My philosophy on this matter is perfectly straightforward, and exactly what the House would expect. I am not seeking to undercut, but I shall match the competition. I will not see our exporters put at a disadvantage when faced with more strongly based and more successful trading rivals in other parts of the world.
I can strike one note of agreement with the hon. Gentleman. I also welcome this debate. I agree that no subject is more important to us all than that of trade, which affects not just the prosperity but the very survival of this country. I should like to drive home a fact that is frequently overlooked. To feed our 55 million people, in order to obtain the raw materials essential for our manufacturing industry and essential fuel supplies at least until North Sea oil comes on to full stream, we have to spend on imports about £10,000 million a year.
To pay for those absolute necessities and the many other things that we require, such as semi-manufactures and capital goods, we must export goods and services in return on a massive scale. Indeed, no less than 30 per cent. of our GDP is exported in goods and services and well over one-third of the output of our manufacturing industry goes into the export trade.
This need to import and to export is the abiding reality of British life. We have therefore three continuing major objectives in world trade. First, we must seek an expansion of the world economy—an expansion in which all countries can share. Secondly, we must strive to ensure that world-wide markets remain open to our exports. Third, we must ensure that our goods and services remain competitive. It is necessary only to state our major objectives to realise the formidable problems that we face today.
We are in the grip of a major world economic crisis. After a quarter of a century of virtually uninterrupted trade growth, during which the volume of world imports increased at about 10 per cent. a year, in 1974 the rate of increase fell to 3 per cent. and in 1975 there was an actual decline in the volume of world trade of no less than 5 per cent. Throughout the world, production has fallen, unemployment has increased and the struggle for export markets has been sharply increased.
The causes of the world trade recession are familiar, but because their effects are ongoing they are worth repeating. The hyper-inflation of 1973 in world trade in commodities and foodstuffs of all kinds, would itself have produced corrective action affecting trade and output in 1974 and 1975, but we had the additional and major impact of the quadrupling of oil prices at the beginning of 1974, which led to a violent redistribution of deficits and surpluses among nations.
In 1973, before the oil crisis really hit us, the OECD countries, collectively, were in surplus to the tune of $2·5 billion, the OPEC countries had a $3·5 billion surplus and the non-oil developing countries a deficit of $5 billion. In 1974, the OECD countries had a deficit of $33 billion, the non-oil developing countries had a deficit of $18 billion, and the OPEC surplus had risen to $67 billion.
Last year, surpluses and deficits were again redistributed radically. The OECD countries, as a whole, almost achieved a balance—they almost wiped out a deficit of $33 billion—the OPEC countries, as a result of greatly increased imports, reduced their surplus to about $40 billion and the non-oil developing countries plunged still further into deficit. The balance of payments recovery of the OECD countries was, of course, achieved at the price of economic contraction, falling production and rising unemployment throughout the Western world.
Our major problem has been and is to find a solution to this new set of problems. The IMF, the Eurodollar market and bilateral borrowings have all played their part in mitigating the consequences of these changes. I am glad to say that the OECD countries have collectively resolved to work together to achieve a new expansion of world trade. At Rambouillet, in November, the leaders of the major trading countries—the United States, Germany, France, Japan, Italy and the United Kingdom—agreed on the need to continue to consult together in order to get world trade moving again.
Some corrective action has been taken; this is particularly notable in the upturn of the United States economy. World trade this year will undoubtedly grow, and there are even more valuable prospects for 1977, but the underlying problems of the financing of balance of payments deficits globally and of the redistribution of surpluses within the OECD area remain. It is right to stress that Trade Ministers can succeed in expanding world trade only if Finance Ministers can find the solutions to the problems of financing world trade.
Long before the events of the last two years, the problems of the developing countries were urgent and in some cases desperate. As the World Bank's recent report on the world economy in 1973 revealed, 61 per cent. of the world's population lived in countries with a yearly per capita income of below $500 and 30 per cent. where it was less than $200.
I have already referred to the dramatic effects that the oil price increase has had since 1973 for the developing countries. It is this, of course, that has given such a special urgency to recent discussions in UNCTAD and elsewhere, and it has led to far reaching proposals designed to give those countries a larger share of the world's income.
I shall shortly be attending the UNCTAD IV Conference in Nairobi. It is the next major international meeting between developed and developing countries at which a very wide range of trade and development issues are to be discussed. In particular, we hope for tangible progress in commodity trade. We should like to see agreement in the Conference to give impetus to the achievement of improved and more stable arrangements for producers—arrangements that will recognise at the same time the interdependence of the interests of producers and consumers alike. We have played a constructive rôle in recent negotiations on tin, cocoa and coffee, and we are currently exploring—though there are difficulties—the possibilities of international action on tea. Together with countries in the Community and the OECD, we shall actively pursue our objectives on commodity trade both at UNCTAD and, indeed, in other forthcoming international meetings.
There are naturally differences of view and emphasis between those engaged in the debate—differences which we have played our part in bridging in the Prime Minister's initiative at the Commonwealth Heads of Government Meeting last May and in the subsequent discussions. Since then, although a considerable gap remains, a further step has been taken, with the agreement of the EEC countries, that the proposals put forward by the UNCTAD secretariat for an integrated approach are acceptable as a basis for further discussion.
I can assure the House that I shall not go to Nairobi with a closed mind on this or any of the other major issues upon the agenda. Clearly, the proposals will require greater elaboration and examination in detail. In relation, for example, to the proposed Common Fund, we shall need to be satisfied that a common institutional framework can play an effective rôle in this complex and difficult field. But if, at UNCTAD IV, we can initiate this further work with a will to find solutions, both at the political and practical level, we shall have at least one major and positive achievement to our credit.
There will also be discussion there of the continuing need of the developing countries for improved access for their exports of manufactured goods. Their special needs have been recognised in the Generalised Preferences Scheme operated now by most developed countries and in the commitments accepted by developed countries regarding the GATT multilateral trade negotiations. At the same time—and this is difficult, above all during a period of recession such as we are going through—we have to have a proper regard for the impact of trade liberalisation on our own producers.
I hope, in any case, that before the conference opens the Community, with other industrial countries, will have made offers on special concessions on tropical products as part of the ongoing progress in the GATT multilateral trade negotiations. Tropical products are of particular importance to so many of the very poorest developing countries, as the House knows.
The Nairobi conference will face up to other important areas of economic relations—resource flows to developing countries, including their debt problems; prospects for further trade liberalisation; and questions of building up their technological base, technological transfers, and so on. We hope that constructive progress will prove possible in all these fields.
In the GATT multilateral trade negotiations, too, the position and problems of developing countries are assuming, I am glad to say, a much larger importance than in previous GATT rounds, including the Kennedy Round. The GATT should, in our opinion, remain the principal forum in which world trade problems as a whole are considered and dealt with.
There are three aspects of the multilateral trade negotiations that I should like to draw to the attention of the House. First, although previous GATT rounds have brought about major reductions in general tariff levels, there is still scope for further reduction. We are particularly concerned that the biggest reductions should be made, in genera], in the highest tariffs, and this is the line that the EEC is taking in the current discussions. Those who have studied the particular problems of tariffs in Europe and elsewhere will, I think, understand why this approach is one that naturally suggests itself to us.
Secondly, a particular feature of the current GATT round is the attention being paid to non-tariff barriers. In a world of reduced tariffs these are of larger importance though they embrace very complex problems. In the multilateral trade negotiations certain types of non-tariff barrier are being grouped together, such as quantitative restrictions, customs procedures and technical standards. We shall need, and no doubt we shall have to have, a flexible approach to these different problems.
Thirdly, as a corollary to the efforts to achieve a further and significant measure of liberalisation of world trade—I think that this will be welcome news to the House—it is even more vital that satisfactory machinery should exist to deal with disruptive imports. I am now talking not about dumping but about disruptive imports that come on such a scale and over such a period that they disturb the expectations and the possibility of adaptation by importing countries. The existing provisions under the GATT—I am thinking of Article XIX—are not wholely satisfactory, and we attach importance, therefore to the adoption of new provisions that will allow a greater degree of selectivity in approach but with improved arrangements for international surveillance.
On the question of agriculture in the multilateral trade negotiations, there is no doubt at all that we have considerable difficulty in getting agriculture firmly on the agenda for discussion—and the reasons are well known. The original members of the EEC take a highly protectionist view on agricultural trade and they wish at all costs to maintain the fortifications which today surround the CAP. I should not like yet to say how far we have been able, as it were, to open the door or, rather, to get the door ajar. However, there is some arrangement now for what I think is called mutual surveillance and common disciplines, and at least an effort will be made by all those concerned to look at their own systems and to see, in the first instance, just what is the nature of the protection which they afford and then whether some common approach can be established for further negotiations. We shall help in all of this to the best of our ability.
I turn to our own position, as distinct from the general survey of world problems which I have tried to give. Our task in adjusting to the current world situation is doubly difficult because we have not only, with others, to deal with the problem of the oil deficit, but we entered the world recession and the oil problem with entirely different and serious problems of our own. In 1973, even before we felt the impact of oil, we had a widening balance of payments deficit. Indeed, in 1973 our current account deficit was £840 million, and in the last quarter of that year it was running at an annual rate of about £1,500 million—a much higher figure. On top of this we had the self-inflicted damage resulting from the three-day working week. Therefore, our balance of payments position at the end of the last boom was substantially worse than that of any of our major competitors. It seems to me that we have a very long way to go.
We have to look to expansion in world trade. We must certainly look to those of our trading partners who are in a stronger position, especially as regards their international payments, not to be too cautious in reflating their economies. That is not a selfish point of view. The degree of recovery in world trade and the world economy is dependent upon their actions and it is, if anything, even more essential to the developing world than to ourselves that the course of recovery is unhindered. We are, unfortunately, restricted from taking a major lead in that process. This time our rôle must be to ensure that we are in a position to benefit as the general recovery of world trade proceeds.
We have many problems to solve. We still need to achieve a substantial shift of resources into investment and export. The need for more investment is self-evident, and I need not pursue that matter now. Certainly the need for more exports is clear if we are to make up the still large deficit that remains in our balance of payments. That deficit last year, even after the immense improvement that we sustained, still left us "in the red" on current account to the extent of £1,700 million. That was how we ended last year. Therefore, we still have a long way to go. For this reason we have further developed in the past year export credit facilities and other means to assist our exporters.
Four new facilities have been introduced in the last year in regard to export credit. I shall not repeat the details, which I hope are reasonably well known to the House. They cover, in appropriate cases, cost escalation, which helps exporters to deal with their problems flowing from our higher than average inflation, and they also deal with performance bonds, pre-shipment finance and certain risks of insolvency on the part of a consortium member, which is important for those who are engaged in large contracts with OPEC and other countries. Improvements have also been announced in the short-term credit facilities of the ECGD.
In all this activity there is a balance to be struck between the need to ensure that our exporters are not at a disadvantage vis-à-vis their competitors, while avoiding a race over credit support. Indeed, it is for this reason that we are playing an active part in negotiations to bring export credit competition under greater control. That is what we are trying to achieve. I hope soon to be able to tell the House the results of these prolonged and difficult negotiations.
It is essential that the Government and our exporters deploy their efforts where the opportunities he. Even before the oil price rise, we were giving special attention to some OPEC markets. After the oil price increase, we strengthened and widened our efforts. As a result, the indications are that last year we achieved the largest increase in exports to OPEC countries of any country in the world. In terms of export growth, we did better than any other country in the world.
Now that recovery is in prospect in major industrial countries—and the countries of North America and Western Europe account for by far the largest proportion of our exports—new opportunities are opening. We can be encouraged by the fact that in last year's recession we more than held our share of world trade. That is a most encouraging and welcome development.
Our exports are now beginning to rise. In volume, they fell during most of 1975, but rose again in the last quarter of the year. In the latest three months, ending February, our exports were 4 per cent. in volume higher than in the previous three months. Moreover, a survey carried out in January of this year by my Department, in co-operation with the larger exporting companies, indicates that these major exporters are looking to an upturn in the volume of their exports this year amounting to 10 per cent. Recovery has begun, and there is a good prospect that it will continue. This is one important reason why it is so important to us that world markets should remain open. We have the prospects, and we must have an open market in which to sell our exports.
In May last year we subscribed to the renewal of the OECD declaration or pledge, with its emphasis on expansion and not restriction. However, I made clear at the time that our renewal was subject to two qualifications. The first was the fact that adequate finance should be available to cover deficits and, secondly, that the economically stronger countries should recognise their obligations to the rest of the world.
Inevitably, a period of recession places a particular strain on certain sensitive sectors whose short-term problems cannot be met by an expansion of exports. Thus, the House will recall that last December my right hon. Friend the Chancellor of the Exchequer announced a number of selective measures to restrict certain imports. These were applied in conformity with the international rules which provide for action in cases of disruption. We have also taken anti-dumping action, about which I should like to say a few words.
The present recession has given rise to a large increase in the pressure for antidumping action. That is hardly surprising. In the last 18 months my Department has received 26 applications for antidumping action. It has imposed three duties, obtained six price undertakings to eliminate dumping, and found no dumping in three cases; five cases are being handled by the EEC. The remainder are in course of investigation. There is inevitably much work involved in an investigation, which cannot be short-circuited if we are to comply with the law and with our obligations under GATT.
I should like to address my next remarks to those who are genuinely concerned about these problems. Our aim is to bring all cases to a conclusion at the earliest possible moment. We are asking firms only for such information as we think essential to establish a prima facie case. We are anxious to assist in any way we can. I do not believe that this is an issue between myself and my Back Bench colleagues, or between the Government Benches and the Opposition Benches. We are entitled to take antidumping action. For once, time and international law are on our side. Let us take advantage of that situation. Let industry co-operate with the Government in providing evidence. We cannot co-operate without receiving reasonable evidence.