Trade Barriers (Hansard, 4 March 1993)

2. Mr. Opphenheim
To ask the Chancellor of the Exchequer whether he will make a statement on the economic cost of trade barriers.

§ The Chief Secretary to the Treasury (Mr. Michael Portillo)
Trade barriers impose unnecessary costs on both industry and consumers and also deprive them of choice. 437 They impede the efficiency of the economy by distorting market mechanisms. A rapid, comprehensive solution to the GATT round would provide a non-inflationary stimulus to the world economy.

§ Mr. Oppenheim
Of all the huge burden of protected industries that bear down on us all as a result of EC or national actions, is not the one whose extra costs particularly hit poorer people—because they spend proportionately more of their incomes on it—and which causes immense injury to virtually every other industry in the country—because they all have to pay over the odds for its product—and which severely damages the environment and people's health—because it produces excessive carbon dioxide and sulphur dioxide emissions —(Interruption.] I can see that Opposition Members finally recognise that I am referring to the coal industry. There is absolutely no excuse to extend the many decades of protection that the coal industry has enjoyed at the expense of virtually every other industry in the country.

§ Mr. Portillo
The Government must and will take seriously the commitments on the environment that they made at Rio. We must, of course, be extremely wary of driving up the price of electricity to our industrial users, because that would put them at a competitive disadvantage. About 90 per cent. of the coal used in power stations in this country is produced in the United Kingdom. The problem of the coal industry is not predominantly one of import penetration: it is one of collapse of demand.

§ Mr. Livingstone
Does the Minister agree that although trade barriers damage our balance of payments, much worse damage has resulted from neglect of our industrial base? Does he agree with the Prime Minister that that was a great mistake? What will the right hon. Gentleman do to rebuild our manufacturing industry?

§ Mr. Portillo
During the 1980s, manufacturing productivity in Britain grew faster than in any other country in the G7, the group of the richest countries. Our manufacturing production reached its record position in 1990. During the 1980s we stabilised our share of world trade after a decade in which it had been falling. These are all remarkable achievements. My right hon. Friend the Chancellor of the Exchequer went further in the autumn statement in providing some encouragement to manufacturing industry—for instance, by the scrapping of car tax and by providing extra money to the Export Credits Guarantee Department.

§ Mr. Merchant
Does my right hon. Friend agree that an important aspect of free trade is the free movement of capital? Does he agree also that the European Community should not do anything to discourage foreign investment in Europe, bearing in mind the large amount of such investment that is coming to Britain, such as Toyota in Derbyshire and Nissan in Sunderland?

§ Mr. Portillo
My hon. Friend is absolutely right. Toyota is investing £700 million at Burnaston, near Derby. Nissan is expected to invest £885 million by the end of the year and to create 4,600 jobs in Sunderland. There is also the Toyota investment that is taking place at Shotton, which will provide 300 jobs. The plant will produce 200,000 engines a year and represents an investment of 438 £140 million. The free movement of capital is important and the conditions that make Britain such an attractive place for inward investment must be sustained.