§ 5.8 a.m.
§ Miss Betty Boothroyd (West Bromwich, West)
I wish to raise with the Minister the question of non-tariff barriers to exports, and I do so under Clause IV, Vote 9, for which his Department has responsibility. I raise the matter perhaps in a somewhat parochial fashion because I represent a part of the West Midlands which is often known as the workshop or the power house of British industry, and in times of recession the country tends to look to that region to generate steam which pulls us out of the mire. It is a tall order, but I know that those people working in the foundries and factories of the Black Country can produce the goods, and what I seek to ensure is that what they manufacture is sold abroad and their products are not met with unfair trading barriers, and that by fair trading their jobs are preserved and industrial activity is stimulated.
What I have to say in the dawn hours of this morning is designed to examine a rather narrow though profoundly important aspect of trade—that relating to trade in electric lamps and lighting equipment. The other side of the coin concerns the brass foundry industry, dealing with taps, stopcocks, valves, joints, sink taps and mixers, all of which I shall refer to as water fittings.
563 Although they have a national dimension, both these sectors of manufacture have a firm base in the West Midlands. They produce first-class equipment. Both experience difficulties in their export trade, which seem to stem largely from the non-acceptability of standards, marking schemes and certifications which relate to standards. For instance, with water fittings problems seem to arise because there is no uniformity whatever in the test requirements specified by the test houses of various countries.
Each test house has its own set of requirements which has been developed over the years. Even if we were to take what one might describe as the "major" countries, special individual requirements exist which do not seem to obtain elsewhere. The French demand detailed standards involving both dimensional and endurance test requirements. In fact, the latest innovation of the German test house is an acoustic one, which requires a maximum noise level. Apparently, so far as I can make out, it has become mandatory. In spite of Germany's being a member of the Community, this seems to have been introduced unilaterally. It is undoubtedly a barrier to trade. Perhaps my hon. Friend can indicate what consultations, if any, took place before its introduction and what consultations are now taking place relating to acoustic requirements.
Sweden is not a member of the Community, but it makes its own special demands which impose a requirement for what is called "dezincification resistance". It means that products have to be made of materials which pass the special test. Although the test is not considered to be particularly comprehensive by many authorities, including the British Non-Ferrous Metals Technology Centre, it is a mandatory requirement. Perhaps the Minister can indicate how it was possible to introduce such a technical barrier without multilateral agreement.
The Netherlands operates a most detailed specification for water and pipe fittings. In fact, the Dutch allow a flow of only 2,000 litres an hour, whereas most taps give a flow of 6,000 litres an hour. But the Dutch have the most fantastic set of demands and dimensions, which are far too numerous and complex to mention. In addition, plumbers in Holland 564 are required to be registered. Additional restrictions are also imposed, because the Dutch will fit only products which have the accolade of their own country's test houses. In fact, the Dutch are not on their own in this. Other countries require registration for the very same reason, while in others water authorities will not connect the supply of fittings which do not carry the approval of their own national test houses.
In contrast, the Institute of Plumbers in this country has sought to secure registration, but without success. There can be no doubt that the present arrangements are working to the disadvantage of United Kingdom manufacturers, because of the nitty-gritty demands of minute measurements, performance requirements, pressure resistance and flow characteristics. It is these requirements which are proving to be barriers to trade. Because of them, the number of acceptances of British fittings by overseas test houses has been small. Therefore, our trade and employment levels suffer.
I now turn to the other side of the coin, that which concerns imports and the very easy access they have to the United Kingdom market. My hon. Friend will correct me if I am wrong, but I believe that foreign manufacturers do not have to submit their products to the National Water Council for approval. This may well be because the Council does not require performance or quality standards. In fact, it requires very little. It bases its requirements on the 1973 Water Act, which simply asks that fittings comply with regulations and byelaws, that they do not waste water, that they prevent the misuse of water and that they do not contaminate water. It is a very simple requirement indeed, and nothing else is demanded.
Other factors such as I have outlined and which other countries demand are not considered. Matters relating to consumer satisfaction are not part of the approval test. Therefore, it is easy for imports to be given an accolade, even though they may not perform satisfactorily. What appears to be needed is a greater degree of harmony in international testing requirements. I shall be glad to hear of any consultations that are taking place or any plans my hon. Friend may have, particularly within the Community, to 565 recommend the harmonisation of testing requirements. This should be on a mandatory basis.
A couple of years ago the industry pressed for more detailed information on import penetration, but little information is available of the actual volume of imports because of the generalised product coding. However, new statistical descriptions have been in operation from the beginning of this year, I believe, and this might provide us with evidence to enable us to mount a disclosure of import information exercise. It is a mammoth task and the industry has to produce a very strong case before the exercise is given the go-ahead. I hope that the Minister will use his very best endeavours to ensure that unnecessary procedures and consultations do not stand in the way of an exercise which, even if it is authorised, will involve many months of investigation before it produces results.
In contrast to this, the electric lighting industry knows the degree of lamp imports into the United Kingdom. I am now talking about what is known as the popular types—in general, those used for automobiles and lighting service tungsten lamps. In 1972, lamp imports represented 13 per cent. of the total British market. That figure has increased by more than 100 per cent. in just over five years. For the 12 months to May of this year, imports represented 29 per cent. of the total United Kingdom market. For automobile lamps, in 1972 imports comprised about 13 per cent. of the market, whereas they have now captured a large slice and represent 43 per cent. of the total British market. I am sure that my hon. Friend will agree that by any standards this represents a very stunning penetration.
It is worth making the point that imports comprise a limited range of lamps of popular standard type. The development costs of this type of lamp are not as high as with the more technically advanced luminaire, yet the British industry has to meet the demands for the more sophisticated luminaires for key industries, for hospitals, for television optical uses, and so on. The high development cost of the more sophisticated product is to a very considerable extent balanced by the financial turnover of the standard type of lamp. So, while it is the less costly end of the market that is 566 being eroded by imports, it also threatens the survival of the technically advanced sector.
The employment picture is dreary, too. This has been affected by increased imports, and in recent years over 2,500 people have lost their jobs. This can be seen from the high penetration of automobile lamps, which has had a profound effect on employment in this sector alone, where there has been a drastic reduction in the labour force of 25 per cent.
There are technical barriers as numerous as the famous "57 varieties". Again, independent certification of the product is required by various countries, which have individual requirements. Although in some cases certification is not mandatory, it has developed traditionally and has become part of the procedure required for exports from the United Kingdom. In the United States major purchasers and Government departments will buy only equipment that has been approved by their own independent authority. Germany insists on a standard mark known as VDE and, although it is not mandatory, it has become a necessity and British products exported to Germany and other countries in Europe, notably in Scandinavia, must first obtain this mark. Perhaps my hon. Friend will indicate how it has been possible for the VDE mark to gain such enormous strength throughout Western Europe.
In France a good deal of Government finance is provided for its industries and public services, but that money is not forthcoming unless equipment is certified by the French independent standards authority. So the tale goes on. It ranges over many countries where British exports face restrictions and conditions. However, imported lamps into Britain have no restrictions placed on them and there are no requirements for lamps to conform to any quality standard.
That open situation means that electric lamps are being brought into the United Kingdom in increasing quantities. An export exercise has provided sufficient information for a case to be presented to the European Commission's dumping committee. The evidence suggests a threat to jobs because of the large penetration of cheap imports from Eastern Europe, especially Poland and Hungary. I hope that my hon. Friend will comment 567 on the negotiations or will inform us when a decision may be expected.
There exist a number of bilateral and multilateral schemes of varying degrees of formality and status that involve the acceptance of standards, but there is no statutory agreement in operation between countries. Obligations exist, but these are not binding. It is essential that attention be given to this area of market inequality if we are to continue with viable industries.
As for luminaires, the immediate need is to obtain a wider acceptance of the authority of the British Standards Institution and its marking.
Finally, in the two sectors that I have mentioned there is a great need for the harmonisation of standards and testing requirements both within the EEC and internationally. What is more, I suggest that standard markings and testing requirements should not be left to the whims and fancies of voluntary acceptance but should be made mandatory. Harmonisation is often spoken of jokingly and regarded with cynical amusement. There is nothing amusing about a lack of harmonisation that reduces Britain's industrial activity and puts men and women out of work.
I hope that my hon. Friend will consider these maters seriously and that his response will be not only illuminating but constructive and offering some hope.
§ 5.23 a.m.
§ The Under-Secretary of State for Trade (Mr. Michael Meacher)
My hon. Friend the Member for West Bromwich, West (Miss Boothroyd) raised a serious and important issue regarding the harmonisation of standards and testing requirements as a means of eliminating barriers to trade that can act against the interests of the United Kingdom. I am grateful to her for raising the issue.
There is a constituency interest, as my hon. Friend has in her constituency a company that is a maker of water fittings. I am aware that one of its plants in an adjacent constituency has recently closed. That indicates the relevance of the points that she has been making. I appreciate her anxiety that one of the reasons for the closure—cheap imports—should not force any other closures in the group or within the industry.
568 My hon. Friend raised two central industrial issues concerning water fittings and electric lamps. Her arguments apply in other areas. There are two main probblems facing the water fittings industry, both of which were brought out when my hon. Friend met the Under-Secretary of State for Industry as part of a delegation concerned with the plant closure.
The problem of cheap imports is closely tied up with the second main problem, that of non-tariff barriers. Until now this relatively small sector of the industry has not had adequate statistical information to assess import penetration and the overall trade balance. However, as my hon. Friend said, from 1st January there has been a separate tariff heading to cover bath and sink taps and mixers. I hope that that will be of help to the industry in assessing the extent of the problems that are facing it. We do not have sales figures for later than 1977 for the last six months of which the figures show sales of bath and basin taps and mixers of about £15.3 million. Imports for the first five months of 1978 were about £1.7 million and exports over the same period were £.1.2 million. However, we cannot yet produce a figure for import penetration.
I understand that officials of the Department of Industry have been in touch with the trade association to advise it on how to use the provisions in the Finance Act 1967—I refer to the section 3 procedure—to seek more information on the origin and type of imports. We know that Italy accounted for about 48 per cent. of this year's imports, that Germany provided 26 per cent., Portugal 8 per cent., and France 6 per cent. I believe that a secure basis of fact is essential to an understanding of this kind of situation, and we now have the prospect of more reliable and relevant information on this matter.
I turn to the main question of non-tariff barriers. This is a product area where, as in many other cases, potential exporters face different technical standards for their products and in many countries use of these is mandatory. That is a relatively uncommon situation in the United Kingdom. Standards in the United Kingdom are mandatory only for such things as seat belts, crash helmets and electric blankets, and they have implications for trade.
569 As for water fittings, the United Kingdom system is completely different from that of much of Europe. We have a low pressure water system in our houses fed from roof tanks. Only the kitchen tap can be on mains pressure. However, Europe has high pressure water systems. Therefore, from the very beginning potential exporters certainly face a major barrier in the United Kingdom.
Coming down to the detail of regulations in Germany and the United Kingdom, I understand that there is some similarity in what is required, acoustic tests apart. In both countries it is illegal to fit non-approved appliances to the water system, but in the United Kingdom it is not illegal to sell such non-approved appliances. Consumers in the United Kingdom seem to be less interested in the kind of appliances that are fitted. That may be a matter for regret, but it seems to be a fact.
A tap designed for a Continental high pressure system which produces a much lower flow rate than a United Kingdom tap is probably acceptable to the consumer, who probably has only to turn it on rather more. Thus, a different pressure system does not provide as effective a barrier to imports as it does to our exports. That was the point made by my hon. Friend.
As for the United Kingdom requirements, only fittings approved by the National Water Council may be installed. But the regulations, as they are at present, require only no contamination and no waste. They say nothing about performance or flow rate.
I understand that the manufacturers and the trade association are in touch with the National Water Council and the Department of the Environment about whether the requirements can be modified. That was the central question raised by my hon. Friend. We shall have to await the results of the discussions among the manufacturers, the trade association, the National Water Council and the Department of the Environment.
When it comes down to what member States, such as Germany, can do by way of introducing non-tariff barriers, it is worth spelling it out in detail. Basically, the Treaty of Rome prohibits the introduction of measures having an effect equivalent to quantitative restrictions. Fol- 570 lowing various cases in the European Court, the Commission will regard as prohibited all measures which could directly or indirectly, actually or potentially, harm intra-Community trade. Such measures would include laws, regulations, administrative practices and similar things done by or attributable to a public authority.
My hon. Friend mentioned the German requirement for acoustic noise levels in taps. This is one area in which noise levels are being specified for products. My hon. Friend asked what consultations had taken place before noise levels were introduced. I cannot answer that question now, but I shall try to find out the answer.
I understand that France also wants to see noise standards on equipment in the domestic environment generally, and work is being considered on the water requirements of domestic appliances. If, through the good offices of my hon. Friend, the industry can let us have more details of the German acoustic requirements, about which my Department is not well briefed, we shall certainly consider taking the matter up with the Germans and with the Commission.
My hon. Friend also mentioned dezincification, which is operated by the Swedes. As they are not members of the EEC, the Swedes are not subject to the same strict rules as are the Germans and hence they could introduce such a requirement without having the detailed consultations that would be required in the EEC. We are prepared to take up their technical requirements with them if there is evidence of their being applied in a discriminatory way against our exporters.
Our concern is for these different technical standards to be modified in order to improve our trade balance. My hon. Friend urged harmonisation so that our exporters were not penalised. We shall support any moves by the Department of the Environment to tighten up enforcement in this area.
I agree that the non-tariff barrier problems are similar in the electric lamp industry, although the pattern of trade is different. I accept what my hon. Friend said about the deteriorating import figures and the employment effects. Import penetration figures are high and have been growing. My hon. Friend referred 571 to the 13 per cent. import penetration of five years ago now having reached 29 per cent. I assume that she was referring to discharge lamps. There are other categories where import penetration has doubled. The import penetration rate in filament lamps increased from 7 per cent. in 1973 to 14 per cent. in 1977. The figures for vehicle bulbs are even more serious. There was an increase from 26 per cent. in 1973—a high figure even then—to 57½ per cent. in 1977. My hon. Friend's figures are not the most drastic.
I agree with my hon. Friend that the solution lies in technical harmonisation within Europe. She will know that there is already a substantial programme of harmonisation of standards and progress is being made all the time.
With the system of type approval for cars—the ECE system—new cars have to be fitted with ECE standard bulbs, but unfortunately there is no requirement for replacement bulbs to be of the same standard and import penetration is high in the replacement bulb market, with most imports coming from Hungary and other major sources including Hong Kong and Taiwan.
I gather that the industry has been pressing for it to be made a condition of the MOT test that bulbs should conform to the ECE standard, but the Department of Transport regards this as impractical. Like us, my hon. Friend may take this up directly with the Secretary of State for Transport, but bulbs from Hungary are of a high standard, contrary to what is sometimes said, and the effect of such a condition might not be as great as may be expected.
As for other categories of bulbs, the ordinary filament bulbs, the so-called GLS lamps, are the subject of an antidumping application by the European industry which is strongly supported by our industry through the Lighting Industry Federation. I understand that the Commission has asked member States to let it have their views on the application. An investigation is certainly something to which we shall give strong support.
It is interesting to note that the Eastern European bulbs that are the subject of an anti-dumping application have a much higher import penetration in other member States than in the United Kingdom, 572 where the figure is currently only about 1 per cent. of the market for GLS bulbs. It may therefore be that the effects of lack of technical harmonisation are not by any means confined to the United Kingdom and that other States also have an interest in achieving this harmonisation.
As I have said, my hon. Friend raised a very important issue which bears strongly on the trade potential of these two industries, which are important not only in the Midlands. The two cases that she raised are only two specific instances of a problem that is much more widespread. Its importance was recognised particularly in the Warner report on standards, which was recently completed. The recommendations in that report are being actively pursued by the Government.
I agree with my hon. Friend that it is particularly important to see that the importance of standards in exports is fully understood and that in our approach to international harmonisation we give priority to the balance of trading advantages. I think that my hon. Friend made a very detailed speech, which contained a great deal of evidence which we shall want to examine. I am certainly grateful for the evidence that she has collected. I give her the assurance that we shall certainly follow up her recommendations vigorously.