEC countries. That may be the right direction in which to move, though there are serious problems regarding the repercussions on industries within the EEC.

Finally, I turn to the multilateral trade negotiations. Barclays Review recently contained a very good article entitled World Trade Reform—The Forgotten War. This issue, which has largely been forgotten, has not been debated to any great extent in this House. It is right that the EEC should take an outward-looking approach to the whole issue. I hope that the Secretary of State, partly for the reasons which I have mentioned, will adopt that kind of attitude to the negotiations. The trouble is that the negotiations have been significantly slowed down. Originally they were expected to be completed by the end of 1975. They are still going on in Geneva.

The impact of the United States presidential election normally has that effect. None the less, I hope that we can make progress on the technical side so that, when that issue is resolved, we can get down to solving the real problems facing us in this area.

It is important, as I have said, for us to do all we can to reduce tariff and non-tariff barriers to trade and make other arrangements which will lead to a growth in world trade. The snag—this was the right hon. Gentleman's point, and I am glad not to disappoint him—is that a considerable procedural wrangle is going on within the negotiations as to whether agriculture should be discussed only in the Agriculture Committee or in other committees as well. I understand that the United States, anxious to ensure that progress is made on the agricultural side, particularly with regard to the CAP, has been pressing for the matter to be discussed in a number of different committees, whereas the EEC has tended to wish to restrict it to the Committee on Agriculture. I shall be interested to know the Secretary of State's position, given that this is a matter of some controversy in the House. We must resolve the matter if we are to make progress on the broader issues of trade generally outside agriculture.

Mr. Jay

Is it not more than a procedural difficulty? The EEC's negotiating position is that the principles of the CAP are not to be called in question at all. Does the hon. Gentleman support that position?

Mr. Higgins

This is something on which we want to inquire of the Secretary of State. It is a procedural point and a question whether—

Mr. Jay

It is more than a procedural point.

Mr. Higgins

It is more than a procedural point. It is both a procedural point, as the right hon. Gentleman points out, and a point of substance. We need to establish to what extent we can make progress without resolving this matter and what the dangers are. I hope that we shall have an indication from the Secretary of State regarding that matter. I do not underestimate the pressure in Washington or the pressure the other way in certain EEC countries. I had a long discussion with the American Secretary of Agriculture on this matter last summer. It is vital that this matter should not lead to the negotiations generally breaking down.

Another important matter concerns whether we feel obliged to go for a linear reduction on tariffs or for the kind of reduction on tariffs which will eliminate many of the American peaks on tariffs which have represented an extremely serious matter for our trade. With a succession of rounds having been completed, we are in a position where a percentage reduction across the board would not on balance be as favourable to our exports as a system which tended to diminish the various peaks on tariffs in the American structure at present.

There are a number of technical matters into which I shall not go now, except one. It is important that on the non-tariff issue the Americans should understand how strongly we feel about the so-called "grandfather" clause which enables them to take countervailing action against exports from other countries which are not subject to the injury test. That is part of the General Agreement on Tariffs and Trade which requires radical revision. It all comes within the general context of the negotiations as a whole.

I hope that this will be only the first of a number of debates on this subject and that the Government will find time to debate it as well. By and large, this matter raises tremendous issues regarding both East-West trade and the important relationship of North-South issues. I hope that the United Kingdom can form a bridge in both those directions. I hope that we can form a bridge between the EEC and the United States and beyond to Japan and other countries. I hope that we can also form a bridge between the developed world and the Third World on a number of these issues on which I believe that we have a great community of interest. We should be in a stronger, not weaker, position to negotiate on these matters as a member of the EEC than we have been for a very long time.

4.57 p.m.

The Secretary of State for Trade and President of the Board of Trade (Mr. Peter Shore)

I hope in the course of my remarks to take up a number of the points made by the hon. Member for Worthing (Mr. Higgins) regarding dumping, export credits, UNCTAD, the multilateral trade negotiations and other matters.

I should like to make two brief comments on certain points made by the hon. Gentleman. First, he invited me to take initiatives in the EEC in terms of the evolution of its trading and commercial policy. I take such initiatives as are available to me. I do not think that any of my right hon. and hon. Friends would expect me to be silent in that forum; far from it. We have a clear view of the right commercial policy for this country and we try to get it adopted within the framework of the EEC. That covers matters such as the multilateral trade negotiations, the Generalised Preference Scheme, the Multi-Fibre Arrangement—although that got under way before this Government had a chance to take over—and various aspects of the North-South dialogue. The hon. Gentleman should have no doubt that we shall do our utmost within the EEC, but he should remember that, as a result of the decision that was taken, we are only one voice among nine. The institutional arrangements allow for a major transfer of initiative from member States to the Commisison particularly relating to trade.

The second comment I wish to make relates to the hon. Gentleman's reference to trade with Eastern Europe. We should approach that matter in a serious and commonsense way. Of course I am aware of the various products that come from Eastern Europe, some of which are highly competitive and some of which my hon. Friends and hon. Members opposite consider to be dumped. We shall watch out for them, as we have done in the recent case of those notorious East German suits, and we are prepared to act upon them.

But let us get the matter in proportion. Our trade with Eastern Europe is one of the areas where we are in substantial surplus—apart from the Soviet Union. They take from us manufactured goods which give work to our people and earn us valuable foreign exchange. We have a deficit with the Soviet Union, partly accounted for by diamonds which we process here, and which always distort trade figures, and partly by essential raw materials.

My concern and that of any responsible Government is to see that Britain's exports grow. As a result of neglect in the past of Britain's trading effort towards the Soviet Union, we export there less than half what France or Italy does, well under half what Japan does, and only about one-sixth of what Germany does. There is a substantial market, and if we are to get our share of it, it is no good pretending that we can offer credit terms inferior to those offered by our competitors. It is humbug for the hon. Member for Worthing continually to make that point.

Mr. Higgins

Is it not therefore sensible to ensure that the credit terms offered by all these countries in trade with the Soviet Union and other Communist countries are not driven down to levels at which it is a very bad deal from all points of view?

Mr. Shore

My philosophy on this matter is perfectly straightforward, and exactly what the House would expect. I am not seeking to undercut, but I shall match the competition. I will not see our exporters put at a disadvantage when faced with more strongly based and more successful trading rivals in other parts of the world.

I can strike one note of agreement with the hon. Gentleman. I also welcome this debate. I agree that no subject is more important to us all than that of trade, which affects not just the prosperity but the very survival of this country. I should like to drive home a fact that is frequently overlooked. To feed our 55 million people, in order to obtain the raw materials essential for our manufacturing industry and essential fuel supplies at least until North Sea oil comes on to full stream, we have to spend on imports about £10,000 million a year.

To pay for those absolute necessities and the many other things that we require, such as semi-manufactures and capital goods, we must export goods and services in return on a massive scale. Indeed, no less than 30 per cent. of our GDP is exported in goods and services and well over one-third of the output of our manufacturing industry goes into the export trade.

This need to import and to export is the abiding reality of British life. We have therefore three continuing major objectives in world trade. First, we must seek an expansion of the world economy—an expansion in which all countries can share. Secondly, we must strive to ensure that world-wide markets remain open to our exports. Third, we must ensure that our goods and services remain competitive. It is necessary only to state our major objectives to realise the formidable problems that we face today.

We are in the grip of a major world economic crisis. After a quarter of a century of virtually uninterrupted trade growth, during which the volume of world imports increased at about 10 per cent. a year, in 1974 the rate of increase fell to 3 per cent. and in 1975 there was an actual decline in the volume of world trade of no less than 5 per cent. Throughout the world, production has fallen, unemployment has increased and the struggle for export markets has been sharply increased.

The causes of the world trade recession are familiar, but because their effects are ongoing they are worth repeating. The hyper-inflation of 1973 in world trade in commodities and foodstuffs of all kinds, would itself have produced corrective action affecting trade and output in 1974 and 1975, but we had the additional and major impact of the quadrupling of oil prices at the beginning of 1974, which led to a violent redistribution of deficits and surpluses among nations.

In 1973, before the oil crisis really hit us, the OECD countries, collectively, were in surplus to the tune of $2.5 billion, the OPEC countries had a $3.5 billion surplus and the non-oil developing countries a deficit of $5 billion. In 1974, the OECD countries had a deficit of $33 billion, the non-oil developing countries had a deficit of $18 billion, and the OPEC surplus had risen to $67 billion.

Last year, surpluses and deficits were again redistributed radically. The OECD countries, as a whole, almost achieved a balance—they almost wiped out a deficit of $33 billion—the OPEC countries, as a result of greatly increased imports, reduced their surplus to about $40 billion and the non-oil developing countries plunged still further into deficit. The balance of payments recovery of the OECD countries was, of course, achieved at the price of economic contraction, falling production and rising unemployment throughout the Western world.

Our major problem has been and is to find a solution to this new set of problems. The IMF, the Eurodollar market and bilateral borrowings have all played their part in mitigating the consequences of these changes. I am glad to say that the OECD countries have collectively resolved to work together to achieve a new expansion of world trade. At Rambouillet, in November, the leaders of the major trading countries—the United States, Germany, France, Japan, Italy and the United Kingdom—agreed on the need to continue to consult together in order to get world trade moving again.

Some corrective action has been taken; this is particularly notable in the upturn of the United States economy. World trade this year will undoubtedly grow, and there are even more valuable prospects for 1977, but the underlying problems of the financing of balance of payments deficits globally and of the redistribution of surpluses within the OECD area remain. It is right to stress that Trade Ministers can succeed in expanding world trade only if Finance Ministers can find the solutions to the problems of financing world trade.

Long before the events of the last two years, the problems of the developing countries were urgent and in some cases desperate. As the World Bank's recent report on the world economy in 1973 revealed, 61 per cent. of the world's population lived in countries with a yearly per capita income of below $500 and 30 per cent. where it was less than $200.

I have already referred to the dramatic effects that the oil price increase has had since 1973 for the developing countries. It is this, of course, that has given such a special urgency to recent discussions in UNCTAD and elsewhere, and it has led to far reaching proposals designed to give those countries a larger share of the world's income.

I shall shortly be attending the UNCTAD IV Conference in Nairobi. It is the next major international meeting between developed and developing countries at which a very wide range of trade and development issues are to be discussed. In particular, we hope for tangible progress in commodity trade. We should like to see agreement in the Conference to give impetus to the achievement of improved and more stable arrangements for producers—arrangements that will recognise at the same time the interdependence of the interests of producers and consumers alike. We have played a constructive rôle in recent negotiations on tin, cocoa and coffee, and we are currently exploring—though there are difficulties—the possibilities of international action on tea. Together with countries in the Community and the OECD, we shall actively pursue our objectives on commodity trade both at UNCTAD and, indeed, in other forthcoming international meetings.

There are naturally differences of view and emphasis between those engaged in the debate—differences which we have played our part in bridging in the Prime Minister's initiative at the Commonwealth Heads of Government Meeting last May and in the subsequent discussions. Since then, although a considerable gap remains, a further step has been taken, with the agreement of the EEC countries, that the proposals put forward by the UNCTAD secretariat for an integrated approach are acceptable as a basis for further discussion.

I can assure the House that I shall not go to Nairobi with a closed mind on this or any of the other major issues upon the agenda. Clearly, the proposals will require greater elaboration and examination in detail. In relation, for example, to the proposed Common Fund, we shall need to be satisfied that a common institutional framework can play an effective rôle in this complex and difficult field. But if, at UNCTAD IV, we can initiate this further work with a will to find solutions, both at the political and practical level, we shall have at least one major and positive achievement to our credit.

There will also be discussion there of the continuing need of the developing countries for improved access for their exports of manufactured goods. Their special needs have been recognised in the Generalised Preferences Scheme operated now by most developed countries and in the commitments accepted by developed countries regarding the GATT multilateral trade negotiations. At the same time—and this is difficult, above all during a period of recession such as we are going through—we have to have a proper regard for the impact of trade liberalisation on our own producers.

I hope, in any case, that before the conference opens the Community, with other industrial countries, will have made offers on special concessions on tropical products as part of the ongoing progress in the GATT multilateral trade negotiations. Tropical products are of particular importance to so many of the very poorest developing countries, as the House knows.

The Nairobi conference will face up to other important areas of economic relations—resource flows to developing countries, including their debt problems; prospects for further trade liberalisation; and questions of building up their technological base, technological transfers, and so on. We hope that constructive progress will prove possible in all these fields.

In the GATT multilateral trade negotiations, too, the position and problems of developing countries are assuming, I am glad to say, a much larger importance than in previous GATT rounds, including the Kennedy Round. The GATT should, in our opinion, remain the principal forum in which world trade problems as a whole are considered and dealt with.

There are three aspects of the multilateral trade negotiations that I should like to draw to the attention of the House. First, although previous GATT rounds have brought about major reductions in general tariff levels, there is still scope for further reduction. We are particularly concerned that the biggest reductions should be made, in genera], in the highest tariffs, and this is the line that the EEC is taking in the current discussions. Those who have studied the particular problems of tariffs in Europe and elsewhere will, I think, understand why this approach is one that naturally suggests itself to us.

Secondly, a particular feature of the current GATT round is the attention being paid to non-tariff barriers. In a world of reduced tariffs these are of larger importance though they embrace very complex problems. In the multilateral trade negotiations certain types of non-tariff barrier are being grouped together, such as quantitative restrictions, customs procedures and technical standards. We shall need, and no doubt we shall have to have, a flexible approach to these different problems.

Thirdly, as a corollary to the efforts to achieve a further and significant measure of liberalisation of world trade—I think that this will be welcome news to the House—it is even more vital that satisfactory machinery should exist to deal with disruptive imports. I am now talking not about dumping but about disruptive imports that come on such a scale and over such a period that they disturb the expectations and the possibility of adaptation by importing countries. The existing provisions under the GATT—I am thinking of Article XIX—are not wholely satisfactory, and we attach importance, therefore to the adoption of new provisions that will allow a greater degree of selectivity in approach but with improved arrangements for international surveillance.

On the question of agriculture in the multilateral trade negotiations, there is no doubt at all that we have considerable difficulty in getting agriculture firmly on the agenda for discussion—and the reasons are well known. The original members of the EEC take a highly protectionist view on agricultural trade and they wish at all costs to maintain the fortifications which today surround the CAP. I should not like yet to say how far we have been able, as it were, to open the door or, rather, to get the door ajar. However, there is some arrangement now for what I think is called mutual surveillance and common disciplines, and at least an effort will be made by all those concerned to look at their own systems and to see, in the first instance, just what is the nature of the protection which they afford and then whether some common approach can be established for further negotiations. We shall help in all of this to the best of our ability.

I turn to our own position, as distinct from the general survey of world problems which I have tried to give. Our task in adjusting to the current world situation is doubly difficult because we have not only, with others, to deal with the problem of the oil deficit, but we entered the world recession and the oil problem with entirely different and serious problems of our own. In 1973, even before we felt the impact of oil, we had a widening balance of payments deficit. Indeed, in 1973 our current account deficit was £840 million, and in the last quarter of that year it was running at an annual rate of about £1,500 million—a much higher figure. On top of this we had the self-inflicted damage resulting from the three-day working week. Therefore, our balance of payments position at the end of the last boom was substantially worse than that of any of our major competitors. It seems to me that we have a very long way to go.

We have to look to expansion in world trade. We must certainly look to those of our trading partners who are in a stronger position, especially as regards their international payments, not to be too cautious in reflating their economies. That is not a selfish point of view. The degree of recovery in world trade and the world economy is dependent upon their actions and it is, if anything, even more essential to the developing world than to ourselves that the course of recovery is unhindered. We are, unfortunately, restricted from taking a major lead in that process. This time our rôle must be to ensure that we are in a position to benefit as the general recovery of world trade proceeds.

We have many problems to solve. We still need to achieve a substantial shift of resources into investment and export. The need for more investment is self-evident, and I need not pursue that matter now. Certainly the need for more exports is clear if we are to make up the still large deficit that remains in our balance of payments. That deficit last year, even after the immense improvement that we sustained, still left us "in the red" on current account to the extent of £1,700 million. That was how we ended last year. Therefore, we still have a long way to go. For this reason we have further developed in the past year export credit facilities and other means to assist our exporters.

Four new facilities have been introduced in the last year in regard to export credit. I shall not repeat the details, which I hope are reasonably well known to the House. They cover, in appropriate cases, cost escalation, which helps exporters to deal with their problems flowing from our higher than average inflation, and they also deal with performance bonds, pre-shipment finance and certain risks of insolvency on the part of a consortium member, which is important for those who are engaged in large contracts with OPEC and other countries. Improvements have also been announced in the short-term credit facilities of the ECGD.

In all this activity there is a balance to be struck between the need to ensure that our exporters are not at a disadvantage vis-à-vis their competitors, while avoiding a race over credit support. Indeed, it is for this reason that we are playing an active part in negotiations to bring export credit competition under greater control. That is what we are trying to achieve. I hope soon to be able to tell the House the results of these prolonged and difficult negotiations.

It is essential that the Government and our exporters deploy their efforts where the opportunities he. Even before the oil price rise, we were giving special attention to some OPEC markets. After the oil price increase, we strengthened and widened our efforts. As a result, the indications are that last year we achieved the largest increase in exports to OPEC countries of any country in the world. In terms of export growth, we did better than any other country in the world.

Now that recovery is in prospect in major industrial countries—and the countries of North America and Western Europe account for by far the largest proportion of our exports—new opportunities are opening. We can be encouraged by the fact that in last year's recession we more than held our share of world trade. That is a most encouraging and welcome development.

Our exports are now beginning to rise. In volume, they fell during most of 1975, but rose again in the last quarter of the year. In the latest three months, ending February, our exports were 4 per cent. in volume higher than in the previous three months. Moreover, a survey carried out in January of this year by my Department, in co-operation with the larger exporting companies, indicates that these major exporters are looking to an upturn in the volume of their exports this year amounting to 10 per cent. Recovery has begun, and there is a good prospect that it will continue. This is one important reason why it is so important to us that world markets should remain open. We have the prospects, and we must have an open market in which to sell our exports.

In May last year we subscribed to the renewal of the OECD declaration or pledge, with its emphasis on expansion and not restriction. However, I made clear at the time that our renewal was subject to two qualifications. The first was the fact that adequate finance should be available to cover deficits and, secondly, that the economically stronger countries should recognise their obligations to the rest of the world.

Inevitably, a period of recession places a particular strain on certain sensitive sectors whose short-term problems cannot be met by an expansion of exports. Thus, the House will recall that last December my right hon. Friend the Chancellor of the Exchequer announced a number of selective measures to restrict certain imports. These were applied in conformity with the international rules which provide for action in cases of disruption. We have also taken anti-dumping action, about which I should like to say a few words.

The present recession has given rise to a large increase in the pressure for antidumping action. That is hardly surprising. In the last 18 months my Department has received 26 applications for antidumping action. It has imposed three duties, obtained six price undertakings to eliminate dumping, and found no dumping in three cases; five cases are being handled by the EEC. The remainder are in course of investigation. There is inevitably much work involved in an investigation, which cannot be short-circuited if we are to comply with the law and with our obligations under GATT.

I should like to address my next remarks to those who are genuinely concerned about these problems. Our aim is to bring all cases to a conclusion at the earliest possible moment. We are asking firms only for such information as we think essential to establish a prima facie case. We are anxious to assist in any way we can. I do not believe that this is an issue between myself and my Back Bench colleagues, or between the Government Benches and the Opposition Benches. We are entitled to take antidumping action. For once, time and international law are on our side. Let us take advantage of that situation. Let industry co-operate with the Government in providing evidence. We cannot co-operate without receiving reasonable evidence.

Mr. Doug Hoyle (Nelson and Colne)

Will my right hon. Friend explain why we cannot take similar action to that taken by other countries—namely, to put the onus on the importer in cases of dumping rather than to ask our manufacturers to prove their case? In many cases, particularly involving textile products, companies have gone out of business while investigations have continued. Why cannot the onus be put on the importer to prove that he is not dumping?

Mr. Shore

There are one or two countries whose Governments take the line suggested by my hon. Friend, but nearly all major trading countries which subscribe to the GATT cannot, and do not, act without first receiving evidence. That is a requirement, but in my view it does not necessarily mean that we must envisage situations such as my hon. Friend describes, in which, for want of swift action, a firm is driven out while we are assembling the case. I can take preliminary and temporary action. I shall not do so recklessly, but I am willing to take action when a serious case is put to me.

I conclude by making one or two final remarks. First, the world trade and payments system is subject to great stresses. Nobody doubts that there are many major difficulties still to be overcome. I think that our economic international statesmanship will be tested to the full in the next few years. Although there is an upturn in world trade, the underlying monetary problems are still unsolved in terms of the world community, with all that means for world trade. Secondly, our balance of payments deficit, already greatly reduced, still remains far too large. It is our responsibility to get that right.

I wish to pay tribute to all those who have helped to improve our export performance in such a remarkable way comparing 1975 with 1974. We then saw a reduction in the trade gap of £2,000 million. That was wholly due to the efforts of Britain's workers and managers in the export markets.

Mr. E. Fernyhough (Jarrow)

Does my right hon. Friend agree that the magnificent job done by our workers, managers and exporters has been principally outside the Common Market? Our exports to the Common Market have gone down.

Mr. Shore

My right hon. Friend is right. It has been disappointing to see that the share of our trade going to the EEC has fallen during the last two years. We must direct a far greater effort into the Community, because we have to do well there if we are to prosper in the years ahead.

The home and export markets go together. Firms whose products compete successfully in export markets will also, by and large, compete successfully with imports into the United Kingdom.

That does not mean there is not a great deal which can be done to save on imports into the United Kingdom. The House will know my attitude on this matter. I have tried to alert consumers and British industry through the NEDC network to have a constructive dialogue between purchasers and suppliers so that we can get a larger proportion of our needs from our home-based industries.

Mr. Bob Cryer (Keighley)

Will my right hon. Friend comment on the situation in which multinational companies are exporting British design and technology to Japan, importing the finished product from Japan and putting people out of work by closing factories in this country?

Mr. Shore

I am into the closing words of my speech, and my hon. Friend has raised a particular problem. I invite him to put it to me after the debate, because I shall be anxious to discuss it.

We cannot fully recover except as part of a world recovery. Our economy is now very closely meshed with that of the rest of the world. That is why countries in the strongest position must lead the way, in their own interests and in the interests of the trading world as a whole—not only the developed countries but the developing countries, with their enormous difficulties.

Several Hon. Members rose—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. I remind hon. Members that the debate must, unfortunately, finish at 7 pm, and 15 hon. Members wish to take part.

5.32 p.m.

Mr. Geoffrey Dodsworth (Hertfordshire, South-West)

The detailed length and content of both Front Bench speeches demonstrated the overdue necessity of this debate. Many of us are concerned that there should be the fullest possible examination of our international trade strategy. We are grateful for the detailed comments of the Front Bench spokesmen, although there has been a restriction in the time allowed for this debate because of earlier proceedings in the House.

This debate is all about trade strategy and our priorities by geography, industry and currency, and in politics. I regard the EEC as our home market and the power base from which we should operate. I was delighted to hear the Secretary of State say that his guiding star would be to match the competition. What a welcome conversion that is! It was music to my ears.

However, I hope that the right hon. Gentleman ensures that the ECGD is always aware of the competition being offered by other countries. This has so often been a bone of contention. I recognise the problem of proving the facts of a case, but in negotiations to decide new credit insurance arrangements we should not outwit ourselves and find our ability to compete reduced while other nations catch up. I say this not from any lack of confidence but as a warning. I have been active in exporting for many years and know from bitter experience how we can be out-manœuvred by Government departments of other countries. I hope that we shall not allow that to happen again.

Reference has been made to trade with the Soviet Union and Eastern bloc countries. There is a problem here which is simply shown in the illustration of what happens in the shipping trade. The Eastern bloc countries will decide to purchase fob but then insist that goods are carried in their own ships. They will sell cif but again insist that the goods travel in their vessels. These are machinations to our disadvantage. They create a real difficulty in our world shipping operations.

During the trade negotiations in February last year, we had an opportunity to make a deal on this shipping question, but we lost it. I asked the Under-Secretary at the time what action we were taking to ensure that we protected our interests while negotiating that trade deal. In choosing our strategy, we should not put ourselves in the hands of any one bloc. My motto for the Secretary of State would be "Don't put Britain in hock to any bloc". We must strike a balance in world trade.

We have an opportunity to develop the sale of our invisible export services to developing nations. We have a superb record, which is second to none in this field. With the Chancellor of the Exchequer, I have attended a conference in Tehran, another in Caracas, with the governor of the Bank of England, and a third in Brazil. We are regarded as the world's financial management experts, and this is something that we can and must sell. Recent figures show that our private invisible earnings have topped £10,000 million for the first time. In 1975, they increased by 9 per cent., to £10,400 million—equivalent to 56 per cent. of Britain's visible exports. That is a terrific record, of which we can be proud.

Much of the increase in private invisible earnings reflected higher returns on overseas investments. Those who advocate that we should sell these investments in order to solve our economic problems should realise that we would be throwing away about £1,300 million a year.

We have to learn from the Committee on Invisible Exports that we have much to gain from exchanges and exchange visits. Trade exchanges can set up orders for the future and demonstrate to people how we conduct our business and handle our affairs. That would help us set up activists in every nation, to generate the trade that the Secretary of State wants to see.

There are opportunities for the Government to act. They can do much to help trade promotion. The Committee on Invisible Exports works on a shoe-string and would be grateful for more assistance. Invisible exports should be given the same sort of recognition that is given to visible exports. In Government Departments there is apparently a lack of understanding and awareness of the contribution that invisible exports can make. I am sorry to have to say that, but I believe it to be true.

It might also be helpful if, in the presentation of figures, we ensured that invisible exports were more clearly analysed to show their true contribution. For instance, they could be separated from Government expenditure, including overseas military expenditure and service payments on local government borrowing.

I am grateful for the opportunity to have taken part in this debate and I hope that it will not be long before we can have another and more lengthy opportunity to debate these problems.

Mr. Deputy Speaker

I am grateful to the hon. Member for Hertfordshire, South-West (Mr. Dodsworth) who spoke for only seven minutes. If subsequent speakers follow his shining example, we may be able to hear a substantial number of hon. Members.

5.40 p.m.

Mrs. Judith Hart (Lanark)

I shall try my best to follow the excellent example set by the hon. Member for Hertfordshire, South-West (Mr. Dodsworth). I should be delighted to reply to the hon. Member for Worthing (Mr. Higgins) wearing my National Executive Committee for Import Controls hat, but I shall leave that to others, because I want to talk about our trading relationship with Third World countries.

I wish to consider two related aspects. The first is the general position of our trade with the whole world. We do not always fully appreciate the statistical breakdown of our exports. According to the 1974 export figures for commodities issued by the Department of Trade, we send £5.5 billion worth of exports to the EEC, £2.9 billion to the rest of Western Europe, £2.6 billion to North America and £5.8 billion to the rest of the world. The rest of the world includes the OPEC countries; exports to them which are growing but are still comparatively small; centrally planned economies—the Department of Trade's description of the Soviet bloc—other developed countries, which description, broadly, means Australia and New Zealand; and developing countries.

In 1974 the developing countries bought almost 18 per cent. of our exports of machinery and transport equipment, amounting to more than £1,000 million. They bought over 20 per cent. of our exports of chemical and pharmaceutical products and over 11 per cent. of our chemical elements and compounds. They bought almost 12 per cent. of our textile industry exports and almost 16 per cent. of the various ranges of manufactured goods. Those are substantial figures, and they are for 1974, when the developing countries were already in the state of desperate economic crisis that accompanied the rise in oil prices. Their rates of growth, which often reached 5 per cent. and 6 per cent. during the 1960s, had fallen to 2 per cent.—in some cases to barely 2 per cent. In other words, they bought those exports at a bad time for them.

We should make more of the goods which the developing countries need. There should be production for need as against production for conspicuous consumption—the production of the small truck rather than the second suburban motor car. When I was recently in Lesotho I saw perfectly designed small Toyota trucks produced by Japan whistling around. Why is not British Leyland designing, making and selling trucks of that kind? Let us produce what the developing countries need and by that means build up the trading relationships that we already have with them.

We should, of course, assist in promoting the rate of economic growth of the developing countries. There is a massive possibility for the expansion of trade for their good and ours. There is a deep identity of interest between us and them. This raises the issues of the UNCTAD Conference in Nairobi. Britain does not have a particularly good reputation at UNCTAD. In 1964 and 1968 we did not shine brilliantly, and the 1972 meeting was not at all a happy experience. If my right hon. Friend goes to Nairobi he may recall that in 1972 there was a fascinating exchange in the Chamber, when I challenged the then Minister of Trade—Mr. Noble, the former right hon. Member for Argyll—and accused him of attending the UNCTAD Conference in Santiago for only one day. He shot to his feet, interrupted me and said "No, no, it was a day and a half". I warn my right hon. Friend that any ministerial attendance at UNCTAD should be complete and that attention should be given to the fine print of the resolutions and amendments in committee. That is what makes or breaks Britain in terms of her achievement at UNCTAD.

The conference will be concerned basically with the various elements of the new international economic order. It will follow on from the declaration and programme of action debated in Manila by the Group of 77 three or four weeks ago. It was summarised to me in Geneva three weeks ago, when one of the leading members of the Group of 77 said: We have condemned the traditional approach to negotiations. We do not present a list of requests but a global statement of what must happen. That will be the firm approach of the developing countries at the meeting in Nairobi. They retained their unity throughout the tremendous tensions of the Manila meeting. Let no one suppose that the tensions between the better off and the poorer developing countries—between Latin America and the African countries—will cause a breakdown between them at some point, and that we need not worry too much about an eventual confrontation. That was being said when I was involved in the Lomé negotiations and when Britain was involved in the sugar negotiations, and each time the people who said it were wrong. The developing countries will preserve their unity, which they regard as being of the greatest importance.

I cannot explore as I would wish the many issues that arise, including the reform of the monetary system and the link between commodity prices and the prices of manufactured goods. The developing countries say that their commodity prices fluctuate but that the price of manufactured goods from the rich countries always goes up. The question of debt arises, as well as the question of the ownership of natural resources, which is a self-evident proposition to the developing countries. Just as we have a right to own our coal, so they say that they have a right to own their tin and copper. They understand why the West quibbles about the ownership of natural resources, but do not think that they should. They believe that the pressure of the multinational corporations exercises too great an influence.

I want to concentrate for a moment on the Common Fund and commodity agreements. The 10 core commodities are all regarded as important. Progress can possibly be made on all 10, and certainly on some. Two countries—the Netherlands and Norway—have now said that they would support the Common Fund. The Netherlands is a colleague of ours within the EEC, What will the EEC say? Are we likely—I trust not—to feel ourselves bound to adopt a common EEC approach? I do not think that is possible, because the Dutch have gone out on their own and said that they will support a Common Fund. That means that there is the possibility of an individual approach. If that possibility materialises there will be no excuse for us. I say to my right hon. Friend and his colleagues that there will be no excuse whatever for Britain behaving in any less progressive way than the Netherlands. We must also quite soon declare our readiness to say that we shall support a Common Fund.

My hon. Friend the Member for Newham, South (Mr. Spearing) put a Question to my right hon. Friend the other day, from the Answer to which it appeared that the cost of the Common Fund approach would be about £38 million a year. If I were still associated with the Ministry of Overseas Development, I should have thought that such a sum—coming in general from Government funds, but some of it, if need be, out of aid funds—would be as good a use of aid to the developing countries, giving them the basis on which to plan and to get the exchange earnings which they need, as many of the other projects on which we spend our money. But I trust it would be regarded as an extra to the aid programme.

Would it put up prices? It is worth considering that only in one or two cases is it likely that commodity arrangements under the Common Fund would be likely to produce an increase in prices. In most cases it would merely establish price stability.

Even where a slight increase in price might be involved, it is worth remembering, when we look at the price of a bar of chocolate or a tin of cocoa in the shops, that within that price only 6 per cent. is represented by the primary commodity; the rest goes in processing, packaging, marketing, advertising, and so on. Even in the case of tea, which needs less processing and treatment, the primary commodity element represents only 15 per cent., at the highest. For all products in the list, it is between 6 per cent. and 15 per cent. In view of what could be gained for us, as well as for the developing countries. I do not think we need regard price increases as a significant factor. It would occur only in the case of one or two commodities.

My right hon. Friend ought to go nap on the common fund. He ought not to hesitate. I hope that the Cabinet will agree that we must take an identifiably forthright and an identifiably progressive line at Nairobi. We need to take a much more positive approach than has been taken in the past. This is precisely the moment for that positive approach, because we now have to recognise that an understanding of our own self-interest leads us directly to maximum co-operation with the Third World.

5.53 p.m.

Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)

I am always tempted by the right hon. Lady the Member for Lanark (Mrs. Hart), and never more than when she is talking about UNCTAD and with particular sensitivity about the problems of the developing world. However, in the interests of brevity I would rather refer to her right hon. Friend the Foreign Secretary and his response to a Question some weeks ago, when he said: The longer I stay in this job, the more I realise that trade is becoming more and more influenced by Governments throughout the world. I sometimes wonder whether we in this country have a system sufficient to meet what we encounter overseas. I have particular thoughts in that direction. I am not being idealogical about this matter. It is a practical question of how we deal with overseas trade. This may need new instruments in this country."—[Official Report, 28th January 1976; Vol. 904, c. 414.] Many of us, on both sides of the House, with some experience of the commercial world, realise that Britain's representation and posture overseas have become increasingly uncompetitive in relation to those of many other countries. In particular, I believe that we suffer from a lack of qualified staff on the ground and very inadequate organisation. It is for those reasons that in recent weeks I have put down Questions to the Secretary of State for Trade, to his right hon. Friend the Minister for Overseas Development, and to his right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs.

Considering first the Department of Trade, I was staggered to note that no members whatever of the right hon. Gentleman's staff, serving in this country or overseas, have recognised qualifications in market research, marketing, advertising or public relations. Furthermore, I was astonished to discover that none of them, apart from the right hon. Gentleman's own personal industrial advisers, has more than five years' commercial experience with a private company.

As to the Ministry of Overseas Development, again it was staggering to note that it, too, had no qualified people in these respects. I suppose one can forgive that Ministry, for certainly under the right hon. Lady's leadership it was a little careful to be not too closely involved with trade matters, preferring to stick to aid, despite the fact that there is undoubtedly a developmental impact of trade, particularly in developing countries. I am glad to note that her successor has modified the right hon. Lady's policy slightly, and that he now at least recognises that trade plays an important part in development.

As to the right hon. Gentleman the Foreign and Commonwealth Secretary, in the rather typical manner of that office, he simply informed me that it would be too expensive to find out whether any of his staff were qualified. This, I believe, is the most disgraceful response to a very serious matter.

I hope very much that the Central Policy Review Staff will look very carefully into the staffing of these three great Departments of State to ensure that we have qualified people on the ground overseas. How often do those of us who visit overseas countries, particularly in the developing world, find members of Governments asking us why we deploy our resources so badly when they are so anxious to buy from us, so anxious to see British exporters, and so anxious to co-operate with us. It is true to say, as I have said in this House before, that the good will which exists overseas for Britain today, now that we have gone through the post-colonial era, is second to none.

Similarly, I refer briefly to the fact that geographically the Department of Trade, the Ministry of Overseas Development and the Foreign and Commonwealth Office again do not precisely match up. This shows a fundamental structural weakness in the capabilities of these Departments to consult with one another to the benefit of the overseas export effort. I note, too, with great regret, that there is no common regional export strategy which is identifiable as between those three Departments.

I believe it was a Conservative Government which set up the Ministry of Overseas Development's experiment with the development divisions; it has proved to be of extraordinary assistance to our development effort overseas. The House will know that this enables regional specialists to be available to a number of countries over the area at a relatively small cost. In the West African Development Division there are engineers, agriculturalists, teachers, economists and sociologists available to all the posts in the whole of West Africa. The same is true of the other four regional divisions.

I wonder whether the Secretary of State for Trade would consider it worth while setting up a similar regional structure to give marketing and selling advice to the posts through, perhaps, a parallel organisation to the Ministry of Overseas Development's Development Division organisation.

It is absolutely essential that we begin to co-ordinate our regional sales effort on the ground. Let me take a brief example to illustrate what I mean. The right hon. Lady referred to the need for agricultural machinery. It so happens that we have some of the largest exporters of these commodities in the world. Yet it is remarkable that they still look at markets individually. Ghana is a different market from Nigeria; Nigeria is a different market from Sierre Leone. Although there is some sort of regional supervision, there is no regional inter-Government negotiation to see whether, by bringing the markets together, the export effort could be improved by making it more efficient, perhaps by setting up a regional manufacturing or assembly capacity from which, for example, assembled tractors could be re-exported to different parts of the region.

All this requires inter-Government effort and inter-departmental effort of very considerable importance, and I hope very much that when the CPRS reports it will have looked into this new trend in world trade and produced a plan for reorganising our posture overseas to take note of the points that I have made.

A terrible example of the lack of cooperation between Departments is to be seen in the fact that, on a day like this, only the Department of Trade is represented on the Treasury Bench. I should like to see representatives from the Foreign Office and from the ODM. I am not making a party political point but a serious point that international trade involves all three Departments and that, if we are to debate it, it would be very helpful for the Ministers from all these Departments, and perhaps the Shadow Ministers, to come together and listen to what right hon. and hon. Members have to say.

I congratulate the ODM on its recent decision to restore allowances for pre-investment studies and to make available public money for that purpose.

Mrs. Hart

I indicated that I would not be tempted, but on this point I must be. The hon. Gentleman must be aware that this was a Conservative Government decision opposed by the official Labour Opposition, abolished by a Labour Government, and now restored by a Labour Government.

Mr. Brocklebank-Fowler

The right hon. Lady will forgive me for pointing out that the responsibilities of office bring an increased sense of reality. I am glad that her successor has shown such a sense.

The right hon. Lady will know that British investment in overseas countries, especially in less developed countries, can be not only an important springboard for development in the country concerned but also an additional source of invisibles, to which my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) referred earlier. We should never forget that investment and trade are at least as important to the less developed countries as is aid itself. In this connection it is very important that we should make a concerted effort to export our intermediate technology to the less developed countries. We know that the ODM is shy of trade and that it prefers aid, but there is an enormous potential overseas for engineers, educators, agricultural advisers, and so on.

Although I welcome the recent appointment of a new chairman to the Agricultural Export Council, this, too, is another body which, in my view, is extremely badly financed, and one to which, perhaps, the Government should consider giving far greater support to enable these technologies, of which we have so large a surplus, to be exported to the mutual benefit of LDCs and to our balance of payments.

The Secretary of State will know that the Select Committee on Overseas Development is shortly to look at the role of private investment and trade in the development of less developed countries. A report will not be published for a very long time, unfortunately. The study will take a year or so to complete. I hope that in the interim the CPRS will recognise the enormous potential for Britain overseas, especially to invest in trade with and to advise the less developed countries to our mutual benefit in times of domestic economic strain when increased aid is not practicable.

As I said just now, trade is always preferable to aid, even to the LDCs, and I hope that the CPRS will propose a substantial organisation for overseas representation and departmental liaison to enable the United Kingdom to exploit these important opportunities.

6.5 p.m.

Mr. Mike Noble (Rossendale)

On a day when we are debating international trade, I am very surprised to see the Liberal Bench totally empty. I note particularly the absence of the hon. Member for Colne Valley (Mr. Wainwright), who earlier today presented a Bill on dumping, and the hon. Member for Rochdale (Mr. Smith), who has had a lot to say about our trade in textiles. He is in the building today, but he is not present in the Chamber to utter a word. I am sure that any constituents from the Northwest of England will be glad to see that there is, however, a fair scattering of textile and footwear Members in the House at the moment.

I am very tempted to comment on the recently concluded textile agreements. However, I refrain from doing so, in view of the time, and confine my remarks to the General Agreement on Tariffs and Trade. This is a treaty which is in urgent need of restructuring, in view of the changes that have occurred, some of which have been mentioned by Opposition Members and by my right hon. Friend the Secretary of State. My right hon. Friend dealt particularly with dumping, and I am pleased to see that recently the Department of Trade has acted with a little more speed in dealing with dumping cases. However, the procedure still leaves a great deal to be desired. In this conection, I take the point made by my hon. Friend the Member for Nelson and Colne (Mr. Hoyle), because there is no doubt that, as the procedure works at the moment, especially in this country, material damage can and does occur before effective steps are taken to prevent the dumping of cheap imports.

There are difficulties of proof where we have non-market economies, as they are called, and now, as I understand it, in certain parts of the world there are difficulties where cross-pricing within multinationals takes place, so that the price on the market is an artificial one and is simply a book transaction within one company.

I take up the point made by the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) about Foreign Office staff. I am amazed that our embassies do not employ people with the specific resposibility of checking dumping allegations in the countries of origin. I put a Question on this matter to my right hon. Friend the Foreign and Commonwealth Secretary. To this, he again replied that he could not afford it. Taking the total cost of the unemployment caused, that seems to be a ridiculous answer.

But there is another matter that needs looking at, and it is the way that GATT operates with regard to trade as a whole. It operates at two levels. There is the aggregate level, to deal with balance of payments problems. Then there is the industry level, to permit structural adaptations to be made to compensate for changes in international trade.

It so happens that I represent a constituency in which the structural changes have had more effect than in most others, since my constituency is very much involved in footwear, textiles and paper. This problem will spread, because it is my guess that in about 10 years virtually every underdeveloped nation will want a motor car assembly plant, with all the other advantages of costs that they may have.

For a number of reasons, we have to reconsider the whole process of international trade. First, it is a fact that in recent years an increasing number of countries have taken measures that contravene the GATT. We have had our own country taking the step, eight or 10 years ago, of a temporary import surcharge, and this has been copied by France, Canada and Italy. We have had non-tariff barriers of the kind that we have now—voluntary restraint agree- ments. We have had administrative restrictions. A firm in my constituency has just had a supply of slippers sent back from Eire because the words "Made in England" are on a label which is stuck on rather than being stamped on the product. How it is possible to stamp black on a black sock or a black sole, I do not know. The consignment has been sent back. I shall take the matter up at another time.

I understand that the United States of America has introduced 70 voluntary export restraint schemes since 1972. That shows that the GATT is failing to meet the problems that it is meant to deal with. It is falling into disrepute. But it has safeguards to enable countries to protect domestic industries. Article 19 authorises emergency measures to be taken to restrict imports if there is an actual or threatened injury to industry. That is interpreted according to the absolute level of imports of a particular type rather than on the degree of penetration. Injury or threat of injury is produced not by the volume of imports but by the degree of penetration into a particular industry. If the domestic market is falling and imports remain at a constant level, there will be injury. This has been seen in the textile and footwear industries in recent months, even when imports are falling.

The definition of injury is vague. I do not believe that anyone knows what the definition is. In the absence of a definition, I do not know how the Government can act specifically and quickly. Governments are afraid to use that article of the treaty because they fear retaliation and having to pay compensation.

The present structure of the GATT has been reduced to a farce. The Secretary of State and the EEC Commissioners have a responsibility to renegotiate the treaty. I hope the Government will bear that in mind.

My final point concerns competition with the developing world. In a recent speech in Basildon, the Secretary of State, referring to cheap imports, said: Nor should we comfort ourselves with the pretence that cheap imports are unfair imports. Some countries are in fact able to produce goods very competitively—because they have natural advantages in raw material supply; because they have invested in more modern machinery; because their labour is either cheaper or more efficient than our own. Certainly we cannot claim that cheap labour is itself unfair competition. The point of importance in that is the Secretary of State's reference to cheap labour. We should be talking not about cheap labour but about low labour costs. If that cheap labour was slave labour we would throw up our hands in horror, but in much of the world workers are little wage slaves, and nothing more.

We should be asking ourselves, when competing with a country, whether there is collective bargaining there, so that employers face the same kind of costs, the same pressures and, therefore, the same final pricing costs as we do. We should ask what kind of social security benefits exist in such countries. The answer to that would usually be "None". In Malaysia for example, men working a 40-hour week in the textile industry are paid only £5.20. How can the Lancashire textile industry be expected to compete with that?

It is time that the Socialist countries of the world—the other EEC countries and ourselves—got together to produce a labour code to be attached to the GATT, which could be policed by the United Nations. If that is not done, the problems in the textile and footwear industries will continue to grow, and this kind of debate will become part of a recurring cycle, until the industries disappear altogether.

6.14 p.m.

Mr. Edward Gardner (South Fylde)

As the Secretary of State pointed out, the deficit in the balance of payments is now leaving us "in the red" to the tune of £700 million on current account. But there is something which we can do to solve that problem. In the short term perhaps we cannot make an effective contribution by exports alone, but in the long term—and one hopes that it will not be a very long term—the solution will be an increase in exports. Those exports will come mainly from the private sector of industry and not from nationalised industries. I hope that the Government realise this.

Selling abroad is not fun. I have always suspected that it is not, and I am told by many people involved in the export business that I was right. The problems are depressing and formidable. I detected some of the problems in Tokyo a few weeks ago on a wintry afternoon when I stood on the corner of the busiest part of Tokyo. Traffic jams there make ours look like civilised processions of traffic. I saw only three British cars in half an hour, and I greeted them with the same sort of surprise which I suppose Stanley reserved for Livingstone.

The indifference which some countries, certainly in Asia, show towards this country as a trading nation is disquieting. The best example that I can give the House is when, in Tokyo, I inspected a large wooden wall map. The sea was painted blue and various countries were raised above the blue sea. Represented on that world map, which was for the guidance of business executives, were all the countries in the world except one—our country.

Mr. Hoyle

Did the hon. and learned Gentleman make inquiries not only about the difficulties facing Britain in penetrating the Japanese market with our cars but about the difficulties which other countries face because of the Japanese barrier?

Mr. Gardner

Of course I made inquiries. I discovered that the Germans, Italians and others in Europe were getting into the Japanese market while our people were not.

I agreed with my hon. Friend the Member for Norfolk, North-West (Mr. Brocklebank-Fowler) when he said that it was a pity that in a debate of this kind a Government representative from the Foreign Office was not present.

I take this opportunity to speak on behalf of 500 of the loneliest business men one is likely to meet anywhere in the world. They are to be found in Taiwan, which I visited recently as a member of a mixed parliamentary delegation. If those 500 British business men were given proper support and were not deserted—as they feel deserted—by the British Government, they could make a considerable contribution towards balancing the deficit which is rightly troubling the Minister.

The right hon. Gentleman should bear in mind that those 500 business men have no Government support. They are doing a remarkable amount of export work and they feel that, if only they had some means of attracting the support and the encouragement of the British Government, they could double and probably treble the amount of money which they are earning. I beg the Minister to see whether something can be done to help them. We have no diplomatic representation in Taiwan, and those 500 business men can obtain some kind of security only by relying on the Americans. That is a situation of which no one can be proud, and I hope that something can soon be done to remedy it.

Several Hon. Members rose—

Mr. Speaker

Mr. Ron Thomas. [HON. MEMBERS: "Oh."] I did not realise that the right hon. Member for Jarrow (Mr. Fernyhough), who is a Privy Councillor, was seeking to catch my eye, and I had others in mind.

6.20 p.m.

Mr. Ron Thomas (Bristol, Northwest)

I am worried by the artificiality of this debate. I find it strange that both Front Benches can divorce problems of international trade from Britain's present economic situation. Listening to the debate, one would not realise that we have about 1½ million unemployed, that our index of industrial production is lower than it was in 1970 and that capital investment was down by 12 per cent. last year and looks like going down another 14 per cent. this year. We have about 200,000 workers on short time, and redundancies are being reported to hon. Members day in and day out.

The Opposition Front Bench spokesman, the hon. Member for Worthting (Mr Higgins), offered us a lecture, including mention of Adam Smith and the 1930s. The hon. Gentleman did not tell us that America, Germany and the other industrial countries completely ignored Adam Smith and industrialised behind high tariff barriers. If they had listened to Adam Smith they would probably still be importing guns and knives from Birmingham and exporting nothing but wheat. It is nonsense to compare the present situation with the 1930s, when we did not have multinational companies, with their oligopolistic price fixing, transfer payments and so on, and their control over international trade.

Those of us on this side of the House who believe in import controls do not ask for them as an end in themselves, and we do not want them on their own. We see them as part of a general economic strategy. We do not believe that the market mechanism suggested time and again in the House will get British capitalism out of its present crisis. We think of a strategy involving the regeneration of British industry by the direction of funds. We do not believe that that will happen unless there are import controls. We also believe in reflation to deal with the high level of unemployment. That cannot be done without import controls. The whole of our strategy is linked. Every proposal that we make relies on another.

My right hon. Friend the Secretary of State said that imports, both visible and invisible, accounted for about 30 per cent. of the gross domestic product. Our import bill last year was £24,000 million. We were told at the Labour Party Conference that it was red-blooded Socialist courage to have planning. We heard that we must have planning of wages. Is it suggested that imports and exports are not, and never will be, part of the planning mechanism, and that we should simply leave them to market forces and multinational companies? We believe in planning, including a planned trade policy. That is the essential point.

My right hon. Friend also told us, in true A-level or perhaps even O-level economic style, that we must export in order to import food, raw materials, fuel and so on. But he did not tell us that practically half our £24,000 million import bill last year was for finished and semi-finished manufactured goods. He did not tell us that if fuel is deducted from that bill, because of its distorting effect almost 60 per cent. of our imports are finished and semi-finished manufactured goods. In 1966 the proportion was only one-third.

The hon. and learned Member for South Fylde (Mr. Gardner) referred to the balance of payments deficit. Our deficit with the Common Market countries last year was almost £2½ billion, although the Common Market was supposed to save and regenerate British industry. Before we went in, we were almost in balance.

My right hon. Friend's official statistics in the Trade and Industry Gazette give the following import volume indices compared with 100 in 1970: food, 98; fuels, 89; and basic materials, 78. It is not those items that are creating the balance of payments problems but semi-finished manufactures, for which the figure is 135; finished manufactures, at 183; and road and motor vehicles, at 203. They have doubled on a volume basis since 1970.

We are told that if we have any kind of import controls there will be retaliation. We do not accept that. We have already heard examples of import controls being introduced. The bulk of our manufactured imports come from—in order of magnitude—the United States, almost £1,200 million; West Germany, £1,100 million; France, £700 million; Japan £446 million; and Italy, £440 million. We have a considerable trade deficit with each of those countries. With the United States it is £574 million, Germany £724 million, France £460 million and Japan £362 million. We doubt very much whether any country will cut off its nose to spite its face because we take certain action to protect British industry, which is in a spiral of contraction and decline.

The United Kingdom took action between 1964 and 1966. France took action in June 1968, the United States imposed a surcharge in 1971, and Italy had an import deposit scheme from 1974 to 1975.

My right hon. Friend spoke of a resurgence in world trade. Twelve months ago my right hon. Friend the Chancellor of the Exchequer promised us a resurgence in world trade that would deal with unemployment. How many of the 1½ million unemployed will be put back in work by the resurgence in world trade?

Against our economic strategy, which includes import controls, all that the Conservatives can offer is deflation and devaluation, the classic ways of dealing with a balance of payments deficit. We have the deflation, and we have had a devaluation of almost 33 per cent. since we entered the Common Market. The hon. Member for Worthing suggested that imports helped to deal with inflation. He could easily do some economic analysis to show that imports have led to the devaluation of the pound. They have certainly helped to devalue it by 33 per cent. since it was floated. That has been the main force behind inflation.

My final point is linked to trade in terms of the Budget and the whole question of sterling. Two weeks ago the Sunday Times said that my right hon. Friend the Chancellor could raise tax thresholds in the Budget and then allow sterling to float downwards because if the Chancellor can cut taxes by (say) £500m, he can devalue by enough to reduce real wages by rather less than that, without people being any worse off. A devaluation of 2 pe cent, would cut real disposable incomes by about £400m. Therefore, the Conservatives' answer—further deflation and a further devaluation to meet our balance of payments problem—will not work. It will not get Britain out of its present economic crisis. Only a totally different economic strategy based on the Labour manifesto will do that.

6.30 p.m.

Mr. Tim Renton (Mid-Sussex)

I am delighted to be able to leave to the Under-Secretary, who will reply to this debate, the task of answering the points just made by the hon. Member for Bristol, North-West (Mr. Thomas). The hon. Gentleman referred to the artificiality of the debate. He was the only one who did so. I would have thought that the common complaint from both sides of this House had been, unusually for this Chamber, its brevity. Those who are winding up the debate have each left themselves only 15 minutes in which to do so, and brevity has been a requirement for all of us, though we would far rather have had longer time for the debate. I hope that the Government will find time for another debate on this subject in the future, perhaps even a series of half-day debates in which we can tackle individual subjects within the very broad context of international trade, because clearly we have had within three hours to compass a very broad spectrum.

I was particularly interested in the speech of my hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) on the subject of invisibles, of which he has very great experience. Clearly, the contribution of the City and the country generally to invisibles has been the mainstay and prop of Britain's external trade for many years past. It is against that background that I find incomprehensible the demand from a certain sector of the Labour Party that banks and insurance companies should be nationalised.

Mr. Robert Adley (Christchurch and Lymington)

Does not my hon. Friend consider it rather disappointing that, while tourism accounted for 11 per cent. of our invisible earnings in 1975, neither Front Bench speaker thought fit to mention the subject?

Mr. Renton

Not at all. My hon. Friend will realise that unfortunately it is one of the subjects which have suffered in this brief debate this afternoon. My hon. Friend the Member for Norfolk, North-West (Mr. Brocklebank-Fowler) gave us from his deep experience of the subject a most interesting analysis of some of the problems in international trade at the moment. I hope the Secretary of State will see that his right hon. Friend the Foreign Secretary carries out a study of just how many people in his Department have commercial experience, because clearly, as commercial advice becomes a more and more important part of the service given by embassies and legations abroad, it is essential that members of those embassies should have a thorough background in the commercial matters on which they are advising British companies.

In opening the debate, the Secretary of State spoke about credit insurance. In the few minutes that I have available, I do not propose to go in any detail into the new policies which ECGD has introduced in the last year. I should like to congratulate ECGD on the flexibility and variety of its arrangements, but I thought that the Secretary of State showed remarkable inconsistency when dealing with credit insurance in relation to the USSR. He told us that in respect of that country both in insurance and—I take it—in credit terms it was necessary for this country to match the competition. But surely in this case there is a danger that the competition is continually driving the terms downwards, both in interest terms and in insurance, in the type of credit insurance and the length of credit offered.

In a degree, the Secretary of State seemed to recognise the point himself, because he went on to say later that he was anxious to see that a war in credit insurance did not develop and that he was taking part in negotiations to ensure that it did not. I hope that the Under-Secretary will be able to clear up this inconsistency when he replies, because on many occasions at Question Time many of us have asked for details of how this famous bilateral trade pact with Russia was working out, but we never get specifics in answer. Therefore, inevitably, we are left with the impression, without having any bias against trading with COMECON countries, that it is working to the benefit of the USSR and to the disfavour of this country. I feel that Ministers owe this House a detailed explanation of whether or not this is happening.

I hope also that on the subject of credit insurance Ministers will be able to tell us whether they welcome credit insurance coming within European Community competence. The Secretary of State shakes his head, which shows his chameleon nature in relation to the EEC. But I wonder whether, when it is within Community competence, that will help him to clip the wings of some countries, like France and Italy, which may at times go further out of the way in offering excessive credit insurance terms than the ECGD wishes to do.

The hon. Member for Rossendale (Mr. Noble)—I hope that he is recognised by his constituents as a very good constituency Member—and the hon. Member for Nelson and Colne (Mr. Hoyle) both raised the question of dumping. I believe that there is a general sense of dissatisfaction in this House that, although the Secretary of State pays lip service whenever he appears at Question Time to his interest in dumping procedures and requests industry to bring him information, we are left with the feeling in this House that nothing special is being done. It is true that when dumping regulations are enforced customers may claim that this makes high prices higher, but this is a small price to pay if the effect of dumping is otherwise to transfer an industry from the home country to another country.

What we see from the pattern of past years, however, is that those nominally free trade countries which administer their trading pattern force the other free market countries to adapt to the commodity structure of exports and imports chosen by themselves. Thus, to be specific, we all claim to be free traders within GATT but some, ourselves among them, are inevitably more free traders than others, and over the post-war period the two industrialised countries which have done best, Japan and France, have not hesitated to administer their international trading policy. I do not pause for one moment in my commitment to free trade, but I believe that Britain should always look at, and demand investigation of, all types of non-tariff barriers. Quality standards, pollution controls and safety regulations are the devices used by other countries which are nominally committed to free trade so as to protect themselves. This point was very well taken up by the hon. Member for Birmingham, North-field (Mr. Carter) in an Adjournment debate on 22nd January 1975, when he pointed out that in 1973 Japan exported to the rest of the world more than 2 million vehicles but that imports of vehicles into Japan amounted to just 37,000. He listed some non-tariff barriers such as design approval and emission requirements that were some of the causes of this.

In this debate many hon. Members have referred to the EEC and have felt that the Community should take a major initiative in the forthcoming UNCTAD negotiations. I support that view very strongly. I should like to press on the Minister a particular point: the dependence of the EEC for its vital raw material and mineral supplies on overseas sources. Is not this an area where the cost of developing a new mine overseas, for example, is now so large and where the political risk can be so great that it is both beyond the financial resources of an individual company within this country and beyond the size of risk that the ECGD itself wishes to take on board? I hope, therefore, that an EEC initiative will be developed in providing credit insurance against political risks for mineral and raw material developments in less-developed countries in the world.

There is another side to this coin in that the Community is a very important customer for raw materials. For example, it imports some 65 per cent. of all internationally traded copper. It will therefore have a greater influence on the policies of the producing country than any single country within the EEC would have by itself. I believe, however, that the availability of political risk insurance for such development is now crucial to the financing of new mines and new raw material sources.

The right hon. Member for Lanark (Mrs. Hart), from her deep experience, spoke mainly about UNCTAD. It is now at the crossroads. The Group of 77 is pressing for action following the Manila Declaration. The market economy countries, with the exception of Norway and the Netherlands, are still holding fire and wondering how far to commit themselves. These are decisions which must be resolved within the EEC before UNCTAD IV meets in only six weeks' time. We hope that the EEC will take a positive and progressive attitude towards UNCTAD IV and will not simply be content with pious hopes and a stale reiteration of positions already adopted.

Here I take issue with the right hon. Lady on a matter of detail—only one of many details that I should like to have covered. She mentioned the commodity stabilisation schemes. It is so much easier to talk about them than to introduce and make them effective. I should declare an interest here as I have been a representative subscriber of the London Metal Exchange for many years.

I believe that commodity stabilisation schemes are politically desired by everyone. They are sometimes commercially feasible. When one looks back on them, however, one wonders whether a developing country has done better as a result of a scheme than it would have done without it.

I shall quote one example—copper. We know that the copper exporting countries have tried unsuccessfully to reach an agreement for many years. It is said that the need was for a buffer stock of about £400 million. In copper, there is a 30 per cent. scrap factor. Therefore, with such a stock, they could control only 70 per cent. of the market. With £400 million or more tied up in copper stocks, at the end of the day one must wonder whether that money could not have been better used in the form of grants or aid to those countries rather than being tied up in a physical stock of metal.

In considering the question of commodity stabilisation schemes rather than a theoretical commitment to them, let the Secretary of State instead go to the City of London, where there is the greatest repository of expertise in futures markets in the world. Instead of knocking the City, the right hon. Gentleman should ask people there to act as devil's advocates as many of them do not believe in commodity stabilisation schemes, and to use all their available skills to produce the best commodity schemes possible, commodity by commodity, and then see what the result is. That I believe to be the most effective way of seeing in which commodities, and how, stabilisation schemes could be worked out.

We are all slowly coming to understand that the stability of relationships among the industrialised nations is influenced by the stability of Governments and institutions among the poorer nations. The Northern Hemisphere cannot afford to ignore the South. The EEC cannot afford to ignore UNCTAD IV or to see it end in utter disillusionment. The right hon. Gentleman said that he is not going to UNCTAD IV with a closed mind. I hope that his open mind will be full of ideas and that there will be greater awareness in the Government that UNCTAD IV is only six weeks away than was shown in his remarks.

6.45 p.m.

The Under-Secretary of State for Trade (Mr. Eric Deakins)

This has been a brief debate, and I congratulate all those who have spoken on making their points so succinctly. It makes it much more difficult for me to reply to all the points raised, but at least there has been no beating about the bush.

The hon. Member for Hertfordshire, South-West (Mr. Dodsworth) suggested that we were not very good in the ECGD in matching competition. But the Department has very good relationships with credit insurers throughout the industrialised world, and there is a great deal of swapping of information about credit terms being offered by various organisations which can only be to our mutual advantage. We get a lot of information about what other people are doing. I do not believe that the Department or our exporters are as laggardly as the hon. Gentleman suggested in this respect.

The hon. Gentleman mentioned the shipping competition from the Soviet Union. That is too big a subject for me to deal with at the tail end of the debate. My hon. Friend responsible will have noted the hon. Gentleman's remarks and his concern, which my hon. Friend shares.

I agree that we must strike a balance in our approach to world trade and not place too much reliance on trade with one bloc. That goes with every trading bloc, including those of which we are members. The danger is that our exporters, who were used to regarding the Commonwealth as their own preserve and were perhaps not exporting enough to the rest of the world, will perhaps come to see the EEC in that light now. That would be a mistake. The EEC is of vital importance. It consists of some of the richest and most highly industrialised nations. But there are other nations outside the EEC which are highly industrialised or are developing in that direction. We have to treat the world as our market place. It is an objective which our exporters must hold before them all the time.

The hon. Gentleman also stressed the importance of invisible earnings. We go all the way with him on that. We accept that there is need to expand our services overseas, but I am not aware that our invisible exporters are lacking in initiative and enterprise—far from it. I have met them in many countries, especially in developing countries, and I know that they are doing a good job. I do not think that they are in special need of Government assistance. They have the benefit, among other services, of the British Overseas Trade Board.

Invisible earnings are a matter not just for the City of London but of tourist earnings, for example, as well. We must not see invisible earnings through blinkered spectacles, seeing only what goes on in the City of London. There is a lot of invisible trade outside the City, and we should be proud of those domestic industries which play a large part in earning valuable foreign exchange.

My right hon. Friend the Member for Lanark (Mrs. Hart) spoke of the need to produce goods for use in developing countries. I agree with her 100 per cent. She instanced the small trucks which the Japanese were exporting successfully to many developing countries. I regret that our motor firms in the past have not thought fit to produce goods of this nature which could find a market in the developing countries. One of the basic reasons why our motor-cycle industry's share of the market has gone down from 95 per cent. almost to nil is that it neglected the lighter end of the market, allowing the Japanese to come in, build up volume and take over sector after sector in the lower-price and cubic capacity ranges.

On the other hand, in Swaziland five years ago I saw a small tractor, a very simple machine—for example, with a very simple lever operation. I am not a technical expert, but it was without doubt a first-class invention. It was a British invention, and I hope that one of our motor car firms will take it up. It would, I think, help in our exports to the developing world.

My right hon. Friend and the hon. Member for Mid-Sussex (Mr. Renton) talked about UNCTAD IV—one of the most vital issues we are facing. Perhaps I may make a few general remarks about UNCTAD. This is an important subject on which I have met some members of the World Development Movement, and my right hon. Friend the Secretary of State has recently met the Secretary-General of UNCTAD to talk over the problems. The approach that we shall be making, together, we hope, with other developed countries, will be to ensure that this conference is much more successful than were the previous three. We shall approach UNCTAD IV in as constructive a spirit as possible. We hope that it will result in a worthwhile advance in agreement on international trade matters between developed and developing countries. Such a matter must be based upon a consensus, and it must be acceptable to the international community if it is to form the basis of action.

My right hon. Friend and one or two other hon. Members mentioned the common fund. We have not yet adopted a final attitude to it. We have not rejected it, but we have doubts about it. We believe that we should start, as the Prime Minister suggested at the Commonwealth Prime Ministers' Conference last year, with guidelines for commodity agreements, giving a general framework of principles. Within that structure com- modities would be examined case by case. The point of this approach is that it is the only practical way to proceed. There should be negotiation on commodity agreements and then a decision about buffer stocks. They would be appropriate for some commodities, but that would not always be the case. Products such as tea and sisal would probably come in the latter category. Consideration will then be given to financing these stocks, and arrangements which might be necessary in other spheres, such as grubbing up tea estates in developing countries which ought to use their land to produce food for their people rather than tea for export, would be examined. A decision could then be taken on whether a common fund was necessary. We feel that to start with a common fund is rather to put the cart before the horse.

Mrs. Hart

Does my hon. Friend appreciate that the great problem is that people in Whitehall can sit down and work out their grand plans and the best possible strategy but that the confrontation to co-operation in Nairobi will be on the basis of the proposals put forward there? Those proposals will include the common fund.

Mr. Deakins

As I understand it, there was a meeting of the Trade and Development Board in Geneva yesterday or the day before, and there were signs of a certain amount of give in the positions of both developed and developing countries. There is a mutual desire to try to make things work at UNCTAD, and that approach is vital if we are to get international agreement. Every country recognises that UNCTAD will have a very heavy agenda. It will talk not only about commodities but about the whole business of debts for the developing countries, whether they should be rescheduled or whether the slate should be wiped clean. That is just as important, or even more so, as the question of commodities.

There is talk about the transfer of technology which involves multinational and some British companies. It raises the question of what more we can do to help transfer technology to the developing countries. Last but not least there is the vital question of trade access for the products of developing countries to the markets of the developed nations.

Together with the EEC, Japan and other countries, we have started to look at this matter within the generalised scheme of preference, but we have only so far scratched the surface. We have to bear in mind the effects of access on the employment situation in this country, and that means that we have to look to the industrial strategy which is, fortunately, a part of the Government's programme to alleviate the worst impact of exports from developing countries.

The hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler) said that there was a lack of adequate and qualified staff in Government Departments. He talked about a structural weakness. He should appreciate, however, that there is a structural weakness in British society. He said that many people in the Civil Service were not commercially qualified, and that may be true. But it is more trenchant to say that there are many people in British commerce who are not commercially qualified, trained or experienced. Many people in British management, unlike French, German or Japanese management, are professionally qualified neither in a technical sense nor in terms of management degrees and management education. We should therefore be looking to put our house in order on the management side.

Mr. Brocklebank-Fowler

Surely that is an invalid remark. Surely it must be the Minister's responsibility to ensure that the people who service him in his Department are qualified. We cannot expect the Government to reform the whole of British commerce, but we can expect them to put their own house in order.

Mr. Deakins

Where necessary, we employ consultants and technical experts to advise us on matters where appropriate. I do not believe that the hon. Member would want to change the system of recruitment and qualifications in the Civil Service. That would require a major revolution in British society—

Mr. Ron Thomas

Hear, hear.

Mr. Deakins

I fear that my hon. Friends may have misinterpreted my meaning, but it is splendid nevertheless to have a Conservative Member calling for a revolution in the recruitment system of the Civil Service.

My hon. Friend the Member for Rossendale (Mr. Noble) raised the question of dumping. The Government's record and present policy stand any amount of criticism. We have to proceed within the international rules of GATT and its anti-dumping code. We conduct our anti-dumping activities as flexibly as possible so as to offer applicants the maximum help. We help them in preparing their case, and in some instances we almost prepare it for them. We give them the benefit of any doubt in establishing material injury. Since inflation affects anti-dumping duties, we try wherever possible to avoid them and to get an undertaking from the exporter to raise his prices to a reasonable level.

It is said that we expect too high a degree of proof, but we must ask for some evidence. We want reasonable prima facie evidence. Applicants do not have to prove the anti-dumping case; that is the responsibility of my Department. But we cannot do it on the basis of allegations, hearsay or merely gossip. We have to have some factual evidence, and if persons are unwilling to provide it—I am sure they are not—we cannot proceed with those cases. My hon. Friend talked about GATT being flouted and gave examples of non-tariff barriers. He referred to Article 19 and non-tariff barriers. We shall be dealing with this as a serious and important subject in the multilateral trade negotiations currently taking place in Geneva.

It is in our interests to eradicate all non-tariff barriers. Our exports suffer more than those of most countries from these barriers since we have rather fewer of such barriers than most other countries. My hon. Friend talked about Article 19 saying that it needed revision because it did not refer to the degree of import penetration. I agree that it does not, but I remind him that our exports won a bigger share of world trade in 1975 for the first time since the 1950s. If my hon. Friend's reform had been undertaken in 1974, it would have opened the way for anti-dumping and other applications to hinder our exports to many of the markets where they have taken a bigger market share.

We have to ensure that if there are revisions of the GATT anti-dumping codes under Articles 12 or 19, which deal with import restrictions, they cannot be used against our own exporters, who are doing a first-class job.

My hon. Friend mentioned cheap labour, but I remind him that British labour is cheap by comparison—

It being Seven o'clock, and there being Private Business set down by The CHAIRMAN OF WAYS AND MEANS under Standing Order No. 7 (Time for taking Private Business), further Proceeding stood postponed.