§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Le Marchant.]
§ Mr. Speaker
I have reason to believe that many right hon. and hon. Members will be seeking to catch my eye during the debate and that most of them are sitting on the Opposition Benches.
§ 4.5 pm
§ The Secretary of State for Trade (Mr. John Biffen)
To invite the House to adjourn during Ascot week is always an adventurous procedural device, but I am certain that the record of today's proceedings will show the lively interest and awareness that there is in the House in and of the multi-fibre arrangement and the responsibilities that will be carried by Her Majesty's Government over the coming weeks and months. That is not least because of the great significance that we attach to the textile and clothing industries, which represent an important sector of our manufacturing base.
I shall review the history of the MFA and then turn to the broad negotiating objectives of Her Majesty's Government. Finally, I shall say a few words about the logistics of the negotiations. At the outset I shall mention—I hope no more than in passing but I think that it will be a courtesy to the House so to do—the somewhat ill-fated Commission document that seems to be circulating through many of the bistros of Brussels. I feel personally involved in the issue because when the matter was first raised by the hon. Member for Workington (Mr. Campbell-Savours) I told him that I would ascertain whether anything could be done. Since then the hon. Member for Norwood (Mr. Fraser) has properly taken a lively interest in the affair.
The document is Commission property and, therefore, it is not within the Government's authority to compel it to be disclosed on a more wide-ranging basis without the permission of the Commission and the other member States whose Governments were intended to have an initial sight of it. In as much as it touches upon the Commission's negotiating stance, I think that we would be less than generous if we did not acknowledge at once that it is a delicate matter. One can understand the Commission's anxiety to protect the document. However, the document has been leaked and understandably and traditionally a robust attitude is taken in the House. Doubtless we fashion our proceedings by experience. I shall say no more than that.
So that we all might conclude on a tolerably happy ending, I add that ever since April the press release of the document has been available in the Library. I suspect that our discussions would have been profoundly well informed in any event had the episode not arisen, but it is good to know that the press release is available to add to our judgment.
§ Mr. John Fraser (Norwood)
It would have been helpful to say that the press statement was in the Library in response to a parliamentary question. When was it placed in the Library?
§ Mr. Biffen
I do not want to be hung on this immediate reply because I am not specifically briefed. I think that the hon. Gentleman will find that it has been in the Library 1191 since April. It is dated April. I believe that it is part of the normal information that would have been made available between the Commission and the Library.
I turn to the origins that inspired the debate—namely, the multi-fibre arrangements themselves. The MFA which we are debating today is only the last in a series of arrangements which began in the late 1950s. At that time there were an increasing number of ad hoc restrictions. The first formal agreement was the "short term arrangement" which came into effect in 1961 and covered cotton textile goods only. This was an interim measure intended only to restore a measure of order into world trade until a more permanent arrangement could be negotiated. This turned out to be the "long term arrangement" which came into effect in 1962 but which still only covered cotton textile goods.
As developing countries increased their exports of other types of textiles and clothing it became clear that this arrangement was not sufficient. Other arrangements were sought to avoid wholesale recourse by some countries to import controls. Thus the multi-fibre arrangement was finally agreed on 20 December 1973. It was effective for four years from 1 January 1974 and was a major improvement on the long-term arrangement since it covered man-made fibre and wool as well as cotton.
The effectiveness of the first MFA was limited for a number of reasons. First, because of delays in negotiating bilateral agreements, trade levels built up so that the quotas eventually agreed were very high. On top of that, the growth rate of 6 per cent. provided in annex B to the MFA proved to be too generous when the sustained growth of the world economy in the 1960s had come to an end. Furthermore, the effects of large numbers of small new suppliers coming on to the market—that is the cumulative disruption effect—was not adequately foreseen and dealt with in MFA 1.
Unsatisfactory as it was, there was general agreement that when the first multi-fibre arrangement expired at the end of 1977, it needed to be renewed. This renewal was done by means of a protocol of extension signed in December 1977. Most of the European Community's bilateral agreements were negotiated before the end of 1977 and came into force with the renewed MFA. They included cutbacks on Hong Kong, South Korea and lower growth rates for particularly sensitive products.
The Community now has bilateral agreements with 27 countries, including China. These bilateral agreements contain over 400 quotas, 50 of which have been introduced since this Government took office. In addition to the MFA agreements, the European Community has voluntary restraint arrangements with six Mediterranean preferential suppliers and one Lomé country—Mauritius—plus autonomous, that is unilateral, measures against four State trading countries which have not signed the MFA and residual quotas against a number of smaller countries predating our accession to the Community. In all, there are over 600 quotas or restraint levels against imports from over 60 countries.
This clearly represents significant protection for any industry. The question must therefore be asked whether it is reasonable or desirable for it to be projected into the future. The answer in my opinion must be "Yes", for reasons that I would like to put to the House.
1192 During the last debate we had on textiles on 26 February this year, both my hon. Friend the Minister for Trade and myself made it clear that the Government are fully conscious of the grave problems which have been facing the British clothing and textiles industries over the past few years. Trade Ministers alone have had some 26 meetings with delegations representing various interests in the industry over the past seven months. In most if not all of these meetings, the MFA was one of the main topics of discussion. We have therefore benefited from the industries' views.
The industries have, of course, been contracting steadily in employment terms over the past 30 years, because of changes in technologies, fibres and fashions as well as increasing competition from imports. The industry has been under severe competitive pressures. There has been a significant swing from cheap goods to the production of higher quality and higher value added products. Despite this trading turmoil, production of clothing and textiles has been remarkably stable. If we take 1975 as the base year of 100, the production index in 1970 was 101.2 and 1979 100.3. However, no one can doubt that the effects of the recession in 1980 were particularly severe. The production index for the industry slumped to 84.8. Three hundred and ninety-one closures were notified to the Government in 1980 alone, and 117,000 jobs were lost.
As I have said, this was a sharp intensification of a trend which had been apparent for some time. Between June 1970 and December 1980, employment in the industries fell by almost 400,000 jobs to a new job total of around 650,000 people. As problems increased in the second half of the 1970s, the number of mill closures increased, and no fewer than 1,044 new closures were notified to the Government between 1976 and 1980. There are, no doubt, others which were not notified and are therefore not included in this total.
The reduction in employment in the industry is not, therefore, a new phenomenon. Although largely due to competition from imports, it is also partly due to changing production techniques, as can be assessed from the rising per capita value of output from those employed in the industries.
We have, therefore, a picture of an industry which has completed a large measure of restructuring and has modernised itself. Nevertheless, it is still in serious trouble and still employs roughly one out of every 10 manufacturing jobs in this country. That is the background against which the Government have to look at their policy for the renegotiation of the MFA.
Although we are debating the renewal of the MFA, it is important to remember that not all low-cost imports come from countries with which the European Community has bilateral MFA agreements. Many of our low-cost imports come from countries with which the European Community has preferential trading arrangememnts. Such countries are outside the MFA so far as the Community is concerned, and up to now imports of clothing and textiles have been governed by a loose series of voluntary restraint arrangements. Two such suppliers—Portugal and Spain—are, of course, currently applicants to join the European Community. I attach importance to the transitional arrangements that will attend their full membership but thereafter their exports will enter the Community freely. That is clearly something the British industry has to take into account in its forward planning.
§ Mr. Nicholas Winterton (Macclesfield)
Is my right hon. Friend aware that Portugal is becoming one of the major competitors of the textile and clothing industries in this country? Before its accession to the European Economic Community, we must ensure that there are safeguards for our textile and clothing industries, in the sense that European moneys and resources are not given to Portugal to enable it to make its textile industry more competitive, thus enabling it to compete unfairly with our industries.
§ Mr. Biffen
I undersand what my hon. Friend is saying, and I know that he in turn will attach importance to the transitional arrangements that are concluded with Portugal. We must not be under any illusion about the consequences once a country becomes a full member of the European Community.
However, in the meantime the Government believe that we cannot consider imports from the preferential suppliers and from the MFA countries as two watertight compartments. On the contrary, we believe that the European Community must take a broad and comprehensive view on low-cost imports so as to ensure that arrangements made with some suppliers are not undermined by a failure to reach satisfactory arrangements with others. It so happens that the European Community's arrangements with the preferential suppliers expire at the end of this year so that negotiations on future arrangements can proceed together with the MFA discussions.
Having considered the totality of the market, I now turn to growth rates. These will clearly be a matter of vital importance in the forthcoming negotiations. Quite clearly, the 6 per cent. growth rate for quotas included in the orginal MFA is wholly unrealistic in today's conditions. We must now seek some closer linking of growth rates to the estimated growth of consumption in the Community. We shall also be supporting the proposals put forward by the European Commission for differentiation among various suppliers.
§ Mr. Jack Straw (Blackburn)
The Secretary of State spoke about differentiation among suppliers. In setting the growth rates, does he agree that there is a need to differentiate between different member countries of the EEC? Their growth or decline rates within their domestic economies vary greatly. The economy of France or Germany may increase by 10 per cent. during the next five years, but it is possible that our growth rate—I am not making a party point—will decrease by 5 per cent. We do not wish to be stuck with an overall EEC growth rate that is separate and different from our experience.
§ Mr. Biffen
That is a fair point. I shall come to national quotas later.
The main aim will be to ensure that there is sufficient room for new suppliers—especially those in the poorest countries—without having to increase total imports to a level at which the basic aims of the MFA are endangered. At the same time we shall be looking for those countries which have unrealistically high protective tariffs against our exports to open up their markets. The basic objectives of the MFA are, to quote from the founding document,to achieve the expansion of trade, the reduction of barriers to such trade and the progressive liberalisation of world trade in textile products, while at the same time ensuring the orderly and equitable development of this trade and avoidance of disruptive effects in individual markets".1194 The Government believe that world trade is a two-way affair; if we are to increase our own imports from low-cost suppliers we want in return to be able to increase our exports to those markets. Those two concepts are not incompatible. The high quality specialised goods we wish to sell are not those which developing countries, in the main, can produce. There would be material advantages to be gained by both sides. In that context I must pay a tribute to countries such as Hong Kong and Singapore which have operated open trade markets.
In addition to those broad policy objectives, the Government will aim to negotiate some sort of mechanism whereby imports may be adjusted in times of recession. That will not be easy. We are, however, currently considering possible techniques with the industry and, at the very least, I hope that we shall be able to achieve some changes in the flexibility arrangements in the current bilateral agreements.
A further point on which we shall be pressing very hard within the Community is an improvement in the current basket extractor system. That is the mechanism whereby new quotas may be imposed if imports from new suppliers or of new products from existing suppliers increase above certain limits. The present system does not provide the certainty that is necessary for the United Kingdom industry to have confidence in the future, and at the same time is unsatisfactory to the supplying countries. Once again, that is a complicated technical area, but we shall be doing our best to try to negotiate a less controversial and more certain procedure.
The Government have already made it clear that we shall be pressing for the full retention of quotas at a national, rather than a European Community, level. I believe that it is only by doing that that we can obtain the certainty about access levels to the United Kingdom market that is required by our industry. We shall also wish to see the continuation of our ability to safeguard those national quotas, under article 115 of the Treaty of Rome, from being significantly undermined by imports into other member States which then come into free circulation within the Community.
I hope that I have been able to give the House a broad outline of the Government's negotiating objectives.
§ Mr. Biffen
I hope that that remark is not read in Brussels.
I have tried to describe strategic objectives while concluding that the detailed and daily discussions must be a matter of flexible tactics. My hon. Friend the Minister for Trade will go into greater detail on individual aspects of the negotiations when he winds up this debate However, before I finish I should like to explain how the. negotiations will be carried out.
§ Mr. K. J. Woolmer (Batley and Morley)
The Secretary of State rightly said that the treatment of preferential countries is intimately linked with the MFA negotiations. He has not commented on the other proposals for outward processing. That matter is of considerable importance to the textile and clothing trades. I hope that he will deal with that point, especially in relation to Hong Kong and other countries. Will he tell the House his thinking on the matter?
§ Mr. Biffen
I thought it would make for reasonable order in the debate if I did not touch on a number of broad issues. Outward processing will be dealt with by my hon. Friend the Minister for Trade. The purpose of the debate is not so much to strike a rigid position as to enable the House to be part of the whole consultative process. I hope that that procedure will commend itself.
§ Mr. Woolmer
I have no wish to delay the debate. However, the right hon. Gentleman will appreciate that there is some concern, especially in relation to Hong Kong, that the threat to the firm with Hong Kong imports might be offset by favourable treatment on outward processing, which would bring in imports additional to those in the MFA. I wish to press him on that point while he is still on his feet.
§ Mr. Biffen
The point that the hon. Gentleman seeks to make in an abbreviated question will be made with much more effect in his speech. There is some good sense in it being dealt with by my hon. Friend the Minister for Trade when he replies.
I return to the pattern of the negotiations, which are essentially on two levels. The first level is that of the European Community. During the negotiations with the other signatories to the MFA, it will be the Commission which takes the lead on behalf of the Community. Our first task, therefore, is to ensure that the mandate that is given to the Commission for those negotiations is, as far as possible, in line with our own requirements. Hon. Members will be aware that the Commission has put forward certain proposals within the Community. They have been the subject of examination at official level and will be considered initially by the Foreign Affairs Council of the Community next week, on 22 or 23 June.
The second level of the negotiations will be the direct contacts between the Commission and the other participants in the MFA. That will take place both in the GATT textiles committee in Geneva—which has its next meeting in the week beginning 13 July—and also on a bilateral basis. Throughout those negotiations the Commission will keep closely in touch with member States. It is in fact the custom to hold a co-ordination meeting following each major session held with other countries.
When the position has been reached that the Commission requires further guidance on the lines it should follow, the matter will be referred back once more to the Council of Ministers. I certainly expect that to happen in October, and probably once or twice thereafter. There will, therefore, be a constant interchange of ideas among member States, the Commission and the other participants to the negotiations.
I have gone into the matter in some detail because I want to make it clear to hon. Members that there is no question of the discussions at the Council of Ministers meeting next week resulting in final and irrevocable decisions on a negotiating mandate for the Commission. The process is flexible and continuous. The views expressed by hon. Members both today and hereafter will be taken fully into account as negotiations progress.
§ Mr. Nicholas Winterton
My hon. Friend is in a very important position as Secretary of State for Trade. Will he give the House, in particular those 140-plus Members who represent textile and clothing constituencies, a general assurance that, should the major portion of what he has 1196 told us not be embodied in any policy decisions of the European Commission and European Economic Community, the United Kingdom, as a member of the European Community, will exercise its veto as other countries such as France have done to ensure that their national interest is safeguarded?
§ Mr. Biffen
I can assure my hon. Friend that we shall fight our corner with all the vigour of an apprentice who has learned some continental habits. I can also assure him that there is plenty of evidence to suggest that we can fight our corner without necessarily resorting to a veto. Certainly any Minister would proceed warily on this topic under the monitoring of an alert House of Commons. That is one of the best guarantees in this situation.
§ Mr. Arthur Davidson (Accrington)
Will the right hon. Gentleman also fight a different battle in the interests of the English language by insisting that a phrase like "basket extractor", which nobody understands, is replaced by one which might be understood by the workers whose jobs are at stake?
§ Mr. Biffen
I am not the most ambitious of people but it is a fascinating task that is being dangled before me. I should like one or two entries from the hon. and learned Gentleman himself which could convince me before I tried to convince the workers.
To return to the question of the procedures in this matter, I can assure the House that the contacts between my officials and the interested parties will be intensified in the coming months so that their views are fully taken into account in the negotiations.
The multi-fibre arrangement is an umbrella agreement. It is the basis on which all important bilateral agreements with the supplying countries can be negotiated. Virtually all the Community's bilateral agreements run until the end of next year. Although we shall expect the Commission to carry out a great deal of preparatory work with the supplying countries this year before the new MFA is signed the detailed negotiations are unlikely to start until 1982. In looking at the new MFA, therefore, we must bear in mind the fact that the agreements we shall be negotiating under it will run from 1 January 1983. It is therefore a fairly long-term process on which we are embarking.
The multi-fibre arrangement provides the British clothing and textile industry with a distinctive measure of protection. At the same time, it provides suppliers with guaranteed access to the markets of developed countries such as Britain, and safeguards them against the danger of unilateral action which Governments would otherwise be pressed to take. It is therefore in the interests of all concerned that when the present arrangements expire a successor MFA should take its place.
We are talking about a prize which is no mean objective—the satisfactory and orderly development of trade between the Western world and the developing countries on terms which are politically acceptable both in the West and in the developing countries.
There are a number of diversions at this season of the political year. I do not want to enter as an unscripted campaign manager, but I thought that the right hon. Member for Leeds, East (Mr. Healey) put the matter very effectively in his Lady Morgan memorial lecture at Cardiff in March last year. He said:There is no doubt that if one major industrial country finally breaks with the principle of free trade many, if not all, of the 1197 others will follow suit. The world will disintegrate into a series of siege economies with steadily declining rates of growth. The best we could then hope for would be an attempt to improve these growth rates by a clumsy series of bilateral trade agreements based on barter like those which have plunged the COMECON countries into even greater disaster than the West.The right hon. Gentleman's point is an extremely fair one. We are not engaged in any crude trade-off between the interests of Bradford and the interests of Bangladesh. This is a much wider consideration. We know that the clothing and textile industries have accepted a degree of contraction and dislocation which is practically without precedent elsewhere in the economy in this century. It is a sign of the commercial, social, and political maturity of this country that we have accommodated that in the manner that we have.
The Department of Trade is not a particularly distinguished building within the complex of Whitehall but spiritually it has a pantheon which contains both Gladstone and Joseph Chamberlain; reminders that all times produce their particular men. The particular men at the moment are those who will take a balanced view on the nature of developing trade between the Third world and ourselves. It is not an appropriate ground for ideologues. Nonetheless, it is an area in which there can be tremendous and enduring advantage for a trading nation such as ourselves to find a mechanism which will be to our mutual satisfaction.
§ Mr. John Smith (Lanarkshire, North)
This is a timely debate. The House is grateful to the Government for providing time for it to give its opinion to the Government before these negotiations commence. I hope that the Government mean what they say—that they expect to be monitored continually by the House of Commons in the course of the negotiations and are prepared to justify to the House the progress of the negotiations, and consider the objectives that the Secretary of State outlined today.
It is clear that the Government must work out a basic policy. This is a very complex issue. There are many highways and byways into which one can easily be diverted in considering the details of the future multi-fibre arrangement. There are some clear objectives to which the Government ought to adhere, some of which have been identified by the Secretary of State. I agree with some. I think that others ought to be put into the negotiating mandate, which the Secretary of State has not mentioned but to which his hon. Friend may refer later.
At the end of his speech the Secretary of State made one point with which I entirely agree, which is that the notion that there can be, or is, a free trade in textiles and clothing in the modern world is absurd. It does not exist. I do not think that it has existed. I do not think that it ever could exist in the foreseeable future. We know, for example, that there are already tariffs of 200 per cent. applied by Brazil and of 100 per cent. by Korea. Even a developed country such as the United States applies a tariff of 40 per cent. against woollen goods from this country.
The whole pattern of trade in textiles and clothing is one in which the description "free trade" is neither exact nor realistic. We know the difficult problem of reconciling the interests of developed countries with those of developing countries at a different stage of development and competing for similar markets.
There is no dispute that we need a renewal of the multifibre arrangement, but there may be controversy, as the 1198 negotiations proceed, over the conditions, terms and levels upon which the MFA should proceed and how successful and genuine the Commission is in seeking to get a tougher and more realistic successor to the existing MFA2. The starting point for our considerations of the MFA is that we do not look simply at the multi-fibre arrangement.
Two other documents are linked to the multi-fibre arrangement negotiations. They are the document on outward processing produced by the Commission and the document on arrangements for the preferential countries, which deals with access from ACP countries and also from the Mediterranean associates. The Government would be well advised to keep these three issues linked throughout the negotiations in the Community, and to insist that the Commission keeps them linked.
It would be absurd to reach a multi-fibre arrangement agreement and then find that the quotas and global ceilings were being eroded by huge increases under the guise of outward processing, access to the Community markets or generous dispositions in favour of, for instance, the Mediterranean associates. Linking is a well-developed Community habit, as I am sure the Secretary of State is well aware. If he was an apprentice before in these matters, I feel sure he is having speedy and thorough training in the habits of the European Community. Linking is an established phenomenon which we should seek to make sure that the Commission adheres to in this respect.
The other important matter that is a starting point is the present position of the textile and clothing industry in this country. It is in a catastrophic condition. The country has gone through two grim years for British manufacturing industry as a whole. On several occasions we have debated this matter and sought to show where we think the responsibility for some of the sad developments in British industry lies, and we have often expressed our dislike of the Conservative Party's lack of industrial policies.
The textile and clothing industries have suffered more than any other sector of our manufacturing economy. Employment in the course of 1980—a particularly disastrous year—went down by about 120,000. The Secretary of State has a figure of 117,000 and there is a competitive figure of 123,000, but about 120,000 people lost their jobs in one year. In a decade or so the industry has shrunk from 1 million to 630,000 jobs. At present there are 374,000 jobs in textiles and 256,000 jobs in the clothing industry. It can be seen still to be an important industry, although it has, sadly, shrunk over the past decade.
The problem of low-cost suppliers is not the only one faced by the industry. It was rocked almost to its foundations by a surge of imports from the United States during the past year or two. That is another serious problem which involves the distortion of the market because of certain policies pursued by the United States. That was a significant cause of difficulty. In the context of the multi-fibre arrangement, it is the problem of the low-cost suppliers that concerns us.
The Government must conclude that the decline in the textile and clothing industries has to be stopped If they decline further, they will cease to exist as a viable part of our manufacturing industry. Morale, unfortunately, is low among management, owners and workers. Art urgent injection of confidence and stability is needed by the industry so that investment can be made with confidence. The industry has shown in the last year or two that it is willing to make investments in the right conditions. Some 1199 confidence must also be given to the work force which has co-operated amazingly well with management to try to save this beleaguered industry.
The Government should decide that on all fronts of their policies there must be a serious attempt to stop the decline in the textile manufacturing industries, and the major objective should be to reach a new multi-fibre arrangement which assists that process.
The Secretary of State mentioned various issues which will be discussed during the negotiations. I want to outline one or two issues which the Opposition think will have to be concentrated on during the negotiations.
One issue is the suggestion of global limits. I am not sure whether we are allowed to refer to a Commission document which apparently, in this bizarre manner, is not available to Parliament. Most of us by surreptitious means have been able to find copies of the document. I understand that it might have been in the Library for some time. Why that was not pointed out to hon. Members I do not know. When we are discussing a Commission document, it should be available on the Table of the House of Commons so that we can discuss it realistically. That would be an elementary change in our proceedings.
The Commission document refers to the introduction of global limits. I am sure that in the discussions the Government will seek to achieve global limits. It is the levels at which they will be set that are important. It is also important to have an overall global limit that includes what is likely to come in via the preferential countries and via any changes in outward processing policy.
It follows that the levels at which the global limits are set will be extremely important. In future they must be related to the market growth. The Secretary of State said that there could not be a 6 per cent. increase as there was in previous versions of the multi-fibre arrangement. We are not in the world of 1974 or 1977. We are in the bleak world of the 1980s, when most of the Western world is in recession and, unfortunately, the United Kingdom is in a deep recession in which market growth must be limited. Therefore, the amount of imports to be admitted from low-cost suppliers must be related to that fact.
At one stage it appeared that the Government were committed to what has been called the recession clause. The Minister of State, in a speech to the British Textile Confederation in Harrogate earlier this year, committed the Government to negotiating hard for a recession clause. The Secretary of State was a little less encouraging. We shall look at his words with care. Whether it is called a recession clause or bears another name, there must be a capacity built into the new arrangement whereby if there is a drop in the market there has to be some attenuation of the imports allowed into the market. Otherwise, there will be even more depredation of the British texile and clothing industry.
It is also important in the negotiations that the base levels should not be on the 1982 quotas. These are too large and an attempt should be made to reduce them substantially.
The overall objective should be to limit the amount of low-cost imports coming into the European Community and the United Kingdom to much more realistic levels in terms of world economic circumstances and of the serious peril facing our industry.
1200 There will be considerable pressure from other countries to follow a much less realistic policy than that which most people here would wish the Government to follow. There are considerable disputes within the Community about these matters, and a different policy will be followed by Germany from that which will be followed by, for instance, France. I hope that the Government will stand firm in the European Community and insist on a realistic mandate for the Commission negotiators.
The Opposition view any enlargement, encouragement or extension of the principle of outward processing with grave misgivings. It amounts to an export of employment. It is a way in which the MFA can be evaded, and a way in which multinational companies can export employment to get the benefit of cheap wages in other parts of the world. I hope that the Minister of State will make clear the Government's view. There should be resistance to any major extension of the principle of outward processing. The Commission has made complicated proposals which will be considered in detail later in the debate, but I hope that the Government will say that they do not view an extension of this device with any favour.
The other of the two linked documents to the multi-fibre arrangement document refers to preferential countries. It is important that some encouragement should be given by the Government to the idea promoted by the Commission that more access should be given to the poorer countries. That arises in the context of the MFA and the preferential countries.
I do not dispute the idea that the poorer countries or the ACP countries do not represent a menace to our indigenous textile and clothing industries. One can take a more relaxed attitude to imports coming from those countries. However, that is not true of the Mediterranean associates. They have supplied a large amount of low-cost imports to Community markets and to the United Kingdom. They are not all poor developing countries. Some are reasonably prosperous and have developed large textile industries. This is how the MFA has been almost subverted in recent years. There should be a tightening up process.
§ Mr. Nicholas Winterton
Does the right hon. Gentleman agree that, while imports from some of the developing countries are relatively harmless, when added to the quotas which have already been granted and when those new imports might exceed the global ceilings which have been set under the MFA, they could be the straw which breaks the camel's back? Therefore, in any global ceiling decided by the EEC, room should be left for certain developing countries which are not yet supplying this country perhaps to supply limited amounts of textiles and clothing.
§ Mr. Smith
I hope that what I am saying is being treated in the context of what I said at the beginning of my speech about an overall global limit having been reached. All the other bits and pieces fall within the overall global limit. I was trying to draw a distinction between the Mediterranean associates and the ACP countries. That distinction is clearly understood by the industry and those who work in it.
A number of things must be said on the general question of developing countries. The developed world has an obligation to take products from developing countries. It is clear that the European Community has taken a fair share of those products. Sometimes in such debates one 1201 might think that we refused to admit low-cost imports from developing countries. That is not so. By volume, about one third of the textile and clothing products used or sold here come in from low-cost producers. Therefore, in a sense, we have given one third of our market to low-cost producers.
§ Mr. Steven Dorrell (Loughborough)
Will the right hon. Gentleman confirm that taking those imports from developing countries is hardly an insupportable burden, as we run a consistent balance of payments surplus in manufactured goods with those countries?
§ Mr. Smith
The hon. Gentleman talks about an insupportable burden. In these debates it is sometimes difficult to appreciate this. Sometimes people say that the burden must be taken by this country. It falls almost uniquely on certain people in the textile and clothing industry, particularly on employees. With the benefit of cheaper goods, it is easier to say in Kensington High Street that those cheaper goods should come in. However, the responsibility will not fall on the person who makes that remark, but on a worker in Huddersfield or some other part of the country, who loses his job as a result.
§ Mr. Dorrell
Will the right hon. Gentleman spare a thought for my constituents who are working in industries making products which are exported to developing countries?
§ Mr. Smith
In all trade matters, we must have regard to export potential as well as import problems. That is obvious. We also export some textile machinery—unfortunately, not as much as we once did. When people make sweeping remarks about how we should allow in more and more from developing countries, they should be informed that we already take considerable amounts.
Furthermore, the EEC as a whole takes more than other parts of the world. The United States does not take anything like the same amount from the developing countries as the EEC. Japan, Canada, South Africa and New Zealand also do not. If we have a world problem in which the developed world has to take more goods than the developing countries, that should be shared out a little more equitably. That should be one of the objectives of the Government in their international negotiations.
§ Mr. Robert Banks (Harrogate)
Will the right hon. Gentleman differentiate between the developing nations and the underdeveloped nations? There is a subtle and important difference in that respect.
§ Mr. Smith
The difficulty about giving way is that that is precisely the point which I wanted to make. There is a difference between some of the countries which are already well developed and some of the genuinely poor countries. The Commission document makes it clear that it wants to encourage more products to come from the genuinely poor countries.
Low-cost imports are dominated by three large producers—Hong Kong, Korea and Taiwan. They have the vast bulk of the share. The objective of the negotiations should be to persuade those countries to take a lower share of the market to allow more room for the other poorer, developing countries to get within the overall global limits which will be set under the multi-fibre arrangement.
§ The Minister for Trade (Mr. Cecil Parkinson)
The right hon. Gentleman said that some countries had high 1202 tariffs against our textiles. He held that out as a reason for being tough with them. Hong Kong has no tariffs of any sort and no quotas. Therefore, I hope that the right hon. Gentleman will confirm that countries which have an open market deserve different treatment from that for those which operate behind high tariffs.
§ Mr. Smith
The right hon. Gentleman should allow me to reply to his intervention before he makes comments such as that. He said that I had been talking rubbish so far, which I do not think is a fair description. We shall not be assisted in the debate by Ministers, who should be listening to what is said, making remarks in such prejudiced fashion before I have even answered the point which he made.
I said earlier that we do not have free trade because some countries had high quotas. We agreed with the Secretary of State, as it was an indisputable fact, when he said that certain countries have an open trading arrangement—namely, Hong Kong and Singapore. No doubt that is one factor which must be taken into account in the negotiations.
One has much less sympathy with a country Such as Taiwan, which has wide access to the British and to the EEC market. It not only follows a restrictive trading policy, but actively indulges in fraud and counterfeiting on a considerable scale. It is time that that was said more openly here and taken into account in the negotiations. I hope that the Government will bear that in mind If the Minister of State can cool himself down sufficiently to listen carefully to what is said in the debate, I hope that he will bear that in mind as well.
Another aspect of the relationship between the developed and the developing countries is the idea of a social clause. The Commission said, albeit tepidly, in its document that it supported the principle of a social clause and that there should be some involvement in the new arrangements linking access from developing countries to their adoption of International Labour Organisation conventions on conditions and wages. In the past, there has been some resistance among developing countries to such a concept. That may be changing slightly. The international trade union movement has been strongly urging that change. It is interesting that the Commission has put forward a proposal. I hope that the United Kingdom Government will support it in the discussions in the Community.
Another feature of the MFA that the Secretary of State touched on which I believe is important is the policing of the arrangements. In the past, arrangements have been made under MFA1 and MFA2 which seemed reasonably satisfactory to the industry when the negotiations were made. However, as the years went by, it was discovered that the quotas were constantly exceeded and that the protection mechanisms did not work. The Commission was often slow in any follow-up and the procedure was excessively bureaucratic and cumbersome. I know the difficulties which successive United Kingdom Governments have had in seeking to make the machinery work.
There are a number of difficulties. First, there is the belief in free circulation in the Community. A disturbing 1203 aspect of what I understand to be the Commission's position is that it wants to encourage free circulation, which will erode the system of national quotas to which the Secretary of State referred. I hope that the Minister for Trade will confirm that the Government will resist an increase in free circulation. If greater free circulation is allowed, there is little point in having the national quotas, because they will be greatly exceeded. It appears that the Commission wants to move completely away from the use of article 115 of the Treaty of Rome. I hope that the Government will fight that strongly.
Similarly, the basket extractor mechanism could be strengthened. There should be a stronger price clause, particularly in relation to the State trading countries. The measures to counter fraud should be strengthened, particularly where goods are labelled "Made in Hoddersfield" or "Mode in England" or where other clumsy fraudulent devices are used to persuade people here and elsewhere that the goods are made in Britain.
It is not possible to look at all the angles of the problem in this debate or to deal with all the difficulties that the textile industry faces. The Secretary of State mentioned the problem of the new entrants to the EEC. Our industry also faces serious problems from them. It is, therefore, all the more important to get a satisfactory MFA, although, even if the agreement is satisfactory, we are not yet out of the woods. There are many other and continuing problems to face.
I have given the Opposition views on a number of the problems. I am sure that in the remaining debate my hon. Friends, who represent the bulk of the textile and clothing areas, will develop the detail and seek to stiffen the Government's resolve to make MFA3 not a weaker MFA2 or to develop existing lines in a weaker direction but to make it a new starting point for an effective and orderly arrangement. The industry is in crisis. It is at the crossroads, and successful renegotiation is crucial for its stability and future.
The Prime Minister said that the Government's objective was a tough and realistic successor to MFA2. We hold them to that. We assume that the right hon. Lady considered carefully what she said. Her statement sets a high standard for the Secretary of State and his colleagues. It is crucial for the country that they achieve it. We wish the Government well in the negotiations, but we are not entirely convinced that they will be as robust in them as they are at making statements. We shall continually monitor, question and probe the matter in the House. It is the duty of all hon. Members with textile and clothing interests in their constituencies to do so.
§ 5.2 pm
§ Mr. John Farr (Harborough)
I believe that the House welcomes the energetic attitude of both Front Benches. The Minister will know the feeling of the House when he goes to Brussels as a result of the debate. I am grateful to the powers-that-be for arranging this important debate. I am glad that we are not too restricted for time, although I shall be as brief as possible.
My right hon. Friend and the right hon. Member for Lanarkshire, North (Mr. Smith) dramatically showed us that employment in the textile and clothing industry has become critical. We have the facts and figures, so I shall not labour them, but it is a human tragedy.
1204 However, it is not generally known that, certainly in the knitwear industry, there is no sign of improvement. The East Midlands is the centre of the knitted goods industry, and in that area the number of jobs is continuing to fall. Redundancies and closures are still unpleasantly frequent. In the past three weeks, six or seven firms have announced further closures and redundancies. From the way that things are going, 1981 will continue to see the same tragic rundown of jobs. It is disgraceful that since the start of 1980 no fewer than 123,000 jobs have been lost. We cannot allow that to continue.
§ Mr. Gary Waller (Brighouse and Spenborough)
Does my hon. Friend agree that, tragic as the job losses are, they were in many cases necessary for companies to continue? The introduction of new machinery has protected jobs for the future, however tragic it is for those who have been made redundant.
§ Mr. Farr
I am grateful to my hon. Friend for what he says.
There is a wonderful spirit in the East Midlands of cooperation between management and work force. I visited many firms with the hon. Member for Nottingham, North (Mr. Whitlock), and many have the most modern machines imaginable, with a work force as efficient and co-operative as anywhere. There is a tremendous fight-back spirit. Frankly, management and work force cannot do more. They have some wonderful design work coming on, but their efforts are continually undermined by low-cost imports. That is why we look to the Minister to adopt a robust attitude on 23 June. I should prefer him to tell us that no agreement had been reached and there was no MFA3 rather than to come back without having plugged the many holes that let the water out of the bath.
The Minister should bear 10 important points in mind when he approaches his colleagues in Europe. They have been mentioned by my right hon. Friend and the right hon. Member for Lanarkshire, North. Particularly important are globalisation, the principle of the relationship between imports and consumption, the principle of base-level calculation and the principle of differentiation. In particular, the principle of the basket extractor must work more effectively.
The right hon. Gentleman, and, I believe, my right hon. Friend, mentioned the particular need to have an effective recession clause. A new MFA is no good unless there is an effective recession clause to take account of what has happened since MFA2 began. A recession clause is essential for the whole industry.
The principle of the price clause is important, as is the need for a clamp-down on fraud. It is also vital to have true reciprocity in access to world markets. The principle of a longer-term policy is also extremely important. It is important that firms should have the confidence to pursue modernisation and adapt to the new circumstances of international competition. Those are some of the points that my hon. Friend and the British team must consider and follow up in great detail when they go to Europe on 23 June.
Two further points have already been touched upon, but I think that it is helpful if hon. Members on both sides tell the Minister what we regard as vital. First, excessive import penetration due to the weaknesses of MFA2 must be removed by an overall reduction in established levels, the greatest contribution being made by countries such as 1205 Taiwan and Korea which, at least in clothing and textile production, can no longer be accorded developing country status.
A further vital point, which I am sure will be enlarged upon later in the debate, must be carefully borne in mind. Tighter restrictions must be placed on the preferential treatment accorded to Mediterranean and Lomé countries. Promises made in the 1960s are unrealistic today. Any growth in imports must have regard to likely demand. We must also bear in mind the accession to the community of Greece, Portugal and Spain in the near future, all of which have highly competitive and efficient knitting industries that benefit, among other things, from very low-cost wage systems compared with our own. Our industry must therefore also overcome those additional disadvantages.
My right hon. Friend the Prime Minister was absolutely right when she wrote on March 11 to my hon. Friend the Member for Melton (Mr. Latham), whom I am glad to see here today, in relation to the MFA renewal agreement:In addition it is our intention to press for a tough successor arrangement when the present MFA comes up for renegotiation later this yearI hope that our team will heed that advice. I think that all Members of the House, with the possible exception of my hon. Friend the Member for Loughborough (Mr. Dorrell), would support that attitude.
It is important properly to establish our position within the EEC and to make it clear that we regard certain things as essential. There is no doubt that some of our EEC partners are less concerned than we are about many matters that affect us closely. I hope that the Minister will clear the air with them so that an acceptable negotiating position is established within the EEC.
Finally, I believe that it is better to have no MFA than a bad MFA3. I hope that the EEC as a whole, on 23 June and subsequently, will establish an effective abandonment position so that if a satisfactory MFA3 cannot be reached to meet the demands and requirements of British industry, which is wasting away before our eyes and must be stopped from doing so, the subject will be abandoned and we shall resort once again to our own national defences in a bid to retrieve what is probably lost forever.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. The hon. Member for Harborough (Mr. Farr) began by saying that we had plenty of time for this debate. It is true that we have a full day, but no fewer than 24 hon. Members have expressed a wish to take part, and there may be others. Those who speak at length early in the debate will, therefore, be denying their colleagues an opportunity to speak later. The hon. Member for Harborough, if I may say so, set an excellent example.
§ Mr. Ben Ford (Bradford, North)
I shall endeavour to be brief. I am glad that the Government have seen fit to provide time for this matter to be discussed. I assure them that it is regarded as being of the utmost importance in the wool textile industry in West Yorkshire. I thought that the Secretary of State made a fair speech. He has clearly benefited from the many briefings emanating from all parts of the textile industry. I believe that he caught the mood of the House in the reasonable and amenable manner in which he made his speech.
In 1977, the industry generally welcomed the multifibre arrangement mark 2 as a means of stabilising the share of consumption taken by imports of products likely 1206 to cause market disruption. Since then, however, the rate of import penetration has risen from 37.4 per cent. to 44 per cent. in the Community as a whole. That is why Members in all parts of the House regard this debate as crucial before Ministers meet their fellow Ministers to discuss the EEC mandate next week. The Government should be under no misapprehension about the strength of feeling in the industry on this matter, nor about the desire that they should not weaken in their resolve to secure reasonable protection for the wool textile industry and the textile industry as a whole against the distortion of trade caused by low-cost imports.
The industry regards a number of items as essential for inclusion in the new multi-fibre arrangement. Some have already been mentioned, but I shall go through the list. Inevitably, I shall repeat, I hope not tediously, points that have already been mentioned. I think that this will happen from time to time in the debate, but it will aid the unanimity of the House in this respect and aid Ministers in their resolve when they go to the meeting.
There is a need to consider a global view of import pressures. I was glad to hear the Secretary of State deal with that. It is necessary for the import figure to be linked with consumption. There should, therefore, be a recession clause, as was also recognised by the Secretary of State. We need realistic base levels. Quota levels should be based on existing import levels. There should be strict control of outward processing, as my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) suggested, because this will clearly be an increasing sector of the trade in years to come.
We must retain United Kingdom quotas. We should not accept any dilution of the principle that Community quotas should be divided in member State shares. I agree, again, as has been said, that we should seek an improved basket extractor mechanism. This in itself is a good idea, but it has not worked too well over the past few years. It could, and I hope will, be improved.
We must seek preferential treatment for the poorer countries. Although we live in difficult times, it is still necessary for an industrialised nation in the West to take its share in helping those less fortunate in the world. I emphasise that, in so doing, we should not go outside global ceilings. According to custom, my right hon. Friend the Member for Wakefield (Mr. Harrison) is precluded from speaking from the Back Benches. He wishes to be associated with the subject of preferential treatment for poorer countries as a result of the representations he has received from his constituents.
I agree that we should seek a social clause, which should be related to the International Labour Organisation's standards in countries that export textiles to the EEC. That is supported by the trade union movement throughout the world and, in particular, by many trade unions in Third world countries. If such a clause is not implemented within a reasonable time, the quotas for those countries should be withdrawn. We should consider arrangements if the MFA fails. The EEC should make it clear that renewal of the MFA is conditional on it being able to negotiate bilateral restraint agreements that are satisfactory in all respects. It should reserve its right to take other steps in the absence of satisfactory arrangements.
West Yorkshire expects the Government to take serious note of all these points at a time when 12.5 per cent. or more of the population is unemployed.
§ Dr. Shirley Summerskill (Halifax)
As he mentioned West Yorkshire, will my hon. Friend bear in mind that more than half of the jobs lost in the textile industry in the past year have been lost in West Yorkshire? Does my hon. Friend agree that his recommendations to the Minister have the firm backing of the British Textile Confederation, which represents both the unions and the employers? It is in a good position to analyse the industry's problems and to produce solutions. Therefore, the Minister should press those recommendations strongly when he attends next week's discussions.
§ Mr. Ford
I am obliged to my hon. Friend, because she has stated the position precisely. I should like to put on record the aims that the MFA seeks to achieve. They are as follows:The basic objectives shall be to achieve the expansion of trade, the reduction of barriers to such trade and the progressive liberalisation of world trade in textile products, while at the same time ensuring the orderly and equitable development of this trade and avoidance of disruptive effects in individual markets and on individual lines of production in both importing and exporting countries.The Ministers will hear many more speeches along such lines. The more agreement we achieve, the stronger will be the Government's hand when the Ministers meet their counterparts next week. I hope that the Ministers will carry these laudable objectives in the forefront of their minds when they represent the British people at those talks.
§ Mr. Nicholas Winterton (Macclesfield)
This is an important debate. As has been said, it gives those hon. Members who represent the 140-plus textile and clothing constituencies an opportunity to express their views and allows the House to express its view, together with the views of the many people employed in textiles. Indeed, the textile industry is one of our largest employers.
I was tremendously impressed and encouraged by the speech made by my right hon. Friend the Secretary of State. From a sedentary position I implied, perhaps with tongue in cheek, that I might have written the speech. I agreed with all that my right hon. Friend said. He merely repeated the requests and demands that I have made of successive Governments in recent years on behalf of the textile and clothing industries. I was so impressed by his speech that I intend to present my right hon. Friend and his wife with the "Think British" scarf and tie that I have in my hands. They will be put on the board for my right hon. Friend and his wife. I intend to do the same thing for my hon. Friend the Minister of State. When they go to Brussels, they will be able to stand up for British interests and positively show that they are doing that. The people of the country expect them to do that. Therefore, the ties and scarves will be placed on the board for my right hon. and hon. Friends and their respective wives.
Perhaps the tenor of the debate is that the country should start to think British once again. We have something to be proud of, namely the textile and clothing industries. From your non-political position, Mr. Deputy Speaker, I know that you can nod in agreement when I say that our textile and clothing industries make excellent products. The industry has suffered severely in recent years only because of unfair competition. Therefore, I ask the Minister to think British when he goes to Brussels for next week's important meeting. I understand that there will be another meeting in July, when final decisions may be made about the MFA.
1208 The hon. Member for Bradford, North (Mr. Ford) implied that hon. Members from all parties wished to strengthen the Government's arm in the negotiations by repeating many of the requests and demands that we wish to see incorporated in the MFA3. It is vital that a global policy be established for all low-cost imports, with effective—I stress that word—global ceilings on all sensitive products. That is vital. There is a need for enforceable limits on our preferential suppliers. Indeed, that has been mentioned by the right hon. Member for Lanarkshire, North (Mr. Smith).
Sympathy has been expressed for the view that there should, for the first time, be a recession clause in the new MFA. It is only right that the growth of imports into Britain—the principle of stabilisation of import penetration—does not exceed market growth. If it does, there will be a further disruption to our textile and clothing industries, more mill closures and more redundancies.
Both sides of the House have often paid tribute to the fine working relationship between the work forces and employers in the textile and clothing industries. Once again, I pay tribute to both the employers and the work forces for the way in which they have tolerated unfair competition. However, on their behalf we have brought pressure on the Government to try to reduce it. I pay tribute to both the employers and the labour force for the way in which they have met the demands of the new world situation and for the way in which they have faced foreign competition, much of which has been unfair. As my hon. Friend the Member for Harborough (Mr. Farr) indicated in his excellent speech, new, sophisticated, high technology machinery has been installed which has resulted in a reduction in the labour force. That has been done without any industrial dispute or difficulty.
In the main the general secretaries and union executives—whether of the Amalgamated Union of Textile Workers, or of the National Union of Tailors and Garment Workers—have been highly responsible. Both they and the work force have co-operated to ensure that the textile and clothing industries have a viable and prosperous future.
I mention briefly the need for a much more effective basket extractor mechanism. The hon. and learned Member for Accrington (Mr. Davidson), in an intervention during the speech of my right hon. Friend, asked for a better understanding and explanation of what a basket extractor mechanism means. I do not intend to provide one, but I know that the present basket extractor mechanism is not effective. It does not work fast enough and is not implemented fast enough by the European Economic Community and the organisations that operate it within the EEC. As a result, severe disruptions have occurred and many jobs have been lost.
It is important that the base levels for MFA3 are not based on quotas for 1982. We need to establish a sensible base. Perhaps the average of the past three years would be a realistic base on which to establish quotas for the future. How right the right hon. Member for Lanarkshire, North was to request the Government to ensure that there was strict control over outward processing. If we do not have tight control over that, all the quotas set within global ceilings will be completely ineffective and will be breached and abused time and again.
On a similar matter, it is important that the European Commission should take a close look at free circulation within the EEC. I want to see article 115 retained. It is 1209 vital that we maintain a national quota system. We need to control free circulation under article 115. It has been mentioned on a number of occasions in the debate that there must be an effective price clause relating to the COMECON or State trading countries.
The wool industry in Yorkshire and the suiting and clothing industries have been badly affected in the past by unfair competition from the State trading countries. It is difficult for the industry to obtain the necessary figures to present to the European Commission in support of an application against dumping or unfair competition, because such figures are not readily obtainable. Often, some of those items come in through other members of the EEC—through Germany because of the close trading relationship between East and West Germany, Germany's proximity to Austria and Austria's proximity to the State trading countries. There is a tremendous problem not only over outward processing but over free circulation. Those matters must be attended to carefully by the Government in the negotiations on the renewal of the multi-fibre arrangement.
Fraud has been mentioned in the debate. Reference has been made to folkloric items. I prefer to call them goods from what we know as cottage industries. The practice of allowing folkloric or cottage-produced items to come into this country free of quota is being severely abused, not least by India. Consignments of shirts that are supposed to have been produced by cottage industries come into this country in large quantities and have disrupted the shirt industry in this country. It has subsequently been proved that those shirts have been produced in factories and non cottages. Those are important considerations that the Government must take into account when seeking a final decision on the renegotiation of the MFA3.
It is important to quote one or two statistics. People are inclined to say that we must assist the developing world—the Third world countries. I shall quote from a document sent out by the Textile Industry Support Campaign. In relation to gross domestic product, the United Kingdom imports considerably more textiles and clothing from low-cost countries than most other major industrialised countries. The document gives figures:The following table, derived from statistics published by the OECD and UNO, shows imports of textiles and clothing from low cost countries … in 1978 in dollars per thousand dollars of GDP.All other modern developed countries are below that figure. Japan allows in goods to the value of only 2.1 dollars per thousand dollars of gross domestic product. France and the United States are low in the league, so are Italy, Canada, Austria, Switzerland, Belgium, Luxembourg and Sweden. All those countries are well below the United Kingdom figure. They take in fewer textiles and clothing from the low-cost countries than the United Kingdom. There is no doubt that we are playing our full part in taking goods from the developing world.
- West Germany, 7.7
- Netherlands, 7.3
- UK, 5/".
It is only fair for me to balance that by saying that, while we want fair competition, a tougher multi-fibre arrangement, a recession clause and firm global ceilings that are not breached, we also want a more liberal trading arrangement in the world. It is important that other countries play the game as much as we do.
It has been pointed out correctly that the United States—a highly developed and sophisticated country with 1210 high technology, which may be ahead of ours, even—operates tariffs against us far higher than the tariffs we operate against it. That is why I was so critical of the Government in the last Tokyo round, when we reduced our tariffs. So did the United States, but its tariffs remained much higher against our goods than our tariffs were against United States' goods.
I hope that the Government will take on board that we want improved access for United Kingdom products, not only in developed countries, such as the United States, but in low-cost countries too. I am a great believer in reciprocity of trade. Perhaps the answer to our problem with Japan which is flooding our market—some of the equipment is not all that good, not much better and in many cases not as good as some of that produced in this country—is to say that we intend to put up tariffs against Japanese goods unless Japan allows our goods to be imported free of non-tariff barriers, which are an effective imposition against goods from other countries.
There are many other areas that I could explore but I want to allow as many hon. Friends and hon. Gentlemen as possible to participate in the debate.
I speak as chairman of the all-party group on cotton and allied textiles just as the hon. Member for Bradford, North spoke for the wool textile group. We are speaking completely across party lines. I have never participated in a debate in which there has been so much cross-party support for British industries as there is today for the textile and clothing industries. They are good industries. We must ensure that they have a future to play in the economy of our country. My hon. Friend the Minister for Trade often quotes the statistics showing that our exports of textiles and clothing exceed £2,000 million a year. That is correct. However, what he does not say is that at one time we had a surplus on our trade in textiles and clothing. No longer does that position prevail. However, it could, if we ensured fair competition for our industries.
I hope that my hon. Friend and my right hon. Friend the Secretary of State will go to Brussels wearing that tie with pride because they will have an ovewhelming mandate from the House to negotiate a tougher MFA for the benefit of Britain, the benefit of the textile and clothing industries and those skilled and responsible workers in the industries who have served those industries generation after generation.
To me, the textile and clothing industry represents a campaign, and it is a campaign that is close to my heart, because I respect the people in that industry for what they have suffered, and for what they have done for this country. But, above all, I look forward to their being able to provide for this country as they have in the past. Only our Government can guarantee that, by ensuring that what my right hon. Friend said in opening the debate is carried forward into reality.
When the MFA3 is negotiated and signed it must contain everything that my right hon. Friend said in his opening speech. If it does not, he will have some very difficult Back Benchers to contend with, because I put the textile and clothing industry above party politics. I do not use those words as a threat. The industry deserves support. Let the Government, with the support of the Opposition, the Liberal Party and all other parties in this House, go to Brussels with a unanimous mandate to do what this House requires.
§ Mr. Cyril Smith (Rochdale)
I am pleased to be able to speak after the hon. Member for Macclesfield (Mr. Winterton), if only because I share his dedication to the textile industry and, indeed, admire his dedication to it. It is a dedication that has been demonstrated even by his going into the Lobby against his own party—a rare phenomenon in the House.
I could be tempted, if only for the record, to give many of the statistics about the textile industry. But I shall not be tempted because of the pressure of time, except simply to say that we are debating today the need to take seriously the textile industry and to ensure that the third multi-fibre arrangement is a tougher one than the first two, and to assure the Minister that when he goes to Brussels he will go with the backing of the whole House—provided that the Minister's opening speech is matched by deeds. That is what we have yet to see.
But I was extremely encouraged by the Minister's speech. Like other hon. Members, I shall be watching with interest to see the extent to which the contents of his speech are borne out in practice when the agreement is ultimately made, presumably some time later this year or early next year.
I have had the opportunity of reading the European Commission's confidential document on this matter and, indeed, I intend to quote from it, but first I must make one constituency point. I note that in that negotiating brief there is reference to the fact that accelerating job losses in the textile industry have hit the least favoured areas. The document goes on to say that it appears that this will be a continuing process.
In making my constituency point, I find it difficult to relate that background to the fact that my constituency is one of those that will be losing their intermediate status in 1982. We shall have to continue to argue that matter with other Ministers, but if the EEC confidential document is to be believed, the loss of that intermediate area status does not seem compatible with the fact that we are in a continuing process and, what is more, in a process where the areas least able to stand it are the ones that are being affected by it.
I suspect that the Minister who will reply to the debate will remind us—as the Secretary of State did—of the many textile quotas and import controls that have been introduced under the present MFA. I say immediately that the industry is very grateful for every one of those controls. But all that has been happening is that the Ministers have been plugging a few holes in a dyke, while the flood waters have tended to rush over the top and round the sides of the dyke. Therefore, as we begin to negotiate MFA3 we have to strengthen and extend the dyke to ensure that in future it will give sufficient protection without our having to try to plug holes in it. In other words, it is a major strategic task rather than a matter of tactical defence.
In paragraph 4 of article 1 of the present multi-fibre arrangement there is a statement about the need for industry to restructure. Indeed, in the European Commission's brief to which I have made reference there is mention in paragraph 7 of restructuring, reconversion and innovation in order tore-establish the Community industry's competitiveness".If that is the background against which the Minister will have to negotiate—I stress that they are not his words but 1212 the words of the European Commission—he will have to tell the members of the Commission that they are talking absolute and utter nonsense. They do not understand what the textile industry is about if, in the brief for MFA3, they are still talking about the need for the textile industry to restructure itself.
Throughout its history the industry has been in the forefront of innovation. It has never ceased to restructure itself. To talk of completing the restructuring, as the Commission document does, is to fail to appreciate that it is a process that will never be complete. But, more important, when the industry has done all that it can it will still not be able to compete with imports that are dumped, subsidised or aided by overseas Governments, and that come from industries whose home base is securely protected.
Over the past 12 months in my constituency I have visited a spinning mill that has just been re-equipped with the latest equipment in the world but has been forced to close. Similarly, I have visited a weaving mill with brand-new buildings and the most sophisticated looms. They had only just been taken out of their packing cases when the mill was forced to close. A few miles from Rochdale is another new building with the latest equipment, which was producing highly sophisticated fabrics, with a high added value and outstanding design content, for the export market. That mill has closed.
One of my constituents is the managing director of a group of modern spinning mills. The mills are in the Heywood and Royton constituency, but the managing director lives in my constituency. One of those mills has announced its closure in the last 14 days because the imported yarn with which it is having to compete is manufactured and delivered here at a price lower than the price of raw cotton.
It is no use the "Eurocrats" writing this sort of nonsense and telling our people that they need to modernise and restructure. Nothing that our people can do will make any difference. Only the Minister can prevent the annihilation of the industry. That is why the renegotiation of the MFA is vitally important. That is why we are pleased that the Government have given the opportunity for the debate today.
Paragraph 8 of the European Commission document mentions expansion and liberalisation. But it must be recognised—and I say this with some trepidation as a Liberal—that Third world access to the United Kingdom market, let alone the EEC, has reached saturation point. It cannot be allowed to grow any further except in so far as there is growth in overall consumption.
I received this morning, as I am sure did every hon. Member, a document from the World Development Movement. I was intrigued to see printed at the top the words "A fair deal for the world's poor". I seek a fair deal for Lancashire's poor. Lancashire's poor are hundreds of thousands of textile workers who have lost their jobs as a consequence of unfair competition and excessive imports from Third world countries. I do not subscribe to the view that we make the weak strong by making the strong weak. The time has come when the Government, through these agreements, have to stand up and say so. I, for one, as a Member of the House, am prepared to be counted on the matter.
We have to make it clear that in times of depression or downturn in demand the quantitative level of permitted imports must be reduced accordingly. This means that the 1213 MFA must contain a clause relating import levels to the level of demand or consumption in the home market. On past occasions the Minister has expressed some doubt about the practicality of such a clause because of the difficulties of measuring and anticipating changes in consumption quickly enough. I believe that if the will is there a way can be found. The industry has already put forward ideas. I hope that the Civil Service will advise Ministers on ways that this can be done.
During the currency of the present MFA there has been great concern, already expressed in the debate, about fraudulent practices—false labelling and countries exceeding agreed import levels. Trigger levels under the existing agreement have been exceeded many times before action has been taken. Even then, much of the action has been too late. Controls have often been based on the higher levels reached rather than the original levels before the agreements were breached.
I see from the negotiating brief that in connection with these malpractices there is talk of deducting 100 per cent. of the fraudulent import levels from the quota allowed to the offending country. That is no punishment. It is like telling someone who pinches a bottle of milk that he will have to drink it. The offending country is allowed to exceed import quotas and is told "If you exceed it, we will take it off what you are allowed to send next year". That, in itself, is commendable, but in the agreement we are looking for punishment for exceeding quotas. That punishment should take the form of sanctions against offenders, such as the stopping of imports for a period or a reduction of quotas by, say, double the amount of fraudulent goods sent in. All my current remarks relate to fraudulent goods.
We have further to ensure that sanctions are not evaded by use of the carry-over or swing provisions that exist under the present MFA. Those provisions should be modified in the new MFA. Many times in the past questions have been raised about excessive imports from a particular country only for a reply to be received stating that the excess was a "carry-over" from last year's quota or a "swing" from one category of imports to another. Overseas suppliers are always ready to use these loopholes. The carry-over and swing provisions should be reduced considerably or, better still, eliminated.
I am glad that it has become increasingly recognised that one of the unfortunate effects of the present MFA and its associated bilateral agreements has been that the lion's share of imports into the EEC has been taken by a few more developed countries of the Third world, such as Hong Kong, Taiwan and Korea, at the expense of newly developing countries. Any new agreement should therefore make it clear that neither the EEC nor this country can give increasing access to each newly developing country without limiting access to some of the well-established import sources. The point has already been made, but I reiterate it to make it clear that it has the support of all sections of the House.
I hope that the new MFA will be so worded that it allows us to take approprate unilateral action if we fail to reach bilateral agreement with each supplier, or if any supplier is dilatory in reaching agreement. After all, the MFA is, in a sense, only enabling legislation. It is the bilateral agreement that ultimately counts. We have to keep an eye on other trade arrangements not covered by the MFA, such as those with the Comecon countries, the 1214 preferential agreements with Lome countries, and the Mediterranean associates and accession treaties for new members of the EEC.
I wish, finally, to stress one aspect of trade in textiles and clothing that concerns the internal affairs of the European Community. While the United Kingdom has always tried, so far as I can see, to play by the rules, it is widely believed by many of us that other member States have applied them more rigidly or have made the administrative machinery more difficult to apply. This has had the effect of making imports into the United Kingdom easier than to the rest of the Community. We must therefore see that the total Community quotas for textile and clothing imports are fairly distributed by the member States and that free circulation is not readily permitted once goods have entered the Community.
I urge the Minister to be tough in the negotiations. I urge him to veto any agreement that fails to give adequate and flexible protection to the British textile industry. I urge him to understand that the hopes of the textile industry for its very survival rest on him and on his negotiations for MFA3. I am sure that he carries the good wishes of all parts of the House in negotiating the toughest possible deal with the rest of the world.
§ Mr. D. A. Trippier (Rossendale)
I am pleased once again to speak following the hon. Member for Rochdale (Mr. Smith). It is the second time that this has occurred in a textile debate. I agree with all that he says. He has great experience of the textile industry. He spoke with great passion. His speech was accurate. I have the pleasure of living in Rochdale, although just outside his constituency. I know that he is familiar with the problems faced by Rochdalians and Rossendalians. Among my constituents I have more people who are employed in the textile industry than the hon. Gentleman has. My constituency is therefore much more vulnerable. because it has failed to diversify as the textile industry in Rochdale has diversified. For that reason, I am especially interested in the debate.
The textile industry is suffering its worst recession since the 1930s. This is amply shown by even a cursory consideration of available statistics. The industry lost about 100,000 jobs in the 12 months up to December 1980. While this statistic alone outlines the gravity of the situation, there are other figures that depict the depth of the troubles faced by the industry. In the 18 months from the middle of 1979 to the end of 1980, 200 textile mills—about 8 per cent. of the total—closed. This was coupled with an overall drop in the volume of output in 1980 of 17 per cent. from 1979.
Additionally, the British textile industry, which had an import-export trade deficit of £700 million in 1979, experienced a further fall in the volume of exports in 1980 of 20 per cent. All this happened at a time when import penetration of the United Kingdom textile market reached an all-time high of 60 per cent.
Meanwhile, even though the British textile industry has slumped during the seven years for which the first two MFAs have been in effect, the textile industries of many low-cost countries, which also adhere to the MFA, have boomed. Far from the trade deficit which the United Kingdom shows in textiles, the low-cost countries have achieved profitable surpluses. For example, Pakistan registered a surplus of $405 million in 1978, while Brazil 1215 had a surplus of $453 million. Even more sobering are the records of India, Hong Kong and South Korea, which in all instances registered trade surpluses. In comparison, in 1978 the United Kingdom had a trade deficit of $930 million in textiles.
In the face of such statistics there can be no doubt that the first two MFAs have not provided a strong enough framework for a truly equitable distribution of the world's textile trade. The result has been that certain nations, such as the United Kingdom, have had to bear an inordinately large part of the recession while other nations have been able to take advantage of growth provisions in the MFA and profit by the United Kingdom's recession.
In view of this grave situation it is of the utmost importance that our Ministers should approach the forthcoming negotiations on MFA3 from a position of strength, determined to make the new arrangement an improvement upon the previous two. By advocating a strengthening of the present arrangement I am not attempting to alter the fundamental principles that lie behind the earlier arrangements. I am calling for a return to the same ideals that were originally set out in the preamble to the first MFA when the initial document was drafted. It stated that:the volatile and continually evolving nature of production and trade in textile products should be constantly borne in mind, and the fullest account taken of such serious economic and social problems as exist in this field in both importing and exporting countries.Hence, it is obvious that the MFA in its original form was intended to be a flexible document, in the sense that it should be able to respond to the economic realities of importing as well as exporting nations. However, no provisions were made to safeguard against economic recession in the developed nations.
It must be remembered, too, that the original arrangement was negotiated in 1973—a time of relative prosperity for the textile industry. The eventual recession was not forseen, and so the provisions of MFA1 were based solely on the prospect of continued economic growth in textiles for developed as well as non-developed nations. It would be stating the obvious to go into the question of how fatuous that supposition proved to be.
In place of the present arangement, whereby developing nations are guaranteed a minimum growth rate of 6 per cent. in their exports of textiles, I urge the Government to fight for the adoption of a recession clause that would more accurately adjust growth rates in the face of actual economic conditions. Along with the recession clause we should convince our fellow-members of the EEC of the necessity to fight for the adoption of various other crucial provisions. First, we must establish more realistic quota levels. These levels should be calculated by taking the 1977 import level and increasing that by the annual growth in volume of consumer demands and not the existing inflated quota base. If necessary, these rates could be adjusted at the end of every two years if growth rates deviate from projection.
Secondly, we should make the basket extractor mechanism less cumbersome and more of a safeguard. By equipping that mechanism with an automatic cut-off level, many of the problems caused by delaying tactics, for example, could be avoided. Thirdly, the policy of product categorisation and sensitivity grouping has proved useful and should be maintained. Fourthly, more safeguards are 1216 needed against fraudulent labelling and other evasive tactics that have the effect of dumping cheap foreign textiles on British markets over quota levels.
The European Community should be united in demanding that these reforms should be carried through. The world needs a tightened MFA to facilitate textile trade. My hon. Friend the Minister for Trade knows very well that without any such international agreement political pressure would build up in each developed country to enact strong protectionist legislation. That would have serious and mainly negative implications not only for textiles but for world trade generally.
The United Kingdom would be in an especially vulnerable position if that were to happen. Being a trading nation we could not set about enacting reams of selective import controls on textiles without suffering the deleterious effects of retaliation in other areas of our export trade. The recent problems with Indonesia provide all too vivid a picture of that scenario.
The simple and inescapable conclusion that emerges is that the United Kingdom, as well as the EEC, needs a more effective MFA. The United Kingdom must lead the way in ensuring that the EEC fights for the tightening of the arrangement, for it is in the framework of such an arrangement, as the hon. Member for Rochdale said, that hopes for the future of our textile industry must lie.
The proposals that I urge my hon. Friend the Minister of State to accept will not result in a ruthless restriction of trade. At the same time, they pose no serious threat to the continued growth of developing countries. Instead, these measures will provide safeguards for all nations in times of economic slump. This is a goal that falls within the stated objectives of the original MFA. It is a goal that is both necessary and obtainable and one that I have every confidence the United Kingdom, in conjunction with its fellow Community members, will pursue in the forthcoming negotiations.
§ 6.7 pm
§ Mr. Frank R. White (Bury and Radcliffe)
In his closing comments the Secretary of State referred to the shadows and history of Gladstone and Chamberlain in the Department of Trade. He said that whenever they wandered away from their historical roles they were pulled back by the shadowy figures, and that the memory of them was awesome. I think that both sides of the House will concede that if the right hon. Gentleman succeeds in achieving what he sets out in his speech he will deserve a position in the Department of Trade equal to that of Gladstone and Chamberlain.
I apologise to the right hon. Gentleman and to my neighbour, the hon. Member for Rossendale (Mr. Trippier), for not taking up their arguments, but I make no apology to the House for acknowledging that I speak in the debate under the stress of a great prejudice. On many occasions in the past, and during this debate, hon. Members on both sides of the House have detailed and articulated precise factual arguments in support of the case for British textiles. I have advanced those arguments in the past. However, I intend to leave the refinement argument to my right hon. and hon. Friends. I shall lay before the House my basic prejudice when debating textiles, especially in my area of textiles, which consists of cotton and allied yarns. However, I hope that my argument will be factual.
1217 My prejudice is centred on Lancashire's textile operative. My support and determination is directed to helping him to preserve his job and helping the region to preserve its industry. It is a prejudice that is tinged with a deal of pride. Once upon a time we were called King Cotton in Lancashire. It was said that Britain's bread hung on Lancashire's thread. What we spun before breakfast was for ourselves and what was spun after breakfast was for the rest of the world.
Despite the savage and devastating closures no one can deny that we have become a beggarly king. We have suffered hundreds of mill closures and thousands of job losses but we have never begged for money. We have never pleaded for massive injections of public cash. All that we have asked for are fair trading conditions and a consistent and defined Government policy towards British textiles and their future, at home, in Europe and in the world at large.
Despite successive Governments declaring their faith and support for a viable textile industry, no Government have been prepared to define its size, and none have been determined enough to act to protect it from the many instances of unfair trading practices and dumping. The immediate response would be that action was taken in some instances, but, as the hon. Member for Rochdale (Mr. Smith) said, in many instances it was a case of bolting the door after the horse had gone, and after the industry, following mill closures, had had to meet the requirement of proving its case against the importing agent. How much better it would have been if the Government had acted to protect British interests and put the onus on the importer to prove that there was no dumping or unfair trade.
How can any Government justify the past year's activities of the American textile industry in dumping in this country man-made fibre, yarns and products as a result of their energy subsidies? In April 1979, the Government of the day, of which I was a member, were warned about the situation and the possible consequences to British textiles. My right hon. Friend the Member for Lanarkshire, North (Mr. Smith) received those warnings at the Dispatch Box. The present Government sat on the problem when they came to office and made little effort to assist the industry. They even declined to criticise vigorously and condemn the American dumping on our markets.
The Government's attitude—it is also the attitude of the Minister of State—is that they preside over 570 textile quotas. The Minister of State regards them as some kind of virility symbol. With respect, that is not the problem. Nor is that a justification for what is happening to British textiles over and around the quotas. Last year, President Carter gave firm commitments about the future of the American textile industry, and those commitments have been endorsed by the present Administration. As the hon. Member for Rochdale said, France and Germany act in a most chauvinist manner in support of their own textile industries. Other countries follow their example. Only Britain is the soft touch in this sensitive area of world trade.
I am sorry that the hon. Member for Loughborough (Mr. Dorrell) has left the Chamber. If the Government want the British textile worker to be the expendable item of world textile trade, or as a balance of trade in the trade of other goods, they should have the guts and honesty to 1218 say so. If that is not true, they should use those same guts to defend the industry. It is that willingness to defend the industry that is on trial now.
The Secretary of State said much in his opening speech that I can support. He said that he is prepared to act, and went a long way to assure me. I hope that he turns those words into deeds. No doubt he will be pursued by the stereo twin voices of the consumer lobby and the Third world supporters, protesting about our indifference to those causes, about which I shall say a few words.
On behalf of the textile workers in Lancashire, I say to the Third world lobby and its journalistic friends, who take great delight in castigating textile protection as indifference to poverty and suffering, that we shall take no lessons from them on the subject of compassion to our fellow human beings. Our concern lasts longer than the ink in their pens. We view the problem in a more practical manner, and see the world more clearly than their views—often seen through the bottom of a lunch-time gin glass.
The history of Lancashire textile workers—refusing to work on slave-picked cotton; cheering Ghandi in our streets, despite his blockade of Indian cotton that put many workers on the dole; the absorption into our industries of many new Commonwealth citizens—gives the people of Lancashire the right to yield to no one on the issue of compassion for the Third world. We have accepted for many years that the Third world and developing countries have a right to a share of world market. Our unions and managements have expressed a willingness to play a part in that development.
The MFA was seen as a mechanism to bring that about in a manner that was fair to Britain, Europe and the Third world. The case is that the responsibilities to help underdeveloped countries is not solely Britain's, and should not solely be the sacrifice of the British textile worker.
I look for a deal that will enable our industry to adjust and redevelop to meet the continuing world challenges, as it has done and as it will continue to do, while at the same time being fair in trade to them and to the Third world countries. I look to the Government to achieve that, and I hope for a greater degree of support from other member States in meeting that obligation.
In the meantime, it would help tremendously if people like the hon. Member for Loughborough—again, I am sorry that he is not in the Chamber—and the Third world lobbyists and their supporters expressed an understanding of our textile workers' problems. It is difficult to accept the "holier than thou" attitude to industrial workers of people whose main industrial threat is merely to suffer gin wrist or tonic elbow.
Since 1979, the Consumers Association has seemingly pursued a policy of denigrating the British textile and clothing industries and has cast dire warnings against import controls. Let us try to establish the credentials. The Consumers Association has 2,500 members and elects a council of 14, whose members make policy statements. That hardly entitles them to speak on behalf of all British consumers, let alone the consumers and their families—numbering hundreds of thousands—who are trade unionists and who support import controls.
The association's argument is that the consumer is entitled to cheap imports. The textile worker asks "When my job has gone and there is no British textile industry, will imports still be cheap?" Obviously, no one can fully 1219 answer that question, but it is fair to assume that the capture of a market by sources outside this country could lead to that body determining price structures detrimental to the British consumer. For that reason, and the more important issue of economic security, it is vital to maintain a viable British textile industry and protect it when it is under attack from unfair trading. To do that is not against the consumer interest.
The MFA to be agreed should be fair to workers in the textile industry. There should be no concession that places further jobs at risk. I subscribe to what has been said in this regard by hon. Members on both sides. The Government's responsibility is to give priority to the survival of our textile industry and to allow the textile worker to continue to fight for his living. To allow him, in the present trading conditions, to shoulder the unfair burdens of world trade alone, which means the eventual destruction of jobs, is both dishonest and disastrously divisive for our country. On this issue, the Government have a responsibility to their people in the textile regions, and on this occasion they must not fail them.
§ Mr. Richard Body (Holland with Boston)
The hon. Member for Bury and Radcliffe (Mr. White) has spoken forcefully in favour of his prejudice, and it is natural that he should do so. Whether or not we represent textile industries, we recognise that some 600,000 jobs are at stake. As my right hon. Friend the Secretary of State for Trade said in opening the debate, that represents no less than 10 per cent. of all manufacturing jobs.
The objective of a multi-fibre arrangement is clear and visible. The hon. Member for Bury and Radcliffe made it clear and visible. If it is to be a success, there will also be consequences that are indefinite and invisible and which cannot be quantified by anyone. I wish to say a word about those consequences.
No one has yet said much about the retail clothing trade, nor about the other manufacturing jobs that will be affected—about 90 per cent. of all manufacturing jobs. I do not seek to arouse any passion on that score, but some could speak just as passionately about those jobs as the hon. Member for Bury and Radcliffe did. A multi-fibre arrangement is futile and a waste of time unless it has one effect, and that is to keep low-cost supplies out of our shops. That is important for every retailer in the clothing business. Clothing shops throughout Britain are closing. Their employees are paid a woeful wage. Their customers buy less and less clothing. No one in the House, conscious of his constituents buying habits, could possibly deny
§ Mr. Body
To what degree consumers are paying extra for clothing as a result of the multi-fibre arrangement is impossible to estimate. Hon. Members who have travelled abroad in recent months will have noticed how much cheaper they can buy clothes in certain other countries. A few weeks ago in Los Angeles I bought three shirts at £10 each. I would have paid £20 each for them in a shop at home.
§ Mr. Body
To the hon. Member who says "Shame", I say that I had £30 more in my pocket when I had bought 1220 the shirts than I would otherwise have had. I hope that I have spent that £30 buying British goods, and in the process helped to secure jobs in other industries. We know that the British consumer spends £8,000 million on clothing in any one year. If a multi-fibre arrangement adds only 10 per cent. to the cost of clothing, that is about £800 million of purchasing power lost to British consumers.
§ Mr. Cyril Smith
Will the hon. Gentleman take on board the argument that if there is no MFA that will put thousands more people on the dole and their income must be paid by additional taxation, which will come out of the hon. Gentleman's pocket?
§ Mr. Body
Of course, I appreciate that point. The hon. Gentleman knows only too well that an appalling number of people are out of work. My argument is that some of that number can be accounted for as a result of various forms of protectionism. I do not refer only to the protectionism that we are discussing, but to other forms upon which I do not wish to touch. Protectionism in one industry invariably causes a loss of employment in other industries. If £800 million of purchasing power is being lost to the consumer, that represents many tens of thousands of jobs in industries other than the textile industry.
Does anyone seriously suggest that the MFA has added only 10 per cent. to the price of clothing? If that was the true figure, we would not be having the debate today, with all the heat and fervour of speeches such as that of the hon. Member for Bury and Radcliffe. The figure is not 10 per cent., but more likely about 30 per cent. If that figure is accurate, we are talking about a loss of purchasing power to the British consumer of about £2,000 million.
The Minister is a referee or arbitrator between the conflicting interests of different industries. I wonder whether he has made an approximate calculation—it can only be very approximate—of the loss of jobs in other industries—among the remaining 90 per cent. of manufacturing jobs—that have been brought about because the British consumer has lost £2,000 million of purchasing power.
Of course, that may not be the right figure. We cannot quantify it, but we can be sure that it is a large sum of money. The hon. Member for Rochdale (Mr. Smith) belongs to a party that used to believe in free trade. There was a time when protectionism was denounced by the Liberal Party because, although it had a certain charm and beauty by protecting industries visibly, at the same time it was damaging other industries invisibly. It is sad that the Liberal Party has now detached itself from that intellectual honesty.
Every hon. Member knows that many poor people are going without clothing or are buying cheaper clothes than they did previously. Those who frequently visit this country say that our poorer people are less well dressed than they were 20 years ago, when wages in real terms were less than they are now. If the better-off people are paying more for their clothing, which manifestly they are, it must follow that they are spending less on other items. There is a diversion of their expenditure.
§ Mr. John Lee (Nelson and Colne)
Is my hon. Friend saying that there should be no multi-fibre arrangement? Is he saying that the British market should be open to world textile manufacture?
§ Mr. Body
I am a free trader. I do not believe in any obstacles to trade. However, I recognise well enough that we cannot bring such agreements to an end overnight. I am worried that the protectionist lobbies in the House will persuade the Government and the EEC to sanction permanent forms of protection for certain industries. The agricultural lobby has succeeded in doing that for farming.
Incidentally, I believe I represent more farmers than any other hon. Member in the House, and I tell them exactly the same—that I am not in favour of protection for any industry. I have argued that point many times with my constituents. I propose to go on doing so.
The visible gain to the textile industry, which is clear and manifest, must be set against the invisible losses that MFAs will cause every other industry in our country. When the Minister visits his constituency he encounters, I have no doubt, from time to time a constituent who is unfortunately unemployed. I have no doubt that with a clear conscience he can assert to that constituent that multi-fibre agreements have not caused his constituent to be without a job. If it be true that this form of protectionism is causing the consumer to lose purchasing power of the order of £2,000 million—if it is anything like that figure—could he then with a clear conscience say to his constituent that the unemployment that that constituent suffers is not unrelated to this particular form of protectionism?
When we look at those industries that have been particularly in decline, other than the textile industries, in recent years, we notice how overwhelmingly they are concerned with consumer durables and the footwear industry. If the British people are being forced to spend less money on clothing because of the way that this agreement artificially puts up the price of clothing in the shops, it follows obviously that they are driven to spending less money on footwear and also many of those consumer durables that are the first to be chopped out of the family budget.
I therefore argue that those hon. Members who have such industries in their constituencies have a marked interest in this proposal for an extended MFA. Those of us who are satisfied as free traders that the invisible losses to industry always outweigh the visible gains, will not be persuaded that this kind of protectionism should be encouraged.
I entirely agree with the hon. Member for Bury and Radcliffe that the MFA protects jobs in the textile industry. Having said that, we must recognise that by artificially putting up the cost of clothing, and taking out of the pockets of the consumer many millions of pounds, this kind of protectionism forces them to spend less on those other goods which may also be produced in British factories and mills, and in so doing causes other jobs to be lost.
§ Mr. Barry Jones (Flint, East)
The hon. Member for Holland with Boston (Mr. Body) argues cogently, but in my constituency trade unionists are now desperate that there should be a complete review of textile and clothing imports. I would say that if the Common Market remains incapable of defending the United Kingdom industry, unilateral action by Britain, either through stiffer tariffs or tighter quotas, will be the only alternative to higher unemployment and the long term eclipse of the entire industry.
1222 Import penetration by the Americans is a scandal of our time. They have built large, modern factories employing non-unionised labour on low hourly rates. They have massive indirect energy subsidies. Their price advantage over British competitors in the United Kingdom market is now estimated to be between 10 per cent. and 30 per cent.
These are some of the reasons why the man-made fibre industry in the United Kingdom is now toppling. It is a very vulnerable but very valuable industrial asset. My constituents are deeply perturbed. By August, when we suffer another 380 redundancies, the work force at our largest mill at Greenfield—a Courtaulds factory—will have declined from 2,398 to 784. Since 1972 5,368 citizens in the man-made fibre industry in North-East Wales have lost their jobs. In the Courtaulds company townships of Flint, Holywell and Greenfield, the unemployment rates can only be described as horrific. It has now been estimated that in Flint male unemployment stands at approximately 38 per cent. and in neighbouring Holywell town at 24 per cent.
In the area that I represent—indeed, in North-East Wales generally—there is a genuine sense of crisis. The collapse of the man-made fibre industry and the decline of Courtaulds—a blue chip company if ever there was one—has dealt industrial Deeside a very severe blow. This denuding of the textiles base in North Wales has coincided with Europe's largest-ever redundancy. Between January and Easter last year at the BSC's Shotton works about 7,000 men lost their jobs.
The message from the textile workers in my constituency to the Government is that they should renegotiate a tough and effective multi-fibre arrangement and that there should be an end to vagueness—even weakness—by the European Commission. If the Government are not able to impose their will and protect an industry as important as textiles, they should not complain if the British people grow impatient with the Common Market and resolve to get out of it.
§ Mr. John Lee (Nelson and Colne)
I welcome the opportunity to speak in this debate. As the House knows, my constituency grew up hand-in-hand with the Lancashire textile industry. Even with the decline that has taken place in the industry under successive Governments it is still our major employer, although now closely followed by aerospace and furniture.
In my maiden speech in June 1979 I talked about the costs of re-equipping a textile plant and went on:Companies will not invest that sort of money unless they see a permanent future market for their products. That is why a commitment to continue with the multi-fibre arrangement well into the 1980s is vital."—[Official Report, 14 June 1979: Vol. 968, c. 690–1.]In the debate on the textile and clothing industries in July last year I said that the industry was suffering from what I then termed the IRI syndrome, namely, interest rates, recession and imports working in combination, and that the industry was haemorrhaging to death. I went on to explain that my decision to abstain in the ensuing vote was based on the fact that we had not received a firmer commitment to a strengthened MFA.
Alas, the closures and redundancies have continued. In my constituency firms like Uttleys are no more. A number of smaller ones have also gone. I received, as many other 1223 hon. Members probably did, the premature Courtaulds wreath, which consists of a call from Courtaulds asking where one will be the following day should they wish to make contact. I see that the hon. Member for Flint, East (Mr. Jones), has had this experience, and this wreath. As a Member of Parliament one braces oneself for tomorrow's closure.
In my case it was Courtaulds' Valley Mills plant—known locally as Jimmy Nelson's—bringing heartache and sorrow to hundreds of workers and their families—workers who for years have been models of moderation and reasonableness in wage claims. Their bitterness is compounded when they compare their redundancy handshakes with those being received by workers in certain public sector industries.
Here I must emphasise that Valley Mills was losing money during the latter period of the last Administration and that the existing MFA—under which our industry and Industry Ministers have had to operate—was negotiated under the then Labour Government, although I have no wish to be excessively partisan. I pay tribute to my hon. Friend the Minister of State for so frequently visiting our textile areas, meeting delegations and addressing rowdy dinners and meetings. No one can accuse him of hiding in his Victoria Street eyrie. Indeed, he and my hon. Friend the Member for Macclesfield (Mr. Winterton) have tramped through so many mills in Lancashire and Yorkshire they are amply qualified jointly to produce a "Good Mill" guide.
§ Mr. Barry Sheerman (Huddersfield, East)
Every time the Minister of State visits my constituency, more firms seem to close down. I do not know whether his laying on of hands causes the black plague, but it is certainly not very successful.
§ Mr. Lee
The visits from my hon. Friend the Minister of State have been much appreciated in my part of the world, and my constituents have made him well aware of the difficulties that they face.
The dilemma in renegotiating the MFA lies in striking a balance between conflicting pressures. There is the balance between the developed and the Third world countries; the balance between our United Kingdom textile manufacturers and retailers, importers and consumers; the balance between the textile industry and other United Kingdom industries that need access to overseas markets and, more particularly, the balance between the different sectors of the clothing and textile industries whose attitudes to and requirements for a new MFA might be diametrically opposite.
What is beyond argument—I know that hon. Members on both sides share this view, especially those who come from textile areas—is that the pendulum has swung too far away and against our manufacturing industry, and that our negotiators must do better next time. Let them come to Lancashire, let them live with mill workers' families, and let them spend a week by our looms, then perhaps, they will understand.
In contributing to this type of debate, too often a Member of Parliament can be accused of not being sufficiently objective and of being biased because of a constituency interest. I therefore produce by way of evidence a witness, one of our greatest retailers, Marks and Spencer. That firm's contribution to and support for 1224 our home textile industry is unrivalled. According to this week's annual report, more than 90 per cent. of its clothing, household textiles and footwear is manufactured in the United Kingdom, and three out of four of St. Michael's garments are made from fabric produced in this country. I ask my hon. Friend the Member for Holland with Boston (Mr. Body) why, if our United Kingdom clothing is of such poor value, do overseas visitors in their thousands, from so many countries, flock to Marks and Spencer's stores to buy British products?
I will quote Marks and Spencer's recommendations for MFA3, and I ask the House to note them carefully. They are:We do not favour substantially increased protection of the home market, but feel strongly that, firstly, fair and reasonable trading arrangements must be negotiated. Secondly, economic recession clauses and speedier administration of anti-dumping legislation are essential. Thirdly, future global trading arrangements must halt further penetration of the United Kingdom market by the Mediterranean associates, China, South America and East European countries, all too often trading with the benefit of export incentives or subsidies. We believe it essential that other countries should honour their trading arrangements as we do.I can do no better than add my voice to that of Marks and Spencer' s.
§ Mr. Lawrence Cunliffe (Leigh)
The hon. Member for Nelson and Colne (Mr. Lee) spoke of strong negotiations. Yesterday there was a meeting between the Japanese Prime Minister and the British Prime Minister. When I read the reports of that meeting, it did not seem to me that the Government would take their stand on any form of unfair trading competition whether by multi-fibre arrangement or by any other agreement.
I represent a mining and textile constituency. In view of what has happened in the past two days, I suggest that we should send Joe Gormley to Brussels. I am sure that he would achieve more positive results than our trade ministers would.
There is a disposition for unity within the Chamber on the need for a common approach to reinforce the Government's initiative on the MFA. The House should not be misled. The MFA, weak and ineffective though it is, is almost entirely responsible for the lamentable state of our textile and clothing industries. The Government cannot opt out of their responsibilities.
The industries have also been adversely affected by the recession, but it is not entirely responsible. It is the multifibre arrangement agreements of 1973 and 1978 that have been responsible for the lamentable decline of these two great industries. I am sure that we all wish to support the Government's initiative, even if it has been rather delayed.
The Government's economic policies have accelerated the decline of industry. We cannot ignore the strong pound, high interest rates, high energy costs and low-cost imports which, generally speaking, have adversely affected the industries' ability to compete.
When I first came to the House, my constituency had 14 textile mills. Five of those have been closed and four are on short time. The hon. Member for Rochdale (Mr. Smith) spoke of the highly sophisticated developments in textile production within his constituency. Unit 1 in Atherton, which was visited during its first few months of its existence by the Prime Minister, has highly advanced technology, with high productivity norms, impeccable 1225 industrial relations, and low-wage labour. In spite of all the will, drive and determination of its employees the unit has had to put its workers on short time because of unfair trading competition.
The Government could have helped these industries by introducing some form of intervention and protection. The industries seek to increase export opportunities in every corner of the world. In markets where excessive tariffs operate, or where unreasonable non-tariff barriers apply, or Customs practices obstruct trade, or domestic industries enjoy large-scale Government assistance, the British textile industry cannot on its own achieve the growth for which it is striving. It is, therefore, imperative that the Government should give the industry direct assistance.
The philosophy of the Conservative Party is not to intervene, but my hon. Friend the Member for Bury and Radcliffe (Mr. White) told the House of the wonderful record and achievement of this great industry, no doubt with gigantic investment over the past 10 years, and it deserves special consideration.
Mention has been made of the enlargement of the EEC. I have great fears and anxieties about that. That is another problem which we shall have to face because Greece, Spain and Portugal have large, modern textile industries built up behind high import barriers. In the negotiations for their entry to the Community, we must not encourage those countries to run away with their textile ambitions in Europe. The industries in those countries are supported by Government aid, giving them an unfair advantage. In the negotiations, which are strong negotiations, the Government must make it clear that we cannot accept the terms of entry unless effective safeguard measures are enforced during the transitional period before those countries become full members of the EEC.
I shall make a quick comment about to quota evasion. It is clear to many of us that there have been serious problems of fraudulent and unfair imports of textile and clothing products. They have disrupted the United Kingdom market increasingly for a number of years, mainly through the evasion of quotas and customs duties. The hon. Member for Rochdale mentioned the penalties suggested in the renegotiated MFA. I believe that they are anaemic and not a strong enough to prove an effective deterrent to the nations which abuse the system.
I suspect that many people have been guilty of evading the 1981 and 1982 quotas. I am afraid that Her Majesty's Customs and Excise has not enough staff to inspect under the microscope the nations which abuse that form of entry. The offending parties should be dealt with more ruthlessly than in the past.
In view of the blatant abuse of provisions allowing free access for handloom and folkloric items, they should be excluded from all future bilateral agreements. The offending parties should be disqualified. I hope that, when the negotiations are carried out, the rhetoric used by some hon. Members tonight is put into operation.
We must remember that these great industries are fighting for their lives. If the Government were to weaken at any stage of the renegotiations, that would be a betrayal and an act of criminal folly. It would also be an abysmal failure. It would be a failure if the recession clause were not implemented and if they ignored the plea for help from this great industry.
§ Mr. Robert Banks (Harrogate)
I am sorry that my right hon. Friend the Member for Oswestry (Mr. Biffen) is not able to be in his seat because I wanted to congratulate him on a very sound speech this afternoon, which I think has drawn support from both sides of the House. During his speech, he referred to some of the background leading up to the negotiations which are taking place. I should like to sketch in one or two small areas which I think are relevant to the debate.
We have seen radical change in the structure of the European textile industry. Between 1974 and 1977, total imports from low-cost producing countries rose by a staggering 75 per cent. Between 1978 and 1980, the import growth, though reduced, was still running at 22.6 per cent. This, unhappily, has not been balanced by exports, which, during the first period of the MFA agreement, were running at a level of 16.5 per cent. The net result has been that there has been a trebling of the textile trade deficit from 1977 to 1979. Fifteen per cent. of firms in Europe have closed and 800,000 jobs have been lost. Some jobs, of course, have been lost because of new technology and the requirement for fewer people to work the machines. It is a grim picture and it has been spelt out by many of my hon. Friends and by Opposition Members.
Britain has had her full share of this reduction in the industry. I think that it hurts each one of us here when we see historic companies in traditional textile towns going to the wall. I have the honour of representing a town which is not regarded as a historic textile town. Nevertheless, we feel the chill wind of the recession and the effects of the imports to the textile market. A clothing manufacturer in my constituency closed down only recently. ICI Research Fibres Divisions has substantially reduced the size of its work force. We are affected in no small measure and as a measure against general employment in Harrogate, it is, of course, considerable.
As we go into the talks I think that it is right that we should consider four factors. I hope that the Minister will take account of these particular points. First, while we adhere to the principles of free trade—and I do adhere to those principles but only on the basis of free trade in the context of freedom from tariff barriers in the countries from which we are taking imports and to which we wish to export—whilst we adhere to those principles, is important that the agreements are based not on a one-sided quota arrangement, but on an arrangement which takes fully into account the need for tariff agreements and the acceptance that quota arrangements rest on a two-way highway.
In this respect I refer particularly to the developing countries. I really do not see the logic of this country taking large imports of made-up clothing and, in some cases, textile materials from a country like Taiwan which has a 100 per cent. tariff barrier against British worsted cloth going in to her. I think that is totally wrong. The negotiations that will take place must take account of the difficulties that our people face when they are trying to sell their goods to those countries. It is a difference between fuelling the industrial expansion of a developing country which has tariff barriers, recognising our obligations to the underdeveloped nations and at the same time preserving the viability of our own industries.
The second point I should like to make is that we as a country and as a Government have to decide on the future 1227 long-term structure of our textile and fibres industry. Many people have said to me "Do we really want to retain a carpet manufacturing industry, a wool textile industry, the tent industry and so on?" Of course, my answer is always "Yes". However, it is a factor which we have to bear in mind in these negotiations as to the size and shape of the individual parts of those industries which we wish to see retained.
We have, sadly, seen whole industries lost in this country. For instance, the sports shoe industry is virtually non-existent as I understand it. The television tube industry is, to all intents and purposes, gone. We have lost the motor cycle industry almost entirely. We are losing other industries, and that is a lesson that we must appreciate and take fully into account when we are negotiating in this area of textiles.
Many firms have modernised and they are competitive. We do still produce extremely good made-up clothing and extremely good textiles; particularly the woollen textiles are second to none. But there is a lot more in my estimation that has to be done. It means that those industries do need time to bring themselves into a competitive position and also to change their designs.
It is not easy, in fact, to go into a shop and put one's hands on a British made suit. Invariably one looks along the rack, and I would say that almost eight out of 10 of those suits are imported from abroad. That is a very sad reflection on an industry in this country which world-wide was regarded as the epitome of good suit suiting and good manufacture.
§ Mr. Torney
The hon. Gentleman said that it is not easy to buy a British-made suit. He represents Harrogate. I suggest that he comes to nearby Bradford. We can sell him excellent woollen cloths made in Bradford and the surrounding West Yorkshire towns. Around Leeds, there are scores of small tailors who would be happy to make up the cloth. It would be British cloth made up by a British tailor in West Yorkshire.
§ Mr. Banks
I am grateful for that intervention. It is good advice, and I shall certainly endeavour to take it up. It is a good suggestion.
Nevertheless, low-cost imports from the poorest countries—and that is other than from developing countries—do have a market in this country. That is different from the one I have just been talking about, but it is one to which we have an obligation because of the very important employment implications that our agreement to take quotas from those countries has for those people living in those countries.
So, therefore, I think that quota agreements have to take account of our industrial strategy and set limits to ensure that we maintain our home market shares in the different sectors and that, as I said earlier, our industries have time to modernise.
The third point that I would like to refer to is that I believe we must ensure that our administrative machinery can effectively check imports against exceeding the quota allocations and that, of course, goods are not dumped in this country. I appreciate that there has to be a certain area of flexibility on the actual precise numbers that come into this country under quota arrangements, but I do think that there is a stop-off point that must be reached after a very small percentage variation, because exceeding a quota 1228 agreement in one year can have a devastating effect on an industry. It is no use taking it off the next year, because it is too late in many cases, and so whilst I agree there must be a small, fine variation, it must be kept to a very fine percentage.
Fourthly, I would like to stress the need for fair play. By that I mean that Governments who are party to quota agreements have to take vigorous action to prevent counterfeiting practices and to have legislation that authorises severe penalties where cases are proved in the courts. This is a matter which has come up time and time again in this debate. I think it is entirely right that it should be voiced here, so that we add our weight behind the Minister in the efforts that he, I know, makes to ensure that we achieve fair play with the people with whom we trade.
I also think that as a member country of the EEC we should have the right to suspend quotas if we suspect that the fair trading arrangements on which we have based the quota agreements are not being upheld, and we should at any time, if we feel that we are not being treated fairly, suspend the quota and put the onus on the other country to come to terms and to adjust itself to what we rightly can demand.
But our objective must be, in my view, to govern the transition of our own industries towards competitiveness. It is no use allowing so great a heat from this import penetration that when one opens the oven door the bird is a dried-up carcase.
§ 7.4 pm
§ Mr. William Whitlock (Nottingham, North)
As cochairman of the hosiery and knitwear all-party group in the House, I am glad to be able to speak in the debate. In my area we have had a buy-British campaign, so I am pleased to display my "Think British" tie. There is only one thing wrong with it. It was made in Macclesfield and not in Nottingham.
I feel sure that the Minister for Trade, who shows signs of replying to the debate, will know that, in response to a petition from the Nottingham area concerning the plight of the clothing and textile trade, the Prime Minister recently wrote to me to express the Government's commitment to the industry and to say that they would be entering the MFA renewal discussions with a determination to get the very best deal for Britain.
I circulated the reply among the leaders of both sides of the hosiery and textile industry, which is an industry of great importance to the East Midlands in particular and to the country in general. The right hon. Lady's letter did not exactly set the industry alight with enthusiasm and hope. After all, Ministers have been saying all these things for some time. There remains a feeling on both sides of the industry that the Government still do not fully understand its problems and that Ministers have done little in international negotiations to eliminate the unfairness with which it has had to contend.
One director wrote to me to say that he was becoming increasingly incensed bythe trite and glib tongued utterances which are forever repeated by Ministers these days.It is that kind of anxiety about the will of Ministers to stand by their commitments to obtain a better deal for Britain that has led to a demand from both sides of the House for this debate.
1229 On 9 June, when a number of hon. Members on both sides of the House demanded a debate on the matter, the Minister for Trade said that the discussions on 23 June would be of a general nature; they would be the first exchange at ministerial level and a probing of each other's minds. He stated:if one enters into an arrangement on the basis of a set of assumptions which turn out to be false, there should be a mechanism for adjusting the arrangement to the facts and not to the imagined facts."—[Official Report, 9 June 1981; Vol. 6, c. 386.]Therein lies the difficulty.
It is the custom in EEC circles on almost any subject to reach a formula of words that is capable of being interpreted in various ways to hedge the whole thing around with bureaucratic thickets of immense complexity, then to sit back and wait for the imagined facts to become reality. Ministers will not find it easy to deal with people with that kind of mentality. They will not find it easy to wrestle with minds that are used to dealing, for instance, with the tortuous daftness of the common agricultural policy, which could have been thought up only by a demented genius. In the face of the dissembling that Ministers will encounter when they go to negotiate on our behalf, they must maintain their resolve to obtain the best deal for Britain.
The probing of minds of which the Minister spoke must be forceful, ensuring that all the other Ministers have registered and implanted in their minds the knowledge that Britain is, this time, resolutely determined to obtain justice. There must be no more pussy-footing and no mere cosy chats. There must be strong and continued assertions of our need for fair play.
I shall not go into the jargon of the need for improvements in the basket extractor mechanism, the need for globalisation, the recession clause and so on. Those points have been put strongly to the Minister many times. Let the Minister take with him the strength of feeling behind those demands, and let him maintain that determination on 23 June and in all subsequent discussions and demand justice and fair play for our textile industry. That is all that the industry and the House demand of him.
§ Mr. Bowen Wells (Hertford and Stevenage)
This debate has frightened me. Indeed, it terrifies me beyond measure. If the House and the nation begin to adopt a policy of trade protection, the country's present difficulties will be compounded out of all recognition. Not only will it be bad for the textile industry: it will be bad for every industry in this country. It will be exceedingly bad for consumers in this country and for those with whom we trade.
What is needed is not an emotional appeal on the basis of the undoubted difficulties of the people of Lancashire and of towns affected by unemployment and by changes in the textile industry. I have the utmost respect for the people of those towns and for the people of Lancashire and Yorkshire in the traditional crafts which they have maintained and the excellent standards which they achieve right now. But it is no service to them for their Members of Parliament to plead in the House for protection, protection and yet more protection.
The textile industry must change. It must meet the challenges from overseas competitors. If it does not, it will not be able to compete. It will not be able to continue to 1230 export. Let us not forget that our textile industry has a fine record of exports. As the hon. Member for Bradford, South (Mr. Torney) will attest, it exports some of the finest clothing and cloth in the world and it is still so regarded. So let us not run down our textile industry in this debate. But let us not protect it so that it becomes inefficient, so that it atrophies and cannot trade, so that it cannot continue the proud record in export markets that it has achieved over the decades.
The clarion call for trade protection will do just that. Moreover, it will prevent countries that seek to export textiles to us from being able to purchase manufactured products from all over the United Kingdom. It must constantly be remembered that our exports to the less developed countries far exceed our imports from them. Unless they can sell goods to this country and to the EEC, they will not be able to purchase from this country. That is why I say that if we protect, protect and protect again, other industries will be unable to continue to manufacture and to export to those less developed countries.
It is not a matter of crying crocodile tears over the less developed and the poor countries. I agree with the hon. Member for Bury and Radcliffe (Mr. White) that his constituency has absorbed large numbers of people from the new Commonwealth with great friendliness and fairness, welcoming them into the community in a way I think no other community in the world would have done. I agree that the tolerance shown by this nation to people from other countries is unmatched in the world. But let us not then turn and ask for protection that is unbalanced.
Of course, we must always ensure that the Department of Trade and its Ministers protect our industries from unfair competition. I agree with my hon. Friend the Member for Harrogate (Mr. Banks) that countries such as Taiwan which protect their own industries with 100 per cent. tariffs against textiles produced here cannot then demand that we permit imports from those countries. It must be a two-way trade. We must ensure that trade is balanced and fair, but in so doing, we must not protect our industries unnecessarily.
A balance must be achieved in the multi-fibre arrangement. I beg the Minister to ensure that he gets the balance right. We need a balance that does not overprotect British industry, and which enables the textile industry's customers to purchase clothing at a fair price. There is no doubt that Britain is a nation of high-priced clothing at present. Prices for clothing are much lower in the United States. The customer is already paying for the protection which exists in this country. The balance must therefore be fair to the customer and also to our trading partners so that they may trade with us and buy our goods.
I hope that the Minister and his supporters will endeavour to achieve that balance in the forthcoming MFA neotiations. We should not call for an extra-specially tough MFA. We should call for a balanced MFA and look forward to the day when we no longer need an MFA but can resume sensible free market trading arrangements in textiles as in other goods for the prosperity of this country and of the countries with which we trade.
§ Mr. Thomas Torney (Bradford, South)
The hon. Member for Hertford and Stevenage (Mr. Wells) referred to unbalanced protectionism. At present, the textile industry has little or no protection at all. I assure the hon. Gentleman and the House that some of the finest woolen 1231 materials are made in West Yorkshire. Indeed, my constituency includes the mill which probably produces the finest mohair and woollen suiting in the world. I refer to Fosters Mill, probably better known to hon. Members as Black Dyke Mills. That is in my patch.
I am sorry that the hon. Member for Holland with Boston (Mr. Body) is not in his place. He claimed that the multi-fibre arrangement added to the cost of clothing. Frankly, as MFAs 1 and 2 have given little or no protection to the clothing and textile industries, I cannot believe that they have added to the price of clothing. The high level of our prices compared with those of other countries is a different matter. I have heard folk say that clothing is cheaper in America, but I do not think that it is dearer here than in many parts of Europe.
The hon. Member for Hertford and Stevenage referred to balanced competition. The kind of balanced competition that we require is impossible while people making textiles in the countries which are dumping them on our doorstep, to the detriment of our industry and the employment of my constituents and those in other parts of West Yorkshire, are working for a pittance. They are certainly not working for the wages that textile mills in Bradford or in the rest of West Yorkshire pay their workers.
God knows, textile employees are not overpaid. Their record of industrial relations is excellent. Rightly, strikes amongst textile workers are unheard of. Their payment for having such good industrial relations is that they find themselves on the scrapheap while unemployment increases hand over fist in all our textile areas, and particularly in mine.
One cannot expect some of the low-price countries—I do not say underdeveloped countries, because some of them are fast developing—to be given carte blanche to push their textile goods into Britain. The multi-fibre agreement gives little or no protection. When we try to sell some of our goods—not necessarily textiles—to some of those countries, we face tremendous tariff barriers. The firm that I have mentioned wants to export to Brazil, because there is a market there. However, it cannot climb over a 205 per cent. tariff barrier. Where is the balance, when such countries can send goods to Britain much more easily? Korea and Taiwan have 100 per cent tariff barriers against our goods. Mexico has a 35 per cent. tariff barrier, as well as import licensing.
Let us turn to countries that are outside the so-called low-price exporting countries. America places much higher tariffs on the goods that we send there than we place on the cheap tufted carpets that it sends to Britain. The United States of America is largely responsible for the decline in the tufted carpet industry in West Yorkshire and other parts of the United Kingdom.
America has dual-priced oil. Oil is used in the manufacture of tufted or nylon carpets. America sells oil more cheaply to industry than to the car-driving consumer. Even that oil is cheaper than our oil. We cannot compete. America sent tufted carpets to sell in our shops at a lower price that we could produce them for in our mills. The mill that was forced to close down in my constituency had all the modern machinery that it could wish for. However, it could not compete against such competition.
§ Mr. Bowen Wells
Earlier, I pointed out that British manufacturers face a tariff wall. Hong Kong is a major exporter of textiles and a major competitor, and has no tariff barriers that I am aware of. Is not the hon. Gentleman amazed to find that there are only minimal British exports to Hong Kong of excellent cloth that could be bought to make suits? My hon. Friend the Minister had to go to Hong Kong and lead British business men into exporting to Hong Kong. Should we not criticise that lack of push?
§ Mr. Torney
I do not know why we have not been able to sell cloth to Hong Kong. I have not checked the figures. I am sure that our lack of exports was not caused by a failure to produce excellent cloth. We produce very good cloth. Mills in Bradford are exporting goods to various countries, including Japan. It may surprise the hon. Member for Hertford and Stevenage to know that one mill in my constituency exports a considerable quantity of its production to Japan. The Japanese attach some prestige to wearing British-made suits.
I am mindful that several hon. Members wish to speak in the debate. Therefore, I shall turn to the problems within the EEC. The Secretary of State referred to this subject earlier. Countries just over the West German border, such as East Germany and Austria, export heavily subsidised goods to Germany. As EEC goods, they find their way into Britain at uncompetitive prices. Just as we cannot compete against low-wage countries, so we cannot compete against Government subsidies. It is particularly dishonourable when we have to compete against the subsidies and sharp practices of countries within the EEC.
In the industry, it is well known that cheap woollen goods have been coming from Italy. They are subsidised by the Italian Government. The MFA3 should be firm about such loopholes. There should not be any fiddling within the EEC, whether it takes the form of low wages, pushing third country goods over the EEC border or quietly and innocently subsidising goods that arrive in Britain. It annoys me that Britain plays a remarkably straight bat in all spheres within the EEC whilst other countries do not. We abide by the rules, although I often wish that we did not. Many of our EEC partners do not abide by them. We should make them abide by the same rules as we abide by, or we should get out of the EEC.
I was impressed by the tone of the Secretary of State's speech. I only hope that the impetus is maintained when he conducts the MFA3 negotiations. I hope that he will demand a fair deal for Britain and for Britain's textile industry. I also hope that he will assure those in Europe that the alternative is the collapse of our textile industry. In constituencies such as mine, that would be a tragedy.
The mass of those still employed in Bradford and the surrounding West Yorkshire districts are employed in the woollen textile industry. If we allow such unfair competition, the collapse of the industry will follow. With that collapse, there will be a phenomenal and disastrous increase in the number of unemployed in the part of the city that I have the honour to represent.
We want a recession clause. When consumer demand falls, imports must fall. The next MFA must not be based on a percentage increase in imports each year, irrespective of trading conditions. The base for calculating future imports should be the import levels for 1981, not a forecast from earlier years which would produce an unreal figure. The MFA must include a social clause related to the introduction of the International Labour Organisation's 1233 standards in countries which export textiles to the EEC. If those standards are not met, that country's quota should be withdrawn.
The proposals for complete free trade in textiles within the Common. Market should be opposed to prevent the flooding of this country with goods from Third world countries re-exported from other EEC countries. Article 115 of the last MFA, which covered quotas within the EEC, should be retained. Hong Kong, South Korea and Taiwan should accept reductions in their quotas so that really poor Third world countries can have higher quotas. At present, one-third of this country's textile goods are imported. The figure in the United States is one-fifth and in Japan one-eighth. The United States and Japan should be prepared to accept a higher proportion of imports from Third world countries.
I make a final appeal to the Minister of State, which I hope that he will pass on to the Secretary of State. I repeat what other hon. Members on both sides have said about the MFA negotiations. The Secretary of State and the Minister for Trade must be tough when they go to the negotiations and fight for Britain and a better deal for Britain's textile industry.
§ Sir Paul Bryan (Howden)
By instinct and history I am strongly biased in favour of the British textile industry. When I left university in the 1930s my first job was in a worsted spinning mill in Halifax. I spent all my industrial life on the Lancashire-Yorkshire border, either in Hebden Bridge or Halifax, in clothing or worsted spinning. I have seen the inevitable long, drawn-out decline of our industry, described so well by the hon. Member for Bury and Radcliffe (Mr. White). Though the decline has been inevitable and long drawn-out, it has also been irregular. The industry is a volatile and turbulent one. There are surges of production from one country or another. It is hard to keep the industry, stable while it is declining in this way. For that reason the MFA is required.
We are considering import controls of one sort or another and naturally they dominate the debate. However, one other aspect has not yet had sufficient emphasis. We underrate the amount of unemployment that results from modernisation. The textile industry is criticised for lack of modernisation, but it is not as guilty in this respect as it is made out to be. There have been tremendous increases in productivity.
In my constituency I have the headquarters of Dewhursts—a major manufacturer of shirts for Marks and Spencers. The company employs over 2,000 people and I visit the works every other year. I am immensely impressed with each year's increase in productivity and modernisation.
Last weekend I was talking to a manufacturer in the West Riding. He said that his company could produce today with 350 workers—if the demand came—as much as it could five years ago with 3,000 workers.
The Guardian tells us that the jobs lost through the introduction of new technology from 1970 to 1975 was 143,000. During the following five years that figure must have been even greater.
My right hon. Friend's speech was clearly welcomed by the House. We agree that his intentions are good; but how are those intentions likely to work out in practice in the light of our experience? Several of the intentions that he voiced today were certainly expressed before the last 1234 negotiations. For example, there was the idea, that sounds so reasonable, that some of the more advanced developing countries such as Taiwan and Hong Kong should have their quotas held or decreased to make room for the poorer countries. If that had worked, Britain would have expected a flood or steady flow of new manufacturers coming in from poorer countries. However, any quota that seems to have been filled has not been filled from Sri Lanka or some backward country. The floods have come from the EEC, from associated European countries, and America—all, the richest countries are taking advantage. Thus it has not worked out as it was meant to.
It is not surprising that countries such as Hong Kong are disappointed. They have made sacrifices and wonder why the right people have not benefited. I hope that the Minister of State will tell us what he sees as the snags ahead. Last time no one could have foreseen the disastrous arrival of America as a major exporter against whom we appeared to have no defence.
Suddenly these exports arrived. They were unfair, in as much as they were based on highly subsidised stock prices of oil. They have succeeded in closing down a large part of our carpet industry. I want the Minister to speculate and tell us what other terrors he sees ahead. I am not sure that our defences against the future members of the European Community are strong. They in their turn may bring another unexpected flood of imports.
The Americans, having started from nothing, now have a third of our man-made fibre market. Why could we not stop this? The brutal reason is that the Americans have muscle. If we stopped the imports on the grounds that they were unfair, the Americans would ban our woollens from the American market. I should like to hear the Minister's speculation on what we can expect next.
I said that America was able to behave as she did because of her strength but we need not assume that the poor countries will in future tolerate such cavalier treatment as in the past. Some countries, like Indonesia, have refused to accept the imposition of a quota by bilateral agreement. Before those negotiations, for the first time the poor countries are planning and getting together. It will be less easy to impose bilateral arrangements of that sort.
The President of Mexico, Senor Portillo, is beginning to complain that he cannot export clothing. What about oil?
When we are told that we must be tough in the new negotiations, I ask myself who we shall be tough on. We cannot be tough on America, our companions in the EEC or the poorest countries. Thus, we are left with Hong Kong, South Korea and Taiwan and such countries. I was glad to hear the Secretary of State and the Minister for Trade both say that in setting quotas they will take account of the fact that Hong Kong and Singapore have no subsidies and no tariffs whatever. They should be treated in a more generous way than a country such as South Korea, whose high tariffs have been described in an earlier speech.
But, having said that, and having heard the good intentions in this direction from the Secretary of State, I wonder how our EEC partners will react. They have not the same relations as we have with Hong Kong. The truth is that in those negotiations the only champion of Hong Kong will be the British Minister in charge, and therefore he has a very big responsibility. No one else will champion the cause of Hong Kong.
1235 Hong Kong is very unlikely to retaliate if badly treated. But it should be understood that the good will towards Britain in Hong Kong is of real value. We should build on that good will and strive to increase our exports to that country in order to earn back some of the money that we spend there.
The opportunities are endless, as my hon. Friend the Minister of State knows. As has already been said with regard to Hong Kong's huge imports of textiles, we get only 2 per cent. of them, so we do very badly in that respect. But we have been genuinely very successful recently, winning orders for two power stations and much of the mass transit railway. Thousands of millions of pounds are there to be earned, and have been earned. Over the next few years there will be a new airport, probably costing £1,500 million, an extension of the mass transit railway, and the construction of the bridges to Lantow. There are huge opportunities if we can keep the good will of Hong Kong and step up our exporting effort.
The House has welcomed my right hon. Friend's speech. We wish him luck in the very hard negotiations that he has ahead of him.
§ Mr. Wm. Ross (Londonderry)
When I was speaking to the trade unions and the management of the man-made textile factories in my constituency last year, they informed me that in their view—and there seemed to be a fair degree of agreement among them—their real problems were related to the high interest rates, the high value of the pound against the dollar, and the fact that there was a cheap United States feedstock.
In July 1980, the minimum lending rate in Britain was 16 per cent., the pound was worth $2.34, and the United States official discount rate was 10 per cent. In February, when the National Union of Tailors and Garment Workers came to see us in the House, the MLR was 14 per cent., the pound stood at $2.20, the United States official discount rate was 13 per cent.—and many people in the man-made fibre industry were beginning to relax a little. Today, minimum lending rate is 12 per cent., the pound is worth $2, and the United States discount rate is 14 per cent. Anyone with a simple mind such as mine would say that the conditions for success that were put to me last year had now been met in full—indeed, rather more than met in full, because the American rate has risen by 4 per cent. in the intervening period.
In my constituency, the Courtaulds plant last week gave 90 days' notice of closure. This was not a run-down plant. It has been described to me by both unions and management within it as the most modern of its type in Europe, and one of the most modern in the world. It is not a small plant; the buildings cover 26 acres. By any standards, that is a fair-size plant. The plant took in the raw material, spun it, wove it and finished it, but it never made a profit from the day that it opened. Therefore, the plant is closing and we shall be losing 626 jobs in the city of Londonderry.
Some hon. Members have spoken of unemployment rates. They should look at the unemployment rate in my part of the United Kingdom. They might get a shock and realise how lucky most other places are.
The Courtaulds factory was the subject of some very adverse comments by the Public Accounts Committee. It 1236 was orginally designed to employ between 1,500 and 2,000 people. It got nowhere near those figures. Quite simply, the whole project appears to have been an utter disaster from start to finish. But because the plant was so modern and because it had good industrial relations I was certain—and I told the unions so—that if the plant were to close it could only mean that, provided the reasons given for the closure were genuine, the whole of the Northern Ireland man-made fibre industry was in very grave danger of going down the drain. If the most modern plant in the country cannot survive, what hope is there for the rest?
I have no doubt that there was fierce competition and adverse market conditions, and that all those things had their effect, but although the product was very good and the plant was modern, apparently no scheme could be devised, even with the help of the Northern Ireland Office, to keep it open. The reason was that no one could envisage a viable future for the plant. There was vast public investment there. One must assume that because of the period of time that has elapsed since the plant was planned and built that public investment has been lost completely.
Most other hon. Members have spoken about the multifibre arrangement, but there is more to the man-made fibre industry as a whole than the MFA. When hon. Members consider the tale that I have just related, and the misery that it has brought to so many people, they will realise that if we are to avoid such disasters in the future the people who have been getting their sums wrong up to now have got to get them right in the future.
But we shall not escape further misery if the company concerned decides in the end to pull up its roots and go away. A great many people wonder whether that is what has happened in this case, because we had what appeared to be a really worthwhile project and we are told that it did not work. We are told that it did not work because of import penetration, not from the low-cost countries alone but also from the high-cost countries, primarily the United States.
In the light of that, if we are to have a man-made fibre industry in Britain in the future the Minister will have to get things right when he next goes to negotiate the MFA. We must have all the help that we can get. We must achieve a position in which there is fair competition. I do not think that anyone in the industry has been asking for more than that. Despite all the comments made in the debate, I have not heard anyone ask for more than that. We are asking for a fair crack of the whip for an industry that is very important in Britan as a whole, and particularly important in my part of it.
The Minister knows well from his own contacts with the industry in Northern Ireland the importance to us of the man-made fibre industry. Indeed, if we were to chop up the United Kingdom into sections, setting them against the developing countries, about which we have heard so many wails today, we would have to conclude that Northern Ireland, in that context, now qualifies as a developing country.
I am saying, on behalf of all textile workers in Northern Ireland, and, indeed, throughout the United Kingdom, that this time we expect the Minister to get it right. Nothing less than that will do.
§ Mr. Arthur Davidson (Accrington)
It is astonishing that the jobs of textile workers in my constituency and 1237 throughout Lancashire should depend in no small degree on something as bizarre, complex, technical and apparently difficult to operate as the multi-fibre arrangement. When one considers that the system introducing new quotas is called the basket extractor, it is little wonder that the mill operatives feel that it does not have much relevance to their jobs. However, we have to acknowledge that in the interests of orderly marketing and in order to stabilise the levels of import penetration from low-cost countries we are stuck with the present multifibre arrangement and that we have to negotiate a stronger one.
One of the factors responsible for the plight of the textile industry has undoubtedly been import penetration. The Secretary of State, in what I thought was an honest and open speech, spelt out how badly the textile industry had been hit in recent years. Employment in textiles fell by about 120,000 in 1980. The index of production fell by 17.5 per cent. in the same year. There is little cause to believe that those figures are the end of the matter. One can therefore choose the adjectives to describe the plight of the industry: catastrophic, disastrous, horrific—they all apply.
It is acknowledged by the British Textile Confederation that three factors have contributed to this state of affairs. High interest rates and the rise of sterling are two factors. They are the factors for which the Government must take the blame and responsibility. I have never thought, however, that import penetration is a factor for which the Government are primarily responsible. It is clear also that the workers in the textile industry are not responsible.
Operatives in my constituency on short-time working have volunteered, and have agreed, to accept a 7½ per cent. drop in wages in order to help their firm get an order. That is a measure of the concern, loyalty and incredibly good labour relations in the textile industry. No other set of workers in the world would agree to a proposal of that sort. None of us can pay high enough tribute to textile workers and to the excellent relationships that exist with management. It is about time that language such as "shirking workers" and "militant trade unionism" was dropped. I am not saying that those are words that the Secretary of State himself would necessarily use.
The right hon. Gentleman has set out his negotiating stance. He has stressed his determination to negotiate a successful and tough MFA3. If he was not well aware of the points to be taken into consideration during those negotiations before his speech—I am sure that he was, if he received the same briefs as those sent to hon. Members—he will be well aware of them now. There has been unanimity of view on both sides of the House about the factors to be negotiated.
There must be a firm link between the rate of growth of imports and the poor prospects for growth in consumption in the Community as a whole. We are also concerned about countries such as Taiwan, which put up a barrier to our goods but none the less expect to sell their goods here without protection. If the debate has served a purpose, it has been to strengthen the Secretary of State's hand. The right hon. Gentleman goes to the negotiations in the knowledge that he has the support of the whole House. He is aware of the points that must be made. He is aware of the strength of feeling on both sides of industry regarding those points. If he does not make them, he will be failing the industry. I have a feeling that he will not wish to do so.
§ Mr. K. J. Woolmer (Batley and Morley)
I appear to be one of the few hon. Members who is perhaps more pleased by the manner than by the content of the speech of the Secretary of State. I should like to concentrate my remarks on the important details of the MFA negotiations. While there are matters other than the MFA involved in textiles—for instance, the problems of the United States and the Eastern bloc—the MFA is nevertheless the matter on which we now have the opportunity to present our views to the Secretary of State.
The industry is of the greatest importance to this country, employing still around 600,000 workers. It is not surprising, in view of the enormous loss of jobs in the last year or two, that workers and management view these negotiations with genuine deep anxiety.
I should like to go over some of the points in the remarks of the Secretary of State about which hon. Members should be concerned. The right hon. Gentleman referred to import penetration and stated, rightly, that the 6 per cent. growth rate under the existing MFA is simply not on this time. I agree with him. The question that arises is what level is on. There is an enormous difference between the projected rate of growth of the market of 1 per cent. and the figure of 6 per cent.
I stress to the Secretary of State that nothing less than a figure somewhere around the growth of the market will be satisfactory from the point of view of workers and employers in the textile and clothing industries. The 1 per cent. figure needs to become firmly fixed in the minds of people in this country, including hon. Members and, of course, the Secretary of State. I hope that the right hon. Gentleman will be able to give hon. Members a firmer assurance than merely saying that he is against 6 per cent. It is rather like being against sin. All would agree. Can the right hon. Gentleman give a firmer indication of what he is looking for?
A second matter in the small print of the right hon. Gentleman's speech that did not give me particular satisfaction relates to the question of base levels at which import quotas will start under the new agreement. We may settle on a 2 per cent. growth rate or something like that, but it could be enormously different according to the starting position. The Secretary of State owes it to the House to tell us somewhat more about his thinking on base levels. We should not talk only about growth rates without examining base levels. Various suggestions have been made. My only comment is that base levels must be realistic and related to recent import levels. I hope that the right hon. Gentleman will be able to give the assurance that he is thinking along those lines. I have no doubt that he is still considering the details.
If we are to help the poorest countries and if we are to achieve tight quotas under the MFA, we must face the problem of preferential countries and Hong Kong, Taiwan and South Korea. It is not good enough to say that trade takes place both ways. If the right hon. Gentleman wishes to convince us that he will adopt a genuinely tough negotiating position, we shall need to hear rather more of his thinking about Hong Kong.
The Secretary of State will recall that during his speech I pressed him on the important issue of outward processing. It would be ludicrous if we had tough negotiations on the MFA but were totally undermined by 1239 unsatisfactory deals with preferential countries and on outward processing. I hope that tonight we shall have some clear statements on these issues.
We must consider the possible accession to the EEC of Portugal and Spain. If we negotiate quotas within the MFA and make deals with preferential countries, we may find that Portugal and Spain enter the EEC and enjoy free circulation of their products in the United Kingdom. That would be additional to the deals that have taken place under other agreements. That is potentially of major significance for our textile and clothing industries.
Portugal is the second largest exporter, after Hong Kong, of clothing and allied products to the United Kingdom. It is a considerably larger exporter than South Korea and Taiwan. We cannot push aside Portugal and its possible accession to the EEC without considering how it fits into the Government's thinking on the MFA and preferential countries. We must have some clearer indications from the Government.
The same comments apply to outward processing. There is a considerable fear that the EEC Commission especially, and possibly our own Government, are seeking an expansion of outward processing, and as a result of that policy introducing imports additional to MFA quotas. I hope that the right hon. Gentleman will be able to give us an assurance that any deals on outward processing will be contained within the negotiated MFA ceilings and the associated bilateral arrangements.
I hope that we shall have a rather more forthright explanation of Hong Kong's potential position. I am given to understand that it has been suggested to Hong Kong that if it accepts an apparent cutback or a tough deal on the MFA it will be all right because a deal will be done on outward processing. That would be unacceptable to the clothing industry as well as to the trade unions and the employers. I hope that we shall be told of the approach that will be adopted towards Hong Kong with the frankness for which the right hon. Gentleman is rightly known. It will be unsatisfactory to me and to the industry if we do not have a clearer explanation than the one that we were given in his introductory remarks.
The next issue is the national quota system and the control of free circulation under article 115. The right hon. Gentleman said vigorously that he rejected any proposal by the EEC Commission to get rid of national quotas. I assume that he has read the third paragraph of the seventh annex of the communication from the EEC Commission to the Council of Ministers dated 13 April 1981. That is the document that we are told we should not have seen. We all recognise that in common sense it was our duty to see it before the debate even if the Commission was silly enough to say that we should not. Will the right hon. Gentleman give a categorical assurance that he will not accept the proposal in that paragraph or anything remotely like it?
I turn to market disruption, quota breaking and the basket extractor mechanism. We must ensure that in the process of reaching agreement on the mechanism there is not a massive and disruptive growth of imports in the meantime. I hope that the right hon. Gentleman will say that he is looking for an agreement in that area that provides that, when the trigger position is reached, further imports will be stopped while an agreement is reached.
1240 Imports must not continue while negotiations take place to try to reach an agreement. That is a standing invitation to drag out the negotiations. In the meantime our factories will close and British workers will lose their jobs. We know that the jobs will never return.
I do not recall the right hon. Gentleman dealing with the social clause. In discussions with colleagues I have been tempted to say "Do not let us push for a social clause because other countries will only say 'That is none of your business'". However, anyone would say on calm reflection that that is not right.
There are extremely important matters underlying the social clause that relate to the right of workers to organise and bargain collectively. They have an effect on minimum wage rights, the control of hours worked and the minimum age of workers. These are vital matters that are regarded as the subject of important international negotiations by the ILO. We should insist that a social clause is written into the MFA. We should insist that MFA signatories sign the ILO convention and adhere to it.
Lastly, I do not recall the right hon. Gentleman making his view clear on our duty to insist that other industrialised countries take a fair share of the burden of assisting Third world countries and the poorer countries. We cannot ask unemployed textile workers in Batley in my constituency to continue to shoulder the burden alone when unemployment among males in the area is over 22 per cent. I cannot say to those who work in the textile industry that they must take an increased share of the burden when the workers of America, Japan, Canada, Australia, France and other countries are not prepared to do so.
I welcome the style of the right hon. Gentleman's presentation, but I am worried that the small print of his remarks suggests that he was speaking for effect rather than describing the likelihood of his negotiating position. He may have been giving us the satisfaction of saying what we wanted to hear him say. I do not make these remarks in a personal sense and I do not wish to be destructive.
I make them because of my genuine concern. I hope that he will deal with these important points when he replies—not simply the detail, but the fundamental principle, and not simply want a response to the genuine constituency concern. If we fail tonight to have a serious discussion about the basic principle of the negotiations, we shall merely have spoken to please our constituents, but in the end we shall seriously disappoint them.
§ Mr. Gary Waller (Brighouse and Spenborough)
Some of those who seek a strengthened multi-fibre arrangement seem to want almost blanket protection, although those who have spoken so far have, for the most part, not asked for that. Nor do I believe that the industry as a whole seeks that. It should be stressed, however, that such a blanket control would not be in the interests either of this country or of those who import goods into this country. When I say "this country", I think not only of our consumers but our manufacturers and, of course, our exporters, who in many cases have done remarkably well despite all the problems that have faced them in recent years.
A renewed and improved multi-fibre arrangement is needed to provide an element of stability during a period of rapid change. Everything that can be done should be 1241 done to correct the failings of the present arrangement. Few can doubt that the present arrangement has had a very large number of failings.
It is in our interests that the poorer countries should industrialise and diversify, but the present MFA has done little to help in that respect. In many cases, imports from the Third world have been curbed, with countries being almost encouraged to find a way of getting round the rules, while the countries that have gained have often been those less subject to regulation. I think particularly of countries in the Mediterranean region, the Lomé countries, and those on the other side of the Atlantic.
Hon. Members are fond of quoting the job losses in the industry to indicate the speed of decline. I share the concern that many Members have expressed about redundancies. How could one fail to be concerned when one knows many of the individuals personally—when one sees them week after week in one's constituency? But I do not believe that the number of job losses is a fair criterion of the health of the industry. It is true that some of the jobs have been lost because of an overall decline in the size of the market and the loss of market share, but others have been lost because of the very necessary process of modernisation, which has reduced the amount of manpower needed.
The companies that have survived have tended to be those that took action early enough and efficiently enough to stop the decline. In my own constituency, I can cite the company of Thomas Burnley and Sons, of Gomersal. Many of that company's workers live in the neighbouring constituency of the hon. Member for Batley and Morley (Mr. Woolmer). I am sure that he knows the company well. It has invested millions of pounds in modernising its plant. It now competes extremely efficiently with producers in the low-cost countries. Part of its success has come about because it has gained the market of firms which have fallen by the wayside Perhaps some of those firms did not have the will to succeed. Others may not have had the capital to invest. Unfortunately, it is a rough, tough and competitive world, in which only the best will succeed.
I realise that the corollary does not necessarily apply. Many of the companies that have had major redundancies, and many of those that have failed, have modernised. In the present situation, many companies sink or swim together. With the diverse structure of the industry, the efficient often go down through no fault of their own. However, even the most efficient companies recognise that they can succeed only if they are dealing with fair competition.
I hope that my right hon. Friend will seek a new arrangement, which deals as firmly as possible with unfair practices and penalises those countries that do not open up their markets fairly to our exporters. We should remember that the United Kingdom is the easiest market to penetrate, certainly in Europe, with the efficient and centralised distribution system that we possess. For that reason—here I echo what was said by the hon. Member for Batley and Morley— the principle of a national quota system cannot be subsumed in a general Community-wide quota.
In the future, we should concentrate on those areas in textiles in which we have the best chance of success. To that end, a renewed MFA should not be a blanket for stifling change but a vehicle for encouraging controlled 1242 development, both at home and in those countries throughout the world with which to a great extent our fortunes are bound up.
§ Mr. Edward Lyons (Bradford, West)
Like others I was impressed by the robust attitude of the Secretary of State when he opened the debate. He sounded like a man confident in the strength of his opinions, and those opinions were widely shared in this Chamber. However, one would expect him to take that attitude to open negotiations. What worried us a little is that it may be a negotiating attitude, and done to impress in that regard. I hope that at the end of the negotiations, he will be able to come to the House with a statement that is as robust then as it appears to be now. That will be the test by which we shall judge him.
According to the British Textile Confederation, 123,000 jobs have been lost in textiles and clothing in Britain since the beginning of 1980. Those figures are horrendous and terrifying. The fall in textile production in 1980 was 17½ per cent., and for clothing 12 per cent. Those figures show that the industry is in a serious crisis.
Let us consider the figures for a smaller area. In Bradford the unemployment figure in general on 8 May this year was 17,318, and the number of unfilled vacancies was 400. So in Bradford 43 people are seeking every job. Many of those people are textile workers out of a job. When I came to the House in 1966, the unemployment statistics for Bradford were in the hundreds, and we thought that that was not very good. Now the figures are terrible and accelerating, at a time when the city is unique in having a rising population and work force. The EEC and the Government should realise the effect that that massive decline in textiles in West Yorkshire is having and will have on the economic and social structure of districts such as Bradford. The textile industry has asked for a fair and stable environment in which to operate.
Then I come to the oft-quoted figure that Korea and Taiwan have up to a 100 per cent. tariff against our textiles and also have certain bans on imports. The figure for Brazil is 205 per cent., as well as an import deposit system. The figure for Mexico is 35 per cent. with an import licensing system. Korea has said that it will be the world's leading textile exporter by 1985. Britain is entitled to equality of treatment. The Government must be tougher to ensure greater reciprocity with such countries.
In talking about low-cost penetration into Britain, we must bear in mind that 54 per cent. of low-cost imports come from Hong Kong, Taiwan and South Korea. It is true that Hong Kong must be looked at differently from other countries because it has no tariffs or restrictions on imports, but Taiwan and South Korea do and the Government must take a tougher attitude towards them.
However, the blame is not all on one side. Hong Kong imports £12,000 million worth of textile goods each year, of which Britain contributes less than 2 per cent.—£20 million. There is a large market for Britain in Hong Kong, with no barriers. I hope that the textile industry will make an effort to explore that market more efficiently and with more enterprise. In the coming year Hong Kong will be our largest market in Asia. Last year it took £559 million of British goods, although few of them were textiles. Although there may have to be a different approach towards Hong Kong, the general approach to other countries with import restrictions must be tough.
1243 It is absurd that the United States takes only 9 per cent. of its textiles from low-cost areas, whereas Britain takes 27 per cent. Britain is bearing a disproportionate burden. The nature of the crisis in Britain is best illustrated by the fact that 60 per cent. of the goods for our textile market come from abroad. Only 40 per cent. of the goods made in our textile and clothing industries are bought by us. That trend is continuing. No other European country is in such a bad position. The rate of increase of penetration in Britain between 1977 and 1979 was more than double the rate of penetration of imported textiles and clothing into the EEC, taken as a whole. The EEC overall penetration is 44 per cent. whereas Britain's is about 60 per cent. That fact should give the Minister an additional powerful voice in the negotiations.
It is a pleasure to know that the Secretary of State for Trade is dealing with the debate. I recall a debate 16 months ago when a former Under-Secretary of State for Industry was the only Minister present to answer questions. He clearly had no authority and did not appear to know a great deal about the subject. For such a difficult and serious subject it is right that a Cabinet Minister should be present, and that he should be the Secretary of State for Trade because trade Ministers deal with these problems rather than industry Ministers.
Britain is a soft market because of the accessibility and efficiency of our distribution system. Therefore, we must resist the proposal that the current system of dividing Community quotas between member States should be relaxed to enable exporting countries to choose which countries should take their goods. When other EEC countries are as easily penetrable as Britain, as a result of an efficient distribution system, it will be time to relax the existing system.
When considering the MFA and the need to control imports we must bear in mind that there is little point in restricting imports from some countries if the gap thus created is filled not by British manufactures but by imports from other advanced countries that are operating unfairly. Two of the reasons why more than half of our current textile imports come not from low-cost countries but from advanced industrial countries are the high value of the pound—which remains a continuing sore—and the fact that during the past year or two America has operated a dual-pricing policy for energy. If we cut back or limit our expansion in one area solely to fill the gap with imports from richer countries, it will not help either the low-cost producers or the British manufacturers and workers.
We must push to have the social clause accepted. I know that difficulties are involved, but Britain can help workers in other countries simply by stressing to the Governments of those countries, and also to the EEC, the need for International Labour Organisation standards to be observed. I know that that is a difficult problem for the Government, but it will assist workers in other countries and also British workers and British industry.
Imports have been growing faster than the rate of domestic consumption. The Government must bear that fact in mind during the negotiations. If we have a system that allows other countries automatically every year to increase their exports to Britain by some formula that does not take into account the fall in our domestic demand, we shall have less and less of a textile industry. The textile industry and clothing trade in Britain take the energies and 1244 time of more than 600,000 persons. It is still a crucially important area. We cannot afford to throw those people on to the dole.
I do not accept the argument that those in the world development movement are gin drinkers. I know many of them, and most of them are teetotal. They are earnest and worthy people. There is a conflict between what they honestly want for the betterment of humanity in three-quarters of the world—3,000 million people who are in a bad way—and our loyalties to the unemployed in Britain. Obviously, we are divided. We want to do the best that we can for everyone. However, textile workers in Britain must not take the greatest part of the overall strain—more than other groups either in Britain or abroad. We must ask the Americans why they resist low-cost imports while expecting the EEC to accept them. We must then ask the EEC why it expects Britain to do more than the remainder of the EEC. No doubt it will return to the argument that it is all the fault of the British consumer and our distribution system, which makes penetration so easy. We must be tough in the interests of our workers and to prevent the death of an industry.
It is not only the workers in that industry who will be affected, but all those in the towns who depend on the prosperity of the industry—for example, the relatives, the shopkeepers, the electricians and the plumbers who have to live by servicing the homes of the workers. They are all at risk. That is why every Member of Parliament representing the Bradford area, and also the hon. Member for Keighley (Mr. Cryer), are in the Chamber to listen to the debate. Irrespective of our political affiliations, we realise how desperate is the position. We must do something about it.
§ Mr. Barry Sheerman (Hudderfield, East)
It becomes increasingly difficult to say something new in a debate such as this. Some excellent speeches have been made that will remind the Secretary of State that whilst we warmed to some of the words and style of his presentation earlier we are keeping a very wary eye on what he achieves in Brussels.
I see from that excellent newspaper, the Huddersfield Daily Examiner, only two nights ago, that the assistant secretary of the National Union of Dyers and Bleachers and Textile Workers, who had been in Brussels, came away very depressed about the possibilities for the MFA. He feels that it is a very strong possibility that the British Government will have to use the power of veto in the final analysis.
Many of us from the West Riding, whose towns and cities are the heartland of the textile and clothing industry, cannot help feeling not parochial but passionate about what has been going on in our communities. We have been seeing the destruction of whole communities, because factories and mills have closed down and workers have been slung on to the scrap heap.
On checking the figures today-like the hon. and learned Member for Bradford, West (Mr. Lyons)—I find that in Huddersfield, looking for a job in textiles, there are 2,013 men and women whose last job was in textiles. That does not include any school leavers. Those people are chasing 15 jobs. That is a tragic state of affairs in a town that was booming and prosperous a very few months ago.
I remind the House that at the time of the last general election Huddersfield had an unemployment rate of 3.4 per 1245 cent. Today it stands at 11 per cent., and it is rising. I read with great sadness in the paper on Tuesday that Taylor and Littlewoods, the oldest privately owned worsted mill in the town, with 154 years of continuous production, is to run down its production altogether. Ninety per cent. of its product went in export sales.
Important as is the securing of a tough and realistic multi-fibre agreement, I think that there is some danger—I sense some danger—in the general atmosphere of the debate. The topic of the MFA has united many of us on both sides of the House, in all parties. At the same time, there have certainly been some exceptions to this feeling of common cause. Certainly some of the free traders—I notice many of them living in the South of England—do not share the worries and passionate concern of those of us in the textile towns of the North.
I believe that we can be distracted from the general consensus of concern and from the realities that surround the general decline of the textile and clothing industry, because a tough multi-fibre agreement will not solve the problems of the industry. I agree with much that has been said about the need to protect British industry—although by temperament and nature I am a free trader—but I do not believe in protection as a principle. I believe that we must be forced into it out of necessity, to defend our communities and our industries, and to give them a chance to survive and revive.
We must protect jobs from unfair competition and from low-cost imports. We must not allow ourselves to be diverted from the main focus of the problem, because not the best or toughest MFA in the wildest dreams of the Secretary of State or of hon. Members on both sides of the House will provide the answer for our industries.
We know that the hopes and prayers of the men and women who work in those industries will not be resolved by talk of the MFA. I should be very surprised if many people in our towns and communities would know what the MFA was if it jumped up and bit them. We have been talking today in very technical terms, in the terms of the MFA. Much play has been made of the basket extractor mechanism; the ACP associates; the quota growth rates; recession clauses; globalisation; outward processing, and so on. Many of the workers in the industry would be nonplussed by the jargon that has floated around the Chamber today. To talk in such terms does not mean much to them.
I shall speak briefly, in common-sense terms, of what the MFA distracts us from. It may be churlish to say so, but the Conservative Government are at the heart of the problem. In the past two years the Government's actions have caused the textile industry to struggle, with the result that firms have closed. The Government have taken no action to save the industry.
The MFA will not save the industry, however tough it may be. We can kid ourselves into thinking of the MFA being concluded in 1983, but that will be too late for the textile and clothing industry. If the Government cared, they would do something more positive in the intervening period.
I understand that the Secretary of State cannot be held responsible for the actions of all his colleagues, but it is the Government's disastrous economic and industrial policy towards all industry in general and the textile and clothing industry in particular that is at the root of the problem. At a time when the industry is in such decline, the right hon. Gentleman's close colleague, the Secretary 1246 of State for Industry, took away the intermediate development area status of West Yorkshire, thus reducing incentives to invest and expand within the county If we are not careful, the confidence of employers and employed within the industry will be so deeply damaged that the cumulative decline by January 1983 will be impossible to arrest.
If the Government reversed their present policies on interest rates and public expenditure, and went back to a sane Tory understanding of Keynesian economics, there would be an expansion of consumer spending. People would have cash in their pockets to buy British textiles and Huddersfield worsteds, and there would be some hope that the industries would last until the MFA was renegotiated.
By a strong interventionist posture and role the Government could help to regenerate the industry. Although there is common cause among employed and employers and Members of Parliament, that is no panacea. The MFA is no panacea; neither is Government intervention.
The textile industry has suffered for many years from poor management, the recruitment of poor managers and a general lack of vision on the part of management. There could still be a chance for industry to reorganise itself if the Government took strong action, along with the MFA. A new deal for textiles could come about to encourage new investment and to provide cheap investment loans and proper start-up capital—not the trivial start-up capital that we are scrutinising in Committee on the Finance Bill.
We could see proper conversion grants and positive tax incentives. We could roll back some of the idiocies of previous policies, such as the loss of development area status in West Yorkshire, and changes could be made. We could also see a change of heart in industrial training board policy, which if unaltered will deal a mortal blow to training in the textile industry. A new deal could be worked out in co-operation with the Departments of Trade, Industry and Employment.
Today we have talked a great deal about exports from the United States. We saw a turning point in the United States under the Carter Administration in 1979, when they took a positive role to give a boost to the textile and clothing industry. Since that time, we have seen a tremendous growth in the home United States industry. Its export potential has been realised. If only we looked across the Atlantic to that example, we could do no better than to copy it.
We are in danger of being blinded by the overwhelming interest in the MFA. The crisis is so immediate for our people that action is needed now. Even in terms of unilateral short-term measures, as a breathing space for the industry, and not waiting for the renegotiations, let us give the industry a chance to review the situation and to recover from the body blows that it has suffered under the Government. I conclude by appealing to the Secretary of State to talk to his colleagues and to act in unison with them before it is too late.
§ Mr. Bob Cryer (Keighley)
The textile industry has followed the Government's requirements of slimming down, investing in new plant and equipment and of putting in modest wage claims, yet it is still losing jobs. Today, we are discussing a planned trading agreement as one area of aid and assistance which the textile industry needs to give it confidence to look ahead. Over the past few years, 1247 there has been a slightly variable but generally continuing pattern of decline and diminution. The fact is that planning trade is here to stay. We cannot rely on market forces to decide worldwide which sort of industry should be retained in a country. Market forces produce closures, unemployment and all the social, psychological and industrial consequences which we know today.
The MFA is important. The Government policies of high interest rates have been extremely damaging to the textile industry as part of general industry. However, that industry has a large number of small firms, and with the high rate of exchange of the pound over much of the past two years, added to high interest rates, many textile firms have found it difficult to survive. Import penetration has been the final straw which has driven so many firms to liquidation.
There has been a consensus to some degree in the debate that some action needs to be taken over the MFA and that some loopholes need to be tightened up. My right hon. Friend the Member for Lanarkshire, North (Mr. Smith) gave a constructive and detailed account of the areas of improvement needed in the MFA. Therefore, I was extremely surprised when, towards the end of my right hon. Friend's speech, the Minister of State commented that he had been "talking rubbish so far." I hope that does not mean that there is a difference of view between the Secretary of State and the Minister, who we understand will undertake the detailed negotiations at Brussels. If that is his position, he will be departing from a stern negotiating position right from the start.
I should like to make another point in this welcome debate, which was obtained by pressure from both sides of the House, after it had been refused by the Leader of the House. We did not have the secret EEC document in time for us to absorb its content and debate it. I am told that there is a press statement in the Library. I also understand that the TUC has seen the document, as it has produced comments on it. It is disgraceful that Parliament, the most important assembly in the country, should be denied access to the information.
I wish to comment on one or two areas of the MFA, as many hon. Members have done, and I wish, too, to make a remark about my constituency. Since 1979, unemployment in Keighley has increased by over 150 per cent., although that is by no means the greatest increase in West Yorkshire. A significant proportion of the increase has been due to the decline in the textile industry. What is true for Keighley is also true for the rest of Yorkshire.
I echo the view of my hon. Friend the Member for Huddersfield, East (Mr. Sheerman). The Secretary of State for Trade made an apparently sympathetic comment about the textile industry. It is alarming that his fellow Cabinet member should deny assistance and intermediate area status to an area that the Secretary of State acknowledges has been severely hit by the recession that has developed at a great pace over the past two years and has done so much damage.
I also echo the view that we need a global policy for all low-cost imports, with effective global ceilings on the most sensitive products. We also need global control of high cost imports, although the MFA does not cover those.
1248 The greatest proportion of imports now comes from high-cost developed countries and not from developing nations. We also need to establish base levels for the renegotiated MFA which are not based on 1982 quotas.
The TUC kindly sent round a brief on the renewal. The clothing and textile committee states:in the life of MFA 2 quotas were allowed to grow at rates far in excess of the EEC market. The MFA proposals imply that quotas in the new bilaterals should be based on existing access levels. The Committee will oppose the use of such high base levels for quotas under MFA 3. The base levels for quotas under MFA 2 should instead be defined as the existing import levels into the EEC, which because of the recession are in many cases lower than the quotas allowed.Some people have suggested that there should be an average of imports over, say, three or four years, but certainly the existing levels of import penetration should not be accepted as a basis for MFA 3.
There is also a need for a more effective basket extractor mechanism. Representatives of the industry have also helpfully sent us briefs. They suggest that imports could be suspended during consultations to provide incentives for speedy agreement and more reasonable quota levels. That is extremely important, and I emphasise to the Secretary of State that a handicap of the previous MFA was that, although it was negotiated in perfectly good faith, its application was left to the EEC.
The basket extractor mechanism illustrates the gap between the intention of the negotiators and the practice of the EEC. The Secretary of State for Trade at the time was Edmund Dell. I have no particular fondness or affection for Edmund Dell, but he negotiated in perfectly good faith a basket extractor mechanism in which it was understood that the EEC would take action when disruptive levels of imports were reached.
The EEC then said, in effect, that it was up to the industry. The industry was not in a position easily to police the situation and provide the information. Even a Eurofanatic like Edmund Dell found that difficult to swallow. There was a large gap between the intentions of the negotiators and the practice of the EEC. It is important that in the renegotiations the actual mechanism of MFA3 should be made clear beyond peradventure and that the mechanism should be applied rigorously by the EEC on our behalf.
Fourthly, there must be strict control of outward processing, so that a section of the manufacturing process is taken out to a low-cost country and then brought back in for free circulation. It has been suggested that outward processing may be used as a negotiating card to induce the low-cost countries to accept the multi-fibre arrangement. Outward processing must be a fundamental part of the MFA. The two must be negotiated not separately but together. Concessions on outward processing must not be damaging, as though they were separate from the MFA, so that the Government can say that they have negotiated a tough MFA while in the background outward processing causes excessive damage, or indeed any damage at all, to the industry. The National Union of Dyers, Bleachers and Textile Workers rightly takes the view that any increase in outward processing will spell the end of thousands of jobs in the industry.
I support the call for a social clause, which the trade union movement has made with the support, incidentally, of the employers in the industry. A social clause is important. Indeed, the Commission refers to this in paragraphs 20 and 21 of its document. The hon. Member 1249 for Rochdale (Mr. Smith) was kind enough to let me look at the secret document. The Commission seems to be acquiring the British Government's obsession with secrecy. I had understood that most British Government documents could be read in the Commission. It appears that the reverse is now also taking place. Once again, I emphasise the need for all relevant information to be made available to us.
Paragraphs 20 and 21 of the EEC document give what might be described as lukewarm support for a social clause. I believe that it is reasonable to have a social clause. I remember one occasion during the halcyon period when I occupied a humble ministerial post being bold enough to say at the Dispatch Box that Hong Kong was exploiting its workers. I recall being pursued by a Foreign and Commonwealth Office document which contained a complete renunciation of my statement so that somebody could read it out in some Hong Kong assembly and say that the Minister who had made that terrible statement was entirely in error.
I had actually checked the International Labour Office conventions to which Hong Kong adhered. I discovered that there were 25, as compared with 75 in the United Kingdom. That gives some idea of the disparity in conditions between workers' conditions in Hong Kong and those of workers in this country. I therefore support the inclusion of a social clause to give parity of working conditions. The right to trade union organisation, for example, is virtually non-existent in some low-cost countries. We should therefore press strongly for a social clause.
Although we are discussing the MFA, we must remember that there is import penetration from high cost sources. Therefore, we must consider the amount of imports from the EEC. A TUC brief states:At no point in the Commission's proposals is there any discussion of the position of high-cost countries and new entrants to the EEC. This ommission suggests that the Commission is not considering the introduction of any special arrangements for these countries under the MFA. This is a serious flaw in the Commission's approach, particularly in regard to the potential enlargement of the EEC".When there is a new entrant to the EEC, a formula is reached for a transitional period in which safeguards are claimed to exist. However, I fear that the evidence for the operation of safeguard provisions is often the evidence of unemployment and mill closures. In other words, we react to a situation. instead of anticipating it. We should carefully consider any special arrangements that can be made within the MFA for high-cost entrance.
Dumping is always a difficulty. Again, by the time the evidence has been produced, the dumping has taken place and jobs have been lost. In reply to my written question on 16 February 1981, the Minister said that we could not take unilateral anti-dumping action. He said:Unilateral anti-dumping action would be contrary to our Treaty obligations to the European Community. Responsibility for taking anti-dumping action rests with the European Commission and we shall continue to press for speedy and effective remedies to be applied by the Commission in appropriate cases "—[Official Report, 16 February 1981; Vol. 999, c. 9.]That demonstrates the difficulties that the industry faces. The industry bears the burden of dumping. It is those in the industry who are affected by it. The Commission does not carry out its duties effectively. I mentioned the basket extractor mechanism, where there was a gap between the negotiator's intentions and the 1250 practice of the Commission. I stress that the MFA is only as good as the people who put it into effect. That is not the United Kingdom Government, but the Commission. Foolproof measures must be incorporated in the MFA which can ensure that the Commission puts it into prompt and effective operation.
Several hon. Members have mentioned the position of the developing countries. They are the poorer nations of the world. Only under conditions of planned trade can we say that we should diminish imports from the developed countries and give more room to the developing countries. That cannot be done when market forces apply. It is a strong reason for paying special attention to the imports from the developed countries.
Members of the World Development Movement are genuinely well intentioned in their regard for the developing countries. We must strike a balance. We must retain a viable, confident textile industry while allowing access to our still wealthy market by the developing nations. The World Development Movement supports the development of a social clause in the MFA. In such ways, common ground can be reached. We can then ensure to the best of our ability that the aim of maintaining a stable, reasonably-sized textile industry, together with the security of more than 600,000 jobs, is achieved and developed while providing some access to the poorest nations in the world.
§ Mr. John Fraser (Norwood)
This is an unusual debate, but it is none the worse for that. It is unusual because it is not often that the House is genuinely consulted before important negotiations. It is an exercise that bears repeating.
There has been little party divide and an almost, though not wholly, unanimous view. At the end of the debate the Secretary of State and the Minister for Trade will be left in no doubt about the strong views held by the majority of those who have spoken. No one underestimates the importance of the multi-fibre arrangement negotiations. The arrangement affects, as the Secretary of State said, one in 10 jobs in the manufacturing industry, 2 per cent. of our gross national product and 5 per cent. of our exports. The textile and clothing industries are critical to employment in many constituencies.
I was not just struck but shocked by the figure given by my hon. Friend the Member for Flint, East (Mr. Jones) who said that, due to closures in the textile and other industries, unemployment in his constituency was 24 per cent. That is totally unacceptable. That is not a party view because the hon. Member for Nelson and Colne (Mr. Lee) spoke about the bitter closures and the effect on his constituency.
We must remember, taking into account one or two of the speeches that were critical of the majority view expressed, that there must be limits to the erosion of industries in deep recession. We must recognise that we are not ungenerous in allowing the entry of goods from the developing world. Some people would describe us, not just in connection with the developing world, as a soft touch, and one hon. Member did so. During the long, difficult and delicate discussions that the Government will have, they should not lose the chance to tell other industrial nations that they do not always bear their fair share of the obligation to take from the less fortunate parts of the world.
1251 The spirit of this consultative debate was marred by the absence of the EEC document. That was not the fault of the Government because they are put under obligations to respect secrecy, but one can justly complain about the bar put by the Commission on the publication of the document which clearly had wide circulation but which came into my possession as late as 9 o'clock last night. In an area where the House and the country have lost their sovereignty, it is not good enough, when negotiations are and can only be conducted by the Commission, that the basis of those negotiations should be kept secret from the House, especially when the document has not been kept secret from trade associations, trade unions or consumers' associations.
I hope that the Minister will make representations in Brussels about the way in which the House has been hog-tied. There must be more openness about Commission proposals. There seems to be nothing in the document about which the Commission should be embarrassed. As it has been so widely published, that must prove the point.
The plight of the textile and clothing industries has been accelerated by the disastrous effects of the Government's economic policies. So much has been said about the effect of imports from low-cost countries. I imagine that the Government are glad that there has been that comment, but let that not provide an alibi for them for the effects of their policies. I hope that the Government Back Benchers who are concerned about the textile and clothing industries will not be afraid to repeat criticisms of the Government, as well as what they see are criticisms of the operation of the multi-fibre arrangement at a time of recession.
Listening to some speeches, especially that of the hon. Member for Holland with Boston (Mr. Body), I did not think that hon. Members fully understood the decline in the industry. I did not think that they fully comprehended what has taken place. My hon. Friend the Member for Bradford South, (Mr. Torney) talked about imminent collapse. I do not think anyone would regard that phrase as dramatic or exaggerated.
From the second quarter of 1979 to the end of 1980, a period of about 18 months, there has been a decline in textile production, apart from man-made fibres, of 27 per cent. Apparent consumption of man-made fibres, wools and cottons was down by 26 per cent. during a period of about only 18 months. Jobs lost between June 1979 and the end of 1980 amounted to about 120,000. It is difficult for those who are not involved to understand the extent of those figures. This is not something that is marginal to employment or marginal to industry. It is absolutely critical and fundamental. Industry has suffered from the effects of monetarism piled upon recession.
§ Mr. Cryer
Will my hon. Friend accept that if that loss of jobs had taken place in a small number of units, say 10,000, 15,000 or 20,000 at a time, there would have been a national outcry? The job loss has been spread over a large number of small and medium-sized units, so that the true nature of it has been disguised by the gradual erosion.
§ Mr. Fraser
I think that is true, and that those who have suffered from it have shown too great a degree of patience and tolerance with the forces that have brought it about.
I turn now to particular aspects of the MFA and associated matters, and I start with the necessity for a 1252 global ceiling for imports. I think that the Government accept that there ought to be a global ceiling for imports for the whole of the EEC. That should then be calculated as totals for individual member States, and the aggregate for the whole of the Community so reached should then be divided by quotas between the importing countries.
In looking at import penetration within the whole of the EEC I am quoting the figures provided in the Commission document. Import penetration for 1979 was 41.3 per cent., of which 10.3 per cent. came from industrialised countries, 17.6 per cent. from MFA low-cost countries, and 10.8 per cent. from preferential countries which are associated with the Community. I shall use the term "preferential countries" as a shorthand term during the rest of my speech.
The degree of penetration by low-cost preferential countries and low-cost MFA countries is fairly high. The MFA countries are somewhat higher than the preferential countries but both show a substantial degree of import penetration. Portugal, as is well known, has about one-third of the British market in shirts.
It is my view and, I think, the view of the majority of those who have spoken today, that it would be nonsense to separate in any quota arrangements the quotas or target figures for the preferential countries from those for the MFA countries. The totals should be taken together in calculating a global ceiling, and I say that for a number of reasons. The first is the difficulty, otherwise, of enforceability on the quotas which come from the preferential countries. I shall say a little more about enforceability in a moment. The second reason is the problems that could arise from pressure for free circulation for goods coming in from the preferential countries.
Do the Government agree that there ought to be a global ceiling, as described by many hon. Members? I notice that the Secretary of State said that there ought to be a broad and comprehensive policy. I think that by that he meant a global ceiling for the preferential countries and the MFA countries. It would be very helpful if the Minister of State could confirm that we can properly interpret the words "broad and comprehensive" used by the Secretary of State as having that meaning.
What are the Government's priorities for the developing countries? What priorities does he envisage for the entry of goods into the Community as between the preferential countries and the MFA countries? Taking the MFA countries, what is his view about preference as between what are described as the more developed developing countries and the less developed poorer countries? What sort of balance does he see?
Perhaps the hon. Gentleman can also be frank about his attitude towards Hong Kong, Taiwan and Korea. It is clear from its proposals that the Commission wants to reduce imports from those three countries and to give part of the savings so achieved to poorer developing countries. I am convinced that we should not treat Hong Kong, Taiwan and Korea in exactly the same way for reasons that will emerge when I talk about reciprocity. What is the Government's reaction to that hint of a proposal within the Commission document? I should also like to know whether the Minister will be urging in the negotiations that industrialised countries outside the Community should take a larger share of imports from the low-cost countries.
There has been general agreement over the necessity for realistic base levels for quotas. Estimates of growth of 6 per cent. a year are now wholly unrealistic. It would, 1253 therefore, be wholly unrealistic to base future levels on agreed quotas for 1982 rather than on actual consumption patterns over the past three or four years. The Minister will perhaps confirm that he accepts the view that has been expressed to the effect that base levels should be on the actual levels of consumption and not on quotas, which should become contracted because of the real market situation.
As so many hon. Members have raised the matter, will the Minister make clear that the global ceiling and quotas for any country will include outward processing? This matter has been regarded as vitally important by many hon. Members. Submissions have also been made to hon. Members. The Minister may wish to make it clear that he accepts the majority view expressed in the House.
I turn now to the recession clause. This is really a shorthand phrase for saying that there should be realism about access to the Community, based on the actual consumption and the ability of the market to absorb goods rather than on some theoretical figure. I should have thought it follows that if there is unexpected growth in consumption the exporting countries should be able to share in that growth. While there is a diminution in consumption, this should be reflected in something along the lines of a recession clause. I hope that the Minister will make it clear that he intends to treat the proposition of realistic base levels as being calculated member State by member State and not calculated by way of aggregate for the whole Community. If carried out on an aggregate basis, the United Kingdom, which has suffered more at the hands of the Government and as a result of other forces, would lose.
We want a realistic mechanism that reflects the facts of the situation. If there is to be a recession clause, I hope that it can be based on objective tests and seen to be fair not only to members of the Community but to those who may be affected by it. It is essential to build certainty into any arrangements that we agree and, so far as possible, automatically. There is great danger in checks, restraints and the imposition of quotas if they are not certain in their operation and if the manner in which they work is not understood in advance.
If there is a lack of certainty and automatic operation, one gets the problems that occurred in relation to the retaliation by Indonesia. I believe that the Secretary of State had this factor in mind when he talked about avoiding controversial situations. If too wide an area exists for difference of opinion between the Community and an individual country and the low-cost exporting country, there are dangers to other industries and also to relations between countries unless certainty is built into the arrangement.
I have mentioned Indonesia. We have had the same problem with the United States over subsidised imports of fibres and carpets. There was no automaticity about the action that we could take. I know that the example is not part of the MFA but it illustrates the argument. There was illfeeling on the part of the United States and a great deal of pressure was applied on other members of the Community to withdraw the quotas that had been imposed. We must avoid that happening in future.
I use an analogy that applies particularly to the basket extractor arrangement. It is better to have a stairs-and-landing policy than an argument-in-the-lift arrangement. The stairs-and-landing arrangement means that when one has gone so far a level is reached and it is possible to rest 1254 there for a while. If there is an argument-in-the-lift arrangement, the receiving country may think that it is going to the third floor and the exporting country may think that it is going to the 20th floor. While they are arguing about it the lift will continue to rise. It is better to have a more certain arrangement for a level being reached.
There is a premium on argument over the basket extractor arrangement for the exporting countries. The differences are extraordinary between the figures that operate the basket extractor mechanism and the final quotas. The most outstanding example is knitted gloves. The trigger level was 236,000 pairs. The final quota was agreed at 4.5 million pairs. That is the extreme example but it is interesting to study the figures published by the Department of Trade and to compare the final quota with the trigger mechanism level. The opportunity for exploiting delay and misunderstanding is built into the arrangement. That leads to ill will, retaliation, controversy and bad relations between the two countries. A stairs-and-landing approach and a degree of certainty would be very much welcomed.
I hope that it is possible to build automaticity and certainty into arrangements between the United Kingdom and the Commission when we have to seek its permission to intervene. Article 115 applications for freedom of circulation are entirely within the discretion of the Commission. I know that it is not possible to renegotiate the Treaty of Rome, although some of us would like to do so. However, it should be possible to establish a convention between the United Kingdom and the Commission that embodies circumstances in which the Commission will act under the article or in which it will act in relation, for example, to cheap imports of American man-made fibre, yarn and carpets. That would mean that the position by convention, if not by article and treaty, would be well understood in advance. There would then be not much room for misunderstanding between the United Kingdom, the Commission and the third country.
I hope that in the course of discussions the Government will be seeking assurances about speed of operation. There is a premium on procrastination and delay that can work to the great disadvantage of a mill or an area in the United Kingdom. The issue was raised by the hon. Member for Nelson and Colne. I hope that it will be pursued in the course of negotiations.
The possibility of a social clause has been endorsed by the Commission and raised by several hon. Members. It is strongly supported by the TUC and by many others. None of us underestimates the difficulty of having a social clause. We know that in some circles it is deeply resented. Is it asking too much to require an observance of at least fundamental trade union rights, including the right to engage in collective bargaining under International Labour Organisation conventions? There are four principle arguments in favour of putting that proposition and pursuing it strongly.
The first argument is an analogy of the price clause argument. When we are dealing with Communist countries or State trading companies, no one denies that there must be a price clause in the agreements. It is of the nature of a State-controlled economy that, unless there is a price clause, the agreement will not work. Surely it is of the nature of a uncontrolled capitalist economy, such as South 1255 Korea, that a countervailing balance is needed. The social clause applied, say, to South Korea is of the same quality as the price clause applied, say, to Hungary or Romania.
The second argument is that such a clause is supported by the Commission.
Thirdly, such a clause has been endorsed by the Brandt report, at page 288, where it says that fair labour standards should be agreed in the context of expanding trade with the Third world.
Lastly—I feel strongly about this, and I have assured people from Amnesty International in this regard, as I am sure have other hon. Members—the House cannot be careless about the rights of working people in countries such as South Korea. I realise that we must be careful about intereference in the internal affairs of other countries, but there is a point at which we are entitled to insist upon a social clause, and that is when there has been an abrogation of human rights and collective bargaining. Therefore, I hope that the Minister will press these matters strongly.
The message has come across clearly tonight that reciprocity is one of the considerations that should be taken into account, particularly in bilateral arrangements. I accept that it is difficult in a debate of this nature to spell out exactly how the principle of reciprocity should work, because a number of weights will be attached to each negotiation. However, in reaching bilateral arrangements, one cannot ignore the high tariff imposed by countries like Brazil—a country that is developing well and which plays a leading role in trade in some products. Nor can we ignore the sort of tariffs of between 80 per cent. and 100 per cent. that are imposed by countries such as Taiwan. I believe that similar tariffs are imposed by South Korea.
Neither can we ignore the fact that a country that exports textiles to us is prepared to receive our goods, sometimes without tariff barriers, and without hidden barriers to trade. Countries that are prepared to have that degree of openness deserve some reward. Therefore, I draw a distinction between arrangements with countries such as Taiwan and Korea, and arrangements with Hong Kong.
I hope that the principles of reciprocity and certainty and others that have emerged from the speeches today will be accepted, endorsed and argued strongly in the negotiations in Brussels and elsewhere.
The first multi-fibre arrangement was drawn up in a period of economic optimism. Indeed, many of the difficulties arise from the optimism of the time. It is a pity that we have to contemplate more restrictive trading arrangements, although this country does not need to apologise, bearing in mind the state of its industry. We all regret the necessity for restraint and restriction. We regret it, because of the condition of our workers and our industry. We regret it in relation to the employment and training opportunities which it restricts in the developing world and other nations.
I know that my next remark has nothing directly, or even indirectly, to do with the multi-fibre arrangement, but I hope that the Government will not so much redouble their efforts—they have not yet made adequate efforts—as start to make an effort inside the Community to bring about reflation and a generation of demand. If we are to believe reports—and knowing the Prime Minister I am sure that 1256 they are true—the right hon. Lady has not been helpful in trying to regenerate trade and employment inside the Community.
The debate has brought about a clear, almost unanimous, mandate upon which the Secretary of State and his colleagues can act. The speeches were carefully prepared and caring. I do not think that anyone has tried to dismiss the problems in other parts of the world. The House has tried to hold them in balance against the problems in hon. Members' constituencies and in an industry which has found itself in a critical state. The views are overwhelming in their force. I hope, indeed I am sure, that they will be reflected in the stance that the Secretary of State and the Government take in their negotiations in Brussels. If they did not reflect those views, the Government would be gravely neglectful of their responsibilities.
§ The Minister for Trade (Mr. Cecil Parkinson)
I congratulate my hon. Friend the Member for Harborough (Mr. Farr), who skilfully used a recent Adjournment debate to recruit 10 colleagues from both sides of the House to build up such pressure that, coupled with an early-day motion, the Government accepted the need to debate this important subject. I told him last week that the Department of Trade would welcome such a debate, but when I said that I did not think that I would have to take an overnight flight back from Saudi Arabia to take part in the debate. I also did not think that I would spend this morning debating company law with Opposition Members. What a wonderful way to return to my native land.
There has been much comment about the EEC document. My right hon. Friend the Secretary of State explained why it could not be put in the Library. It is a Commission document, not the Community's policy. The Community's policy will be settled at the Council of Ministers meeting by Ministers from member States who, like my right hon. Friend and myself, will have consulted the industry, the trade unions and the management in the textile industries in their countries. They will have been listening to debates in their national Parliaments. It is important to put that document in perspective. It is not the Community's policy but a Commission discussion document.
The hon. Member for Nottingham, North (Mr. Whitlock) doubted the Government's commitment to the textile industry and said that a number of people in the industry doubted whether the Government were committed. I do not wish to bore the House tonight with a battery of statistics—most of them are well known—but we now have more than 600 quotas with 63 different countries. Those quotas are enforced, and we take that enforcement seriously. When the Government came to power there was no arrangement with Cyprus, Malta or Mauritius, and Turkish yarn was pouring into Britain. We dealt with those problems.
We learnt from the mistake made by our predecessors in the negotiations for Greek accession, when they decided to rely on a safeguard clause and not to have transitional arrangements with Greece.
We have been working to make sure that there are satisfactory transitional arrangements with Portugal and 1257 Spain. I accept what the hon. Member for Keighley (Mr. Cryer) said about the need for this. The Government recognise that and have been working for it.
On 1 January origin marking arrangements will come into force. The Government have strengthened the fraud squad to catch up with textile fraud. I suggest that in a variety of ways, of which I have listed a few, the Government have shown their commitment to the textile industry. That commitment was further underlined today when my right hon. Friend outlined the Government's approach to the renegotiation of the MFA. The Government recognise the importance of the industry. That recognition is based on the industry's contribution to our economy as an employer of well over 600,000 people, and as a producer still of about 70 per cent. of all the textiles and clothing purchased in this country.
The right hon. Member for Lanarkshire, North (Mr. Smith), I think by a slip of the tongue, said that we have already given approximately a third of our market to the low-cost suppliers. What I am sure he meant was that a third of our imports come from low-cost suppliers. That is a quite different thing.
It is important in talking about the industry to recognize that it still provides—
§ Mr. Parkinson
—70 per cent. in value of all the textiles purchased in this country. I know there is another argument but I have never accepted the argument that a tonne of sacking and a tonne of silk should be regarded as of equal significance because they both weigh a tonne. I think that value is an important measure of imports.
§ Mr. Woolmer
Will the Minister confirm that value is different to volume and that from the point of view of the worker in this country a shirt is a shirt and a pair of trousers a pair of trousers? Can he confirm that by volume the figures are very different indeed? Whilst he is on that point, can he deal with its relevance to the question of outward processing? Will the Government in fact be pressing for the percentage in outward processing to relate to volume and not to value?
§ Mr. Parkinson
I shall be dealing with the question of outward processing. We recognised, in the Government's document "The Government and the Textile Industry" that there are two different ways, but I believe that it is still true to say—it is an important fact; the figures are significant—that 70 per cent. of all the money spent on purchasing textiles and clothing in this country is spent on purchasing British textiles and clothing.
§ Mr. Parkinson
I will not. I have a great deal of ground to cover. I have dealt with my hon. Friend's point and there is no point in conducting this basic argument. The plain fact is that 70 per cent. of all the cash spent on buying textiles and clothing in this country is spent on buying British made textiles and clothing.
§ Mr. Winterton
Could I press my hon. Friend? He has referred to silk. Bearing in mind the fact that my constituency was perhaps one of the biggest silk producers in the whole of the United Kingdom, I hope he will understand my interest in this. Will he agree that, in referring to textiles and clothing, if he referred to textiles alone as distinct from clothing, the amount of import 1258 penetration is close to 60 per cent. of textiles. This is very important, because, up-market from textiles to clothing, if we continue at this rate, the problems which will face the clothing industry will be that much greater. It will be that much more susceptible to competition and unfair competition from abroad.
§ Mr. Parkinson
The point I am trying to make is the point that my hon. Friend is constantly repeating to us. The only point I am trying to establish is that we are talking about an important industry. Does he want to deny that it is an important industry?
§ Mr. Parkinson
I am singing the praises of the industry because I believe that, as an employer, as a producer and as an exporter, it is an important part of the national economy.
On the question of trade in textiles and clothing with developed countries, there is a suggestion that we need an MFA between developed countries, and that we should extend the activities of the MFA to cover trade in textiles between developed countries. I believe that to be a hopeless concept. It would inevitably lead to an attempt to manage world trade in textiles, and that is not feasible.
We have discussed today how difficult it is to enforce an arrangement which covers the 16 per cent. of our textile trade represented by imports from low-cost countries, so we can see the even greater difficulty of trying to manage a world trade in textiles between developed and developing countries right across the board.
Our trade with the developed countries is broadly in balance. Last year there was a slight surplus of about £10 million—a deficit on textiles and a surplus on clothing. But the trade in textiles and clothing with the developed world is reciprocal, and in most cases works well. When difficulties arise, as they did for instance with the United States of America, it is possible for the Government to act. We took action under article XIX against two products, to the cheers of the House and the industry. Nine months later, no one shed a tear when those quotas disappeared. They proved to be ineffective and disruptive.
The real basis of American competition at the time had five components: the weakness of the dollar against the pound, oil and gas prices, the restriction of the export of naphtha by the Americans, the high interest rates and the high MLR. The dollar is now stronger against the pound, the new American Administration has de-regulated oil, naphtha is available for export, and interest rates are five points lower than they were. The Administration is committed to the de-regulation of gas as quickly as it can get it through Congress. As a result, when our statistics since February become available, we have reason to believe that they will show a fall in United States exports to us.
The Government were right to put emphasis on encouraging the Americans to remove some of the unfairness, rather than to take action which would have resulted in counter-action against wool textiles and knitwear, two very successful exports to the United States.
§ Mr. Wm. Ross
Does the Minister remember what I said about the Courtaulds factory in my constituency, which is on 90 days' notice? Despite that change, the 1259 factory is still closing, and one reason is that the American penetration of the market for the textiles produced by that factory cannot be dislodged.
§ Mr. Parkinson
It is no secret, as I told the House just before Christmas, that one reason why the Government carefully considered renewing those quotas was the serious problem of the synthetic fibres industry in Ulster. We reluctantly came to the conclusion that it was pointless to take action which would not help Northern Ireland and would damage another part of the United Kingdom.
In discussing problems with developed countries, there is also the possibility of taking action against dumped products. That is not just a theoretical possibility. At the moment, for example, we have six anti-dumping duties against American textile and chemical products coming into our market. The most recent one, on polyester woven fabric, was a 38 per cent. provisional anti-dumping duty. That is in addition to the 13 per cent. duty which is already charged. Therefore, it is possible to take action against dumped products. The Department maintains a unit which is there to help the industry prepare its case. We work constructively with industries. I believe that we can point to results.
I turn now to trade with developing countries. If the speech of the hon. Member for Bury and Radcliffe (Mr. White) does not win him votes in Bury and Radcliffe, I cannot imagine that he will ever make a speech which will. We do not buy from developing countries for sentimental reasons. As he knows, and as my hon. Friend the Member for Hertford and Stevenage (Mr. Wells) said, the developing countries are important customers. In manufactured goods, which are important to us, we ran a surplus last year of over £5 billion.
Therefore, there is good reason for continuing two-way trade between developed and developing countries—between this country and developing countries. It is wrong to say that, because of the problems of one industry, we should take action regardless. The Government have shown their commitment to the textile industry, but they must not forget the rest. I hope that the hon. Member will not forget in future that we run a substantial surplus on our trade in manufactures with those countries.
My hon. Friend the Member for Holland with Boston (Mr. Body) said that the customer pays the price. That must be right. The object of the policy is to ensure that the flow of low-cost items to our market is controlled. There is a limited access to low-cost products for our consumers. I accept that there is a price to be paid, but I differ from my hon. Friend in that we believe that the textile industry is so important that that price is worth paying. However, it is foolish to pretend that no price is being paid by the customer for the MFA.
My right hon. Friend the Secretary of State set out the Government's general approach to the renegotiation. He has a well-deserved reputation in the House for originality, but I think that he would be the first to admit that he restated the Government's approach, which has been already declared. He did not announce any changes of Government policy. He spelt out in more detail the Government's already declared approach to the renegotiation. I intend to continue that approach of spelling out more detail now.
1260 On a number of occasions, we have made it clear that we believe that the arguments for a recession clause are strong. I have said in the House in the past, and I repeat it now, that I believe that a policy which is based on a set of assumptions which subsequently are proved wrong should be capable of being adjusted. The Government wish to find an answer to the problem and are committed to working with the industry and with our partners in the Community to find that answer.
In discussions with colleagues in the Community and outside it, I find that the idea of the recession clause does not command the widespread support which it commands here. I have urged our industry to talk to its fellow industries and trade unionists in the countries of the Community to encourage them to put the point to their Governments that the recession clause is important. Let there be no doubt of the Government's acceptance of the importance of that clause.
§ Mr. Nicholas Winterton
Will my hon. Friend accept that the United Kingdom clothing and textile industries employ many more people than any of the other clothing and textile industries within the EEC, so the recession clause is of particular importance to the United Kingdom? Will he therefore give an assurance—the assurance for which I asked from the Secretary of State—that if we cannot get a recession clause we could well use our veto in the Council of Ministers on the renegotiation of the MFA?
§ Mr. Parkinson I prefer to get into the negotiations and work towards getting the recession clause, which is an important component of the new MFA. The Government have already made their position clear in bilateral discussions with other Governments. We shall be working within the negotiations to try to obtain the answer that the House wants.
The question of growth rates was raised. Annex B of the original MFA states that, in principle, quotas imposed on suppliers under the arrangement should be increased by at least 6 per cent. a year. In fact, as the House knows, under the present MFA the community amended downwards most of the growth rates in its bilateral arrangements, and in one case the increase was only 0.05 of 1 per cent. It is not, therefore, true to say that there has been a uniform right for imports to grow under the MFA at 6 per cent. a year. However, even at those reduced levels the effect of the depression in the market over the past two years has meant that in some cases the share of our market taken by imports has increased considerably. In others, the result has been that suppliers have not been able to reach the access levels available to them.
Looking to the future, I believe that there are strong arguments for, in some way, relating growth to the expected levels of consumption within the Community. The Commission has forecast that overall consumption is likely to grow by no more than 1 per cent. or 2 per cent. over the next few years. That clearly means that growth levels of 6 per cent, as in the original MFA, cannot be considered in the renegotiated arrangement. Having said that, I do not believe that it is possible to lay down a set growth rate across the board. We have to look at the products concerned and our own ability to supply the United Kingdom market.
We are in discussion with the industry to make sure that in the renegotiation we tailor the arrangement to suit our 1261 industry so that it gets the help where it needs it most, and that the new arrangement recognises that the shape of the industry has changed considerably since 1977. We want to make sure that the new arrangement is effective, but saying that we will have an across-the-board level of increase of access might be against our interests. However, we recognise that growth rates must be tied to the projected growth of the market.
A number of hon. Members, including the hon. Member for Norwood (Mr. Fraser), raised the question of base levels. There have been many requests to cut back the level, if possible to the level of 1977 imports, for instance, on the ground that the present arrangement was based on a misconception. In 1977 it was impossible to evolve an agreed recession clause, and we cannot now act as though one had been agreed in those negotiations. We have to accept the situation as it is.
A very interesting suggestion was put forward about the average of the last three years.
§ Mr. Parkinson
A further suggestion came from the Opposition Benches. I suggest to the House that that is precisely the sort of matter that will have to be thrashed out in negotiation. I give the House the undertaking that in the negotiation we shall remember clearly what was said today.
The basket extractor is almost as unworkable as it is unpronouncable. It is an extremely unsatisfactory mechanism. It creates misunderstanding within our industry and, as we saw in the case of Indonesia, political ill will, because of the slow pace at which it works. I accept what has been said in the debate. We need an arrangement which will work better, and we shall press for such an arragement.
Automaticity is a little difficult in that it would effectively set quotas over the whole range of goods. An agreed automatic level would effectively set a quota on everything. That is precisely what the basket extractor was not intended to do. It was supposed to be capable of use against new products. Having had to suffer the workings of the mechanism, however, I share the House's enthusiasm to see it changed.
The Government's position on outward processing is clear. We have always regarded outward processed goods as being part of the quota, and we intend to maintain that position. Some manufacturers have put it to us that, if one accepts the basic rule that outward processing counts against the quota, there may be a case for outward processing of our material. If the goods are to come here in any case, I should prefer them to come made up of British cloth. Therefore, provided the arrangement includes the safeguard that the outward processed goods are part of any quota, if there is some rearrangement of the mechanism within that strict framework, I think that the House will be satisfied.
§ Mr. Woolmer
The Minister says that he thinks the House would be satisfied. He will appreciate that our silence does not necessarily mean satisfaction until we see the implications of his statement.
Will the Minister deal with the important question of the basis of determining the value or amount of outward processing? What are his current thoughts on the important 1262 difference between value added and volume? As he will appreciate, that will make a significant difference to the impact upon the clothing and cloth industries.
§ Mr. Parkinson
I am afraid I shall have to write to the hon. Gentleman on that. I had not considered that point as carefully as I now shall. I shall consider the matter and write to the hon. Gentleman.
As the House knows, there is a price clause in our bilateral arrangements with the various State trading countries. We must, however, recognise that low-cost countries have an advantage in price. We try to make up for that through the quota, which restricts the amount of goods which can come into this country. We recognise the price and cost advantage enjoyed by low-cost suppliers and counter that by placing a restriction upon the amount of goods that they may send here. I suggest that to have a price clause and a quota would be a belt and braces approach. I believe that the quota is the way in which the Government try to recognise and to counter the inherent advantage of the low-cost supplier.
I am a shade sceptical about the concept of a social clause. As I believe I mentioned in an earlier debate, I visited a developing country which had signed the United Nations declaration on minimum prison standards. That declaration guaranteed prisoners a standard of living about three times as high as that of the community as a whole. As a result, it was difficult to get people out of gaol rather than to prevent them from going in.
That is an example of what happens when we try to transpose to a developing country a concept that makes sense to us. I recognise the hon. Gentleman's arguments, but it is difficult to transpose Western standards and trade union practices to developing countries which have per capita income that is about one-fortieth of ours.
§ Mr. Cryer
The task should not be baulked at because of the difficulties. Surely it is desirable that the trade union practices and social standards of the wealthy Western nations should be adopted in those countries. I refer particularly to the rights of individual workers. Surely the Minister subscribes to that aim.
§ Mr. Parkinson
I do not have the hon. Gentleman's certainty that we are always right. It is possible to cause difficulties for oneself by seeking to impose a set of standards that make sense here on to a people who have no concept of them. However, we shall note carefully what hon. Members have said.
The hon. Member for Bradford, North (Mr. Ford) and my hon. Friend the Member for Harrogate (Mr. Banks) raised the question of widespread fraud. It was precisely to meet that point that we considerably strengthened our capacity to detect textile fraud. Far more people than ever before work exclusively on the problems of textile fraud. They are achieving results. We recognise that hon. Members feel strongly about counterfeiting and fraud. Where we have bilateral relations with Governments, we are taking actions on a bilateral basis. Where we do not have such relations, as in the case of the Taiwanese authorities, we have found ways of getting our message through.
I am grateful to the hon. Member for Huddersfield, East (Mr. Sheerman) for having raised this matter and for having enabled me to take up the matter with the Taiwanese authorities through the medium of Parliament. Hon. Members may be interested to know that every word 1263 uttered in the House is read avidly in Taiwan. Those who doubt the effectiveness of the House of Commons should see the effect that a speech from the hon. Member and another from myself had on the Taiwanese authorities. Little did they know that only he and I were present when the debate took place.
Several hon. Members have mentioned duration. There have been proposals that we should seek an arrangement of up to 10 years. That would be a mistake. The arrangement as negotiated in 1977 has been overtaken by events. A five-year arrangement is a sensible one to go for. I am pleased that the Commission shares that view. I turn to the subject of differentiation and reciprocity. Several hon. Members raised this subject. I was extremely pleased to hear recognition from all parts of the House that countries that open their doors to our products should be treated differently in the MFA renegotiation—particularly as regards differentiation—from countries that do not. Hong Kong's market is completely open to our goods without tariffs or quotas. The markets of Taiwan and Korea are not. That fact should be recognised in the renegotiation. I am glad that hon. Members from all parties, including the hon. Member for Norwood took that point.
The Community has global ceilings on the most sensitive products and will press for the retention of that system. It will also consider whether the list of products covered should be changed or extended. We are consulting industry about this. I urge the House to remember that we are entering a complex negotiation, in which many countries will be involved. We are not in a position to impose a solution. We shall have to negotiate our way towards a solution.
Secondly, we recognise the need for the arrangements with Mediterranean suppliers and the Lomé preferential suppliers, and those under the MFA, if possible to run in concert with each other. We shall seek to see that they do.
Finally, I repeat that in consultation with the industry we want to ensure that the new negotiations reflect the needs of industry in the 1980s. We shall be trying to tailor the negotiations to that end.
§ It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.