Japan (Hansard, 29 April 1987)

§ 1. Mr. Caborn
asked the Secretary of State for Trade and Industry what progress he has achieved in securing wider access for British exports to the Japanese market.

§ 5. Mr. Simon Hughes
asked the Secretary of State for Trade and Industry what is his latest estimate of the trade deficit with Japan; and if he will make a statement.

§ 17. Mr. MacKenzie
asked the Secretary of State for Trade and Industry what progress he has achieved in securing wider access for British exports to the Japanese market.

§ The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon)
In the year ending February 1987 the United Kingdom visible trade deficit with Japan was £3.8 billion. Some progress has been made. I am glad to say that in 1986 United Kingdom visible exports to Japan increased by 18 per cent. to £1.26 billion.

§ Mr. Caborn
Will the Secretary of State tell the House what progress has been made since he dispatched his Minister to Tokyo a few weeks ago with "a timetable in his pocket for the opening up of the Tokyo stock exchange"? First, was a timetable negotiated there, and, if so, what was it? If it was not negotiated, will the Secretary of State use the powers that he now has under the Financial Services Act?
The right hon. Gentleman has informed the House that the trade deficit with Japan was £3.8 billion, but in 1979 it was about £882 million. The position is worsening. Will the Secretary of State tell the House what action he will take to protect British industry?

§ Mr. Channon
The hon. Gentleman's question relates to two points. On the general trading front, the figures are inflated by the present strength of the yen. The House must understand that the figures are changing. As the yen appreciates, in cash terms the figures look larger at the beginning. In terms of volume, that will change as the value of the yen changes. It is mildly encouraging that British exports increased last year by more than those of any other Western European country.
294 As for my hon. and learned Friend's visit to Tokyo—and the hon. Gentleman's question relates entirely to financial services—he did indeed lay down a timetable for the opening up of the Tokyo stock exchange. There will be further financial talks at the end of the next month, and we have made it clear that we will use our reciprocity powers under the Financial Services Act if we have to. My hon. and learned Friend has already achieved a considerable moving forward of the Japanese Government's timetable for opening up the Tokyo stock exchange, and he is to be thoroughly commended for that.

§ Mr. Simon Hughes
Does the Secretary of State agree that there is now a real danger of a diversion of Japanese exports to the EEC following tariffs being imposed by the United States? Can he give some indication of the Government's attitude to the proposals of Commissioner De Clercq this week on behalf of the Commission, and of what measures he thinks we can take to ensure that our financial institutions have access into Japan and to deal with the anti-dumping problem? The Government have not yet made their position clear on that.

§ Mr. Channon
On the anti-dumping point, we are strongly in favour of effective action to stop so-called screwdriver operations, and we shall support effective steps to that end. On the question of the Financial Services Act, I do not think that I can add much to my reply to the hon. Member for Sheffield, Central (Mr. Caborn). The problem relates to the Tokyo stock exchange, and I have described that. As for trade diversion because of the American tariffs, there is a real risk of that. Commissioner De Clercq and the British Government have been working very closely together on the problem. We strongly support the Commission's proposals. If goods are diverted from the United States to the European Community, we shall take action, I hope within the next two or three weeks.

§ Mr. MacKenzie
Will the Secretary of State accept that those of us who represent constituencies where electrical appliances are manufactured are bitterly disappointed at the lack of progress on trading with Japan? It has gone beyond being a normal diplomatic incident. May I suggest that the right hon. Gentleman asks the Foreign Secretary formally to call in the Japanese ambassador and express to him in the strongest possible terms that we have completely lost our patience?
Secondly, is there not a great deal to be said for taking a leaf out of the book of our French partners and treating Japanese goods in precisely the same way as the French Government have been doing for some time?

§ Mr. Channon
I have some sympathy with what the right hon. Gentleman said in the first part of his question. The Japanese ambassador is well aware of the Government's views, and he is also aware of the views of the House of Commons. I shall, I hope, be taking more effective steps than that. I am to see the Ministry of International Trade and Industry Minister, who is coming to London. I shall be having a meeting with him tomorrow, and on that occasion I shall convey to him what the right hon. Gentleman has said. There has been some exaggeration of the extent of what the French have done in the last few days. They have imposed duties on frozen Coquille St. Jacques and on a Japanese fish dish. Whether that will strike terror into the heart of the Japanese Government must be open to doubt.

§ Sir Peter Emery
Will my right hon. Friend make it absolutely clear that we are complaining about the unfairness of trade between Japan and this country? We want there to he full and fair trade, and we want it to be expanded. Will my right hon. Friend make it clear that that is the general view of the Government, and not that there should be an overall restriction of trade?

§ Mr. Channon
I agree absolutely with my hon. Friend. We want to open up the Japanese market to British goods, not to close the British market to Japanese goods. If we have to take action, either with our Community partners or, where we have to do so, on our own, that, though regrettable, may have to be done. I understand that the general aim in all parts of the House is to open up the Japanese market. I do not disguise from the House that that is extremely difficult, but some progress is being made.

§ Mr. Tim Smith
Is my right hon. Friend aware that one of the few notes of caution in an otherwise very encouraging quarterly survey that was published yesterday by the CBI relates to the prospect of a world trade war? Therefore, will my right hon. Friend proceed with great caution when considering possible measures against Japan? What is proposed could be very counterproductive. What we need are specifically targeted measures.

§ Mr. Channon
I agree entirely with my hon. Friend. If he is referring to financial services, we have a whole range of powers. If we took action under the reciprocity powers, we would choose specifically targeted measures that we thought were very much in British interests, in order to make sure that the action that we were taking helped Britain.
As to the question of a world trade war, I could give many examples. We have a whole range of powers relating to financial services, of which the House is well aware, from the refusal of extra licences to the removal of institutions that are operating in this country. One could take any precise example between those two. If my hon. Friend cares to put down a question, I shall try to answer it. A world trade war would be a disaster for this country, which depends so much on exports. Incidentally, it would also be a disaster for the Japanese.

§ Mr. Alan Howarth
Will my right hon. Friend take every opportunity that he can to point out to the supporters of protectionism, whether in Japan, the United States or the EEC, that protectionist measures damage consumer interests everywhere by restricting competition, by raising prices and by reducing the volume of trade? Does he agree that in an interdependent and fragile world economy we cannot afford to concede protectionist measures to producer interests and producer lobbies who are agitating in their own interest?

§ Mr. Channon
In general, I agree with my hon. Friend. I emphasise what I said a few moments ago, that we want to open up the Japanese market to our goods, not to close our market to the Japanese. That is the aim that we are trying to pursue, with some success, but I do not disguise from the House that I should like it to be much more successful.

§ Mr. Wrigglesworth
Is the Secretary of State aware that many of us are deeply cynical about why the Government started all this sabre rattling? We believe that it is probably 296 designed more to impress the British electorate than the Japanese Government. If the Government are genuine in their desire to stop the grossly unfair trade impediments that have been placed in Japan on products from this country, why did they not act earlier to try to help the Scotch whisky industry and many other industries that have been unable to sell their products in Japan in previous years and that have had precious little support from the Government?

§ Mr. Channon
That is absolute nonsense, and I suspect that the hon. Gentleman knows it to be nonsense. No objective person would say that I have been sabre rattling this afternoon. That was a ridiculous remark. As to Scotch whisky, the hon. Gentleman knows perfectly well that the Community is taking action. The GATT panel is meeting this week, and we shall receive a report later in the summer. If there is no satisfaction from the Japanese Government, we shall retaliate.

§ Mr. John Townend
When considering taking action to force open the Japanese market to British goods and services, would it not be wiser to try to hit the Japanese where it really hurts, in respect of manufactured goods, rather than take action against Japanese financial houses, which will have an adverse affect on the City? If my right hon. Friend is going to quote the GATT regulations, can he explain why it seems all right for the American Congress to take action against Japanese manufactured imports?

§ Mr. Channon
I am sure my hon. Friend is aware that when I was talking about financial services I was talking about trying to obtain reciprocity for our financial services in Japan, not of trying to use financial services powers for other matters. As for general trading matters, the Community as a whole must deal with them, and I think that that is well understood in the House. A great many activities are going on in the Community at present. There is the anti-dumping matter to which I referred. There is the prospect of a trade diversion because of the American actions. That matter is being actively pursued and action on it may take place shortly. There is also the action that we are taking in the Community to try to unbind the tariffs on a certain range of products as a result of Spanish and Portuguese accession to the Community.

§ Mr. Hoyle
Does the Secretary of State agree that the Japanese ambassador and the Japanese Prime Minister have been well aware of the Government's view for many years, yet the gap gets wider and wider? Will the right hon. Gentleman say something to them about the way in which Scotch whisky is taxed out of the Japanese market, and about the fact that each of the 2,000 cars that Jaguar sells to Japan is inspected individually? Is it not time to stop talking, to take action and to say to the Japanese that we will apply exactly the same measures to their goods coming here as they apply to our goods going into Japan? That will mean something, rather than having this meaningless talk that goes on time after time from the Dispatch Box.

§ Mr. Channon
The hon. Gentleman has chosen one or two rather poor examples. Jaguar is doing extremely well in the Japanese market. The hon. Gentleman has raised the question of cars, so he may be interested to know that Austin Rover is now the fastest growing exporter of cars to Japan and is beginning to do much better in that market. There is a long way to go. As to the question of 297 Scotch whisky, the hon. Gentleman knows perfectly well that the Community has taken this matter to the GATT. The panel met yesterday and we will receive a report in a couple of months' time. We will either get satisfaction from the Japanese, or the Community will retaliate.

§ Mr. Pollock
Apart from the GATT panel's deliberations on Scotch whisky, may I suggest to my right hon. Friend that it would also be encouraging to the Scotch whisky industry if, parallel with those deliberations, there was some direct representation by Her Majesty's Government to the Japanese Government about the need to end as quickly as possible their discriminatory tax regime against imports of that product?

§ Mr. Channon
I shall be raising that matter tomorrow with the MITI Minister.

§ Mr. Robin Cook
Does the Secretary of State agree that, given the remarkable success of the Japanese industry in miniaturising every electronic product, it is not credible for the Japanese Government to claim that they cannot admit any more British members to the Tokyo stock exchange because they cannot find space for them on the floor? Therefore, was the Secretary of State not surprised to read, after his colleague met the Japanese Minister for Finance, that one of the officials present told the press that he was gratified to hear that reports to withdraw the licence of Japanese banks had been exaggerated and that he assumed that such a horrible thing would not happen? When will the Government steel themselves to give the same protection to British business and British industry as the Japanese Government give to Japanese industry and Japanese business, and to act to halt the mounting deficit in our trade with Japan, which has shot up fourfold under this Government?

§ Mr. Channon
I am very touched by the hon. Gentleman's deep concern for the British financial services industry and its desire to be part of the Tokyo stock exchange. I agree with him, and that is why it is so encouraging that, as a result of my hon. and learned Friend's visit, the timetable for entry into the Tokyo stock exchange has already been improved. When my hon. and learned Friend was there he set down a clear timetable and make it perfectly clear that, if it is not met, we shall retaliate. No doubt the House will keep us up to the mark.
As to the general trading front, I have already described the action that we are taking within the Community. There is a great deal of frustration, not only in this country, but in the rest of the European Community. We shall pursue this matter. It will not go as fast as all hon. Members would like, and there is no point pretending that it will, but some progress is being made.