House of Commons Hansard Debates for 14 Jun 1994

Mr. Sainsbury : The whole House knows that my hon. Friend is a tireless campaigner for the textile industry and I entirely share her views on the disappointing nature of some of the market access offers.

It was certainly disappointing that the US could not agree greater reductions in some of its peak tariffs--to which my hon. Friend referred-- although the cuts for wool cloth are significant gains for our industry. We hope that the continuing negotiations with countries benefiting from the phase-out of the MFA, such as India and Pakistan--to which my hon. Friend referred also--will result in genuine tariff concessions which will recognise their improved access to our markets.

I turn now to the agricultural aspects of the round. Agriculture, too, will, for the first time, be brought fully within multilateral trade rules. The overall aim of the new agreement on agriculture is to promote more market-oriented agricultural policies, with less reliance on the uncontrolled use of subsidies and on protection against imports.

The Government are well aware that the recent reform of the common agricultural policy has already meant a lot of change for the farming industry. The reform was a significant step towards bringing the CAP into a close relationship with world markets and reducing European farmers' dependence on intervention. It has undoubtedly helped pave the way for the GATT agreement.

The European Commission considers that the Community should be able to meet most of its new GATT commitments on the basis of already agreed CAP reforms. The Government's own economic analysis broadly supports this conclusion. However, that does not mean that the process of CAP reform will stop. The need for further reform in certain areas of the CAP--for example, beef--remains, but that would have been so with or without a GATT agreement.

Similarly, further action will clearly be needed in some of those sectors where reform has yet to start. Sugar is one example, and fruit and vegetables are others. I know that my right hon. Friend the Minister of Agriculture, Fisheries and Food will continue to press the case for further reform.

Other trade agreements covered by the WTO agreement will also provide important benefits for British industry. The agreement on subsidies will impose faster procedures, define and categorise subsidies according to their trade-distorting effects and, for the first time, ensure

Column 529

disciplines on developing country subsidies, particularly in sectors where those countries are competitive, such as leather products from India.

The anti-dumping agreement will strengthen and clarify rules governing the imposition of anti-dumping measures and impose time limits on their application. The safeguards agreement will impose important new disciplines and greater transparency on the use of safeguard measures. Action will still be possible against sudden surges of imports that threaten serious injury to domestic producers. The agreement will, however, lead to the phasing out of so-called grey area measures, such as voluntary export restraints, which have increasingly been used to restrict imports over recent years. All those agreements, together with changes to more technical rules in areas such as customs valuation, technical barriers to trade and import licensing, will strengthen the multilateral framework of rules, which is vital to the growth and security of world trade. Reductions in tariff barriers to trade have already been referred to in several interventions. As I said earlier, the lowering of tariff barriers has been a central element of every round of GATT negotiations since the war. The Uruguay round has been no exception. The complete removal of United States, Japanese and Canadian tariffs in a number of major sectors represents one of the most important achievements of the round. Our exports of pharmaceuticals, medical equipment, agricultural and construction equipment, Scotch whisky, beer, steel, toys, furniture and paper will in future benefit from zero tariffs in those three key markets in exports which totalled more than £2.4 billion in 1992.

Those reductions, and cuts in other markets, will offer a major boost to British exports, including, for example, exports of Scotch whisky, which already total over £2.1 billion a year. Important cuts have also been achieved in a number of peak tariffs. To take one example, the United States rates of 20 per cent. on synthetic dyes will fall to 6.5 per cent.

It is not only exporters who will benefit. Many British businesses depend on imports of materials and components. Reductions averaging 37 per cent. on a trade-weighted basis in the EC's own tariffs will bring real benefits to those businesses.

Mr. Gary Waller (Keighley) : I am listening to my right hon. Friend with great interest. Does he accept that many in the textile industry feel that their sector has been traded off against others and that it has been the loser ? Reference has already been made to the United States, where the tariffs will come down by only 1 per cent. a year and remain at a relatively unacceptable level.

Following Marrakesh, negotiations with India and Pakistan remain unresolved. Will my right hon. Friend assure the House that everything possible will be done to ensure that the considerable purchasing power of the sub-continent will not be denied to our textile industry and the many people that it still employs ?

Mr. Sainsbury : The textile industry was certainly not singled out to be treated badly. I believe that the outcome of the Uruguay round was balanced and covered all the aspects of the relevant sectors. I agree with my hon. Friend that rather disappointing market access offers were made

Column 530

relating to textiles. I assure him that it will remain our objective to open the substantial markets to which he referred to better access for our high-quality textile exports.

An important feature of market access commitments given by developing countries has been the "binding" of tariffs--in other words, an undertaking not to increase tariffs in future. Many countries with very limited tariff bindings prior to the round, such as Argentina, Colombia and Romania, have now agreed to bind their tariffs on all industrial imports. That may sound rather technical, but is essential. Binding tariffs means that a country cannot decide to raise tariffs dramatically and suddenly in response to the success of a British export promotion campaign.

The creation of the WTO, which will put the GATT on a permanent institutional basis for the first time, is only a beginning. There is still unfinished business to complete. Perhaps inevitably, given the number of nations involved and issues under discussion, the Uruguay round negotiations failed to achieve all their objectives. Some market access offers, for example India and Pakistan's offers on textiles, were disappointing. Too many tariff peaks remain, but we are working to improve them.

Moreover, it proved impossible to reach agreement on a satisfactory package of liberalisation commitments on telecommunications, shipping and financial services before the conclusion of negotiations. So GATT members agreed that negotiations in those areas should continue after the end of the round. We attach great importance to achieving real liberalisation in those negotiations.

Work to reduce trade barriers further is also continuing in a number of other important sectors such as civil aircraft and steel. The Government are working hard to achieve a level playing field--no speech on GATT would be complete without a reference to a level playing field--for the UK's civil aircraft industry. We are seeking strict but fair disciplines on all Government subsidies in that field. It is important that those should cover both direct support with which we are familiar, such as launch aid, and indirect support such as that which comes to the US aerospace industry from NASA and the Department of Defence. The hon. Member for Alyn and Deeside (Mr. Jones) is familiar with that matter.

Although not strictly part of the GATT, negotiations on a multilateral steel arrangement have also resumed in Geneva. We hope to reach agreement by the end of 1994. More immediately, we must concentrate our attention on the current GATT deal. Although the Uruguay round was officially ended by the signature ceremony, the agreements still require ratification and agreement before they can come into force.

The Uruguay round is a challenge and an opportunity for British industry. Information on new opportunities that will be available is already public. Industry should start preparing to take advantage of those opportunities now. In 1992, our exports of pharmaceuticals to the US, Canada and Japan totalled £518 million and paid some £34 million in duty. Those exports will be free of duty once the WTO comes into force.

Our exports of chemicals to those markets were worth £1.7 billion in 1992. Harmonisation of tariffs will bring about an annual saving in that sector of more than £50 million. Our exports of medical equipment to the US, Japan and Canada were £386 million in 1992 and have been subject to duties of up to 9.9 per cent. Those tariffs

Column 531

will be phased out completely over the next five years. In 15 major markets, tariffs will be reduced to an average 3.7 per cent. It is clear from those examples alone why the director general of the CBI referred to the conclusion of the round as

"a momentous and welcome event".

Reductions in trade barriers will increase opportunities for exporters of both services and goods. Innovators and service exporters will benefit from inclusion in the GATT of intellectual property rights and trade in services for the first time. Consumers will benefit from increased choice and lower prices. It is no wonder that, within the UK, both consumer groups and industry have welcomed the outcome of the round.

However, British companies must remember that the increased competition from overseas, which will benefit consumers, will increase competition for British industry. It is a challenge as well as an opportunity. My Department will do all that it can to assist, and our export promotion and sponsor divisions will pull out the stops to help ensure that all exporters are made fully aware of the new opportunities open to them. However, my Department cannot do it all. Its role is "Helping Business to Win", which is the title of the recently published White Paper on competitiveness. I recommend it to hon. Members.

The increased competition that the round will bring is an opportunity and a challenge. Trade liberalisation is a continuous process. No trade agreement can settle every trade dispute or open every market. But the completion of the Uruguay round represents an enormous achievement in which the world has chosen trade liberalisation rather than protectionism. The conclusions of the round provide a secure basis for future expansion of world trade and the growth and prosperity that go with it.

4.29 pm

Mr. Stuart Bell (Middlesbrough) : The House will be grateful to the Minister of State for making an important but nevertheless dull subject more interesting for the House. He has certainly had a response from hon. Members in the House by way of many interventions.

The Minister of State was right to draw our attention to the extensive scope of the GATT agreement and its variety of annexes and schedules. I am sure that the Chancellor of the Exchequer, who is not with us today, could safely put his hand on his heart and say, "I have not read this document," and we would all forgive him for doing so. The Minister also referred to the White Paper that the Government have prepared, which is a succinct and well put together report which I think that we can all follow.

The House will have to excuse me if I am not able to mention all the subjects that were included in the debate. My former hon. Friend, the previous Member for Bradford, South, Bob Cryer, took a big interest in textiles issues and I was glad to see his successor sworn in today. I know that the hon. Member for Batley and Spen (Mrs. Peacock) will make a contribution about textiles. My hon. Friend the Member for Bradford, West (Mr. Madden), too, is in the Chamber and takes an interest in that subject. The hon. Member for Keighley (Mr. Waller) may also catch your eye on that subject, Mr. Deputy Speaker.

Audio-visual, agriculture and property rights, all of which the Minister mentioned, are important subjects, but it is not possible to cover them all in a single debate. I shall

Column 532

therefore modestly restrict my comments to a whole scheme of ideas that the Opposition have, which would constitute a trade policy. Many Members who have followed these debates with care are in the House today. I remember preparing for a speech by my former leader John Smith on the subject and going into great detail about GATT. The Minister went through a series of rounds, including the Kennedy round. John Smith was able to remind me gently that he had been Secretary of State for Trade in 1978 during the Tokyo round. We all have a part to play in the process but, as the Minister said, it has been going on for many years and we are now witnessing the culmination of a lengthy procedure.

I was pleased that the Minister of State was in Marrakesh and signed the agreement on behalf of Her Majesty's Government. I hope that he managed to see the Atlas mountains from the Mamounia hotel and I am sure that he enjoyed the short experience of being out of the country at that time. The Uruguay round, as the Minister said, goes back more than seven years. It has taken a hike around the conference tables of the world from Punta del Este to Morocco--not a voyage as exciting as that from the halls of Montezuma to the shores of Tripoli, but a fruitful voyage for all that.

The Minister ended his speech where I would like to begin : the Uruguay round has achieved what it set out to achieve--a further liberalisation of world trade. There will be tariff reductions on a wide range of industrial goods, services and intellectual property within the frame and we have a new World Trade Organisation--according to the Minister, 40 years in coming --which will come into effect once the United States Congress has agreed the entire Uruguay package. Here I make a little warning sound about the ratification of the treaty in the United States. Opposition to the treaty is not so great as opposition to the North American Free Trade Area agreement. We witnessed a great deal of pork barrel politics in the United States Congress to obtain many concessions from the administration in order for the latter document to be signed, but we do not feel that a similar thing will happen on the Uruguay round. Nevertheless, proceedings in Congress can be lengthy and if Congress does not ratify the treaty by the end of its parliamentary session the World Trade Organisation will come into effect, not on 1 January 1995, but on 1 July 1995. That is important and significant, and it is helpful that the President of the United States has committed himself and, one hopes, Congress, to completing all its passages this year. One of the advantages of the new agreement is the speed with which trade disputes should now be settled between nation states which are signatories to the Uruguay accords. My hon. Friend the Member for Workington (Mr. Campbell-Savours) mentioned that briefly, as did the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who also mentioned it in relation to the rapidity with which disputes can be settled. One of the defects of the old GATT was that trade disputes simply went on and on and on. The procedures were cumbersome and it took as many as five years to achieve any result. That should no longer be the case. A dispute should be quickly and effectively dealt with and should take no longer than 18 months to resolve. I hope that those nations that wish to take unilateral action against one trading nation, for reasons that are nothing to

Column 533

do with trade, will note that in signing up to the World Trade Organisation they are signing up to a set of rules that should make such unilateral action no longer possible.

The Government are right, in that sense, not to vaunt the economic benefits of the Uruguay accord as they are nebulous and frankly unquantifiable. The Minister rightly referred cautiously to the Organisation for Economic Co- operation and Development, which spoke of a boost to annual world income of $270 billion. As the right hon. Gentleman said, that can happen only when the Uruguay accord is brought fully into effect, which will take some 10 years. While we welcome the breakthrough in the Uruguay round of the GATT talks, it will be 10 years before the full fruits of the accord are seen. The gains are likely to be incremental and beneficial.

The Opposition have taken the view that it is better to have a successful conclusion to the Uruguay accord than no conclusion at all. It is better to have an international framework than no framework. However, whether the 125 participating countries really give the World Trade Organisation their full support, and whether there will be the consequential positive economic gain to which the OECD alluded, only time will tell. I throw to the Minister the biblical quotation :

"By their fruits ye shall know them."

We shall measure the World Trade Organisation and the new agreements by the actual fruits that come as the years pass.

Mr. George Howarth : And the tomatoes.

Mr. Bell : Yes, and the tomatoes. Although always reluctant to answer sedentary interventions, at least on this occasion we can say that they are not square tomatoes. We were happy to note that in Austria the square tomato party did not swing the votes in the referendum on accession to the European Union.

In their White Paper, the Government rightly draw attention to their role in keeping the Uruguay negotiations on the rails when they were threatened with severe disruption and trade wars between the United States and the EU. The hon. Member for Somerton and Frome (Mr. Robinson) referred to the modesty with which the Minister put forward his proposals and the hon. Member for Lancaster (Dame E. Kellett-Bowman) actually went out of her way to praise Sir Leon Brittan. It was left to the Minister to praise the Prime Minister. It is interesting to see where the praise lies. We all know that victory has a thousand fathers, but defeat is an orphan ; there are certainly no orphans today.

If the Government did indeed play a part in ensuring that the accords were signed, their role was less than noble when it came to the actual content of the accords. While the Minister was able to tell the House that 23 per cent. of our exports come from services and to refer to a figure of £23,000 million per year, and while he was able to say that we are the fourth exporter of invisible exports--it was difficult for him to get around that phrase, but we understood what he meant--nevertheless there is a feeling, which is reflected in the Government's document on competitiveness, that we have not done so well in financial services exports as we might have done. We were not able to impose a fully-fledged agreement on financial services on the European Commission and in the negotiations with

Column 534

the USA and the other participating countries. While the Minister was right to vaunt the great benefits that came from the so-called GATTS, the feeling is that we did not do well enough in financial services.

We must hope that the Government will follow up on their own commitment, as expressed in their competitiveness document "Helping Business to Win", and will vigorously pursue the issues of financial services--banking, insurance and securities--telecommunications, maritime services, aerospace and steel. I am glad to see in the Chamber my hon. Friend the Member for Alyn and Deeside (Mr. Jones), who I am sure will make his own points about aerospace. The conclusion was not so successful as it might have been, had there been more important input in terms of world share of financial services.

Mr. Ian Taylor (Esher) : I share the hon. Gentleman's frustration at the failure to liberalise financial services, but does he agree that the biggest problem was not failure by the British Government but the intransigence of the US Government and the need to put that aside to achieve overall agreement, with the intention of continuing to consider financial services ?

Mr. Bell : Yes. The Minister indicated that there were many occasions during the negotiations when we were close to a trade war, so there was much to-ing and fro-ing. There was a feeling that US interests in financial services did not extend beyond American Express and improving its position in respect of financial services. Nevertheless, the new agreements offer the possibility of pursuing that aspect. The Government's competitiveness document indicated that they will do so. We shall keep them to that and monitor progress. The Minister pointed out that there were about 24 signatories at the beginning and that the number is now up to 125. There is the prospect of China joining GATT through most favoured nation status. Saudi Arabia is joining the agreement, and it is possible that Russia and Taiwan will do so. We take the view that trade is a tool of co- operation and not of coercion. The more countries in membership of GATT are prepared to live by the rules, the more we shall be happy and trade will improve.

The third world aspects of GATT preoccupied many. My hon. Friends the Members for Bradford, West and for Nottingham, South (Mr. Simpson) are in their places and if they catch your eye, Mr. Deputy Speaker, they may refer to that topic. The basic premise was always that a successful conclusion to the Uruguay round would increase world trade, be better for consumers by offering wider global choice, perk up economies currently suffering from recession, and bring improvement over and above the so-called Trinidad terms to assist third world countries to alleviate their massive debts to western banks and Governments. We hope to see a lift for the third world with higher agricultural prices and better access to world markets. The conclusion of the Uruguay round brought a host of measures designed to protect less developed countries. We welcome the protection granted in terms of longer transition periods, due process rights provided under the new understanding on rules and procedures governing the settlement of disputes, special needs clauses to promote transfers of technical aid, and acceptance of the necessity for flexibility in imposing obligations under the Uruguay

Column 535

round which less developed countries might have trouble observing. We remain concerned about the ability of the poorest countries to protect their food producers against cheap imports and dumping. We are anxious that developing countries should be given the freedom to protect infant service industries and other key sectors of their economies, which will require surveillance and supervision. Another disappointing failure which goes to the heart of the Uruguay round is one to which the Minister, not surprisingly, made no reference. I refer to the absence from GATT of any platform of social rights. There is no reference to that in the Government's recent competitiveness document either. Trade should be fair and balanced, and should address the aspirations of workers and consumers alike. There is a theoretical case for free trade, in that it is meant to provide the most efficient producers with access to world markets. It allows lower prices and forces domestic producers to be more efficient. Consumers and the most efficient companies benefit. Therefore, there is public interest in choice through free trade. We are the world's fifth largest trading nation, but I must disappoint those hon. Members who are not Francophiles, although I do not include the hon. Member for Esher (Mr. Taylor). The French, as the world's fourth largest exporters, are ahead of us. It must be in our national interest to pursue a policy of fair and balanced trade, where that trade is fair and balanced in other countries. The Uruguay round makes no provision for workers' rights : the only reference is that they should be part of a working programme for the new World Trade Organisation.

We look for allies in our cause. We are not alone in seeking to improve environmental and labour standards in relation to trade. My hon. Friend the Member for Knowsley, North (Mr. Howarth) will wind up on the environmental aspects of the Uruguay round, but the European Commission recommended an overall evaluation of trade benefits for 60 developing countries, with new incentives for improving environmental and labour standards, when the generalised system of preferences is reviewed. We are entitled to draw the attention of the House to GATT's failure to address workers' rights, which has meant an imbalance in world trade. There was a missed opportunity to incorporate such rights in the Uruguay round.

We welcome the extension to the principle that industrial products should not be the only subject of GATT but that it should embrace also intellectual property rights and agriculture. We are disappointed that workers' rights are not covered. We shall continue our efforts to ensure that they are not forgotten, with canvassing and campaigning in the European Union, World Trade Organisation, European Commission and European Parliament.

It is worth remembering that the European Parliament will ratify the GATT agreement, which is something that this House will not be doing. I understand that this is our last debate on the subject, but there is room for us to make headway elsewhere, with improvements to basic human rights on employment in relation to fair and balanced trade. That could be achieved at no detriment to the developing world and without enhancing protectionism. If there is to be fair and balanced trade, there should be a proper platform for workers' rights and for the environment.

We envisage world trade based on GATT, and a World Trade Organisation based on a strong environmental and

Column 536

workers' rights platform which leans strongly towards the third world. The long section on trade in the competitiveness document to which the Minister referred deals with the mechanics of investment and world trade, but contains no overarching strategy : there is movement, but no action.

We always welcome the peripatetics of the Minister for Trade, who is not with us today. We understand that he has just returned from another trade mission to Saudi Arabia. We admire his zeal, zest and commitment to his task. If there is a Government reshuffle, we hope that the hon. Gentleman will keep his job. As we are not malign in any sense, we hope that all the members of the Government's trade and industry team will keep their jobs. When we are on the Government Benches, we shall expect the same consideration and generosity.

Mr. Derek Fatchett (Leeds, Central) : My hon. Friend takes solidarity too far.

Mr. Bell : It may not exist to that extent, but as Napoleon said--he was not necessarily a free trader--it is but a single step from the sublime to the ridiculous. Many Government Ministers may shortly discover that to be the case.

The competitiveness document indicated that the Government will monitor GATT's progress in relation to a host of issues to which the Minister referred and its progress within the European Union on financial services, telecommunications, maritime services, aerospace and steel. We do not believe that the Government have a strategy to reverse our decline in world trade. The competitiveness document revealed that our country's share of world trade has declined over the years and now only holds steady. The French--our European partners--have seen their share of world trade increase.

We are pleased that the British Export Credits Guarantee Department has resumed its export credit insurance cover for Brazil and that in the past two years it has resumed cover for 14 additional countries where business has been renewed. Nevertheless, the Labour party is not satisfied, and never will be, that the dead hand of the Treasury does not lie across the Department of Trade and Industry. The Labour party is not satisfied, and never will be, that our exporters enjoy the same support and advantages as, for example, the French or the Germans. The Labour party is not satisfied, and never will be, that our exporters can match foreign competition on the level playing field to which the Minister referred in terms of price, technology, product and package. "What is the package ?" is so often the cry in the City of London.

Mr. Malcolm Bruce (Gordon) : The hon. Gentleman makes an important point. Is he aware of the fact that a project worth more than £100 million, which might have come to this country, went instead to Italy because the export credit guarantee premium was 13 per cent. in the UK compared with 8 per cent. in Italy--a difference of more than £6 million on the contract, which was mostly profit ? That is why we are losing out.

Mr. Bell : Obviously all Governments, including ours, put the best face on every aspect of their trading relations. We have heard many a time how the Government have increased export credit guarantees in terms of number, and how the average premium has been reduced. We are also aware that the Treasury goes behind the back of the

Column 537

Department of Trade and Industry and sets premiums which are far too high and thus do not make the firm that is seeking to export competitive. We are trying to weed out the problem which exists between the Department of Trade and Industry and the Treasury. That is why I say that the package offered to exporters is not so good as that offered to exporters in Italy, or certainly those in France and Germany.

When we look at the package available for exporters in relation to the GATT agreement, again we are found wanting and it is inadequate. We know that the Department of Trade and Industry is aware of that. The Ministers know it, but they know that they cannot lift the dead hand of the Treasury from across our export trade. What we shall have to ensure, what we shall have to prepare for, and what we shall see happen is that the day will come when a Government are in office who will ensure that it does.

4.52 pm

Mr. Mark Robinson (Somerton and Frome) : Any negotiation involving 123 nations will always be complex and difficult to bring to a successful conclusion, and the Uruguay round is no better an example of that. That is why, at various times, none of the participants could be certain that the negotiations would reach a satisfactory conclusion, because the length of the negotiations meant that political circumstances and events--dare I say elections ?--would intervene, which caused the positions of the participants to shift with the electoral evening tide or the morning glow of the arrival of a new Government. That is why, at certain stages, the negotiations became extremely polemical. That, perhaps, was to be expected, but it made it extremely difficult for the parties concerned.

I mentioned earlier the role that the British Government were able to play in trying to heal and soothe some of the gulfs that opened up in regard to those polemics. For example, one must pay tribute to my former right hon. and learned Friend, the commissioner in Brussels, Sir Leon Brittan, for the work that was done to bring about the Blair House agreement. It seems like a long time ago as we move on from the final conclusion of the Uruguay round, but had not that work been effectively concluded, we would never have got on to the second stage, which was to try to ensure that the French came into line with the rest of the Community so that the European bloc was able finally to reach an agreed negotiating position.

It is a fact of life that any negotiation of that size, involving as it did 123 nation states, will be a series of mini-negotiations before the final one. I have had the privilege and experience of working in international secretariats, so I know a little bit not just about the 11th hour of negotiation, which always seems to be an inevitability, but about the umpteenth hour of the umpteenth night, when, finally, one is able to reach the desired objective. Would that it was possible to do that in some other way, because one often has a sickening feeling when coming to the negotiations. We know before we start that it will not be before the umpteenth hour of the umpteenth night that we will be in a position to reach the desired objective. When the history of the negotiations comes to be written, Britain's part will increasingly be seen as having been of the highest significance.

Column 538

I take the point made by the hon. Member for Middlesbrough (Mr. Bell), the Opposition spokesman, that we could not achieve everything that we wished in terms of financial services. I do not think that we ever expected that it would be possible through the Uruguay round to achieve success in every single field. At the end of the day, one has to decide the areas where one will give ground to allow the negotiations to be completed, and those where one will fight to get the most satisfactory conclusion that one can. But, of course, the great advantage of the Uruguay round and its predecessors is that the final signing of the agreement is not the end, by any means, of the process. That is where the World Trade Organisation will play a major part.

For those of us who believe in free trade, and I believe that most of us do, the world stands to gain not from tariff barriers or protectionism, but from the ability to increase markets. That is as relevant to the developed world as it is to the developing world. It is through the success of the international mechanisms which have grown up since the second world war that considerable achievements have been made. If it had not been for the honing of those negotiating mechanisms, the prize, which the Uruguay round and the GATT agreement delivered, would not even have been closely within our grasp. It was not just a desirable prize ; it was an essential one. We all talk about growth in trade, and growth in world trade. Those of us who discuss those issues believe that continued growth is essential. We believe in developing new markets. We believe in developing new trade opportunities. I pay tribute to my colleagues on the Front Bench who go around the world fighting for markets and opportunities, and new ones are developing all the time. With the return of South Africa into the international community, I know how hard they have worked in terms of trying to open up the opportunity that the arrival of a new Government in South Africa is bringing to the world trade process.

It is a pity that it is sometimes necessary to resort to threats in the negotiations, but I do not believe that any of what was ultimately achieved in the Uruguay round was achieved as a result of such threats. Far from helping the process, threats merely slow it down and breed uncertainty-- uncertainty that feeds into the market place in our constituencies, the businesses that we are trying to encourage and the employment opportunities that we all spend so much time discussing here.

In my rural constituency, where issues relating to agriculture and agricultural machinery are considered extremely important, there was great relief when the Uruguay round was completed--although in some respects that relief has now turned to uncertainty. No sooner were the negotiations over than the so-called beneficiaries were asking, "What does this mean for me ?" With such a protracted timetable, farmers and business men cannot always find ready answers to their questions--not because Government Departments are sitting on those answers, but because further negotiation will inevitably be necessary to produce them.

I observed that uncertainty the week before last, when I visited the very successful Royal Bath and West show in my constituency. The conclusion and implications of the GATT were at the forefront of farmers' minds. Britain, after all, will benefit from a freer market in agriculture, but that freer market is still slow in arriving.

Column 539

There is no doubt that the agricultural community welcomes the more market-oriented approach to agriculture and the impact that it will have on many agriculture-related businesses ; but they, like any other business, must plan for future opportunities, growth and marketing. They cannot make their plans until they know what the consequential decisions will be. At a time when the value of the pound has fallen and opportunities have increased--especially in the dairy sector-- farmers are frustrated by the fact that, although they can see the opportunities that exist, many of those opportunities still lie beyond their immediate grasp.

The same is true of small and medium-sized businesses. They are all aware of the trading opportunities that exist in the outside world and feel frustrated when they come up against the barriers that are still preventing them from expanding their trade further. Let me add, however, that it is easy for businesses to think that they cannot make progress when often they can.

A printing company in my constituency--Butler and Tanner--recently decided to take on the German market head on. Others in the industry had said that it was not worth trying and that the company would have little success in winning orders ; but it nevertheless took its marketing abilities across to Germany and won the order involved. When I asked what had been the most difficult obstacle to overcome, the managing director said that it had been the shock felt by a German company seeing a British company actually coming over to win an order. When I asked how the company had coped with the language barrier, he said, "We were lucky ; one of our important marketers is a fluent German speaker. Without that linguistic ability, we could not have made the breakthrough."

I believe that such opportunities are available to British business--not just in Europe but in the United States and, indeed, throughout the third world. I am thinking particularly of the far east. Sadly, many business men are frightened by the prospect of going there and trying to win orders for their companies ; but the chance of success is undoubtedly there if they are prepared to make the leap and visit Japan or south-east Asia.

Some of the barriers are breaking down. Those who have turned to the Department of Trade and Industry for help in that regard have been extremely surprised and pleased at the amount of service available to them, but it is not simply a question of saying to the DTI, "I should like to do business in a particular part of the world : please tell me how to do it." Businesses must know the markets for which they are heading, make their plans and then say to the DTI, "This is what we propose to do. What support and help can you give our marketing exercise ?" As I am sure my hon. Friend the Parliamentary Under-Secretary of State will agree, businesses that have taken such action have been highly successful in breaking down barriers-- artificial barriers, rather than the kind that were discussed in the GATT negotiations.

The future is just as important as the successful conclusion of the Uruguay round. We cannot be complacent simply because of the considerable achievements in the removal of tariff barriers to which my right hon. Friend the Minister for Industry referred. Five per cent. is 5 per cent. too much. We must keep up the pressure, encourage our partners and work together at the heart of Europe, while also using our influence. The

Column 540

negotiations were a classic example of Britain's ability to work at the heart of Europe, bringing Europe together but then acting as a bridge between it and the United States.

Other parties to the negotiations may have regretted the fact that, to the outside world, the heart of the negotiations seemed to lie on one side of the conundrum. Everyone took it for granted that, once the argument that had raged between the Americans and the Europeans was successfully concluded, the other countries would fall into line. It was assumed that the remaining issues were not complex or difficult ; in fact, they were extremely complex and extremely difficult. The negotiations lasted for many hours, and different negotiations took place in parallel. Perhaps because the issues involved were not so close to home as other matters covered in our financial newspapers, they did not receive as much coverage as the other side of the equation.

We have to work on and encourage the World Trade Organisation not to fall into a plethora of bureaucracy, but to develop an action programme to take forward those important issues. It is easy to sit back and say, "We have created the World Trade Organisation ; let us relax now." Those at the front line of marketing, business and agriculture want the process to continue so that the opportunities that clearly exist can be secured and their competitiveness and businesses will grow. That will have an impact on employment, which we discuss a great deal in this place.

Unemployment falls because jobs are created ; it has been said time and again and it is a fact of life. Successfully building up and managing our trade opportunities leads to an increase in employment prospects, as we have already seen over the past few months. Reorganisation is still taking place in British industry. Jobs are still being lost, but at the same time jobs are being won which are bringing down the overall level of unemployment. That is happening only because of the market opportunities that are being created at home and overseas. The opportunities that are created overseas bring further job opportunities to other industries that do not naturally or necessarily export overseas, but will benefit from those companies which do.

Over the next decade, we can look forward to a period of great opportunity for Britain in terms of its trading potential. We can do that with even greater confidence because of the work that went into securing the success of this very complex and complicated negotiation.

In the short time available, my right hon. Friend the Minister was able only to touch on the heart of the subject matter which is contained in the voluminous documentation with which some of us are familiar. Without the many hours of hard work that not just British officials but officials from all over the world put in to secure the success of that complex negotiation, we would not perhaps be looking forward to the next 10 years with the same optimism.

After a prolonged period of recession, there is a temptation among commentators to think that it will never end, yet I visit businesses and hear stories of improved order books, fresh opportunities and successful balance sheets. I could easily name a variety of companies that I have visited in my constituency in the past few weeks. I have already talked of a major printing company and Cuprinol is another company in my constituency. I could go on and on. I have noticed changes from a year ago.

Column 541

When I walk into a business--whether it is a large or a small one--the first question I always ask is, "How is the order book looking ?" The prognosis 12 months ago was extremely pessimistic. That pessimism has gone. The position is not uniform ; there is more pessimism in construction than in other sectors, but confidence is growing and gradually making its way across the economic front. I know that at times it is difficult for the Opposition to recognise that because it goes to the heart of much of what they say in terms of their criticism of the Government and the Government's attitude to the economy and trade. That is quite understandable, but as the climate improves and the volume of trade grows, as we see Britain as having one of the most successful records of growth in trade in the European Community, and as we get the figures month after month, the general public begins to recognise them and the aura of confidence starts to return.

As we move on from the GATT negotiation into the next decade, in the next two or three years we shall be taking a different view of the British economy from the rather jaundiced attitude that some people take at the present time. If one is prepared to go out and ask the questions, the seeds are there. They are growing day by day. It is no accident that unemployment is starting to fall, the volume of trade is growing and export opportunities are improving. The signs are there and the recovery is under way.

It always takes the public longer to recognise recovery. It is often six months to a year behind, just as the end of the boom was not noticed, except by connoisseurs, for a year if not two years after it had actually run out of steam.

I say to businesses in my constituency which tell me about the growth in their order books that now is the time to plan for the future growth of their trade. Now is the time to be thinking about making investment decisions ; now is the time to be contacting the bank manager to try to persuade him of the strength and relevance of the business. If companies are involved in exports, now is the time to be going out and looking for market opportunities, which certainly exist and which the successful GATT negotiation has created.

Mr. Deputy Speaker (Mr. Michael Morris) : Before I call the next hon. Member, may I remind hon. Members that this is a debating Chamber and not a Chamber in which the general post is delivered and dealt with.

5.16 pm

Mr. Denis MacShane (Rotherham) : I am sad that the House is so empty for this important debate. The Uruguay round and the creation of the World Trade Organisation will touch and affect everybody in the world, from my constituents in Rotherham to the poorest peasants of the Amazon and India.

Although Napoleon said that England was a nation of shopkeepers, there was really no excuse for sending a grocer to sign the Uruguay round in Marrakesh ; every other leading country in the world sent its top Trade Minister. I regret that the President of the Board of Trade, who would be Prime Minister, has not graced us with his presence this afternoon.

I read the GATT treaty in full. I put a diskette into my computer and started to print it out. It was 100, 200, 300,

Column 542

400 pages--more than 500 pages of densely printed text, a treaty that bears some close study. Socrates said-- [Interruption.]

Mr. Jacques Arnold (Gravesham) : When the hon. Gentleman refers to those hundreds of pages of detailed text, in the light of what he said about my right hon. Friend the Prime Minister, will he bear in mind the fact that not only did my right hon. Friend master all that detail, but he pushed very much of it through ?

Mr. MacShane : I referred not to the Prime Minister but to the President of the Board of Trade, who would be Prime Minister. If the hon. Gentleman would listen, he might know what I was talking about and might understand what he will be talking about later on. Socrates said that any politician who did not know the price of wheat was not worthy to hold any kind of office. That 2,000-year-old adage is true today. We need to know exactly how world trade works in all its intimacy.

The Uruguay round and the new World Trade Organisation will go far beyond trade in finished goods and will cover trade in services and, most important of all, trade in ideas. I believe that "intellectual property rights" is the rather pompous term for what we would call an idea. We are now talking about the buying and selling of ideas, the putting of a price on an idea or a patent that can be injected through biogenetics into agricultural produce and medicines, which will mean that an extra royalty can be demanded from the poorest in the world. That will significantly alter the way that we regard world trade. Patents are power and biogenetics will substantially alter the way in which we trade ideas with each other.

I am not sure whether I speak for all Opposition Members, but I strongly favour free trade. It is, however, ironic that in the previous half century free trade expanded most quickly when full employment lay at the heart of policy on both sides of the Atlantic. The Minister for Industry said that trade was not a zero sum gain. I wish that he were right, but, alas, in the past decade, many people have become substantially worse off because of deregulation and the application of full neo-liberal free trade ideas.

In Mexico, the purchasing power of a worker is about 50 per cent. of what it was 12 years ago before the Mexican Government implemented free trade ideas which culminated in the North American Free Trade Agreement. I did not especially want to cite the case of Rotherham, but the majority of my constituents are worse off now in terms of their purchasing power than they were 15 years ago because of the application of neo-liberal free trade ideas.

Next Section

Home Page