HC Deb 31 May 1967 vol 747 cc96-101

The following Question stood upon the Order Paper:

75. Mr. BRUCE-GARDYNE: To ask the President of the Board of Trade if he will make a statement on the outcome of the Kennedy Round of tariff negotiations in Geneva.

The President of the Board of Trade (Mr. Douglas Jay)

With permission I will now answer Question No. 75.

The essential elements of agreement in the Kennedy Round of trade negotiations were reached on 15th May. The Secretariat of the G.A.T.T. is now engaged in compiling the detailed results. I shall as soon as possible present to Parliament a White Paper setting out these detailed results so far as they affect this country. In the meantime, I can give the House a general account of what has been done.

Reductions in industrial tariffs will be very substantial. So far as can be judged now, the average reductions made by the major trading countries in their tariffs on industrial goods will be over 35 per cent. This compares with the average of about 7 per cent, achieved in the previous Dillon negotiations completed in 1962.

The bilateral arrangements between the United Kingdom and the European Economic Community, the United States and Japan provide for reciprocal reductions which are estimated to average 37 per cent., 38 per cent, and 33 per cent, respectively, and affect well over 70 per cent, of our exports to them. British exporters will also benefit from reductions in m.f.n. tariffs negotiated bilaterally between other participants.

Large reductions in chemical tariffs have been agreed, and the United States has undertaken to seek legislative authority for the abolition of the American selling price system which affects trade in benzenoid chemicals. As a contribution to the final settlement, which called for concessions from all the main participants, the United Kingdom agreed to reduce both its ad valorem and specific duties on iron and steel by 20 per cent.

The world-wide reductions in tariffs will begin to be made in 1968, and will normally be spread over five stages.

A new code of practice for dealing with allegations of dumping has been agreed which should be of considerable benefit to British exporters.

For the first time in the history of such negotiations, the Kennedy Round settlement includes a substantial agricultural element. The essentials of an arrangement covering trade in cereals have been agreed. These provide for minimum and maximum prices for wheat; the minimum price is above that of the existing international wheat agreement, but below current price levels. They also provide foi a food aid programme totalling 4½ million tons a year for the benefit of the developing countries. The British contribution to the cost of this programme will be 5 per cent.

The less developed countries should gain considerably from the settlement, which included reductions of barriers to trade in tropical products, primary materials and manufactured goods of interest to them.

I regard the outcome of these protracted negotiations as highly satisfactory and of great advantage to British industry. The high degree of success achieved must be attributed to the wisdom and patience of the negotiators, and notably of the Director General of the G.A.T.T., who played a vital part, particularly in the final stages.

Mr. Bruce-Gardyne

I thank the President of the Board of Trade for his statement, and endorse his expression of satisfaction over the remarkably wide-ranging settlement that has been reached, but can he tell us how long it will take for these tariff reductions to be brought fully into effect? Can he tell us what effect he thinks the agreement will have had on the Government's application for membership of the Common Market? In this context, has he noticed the comment of M. Jean Rey that the British delegation's attitude of constant support of the United States and opposition to the Common Market in the closing stages of the negotiations—

Mr. Speaker

Order. Questions must be brief.

Mr. Bruce-Gardyne

—have reduced the prospects of a successful British application?

Mr. Jay

As I said, the reductions will start in 1968 and will be spread over five years. The industrial common external tariff in the E.E.C. will now be reduced as the result of the negotiations, whether the United Kingdom joins or not.

Sir K. Joseph

Will the President of the Board of Trade accept that we on this side welcome this notable success, and join in his tribute to all concerned, including our negotiators?

I have three short questions* Mr. Speaker. First, why has there been no cut in respect of lorries and tractors, which are important parts of British exporting industry? Why have the Government not succeeded in persuading other industrial countries to increase their textile quotas? In view of the apparent dissatisfaction of the less developed countries with the outcome, will the Government undertake to renew the initiative so successfully taken by my right hon. Friend the Leader of the Opposition at U.N.C.T.A.D. in Geneva in 1964?

Mr. Jay

I am grateful to the right hon. Gentleman for his welcome. We recognise that this effort was supported in all parts of the House.

As to the lorries, we pressed this aspect extremely hard but the E.E.C. was unwilling, right to the final day of negotiations, to make any concession, and there was, therefore, nothing further we could do.

Although the full details of the results are formally confidential until the agreement has been signed, considerable reductions in tariffs on textiles have been made by the other industrial nations, which will be of great benefit to the less developed countries. The negotiations on the quota are, strictly, separate from the Kennedy Round negotiations, as the right hon. Gentleman knows, but they are going forward and we shall continue to press them.

It would be a mistake to think that the developing countries do not gain by the agreement, because when industrial tariff cuts are made under the M.F.N., they are automatically extended, without reciprocity, to the developing countries. This is a great advantage. But I can assure the right hon. Gentleman that we are pressing forward with the position in regard to U.N.C.T.A.D., to which he referred.

Mr. Sheldon

While offering congratulations to the negotiating team which produced this success, may I ask my right hon. Friend whether he is aware that it is very difficult to get a true measure of the successs until the detailed results in the actual tariff categories are made available in a White Paper?

Mr. Jay

We shall certainly do this. As soon as we have the necessary detailed documents from Geneva, I shall publish a White Paper giving all details relating to the United Kingdom.

Sir C. Osborne

If the average reduction in industrial cuts is 38 per cent., is it fair to deduce that the need to go into the Common Market on economic grounds is greatly reduced?

Mr. Jay

The figure the hon. Gentleman refers to is 35 per cent., not 38 per cent. Despite this agreement, of course, there is still a tariff barrier between the E.F.T.A. countries, on the one hand, and the E.E.C., on the other.

Mr. Luard

Can the President of the Board of Trade say whether the exception which the Common Market countries demand on lorries and larger vehicles is accepted as final by Her Majesty's Government, or are negotiations still continuing?

Mr. Jay

I doubt whether anything is ever final, but the Kennedy Round negotiations are finished. We shall not be able to get a concession on lorries on this round of the negotiations.

Mr. Bessell

Is the right hon. Gentleman aware that the Liberal Party always gives a cordial welcome to any proposals which reduce tariffs, particularly when they help to increase our exports? May we also be associated with the congratulations he has extended to the Director General for the part he played in these successful negotiations?

Mr. Maxwell

Will my right hon. Friend tell the House what concessions the American negotiators made on their notoriously unfair tariffs on chemicals on the so-called A.S.P. system? Further, can he tell the House whether it is a fact that the main reason for the success of the negotiations was the strength and unity of the negotiators of the E.E.C. countries?

Mr. Jay

The position on the American tariffs is that there will be some quite material reductions forthwith and unconditionally. Secondly, the United States Government have undertaken to recommend to Congress the abolition of the American selling price system. It that goes through, further reductions will be made by the other countries concerned.

As to the success of the negotiations, I think that we had probably better give equal credit to all the parties concerned.

Mr. Ronald Bell

Will the effect of this agreement be to reduce the average level of the common external tariff of the European Community to 7 per cent.?

Mr. Jay

I should not like to confirm that exact figure off the cuff. There will be a reduction of 33 per cent, or 35 per cent, in the industrial tariff.

Sir S. McAdden

While congratulating the President of the Board of Trade on the successful outcome of these negotiations, may I ask whether he will regard our undertakings in this matter as being binding on us as distinct from the previous agreement on tariffs and trade signed by the then President of the Board of Trade and rejected by him within a week of his becoming Prime Minister?

Mr. Jay

I think that the hon. Member has got the facts considerably distorted. I am not quite sure to what he is referring. [HON. MEMBERS: "Oh."] The hon. Gentleman is sometimes not very explicit. These tariff changes are binding on the parties unless a complex procedure under the G.A.T.T. is made out.

Mr. Hugh Jenkins

In view of what my right hon. Friend has said about the E.E.C. tariff wall, and his previous statements, would he agree that it would be more beneficial, on balance, to remain outside that wall than to get inside it?

Mr. Jay

I think that that is another question.

Mr. Patrick Jenkin

With reference to the last point raised by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), will the Government give an undertaking to bring to the next U.N.C.T.A.D. discussions in Delhi, in March next year, the utmost priority, as the initiative must be resumed if that body is ever to fulfil the high hopes we had for it at the beginning?

Mr. Jay

I entirely agree and that is what we are doing.

Mr. Hall-Davis

Will the President of the Board of Trade say whether the new code on dumping to which he referred will have any specific relevance to the situation in the textile industry?

Mr. Jay

This has no material effect on our existing anti-dumping procedure. What it means is that other countries will come into line with our procedure, which will be of substantial advantage to us. Therefore, it has no effect on textile imports to this country, if that is what the hon. Member has in mind.