Wool Textiles (Hansard, 15 November 1976)

Mr. Alan Williams

The following are the recommendations produced by the sector working party, which is the Economic Development Committee for the Wool Textile Industry, together with an outline of the action taken so far.

The EDC is continuing its examination of the industry and further reports and recommendations can be expected to follow in due course. Recommendation—There should be a positive response to the proposals put to Government by the EDC for further financial assistance under the Industry Act to encourage mergers. Action—An announcement on a second stage scheme of assistance will be made shortly. Recommendation—There is an urgent need for stricter controls over imports of garments. For example in the case of fashion goods, a provisional duty might be applied while the disruption of the market is investigated, or the onus of proof in case of alleged dumping could be put on the importer; or importers might be required at the time of ordering to put down a deposit on the foreign currency 427W required. Alternatively, or in addition, pressure might be brought to bear by the industry on retailers or the public to exercise discrimination. Action—The Department of Industry is engaged on a policy review of the Multi-Fibre Arrangement. The Government have been in close touch with the industry and unions in formulating their policy and will continue to do so. On dumping, the Department of Trade has reviewed its procedures to ensure that within the spirit of the relevant legislation and the United Kingdom's international obligations cases are handled as quickly as possible, but it depends heavily on industry to supply it with the requisite information. In all countries anti-dumping action envisages a process of investigation and proof and the United Kingdom Department of Trade's record as regards time is good in relation to that of other countries. Recommendation—There is an urgent need for stricter control over imports of woollen fabrics and support should be given to the representations being made to the EEC Commission by the Woollen and Worsted Trades Federation. Action—The Department of Industry has always expressed its willingness to support the WWTF provided it can produce evidence to substantiate a case. The Commission has recommended in favour of the WWTF pursuing with Her Majesty's Government the possibility of action under Article 135 of the Treaty of Accession and it will depend on the evidence which the industry intends to submit whether an application to the EEC Commission would be justified. Recommendation—There should be a re-examination of the requirements for labelling imported textiles. Action—The Trades Description Act 1968 is now under review and this will enable the Government to consider the scope of the order-making powers in this field. Recommendation—The Government in direct trade negotiations and through embassies should make further efforts to reduce tariffs and other barriers against British textile exports. Action—The Government will certainly attempt to secure reductions in the US and Japanese tariffs on textiles in the context of tariff negotiations in the GATT. Recommendation.—The ECGD should be more sympathetic to the industry and in particular give a quicker response to new enquiries and raise the discretionary limits. Action.—Extra discretionary limits introduced last December will be kept under review. The ECGD has written to the industry. Recommendation.—Interest rates which are higher than those which the industry's competitors have to pay should be reduced if necessary by introducing differential rates which favour manufacturing industry. There is also a case for giving preferential treatment for working capital for exports, particularly, for example, over finance for imports of consumer goods. 428W Action.—Given the complexity and sophistication of our financial markets it would be extremely difficult to devise any scheme of two-tier interest rates. In particular, it would be difficult to police any separation of home and overseas borrowers. The alternative, a broad subsidy to industrial borrowing costs, would mean an enormous increase in the public sector borrowing requirement. Recommendation.—There should be an urgent examination of the impact of the imminent increases in water and effluent charges on the industry's competitiveness and a comparison of these charges with those borne by the industry's competitors in the EEC, with a view to securing immediate relief and eventual harmonisation of such charges in the EEC. Action.—The industry's proposals for providing relief are being looked at as a matter of urgency by the Departments of Industry and Environment who are also looking at the wider implications and at the recommendation on the harmonisation within the EEC of water supply and trade effluent charges. Recommendation.—There should be a reduction in corporation tax to enable firms to retain more of their profits for reinvestment. Action.—There is not much scope for increasing incentives through the present tax system. As the Chancellor of the Exchequer pointed out in his Budget statement of 6th April, substantially the whole of any profits which a manufacturing company invests in its business whether in fixed or working capital will effectively be relieved from corporation tax. The most important incentives are the 100 per cent. first year allowance for expenditure on plant and machinery and the scheme for stock appreciation relief.