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Mr. Jacques Arnold : I am concerned about the hon. Gentleman's comment on unit costs relating to Portugal. The Portuguese pride themselves on their relatively low level of unemployment because their employment and unit costs are low. Where does the hon. Gentleman gets his figures ?
Mr. Bruce : As I recall, they are European Commission figures for the manufacturing industry. Germany, with its high social and wages costs, has the lowest unit costs. That is the most important part of the equation. If taken across the whole of its economy, the fact that Portugal has low wages may benefit its economy. But that is not the case in manufacturing, partly because it has neither the investment nor the modern plant in its indigenous industry to enable it to perform competitively. That is the nub of the point that I am trying to make.
What really matters to the United Kingdom is our ability to maintain investment and innovation so that we are competitive, and to make things on a lower unit cost basis but of a comparable quality to our major competitors. France and Germany are the countries which we should try to match. We are simply not succeeding in doing that at present.
I was astonished at the Prime Minister's intervention in the European debate about a multi-speed Europe. Although I understand the argument for it, particularly with regard to enlargement, his comment gave many people the idea that the United Kingdom might choose to opt out of the division that includes France, Germany and the Benelux countries. If that is the Government's ambition, I neither share nor accept it. If we cannot compete on equal terms with France, Germany and the Benelux countries, we must get our act together and ensure that we can do so alongside them. We are not at that point and it is foolish of the Government to pretend that we are.
There is a genuine need, which cuts across party politics and also exists outside the House, to recognise that we are not performing well enough as a trading nation to meet the aspirations of the British people. Our chronic balance of payments deficit is unacceptably high and all the indications are that it will worsen as the economy improves. If we do not invest and innovate, and plough money into research and development, we risk being unable to compete not only with high-investment economies such as France, Germany and America but with low-wage economies such as the Pacific tigers and emerging countries elsewhere. We shall then really be in the middle, which will lead to serious problems.
If we start to lose ground, we may be unable to fulfil the hopes and expectations of our people. We shall be unable to reduce unemployment or give people quality jobs with wages that enable them to aspire to the quality of life that they want. The Government may be tempted into political polarisation to ensure that--I shall put it bluntly--the cake is redistributed to sweeten their supporters, thus increasing the social divide. Many Conservative Members would feel uncomfortable about that, although some of us think that it has already happened. If it goes much further in that direction, serious social tensions may be opened up.
In his opening remarks, the Minister said--predictably and, perhaps, slightly rhetorically--that the result of the
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GATT round is an opportunity. Of course, it is an opportunity and we must succeed. Those who got us to this point, despite the difficulties of doing so, are to be congratulated. But we must not say, "This is a wonderful opportunity ; we are a trading nation, so everything will fall out of the sky and we shall be prosperous." An awful lot of countries, from the richest to the poorest, will be fighting for the business, and unless we have a clear and incisive idea of how to maximise our potential and make a commitment to achieving our share of that growing trade, we risk falling further and further behind. We do not have that strategy at present. This is not an attempt to make a party-political point. It is a genuine plea to the Government to aim, along with all sectors of industry, for an objective of a balance of payments surplus, an improvement in our technical competence, a reduction in unit labour costs because we back investment, and a recognition that training, technology, investment, research and development are the keys to success.6.35 pm
Lady Olga Maitland (Sutton and Cheam) : I warmly welcome this debate. I was sorry, however, to hear the hon. Member for Gordon (Mr. Bruce) talking down Britain, which we have heard over and again from the Opposition. Bashing Britain does us no good and will certainly not relieve the problems that he tried to describe. He described a situation which we know is untrue and suggested that all the indications were that things would get worse. That is not correct. Unemployment has come down, fewer companies are going to the wall and productivity is up. What kind of world does the hon. Gentleman live in ? He certainly does not live in this world. Thank goodness that I now have a chance to put the record straight.
As a great trading nation with experience built up over hundreds of years, it is appropriate that Britain should have played such an instrumental role in securing the signing of the Uruguay round in Marrakesh. We all recall the hearty sigh of relief that came over the airwaves when, after eight war -weary years of interminable stop-start negotiations, an agreement was made involving 125 countries. I pay tribute to Sir Leon Brittan who, in his role as British Commissioner on behalf of the EC, negotiated long and hard through many nights with the United States to break a deadlock which threatened the successful outcome of the trade talks. In effect, he averted a trade war.
From my knowledge of Sir Leon, I cannot think of a better person to have fought that battle. He is well known for being tenacious with a strong intellectual ability and we owe him a great debt. His work came on the back of the Government's earlier efforts. As my hon. Friend the Member for Somerton and Frome (Mr. Robinson) said, our Prime Minister has always said that he is committed to working at the heart of Europe. In doing so, he used the opportunity of Britain's presidency of the Community to get both the EC and the US back to the negotiating table to reach an agreement on agriculture. That hardly sounds like someone who is fading away and almost ready for a tombstone that says RIP.
Mr. Malcolm Bruce : You said it.
Lady Olga Maitland : Far from it. The Prime Minister gets on with it. He rolls up his sleeves. Time and again, whether the negotiation is on trade, Europe or the Irish
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difficulties, he is a master when it comes to getting people round a table and making an agreement. He has a sense of detail and an ability to control that brief, from which we have enormously benefited.After that effort in 1992, Britain last year was instrumental in encouraging the Clinton Administration to extend congressional authority to permit the GATT round to be concluded. The Prime Minister then pressed for agreement on tariffs at last year's Tokyo summit. He received a deserved tribute from the Japanese ambassador to this country, who said recently :
"Great Britain is a trail-blazer for free trade in Europe". That is a classic example of where Britain really stands in the world, and to knock Britain in the shabby way that the Opposition do is cheap. I think that we should applaud that : one cannot buy such a tribute. The ambassador was not trying to score political points--he was simply speaking the truth.
I shall speak for a moment about the undoubted benefits that will come out of the new round. As an island nation, comfortable with trading, we can only build on GATT. We are already the world's fifth largest exporter, exporting one quarter of all that we produce. Indeed, the Board of Trade's paper, "Competitiveness : Helping Britain to Win" said that the removal of barriers and opening of doors can only help us :
"UK business cannot keep pace with international competitors without easy access to overseas markets. It also needs . . . competitively priced inputs to its production processes. As business becomes more complex and globalised, the remaining barriers to trade and investment"
can be
"disruptive and damaging. Eliminating barriers benefits UK business and consumers in terms of choice and price for goods and services competitively supplied in open markets."
In the fullness of time, as has already been said several times today, an extra 400,000 jobs could be generated in Britain alone as the successful conclusion to the Uruguay round and as trade opens ever wider.
I can think of several businesses in my Sutton constituency which will immediately benefit, including a company called Pobjoy Mint, which produces coins and sells them worldwide. Far from withering away, as the hon. Member for Gordon tried to suggest, that company increased its exports by £3 million last year and hopes that as a result of the round a fairer arrangement will develop. At present, in the UK it has to pay 17 per cent. VAT on its gold coins, but in Germany there is not such a heavy burden-- indeed, nothing is payable. Another company in my constituency, a small and enterprising company called DesignPlan, which makes public lighting fixtures, is breaking new ground overseas and will undoubtedly benefit. It is showing all the dynamism and energy that the hon. Member for Gordon seems to deny.
Mr. Bruce : First, the hon. Lady is putting words into my mouth that I did not use. Secondly, Britain at the moment has an annual balance of payments deficit running at £12 billion, which is the greatest of any in the European Union. Our biggest trading partner in the union is Spain, which has the second worst deficit. Does she not feel that we should address that issue at the very least ?
Lady Olga Maitland : We have a capital inflow to pay for that deficit.
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Lady Olga Maitland : May I carry on ? Another company in my constituency, Tomy Toys, whose European headquarters is in Sutton, tells me :
"Ratification of GATT brings significant beneficial effects in the short, medium and long term. Failure to ratify restricts supply and choice to the consumer and increases prices."
In future, if all goes smoothly, Christmas and birthday children's toys will decrease in price. That can only be good news for parents, aunts, uncles and godparents. I agree with my hon. Friend the Member for Somerton and Frome that confidence has certainly started returning in my constituency and any Conservative Member is able to give endless examples. It is a pity that the Opposition seem to find it so difficult to recognise that.
With my interest in Northern Ireland, I know that there are companies there who will benefit. Britain is especially strong in the pharmaceutical sector and I mention Norbrook Laboratories in County Down, which this year won the Queen's award for industry for exports. By successfully selling animal vaccines world wide, that company is able to provide more employment in Ulster and in turn, with its profits, can afford to take an active role in cross-community activities. GATT will provide ever more opportunities, so in the end everyone in the Province will benefit.
In global terms, world income will be boosted by £180 billion once the round has come into effect and I trust that future generations, and Parliaments here, will remember that it was our Prime Minister who pitted his energy and commitment to that end.
A word of caution, however. For the opening of trade and competitiveness to be effective, everyone must understand the need for, and value of, free trade. It is no good any country, political party or individual saying, "Yes, I support it" and then undermining its spirit. The Opposition seem to want to have it both ways. They support GATT but when the chips are down the Labour party backed the Euro-Socialist manifesto, which argued that the principle of free trade must not be used to undermine social standards in Europe. Indeed, the hon. Member for Middlesbrough (Mr. Bell) complained that there was no mention of workers' rights in GATT. The hon. Member for Gordon also, by implication, backs the social chapter.That is contradictory, especially if those people persist in arguing for the implementation of the social chapter to a point where it will be a gross burden on businesses and undermine competitiveness. It will mean that businesses will not be able to produce goods at a price at which they can be sold world wide.
Socialists throughout Europe are beginning to wake up to free trade, but it takes time. Especially for the eastern bloc countries who, for 70 years, operated on burdensome centralised economies, learning new free trade habits takes time. However, there is no excuse for the Opposition here giving anything less than whole-hearted support to the agreement, bearing in mind the natural instincts and successful record of business in Britain.
Another word of caution. Although I welcome the establishment of the World Trade Organisation on 1 January 1995, I can only hope that all the 125 players will make the ratification process go through smoothly before implementation takes place. An agony of indecision and delay will be harmful. As Peter Sutherland, the Director General of GATT, said in his statement in May :
"It is essential that those who are the major trading partners of virtually every country in the world must lead the ratification."
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I understand that, according to press reports, only about 30 of about 120 countries which agreed the settlement have ratified the pact. In a recent interview in the Financial Times , Mr. Sutherland went on to express the view that"the birth of the WTO should not be held hostage to domestic political in- fighting--nor to transient trade squabbles, which tend to be of mind- withering inconsequence when measured against the crucial importance of the new multi-lateral trading system".
In relation to that, we might spare a thought for events taking place in Washington, as my hon. Friend the Member for Esher (Mr. Taylor) discussed, but I take comfort from the knowledge that President Clinton has given his support, as do the vast majority of Congress. I hope that, in the end, they will outweigh the doubters who might try to destroy the process.
In short, everyone must understand and obey the rules. We do not want countries across the world to revert to what I can only call "business as usual", perpetuating their preoccupation--justified or not--with bilateral trade balances. The ideals and the targets are in place, covering a range of areas such as dismantling remaining barriers, opening new markets, trade promotion, dumping and so on. However, I spot a weakness--what sanctions will the WTO have should things go wrong ? It was appropriate that the hon. Member for Middlesbrough should ask how long we should wait and how we would enforce any sanctions. What sort of penalties could be imposed on a country which had been repeatedly obstructive and continually in breach of the agreements ?
To what degree have we given that problem serious thought, or are we trying to shelve it by saying, "We won't fall into old habits, such as allowing five years to pass before a dispute is sorted out ; we will try to speed up the process to 18 months." That is not enough. We need to know what sanctions and pressures can be put on countries failing to comply with the agreements. I hope that the trade dispute procedures will be thoroughly analysed and I trust that detailed attention will be paid to this soon. I foresee some serious problems if that does not happen.
I want to make a brief plea about the situation in China, which is a country with enormous potential. It has one fifth of the world's population, but it is locked away from the rest of the world. I hope that we shall be able to pave the way for it eventually to join the GATT process. I accept that China's economy, which has been so centralised, has a long way to go to catch up with what I call the developing nations. However, there is progress to be made and there should be some close analysis of what can be done. I am aware that China is not the easiest country with which to negotiate as it has different laws on a single issue, depending on the part of the country : the free enterprise zones have one set of rules, but there is another set elsewhere, making life difficult for the business man trying to find his way through it all.
One question that has caused tremendous debate throughout the world is the extent to which we should allow our concern about human rights to play a part in the degree to which we trade with China. We were all horrified by the events of Tiananmen square and it was natural to want to step back and say, "Close the door, shut out China and impose sanctions ; we must lock China away from the rest of the world." However, that is not the way to go about things. We should use every possible method to make clear our feelings about human rights, but the danger in locking a country out of the mainstream of the world is that that
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country will never learn the standards that we want it to accept. More than that, it is by developing trade links that cultures can achieve the parity that we would all accept.Mr. Corbyn : Does the hon. Lady accept that some of the worst abuses of human rights occur in the slave labour factories in the economic development zones, where children and young people are paid disgracefully and disgustingly low wages so that the products that they make can be exported to western Europe and the USA ? Does she further accept that her argument of non-interference is exactly the argument that the Conservative party and Government used in South Africa during the era of apartheid ? Are there not many other examples of that ?
Lady Olga Maitland : It is a matter not of non-interference or turning one's back on tragedy, but of applying appropriate pressure at the appropriate time and in the appropriate way. Is the hon. Gentleman saying that only by supporting the African National Congress in exile could we have helped to solve the problems in South Africa ? The answer must be no. What really changed events in South Africa was the fact that our Government worked with the South African Government and reassured them that by abandoning apartheid they would not be abandoning their hearts, souls and cultural heritage. We helped them through the process and I have no doubt that our role was crucial.
GATT will have a beneficial effect on the less developed countries. During the past year I briefly visited Sri Lanka and Malawi and I have no doubt that those developing countries, which are food exporters, will benefit from the agricultural agreements which provide greater market access and reduce subsidies. It is another example of the genuine, world-wide benefit that will be gained. I want briefly to touch on the importance of export promotion. I pay tribute to my right hon. Friend the President of the Board of Trade and his team--he cannot operate alone--for their enormous energy, vision and commitment. I can give a personal example of that. I accompanied a firm from my constituency at a meeting with one of the ministerial team-- the Minister for Trade, my hon. Friend the Member for Wiltshire, North (Mr. Needham)--and we had a fine show of support. We discussed the export credits guarantee issue and there was a satisfactory outcome. My hon. Friend the Minister for Trade has shown tremendous energy in motivating and supporting companies, big and small.
I take issue with the hon. Member for Gordon, who tried to suggest that small or medium-sized companies are ignored. That has not been my experience. Indeed, I know of very satisfied customers in my part of the world. Nevertheless, I want to encourage the Department of Trade and Industry to continue its assistance to companies trading overseas. It has increased the budget and I hope that it will be increased again. I have no doubt that the Department will reap a reward far greater than the money that it has invested. When overseas, I have noted the enormous energy that our rivals--whether the French, the Germans or the Americans--have put into competition. I am proud that we can hold up our heads, but I would like Britain to have a sharper cutting edge.
This has been an enormously important debate and I feel privileged to have taken part in it. The small businesses in my constituency can look out into a world of
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enormous opportunity. I can truly say that they thank this Government and our Prime Minister, who is enormously dedicated to tough negotiations to get the best possible result for our companies.6.58 pm
Mr. Barry Jones (Alyn and Deeside) : The hon. Member for Sutton and Cheam (Lady Olga Maitland) will forgive me if I do not follow her distinctive train of thought. I disagreed with much that she said, but I listened with care to the remarks of the Minister for Industry. He paid tribute, as he had to do, to those who negotiated the agreement and he emphasised that, besides rights, nations also have obligations in that important matter.
I pricked up my ears when the Minister mentioned a level playing field, because I want that for the traders and manufacturers of Britain who sell and make our nation's goods. I agreed with the Minister's remarks about free trade, but recalled the remarks of workers in Deeside, who believe that free trade should not provide an easy route for foreign competitors into markets in our country. Our constituents' jobs are at stake, and we shall always look to Ministers to make sure, when bringing home a good GATT, that our work forces do not suffer in any way.
Britain's balance of trade is of relative value in any discussion of GATT. That colossal deficit is a sobering feature of our economic national life. I do not believe that Governments have adequately addressed the massive deficit that still occurs month after month. I will try to put this debate in context, as the Minister did in his usual courteous style, by referring to Britain's loss of manufacturing. I hope that the details announced today will not mean a further loss of that capacity in the years immediately ahead. We have seen the virtual wiping out of our machine tool industry, loss of our capacity to make titanium granules, cuts in our steel-making capability, massive loss of jobs and capability in the aerospace and textile industries, virtual quartering of our cement manufacturing, virtual elimination of our coal and shipbuilding industries, and less and less computer manufacturing capability.
All that happened in recent times. Britain's loss of manufacturing capacity since 1980 has been stupendous, and our nation has yet to realise the awesome nature of losses in that sphere of our national life. I remain critical of the then Chancellor of the Exchequer, Sir Geoffrey Howe, and of the then Secretary of State for Industry, Sir Keith Joseph. Both are now members of another place and are in many ways honoured in British public life. When they were Cabinet Ministers and dominant in their party's councils, they let Britain down. For several years after their appointment by Margaret Thatcher, they allowed too much of Britain's manufacturing capability to go to the wall. I remain deeply concerned about Britain's manufacturing capacity into the next century.
Our future will rest on two basic industries that survive, albeit in a greatly slimmed-down form. I refer to the steel and aerospace industries. The steel-making workers have been co-operative almost to a fault. They are brilliant at being productive and delivering high-quality goods. The British steel industry is now lean, competitive, successful and fit. It is an industry of which every right hon. and hon. Member can be proud--but at a massive cost in closures and redundancies.
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The past three years have seen plant closures also in Britain's aerospace industry, with tens of thousands of job losses. There are still major question marks over the future of that industry. The Government are guilty of undervaluing those seed corn industries. Without them, Britain will have a poor future as an industrial nation in the next century. If the Government will fight for and encourage, promote and invest in those industries, they can enjoy great success. The quality of their work forces, management and products is second to none.I was perplexed to read in the business news section of The Times today that the bellwether of British industry, ICI, proposes to invest £250 million not in Britain but in Pakistan, and is considering several major investments in various regions of China. Recently, we saw the sale of Rover to BMW and the sale by British Aerospace of its corporate jets division to Raytheon Inc. Accordingly, there remain questions about the policies extant in the boardrooms of British industry and the nature of the Government's leadership and encouragement.
I want to raise several questions about the Airbus project in particular, which I hope the Under-Secretary of State for Corporate Affairs will answer when he winds up the debate. There may not have been a GATT agreement had not the civil aerospace industry been removed from negotiations at the last moment to facilitate a declaration. I understand that there are question marks over specific aspects of European Airbus sales to north America. Where does GATT stand in that respect ?
President Clinton, without any shadow of doubt, stands up and battles for and encourages the Boeing work force. He regularly visits Seattle where the jumbo jet is made and the new 777 is being constructed, and tells the Boeing work force that he is on their side and will not let them down. I would like the same bold statements to be made by Ministers to the British Airbus work force and to the Airbus company in Europe.
Mr. Jacques Arnold : As to the Boeing 777, large Airbus project and the new generation of supersonic passenger aircraft, would not it be far better for President Clinton to encourage more airlines to order such aircraft ? Only British Airways has shown a definite interest in such projects, and it is worth bearing in mind the fact that British Airways was privatised--against which the hon. Gentleman voted.
Mr. Jones : I regret having given way to the hon. Gentleman. With his garbled intervention, he does not realise that British Airways refused to buy, in any worth while number, the Airbus. Workers in my constituency tell me that they wish British Airways to put in the same orders and show the same commitment as Air France and Lufthansa. I ask the Minister to consider how he might persuade British Airways to fly the flag, as it were, and purchase the Airbus, which many of the world's airlines are prepared to do, and they testify to its success.
Mr. Jacques Arnold : Will the hon. Gentleman give way ?
Mr. Jones : I will not give way further to the hon. Gentleman.
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I believe that the British Government and, indeed, the Governments of Europe, must be very firm with the United States and the future sales of Airbus. Many thousands of jobs in Britain depend on such backing.In the context of the debate on GATT, and bearing in mind the difficulties that we have under GATT in terms of Airbus and the United States market, I refer to the future large aircraft project. I am told that some 7,000 British Aerospace jobs will depend directly on Her Majesty's Government, principally the Ministry of Defence, ordering the FLA. I have raised the matter with the Department of Trade and Industry and the Ministry of Defence. I have always found Ministers at the Department of Trade and Industry courteous and responsive to my queries about the FLA. I believe that they have informed advice from their section within the civil service and within the Department. Whenever I have visited the Department, I, and the work force leaders whom I take to see civil servants and Ministers, have been well received, not least by the right hon. Member for Hove (Mr. Sainsbury), the Minister for Industry, who opened the debate.
I emphasise that the FLA project is of massive importance to British manufacturing industry. It will have massive implications for trade, exports, skills and training, and I very much hope that the Government will look to the interests of Britain and not of a company based overseas. I must tell the Parliamentary Under-Secretary that I have received some 107 letters from my constituents at the BAe Airbus factory at Broughton. Every one expresses deep concern at what would happen to our great aerospace industry if there were no substantial orders for the FLA by the Ministry of Defence. My constituents tell me that they want a level playing field. It is a coincidence that, as I make my speech on behalf of the FLA and my constituents, the current issue of The House Magazine contains a two-page briefing about the FLA. In case the Parliamentary Under-Secretary has not seen it, it says :
"Today, the Government is faced with a decision that could affect all our tomorrows."
It continues :
"The UK has the chance to be part of building Europe's own purpose-built transport aircraft, the FLA (short for Future Large Aircraft).
Designed to replace America's venerable Hercules, only FLA can carry the key equipment today's military so desperately need . . . Unfortunately, there is a very real danger that the wrong choice may again be made. It's time to quit stalling. We urge the Government to give FLA the green light and so ensure future generations actually have a future. After all, a decision that carries this much weight shouldn't be taken lightly."
I draw that to the attention of Ministers and hope that they will respond later.
I have received many letters on the matter from the 2,000-plus workers at BAe Airbus at Broughton. I now quote from a letter from one of my constituents from Connah's Quay, Deeside, who says : "it now seems certain that the Government's short sightedness will allow the opportunity of being a founder member of the F.L.A. project to pass us by, once again putting the whole of the U.K. Aerospace Industry in doubt with regards its future."
That may or may not be the case, but my correspondent continues : "If our major partners in the Airbus project are allowed to dominate the F.L.A. project without input from the U.K., then there must surely come a time when they"
in Europe
"will feel that the Airbus project can also be continued without U.K. involvement."
"What then ? Thousands more jobless with the resultant loss of revenue from Tax and N.I. contributions."
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That may or may not be the case, but it shows that, in the context of a serious debate on GATT, and bearing in mind the difficulties over Airbus, Ministers have a real case to answer about the project. I hope that the Department of Trade and Industry will leave the Ministry of Defence in no doubt as to what should happen in the placing of orders for the FLA programme.I must tell the Minister that, on the Order Paper of 18 May 1994, there is an early-day motion entitled, "European Future Large Aircraft Programme." It says :
"That this House notes that a commitment from Her Majesty's Government to the European Future Large Aircraft programme would secure and create employment throughout the United Kingdom and would provide high technology work for British Aerospace, Rolls-Royce and Shorts as well as significant prospects for over 60 equipment supply companies".
I rest my case as of now.
In conclusion, I emphasise that trade is Britain's lifeblood. It is as simple and as important as that. But I think that Britain has lost too much of its industrial base in the past 15 years. It appears to me that Her Majesty's Government have no strategy for the next century for our remaining industries. I believe that, compared with France, Japan, the United States or Germany, we in Britain give the impression of being amateur in our defence and promotion of our industries and trade. Either we export, or, as a nation, we die. As a trading nation, we must export. We must, therefore, invest in and encourage our industries. I know that, now, the British market is heavily penetrated by our industrial rivals. I have already mentioned some of them. I pose the question to Ministers, just how good is the GATT for Britain's future ? Will it reverse the obvious decline in our industrial capacity in the immediate years ahead ? Those are the vital questions. The sad fact is that the Government's White Paper on competitiveness, which was brought to the House last month, appeared, to many of us on the Opposition Benches, to be lacking, to be toothless. It seemed to lack true financial commitment to British industry. It appeared to many of us that the Prime Minister and his Treasury allies had decided to outmanoeuvre the President of the Board of Trade and prevent him from coming to the House with his White Paper for a truly powerful strategy for our manufacturing industries to the end of the century and beyond.
I think that hon. Members are entitled to express at least some scepticism- -if not cynicism--about the claims that have been made for GATT today, notwithstanding the elegant speech made by the Minister for Industry. I want the Minister to be successful ; Britain needs him to be successful ; but he is serving a Cabinet that fails to devise a strategy and leaves the fate of our great manufacturing industries to the vagaries of market forces. On that basis, I find Government policy wholly lacking.
7.19 pm
Mr. Jacques Arnold (Gravesham) : The hon. Member for Alyn and Deeside (Mr. Jones) seems to have a vested interest in droning the last rites for British manufacturing industry. Let me remind him that the United Kingdom exports more manufactured goods per head than either the United States or Japan--although no one would believe that from what he said.
I welcome the Marrakesh Final Act agreement on GATT. It has been a long time coming. The Uruguay round was launched eight years ago in 1986, after the Punta del Este ministerial conference ; it has taken from then until now to achieve the final agreement. Nevertheless, it is a
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great achievement in view of the large number of countries that had to be brought into line, each with its considerable vested interests.We should bear in mind that free and fair trade is especially important to the United Kingdom, which is the world's fifth largest exporter, exporting a quarter of all that we produce. It is estimated that, over time, an extra 400,000 jobs could be generated in the UK as a result of the successful conclusion of the round. That is particularly valuable in constituencies such as mine, which certainly need more jobs.
The Uruguay round will help British industry by bringing down barriers to exports of manufactured goods and services. It will give manufacturers greater protection against piracy of their copyrights, patents and designs, and strengthen the world trading system against unfair practices by individual countries. It is worth remembering that the UK is the world's fifth largest exporter of goods and commercial services and that our markets are already among the most open. This country therefore stands to be one of the biggest gainers from cuts in worldwide tariffs, quotas and other restrictions. The achievement, ratification and putting into effect of the GATT agreement have been essential not only to Britain but to the developing world. It is all very well to ask the countries of the developing world to scrap their "import substitution" policies and open their markets ; for that they need foreign currency, which they cannot earn unless they can sell into our markets. If we have trade barriers and tariffs set against them, they do not have a chance, but if they can earn foreign exchange by exporting they will earn not only money but self- respect. That is much better than the begging-bowl mentality so beloved of Opposition Members and that is why the measures on agriculture are so important.
Agriculture is being brought within the rules of multilateral trade for the first time through the GATT agreement. Over a period, that will create the conditions for a fairer and more market-orientated agricultural trading system. The agreement provides a strong basis for further liberalisation in the future. I welcome the conversion of all restrictions on imports of agricultural products to tariffs, which will make the whole matter very much more transparent and easier to deal with. Let us hope that the significance of the Poitiers customs house is a thing of the past.
We should also welcome the other provisions, such as the 36 per cent. reduction in tariffs over six years with a minimum cut of 15 per cent. in every tariff ; the guarantee that at least 3 per cent. of domestic markets for agricultural products will be open to imports, rising to 5 per cent. by 1999 ; and controls on subsidies, with domestic support reduced by 20 per cent. from the 1986 to the 1988 level, expenditure on export subsidies reduced by 36 per cent. and the volume of subsidised exports cut by 21 per cent. from their average levels between 1986 and 1990. The agreement will provide a basis for freer trade, and in time will extend choice and lower prices for consumers while reducing the burden of agricultural subsidies paid by taxpayers around the world--not least in this country.
The biggest danger to international world trade has been--and, to a considerable extent, remains--the growth of trading blocs, which are themselves subject to pressures for introversion and the creation of a fortress mentality hiding behind tariff and other barriers. That has been a real danger in the European Community, especially under the
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inspiration of the French ; it has also been a problem in the United States, which is now extending its bloc through the North American Free Trade Agreement, to which a number of Latin American countries wish to adhere. I would much rather see a free trading world with co-operating trade areas--a reformed European Community, a NAFTA and a Mercosur in Latin America.I want to focus on Latin America, a region that has been transformed politically and economically over the past few years. Every Latin American country except Cuba is a democracy, and all those countries have enthusiastically embraced free trade. They have cut tariffs unilaterally. The House should concentrate on facts such as these. In 1985, when the process of liberalisation began, the average tariff level in Latin America was 56 per cent. ; in 1992--the most recent date for which figures are available--it was 16 per cent. That change was carried out unilaterally, and showed Latin America's dedication to free trade. The response of the rest of the world is long overdue.
The Latin Americans were dismayed by French policy in the European Community, not least because exports from France, with its vast metropolitan agricultural areas and its Caribbean overseas departments, compete directly with many of Latin America's agricultural exports. France's approach has been supported by Spain with its Canary Islands dependencies and Portugal with Madeira. The Latin American countries have increasingly come to realise that the interests of Britain and the new Latin America have much in common. We are, after all, the fifth largest exporting nation and we export more per head than the United States or Japan. The Latin American countries depend on free trade for the success of their new economic policies. As I have said, we have much in common and I believe that Britain is very much the champion within the European Community of the Latin American countries.
The House should give credit to those who have worked so hard for the successful conclusion of the GATT round. My right hon. Friend the Minister for Industry mentioned the successive endeavours of Arthur Dunkel and Peter Sutherland, who have worked hard ; I would add the name of our right hon. Friend the Prime Minister, who has fought consistently to keep the negotiations going. Following the negotiations over the Maastricht treaty, he has again shown himself to be a master of negotiation, pushing the British interest. Let me also add the name of the right hon. Sir Leon Brittan, who did so much to secure agreement between the European Community and the United States.
The United Kingdom played an important role in securing agreement in the Uruguay round. It was summed up best by the Japanese ambassador in London, who said last year :
"Great Britain is a trail blazer for free trade in Europe." Lastly, I would agree with my hon. Friend the Member for Esher (Mr. Taylor) that we should not take it for granted that GATT will be ratified by the European Community and the United States. We do not know what view the new European Parliament elected last week will take. We have lost many free trade United Kingdom members like my own erstwhile Member of the European Parliament, Ben Patterson. I hope that his successors and those of others will make sure that the hard pressure for free trade, in the European Community and in the world generally, will be kept up.
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I hope that today's debate will signify the assent of the House to the ratification by Britain of GATT. The GATT deal also has to be ratified by the United States Congress. The loss of tariff revenue to the United States Government may produce odd pressures on Capitol hill. We must wish President Clinton godspeed in his current negotiations. The transformation in the world with the collapse of the socialist bloc and the development in countries in Latin America and Africa of free trade and free market economies gives us very much to hope for.The recent GATT deal will provide a wide base for the development of that freedom, both politically and in the economy. It is incumbent on the House to campaign steadily in the debate and onwards for free trade throughout the world and to press on to achieve the ratification of GATT and the successful establishment of the World Trade Organisation so that there can be free trade and prosperity throughout the world.
7.30 pm
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