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Mr. Tim Smith (Beaconsfield): I hope that you enjoyed that speech, Mr. Deputy Speaker. It was clear that the hon. Member for Brent, East (Mr. Livingstone) not only had not got hold of a copy of the Conservative research department's briefing, but had not obtained any briefing from the Labour party's Front-Bench team either. Had he received any briefing at all, it might well have been from the Referendum party. It struck me that the hon. Gentleman's views on world trade were pretty well 100 per cent. consistent with those of Sir James Goldsmith. Perhaps more people should be aware that the hon. Gentleman and Sir James have views in common on free trade. I certainly disagree with the hon. Gentleman.

I noted in an intervention that the White Paper on trade and investment points at paragraph 12 on page 18 to the relationship between the trade orientation of developing countries and the growth in their living standards. It states:

"The evidence has persuaded more and more countries that cutting themselves off from the world economy is a recipe for stagnation. Increasingly, developing countries are seeking greater integration by switching from inward-orientated to outward-orientated economic strategies and opening their markets."

In the globalised world economy in which we live today, no country--rich or poor, large or small--has any real choice. We all have an interest in free trade and we shall all benefit from it in the form of rising living standards.

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The White Paper also deals with agriculture, which the hon. Member for Brent, East mentioned. Of course, he is right about agriculture--world markets in agriculture need to be freed up and opened up. The White Paper recognises that and states on page 28:

"Efforts to achieve free and open agricultural markets are particularly important to long-term world prosperity and development; resources are significantly mis-allocated in both the developed and developing world."

I agree with that. I do not believe that we shall have genuinely free world trade until we have free trade in all goods and services, including agricultural products.

I wish my right hon. Friend the President of the Board of Trade every success as he leaves today for the World Trade Organisation ministerial conference in Singapore. Although the hon. Member for Rotherham (Mr. MacShane) was rather inclined to talk about my right hon. Friend scarpering off to the sun, everybody knows that Ministers, like everyone else who travels overseas on business, work extremely hard. I personally know many people who spend a great deal of their working life travelling overseas to sell British goods, to invest there or to encourage investment here. It is not an easy life; international travel is not some kind of holiday. Such people work extremely hard in Britain's interests--as do Ministers who travel overseas--and we should pay tribute to them for the work that they do.

The most significant fact that underlies Britain's improved economic performance since 1979 is the quite dramatic improvement in manufacturing productivity. By whatever measure, we have closed the gap between us and other countries in manufacturing productivity. Of course we have more to do, and we should and must catch up with Germany, but we have bridged more than half the gap already. My hon. Friend the Under-Secretary of State might be able to give me the exact figures, but I believe that we have closed as much as two thirds of the gap. That is the Government's single most significant economic achievement, because it underlies so many of the successes to which my hon. Friends have pointed in the debate.

One factor that has contributed directly to improved manufacturing productivity is inward investment. Inward investors simply would not tolerate the level of manufacturing productivity that prevailed in this country in 1979. They brought with them new techniques and technologies and better-quality management, and insisted that they were introduced not just at the plants that they established in the United Kingdom, but among their suppliers. They were not prepared to source in the United Kingdom unless UK component suppliers also raised their productivity and the quality of their goods to the standards to which the investors were accustomed in the countries from which they came.

Short Brothers plc exemplifies how inward investment has improved manufacturing productivity. It was owned by the Government until about 1988. The Treasury refused to invest in the business and the business ran up huge debts. The shop floor was like something out of the 1930s. The company was bought by Bombardier of Canada, which has since then invested hugely on the shop floor. Today, Shorts has some of the most advanced manufacturing technology in the world.

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The most important point for the Northern Ireland economy is that Shorts worked hard to ensure that it was able to subcontract engineering work and buy many of the components that it needed from local manufacturers. It did so to ensure that it was able to meet its requirements, and it has led to an increase in manufacturing productivity in Northern Ireland. Although that activity concerns a small part of the United Kingdom economy, it has been replicated throughout England, Scotland, Wales and, indeed, Northern Ireland, as inward investors have insisted on higher productivity and higher-quality goods.

The hon. Member for Middlesbrough (Mr. Bell) mentioned Northern Ireland, and as I have spent the past couple of days over there, I am glad to be able to say that inward investment into Northern Ireland is still going pretty well--notwithstanding the termination of the ceasefire. Existing investors are increasing their investments. Seagate is investing at Limavady, with the creation of another 760 jobs, and Daewoo, which already invests heavily in the Province, is also increasing its investment, with the creation of a further 330 jobs. I asked Daewoo, a Korean company that invests in the United Kingdom, why it chose to come to the United Kingdom. It told me that it was, first, because this country was part of the single market--it sees it as a platform for exporting to other member states. But it also chose this country because of our labour market.

There are many aspects to the labour market. We have a reliable and skilled work force, and outstandingly good industrial relations compared with those of 18 years ago. We have relatively low non-wage labour costs. The Department for Education and Employment produced an excellent booklet entitled "Jobs", which set out the precise the non-wage labour costs in France, Germany, Spain and the United Kingdom. They are much lower here than in any of those other member states, which is an important consideration for companies that invest here.

It therefore follows that any attempt to impose extra burdens on employers--whether through the social chapter, a minimum wage or any other idea that the Labour party may have for imposing extra costs--must act as a disincentive to inward investors into this country and must make other member states more attractive. That is why any such attempts should be resisted. Companies are also impressed by this country's standard of education and training, the training that can be provided to inward investors and the advantage that we have through our use of the English language.

It may be true that when inward investors first arrive in this country, they are largely assembly operations, importing a large proportion of the components that make up the finished product--a point mentioned by, I think, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). But once they gain confidence in this country, they start to reduce the level of imports and undertake research and development work. Long-established American companies, such as Ford and General Motors, eventually started to produce products designed exclusively for the European market. That is already starting to happen with our more recent inward investors; it will continue to happen because they have confidence in the market in which they have invested.

In an earlier intervention, I mentioned the remarkable turnaround in our balance of trade with Japan. In his speech, my right hon. Friend the President of the Board

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of Trade said that we now have a balance of trade surplus with Japan of, I think, £1 billion. If that is the figure, it shows a remarkable transformation from the position only a few years ago, when we seemed to import almost every high-tech electronic product from Japan and it seemed almost impossible--whether for protectionist reasons or whatever--to export anything to Japan. That position, which is apparent in the far east markets, has been replicated in many other countries.

We are producing an outstandingly good trade performance. Many forecasters would have predicted that, during a period of economic recovery, our trade performance would deteriorate. That has happened previously--as the economy has started to grow, we have sucked in more and more imports and the balance has started to deteriorate. We have now had three or four years of economic growth, yet the balance of trade has not deteriorated--in fact, the balance of payments is roughly in surplus, as would normally be expected. That is an outstanding record.

My sole concern relates to the European single market, which was established nearly five years ago. We are still not making the progress that we ought to be making in some internal markets--I am thinking particularly of insurance, telecommunications and public procurement, but there might be other markets in which more progress ought to be made. Deutsche Telekom has recently been privatised, but I do not believe that that privatisation has been accompanied by the same deregulation of Germany's telecommunications market that in this country accompanied the privatisation of British Telecom.

British companies must be able to compete in continental markets, and German, French and other companies must be able to compete in ours. We have already complied with our half of that deal and we have an extremely open market in telecommunications, but the Government must work hard in Brussels to open up the markets that are still effectively protected and ensure that British companies--many of which are now world leaders because of the opportunities that liberalisation gave them--are able to expand accordingly.

The record on international trade is outstanding, and that is vital because this country is, always has been and always will be hugely involved in international trade. We are the fifth largest exporter, and exports account for a quarter of our gross domestic product. Although it may be true that we have had some difficulty in holding our share of world trade, we have done better than previous Governments in preserving our position. As other economies grow at higher rates of growth from a much lower base, they tend to take a larger proportion of world trade, so it becomes increasingly difficult for a developed country such as ours to maintain the same market share. We nevertheless have a good record, which is why I conclude by wishing my right hon. Friend the Secretary of State every success in his discussions in Singapore.

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