HL Deb 06 June 1962 vol 241 cc626-33

3.38 p.m.


My Lords, with your Lordships' permission, I should like to make a statement on behalf of my right honourable friend the Minister without Portfolio, similar to that which my right honourable friend the President of the Board of Trade is making in answer to questions in another place about imports of cotton textiles and other matters affecting the cotton industry. I will use his own words.

"The Government have received, through the Government of Hong Kong, an offer from the Hong Kong industry to continue up to the end of 1965 the present ceilings on their exports of cotton piece goods and made-ups for retention in this country, and, in addition, to limit yarn exports to the 1961 rate. The limitation of yarn exports is a new feature which would come into operation shortly.

"The Government are aware that the British industries concerned regard these levels as excessive, and very strong representations have been made by the Cotton Board to secure a reduction.

"On the one hand, the Government recognise the serious difficulties which a large volume of imports cause to these industries; on the other hand, the Government are bound to take account of the importance of textile exports to the economies of the Commonwealth countries concerned. They believe that the proposed ceiling is reasonable in all the circumstances and they have decided that the offer should be accepted.

"This offer is subject to the acceptance of similar arrangements on the part of India and Pakistan, which I am expecting shortly.

"Certain matters remain to be settled and the arrangements would be on the basis of the present system whereby cotton textiles from Commonwealth countries enter Britain duty free. If, as a result of the negotiations in Brussels, there were to be any change in this system, the Governments and industries concerned would naturally reserve their right to reconsider the matter.

"The long-term Geneva Arrangement is due to come into operation in October next. The Government intend to accept it for the United Kingdom subject to a reservation exempting us from obligations under the Arrangement to admit increased imports.

"These measures will ensure stability over a large part of the market. Supplies from all the major low-cost Asian producers are now regulated either by voluntary means or otherwise. Imports from Japan, Formosa, China and the Eastern bloc countries are under licensing control. This will continue. Imports from Spain are limited by agreement with the Spanish industry. All imports of cotton cloth from foreign countries pay import duty. I am circulating in the OFFICIAL Report Tables of figures relating to different areas since 1959.

"Cotton textiles is a trade where exports from new sources may grow very rapidly. The Government intend to keep the situation under review and are therefore introducing a system of open individual licensing. This involves the withdrawal of the present Open General Licence under which cotton piece goods, certain made-ups and yarn may be freely imported from most sources, but it does not entail new restrictions. A full announcement of the details of the licensing arrangements is being isued to-day.

"It would be unfair to those countries who are voluntarily restricting their supplies to this market if other countries took advantage of such restraint to increase their own sales. Countries with no traditional trade in cotton textiles should not count on being able to build up a new market in Britain.

"There is one further matter to which I should refer. The Cotton Industry Act, 1959, allowed three years for the submission of applications for re-equipment grant. This period ends on July 8. Firms intending to submit applications to the Cotton Board should do so without delay. They will still have another year to place their orders with machinery makers and up to July, 1964, to complete installation of the plant.

"This statement will enable firms in the industry to judge where they stand and to decide upon their future action. Much special help is being given to the industry, but the industry itself has a great deal to do."

My Lords, that is my right honourable friend's statement.

Following are the tables referred to in the statement:

Million sq. yds.
Original Current*
Hong Kong 164 (February, 1959-January, 1962) 185
India 175 (January, 1960-December, 1961) 195
Pakistan 38 (January, 1960-December, 1961) 42
377 422
* NOTE: Provision is made in the present arrangements for the issue of supplementary quotas, on certain conditions, if this is necessary to ensure that the voluntary restraint exercised by these countries does not prejudice their share of the United Kingdom market in relation to other exporting countries.
Million sq. yds.
1959 1960 1961 1962 (1st Quarter)
Piece Goods 305 320 259 60
Made-up goods (cloth equivalent) 61 77 73 23
366 397 332 83
Million sq. yds.
1959 1960 1961 1961 1962
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter
Total imports of which for re-export 525 713 714 221 192 163 138 143
153 191 193 55 54 47 37 30
For retention of which 372 521 521 166 138 116 101 113
A. Duty free
From Hong Kong India and Pakistan 305 320 259 83 72 61 43 60
From Canada 10 22 5 6 5 6 3
From other Commonwealth countries and Irish Republic 4 6 11 2 3 2 3 2
Total duty-free 309 336 292 90 81 68 52 65
B. Dutiable
From countries now restrained 17 74 90 27 22 22 19 16
From Western Europe and U.S.A 44 82 95 31 24 17 22 23
Other countries 2 29 44 18 11 9 8 9
Total dutiable 63 185 229 76 57 48 49 48
* Western Europe: West Germany, Netherlands, Belgium, France, Italy, Austria and Switzerland.

My Lords, the House will be grateful to the noble Earl for the statement he has just made. It is undoubtedly true that the cotton industry is in very considerable difficulties to-day, and the high hopes which the Government must have had, and which I think were also held in certain sections of this House, that the Cotton Industry Act, 1959, would create an atmosphere in which the cotton industry could reorganise itself and face its problems have not, regrettably, been fulfilled. Any form of restriction, particularly on Commonwealth countries, must be regretted, but I think in these circumstances it is necessary, and it is indeed good to see that Hong Kong has voluntarily agreed to these restrictions. I hope that we shall shortly have news that India and Pakistan will also agree to some arrangement. But the question which no doubt we must ask ourselves is what is going to be the position with this country's possible entry into the Common Market? These countries may well be excluded from the arrangements and this may well mean that instead of having these voluntary quotas within which they may work they will have fairly high tariffs acting against their imports. This is, of course, something which we must take into account, particularly as we listen to the debate this afternoon, and when we consider the recent large numbers of refugees that have made their way to Hong Kong.

I should like to ask the noble Earl this point and if he is not able to answer this afternoon perhaps he would convey these remarks to the Minister. Under the Cotton Industry Act, 1959, the period for their application for a re-equipment grant will end on July 8. I am sure the Minister would agree that there is considerable uncertainty and lack of confidence within the industry and very few firms have taken the opportunity of making applications for re-equipment. I wonder therefore whether the noble Earl would consider the extension for, say, twelve months in which cotton industry firms could make application for this re-equipment grant so that we can first of all see the effect of the measures which have been announced this afternoon and also take into account what may arise if the Government is successful in its negotiations in Brussels.


My Lords, I should like also to thank the noble Earl for this Statement and to ask him just one thing. I think he said that Her Majesty's Government have received an offer from the Government of Hong Kong. Could he tell us whether that was a voluntary offer by the Hong Kong Government or whether pressure was exerted from this country or some other country? After all Hong Kong is a very grave responsibility of ours and with its population trouble I am sure none of us would like to see its employment dropping in any sense. I wonder how it is that Hong Kong, being in the rather difficult situation it is, are making a voluntary offer to reduce its exports to this country.


My Lords, I will very briefly reply to those points. I am glad that your Lordships welcome this Statement. There will, of course, be increased competition from European textiles in the British market if we join the European Economic Community and, of course, increased scope for British exports. It is not possible to say what will be the outcome of the negotiations on Commonwealth Asian textiles. I will bring to the notice of my right honourable friend the request that the noble Lord, Lord Shepherd, made that there should be an extension of date for the re-equipment grants, but I should not like to comment on that at all. I have just spoken fully about applications for re-equipment grants in this Statement. With regard to the question of the noble Lord, Lord Rea, I would not be able to say at this juncture what pressure, if any, brought about this offer from Hong Kong. I would not like to go any further than that.


My Lords, before the noble Earl sits down I should like strongly to support what the noble Lord, Lord Rea, has said. As a very frequent visitor to Hong Kong over a great many years I have been astonished at the growth of that area. It is hard to realise, sitting here, that they are within 30 miles of the edge of a volcano, yet they carry on regardless and most courageously. I do not think we should in any way embarras them if we can avoid doing so. I do not know what has been done in the way of consultation but I rise only to say that as an enormous admirer of Hong Kong I hope we are not putting undue pressure on them.


My Lords, may I just say to the noble Earl that in Hong Kong it is not a question of development in textiles. What they want is diversification of their industry.