§ 12.1 p.m.
§ Mr. Cyril D. Townsend (Bexleyheath)I wish to draw the attention of the House to the question of British trade with South Africa. I begin by giving a warm welcome to my hon. Friend the Minister of State, who, I believe, is appearing on the Government Front Bench for the first time. He cannot command success, but he certainly merits success. I and all my colleagues wish him well.
This hour-long debate gives the Government the opportunity for the first time to make clear their policy. It gives me the chance to suggest to the new Government what that policy should be. I am optimistic that by lunch time we shall not be too far apart. I am also conscious that in the last Parliament insufficient time was given to foreign affairs. That 1382 must be put right in this Parliament. South Africa will loom large in the next five years. Her fortunes will have a marked effect on our fortunes.
Let us consider the importance of our trade with South Africa. About 10 per cent. of all British overseas direct investment is in that country; the market value of it is about £4,000 million. Indirect investment is about £3,000 million. I accept that those are bound to be rough figures.
Britain's total gross income from trade with South Africa is about £2,000 million a year. Over 400 British firms have trading links with South Africa. Many of those firms have been trading with South Africa for well over a century. In 1978, our exports to South Africa were valued at £667 million, the second highest figure ever achieved and £81 million up on the previous year. The House will know that South Africa is one of the world's biggest holders of sterling.
Those who argue in the United Nations and elsewhere in support of trade sanctions and the withdrawal of overseas investment from South Africa do so because they dislike apartheid. Apartheid is not the issue before the House today. I dislike it. So, as far as I know, do the other 634 right hon. and hon. Members of this House. So do all the parties represented in the House. I regard apartheid as an economic nonsense, a social blunder and a moral outrage. So let us move on to the real issues.
On 17th March last year, the then Foreign Secretary made a speech in which he encouraged prudent business men and prudent investors to reconsider their involvement in the Republic. I doubted the wisdom of his comments then and I regard them as misguided now. He seemed to be pointing the way towards cutting trade with South Africa as a means of changing the internal policies of that country. If one takes Britain down that road, one ends up with Britain supporting trade sanctions against South Africa, as some Opposition Members would like and as some countries represented in the United Nations would like.
How does one enforce sanctions? At the end of the day, it is by force of arms, by shot and shell, by maiming and widowing, and by killing South Africans. Logically there is no other way. That is why I 1383 for one reject trade sanctions against South Africa.
What happens if one does not go as far as sanctions but encourages disinvestment and calls for a reduction of trade, as is presumably still the approach of the Opposition Front Bench, although Labour's programmes passed by a number of party conferences took a different line and were much tougher with South Africa? Here in Britain one would immediately bump into the leaders of the TUC who do not support total withdrawal of British investment in South Africa. They made that perfectly clear when the previous Foreign Secretary put forward his plans. The TUC leaders realised that up to 100,000 jobs could be at risk in this country. Is that really what the Opposition are encouraging the British Government to do?
As the right hon. Member for Plymouth, Devonport (Dr. Owen) told the Young Fabians in October 1977,
Our economic links with South Africa could not disappear overnight without causing dislocation to the domestic economy and having severe repercussions on the level of employment. We are living in the real world, and this is a harsh fact which we have to take more into account than any other Western European country.I doubt whether the right hon. Gentleman made much impression on the Young Fabians, but he was right. What about the unemployment that would be created in South Africa? The urban blacks would be the first to suffer. They know that; we know that. That is why many of the black South African leaders, such as Chief Buthelezi of the Zulus, want more foreign investment, not less. One must also remember that the jobs of many blacks from neighbouring countries would be lost. Most of the Republic's neighbours are heavily dependent on South Africa.The raw materials of South Africa are vital to both Britain and the Western world. They could not be readily replaced, even at increased cost. Without platinum, chrome and manganese from South Africa, many firms in Britain would have to close. South Africa has a near monopoly in some critical metals. We would be playing into the hands of our trade competitors, many of whom, far from withdrawing, have been increasing their trade with South Africa. We would be playing into the hands of the Soviet Union. By evil chance of geography, 1384 South Africa and the Soviet Union between them produce 93 per cent. of the world's platinum group of metals. One can imagine the astonishment of the Soviet military and economic planners if we were ever to hack about ourselves in this way, not in some passing fit of madness but as a cold and calculated long-term plan.
It must be made clear that for many companies withdrawal would mean heavy losses, for their investment is in machinery and buildings. Alternative markets for other companies would be difficult if not impossible to find. If that withdrawal took place at the time other countries were also withdrawing from South Africa, the financial loss would obviously be very considerable.
We are to learn today the attitude of the new Government. My party made no mention of South Africa in its manifesto. It was not mentioned either in the Gracious Speech or in the speech last week of my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour). Therefore, the Minister today is to make an important pronouncement that will be noticed at home and abroad.
What should be the attitude of the British Government? Unquestionably, in my view, we must maintain the trade and investment links that exist. If there is a flourishing economy in the Republic, the black South Africans are given better jobs and better wages if only because there is a desperate shortage of skilled labour. It will be difficult, if not impossible, for prosperity and apartheid to exist side by side. In the United States, the needs of industrial expansion did far more to help the blacks than legislation and speeches in Congress. In concert with our European partners, we should encourage as much contact as possible in both economic and political terms, thus increasing our influence on the Republic.
I believe that we should support the main recommendations of the 1974 House of Commons Expenditure Committee relating to the employment conditions of Africans in organisations where British companies hold 50 per cent. or more of the equity. We should continue to seek undertakings from companies to adopt the code of practice on employment conditions before they receive help, financial or otherwise, from the Government. By 1385 being in the vanguard of good employment practices, British companies can help to enhance the position of the blacks and set the trend for the improvement of earnings, social conditions, skill training and general education. We should certainly not give in to any future pressure that there might be from other countries—possibly even Commonwealth countries—which demand that we cease trade with South Africa or they will cease trade with us.
I trust that this Government and all future Governments will not allow themselves to be pushed around in such a manner. If we allow others to dictate our foreign policy, where will it stop? No doubt some countries would like us to comply with the misguided United Nations resolution of 1968 on Gibraltar and others might like us to leave NATO.
In February last year our outgoing United Nations ambassador, Mr. Ivor Richard, gave excellent advice. I pay tribute to Mr. Richard. I believe that he was a very worthy representative of the British people at the United Nations. He said:
Our economic and trade relations with South Africa should be organised in precisely the same way that we trade with virtually everybody else. If trading carried a seal of approval or approbation there would be a very long list of countries that British exporters have been trading with for a very long time that would have to be drawn up.It is therefore perhaps time that there was a degree of greater collective realism on the part of the West in their approach to the problem of South Africa. There should be a clear expression of disapproval and non-approbation of its policies, but then it should be treated in precisely the same way as any other country with which we have economic relations, but whose policies we do not approve of. It is not suggested, for example, that collectively we should try and democratise … some of the eastern European countries, despite the fact that we are prepared to trade with them. We should make that perfectly clear to South Africa and the world. Gesture politics does not work. It is transparent, intellectually dishonest and morally specious.I find that I agree with every word of that.Let our Government take the lead, not by lecturing the South African Government, for that would show ignorance of their very nature, not by pushing them into direct conflict with their millions of black citizens, for a peaceful multi-racial society is unlikely to emerge phoenix-like 1386 from bitterness and bloody chaos, but by helping them along the road to progress and reform. Change must come. It will come. But it must come in peace.
§ 12.13 p.m.
§ The Minister of State, Department of Trade (Mr. Cecil Parkinson)I thank my hon. Friend the Member for Bexleyheath (Mr. Townsend) for his kind remarks. I hope that at the end of my speech he will not be too disappointed. I also congratulate him on winning this debate in the ballot.
The House might like to know that I am due to leave for Manila at 3 o'clock this afternoon. I shall be leading Her Majesty's Government's delegation to the UNCTAD V conference. I suspect that there are those who would say that a debate on South Africa was hardly a good warm-up for a visit to Manila and a meeting with the Group of 77. But it is an opportunity for the Government to answer the debate, initiated by my hon. Friend, and to express their views on the trade with South Africa.
The policy of Her Majesty's Government is that civil trade with other countries should be determined by commercial considerations, not by the character of the Governments of those countries. That point was made strongly and powerfully by my hon. Friend and was the theme of his speech.
In our short term in office my right hon. Friend the Secretary of State for Trade and I have met representatives of no fewer than 14 different countries representing a very wide spectrum of political systems of government. The one thing that we have in common with all of them is that we trade with them and that economic relationship in no way implies approval or disapproval of those countries' policies, internal or external, or of their politics. I suggest that is the context within which our trading relationship with South Africa is and should continue to be determined.
However, two points need to be made. First, my hon. Friend mentioned South Africa's racial policies and stressed his repugnance for them. I agree with him. He also mentioned that no member of the Government had expressed a view about South Africa recently and that it was not mentioned in the Queen's Speech. However, it was mentioned in a strongly 1387 worded part of the speech by my right hon. Friend the Lord Privy Seal during the foreign affairs debate on 18th May. He said that the South African Government's
policy of apartheid … is a continuing cause of unrest in that troubled country, and one that we deplore. Our task … is to encourage by all available means the peaceful dismantling of that system."—[Official Report, 18th May 1979; Vol. 967, c. 565–6.]Therefore, my hon. Friend was not quite right when he said that the Government had not expressed a view about apartheid or about South Africa. My right hon. Friend had already done so.The second point concerns our international obligations. In November 1977 the United Nations Security Council imposed a mandatory embargo on arms and military and paramilitary equipment to South Africa. That Security Council resolution has been fully implemented by Her Majesty's Government.
In opening the debate my hon. Friend gave a number of interesting statistics which demonstrated the importance of South Africa to Britain as a trading partner. I should like to reply with a few statistics of my own.
We have been South Africa's principal trading partner for very many years. In 1978 we exported goods to South Africa to the value of £667 million compared with £581 million in the previous year and we imported from South Africa goods valued at £768 million compared with £880 million in the previous year.
South Africa is a valuable market for us. It ranks sixteenth in the worldwide export league for Britain. Its economy, which has been through a difficult patch, has started to come through the world recession, which started at the end of 1973, and it made a moderate recovery in 1978. Largely because of the sharp rise in the price of gold, South Africa was able to convert a visible trade deficit into a surplus in 1977 and 1978.
I mention these figures because there is a tendency in some quarters to regard our trade with particular countries as something of a national sideline that we can take up or put aside without much affecting our own way of life. That is quite wrong. Our overseas trade is our life support system. We need to export to provide our people with work and wealth and we need to import to obtain 1388 the materials without which we cannot manufacture.
We cannot allow our trade with a country such as South Africa to be reduced without endangering our own economic health. This is often overlooked by those who criticise our trade with South Africa. International trade is highly competitive and unless we strive to keep up our markets overseas and expand them, our competitors will readily take our place.
Our major industrialised competitors are already taking an increasing interest in the South African market. For example, the West German market share rose from 18 per cent. in 1977 to 20 per cent. in 1978, the Japanese from 12 per cent. to 13 per cent. and the French from 5 per cent. to 8 per cent. Our share of the South African market was 16.6 per cent. in 1978 and, although exceeded only by West Germany, was virtually unchanged from 1977.
Our prospects for increased exports to South Africa are reasonably good in the short term. Eight trade missions supported by the British Overseas Trade Board have been there so far this year and another nine are planned. Pointers to improved exports are suggestions by the NEDC working parties that there are appropriate opportunities in South Africa for the export of heavy electrical machinery, industrial electrical equipment and mechanical handling equipment.
Our imports from South Africa are mainly raw materials, which are of great importance for our economy. I underline what my hon. Friend said, that it is not only this country which depends on South African chromium, manganese, platinum and vanadium. He pointed out the strategic consequences of this dependence and outlined who controls the alternative sources of supply. It cannot be overstressed that these vital minerals are important to the West, not just to its interests as a trading bloc but to its defence. There is a similar dependency throughout the whole industrialised Western world. We also have significant imports of seasonal fruit and vegetables which would be hard to replace, but they are relatively unimportant.
Therefore, our bilateral trade with South Africa is not peripheral to our 1389 economy. It is of central importance. My hon. Friend mentioned the use of economic sanctions. That is of course a matter for my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs. Our policy is to press forward with negotiations on the problems of Southern Africa. We believe that it is in the interests of the people of Africa and of the whole Western world that these problems should be solved peacefully. Her Majesty's Government will do their utmost to see that these negotiations succeed. Talking about what would happen if they did not could undermine the negotiations. Thus, we believe that the question of sanctions is and should remain hypothetical.
My hon. Friend gave impressive figures about our investment in South Africa. It is for the commercial judgment of the British parent companies concerned to decide whether to maintain or increase that investment. It is not a matter for the Government. South Africa needs more foreign investment to promote economic growth, which brings the best hope of peaceful change.
I was in South Africa three years ago, when I realised that the expansion of that economy, creating a demand for skilled labour which could not be met from the white population, was forcing changes in those despicable job preservation laws. Helping those economic pressures to build up is the best way to ensure that there are the changes we want in South Africa's approach to its black citizens.
There are recent and welcome signs that attitudes are changing for the better, and we welcome them. Such changes as may take place will mainly have been stimulated by economic pressures and not by political threats. I am glad that British companies have generally recognised their part in this process and the fact that they have social obligations to their employees in South Africa as well as responsibilities to their shareholders. That is why the Government will continue to encourage British companies to implement the code of conduct for companies with interests in South Africa—a code which has been adopted by the Governments of the nine member States of the European Community.
My hon. Friend asked that we should not be deflected from our trade policies 1390 towards South Africa by threats of retaliation from other Governments. We are always willing to listen to views which are rationally expressed. We understand the deeply held views of many Commonwealth Governments on the issues of Southern Africa and we share their concerns. But we cannot and must not give way to threats.
However, we must not lose sight either of our important interests throughout Africa. We are aware that in 1978 our visible exports to Nigeria were worth almost twice as much as our exports to South Africa. That is an important factor, but we believe that the way to progress in South Africa is through peaceful negotiations.
I share my hon. Friend's wish that the United Kingdom's trade with South Africa, as with other parts of the world, should be maintained and developed. That is why the present Government place such a high priority on seeking solutions to the many difficult political problems of Southern Africa.
§ Mr. William Hamilton (Fife, Central)On a point of order. I do not know whether I am in order, Mr. Deputy Speaker, in pointing out that my hon. Friend the Member for Ealing, Southall (Mr. Bidwell) is due to take the next debate but I do not see him here.
Mr. Deputy Speaker (Mr. Bryant God-man Irvine)That debate is timed for one o'clock, so the House will be suspended until one o'clock.
§ 12.28 p.m.
§ Sitting suspended.
§ On resuming—