§ The Minister for Trade (Mr. Peter Rees)With permission, Mr. Speaker, I will make a statement about the special session of the Foreign Affairs Council of the European Communities which was held on Saturday 24 July. The purpose of the meeting was to consider the latest developments in the very serious dispute between the Communities and the United States over action taken in the United States against certain steel imports.
Last January the United States steel industry initiated both countervailing and anti-dumping complaints against imports of certain classes of steel from a number of sources, including seven Community countries, one of which is the United Kingdom. In the countervailing cases, provisional duties have been in force since 11 June. Provisional duties in the anti-dumping cases may be determined shortly. There is no assurance that further suits will not be initiated.
The highest rate of provisional duty, at about 40 per cent., has been determined in the case of products exported by the British Steel Corporation. This, as I understand the position, is on the basis that the capital introduced into BSC by the Government, and the waiver of certain BSC obligations, constitute an unfair subsidy to exports into the United States market. This is a formulation which we find quite unacceptable.
The Government's concern is to safeguard the interests of the United Kingdom steel industry, both public and private, in the face of these protectionist measures and to maintain the stability of the internal steel market in the Community. The Community has tried repeatedly but unsuccessfully to achieve a settlement of this dispute on the basis of some limitation of exports to the United States of selected steel products in return for withdrawal by the United States industry of all its countervailing and antidumping complaints. The United Kingdom has fully supported these efforts. However, none of the Community's proposals so far has been acceptable to the United States.
At its session on 19–20 July the Council therefore agreed that the member States worst affected, with the participation of the Commission as co-ordinator, should seek bilateral arrangements with the United States. After midnight on Saturday 24 July action to suspend the current countervailing complaints could be taken by the United States Administration only with the concurrence of the United States steel industry, under United States law.
Regrettably, last Thursday, 22 July, the United States rejected the proposals put to it under this Council decision by the ambassadors of the countries worst affected, including the United Kingdom. The Administration in turn proposed an arrangement for limiting imports of seven products from these countries at an unacceptably low level. In view of the imminence of the deadline, the Council met again on Saturday at the request of Her Majesty's Government and the French Government. It accepted eventually that discussions between the countries worst affected and the United States should continue to see if bilateral agreements were still possible. The Government had despatched to Washington after the Council of 19–20 July a special team accompanied by representatives of the industry. Following the conclusion of the Saturday Council meeting, our team immediately 746 took all possible steps with the United States Administration to negotiate a bilateral agreement for the United Kingdom alone.
I have to inform the House that, despite every effort by our team, reinforced by a last minute approach by myself, and despite earlier indications to the contrary from it, the United States Administration were not willing to conclude a bilateral agreement with the United Kingdom.
The decision of Saturday's Council also provides for a new initiative for the settlement of this dispute on a comprehensive basis by the Community. Such a settlement should embrace both current and future countervailing and anti-dumping suits. The precise terms of the Commission's mandate for these negotiations will be determined in the course of this week. During these negotiations we shall ensure that the interests of the United Kingdom steel industry, both public and private, are taken fully into account.
§ Mr. John Fraser (Norwood)The House will recognise the serious consequences of that statement, not just for the steel industry, where exports worth about £100 million are at stake, but for world trade. Will the hon. and learned Gentleman make it quite clear to the United States that one cannot tolerate a situation where it wants to make up the rules for others to follow, as it appears to have done for steel, and has done on the Siberian gas pipeline and energy pricing? I hope that he will make it quite clear that the United States must behave like trading partners and not like trading bullies.
Last Monday the Minister promised vigorous action over the United States' measures. That vigorous action, be it from the United Kingdom or the EEC, has, unfortunately, failed to produce results. Will the Minister confirm that the United Kingdom has played by the rules on both pricing and volume and that that has not helped us? Has the United Kingdom been put in jeopardy by the behaviour of other European exporters to the United States? Did the EEC proposals give our steel industry a fair deal? Why was no bilateral arrangement between the United States and the United Kingdom possible? As I understand it, the 40 per cent. duty that is to be slapped on British Steel exports will be much more damaging to our steel industry than any other arrangement on limitation of volumes that might otherwise apply. What further immediate hope, through compensation, other markets or other limitations, can the Minister give to the British steel industry in the immediate future?
§ Mr. ReesI assure the House that the most vigorous representations have been made during this dispute. I very much regret that so far that has yielded no results. The various protectionist measures of the United States Administration, both in this and other spheres, have been, and will continue to be, the subject of complaint by the European Community to GATT.
I confirm that the United Kingdom steel producers and exporters have played by the rules, as we understand them, on both price and volume. It is difficult to say how far the United Kingdom steel industry would be affected if these countervailing duties were confirmed. At present, there has been only a preliminary determination. However, my view is that BSC would be unable to sell over a 40 per cent. tariff and would be compelled either to cut production or to look for other markets for its products, perhaps on the Continent.
747 I should prefer not to enlarge on the precise proposals that have been put forward in the negotiations either by the Community or by the United Kingdom. It would not be helpful to say what our position has been or what movement from that position we would be prepared to contemplate. I am sure the House recognises that it is difficult to negotiate these delicate matters in public, but I assure it that we shall have the particular interests of the United Kingdom steel industry well in mind.
Since the Council on 19–20 July, we have explored the possibility of bilaterals, first on a co-ordinated basis, and, secondly, on a United Kingdom basis. It would not have been helpful to do so earlier, because we felt that acting as part of the Community would, if I may use the expression, have more clout against the American Administration. There are also certain international obligations to which we must have regard.
With regard to compensation, should it not be possible, against our hope and expectation, to negotiate proper entry for our products into the United States, I am sure that the British Steel Corporation will consider other markets. The long-term future of the industry is, of course, a matter for my right hon. Friend the Secretary of State for Industry.
§ Mr. SpeakerOrder. I propose to allow questions to run until Four o'clock by the digital clock, at which time we must move on.
§ Sir Anthony Meyer (Flint, West)Does not this sorry tale show that the jobs of British steel workers can best be protected if the European Community acts as one? Is there not now a grave danger that a commercial war with the United States will spread into a commercial war over steel with our European neighbours, with disastrous consequences for the British steel industry?
§ Mr. ReesSteel is essentially a Community problem although, naturally, a national Government such as ours must have regard to the specific national implications, which we have done and will continue to do. I hope that my hon. Friend will say that I deprecate the use of words such as "war" or, to quote the words of a Foreign Minister of a neighbouring State, "a progressive divorce." Such metaphors do not advance cool and patient understanding of the problem, but it is true—I cannot conceal it from the House—that commercial relations between the United Kingdom and, indeed, the Community as a whole and the United States are clouded by many outstanding trade issues. It is the hope and determination of the Government, acting with and through the European Community as a whole, that we will patiently resolve the issues to the advantage of steel workers here and on the Continent.
§ Mr. Barry Jones (Flint, East)What is the estimate of the potential financial and job losses to BSC if the Americans refuse to listen to sense? Is the Minister aware that in January and February of this year Britain imported more than £200 million worth of steel? Does he remember that last year Britain complained vigorously about unfair man-made fibre subsidies that the Americans gave to their textile industry?
§ Mr. John Evans (Newton)The Government say that, but they never do anything.
§ Mr. ReesIf the hon. Gentleman had accompanied me and spent his weekend in Brussels, as I did, he would not have made that ill-judged intervention from a sedentary position.
We are sensitive to the threat to jobs not only in the United Kingdom but on the Continent as a whole. We are aware of the statistics which the hon. Member for Flint, East (Mr. Jones) has drawn to the attention of the House. The most vigorous representations have been made to the United States and, as I have told the House, the Community through the Commission has taken a range of United States protectionist measures to the GATT. I hope that those complaints will be pressed home.
§ Mr. Ian Wrigglesworth (Thornaby)Is the Minister aware that the Government will have full support from the Social Democrat and Liberal Benches for the action that they are taking? Does he not find it a little incongruous that the party that advocates import controls, right, left and centre, in this country is opposing import controls by another country which is doing damage to our steel industry? Will he ensure that vigorous action is taken to protect steel jobs, which are being shed in increasing numbers? Will lie further ensure that in any package that is agreed between the Community and the United States the interests of Britain as against the other European countries are well taken into account?
§ Mr. ReesThe hon. Gentleman, presumably speaking for the Social Democratic Party, well makes the point that Britain, both in steel and in other commodities, has a strong interest in preserving the open trading system. It is because we are extremely worried about the threat to that system posed by a range of measures from one of the most important commercial and economic Powers in the world that we propose to follow up this theme vigorously not only in bilateral discussions with the countries concerned, but at the GATT.
§ Sir David Price (Eastleigh)Is my hon. and learned Friend aware that this is not a delicate matter, as he suggested, but a robust matter of trade confrontation? Does he agree, as he appears in his statement to say, that the United Kingdom will have more punch working together with our EEC partners than by working alone?
§ Mr. ReesIf I have referred to it as a delicate matter, it is because we regret very much that the protectionist actions of a Power which we regard as friendly and an ally of ours should have clouded our relations and put at risk a range of industries and jobs in the United Kingdom. I assure my hon. Friend that I have not been over-oppressed by considerations of delicacy in the representations that I have made on the other side of the Atlantic.
I assure the House that we have kept our partners in the European Community fully informed of what we have been doing, because we think that it is very important that we should all stick together. We feel that we shall have more weight in economic and trade questions if we act as a Community rather than as a series of individual countries.
§ Mr. Stan Crowther (Rotheram)Is the Minister aware that his personal attempts to safeguard the interests of the British steel industry have widespread support? But is it not obvious that the fact that bilateral negotiations have become necessary is an indication of the miserable failure of the Commission to safeguard the interests of the British 749 industry? Is the Minister satisfied that the Commission properly represented the special United Kingdom case, which arises because we have been over-zealous in meeting the Commission's demands for cuts in capacity and manpower? By incurring huge redundancy payments we have been placed in a position whereby the Americans are now claiming that those payments are a form of subsidy.
§ Mr. ReesI am grateful to the hon. Gentleman for what he said about my personal attempts. He has put his finger on an illogicality and anomaly in the United States' position, in that what we have done is responsibly to encourage the restructuring of the British Steel Corporation. Indeed, by an irony what we have done was commended by Commerce Secretary Baldrige to Congress, yet what we have done is apparently forming the basis for the most swingeing countervailing tariff of all. If we chose to embark on bilateral negotiations during this week it was because we were acutely concerned about the importance of the 24 July midnight deadline, Washington time. We were concerned not to miss that deadline, the importance of which had been stressed to us by the United States Administration.
§ Sir Peter Emery (Honiton)Will my hon. and learned Friend make it clear to the United States that even some of the greatest friends of America in the House find the action taken by the United States Administration absolutely unacceptable? While negotiating as he has to in the most delicate situation, will my hon. and learned Friend publish, in some way or other, all the action in terms of trade retaliation that could be taken by the United Kingdom against the United States' trade with this country, not with the idea that we have to take such retaliation, but to make it known to the United States that many Members in the Chamber find their action so unacceptable that we have to consider what action we can take to defend ourselves?
§ Mr. ReesI understand the strength of feeling shown by my hon. Friend and, indeed, by other hon. Members during these exchanges. I am not certain whether it would be helpful at this stage to talk in terms of retaliation. There are, after all, a range of international agreements which we have observed with reasonable fidelity which are designed to provide for the orderly resolution of these problems. As I said in answer to an earlier question, we as a country have a strong interest in the preservation of the open trading system. It is for that that we must work rather than contemplate any type of trade war between ourselves and old friends and allies.
§ Mr. James Hamilton (Bothwell)Will the Minister recognise that those hon. Members with steel interests in their constituencies believe that there should be bilateral negotiations and that the American people should be left in no doubt that enough is enough? Is the Minister aware that if Scotland fails to benefit from the Siberian pipeline, this will be catastrophic for the steel industry and could easily lead to more than 50,000 redundancies?
§ Mr. ReesIt was because I felt that it was important to take advantage of the last few hours before the deadline ran out that I instructed our team to press ahead with all possible speed on bilateral negotiations. I have to stress to 750 the hon. Gentleman and to the House that a fundamental reason for the United States Administration failing to conclude bilateral negotiations with us before midnight on Saturday was their desire for a much wider and comprehensive deal with the Community as a whole. To be fair, this point was made to me in Washington three weeks ago. In those circumstances I cannot hold out any hope of bilateral negotiations with the United Kingdom being successful in the prevailing situation. I do not, however, wish to contemplate the possibility of failure. Should it turn out that a further effort on behalf of the Community is unsuccessful, we shall not rule out further bilateral negotiations.
The Government are very much aware of the implications of the pipeline project for employment in the United Kingdom, especially in the constituency—I am not sure whether it also effects the hon. Gentleman—of the hon. Member for Dunbartonshire, Central (Mr. McCartney).
§ Mr. Anthony Grant (Harrow, Central)Will my hon. and learned Friend remind the United States Administration, in no uncertain terms, of the numerous statements and commitments by President Reagan at the summit and elsewhere in favour of free trade and against protectionism? Will he remind the United States that if this unjustified action should lead to a wave of protectionism it will cause the very political instability, as well as economic instability, in the Western world that it fears?
§ Mr. ReesWe shall not be slow to quote back in appropriate circumstances various ringing affirmations from the United States Administration in favour of the open trading system. I have told the United States Administration that what they have done and what they propose augurs very badly for a successful outcome of the GATT ministerial meeting in November, to which, I happen to know, it attaches great importance.
§ Mr. Peter Hardy (Rother Valley)Will the Minister confirm that those European companies that may have dumped face less discouraging threats than those parts of Britain that are traditional suppliers of the American market? Some of the steel works in my constituency have been supplying that market for a long time. Given that the steel industry's experience of membership of the European Community has been almost invariably bad, will the Government ensure that they take vigorous unilateral action to see that Britain does not face the harshest penalties of this foolish American course?
§ Mr. ReesI do not think it is necessary to compare the performance of the various steel industries in Europe. I note what the hon. Gentleman says. Unilateral action now would not, I believe, prove to be in the long-term interest of the steel industry and those who work in it, some of whom I am aware are ably represented by the hon. Gentleman.
§ Mr. Hal Miller (Bromsgrove and Redditch)Does the Minister not consider that the EEC steel cartel is itself offensive to the open system of trade, which we so strongly support? Will he ask his right hon. Friend the Secretary of State for Industry to consider with his opposite numbers how long this cartel should continue in view of the damage being caused to United Kingdom consumers of steel and the fact that it is leading to imports of manufactures and semi-manufactures of steel?
§ Mr. ReesI think that my hon. Friend's question goes slightly outside the basis of my statement. The Government are, naturally, anxious that there should be an orderly and stable market in steel products inside Europe. I do not believe that it would be for the long-term benefit of consumers—it is right that we should pay attention to their interests—or to the steel industry and those working in it if there were to be a destabilised market as a consequence of this or any other proposed measures.
Mr. Frank Hooky (Sheffield, Heeley)Is the Minister aware that if British steel products are shut out of other markets, the remedy is to control the domestic market? If this Government will not do that, a Labour Government will.
§ Mr. ReesIt is difficult for me to determine what domestic measures the hon. Gentleman has in mind. I suspect, in any case, that these would not be a matter for me as Minister for Trade.
§ Mr. John Townend (Bridlington)Will my hon. and learned Friend consider being more forthright with the Americans and pointing out that if they intend to impose an increased duty on British steel to protect their home market, it is just as easy for us to impose increased duties on American textiles and chemicals, which, in the past, have been produced from subsidised feed stocks?
§ Mr. ReesI hope that I have been reasonably forthright. This is a matter of personal style. I must leave it to the House and to the American Administration to judge how I have performed. I note what my hon. Friend says. I have already stated that it would be ill-advised for us to talk in terms of a trade war or retaliation, although we are naturally concerned to see how we can counter the protectionist measures of the United States Administration.
§ Mr. D. N. Campbell-Savours (Workington)Does the Minister recognise that, despite the fact that nearly half of BSC's product areas are excluded from the claim made by the Department of Commerce, the British Steel Corporation may introduce those excluded areas into the general areas of consideration? Will he study that aspect closely? It has wider implications for BSC, for the regions and for the industries in which a great number of people are employed.
§ Mr. ReesI take note of the point that the hon. Gentleman makes. It would be the wish, I think, of the whole European Community and, in particular, the United Kingdom that there should be a comprehensive settlement of this highly regrettable and damaging dispute.
§ Mr. Teddy Taylor (Southend, East)Would the problem not have been relieved, or perhaps avoided, if other members of the Common Market cartel had cut their steel capacity as they were pledged to do and which Britain, unfortunately, has done almost single handed? As the Minister stated that we are keeping to the rules on price, can he give a categoric assurance that BSC has not been selling steel in America more cheaply than to steel consumers in Britain?
§ Mr. ReesIt is true, I believe, that we have restructured more effectively than most of the other countries in the European Community. I am very confident about what my hon. Friend has said. For example, the producers in Holland and Germany have not been singled 752 out by the United States for swingeing, countervailing duties of the kind that we have encountered. It would be unwise for me to comment on my hon. Friend's other proposition—
§ Mr. TaylorWhy?
§ Mr. Rees—because I do not want to say anything, unlike, apparently, my hon. Friend, that might prejudice the position of British Steel in the course of the anti-dumping investigation, which continues. We want to arrive at the facts. We are concerned to see that British Steel occupies as strong a position as possible to resist the measures contemplated by the United States Administration both on the countervailing front and on the anti-dumping front.
§ Mr. Allen McKay (Peniston)Does the Minister agree that if the Americans go ahead with their proposals, all the efforts of Mr. Ian MacGregor will come to nil and that the steel industry will be further damaged? Does the hon. and learned Gentleman not realise that in my constituency, as in Sheffield, the silverware industry, the cutlery industry, the steel industry and the textile industry will decline virtually to nothing? Is it riot time that he took stronger measures and considered seriously the possibility of import controls, in the long-term interests of these industries?
§ Mr. ReesIt would not be appropriate for me to engage in a debate about the long-term structure of the British steel industry. That is an important question, but not essentially a question for me, except in its external trade aspect. It might assist the House in its consideration of the issue if I mention that about 200,000 tonnes of BSC's exports to the United States are likely to be affected if the preliminary countervailing duties are confirmed at the 40 per cent. level.
§ Mr. Jonathan Aitken (Thanet, East)When my hon. and learned Friend does his best to fight for Britain's interests in this matter, does he not feel encumbered in his negotiations by the European baggage that he must take with him? Has not Britain already moved further than almost every other European country to meet the terms of fair trade, and are we not being made the scapegoats for the unfair practices of some of our European partners?
§ Mr. ReesI shall not conceal it from the House that it sometimes requires delicate negotiations to reconcile all the interests of the Community countries, but, provided that an acceptable balance has been struck, in the end we gain immeasurably in negotiating strength with a Power such as the United States of America if we are part of the Community. I do not wish to sound over-optimistic, but I hope that, as part of the Community, an acceptable deal will be struck that will safeguard the position of the British Steel Corporation, the British private sector and all other European producers and exporters.
§ Mr. SpeakerI believe that the hon. Gentleman has a constituency interest in this matter.
§ Mr. ClarkeIs the Minister aware of the great anxiety about the events, especially in Lanarkshire, where many people who used to work for American firms are now in the dole queue? Is he aware that there is especial interest 753 in the future of Ravenscraig and Gartcosh and that the events should not be used as an excuse to add to the difficulties of those who work in those plants?
§ Mr. ReesOf course I recognise that a range of American measures—not only the countervailing duties, but what is threatened, though I hope will not be implemented, about the trans-Siberian pipeline, which involves many British or even Scottish companies—are of considerable anxiety not only to the hon. Gentleman and those whom he represents but to companies and representatives of other parts of the United Kingdom.