§ 4.17 p.m.
§ Lord Strathclyde rose to move, that the draft order laid before the House on 28th July be approved [35th Report from the Joint Committee].
§ The noble Lord said: My Lords, the purpose of this commencement order is simply to put into effect the provisions of the Consumer Protection Act 1987 which repeal the Trade Descriptions Act 1972. The prospect of this repeal has aroused some concern 861 since it was announced in October 1986. It may therefore assist the House if I spend a little time outlining the background.
§ The 1972 Act requires goods made abroad but supplied here which bear a UK name or mark or anything likely to be taken as such also to be marked with a conspicuous indication of their country of origin. The Act does not require UK-made goods, nor imported goods without markings, to be marked with their country of origin. It is thus not a universal marking requirement.
§ Additional origin marking requirements were introduced in 1981 by the Trade Descriptions (Origin Marking) (Miscellaneous Goods) Order, which required virtually all clothing and textiles, footwear, cutlery and domestic electrical appliances to be marked with their country of origin at point of retail supply, irrespective of whether the goods were made in the UK or abroad and whether or not they bore any brand names or trade marks.
§ Fairly soon after it was made, the order was the subject of European Community infraction proceedings and, although vigorously defended by the United Kingdom before the European Court of Justice, it was found to be incompatible with Article 30 of the Treaty of Rome, which prohibits barriers to imports between member states of the European Community. In the court's view the order was likely to have the effect of increasing the production costs of imported goods and making it more difficult to sell them on the UK market. If it were advantageous for manufacturers to indicate national origin, they were quite free to do so voluntarily and legal compulsion was unnecessary. The protection of consumers was adequately safeguarded by measures prohibiting false or misleading indications of origin and these measures were not called in question by the treaty. In the United Kingdom such measures are enshrined in the Trade Descriptions Act 1968.
§ Some two years ago the European Commission commenced further formal infraction proceedings against the United Kingdom on the grounds that the 1972 Act was also incompatible with Article 30 of the European Treaty. After careful consideration of the legal position, especially the earlier decision of the Court which I have just outlined, the Government concluded that the United Kingdom could not expect successfully to defend the Act.
§ It is important that the current Commission challenge is seen against this background. Article 30 of the treaty prohibits quantitative restrictions on trade between member states or measures having equivalent effect. The treaty provides certain exceptions to this rule, but they do do not include the purpose of consumer protection other than the protection of health or life. Case law has recognised this as a legitimate purpose for national measures, provided that certain conditions are fulfilled. In the context of the 1972 Act, the main conditions are that a measure must be proportionate to that purpose—that is to say, it must go no further than is necessary to achieve it—and that there must be no discrimination between UK goods and those of other member states.862
§ The 1972 Act clearly exceeds these conditions. The Act applies only to foreign goods. It therefore discriminates between United Kingdom goods and goods from other member states, and is in default of the treaty on that ground alone. Moreover, virtually any name or mark used in trade in the United Kingdom falls within the definition of United Kingdom name or mark whether or not there is anything misleading about it. In these respects the requirement to origin mark goes further than is necessary to prevent customers from being misled.
§ More positively, however, when we agreed to repeal the 1972 Act, the Government made it clear that the United Kingdom intended to institute a successor regime, compatible with treaty obligations, to take effect upon the repeal of the 1972 Act. The need for such a requirement was fully endorsed in discussion in this House in the Committee stage of the then Consumer Protection Bill.
§ A second order, the Trade Descriptions (Place of Production) (Marking) Order, which I shall call the marking order, was laid before this House on 19th October, to fulfil this commitment. The marking order represents the outcome of wide and lengthy consultation with interested parties and we have also secured the acceptance by the European Commission of its terms. Although the marking order is not the subject of this debate it may be helpful to the House if I explain exactly what it does.
§ The marking order is made under the Trade Descriptions Act 1968. This Act makes it an offence for a person in the course of a trade or business to apply a false (including misleading) trade description to goods, or to supply or offer to supply goods bearing such a description. A trade description is any indication given in respect of a range of characteristics of goods, including their place of manufacture or production.
§ The aim of the marking order is to set out the circumstances in which a positive, corrective indication of origin is required in order riot to commit an offence under the 1968 Act. The essential trigger mechanism is whether the presentation—that is, the packaging, marking, get-up or any other indications—of goods would create the impression that they were made somewhere other than where they were actually produced or manufactured. Regard must be had to the totality of the presentation of goods, although certain relevant indications, such as flags, names, persons and suchlike, are specified in the schedule to the order.
§ The marking order does not protect any one national origin. It would apply to misleading suggestions of, for example, German origin as well as of United Kingdom origin. There is therefore no element of discrimination against other member states' goods. And unlike the 1972 Act, the use of a particular language or trade mark is not in itself to be considered as necessarily indicating a particular origin.
§ The marking order has been clarified and revised in a number of ways as a result of consultation on its terms. In particular, it now requires a statement of the country of origin of goods as distinct from any other expression of their place of manufacture if the 863 latter could in itself be misleading. If, for example, goods were marked "Made in Sheffield" when they are supplied in the United Kingdom and that refers to one of the Sheffields in the USA, then the actual country of manufacture would have to be shown. I think that this should allay the concern of manufacturers who pointed to this potential difficulty. The marking order comes into effect on 31st December this year.
§ I think it fair to say that in consultation on the marking order interested parties—such as industry, trade, consumer associations and enforcement agencies—have generally accepted that there are now very clear limits on the scope for compulsory origin marking and that the order represents the most that is workable on a national basis, within our European Community obligations.
§ We are aware, however, of continuing concern about origin marking in the wider context, primarily about goods made elsewhere in the world which are supplied here bearing well-known European names, UK or otherwise. While such names may not in themselves indicate origin, they may well be closely associated with goods from specific countries or places. The only possible solution to these outstanding concerns is a European Community regime.
§ Although the Commission has not shown any positive enthusiasm for such an approach, it was not clear whether this reflected the view of the majority of member states. The Government therefore decided to estabish whether there is any consensus among member states on the desirability of a Community origin marking regime. There is a good measure of support from United Kingdom industry for such an initiative and it is one which the Government are pursuing. However, I have to warn the House that progress will be neither easy nor speedy.
§ I have spoken at some length about the considerations surrounding these developments. I believe that we have, within the constraints imposed by our Community obligations, achieved as satisfactory an outcome in this difficult area as it is reasonable to expect. I beg to move the commencement order.
§ Moved, That the draft order laid before the House on 28th July be approved [25th Report from the Joint Committee].—(Lord Strathclyde.)
§ Lord Williams of Elvel
My Lords, the House will be grateful to the noble Lord, Lord Strathclyde, for explaining in considerable detail the purpose of this order and of the marking order. I tried, in so far as I could, given the surrounding noise in your Lordships' House, to listen to what the noble Lord had to say. At the time of the passage of the Consumer Protection Bill in your Lordships' House we had a long and at times rather contentious discussion about the disappearance of the mark "Made in England" which was proposed by the repeal of the Trade Descriptions Act 1972. On this side, we hope that the Government may arrive at some reasonable formula with the European Community which would allow "Made in England", 864 "Made in Wales", "Made in Scotland", or whatever appropriate disignation was required by the manufacturer, to continue while being in conformity with our obligation under the Treaty of Rome.
At that time the predecessor of the noble Lord—indeed, he was probably his predecessor by two or three; I cannot quite remember—said that negotiations were taking place with the Community about origin marking. The noble Lord has said today that these negotiations are still dragging on and that it will be some time before they come to any serious conclusions.
Nevertheless, we welcome in a mitigated fashion the ability, even under this order, for manufacturers in the United Kingdom voluntarily, if it is advantageous—I will come back to that expression in a moment—to say that the object in question was made in a particular country, such as England, Wales or Scotland. It is not compulsory and it cannot be compulsory. I understand, after our discussions in connection with the consumer Protection Bill, that essentially it would be in contravention of the articles in the Rome treaty if it were to be made compulsory.
The Bill having gone through your Lordships' House and become statute, we accept that there can no longer be any compulsory obligation in respect of origin marking. Nevertheless, over the years origin marking has been an important factor in United Kingdom trade, and it would be disturbing from our point of view if origin marking were in some way to disappear simply because it was deemed to be not advantageous, to use the noble Lord's expression, to any manufacturer to use it.
We believe that to indicate that an article has been made in Sheffield, in Birmingham, or wherever, is an important selling point and we hope very much that people in Sheffield or Birmingham who manufacture goods of this nature will take advantage of the permissive nature, as the noble Lord has outlined it, of the new arrangements to mark their goods "Made in England", even if that is not compulsory.
We are a little concerned when the noble Lord says that the trade mark on goods or services—because trade marks apply to both goods and services—may not necessarily be taken to indicate national origin. I wonder whether that is in conformity with the Copyright, Designs and Patents Bill which your Lordships recently considered. Where trade marks have been clearly stipulated as being those marks of goods or services—this reflects the trade marks—Act—where there can be a trade mark which is of a clearly established nature and if that clearly established nature subsumes a national origin, I wonder whether that is not in contravention of what the noble Lord has just said. For example, one could take Sheffield steel, were there any longer Sheffield steel, or banking services in the City of London. Trade marks of various kinds which are used in the sale of goods and services quite clearly, by their nature, indicate national origin. Is that in contravention of the order which the noble Lord is moving?
My last point is that we regret that during the passage of the Bill in your Lordships' House, in their anxiety to meet all these requirements the 865 Government did not make further efforts to ensure that the great marks of origin we used to have were sustained in order to encourage people to buy British. Having said that, I do not wish to oppose the Motion.
§ Lord Strathclyde
My Lords, I am grateful to the noble Lord, Lord Williams of Elvel. I gathered from what he said that, generally speaking, he welcomed some of the proposals and wished to have one or two questions answered. He specifically asked about origin marking and referred to the fact that some goods of United Kingdom origin should be labelled "Made in Britain". As I mentioned—I hope I am not repeating something which the noble Lord already—knows many British manufacturers will continue to wish to draw attention to the fact that their goods are made in Britain, and they remain free to do so. What is now clear is that member states may not take national measures to compel traders to origin-mark their goods unless—
§ Lord Williams of Elvel
My Lords, I am sorry to interrupt the noble Lord. He is quite right in saying that I said that, but he used the expression "if advantageous". If it is not advantageous, they will not do it.
§ Lord Strathclyde
My Lords, I take the noble Lord's point, but that is exactly the issue. They are not obliged to do so if it is not particularly advantageous. Is is totally a commercial decision for manufacturers as to whether they want to label their goods "Made in England", "Made in Great Britain", or whatever it may be. It would be discriminatory to insist that all goods sold in Britain were labelled and I think it would be unfair if we insisted that all British manufacturers should label their goods "Made in Britain".
As for the noble Lord's second question concerning trade marks, taking account of all the circumstances, trade marks may indicate origin but need not necessarily do so. Trade marks which include an indication of origin will trigger the requirements of the order which I went through earlier.
§ On Question, Motion agreed to.