House of Commons Hansard Debates for 9 Dec 1988

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Madam Deputy Speaker : Order. Before I call the next hon. Member, I remind hon. Members that there is a good deal of interest in the debate. I appeal for shorter speeches so that every hon. Member will be able to catch my eye.

11.26 am

Sir Richard Body (Holland with Boston) : I hope that you will watch out, Madam Deputy Speaker, because I may crave the protection of the Chair. I intend to do a dreadful thing. I want to enter a small plea for the consumer.

I see that I am encircled by hon. Members representing Yorkshire constituencies--and rightly so. I hope that one of them will be able to explain one thing to me. A few months ago I visited my tailor in the City of London where one can buy the best clothes at the cheapest price. He has an old-fashioned shop. Like many tailors now, he has on show a row of ready -made suits. One of them caught my eye. Half an hour ago I realised that I am wearing it. I know that it is not very well cut, but I shall come to that in a moment. I felt the cloth and thought that it was very good, hard- wearing cloth that would stand up to wear on these green Benches. I tried on the suit. I know that it does not fit very well but I bought it because of the quality of the cloth. My tailor assured me that it is the best Yorkshire cloth. I am sure that my hon. Friend the Member for Batley and Spen (Mrs. Peacock) will vouch for the fact that it is very good cloth. Mrs. Peacock indicated assent.

Sir Richard Body : Having purchased the suit, my tailor told me that it had been made in Italy. I nearly handed the suit back to him, but the cloth is so good that I decided to buy it.

Is any Member with a Yorkshire constituency able to explain to me why good Yorkshire cloth cannot be made into suits in this country? Why do we have to send the cloth hundreds of miles to Italy to be made up into suits which are then brought back here to be purchased by customers such as me? Something must be wrong with our textile industry if it cannot take advantage of its assets. I know that consumers are not very popular characters, but

Mr. Gary Waller (Keighley) : May I make the simple point to my hon. Friend that it works both ways : that material from overseas is sent here to be processed and made into excellent suits and other garments, which in many cases are then re-exported. That is the nature of free trade, which my hon. Friend probably supports. We should not regret it, because unless material comes here to be made into excellent garments we do not get the jobs that are created thereby.

Sir Richard Body : I have been rather beastly : I have not said what my tailor went on to tell me. He said that the Italians are much more sensitive to consumer wishes and make suits that customers want. He cannot obtain such suits from Yorkshire. I hope that my hon. Friend the Member for Keighley (Mr. Waller), who represents his constituents so vehemently, will take that message back to some of them. I am an advocate of fair but free trade, and I should like industry in Yorkshire to thrive for, incidentally, it is exactly 40 years ago this week that I became a parliamentary candidate for Yorkshire, and I will always wish it well.

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Sir Marcus Fox (Shipley) : My hon. Friend must not assume that firms in Yorkshire cannot make suits as good as the one he is wearing. My suit, which I hope is as good as his, is made by an excellent, pro-British firm in Leeds called Jackson Centaur. I wish that the shopper would take more care when buying a suit. It is untrue to say that our designs are not as good as those from Italy.

Sir Richard Body : I thought that my hon. Friend was about to say that firms in Yorkshire do not cut suits as badly as the one that I am wearing. However, my hon. Friend's remarks do not answer what my tailor told me. I hope that what I have said will be borne in mind by our firms.

It has just dawned on me that I have a textile firm in my constituency which is part of one of the largest textile companies in the United Kingdom. It is vibrant, progressive and is expanding almost every week. I have not heard a whisper from it about this debate or a plea for protection. It is doing its utmost to meet consumer demand and recognises that, to echo the phrase used by my hon. Friend the Minister, the consumer is sovereign.

Much of the textile industry is responding to consumer demand and does not fear the future. No doubt some of the tales of woe told by hon. Members apply to some textile firms, but I hope that my hon. Friend the Minister will bear in mind that such tales do not apply to every corner of the textile industry. The factory in my constituency is comparatively small and employs only a few hundred people, but it has much confidence in the future.

Items are not imported unless the consumer wants them. Often the type of consumer who wants such goods is among the least well-off of our society, for whom the expense of new clothing or something for the household is an important item of expenditure. They look, quite rightly, for the cheapest article that they can find. If they save a few pounds by purchasing a cheaper garment, they have more money to spend on another necessity. I am speaking not of those who would cut down on some luxury item but of those-- I have many in my constituency--for whom clothing is an expensive item.

I know that my hon. Friend the Minister is arguing as valiantly and vigorously as anyone in Brussels and elsewhere on behalf of British industry, but I hope he will bear in mind that when we impose protection we do so against consumer demand. Overwhelmingly, the poorest in society are affected by protection. They are much poorer when the House--or should I say the Commission--imposes restrictions on what they are allowed to buy.

I thought that I would need your protection, Madam Deputy Speaker, but I seem to have got through my speech unscathed. I made it because all hon. Members have not hundreds but thousands of constituents for whom clothing is an expensive item. In real terms, it has become more expensive than many other items that they must buy, and when they have to pay £2, £3 or £4 more for something it seriously affects them, especially those on low incomes or those who may be out of work. I hope that my hon. Friend the Minister will bear that in mind. I do not think that we could have a more doughty champion of their cause than my hon. Friend the Minister. We could have no one better, not even my hon. Friend the Member for Macclesfield (Mr. Winterton), whose strongest characteristic is not

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subtlety, a little of which is necessary in Brussels. The Minister has been very successful and we wish him well at the forthcoming negotiations.

Most Ministers are rather coy about the House's loss of power over trade negotiations and other issues. I was, therefore, glad that my hon. Friend the Minister made it clear--although he was not as explicit as he might have been, but that is part of the subtlety that he practises so skilfully- -that we are not sovereign in matters such as this. When Opposition Members or anyone outside the House criticise the Government for not having an effective system of protection against textiles from abroad, they should recognise that all the 26 textile trading agreements have been negotiated and settled not by a United Kingdom Minister but by the Commission. That is a measure of the House's loss of power and our inability to be as effective as we might wish on behalf of our constituents.

11.37 am

Mr. Max Madden (Bradford, West) : The hon. Member for Holland with Boston (Sir R. Body) raised the tentative voice of consumers in Britain and revealed some secrets about his tailor. The name of his tailor should be given to the clothing industry, with which I have considerable contact, because I should be amazed if it could not supply him with extremely attractive and well-designed suits of a good quality. I am sure that the hon. Member for Holland with Boston and the consumer would be well satisfied with them.

The hon. Member for Holland with Boston does not seem to have appreciated the points that have been made in the debate about the dangers of a high interest and high exchange rate regime for the competitiveness of the British textile industry. We are arguing for protection, not because we are fearful of competition but because, given the unfair competition, action needs to be taken by the Government to create fairer trading conditions. A high interest and high exchange rate regime is making matters extremely difficult. I wish to declare my interest as a Member sponsored by the Transport and General Workers Union with a particular interest in the textile group of that union. The national secretary of the textile group, Mr. Peter Booth, has been referred to on a number of occasions, especially by my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond), and I should like to quote briefly from another press release that Mr. Booth issued only last month about this debate. He said :

"This is a golden opportunity for Textile MPs of all Parties to raise the serious issues facing the Textile Industry. Our members in textile constituencies across Yorkshire, the East Midlands, the North-West of England, Scotland and other areas are anxious to see vociferous support given to their industry at a time when threats of mill closures and further job losses are looming large."

That is the voice of the largest trade union representing men and women working in the industry.

Mr. Alan Clark : It is rather unorthodox for a Back Bencher to be invited to give way to a Minister and I am grateful for the hon. Gentleman's courtesy in so doing.

The hon. Member for Oldham, Central and Royton (Mr. Lamond) quoted Mr. Booth's demand that we should consider import controls. I would be interested to hear Opposition Members pick up that point and argue the case

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for import controls. I hope that I have intervened at a stage in the hon. Gentleman's speech which will allow him to do that, if he believes that he has an answer.

Mr. Madden : I shall certainly refer to that aspect later. The Minister is right to say that there is widespread belief in the textile and clothing industry that selective import controls can play a part in tackling the industry's problems.

I now wish to refer to a letter written to the Government in mid November by three organisations--the British Clothing Industry Association, the British Textile Confederation and the Knitting Industries Federation. In their letter, they said :

"But we now share a growing apprehension about the level of activity over the coming months and beyond. On the export front, where we have had considerable success, the strengthening of sterling has made it difficult to maintain this pace of advance. At home, the effect of higher interest rates is likely to depress consumer and retail demand. The weak US dollar has materially increased the competitiveness of imports, particularly from those countries in the Far East whose currencies are linked to the dollar, and this has had a twofold impact : pressure on the market place, and pressure on prices and margins, reflected in some areas of the textile industry by short-time working, closures and redundancies. There is concern about future orders across a growing area of joint industries." They concluded :

"Confidence would be strengthened if there was seen to be more determination by the Government and the European Commission to use our rights in the existing trading agreements fully and promptly to counter disruptive import surges, and to resist the progressive opening of our market to countries that remain closed to us or distort trade by subsidies to their domestic industry."

I have participated in these debates for 10 of the past 14 years. We always hear ritualistic praise about the loyalty of the work force, how hard working people are, how modest their pay claims are and how, as a result of industrial peace, there is so much co-operation and high productivity. All those things are absolutely true. However, we hear less about the declining work force. May I remind the Minister that, between September 1987 and September of this year, there has been a fall in employment in textiles alone of more than 8,000--the precise figure is 8,700. In the same period, the decline in clothing and footwear has been 8,600, so, in that year alone, we have seen a decline in employment of 17,000 jobs which men and women badly need. They depend on those jobs, and the communities in which they live are seriously damaged by those extensive job losses. In terms of cost to the community and to the economy, those 17,000 jobs are worth between £12 million and £15 million, a significant loss in employment. We do not hear very much about the systematic overtime worked in much of the industry. I have always been told that systematic excessive overtime was an indication of basic inefficiency. It certainly has the effect of creating low basic rates of pay because the men and women in those industries have come to depend on systematic overtime to secure reasonable incomes. That is often overlooked. The Government should consider the amount of overtime involved and devise ways and means to create jobs and increase employment, instead of causing job losses, by reducing systematic and excessive overtime which is even being worked at a time of high job losses in much of the industry.

We have heard, quite rightly, a great deal about the export performance of those industries. We are the fifth

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largest United Kingdom exporter. We are the largest exporter to Japan--perhaps the most difficult market for any exporter. That is a measure of the success of the British industry. It is the answer to the tailor of the hon. Member for Holland with Boston. If we can export successfully to Japan and meet the sophisticated requirements of Japanese consumers, why cannot we satisfy a London tailor about the style and quality of suits produced in this country?

We must face the major lack of confidence in the industry at present, although it has been there to some extent for many years. There is a basic doubt in the minds, not only of the men and women who work in the industry but of those who manage and own the industry about the industry's future as perceived by the Government. There is a fear that the industry is expendable. There is a fear that Turkey is allowed to get away with dumping, which is proved and accepted because our Government are anxious to block Turkey's entry into NATO. They are anxious to secure the contracts to build bridges across the Bosphorus.

It is believed that political considerations are the real reason why the Government are not prepared to fight determinedly and with real vigour and enthusiasm for the interests of the British textile and clothing industry. The Government's firmly held political considerations make the workers believe that the industry is expendable. There are also fears that the British textile and clothing industry will become expendable so that financial services can expand and prosper. That is a fear which the Minister must address.

We are facing 1992, with all the challenges that that creates, and we have heard the figures today about the extent of the trade deficit and the import penetration of the British market. I fear that that will become much worse after 1992.

The associations to which I have referred have said that they are extremely concerned that there will be pressure to replace national quotas with a single Community quota. That creates anxiety in all sections of the industry.

Someone who has been particularly prominent in the debate about the benefits and advantages of 1992 is Mr. Alan Lewis, the chairman of Illingworth Morris. Mr. Lewis acquired Illingworth Morris some time ago, following a reference to the Monopolies and Mergers Commission. At that time, the hon. Member for Shipley (Sir M. Fox)--I have given him notice that I intended to refer to him today--expressed concern about the acquisition of Illingworth Morris by Mr. Lewis. For reasons that are not altogether clear, those anxieties were removed and he supported the acquisition.

It is clear from the Register of Members' Interests that the hon. Member for Shipley is a consultant to a firm called Alcrafield Ltd., a holding company which has been very much at the heart of Mr. Alan Lewis's business empire for a number of years. It is also clear that Mr. Lewis is the head of the Hartley Investment Trust.

The Observer last Sunday, under the headline

"£4 million Tory bonanza from big business",

said :

"Britain's largest companies more than doubled their contributions to the Conservative Party last year, paying a record £4.5 million to help ensure Mrs. Thatcher's re-election.

A survey carried out by an independent organisation, the Labour Research Department, reveals that 333 companies paid £4,528,553 to the Conservative Party in the financial year covering the election

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According to the Labour Research figures, the Conservatives' Treasurer, Lord McAlpine, received seven corporate donations of £100, 000 or more.

The largest--£167,000--was paid over by the Hartley Investment Trust headed by the textile millionaire, Mr. Alan Lewis. Labour Research claims the Hartley Investment Trust is mainly a laundering operation'.

Early last year, according to the researchers, Mr. Lewis--who runs Illingworth Morris plc"

Mr. Nicholas Winterton : On a point of order, Madam Deputy Speaker. Is the reading out of huge extracts from newspapers relating to Members' interests directly concerned with the debate on the MFA? I have listened at some length to the hon. Member for Bradford, West (Mr. Madden) because I sympathise with the stand he takes on textiles. However, what he has said in the last three or four minutes appears to be divorced from the debate.

Madam Deputy Speaker : This is a wide debate on the Adjournment. The hon. Member for Bradford, West (Mr. Madden) is not completely out of order, but I have appealed for shorter speeches which I hope will be more directed to the topic on the Order Paper.

Mr. Madden : I appreciate your view, Madam Deputy speaker. I shall conclude by reading the last section of the quotation. It is relevant to the debate on the future of the textile industry, bearing in mind the prominent role played by Mr. Alan Lewis. As I have said, he argues that there are advantages open to the British textile industry from the changes that will take place in 1992.

The Observer said :

"Early last year, according to the researchers, Mr. Lewis--who runs Illingworth Morris plc, manufacturers of woollen textiles--used direct mail to ask people for donations to meet a special requirement of the Conservative Party'. Mr. Lewis had already put up the money himself. Company accounts show that in the year ending March 1987 the Hartley Investment Trust paid the Conservatives £278,343. However, this sum was not met by donations, and the company received a refund from Conservative Central Office. The donation was revised to £167, 000."

I can understand why Conservative Members are reluctant to allow such information to be revealed. However, like most Members of Parliament, and most members of the public. I believe that it is important that when Members speak in this place, and when individuals speak outside, we should all know who they are speaking for, who they are representing and what interest they are seeking to protect and promote. I have brought this information to the House because it is important that we have it.

I have drawn to the Minister's attention the worries which have existed in the industry for many years and which will intensify unless urgent action is taken. We need a plan for the textile, clothing and footwear industries for the year 2000. We need from the Government a clear strategy document spelling out their policy, attitudes and priorities to those industries. As I suggested in an earlier debate this year, we should have a national conference where the Minister, Members of Parliament, trade unions, employers, local authorities and agencies with direct interests in the future prosperity of these industries are allowed to express their views, make suggestions, give ideas and make proposals such as those that have been made in this debate.

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The central pillar of such a strategy must be, first, MFA5. That is required to give a basic stability and confidence for the future on which investment planning and all other planning can be based. The Minister asked me in what respect I and others support selective import controls. The overwhelming case is against Turkey. I have referred to the briefing given by three organisations. I am sure that the Minister has been given copies of it. There is scathing criticism of the way in which the Turks have conducted their trade in recent years. The document states :

"In breach of the Treaty of Ankara, which gives Turkey duty-free access to the Community for its exports, Turkey has continued to grant generous investment and export subsidies (which would be illegal if introduced by any EEC country) to its textile and clothing industries, while shutting out imports by extremely high tariffs. When all the different forms of duty are added together (including an obligatory payment to the state housing fund), taxes on imports can reach 122 per cent."

The hon. Member for Macclesfield (Mr. Winterton) referred to that. There are suggestions in the document on actions that can be taken which amount to selective import controls.

We want action to be taken against China. The Minister should go a little further than he did in replying to my intervention and answer the following questions. Do the Government accept that China is a dominant supplier? Will they accept the logic of that position? We want priority to be given to this important industry which is a major exporter and employer and an important section of our economy. In the past, arguments have been deployed about the industry's importance. I have discussed these matters with all sections of the industry. They do not believe that the importance which they represent to the British economy is reflected in Ministers' attitudes or the way in which they protect the industry's interests.

We want an investment plan for the industry and an exchange rate and interest rate regime that reflects the interests of British industry. Only last week I talked to one manufacturer--other hon. Members were present at the meeting--who told me that the increase in interest rates had resulted in his company paying an extra £4,000 a week in interest repayments. That is the scale of the burden faced by many small and medium-sized companies.

We need a training plan for the industry. There is already worry about skill shortages, yet in my city there is a penniless army of 900 young people under 18 who are without hope because they are denied benefit or have not been able to get a YTS place or job. Many will be forced into crime and prostitution. Many of those young people have the skills and attitudes necessary to make an important contribution to the British textile industry.

I shall end with an appeal that I have made on previous occasions. I regret that the Minister has chosen this moment to leave the Chamber. I hope that he will appreciate the anxieties expressed both today and previously. I hope that there will be a range of positive actions to help British industry. I have already outlined the direction that I believe such action should take. I am sure that my hon. Friends will reinforce that appeal.

12 noon

Mr. Gary Waller (Keighley) : The debate is timely, coming as it does when the industry has reasonable experience of MFA4, having lived for 18 months with the bilateral agreements with the European Community's supplier countries.

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The end of the current arrangement in July 1991 is sufficiently far off for the House to consider issues other than that of what should follow. There will be plenty of opportunities for such debates. It is right that the House should never lose sight of the importance of the clothing and textile industry, which, as has been said several times today, provides the livelihood for so many people in this country. Those who keep in close touch with the textile industry, especially the wool textile sector, know that it is highly cyclical. Perhaps it is misleading to refer to the industry as a single entity. As the hon. Member for Oldham, Central and Royton (Mr. Lamond) said, it incorporates a whole spectrum of different processes that are affected differently by changes in the economic climate, as well as by shifts in fashion. That, inevitably, means that it is not an industry suitable for those who like a steady and predictable life. As the hon. Gentleman also said, we often receive letters from management. We always respect what is said, but, as my hon. Friend the Minister appreciates, it appears that any advance is always due to the efforts of the company, while any failure is attributed to the Government. That is certainly true of the attitude of a few members of the industry, although many others take a different and more robust attitude.

During the past five years the House has debated textiles rather less than it used to, and there is a good reason for that. I use the word "good" in both senses. After the terrible carnage of the 1970s and early 1980s, when many mills closed and thousands of jobs were lost for ever, textiles have enjoyed a successful period. Now, once again, there is a feeling of doubt and nervousness about the future. Some sectors, such as knitting and acrylics--the former has certainly been affected by a change in fashion, although it may be short term--face problems that are already much more than just an ill wind, and the cuts and closures are already starting to bite.

The industry is now much better placed than it was to withstand the vicissitudes of tougher times ahead. A decade ago we were bedevilled by structural inadequacies. Our products had a reputation for durability that was second to none, but our designs left much to be desired. There was surplus capacity, low levels of automation and inadequate marketing skills. We all recognise that there was also a chronic failure to invest when it was most needed.

The process of change has certainly not been easy. In fact, it has been downright painful. The unions have co-operated in enabling that change to come about, despite the effect on their members, with mills closing almost daily at one stage. The result is that the industry is infinitely more robust and better able to withstand competitive pressures.

There has also been a much greater recognition of the need for first-class training--to which the hon. Member for Bradford, West (Mr. Madden) referred --and for recruitment policies to attract some of the brightest young people into a sector that has not always been perceived favourably in employment terms. I pay tribute to the Confederation of British Wool Textiles Ltd. for the positive moves that it has made to remedy the situation.

It has been said that the multi-fibre arrangement has provided the industry recently with some welcome protection. Protection is sometimes a feature that we welcome when our people benefit from it, but we are not slow to condemn protectionism when others, such as the

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Americans, seek recourse to it. It is worth spending a little time sorting out in our minds when such measures are justified and when they are not. I believe that my hon. Friend the Member for Holland with Boston (Sir R. Body) failed to draw that distinction. One of the people who seemed to have some difficulty with the concept in a previous debate was the hon. Member for Yeovil (Mr. Ashdown), who is now the leader of the Social and Liberal Democratic party, but was then simply his party's spokesman on trade and industry. In the debate on 9 May 1985 he declared roundly that if MFA4 was to come into effect--and he had doubts about that--it should be the last of its kind. He was then lambasted by his hon. Friend the Member for Rochdale (Sir C. Smith), who left us in no doubt that, in his estimation, he knew a great deal more about the matter than did his hon. Friend who held the shadow trade portfolio. He said : "I try to deal with my hon. Friend kindly, so I say simply that it might have been better if my party had decided to leave the speech to someone who knew something about the textile industry."--[ Official Report, 9 May 1985 ; Vol. 78, c. 963.]

Today, people in the textile areas are waiting with bated breath to discover whether the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) is a member of the Yeovil school of social and liberal democracy or the Rochdale school.

Of course, free trade is a slogan that we should not mock. As a nation which is so dependent on trade, and which has a textile industry that is good at exporting--when it has a chance to do so, as the hon. Member for Bradford, West said--it is an ideal profoundly to be wished. However, in a period of rapid change free trade can easily be supplanted by a state of disorder, which benefits only those who put short-term expediency before long-term stability. We know that the beneficiaries would be countries which make a virtue of breaking the rules on dumping, unfair subsidies and erecting barriers to imports. The losers would include many of the poorest countries to which MFA4 gives special priority in the hope that they can pull themselves off the floor by their own efforts.

Thus, if the multi-fibre arrangement were no longer needed, it could only be after there had been a drastic review of the provisions of GATT that left no room for doubt that every player that stood to benefit from genuine liberalisation had certain obligations to fulfil and that the will existed, above all, to enforce them. There is no sign that we are yet approaching that state of affairs.

There is no doubt that we are undergoing rapid change. In textiles, the share of world exports held by developed countries fell from 79 per cent. in 1955 to 60 per cent. in 1982, while the share held by developing countries doubled from 15 to 30 per cent. In clothing, the speed of change over the same period has been even more pronounced. Developed countries saw their share plummet from 71 to 38 per cent., while that of developing and mainly low-cost countries, with many of which bilateral trading agreements exist under the terms of MFA4, climbed from 10 to 48 per cent. That trend has continued even more strongly since 1982.

Anyone who argues that the MFA is a means of stultifying progress fails to take account of the facts. But for its existence we would long since have seen complete chaos breaking out, which would benefit no one. Where fair methods have been adopted, we cannot begrudge the fact that poorer countries are benefiting from industrialisation.

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However, there is no disguising the effect that that has had on employment in the United Kingdom. Although a study has suggested that developing countries are responsible for only one third of the job losses due to external trade, as many as half the jobs lost in the period of most rapid contraction, between 1973 and 1982, may have resulted from improvements in productivity.

Those who, like the hon. Member for Halifax (Mrs. Mahon), who I am delighted to see in her place, blame Conservative policies, as the hon. Lady did in a recent Adjournment debate, conveniently forget that the dates do not match. If the industry had not modernised, its position would have been much worse than turned out to be the case.

Mr. Cryer : The hon. Gentleman has mentioned the modernisation of the industry. Does he accept that a fair proportion of that modernisation was undertaken in the period of a Labour Government. I am thinking, for example, of the wool textile industry scheme, which improved on the original wool textile scheme that was introduced in 1973 by a Conservative Government? Does the hon. Gentleman recognise that the bulk of that work was carried out under Labour?

Mr. Waller : No, I do not necessarily agree that the bulk of it was done under Labour. Both parties have given assistance to the industry to enable it to equip itself with more modern and more productive machinery.

The much derided Professor Silberston, who produced a report for the Government before the last MFA negotiations, and who has again been asked to report on subsequent developments, fairly assessed the many trends. However, there is a feeling that he paid relatively little attention to the barriers faced by British exporters in many developing countries. Only half a page was devoted to that issue, and little was made of the fact that some of the worst offenders can no longer be described as developing countries, but must be thought of as newly developed.

There has been a substantial increase in textile and clothing imports from MFA supplying countries, from 205,000 tonnes in 1985 to 331,000 tonnes in 1987--a 62 per cent. increase in two years, with a further 10 per cent. climb in the first nine months of this year. Those figures demonstrate not only the greatly increased access permitted under MFA4 and financial agreements, but the benefits that the MFA countries have gained from currency factors, especially the far east and south-east Asian countries that are tied to the United States dollar. At the same time, the relative strength of sterling has weakened Britain's competitiveness in many of our best markets. In a previous debate on this subject I complained about the unfair barriers erected by Taiwan and South Korea. There has been a distinct improvement, which is welcome, in that those countries have not only reduced tariffs and quotas to more acceptable levels, but have reduced their dependence on the dollar. As Taiwan is not recognised diplomatically by the European Community it is not, strictly speaking, an MFA state, although restrictions are broadly in line with the agreements reached with other supplying countries.

Brazil remains highly restrictionist, although, like many other countries in south-east Asia and South America,

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parts of its population could be substantial purchasers of our products. However, with total bans and tariffs of over 100 per cent., such sales do not seem a likely prospect in the near future. High indebtedness may be submitted as an excuse, but no such excuse exists for the high barriers operated by non-MFA countries, such as Australia and South Africa, although the economic difficulties of the latter perhaps have different origins.

The United States is a special case. We hope that President-elect Bush will be as vigorous as President Reagan has been in restricting protectionist measures. Measures such as the Textile and Apparel Trade Bill have been misguided in their objectives of seeking stringent controls over imports from any countries, including those in the European Community. Tariff barriers to our exports are already much higher than those operated by the Community. When Congressmen in the United States talk about reciprocity, they tend not to mean that barriers must be removed reciprocally--something that we can all applaud--but that levels of trade must be reciprocally adjusted--a totally artificial concept that would suppress trade and apply a general brake. That kind of protectionism arises from the hold that single interest pressure groups have over Congress. That cannot be defended in a world where trade is needed to break down political and social, as well as economic barriers. If the United States were to have recourse to protectionism, Britain, with its open distribution system, would be in the front line of those likely to be damaged by diversion of trade, and that is something that we cannot allow. The open system, which has resulted from a concentrated retail structure in which a small number of companies play a dominant part, should also cause us to beware of the dangers posed by the fact that the ending of the existing MFA in 1991 coincides so closely with the creation of the single European market at the end of 1992. The present bilateral negotiations are based on national quotas. Any move towards single Community quotas would leave Britain uniquely vulnerable to market targeting because of the distribution and retailing structure to which I have referred.

Mr. Nicholas Winterton rose--

Mr. Waller : I shall not give way, because I know that a number of hon. Members are anxious to contribute to the debate.

The approach of the single market should also alert us to the dangers posed by the ability of the state trading countries of eastern Europe to take advantage of their preferential position in terms of access to Community markets, especially via the Federal Republic of Germany. I had intended to discuss China and Turkey, but, as other hon. Members have already done so, I shall not.

Protectionism per se must not be allowed to become our rallying cry. Although many existing practices throughout the world mean that we must continue to protect our industry and our workers, lowering our guard in the name of free trade--operating a policy of unilateral trade disarmament-- would ensure that some of the existing practices continue untramelled and would, itself, represent a betrayal of free trade. That would be just as dangerous as retaining unneeded barriers, which would undermine the trade on which our industry depends at a time when trade in textiles has been growing twice as fast as trade in goods and services worldwide.

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This is a complex issue and we must resist the urge to look for simplistic solutions, because they are bound, almost certainly, to be wrong. Presently, the failure to protect British interests would appear to be the greatest danger. In general terms, however, protectionism on the one hand and an attitude that assumes that free trade operates when, in reality, some of our competition are cheating, would achieve the same result--a state of stultification and chaos. We must steer between those two avoidable dangerous rocks that could sink us. We cannot fail because, as so many hon. Members have already said, many thousands of our fellow countrymen and women demand that we should succeed.

12.16 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I am pleased to speak after the hon. Member for Keighley (Mr. Waller) in this important debate. I agree with him that the debate is timely because it gives us the opportunity to consider how MFA4 is working and it also gives us a chance to consider some of the complex negotiations to be conducted in Montreal during the current round of the GATT talks.

The hon. Gentleman understandably, if rather predictably, raised the difference of opinion between my hon. Friends the Members for Yeovil (Mr. Ashdown) and for Rochdale (Sir C. Smith). It is perfectly reasonable that, within party political groupings, there should be a divergence of views on some subjects. I should point out to the hon. Gentleman that his colleague, the hon. Member for Holland with Boston (Sir R. Body), bespoke suited as he is, takes a different view from him.

These are complex issues and it is right that consumer interests should be taken into account. It is also right that the legitimate interests of less- developed countries should be considered. The industrialists in my part of the world, who take an interest in those matters, are concerned about both. The Minister was correct to say that we must achieve a balance between the interests of all parties. I want to make an unashamedly constituency speech, because it is only fair to warn the Minister that the economy of my constituency will face potential ruin unless some guaranteed limits can be secured on the future level of imported cashmere garments coming from China to the European domestic market. I seek the Minister's assurance that the special circumstances of the Borders knitwear industry are being taken into account during the course of the current negotiations regarding the Chinese bilateral agreement and other matters. If the Government fail to protect the interests of high quality, specialist knitwear producers like the cashmere industry working in towns like Hawick, the adverse financial circumstances for the Borders region would be very difficult to exaggerate. Hon. Members have already said that until recently the knitwear scene in the Borders, as it has been generally, has enjoyed a relatively healthy period. However, there is now apprehension about the level of activity and order books in the coming months and beyond, particularly on the export front.

The level of sterling in the international money markets has made matters much more difficult. The Minister teased the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) about the rate at which sterling should be set to accommodate the interests of industry. Information from my sources is that they do not mind too much about

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the level of the pound, although they would obviously prefer that to be lower rather than higher. However, they would like some stability. They want to be able to plan from one season to the next with guarantee that they are in the right ball park in terms of estimating the exporting position in the markets that they will address in future. Stability counts, and in that regard the Government should consider carefully the prospect of joining the European monetary system and the increased stability that that would provide.

At home the effect of high interest rates is likely to depress consumer and retail demand. It also depresses the level of future investment that is required. In an area like the Borders, there is no regional development status of any kind to aid industry with its capital restructuring.

Mr. Alan Clark : Is the hon. Gentleman making the same point about cashmere in his constituency as that made by my hon. Friend the Member for Macclesfield (Mr. Winterton), or is his a different point?

Mr. Kirkwood : I will not burden my remarks by focusing them on cashmere. I want to set the general context, but I will refer to cashmere later.

The weak US dollar has materially increased the competitiveness of imports, particularly from those countries whose currencies are linked to the dollar. That puts pressure on markets which is reflected in the pricing policies and the margins available to industry in my constituency.

The results of all those factors taken together, in connection with the trends that are developing, suggest that factors have been coming together in a way that will produce short-time working, closures and prospective redundancies. The Minister should assure the House that he will raise those matters privately with the Chancellor of the Exchequer as a matter of urgency.

I am one of the Minister's fans. He has received fan mail from Opposition Members. I believe that he does a reasonable job, and that view is reflected among the manufacturers in my constituency who recognise that he fights. However, he must take up these matters with the Chancellor as a matter of urgency.

As a result of some of the factors coming together that I have described earlier, in the past few weeks 175 jobs were lost with the closure of Laidlaw and Fairgrieve's spinning mill at Walkerburn in the constituency of my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel). The loss of 175 jobs would be a bad blow for Bolton or Bradford, but it involves an entire village in Walkerburn. An entire village has been decimated and there are no other employment prospects. That special circumstance must be considered. If that is true for village communities like Walkerburn in the Borders, it is also true on a larger scale in towns like Hawick.

My hon. Friend the Member for Rochdale, who was given gracious mention earlier, asked me to draw attention to the difficulties in the spinning and knitting industries in his part of the world. Five cotton spinning mills were closed recently in his area. Also, acrylic spinning mills in Yorkshire have closed. A large clothing unit in Oldham announced its closure a few weeks ago, as did two clothing factories in Merseyside and a finishing works in Derbyshire. The hon. Member for Newcastle upon Tyne, North had a list of closures which was too long to mention,

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