GATT (Ministerial Meeting) (Hansard, 29 November 1982)

§ The Minister for Trade (Mr. Peter Rees)
With permission, Mr. Speaker, I shall make a statement about the ministerial meeting of the General Agreement on Tariffs and Trade at Geneva, which concluded its proceedings at 5 am today. A copy of the declaration and decisions of the meeting will be placed in the Library as soon as possible.
The ministerial meeting was the first for nine years and was attended by more than 80 signatories which account for more than 90 per cent. of world trade. The purpose of the meeting was not to revise or amend the general agreement but to reaffirm support for existing obligations and to seek agreement on the examination of certain important issues that might form the basis of future negotiations.
After five and a half days and nights of negotiation—[HON. MEMBERS: "Ah!"]—the meeting adopted by consensus a document which constitutes a realistic commitment by the signatories to maintain the existing obligations of the GATT that have underpinned the open trading system since the war and to strengthen their observance in the future. The document does not prevent contracting parties from adopting safeguard measures, under the GATT, or measures with a similar effect.
In particular, the document provides for: a study to cover ways and means of achieving the acceptance by newly industrialised countries of increased obligations under the GATT and of an increase of trade with them; a study of the problems of international trade in services; a study covering agricultural trade issues in their entirety; a study of how best to combat trade in counterfeit goods and an improved procedure for the settlement of disputes.
Throughout the meeting the countries of the European Community consistently emphasised the need for conclusions and decisions to be expressed in realistic terms. For that reason, the European Community entered a reserve on a proposal to link the study of agricultural trade with a wide commitment to renegotiate the fundamental structure of that trade. The European Community, in common with a number of other signatories, made certain other interpretative declarations.
Even with those reservations, the outcome of the negotiations—undertaken against the background of a world recession—must be regarded as an encouraging recommitment to the maintenance of the open trading system, on which the prosperity of the United Kingdom as a great exporting nation depends, and has helped to focus the attention of the world on the consequence of a breakdown of this system. It was, I think, recognised that the United Kingdom, through the European Community, made a full and constructive contribution to this outcome without, however, compromising its right to safeguard its essential national interests.

§ Mr. K. J. Woolmer (Batley and Morley)
The Minister will know that the Opposition had not minutes, but seconds, in which to consider the statement before he rose to address the House. Nevertheless, we are grateful to him for letting us see the statement.
On 19 November the Minister said that agriculture was not a crucial issue for Britain, and added: We are not uncritical supporters of the CAP". 21 Has the Minister supported the interests of British consumers, taxpayers and industrial workers in the attitude that he has adopted in the negotiations towards agricultural trade and the CAP? What steps are to be taken to control unfair competition from newly industrialised countries such as Brazil and Korea and to reduce the trade barriers that they erect against our exports? What progress has been made on improving and speeding up GATT disputes procedures and on ensuring that other countries, as well as Britain, abide by the rules of the game?
In particular, what pressure is to be put on Japan to open its markets, just as we frequently open our market to Japanese goods? The Opposition welcome any move to open up international trade in services, but does the hon. and learned Gentleman recognise that manufacturing industry in Britain is bearing the full brunt of the Government's deflationary economic policy, of unfair competition and of dumping from abroad? Does he recognise that a growth in banking and insurance services is no substitute for the decimated manufacturing industries, such as steel, vehicle production and textiles?
Does the hon. and learned Gentleman recognise that the Opposition share the anxiety that the world should not drift into "beggar your neighbour" policies of trade restriction and cumulative unemployment? Does he also accept that such protectionism stems from the problems of unemployment and excess capacity, whose basic causes lie in the economic policies of cutback and despair that are promoted by his Government?
Finally, what steps are being taken by the world's political leaders to co-operate to expand demand, production and employment, so reducing the very fear that is leading to a threat of protectionism? What is to be done about increasing the borrowing capacity of the developing nations which still provide vital markets for our industries? What does the Minister wish to see done about the generalised chaos of the foreign exchange markets, which leaves British and American exchange rates so badly out of line that it is precious little wonder that the unemployed suffer from the threat and fear of protectionism?

§ Mr. Rees
I recognise that trade issues cannot be divorced from economic and monetary issues. It was not, however, within the remit of the GATT to conduct quite such a wide-ranging review, although there were perceptive contributions by the representatives of the International Monetary Fund and the World Bank.
As the House will recognise, the common agriculture policy is a particularly sensitive European Community issue, and I emphasise that in practically every country agriculture is treated as a special case. It was for that reason that it was thought wise in the first instance to conduct a far-ranging review.
I have emphasised that it is important that the newly industrialised countries should recognise their obligations as well as their rights, not only to the developed countries, of which the United Kingdom is one, but to the less developed countries, which are desperately anxious to have access to their markets.
We would like to see a rather sharper procedure for the settlement of disputes. I hope that that will result from the meeting.
Of course Britain has difficulties with various countries. The hon. Member for Batley and Morley (Mr. Woolmer) mentioned Japan, but he will recognise that in an international forum of this type, which was concerned 22 with the establishment of general principles by which the conduct of individual countries could be judged, it would not have been appropriate for me to enter into a series of bilateral meetings to discuss these individual problems, although we are conscious of them. I assure the House that we shall follow them in other forums.
I should certainly not assert that trade in services should assume a primacy over our concern with trade in manufactured goods. However, I remind the House that three out of every five employed people in this country are employed in service industries, not only in banking and insurance, but in consultancy services, shipping and so on. It is important for Britain's well-being that we should try to liberalise trade in services as well as in manufacturing.

§ Mr. J. Enoch Powell (Down, South)
Does not this ill-disguised fiasco make it clear that the Government's justified attachment to an open trading system is fundamentally incompatible with membership of the European Economic Community, to which they are also, unfortunately, disposed to cling?

§ Mr. Rees
I leave the House and the outside world to judge whether the word "fiasco" would be appropriate in this context. It would be better to judge by the consequences that flow from the decisions taken on this occasion than to anticipate them. I find no inconsistency whatever between Britain's adherence to the European Community, which, as I have said, demonstrated that it is an outward looking organisation which plays a substantial role in underpinning the open trading system.

§ Sir Julian Ridsdale (Harwich)
Is my hon. and learned Friend aware of how many hon. Members appreciate the Government's determination, in spite of the difficulties, to continue their policy of an open trading system? With regard to Japan, will my hon. and learned Friend continue the industry-to-industry talks which have been taking place, as it is on this basis particularly that help can be given to remedy the present large imbalance in trade?

§ Mr. Rees
I am grateful to my hon. Friend for his views. The Government recognise the importance of the industry-to-industry consultations, and nothing that took place in Geneva would prevent such agreements being concluded.

§ Mr. John Horam (Gateshead, West)
Is the Minister aware that a limited and unsatisfactory agreement such as this is certainly better than no agreement at all? First, is the Minister confident that the EEC is still seeking to expand world trade as much as it should be during this phase of world recession? Secondly, will the hon. and learned Gentleman expand on the studies in international services which have been agreed by the signatories? In particular, what factors do they cover, and is Japan to be included, because the Japanese market is extremely difficult for British companies wishing to sell services? As the Minister said, three out of five people are now involved in services and it is an extremely important sector in this country.

§ Mr. Rees
I assure the hon. Gentleman that the European Community, as a community, is concerned with the expansion of world trade.
With regard to the study of services, the first need will be to identify obstacles in each particular country and then to meet again to consider what steps can be taken to deal with them. Certain of the less developed countries entered 23 reservations on that matter. Japan, however, entered no such reservation, and therefore any obstacles that are found to the trade in services of that country would certainly be within the purview of the examination.

§ Mr. Barry Jones (Flint, East)
If the conference was not a fiasco, will the hon. and learned Gentleman categorically state that the future for steel workers and textile workers, whose jobs have been destroyed by cheating imports, is now more assured?

§ Mr. Rees
I cannot assure the House that their future will be more assured, but I can say that nothing that emerged from this conference will prejudice their future. Indeed, they ultimately will have an interest in a system of free but fair trade.

§ Mr. Michael Grylls (Surrey, North-West)
I congratulate my hon. and learned Friend on his stamina at a marathon conference. Does he agree that the important thing is to maintain not only free trade but fair trade, and that the House will expect, within GATT, to undo these non-tariff barriers that are making it so difficult for British firms to export to countries such as Japan and Korea?

§ Mr. Rees
I am grateful to my hon. Friend for his kind opening remarks. Perhaps one develops a certain stamina in Committees on controversial Bills which stands one in good stead at these meetings. I hope that it will emerge from the declaration of the meeting that the identification and removal of unfair tariff barriers should play a major part in the GATT system.

§ Mr. Douglas Jay (Battersea, North)
Since it is wholly in the British national interest to give full support to the United States' opposition to EEC export subsidies which are a breach of GATT principles, why did the Government not do so?

§ Mr. Rees
The United States must speak for and explain its own position. Although the United States' representative was careful to express his country's views in moderate terms, by contrast with some of his legislators who turned up at Geneva, there is no sign that a trade war in this area will break out. I should deprecate it, and I should hope very much that the United States' Administration would also do so. It would not be to the advantage of the world as a whole if a conflict on the issue of subsidies were to break out and any country, particularly one in a dominant position, were to flood the agricultural markets with subsidised exports. The casualties would be the smaller countries, and particularly our friends in New Zealand.

§ Mr. Russell Johnston (Inverness)
As the Minister has a reputation for clarity, does he agree that this is a somewhat dense statement, even for five o'clock in the morning? Does he believe that it will result in a decrease in protectionism? Will he be so kind as to explain what he meant by saying that the European Community made certain other interpretative declarations?

§ Mr. Rees
I leave the House to judge whether my statement was vital or moribund. It is not for me to say. I shall endeavour to provide the clarification that the hon. Gentleman requires. An interpretative reservation was entered on roll back. As I have said, a reservation 24 remained on agriculture. There were one or two matters of triviality which arose largely because of the haste in which it was necessary to draft the final declaration.

§ Mr. Anthony Nelson (Chichester)
I understand that last year, for the first time, Britain's earnings from invisible trade amounted to more than those from visible trade. Given that significant fact, will my hon. and learned Friend explain the main reasons for the partial failure of the section of the GATT talks dealing with service agreements and name the main culprits? An agreement in this area is vital for the industries concerned and for our future.

§ Mr. Rees
Both the European Community and the United States attach importance to progress in this sphere. I should not like to suggest that there are any culprits. However, a number of the less developed countries entered formal reservations.

§ Mr. Michael Meacher (Oldham, West)
What precise means have been established to ensure that the grossly unequal tariffs in many sectors between the United Kingdom and the so-called newly industrialised countries will be equalised within a reasonable period?

§ Mr. Rees
I cannot suggest that there was any guarantee, but the relationship between the developed world, the less developed world and the newly industrialised countries featured in our discussions and a programme of work is envisaged.

§ Mr. Nigel Forman (Carshalton)
May I add my tribute to the work that my hon. and learned Friend did in Geneva? Will he tell the House a little more about the study that is to be launched into the settlement of disputes, which was clearly one of the most important topics to be discussed? Will he assure the House that UNCTAD will not have an important implementation role in a sphere which should properly belong to the GATT?

§ Mr. Rees
To be realistic, one must recognise that the initial process in the settlement of disputes should be one of conciliation and consensus. Emphasis was laid on that. It is regrettable that there have been occasions when countries have blocked the conclusion of the panel. I hope that the conclusions that have been reached will discourage countries from using that type of technique. I cannot predict the outcome of UNCTAD's consideration of the agenda. That is a separate matter. The GATT is possibly a better forum, because it concentrates exclusively on trade issues while UNCTAD has a wider remit.

§ Mr. Ron Leighton (Newham, North-East)
Will the Minister accept that one of the major reasons for the failure of the conference is the EEC's rigid agriculture protectionism? Is it not true that Mr. Anthony of Australia left the conference early, having called the whole thing a fiasco, because of the EEC's attitude? Does he agree that the common agricultural policy fouls our relations with Australia and the United States and undermines the economies of the Third world?

§ Mr. Rees
In every country agriculture is treated as a special economic activity.

§ Sir Peter Mills (Devon, West)
Quite right, too.

§ Mr. Rees
I even discovered that our Swiss friends support agricultural activity to a minor extent. I regret the statement of Australia's Deputy Prime Minister. For 25 reasons that I understand, he had to leave the conference early on Saturday morning. The text of his statement was circulated before the final declaration, and perhaps it did not reflect the conference's ultimate conclusion. It might have had a different tone—this is for him to say, not for me—had he remained to the end.

§ Mr. Robin Maxwell-Hyslop (Tiverton)
Does my hon. and learned Friend agree that agricultural output depends on the weather, over which producers have no control? Surely it is better to have regulations so that surpluses do not ruin producers than to have shortages, in which event people starve.

§ Mr. Rees
My hon. Friend perceptively draws attention to the crucial distinction between manufacturing and agriculture, which naturally bears on different countries' approaches to the problem.

§ Mr. Doug Hoyle (Warrington)
Will the hon. and learned Gentleman accept that, whatever he says about service industries, Britain's prosperity and employment prospects depend upon a buoyant manufacturing industry? His statement, which was like one of Scrooge's, has brought little cheer to our manufacturing industry, especially to the automobile, steel, electronic and textile industries. Why did he not do more about unfair competition, and especially dumping? Such action has been further delayed by our membership of the EEC.

§ Mr. Rees
Nothing that took place at the GATT conference will prevent the most rigorous application of anti-dumping procedures. I should not like to assert as confidently as the hon. Gentleman that Britain's prosperity depends upon any one economic sector. Naturally it is the Government's desire that Britain should have a bouyant manufacturing sector. That depends on its being as competitive as possible.

§ Mr. Jonathan Aitken (Thanet, East)
My hon. and learned Friend will recall that the Gracious Speech included the premise that Britain would take action at the GATT to try to remedy the unfair trading practice that means that British-manufactured cars exported to Spain are subject to a tariff nine times greater than that which Spanish cars attract when they are imported into Britain. What happened on this issue at Geneva? What other unfair trading practices that discriminate against Britain were remedied?

§ Mr. Rees
I mentioned this problem—there are others between Britain and Spain—to the Spanish Minister for Trade, who is about to hand over his portfolio in a matter of weeks to a member of the incoming Spanish Government. As I have explained, it was not exactly the forum at which to pursue to a conclusion bilateral negotiations and problems, even such important problems as motor car tariffs.

§ Mr. Ian Mikardo (Bethnal Green and Bow)
If we are to assess the results of the conference realistically and not through rose coloured glasses, was it not condemned to ineffectiveness and ridicule on the very first day when the Japanese Government's representative put his tongue firmly in his cheek and claimed that Japan was one of the most open markets in the world?

§ Mr. Rees
I assure the House that my spectacles were not rose coloured at any stage while I was at Geneva. I listened with great care to the Japanese Foreign Secretary's 26 statement. Each country has its own perception of the advantages and disadavantages for its own markets. We shall continue to press on the Japanese the necessity to open their markets still further to British exports.

§ Mrs. Elaine Kellett-Bowman (Lancaster)
Will my hon. and learned Friend accept that I am much relieved that the consensus does not prevent the use of safeguard measures when vital national interests are involved? May I thank him for his robust efforts on behalf of the textile industry in trying to get a fair deal for newly industrialised countries and for our textiles?

§ Mr. Rees
I am grateful to my hon. Friend for her statement. I assure the House—especially hon. Members representing textile constituencies—that nothing in the declaration will prevent a firm MFA.

§ Mr. George Park (Coventry, North-East)
When I asked the hon. and learned Gentleman about tariff disparities on the import-export of vehicles on a previous occasion, I was told that he would deal with the issue at the GATT meeting. Following the debacle at Geneva, what does he propose to do?

§ Mr. Rees
I do not accept that there was a debacle at Geneva. I assure the hon. Gentleman that bilateral problems will be pursued as vigorously as they were before I went to Geneva.

§ Mr. John Townend (Bridlington)
Does my hon. and learned Friend agree that we have been talking to the Japanese for years about opening up their market to British goods and services and that the results have been minimal? Is the time not approaching when we should tell the Japanese that they are to open their market quickly, or the talking will cease and retaliation will have to begin?

§ Mr. Rees
The Government have taken a robust attitude, as has the European Community, on trade with Japan and a complaint had been made under article 23 of the GATT long before the Geneva meeting.

§ Mr. Ioan Evans (Aberdare)
In his discussions with the representatives of the Third world and the Commonwealth countries, did the Minister reiterate that it is this country's intention to reform fundamentally the common agricultural policy or to pull out of that part of the EEC, or did he put the point of view of the EEC?

§ Mr. Rees
The negotiation on behalf of the European Community was undertaken by the Commission. I assure the House that there was a considerable British input to the Community position before the Commission representatives went into the council chamber. Because the CAP is essentially a Community issue, although its effects go outside the Community, there could be no question of a renegotiation of the CAP at Geneva.

§ Mr. Tony Marlow (Northampton, North)
Do the Government wish to move to a freer and fairer trading system in agriculture products, as in other products? If that is so, is it permitted by that foreign institution in Brussels to have a national view on the subject?

§ Mr. Rees
I do not know how my hon. Friend defines "foreign". There is an institution, the headquarters of which are situated in Brussels, of which we are members. That gives it a British complexion, although it may also give it a French, German and Benelux complexion. The negotiation, renegotiation or transformation of the CAP is a question for the Community and did not arise at Geneva.

§ Mr. D. N. Campbell-Savours (Workington)
How does the Minister expect the United States to react to Europe's inflexibility on the CAP? In the light of what he said, is he not disturbed by the prospect of American legislators returning to the United States and publicly propagating the view that Europe is now highly protectionist, particularly in agricultural activity?

§ Mr. Rees
Naturally, I should not like American legislators to go back to Capitol Hill and put about that view, because it is not true. However, they must speak for themselves. They were not part of the United States negotiating team at Geneva.

§ Mr. Hal Miller (Bromsgrove and Redditch)
I endorse my hon. and learned Friend's vigorous pursuit of our vital interest in keeping open the channels for exports of services, but will he say, without an interpretative note, whether anything took place at the GATT meeting that made it more difficult—or easier—to deal with the disparities in our tariffs with Spain on the vital trade in components and vehicles?

§ Mr. Rees
Nothing that occurred at Geneva will make it more difficult for us to deal with that problem.

§ Mr. Derek Foster (Bishop Auckland)
Does the Minister recognise that the virulent growth of protectionist forces is the inevitable result of the vicious cycle of contraction throughout the international world, caused by similar orthodox financial policies pursued by Governments such as the Minister's? Would not the Minister be better employed using his time to persuade the major countries of the OECD to begin to boost their economies?

§ Mr. Rees
It was not part of my responsibilities to raise that question or to pursue it with the other signatory countries at Geneva. We were primarily—indeed, essentially—dealing with the problems of trade, but, as I hope I made clear in an answer to an earlier question, one recognises that trade cannot be divorced from economic questions. However, I hope that nothing in my answer can be construed as acceptance in any way of the strictures by the hon. Gentleman on the Government's economic policy.

Several Hon. Members
rose— —

§ Mr. Speaker
Order. I propose to call the three hon. Members who have been rising.

§ Mr. Richard Shepherd (Aldridge-Brownhills)
Is it not curious that the Government have abandoned the belief in free trade in agricultural produce which was the basis of our attachment to free trade, originally and historically? Is my hon. and learned Friend not alarmed at the division that that is causing with our historic allies, the United States and our most important allies, the British Commonwealth nations?

§ Mr. Rees
The party to which my hon. Friend and I belong has moved on a little since the repeal of the corn laws.

§ Mr. Shepherd
To our benefit?

§ Mr. Rees
I emphasise that I kept closely in touch with both United States and Commonwealth representatives. I went to a special meeting of Commonwealth Ministers the afternoon before the conference opened.

§ Mr. Allen McKay (Penistone)
Is the Minister aware that my constituents will believe that what he said, particularly about the steel industry, fell peculiarly from his lips, bearing in mind that it has just been announced that at the steelworks in my constituency, Stocksbridge, and in the constituencies of my hon. Friends the Members for Rotherham (Mr. Crowther) and for Sheffield, Attercliffe (Mr. Duffy), 1,709 jobs are to be shed, after years of job shedding? When will the Government take effective, urgent and, if necessary, unilateral action to support our steel industry?

§ Mr. Rees
I know of the hon. Gentleman's anxiety, which is shared by many other hon. Members, but I emphasise that long before the meeting at Geneva, which was not the forum at which to raise such a precise issue, this country took a robust position at Brussels, particularly in respect of the United States' countervailing and anti-dumping duties.

§ Mr. Teddy Taylor (Southend, East)
As a written answer last week showed that Common Market food prices, on average, were more than twice as much as world prices and sugar was three times as much, did not my hon. and learned Friend, as a supporter of open trade, feel justified in persuading his colleagues to make a tiny move towards the reduction of the absurd protectionism that involves tariffs of over 100 per cent. and export subsidies of £7 million a day, which are not only causing hardship here but are wrecking the economies of some of the poorest countries in the world?

§ Mr. Rees
Many countries and trading groups in the world subsidise their agriculture and agricultural exports. My hon. Friend is wrong to concentrate too much—although I know his view—on this problem of the European Community. As I emphasised, agriculture featured in our discussions, and there will be a study. I have no doubt that there will be some useful and constructive conclusions. Perhaps I am over-optimistic, but they may even satisfy and reassure my hon. Friend.

§ Mr. Woolmer
The Minister referred to entering a reserve on the proposal to study agricultural trade and to certain interpretative declarations. Will he throw more light on those cautious words? Will he recognise that the House regards his statement and the conference as, to say the least, extremely disappointing, and, at best, believes that he has won a breathing space against the forces of reducing trade rather than increasing it? What use will the Minister and the Government make of that breathing space to protect our industries from unfair dumping and to open up other markets to our exports, and what will the Government do on the world scene to make the world economy expand again?

§ Mr. Rees
The reserve was not on the proposition that there should be a study of agricultural problems but on an unrealistic commitment to a fundamental reform of the structure not only in the European Community but in the world, which we felt could not be observed and would therefore only discredit some of our conclusions. Of course I recognise that a breathing space has been achieved. Perhaps we cannot say that the principles of GATT have been carried forward far, but I have indicated one or two areas where they can be carried forward, which will be of definite benefit to the United Kingdom, its economy and its manufacturing and service industries.