Companies (Extra-territorial Controls)

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 11th May 1988.

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Photo of Joan Walley Joan Walley , Stoke-on-Trent North 12:00 am, 11th May 1988

To ask the Chancellor of the Duchy of Lancaster if he will make a statement about his policy towards the United States Government exerting extraterritorial controls over United Kingdom firms.

Photo of Mr Alan Clark Mr Alan Clark , Plymouth, Sutton

We have asserted on many occasions our rejection of United States claims to extra-territorial jurisdiction which infringe on United Kingdom sovereignty.

Photo of Joan Walley Joan Walley , Stoke-on-Trent North

I thank the Minister for his reply, but I should have liked a fuller explanation of the way in which he thinks that this policy will affect the £2 billion trade deficit in the information technology industry in the United Kingdom. Given the damaging effects that it is having on not only my constituents but on others thoughout the country, does he agree that the time is right to ensure that United States law does not apply here? Will he take steps to do something about it?

Photo of Joan Walley Joan Walley , Stoke-on-Trent North

Does the Minister agree with The Daily Telegraph that this amounts to "RAM-shackle protectionism"?

Photo of Mr Alan Clark Mr Alan Clark , Plymouth, Sutton

I do not think that it has any effect on the trade deficit, although I should be interested to hear any case that the hon. Lady could draw to my attention. The problem with the United States' extra-territorial claims is that they carry, latent within them, a threat to cut off supplies to United Kingdom manufacturers if they do not conform to certain requirements of the extra-territorial provisions. If anything, it could be argued loosely that it has a beneficial effect on our trade rather than otherwise.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

Does my hon. Friend agree that the right way forward in this complex matter is to strengthen COCOM? How does he propose to deal with the problem, particularly as post-1992 some members of the European Community will not be members of COCOM?

Photo of Mr Alan Clark Mr Alan Clark , Plymouth, Sutton

I do not entirely agree with my hon. Friend. If the opposite of strengthening is weakening, I would say that COCOM needs to be relaxed rather than strengthened. One of the problems with COCOM is that it is too comprehensive, pays little regard to obsolescence and the list of items included thereon is far too long.

Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Energy and Climate Change), Shadow Spokesperson (Environment, Food and Rural Affairs)

Is not the Government's attitude towards the American Government over this matter spineless? British companies and individuals faced with prosecution under American law, which does not apply in the United Kingdom, are put in a difficult position. One of my constituents cannot leave the country for fear of threat of prosecution from the American Government, but the British Government are not prepared to do anything to refute the allegation or to support him.

Photo of Mr Alan Clark Mr Alan Clark , Plymouth, Sutton

The hon. Gentleman is entirely wrong. There is no compulsion on British firms to accord with the provisions of the extra-territorial legislation in the United States. Any British company that wants to resist it will receive the fullest support of my Department.

Photo of Mr Roger Stott Mr Roger Stott , Wigan

Is the Minister aware that the equipment that is being caught by these regulations is not necessarily state of the art stuff? It is equipment that he and I use in our offices. He must be aware that a growing number of British companies must go through the rigmarale of filling in forms to satisfy the United States Department of Commerce, which is having an increasingly corrosive effect on relations between the United States and its allies. Is it not time that his Department did something more positive? I suggest that the Minister might consider using some of the provisions of the Protection of Trading Interests Act 1980 to signal to the United States that this country is not prepared to accept extra-territorial laws, which are affecting British companies and damaging British trade.

Photo of Mr Alan Clark Mr Alan Clark , Plymouth, Sutton

The British Government have made absolutely no concessions to the United States' extra-territorial provisions. If a British firm feels that its commercial interests are best served by acceding to the provisions, that is a matter for it. If it wishes to enlist our support in resisting them, we should be very glad to offer it. The United Kingdom does not accept the provisions and has always rejected them. The form filling to which the hon. Gentleman referred is in no sense a statutory obligation. It is purely a matter of convenience which some firms adopt to speed up their internal auditing processes.