§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Goodlad.]
10.15 pm§ Mr. D. A. Trippier (Rossendale)I am pleased to have the opportunity to raise on the Adjournment a matter of vital concern to the footwear industry in my constituency, namely, the dumping of Chinese slippers in the United Kingdom. To illustrate how vulnerable Rossendale is to dumping of this kind, it is essential to remind my hon. and learned Friend the Minister for Trade that 50 per cent. of all slippers and house footwear produced in this country—about 16 million pairs a year—is manufactured in Rossendale.
In November 1981 the attention of the Lancashire Footwear Manufacturers Association and the British Rubber Manufacturers Association was drawn to samples of slippers originating in China which were in circulation to wholesalers and distributors. Both associations were told that the cheapest of the selection were being offered at about 53p per pair. In January this year a price list was obtained from the Beehive Rubber Company showing that the lowest bulk price was 51 p per pair.
Allowing for freight costs and handling charges, the cheapest slippers appear to be produced in China for between 12p and 15p per pair. The LFMA and the BRMA do not believe that they could be produced in China at those prices without overt financial assistance to the producers. My purpose today is to convince my hon. and learned Friend that the goods in question are being dumped in the United Kingdom, creating disruption of trade and distortion of the market.
Since the end of the war there have been quotas on footwear from China. The figure with which most hon. Members are familiar is £200, 000, the quota being expressed in pounds sterling, and there has been little pressure from the Chinese or from distributors to change the quotas. Industry has always understood that the quotas covered all footwear, including slippers, but the policy of covering all footwear from China was changed by the EEC in 1971, with the agreement of the United Kingdom Government, but with no consultation with the industry.
My hon. and learned Friend will be aware that United Kingdom market sales of slippers are at best static and at worst in overall decline. Import penetration is rising, and although the figures for quota and non-quota Chinese slippers did not appear significant in volume in the past, any introduction of volume cheap slippers will have an immediate impact on the market. I am now reliably informed that between 300, 000 and 350, 000 pairs of Chinese slippers have been ordered by United Kingdom distributors for the 1982 season.
The Minister will be aware that a delegation comprising representatives of the Lancashire Footwear Manufacturers Association, the Rossendale Union of Boot, Shoe and Slipper Operatives and the British Rubber Manufacturers Association met representatives of the Departments of Industry and Trade in London on Wednesday 10 February 1982 to present evidence for anti-dumping action against the imports of slippers from China.
Whilst additional evidence is being produced I appeal to the Minister to take unilateral action against China under article XIX of GATT or under the emergency provisions of the Treaty of Rome. I further ask for a top level investigation to be conducted into the whole matter.
In the meantime, the LFMA and the Rossendale union will try to gather hard evidence, but the Minister will be aware that 836 distributors will not lightly divulge information about their transactions to buy slippers from China. The Director General of Fair Trading has power under section 2 of the Competition Act 1980 to investigate distortions of trade and I should be grateful if the Minister would say whether this could apply in this case.
In 1977 the Government set upan inquiry into the footwear industry, and the result of that was a blue book published in 1978 recommending a cash injection of £11.2 million for the industry to be spend on recruiting better quality managers with entrepreneurial skills and flair to develop new designs and technology. In the event, the Government allowed only a total grant of £4.2 million to the industry, which altogether generated an overall investment of £32 million for the industry as a whole. I have estimated that in Rossendale alone about £3 million was invested as a result of the Government's scheme. The grant has been' aken up and the scheme brought to an end. Other industries, such as textiles, did not take up their full grant.
Is all this new investment to be thrown away now because our industry cannot compete with dumping? We are talking not about straight competition but about the production of slippers that are sold below the cost of the materials. The Government must act. Ifthey do not, they must stand accused of throwing down the drain public money that has been invested in the footwear industry. Overall, about 10, 0003obs are at risk among those engaged in the production of footwear and slippers in the North-West of England. In Rossendale there are about 4, 000 people engaged in slippers, shoe and ancillary work.
The Rossendale Valley gave birth to the new, sophisticated footwear industry in the North-West. Valley surnames are found alloverthe North-West following a craft that was founded just over 100 years ago. The valley is still the epicentre and any effect on its future by unfair dumped goods must have a seismic impact on all engaged in this labour-intensive industry.
The Minister may say that the footwear industry is already well protected. We certainly have more VRAs than any other industry, but if China has unfettered access to this market the Taiwanese and the South Koreans will not accept the VRAs as they now exist.
There is another fundamental point, which needs to be made. The quality of Rossendale slippers is second to none. The people who work in the industry in the valley take an enormous pride in their work. They have always been ably represented by their trade union, the Rossendale Union of Boot, Shoe and Slipper Operatives, which is as keen as the employers association on action being taken to stop the dumping of these slippers.
All the footwear workers in Rossendale are aware of this threat to their jobs. I could think of nothing more immoral than for their jobs to be blighted by Government inaction in this area. I have always been cynical about Government action against unfair import competition. I have always believed that we play the game by the rules—probably too much by the rules. We play cricket, whereas everyone else plays rugby. I now call on the Minister to play rugby and to take action on this matter.
§ The Minister for Trade (Mr. Peter Rees)I can hardly resist the blandishments of my hon. Friend's invitation to play rugby football rather than cricket. Unfortunately, as I hope to demonstrate to him and to the House, ! would not be in the centre of the scrum even if we were playing rugger. The 837 responsibilities lie slightly elsewhere, although the Government are naturally concerned and we are taking a close look at the situation.
I should emphasise that the Government appreciate the importance of footwear manufacturing and particularly slipper manufacturing in Rossendale. I recall that I had the great pleasure of visiting my hon. Friend' s constituency in his company slightly less than a month ago, although the primary purpose of our visit was to view the textile industry in the context of the multi-fibre arrangement, which, as the House well knows, is the subject of negotiations.
Naturally, we are concerned about any threat to the industry. My hon. Friend is right to remind the House of the considerable sums put into the industry, particularly in Lancashire and Rossendale, under the footwear scheme of assistance of 1978. I should like to feel that the money was being expended to good purpose and that it would not be prejudiced by any dereliction of duty on the part of the Government.
I hope to demonstrate to my hon. Friend that this charge cannot reasonably be levelled, certainly not at this time, against my Department or the Government. I should like to attempt to place the problem in perspective. My hon. Friend has rightly reminded the House that about 16 million pairs of slippers were manufactured in the Rossendale valley. I assume that he was referring to the 1981 calendar year. Total United Kingdom production in that year was about 28 million pairs, or slightly in excess.
Chinese slipper imports in 1981 amounted to 56, 000 pairs. I appreciate that my hon. Friend is concerned not so much with the past as with the future. I am not questioning my hon. Friend's figures. He will appreciate that it is difficult to get hard evidence. This is one of the facets of the case that I want to draw to his attention and that of the House. Let us assume that orders for 350, 000 pairs of Chinese slippers have been placed. I agree that this was the information that came out of the Blackpool fair where these matters were the subject of keen debate.
Assuming that those pairs were imported and that production remains at the level of 1981 that would still represent slightly less than 1 per cent. of the United Kingdom slipper market. At the moment, even if my hon. Friend's worst fears were confirmed, although it is not a matter that a slipper manufacturer would disregard, it would not be right to suggest that the whole fabric of manufacturing in Rossendale, at least of slippers, is likely to be undermined. This is, however, a matter that has to be kept under close investigation.
My hon. Friend says that he must persuade me to take action and I must correct him on that. I would not be the tiniest bit shy of taking action if I felt that the case was proved and if the responsibility really were mine. However, on reflection and on studying this matter, he will appreciate that it is for the Commission in Brussels, if dumping is involved, to take action. Of course, a case of dumping must be made out. The House knows that the rules are a little technical and it is not merely that there must be a prima facie case that the product is being sold at less than the cost of manufacture. There may be a prima facie case if these slippers are really being sold at 53p.
However, one must consider, for example, whether there will be major damage to the industry as a whole. Again, my hon. Friend obliquely touched on that aspect. He suggested that there were other imports of slippers from Taiwan and Korea sold at figures, as I understand it, well in excess of 53p 838 a pair but, on the other hand, at rather less than they were currently being manufactured and sold from well-established factories in his constituency.
Therefore, even if a prima facie case of dumping was established on Chinese imports, it would not of itself justify action by the European Commission. That is one of the difficulties. My hon. Friend fired from perhaps three barrels when he asked why we could not take action under GATT. I have to remind him and the House that, ofcourse, China is not a signatory to GATT so that that course would be impossible. Although I do not want to weary the House with technicalities, action would be taken under the European Commission Council regulation 2532 of 1978, which involves various steps, or, alternatively, as my hon. Friend is right to suggest, under the dumping rules of the European Community.
However, the dumping rules can only be brought into play by the Commission. My Department is very ready to assist factories which feel that their position is imperilled, to get together their evidence and to mount a case to the Commission.
I turn to the history of the case because my hon. Friend is right to remind the House that—
§ Mr. D. N. Campbell-Savours (Workington)What about the third alternative?
§ Mr. Campbell-SavoursWhat about the Director General of Fair Trading?
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)Order. If the hon. Gentleman wishes to interrupt, would he be good enough to do so standing up?
§ Mr. ReesTaking that intervention made from a sedentary position seriously, as I am sure it was intended, the Director General of Fair Trading would not have a position on this. If the hon. Gentleman reflects on that for a moment he will appreciate that the only case for Governmental action to prevent the import of Chinese slippers is on the basis outlined by my hon. Friend. The hon. Gentleman may have material which he may care to disclose to me on another occasion. I must have notice if he has a detailed case which he feels ought to be presented to the Director General of Fair Trading. I would be happy to consider that.
§ Mr. Campbell-SavoursIs the hon. and learned Gentleman aware that his right hon. Friend has replied to questions which I have placed on the Order Paper about the powers of the Director General of Fair Trading? Is he aware that the Director General of Fair Trading does have the power to investigate whether there has been a distortion of trade and, therefore, whether there has been an anti-competitive practice committed in the distribution of goods under the section of the Competition Act 1980 referred to by his hon. Friend the Member for Rossendale (Mr. Trippier)? Why does he not direct himself directly to that, because that is an alternative open to this Government to deal with the problem of these imports where they distort trading and distribution?
§ Mr. ReesIf the hon. Gentleman reflects on that aspect, he will realise that the Director General of Fair Trading has no power, and no capacity, to initiate action through any Minister of the Crown to prevent imports. If the hon. Gentleman cares to raise that point on another occasion—not now, because he fully appreciates that there is little time to investigate an entirely novel case—I will be glad to consider 839 the matter. He will be hard put to suggest that action against imports could be taken on the initiative of the Director General of Fair Trading on dumping or under the regulation I suggested.
My hon. Friend will recall that the French Government took action on the import of espadrilles into France, which was affecting one of their industries. I do not say that that was a more serious case, but the import penetration was greater. It increased from 9-3 percent. in 1979 to 35.5 percent. in 1981. There has not yet been penetration of that order from China or anywhere else of slippers or textiles. Unless a more voluminous case than my hon. Friend has outlined can be assembled, I doubt whether a case can be mounted under the regulation. The same applies to dumping. However, we stand ready to assist the industry if it requires information or if it wants to know how to present its case in Brussels.
As a major exporting country—no country exports a greater proportion of its gross domestic product than Britain—we have to be sensitive in the use of what could be regarded as protectionist measures. If such measures were used insensitively, they could invite retaliation against our great exporting industries. I do not happen to know offhand what exporting industries are located precisely in my hon. Friend's constituency but I am sure that there are some. There may be some in the constituency of the hon. Member for Workington (Mr. Campbell-Savours). We must be cautious, however anxious we are to protect individual industries against what might or might not be regarded as unfair competition. We have to take a wider view of the problem. We realise that our exports might be prejudiced if we were cavalier in the measures that we invoked.
Having listened to my hon. Friend's eloquent contribution, the House will realise that this issue is of great importance in Rossendale. It is right that it should be brought out into the open and carefully scrutinised for his constituency and for the entire footwear industry. However, I hope that he will realise that there is not a case for immediate action, sympathetic though we must be.
I assure my hon. Friend and the House that I, the Department of Trade and the Department of Industry will keep this issue under the closest possible observation. Should it transpire that the regulation is being breached or that the dumping regulations have been breached we shall, if the responsibility lies with us—it does to a limited degree with the regulation but not with dumping—be at hand to do all in our power to ensure that the manufacture of slippers in Rossendale continues unabated into the distant future.
§ Mr. D. N. Campbell-Savours (Workington)The House will be indebted to the hon. Member for Rossendale (Mr. Trippier) for introducing this debate at such late notice. I rise because there are some minutes left in which to make a few observations.
Throughout the country there are those who will read the Minister's words with great care. They will notice that he has not been receptive to the protests made by his hon. Friend and has not been willing to acknowledge the need to intervene. I return to the powers of the Director General of Fair Trading to 840 intervene in the distribution of imports. The hon. and learned Gentleman suggested that the director would be dealing exclusively with the practice of importing. If he were to use his powers under section 2 of the Competition Act 1980, he would deal directly with the problem of distribution. The Act states clearly that if the effect of the distribution of goods and services is to distort trade, that can be defined as an anticompetitive practice and the Director General of Fair Trading has power to act.
As I understand the legislation, it does not place upon him a statutory requirement to investigate. Equally the Minister is not in a position, unless he introduces further legislation, to place a statutory requirement on him to investigate, but he is in a position to ask the Director General to investigate the import of shoes from China. I refer to that lest I step out of order because that is the case that has been brought by t he hon. Member for Rossendale.
I should like from the Minister an undertaking that instead of replying to my written questions as it has over the last week, his Department will evaluate the case. Many hon. Members recognise that the procedures and processes available to us through the European Community and also under GATT are insufficient to deal with the problems of unfair importing into the United Kingdom and the distribution of goods which have the effect of distorting trade.
The Minister should have seized this opportunity to comment directly onthe possibility of action. If he is not w riling to do so tonight, then he should seek to speak to the Director General of Fair Trading and ask him to investigate.
There is a special reason for asking the hon. and learned Gentleman to investigate following this debate. My information today is that the Lancashire Footwear Manufacturers Association, to which the hon. Member for Rossendale so wisely referred, has made a complaint to the Director General of Fair Trading regarding the distribution in the United Kingdom of these products from China. This problem does not affect only the constituency of the hon. Member for Rossendale; it equally affects my constituency because there too there are footwear manufacturers.
If I put down another written question the Minister might indicate in his answer or alternatively by letter that he is willing to approach the Director General of Fair Trading. Many of us believe that this is the way to deal with the unnecessary amount of imports that are being dumped from various parts of the world. Successive Governments have refused to act.
There are many cases which should be handled by the Department of Trade and which should be aided for action by the European Community, but British manufacturers have given up hope. They believe that the facilities for examining accusations of dumping in Europe are not good enough. For instance, the manning of the offices is insufficient. The Government are so preoccupied with free trading policies that jobs are being lost on British manufacturing industry. I am sure that the hon. Member for Rossendale will agree that this is not good enough.
§ Question put and agreed to.
§ Adjourned accordingly at seventeen minutes to Eleven o'clock.