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General Agreement On Tariffs And Trade

Volume 78: debated on Wednesday 1 May 1985

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asked the Secretary of State for Trade and Industry what progress is being made towards a new general agreement on tariffs and trade round of international talks on trade.


asked the Secretary of State for Trade and Industry what progress is being made in preparing for talks aimed at a new round of tariff reductions.

We are making good progress towards a new round of multilateral trade negotiations, although we do not yet have the agreement of all the GATT members. I hope that the Bonn economic summit will provide further impetus towards the launch of a new GATT round in 1986.

Does my right hon. Friend agree that freer trade will mean more trade and that more trade will mean more jobs in Britain? Will he give the House an assurance that the Government are doing what they can to ensure that all the GATT members enter into a new round of talks so that freer trade can be established as quickly as possible?

Yes, I can give my hon. Friend that assurance. I agree with what he has said. Since the second world war, world trade has increased eightfold, while world production has increased only fourfold. My hon. Friend has made an important point.

Does the Minister agree that free trade means free trade in both directions, and that that is an essential part of any agreement?

Yes, Sir. In any round of negotiations our aim will be to try to persuade other countries to remove any barriers that may exist against our exports.

Does my right hon. Friend accept that free trade will lead to more jobs only if the advice of the hon. Member for Oldham, Central and Royton (Mr. Lamond) is carried through? Britain has been a freewheeling area for most manufacturing countries, especially within the developing world, and even within the EC.

We have suffered because jobs have gone. Free trade in Britain has led to fewer rather than more jobs.

I cannot agree with my hon. Friend about that. We probably export more of our GDP than any other developed country—[Interruption.] It is interesting that such comments should be made today of all days when we know how confident British industry is about its export effort. My hon. Friend the Member for Macclesfield (Mr. Winterton) will know that we probably export more of our GDP than any other developed country. It is essential that we have overseas markets for our goods. That means that we must in general be in favour of free trade; that is, free but fair trade.

First, I appreciate the letter that I have received from my right hon. Friend. When he engages in international talks, will he be absolutely certain that they lead to a new multi-fibre arrangement that is acceptable to the British textile industry, whose future will depend on it entirely?

My hon. Friend will know that the Government have not yet come to a conclusion on the multi-fibre arrangement. I hope that we shall be able to discuss the matter in the near future.

Is the Minister aware that the answer that he gave to his hon. Friend the Member for Dumfries (Sir H. Monro) will create despondency in the textile industry? Whenever we hear his responses to questions on the textile industry, it seems that he is planning to open up totally free trade for the British textile industry. If he does that, he will have a war on his hands in the House.

I do not think that my answers need cause any dismay to the textile industry. It has heard and read reports of our exchanges on many occasions. It has made many representations to me, and I have engaged in many consultations. I am aware of the industry's view. I hope that the Government will soon have an opportunity to make their views clear to the House, and I am sure that we shall be able to convince it that they are right.

Does my right hon. Friend accept that moves towards a new round of GATT talks are extremely welcome? Does he also accept that a most important restriction on the growth of international trade is exaggerated and speculative movements in foreign exchange rates? Therefore, does he accept that he has a major departmental interest in the Government in following any avenues that may lead to a reduction in such movements?

My hon. Friend raises an extremely important point, but he will appreciate that it is primarily the responsibility of my right hon. Friend the Chancellor of the Exchequer, who has held talks about this and related matters in the OECD and in Washington.

Is it not true that the MFA was set up as a temporary measure behind which we could restructure our industry? Does not the Silberston report show that the damage caused to the British textile industry by at least liberalising the MFA would not be as great as is often claimed? Therefore, is there not a case, in terms of moral obligation and practical wisdom, to consider some liberalisation of the MFA?

I note what the hon. Gentleman says, and all those points will be borne in mind before decisions are taken. That is the view of the Liberal party on this issue.

When my right hon. Friend begins the new round of GATT, will he bear in mind the problems of Third world countries, which need to export to the European Community, and will he consider cautiously further attempts by the Community to erect trade barriers against products on which Third world countries depend for their existence?

I agree with my hon. Friend. In the European Community, Britain is trying desperately to retain a free trading element to give access to developing countries. Since we export to them, they must be given an opportunity to export to other countries. Otherwise, they will not be able to pay for the goods that they buy from us. It will be in our interests to do so.

Since our deficit in manufactured goods this year is already breaking all records, is it as self-evident as the Minister seems to believe that his free trade theology is best suited to our trading needs? Before he rushes headlong into a further round of tariff cutting, which can only increase our vulnerability to imports, will he ensure that we at least have a proper debate in the House and the country as to where the balance of advantage lies?

There is no question of headlong rushing, because trade talks are bound to take years. Nor are tariffs the major point. It is extraordinary that the hon. Gentleman should persist with such allegations on a day when we see that business confidence has increased, exports are increasing, the figures for manufactured exports are better than ever, there is more optimism. and export orders are at record levels.