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House of Commons

Thursday 1 May 2003

The House met at half-past Eleven o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Trade Liberalisation

1. Mr. Nick Gibb (Bognor Regis and Littlehampton): If she will make a statement on the latest developments in the Doha round of talks on trade liberalisation. [110624]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): Since we launched the Doha development round in November 2001, progress has not been as fast as it should have been. In particular, we still have to conclude an agreement on trade-related aspects of intellectual property rights and access to medicines, and far more progress needs to be made on agriculture.

In other areas, however, progress has been more encouraging. The European Union submitted its general agreement on trade in services offer to liberalise trade in services earlier this week, and detailed negotiations are continuing on non-agricultural market access in the hope of reaching an agreement on the scope of negotiations by the end of May.

Mr. Gibb : I am grateful to the Secretary of State for that honest answer. Does she agree that the Stuart Harbison Doha round proposals to phase out export subsidies would bring worldwide gains of about $100 billion a year, which would be especially helpful for third world countries? Was she therefore surprised and concerned that the French Minister, Hervé Gaymard, said in a speech last month that he is

Will she assure us that she will resist any attempt by the French to scupper such an important humanitarian proposal for trade liberalisation?

Ms Hewitt: I entirely agree with the hon. Gentleman. The gains to the developing world and to the world as whole—including the developed world—from a successful trade round will be enormous at this time of economic downturn. It is important to succeed in the round and to demonstrate that we have made progress by the time of the mid-term ministerial in Cancun in

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September. The hon. Gentleman will also be interested by President Chirac's recent proposals on preferential treatment for countries in sub-Saharan Africa. We welcome the fact that his statement recognised the enormous damage caused to farmers in developing countries by export subsidies on agricultural products.

I hope that the French Government will support the process of reforming the common agricultural policy because that will be essential if we are to make a better proposal in the Doha round.

John Cryer (Hornchurch): Where is the evidence that liberalisation and privatisation benefits third world countries? Surely the examples of Rwanda and Tanzania a few years ago and the recent failed attempt to privatise water in the third world tell us something about the sins of over-enthusiastic neo-liberalism.

Ms Hewitt: Nothing in World Trade Organisation rules or the general agreement on trade in services requires either developing or developed countries to privatise any of their public services, including water. Indeed, the GATS offer that the EU has just published explicitly excludes our public services and public utilities. Attempts to privatise water in developing countries had nothing whatsoever to do with GATS or the WTO.

Although I agree with my hon. Friend that it is extremely important to get the phasing of market opening in developing countries right and to accompany that with appropriate measures for governance and effective regulation, we only have to compare the experience of African countries with that of many countries in south-east Asia over the past 30 years to appreciate how trade in a more liberal world economy that can be made fair as well as free benefits poor people in poor countries.

Dr. Vincent Cable (Twickenham): Does the Secretary of State agree that what would have been difficult negotiations will be made more difficult by the rifts between the United States and some countries in western Europe? Does she agree that the best position for a free-trading country such as the United Kingdom to adopt is to be even-handed in criticising and condemning both the totally unacceptable protectionist interests in Europe that have prevented the EU from making a meaningful offer on agriculture and, equally, the aggressive unilateralism of the US that is manifested in its illegal action on steel and its continued refusal to put the developing world's wider interests in medical technology before the interests of its pharmaceutical companies?

Ms Hewitt: The hon. Gentleman may remember that when the United States imposed tariffs last year on steel imports, including those from the United Kingdom, I condemned them roundly in the House and outside it. The steel tariffs are clearly unlawful under World Trade Organisation rules and I hope very much that the American Administration—I have said this to them privately—will not appeal against the ruling that found the tariffs contrary to WTO rules but will instead remove them at the earliest opportunity.

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If I may, I shall send the hon. Gentleman a copy of my recent speech in Brussels setting out precisely the Government's views on the need to create a framework of rules for trade that is fair as well as free and tackling the highly damaging protectionism in Europe, especially in relation to agriculture, and in the United States, where it has arisen in relation to steel.

Linda Perham (Ilford, North): Does my right hon. Friend agree that progress on the Doha round depends on the trade rules, in particular the special and differential treatment rule and the multilateral rules framework, and that that will assist investment and competition? We cannot leave it all up to negotiations at Cancun. We must assist developing countries or we will lose the opportunity that we now have.

Ms Hewitt: I agree with my hon. Friend. One of the things that we have discussed in great detail with the developing countries is the issue of special and differential treatment to ensure that the new round reflects the different stages of development that different countries have reached. The House will recognise that if we can make the necessary progress in the Doha negotiations, we will not only give a much needed boost to the world economy, but hold out hope to developing countries, which more than anything else want to earn and trade their way out of poverty rather than being trapped in dependence on aid.

Registration Officers

2. Dr. Brian Iddon (Bolton, South-East): If she will make a statement on the employment rights of registration officers. [110626]

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): The Government agree that all workers should have protection.

Dr. Iddon : May I first declare an interest, as the honorary patron of the Society of Registration Officers in England and Wales?

Today is the sixth anniversary of the Labour Government. For most of that time, I have dealt with six different Ministers, four at the Treasury and two at the Department of Trade and Industry, attempting to win right of access to employment tribunals for registration officers. Section 23 of the Employment Relations Act 1999 provides that that can be done by order. The registration service is about to undergo a major reorganisation and registration officers are likely to become local authority employees. Does my hon. Friend agree that it is important to have the measure in place before that happens? Has he any news that I can give to registration officers at their annual conference in Wales on 14 May?

Nigel Griffiths: The Government are studying more than 400 responses to the consultation document, considering how best to proceed, and setting deadlines. My right hon. Friend the Secretary of State made it clear last month that all new employment legislation must be

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implemented by 6 April or 1 October. We will work with the Office for National Statistics so that those deadlines can be adhered to.

Mr. David Watts (St. Helens, North): Does the Minister agree that although tremendous progress has been made in improving employment rights for British workers, it is still a national scandal that many millions of them will take this bank holiday Monday off without pay? Does he believe that employment rights need to be improved to ensure that all British workers can enjoy the same—

Mr. Speaker: Order. That is very wide of the question.

Inward Investment

3. Mr. Richard Page (South-West Hertfordshire): What the total sums of manufacturing inward investment were in each year since 1999. [110627]

The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The total stock of manufacturing inward investment in the three years of 1999 to 2002 was £63.3 billion, £69.7 billion and £92 billion.

Mr. Page : I thank the Secretary of State for that. Is she not concerned that the net figures show that we are losing out and that foreign investment into this country is not going ahead? Is she not also concerned that, at the same time, companies such as Dyson, Royal Doulton, Black and Decker and even Corus are downsizing, closing down or escaping abroad? Is she not worried that all that contributes to the fact that more than 500,000 people have lost their jobs in the manufacturing industry in this country? What representations is she making to the Chancellor to improve the lot of manufacturing in the United Kingdom?

Ms Hewitt: Every job loss and every decision by a company to reduce its employment or to relocate outside the UK is of course a matter for great regret. However, the hon. Gentleman is ignoring the fact that the latest UN report on world investment confirms that the UK is the No. 1 destination for foreign direct investment in Europe. That investment is particularly important in manufacturing, and I am delighted to say that at the end of 2002 foreign direct investment in the UK was significantly higher than a year before.

One factor in location and investment decisions is the fact that the UK is outside the single currency. The hon. Gentleman may not welcome my saying this, but the impact of that on investment, jobs and trade is one of the issues that we will take into account in making our decision on membership of the euro.

Lawrie Quinn (Scarborough and Whitby): Will my right hon. Friend join me in thanking and congratulating the Canadian food manufacturer, McCain, which has invested heavily to make Scarborough its European base and gone on to great success? It has also been involved in innovation and development, proving not only that it richly deserves its recent Queen's award for industry but that it is a flagship

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company, which is telling other companies in north America just how important it is to invest in places in Britain such as Scarborough and Whitby.

Ms Hewitt: My hon. Friend is absolutely right, and I am delighted to take this opportunity to congratulate the company and all those who are helping to make Scarborough an excellent location for inward investment. That underlines the fact that under the Chancellor's stewardship the UK remains one of the best places in the world in which to set up and grow a business. It is also one of the most attractive countries in the world, second only to the United States, for foreign direct investment.

Sir Nicholas Winterton (Macclesfield): Does the Secretary of State accept that her final comment to my hon. Friend the Member for South-West Hertfordshire (Mr. Page) rather spoiled what had hitherto been a reasonable answer? Is she not aware that the high level of bureaucracy and over-regulation and the high social costs that are imposed on manufacturing, particularly through the European Union, are having a direct impact on that industry, and that many jobs are moving away from Europe and the UK for that reason? Is not the right hon. Lady somewhat concerned that our manufacturing base, for which investment is clearly very important, is shrinking because of over-regulation, high taxation and heavy on-costs, many of which are imposed because of the EU?

Ms Hewitt: I am extremely concerned to ensure that this country has a strong, successful future in high-technology, high value-added manufacturing. That is why one of the first things that I did as Secretary of State was to bring together industrial leaders and trade unionists to help us to put in place the first manufacturing strategy for the UK for 30 years. As a direct result, we have established throughout all the English regions a highly successful manufacturing advisory service, which is already helping small and medium-sized manufacturers to improve their productivity and profitability. Although manufacturing jobs continue to be lost, not only in this country but in every other industrialised country, we are also growing new manufacturing industries, particularly in biosciences, which will help to create good jobs.

I also draw the hon. Gentleman's attention to the fact that every international benchmarking survey shows that our business environment is one of the best in the world, and we will continue to improve the regulatory environment to keep it that way.

Mr. Tim Yeo (South Suffolk): What effect does the Secretary of State think that higher national insurance contributions, the climate change levy, the pensions tax and the provisions of the Employment Act 2002, which came into effect last month, will have on inward investment? Will she confirm that six years to the day since Labour was elected, the Government have produced the worst trade deficit since records began in 1697, the second worst fall in business investment since records began in 1966, a halving of the productivity growth rate achieved under the Conservative Government, the worst strike record for over a decade,

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and the destruction of more than 2,000 manufacturing jobs every day since this Prime Minister moved into 10 Downing street?

Ms Hewitt: I know that the increase in national insurance contributions will help to secure the huge improvements in the national health service that everybody in our country, including employers, wants. I know that the climate change levy and the climate change agreements are already delivering measurable improvements in energy efficiency throughout manufacturing, thereby helping to reduce costs. I know also that the new regulations on family-friendly working that we introduced last month will give employers the benefit of access to a more flexible and highly skilled work force.

I regret the fact that the hon. Gentleman chooses to talk down the British economy and British manufacturing as he has done today. As he well knows, thanks to the decisions made by my right hon. Friend the Chancellor six years ago, ours is one of the fastest-growing major economies in the world; and our manufacturing companies, despite the very tough global conditions they face, have succeeded in keeping up and, indeed, increasing the exports they send to the rest of the world. The hon. Gentleman should congratulate them on that.

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