FOREIGN BOYCOTTS BILL: SELECT COMMITTEE'S REPORT

HL Deb 01 February 1979 vol 398 cc361-436

Debate resumed.

4.39 p.m.

Lord REDCLIFFE-MAUD

My Lords, if we may return to the debate, may I first thank the noble Lord, Lord Byers, for having enabled us this afternoon to see what Parliament and the Government think of the proposals which the Select Committee made. I should also like to thank the other Members of the Select Committee for showing me the indulgence that we all know is shown to a maiden speaker. This was my maiden chairmanship of a Select Committee. I very much needed that indulgence and the Select Committee were generous in what they did for me. The noble Lord, Lord Byers, was generous in what he said about the result. Still more, I thank them for the intensive work which they were prepared to put in, particularly during the last week or so of our discussions, in order that the House might have a report from us before the end of that Session.

I should also like to thank the economic specialist adviser whom we had to help us, Mr. Christopher Allsopp of New College, Oxford, and to the Clerk of the Parliaments I must also add my thanks. I have had some experience, not of Select Committee chairmanships but of other chairmanships, and the member of the staff who has already been mentioned by name, Mr. Paul Hayter, I think is in fact the best secretary of any committee which I have ever chaired, and that is very high praise.

I should also like to thank the witnesses. We had, I think, 57 of them. The Arab Governments were a little shy of giving us many detailed answers to our questions, or indeed having many of them come before us, but that was made up for by the readiness of British businessmen and other such interests and those with knowledge of the Israeli position to come and help us. The consequence was that in a hard-working four months we acquired a tremendous lot of first hand information on a very difficult subject; and perhaps it is worth commenting that in my limited experience this was a rather good illustration of the value of your Lordships' House. Here was an important and difficult subject for which the other place has no time at present, and we were able to give it that kind of scientific inquiry, as well as the deliberation among ourselves, which I believe all of us who were involved in the subject think it deserves.

The reason why I think it is so valuable to have this debate this afternoon is that by some miracle we in the committee managed to achieve unanimity, and the only point on which we found we were not unanimous was one on which a Socialist and a Conservative agreed against the rest of us. This showed that it was a matter which was considered to be entirely outside the narrow limits of Party division. I think that part of the value of the report is that it sets out a lot of facts of which certainly we in the Select Committee were previously unaware and which perhaps I might commend to the House for leisurely reading.

Still more important, this afternoon, I hope we shall have from those on all sides of the House who were not members of the committee and from the Government, some indication of how they feel our recommendations should be treated. It was particularly happy that the last speaker in this debate, the noble Baroness, Lady Hornsby-Smith, should have spoken as she did, so movingly and with such long experience, and she seemed on the whole to be supporting our recommendations, although no doubt they did not go far enough.

It seems to me that we must start with the fact that our exports to the Middle East are enormously important. If my memory serves me, the last time we counted, which was in 1977, because the full accounts for 1978 were not available to us, the Committee found that there were £2.7 billion worth of visible exports achieved to the Arab States. In that same year there were a very valuable £274 million worth to Israel. Between them, those exports constituted 8.4 per cent. of our total exports and those total exports represented, I think, nearly 30 per cent. of gross national product, compared with 10 per cent. in 1977, which represents the United States export total in relation to their gross national product. I am sure that the House would wish to have this in perspective and not feel that we are talking about trivial risks when we ask ourselves what ought to be United Kingdom Government policy and what should Parliament be asked to approve in relation to trade with the Middle East.

On the face of it, "go bald-headed for exports" might be thought to be the policy which I and the Select Committee should be commending to this House and to the Government, if this is one of the few growth points in the world and if we are in a position where we so earnestly need to exploit our continuing and, I hope, growing capacity to export the goods and services that people want. And let me just remind the House that what I was speaking of in regard to those figures were visible exports; on top of that there are invisible exports and the Committee made some attempt to find out the value of those, but we decided that it was not possible to give an honourable figure. Also there are the balances of sterling which the Arabs keep and which in theory at any rate they could move elsewhere. There are also the commodity markets, in particular the cotton market, to which reference is made in our report, which is riddled with boycotts. Quite apart from the Arab boycott, all sorts of boycotts affect the cotton that comes into the cotton market, and supposing that legislation of this kind were on the Statute Book I think the cotton market would find it difficult to know what they should do about it.

Of course none of these things is in any way conclusive because it is impossible to recommend to Her Majesty's Government that their policy should be: "Oh business, Oh Government, go bare-headed for exports into the Middle East and for nothing else". So long as the boycott continues—and let us just note that nothing except the cessation of the problems of the Middle East and a settlement in the Middle East will remove the conditions which are the reason why the boycott exists, and therefore nothing that we do should risk at any rate the making of a settlement in the Middle East less likely—there is the fact that the objective of expanding exports has to be reconciled with two other objectives. One is that we do not get involved in conflict which one side regards as warfare in the Middle East, both Israel and the Arab States being friendly countries with whom we are therefore in a relationship of friendship—and let me say neutrality in any conflict that there may be. Perhaps still more important from one point of view is that we should not find undermined our convictions of life in our United Kingdom society. I do not wish to bring the noble Lord, Lord Mancroft, into this matter, but he gave valuable evidence to us. What I shall call "the Mancroft case", although it arose some time ago, is something which none of us ought to forget. It is, to my mind, unthinkable that any British Government should not regard avoidance of that kind of degradation of our civilisation as one of the objectives of policy. Therefore, instead of bare-headed, flat-out plunging for exports and thinking of nothing but how we can increase the figure of £2.7 billion or whatever it is, we and Her Majesty's Government and Parliament have to reconcile the three objectives to which I have referred. That is why this is a difficult as well as an important subject.

I do not want to take time repeating what the noble Lord, Lord Byers, so admirably summarised from the recommendations of our report. I can only, as it were, second his plea that the Government will this afternoon go as far as they can to give us a sympathetic and a satisfactory answer to all these various recommendations. But I should like to say a word about one point which is not easy to put into words. We laboured—I think with some success—to make our meaning clear in the report. It is this: I think it is the Government's policy at the moment to say—and it has been the policy, so far as I know, of all Administrations that I can remember—"We deplore the boycott. We wring our hands, but we are sorry we cannot do anything about it. Every businessman must make up his mind and get what he regards as a worthwhile return by whatever means he likes." Of course, those are not the words Her Majesty's Government use when describing the status quo, but it is a not unfair description, I think. They say, "We deplore the boycott; you go ahead and take the decisions."

In fact, you cannot in practice take those commercial decisions without doing something political. It is, if I may say so, a waste of time to tell businessmen to use their commercial judgment. That is what they are there for and that is what they should and will do. But, in so far as there is a political element in the judgments which businessmen have to make, whether or not they are trading in the Middle East, it is surely for the Government and Parliament to lay down the political context within which they quite rightly say that the businessman must be free to take his own decisions in the interests of the workers, the shareholders and the country. It is for the Government to spell out their answer to the question by saying, "We do want to reconcile, we agree with the Select Committee, we want to reconcile those three objectives." Do they accept our suggestion, illustrating what we meant, on how that spelling out could be made clearer, more honest and more effective? We do think it should be accepted by the Government—and I very much hope that we may be able to hear that this at least is acceptable—that, however free the businessman is to take his own decisions, so long as there is a boycott, there is a political element and the Government and Parliament cannot escape involvement in what happens as a result of trading in the Middle East.

Let us note that we on the Select Committee are talking only about the secondary and the tertiary boycotts. It was not our business to talk about the primary boycott. The noble Baroness, Lady Hornsby-Smith, spoke about the work of the Economic Warfare Department, which was very much in our minds. My personal opinion is that in time of war you have to have economic warfare, and that there is nothing inherently wrong in economic warfare. But, when the rest of the world is nominally at peace, there is something very wrong in trying to involve in the conflict persons other than those taking part in that conflict when both sides are in fact friendly countries—in this case, the United Kingdom. I ask the Government whether they can agree with us that something more than just deploring the boycott is necessary.

I shall not go over the detailed suggestions that we made, but I would summarise—interpreting the Select Committee's report on behalf of the Government and Parliament—by saying that we want to encourage courage among the businessmen. We want to say, "Do not extend the work of the Damascus Boycott Office." Do not say "No, no, we had better not do that. It is not within the boycott regulations and we could do it. This is normal trade with Israel, but you never know, it may come back on us. On the whole it will be safer to have nothing to do with it, whether it is tugboats, or with small or big undertakings in Israel, because that may eventually get us on the blacklist." The committee suggest that the policy of the Government towards British businessmen should be to encourage them to be brave, ingenious and persistent.

As the report documents, there is no such thing as the Arab boycott. We use the term for short, but each Arab State interprets the Arab boycott in this way or that; we therefore have a multitude of different States with different attitudes to the boycott. Accordingly, there is a way of bringing an informal diplomatic pressure to bear which we suggest should be very much increased with individual Arab States. There should not be a great boosting: "Please do not impose these intolerable requirements." If our representatives abroad said that, it might very well provoke a protest and make matters worse rather than better. But there are informal ways by which we have no doubt we could make progress in certain Arab States in getting them to be sensible about what they ask or do not ask if they want the services or the goods that the United Kingdom businessman has to offer. So encouraging courage would sum up one aspect.

As part of that effort, the more everybody knows about what is happening and what there various States are doing differently from the others the better. That is why we ask the Government if they will invite businessmen to report on a purely voluntary basis to the Department of Trade, on the understanding that the Department of Trade will keep the information strictly confidential and will pass it round, without names, so that the business community in general can become better informed about ways in which they can trade with Israel and the Arab States without getting on the black list, adding without any difficulty that £274 million to the 2.7 billion.

Lord JANNER

My Lords, may I ask the noble Lord one question to which I am sure the House will want the answer? Which of the Arab States, if any, is giving a bigger benefit to this country in regard to its trading relationship than Israel?

Lord REDCLIFFE-MAUD

My Lords, I cannot answer that question. It is a perfectly proper question, but I cannot answer it.

If encouraging courage is one aspect, then the next is to discourage discrimination. We should encourage courage through wider information about the openings, and encourage businessmen to use their ingenuity to get through the boycott or to get round or bypass the boycott. However, we must discourage discrimination. We must let the businessmen know that if they can simply avoid signing a document which is patently discriminatory against a friendly State, they should do so. If they find that they have to do so let them, if possible, find the money from their own resources and not use public funds. If a private firm were to use public funds it could be taken to involve Her Majesty's Government—indeed, all of us—in what that private firm was legally doing.

I do not want to go into this matter because it has already been referred to, but let the hands of Her Majesty's Government be as clean as possible if they are telling businessmen to do the best they can to avoid signing documents that are discriminatory against a friendly State. Let us have the courage to say that for very good reasons, in our opinion we have been authenticating through the Foreign and Commonwealth Office, through the apostille, these documents in which the only thing that we mean to do is simply to guarantee that the Attorney's signature is O.K. I personally would not take so cruel a line. I think that the Foreign Office and Foreign Secretaries have been doing their best to sustain what to me has become unsustainable—the view that the authentication or legalisation of boycott documents by the Foreign and Commonwealth Office has nothing to do with the content and therefore can be dissociated from the process of the boycott. I do not think that it can, and I very much hope that we shall hear that that will be acceptable to Her Majesty's Government.

I strongly commend those parts of the recommendations which deal with the European Economic Community, which is by far the greatest of the trading partners of the Middle Eastern States both for import and export purposes. Therefore, it is in the strongest possible position to talk frankly and effectively to States which are doing something which the European Economic Community, by its very nature and philosophy, does not like—namely discriminating. The underlying doctrine of the Treaty of Rome is clearly nondiscriminatory and that is why Clauses 84 and 85 enable co-operation agreements, no distortion of competition and so on. However, the Treaty of Rome—if I may guess—was drafted without a thought about the boycott. Neither the two clauses that I have mentioned, nor any other part of it, was designed to make it easy for the Community, as such, to say to the Arabs, or to anyone else who was proceeding in this way, "Shut up, if you want to work and trade with us".

Therefore it comes down to the need. Of course, the Commission is ready to help. The Dutch, as we have been told, are thought to be ready. The French have already legislated in a rather, if I may say so, characteristic way, because by an administrative arrangement immediately after the legislation they seem at any rate to have invalidated what they set out to do. However, they are members of the Community and anything that was said may not fall on deaf ears.

I have great sympathy—more, I think, than the noble Lord, Lord Byers—with any Foreign Secretary who is asked to stand up and be counted for the first time by saying, "Those Arabs must be bust and the Community must unite to have a new consensus of an anti-boycotting nature". But surely when we talk about an initiative it can involve all sorts of informal diplomatic matters. However, it is important that a consensus should be developed within the Community which will enable the Community to exploit its position of strength in doing its best to get the Middle Eastern world clear of at least the secondary and tertiary boycotts.

I was particularly glad that we were able to produce a nearly unanimous report. I was particularly grateful for what, in my own mind and dreams, I thought of as Scylla sitting on one side and Charybdis on the other, because I felt that fisticuffs might be the outcome, but there was nothing of the kind. I shall not say who, in my dreams, played either of those parts. However, the report was unanimous. It recommended that the Bill should not proceed, but it spelled out various matters which it thought were a better way of proceeding than legislation; and I think that it ought to be one of our rules always to avoid legislation. In this case in particular it would, on the face of it, be totally unworkable because 90 per cent. of the business evidence before us was dead against it and thought that legislation was wrong. Partly for the reasons which the noble Lord, Lord Byers, mentioned about feelings in the United States, and partly for other reasons, I think that the committee was right to make it plain that it thought something needed to be done now and that if the measures that it suggested or other measures were not found successful in getting the reconciliation right between the promotion of exports, the avoidance of involvement in conflict in the Middle East, and above all avoidance of having one citizen set against another on the ground of his ethnic, racial or other character, then we should have to think of legislation.

Baroness GAITSKELL

My Lords, before the noble Lord, Lord Redcliffe-Maud, sits down I should like to ask him a question. Surely what has been said today by the noble Lord, Lord Byers, is the most important thing that we have heard for years? A small number of us went to see Mr. Edmund Dell when he was Minister in the Board of Trade—or whatever its then name was—to ask about this matter. The Government have not only been tepid: they have been absolutely inactive. The importance of the speech of the noble Lord, Lord Byers, is that if other Governments can take action surely we also can take action; but we have not taken any action up until now.

Lord REDCLIFFE-MAUD

My Lords, I think that no action could be taken by me.

Lord BOOTHBY

My Lords, I, too, should like to ask a question. As we deliberately chose to play no part whatsoever in the negotiations which led to the drafting of the Treaty of Rome, is it not very difficult for us now to exercise great influence to get it substantially modified? We would not take part in the negotiations—indeed, we did not take part.

Lord REDCLIFFE-MAUD

My Lords, I am grateful for the chance to say that what the committee had in mind and what I was advocating requires no amendment of the Treaty. It is simply action to be taken by consensus within the Council of Ministers. in due course amendments may be needed, but we were not suggesting an amendment to the Constitution. I was merely referring to the fact that as it stands the Constitution does not deliberately set out to make anti-boycott easy.

5.10 p.m.

Lord AYLESTONE

My Lords, the House is grateful to the noble Lord, Lord Byers, for initiating this debate which gives those of us who had the honour and privilege of serving under the noble Lord, Lord Redcliffe-Maud, on the Select Committee an opportunity to pinpoint one or two aspects of our report. The noble Lord, Lord Redcliffe-Maud, has mentioned that we took a great deal of evidence. We did indeed. As he has already said, it is quite fair to say that a great deal of it was on one side, whereas we did not take quite as much evidence as we should have liked from the Arab countries. However, that is a matter for them; they were invited but they did not come along.

One must accept that in war, or in warlike circumstances, an economic boycott of one side against the other or against each other is understood and acceptable. A country at war does not normally trade with its enemies. But what is wrong about this particular boycott is that it involves third countries whose only desire is to be friendly with both and to trade with both, and who should not be subjected to blackmail such as the boycott which we are experiencing involves.

Therefore, we should consider how best to assist British companies to trade with whom they wish and to combat the Arab boycott; to trade with Israel or to trade with any Arab country. It ought to be mentioned here—and mentioned quite fairly—that it is not every Arab country which uses a boycott. In some cases there is no such boycott. There are many instances of British companies trading freely both with Arab countries and with Israel. I think that that should be stated.

According to the Arab theory, their object in blacklisting is to prevent any British or American exporter—any of the third countries—from aiding the Israeli economy, not necessarily the war effort. Under that heading one could put almost anything that is exported, because obviously Israel would not wish to import if it did not help her in some way or another. So considerable difficulties arise and it is clearly difficult to understand the Arab reasoning behind the blacklisting of some exports. If there had been a black listing of guns or warlike materials, one could perhaps understand it. But, as the noble Lord, Lord Byers, pointed out, in the questionnaire that has to be completed the questions are manifold and go into a great deal of detail about what actually is being imported into an Arab country.

I regret it, but our Government's attitude seems to be to "deplore" the boycott. However, they do very little about protecting British companies and they leave it to British companies to decide on any anti-boycott action which they think they can take or should take in their own business interests. Simply to "deplore" and to do nothing is not enough, because, as has already been said, France, Holland, the United States, to some extent Germany, Canada and many other countries do something, although not necessarily the same thing. Now, of course, the United States has anti-boycott legislation. When the Select Committee considered the situation, the American legislation was very current and it was too soon to assess its effect upon American exports to Arab countries. However, I have since learned—as I think have many others—that there has been practically no loss of trade whatever as a result of the American legislation.

If legislation would help to combat the boycott—and I think it does—I would support it. But, short of that, there are actions which the British Government could take. I do not anticipate that tonight we shall be told from the Front Bench that the Government have legislation in mind. Therefore, perhaps the Minister will reply to the issues that have been raised by the noble Lords, Lord Redcliffe-Maud and Lord Byers.

The position in Arab countries differs from one to another. But surely our consular posts in each Arab country which applies some sort of boycott would be in a position to provide first-hand information for British exporters. In fairness, one or two of our posts overseas do that, but certainly not all. The Department of Trade could make available much more advice to British exporters than it does, although it does make some advice available, and it could assist those companies which want to, to complete the questionnaire which in itself is a threat of blacklisting to exporters. If a company feels that it is being unfairly blacklisted, should not the Department of Trade or the Foreign Office—perhaps quite informally—advise that company and tell it in what way other companies are able to avoid the boycott and so import their goods into Arab countries.

Like other speakers, I am sure that not only is the authentication of the negative certificates of origin a mistake, but it is somewhat objectionable that a British Government would be prepared to authenticate the signature on a certificate, the documents of which make it clear that the goods, or any part of the goods, did not originate in Israel. That is a negative certificate. I found that evidence given by the Foreign Office on this question of authenticating the signature most unsatisfactory. I hope that I am not exaggerating, but it almost seemed that they rubber-stamped and authenticated everything that came in front of them. In fact, they said in evidence that it would be extremely difficult to sift out negative certificates from positive certificates. In my view that is a grave admission of a weakness in the Foreign Office which could be put right. If they are only legalising the actual signature on a document, I am sure that the Arabs are of the opinion that the attached documents—with the British Government's signature and a stamp on them—mean that in some way or another the British Government approve the negative certificates. I regret to say that but, it seems very much the case.

There is a deep feeling among our European partners that the Arab boycott is damaging to trade and quite unfair between the EEC members and, of course, the exporters of those countries. In our short visit to Brussels, which lasted two days, apart from the discussions around the table, it was made very clear from talking to officials that many of the European countries wish something to be done. Everyone wanted something to be done, and the official view was that unless it appeared on the agenda of the Council of Ministers, nothing very much would be likely to happen. Is it too much to ask that our Foreign Secretary should take the initiative? Whatever may be the outcome—it may fall flat on its face—could he not ensure that the question of the Arab boycott of Israel is put on the agenda of the Council of Ministers? If we get as far as that, then something worth while will have been achieved.

I do not want to go on, particularly in view of yesterday's debate about the length of speeches. Of course the best solution to the whole of the Arab boycott problem would be peace in the Middle East. However, I do not think that a little Government help along the lines I and others have suggested would imperil any peaceful activity being undertaken by our country, or America, or anyone else. On the contrary, it might help. It would certainly help those British companies whose sole desire is to export to any country in the world, and especially to the Arab countries and to Israel.

5.21 p.m.

Lord SELSDON

My Lords, I often ask myself why, when someone mentions the words Arab and Jew in the same breath, I get a feeling of, "Hush, hush, whisper who dares." The word "prejudice" springs immediately to the forefront of my mind. I submit that often in these affairs the word "prejudice" is particularly important, for in events and matters such as this undoubtedly there are two sides on both extremes, both of whom feel prejudice, and often one forgets to realise that there are many people in the middle who share no prejudice at all. That in general, I submit, is the view of the bulk of the United Kingdom. None of us, as has been apparent, supports a boycott on moral grounds. We are worried too over the impact of a boycott on the whole question of morality. Boycotts, however well organised or badly organised, are seldom, if ever, fairly applied. So something that lacks morality and is unfair should be opposed and condemned. I believe that that is the general attitude of successive Governments to all matters of boycott. This indeed is my own attitude.

Although I speak today with absolutely no prejudice, I have two interests that I should perhaps declare. I am a banker, and my bank is a member of the British Bankers Association, and the evidence we have submitted, really in good faith, leads us to believe that any form of action could be detrimental to our interests. I am also currently one of the deputy chairman of COMET (the Committee of Middle East Trade), which is the area advisory board of the BOTB. I should like to express the regrets of the chairman, my noble friend Lord Limerick, that he is unfortunately abroad today. The Committee of Middle East Trade also supports the idea of no action. While accepting many of the recommendations of the Boycott Committee, it would in the interest of trade, not willingly accept those that suggest any particular action. Thus it is a question of, if possible, "cool it", because if action is taken there is little chance that it could have any positive effect either on trade or on the strength or status of the United Kingdom, and it could be detrimental.

If the noble Lord, Lord Redclifle-Maud, will permit me, I wish to up-date some of the figures he has given today. Regrettably we must look at trade. We must look at visible trade; we must look at the balance of payments, because our whole economy and lifeblood depend on it. It is often unfortunate that in many areas, particularly those where the boycott is applied, our exports should be of such great importance to us. We are, if I dare suggest it, in very dire straits indeed so far as our visible exports are concerned at the moment. Hidden underneath the effect of our North Sea oil is a worsening and dreadful trend on the visible front. Your Lordships will recall that probably only once in 60 years have we had a surplus on visible trade, and last year we had a deficit of £1.1 billion. That deficit, if we did not take into account oil, would have been even greater. Equally the policies of the current Government do not make it particularly conducive in the current climate for exports to increase, or for exporters to have any real confidence. Thus any market which takes large quantities of British goods, particularly visible goods which produce a large amount of employment at home, must be treated seriously not only in terms of what it represents today but in terms of the trend.

I am fortunate to have the export figures for last year. I am sure your Lordships will be pleased to note that for the first time we have shown a substantial surplus in our trade with the Arab world. The overall figure shows a surplus of something of the order of £463 million; a swing of almost £500 million since the 1977 position. More than that, in some areas we have seen a decline in imports, in particular from Saudi Arabia. The Arab world today accounts for 9 per cent. of the total exports of the United Kingdom; the Middle East as a whole something over 10 per cent. In looking at it we must also consider the growth that we may expect. Last year trade with the Arab world rose by something of the order of 14 per cent.; substantially higher than the national average. Trade with Saudi Arabia, Kuwait, and countries of that sort, often showed increases of over 30 per cent., or nearly 40 per cent. Even Iraq showed an increase of 29 per cent. There were decreases, it is true, in the lower Gulf, but the general trend is likely to be upwards.

If we consider the other alternatives around the world for our trade, the picture is not particularly bright. There is the situation in Iran, one of our biggest markets, which has seen something around £700 million of United Kingdom exports last year. That situation is serious. We heard on the news yesterday of the cancellation of an order of £1,000 million worth of defence equipment. That market must be replaced somewhere. If I dare mention another market that causes me personal concern, because I wonder whether we might take action against that at some time or another, it is South Africa, which receives £650 million of British exports. All in all, I am not speaking for a hard line on trade before everything, but pointing out the importance of trade to us, and the essential importance of ensuring that our existing markets are not prejudiced in any way.

Figures have been quoted about trade with Israel. All of us would like to see an increase in trade with all countries of the world. Trade with Israel fell last year from £273 million to something around £243 million. Whether that fall, or how much of that fall, was due to the effect of the Arab boycott, I do not know. But one looks at the quality of that trade as well and realises that some £114 million in 1977, and I would estimate something over £100 million in 1978, was in the export of diamonds—effectively the re-export of diamonds. In terms of actual visible trade of manufacturers from the United Kingdom the figure was fairly small but very significant.

I can reply to a question raised just now as to how Israel compares with the individual Arab territories. The figure for Kuwait was £332 million; Saudi Arabia £786 million; Iraq £215 million; Bahrain £119 million; Dubai £273 million; the major markets in Egypt something over £200 million. These figures are quite important, but it is not the presentation of these figures that takes one away from the moral issues of a boycott. I believe as a banker, trader, and someone involved in that part of the world that it would be wrong to have any form of legislation, or any action as proposed by the Select Committee.

I think that the report itself has done a lot of good. It is quite a remarkable report not only in its content but in the way in which it is impartially presented, and with utter fairness. This report itself can do a lot of good for the British cause. I should like to feel that we might hint to people that we would contemplate taking action, and leave some form of Sword of Damocles hanging over them. But to say that legislation should take place because the United States has done it, or the Canadians have done it, or because the French, with their peculiar legal system have done it, is totally wrong. From an American point of view I am not in any way denigrating the United Kingdom, but it would be wrong to assume that we could expect to exert the same influence over the Arab world as does the United States. Equally it would be wrong to assume that the importance of Arab world trade to the United States is as great as it is to ourselves. I believe that in the first nine months of 1978 trade from America with the Arab world increased in dollar terms by 14 per cent. United Kingdom trade increased in dollar terms by 28 per cent. with the boycotting countries, so there is an upward trend.

None of this detracts from the morality of the whole issue, but regrettably emotion is at stake. All the countries of the Mildde East and all those nearer the Equator always show a much greater feeling of emotion and sensitivity than those of the cold-blooded North. Often there is misinterpretation of action—sometimes deliberate, sometimes totally accidental—and there is a herd like instinct that grows with people following something not knowing why they are following it.

At present we have a situation in Iraq, historically an old friend of the United Kingdom, now regarded, as somebody commented today, as a hard-line Arab country; a Socialist country, but one which at the moment—since the issue of the report; I think since 13th August of last year has imposed a boycott on all United Kingdom trade. That boycott had nothing to do with the boycott in Damascus. The boycott was imposed by the Iraqis, I would say, because of a misunderstanding of the attitude of the United Kingdom Government and because of what someone might have called "little local difficulties" here, but effectively the terrorist situation.

Out method of law and fairness, which is absolutely correct and right, conflicts with their attitudes and opinions, yet we have an impasse, an impasse between two countries both of whom would like to trade again. We have a delicate political issue to be overcome and I hope the noble Lord, Lord Goronwy-Roberts, can tell us what action Her Majesty's Government might be taking now vis-à-vis Iraq and can assure us that steps are being taken to obtain the release of people held in prison there and to encourage the recommencement of trade; because the increase I mentioned—of 29 per cent. last year—will undoubtedly fall away if no orders are placed, and orders are still at risk.

We must also consider the fact that regrettably our competitors—competing nations and companies—are not always themselves fair. Many of them take a hidden delight in the discomfort of companies on the boycott and may, unwittingly or perhaps wittingly, try to encourage the maintenance of that boycott, often when individual countries would wish to remove it. It is, as the noble Lord, Lord Redcliffe-Maud, pointed out, the differing attitudes between the differing countries. If we see a peace signed between Israel and Egypt, part of the conditions are immediately the removal of the boycott. What encourages me is that at present there are innumerable individuals and enterpreneurs who are beginning to plan for peace in the Middle East. If there is peace, the growth in trade will go ahead at an even greater rate than it has while a state of war has existed.

I appreciate that it is hard for us, a nation with the history and background we have, to condone non-action on an issue of this sort, but that is the "action" I would recommend and wholeheartedly support. While I appreciate the enthusiasm of those who would like to encourage legislation and who believe it could have some effect, I would ask them to steer a happy course between what one might describe as the optimism of enthusiasm and the pessimism of intelligence.

5.35 p.m.

Lord JANNER

My Lords, I have listened with considerable interest to the speeches that have been made and I wish at the outset to thank the noble Lord, Lord Byers, for the remarkable presentation he made. I felt the same about the speech of the noble Baroness, Lady Hornsby-Smith, and others who have spoken, but I cannot say the same about the speech of the noble Lord, Lord Selsdon. Of course, I anticipated his speech, having followed very carefully the proceedings which were taking place and having full information in regard to the evidence that was given. I wish particularly to thank the noble Lord who chaired the committee for the tremendously important work he did, for steering it the way he did and for spending so much time investigating the position, and I extend the same compliments to the members of the committee.

The noble Lord, Lord Selsdon, touched on what to me and to every civilised person is something which he should consider to be against the sideline in which his particular interest is involved. I have no financial interest in this, though I need not tell your Lordships that I have, and have had for the last 50 years, a very keen interest in Israel, an interest which I have expressed in this House and elsewhere. My honest view is that Israel exists for the benefit of the whole world and that any action taken against Israel detracts from the importance of a State which has done no harm to anybody, which has been attacked by its enemies and the existence of which, if we are to maintain civilisation, is essential. In other words, if it were not for Israel being what it is, we should have to create something in the Middle East to deal with the principles about which the noble Lord spoke when he began, because the moral situation is extremely important in this whole matter.

Noble Lords who wish to participate in this debate are obviously wondering what they could say that has not already been said by Lord Byers and others. Not knowing where we would come in the order of speakers, we have tried to imagine what we could contribute to a debate of this kind. The subject under discussion goes far beyond this attack on Israel. The boycott was commenced years ago with a view to preventing the recreation of the State of Israel, which is the only democratic State in the Middle East. How dare we expose a State of this description to destruction, to condone an action which was designed to destroy it even before its existence! We must consider this vicious boycott as a move designed to wreck trade relations between countries and those with whom they arc living in friendship and peace. I would tell Lord Selsdon with respect that it is the duty of the banks and the organisations with which he is concerned to take part in this tremendously important object.

The use of blackmail, to which I have referred on a number of occasions, and to which I still refer as "blackmoil", is now an attempt to ruin economically and so destroy a State which some country desires to destroy for its own evil ends. If this is allowed to prevail, a strong step will be taken against civilisation as we understand it. Any country, no matter how insignificant, if it has the fortune to acquire from natural resources a bountiful supply of a raw material essential to the economy, or, perhaps even worse, the health of other human beings in any part of the world, can, if there is the idea that it is expedient from a profit-making point of view to succumb to the blackmail, deprive the rest of humanity of that material.

I am not just speaking without facts, and I should like to give a simple illustration of the position where "black-moilers" have already used their pressure, even to the extent of preventing such a vital commodity as breathing aids to reach Israel. What a cry there has been, and is, in our own country today, that no steps should be taken to deprive anyone at all of medical assistance or anything of that nature. Here is a case which I shall quote to the House. I refer to one of the Chubb companies, which puts forward a plea that its breathing aid was an important asset in relieving the difficulties of sufferers. I have no doubt as to what would be the reaction of any citizen of any country to a threat to be deprived of such a help. This is a factual position in which a company is succumbing to this blackmail.

No one here doubts what my view is with regard to Israel. I do not think that anyone in this House, or in the other House, or indeed in the country has any doubt about this. What a despicable action, or appreciation, the boycott is for the vast help which the Arab world, no doubt including Arab bankers, among them those from the boycotting countries, get from Israel.

Certainly since 1937, but even before, it has been an open secret that thousands of Arabs, nationals of States at war with Israel, have nevertheless flocked to the Jewish State to receive high-level medical treatment and advice which is lacking in their own lands. They have joined other thousands from among the territories under Israel's control in benefiting from this humanitarian service, and have done so over the "open bridges" across the Jordan river. This is another constant reminder of Israel's readiness to trade and to conduct relations with her neighbours, whose response, as we have heard today, has been both to reject such overtures and, at the same time, to prevent other countries and peoples from contact with Israel.

With the greatest respect, what right have any, including the bankers, to brush aside this kind of thing for a temporary purpose? It is a temporary purpose, and I shall come to that in a moment or two. I hope that the House will forgive me for taking some little time on this matter, but I feel it deeply at heart. What right has anyone to interfere with this kind of action on the part of Israel? How narrow-minded and self-defeating such a boycott policy becomes, especially when the side employing the boycott is aware of the tremendous benefits which Israel has brought, and can bring, to its own nationals.

The logical direction of such an uninhibited and unrestrained Arab boycott would be not only to deny themselves—and that is surely their loss—but also to deny to us and to other enlightened countries not only Israeli products and services but the discoveries of Jewish scientists, such as Salk and Sabin, who have saved the world from the scourge of polio. This is merely one brief example.

One major interest of the Western world, we are told, remains the theme of Christian pilgrimages to the Holy Land, sacred to the three great monotheistic religions. The Arab boycott has sought, and still seeks, to prevent visits to Israel and its environment in which so many holy sites are to be found, purely on the grounds that all support for Israel must be denied, regardless of the motives behind it.

I have spoken on many previous occasions, and I do not want to take up too much of the time of the House, but I feel strongly on this matter, as I am sure do other people who have also watched the situation from the beginning of the State of Israel, and even before then. Such people must be fully with me at present in what I am saying.

The nations of the world are successfully obtaining supplies of oil in their territories and territorial waters. These supplies are expanding daily, and it will probably not be very long before there will be sufficient oil and other forms of energy to meet the needs of the world. With the greatest of respect, I would commend this point to the noble Lord who has just spoken, in an endeavour to show him that he is on the wrong track from the point of view of assisting financial benefits to this or any other country. As I have said, these supplies are expanding daily, and it will probably not be very long before there will be sufficient oil and other forms of energy to meet the needs of the world. Everybody should then be in a position to overcome in no small measure any temporary loss of profits ensuing from their defiance of the wreckers of decent international trade relationships.

I should also like to raise the question whether it would be fair not to protect ourselves from this menace. After all, for many years Israel was a good and welcome customer for our products, and is better in regard to the balance of trade today than all but one Arab country, Saudi Arabia; and certainly no step which throws a spanner into the machine of international trade relationships and good will should be encouraged by any action of ours as against Israel or any similar nation with whom we have, and have had, good relationships.

I must confess that I was disappointed—and I am sure that the noble Lord, for whom I have the highest regard, will understand my fears in the directions to which I am going to refer for a few minutes—that the Select Committee examining the Foreign Boycotts Bill proposed by the noble Lord, Lord Byers, did not see fit to recommend that the Bill become law, despite the fact that during their several weeks of painstaking work they heard a considerable amount of evidence indicating the widespread nature of the boycott in this country and its damaging effect on British trade. Indeed, the last figures for the trade between Britain and Israel showed that we increased our imports from Israel in 1978 by 18 per cent. to £189 million. As a whole, I strongly support of course that we must at once take the steps which have been proposed by the Select Committee. Our exports to Israel fell by an alarming 11 per cent. to £243 million.

Much of the blame for this loss of business can be laid at the door of the boycott and the increasing uncertainty, and even fear, that it engenders among British businessmen who are interested in trade, not politics. The committee decided, in its wisdom, that the actual loss of trade caused by British firms accepting the dictates of the Arab Boycott Office in Damascus was less than the potential loss in trade with Arab countries if Britain introduced anti-boycott legislation. I believe that this was a wrong decision, on many grounds—moral, certainly; economic, also—and can only open the door to even more pressure on British firms, not only by Arab countries but also by any other overseas country which may want to exert political pressure on us in the future by the use of such threats.

Leaving aside for one moment the moral aspect, which I believe is a most important one, let us examine briefly the situation in America. It is no good brushing America aside and saying, as the noble Lord did a moment or two ago, "We are different from America. America can afford to be decent; we cannot. America can afford to have legislation on actions against Israel; we cannot afford to have such legislation". I want to refer to the American situation because it is important from the point of view of the whole subject being properly discussed. There, your Lordships may recall, legislation has been introduced despite open threats from the Arabs that such a move would have dire consequences for trade between America and the Arab world. What has happened since the legislation was introduced? May I first of all quote what was said in November by Mrs. Juanita Kreps, the American Secretary of Commerce? She recalled those predictions and then added: I am happy to report that exports to Arab countries are up by 12 per cent.". I should now like to refer to a speech made by Stanley Marcus, who is senior Deputy Assistant Secretary for Industry and Trade at the American Commerce Department and the man responsible for anti-boycott enforcement. Addressing the International Trade Club in Chicago last March, he said that since the legislation was introduced: boycotting countries have shown both a willingness and an ability to make adjustments in their general boycott practices. Apparently there is a growing tendency on their part to view the US anti-boycott law as a legitimate attempt by us to protect our own sovereignty and to prevent American companies from engaging in anticompetitive behaviour". My Lords, I sincerely wish that the Select Committee Report had resulted in our Government adopting a similarly tough line. Had they done so, I am convinced that the Arabs who do business with us would have adapted themselves, as they are doing in America, and would have continued to engage in two-way trade with us.

As my noble friend Lord Fisher of Camden and I explained in a statement submitted to the Select Committee, which your Lordships will find on page 108 of the report, we shall not be happy until legislation of some sort is introduced. In the meantime, however, as the next best step, I want to urge the Government as forcefully as I can to adopt all the measures recommended by the Select Committee. These recommendations, while stopping short of legislation, would, if implemented, in my view go some way towards curbing boycott practices and would, in addition, show to the Arabs and to the bewildered British businessmen that we are sick and tired of being told by firms in other countries whether we can trade with them.

At present, the British businessman seeking advice and guidance from the Department of Trade about the vagaries and complexities of the Arab boycott is left in the end to his own devices, the line being taken that he must decide on the basis of his own commercial judgment whether or not to bow to the demands of the Arab Boycott Office. In my view, this is simply not good enough. Therefore, I wholeheartedly endorse the recommendation of the Select Committee that Her Majesty's Government show a more positive attitude of resistance to the secondary and tertiary boycotts. Her Majesty's Government should show that their statements deploring the boycott mean what they say". I am also glad that the committee recommend Her Majesty's Government to undertake an initiative in the European Council to develop a common fundamental policy of non-discrimination". I sincerely believe that such an initiative on Britain's part would elicit a favourable response among many of our European partners, some of whom are already taking legislative actions against the boycott. Here is a chance for our own country to show a lead and to unite Western Europe in a common front against the insidious practices of the Arab boycott.

Before concluding—and I apologise to the House for the need to take a little more time, but I feel strongly on this matter, as noble Lords will understand— there is another aspect of this question to which I should like to refer. Soon, I say hopefully, Egypt and Israel will sign a peace agreement, that will have far-reaching implications for the whole area. I believe that such an agreement will be of enormous benefit to the sorely strained economies of both countries. Not only will they be able to trade with each other—and, as immediate neighbours, that is only logical and sensible—but also it will encourage overseas companies to invest there in a far bigger scale than ever before. To show their opposition to such an agreement, some of the hard-line Arab States will no doubt attempt to intensify the boycott and if we in Britain do nothing it will strengthen those forces which want to prevent peace from coming to the area. We should be, by implication, siding with them, even though the often-stated policy of our Government is a peace agreement based on the terms agreed at Camp David.

My Lords, I have outlined some of the reasons why I agree that Britain should introduce anti-boycott legislation. As that is apparently not to be, at least for some time, I can only again endorse the recommendations of the Select Committee and urge Her Majesty's Government speedily and unequivocally to accept them and to implement them. If they do not have the desired effect of eliminating the boycott in this country, then I agree with the Select Committee that we shall have to consider again the question of legislation.

6.2 p.m.

Baroness SEEAR

My Lords, I am sure that all noble Lords will agree with me when I say how glad I am to see that the noble Baroness, Lady Hornsby-Smith, has been able to break her painfully- enforced silence over the last 11 months to take part in the debate this evening— and to take part in it so very effectively. In this debate, based on so excellent a report, there is very little left to say that has not already been said a great deal more effectively than I can say it. In the spirit of yesterday's debate which, unfortunately, I did not attend, I should be inclined to sit down now, but I want to take up two points that were made by the noble Lord, Lord Selsdon, who is not in his place. The first point that he made was that any action to be taken by Her Majesty's Government would be detrimental to our very real and considerable economic interests with Arab countries. We are not, apparently, going to legislate, and I, for one, tend to share the view of the noble Lord, Lord Janner, that maybe it would have been a good thing to have taken the bull by the horns and to have had legislation. But I am not pressing that point of view, for it has already been decided that that is not going to be the line of action.

This leaves to Her Majesty's Government a wide range of action that they could take and it is clear that that action will be taken having regard to the very real interests to which the noble Lord, Lord Selsdon has referred. But what we are seeking—and I am sure that the noble Lord, Lord Selsdon, would not be able to prove his case against this—is that, having regard to those interests (and their importance is accepted) there is a wide range of things that the Government could do. They could start by ceasing to sweep this matter under the carpet. That, to a large extent, is what has been going on. They could limit themselves to providing much clearer information to the considerable number of people, who, we are informed, do not know what the pressure of the boycott is, what they are allowed to do and what they are not allowed to do. I find it impossible to believe that the mere provision of information is going to stop the Arab countries ordering new docks from this country. One's imagination baulks at the idea. That is the least that could be done; but even that would be something.

Then the Government could move on to stronger action in the diplomatic field. That, again, is surely something which could be handled with the diplomatic skill that this country has in a way which could bring about results without really putting our economic interests at very great risk. Having no direct economic interests in the Middle East, it is, perhaps, easy for me to say that and, therefore, I say it hesitantly. However, where there is a strong moral case, as in connection with the secondary and tertiary boycotts— and one accepts that the primary boycott is a matter which continues with the cold war which exists in reality between the Arab countries and Israel—some risk, at least, on the economic front is not too much to undertake in this regard. I would underline here the element of hypocrisy which creeps in when, quite properly, we push our own policies of non-discrimination with regard to ethnic minorities in this country, while being so very hesitant to take action in this case where there are overtones of racialism —even if the boycott is not basically racialist in character but more in the nature of a military activity. Surely, from the wide range of possible action that is open to Her Majesty's Government they can find some alternative to the existing inaction which has characterised their attitude towards the boycott up to the present time.

The second point made by the noble Lord, Lord Selsdon, was that, unlike the Americans, any action we took would be ineffective because, in comparison with the United States, we are not in a strong power position in relation to the Arab countries. Because of the greater strength of the Americans, in his view, they were able to take much stronger action than we in this debate are advocating. Of course, it is true that the Americans are in a position to bring greater pressure to bear on the Arab States than we in this country, by ourselves, are able to do. But here, surely, as other noble Lords have said—and this I underline particularly—is a case for the European Community countries to stand together. I know that the noble Lord, Lord Goronwy-Roberts, is very much in favour of both formal and informal action in foreign affairs and affairs of this kind being taken, wherever possible, in conjunction with our partners in the EEC.

If we want to be in a position to exercise real influence with the Arab countries in regard to the boycott, surely this is a prime case for acting together inside the Community. Is it too much to ask that this should be considered as an item for the agenda not just of the Council of Ministers, but of the European Council when the Prime Ministers get together? They have many ways of communicating with each other on matters of this sort and if we take the initiative and it is made clear that we believe action should be taken on this front, then surely we can act together. Once we act together, any argument that our power base is inadequate falls to the ground. The influence of the Community countries is surely every bit as great as the influence of the United States.

6.10 p.m.

Baroness ELLIOT of HARWOOD

My Lords, I shall be brief. I should like to support the noble Lord, Lord Byers, in this extremely interesting debate which he has inaugurated. I should like to congratulate him and say that the work and support he gives to Anglo-Israeli relations, and to those subjects which come before us, is splendid and I should like to support him in all he does in this matter. I should also like to add my congratulations to the noble Baroness, Lady Hornsby-Smith. It is a very long time since we heard her voice and it was an enormous pleasure, as the noble Baroness, Lady Seear, said, to hear her make such an excellent speech on this occasion.

I am no expert on the subject of boycotting, but I am deeply concerned about all forms of discrimination against race, colour, religion or politics. I condemn this kind of policy. In this country, where we spend so much time in Parliament, both in this House and in another place, passing legislation to prevent discrimination, this is one of the occasions when we can stand up and be counted because all of us feel strongly that this is discrimination and we do not like it. I suppose that it is quite unnecessary for me to say that of all the races in the world who have suffered from discrimination and persecution, none has suffered more than the great race of the Jews. We are always bitterly opposed to this in this country and we stand up for their rights and freedom.

There are occasions when discrimination amounts to blackmail. I certainly believe that the only way one can deal with blackmail is to fight it. One does not deal with it by giving in to it. There are one or two facts connected with Israel which I have always felt militated very much against their powers in the world at large. I can well remember when I was a delegate to the United Nations, and we used to have discussions and debates, there were always 14 or 15 sometimes more—Arab States and supporters all on one side. When it came to putting the Israeli case, there was just one ambassador, one person from Israel, standing up for the State of Israel. That is unfortunately something that we cannot escape. It happens all the time. I imagine that when there is a conference in this country, in the Foreign Office for instance, one gets 14 or 15 ambassadors all backing one line and only one ambassador speaking up for Israel. So they are permanently at a disadvantage. We are deeply concerned that there should be fair play for all countries and that we should do our very best to counter this imbalance in every way that we can.

I read the report -not I am afraid from beginning to end, but the first part of it— with enormous interest. Obviously, there is a large proportion of business interests in this country who are not in favour of the Bill. Nevertheless, many British companies do trade with both the Arab States and Israel and this should be encouraged. I like the slogan which the noble Lord, Lord Redcliffe-Maud, gave us: "Encourage courage". That is something we can all adopt. Any attempt by Arab interests to prevent this should be resisted.

Noble Lords have spoken in the debate about the relationship on a trading and commercial basis between the Arab States and Israel, and it is perfectly true of course that this is internationally almost negligible. Before Christmas, I—as other noble Lords or their wives may have done—went into one of the big Marks and Spencer stores at Marble Arch. It was packed with people of every nationality and colour. There were hundreds and thousands of Arab women buying in Marks and Spencer at Marble Arch. I am perfectly certain that they did it in many other stores of that company. It is possible for there to be a breakdown of antagonism between the Jew and the Arab when it comes to practical things. Certainly in shopping and that type of situation there is no doubt at all that the Arabs are just as keen to take advantage of the brilliance and excellence of Jewish commercial people as anybody else. This type of experience of watching on those occasions supports the second request of the Select Committee in paragraph 98 that the United Kingdom should retain her friendly relations with both Israel and the Arab States. I am sure it can be done.

The fourth point —that the British policy of non-discrimination between the people of the United Kingdom and any other race of any description in this country should be observed—is another of the recommendations which I strongly support. It is absolutely essential that any demonstrations in the United Kingdom, whether political or commercial, shall not be allowed if they are demonstrations against another race and, in particular, against the Jewish race. Here again, the courage that is being recommended by the noble Lord, Lord Redcliffe-Maud, comes in. We must bring discrimination of any kind within our Race Relations Act and not allow anyone to get away with discrimination as between the Arab or the Jew, whether or not it be commercial.

We are not to have the Foreign Boycotts Bill. Trading between British companies and Israel and British companies and the Arab States must be conducted on commercial grounds and not on a political basis. That is the message of the report. Listening to all the other speakers who know much more about commerce than I do, I feel that it can be done if we have one or two courageous actions by the present Government. I should like very strongly to support those noble Lords who have suggested that the subject of the boycott should be raised by our own Government in the EEC, where I am quite sure it will be favourably received. After all, there is a great group of European States learning to work together and working together, and all those States were involved in the Second World War. All are aware of—and, alas, some took part in—the agonies which the Jewish race went through. Therefore, it must still be in the minds of European statesmen.

I do not think that there is any influential forum where this matter could be discussed with more feeling and more understanding than the European Community. So I very strongly support the proposal which has been mentioned by the noble Lord, Lord Aylestone, and the noble Baroness, Lady Seear, that Her Majesty's Government, among the many recommendations that people have been urging upon them—all of which I support —should be urged to take the advice of the Redcliffe-Maud Committee and heed the words of noble Lords here. At the first opportunity, they should get the Common Market, the European Council, to discuss this very important subject.

My Lords, I shall say no more because I agree with all that has been said. I urge Her Majesty's Government not to miss this opportunity of doing something practical on a subject which has been going on for a very long time.

6.20 p.m.

Lord MCCARTHY

My Lords, may I start by joining those who have thanked the noble Lord, Lord Byers, for inaugurating this debate and indeed for inaugurating this subject and the committee which considered it. I should like also at this time to pay a tribute to the work which he did on that committee, which I think the chairman would agree was second only to his own. My problem is that I appear here as one of a minority of two—and the other has unaccountably disappeared. I was one who, with the noble Lord, Lord Boyd-Carpenter, voted against paragraphs 112 and 121(7). I do not know whether that makes me a substitute Scylla or a deputy Charybdis; but since he is not here I have to do the best I can.

I want to explain very briefly why we felt we had to disagree to those paragraphs. I should say it is not because I, for one, disagreed with the mainstream of the argument in the report. In paragraph 98 the committee says that our policy should be basically decided by four things: first, we should do nothing to impede the negotiation of a settlement in the Middle East; secondly, we must maintain friendly relations with both the Arabs and Israel; thirdly, the right conditions must be provided for the United Kingdom to increase our exports world-wide and especially in the Middle East; and, fourthly, British policy of nondiscrimination within the United Kingdom between peoples of different races, reli- gions and ethnic origins should not be undermined by the policies of foreign Governments.

The problem was that the more one considered them the more it appeared, at least to me, that three of those considerations, though very important, did not actually help one to decide in precise terms what to do about the Foreign Boycotts Bill and what to say if one did not want to proceed with it. We say in paragraph 99 that so far as we can see, so far as No. 1 is concerned, the Middle East settlement, the passage of the Foreign Boycotts Bill or any substitute measures we might suggest are very unlikely to have much effect on the likelihood of a Middle Eact settlement one way or the other. We say in paragraph 100 that, while the carrying of the Bill into an Act would almost certainly annoy our Arab friends, to do nothing about it would almost certainly irritate our Israeli friends; so that does not get us very far. We say, I think, in paragraph 116, that if it is the case—and we do not know whether it is or not—that the present Race Relations Act would not deal with an incident such as the Mancroft incident, then it jolly well ought to do so; but since we do not know whether it does or not, and since no incident has been reported to us at this time, that does not help us very much to deal with the Foreign Boycotts Bill.

I think the committee had to consider this issue essentially on criterion No. 3: The right conditions should be provided for the United Kingdom to increase her exports world-wide, and especially in the valuable markets in the Middle East". That was really what it came down to; and the first point to make about that is that the major damage of the boycott has probably been done already. It has been done because of the many hundreds of British firms who grossly exaggerate the consequences of the boycott.

The fact is that the boycott intends to classify firms into three groups. There are those who have no trade involvement at all with Israel and are not affected by the boycott. There are those who have a fairly specific minimum level of involvement with Israel and should not be affected by the boycott; and there are those who have a fairly extensive involvement with Israel which is actually prescribed. I would suggest that the great majority of firms do not export war material to Israel; they do not have factories or plants in Israel; they do not sell patents or technnical help to Israel; they do not invest in Israeli companies; they do not have their main company office for the Middle East in Israel—they would be very foolish if they did—and, whether in fact this is a good thing or a bad thing, they do not have prominent Zionists on their boards.

Essentially, that is the degree of involvement at the point at which the boycott operates and the important thing for the Government to do is to make that as clear as possible to every British firm which remotely considers the possibility of exporting goods to Israel. I think the committee came to the conclusion that it is by no means clear now, and that the efforts which the foreign Office make to help people to pass their forms through the Foreign Office sifting machine do not begin to deal with the problem. That is the central matter about which I think the Government ought to give us an undertaking today.

If we take the view—and I think it was the view of the Committee—that help and encouragement of this kind is thought to be of more assistance at this time than the passage of the Foreign Boycotts Bill, of course it will be said; "What about the United States?" The difference between our situation and that of the United States has also been stated most clearly by the noble Lord, Lord Redcliffe-Maud. I would add one other point. If you look at paragraph 74, you will see that we spell-out what the exceptions are in the legislation of the United States: they are quite considerable. I would suggest that the Boycotts Bill we are being asked to pass does not have those exceptions in it. It may be because of the exceptions, and particularly the unilateral selection exception mentioned in paragraph 74—as far as we can see, although it is very early days—that the boycott legislation in the United States is having substantially little effect. Therefore what we are saying, particularly in paragraph 105, is that the way forward is through trying to get rid of what we call "the voluntary boycott" or, if you like, the unnecessary boycott— the boycott which arises because people exaggerate the scope of it and because, as the noble Lord, Lord Redcliffe-Maud, said, they are not sufficiently ingenious about how they approach it. What we suggest, among other things, is to add to the pool of shared experience and create a better understanding of the actual scope of the boycott.

So I come to the area of difference between us. I find it difficult to square what is said in those paragraphs with what is said in paragraphs 112 and 121, or that part of paragraph 121 which affects paragraph 112. It seems that there we go back on the wholehearted discouragement of the voluntary boycott and we start trying to introduce something like the kind of pseudo-coercion of the Canadian or Norwegian approach. I am sorry to say this, but I do not think that in paragraph 112 the majority of the Committee found appropriate words to express their desires. I can see why they did not, because those desires are very difficult to express. What is said in paragraph 112 is that: Her Majesty's Government should give careful consideration to the use of public funds in support of particular boycott-related transactions, i.e. those involving direct compliance with the boycott in the form of a boycott declaration or negative certificate of origin". I repeat "careful consideration". But such careful consideration would not mean necessarily, they go on to say, that public funds must never be used in boycott-related transactions; there may be good cases for such payment. But if companies need assistance to secure a contract which includes boycott conditions, they should normally go to the open market not to the tax payer for that money". I have a number of difficulties with this paragraph.

In the first place, I cannot say that I quite understand the distinction between direct compliance and indirect compliance. Apparently, "direct compliance" covers boycott declarations and negative certificates of origin, whereas "indirect compliance" covers those other methods, random checks and questionnaires. I am not at all certain that boycott declarations and negative certificates of origin are necessarily worse, and indeed more direct, than random checks and questionnaires. Indeed, I am unable to understand the excitement which the notion of a negative certificate of origin arouses. I have explained my point of view many times, but people do not see it. It seems to me that the positive certificate of origin tells you all you need to know. It tells you where the goods come from. They come from this country, and if they come from this country they cannot come from Israel. So why anybody should want a negative certificate of origin—

Lord BYERS

My Lords, does the noble Lord not see the distinction? A negative certificate which mentions Israel is a discriminatory document, whereas a positive certificate is not.

Lord MCCARTHY

No, my Lords, I cannot see that. The question is whether you have a basis on which to discriminate. If you have a positive certificate of origin, you have a basis on which to discriminate. If you have a negative certificate of origin, you also have a basis on which to discriminate. I know that some people find the name "Israel" offensive—they would rather have the name of this country—but to me it is a distinction without foundation.

Lord ELTON

My Lords, would the noble Lord be kind enough to help me, as I was not on the committee? Am I to understand that a negative certificate may require much more than a statement that no part of the goods came from Israel? It may require a statement that no part of the goods came from any other country, or ' any commercial concern which is on the black list, which is a very long list indeed, and that is certainly a discriminatory document. I should be glad if the noble Lord would elucidate.

Lord MCCARTHY·

My Lords, these things could just as well be put as part of other certificates of origin. In any case, these things are put in questionnaires and they do not form the basis of a distinction between a direct form of compliance and an indirect form of compliance.

Secondly, I do not know what the majority mean by "consideration". As I have tried to indicate, they are saying, sometimes, that as a result of careful consideration the Government should stop the money. But at other times we are told that as a result of careful consideration—and we are not told the grounds—the Government will continue to give it. Whether it would be in the case when the order was so large that we could not afford this practice, I do not know. But it does not seem to me very precise, or to justify the distinction between direct and indirect forms of compliance.

Although I approve of the rest of the committee's report, I cannot approve of those parts which relate to a form of tokenism. It is as if we are saying that we have decided not to introduce a Boycotts Bill—and I think that is right— but that, although we cannot do some- thing along those lines, we want to do something, not because it would necessarily do any good or assist the main aim and stream of the report, which is that we should try to reduce the voluntary boycott, but because we must do something. That is a form of tokenism. It derives from a very honest belief, which is nevertheless erroneous, that because you disapprove of things you must do something about them, whether or not that has any effect at all, and you must take some form of legislative or administrative action. I suggest to the House, as I suggested to the committee, that there are many things in this world that we do not like and do not approve of, but we cannot do anything about them.

Baroness GAITSKELL

My Lords, before my noble friend sits down, is he really saying that when we do not like a boycott, as we have here, when we do not like apartheid, when we do not like racial discrimination or a great many evils in this world at this time, we should do nothing at all about them? Is he saying that we should not even try? If so, I totally disagree with him.

Lord MCCARTHY

My Lords, I am not saying that. I am saying that such action as we take should be effective, and we should believe it to be effective. It should not be tokenism. I am saying that, to me, those paragraphs in the report are a form of tokenism.

Baroness GAITSKELL

My Lords, how can my noble friend guarantee that what we do will be effective? We have to try.

6.35 p.m.

Viscount SLIM

My Lords, when we had our debate originally I had to say to the noble Lord, Lord Byers, that I felt I could not follow him in this matter, and I have not changed my mind. But what I should like to say to him is that the fact that he raised the whole matter and put it in the open, and the fact that the committee have done such an excellent job in producing the report, will clear the minds of many people. So I should like to thank him most sincerely for that.

I am against legislation, and I hope that I speak like many businessmen in this country. I am against it because however unpleasant a boycott may be, business has to be done, and, with some of that courage which the noble Lord, Lord Redcliffe-Maud, mentioned, British businessmen have found they way through the morass and the difficulties of the boycott situation. This, in itself, is sometimes distasteful, but it is practical, and when you know your way around somewhere you can generally do a little bit of business.

If we have legislation we become inflexible, and the opportunities that suddenly emerge are harder to define and to react to more positively and quickly in a matter of export and in selling British goods and services overseas into the Middle East. If I may say so with great respect to the Government—whichever Government this country might have— "legislation" is not a happy word to businessmen. We have already discussed filling in a few forms in regard to the boycott matter. I have a nasty feeling that if the Bill became law we should be filling in a great many more forms in Whitehall, and, as I have said, the whole procedure would slow down.

It is not right—and here I take issue with several noble Lords, particularly the noble Lord, Lord Byers—to look at the British case through the eyes of the American experience. I do not see the tie-up. I do not see the parallel in the ways by which our two countries look after themselves, the ways in which our two countries are formed and in the might and the richness of both of us. But it is good to see the American experience, and it is good to judge what other people do.

The noble Lord the Minister will know, as do many of us, that Arab unity as displayed today is a fairly fragile flower, and I should have thought that the Government, too, would need to retain flexibility. I should not have thought that legislation would help very much on this issue over the whole gamut of Middle East affairs today. The boycott is a rallying cry to Arabs. It is one about which they feel deeply, and we have to understand that. I should have thought that this was a time for more co-operation, not less, with our Arab friends, and that we should try to iron out matters in a perfectly normal and sensible way. We all realise that it will take time, but if we can get some form of peace between Israel and the Arab world many of these problems should, might and, hopefully, will fall away.

I would ask the Minister about one point which is in the context of our debate today. I am particularly perturbed about the situation of Iraq with regard to business. I am even more perturbed about it if we are to be under severe pressure in Iran next door. The market in Iraq is there. My own personal experiences in that country are that, like anywhere else, it is not easy to pull something off, to get an order, to sell something, but that the goodwill, when you get to know the people, the businessmen and the officials, is there.

I should like to ask the noble Lord the Minister whether he thinks that the Government are showing sufficient initiative in order once more to normalise our relations so that commercial action can take place. I speak as Chairman of the Middle East and North Africa Committee of the London Chamber of Commerce and Industry and as one who sits on the Council of the British-Arab Chamber of Commerce. We have had to cancel quite a number of missions and major projects that were well under way, and also new areas of business.

I may be wrong—and I hope that the noble Lord will correct me if I am— but I cannot recall a Minister of this Government going to Baghdad. It may be that there is something about Iraq that the Government do not like. I completely concur with the actions which they took in this country; that was correct, honourable and what ought to have been done. But if the Government feel that they cannot send out a mission, or make better contact, we shall have to consider very carefully whether or not a completely non-political mission of businessmen—very few and carefully chosen—ought to go out there to see whether or not they can break this deadlock. I should very much welcome the Minister's comments.

I agree with the noble Lord, Lord Selsdon, that this is not the time to pass legislation. I do not believe that it would help the British businessman. This is the time to keep cool, to watch events, to try to co-operate, certainly with Israel and with the Arab nations, and get ourselves, in a perfectly non-political way, trading in both places. Today, the British businessman is more international than he has ever been. Operating from here, he is daring and courageous in many parts of the world. If we legislate to make things more difficult for him, he will merely take himself off to Peking or Sao Paulo and start again from there. Having read the most excellent report of the committee, I do not believe that that is their hope or intention.

May I suggest that no legislation should be passed at this stage? I think that this is a most opportune report—certainly, during my short time in your Lordships' House, one of the best that I have studied. It has taught me a great deal. The only other suggestion that I would make to the noble Lord, Lord Redcliffe-Maud, and to the noble Lord, Lord Byers, is this: why not make a précis of the report, print it in Arabic and send it out to some of our Arab friends? I find that one can look one's Arab and Israeli friends in the eye and talk perfectly honestly and openly about this matter. May I thank noble Lords for listening to me.

6.44 p.m.

Lord FISHER of CAMDEN

My Lords, I should like at the outset to express my appreciation of the valuable service which the Select Committee has rendered to this House and to the community at large by submitting its report in a well balanced statement. The Select Committee is also to be thanked for the enormous volume of evidence it has assembled and analysed, which ranges over many areas and conflicting viewpoints on the boycott problem. Our thanks are specifically due to the noble Lord, Lord Byers, for his initiative and to the noble Lord, Lord Redcliffe-Maud, for his outstanding chairmanship of the Select Committee. My observations are confined to com- menting on some of the findings and recommendations contained in the report, since I have already had the advantage of communicating the views of the Board of Deputies of British Jews, over which I have the honour to preside, to the Select Committee.

In the introduction, the report mentions that some 90 countries direct economic boycotts against at least one other country. We have submitted that none of them has the blatantly and pervasively racial character of the Arab boycott of Israel—and by common consent this is the particular boycott on which the report focuses— which in its secondary and tertiary forms discriminates against citizens of this country and other countries on the ground of their religious, racial or ethnic origin.

Paragraph 36 of the Select Committee's report states: In spite of denials, it is clear that the boycott has sometimes shown anti-Jewish tendencies, as opposed to strictly anti-Zionist tendencies". We have provided incontrovertible evidence of the fact that the Arab League Council's General Principles of the Boycott of Israel, issued in 1972, discriminates against Jews as such as well as against Zionist sympathisers.

In the very document in which the Commissioner of the Arab boycott of Israel protests against the non-discriminatory nature of the Arab boycott, details are given of the exclusion of foreign companies or firms owned or controlled by persons having "Zionist inclinations". The plain fact of the matter is that the distinction claimed to be made by the Arab boycott between Jews and Zionist supporters or sympathisers is non-existent. The overwhelming majority of Jews consider themselves, in varying degrees, as Zionists or as having Zionist sympathies, in the sense that for 'millennia, and going back to the destruction of the first Temple, the identification with Zion has been indissolubly linked with the destiny of the Jewish people as part of their religious and cultural heritage and is recorded in their daily prayers.

If there were any doubt of the racist character of the Arab boycott, the same passage of paragraph 36 of the report cites the fact that the phrase "Zionist tendencies" has to be read in conjunction with a decision of the United States Court of Appeals of April 1978, which describes as the established policy of Saudi Arabia the exclusion of persons of Jewish religion, creed or identity from its boundaries, a policy shared by Kuwait.

If I have belaboured the unmistakably racist and anti-Semitic character of the secondary and tertiary features of the Arab boycott, it is because it is basic to our understanding of why it should be proscribed and banned from our economic and national life. It is therefore imperative that prompt and firm action be taken against these insidious forces which remind us of the racial hatred disseminated in this country and elsewhere in Europe in the late 1930s. I particularly welcome, therefore, the committee's recommendation that compliance with the boycott, which involves discrimination within the United Kingdom against people of different racial, religious or ethnic origin, ought to be brought within the Race Relations Act if, on a test case, the Act is found not to apply.

Another particularly valuable service performed by the Select Committee is its dispassionate, logical and objective appraisal of the economic consequences of legislation. The dire predictions of the Cassandras flow from the pens of those with vested economic interests at stake in the Arab world, whose purpose—as paragraph 94 of the report tellingly puts it—it clearly serves: …to stretch the potential risk of passing the Foreign Boycotts Bill to its maximum". Fair-minded men of goodwill may differ in their conclusions. There are those of us who have expressed the view that, precisely because we are a trading nation for whom, together with others, the principles of non-discrimination and the progressive abolition of restrictions on international trade, as enshrined in GATT and the Treaty of Rome, are fundamental, we must legislate on the lines of the Foreign Boycotts Bill. There are indeed several amendments which could and should be introduced in the light of the evidence assembled in the committee's report about the effect of other boycotts on British re-exporters, but I am still of the view that legislation in some form cannot be avoided. The opinion is rapidly gaining ground that, in the final analysis, Arab nations are pragmatic and realistic. We should like to think that the Camp David framework accords, which make reference to the boycott problem, hold some prospect for its solution. However sanguine we should like to be in the context of the delayed peace negotiations, we must realise that the Arab states of rejection and confrontation threaten to extend the boycott to Egypt, should it enter into a peace treaty with Israel.

However, the trend discussed in paragraphs 90 and 91 of the committee's report has been confirmed. The regulations now operative in the United States of America under the Export Administration Act of 1977 and the Tax Reform Act of 1976 have not hampered United States-Arab trade. On the contrary, most Arab States have accommodated their regulations to meet the new requirements of United States law. Following the entry into effect under the Export Administration Act of regulations barring, as from June 1978, negative certificates of origin, the responsible official at the United States Department of Commerce reported in the middle of last September that, in the main, Arab Governments no longer required the production of negative certificates of origin. Instead, shipping certificates which provide positive information of the national origin are accepted as being sufficient. Prohibited boycott conditions previously insisted upon in letters of credit for Arab purchasers have now been relaxed. The United States law has thus shown itself to have brought about a reduction of boycott pressures and, far from there being reprisals, the United States sales to the 14 Arab boycotting countries increased by 10 per cent. in the first six months of 1978 as compared with the corresponding period of 1977.

Similarly, in Canada, the Government Bill became law on 9th November 1978. Thus, the secondary and tertiary Arab boycott effects based on discrimination in business relationships on the grounds of race, religion, national or ethnic origin, are now prohibited. Further, a sharpening of Canadian Government anti-boycott policy should be reported in the recent initiation of legislation obligatorily requiring the reporting of boycott requests on pain of a fine. It would therefore appear to have been insufficient to rely on voluntary reporting of such requests, at least so far as Canada is concerned.

Thus, in the United States the effectiveness of anti-boycott legislation has been established and Canada's anti-boycott stance is also being backed by laws at provincial and national levels. Many will, therefore, be disappointed that in this country the Select Committee recommends that the Foreign Boycotts Bill should not proceed for the present, in the absence of widespread support. While one may agree that piecemeal legislation should not have been recommended, a re-drafted version of the Bill to take account of valid objections would have been preferable. It is, however, encouraging to note that the committee does not exclude a future resort to legislation if the impact of the boycott on British business continues unabated.

In paragraph 110 of the report, the committee advocates a policy corresponding broadly to that of the Canadian Government, if not quite the same. Thus the committee recommends that, whenever possible, companies should avoid entering into agreements specifically discriminating against a friendly country, and urges that Her Majesty's Government should carefully consider whether public funds should be used for the support of particular kinds of boycott-related transactions. Yet the committee inconsistently concludes that the Export Credit Guarantee Department should not be required to stop guaranteeing boycott-related transactions, because this would not be compatible with promoting British exports. However, as the committee has noted, the equivalent Canadian body to the ECGD—namely, the Canadian Export Development Corporation—does not support commercial contracts containing unacceptable boycott clauses.

I would firmly take issue with the recommendation that the ECGD should carry on as previously and continue to guarantee boycott-related practices on the basis of business as usual. In paragraph 44 of its report, the committee observes that the ECGD is meshed into the boycott, since companies contravening the boycott will not be assisted because contracts in breach of boycott conditions are legally unenforceable in Arab countries. But has it occurred to the ECGD that contracts respecting Arab boycott secondary and tertiary clauses may be voidable under Community law? A note by the ECGD submitted to the committee in April 1978 forms Appendix 7 to volume 1 of the committee's report. It reveals an attitude which I submit should be carefully re-examined in the light of our commitments under the competition rules of the Treaty of Rome. The position is similar to that of the organisation known as COFACE, which withholds compensation under insurance contracts with French exporters if loss results from the breach of boycott conditions accepted by a French export company in an agreement with an Arab importer. Both COFACE and ECGD may properly be regarded as undertakings entrusted with the operation of services of general economic interest, and as such are subject to the rules contained in the Treaty of Rome and specifically the competition rules.

It is arguable, based on the American and Canadian experience, whether the application of the competition rules to the ECGD would in fact obstruct the performance of its functions—namely the promotion of British exports. It is equally possible to conclude on the evidence from these countries, that a policy of refusal to insure or underwrite boycott-related transactions will result in the withdrawal of the boycott conditions to which that transaction would otherwise have been subjected.

I conclude with two further comments. First, the recommendation that officials of the Foreign and Commonwealth Office should no longer authenticate signatures on negative certificates or origin is to be warmly welcomed. A case is known of a United Kingdom company which, as a wholly-owned subsidiary of a United States parent company, could not supply to certain Arab countries the United States-made goods of its parent. While United States companies are dispensed from providing negative certificates of origin in recognition of the fact that the regulations under the Export Administration Act in the United States permit only of positive certificates of origin, the United Kingdom subsidiary is doubly penalised.

On the one hand, it cannot be dispensed from importing goods on a negative certificate of origin because, in the absence of a United Kingdom law barring such compliance, there are no dispensations for United Kingdom firms by Arab countries. On the other hand, the firm cannot contravene United States regulations applicable to it as a subsidiary of a United States corporation dealing in goods in United States commerce, thereby rendering it impossible to supply the negative certificate requested. The United Kingdom firm thus lost this sales opportunity, which is really the height of absurdity. Had the United Kingdom firm also been prevented by United Kingdom law from supplying a negative certificate of origin, there is little doubt that it would have received a corresponding dispensation from that Arab State.

Secondly, many of us will be able un-hesitantly to support the committee's recommendation that a very important instrument, and in fact the natural instrument in Europe, for reacting to the boycott is the European Community. Many of us will subscribe to the view that concerted action by the Community in rejection of secondary and tertiary boycott interference with European trade could not be resisted. The Euro-Arab dialogue is the best evidence of this. So far it is the Arab negotiators who have been pressing for unconscionable changes in the Community's policy in political matters in the Middle East conflict. It would undoubtedly be open to the Community to make clear that the members of the Community are united in their opposition to any extension of Arab warfare in the form of secondary and tertiary boycott into the field of the Community's internal trade. If the political will could be found for taking this line, there is virtually no doubt that it would have to be accepted.

The point which I and my colleagues have made is that if the United Kingdom itself were to legislate, the possibility of the application of Article 100 of the Treaty of Rome, calling for approximation of laws in Member States, would undoubtedly provide a more effective means of action, since, whatever doubt may exist about its application, it is clear that France, too, has adopted an anti-boycott law amending its penal code. But leaving aside the question of national legislation, the Community can, under Article 235 of the Treaty of Rome, via the Council, by unanimous decision and acting on a proposal from the Commission, take appropriate measures to attain one of the Community's objectives, should it be found necessary to take action for this purpose and the necessary powers have not been found sufficient under the Treaty of Rome.

We know that an important objective of the Common Market is to ensure that competition in the market place is not distorted. Surely the will ought to be found among the Nine today to make it clear beyond doubt that the European Community will not permit the terms on which its members conduct trade to be subjected to interference on the most spurious and objectionable grounds, arising out of conflicts or disputes outside the Community for which it has no responsibility and where it aims at friendly relations with both parties. The Community would thereby make it clear for all foreign boycotts with secondary or tertiary aspects which the Community considers unauthorised that it will not permit the quarrels of others to interfere with the objectives for which the Community was created, nor to compromise principles of non-discrimination and free trade which it shares with other likeminded countries on a universal basis.

My Lords, it is my earnest hope that the thrust of this debate will be to support the Committee's recommendation contained in paragraph 119 of its report; namely, that Her Majesty's Government should take the initiative, in concert with likeminded members of the Nine, to place on the agenda of the European Council the Proposal aimed at the adoption, on a consensus basis, of effective measures to achieve the basic principle of non-discrimination by the elimination of all secondary and tertiary boycott practices in the Common Market.

7.6 p.m.

The Earl of KINNOULL

My Lords, I intervene very briefly in this fascinating debate on the ground that I served as well as a very junior minnow among some Goliaths on the Select Committee. I should like to add my thanks to our distinguished chairman, Lord Redcliffe-Maud, and say what a privilege it was to serve under his chairmanship. I would also add my appreciation to the Clerk of the Committee, whose skill and hard work produced such wideranging and comprehensive evidence for the Committee in a remarkably short time. I think the Committee owe a great debt of gratitude to the Clerk for his assistance in drafting the report, under the ingenious influence of our Chairman, which allowed general agreement to the report by the Committee; that, I think, came as a considerable amazement to a number of members of the Committee.

My Lords, if one were to ask what the herculean efforts of the noble Lord, Lord Byers, have achieved so far on the issue of boycotts, I would suggest two. The first is that his efforts have helped to lift a number of veils, exposing the issue in what I hope is a fair-minded, inemotional way. And the second is that there is now a strong case, which has been made out, I think, in the report, that the Government should show more political will and indeed honesty on this issue in a way which would seek to avoid any major damage to our commercial interests. I hope the Minister, when he comes to reply in his very best Welsh tones, will say that the Government will examine the recommendations and indeed will consider very carefully the recommendations that have been made.

At this stage of the debate I think it would be true to say that all the key arguments set out in the report, all the moral issues of accepting discrimination or the counter powerful trade arguments, have already been developed. I do not envy the Government's position on this issue. They, of course, have a massive responsibility to protect the nation's commercial interests. I would agree with them, if the noble Lord argues this, that the case of America has little relevance in reality to our own case. Against that, I think the report shows fairly bluntly that a policy generally to deplore and do nothing else can quickly become a morally bankrupt policy if the boycott is stepped up. There are two conclusions in the report which have already been mentioned once or twice, or perhaps five times, which I should like to draw to the noble Lord's attention yet again. The first is the position of the EEC. I think it is now vital, if the Government have any political will on this subject at all, that they should encourage the EEC to adopt a policy. I do not think it would be unwise for the heads of State to put this on their next agenda. In fact it they could make a joint declaration on this issue it would be very valuable.

The second issue is discrimination against the individual. There is perhaps nothing more repugnant in a boycott policy than the deliberate seeking out and removal of an individual from a company. We considered in the Committee what is known as "the Mancroft case". I do not recall precisely how many other cases there have been, but I came to the conclusion, as I think the noble Lord, Lord McCarthy, did, that the Race Relations Act does not protect this sort of case. I hope that the noble Lord the Minister will be able at the end of this debate to be quite firm on that issue and to say that the Government will protect individuals in these cases. I have sufficient faith in the Arab world that they would respect that.

I hope tonight that the Minister, in his reply, will indicate that the Government are seriously considering the recommendations and that they are now prepared to extract themselves, and indeed their predecessors, from the horns of a dilemma that they have sat upon for far too long. I believe, as other noble Lords have said, that the report has demonstrated that something needs to be done now.

7.10 p.m.

Lord WEIDENFELD

My Lords, almost anything I could or would wish to say is covered by the initial observations and conclusions of the noble Lord, Lord Byers. If I still ask to be allowed to speak in this debate it is, in the first instance, to pay tribute to the noble Lord's efforts and to his distinction of having been the prime mover of a Foreign Boycotts Bill. In the event, those efforts have been somewhat thwarted by the recommendations of the Select Committee, largely in the name of political expediency and, alas! partly at the expense of mercantile morality. Yet we still have to thank the noble Lord, Lord Byers, for having argued his case courageously, rightly and convincingly and it is certainly due to him if some substantive elements of what he originally had in mind are contained or retained in the recommendations of the Select Committee.

Inasmuch as the report focuses, in essence, on one of the consequences of the Arab-Israeli conflict, it is only fair to say that, should the present negotiations between Egypt and Israel reach a positive conclusion, the whole scope and range and perhaps even the fate of the Arab boycott would be radically altered. For it is one of the crucial conditions of a peace treaty—I believe it is the contentious and crucial Clause 6—that Egypt withdraws from any active part in the boycott against Israel. It stands to reason that some other more moderate Arab countries would, explicitly or tacitly, follow suit. But, in any case, the character and effectiveness of this instrument of economic warfare would fundamentally change.

In the meantime, as the report states, British policy towards the boycott must attempt as one of its prime conditions to ensure that nothing is done to impede a negotiated settlement. The Foreign Secretary is quoted as saying that any change, whether legislative or administrative, which substantially alters the present situation would be bound to damage relations between the United Kingdom and the Arab States who would regard it as a political act marking a shift in favour of Israel and that would therefore hamper the Government's ability to continue effectively with peace negotiations.

With all due respect, I cannot agree with my right honourable friend the Foreign Secretary and perhaps he will forgive me if I say, in all diffidence, that my guess is as good as his. For it can be argued that, on the contrary, anti-boycott legislation might impress the moderate forces in the Arab world. President Sadat might view positive action and a reaffirmation of principle on the part of a great trading nation such as Britain as a signal of firmness worthy of notice. After all, Canada, Norway and, interestingly enough France, have put far more teeth into their anti-boycott policy than we have, and they have not fared any worse in their dealings with the Arab world. The Dutch and Germans have taken robust diplomatic lines in stubborn defence of their fellow citizens and of the threatened companies.

As for the United States, the country which after all bears the main brunt of mediation in the conflict, legislation and application to commercial practice is muscular and tough and, if anything, stiffening, if we are to judge by the most recent efforts made by Members of both Parties in both Houses of Congress, efforts which I believe are to come to a head in the current session on Capitol Hill.

The noble Lord, Lord Selsdon—and I hope he will forgive me when he reads Hansard, because he is not present— made an eloquent textbook case for moral appeasement and acceptance of the status quo on the plea of economic vulnerability. Yet he has quoted some very impressive figures and an array of statistics showing a growing volume of trade. I could put to him far more dramatic statistics showing steep rises in the volume of trade and exports on the part of the United States since the stiffening of the boycott regulations, and in a political climate in Congress, on the media and a regards public opinion which is passionately hostile.

Of the positive features of the report, I note with satisfaction that the committee does not rule out a need for United Kingdom legislation in the future if the impact of the boycott on British business cannot be reduced by the various measures it advocates or by other means. I certainly endorse the committee's concern that the boycott thrives because it is largely not resisted, and is even given unsolicited help by British companies operating what amounts to a voluntary boycott.

I believe that the Government should not only urge companies receiving boycott requests to report them to the Department of Trade on a voluntary basis, but I see no reason why that should not be a statutory requirement. Voluntary action so often proves ineffectual, atrophies, dwindles into nothingness. We have, alas! seen telling examples of that bitter truth in other sectors of our public life. No one can quarrel with the proposition that suitable diplomatic opportunities should be seized and that informal approaches may often be more productive than formal protests. Bilateral talks can be effective especially as the boycott is unevenly applied, and there are subtle distinctions prevailing in the minds of various Arab Governments.

A firmer stand against secondary and tertiary boycotts is essential. The example of the Canadian Government should be heeded, for Canada not only deplores the boycott while allowing companies to decide for themselves, but actively encourages business firms to observe the Government's official statement of hostility. There are numerous examples where Canadian firms complying with the boycott forgo Government aid such as the withdrawal of financial facilities or the denial of help by trade missions abroad.

Perhaps one of the crucial touchstones of the Government's seriousness to show their true colours relates to the public sector. I hope that my noble friend the Minister of State will urge on the Government that they should heed the letter and spirit of this particular passage of the Committee's Report. When companies in the public sector enter into deals in compliance with the boycott, they should avoid signing contracts specifically discriminating against a friendly State. The same applies to the allocation of public funds to boycott-related public transactions. If companies need assistance to secure a contract which includes boycott conditions, it would be, I think, much more fitting if they were to go out into the open market and not to the taxpayer.

Finally, and most importantly, I agree with the committee's finding that our attitude to foreign boycotts in general, and to the Arab boycott in particular, should not be treated exclusively as a national British concern, but seen as what it is: a vital international problem. It is an essential part of our fight to preserve freedom of trade, if one likes, a fight for human rights in the field of international business, in which trading nations, great or small, must assert their legitimate claims.

The boycott issue is not merely a theatre of operations in the generation-old war of Arab versus Israeli. It is a test of our resolve not to let the globe shrink from a world map of open opportunity to an atlas of interdictions, a gazatteer of blacklists and blackmail, embargoes, sanctions and boycotts. If carried ad absurdum, the Russians would like us to stop deals with China, the Americans are frowning on the Cuban trade, some zealots would wish us to erase the Andes from the map of South America, and yet others would like us to jeopardise, with one magisterially dismissive sweep, most of our investments and interests in Southern Africa.

Although we must at no time lose sight of the need to keep in step with the United States, Canada, Australia, Japan and the other trading nations overseas, our proper platform for remonstration and redress is the European Community. It is before the Council of Ministers of the Nine that we should forcefully press the case for a positive policy and concerted action. It has been suggested by noble Lords that the Foreign Secretary and our Government take initiative. In all frankness, on past records I think that that is far too ambitious a step to suggest. I should be very happy if they would just concur and speak up. Let us not just hid behind the banner of Europe, but keep a truly firm and manly grip on the flagstaff.

7.20 p.m.

Lord CACCIA

My Lords, at this stage in the evening perhaps it would be best for me merely to get to my feet to say that I had the honour to belong to this Select Committee, note the fact that with others I concurred in the conclusions and suggestions made, say "Me too" and sit down. However, I should also like to say "Me too" in particular to what has been said about our chairman and "Me too" to what has been said about the very clear way in which the noble Lord, Lord Byers, presented this report to us at the beginning of the debate and showed us the conclusions and suggestions.

If I stray from those short comments, I shall do so only on purely tactical questions. The first is the negative certificate. Here, it has sometimes been suggested that the action taken by the Department— to which I had the honour to belong for many years—was something done by the Foreign and Commonwealth Office. Of course, the constitutional position is that the officials of that Department take action on the direction of Ministers. Therefore, I am sure that the Minister who is to reply will say that he accepts that responsibility and that it cannot be welcome to him, personally, to ask officials to do the sorts of things about negative certificates which the present procedure prescribes; that is to say, one signs the negative certificate on the basis that one is only authenticating a signature and that one does not turn over the page to see whether the consignment will be for something quite bland or for something which is against the policy of the British Government. I would take as an example the trade in arms with South Africa. There- fore, there is an objection here to Ministers requiring officials to do something which is against all sense and conscience any longer than they absolutely have to.

The second remark I would make in this tactical sense is about the European Community. In the ordinary way, this is the sort of question which I assume—I hope rightly—would be put to the Council of Ministers by the Commission. The role of the Commission is to put forward suggestions for things of this sort to the Council of Ministers. I rather doubt whether they would do so. They might hesitate on a number of valid grounds: that there are many other very serious matters to be considered, that this is not the right moment, that the Ministers would not welcome it, and so forth. We may say "All right". It has been suggested here that the Ministers might take up the call and say, "We shall take this in hand; the British Government should be the one to compel Ministers in the Council of Ministers to do so." Of course, one must be plain in this House and say that that carries a risk, because, although we are all members of one another to this extent, it is at the same time not altogether beyond the bounds of posibility that it will become known that it is we who have taken the lead and, if any penalties are to be exacted, they will fall on us.

Whether we think that that is a valid risk or one that can be disregarded, there are ways round it. I need not suggest them to the noble Lord the Minister of State, who will know much better than I how these things can be managed. After all, it is not beyond the bounds of possibility that the United States Government might have approached the European Community saying "We think that this is a subject with which you ought to deal". All right, let them do so. That would take away from British Ministers—if they wanted it taken away—the necessity of appearing in public to take a lead in this matter which might endanger the future of British trade. That is purely a tactical matter.

Lastly, Her Majesty's Government may feel that that situation now is not quite as we described it in the report. We said then—and I am sure that all the Members still hold this view—that the British Government should not do anything which might jeopardise the possi- bility of peace in the Middle East. That must be a standing and permanent aim and object of Her Majesty's Government. However, since last summer events have occurred in Iran which of themselves have affected the stability of the Middle East altogether. It may well be that Her Majesty's Government believe that they should be careful and hesitate at this moment to do anything which might be thought by a number of Arab countries in that area to add to instability at a moment when nothing more need be done in creating anxiety.

I understand that, but I should have thought that the way the boycott is now operating—so diversely in different countries—means that this can be handled very successfully by Government direction, advice and help individually, taking into account the different positions in different States. If a general direction cannot be given at once that, for instance, negative certificates are no longer to be authenticated anywhere, could consideration at least be given to the fact that they should not be authenticated to countries which, on other evidence, quite plainly do not need them any more? Those are the only remarks I should like to make, except to repeat what an honour it was to serve on this committee under the chairmanship of the noble Lord, Lord Redcliffe-Maud, and with a clerk who so admirably presented the diverse views which we at various times uttered.

7.27 p.m.

Lord ELTON

My Lords, at the outset I ought to say that a company of which I am a director acts as the London agent for Companies in the trade fair and exhibition business in countries throughout the world. One of the companies for which it acts in that capacity is based in Bahrain; the connection is a tenuous one, but I should not wish to leave it undeclared.

The noble Lord, Lord Redcliffe-Maud, declared himself to be a maiden. I can only say that the accomplishment of his performance leads me to wonder whether that can indeed be the case. This has been an extremely useful report, very elegantly and lucidly put together, and we are grateful to the noble Lord for having chaired the committee, to the members who served upon it and to the noble Lord, Lord Byers, who set the whole process in motion and who will soon be telling us what he thinks of what we have said.

We are all aware of the very great importance to this country of our export trade, and we are all aware that our exports to the Middle East constitute a large and valuable proportion of that trade. Excluding subsidiaries, I understand that there are around 1,500 companies involved in generating an income of nearly £2.7 billion—a figure quoted by the noble Lord, Lord Redcliffe-Maud. My noble friend Lord Selsdon has shown that that account is now handsomely and successfully in the black. The greater part of that income is earned in trade with those countries most closely concerned with maintaining the boycott. Moreover, one of our chief trading partners is at this moment in the throes of a political upheaval that is likely at least to interrupt the flow of trade for an appreciable time, if no more. Therefore, what we are discussing is a matter of no small importance to the economy of this country.

We are also all aware of the intensity of feeling which the conflict between the Arab and Jewish peoples generates in those who take part in it, whether face to face or at a distance. The Bill upon which the committee has reported deals with one aspect of that conflict: the economic dimension of the Arab campaign against Irsael. Therefore, we know that we are dealing with a subject which will be far more emotive to many who read this debate than to Members of this House who, by tradition and training, are accustomed to dealing dispassionately even with matters relating to our own national interests. Notwithstanding this, many of our citizens and some of your Lordships feel a degree of personal commitment to one or other side in the conflict that makes them perhaps a little special in their pleading.

So what has to be made clear in general at the outset is that, so far as our nation is concerned, our relations with both sides in this long and bitter conflict are relations with friendly powers, and that we cannot therefore allow ourselves to be drawn into the quarrel on one side or the other to be made enemies where we have been friends. This is the position of our country and the position therefore of its constituent parts, including its commercial and manufacturing houses.

Our only proper national stance at this stage must either be detachment or mediation. The right of Arabs and Jews to place embargoes on each other's trade is understood. We have done the same thing many time in our own history in pursuance of our own causes. That is a matter which is private to them. But the boycott as it is explained to us by the committee extends this operation to include third parties, and here we become involved.

No British interest ought to suffer in support of one side against the other. It was to prevent British companies being caught up in the quarrel that this Bill was originally drafted. That is an entirely proper aim. It was the function of the committee to see whether that proper aim had been achieved. In the view of the committee it had not, and I must say that I share the view of the committee.

In the first place, I am always suspicious of laws which seek to protect people by punishing them. The Arab boycott seeks in what the committee terms its "secondary effect" to harm companies which do not conform with its policy. The aim of the Bill was to harm those companies if they did. Businessmen, in effect, were to be given the choice of which stick they would be beaten by. That does not seem to me to fulfil the essential function of law, which is to create a secure area within which individuals and corporate bodies can act freely. I understand of course that the operation of the Act, if it were passed, could be pleaded in extenuation when failing to comply with the boycott, but I feel that that is a rather distant argument for the purpose. Business bashing has, I think, become too popular as a political pastime these days. Only a few weeks ago we saw Her Majesty's Government breaking a stick over the back of British Leyland, and they too had had to choose which stick they were to be beaten with. It is a bad choice, and one that a business should not be faced with.

In the second place, I believe that the scheme of compulsory notification set out in the Bill would be hideously cumbrous, slow and probably ineffective. I do not believe in the creation of bureaucracy as the solution of more than a very few ills in life. If industry wants this system, let it ask for it or, better still, let it set up a voluntary system of its own. The committee asked point blank if they wanted it, and the unequivocal answer in almost every case was, "No, we do not".

I turn to the American example. Whatever view is taken of the economic results of the American anti-boycott legislation, and those I think have changed since the time when the committee took evidence, its political result at least is clear. It has made America's objections to interference with her trade plain for all to see. That is something which I believe we ought also to do. However, I believe we can do it without either generating new law or giving unnecessary offence to those with whom we wish to continue to trade on friendly terms.

At present the boycott States from time to time operate a system of requiring negative certificates of origin. These have been extensively referred to, particularly by the noble Lord, Lord McCarthy, with whom I happen to disagree. Normally a certificate of origin states baldly where an article, or a manufacture, comes from. A negative certificate lists the places offensive—and indeed companies within places not so listed—to the boycott States for a variety of reasons, sometimes tenuously connected with the primary boycott itself, and it has to state that neither the article nor any constituent part of it originates from, or is in any way connected with any of those places or firms.

The actual process of verifying and making this certificate is laborious for companies which sub-contract out, possibly to other companies which subcontract again for components in their manufactures. The nature of the inquiry is intrusive, and the dictation implied by it is unwelcome. I can best summarise the reaction of British industry to this imposition by quoting the passages from the evidence given by the Director-General of the Association of British Chambers of Commerce, Mr. W. A. Newsome. I will take three related and brief passages from page 170. He said: Now, because chambers of commerce are completely opposed to boycotts the chamber of commerce will not so authenticate a certificate of origin if that contains any matter on the face of it other than a straight certification of the origin of the goods". A little later he went on: If it does [contain such material] the chamber of commerce will not have anything to do with it; no chamber of commerce affiliated to this Association, authorised by us on behalf of the Department of Trade to issue certificates of origin, will have anything to do with it. We have nothing to do with that. If the trader decides—and he is a free agent—to do business on the terms proposed and therefore to make some form of boycott declaration he makes that on a separate sheet of paper". Finally, he says as to the signature: It is on a negative declaration and it is simply authenticated as a signature. In no possible way can the chamber be seen to be certifying the content or the accuracy, the validity, of the declaration itself". It is made absolutely clear in this way.

That, oddly enough, is very nearly an accurate statement of the position of the Foreign and Commonwealth Office also, as I understand it. They will not authenticate a negative certificate but only the signature upon it. There were exchanges, both this evening and in the committee, as to whether or not an official could properly, or did frequently or unintentionally, read any part of the document. Again this seems to me rather in the realms of theology. But they will not authenticate a negative certificate but only the signature on it.

If we are looking for a way to express the Government's dislike of, and opposition to, the boycott without adversely affecting trade, surely it is here presented to us as noble Lords have suggested. The imprimatur of the Foreign and Colonial Office, called an apostille—a word that I had not hitherto encountered— on a negative certificate, even though it relates only to the signature, has every appearance of approving the document, and certainly has to acknowledge the standing of the document as a matter of fact because it has been presented for the authorisation of the signature. Presumably the Department provides this service in the furtherance of British trade and declines to suspend it for fear of losing trade.

I very much doubt whether their position or the Government's position is sound on this. The chambers of commerce can quite well authenticate the signatures themselves. They can thus enable trade to continue unimpeded, and in so doing they give no indication at all of the official British Government position in the matter. By withdrawing this service the Office would make their own position a great deal less equivocal than it now is. They would make their view abundantly clear to our Arab trading partners without giving them grounds for resentment. It would be a useful development for any approaches to the European diplomatic circle that was so carefully elucidated by the noble Lord, Lord Caccia, and I hope that the Government will agree to look at this suggestion of the committee again. I hope they will also keep chambers of commerce, and especially COMET, up to date with the additional services they are offering to companies suffering from the boycott. I hope that the noble Lord will bring his influence to bear on this point.

I notice in this connection that a number of noble Lords were at pains to encourage the commercial branches of our embassies to increase their efforts in the Arab world. I hope that they do this world-wide. I should be very sorry if I thought that the commercial attaches and First Secretaries Commercial, and all the talent they have at their disposal, did not regard it as a personal victory every time Britian landed an order in any country in competition with any other country. I believe that a great deal of our success abroad depends on that frame of mind.

I agree with the committee that the withdrawal of ECGD facilities from transactions carried out in conformity with the boycott would be unwelcome at the moment. I think we can arrive at that position without the volte face that the French did with their COFACE organisation. But there is one other area that the Government should look at again with care. If occasions arise where large sums of public money go into subsidising a deal, I do not think it is proper that these should be harnessed as a weapon to be used by one side, in a conflict between peoples with whom we are not in conflict, against the other. Nor do I think we should suppose that our trading partners would necessarily expect us to. If the Government doubt this, let them read again the evidence already referred to and summarised in paragraph 70 of the report.

The Norwegian Government took exactly this stance and there was no loss of business; the offending clause was removed from the contract. On the whole, we tend to forget in life at present in this country the respect which is naturally given to those who have the courage of their convictions and are prepared to stand on and speak out on them. Government aid in such cases should at least be in doubt, even if it cannot, for some reason not clear to the House, be withdrawn.

I cannot conclude without stating again the position made clear by my noble friend Lord Carrington when he spoke from the Benches opposite on one aspect of this matter nearly 16 years ago, when we witnessed the harassment of a Member of this House in pursuit of the policy of boycott: I must repeat that any discrimination against individual British citizens by foreign powers in pursuit of their potential ends is utterly repugnant and unacceptable and, indeed, is likely to be extremely counter-productive". That, of course, is not a remark which should be restricted in its relation only to the two blocs we have discussed today, because we tend to lose sight of the fact that this is a Bill dealing with boycotts as a whole and not Arab boycotts only, and we should not allow ourselves to let our thinking become quite as polarised as it has.

That nearly concludes my case, but there is one other consideration which should weigh with us and which this House, and indeed Parliament itself, keeps too little in mind. It is our overreadiness to make laws. Legislation should be used as a framework within the boundaries of which men may move with freedom and security. Too often we use it as a pistol or a whip; if it sees any sort of difficulty nowadays, Parliament reaches for a statute like a millionaire reaching for his cheque book or a sheriff reaching for his gun.

Laws should not be made unless there is a clear and overwhelming case for them. They always cost Parliament time and the taxpayers money to enact; they always give rise to contention; they always need interpretation in the courts; they always cost money to police; they very often produce results different from those intended; and more often than not, as a result, they have to go back to Parliament for amendment at the expense of more of Parliament's time and more of the taxpayers' money. Very rare indeed is it that one half-hour of actual productive wealth creating work results from any of them.

We do not therefore confer laws on the public as a blessing, as we seem to imagine; we impose them, rather, as a burden. This rule is not confounded by the exceptions to it. Great as they may be, I believe that they prove it.

I am therefore opposed to the making of any legislation that is not clearly both necessary and effective. What has been said in this debate has not convinced me that the Bill considered by the Committee is absolutely necessary, though it has convinced me that in its effects it would be experimental. I do not think the Bill has passed either of those tests and, much as I sympathise with the wish to avoid foreign interference in our patterns of trade, I do not think this is the way to prevent it. Therefore I can commend your Lordships' committee for a thorough investigation of the matter and the noble Lord, Lord Byers, for giving us an opportunity to say what we think, and I hope that certain people listening will blush a little when they realise the emotions which their actions have stirred among us.

I believe I heard the noble Baroness, Lady Gaitskell, ask why they should. I do not know whether she intended me to hear that remark, but as she has intervened already twice in the debate I shall take it that she is a participant. I mean that there have been certain extreme actions, and I referred to one recently when I told of the experience of one of my noble friends who had to leave the board of a company. That was an unfortunate move on the part of the people who I hope will read the Official Report of this debate, and in case they have forgotten how we feel about it, this is an opportunity for them to be reminded. That is what I meant.

My Lords, I believe this goes a little further than the charmingly expressed verbal opinions referred to by my noble friend Lady Hornsby-Smith, and I commend the conclusions of the committee to your Lordships.

Lord MCCARTHY

My Lords, perhaps the noble Lord will help me to understand by telling me whether he was actually saying that the Foreign Office could afford not to authenticate negative certificates of origin because they could be quite sure that British chambers of trade would do it for them? If that is what he is saying, could anything be more cynical?

Lord ELTON

British chambers of trade are already doing it for them, my Lords. If the document is acceptable to the other side, why should we add to this facility the appearance of condoning a policy which we condemn?

7.46 p.m.

Lord GORONWY-ROBERTS

My Lords, the noble Lord, Lord Byers, who introduced this debate, did so with a combination of conviction and moderation which we always expect of him, and the debate has shown a greater understanding of the circumstances and operation of the Arab boycott than perhaps the House possessed some 12 months ago when we last debated this matter. We owe that increased understanding in great measure to the Select Committee under the chairmanship of the noble Lord, Lord Redcliffe-Maud, whose report is before the House, and on behalf of Her Majesty's Government I wish very warmly to endorse the many tributes from all parts of the House which have been paid to the noble Lord and his colleagues today for the careful and thoughtful attention they gave to a highly complex and difficult subject. The report is a model of its kind, combining brevity, as reports go, accuracy and, above all, clarity. It will be of great value to everybody concerned with this issue, to firms and trades and organisations which are exposed to the operation of the boycott, and not least to the Government in their continuing study of this problem.

My task tonight is to give the Government's response to the report of the Select Committee and I shall comment on each of the committee's specific proposals and indicate, so far as I am able, what action the Government propose to take at this time.

As a preface to their recommendations and reflecting their sensitivity to the wider considerations, the committee suggested four conditions which they believed should underlie the Government's policy towards the boycott. They were: It should not impede a Middle East settlement; it should maintain the United Kingdom's friendly relations with the Arabs and Israel; it should promote United Kingdom exports; and it should preserve the principle of non-discrimination within the United Kingdom between people of different races, religion and ethnic origins". The Government accept without qualification the importance of these conditions.

They are, indeed, the kind of factors the Government have always tried to take into account in formulating their policy in this field.

To take the first condition, we of course earnestly wish to see a lasting and full settlement in the Middle East providing a just solution to the Palestinian problem and allowing the Arab States and Israel to live and trade in harmony with each other. It is important to recall that the boycott is a symptom of a conflict which has troubled the Middle East, and indeed the world, for over 30 years, and the first objective of the Government is to contribute to the international effort to find a solution to this problem, and certainly, in the words of the report, "to do nothing to impede such a solution". In connection with the paragraph from which I have quoted, the report is concerned with the broader political and economic issues of the relations between this country and the Arab States and Israel.

This brings me to the second condition. Of course we fully agree with the committee's view that we should do everything we can to maintain friendly relations with Israel and the Arab States. That is a long-standing objective of British policy. Here, I wish to refer to the remarks of the noble Lord, Lord Selsdon, and, I believe, the noble Viscount, Lord Slim, who addressed themselves specifically to Iraq. Let us remember that this country has a long historic connection with Iraq. Our relations today are certainly not what we should like them to be. I hope that from this House, and from what I have said in response to the two noble Lords, there may be an indication that we might gradually resume that relationship. Incidentally, I can assure the noble Lord, Lord Selsdon, that we continue to do everything we can in regard to the personal basis which he mentioned.

In regard to the third condition, it is naturally the Government's objective to see this country's exports to the Middle East grow to the fullest extent possible. Sometimes the debate has suggested that this concern about the viability of our relationship with the Middle East in economic terms is somehow a personal predilection of Ministers. Ministers have a duty—and it is a difficult duty to dis- charge—to do everything they can to maintain the fundamental fabric of our country and our society, and that means working day and night to shore up and to improve our economic performance abroad.

This is not a ministerial policy, it is a national necessity. When certain solutions are offered emphasising in words the importance of maintaining and promoting our economic viability but at the same time suggesting other action—though what precise action is not always clear to me—then I say that it is time to be absolutely clear about these things. Our first duty as a Government—it would be the duty of any Government—is to see to it that the United Kingdom maintainsand strengthens its essential viability in the community, otherwise it is useless to the Middle East or to the rest of the world.

The facts are as follows. Our exports to the Arab countries which operate the boycott are of enormous value, as we were reminded by the noble Lord, Lord Redcliffe-Maud. He quoted the 1977 figure. I have the 1978 figure. The figure of £2.7 billion has appreciated to £3.1 billion. That is an enormous sum. It is a high percentage of our total export efforts and, as the committee's report emphasised, we must do nothing to imperil it.

Although the value is smaller, we also attach importance—absolute importance—to our export trade with Israel, which in 1978 amounted to £240 million, which is a very high figure for a small country and another country with which we have deep-rooted and affectionate connections. I come from a small country, itself diminutive, devout, and democratic, which understands perfectly well what the Israelis are trying to do in building up their small country. Of course we attach the utmost importance to our trade with Israel and to the survival of Israel as part of the life of the world, and we hope that more British companies will look at the opportunities in this diversified and promising market. It is a market of very great potential for the future as well as of present importance to us.

Again, we deplore the boycott—and I make no apology for saying that the Government deplore the boycott. They do more than that of course. It is not a matter of using words, wringing one's hands, and doing nothing. Some of the speeches I have heard have suggested that nothing is being done on the diplomatic front. I can assure the House that a tremendous amount is being done every day in the way of advising firms by both the Department of Trade and the FCO. I may say—and here those who are familiar with the business world will strongly support me—that my desk is piled high with letters which I greatly appreciate, because they are written to thank us for the work done by our own officials in the Foreign Office, and in the Department of Trade and other departments, as well as those en poste abroad, not least in connection with the problems of the boycott.

So, when I am urged somehow to strengthen the diplomatic effort, I really do not know how. Our chaps are flat out doing exactly that. Here I join with the noble Lord, Lord McCarthy. I think that he put his finger on something very important when he said that we do not want the Bill, and therefore something must be done. It is no good saying that something must be done; you must decide what you are going to do. It is no good saying, "Some risk must be taken." How much risk must be taken in terms of jobs? The buck stops there; somebody must decide. These generalised remarks to the effect that this, that or the other should be done are not much help. I hope to tell the House exactly what we are doing, and what we propose to do.

Finally, there is the fourth condition: there can be no question of the support of this Government, or indeed of any possible Government in this country, for any kind of discrimination in this or any other connection. I shall return to this point in a few moments. Nevertheless, as the Committee recognised, acceptance of these conditions does not lead to an automatic or precise policy description. Indeed, some of the conditions reflect its reconcilable or mutually exclusive aims. There is therefore a need for balance and judgment. When I hear words like "hypocrisy" and "honesty" bandied about, I ask noble Lords to think carefully before using such words. Balance and judgment are essential in approaching complex and difficult questions of this kind. One can translate balance and judgment into deviousness, hypocrisy, and dishonesty, or indeed one can translate those terms into balance and judgment and into the use of that far-seeing common sense which is always rooted in the need to serve our own country and our own community and, in so doing, be of some use to other countries and communities.

In the process of reaching their conclusions, the Select Committee established certain facts and made a number of judgments. Some of these are of great importance, and are worth emphasising. First, in the words of the committee, the overall total of Anglo-Arab trade is so large that a high degree of caution is needed in considering any measures which might have repercussions on it". That puts it fairly.

Here, I should like to say that, when we compare the actions and performance of our friend and ally the United States, we are not comparing like circumstances with like. The sheer enormity of the British interest in this trade dwarfs, in proportion, the United States' interest in it. I am not speaking of influence now, I am speaking of the bread and butter—and I make no apology for that. Moreover, the internal situation—I mean the political situation—in the United States on the Arab-Israel issue is very different from what it is in this country. So I hope that nobody will quote the United States against this country in a "holier than thou" mood. There is no need to do that. We are very close friends and allies. There is (I never hesitate to say this) a very special relation between us still—and long may it persist! So a little less comparison between two very dissimilar circumstances.

Secondly, the boycott is a fact of life and a measure to which the Arab States attach considerable importance. The committee have been very frank about this. I refer to the fact that it is a symptom of an almost intractable problem of hostility that is at least 30 years old, and they feel about it in this way. Others feel about it in another way; but it is a fact of life. So how do we deal with it? By legislation of the kind that has been proposed? Clearly nobody supports that. By various means of persuasion, diplomatic and other? We shall see in a moment what can be done. But, thirdly, while the boycott does have an impact on our trade with both the Arab States and Israel, it need not affect unduly our trade prospects with either. We agree. May I, in this context, draw particular attention to paragraph 34 of the report which underlines that in normal circumstances the boycott does not apply to normal direct trade with Israel? This is an area of persistent and unnecessary misunderstanding. Fourthly, the committee endorsed the view that it is proper to leave the final decision whether or not to comply with the boycott to individual enterprises and businessmen.

Noble Lords may be aware that these are points which the Government have themselves stated on a number of occasions. Indeed, we are encouraged by the extent to which the report has validated and confirmed the understanding of the boycott which the Government have themselves acquired over the years, and the view they have taken of the way that this problem can be best and most effectively handled. Nevertheless, while the committee do not question fundamentally the policy of the Government, they have made a number of suggestions for change, and it is to these that I now turn. I have already commented on the first recommendation, which identifies the four conditions. I would not wish to say anything further except to reiterate the Government's opposition to the boycott and their desire not to tolerate it any more than is inevitable in the circumstances of various businesses. We should like to end it. We shall do our best to mitigate it. In the meantime, it is right that we should state constantly that we deplore this kind of action in the international field.

I need say also very little about the second recommendation, concerning legislation. The committee themselves set out the right reasons for not pursuing this approach, and have done so clearly and strongly. We also agree with the proposal in Recommendations 2 and 4 that the best response to the boycott is to encourage the expansion of trade with the Middle East. The Department of Trade, together with the British Overseas Trade Board, monitors very closely our export performance in those markets, and continues to search for ways in which firms can be encouraged to seize the opportunities. There is a very effective co-operation between the home Departments and personnel on post. This is amply illustrated from day to day; and, indeed, we owe a great debt of gratitude to our officials here and abroad for the magnificent work they are doing, both in the Middle East and in other parts of the world, on behalf of the British export trade.

A wide range of services and facilities has been developed to assist companies, and the British Overseas Trade Board, assisted by two very active area advisory groups, the Committee for Middle East Trade (Comet) and the British Overseas Trade Group for Israel, mounts a wide range of promotional activities designed to enhance the prospects for British goods and services. In recognition of the importance of the committee's recommendation, the Government will, with the help of these bodies, review our strategy and objectives to see whether more can be done. The performance is there. Certainly the structural basis is there; but we take due note of what the committee say in this recommendation, and certainly we have already started looking at this to see whether we can strengthen our effort. In due course the House will no doubt be interested to learn the results of this work.

Next I turn to the position of companies in relation to the boycott, which is the subject of two recommendations, 3 and 6. We of course agree with the committee's view that enterprises, including those in the public sector, should be free to decide their attitude to the boycott in the light of their commercial interests, and that, as is said in paragraph 110 of their report, firms cannot be expected to let their decisions as to what is in the interests of their company be affected by political issues or judgments". Those are the words of the report. Nevertheless, we also understand the committee's wish that the Government's views should be more widely known, so that companies can take their commercial decisions in the knowledge of the wider context in which they are placed—a point which the noble Baroness, Lady Seear, made very effectively. We entirely agree. We are doing a great deal in this sense already, but I take very much to heart, and I am sure my colleagues will, what has been urged by the noble Baroness and others as to stepping up, if possible, this part of our operation.

We also respect the intention underlying the recommendation that companies should, wherever possible, avoid signing contracts which include conditions specifically discriminating against a friendly State". It is, again, as the committee emphasised, a matter for the judgment of individual firms, and it may not in all cases, or indeed very often, be possible to resist boycott clauses and requests if orders are to be won. However, in some cases it may be possible to negotiate the relaxation of a boycott requirement, or to resist declarations which go beyond its normal scope; for example, that the company will not trade with Israel at all. In that connection, I repeat, every possible help, guidance and advice will be available from the relevant Government Departments, as it is now, for any businessman or firm who comes to them for help.

Taking into account the committee's views, it is the Government's intention, therefore, to amend the present note issued for the guidance of firms and to include in it a statement, the full draft of which I have here. I will not, at this point, read it to the House as time is going on and I have one or two more points to cover. But I can assure the House that there will be a strong clarificatory addition to the existing guidance note which I think will meet the wishes of the House and further help businessmen and firms.

The Department of Trade has for a long time encouraged firms which encounter problems with the boycott to contact them, and the accumulated experience has been used to advise other companies facing similar difficulties. This was a point emphasised by more than one speaker. This is being done. Information is coming in from firms which have to deal with boycott demands, and it is used in order to guide, advise and help other firms in coping with the boycott. It is simply a question of seeing how this can be done more effectively. We believe that this service, which is always provided on a confidential basis, has been much appreciated. To this extent, the recommendation that companies should report voluntarily their experience is welcome, and we hope that companies will continue to share their experience with us in confidence. Here, once more, is a direct invitation to any firm who wishes to approach us to do so. That confidential information we, in turn, will use in such a way as to assist others to cope with these unnatural demands on commercial practice as they afflict other firms.

Next, in Recommendation 5, the committee ask that more diplomatic opportunities should be taken to reduce the incidence of the boycott. I have dealt with that. I merely repeat that the diplomatic effort is already very strong and, I think, effective. I can assure the House that we shall lose no opportunity of increasing its effectiveness further. Here I should like to take brief issue with my noble friend Lord Caccia, who seemed to me at one point to be painting a picture of the Foreign and Commonwealth Office as peopled by officials, hapless officials, being chased by Ministers up and down corridors and forced to do things which were very repugnant to them. The noble Lord knows that this is not how it works. Ministers are responsible; but they come to their decisions having listened very closely indeed to official advice, as the noble Lords knows better than anybody, or almost anybody, in this House. It is shared responsibility of advice and of execution.

Lord CACCIA

My Lords, perhaps the Minister would allow me to intervene. I only said what I said after the noble Lord, Lord Byers, had said earlier that he thought that the evidence from the Foreign and Commonwealth Office was unsatisfactory, particularly in regard to this aspect of the negative certificate of origin, for the reasons I gave. It was for that reason that I said that those actions were taken on Ministerial responsibility; and it was for this reason that I was pressing this point: Could the Minister not give us some assurance on the point raised by other speakers about the suggested cessation of the authentication of negative certificates?

Lord GORONWY-ROBERTS

My Lords, I am not sure that that information has helped me or the House. Responsibility is indivisible. Once we slip into the position that Ministers blame officials and officials blame Ministers, the system will not work. Ministers have a duty. They have to defend policy and execution at this Box. Officials have their duty, too, to give the best advice they possibly can to the Ministers, and, having given it and having had it adopted, jointly to assume the responsibility for its execution. However, it is a long time since I had a little brush with my noble friend, and a mere Minister should on occasion be allowed to tackle an august personage like a former Permanent Secretary.

I now turn to Recommendations 7 and 8 which concern the position of the Government in relation to the boycott. I should like to make it clear that it is not the practice for Government Departments to accept boycott clauses in their own contracts. I think that meets one of the points made by my noble friend Lord Weidenfeld. That would be entirely inconsistent with the Government's general position.

Lord BYERS

My Lords, may I ask this of the noble Lord for clarification? Did he say "nationalised industries" or "Government Departments"?

Lord GORONWY-ROBERTS

My Lords, I shall give the House the extended note.

Lord WEIDENFELD

My Lords, I meant both.

Lord GORONWY-ROBERTS

My Lords, it is not the practice for Government Departments to accept boycott clauses in their own contracts. That would be inconsistent with the Government's general position. We have also given serious consideration to the wider implications of the recommendations. I have no note here on the practice with nationalised industries; but I am inclined to say, off the cuff, that this is the practice with nationalised industries. It is, however, an important point and I would ask my noble friend to allow me to address myself to it separately by Written Answer or a letter to him. I am trying to hurry. I think the House itself has argued away the question of economic sanctions like the withdrawal of ECGD facilities. We should not be less prescient than the French on this point, should we?

I now move on to Recommendation 9 concerning the authentication of signatures and seals on negative certificates of origin or, to be more precise on the negative declarations attached to certificates in their normal form. I listened to the noble Lord, Lord Elton, on this point. He made a cogent and clear request based on an acceptance of the real difficulties involved in identifying and isolating, as a group, the kind of document that he and I have in mind. There are difficulties. However, I am glad to respond to him and to the noble Lord, Lord Byers, on this point and to the general wish of the House. We do need to assess more thoroughly how far any risks to our trade could be minimised and how any practical problems for our exporters could be overcome, side by side with seeking ways of meeting the committee's point about what I call the authentication of signatures. Therefore we intend to look further into the desirability and practicability of ceasing the authentication of signatures on this particular group of documents. Before making a final decision we intend to consult the industrial and commercial organisations on this matter, those directly concerned with export documentation. We shall start the process of consultation immediately after the debate, taking into account the views which have been expressed, and we shall announce our conclusion in due course.

Some noble Lords have referred to authentication as though it were a process specially devised to deal with boycott documentation. The fact is that it is a normal international practice performed with respect to signatures and seals on documents of many types. We ourselves require other countries to provide such a service. Authentication relates to the validity of the signature or seal on the document in question and not to its substance. However, we shall see whether we can identify and isolate this group because of what has been said about the symbolic meaning of this provision. If it is possible to do so, I think that I and my colleagues will be delighted to do so.

My Lords, I have no time to indicate to the House the varying requirements of varying Arab countries. Somebody referred to the fact that Arab unity is of (shall we say?) rather late growth. That is true. There is an engaging diversity of views and of practice and, certainly, that applies to this particular operation. The only other point that I have time to deal with now is the suggestion, repeated by many speakers this evening, that my right honourable friend should raise the question of European action in the Council of Ministers. He explained in written evidence to the committee why Her Majesty's Government did not consider that there was a case for raising the issue of the boycott in the Council at that time. Naturally, we have given further careful thought to that suggestion and particularly to what the committee had to say about it in their report. I have listened carefully to those speakers who have raised this particular matter. I have to say that Her Majesty's Government do not consider the position has changed so far.

We have heard, notably from I think my noble friend, Lord Caccia, of the real hazards to this country—whose stake in this is greater than that of any other European country—of being seen to be ahead of the pack, as it were, forwardly stirring up things, and its action interpreted as deliberate action to disturb the fact of neutrality. It is far better to let the Nine—and we are only one of Nine— engender a consensus of attitude and action in this matter. I should like to say on behalf of my right honourable friend that as such a consensus is generated organically in the Nine, we shall certainly be ready to form part of it. I ask the House to consider very carefully whether it would be either effective or indeed productive for what we have in mind, and for this country, if it were with a flourish to make this gesture on its own in that forum.

My Lords, a number of other points were raised, but time has gone. I can assure your Lordships that, as always, I shall be going through the Official Report, and I shall fill the gaps in my response to the debate by writing to noble Lords and also by instigating Questions for Written Answer. I close on this note. We have heard a great deal about the need for us to maintain our friendship with the Arab states and with Israel. I have given some subjective as well as some official reasons for that. It is essential that we do. The Middle East, of which Isreal is a part—and a very important part, and potentially an extremely important part if we can have peace and toleration in that area—is perhaps the fastest growing area in importance to us in the West. I think it was the noble and gallant Viscount, Lord Slim, who reminded us of the instability—we hope only temporary instability—in the vast and potentially very strong country of Iran. There is from Morocco deep into the Pacific an Islamic world, perhaps reawakening to its own past and possibilities. It is essential that western democracy should so frame its policy and its actions that, as in the past so in the future, that world—the Islamic world, the Near the Middle East and all that attaches to it—remains natural friends and allies of the West rather than of any other ideology or purpose in the world. In all that, Israel has an absolutely fundamental role. So I say as a friend of Israel—officially so, as a member of the Organisation—that in watching our step in regard to what we do about the boycott, we must not impair and, still less, in peril, our profound commitment to Israel and its people.

8.23 p.m.

Lord BYERS

My Lords, at this time of night I do not propose to detain the House for very long. I should like to thank those who have taken part in this debate. It has been a good debate; it has been a worthwhile debate. On a rough count, I reckon that we had 12 speakers for the report, about three against, and the noble Lord, Lord McCarthy, who was for and against during the course of his 10-minute speech.

But I must say that I listened with a sense of growing disappointment as the noble Lord, Lord Goronwy-Roberts, gave the Government's response to this report. I welcome, of course, the points that the Government have made: that they will do their best to mitigate the boycott and that they still deplore it. Also, they will review the strategy and objectives of COMET and BOTB. I think that is important. It is important that the Government should be seen to agree that companies should avoid signing false boycott clauses. These are pluses. The fact that the Government would welcome voluntary reporting is a good thing. I should like to ask whether they would consider setting up a system to make it easy for companies to report to the Government. They will need some help on that.

On this question of intensive diplomatic study, this simply did not come across from the witnesses who appeared before us. It was a gap that we could see in the diplomatic activities. This ought to be reviewed with some care. Regarding it not being the practice of Government Departments, or possibly nationalised industries, to sign contracts with boycott clauses in them, I think that this is not true. I think that I can, in confidence, provide the Government with a very recent case, and there may be one or two others as well.

I am somewhat puzzled about the attitude of the Government on the authentication of the negative certificates. If it is good news, then I welcome it tremendously. If it is merely fobbing us off once again, then I do not like it at all. Knowing the noble Lord, I hope that he will take a personal interest in this, because this is one of the things which could quite easily be removed from Government responsibility and would give great pleasure in many quarters.

My real worry is over the attitude which the Government have expressed about an initiative in the EEC. It seems to me surprising that the views of a committee of this distinction, with a chairman who was a former ambassador, a member who was head of the Foreign Office for some time and containing two former Cabinet Ministers who went to the EEC, should not have elicited a more favourable reply from the Government. I hope that something more positive can be done, even to the extent that, if we are able—as I propose to try and do—to get this raised in the European Council, of our receiving support from Her Majesty's Government when the matter is put on the agenda.

I only want to say one more thing: I appreciate that many noble Lords have spoken who would have liked to have seen the Foreign Boycotts Bill go through the House in the normal way and become legislation. I can only say to them: "so would I". But we have to be realistic, there was not the parliamentary time and I do not believe that there was enough parliamentary support. I believe that we have carried out a useful exercise in getting this excellent report in front of the House, because that report has educated a lot of people. It may one day help us in getting legislation in this House or through the EEC. In the meantime, I think that it will be the wish of the House that, having set up a Select Committee, we should agree that we take note of this report. I think it is the sense of the House today that we should do that. Owing to a technicality of my having moved a Motion for Papers, I am advised that if I want to avoid receiving four pantechnicons of papers relating to the boycott and international trade, I should, in accordance with the Companion and the instructions of the House, seek leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.