§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Sainsbury.]
§ Mr. Speaker
Before I call the Minister to speak in this important debate, I remind the House that many hon. Members have a direct constituency interest in the subject. No fewer than 12 of them have already notified their intention to speak, and others may wish to do so. Therefore, I appeal for brief contributions.
§ 4.1 pm
§ The Minister for Trade (Mr. Alan Clark)
The debate, which is in response to requests from hon. Members on both sides of the House, is about the extension of the multi-fibre arrangement to allow imports of textiles and clothing to he controlled for a further period after 31 December. The arrangement and the complexities embraced therein exemplify the problems of reconciliation that are inherent in Britain's trading policy.
Our policy must be considered from three principal aspects. Right hon. and hon. Members on both sides of the House have their views on this, and will voice their arguments in the interests of their constituents, as they see them. It is the place of the Government to reconcile those and to offer the best solution in the light of a careful consideration of all the arguments. I certainly do not see the divisions along party lines. There are inconsistencies in the arguments of some of my hon. Friends, just as there are contradictions and anomalies in the attitude of the Opposition. Indeed, differing voices can be heard in industry and in many trade unions.
I suggest that the House approaches the matter from this angle: first—I mention it first and rate it first—are the interests of the people of the United Kingdom, although even here there are problems of reconciliation because the people of the United Kingdom are producers and consumers; secondly, the complexities inherent in our position of negotiating jointly with our partners in the EC; and, thirdly, the position of the MFA in relation to our world trading policy, the GATT and the overall objective of the reduction of trade barriers to our goods and services worldwide.
When the MFA was set up in 1974, the text of the arrangement stated that it was intended to be a temporary instrument. That intention remains, but I must tell the House that I have no intention of getting rid of it until I am satisfied that the need for the safeguard that it provides has ceased to exist.
I invite the House, initially, to consider the position of the industry. It is a great industry employing nearly 500,000 people—about 2 per cent. of the nation's work force—and it is widely spread throughout the country. With its counterparts in other Western countries, in recent years it has experienced an exceptionally rapid period of change, as the entry of new suppliers into the world market has coincided with rapid technological advance. That combination of exceptional changes justified the exceptional step of suspending the internationally agreed trade rules for a time, so that discriminatory import quotas could be lawfully imposed to give the industry in this and other countries a breathing space in which to adjust.
Now, after a difficult period at the beginning of the decade, when one job in three was lost and in which output declined, we are witnessing a healthy recovery. The 1108 industry's output has been growing for four years and the export record is impressive. During the first 11 months of 1985, textile exports were l5 per cent. higher than in the same period in 1984. Those percentages can be measured in billions of pounds. Perhaps most striking of all is the fact that our exports of woollen and worsted fabrics to Japan—notoriously a difficult market—increased by more than 26 per cent. in the first 11 months of 1985 compared with the same period in 1984, and that Japan is our biggest market for such textiles.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
I am delighted to hear that my hon. Friend will put the interests of United Kingdom citizens first. Does he accept that, welcome though his figures are, they come from a low base? I should not like those figures to lull him into a false sense of security.
§ Mr. Clark
I am obliged for my hon. Friend's words of caution. However, when I cited the percentages, I said that they can be measured in billions of pounds. This is a technical subject and there is little scope for flights of oratory. I have deliberately excluded from my speech a mass of figures. Although I agree that percentage increases from a low base can be misleading, textile exports in 1985 were £1.3 billion, and clothing exports were more than £1 billion. Whatever the base, my hon. Friend must agree that those figures are impressive.
I cite those figures as a tribute to the tremendous effort that has gone into changing our industry into a more specialised one, meeting competition by selling products on the strength of their quality and design.
When trade restrictions are at issue, we must consider their effects not only on the industry protected by them, but on the economy at large. The indirect economic effects are spread thinly but widely; it is hard to measure them, but wrong to ignore them. Several economic studies have examined them, including the Silberston report commissioned by my Department, and other studies carried out by OECD and the Trade Policy Research Centre. They point out that curtailing the consumer's freedom of choice increases prices. We must remember that the consumer is often another industry: for example, textiles are consumed by clothing firms.
The studies say that the greater part of the additional revenues attracted from consumers often accrues to the benefit of foreign suppliers rather than British ones. They also say that although trade restrictions can save jobs in the industry concerned, they may not necessarily have that effect in the economy at large. Plainly, higher prices for the products of one industry leave consumers with less money to spend on those of others. I accept that trade restrictions cast a long shadow, which often falls in unexpected places.
§ Dr. Keith Hampson (Leeds, North-West)
Does my hon. Friend agree that the burden would fall very heavily on some parts of the country if we weakened the multi-fibre arrangement too much? The clothing industry is already introducing much new technology, which does not allow the industry to take on much extra labour. Whatever might be the extra input to the economy as a whole, any weakening would damage areas where there are few alternative jobs. There would be no increase in jobs or new industries in areas where textiles are concentrated.
§ Mr. Clark
I have already said that I have no intention of getting rid of the arrangement until I am satisfied that 1109 the safeguards that it provides are no longer needed. I would not wish to use the word "weakening", but we are contemplating some changes. I shall be interested to hear my hon. Friend's comments on them.
Most of the competition comes from within the Euopean Community. Imports account for 40 per cent. of British consumers' expenditure on textiles and clothing. Of that, 24 per cent. comes from our Community partners, compared with 10 per cent. from the developing countries covered by the arrangement.
Most Community supplies now enter free of all restraint, and so, after the end of 1989, will supplies from Spain and Portugal. Some of the most formidable low-cost competitors will then have free access to our market, which is already open to some of the most formidable high-value competitors.
Hon. Members will know, as I stated at Question Time yesterday, that it is the Community, and not individual member states, which negotiates on the EC's external trade policy. It is therefore through the Community that the United Kingdom will be negotiating in the GATT to renew the MFA. The Council of Ministers will be deciding, in the Foreign Affairs Council, the Community's negotiating mandate. In that process, the British voice is one of 12, and my intention is that it will be persuasive.
§ Mr. Nicholas Winterton (Macclesfield)
As my hon. Friend has particular responsibility for looking after, I do not say safeguarding, the interests of 500,000 people who work in the textiles and clothing industries, will he seek to influence my right hon. Friend the Leader of the House and the business managers of this place to ensure that this matter will come to the House again before he finally negotiates a mandate with the European Community? The House, and not just the Minister, should seek to represent the best interests of the British people.
§ Mr. Clark
My hon. Friend's comments will have been heard by the business managers, who are present. I believe that today's debate is a step in that direction, and I look forward with great interest to hearing my hon. Friend's comments. Certainly it might be appropriate at a later stage, when the mandate is in a more tangible form, for the House to re-examine the matter, but that is not a matter for me to judge.
§ Mr. Max Madden (Bradford, West)
In view of concern of textile trade unions about the 500 jobs a week that have been lost during the lifetime of the present MFA, will the Minister give an undertaking that he will meet the unions before the mandate is finalised, so that he can hear their views, because, to judge from what he has said today and earlier, I suspect that he is not fully aware of them?
§ Mr. Clark
I would like to think that I am well aware of their views, although as the hon. Gentleman knows, I have been in this post for only 10 days.
The first thing that strikes me about the trade unions' views is that they are not unanimous. They express different views, and there is a conflict of opinion and approach between them. The hon. Gentleman will appreciate that I cannot—
§ Mr. Straw
The Opposition are glad to learn of the Minister's resolve to defend the interests of the textile industry.
I should like to correct the Minister on his point about the trade unions. Hon. Members on both sides of the House who represent constituencies with textile industries would say that the textile trade unions have always worked in concert and with the British Textile Confederation, and employers and have put up a united and sensible front to defend the best interests of the industry.
§ Mr. Clark
I apologise to the hon. Gentleman and to the House if I inadvertently cast aspersions on the united front which the trade unions display in these matters. However, I think that some trade unions, possibly not in the textile industry, were urging us to admit imports from Bangladesh, on the ground that their exclusion created social deprivation in that country. There has been a certain amount of dabbling by trade unions in an attempt to regulate or combine social conditions with acceptance of quotas and so forth. The front that the trade unions present is not entirely harmonious, but perhaps the hon. Member for Blackburn (Mr. Straw) will develop that point if he catches your eye, Mr. Deputy Speaker.
Simultaneously with the negotiations in the GATT to renew the MFA, a preparatory committee is meeting to arrange the launching of a new GATT round of multilateral trade negotiations. That will be the first such round since the Tokyo round was launched in 1973.
I invite the House to consider the position in the GATT of the newly industrialised countries. They benefit greatly from their access to developed countries' markets, while enjoying the same exemption as the poorest developing countries from the requirement to reciprocate that access by opening their own markets. In the long run, the future of the MFA and the integration of the newly industrialised countries into the GATT system are similar issues.
The Government are convinced that the Community must be willing to negotiate these two issues together in the new GATT round, and that we must make that clear to the developing world when an extension of the MFA is sought this year. Indeed, nothing has raised sharper questions about the wider international effects of the MFA than the debate, as I mentioned to the hon. Member for Blackburn a moment ago, over its application last year to Bangladesh.
No fewer than 81 hon. Members have written to Ministers at the Department of Trade and Industry about that. I understand the questions that they raised about a system that allows rich countries to discriminate against textile imports from the poorest countries, while continuing to trade amongst themselves on the nondiscriminatory terms enjoyed by the GATT. I understand, too, the problem of how developing countries are to repay their debts, often to our own banks, if they cannot sell us the goods that they make best. All these arguments add to the complexity of the Government's dilemma.
The Government's objectives remain broadly as they were set out by my predecessor in the House on 9 May 1985. They are, first, to seek a renewal of the arrangement for a further transitional period because it is inappropriate, as I said at the outset, to dispense with a sudden jolt, with 1111 the safeguards that it provides. These safeguards must be maintained, but perhaps focused more accurately on those sections of the industry that need it most.
Secondly, we should consider liberalising in several respects: for example children's clothes, quotas which are disproportionately costly in relation to the amounts of British production protected, the poorest developing countries and those which maintain low barriers to British exports.
All that must be set in an explicit long-term context which looks to the new GATT round as the forum in which the MFA, like other exceptions from the normal rules of the GATT, should be put on the table for negotiation, with the aim of getting those rules more widely and consistently respected. Finally, the state trading countries should continue to be handled differently from market economy countries in ways appropriate to their trading systems.
Let me briefly review events since that debate in May last year. Last July the Community made a declaration in the GATT textile committee, with the approval of the Community's own Council, calling for a renewal of the MFA on a more flexible basis and recognising the close links between this question and the efforts then being made to launch a new GATT round.
In December the Commission made a proposal to the Council of Ministers as to what the Community's negotiating mandate should be. It issued a lengthy press notice, which is in the Library of the House, and hon. Members may consult it and derive some idea of the Commission's view of the mandate.
We start in earnest with the negotiations at the GATT textile committee on 3 April. In the meantime, there has been some preliminary discussion in Brussels among Community Ministers as well as technical discussion among officials. Some countries are reluctant to countenance much, if any, liberalisation. Others are arguing for a firm commitment to phase out the MFA. British spokesmen have continued to advocate the strategy that has been set before the House. My Department has throughout kept in close touch with the main trade associations representing the British industry, with the TUC, and with consumers' and distributors' organisations.
In his speech to the House in May, my predecessor took the view that the Community's position would, in the nature of things, evolve to take account of the positions of other major participants and that the position of the United States would obviously be especially important. Since that time the President has vetoed the Jenkins Bill, which, if it had been enacted, would have been a major protectionist step.
The President announced that the United States would most aggressively renegotiate the new MFA. The detail of the United States' approach to the negotiations is not yet clear. The recent renegotiations of existing United States bilateral agreements have allowed for a growth of imports, on average, of around 6 per cent.
I shall mention a few points which are under debate in Brussels and on which I look forward to hearing hon. Members views. First, there is the level of growth rates and whether the so-called dominant suppliers, of which Hong Kong is the most important, should be treated less favourably than other countries. Secondly, there is the question of the extent to which the Community can expect a degree of reciprocity in return for any liberalisation provided. Thirdly, there is the basket exit mechanism.
§ Mr. Clark
The basket extractor — the hon. Gentleman is correct. To be honest, it is a term of such hideous jargon that I regret that the hon. Member for Birmingham, Ladywood (Ms. Short) is not in the Chamber, because were she here I could express by my tone the distaste that I feel for that piece of jargon, and she might repeat some of the accusations that she has made against me previously. I should be glad if hon. Members came forward with suggestions as to how that ludicrous term, which has somehow slipped into the parlance of the arrangement, could be made into a more intelligible title.
The fourth point is whether the arrangement can, or should, be used as an instrument for influencing social policies within developing countries.
On each of those points we must bear in mind what is negotiable and what is desirable, and, no less important, the balance that must be struck between the textile industry's interests and those of our trade more generally.
I should like to set the debate in the context of free trade versus protectionism. I do not see them as mutually exclusive alternatives which preclude any other approach. I recognise that the attainment of a genuinely free trade society is an admirable long-term objective, but Governments must negotiate in the real world, and in the real world free trade, like unilateral disarmament, is fine—[Interruption.] My hon. Friends will understand that I had to attack the allegiance of Opposition Members.
Free trade is fine if everyone else allows it, but if we try to achieve it by example alone it may be dangerous and even damaging. The hard-headed bargaining of reciprocal advantage and concession in an atmosphere of mutual respect is completely different from protectionism. Any Government who ignore that principle in obeisance to some abstract credo — is it ignored by our principal trading competitors, the Americans, the Japanese, and the French, who are the arch practitioners of that doctrine? —are in derogation of their duty to their people. I shall be adopting that approach in the MFA negotiations, and it is one which I invite the whole House to endorse.
§ Mr. Bryan Gould (Dagenham)
I shall begin by welcoming the Minister to his new responsibilities and especially to this subject. He brings to the MFA negotiations an enviable reputation as someone who is ready to put the national interest first. The Opposition hope that he will maintain and build upon that reputation.
At times during the Minister's speech, we were encouraged—in particular, when he departed from his text rather than when he read from it—that he would enhance that reputation.
I urge the Minister not to feel any obligation to learn the art of speaking backwards which is, I believe, a talent much prized by some of his ministerial colleagues in the Department of Trade and Industry. We should like him to carry on speaking in much the same direction, on this subject, as he has done in the past.
The debate is welcome. We are grateful to the Government for having made time for it. It comes at a crucial time. We know that the EEC negotiating mandate is to be concluded, if the Commission has its way, by the end of the month. We shall say something about whether that timetable is appropriate. It means that it is important that the House has an opportunity to express a view now 1113 as to what we know of the likely content of that negotiating mandate, because once agreed—I take the point made by the hon. Member for Macclesfield (Mr. Winterton) about the desirability of another debate—that will be that. The Government will say, "We have no further part to play."
Once that has happened, we shall have determined the future of what is universally regarded as one of our most important industries. I need not rehearse all the facts. The importance of the industry is common ground.
We know that the outcome of the negotiations matters crucially to nearly 500,000 employees in this country. That is nearly one in 10 of all those who work in manufacturing in Britain.
As I think the Minister was reminded by one of his hon. Friends yesterday, that total exceeds the combined totals of those who work in the coal and steel industries. It is valuable employment, as has been said many times. It is important from a social and regional viewpoint because of the heavy concentraton of jobs for women and members of the ethnic minorities. Those jobs matter. No Government could responsibly gamble with them.
The arrangement is not just important to the employees. The employers have a creditable investment record. They need to know the industry's future shape and prospects before they embark on yet another round of greatly needed investment.
The Opposition take little comfort from and have little confidence in the Government's overall attitude when we consider what Ministers have said from time to time about the importance of manufacturing. We are alarmed by the carelessness and lack of interest with which the Government have so often regarded the collapse of this or that part of our manufacturing base. Over the past month or two, the country has watched what has happened to sectors of our car and helicopter industries. The attitudes displayed and the policies implemented give us little confidence that the Government are serious about maintaining the base of our manufacturing capacity.
The Opposition—I believe that we may have strong support from Conservative Members — are determined that what has happened to our car, helicopter and other industries shall not happen to the textile industry. The threat is not that someone will come from abroad and buy the best and juiciest bits, it is merely that the industry will fade away and be ground down by the rising tide of imports.
One of the problems that we face—the Minister was fair in conceding the point—is the difficulty we have when we get at this Government, because they are merely one of 12 partners negotiating in Brussels. The Minister was at his most persuasive and engaging when he assured us that that one voice would be a strong one. Nevertheless, all too often there are opportunities for Ministers to slip out from behind their responsibilities and say that it is nothing to do with them—"It is all to do with those wicked people in Brussels. We had to agree this or that concession."
We will not accept that. We believe that the Government and the Mininster have a clear and direct responsibility for what is agreed in Brussels. I pause only to remark upon the irony, which the Minister appreciates, that we have handed to the EEC the unique right to negotiate on our behalf in trade matters such as this. When 1114 one considers the level of EEC imports, which have done so much damage to our industry, one can only reflect that it is rather like handing over the keys to one's house to someone who has just burgled it. I believe that that is our present situation.
§ Sir Adam Butler (Bosworth)
That is a fallacious argument. If we were to negotiate on our own with the various under-developed countries we would get nowhere near as good a bargain as the EEC, with its bargaining power, can obtain for the United Kingdom and other members.
§ Mr. Roy Hughes (Newport, East)
Does my hon. Friend think there is anything in the reports emanating from Brussels that our officials are trying to weaken the multi-fibre agreement? Why is the Common Market hurrying these negotiations when the Americans have not decided their position?
§ Mr. Gould
I am extremely grateful to my hon. Friend. I shall deal with his first point a little later but his point about the timing is something to which the Government should address themselves. The Minister may say that he has difficulties in negotiating an overall agreement, but it is perfectly clear he has great control—if only from a negative viewpoint — over the timing of these negotiations. If the Commission is trying to rush us into a final agreement by the end of the month—which, as I hope to show, will not be in our best interests—I hope that the Minister will recognise he has a veto over that process. He can drag his heels. The Minister may need a great deal of political will to get away with it but he could do so.
There is a suspicion that the Commission for reasons of its own, perhaps for administrative convenience, is rushing ahead with these negotiations and trying to reach a final agreement much sooner than is in our interests, Why are we in such a hurry to reach an agreement when Spain and Portugal, major elements in the negotiatons, have only just acceded to membership? They have had hardly any opportunity to make a proper contribution to the new regime. Portugal has been so alarmed at what it perceives to be the likely contents of the negotiating mandate that it has threatened to ask for renegotiation of its own transitional entry terms to the subject. That is one good reason for taking our time.
As my hon. Friend the Member for Newport, East (Mr. Hughes) pointed out there is the position of the United States to consider. The position which the United States finally takes up will be a major factor in the eventual negotiations. We know that the United States position is likely to be fairly restrictive. We know that it is likely to want quota cuts from the dominants, that it will want an extension of the product cover for the new MFA and that it will wish to tie quota growth to market growth. The United States will wish to tighten—here I agree with the Minister in his diatribe against the expression — its equivalent to the basket extractor mechanism.
As the Minister correctly pointed out, following the veto by the President of the Commission of the Jenkins 1115 Bill, we had a strong statement from the President about the aggressive stance which the United States had taken. Contrary to what the President said about the American stance on bilateral negotiations, the evidence shows that in their negotiations, with the Japanese on a bilateral agreement it will take a tough line.
If this is true, we are taking a grave risk in setting a concrete negotiation position which is markedly more liberal that the American position. The result of an MFA in which the Americans take tough action but we take weak action is that there will be a substantial diversion of exports from the American market into the less protected market—the United Kingdom. This is a major reason for taking our time and I urge the Minister to bear that factor in mind.
§ Sir John Farr (Harborough)
It is a good idea to bide time. Unfortunately, as the hon. Gentleman is aware, the present GATT arrangement expires in July this year. It is important to make sure that the Government are properly and well-prepared in time.
§ Mr. Gould
I do not disagree with the hon. Gentleman. There is a timetable to which we must adhere but there is no point in getting out ahead of the Americans. We should try to co-ordinate it so that we do not simply establish our position without reference to what we believe the American position will be.
It is puzzling that, long before we had even agreed a negotiation mandate for the MFA, the Commission was intent on pressing ahead with bilateral negotiations. These agreements do not expire until the end of the year—we have plenty of time. Why are we pressing ahead with those negotiations without knowing the shape of the umbrella under which they will take place? Again the suspicion must be that the purpose of the Commission in pursuing bilateral negotiations is to try to establish, through the sequence of negotiations, a fait accompli — greater liberalisation irrespective of the outcome of the MFA negotiations.
If the Government are prepared to go along with that one is bound to look suspiciously and cynically at their assurances to the House and to the industry that they are intent on providing a proper measure of protection.
§ Mr. Richard Wainwright (Colne Valley)
I am most grateful to the hon. Gentleman. He mentioned a fait accompli and that is a term that sends a cold shiver down the spines of those engaged in the great industries which are lumped together as textiles. The hon. Gentleman has been eloquent on the complexity of the distinct stages of these negotiations—most of which take place far away from the ears of the British media. Will the official Opposition, with their influence on the business of the House, do their best to insist that each distinct stage is given a full statement and preferably a debate on the Government's intentions?
§ Mr. Gould
Of course I am happy to give that assurance and to point out that this debate takes place after a formal request by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) that the Government should provide time for it. I am glad that the hon. Gentleman said that the official Opposition would have to take responsibility for these matters as it is perfectly clear that the remainder of the Opposition, 1116 especially the Liberal party are utterly split between the Yeovil tendency and the Rochdale factor. They are certainly not able to present a united front on this issue.
§ Mr. Gould
I must press on as I have taken up much time.
It is bad negotiating practice to reveal one's negotiation position sooner than is necessary. It calls to mind the Government's earlier and substantial mistake—admittedly under different management—when they commissioned and published the Silberston report. Apart from its merits or demerits—it is widely regarded as a shoddy piece of work—the publication of that report was the worst thing to do when we were preparing for international negotiations. We handed over to our negotiating partners a document which made the case against us. I cannot believe that the Government would wish to repeat that mistake.
What are the contents of the EEC negotiating mandate? We have not been privy to the negotiations and we have not seen any official reports or documents. However, Brussels leaks rather as Whitehall leaks, but perhaps not in quite such dramatic circumstances.
We have seen some evidence of what the mandate might contain, and what we have seen is extremely worrying. The Minister has said that he is contemplating some form of liberalisation, but let us bear in mind that any liberalisation will mean an increase in the level of imports, which is already 45 per cent. Every percentage point increase will put more of our textile workers out of work. Even during the term of MFA 3, 2,100 jobs were lost in the industry during each month that the agreement ran. That is the measure of the risk that we are taking by even thinking of further liberalisation.
§ Mr. Fallon
Does the hon. Gentleman agree that the Commission is favouring liberalisation and in so doing appears to be the only party in the entire debate that is thinking of consumer interests? Is there not significant evidence in the Silberston report, from the Consumers Association and from the trade policy research centre that the MFA is a tax of 15 per cent. on clothing prices and 17 per cent. on children's clothing prices, and that it is costing every household in Britain this year about £377 whether or not it buys clothing?
§ Mr. Gould
I rather regret having given way to the hon. Gentleman. He has advanced the classic argument which ignores the fact that the consumer, who is believed to have a miraculous separate existence, is someone who depends for his livelihood, either directly or indirectly, on workers in the industries that we are trying to protect.
That which we know about the content of the negotiating mandate is worrying. Quota growth for group 1 products is to be even higher than the presumed and projected market growth. The quotas for other products will be allowed to grow by 6 per cent. No attempt will be made to re-base quotas on import levels as the TUC had recommended. If that had been done, there might have been room for greater flexibility on quota growth. Unfortunately, that has not been done. No attempt has been made to make room for concessions to the poorest suppliers by requiring cuts of the dominant suppliers. The possibility of using the MFA, as we would wish, to increase the export opportunities of the poorest countries 1117 —for example, Bangladesh — has not materialised because of the shortcomings of the Commission in framing the document.
Lip service only has been paid to the social development clause. It is there and it is mentioned, but only in terms that make it crystal clear that at the slightest hint of opposition, which the Commission no doubt fully expects, the Commission will run away from the commitment. As the Minister said, the approach to reciprocity is extremely weak-kneed. It is only half-hearted. There is no likelihood that the Commission will even raise the matter with the bilaterals in the negotiations that it will conduct.
The quota transfer arrangements within the EEC are a source of great concern. Unfortunately, the issue has become tied up in some way with the anxiety about completing the internal market. As the quotas are transferred, there is a real possibility that a country such as Britain will find that quota levels will be exceeded by anything up to 13 per cent.
There was no attempt to deal with the continuing problem of quota overhang. Neither was there any attempt to replace the admittedly ineffective anti-surge mechanism. All that we are offered or promised is a vague consultation clause.
Finally, I turn to our old friend the basket extractor mechanism, which is to be relaxed instead of being made more effective. The Government intend to argue—the Minister reflected the intention to some degree—for a position that comes between two extremes in the EEC negotiations. The Dutch, the Danes and the Germans want liberalisation while the French, the Italians, the Portuguese and the Belgians want an effective MFA. It seems that we are virtuously steering a middle course, and it is said that that is a sign that we are getting things about right. It is an example of the typical British compromise. I do not accept that that is an adequate or effective stance for our negotiators to take.
We are not in a weak position in these negotiations. We can determine their outcome by placing our weight on one )side or the other. Indeed, we are in an immensely powerful position. If the Minister is to remain true to what he and his ministerial colleagues have assured the House, which is that they want to see an effective renewal of the MFA, they will make it clear in Brussels that they side with those who, quite properly, in their own interests and in the interests of the EEC, will insist on an effective renewal of the MFA.
There is a problem, and it is one that causes many of us to be suspicious. Whenever a Minister repeats the pledge which was given on 9 May 1985 that the Government are committed to an effective renewal of the MFA, we hear strong and persistent reports from many sources in Brussels that those who are in the van of the pressure to liberalise the MFA are the British officials. We require the clearest possible assurance from the Minister when he replies that our officials are not acting under ministerial instructions and that they, to the extent that they have earned this reputation, will be brought to heel smartly by the Minister's responses.
I shall conclude by asking the Minister a specific question. Now that we know the likely shape of the EEC negotiating mandate, has any proper job assessment been carried out of the consequences of employment in Britain? 1118 If the answer is no, the Government are acting irresponsibly. We cannot afford further job losses in a hard-pressed industry. We must know what the job consequences will be. It is all very well talking in general terms about the benefit to the consumer, but that does not cut much ice with those whose jobs are on the line.
The Minister is refreshingly free of the free-trade theology which has marked so much of his Department's policy-making in this area over the past year or two. He talked about free trade and unilateral disarmament as though they were different phenomena. I would argue that free trade is unilateral disarmament, and that is exactly what we want to avoid. If the Minister says that there is comparability in that sense, I shall agree with him.
We shall accept no excuses from the Government or the Minister about the difficulty of negotiating in Brussels. We believe that the hon. Gentleman has every opportunity to defend the national interest. We believe also that we are entitled to judge him on the results that he achieves in Brussels. We have hopes that he will enhance his reputation for fighting for the national interest. We hope that he will fight for the British textile industry in the negotiations, and we urge him to do just that.
§ Sir Adam Butler (Bosworth)
It is appropriate to congratulate my hon. Friend the Minister for Trade on what I take it is his maiden speech in his new capacity. He delivered it in a refreshing manner, and rather blushingly at times. He will have to become all too used to the strange phrases to which some of us have been accustomed for some time. When he debates these issues in the Council of Ministers he will find them highly complex, but I know that he will be up to the task.
When I first started taking part in textile debates in the House some few years ago, I used to declare that I had been an employee in the textile industry. Indeed, I was an employee at that time, but that is no longer the case. A much more important interest to declare now, as then, is the interests of my constituents.
Despite the ravages of the past few years, which have hit the east midlands and Leicestershire as hard as anywhere else in the textile industry, hosiery and knitwear remains the principal industry in my constituency. I should like to spend a long while talking about the subject, but I assure the House, and especially my hon. Friends, who by their numbers demonstrated the importance of the debate, that the brevity of my speech will be in inverse ratio to the importance of the matters that we are debating.
The companies in my constituency, like the industry as a whole, have shown remarkable resilience over the past years. They have shown an ability to adapt and survive. The fashion knitwear industry, for instance, through greatly improved design—perhaps we might say at long last—and the use of up-to-date machinery, has shown that it can compete with the best in the world.
In some sectors there is evidence of growth in order books, high levels of activity and prosperity. However, that prosperity is selective and fragile. There is little or no confidence in the future. It is important that there is not enough confidence to encourage long-term investment. Where prosperity exists, it must not be allowed to distract us from the casualties of recent years—for example, the thousands of workers in the industry who have lost their jobs and the hundreds of companies, especially small 1119 family ones, which have gone under. The knitted underwear sector, for example, has been especially hard hit and remains very much at risk.
The MFA has undoubtedly helped in easing the transition and ameliorating the worst effects of imports from low-cost countries. Its continuation is welcomed. There were many parts in my hon. Friend's speech which I found most helpful, but the terms of that next arrangement continue to give us concern. It is the uncertainty about them and the Government's talk of liberalisation which serves to undermine confidence and make company boards hesitant about investment.
There are many aspects of the new arrangement which demand attention, but I do not intend to dwell on those. Other Members may deal with the need for more effective machinery to deal with a surge in imports, perhaps from a totally new country of origin, and to deal with that surge swiftly.
There is the question of preferential treatment for those exporting countries which give comparable access. There is the very important question of no switching of quotas between EEC countries. Indeed, there is the wider problem of outward processing by other EEC countries, and it is from that cause that much of the increase in imports from within the EEC has arisen. Others have already referred to the importance of comparability with American practice. There is all that and much more.
There is talk of greater liberalisation. The present and former arrangements are liberal. The whole concept of the MFA is not to achieve rigid protectionism, but to control the rate of increase in certain sensitive items. The MFA gives guaranteed and growing access to clothing and textile imports from developing countries. The industry is not arguing for that growing access to be reduced. However, that growth rate is significantly higher than the growth in domestic demand, which historically has been less than 0.5 per cent. per annum in the last seven years or so.
What would be an act of irresponsibility, what would be damaging and grossly unfair to an industry which has demonstrated its adaptability, and which has shown clearly that it can continue to make its contribution to the nation's economy and to employment, would be for growth rates — that is, the rate of annual increase in imports of sensitive items —to be increased. Liberalisation is already a basic feature of the MFA, but it is controlled liberalisation. To continue in a new arrangement with the same terms would in fact provide for further liberalisation. That, I believe, is acceptable. What is not acceptable is for the terms to be eased. What is also not acceptable is for the growth rates to be increased.
I hope that when winding up the debate my hon. Friend will give us a categorical assurance on that point and that my hon. Friend the Minister for Trade will be as persuasive as he possibly can be in that direction in the Council of Ministers.
§ Mr. James Lamond (Oldham, Central and Royton)
I, too, welcome the latest Minister to assume responsibility for this matter. Those of us who have attended textile debates for some time know that Ministers come and go, perhaps with unfortunate frequency. The newest Minister has an engaging style and a refreshing approach to the matter. Whether that will ensure a longer tenure of office looking after textiles I do not know, but 1120 I trust so. I hope that he is still the responsible Minister when the matter comes to fruition and all that he has told us today has been carried out.
The Minister said that the industry is an important one, employing 500,000 people, or 2 per cent. of the working population. Two per cent. does not sound very much, but those 500,000 people are heavily concentrated in certain areas. Sections of the industry are even more heavily concentrated in areas such as Oldham, my constituency.
The Minister will know, I am sure, that Oldham has been famous over the years for its part in the spinning section of the industry. I wonder whether the Minister had the opportunity of seeing the BBC programme which dealt with the decline of the textile industry. It was produced originally about two years ago, but was shown again about a fortnight ago. If the Minister can get hold of a cassette of that, it would do him no harm to see it. Contrary to his suggestion that there has been a decline in the textile industry over about 10 years, the film shows that the decline in the textile industry has been going on very much longer that that—perhaps for half a century.
Anybody who saw the programme would come to the conclusion that under the MFA there cannot be a long-term solution to the problems. It is a temporary measure. One can, of course, discuss how long is temporary. I do not think that we have had it for long enough at present, and I should like to see a fairly lengthy renewal of the MFA, and perhaps another. one after that.
§ Mr. Straw
While Oldham was known for its spinning, Blackburn was once the weaving centre of the world—indeed, it is still an important textile centre.
My hon. Friend referred to the long-term decline in the industry, and I share his view that there has been a long-term decline as other countries have become industrialised. Does he agree that, in terms of output and employment, what has happened since 1980 in the textile industry has been of a different magnitude from anything experienced by the industry in the post-war period? Two hundred thousand jobs have been lost, which is catastrophic.
§ Mr. Lamond
I do not deny that it is catastrophic, and I fully support the point made by my hon. Friend.
If I may make a couple of constituency points, the first is that investment is taking place in the industry. Because of the resurgence which the Minister mentioned, there is a fragile recovery in the industry, although not very strong at present. It needs to be supported, and therefore we welcome the debate today.
Three weeks ago Courtaulds announced an investment of £4.5 million in re-equipping a maple mill in my constituency. I was present when the company made the press announcement, and we had a look at the mill. Although I warmly welcomed the investment and the confidence that that showed, unfortunately it has resulted in a net reduction of 150 jobs in the industry in my constituency. This does not mean that 150 people will lose their jobs immediately—they will be found some work —but ultimately there will be a net loss. It is important to take that into consideration. Part of the problem is that trying to keep up with modern technology may ultimately mean a reduction in jobs.
I have mentioned that cotton spinning is particularly important in Oldham. Among the many representations 1121 which we will all have received, I have received a note from the British Textile Employers Association in Manchester saying:The UK Government has consistently regarded the cotton yarn spinning sector as being highly sensitive. It is regionally concentrated in the North of the Greater Manchester area and in South East Lancashire, largely in towns with few alternative employment opportunities. Unemployment in the main areas of cotton yarn production in November 1985 was above the national average.The note gives the example of Oldham as having unemployment of more than 14 per cent.
The association continued:The sensitivity of the sector is increased by its position as the first stage of the production chain. Cotton yarn producers are affected not only by imports of cotton yarn but also by imports of clothing, household textiles and fabric, which reduce their potential market.Their position in the textile stream makes them particularly vulnerable. I hope that the Minister will keep that in mind and ensure that the negotiators are aware of it.
The secretary of the Oldham and Rochdale Textile Employers Association, Mr. John Longworth, is well known to many of us and happens to be the efficient secretary of the textile industry support campaign. He writes:Under the present MFA there is a formula known as the burden sharing formula which aims at a fairer sharing of imports amongst the members of the European Community. It is arrived at by the comparing the size of each member state and its historic import levels.In the past cotton yarn imports into the UK have been given special consideration because of the comparatively high contraction rate in the UK spinning industry and also because of the very high level of cloth imports which have affected upstream spinners just as significantly as direct yarn imports.Our information concerning the mandate for renewal of the MFA later this year, indicates that the need to continue the existing provision for yarn imports into the UK has been overlooked.I hope that the Minister will inquire into that matter, to ensure that it has not been overlooked and that it is written into the mandate with which our negotiators will go forward.
Mr. Longworth continues:May I suggest that if you get an opportunity to speak in the debate tomorrow you might make reference to the need to continue the special provision for yarn. This is most important for Oldham which still has the highest concentration of cotton spinning in the UK.I know that these negotiations are complex, and difficult for anyone who is not immersed in them as a negotiator to understand. The basket extractor mechanism and the rest sound technical, but they are extremely important in some areas. It is difficult to over-emphasise the anxiety of employers and employees about the future, and therefore these matters must not be overlooked.
There is a feeling in the textile industry that our negotiators are taking a leading role in trying to liberalise the MFA. That has been reflected in letters that I have received from employers in my area, some of them very prominent. I have raised the matter with Ministers on several occasions —not, of course, with the present Minister —because employers have expressed their concern about how our negotiators are considering this matter.
I have already suggested that the Minister might benefit from watching a video recording of a BBC2 programme 1122 about textiles. If the Minister has not had the opportunity —he cannot do everything at once and he has been in the job for only 10 days—he should read carefully the Trades Union Congress statement on MFA 4 entitled "A Fair Balance in Textile and Clothing Trade." He would find that what he said earlier was mistaken. There is harmony among the trade unions. Their attitude is not based simply on self-preservation and a selfish interest in their own jobs. The pamphlet deals sympathetically with the need to encourage growth in the textile industries in developing countries. The trade unions do not dismiss that aspect of the debate.
I sympathise with the Minister. Of course he has a difficult job trying to balance all these considerations. I am sure that he also received a letter from the world development movement. Anyone who wants to take a reasonable view of the negotiations must take account of its arguments. During the past eight years the Third world's share of United Kingdom imports of textiles and clothing has dropped from 34.5 to 27.5 per cent. We have to take account of that. Those figures include the market share of the poorest developing countries, such as India and Bangladesh, which fell from 7 to 5 per cent. Those are important matters that must be balanced against the protection of jobs in Britain.
The trade union movement has not overlooked that—far from it. It says in its pamphlet:The restrictions under MFA 4 should be set at levels which ensure that the market access for imports from all low cost sources (including the preferential countries) grows at the likely 1–2 per cent. rate of expansion of the EC market. Again, preference should be given to the least developed suppliers in allowing them higher growth rates in exchange for lower growth for the dominant suppliers.That reflects the anxiety that has been expressed in the world development movement and, from time to time, by hon. Members. Some of us are anxious that the poorest countries should be given an opportunity to bring their economies up to a reasonable level. I hope the Minister does not think that those of us who speak with a strong constituency interest do not share that view.
There is a paragraph in the trade union pamphlet which the Minister might not find very acceptable, as he said something a little disparaging about those who want to mix free trade with interfering with social conditions in other countries. I do not agree with him. If we are to sacrifice jobs—which is what happens ultimately—we have some right to say that there should be some social change in the countries that are to benefit. We do not ask for change in the system or type of government, but we do ask for a change in the organisation of labour, for example.
§ Mr. Paddy Ashdown (Yeovil)
I should like to take the hon. Gentleman to task for what he described as the world development movement's stance. He misrepresented it slightly. He talked of just the poorest countries, but the movement favours "positive discrimination in favour of imports from developing countries especially the poorest." The movement talks of all, not just the poorest.
§ Mr. Lamond
I would not want to misrepresent anything, and I accept what the hon. Gentleman has said. When I read from the trade union pamphlet, I quoted that part which said "the least developed". Far be it from me to misrepresent, or even to try to speak on behalf of, the world development movement. I am doing my best to protect the interests of working people in my constituency, as they would expect. 1123 The TUC pamphlet says:The TUC is proposing that a new Article should be written into the MFA to encourage social development in member countries, building on the reference to this acknowledged objective contained in Article 1 of the existing MFA.In the existing MFA we have the seeds of that idea. If we accept, as I do, that the MFA is not simply a mechanism for restricting imports, but is already a liberal arrangement which recognises the need for some countries to expand their exports, we will make much more progress in the negotiations.
The Minister should consider the arrangement positively. He should regard it, not as restrictive, but as a means of assisting the poorer countries, which desperately need our help. That can be done with the full support of the trade unions, provided their pamphlet is taken into consideration.
§ Mr. Nicholas Winterton (Macclesfield)
This is a vital debate. We are concerned about the employment of 500,000 people in an industry which is our fourth largest employer. As we have heard from the Minister and others, the industry is larger than the coal and steel industries put together, twice the size of the aerospace industry and two and a half times the size of the computer and office equipment industry. Therefore, we are talking about a very important part of the manufacturing base of the United Kingdom.
The instincts of my hon. Friend the Minister for Trade are good. He is so much better when he speaks from the heart than when he speaks from the notes produced by the Department of Trade and Industry. My hon. Friend came across loud and clear and genuinely and sincerely when he departed from the bureaucratic notes that had been prepared for him. He should be his instinctive, sensible self more often and should not be influenced by the restrictions and limitations placed upon him by officials in his Department who are extremely well paid but who will not be affected in any way by the decisions that they make. I do not mean any disrespect to those who may not be in the Chamber but who can hear my remarks when I say that we have a duty to represent the best interests of the people.
How right my hon. Friend was to point out that free trade is an ideal theory but that in practice it does not work because nobody else practises it. Too often in the past, and not just in textiles and clothing, we have been the soft touch and have lost out.
For too long it has been argued by some of my hon. Friends, including my hon. Friends the Members for Darlington (Mr. Fallon) and for Loughborough (Mr. Dorrell), that the textile and clothing industry has been inefficient, overmanned and reluctant to introduce new technology and equipment, and that it is producing overpriced products that are protected from international competition by the multi-fibre arrangement. That is not a true picture of the industry.
§ Mr. Winterton
I shall not give way to my hon. Friend. I gave an assurance to the Chair that I would speak for only seven or eight minutes.
The industry has made impressive profits in recent years. Productivity per capita increased by 33 per cent. between 1980 and 1984 and a further increase is expected 1124 in the current year. Investment is running at £250 million per year. Of course, there will be more investment if the debate delivers the right message to the industry.
To put the reference to children's clothing in proper perspective, I shall quote from the Employment Gazette which shows the average percentage increase in the retail price index between January 1974, when the MFA became effective, and December 1985. In that period the price of children's clothing went up by 164 per cent. Some hon. Members may say that that was a substantial increase, but we should compare it with other increases in the same period. The price of bread went up by 243 per cent., potatoes by 333 per cent., beer by 407 per cent., rents by 317 per cent., rates and water by 440 per cent., electricity by 422 per cent., newspapers by 453 per cent. and post age by 370 per cent. The Government were partially responsible for some of those dramatic increases. The increase of 164 per cent. in the price of children's clothing is very modest in comparison with those other increases.
§ Mr. Winterton
I am not giving way.
The figures I have quoted show that the multi-fibre arrangement has been of great benefit to the industry arid the country.
We are talking about a driving, competitive industry which will continue to prosper if there is orderly marketing and the minimum of unfair competition. Output in 1985 amounted to £ 12,000 million and value added will exceed £4,500 million. That is a considerable achievement. Output could be higher if the unfair competition which the industry has faced for so many years is curbed. There should be much more reciprocity. How much I agree with many of the points made by the hon. Member for Oldham., Central and Royton (Mr. Lamond). We should seek to give business to the poor countries which do business with us and which would benefit from the opening of the British market. We should not just give quotas to the countries that are relatively affluent in comparison with many deprived countries.
The textile industry can make a major contribution to the economy, but the Minister should not overlook the fact that in the period from December 1978 to November 1985, for most of which the Conservative party was in power, employment in the textile and clothing industry dropped from just over 800,000 to just under 500,000. We have not had strikes or demonstrations. The industry is not irresponsible and the work force is not overpaid. The industry as a whole has invested and rationalised. It has sought to heed all the exhortations of successive Governments.
There is still muted optimism that the recovery can continue. Obviously the recovery of the last few years is welcome news. But how right my right hon. Friend the Member for Bosworth (Sir A. Butler) was when he said that the recovery is very fragile. The future of the industry will depend very much on the MFA.
§ Mr. Andy Stewart (Sherwood)
I have been listening carefully to my hon. Friend. Does he realise that thousands of people in my constituency depend upon the knitwear and clothing industry for employment? Would it be helpful for him to know that I support his view that we must have a renegotiated multi-fibre arrangement in the interests of my constituents as well?
§ Mr. Winterton
Having been to my hon. Friend's constituency and having met many of his constituents, I know that they respect the way in which he seeks to represent their views and to stand up for an industry which is vital not only to Sherwood and Nottingham but to the United Kingdom as a whole.
Although there is optimism, may I point out that production in the textile and clothing industry is lower than when the Government came to power in 1979? Ministers must not think that, because of the MFA, the industry is bursting at the seams, even though production is up. Yes, production has started to creep up in the last two or three years, but it is still lower than when we came to office in 1979.
What of the future of the industry? Surely it depends on continuing trends of product innovation and new technology, but both require confidence in the industry. On the BBC2 "Money Programme" on 2 February David Alliance of Vantona Viyella said of his company:We have spent over £50 million in the last two years. We are prepared to spend a lot more—after we know the results of the MFA agreement.That man is in every way the epitome of what the Government seek in industry. He is progressive and radical, introduces new technology, and is one of the largest and most important employers in the textile industry today. Yet that is the message that an industrialist, supporting the views of trade unions in the industry, delivered to the Government. Obviously, I support the broad principle of a free international market, but it must be free for all, not just every country but ours acting in its own interests.
I could refer to many matters about reciprocity, but I shall restrict myself to one or two. Fabric imports from Brazil to the United Kingdom are affected by a 13 per cent. level of duty only. When we send fabric to Brazil, it is subject to a levy of 105 per cent. Is that reciprocity? I hope that my hon. Friend the Minister will not say that it is because we know that it is not. Garments from Brazil to the United Kingdom are subject to a Customs tariff of only 15 per cent., but those from the United Kingdom to Brazil are subject to 105 per cent. Indeed, most of our products outside textiles and clothing are probably banned altogether. Therefore, let us get an element of reciprocity. It is vital.
My hon. Friends and, to a limited extent, Opposition Members have touched on many other important matters, so I shall not cover the same ground. The outcome of the present MFA negotiations will affect the whole shape of the international textiles and clothing trade to the end of the century and, perhaps, well beyond. It will decide the future of the lives of about 500,000 people who work in the industry. How right the hon. Member for Oldham, Central and Royton was to say that there is no point in divorcing the consumer from the equation because he is often also the employee. With no disrespect to my hon. Friend the Member for Darlington, if there is no purchasing power in the United Kingdom, it does not matter from where a product comes because there will not be much of a market for it.
Damaging uncertainty needs to be resolved. We need a robust renewal of the MFA, which can be amended if there is no longer a supply of a particular commodity, fabric or yarn. Then we must amend the quotas so that the 1126 clothing industry—the other half of the textile-clothing formula—can obtain the good quality product that it needs to survive.
§ Mr. Winterton
I hope that my hon. Friend will forgive me if I do not give way because I hope to sit down within 30 seconds.
It is vital to the United Kingdom that the Government are seen to support the manufacturing base, which is the true creator of wealth. The present uncertainty in the industry must be resolved quickly. The European Economic Community's acceptance of any proposed changes to weaken the MFA must be abandoned, and our civil servants in Brussels must be given a clear mandate by Ministers to deliver today's message from the House.
The Government must not betray an industry which has been of such vital value to the United Kingdom, which heralded the industrial revolution, and which has brought power, influence and wealth to our nation. It is prepared to play that role in the future. The Government have the opportunity today to ensure that it does.
§ Mr. Paddy Ashdown (Yeovil)
It is fair to say that my speech will not find favour with many hon. Members on either side of the House, and probably least of all with the hon. Member for Macclesfield (Mr. Winterton). If the hon. Member for Dagenham (Mr. Gould) would like to intervene, I shall happily give way.
§ Mr. Ashdown
I hoped that the hon. Gentleman would make that comment, which is why I tempted him to the Dispatch Box. I should like to make it clear that the policy that I announced when last I spoke and which I shall repeat today is agreed by every alliance Member with one exception. On this occasion one may refer to him as the Militant Tendency of the Liberal party. The noble defence by my hon. Friend the Member for Rochdale (Mr. Smith) of his constituents' interests is a matter for him which he has expressed clearly and pungently. It is no more accurate —indeed, it may be significantly less accurate—to say that the Liberal party is split because of his apostasy on the matter, than to say that the Conservative party is split because the hon. Member for Macclesfield disagrees with almost everything that his Front Bench says, or that the hon. Member for Dagenham (Mr. Gould) should be held to account for the speeches of his hon. Friend the Member for Coventry, South-East (Mr. Nellist).
Having said that what I shall say will find little favour, except perhaps with the hon. Member for Darlington (Mr. Fallon) and some other braver souls, I shall begin on points of common agreement. The textile and clothing industry is one of our greatest industries and our fourth largest. It has made phenomenal and significant strides forward in profitability and efficiency, and is to be greatly commended for that. Conservative Members may not agree but Labour Members may, that the most significant problem of the industry, in common with every other British industry, is that the Government have set out no framework, context or climate to encourage it. That 1127 problem is infinitely bigger than any problems from which it may suffer from our continuance in or withdrawal from the MFA. There is no strategy for the textile industry.
I sometimes believe that hon. Members who have constituency points to make may be better advised to drive the Government and push the Labour party towards a genuine strategy for the textile industry.
§ Mr. Ashdown
I shall give way to the hon. Gentleman in due course.
In the absence of any overall strategy for the textile industry, which, God knows, it deserves and badly needs, it is not surprising that many employers and union members clutch on to their one hope—the MFA. It is the one positive piece of policy for them to hang on to. It is not surprising that under those circumstances they elevate the MFA to a level which is not borne out by the facts.
§ Mr. Ashdown
If I may continue a little further, I shall give way, but the Minister's hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) should be allowed to intervene first.
I recognise the industry's fear. Lest I am charged with speaking in an airy-fairy way, the second largest employer in my constituency is directly involved in textile interests. I am well aware of those interests. Moreover, I know what it is like to have to fight for a constituency interest against the prevailing mood because I have had to do so during the past few months.
§ Mr. Brandon-Bravo
The hon. Gentleman will accept —indeed, he has already done so —that he will find little sympathy from either side of the House for the alliance case. Will he tell the House why he can defend his constituency interests in the Westland affair and speak in such pejorative terms about his hon. Friend the Member for Rochdale (Mr. Smith), who in our last debate did not merely speak for his constituents? The hon. Member for Rochdale said, in effect, that he was the only member of the alliance who knew anything about textiles. It is a great pity that he is not present today.
§ Mr. Ashdown
I have no doubt that there are many in this House who are sorry that he is not here today. I have to say quite bluntly that I am not one of them, although I recognise that he is a doughty defender of his constituents' interests. To answer the hon. Member for Nottingham, South, I sought to protect what I believed were the best interests of my constituents and the interests of Britain's defence industry as a whole, in the Westland affair. I seek now to argue a case which will be for the best long-term interests of my constituents —the second largest employer in my constituency is the textile industry —and of the industry as a whole in my capacity as my party's trade and industry spokesman. I think there will be more significant points about which hon. Members will disagree than this particular one.
§ Mr. Butcher
There is one point which the hon. Gentleman should expand upon. He said that there was no industrial strategy coming from the Conservative benches. I have asked this question before. Perhaps the hon. Gentleman might like to have another go at answering it today. Given that a fairly honest and accurate estimate of 1128 alliance policy implies an increase in public expenditure of about £8.5 billion, how would they propose to protect industry and commerce either through increasing their tax take, or an increase in interest rates?
§ Mr. Ashdown
The Minister tempts me to go broader than this debate, but let me dispose immediately of some of his arguments by saying that we in the alliance propose an overall increase in the public sector borrowing requirement, which may amount to £2 billion. This is similar to the amount the Government have overrun on PSBR already. The significant difference between us is riot in terms of the size of those sums, but how they are disposed of. We would invest in Britain, and not pour the money in benefit down the bottomless pit of unemployment. If the Minister wants me to go into the detail of industrial policy, I would be straying much wider than this debate permits, but I will send him a recent pamphlet that I have written which will explain the situation much more clearly than I have time to do at present.
Those who are genuinely interested in this, one of the greatest industries of our nation and in the long-term jobs of those in the industry, workers who have done so well for Britain in the past, should press for a decent plan for textiles and for the EEC to develop its own plan for the industry. We have made great strides forward in efficiency, and we must consolidate them because in due course they will make the MFA unnecessary.
Allowing for transport costs, the West German industry, whose levels of efficiency we are fast approaching, would need only a 3 per cent. duty on yam and a 12 per cent. duty on cloths now to be able to compete head to head with the Koreans. The United States industry needs no duty. That is what we should be working towards, and not seeking to place indefinite reliance on a protectionist trading mechanism that is bound to fall in due course.
Those hon. Gentlemen who argue for the continuance of the MFA into the distant future ignore the fact that reliance on it puts us in the hands of other nations as well as our own. Surely hon. Members who have the long-tern interest of their constituents at heart should be seeking to make the industry efficient enough to be able to stand on its own feet without this kind of assistance.
§ Mr. Ashdown
I look for a long-term plan which would create a situation on which industry could rely, which is not in the hands of other nations and which would encourage the tremendous strides towards more competition and diversity. We shall also be encouraging the Government to be much stronger than they have been in terms of their reactions to the United States moves towards protectionism, which has so desperately affected the Scottish woollen industry in particular. It is within that overall context that we should look at the MFA.
There are three criteria by which we can judge our action. Firstly, is it effective as an instrument for allowing restructuring? Secondly, what are its effects in Britain and abroad? Thirdly, is there another way of helping the textile industry?
Let me take them in turn. Is it an effective instrument for restructuring? We have to recognise that the MFA is a major exception to the guiding principle of trade which underpins the GATT agreement, that of nondiscrimination and of trading arrangements made on a 1129 bilateral basis. We have to recognise that three quarters of our textile and clothing trade is outside the scope of the MFA. That non-MFA element is not diminishing, but is growing as a result of the MFA.
The amount of textile imports to Britain since 1974 has fallen from 27 to 24 per cent. There is no evidence there that the MFA is helping the restructuring of the clothing industry. It has not created the liberalisation of trade, which is supposed to have helped those areas of the world which have growing industries, nor has it achieved the restructuring of our own.
At best, there has been very little progress, and such progress as there has been is in the opposite direction. Yet we have an MFA which has been running for 16 years.
Secondly, I want to touch on its effects. I agree wholeheartedly with the hon. Member for Darlington. There is incontrovertible evidence that the MFA has cost the consumer a considerable amount of money. I know that it has faults and flaws, but the basic premise put forward by the Silberston report is accurate and supportable, and it indicates that there is a very significant cost to the consumer. Th Consumers Association has said that the prices of imported jeans and shirts from Hong Kong may well have increased by up to 40 per cent. as a result of quota purchases and the MFA.
The trading policy research centre has said that MFA quotas put up the price to the consumer in 1982 by 15 per cent. in some sectors, particularly woven trousers, knitted blouses, woven shirts and so on.
Let me take the point made by the hon. Member for Dagenham. It is true that Britain does not consist only of consumers but also of people who are in employment. The total cost of that small sector—woven trousers, knitted blouses, woven shirts and other woven goods —to the consumer of a rise in prices of 15 per cent. in 1982 is calculated by the trading policy research centre to amount to £170 million. How much better for industry, and for jobs, if that money was to be put directly into the industry to help to create those jobs. It is a ludicrous misuse of money to make consumers pay more when the money is not used to assist industry directly. It seems to me that that is one of the arguments in favour of ensuring that the MFA does not continue indefinitely. Nor does that account for the other effects of the MFA which bring about reciprocal action by Third world parties that can be damaging to world trade and encourage the growth of protectionism in the world. I am not a free trade freak, but I believe that this country of all nations suffers whenever there is a trade war or a protectionist war.
§ Mr. Ashdown
I remind the hon. Gentleman that the textile industry has been successful in going up market and bringing down prices by investing in new machinery. I remind him also that the West German industry, which is ahead of ours, can almost compete on the world market without quotas and restrictions, as can American industry. 1130 Why should we not exist in that up-market, lower-cost sector? Deployment of these sums would considerably help successful textile industries.
I return to the point made by the hon. Member for Macclesfield (Mr. Winterton) about children's clothing. He said that the price had increased by 164 per cent. and recounted a series of other items—carefully selected and taken from one of the manufacturer's briefings—where prices had increased even more. Surely, we must look at this matter on an apples for apples and a pears for pears basis. Surely it is reasonable to assess the amount by which the price of children's clothing has increased in comparison with clothing prices in general. That paints a different picture, because the price of clothing in general has increased by 127 per cent. and it is the poorest sectors of society who are paying most. That fact has been missed.
The poorest countries which we sought to assist through liberalisation of the MFA have been suffering. Since MFA 1 started, imports from the developed nations have decreased from 30 per cent., to 24 per cent., and 21 of the leading less developed countries have asked for a return to bilateral trade.
I do not wish to detain the House too long but I cannot resist remarking on the fact that the Labour party, which is always trying to convince us with crocodile tears about its commitment to Third world development, is insisting on this occasion on erecting and maintaining these protectionist barriers which so evidently damage the less developed and poorer countries. It is a remarkable fact that even the Government are more liberal with respect to the third world in these matters than the Labour party wishes to be. The only ally that the Labour party has in this area is the hon. Member for Macclesfield whose views on development problems are as well-known as they are unsupportable.
§ Mr. Gould
The hon. Gentleman cannot be allowed to get away with such an attack, especially when it is so inaccurate. One of the points I raised with the Under-Secretary of State was the failure of the EEC negotiating mandate to attempt to make room for concessions to poorer countries. The hon. Gentleman has failed to understand the point made by the hon. Member for Nottingham, South that the MFA is designated not to operate in an entirely protectionist way but to regulate improved access for the poorer countries.
§ Mr. Ashdown
It has not had that effect. That is totally at odds with the view of the world development movement, which is a well-respected authority in these matters.
We look for a decent plan for textiles and for a decent industry and economic strategy. We need recognition of the effect of exchange rates. As de Zoete and Bevan has said in a recent letter to the Financial Times, the effect of the exchange rate is infinitely more important to the textile industry than the continuation of the MFA.
I would not wish the MFA to be brutally or precipitately dismantled. That would be wrong. [Interruption.] Let me make it clear, as I did in the last debate on this subject, that I believe that there is a need for a renewed MFA for one more term. But it would be wrong to tighten it, as some hon. Members would like. I believe that any movement should be in the opposite direction. The industry deserves better than just "something on MFA". Everyone knows that there will be a day when the MFA 1131 will no longer exist. It is time we started to plan for that. We should be adjusting to the fact that the MFA is not a permanent institution to protect this nation and one day will have to go. We should put in its place something much firmer and better for the industry. We should be adjusting to that fact, not pretending that it is not there and conveniently hiding behind the delusion.
§ Mr. Gary Waller (Keighley)
I give credit to the hon. Member for Yeovil (Mr. Ashdown) because he has at least been consistent and we know where he stands. The world of which he speaks is a world of ideals; it is not the world we know and understand. Like my hon. Friend the Minister for Trade and Industry, I look forward to the day when it will be possible to do without artificial restraints of this kind. But I believe that that day is some way off.
The hon. Member for Yeovil said that the multi-fibre arrangement had allowed the industry to continue without restructuring. That is far from the truth. There can have been no industry in our history that has had to restructure as quickly and as radically as the textile industry in the past few years.
The textile industry has not always been supremely efficient. It has nevertheless rapidly increased productivity, heavily invested in advanced technology and shown adaptability in the face of changing customer demand. There are new styles, fabrics and fashions. The industry differs greatly from 10 years ago. There has been a great shakeout. The industry has been fortunate because there is determined management, among the companies that remain, and a constructive approach has been demonstrated by trade unions in a way that is almost unique in British industry. I pay credit to them.
The hon. Member for Yeovil talked about the need to help underdeveloped countries. I agree with him, but he was wrong about means of doing so. I point out to those who would like to abolish the MFA that it is only because the MFA imposes restraints on the more advanced of the developing countries that the most underdeveloped nations have any opportunity to gain a foothold in world markets. Similarly, those who speak out against any liberalisation must recognise that a refusal to give any ground at all is an attack on the poorest peoples in the world as well as, in some ways, an attack on British consumers.
The MFA is a developing arrangement to allow orderly changes in trade to take place. That is why it must be renegotiated every few years. Some Labour Members talk as though any move towards liberalisation were a betrayal, but I do not believe that that is the view expressed by the industries. They recognise that the MFA is an evolutionary instrument. The idea that it must remain unchanged is fallacious. Nevertheless, we need to retain a strong agreement. The opponents of the MFA ignore the fact that it allows the volume of clothing imports to increase substantially and the fact that retail prices of clothing have risen much less quickly than the average of all retail prices.
During last year's debate and subsequently we have heard voices, including that of the hon. Member for Yeovil, urging that the MFA 4 should be the last MFA. I very much welcome the fact that Ministers have refused to give any such commitment. That stance has been vigorously affirmed today. Changes have been happening so quickly that it would be folly to try to forecast the position in 1990. It would be supreme stupidity to throw away our best bargaining counter. During the next round 1132 of GATT multilateral trade negotiations we shall need to retain it. The benefit to be gained from making a commitment at an early stage is small. The disadvantages stare us in the face.
Reference has been made in the debate to the world development movement. It, too, has suggested that the forthcoming multi-fibre arrangement should be the last, but all those who seek to improve the lot of the poorest countries should be aware that they would be the first to be swept aside in a free for all. One of the objectives of the negotiations should be to discriminate in favour of imports from the poorest countries, but to throw away any such arrangements would be extremely damaging to them.
Let no one imagine that the textile industry seeks to be mollycoddled. On the contrary, I am afraid that there are all too many instances of our industry being allowed to become the fall guy. France, Belgium, Holland and Italy got away for years with the extension of massive aid to their textile industries. Throughout that time the European Community failed to act. The Community is now tightening up its competition policy, and one of the first schemes to be vetoed was our own more limited CLOFT scheme. A few years ago the textile and clothing industries employed more than 800,000 people; they now employ about 490,000. However, they still provide jobs for far more people than most people give them credit for. In modernising themselves they have overcome considerable obstacles. They now look to the Government to ensure that there is fair competition—not special privileges—and stability so that they can invest for the future.
Nobody should underestimate the extent of the pressure for protectionism in the United States and the effect that further protectionism would have upon the diversion of imports to Europe, particularly to our very open market. American Congressmen seeking re-election every two years are vulnerable to single interest pressure groups. Although President Reagan has been firm so far in vetoing the Jenkins Bill that was passed by Congress, who can tell what will happen in August when it is brought forward again or, if not then, at a later date? Congress may then obtain the two thirds majority that it requires to overcome the presidential veto.
The tariffs that are operated against our exports to the United States are already a major barrier. Although our manufacturers have improved their quality and designs in order to increase their performance in the American market, nobody can doubt that if currency factors were to operate against us and that if protectionism were to be stepped up at the same time, not only would our export drive be badly blunted but we should also face massive pressure at home, which would result in the loss of many jobs.
We must also remember that the European Community's bilateral trading arrangement with China expires at the end of 1988 and that the growth of exports from China would have an explosive effect as the Chinese sought markets for their products. Genuine two-way trade exists with some states such as Hong Kong and Singapore. United Kingdom imports per head from them are not broadly out of line with imports per head by them of British textiles and clothing.
However, the position is very different for South Korea, Taiwan and Brazil. They hold down our exports annually to the value of just 6p, on average, per head of population. We imported from those countries £4.80 worth of textiles and clothing for each British citizen. For 1133 countries that must now be considered to be industrialised, this disparity is unacceptable. Other countries are highly protectionist, too —for example, India, Pakistan, Malaysia, the Philippines and Indonesia. But Korea, Taiwan and Brazil in particular are making rapid advances, and their populations include those with middle and upper income levels. They could therefore become significant markets for the high quality goods that are produced by the United Kingdom textile and clothing industries. Even if we could sell products to the value of £1 per citizen per year to Taiwan and South Korea, and perhaps only 50p per citizen per year to Brazil, it would mean a £100 million boost to our textile industry. It would create 4,500 new jobs in the United Kingdom.
When my hon. Friend the Minister for Trade takes part in the discussions about the new MFA, he should have engraved on his heart the fact that Korean tariffs against British goods range from 35 to 40 per cent. and that many imports are banned altogether; that Taiwan's tariffs range from 40 to 100 per cent. and that some bans likewise apply there; and that Brazil applies a tariff of 105 per cent., a tariff that at one stage rose to 205 per cent., although it has been somewhat relaxed. But Brazil bans the import of most of our textile products. All these countries enjoy generous access to our markets under the MFA, with tariffs—if they exist at all—up to a maximum of 15 per cent.
This cannot be allowed to continue. Before we relax our vigilance we need more than just assurances —for instance, from Korea —about future reductions. Countries with open markets deserve to be treated more favourably. If we are sufficiently strict with markets that are closed to us, it will give us scope to be more generous to more open markets.
The wool textile industry, in which I have a particular constituency interest, has said that for its products it is willing to accept greater flexibility. The wool sector is inextricably bound up with knitting and clothing. It is in those downstream sectors that it is vital to retain certain quotas. In the wool sector, quotas need to be retained on wool tops from south America, whose countries enjoy all the benefits of state aid, including differential exchange rates and freight rates and also export subsidies. Also let us not forget that state traders like Romania can dump cheap suits on our market at prices as low as £14 each. There are quotas that the industry is prepared to forgo, but others remain vital to its future prosperity and job creating potential.
Textiles are evolving fast. It is not a sunset industry. I am glad that Ministers have ceased to refer to it as a sunset industry. It is grasping new opportunities and meeting new challenges, using the most modern techniques that high technology can offer. The industry will be encouraged by the speech of my hon. Friend the Minister for Trade, but it has been disappointed on many occasions and it will wait before it can cheer the outcome of these negotiations.
§ Mr. Frank Haynes (Ashfield)
I share the confidence of the hon. Member for Macclesfield (Mr. Winterton) in the new Minister for Trade. I know that he put a great deal of work into the last Bill that dealt with the trade unions. I hope that he will put as much work into the renegotiation 1134 of the multi-fibre arrangement. The workers in the textile industry and its management are to be congratulated. They have worked together to overcome massive problems. They have had to lay off workers, who have then joined the dole queue.
The Minister for Trade suggested that there has been a recovery in the textile industry. I accept that, up to a point, but almost at the beginning of the Minister's speech my hon. Friend the Member for Bradford, West (Mr. Madden) intervened to say that 500 jobs a week had been lost in the industry since the introduction of the MFA. The MFA is now being renegotiated, but the Minister will be up against formidable problems. Reference was made to the battles that we shall have with European Community officials in Brussels.
There is a problem with the negotiating mandate. We are really up against it. The Commission's paper containing the draft negotiating mandate is a detailed document and it contains about 20 separate proposals to liberalise and weaken the existing regime.
I listened closely and wanted to hang on to every word of the hon. Member for Yeovil (Mr. Ashdown). I am pleased that he is not the Minister. I know that he has left the Chamber, but I feel that I must make these remarks. It was not many days ago that he was fighting for the people of Westland because it is in his constituency, but today he made a contribution to the debate as though he could not care less about the textile industry. It is obvious to me that he said that there should be no protectionism. He was trying to protect the workers in his constituency. We are trying to protect the workers within the textile industry and other industries in this country in the hope that those industries will expand and will create more jobs.
I have a little faith in the Minister simply because he has been successful in accruing capital. That is a step in the right direction. If he can manage that, which he has because he has a bob or two, he might be successful in breaking down the Commission. The Commission should be broken down because of the way in which it conducts itself and speaks. It is excessively liberal and it will greatly increase import penetrations —I am talking about the draft mandate which I mentioned earlier. The Commission will also remove or substantially weaken the safeguard mechanisms built into the MFA, and it will create new uncertainties in the regime and it will become legitimate for imports substantially to exceed quotas. We must control dumping as well as insist on quotas. The hon. Member for Yeovil could not care less about that and it clearly suggests to me, and I am sure to other hon. Members, where his opinions and ideas lie.
§ Mr. Haynes
I am sorry, but I shall be as brief as I can because other hon. Members want to speak.
We must have meaningful negotiations with a view to achieving something which is acceptable. I again part company with the hon. Member for Yeovil. He is talking like the previous Minister, now the Secretary of State for Trade and Industry, who was talking about a once-and-for-all agreement. We must have the right to renegotiate if it is necessary in the interests of our workers and industries. The door must be kept open and there should be no question of closing it once and for all.
§ Mr. Haynes
I will not give way because I promised Mr. Speaker that I would be brief in the interests of other hon. Members.
I agree with the Minister that the biggest danger is Europe. The hon. Member for Yeovil suggested that the Labour party would not do what it says it will for underdeveloped countries. If we get into office, we will show the hon. Gentleman what we mean by helping underdeveloped countries.
I come back to the point made by the Minister. When we talk about Europe, we talk about developed countries, and that is the problem. I wish the Minister well in his negotiations and I hope that we will get regular reports from the Dispatch Box about how successful he is being in our interests. It is the Minister's chance to make a name for himself. He did not make a name for himself in his previous Department, but he now has the chance to do so in the interests of the textile industry, particularly hosiery and knitwear.
In my constituency I have seen the suffering, and the massive amount of work put in by the trade unions and management to try to overcome the serious problems. It is a question of the management and unions agreeing. They have committed themselves to investment within the industry. The Government have to back that up by renegotiating in the interests of the industry. I hope that when the Minister goes to the negotiations he will not let the other countries push him around. He should give them some of what they have been dishing out to us over the past few years. I give the Minister just one warning—"Do not go rushing in and cock it up".
§ Mr. Speaker
Order. I made an appeal for brief contributions. The speeches have not been very brief. Six hon. Members want to speak, and I understand that the first Front-bench speaker wants to rise at 6.35 pm. May I again make a plea for brief contributions?
§ 6.6 pm
§ Sir John Farr (Harborough)
In view of your remarks Mr. Speaker, I shall not refer to the preceding speeches, and I shall not refer to some of the Liberal nonsense which the House has heard and not particularly liked.
For the sake of the east midlands and for those with knitwear interests it is essential that the MFA is renewed. It has a fantastic record, and I cannot understand why so many people think that the MFA should be dismantled. Despite having what some people who are opposed to it regard as a restrictive structure, since the establishment of the MFA in 1973 the developing countries have increased their share of world textile trade from 30 to 38 per cent., while the industrialised countries' share of the textile trade has fallen from 59 to 49 per cent., and a similar patten can be seen with all the other fabrics.
In the 12 years since the inception of the MFA, the developing countries have steadily increased their share of world trade. The big advantage is that it has been done in an orderly way with which the developing countries have been able to cope. If, as some would wish, our Government went to Brussels, or wherever the negotiations are to be held, without a mandate to renew a vigorous MFA and it was abandoned, one of the big sufferers would be the developing countries, because the 1136 MFA is a form of protection for them. It has been made quite clear by the United States that if the MFA is abandoned, it will introduce unilateral restraint measures.
I shall skim on quickly. China is another world giant which is flexing its muscles. What would that country do if there were a total lack of restraint? There is no doubt that abandonment of the MFA would enable China to expand its export sales enormously at the expense not only of the developed countries but of the lesser developed countries and some of the newly developed countries. In other words, abandonment of the MFA would release the strength of China and its massive manufacturing capacity on to world markets.
Time forbids me to say what people associated with the knitwear industry in my constituency think of the Silberston report, whose conclusions are wrong. This is the first time that the House has had to touch on it since it came out. Basically, its assumptions are based on inadequate evidence, and solely on the cotton industry, which is a unique case in the textile and clothing trade. We are certain that the report's calculations and predictions about employment and job losses are hopelessly out of date and wrong.
The MFA has done much for the British knitwear and textile industry. It has enabled many of our companies to become a little more modern and to get more sophisticated machinery, with great co-operation from the work force. This will enable the British textile industry to compete in the world market by keeping ahead with modern machines. We have had the most fantastic co-operation from the work force and the unions, and all this would be placed in jeopardy if a free for all were to obtain.
The MFA gives guarantees and growing access to textile and clothing imports from developing countries with average growth rates well in excess of the very low volume of growth in demand in the United Kingdom market. Our market had an average growth of under 0.4 per cent. a year between 1978 and 1985. The MFA can help the textile and clothing industries to develop in the poorest countries. The House has been concerned with famine in the world and the needs of the impoverished countries, on which the Government have a good record. In the textile and clothing sectors the MFA can help to protect the emerging nations, which would be swept away if there were unrivalled and unbridled competition.
I have the honour to represent part of the east midlands —a small but not unimportant part. In the knitting sector alone, two thirds of the people employed come from the east midlands. Some 124,000 were employed in 1974, but this has been reduced to 81,000. No Government, and particularly not my Government, can permit that continuing decline.
§ Mr. Tom Torney (Bradford, South)
Contrary to what the Minister said, I assure him that both the employers and the trade unions in the textile industry are united in their demand for the continued protection of the MFA. I suggest that he asks his researchers to do better with their brief on that point in future.
Wool textiles have suffered serious setbacks in trade over many years. Bradford and its districts, of which I represent part, are evidence of this with derelict mills, open spaces where mills once stood and, in a few cases, mills being used for other purposes. All this has resulted in considerable unemployment among textile workers. 1137 Despite an excellent relationship between the trade unions and employers in the industry, there has been mass unemployment, but nobody can claim that textile workers are highly paid, for it is a low wage industry. The MFA has undoubtedly made a major contribution to the fight back by the industry to recover some stability and confidence. Employment has stabilised at around 38,000 or 39,000 in the woollen textile industry.
There has been significant investment in the latest technology, productivity has risen, and considerable improvements have been made in colour, design and marketing. In Bradford, as in the whole of west Yorkshire, we can produce the finest textiles and suiting cloths in the world. We can compete in the world markets with the best, but not with countries that produce textiles but pay their workers only slave rates, with few or no fringe benefits.
However, we cannot compete with countries that, by various means, subsidise their textile industries, fiddle their supplies though other countries, and even indulge in false labelling to deceive the purchaser that the garment is British made. This is grossly unfair competition and such actions are losing the jobs of other workers. The MFA did not stop every loophole of unfair competition, but it went a long way along the road.
The Government appeared to be taking a far too relaxed attitude in the run-up to the renewal of the MFA. They do not seem to be fully prepared to argue with the so-called EEC partners who wish to weaken the MFA. Will the Government allow the textile industry to go the way that they have allowed so much of our manufacturing industry to go and to close down, with consequent additions to the continuing job losses in our country? It is criminal to do this after the years of hard work put in by everybody to fight back against recession and achieve some stability in the textile industry. To consolidate our industry and to maintain existing jobs, we must have the MFA renewed, and it must be no weaker.
§ Mr. Tony Speller (Devon, North)
There are some excellent textile firms in the most unlikely places, as my hon. Friend the Minister for Trade will agree. Later this month, my hon. Friend the Member for City of Chester (Mr. Morrison) will open yet another high-tech extension in Barnstaple to the factory complex run by Norman Sussman, a man famous thoughout the industry and greatly respected and appreciated in north Devon. Without some form of MFA, neither this extension nor previous ones would have come about. Neither would extra jobs have been created, nor existing jobs safeguarded.
Some obvious economic lessons can be learnt from the textbook. Free trade in textiles or food means lower prices, which seems excellent until we realise that lower prices caused by vast imports are followed by loss of jobs. That applies as much to shirts as to food. Free trade also means inundation by imports from overseas, leading to the destruction of the factory and the industry. Inevitably one becomes a captive market, with no productive capacity left. We have seen this, for example, in the motor cycle industry.
Is protectionism the answer? It means stable or higher prices, which are bad for the consumer and brings instant reprisal against our own exports. There is as little logic, in this day and age, in saying that we should have all free 1138 trade as there is in saying that we should have all protectionism. We have to seek a straightforward and logical compromise.
I ask my hon. Friend the Minister to take into account three points about the MFA that have tended to be lost in today's debate which has been more on principle than practice. By all means update the MFA, but in no circumstance destroy it or make noises that sound as if it will be destroyed 12 months or so hence. Secondly, do not allow any increases in quota when there is no increase in the total market. That way lies lunacy.
Finally, let us have no switching of quotas between EEC countries. This would be impossible to police. The United Kingdom's tight and well-organised distribution network means that we would be inundated with imports and our industry would disappear. It makes no sense and is not the way in which this House should look after the textile industry.
§ Mr. Max Madden (Bradford, West)
I declare my interest as a Member sponsored by the Transport and General Workers Union, which represents many workers in the textile and clothing industries.
During the debate, many hon. Members have rightly paid tribute to the industrial, economic and social importance of the textile and clothing industries. It should be noted that the industry's sales are worth £12 billion and exports are worth £3 billion. The importance of the industries for employment has already been recognised. In Britain, 500,000 people are employed in those industries.
It is sometimes overlooked that many people, who are not directly employed by the industries, are dependent on them, such as in transport, engineering, chemicals and the financial services. The future of the industries is important, and we all wish to see them expand and their prosperity continue.
There can be no argument about the major importance of the clothing and textile industries, but we must remove some of the misunderstandings about the multi-fibre arrangement. It is a modest attempt to try to manage and plan trade. The arrangement allows for the growth of textile and clothing imports, although judging from some contributions during the debate that has not been readily understood.
We need a strong and effective multi-fibre arrangement to provide our domestic industries with the confidence to take decisions to plan and expand investment. The remarks, which have already been mentioned, of the chief executive of Vantona Viyella plc demonstrate the importance that many leading industrialists place upon a renewed, strong and effective MFA.
We must recognise the importance of the textile and clothing industries to areas that are characterised by high unemployment. West Yorkshire is a notable example. We have heard that the average loss of jobs during the lifetime of the current MFA has been 500 a week. Increased productivity, new technology and other developments will cause further job losses.
We must sustain employment in high unemployment areas. The textile and clothing industries are extremely important to many communities that are ravaged by high unemployment. A recent report published in Bradford looks to the future of Bradford in the year 2000. It points out that, rather than attracting new industry, we should 1139 invest in existing industry if Bradford is to stand any chance of developing as a major industrial city in the year 2000.
The textile and clothing industries must be a major target for new investment. Government policies should be directed towards encouraging investment in those industries to ensure that employment is expanded rather than reduced and to ensure that those industries are helped in every conceivable way.
I take issue with the hon. Member for Yeovil (Mr. Ashdown) who spoke on behalf of the alliance. He seemed seriously to misunderstand one essential point. He made much in his speech about the fact that the poorest and least developed countries had not gained from the advantages that our markets can offer them. He misunderstands. One reason that those countries have not used up their quotas is that demand in Britain has been low during recent years. Britain has had a major recession with 4 million unemployed, who are not buying as much clothing and textiles as in the past—wherever they are produced.
The hon. Member for Yeovil made a special point about children's clothing. We have a depressed market because of the recession, but there are added problems with children's clothing. There are now fewer children and young people than in years past, but that has not been recognised by the hon. Member for Yeovil.
§ Mr. Madden
No, I wish to make a brief speech.
Many people are dependent on the textile and clothing industries. Women represent 63 per cent. of the work force. If we are to provide the chance for women to seek and keep employment, it is important to maintain employment opportunities in those industries. Many young people and many of those who originate from the ethnic minorities work in those industries.
Recently, the Government gave small amounts of money to help the inner cities. A positive way to help the inner cities is to encourage investment in the textile and clothing industries, which operate in many deprived areas. I urge the Government to recognise their importance to the disadvantaged and depressed areas of the United Kingdom.
West Yorkshire has the lowest pay rate of the nine main urban regions of the United Kingdom. West Yorkshire has almost 500 clothing firms, which are covered by the wages councils agreement. Most of those firms pay rates as low as £65 to £78 a week. In many cases the rates fall to £50 a week. Average full-time earnings in west Yorkshire are £150 a week, but in clothing and textiles average earnings are £100 a week.
Systematic and substantial overtime is being worked in many clothing and textile firms. Instead of allowing substantial and systematic overtime, which is necessary to many workers, because of their low basic earnings, the Government should try to expand employment opportunities.
I wish to discuss the least developed countries. If the Minister has not already read the TUC document published a year ago "A Fair Balance in Textile and Clothing Trade", I urge him to do so. The report makes a clear case. It dispels the Minister's notion of disunity among trade unions in the textile and clothing industries. It sets out clearly their sincere concern for the future of the industry in the poorest and least developed countries. Regardless 1140 of what the hon. Member for Yeovil has said, if it were not for the limited help of the MFA the textile industry of underdeveloped countries would be smashed by the super-efficient textile industries of Taiwan, Hong Kong and South Korea. I urge the Minister to meet trade unions representing textile and clothing workers to hear their case for an effective and strong renewal of the MFA and their suggestions about how to assist the least developed and poorest countries. I hope that he will take advantage of that.
I sensed from the Minister's speech that he is new to the job. He will have an exciting journey of self-education and revelation. He should visit some of the areas that we represent and see the history of dereliction. Those who worked in our industries have paid the price for new technology, unfair competition, overseas subsidies and all the fiddles and the rackets with their jobs. Although alit the members of some of my constituents' families used to work in textiles, most of them have been made redundant. They have been out of work for two, three or four years and have no prospect of getting other jobs. That experience is not shared by many hon. Members.
I end by quoting from a letter recently published in the Financial Times from Peter Booth, the national secretary of the textile group of the TGWU:If the present EEC draft negotiated mandate is adopted at the next Council of Ministers meeting and becomes part of a renewed MFA, it will jeopardize 100,000 textile and clothing workers jobs in the UK. In view of the 300,000 jobs already lost to the industry since 1979 and the shameful level of unemployment at 3.4m, more care needs to be taken to ensure the future of this valuable manufacturing industry and the 500,000 UK workers still employed within it.
That is the challenge that faces the Minister, and we shall watch him closely. We expect to be kept informed of the progress of the negotiations. I assure the Minister that many people who depend directly and indirectly on the textile and clothing industries will wish him every success, but they will not tolerate a sell-out by the Government. A great deal rides on the negotiations. I hope that the Minister will take full account of everything that has been said in the debate and will ensure that the next MFA is not significantly more liberal than the present one.
§ Mr. Roger Sims (Chislehurst)
During the MFA negotiations, Hong Kong will be pressing its case in the appropriate quarters. I hope that the United Kingdom Government will give Hong Kong the fullest possible support, and that especially in the inner councils of the European Community, where Britain is represented and Hong Kong is not, they will ensure that Hong Kong's interests are fully represented.
On 15 January, the previous Minister for Trade said in answer to a question from me on the arrangement:We certainly take the view that it should give favourable treatment to the poorest developing countries and to developing countries with very low barriers to British exports, which includes Hong Kong." —[Official Report, 15 January 1986; Vol. 89, c. 1065.]I hope that my hon. Friend the new Minister for Trade will confirm that that is his approach. The previous Minister mentioned "very low barriers", but Hong Kong has no barriers on textiles. Not only are there quota barriers, but there is 14 per cent. duty on textiles and clothing imported into the United Kingdom.
Under the MFA, Hong Kong has suffered a reduction in quota from 16 to 11 per cent. My hon. Friend said that 1141 one subject to be discussed in Brussels is whether the so-called dominant suppliers, of which Hong Kong is the most important, should be treated less favourably than other countries. I must tell him that such a move would be most unfavourably received in Hong Kong at this very sensitive time. I strongly urge him to resist it with the robustness of which we all know he is capable. The words "treated less favourably" imply penalties, and Hong Kong has been penalised enough already.
The theory of the quota reductions was that they would benefit the developing countries. That has not been the case. Indeed, the developed countries have benefited, with the EC countries increasing their share of the United Kingdom market from 38 to 48 per cent. The developing countries have not been helped, and many of them have said that they do not wish the MFA to be renewed.
Hong Kong has no natural resources other than the skill and industry of its people, who manufacture a wide range of high-quality products of good value, of which textiles are among the most important. At present, Hong Kong's position is one of certainty and uncertainty: certainty in the sense that the agreement with China about 1997 and beyond has been finalised; and uncertainty about the political and economic developments that are likely before then.
Hong Kong is an important supplier and an important and completely open market for British goods —at present to an annual value of £949 million. A statement that Hong Kong's case is understood by the Government and will be robustly championed by them in the negotiations would do much to reassure the people of the territory. I hope that my hon. Friend can offer that reassurance.
§ Mr. Geoff Lawler (Bradford, North)
A welcome feature of the debate has been the many positive references to the textile industry—references that are long overdue. We should recognise its significant achievements. The debate is not about propping up the industry, but about maintaining a fair and stable trading environment that gives the industry confidence for future investment. There is no doubt that confidence is returning to the industry, especially the wool textile industry, which has increased productivity by one third and increased exports during 1985 by about 16 per cent., reaching a record £600 million. It still employs a healthy 14,500 people in Bradford.
There is equally no doubt that the developing countries have a great potential to penetrate United Kingdom markets on such a large scale as to affect British companies adversely. Many of those countries have the heaviest protections and the most effective shields for keeping out imports. As long as trade is one-directional, we must continue to have safeguards. The textile industry used to sell south of the equator, but that entire part of the world, as with others, has been cut off, not because British manufacturers cannot meet prices or deliver goods on time, or because our designs or fashions are out of date, but because of the tariff barriers imposed by those countries.
The wool textile industry and textiles in general can export. During the past few years they have found new markets and developed existing ones with great 1142 effectiveness, but no matter how good they are, they cannot sell in countries which have barriers, such as 50 per cent. in South Korea and 105 per cent. in Brazil. That inequality must be recognised in the renegotiation of the MFA. The new agreement must allow for reciprocity, so that we can serve notice on those countries that we will not tolerate their prohibitive barriers and that we wish to encourage free trade.
Britain cannot consider its position in isolation. There are great protectionist pressures across the Atlantic—probably greater than those in Britain—as a result of the dramatic increase in December last year of 41.3 per cent. in textile and clothing imports into the United States. During the past four years imports into America have doubled—imports to a market that has had little or no growth. Congress responded with a Bill that was vetoed by the President, but it is likely to be reintroduced at election time, when it will require only another 6 per cent. of the votes to see it through.
If, as is likely, America takes a tough line in negotiations, the EC must not take a weaker line. If it does, we shall suffer the effects of a significant trade diversion from a United States market that takes in £15 billion, as opposed to our £5 billion worth of imports.
Healthy profits and investments, and technological change, will be factors in making the MFA unnecessary. We do not call for an endless MFA, but we do call for an effective fourth agreement, because that will eventually reduce protectionist pressures and lead to liberalisation. The textile industry is not a sunrise industry, nor is it a sunset industry, but there is a great fear that it could be sundown for many British companies if a liberal MFA is agreed in the face of what is happening elsewhere.
§ Mr. Alan Williams (Swansea, West)
The House must send a clear and unequivocal message to Brussels today, and that message is simply, "It is not on." We have heard whispers of what is being considered by the Commission. The proposals that we have heard about are utterly unacceptable. They are particularly unacceptable to this country in the aftermath of the first ever deficit on manufacturing trade.
Against that background, how on earth can we afford to say to Europe, or to the rest of the world, that we can write off, or see severely damaged, an industry which contributes £12,000 million a year to our national income, which provides 10 per cent. of all manufacturing jobs and has 500,000 workers in areas where, if they lose their jobs, they will be destined to become not just unemployed, but long-term unemployed?
Another message which Ministers must take to the Commission is that perceptions about this industry are out of date. The textile industry is not a hang-over from the 19th century, which is how the Commission sees it, and it is not a "no-tech, low-tech" industry. The industry, in an age of new technology, is at the forefront in pioneering new techniques. In fact, the concept of old industry and new industry has no relevance in an era in which the industry is applying the new technologies of robotics and the microchip.
That is demonstrated if we consider the world leaders in the industry. The export leaders do not come from the Third world. West Germany dominates the world in textile exports, and Japan is second. In December, the Financial Times carried a small article headed "Star of the Stock 1143 Market". The article was referring to Tokyo and the star of the stock market was the Japanese textile industry. The Japanese have invested to ensure that that industry is at the forefront of new technology. We can do the same, and our industry is trying to do that. Indeed, as he has been quoted as saying, David Alliance has invested £50 million to show that the industry can achieve that, and he is willing to invest more.
We must face reality. If we are to have a high investment industry, we must have an industry that faces certainty. To achieve high investment, the people who are risking their money must be certain of a return, and there must be profitability. If there is no profitability, there will be no resources to invest.
We have heard today from both sides of the House of the crucial importance of the industry to employment. The industry is concentrated in those areas of greatest deprivation where, as I have said, there is no prospect of alternative employment for those who lose their jobs. Superimposed on that is the problem of the inner cities. Unfortunately, in too many of our inner cities ethnic minority women see the industry as the only possibility of earning an income.
I welcome the Minister for Trade to his new position. We have heard today that he is thinking of liberalising the MFA 3, which is now coming to an end. He should bear in mind what other hon. Members have said—
§ Mr. Williams : The hon. Gentleman did say that, and I wrote it down at the time. I invite the Minister to check the Official Report tomorrow, as I certainly will. As hon. Members have stated, under MFA 3 25,000 jobs a year have been lost. The Minister who is t
there will be four or five months for further negotiations on the bilaterals.
1144 An early decision is unwise because it will leave us exposed to what the United States eventually decides to do. If, as the president has intimated, the United States takes a rigid, strong and defensive line, as endorsed by recently negotiated bilaterals, we all know where the diverted exports will end up. We all know that we will see an unfair proportion of them here.
It is also unwise because we would reveal our hand at too early a stage. It is unwise because it would not give Spain and Portugal adequate time to represent their positions. I understand, as my hon. Friend the Member for Dagenham said, that Portugal has intimated that it would want to reconsider the interim arrangements within the EEC if the Commission's proposals were adopted.
It is not just ludicrous, but absurd, for the Commission to consider carrying on the multilateral and bilateral negotiations concurrently. That makes no sense at all. The bilaterals, as negotiated by the EEC officials, will create a straitjacket which, by July, will mean that there is no room for manoeuvre. The whole position will be predetermined. The Government must tell the Commission that bilaterals are not to be concurrent, but should follow. In those bilaterals, the EEC officials must be limited by what they have been told on the multilateral decision. There must be no drift or undermining of the agreed position, as happened so often in the past.
Even the proposed basis for the negotiations is wrong and untenable. We are speaking of allowing a growth rate that bears no relationship to the market's past growth and probable future growth. Between 1978 and 1985 we saw a growth of 0.4 per cent. a year in the British market, and yet even in group 1, the most sensitive area, the EEC is considering permitting a 1 per cent. growth rate and a growth rate of more than 6 per cent. in the rest of the areas for imports.
The base that will be used to decide the quotas and the growth rates is unacceptable. There should be cuts in the dominant suppliers' quotas to make greater room in the poorest countries. We should relate the negotiating position to actual trade, not to unfulfilled quotas. If we relate them, as the EEC intends, to unfulfilled quotas, with a built-in growth factor, and if the participating countries, with that headroom, were to decide to take up their full quotas with the extra growth, there would be a surge of imports with which we could not cope.
If the mandate were approved, it would leave Britain helpless in the face of any such surge. There would not just be the removal of quota restrictions on many items, but the existing safeguards—inadequate as they are—would be removed. The basket extractor would be relieved and quota switching would be permitted. A combination of those four factors would have a disruptive impact on the British market. They would maximise uncertainty and destroy investment in the industry's future.
I ask the Government to tell the EEC that the proposals that we have heard from Brussels must be seen as a nonstarter. The House regards the mandate suggested by Brussels as weak, damaging and completely unacceptable.
§ The Parliamentary Under-Secretary of State for Trade and Industry (Mr. John Butcher)
In past trade and industry policy debates, it has been important to put some information on the record quickly to identify those matters on which there is unity in the House. 1145 Hon. Members will have heard me say previously that one statistic underpins all our considerations of trade and economic policy. It is estimated that 80 per cent. of what this country manufactures is internationally tradeable, whereas only 18 per cent. of service sector activity is internationally tradeable. That demonstrates that the nation has no option other than to retain and enhance the United Kingdom's manufacturing base. To that extent, the speeches of my hon. Friend the Member for Macclesfield (Mr. Winterton) and the right hon. Member for Swansea, West (Mr. Williams) showed some bonding. They were an echo of the speech made by my hon. Friend the Minister for Trade. I hope that they will be encouraged to hear that confirmed.
I have no doubt about the importance that my right hon. Friend the Member for Bosworth (Mr. Butler) attaches to the industry as a key wealth creator in the east midlands. I share the view of the hon. Member for Oldham, Central and Royton (Mr. Lamond) that, where there is room to manouevre within the MFA, it should be used on the basis that we identify the poorest countries, by the United Nations definition, and those of the newly industrialised countries which are the most liberal free traders, including Hong Kong, which, in my view, should be rewarded for its free trade policy because it is the nearest that we can see to a completely open market in every sector, and those newly industrialised countries which may be lingering in their affection for protectionist measures in their mature industrial sectors. The MFA should send its own signal of encouragement of liberalisation to those newly industrialised countries.
I share the pride of my hon. Friend the Member for Bradford, North (Mr. Lawler) and of the hon. Member for Yeovil (Mr. Ashdown) in the great strides that have been made by the texile industry. There was an article in The Sunday Times last week in which Ian McArthur, the director of the British Textiles Confederation, was quoted as having made some pertinent observations. He pointed out:Exports were up by 13 per cent. in value last year, to reach a record £3,136 million. 'It has been a remarkably good year,' says Ian McArthur … Overall, early industry estimates suggest a 4 per cent. rise in textile and 1 per cent. increase in clothing production in 1984. Productivity is certainly up again, says McArthur, although it is too early to give a precise figure. While there is still a £2.3 billion trade deficit in clothing and textiles, there are signs that its rate of increase is slowing. McArthur describes his mood as one of 'sober optimism'.That was reflected in a number of speeches made this afternoon from both sides of the House.
My hon. Friend the Member for Keighley (Mr. Waller) correctly pointed out —this was echoed in other speeches—that we are not talking now, and I hope we never were talking, of a sunset industry. We are talking of a mature industry. By strapping on new technology and introducing new production techniques, the industry is becoming —if I may coin an alternative phrase —a sunshine industry. It is an industry that is living on its wits, adding value, moving up market and becoming involved in new designs.
I shall put in a plug for an immensely underrated policy which could be of benefit to the textile industry. I am looking at my hon. Friend the Member for Darlington (Mr. Fallon) when I preface my remarks by saying that it is a scheme which works with the grain of market forces. We 1146 can supply to the smaller and medium-sized textile and clothing companies the best designers in the world at a discount, because we will pick up 75 per cent. of the costs of putting in those best designers for 15 man-days work. That will provide products which are relevant to today's market demands, which is surely one of the best ways to help industry fight back in international markets.
§ Mr. Whitfield
My hon. Friend referred to the hon. Member for Yeovil (Mr. Ashdown). Does my hon. Friend agree that the extraordinary statement that the hon. Gentleman made about the MFA somehow holding back the restructuring of the textile industry, which has largely taken place, is a sign of the Liberal party's lack of understanding of the textile industry? That is further demonstrated by the absence from the debate of the leader of the Liberal party who, by his absence, is presumably showing that he is prepared to abandon the Scottish textile industry to the sacred cow of free trade.
§ Mr. Butcher
My hon. Friend has made an interesting point. Bearing in mind the Liberal party's fixation with open government, the hon. Member for Yeovil is duty bound to send copies of his speech to those many constituencies in Lancashire, Yorkshire, the east midlands and Scotland which may wish to be comprehensively informed of what is apparently official Liberal party policy.
§ Mr. Ashdown
I mentioned the Scottish wool industry. My right hon. Friend the leader of the Liberal party is not here but no more is the leader of the Conservative party. The policy I explained is that of the Liberal party. It is the policy of the alliance as expressed almost word for word in my speech on 8 May last year. That speech has been circulated with great effect to those of my hon. Friends who represent textile constituencies such as Leeds, West and Colne Valley. It is a speech of which I and they are proud because it sets out a policy at variance with that of the old alliance between the Labour party and the Conservative party.
§ Mr. Butcher
I give an undertaking to all hon. Members who have asked questions that we shall write to them giving as clear an answer as we can at this stage of the negotiations.
On the last occasion that I attended a meeting in Brussels on this matter, the Dutch President found that there was such a lack of unanimity that he adjourned the meeting for a fortnight. It is not easy to write to hon. Members and say "this or that is the position" because at the moment there are nine or 10 different positions.
§ Mr. Butcher
The British are not on the flank of the most liberal or most protectionist stances of the various nations.
I should make clear our position on subsidies in other parts of Europe and of the world, particularly because the major growth in British imports has been from the European Community; it has not been from the MFA countries.
It is rightly argued that subsidies distort competition within the Common Market, and if such distortions are allowed the British Government should subsidise industry. My hon. Friend the Member for Keighley (Mr. Waller) reminded us that our own proposal for a sectoral aid scheme, CLOFT, was disallowed by the Commission. Our 1147 strongly held view was that this meant that no member state should operate aid schemes for this sector, and we pressed the Commission hard on this. I am pleased to say that by the middle of last year the remaining sectoral aid schemes in other member states had been terminated.
My hon. Friend the Minister for Trade will no doubt bask in the unanimous warmth which descended on him during this debate. I share the concern of the House that my hon. Friend should, bearing in mind the comments made by hon. Members this evening, take his remit with full vigour into the crucial discussions on an important industry.