Free Trade and Foreign Policy

– in the House of Commons at 3:31 pm on 11th November 1996.

Alert me about debates like this

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary 3:31 pm, 11th November 1996

With permission, Madam Speaker, I should like to make a statement on the publication of a White Paper entitled "Free Trade and Foreign Policy: A Global Vision", which my right hon. Friend the President of the Board of Trade and I are presenting to Parliament jointly today. Copies of the White Paper, together with a summary, have been placed in the Library.

The Government have a vision of global free trade by the year 2020. Both in the European Union and more widely, we will champion the cause of free trade and open markets. An immediate objective will be to persuade the European Union to commit itself to seeking global free trade by 2020.

The first ministerial conference of the World Trade Organisation will take place one month from now in Singapore. My right hon. Friend will represent the United Kingdom. The Government's objectives are wide ranging. They include free trade in services as well as in goods. They extend also to free and open markets for investment and capital flows—issues of particular interest to my right hon. and learned Friend the Chancellor of the Exchequer and requiring the involvement of a variety of international organisations.

That commitment to global free trade by 2020 should be realised in three stages: first, pressure at Singapore next month for progress in implementing existing commitments, completing continuing negotiations and initiating a further substantial liberalising work programme; secondly, a new round of multilateral trade negotiations to be launched before the end of the century so as to produce results by 2010; and then a final push forward to achieve the target of global free trade by 2020.

The Government are clear that free market policies are best. They produce the greatest economic benefits and, applied internationally, foreign policy benefits as well. The degree of interaction between trade policy and foreign policy is increasing.

Political developments over the last decade have created major new opportunities. The collapse of communism and of state socialism has removed the major ideological obstacle to global extension of the free market. The liberal, democratic, capitalist model is offering new hope to countries that were previously subject to authoritarian state control, not just in central and eastern Europe, but in the developing world. It is important that this new hope placed in the market economy and the democratic system is not disappointed.

Throughout the world, security and stability are an essential precondition for markets to function smoothly. Britain is making a significant contribution to efforts to uphold international peace and security, reflecting our global spread of interests. At the same time, the Government are convinced that free and open markets are themselves a force for peace. Closer trade and economic ties between countries create a community of interest, and the prosperity that they bring provides a powerful incentive to maintain stability and order in international relations.

Britain is better placed than any other nation to champion free trade and open markets on a global scale. We are a merchant nation, and we are active in a wide range of international organisations. Over the next two years, Britain will host the Commonwealth Heads of Government meeting, in October 1997; assume the presidency of the European Union, in the first half of 1998; and host both the Group of Seven summit of leading industrialised countries and the Europe-Asia summit.

In pursuing our aim of world security and prosperity, we benefit particularly from our position in the Security Council and in key international economic institutions. Our contribution to their work is an effective means of promoting British interests.

By working together on trade issues, the European Union carries greater weight than any member state could hope to do acting individually in difficult negotiations with the United States, Japan and other countries. The EU made a constructive and, in some respects, decisive contribution to the Uruguay round of multilateral trade negotiations, concluded in 1994—for which the Commission team, led by Sir Leon Brittan, deserves much credit. The British Government were consistent then in their support for trade liberalisation and, by working through the EU, we were able to achieve our objectives. We are determined to use our influence in the Union to secure further progress towards global free trade.

Within the European Union, the single market programme already provides for the elimination of all barriers to trade, in both goods and services, and for the elimination of all barriers to investment. It establishes rules and provides for their enforcement. A system of global free trade would have to be broadly similar in nature.

The single market demonstrates what can be achieved on a regional basis. Around the world, countries are entering into regional trading arrangements. Those arrangements hold promise, and it is important that the promise is fulfilled—not only in boosting economic activity within the region concerned, but in contributing to multilateral liberalisation, as the EU has done. Like the EU, many regional arrangements extend in scope beyond trade to other spheres of economic and political co-operation. By fostering dialogue and understanding between neighbouring countries, they help promote stability as well as prosperity.

Britain is an Atlantic as well as a European nation. Success in maintaining security, as well as in building prosperity, over the past 50 years has been rooted in transatlantic co-operation. The joint EU-US action plan, agreed last December, renewed the commitment of both sides to work together for a more stable and prosperous world. It also set out the practical steps needed for development of the transatlantic marketplace. The volume of two-way trade and investment is already massive, with scope to multiply further. The Government are committed to pursuing transatlantic free trade in the context of world trade liberalisation.

The Government believe that by setting the firm target of global free trade by 2020—to be reached in well-defined stages—and by pursuing other liberalising policies, the nations of the world will establish the most favourable environment for progress. Our development assistance programme has an important part to play in creating the conditions necessary for profitable trade and sustained long-term investment. We recognise that poorer countries may need help with adjustment. Over time, however, all stand to gain from being able to trade their way to prosperity. Economic development is also the way in which to deal with other issues of international concern, including environmental and labour standards. The director general of the World Trade Organisation has proposed that the least developed countries should be given a guarantee of tariff-free access for their products, which would bring practical benefits to many of the world's poorest countries. Britain is urging the EU and others to support that initiative.

Open markets provide an important competitive spur, but it is important that all undertakings given to open up market access are honoured in practice. Two Government initiatives—action single market and the trade barriers initiative—aim to secure the elimination of those barriers to trade which obstruct British business in Europe and outside.

We are determined to help British firms to secure the benefits of free and open markets. Supporting business is the largest single activity of our diplomatic posts abroad, accounting for 35 per cent. of our front-line diplomats. The Foreign and Commonwealth Office and the Department of Trade and Industry work together, through the joint export promotion directorate, to promote exports, which are at an all-time high—twice the level that they were in 1979. Inward investment is also running at record levels—Britain receives one third of all inward investment in the EU.

My right hon. Friend the President of the Board of Trade and I have agreed that, to enhance our inward investment effort further, the Invest in Britain Bureau should operate in a similar way to, and alongside, the joint export promotion directorate. That will strengthen the IBB's role, enabling us in particular to promote international trade and investment at home and overseas in a way that develops a common strategic approach to those issues in different countries and regions.

We are determined to open up new opportunities. Britain is well placed to make the most of them. Our economy is thriving—tax rates are low; social costs are lower than in other comparable countries; labour relations have been transformed; and the social chapter opt-out is necessary to ensure that labour market rigidities are not reintroduced. We are committed to policies to improve competitiveness. The Government are making Britain the enterprise centre of Europe.

Free market policies are the basis for our success. Global free trade represents their extension to the world. We are proposing a plan of action for the next quarter-century.

In parallel, we will work in the Organisation for Economic Co-operation and Development, the International Monetary Fund and elsewhere for free flows of investment, and to create the right environment for economic growth.

Global free trade by 2020 would bring enormous benefits—political as well as economic. The Government have the vision to set that bold policy objective. It is achievable in the time scale. It is our 2020 vision for the world.

Photo of Robin Cook Robin Cook , Livingston

It is a measure of the bland content of the White Paper that there is much in it with which I can agree. Will the Foreign Secretary accept our agreement with the strong emphasis on Europe? Will he repeat to the House the conclusions of chapter 5, which confirm that the majority of our exports go to the European Union and—a welcome observation—that the European Court of Justice provides valuable machinery to enforce access to the single market? Will he take the opportunity to spell out those facts of our trade life to his party's Euro-sceptics, as he curiously failed to do in his lengthy opening statement?

The key question is: how can the Foreign Secretary justify the cost of printing this compilation of platitudes as a Government White Paper? What reply did the Foreign Secretary give to the letter from Downing street which noted that the Prime Minister could not identify anything new in the White Paper and did not believe that it would be convincing as an action plan? Will the Foreign Secretary accept that those of us who have read the White Paper agree that, for once, the Prime Minister got it right?

Will the Foreign Secretary confirm that the White Paper does not propose a single new post in the commercial sections of our embassies, does not release a penny of new investment in our trade missions and does not come up with a single fresh initiative for supporting British exporters?

The Foreign Secretary claimed that economic development was the way to address concerns on international labour standards. Is he aware that the Government's opposition to a social clause in the general agreement on tariffs and trade puts them to the right not just of most of Europe, but of the Republican majority in Congress? How dare Ministers claim, as the President of the Board of Trade did this morning, that a clause stopping trade in the products of child labour or convict forced labour is somehow protectionism.

Does the Foreign Secretary also recognise that there will be widespread disappointment that the White Paper equivocates over the environment clause in the general agreement on tariffs and trade and that his statement appeared to reject it? Does he agree that it would be intolerable if the rules of the World Trade Organisation were to prevent individual nations from refusing to import products that broke environmental treaties? Does he also recognise that free trade must be balanced by fair trade? Is he aware that the countries of sub-Saharan Africa will lose 3 per cent. of gross domestic product from the latest GATT round? If so, why are the Government cutting overseas aid when it is needed most?

There is an unreality about a Government with five months left to run producing a vision for the year 2020. There was the same lack of reality in the Foreign Secretary's complacency about Britain's trade performance. Does he not know that the OECD's figures reveal that since 1979, the growth by value of British exports has been the lowest of any European member state? Does he not know that Britain's share of the new markets in Asia has fallen by one third over a decade in which Germany, France and Italy have all increased their market share? If he does know that, why has he no proposals to recover the ground that we have lost? How can Britain recover that lost share of export markets when this Government have left Britain third from the bottom in the investment league and second from the bottom in the skills league? Today's White Paper shows that, after two decades in power, the Government can neither comprehend the extent of their failure nor propose any remedy. This barren White Paper exposes the fact that the Government have run out of ideas and must go as they have run out of time.

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

The hon. Gentleman—the right hon. Gentleman; I apologise, but that is the only thing for which I shall apologise to him—has presented a farrago of nonsense in his response to my opening statement. He declined to remind the House that our share of world trade continued to fall under the previous Labour Government and began to stabilise only under the present Administration. He failed to point out that since 1981 our trade has increased faster than that of France or Germany and that our trade increase over the years has been higher per capita than that of either the United States or Japan.

The right hon. Gentleman made an extraordinary statement about free trade needing to be balanced by fair trade. Does he not know that that has been the slogan of the protectionist throughout the ages—it is exactly the kind of line used year after year by those who wish to pay lip service to free trade but who yearn to interfere, control and direct and thereby render a disservice to their countries?

The right hon. Gentleman makes pious remarks about the importance of good labour standards. Of course, we can all share a belief in good labour standards, but the proper place to raise such matters is in the International Labour Organisation. The World Trade Organisation is about trade. Labour standards can properly be raised, as the Government have often emphasised, in the ILO. That is the right and proper way to proceed.

The right hon. Gentleman complains about the content of the White Paper but he should remember that there is a difference between soundbite and strategy. I am not surprised that the Opposition spokesman should be concerned about soundbites, but this document provides a strategy for the nation—indeed, not only for this nation. It also makes a contribution to a historic world debate which will have a crucial effect on the prosperity of people throughout the world in the years to come. As this party and this Government intend to be presiding over the nation's affairs during those years, it is right that we should spell out the facts to the nation.

Photo of Hon. Tim Sainsbury Hon. Tim Sainsbury , Hove

I congratulate my right hon. and learned Friend the Foreign Secretary and my right hon. Friend the President of the Board of Trade on their commitment to free trade. Does my right hon. and learned Friend agree that that commitment has created an enormous number of jobs in this country, especially because of the effective work of the joint export promotion directorate of the two Departments? I therefore especially welcome the idea that the two Departments will work together more closely on inward investment. Is it not the case that our national success in terms of exports and inward investment—a success that is so often belittled by the Opposition—is due to the great increase in the British economy's productivity and competitiveness since 1979?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Yes, and I pay tribute to my right hon. Friend for the work that he did as the United Kingdom's Trade Minister. It is precisely because of the benefits that we have seen from joint action by the Department of Trade and Industry and the Foreign Office on export promotion that we have agreed that it would be sensible to have the same degree of co-ordination for the Invest in Britain Bureau; I believe that the same benefits will thereby flow.

Photo of Mr David Steel Mr David Steel , Tweeddale, Ettrick and Lauderdale

As the representative of the party of free trade, I cannot but welcome the publication of the report, which has so excited my hon. Friends.

I have two serious points for the Foreign Secretary. First, the Prime Minister and the Chancellor of the Exchequer have a good record in pressing in the international financial institutions for debt relief for the poorest countries, and the proposal in the White Paper to press the WTO proposal for tariff-free access for the less developed countries could be crucial; I hope that he will underline that in the European Union, because it could go some way towards mitigating the Government's disastrous record on overseas aid.

Secondly, there is one omission in the security section of the White Paper, concerning an area in which we could do with less free trade: the sale of conventional arms. The Foreign Secretary will know that there are already reports that British arms have been found in the current conflict in Zaire, and it is important for the Government to give higher priority to controlling conventional arms sales and not to give the impression, as they sometimes do, that our economy is so impoverished that we cannot afford to be choosy about the countries to which we sell arms. Will he give full support to strengthening the United Nations arms register?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

I welcome the right hon. Gentleman's initial comments, representing as he does the last vestiges of a once-liberal party that still refers to itself by that name but has abandoned its liberalism in many respects. I am pleased that he welcomes our free trade objectives. Arms sales are not subject to free trade but are under strict control in all countries, and nowhere more so than in the United Kingdom.

I also welcome the right hon. Gentleman's remarks about the recommendation of Mr. Ruggiero of the World Trade Organisation; I agree that the European Union has an obligation to respond quickly and unequivocally to that proposal of tariff-free access for the exports of the least developed countries. A fundamental debate is continuing in the European Union between the traditional free traders and the traditional protectionists, most of whom are from the Mediterranean countries. I believe that the European Union should be more generous about access to western Europe and especially about the exports of the least developed countries; without that access, such countries will not be able to break out of the poor economic conditions that they currently experience.

Photo of Mr Tom King Mr Tom King Chair, Intelligence and Security Committee of Parliament, Chair, Intelligence and Security Committee of Parliament, Chair, Intelligence and Security Committee of Parliament, Chair, Intelligence and Security Committee of Parliament, Chair, Intelligence and Security Committee of Parliament, Chair, Intelligence and Security Committee of Parliament, Chair, Intelligence and Security Committee of Parliament

Does my right hon. and learned Friend agree that, notwithstanding the carping comments of the right hon. Member for Livingston (Mr. Cook), the statement is to be widely welcomed? Is not it clear that, although he said in the statement that regional trading groups held promise, they also hold great threats? Is not his initiative extremely well timed to ensure a more global approach to such problems, not only for our country, which depends uniquely on overseas trade in both goods and services, but for every country in the world, because everyone can benefit from greater world trade?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

It is certainly true that regional trading groups such as the Association of South East Asian Nations, the European Union or those in the North American free trade agreement could act against the interests of global free trade by being restrictive; for the most part they have not done so, and I believe that the overall judgment on such groups should be positive.

One has only to ask whether, if NAFTA or the single market did not exist, we would be nearer to or further from the achievement of global free trade; I believe that we would be much further away, because the single market has shown that even the world's most sophisticated economies can sweep away trade barriers and tariff restrictions, thereby increasing prosperity. If the most sophisticated countries can do that, it should be possible for the international community as a whole. With that caveat, I believe that we can welcome such structures.

Photo of Mr Denzil Davies Mr Denzil Davies , Llanelli

The Secretary of State will be aware that the People's Republic of China was one of the signatories to the Uruguay round and has therefore accepted all the arrangements and agreements that it contains. Why then is China not allowed to be a member of the World Trade Organisation? Is not it extraordinary that the world's largest market is not a member of the WTO?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

We look forward to the day when China becomes a member of the World Trade Organisation. However, joining the WTO is not simply a matter of submitting an application form. A country has to be able to demonstrate that it can accept the disciplines and organisations of the WTO, or it will make no contribution to the objective of moving towards global free trade. When China has met those requirements, its admission will be welcome.

Photo of Mr Michael Jopling Mr Michael Jopling , Westmorland and Lonsdale

Does the White Paper recognise the immense commercial opportunities in the Commonwealth which were recently highlighted by the Select Committee on Foreign Affairs? Does it also recognise that an essential catalyst for our successful international trade is to have well-staffed commercial sections in our embassies around the world as well as a highly effective World Service? Therefore, will he give the House an assurance that the current public expenditure round will not produce further short-sighted cuts in the establishment of our commercial sections around the world?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

I very much agree with my right hon. Friend in regard to the importance of Commonwealth markets. Growth in the economy of a developing country does not represent a threat to our economy, but presents an opportunity for new export markets. With regard to the latter part of his question, I endorse the point that he made and I do not envisage any cuts in our overseas representation. I wish to expand our overseas representation and not reduce it as it benefits the United Kingdom. For example, a report by the National Audit Office in south-east Asia showed that for every £1 invested in our export promotion and assistance, we earn £80 in additional exports. That seems pretty good value for money.

Photo of Harry Cohen Harry Cohen , Leyton

Although I support the removal of barriers to world trade, does the Foreign Secretary agree that one of the biggest barriers is corruption, which is devouring such countries as Nigeria, Pakistan and Zaire? What proposals do the Government have to tackle corruption? For example, how will they deal with the Swiss banks that are holding the £5 billion that President Mobuto stole from the people of Zaire? Do they propose to implement the OECD recommendation that countries should not give tax relief on commissions or other bribes to foreign dictators? What do the Government intend to do about corruption?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

The hon. Gentleman refers to important matters, but they are not relevant in the context of developing global free trade. I entirely endorse the view that any steps that can be taken to limit the effects of corruption must deserve our support.

Photo of Mr Mark Lennox-Boyd Mr Mark Lennox-Boyd , Morecambe and Lunesdale

Does my right hon. and learned Friend agree that a successful, enterprising and adventurous economy such as Britain should follow the example of other adventurous economies and avoid any restrictions on employment laws as advocated by the Labour party? Will he remind the Labour party that we are against the social chapter and the minimum wage not because we do not want high standards of living, but because we know that that is not the way to achieve them?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Yes, and it is not simply doctrine on our part; it is reflected in the unemployment effects. The fact that unemployment in Britain has been falling for several years while that elsewhere in western Europe has been between 10 per cent. and 25 per cent. and rising must have something to do with the different approach to employment legislation and the additional burdens placed on the wealth creators in those countries.

Photo of Mr Bernie Grant Mr Bernie Grant , Tottenham

I would have been more impressed had the White Paper been about fair trade rather than free trade. What is the Government's current stance in respect of the eastern Caribbean banana-producing countries? The Foreign Secretary will know that the Americans and the dollar banana countries have taken the European Union to the World Trade Organisation for what they consider to be the anti-competitive position of the European Union. Has the Government's position changed as a result of that statement?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

As it happens, I saw the Prime Minister of Jamaica this morning and he welcomed the support given by the United Kingdom in the very matter to which the hon. Gentleman refers. The United Kingdom is well aware of the sensitivity to the exports of that product of the small island economies to which it is a highly important source of foreign exchange. We recognise the importance of those matters and therefore support the views of the Caribbean countries.

Photo of Mr David Howell Mr David Howell , Guildford

Does my right hon. and learned Friend agree that the White Paper is a reminder that the wider world is just as important to Britain's interests and prosperity in the future as western Europe—perhaps even more so, as the great emerging markets develop and become the markets of the future? Does he agree that several steps are highlighted by the White Paper? First, as my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) mentioned, we should concentrate much more, in terms of both policy and resources, on developing the Commonwealth network of the great markets of south-east Asia and Africa and putting some effort behind that endeavour. Secondly, we should develop those agencies that encourage the investment and the knowledge-intensive exports from Britain that will be the pattern of the future and make them receptive and friendly to British commerce—I refer to agencies such as the BBC World Service and the British Council.

Thirdly, will my right hon. and learned Friend consider the need to put still more resources into the commercial elements of our diplomatic posts, which can develop those markets in the Commonwealth and Latin America? Finally, will he make sure that his colleagues in the Treasury read the White Paper as carefully as his colleagues in the Foreign and Commonwealth Office and the Department of Trade and Industry?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

On the final part of my right hon. Friend's question, my right hon. and learned Friend the Chancellor of the Exchequer played an important part in the drafting of the document and will, I am sure, welcome my right hon. Friend's observations. I agree that many of the United Kingdom's most important markets in years to come will be in other parts of the world. Western Europe remains important, but it is interesting that the growth of imports—and, therefore, demand for our exports—in western Europe has been only 4.5 per cent. over the past five years, whereas it has been 10 per cent. in Asia and 11.5 per cent. in Latin America. We must be more aware than we have been in the past of the crucial importance of south-east Asia, Latin America and other regions as potential markets for significant and substantial export growth.

Photo of Mr Andrew Faulds Mr Andrew Faulds , Warley East

What does this beautifully delivered, futuristic guff about free trade actually mean for the economies of the under-developed world throughout the whole of the universe?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

No one would be other than pleased to be given the compliment of having presented a White Paper that can be described in the terms used by the hon. Gentleman. For the developing world, the crucial importance of this document is that developing countries need access for their exports, which means the removal of trade barriers. The third-world countries that have made the most remarkable economic progress in the past 10 years are the countries of south-east Asia and Latin America. It is no coincidence that those are the countries that have done most to sweep away barriers to trade and over-bureaucratisation of their economies and have endorsed and welcomed a capitalist economy in a way that we have long encouraged. The fact that, as a consequence, they are moving out of the third world into the developed world should be an exhortation to all other countries.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Southend East

Does the Secretary of State agree that this superb and uplifting policy should apply to agriculture as well as to manufacturing trade, observing that the common agricultural policy is the most costly and filthy protection racket ever invented by man?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Without necessarily endorsing all my hon. Friend's rhetoric, I say that global free trade means exactly that—all free trade, including agriculture. It is not possible to say that we have achieved our objectives unless we extend the policy to goods, services and all products, including agricultural products. That does not mean that there will not have to be continuing support for the rural sector; but that support should not be in the form of tariffs, production subsidies or other measures of that sort, because that interrupts the free trade objective that we have set ourselves.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

Will the Foreign Secretary put aside for the moment the party political gloss on his statement and come to terms with the realities? Does he agree that the European Union's trade negotiations with South Africa have less to do with helping South Africa to develop its economy and much more to do with the self-interest and protectionism of the European Union? In the context of those negotiations, does he also agree that proposals rapidly to enforce a total free trade area between Europe and all the countries of the South African customs union will lead to serious consequences, including a 15 per cent. loss in Namibian revenue? How can that help stability if the process is not two way but based on the one-way self-interest of the developed countries?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

The hon. Gentleman refers to the negotiations between the European Union and South Africa, and I entirely agree with him. The United Kingdom was highly critical of the European Union's negotiating policy and we worked closely with the South African Government. When President Mandela was here, he paid tribute to the United Kingdom for standing shoulder to shoulder with South Africa in demanding more generous access in the European Union's negotiating mandate. As the hon. Gentleman takes such a deep interest in those matters, he should have paid tribute to what the Government have been seeking to achieve.

Photo of Michael Spicer Michael Spicer , Worcestershire South

Although I warmly welcome my right hon. and learned Friend's general attitude towards free trade, does he agree that one of the most protectionist influences in the world nowadays is the European Union? It is a question of not just agriculture but its attitude to eastern European countries. On reflection, does he agree that, far from being a benign influence in the Uruguay round of GATT, the EU was one of the major causes of the massive delays that took place?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

That is the paradox of the European Union. Within its boundaries there has been a greater realisation of genuine free trade than the world has ever known. The single market is a remarkable achievement, which would not have happened without the European Union and which has brought great benefits to the United Kingdom. My hon. Friend is also correct to say that, in terms of the EU's relationship with the rest of the world, there has been a lack of generosity and imagination, which has inhibited the development of trade and done a disservice to the developing economies in central and eastern Europe as well as in the third world.

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

Is it not typical of this Tory Government that, after 17 years in power and having wrecked the British economy, they now turn their attention to solving the world's problems? I only hope that the world does not get the same treatment as Britain has had, with 4 million people out of work, the public sector coal industry almost destroyed, the shipbuilding and steel industries down the pan, our manufacturing base reduced by 40 per cent., a trade deficit of £13 billion, a public sector borrowing requirement of £27 billion, and the country up to its neck in debt of £320 billion. And the Government tell the world that it can have a basinful of that? They will need Murdoch with his 2020 global vision to sell that crap.

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

I prefer, on these economic matters, the verdict of the International Monetary Fund, which described the condition of the British economy as "enviable".

Photo of Patrick Cormack Patrick Cormack , South Staffordshire

Does my right hon. and learned Friend accept that his robust and welcome statement gives a ringing endorsement to two matters: first, to the case for enlargement of the European Union at the earliest possible date; and, secondly, to the case against the cheese-paring economies of his own Department?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

I assure my hon. Friend that my attitude to cheese-paring economies is at least as robust as his. We look forward to developing our assistance to exports and trade. There has been a remarkable change over the past 20 years: one in three of our diplomats overseas now assists British exporters and British industry. That would have been inconceivable even 20 years ago, which shows how our diplomatic effort is combining with our industrial and economic effort in the national interest.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I welcome the global vision as distinct from the purely Eurocentric vision that so many people have pursued in recent years. We should remind ourselves that at least half our trade and 80 per cent. of our investment take place in markets other than those of the European Union.

But are not the right hon. and learned Gentleman and the President of the Board of Trade practising a certain amount of self-deception in the White Paper that they have just announced? They presented it as if the Government had something beyond aspirations to offer, but is it not the case that we long ago abandoned to the European Commission and the European Community the power to do anything to promote our own trade by reducing or raising tariffs, which are the principal direct instruments of influencing trade? Is it not the case that the Government can do virtually nothing to pursue those aspirations, without the prior permission of the European Community and Sir Leon Brittan?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

The right hon. Gentleman is wrong. He implies that the European Union makes trade policy through the workings of the Commission; it does not. When, for example, we were determining a mandate for the negotiations between the European Union and the United States, Sir Leon Brittan had to approach the member Governments and ask them to agree a mandate. There was a great debate between the free traders and the protectionists. I am happy to say that the United Kingdom not only led the free trade case, but won. The mandate that Sir Leon is now negotiating, and which he is happy to negotiate, therefore owes its genesis to Britain and the other member states which successfully argued the free trade case and thereby determined EU policy.

Photo of Mr Wyn Roberts Mr Wyn Roberts , Conwy

My right hon. and learned Friend will be aware that the value of United Kingdom exports has increased by 82 per cent. since 1987, and that the value of European Union exports has increased by a similar percentage. He will also be aware, however, that the value of the exports of other OECD countries has increased by 110 per cent. What can we do in Britain to equate to the performance of those other OECD countries?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

My right hon. Friend draws attention to an important challenge for the United Kingdom Over the years since the end of the second world war, Britain's trade as a proportion of total world trade consistently declined until the present Government came into office. Then, in the early 1980s, it stabilised and has remained stable. We have not yet been able to reverse the trend and take an increasing share of world trade. We have stopped the rot, but we have not yet reversed it. That is a crucial challenge for the next few years.

Photo of Mr Harry Barnes Mr Harry Barnes , North East Derbyshire

What vision is there for the future of developing nations that are dependent on import substitution?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Developing countries, like other nations, must identify their natural areas of strength with regard to their own products. They must be given facilitated access to the markets of the developed world, as the White Paper argues. In that way, just as we have found in Europe and other parts of the world, they can achieve the same prosperity. There is no obvious reason why a country such as Thailand or Singapore should be prosperous, whereas other countries in Asia are not. The fact that some are successful and some are not is explained by the policies that they have pursued.

Photo of Mr Jacques Arnold Mr Jacques Arnold , Gravesham

I welcome my right hon. and learned Friend's repeated emphasis on opportunities for Britain in Latin America. Can we look forward to further emphasis being put, through our trade missions in those countries, on developing their already outstanding record? When my right hon. and learned Friend considers the transatlantic trading community, will he remember Latin America and be a champion for the Mercosur trading market in the councils of the European Union?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Mercosur, which is a very successful customs union, is a further example of how regional trading groups can provide the building blocks towards a system of global free trade. The United Kingdom, at diplomatic level and through the Department of Trade and Industry, is giving added emphasis to the potential of Latin America. We will host a major conference on Latin American-British trade early next year, which will give an added impetus to our efforts.

Photo of Robert Wareing Robert Wareing , Liverpool, West Derby

The Foreign Secretary cannot get away with the answer that he gave to the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel). Successive Tory Foreign Secretaries have said that it is the aim of British foreign policy to promote good government. How does that square with the continual sale of arms to murderous dictatorships such as those in Indonesia and Saudi Arabia?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

I do not accept the hon. Gentleman's description of those Governments. We believe that Governments are entitled to protect themselves from external aggression and, on that basis, we provide arms to certain countries. It is an entirely just and appropriate approach and, so far as I am aware, it is what the Labour party claims that it would do.

Photo of Mr David Shaw Mr David Shaw , Dover

My right hon. and learned Friend will be aware that many of my constituents owe their jobs to free trade and to the success of the Government's policies. Will he assure the House that the White Paper is designed to ensure that our free trade policies do not result in the importation of unemployment and the sorts of problems that exist in Europe? Our policies must avert such difficulties.

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Britain is perhaps better placed than almost any other country to address the challenges of global free trade. Because the Government have removed existing artificial barriers to wealth promotion in the United Kingdom by reforming the trade unions, removing state subsidies and increasing competitiveness, British companies are more able to face the global challenge than those of almost any other European country. We can take great pride in that achievement.

Photo of Mr Tony Banks Mr Tony Banks , Newham North West

This is not a White Paper, but a blue paper. That is very appropriate, given the fact that it is largely a meaningless puff for the Conservative party. We can always identify the serious White Papers because those that are harbingers of legislation do not carry mug shots of Ministers on their front pages. This White Paper contains mug shots of two Ministers.

I have now examined the document, which contains a little about environmental protection. What about protecting the world's scarce resources and endangered species? For example, will the proposals affect the American ban on Mexican tuna that is not dolphin friendly? Will the world's rain forests be protected? What is the future of the ban on the ivory trade? Will those matters be discussed in Singapore? Will the British Government raise them at the conference?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

As to issues of public health or other aspects of public policy, the hon. Gentleman can take great comfort in the fact that proper protection for endangered species will continue and that we shall persist in preventing trade in harmful products. Global free trade refers to the vast majority of goods and services to which those considerations do not apply. When there are special justifications that relate not to trade but to public health, environmental or other matters, they will continue to be taken into account.

Photo of Mr Mark Robinson Mr Mark Robinson , Somerton and Frome

I welcome the emphasis that my right hon. and learned Friend places on the expansion of world trade. We hear much—particularly from Labour Members—about the need to deal with the problem of world poverty. Is it not true that expanding world trade is the right way of dealing with that problem, as is proved by the success of countries such as Malaysia?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

That is absolutely right. It is no coincidence that those countries that have embraced the principles of free trade have enjoyed the greatest increase in prosperity and, therefore, have been able to deal with their domestic poverty problems. If we apply globally the principles that have proved so successful at a national level, we shall achieve the common objective of eliminating fundamental poverty.

Photo of Mr Donald Anderson Mr Donald Anderson , Swansea East

By his panache, the Foreign Secretary has made a rather bland, thin statement sound exciting. However, we remain a little puzzled as to his motives. All states and groups, such as the European Union, the United States or ourselves, can subscribe to grand declarations about free trade. However, when we examine the record of the European Union in relation to South Africa—the British Government have a good record in that area—or that of the United States in relation to Cuba, we see a rather different picture. For example, what are the Government doing to impress upon the United States the absurdity of its embargo on and blockade of Cuba?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

We have unreservedly condemned the United States' action with regard to the Helms-Burton legislation and the Protection of Trading Interests Act 1980, which is on the statute book, protects British companies.

There is a great global debate to be won. Everyone pays lip service to the principle of free trade, but not everyone believes in it. For example, the right hon. Member for Livingston (Mr. Cook) immediately qualified his commitment to free trade by saying that fair trade was needed also. When people talk about the need for fair trade as well as free trade, we can be certain that it means that they do not believe in the former and that they are trying to preserve protectionism. That debate is resolved on Conservative Benches, but the hon. Gentleman could assist us by converting his Front-Bench spokesmen so that they stop trying to be all things to all people.

Photo of Mr John Wilkinson Mr John Wilkinson , Ruislip - Northwood

May I focus my right hon. and learned Friend's attention on the practical and immediate aspects of British trade policy rather than the grandiloquent and the futuristic? My right hon. and learned Friend intends to use the European Union as the model. Can we therefore take it that the Government will bring about at an early specified date enlargement of the EU to include not only central European countries but countries such as the Baltic states, which deserve to join? Can we take it also that the Government will seek to prevent European policies that militate against free trade, such as the common agricultural policy and the creation of a single European currency within a tightly integrated, centralised and bureaucratic western Europe, which is the exact antithesis of a model for free trade?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

We look forward to the day when the Baltic states join the European Union, as my hon. Friend has recommended. I see the EU as a model with regard to the single market and the elimination of barriers within the EU, but I most certainly do not see it as a model to be followed on the basis of its existing trading relationships with central and eastern European countries and countries of the developing world. In that respect, substantial changes are required of a kind to which the White Paper draws attention.

Photo of Dr Norman Godman Dr Norman Godman , Greenock and Port Glasgow

In the context of trade within the European Union over the next 20 years, does the Foreign Secretary expect the European Court of Justice to play a judicial role in the resolution of trade disputes among member states? If that European supreme court is to perform that sort of role, it will surely require more resources.

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

I do not think that it will. I think that the court's proper role is to adjudicate on disputes involving the treaty. It plays a valuable role with regard to the enforcement of the single market, and that I very much welcome. There are other areas of its activities where we have put forward recommendations for change, which I commend to the hon. Gentleman.

Photo of Michael Fabricant Michael Fabricant , Staffordshire Mid

While welcoming the spirit and tone of the White Paper, may I ask my right hon. and learned Friend whether he is aware of the fairly recent acquisition by Bass, near Lichfield, of Holiday Inns in the United States, Canada, Australia and New Zealand? Does he agree that its choice in acquiring the firm was probably the result of not only the good business sense of so doing but the fact that there is a common corporate law in the countries involved, a common economic cycle and a common language? There is also the fact that the gross domestic products of all the other countries far exceed those of the countries of the European Union.

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Whenever countries produce the right conditions to attract investment, it is no surprise that they secure that investment.

Photo of Denis MacShane Denis MacShane , Rotherham

May I welcome the Foreign Secretary's positive language about the International Labour Organisation, which is in some contrast to the position 18 months ago when the Prime Minister and the then Secretary of State for Employment, who is now the Secretary of State for Defence, wanted us to withdraw from the organisation? Will the right hon. and learned Gentleman confirm that the Government now support the ILO and will abide by its conventions and rulings?

As for child labour, does the Foreign Secretary realise that by so boastfully breaking faith with what the United States wants—which is, if not regulation linked to trade, at least discussion of child labour—he will encourage the US to take unilateral action, which whether on Cuba or on the general system of preferences countries is not the right way forward? Britain should be standing with its allies and insisting that child labour should at least be discussed in the context of the World Trade Organisation.

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

If the hon. Gentleman had been listening carefully, he would have heard me say that if issues of labour standards were to be raised, the International Labour Organisation would be the proper forum and not the World Trade Organisation. That is the Government's view. If there is an ILO, it is appropriate to use it for the purpose that we are discussing, and not the WTO, which has a different remit.

Photo of Mr Patrick Nicholls Mr Patrick Nicholls , Teignbridge

Does my right hon. and learned Friend agree that if it were fair and accurate to describe the Indonesian Government as a murderous regime, the Labour Government would not have signed the Hawk trainer contract with them in 1978?

Photo of Malcolm Rifkind Malcolm Rifkind Foreign Secretary

Not only is that true, but we have had the shadow spokesman on defence saying that a Labour Government would continue to sell arms to Indonesia. That, too, should be borne in mind.