§ Mr. Chris Patten (Bath)I am grateful for the opportunity, even at this time on Maundy Thursday, to follow a debate about one of our great British industries and to raise a matter which is of considerable interest to the printing industry particularly in my constituency.
The matter was first brought to my attention by one of the many printing firms in Bath which make a major contribution to the economic life of the city and the surrounding area. Hon. Members will know that the printing industry has been going through a tough time during the past few years. It has suffered job losses, falling sales, profits and investment and a number of bankruptcies. Its difficulties result partly from matters which have not been sorted out for a number of years and partly because of the extremely high exchange rate of a couple of years ago, high energy costs and the disgraceful disinclination of local education authorities to spend the money which is available in the rate support grant for the purchase of school books. That, however, is perhaps a matter for another occasion.
The decision taken last year by the United States Congress to continue the back-door protection of the American printing industry came, in that climate, as the last straw for many good British firms. That Congressional decision, to which I shall refer in more detail later, raises much broader questions going far beyond the industry's immediate problems. I speak as someone who is an unashamed admirer of the United States and its cultural and political contributions to this country, to Europe and beyond. However, on this issue the United States has behaved irresponsibly and with an absence of that candour and straightforwardness which should characterise plain dealings, one would hope, between friends.
Secondly, I speak as someone who is an instinctive free trader who notes with some anxiety the way in which the over-vigorous practice of free market economics domestically is driving all OECD countries towards the most illiberal, anti-market economics internationally. On this subject, it is difficult to avoid the conclusion that, unless the United States behaves within the spirit and the letter of the undertakings which it has given from time to time, we shall need to protect our printing and other markets from United States exports.
This is a particularly grave issue which demands and deserves the most urgent political attention. I know that Ministers are familiar with the sad and sorry tale, not least because of the efforts of ray hon. Friend the Member for Skipton (Mr. Watson), who has been such a stalwart friend of the printing industry and who brought these problems to the attention of the House and the Ministers on a number of occasions. I do not therefore need to go through the history in great detail. However, there are one or two salient features that I should like to sketch before urging a couple of courses of action upon the Department of Trade and the Government.
For almost a century new English language books in the United States by American citizens or residents of the United States have had to be manufactured in the United States to obtain copyright protection. That represents an ingenious way—not least because the United States 489 somehow received a derogation from the Florence agreement to continue its protectionist devices—of keeping British and other foreign printers out of the United States market. Clearly, because of the language which both unites and divides us, this is a problem for British printers rather than mainland continental European printers.
The manufacturing clause was due to be repealed in 1982. However, after a good deal of strenuous lobbying by the American printing industry, which does not emerge from this business smelling of roses, Congress renewed the clause until 1986, overriding in the process a Presidential veto. It will not have escaped the notice of hon. Members that 1982 was a mid-term election year in the United States and that 1986 is also a mid-term election year.
We can doubtless expect a good deal of pressure from the Printing Industry of America directed towards the re-election prospects of members of the House of Representatives and senators when the clause comes up again in 1986. In 1982, the PIA awarded those responsible for preventing the repeal, for once and all, of the manufacturing clause something that it calls the Gutenberg award, which must have had Caxton turning in his grave. I dare say that in 1986 that award will be available once again, together presumably with substantial donations to political re-election funds.
Perhaps we can consider what is now happening. First, the International Trade Commission in Washington is considering the matter—the Minister will correct me if I am wrong—and I believe that the commission is due to report in July. The House Ways and Means Committee has undertaken to introduce legislation to repeal the manufacturing clause if the International Trade Commission reports that that clause represents an unfair trading practice. However, a promise to introduce legislation is no guarantee that that legislation will be passed. I remind hon. Members that the legislation will be considered by Congress as we get nearer to the mid-term Congressional elections. Doubtless the Gutenberg award will be wheeled out again then should it prove to be necessary.
The second action that is being taken is that the European Commission has referred the subject to GATT. Clearly it was right to do that. There is little doubt that, as the European Commission has argued, the clause is a
deliberate and arbitrary barrier to trade.It offends against article 11 of GATT, because, as the new clause was not enacted until after the repeal of the earlier clause had come into effect, it is technically a new non-tariff barrier. The manufacturing clause is also in breach of article 13 of GATT, because it discriminates in favour of Canada which is exempted from its provisions.In the light of those clear transgressions of the GATT articles, the European Community is properly starting proceedings under article 22, which deals with compensation for trade barriers.
I wish to make three general points and to draw two specific conclusions. First, it is difficult to assess accurately what share of the United States market could be won by European, mainly British, printers. We have been shut out of United States markets since 1891 and no reliable, up-to-date statistics are available. It is difficult to make anything but a broad brush guesstimate of the likely effects.
490 However, the United States' negotiators and the PIA cannot have things both ways in their consideration of the likely effect of allowing British printers a stake in the American market. The Americans justify the protectionism of the manufacturing clause by arguing that allowing British printers into their market would be extremely damaging. Some dubious figures have been adduced to that effect. But the Americans justify their argument that action should not be taken against them under the GATT by claiming that the damage done to British and European printers is not substantial.
If the removal of the manufacturing clause would have a substantial effect on American printers, it follows that its retention must have a substantial effect on British printers. Therefore, the United States should expect substantial repercussions. If, on the other hand, the retention of the manufacturing clause has negligible effects on British and European printers, it follows that its removal would have negligible effects on American printers. Either way, it is extremely difficult to justify the clause.
My second general observation is that it is especially galling that the United States is behaving in this way towards the European industry. Some countries impose restrictions on printing imports that are as indefensible as are those applied by the United States, but Europe does not fall into that category. Indeed, because European countries signed the Florence agreement, the United States printing industry has a virtually free run in the European market. It is the only industry that I can think of that enjoys such protection within the EC. Europe should surely get at least the same sort of treatment as Canada receives in the United States market.
My third general observation is that, because the United States assured the European Community during the discussions on the Tokyo round that the manufacturing clause would expire, negotiations on that issue were dropped. The fact that the clause was not dropped was a breach of the understandings reached between the United States and the EC and has unbalanced the final tranche of concessions reached during the Tokyo round. The American negotiators showed a sly disregard of the conventions that should determine negotiations on such matters.
The House looks forward to hearing the reply of my hon. Friend the Minister for Consumer Affairs. I hope that he will tell us what the Government have done and propose to do, but I shall make two suggestions. We need to put as much pressure as possible on the United States to ensure that Congress is aware that, unless the manufacturing clause is dumped, there will be retaliation against United States exporters and demands for further remedies under GATT.
I should like to be totally convinced that the Department of Trade will add its weight to the argument. I do not want to labour the point, but I recall that last year the Department of Trade and the Government in general—I shall not quote from the letters—argued that they were reluctant to ask President Reagan to exercise his veto on the ground that he would be expending political capital to no effect if he did. The President was prepared to use his veto, and it strikes me as being a trifle curious that at that time we were more concerned about the President's political capital than he evidently seemed to be.
I need some reassurance that we shall pursue this matter with vigour. If the Americans behave badly, there is no 491 reason why we should have to suffer the consequences. To put the point bluntly and in a way which might be better understood by members of the House of Representatives and senators, especially in a mid-term election year, I do not see why my constituents should lose their jobs to help re-elect one or two American Congressmen from the boondocks who have not got the gumption to stand up to an industrial lobby which does not give a fig for GATT, the Florence agreement or the printing industry in other countries.
At present we cannot retaliate against the United States printing industry because of our signing of the Florence agreement. That means that United States firms can go on doing well over £12 million worth of business a year in our market without a care in the world. Unless the United States changes its mind, and unless the Congress drops the manufacturing clause, I believe that we should press for a get-out clause to the Florence agreement—a derogation just like the one secured by the United States—so that we can protect our own market from unfair competition from the United States and, while we are about it, from eastern Europe as well.
We are discussing the livelihood of one of our greatest and oldest industries. It is that livelihood which is at stake. I hope that we can get proper assurances from my hon. Friend the Minister on some of the issues that I have raised which are so important to the industry as a whole and to many of my constituents.
§ The Minister for Consumer Affairs (Dr. Gerard Vaughan)I am grateful to my hon. Friend the Member for Bath (Mr. Patten) for raising this matter on the Adjournment. It is an extremely serious problem, and I know that the British print industry will be glad that my hon. Friend has drawn attention to it.
As my hon. Friend said, book production is an intensely competitive market and our industry is facing severe competition from many different sources in the world, including the far east. In those circumstances, it is extremely galling to have to endure a totally artificial and out-of-date trade barrier in the form of this United States manufacturing clause. The Government agree with my hon. Friend that this is a handicap which cannot be justified and which ought to be removed as soon as possible.
The Government share the industry's objection to the clause, and we are as determined as my hon. Friend and the industry that it should be done away with if possible. It was introduced in 1891 to protect what was then an infant United States printing industry, and it effectively prohibits the import or distribution within the United States literature in the English language by an American author unless it has been manufactured in the United States or Canada.
It is clear that the clause has long since outlived its original purpose. Its retention in United States law is now totally unjustified, particularly when one considers the strength and efficiency of the United States printing industry today. It is well able to stand on its own feet. It is well able to trade in the international market in exactly the same way as our industry has to trade.
I agree with my hon. Friend that the clause is contrary to the United States' GATT obligations and must be put right. As my hon. Friend said, the clause was due to lapse 492 in July last year, and we made strong representations, both written and personal, to the United States Government. I shall put on record what we have done.
We wrote in March 1981. We wrote again in December 1981, and the Secretary of State for Trade wrote in May 1982 to the United States trade representative, William Brock. In July the Minister for Trade raised the subject with the United States Secretary of Commerce, Mr. Malcolm Baldrige. In November 1982 the Secretary of State again raised the matter with William Brock. Only last week the Minister for Trade again raised the subject. My hon. Friend will agree that we have certainly tried by direct representation to the United States Government.
At the same time, the European Community made representations to the United States Administration. 1 shall not list the detail, but written representations were made in December 1981, March 1982, April 1982, December 1982 and February 1983. We are putting all the strength that we can into representations to the United States Administration.
Congress was clearly influenced by a strong American printing lobby. It voted for the clause to be extended to 1986. President Reagan exercised his right of veto over Congress. We were pleased about that, but unfortunately our success was shortlived, since Congress, in an unusual way, overturned the veto a few weeks later.
Since then we have had two objectives. The main objective is to persuade the United States to remove the clause as soon as possible. The second objective is to obtain some compensation for our printers from the Americans through GATT. In relation to the first objective, we are continuing to make representations to the American Government. We supported the British printing industry when it recently contributed to the American international trade commission's inquiry into the long-term effects of the abolition of the clause.
In spite of overriding the President's veto, Congress was anxious that the matter should be examined, and that is why it commissioned the ITC study. My hon. Friend is correct in saying that we expect the report in summer, although we are not sure in which month.
In the GATT forum the Americans were at first reluctant to discuss any compensation. They argue that the damage suffered by Community printers is minimal. They think that it involves about $7 million a year My hon. Friend is right to say that that is at variance with their contention, which was accepted by Congress last year, that the abolition of the clause will lead to the loss of 357,000 jobs in the United States. The two opinions do not match. There is a clear contradiction. If the clause is highly effective in protecting the United States industry, our calculation of compensation of at least $250 million is correct and they should be considering a higher rate of compensation.
We are represented in GATT by the European Community. We are urging the European Community to continue to take a strong line with the Americans. My hon. Friend referred to retaliation, which was one of his two proposals. We could take retaliatory measures, but I suggest to him and to the industry that such a conflict would not be in anyone's interests. Wide implications could follow from setting up a trade barrier of our own. We should go down that road only if we are sure where it will lead. We could end up doing more harm than good to our industry. Meanwhile, we shall continue to discuss 493 compensation and we hope that the American Government, through the GATT machinery, will make a reasonable offer.
Finally, to use my hon. Friend's words, we will pursue this vigorously. While my hon. Friend's suggestion of an approach through the Florence agreement is interesting, I do not think it worth pursuing, but I shall consider it. We are committed to supporting the printing industry's efforts to get the clause removed as soon as possible. We shall continue to press hard in GATT for an adequate remedy to the denial of access by our printing industry to the American printing market. We believe strongly in our industry's cause and I assure my hon. Friend that we shall do all that we can to bring the matter to a satisfactory conclusion as soon as possible. Once again I congratulate my hon. Friend on bringing this serious matter before the House today.