§ 3.6 p.m.
§ Baroness HORNSBY-SMITHMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
§ The Question was as follows:
§ To ask Her Majesty's Government, in view of the EEC facilities for outward processing of textile products granted to certain Mediterranean countries, when it is expected that the promised regulations will be made to confine this trade to bona fide manufacturers, aligned to a percentage of their domestic production.
§ The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard)My Lords, the Community outward processing regulation is expected to permit, but not to require, Member States to confine access to any separate outward processing facilities to manufacturers. The draft regulation is still being discussed between Member States. However, the delay has no direct effect in this country because the United Kingdom counts outward processed goods against normal restraint levels.
§ Baroness HORNSBY-SMITHMy Lords, in thanking the noble Viscount for that reply, may I ask whether he can give us any figures regarding the extent of our processing not by manufacturing industry, as well as by manufacturing industry? Secondly, what assurance is there that the proposed regulations now being discussed will prevent the possibility of non-manufacturing distributors sending fabric which may or may not have been made in this country to a clothing manufacturer abroad, in a country whose exports to the EEC are normally subject to duty, and by using the outward processing formula evading full payment of duty and possibly exceeding the level of their quota?
§ Viscount TRENCHARDMy Lords, it is extremely difficult to get a clear picture of the quantity of outward processing—and certainly not broken down between manufacturers and retailers or wholesalers; I am speaking of course of Europe as a whole. However, it is 1362 possible to know that the total outward processing quotas of the EEC amount to 12 per cent. of the normal quotas of the EEC. It is not possible to know whether part of the normal quotas is at present used by other countries for outward processing purposes, nor whether in other cases the full outward processing quotas are in fact used.
What we hope to get out of the regulation at least is that the Council will control the total amount of outward processing. At the moment there is not agreement within our own country or other countries as to whether we should use the suggested permitted power to restrain non-manufacturers from using this quota; and there is most definitely more than one opinion on that subject, particularly abroad.
Lord CAMPBELL of CROYMy Lords, can my noble friend the Minister of State confirm that the Government of West Germany already restrict outward processing to bona fide manufacturers, and that they also impose a quota on such manufacturers' stock? Can we not do the same in this country?
§ Viscount TRENCHARDMy Lords, I thank my noble friend for that piece of information, of which I was not aware. I shall immediately try to check it, but my impression is that Germany is very definitely not one of those countries in favour of tying the use of outward processing quotas to specific manufacturers. If I am wrong on that, I shall let the House know on a future occasion.
§ Viscount ECCLESMy Lords, would the Minister enlighten me? What does "outward processing" mean?
§ Viscount TRENCHARDMy Lords, as far as I can understand it, it means that you send British cloth or British materials abroad to a country where costs are cheaper, where the cloth is made up into clothing of one kind or another. It is then imported back into this country or, for that matter, into any other EEC country if this method is practised by them.
§ Lord DRUMALBYNMy Lords, could my noble friend say at what stage of preparation these regulations are at the present time?
§ Viscount TRENCHARDMy Lords, the work on this proposed regulation started in February of this year, and we hope that it will come to fruition in the very early part of next year.
Lord HAWKEMy Lords, are Her Majesty's Government aware that they are innocents living in a world of artful dodgers, and that unless they find some better method to protect our textile industry then this industry, which is vital for strategic reasons, will just die?
§ Viscount TRENCHARDMy Lords, there are artful dodgers. I do not think the world is completely full of them, and some of them live in this country.
§ Lord HALEYes, my Lords, but is the noble Lord aware that the whole subject of outward processing has been dealt with at length by the Select Committee of this House, that the problems are fully postulated and that the noble Viscount's Answer today makes abundantly clear the case for a renewal of the multifibre agreement, because the added uncertainty of his reply today and the added suggestion that it will take some time to clear things up leaves every textile manufacturer facing demands for his plans, and so on, without being able to know what is going to happen in any department of the industry in six months' time?
§ Viscount TRENCHARDMy Lords, the report of the Select Committee, as always in this area, has been extremely valuable; and, if I recall correctly, one of its main points was that this country must include outward processing as though it were imports within all existing quotas and restraints. That, indeed, is the policy and the practice of Her Majesty's Government. So far as the MFA is concerned, I think that is another question. My right honourable friend has made clear that forms of restraint and regulation must continue after the end of the present MFA.