§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Morrison].
§ 1.39 p.m.
§ The Minister of State, Department of Trade (Mr. Cecil Parkinson)
Yesterday, the OPEC Ministers took the decision to put up the price of oil. Today, in Tokyo, my right hon. Friend the Prime Minister and the other leaders of the West will be discussing ways of dealing with the energy crisis and other pressures on the world economy.
One of the dangers facing the West is that the OPEC decision will give a new impetus to those who see protectionism as an answer to our problems. It is against this background that we are today discussing the outcome of the Tokyo round of the multilateral trade negotiations, one of the main barriers to protectionism.
As the House will know, this latest round of multilateral trade negotiations, as they affect the United Kingdom, was launched by my right hon. Friend the Member for Worcester (Mr. Walker), now Minister of Agriculture, Fisheries and Food, in 1973 when he was Secretary of State for Trade and Industry. The negotiations took a very long time to get started seriously, and even after the necessary United States legislation had been passed at the beginning of 1975, serious negotiations had to await the outcome of the United States presidential elections and the appointment by the new President—President Carter—of Ambassador Robert Strauss as his special trade negotiator. Unlike some international negotiations which have been in the doldrums and have subsequently foundered, however, these have been brought to a successful and worthwhile conclusion.
The Commission, negotiating on behalf of the countries of the EEC and the other negotiators—largely from developed countries—initialled agreements on most of the subjects that had been under discussion in the multilateral trade negotiations in Geneva on 12 April of this year.
Many developing countries are currently considering whether to accede to some or all of the agreements. The 833 Government earnestly hope that they will feel able to do so. That was the course I urged on them at UNCTAD and during my subsequent trip to the ASEAN area. I understand their feelings that they were to some extent "bounced" in the later stages of the negotiations. It is true that the need to get the agreements ready for the United States Congress to consider them this summer did not permit the more thorough negotiation that would have been desirable.
I explained to the Ministers of a number of countries whom I met in Manila that the multilateral trade negotiations were not a charter for protectionism, as some of them saw them, but were, rather, a vital weapon in the armoury of the Governments of the Western countries that should enable them to resist protectionism. I found that many Ministers representing rather less democratic countries than ours find it hard to understand that the impetus for protectionism in a country such as ours does not come from the Government. It is a pressure which comes from the people and which Government are resisting.
The agreements are important, but how they are put into practice and how they will work is just as important. In evolving the necessary codes of practice and the new techniques that will be necessary if we are to implement the multilateral trade negotiations, the developing countries can play, in our view, a most important part.
I shall not attempt now to expound the detailed provisions of the agreements. Anyone who has examined those texts, which have been made available to the House, will see that they are very complicated. The texts are being finalised. Once they are in their final form, the Government will have them printed and laid before Parliament in the usual way. My Department has prepared for this debate a background paper which tries to set out the points which we consider are of real economic and political importance. I hope that those interested will have been able to have had a look at them.
Looking round at the rather less than crowded House, I was tempted to come to the conclusion that many Members, having looked at the paper, had decided that it was not a subject for them and had been frightened away. That was not the 834 Government's intention in putting that paper in the Vote Office.
Before I turn to the general intent of the agreements, I shall say something about their importance in rather more general terms. The Tokyo round negotiations were launched before the oil crisis—and by that I mean not the 1979 oil crisis but the 1973–74 oil crisis—so many of the objectives that Ministers set themselves in Tokyo proved incapable of complete fulfilment in the light of the recession that followed the oil price increase in the middle of the 1970s.
That recession and the rise in unemployment in the developed world naturally led to considerable protectionist pressures in many developed countries—mainly from industries that found themselves in difficulties. It has been the general consensus amongst the leaders of the Western world, at their successive economic summits since 1975, that it would be disastrous to give way to such pressures, and that the route of protectionism is not one that it would be wise for the Western world to follow. That does not alter the fact that there can scarcely ever have been a time when it seemed less appropriate to be discussing the liberalisation of trade than during what has proved to be a prolonged and very stubborn recession.
It is against that background that I pay tribute—I hope that it will not embarrass him too much—to the right hon. Member for Lanarkshire, North (Mr. Smith) and to his predecessor, Mr. Edmund Dell. This was their attitude, in direct contrast to the policy advocated by some of their hon. Friends, who argued strongly in favour of a protective wall of import controls behind which British industry was supposed to revive itself through increased demand.
Apart from the fact that adopting generalised controls is a policy closed to us by our international obligations and our membership of the EEC, and would almost certainly provoke retaliation, I do not believe that the removal of the stimulus of overseas competition would assist in improving domestic industrial efficiency. The fact that the consumer has a choice and is prepared to use it if British companies do not provide what he wants when he wants it at a price that he is prepared to pay, is the best spur that British industry has to increase its competitiveness and productivity.
835 The fact that multilateral trade negotiations were going on and creating a real prospect of a further step towards the liberalisation of world trade and better and more up-to-date rules for it, and for the settlement of disputes about it, has been an important element in enabling Governments to resist the pressure for piecemeal protection.
If the negotiations had failed—and at times an outcome as successful as the one that has been achieved seemed very far from a foregone conclusion—there were real grounds for fears that the alternative would have been steadily increasing protectionist actions by Governments. That the negotiations succeeded was due very largely to the contribution from the United States side and, in particular, from Ambassador Strauss. Many people regard his appointment by President Carter as the special trade negotiator as probably the main turning point of the negotiations.
I also pay a compliment to those who have negotiated on behalf of the EEC and those unsung heroes, the officials of the Department of Trade, who played a very substantial part in keeping the negotiations moving.
I now touch on the most important elements of the package agreed. Industrial tariffs are to be cut by somewhat under a third over a period of eight years. That average naturally conceals considerably different tariff bargains between the main negotiating partners. The most far-reaching is probably the bargain between the EEC and the United States, with clearly balanced cuts of about 30 per cent. on each side, where the cutting process was pursued as far as the negotiators judged practically possible. The outcome of the negotiation with Japan, with cuts on applied tariffs of 25 per cent. on their part and 20 per cent. on the Community's part, was a little disappointing.
The industrial tariff cuts offered by Australia and New Zealand to the Community are relatively modest, but they reflect the fact that the reciprocal concessions by the Community had to be found, and that they were found with some difficulty in the agriculture sector. I shall return to that aspect of the negotiations later.
§ Mr. Bob Cryer (Keighley)
The right hon. Gentleman mentioned earlier the fact that his Department had produced a background paper on this subject. He claimed that it had been laid in the Vote Office. That background paper is not available in the Vote Office or the Library. The negotiations are complicated and important and we are here because we are interested in them. The papers will be a useful guide. Perhaps the hon. Gentleman will find out what has happened to them.
§ Mr. Parkinson
I thank the hon. Gentleman for that information. I approved the paper over the weekend, thought it was an excellent idea, and gave instructions for it to be placed in the Vote Office. I am sorry that that has not happened and that I am the only hon. Member present who has seen a copy, but the hon. Gentleman will see that action is being taken at this moment.
We do not believe that the extent of the current cuts that have emerged from this round of the GATT negotiations will damage United Kingdom industry. Certain industrial sectors were unhappy at the extent of the tariff concessions that the Commission made to the United States. In the context of the tariff package as a whole, and with the various safeguards for the textile and paper industries decided upon by the EEC Council of Ministers on 3 April, the Government believe that it is one that the EEC Council of Ministers should in due course formally accept and implement.
It would not be wise to judge this round of renegotiations purely on the basis of the size of the tariff cuts. The Tokyo round of cuts is worth while, but the negotiations were not principally about the cutting of tariffs; they were about the removal, as far as possible, of the proliferation of non-tariff barriers to trade that have evolved in recent years. The main aim of the Tokyo negotiations was nothing less than to clean up the rules of the world trading system.
The agreements on non-tariff barriers in the MTN package are not castles in the air but real attempts to overcome the practical difficulties that face exporters and hence promote trade. If exports are to develop and international trade to thrive, exporters need to be able to predict the total charges to which their goods 837 will be liable before reaching the customers. They want to know not just the rate of duty that will normally be charged but such things as the basis on which the duty is calculated—that is, the basis of customs valuation—whether antidumping or countervailing duties are likely to be imposed, what technical regulations or standards have to be met and what conditions exist for bidding for foreign Government contracts. The agreements tackle these four major problems.
The non-tariff agreements provide a better framework for international trade and greater transparency and openness. We have not been able to get all that we wanted. In negotiations of that kind it would be ideal to impose obligations on others and leave ourselves free of any, but I believe that experience of the working of these agreements will in time show that we have struck a fairly well-balanced bargain.
Disparate methods of customs valuation in different countries have in some instances led to arbitrary and aggressive valuation to raise revenue or protect domestic industry. The danger of the extended use of such valuation practices in order to compensate for the lowering of ad valorem custom duties in the current round added impetus to the search for a system of valuation that would meet with universal acceptance. It was not possible in the negotiations to win everyone round to the system currently used by the Community—the Brussels definition of value. A new system has evolved based in the main on the price paid or payable.
The code has what is described as a hierarchy of secondary methods for use only if in well-defined circumstances it has not proved possible to use the primary method. The 1968 anti-dumping code has been updated without major changes to bring it into line with the subsidies and countervailing duties agreement. In the Community anti-dumping investigations are carried out by the Commission, but my Department maintains a unit to help United Kingdom industry with cases and with its search for amendments to the code. The present arrangements cannot significantly be improved, although my right hon. Friend and I are going to Brussels on 10 July and will be examining the way in which, in practice, the anti-dumping arrangements within the 838 EEC work and seeking improvements. In the main they are working reasonably well.
In the subsidies and countervailing code, the United States has accepted important GATT obligations that were previously excluded by United States legislation which predated the GATT. In return, there has been a tightening up of the GATT rules on subsidies that affect other countries as well as the United States. There is no fundamental change in existing GATT provisions, but the code spells them out and provides new dispute-settlement machinery. Existing export assistance schemes, such as the Export Credits Guarantee Department and the British Overseas Trade Board, should not be affected.
The United States practice on countervailing duties is of such importance to the exports of some individual sectors that I must say more about that. Schemes of assistance to industry similar to our own, including regional assistance, are operated widely in the developed world, including the United States. Our schemes are not intended to have a direct effect on international trade or to give special advantages to our industry through subsidy; they are intended to compensate for geographical and historical disadvantages.
Our industrial support policies are in the process of being reviewed and are likely to be reduced in scope and scale. Whatever decisions the Government may take about industrial support, United States competitors may regard them as contributing to unfair competition. If United States industries think that imports into their market are causing material injury they may well apply for countervailing duties to be imposed. The precise impact of the United States legislation to implement the MTN agreement will not be clear for some time. We attach a great deal of importance to uniform application of the code by all the main parties of the negotiations.
Exporters who are worried about countervailing duties—particularly those hoping to expand their sales in the United States markets—should keep closely in touch with my Department, which will be monitoring the legislation as it goes through Congress and the Senate and as 839 it finally arrives on the United States statute book.
United Kingdom exporters constantly complain, often with every justification, that foreign technical regulations and standards are used as barriers to trade to protect domestic industry. The new agreement concentrates on the principle of transparency—the publication of proposed new measures so that information is more readily available. Exporters should be more able to identify what barriers there are, and the practice of developing standards systems so that they are a barrier to trade will be outlawed.
The Government procurement code brings in a limited measure of liberalisation for Government purchasing. It thus creates new opportunities for exporters, but it will make some formerly "safe" markets for manufacturers more open to competition, although much of the purchasing concerned has already been liberalised within the EEC. There are important exclusions such as local authorities, most nationalised industries and what are described as warlike stores. The important element is again transparency—more open procedures to prevent "fixing" or covert discrimination.
Another important agreement is on trade in the civil aircraft sector. The key provision is for duty-free trade amongst the signatories in aircraft and parts. Since the EEC has not in practice been able to impose tariffs on civil aviation and civil aircraft since its inception, the advantages to our exporters of negotiating away the United States and Japanese tariffs are obvious. The agreement also contains some generally worded agreements on procurement, offset, and so on, to set a framework for international trade in civil aircraft.
Negotiations are continuing in the framework of the MTNs for an agreement on counterfeit merchandise to tackle the circulation in international trade of goods with forged trade marks. It is important to increase the rate of detection of them whilst not creating new barriers to trade, and to create financial disincentives to those engaged in these criminal practices, which are causing genuine concern and damage to many British firms.
No text has yet been published, but the Government welcome the fact that 840 the main negotiating parties have agreed on the principles of an agreement.
The major aspect of the MTNs which remains unsettled is the negotiations on safeguards. These negotiations largely ceased during the meetings of UNCTAD in Manila but are now restarting in the GATT, so far informally.
The Government are strongly committed to a successful outcome of the negotiations for a revised safeguard clause in the GATT. We said so in our manifesto, and we shall continue to seek a successful conclusion to the negotiations. Our objective is to ensure that when safeguard action is necessary it does not have to be taken against all sources of the goods in question but only those causing difficulties. The shorthand phrase for this concept—there is a great deal of shorthand in this slightly jargon-ridden area—is "selectivity". It seems to the Government that this will cause less and not more disruption to trade, and it is certainly not intended, as some developing countries fear, as a preliminary to the wide and indiscriminate use of safeguard action against their exports.
Selectivity is not the only issue in the negotiations. The United States Government wishes to secure agreement on improved procedures and discipline in the use of the safeguard clause. We are prepared to co-operate in the negotiations for that purpose. Although the earlier stages of the negotiations were marked by a serious resistance to the concept of selectivity, the vast majority of developed countries have recognised the validity of the concept, and the developing countries have been willing to talk about the conditions in which it could be used. The main discussions are about the criteria of selectivity.
The Government are not opposed in principle to tighter criteria—criteria which will have to be met before selective safeguard action can be taken—always provided that, at the end of the day there is a usable selective safeguard. We would not wish to see the negotiations produce something which has a theoretical value but which is so hedged around that it simply cannot be used in practice.
The main areas under discussion on the use of selective safeguard action generally are the criteria which have to 841 be evolved before we can decide just when such action can be taken. Issues which have to be settled include such things as whether a safeguard action should have a specific limited life, the base period which should be used in determining any quota, and whether there should be automatic increases in quota levels during the life of the quota. Additionally, it is proposed to establish a GATT safeguards committee which will have the responsibility of monitoring and reviewing safeguard measures. The extent of the role of that body is still under discussion.
Our approach to all these negotiations is, as the House would expect, a pragmatic one. The outcome that we seek is improved discipline in and surveillance of safeguard action but without rendering it impractical, in a way that, in our opinion some suggestions would do. We have to be able to tackle sudden and massive surges of imports effectively.
This does not mean that the Government are contemplating the daily use of safeguard action. On the contrary, we are committed to the open trading system, and our view is that safeguard action, selective or non-selective, should be taken only when fully justified. But within this framework we feel that selectivity will help to maintain the open trading system by directing safeguard action, when it really is necessary, against the specific problem rather than against all imports of the goods in question, including the traditional and the non-disruptive.
This subject came up over and over again during the UNCTAD conference in Manila. During my visit to the ASEAN countries, I was able to talk to a considerable number of representatives of different countries at the conference. I found that the concern which all of them had was that the selective safeguard would be an overused instrument which would simply be a way for countries which were facing imports that they did not like to stop them. I stressed, as I have tried to stress today, that that was not the way in which we saw the selective safeguard. But I did stress that without it it would be very difficult for the Governments of the developed countries to sell a liberalised trade package to their people, and I underline that again.
§ Mr. Cryer
Was the question of selectivity in any way linked to the social conditions that prevail in some of the countries that produce the exports that affect our position in this country? Did the negotiations involve discussions of a social clause, so that selectivity could be used against a country where there was clear exploitation of workers to the disadvantage of workers in this country?
§ Mr. Parkinson
As I am sure the hon. Gentleman knows, the negotiations are not concluded; they are in the process of being renewed. They have started informally at the GATT, and the impetus to negotiation will be building up over the next few days. The point raised by the hon. Gentleman has not been raised previously with me, and I am sure that it has been noted by those listening to the debate. I certainly take it on board, but I feel that sometimes we get carried a little overboard in our attempts to impose what we consider to be proper working conditions in other countries.
I remember a good example of that. It was when I visited Umtata, in the Transkei. The new Government there told me proudly that they had signed the United Nations declaration on minimum prison standards. The problem was that the United Nations declaration foresaw a standard of living inside gaol of about twice the standard of living of the average citizen of the Transkei, and the Transkei Government therefore found themselves in the difficult position of having to throw people out of gaol and to stop people from trying to break in. That is just a measure of what happens when one tries to impose on countries which are not ready for them standards which might be entirely appropriate in developed Western countries.
§ Mr. Parkinson
About two years ago. I know what my hon. and learned Friend is thinking, but I prefer not to comment.
I turn to the question of agriculture. It may surprise the House to hear that we find the result of the MTNs in this sector particularly welcome. When we took office, the Community had already 843 negotiated deals with an important agricultural context with the United States, Canada and New Zealand, and the Australian deal, agreed a fortnight ago, was already on the stocks. That deal contains a major agricultural element.
The main effect of these agreements is of substantial benefit to the United Kingdom. Under the deal negotiated with the United States, the wine gallon assessment method for taxing imported spirits will be abolished for imports from the Community and the quotas for cheese will be substantially increased. In return, the Community has made concessions over high quality cuts of beef, known as Hilton beef, turkey portions, rice, tobacco and a number of other products. Abolition of wine gallon assessment will mean that after the end of this year United Kingdom whisky and gin distillers will no longer be faced with penal rates of duty on whisky and gin exported in the bottle rather than in bulk. This concession is very welcome and will be especially appreciated in Scotland, as I am sure the right hon. Member for Lanarkshire, North will agree.
The EEC deals with Canada, Australia and New Zealand involve some loosening of the rigid framework that has almost cut out some types of international trade, with the provision of modest but useful quotas in each direction. The important thing about the deals with Australia and New Zealand in particular is not so much the effect that they will have on supplies within the Community—as everyone knows, the Community problem with dairy products is one of over supply rather than shortage—as their effects in securing and expanding trading links between the Community and Australia and New Zealand at a time when there was a real danger that these links would become more and more tenuous. I am glad that our EEC partners were able to recognise the importance to Australia and New Zealand of their agricultural exports, and the need therefore for the Community to find some ways of enabling these exports to be increased.
I remember hearing the excellent speech of the Australian trade negotiator, Mr. Garland, in London towards the end of last year, when he pointed out very effectively that if the EEC continued to adopt such a rigid attitude to imports of 844 agricultural products from Australia, the end result might be that Australia would be forced to sever trading links with us and be driven into a regional trading block, which her Government did not want. I am glad that in the later stages of the negotiations it was proved possible to avoid that danger.
I shall say a few words about the various steps necessary to implement the results of the MTN package. This deals very largely with matters that are subject to Community legislation. Therefore, most of the implementation will be by decisions and regulations made by the EEC Council of Ministers. Subject to satisfactory progress in implementation by others, including the United States Congress, the Commission will make the necessary proposals to the Council for it formally to enter the MTN agreements with the participation of the member States also where necessary, and for the necessary alterations to existing internal arrangements, which will not be widespread. These proposals will be deposited with Parliament and will be available for scrutiny in the normal way. Some of the agreements may need to be designated as "Community treaties" under section 1(3) of the European Communities Act 1972. In that case the Government will introduce the necessary draft orders in the autumn.
The successful outcome of the negotiations can be regarded as particularly important for the United Kingdom in practical terms. We must never forget the degree of our dependence on international trade. In 1978 our exports amounted to almost one-third of our gross domestic product, compared with only 20 per cent. 15 years ago. In that same period exports of manufactured goods have remained a stable proportion—about 80 per cent.—of total exports. Since our imports also amount to about one-third of our GDP, with an increasing proportion—now nearly two-thirds—being manufactures, we must make vigorous use of increased trading opportunities such as those provided by the newly renegotiated MTNs.
To sum up, in trade terms the package will bring advantages to the United Kingdom. There seem to be adequate safeguards for those sectors of our industry that are worried about certain tariff cuts. The package will strengthen the role of 845 the GATT as the institution for the negotiation of new commitments for the promotion and liberalisation of world trade. To enhance its authority as the place for the orderly settlement of disputes about international trade, the Government's conclusion on the MTN package—in this we agree with our predecessors who accepted it at the April meeting of the Council of Ministers—is that it should be endorsed.
I believe that it is very important now, when there is concern about a possible recession, that developed and developing countries do not draw back from reaching final agreement. In times of crisis it is more important than ever that in the world trading system we should operate within a framework of agreed rules and that people trade within those rules. I heartily commend to the House the newly renegotiated package.
§ 2.17 p.m.
§ Mr. John Smith (Lanarkshire, North)
The whole House is grateful to the Minister for his comprehensive report on the outcome of the multilateral trade negotiations. For a country like the United Kingdom, which exports one-third of its gross domestic product and imports about one-third, the rules of international trade are of special importance. It is often forgotten in this country that we export twice as much per head of population as Japan. That is not the popular impression in this country, mainly because the Japanese concentrate so much on certain sectoral areas of activity. These rules of international trade are tremendously important to us as one of the world's most important trading nations.
In approaching any assessment of the result of these negotiations, we must bear in mind the balance between our export interests and the natural concern of some of our domestic industries over the flow of imports. Particularly on tariff negotiations, one must evaluate the potential value of a cut in tariffs—for example, a cut made by the United States—as against the penalty that we have to pay by cutting our own tariffs. This is a matter of considerable debate and dispute in the textile industry, depending to some extent on whether one is concerned with the man-made fibre area or with woollens. On the whole, the tariff cuts are reasonably balanced, with one exception.
846 A great deal of disappointment has been expressed at the offer put forward by the Japanese Government. Unfortunately, that disappointment must remain. While Japan has such a substantial trade imbalance with the EEC, this country and many others, it is incumbent upon the Japanese to take steps to try to reduce the imbalance. One of these steps would be to liberalise their trade much more. They have made offers, but it is widely agreed that they are not yet wide enough. It is very difficult for our exporters, despite the excellent work of the Department of Trade with its specialised unit on Japan, to break into what is in many ways a closed market. This market is sometimes defended by custom and national attitude as much as by a particular tariff or non-tariff barrier. I think that we should agree that Japan has not made a significant enough contribution, as yet, to the liberalisation of world trade.
I pay tribute to the negotiators in the Department of Trade during the whole period of these multinational trade negotiations. The Minister said that they were unsung, and I think that that is true. These negotiations have not been in the forefront of public view. None the less, they have been extremely complex and demanding, involving negotiations within the European Community and negotiations outward from the Community, which in turn has involved all kinds of complex international negotiations, together with the close contact with many of the industries most affected by them. I have unstinted admiration for the work which was done and which I observed at close quarters during my period in the Department. The country owes a debt of gratitude to the skill and determination exhibited by the negotiators.
I mention also my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) and Mr. Edmund Dell, both of whom played a very important part in bringing these negotiations forward and supervising them through the long period of gestation since the round was first announced. The Minister, very helpfully, put the various negotiations into different categories and I shall roughly follow the categories that he identified.
I think that the judgment must always, in relation to tariffs, be conditioned to 847 some extent by the industrial interests involved. Major concern was expressed during the negotiations by the textile and paper industries in this country. We were able at the Council of Ministers meeting on 3 April to make significant progress with regard to the paper industry. The proposals initially put forward were substantially reduced and rephased, as a result largely of a spirited effort by the United Kingdom and French Governments. The French Government shared our concern over the paper industry, and I think that that important amendment was widely appreciated throughout the paper-making industry in Britain.
It is extremely important, on textiles, that we bear in mind the importance of the multi-fibre arrangement. During these negotiations it was insisted by the United Kingdom Government that progress towards the tariff-cutting exercise, under the multilateral trade negotiations for textiles, be conditional upon the renewal of the multi-fibre arrangement. That arrangement is the most comprehensive set of agreements regulating the import of textiles into this country that has ever existed. It was substantially renegotiated and widened during the period of the previous Government, and I hope that the success that we achieved will not be put at risk by the present Administration. I confess that I was deeply disappointed that the hon. Gentleman, when answering questions during the last Question Time on trade, seemed to display a reluctance to commit the Government to a continuance of the multi-fibre arrangement.
We shall be pressing the Government constantly on this matter. We reached agreement within the Council of Ministers on the importance of renewing the multi-fibre arrangement, and it will be little short of folly if that achievement is thrown away needlessly by the present Government. I believe that the Government will come to realise, during the course of the negotiations with the industry, that all sides of the textile industry place great importance on renewal. If there is to be a secure future for the industry there must be a renewal of the multi-fibre arrangement on something like its present scale. The Government must also take into account the importance of connecting that with the textile tariff reductions 848 of the multilateral trade negotiations.
§ Mr. Parkinson
The right hon. Gentleman has just given an example of the difficulties. He said that there must be an agreement on a similar scale, though he recognises that there will probably be changes two-and-a-half years from now in the agreement as it now exists. I am sure that he would like to confirm that.
§ Mr. Smith
What I did not have confirmed, despite persistent and precise questions, during the last trade Question Time in the House was an agreement in principle by the Government that the multi-fibre arrangement would be renewed. I am not expecting the Government to spell out now what would be the precise quotas or amounts that would be determined. They must be negotiated. But there must be an important commitment in principle by the Government. That has been lacking so far. I assure the hon. Gentleman that this matter will be raised again and again not only from the Labour Front Bench but by many of my hon. Friends who have very important textile interests to protect and defend.
So far as non-tariff barriers are concerned, I welcomed what the Minister of State said about the subsidies code. There was a real danger in this code for the United Kingdom. That danger was that an attempt might be made to penalise United Kingdom exporters who benefited from our regional policy and our policy of assistance to industry. As the hon. Gentleman rightly recognised, the purpose of our policy in helping the regional development of industry, and of selective assistance to industry, was not to confer benefit upon British exporters but to assist in the regeneration of British industry and make sure that it was better distributed throughout the country.
Of course, there have been complaints about it from some United States interests alleging hidden export subsidies. They sometimes forget the very important assistance given to their exporters by the military and industrial complex of the United States and the use of defence contracts. That is something that we must also bear in mind. I am glad that the insistence which the previous Government placed upon the wording of the code being such as to permit the 849 development of the regional policy of assistance to industry to continue has been maintained. That appears in the code which will be signed as part of these negotiations.
However, I deplore the fact that the necessary protection which we sought for regional policy and for assistance to industry is less likely to be used as a result of the decision, which this Government have already arrived at, of running down regional development to industry and running down selective assistance to industry. Having fought so hard to protect the right of a Government to do that, it is rather galling to find that the present Government are not prepared to use some of these techniques. I think that the Government will come to realise the folly of that policy as the months roll by and I hope that there will be a change of attitude to the use of money and techniques for the development of our industrial structure.
Some very important achievements have come from these negotiations, which are shown up in the codes. The hon. Gentleman mentioned abolition of the wine gallon assessment by the United States. This is an important change which has long been sought by the whisky industry, and some other industries, in this country. It has always been the position that one had to pay a tariff on the water in a bottle of whisky as well as on the whisky. Fortunately that perk, which applied to the United States, has now been abolished. Speaking personally and not only for the United Kingdom but for one part of it, I regard that as a very important achievement.
The United States has now brought some other important changes more fully into the GATT framework. Some of the advantages that it enjoyed under the "grandfather clause" are now being removed. As a result the United States will enter more fully into the GATT structure. These are developments to be welcomed, as is the abolition of the American selling price. That was another device used to increase the tariffs on goods entering the United States. These are positive and important achievements for the United Kingdom.
Similarly, the code on civil aircraft will be of value to the United Kingdom. We have a very important aviation industry 850 in this country, which is already a substantial exporter. Its importance can hardly be overestimated. It faces fierce international competition, but I believe that our aviation industry is largely competitive and can secure an increasing share of world orders. In the civil aircraft code, the steps taken with regard to our domestic industry seem to me to be ones that will be of advantage.
Agriculture tended, in the negotiations, to be more an issue between the other countries of the European Community which are more committed to the common agricultural policy and the United States than it was of direct interest to the United Kingdom. It was somewhat disappointing that the Community wanted to preserve all the principles of the common agricultural policy intact as one of the objectives of the negotiations. But from time to time the United Kingdom Government interceded on behalf of the Governments of Australia and New Zealand to make sure that a fair deal was extended towards their interests.
I had discussions from time to time with Mr. Garland and other representatives, and I believe that the United Kingdom acted as an honest broker on behalf of Australian and New Zealand interests. For wider political and trading reasons we were anxious to maintain good relations with Australia and New Zealand. The CAP was such an ark of the covenant within the EEC that it was difficult to dislodge those concerned from adherence to every principle involved.
Overall, I believe that the agreement has been satisfactory. Much of it will require to be monitored in detail. The Government procurement code will have to be watched very carefully. Many countries are happy to sign international agreements involving high-sounding principles, but when it comes to practising them they are not so forthcoming.
There has been a great deal of disappointment in this country about the code of purchases within the EEC, in which the United Kingdom undertakes all the obligations about advertising contracts within the EEC but in which there is a certain laggardness on the part of other Community countries. I hope that the Government will pay close attention 851 to monitoring the Government procurement code to see that it is carried out in practice as well as merely by adherence to the principles involved in the negotiations.
Although important steps have been taken to complete the Tokyo round, there are still a few hurdles to be overcome. Some of those obstacles exist within the United States Congress. I was glad to hear the Minister say that the Government will be monitoring developments in Congress to ensure that the agreements are effectively concluded and implemented in United States domestic legislation.
I hope that these provisions are successful and that the United States Administration are able to carry the agreements—agreements which they have signed in principle—through Congress. It will be a serious setback if there is some difficulty on that front. As I understand it, it will not be open to Congress to amend the legislation. It will either have to accept it en bloc or reject it en bloc. The Minister was right to pay tribute to the work carried out by Ambassador Strauss, who has now left that area of concern. A great deal of the credit for the success of these negotiations is due to the impetus that he gave them on behalf of the United States. Therefore, although we welcome the general agreement, it is important that the Government should listen to our comments, particularly about the textile industry and the importance of continuing to monitor these agreements.
When the negotiations began there was a great deal of scepticism whether they could ever be brought to a successful conclusion. As the world has suffered energy crisis after energy crisis and is now deeply involved in the middle of another one, and although, to put it mildly, the prospects for world trade are not encouraging, I believe that it is a considerable achievement that the initiative launched many years ago has now been brought to fruition. It is a countervailing force against some of the other more gloomy forces now affecting international trade. Unless the developed world pays attention to the orderly development of trading relationships, we could easily descend into the kind of trading which characterised the interwar period, with the slumps and all the other difficulties that then occurred.
852 I wish to remind the Minister of the selective safeguard clause. I very much doubt whether that clause will be agreed in these negotiations. I suspect that they will be concluded without such a clause but that some reference will be made to continuing negotiations. It is of the utmost importance that we have the capacity for selectivity in the application of import controls—otherwise one is forced to take blanket action against many countries, some of whose activities are not complained about. I doubt whether it will be possible to achieve it, but in the event that it is not possible to achieve it the Government should resist entering into a selective safeguard clause which is meaningless or which acts against our interests.
If such a course is impossible, I should be grateful if the Minister would say what attitude Her Majesty's Government will take to the use of article 19 of GATT which, in the opinion of many countries, already allows them to take selective action. I believe that the Council of Ministers came to such a conclusion at one of the meetings that I attended. It is important to achieve selectivity. There are some delicate industries now in this country. We can think of many which are now under severe economic pressure. However, unless we can achieve some selectivity, we shall face a difficult reaction in many countries.
The developing world has to understand that the developed countries are now in some difficulty. If there is not the possibility to take selective action, there will be a reaction against the liberalisation of world trade, which will be very serious in character. I hope that the Government will bear in mind the importance of selectivity. If we do not achieve a satisfactory agreement, let us not make one. If no agreement is achieved, let us be prepared to use article 19 of GATT to defend essential British national interests.
I wish to thank the Minister for his comprehensive report. The multilateral trade negotiations, unfortunately, are not at the forefront of our political and economic dialogue in this House or elsewhere in this country, but their importance can hardly be underestimated. I am glad that at last the House of Commons has managed to have at least one short debate on this important subject.
§ 2.36 p.m.
§ Mr. Ronald Bell (Beaconsfield)
I, too, congratulate the Government, and indeed their predecessors, on the progress of the Tokyo round and on the relatively successful conclusion of that negotiation, which is clearly of national and world interest.
I want to draw attention to what I see as a serious defect in the Tokyo round. I refer to the continuing inadequate and unfair treatment of Australia and New Zealand. The right hon. Member for Lanarkshire, North (Mr. Smith) referred to that subject, but he appeared to be relatively happy with the concessions embodied in the draft—a draft which we have been able to examine only briefly. I wish that I could feel the same satisfaction about the outcome, but I do not.
My hon. Friend the Minister of State, in describing the progress made and in referring to the problems of Australia and New Zealand, said that the difficulty was that if one acted it would mean encroaching upon agricultural matters. What a remarkable reverse that amounts to. I remember when we charged no tariffs on food into this country and when our negotiations related to manufactured goods. Now we are saying that these matters are very difficult. However, it is not insuperably difficult to reach agreements on manufactured goods. But when we come to talk of reducing tariffs on food we enter into an extremely difficult area—to such an extent that the most exiguous degree of success appears to be held as a triumph.
The British Dominions of Australia and New Zealand have been treated scurvily in the Treaty of Rome, and indeed by this country, which had special responsibilities towards them. Those responsibilities are in no way discharged by the concessions obtained in the Tokyo round. I am glad that there is to be some concession about a few thousand tons of cheese and the quotas on frozen beef, but those are minimal matters. The fact is that, although Australia seems to be emerging with some success from its economic difficulties, New Zealand is in a very difficult position. That is happening because the United Kingdom entered into the Treaty of Rome on unfair terms and this put New Zealand in an awkward position. That position is now being 854 aggravated by the increase in the price of oil—a commodity imported by New Zealand. I must tell the Minister of State that this matter cannot be considered to be closed by the minimal concessions that have been extracted in this round. Something substantial has to be done about New Zealand in particular, but also, I like to think, about Australia.
The general concept of the Treaty of Rome, as the right hon. Member for Lanarkshire, North said, is the real trouble. We are working through the various GATT rounds towards the concept of almost free trade in manufactured articles. But, for some reason, the same goal is not accepted in relation to agriculture. There should not be this distinction and this dichotomy between manufactured goods and agriculture. All are branches of human industry, and the considerations that apply to one in favour of free movement between countries apply equally to the other. I should argue that they apply more to agriculture. The classic example in this context is New Zealand dairy products.
New Zealand is more competitive in dairy products. It produces the best and the cheapest dairy products in the world because of its climate. What better argument could exist for New Zealand to supply them to other countries less favoured in that respect? That would be the ordinary law of free competition, which we regard as the ark of the covenant in the GATT negotiations. But it is not applied because the Common Market treaty is based on the narrow interests of France and Germany and the agriculture surplus countries in the West of Europe. For that reason, the GATT negotiations are based upon the assumption that there is some fundamental difference of principle betweeen agriculture and manufactured goods.
If we are to save the prosperity of those British Dominions on the other side of the world, we must get away from the totally false distinction between manufactured goods and agriculture.
The next point that I wish to make, although related, is different. I question the value to us at all now of the Rome Treaty and the Common Market concept. I was always doubtful of the wisdom of entering into that bargain. I believe that people committed themselves, and took 855 up positions, before the success of the Kennedy round under GATT and at a time when there was widespread scepticism about the success of the Kennedy round. Once that round had attained expected success, it always seemed to me that the economic argument, to the extent that there was one, in favour of the Common Market treaty had been destroyed—the argument about a single internal market of great magnitude. Our experience in recent years has shown my view to be true.
Now that the Tokyo round has been concluded in the sense that the Minister of State has expounded to the House, it is surely beyond argument that there is no conceivable advantage to the United Kingdom in being inside the Common Market as defined by the Rome Treaty. I realise that both Front Benches are the prisoners of past statements and past momentums, if that is the correct plural. I do not expect a clear announcement this afternoon. I hope, however, that the inescapable logic of what my hon. Friend has been saying to the House will begin to mature and bear fruit. It would be realistic in eight years' time, when the existing tariffs have been reduced by 30 per cent. of their present level, to talk about the immense advantage of being inside this tariff fence, especially when one considers the alternative.
I am not hopeful. I throw the seed upon the ground, hoping that it is not barren. When we entered the Rome Treaty, we threw away the two great competitive advantages of British industry. One was cheap food—that was our big advantage in the world—and the other was that our tariffs were higher than other people's. By entering the Community, we lost the cheap food and became a dear food country. We also threw away the substantial tariff advantage, which would be so welcomed by British Leyland now.
I am not adopting a protectionist view. My hon. Friend rightly said that protectionism is not the reaction to the difficulties in the world. It is not. Competition is very important for improving the efficiency of management and bringing realism to the thoughts of trade unions. But do we throw away an existing degree of protection when nationally we are 856 going through one of our weakest periods, which still exists, at a time when the productivity of our people per head is about a third or half that on the Continent of Europe or the United States?
A fresh breeze of competition is healthy. To plunge a patient into a bath of ice is another matter. We threw away the two positive advantages that we possessed at a moment when we were least able to take the oncoming shock.
My hon. Friend announced to the House today the gradual extinction of the protective tariff around the European Community. In the interests of our overseas Commonwealth and also in the interests of the people of this island, it is time that we began to do the sums again and to ask ourselves whether the way ahead is not the way out.
§ 2.47 p.m.
§ Mr. Bob Cryer (Keighley)
This debate is too important for a Friday afternoon. I hope that in future the Government will leave Fridays for what has been traditionally the prerogative of the Back Bencher and Private Members' motions rather than bringing forward their own business. My view applies not only to this debate but to the earlier statement about EEC matters.
The arrangement of world trade is crucial to our industrial development, to the retention of jobs and the creation of new ones. We face a difficult future, not least because of some of the proposals. One of the problems is that we are not planning our international trade sufficiently. To say that the reduction of tariff barriers and the breath of competition will produce the answers is not enough.
We already face an amount of de-industrialisation in this country. I am talking not about widespread protectionism but about the right of the United Kingdom Government to make decisions about our economic position which involve the retention and the regeneration of British manufacturing industry. Unless we have the right, for example, to institute quota provisions over a wide area of manufacturing activity, we lose the opportunity to ensure that this regeneration takes place.
I am not talking of protecting outdated and inefficient industry. I am talking about industry which has been deprived of development during the whole of the 857 post-war period. I am also talking about the position of large sectors of our economy which have enormous power and strength—the multinationals which can make decisions affecting thousands of people and which are subject to little or no accountability.
An example is Thorn, the multinational television and audio manufacturer, which decided to close a factory in Bradford with a loss of 2,300 jobs. That means that there will be fewer opportunities in the area for the learning of skill and for employment. That decision was taken at the expense of importing 100,000 portable television sets from West Germany and South Korea.
That type of decision cannot be taken for ever. Industry will be totally extinguished by imports if we do not arrest the process of deindustrialisation, preserve jobs and encourage research and development into the creation of new jobs.
Our anti-dumping measures have been less than satisfactory. The Department of Trade has retained the unit which gives advice and guidance to manufacturers. However, the onus is on manufacturers to prove that competitors are dumping. It is almost impossible to discover the costs involved and to open competitors books. In practice the implementation of anti-dumping rules is most unsatisfactory.
The Minister talked about the removal of non-tariff barriers and cleaning up the rules of the world trading system. We all welcome that. If the negotiations result in that, all will be well and good. But we seem always to be at the receiving end of the application of non-tariff barriers. We always seem unwilling to apply non-tariff barriers ourselves, or incapable of doing so, even when an element of common sense is involved.
An example is the application of safety rules. If a West German manufacturer places equipment on exhibition and it is below the West German safety standards, a sign is placed upon it, it will not be sold and it will be removed from the exhibition. That does not happen here. Section 6 of the Health and Safety at Work, etc. Act has enormous powers, and yet there are no factory inspectors at our ports to examine equipment coming into the country. If we say that we 858 must clean up world trade and rid ourselves of the dubious non-tariff barriers, it is reasonable for us to have safety standards which are as high as those which operate in West Germany.
The Minister said that the new agreement concentrated on transparency. But we should let importers know that the Health and Safety at Work, etc. Act exists. Let factory inspectors examine manufactured goods at ports of entry and in exhibitions to ensure that they are safe. At present machinery and goods are imported and only if an accident occurs do we discover that there is a defect in that equipment. Other countries work differently.
The Minister said that industrial support was likely to be reduced. That is a matter for anxiety. We are not acting in total multilateral synchronisation with other countries. If we reduce our industrial support policies other countries will not match that reduction. There is no reason why they should.
The Government are reducing industrial support because of their belief in the political will-o'-the-wisp of private enterprise standing on its own feet and their faith in competition producing all the right answers. It happened before, in 1970. The Government, led by the right hon. Member for Sidcup (Mr. Heath), said the same. All the money went not into manufacturing enterprise but into property. When the property bubble burst it nearly brought down the English banking system.
There is no guarantee that if we reduce industrial support there will be the draught of competition which will create new jobs and new opportunities. That is unlikely to happen. Our competitors will not operate the same policies. Countries such as West Germany, Japan and France have strong advice, guidance and investment policies which help develop and regenerate industry.
All that we shall do by reducing industrial support in the regions, and in general through the national schemes, is to place one of our industrial hands behind our back while our competitors forge ahead. It is absurd to operate such a policy.
It is not a question of whether the Government will perform a U-turn on industrial policy but when they will do it. 859 They will turn at some stage. They cannot do otherwise, because the consequences of their policies will be the loss of thousands of jobs and the decline of industry.
I turn to the question of the Government's procurement code. The Minister says that this will be more relaxed and that it will allow a wider degree of tendering by international bodies. Once again in the EEC we are conforming to the rules when others do not. I tabled a question about the number of advertisements that we had inserted over a certain period. I discovered that we had advertised 250 contracts while the total from the EEC membership was about a dozen. That is absurd. Why do we have to go through that rigorous procedure when other member States do not? Why should we do that when we are not operating at parity, when West Germany and France have a more buoyant economy? We open our doors to international tendering for our contracts but other EEC members do not. That is a matter that must be watched extremely carefully. I hope that we shall receive an assurance from the Government.
The Minister referred to selectivity and safeguard action against imports. I share the view of my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) that probably nothing will happen in those vital areas.
One of the most sensitive issues during the renegotiation of the multi-fibre arrangement was that the textile industry faced sudden massive imports from countries which were not foreseen to be sources of textile products. There was enormous disruption, which led to job losses.
I know that the Department of Trade is dominated by free-traders to the virtual exclusion of all else. They think that we should adhere to the philosophy of free trade, but it should not be adhered to at the expense of jobs. Those who have comfortable, well-paid jobs with index-linked pension schemes should bear in mind that disruption caused by cheap imports means the loss of jobs in the United Kingdom. It means the closure of mills and factories. Therefore, we should press strongly for selectivity and the possibility of a safeguard clause against a disruptive level of imports that will threaten jobs and industry.
860 I remind the House of what can happen. As a first step we may accept the introduction of imports. We have a responsibility to the rest of the world and we want to ensure a reasonable level of trade. The introductory level may be 20 per cent. but it may climb, as it did with cotton yarn, to about 80 per cent. of the total United Kingdom market. If that happens, the United Kingdom industry diminishes to a level at which it is no longer able to support research and development organisations, and at which companies cannot maintain their own research and development programmes. Therefore, the industry and the companies lose out.
However, the companies of the exporting countries will carry out research and development work in either textile products or manufacturing techniques. The result is that British industry falls behind yet again. We must ensure that suitable criteria are agreed and that we have reserve powers of selectivity.
I intervened in the Minister's speech to ask him about a social clause. That is frequently mentioned when discussing the Tokyo round. It was raised by both sides of the textile industry. The Minister said that negotiations had not yet finished and that the matter might well be discussed. Unlike some Conservative Members, I do not think that competition is the universal panacea. That belief is held by a diminishing number of Conservative Members which will become even smaller as time shows that it is a false premise.
When I talk to industrialists they say that they are prepared to face competition as long as it is fair. However, they now have to face unfair competition. We have employment protection and health and safety legislation. There are Acts on the statute book that require that wages should be paid in cash and in full. The Truck Acts date from the nineteenth century. Some of the provisions of that legislation can be circumvented by some employers, but the fact remains that we have employment legislation which is designed to ensure that reasonable standards are enforced. These standards are often enforced through the ILO Convention. I have compared the performance of Hong Kong with that of the United Kingdom, and it seems that Hong Kong put into effect 24 applications of the convention, 861 whereas the United Kingdom applied about 75.
When I was a Minister I said that workers in Hong Kong were exploited. I am happy to say that that caused enormous ructions in the Hong Kong Assembly. Members went berserk when they heard that a United Kingdom Minister had said that. Apparently we were supposed to keep our mouths shut and ignore the differential system of employment between the United Kingdom and Hong Kong.
The position is the same in South Korea, where employees work long hours and there is little labour legislation. The trade union movement is virtually nonexistent, as are the rights of workers. We want to ensure the addition of a social clause to a selectivity provision so that we may say "The United Kingdom market is open to you to a reasonable degree. We want to help you, but at the same time we want to ensure that minimum levels of employment legislation are applied in your country, so that workers are not exploited in the grossly offensive way that often happens in countries such as South Korea and Hong Kong." All these matters must be part of the continuing negotiations.
We are grateful for the Government background paper. I regret that a copy was not in the Vote Office, as the Minister claimed. Apparently it was in the Library. I do not know at what time it was available in the Library, but it was not there early this afternoon. The Minister will therefore appreciate that I have not had time to absorb all the documents on this complicated matter.
The Minister said that the final text, when agreed, would be an important document. He is absolutely right. Will he bring to the notice of his right hon. Friend the Leader of the House the need for a further debate on the final text? I hope that this is a preliminary debate on that route.
I have received representations from the West Riding wool and textile industry. I hope that the Minister will not mind my using the words "West Riding". They were deleted from our language by executive fiat of a previous Conservative Government. That caused 862 deep and continuing resentment in the West Riding.
The West Riding wool and textile industry was greatly concerned at the tariff that it faced in America. According to paragraph 12 of the background paper, the tariff on woven woollen cloth of over $9 per pound is to be reduced from 44.4 per cent. to 33 per cent. We have a good trading relationship in many areas with America. If we reach multilateral arrangements which are to our reciprocal advantage, all well and good. However, we must ensure that we do not grant concessions, without reserving rights of our own, to a point where our industry is severely damaged. We have gained a tariff reduction of about 11 per cent. However, the West Riding textile industry still faces problems over outward processing, on which the EEC Commission appears not to be acting with sufficient speed. Although we made a modest gain, there is still the problem of outward processing.
I agree with my right hon. Friend on the question of the renewal of the multifibre arrangement. It may be that as the notion of international competition and free trade is still echoing around, somehow the MFA talks appear to be some time away. The Minister should be well prepared for the MFA renegotiations. If not, the Commission might well try to spring on him the kind of measure it sprang on the previous Government. It tried a number of dodges to reduce the standards. We sternly resisted them. It is to the credit of the previous Government that the MFA is so strong and gives greater quota protection than ever before.
The MFA must continue. We do not expect a guarantee of the exact area of quota protection or quota coverage to be given. Confidence would be given to the industry if the Minister said that when the MFA came up for renewal it would be part of the Government's stance to maintain an adequate position for the industry, so that it could have confidence that it would not simply disappear under a huge pile of imported sensitive items and become extinct. I hope that the Government are concerned to renew the MFA when it comes up for renewal in two years' time.
863 I hope that this debate is not the conclusion of the matter and that the Leader of the House may afford a further opportunity for debating this important issue.
The background paper is of the greatest importance. The only previous article on the subject appears in the Department of Trade and Industry weekly magazine, which has a somewhat narrow and highly specialised circulation. I hope that the Minister will issue further papers and supply them to the Vote Office and the Library somewhat earlier than the day of the debate.
§ 3.10 p.m.
§ Mr. Parkinson
With the permission of the House, Mr. Deputy Speaker, I should like to reply to several matters which were raised in the debate.
Concerning the missing background paper, I am now informed that the paper has been available in the Library since Tuesday. I am sorry that hon. Members have had difficulties in obtaining copies of it, but it was there. I misled the House in suggesting that it was in the Vote Office; I should have said the Library.
I deal first with some of the points raised by the right hon. Member for Lanarkshire, North (Mr. Smith), who was Secretary of State for Trade at the time that these negotiations were coming to a conclusion. It was not, therefore, entirely surprising that this afternoon he welcomed the outcome of the negotiations. It would, in fact, have been extremely difficult for him to do otherwise, because a great deal of the credit or blame attaches to him and his predecessor. We think that in this instance he did a first-class job, unlike many of his colleagues in the previous Government. I compliment him on it. We were quite happy to accept the outcome of his negotiations.
The right hon. Gentleman mentioned three matters with which I should like to deal in particular. One of them was also mentioned by the hon. Member for Keighley (Mr. Cryer). With regard to the muli-fibre arrangement, anyone who has read the speeches by the Secretary of State and myself about it—we have each made several speeches in the House and outside—will know that we recognise the importance of the textile industry We 864 realise that it is not scared of fair competition and has taken very considerable steps to reinvest and to equip itself with modern machinery. It is an industry in which management and staff work very well together. Over the last few years 400,000 have left the industry, and it is making arrangements to restructure itself and to make itself capable of facing any fair competition. We have every intention as a Government of ensuring that it is not exposed to unfair competition or put in an impossible position.
The arrangement has two and a half years to run, and during that time we shall be able to see how it works, where it needs changing and where it needs modifying. In my brief time in the Department, I have already been approached by textile companies pointing out some of the disadvantages to various sections of the industry from the way in which the agreement is working.
The Government are not prepared to commit themselves to saying here and now that the MFA in its present form will be renegotiated completely as it is, but we recognise that the arrangement has been welcomed in this country and outside. We also realise that there will be arrangements made for the orderly marketing of textiles in the future. We should like to keep our negotiating hand open. We share many of the ambitions for the industry mentioned this afternoon by the right hon. Gentleman and by the hon. Member for Keighley.
I turn now to the matter of selective safeguards and the necessity for them, about which we are all agreed. However, we disagree about the fact that there seems to be a notion that it will not be possible to obtain a worthwhile selective seafeguards clause. At a time when that is about to be negotiated, we do not think that we should enter the negotiations in that frame of mind. We are determined in every way we can to press the case for a selective safeguards clause.
We believe that it is an important and vital reassurance to our industries that they will not become the subject of an attack on a narrow sector from, say, a very large quantity of low-cost goods, perhaps partially dumped, which could cause lasting harm. We believe that it is very important that Governments should have the right to act.
865 If there were a failure to obtain a safeguard, we would use article 19 effectively to make sure that we could do what we wanted to do. But we would still prefer to press for a meaningful selective safeguards clause. I thought that I had made clear in my opening remarks that we would not welcome something called a safeguard if it had no practical worth. I repeat that for the benefit of the House.
The right hon. Member for Lanarkshire, North mentioned Government procurement, and again I accept many of the points he raised. The hon. Member for Keighley also made the point that the British Government had been fulfilling their obligations under the EEC agreement, though a number of our EEC partners did not seem to be so enthusiastic. Nevertheless, there are signs that France and Germany now recognise that they have been remiss in this. We shall continue to press them to make sure that we are not the only country that observes the rules.
My hon. and learned Friend the Member for Beaconsfield (Mr. Bell), in a typically interesting and incisive speech, made the point that we have not done enough for Australia and New Zealand. I accept that criticism. However, successive Governments—our predecessors, and certainly ourselves—have impressed upon the Community the importance of making arrangements that safeguard the interests of Australia and New Zealand. What has been achieved is a great improvement and advance on what was proposed originally.
I accept that there is a distortion in international trade because of the rigid rules in regard to agriculture. There is a strongly held view that the CAP, in its present form, will have to be renegotiated in due course and will have to change. There are rigidities built into it which could produce similar rigidities in other areas of international trade. I accept a number of my hon. and learned Friend's criticisms.
My hon. and learned Friend said that he was not expecting an announcement from me this afternoon that we intended to withdraw from our obligations under the EEC treaty. He will not, therefore, be disappointed when I tell him that I shall not be making any such announcement. 866 His views on the EEC are well-known. I do not think that they are widely shared, but it is recognised that they are held very sincerely and that he never fails to promote them.
The hon. Member for Keighley made a characteristic speech. He can take that as a compliment or a criticism, depending on his point of view. He made one or two assertions which I cannot accept. First, he asserted that we are always on the receiving end, and that it is the British who play the fair trade game and that we do not do any of the things for which we criticise other people. There is another school of thought which says that if we look at the range of regional aids, subsidies, grants and as on which proliferated under the last Government, we see that we were becoming pacemakers, in our own way, in unfair trade.
I was present at a hearing in the United States before the Federal Trade Commission, when it was argued that no private enterprise steel company could afford to lose £10 million per week and still press on with its investment programme, and that companies that could must be trading unfairly. That is another point of view from the one put forward by the hon. Member for Keighley.
§ Mr. Parkinson
I accept what the hon. Gentleman says. May I take him up on another matter? He talked about our plans for reducing a number of supports to industry. We are not doing it for ideological reasons. We are doing it because they are very expensive and do not work. We are doing it because we do not believe that large sums of money, dispersed by politicians into marginal seats to try to buy votes, is the way to regenerate industry or do the country any good. It might do a party in government some good in the short term, although the indications at the last election were that even then it does not work. Those are the reasons why we are reviewing this very expensive area of Government expenditure.
867 The hon. Member for Keighley talked about the loss of jobs because of cheap imports. I know that there is a strongly held view in the Labour Party that we should implement the alternative strategy, and that behind the walls of protection we should modernise ourselves. I have just come back from the UNCTAD conference in Manila, where I met representatives from a number of the lesser developed countries. It is a fact that we run a substantial trade surplus with these countries. It is also a fact that if those countries are to be able to buy from us, they must be able to sell us some of the commodities which they are capable of and good at producing.
Textiles is an area in question. As the hon. Gentleman knows, the developing countries tend to set up textile industries. He may have seen some of the work that has been done recently, showing that although we have undoubtedly lost jobs because of cheap imports from those countries, we have also gained a considerable number of jobs—probably more—because of our exports to them. I sometimes think that the hon. Member for Keighley takes a rather simplistic view of these things.
The hon. Gentleman asked for a further debate. I do not wish to raise his hopes. He seems to be in a minority in having hopes of this kind. I suggest that today's attendance in the Chamber does not demonstrate a massive enthusiasm for debating this subject again. As he knows, there is a shortage of time available. It may be that we could achieve the end he desires by meeting later in the negotiations, when I could explain to him what has happened. However, I shall put the hon. Gentleman's point to the Leader of the House.
I want to emphasise a point made by the right hon. Member for Lanarkshire, North. I believe that implementing the MTN, as renegotiated, is absolutely critical if we are to maintain an open trading system. I believe that the outcome of the Tokyo round will probably be a great deal more decisive, and will have a great deal more effect on the standard of living and prospects of our people than many of the other measures that will fall to be implemented by this House. I am glad that a worthwhile package has emerged. I am glad that 868 those who have spoken in the debate feel that way. I am sorry that not more hon. Members have been present, but I think that it has been a worthwhile debate.
I beg to ask leave to withdraw the motion.
§ Motion, by leave, withdrawn.