§ 2.46 p.m.
§ BARONESS WHITE rose to call attention to the third session of UNCTAD (United Nations Conference on Trade and Development) and to the need to foster equitable trading relations between industrialised and less developed countries, and to ensure that British entry to E.E.C. will not diminish our concern for a fair deal for poorer countries which try to improve their living standards by their export trade; and to move for Papers. The noble Baroness said: My Lords, I rise to move the Motion standing in my name on the Order Paper. I am able to do so to-day at a relatively early stage in the deliberations of UNCTAD, which opened on Thursday in Santiago, through the kind co-operation of the Liberal Peers and, in particular, the noble Lord, Lord Byers, who agreed to postpone his Motion originally down for to-day until a later date. I am sure that I speak for all noble Lords when I say how much obliged we are to the Liberal Peers for having allowed us to have this debate at a time when it is obviously extremely topical. I should like to say also how glad we are that the noble Earl, Lord Limerick, will be making his debut on the Front Bench in this debate. I am sure that with his experience and knowledge in these matters he will add very considerably to the value of our deliberations. May I also be allowed to say that it is a particular personal pleasure to congratulate the noble Baroness, Lady Tweedsmuir of Belhelvie, on succeeding to a job which I once held, so I can extend to her sororal greetings. Perhaps I may be allowed to add that I hope she will avail herself of the arrangements which, after a great battle, I made at the Foreign Office for Lady Ministers and for lady members of the staff.
§ Having said that, I hope that during the course of the debate the spokesman 63 for the Government may be able to tell us which Minister is going to proceed to Santiago to take the place of the Minister of Trade, Mr. Noble, who I understand has already returned home after a sojourn of two or maybe three days there. I hope that it will he either the noble Baroness herself or the Minister of Overseas Development, or perhaps even some more senior member of the Government who will be going to represent Britain at this important conference. It is all very well sending a Minister of Trade, but I am sure that we all appreciate that the problems facing the 142 nations who are assembled in Chile have implications which go far wider than the technicalities of trade.
§ I am sure that I speak for many people, not only in your Lordships' House, when I say that we feel that a senior Minister from the Foreign and Commonwealth Office should be there, too, because I would remind your Lordships that at the first UNCTAD conference in 1964 Britain was represented by our present Prime Minister, who was then of course in the Cabinet. At the last quadrennial conference in New Delhi in 1968 the last Government sent the President of the Board of Trade, then Mr. Anthony Crosland, and also Mr. George Thomson, who was Secretary of State for Commonwealth Affairs. So far, this is the first UNCTAD meeting at which Britain has been represented at somewhat below full Cabinet level. This is in no way derogatory of Mr. Noble who has already been there, but simply to point out that if we are to take this matter of relationships with the Third World seriously, then the standard of our representation should indicate this. There has been a good deal of adverse criticism so far on the scale of our representation. I very much hope that before this debate is concluded we may have some better news from the Government Front Bench.
§ It is right that this third UNCTAD meeting should be held in Latin America. Historically UNCTAD may be said to have grown out of the United Nations Economic Commission on Latin America, but, more importantly, this part of the world exemplifies perhaps more clearly than most the clashes which arise in the confrontations between the highly industrialised countries of the world and the much less affluent countries of what 64 is often called the Third World. It is perhaps particularly apposite that the meeting should be held in Chile, where President Allende is facing every kind of pressure, political as well as economic, in his endeavour to free his country from external economic dependence and to establish a more égalitarian system within its own community. Whether we approve of his ideology or not, I hope we are united in condemning the political interference in the affairs of an independent State attributed to the multi-national company which sought to prevent President Allende's election to office.
§ This third UNCTAD Conference is historic for another reason, in that for the first time we have the participation of Communist China. We do not yet know how strong a line the representatives of China will take, but I think in this context it is bound to be significant. I understand that they have sent a very large delegation. Of all the countries extending aid and technical assistance I have always thought that the Chinese have been the most successful in putting themselves alongside the people they are trying to help. Their own standard of living, after all, is not very much higher than that of many recipient countries. This makes the give-and-take relationship a great deal easier than when there is a yawning gulf between donor and recipient, with all the psychological and political undertones which follow from that.
§ We must never forget that the gap in average gross national product per head between the richest and the poorest countries of the world is something of the order of 4,000 dollars in the United States as against 200 dollars in the poorest countries of the world. To my mind, those figures are far more eloquent than any words, and the gap is widening. It is quite true to say, as Mr. Noble said in Santiago, that this could hardly be otherwise when the number of heads increases twice as fast in developing countries as in the developed world. But the fact remains, and I think it should be in the minds of all of us when we discuss the problems of the developing world in this debate to-day. I do not think anyone pretends that the Santiago Conference is likely to bring any easy or resounding successes. The difficulties are too great, and one may say that a 65 gathering of 142 nations is not perhaps the ideal forum for discussing technicalities of special drawing rights, generalised preferences, commodity agreements, buffer stocks and the like. But no one should under-estimate the importance for future world relationships of the decisions taken and, in particular, of the attitudes taken at Santiago.
§ The countries of the Third World have tried to band themselves together in what is still called the Group of 77, although I think it has now grown to a group of some 96 nations. They met last autumn in Lima to draw up their own proposals. Unless the richer industrialised countries show a really positive spirit of understanding and co-operation, I believe there is a great danger that UNCTAD III may turn very sour. It could end, after its five weeks' deliberations, in charges and counter-charges, in an atmosphere more bitter than that at New Delhi, where there was indeed a sense of frustration but still of hope. In the minds of some observers the time for hope may be running out. It is encouraging, nevertheless, to have had presented to this Conference a really first-class Report by the Secretary-General of UNCTAD on International Development Strategy in Action, and also opening speeches of the quality and force of those delivered by Robert McNamara, President of the World Bank, and by Dr. Mansholt, Chairman of the E.E.C. Commission, not to mention the sombre opening statement by President Allende himself. I would remind Her Majesty's Government that it is by such standards as this that the British contributions will be judged.
§ We should like to know what attitude is to be taken by Her Majesty's Government on the main points put forward by the Group of 77. There is no doubt that recent events, particularly in the United States, have brought monetary matters in particular very much to the fore. The shock of dollar devaluation, tariff surcharges and so on have by no means passed the Third World by. Poorer countries have little chance in world currency moves of gaining on the swings what they may have lost on the roundabouts. They feel themselves to be helpless victims of other people's monetary policy. One can understand that those nations, like ourselves, who belong to what is called the Top Ten may find it 66 difficult to see ways of accommodating the demands of those who do not so belong. But surely we can all understand the sense of indignation felt by countries who find that decisions are being taken which vitally affect their interests, but on which they are in no way consulted and in which concern for their well-being may have played little or no part.
In the words of the Secretary-General of UNCTAD:
I cannot emphasise too strongly that the exclusion of developing countries from key areas of decision-making on monetary and trade questions and the recent almost exclusive pre-occupation of the rich with their own problems, relegates the development of the Third World to that of being a casual by-product of output and demand in the industrial countries.
I do not think it could be better or more succinctly put. It seems to me that possibly a Treasury Minister should also go to Santiago, although I must say I was very glad to see that Mr. Noble made a very sympathetic reference in his speech to this particular problem. I very much hope that the noble Earl, Lord Limerick, may be able to expand on how Her Majesty's Government think that the representation of Third World interests in monetary negotiations can best be achieved.
In the field of finance there is also a special problem which is pre-occupying many of us; namely, that of special drawing rights with the International Monetary Fund. We in the Labour Party believe that the time has come to show some positive initiative here. As the Financial Director of UNCTAD, Sidney Dell, argued last January at The Hague, the
international monetary system needs a built-in mechanism which would enlarge the import capacity of the developing countries sufficiently to provide outlets for the trade surpluses of the industrial countries.
So far, at least, I trust we are all agreed. He went on to say:
Hitherto the link has been viewed merely as a means of adding to the flow of resources. It should now be seen as an integral element in any overall solution to the present international monetary crisis.
§ I am well aware that not everyone is prepared to go so far along the road of monetary reform. There are those who argue that to use special drawing rights both to improve international liquidity, largely replacing gold and 67 dollar reserves, and at the same time using them as a vehicle for increased assistance to poorer countries, might endanger both objectives. But I must say clearly that I come down, as does the Labour Party in its recently published statement on UNCTAD, on the side of some action now, even if we cannot go all the way. I do not believe that we should wait until we have evolved the perfect formula for all eventualities. Dr. Mansholt was of course right when he warned in his speech that special drawing rights are not a panacea. But, as he also said, that does not mean that one should not try to use them to improve the balance between those countries which, because of poverty, now have exceedingly limited drawing rights and countries which can call upon vast additions to their liquid reserves. At present, as your Lordships know, one can take from the I.M.F. only in proportion to what one puts in, which leaves the poorest countries quite hopelessly behind.
I was interested to note that the T.U.C., in its latest Economic Report, supports the idea that industrialised countries should donate a proportion of their own drawing rights to assist countries which do not qualify for enough to meet their needs. In addition to this, I was also much interested to see that Dr. Mansholt, speaking on behalf of the European Commission, urged that,
at the next allocation of drawing rights a special allocation for developing countries should be envisaged to compensate for the losses in purchasing power of their reserves resulting from the recent monetary crisis.
One wishes that Dr. Mansholt was speaking also for his much more timorous Council of Ministers and not just for the Commission. As I understand it, our own Government are not hostile to the idea of experimenting with special drawing rights, but I hope that the Minister will go further than just saying that the whole matter should be studied by the International Monetary Fund. This is a very emotive issue, my Lords, and I believe it is time we took courage actually to try something, and not just talk. We may go wrong, we may make mistakes; but, after all, if we look at the economic and financial morass into which the most developed country in the world can get itself—and I refer to the United States, of course—who are we
to deny to the Third World the chance to try out what they believe to be a better system of sharing international resources?
§ My Lords, there are so many subjects on the Santiago agenda that one can select only a few and, having looked at the list of those who propose to take part in this debate, I am all too well aware that there are many in your Lordships' House who are far more expert than I am in many of the fields concerned. So I want to touch on just one or two other specific matters, particularly international indebtedness and conditions of trade. My Lords, the debt position of developing countries is becoming extremely worrying. I know it varies greatly from one country to another, but we are surely all conscious that it can have some serious political repercussions—as, for example, recently in Ghana. I think one can fairly say that it was largely the pressure of external debt which led to the recent coup and the displacement of Dr. Busia.
§ It means, if I may give an illustration, that roughly out of every 14 dollars transferred in 1970 from developing countries and multilateral agencies to the developing countries, almost 6 dollars were absorbed by debt service payments. This is a totally unsatisfactory proportion, I am sure we agree. It indicates a serious decline in the net transfer of resources from the rich side of the world to the poorer side; and poorer countries may be borrowing at even higher rates to pay back earlier indebtedness. It is particularly disturbing because the largest net decline has occurred in the lowest income countries of Africa and in India and Pakistan, which of course is completely contrary to the aims of the development programme. Again, the Government have made sympathetic noises about soft loans and about untying aid, but are we actively campaigning among our fellow richer countries? If we could get some further positive agreements on this matter at UNCTAD I think it would be well worth while. Again, I very much hope that the noble Earl, Lord Limerick, or the noble Baroness will be able to take us much more into the Government's confidence as to how they propose to deal with this very serious matter of increasing indebtedness.69
§ I turn now to the key to many difficulties—the terms and conditions of trade. I would remind your Lordships that during the last twenty years the share of the developing contries in world trade has dropped from around 31 per cent. to around 18 per cent. or, if one excludes oil, to around 12 per cent. In other words, they are not keeping up with the general increase in world trade. In the last decade particularly, the terms of trade, which are of such great importance to so many of the poorer countries of the world, have turned against the primary producers. Some of these now, by improved methods, could in fact produce more than they could profitably sell; some are threatened by synthetic substitutes; and for some a new menace has appeared in the dominance of great multi-national corporations which can have undue influence in particular markets.
§ Now I know that there has been an encouraging move towards some relaxation of protective measures in the adoption of generalised preferences by a number of industrialised countries, including our own, but not, I think, as yet, the United States. But the Order introducing this liberalisation was opposed in another place last December by Mr. Boardman, who has just been appointed Minister for Industry, on the ground that it could damage the British footwear industry. Similarly, while the textile import restrictions have been maintained, we have added a tariff, as from January 1 of this year, as an additional barrier to textile imports. In the debate last December in another place, the Minister for Trade, Mr. Noble, maintained—and quite rightly, in my view—that our pattern of preferences was on the whole better than that adopted by the European Community as recently as last July, but he gave no clue as to how we were to persuade our colleagues in Europe to change, or how we were to avoid having to adopt their procedure after 1974, even against our better judgment. It was a very interesting argument that Mr. Noble put forward and I hope that one of the Government spokesmen today may be able to say something about this matter.
§ But, no matter which method one adopts, what stands out a mile is that 70 our own workpeople here in this country will not accept more generous treatment of imports from developing or any other countries unless they can see positive policies of full employment being acted on here at home. To my mind, this is at the heart of the matter for our domestic trade policy, and no fine words in Santiago can cover it up. The T.U.C., in the Economic Report to which I have just referred, has made it quite plain that it is much disturbed by the unemployment position at home and its possible repercussions in our relations with countries of the Third World. It is also much concerned by what it believes to be the growing investment by multi-national companies in low-cost countries overseas without proper safeguards for the earnings of local workers. If one were sure that the benefits of trade were accruing to the people of these countries, there would be less ground for resistance to the importation into this country of low-cost products, not only in textiles and footwear but in such matters as electronics. But, of course, one has no such assurance.
§ Also, when one examines some of our apparently generous trading policies, one finds that even they are not quite as generous as they may at first sight appear. Some very illuminating studies have been made of the nominal level of protection enjoyed by industrialised countries, side by side with the effective level if one takes into account non-tariff factors such as quotas, subsidies and other devices. The results, my Lords, are quite startling. In Britain, for example, where the nominal protection works out at a fairly low figure, the effective protection, if one takes all these other factors fully into account, may be four times or even greater what the nominal tariff barrier indicates. The people in charge of the affairs of the countries in the Third World are gradually becoming aware of this fact, and this is one of the reasons why perhaps they are not quite as grateful as we may sometimes think they should be. I would draw your Lordships' attention to some very interesting booklets published by the World Development Association on this and other matters which I think should prick any complacency in which we might be disposed to indulge.71
My Lords, I do not think it takes very much imagination to realise how we should feel if we were representing a poor country at UNCTAD and if we saw the scales weighted against us by the richer countries, by the great international institutions and increasingly by the powerful multi-national companies which owe no allegiance to any particular segment of humanity. We should know, as Robert McNamara very rightly said, that all might not be well in our own country and that we might not ourselves be distributing such wealth as we have equitably and fairly. This is a great social problem in many of the developing countries in the world, as I think many of us are acutely aware. We might say, as Mrs. Indira Gandhi did quite recently, that
the very institutions we have created for promoting faster growth and capital accumulation now seem to frustrate our attempts for better distribution and social justice".
We could acknowledge all this, though the gross inequity of the world system as a whole might blunt our consciences and seem to exonerate us. But if we then heard some sanctimonious phrases about aid filling the gaps left by trade, then I believe our attitude would be derisory. I cannot understand how any wealthy Government can refuse, as our present Government persistently refuse, to accept even as a target that 0.7 per cent. of our gross national product should be used as genuine aid. I say "genuine" because, to my mind, to call private investment "aid" is simply an abuse of language. It may be very good in itself, but it is not aid.
§ LORD BARNBY
My Lords, would the noble Baroness say that over the past 50 or 80 years the immense British private capital that has gone out to develop all parts of the world is not aid to the populations of those countries?
§ BARONESS WHITE
My Lords, I do not think it is aid in the normally accepted sense in which people understand that word. I repeat that it is investment and may be desirable investment.
I had drafted my speech when this morning I was reading the Guardian newspaper, and in the centre page, next to a very interesting article on the meaning of democracy by my noble friend Lord Chalfont, there is a quarter-page 72 advertisement by the Electricity Corporation of Nigeria which is headed:People are earning HUGE PROFITS"—those words are in very large letters—in Nigeria, where there is a huge domestic market of 55 million people".And it goes on to describe some of the physical advantages, such as raw materials, land in abundance and so forth. Then it says:Abundant manpower is available at a rate as low as 7 U.S. cents per man-hour ….Pioneer industry enjoys substantial amenities.It is possible to get your investment back in less than three years.And then it repeats:People are earning huge profits in Nigeria, why don't you!Now, my Lords, if that is what you call "aid", it is not my idea of "aid". It seems to be the idea of Her Majesty's Government that that can be properly included as aid. They use that as an excuse for saying that it is impossible for this great country to meet an international target of 0.7 per cent. of our gross national product in public aid which is not tied to profit, and I hope not tied to low-cost labour at 7 U.S. cents per man-hour. I will not pursue this matter, but it is something on which I feel extremely strongly. It is time to stop this hypocrisy of calling this "aid". We add to the so-called aid figures a soaring amount in the last couple of years for export credits to commercial firms. We lump all this in with aid and use that as part of the excuse for not meeting the 0.7 per cent. target. I am not saying that there is anything wrong with export credit. By all means have export credit, but do not pretend that we are doing something outstandingly generous. It is the pretence and hypocrisy behind this attitude on the part of the richer industrialised countries which I think leads to a great deal of the cynicism and frustration which is felt by so many countries of the Third World.
My Lords, we have had a great imperial past. I do not believe that we consciously wish to indulge in what is called neo-colonialism. I am sure that there is at least a sizeable minority in this country which wants to do something positive about world poverty, and I want us to play a leading part in the world in 73 this field for which our history and experience so well fit us. Santiago gives us a chance to do just this. I hope we shall seize it and not be content to leave most of the running to other countries who are certainly no better off than we are ourselves. I 'believe that though the Government by past standards are at the moment spending pretty well on genuine aid, those past standards have proved quite inadequate. We are simply not succeeding in redressing the balance between the rich and the poor. Our trade policies are in the right direction, I think, but they are not as good as they seem and they may well be deflected if we enter into the European Community. The creation of such a new trading bloc may also lead to new tensions. Not all countries, even if they wish, can be associated with the European Community. I speak after a recent visit to India. Throughout the Third World the monetary crisis, to which I have referred, has shaken confidence in the ability as well as in the motivation of richer countries to carry out policies without detriment to their poorer neighbours.
Overall is the increasing menace of the population explosion; increasing illiteracy—100 million more adult illiterates to-day than 20 years ago; increasing unemployment—up to 30 per cent. or more in some areas; and a battle against malnutrition which we are not winning, in spite of scientific discoveries and improved agricultural production. We have been trying for the past 20 years to work out systems to help the Third World. We have been only very partially successful. Our clear duty, as Robert McNamara said at Santiago, is to face up to mass poverty for what it really is, to recognise that the world is one society and to meet the challenge of our times. If we fail, our children and our children's children will have to pay a far heavier price. My Lords, I beg to move for Papers.
§ 3.15 p.m.
§ LORD GLADWYN
My Lords, it may well be that only those with a really specialised knowledge of the appalling problems presented by "aid" are entitled to join in the debate to-day. But perhaps it is permissible for someone who has only followed this problem in the Press and in learned periodicals—with mounting alarm I must say—over the last few 74 years to say just a few words from the general point of view. And seeing that the noble Baroness, Lady White, has herself, in her Motion at any rate, brought up the subject of the future of "aid" in the event of our joining the European Economic Community—though I do not think she developed that point very much in her speech—perhaps I may say a word also as a convinced European.
My Lords, as I say, I have myself, and I am sure all your Lordships have, experienced mounting alarm at the virtual failure of two UNCTAD conferences over the years and, I regret to say, the prospective failure of a third. But this is not so much owing to any very great sense of guilt because our own country is a moderately rich one, though I believe that we have now sunk to about No. 12 or No. 13 in the world standard of living table. It is not so much a sense of guilt that I have as a feeling that the virtual collapse of organised society in a large number of the poorer countries may well take place if things go on as they are and may therefore result in a state of anarchy that could, by involving the great Powers, even increase the dangers of a third world war. One has already seen what is likely to happen in respect of a State like Bangladesh; and if the population curve and those curves of food production and industrial production and trade continue their present directions, it looks as if there will be a good many more "Bangladeshes" fairly soon in other parts of the world.
At the same time, I would not say that the obvious fact that the poor are getting poorer and the rich richer is entirely the fault of the rich. After all, there have been quite startling examples of poorer nations, even those without many, and some without any, natural resources, pulling themselves up as it were by their own bootlaces. Japan is of course the classic instance, though it may be argued that she achieved her present enviable position partially as a result of American credits as indeed did Formosa, whose standard of living is now also, for Asia at any rate, extremely high. But, after all, other countries where the position is apparently desperate have also received vast American and other aid and credits since the war.
And, my Lords, what about China, to which the noble Baroness, Lady White, 75 also referred? There is no doubt that for the last quarter-century or so China has had no aid of any kind from the richer countries, and, for the last ten years or so, nothing from Russia—which never, incidentally, contributed very much. Yet this vast land where the standard of living, judged by Western standards, is still extremely low, seems at any rate to be in a different category from the great majority of the so-called underdeveloped countries and notably the countries of the Indian sub-continent where the situation, we are told, unless something dramatic happens in Santiago, will soon be desperate. Why is this so? Well, in China there are, as I understand it, no religious and racial differences, or at least no substantial racial and social differences preventing the application of anything like radical reforms. And although it is true that progress might have been much more rapid had it not been for the cultural revolution, and that the whole system, to our eyes, is profoundly undemocratic, yet the system does not seem to be one which apparently suits the Chinese. So it is possible, I suppose, that in that system, much as we may dislike it and disapprove of it, there may be certain elements which might be usefully taken notice of in any project for the successful development of other underdeveloped countries.
Whatever the reason, the moral seems to be that it is not just the wickedness and the selfishness of the richer countries which is entirely responsible for the present chaos and misery in vast areas of the world. For instance, if the so-called underdeveloped countries were to concentrate more on immediately practical schemes to increase more particularly agricultural, but also industrial production, and less on grandiose projects such as State airlines and so on; to avoid civil wars, as in Nigeria; to co-operate among themselves, instead of splitting up confederations as in East Africa; to suppress corruption; to introduce, say, birth control by every possible means; and, in general, to pursue healthy policies of development, there is no doubt that they could be much better off than they are. And yet there is also no doubt that, if only in their own interests, the richer countries should do something to alter the terms of trade—and here I could 76 not agree more with the gist of the noble Baroness's argument—whereby, as often as not, developing countries receive less and less in return for the raw material and agricultural exports on which their present economies must to a large extent depend.
None of the remedies for this state of affairs so far suggested has been as yet fully applied, if at all, and the failure of the richer nations to agree on some master plan is, I believe, as shameful as it is shortsighted. Some years ago it was thought, I believe, that there might be a simple correlation of trade with aid; that is to say, the worse the terms of trade from the point of view of the poorer countries, the more the aid. This was found, no doubt for very good reasons, to be impracticable. Then we had the idea of generalised preferences and a reduction in favour of those countries of non-tariff barriers. That has not been really adopted either or, if it has, only to a relatively small extent. We have to admit that if it were fully adopted there might be, and I believe would be, distress in certain areas in the richer countries, which is something that popularly elected Governments may well find it difficult to face. There is the rub. We are most of us in favour of aid until it actually touches our own province. But there it is. If we are to contemplate making sacrifices, it is bound to hurt somebody. We must recognise that.
Finally, we have the proposal that the poorer nations should have proportionately more S.D.R.s (Special Drawing Rights) with the International Monetary Fund, thus linking S.D.R.s with development finance. I shall be pleasantly surprised if this is not turned down also. Like the noble Baroness. I eagerly await the views on this subject of the noble Earl, Lord Limerick, and I should like to congratulate him very sincerely on his new appointment.
We are left therefore with our obligation, in principle, to provide something like 0.7 per cent. of our G.N.P. in aid; that is to say, in total aid, governmental and non-governmental. But in this country we have I believe—I may be wrong in this—not even formally accepted that principle. Anyway, our performance even in this sphere does not compare, I regret to say, very favourably with that of our immediate neighbours. In 1970, the Netherlands, France, 77 Belgium, Portugal and Denmark contributed in "official" aid respectively 0.63, 0.65, 0.48, 0.45 and 0.38 per cent. of their G.N.P. as compared with our own 0.37 (these are all O.E.C.D. figures and I imagine that they will not be contradicted), while the Germans, who have a far greater G.N.P. than we have with only 10 per cent. more population, contributed in total terms much more than we did. The noble Baroness nevertheless, in the terms of her Motion, even if not in what she said, seems to think, I suspect, that by joining the E.E.C. we might be in some danger of being forced to reduce even the rather exiguous aid that we extend at present. I must say that I should have thought that the contrary was the case. What is clearly wanted and what we may well achieve—and could achieve if and when we join the Community—is a common European policy for aid as a whole which does not penalise any particular member and which might—and this is the suggestion that I put forward—even be administered by the Commission under the general direction of the Council of Ministers out of some common pool derived from (shall we say?) a very small fraction of the proceeds of the value added tax. After all, if we have undertaken, as we have, to hand over up to 1 per cent. of the V.A.T. proceeds for financing the Common Agricultural Policy, why not add another small percentage and get rid of our own contribution of, I think, £350 million in the process? Perhaps the noble Baroness when winding up will be able to say whether the Government think, in principle, that there is anything in this idea. However this may be, a great effort should be made now in Europe to streamline our various practices in the field of aid generally.
Let me take one example. Again according to the O.E.C.D. figures, the Germans outstrip us in the amount of training they give to about eight times as many foreign bilaterally financed trainees, largely industrial, by something like two and a half to one; that is to say, in the amount of training, measured in time, that they give to their trainees. Seeing that the training of technicians for employment in the industries of developing States is by universal consent among the most profitable, as it is one of the cheapest, forms of aid this really 78 puts us to shame. If the Germans, who have to overcome severe linguistic difficulties can do this kind of thing, why cannot we? Even if the Government cannot approve now of my tentative suggestion regarding the handling of aid generally (which I am sure they cannot), I hope that they will at least do something about overseas industrial trainees. I do not, of course, refer to European trainees but to those from all the overseas developing nations and notably from the British Commonwealth.
I should like to develop these ideas further, but there is no time. We might perhaps revert to the subject when we discuss retraining on May 3. I would only repeat, in conclusion, that, far from assuming that the prospective enlargement of the E.E.C. is likely to have an unfavourable effect on the progress of the underdeveloped nations we ought surely to regard it as a great opportunity for instituting a common Western European programme for aid which would redound to the advantage not only of this country and of those countries particularly associated with Britain, who would all. of course, benefit from the enlargement of the Yaoundé system, but also owing to its possible effect on the price of raw materials might assist all the other less prosperous underdeveloped nations of the world.
§ 3.30 p.m.
§ THE PARLIAMENTARY UNDERSECRETARY OF STATE, DEPARTMENT OF TRADE AND INDUSTRY (THE EARL OF LIMERICK)
My Lords, it is indeed agreeable that the first sentence that I should address from this Despatch Box should be one of thanks to the noble Baroness, Lady White, and to the noble Lord, Lord Gladwyn, for their warm welcome. I will do my best to satisfy their high expectations in this matter, as in others in the future. If I may on this occasion be permitted a very brief personal reflection, it is quite an experience to be translated directly, unexpectedly and overnight, from a life which I can best describe as being connected with the City of London with one foot on the Cross Benches, and, from the position in which I now stand, I am at the moment very conscious that the House presents a vastly different prospect from the Cross Benches on which I have rarely been seen 79 and from which I was still more rarely heard. This in fact is only my fourth speech. I am therefore grateful in the knowledge that this House is a kindly place and I hope that even if I have no claim as of right to the indulgence given to a maiden speech, nevertheless your Lordships will be indulgent for a period towards my Parliamentary and Departmental inexperience while I do my best to remedy both.
I am glad of this afternoon's subject for my first contribution. The terms of the Motion—in which the noble Baroness, Lady White, gives me the opportunity of describing the policies of Her Majesty's Government on some of the issues now before the third United Nations Conference on Trade and Development—are both thoughtful and helpful and I am correspondingly grateful to her. She draws attention to theneed to foster equitable trading relationsandconcern for a fair deal for poorer countries.I feel that these phrases get straight to the centre of the problem.
International conferences should not be bloc confrontations but reasoning searches for "equitable relations" and "fair deals", equitable and fair alike to the buyer and the seller, the borrower and the lender, the provider and user of services, the donor and recipient of aid. the foreign investor and the host nation. Such balances are not impossible and it is vital to the peace and prosperity of the world that they be found. I should here mention that I personally have spent a large part of the past 14 years in promoting and financing foreign trade, a good part of it with developing countries, and I have derived enormous satisfaction from doing so. This involves questions both for heart and for head. One's heart leads one on and keeps one struggling with a problem long after it would be easier to give it up; but at the same time one ignores one's head at one's peril. Both are needed for a solution which is satisfactory to both sides in the long run.
This afternoon, my Lords, I shall deal broadly with trade matters and with monetary reform, and my noble friend the Minister of State at the Foreign and Commonwealth Office will deal later in the debate with aid and with private 80 investment. Against the background which I have given it will come as no surprise if I stress at the outset my deeply held conviction that the only real and lasting solution to the imbalances under discussion must be sought in increased trade conducted on fair terms. The very necessity for aid, vital though it be, arises largely from trading imbalances. Against the fact that about three-quarters of all the foreign exchange flowing into developing countries comes from the sale of their exports, this point is well understood alike by rich nations and by poor.
My Lords, the background to our present policy at the United Nations Conference on Trade and Development is as follows. Since the first UNCTAD Conference was held in Geneva in 1964 when my right honourable friend the Prime Minister led our delegation, the United Kingdom has played, under successive Governments, a constructive part in the work of this organisation. My right honourable friend the Minister for Trade was in Santiago for the opening of the Conference and the members of his delegation will do whatever is in their power to ensure the success of the present conference.
My Lords, the achievements of UNCTAD in the last eight years have been far from negligible. The first Conference offered to the developing countries collectively their first major opportunity to present to the developed world their economic and trading needs. Although there were many questions on which no measure of agreement was reached at the Conference, UNCTAD I was certainly an important step forward. Substantial recommendations were agreed for collaboration in aid and development, particularly a target of 1 per cent. of national income as the amount of resources which developed countries should aim to transfer to the developing world each year. Another important outcome of that meeting was the creation of permanent institutions through which the developing countries could continue to discuss the problems of aid and trade.
By the time of the second UNCTAD in 1968 most of the developed countries of the West were prepared to undertake two new major commitments to the developing. countries. The first was a target of 1 per cent. of gross national product rather 81 than of national income. The second was a system of generalised tariff preferences for the imports of manufactures and semi-manufactures of developing countries. In this discussion of tariff preferences the United Kingdom made a major contribution in the preparatory work carried out in the O.E.C.D. The second Conference also agreed a programme of work concerned with the export of primary commodities from developing countries and on other matters of interest to the developing world.
Two years later, in October, 1970, the United Nations General Assembly adopted an International Development Strategy for the Second United Nations Development Decade. This decade began on January 1, 1971. My right honourable friend the Prime Minister told the General Assembly of the United Nations that Her Majesty's Government accepted, subject to certain reservations, the Development Strategy as an expression of the political will and collective determination of all in that organisation to achieve true progress. The developed countries recognised in this strategy how important it was for them to supplement the efforts of the developing countries by pursuing more favourable commercial policies and by providing increased financial resources, whether they were private or governmental. This present conference in Santiago is the first UNCTAD of the Second Development Decade and it will, therefore, be an opportunity to consider the progress made so far in achieving the objectives set out in the development strategy.
In preparation for the Santiago Conference the 96 developing country members Of UNCTAD, known historically and rather modestly as the Group of 77, have met at regional conferences and, as a group, to draw up their proposals. These proposals have been set out in the declaration, programme and plan of action adopted at Lima in November last year. This programme of action is a lengthy and ambitious one, directed at both developing and also developed countries. It will form the main basis for discussion at Santiago. Broadly the Conference will consider the proposals of developing countries in the fields of international monetary arrangements, trade—especially in primary commodities—the flow of finan 82 cial resources from the developed world to developing countries, the transfer of technology, shipping and special measures for the least developed among developing countries. There are over thirty items on the formidable agenda for this conference.
From this agenda the questions to which developing countries have attached particular importance in the Declaration of Lima are these seven: the reform of the international monetary situation; the implementation of generalised tariff preferences; the acceptance by developed countries of new targets for financial resource transfers; measures to help the least developed countries; private investment in developing countries; shipping; an assessment of the impact of regional economic groupings of the developed countries on international trade. We and the other developed countries of UNCTAD have been preparing for the Santiago conference by discussing in detail the agenda and the Declaration of Lima of meetings in Geneva and, under the auspices of O.E.C.D., in Paris. At the meeting in Geneva Her Majesty's Ambassador has been the chairman. Before the Conference there were some twenty discussions in O.E.C.D. The object of these preparations was to make as positive a response as possible to the proposals in the Declaration of Lima. Traditionally, members of UNCTAD work through geographical groups, developed countries being styled Group B; African and Asian countries Group A; the countries of Latin America Group C, and those of Eastern Europe Group D. The emphasis is thus on a collective approach to the questions under discussion. Hence, the prior meetings of the developed countries have been devoted to a careful examination of the position with regard to the proposals in the Declaration of Lima. The United Kingdom has played its full part in these discussions.
Her Majesty's Government's attitude is that this Conference is very important. It is possibly the largest meeting ever held to discuss the problems of trade, aid and development. The United Kingdom delegation is determined to do all it can to make the meeting a success. Our discussions with other developed countries, however, have shown that it would be a mistake to believe that there will be any spectacular advances for the developing world at this meeting. This has been 83 recognised also by most of the developing countries. It is therefore somewhat regrettable that the phrase "make or break for development" has come to be associated in some minds with this Third UNCTAD. Trading and industrial relationships are a matter of evolution, not of revolution. Our own so-called "Industrial Revolution" took half a century starting from a higher relative standard of living than that currently pertaining in many or most of the developing countries. There is a danger that too much will be expected of UNCTAD III. With so many demands, so many hopes, so much preparation, so many participants and so much publicity, it is possible that there will be a feeling of anti-climax. Our delegation will therefore emphasise that if there are no spectacular advances at UNCTAD III this need not mean that the Conference is a failure. Development is a slow and continuous process, and the work of UNCTAD goes on throughout the year, through meetings of the Trade and Development Board and in a number of important committees. It is unrealistic to expect a conference held every four years to mark a spectacular advance at every session but it is also undeniable that progress has been made and that attitudes have changed substantially—and this during a period when several of the developed countries have had very substantial economic problems of their own.
The Declaration of Lima makes the point that while world trade has admittedly expanded the trade of the developing countries has expanded at a lower rate than that of their developed trading partners. There are many reasons for this, but any implication that the more rapid rate in the developed countries is somehow achieved at the expense of the primary producers would not be justified. Indeed, experience has shown (and this is recognised by the UNCTAD Secretariat) that faster growth among the advanced countries has been a major factor in allowing the developing countries to increase their rate of growth in the past decade. Poor trading conditions among industrialised nations are by definition bad for primary producers.
Her Majesty's Government also believe that there is a danger that developing countries may try to do too much too quickly, without adequate development 84 planning. We believe that the international community should help developing countries to diversify the pattern of their economies with an eye to its profitability and its effect on the supply position for the product in question. We do not believe that it is in the interests of developing countries to create industries which, because they are not competitive in world markets, are likely to require long-term protection. I am happy to say that there is also a bright side to the statistical history of development in recent years. The average growth target set for developing countries in the First Development Decade (1961–71) was more than achieved.
The United Kingdom has played a constructive part in UNCTAD'S work on commodities. The Government's policy is to favour international commodity agreements, wherever these are appropriate and practicable, with the aim of stabilising prices at levels which are fair to consumers and remunerative to producers. The United Kingdom is a member of all five existing commodity agreements, and Her Majesty's Government have for many years taken a leading role in promoting a Sixth International Agreement on cocoa. We are glad to see that in the last few years there has been a small but significant reduction in developing countries' dependence on earnings from primary products; but we realise that many of these countries will depend on their earnings from exports of primary commodities for many years to come. This makes it all the more important that we should tackle urgently in every way we can the outstanding commodity problems. On practical grounds we favour an approach commodity by commodity, but this does not mean that we should not he ready to discuss the problem on a general basis. However, long experience has shown that commodity questions are complex and varied and that an individual approach is usually the best one.
In Santiago our delegation will emphasise the United Kingdom's exceptional record as an importer from developing countries. The percentage of our consumption met by imports from developing countries is higher than that of any other major developed market. This is in part a result of the Commonwealth Preference 85 system. Under UNCTAD'S auspicies preferences have been extended to other developing countries, and the United Kingdom's Generalised Preference Scheme came into effect on January 1 of this year. This is something that we have been advocating since the First UNCTAD. The Generalised Preference Schemes are perhaps the greatest of UNCTAD'S achievements so far. They show that developed countries have accepted that there is much more scope for the export of manufactures by developing countries. This has been shown by the rapid growth in the past ten years of exports and manufactures from developing countries.
My Lords, we shall say in Santiago that we consider our offer, and the schemes of other developed countries, of great potential advantage to the developing world. The only important exclusions in the United Kingdom's scheme are textiles and petroleum. Our list of agricultural products is generous. It will be our aim through this scheme to enable developing countries to achieve a faster growth in their export earnings and in their industrialisation on a competitive basis. We believe that the international community should play an important part in helping these countries in their trade promotion; but the primary responsibility must of course rest with developing countries, who will have to take the necessary measures to help their exporters take advantage of the new opportunities. It is for this reason that we support the work of the GATT/UNCTAD International Trade Centre. Now that schemes have been introduced by developed countries for removing tariffs on manufactured goods, the time has come to pay further attention to non-tariff barriers to trade. The responsibility for progress here rests clearly with the General Agreement on Tariffs and Trade. Negotiations next year in that Organisation will need to include the whole field of non-tariff barriers, in addition to the problems of the tariffs which remain.
We regard UNCTAD'S discussion of shiping problems as particularly important. The code of conduct for Liner Conferences is perhaps the major issue. Liner Conferences are international both in membership and in function, and cannot properly be supervised by Governments each 86 applying their own brand of national regulation. Instead, we consider that conferences should be expected themselves to accept and apply internationally agreed standards of practice and behaviour. This concept of a code for conferences was very fully developed in the Report of the Committee of Inquiry into Shipping, under my noble friend Lord Rochdale, which was published in May, 1970.
At the beginning of last year Her Majesty's Government, in concert with other like-minded Governments of Western Europe and Japan, invited their shipowners, in consultation with the shippers, to formulate such a Code. They duly did so, and British shipowners and shippers played a leading part in this work. The Governments concerned accepted the Code and asked the shipowners to promote its adoption in the international conferences, which they are now seeking to do. This Code is not only a valuable instrument of self-regulation in its own right, but also forms a useful preparation for the much longer-term concept of a world code.
Discussion on the preparation of a world code is likely to start in UNCTAD III. It is not, however, a project which can be achieved in one meeting. It will be a difficult and time-consuming task. The code which emerges must be both practical and flexible. It must not impede trade or make carriage by sea more expensive. It must be developed in close consultation over a period of time with the shipowners and traders for whom it is designed. We therefore support the start of a series of international consultations on this subject, of which UNCTAD III could be the first. It must be admitted that there are at present major differences of view between developed and developing countries on some of the elements which should go in a code of this kind, and particularly on the role of individual Governments. It will be the purpose of the consultations to find solutions which will not prejudice the smooth functioning of world shipping and world trade.
Insurance and reinsurance are among the subjects for discussion at UNCTAD which are of particular concern to Her Majesty's Government. It has been estimated that the total demand for insurance is increasing at an annual rate of 10 87 per cent., and Her Majesty's Government welcome the growth of sound and flourishing insurance companies in developing countries, which in several cases are being built up with the assistance of know-how from the London market. Insurance of trade and construction projects is an international business. There is general acknowledgement that the City of London has the most efficient insurance service in the world, and if local restrictions are imposed on international operations, confining their insurance business to local markets, their insurance will almost certainly be made more expensive. We do not believe that the long-term interests of the developing countries would be served by artificially isolating their insurance markets from international competition, but rather by developing free local markets (for which we recognise, of course, that some initial protection may be required) to work with the established markets of proven efficiency in London and other centres.
The present international monetary situation and its impact on world trade and development, especially of the developing countries, will be one of the most important subjects for discussion of UNCTAD III. Although Her Majesty's Government consider that decisions on international monetary reform must be a matter for the International Monetary Fund, we recognise that UNCTAD has an interest in this matter which has an important bearing on the problems of trade and development. In this connection suggestions have been made that the realignment of parities has been at the expense of the developing countries. The fact is that no generalisations are possible. Different countries—both industrial and developing—were differently placed as regards the composition of the reserve holdings and the denomination of their debts, and made different decisions about their parities and the form of their links with the major trading currencies. The terms of trade will have been differently affected for different commodities and different countries. The International Monetary Fund is now considering the future shape of the world's monetary system. We fully recognise that developing countries must be able to put forward their views on reform. We are glad that there is such general support for machinery such as a "Group of 20" 88 which is a group to meet at Ministerial level which will provide proper representation for developing countries.
Related to monetary reform is the proposal that "special drawing rights" should be linked with development finance. This is of great interest to many Governments in developing countries. Our delegation at Santiago will make it clear that the British Government support the idea that this question should be closely examined, the examination to take place within the context of international monetary reform. Any study must first elucidate whether wider international monetary reform would provide a suitable opportunity to bring about a link between development assistance and the creation of international monetary reserve assets. Second, it will have to be determined whether this link will be compatible with early reform of the international monetary system. This therefore is a matter for the International Monetary Fund and an alteration to the I.M.F. rules would be required to bring it about. While all of this is being considered, we believe that the developed countries should seek ways and means of continuing and improving traditional multilateral and bilateral aid.
These are some of the issues before UNCTAD III of particular interest to me. There are others which will be considered by my right honourable friend the Minister of State at the Foreign and Commonwealth Office later in this debate. The Government believe that our record of co-operation in UNCTAD is good and it is our intention that it shall continue to be so. In Santiago we hope to show the developing world that we understand their problems and needs. We shall have to say, however, that there are many proposals before the Conference which are not acceptable to the Government. Nor can we make any promises which are not within our power to implement. None the less, I hope I have shown that OUT attitude to UNCTAD III is forthcoming and constructive and that we have carefully considered all the problems under discussion. The practical problem will be to try to reach conclusions which are realistic in terms of what can be achieved in practice. We shall show our genuine concern for the problems of the developing world (which are in a literal sense also our trading problems) and we shall reaffirm our faith in the ability of UNCTAD to help in the 89 resolution of these problems. We hope that the vast majority of the participants in the Conference will be satisfied with its outcome and leave Santiago with renewed confidence in the ability of the international community to tackle, through this important Organisation, the problems of aid and development in the future.