§ LORD ARCHIBALDMy Lords, I beg leave 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 they are aware of, and have considered, the United States Government's 714 proposal for the setting up of Domestic International Sales Corporations the declared purpose of which is to subsidise American exporters by means of special tax advantages: and whether this proposed legislation would (a) discourage U.S.A. investment in overseas manufacturing companies: and (b) constitute a breach of GATT and be prejudicial to our export trade in markets where we compete with U.S. exporters.]
§ LORD BROWNMy Lords, we have kept ourselves informed of this proposal, which the United States Administration made public on May 12. Briefly, the scheme would offer to United States exporters the opportunity to defer the payment of taxes on income arising from their export sales conducted from within the U.S.A. It is too early to assess what effect this facility might have upon the investment intentions of United States firms. As to the GATT, I have no doubt that the United States Administration is mindful of its obligations under the Agreement, which prohibits subsidies which enable the export price of manufactured goods to be reduced below the domestic price. We shall watch the development of the proposal and take any action which we think is justified.
§ LORD ARCHIBALDMy Lords, may I thank my noble friend for his Answer, and ask him just one simple question? Does he feel that the announcement of this proposal in certain financial journals in this country has been exaggerated and perhaps over-dramatised, and that it is not as serious as they indicated? Is that the purport of his Answer?
§ LORD BROWNMy Lords, I have seen the Press extract, and there is no question that it has been over-dramatised. The main effect of the provisions, if they are brought into force, is somewhat to increase the liquidity of internal firms set up in the United States to help United States firms export.