HC Deb 09 December 1999 vol 340 cc975-7
6. Sir Teddy Taylor (Rochford and Southend, East)

What has been the cumulative balance of trade with the EU since Britain joined that organisation; and if he will make a statement. [100529]

The Secretary of State for Trade and Industry (Mr. Stephen Byers)

There has been a deficit of £130 billion.

Sir Teddy Taylor

As the trade deficit with Europe has been absolutely horrendous over the years, will the right hon. Gentleman take steps to remind the Government of France that if, as a consequence of their illegal action on beef, British consumers turn against French products, the people and industry of France will suffer? Will he do all in his power to promote free and fair trade, and not restricted trade?

Mr. Byers

On the action of the French Cabinet yesterday evening, the French need to be reminded that the EU is not like some Woolworth's pick-and-mix counter, where they can choose some regulations with which they agree, but not others with which they do not. Law, science and—I think—good taste is on our side on this issue. We shall now try to negotiate a settlement with the French Government. They have not been prepared to accept that, so we must ensure that the Commission exercises its legal powers. I understand that it intends to do so and to take the French Government to court.

Mr. Richard Burden (Birmingham, Northfield)

Does my right hon. Friend agree that it is not good for trade in the European Union or anywhere else when the European Commission takes an inordinately long time to complete inquiries? Does he share my concern that, despite the fact that the details of the recommended aid package between BMW-Rover and the Government have been with the EU for some time, a decision still has not been made? Does he recognise that in the west midlands there is a great deal of concern about the possibility that the goal posts are being moved? Can he assure me that we are doing all we can to expedite the matter and ensure that a decision is made as soon as possible?

Mr. Byers

I can give my hon. Friend that assurance. I spoke yesterday to Commissioner Monti, the Competition Commissioner, who deals with these matters, specifically about the application to provide aid to BMW in relation to Rover at Longbridge, and I stressed to him the urgency of arriving at a decision.

There is some time available, though. I have discussed the matter with BMW, which will be content provided that a decision is taken within the next six months. We need to make sure that the Commission treats the application fairly. I believe that it will do so. It must go through the usual procedures, and that is what is happening. Provided that we get a decision, probably before May or June next year, there is no reason why the aid should be threatened, as that is the sort of time scale to which BMW is working as well.

Dr. Vincent Cable (Twickenham)

Does the right hon. Gentleman agree that it is hardly necessary to blame Brussels or Paris for the large cumulative trade deficit, which is due to prolonged lack of competitiveness of British industry? Looking to the future, does he agree with the assessment of the Organisation for Economic Co-operation and Development, confirmed by the House of Commons Library, that British manufacturing has suffered a decline in competitiveness of 12 per cent. since the Government came into office because of exchange rate changes, and 25 per cent. since the end of 1996? Or does he agree with the comment made during the week and attributed to the Prime Minister, which may well have been inaccurately reported, that Britain now has a competitive exchange rate? To which of those two views does he subscribe?

Mr. Byers

From my conversations with many manufacturers, it is clear that they know that the rate of sterling is linked to the fact that we have a strong and growing economy, which is reflected in sterling. They have improved their productivity and, as a result, many manufacturers can compete globally. The latest figures for manufacturing for the last two quarters show that there has been a real improvement.

It is important to bear in mind that more than half of the deficit was accumulated between 1986 and 1990. In that five-year period, well over £60 billion of the deficit was accumulated. That was in the middle of the Lawson boom, when we sucked in exports and did not use the opportunity to improve our economic base. This Government do not intend to make those mistakes. We are steering a course of stability to ensure that we continue to have economic growth and prosperity for all our people.

Dr. Norman A. Godman (Greenock and Inverclyde)

On the issue of fair competition, down the years many people in the United Kingdom shipbuilding industry have complained about the lack of fairness, largely because of the hidden subsidies given to shipyards elsewhere in the European Union. Is my right hon. Friend satisfied that no hidden subsidies are now being given to shipbuilding yards in other member states of the EU?

Mr. Byers

My hon. Friend raises an important issue. Like him, I represent a shipbuilding constituency, so we share a concern about those matters. One of the actions that I have been pleased to take as Secretary of State was to alter the way in which the shipbuilding intervention fund can be used. The changes that we have introduced will benefit not just shipbuilding, but conversion work. That has allowed a number of significant orders to be achieved by yards in the UK. I believe that shipbuilding, ship repair and ship conversion have a real future, especially if there are increases in global trade. I will do all I can to make sure that there is fair competition, that we can support the industry in the UK and that there are no unfair subsidies in other countries.

Mr. Alan Duncan (Rutland and Melton)

The Secretary of State's answer to my hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) showed clearly that many people exaggerate the share of Britain's trade with the European Union. We, probably more than our European partners, also look to the dollar zone—especially to the United States—for our trade. What analysis has the Department carried out on how the balance of our trade between the euro and dollar zones ties in with pressures on our currency? If the United Kingdom were part of the euro zone, we would face different trade pressures from the rest of the European Union. Will the Secretary of State explain how the different trade patterns fit the economic tests that the Chancellor set for the United Kingdom joining the euro?

Mr. Byers

We know that the hon. Gentleman would like to rule out joining the single currency. That is not the view of the Leader of the Opposition, but it is the hon. Gentleman's position and that of the hon. Member for Tiverton and Honiton (Mrs. Browning). It would be interesting to know how they reconcile their personal views with those of the Leader of the Opposition. The hon. Gentleman does not like to be reminded of his principled position on the single currency.

To answer the hon. Gentleman's specific question, the latest figures show that 58 per cent. of all United Kingdom exports are to the European Union, whereas only 55 per cent. of imports into the United Kingdom come from the European Union. There are benefits from that. The deficit that I mentioned earlier is largely due to decisions that the Conservative Government made between 1986 and 1990. The danger of the approach that the hon. Gentleman advocates is that, if it were adopted, the United Kingdom would no longer be the leading place for inward investment from Japan and the United States. He wants to renegotiate our position in relation to the European Union, but that would put thousands of jobs at risk. The Government will put the national interest first, and not rely on political dogma.