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Japan

Volume 78: debated on Wednesday 1 May 1985

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5.

asked the Secretary of State for Trade and Industry if he will make a statement on his recent visit to Japan.

During my recent visit to Japan I had useful exchanges with senior Japanese Ministers, including the Prime Minister, about a range of multilateral and bilateral trade issues. I also met several leading industrialists with whom I discussed the prospects for further industrial co-operation and two-way investment.

I thank my right hon. Friend for that reply. Penetrating the Japanese markets requires not only commercial competitiveness but cultural understanding. To which bodies can smaller businesses especially look for guidance and advice as to how they can best penetrate Japanese markets?

The first point of contact for a company considering exporting to Japan and which needs advice is the Export to Japan unit of the British Overseas Trade Board, which can itself help and can direct companies to other places where help can be obtained.

When will the Secretary of State do something about the huge deficit between our imports of Japanese goods and our exports to Japan? He claims to be tough—the hammer of the unions. Will he show his toughness by standing up for British interests, especially with the Japanese?

That is a nice piece of gunboat diplomacy from the hon. Gentleman, but he should understand that things are not quite the way they were in the middle of the 19th century. There is little doubt in my mind that some members of the Japanese Government, including the Prime Minister, are as aware as the hon. Gentleman of the threat that will arise to the world free trading system unless Japan's trading surplus is abated. There will be many problems in organising a sensible abatement of that surplus. I do not entirely share the hon. Gentleman's gunboat diplomacy view, especially as gunboats are in short supply.

Well known as my right hon. Friend is as one of our principal gunboats in our trade disputes and relations with Japan, could he tell me what representations he has made to the Japanese Government on their predatory and disgraceful dumping prices in relation to the building of the Bosporus bridge? What did his counterpart in Japan say that they would do about this focused assault on our legitimate trading interests?

When I was in Japan, I was not aware of the scale of the subsidy that was being offered by the Japanese contractors and their partners in seeking to gain that contract. With regard to the bridge contract, the British company's bid and the scale of aid that was offered by the British Government were highly competitive with the Japanese company's bid and aid in that sector. However, the same was not true of either the pricing or the scale of aid offered on the associated roadworks; in particular, our partners in foreign companies were not able to come forward with an aid package the size of that of the Japanese. Having said all that, it seems to me that the Japanese tactics of subsidy in this case were scarcely compatible with their avowed aim of reducing their trade surplus. No doubt that will be brought to their attention.

Accepting that capitalism is a system of international competition and that the Government are dedicated to the capitalist concept, is it not true that for the British people the interests of British capitalism also have some interest? When will this capitalist Government, dedicated to the continuation of the capitalist system, do something about defending British capitalism against Japanese capitalism?

I think that the hon. Gentleman, uncharacteristically, may be in a state of some political confusion. I think that he is mixing up 20th century capitalism with 17th century mercantilism. I do not think that subsidies should form a large part of capitalism either in the United Kingdom or elsewhere.

Reverting to predatory pricing by the Japanese, may I ask whether my right hon. Friend is aware that there are 900 bridge builders in my constituency who would very much welcome some firmer international rules on the extent to which Governments can subsidise companies in important overseas contracts of this sort?

I would welcome not only firmer rules, but perhaps a greater willingness to abide by the rules; although again I have to say that in this case it does not appear that the Japanese Government broke such rules as there are.

If the Japanese people take no notice of the urgings of their Prime Minister to buy more goods from outside Japan, what steps will the Secretary of State contemplate?

Several steps could be taken, some of which I urged upon the Japanese Government. The Japanese Government could give a good example to the Japanese people by making major capital purchases from overseas. That is one thing that could be done. They could also help by introducing measures to internationalise the yen so that it more accurately reflected the strength of the Japanese manufacturing economy. Taking steps along those lines could ease that problem.

Does my right hon. Friend accept that the predatory pricing policies of Japan and the dumping of credit are an absolute disgrace, and that the consequence is that the Japanese are simply hijacking our industry? The bridge builders in the constituency of my hon. Friend the Member for Darlington (Mr. Fallon) will be eliminated as a result. Furthermore, many other British industries have had their bases destroyed by such policies. What is my right hon. Friend going to do about it?

I can well understand the anger felt by my hon. Friends, because clearly the British company's bid was competitive and better than that made by the Japanese company. British Government aid to that company was on the same level as Japanese aid, but unfortunately the countries associated with us were not as smart as the Japanese company's associates.

I agree that the Japanese Government, in offering cheap credit and subsidy to that extent, were foolish. It was probably unnecessary under the circumstances for the Japanese Government to go that far to get the order. The Japanese Government's action was incompatible with the programme they have announced to reduce their trade surplus. That will be brought clearly to their attention again. As I said in Japan, unless that surplus is abated, unless their markets are opened and unless the Japanese desist from some of their trading practices, protectionist forces will be impossible to resist.

Is the Secretary of State aware that, although I have no doubt that he raised these issues with the Japanese in Tokyo, there is a great difference between Japanese professions and Japanese actions? Precisely what undertakings, if any, did the right hon. Gentleman receive from the Japanese about a change in their policies? If no undertaking was given, what action will the right hon. Gentleman take to ensure that such undertakings are given?

When my hon. Friend the Member for Macclesfield (Mr. Winterton) is invited to speak from this Box I hope that he will put his case, but perhaps he will allow me to answer the question.

The undertaking that I received was that the Japanese Government would pursue with vigour the policies which Mr. Nakasone announced on 9 April—that is, opening and liberalising the Japanese market. An undertaking was given to seek further to reduce the non-tariff barriers where we could show that effective non-tariff barriers were being imposed by the Japanese Government.

Although no guarantees were given, a great deal of discussion took place about the liberalisation of the Japanese financial markets. I believe that that liberalisation will occur, although much too slowly for my liking. I have no doubt that the Japanese are keeping some of their powder dry, like most other countries, for future rounds of trade negotiations.