HC Deb 14 March 2000 vol 346 cc38-46WH 12.29 pm
Mr. John Wilkinson (Ruislip-Northwood)

It is perhaps a sign of the times that a debate of such importance should be shuffled sideways to this parliamentary annexe. It may suit the Government, who do not seem to be as interested in—

Mr. Deputy Speaker (Mr. Frank Cook)

Order. I point out to the hon. Gentleman that this annexe, as he calls it, is the House of Commons.

Mr. Wilkinson

I understand that; it is perhaps convenient for the Government, but it belittles the House as a whole. However, I hope that my brief remarks will be a useful postscript to the much fuller debate in the House of Lords on Latin American trade, admirably initiated by Baroness Hooper on 8 February, which itself complemented the debate on Latin America on 9 June 1999, led by Lord Montgomery, who has made such a notable contribution to the promotion of trade and good relations with Latin America. The loss to Parliament of his expertise and that of Lord Dundonald, the honorary consul for Chile, will be a sad side effect of the so-called reform of the other place.

As secretary of the British Latin American all-party group, officer of the Colombian and Chilean groups and a member of the Latin American Trade Advisory Group—as well as of Canning House for purely educational reasons—I have a personal but not a commercial interest in Latin America, which is strongly inspired by a love of Chile, the land of my wife's birth. I hope that the Minister will understand where I am coming from.

Distance and lack of contact deepen British business pre-conceptions of Latin America, often deterring many small companies from exporting which, with more knowledge and support, could find significant niche markets there. Big firms need less assistance to identify, analyse, develop, exploit and sustain export opportunities. Yet in Latin America, local understanding and personal contact are essential, and small and medium-sized enterprises need all the help that they can get.

A few major economies dominate the region, but even Brazil ranks 29th in a list of countries to which the United Kingdom exports, and Argentina 39th. Of the nations from which the United Kingdom imports, Brazil ranks 31st, Mexico 40th and Chile 44th. I know the great interest that the Minister for Trade takes in these matters from a meeting that we both attended on Brazil not long ago. Nevertheless, the potential is immense, not just for British investment. In this regard, the United Kingdom does well. I believe that we are the third biggest investor in the region, after the United States of America and Japan. However, potential exists for burgeoning British export trade in carefully selected markets.

The resurgence from recession of the Brazilian, Mexican, Chilean and Argentine economies is impressive. Bolivia has been a model of good economic managment. Bolivia and Peru offer more optimistic prospects than the other Andean community countries—Colombia, Ecuador and Venezuela—but, with rising oil prices and a resolute effort to tackle political and social difficulties, their time will come. Expert guidance to exporters to such markets is essential. I was pleased that the Department of Trade and Industry organised an excellent seminar on the Andean community, which I had the privilege of attending only a few days ago.

The formation of British Trade International as a consequence of the Wilson report, to bring together the trade promotional functions of the Department of Trade and Industry and the Foreign and Commonwealth Office, is laudable, but its benefits could be vitiated in Latin America. The idea of a single committee for the Americas in British Trade International may appear to be a grand rational strategy on an organogram, but if it subsumes the work of the Latin American Trade Advisory Group in a single in-house operation, I fear that the loss of LATAG's wide, practical business experience of Latin America's exceptionally diverse, sensitive and sophisticated markets would soon be deeply regretted by British exporters, especially small and medium-sized enterprises. For example, the chairman of the British Argentine chamber of commerce, Mr. Peter Edbrooke, wrote to me on 10 March stating: In all its bilateral activities the— British Argentine chamber of commerce— works closely with a number of other bodies, prominent amongst which is the Latin American Trade Advisory Group … Bilateral relations with Argentina have developed and strengthened after the significant problems of 1982 in the South Atlantic. They nonetheless remain delicate. In this context. the BACC views with great concern recent considerations to abolish Area Advisory Groups. We believe that such a move, in addition to considerably weakening Britain's resources and its effectiveness in its trade relations with Latin America would be interpreted by most Latin American countries, including Argentina, as a retrograde and even slightly insulting move.

I trust that you will able to make known and support our views. The attitude of unjustifiable British condescension must always be vigorously resisted. Damage was done, if we are candid, to the United Kingdom's commercial relations with Chile by the British detention of Senator Pinochet. The Government failed to understand that General Pinochet secured as high a percentage of the popular vote—44 per cent.—in the plebiscite that caused him to relinquish power as the Prime Minister received in the 1997 general election. Chile has a sophisticated economy and is a stable democracy. It is not the cold war cockpit of the early 1970s.

I am pleased that the Minister of State, Foreign and Commonwealth Office went to President Lagos's recent inauguration. Ministerial visits are important and the Minister is diligent in making such visits, but they should be carefully focused. Perhaps too many Ministers have been to Cuba, which receives only £25 million of British exports a year, and not enough have been to Chile, which takes almost 10 times as much. The official visits to the United Kingdom of President Frei of Chile, President Menem of Argentina and President Cardoso of Brazil in recent years have opened doors to British exporters. The Prime Minister, the Foreign Secretary and the Secretary of State for Trade and Industry should spend less time at European Union meetings and more time in Latin America and other global markets. Diplomatic missions in Latin America should be beefed up, not reduced, and where there are opportunities for British defence sales, the number of attaches, including service attaches, should be maintained, not diminished.

In the meantime, full opportunity should be taken of the reform of export promotion by Sir David Wright, head of British Trade International. He brings impeccable personal credentials to the task, not least from his long diplomatic experience in Japan—a tough market for British exporters if ever there were one. The key must be to build on the strengths of the Latin American Trade Advisory Group and Canning House. LATAG's committee of business people to provide strategic advice should still advise British Trade International on British exports and investment in Latin America. LATAG's secretariat is ideally qualified to maintain awareness of business opportunities in the region for small and medium-sized enterprises. LATAG's assistance with trade missions and seminars is' invaluable and its co-operation with trade associations and chambers of commerce is exceedingly effective. We must build on its strengths. Its location in Canning House offers the key.

Canning House is the centre for Latin America in London. It is a prestigious, internationally recognised centre for informed discussion and study of Latin American politics, business, literature and culture. It has the support of political bodies, finance, business, the British Government and the European Union. The benefits of merging the Latin American trade advisory group and Canning House have been compellingly spelt out in a memorandum of 21 February from Sally Unwin, chairman of Canning House, and Alexander Kennedy, who is chairman of LATAG. Hon. Members who participate in events organised by the British and Latin American parliamentary group will have gained a first-hand appreciation of the wonderful work done by Canning House in the annual parliamentary seminar that it organises for hon. Members and members of the House of Lords.

The memorandum of 21 February, from which I shall briefly quote, spells out the benefits of a merger. It states: By merging the two entities, the delivery and cost effectiveness of the services now provided separately to UK businesses and to government can be improved, as well as providing a platform for their further development. The single entity would reinforce the complementary link between the UK's cultural and trade interests in the region. It would … address admirably one of the issues highlighted in the Wilson review, by resolving the confusion, in the UK and Latin America, over the relative functions and roles of the various private bodies and government departments working on overlapping aspects of the region. The merged organisation would provide government and British Trade International with one stop access to specialist skills in trade promotion in Latin America. It would constitute the only source of strategic, regional advice on Latin America to SME's. It would concentrate the existing strengths and identity of LATAG and Canning House. As I said at the beginning of my speech, Canning House would provide specialist, regional, private sector input to the Americas Umbrella Group of British Trade International through LATAG. Conversely, if LATAG were to be removed from Canning House, all opportunities for synergies and savings would be lost and Canning House would have to curtail, perhaps drastically, the scope of its existing activities and we should not underestimate its negative impact in the region. The memorandum concluded: British Trade International is embarked upon a modern and more innovative approach to trade development and export promotion. We recommend the above proposals on the basis that they promote the same agenda and offer a genuine partnership between the public and private sectors. So do I.

12.42 pm
The Minister of State for Trade (Mr. Richard Caborn)

I thank the hon. Member for Ruislip-Northwood (Mr. Wilkinson) for initiating this dabate. He and I have two subjects in common—Latin America and the aerospace industry. His contribution to both is well respected in the House, but his analysis lacked its usual objectivity. I detected a little of his party political views in his comparison of the vote for President Pinochet with that for my right hon. Friend the Prime Minister.

This debate gives me the opportunity not only to respond to the hon. Gentleman's points but to discuss relationships and set out what the Government are doing. In doing so, I shall explain our plans for improving delivery of services and support to British companies. The main vehicle for the new approach is British Trade International, to which the hon. Gentleman referred. The debate is timely, in that it coincides with this week's important visit to Brazil by my right hon. Friend the Deputy Prime Minister, accompanied by a strong team of business men and women. I shall return to that visit in due course.

I doubt whether any hon. Member needs to be convinced of the importance of Latin America and the role that it will play in Britain's economy in the future. I became convinced of that in 1995, when I visited the Argentine and Brazil with the Select Committee on Trade and Industry. What we found is as true today as it was then, and the report at the time made several recommendations to the Government. The opportunities for trade and investment were—and are—substantial. Over the past decade, the region has been transformed. It was once a region where too many countries suffered from rampant hyperinflation, unmanageable debt, high tariff walls, low foreign investment and military Governments. The Latin Americans themselves talked about "the lost decade", which is now well and truly behind us. Throughout the region, countries have tamed inflation, slashed tariffs and opened their economies to foreign and intra-regional investment. Developments in the region have brought countries closer together, both politically and economically, and reduced historical animosities and conflicts.

Mercosur—the common market of the south—is recognised throughout the world as a growing economic force and a necessary partner. In 1995, when I was in Latin America with the Select Committee, Mercosur's development was impressive by any standard. The speed at which change has been managed has had a substantial impact on the development of Latin American economies. Mercosur and the people who put these developments in place deserve credit for that.

As has been said, the Andean community seeks a free trade area with Mercosur. That continuing integration, together with an improving economic climate, will open up vast opportunities for trade and investment. Indeed, the growing robustness of Latin American economies was amply demonstrated during the economic crisis in Japan, south-east Asia and Russia. That crisis, combined with low commodity prices and sluggish world exports, has severely tested the Latin American economies. However, most have come through in a way that has surprised many observers—none more so than that of Brazil. A little more than a year ago, following devaluation of the currency, there were dire warnings. Recession and the re-emergence of rampant inflation were predicted to follow. The picture is now very different: Brazil has achieved a remarkable out-turn. Growth, though small, is defying the doomsters, and inflation has been kept in single digits. Last year saw record investment, so we have a picture of a continent that is very much in business and eager to develop partnerships.

Unfortunately, Britain has been slower than many of our competitors in recognising those changes and the opportunities that have arisen from them. I think that the hon. Gentleman has drawn that to the House's attention. Latin America still does not receive the attention that it deserves in this country in the media, among the business community, or from politicians, despite the efforts of many hon. Members. On the other hand, there has been a striking growth in the teaching of Spanish in our schools and elsewhere. Indeed, two members of my private office staff are taking lessons, so it has even spread to Government Departments. I do not know why; perhaps my staff are trying to tell me something. Perhaps they are on their way.

The striking feature of Britain's involvement with Latin America—as opposed to that of many other countries—has been the prominent role of investment. That means investment in machinery, plant and fixed capital, as opposed to portfolio investment in stocks, shares and other securities. Investment has continued to grow, and has been stimulated by the right economic and political conditions. Britain has long been the leading European investor, athough other countries, such as Spain, which are generally taking a more active role in privatisation, are challenging that. We have a good record in the Argentine, and I hope that our record in Brazil is changing. That is why the Deputy Prime Minister is there—for important investment involving British Gas and the national grid.

When the Select Committee was in Brazil, British Gas—as the whole company was called in 1995—was in the Argentine, laying down a major part of the energy infrastructure. It brought much of its supply base with it. I remember a welding company from Warrington that flew out there as a supplier and sub-contractor to British Gas. The technique of welding was picked up; a good deal of work was fed back to the UK; and a totally different relationship with many of the Argentine companies developed. Many opportunities were created.

Our strength in investment has not acted as it should as a catalyst for trade in goods. Britain has a markedly lower share of Latin American imports than inward investment. It has generally been below 2 per cent., while our share of world imports is closer to 5 per cent. We have much to do to correct that imbalance and to start catching up with some of our competitors. Our task is simply stated, but will require a major effort to ensure that many more British companies seize the opportunity for trade, investment and partnership in Latin America.

Mr. Tam Dalyell (Linlithgow)

In my capacity as chairman of the all-party Latin American group, may I thank my right hon. Friend and former squash partner for all the work that he has done in Latin America? Does he intend to see Michael Valdez-Scott and the Latin American trade advisory group about these problems? Is he coming on to that?

Mr. Caborn

Yes, I am coming on to that. It is many years since my hon. Friend and I played squash together. Taking it up again would be no bad thing in view of my current weight.

Much has already been done, but we must look firmly to the future. We must do as much as we can to ensure that our businesses are well equipped for the task ahead. That means ensuring that the support and promotion services provided by the Government are the best available and meet the needs of the business. They must be customer-focused and we must ensure that we use our resources more effectively.

When we came to power in 1997, we began that process with the export forum. Its aim was to assess the effectiveness of existing services and we implemented its key conclusions—more refined market priorities, a greater emphasis on sectors and outward investment, and customer focus, which was to be the key. Having assessed the requirements for services, we needed to establish how best to deliver them. The Cabinet Secretary, Sir Richard Wilson, was appointed to that task in 1998. His report on export promotion resulted in the establishment of British Trade International, whose aim was a more coherent approach with an overriding customer and sector focus, an improved regional delivery service and a shift towards trade development. It helped companies, especially small companies, to develop the capacity and ability to tackle overseas markets.

Much has been achieved in a short time by bringing two major Departments of State—the Foreign and Commonwealth Office and the Department of Trade and Industry—together to drive forward the agenda on trade promotion and development. For the first time, there is a published national strategy for trade development and promotion. There is a board, of which I am co-chairman with my hon. Friend the Minister of State, Foreign and Commonwealth Affairs, consisting primarily of business people, who meet regularly to help to drive the agenda forward.

Perhaps most importantly, we intend to raise awareness of our services—essential if we are to make an impact in developing British business success overseas. Over the coming months we shall see regional events and a high profile national launch. We shall tell British business and our partners about the important changes in the means by which we provide our services. We shall focus particularly on the new electronic gateway to our services, provide a new emphasis on trade development services and new regional structures, and offer a new service brand unifying our various activities in one joined-up package.

As the hon. Member for Ruislip-Northwood knows, and as I explained in my recent letter to him, the Wilson report also recommended that the board should review the structure and role of the business advisory groups involved in carrying out promotional activities and providing advice. I reported that those groups vary their focus, financing and role. That task has been undertaken by Sir Martin Laing, until recently the vice-chairman of the board. He has already presented his initial recommendations and I expect him to put his report and final recommendations to the board at the end of this month.

In examining the role of groups such as the Latin American trade advisory group, it is important to distinguish between two separate main functions:advising the Government on a strategic approach to the region; and promoting opportunities in the market. LATAG was set up to give private sector advice to the then British Overseas Trade Board on doing business in Latin America. In addition to serving a committee of private sector representatives, the secretariat also assisted the Department of Trade and Industry in promoting markets, advising on business inquiries and running trade missions. This promotional role supplements a much bigger initiative which the Government have in place to promote Latin America.

Private sector business advice is not confined to LATAG. Our commercial teams in both the United Kingdom and our posts in Latin America include people who have extensive business experience in the region. There are seven export promoters in the UK. They are senior executives who have been seconded from the private sector and have first-hand experience of particular markets and sectors. Staff have been recruited for their business experience and clear knowledge of their own markets. Throughout England, 80 export development counsellors have been recruited from the private sector. They operate within business link networks to assist companies with exporting. Many export development counsellors have been taken on missions to Latin America via British Trade International to familiarise themselves with the markets.

Sir Martin Laing's initial recommendations looked at four strategic multi-market groups which mirrored the internal structure of BTI. These groups could provide advice on regional priorities and spend. Sir Martin also proposed the establishment of export groups associated with these multimarket groups to provide more focus, advice and activity. The groups would be established for a defined period at the end of which their continued relevance and contribution to BTI's objectives would be reviewed. Sir Martin will present his recommendations, including options for the structures of business advisory groups, to the board of BTI at the end of the month. Meanwhile, no decision has been reached on the structure or role of existing groups such as LATAG. When a decision is reached, it will take full account of the contribution that such organisations might make to the delivery of BTI's objectives. It will also take account of other considerations such as efficiency and value for money. It is both helpful and constructive, therefore, that LATAG, in association with Canning House, has submitted proposals to Sir Martin Laing on how its relationship with BTI might evolve. We shall consider the proposals seriously when decisions are taken.

I wish to make it clear that none of that is preventing the Government from driving forward their commitment to a closer business relationship with Latin America. We are doing this on a number of fronts. But we are targeting specifically the major markets of Brazil and Mexico, by promoting trade missions to and from the region. We are supporting companies which wish to exhibit at trade fairs by supplying a range of support services and through ministerial visits. The Deputy Prime Minister is visiting Brazil this week. The brochure entitled "The Visit to Brazil by the Deputy Prime Minister" sets out the names of the people who have accompanied him and the areas that they will cover. There is an impressive array of top business people from various sectors such as banking, ports, airports, construction, water, telecommunications and energy. My right hon. Friend will meet President Cardoso, senior Ministers and other members of his Government as well as important players in the business community.

Yesterday, we announced increased export credit guarantee cover and reduced premium rates for Brazil. Rates will compete internationally and extra credit will be sufficient to cover the expected significant increase in business. This underlines our commitment to this huge important market and will be an important element in the second year of our initiative to target business opportunities in Brazil and the wider Mercosur region.

In January, I launched a three-year promotion campaign to help British companies develop their business with Mexico. The campaign will involve a range of new services and initiatives to attempt to raise awareness of Mexico among British businesses, support outward investment, especially by medium-sized companies, encourage the use of digital technology for commercial purposes and develop regional links. As my noble Friend Lord McIntosh of Haringey announced in the upper House last month, we are planning a touring millennium products exhibition next year to several Latin American countries, including the Argentine, Brazil, Chile, Mexico and, possibly, other countries. It will be supported by other events promoting Britain as a country at the leading edge of technology, design and innovation. Finally, there will continue to be a full programme of support for trade fairs and trade missions throughout the region. That programme is intended to be the biggest ever, and will take many British companies to new, exciting markets.

That all adds up to a substantial effort to back our commitment. Indeed, at a recent event attended by the hon. Member for Ruislip-Northwood, the Brazilian ambassador offered congratulations—

Mr. Deputy Speaker

Order. We must wind up.

It being One o'clock the matter for the Adjournment of the sitting lapsed, without Question put.