HC Deb 03 March 1977 vol 927 cc757-74

10.17 p.m.

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

Mr. Speaker

Order. Would hon. Members who are leaving the Chamber please do so quietly?

Mr. Meacher

I beg to move, That this House takes note of Commission Documents Nos. S/752/76 and 1/427/76 on Export Credits. With regard to the two documents before the House tonight, I propose to deal first with Document 1/427/76, which contains the Commission's proposal for the Community to apply, on an experimental basis until 30th June 1977, certain guidelines for Government-supported export credits to third countries. Those guidelines are set out in the Annex to the draft Decision and relate to minimum pre-delivery payments, minimum interest rates and maximum lengths of credit.

The main effects are to set minimum pre-delivery payments of 15 per cent. of the contract value for sales to all markets, to raise the minimum interest rate for credits of two to five years, inclusive, to 7¼ per cent. per annum except for sales to wealthier markets where the minimum rate will be 7¾ per cent., and to set maximum lengths of credit varying between five and 10 years according to the relative financial strength of markets, whilst maintaining minimum interest rates on credits exceeding five years at, or above, the existing internationally-agreed levels. Certain classes of goods which are the subject of existing arrangements are excluded.

The Commission's proposal needs to be set in its wider international context. For many years the major exporting countries have expressed their attachment to the principle of avoiding self-defeating export credit competition. But despite these expressions of general principle, at the operational levels progress towards greater uniformity of the terms of export credit has been very slow. In the Berne Union, the OECD, and the EEC, there are procedures for prior consultation or notification in certain cases, and there are understandings about the appropriate maximum terms for a few particular categories of goods. But for the most part these arrangements are confined to broad understandings about the length of credit.

In the middle of last year, seven countries, including the United Kingdom—the number has since increased to nine—agreed to respect the guidelines which the Commission has now put forward for endorsement by the Community as a whole. Members will recall the United Kingdom decision announced to the House by the Secretary of State for Trade on 15th June 1976 as reported at col. 124–125 of Hansard. The effect of the Commission proposal would be that all the countries of the Community would apply the guidelines, to which the Community as a whole would subscribe.

These guidelines may be regarded as a modest step, but it should be recognised that they go a good deal further than the previous arrangements, in that they cover length of credit, interest rates, pre-delivery payments and even to some extent credit mixte facilities. Because of this they have been introduced experimentally until 30th June 1977. They have no legal force, and individual countries have complete rights to derogate or withdraw altogether.

As experience is gained of the application of the guidelines, and particularly if they are successful, as in practice they appear to be so far, we would expect an attempt to be made to make them firmer, and to encourage more countries to join in, as well as building on them in various ways. The key to further progress lies to some considerable extent in a Community endorsement of the guidelines.

There have been difficulties here arising over problems of Community competence, in particular the extent to which the individual powers of particular member States would be subjected to Community disciplines, for example to derogate or withdraw, but there are grounds for hope that a satisfactory compromise will still be reached shortly between the Commission and the member States on these issues, and endorsement of the proposal by the Community is now in early prospect. The Government welcome this prospect so that further steps along this road can be taken.

Mr. Tim Renton (Mid-Sussex)

Am I right in understanding that even if the Ministers of Finance agree with these proposals on 14th March there will still be an absolute right for any member of the Community not to apply these guidelines to its own export credit systems?

Mr. Meacher

Of course individual member States will retain the right to make their own credit agreements with third countries. Indeed, the Commission does not have the power, the facilities or the funds for this purpose. Member States will be expected—and indeed required—to adhere to the guidelines unless they specifically make their own individual arrangements, in which case, if they were not in accordance with the guidelines, they would be expected to seek a derogation. Whether a derogation would be agreed is another matter, but it would be within the sovereignty of individual States to make their own arrangements if they chose to do so and to face the consequences.

I turn now to cost escalation cover, which is referred to in S/752/76. Our attitude on this is, of course, governed by our general policy of supporting action through international agreement to restrain excessive competition by Governments to promote their exports, which I have already explained. We have already said that we are willing to take part in international discussions on the subject of cost escalation schemes and of other schemes similar in their effect. That continues to be our position, and we are currently participating in a study of the subject by a working party of GATT. If such discussions were to show a possibility of international agreement to ban or limit such schemes, we should play a positive and constructive part in efforts to reach such an agreement, provided, of course, that it took adequate account of our own legitimate national interests.

I must point out, however, that we did not develop the idea or practice of cost escalation cover. Others, notably the French and the Finns, had been practitioners of this art for many years before we introduced this temporary scheme. Hon. Members will recall the very serious problems, arising from the very high rate of cost inflation that was affecting United Kingdom exporters, which led to our decision to establish a scheme early in 1975. The scope of the scheme was limited, so that it applied only to a relatively small part of our export trade where the problems of cost inflation were most severe, and the scheme was deliberately presented to Parliament as a temporary measure, initially for a duration of two years only. I think this made it quite clear that we regarded cost escalation cover as something in the nature of emergency first aid and certainly did not decide to make it a normal and permanent feature of our support for exports.

Judged by these modest objectives, we may fairly claim that the scheme has been a success. Certainly, this has been the view reflected by the number of representations we have received from industry that it should be extended for at least a further year. To date six guarantees have been given by ECGD and, in support of ship exports, a further six by the Department of Industry. In addition many offers of cover have been made and a further £500 million of export business has been won with the support of those two schemes.

The ECGD scheme as such has given the heavy end of our export industry an essential measure of reassurance in respect of the effects of exceptional and unpredictable inflation on its costs. Many exporters have acknowledged the help which they have received from the availability of this insurance. It has been of particular importance during a difficult economic period when overseas buyers and governments, in OPEC markets and elsewhere, have increasingly insisted upon completely fixed prices, leaving the exporters themselves to bear the risk of exceptional inflationary cost increases.

In the event some exporters who have won contracts on the basis of ECGD's support have decided to go it alone in bearing these risks, as they are entitled to do since cover is optional. But in the absence of the safety net which the scheme represents many, I feel sure, would have been unwilling or unable to go after the business in the first place. That is the key point.

Because of its limited nature, we do not believe that our scheme distorts competition in international trade generally. As I have pointed out, it applies to only a very small proportion of our exports, and the terms on which it is given merely go some way to correcting an inequality in conditions arising from the exceptionally high rates of United Kingdom inflation over the past few years, which are a serious impediment to the efforts of our companies to win major contracts abroad.

Furthermore, though predicting the future in this area is a dangerous thing to do, on presently predicted rates of inflation any future cover under the scheme stands a good chance of breaking even financially.

However, as I have said, industry places a substantial value on the insurance against unpredictable contingences it obtains from the scheme, and has strongly urged that it should continue. The Government therefore decided to seek the House's approval to an extension of the scheme for a further 12 months from 26th March, the expiry date of ECGD's present statutory power to operate it.

The necessary draft order has been considered in Committee and will be made shortly. Although some exporters have pressed us strongly to make costly improvements in the terms on which cover is made available, I am afraid there can be no question of our doing so. We need to keep a very firm control on all aspects of public expenditure. Nor do we wish to get into a new area of subsidising exports. This, incidentally, is the answer to any suggestion that we should emulate the more favourable terms of the French scheme.

The decision to continue the scheme for another year on its present terms does not alter anything I have said about its essentially temporary nature, or about our willingness to discuss arrangements for such schemes internationally. In our opinion the most suitable forum for this is the GATT, where a study has already begun. That is because we believe that cost escalation cover is only one method by which Governments can give support to their export industries to help them with the special difficulties they experience in times of high inflation, and we think it necessary and only fair that an international study should take account of other possible methods that may be used by Governments who do not themselves provide cost escalation cover.

As regards the draft directive from the EEC Commission that we are debating tonight, we sympathise with the Commission's attempt to secure a uniform Community position, which we agree is desirable if we are to participate most effectively in wider international discussions. We shall certainly play our full part in attempts to achieve that position. Essentially, however, and I say this with care, this is something that can be effectively pursued only in an arena wider than that of the Community.

There are important exporting nations outside the Community that have a legitimate interest, and are important competitors of which we must take account. We think, therefore, that it would be premature and tactically unwise for the Community to tie the hands of its own members by laying down detailed rules for the harmonisation of cost escalation schemes, with a view to their eventual phasing out, before the wider international study has taken place. This is the line that we have so far taken in the Community when discussing the Commission proposal, and the one we propose to continue to take in future.

Mr. Douglas Jay (Battersea, North)

Could my hon. Friend make slightly clearer the Government's attitude on the cost escalation scheme? In his own explanatory memorandum the EEC proposals are described as a proposed Council directive on the abolition of the cost escalation guarantee schemes for exports to third countries". Do I understand him to say that until the wider international discussions, which seem to me clearly necessary, have reached some agreement the Government will not agree to the abolition of our cost escalation scheme?

Mr. Meacher

Our view is that it would be unwise for the Community to seek to bind the member States in a system for winding down and ultimately phasing out cost escalation cover before the international studies have had time to reach fruition. That remains our position, but we must take account of the situation in a year's time. This is an extension for a year. That is the maximum for which we can extend the cover at any one period. The situation in Britain may be different in a year's time. We are opposed to the phasing out of cost escalation cover until the international studies have been completed. That will remain our position.

10.32 p.m.

Mr. Cecil Parkinson (Hertfordshire, South)

As the Minister pointed out, the two EEC documents before us have a similar purpose, namely, to impose on member States a tighter discipline concerning export credits.

A decision by the European Court made it clear some time ago that export credit terms were a matter for the Commission rather than for member Governments to decide. Needless to say, this is not accepted by all the member countries. The French Government in particular are reluctant to accept this finding. That reluctance may explain why draft proposal S/752/76, which should have come into effect on 1st April 1976, is still only a draft proposal.

The proposal seeks to phase out the cost escalation schemes operated by the French and ourselves and previously by the Italians. There is no doubt that these schemes are extremely unpopular with major trading nations which do not have them and do not operate them. The Commission proposes in the document that the schemes should be phased out within two years.

A GATT working party is examining such schemes, and it will be a surprise to everyone if it does not produce an adverse report on cost escalation schemes. Nevertheless, British exporters like the scheme, and, as the CBI made clear in its evidence to the Select Committee on European Secondary Legislation, &c., would like to retain it. In evidence to the Select Committee, the CBI spokesman said: We think that the scheme is of significant value to exporters and should be retained. Later he said: It is a fact that escalation in this country through no control of the exporters is twice as high as it is in Germany. When the scheme was proposed, British exporters were facing a serious situation. We had a record rate of inflation, the pound was falling dramatically, and it was obvious that British exporters were at considerable disadvantage against exporters from other countries which had more stable currencies and were not suffering our rate of inflation. Although the pound appears to have stabilised, it would be a brave man who would claim that inflation is under control or that it will be so in the near future. The truth is that if there were a need for such schemes, that need still exists.

On behalf of the Opposition, I welcome the fact that yesterday the scheme was extended by the House for a further year. When the scheme was introduced by the Government, its scope was restricted and it was confined to a strictly limited portion of our export trade where the problems of cost inflation were most acute.

The scheme has not been widely used. It was a great surprise to find that, after the scheme had been in existence for over a year, only two contracts had been guaranteed under it. But in recent months, however, interest in the scheme has been growing. A large number of inquiries are being received and more and more business is being written. There is no doubt that in a number of major cases the scheme has proved to be of significant value to exporters. As the Minister said, it was never intended to be a normal or permanent feature of the Government's export services. It was always intended to be an emergency measure, and it would be far better for British exporters, if our economic conditions were to stabilise, if we did not need such a scheme.

The scheme can be expensive. Recent estimates suggest that the French scheme could be costing up to £200 million a year. It is not a scheme which one undertakes lightly or which one would want to see being used very widely. If it was being used widely, we would be suffering a high rate of inflation and the cost would be considerable.

This is an occasion when the House can please everyone. The EEC can be reassured that the spirit of the draft proposal is acceptable, and GATT can be reassured by the fact that we are playing an active part in examining the whole question of cost escalation schemes. Meanwhile British exporters will have the cost escalation scheme into the foreseeable future, so that our intentions are beyond reproach and our exporters are receiving the help that they feel they need. On this occasion we are pleasing everybody. We are pleasing GATT and the EEC, and, not least important, the interests of the British exporter will continue to be protected.

The other draft proposal, I/427/76, is much less contentious. Obviously it is sensible for the world's trading nations not to become involved in a full-scale export credit war. The document sets out guidelines covering minimum rates of interest, minimum down payments and minimum credit periods, which, I suggest, are acceptable and, indeed, in the interests of all the world's trading nations to accept. I welcome the fact that the Government have accepted the spirit of the proposals and their implementation, and we support them in that desire.

The ECGD is determined to make sure that British exporters have available to them the full range of credit facilities and supports that are available to our trading rivals. We welcome that determination and we support the ECGD in it.

10.40 p.m.

Mr. Tim Renton (Mid-Sussex)

This is the second time today that I have had the pleasure of listening to the Under-Secretary of State, once outside the Chamber and now in it, and I am pleased to hear that he is still in such good voice and so fluent.

It is interesting that the EEC claimed as long ago as 1973 that export credit lay within its competence. My hon. Friend the Member for Hertfordshire, South (Mr. Parkinson) reminded us that, because of disagreement, notably by France, as to whether the EEC's position was justifiable, one of the documents which we are taking note of tonight which should have come into implementation some months ago has not yet done so. In fact, I believe that the first EEC document on export credit, Document S/678/73, never became a regulation. It stayed a proposal, and one of the reasons for that, as my hon. Friend said, was that France disputed whether this lay within the competence of the EEC.

The EEC Finance Ministers are to meet on 14th March, and I understand that it is up to them then to decide whether they agree with the guidelines in the document before us. I was not entirely clear from the Under-Secretary's reply to me whether, if the Finance Ministers did agree to follow these guidelines, there would still remain a total right of any member of the Community to opt out of the system. Yesterday, the Financial Times referred to the meeting of the Finance Ministers on 14th March, and I understood from the article that if The Ministers do agree it will then become accepted that export credits are the exclusive preserve of the Commission. On that basis the Commission would drop the case that it was threatening against those countries, ourselves included, which signed the gentlemen's agreement on export credit guidelines last year. Perhaps the hon. Gentleman will enlarge on that in his reply.

We are presented tonight with the two EEC proposals, one which is basically in Britain's interest and the other, on the cost escalation scheme, which is potentially against Britain's interest. Doubtless, this is an example of which we have to learn from the Community. If the Community is to grow in competence and authority, there will have to be give and take by the member nations. While fighting legitimately to protect their national interests, at some stage in the bargaining member nations have to remember that the Community interest may be greater or in the long run more important to themselves than a particular self-interest which they are striving at the time to protect. No doubt we ourselves will experience this dichotomy of interest when we come to the revision of the common agricultural policy. I think that we see it also in the documents before us now.

I welcome the idea of the Commission being involved in export credit guidelines but I see in these two documents a strong, diversity of interest between different members of the Community. As my hon. Friend said, we can welcome Document I/427 with very little reservation. Clearly, it is to everyone's benefit that there should be standardisation of terms in export credit, and especially in negotiations with the less developed countries such standardisation should be of assistance.

I put to the Minister two points on that document. First, there are no sanctions proposed in it. I understand that the gentleman's agreement signed at the Puerto Rico summit last year is being abided by at present, although there are from time to time claims that France, in particular, is not sticking quite as closely to it as she should. I wonder what will happen when there is a very large export contract for which three or four member States of the Community, or States which signed the Puerto Rico gentleman's agreement last year, are competing. What will happen to the guidelines then? Does the Minister really think that they will stick when there is a large reward in prospect for which two industrialised exporting nations are competing? We must be willing to be as flexible as any other Government in interpreting these guidelines.

In saying that, I am aware than Spain, for example, is becoming more active in the export field, and is now beginning to take a leading part in the export of nuclear equipment. There is increased competition in manufactured exports from such countries as South Korea and India. We must not lull ourselves into an atmosphere of believing that all competition in export credit has ceased because the guidelines have been accepted, especially when one sees competition arising from such potential competitors as I have just mentioned.

The guidelines are less important to us now than in the past. This arises from the Chancellor's decision, as part of the IMF loan agreement in December, that the greater part of long-term export loans from this county should be financed in dollars rather than sterling. This means that we are now less concerned about the period of time in which we receive payment for our exports, because we are receiving payment in dollars and not in sterling. Essentially, as a nation we are going on to the Eurodollar market in order to borrow the money that we need to finance our export credits, and we are now less concerned about receiving depreciated currency in the years to come than we were when we worried about depreciated sterling being paid back.

We have to use dollars rather than sterling as a condition of the IMF loan, but this makes things harder for our exporters because they have to persuade overseas customers to borrow dollars from them rather than sterling. I would be sorry if, as result of the guidelines, a lot of restrictions were put upon exporters just at a time when, as we are all agreed, we need to increase exports in order to build up a better international base.

As to the second document which foreshadows the withdrawal of the cost escalation scheme, I have considerable reservations. I was pleased to hear the Minister say that, although we are taking note of the document tonight, that does not mean that we are accepting it. The Minister said that the Government are awaiting the results of a wider international study before agreeing to the definite withdrawal of the cost escalation scheme. That is right, because our need for the scheme, when we have as high a rate of inflation as we have now in comparison with, for example, Germany, is much greater than that of German or Dutch manufacturers.

The problem is not only the high rate of inflation but uncertainty among manufacturers as to what the future rate of inflation will be. It cannot be said that they receive good guidance from the Government. The Government proclaimed a rate of inflation of 8.4 per cent. a short time ago, and we later found that the rate was about double that figure. If the Government can so mislead themselves, what about the poor British manufacturers!

If we were to abolish the cost escalation scheme in the near future, that could put some of our major manufacturers—who are now, as my hon. Friend the Member for Hertfordshire, South said, going in for larger tenders—under a serious disadvantage and could provide a disincentive for them to try for some of this business.

We have heard that comparatively few contracts have been accepted for the cost escalation scheme. Can the Minister tell us how many tenders are out from this country internationally into which ECGD cost inflation guarantees have been written? That would foreshadow the degree to which the scheme will be used by British manufacturers in the months ahead.

I heard the Under-Secretary speak earlier today at a world development meeting and he elucidated the detailed technical objections to a common fund. However, he left the door ajar on the question of a common fund as one of the options to be studied at a conference in Geneva next week He was right to do that. Whatever the technical objections, a common fund must be one of the possibilities to be considered in the attempts to achieve commodity stabilisation.

Much will depend on the attitude of the new American Administration. If we are to have a common fund, it will be necessary for the consumer countries to encourage the exploration for and development of non-fuel mineral deposits in the less developed parts of the world. Let us take copper as an example. If there is a stabilisation agreement, it is likely to lead to higher prices. To keep the matter in balance, we as a consumer must seek to aid the European mining companies in their search for more copper.

Can the Minister give us any information on the political risk guarantee scheme which is under discussion between the European mining industry and the Commission? The implementation of the scheme is important if we are not to have a shortage of non-fuel minerals in 10 years' time. I hope that the Government are using their influence with the Commission to speed up consideration of such a scheme. The guarantees proposed would cover the situation in which a mining company's interests were damaged by unilateral action by the host Government in defiance of their original undertakings in the agreement.

This is a potential part of the Community's involvement in export credit, and consideration of such a scheme brings me back to the duality of interests and possible conflict between national and Community interests. In this case I do not think that there is any conflict. Such a scheme would be of great benefit to Britain, because we have a greater concentration of technical mining skills and expertise than any other EEC country, and to the Community, which is so dependent on third countries for imports of non-fuel minerals.

10.53 p.m.

Mr. Douglas Jay (Battersea, North)

I wish to ask one question arising from Document 1/427. On the one hand we have a general agreement between a number of countries, some of which are outside the Community. On the other hand we have the Community proposals for general guidelines which would to some extent limit the freedom of this country in export credits. As our freedom is limited by the Community guidelines, will other major exporting nations outside the EEC be similarly affected?

Surely, the situation that we do not wish to arise is the one in which in shipbuilding, for instance, Japan is able to offer much more favourable export credit terms than ourselves. I am sure that that is not my hon. Friend's intention, but will he make quite clear what our relations will be with countries outside the EEC if we observe the EEC guidelines?

10.56 p.m.

Mr. Meacher

I am grateful for the remarks of my right hon. Friend the Member for Battersea, North (Mr. Jay) and Opposition Members on these two draft directives. It is not often in our debates that there is such real and genuine unanimity and, indeed, welcome for such proposals. I am glad that in this case there is such wide acceptance. A number of points have been made and I shall try briefly to reply to them.

The hon. Member for Hertfordshire, South (Mr. Parkinson) referred first to cost escalation cover. He said that the French traditionally have tended to reserve the idea of independence in respect of export credits. That is perfectly true, or at least it has been true up to now. However, in the past week or two the French, prior to the meeting of Finance Ministers on 14th March, seem to have shown signs of having accepted the inevitability of a common position on export credits. I do not wish to prejudge the ultimate position that they take up—certainly their officials have been careful not to disclose too much—but there seem to be signs that they will accept a common line on 14th March.

The hon. Gentleman referred to the opinion of the European Court in November 1975 when it found in favour of the Commission. It found that the Commission had exclusive competence to conclude an agreement on OECD local cost standards. This is relevant to the question of whether Articles 113 and 114 of the Treaty apply to export credits. Those articles are concerned with the harmonisation of export aids. The Commission has started proceedings against four member States that were signatories to the consensus of July 1976 as being in breach of Article 113 on the ground that the Community has full competence in the matter.

The Commission has also put proposals to the Council under Article 113 requiring the phasing out of cost escalation insurance. That is what we are examining tonight. We hope that if the draft decision is accepted the Commission may see fit to drop these infraction proceedings.

The hon. Gentleman was right to insist that industry sees great value in this scheme. As the hon. Member for Mid-Sussex (Mr. Renton) rightly said, even if the rate of inflation were significantly to drop it has a value for industry that we should take properly into account. It is not exclusively to be seen as a relief to high rates of inflation. I am talking about manufacturers of goods with long production periods—for example, aircraft, ships, power plants, telecommunications, computers and items of that kind with a period of construction that could be five years or more. That is where I believe that a scheme of this kind continues to have an extremely import fallback value. The hon. Gentleman was right when he drew attention to the valuable part that this scheme has played in the winning of business.

I was asked what was the extent of tenders at present involving cost escalation cover. At present, live applications total £2.6 billion worth of business. Of these, there are likely to be five further issues of guarantees. There are also 15 cases where exporters secured the business with cost escalation support but decided in the event to dispense with cover. Therefore, it has a significant role.

Our aim is to get the rate of inflation down. The Treasury forecast, when the Chancellor made his statement in December, was of 15 per cent. inflation year on year at the end of 1977, but such has been the improvement in the situation as a result of the Chancellor's measures and, of course, of the stability of sterling that we hope to improve on that performance. I repeat, our aim is to bring down the rate of inflation. That will do more than anything else to restore confidence to our exporters and assist them further in winning extra business.

I can only emphasise my agreement with what has been said by saying that, as our fundamental aim, we should support any measures which can end self-defeating export credit competition. I am sure that that is right, and that is our policy. It is consistent with what I have said about one of these measures.

The hon. Member for Mid-Sussex referred to French resistance to previous Commission proposals. Indeed, he quoted a particular directive which was not implemented because of French resistance. The French now show signs of accepting a common line on this matter.

The hon. Gentleman asked whether, if the guidelines were agreed at the meeting of Finance Ministers on 14th March, individual member States could opt out. I thought that I had made the position clear. I am certainly seeking to do so in my reply. Member States will be expected, as under the existing consensus—the so-called Washington Agreement—to keep to the terms of the Commission proposal. But we still have a right to seek a derogation. The only point is whether, if we seek a derogation, it is likely to be acceptable to the other member States. Indeed, if one of our competitors were to seek a major credit agreement involving a significant derogation from the guidelines, I am sure that we would be greatly concerned.

Mr. Tim Renton

I am probably being very obtuse. If we sought a derogation, would we still run the risk of a European Court of Justice ruling against us? In 1975 it ruled that export credits were the exclusive preserve of the Commission. Does that ruling mean that a member State has no right to seek a derogation?

Mr. Meacher

No. Member States have the right to seek a derogation. As member States retain exclusive control over the making of new credit agreements, they would be able to insert terms which involve a derogation from the Commission proposal as stated here. However, it is not to be assumed, nor is it desirable, that that should be regarded as other than wholly exceptional.

I say that to make it clear that in our view this does not involve a loss or transfer of sovereignty. The adoption of this decision may be interpreted by some as a concession of competence to the EEC over a wide area of export credit policy, but it would be more proper to regard it as no more than the application of the terms of the European Court opinion to a reasonable proposition from the Commission.

The hon. Member then asked me whether, if there were a large contract which was likely to form a lucrative competition for a number of relevant countries, the guidelines would be expected to stick. I certainly hope that they will. The evidence is that up to now they have done so. On the question of whether the French have sought some shift from this in the interests of the provision of credit mixte facilities, they may have done so in some cases but that has always been the case. Equally, however, we shall still be able to match officially-supported competition from any country on terms more generous than the guidelines. We could match such tactics in the relatively exceptional cases where this happens.

Any country offering longer or cheaper credit will know that others will be able to match those terms. That is the disadvantage of seeking to deviate from the guidelines. Matching will be considered for terms offered both by countries which have adopted the consensus and by those outside the consensus. There is a greater realisation that increased competition on export credit terms is self-defeating in anything but the short run. In fact, its benefits assist only overseas buyers. To that extent, therefore, I would not anticipate any major deviations.

The hon. Member also referred to the growing presence of new exporting countries like Korea and Brazil. What he said is true, but if this proposal were accepted we should expect that to be the basis for an extension of the coverage of the scheme to include other countries—which are sometimes called the super-competitive, so-called developing countries—the intermediate group which are industrialising fast and providing extremely competitive goods to this and other European countries. Certainly I would see us making efforts through the existing channels to extend its scope.

The hon. Member then asked about cost escalation cover. It is true, as he said, that the industry needs long-term assurances, but this is being extended for one year only, because that is the maximum that is possible at any one time.

The hon. Gentleman asked whether I could assist in speeding up the political risk guarantee scheme in respect of the mining industry within the EEC. I am well aware of the problem of non-fuel minerals and the present problems of mining companies in many developing countries. We provide investment insurance cover ourselves at present through ECGD. That should go some way towards providing the sort of cover that the hon. Gentleman wanted. As he must have expected, I cannot give him an immediate answer to his specific question, but I shall certainly write to him about it.

My right hon. Friend the Member for Battersea, North asked how far other countries outside the Community were involved, and whether, by agreeing to the guidelines, we would be putting ourselves at a disadvantage relatively to third countries outside the Community. I do not think that that is the case, partly because there were originally seven signatories to the consensus. That number was later extended to nine. Four of these countries were inside the Community, while those outside included the most important economically—the United States and Japan. Therefore, by adhering to the Commission's proposals, we are ensuring that the smaller countries within the Community, such as Holland and Belgium, will be required to adhere to the guidelines where previously that was not the case, while outside the Community major competitors will still be constrained by the July 1976 consensus.

Mr. Jay

One can assume, therefore, that the guidelines in the two different agreements are substantially the same.

Mr. Meacher

They are identical. The Commission proposes an extension to the other States of the Community, besides the four which have signed the consensus, of exactly the same conditions as laid down in the wider agreement.

I hope that I have answered the points raised in the debate. I am glad that these proposals have met with the approval of both sides of the House. I am sure that they will be in the best interests of our own industry.

Question put and agreed to.

Resolved. That this House takes note of Commission Documents Nos. S/752/76 and 1/427/76 on Export Credits.