Multi-Fibre Arrangement

HL Deb 14 December 1982 vol 437 cc479-84

3.2 p.m.

The Secretary of State for Trade (Lord Cockfield)

My Lords, I should like to make a Statement on the Multi-Fibre Arrangement. The Council of Ministers yesterday agreed that the European Community should stay in the third Multi-Fibre Arrangement for the whole of its term up to July, 1986. This decision marked the end of almost two years of negotiations, first to decide upon a protocol to extend the MFA itself and then to settle with 25 individual supplying countries or territories the terms of new bilateral agreements to run up to the end of 1986.

Twenty-five new agreements have now been initialled and will come into effect on 1st January. The countries concerned are Bangladesh, Brazil, Bulgaria, Colombia, Czechoslovakia, Egypt, Guatemala, Haiti, Hong Kong, Hungary, India, Indonesia, Macao, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Rumania, Singapore, South Korea, Sri Lanka, Thailand and Uruguay. All these agreements were concluded within the negotiating mandate established by the Council of Ministers at a series of meetings during this year and 1981. One country, Argentina, has not concluded a new agreement, and the European Community will therefore impose a unilateral limitation on Argentine textile imports. There will also be unilateral measures, as before, in respect of Taiwan.

The 25 agreements are technically complex and contain several hundred quotas. The most important points are, however, as follows. First, the quotas. For the eight most sensitive textile and clothing products making up Group I, the global ceilings established by the council in February have been fully respected. The annual rate of growth in these quotas between 1983 and 1986 will be substantially below 1 per cent. per annum on average for the United Kingdom's share. For the five Group I clothing categories, the 1983 quotas of the three dominant suppliers who have so far concluded agreements (Hong Kong, Macao and South Korea) will be cut back by 7–8 per cent. on average from their 1982 levels. The corresponding quotas for Taiwan will for the time being be reduced by 10 per cent. Outside Group I, annual growth rates will in the great majority of cases be significantly below the rates applying under MFA2.

Secondly, the textual provisions of the new agreements. The agreements follow the same general outline as the present agreements but with a certain number of significant improvements. All the agreements contain tougher provisions than in the past for introducing new quotas (the "basket extractor mechanism") and for dealing with fraudulent imports in breach of quotas. All the agreements contain the "anti-surge mechanism" which can be invoked when there are substantial surges of imports within quotas. For the dominant suppliers there are changes in the so-called "flexibility" provisions, which for Group I products will allow us to withhold in large measure advance use of quotas or carry-over from the previous year.

Those are the main points. Following past practice the new agreements, once they have been formally signed, will be submitted to the appropriate committees of both Houses in the usual way. However, before the end of this month the council regulations containing the quotas for 1983 will be published and available for detailed analysis.

The new agreements extend the protection of the United Kingdom textile and clothing industries against low-cost imports for a further four years, and at a rather tougher level than hitherto. I have every confidence that those industries which have played such a notable part in the industrial life of this country-will take full advantage of the certainty offered to them by these agreements to secure and improve their position in home and export markets.

3.8 p.m.

Lord Cledwyn of Penrhos

My Lords, the noble Lord has made an important Statement, and a complicated one. As I have only just had the opportunity of reading it a few minutes ago, I think that I and the rest of the House, on all sides, will wish to study it carefully before we can come to any balanced conclusion about it. I can say, however, that we welcome the fact that it will extend protection to our clothing and textile industries for a further period. The new quotas are said to be, (and I quote the words of the noble Lord) "rather tougher" than before. Could the noble Lord enlarge on that and explain to the House in simple terms how they will be tougher and how they will in fact differ from the previous agreements, about which many people in the textile areas had a good deal of complaint?

We also welcome the information that the agreement, when it is signed, will in due course go to a committee of this House, which will be able to consider it in detail, as well as to a committee in the other place. As the House is aware, the British textile industry and the workers in that industry have gone through a most difficult time in recent years. Indeed, the working population of areas of Lancashire has gone down substantially because of the troubles in that industry. Can the Secretary of State therefore give an assurance that the Government will do all they can to ensure that if the new Multi-Fibre Arrangement does not come up to expectations, and our textile industry continues to suffer, those affected in that industry will be compensated in some way or another?

Lord Banks

My Lords, I too thank the Secretary of State for making that Statement this afternoon. We shall certainly want to consider the Statement and the agreements carefully before reaching a final opinion about them. We recognise of course that textiles is a crisis industry requiring special measures by the European Community and we hope that, where special measures of this kind are required, they will be transitional, and we understand that that is the underlying intention. We are glad that agreement has been reached with 25 countries, but we are concerned that the agreements seem more, rather than less, protectionist. Is it right that the agreement and its negotiation have been the cause of considerable friction with the countries concerned? What will follow at the end of the term of the agreement? Do the Government feel it will be possible at that time for the Community to move to a less protectionist, less tough agreement?

Lord Cockfield

My Lords, I am most grateful to both the noble Lords, Lord Cledwyn and Lord Banks, for what they said. I entirely agree that these are both important and extremely complicated matters and I would not expect that anybody would come to any final view or conclusion on them without the opportunity of studying the papers in detail. I felt—and I am sure this would be the feeling of the House—that it was important that I should report to the House at the earliest possible opportunity. The agreement was reached yesterday and therefore it was only right that I should report to your Lordships today.

To take up the points raised by the noble Lord, Lord Cledwyn, the agreements extend for a further period of four years. What we had in mind—as did all our partners in the Community—was that there should be a period of stability in which one could then consider where one went at the end of that period. That point is very important in relation to what the noble Lord, Lord Banks, said.

The agreements are tougher in that the original Multi-Fibre Arrangements contemplated a rate of growth in imports of 6 per cent. per annum, the agreements which have now come to an end contemplated a rate of growth of 4 per cent. per annum in imports, while the present agreements represent a rate of growth of less than 1 per cent. per annum. So, from that point of view, they represent a significant toughening of our stance. This, in turn, depends on two factors, first on the need to give our own industry further time to adapt to the circumstances of the changing world and, secondly, on the need to take account of the fact that in the world outside the European Community big changes are taking place. Therefore, there have been bigger reductions in the quotas in respect of the dominant countries—Hong Kong and the other countries I mentioned—while at the same time there are quotas for countries which are beginning, for the first time, to appear on the scene. So there is a degree of flexibility here. We are not freezing matters entirely as they stand, but, looking at it from the point of view of the United Kingdom's textile industry, the quotas are tougher and tighter than they were.

That is essential in the present circumstances, when our industry is under very heavy pressure. One can quote statistics and take any period one likes, but if one looks back over a long period—over the last 30 years, for example—one sees that employment in our textile industries has declined to less than one-half of what it was. Recognising that the pattern of world trade has changed, nevertheless it is essential that we should give our own industries time to adapt to these changes. So what we are doing is steering what we feel to be the best path between protecting our industries (as the noble Lord, Lord Cledwyn, rightly feels we should) while, at the same time, leaving the opportunity for adaption and change (to which the noble Lord, Lord Banks, also looks forward) as one of the important objectives.

Lord Rhodes

My Lords, may I ask the Minister to congratulate the negotiators for the excellent job they have done? Would he agree that this shows what can be achieved if Europe speaks with a united voice?

Lord Cockfield

I entirely agree, my Lords. Our negotiators, under the leadership of my honourable friend the Minister for Trade, have done a magnificent job. They have both looked after the interests of the United Kingdom while at the same time recognising the interests of the third world. It has not been an easy balance to strike but it has been done remarkably well and I am grateful to the noble Lord for the tribute he has paid.

Lord Shinwell

My Lords, I fully agree with my noble friend Lord Rhodes in this matter; I welcome this partial agreement. The Minister referred in the course of his Statement to several bilateral agreements; that is, agreements entered into with various countries. Is he aware that last week, when he informed the House about his disappointment at the failure to reach a collective agreement among 80 countries, I asked whether we could arrange some bilateral agreements which would be to our advantage, and the only response I got from him was a rebuke for suggesting bilateral agreements, because he wanted a collective agreement? Now, however, the noble Lord tells us that in the course of one week he has changed his mind and welcomes bilateral agreements. Would he agree that I was right and he, despite his brilliance, was wrong?

Lord Cockfield

My Lords, if it were ever thought that I had even tried to administer a rebuke to the noble Lord, Lord Shinwell, I would immediately deny that I had ever tried to do that; his wisdom and experience far transcend anything I would pretend to possess. However, there is, as a purely factual matter, a difference between the negotiations under the Multi-fibre Arrangement and the GATT negotiations. This is an entirely technical matter. So far as the multi-fibre agreements are concerned, these are bilateral agreements in the sense that the Community is bilaterally agreeing with each of the 25 countries with whom agreement has been reached, so that each agreement is a bilateral one. In the case of GATT, 88 countries were all trying to arrive at a single multilateral agreement as to what the future trade system of the world should be.

Lord Kaldor

Am I to understand from what the Minister has just said that the quotas given under the agreement are quotas to the Community as a whole, or are they for each of the members of the Community separately; that is to say, does each member country guarantee a separate quota?

Lord Cockfield

My Lords, the answer to that question is that they are both; there are global quotas for the Community and individual quotas for the members.

Lord Hatch of Lusby

My Lords, does not the Statement of the noble Lord the Minister represent a shocking exposure of the way in which the industrialised nations are preventing the developing nations from expanding their growth, as has been customary, on the basis of textiles? Is the Minister saying that the developing nations, or the 25 that he mentioned, will be able to expand their exports to Europe by only 1 per cent. over the next few years? Does that not also make a mockery of the Government's constant claim to be supporting and maintaining the principle of free trade? Finally, is it not the case that in terms of competition in our textile industry imports from the outside world are four times as high from the industrialised nations as they are from the developing nations?

Lord Cockfield

My Lords, the noble Lord will not be surprised if I say that I do not agree with any of the points that he makes. The Multi-Fibre Arrangements are of great benefit to the developing countries as well as to the industrialised countries, because they ensure a guaranteed market in the industrialised countries for the products of the developing countries, and that is of immense value to them.

Lord Hatch of Lusby

My Lords, will the noble Lord answer my other two questions?

Lord Cockfield

My Lords, a very large proportion of the total imports in fact come from the developing countries—that is perfectly true—and one of the objects of the arrangements is to ensure that, on the one hand, the industries of the industrial countries have sufficient time to adjust themselves to the changes that are taking place. We do in fact have a duty to our own people, and that duty we must discharge. At the same time we are offering an important and guaranteed access to our market for the developing countries, and that is of great value to them as well. In all of these matters affecting international trade we are trying to maintain a fair balance between the interests of our own people and the interests of the developing world. I believe that we have successfully maintained that balance, and on that I rest upon your Lordships' judgment.