HC Deb 27 January 1994 vol 236 cc516-22

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Andrew Mitchell.]

10 pm

Mr. Graham Riddick (Colne Valley)

I am extremely grateful to you, Madam Speaker, for selecting this topic for debate because it shows how important it is to have as Speaker a daughter of Dewsbury. You well understand the textile industry and its problems.

I am pleased to see one or two of my hon. Friends here tonight and I am grateful for their support and for that of the hon. Member for Bradford, West (Mr. Madden). I am pleased to see here my hon. Friends the Members for Keighley (Mr. Waller) and for Harborough (Mr. Garnier). My hon. Friend the Member for Batley and Spen (Mrs. Peacock) had hoped to be here and is sorry that she cannot be.

The textile industry is still very important and wool textiles in particular dominate the scene in west Yorkshire. The 1991 census revealed that nearly 7,000 people are employed in textiles in the Huddersfield travel-to-work area and that approximately 2,500 people work in textiles in my constituency of Colne Valley. In the country as a whole, the clothing and textile industries provide about 400,000 jobs. The future of the industry is, therefore, of enormous importance to us all.

Let me make it clear from the outset that I am absolutely delighted that it has been possible to reach a general agreement on tariffs and trade. People on both sides of the political divide are increasingly coming to appreciate the benefits of free trade, not only in this country and in the European Community but across the world. GATT has made and will continue to make an important contribution to the ending of barriers to trade and I am pleased that, after a number of hiccups and disagreements, an agreement was possible.

As Britain is a major exporting nation, the deal will be good for British industry and British jobs. However, I have to report that the textile industry is not happy about the way in which GATT will affect it. As part of the agreement, the multi-fibre arrangement is to be phased out over 10 years. The industry is relatively sanguine about the fact that the MFA, which currently provides some protection against foreign imports, is to go. In return, however, the industry had hoped and expected a significant increase in market access in other countries. Sadly, that does not appear to have happened.

The industry is extremely happy with the strengthened rules on the protection of intellectual property and with the new anti-dumping regulations. Its disappointment relates to GATT's failure to result in significant reductions in the tariffs being levied on British exports to a number of countries. One of the problems is that we have not yet received full details of the agreement; perhaps my hon. Friend the Minister for Trade will be able to fill in some of the gaps in our information. However, one thing is obvious, and that is that the high tariffs remain in place in many countries.

I welcome the gradual reduction in the American tariff of 36 per cent. on wool cloth, which will be reduced to 25 per cent. over 10 years, but that is a fairly slow reduction, which does not go far enough when compared with the tariffs charged by European Community countries of 3.8 per cent. on yarn and 13 per cent. on woollen and worsted cloth.

As far as we know, the tariff of 85 per cent. in India will remain. Similarly, Pakistan levies 80 per cent. on wool cloth from the United Kingdom with an additional 15 per cent. import tax and an extra 15 per cent. sales tax on top of that. Indonesia levies 25 per cent. on cloth from the United Kingdom and up to 40 per cent. on other textile products. Australia levies 29 per cent. duty on imported cloth, New Zealand 22 per cent.—to be fair, to be reduced to 20 per cent. by July 1996—and South Africa levies duty of 32 per cent. on worsted cloth and 45 per cent. on woollen cloth.

I mention those specific countries because they all represent excellent potential markets for British textiles. In reality, however, British sales are dramatically lower than they might be because of the high prices caused by those high tariffs. India, for example, has a burgeoning middle class of more than 200 million people, many of whom would be only too happy to buy high quality woollen and worsted cloth made in Huddersfield. The absurdly high tariffs, however, make it extremely difficult for British exporters to all those countries.

Furthermore, we have the ridiculous situation that a great deal of Indian yarn comes into the United Kingdom, where only 3.8 per cent. duty is payable or, if it has a general systems preference certificate, it is free of duty. That yarn is then made up into cloth in this country. That cloth could be sold to India. If it were sold to India it would incur a duty of 85 per cent., but the sale of that cloth back to India is conditional on an undertaking to guarantee 100 per cent. re-export. In other words, once the cloth has been made up the Indians are saying that it has to be re-exported out of India. The result of all that is that Britain exports very few textiles items to India. That is unacceptable.

There is no doubt that the GATT round provided the best opportunity to tackle the problem of those high tariffs. I am extremely disappointed that the European Community negotiators failed to secure significant reductions. However, all is not lost. I understand that the European Community is to undertake bilateral negotiations during the next few weeks with the countries that I have mentioned and I strongly urge the European Commissioner, Sir Leon Brittan, to push for massive tariff reductions in those countries.

I very much hope that my hon. Friend will draw the attention of Commissioner Brittan to this debate and make it crystal clear to him that more progress is required. I notice on today's Order Paper that the question to the Trade and Industry Ministers that I have tabled is due to be answered in two weeks' time. I think that it is No. 6, so I hope that my hon. Friend will then be able to report some progress.

I do not believe that we should take lying down a refusal by those countries to reduce their tariffs. If no progress is made, the European Community should consider what steps can be taken, in spite of an outside-of-GATT agreement. There is a case for refusing to reduce any of the EC's tariffs for those recalcitrant countries. In addition, some of the emerging third world countries enjoy the benefits of the European Community's tariff preference scheme, where no duty is payable, and there is a strong case for saying that that should be withdrawn from the countries which refuse to reduce their tariffs.

Free trade benefits producers and consumers alike. GATT has given a massive boost to free trade in the world but, sadly, not to free and fair trade in textiles. While we have agreed to phase out—

Mr. Edward Garnier (Harborough)

rose—

Mr. Riddick

Does my hon. Friend wish to intervene?

Mr. Garnier

I am grateful to my hon. Friend for giving way during his important and illuminating speech, although I would have waited until he had finished his sentence.

My hon. Friend will appreciate that in my constituency of Harborough a fair percentage of the working population is engaged in the textile, hosiery and knitwear industries. Will he accept from me that, despite some disappointment with the result of the recent GATT round, there is none the less a great sense of optimism in the domestic textile industry? Many people are finding new markets, both within the United Kingdom and externally. Perhaps significantly, unemployment in my constituency is below 2,000. I trust that my hon. Friend will agree that we should not paint to gloomy a picture, because he has as much of an interest as I have in increasing British exports of textiles.

Mr. Riddick

I am grateful to my hon. Friend, and delighted to learn of the success of the textile industry in his constituency. I can report to him that several companies selling wool textile items in my part of the world are doing extremely well. However, Adjournment debates provide an opportunity to encourage Ministers to get the best possible deal for British companies and British industry in general—and, of course, that is the purpose of tonight's debate.

Mr. Bob Cryer (Bradford, South)

I support what the hon. Member for Colne Valley (Mr. Riddick) has been saying about the GATT arrangements, especially the reservations that he has expressed. I was at the same meeting of the Confederation of British Wool Textiles, and employers there clearly expressed strong difficulties with, and reservations about, the arrangements reached so far for textiles, exactly as the hon. Gentleman has been describing.

Mr. Riddick

It grieves me somewhat to say this, but I agree with the hon. Member for Bradford, South (Mr. Cryer). We do not often agree, but I am delighted that we can agree tonight. Yes, we were at the meeting together, and much concern was expressed by employers in the British wool textile industry. That is why we are having the debate. Without that briefing during the Christmas recess, I would not have realised how disappointed employers were with the GAIT deal. The debate is an excellent opportunity to flag up some of the problems that have arisen and to ask the Government, and in particular my hon. Friend the Minister, what we can do about it. Can we, even at this late stage, encourage the countries concerned to reduce their tariffs? That is what we should aim to do.

As I have said, GATT is most important, and will give world trade a massive boost, so it is disappointing that the textile industry has not been able to give it a wider welcome. While we have agreed to phase out the multi-fibre arrangement over 10 years, many potential markets are protected by the punitive levels of tariff imposed by their own Governments, as I have tried to illustrate.

I much deplore that, and I hope that in the short time still available for negotiations between the European Community and those countries, progress can be made to create more of a level playing field. I am confident that where there are open markets and fair trade, the British textile industry, especially the wool industry, is as capable as any other industry in this country of creating new markets and generating new business, because it is dealing in quality products at competitive prices.

I am grateful to my hon. Friend the Minister for Trade for meeting representatives of the British wool textile industry 10 days ago, along with members of the all-party wool textile group, and I am grateful to him for being here tonight. I look forward to hearing his response to what I have said.

10.13 pm
Mr. Gary Waller (Keighley)

My hon. Friend the Member for Colne Valley (Mr. Riddick) has put a robust case and his arguments were forceful. The industry on whose behalf he spoke has a remarkable record. He referred to the large number of people, some 400,000, employed in the industry. That is only half the number employed in the industry 10 to 12 years ago. Things have moved on since then and the industry has become very effective and productive.

In the interests of free trade, the industry has always been prepared to see the phasing out of the multi-fibre arrangement. However, it has always stressed that that must be accompanied by strengthened rules and disciplines in GATT. It is fair to say that there is serious disappointment that the rules so far announced are not sufficiently strong. We await further announcements about the disciplines which will be brought to bear to ensure that the rules are enforced. Too often in the past there has been a failure in that respect.

My hon. Friend the Member for Colne Valley was right to draw attention to the lack of market access which so far appears to have emerged from the Uruguay round and to the fact that, in too many of the burgeoning markets of the world where there is a rising middle class with considerable buying power, our exporters face insuperable barriers and enormous tariffs which are almost impossible to overcome. Even with regard to the United States, over a 10-year period, the reduction in tariffs will be gradual and inadequate.

In the further GATT negotiations which are bound to take place, I hope that a robust line will be taken by the Commissioner and I hope that my hon. Friend the Minister and his colleagues will press to ensure that the agreements which have been reached are fully enforced and that the disciplines are strengthened. At the end of the 10-year period, I hope that we will not say that the agreement reached this year was a failure in terms of its ability to ensure that free trade could operate in the interests of textiles and clothing in this country.

10.16 pm
The Minister for Trade (Mr. Richard Needham)

The importance of this debate can be seen by the number of hon. Members in the Chamber. My hon. Friends and Opposition Members will appreciate that, having been responsible for the textile and garment industry in Northern Ireland for several years, I have it very much as part of my heart and soul, as they do when it comes to discussing the wool and worsted industry in Yorkshire which is one of this country's great industries.

Although I accept that GATT overall is of enormous benefit to the industry or our country and that the safeguarding and anti-dumping regulations in the new agreement are significant improvements on what went before, I must accept that there are considerable disappointments in the agreement with regard to the textile and garment industry.

As for the multi-fibre arrangement, those of us who were involved at the time will be aware that orginally we were not considering a 10-year phase-out; we were considering a five-year phase-out. The fact that we have achieved a 10-year phase-out is a benefit to the industry as a whole.

Nevertheless, I accept that we have not achieved everything that we would have wished to achieve in the present GATT. We fought hard in Geneva, right up to the last minute, to force the Indians, Pakistanis and Indonesians to allow market access for our textiles and clothing at a maximum of a 35 per cent. tariff. We involved the Commission, the United States and Peter Sutherland, the head of the GATT negotiating team, in negotiations right up to the very last second. Unfortunately, we felt that the whole deal could have unravelled if we pushed the point, but at that meeting we received a commitment from the Pakistanis, the Indians and the Indonesians to continue negotiating.

I can tell my hon. Friend, even though his question will be answered in two weeks, that, although 15 February is the final date for schedules to GATT to be approved, the Commission has assured me that it is determined to continue arguing until Ministers have to sign the final Act in April. I assure the House that the strongest pressure will be brought to bear on those countries. I have asked my senior officials to meet representatives of the textile industry next week to discuss with them the details of exactly what we intend that pressure to be.

Unfortunately, this is not the only disappointing news. As hon. Members know, in July last year, at the Tokyo summit we agreed a framework market access deal which included the objective of 50 per cent. cuts in tariff peaks. That appeared to be an important breakthrough, securing what we believed at the time were substantial reductions in the crucial United States textile tariffs. Despite strong pressure from the European Community and, most important, from ourselves, the United States refused to honour the Tokyo deal in respect of textiles. It claimed that there was an oral understanding in Tokyo that its offer—I will not go into details, but it did not do it. That was extremely disappointing to us, and we continued to ask and press for improvements. Our position was not particularly helped by the news in September that the European Community and the United States had come to an agreement over United States tariff reductions on textiles.

I thank the industry for its support in making our case and for the warnings that it gave its European colleagues. Unfortunately, they were not listened to, and the result fell far short of United Kingdom industry requirements and was far below the objective of 50 per cent. reductions in peak tariffs that had been put forward in the Quad in Tokyo. I repeat my thanks to the industry for the way in which it worked with us to try to achieve that which, unfortunately, we did not manage to get; but we agreed a cut which, although disappointing, was substantial. Wool fabric tariffs were cut from 42 per cent., 36 per cent. and 33 per cent. to 25 per cent.. That must be of real value to our industry. Wool clothing tariffs were cut from 22 per cent. and more to 17.5 per cent. and from 17 per cent. to 14 per cent. That will help our companies in the American market.

As for other countries, we have some successes to report—Thailand, 100 per cent. to 30 per cent. We will not find many people wandering around in thick woollen suits in Thailand, and the same argument applies to India, I suppose. I accept that the results in respect of India, Pakistan and Indonesia were disappointing but, as hon. Members know, the South Koreans increased their wool and textiles tariff rate to 19 per cent. I protested to the Korean Government when I went there in April, and I wrote to the Korean Finance and Trade Industry Ministers only last week, expressing our dismay. Sir Leon Brittan has also complained to the Koreans. We are considering how we will respond to the Korean tariff increases. We have some ways in which we think that we will retaliate against what they have done. I shall continue to raise the matter with the Korean Ministers.

Mr. Cryer

The Minister touches on an important point. I have written to Ministers on several occasions about both the actuality and the threat of the increase in Korean tariffs, which has been hanging over us for some time. An employer has informed me that, if the tariff does not revert to its pre-increase level, the number of jobs in the textile industry may well be reduced. As the Minister knows, in my constituency and that of my hon. Friend the Member for Bradford, West (Mr. Madden), there are 11,000 jobs at stake, and the figure for the whole of the west riding of Yorkshire is 20,000 or more. The matter is vital, and I am pleased to hear the Minister say that the Government are considering retaliation.

Mr. Needham

We have bilateral agreements with the Koreans whereby, if they have oversupplied in one area, they have been able to move goods across to another. We are looking at ways of stopping that. The problem comes not from the British industry but from the Italian industry, as my hon. Friend the Member for Colne Valley (Mr. Riddick) knows. But that is not the point. What the Koreans have done is not acceptable.

As hon. Members have said, the industry has achieved enormous success across the world over a very long period and is well renowned. The circumstances in which it finds itself make it even more important for the Government and the industry to develop a partnership to support the industry's exports and help it further to improve its international competitiveness.

Mr. Max Madden (Bradford, West)

The Minister referred to the need for the industry to become more competitive. Does he think that there is any mileage in trying to persuade the Indians and Pakistanis in particular to lower their tariffs in the context of growing mutual trade between the United Kingdom and those two countries? Might we be able to secure lower tariffs in that context?

Mr. Needham

That is exactly what we intend to do, not only up to 15 February but thereafter. That will be the general context in which we shall argue these points, which we shall also argue through the Commission. The hon. Gentleman is right to say that those countries want access to our markets, not only in textiles but in other goods.

The partnership to which I referred is under way. The Department's textiles division has the closest working relationship with the British Apparel and Textiles Confederation and we are working on a number of initiatives, as I explained last week. One of the aims is to bring the United Kingdom textile and clothing manufacturers and retailers into closer partnership to boost home sourcing, which is most important. By their very nature, large parts of the clothing industry face constant change in what customers want. That is what high street fashion is now all about. To meet those changing demands, a rapid response is needed on the part of clothing suppliers and those who supply them with fabric. Where better to provide that rapid response than at home? We should be able to read across to other United Kingdom retailers the potential opportunities that, for example, Marks and Spencer has provided over the years.

We are already working with BATC to home in on the export markets in Japan and Germany in a concentrated effort to promote exports of British clothing and textiles, and we plan to expand that targeted approach to 10 other overseas markets next year. We are talking to the woollen and worsted sector about its long-term prospects, and I was in Leeds today talking to Mr. Ackroyd and others about ways in which we can develop initiatives that will meet the industry's needs. Moreover, we are working with the clothing and textile sector as a whole on how we can consider aspects of competitiveness such as benchmarking, quality, design, research and technology.

In case anyone thinks that the Government have not put their money where their mouth is, I inform the House that my right hon. Friend the President of the Board of Trade has decided to increase significantly the number of staff involved in textile and clothing sponsorship work in the Department.

I understand the disappointment of my hon. Friend the Member for Colne Valley about GATT. Nevertheless, we have an immensely strong industry. We are working with vertical integration as between retailers and textile and garment manufacturers not only to boost our exports but to find ways to improve our sales at home. There is a new sense of confidence in the industry and a new feeling that it has a long-term future. As I said, the industry is vital to many of the areas that hon. Members represent. I can assure the House that the Government will do all that they can to support it.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Ten o'clock.