Balance of Trade

HC Deb 19 June 1978 vol 952 cc9-12

5. Mr. Canavan

asked the Secretary of State for Trade what is the latest figure for the United Kingdom balance of trade.

Mr. Meacher

In the three months ended May 1978, there was a deficit on visible trade of £225 million, a reduction of £146 million compared with the previous three months.

Mr. Canavan

What is the up-to-date deficit with the other Common Market countries? Is it not now obvious that we could have had a surplus of almost £2,000 million by the end of this year if it had not been for our disastrous entry into the Common Market?

Mr. Meacher

The approximate deficit on visible trade with the EEC is over £2 billion. There has been an improvement in the export-import ratio with the EEC countries during 1977, with a slight fallback at the beginning of this year. I do not think, however, that it can be suggested that if Britain had not entered the EEC we would now have a surplus.

Several Hon. Members

rose—

Mr. Speaker

Mr. Enoch Powell.

Mr. Powell

I did not rise, Mr. Speaker.

Mr. Speaker

The right hon. Gentleman did the first time. I beg the right hon. Gentleman's pardon. Mr. Peter Emery.

Mr. Emery

Does not the Minister realise that in the balance of trade in black Africa Ghana is the second largest of our trading partners? If Ghana had the sort of credit terms that we extend to the Russians, our trade with that country could massively increase. Does it not make sense to give our friends—pro British, ex-colonial members of the Commonwealth—the same sort of credit terms as we give to the Russians?

Mr. Meacher

I applaud the hon. Gentleman's passionate plea on behalf of the Ghanaians, who are, indeed, extremely pro-British and, I am sure, an important market for the future. It is also true that there is a large default on payment of past debts of which, I am sure, the hon. Gentleman is well aware. Until those can be cleared, I do not think that we can offer the same terms to Ghana as we can to other countries.

Mr. MacFarquhar

Is my hon. Friend aware that in the last few days the Japanese Minister of Economic Planning, Mr. Miyazawa, has called for a more flexible version of GATT and IMF than we have had in the past many years? Will he state whether he thinks that a more flexible system of that type would benefit our balance of trade?

Mr. Meacher

I am not entirely sure what more flexible kind of international trading arrangements is envisaged. We are seeking a selective safeguard mechanism in order to ensure that the indiscriminate operation of Article 19 can be made more flexible so that where there are disruptions, caused by one particular exporting country, it will be possible to take action in respect of that country without undermining trade in general in that product.

Mr. Marten

With regard to the EEC, is the Minister aware that based on the last three months the annual rate of our deficit—on an overseas trade statistics basis published by his own Department —is over £2,700 million? Is not there some discrepancy between that and what we were told before we joined?

Mr. Meacher

I do not think that any of the proponents of entry into the EEC were suggesting that after a period of accession there would be a surplus on trade. The question ultimately depends on the pattern of international specialisation, particularly in manufactures. In that respect it is too early to say what the long-term results will be.

Mr. Ronald Atkins

Is it not true that one of the more important sectors in imports, which is increasing rapidly, is manufactured goods? Is not that associated with membership of the EEC? Does that not reverse the promises made that we would increase our share of manufactured goods once we joined the Common Market?

Mr. Meacher

Of course, Britain still retains a substantial surplus in trade in manufactures, although it has declined in recent years. About 45 per cent. of our trade in manufactures is with the EEC. Significantly, the area where we have the biggest surplus in manufactures is the developing countries. It is there that I believe we must have the biggest thrust for the future.

Mr. Parkinson

Is the Minister aware that his right hon. Friend said earlier that trade is not necessarily multilateral? Is he also aware that as a result of the Minister's actions in restricting the import of Japanese motor cars the trade balance with the EEC has become worse because we are importing more EEC cars? As a result of our importing less from Japan, Japan is buying less from Australia and Australia is buying less from us. The net result of restricting Japanese car imports is that we are importing no fewer cars but are selling fewer goods abroad. Has not his right hon. Friend got it wrong once again?

Mr. Meacher

No, my right hon. Friend has not got it wrong. There are certain distinct fallacies in what the hon. Gentleman is proposing. The main one is that the EEC market is open to our manufactured goods, whereas the Japanese market is not open to the same degree at all. In the case of motor car components, for example, we have a very substantial trade with the EEC but a very small trade indeed with the Japanese. That suggests that there are definite restraints on those exports by Britain although they are highly competitive.