§ Mr. Whitlockasked the Secretary of State for Industry what representations he is making about the major loophole in the Multi-Fibre Arrangement arising from the fact that capital-intensive knitting of goods is carried out in EEC member States while the labour-intensive making up of these goods is carried out in such places as East Germany, Yugoslavia and Tunisia, and that such outward processed goods returning to other member States do not count against quotas and are being allowed to circulate freely into the United Kingdom without deduction from quotas, whereas outward processed goods entering the United Kingdom direct do count against such quotas.
§ Mr. CryerArrangements exist for keeping the volume of EEC trade in outward processed goods under control. Most member States operate a control system for such trade which in many cases is kept within special quotas set aside for that purpose. For the most sensitive products, 359W quotas form part of the global ceilings and outward processed goods which are not set off against special quotas must be counted against quotas for direct trade. Because the United Kingdom has no control system for outward processed trade United Kingdom imports of outward processed goods from third countries are counted against quotas for direct trade. Control of non-EEC goods consigned to the United Kingdom from other member States can be exercised through appeals against free circulation under article 115 of the Treaty of Rome.
I am, however, pressing for—and the EEC Commission has undertaken to prepare—a Community outward processing regime, which would allow individual member States a greater influence over trade in outward processed goods in the Community as a whole.
§ Mr. Whitlockasked the Secretary of State for Industry to what extent his monitoring of the operation of the Multi-Fibre Arrangement reveals imports of textiles to the United Kingdom in excess of formal quotas; and what action he is taking to eliminate breaches of control arrangements.
§ Mr. CryerFormal quotas in the MFA bilateral agreements are strictly enforced through a licensing system under which the Department of Trade issues import licences up to—but not exceeding—the quota, against export certificates produced by supplying countries. Import statistics can be a misleading indication of quota usage since they include goods shipped in 1977 which cleared customs after the end of that year and goods imported for re-export which are not counted against quota. I know of no breaches of the control arrangements.