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22 Mar 1999 : Column 77

EU-US Trade

7.16 pm

Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): I beg to move,

The motion stands in the names of my right hon. Friend the Member for Yeovil (Mr. Ashdown) and other right hon. and hon. Friends--[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman is addressing the House and hon. Members must come to order.

Mr. Moore: Thank you, Mr. Deputy Speaker.

A vital part of world trade has entered a mire and, to an increasing extent, the very principles of free and fair international trade are at stake. A dispute about the world banana trade has got out of hand and now threatens the jobs of thousands of people employed in industries throughout the country, ranging from cashmere in the Scottish borders to candles in north Cornwall. Today we learned that not even the Scottish Tunnock wafer is safe.

To ensure the freedom and fairness of world trade, there have to be rules that are agreed by the participants and overseen by a credible international body. Painfully and painstakingly, over several decades, moves were made toward a consensus on that matter, leading only a few years ago to the establishment of the World Trade Organisation. Yet, as the WTO prepares for the new round of trade negotiations later this year, the whole trading edifice is on the verge of collapse.

The origin of the current dispute between Europe and the United States lies in a row over bananas that has rumbled on for many years. At the heart of that dispute is the European Union import regime, which offers special preference to former colonies in the Caribbean and elsewhere. The main points of today's debate relate to the manner in which the dispute has been handled by Europe and America and to the consequences of our failure to resolve it, but there are many other issues--for example, my hon. Friend the Member for Lewes (Mr. Baker) hopes to speak about genetically modified organisms.

It is worth remembering that, although the United States is much exercised about the problems affecting the export of Latin American bananas into Europe, the African, Caribbean and Pacific countries have only 20 per cent. of the European Union market, whereas three north American multinationals--Chiquita, Dole and Del Monte--control two thirds of the world banana market between them. The questions have to be asked, exactly how much do they think they need and how much do they think is fair? Ensuring fairness to African, Caribbean and Pacific countries in the resolution of the dispute will be one of the keys to a decent solution.

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It is evident that there is great animosity between both sides in the dispute. At different stages, my hon. Friends, especially my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood), and I have lobbied various people and organisations, including American ambassadors and the WTO itself. It has been apparent throughout that the WTO is caught in the middle as Europe and the United States flex their diplomatic muscles rather than try to find a solution. The situation is out of hand.

Mr. John Bercow (Buckingham): The hon. Gentleman mentioned three United States companies that he accused of controlling 60 per cent. of the market. Am I mistaken in thinking that the Liberal Democrats used to believe in free trade? Would the hon. Gentleman care to say instead that those companies won that share of the market?

Mr. Moore: The hon. Gentleman may advance the cause of those multinationals later if he catches your eye, Mr. Deputy Speaker. In response to his point, some of the practices of those multinational companies in different parts of the world are entirely questionable. I pointed out that the African, Caribbean and Pacific countries that import to the European Union have only 20 per cent. of the European market. So Conservative Members have ignored the fairness argument, which is surely as important as the free trade argument.

Moving away from bananas, the immediate and painful consequence of this dispute is the loss of thousands of jobs in the cashmere industry, in both small and large operations in Hawick and Innerleithen, and in the candle industry in operations such as Art Candles in Bodmin and Eclipse Candles in the constituency of my hon. Friend the Member for Weston-super-Mare (Mr. Cotter). In the medium and long term, the very principles of international trade may be damaged irrevocably if there is no solution soon.

For months, my hon. Friend the Member for Roxburgh and Berwickshire and I have been putting the case for an early resolution of the dispute to both the European Union and the United States on behalf of our constituents in the cashmere business. The situation was summed up for us when we travelled with my right hon. Friend the Member for Yeovil (Mr. Ashdown) to the World Trade Organisation in Geneva just over a week ago. When we visited the European Union ambassador to the WTO, he was very patient. He took his time and explained that it was all the fault of those nasty Americans. We then travelled around the city of Geneva to meet the American ambassador. She was also patient and energetic. She expressed sympathy with our cause, but explained that it was all the fault of those nasty Europeans.

It is clear that the WTO can resolve the dispute only if both sides make a serious effort to sort out the basic differences. The organisation is under-resourced and under-staffed, and many would say that it is being asked to solve an impossible problem. There is no point in the European Union or the United States blaming each other, because that ignores the real pain endured by our constituents in the borders, where thousands of jobs have been lost in the textile, electronics and farming industries in the past two years.

There can be little doubt that the European Commission has been sleepwalking through this crisis. It has failed at every stage to recognise the seriousness of the American

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Government's intention to sort out the dispute on their own terms. For at least the past six months, the European Commission has been more interested in name calling than in serious diplomatic efforts. In this area--as in so many others recently--the European Commissioners have clearly not been earning their pay.

In the wake of the Commission crisis, nobody knows who is in control. It could not have come at a worse time for these industries and for the jobs that are in jeopardy across the country. The House must send a strong signal to Sir Leon Brittan: although he may be tempted to campaign for another job, he must remain firmly focused on securing a resolution to this dispute before it is too late. We do not want him to get a new job if thousands of others lose theirs.

While the Commission is in limbo, Sir Leon has an opportunity to devise a scheme that will resolve the dispute fairly and equitably and to present it to the President of the European Union, Chancellor Schroder. The President could discuss the issue on his shuttle trips around the capitals of Europe and provide some impetus for a solution. Every day counts. The seasonality of the business--particularly the cashmere industry--means that, if producers do not sort out their orders in the next month, job losses will follow almost immediately.

For its part, the United States has earned little credibility. Notwithstanding the merits of its case, its unilateral response is completely illegal in international law and outwith the framework of the WTO, which the US claims to support. The list of targeted goods is openly cynical and is clearly targeted at the most vulnerable European work forces. The tactics are those of the international bully boy, and our constituents up and down the country are entitled to question whether our special relationship with the United States--of which we hear so much--is worth very much. Both sides in the dispute must recognise that the World Trade Organisation alone is the judge of the merits of the case and must be respected.

The United Kingdom Government clearly appreciate what is at stake. They have been keen throughout to highlight the role of the European Commission and the fact that it is the lead authority in the negotiations. It is also clear that, in choosing the list of goods to target, the Americans wanted to influence the British Government, whom they believe have not tried seriously to solve the problem. Ministers will have an opportunity to respond to that point later, and I recognise that they have made serious efforts in the past few months. However, that is not the perception of the American Government.

The meetings with American officials and ambassadors to which I referred have illustrated an awareness of the seriousness of the situation. The Department of Trade and Industry and the Scottish Office have been keen to listen to our views and those of others. However, the Government must be seen to be getting behind a fair and equitable solution to the banana crisis that Britain actively supports and encourages. While not employing the bully boy tactics of the United States, this Government must be seen to be interested in finding a solution. If they do so, British goods may come off the American hit list.

On 4 March, in response to a private notice question from my hon. Friend the Member for Roxburgh and Berwickshire, the Secretary of State announced that the

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Government would introduce a guarantee scheme for the cashmere industry. My hon. Friend and I welcomed that announcement, which recognises the special conditions that pertain in the cashmere industry and the importance of the American market. However, we face a real problem because the scheme's detailed requirements are not yet in place. Although we accept in principle that the Government intend to introduce the scheme and keep it in place until the dispute is resolved, the problem is that every day without a scheme sees the erosion of the confidence of US customers and of carriers such as DHL and Federal Express. It is critical that we retain that confidence and ensure that we get the orders.

Speed is of the essence. On 4 March, in response to my question, the Secretary of State said:

The statistics of the order book in the past fortnight vividly demonstrate that point. Two weeks ago, the United States' order book for cashmere was worth £4 million. Since then, that amount has doubled. This is a fast-moving situation. Perhaps more tellingly, however, although the amount on the order book has doubled, the same amount again has been lost because people are not prepared to gamble and take on board what the Government have been saying.

Murray Allan, a company in Innerleithen in my constituency, told me today that the latest visit to the United States by one of its sales representatives had resulted in two major US department stores declining to do business. One demanded a personal guarantee and disclaimer and another said that the risks were not worth taking. Those who work at Murray Allan, Ballantyne, Barrie and other companies in the cashmere industry want to know when the scheme will be up and running and the details known. For now, the clouds of uncertainty surround the industry and people are deeply worried. I hope that the Minister, in his response, will be able to give us an assurance and a reason to be optimistic.

As I have said, thousands of people are on the brink of losing their jobs because of macho diplomacy in the capitals of Europe and the United States which is divorced from the world of those whom it affects. Whatever the motivations of the different parties in the dispute, it is clear that one issue is a warm-up for the next set of issues to arise between America and Europe, whether they relate to bovine somatotropin, hormones in beef or genetically modified organisms.

Whatever else we learn from the dispute, it is clear that the macho tactics of the Europeans and the Americans do not work. The only way that we can hope to build up the credibility of the international trading order is to give the WTO full support. The Government have a major responsibility in that and must take the lead. We are in an awful mess and we need to get out of it as soon as possible.

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