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1.42 pm

The Minister for Energy and Industry (Mr. John Battle): I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

'recognises the importance of open markets between the EU and the US, notes that in general the trade relationship is a good one; acknowledges the work being undertaken by the Government in seeking a solution to the banana disputes in a way that is World Trade Organisation compatible and is helpful to British industry and to those countries economically dependent on exports of bananas; welcomes the Government's commitment to find a solution to issues concerning US food exports that is good for the consumer, respects scientific research and avoids protectionism; welcomes the Government's commitment to consider sustainable development issues in its approach to trade issues as well as the interest of developing countries; and endorses the Government's support for comprehensive trade negotiations to be launched at the World Trade Organisation Ministerial meeting in Seattle in late 1999.'.

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I know that it is not fashionable to read out the detail of a Government amendment to make sure that people are clear about what it says, but in the light of the speech by the hon. Member for Eastleigh (Mr. Chidgey), I am tempted to do so and to urge him to vote for it. It gives him some of the assurances that he seeks.

We recognise

"the importance of open markets between the EU and the US".

I would have thought that Liberals were in favour of open markets. We also note that in general--I will spell out how--our trade relationship with the US is successful and good. We have worked to find a way through the banana dispute, to which the hon. Gentleman referred, in a way that was

"helpful to British industry and to those countries economically dependent on exports of bananas".

The amendment also expresses our

"commitment to find a solution to issues concerning US food exports that is good for the consumer, respects scientific research and avoids protectionism".

We also take into account sustainable development, including biodiversity, in our approach to trade issues, as well as the interest of developing countries, as my colleagues throughout Government Departments have demonstrated. What is more, we certainly intend to grasp the opportunity late in the year to support comprehensive trade negotiations to be launched at the World Trade Organisation ministerial meeting in Seattle.

Mr. Chidgey: I make this point in all seriousness. The Minister will have heard my comment about concerns over the recognition of biodiversity protocols within the WTO rulings. Will he give a specific assurance that the Government intend to embrace that and press for recognition?

Mr. Battle: We are pressing for the inclusion of environmental concerns on the agenda. As I make progress I shall state in detail how.

I found some parts of the hon. Gentleman's speech uncharacteristic of him. He used extravagant, headline-chasing language which was not all thathelpful. My hon. Friend the Member for Workington(Mr. Campbell-Savours), who is not in the Chamber now, referred to it. It is not helpful to talk of trade wars going nuclear. The hon. Gentleman said that that was a metaphor, but I class it as extreme hyperbole with a myopic focus.

The hon. Gentleman spoke of GMOs, but they are not a trade issue with America.

Mr. Chidgey: They will be.

Mr. Battle: The hon. Gentleman says that they will be, but I hope that he is not trying to talk up a problem. We believe that we should try to resolve disputes patiently and build an international trading arrangement that enables growth while respecting people and the environment. It is not necessarily what has been called by Lester Thuron a zero-sum game, and it ought not to be.

I accept that a few trade disputes exist; they centre on agriculture and food matters. By and large over the past 200 years, disagreements between Europe and the United States of America have been the exceptions to the rule.

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Since the 18th century, there have been only a handful of intense disputes, and that includes the Boston tea party. Creating the impression that there is a trade war does not conform to the facts.

I shall give the House some figures, beginning with the EU's main exports to the US. Road vehicle exports in that direction total about 16.4 billion euros, with no disputes. Power-generating equipment exports are worth 9.5 billion euros, with no disputes. Specialist machinery exports are worth 8.9 billion euros, with no disputes. Other categories include electrical machinery, general machinery and organic chemicals, none of which has aroused a dispute.

European Union imports from the US include vehicles, office machines, and electrical and power-generating machinery, and are worth many billions of euros. However, EU agriculture exports to the US amount to only 2.8 billion euros, while EU imports from the US total 4.3 billion euros. Those figures show that trade in agriculture amounts to only a tiny fragment of the overall trade. By and large, there are no disputes in EU-US trade in the vast majority of goods. It is worth getting the matter in perspective.

Mr. James Gray (North Wiltshire): I want to pick up the Minister on a detail, about which I am sure that he would not want to mislead the House. He said that trade in electronic instruments was not the subject of dispute, but he will know that there is a trade ban on the import from America of electrothermic tea and coffee makers. Perhaps he would like to correct what he said.

Mr. Battle: I accept that there is a knock-on effect from the dispute about agriculture but, by and large, trade between the EU and America has gone along peacefully, calmly and without problems for generations. Although real and serious disputes exist, we should keep them in proportion.

The vast majority of trade and investment between the EU and the US takes place without difficulty. The relatively few disagreements that exist, although important, should not be allowed to discolour the nature of the relationship.

Mr. A. J. Beith (Berwick-upon-Tweed): That may be so, but I hope that the Minister will recognise that the US seems to have an uncanny knack of lighting on products that are the staple industries of small communities. The cashmere industry in the borders is an obvious example, but there are others. It is almost as if the US has rather better intelligence about which communities are most vulnerable to import tariffs than about the location of Chinese embassies.

Mr. Battle: Some of the headlines that have appeared--for example, suggesting that the US plans to "punish" British companies--are not accurate, as the secondary list of trade goods will not be available for a few days. I shall return to that matter in greater detail later, and suggest how it can be tackled, but there are bound to be occasional frictions in what is a substantial and complex trade relationship. I do not underestimate the problem, but the figures speak for themselves.

The EU and the US are the two biggest economies in the world, accounting for 54 per cent. of world income. Even excluding trade within the European Union, together

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they account for 38 per cent. of world exports, and 39 per cent. of world imports. In 1997, EU goods exports to the US were worth $160 billion, while US goods exports to the EU came to $156 billion. The US is easily the EU's most important external export market, accounting for about 20 per cent. of exports.

The trade figures are impressive, and the investment figures are too. In 1997, direct investment flows from the US to the EU amounted to about $24 billion. The US is the most important source of external investment into the EU, accounting for more than 50 per cent. of the total. Again in 1997, EU investment flows to the US came to $42 billion, with the US accounting for more than 40 per cent. of total EU direct investment overseas. I give those figures to demonstrate the perspective of our trade relationship, to keep that substantial relationship in focus and to show that the present disputes are far from totally undermining the relationship.

Bilateral relationships are not the only reason why the European Union and the United States of America matter in the world economy. They are the twin pillars of the world trade system, and they are co-operating to advance shared interests across the whole system. We must bear in mind the joint impact of the two trading partners on every part of the world. For example, we should consider the effect of the banana dispute on smaller nations--the African, Caribbean and Pacific countries that rely so much on the export of bananas to the EU.

I appreciate that other hon. Members have worked in other capacities during their lives. I have spent some of mine working on EU policies for third-world countries under the agreements of the Lome convention, and I know how difficult it is to carry through detailed negotiations to make sure that people receive justice in a complex world. The EU and the USA have had several formal opportunities to do so, not least through the twice-yearly summits, including the last on 18 December 1998. The next will be on 21 June, giving the opportunity for dialogue that can minimise trade frictions and build co-operation and confidence. There is scope to enhance that dialogue further for better management of disputes.

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