HC Deb 16 December 1999 vol 341 c238W
Mr. David Stewart

To ask the Secretary of State for Trade and Industry if he will make a statement on the instruction he gave earlier this year to the Export Credits Guarantee Department to establish a bond guarantee scheme for cashmere exports to the US. [103465]

Mr. Byers

In March of this year, the dispute between the EU and the US over the EU's banana regime led to the US requiring the posting of bonds in respect of potential additional customs duties for certain categories of EU goods, including cashmere knitwear, pending the decision of the WTO arbitrator. Given the potentially devastating effect this could have had on the UK cashmere industry, the Government decided to establish a limited scheme, to be administrated by the Export Credits Guarantee Department, to indemnify cashmere exporters against losses arising from these bonds and additional customs duties.

ECGD's Accounting Officer advised me that, in his judgment, the risk involved in giving such guarantees under Section I(1) of the Export and Investment Guarantees Act 1991, could not be accepted under ECGD's normal underwriting criteria.

However, in view of the importance which Ministers attached to ensuring the future of the UK cashmere industry, I instructed him to make such guarantees available.

Cashmere was subsequently removed from the list of affected goods and I can now report that the scheme has been closed down and that ECGD has not been and will not be required to pay any claims.