House of Commons Hansard Debates for 23 Nov 1990

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phased out, but is looking for a strong link to strengthen GATT rules and disciplines at the same time. It would be helpful to receive that assurance today.

We are looking for a phasing-out period for the MFA of at least 10 years, and most Community Governments agree with that time scale. Some textile and clothing industries in the community, the United States and Canada have asked for 15 years. Many developing countries would support 10 years. We support the EC proposal that increases in import growth rates should be limited in the first stage of the phasing-out period and increased gradually. There must be an effective means of enforcing respect for the GATT rules and disciplines at each stage of the phasing-out period-- perhaps, I suggest, by suspending further import growth of any supplying country that fails to open its market.

The United Kingdom clothing and textile industries are strongly in favour of fair and free international trade. They are efficient and are using modern equipment and high technology to produce goods of high quality and good design for an increasingly international market. Thousands of metres of high-quality worsted cloth are sitting in warehouses in west Yorkshire which were all made with special personalised selvedges for sheikhs in the Gulf. Money has been invested, and when the Gulf crisis is resolved, we hope to be able to re-establish that trade. It is not possible to send that fabric to any other country, because it is personalised, and those sheikhs paid highly for it.

It is not acceptable that the MFA should be phased out without significant strengthening of the GATT rules and disciplines. I know that Ministers will probably be sick and tired of hearing me say that, but it cannot be said too often or too strongly, because it is very important.

The terms of the MFA phase-out period must be tightly drawn and linked at each stage to progress in implementing strengthened rules and disciplines. The Government's approach in Community discussions must be vigorous and they must continue to fight for the interests of our industry. A case for fairness and balance in international textile and clothing trade must be approached on its merits in the closing stages of the round, which in the next couple of weeks will be very important indeed.

We all agree that a strong manufacturing base is crucial to the nation's future and prosperity. A strong home manufacturing market is central to a strong export market. Some people may say, "You would say that, because you represent a manufacturing area," but it is more than that. I was born and brought up and have lived for most of my life in manufacturing areas, and I therefore feel with some humility, as the hon. Member for Clwyd, South-West (Mr. Jones) said, that I have some knowledge of what we are discussing.

I was much encouraged by my discussions with my right hon. Friend the Secretary of State and my hon. Friend the Minister on Wednesday. When my right hon. Friend replies to the debate, I hope that he will give the House and the textile and clothing industry, which is listening carefully and will carefully read what has been said, the Government's position on the phasing out of the MFA and the phasing in of the strengthened GATT rules. If he assures us that the Government are fighting for a long phasing-out period--that was my impression from speaking to them both this week--it would encourage the textile industry to invest even more. Someone is on the

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verge of announcing a £1 million investment in a project not many yards from my boundary, not because he sees that the wool textile industry is at its best now, but because he sees a future for it. Some reassuring comments from my right hon. Friend the Secretary of State today would help to release that £1 million investment, which we desperately need.

I apologise to my right hon. Friend for the fact that, regrettably, I cannot be here to hear his reply to the debate. Like many hon. Members this morning, I have cancelled constituency engagements at short notice to be here. With the help of British Rail, if its trains are running again, I must go back north to continue my constituency work. I hope that my right hon. Friend will accept my apology. I assure him that on Monday I shall read extremely carefully in Hansard what he says, in the hope that we can all reassure the textile and clothing industry that it is of prime importance not only to the Members of Parliament who represent textile areas but to Ministers, who will put emphasis on the negotiations as we approach 3 December.

12.55 pm

Mr. Alan W. Williams (Carmarthen) : I shall address most of my remarks to the implications for agriculture of the GATT negotiations. It is critically important to Britain that GATT succeeds and that the latest round produces tangible results.

Britain has stood for free trade for centuries. Indeed, we could even claim to have invented world trade back in the 18th and 19th centuries in the colonies. Britain devotes a larger proportion of its GDP to trade--imports and exports--than any other country. We devote about 30 per cent., so liberalising trade is important to us. This morning, many hon. Members have alluded to the intricate web of subsidies in world agriculture. I have read an estimate that about $200 billion-worth of subsidies have evolved worldwide. To get rid of those subsidies over a period of 10 or 15 years would offer almost as much saving in Government expenditure internationally as defence cuts.

The way in which we insulate agriculture but no other industry is incredible. I represent a constituency which has been at the sharp end of the rundown of the coal industry in the past five or six years. The coal industry has no subsidies. Nor does the motor industry. In no other industry do we guarantee a price well above world prices and guarantee a market even when there is no market for any surplus products.

The common agricultural policy is in desperate need of reform or scrapping. It costs £20 billion--or, in terms which the housewife will appreciate, £16 a week for every household in Britain. To guarantee prices way above world prices--not 10 or 20 per cent. above world prices but sometimes treble or four times those prices--stimulates the production of unwanted surpluses. In turn, those surpluses are dumped on the world markets. They are subsidised exports which undermine the exports of other economies.

The United States is perhaps the motor for changes in agricultural subsidy. Subsidies frustrate American export efforts, given that country's balance of payments deficit. I returned a couple of weeks ago from a short visit to the United States. I was struck forcibly by the price of food

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there, both to buy in supermarkets and to eat in restaurants. That vast continent can produce huge amounts of food, but the Americans deliberately under-utilise their vast potential.

Dumping on world markets automatically affects Third-world economies. Such countries are poor and often some specialist food is the only commodity they can export. We undermine and undercut their market and frustrate their development.

We have already heard that the storage and disposal of those surpluses uses up more than half of that £20 billion. What is most absurd about this absurd policy is that rich farmers get the largest subsidies. The September newsletter from the Commission of the European Communities office in Cardiff talks about the MacSharry proposals and says :

"At present 80 per cent. of the EC's resources go to 20 per cent. of the recipients."

Last month's newsletter from the National Consumer Council, which we all received, tells the same tale with different statistics. It said of the CAP :

"Around two thirds of CAP price policy support goes to the largest 28 per cent. of Community farms."

It is absurd that two-thirds of the subsidies go to a quarter of Community farms. It means that the other three quarters receive only one third of the total between them. That means that the average big farm receives in subsidy five times as much as those among the other three quarters. It is a crazy policy which allocates bigger subsidies to the largest farms and richest farmers because they produce more. All the subsidies are production -based, so if a farmer has 500 cows, he receives five times the subsidy of a farmer with 100 cows. To add insult to injury, our poorest households spend relatively the most on food. Therefore, the price of the CAP is paid for by low-income families and the benefits go disproportionately to rich farmers. There is a strong environmental argument against the CAP. In the past few decades, agribusiness has grown up parallel to it. It involves destroying hedgerows to make larger fields, spraying, and the extensive use of fertilizers, pesticides and so on. The CAP is the most destructive environmental policy that could be invented for agriculture and should unquestionably be dramatically reformed or scrapped. As my hon. Friend the Member for South Shields (Dr. Clark) said in his opening remarks, it is a tragedy that the Government and Europe have not used the opportunity of this round of GATT negotiations dramatically to reform the CAP.

I fully support the 30 per cent. policy that the Government have pursued in Europe, but we must protect small farmers during the transition that should take place in the next decade. Another problem with the CAP is that it is remorselessly driving farmers out of business. I represent a rural constituency and many small farmers. There are probably more farmers in my constituency than in any other in England and Wales and, probably, in Scotland. My constituents have small dairy farms, but more and more sheep have been introduced since the quotas. As the hon. Member for Brecon and Radnor (Mr. Livsey) said, the past year has been traumatic, with big decreases in the price of lamb and beef. If there are 30 per cent. cuts in agricultural support across the board, many of those farmers will be driven to bankruptcy. There is no question about that.

Small farmers are important because they form the fabric of rural communities. Their support is critical for

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rural schools. The Welsh language is under attack in my part of Wales when agriculture is under threat. I was brought up in the country and have lived all my life in my constituency. Many of my relatives are farmers. Over my lifetime, I have seen the amalgamation of small farms. As they come on to the market, they are gobbled up by larger farms. That amalgamation in Britain has gone ahead in a way that has not occurred in France, Germany or Italy. The average farm size in Europe is much smaller than in Britain. The last thing that we want in agreeing to the 30 per cent. cuts is for those cuts to be imposed across the board. That would drive small farmers out of business.

We should support small farms, because that is environmentally friendly agriculture. It is less intensive agriculture. It works with nature rather than attacking it. We need to reform agricultural support. Historically, the common agricultural policy has been production-based. We need to change the emphasis, so that it is environment-based. The purpose of the CAP should be to protect the countryside and the livelihoods of small farmers, to keep them in the countryside and to protect the landscape that they look after. That means giving conservation grants and support for less intensive agriculture. It means attacks on pesticides, a penalty on the use of fertilizers and support for organic farming.

We need to consider giving deficiency payments and income aids for small farmers. The present policy gives most to the largest farmers, but if we had a more uniform policy which worked more on a per farmer basis, the cost would be far less than the cost of the CAP. About £2, 000 or £3,000 a year per farmer could be given through income support, income aids, conservation grants and green premium payments to protect the countryside rather than to produce unwanted supluses. Internationally, we need to get rid of all agricultural subsidies. We need to develop free markets and a free trade in agricultural products. Britain has nothing to fear from that free trade, because of our efficient agricultural sector. In making these changes, we must protect small farmers. Public opinion is overwhelmingly hostile about the absurdities of the CAP, but the public would support some of the money--this proposal would cost about £1 billion--being used to protect the countryside.

1.8 pm

Mr. John Greenway (Ryedale) : Having asked my right hon. and learned Friend the former Leader of the House for an urgent debate on agriculture and the GATT round, I warmly welcome this debate and the opportunity to contribute to it, but I find it difficult, if not impossible, to concentrate and comment on this important GATT issue without some reference to yesterday's events.

We have lost a great Prime Minister. Yesterday, she put the country and the party first, something that many people said she would never do. It is ironic--as my right hon. Friend said, it is a funny old world--that we are debating this matter.

I was in Rome this week. A month ago my right hon. Friend the Prime Minister was in Rome. I believe that what occurred at the Rome summit might be called the catalyst for her ultimate resignation. History will show that she was right when she said in Rome that the priority for the EC now is not to set an agenda for further developments in the Community but to demonstrate that

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the member countries can work together and reach practical and sensible positions on the issues that are of real concern. The threat of a trade war if the GATT negotiations break down must be of greater concern to the people of Europe, and of the wider world, than plotting some further development in economic and monetary union. It was essential to reach agreement on GATT, and the Minister of Agriculture, Fisheries and Food deserves credit for his persistence in the negotiations. Unfortunately, those negotiations took too long to complete and the speeches today have demonstrated the concern that is felt about British agriculture. The time that it took to reach agreement in the EC on GATT and farm prices served only to strengthen anti-farming sentiment, and that has been bad for farmers everywhere.

We need to reach agreement in the Community on how to resolve internal trade disputes. The disputes that occurred this year with, for example, the German and French ban on beef and, more recently, over the export of livestock into France demonstrate the protectionism that exists in Europe. Protectionism in the Community cannot be tolerated, so we must establish a better mechanism to ensure that when disputes arise they can be quickly settled. The United Kingdom has been communautaire throughout the negotiations this year on farm policy and that has been the test of our Euro credentials. Collaborative action, rather than rhetoric and ideology, must be the principle that guides us in the development of the EC and the single market.

Hon. Members on both sides have said that the proposed reduction in farming support is hard for agriculture to grasp at this time. I am in no doubt that agriculture is in crisis. The cost of the CAP is growing, yet farmers in my constituency, as in the constituencies of other hon. Members, face ruin and bankruptcy. So reform of the CAP is essential, but how are we to achieve it? Reaching a settlement in the GATT round is the first step to CAP reform, because unless we establish the size of the budget and the terms for world agricultural trade, we cannot begin to consider the changes that are needed in the CAP.

Although I say that agriculture is in crisis, I agree with others that much of the cost of the CAP does not go to farmers. I am not convinced that reductions in support for farmers would result in major reductions in food prices in the shops. For example, although the prices being reached for livestock in markets in my constituency and elsewhere--for beef, lamb and livestock generally--have shown a substantial reduction this year, the housewives in my constituency tell me that they have not noticed much of a reduction in prices in the shops. The answer is all too obvious. The cost of the raw materials--the animals that are sent to the slaughterhouse--is such a small part of what housewives pay in the supermarket these days--

Mr. Livsey : Does the hon. Gentleman agree that it is intolerable that farmers in my constituency are selling lamb at 82p per pound but that in the past fortnight housewives in the supermarket have had to pay £3.99 per pound for the same product?

Mr. Greenway : That reflects what I have seen in my constituency. Perhaps we shall need a debate on another day about the structure of the livestock market and the number of people involved in the chain to try to find a

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better way of ensuring the lower prices that the housewife wants. Many hon. Members of all parties seem to think that by reducing agricultural support we shall see a substantial reduction in prices in the shops, but all logic dictates that that is not the case. If we need to reform the CAP, how do we go about it? First, we must recognise that we belong to a club of 12. Competence in agricultural policy rests with the European Commission, not with national Governments. Whatever we seek to achieve must be approved by all our colleagues in Europe. I do not believe, and never have believed, that the collapse or wholesale destruction of the CAP is the answer. Hon. Members have referred to the fact that we had the opportunity in Copenhagen in 1988, but that it was not taken. I fundamentally disagree with that view. The past three years have proved that that was not the correct judgment. Our Prime Minister went as far as she could at that time to press our colleagues in Europe about CAP reform. All that has happened since has served only to demonstrate that the wholesale collapse of the CAP would mean wholesale bankruptcies for farmers, the collapse of that industry and higher--not lower--prices in the shops.

Although the task that we face is urgent, change must evolve. There needs to be a change of emphasis. I remember saying to some farmers three and a half years ago in the election campaign that we should recognise--far more than we do--the important role that they play in protecting our environment. Suddenly, everybody is suggesting that that is part of the solution.

There is much debate about the alternatives--whether we should continue to pursue an open market philosophy or whether some form of supply management would be a better bet. The attractions of the two are clear. However, British agriculture has endured the financial effects of a long and painful restructuring process. If all goes according to plan--I accept that that is a big if--we should be on the verge of reaping the reward of that painful restructuring. I am reluctant to see us throw all that away. I think back to the debates that we have had in the House in the past three years about the need to persuade our colleagues in Europe about the merits of a fair deal in terms of the green pound. All that is within our grasp. It is appropriate that my right hon. Friend the Secretary of State for Trade and Industry is to reply to the debate because, from talking to farmers, I have found that it is the effects of inflation, high interest rates and the uniform business rate on some of their diversified occupations--as much as anything else--that are causing them concern. That dictates that we must get our economic management policies right, as well as looking at the policies that affect agriculture alone.

An open market does not mean that there should be no support. Appropriate measures for the environment are being developed. It was the Conservative Government who first proposed the establishment of environmentally sensitive areas. We are right to use the hill livestock compensatory allowances scheme to support less-favoured areas.

Let me take this opportunity to refer once again to the north York moors farm scheme, launched in my constituency earlier this year by my hon. Friend the Member for Skipton and Ripon (Mr. Curry), the

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Parliamentary Secretary in the Ministry of Agriculture, Fisheries and Food. That scheme has been on the back burner for two or three years. We want farmers to realise that the presence of sheep and suckling cows on the moors is crucial if we are to maintain the moors in their present state but that the numbers need to be limited. We must make environmental payments to support that policy. Similarly, Government support is required if we are to keep our landscape and our buildings, stone walls and hedgerows. We should take the opportunities that we have not taken in the past.

There are dangers in a control of output policy. Britain tends to play fair ; others do not. I was arguing with a representative of a British company in Italy this week. He seemed to feel that all that mattereed was that one should agree with the principle and make it appear as though one was going along with everything. I do not believe that that is the answer for the Europe of the future. The control of output will also freeze the farm structure. Are we satisfied that the present structure is entirely in Britain's interests, especially given that it is almost impossible for youngsters to go into agriculture? If we freeze that structure by controlling output, we shall prevent the United Kingdom from exploiting the more efficient methods that we all know exist. With hindsight, milk quotas are often cited as having been a success. They certainly brought profitabiity back to the dairy industry but their introduction was a rather different experience. It was very traumatic and I remember it being extremely unpopular during the Ryedale by-election in 1986. We must face the fact that there are still major problems in our dairy industry and that even our present quota arrangements cannot continue completely unchanged.

There is a danger that output control may be used by other member states to protect small farmers. Pressure for the protection of small farmers has been seen all too clearly this year, with the outrageous attacks in France on British consignments of lambs. Two of the attacks by demonstrators, seen on television throughout the world, were on consignments of lambs from my constituency. This is perhaps not the time to enter into a detailed debate about the merits of live exports. I fully understand concerns about animal welfare, but I cannot let this opportunity pass without suggesting that if we stopped the export of live sheep and lambs to the continent, there would be disastrous consequences for sheep farmers in my constituency and, I dare say, in the constituency of the hon. Member for Carmarthen (Mr. Williams).

We should recognise the need to develop policy and take note of the fact that under GATT, restrictions would apply only to support that aids production. We can do much to help farmers that does not involve directly giving aid or encouragement to production.

In the proposals of my right hon. Friend the Minister of Agriculture, Fisheries and Food--in the position that the Government have taken in the Community and GATT we have gone as far as we should go. They are enough. We need no more, and fairness has to be the watchword. Agriculture in Britain is undoubtedly at a watershed. We now have the opportunity of a generation to ensure the future profitability of agriculture. That issue is far too important for us to allow our rural communities to be used as a political football. It is the responsibility of the House to ensure that we are successful in the

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negotiations and in the reform of the CAP. That is a great responsibility, and what we do now will dictate the pattern of our rural economy for many generations.

As my right hon. Friend the Minister said, we have a moral responsibility to the rest of the world. At prayers every day in the House we say :

"Give us this day our daily bread"

The CAP has ensured that not only has Europe been fed but housewives have been offered a greater and wider choice of food than ever before. In the GATT round we must defend our own interests and we shall. We should also work to ensure that the world is fed and success in the GATT round is the key to that.

1.25 pm

Mr. Jeremy Corbyn (Islington, North) : This is an interesting and extremely important debate. It affects everybody in Britain, and in a short time the outcome of the GATT negotiations will affect the world. We are debating a serious issue, which plainly affects jobs in many parts of Britain. It also affects the world's environment and the relationship between the northern and southern countries. It is disturbing that the whole issue is presented as if it were a question of negotiations between, primarily at the moment, the United States and the European Community and that when they sit at the negotiating table they start talking to representatives from the southern, mainly Third-world, countries. There is an extremely important and powerful missing player representing the interests of multinational corporations, most of which are in the United States but some of which are in Europe.

I should like to quote from a fascinating article by Chakravarthi Raghavan in the most recent issue of Resurgence, a magazine produced in Penang, Malaysia, by the Third World Network. He said : "It is really a worldwide economic charter for transnational companies to gain extraterritorial rights' in all countries, and for foreigners to have untrammelled rights to property not known since the end of the colonial era".

That was the comment of an American observer who was watching what was going on in the early stages in this Uruguay round of GATT negotiations.

We must look at the matter in the light of the world's present state. Two thirds of the world's population do not enjoy anything like the standard of living enjoyed by the majority of people in north American and western Europe. There is an annual capital flow of $150 billion from the poor southern countries to the banking systems of the north. That is mainly interest paid on the huge debt of southern countries, and that debt has been brought about by a mixture of circumstances--the very high interest rates charged in the northern countries, dominated in particular by the federal deficit of the United States, and by historically low prices for Third-world commodities. Commodities from the Third world are at their lowest price for 20 years.

There is increasing impoverishment in a large part of the world. To some extent, the GATT negotiations undermine what should be going on through the United Nations Conference on Trade and Development, because the motor driving the GATT negotiations is the free-market policy of the United States and British Governments. At the end of the day, that policy leads to the loss of jobs in Britain's older industries, bankruptcies among Britain's small farmers and impoverishment in

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Zimbabwe, west Africa and Latin America. We are seeing a struggle between the rich, the big and the powerful, and the small and voiceless who will suffer at the end of the process.

The transnational corporations are certainly prepared. In July this year, they had their first outing at the Group of Seven industrial leaders' summit meeting in Houston. The multilateral trade negotiations coalition is chaired by the former United States trade representative, William Brock. It includes American Express, General Motors, IBM, General Electric, Cargill, Citicorp, Procter and Gamble, and other companies, as well as the United States Council for International Business, the American Business Conference, the National Association of Manufacturers, the Coalition of Service Industries and others. It describes itself as

"a broad alliance of American private sector interests committed to a strengthened and more effective multilateral trading system. The Coalition includes an array of business, farm, consumer and trade associations".

They have joined together to try to influence or dominate the GATT round. They are powerful, well financed and effective. One can see from the initial stages of the GATT negotiations just what effects they are having.

At the end of the sessions, the Brazilian ambassador, Rubens Ricupero, issued a statement on behalf of the Third-world delegation, in which he said :

"Developing countries wish to reaffirm their readiness to negotiate constructively (but) will reject any attempt to impose upon them a pre- negotiation package agreed only by a few. It is with profound concern that developing countries find themselves compelled to declare that, if the current situation is not changed soon, the Uruguay Round will be in serious jeopardy as a result of the lack of political will of the major participants."

He quite correctly makes that rather guarded comment because the demands that have been put on the table will have enormous effects in many cases.

For example, the transnational corporations want larger markets for their goods. They want to be able to control those markets, and above all they want to control the ability of Third-world producers to compete. There is growing evidence that the multinational corporations that own patent rights to new manufacturing processes carry them out in western Europe or north America, but do not allow local manufacturers in Third-world countries to operate them. That is a kind of economic colonialism in manufacturing ability. This has been demonstrated in the production of CFC alternatives, and time and time again in high-tech industries, particularly electronics. These corporations are permanently trying to dominate what goes on.

The Secretary of State for Trade and Industry (Mr. Peter Lilley) : Can the hon. Gentleman give examples of this phenomenon? As I understand it, it would require a national Government to uphold a patent the use of which was deliberately suppressed in satisfying the needs of its consumers nationally, which would be a rather unusual practice.

Mr. Corbyn : The most obvious example is the one that I have already given--the production of CFC alternatives. They can be manufactured only under licence granted by the owner of the patent, so if a Third-world country wishes to encourage the development of the CFC alternative--an ozone-friendly product, for want of a better word--it can do so only by paying a large fee to the original manufacturer. That was one of the issues raised by Mrs.

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Gandhi at the conference on global warming and the destruction of the ozone layer. There are many other examples.

We should also be concerned about the effect on the environment of the growth of free trade policies. There is understandably a welcome growing concern about the effects on the environment of the destruction not just of the rain forests, tragic though that is, but of the temperate forests and the savannah grasslands, and the pollution of the southern oceans. These are the three major areas of the change of carbon dioxide into oxygen. We are right to be concerned about this.

If we adopt a trade model that encourages the maximisation of the use for agricultural purposes of land that provides an immediate return on capital rather than a long return, the result is the destruction of more rain forests, because one can produce a little more beef for a short time, never mind that in the long term it is disastrous.

I hope that the Secretary of State will tell us what work has been done on the environmental effects of the free trade policies being promoted. It is all very well for the British Government to increase the funds that they make available to the environment commission of the United Nations. I am glad they have. I welcome that move, but there must be a recognition that the destruction of the environment comes from many sources, including the trade policies that are now being followed.

The development of free trade policies benefits the richest and the most powerful throughout the world. We are not dealing with free trade that is fair. There is a contrast between a large grain-producing operation in the mid-west of the United States, or Canada, with all the cheap production facilities that are available to it, along with a high degree of mechanisation, good transport infrastructure and everything else, and a small farmer in Zimbabwe attempting to grow maize for the local market.

We find throughout the world that large subsidies are given to large producers. We find also that many of the products of Europe and north America end up being dumped into third world markets. For example, wheat is sold for $160 a tonne as a guaranteed price in Europe or north America, and it finds its way to Nigeria as a dumped product, where it is sold for $60 a tonne. That depresses local productive ability, because the local product cannot be sold at that sort of figure. Local farmers go out of business because of the impact of imported wheat.

It is ironic to find in Zimbabwe and throughout southern Africa, which is a beef-producing area, that European beef is being sold while local farmers go out of business. If self-reliance in Third-world agriculture is to be promoted, as the United Nations and many others suggest, trade policies and the trade environment will have to reflect that. The United States Secretary of Agriculture John Brock, has said :

"Self-reliance in Africa is a romantic anachronism."

His agenda is extremely clear.

There will have to be three objects for farming and farm products. First, we must end over-production. The over-production that is taking place in Europe and the United States is damaging and obscenely wasteful. It is damaging to the environment, and it is obviously obscenely wasteful when products that are the result of over-production are being burnt in an attempt to maintain prices. The 30 per cent. reduction in subsidy will mean that

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farmgate prices will increase by about 7 per cent. in real terms over the next five years. The people who will suffer most as a result of that are the small farmers that my hon. Friend the Member for Carmarthen (Mr. Williams) was talking about, not the large producers in Europe or north America.

Secondly, we must end export dumping. Instead, we must promote aid and trade policies that encourage self-reliant production, which is more protective of the local economy and less dependent on the economies of western Europe and of the United States. Such production would obviously require less transportation.

Thirdly, what happens to the political sovereignty of poor countries that do not have the infrastructure that is available in Europe and north America when they are told that, because of the debt crisis, they must open up their economies to multinational capital to do whatever it will, and when the IMF and the World bank tell them that they must cut social expenditure? They are now told that they must pursue free trade policies for farm products. Those policies add up to disaster for poor countries.

I hope that the Secretary of State will show when he replies that he recognises that the policies that are being promoted by the Government that he represents, by the United States Administration and by the European Community are not beneficial to environmental protection throughout the world or to the poorest people in the poorest countries. They are a continuation and extension of the growing impoverishment of two thirds of the world, which has been going on ever since the end of the second world war.

We need to think about the world in a global sense, about the obscenity of poverty throughout the world, and about the danger that environmental destruction creates for every person in this world. The GATT round provides the opportunity to deal with some, if not all, of those issues.

1.40 pm

Mr. Gary Waller (Keighley) : I am sorry that, during this important debate, so little time has been devoted to discussing textile issues. I remind my right hon. Friend the Secretary of State that the textile and clothing industry still employs 480,000 people--many fewer than the 700,000 that it employed when I came to the House, but nevertheless a substantial number.

No one could exaggerate the importance of pending decisions to be taken by the Government and their European partners as they approach the climax of the Uruguay round during the next few days. If the right decisions are taken, the industry will continue to be one of the great contributors to our future economic growth. But if our industry is betrayed, there will be empty shells of once-thriving mills, a serious contraction in the industry, and many more of its work force walking the streets. Those directly employed in the industry and their dependants add up to well over 1 million people, most living in the midlands, the north and in Scotland, and a large percentage of them currently represented by Conservative Members. They will pay close attention to the words of my right hon. Friend when he replies to the debate.

Matters of the utmost national importance are involved. I hope that my right hon. Friends the Members for Henley (Mr. Heseltine), for Huntingdon (Mr. Major)

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and for Witney (Mr. Hurd) will also give some thought to those issues during the next few days, even though I fully appreciate that they have many other matters on their minds. I shall draw my remarks and those of other hon. Members who have spoken in the debate to the attention of my right hon. Friends. I am sure that they will wish to remember just how many of our fellow citizens will be affected by the GATT decisions.

The textile industry knows full well, from bitter experience, that many other countries that erect barriers to our exports and put obstacles in the way of free trade have never ceased to drag their feet when pressed to do so. By now, it should be fully understood that they will not yield ground voluntarily. A tough negotiating stance, linking the gradual ending of the multi-fibre arrangement derogation with a GATT agreement that really points towards free and fair trade, is vital. That appears to be well understood by a number of our EC partners, which are arguing in favour of a phasing- out period of 10 to 15 years. Compared with the position when MFA4 was negotiated four years ago, we now appear to be taking a less robust line.

I am afraid that my right hon. Friend, in his speech to the British Clothing Industry Association, blew a hole in our negotiating stance when he said that the Government continue to argue that 10 years would be too long a transitional period. I understand that because of divisions among members of the Community on that issue, the British stance could prove to be decisive. We should be arguing in favour of a longer, rather than a shorter, phase-out period. It should be clearly understood that the speed of its implementation is linked to the willingness of other countries to abide by more open trading rules.

It is essential that a strong mechanism should link the stages in the phasing out of the MFA with clear signs that progress has been made in implementing strengthened GATT rules and disciplines. Unless a formal mechanism exists, it is unlikely that some states will abide by their obligations. If they believe that the MFA will be abolished regardless of compliance with the rules, they will merely wait for that development. It would also be disastrous for substantial additional access to be given to the import of textiles and clothing in the first stage of the phasing-out period, and for excessively large increases in import growth rates to be given before the existing distortions in world trade have been affected by the new GATT regime.

We must point to the many, many examples--I do not have time to cite them-- of countries with enormous barriers to our exports. For example, India has a substantial number of potential purchasers for our high-quality goods, but it prohibits the import of textiles and clothing similar to those produced domestically, and it charges tariffs of 200 per cent. and more on the remainder. How can anyone excuse the United States for charging 36 per cent. import duties on British wool cloth--more than twice as much as the duty imposed on any goods flowing the other way across the Atlantic? The United States has graciously offered to knock off a few percentage points, but nothing off such important British exports as sweaters.

It is all very well to talk glibly of strengthened rules and disciplines. We hear words, but commitments are strangely lacking in respect of subsidies, the theft of designs--which is all too prevalent--dumping and safeguards. We are still miles away from reaching a satisfactory conclusion.

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Will my right hon. Friend aim at a 10-year phasing-out period for the multi-fibre arrangement? Until recently, the Government argued for six years, and my right hon. Friend the Secretary of State said that 10 years would be too long. However, a few days ago, he seemed to imply that 10 years might be about right.

When the fourth multi-fibre arrangement was negotiated, we seemed to be in the middle range of EC countries in terms of the objectives sought, but many others are now being much more robust than we are. Their textile and clothing industries are arguing for as long as 15 years to phases out the MFA, as are the United States and Canada. It is illogical to abandon all its safeguards well before GATT rules and disciplines can properly be put into effect.

Will my right hon. Friend the Secretary of State make reciprocity a central tenet of his policy, so that any country that fails to open up its market will be denied import growth into the Community? Will he advocate a staged phasing-out of the MFA, so that import and export growth rates are gradual, as stronger GATT rules and disciplines take effect, with appropriate safeguards against import surges?

Let no one doubt the impact that failure would have. If agreement is reached to phase out the MFA without a strong successor regime to replace it, our counterparts in the United States Congress will inevitably insist on overruling the presidential veto and, by rejecting the Uruguay round, create a cocoon of even greater protectionism round America. That would bring in its wake a diversion of trade to which the United Kingdom market would be more vulnerable than any of its fellow European member states.

If such developments come to pass as a result of inadequate and indeed spineless action on our part, who knows what the effect will be in terms of job losses? Will the number be only 33,000, as Professor Silberston estimates--although his figures are challenged by almost everyone in the industry--or 100,000, as the Trades Union Congress suggests?

I plead with my right hon. Friend the Secretary of State never to say again, as he did recently, that over the economy as a whole, the gains to employment from freer trade would exceed the losses. Fair trade would probably create more jobs, rather than bring unemployment--but one-sided free trade will certainly bring job losses in textiles that could never be replaced. Such losses, which would be concentrated in areas where no other employment is available, could never be compensated for by the vague prospect of a marginal increase in jobs spread thinly throughout the country.

God forbid that any Minister should be allowed to think that the British textile industry can be traded off against others. It follows that any agreement to phase out existing protection, however desirable, must be accompanied by a genuine commitment on the part of all concerned to fair and free trade, must be conditional on the latter--and should not be regarded as the prior condition for it. We heard on the radio this morning that the contenders for the leadership of the Conservative party would not have to concentrate on the House of Commons today because it was not holding an important debate. Perhaps this debate is more important than some people think. If the textile and clothing industries, which are vital to so many people, are driven towards the precipice, that folly

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would blight irretrievably the honeymoon period of any incoming Prime Minister. The subject of today's debate may be his first vital test, and one that he and other members of the Cabinet must not fail.

1.49 pm

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