Pianos (Imports) (Hansard, 19 June 1981)

§ Sir Anthony Kershaw (Stroud)

I am grateful for this opportunity to raise a matter of importance to my constituency in particular and to a national industry in general. The British piano industry is in a bad way, and I suggest that the Government could take action to help. If nothing is done, I have no doubt that many old and hitherto sound piano manufacturing businesses will go out of business, with the consequent loss of thousands of jobs and some millions of pounds of export earnings.

A year ago there were nine British piano manufacturers, and now there are five. Employment in the industry has 1330 fallen by 40 per cent. and production is down by 33 per cent. compared with a year ago. At the Frankfurt Music Fair that was held in February 1981—it is the annual fair where all piano makers congregate—orders for British pianos were down 75 per cent. on a year ago. The share of the home market in 1980 enjoyed by British pianos was down by 40 per cent., and nearly 6,000 pianos valued at nearly £4 million were imported into the United Kingdom.

I have only to recite these figures to make it clear that before long the British piano industry will be wiped out unless something is done. It is not bad management, lack of expertise or bad workmanship that is responsible for these difficulties. British pianos are second to none in quality and have been competing very well with all the traditional European manufacturers. In 1979 Britain exported £7 million worth of pianos, but today, I am afraid, the figure is much less.

Even in Germany, where many of the best pianos have long been made, British exporters have until recently been doing well. The Bentley Piano Company, in my constituency, has long had excellent sales in that country. We do not fear fair competition, but the trouble is that the competition has not always been fair.

The competition is unfair in two main ways. The first unfairness lies in the price. The prices of pianos from East Germany, Poland and Korea are from £350 to £400. West European prices—that is, in the United Kingdom, West Germany, France, Italy and comparable countries elsewhere—are about double that. There are no special reasons why the Eastern and Far Eastern countries should be able to make pianos at half the price at which we make them. It is obvious that they are being sold here at less than cost in order to earn foreign currency.

Last year, for example, the German Democratic Republic exported to the United Kingdom 1,391 pianos, of a value of £723,000—an increase of 68.4 per cent. compared to 1978. The next highest exporter was the United States, with 1,271 pianos, of a value of £561,500. However, those American pianos are of an inferior quality and go to a type of trade at which our manufacturers do not aim.

Last February the Minister applied to the EEC for an anti-dumping order. It seems to be taking a tremendous amount of time to come to a conclusion that I and others think is obvious. During that delay, the life blood of the industry has been ebbing away. What can be done to make Brussels hurry up? The Federal Republic of Germany, France and Italy all support our action. Will the Minister do all that he can to inject some urgency into the investigation? I should be glad to hear what the Minister has been able to do. I know that he has the matter in hand, but the urgency is great.

The second unfairness lies in the sales methods of some of the importers. The Koreans, for example, give their pianos phoney names. One company calls its pianos "Steinbach" pianos—a combination of two famous German names—but nowhere on its pianos does one find a reference to the country of origin. I have in my hand an offer from a Dutch firm in Rotterdam offering six months' credit for those Steinbach pianos. There is no mention on the invoices or in the proposals of the fact that those pianos are not made in Holland. Russia exports a piano that it calls the BlÜtmayer, a combination word from "BlÜthner" and "Schiedmayer", which are both well-known German 1331 names. Surely those practices must be a breach of our Trade Descriptions Act 1968. I ask the Minister to look into that matter also as one of urgency.

People do not buy pianos often during their lives. I do not know whether, in your professional capacity, Mr. Deputy Speaker, you had to buy pianos for your charges, but most people buy them for their family. A good piano lasts for three generations, but the ordinary buyer who wants only to encourage little Jimmy to do his scales does not have much experience of buying pianos. When a piano is new it is not easy to tell how long it will last and hold its tone. For the ordinary buyer, price is important. Only the professional musician can judge a piano in comparison with others that he has come across. The cheap imports will not, therefore, be proved inferior in quality for some years, and in the meantime the British industry may die.

There is one last point. Local education authorities were big buyers of pianos. Not many new schools will now be opened, because of the fall in school numbers, so they are not quite so much in the market as they used to be. Nevertheless, each local education authority, at any rate in a county like Gloucestershire, must own between 600 and 700 pianos, which have to be reconditioned and occasionally replaced by new ones. I wonder how many local authorities buy British. I bet that there would not be a foreign piano in a French school, even if there were only one French piano manufacturer. It is an example that we should follow.

I am glad to say that my county of Gloucestershire has a good record. When we buy to recondition pianos, local workmen do the job, and, at any rate in the past two years, I am happy to say that our pianos have been bought from a local firm. However, I doubt whether that is true overall. Whatever my hon. Friend can do to bring the point home to local education authorities, as possibly the greatest customers for pianos in the country, could have an important effect on the purchase of British pianos.

The matter is urgent. We must soon have a decision about dumping and fair trading. I look forward to hearing what my hon. Friend has to say. I am gratified that he has put himself out and has come home especially from Saudi Arabia to answer the debate, which shows the importance that he attaches to the problem. I very much hope to hear some good news from him this afternoon.

§ The Minister for Trade (Mr. Cecil Parkinson)

My hon. Friend the Member for Stroud (Sir A. Kershaw) is right in saying that the debate was one reason why I came back yesterday from Saudi Arabia, but I hope that he will not be offended if I say that I had others as well.

I can well understand my hon. Friend's concern about the matter. As he told us, in his constituency he has one of the most important piano manufacturers in the country. I am grateful to him for raising a matter about which he and I have been in correspondence. I congratulate him on the conscientious and determined fashion in which he continues to look after the interests of his constituents and to press their case on the Government.

Before I turn to the specific subject that my hon. Friend raises, perhaps it would help the House if I restated our policies on trade generally and unfair trading practices in particular. The Government are entirely committed to a policy of free trade on fair terms, not for idealistic but for hard-headed reasons. We rely on trade perhaps more than any other developed country. Last year, British exporters 1332 sold £50,000 million worth of goods into markets all over the world. One-third of all that we produce is sold overseas. We must accept that trade is a two-way affair. If we are to be big sellers we must be prepared to buy other people's products and to be importers as well as exporters. We are determined, however, to oppose all forms of unfair trade which cause damage to industry in this country, destroy jobs and destroy companies which could otherwise be profitable.

Many imports are cheap for perfectly good and proper reasons. Some countries, particularly in the developing world, have access to cheap raw materials and cheap labour, giving them great advantages in producing goods. It is right that we should take our full share of imports from those countries so that they may continue to grow and become more prosperous and to buy from us. Last year, we sold nearly £10,000 million worth of manufactured goods to developing countries. They are very important customers for our exporters.

Other countries, in the developed world, may have the advantage of economies of scale and, I regret to say, in some cases of greater investment in new technology. On the other hand, there is little doubt that current conditions of world recession have tempted many of our competitors to indulge in the kind of unfair practices that we as a Government are committed to oppose. The most notable of these, of course, is dumping. By this we mean, under definitions internationally agreed in the GATT, the selling of goods in export markets at below normal value. This may be either the value of the goods on the manufacturer's home market or his cost in producing them. With Communist and centrally planned economies, the price comparison must be made with prices in a comparable market economy because East European economies offer no reliable guide to prices, and exchange rates are invariably fixed by their Governments at an arbitrary level.

To assist our industry in preparing anti-dumping cases, the Department of Trade maintains an anti-dumping unit. Earlier this year, we issued an anti-dumping pack outlining the procedures which must be followed to establish a case, and we have been working within the Community to simplify those procedures.

It may interest my hon. Friend to know that since the beginning of the year more than 4,000 copies of that information pack have been distributed to United Kingdom companies, and the Department's anti-dumping unit is working with a number of United Kingdom industries in preparing cases to put to the European Commission. I must tell my hon. Friend that responsiblity for taking antidumping action now rests with the European Commission.

My message is that an anti-dumping action, particularly one prepared with the help of the specialists in the Department of Trade, is not as difficult to mount as is sometimes made out. We believe that the anti-dumping procedures are effective. Any industry which considers that it is suffering from dumping should contact the unit, preferably through a trade association, and the unit will be happy to give the trade association every possible assistance.

Once a case has been put together, it is put to the Commission and considered by a member States advisory committee. If a prima facie case is established, the Commission will set about a formal investigation by visiting all interested parties—exporters, importers and Community producers—to establish whether dumping causing injury has taken place.

1333 If the Commission's investigations concluded that dumping existed and that it was causing injury, it would be in a position to impose anti-dumping duties. In cases of serious injury, a provisional duty can be imposed prior to any final decision. The exporters may, however, offer price undertakings, which could be accepted if they were considered to be an adequate remedy. The protection given by either course would be at a level sufficient to eliminate the dumping margin or the extent of the injury.

The world recession has resulted in an increase in dumping complaints. In the last year or so, a number of cases have been brought to a successful conclusion. The most recent was a case in which it was discovered that the Americans were dumping polyester fabric on to the market, and an anti-dumping duty of 38 per cent. was imposed on them.

The Commission is looking into imports of cotton yarn, codeine, petrochemical catalysts, television sets, wrist watches, plywood and a considerable number of other products still to be announced. That is an impressive list most of which is of direct benefit to United Kingdom industry, since many of the investigations were sparked off by complaints compiled by United Kingdom industry either on its own behalf or with their European counterparts.

The increase in activity has stretched the Commission's resources, but as a result of United Kingdom pressure a strengthening of the Commission's unit has recently been achieved. That answers the point raised by my hon. Friend. The number of cases has been growing and the number of people available to deal with them has been insufficient, so a backlog has been building up. However, as a result of our pressure the staff has been increased and there should be an improvement in the performance of the anti-dumping authorities in Brussels.

My hon. Friend was almost modest in extolling the past successes of the piano industry. It had an excellent record for many years until its recent troubles. For instance, it exports more than half its output; it has a fine industrial relations record and the industry has exhibited at many international trade fairs with great success. It is tragic that an industry with such a highly skilled work force and such fine traditions should be facing difficulties.

Let me outline the sequence of events in the piano antidumping case. Hon. Members will appreciate that as the matter is still under investigation I cannot be too specific about certain details, because I would not wish to prejudice the outcome of the case.

Following the severe decline in sales in 1979, the British Piano Manufacturers' Association approached the Department's anti-dumping unit in 1980 and with its assistance set about preparing the case. In order to construct a case on a European basis, support had to be obtained and data collected from its Community counterparts to provide sufficient prima facie evidence to justify the Commission's opening an investigation.

The task of co-ordinating the case was undertaken by Mr. Brasted of the association, whose hard work made the case possible. I am gratified that in a recent speech Mr. Brasted publicly acknowledged the valuable assistance given to him both by my anti-dumping unit and by the Commission. That gesture was much appreciated by all concerned.

1334 The case was formally submitted to the Commission on 8 September 1980. It was discussed at the advisory committee in October 1980 when certain additional explanations were requested. The committee subsequently accepted the case for investigation and a formal announcement of the investigation was made on 18 February 1981. In the meantime preparatory work had been undertaken. The investigation has to establish both whether imports have been dumped and whether the dumping has caused injury.

After the industries complained of had been given the opportunity to respond to the allegations in the complaint, a Commission team, together with members of our anti-dumping unit, visited interested parties in the United Kingdom early in May this year and similar visits have been made in the past few weeks to parties in other member States. All that is designed to confirm the extent of the injury to the Community manufacturers. The next stage will be to determine normal value by establishing the selling price of comparable pianos in a market economy.

The results of the investigation will be analysed and if it should be proved that dumping is taking place and that the imports are causing injury we shall press the Commission to impose urgent remedies in the form of the provisional duties about which I spoke earlier. Such remedies should afford protection to all sections of the United Kingdom piano industry that are at present in difficulties. Defensive action agreed by the Commission will almost certainly apply to dumped imports into our EEC trading partners. As a substantial amount of our exports go to them, this should help the British piano industry in its export markets, too.

It may be argued that the procedures involved and the information required for anti-dumping action are much too complicated. It is certainly true that action cannot be initiated on the basis of unsubstantiated allegations. I believe that if my hon. Friend thinks about that he will come to the conclusion that that is right. As a country exporting huge quantities of goods to other people's markets we should be extremely vulnerable if it were possible to take action using the anti-dumping rules when the case was not proved.

However, the information required to start an action falls a long way short of proof. Proving a case is the job of the European Commission. As I have said, however, the Government are dedicated to a fair and free international trading environment. Therefore, if we are to support protectionist measures we must be certain that they are justified, are taken with regard to our international obligations, and are within the rules of international trade.

This case may have taken longer than some others—perhaps one of the reasons is the shortage of staff in Brussels—but I am satisfied that it has been conducted properly and in accordance with the regulation. I hope that the industry's great efforts will be rewarded shortly, and that the Commission will be in a position later this summer to give us its conclusions and, we hope, to announce the imposition of an anti-dumping duty.

The second unfairness cited by my hon. Friend was misleading names and lack of origin marking. This is a subject for my right hon. Friend the Minister for Consumer Affairs. The Government have introduced origin marking on a number of products with effect from 1 January next year. I shall bring my hon. Friend's remarks to the attention of my right hon. Friend.

1335 My hon. Friend also raised the question of the poor quality of some imports, which the inexperienced buyer may think are comparable to the higher-quality home product. There is little that the Government can do to educate the public. It must be a matter for the home industry to deal with. It is for it to get its case over and prove to the would-be purchaser that our goods are better.

I come finally to the question of a "Buy British" policy for local authorities. I have great sympathy with this, and I congratulate my hon. Friend's county on its excellent record. The Government believe that public bodies should give home producers every opportunity to meet their 1336 needs. We should make it clear that that is our wish, but we should leave the decisions to those who are doing the buying.

I hope that my hon. Friend believes that I have shown him that the Government share his concern about the state of the United Kingdom piano industry and are prepared to work with the industry in eliminating the unfair competition that I believe is the cause of some of its problems.