Dáil Éireann debate -
Tuesday, 21 Jun 1988

Vol. 382 No. 5

Insurance (Export Guarantees) Bill, 1988: Second Stage.

Minister for Industry and Commerce (Mr. Reynolds)

I move: "That the Bill be now read a Second Time".

The purpose of the Bill is to increase from £300 million to £500 million the aggregate amount of liabilities which I, as Minister for Industry and Commerce, may assume at any one time in respect of export guarantees under the Insurance Act, 1953, as amended.

The Insurance Act, 1953, enables the Minister for Industry and Commerce, with the consent of the Minister for Finance, to make arrangements for the giving of guarantees for the purposes of encouraging exports. This is the legislative basis for the export credit insurance and finance scheme. The principal aims of the scheme are to help maintain the competitiveness of Irish exports, to stimulate export growth and to encourage diversification into new markets. The scheme assists and supports Irish exporters by providing them with protection against non-payment for either commercial or political reasons by foreign buyers. It also provides access to export credit finance from the banks at preferential interest rates.

The demand for export credit insurance has increased considerably since the ceiling of £300 million was set in 1981 and as a result aggregate liabilities have now reached £298 million. Demand for export credit insurance is strong and I anticipate further growth in such demand in the years ahead with the continuing expansion which I hope and expect will be maintained in our overall exports.

The export credit scheme is administered by the Insurance Corporation of Ireland plc, as agent of the Minister for Industry and Commerce. The scheme is intended to run on a self-financing basis over time. In other words, any costs borne by the Exchequer by the payment of claims should be made good by premium income receipts and recoveries on outstanding claims. This is a very desirable commercial objective which this Government and previous Governments have pursued. Despite a commercial approach, however, it is not possible to eliminate entirely the risks associated with international trade, particularly in the difficult economic climate which has prevailed in recent years. The emergence of severe debt-servicing problems in many Third World and developing countries in the early eighties has compounded both the commercial and political risks in selling abroad. At the same time, we have seen growing competition among national export credit agencies in the drive to win new business.

Consequently, there has been a significant rise in the level of claims over the past few years and there was a cumulative deficit on the scheme of approximately £12.8 million to the end of 1987. This does not mean, however, and I stress this point, that our objective of breaking even has failed. The total value of exports insured since 1971 amounts to £4.5 billion which means that the deficit amounts to a mere 0.28 per cent of the value insured. It is my intention that the deficit which our scheme has accumulated will be reduced and eventually eliminated. For example, every effort is being and will continue to be made by me and my agents to secure a maximum recovery of outstanding debts on which claims were paid. At present we are owed approximatley £9 million in respect of debts arising from foreign currency shortages in debtor countries. These debts are really national or government debts of the countries concerned. While it would be unrealistic to expect a 100 per cent recovery there is a reasonable chance of recovering a proportion of these debts but possibly over a fairly lengthy period of time. The main debtor countries concerned are Nigeria, Argentina, Sudan, Tanzania and Sierra Leone. The prospects of recovering debts from Nigeria have been enhanced by the signing, in December 1987, of debt re-scheduling agreement between Ireland and that country. This agreement provides for a repayment of insured trade debts over the next six years. Significant progress has also been made in recovering debts in Argentina. Interest payments on outstanding debts were received from Argentina in the past few months; in addition, promissory notes have been received in respect of outstanding principal and some money should be recovered on these notes later this year. Prospects of recovering moneys from Sudan, Tanzania and Sierra Leone are less encouraging, though it is intended to negotiate a debt re-scheduling agreement with Tanzania this year.

A full recovery was made in March of this year in respect of a claim of some £1.7 million paid in September 1987, in respect of exports to China. Two large claims amounting to over £6 million arose from defaults by two US companies. Negotiations in regard to recovery of these debts, which have been difficult and complex, are now reaching a critical stage and I am hopeful that some recoveries can be made.

Claims are only one side of the equation. The other is premium income. The premium income obtained from exporters using the scheme goes to offset the cost of claims which have to be paid from time to time. Premium income in recent years has been insufficient to meet the cost of claims and hence the scheme is in deficit. It is likley, however, that premium income will increase in the next few years. Premium rates for the vast bulk of policy holders were increased by an average of 10 per cent at the beginning of this year, the previous increase having occurred in 1986. Premium rates for certain medium term credit policies were increased by over 50 per cent from January 1988, but this was the first increase in these rates since 1971. New charges for the provision of guarantees in respect of export credit finance took effect from 1 April 1988. Notwithstanding all these higher charges, premium rates charged for export credit insurance in Ireland compare favourably with other countries. A recent survey carried out by the OECD showed that Ireland was ranked sixth lowest out of 20 countries in terms of premium rates for export credit insurance. I am confident that we have managed to strike a balance between the need to operate the scheme according to commercial criteria on the one hand and the need to provide a competitive and attractive product for the exporter on the other.

The deficit, as I have said earlier, must be seen in perspective. It is quite small when compared with the total amount of exports insured under the scheme to date, approximately £4.5 billion.

I mentioned briefly at the outset that the need for this legislation arises from an increase in the demand for export credit insurance for markets worldwide and that this trend is likely to continue in the years to come. At present the export credit scheme is covering about £750 million worth of exports annually. This is actually quite small relative to our total exports, which amounted to £10,700 million in 1987. The reason for this is that the bulk of our exports are to OECD countries which many exporters consider to be reasonably safe markets and where they believe that there is little or no political risk. The facilities available under the export credit scheme are relatively straightforward and easy to use. If exporters are concerned about devoting too much time and resources in attending to export credit limits and other such details of insurance cover, they can employ a suitable insurance broker to handle all these matters at no extra cost to them. Exporters should think about using the facilities under the scheme.

Many exporters claim that it is difficult to get quick decisions from ICI on export credit insurance and claim that export sales can be lost as a result. I agree fully that there is a need for decisions to be taken quickly, but often the problem lies with the exporter not providing sufficient information to enable a decision to be taken on the application. In many cases the exporter approaches ICI at the last minute and expects to be given export credit insurance instantly. Exporters must appreciate, however, that where information is not readily available on overseas buyers, credit checks need to be carried out by ICI before a decision can be made as to the level of cover which can be granted. While ICI have many buyers on their files, they are installing, at my request, computerised facilities to enable detailed buyer information to be stored in a readily available format. This should improve the speed of response within ICI to the benefit of the exporter. To conclude on this point, I would say that I recognise fully the need for a fast efficient export credit service to be available at all times to the exporter. At the same time, however, this need must be balanced against the need for careful, judicious underwriting to minimise the risk to the Exchequer.

Export credit insurance not only affords protection against non-payment from abroad, it also provides access to finance from the banks at preferential interest rates. Access to such finance is made possible either by means of assignment of the exporter's insurance policy or the provision of a State guarantee to a bank. For Irish pound financing the exporter can borrow at AAA interest rates. Many small to medium sized exporters would not otherwise be able to obtain finance at such competitive rates. Small or medium sized exporters are often charged A or AA interest rates which involve significant additional interest costs. Export credit insurance therefore has the added attraction of opening the door to otherwise unaffordable working capital to finance exports. More importantly, this export credit finance should not normally interfere with other credit facilities or limits which may be available to exporters from the banks.

There are two finance schemes in operation at present; the short-term finance scheme which normally relates to exports sold on credit terms of up to one year and the medium-term finance scheme which normally relates to credits of up to five years. Both of these schemes can be of benefit to the exporter and can provide a further boost to export growth. The short-term scheme is perhaps of greater importance to the majority of Irish exporters than the medium-term scheme which relates exclusively to capital goods. The level of usage of the short-term scheme by exporters has however been disappointingly low, and I believe there is scope for getting more exporters to use this facility. With this in mind, my Department and ICI are carrying out a detailed review of this scheme, which has been in operation now since 1981. Once this review has been completed, I will ask officials of my Department and ICI to discuss the operation of the scheme with the banks. The banks have a major role to play in this area and I would like to see them taking on a more active, aggressive and supportive approach to financing exports. They have made a number of suggestions as to how the scheme might be improved and these are being considered at present by the Department and ICI. What I require, however, is for the banks to help share the risk involved and not simply rely on Government guarantees before releasing finance.

Deputies will be aware of the Government's special trading house scheme which was approved by the European Commission in February of this year. The scheme is designed to promote the growth of exports of Irish manufactured goods though the establishment of centres of marketing expertise which will specialise in the exports of such goods. I am pleased to say that in addition to qualifying for the 10 per cent rate of corporation profits tax as well as benefiting from investments under the business expansion scheme, licensed trading houses will be eligible to avail of the full range of facilities under the export credit insurance and finance scheme. This will certainly be a significant added asset to trading houses in their task of selling Irish manufactured products abroad. So far special trading house licences have been issued to two companies and a number of other applications for licences are currently being examined in my Department.

Export growth is central to the Government's programme of economic recovery. Last year Irish exports reached an all-time high of £10,700 million and the indications are that export performance in 1988 will be even better than it was in 1987. We now expect total exports to reach a record of £12,000 million this year. Growth in demand for export credit reflects the growth in our exports and also the diversification of Irish exports into non-traditional markets. For example, as a result of successful growth in business contacts in Iraq and in the context of the Irish-Iraqi Joint Commission, it was decided to provide export credit facilities in respect of Iraq. This is a positive development in terms of sustaining export growth in the long term.

I believe that the export credit scheme has an important role to play in the Government's strategy of export-led growth. This is particularly so in the context of improving the export performance of small indigenous companies. The availability of export credit insurance and finance can in very many cases be the deciding factor in whether or not a company should proceed with an export contract. It can eliminate the risk which might otherwise be unacceptable and provide access to valuable working capital which might not otherwise be within the company's limited resources.

All our major trading competitors provide Government supported export credit insurance and finance schemes to assist their exporters in winning valuable contracts abroad. If the Irish Government did not operate a similar scheme it would mean that our trading competitors would have a competitive edge over Irish industry particularly in certain international markets. We simply cannot allow this to happen. I do not see this scheme as some sort of expensive luxury; it is a vital tool in encouraging continued growth in exports and generating industrial prosperity with, hopefully, more jobs for the future.

I am satisfied, that by increasing the statutory limit on export guarantee liabilities to £500 million, this Bill will make a valuable contribution to the further growth of Irish exports. I therefore recommend the Bill to the House.

Mr. J. Bruton

Export credit insurance operates basically as an insurance arrangement. I understand that, generally speaking, in regard to trade in goods there is no element of subsidy but where capital equipment is being exported I understand the practice has grown up that the exporting countries give what is essentially a subsidy to the purchaser through the terms of the export credit insurance which it offers. Ireland does relatively little export of capital goods in comparison with other European countries but we do some. I understand there is a growing worry in international organisations concerning the OECD, in particular, about the increasingly fierce competition in the matter of subsidisation of capital exports by developed countries. One might say this is something that is of benefit, in that countries which are purchasing are relatively poorer countries than those exporting and in a sense it is a chance to obtain resources from the rich countries.

The fear is that it is a kind of roller coaster which it becomes increasingly difficult to get off in that one country bids for a contract, then another comes along and has to do better and the third has to do better still. The asking price on the next occasion a similar contract comes up is the best deal which was made the last time and it goes on in a similar fashion. I know the Minister is not directly involved in this to any appreciable degree other than as a member of the Council of Ministers of the European Community but I would like to ask him what his views are on this development. Is he happy that it is in the best interests of the rational development of industry? What it does is to distort the pattern of sales by capital goods-producing industries in the sense that they will tend to want to export to countries where they can get an export subsidy in the form of export credit insurance. They will not export to countries, perhaps nearer home, where they will not get export credit insurance because they are in a better competitive position in the form of a better market. As with all subsidies they distort the natural development of the industries. I would like to ask the Minister if we give any export credit insurance in regard to capital goods and, if so, do we give any interest subsidies, or other subsidies, which would qualify as other than straight commercial insurance involving a subsidy element and what is the Minister's policy in that regard?

When I was Minister for Industry and Commerce I had the privilege of leading a number of overseas export missions. There are few people whose practical patriotism I admire more than exporters. In many cases they spend half the year cumulatively away from their families in exotic but far from comfortable locations trying to operate telephone and telex systems that do not work. They live a life of hassle and uncertainty wondering if their flight will be cancelled, if they will get to meet the official in the ministry who was so difficult on the last visit, they wonder why they must wait for three hours for an appointment and if they must attach any significance to that, or if this means that the official will not buy any goods at all. They must knock on doors for weeks and in many cases only get a decision one hour before the flight is due to depart for home. The importer may play them out to the very last to see if he can get a better deal from them. That life of hassle and anxiety is lived away from home in an unnatural environment for the people concerned. It is important, when discussing exports in the House, to pay tribute to the personal qualities and sacrifices of those involved in making this country one of the greatest exporting nations in the world. I say that after making the due discounts I made of the value of our exports. They are not as valuable as the official figures indicate but they are very valuable and they would not exist without the type of dedication I have referred to.

I do not have any objection to the Bill, which essentially is a natural result of increased trade in that the amounts of exports to be covered at any given time need to be increased. That does not mean that the amount of losses is increasing or that the amount of State expenditure is being increased but simply means that the value of the amount covered is being increased. That, in turn, could mean larger premium income to the Government. I do not see any problem about that. However, I am interested to note that the main debtor countries who have not been paying, and in respect of contracts to whom the exporters have had to turn to the fund for money, are Argentina, Nigeria, Sudan, Tanzania and Sierra Leone. Nigeria, which has substantial oil exports, is a country with which I believe the Government have been contemplating a major deal in regard to oil. Yet, the Government are having problems getting paid for goods we have supplied to Nigeria. I have been pursuing this for some time. A payment due from Nigeria was the subject of a question by Deputy Colley in the early days of this Dáil and I have taken an interest in it. I have repeated the question every six months. It comes forward like clockwork on my BF system and the question is put on the Order Paper again. The money has not been paid and the company is still waiting for the Nigerians to stump up on this contract. I should like to ask the Minister why that is the case. What is his attitude to exported credits for Nigeria? What is his attitude to the credibility of Nigeria as an entity with which to do business?

That is fair question. It is not an insulting one and I do not wish to cast any aspersions on Nigeria, but the fact is that they have not paid on that and other contracts. Are we continuing to deal with that country? Are we giving cover? How has the premium been altered in the case of Nigeria to take account of the risk factor involved? I do not have that much to say about Argentina and I note that the Minister has singled that country out from the list and stated that some progress has been made in regard to it. Interestingly, Sudan and Tanzania are countries to whom we give an amount of bilateral aid. Incidentally, bilateral aid has been cut back this year.

Mr. Cullen

Sadly.

Mr. J. Bruton

I am not going to get involved in that in a debate about export credit insurance. Have the Government used any leverage in regard to this? Is the money due from public sources or private sources? Do those governments have any influence over those who owe money to our exporters? What diplomatic de-marche has been made with a view to getting the money back? I can understand the problem in regard to Sudan because that country is in the throes of a most unfortunate civil war. I am not certain how effective is the writ of the Government of Sudan in every part of their territory and presumably any money they have is devoted to the civil war. However, that is not the case with Tanzania, a country with which we have had links for a long time. In fact, the President of Tanzania was received here not so long ago. It is regrettable that the country is not paying for goods we have supplied to them. Will the Minister give us some indication of the nature of the goods supplied?

I would like the Minister to give some indication of the type of export contract for which export credit insurance is sought by comparison with other routine exports. We cover in the region of £750 million worth of exports annually and that is quite a small proportion of the total, which is somewhere in the region of 15 times as great. How do those who look for export credit insurance select themselves? What are the criteria which prompt an exporter to go looking for export credit insurance? Is there a particular type of contract or export product for which insurance is sought? How do other exporters cover themselves if they do not avail of this scheme? Do they take out private cover and, if so, is there a need for a Government service at all? If the rest of the export portfolio — the amount we are dealing with is only about one-fifteenth of the total — can be covered by ordinary commercial arrangements, do we need a State scheme? I do not say that in the sense of asking for an abandonment of the scheme but on the basis that every area of activity should be questioned from time to time. I am just questioning this area and perhaps the Minister would give a reply.

How much of this is given in respect of non-EC countries, or is any of it given in respect of EC countries? Are there any Community proposals, draft regulations, directives or even suggestions emanating from the Commission for the introduction of some limitations on competitive granting of export credit facilities by member states, either in intra-Community trade or intra-exports out of the Community? It would appear that in the context of 1992, as the Community moves towards putting a limit on what member states may do in the area of aiding their own industries, since Ireland is one of the poorer countries it would be in Ireland's interest to get the Community to set rather strict limits on what sort of export credit insurance may be granted. Take, for example, a fight over a contract, where a German and an Irish exporter are both getting export credit insurance from their respective Governments. If the terms are approved by the Germans, in the final analysis we cannot go as far as they can because our purse is not as big as theirs. It seems to be sensible therefore from an Irish point of view for us to try to get the Community to establish norms and limits, just as it would be sensible for us to get the Community to set rules in regard to capital grants for industry. If the Community were to establish a rule that no member state may give any grants for industry that would suit us, because we are not able to compete with the bigger countries in that sort of area. It would certainly suit us in the area of export credit insurance. I would ask the Minister to indicate his policy in that regard or whether he has had any discussions on it with his colleagues.

Mr. Cullen

I liked the tone of the Minister's speech. I agree with him in underlining that what is a very important prerequisite for our economic recovery and the potential it offers in the future is an expansion in exports. Any scheme that helps to further our exports should be encouraged. I also agree that this type of scheme is not some sort of luxury. In the main it is self-financing. In that regard it is very important that this scheme be maintained and indeed it is obviously necessary to expand it. I take it from the Minister that the reason for his need to expand the aggregate amount from £300 million, as I understand it is at present, to £500 million is due to the volume on hands generally at present in the export area. If this is the case it is to be welcomed. Our activities in the export markets are improving and that is also to be welcomed.

The Minister has identified a number of countries which are the major problem areas at present in relation to the deficit. Deputy Bruton referred to that, but I do not know if he asked the Minister have we stopped dealing with these countries because they have been unable to repay their debts. Perhaps the Minister would clarify if these debts are due to foreign currency problems within those countries. I would like an answer on each individual country and whether or not we will continue to deal with them. In the context of the debt which the Minister has indentified, what portion of it is owed by Nigeria? Are they the main culprits in this whole area or are they of equal culpability with the other countries which he has mentioned? The Nigerian situation is a bugbear in this area. As Deputy Bruton has said, we seem to be discussing possible oil deals and so on with this country at present. It seems a contradiction that we have been unable over a period of time to get them to repay their debt and on the other hand that we are prepared to do business with them. I agree that this matter must be considered.

The Minister spoke about short term facilities not being taken up as much as he would like to see them taken up. Obviously, there is some fault somewhere along the line, either with the exporters or with the Department and ICI. Exporters should be made aware of this scheme so that they could avail of it. The Minister is right when he says that it is the small companies who would probably never be able to operate in the export market area who would be involved, particularly as most of the countries for which this scheme is used are countries which are not in Europe but in Africa and South America, which are great distances from us. The Minister has said that he is reviewing this matter and is looking into how the message will be spread. I would like him to elaborate on what the Department intend to do in this regard. Will they take a more public profile in promoting the scheme?

The Minister has listed a number of countries. Are there any other countries that he has not listed in his speech that are defaulters in this area and, if so, would he identify them? Will he say if all of these countries are classed as Third World developing countries or are there other countries who are for some reason not in a position to repay their debts? Many of the problems that arise are not the fault of the civil servants involved but of the precedent of bureaucracy that has grown in getting proper access to schemes and being able to expedite them. Deputy Bruton has rightly identified the problems that we may be faced with in the context of the single market. I agree with him that that should be looked at with regard to limits, because our purse is certainly not as deep or as wide as that of other EC countries. In this whole area of operation we must be absolutely sure that we will not be put at a disadvantage vis-à-. vis the other countries in Europe. That is very important in the context of the single market. Ireland is a very open economy, the most open economy in the European Communities. That poses problems but it also brings great benefits. The export area is essential and crucial in the overall development of our industrial base.

I would like to ask the Minister is there a pattern in the type of companies who seek this insurance and, if so, could he identify what it is. Have they done any analysis as to why it pertains to particular apsects of industry? If it constantly pertains to a particular area, have the Department examined the reason for that?

The trading house development is very much in its infancy in Ireland and is being held out by the Government as offering great things for the future. The potential may or may not be there. The Minister and in particular the Minister of State with responsibility for trade and marketing have mentioned the trading houses. Those involved in the trading houses should be made aware of this scheme. The trading houses could be used as a forum for selling the scheme to the people who are using them. They are the operators, the business people in the market place who can see the benefits. This is an opportunity for a selling vehicle and it would, of course, increase the premium income for the Department and the ICI. That is one of the ways it could be looked at.

The reason for discussing this Bill this evening is that there must be a knock-on effect in creating jobs. The biggest curse in the country today is that we are not creating the jobs to match our exports. I know this may be difficult, but are there any criteria set down for the companies applying under these schemes? Is there any way we can ensure that these companies will be able to provide an increase in employment? This should be looked at. If it has not been looked at, I would like to see the Department try to link the two together. There must be criteria which would relate benefits under this scheme directly to employment. I do not want to say the figures are fictitious. The value and volume of our exports do not relate to real employment on the ground. That is a tragedy. I realise the Department are conscious of employment needs but they should be to the fore in trying to operate this type of scheme.

The Progressive Democrats have no objection in principle to this Bill. The Minister said these provisions are common to other countries, but in the years ahead we should be very careful in the market place that we are not put at a disadvantage when compared with other countries. The Minister has identified that the banks are not prepared to share the risk. This is a serious problem which, instead of getting better, is getting worse. In some ways they are maintaining a very hard view on what is a risk, almost to the point that when they get involved there is practically no risk. We all know there is a great deal of money available in this country for viable propositions which would create exports and employment. I would like to see the banks get involved in a more positive way in risk taking. It would be a good partnership between the public and private sectors. I am not one of those who sees the private sector as the saviour of all. There are many opportunities for co-operation between the public and private sectors. This point is well worth reiterating. I hope the Minister will be able to achieve progress in this area which would be of great benefit in unlocking a great deal of capital.

The Bill is short, we welcome it and I await the Minister's reply.

Minister for Industry and Commerce (Mr. Reynolds)

I thank Deputies for contributing to this debate. They raised some very interesting questions and made very interesting remarks. I join with Deputy Bruton in paying tribute to our exporters, the people who spend most of their time away from home, sometimes in not the best hotels because in many developing countries good hotels are not available. These people have to face many problems and, like them, I experienced those problems at first hand. There is no question about it, they are the heroes of this country. We need their business, we need jobs and these people should be recognised for their great input, even though there have been many upheavals in their families as a result of their work abroad.

This is a very good scheme. I looked at it soon after coming into office. The fact that there was a deficit of that size prompted me to look at it immediately to see what was going wrong. I looked at each country where debts were not being recovered. I looked at the amount of business written off since 1971 and the fact that there was only .28 per cent of a loss struck me as being a good case for a private sector insurance company, or something like that. We are pursuing that line, but we have not had any positive responses yet. When one looks at other countries one sees the state is involved everywhere but that does not mean we have to stay involved.

We are off-cover in Nigeria, the Sudan, Argentina and Sierra Leone. We came off cover in Nigeria in 1987 and in the other countries as well. I was asked what kind of debts there were. In some countries, like Nigeria, there is money due from private companies or tribes or chiefs, who claim they have the money in local currency, lodged in their central bank but because of the shortage of foreign exchange currencies we have to queue up for our money. We queued for a while and then decided to re-schedule the debts, underwritten by the Central Bank, to ensure that we would get our money over a period of years. Most people will be familiar with having to queue to buy foreign currency in some of the developing countries. As I said, we re-scheduled those loans where we could, and we are doing the same in Argentina.

The Sudan is in very bad shape. The question of linking it to our international aid is a separate issue. I know that in business one thinks if one were paying money in one direction one could take it back, but I do not think the House would be in favour of that type of approach to the Sudan. It would not be my approach and we are not into that kind of activity.

There is certainly a link between jobs and the scheme. If some small or medium sized companies were to incur very big debts in another country it could lead to the collapse of these companies. If they could increase their exports it could lead to more jobs, but if they had too many bad debts the companies might close. I was asked what kind of companies are covered by the scheme. The scheme is open to all sectors of industry. It is a question of what the customer wants. There are many reasons a company apply under this scheme. If a small or medium sized company are going into a foreign market for the first time, they may feel they need the comfort of the scheme behind them while they are getting to know their buyers and seeing what their paying record is like. Rather than take the risk, they pay their premium, ICI check them out and the Irish company feel more comfortable. Some companies only take insurance cover for the first time and forget it for every other trip because it is an added cost. In developing countries, particularly in the Far East, there is always the possibility of political upheaval, the political climate might not be as stable as it is here, and the companies might feel they would need cover when doing business in those areas. The matter of getting money out of certain developing countries is a risk. They might have to wait such a long time that cash flow would be affected. We do not seem to provide much insurance cover within the EC or OECD areas, although it is available to them.

We do not export capital goods to any great extent. Some OECD countries provide aids and grants in addition to the agreed interest subsidy. There is no divergence in regard to the agreed interest subsidy but there is divergence in grants and subsidies. This would certainly hit us if we were engaged in the export of capital goods. The stronger countries get stronger in relation to capital goods exports and the weaker get weaker because they cannot afford to meet the terms asked for them. It is an ideal subject to be tackled by the Community as we approach 1992. Other countries have more at stake in the capital goods area but we will be pursuing it on the basis that it distorts competition.

I have already dealt with Sudan and Tanzania. The prospects of recovery from those areas are slim. With regard to Nigeria, the debts have been rescheduled and underwritten by the central banks there. A major case involving £6 million in the US has been the subject of investigation from many angles. We may get some recovery from it. The figure of £6 million puts the whole deficit into context. Half of it relates to a specific customer in a specific area.

The meat market use it fairly extensively in certain countries. They do not use it as much in other countries where they have long-term associations. Small pharmaceutical companies use it fairly extensively in dealing with developing countries, usually in relation to small orders for markets with which they are not very familiar. It helps them to become established over several years and sometimes they then withdraw.

I would certainly agree with Deputy Cullen about the banks playing a greater role. For too long the banks have been relying on fixed assets, whereas the future of this country has to depend on increased exports. Two out of every three jobs here depend on exports. I have been pushing the idea with the banks and will continue to do so. I should like to see the banks become more actively involved on a "share the risk, share the reward" basis. They should gear themselves to making a judgment as to whether a product will be successful and companies will be only too happy to share the reward with them.

I thank Deputies who have contributed. I have covered most of the points they raised.

Question put and agreed to.