Orders of the Day — Multilateral Trade Negotiations

Part of the debate – in the House of Commons at 12:00 am on 29th June 1979.

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Photo of Mr John Smith Mr John Smith , Lanarkshire North 12:00 am, 29th June 1979

What I did not have confirmed, despite persistent and precise questions, during the last trade Question Time in the House was an agreement in principle by the Government that the multi-fibre arrangement would be renewed. I am not expecting the Government to spell out now what would be the precise quotas or amounts that would be determined. They must be negotiated. But there must be an important commitment in principle by the Government. That has been lacking so far. I assure the hon. Gentleman that this matter will be raised again and again not only from the Labour Front Bench but by many of my hon. Friends who have very important textile interests to protect and defend.

So far as non-tariff barriers are concerned, I welcomed what the Minister of State said about the subsidies code. There was a real danger in this code for the United Kingdom. That danger was that an attempt might be made to penalise United Kingdom exporters who benefited from our regional policy and our policy of assistance to industry. As the hon. Gentleman rightly recognised, the purpose of our policy in helping the regional development of industry, and of selective assistance to industry, was not to confer benefit upon British exporters but to assist in the regeneration of British industry and make sure that it was better distributed throughout the country.

Of course, there have been complaints about it from some United States interests alleging hidden export subsidies. They sometimes forget the very important assistance given to their exporters by the military and industrial complex of the United States and the use of defence contracts. That is something that we must also bear in mind. I am glad that the insistence which the previous Government placed upon the wording of the code being such as to permit the development of the regional policy of assistance to industry to continue has been maintained. That appears in the code which will be signed as part of these negotiations.

However, I deplore the fact that the necessary protection which we sought for regional policy and for assistance to industry is less likely to be used as a result of the decision, which this Government have already arrived at, of running down regional development to industry and running down selective assistance to industry. Having fought so hard to protect the right of a Government to do that, it is rather galling to find that the present Government are not prepared to use some of these techniques. I think that the Government will come to realise the folly of that policy as the months roll by and I hope that there will be a change of attitude to the use of money and techniques for the development of our industrial structure.

Some very important achievements have come from these negotiations, which are shown up in the codes. The hon. Gentleman mentioned abolition of the wine gallon assessment by the United States. This is an important change which has long been sought by the whisky industry, and some other industries, in this country. It has always been the position that one had to pay a tariff on the water in a bottle of whisky as well as on the whisky. Fortunately that perk, which applied to the United States, has now been abolished. Speaking personally and not only for the United Kingdom but for one part of it, I regard that as a very important achievement.

The United States has now brought some other important changes more fully into the GATT framework. Some of the advantages that it enjoyed under the "grandfather clause" are now being removed. As a result the United States will enter more fully into the GATT structure. These are developments to be welcomed, as is the abolition of the American selling price. That was another device used to increase the tariffs on goods entering the United States. These are positive and important achievements for the United Kingdom.

Similarly, the code on civil aircraft will be of value to the United Kingdom. We have a very important aviation industry in this country, which is already a substantial exporter. Its importance can hardly be overestimated. It faces fierce international competition, but I believe that our aviation industry is largely competitive and can secure an increasing share of world orders. In the civil aircraft code, the steps taken with regard to our domestic industry seem to me to be ones that will be of advantage.

Agriculture tended, in the negotiations, to be more an issue between the other countries of the European Community which are more committed to the common agricultural policy and the United States than it was of direct interest to the United Kingdom. It was somewhat disappointing that the Community wanted to preserve all the principles of the common agricultural policy intact as one of the objectives of the negotiations. But from time to time the United Kingdom Government interceded on behalf of the Governments of Australia and New Zealand to make sure that a fair deal was extended towards their interests.

I had discussions from time to time with Mr. Garland and other representatives, and I believe that the United Kingdom acted as an honest broker on behalf of Australian and New Zealand interests. For wider political and trading reasons we were anxious to maintain good relations with Australia and New Zealand. The CAP was such an ark of the covenant within the EEC that it was difficult to dislodge those concerned from adherence to every principle involved.

Overall, I believe that the agreement has been satisfactory. Much of it will require to be monitored in detail. The Government procurement code will have to be watched very carefully. Many countries are happy to sign international agreements involving high-sounding principles, but when it comes to practising them they are not so forthcoming.

There has been a great deal of disappointment in this country about the code of purchases within the EEC, in which the United Kingdom undertakes all the obligations about advertising contracts within the EEC but in which there is a certain laggardness on the part of other Community countries. I hope that the Government will pay close attention to monitoring the Government procurement code to see that it is carried out in practice as well as merely by adherence to the principles involved in the negotiations.

Although important steps have been taken to complete the Tokyo round, there are still a few hurdles to be overcome. Some of those obstacles exist within the United States Congress. I was glad to hear the Minister say that the Government will be monitoring developments in Congress to ensure that the agreements are effectively concluded and implemented in United States domestic legislation.

I hope that these provisions are successful and that the United States Administration are able to carry the agreements—agreements which they have signed in principle—through Congress. It will be a serious setback if there is some difficulty on that front. As I understand it, it will not be open to Congress to amend the legislation. It will either have to accept it en bloc or reject it en bloc. The Minister was right to pay tribute to the work carried out by Ambassador Strauss, who has now left that area of concern. A great deal of the credit for the success of these negotiations is due to the impetus that he gave them on behalf of the United States. Therefore, although we welcome the general agreement, it is important that the Government should listen to our comments, particularly about the textile industry and the importance of continuing to monitor these agreements.

When the negotiations began there was a great deal of scepticism whether they could ever be brought to a successful conclusion. As the world has suffered energy crisis after energy crisis and is now deeply involved in the middle of another one, and although, to put it mildly, the prospects for world trade are not encouraging, I believe that it is a considerable achievement that the initiative launched many years ago has now been brought to fruition. It is a countervailing force against some of the other more gloomy forces now affecting international trade. Unless the developed world pays attention to the orderly development of trading relationships, we could easily descend into the kind of trading which characterised the interwar period, with the slumps and all the other difficulties that then occurred.

I wish to remind the Minister of the selective safeguard clause. I very much doubt whether that clause will be agreed in these negotiations. I suspect that they will be concluded without such a clause but that some reference will be made to continuing negotiations. It is of the utmost importance that we have the capacity for selectivity in the application of import controls—otherwise one is forced to take blanket action against many countries, some of whose activities are not complained about. I doubt whether it will be possible to achieve it, but in the event that it is not possible to achieve it the Government should resist entering into a selective safeguard clause which is meaningless or which acts against our interests.

If such a course is impossible, I should be grateful if the Minister would say what attitude Her Majesty's Government will take to the use of article 19 of GATT which, in the opinion of many countries, already allows them to take selective action. I believe that the Council of Ministers came to such a conclusion at one of the meetings that I attended. It is important to achieve selectivity. There are some delicate industries now in this country. We can think of many which are now under severe economic pressure. However, unless we can achieve some selectivity, we shall face a difficult reaction in many countries.

The developing world has to understand that the developed countries are now in some difficulty. If there is not the possibility to take selective action, there will be a reaction against the liberalisation of world trade, which will be very serious in character. I hope that the Government will bear in mind the importance of selectivity. If we do not achieve a satisfactory agreement, let us not make one. If no agreement is achieved, let us be prepared to use article 19 of GATT to defend essential British national interests.

I wish to thank the Minister for his comprehensive report. The multilateral trade negotiations, unfortunately, are not at the forefront of our political and economic dialogue in this House or elsewhere in this country, but their importance can hardly be underestimated. I am glad that at last the House of Commons has managed to have at least one short debate on this important subject.