Imported Goods (Labelling) (Hansard, 19 December 1980)

§ Mr. Barry Sheerman (Huddersfield, East)

I rise with mixed feelings. I feel a sense of privilege at being granted the opportunity to make the last but one speech before the Christmas Recess and the last but one of 1980, but the subject of my debate is serious. Before I enter upon it, Mr. Deputy Speaker, may I wish you, my fellow hon. Members, members of the Press Gallery and those in the Strangers' Gallery a merry Christmas.

The general depression in our economy, the bad recession that we are going through, has affected the textile and clothing industry more than most. The industry is under extreme pressure. I shall not dwell on the reasons. Government policy, since the election, or, as many of my constituents—employers and employees—would say, the lack of Government policy, is largely responsible for that pressure. While bringing about a depression, the Government have maintained inflation at quite a rate. Interest rates are still severely high for those who want to invest and to make goods for export. In my constituency, as in West Yorkshire generally, a high percentage of goods is exported. The increased value of the pound has severely hampered our attempts to maintain levels of production for export.

The lack of action to stamp out unfair competiton is of particular concern to my constituents. Twenty per cent. of the population of Huddersfield still work in the industry. They are very concerned about the dumping and other unfair competition, including political interference, that they have to face.

The unfair competition does not come from only one part of the globe. It comes partly from the United States, which I was recently told is importing oil at $35 a barrel and exporting it in the form of synthetic fibre at $15 a barrel. How can my constituents compete with that? The unfair competition also comes from Eastern Europe, China and many other places.

I want today to dwell on a matter that is related but different—the massive fraud that is taking place in certain parts of the world. This fraud, which is seriously affecting the present and future of British industry, is so massive that it threatens the very future of many sectors of British industry, those in which British goods are renowned for their quality and exclusiveness.

I do not speak in a narrow spirit. That would be unsuitable to the season. I strongly believe in the help that we in Britain can give to the underdeveloped world. As a sophisticated and developed nation, we must help the underdeveloped parts of the world to expand their trade and increase their prosperity. I am a great supporter of the Brandt report, but my constituents deserve protection from the outright and outrageous fraud now being perpetrated in some parts of the world, where British goods are being copied and exported as though they were our products.

Britain's greatest strength is the production of quality goods that the world wants. For at least three years, British manufacturers have been telling hon. Members and the Government about these massive frauds, particularly in Taiwan but also in Hong Kong, South Korea and Eastern Europe, especially Romania. The fraud relates not only to false labelling of goods but also to dodging the quota 725 system under the multi-fibre arrangement. National quotas are juggled. Hong Kong and South Korean goods are diverted through Indonesia or labelled "Made in Indonesia" to expand the quotas of the countries of origin. This is fraud, not simply fair or unfair competition.

Whether the practice is condoned by the host Government is a matter of speculation, but it seems that such Governments are actively involved as conspirators in aiding and abetting the fraud, which destroys the jobs of my constituents and the future of important British industries.

I am not being parochial and expressing concern only about the wool textile and clothing industries. A frightening example is the manufacture of brake pads. I have been told that unscrupulous agents in Britain can have an exclusive branded product—made in Britain or other parts of Europe—copied exactly in Taiwan within one month. The only thing that is not exactly copied is the quality.

If we allow fraudulent goods to circulate in a free market, we shall face similar problems to those that arose in the days of Henry VIII and Elizabeth I, when counterfeiting debased the currency. Bad currency always pushes out good, and we have real problems already with our economy.

Most people in this country know the genuine quality of goods made in West Yorkshire and other areas which have a reputation for quality products, but in other countries which were traditionally our markets, if people buy branded as British worsted suiting without a shred of wool in it and brake pads which last only hundreds instead of many thousands of miles, the whole quality of British exported products is debased and the future of our long-term export markets is under threat.

When hon. Members presented the Minister with examples of fraud, they were hardly impressed by the Minister's alacrity or that of the Government. Time after time Ministers have told me and other hon. Members to give them evidence. It is an interesting story. We were informed about frauds that took place not only in products with which we were familiar but which were estimated—even in Taiwan—to amount to about £400 million annually. If £400 million of shoddy goods that are falsely labelled as having been made in Britain are being dumped on markets that we have traditionally called our own, it can only bode ill for the future of our economy.

The Government have been prompted to act quickly, because earlier this year an all-party parliamentary delegation went to Taiwan. I am told that it started off as a red-carpet reception but turned into a red-faced reception. Early in the visit, members of the delegation were taken to large factories and to the largest textile mill in Taiwan. They found that half the products on the shelves were fraudulently labelled. Products that had just come off the mill had been marked as being made of 100 per cent. Yorkshire worsted, or as having been made in Huddersfield or as containing 100 per cent. English wool. Indeed, the hon. Member for Gosport (Mr. Viggers) recently mentioned this matter during Question Time.

The Government must realise that a massive amount of fraud is going on in various parts of the world. I hope that the Government will pursue an active policy in order to stamp out this grave threat to the future of British exports. The bizarre visit to Taiwan dramatically revealed the 726 extent of the problem. At the time, the delegation attested that the Taiwanese Administration had no fears about reprisals from or action by the British Government. They must have felt that the British Government were a pretty tame animal. They must have thought that the British hon had had its claws clipped and its teeth pulled if they could take a parliamentary delegation round their factories and could openly and fraudulently broadcast the fact that they were copying British goods. The Government should consider it a serious matter that the Taiwanese Administration are so complacent.

It is well known that European merchants can obtain fraudulent goods. They will do so to an increasing extent. I do not only criticise the manufacturers in Taiwan, because many of them are the mere puppets of unscrupulous manufacturers in Europe. Any demands that are made either today or in future will be demands for action not only by this Government but by the European Community, however cumbersome that body might be.

Our well-known quality branded products are being copied exactly in terms of appearance and represent a great danger to our markets. The nub of the problem is that the bad drives out the good. These products not only take away our markets; they ruin our reputation. The best worsteds in the world are made in my constituency, as you, Mr. Deputy Speaker, will know from your experience. When men and women throughout the world buy goods that turn out to be shoddy and fail to last, that will reflect on the future of my constituents, who are the salt of the earth. They are the people who make our exports and create the wealth of this country. Under this Government they have suffered a 158 per cent. increase in unemployment. They now face unemployment on a scale that they have never known in their history, nearing 10 per cent. This is why my constituents are especially concerned that the fraudulent practice that I have described should be treated by the Government in a severe manner. I am talking about a town that is known for its skills and its product. The message must go to the Government that we want action now. We do not want promises of future activity.

I shall explain briefly what it is that my constituents and I consider to be vital. I have spoken to many manufacturers who are genuinely distressed that they can get no action. Taiwan is in a strange relationship with Her Majesty's Government. There is no official recognition of the Taiwanese Government. We have no diplomatic ties of a proper nature with Taiwan. We have seen some successes in Korea and in other countries. We have persuaded Korea to subscribe to the Treaty of Paris. By using the court system in host countries, we have been able to achieve successful prosecutions against manufacturers who were fraudulently labelling goods. However, we are in an especially difficult position with Taiwan. There is no diplomatic recognition and there has been almost nil success in the Taiwan courts for British manufacturers even though the case speaks for itself.

I am not impugning any court system in Britain or abroad. However, it is strange, when the practice of fraudulent labelling is taking place on a great scale, that there is only one case in the courts involving British goods that have been fraudulently copied.

There is a real possibility of action. We have an unfavourable trade balance with Taiwan of £205 million imports and £205 million exports. The Taiwanese very much value Britain as a market. If the Government say to 727 the Taiwanese authorities "We shall place an embargo on all Taiwanese goods unless you stamp out this illegal practice of fraud", the message will go home and will go home quickly. Her Majesty's Government have every right to say that immediately. It is not necessary to wait for the new year. It can be our Christmas message to Taiwan. That message should be "We shall embargo your goods. We do not mind fair competition, but we will not stand fraudulence."

We want signs of greater activity. The parliamentary delegation found that there was only one man and a part-time young lady working in the trade mission in Taiwan. The United States and Japan had large staffs. Is it not about time that we took the business of exporting seriously? Surely it is time that we had a large staff helping exporters in every part of the globe and an inspectorate that checks that fraud is not taking place. As soon as there is a suggestion—not hard evidence—of fraud, we should send out investigators to ascertain the facts. I hope that the Minister will consider introducing such a scheme in the new year.

I reiterate the facts. This is fraud and not competition or unfair competition. I do not want at any time to be associated with the call for narrow protectionism. I do not believe in that type of protectionism. However, I believe that Britain suffers through being slow to react to gross injustices and from a lack of commitment. I hesitate to equate that with patriotism.

Large sectors of our population have been persuaded over past years that it is non-U and unfashionable to buy British. The sooner that the Government introduce legislation to bolster the notion of buying British, the better. It could be through origin marking of a substantial nature, and I hope that it will be of a substantial nature. The Government are considering that at the moment. We urgently need a change in legislation to make it clear when people are buying British.

The general secretary of the National Union of Dyers, Bleachers and Textile Workers saw a sweater in a store in Bradford only last week. It had a Union Jack on the front and said "Shetland wool", so he believed that it was made in Britain. When he turned the label over, he found that it was made in Macao.

The Government should bolster attempts to make the country more conscious that British buying means British jobs and future British prosperity. That would aid us all. The first step should be to cut out the severe threat to our quality exports.

§ The Minister for Trade (Mr. Cecil Parkinson)

If I do not have time to deal with all the points raised by the hon. Member for Huddersfield, East (Mr. Sheerman), I hope that he will understand. I shall write to him about any that I do not have time to deal with.

I shall not take up his invitation to debate the Government's economic policies or general textile problems, but I am sure that his constituents will be pleased that this week the Americans have removed the threat that previously existed to the export of wool textiles into America by removing the instrument that President Carter signed a few months ago. The prospects are that much brighter at the end of this week than at the beginning.

As the hon. Gentleman said, false labelling and counterfeiting of goods is a serious issue. In the past few 728 months there has been growing concern about it, which was stimulated recently by the Taiwanese authorities, who, as he said, made the mistake of showing a good-will mission of Members of this House a factory in Taiwan where cloth was being made marked "Made in Huddersfield". If ever there was a way to turn a good-will mission into the opposite, the Taiwanese Government found it.

Earlier this week I discussed with representatives of the car industry a range of problems that they have. Its trade journal, the Auto Accessory Retailer, came forward with a group representing the Society of Motor Manufacturers and Traders, the Anti-Counterfeiting Group and leading manufacturers and presented substantial evidence of counterfeiting.

I thank you, Mr. Deputy Speaker, for sending me a note during the debate telling me where I could find further evidence. I shall follow that up.

We are getting information from a wide range of industries, including textiles, cars, films, tools and locks, about the problem of counterfeiting and the dangers and losses that are being caused by it.

May I make the position clear straight away? The best line of defence for any country is a properly registered patent or trade mark. Without that, a company is in a difficult position. Companies must obtain the relevant patent and trade mark protection before they market products.

The hon. Gentleman mentioned the Paris convention. We support it strongly and have played a part in ensuring that 90 countries are now members. That means that in 90 countries British manufacturers who register their trade marks have the same legal rights as does local industry. That is a very important line of defence for our industries. That is why we encourage countries such as Korea to become signatories. It is important that companies should ensure that they have rights and that the Government do their part to ensure that those rights are enforceable in as many countries as possible.

We have in this country a substantial range of possible measures to use against those who seek to bring counterfeit goods into the country. There are safety, industrial property and consumer protection regulations covering all goods imported, and we believe that the amount of counterfeit goods coming in is small. However, we are determined to stop them completely if we can.

The hon. Member mentioned brake linings and the dangers associated with them. My right hon. Friend the Minister of Transport is well aware of them, and I give the hon. Gentleman the assurance that if any evidence comes to him or to us of defective brake linings coming into the country action will be taken to ban their sale and to seize the goods. Companies that have evidence of fraud should present it immediately under the Trade Descriptions Act to their local trading standards officers. The Customs and Excise are again willing, using their powers, to take action against these counterfeit goods.

It will be of special interest to the hon. Gentleman that just recently the customs investigation branch of the Customs and Excise was increased by 12 members who will concentrate exclusively on textile fraud. My hon. Friend mentioned problems with Romania. That is a classic case where the new customs investigation officers can act, and they will be acting on that problem. Outside this country we have to take advantage of our rights under the Paris convention, and British industries have been 729 doing just that. The Scotch whisky industry is a magnificent case, showing that by tenaciously pursuing its rights it has been able to jump on quite a few people who were marketing false products labelled as Scotch. We encourage all our industries to copy its example and to be as resolute and determined as it has been.

The Government are always ready to back up companies when making bilateral approaches to the Governments of countries where we discover that products are being counterfeited. We will not hesitate to do that. That is why I welcome the evidence that has been given to us. We cannot, however, act on anecdotal evidence. We need facts. When we have them, we will not hesitate to take up the problems with the Governments concerned.

Let me deal with two countries that have been mentioned and contrast their attitude. The hon. Member mentioned Hong Kong, which used to be a major source of counterfeit goods. The Hong Kong authorities did not like the reputation that the colony was acquiring. They strengthened their legislation and their investigating officers. They now have 46. Last year they carried out 600 investigations and there were a considerable number of prosecutions. They are determined to stamp out that activity in Hong Kong.

This contrasts remarkably with Taiwan, where the authorities have the law on their side—legislation that bans this trade—but we believe that they do not enforce it. If 730 they wish to be accepted as responsible members of the world trading community, I serve notice on the Taiwan authorities that they will have to mend their ways. The recent parliamentary delegation brought back incontrovertible evidence. On vehicles, we have very strong evidence. The hon. Member said that the way forward is for us to ban the import of products from Taiwan. I must tell the Taiwanese authorities that our patience is wearing extremely thin. We are considering the evidence that we have at our disposal. They have the opportunity to avoid a major incident by taking the strong action that Hong Kong has taken. Unless they do, the Taiwanese authorities must be prepared to accept the consequences.

We recognise that counterfeiting is a dangerous menace. It costs our industry sales, it damages our reputation and it costs us jobs. A concerted attack by industry and the Government offers the best prospect of dealing with this problem. I assure the hon. Gentleman that the Government are ready to play their part, and I thank him for raising in this last debate before Christmas an important and interesting subject.