§ 2.38 p.m.
§ LORD LUCAS OF CHILWORTHMy Lords, I beg to ask the Question which stands in my name on the Order Paper.
§ [The Question was as follows:
§ To ask Her Majesty's Government whether the Export Credits Guarantee Department are continuing to underwrite risks on export business to Brazil; if so, at what increase in rate; and if not, what has been the effect on our exports to Brazil, both in volume and value, since the stoppage of such credit guarantee facilities.]
§ THE EARL OF BIRKENHEADMy Lords, since the dagger has already been thrown upon the floor I can attempt to answer the noble Lord's Question. This is an extremely complex and difficult Question, like a number of others which, alas! it has recently fallen to my lot to answer. On the short-term side of their operations—that is, mainly consumer goods—the Department have ceased to underwrite new risks on Brazil, except for certain classes of trade which, under Brazilian regulations, allow the earmarking of the means of payment before goods are shipped from the United Kingdom. This trade has no appreciable effect on the current trading and payments situation. Medium-term—that is to say, capital goods—contracts are being dealt with on their merits and subject to Exchange Control rulings where necessary. The Department are also covering shipments made, and likely to be made for some months ahead, in respect of contracts for future delivery which were declared to them for risk before the general withdrawal of cover took place at the end of July this year. By July it was calculated that this trade would amount to £14 million between July, 1952, and May-July, 1953. The Department have, in fact, increased their premium rates, 637 but these rates do not apply to shipments under old contracts; that is, contracts taken on risk before cover was withdrawn. They apply only to the small amounts of special trade now being carried on. In effect, therefore, what it amounts to is this: that while higher rates are in existence they have little effect in the present situation because there is practically no trade to which they can be applied.
It is not possible to estimate the precise effect of the withdrawal of E.C.G.D. cover on the volume and value of current trade. The Department have never covered more than 30 per cent. of total United Kingdom exports to Brazil, but it is estimated that the shipments, which I have indicated will go forward during the next few months at E.C.G.D. risk, will represent about 50 per cent. of the trade which the Department would have covered during the period had they not withdrawn cover for certain business. In attempting to assess the impact of withdrawal of E.C.G.D. cover on our trade with Brazil, it must be remembered that the Brazilians themselves, during recent months, have so far recognised the seriousness of their indebtedness that they have made drastic cuts in imports and also in the issue of import licences. It therefore seems reasonable to assume that in any case, for this reason alone, the volume of our exports to Brazil would have been seriously curtailed.
§ LORD LUCAS OF CHILWORTHWould the noble Earl accept my thanks for the very long and intricate reply he has given me and also, at the same time, accept my sympathy for having to put the answer over? Out of consideration for him I will refrain from asking any supplementary question, but I must tell the noble Earl that we shall study very carefully the answer given, because, so far as I can gather, it is so full of ambiguities that it needs considerable study. I may then return to the subject by putting another Question on the Order Paper.
§ THE EARL OF BIRKENHEADI am extremely grateful to the noble Lord for his abstinence and I shall prepare to meet him on the new field.
§ VISCOUNT BRIDGEMANIs the noble Lord aware that anxiety about trade with Brazil is not entirely confined to the other side of the House?