§ 2.52 p.m.
§ Viscount MONTGOMERY of ALA-MEINMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government why, in the absence of any economic impediment, medium-term ECGD cover is not available for Chile, and when this will be restored.
§ Lord JACQUESMy Lords, the department's cover for medium-term credit was withdrawn in May 1972, following Chile's 9 default in payment of these debts. A large portion of the debts guaranteed by the Department, due for payment in 1972–75, still remains to be repaid. I cannot say when this cover will be restored, but I can given an assurance that the matter is under continuing review.
§ Viscount MONTGOMERY of ALAMEINMy Lords, although I am grateful to the noble Lord for that reply, it does not entirely answer the Question. Is the noble Lord aware that the outstanding debt, which now stands at only £25 million, is quite insignificant compared with Chile's total foreign trade? Furthermore, is he aware that Chile could not make accelerated payments because these would be outside the arrangements of the last round of the Paris Club discussions, from which Great Britain abstained? Finally, is he aware that France, Germany, the United States of America, Australia and Canada—all nations with which we compete in this important market—have Government-supported credit facilities? Therefore, why are these denied to British industrialists?
§ Lord JACQUESMy Lords, I am aware of the amount of debt outstanding. I would point out that the cover for short-term credit—that is, credit not exceeding six months—has never been withdrawn and is still available, and there is only a modest demand for it. On medium-term credit, it is true that many countries are now giving cover; but I must point out that the credit insurers of Denmark, Sweden and Belgium are not giving such cover. I would also point out that many of the countries that are giving cover, including the United States, are giving it on a very restricted basis—restricted both as to term and amount.
§ Lord ELTONMy Lords, first, I should like to ask the noble Lord whether I am right in thinking that this is his first appearance at the wicket in what I would call his second innings. If so, I congratulate him on his reappearance. Secondly, I should like to ask for an assurance that the decisions to which he has just referred have been made on purely economic grounds and not on those of political preference.
§ Lord JACQUESMy Lords, first, it is my second innings; I hope that the 10 bowling will not be too fierce and will not spin too much. On political motives, it is, of course, well known to everybody that the two Governments do not see eye to eye on human rights. That is accepted and is now a question of fact. However, as I pointed out, the facility was not withdrawn until Chile defaulted, and a substantial proportion of the debt that accrued still remains unpaid. Furthermore, the short-term cover has never been withdrawn and is still available.
§ Viscount MONTGOMERY of ALAMEINMy Lords, I apologise for returning to this question and for bowling another ball which I hope is not a googly. Is the noble Lord not aware that Chile is undergoing a miraculous economic recovery and is indulging in a process of industrial regeneration and that if Britain does not participate in that regeneration, she may be excluded from this market—which has been laboriously built up over 150 years—for many years to come? It is no use having 180 days' cover for that type of capital goods requirement.
§ Lord JACQUESMy Lords, it is true that in the last year or so there has been substantial recovery in Chile's economy. But it is also true that serious problems still remain, especially problems of relatively high inflation and unemployment, and the servicing of external debts. It should also be borne in mind that the American trade unions have been threatening a trade boycott of Chile, and that to the best of my knowledge the final decision on that has been deferred for only one month.
The Earl of HALSBURYMy Lords, can the noble Lord say whether this is just another case where Her Majesty's Government expect British industrialists to compete with European industrialists in the field of heavy capital equipment exports while they themselves are dragging their feet in competition with other European Governments?
§ Lord JACQUESMy Lords, again I must point out that in the beginning this arose through no fault of ours. We were not the initiators; it occurred when there was default. I must also point out that a substantial proportion of the debts then created stilt remain unpaid and, finally, that short-term credit is still available.