§ 9. Mr. Wallerasked the Secretary of State for Trade what progress is being made in achieving international agreement on the more cost effective use of export credit.
§ Mr. ParkinsonThe international agreement setting guidelines for officially supported export credit terms is the OECD consensus. This was established in 1976 but negotiations for its revision are taking place this year, aimed particularly at the problem of the difference between current market interest rates and the minimum rates set by the consensus. Little progress was made at the meeting of participants last month, but further meetings have been arranged for later this year. One of the difficulties preventing an increase in interest rates under the consensus has been the fall in interest rates in Japan.
§ Mr. WallerCan my hon. Friend confirm that the cost of export credit guarantees is about £500 million per annum? What has been the effect on that cost of changes in interest rates throughout the world in recent months?
§ Mr. ParkinsonThe cost to the taxpayer arises from the difference between our market rate—the rate that the Government pay for the money—and the rate at which we lend it to foreign importers. Last year, that difference cost nearly £500 million. Obviously, the reduction of five points in MLR from the peak of 17 per cent. should reduce the cost to the Government, but we believe that the consensus is fundamentally out of line with the real rate of interest world-wide and needs revision.