§ Mr. Emeryasked the Secretary of State for Trade what further measures the Government intend to take to help United Kingdom exports to combat offers of unusually soft credit terms by their overseas competitors.
§ Mr. ParkinsonBritain remains an active supporter of international efforts to restrict and eventually to ban the use of unusually soft export credits, typically of the French credit-mixte variety, which distort normal patterns of commercial trading. Until these efforts succeed, our best deterrent to soft credit practices by others lies in an effective matching policy.
The aid and trade provision (ATP) is available from the aid programme to provide matching support in pursuit of developmentally sound projects in aid-worthy countries. However, there can be difficulties over judging the developmental soundness of a project in time when decisions on matching terms have to be taken at short notice, and in any case the ATP does not always fit the circumstances. The Export Credits Guarantee Department has powers to provide grants whereby the United Kingdom can match the concessionality of foreign offers in the non-aid field by lowering the effective interest rate to the overseas customer. The operation of these powers is not linked to developmental criteria.
Accordingly we have now decided to make a limited and we hope temporary provision for the use of such ECGD powers. They will be available as a defensive measure aimed at improving the United Kingdom's ability to counter foreign offers of unusually soft terms where this would be in the national interest. The new scheme will come into operation on 2 February 1981, and £2 million in 1981–82 and £4 million in 1982–83 have been set aside for the purpose. The scheme will be reviewed in the second half of 1982 or sooner if there is significant progress internationally in restricting these soft credits.
I believe that this new scheme, and the existing ATP arrangements which continue to operate, should provide more effective support to our exporters' sales efforts where they are competing with soft credit offers.