House of Commons Hansard Debates for 12 Jan 1990

Mr. Redwood : Does the hon. Gentleman agree that it is much better for the industry to have the economic background that we now enjoy, rather than the one that we experienced in the mid-1970s, when the Labour party tried a policy of runaway inflation and almost bankrupted the whole of British industry?

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Mr. Henderson : I am surprised that the Minister raised that point. We have not only high interest rates but the highest inflation rate in Europe. That is the background that our manufacturers must face. The multi- fibre arrangement was set up in 1974 to regulate trade expansion in textiles and clothing products between supplier countries in the developing world and consumer countries in the industrialised world. It was set up to combat anarchic trading patterns and a growth in protectionism. It was set up also to allow access to industrialised markets from the poorest developing countries such as Lesotho and Macau. We must never forget the importance of that. Those countries have argued that, without a multi-fibre arrangement, they would be excluded from markets by competition from other more industrialised developing countries such as Hong Kong and South Korea.

An interesting article in the Financial Times of 4 October 1989 states that within the past three years more than 20 companies, mostly textile operations, have moved to Lesotho, primarily to exploit the country's preferential access to international markets "We came here to trade internationally," said Mr. Steven Kluck, director of Morija Textiles, which is producing 3,000 articles of clothing a day, mostly for export to France, Italy and Britain. He said, "We looked at Mauritius and Swaziland, but we decided that Lesotho was more focused on a wide range of markets." '

I am not making a particular point about Lesotho. But many other countries, regardless of the political situation there, need access if they are to have any economic development. Clearly, they cannot do that unless they have assistance through the multi-fibre arrangement.

The arrangement was set up also to enable industrial countries to restructure in the face of stiff competition from newly industrialised countries. That is an extremely important issue for the United Kingdom. Other Common Market countries have made much more of the opportunity to restructure than we have. Between 1973, the year before the multi-fibre arangement was introduced, and 1987, Italy increased its trade balance in textiles from £255 million per year to £1,576 million per year, which is a six times increase in historic cash terms. The clothing figures show an increase in the Italian balance from £453 million to £4,383 million. Germany increased its trade balance in textiles, calculated on the same basis, from £119 million to £977 million. That is a nine times increase. Belgium-Luxembourg increased its trade balance in textiles from £274 million to £1,230 million, although a substantial proportion was in carpets, which is outside the multi-fibre arrangement.

The main point is that Britain fared the worst of all EEC countries. Our trade balance in 1973 was £75 million in surplus in textiles, but, by 1987, even with the protection that was granted by the multi-fibre arrangement, we had a deficit of £1,614 million. That does not prove that the multi-fibre arrangement does not work. It proves that other things are necessary to enforce it. In clothing, the deficit in 1973 was £154 million. By 1987, the deficit had reached £1,351 million.

Some sectors of the industry have responded to the changing world situation, but others have failed to respond, despite the multi-fibre arrangement. In many instances, the economic situation has not allowed them to make the necessary response, but all of them have welcomed the presence of the multi-fibre arrangement.

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Many companies believe that, even with the arrangement, there were too many loopholes and that quotas were too slack.

In 1984, Professor Silberston argued that the multi-fibre arrangement was damaging to Britain's overall trading interest. He said also that welfare in the country could be increased if the multi-fibre arrangement were abandoned. The textile and clothing industry was relieved when the professor's advice was set aside by the then Secretary of State. Since then, Professor Silberston has further reported on the multi-fibre arrangement.

Some people say that all professors are mad. Others say that only some professors are mad, and others say that only professors who are employed by the Government are mad. Professor Silberston has shown that, whatever the mental state of his profession, on occasions, even professors employed by the Department of Trade and Industry are prepared to take another look at the situation, consider more evidence, and make a conversion in their views. There are conflicting views within the industry on the extent to which Professor Silberston has converted his views. The Apparel, Knitting and Textile Alliance has acknowledged the professor's conversion and described his latest report as

"a balanced attempt to assess the impact of international trading policies in the UK economy."

Others have been more critical. The Scottish Knitwear Council described his work as

"a most unsatisfactory piece of work."

The professor was right to acknowledge that there is an important link between any changes in or abolition of the multi-fibre arrangement and the GATT talks that are currently taking place. However, I do not think that his evidence, or that of others which has been put forward to coincide with his evidence, has made out any case to end the multi-fibre arrangement. The professor was right that a strengthened GATT framework was crucial in the event of any multi-fibre arrangement, but no case was made out to abandon the existing situation.

If we had no regulation of trade in textiles and clothing, the inevitable consequence would be beggar-thy-neighbour policies of protectionism, trade disputes, trade disruption and, of course, disastrous consequences for the weakest supplying countries. The previous Minister, the hon. Member for Plymouth, Sutton (Mr. Clark) said :

"If it is of any consolation or comfort to the House, I can state that if the multi-fibre arrangement is to be discarded and if such an action is not accompanied by a satisfactory liberalisation and by a genuine strengthening of GATT rules and by proper discipline, I will not be the Minister who comes to the Dispatch Box and announces it."--[ Official Report, 9 December 1988 ; vol. 143, c. 620.] Clearly the hon. Gentleman is not here today. I hope that his absence is a sign that he has gone on to other things--perhaps even better things. It is not a reflection that there is no comfort for the industry.

The present Minister has historically shown his hostility to intervention in trade matters. He will correct me if I am wrong. I expected him to have difficulty in defending the Government's position and in arguing for a strong renewal of the multi-fibre arrangement. However, it seems that he has no great difficulty. Again, he will correct me if I am wrong, but I did not detect in his speech any great desire to continue to have a stronger multi-fibre arrangement. Hon. Members will want to explore exactly what the

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Government's position is in this business. An important starting point must be the dismal performance of our industry in competing for business overseas and in countering the flood of imports. How can the relative failure of our industry be redressed? Is the Minister prepared to acknowledge that he carries a greater responsibility than his counterparts in Europe because of the particular and serious difficulties of our industry? Does the Minister recognise that it is our industry that has failed to restructure ; that it is our industry that needs additional support and protection and is demanding that the Government bat firmly for the United Kingdom on the multi-fibre arrangement talks? It is our industry that will suffer if the quotas are too large. That's why it is demanding that in future years they should be based on increases in actual usage, not on increases in total quotas. Over the coming period the difference may be academic because, as hon. Members know, many of the quotas this year have been fully utilised?

Does the Minister also recognise that it is our industry that is worried about the abolition of internal quotas in the EC? The fact that our high street market place is dominated by five large retailers makes us far more vulnerable to be flooded with imports that were previously spread throughout the European Community. What is the Government's view on that? Will the Minister argue for the retention of internal quotas or will he seek a transitional agreement?

The industry has acknowledged the desire of many Governments eventually to integrate textile and clothing trade regulations into GATT. I understand that observation. If the Government support the same view, will the Minister confirm that he recognises the importance of the link between negotiations on GATT, which are satisfactory to the industry, and any major change in the multi-fibre arrangement? In the past the industry has argued that modifications to the multi-fibre arrangement are necessary, but does the Minister recognise that the MFA could eventually be replaced by GATT only if the many outstanding matters which have previously been discussed as part of the review of the MFA and which are currently being discussed in GATT are resolved to the satisfaction of the House and Europe? Will the Minister give a firm commitment today that he will argue strongly in the medium term for a renewal of the multi-fibre arrangement unless there is a complete change in the current regulations on safeguard clauses under article 19 of GATT? Does the Minister recognise that action against dumping needs to be taken, and will he comment on how he proposes to outlaw that practice? Will he put any proposals to the EC for negotiations on the multi -fibre arrangement or GATT?

The industry has expressed other concerns that must be raised at GATT. Will the Minister take up the matter of access to the developed markets of Australia and the United States and the question of possible access into South Korea, which has already been referred to this morning? What is the Minister's sticking point on that issue? What action does he propose to deal with non-tariff barriers that he knows affect trade in several countries, including Brazil? What action does he propose to outlaw the counterfeiting of designs and trademarks? He has said that he wants to outlaw that practice, but what action will he propose at GATT on that matter?

Other issues also have a serious impact on the industry. There is, for example, the question of assistance to eastern

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Europe and to Poland and Hungary. The Minister is aware that the Polish Government have asked for a 44 per cent. increase in their quota and that the Hungarian Government have asked for a 16 per cent. increase in theirs. I am sure that all hon. Members want to support a programme of aid to develop the economies of those and other countries in that geographical area--

Mr. Nicholas Winterton : But not at the expense of our own.

Mr. Henderson : Yes, I am coming to that. However, the industry has put a valid point to me in the representations that it has made since those issues were first raised in October and November 1989. Why should the industry bear the economic cost of our political views? Is the Minister prepared to make compensatory arrangements to ensure that the industry does not carry the whole burden and that it does not lose out, so that the people who work in the industry in, for example, the east midlands, do not lose their employment? Is the Minister prepared to make firm proposals to balance his other statements on assistance for Hungary and Poland?

Many other issues could be raised in the debate, but I am concious that many other hon. Members wish to speak. I hope that hon. Members will raise the issue of the social clause. I am sure that that will be raised by Opposition Members. I hope that hon. Members will also mention the footwear industry, which is a closely linked industry that has had its own difficulties, many of which have followed from the Government's failure to reach an arrangement with other EC countries on this matter. Many questions have been and will be raised with the Minister in the debate, but a major question is undoubtedly whether the Government intend to support the renegotiation of the multi-fibre arrangement. Perhaps more important, and in many respects the key question, is whether the Government recognise that tightening the quotas and toughening the multi-fibre arrangement will not only help the industry in this country now, but will allow any preliminary talks on eventually bringing the textile and clothing trade into the GATT regulations to be conducted not from a position of weakness, but from a position of strength.

People in the industry, workers and managers alike, will be watching the debate closely to judge whether the Government are prepared to fight for the industry. They will look for a firm commitment from the Government to negotiate a new and tougher multi-fibre arrangement. They will be looking for a commitment to enter into negotiations on measures to stop low-cost products being dumped on our market. They will be looking for a commitment to support a social clause, which is essential if a level playing field is to be achieved. They will be looking for a commitment to draw up proposals to help the footwear industry, but perhaps above all, they will be looking for a comitment to show that the Department of Trade and Industry actually cares about industry and will make representations to the Chancellor, urging him to take measures to stabilise our currency and to reduce the crippling interest rates. The debate will show that the textile and clothing industry has many difficulties, but it will also show that potentially it has a great future. It will also show that it needs strong Government action to protect its interests

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here, in the European Community and at GATT. I shall not be satisfied with glib answers from the Minister, and neither will the House.

Mr. Deputy Speaker (Sir Paul Dean) : I remind the House that Mr. Speaker announced at the beginning of the debate that there will be a 10- minute limit on speeches from 11.30 am. Under the Standing Orders it is not possible to impose the limit until that time, but in view of the many hon. Members who wish to speak, I hope that hon. Members will feel that it would be appropriate if they were to impose a 10-minute limit on themselves from now on.

10.36 am

Sir John Farr (Harborough) : I am most grateful to you, Mr. Deputy Speaker, for calling me so early in the debate. As I have not spoken in the House for a year, I reckon that it might be my turn. I shall certainly not abuse my privilege this morning because I can say what I want and have to say within 10 minutes.

I am scared stiff about what the Government may do about the multi-fibre arrangement. Some of us--in both parties--have lived with the textile industries for many years and some of us are dependent on the textile and footwear industries for thousands of votes in our constituencies. It does not matter whether those people vote for us because we are talking about their livelihoods. We know that without successive MFAs--as we call them-- over the past 10 or 20 years, no textile, knitwear or hosiery industries would exist in Britain today. They would have been priced out of existence years ago by dirt cheap competition from the far east and from low-cost countries. They exist now only because successive Governments took some action. However, the Conservative Government's attitude worries me more than the Labour Government's attitude used to worry me, because the Conservative Government's attitude appears to be that we can sacrifice the multi-fibre arrangement without some sort of firm undertaking from GATT.

I listened carefully to what my hon. Friend the Minister said. He was probably not in the House on 12 December last year when my hon. Friend the Member for Grantham (Mr. Hogg) spoke in an important debate on the Leicestershire knitwear industry and said : "It would be wrong for me to try to persuade the House that the MFA will be extended permanently, for that is not the case."

I repeat that my hon. Friend the Member for Grantham said this. He continued :

"The plain truth is that this aspect of trade must be brought within GATT, but, to the extent that it is necessary, GATT rules must be strengthened to provide more safeguards in the respects that I have identified, and also to allow a proper period of transition."--[ Official Report, 12 December 1989 ; Vol. 163, c. 984.]

That is all very well, but I do not think that it falls on the shoulders of my hon. Friend the Member for Grantham to make such fundamental statements. It has never been said before by a Conservative Member. As so many thousands of jobs all over the country, not just in the east midlands, depend on the MFA, I hope not to be a member of a Conservative Government who bring about its dismantling.

It is clear from the speeches that have been made so far this morning that the British textile, hosiery and knitwear industry has modernised extensively. It is as modern as any industry in the country and there is no way in which

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low-cost imports can be met by further modernisation. It is no use my hon. Friends the Members for Grantham and for Wokingham (Mr. Redwood) saying that they do not see any prospect of the MFA being renewed, but that the GATT rules may be strengthened. I do not think that the House is prepared to leave it to them to make such a decision. Nor is the House prepared to leave it to anyone else. There must be a firm undertaking that, if the MFA is to be ditched, we will not wriggle out of it. It must be done by the firm decision of the House, and any replacement of MFA rules by a restructuring of GATT must be at least as strong as what we have now. We owe that to our constituents.

I had to come here today because I have been worried by what has happened to a similar industry upon which I am lucky enough to depend for a few votes, I think. The same thing is happening with footwear. I have tabled a succession of questions for written answer during the past few days about cheap footwear imports from Korea, Taiwan and Poland and a thing called the VRA--the variable restraint agreement--from which Poland now benefits. We are full of admiration for what is happening behind the iron curtain and the earthshaking events there, but some of us were deeply disappointed when the Minister for Trade in another place, to whom I have spoken on the telephone and who has been most courteous, said that he did not think that many British jobs in the footwear industry would be put at stake by our adopting a much more relaxed attitude towards imports from Korea, Taiwan and Poland. I cannot say it to him here because he is not an hon. Member of this House, but perhaps the message will get through--there are Members of Parliament with tens of thousands of constituents who depend on the textile, knitwear, hosiery and footwear industries.

We demand protection for our constituents. We admire what is happening in Poland, but it is no use the Minister for Trade saying, as he told me on the telephone, that he is not giving instructions to our delegation in Brussels to adopt a vigorous attitude in defence of our footwear industry. If he allows our industry to be eroded, the effect on our constituents will be substantial. It would create a weak and disgraceful pattern of failure by the Government with which I would not wish to be associated.

I have come to the House today because I am scared stiff about the Government's intentions. I have read the report of the debate on 12 December initiated by my hon. Friend the Member for Rutland and Melton (Mr. Latham) on job losses in Leicestershire. It was a most important debate. Since 1987, 11,000 jobs--I think that the Minister is aware of these figures, but he keeps writing them down--in knitwear and hosiery have been lost. Since 1978, more than 42,000 such jobs have gone. There must be a limit.

Mr. Janner : Perhaps I may be permitted to say how happy I am that the hon. Gentleman is back in the House in robust health and voice, expressing a view which I am sure he understands is accepted on both sides of the House by his colleagues from the county of Leicestershire. Does he see any hope of improvement if the Government do not renew the MFA? If he intends to lead further delegations--he has done so successfully in the past--he will be joined by Opposition Members.

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Sir John Farr : Once again, I express my gratitude to the hon. and learned Member for Leicestershire, West (Mr. Janner), with whom I have been lucky enough to get on very well when dealing with issues that affect Leicestershire, whether they be health, education, industry or anything else. I am glad to say that we have had no difficulty co-operating in the best interests of our constituents. I am most grateful for his support.

I said that I would be brief. We have to keep the MFA. I would like my hon. Friend the Minister to refer to what my hon. Friend the Member for Grantham said in the House on 12 December--that scope for Government funding exists. The hon. and learned Member for Leicester, West mentioned that statement earlier. Funds are available, and I would like more details. My hon. Friend the Member for Grantham said that he was disappointed with local firms' response to the opportunity to gain access to that money. If the money is there, we need it. We need help. It is no use my hon. Friend making such statements without at least, one would have thought, putting out a press release the next day saying "These are the schemes. Why do you not enter for them?" The hon. and learned Member for Leicester, West and I, and our colleagues from the county and city of Leicester, realise that our companies will seize such opportunities if they exist.

I have come up to the House because I am scared stiff. No Government whom I support will ever abandon the MFA.

Mr. Deputy Speaker : I am most grateful to the hon. Member for imposing a nine-minute limit on himself.

10.47 am

Mr. James Lamond (Oldham, Central and Royton) : It is a great pleasure for me to see the hon. Member for Harborough (Sir J. Farr) in his place. It is a credit to him that he came here today to speak in this important debate on behalf of his constituents. It is a special pleasure to follow him, because I happen to agree with much of what he said. I take the same line as he does : the bottom line in all of this is the need to retain secure jobs for our constituents. I shall not say whether they are well- paid--they are reasonably well-paid jobs--but they must be secure.

The Silberston report is necessarily rather academic. We expect that as it was prepared by Professor Silberston, assisted by Michele Ledic, who is also an academic. I do not believe that it is possible to put to one side the calculation, which Professor Silberston made, that a possible 5 per cent. reduction in the cost of textiles must be set against a loss of 33,000 jobs.

A cost reduction of 5 per cent. spread throughout the country would not make much impact on family budgets. For a start, each year, the inflation rate is more than 5 per cent. so that 5 per cent. would be swallowed up quickly. Even if we accept the 33,000 calculation made by Professor Silberston--it is not the calculation made by the trade union movement--the job losses would fall heavily on certain areas, including my constituency.

The Minister, if I may be a little critical, is rather academic in respect of this issue, and I hope that he will remember that we are dealing with human beings. People's jobs will disappear just to achieve, as the Minister sees it, a 5 per cent. gain in someone's budget far away. We should not proceed in that manner.

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I shall keep within the 10-minute limit, so I shall concentrate on a couple of points. I must emphasise that the report was compiled before the recent momentous events in eastern Europe. Page 6 of the report refers to outward processing and to the link between West Germany and the German Democratic Republic with regard to processing. Processing clothing is sent to the GDR and then comes back to West Germany without quota restraint. Circumstances have changed dramatically, however, since the report's publication. Although we are keen to help the development of the east European countries I underscore what my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) has already said, we do not want such help to be given at the expense of one particular region of our country or one particular industry.

When the Minister is considering the Silberston report proposals he should bear in mind the recent changes in eastern Europe and their impact on clothing coming into the European Community from those countries.

China is mentioned on page 119 of the report. Although I do not agree with the report's conclusions, it is valuable because it has drawn together a great deal of information about the textile and clothing industries. It mentions that China's potential for exporting textiles and clothing gives rise to the greatest fear in this country. Since 1970, the growth in China's textile industry and its exports has been tremendous.

We are not talking about an under-developed country that is trying desperately to match our performance. The report informs us that, in 1987, China was the third largest exporter of textiles in the world. What is even more interesting is that China has six universities, more than 40 technical schools and 80 research institutes devoted to textile education and research. If that country is given unrestricted entry to our markets within the EC, the effect on our textile industry will be devastating.

Mrs. Peacock : Does the hon. Gentleman agree that, apart from the textile research and education undertaken in China, what is worrying is that Hong Kong companies and some of our own are now investing in plant in Guangdong province? Such investment means that those companies can operate outside the quotas and it means that much of the expansion of the Chinese textile industry is being funded from outside that country.

Mr. Lamond : The hon. Lady's point strengthens my argument. My constituency still has considerable textile interests, although they have been greatly diminished in the 20 years that I have represented it. About 6,000 people are now engaged in the textile and clothing industries in Oldham, but, in the past year, 1,000 jobs have been lost and a number of mills have been closed, including Courtaulds' mills.

Courtaulds is a good company and it has invested a great deal in improving its mills, particularly in the Oldham area. The result of increased investment, however, has led not to an increase in employment, but a decrease. The company has become more efficient, but the net result has been a loss of jobs. I do not like that. I want increased efficiency to result in increased employment. Perhaps the Minister will say something about that when he replies. Courtaulds has spent £5 million modernising the Maple mill in Oldham. It was ironic that, on the day Professor

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Silberston visited Oldham to see the Maple mill, it was closed because of short-time working. Courtaulds has been forced to close the Briar mill, the Fox mill, the Lilac mill and the Maple No. 1 mill. In the clothing industry, the Barron Clothing Manufacturing company and Eli Lees have closed. That has all happened in the past year. The situation is serious, and if the MFA is abandoned it will become even more so.

This week I received a number of letters about this debate. I received one from Courtaulds Spinning of Oldham. By and large, that company accepts the Silberston proposals, provided, in common with Professor Silberston, that the GATT protection is strengthened. That company asked me to emphasise to the Minister that one cannot abandon the MFA without taking fully into account the Silberston proposals to replace it.

I also received a letter from an important local company, Shiloh plc from the chairman and managing director of that company, Mr. Edmund Gartside. His letter is much more forthright. Mr. Gartside is internationally important in the textile industry, and has played an important part in the EC negotiations. He unequivocally states : "We do not accept the Silberston Report that the MFA should be phased out. Even if there is a strengthening of the GATT rules under the Uruguay round talks it is absolutely essential that any new rules are seen to be effective before we can contemplate a relaxation of the MFA.

It does not give us much confidence when the existing GATT rules are not used, so how can we have any confidence that strengthened rules will be effective?"

Mr. Gartside also mentioned dumping, which is negotiated on our behalf by the EC, as is the MFA, which, sometimes is rather disturbing to consider.

On dumping, Mr. Gartside says :

"We have something like between 10 and 15 anti-dumping cases in the pipeline originated by Eurocoton in Brussels. Some have been on the books for nearly two years, e.g. Turkish cotton yarns."

I have written to the Minister on a number of occasions about that. The letter continues :

"There is no sign at all of them reaching any effective conclusions. Meantime jobs are being lost in your constituency and serious hardship is being caused while the papers lie in the Civil Servants pending trays in Brussels and London."

We look to the Minister to do something about those long-standing matters that are costing jobs every day of the week in Oldham. 10.58 am

Sir Giles Shaw (Pudsey) : I am delighted to join colleagues on both sides of the House in welcoming the return of my good friend, my hon. Friend the Member for Harborough (Sir J. Farr). How good it is to see him lead the debate once again with such vigour.

In common with the hon. Member for Oldham, Central and Royton (Mr. Lamond), I shall be brief. In a sense, I must apologise not to the House, but to my constituents. This is the first time in about 10 years that I have participated in a debate on textiles. The issues, however, remain much the same.

I make no apology for speaking as a firm and committed supporter of the continuity of the multi-fibre arrangement. I may view it from a different angle from other hon. Members, but I do not envisage the use of the arrangement as purely protectionist. It is part of the

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development of a trade policy that, with fairness and firmness, will allow world textile manufacturers and marketing to take place in an orderly and reasonable way.

Although I have heard Professor Silberston and read chunks of his report, I do not believe that the issue can be determined by such examinations. My hon. Friend the Parliamentary Under-Secretary of State for Corporate Affairs should accept that in any industry as complex as the textile industry--which has been ill-organised for many generations, but now it is impeccably organised--there will always be huge difficulties with international trading arrangements, whether with primary raw materials, marketing, manufacturing or the labour force.

The reason for the large gathering of hon. Members today is to demonstrate, almost at a stroke, that we are talking about 9 per cent. of British manufacturing industry. Every significant region on the north and the midlands is represented by its Member of Parliament. It is a large exporting industry, with significant potential.

What has happened during the past 25 years in the industry is history, but there has been a massive reinjection of new technology, which has contributed to the reductions in labour forces--however unwelcome they may have been. I take the point made by the hon. Member for Oldham, Central and Royton about the future stability of employment in the industry depending upon the future stability of the industry. Employment is not, of itself, the objective ; the objective is an industrial base that can sustain employment. To date, that degree of security has been represented by the multi-fibre arrangement. I wish to make three points about that.

First, if we believe, as I do, that the arrangement is a continuing ideal, there is no reason why the basis of how it is implemented should not change. I well recall that, when it was introduced it was viewed as a transitional arrangement from two standpoints--first, that of European Community development and, secondly, world trading arrangements with countries outside the Community. It was to be a market liberator, an industrial opportunity and a trading bedrock that would allow that opportunity to develop fairly over time. There is no reason why the multi- fibre arrangement should not be renegotiated within the GATT framework, which would ultimately take over. However, we must learn from what has already happened with the application of the multi-fibre arrangement and what needs to be done in GATT to make that application more effective for all parties. My hon. Friend the Under-Secretary referred to modalities. In Pudsey we do not know about modalities, but we do know about dumping. I agree with the hon. Member for Oldham, Central and Royton that, taking it as a simple issue, the existing arrangements on dumping are absurd. No organisation in the City of London would have a regulatory body operating in such an arcane and absurd way. Why cannot the onus of proof be on the importing country? Why must the receiving country have to prove that 14 companies have collapsed? That is absurd. If there is to be a way of passing through the House a refined multi-fibre arrangement within the context of GATT, the dumping issue must be grabbed. My hon. Friend the Under-Secretary has the zeal to grab it. He must demonstrate that the Government will make it an

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immediate and effective requirement on the exporting countries to show, at bill of lading stage, the costs of their goods and that those are true, fair and acceptable.

My hon. Friend specifically mentioned time scale. There must be a time scale while the multi-fibre arrangement and GATT work through. I do not think that any hon. Member would disagree that the linkage between the two is essential. The time scale must be generous--perhaps five, six or eight years. That matters not, provided that it is not overnight and provided that it is not dealt with, in European Community terms, as an arrangement that we have had for long enough, and therefore we just end it.

I am worried that Community rules and regulations may not provide for a sufficiently long period of linkage into GATT before GATT takes over. I recognise that other textile countries within the Community are not as substantially based as the United Kingdom, so they may think that it is another British issue that they would rather not tackle. I urge my hon. Friend to recognise that the present state of the industry--even in this country, where it has great support, 9 per cent. of manufacturing, and a vast export potential--requires a generous renegotiation of the multi-fibre arrangement within GATT and that the linkage be positive, not negative.

The Community arrangement with GATT must be firmly led by the United Kingdom, and must not trot off after the Portuguese. Above all, dumping--I do not know the Turkish word for dumping, but I do not like the sound of it --should be dealt with in an effective, speedy and practical way, as opposed to the impractical modality at present in place.

11.6 am

Mr. Archy Kirkwood (Roxburgh and Berwickshire) : I am pleased to follow the hon. Member for Pudsey (Sir G. Shaw). I agree that there is a danger that the discussion of this important subject could be confused and befuddled by a great deal of technical, economic jargon that no sensible knitwear or other manufacturer understands or wants to know anything about. However, they certainly do know the difference between modality and dumping. That should be understood by the Government.

The background economic conditions affecting the industry are serious. There has been a serious financial haemorrhage suffered by the industry in recent years. It is no exaggeration to say that it is now bleeding towards a slow and lingering death. That must be a matter of concern for the Government. It would be unfair to attribute all of these difficulties to imort penetration alone. Obviously, other factors are involved such as the increase in raw material costs, fashion changes in the knitwear industry and the warm weather during the past few summers, all of which have had an impact on the domestic market. Those are in addition to the more obvious perennial economic problems of relatively high interest rates and a wildly fluctuating exchange rate. In the high fashion sector of the knitwear industry there has emerged a noticeable increase in consumer resistance to the price increases required for the industry to maintain any degree of profitability. We should therefore reccognise that other factors are involved.

We are rightly principally concerned in this debate with import penetration. It is worth remembering that against the background to this debate, which is a shift in, or at

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least the beginnings of a reconsideration of, Government policy in two important areas. The first is the relative importance of manufacturing as opposed to service industries.

During the past few years, there has been an almost pathological obsession in favour of service industries, to the detriment of manufacturing industries, emanating from the Treasury as well as the Department of Trade and Industry. I hope that that balance will shift more positively in favour of manufacturing industry. The Minister today has a valuable, if not unique, opportunity to demonstrate, in the way that he handles this issue, the Government's position on the balance between manufacturing and service industries. That will be crucial to the industry in the coming months, if not years. In terms of the Government's macro-economic and trade policy, whatever he does about the knitwear industry will have an impact on the country's trade deficit and balance of payments. I wholeheartedly agree with everything said earlier in the debate about the difficulties which the industry faces because of the constraints on their exporting efforts.

The knitting industry is the sector that concerns me most because of its importance to my constituency. According to the provisional figures, which go to the end of 1989--I have to rely on them because the final figures are not complete--the United Kingdom imports of knitted products in 1989 amounted to £1,470 million. There were exports in the opposite direction of £700 million, which leaves a trade deficit of £770 million. That has a substantially adverse effect on the United Kingdom's economy.

Imports of knitted products to the United Kingdom have increased since 1986, when the import figure was £923 million. In 1989--again using provisional figures--it was £1,470 million. That is an increase of £547 million during that period. It is a 59 per cent. increase in three years--a substantial figure in anyone's language. That was against the background of the MFA. If anyone were to suggest that the level of imports could have been properly controlled if the MFA had not been in place during that time, it would require a great deal more detailed explanation, at least to satisfy me.

This debate is important, because it gives us the chance to share constituency experiences. Each constituency Member is concerned about particular aspects of the industry. It is also an important and valuable opportunity, particularly because the textiles committee in GATT is required to meet in July 1990 to discuss whether another renewal is to be contemplated. Therefore, during the next six months or so, public and private discussions will take place. It is necessary for the Government to make their position clear to the House. I fully understand that Ministers are not entirely masters of their own house in this matter. Therefore, it is important that the EC mandate that is eventually negotiated should be discussed as openly as possible.

I have found in the past that this debate is valuable too, in order to explain the exact realities of the multi-fibre arrangement to the outside world. Many people labour under misconceptions about the arrangement and its effect. It produces difficulties as well as advantages, and these must all be weighed in the balance. It surprises my right hon. and hon. Friends when I remind them that there have been significant and dramatic increases in quotas in the three renewals since the original

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MFA was introduced in 1974. It staggers some of my hon. Friends when I tell them that the United Kingdom's MFA quota on sweaters is 52 million pieces per year. The misconception exists that there is a great, oppressive element of trade restriction and barrier in the multi-fibre arrangement. Far from that being the case, under the current arrangement generous increases have been countenanced and others observed during the past 15 years.

Each of the three renewals of the arrangement has made considerable improvements. For example, during the last renewal one quarter of the products covered by quota were removed. The MFA has improved the regulation of trade and provided confidence and stability in international trade, which is warmly welcomed, particularly by less developed countries. The newly industrialised countries can look after themselves.

I share the fear mentioned by the hon. Member for Oldham, Central and Royton (Mr. Lamond) about the future impact that China may have on this country's trade position. That must be watched carefully. The multi-fibre arrangement has allowed helpful bilateral arrangements to be negotiated across the world, throughout the network of international trade, in a positive and beneficial way. It has given this country's industry the confidence to invest substantial sums of money, to go high tech and to be as capital intensive as possible--the industry is essentially labour intensive. All those benefits have accrued because of the MFA's existence in the past.

If there had been no multi-fibre arrangement to provide orderly regulation in the international market, the Americans would not have kept their markets as open as they have in the face of the penetration that they have suffered. Costs and benefits are therefore involved on both sides of the equation. The Silberston report refers to them. We have also heard that there is a case for allowing greater access to the lesser developed countries. It is no part of my political philosophy that there should be a siege economy in this country. It would be stone daft for us to consider going for trade barriers for the sake of them. This country has survived and prospered because of its quite rightly open international trade policy.

We are talking not always about the Bangladeshis and Sri Lankans, but about, for example, Australians. I remind hon. Members that countries such as Australia, which is not a signatory to the arrangement, impose 60 per cent. tariff barriers on our knitwear going into Australia. We buy the wool from Australia and knit the jerseys with Australian wool, then the Australians charge a 60 per cent. tariff when we try to export them to Australia. That is unacceptable. It is not fair trade, but exploitation. That cannot be allowed to continue if the industry is to have any chance of surviving and prospering.

I am sceptical about the modalities and other economic factors that have crept into the Silberston report. I do not follow all the detailed economic arguments, but there are good grounds for rebutting some of the economic conclusions reached by Silberston, about the effect of the MFA on import prices, manufacturers' prices, output and unemployment. His job loss figure is not right.

The knitted products sector alone in the year to June 1989 suffered as much as almost 7,500 job losses. My figures are slightly different from those used by the hon. Member for Newcastle upon Tyne, North (Mr. Henderson), mine come from Textile News. Those are

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serious job losses. Professor Silberston is wildly optimistic if he thinks that the removal of the MFA would result in the loss of only 32,000 jobs.

The Silberston report has not paid enough attention to the impact on sectoral employment. I am pleased that Hawick in my constituency gets an honourable mention on page 99--that is an improvement on the first Silberston report some years ago, which did not even mention Scotland. However, there is evidence that there is a move towards twin tracking in the industry's lower sector, in places such as Leicestershire and Lancashire. I do not blame them because they have suffered more job losses than we have in the Borders of Scotland, if not in other parts of Scotland.

The trend is for some of those companies to trade up market. I do not blame them for that, but they will end up competing with the fashion sector of the industry that already exists in the Scottish Borders. That will produce no solution for the United Kingdom's domestic industry in the long term.

The Silberston report did not pay enough attention to the problems that will occur in the single European market. Unless something is done about it, there is potential for market targeting by importing countries that could cause havoc in the United Kingdom's domestic market and will end up with us taking even more than we are now. Ater 1992, the MFA can and should be subsumed into GATT. I make no apology for returning to the point made by the hon. Member for Leeds, North-West (Dr. Hampson) when he quoted page 123 of the Silberston report. Those three sentences are most important and I make no apology for quoting them again. Under the heading

"Europe 1992, GATT and the Uruguay Round"

it stated :

"What would be regrettable would be for the MFA to be abolished without agreement on measures to strengthen GATT rules and disciplines. The MFA, for all its faults, is better than no MFA with no international agreement on safeguards. That would lead to piecemeal unilateral, or forced bilateral, action by many importing countries, without multilateral supervision : the remedy would be worse than the cure."

The Government must take that advice seriously. The MFA can and should be brought back into GATT, but the linkage is crucial. We must get movement on reductions in tariff and non-tariff barriers, more effective action against dumping, better safeguard clauses than the existing article 19 and action against piracy of design and trade names. That linkage is crucial. Without it the future of the industry throughout the country and particularly in areas such as the Borders and my constituency will be seriously prejudiced.

11.21 am

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