§ Mr. Dudley Smithasked the Minister for Trade how negotiations on the draft European Economic Community directive on product liability are proceeding; what is Her Majesty's Government's policy towards this directive; and if he will make a statement.
254Woverseas enterprises in 1978 and 1979; how much in each case was retained profit; what effect the change in accounting for corporation tax had on the total; and whether he can provide the corresponding figures for manufacturing alone.
§ Dr. VaughanDetailed figures of the components and level of inward direct investment were given in table 6 of the article "Overseas net direct investment in 1980", a copy of which is in the library. The articles also gives on pages 79 and 80 a rough indication of the effects of the change in accounting for deferred tax; precise estimates are not available. Figures for inward direct investment in manufacturing for 1978 and 1979 corresponding to table 6 are as follows:
§ Dr. VaughanThe Government's attitude to the draft directive remains as set out by my right hon. Friend the Member for Gloucester (Mrs. Oppenheim) during the debate in the House on 4 November 1980. The Government have noted the support that many of our partners have given to the principle underlining the draft directive and accept that there would be advantages in establishing a common system of liability throughout the Community. They are therefore prepared to negotiate constructively on the basis of the Commission's draft. This did not, however, strike a proper balance between the interests of injured victims and of producers. The Government have therefore reserved their position on the draft and are seeking improvements. One of the most important of these is a "state of the art" defence under which a producer would not be liable for a defect which could not have been detected by a producer of the type of goods in question in the light of the scientific and technological knowledge at the time when the product was put into circulation.
The Committee of Permanent Representatives is at present discussing certain fundamental questions arising from the draft including the question of a "state of the art" defence. When these questions have been resolved we expect the Council working party to resume its detailed examination of the draft.