GATT (Uruguay Round)

HC Deb 05 November 1992 vol 213 cc437-50 4.53 pm

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine)

With permission, Madam Speaker, I should like to make a statement on the position in the GATT Uruguay round of trade negotiations.

The House will recall that the Uruguay round of trade negotiations—the eighth GATT round—was launched in 1986. Its coverage was ambitious—fifteen different areas and 108 parties—making it the biggest trade negotiation in history. As well as traditional GATT areas, such as tariff and non-tariff barriers, it covered the new areas of services, intellectual property and investment, and the development of new GATT rules for agricultural and textiles trade. It also aimed to improve the rules and functioning of the GATT generally.

Those aims were ambitious, but they have now been very largely achieved. The draft text produced by Mr. Dunkel, the GATT Director General, at the end of last year proposed a basis for agreement on all these issues. More than 80 per cent. of the proposals were agreed by all the parties. However, there remained a number of unresolved problems, principally over agriculture, which led the European Community to say that the text was not acceptable as it stood. Negotiations also still have to be completed on the commitments by individual parties to cut tariffs and barriers to trade in services.

I must make it clear to the House that the European Commission is responsible for negotiating in the GATT on behalf of the European Community. It negotiates under authority from the Council of Ministers, who will have to approve any final agreement. For their part, the Government have consistently supported a Uruguay round agreement. That has been particularly true during our presidency, when we have made concerted efforts to help achieve a satisfactory conclusion.

Since the Dunkel text appeared, efforts have concentrated on bilateral negotiations between the European Commission and the United States. They were aimed at resolving their remaining bilateral differences, mainly on agriculture, and so open the way to the completion of a full multilateral agreement in Geneva.

The latest round of the talks took place earlier this week in Chicago between the European Community's Agriculture Commissioner, Mr. MacSharry, and the United States Agriculture Secretary, Mr. Madigan. As well as continuing attempts to settle the remaining difficulties over the GATT agriculture agreement, they were also trying to resolve a separate but related trade dispute over the Community's support regime for oilseeds. The Community and the United States have been negotiating changes to that regime, following the findings of the GATT panel that it breached the EC's GATT obligations.

Some progress was made on both issues, but final agreement had not been reached before the talks were suspended on Tuesday evening. The gap between the two sides has nevertheless been narrowed substantially, and the remaining differences are very small indeed. The Government are working to bring both sides back to the negotiating table as soon as possible.

A few moments ago I was informed that the United States had just announced retaliatory action in the oilseeds dispute against $300 million of Community exports. I understand that that covers various types of wine, rapeseed oil and wheat gluten. That is a highly regrettable development and the Community will need to consider its response carefully. I stress that the first list will only be expected to come into effect after 30 days. The question of EC counter-retaliation, which some in the Commission have mentioned, will only arise if there is no settlement in the meantime, and would in any case be subject to the approval of the Council of Ministers. It is in the interests of both sides to avoid starting a spiral of retaliation, which can only harm exporters and damage the prospects for GATT agreement.

Little time remains if we are to meet the end-year target set for conclusion of the GATT round by the G7 summit and the Birmingham European Council. That is also important if the United States Administration are to take advantage of their arrangements for so-called "fast track" approval under which any agreement must be notified to Congress by March. We may never have a better chance to conclude such a wide-ranging agreement. If this chance is missed, the prospects for the negotiations and for the world trading system are serious, and those most directly concerned will carry a heavy responsibility.

While the remaining issues are difficult, the two sides have also never been closer together. A settlement both of the GATT issues and the oilseed dispute is achievable. The benefits of agreement would be substantial. Apart from the extra $200 billion annual world output which, on an Organisation for Economic Co-operation and Development estimate, would result from the round, there is the immediate boost to business confidence which agreement would give. We can and must grasp that prize.

Mr. Robin Cook (Livingston)

All parties in the House will agree with the closing remarks of the President of the Board of Trade on the gravity of the challenge to the world economy from the breakdown of the talks. In particular, I endorse his recognition that we are unlikely to obtain any agreement if we cannot conclude the talks by March when the fast-track mandate from the United States Congress expires.

The President may also wish to recognise the impatience of the rest of the world that an agreement which benefits more than 100 countries, including some of the poorest, should now be halted as a result of a bilateral dispute between the two most powerful trading blocs.

The President cannot pass responsibility for failure to the EC as though Britain were not part of it. Britain is currently President of the EC. Has the right hon. Gentleman forgotten that, on 30 June, the Prime Minister assured the House that he was looking for a successful outcome of GATT during his presidency?

In order that we can judge the concerted efforts for success to which the right hon. Gentleman referred, can he tell us whether the Government accept the finding of the two GATT panels, that the EC is at fault in its oilseed regime? If the Government accept the outcome of those two panels, what have they been doing during their months in the EC presidency to resolve that matter? Equally, does the President recognise that there is fault on both sides of the dispute?

Have the British Government reminded the United States Administration that they have secured progress on cutting EC subsidies and obtaining protection of intellectual property which must have exceeded their expectations six years ago when the talks began? Does he agree that the United States stands to gain most from the current agreement on offer, and that it would be unwise to throw it away for the sectional interest of oilseed farmers?

What protest have the British Government made bilaterally to their friends in the present United States Administration to remind them that there are great dangers to the United States as well as to Europe in starting a trade war? In the event that those representations are not successful, I put to the President two questions on which industry will want reassurance.

First, what attitude will be taken by the British Government at the meeting of the Council of Ministers, which I understand is to be held on Monday, to consider retaliation against today's announcement by the United States? As it appears that British products have largely been excluded from the first round of sanctions announced today, will the British Government resist imposition by the EC of tariffs on United States products which will put up the price equally for British consumers? Will Britain argue against the futility of tit-for-tat retaliation?

Secondly, will the President clarify the Government's current position on the multi-fibre arrangement in the light of the latest deadlock on GATT? He will be aware that progress on MFA depends on progress on GATT. Can he confirm that the existing MFA will be prolonged so long as GATT remains in abeyance?

It almost beggars belief that, at a time of world recession, a major stimulus to world trade should be at risk over a difference in negotiating position of just over 1 million tonnes of oilseed production. The gains to industry and commerce could be immense. The Government and the House must not permit those gains to be lost in a dispute over a row of soya beans.

Mr. Heseltine

I find myself in almost total agreement with the hon. Gentleman. I think that the House will share his indignation that, after six years in which the process has been under way, we have not been able to reach agreement on what is, by any standards, one of the most significant things that could give a boost not just to the economies of the advanced world but to the economies of the less privileged parts of the world.

The British Government's position has been consistently in favour of reaching a satisfactory outcome to the GATT round. The Prime Minister has been continually in touch with those people who can influence its momentum and direction in order to urge them to make progress.

The hon. Gentleman drew our attention to a number of specific issues. It was envisaged that the multi-fibre arrangement would be replaced as the new arrangements came into place, and we shall now have to consider how that meshes in with the present situation.

But the British Government's overriding interest is to continue to exercise whatever influence they properly can as an independent nation and as President of the EC to get the talks started again. It will be of no surprise to the House that there is continual contact on the matter in order to try to ensure that the suspended talks reopen. I give the House my emphatic asssurance that the Government will do everything they can in order to bring that about.

As the House well knows, the European Commission negotiates on behalf of the Community, and at the recent Birmingham Council the European Commission was clearly mandated to move towards a satisfactory resolution of the negotiations with the United States.

The hon. Gentleman asked what steps the Government have taken to "protest", to use his language, to the President of the American Administration. I can assure the hon. Gentleman that there has been constant communication with the American Administration in order to ensure that the dialogue is maintained.

It is, as I say, much to be regretted that we have now moved to this dangerous stage. The question of retaliation will have to be considered in the light of discussions within the Commission, but in the end it is a matter for the Council. Much the most important thing that could be achieved is not to move to retaliation but to the restoration and, hopefully, the successful outcome of the talks.

Mr. Michael Jopling (Westmorland and Lonsdale)

Does my right hon. Friend recall that it was this Government who played the leading role in bringing agriculture into the Uruguay round, and that we brought the EC kicking and screaming into that agreement? Does he understand that a successful settlement of the discussions will cause considerable difficulties to agriculture in Europe? He knows my interest in that. Does he agree that agreement is essential for world trade in general and for the economy of Britain in particular? In the negotiation that the Commission is currently conducting, is there a qualified majority of members of the Council who would support a settlement to which, currently, the Commission is refusing to agree because of a minority of nations which are being particularly intransigent?

Mr. Heseltine

My right hon. Friend has profound experience in the role that agriculture has played in the general conduct of the Uruguay round. I recognise the specific problems caused for the agricultural industry, but many of those have flowed from the reform of the CAP which has been an important step in moving to a point at which we can, hopefully, resolve the outstanding issues of the Uruguay round. I know that the House will understand if I say that my right hon. Friend the Minister of Agriculture, Fisheries and Food, who is responsible for the detailed negotiations under our presidency, has been resolute in the energy and dedication that he has applied to that task.

I cannot comment on the existence of a qualified majority because no such position has been tested. These matters are, in the first case anyway, open to resolution of the Council by qualified majority, but we have not reached the stage where that has been tested.

Mr. Malcolm Bruce (Gordon)

Will the President of the Board of Trade accept that the House and country will be looking to him, as Chairman of the Council of Ministers, and to the Government, to prevent a potentially fatal escalation of the confrontation and to secure agreement? However, will he accept that the position of the Government and the EC would have been substantially weakened had the vote last night gone the other way? Is it not crucial that the EC is able to maintain and secure a united position to prevent the escalation of a trade war?

Mr. Heseltine

The hon. Gentleman illustrates clearly the interrelationship of so much of our commercial and foreign policy within the Community. For Britain to have a proportionately important influence, it is important that we should be seen to be at the centre and committed to the process that we were discussing yesterday. It is very much our view that the worst deterioration that could take place would be from a tit-for-tat consequence to the American lists that have been published today. We shall do everything we can, as President of the Community, to bring the matter back to the conference table and, hopefully, resolution.

Mrs. Elizabeth Peacock (Batley and Spen)

My right hon. Friend will be aware of my interest in the GATT round over a considerable period, particularly relating to textiles. As he will be aware, the apparel and textile industry has sales of about £15 billion a year and still employs nearly 500,000 people. We wish to see that continue. He will also be aware that the MFA was extended to the end of this year in the hope that there would be a settlement in the GATT round. Can he assure British industry generally that the MFA will be extended on its present terms beyond the end of this year for as long as is necessary?

Mr. Heseltine

I certainly know of my hon. Friend's interest in textiles, and in other industries—[Laughter.]—although we find it easier to agree with her views on textiles. I can go a long way to reassure her on this occasion, if not on others, that the Commission is negotiating the extension of the multi-fibre arrangement until the GATT round is concluded.

Mr. Bob Cryer (Bradford, South)

Does the right hon. Gentleman agree that it is an indictment of the European Community that it has allowed agriculture to dominate when agriculture represents only 10 per cent. by value of world trade? May we be assured that a strong position will be taken in the negotiations by Her Majesty's Government, who will demand that manufacturing industry, particularly textiles—in Bradford, for example, 12,000 people are employed directly in that industry—will not have its interests put to one side in the interest of agriculture?

In particular, will we press for the period of the MFA to be retained for at least 10 years to protect the industry and the jobs that rely on it? Is the right hon. Gentleman aware that 450,000 jobs in textiles and clothing in Britain depend on there being proper, progressive trade negotiations, that the stealing of copyright designs must be prevented and that there must be more access to markets over trade barriers that are far too high in many countries? I have referred to some important aims that must be achieved if industry is to have confidence.

Mr. Heseltine

The hon. Gentleman makes some points with which I agree. The disquieting aspect of the negotiations is that the interests of an important but, in proportionate terms, relatively small industrial sector in world terms is at the centre of the difficulties that frustrate us. That is true in the European Community and in the United States. The agricultural interests are politically of great significance on both sides of the Atlantic. That has been the stumbling block which has prevented us from making progress.

I agree with the hon. Gentleman that, from the point of view of the self-interest of the parties to the GATT negotiations, a whole range of industries has much to benefit. Indeed, the overwhelming self-interest of the countries concerned is to proceed with GATT. But there is no escaping the fact that there are areas of political difficulty in trying to deal with the problems of agricultural surpluses or subsidies.

Mr. David Madel (Bedfordshire, South-West)

As America is about to begin the lengthy process of changing its Administration, will the British Government be arguing at the European Council that no retaliatory action should take place until America's new Administration is in place? As it is a long time until 20 January, will the Commission soon be starting informal talks with President-elect Clinton and his Administration to see what their policy is likely to be?

Mr. Heseltine

My hon. Friend will appreciate that it is for the Commission to discuss how it pursues the negotiations on behalf of the Community. Without doubt, the matters to which my hon. Friend refers will be discussed. I have no doubt that at the informal meeting of Ministers, which is due to take place tomorrow under my presidency, those matters will be raised. But there is no immediate power for a particular country to take over responsibility for negotiations that are properly those of the Commission.

Mr. Adam Ingram (East Kilbride)

Is the right hon. Gentleman aware that those of us who represent manufacturing constituencies—albeit their industries, especially in the aerospace sector, have been devastated by Government policy—are greatly concerned at the possibility of an escalating trade war? Is he aware that it is not good enough for him to hide behind discussions that have taken place in the European Community? What pressure has he put on the French Government to end the problems that have been created by the intransigence of the French farming community?

Mr. Heseltine

The hon. Gentleman will know from reading the newspapers that my right hon. Friend the Minister of Agriculture, Fisheries and Food, who is President of the Agriculture Council, was present in Chicago while discussions between Commissioner MacSharry and Mr. Madigan were taking place. He was not negotiating—it was not his task to do that—but he was there to make clear the strong sense of commitment that this country has, as President of the Community, by being as close to the negotiating machine as possible. So there is no doubt that, in every conceivable way open to us, we have sought to make progress in the negotations. But in the end, we are dealing with sovereign states and the self-interest of those states, and no powers are available to us to compel people to do what they do not want to do.

Mr. Peter Viggers (Gosport)

Is my right hon. Friend aware that his negotiating position has widespread support and that it is vital to avoid a cycle of retribution and retaliation which would damage us as a major trading nation and do considerable damage to third world producers? Does he think that there is any prospect in the negotations ahead of detaching oilseed from the GATT agenda? Might that be a possible way forward?

Mr. Heseltine

My hon. Friend raises an interesting point, which I hope will be heeded. There is no reason technically why the two issues should not be separated, but those who have some idea of the ways in which the negotations are proceeding see no reason why we cannot conclude a satisfactory GATT round. The margins of division are very narrow indeed. To be frank, it would seem incredible if such narrow differentials precluded a satisfactory outome to the round.

My hon. Friend raises a point with which the whole House will agree. We spend a huge amount of time—we have today—discussing aid to the third world. No aid programme within our gift could in any way equal the benefit to the third world that would come from a satisfactory outcome of the GATT round.

Mr. Terry Rooney (Bradford, North)

The President of the Board of Trade will be aware of the deeply difficult trading conditions facing the textile industry. Is he aware, for example, that the industry, particularly in Bradford, is delaying investment decisions because of the lack of a conclusion to the MFA situation and GATT? Will pressure be put on the United States in particular in Geneva to remove artificial and protective tariff barriers that are themselves in contravention of GATT?

Mr. Heseltine

The negotiations in Geneva will be multilateral. Great progress has been made, but not the whole way, and it will be for the Commission, which will represent us in Geneva, to secure a deal, which must then be presented to the Council of Ministers for approval.

The point made by the hon. Gentleman adds to the concern that hon. Members have expressed. This is not just a question of tariff walls being erected: it is the uncertainty that flows from that. Understandably, the textile industry is hound to ask about the future and, if it is unable to get certain questions answered, will delay investment. All that is part of the cycle of deteriorating confidence that the failure to achieve success creates.

Mr. Phillip Oppenheim (Amber Valley)

Is it not a disgrace that the European, and particularly the French, agricultural lobby—probably the most subsidised and protected industry in Europe—should be allowed to hold the GATT round and the whole global trading system to ransom? The amount of intervention and protection that the industry has enjoyed since the war is surely the best argument against political interference in industry, intervention in business and protectionism in agriculture, textiles, coal, steel or any other industry.

Mr. Heseltine

I hear what my hon. Friend says, but it does not quite reflect how the negotiations in Chicago unfolded. Commissioner MacSharry went as far as he could reasonably have been expected to go to secure a closing of the gap between the two sides. I wish to put that firmly on the record. However, those political self-interests exist to which my hon. Friend has drawn our attention, and I hope that no country will put the sectoral interests of a small part of its economy against the overwhelming interests of the world trading economy.

Mr. Nigel Spearing (Newham, South)

Will the President of the Board of Trade confirm that, as the Chair or President of the relevant Council of Ministers, he is the nearest thing in the European Community, and certainly in the House, to a politician taking responsibility in this matter? Is not the surplus of oilseed, to which he referred as a casus Belli, controversial both in the European Community and in this country? Was it not exported around the world, including to the United States, with the assistance of public money? If so, has not the use of public money—unwisely in that case—prejudiced the reactivation of world trade?

Mr. Heseltine

The hon. Gentleman asks me to confirm what everyone knows—that the level of subsidies in oilseed is one of the causes of concern that has led to the threat of retaliatory action. I hope that the hon. Gentleman will forgive me if I do not get drawn into the precise details of what is essentially a matter for my right hon. Friend the Minister of Agriculture, Fisheries and Food.

Mr. Mark Robinson (Somerton and Frome)

Does my right hon. Friend agree that the further breakdown and delay in those talks will be greeted with dismay in the agricultural community? Will he assure us that he will do everything in his power to urge on the parties—both the United States and the European Community—the necessity of cracking that last part of the agreement? Then, and only then, will we be able to take the matter forward.

Mr. Heseltine

My hon. Friend is absolutely right, and I give the unreserved assurance that he seeks. The whole House will accept that only the most naive economists argue that we should try to support the prosperity of our agriculture by impoverishing the rest of the economy. Nothing is more likely to help to create the markets for agricultural products than a buoyant restoration of the confidence of the world economy.

Mr. Dafydd Wigley (Caernarfon)

Does the President of the Board of Trade accept that it will be an unmitigated disaster if we cannot get out of the difficulties with the GATT round, not least in areas like Wales, where a number of American companies have invested? The uncertainty created must have a detrimental effect on possible future investment. In seeking a compromise, will he give an undertaking that there will he no compromise on the environmental dimension, which has had some consideration in the background to the negotiations?

Mr. Heseltine

I am not aware of an area where environmental divisions separate the negotiators. Naturally, I accept that, if the GATT round were to fail and we were to proceed into a trade war, that is as dangerous a situation as we could envisage, given the present state of the world economy. It would be bad in any circumstances, but it would be catastrophic in the present circumstances.

Mr. Gary Waller (Keighley)

Will my right hon. Friend acknowledge the impressive exporting success of the British textile and apparel industries in recent years? Does he accept that a successful GATT agreement must encompass greatly strengthened rules and disciplines, and better access to other markets for our products? Does he agree that the British textile and clothing industry wants not protection but a fair marketplace where it can compete with other countries?

Mr. Heseltine

I am glad to hear that my hon. Friend feels that, because he represents a textile area and has a considerable knowledge of the subject. I readily acknowledge that industry's success in export markets, as in the domestic market. I certainly agree that, if we are to have international machinery for trade negotiations of that sort, it must carry with it the assumption that people will stick by the rules. That is one reason why it is so important that the oilseed dispute be resolved.

Mr. Thomas Graham (Renfrew, West and Inverclyde)

The President of the Board of Trade will recognise that that is another of the Prime Minister's predictions that has failed miserably. Many of us have lost thousands of jobs in our constituencies. What contingency plan will the Government put into operation to help some of the companies which, if a trade war takes place, could face the inevitable—unemployment, bankruptcies and closures? What plans do the Government have in the meantime?

Mr. Heseltine

The hon. Gentleman can have no concept of the scale of the disaster that a trade war and a failure of GATT would have. No conceivable Government action can substitute for the scale of the marketplace which would be denied them by this development that we are discussing today. There is no conceivable level of tax that could be raised, or whatever it was, to produce the subsidies to support the companies for the orders that they would lose. It is utterly naive not to realise the awful dilemma that the trading economy of this country would face if we see this development proceed as badly as we fear.

Mr. Matthew Carrington (Fulham)

Will my right hon. Friend join me in deploring the United States Government's action in raising tariffs, which is clearly a crude negotiating tactic to try to force a settlement of the Uruguay round quickly and on their terms? It would be wrong if the EC retaliated in kind, and I hope that my right hon. Friend will ensure that the Council of Ministers does not do so. Does he agree that the effects of a tariff war would be to turn the world recession into a world slump, which would be a disaster for our industries and for all industries throughout the world?

Mr. Heseltine

My hon. Friend comes close to the analysis that I have been trying to give the House. However, in trying to make progress in the matter, one must recognise that the Americans have been pursuing the oilseed dispute through the GATT machinery and their case has been found to be substantiated through the existing machinery. There is therefore no gain for me in trying to raise the temperature in that fragile situation. A possibility raised by my hon. Friend the Member for Gosport (Mr. Viggers) was that we could separate the two issues and make progress with the GATT arrangements, which are now close to potential resolution. We could then seek ways of resolving the oilseed dispute, which remains under existing GATT arrangements.

Mr. Harry Barnes (Derbyshire, North-East)

The Maastricht treaty alters almost every section of the treaty of Rome, often in considerable detail. However, not one item, word or dot of the agricultural elements in that treaty is altered. Would it not have been helpful in the negotiations if moves had taken place to tackle, through the Maastricht treaty, the agricultural problems?

Mr. Heseltine

The hon. Gentleman must have missed out on the fact that there has been a major reform of the common agricultural policy, which was negotiated with considerable success and in which the British Government played a major role. The object of the exercise was to change the regime, and that has been concluded.

Mr. Spencer Batiste (Elmet)

My right hon. Friend will be aware of the shock and horror in British industry, particularly at the consequence of an international trade war, bearing in mind how relatively large a proportion of our gross national product we export around the world compared to our Community partners. Will he therefore make it clear to those of our partners in the Community whose unreasonable intransigence stands in the way of reaching a successful conclusion to the GATT round that we shall oppose any reciprocal tit-for-tat trade war arrangements proposed within the Community unless they are prepared to be reasonable in finding a solution?

Mr. Heseltine

My hon. Friend is absolutely right to remind the House that, per capita, we have the largest exports of any nation of our sort in the world: so there is no doubt about the damage to our economy that such a threat poses. My hon. Friend will forgive me if I do not get drawn into where that retaliatory process might end. Certainly the Government will do everything they can to ensure that it does not begin.

Mr. David Trimble (Upper Bann)

There is a tremendous disparity between the amount of time that the House has spent discussing the Uruguay round—which, if successful, could lead to a considerable increase in world trade and the reflation that our economy needs—and the amount of time that we have spent discussing the treaty on European union which, if implemented, would result only in further deflation.

Is not part of the problem the incredibly complex and cumbersome machinery within the European Community that has prevented effective decision making and allowed narrow political self-interest—not just in France, but in the Commission—to obstruct progress? Is it possible for the Council of Ministers not just to give mandates to the Commission, but to instruct the Commission on what it should do?

Mr. Heseltine

That is exactly what the Council of Ministers did at Birmingham: it instructed the Commission to conclude a negotiated settlement of the outstanding agricultural issues with the Americans of the Uruguay round so that the Commission could proceed to Geneva for the wider dialogue. That is precisely what the Council of Ministers, under our presidency, did. The discussions in Chicago were conducted by Commissioner MacSharry on behalf of the Commission, and it is fair to say that he moved the position of the European Community in order to meet the American position. Perhaps the Americans should consider whether they could have reciprocated more than they did.

Sir Peter Emery (Honiton)

I think that the House will thank my right hon. Friend for emphasising third world countries, as reaching an agreement is even more important to them than it is to the industrial world. My right hon. Friend will know my interest in the issue as I was responsible for the general agreement when we were both Ministers together at the Department of Trade and Industry in the 1970s.

While an absolute solution across the board is desirable, if it obviously becomes impossible to achieve that in time to meet the fast track with the American Congress, will my right hon. Friend examine more closely the possibility of contracting out the oilseed from the general agreement? I believe that that is legally possible, and it would mean that the whole agreement could go forward, with the exclusion of the agreement between Europe and America. In that way the Commonwealth and the third world could benefit from the general agreement, and the resolution of the separate agreement could be left to a later date.

Mr. Heseltine

I look back on our time together at the DTI in the 1970s as among the happiest years of my life, and I am glad that my hon. Friend shares those memories.

There are two issues: the dispute over oilseed under the existing arrangements in the GATT; and, coincidentally, negotiations proceeding to a new GATT. It would be possible to separate the two, which might enable us to make progress towards the new agreement, but there is no doubt that, in the real world, the same people are negotiating and the same subjects being discussed. Therefore, the escalation of the existing oilseed dispute into a trade war would significantly colour the atmosphere in which we tried to make progress on GATT.

Theoretically, we could separate the two issues and make progress on the GATT front. That would be desirable, but the human and political dimensions make it harder to achieve progress in that way than if we could simply process both arrangements in one package.

Dr. Kim Howells (Pontypridd)

Is the President of the Board of Trade aware that a senior Minister from the French Government was cited on Radio 4's "World at One" as "celebrating" the breakdown of the GATT talks? Does the right hon. Gentleman acknowledge that it is difficult for the British people to place much faith in the European Commission and the Council of Ministers when those organisations appear to be paralysed by a numerically small but politically powerful lobbying farming group? During the remaining period of his presidency, will the right hon. Gentleman turn his rhetoric and artillery on that lobbying group as he did on the British miners?

Mr. Heseltine

The hon. Gentleman must realise that, where there is a strong national interest—there is in France —the country involved would he a party to the GATT negotiations in its own right were it not represented by the Community. Therefore, difficulty would undoubtedly arise as national Governments negotiated, and we would find ourselves in a not dissimilar position as we do now with the Commission negotiating on behalf of the 12 countries.

It is arguable that the Commission is empowered to conclude an agreement in the GATT machinery, and the French Government would have to decide what to do about that. That is the legal position, but, obviously, in the give and take of the real world, the interests of France must be considered by the Commission in the same way as it would consider the interests of all Community members. The Commission is empowered to negotiate and reach an agreement, which is what it was instructed to do.

It is of considerable importance that the credibility of the Commission as a negotiating bloc should not be diminished by what is happening. I have made it clear that Commissioner MacSharry discharged his responsibilities in that manner, and I hope that French Ministers will not undermine the position. We have made it as clear as we believe is relevant that Mr. Delors should act as President of the Commission, not as a French citizen.

Mr. Anthony Coombs (Wyre Forest)

Does my right hon. Friend agree that, on a conservative estimate, a successful resolution of the GATT talks would allow improvements in the gross national product of £30 billion a year for Europe alone? Does he also agree that France is the second largest food exporter in the world and, as the largest beneficiary from the common agricultural policy, has a specific responsibility to ensure that it demonstrates its Community credentials—not just theoretically by treaty ratification, but practically, by putting pressure on its massively over-subsidised and over-numerous farmers?

Mr. Heseltine

I agree with the thrust of my hon. Friend's remarks. If I remember the figures correctly. the agricultural interests of France are 5 per cent. of its economy, so the overwhelming proportion of French people stand to gain from a GATT resolution. The politics in France are no doubt difficult, but the politics of the GATT machinery present challenges and difficulties for all of us. That is a sacrifice worth making in each country in various ways, because the overall gain in national and world self-interest is so obvious. It is calculated that about $200 billion of additional annual world output stands to flow if we reach an agreement on the GATT round.

Mr. Richard Caborn (Sheffield, Central)

rose—

Madam Speaker

Am I right in observing that the hon. Gentleman was not in the Chamber when the statement was made?

Mr. Caborn

That is not true at all. I have been in the Chamber ever since the statement was made—indeed, I entered the Chamber specifically to hear it.

Madam Speaker

The hon. Gentleman is not on my list as having been in the House when the Secretary of State made his statement, but he must ask his question if what he says is the case.

Mr. Caborn

It is the case that some people consider the questions asked. Having heard all my colleagues ask their questions, I wish to explore a different aspect of the statement. That is why I entered the debate late.

Having heard every word that the President said, may I ask him to advise the House on whether he will take the initiative inside the Council of Europe to split the negotiations between oilseed and GATT? Is that possible and practical? Can he take that initiative to give new directions to the Commission's negotiating team? We are in a strong position to do that.

Mr. Heseltine

As President of the European Community, the Prime Minister, together with his colleagues, will take a continuing interest. I cannot say that it will be a new interest, because we have kept closely in touch with all events, but ultimately it is the Commission's responsibility. Therefore, we are in a good position to be able to constantly remind—

Mr. Caborn

It is the politicians who instruct the negotiators.

Mr. Heseltine

No, conducting negotiations is not a political responsibility, but the Commission's. However, there is a constant interchange between the politicians and the Commission's bureaucrats, as there is between politicians and negotiators across the Atlantic. There is a constant dialogue on all matters, and most of those involved are talking to each other on an extended basis. The House should have no doubt that we as a Government will do everything that we properly can to bring about a successful conclusion, which will necessitate the restoration of the dialogue.

Mr. Stuart Bell (Middlesbrough)

The House will welcome the assurance from the Secretary of State that the involvement and interest of the British Government will continue. We find it delightful—nay, delicious—that the hon. Member for Gordon (Mr. Bruce) said on behalf of the Liberal party that he thought that Mr. Madigan, when negotiating on behalf of the United States, was concerned about the vote in the House last night—the more so since the vote took place 24 hours after he had pulled out of the negotiations.

I should like to give the Secretary of State certain messages to take away from the House. He was asked whether the deadline might be extended to take into account President-elect Clinton's not taking office until March. I caution him against that advice; we ought to stay within the deadline set by the G7, which is the end of the year.

The third world has an immense interest in a successful conclusion to the GATT round, if it is to gain access to our markets and be able to pay back its debts. We are thankful for small mercies. The Secretary of State has announced only about $300 million-worth of retaliatory tariffs on wine, linseed oil and wheat gluten—not the $1,000 million-worth originally suggested. The House is not interested in tit-for-tat tactics.

My hon. Friend the Member for Livingston (Mr. Cook) mentioned the meeting of Foreign Ministers on Monday, and the right hon. Gentleman has referred to a meeting tomorrow on this subject. We urge the Government and the Secretary of State to use the influence of the presidency to ensure that no tit-for-tat tactics are begun.

Secondly, we ask that the oilseed problem be taken out of the negotiations and made subject to arbitration, so that the industrial side of the GATT negotiations can reach a successful conclusion, in the interests of the world and of ridding the world of recession.

My final plea is that we hear more from the President on this subject in the weeks to come.

Mr. Heseltine

I am grateful for the hon. Gentleman's remarks. The Americans were offered arbitration by the Commission on the oilseed dispute, and refused it. It would certainly be a way forward but it cannot be imposed —only offered. I understand the strong feeling expressed by hon. Members on both sides that the last thing we want is a tit-for-tat trade war. I confirm that it is also the last thing the Government want, and that we will do everything possible to prevent it.

The hon. Gentleman is right to say that we should try to stick to the deadline at the end of the year. Opening these things up only brings in a new range of complications and everything begins to unravel. The incentive to keep within the deadline is that it would keep us within the American fast-track procedure—which it would also be unwise to open up again.

I think that I was the first to mention today that those who will suffer most are the least privileged and least well-off people and economies of the world. We all stand to gain a great deal, and I assure the House that I will keep it in touch if there is anything that we can add to what I have said today. We will continue to deploy every energy to making a success of the Uruguay round.