HL Deb 29 November 1982 vol 436 cc1069-76
The Secretary of State for Trade (Lord Cockfield)

My Lords, with permission, I will make a Statement about the Ministerial Meeting of the GATT at Geneva which concluded its proceedings this morning at 5 a.m. A copy of the declaration and decisions of the meeting will be placed in the Library as soon as possible.

The Ministerial Meeting was the first for nine years and was attended by over 80 signatories which account for over 90 per cent. of world trade. The purpose of the meeting was not to revise or amend the general agreement itself but to re-affirm support for existing obligations and to seek agreement on the examination of certain important issues which might form the basis of future negotiations.

After five and a half days and nights of negotiation, the meeting adopted by consensus a document which constitutes a realistic commitment by the signatories to maintain the existing obligations of the GATT which have underpinned the open trading system since the war and strengthen their observance in the future. The document does not prevent contracting parties adopting safeguard measures under the GATT or measures with a similar effect.

In particular the document provides for:—a study covering agricultural trade issues in their entirety; a study of the problems of international trade in services; a study to cover ways and means of achieving the acceptance by newly-industrialised countries of increased acceptance by them of obligations under the GATT and of an increase of trade with them; an improved procedure for the settlement of disputes; and a study of how best to combat trade in counterfeit goods.

Throughout the meeting, the countries of the European Community consistently emphasised the need for conclusions and decisions to be expressed in realistic terms. For this reason, the European Community entered a reserve on a proposal to link the study of agricultural trade with a wide commitment to renegotiate the fundamental structure of this trade. The European Community, as did a number of other signatories, made certain other interpretative declarations.

Even with these reservations, the outcome of the negotiations—undertaken against the background of a world recession—must be regarded as an encouraging recommitment to the maintenance of the open trading system on which the prosperity of the United Kingdom as a great exporting nation depends and has helped to focus the attention of the world on the consequences of a breakdown of this system. It was, I think, recognised that the United Kingdom through the European Community made a full and constructive contribution to this outcome without, however, compromising its right to safeguard its essential national interests.

My Lords, that is the end of the Statement.

3.19 p.m.

Lord Bruce of Donington

My Lords, the House will wish to thank the noble Lord for the Statement he has just made, a copy of which reached me precisely nine minutes ago. This short time limit does not really permit those in opposition adequate opportunity to study the content of it, and I hope that on the next occasion when we have a fairly complex Statement adequate time will be given to the Opposition and to others interested so that we can respond to the Statement in a constructive manner. Having said that, I sympathise very sincerely with the personal position of the noble Lord. It is quite clear from what he has said that the negotiations upon which he has been engaged have been very arduous, and I can imagine that he must be very tired after sitting up for long periods of the night—I do not know whether the rooms were smoke-filled. We all sincerely appreciate the endeavours that the noble Lord must have made.

Regarding the Statement, once again it is an unsatisfactory feature that the document upon which the noble Lord set such great store is not available at the same time as the Statement and that one has therefore had no opportunity of examining it. It is a little unclear from the Statement whether the contents of the document are going to be worth discussing at all, because it comprises some four studies and a statement of improved procedure. This does not really amount to very much and makes it very difficult to justify the remark in the Statement that it must be regarded as an encouraging recommitment to the maintenance of the open trading system. We have heard these generalities before.

I have some questions to ask the noble Lord. I am sorry that I could not give him notice of them because I have only had very short notice myself. Can he tell the House how long it is going to take to complete these studies to which he has referred? We have a study covering agricultural trade issues, a study of the problems of the international trade in services, a study to cover ways and means of achieving the acceptance by newly-industrialised countries of the existing obligations under the GATT, and so on. Then we have a study of how best to combat trade in counterfeit goods.

Has the noble Lord any idea how long it is going to take these studies to materialise? There have been plenty of studies over the years. Select Committees of your Lordships' House have studied these matters over a long time. How much more study is necessary among a group of people who presumably have their own experts in all these fields and have had for many years, or is it the case that the term, "these matters have been remitted for study", is merely another bromide in order to cover up the fact that no progress was made at all?

The noble Lord in this Statement probably does himself less than justice. In the light of his previously uttered remarks in this House, many of us on this side are quite convinced that he is doing his very best within his participation in GATT to safeguard the interests of the United Kingdom. This would appear on the face of it to be very little more than a cover-up for what, in the event, has turned into almost a complete failure.

I say "almost" because there may have been some residual benefits. After all, for the various Ministers to meet occasionally on convivial terms and discuss their problems with one another probably brings some slight progress. It will also have given the noble Lord personally the opportunity of meeting many of his opposite numbers whom he may not have met before. All these matters are of advantage to the United Kingdom. We shall need a far more comprehensive Statement than this one and an indication of far more constructive action and intention before we can ever regard a Statement of this kind with the degree of equanimity which its tone expresses.

Lord Banks

My Lords, I, too, should like to join in thanking the noble Lord the Secretary of State for making this Statement this afternoon. It is clear from what he said that a few positive decisions were reached; but we on these Benches have been discouraged during the past week to hear the rumours of deadlock and of the search for a facesaving compromise. One cannot help wondering whether the Secretary of State is perhaps a little too complacent about the result of this conference. I wonder whether he can say with confidence that the protectionist advance will be held up as a result of it.

Will any protectionist obstacles disappear as a result? I should like to ask the noble Lord what happened about the Australian proposal for a cease-fire so far as protectionist measures are concerned? Was that rejected out of hand? Then I wonder whether the noble Lord can tell us about the extent of the discussion on safeguards. Must we expect more and more bilateral agreements outside the GATT? Were textiles discussed in this context? Did the EEC, as reported, refuse any modification of the EEC stance on agricultural export subsidies? What does the noble Lord think will be the attitude of the United States on this particular subject in the immediate future?

Finally, I should like to ask the noble Lord whether he agrees with the expert opinion that was given to the conference, that protectionism is now endangering the prospects of a medium-term economic recovery because developing countries with liquidity problems need an expansion of world trade to service new borrowings.

3.27 p.m.

Lord Cockfield

My Lords, I am grateful to both noble Lords for their comments. I am extremely sorry about the very short notice that was given of the Statement, but the reason, quite simply, was that as I indicated at the beginning of the Statement, the discussions did not conclude until 5 a.m. this morning. Our negotiating team did not arrive back in London until 2 p.m. this afternoon. One therefore faces a considerable dilemma: either one gives the House no information until tomorrow—in which event one is naturally criticised on that score—or one gives what information can be given immediately despite the shortage of notice. We felt that, on the whole, the latter was the better course to take.

The document which has been agreed is an extremely lengthy one. I suggest that it would be best for noble Lords to study it in detail and decide to what extent it answers the various anxieties that they have expressed. If I may pick up one or two of the points that were made, the noble Lord, Lord Bruce of Donington, asked how long the studies would take. That is a question that I cannot answer at this stage. There are over 80 signatories to the GATT, and in the end what one is trying to do is to take them all along together to see what improvements can be made in the system. The noble Lord suggested that the conference was in fact almost a complete failure, and he questioned whether sufficient steps had been taken to safeguard the interests of the United Kingdom.

In fact, the position is that, as I indicated in the Statement, this conference was not intended to renegotiate to the GATT itself. What it was intended to do was to reaffirm the general confidence of the world as a whole in the value of an open, liberal trading system of the kind that we have had over the past 30 years. The signatories did in fact reaffirm their faith in such a régime. That in itself is important, I think, in an area in which, as both noble Lords said, there is increasing evidence of people moving down into protectionist paths. At the same time we have ensured—and I give the noble Lord an assurance on this—that it is still open to us to take safeguarding measures in the case of industries such as textiles and footwear and also motorcars and consumer electronics, where our home industry might be seriously affected by a surge of imports from low-cost producers. Our right to take these measures still remains.

Thirdly, we have, with great difficulty I may say—and it is a considerable tribute to our negotiators—secured agreement on studies which will widen the field of international trade. It is not good enough merely to look at those instances where the freedom of trade is being eroded. One also needs to look at those instances where it may be possible to widen the opportunities of liberalising trade. The two directions which are most important here are the services, in which of course this country has a very big stake, and also persuading the newly industrialised countries gradually to assume, not just for our benefit but for the benefit also of the least developed countries, the obligations of the GATT agreements themselves and to progressively open up their own markets. This is a matter on which I spoke at some length in your Lordships' House on 20th October, so there are quite positive advances there.

The noble Lord, Lord Banks, touched upon the question of safeguards. The document which is issued makes significant improvements in terms of what is known as "transparency", so that there is now a new agreement on the way that safeguards should be approached. One would hope that the effect of this would be that safeguards will be invoked only in those cases where there is a strong case for so doing.

The noble Lord asked a number of specific questions about the attitude of other countries and instanced in particular the Australian proposal for a "ceasefire", as it has been called. This proposal was not adopted specifically. What matters is to try to get a consensus on actually what you are going to do, rather than merely have general statements of this kind. There is also the point that there are many countries which have very high tariffs—Australia is an example—where progress needs to be seen in the direction of reducing those tariffs.

He also inquired about the attitude of the United States and of the EEC in relation to export subsidies. There has been an agreement, and both the EEC and the United States have gone along with this, that there should be a study into the full range of agriculture. Where the difference has come, and where the EEC has put in a reservation, concerns what happens after the study is completed. So far as the EEC is concerned, that is still an open question. The EEC is not prepared to commit itself to negotiations at this stage.

I hope that I have answered the major points which were raised, but I would suggest that the right thing now is for noble Lords to study this document which, as I say, is a long and complex one, as soon as we are able to put it into the Library. But I do feel, and I should like to emphasise this, that this meeting represents a significant measure of progress. It is not as much progress as we would like to have seen, but it is progress and it is progress in the right direction.

Lord Boyd-Carpenter

My Lords, is my noble friend aware that many people outside, and particularly in the industrial and commercial worlds, have watched with great admiration the struggle which his negotiating team, and notably his very able Minister of State Mr. Peter Rees, have fought over these last few days to preserve the main free trade structure of the GATT, on which the interests in this country so much depend? Is he also aware that many people will look with gratitude on the outcome of the considerable measure of success achieved in that way, despite the rising tide of protectionism which has been generated by the world recession?

Lord Cockfield

My Lords, I am most grateful to my noble friend for his comments. What he says, of course, is entirely true. We are trying to walk along a very difficult path in maintaining an open and liberal trading system on the one hand, while at the same time protecting the interests of our domestic industry where those interests come under unfair and severe pressure. I am most grateful to him for the tribute he has paid to my honourable and learned friend Mr. Peter Rees and the other members of the team, who have not only made a notable contribution to the success of the conference but have also upheld the interests of this country in a very successful manner.

Lord Kennet

My Lords, we will of course study the document fully, as the Secretary of State advises. In the meantime, could he amplify a little something he said in his first answer? He said that of all the studies one of the two most important was that concerning international trade in services. The truth of that is surely obvious to a country, an increasing percentage of whose exports per year are invisible or services. Would the Secretary of State be able to tell us anything now about how he intends to make sure that this country takes a very active part in that study and puts on to the job officials, or whoever, who are fully capable of seeing not only the possible advantages to Britain in the increased regulation of this trade but also the possible pitfalls?

Lord Cockfield

My Lords, I am grateful to the noble Lord for what he says. We do in fact recognise the great importance of services and took a leading part in ensuring that agreement was reached upon this study. When I was in the United States I discussed this issue with the American Administration and we make common cause on it. It was largely our efforts and those of the American Administration which produced the present result. We intend following it up with vigour.

Lord Drumalbyn

My Lords, may I congratulate my noble friend on the success that has been achieved, especially bearing in mind the existence of the prophets of doom so far as the imminent breakdown of GATT is concerned? Would he go a little further in the answer he has just given and perhaps tell us what the composition of the personnel engaging in these studies is to be? Will the studies be carried out by the secretariat of GATT or will they be conducted by special bodies to be appointed?

Lord Cockfield

My Lords, my noble friend raises a point of importance. I can assure him that we will watch the method of carrying out these studies very carefully. We will ensure that the United Kingdom plays an active part and makes an important contribution; but, as regards the exact administrative measures to be taken, that is a matter on which agreement still has to be reached.

Lord Hooson

My Lords, does the Secretary of State agree that the weakness of the GATT is that the reservations made by this country, and by all the other 80 signatories, to safeguard their own national interest should trade require it, are such, because a subjective judgment is taken of those national interests, that if they all implemented those reservations we would really be in a protectionist world, despite the GATT, and was no progress made on reducing the reservations?

Lord Cockfield

My Lords, we live in a hard world in which the practical issues need to be borne in mind throughout. Where we, or other people, find a domestic industry very seriously threatened by a rising tide of imports, it is almost impossible to justify taking no action. The important point is to ensure that action of that kind—safeguard action, as it is known under the terms of the GATT; and there is specific provision in the GATT itself, under Article 19, for such action—should be taken only where the facts so demand, where the situation is sufficiently serious to justify the action taken. The fact that the signatories to GATT agreed on a general declaration, that it was in the interests of all of us to maintain a liberal open trading system, represents a matter of very great significance.

Lord Soames

My Lords, I wonder whether I may ask my noble friend a few questions and whether he would give us a bit more—I think it is all we can expect from him at this time, so close to the meeting—about his general impressions of the meeting and of what came out of it. First, on the trade in services, does he envisage, for instance, an agreement being arrived at within the Community on the whole question of free trade in services, so that the Community will be enabled in this aspect of the study to speak with one voice? Secondly, where the newly industrialised countries are concerned, was there general agreement among the NICs themselves that they enter this study with a real will to bring something out of it?

Thirdly, on the question of trade in agricultural goods, I perfectly accept, of course, what my noble friend said, in that the EEC did not feel in any way able to commit itself to what might flow from the results of the study. But did he get the impression that the EEC as a whole, including France, is now ready to enter into an international study on trade in agricultural products and, in particular, on the subsidies on trade in agricultural products with the rest of the world outside the EEC? Finally, does my noble friend feel, generally speaking—which we all hope he does—that this ministerial meeting ended with a resolve to hold fast to the principles of free trade and not to increase the danger, which a possibly increasing recession is likely to enforce upon the world, of sliding inexorably into a greater degree of protectionism, with every country saying that it has its own interests to protect?

Lord Cockfield

My Lords, my noble friend will be well aware that, with 87 countries represented at an international conference, there will be a wide divergence of views on a number of matters and that not everybody will take the same view as other people on separate issues. So far as the procedures in the European Community are concerned—and my noble friend raised specifically the case of services—the method of procedure which has always been adopted is for the European Community to endeavour to establish a common line in advance, although individual countries still continue to make their separate views well known.

So far as the newly industrialised countries are concerned, the agreement, of course, related to the whole of the developing world and it is inevitable, with the very large number of countries involved, that there should be a divergence of view between many of them. It was a very considerable achievement that agreement was reached that a study of this kind should be launched, directed to improving the level of trade between the developed world and the less developed world. In the case of agriculture, my noble friend is perhaps even better informed than I am on the tensions and views which exist inside the European Community on this particular matter. There was a reservation put in at the end by the European Community. There has been agreement on undertaking the study, but the European Community is not prepared at this stage to commit itself to negotiations arising out of that study.

Lord Shinwell

My Lords, may I ask the noble Lord this question: In the absence of complete agreement—and he himself has demonstrated that there was not complete agreement, except on the general point of the liberalisation of trade—from the point of view of the United Kingdom, and those countries which are convinced that liberalisation of trade is essential, would it not be better to rely on bilateral agreements?

Lord Cockfield

My Lords, while I appreciate the point which the noble Lord makes, I would not, in fact, agree with him. International trade is, of course, by its very nature, multilateral. One has surpluses with some countries and deficits with others, and if one tries to rely entirely on bilateral agreements the effect is, in fact, to limit the total amount of international trade. There is no question whatever that the negotiation of the original GATT itself resulted in a very big increase in the level of international trade to the benefit of the world as a whole, and of this country in particular.

Lord Soames

My Lords, I wonder whether I may press my noble friend the Secretary of State. I was asking him whether he would give his own personal impression. Of course, I know that every individual country in the GATT has its own interests to protect. But the main objective of this conference was, in effect, to aid the freeing-up of trade and to stop the protectionist movement, which has been growing in strength as a result of the increasing recession. Is it his impression that this has been stopped, and that we can look forward to a greater degree of understanding and sympathy among members of GATT towards sustaining a free trade system?

Lord Cockfield

My Lords, the very fact that the ministerial conference as a whole subscribed to a document which expressed their confidence in the value to the world as a whole of the continuation of an open liberal trading system is a matter of immense importance. The amount of progress that could be made while the world is in recession, and while there are very strong protectionist tendencies, is inevitably limited. As I said earlier, the progress that we have made is not perhaps as much as we would have liked, but progress, nevertheless, it is and, as such, is of great value.