HC Deb 12 March 1979 vol 964 cc6-7
4. Mr. Whitney

asked the Secretary of State for Trade when he expects to restore medium-term Export Credit Guarantee Department cover for Chile, in view of the fact that only £25 million outstanding debt to the United Kingdom remains unpaid.

16. Mrs. Knight

asked the Secretary of State for Trade if he will make a statement on the restoration of the Export Credit Guarantee Department medium-term cover for exports to Chile.

Mr. John Smith

Some £20 million of the £50 million claims paid by ECGD in respect of defaults by successive Chilean Governments is still to be recovered. This is not an inconsiderable sum and I am not prepared to authorise the resumption of ECGD cover for new medium-term credits.

Mr. Whitney

Is the Secretary of State aware that that reply will cause grave disappointment to British industry? Does he agree that £20 million is an insignificant sum in relation to Chile's foreign trade? As the Secretary of State knows, the delay in the overpayment is because of technical arrangements related to the"Club of Paris ". Does he agree that the expansion of the Chilean economy as a result of following policies which the Secretary of State may not find congenial to his own ideas has resulted in an increase in the industrial market? This is available to industrialised countries in the West but it is being absorbed by our economic competitors and denied to our industrialists because of the Secretary of State's policy.

Mr. Smith

There may well have been an improvement in the external side of the Chilean economy in the last year or so. None the less, the House should remember that serious problems remain, including the high rate of inflation, unemployment, the external debt service and the possibility of an international trade union boycott. In those circumstances, there is need for some caution, given the commercial nature of ECGD's operations.

Mrs. Knight

Is the Secretary of State aware that many Birmingham firms are being prevented from doing any trade with Chile because of the intransigence of the ECGD? Is a political decision involved? If it is, is the Secretary of State aware that America and Russia make these credit facilities available?

Is the Secretary of State aware that Chile increased its gross national product by 6 per cent. in the last three years and that there was a 12 per cent. increase in purchasing power in the same period? Does he agree that those factors make for a more important market and that we should get into it?

Mr. Smith

I gave the reasons for my decision in an earlier answer. The hon. Lady may have made a mistake. So far as I am aware the Soviet Union does not give cover, but I shall inquire into that. I remind the hon. Lady that ECGD cover is not withdrawn for business in terms not exceeding six months' credit. That cover is freely available. Some countries give cover and some do not. Amongst those which do not give medium-term cover are Belgium, Denmark and the Netherlands.

Mr. Grocott

I understand the Opposition's desire not to allow morality to intrude into the money-making process, but does my right hon. Friend agree that all who love freedom and democracy hope that the present regime in Chile is temporary? Does he agree that it would be unwise for anyone to make a substantial investment in Chile?

Mr. Smith

My hon. Friend has broadened the question. I shall confine myself to the original question.

Mr. Nott

When I was a junior Minister at the Treasury I received formal representations from the then Labour Opposition that we should engage in trade with Chile on an entirely non-political basis, in view of the longstanding friendship between the Chilean and the British people. That was the position of the official Labour Opposition when we were in Government. What has changed, apart from the regime, to alter that attitude?

Mr. Smith

My hon. Friends might think that the fact stated in the latter part of the hon. Gentleman's question justifies their change of attitude.