HL Deb 02 December 1982 vol 436 cc1308-10

3.10 p.m.

Lord Boyd-Carpenter

My 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 what is the total amount of tax, expressed as a percentage of the value of a vehicle, imposed on the entry into this country of a car manufactured in Spain, and what is the total amount of tax calculated as above imposed by the Spanish authorities on the entry into Spain of a car manufactured in this country.

The Secretary of State for Trade (Lord Cockfield)

My Lords, the duty on cars imported into the United Kingdom from Spain is 4.2 per cent. Spain imposes a duty of 36.7 per cent. on cars from Community countries including the United Kingdom. In both countries cars, once imported, are subject to the same taxes as domestic products or (in the case of Spain's home compensation tax) taxes claimed to be of equivalent effect to those on domestic production.

Lord Boyd-Carpenter

My Lords, in view of the very wide difference in the treatment of imports into each of the two countries from the other and the gross unfairness which those figures indicate to our own hard pressed motor manufacturing industry, is my noble friend able to tell me what he is going to do about it?

Lord Cockfield

My Lords, I entirely agree with my noble friend's analysis. The problem arises under a treaty signed in 1970 between the European Community and Spain, the benefit or burden of which we inherited when we joined the Community in 1973. When Spain itself accedes to the Community, the duties will of course disappear. We are pressing strongly for a very short transitional period of three years but we do not think that matters ought to be allowed to rest there. We are therefore pressing very hard through the European Community for action to be taken ad interim; the matter was raised at the November Foreign Affairs Council and it will be raised again at the forthcoming council on 13th and 14th December.

Lord Shinwell

My Lords, may I ask the noble Lord the Minister a question? I am glad to have the opportunity of asking him this question because he is perhaps the most able member of the Government. Perhaps he can clear away some of the misunderstandings. On which leg do the Government stand? Quite recently—I do not know whether this applies to him but it applies to the Government in general and to Members on the other side of the House—there was a manifestation of high euphoria because Spain had entered the Common Market. No sooner do they enter the Common Market—and they are welcomed with open arms—than we complain about them. On which leg do the Government stand? The Minister surely is capable of replying to that question.

Lord Cockfield

My Lords, I am grateful to the noble Lord for the complimentary remarks that he made at the beginning of his supplementary question. The Government have two feet and they stand firmly on both of them. We believe that our membership of the European Community is of great value. Nevertheless, there are problems in the Community and we turn our attention to solving them.

Baroness Trumpington

My Lords, I believe I asked a question which specifically mentioned car imports from Spain. I asked this question two weeks ago. I asked whether this matter would be brought up at the GATT meeting in Geneva. Was it, my Lords?

Lord Cockfield

My Lords, there were general discussions on the question of unbalanced trade between different countries. There was a passage which appeared in the final communiqué referring to obtaining a better balance of trade. The question of Spain was not itself specifically discussed as the objective of the GATT ministerial conference was to deal with general problems rather than pick out specific problems relating to trade between particular countries.

Lord Bruce of Donington

My Lords, may I press the noble Lord a little further on the answers that he has already given? The noble Lord referred to the desirability of a short transitional period for Spain assuming the full responsibilities under her EEC membership. Will he say whether the Government envisage a progressive scaling down during the transitional period of this discrepancy in duty to which the noble Lord, Lord Boyd-Carpenter, refers?

Lord Cockfield

Yes, my Lords. What we are concerned with now are the negotiations between the Community and Spain for her accession. In those negotiations we are pressing for an early and substantial reduction in the disparity between the two levels of duty.

Baroness Fisher of Rednal

My Lords, is the noble Lord aware that forgings for the automotive industry enter Spain bearing an import duty of 34 per cent? By contrast, for the United Kingdom and the EEC there is an import duty of only 2.9 per cent. Accepting what the noble Lord the Minister has said regarding Spain entering the EEC, will he give some advice to those industries in the West Midlands that are in the forging industry regarding how they can overcome the unemployment situation that is facing them in the interim period? Though they have competent management and a skilled and hard-working workforce, they cannot compete when they have this gross imbalance of import duties.

Lord Cockfield

My Lords, what the noble Baroness says is another example of the general problem that I mentioned at the beginning; namely, that the treaty between Spain and the European Community is a very unbalanced one. That is a situation that we are trying to deal with both before accession and most certainly after accession.

Lord Shinwell

My Lords, is the noble Lord aware of the dissatisfaction that has been expressed on this side of the House? That means dissatisfaction with our association with the Common Market. Will he take note that at the next election this is the issue on which the Tories will lose?

Lord Cockfield

My Lords, the membership of this country of the European Community is of very great value to us. Some 43 per cent. of our total exports now go to the European Community. Many millions of jobs depend on our membership. There are undoubtedly in some areas very considerable problems. But we have more chance of getting these problems—particularly the one relating to Spain—solved through the Community mechanism than we would be able to on our own.

Lord Leatherland

My Lords, does the Minister agree that one way of solving these difficulties with Spain would be to place an embargo upon the importation of sherry from that country?

Lord Cockfield

My Lords, we have no power, either under the terms of the European Community rules or under the rules of GATT, to impose such an embargo.