§ The Minister for Trade (Mr. Paul Channon)
I beg to move,That this House takes note of European Community Document No. 9272/1/83, the first Annual Report of the Commission on the Community's anti-dumping and anti-subsidy legislation; and supports the Government's intention to ensure that the Commission's action in this field continues to take full account of United Kingdom interests.This is a useful occasion to debate this document. I imagine that the Select Committee which recommended a debate on this topic did so because it was concerned that the Community's anti-dumping and countervailing procedures should be effective and offer adequate protection to Community industries against unfair and damaging competition from countries outside the European Community. I emphasise that the debate is solely concerned with countries outside the Community. The Govemrient entirely share his concern. We have shown our strong support for the Community's antidumping and countervailing activities. Lest any hon. Member does not know what dumping or subsidy is, let me explain the terms and say what can be done to counter the abuses.
Subsidy does not need much explanation. It can take many forms, but essentially it is a financial benefit from Government to industry. Dumping is the sale of goods for export markets at lower prices than for domestic markets. It is obvious that both dumped and subsidised imports can damage our industries if they take an increased share of our domestic markets by depressing prices, reducing profits and destroying employment opportunities. Should this happen, the industry suffering the damage can ask the Community to take action.
Such action could be to impose a duty or to negotiate a price undertaking to counter and alleviate the injury. But I must emphasise that these remedies can be applied only against unfair dumped or subsidised imports. There is nothing intrinsically unfair in cheap imports where a producer has a competitive advantage, whether it be low labour, low material costs or whatever.
There is general agreement throughout the international trading community that it is right and proper to protect an industry from damage by such unfair trade, and there is a clear need for effective action. In the United Kingdom and in the Community, we have two special and compelling reasons for taking this seriously. The first is our commitment to free but fair trade. It is wrong that Community industries should suffer damage to their wellbeing and to their prospects from competitors who have the advantage of Government subsidy or who are able to act like predators in their pricing policies. The second reason is that.. unless we take action against trade that is recognised internationally as unfair, we weaken our stance against the pressure for protectionism which exists in all countries. If industries in the United Kingdom and in other member states are to survive in fiercely competitive markets without the umbrella of Government protection, they must have the assurance that action against unfair practice can and will be taken.
How do we get the greatest advantage from the means open to us? First, we ensure that the legislation takes full account of our interests. The Community's anti-dumping measures and our countervailing legislation are based on 982 the two GATT codes that were negotiated and developed over a period of years in the light of practical experience. The British Government helped to shape the GATT codes. We believe that they represent a fair balance between the interests of producers, traders and consumers. We also helped to shape the Community's legislation, and I believe that it implements to the full the specific provisions and the overall spirit of the codes.
However, that does not mean that the legislation is set in concrete for all time. The basic regulation which came into force at the beginning of 1980 has been revised with the aim of preventing frivolous applications for the review of cases immediately after the imposition of a remedy. When those cases occurred, such an application could waste precious resources, and it was right to stop them. Similar amendments are going through the legislative machinery of the United Kingdom and the Community. They are minor and technical, but useful. I hope that when they are finished the outcome will be clearer, with more effective anti-dumping procedures that take account of practical experience.
That is immediate and short-term work. In the longer term, work is going on in the GATT to refine and improve the international codes that are the basis of the Community's and its trading partners' specific antidumping legislation. This work is very technical and inevitably slow, but I think that progress is being made. The sort of topics that are being discussed—I need not weary the House with the details of them — are investigation procedures, the information to be taken into account, special price monitoring schemes and so on.
§ Mr. Ivor Stanbrook (Orpington)
Will my right hon. Friend confirm that there are more people employed in the anti-dumping unit of the Department of Trade and Industry than there are in the whole of the Commission of the European Communities? Is it not essential that the European Communities should give more attention to this and strengthen their own anti-dumping unit, since the Department of Trade and Industry has no power in this matter, whereas the Commission has all the power?
§ Mr. Channon
My hon. Friend was good enough to raise that matter at Question Time some months ago, and I have checked the facts. I am glad to tell him that that is not the case. As far as I recall, the number of people in the Commission dealing with anti-dumping is three times the number in the Department of Trade and Industry. It is, of course, true that the British Government have been pressing for a long time for more resources to be made available for this, and it is partially because of pressure from the House by the British Government that the numbers have increased. I am happy to tell my hon. Friend that that information which may well have been true some time ago, is no longer correct.
Legislation is not enough to deal with this issue. Resources have to be made available so that the legislation can be put into practical effect. By that, I mean financial and human resources. The legitimate complaints of Community industry must be properly investigated. Industry must be able to take full advantage of the remedies offered by Community law.
My hon. Friend puts his finger on a crucial point. Staffing levels in the Commission anti-dumping service call for careful and continuous scrutiny. However, I am glad to say that, at the United Kingdom's instigation, the 983 Commission has devoted more and more resources to this important area. The Commission staff increased to 38 at the beginning of this year. In 1980 it was as few as 26, so it has gone up by nearly 50 per cent. in a short time. They are skilled and mostly qualified personnel in law, economics and accountancy, and they are difficult to recruit for this technical work, but the figures, we believe, are now just sufficient to handle the anti-dumping requirements of industry. We keep a careful watch on this. The importance we attach to adequate staffing for this work is well known in Brussels. If there is any backsliding on it I shall certainly make strong representations. I hope that my hon. Friend will continue to keep an eye on a very important point.
No matter how many staff there may be, and whatever the legislation may be, nothing will happen if the Community's industries do not know their rights to protection or do not know how to secure them. That is why we, alone among the member states, have a strong national anti-dumping unit in the Department of Trade and Industry. As my hon. Friend has pointed out, it has no executive powers. Its task is to advise British industry on how best to take advantage of the Community's antidumping procedures. It does that at all stages of a case. So if industry has a problem with dumped imports from third countries, as a first step the unit will send it a copy of the anti-dumping pack, which is a simple guide to what dumping is, what can be done about it and how to start.
Once an industry decides to go by the anti-dumping route, the unit is ready to advise on whether the case has a chance, to explain the Community procedures, and to set up contacts with the Commission. If necessary, it will help to dig out the information needed and advise on its presentation, and represent the industry's viewpoint in discussions of the case in Brussels. It will accompany the Commission on fact-finding missions at home and abroad. It will do everything in its power to ensure that British industry is given a fair hearing.
As the House wanted to debate this report, it is interesting to draw attention to the fact that the report includes information on those who use the machinery. A wide range of industries have used it—steel, chemicals, food processing, engineering, pharmaceutical, wood and timber; all these are listed in an annex. Another annex lists the provisional duties which the Commission has imposed to prevent further injury to Community industry during the course of investigation. There is a list of the investigations which ended in definitive duties, some 25, and nearly 90 where price undertakings were accepted. That is not a bad record.
In 1983, 39 new cases were opened, involving 24 different products, and, of the 55 cases closed, 14 were closed with the imposition of definitive duties, in 27 price undertakings were accepted and in four cases there was a combination of duties and price undertakings. The House may be interested to know that in the first quarter of this year a further 16 cases have been opened, involving nine more products. I have been speaking in general terms of Community industry.
Of course the House is rightly concerned specially with the protection of British industry against unfair competition. Has British industry lost or gained through the transfer of responsibility for anti-dumping action from London to Brussels and from national to Community 984 hands? I am satisfied that the operation of the antidumping procedures is flexible enough to protect the interests of British industry from injury by dumped or subsidised imports. In practice, we discover that Community producers are often willing and sometimes eager to co-operate with British industry in preparing a case to ward off disruption of the Community market or any sector of it. When a duty is imposed or a general undertaking on prices is negotiated, the market of the Ten is protected.
We have looked back through the cases covered by the Commission's report. The best estimate that can be made is that British industries had a significant interest in more than half of the cases opened. British interests are definitely not overlooked when we are so strongly represented in the cases investigated. The Community market and Community industry are naturally larger and more complex than national markets and national industries, but I am glad to say that there has been a significant reduction in delay in bringing protection to injured industry.
I think that the anti-dumping procedures are as swift as those of the United Kingdom when we used our own national powers. Certainly they compare favourably with those of other major trading partners. It is not just the big industries that can look after themselves, those with strong organisations like steel or chemicals, that have taken advantage of these procedures. The annexes to the report show that a wide range of industries, big and small, have used the opportunities.
On the whole, I believe that the GATT anti-dumping code, the Community's legislation and the Commission's implementation of it have withstood the test of experience. The procedures are now well established, they are extensively used by Community industries, and some industries at least have given public recognition of their value.
There is machinery in the European Court of Justice and in GATT to ensure that the anti-dumping law is properly administered. My Department keeps in close touch with the Commission and with industry and does all it can to ensure that full account is taken of United Kingdom interests. If hon. Members have any cases that concern them or that they think should be investigated or need help from the anti-dumping unit, my Department and I are always ready to see what we can do to help a United Kingdom industry that may feel that it has been treated unfairly by anti-dumping or by anti-subsidy measures from third countries.
I do not think that I need hesitate in recommending the motion. It is useful that we should have the debate. It is very rarely that we have the opportunity of debating antidumping and anti-subsidy activities. The record is, I think, not too bad. We shall go on pressing the Commission to keep up its staffing levels. I am determined to ensure that United Kingdom industry is as fully protected as any other industry in the Community and, indeed, as fully protected as it has ever been in the past.
§ Mr. Bryan Gould (Dagenham)
The three years from 1980 to 1982 which are covered by the report were undoubtedly traumatic years for British industry, and in particular for British trade. One measurement of that trauma is the measure of the competitiveness of British industry over that period. According to perhaps the most 985 commonly used index, the IMF relative normalised unit labour costs, British industry lost up to 40 per cent. competitiveness from 1979 until the end of 1982. That is in general terms.
In trade with particular countries—for example, with Belgium—the loss of competitiveness was even greater, perhaps up to 60 per cent. As a not surprising consequence of that terrifying loss of competitiveness, our balance of trade in manufactured goods particularly declined substantially over that period, from a surplus of £5.5 billion in 1980 to less than half that surplus, £2.5 billion, by the end of 1982. That, as we know from subsequent history, was itself a prelude to a significant move into deficit for the first time in 1983.
One clear cause—indeed, one clear aspect—of the decline was a very rapid rise in import penetration, right across the board, in sector after sector of British industry. Between the end of 1979 and the end of 1982, the share of the British market taken by imported cars rose from 56 per cent. to 60 per cent. For commercial vehicles, the figure rose from 24 per cent. to 40 per cent.; for footwear, from 34 per cent. to 44 per cent.; for textiles, from 33 per cent. to 41 per cent.; for domestic electrical appliances, from 30 per cent. to 39 per cent.; and so on.
Against that all-engulfing background of the advancing tide of imported manufactured goods, it is perhaps not surprising that the problem of dumping is somewhat dwarfed in scale. To require us this evening — I am happy to do it—to look at the problem of dumping is rather like being required to treat a minor rash on a patient who is dying from a terminal illness.
Many British firms, trying to operate in a climate of substantially reduced competitiveness, found it extremely difficult to distinguish between the problems of dumping, on the one hand—the Minister referred to this—and, on the other hand, the simple problem of trying to meet increasingly severe competition from imported goods which had an enormous price advantage.
There were many instances of British industries and British companies complaining about what they regarded as dumping when in fact they were complaining about a simple inability, because of the Government's monetarist ratchet which had forced up the exchange rate, to confront and grapple with very severe and keen price competition.
One example that I and probably many other hon. Members recall is that of carpets. The British carpet industry was very severely damaged over the period concerned. With the pound at $2.40, we can hardly be surprised at that, but a pound at $2.40 now seems a long way away. I understand that, with the pound now at $1.30, those problems have, to some degree, diminished.
§ Mr. J. Enoch Powell (South Down)
In this tale of woe, will the hon. Gentleman take into account the fact that during these years this country had a large and increasing surplus on its current account? How could it have been otherwise than that there should have been the phenomena that he described if we had that large and increasing current account surplus? Does the hon. Gentleman believe that measures should have been taken to ensure that we had no such surplus?
§ Mr. Gould
The right hon. Gentleman tempts me into an area that is even wider of the subject of the debate than the remarks that I have made so far. However, I shall be glad to respond to his points.
986 The right hon. Gentleman expressed a widespread fallacy, which is often expressed by the Minister and the Secretary of State for Trade and Industry. The fallacy is that, because we have North sea oil, which necessarily gave a great boost to the balance of payments. it was inevitable that the exchange rate would rise, and that manufacturing industry would suffer and. indeed. contract substantially in absolute terms. The true analysis is that it was inevitable that, with the enormous benefit of North sea oil, the benefit that we would expect to gain from manufacturing industry would decline proportionately, but nothing in my statement need lead to the conclusion—the Norwegian experience points in the opposite direction —that the size of manufacturing industry need decline absolutely at all. What we would expect to happen is that the economy, because of the immense advantage of North sea oil, would improve substantially. So manufacturing industry, while falling as a proportion, would nevertheless grow in absolute terms.
The experience to which I am drawing attention during the three years covered by the report was that we lost up to one fifth of our manufacturing capacity because we found it impossible to sell in international markets, including our own, because of the enormous loss of competitiveness. A British industry that found it extremely difficult to sell on the United States market with the pound at $2.40 now finds it much easier to do so. That was confirmed in a conversation I had today with the British Chemical Industries Association, which made it clear that, whereas in the years covered by the report, especially the early years, the pound was extremely high, many of the problems confronted by their members arose through American dumping of chemical products. It says that, with the pound now at $1.30, it would be possible to Chow on price criteria that the dumping still takes place but that the damage is much less. Therefore, it can disregard it to a large extent.
§ Mr. J. Powell
I am obliged to the hon. Gentleman for giving way again. I thought at one point that he was about to argue that we should have prevented the export of petrochemicals, but I gather that that was not his ambition. According to him, we should instead have run a surplus on our manufacturing exports as well as on the rest of our current account. What would he have done about the increased capital export that would then have been called upon from this country? Would not the only consequence have been the export of even vaster amounts of capital, and would the hon. Gentleman have liked that any better.
§ Mr. Gould
The right hon. Gentleman expresses the familiar truism that the balance of payments must balance. We all accept that. I am saying that the fact that we were blessed with North sea oil did not mean that we had to allow the exchange rate to rise to such an extent as to destroy large chunks of our manufacturing industry. The experience of other countries shows that that was not a necessary price to pay. Instead, we could have used North sea oil to escape from the traditional constraint of balance of payments problems, from which our economy has so often suffered, and to run a larger economy with the import of more goods to fuel the expansion of British industry. We could have balanced our trade by importing more to produce more. Nothing in the possession of North sea oil necessarily condemned us to lose one fifth of our manufacturing capacity.
987 Having been tempted into areas far removed from dumping, I wish now to deal with the report described somewhat quixotically the "first annual report" of the Commission on dumping although it covers a period of three years. As the Minister has explained, the report details the Commission's activities during a period when responsibility for dealing with dumping had passed from the Department of Trade and Industry to the EEC Commission and when the Department could no longer have more than a supporting role in helping British complainants to prepare cases for the Commission. That era began on 1 July 1977, but the period covered by the report begins in 1980, perhaps because that was when regulation 3017/79 was implemented, giving effect to the Tokyo round amendments to the GATT.
The report goes into great detail, citing all the cases raised before the Commission, but it leaves a number of questions unanswered. Interestingly, they are questions that the Minister, too, tended to gloss over. Despite the slight air of self-congratulation in the report, I believe that those questions continue to cause concern.
The hon. Member for Orpington (Mr. Stanbrook) asked about the resources available to the Commission to deal with these matters. He will recall that only a couple of years ago the then Secretary of State for Trade, Sir John Nott, complained that the Commission had only five people employed on anti-dumping measures. I am prepared to believe that that figure has increased substantially, but it would be useful to know exactly what the present position is. I do not think that the Minister actually gave the figure.
§ Mr. Gould
I am most grateful to the Minister.
The mechanical question about the number of people working on these matters leads on to the wider question of the Commission's performance in dealing with complaints about dumping. The slight improvement that is mentioned in the report and to which the Minister drew attention still means that in the period in question the average time taken to deal with a dumping complaint was 8.7 months. It is often said that we did not do much better than that when we dealt with these matters ourselves, but I do not regard that as a compelling argument as there were continual complaints that we were too slow in dealing with these matters. I believe that an average time of 8.7 months is still far too long.
The report makes the point that we deal with these matters as promptly as most of our major trading partners —for example, the Americans. The time taken by the Americans to investigate dumping complaints matters much less because they have a practice of imposing provisional duties from the outset of the investigation. The Commission takes an average of 4.3 months to reach that stage. The time that we take to deal with investigations matters considerably more.
§ Mr. Paddy Ashdown (Yeovil)
Is the hon. Gentleman aware that the American system is frequently abused because they require bonds to be put down, frequently from Third world countries that are seeking to export goods even when there has been no contravention of dumping procedures? That ties up significant amounts of 988 money and creates significant problems for the importer of goods from Third world countries. Is that the kind of procedure that he would recommend?
§ Mr. Gould
A balance must always be struck. I am suggesting that, as the primary objective of anti-dumping measures is to give necessary protection to one's industry, it is not good enough to wait for an average of 4.3 months from when an investigation starts before taking any measures, provisional or otherwise.
The average conceals some cases which took a great deal longer to investigate. The Chemical Industries Association points to the case of paracetamol where the investigation took well over a year.
I have noticed in Hansard that during this period time and again hon. Members have mentioned examples of industries in their constituencies having clearly suffered damage but no redress having been available for what seemed to be a considerable time. I notice that the hon. Member for Stroud (Sir A. Kershaw) is present. He asked about pianos, a matter of some importance to his constituency. I believe that he was complaining of the delay. He used the telling phrase that the lifeblood of the industry was ebbing away while the Commission pursued what appeared to be a leisurely course. The Minister must accept that the problem of delay, although showing signs of improvement, remains.
There is also dissatisfaction at the type of action that the Commission eventually decides to take when it reaches a conclusion. I have already referred to the delay in comparison with the Americans in imposing provisional duties, but perhaps somewhat more important is the trend noticed between 1980 and 1982 of a move towards price undertakings and away from definitive duties. In 1982, for example, there were only seven recorded cases of definitive duty being imposed whereas there were 35 cases of price undertakings accepted.
The problem with price undertakings is that they are not monitored properly. They rest upon an agreement between the Commission and the exporter to which the complainant is not privy. He is not a party to the agreement. There is no transparency, and it is impossible for the complainant, even if he watches the market closely, to say whether the undertaking is being met. Representatives of one industrial association said to me today that in their view the Commission seemed to lose interest in the matter once it had achieved a price undertaking; it ceased to monitor the undertaking.
There are further problems. A price undertaking is substantially affected, as one would expect, by price changes particularly in countries with a high inflation rate. It is therefore extremely difficult to keep pace with what has happened.
The conclusion that many sectors of British industry might reach is that price undertakings, while a useful weapon in the armoury, should be the exception rather than the rule which they appear to be in the report.
In addition to the usual problems of dealing with dumping— no one pretends that it is easy to grapple with these matters—some problems arise specifically because dumping complaints are the responsibility of the Commission. Some sectors of British industry might face psychological problems in accepting that the EEC would in every case be as keen to protect British industry as we would, particularly where is it clear that EEC imports are causing major damage to our industry. There is also a 989 suspicion that at times the wider considerations of the EEC's external policy in matters involving, for example, East Germany tend to have too great an importance. Foreign policy will always have a part to play in trade matters. Where the powers are being exercised by the EEC., there is some evidence that those factors are more intrusive than they would be if we were exercising them.
I have also been told by representatives of the British Independent Steel Producers Association that it feels that, whereas generally the EEC has done an acceptable job, in some urgent cases it has been a little less quick to act that they might have hoped our own Government Department to be. That is not too difficult to accept, as it is clear that moving responsibility for these matters to the EEC has meant the introduction of a new stage in the proceedings. Most complaints still go to the DTI. The hon. Member for Orpington said that there was still a substantial unit in the Department dealing with these matters and then preparing a case which went further on to the Commission. So an additional stage has been introduced which can only slow down the procedure, and it can hardly be emphasised too often that in cases of dumping speed is of the essence.
One consequence of handing over responsibility to the EEC which creates a potentially significant problem is the requirement that anti-dumping measures can be taken only if damage is suffered by a Community industry or a major part of it. In other words, it is not enough to show that a British industry is suffering material injury. In many cases this problem can be overcome by effective co-operation between affected British industries and their European counterparts. Often it is done through the appropriate European trade association. But I fear that in some cases dumping is concentrated in Britain because Britain is seen as the easy market—almost the soft underbelly of the European economy because of the parlous state of the competitiveness of British industry. Therefore, there will be cases where dumping matters to the British industry, whereas it may be difficult to show that it is materially injuring the Community industry.
As it happens, I have an instance of precisely this phenomenon in my constituency, where there is a car battery manufacturer, Chloride, a member of the British Battery Manufacturers' Society. In September last year the society identified Japanese imports of car batteries as posing a threat to the British industry—not an actual threat but a potential threat. The Japanese had begun an advertising campaign making quite clear their intention of importing substantial numbers of batteries and taking a large share of the British market.
The society believes that it has proved that the Japanese price is a dumped one. It is dumped in the sense that it is lower than the price being charged to domestic consumers in Japan. Again, I do not think that we need strain too hard to accept that this is likely to be the case, because it is very much part of the traditional tactic of the Japanese when seeking to take command of a market. We have seen in the past in other instances how effective they can be in doing that.
The society has had useful talks with the anti-dumping unit in the Department. It has been told that the time is not yet ripe for taking the matter to the Commission, and it has been offered two reasons why. The first is that the society has yet to show that the Community industry as a whole has suffered or is likely to suffer damage from the Japanese imports, because it is clear that this is one case where the imports are to be concentrated in Britain and where it is 990 the British industry which will suffer. That is the first ground on which it is suggested that the society will find difficulty in pursuing the matter. Ten months have elapsed since it identified the problem, and there has been no effective action.
The second difficulty to which the society's attention has been drawn is that the threat so far is potential rather than actual, in that there are imports of Japanese car batteries but that they are not numerous at present. But, as the society points out, if it is to wait until, say, the Japanese car batteries take 30 per cent. of the British market and then has to wait a further year before it can get action, it will be too late.
Surely we have learnt our lesson by now. It is not good enough to wait until large chunks of the British market have been lost to dumped produce from abroad, because it is not only the loss of the market which is important; it is the strain imposed on the viability of British firms through having to reduce their prices, cut their costs, shave their profit margins, and so on. The effort to meet that competition means that they end up in an enfeebled state in any case.
In addition to all the other burdens which manufacturing industry has suffered in this period, there is the danger —I have mentioned one precise instance—that British industry will suffer from a lack of prompt and effective action to deal with dumping directed at Britain. It is interesting that regulation 3017/79 makes it clear that it is enough for the injury to be caused or threatened. In other words, it specifically covers potential threats rather than actual threats. However, the Commission has never tested that point in practice. No case has ever been brought in which the threat has not yet materialised but is clearly visible on the horizon. I hope that the Minister will ask the Commission why it will not take action in appropriate cases when threats of this kind are posed.
The picture painted in the report is not too bad, but we are entitled to say, "They could do better." The salvation for British industry is improved competitiveness, but, despite constant Government references to the need for competitiveness, competitiveness seems to be an the downward slope again. In the meantime, it is essential that deficiencies in dumping procedures should be reviewed and corrected and that the maximum pressure should be put on the Commission to make sure that that is done.
§ 11.6 pm
§ Mr. Ivor Stanbrook (Orpington)
My right hon. Friend the Minister for Trade has declared himself satisfied with the arrangements made with respect to dumping. I must declare myself not satisfied. I believe that the arrangements provide for a cumbrous machinery and that in very few cases is there effective and efficient action on the part of the Commission of the European Community in dealing with legitimate problems of this kind.
How are we to determine what is free trade, and what is fair trade? That is the difficulty. We can tell the difference between free trade and protection, but all too often the safeguards made to preserve fair trade are nothing more than instruments of protection. Should we interfere in normal and legitimate trading between nations? Are we entitled, in any particular case, to say that the normal exchange of goods between nations should be interrupted in the interests of the producers? Should we not place more emphasis on the interests of the consumers? Is there not a strong argument for saying that dumping 991 benefits the consumer in the importing country, and is there not a great deal to be said for satisfying the consumer? Consumers represent the majority of the people concerned in the exchange.
I declare an interest as a partner in a firm of barristers practising in Brussels which deals with problems arising for individuals and firms out of the operations of the European Community and the treaty of Rome. In my experience and that of my firm, cases involving dumping last, in some cases, for years. On average they last far too long. The Commission report states that the delay in respect of normal cases — whatever "normal" might mean—has been reduced from 9.6 to 8.7 months. A "normal" case might include any case which is rapidly dealt with for some technical or other reason. There must be many cases—I know of one or two—which have gone on for far longer than the 8.7 months acknowledged as the mean period of delay at present.
In all such cases, there is a balance. There is a conflict of forces and interest on both sides, and it is very difficult for ordinary politicians in the countries concerned to say where the right lies, and where the wrong. Ultimately, nobody benefits from an anti-dumping case except lawyers and bureaucrats. In many cases industry suffers and, in most cases, trade suffers. Therefore, the consumer suffers.
We are getting the same problem with the general agreement on tariffs and trade on a larger scale. Exemptions are being made for developing countries. That seems desirable, but it produces yet another set of desiderata that must be applied. We are getting refinements in definitions of, for example, normal value. As with litigation in Britain, we are reaching the stage at which a wise lawyer suggests to his client that the best course of action is to settle the case and get on with his normal work, rather than pursue litigation that might be costly in terms of money and of time. We might eventually have to advise British industries to settle quickly rather than fight an anti-dumping case in the EC.
The hon. Member for Dagenham (Mr. Gould) referred to American practice. To me, American anti-dumping legislation seems nothing but an instrument of economic nationalism that is in the interests only of American industry. Perhaps I am not being fair to the Americans, but it can be so argued. The EC, of which we represent but one quarter or one fifth, is several trading communities which are banded together legally but all of which have competing interests. We are not discussing trading practices within the Community, but how can the Commission reconcile all of those different interests and represent the whole Community properly, as do the American Government their industries? It is no wonder that British industries have difficulty using the Community's anti-dumping procedures when they discover that their interest lies in something that is produced by them alone. They must make a case for a Community interest and Community industry being involved. That is extremely difficult.
I do not wish to criticise the anti-dumping unit of the Department of Trade and Industry. It is excellent and, as far as I know, efficient. It is helpful to British firms that seek its assistance but it has no executive power. It can advise, encourage and warn but it cannot act, except by helping a complaint along to Europe. In Europe, the Commission, which is now staffed by 38 people—a vast 992 improvement — is dealing with what is potentially a mountain of complaints on unfair trading practices by foreign industries. It is good to know that the Commission is bigger, but it has to cope with an enormous problem. I am sure that its problems and the number of cases with which it has to deal are increasing. Its staff should be increased to deal with legitimate cases. Unfortunately, it is not geared to that. It is organised on the basis of all-European bureaucracy which, if anything, is even more stifling than British bureaucracy. The result is that it does not have the resources and the efficiency that one would like to see.
The Community's experiences in the European Court of Justice have not been encouraging. Paragraph 19 of the report refers to a first judgment on the issue arising in the Alusuisse case. The report states:the court held that an action by unrelated importers in the Community, requesting the Court to declare void an act of the Council imposing anti-dumping measures, was inadmissible on the grounds that the Council Regulation concerned was not of direct and individual concern to the importers.That is just the sort of thing that sends the action off at half cock and which depresses those who think that by taking legal action before the Court of Justice one might be able to reach a speedy decision on an important point that might help to abbreviate and expedite future cases.
The individuals concerned who work these provisions in London and in Brussels are excellent and devoted public servants, but they are groping with a problem that is beyond them at present, and which is growing. I do not believe that we should put trust in the provisions in the treaty of Rome that deal with the problem. Perhaps that is just as well. That is part of the illusion held by many hon. Members as to the possibility of the European Community solving Britain's particular problems. Import penetration may be represented as being against the interests of British industry, or as a competitive influence on British industry or even as being beneficial to the United Kingdom consumer. Against that sort of background, we should consider carefully in what way the anti-dumping unit of the Commission operates in the interests of British industry.
§ Mr. Paddy Ashdown (Yeovil)
The hon. Member for Orpington (Mr. Stanbrook) mentioned free and fair trade. I should like to start my relatively brief intervention at that point.
It is a pleasure to welcome the report, on three grounds. First, it is, as the hon. Member for Dagenham (Mr. Gould) rightly said, the first report of its kind. May there be many more of them, and may this be the first step along the road towards the development of an appropriate anti-dumping policy. I shall touch on that aspect later.
Secondly, the report was produced as a result of pressure from the European Parliament. That is good, because the Parliament shows that it is operating in a way that we should like to see continue. Thirdly, as the Minister correctly said, that is not a minor issue with a narrow span. It is a broad issue, touching on free and fair trade, as mentioned by the hon. Member for Orpington.
When we read the listed items that we are supposed to be discussing tonight, we might be forgiven for imagining that they are esoteric and somewhat abstruse items of study. There is reference to items such as welded link chain and upright pianos. I am delighted to know that 993 upright pianos are, as it were, close to the heart of the hon. Member for Stroud (Sir A. Kershaw). The annexes refer to oxalic acid., trichlorethylene, and so on.
More important factors than listed items are involved. The Commission has a commitment to free trade, and it is only through the creation of anti-dumping measures and countervailing measures, that are against fair trade, that one can create a climate of justice and fairness in which nations can conduct free trade with some confidence. I should like to start by addressing that matter. These are the front and obverse sides of the same coin. Only by having an effective anti-dumping policy can one achieve the concept of free trade and its commitment and contribution to the world in which we live. We on these Benches have striven for that commitment for a long time.
I was reading today some of the words written on free trade as long ago as 1850, by Cobden. His words are apposite:Free Trade. What is it? Why, the breaking down of barriers that separate nations; those barriers behind which nestle the feelings of pride, revenge, hatred, and jealousy, which every now and then burst their bounds and deluge whole countries with blood; those feelings which nourish the poison of war and conquest, which assert that without conquest we can have no trade, which roster that lust for conquest and dominion which sends forth warrior chiefs to scatter devastation through other lands".Hon. Members may think that that is a somewhat purple passage to use in this debate. But only through the creation of a reasonable system of countervailing measures against unfair trade can we achieve that free trade with which we have been associated for so long.
I readily and enthusiastically dissociate myself from some aspects of 19th-century economic liberalism, which may more readily be the property of Convervative Members, who, of course, wish to return to that splendid Victorian England to which they belong. But the principle of free trade has much to commend it, and much to contribute to the world in which we find ourselves. I see the hon. Member for Dagenham smiling. I regret to have to introduce a note of discord into what might otherwise be a fairly harmonious late night debate, but it is depressing for us to see the Labour party that he represents —although, in this case he is not typical of it, as he has a career in the diplomatic service—an that was founded on the ideas of international Socialism, now retreating into the narrow and squalid corners of the siege economy and protectionism, which are voiced so widely abroad.
§ Mr. Ashdown
I recognise what the hon. Gentleman says, and that is his position. But we all know that there are voices in his party who call—they did so during the last election — for a seige economy. Those Labour Members want the protection of barriers and believe that we can somehow maintain a small island, England, and build a protective barrier round ourselves. That would be the very thing to instititue a new trade war. For many of us on these Benches, that view is deeply depressing. However, I recognise that the voice of the hon. Member for Dagenham is perhaps different from that of others in his party. It is very depressing for us to see a party that was 994 founded on the international concept of the brotherhood of man retreating back to the narrow chauvinism of the little Englander.
Many of us think that it is hypocritical that the same party which frequently mouthed platitudes of concern about the misery and poverty in the Third world should at the same time plan precisely that protectionist economy. The creation of tariff barriers would do more to damage the Third world than anything else.
§ Mr. Gould
I am grateful to the hon. Gentleman for allowing me to intervene a second time. Surely he must accept that the dumping against which we, and most hon. Members, have complained, is done by other advanced industrial countries, and that no institution has done more harm to the trading interests of the Third world than the EEC.
§ Mr. Ashdown
Of couse I recognise that dumping is part of the issue of free trade. However, that does not alter the fact that the sort of economy that the hon. Gentleman seeks to create goes much further than anti-dumping measures, and into the business of tariff building.
I acknowledge — as I did at the beginning of my speech—that if one is in the business of building a free trade system, and has a genuine commitment to that, one must also have a system that creates fair and just trade.
§ Mr. Ashdown
I shall come to that point in a moment. However, the hon. Member for Dagenham knows as well as I do that there are powerful voices in his party that seek not only countervailing measures against unfair trade but also the creation of the sort of protected economy that could run quite contrary to the liberalisation of trade which would benefit the very Third world that many in his party pretend, with good reason, to be concerned about.
Having covered the broader aspects of the issue, we must now get down to the details. Anti-dumping measures are part of a system of fair and free trade. It is worth mentioning the kind of anti-dumping policy that we might want, and the attributes of such a policy.
Our dumping policy should have three qualities. First, it needs to be flexible so that it can take the appropriate action. Secondly —this point has been made by hon. Members on both sides of the House—it needs to be swift when it is put into operation. Thirdly, when it comes into operation, it needs to be punitive, or at least have strong and effective measures. The best that we can say about the report is that we have not achieved such an antidumping policy. However, we are taking the first inadequate and hesitant step towards such a policy.
At present, the measures that we can use are fairly useful when applied to basic products but much less useful when applied to variable products and manufactured products. It is significant that basic products form a large part of the cases in the report—45 per cent. relate to chemicals, and 13 per cent. to steel.
Manufactured products are difficult to deal with, because it is difficult and time-consuming to prove that dumping has taken place. It is significant that only 12 per cent. of the items in the report relate to mechanical engineering goods and ony three of the 121 cases relate to textiles and footwear. I recognise that textiles are covered 995 by the multi-fibre arrangement, but nevertheless there is inaction. That is proved by the fact that the report does not set out actions that can and should be taken in such cases.
This is an important sector, which causes some concern. Turkey appears to have been dumping velvet and cotton yarn, and Portugal appears to have been dumping towels. I have already been in contact with the Minister about the use of false certificates of origin to avoid quotas. I know that that matter concerns him, as it concerns us.
I shall not labour the point about the size of the staff to do all the checking work, as it has been mentioned by right hon. and hon. Members before. It remains the case that the United States has many more people involved in this than we do. As the Minister for Trade and the hon. Member for Orpington (Mr. Stanbrook) have mentioned, the Department of Trade and Industry has an anti-dumping unit. I pay tribute to the work that it has been doing in advising United Kingdom companies on how to put in submissions for such actions to be taken. However, that is no substitute for more EEC resources being spent on this.
There is also the problem of second generation dumping —the dumping of products that are then manufactured into finished goods, and exported at costs below those that can be matched in a reasonable economic climate. I understand that there is a particular problem of man-made fibres that are exported from the United States at a price that we cannot match, but nothing can be done about this. We hope that when the next report on this matter comes before us, it will have an anti-dumping policy with increased flexibility to take account of some of these problems.
The anti-dumping policy needs to operate relatively swiftly. We have made some progress on this. We have reduced the timetable—I see the Minister nodding—but it still takes the best part of a year to implement, and even provisional duties take the best part of half a year to impose. There must be more progress. The policy is not yet fast enough, for example, to take account of short-term dumping of surplus production. We hope that it will soon be possible to include that category.
When one acts in this matter, one should act decisively and with force. There are welcome signs in the report that we have taken, and are taking, a tougher line, but more needs to be done. More investigations have been started and more provisional duties have been imposed, with the result that 60 per cent. of first cases result in exporters agreeing to raise their prices, while 20 per cent. of cases have not been proven. The figures show that one out of six result in the imposition of a definitive duty.
However, there are what could be termed the recidivist dumpers. It is of some concern that no less than 52 per cent. of the cases now before us come from state trading countries, in most cases with direct relations with Comecon or even as members of Comecon. The United States, with 21 cases against it, is second in the table, and we then progress down to single figures.
What, if anything, can be done to ensure that those who persistently contravene the dumping regulations and laws are taken to task rather more swiftly and effectively than at present?
Everyone recognises that we are moving into a difficult area and that anti-dumping legislation needs to be effective and fair. It must also obey the GATT codes. Recession has 996 in no way made this any easier. Someone told me the other day that recession has proved the mother of protectionist invention, and that is the case.
There is a regrettable tendency towards economic chauvinism, but this can be resisted only if trade is free and fair. It is absolutely necessary to have an effective system of anti-dumping sanctions and countervailing measures against unfair trade if we are to strive towards the reduction of tariff barriers which many of us regard as vital.
Anti-dumping legislation is a vital part of that free trade system. It provides the justice within which we can strive towards free trade. I welcome this report, not as a final solution but as a first step towards perfecting truly effective legislation to deal with this important matter in the wider scope of moving towards a more perfect system of free trade.
§ Mr. Channon
I am not sure whether I need the leave of the House to reply briefly to the debate, but, if I do, I ask for it. Some important points have been made which will require careful study.
I was particularly gratified by the tribute paid to the Department of Trade and Industry's anti-dumping unit. That was extremely kind of hon. Members. What they said was much appreciated and I shall ensure that it is fully understood. It is true, because British industry has said the same thing time and again. That at least is common ground between us.
I am in no way complacent about the operation of the anti-dumping system as it exists throughout the European Community. The Select Committee was quite right to take the view that the House should debate this instrument. The Government will take note of the views expressed in all parts of the House and will continue to press the Commission to make sure that sufficient staff are available in the Commission to ensure that cases are dealt with expeditiously and sensibly and that reasonable remedies are found.
My hon. Friend the Member for Orpington (Mr. Stanbrook) implied that a mountain of cases now existed. I am glad to tell the House that as far as we know 17 new cases and nine old cases are now being reviewed by the Commission. No mountain of anti-dumping cases is in front of the Community. Therefore, hon. Members need not be worried about that.
We are anxious that time limits should be adhered to and that if any changes are made they should be improvements on what has taken place so far. As the hon. Member for Yeovil (Mr. Ashdown) has said, there have been some welcome improvements but we have not reached a state of perfection. It would be much better to have remedies imposed more speedily. However, the issues are difficult and complex and, as my hon. Friend the Member for Orpington said, other interests are involved, including those of consumers. It is not always easy to deal with these matters as speedily as we would like.
I hope that the House will forgive me if at this hour I do not take up with the hon. Member for Dagenham (Mr. Gould) the question of the United Kingdom's competitiveness. I was entirely in agreement with the interventions of the right hon. Member for South Down (Mr. Powell) and, with respect to the hon. Gentleman, I do not think that he 997 answered them fully, or at least not to my satisfaction. I have a feeling that we shall return to that subject on other occasions.
It is not correct to say that the Americans always take less time to carry out their investigations. In some instances they have taken longer than the EC. I believe that I am right in saying that the GATT rules allow a year for investigations, and, dilatory though some hon. Members may consider the Community to be, it is well within that timetable except in unusual cases.
I do not think it fair to say that an extra wheel has been put into the machinery by the use of the anti-dumping unit. It is a complicated procedure to mount a case in Europe and material injury has to be shown. The anti-dumping unit eases the difficulties to some extent and I shall ensure that it has sufficient staff to provide the service that British industry needs.
The hon. Member for Dagenham talked about price undertakings which the unit has monitored on occasions. We would naturally like it to do that whenever possible. It would be wrong for me to express a view on the strength or otherwise of the case of the battery company to which the hon. Gentleman referred. It would probably be unwise for me to do so and would not accord with the wishes of others. We are keeping a close watch on the issue, and if any further help can be given we shall wish to make it available.
The hon. Member for Dagenham raised an important point about the potential threat of injury rather than actual injury. The GATT code provides that the determination of a threat of injury should be decided with special care that is based on facts and not on allegation, conjecture or remote possibility. It takes the view that the threat should be clearly foreseeen and imminent. No case that has been based solely on the threat of injury has been acted upon by the Commission. That is a good and fair point and I shall consider whether it is worth raising it with the Commission
The hon. Member for Yeovil talked about a climate of fairness and free and fair trade. That is the right policy and we must have an effective anti-dumping policy if we are to have free trade, which most hon. Members wish us to have in the overwhelming majority of cases. The cost of successful anti-dumping action need not necessarily be high. Many small firms have been succcessful, and I believe that the costs are very much lower than they would be, for example, in the United States.
998 My hon. Friend the Member for Orpington has followed these matters with great expertise over a number of years. He says that perhaps it is a mistake to take any action at all because the consumer will benefit if goods are dumped in the UK. On the other hand, he says that the procedures are too cumbersome and should 'De made quicker and easier. I am aware of the intellectual dilemma that he poses for us. Dumping might be beneficial to the consumer in the short term, but if the home industry is destroyed as a consequence it will be bad for those who are employed in it, and might turn out to he extremely bad for the consumer in the long run. My hon. Friend is right in saying that we should try to make the procedures more speedy — his argument was reinforced by the hon. Member for Yeovil—and effective and punitive when instances of dumping can be proved. That accept.
As the House has wisely observed, my role is to try to help the anti-dumping unit and to help British industry in occasionally making rerpresentations. It is for the Community to make the decisions. Whether that is right or wrong, that is the reality. My role and duty is to ensure that United Kingdom industry is not worse affected now than it was years ago. That might in itself not be satisfactory enough and perhaps we can improve upon that, and maybe we should. Certainly that should be the minimum that I should do. I shall endeavour to ensure that we make even better progress in future.
This has been a useful debate and I am grateful to the House for that. Hon. Members have made useful suggestions that my Department will want to consider in taking anti-dumping and anti-subsidy arguments on which it feels strongly.
I hope that the House will agree to take note of the document, which represents an important improvement and a step forward. It may not be as far as the House would like to go, but it is an improvement. That is good, and it is encouraging that a report has been made so that the House can get its teeth into it and to see what progress is being made. I shall do my utmost to help British industry in difficlt cases that may arise.
§ Question put and agreed to.
That this House takes note of European Community Document No. 9272/1/83, the first Annual Report of the Commission on the Community's anti-dumping and anti-subsidy legislation; and supports the Government's intention to ensure that the Commission's action in this field continues to take full account of United Kingdom interests.