Multi-fibre Arrangement

Oral Answers to Questions – in the House of Commons at 4:46 pm on 14th December 1982.

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Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal 4:46 pm, 14th December 1982

With permission, Mr. Speaker, I should like to repeat a statement made in another place by my right hon. and Noble Friend the Secretary of State about the multi-fibre arrangement.

The Council of Ministers yesterday agreed that the European Community should stay in the third multi-fibre arrangement for the whole of its term up to July 1986. This decision marked the end of almost two years of negotiations; first to decide upon a protocol to extend the MFA itself and, secondly, to settle with 26 individual supplying countries or territories the terms of new bilateral agreements to run up to the end of 1986.

Twenty-five new agreements have now been initialed and will come into effect on 1 January. The countries involved are Bangladesh, Brazil, Bulgaria, Colombia, Czechoslovakia, Egypt, Guatemala, Haiti, Hong Kong, Hungary, India, Indonesia, Macao, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Romania, Singapore, South Korea, Sri Lanka, Thailand and Uruguay. All these agreements were concluded within the negotiating mandate established by the Council of Ministers at a series of meetings during this year and 1981.

One country, Argentina, has not concluded a new agreement, and the European Community will therefore impose a unilateral limitation on Argentine textile imports. There will also be unilateral measures, as before, in respect of Taiwan.

The 25 agreements are technically complex and contain several hundred quotas. The most important points are, however, as follows.

First, the quotas. For the eight most sensitive textile and clothing products making up group I, the global ceilings established by the Council in February have been fully respected. The annual rate of growth in these quotas between 1983 and 1986 will be substantially below 1 per cent. per annum on average, for the United Kingdom share.

For the five group one clothing categories, the 1983 quotas of the three dominant suppliers who have so far concluded agreements—Hong Kong, Macao and South Korea—will be cut back by 7 to 8 per cent. on average from their 1982 levels. The corresponding quotas for Taiwan will for the time being be reduced by 10 per cent. Outside group one, annual growth rates will in the great majority of cases be significantly below the rates applying under MFA 2.

I turn to the textual provisions of the new agreements. The agreements follow the same general outline as the present agreements, but with a certain number of significant improvements. All the agreements contain tougher provisions than in the past for introducing new quotas—the "basket extractor mechanism"—and for dealing with fraudulent imports in breach of quotas. All the agreements contain the "anti-surge mechanism" which can be invoked when there are substantial surges of imports within quotas. For the dominant suppliers there are changes in the so-called "flexibility" provisions, which for group one products will allow us to withhold in large measure advance use of quotas or carry-over from the previous year.

Those are the main points. Following past practice, the new agreements, once they have been formally signed, will be submitted to the appropriate Committee of both Houses in the usual way. However, before the end of this month the Council regulations containing the quotas for 1983 will be published and available for detailed analysis.

The new agreements extend the protection of the United Kingdom textile and clothing industries against low-cost imports for a further four years, and at a rather tougher level than hitherto. I have every confidence that those industries which have played such a notable part in the industrial life of this country will take full advantage of the certainty offered to them by these agreements to secure and improve their position in home and export markets.

Photo of Mr Ken Woolmer Mr Ken Woolmer , Batley and Morley

The House will know that the Opposition have consistently called for, and supported, a tough negotiating position in MFA 3. Although some important matters of concern remain, I congratulate the Minister on his grasp of the issues facing the textile and clothing industries and on his tenacity and stamina during the long negotiations.

However, the House will feel that today's statement was too brief and that it did not offer hon. Members or the workers and managements of those important industries any assessment of the impact of the new agreements on jobs and production. I remind the House that 210,000 clothing and textile jobs have been lost since June 1979. For the remaining 580,000 workers, it is vital to know whether the agreement means job stability and whether there is a basis for confidence in the future. Did the Minister satisfy himself about the consequences of the agreement for jobs and production before he agreed to the deals? If so, will he tell the House his assessment of those consequences up to 1986?

Will the agreements stop the rising import penetration in those industries? Does the Minister accept that the original mandate suffered from a fundamental weakness, by basing growth in future quotas on 1982 quotas, instead of on the exisiting levels of trade? Does the hon. and learned Gentleman accept that that crucial factor means that imports of the most sensitive products can grow by more than 20 per cent., which is far in excess of the less than 1 per cent. growth in quotas that he presented in his statements? Why did the hon. and learned Gentleman agree to a weakening of the cutback from dominant suppliers—on average from 10 per cent. to per cent.—and is he aware that Hong Kong has presented that as meaning no cutbacks in its exports to us?

Is there not a systematic and substantial uplift of quotas from 1982 to 1983 in many products? Will not that uplift in the next 12 months render worthless any claims to a lower rate of import growth in the subsequent three years?

Will the Minister be more specific about group two imports? Will he give us his estimation of the import growth that is to be permitted compared with the 5 per cent. growth under MFA 2? Why has the hon. and learned Gentleman referred to a growth in quotas between 1983 and 1986? What is happening to the growth in quotas in that uplift period?

Does the Minister recognise that his efforts to sustain the textile and clothing industries are being sabotaged by the Government's economic policies of deflation and an over-valued pound? The latest disastrous industrial output figures show that there has been a 28 per cent. fall in textile and clothing production since the Conservative Party came into office. Will the hon. and learned Gentleman urge on the Prime Minister and her Ministers the need to change their policies as effectively as he appears to have dropped his free trading principles in the interests of British industry?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I am grateful to the hon. Gentleman for his opening remarks. However, I had thought that the House would welcome the brevity of my statement, as it is the third to be made this afternoon.

It is impossible to forecast with any scientific accuracy the precise consequences of the new agreements for jobs. The industry is going through a period of restructuring and has been for perhaps the past decade or more. As a result of the new agreements within the protocol, managers will have some certainty when plotting their courses.

The hon. Gentleman suggested that imports in sensitive quotas could grow by as much as 20 per cent. he is being wildly speculative. As I have said, and as I stress, the growth rates in group one—the sensitive group—will be only 1 per cent. per annum for the United Kingdom. That is far lower than the growth rates negotiated under MFA 2, which was worked out under the previous Labour Government.

As regards the weakening of cutbacks, I stress that when aggregated, the individual agreements are comfortably within the global ceilings that form such an important part of the negotiating mandate, which I explained to the House at an earlier stage in the negotiations. For group two imports, there are about 100 quotas and it is impossible to give any realistic growth rate figures for them. However, the figures overall are likely to be less than the growth rate for group two under the previous MFA.

The hon. Gentleman has been spreading gloom for too long about the effect of the Government's economic policies on the textile industry. I congratulate the industry on the fact that its exports are running at £2 billion per annum. One company is even exporting shirts to Hong Kong.

Photo of Mr Robin Maxwell-Hyslop Mr Robin Maxwell-Hyslop , Tiverton

Without a copy of my hon. and learned Friend's statement, it is difficult to follow the details, but what specific action has been taken to deal with the problem of textile exports from the United States of America to the European Community, and particularly to Britain? Normally, we do not consider the United States of America to have a low- wage economy, but that is the nature of the textile industry in Georgia. Those in that textile industry often work in appalling conditions that rival those in the Far East. Are not Malaysia and Hong Kong, for example, right in saying that we do not apply the same standards to the United States of America as we apply to our colonies or to members of the Commonwealth?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

The United States of America is not covered by the MFA or by any of these specific agreements. Notwithstanding what my hon. Friend said, it is not regarded as a low-cost exporter. There have been considerable exports from the United States of America to the United Kingdom market, but they are now slightly in decline. Until recently, the United States of America had an advantage, because of its energy costs and the pound-dollar exchange rate. However, those advantages have been largely redressed. I hope that the United Kingdom's textile industry will be able more than to hold its own.

Several Hon. Members:

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Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. If questions are brief, I shall be able to call all those who have been standing in their places, as I know that they have constituency interests.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

Does the Minister accept that if there is a 1 per cent. growth rate in imports of group one products during a recession, it will inevitably lead to closures in Britain? How will the MFA be enforced, as enforcement is crucial to its success? Who will supervise the quotas activating the basket extractor mechanism? How speedy will remedial action be? Will action depend on Government-fed information or on the industry? The industry is not equipped to act, and that means that urgent Government action will be needed to put the MFA into operation. This is a complicated matter which the Minister accepts that he has not been able to detail. Can we have an early debate so that we can discuss the details?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I would not accept that a 1 per cent. growth rate in group one products must inevitably result in closures. With regard to enforcement, as the hon. Member for Keighley (Mr. Cryer) and the House will appreciate, exporting countries will have to give licensing authority for exports which will match the licensing from this country. The policy is a matter for my Department, but the supervision will be a matter for the Customs and Excise. I assure the hon. Member for Keighley that they will be as astute and quick as they have been in the past to detect any breach of ceilings, and any circumstances that might require the operation of the basket extractor mechanism. It is not a matter for me whether we have a debate.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

May I congratulate my hon. and learned Friend on the tenacity and vigour with which he has pursued the MFA and endeavoured to achieve a satisfactory outcome. I believe it is unequalled by any Minister since the inception of the MFA.

Is my hon. and learned Friend aware that the growth rate that has been obtained is still higher than the expected growth of consumption, and that the total access to the United Kingdom market for clothing and textiles is much higher than recent actual trade levels? It is much higher than this country can assimilate. Is he further aware that the fundamental weakness of the mandate, upon which he has had to negotiate, is that the quotas set for 1983 are generally far too high and much higher than recent trade levels? Will my hon. and learned Friend direct his attention to those fundamental matters? We are dealing with an industry in which 300,000 people have lost their jobs during the past 5 years.

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I am grateful to my hon. Friend the Member for Macclesfield (Mr. Winterton) for his kind words. They are a consolation to me, as they come from someone who has such expert and wide knowledge of the textile industry. My hon. Friend is taking too gloomy a view of growth rates. He will be aware that the anti-surge mechanism was devised largely at the United Kingdom's request to deal with a sudden surge of imports. I hope that that will meet the point raised by him. I am acutely aware of the number of jobs that have been lost over the past two or three years. I made that point with great regularity at the Council of Ministers which was called to consider these matters.

Photo of Dr Shirley Summerskill Dr Shirley Summerskill , Halifax

Will the Minister bear in mind that it is absolutely no comfort to the thousands of textile workers in West Yorkshire, including those in my constituency, to be told that the industry is going through a period of restructuring? Will he answer the question put by my hon. Friend the Member for Batley and Morley (Mr. Woolmer) who wants an assurance, on behalf of those people employed in the textile industry and those who have lost their jobs, that as a result of these welcome protective measures there will be no further mill closures and jobs lost. The measures will be tested by the ability of people to stay in work in the future.

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I recognise the anxiety of the hon. Member for Halifax (Dr. Summerskill). She and the House must realise that I could not possibly give such an assurance. However, I believe that both the textile and clothing industries can take some comfort from the new MFA. They have an assurance that there will not be a flood of imports from low-cost exporters and therefore they will be able to plan for the next four years with greater certainty than seemed possible even six months ago.

Photo of Mr Michael Latham Mr Michael Latham , Melton

Is my hon. and learned Friend aware that, while we must reserve judgment on the details, there will be a welcome from the Conservative Benches for his persistence and hard work on a difficult matter? Can he assure the House that when he was sitting next to his French colleague from the EC negotiating about the Third world he told him that we expect also to be able to sell knitwear and textiles to the French?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I believe that that general point became clear during my interventions. As my right hon. Friend the Foreign Secretary made clear in his statement preceding mine, we attach great importance to the opening of the European Community's internal market. Such barriers as remain must be removed steadily and relentlessly. I believe that the particular point that my hon. Friend the Member for Melton (Mr. Latham) has in mind will be the subject of challenge by the European Commission.

Photo of Barry Sheerman Barry Sheerman , Huddersfield East

The Minister will be aware that the Opposition are grateful for small mercies, but that we do not put all our eggs in the MFA basket. While the Opposition are grateful for the reasonably tough stand taken by the Government, we believe it is only the beginning of a process of resuscitating an industry killed by the Government's policies.

The Werner report states clearly that our competitors' Governments are trying to save them. Our Government are trying to destroy our home industry. Shall we now see the Government aiding wool textile industry areas which have just lost intermediate development status and have no hope of any other State aid?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I have never asserted to the House, and I do not believe that any responsible spokesman could, that the multi-fibre arrangement—whether it be first, second, third or any individual agreements—would solve all the problems of the textile industry. That would be largely a matter for the industry. There are other aspects of our market and export markets that will require constant attention and consideration. I realise that the third point by the hon. Member for Huddersfield, East (Mr. Sheerman) is a constituency point, but it is a matter for my right hon. Friend the Secretary of State for Industry, who will no doubt take careful note of what the hon. Member has to say.

Photo of Mr John Lee Mr John Lee , Nelson and Colne

May I join other hon. Members in congratulating my hon. and learned Friend on all his efforts on behalf of the textile and clothing industry? May I draw his attention to the fact that one of the biggest criticisms of the existing MFA, which was indirectly negotiated by the Labour Government, relates to policing? Is my hon. and learned Friend satisfied that there are sufficient personnel in his Department and in the Customs and Excise to enforce and effectively police the new MFA?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I understand the anxiety felt by my hon. Friend. It echoes that felt by the Opposition. The agreements are worth nothing if they cannot be properly policed and enforced. Only a rash man would say that he was absolutely confident that there would be no breach of any agreement. I believe that all the necessary administrative arrangements have been made to ensure that there will be proper enforcement.

If any hon. Member receives evidence of breaches of the provisions of the agreement we will take them up urgently.

Photo of Mr Barry Jones Mr Barry Jones , Flint East

The Minister has chastised hon. Members for expressing gloomy views. Has he forgotten that by September this year Great Britain had imported £1.5 billion worth of textiles? How ruthless will the Minister be against cheating imports? Does he know that in my constituency the Deeside Courtaulds mill is struggling desperately to remain open and needs him to take action against man-made fibre imports?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I recognise the deep anxiety felt by the hon. Member for Flint, East (Mr. Jones) about man-made fibres, which are of crucial importance in his constituency. Man-made fibres from low-cost exporters are covered equally by the multi-fibre arrangement and the various specific agreements. The fraud provisions in the multi-fibre arrangement have been tightened considerably compared with those in the previous multi-fibre arrangements.

Photo of Jack Straw Jack Straw Shadow Spokesperson (Treasury)

Does the Minister accept that the Government's record towards the textile industry must be judged as a whole? To do that it must be set against the fact that under the Labour Government the output of the textile industry remained stable throughout the five years and under this Government, as my hon. Friend the Member for Batley and Morley (Mr. Woolmer) said, it has slumped by 28 per cent. Employment in the textile industry in many of our constituencies has been halved. Blackburn has lost 3,000 jobs during the last three years. Despite all the Minister's hard work, the fundamental failure of the MFA is that there is no recession clause and import growth is not linked in any way to the continuing decline that the textile industry will face as a result of the Government's economic policies.

Does the Minister agree that he has said nothing about damaging imports from some of the Mediterranean associate countries, including Turkey, whose breach of the unilateral imposition upon them has been scandalous? What action do the Government intend to take to restrain Turkey and the other EC associates from breaching the spirit of the MFA?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

I appreciate that the arrangements must be judged as a whole. The decline of the textile industry did not start three years ago. It had been going on for a much longer period. It is precisely because of recessionary pressures that the Community pressed for, and secured, a cutback in the quotas of the three dominant suppliers and that the Community stood out for much lower growth rates than were secured by the previous Government through the Community under the second multi-fibre arrangement.

I did not refer to Turkey or the Mediterranean suppliers—I appreciate that this is an important aspect of the textile scene—because they are not dealt with technically under the multi-fibre arrangement. Voluntary restraint arrangements have been negotiated with most of them. My hon. Friend the Member fo Macclesfield (Mr. Winterton), who is so well informed, reminds me that no voluntary restraint arrangement has currently been negotiated with Turkey. An attempt was made this year. In regard to breaches by Turkey of earlier arrangements, the Community took action to safeguard category 2 and category 4 products. We shall be keen to see that Turkey plays fair with our textile market.

Photo of Mr Tom McNally Mr Tom McNally , Stockport South

May I ruin the Minister's afternoon completely by joining the hon. Member for Batley and Morley (Mr. Woolmer) and the hon. Member for Macclesfield (Mr. Winterton) in offering congratulations on the completion of complex and difficult negotiations? Does the hon. and learned Gentleman agree, given our Indonesian experience, that we have benefited from negotiating these arrangements as a Community? Will he also say that it is part of his policy—this is of great importance to the industry—now to move to MFA 4, which will provide a long-term, ordered and structured market both for the developing countries and for the British industry?

I wish also to take up the question posed by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). Will the Minister take on board the threat to the British textile industry posed by developed textile manufacturers such as the United States who do not always play fair?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

My gratitude to the hon. Gentleman for his opening remarks was tempered by his suggestion that we should already be enmeshed in negotiations for a fourth multi-fibre arrangement. We should see how matters turn out. We should not be committing ourselves to another prolonged and agonising negotiation when we have only just completed one. I agree with the hon. Gentleman about our position in the European Community and his reference to what occurred at an earlier stage when quotas were opened in respect of Indonesia.

We derived strength from negotiating in this instance through the Community. Our exporting industries would have been in an exposed position if we had been attempting to negotiate so toughly on our own without the support of other members of the European Community. We can derive considerable satisfaction from being part of the largest trading group in the world.

I do not think that I can add to what I have stated about imports from the United States. I hope that this w ill, to a degree, correct itself because of a readjustment in the exchange rate between the dollar and the pound, and also because of the increase in energy costs in the United States. It is certainly a matter that we shall keep under review.

Photo of Mr Ken Woolmer Mr Ken Woolmer , Batley and Morley

Will the Minister recognise that the Government's own Central Statistical Office yesterday published figures showing that in the last three years of the Labour Government production in textiles and clothing increased slightly, whereas in the first three years of his Government production fell by 25 per cent? How can he claim that to be a success or anything other than a cause for grave concern?

I wish to press the Minister on the issue of the uplift between 1982 and 1983. The hon. and learned Gentleman must give an answer to the House. Is he aware that although the figure quoted for the growth rate in the supply of anoraks from three ASEAN countries from 1983 to 1986 is 4½ per cent., the increase for the first 12 months is 24 per cent? Is that not shattering support for the truth of the claim that there will not be a restriction of imports and that a serious threat will arise to jobs? I implore the Minister to answer this question. Does the agreement mean job stability and prosperity for textiles and clothing? If he cannot give that assurance, why has he agreed to these bilaterals?

Photo of Mr Peter Rees Mr Peter Rees , Dover and Deal

No Minister in his right mind would assure any industry of job stability and prosperity. These factors must, to a large degree, depend upon circumstances outside any Government's control. There is the world recession. Matters also depend to a considerable degree on the entrepreneurial skill of the managers in a particular industry. The hon. Gentleman knows that he makes a rather absurd proposition.

On the issue of uplift, the hon. Gentleman has carefully selected anoraks because they are in the less sensitive area of group 2. They have been generally accepted by the Community and by the industry not to be as sensitive as the areas covered by group 1. A fair comparison would be the sensitive areas of group 1 where such extreme examples could not be reproduced.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

On a point of order, Mr. Speaker. I wonder whether you will inquire if the necessary requirement for the advertising of this statement to be posted around the House has been carried out? Neither the Gang of Four nor any Liberal Members have turned out to hear the statement. I wonder whether the proper posters have been arranged.

Photo of Mr Bob Cryer Mr Bob Cryer , Keighley

On a point of order. I have raised this point of order with you, Mr. Speaker, on several occasions. It was clear when the Minister rose to make his announcement that a great bundle of copies was available in the Press Gallery. Yet, repeatedly, statements are not made available to hon. Members. The multi-fibre arrangement is a particularly complex matter. I know that it is difficult for you, Mr. Speaker, but I would ask you to try to use your influence to see that copies are available for hon. Members so that we can at least be placed on the same basis as members of the press.

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I have a great deal of sympathy with the point raised by the hon. Gentleman. It is, however, a matter for the usual channels, not for me.

Photo of Mr Arthur Lewis Mr Arthur Lewis , Newham North West

Further to the point of order, Mr. Speaker. This matter may be within the prerogative of the usual channels. Is it not the case, however, that you, Mr. Speaker, in conjunction with the Leader of the House, have duties to try to help the House? This, you and the Leader of the House do. As the Leader of the House is now present and as you, Mr. Speaker, have said that you have sympathy with the point put by my hon. Friend the Member for Keighley (Mr. Cryer), may I ask you to ask the Leader of the House—since he provides copies to hon. Members on the Liberal Bench who never turn up—that some copies might at least be available to hon. Members from the Vote Office? If one copy is to be made, it might be possible for another 10 or 20 to be available in the Vote Office. I see no reason why the Leader of the House could not advise all Ministers that copies of statements should be made available in the Vote Office.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

Further to the point of order, Mr. Speaker

Photo of Mr George Thomas Mr George Thomas , Cardiff West

I shall take the point of order, but the applications under Standing Order No. 9 are a little later than usual.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

I shall be brief, Mr. Speaker. Further to that point of order, and in support of what has been said, is it not fair, as you are here to safeguard the position of Back Benchers, that those of us who have an interest in an extremely complicated matter such as the MFA should be allowed to have a copy of the statement before it is made? If the press is allowed to have it, and 167 copies can be made available for the members of the Press Gallery, cannot the Government make available to Back Benchers copies of such a complicated and important statement before the Minister makes it?

Photo of Mr George Thomas Mr George Thomas , Cardiff West

Order. I point out to both the hon. Member for Macclesfield (Mr. Winterton) and the hon. Member for Newham, North-West (Mr. Lewis) that those who are responsible for these matters will have listened, I presume, as carefully as I have to the points of order. However, I have put my foot in it once this afternoon and I have no desire to do so a second time.