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11.50 am
Sir Kenneth Carlisle (Lincoln): I am delighted to take part in this annual debate. I add my thanks and congratulations to my hon. Friend the Member for Gravesham (Mr. Arnold), not only for organising this yearly debate, but for everything else he does during the year to promote our good relations with Latin America. I have great respect for his activities in that regard.
I am delighted that our relations with Latin America have improved so much. All of us who love that part of the world can only take pleasure from the fact that our trade with that area is growing, that our links with the people are ever more active and that we appear to be moving on a strong upward curve toward re-establishing our historic links with those countries. That is undoubtedly occurring because free trade and firmly based democracy are now dominant in Latin America.
I am especially interested in watching the development of Mercosur. In my intervention on my hon. Friend the Member for Gravesham, I mentioned the stimulating effect on investment, free trade and the growth of jobs that that development has had over the past five or six years. Investment into the whole region is impressive and I am delighted that the United Kingdom is at the forefront of that effort.
As we all know, substantial UK companies such as British Gas, our water companies, British Petroleum and other oil companies, are now operating in Argentina and other countries. We are also investing in manufacturing in telecommunications. That is mirrored by the huge interest and activity of the financial services sector. Only a week or two ago, I visited a merchant bank in the City that had realised that it had to get back into South America because all its rivals were setting up offices there. Such activity
promotes not only businesses that are already established and growing, but the skills that we can offer--for example, our experience in privatisation ensures that our aid and advice on that subject are second to none.
The scene is one of growing activity and encouragement. We all have an interest, therefore, in the continuing stability and growth of Latin American economies. It is not easy for countries to achieve those aims. For example, the value of the Argentine currency is high and unemployment is great. We must try to ensure that growth continues at the level that is needed to cut unemployment. Stability, democracy and inward investment are essential in that effort.
I strongly echo the words of my hon. Friend the Member for Wycombe (Mr. Whitney) about opportunities for this country. Although many of our major companies are active in Latin America, we need to spread the word to get middle-ranking companies involved to a much greater extent. I am always impressed by figures showing that our investment is, I believe, the second largest in Latin America--it certainly is in Argentina--but our exports are not as high in the league. We need the involvement of smaller companies if we are to do better.
We can help Argentina to face its current unemployment problems by investing in growth, but we should also support President Menem's courageous efforts to address the structural inflexibilities in Argentina's labour market. That is a difficult long-term problem and President Menem is trying to get the unions to address practically the requirements of modern economies. We wish him well in that brave effort.
In general, our relations with South America are encouraging. One of the most interesting aspects of free trade and economic stability is their effect on democracy. I tried to intervene on the hon. Member for Islington, North (Mr. Corbyn) to make that point, but he was determined not to listen. As my hon. Friend the Member for Wycombe said, the example of Paraguay, where the threat to democracy was overcome by pressure from neighbours, is a tremendous tribute to what can be achieved by free trade and large areas of economic co-operation. Everyone in Paraguay knew that, if a dictatorship were re-established, the country would have to leave Mercosur and all the advantages that that brought. In that part of South America, free trade and democracy go hand in hand.
My hon. Friends and I are adamant that we should seek to ensure that the European Union is generous and open with Mercosur. We do not want trading blocs to raise tariffs against each other. This country's reputation for supporting free trade should lead us to ensure that barriers between trading blocs continue to fall. It is of the greatest importance that our Government should pursue that aim over the next two years.
Before ending, I should mention the continuing difficulties associated with finding a long-term solution to the questions surrounding the Falkland Islands. I know that both the British and Argentine Governments are working hard to develop co-operation in matters such as oil exploration and fishing. We must work hard to find practical solutions. We must be tolerant. We must work hard to get the support of the peoples of both countries and make them see that the long-term solution to the problem is real co-operation and ever closer links. In the end, that is the only solution.
Mr. Robert Banks (Harrogate):
I join in the congratulations to my hon. Friend the Member for Gravesham (Mr. Arnold) on initiating the debate. I have a warm regard for his close involvement in Latin America and his great knowledge of that region.
I have had the privilege of visiting Argentina and Brazil with the Trade and Industry Committee. In previous years, I visited Venezuela and, this year, I visited Colombia, Ecuador and Peru privately. On all those occasions, I found that there was a strong sense of this country's historic links, which go back centuries, with countries in that part of the world. I was enormously impressed by the landscape and the stunning beauty of the countries that I visited, and I think that they offer a huge opportunity for people to see something quite different from our civilisation.
I should like to concentrate my remarks on Peru. I do not think that anyone doubts that the economic progress made in that country in the past six years is anything short of stunning. In 1990, it had an inflation rate of 36,000 per cent.--which is extreme hyper-inflation. The inflation rate is now below 15 per cent., and it may even be below 10 per cent., which is a huge tribute to the economic management of that country. President Fujimori has done a remarkably good job in Peru, and has laid down the foundation for steady growth. We are now exporting ever more goods to that country, and we have very considerable opportunities for foreign investment and for building a sure economic connection with it.
The foundation of that growth has been the privatisation of some manufacturing and of the telecommunications, mining, banking, transportation and energy sectors. There is no doubt that the work that has been done in privatisation in the United Kingdom has had an enormous effect worldwide and that it is being copied. There is also no doubt that the success of the economy in Peru is nothing short of miraculous and that it is due, in part if not in the main, to their privatisation policies. Domestic investment there has grown, and our exports to that country are rising considerably.
There have been ministerial visits to Peru--which I know have been warmly appreciated--including that by my right hon. Friend the Secretary of State for the Environment, who was there only a few weeks ago, following an earlier visit. I recall vividly his description of his visit to Machu Picchu, which was recounted at a lunch he hosted for a Peruvian delegation to the United Kingdom. That description played a part in convincing me of the importance of visiting that quite remarkable place, which is one of the world's greatest wonders. I shall never forget the visit I made there earlier this year with my wife and daughter.
Peru is not without its problems--it is in considerable debt to international banks and the international finance community. In the light of Peru's terrific economic
progress, and in recognition of its poverty--such as exists in a great many Latin American countries--I hope that we will give careful consideration to recycling and alleviating some of its debt. We have an obligation to do what we can to help in the provision of education and health services.
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