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Mr. Stephen: Does my right hon. Friend agree that the working time directive has nothing to do with a shorter working week, but is just an attempt by the unions to get more money for the same or even less work, and that such socialist and corporatist nonsense is making continental Europe uncompetitive?

Mr. Denis MacShane (Rotherham): Make them work longer--a 56 or 64-hour week.

Mr. Lang: My hon. Friend is right. The working time directive, like many of the other burdens on business, is not to do with health and safety but is to do with social engineering--[Interruption.]

Madam Deputy Speaker (Dame Janet Fookes): Order. If the hon. Member for Rotherham (Mr. MacShane) wishes to intervene, I am sure that the Minister will take account of that, but repeated sedentary interventions are not in order.

Mr. Lang: It is because continental Governments are imposing over-regulation and burdens on their business that so many of the companies from those countries are locating in this country.

Some hon. Members may be aware of the case of Mr. Olivier Cadic. He is a French business man who, earlier this year, announced that he planned to move his business--a high-tech graphics company--to Ashford in Kent. He said that high social costs in France were pricing him out of his market. He is not alone. The inward investment agency Locate in Kent has helped 33 foreign companies set up business in that county in the past year alone.

Continental employers know that burdens on business are destroying their competitiveness. They plead with their Governments to get rid of them. Hans-Olaf Henkel, president of the German employers federation, the BDI, said:

"we have too rigid labour laws. We have too high social costs and taxes. We work the shortest week in Europe. The German government spends 50 per cent. of GDP as opposed to 42 per cent. in Britain. No wonder we have a problem."

From our position of strength in the world--through trade and inward investment--we are able to be at the forefront in advocating multilateral free trade. The Government have the vision to recognise that globalisation--the increasing integration of economic activities throughout the world--means that the United Kingdom has no choice but to trade on a global scale. The growth in trade in goods has been phenomenal, increasing

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more than 14-fold since 1950. That has brought us enormous benefits, because about a quarter of our gross domestic product comes from trade in goods and services.

I want Britain, from that position of strength, to lead the world in promoting free trade. We did that in Europe; the single market was largely a British initiative and our leading role helped to galvanise other nations into action. Now is the time for Britain to turn evangelical in support of global free trade.

I am leaving for Singapore today, to pursue Britain's liberalising agenda, with more than 100 Trade Ministers from throughout the world, at the first ministerial conference of the World Trade Organisation.

Mr. MacShane: The President of the Board of Trade is now off, with a bevy of advisers, for a week in the sun in Singapore. We all wish him well on his trip and hope that he has a nice holiday, but is it not a scandal that Britain is being evangelical? A century ago, William Wilberforce took the lead in abolishing slavery, but the Secretary of State is going to the sun in Singapore to veto efforts to ban child labour in the context of World Trade Organisation discussions--efforts led by America, France and other progressive evangelical countries. It is a scandal that he is going there to veto efforts to place child labour on the WTO's agenda.

Mr. Lang: The World Trade Organisation is a trade organisation, not a social organisation. It is responsible for ensuring trade liberalisation, not for seeking to impose obligations on emerging economies. The best way to help economies that are emerging and that wish to raise their labour standards is to trade with them, so that prosperity spreads to those countries. I shall be in Singapore to support the agreed line of the European Union on trade and labour issues.

Our hand at the Singapore conference will be strengthened by our membership of the European Union. As members of the world's largest trading bloc, we have massive influence on international trade issues.

At next week's conference, I shall press for three priorities: first, a substantial work programme to carry forward trade liberalisation in the WTO; secondly, the completion, at least in outline, of an information technology agreement aimed at the progressive elimination of tariffs on IT products; and thirdly, real progress on negotiations to liberalise telecommunications services.

The information technology agreement will mean lower costs for users and manufacturers and it will help businesses to export. It is estimated that that agreement will benefit British industry by at least £200 million a year. That is a win-win objective in a sector of enormous importance globally, the backbone of developed and developing economies alike. Likewise, the potential gains from a world telecoms deal are huge.

We gain when both we and others open markets. For that reason, we want to secure a substantial work programme to tackle the barriers to trade that confront our companies in global markets. Our priorities offer the best prospect of real liberalisation for British industry and consumers. Let me expand on a few of them.

We want Government procurement to be opened up globally. That accounts for a substantial proportion of economic activity--as much as 10 to 15 per cent. of GDP

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in the European Union and in the United States--but large volumes of trade involving central and local government and nationalised industries are protected. We must ensure efficient use of what is, after all, public money.

We recognise that import and export regulations and procedures incur considerable costs for our businesses. The United Nations Conference on Trade and Development has estimated that compliance with regulations averages as much as 10 per cent. of the value of world trade in goods. We want work to take place to simplify such procedures and cut costs.

Business continues to tell us that one of its biggest worries is that standards and technical regulations often differ regionally and nationally. Again, we need to focus work at an international level.

EU exporters are losing an estimated £2 billion a year on piracy of software, books and compact discs, to name just a few items. We would gain from measures in the area of intellectual property rights and we shall seek to make progress there.

Our record of success in investment--inward and outward--means that it is vital for our companies to be able to make their investment decisions confidently, at home and overseas. We are committed to working for liberal and open markets in investment world wide. To both British business and the Government, work in the WTO on trade and investment is a priority.

I have spoken about our record on inward investment, but I want to make it clear that outward investment is advantageous, too. Recently, someone said to me, on a very public platform--she is not here today, so I shall not name her--that the fact that we have record flows of investment overseas shows Britain to be in a decrepit state. I was flabbergasted at the scale of that incomprehension, because nothing could be a greater endorsement of the success that Britain enjoys than the fact that our self-confident investors are buying and setting up businesses and making money throughout the world.

For free traders, trade is not one-way. Just as wishing to export but not to import is a sign of a protectionist mentality, wanting to be the recipient of investment without wishing to engage in it betrays a fundamental lack of understanding of the virtues of trade. People should be free to find the best opportunities, the best markets, the best investments anywhere in the world, without constraints. In that way, people can make the fullest use of their skills and resources; competition can ensure maximum efficiency; people can enjoy the choice and diversity that the whole world offers; and the quantum of economic activity, and thence employment, increases.

Britain does extremely well out of its overseas investments. Last year, British companies earned nearly £25 billion from the total stock of outward direct investment of £214 billion--an extremely high rate of return. In fact Britain receives more income, and more interest and dividends, from its ownership of companies overseas than it pays out to those who own companies in Britain. The surplus is approaching £10 billion.

Outward investment benefits Britain in other ways, including our exports. The Government commissioned a major study by KPMG to study the effects of outward investment. Its principal findings were that, for most companies, overseas investment is driven by market expansion and development. Other companies sought to

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improve service to existing customers overseas, or to establish a regional hub from which to expand further an existing overseas market.

One example that I came across recently on a visit to Mexico was that of a United Kingdom manufacturer of high-tech equipment. Having successfully built up an export market for its products there, that company is considering building a production facility in Mexico, which would enable it to expand its marketing effort to include north America and perhaps Latin America.

Such investment brings benefits to the British companies involved and, therefore, to the United Kingdom as a whole, in ways that could not be achieved simply through exporting goods. Closeness to one's market and the ability to respond to changing customer requirements, as well as local good will, are vital to success. The KPMG study concluded that, far from displacing trade, such investment enhances it overall.

The assertion by some that outward investment is simply "exporting jobs" is simply not true. The KPMG survey found that in only a very few cases of outward investment was production moved overseas to reduce input costs. It found no evidence that investment overseas displaced British production and employment levels, domestic and export sales, or quality of service to existing customers. Indeed, the evidence showed that many outward investments were accompanied by increases in sales and production from British facilities.

The benefits of a liberal international investment regime are palpable. But the core of my thesis today is the proposition that inward investment and outward investment, linked to an export drive, can help to form a golden triangle of prosperity for Britain, each interacting with and benefiting the other.

Another return from the high level of overseas investment is the establishment of a depth of experience in a wide range of markets. That has made a significant contribution to the success of sales of British financial and advisory services abroad.

In short, investment abroad, wherever there are opportunities that are not matched at home, enables British resources to be used more efficiently and increases our national income. So although attention is often focused on the success stories and benefits of inward investment, I want to make it clear that I regard outward investment, too, as a source of major benefit to the British economy. Cross-border investment brings advantages to both sides. That is why overseas companies come here and why British companies look overseas, as well as at home, for opportunities. Both forms of investment help our exports.

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