§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]
§ [The following documents are relevant: European Community Documents Nos. 11580/86 and the supplementary Explanatory Memorandum submitted by the Department of Trade and Industry on 23 January 1987 on common rules for imports of textile products from Yugoslavia, 11621/86 and the supplementary Explanatory Memorandum submitted by the Department of Trade and Industry on 23 January 1987 on the arrangements for imports of textile products from Taiwan, 6104/87 and the supplementary Explanatory Memorandum submitted by the Department of Trade and Industry on 10 July 1987 on the arrangements for imports of textile products from Taiwan, 7207/87 on modification of the textiles agreement with Thailand. 6647/88 and 9562/88 on modification of the textiles agreement with Hong Kong and the unnumbered Explanatory Memoranda submitted by the Department of Trade and Industry on 16 December 1986 and 23 January 1987 on common rules for imports of textile products from third countries.]9.34 am
§ The Minister for Trade (Mr. Alan Clark)
It is two and a half years since the House had an opportunity to discuss the multi-fibre arrangement. We have before us a number of European Community documents which the Scrutiny Committee has recommended for consideration since the subject was debated two years ago. Of course, we have had a number of Adjournment debates covering the subject during that period, and I know that the House will wish to take the opportunity today to enlarge the scope of the discussion in more general terms. I welcome that.
I also welcome today's occasion because I am mindful of the vigilance and commitment of many hon. Members in whose constituencies there are textile interests. Hon. Members frequently write to me on the subject—I have had more than 400 letters since my appointment as Minister for Trade. They always write with expert knowledge and set out their arguments in a lucid and constructive manner, with one possible exception who has not bothered to turn up. I may allude to him in the fullness of time. In response to their concerns, I have met delegations from industry and from hon. Members on a number of occasions and I have found those meetings useful and constructive.
I am very conscious that the textile industry, with about half a million employees, is still our largest single employer of labour. The Governmnt attach great importance to the health and vitality of the textile and clothing industry. The industry is spread geographically throughout the United Kingdom—knitwear in Scotland, flax and man-made fibres in Northern Ireland, cotton in the north-west, lace 556 and knitwear in the east midlands, man-made fibres in south Wales, Humberside and the north-east, and wool in north Yorkshire, with clothing firms spread throughout the United Kingdom.
It is important to recall how important the textile and clothing industry is today and the extent to which still makes a major contribution to our wealth creation, even after the retrenchment in size in recent decades. It comprises about 15,000 firms, employing about half a million people, equivalent to approximately 2 per cent. of total employment in the United Kingdom and almost 9 per cent. of manufacturing employment. Total output in 1987 was about £12 billion, making it the United Kingdom's fourth largest manufacturing industry. Exports in 1987 of textile and clothing products totalled over £3 billion, forming one of the largest exporting sectors in the United Kingdom. Our two largest textile firms are the largest in Europe, and amongst the six largest in the world.
By any standards, therefore, the industry is very large. It has achieved much and has shown considerable resilience. That is due to the industry's skilled and adaptable work force and strengthened management.
The increasing use of more sophisticated technology in all sectors has produced significant productivity gains. The critical importance of design, where good progress has been made over the past few years, should also be noted and the increasing trend towards specialisation, with companies identifying what they do best and adapting and developing for all they are worth.
All these are important if we are to have a thriving and competitive industry able to respond rapidly to the changing demands of the market place. None the less, we recognise the difficulties facing the industry and the concerns about closures and redundancies in the last year. I am always sorry to learn about those. Hon. Members are quick to write to me and my colleagues in the Department about their concerns, and I can assure the House that those issues weigh heavily in our consideration of future textile trade policies.
More widely, the Department has a close relationship with industries through its contacts with individual companies and the trade associations. I have met those myself on 12 occasions since my appointment as Minister.
We live in a time when the consumer is regarded as sovereign, but I am well aware that the consumer is not much good at consuming if he or she is out of work. The MFA seeks to balance the interests of consumers and producers. The Consumers Association briefing arrived on my desk late last night, and I have it with me in case any hon. Members propose to base their arguments upon it.
As hon. Members know, the MFA was first established in 1973 in order to provide a breathing space for the textile and clothing industries in industrialised countries to adjust to low-cost imports from the developing world. It has been renewed three times since then, most recently in 1986, and during its life access has become more generous and the quotas enlarged so that in certain sectors we have already a virtually complete liberalisation.
The House debated the subject when negotiations to renew the MFA protocol were at a formative stage and again just before the Community agreed its mandate. In December 1986 we debated the outcome of the negotiations.
Since that time the agreement with Yugoslavia and the Council regulation applying autonomous import arrangements to Taiwan have become available. There have also 557 been some technical modifications to a number of the third country agreements. The need for those technical changes was foreseen when the original bilateral agreements were negotiated. In the cases of Taiwan and Thailand, up-to-date import statistics were not available. The Community agreed therefore to reconsider these agreements as necessary when full 1986 figures became available. In the case of Yugoslavia, the agreement takes a slightly different form, being an additional protocol to the EC-Yugoslavia co-operation agreement.
In other instances, amendments have been necessary to take account of certain classification changes introduced this year with the harmonised commodity description and coding system. In some cases changes to tariff codings brought previously unrestricted goods within restricted categories and negotiations have been necessary to agree appropriate adjustments to quotas with the objective, to which I attach importance, of ensuring as far as possible that the effect on trade is neutral, in accordance with the terms of the bilateral agreements and of the MFA itself. Such alterations have occurred, for example, in the case of Hong Kong.
Further amendments of that sort are in train for the agreements with Hong Kong, Thailand, Philippines, Pakistan and India. The Community has exchanged letters with Colombia, Guatemala, Haiti and Mexico—I realise that those countries do not impact on United Kingdom trade containing consultative clauses in the event of exports rising to disruption levels, but no restrictive levels. In all of that the industry has been kept closely informed.
We are also in close touch with it about the current round of the general agreement on tariffs and trade multilateral trade negotiations. The House is aware that the future of the MFA was one of the many issues under consideration in the negotiations. The United Kingdom, together with its Community partners and other GATT members, committed itself at Punta del Este to examining the "modalities" for the return of international trade in textiles and clothing to normal but strengthened GATT rules.
§ Mr. Graham Allen (Nottingham, North)
Before the Minister becomes too involved in modalities and other highly technical questions on the MFA, will he address the wider economic background in which the industry finds itself, particularly in the east midlands, where 111,000 people work in the industry—20 per cent. of the total in the United Kingdom. There is great concern there about the uncompetitiveness of sterling and the historically high levels of interest rates. Before he goes too far into his detailed comments, will he comment on the broad-brush economic background in which the industry operates?
§ Mr. Clark
I have referred to that. I recognise that the prospects of every industry have to be set in a general, as well as a narrow, context. It is not appropriate for me, particularly in the narrow confines of this morning's 558 debate, to digress. I shall certainly listen with great interest to the hon. Gentleman if he should catch Mr. Speaker's eye, but that is really a matter for my right hon. Friend the Chancellor of the Duchy of Lancaster.
The mid-term meeting at Montreal will be of interest to the House. The Community and the United Kingdom argued strongly that any return to normal GATT rules would have to be progressive and accompanied by a satisfactory liberalisation by all countries, including the less developed ones and particularly the newly industrialised economies, and by strengthened and more effective rules, especially those concerning safeguards, unfair trade, intellectual property and market access. However, final agreement on textiles proved impossible because developing countries sought a commitment to a specific timetable for the phasing out of the MFA without substantial progress on the other issues. The position in the negotiations therefore remains that agreed in 1986 when negotiations began—a commitment to find means by which textiles could eventually be integrated into GATT on the basis of strengthened GATT rules and disciplines. I hope that that further carefully worded statement goes some way to enlightening the hon. Member for Bradford, South (Mr. Cryer), who questioned me about the concept of modalities.
Hon. Members are well aware of the high tariff and non-tariff barriers which face our exporters in many parts of the world, while the countries in question enjoy more open access to our markets. I cannot emphasise strongly enough our determination to press in the negotiations for a better balance of rights and obligations among GATT partners.
Hon. Members will make their own points. I shall be present throughout the debate and, with the leave of the House, I hope to summarise those and respond to the best of my ability at the conclusion of our debate.
The current agreement between the European Community and China runs out at the end of the month. After lengthy negotiations between the EC Commission and the Chinese authorities, a new agreement was drawn up yesterday. It is expected that this will be initialled by the Commission shortly and then submitted to the Council of Ministers for approval.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I an not sure that I fit that description.
Will the Minister say how soon we shall see the detailed terms of the Chinese agreement, particularly the new negotiated inner limits on cashmere garments coming into the domestic EEC market?
§ Mr. Max Madden (Bradford, West)
Speaking from the moderate centre, may I ask the Minister to make it clear whether China is regarded as a dominant supplier? Judging by China's production, imports and potential, it is 559 regarded by everyone as a dominant supplier. Is that the position of the Government and the international community?
§ Mr. Clark
The hon. Gentleman makes an important point. I regard China as a dominant supplier in all but name and think that that is a realistic assessment of her present status. As the hon. Gentleman knows, the manner in which these agreements were written and in which they operate prevents us from identifying China formally as a dominant supplier until the agreements are renewed or rewritten. I am aware that China's dominance is increasing. I am not entirely happy with the trend in the agreements that are being considered with China, because they do not reflecct that point as much as they should. We are examining this matter closely. Like many in the Community, I think that the sooner China is accorded that dominant status, the better.
§ Mr. David Tredinnick (Bosworth)
The import of cheap Chinese underwear is threatening my constituency in the east midlands. This matter is raised many times. The issue of whether China is recognised as a dominant supplier is crucial to the prosperity of Hinckley and the east midlands as a whole.
§ Mr. Clark
If my hon. Friend will excuse me, I have given way several times already. Perhaps he will make his point later, and I shall try to respond to it.
I turn to the more vexatious subject of Turkey. The House has already debated the concern felt by the industry in the acrylic yarns spinning sector. As the House knows, when the voluntary textile restraint arrangements were renewed last year between the Turkish textile producers and the Community, we were able to secure a new restraint limit on acrylic yarn exports, although the level was higher than the industry had wished. However, at the time of the negotiations there was insufficient evidence of disruption to United Kingdom industry to justify tighter restraint. I know that that statement irritates hon. Members. I have made it before and it is a matter of fact. It is not possible for me to take the action that I should like or to argue for it until there is evidence of serious disruption.
§ Mr. Clark
I shall not give way until I have finished this paragraph. Then I shall give way, as I always do.
It is relevant to know that imports of Turkish acrylic yarn have fallen sharply in the first nine months of this year compared with the same period last year. They represent only about 25 per cent. of the agreed restraint level.
§ Mr. Cryer
Can the hon. Gentleman give a better and tighter definition of the disruption that is necessary before an agreement to restrain imports can be reached? The trouble is that the industry does not have much idea of the sort of damage that can be done. Is it a matter of the number of people unemployed, or is it simply the level of imports? As the hon. Gentleman knows, imports have increased from a low base to a high base and have declined from a peak. That peak has caused, is causing and will cause damage.
§ Mrs. Peacock
Yes. As my hon. Friend is aware, recently I sent him a headline from my local newspaper which said that 92 jobs were to go. That is happening only because of the acrylic yarn that has come to this country from Turkey, with a little coming from Mexico. How can we obtain the information that will result in a level being imposed before the damage is done? By the time the level is set, it is too late and we are losing jobs that we desperately need.
§ Mr. Clark
I appreciate the points made by the hon. Member for Bradford, South and my hon. Friend the Member for Batley and Spen. I am ready to take action as soon as I have the avidence. It must be proved to the industry and related to cause and effect. As soon as that evidence is in a form that will be satisfactory to the Commission, we shall take the action. The industry is in close contact with my Department. I encourage that. Such contacts cannot be frequent and continuous enough for me because I am ready to make a move, provided the facts justify it. I accept the contention that this damage can be suffered in a period of high impact and that it is difficult to repair it. If imports have fallen and are only at 25 per cent. of the agreed restraint level, it is not possible to take this any further.
§ Mr. Keith Vaz (Leicester, East)
That is where the Minister spoils his case. He comes to the House, is courteous and charming and makes some good points about commitment to the industry. Last week in my constituency, Chilprufe, a firm that has been operating since 1906, and therefore is no fly-by-night, announced that 190 people were to be made redundant. The workers blame not GATT or the MFA but the Government, because they say that the Government have not taken sufficient action to protect the industry. It is not fair competition when other industries are being supported and given subsidies. The Minister has the proof from the hon. Member for Batley and Spen (Mrs. Peacock) and other hon. Members, including me. When we came to see him at his Department, we spent more than an hour explaining that there was damage. When will the hon. Gentleman take sufficient action to protect people such as the employees of Chilprufe?
§ Mr. Clark
The hon. Gentleman's intervention was couched in such a form that I can only assume that he will leave early for some social engagement or that he felt that he was unlikely to catch your eye, Madam Deputy Speaker. It was a kind of mini-speech, somewhat separated from the germane and effective points made by my hon. 561 Friend the Member for Batley and Spen and the hon. Member for Bradford, South which related directly to Turkish acrylic yarn.
The hon. Member for Leicester, East (Mr. Vaz) asked when I will take action. I always take action, where I am allowed, within the parameters of our international agreements and the relationship to the Commission which governs the whole subject. The hon. Gentleman seemed to be moving into a "mode" where he was asking why I would not subsidise the industry. He did not explain why Chilprufe needs a subsidy and what subsidy its competitors enjoy that give them the advantage. If the hon. Gentleman can cancel his engagement later in the day and remain here, I shall look forward to listening to his speech, in which he will probably digress and deal with this subject.
§ Mr. Nicholas Winterton (Macclesfield)
To return to the point raised by my hon. Friend the Member for Batley and Spen (Mrs. Peacock) and the hon. Member for Bradford, South (Mr. Cryer), does my hon. Friend agree that the criteria upon which anti-dumping measures can be taken are inadequate and that something must be done to make them more effective? There is no point in saying that imports have fallen and that the Turks have not taken up all of their voluntarily agreed quota. Damage is being done by unfair competition to the textile and clothing industry. My hon. Friend has no love, rightly, for the Commission because it consists of ineffective bureaucrats who do not have the best interests of our industry at heart. The criteria upon which an anti-dumping request is made must be changed if they are to be in any way effective.
§ Mr. Clark
It is a fairly tall order to try to alter the definition of what constitutes dumping. One of the problems with anti-dumping actions is the interval between the injury first being felt and the judgment on the dumping case being implemented, and there may be scope for changes to that. The industry—and, indeed, other industries—might regret any drastic action to change the criteria. I should prefer action to be taken over the timescale.
Those factors have created difficulties especially for the anti-dumping applications made by the industry against imports of acrylic yarn from Turkey. That complaint remains on the table and there appears to be no early prospect of returning to the Commission with a renewed request for action. We shall continue to monitor the position closely in conjunction with the industry. I very much hope that it will keep in touch with my Department.
§ Mr. Frank Haynes (Ashfield)
The Minister has, rightly, been courteous this morning. I realise only too well the period that he has been in his post and the work that he has done, but it is not good enough. Mansfield and Ashfield have lost 1,200 jobs in a short time. That is why we are here this morning. We want to get at the Minister and find out what he will do about those jobs. There are problems in the industry and we want to know what the Minister intends to do. Matters are becoming worse as time goes on.
§ Mr. Clark
I reject that. I do everything within my power to defend those industries. The House well knows that the sovereign power of the United Kingdom in such matters is restricted by our signature to the treaty of Rome, our membership of the European Community and other international trade treaties and arrangements that govern the trade. It is a very good line for the local newspapers when hon. Members say, "What is the Minister doing about it?". Hon. Members who accuse me of inaction should say what they want me to do. Do they want me to break international agreements?
§ Mr. Clark
In that case, perhaps the hon. Gentleman will excuse me if I do not give way—[HON. MEMBERS: "Give way."] Of course I will give way to the hon. Gentleman, who I have known and respected for many years. He gave me a hard time in an employment Bill Committee when I had only just been made a Minister. I have respected him since then.
§ Madam Deputy Speaker (Miss Betty Boothroyd)
Order. Let us be certain about to whom the Minister is giving way.
§ Mr. Haynes
The Minister should be careful with his words! It appears that he is protecting Turkey, China and all those places doing harm to our industries and our country. The Minister should be looking after British industry; that is his job.
§ Mrs. Mahon
The Minister threw out the challenge that we should tell him what to do. May I offer him a helpful suggestion? The Opposition would have had a great deal more confidence in him had he not appointed Professor Silberston, who produced a flawed report on the state of the industry. We would have had more confidence in the Minister's desire to protect the industry had it not been for that appointment.
§ Mr. Clark
It is especially disappointing that Turkish taxes on imported goods have recently been raised again, adding to the already heavy burden of duties and other levies on exports to that country. I welcome the setting up, at last, of a group of experts from the Commission and representatives from Turkey who will try to resolve 563 distortions of trade within the framework of the European Community—Turkey association agreement. That group held its first meeting recently and my Department will be supplying relevant information to support the Commission's work.
There are implications for any future textile trade arrangements in the single market completion that is scheduled for 1992. The Commission believes that, if quota arrangements remain, they would have to be operated on a Community-wide basis after 1992. That line has been supported, in a non-textile context, by the European Court of Justice. However, with the MFA negotiations still in progress, it is too early to say what the outcome will be for textiles. I believe that 1992 will be an opportunity for our manufacturers and exporters, with their excellent trading record, to enter an unrestricted new market of 320 million consumers with high levels of disposable income. That opportunity will need to be grasped early or it will be lost. I hope that UK textile firms are planning now how best to meet that challenge. I know how much work they have put into restructuring their industry since the introduction of the MFA in 1974 gave them that incentive. I am confident that they will rise to the challenge.
I wish to stress how important it is for all our trading partners, not least those who press most stridently for the abolition of the MFA, to consider whether their own restrictive policies sit comfortably with that request. Some, like Hong Kong, conduct their relations on a genuinely free trading basis; others—and I have just been talking about Turkey—most emphatically do not. As 1992 approaches, there is talk and, indeed, apprehension about the prospect of a Fortress Europe developing, and that would not be in the interests of the United Kingdom. The atmosphere for its rejection is not improved by those countries, particularly the newly industrialised countries, which insist on unrestricted access to the Community market, yet seem to make so little progress in liberalising access to their own.
§ Mr. Doug Henderson (Newcastle upon Tyne, North)
The Minister said in his introduction that he was prepared to take up a number of points that my hon. Friends and other hon. Members have made. If the number of interventions is indicative of the complaints received by hon. Members, I suspect that the Minister will have to make a lengthy reply to the debate.
The House is grateful for the chance to consider the bilateral arrangements that have been made with countries such as Hong Kong, Thailand, Taiwan and Yugoslavia. A debate on those arrangements is welcomed by the industry, as it allows the House to comment on a number of wider issues. It allows us to comment on what is happening in the Uruguay round of GATT talks which is currently taking place in Montreal and which, as hon. Members present this morning know, is crucial to the future of the textile and clothing industry. The debate also allows us to review the state of the industry in the mid-term of MFA4.
In his introduction, the Minister pointed out the importance of the industry to our economy. We know that it is the fifth largest industrial sector, with an asset value of over £5 billion and annual sales of about £13 billion—the Minister said £12 billion but I shall not argue about the difference. The industry is a major exporter, with a value 564 of more than £3.5 billion per annum. As people throughout the country know well, it is also a major employer, employing 482,000 people, often in vulnerable areas of the economy such as west Yorkshire, the north-west, the east midlands, parts of Scotland—particularly the borders—and Northern Ireland. We cannot ignore its importance in some areas of inner London, where the industry employs many people from ethnic minority groups.
Hon. Members need little reminder of the main issue that relates to the textile and clothing industry in our country. I hope that hon. Members will agree that international trade agreements are essential to the future prosperity of the industry. The House will know that since 1974, all United Kingdom Governments have supported the regulation of trade in textiles and clothing through the multi-fibre arrangement. Since 1974, in various GATT talks, all Governments have emphasised the importance of the MFA and that it is important for MFA countries to conclude bilateral agreements with non-members—in our case, through the European Community.
The documents before the House this morning, which have given us the opportunity for this debate, relate to many of those bilateral arrangements. If the House does not know it already, it should know that alarming trends are becoming apparent in our industry. The textile and clothing industry's trade gap is deteriorating and is rapidly becoming a chasm. The United Kingdom market has been flooded by imports in the past year. The latest figures available show that after nine months the trade gap for the industry stands at £2.5 billion. That is equal to the level for the full year in 1986, when the multi-fibre arrangement was last negotiated. It is equal to 26 per cent. of the total trade deficit incurred by the country in the first nine months of the year. In a full year, the textile and clothing trade deficit is anticipated to be £3,416 million, or over £55 per person per year in this country.
Hon. Members will emphasise different aspects of the problem. I believe that there are three main reasons for the emerging crisis. First, the over-valued pound has caused enormous damage in two ways. It has cheapened the price of imports, particularly from other EEC countries which still constitute about 60 per cent. of textile imports. It has also priced some of our exports, especially in the high-value area, out of foreign markets. That proves to us that the textile trade gap is not solely caused by excessive imports from the developing world and that action that is geared only to curbing imports from the developing world will not solve the problem.
I have received much correspondence this week from the industry. I have a letter from Peter Hargreaves who, appropriately, is the managing director of the Hilden Manufacturing Co. in Accrington. I do not know whether he is related to the Hargreaves who invented the spinning jenny, but he may be. He writes:While the Company is naturally very proud and honoured to have received the Queen's Award for Export achievement those eight years of investment and hard work are now virtually being destroyed in a matter of months by the government's present policy of maintaining a strong pound, and the Enfield Group has been forced, for the first time in its history, to adopt a non-recruitment/replacement policy in order to maintain employment".New technology is being reflected in correspondence to the House. I received a fax last night from the Cumnock Knitwear company in Cumnock, Ayrshire. The manager of the company, Mr. John Liddell said: 565Our sector of the textile industry is going through quite the worst slump in living memory due very much to the strength of sterling, high interest rates and the importation of knitwear at an unprecedented level from the low-cost countries.Other hon. Members will have received similar correspondence and I should be very surprised if the Minister had not received correspondence from employers throughout the industry, ringing the alarm bells.
Another factor, apart from the high pound, that is causing damage to the industry is undoubtedly the dollar pricing by far eastern and south-east Asian producers—combined with artificially low exchange rates—which has created unfair trade. That is particularly unacceptable in the case of countries such as South Korea, which has a fairly substantial trade surplus. The relaxation of the rules in MFA4 in comparison with its predecessor, has also had an impact on our industry and that point has been given particular prominence by the British Textile Confederation. In correspondence this week, it has pointed out the damage done in terms of job losses. There is a long list of job losses, as the hon. Member for Batley and Spen (Mrs. Peacock) said when talking about acrylic yarns. The list of jobs lost over the past six months includes 96 in Bingley, 200 in Bramley, 50 in Bradford, 200 in Oldham, another 230 in Oldham, 160 in Bolton, another 80 in Oldham, 540 on Merseyside and 250 in Chinley. That is all in the list prepared by the British Textile Confederation. It is a reflection of the increasing trade gap, which will be seen in a number of ways in the industry, particularly in job losses.
As my hon. Friend the Member for Ashfield (Mr. Haynes) said in an intervention, the main issue in the debate is Government action to halt the crisis. The Minister said that, in the general context, the responsibility lay with the Chancellor of the Exchequer. The Minister should take warnings from the House back to the Chancellor. Those warnings do not come solely from the Opposition because I am sure that many Conservative Members will identify the danger to the industry that is caused by the excessively high pound. Will the Minister confront his right hon. Friend the Chancellor directly on the Treasury's impact on our manufacturing industry? Too often the Treasury take decisions as though they were purely theoretical. However, this debate shows that decisions taken by the Treasury affect the real world, the real economy and real jobs in the textile industry.
§ Mr. Alan Clark
That point has been raised by hon. Members of all parties and was raised with me by one of my hon. Friends at Question Time on Wednesday. Neither hon. Members nor industrialists, when they complain about the high value of the pound, ever say at what level they would be comfortable and for how long. Will any hon. Member postulate a preferred dollar exchange rate, deutschmark exchange rate or basket exchange rate? I am not saying that I would endorse that, I am simply curious about opinions on it.
§ Mr. Henderson
If the Minister talks to the same industrialists whom I meet from time to time and if he reads the same correspondence from the CBI, he will recognise that many people in industry attribute the difficulty to the last Budget when unnecessary tax cuts were given to the richer sections of the community, which 566 caused—[Interruption.] Conservative Members should talk to industrialists in the textile industry because they will say that they were very much opposed to those tax cuts and that they wanted protection for the industry. The House wants to know whether the Minister and his right hon. Friend the Chancellor of the Exchequer will accept that industry is facing real problems because of the Government's economic policy.
§ Mr. Cryer
Last night we had a debate on water privatisation, for which all Tory Members voted. The Confederation of British Wool Textiles Ltd. has made clear its objection to the privatisation because of the danger of increased charges. Already electricity privatisation has been postulated on the basis of a 15 per cent. increase in electricity prices. Such factors must prejudice the position of British manufacturing industry, and specifically the wool textile industry, which depends on those two service commodities. The Minister's platitudes about being ready for the future and 1992 are being damaged by the Government's policy on privatisation.
§ Mr. Henderson
My hon. Friend has made an excellent point. If I had more time I might have developed some of his points myself.
§ Mrs. Mahon
I am grateful to my hon. Friend for allowing me to intervene. I am glad that the junior Minister at the Ministry of Agriculture, Fisheries and Food, the hon. Member for Calder Valley (Mr. Thompson) is in his place because I have received a letter that concerns both our constituencies. It is from a manufacturer, J. S. Taylor Ltd,. and states:We are finding reluctance to order with the continuing strength of the pound, which is also making our job of exporting very difficult. These factors also contribute to our imbalance of trade on cheap imported fabrics, which are in any case not sold to the United Kingdom at real market prices … Another area however which is of great concern to us is the Government proposal to privatise the water authorities.That is direct evidence and I am pleased that the hon. Member for Calder Valley has been here to hear it.
§ Mr. Henderson
I am grateful to my hon. Friend the Member for Halifax (Mrs. Mahon) for that contribution, which clearly reinforces the points that have been made about concern in the industry.
Industry does not complain only about macroeconomic policy—
§ Madam Deputy Speaker
Order. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) clearly is not giving way.
§ Mr. Henderson
Thank you, Madam Deputy Speaker.
567 Industry wants to know about other issues relating to it. It wants to know whether the Government will stand firm in the GATT talks on arrangements for the textile industry and whether the Government will take a firmer stand on that than they appear to do on some other issues. It will also want to know whether the Government will give the industry confidence by announcing that they will support the renewal of the multi-fibre arrangement in 1991. I know that the Minister has made some soundings on that, but there has been nothing stronger.
§ Mr. Tredinnick
On a point of order, Madam Deputy Speaker. My hon. Friend the Minister for Trade gave way almost a dozen times during his speech, so is it not reasonable that the Opposition spokesman should give way as many times as my hon. Friend?
§ Mr. Henderson
Thank you, Madam Deputy Speaker. I must make it clear that the Opposition recognise that for a trading nation such as the United Kingdom it is important that we encourage the maximising of free trade. Employers and unions in the industry are clear that we can have free trade only if we have fair trade. We cannot have fair trade with countries that have a trade surplus that is maintained on unsustainably low exchange rates; with countries such as Brazil, which maintains excessively high tariffs, keeping out products not only from the EC but from the less developed of the developing countries; with countries such as Turkey, which retains an array of Government subsidies; or with undemocratic regimes that are reinforced by unacceptable low wage economies. In case some of my hon. Friends representing Yorkshire constituencies are in some doubt, and even if they recognise some of the characteristics to which I have referred, my comments were not intended to be in any way a reference to the city of Bradford.
The industry demands to know the Government's view on trade. Do they accept that until we have fair trade we must have regulated trade? Do they accept that without a multi-fibre arrangement we would face unilateral action, as the United States has already threatened, we would face anarchic instability in markets as employers identify, and we would face an outbreak of beggar-thy-neighbour protectionism?
The general president of The National Union of Hosiery and Knitwear Workers, Mr. David Lambert has written to me this week stating:Companies are now taking investment decisions, both to buy new machinery and to create a skilled labour force, and to do this, they need the confidence that there will be a market for their products after 1991.Can the Government give both unions and employers the confidence to invest? Can they give them hope beyond 1991? Will the Government assure us that they will take advice from sources other than Professor Silbertson, to whom one of my hon. Friends has referred? Many of us believe that taking advice from Professor Silbertson is a bit like the three little pigs taking advice from the big bad wolf.
The current trade talks in Montreal are important and it is vital that we refer to them in this debate. Will the Minister state some of the Government's priorities in those talks?
The Minister knows that under GATT rules selective action to stem a surge in imports is outlawed. That is as 568 true for textiles and clothing as it is for other goods. The industry argues—this point was identified by the hon. Member for Batley and Spen—that selective action is necessary. The industry has cited the case of the surge in the importation of knickers from China, which could not be stopped without a more widespread application of restrictions which would act indiscriminately against other suppliers.
Will the Government support the need for a safeguard clause in the Uruguay round? The inclusion of a social clause is also important, although it is not a matter for the Uruguay round. It relates more directly to the negotiations on the next multi-fibre arrangement.
Surprise, surprise, the United States Government have recently reached an accommodation with the American labour unions on a social clause. Countries that deny basic workers' rights in their industries, such as the right of free association and minimum conditions, are now denied access to the American market. Imports from Chile and Paraguay have been recently knocked back because the United States Department of Trade recognises the organisation of industry in those areas. China is not included.
The Minister will be aware that the United States Government have now asked GATT to set up a working party to consider the wider applications of that social clause. The Minister will also know that the Government are never slow to second any other proposals from President Reagan. Industrialists in the defence industries tell me that that is particularly so when American manufacturing industry stands to gain. Will the Minister seek the support of the Prime Minister for the insertion of a social clause in the GATT talks?
§ Mr. Henderson
I hope that the Minister will reconsider that answer. If you do, you will be able to say that you have the support of—
§ Madam Deputy Speaker
Order. The hon. Gentleman is bringing me into this debate rather more personally than he should.
§ Mr. Henderson
For that I apologise, Madam Deputy Speaker.
If the Minister does approach the Prime Minister, he will be able to tell her that he has the support not only of the House but of the British Textile Confederation, the Knitting Industries Federation and the British Clothing Industry Association.
Other matters are important in the review of the multi-fibre arrangements. One important issue is to find the means of monitoring new technological developments. One way for a producer to increase access to markets is to export a new fibre that might be outside the terms of the previous MFA. I always thought that ramie was something that happened in a bar-room brawl at the Scottish Conservative party conference, but I can assure the House that ramie is also a new fibre that comes from China. Ramie was not included in MFA4 and I hope that the Minister acknowledges the damage that the import of such products does to economies such as our own. In future talks on the MFA. I hope that he will consider supporting the establishment of a committee to examine new technological developments. 569 The renegotiation of the bilateral agreement with China is another important issue. Under previous agreements. China has enjoyed the privilege of not being classed as a dominant supplier. Therefore, it has greater access and a larger quota growth than countries such as Hong Kong and South Korea. Circumstances have changed, however, and China is now the second largest volume supplier to the EC. Its economy is rapidly industrialising and the Chinese will soon be able to penetrate our markets even further. Do the Government accept that China should now be put on a similar standing to the dominant suppliers, such as South Korea? Do the Government accept that, as a consequence of its new standing, China's rate of access to our markets would then be reduced?
Such measures are not necessarily only in the interests of European manufacturers. A strong case can be made to support the fact that a tightening of the regulations with China would do much to help the less developed of the developing countries. Our Government could make an important contribution towards that aim.
The impact of 1992 worries many in the industry. Those familiar with the quota system will know that the EC agrees a quota and that it is then divided among EC countries, essentially on a historic basis. Many industrialists have already identified that, after 1992, it will be almost impossible to allocate quotas to a particular EC country. They fear that countries with an over-valued currency will suffer from a surge of imports from other EC countries. Those with the most over-valued currency would be flooded with the full impact of any particular EC quota.
Others are alarmed that outward processing, which has existed in Europe for a considerable time, will be exacerbated after 1992. Some countries will have an arrangement to outward process which will then allow the re-export of such products to another EC country.
We must tackle those issues as we approach the second half of MFA4. Other concerns will undoubtedly be raised by my hon. Friends and by Conservative Members. Time denies me the opportunity—
§ Mr. Henderson
A lot of hon. Members wish to take part in this debate, but as I promised the hon. Member for Colne Valley (Mr. Riddick) that I would give way, I gladly do so.
§ Mr. Riddick
I shall not make the point about water that I wished to make earlier. The hon. Gentleman has rightly asked the Minister a number of questions about how he will approach some of the important issues. If the hon. Gentleman were a Minister in a Labour Government—I know that that is most unlikely—would he consider breaking international agreements to help our textile industry? That has clearly been advocated by one or two of his hon. Friends.
§ Mr. Henderson
I do not believe that any of my hon. Friends have suggested that we should deliberately break international agreements. What my hon. Friends have advocated—and what a Labour Government would do—is a tougher stance in negotiations, particularly with EC countries, when we are preparing the EC agenda for MFA or GATT talks.
570 I know that my hon. Friends will wish to reinforce some of the points that I have already made. I do not wish to dwell on Turkey, but perhaps that will be taken up later. I also hope that special assistance for the United Kingdom industry and dumping will be considered later.
The people, especially in the textile areas, will want to know whether the Government are prepared to bat for the British textile industry. They will want to know whether the Government will give the industry confidence for future investment by announcing today their support for the introduction of MFA5. They will want to know that, in any future review, regulations of trade in textiles and clothing will plug existing gaps. They will want to know whether help will be given to the least-developed of the developing countries; whether the Government will stand firm in the GATT talks and whether a sensible modification of the bilateral agreement with China can be achieved. Most of all, they will want to know that the Treasury will listen to what it is told about the damage to industry as a result of high interest rates and high exchange rate policy.
§ Mr. Nicholas Winterton (Macclesfield)
I congratulate the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) on the general tenor and tone of his speech. It might well have been me speaking nearly 18 years ago because I have taken a strong interest in this important industry throughout the time that I have had the honour to serve in this House.
I commence my speech by quoting the statistics that the hon. Gentleman gave earlier because they are extremely relevant and I hope that they will weigh heavily with my hon. Friend the Minister and all members of the Treasury Bench. The trade deficit in textiles for the first nine months of 1988 widened to a staggering £2,562 million, more than a quarter—some 26 per cent.—of the total national current trade deficit. I have opened with those remarks so that we may put into context the true importance of the United Kingdom textile and clothing industry within the United Kingdom's economy.
Our whole economic growth is jeopardised because of the serious imbalance in trade with the rest of the world. I urge my right hon. and noble Friend the Secretary of State for Trade and Industry and my right hon. Friend the Chancellor of the Exchequer to pay careful attention to what is said today by hon. Members on both sides of the House so that this very important sector of our manufacturing base can be given the support and understanding that it needs to compete fairly with the rest of the world.
The trade imbalance which was used as the reason or, should I say, the excuse a few days ago to force up interest rates still further could be brought down again by simple steps to help an industry which provides employment for 482,000 people. Again, I take up the statistics referred to by the hon. Member for Newcastle upon Tyne, North. That industry exports about £3.5 billion worth of goods every year, it invests more than £550 million a year, and its competitiveness has increased by more than 40 per cent. since 1980. That is a fine record which has been seldom equalled by any other sector of manufacturing industry in the United Kingdom.
Those statistics paint a picture of a healthy and thriving industry which has the ability and the products to compete 571 in the market place throughout the world. It would be foolish and short-sighted not to seize the initiative to allow the textile and clothing industry to move forward into the future with the confidence that led to exports to Japan soaring by more than 50 per cent. in the first six months of the year—a fact that has not been referred to so far today. That confidence is making textiles and clothing the United Kingdom's greatest export to Japan, which is arguably the most quality conscious and demanding market in the world. That has been achieved by the clothing and textile industry, and we should be proud of it.
Clearly the industry's products and the efficiency cannot be blamed for today's trade imbalance. Where does the problem lie? On the export front, where the industry has achieved a great deal, the strengthening of sterling has made it difficult to maintain the pace of advance. That point was made by the hon. Member for Newcastle upon Tyne, North and by others in interventions today. At home, the effect of higher interest rates is likely to depress consumer and retail demand for home-produced quality goods. The weak US dollar has materially increased the competitiveness of imports, particularly from those countries in the far east whose currencies are linked to the dollar.
The cumulative effect of currency changes over the period 1985 to 1987 make the US dollar 62 per cent. more competitive than sterling. It made the Chinese currency 112 per cent. more competitive, and the currencies of South Korea, India, Pakistan, Malaysia, Thailand and the Philippines between 50 and 100 per cent. more competitive. In short, high interest rates and strong sterling are not just hard on British householders; they create a positive penalty barrier for British manufacturing industry. I know that my hon. Friend the Minister for Trade shares my view that at the end of the day manufacturing industry creates the wealth which allows the country to prosper and provides the resources for the infrastructure which our people demand. For the sake of future confidence in the textile and clothing industry, I hope that my hon. Friend will speak as a matter of urgency to the Chancellor of the Exchequer on that point.
The question of what rate we should set for our exchange rate was raised earlier between the Opposition Front-Bench spokesman and my hon. Friend the Minister. I believe that it is counterproductive to have high interest rates which could drive more British manufacturing industry into liquidation and out of business. At the end of the day, that would mean that we would have a bigger trade imbalance because we would need to import more to fulfil our market requirements.
We must have a less blunt weapon to tackle inflation than merely the use of interest rates. Industry can cope with high interest rates or high exchange rates, but it finds it almost impossible to deal with both. The mandarins in the Treasury should have a real understanding of manufacturing industry. If they really wanted British industry to expand, they should not have phased out capital allowances in 1984. I said that at the time and most of industry supported me and industry is saying that even more strongly now, although it is sadly too late in the day.
The position is very difficult. Despite the possible impact of reduced confidence and high interest rates on investment decisions, I know that because of his considerable contact with the industry my hon. Friend the Minister for Trade is aware that the textile and clothing industry is determined that the drive for continually 572 improving competitiveness must be intensified. Confidence would be strengthened if more determination was shown by the Government and by that body across the Channel—the European Commission—and our negotiators in Europe to use our rights in the existing trading agreements fully. They should act properly to counter disruptive import surges and resist the progressive opening of our markets to countries that remain firmly closed to us or distort trade by subsidies to their domestic industry.
I am not arguing for protectionism. I am arguing for pragmatism and common sense. We simply cannot afford to allow the United Kingdom to become the world's dumping ground for cheap textile products. It is useless to improve the efficiency of our manufacturing industry if we end up by subsidising industries in other countries. It is no secret that Turkey is one of the areas of greatest concern to our manufacturers. Despite the Ankara agreement that it would phase out import tariffs and abolish subsidies to its producers, Turkey has not yet made sufficient progress down that route.
Some hon. Members may not be aware of the information that I discovered through a series of parliamentary questions that were answered almost a year ago. I found out that our textile exports to Turkey face basic tariffs of between 10 and 40 per cent. There are also hidden tariffs in the form of municipal taxes, customs charges, stamp duties, import premiums, wharf dues and even housing funds. The practical implications are that exports of synthetic filament yarn from this country to Turkey face tax barriers of nearly 40 per cent. The export of wool cloth faces nearly 80 per cent. tax barriers. Cotton cloth faces 77 per cent., knitted outer wear faces taxes of 122 per cent. and men's suits are barred by tariffs of 87 per cent. However, not one of those products imported from Turkey into the United Kingdom faces any tariffs.
When he replies, I hope that my hon. Friend the Minister for Trade will direct some remarks to those grotesque inequalities and tell us what the Government will do to put them right. That is not our idea of fair trade. That is not an open market. It is surely protectionism at its worst.
My hon. Friend the Minister for Trade has already reminded the House that Turkey is not a party to the MFA, but that does not relieve his Department of the duty to do better to protect our domestic industry from unfair competition. Turkey does not have merely a foot in the door of our markets; it has a hob-nailed boot firmly on the throat of many British textile and clothing manufacturers. If Turkey is to remain convincing about its intention to join Europe in our single market of the future, let us have a clear sign from the Turkish Government of their willingness to trade freely and fairly with the United Kingdom.
I shall balance what I have said by drawing attention to a problem that is faced by one of our major textile employers. I refer to Coats Viyella and its India Mills, which are in Darwen, Lancashire. I am advised by the company that for the past 18 months it has been battling with the European Commission over the introduction of a dumping duty on polyester staple fibre from, among other countries, Turkey. In its letter to me—I suspect that the company has written to other hon. Members—the company explains that it buys from Turkeyfor one of our spinning units, India Mills, a melt dyed polyester staple fibre, as there is no readily available source 573 from within the Community. We have tried to buy the fibre from Hoechst of West Germany and I quote from their telex of 29th June 1988.The telex is headed "Polyester Spun Dyed Colours" and reads:We are aware of a growing interest in such an item and are conducting a feasibility study into the matter. However, such a product requires new plant to separate from existing lines. Whatever the outcome of this study will not affect our short term position of only being able to offer black.That is signed by a representative of Hoechst UK.
The letter from Coats Viyella adds that the company is loyal to European fibre suppliers, with 94 per cent. of its total synthetic requirements being purchased within Europe and 89 per cent. from within the European Community. The letter continues—and this is the other side of some of the arguments that have been advanced this morning—We find that the imposition of this duty puts the UK (and for that matter, other European) spinning and weaving industries, on less than a competitive footing with imports of spun yarn and fabrics of polyester, where in many cases no duty is levied. The confirmation of a permanent duty on coloured polyester fibre will have dire consequences on our business, putting at risk 650 jobs solely at India Mills. There is then the likelihood of a knock on effect through to weaving and finishing.The letter is dated 28 November.
The managing director of India Mills, Mr. Stephen Isherwood, wrote to me on 6 December in these terms:I write to inform you that for the first time for over 10 years, almost the entire work force (650 persons) at India Mills will be laid off for the whole of the week commencing 12 December.I want fair competition for the textile industry. Where British manufacturers or other European manufacturers no longer produce a particular product, it is important that the MFA and the other agreements should be flexible enough to allow manufacturers to import from whereever they wish to fulfil their contracts and orders.
Having taken an interest in the textile and clothing industry for many years, I believe that MFAs have brought stability to the world market for textiles. They have enabled the United Kingdom textile and clothing industry, although it has so often been at a competitive disadvantage, to plan confidently for the future. The arrangements have allowed industries in the developing world, about which many of us are concerned, to invest and to grow securely. They have played an important role in saving our industry from collapse and in enhancing the economic prospects of many other countries. We would be foolish to abandon a scheme of such proven worth and to ignore its proven benefits.
The textile and clothing industry does not dispute that the return of textiles and clothing to the normal rules of the GATT must be regarded as the ultimate long-term objective, but such a step is not a practical proposition now or in the foreseeable future. Any return to the GATT rules cannot be contemplated, in my view, until two basic conditions have been fulfilled. First, the circumstances which in the first instance gave rise to the MFA and to its subsequent renewals must not continue to pose the threat of disorder. Secondly, the return to the normal rules of the GATT must be made only as part of a general move towards genuine liberalisation of the world textile and clothing trade, involving a better balance of rights and of obligations.
574 The MFA has not acted as a protectionist barrier as some within the consumer industry would have us believe —far from it. Instead, it ensured that an orderly growth of penetration into our domestic market has taken place.
In 1985, we imported 205,000 tonnes of textiles and clothing products from MFA countries. In 1986, we imported 248,000 tonnes. By 1987, these imports had risen to 331,000 tonnes. Imports increased by 62 per cent. over that period. It seems that this year there will be a further 10 per cent. rise on last year's figure.
I and the British textile and clothing industry remain committed to making the MFA work in future. I hope that my right hon. and hon. Friends on the Treasury Bench will give an assurance that its value is properly appreciated and that it will be retained for the foreseeable future.
I take advantage of the platform that is provided by the debate to deal specifically with an issue that is causing considerable concern to the textile and clothing industry. Adulterated cashmere products are being delivered to our quality clothing sector by Chinese producers. I hope that my hon. Friend the Minister is aware of this. The textile trade with China is covered by letters of agreement, which have been honoured for many successive years. They guarantee a given quality and quantity of cashmere. Recent changes in the economic system in the People's Republic of China, which reflect an appreciation of the need for competition in the market, have created difficulties for our cashmere users. The result is what can perhaps best be described as teething problems within the new system in the People's Republic. Companies in the United Kingdom have complained about sudden rises in prices in China for raw cashmere. I have no objection to that because the market must determine the cost to industry, but in this instance the charges levelled were in breach, so it seems, of agreed contracts.
I hope that my hon. Friend the Minister will be able to investigate the problem and the allegation that a considerable tonnage of Chinese cashmere has been doctored with sheep's wool or man-made fibre as part of a new production process. If the allegations are true—we have strong reason to believe that they are—neither the Chinese producers nor our clothing manufacturers stand to gain by besmirching the reputation of cashmere quality. Perhaps the long-term future for cashmere lies in finding a strain of cashmere goat that can be farmed in Britain on some of the redundant farmland that arises from the disruption of the dairy industry that is caused by the introduction of milk quotas. I am only sorry that my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food is no longer in the Chamber to hear me. I am aware of the important responsibilities that my hon. Friend carries within the Ministry.
Perhaps British cashmere is currently a dream. I say that with regret because one farmer in my constituency is breeding cashmere goats, and in seeking to expand that business she is coming up against the bureaucratic machine in Brussels that insists on charging levies on goats imported into this country for breeding, for the purpose of producing cashmere wool. I hope that my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food will check with his Department what is the position and ensure that in future negotiations any goats imported into the United Kingdom for the purposes of breeding for cashmere production will be exempted 575 from any form of Community levy. I hope that the Minister will be able to give me that assurance before the end of the debate.
I hope that the Government will act to defend the interests of one of the United Kingdom's most stalwart and robust manufacturing industries. It has an unrivalled industrial relations record, whichever of the several unions concerned has been involved. They have co-operated for more than 40 or 50 years in the industry's rationalisation. There has been no major strike, the unions realising that the industry is up against stiff competition. They have co-operated and shown an example that should be followed by unions in many other sectors of British manufacturing industry.
I hope also that at the end of this debate the textile industry will receive clear messages and reassurances from the Minister that not only will the MFA continue but that the industry has the Government's understanding and support.
§ 11.1 am
§ Mr. James Lamond (Oldham, Central and Royton)
It is always a pleasure to follow the hon. Member for Macclesfield (Mr. Winterton), as I often do in debates of this kind. because he is so forthright in his views. I recall that 14 or 15 years ago, he and I formed the all-party cotton and textile group, which is still in existence, although its meetings are almost as cyclical as the industry itself. I say that it is a pleasure to follow the hon. Gentleman, but it is also rather worrying, because, as we share many friendships in the industry, he probably receives the same briefs and letters as I do. When he speaks before me, I grow anxious in case he quotes from the material that I intend introducing into my speech.
I agree with everything that the hon. Gentleman has said, with the possible exception of his remarks about the breeding of cashmere goats—about which I admit to knowing nothing, because it is one of the very few activities not carried on in Olclham, Central and Royton. I cannot say whether the hon. Gentleman is right in his comments on that subject, but I support all his other views.
At the beginning of the debate we heard the Minister confirm, as we usually do, the industry's importance. With more than half a million employees, it has more than coal mining, steel and shipbuilding put together. One can throw in the car manufacturing industry as well, and still the textile industry's employees outnumber them.
The term "textile and clothing industry" covers a wide field. It is difficult to discuss it as one subject, because while one part of the industry may be having a successful time, another may be teetering on the edge of disaster. Bearing that in mind, it is not surprising that the Minister receives many letters, because one section or another of the industry is usually suffering.
§ Mr. Lamond
The Minister is correct. I confess that I had not realised that he was so sensitive. If it helps his morale, I shall drop him a line when manufacturers write to me saying that they are having a good time. I shall certainly pass on any such letters. So far, I have not received any.
Mr. John Longworth is the secretary of the Oldham and Rochdale Textile Employers Association Ltd. and a 576 good friend of mine, though he is certainly no Labour man. I should not like to say that he is a Tory either. He informs me that the past four years have been reasonably good. I believe that that must be so, because I am not receiving the same number of complaints as I usually do. However, what are reasonably good years for employers may not be reasonably good for employees.
The industry has been profitable and there has been investment. I remember being in Oldham two years ago when Courtaulds announced its considerable investment programme of three or four mills there. Unfortunately, now that that investment has been made, the installation of new machinery and improved methods have increased production and profitability, but not the number of employees. In fact, there has been a decrease, and it was always planned that there should be.
The argument deployed, which I must accept as being reasonable, is that, had that investment not been made, even more people would have been made redundant. It is difficult for the trade union movement to accept that because it has seen a decline in the industry, not just in the three or four years that the present Minister has been in post—I do not blame him for that—but for 50 or 60 years. That has in some respects been advantageous, because Oldham has for many years worked at attracting other industries to the area, and it did so earlier than other towns, where a decline in traditional industries did not occur so quickly. Oldham can now boast several computer-based industries, and so on, and we are grateful for that.
The fact remains, however, that there has been a downturn in Oldham's textile industry over the past few months. As recently as this week, Courtaulds has issued short-time working notices in nine of its Oldham mills. The notices will not come into effect for a fortnight, but it is unlikely that there will be any drastic change during that time, with the result that employees will be on short-time working, which for them is unacceptable. Mr. Peter Booth, the national secretary of the Transport and General Workers Union textile group, will be seeing what the Government can do to help in that respect.
Earlier, my hon. Friend the Member for Ashtield (Mr. Haynes), in a typically fiery intervention, attacked the Minister and, if I read correctly between the lines—it is not often that one has to do that in respect of my hon. Friend —he seemed to be calling for the Minister's resignation unless he takes positive action. I do not support my hon. Friend's call. For as long as we have a Tory Government, I am happy that the hon. Gentleman should remain in his post. I admire his style at the Dispatch Box, particularly at Question Time. There is a refreshing honesty and candour in his style that is not often found in any Minister of any party when at the Dispatch Box.
We are all aware that although the Minister tries hard to conceal it, he is not in the forefront of admirers of the Common Market and its bureaucracy. From time to time we tease him about going back to his old ways before he was a Minister. He is sophisticated enough not to be caught by that trap, but we know that in his heart he is a staunch defender of British industry in his negotiations in the Common Market.
I should not be at all happy to see the Minister replaced, unless it was by the hon. Member for Macclesfield. I have often wondered about that. Perhaps it is because the hon. Gentleman specialises in one industry, but he speaks about that industry in the most honest and straightforward 577 manner. If I thought that he would get the Minister's job I should certainly support him, but he may have blotted his copybook in other ways. He may be too forthright to be considered for the job. However, that is by the way. The Minister is here, and I should like him to note that our exchange at the beginning of the year about Turkish imports, and the subsequent correspondence that I sent him, which was not entirely complimentary to him and his Department, did not carry my condemnation as strongly as that of the employers who wrote to me asking me to convey what they thought.
I received a letter dated 5 December from Mr. Edmund Gartside, who was very concerned and made complaints about the Government's action. Mr. Gartside is prominent in the textile industry. He was chairman of the committee that dealt with Brussels on behalf of the industry, and I think that at one time he was president of the British Textile Confederation. He has certainly held high office. He is the chairman and managing director of Shiloh plc, which is based in my constituency. He wrote:As you know, there was a distinct deterioration in the market earlier this year which caused the closure of five cotton spinning mills and widespread short time working in our sector of the industry, including one of our mills.
One of the mills owned by Shiloh, which is a very good firm, was forced to close. Its employees and ex-employees are so loyal that when I advised elderly ladies and gentlemen about their right to sue their former employers because they had been refused lump sum compensation for byssinosis, they would not sue the firm because they thought so highly of Mr. Gartside and the firm where they had been employed. That is the employer who wrote to me about the disastrous effects on the industry. Mr. Gartside continued:This was caused in my view by the very high level of imports in 1987 which on the yarn side represented a 22 per cent. increase on the previous year. We warned the United Kingdom Government that this would have a devastating effect on confidence and employment in the industry, but Mr. Alan Clark, in answer to your questions"—that is my questions—in the house last January said that there was no evidence of any disruption, despite the fact that I and others in the industry had given firm evidence of a downturn in sales and increasing stocks as early as the last quarter of 1987.Mr. Clark said in answer to your question on the 13th January that if the industry 'produces evidence of serious injury it will enable me to take action to reduce the volume of imports from Turkey'.Despite five large mill closures and short time working, Mr. Clark has still taken no action, and if this is not evidence of serious injury, I wonder what is.The plain fact is that the industry is being decimated, not only by the volume of imports, but by the absurdly low prices of these imports which are heavily subsidised to the extent of between 30 per cent. and 40 per cent., not only from Turkey but from other sources also.
Mr. Gartside continued at some length:I hope you find the above information useful in representing the industry's case in the debate later this week and I assure you the situation in the industry is now getting very serious. Let us not forget that this government did nothing to prevent the destruction of half the industry (the Lancashire sector) in the early 1980's. The revival was very much due to the fact we had inadequate capacity when there was a mini-boom.
I remind the House that I am reading, not from something from a trade union or in a Left-wing journal, but from a letter from Edmund Gartside, one of the best employers in the industry. He concluded by saying: 578Now it seems hellbent on destroying a further large slice of the industry, and possibly eliminating it entirely, as we cannot possibly compete with subsidies of 30-40 per cent. The Government knows these subsidies exist, but deliberately turns a blind eye to them.
Perhaps that criticism was a little harsh, especially of the Minister, but I am passing on the real feelings of those whose lives and employment prospects are tied up with the industry. I hope that the Minister will take them seriously.
I shall not speak for too long because other hon. Members, by their anxiety to intervene, have demonstrated a great interest in the debate, but I wish to make about four short points.
There is no doubt that the overvalued pound is having a considerable effect on the industry. I received a letter from Mr. Longworth, to whom I referred earlier, in which he said:The industry is entering another difficult period, as we forecast last year. Already there has been some short-time working and mill closures. The spinning industry and the knitting industry have been particularly affected. Five cotton spinning mills closed recently, also acrylic spinning mills in Yorkshire have closed. A large clothing unit in Oldham announced its closure".
That is a firm on the other side of the industry. I shall not name it, but it has recently closed its unit in Oldham, where is had employed 400 workers. It had been established in Oldham for a considerable time. Perhaps one of the reasons for that closure was that it was a major supplier to Marks and Spencer. I understand that Marks and Spencer, an excellent firm for which I have the highest regard, for many years had a policy of buying as much of its clothing stock as possible from British sources. I think that it used to say in its advertising that nearly 99 per cent. of its products were British and that the only country from which it imported goods was Israel.
The feeling in the industry, as expressed to the media, is that Marks and Spencer is increasingly moving to overseas sources. That may be due to the pressure of competition, and I can understand that because other large multiple stores, such as British Home Stores and Littlewoods, carry a tremendous amount of imported clothes, such as suits from Czechoslovakia and Romania, and shirts from Hong Kong. I enjoyed what the Minister said about Hong Kong and absolve that country from criticism because it operates a very fair system and does not close its markets to us.
That is a very important development. If a large store such as Marks and Spencer is moving towards buying from overseas sources, the Minister—or somebody in his Department—ought to consider what can be done to minimise it.
Mr. Longworth then said:The MFA, with all its imperfections, has helped to prevent even more closures and it is essential therefore that it should continue and be renewed in 1991.I accept that.
When we debated the multi-fibre arrangement it was thought unlikely that it would be renewed in 1991, but I urge the Minister to look at what has happened in the meantime. I agree with the hon. Member for Macclesfield that it is essential. The MFA does not restrict trade. It helps to bring about its orderly development. It provides for the expansion of imports from certain developing countries. The trade unions support it, provided that the competition is fair, and provided also that a social clause is obtained that is similar to the one that the United States is considering. 579 The overvalued pound is hitting our exports. It is difficult to sell abroad. Moreover, foreign countries have much easier access to this country because their goods are cheaper. I refer especially to those countries whose currency is tied to the American dollar, including a considerable number of poorer countries. High interest rates cannot be divorced from the difficulties that face the industry.
The Chancellor of the Exchequer may think that high interest rates provide an effective method of cutting inflation, but I have yet to see proof of it. The right hon. Member for Old Bexley and Sidcup (Mr. Heath) was right when he said that to use high interest rates alone to check inflation was rather like using only one out of a bag of golf clubs. Surely there is a more sophisticated method of controlling inflation than continually increasing interest rates, which have an enormous effect on many other aspects of life, including manufacturing industry, which is still the lifeblood of this country.
The United States' protectionist policy is a danger to our textile industry. If the United States closes its doors to us that is bad enough, but it also means that other countries, including China, which are looking for markets in the United States, will divert their products to this country, among others. In our previous debate it was said that China had great plans for expanding its production. It will perhaps amount to as much as the production of all the EEC countries.
Another rumour, or story, is circulating in the north-west. Only the other day I learnt that a United Kingdom machinery manufacturer is selling machinery to the Chinese on condition that the Chinese importer gets a 30 per cent. grant from the United Kingdom Government. On top of that, it will be receiving a soft loan from the United Kingdom for, I understand, 20 or even 30 years at well below commercial interest rates. The Government should look into that. We cannot expect to sell textile manufacturing machinery and then be surprised if foreign countries manufacture textiles with that machinery and try to export them and sell them here. We should examine all the implications of such a policy.
I am sure that the Minister has read Mr. Peter Booth's press release. He is the national secretary of the Transport and General Workers Union textile group. In that press release of 10 November he referred to the anxieties of both employees and employers, and said at the end:We would also support the call for a summit meeting of all concerned in the industry to determine a better way forward. It is also important that all Members of Parliament with textile and clothing interests in their constituencies raise their collective voices in support of the industry.We can reasonably claim that we do that.
Mr. Booth continued:They should act now by joining our call for selective import controls and exert pressure on the Government to bring sterling down to a fair trading level. At the current level of redundancies we are witnessing a return to the situation of the early eighties where over 300,000 textile and clothing workers lost their jobs and a large part of the industry closed its gates for the last time.We do not want a return to what happened then. I know that the Minister does not want that. I look to him to take action to ensure that we do not.
§ Madam Deputy Speaker
Order. Before I call the next hon. Member, I remind hon. Members that there is a good deal of interest in the debate. I appeal for shorter speeches so that every hon. Member will be able to catch my eye.
§ Sir Richard Body (Holland with Boston)
I hope that you will watch out, Madam Deputy Speaker, because I may crave the protection of the Chair. I intend to do a dreadful thing. I want to enter a small plea for the consumer.
I see that I am encircled by hon. Members representing Yorkshire constituencies—and rightly so. I hope that one of them will be able to explain one thing to me. A few months ago I visited my tailor in the City of London where one can buy the best clothes at the cheapest price. He has an old-fashioned shop. Like many tailors now, he has on show a row of ready-made suits. One of them caught my eye. Half an hour ago I realised that I am wearing it. I know that it is not very well cut, but I shall come to that in a moment. I felt the cloth and thought that it was very good, hard-wearing cloth that would stand up to wear on these green Benches. I tried on the suit. I know that it does not fit very well but I bought it because of the quality of the cloth. My tailor assured me that it is the best Yorkshire cloth. I am sure that my hon. Friend the Member for Batley and Spen (Mrs. Peacock) will vouch for the fact that it is very good cloth.
§ Sir Richard Body
Having purchased the suit, my tailor told me that it had been made in Italy. I nearly handed the suit back to him, but the cloth is so good that I decided to buy it.
Is any Member with a Yorkshire constituency able to explain to me why good Yorkshire cloth cannot be made into suits in this country? Why do we have to send the cloth hundreds of miles to Italy to be made up into suits which are then brought back here to be purchased by customers such as me? Something must be wrong with our textile industry if it cannot take advantage of its assets. I know that consumers are not very popular characters, but—
§ Mr. Gary Waller (Keighley)
May I make the simple point to my hon. Friend that it works both ways: that material from overseas is sent here to be processed and made into excellent suits and other garments, which in many cases are then re-exported. That is the nature of free trade, which my hon. Friend probably supports. We should not regret it, because unless material comes here to be made into excellent garments we do not get the jobs that are created thereby.
§ Sir Richard Body
I have been rather beastly: I have not said what my tailor went on to tell me. He said that the Italians are much more sensitive to consumer wishes and make suits that customers want. He cannot obtain such suits from Yorkshire. I hope that my hon. Friend the Member for Keighley (Mr. Waller), who represents his constituents so vehemently, will take that message back to some of them. I am an advocate of fair but free trade, and I should like industry in Yorkshire to thrive for, incidentally, it is exactly 40 years ago this week that I became a parliamentary candidate for Yorkshire, and I will always wish it well.
§ Sir Marcus Fox (Shipley)
My hon. Friend must not assume that firms in Yorkshire cannot make suits as good as the one he is wearing. My suit, which I hope is as good as his, is made by an excellent, pro-British firm in Leeds called Jackson Centaur. I wish that the shopper would take more care when buying a suit. It is untrue to say that our designs are not as good as those from Italy.
§ Sir Richard Body
I thought that my hon. Friend was about to say that firms in Yorkshire do not cut suits as badly as the one that I am wearing. However, my hon. Friend's remarks do not answer what my tailor told me. I hope that what I have said will be borne in mind by our firms.
It has just dawned on me that I have a textile firm in my constituency which is part of one of the largest textile companies in the United Kingdom. It is vibrant, progressive and is expanding almost every week. I have not heard a whisper from it about this debate or a plea for protection. It is doing its utmost to meet consumer demand and recognises that, to echo the phrase used by my hon. Friend the Minister, the consumer is sovereign.
Much of the textile industry is responding to consumer demand and does not fear the future. No doubt some of the tales of woe told by hon. Members apply to some textile firms, but I hope that my hon. Friend the Minister will bear in mind that such tales do not apply to every corner of the textile industry. The factory in my constituency is comparatively small and employs only a few hundred people, but it has much confidence in the future.
Items are not imported unless the consumer wants them. Often the type of consumer who wants such goods is among the least well-off of our society, for whom the expense of new clothing or something for the household is an important item of expenditure. They look, quite rightly, for the cheapest article that they can find. If they save a few pounds by purchasing a cheaper garment, they have more money to spend on another necessity. I am speaking not of those who would cut down on some luxury item but of those—I have many in my constituency—for whom clothing is an expensive item.
I know that my hon. Friend the Minister is arguing as valiantly and vigorously as anyone in Brussels and elsewhere on behalf of British industry, but I hope he will bear in mind that when we impose protection we do so against consumer demand. Overwhelmingly, the poorest in society are affected by protection. They are much poorer when the House—or should I say the Commission—imposes restrictions on what they are allowed to buy.
I thought that I would need your protection, Madam Deputy Speaker, but I seem to have got through my speech unscathed. I made it because all hon. Members have not hundreds but thousands of constituents for whom clothing is an expensive item. In real terms, it has become more expensive than many other items that they must buy, and when they have to pay £2, £3 or £4 more for something it seriously affects them, especially those on low incomes or those who may be out of work. I hope that my hon. Friend the Minister will bear that in mind. I do not think that we could have a more doughty champion of their cause than my hon. Friend the Minister. We could have no one better, not even my hon. Friend the Member for Macclesfield (Mr. Winterton), whose strongest characteristic is not 582 subtlety, a little of which is necessary in Brussels. The Minister has been very successful and we wish him well at the forthcoming negotiations.
Most Ministers are rather coy about the House's loss of power over trade negotiations and other issues. I was, therefore, glad that my hon. Friend the Minister made it clear—although he was not as explicit as he might have been, but that is part of the subtlety that he practises so skilfully—that we are not sovereign in matters such as this. When Opposition Members or anyone outside the House criticise the Government for not having an effective system of protection against textiles from abroad, they should recognise that all the 26 textile trading agreements have been negotiated and settled not by a United Kingdom Minister but by the Commission. That is a measure of the House's loss of power and our inability to be as effective as we might wish on behalf of our constituents.
§ Mr. Max Madden (Bradford, West)
The hon. Member for Holland with Boston (Sir R. Body) raised the tentative voice of consumers in Britain and revealed some secrets about his tailor. The name of his tailor should be given to the clothing industry, with which I have considerable contact, because I should be amazed if it could not supply him with extremely attractive and well-designed suits of a good quality. I am sure that the hon. Member for Holland with Boston and the consumer would be well satisfied with them.
The hon. Member for Holland with Boston does not seem to have appreciated the points that have been made in the debate about the dangers of a high interest and high exchange rate regime for the competitiveness of the British textile industry. We are arguing for protection, not because we are fearful of competition but because, given the unfair competition, action needs to be taken by the Government to create fairer trading conditions. A high interest and high exchange rate regime is making matters extremely difficult.
I wish to declare my interest as a Member sponsored by the Transport and General Workers Union with a particular interest in the textile group of that union. The national secretary of the textile group, Mr. Peter Booth, has been referred to on a number of occasions, especially by my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond), and I should like to quote briefly from another press release that Mr. Booth issued only last month about this debate. He said:This is a golden opportunity for Textile MPs of all Parties to raise the serious issues facing the Textile Industry. Our members in textile constituencies across Yorkshire, the East Midlands, the North-West of England, Scotland and other areas are anxious to see vociferous support given to their industry at a time when threats of mill closures and further job losses are looming large.That is the voice of the largest trade union representing men and women working in the industry.
§ Mr. Alan Clark
It is rather unorthodox for a Back Bencher to be invited to give way to a Minister and I am grateful for the hon. Gentleman's courtesy in so doing.
The hon. Member for Oldham, Central and Royton (Mr. Lamond) quoted Mr. Booth's demand that we should consider import controls. I would be interested to hear Opposition Members pick up that point and argue the case 583 for import controls. I hope that I have intervened at a stage in the hon. Gentleman's speech which will allow him to do that, if he believes that he has an answer.
§ Mr. Madden
I shall certainly refer to that aspect later. The Minister is right to say that there is widespread belief in the textile and clothing industry that selective import controls can play a part in tackling the industry's problems.
I now wish to refer to a letter written to the Government in mid November by three organisations—the British Clothing Industry Association, the British Textile Confederation and the Knitting Industries Federation. In their letter, they said:But we now share a growing apprehension about the level of activity over the coming months and beyond. On the export front, where we have had considerable success, the strengthening of sterling has made it difficult to maintain this pace of advance. At home, the effect of higher interest rates is likely to depress consumer and retail demand. The weak US dollar has materially increased the competitiveness of imports, particularly from those countries in the Far East whose currencies are linked to the dollar, and this has had a twofold impact: pressure on the market place, and pressure on prices and margins, reflected in some areas of the textile industry by short-time working, closures and redundancies. There is concern about future orders across a growing area of joint industries.They concluded:Confidence would be strengthened if there was seen to be more determination by the Government and the European Commission to use our rights in the existing trading agreements fully and promptly to counter disruptive import surges, and to resist the progressive opening of our market to countries that remain closed to us or distort trade by subsidies to their domestic industry.
I have participated in these debates for 10 of the past 14 years. We always hear ritualistic praise about the loyalty of the work force, how hard working people are, how modest their pay claims are and how, as a result of industrial peace, there is so much co-operation and high productivity. All those things are absolutely true. However, we hear less about the declining work force. May I remind the Minister that, between September 1987 and September of this year, there has been a fall in employment in textiles alone of more than 8,000—the precise figure is 8,700. In the same period, the decline in clothing and footwear has been 8,600, so, in that year alone, we have seen a decline in employment of 17,000 jobs which men and women badly need. They depend on those jobs, and the communities in which they live are seriously damaged by those extensive job losses. In terms of cost to the community and to the economy, those 17,000 jobs are worth between £12 million and £15 million, a significant loss in employment.
We do not hear very much about the systematic overtime worked in much of the industry. I have always been told that systematic excessive overtime was an indication of basic inefficiency. It certainly has the effect of creating low basic rates of pay because the men and women in those industries have come to depend on systematic overtime to secure reasonable incomes. That is often overlooked. The Government should consider the amount of overtime involved and devise ways and means to create jobs and increase employment, instead of causing job losses, by reducing systematic and excessive overtime which is even being worked at a time of high job losses in much of the industry.
We have heard, quite rightly, a great deal about the export performance of those industries. We are the fifth 584 largest United Kingdom exporter. We are the largest exporter to Japan—perhaps the most difficult market for any exporter. That is a measure of the success of the British industry. It is the answer to the tailor of the hon. Member for Holland with Boston. If we can export successfully to Japan and meet the sophisticated requirements of Japanese consumers, why cannot we satisfy a London tailor about the style and quality of suits produced in this country?
We must face the major lack of confidence in the industry at present, although it has been there to some extent for many years. There is a basic doubt in the minds, not only of the men and women who work in the industry but of those who manage and own the industry about the industry's future as perceived by the Government. There is a fear that the industry is expendable. There is a fear that Turkey is allowed to get away with dumping, which is proved and accepted because our Government are anxious to block Turkey's entry into NATO. They are anxious to secure the contracts to build bridges across the Bosphorus.
It is believed that political considerations are the real reason why the Government are not prepared to tight determinedly and with real vigour and enthusiasm for the interests of the British textile and clothing industry. The Government's firmly held political considerations make the workers believe that the industry is expendable. There are also fears that the British textile and clothing industry will become expendable so that financial services can expand and prosper. That is a fear which the Minister must address.
We are facing 1992, with all the challenges that that creates, and we have heard the figures today about the extent of the trade deficit and the import penetration of the British market. I fear that that will become much worse after 1992.
The associations to which I have referred have said that they are extremely concerned that there will be pressure to replace national quotas with a single Community quota. That creates anxiety in all sections of the industry.
Someone who has been particularly prominent in the debate about the benefits and advantages of 1992 is Mr. Alan Lewis, the chairman of Illingworth Morris. Mr. Lewis acquired Illingworth Morris some time ago, following a reference to the Monopolies and Mergers Commission. At that time, the hon. Member for Shipley (Sir M. Fox)—I have given him notice that I intended to refer to him today—expressed concern about the acquisition of Illingworth Morris by Mr. Lewis. For reasons that are not altogether clear, those anxieties were removed and he supported the acquisition.
It is clear from the Register of Members' Interests that the hon. Member for Shipley is a consultant to a firm called Alcrafield Ltd., a holding company which has been very much at the heart of Mr. Alan Lewis's business empire for a number of years. It is also clear that Mr. Lewis is the head of the Hartley Investment Trust.
The Observer last Sunday, under the headline£4 million Tory bonanza from big business",said:Britain's largest companies more than doubled their contributions to the Conservative Party last year, paying a record £4.5 million to help ensure Mrs. Thatcher's re-election.A survey carried out by an independent organisation, the Labour Research Department, reveals that 333 companies paid £4,528,553 to the Conservative Party in the financial year covering the election …585According to the Labour Research figures, the Conservatives' Treasurer, Lord McAlpine, received seven corporate donations of £100,000 or more.The largest—£167,000—was paid over by the Hartley Investment Trust headed by the textile millionaire, Mr. Alan Lewis. Labour Research claims the Hartley Investment Trust is 'mainly a laundering operation'.Early last year, according to the researchers, Mr. Lewis —who runs Illingworth Morris plc"—
§ Mr. Nicholas Winterton
On a point of order, Madam Deputy Speaker. Is the reading out of huge extracts from newspapers relating to Members' interests directly concerned with the debate on the MFA? I have listened at some length to the hon. Member for Bradford, West (Mr. Madden) because I sympathise with the stand he takes on textiles. However, what he has said in the last three or four minutes appears to be divorced from the debate.
§ Madam Deputy Speaker
This is a wide debate on the Adjournment. The hon. Member for Bradford, West (Mr. Madden) is not completely out of order, but I have appealed for shorter speeches which I hope will be more directed to the topic on the Order Paper.
§ Mr. Madden
I appreciate your view, Madam Deputy speaker. I shall conclude by reading the last section of the quotation. It is relevant to the debate on the future of the textile industry, bearing in mind the prominent role played by Mr. Alan Lewis. As I have said, he argues that there are advantages open to the British textile industry from the changes that will take place in 1992.
The Observer said:Early last year, according to the researchers, Mr. Lewis —who runs Illingworth Morris plc, manufacturers of woollen textiles—used direct mail to ask people for donations to meet 'a special requirement of the Conservative Party'. Mr. Lewis had already put up the money himself. Company accounts show that in the year ending March 1987 the Hartley Investment Trust paid the Conservatives £278,343. However, this sum was not met by donations, and the company received a refund from Conservative Central Office. The donation was revised to £167,000.
I can understand why Conservative Members are reluctant to allow such information to be revealed. However, like most Members of Parliament, and most members of the public. I believe that it is important that when Members speak in this place, and when individuals speak outside, we should all know who they are speaking for, who they are representing and what interest they are seeking to protect and promote. I have brought this information to the House because it is important that we have it.
I have drawn to the Minister's attention the worries which have existed in the industry for many years and which will intensify unless urgent action is taken. We need a plan for the textile, clothing and footwear industries for the year 2000. We need from the Government a clear strategy document spelling out their policy, attitudes and priorities to those industries. As I suggested in an earlier debate this year, we should have a national conference where the Minister, Members of Parliament, trade unions, employers, local authorities and agencies with direct interests in the future prosperity of these industries are allowed to express their views, make suggestions, give ideas and make proposals such as those that have been made in this debate.
586 The central pillar of such a strategy must be, first, MFA5. That is required to give a basic stability and confidence for the future on which investment planning and all other planning can be based. The Minister asked me in what respect I and others support selective import controls. The overwhelming case is against Turkey. I have referred to the briefing given by three organisations. I am sure that the Minister has been given copies of it. There is scathing criticism of the way in which the Turks have conducted their trade in recent years. The document states:In breach of the Treaty of Ankara, which gives Turkey duty-free access to the Community for its exports, Turkey has continued to grant generous investment and export subsidies (which would be illegal if introduced by any EEC country) to its textile and clothing industries, while shutting out imports by extremely high tariffs. When all the different forms of duty are added together (including an obligatory payment to the state housing fund), taxes on imports can reach 122 per cent.The hon. Member for Macclesfield (Mr. Winterton) referred to that. There are suggestions in the document on actions that can be taken which amount to selective import controls.
We want action to be taken against China. The Minister should go a little further than he did in replying to my intervention and answer the following questions. Do the Government accept that China is a dominant supplier? Will they accept the logic of that position? We want priority to be given to this important industry which is a major exporter and employer and an important section of our economy. In the past, arguments have been deployed about the industry's importance. I have discussed these matters with all sections of the industry. They do not believe that the importance which they represent to the British economy is reflected in Ministers' attitudes or the way in which they protect the industry's interests.
We want an investment plan for the industry and an exchange rate and interest rate regime that reflects the interests of British industry. Only last week I talked to one manufacturer—other hon. Members were present at the meeting—who told me that the increase in interest rates had resulted in his company paying an extra £4,000 a week in interest repayments. That is the scale of the burden faced by many small and medium-sized companies.
We need a training plan for the industry. There is already worry about skill shortages, yet in my city there is a penniless army of 900 young people under 18 who are without hope because they are denied benefit or have not been able to get a YTS place or job. Many will be forced into crime and prostitution. Many of those young people have the skills and attitudes necessary to make an important contribution to the British textile industry.
I shall end with an appeal that I have made on previous occasions. I regret that the Minister has chosen this moment to leave the Chamber. I hope that he will appreciate the anxieties expressed both today and previously. I hope that there will be a range of positive actions to help British industry. I have already outlined the direction that I believe such action should take. I am sure that my hon. Friends will reinforce that appeal.
§ 12 noon
§ Mr. Gary Waller (Keighley)
The debate is timely, coming as it does when the industry has reasonable experience of MFA4, having lived for 18 months with the bilateral agreements with the European Community's supplier countries.
587 The end of the current arrangement in July 1991 is sufficiently far off for the House to consider issues other than that of what should follow. There will be plenty of opportunities for such debates. It is right that the House should never lose sight of the importance of the clothing and textile industry, which, as has been said several times today, provides the livelihood for so many people in this country.
Those who keep in close touch with the textile industry, especially the wool textile sector, know that it is highly cyclical. Perhaps it is misleading to refer to the industry as a single entity. As the hon. Member for Oldham, Central and Royton (Mr. Lamond) said, it incorporates a whole spectrum of different processes that are affected differently by changes in the economic climate, as well as by shifts in fashion. That, inevitably, means that it is not an industry suitable for those who like a steady and predictable life.
As the hon. Gentleman also said, we often receive letters from management. We always respect what is said, but, as my hon. Friend the Minister appreciates, it appears that any advance is always due to the efforts of the company, while any failure is attributed to the Government. That is certainly true of the attitude of a few members of the industry, although many others take a different and more robust attitude.
During the past five years the House has debated textiles rather less than it used to, and there is a good reason for that. I use the word "good" in both senses. After the terrible carnage of the 1970s and early 1980s, when many mills closed and thousands of jobs were lost for ever, textiles have enjoyed a successful period. Now, once again, there is a feeling of doubt and nervousness about the future. Some sectors, such as knitting and acrylics—the former has certainly been affected by a change in fashion, although it may be short term—face problems that are already much more than just an ill wind, and the cuts and closures are already starting to bite.
The industry is now much better placed than it was to withstand the vicissitudes of tougher times ahead. A decade ago we were bedevilled by structural inadequacies. Our products had a reputation for durability that was second to none, but our designs left much to be desired. There was surplus capacity, low levels of automation and inadequate marketing skills. We all recognise that there was also a chronic failure to invest when it was most needed.
The process of change has certainly not been easy. In fact, it has been downright painful. The unions have co-operated in enabling that change to come about, despite the effect on their members, with mills closing almost daily at one stage. The result is that the industry is infinitely more robust and better able to withstand competitive pressures.
There has also been a much greater recognition of the need for first-class training—to which the hon. Member for Bradford, West (Mr. Madden) referred—and for recruitment policies to attract some of the brightest young people into a sector that has not always been perceived favourably in employment terms. I pay tribute to the Confederation of British Wool Textiles Ltd. for the positive moves that it has made to remedy the situation.
It has been said that the multi-fibre arrangement has provided the industry recently with some welcome protection. Protection is sometimes a feature that we welcome when our people benefit from it, but we are not slow to condemn protectionism when others, such as the 588 Americans, seek recourse to it. It is worth spending a little time sorting out in our minds when such measures are justified and when they are not. I believe that my hon. Friend the Member for Holland with Boston (Sir R. Body) failed to draw that distinction.
One of the people who seemed to have some difficulty with the concept in a previous debate was the hon. Member for Yeovil (Mr. Ashdown), who is now the leader of the Social and Liberal Democratic party, but was then simply his party's spokesman on trade and industry. In the debate on 9 May 1985 he declared roundly that if MFA4 was to come into effect—and he had doubts about that—it should be the last of its kind. He was then lambasted by his hon. Friend the Member for Rochdale (Sir C. Smith), who left us in no doubt that, in his estimation, he knew a great deal more about the matter than did his hon. Friend who held the shadow trade portfolio. He said:I try to deal with my hon. Friend kindly, so I say simply that it might have been better if my party had decided to leave the speech to someone who knew something about the textile industry."—[Official Report, 9 May 1985; Vol. 78, c. 963.]Today, people in the textile areas are waiting with bated breath to discover whether the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) is a member of the Yeovil school of social and liberal democracy or the Rochdale school.
Of course, free trade is a slogan that we should not mock. As a nation which is so dependent on trade, and which has a textile industry that is good at exporting—when it has a chance to do so, as the hon. Member for Bradford, West said—it is an ideal profoundly to be wished. However, in a period of rapid change free trade can easily be supplanted by a state of disorder, which benefits only those who put short-term expediency before long-term stability. We know that the beneficiaries would be countries which make a virtue of breaking the rules on dumping, unfair subsidies and erecting barriers to imports. The losers would include many of the poorest countries to which MFA4 gives special priority in the hope that they can pull themselves off the floor by their own efforts.
Thus, if the multi-fibre arrangement were no longer needed, it could only be after there had been a drastic review of the provisions of GATT that left no room for doubt that every player that stood to benefit from genuine liberalisation had certain obligations to fulfil and that the will existed, above all, to enforce them. There is no sign that we are yet approaching that state of affairs.
There is no doubt that we are undergoing rapid change. In textiles, the share of world exports held by developed countries fell from 79 per cent. in 1955 to 60 per cent. in 1982, while the share held by developing countries doubled from 15 to 30 per cent. In clothing, the speed of change over the same period has been even more pronounced. Developed countries saw their share plummet from 71 to 38 per cent., while that of developing and mainly low-cost countries, with many of which bilateral trading agreements exist under the terms of MFA4, climbed from 10 to 48 per cent. That trend has continued even more strongly since 1982.
Anyone who argues that the MFA is a means of stultifying progress fails to take account of the facts. But for its existence we would long since have seen complete chaos breaking out, which would benefit no one. Where fair methods have been adopted, we cannot begrudge the fact that poorer countries are benefiting from industrialisation.
589 However, there is no disguising the effect that that has had on employment in the United Kingdom. Although a study has suggested that developing countries are responsible for only one third of the job losses due to external trade, as many as half the jobs lost in the period of most rapid contraction, between 1973 and 1982, may have resulted from improvements in productivity.
Those who, like the hon. Member for Halifax (Mrs. Mahon), who I am delighted to see in her place, blame Conservative policies, as the hon. Lady did in a recent Adjournment debate, conveniently forget that the dates do not match. If the industry had not modernised, its position would have been much worse than turned out to be the case.
§ Mr. Cryer
The hon. Gentleman has mentioned the modernisation of the industry. Does he accept that a fair proportion of that modernisation was undertaken in the period of a Labour Government. I am thinking, for example, of the wool textile industry scheme, which improved on the original wool textile scheme that was introduced in 1973 by a Conservative Government? Does the hon. Gentleman recognise that the bulk of that work was carried out under Labour?
§ Mr. Waller
No, I do not necessarily agree that the bulk of it was done under Labour. Both parties have given assistance to the industry to enable it to equip itself with more modern and more productive machinery.
The much derided Professor Silberston, who produced a report for the Government before the last MFA negotiations, and who has again been asked to report on subsequent developments, fairly assessed the many trends. However, there is a feeling that he paid relatively little attention to the barriers faced by British exporters in many developing countries. Only half a page was devoted to that issue, and little was made of the fact that some of the worst offenders can no longer be described as developing countries, but must be thought of as newly developed.
There has been a substantial increase in textile and clothing imports from MFA supplying countries, from 205,000 tonnes in 1985 to 331,000 tonnes in 1987—a 62 per cent. increase in two years, with a further 10 per cent. climb in the first nine months of this year. Those figures demonstrate not only the greatly increased access permitted under MFA4 and financial agreements, but the benefits that the MFA countries have gained from currency factors, especially the far east and south-east Asian countries that are tied to the United States dollar. At the same time, the relative strength of sterling has weakened Britain's competitiveness in many of our best markets.
In a previous debate on this subject I complained about the unfair barriers erected by Taiwan and South Korea. There has been a distinct improvement, which is welcome, in that those countries have not only reduced tariffs and quotas to more acceptable levels, but have reduced their dependence on the dollar. As Taiwan is not recognised diplomatically by the European Community it is not, strictly speaking, an MFA state, although restrictions are broadly in line with the agreements reached with other supplying countries.
Brazil remains highly restrictionist, although, like many other countries in south-east Asia and South America, 590 parts of its population could be substantial purchasers of our products. However, with total bans and tariffs of over 100 per cent., such sales do not seem a likely prospect in the near future. High indebtedness may be submitted as an excuse, but no such excuse exists for the high barriers operated by non-MFA countries, such as Australia and South Africa, although the economic difficulties of the latter perhaps have different origins.
The United States is a special case. We hope that President-elect Bush will be as vigorous as President Reagan has been in restricting protectionist measures. Measures such as the Textile and Apparel Trade Bill have been misguided in their objectives of seeking stringent controls over imports from any countries, including those in the European Community. Tariff barriers to our exports are already much higher than those operated by the Community. When Congressmen in the United States talk about reciprocity, they tend not to mean that barriers must be removed reciprocally—something that we can all applaud—but that levels of trade must be reciprocally adjusted—a totally artificial concept that would suppress trade and apply a general brake. That kind of protectionism arises from the hold that single interest pressure groups have over Congress. That cannot be defended in a world where trade is needed to break down political and social, as well as economic barriers. If the United States were to have recourse to protectionism, Britain, with its open distribution system, would be in the front line of those likely to be damaged by diversion of trade, and that is something that we cannot allow.
The open system, which has resulted from a concentrated retail structure in which a small number of companies play a dominant part, should also cause us to beware of the dangers posed by the fact that the ending of the existing MFA in 1991 coincides so closely with the creation of the single European market at the end of 1992. The present bilateral negotiations are based on national quotas. Any move towards single Community quotas would leave Britain uniquely vulnerable to market targeting because of the distribution and retailing structure to which I have referred.
§ Mr. Waller
I shall not give way, because I know that a number of hon. Members are anxious to contribute to the debate.
The approach of the single market should also alert us to the dangers posed by the ability of the state trading countries of eastern Europe to take advantage of their preferential position in terms of access to Community markets, especially via the Federal Republic of Germany. I had intended to discuss China and Turkey, but, as other hon. Members have already done so, I shall not.
Protectionism per se must not be allowed to become our rallying cry. Although many existing practices throughout the world mean that we must continue to protect our industry and our workers, lowering our guard in the name of free trade—operating a policy of unilateral trade disarmament—would ensure that some of the existing practices continue untramelled and would, itself, represent a betrayal of free trade. That would be just as dangerous as retaining unneeded barriers, which would undermine the trade on which our industry depends at a time when trade in textiles has been growing twice as fast as trade in goods and services worldwide.
591 This is a complex issue and we must resist the urge to look for simplistic solutions, because they are bound, almost certainly, to be wrong. Presently, the failure to protect British interests would appear to be the greatest danger. In general terms, however, protectionism on the one hand and an attitude that assumes that free trade operates when, in reality, some of our competition are cheating, would achieve the same result—a state of stultification and chaos. We must steer between those two avoidable dangerous rocks that could sink us. We cannot fail because, as so many hon. Members have already said, many thousands of our fellow countrymen and women demand that we should succeed.
§ Mr. Archy Kirkwood (Roxburgh and Berwickshire)
I am pleased to speak after the hon. Member for Keighley (Mr. Waller) in this important debate. I agree with him that the debate is timely because it gives us the opportunity to consider how MFA4 is working and it also gives us a chance to consider some of the complex negotiations to be conducted in Montreal during the current round of the GATT talks.
The hon. Gentleman understandably, if rather predictably, raised the difference of opinion between my hon. Friends the Members for Yeovil (Mr. Ashdown) and for Rochdale (Sir C. Smith). It is perfectly reasonable that, within party political groupings, there should be a divergence of views on some subjects. I should point out to the hon. Gentleman that his colleague, the hon. Member for Holland with Boston (Sir R. Body), bespoke suited as he is, takes a different view from him.
These are complex issues and it is right that consumer interests should be taken into account. It is also right that the legitimate interests of less-developed countries should be considered. The industrialists in my part of the world, who take an interest in those matters, are concerned about both. The Minister was correct to say that we must achieve a balance between the interests of all parties.
I want to make an unashamedly constituency speech, because it is only fair to warn the Minister that the economy of my constituency will face potential ruin unless some guaranteed limits can be secured on the future level of imported cashmere garments coming from China to the European domestic market. I seek the Minister's assurance that the special circumstances of the Borders knitwear industry are being taken into account during the course of the current negotiations regarding the Chinese bilateral agreement and other matters.
If the Government fail to protect the interests of high quality, specialist knitwear producers like the cashmere industry working in towns like Hawick, the adverse financial circumstances for the Borders region would be very difficult to exaggerate. Hon. Members have already said that until recently the knitwear scene in the Borders, as it has been generally, has enjoyed a relatively healthy period. However, there is now apprehension about the level of activity and order books in the coming months and beyond, particularly on the export front.
The level of sterling in the international money markets has made matters much more difficult. The Minister teased the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) about the rate at which sterling should be set to accommodate the interests of industry. Information from my sources is that they do not mind too much about 592 the level of the pound, although they would obviously prefer that to be lower rather than higher. However, they would like some stability. They want to be able to plan from one season to the next with guarantee that they are in the right ball park in terms of estimating the exporting position in the markets that they will address in future. Stability counts, and in that regard the Government should consider carefully the prospect of joining the European monetary system and the increased stability that that would provide.
At home the effect of high interest rates is likely to depress consumer and retail demand. It also depresses the level of future investment that is required. In an area like the Borders, there is no regional development status of any kind to aid industry with its capital restructuring.
§ Mr. Alan Clark
Is the hon. Gentleman making the same point about cashmere in his constituency as that made by my hon. Friend the Member for Macclesfield (Mr. Winterton), or is his a different point?
§ Mr. Kirkwood
I will not burden my remarks by focusing them on cashmere. I want to set the general context, but I will refer to cashmere later.
The weak US dollar has materially increased the competitiveness of imports, particularly from those countries whose currencies are linked to the dollar. That puts pressure on markets which is reflected in the pricing policies and the margins available to industry in my constituency.
The results of all those factors taken together, in connection with the trends that are developing, suggest that factors have been coming together in a way that will produce short-time working, closures and prospective redundancies. The Minister should assure the House that he will raise those matters privately with the Chancellor of the Exchequer as a matter of urgency.
I am one of the Minister's fans. He has received fan mail from Opposition Members. I believe that he does a reasonable job, and that view is reflected among the manufacturers in my constituency who recognise that he fights. However, he must take up these matters with the Chancellor as a matter of urgency.
As a result of some of the factors coming together that I have described earlier, in the past few weeks l75 jobs were lost with the closure of Laidlaw and Fairgrieve's spinning mill at Walkerburn in the constituency of my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel). The loss of 175 jobs would be a bad blow for Bolton or Bradford, but it involves an entire village in Walkerburn. An entire village has been decimated and there are no other employment prospects. That special circumstance must be considered. If that is true for village communities like Walkerburn in the Borders, it is also true on a larger scale in towns like Hawick.
My hon. Friend the Member for Rochdale, who was given gracious mention earlier, asked me to draw attention to the difficulties in the spinning and knitting industries in his part of the world. Five cotton spinning mills were closed recently in his area. Also, acrylic spinning mills in Yorkshire have closed. A large clothing unit in Oldham announced its closure a few weeks ago, as did two clothing factories in Merseyside and a finishing works in Derbyshire. The hon. Member for Newcastle upon Tyne, North had a list of closures which was too long to mention, 593 and we have not spoken of the innumerable units now working on short time, which is the chronic curse of the cyclical nature of the industry.
The catalogue of general decline may paint a dismal picture for the prospects for the industry in Lancashire, Yorkshire and other such areas. I accept that these areas have been devasted, along with the area in my constituency to which I have referred. In theory, however, there is an industrial infrastructure in Lancashire and Yorkshire, for example, that could in future create alternative job opportunities. That is not the position in the area that I represent.
The current negotiations with China are extremely important to the industry in the Borders. China is now the second largest Community supplier. It has the potential to increase its exports rapidly and on a huge scale to the detriment of the entire United Kingdom industry, but especially that which is located in the Borders. That would be to the detriment also of smaller low-cost supplying countries. Therefore, China should be treated as a dominant supplier. I hope that the Minister will listen to the pleas which have been made by hon. Members on both sides of the House that China should be treated in the same way as Korea, Hong Kong, Taiwan and Macao, whose quotas have been limited by the European Community agreement, which took effect on 1 January 1987. Are the Government pressing the Commission and the other member states to treat China as a dominant supplier and to impose access limits? The industry will be reassured if the Minister says something about the issue today.
I ask the Minister to take into account the fact that the People's Republic of China is a state trading nation, with all the associated trading distortions that that means, including pricing policies that are dictated by political and not commercial factors. China's national policy of self-sufficiency is pursued rigorously by its Government departments. What regard is being paid to the long-term implications of Hong Kong's return to China in 1997? That year may seem a long way away, but a problem is looming large on the horizon.
Is the Minister satisfied that the new inner limits for cashmere garments will be held at about their existing levels? That is a crucial matter for areas such as Hawick in my constituency. China is the sole supplier of cashmere and it could export finished garments to the United Kingdom at a lower cost than the cost of the yarn for the garments to the manufacturing industry in Hawick. The Minister has said that the negotiations have been completed. I understand that the details must be studied by committees at a European level before they are published, but it would be of considerable assistance to the industry in general, however, and specifically to the industry in the Borders, if the hon. Gentleman were to say something about the progress that has been made on inner limits.
Secondly, is the Minister satisfied that the Chinese, who have a monopoly of cashmere supply, are taking real and positive steps to eliminate the adulteration of their own material, which was referred to by the hon. Member for Macclesfield (Mr. Winterton)? Adulterated cashmere is not usable in the high-quality end of the market that is supplied by towns such as Hawick. Have talks taken place to resolve that matter through the Community economic 594 co-operation agreement with China? If so, what are the results of the talks? That is another important matter on which I hope the House will be advised by the Minister.
What representations have been made to the Chinese on the unilateral rejection of contract prices for cashmere over the past couple of years? The Government must make known to the Chinese the level of damage that conduct of that sort does to its own hard-won international reputation as an honourable trading partner, in addition to the dislocation that it causes to manufacturers, which see agreed deals and prices change in the middle of knitting up their orders.
The three questions which I have put to the Minister require urgent attention if confidence is to be retained in the Borders industry and the necessary investment decisions made to secure employment in future.
More generally, I am sceptical about arrangements for policing quotas agreed under the MFA. Knitwear import figures for 1983 to 1987 show that, over that period, their value rose from £578 million to £1,072 million. If that is true, it is an increase of 85.5 per cent. Either quotas are being breached or exporting countries are milking the agreement for all it is worth—using all the devices that we know exist to manipulate their quotas to the maximum allowed.
The MFA should eventually be taken back within the ambit of the GATT rules. Of course we must allow increasing access by Third world countries that are genuinely underdeveloped, but we must not be taken for mugs in the short term by countries such as Brazil, Turkey and South Korea. South Korea, for example, exports £2 of general goods to the United Kingdom for every £1 that we export to South Korea—but it exports £4,000 in value of knitted garments for every £1 that we export there. It pays a 14 per cent. tariff, but we pay 50 per cent., and that is clearly unfair.
Finally, speaking for my constituency. I believe that the MFA, with all its imperfections, has helped to prevent even more closures. It is important that it should continue —and if circumstances do not change, the Government may need to consider its renewal in 1991.
We know that there will be pressure from several Third world countries for an immediate end to the MFA, and no doubt it will increase during the GATT negotiations in Montreal. All sectors of the industry in my constituency argue that the Government must resist such pressure and refuse to countenance any progressive or gradual integration into GATT, however desirable that may be as a longer-term goal, until such time as the United Kingdom industry enjoys genuine, reciprocal access to those markets that currently present such substantial tariff and non-tariff barriers that they make impossible any kind of free trade on fair terms.
§ Mrs. Elizabeth Peacock (Batley and Spen)
To many right hon. and hon. Members, a debate on the intricacies of the multi-fibre arrangement may seem unattractive and unimportant, and perhaps that is reflected in the small number of hon. Members present in the Chamber. However, those of us who represent constituencies in which the textile industry plays a great part in providing employment know that the opposite is true and that it is an extremely important industry.
595 Although it is often an arcane and frustrating area of international relations, the MFA, under the umbrella of the GATT, is vital to businesses throughout the country, and particularly to those in Yorkshire and in my constituency. The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) almost apologised to the House for making a constituency speech. I often do so, and will continue that tradition today.
Before referring to the problems that have arisen over MFA renewal negotiations, I remind the House, as other right hon. and hon. Members have done, of the importance of the United Kingdom textile industry. Earlier, we heard that it provides much of the country's wealth—the spending of which the House often devotes much time to debating—and long may it continue to do so. Textiles and clothing represent the United Kingdom's fifth largest industrial sector. Although that point has already been made, there is no harm in re-emphasising it. It is bigger than the computer and aerospace industry in terms of export earnings, having an annual turnover of about £9 billion.
The industry continues to provide nearly half a million jobs throughout the country—in east Lancashire, west Yorkshire, the east midlands and Scotland. In some of those areas the prosperity that the Government have generated in recent years is beginning to have an effect. In my part of Yorkshire, investment in manufacturing industry is tremendous. Factories are growing like mushrooms there, and we welcome that. Against that background, all countries are trying to regulate the flow of exports and imports, which in 1985 totalled a mammoth £100 billion.
Before dealing with the MFA in detail, it is important to note that Britain's exports have done reasonably well in recent years. In 1987 they rose by 8 per cent. to £3.3 billion, and productivity also increased by 8 per cent. The vital investment that is needed in new technology totalled about £387 million. I assure my hon. Friend the Minister that we do not all think that today's textile industry is failing. It is a vibrant and successful industry, and I am sorry that my hon. Friend the Member for Holland with Boston (Sir R. Body), who told us about his suit, is not present. It is an excellent industry, and I could take him to many places in Yorkshire where he could have excellent suits made from excellent Yorkshire cloth. In my constituency there is a very good tailors, Sladding, who have been established for 100 years and whose ancestors trained in Savile Row. They still make good Yorkshire suits. Therefore, there is no need for any right hon. or hon. Gentleman to say that he cannot have Yorkshire suits made from Yorkshire cloth.
Wool textile exports continue to rise, and when the final figures are available they will show that 1988 was a record year. British companies continue to develop their export drive and many of them make regular trips to Japan and the far east. There is a steady demand for quality cloth in the fashion industry. United Kingdom companies continue to campaign for good quality school leavers who can be trained to provide a skilled work force for the 1990s. Already, companies in west Yorkshire are finding it difficult to attract sufficient 16 to 19-year-olds to maintain current standards. As the numbers of school leavers fall during the next 10 years, that problem will become more acute. The industry is responding marvellously, with video recruiting packages aimed at schools throughout west Yorkshire and the rest of the country. Companies consider it their responsibility to attract young people into a 596 thriving textile industry which uses high technology and certainly is not the dark Satanic mills industry of the past. Such long-term views about the health of the industry continue to pay off, with the Confederation of British Wool Textiles Ltd. winning one of the Government's prestigious national training awards for its much-admired career structure for skilled workers.
Hon. Members may wonder why such a go-ahead industry needs international regulations such as the MFA. Why should healthy companies have anything to fear from fair competition in an open market? I should emphasise "fair competition", as that is the purpose of the debate. The answer is obvious to many of us with textile companies in our constituencies. Some foreign competition is not in any sense fair. We have heard many examples of that this morning. The world market in some products is clearly distorted.
The MFA purports to regulate the annual growth rates of exports by state trading nations, developing countries and newly industrialised countries. The agreement deters any particular country from taking harsh unilateral measures that could lead to a disastrous trade war. It helps to iron out the regional imbalances in global trade in textile products and guarantees certain developing nations access to the markets of the developed world, and we need to ensure that that will continue. That access would disappear under the potential dominance of countries such as China in a world trade war. However, many countries frequently act in breach of the MFA or similar agreements such as the treaty of Ankara. As that has already been mentioned, I shall not dwell too long on it, but it is important.
The flood of cheap imports of acrylic yarn continues, mostly from Turkey, but also from Mexico. causing significant problems for many companies in the north of England. My hon. Friend is well aware of my interest in that subject. Although there are job losses due to cheap imports, that is not a new phenomenon in the textile industry. My local newspaper has a column entitled "25 Years Ago", which said:Employment in the town was another problem, as there has been a steady decline in the big three industries in the area since the war."—so we are not talking simply about the past eight years under the Conservative Government—At least one woollen mill had closed each year, mining was declining sharply and the rag trade had been badly hit by the introduction of synthetic fibres.Perhaps we have just moved on and we are now having problems with synthetic fibres coming in from other countries.
I referred earlier to the job losses at Thomas Burnleys in Gomersal. They are much to be regretted. Thomas Burnleys is part of the Coats Viyella group, which has been successful because of its policy of reinvestment and re-equipment. However, acrylic yarn imports have led to its beginning to suffer. I accept what my hon. Friend said about having done everything that he possibly could about acrylic yarn imports. As he has worked hard, but the right results have not been achieved, I suggest that he should consider taking action before job losses become even worse. The available evidence suggests to those in the textile industry that Turkey is granting export subsidies to its textile industry and shutting out imports by imposing high tariffs. In some cases the duty on textile imports into Turkey is about 122 per cent. There is also a mysterious contribution to the state housing fund. I am not sure what 597 that has to do with textiles, but perhaps my hon. Friend will consider adding such a subsidy here; it would help to improve housing investment in this country. Many hon. Members will be aware of the fact that Turkey is not a signatory to the MFA. The problems of cheaper imports from and dumping by Turkey are a foretaste of what will happen if the MFA is not renewed. Unfair trade costs jobs in this country.
I apologise to my hon. Friend in advance for the fact that I may not be able to stay to hear his speech, but I shall read carefully what he says. There are occasions when I do not care to put off constituency duties, much as I should like to hear the Minister. I hope that he will press as hard as he can for fair trade between the United Kingdom and other countries, such as Turkey and Mexico. That is all that we ask. We do not ask for the introduction of special protectionist measures. I hope that the Government will campaign vigorously for the renewal of the MFA. I suggest that it should be a high priority. The agreement cannot be phased out when the reasons for its introduction remain. Unfair trade practices such as dumping can only lead to a suicidal trade war if they remain unchecked.
If the Government say unequivocally that they believe that there is a future for a capital-intensive, highly-skilled and competitive United Kingdom textile industry—I believe that they have said that in the past and that they will continue to support such a policy—I hope that my hon. Friend will assure us that he is prepared to do all that he can internationally to promote that aspect of our industry. If he is unable to give such a simple undertaking, I am sure that many hon. Members and my constituents in particular will want to know why. The MFA is the most pressing of these negotiations. It must not become, as has been recently rumoured in the press, a bargaining counter for nations that are anxious to phase out the GATT agreement as a tit-for-tat step towards an unbridled market. Jobs in this country, particularly those of my constituents, must not become pawns in an international game.
The United Kingdom textile industry is successful. Since 1980 output per person has risen by a staggering 40 per cent. With such an output, how can we say that we are not an efficient industry? The industry wants fair trade from the MFA, not trade regulation. I cannot emphasise too much that we want fair trade and the right to compete on equal terms with our competitors. Yorkshire people have a reputation for not asking for help very often, but we are doing so now. We want to be given a fair chance to show that, if allowed to compete on equal terms with producers in other countries, we can be the best in world markets.
§ Mrs. Alice Mahon (Halifax)
This is the second time within a few weks that I have spoken on the industry. I hope not to repeat the arguments that I made in the Adjournment debate on 31 October, but the Minister promised me a written reply to my questions. I have yet to receive it, so perhaps I shall have to repeat myself on one or two issues.
I should like to concentrate my initial remarks on the textile industry's employees. I say to the Minister—I hope that the message gets home—that we have listened time 598 after time, year after year, to phrases such as "retrenchment", "acknowledgment of the industry's skills and its good work force". We are asking for protection of the work force and some acknowledgment of its contribution to the country not only recently but for many years. When I listen to Ministers paying tribute to the skills and adaptability of the work force, I think how much better it would be if the Government rewarded it with some commitment and promises. Today, the Government have an opportunity to do so. Some of the fine talk that we have heard should be transferred into benefits.
The work force has not been treated well over the past few years. Conservative Members have referred to its increased output and higher productivity. Often, that has been achieved at the expense of long hours and, as my hon. Friend the Member for Bradford, West (Mr. Madden) said, institutionalised overtime, low pay and insecurity. The work force is going through an insecure period.
Many thousands of the work force, of whom I have many in my constituency, were brought into this country from the Third world, but have been abandoned under various policies. The hon. Member for Keighley (Mr. Waller) said that I blamed the Government for that. I make no apology whatever for blaming directly on the Government what has happened to good firms in my constituency over the past 10 years. We have been down this road before, which is why Labour Members are again warning the Government. We recognise the same fears as were expressed in the early 1980s, when factory after factory closed and people were thrown on the scrap heap.
§ Mr. Greville Janner (Leicester, West)
May I say how much I welcome what my hon. Friend is saying? Does she realise that in recent months there have been 3,000 redundancies in the Leicester area alone, 2,000 of which were at the Corah factory in my constituency? The people of Leicester urge the Government to listen to my hon. Friend and take action, because it seems that there will be a great recession in the area, which relies much on hosiery, knitwear and footwear.
§ Mrs. Mahon
I received a letter from the National Union of Hosiery and Knitwear Workers, which confirmed what my hon. Friend has said and identified the loss of 5,000 jobs. I do not know whether my hon. and learned Friend is aware of this, but the letter says:In addition to the 5,000 jobs which have been identified as lost by the Union because of the composition of the work force, 70 per cent. female, factories can reduce their labour force very rapidly by natural wastage without announcing redundancies. This has happened recently and would substantially increase the 5,000 jobs which have been lost.There is an element of hidden unemployment, which is always present when we discuss female labour.
Conservative Members are in a position to bring some pressure to bear on the Government. Everything that is happening to the economy cannot be divorced from what is happening to the industry. The cost of energy has risen far higher than the rate of inflation, and we all remember the 10 per cent. tax that the Chancellor imposed to finance tax cuts. The industry has been exposed to excessive increases in the cost of water, which is used in many of the industry's processes, and it is feared that privatisation will further increase that cost.
High interest rates cannot be ignored and hon. Members must draw the attention of the Chancellor of the Exchequer to that. It is a crazy system. It is a crazy way to run the economy and it is very damaging. I welcome the 599 point made by the hon. Member for Macclesfield (Mr. Winterton) about manufacturing industry creating the country's wealth. That is true, but, from being the workshop of the world, we are becoming an international supermarket and dumping ground for other people's goods.
I agree with the hon. Member for Batley and Spen (Mrs. Peacock) that we do not want special favours, although I would probably go further than she does in asking for favours. We at least want fair competition and, at present. we are not being exposed to such competition. There is no coherent policy for the industry. Will the Minister tell us today what he has in store for the industry?
Philosophically speaking, we are not opposed to free trade, but we recognise the dangers. Opposition Members are not fools. Many of us have been closely associated with manufacturing industry. Most of my family worked in the textile industry. We all breathed a sigh of relief when the United States Congress failed to override the President's veto on the Textile Trade and Apparel Bill.
Will the Minister consider the inclusion of a social clause in the multi-fibre arrangement? There are dreadful abuses of human rights in Turkey, for example, involving people working in the industry there. A social clause could perhaps do something to help. After all, we are a trading nation and, as such, we are internationalists. When trade unionists in other countries with which we trade are imprisoned simply for belonging to a trade union, we cannot, and should not, separate ourselves from that suffering.
Many other hon. Members want to speak, but I wish to draw attention to our fears for the industry. Those fears are reinforced when we see that Professor Silberston has been appointed yet again to produce a report. I do not hold the Minister responsible for his appointment: we recognise that it was made by someone in another place. I shall not refer at length to the press release from the British Clothing Industry Association, the British Textile Confederation and the Knitting Industries Federation in criticism of the 1984 report by Professor Silberston, but those organisations stated that major flaws invalidated the conclusions of the Silberston report. They went on:The Silberston report cannot provide a basis for the formulation of responsible Government policy.They concluded:It is an illusion to suppose that the phasing out of the MFA on the basis suggested by this Report would lead to the vast international trade in textiles and clothing becoming either free or fair. The MFA brings order and stability to international trade in textiles and clothing, which is far preferable to the disorder that would take its place. Without the MFA, unilateral actions by individual countries would certainly provoke similar actions by others forced to protect themselves from the upsurges of diverted imports that would result. The evidence offered in the Silberston Report does not justify its conclusions. It cannot provide a basis for the formulation of responsible Government policy".The cynical appointment of Professor Silberston leaves Opposition Members with little confidence to pass on to the people who lobbied us.
I should like to draw the Minister's attention to the proposal, which is all part and parcel of the free market philosophy, to abolish the export promotion levy. The National Wool Textile Export Corporation referred to its astonishment at the proposal and said that astonishment was perhapsnot too strong a wordto use. 600 I should like the Minister to give us a guarantee that that measure will not be thrown on to the altar of the free market.
We are asking the Minister to take a holistic view of the industry when he tackles his right hon. Friend the Chancellor and the Prime Minister about the future of the industry. Five thousand people in my constituency and 500,000 in the country rely on the industry for a living. That is how we will have to earn our living when the oil runs out, and it is one of the few ways in which we can get out of the horrific mess of the trade deficit.
I should like the Minister to give us a firm commitment about the MFA because that is part and parcel of the fight back. I know that the Minister is sympathetic, so I appeal to other Conservative Members who have textile industry interests in their constituencies to bring pressure to bear on the Government, the Treasury and the Chancellor to support the Minister. I hope that he will take into account one or two of the issues raised today.
§ Mr. Ken Hargreaves (Hyndburn)
I shall begin by informing the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) that my constituent, Peter Hargreaves, to whom he referred, is not related to James Hargreaves, and nor am I, despite the fact that we both come from Oswaldtwistle, where the spinning jenny was invented. The only thing that I have in common with James Hargreaves is that he died a pauper and I expect that I shall, despite yesterday's announcement.
The reason for the timing of this debate remains somewhat obscure, given that the existing agreement lasts until 1991. Nevertheless, the debate gives us a chance to rehearse before the Minister the reasons for our support of the MFA and why we think it must continue after 1991. My only worry is that, although the MFA will be with us until 1991, the Minister may not. Ministers have a nasty habit of moving on, and it may well be that my hon. Friend's career will have reached even greater heights by then and we will have rehearsed our arguments and support in vain.
I am grateful for this opportunity to make a short speech. Not many years ago a debate on textiles would have resulted in a heavy post-bag from my constituents. That is not so today, and it is a sad reflection of the massive reduction in textile jobs in Hyndburn. Nevertheless, the textile industry is still important to north-east Lancashire as a whole, not least in Pendle, in which it is the largest single employer. My hon. Friend the Member for Pendle (Mr. Lee) regrets that because of ministerial duties he is unable to be present.
I have received only one letter urging my support for the continuation of the MFA, but my hon. Friend the Member for Pendle has received several. They make interesting reading. For example Thomas Mason of Primet Mills, Colne wonders who has had the benefit of the high street boom, commenting that the great British public are certainly not buying shirts. All the letters make basically the same three points.
First, they say that the MFA is imperfect but that it offers the best protection for employment. Secondly, they say that in the long term jobs can be protected only by modernising plant, and that can be done only if the industry is confident that there is a market for its products. Thirdly, there is concern about the downturn in trading 601 activity over the past few months, which, the Blackburn and District Textile Manufacturers Association says, has resulted in a number of companies arranging, or considering, short-time working.
There is no doubt that there is growing apprehension about the level of activity in the textile indusry. The considerable success in exports, not least by the Hilden Manufacturing Company in Oswaldtwistle, which won the Queen's award for export and industry, is threatened by the strength of sterling. At home the effect of higher interest rates is likely further to depress demand. In those circumstances, the need for a strong MFA is greater than ever before.
The fourth renewal of the MFA in July 1986 provided the supplying countries with considerable scope for increased access to the Community market, and those opportunities have been seized. Textile and clothing imports from MFA supplying countries have increased from 205,000 tonnes in 1985 to 331,000 tonnes in 1987—a 62 per cent. increase. Only the constraints of the MFA have held back an even faster and more damaging wave of imports.
In supporting the MFA, hon. Members from textile areas are asking, not for protection from fair competition, but for protection from unfair competition. I accept that the MFA has given the United Kingdom's textile and clothing industry more protection from the growth of the low-cost imports than any other United Kingdom manufacturing sector. Given the textile industry's history, it is no more than the people of that industry deserve.
Having lived all my life in a textile area, I have seen at first hand the problems caused to ordinary working people by job losses in textiles. Mill towns such as Accrington were devastated. I should not like that to happen in other areas. It was tragic to see skilled, hard-working people, with an industrial relations record second to none, who had readily accepted attempts to improve competitiveness—shift working, job flexibility and low wage increases—thrown on the scrap heap. It was a bewildering experience for them, and they were given no large redundancy payments.
The textile industry and the people in it have earned our support. It is often said that by protecting our textiles we are hurting the people in the Third world countries. I want help to be given to those countries, but that help must come from the country as a whole. It must come from other countries as well, not just from one section of one country. The remaining textile workers in my constituency cannot be asked to accept an increased burden if workers in the United States, Japan and Australia are not prepared to do so.
As we have seen from the figures, the MFA has allowed European Community imports to grow, and by providing guaranteed and growing access to developed markets it has greatly assisted developing countries to advance their exports in an orderly trading environment. If we abandoned the MFA it would lead to chaos, not least in Third world countries. Political pressure would build up in each developed country to enact strong protectionist legislation, which would have serious and mainly negative implications for textiles and world trade generally.
For that and the other reasons that I have outlined, I support the MFA and its continuation in 1991. In the 602 meantime, I look forward with great interest, and not a little anxiety, to the further report by Professor Silberston. I hope that the major flaws which invalidated much of his previous report will not be repeated in the next one.
§ 1.2 pm
§ Mr. Bob Cryer (Bradford, South)
I understand that during my absence for a minute or so at the beginning of the debate the Minister referred to my absence. My pervasive presence in the Chamber—
§ Mr. Cryer
If that was not so and the Minister was merely missing me, I am happy to know that my absence, even for only a minute, is recognised. I thought that I would mention that because two or three people have raised it with me.
Hon. Members have mentioned the importance of the textile industry to more than 500,000 employees. Lest anyone be under an illusion, it is not an antique industry. It has much investment and is modern and up to date, and should be recognised as such. The MFA should be renewed, subject to a number of qualifications about its application.
I have been a supporter of the MFA since its inception because it is better to plan trade than to leave it to market forces. It allows ordered access for the developing countries. That access has been increasing since the MFA's inception, and I do not think that any group can say that it has been unfairly penalised. As my hon. Friend the Member for Halifax (Mrs. Mahon) said, we need a social clause for the MFA and the GATT—a sort of fair wages clause—by which we can ensure that there are trade union rights and health and safety standards for the countries which are seeking access through the MFA. That was the kind of request that was made in the 1970s during debates in the Chamber.
A letter from Initial Service Textiles states:We understand that there will be a debate in the House of Commons on Friday this week about the textile industry and the renewal of the Multi-fibre Agreement.We believe that the renewal of the Multi-fibre Agreement is vital for the future of the British Textile Industry and also the European Textile Industry.
I imagine that it is referring to that section of Europe called the Common Market. It continued:We have been at the forefront in investing heavily in capital equipment to make our factories some of the most modern in the world. Our Company has been increasing its turnover by 20 per cent. per annum and has been expanding its export sales to the EEC year after year.Whilst we have no objection to fair competition, we need to ensure that effective controls are put on textile producing areas where there is, in our opinion, unfair competition. The use of Government subsidies such as in Turkey, Pakistan and India combined with wage rates in certain countries of £50.00 per month are hard to combat.We believe that the renewal of the Multi-fibre Agreement in some form is essential to ensure that this sort of competition is controlled.I endorse that viewpoint, and am glad to put it on the record.
One problem, which has been echoed across the Chamber, is that the application of the MFA is not in the Government's hands. The Minister must, to the best of his ability, use his influence to counter the indifference of the EEC. Although the Government may already be attempting to do that, the fact remains that the Government have capitulated time and again to the EEC. 603 The Single European Act is one example. I understand that a three-line Whip was imposed on that measure, which gave the EEC yet more power. Thé Government have virtually capitulated over origin markings, against the wishes of the textile industry. Consumers have the right to know comprehensively the source of products on sale in this country. The Common Market does not like that because it does not want individual member states to be recognised—it wants a universal Euro blur. We must recognise the pressures coming from the Common Market and the Government must be prepared to stand against them.
§ Mr. Alan Clark
The hon. Gentleman was a Member of the European Parliament and he knows how these matters work. He and I have our views about the Single European Act, but it exists and majority voting applies. To say that we must stand up to Common Market pressures is just an empty phrase.
§ Mr. Cryer
I accept that the Council of Ministers makes decisions and that it has majority voting on a number of issues, including the MFA, but surely the Commission can be pressurised rather more effectively than has happened to date. I accept that it is a difficult process, but the Government could use the threat of a repeal of section 2 of the European Communities Act 1972. The Minister might have a sympathetic streak towards that, but he will not get far in the Government if he says so. Some leverage must be exercised against the Euro blur, which is too often favoured by the Council of Ministers and the Commission. When the MFA was renegotiated in 1978, the then Commissioner in charge—a Viscount—put forward views opposed to those of the Government and we summoned him to London to explain that. He was a little upset, but he was forced to come, and strong views were expressed to him.
As a nation, we must be prepared to recoup from the Commission, for example, our anti-dumping powers. I am not suggesting that we break agreements, but we should attempt to negotiate our way out of such agreements. We must be in a position where we can make better judgments. The problem is that, after receiving representations, the Minister's judgment cannot be exercised because he is bound by the terms of various agreements, the application of which is sometimes not in his hands. That is the difficulty. There are times when the nation needs to make a judgment about circumstances affecting manufacturing industry and then to apply that judgment. That includes trading relations with other countries, the rights of access for developing nations and the need to preserve sections of our manufacturing industry and the jobs that go with them.
In that context, I want to mention Turkey, which is not a signatory to the MFA, although strong elements in the Community want Turkey to join the Community. Turkey is in breach of the treaty of Ankara in a number of ways. It promised not to apply massive duties, but it does. I asked the Minister in an intervention about the question of definition under the agreement with Turkey.
604 It is a difficult one, but we need more information from the Minister. The industry has provided information and has an anti-dumping application in process at the moment.
Efforts could be made again to renegotiate the relevant section of the agreement, because it has proved damaging. Up to last summer, 600 jobs had been lost in the Bradford travel-to-work area as a result of the import of Turkish acrylic fibre yarns. Bradford has a slogan about "Bradford bouncing back". In view of those job losses, Bradford is bouncing backwards.
The textile industry has undergone a great deal of diminution. There are 500,000 jobs in the industry now, whereas a few years ago there were 700,000 jobs in textiles and clothing, and the erosion of jobs has gone too far. I hope that the Minister can develop the criteria for damage, so that they will be of greater advantage to our country. The Minister must recognise that once damage has been done, it cannot easily be reversed.
The Government's general economic policy is not a help. That is reflected in a letter from the British Clothing Industry Association, the British Textile Confederation and the Knitting Industries' Federation, that is, in the words of the employers, not the employees. The letter says:But we now share a growing apprehension about the level of activity over the coming months and beyond. On the export front, where we have had considerable success, the strengthening of sterling has made it difficult to maintain the pace of advance. At home, the effect of higher interest rates is likely to depress consumer and retail demand. The weak United States dollar has materially increased the competitiveness of imports, particularly from those countries in the Far East whose currencies are linked to the dollar, and this has had a twofold impact: pressure on the market place, and pressure on prices and margins, reflected in some areas of the textile industry by short-time working, closures and redundancies. There is concern about future orders across a growing area of our joint industries.
That must be linked to the huge trade deficit, which has been growing under the present Government. Between January and September, in textiles and clothing it was £2.5 billion. It has been emphasised that workers in the industry have been co-operative over the years and in return for their co-operation in every improvement, with three-shift working and so on, many have been kicked in the teeth, with redundancies and mill closures. The workers in the industry deserve better.
The industry does not deserve the privatisation of water supplies, which will almost certainly lead to increased prices. The Confederation of British Wool Textiles Ltd. has expressed the view that it is opposed to water privatisation. Again, that is the view of the employers, not of the employees. Neither employers nor workers deserve the prospect of increased electricity charges. Electricity is a basic component of manufacturing industry. No matter how reasonable the Minister appears to be, he is part of a driving force that has the ideology of privatising virtually everything in sight. That is damaging for British manufacturing industry, and the workers must be warned never to put their trust in a Tory Government.
It is ironic, when we are talking about the textile industry and the need to retain jobs in it, that the current issue of CBI News contains a big advertisement saying:Just think Hong Kong and you've got it made.The CBI is not backing British industry by giving space to that advertisement which does not seem to provide much benefit for workers. I hope that the Minister will take that point on board. We know that he has some sympathy for 605 the industry and we hope that he will try to translate that into practical action, in spite of all the difficulties that he faces from his colleagues.
§ Mr. David Tredinnick (Bosworth)
I want to argue the case, not just for the continuation of the multi-fibre arrangements, but for the continuation of an effective MFA after 1991. I do so, proudly representing 90 hosiery and knitwear companies in my Bosworth constituency, which employ about 16,000 workers, and against a background of the recent loss of 5,000 jobs in the east Midlands. These losses include 200 redundancies in my constituency, mostly in the dyeing and finishing trades, including 80 at Sunnydale Knitwear in Hinckley and another 30 at Trinity Dyeworks.
I will argue for an effective MFA because, when the MFA was renegotiated in 1986, many concessions were made that increased access from low-cost suppliers. I advise my hon. Friend the Minister for Trade that there should not be the same level of concessions in 1991, given the difficulties of the high exchange rate that the industry faces at the moment and the effects of the watering down of the MFA in 1986.
The first factor that reduced the effectiveness of the MFA in 1986 was the substantial uplift of quota levels in the first year of the new agreement. Secondly, the new annual quota growth rates were generally higher than under the previous agreement. Thirdly, the flexibility allowed to exporting countries to transfer quota from one year to another or one product to another was increased. Fourthly, quota transfer between EEC member states was allowed automatically, within limits—a new facility.
I shall dwell on that point for a moment as it is significant, because, if quotas can be exchanged and used throughout the EEC, there is nothing to stop a predator country or a low-cost producing country from targeting one particular country in one year, and knocking out its industry. This country—and London in particular—is an ideal target, because within 1 square mile of London a potential buyer could capture 80 per cent. of the market. To expand on that, 14 retail outlets account for 80 per cent. of the United Kingdom's garment sales. What a target that would be for a country such as China. What is to stop a country, under the new arrangements, saying, "Let us go for London this year. Let us wipe out the London market. Let us go for it." By London, I mean the hosiery and knitwear companies in Hinckley, Earl Shilton, Barwell and Anstey, which I represent and whose products are sold in the London market. We must be careful about that.
Hon. Members have referred to the textile and clothing trade deficit. I shall not dwell on that, except to say that the figures show that imports from MFA suppliers have increased sharply. However, it is clear that the MFA's strengths have held back what would have been a faster and more damaging wave of imports had the MFA not existed.
I turn briefly to three issues, two of which have been touched on in the debate. The first is China. In an intervention I referred to the damage caused to the industry in my constituency. I am grateful to my hon. Friend the Minister for allowing me to intervene in his 606 opening speech. The plain fact is that China is a dominant supplier, and it should be treated as such. If ever we needed encouragement to do so, it comes in a letter that my hon. Friend has kindly made available from the China International Convention Service Ltd. It said:The Chinese Ministry of Textile Industry (MTI) has recently worked out a development program for the 1988–90 period with emphasis on 'upgrading the products, development of new textile technology, strengthening technical renovation of existing factories, and improving key technology' … the textile industry is given investment priority by the Chinese Government.If ever there was a warning, it is contained in that letter from the highest authorities in Peking.
The high import tariffs imposed by Turkey and the problems that they cause to manufacturers have been highlighted. We should place those charges on the record, because I believe that they are almost unbelievable and illustrate the problem faced by exporters in Hinckley. If knitted outwear manufacturers in my constituency want to export to Turkey, they must first pay a basic tariff of 40 per cent., then there is the municipal tax of 15 per cent. of the basic tariff, then they face customs charges of 2 per cent., followed by a stamp duty of 10 per cent., topped up by an import premium of 8 per cent. That is followed by 5 per cent. wharf dues and a $20 per kilogram housing fund. All that comes to 122 per cent. I am supposed to go to my constituency and say, "Have a go at Turkey," when the Turks can sell to Britain without paying a cent. of duty. It is just not on.
Another reason for maintaining a tough MFA is the change that will take place in German trading arrangements in 1992. Currently, East Germany, because of its obvious historic relationship with West Germany, has special trading rights to sell into West Germany. The deal is that East German goods shipped to West Germany cannot be exported to the EEC. After 1992, however, all goods from Germany will be exported throughout the EEC. That will create a new problem. First, we shall have a flood of cheap, politically priced goods from East Germany coming to all the EEC countries, including Britain. Secondly, other COMECON or east bloc countries will push goods which, will be underpriced, through the German bridgehead, and straight into Europe. Surely that is the best reason for keeping an effective MFA.
I have looked at the gloomy side of the industry, but I should like to end on a more optimistic note. Because of the protection of the MFA, many manufacturers in my constituency are now gearing up with new equipment, new knitting machines and computer technology for design in fully-fashioned knitwear, despite the cost. One manufacturer that I visited the other day told me that he is now attacking the Italian high fashion market. Hon. Members will know just how difficult a market that is to penetrate.
The MFA is providing protection and manufacturers are moving with the times, but we must not be fooled. We cannot do away with the MFA in 1991; we must extend it. If we do so, normality in GATT will return. The MFA must be extended, and it must be effective.
§ Mr. Frank Haynes (Ashfield)
I shall be brief in the interests of other hon. Members who want to speak.
With reference to what my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) said, I was not asking for the Minister's resignation. The Minister is not responding.
§ Mr. Alan Clark
The hon. Gentleman would have done me a good turn if he had. It would have kept me in place a bit longer.
§ Mr. Haynes
The Minister has not done a bad job over the years. I have been here and I have praised him on numerous occasions because of his efforts, but at the moment we have a problem and I want to talk to the Minister about it.
The Minister may be unaware that, yesterday I asked the Leader of the House whether he knew that we were to have a debate on the MFA today. I suggested to the right hon. Gentleman that this debate would probably be a talking shop for the Government. I was hoping for some action. The Department of Trade and Industry must take some decisions with a view to helping the industry, which is in serious difficulties. As I said earlier, in Mansfield and Ashfield we have lost 1,200 jobs in the hosiery and knitwear industry in a matter of weeks. That creates a massive problem for jobs. There are many reasons why there are difficulties. I will stick to basics, and I will not be technical and pour out statistics such as those that we have heard today.
The Government must face several problems. They must consider the present balance of trade. Imports are pouring into this country, espcially from China, Turkey Taiwan and Hong Kong, at the expense of jobs in our industry. The Minister must badger the Chancellor of the Exchequer because credit is out of control. When we regain control of credit, there will be a massive full stop and we will feel it in industry, not only in the hosiery and knitwear industry, but in other national industries as well. Jobs will be hit.
Earlier it was said that we were not looking for protection for the industry. However, the Government have a responsibility to British industry. What have the manufacturers and trade unionists done over many years? They have worked together to modernise the industry and they have helped to reduce manpower. However, because of that modernisation, and in addition to the other problems such as the balance of trade and dumping in this country, matters have become worse. We are now squealing at the Government to pull up their socks and do something.
Earlier I said that the Minister had done a fair job. However, we have a real problem, and he must understand exactly what is happening. With no disrespect to anyone else, it seems to me that the Minister is entering the negotiations without the proper advice. He should have people in his team from the industry and the trade union movement because they know what is happening in the industry. He would then get the right advice. It is all very well to say that the MFA runs out in 1991, and I have heard hon. Members appeal for an extension. However, I am worried about what will happen in 1992. If our industry is on the floor in 1992, it will not pick itself up again because of the competition across the water and around the world.
608 The Minister must recognise that he needs the proper advice for his negotiations. We are not looking for protection; we are looking for fairness for the industries that the Government are supposed to be helping. The word "help" has been writ large by hon. Members on both sides of the Chamber today. That word stands out a mile because the industry is crying out for it and only one organisation can provide that help—the Government. The Government must not sit back as the Minister is sitting on the Treasury Front Bench. The Minister must give us some guarantees. He must provide the help that is needed if we are to save a marvellous industry that employs so many people. If nothing is done, the number of jobs in the industry will diminish. My constituency has suffered from pit closures, as has that of my hon. Friend the Member for Mansfield (Mr. Meale). Mining is no longer the leading industry in our constituencies. The hosiery and knitwear industry is way out in front, but slowly and surely it is declining just as the mining industry has declined.
The Government were responsible for the decline of coal mining. If they are not careful, they will be blamed for the serious decline in hosiery, knitwear and textiles generally. I appeal to the Minister to do the right thing. I understand that he can do that only if he has the right information and advice, which must come from those who work or participate in the industry.
That is really all that I have to say. I shall not go on and on like some hon. Members have done today. I do not intend to pour out statistics on this, that or the other. I appeal to the Government to help the industry and, at the same time, to help the British economy.
§ Mr. Graham Riddick (Colne Valley)
On the last occasion on which I took up the remarks of the hon. Member for Ashfield (Mr. Haynes), he tried to cross the Floor to beat me up. Our views today are probably not as polarised as they were during the passage through the House of what was then the Employment Bill.
I am pleased to have the opportunity for the first time since becoming a Member of this place last year to participate in a debate on the multi-fibre arrangement. My Liberal predecessor, Richard Wainwright, participated in the previous debate. He described the Colne Valley constituency as a traditional textile and Socialist seat. I am pleased to tell the House that the constituency is still definitely a traditional textile area. It is most definitely not a Socialist seat.
I sought to intervene during the speech of the hon. Member for Newcastle upon Tyne, North (Mr. Henderson), who spoke from the Opposition Front Bench, to refer to the privatisation of the water authorities. Unfortunately, he would not allow me to do so. I wanted to say that the chairman of Yorkshire Water has written to the Yorkshire and Humberside Association of Chambers of Trade to say that, if he were to hazard a guess, he does not think that prices will rise any more under privatised industry than if the industry remains in public hands. That is important to bear in mind when the statement comes from the chairman of that authority.
Most of the producers in my constituency tend to be involved in high-quality woollens and worsteds. That means that the MFA tends to have less impact on them than on those in other areas, including west Yorkshire As many others have said, however, the importance of the 609 textile and clothing industries in the United Kingdom must not be underestimated. They produce sales of more than £13 billion per annum and employ about 500,000 people. It is clear that we are talking about a major and important industry. Therefore, our approach to the MFA must be considered, not ideological. Ideologically, I should like to see the arrangement abolished. That is because I believe in free and open trade between nations. By placing restrictions in the way of free trade, consumers usually suffer by having to pay higher prices. Secondly, the pace of necessary economic change can be impeded.
Notwithstanding that belief, I and everyone must consider the world as it really is. There are several factors that would make it premature and unwise to press for the abolition of the arrangement once the current one ends. I believe in free trade, but that trade must be fair between countries. If we break down all barriers to imports into the United Kingdom, no purpose is served if we find that we are unable to export to other countries because of the trade barriers that they have erected. By the same token, we should not offer our markets openly and freely to countries that heavily subsidise their textile industries. That has been a common theme throughout the debate. I was reassured by the comments of my hon. Friend the Minister on that score.
Another important factor is that the MFA plays a useful role in keeping at bay the protectionists in the United States. I have no doubt that if the MFA did not exist, the American Congress would have erected considerable barriers to imports, which would have undoubtedly hit hard our country and less developed producer countries. A number of complicating factors surround the whole issue.
I was amazed by a pronouncement made two or three years ago by the then Liberal party. Like everybody else, I am somewhat confused as to what that party is now called. Where is the Liberal party today?
Incidentally, the House may be amused to know that, last weekend, there was the ludicrous and hilarious spectacle of the leader of the SLD group on my local council of Kirklees attending the founding conference of the old Liberal party. Subsequently he was quoted as saying that he will remain leader of the council's SLD group. That proves what many of us have long suspected—that no Liberal feels at home in any one party but prefers to straddle as many parties, and therefore as many options, as possible.
I was amazed at the Liberal party's statement of two or three years ago that the current MFA must be the last. That is what was said by the party's official spokesman at that time.
§ Mr. Tredinnick
It is amazing if the SLD is against the multi-fibre arrangement. I am sure that my constituents will take a dim view of that. Will my hon. Friend elaborate, because I am not sure that I understand him correctly?
§ Mr. Riddick
It is always difficult comprehending Liberal party policy, but my understanding is that that party made crystal clear its belief that the current MFA should be the last, and that my predecessor, as the Member 610 of Parliament for Colne Valley, Mr. Richard Wainwright, argued strongly that that was the case. That argument was also made by the hon. Member for Yeovil (Mr. Ashdown).
§ Mr. James Lamond
I was present on that occasion. I advise the hon. Member for Bosworth (Mr. Tredinnick) to read the record of that debate, which bears out what was said by his hon. Friend the Member for Colne Valley (Mr. Riddick). He will also find that the hon. Member for Rochdale (Sir C. Smith), who, unfortunately, has not graced the Chamber with his presence, was bitterly opposed to the then Liberal party's policy—and not for the first time.
§ Mr. Riddick
It will not have been the first time that the hon. Member for Rochdale (Sir C. Smith) was the only Liberal Member of Parliament talking any sense. I wonder whether the Liberal party's approach to the MFA was a contributory factor to its being wiped out in Yorkshire in the last general election.
§ Mr. Tredinnick
If that really is Liberal party policy, it will play a significant part in the thinking of the Leicestershire electorate as they approach next year's county council elections.
§ Mr. Riddick
I feel sure that my hon. Friend will bring Liberal policy to the attention of his constituents.
The main reason why I was so amazed was that it is unusual to find the Liberal party coming out with a clear and decisive policy on any subject.
§ Mr. Haynes
On a point of order, Mr. Deputy Speaker. Is this a debate on the MFA, or a party political broadcast?
§ Mr. Deputy Speaker (Sir Paul Dean)
The hon. Member for Colne Valley (Mr. Riddick) is referring to the MFA, although there have been occasions when he has allowed himself to be diverted.
§ Mr. Riddick
It is important that my constituents should be aware of the position taken by the Liberal party and by SLD Members on this important issue, for it is significant to the people of west Yorkshire. I am surprised at the intervention of the hon. Member for Ashfield, who usually likes matters to be understood as clearly as possible.
The matter to which I refer is not typical Liberal fudge but a policy which everyone can understand. I applaud the fact that the Liberals made it clear where they stood on the issue, even if it was the wrong stance. I believe that it was wrong for some of the reasons that I have already mentioned and because, if one gives notice to developing producer nations that the MFA will end in 1991, those countries are bound to prevaricate on reducing their own barriers to our textile exports.
Before leaving Liberal policy, I should mention the speech of the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who unfortunately is not present. As he said, he made a constituency speech. At least he would appear to agree with the hon. Member for Rochdale in that he wants to keep the MFA, but he did not change the official Liberal policy or approach to the matter.
It is only right that such a debate should address an issue which the industry inevitably raises with politicians, and which has been mentioned frequently by Opposition Members—high interest rates and the value of sterling. 611 The industry, which is currently investing heavily and which is an important exporter, is hit if the pound appreciates and interest rates are high. But I defend the Government's current economic position. Inflation is the number one enemy of the textile industry as well as the rest of industry. Interest rates are the most effective tool for dealing with the current problem and for allocating the available resources to those people and industries who most need them and therefore are prepared to pay the high interest rates. The current high level of sterling reflects not only high interest rates but the high esteem with which the British economy is viewed by investors and market makers abroad.
With the enormous economic improvements that have taken place under this Government, the pound is destined to stay high and any future improvement in the British economy will again be reflected in the price of sterling. Indeed, because the Chancellor tried to feather-bed industry generally, he reduced interest rates too far earlier in the year and that has now led to a higher interest rate than would otherwise have been needed. Therefore, the textile industry will have to continue with its effort to improve productivity and competitiveness.
All is not doom and gloom. The CBI magazine, which I received this morning, forecasts that, despite all the problems facing British industry, Britain's economy will grow by 3.4 per cent. next year and manufacturing output will rise by 4.8 per cent. By no stretch of the imagination can those be described as disappointing production figures.
The textile industry has made enormous strides in recent years. Exports of wool textiles are at a record level this year and woollen exporters to Japan continue to make great strides. Exports to Taiwan and South Korea will have more than doubled during the past two years to some £25 million, which just goes to show what our industry can do when trade barriers are reduced and our industry is given the chance to compete on equal terms.
I am very impressed with the efforts which the industry is making in training—which I do not think have been mentioned in the debate—and getting into schools to tell youngsters about the opportunities it offers. For example, there is one manager for every eight operatives; therefore, prospects are good. There has been increasing liaison with careers officers and a recent link with technical colleges in Huddersfield and Bradford so that existing operatives may receive extra training at those colleges. All those moves augur well for the industry's future, and indeed its training efforts were rewarded only recently when it received one of the Government's national training awards. I congratulate the industry on its efforts in training.
In my constituency, there are a number of very successful textile companies. One of the most dramatic success stories involved Drakes Fibres and F. Drake and Co. of Golcar massively expanding their production and export sales of polypropylene filament yarn. That was despite the unfair and illegal subsidy that the French Government made to one of their direct competitors and that, to its shame, the European Commission did nothing about. I wonder, incidentally whether the Minister has received a translation of the Commission's judgment in that case. He had not received one when the matter was last discussed in the House.
The EEC's role in these matters is becoming increasingly important. What steps is the EEC taking to stop unfair subsidies within EEC countries? I believe that 612 Italy still provides massive subsidies for its textile industry. What are the Minister's views on the EEC's ability to negotiate single Community quotas in the future? They could make Britain particularly vulnerable, as the concentration of United Kingdom buying power lies with five or six major retailers, headed by Marks and Spencer.
I shall ask my hon. Friend about Turkey, although, unlike Opposition Members, I do not blame him for all the problems that Turkish imports have created. Why has the European Commission so lamentably failed to do anything about the grossly unfair and highly subsidised imports from Turkey? Some people in the industry, as well as the hon. Member for Bradford, South (Mr. Cryer), who is not in his place, believe that the EEC has taken no positive action because Turkey is regarded as a particularly sensitive matter, both politically and strategically, and that we cannot therefore afford to upset the Turks. I do not believe that, because the EEC is allowing Mexico massively to increase its exports of acrylic yarns to this country. One wonders whether the EEC has the will to tackle these problems, particularly as Turkey and Mexico are outside the MFA. What steps has my right hon. Friend taken to tackle these problems?
How can British textile exporters compete when they are faced by tariffs that in Brazil are as high as 105 per cent. and in Turkey 122 per cent.? I know that the Minister is totally frustrated and believes that he is in a straitjacket, since we are at the mercy of the EEC and the European Commission.
The textile and clothing industries have made it clear that they would be happy if we returned to the normal GATT rules and if they were allowed to compete freely in world markets. However, I agree with them that that cannot happen and that the MFA will have to remain in place until all artificial trade barriers are abolished and unfair Government subsidies removed. Until that happens, the MFA must remain.
§ Mr. Pat Wall (Bradford, North)
I thank those who sit on the two Front Benches and the Whips for organising this debate in such a way that all hon. Members who wish to speak on the subject will be allowed to do so.
Historically, the textile industry has been a barometer for the rest of British industry. What happens in textiles today will happen tomorrow in other industries. That happened during the 1975 recession. The present redundancies, lay-offs and short-time working are the result of the worsening position of exports compared with imports, the sharp increase in interest rates and the consequent gross over-valuation of the pound compared with the American dollar and other leading European currencies. The importance of those trends in the textile industry has, perhaps, been over-emphasised and I apologise for repeating them briefly, but the industry is the fifth most important in Britain. It accounts for a quarter of Britain's total trade deficit, but nevertheless is the fifth largest exporter.
The textile industry has a special social significance. Some sections of it are located in the south, but in the main it is located in areas of high unemployment and social deprivation, where the problem of high interest rates is felt especially. Firms in prosperous areas that have more stable, established and growing markets may be able to deal with high interest rates for a while, but in areas such 613 as the West Riding of Yorkshire, which has experienced tremendous social problems since 1975, the battle of clawing money back, reinvesting in new methods and technologies and achieving higher productivity has not been easily won. Recent figures show that unemployment is falling faster in more prosperous areas than in the more socially deprived areas of high unemployment, but if there is a large-scale loss of textile workers' jobs there will be a complete reversal of the few gains that we have made over the past two or three years.
Since the 1975 recession, the industry has made considerable efforts to improve. Since 1980, productivity in wool and yarns has risen by over 40 per cent., by over 50 per cent. in carpets and over 70 per cent. in bleaching dyeing and raising. Since 1981, profits have risen from about 1 to 4 per cent. to 10 per cent. more recently.
I must emphasise that workers in the textile, clothing and footwear industries have made the greatest sacrifices. Employment has fallen by 46 per cent., but workers have increased productivity by about the same figure. The average earnings of most textile workers remain at £20 a week less than the average throughout manufacturing industry.
The Government have abandoned manufacturing industry in favour of finance, and the Minister is faced with a difficult problem. It is generally accepted in the House that he has a genuine interest in manufacturing industry and is aware of its importance, but the party that he represents, especially the Cabinet, has abandoned manufacturing industry in favour of financial interests, which is crazy. Some 90 per cent. of trade on the world stock exchanges concerns not manufacturing, trade or goods and services but speculation. The value of our manufacturing exports worldwide is six times greater than that of service industries. It must be an obvious truth to anyone but the Government that manufacturing is the sole source of wealth in a modern society. The taking of raw materials, part-finished goods and machines, and the application of human labour, skill, nerves and imagination to make useful products or machines to create further products is the basis of society's wealth. We would not have dentists, a Health Service, supermarkets or nice restaurants if that wealth were not created in the first place by manufacturing industries. That neglect of manufacturing, which is highlighted in the textile industry, is the Government's responsibility.
The textile industry's demands are modest. The industry is asking for an organised and orderly method of conducting trade and the multi-fibre arrangement provides that. It is not a perfect arrangement. It does not work entirely as it should, but it allows the important elements of the textile trade to operate. For example, textiles connected with house wares affect the world economy. Since the war, there has been a sharpening of the division of labour, but textile and clothing industries remain in the most advanced and technically developed countries and those countries that are attempting to emerge as advanced economies.
The industry has asked for the maintenance of the agreement which recognises the historic role of textiles in the more advanced countries and the needs of exploited workers in Asia, Latin America and other parts of the world. I support all those hon. Members who have spoken 614 for the continuation of the agreement and for the improvement of MEA5. They have asked that China be recognised for what it is—a dominant supplier to the textile industry.
Reference has also been made to dumping, particularly the dumping of Turkish acrylic products. I see that every day because I live opposite a mill which, for two years, has been prosperous and where the workers have had regular overtime. I believe that they worked far too much overtime, but they had to do so. For the first time in over two years, they are on short time as a direct result of the present situation.
The question of timescale is at issue. The Turkish acrylic yarn incident highlighted the Government's slowness to react. We debated that matter only a few weeks ago in an Adjournment debate initiated by my hon. Friend the Member for Halifax (Mrs. Mahon). We debated the wool textile industry in an Adjournment debate that I initiated in May. Well before that, the industry, the unions and hon. Members raised the issue in the House. However, when the damage has been done and the redundancies have been made, we are told that a meeting will take place and those involved might come to an agreement, but the net result of that meeting will be the fixing of a high level figure.
When mills close and machines are removed, they are not easily replaced, just as, when shipyards are closed, they are not easily replaced. Thirty per cent. of British manufacturing industry was destroyed, but, when we moved into an easier market and a boom period, that could not be rebuilt overnight to meet the nation's needs and has thus led to the continuation of an increased volume of imports.
We hope that the textile industry will be safeguarded in view of 1992 and its implications, not only in respect of imports from East Germany, but because Britain may become the dumping ground for the whole of Europe when a single tariff agreement is introduced.
I support my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) in his plea for a social clause. I shall never be a little Englander and I have never been a strong supporter of import controls. However, I have travelled to Hong Kong, Taiwan, South Korea, Malaysia, Singapore, Thailand and Sri Lanka on many occasions and I have told the story in the House about the working conditions that I saw in the textile trade in South Korea. I went there in connection with the trade in housewares. I saw those lovely, hard-working people in South Korea. There were girls living in dormitories working 60 hours a week with two days off after 28 days. Those people are trying to form trade unions and obtain civil liberties and the right to vote. We should support the right of people to organise freely and form trade unions independent of the state so that they can obtain improved working conditions. That would be better understood by Korean, Taiwanese or Hong Kong workers than import barriers and import controls. They would understand something that offered them some improvement in their working conditions.
I strongly support my hon. Friend the Member for Bradford, West (Mr. Madden) in his demand for an accelerated investment programme in textiles and for improved training. Textile workers undervalue their skills. Their skills should be recognised and there should be a proper training programme. Young people should be attracted to the industry and given a sense of security.
615 As a Socialist, I look forward to the day when the textile, clothing and footwear industry is owned and controlled democratically by the working people who produce the wealth in it. I look forward to the day when they will be able to share in that wealth. I look forward to a world in which trade is not left to the market. The existence of the MFA and GATT and their effect on the Group of Seven bankers shows that the world market does not solve all the problems that face mankind. I look forward to a world in which trade is organised in a friendly and democratic way. That would be in the interest of all the peoples of the world and would help bring about an improvement in their standard of living.
I do not expect support from the Government for that. However, the Government defend the market economy and say that they stand in defence of British industry. As my hon. Friend the Member for Bradford, West said, industry pays plenty of money to ensure that the Conservative party is returned to power. It is for the Government to show that they can protect the interests of nearly half a million textile workers and their families in Britain and ensure that the industry looks forward to a secure future.
§ 2.2 pm
§ Mr. Henderson
With the leave of the House, I should like to respond to some of the points that have been made. It is interesting that Members on both sides of the House made it clear that the Minister has a reputation for being refreshingly frank during Question Time. I am not sure that the Minister welcomes such tributes from the Floor of the House, so I shall not labour the point. I know that the House is looking for the Minister to be equally frank in his response to the debate today.
I realise that the Minister might not be able to move the Chancellor of the Exchequer on interest rates or the rate of exchange, but I hope that he will put to his right hon. Friend the case for industry, and particularly the case for the textile and clothing industry. Industrialists and workers in the textile and clothing community believe that, apart from the details of trade, the main issue now affecting industry is the Government's macro-economic policy. I hope that the Minister will take the views expressed in this debate to the Chancellor.
The Minister's Department is directly responsible for trade regulation. I hope that he will provide clarity on trade issues. We have heard from the hon. Member for Macclesfield (Mr. Winterton) and the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) of the fears about the potential impact on their constituencies of a dramatic increase of imports from China.
We live in a changing world. Economies and growth rates change. Formerly, agricultural or semi-industrial countries quickly become industrial. In reviewing our trade agreements, whether the GATT, the MFA or the bilateral agreements flowing from them, it is necessary continually to examine developments in different countries. I hope that the Minister will make a statement on the terms of renegotiation of the bilateral deal with China and tell us when we may hear some details.
I have been impressed by the near unanimity in the House on the need for a renewal of the multi-fibre arrangement. The hon. Member for Macclesfield and my hon. Friend for Oldham, Central and Royton (Mr. Lamond) reminded us of that need. If I understood 616 correctly, even the hon. Member for Holland with Boston (Sir R. Body) recognised that, to have a future as a trading country, Britain needs to insist on fair trading agreements throughout the world.
Hon. Members have recognised the need for regulations and fair trade. They know the alternative and that it will cause damage and devastation to industry and large parts of Britain. They know that unless we can conclude sensible and equitable arrangements on trade we will face the horrific alternative of beggar-thy-neighbour protectionism. Those hon. Members who have spoken, who by and large have a specific interest in the textile industry, must pass on to those hon. Members who have no axe to grind in respect of that industry that, if protectionism is allowed to apply to textiles, it will not be long before protectionism and beggar-thy-neighbour policies apply to other industries. In the long term, that is bad news for hon. Members who represent largely exporting industries. I hope that they will join us in putting pressure on the Minister and the Government to insist that there is an early commitment on MFA renewal. I hope that the Minister can give hope to industrialists who seek to invest and who believe that they have export markets to tap, but need to be given a guarantee of stability and security.
Concern has been expressed about trade with Turkey. We have heard of the breach of the treaty of Ankara, which regulated trade between the EC and Turkey. My hon. Friends the Members for Halifax (Mrs. Mahon) and for Bradford, North (Mr. Wall) and the hon. Member for Batley and Spen (Mrs. Peacock) referred to matters affecting our unacceptable trade agreement with Turkey. If that country has ambitions to be part of the EEC, it must begin to behave to the minimum standards required within the EEC. It is unacceptable that the Turkish Government should provide investment grants greater than the level of investment. That must stop if equity is to be restored. It is unacceptable that there should be a range of subsidies that cumulatively amount to 122 per cent., as was mentioned by the hon. Member for Bosworth (Mr. Tredinnick).
Trade union rights are important. If there is to be fair trade, those who prepare and manufacture goods must have basic minimum conditions. Indeed, that was what President Reagan said when he reached an accommodation with the American unions. That must be a key issue for countries which hope to participate in our fair trading practices. I hope that during any future negotiations on the MFA the Government will insist on the insertion of such a vital social clause. I hope that the Minister will tell us what action he believes will bring about the regulation of our trade with Turkey.
We have had a fairly full debate on the textile industry and its future priorities. I am pleased that that has happened while there are talks in Montreal about future trading relationships. It is also right to have such a debate at the mid-term of MFA4, when we can evaluate its impact on the real economy.
I hope that the Minister can give some hope, not only to hon. Members who have raised many points during the debate, but to the workers in the industry, the industrialists, the textile communities and the consumers of such vital products.
§ Mr. Alan Clark
With the leave of the House, Mr. Deputy Speaker. I have been present throughout the debate other than for brief absences totalling three minutes 18 seconds. I have heard every speech, all of which have been useful and constructive. I shall do my best to reply in the time available to the points raised.
My prognosis of the conduct of the hon. Member for Leicester, East (Mr. Vaz) was correct. Following a rather disparaging, rambling intervention early in my opening speech, he departed for a social engagement. That, however, does nothing but contrast favourably with the conduct of his hon. and learned Friend the Member for Leicester, West (Mr. Janner), whose sense of self-importance is so great that he does not even sign his letters on this subject, but leaves it to his research assistant. I am sure that he whole House will join me in our wildly diffused sense of chagrin at the absence of Mr. Peter Bruinvels, who used to represent a Leicester constituency.
The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) made a number of cogent points. I welcome his statement that international trade agreements are essential to the prosperity of the industry. Indeed, it is within that framework that we are having this debate. All hon. Members accepted that, with the possible exception of the hon. Member for Leicester, East in his rather short and dotty intervention. The question of ramie was raised. It is important—although it is not included in MFA4—and there is provision in the current arrangement for action to be taken against disruptive imports of ramie textile and clothing products. We have been monitoring the position closely and imports of such products into the United Kingdom at present are at a fairly modest level and not at a level at which distress has been expressed to us.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) made two important points. In an intervention, he raised the question of the inner limit for category 5 imports from China and he asked whether it is in the new agreement. It is, but for reasons that he will appreciate, I cannot give details at this minute. He and my hon. Friend the Member for Macclesfield (Mr. Winterton), who has, unfortunately, had to leave the House—
§ Mr. Clark
My hon. Friend raised the important question of cashmere supplies. I am aware of the concerns of the users of cashmere at the deterioration in the quality of cashmere supplies. We have established a system for taking up specific complaints with the Chinese authorities through our embassy, and the Community has taken up the issue in the recent negotiations. The Chinese Government have recognised the concern of cashmere buyers in the Community over problems with the implementation of commercial contracts including quality aspects.
The Chinese Government have undertaken:to endeavour in consultation with the organisations responsible for export of these products to find remedies for these problems, to ensure that the quality of the product is improved in order to meet the standards required by European industry and to enter into consultations in the event of difficulties in the provision and delivery of the products.They also indicated a willingness to assist Community industrialists wishing to buy cashmere and other similar raw materials such as silk or angora in the future.
§ Mr. Clark
No, because I gave way 15 times in my opening speech and the House would probably prefer me to go through the important points that were raised before I give way.
My hon. Friend the Member for Bosworth (Mr. Tredinnick) raised the question of Chinese underwear. That will be covered by the quota under the new bilateral agreement with China.
My hon. Friend the Member for Macclesfield also touched on the question of imports and how they are sometimes needed by British manufacturers. At intervals, we have had the curious paradox that an hon. Member complained about an anti-dumping provision when it affected an industry in his constituency which needed an import and yet that same hon. Member complained that other imports were not subject to anti-dumping provisions on the ground that they offered competition to manufacturers in his constituency. I do not deny that both those contentions are valid. They illustrate the great complexity of international trade and the need for vigilance and co-operation with industry and others affected and for close and continuing monitoring and scrutiny. My Department relies as much on hon. Members for that as it does on its contacts in industry.
The hon. Member for Oldham, Central and Royton (Mr. Lamond) raised, among other points, the question of serious injury, as did his hon. Friend the Member for Bradford, South (Mr. Cryer). The question of criteria is difficult. I have said this on many occasions and I repeat it now. There must be some systematic evidence, above all of a fall in domestic production, which can be shown to be caused by rising imports from the "low-cost supplying country" in question. Factors to be taken into account include systematic evidence of falling employment in the domestic industry, falling orders and rising stocks. Those elements are undesirable in themselves and can occur separately and independently, but they must be attributable to rising imports from the "low-cost supplying country." That is the key phrase that encompasses the link, without which it will not be possible to establish injury.
That brings me conveniently to the question of polyester fibre anti-dumping. In the Commission we have discussed ways in which the problems of the users of polyester fibre can be overcome. Those discussions will continue in Brussels next week. The question of what is available from EEC sources is not entirely straightforward. As I have said, it is a classic case which shows the continuing conflict of interest that can arise at any time in relation to complaints about dumping. Hon. Members have been urging me to find ways to make it easier to take action against dumping by Turkey in the case where the Commission has taken action and imposed provisional duties. However, I am also urged to ensure that those duties are not confirmed because of the adverse effect on our own industry. I quite understand the reasons in each case, but hon. Members should realise that I often have to make difficult judgments in weighing the relative advantage and interest of their constituents in different sectors.
In that context, I should like to mention the constructive and sympathetic speech of my hon. Friend the Member for Holland with Boston (Sir R. Body). It was the only speech from the consumer side. He properly drew the House's attention to the fact that poor people with low 619 earnings are those most affected by small differences in the cost of clothing and apparel. That point was well understood. I shall stick to the point that I made when I opened the debate that although poor consumers may be the most affected, they would be even poorer if they were put out of work by the incursion of the goods that are affecting their standard of living and quality of life being provided to them at a lower cost.
Although this idea has never been systematically put to the test, I sometimes think that there are more people in this country than the Consumers Association credits who would not mind paying an extra 5p or 7p on the price of a tee-shirt or whatever if they knew that in so doing they were helping our domestic industry and their compatriots, their friends' and neighbours' prospects for employment and, indeed, the whole of British industry and the British economy. That point has never been properly surveyed. I fully appreciate the points made by my hon. Friend the Member for Holland with Boston that such consumer considerations impact most strongly on the poorer sections in our community.
Many hon. Members raised the difficult question of the social clause. I understand them to be arguing for sanctions against supplying countries that fail to meet adequate social and working conditions. It is true that the first article of the MFA states that a principal aim in the implementation of the arrangement shall be to further the economic and social development of developing countries.
The Community pressed for that to be emphasised in the new protocol and that was done. To go further and introduce new restrictions where certain social conditions were not met would not, in the view of many, have been desirable. Social and working conditions are more likely to be improved by allowing a country to sell its goods than by preventing this. There are proposals for a GATT working party to examine the question of workers' rights in developing countries. The Government would be prepared to support an agreement to establish a working party. I must tell the House that, to date, all such proposals have been received with great hostility by the developing countries.
It is common sense to consider that—it is a view shared across the Chamber—China is becoming a dominant supplier, if it has not already attained that standing. That must be recognised at some point in the future, but I used those words because present Chinese exports to the United Kingdom do not account for more than 1.6 per cent. of imports. Therefore, in relation to the level of imports into the United Kingdom, China cannot presently be described as a dominant supplier.
I have been urged by a number of hon. Members to comment on the future of the MFA. I have been impressed by the argument from my hon. Friends the Members for Colne Valley (Mr. Riddick) and for Keighley (Mr. Waller) and others that the importance of the MFA is not solely something to be assessed in a purely protectionist context 620 and that it has an importance that the less-developed countries appreciate. When I was in Pakistan I found it extremely easy to explain to my interrogators just exactly what the consequences to their economy would be were all restrictions on textiles to he removed, because they, along with many others on the border with China, would suffer acutely from a free-for-all.
The MFA has a genuine and salutary regulatory effect just as much on the less-developed countries as on the more sophisticated and adaptable economies of the Community and the OECD.
I cannot give a personal commitment that the MFA will continue after 1991. The House will appreciate that that is not solely a decision for me, and competence in this matter lies with the Community and the Commissioner who negotiates on our behalf. We have a commitment in the Uruguay round to examine the modalities. I said at the start of the debate that that is a pretty imprecise interpreter's word that can be construed in a number of different ways. The modality is for returning textiles to strengthened GATT rules. It must include looking at the future of the MFA, but that must be done within the context of considering that any such return must be progressive and must be accompanied by satisfactory liberalisation by all countries. I hasten to say that progressive is the opposite of instantaneous. That liberalisation should affect the less-developed countries as well as the newly industrialised economies. The rules must be strengthened and made more effective, especially those concerning safeguards on fair trade, intellectual property and market access.
Time and again hon. Members have drawn my attention to the need for fairness and the abuses that are put in the path of our exporters by other countries. I am grateful that my hon. Friend the Member for Bosworth (Mr. Tredinnick) cited, yet again, the outrageous fiscal obstacles that the Turks put in the way of our exporters.
If it is of any consolation or comfort to the House, I can state that if the multi-fibre arrangement is to be discarded and if such an action is not accompanied by a satisfactory liberalisation and by a genuine strengthening of GATT rules and by proper discipline, I will not be the Minister who comes to the Dispatch Box and announces it.
§ It being half past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.