7 July 1982]
THE INDUSTRY AND TRADE COMMITTEE
MR PETER REES, MP, MR C B BENJAMIN and MR A DUNNING
[Continued
23
[Mr Hill Contd.]
think perhaps Mr Benjamin might help, who is head of ATP.
(Mr Benjamin.) We are under some restraints in allocating administrative res- ponsibility for ATP because it is part of the development programme which is adminis- tered under the Overseas Development Act and it therefore falls quite clearly to the ODA as the sponsoring and responsible department. Money, because it comes from a developing programme, has to come from their source of funds and subject to their criteria. It is really because the competition wish to use their aid programmes in the way they do, we want to use our aid programme in the way we do.
50. To put the question this way then, Mr Benjamin, would it work more smoothly and perhaps even more efficiently if it were within the control of the Department of Trade?
(Mr Benjamin.) I think, Mr Chairman, we would still have to meet the same develop- mental tests as we would do in any event and obviously there would be the same problems of expenditure allocation irre- spective of who formally had the adminis- trative role.
Mr McNally
51. You are reasonably confident that the ODA when dispensing its funds does have a mind to British export potential? It is not too dewy-eyed and innocent in agreeing to fund projects for governments that then go and place orders to other countries?
(Mr Rees.) I think you addressed your question more to Mr Benjamin but, de- pending on his answer, perhaps I might be allowed to come in.
(Mr Benjamin.) Mr Chairman, if you took the whole of our bilateral aid pro- gramme the majority of it is tied to United Kingdom exports and tests are administered to ensure that the United Kingdom exporter benefits from aid that we provide. So to that extent ODA are certainly very conscious that our aid should be expended on our goods and services.
(Mr Rees.) If I can come in there too, the administration of aid and trade provision is not the exclusive prerogative of the ODA in that we have to consider the various con- tracts, the various projects that are put up as likely candidates for ATP. So that the Department of Trade very definitely has a role and I think I could say without impropriety obviously we look at matters with a commercial eye.
Mr Hill
52. Can I continue then with the prob- ing questions that are always getting prob- ing answers, I am afraid. Is Her Majesty's Government able to counter the aggressive tactics by our competitors? I am referring to that very useful paragraph 16 in your paper where you say, "The enormous potential of the area for development has stimulated the use of aggressive tactics...". Can you describe the aggressive tactics and what counter-measures you use to combat them?
(Mr Rees.) Let me single out — and I hope not too disparagingly certain friendly countries. Now, for example, the Japanese have considerably greater finan- cial muscle should they choose to exert it, particularly in markets like South East Asia which are geographically very much closer to theirs, and we do know of examples where we suspect that tenders have been on behalf of Japanese organisations at what appear to us to be sacrificial prices. If it comes to a battle on those terms it is doubtful whether in the long run over a very wide field at the moment the United Kingdom could match that kind of tactic. If we look at the administration of the aid soft credit programme, it is sometimes suggested that our French neighbours are more adroit than we are. I would like to think, without I hope sounding at all complaisant, that that may possibly have been true a decade ago but that it is not true any longer. That is not to say there may not be some areas where COFACE perhaps provides a cover which ECGD does not, but on the whole we are pretty alert to what is going on in that kind of area among our friendly competing countries, and we hope to match them and, on occasion, do better.
53. You mentioned sacrificial prices, but you have not really given us an indica- tion that aggressive tactics could be almost below the belt blows which we are either reluctant to counter or unable to find a means of countering. I think particularly of money that passes under the counter perhaps. Is there any evidence that you are failing to counter aggressive tactics of this kind?
(Mr Rees.) I do not think we intended to convey that by the use of that particular phrase. For example, we do not have any intention of introducing any kind of legisla- tion such as the United States have.
Mr Crowther
54. You have used this phrase “sacrifi- cial prices" twice. I am not quite sure what