Japan

HC Deb 18 June 1986 vol 99 cc1037-8

11. Mr. Pollock

asked the Secretary of State for Trade and Industry what steps are being taken to follow up the initiative of the Prime Minister at the Tokyo summit when she pressed the Japanese Prime Minister to remove the tax-duty discrimination faced by Scotch whisky bottled in Scotland.

Mr. Alan Clark

We are continuing to press strongly for the removal of Japanese discrimination in the tax and duty facing Scotch whisky and other imported alcoholic drinks. The European Community is to have further talks with the Japanese shortly, and we continue to take every opportunity to press the case bilaterally.

Mr. Pollock

Although I am encouraged by that reply, may I ask whether the Government made it clear to the Japanese authorities that their grading of liquor taxes represents a tax on quality, and therefore discriminates strongly and unfairly against this unique quality product from Scotland? Has it been pointed out to the Japanese that if we were to indulge in similar fiscal tactics against Japanese products, which are equally strong in their market sector, that might be a lesson which they would begin to understand?

Mr. Clark

I agree with my hon. Friend about the quality of Scotch whisky. The Japanese practice of grading alcoholic drinks is practically impossible to define in any sense which makes it possible to contest it. For example, Bourbon whisky is rated lower in duty terms than Scotch whisky, although the price is the same. My suspicion is that this relates more to political relations between Japan and the United States than to some abstruse factor in the grading.

Mr. Kennedy

Will the Minister give more information about the state of the welcome bilateral pressure to which he referred? Which of our European allies are being more helpful to the United Kingdom and the constituency needs of the hon. Member for Moray (Mr. Pollock), myself and others north of the border, and which are being less helpful in regard to this disgraceful exhibition of protectionism and disincentive against a United Kingdom export to Japan?

Mr. Clark

While the Community is putting together a case to take to the general agreement on tariffs and trade, it would be invidious of me to differentiate between those which are in favour and those which have reservations. The House knows that, regrettably, we are to some extent circumscribed in the multilateral trading system by being a signatory of the treaty of Rome and by the GATT. In the last resort, when those inhibitions continue to restrict action and abuse continues without adequate control or compensation, and if we cannot get the support of our Community partners in a European initiative, we would certainly have to consider unilateral action.

Mr. Bill Walker

My hon. Friend will be aware that there are many products that can be described as quality products and that they can be manufactured anywhere, but that Scotch whisky is unique and can be manufactured only in Scotland. It is the product of Scotland and is regarded by the Scots as their flag bearer, as 90 per cent. of the product is exported. If the Japanese are allowed to get away with the practices in which they have indulged recently, others might decide to follow, and that could be very damaging for the Scottish industry.

Mr. Clark

My hon. Friend is right. Discrimination also exists in Korea and we are doing our best to correct that. When, two weeks ago, I was in Korea, I had talks on this subject. My hon. Friend will be glad to hear that I found the Koreans more receptive to our view than the Japanese have so far managed to be.

Mr. John Smith

The Minister told us a little while ago that his judgment is that the Japanese are exercising political discrimination in favour of the United States in respect of Bourbon whisky and, presumably, political discrimination against the United Kingdom in respect of Scotch whisky. Will he tell us what political action the Government intend to take?

Mr. Clark

I should have thought that there was very little that we could do, short of increasing our gross national product to approximately the same level as that of the United States. The right hon. and learned Gentleman knows perfectly well that there is a special relationship, if one can use that phrase without being discourteous, between Japan and the United States, and I believe that the arrangement is in recognition of that. If we had the clout, I do not doubt that the Japanese would accede immediately. The fact is, however, that there is no comparison between the leverage which the United States can exert on Japan and that which we can exert.