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Volume 181: debated on Friday 23 November 1990

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[MR. SPEAKER in the Chair]

General Agreement On Tariffs And Trade

Motion made, and Question proposed, That this House do now adjourn.— [Sir George Young.]

9.35 am

We are discussing today, albeit on a motion for the Adjournment of the House, an issue which may have the greatest effect upon our future—the need to increase trade between nations, not only developed nations but those which are developing. Obviously, trade is of the utmost importance to any country, but for the United Kingdom, not only today but as a historical fact, trade is at the centre of our economic fortunes, and we cannot in any sense underestimate the degree to which a successful general agreement on tariffs and trade round is vital for increased prosperity.

I hope that we can debate the matter with an understanding that this is not only of importance to ourselves, the European Community of which we are a part, the western world and, indeed, the new countries which have emerged from the socialist east, but to the developing countries for whom access to markets is crucial and to those of us who see the moral responsibility of the west and of rich countries to them.

If that is so, it is the Government's responsibility to see that the negotiations are brought to a successful conclusion, and in that we have support in large measure from all parts of the House. That means that the talks must be brought to a fair and honourable conclusion. There must be a fair exchange, so that trade may be carried out on all sides. I hate the phrase. "level playing field", but unless I introduce it into the debate we will probably not be able to move further. We need a level playing field, and the purpose of the GATT round is to achieve that.

I hope, too, that we shall recognise in the negotiations that all parties have their own axes to grind. Sometimes, people talk as if only the United Kingdom and the rest of the European Community pressed for the coverage of their special difficulties. Most hon. Members recognise that many of the high-flown statements of those with whom we negotiate are specially tailored to press for a particular way of solving problems which just happens to be of value to their industry, services or agriculture. Therefore, I hope that no hon. Member will feel constrained to put forward the special needs of the United Kingdom and those aspects of United Kingdom trade, commerce, services and agriculture which he or she wishes to defend.

We do so realising that the GATT round is essentially a package. It cannot be unpicked. We cannot leave on one side whole areas of activity. That which is important to one country may be less important to others, but it cannot be left to one side.

For this nation, unrestricted access appears to be a danger, yet we are negotiating with countries for which access is the only thing that matters. We cannot suggest that there are simple ways out of some of the problems that face us.

We are seeking in GATT to recognise that trade patterns have changed and that we must adapt the system if it is to survive. If it does not survive, there will be a major interruption in the world's ability to provide for higher standards of living in the rich west and to do something about the appalling living standards in much of the world. We need to wipe out the shadowy trade barriers that have grown in the margins of GATT. We need to strengthen GATT so that no country feels driven to unilateral action and trade war tactics. We need to extend it to encompass trade in services, direct international investment and intellectual property rights. The importance to world trade of all those aspects has grown vastly.

GATT still has the feeling of a system that was produced to cover trade that was largely in manufactured goods, but there has been phenomenal growth, in the developed world in particular, in other aspects which have not been properly covered. We have set ourselves essential goals. That is important now, above all, when nations whose economies have long been crippled by protectionism and managed trade are courageously embracing democratic capitalism.

I feel more than usually passionate about the GATT round because of my visits to eastern European countries. Obviously, agriculture and food are at the base of their problems, but I returned with an appreciation of the devastation caused by protectionism not only to a country's industries and trade but to its very nature. It cuts nations off from their natural intercourse with other nations. It makes it impossible for industries to thrive and flourish, and it ensures that backwardness is the order of the day. Unless we solve those problems, we will be in an infinitely more dangerous position and the GATT round will disappear into a series of bilateral protectionist arrangements.

There needs to be a substantial reduction in the tariffs and other barriers to trade that face British manufacturing companies. We need an agreement for the first time to establish international rules liberalising trade in services because they now account for 55 per cent. of our gross domestic product—an amazing turnabout, which we must recognise internationally. We want better and more effective protection for patents, copyright and trademarks. We must have much more effective measures against counterfeiting. We cannot do without an agreement that will minimise the restrictive rules which can be applied to British companies investing overseas.

We need to agree to strengthen the GATT system, especially the system for settling trade disputes. We need to be able to take more effective action through GATT against overseas Governments who unfairly protect their industries. We need agreement by developing countries, particularly the most advanced, that they will become more fully integrated into the multilateral system and take on a share of responsibilities under GATT that is consistent with their degree of economic development.

It would be wrong to reform GATT in a way that left those developing countries in a position where they were thought of as a separate group that was not able to take a growing part of their responsibilities. In that sense, GATT is a means whereby they can grow into the world community. As that growth occurs, their industries, commerce and standards of living will improve.

If all this is true, the taxpayer stands to gain significantly from reductions in the costs imposed by protection. If we are going to ask for market liberalisation from other people, we cannot expect not to open our markets. Our industries must be free to operate in and adapt to the world of competition. They must be lean, fit and healthy. No country can afford the costs of artificial protection in the long term, penalising every citizen not once, but twice—as a taxpayer and as a consumer.

The particular problems that the textile industry has faced from low-cost imports have been recognised for many years through restrictions such as the multi-fibre arrangement. I am sad that, for reasons outside my control, there was no specific debate on textiles. The Opposition had intended to have such a debate, but I am sure that we will divide the time satisfactorily between the main matters of contention. I am sure that the House agrees that that was a sensible subject for the Opposition to put forward because it is crucial for all of us. It is not easy to answer questions on this issue because the answers pull in opposite directions.

It is particularly helpful that the MFA's future is being considered in the context of the multilateral GATT negotiations. That may be one advantage of debating this matter today rather than earlier. These global negotiations include many matters of great interest to the textile industry and to manufacturing and to services as a whole. Increasingly, restructuring of the textile industry, which has been possible because of the MFA, has enabled that industry to open up markets abroad. Those textile companies are beginning to find that they need access and that the access problem is no longer the one-way difficulty that it seemed to be in the past. They too, recognise that the GATT problems pull in opposite directions.

We have a draft text providing for the phasing out of the MFA over a period of years on the basis of the existing restrictions. The phase-out will be achieved over a period yet to be agreed. That is one matter still open to negotiation. The broad aim of the Commission, supported by the United Kingdom, is to take account as far as possible of the sensitivities of European industry, of which United Kingdom industry is a part.

There is clearly scope for some products, especially those not under MFA restraint, to be integrated immediately into GATT and subject to its rules. If that happened, it would be a good earnest of our intent. If the main textile exporting countries are to agree to the arrangements on textiles—satisfactory arrangements are a condition for their agreement to the final Uruguay round package as a whole—there needs to be an improvement in market access for them at an early stage.

As the Minister said, this is an important subject for many textile constituencies, including Bradford. Before the right hon. Gentleman leaves the subject of textiles, will he say what he has in mind for enforcing all the desirable aims of stopping counterfeiting, setting up anti-dumping measures and so on? How will he insist through GATT that those measures are carried out and are effective, to ensure that the industry survives?

The hon. Gentleman is right in saying that policing and enforcement are vital. Our experience in recent years has been particularly bad on that front in terms of not just textiles but right across the board. Much of the argument about intellectual property rights, counterfeiting and similar matters has arisen because we have not been good at enforcement or at finding out where difficulties have occurred or what the problem has been. That is at the centre of the current argument about better enforcement. The United Kingdom has pressed the Commission on that matter. My right hon. Friend the Secretary of State for Trade and Industry will deal with it in his speech—no doubt at greater length, now that the hon. Gentleman has raised that point.

The hon. Gentleman is right in that nobody in the industry can have confidence in the solutions that are found in GATT unless they believe that they will be imposed on everybody. If they feel that this is a nice deal between those who will obey the law but that it will be flouted by a number of countries that will not obey the law, they, rightly, will not be prepared to accept the difficulties that GATT imposes on them.

As well as enforcement, which is crucial, will the Minister confirm that it is still very much in the Government's mind that the original Uruguay declaration made it clear that access to third-country markets was an essential condition of any transitional phasing out of the MFA? If the Government do not return with some cast-iron guarantees on that linkage—increasing imports at the same time as industries have a chance to export their way out of some of the difficulties that increased import penetration will cause—the Minister will get a rough reception on his return from hon. Members who represent textile constituencies.

The hon. Gentleman is right. We must have the improvements before phasing out the MFA. There must be that linkage and it is all part of the present negotiations. The United Kingdom has been firm in making that clear. The Commission understands that position clearly, remembering that it, too, must sell it, not only to the United Kingdom but to other member states of the European Community, and we are not the only country that feels strongly about it. So there is real pressure on that issue from the Community point of view.

I hope we shall see that the textile industry now has a real interest in opening up markets for our products and in the orderly, over time, removal of protection, which was always intended to be temporary. Members in all parts of the House recognise that there is a contradiction in our minds in that connection. On the one hand, we want to enable people who are starting on the road to improve their economies, stage by stage to find markets. On the other, we cannot do that at the cost of industries which employ our own citizens. There is a balance to be struck and I hope that in all the speeches that we make on the issue we remind audiences of both aspects of the impact.

On a personal note, I found it necessary the other day to repeat something that Dr. Allen Booth, a former head of Christian Aid, wrote in a letter in which he chastised an archbishop, when he wrote that it was all very well to complain about not helping the developing countries, but one should not do that at the same time as objecting to the closure of boot and shoe factories in Northampton. One must recognise that both are part and parcel of the same problem. GATT seeks to cut through that and to find a way of bringing the two difficulties together.

The House will want me to comment on the area in the GATT negotiations with which I have been personally involved, and that is agriculture. I have the issue burnt on my heart because we have sat longer and argued to a greater tedium on that than on almost any other subject I can remember. There was a point at which some of my family wondered whether I had a special arrangement in Luxembourg, because it seemed that it would be easier to commute to London from Luxembourg than to Luxembourg from London. Although they were frustrating discussions and it was necessary sometimes to remind our Community partners of their responsibility to be communautaire. in action as well as in fine phraseology, in the end we got an agreement on a programme to be presented to the GATT round.

I hope that, in retrospect, we can recognise the real problems for agriculture of the proposition that must be faced. It is not easy for the British farming industry to accept the kind of proposition that we have put to the GATT round, and it is no good ignoring the effects of the offer that is before us.

Some people overstate it in the sense that they do not recognise that the 30 per cent. relates to a reduction in support—they sometimes think that it is a reduction in price—and they do not recognise that it has already partly been achieved in the unilateral decision—in this case I am in favour of unilateralism—of the European Community.

I thought I would say that, so giving the hon. Member for Bolsover (Mr. Skinner) an opportunity to intervene.

I am charitable to the hon. Gentleman, whose fascination with agriculture is well known.

My hon. Friend the Member for Hornsey and Wood Green (Sir H. Rossi), the Chairman of the Select Committee on the Environment, will agree that, unless we have a healthy agriculture, the countryside cannot be looked after, and that the healthiness of agriculture demands a return from agricultural activity sufficient to look after the countryside. Those who talk as if we can divorce environmental considerations from reasonable returns for the farming community do not understand the situation in our rural areas.

Agriculture remains the major activity in our rural areas and is concerned with looking after 80 per cent. of the countryside. Much of that involves looking after areas such as the rolling hills of Derbyshire, which would be much less attractive if agriculture did not exist. Indeed, the farmer has created that landscape, as he has created the landscape in the rest of the nation.

It is true that agriculture has always been covered by GATT, but in practice it has been subject to a range of special provisions which have meant that the fundamental disciplines of GATT have not applied to agriculture as clearly or as strictly as they have to other areas of trade. The waiver granted to the United States in 1955 is a case in point.

By the mid-1980s, the costs of agricultural support had grown to unprecedented levels. The OECD estimates that the costs reached about $290 billion in 1987. Many developed countries had in place extensive and complex systems of support which, combined with increasing productivity and stable demand, led to the emergence of substantial surpluses.

That is why agriculture must be part of the Uruguay round, and I am sure that hon. Members will not argue that one could have a GATT round without agriculture being part of it. But we need real progress towards substantial, progressive reductions in agricultural support and protection, sustained over an agreed period, resulting in correcting and preventing restrictions and distortions in world agricultural markets. That is the agreed position of GATT.

Hon. Members will recall that I had to be sharp, particularly with the Germans and French, because, having agreed to that, the propositions that they were putting to the negotiating team from the Commission were clearly not meeting it. One cannot make the statement and then say, "We shall not change the CAP", or, "We shall not reach out to any of our partners in the negotiations." I fear that that was part of the problems involved in the recent discussions in Luxembourg and Brussels.

But there was a second aspect which many people missed. We spent too long pretending that the GATT round would not come about. I am amazed at the degree to which people, particularly in this country, had not faced up to the issues. Opposition Members will agree that, in our discussions with people in the countryside, we found that farmers and non-farmers alike had no idea what GATT would mean for them, for the rural community and for the consumer. None of that had been brought out into the open, and some of the organisations which represent farmers and others should have got the issues on their agendas much earlier.

The difficulties involved in grappling with agricultural reform are obvious from the long arguments that we have had in the Community. But I hope that we recognise the strength of the position that we have now proposed. I cannot propose in the world forum anything that would do down Community farmers as against other farmers in the world.

We must have a basis of measurement that is fair. An aggregate measure of support is vital to any proper solution. It casts doubt on the credibility of some of the proposals when one sees how long it has taken some of our partners outside the Community to feel that they can accept an agreed measure of support. They were suggesting that their form of support did not count, but that everybody else's did. There is still too much of that attitude in the propositions that are being presented, especially from the other side of the Atlantic.

That support, measured on an aggregate basis, will be reduced by 30 per cent. over the 10 years from 1986, the start of the Uruguay round. That is not an artificial date that has been picked for the convenience of a specific nation—1986 is the year when we started to negotiate the round. It is the date from which the European Community recognised that if it was to give the sort of response to which it was committed under the Uruguay round, that would have to be put under way.

If the process did not start then, it would be too big a thing to ask of our farmers. Therefore, it would be wholly improper not to count in the calculations the significant amount, varying between 11 and 15 per cent.—depending on how it is measured—which has already been achieved as a result of the Uruguay round, not out of any other ulterior motive.

The provisions cover the period from 1986 to 1996 and will take into account what has already been done and the pain that we have already borne. It focuses on the level of support for commodities and, above all, it faces the fact that the European Community has an integrated system, parts of which cannot be dissociated from others.

Some people are attracted by the views of the United States, which suggests that we should do something special about export refunds. We can do much to ensure that export refunds are affected equally across the board by the 30 per cent. reduction. Some fear that reduction will not have the same effect on export refunds as on the other parts of the CAP and that, in other words, we can make it much more transparent. The idea that the whole system can be distorted by a special operation relating to export refunds is advanced only by those who do not understand the system. We must take that point seriously.

In any case, our proposals lead to other changes in the CAP. They will mean a switch from a variable levy to a new system of charges on imports from third countries, together with the "rebalancing" which is a sort of Community code. I wish that we could have a group of people in the House who could prepare what I would call "real English" rather than "Euro-English" for some of these phrases. We get so used to using this language that we forget that the majority of people could not possibly understand what "rebalancing" is. In fact, it would even up the present level—[Interruption.] I am prepared to be anti-anybody if I think that that person is wrong. That is why I am so often anti the hon. Member for Bolsover—he is wrong so often. I should like our language—real English—to dominate and not some pseudo pidgin English, which we encounter all too often.

The hon. Gentleman does not like the word "communautaire". Perhaps he could give me a good alternative. He has been giving the Prime Minister some good ideas, so perhaps he could do the same for me.

In addition, it has been accepted that there will be a category of policies that will not be subject to the programme of cuts. That has come to be known as the "green box". This country must ensure that we provide help for farmers for environmental reasons. We must keep sheep and cattle in the hillsides because they are crucial environmentally. We must also ensure that the costs of caring for the countryside and of improving the countryside are fully met. That, too, may mean extra help.

We must recognise that Britain has been the leader in this area. Britain's environmental proposals have all-party support. My right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling) put such proposals to the Community when Britain had the chairmanship. Those proposals have now become the basis for most countries' environmental activities. The establishment of environmentally sensitive areas represents one of the major changes in the environmental package in Europe and elsewhere. There are also many other measures that can be used as a means of enabling the farming community to carry out one of its major jobs, which is to look after the countryside.

Does the Minister agree that, given the drop in market prices for livestock in the past 12 months in Britain—especially in the beef and sheep sectors, in which there has been a drop of 25 per cent. in some cases—although the environmental support measures are welcome, the resources that are provided are insufficient to make up for the drop in market prices for the livestock farmer?

The hon. Gentleman has raised a crucial point. We all agree with the burden of his comments, but I am surprised that he referred to "the drop in market prices … in Britain". The first thing that we must recognise is that there is a drop in market prices throughout the Community. We must be careful not to isolate the British agricultural position from that in the rest of the Community. This is a Community problem. The drop in prices is a European and, indeed, a wider problem. The hon. Gentleman should be careful about making that direct link.

I hope that the hon. Gentleman will accept that in every area in which I can do so under Community rules, I have sought to help the less favoured areas. The hon. Gentleman is a member of a party that is inclined to refer to its "communautaire" nature, but I notice that his party is communautaire in general but rather nationalistic in particular. Perhaps we should be common in both regards, which is what I try to be.

The Community is putting forward a tough package but it would be phased in over a number of years and that would, I believe, allow farmers adequate time to adjust. It will mean continuing price cuts. Those will, I appreciate, come on top of several years of pressure on farm incomes—not least in the United Kingdom where profitability has been at historically low levels for most farm enterprises. The House will also know that the United Kingdom has strongly and consistently supported the Commission proposal since it first emerged in September.

Our reputation in the Community has been enhanced by our willingness to take that Communautaire stand. I have been less than pleased by the attitude taken by some people in this country, who are sometimes inclined to attack the Government for not taking such a stand, but who have then complained about it in the very area in which we have taken such a stand, and to such effect. There is no doubt that, in all essentials, this package is what was proposed by the Commission in the first place. Without Britain's support, that would not be the case and we would not be able to start the negotiations.

I must explain why we think that this is essential. It is a coherent proposal, which covers all that it ought. It is a realistic proposal and is the minimum that stands a chance of being negotiated. The United Kingdom must face the fact that the United States and the Cairns group have asked for what appear to be more radical goals—of a 75 per cent. reduction in internal support and a 90 per cent. reduction in export subsidies. However, that is very much less than it appears.

I hope that the United States has now stopped the megaphone diplomacy that has characterised its approach so far. Headline totals are not what they seem: they do not cover the same range, or start with the same dates, and they contain curious information about income aids and deficiency payments. Although some aspects of the proposals may be helpful and, although if one examines the two sets of proposals on a common basis, one finds that they are much closer than those who pursue megaphone diplomacy would have us believe, there are significant differences. The United States has put forward proposals that are closely allied to its own interests in such a way as to suggest to some of the popular media—which may not have had time to read the proposals in detail—a world view or a special moral position.

We should remember that the United States is trying to treat its deficiency payments solely as internal aid despite their impact on exports, and virtually to abolish export subsidies—a position that is perfectly acceptable to the United States because it does not make much use of such subsidies. But support under deficiency payments will have exactly the same direct effect on the cost of products in the market. Whether one gives £100 in deficiency payments or £100 in export subsidies, the potential export price will be diminished by £100. One cannot ignore that; it is a clear economic fact, and anyone who suggests differently is suggesting that the British farmers should be disadvantaged vis-a-vis their mid-western counterparts.

There is one important issue that divides the Government and the Opposition: the Opposition have sought to disadvantage British farmers by accepting the mid-western farmers' proposals. This Government and this Minister will not disadvantage the British farmer, and I hope that every farmer in the country knows that the Opposition are determined not to fight for a level playing field to enable the CAP to be regarded on equal terms with the United States proposal.

If we are to pursue the negotiations, our major partners must realise that they have set their sights too high. They have done so because their farming is different from ours. One can leave aside large tracts of prairie without causing great concern to environmentalists, townsmen or suburban dwellers. We cannot do that in the United Kingdom or the rest of Europe. Most of our countryside lies within 15 miles of a major town and we cannot leave it to go to rack and ruin. Our farmers must be able to gain sufficient resources from the market and support to enable them to look after the land.

If we are not prepared to go as far as some would like, it is because we are not prepared to betray our countryside. However, we are prepared to go as far as we can, bearing in mind our farmers' difficulties. We are determined to do that without dismantling or abandoning the CAP, because freer market conditions are necessary for our farmers to prosper. In addition, the advantages that will flow to the rest of the economy are essential if we are to give our farmers the support that they need. The support that farmers need must come from somewhere and it cannot come from a nation whose trade, industry and services are debilitated as a result of protectionism.

The success of the GATT round is important to farmers directly because it will open up the market and indirectly because it will enable them to operate within a Community that is rich enough to pay for the environment that it demands. We cannot expect our farmers to enter the next five years without some reduction in support, and the support provisions therefore need to be considered most carefully. But if we are to provide extra help or to reassess the way in which we help farmers, we must do so on a fair basis.

As I said at the outset, we want a level playing field; we want the Community of which we are a member to be on equal terms with the rest of the world. It is also vital that we should have a level playing field within the Community. I am not prepared to accept discrimination between the countries of Europe, however much it is dressed up as rural help of one sort or another, although I accept that it is necessary to give help in certain circumstances.

One important change that we discussed has not been sufficiently noted. The French farming leaders have suggested that France and Germany failed to secure the changes for which they hoped, and I believe that they are right. But Britain secured one important change in two separate parts of the negotiating brief—the introduction of the word "non-discriminatory" in both the negotiations and in the measures introduced by the Community following the GATT round. We were absolutely right to do that.

The Council has pressed the Commission to come up with assurances that cuts in market support will be accompanied by measures to offset the impact on certain regions and certain groups of producers. The Commission has to make formal proposals and the Council will then debate them and reach decisions in accordance with the normal procedures. The first proposals may emerge very soon—possibly before the end of this year—and, to judge by indications given so far, we shall have the further development of certain schemes such as set-aside and extensification. New measures may be proposed. The process would not amount to a complete transformation of the CAP but, rather an evolutionary shift towards more direct and targeted payments.

What would be the implications for British farmers if the Community's proposal were implemented? It would mean lower levels of support and some shift in the balance between support given through management of markets and support given by direct payments.

The support reductions need to be seen in their proper perspective. I fear that percentage targets set by the Community and elsewhere cause more alarm than is justified. We do not yet know how cuts will fall or what their main effects will be. That will have to be discussed by the Community.

The European Community has entered into the GATT round with every intention of making it a success. I believe such success to be vital for the whole country—consumers, manufacturers, commercial people and agriculturists alike. We cannot afford to fail. The success of the round is essential if we are to achieve the increase in world trade that will so greatly improve opportunities for all our people.

It is especially important for our farming community that we secure an agreement which enables it to continue to look after the land and to provide the food that we need but which also brings it closer to the market and so gives it new opportunities. Only a richer, more effective trading community can create the wealth on which support for our farmers can be based.

I give farmers and the House the pledge that in these negotiations the Community, fully supported by the United Kingdom, will negotiate for a fair deal in the world for Community farmers. It will also negotiate for the same sort of deal for Community industrialists, manufacturers and traders. I also pledge that the United Kingdom's continued and constructive aim and utter determination is to ensure a fair deal for British farmers in the Community itself. That can be achieved only if the changes in support systems and the reorientation—to use another horrible Euroword—in the CAP are on the basis of equality and non-discrimination and aim at preserving competitive agriculture.

There is no place in Europe for a policy which suggests that we should solidify, stratify and significantly ossify agriculture in its present state. That is not the way to compete with the rest of the world, to protect our food supplies should there be a future shortage, or to give British farmers a fair deal. It is not the way to ensure that the consumer gets good food at reasonable prices.

The GATT round is a necessary part of the liberalisation of trade and of the improvement of agriculture. It must be followed by changes in the common agricultural policy which adapt but do not destroy it and which ensure that Britain's farmers continue to have a fair deal in the world for their products. It must also ensure that our farmers have the kind of support which protects their non-discriminatory position in a Community that is constantly inclined to look backwards to older methods and circumstances. We need competitive agriculture that is properly protected so that the environment can be looked after by the only people who can do it, those who have contributed so much to our landscape and our nation, Britain's farmers.

10.21 am

I shall begin by agreeing with the Minister. That comes naturally to the Opposition when we understand that unity is required. I wish him well in the negotiations because we want them to succeed. The House will agree that GATT has served the world well for the past 40 years. In that time, we have seen the global economy grow consistently at a rate of 4 per cent. Trade has grown even faster, at a rate of 6 per cent. That success has meant that a repeat of many of the worldwide depressions that occurred in the years prior to GATT have largely been avoided.

As we move to update GATT under the Uruguay round, success is vital. As the Minister has reminded us, failure in negotiating this round would mean disaster for world trade and international relations and would be especially damaging to the British economy. Failure would lead to extra protectionism, and that would be accompanied by reduced exports and increased unemployment. I am afraid that Britain will be among the worst affected. Our interest rate is 14 per cent., the highest among the G7 countries. Inflation is touching 11 per cent. and 1·7 million people are unemployed. Only yesterday, we heard that the balance of payments deficit for October was £1·1 billion. For the last full year that deficit was £23·8 billion.

All independent economists agree that our economy is already in recession. Failure in GATT will make the position even worse. I say without pleasure that the Uruguay round may fail. Carla Hills, the trade representative of the USA, recently warned OECD members that trade wars could break out if substantial agreements were not reached in financial discussions later this month. A trade war between the United States and the Community would have catastrophic effects not only on us but on the wider world.

It is ironic that, at the very moment in post-war history when the barriers between east and west are coming down, we may be erecting new trade barriers and creating other blocs in the world. Increased protectionism would be especially damaging to the economies of the developing countries and to the emerging democracies of eastern Europe as they emerge from their communist past into a more democratic future. The rightful aspirations of the people of those countries can be met only by an expansion of world trade. For all those reasons, we cannot countenance failure in the Uruguay round.

We appreciate that there are many difficult issues, some of which were raised by the Minister. We appreciate that there has to be a trade-off, not only between nations and blocs but between the developed and the underdeveloped countries. We want to gain some benefits and so do they. We recognise that issues such as intellectual property rights, services, textiles and cars are difficult. However, as the Minister rightly said, the key to the whole round is agriculture because, in a sense, that sphere of activity has not been covered by GATT as tightly as other spheres in the past 40 years.

A liberalisation of world agricultural trade is vital. In that sphere protectionism is rife, with the result that the economies of many developing countries are suppressed, leading to the excruciating poverty that we all abhor. Something must be done. As the Minister also said, in general terms or, to use the American expression, in ball-park terms, the Cairns group, representing 14 agricultural exporting countries with a population double that of the EC and the United States combined—that is an amazing statistic—has suggested that all agricultural support should be swept away. One of the countries in that large group, New Zealand, has just done that.

As the Minister said, in the same headline terms the United States has suggested a compromise position of a 75 per cent. reduction as a generality. The EC is entering the negotiations with an offer of 30 per cent., half of which has already been achieved. I listened carefully to the Minister who said that that was our starting position. Am I right in thinking that, during the course of the negotiations, that percentage may change? It will have to change if we are to be successful.

I would not like the hon. Gentleman to be misled. If I use the term "starting position", it is because it is precisely that: we have started with it. I do not think that there is much elbow room there. If the hon. Gentleman thinks that our farmers will be able to accept very much more than that, he has spoken to different farmers from those to whom I have spoken. We are battling for that, because the Community is already greatly stretched in its proposals.

The Minister said that the proposal was the minimum which stood a chance of success in the negotiations. Those were his precise words. We must contrast that with the statement by the American secretary for agriculture that that bid was not even in the ball-park, to use his colourful jargon. We are in a serious position. Before I explain our specific approach, I remind the House of the declaration of intent signed in Uruguay in 1986 by our Government and more than 100 other Governments. It said:

"There is an urgent need to bring more discipline and predictability to world agricultural trade by correcting and preventing restrictions and distortions."
We should have pursued that stated intention with vigour, and taken the opportunity of these GATT talks to achieve a fundamental reform of the CAP, which does not serve well either the consumer or the farmers, who are so beloved of the Prime Minister.

I do not understand why Conservative Members shy away from reform; the National Farmers Union, of all bodies, has come out in favour of a fundamental reform of the CAP, so it is not a belief held only by the Labour party. Hon. Members know that the CAP is nonsense. It is not a viable or sensible way to support agriculture. How can we defend a system in which it has been estimated that at least £6 billion a year is lost through fraud?

As Agra Europe pointed out in June:
"the policy is so full of absurd and lavishly financed mechanisms designed to support every small or large, real or imagined weakness in the market, that it is often possible to make large profits merely by moving goods around rather than actually buying and selling."
That is nonsense and simply crazy. It is the only system of agricultural support in which the taxpayer pays a subsidy to farmers only to have to pay for food in the shops at a higher price than if the subsidy had not been paid in the first place. It is an "Alice in Wonderland" scenario.

Is my hon. Friend aware that one of the consequences of the European agricultural policy is the dumping of food exports on Third-world countries, with devastating results for their production capability, and investments in agricultural infrastructure?

As always, my hon. Friend has drawn the attention of the House to an important point, and one that I hope to develop in a moment or so. I am grateful that he has reminded us of a further folly of the CAP.

It is beyond the ken of Labour Members why the consumer should pay such high prices. Why should sugar be anything up to four or five times the world price? Why is wholesale beef costing four times the world price. and why are dairy prices double the world price? It does not make sense.

I am sorry to interrupt the hon. Gentleman, but I hope that we can clear up some or our difficulties in this debate. Does the hon. Gentleman agree that the concept of a world price when there is so much subsidy throughout the world is an artificial one? If we did not have subsidies, the so-called world price would rise considerably. Saying to the consumer that he is paying four times the world price for something suggests that, without subsidies, he would get the product at a quarter of the price, but he would not. Either the food would not be there, or it would be there at a higher price. There are other mechanisms, but that one is particularly misleading.

The Minister is right to say that, if the largest export subsidiser in the world—the CAP—stopped its export subsidies, world prices would rise, because world prices are low—for the poignant point made by my hon. Friend the Member for Islington, North (Mr. Corbyn), that the EC dumps, at a great cost to the taxpayer, so much on the economies of other countries. I shall return to this point later and he Minister may want to intervene again.

The OECD estimates that the cost of the CAP was £52·6 billion in 1989. Last year, the average household of four in the United Kingdom, according to the Government's National Consumer Council, was paying £14 a week more than it should have been towards the cost of the CAP—£8 in higher food prices and £6 in tax—and the figure for this year will be even higher. I remind the Minister that the burden on the poorer families who spend a larger proportion of their income on food is greater. That is simply unfair.

The 1990 EC budget for agriculture allows for an increase in subsidies to 26 million ecu. Even one of the Minister's advisers, Mr. Carden, admitted only last week at a conference in Harrogate that it would be difficult to keep the system running at the present support level because the CAP is simply grossly inefficient. For every £10 spent on agriculture support, only £4 goes to the farmers.

That is the weakness of the system. The hon. Member for Sherwood (Mr. Stewart) speaks like the farmers. Joking apart, he has a good point. The farmers produce food and look after the countryside. When the taxpayer pays £10 for agriculture support but the farmer gets only £4 of it, we want to know why the other £6 goes for storage, destruction and export subsidies. I cannot understand why, if Conservative Members so clearly agree with our logic, they cannot bring themselves to tell the Minister to back the NFU and the Labour party and to press for some fundamental reforms in the CAP.

What does the Labour party propose to do about the agricultural surpluses of Europe—burn them?

I shall come to that point. The real point that needs to be made is that, when the CAP was designed, we were not an exporting Community, as Mansholt, the architect of it, recently made clear. We need to devise an agricultural support system that allows us to avoid creating surpluses, because surpluses cost this country dear.

As the hon. Member has invited me to support his policy, will he, in simple terms, answer my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin) and tell us exactly what he proposes to do and how what he proposes to do will be accepted by the European Community? We can all make propositions, but how does the hon. Member expect the other 11 nations to take this proposition? Which of them does he think will support it?

As always, the Minister raises real issues, and I shall try to deal with them. Neither the Minister nor the Prime Minister were successful, because she had a golden opportunity in February 1988 when the veto did not apply, and the CAP was legally bankrupt. We could have dictated our terms, and the Prime Minister went with the intention of doing so. I remember the economic brief, circulated by the Treasury at the NFU annual general meeting, in which the Prime Minister pointed out the cost of the CAP to the average household of four. She backed down late on the Sunday evening and left us with a tinkered-with system that is not working and will not work. The Treasury economic brief disappeared from the scene and we cannot get hold of it any longer. I shall return to the point about our proposed reform of the CAP later.

The key point that the hon. Member for Sherwood allowed me to make is that we dump our surpluses in the world, wrecking the economies of developing countries. The EC Court of Auditors report this year said:
"Over the past two years, the subsidised export of agricultural produce to countries outside the Community has replaced intervention storage as the principal instrument by which the Community maintains the equilibrium of the internal market. Export refunds have superseded public intervention stores as the keystone of the price guarantee system under the Common Agricultural Policy."
Despite the much-vaunted reforms of the CAP over the past few years, such as the introduction of milk quotas and stabilisers, the CAP is out of control again. We have spent a large sum on export subsidies, but, despite that, and in addition to it, costs are increasing again. The Minister has had to admit that he will have to overspend by as much as £410 million on the CAP and the intervention board this year. If costs this year and for the next two years are added together, we shall have to increase expenditure on intervention by almost £1 billion.

Despite our huge subsidies on exports, we still cannot get rid of our agricultural produce. There is a major increase in intervention stocks. Between October 1989 and October 1990, there was a doubling of the EEC's stores of butter, a fourfold increase in the amount of beef in storage and a 68-fold increase in the amount of skimmed milk powder that is in store. That is crazy.

Even if we sweep aside financial constraints and economic considerations, the CAP has not achieved its stated objective of retaining those who work in agriculture in the countryside. In 1957, there were 15 million farmers in the original six member states. There are now only 5·6 million farmers. There has been a 62 per cent. decline in their numbers. We in Britain have suffered a similar decline. On every day since the Prime Minister took office, six farmers have been forced off the land and 16 farm workers have lost their jobs. I do not regard that as a very successful agriculture support system.

I gave the figures and the hon. Gentleman should have listened.

If we consider some of the broader perspectives of the CAP we find further oddities. For example, it is ludicrous that 4 per cent. of the CAP's budget goes to both tobacco and vegetables when tobacco is seen to cause cancer and vegetables are believed to help prevent it. The system is faulty in economic terms, in retaining a rural population and in producing healthy foods.

Faced with that, I should have thought that any Government, especially a British one, would have taken the opportunity of the GATT negotiations to put pressure on our EEC colleagues to engage in a major reform of the CAP. Unless we do so the problems will become greater. Unless we succeed, a subsidy war will break out between the United States and the EEC, and the result will be an even more expensive CAP.

This is where the Labour party opposes the Government's approach to the GATT agriculture talks. The Government have failed to grasp the significance of the linkage between CAP reform and the GATT. Despite the condemnation of the Minister, the Government have slavishly followed the United States' linear approach to the problem by examining only how we can minimise the subsidy cuts. It is not surprising that they have been negative.

The Minister made some derogatory comments about the American deficiency payment system. Why has he not been considering the possibility of introducing deficiency payments in Europe? That might be a much more effective. way of providing food at more reasonable prices for the consumer and of providing support for farmers. The system worked well until we entered the EEC. It has not, however, been costed since. It is said that such a system would cost too much, but, remembering that three areas of agricultural support might have to be reduced, why do not we consider the possibility of deficiency payments to ascertain whether they constitute an option? I do not know the answer because the Opposition have been unable to carry out the costings, but the Government have the necessary facilities. They have computers and they could undertake the computer projections. Let us have some statistics.

In effect, the hon. Gentleman says, "Why?" I shall tell him. He knows that there is no point in putting forward propositions that are unacceptable to every other member of the Community. He knows that Britain, in supporting the Commission, managed to secure what I outlined in my speech only after seven extremely long meetings. We did so in the teeth of opposition from most other member states. The hon. Gentleman puts forward a preposterous proposal that is not acceptable to any other member state. That shows how out of date the Labour party is. It could not negotiate within the European Community and, thank God, it will not have the chance to do so.

I recall hearing it said in the House yesterday, and I read in "Today" this morning, that the Chancellor of the Exchequer was urging the hard ecu proposal for the reform of the monetary system in Europe. I recall it being said that when that proposal was first made the United Kingdom was in a minority of one. However, there had been careful costings and the necessary homework had been done. The Chancellor of the Exchequer said that the Government had been able to prove the strength of their case and would have a fair wind in the Community. Why has not the Minister tried to persuade our European colleagues as the Chancellor of the Exchequer did? It is not good enough merely to attend trade lunches and be offensive to our neighbours. That is not the way to persuade them to vote for us. Why have not the Government considered seriously the production entitlement guarantee proposal? That system would give farmers a guaranteed price for a set amount of production. It is a mechanism in which deficiency payments could be used yet again. The amount to be subsidised would be limited and, therefore, the price could be contained. In that way food prices could be brought much nearer to world levels.

Why does the Minister—I use Sir Simon Gourlay's phrase—hit the roof every time the NFU suggests the supply side management of agricultural support? The Opposition recognise the weakness of the approach with its dangers of ossification and rigidity, but at least the NFU has produced some positive ideas and is contributing to the debate. At the same time the Government are purely negative and content with only a damage limitation exercise. By following that line the Government are selling the country short. They are doing farmers a disservice in the long term and costing consumers dear.

The Labour party believes that farmers need to be supported financially. We believe, as does the Minister, I think, in a thriving countryside. We consider that that can be achieved only by having farmers living and working in it. Without farmers the countryside would not be as we like it or as we see it today. To achieve those objectives we must move away from a purely market-supported agricultural system. The Opposition have put forward proposals for the payment of a green premium to farmers who are prepared to do their work in an environmentally friendly and positive mariner. That means that we would start the process of decoupling public subsidy from production.

I was delighted to see our views endorsed, in effect, earlier this month by an authoritative report commissioned by the much-respected World Wide Fund for Nature and the Council for the Protection of Rural England. The report supports the main thrust of the Opposition's case that cutting prices paid to farmers would lead to environmental degradation, even more farm bankruptcy and rural depopulation. The report's conclusions are basically the same as ours. A section of the report states:
"The budgetary cost is large and set to rise; the benefits to farmers are at the expense of consumers and taxpayers; price support, the chief instrument of the Common Agricultural Policy, is an inefficient way of supporting farm incomes: and current policy instruments frequently encourage and exacerbate those aspects of farming which damage the environment."
We agree with those conclusions. The Government should be arguing for a policy reform along those environmental lines.

We do not believe that food production should be rewarded by the market alone, although I cannot help a wry smile when I hear the Minister talk about that. What does he mean by the market? Does he mean the free market or the largely subsidised market? I think that he means the subsidised market. We cannot argue that we should leave it to the free market; the whole system would fall apart.

Public support for farmers should be focused on the environmental factors that the market cannot meet. A Labour Government would develop an environmentally based system of payments to farmers that would be integrated into wider agricultural policies. There would have to be a transitional period, and there would have to be payment for production during that time. Specific arguments might be made for farmers who wish to switch towards more benign methods of food and animal production, or who produce healthier food. Such a scheme would have to be phased in, but we could start by extending the environmentally sensitive area concept that has worked so well and has received support from both sides of the House. Such a scheme has been shown by the CPRE, the World Wide Fund for Nature and the Countryside Commission to be a much cheaper system of supporting farmers than the current one. As the hon. Member for Sherwood again pointed out, only £4 out of £10 goes to the farmers. The current system is inefficient.

The Uruguay round provides the opportunity for reform, and it must succeed. It is inevitable that subsidies to support agriculture will be reduced, so we must try to achieve reform. It is necessary to support farming on the grounds of both food production and the environment.

We are pressing for a sensible reform of the CAP which would enable us to reduce the amount of public subsidy for farmers while not reducing the actual amounts that they receive. By that means, we can achieve an agreement on GATT that will benefit the service, manufacturing, and other industries which make up 97 per cent. of the gross domestic product of the European Community.

10.52 am

The crucial subject of the GATT round, with particular reference to agriculture, appears to have come to our attention somewhat late. We, as interested Members of Parliament, should have been briefed about and had our attention drawn to the importance of the subject many months ago. The National Farmers Union, which has been rightly concerned about the immediate profitability of agriculture, has lamentably failed its membership in this matter. I am sorry to be critical of that organisation, but it is reasonable to say that if the GATT round were to fail as a result of the obduracy of the European farmers and, for that matter, the American trade negotiators—I suspect that both groups need their heads knocking together—agriculture will be held to be responsible for a serious reduction in world trade. I have heard that$3 trillion is at stake in the GATT round.

I am no great expert on trade matters, but on such an occasion it would be wrong not to declare an interest. All the outside interests that I declare in the Register of Members' Interests will be affected, in some way or another, by the outcome of the GATT negotiations. I suspect that all hon. Members with outside interests will be in the same boat.

To say to our beleaguered farmers that they must take a cut in support is a serious political proposition. I listened with some care to the hon. Member for South Shields (Dr. Clark), but I must admit that I should not know what to say to my hon. Friend the Member for Sherwood (Mr. Stewart) about the planning of his farm. The Opposition spokesman left him in no doubt that on the one hand the CAP should be abolished, while on the other it should be reformed—and at the same time my hon. Friend must grow environmentally suitable crops, whatever they may be. We have not yet been told.

There has been a chronic decline in farming profitability. Since 1977, farm gate prices have risen by only 60 per cent., compared with a rise in the retail prices index of 150 per cent. Real farming income has fallen by an average annual rate of 2·4 per cent. since 1979. High interest rates and inflation, the premium on vacant land, persistent green pound short-changing and poor marketing power against the supermarket giants have all contributed to that decline. One-off factors, such as the food scares that affect consumer confidence, new competition from eastern Europe, disruptions in the French lamb market, the drought and the Gulf crisis have all added to the woes of our farmers.

The Select Committee on Agriculture, which I chair, has just visited the United States of America and Canada, and their farmers are in no better a position. Canadian farmers have suffered a drop of 50 per cent. during the past two years in the real price of their products. We have considerable sympathy for world agriculture. The Cairns group has a clear and specific objective, which must be understood in the context of the geography of the world.

The fact remains that wheat can be grown in Canada and Australia far more cheaply than it can be grown in northern Europe. Beef can be produced in Australia and the Argentine more cheaply than it can in northern Europe. In fact, almost every basic commodity can be grown more cheaply outside this country, and then imported, than it can be grown in Britain.

The only alternative for Governments is to find a way to support the farming industry—that is, if we believe that it is important to have that industry. I find it extraordinary that, yet again, I am having to argue that we must support our agriculture. We have been on the brink of starvation twice this century. It is somewhat righteous to argue that that cannot happen again, because until the events in Iraq apparently there was no necessity for armed forces. Hon. Members should just think about the size of the Army that we have sent to the Gulf. I do not believe that, for strategic reasons, we should be wise to allow our agriculture to move into a state of total decline.

We must take into account the social aspects of the CAP—a policy that I have always thought to be more social than agricultural. It was designed to keep prosperity and people in the countryside, whether they be the hill farmers of Scotland or the olive growers of southern Italy. Without assistance, the countryside of Europe will collapse from one end to the other.

The hon. Gentleman made valid arguments about keeping jobs in agricultural areas. Does he agree that the same arguments apply to textile areas? Is not it important, for social as well as for economic reasons, to keep the textile industry buoyant and developing?

The hon. Gentleman has pre-empted a point that I had intended to make. The multi-fibre arrangement is extremely costly; it supports his constituents at a vast cost. We have to decide whether we provide such support, or whether we do not. The Labour party cannot support the multi-fibre arrangement and oppose the CAP. That would be illogical. If it supports both, that is a different matter.

When the hon. Gentleman answers the point raised by my hon. Friend the Member for Bradford, South (Mr. Cryer), will he also comment on the balance between support for agriculture and agricultural workers and the support given to those who work in the textile and other industries? Is not it true that currently more than half the budget goes to agriculture, with only a small percentage going to other industries?

I am happy to reorder my comments to deal now with that aspect.

The National Consumer Council issued a brief stating that the average increase in retail prices as a result of the multi-fibre arrangement is 5 per cent. That affects the lower-paid in particular, because cheaper garments are very often those that they purchase. One of my companies imports more than £400 million a year of textiles from abroad, and that cost is translated to about £28,500 per worker in the hon. Gentleman's constituency.

Does my hon. Friend agree that there is no use telling a housewife living in any textile area that she may enjoy a reduction in the cost of the items that she must buy for herself and her husband if they have both lost their jobs?

It being Eleven o'clock, MR. SPEAKER interrupted the proceedings, pursuant to Standing Order No. 11 ( Friday sittings).

Fishing Vessel (Sinking)

11 am

(by private notice): To ask the Secretary of State for Defence if he will make a statement on the sinking of the fishing vessel Antares from Carradale, with the tragic loss of four lives, following an incident involving one of Her Majesty's submarines.

At approximately 02.40 yesterday morning, the Royal Navy submarine HMS Trenchant reported that whilst operating submerged in the Clyde area, certain unexplained sounds on her starboard side led her commanding officer to believe that she might have snagged the gear of a fishing vessel. The submarine therefore surfaced and conducted a visual search of the area, sighting two fishing vessels some 3,500 yds astern. The crew recovered a length of trawl cable from the casing and, believing that she may have snagged the gear of one of the vessels sighted, attempted to make contact on VHF radio. The fishing vessels did not reply.

The Royal Navy then advised the coastguard, who also tried to make contact with fishing vessels in the area, but without success. The submarine remained on the surface for some two and a half hours in good visibility and, as it appeared that the fishing vessels were in no difficulty and that there were no other untoward signs, she continued her operations before returning to Faslane.

Following the call from the Navy, the coastguard initiated inquiries in an attempt to account for all vessels that may have been in the area. During the course of the morning, it was established that the fishing vessel Antares, a 16 m pelagic trawler from Carradale, with a crew of four, was unaccounted for. A search and rescue operation was initiated immediately, and I can now report that the Antares was discovered on the sea bed at 03.40 this morning in the area in which Trenchant reported the previous night's incident.

The search for the crew continues but, sadly, it now seems extremely unlikely that they will be found alive. This is of course a tragic loss for the small community of Carradale, and I know that the whole House would wish to join me in expressing the deepest condolences to the families of the four men. The crew of Trenchant and the entire submarine community are also, I know, shocked and deeply saddened.

The Department of Transport will of course be conducting a full inquiry into the incident, as will the Royal Navy, and I would not wish to speculate on the outcomes at this stage. Royal Navy submarines have been operating in the Clyde area for more than 80 years, with an excellent safety record. Fishing vessels are almost always present in the areas where our boats operate, and submariners are accustomed to maintaining a constant and careful watch for them. I believe that our record and our safety procedures are excellent, but we will of course look carefully at the results of both inquiries to see what lessons can be learned from this tragic accident.

I am grateful to the Minister for expressing his sympathies, in which I know the whole House shares, to the wives and families of the crew members who have been lost. The shock and sorrow is very real in Campbeltown, and particularly in the small, tightly-knit community of Carradale, where the boat came from.

I welcome the announcement that there will be a full and extensive inquiry, and I hope that we will receive an early report. Meanwhile, will the Minister suspend submarine operations in the firth of Clyde, because this is not the first such incident? Will the Minister acknowledge that I and other Members of Parliament representing constituencies in the firth of Clyde area have repeatedly asked the Ministry of Defence to devise a solution to the danger that the accident highlights? There are various options for allowing submarines to identify fishing gear, which often swings a considerable distance away from the position of the fishing vessel itself. I have myself discussed the matter at length with Navy personnel, and they have worthwhile ideas on how to overcome that problem.

Will the Minister explain why the rescue services were not alerted earlier? Finally, it would help the bereaved families enormously in their sorrow if the Navy were able to refloat the wreck, which I believe is lying in 80 fathoms of water, so that the bodies of its crew members can be recovered.

I am grateful to the hon. Member. My right hon. Friend the Minister of Agriculture, Fisheries and Food, who is in his place, will report this exchange also to our noble Friend the Minister of State in another place.

We shall make every attempt to produce an early report on the incident. Delay is in nobody's interest, and we will ensure that that report is produced as soon as possible.

It would be extremely difficult to suspend Royal Navy operations meanwhile, as that would inhibit extensively the Royal Navy. The hon. Lady said that this is not the first such incident. That may be so, but in the 10 incidents involving the Royal Navy and the two involving the US navy since 1979, there was no loss of life, although two yachts were sunk in the Clyde area. The incident that I have reported is most tragic, but it seems to have been a freak accident.

The hon. Lady asked what can be done. We are reviewing the question of attaching bleepers to nets. The Ministry is sponsoring research by the Admiralty research establishment. Trials have already been undertaken, and more will be commissioned. The results so far have given us cause to be very pleased. That innovation could make a massive difference. At present, a submarine can only listen to a fishing vessel's engine noise. If bleepers are fitted to the cables themselves, that will make a major difference to safety. We will place all the emphasis that we can on continuing research into that aspect from here on.

We certainly have plans to recover the wreck. Recovery vessels will shortly be dispatched, and we hope to discover more about what happened when the wreck is brought to the surface.

My hon. Friend will appreciate that everyone in Scotland is saddened by the incident. The submariners themselves, as well as fishermen, are deeply concerned, because they too are at risk from anything that can snag their equipment when they are operating below the surface. The inquiry should bear in mind not only the submariners' operational needs, which are paramount, but their safety.

My hon. Friend is absolutely right. I repeat: the submarine community is equally distressed, because submariners spend a great deal of time with fishermen during their training, and they regard it as a matter of professionalism to ensure that they do not become involved in such accidents. That matters very much to the submariners, and I know that they are deeply concerned and upset that the accident should have happened.

Campbeltown is only miles from Northern Ireland. Northern Ireland's fishing industry has a close working relationship with fishermen on the west coast of Scotland. On behalf of the Ulster Unionist party and our fishing industry in County Down, I extend sympathy to the families in Campbeltown who have been so sadly bereaved and to the whole fishing community there.

Will the Minister acknowledge that what has happened was forewarned? It was inevitable, as fishermen have been saying for several years. It was a tragedy, and it should not be dealt with lightly. It requires not only a specific inquiry into what happened in the firth of Clyde but a wider inquiry into the operation of submarines of the Royal Navy and the United States off the west coast of Scotland and right down the Irish sea.

The fishing industries of Northern Ireland, Scotland, the Isle of Man and the Republic of Ireland—for which, oddly enough, I can speak today—are concerned about the number of incidents involving submarines, of the deaths and losses that have occurred and of the increasing threat in the sea which is attacking all our fleets. I therefore ask the Minister to widen the terms of the inquiry to the operation of submarines in the Irish sea and the firth of Clyde and to report on how there can be better co-ordination between fishing fleets and the submarines of various nations.

I am grateful to the right hon. Gentleman for the sympathy that he sends the families, and I know that his views will be echoed by everybody in the House.

There have not been many incidents. It has been implied that submarines were involved in accidents with fishing vessels, but on investigation a number of those accidents were found to have occurred in water that was too shallow for submarines to operate in. We must be careful before attributing to submarines every accident that happens to fishing vesseles in coastal waters around Scotland or Northern Ireland, because that is not the case.

We shall see what lessons can be learned from the inquiry and what can be done to improve our procedures. We must be careful not to rush into saying that this has implications for all submarine activities. We must press on to make the position of fishing vessels safer. I have high hopes for the bleepers that can be fitted to nets.

We all sympathise in this most tragic incident and express sympathy for the bereaved.

As the Defence Minister answering this private notice question, my hon. Friend will confirm that the Royal Navy carries out the most scrupulous checks in surfacing and submerging and that, if necessary, he will tighten anything that needs to be done by the Royal Navy.

Does he agree that it would be wrong for the inquiry to concentrate only on the Royal Navy's procedures, because the procedures of fishing boats may also need investigation? For instance, the procedures for cutting nets may need to be improved. Will he confirm that the inquiry will consider the procedures of not only the Royal Navy but fishing boats?

Yes. I should like to confirm that there will be two inquiries. The Department of Transport inquiry will carefully consider the implications for the fishing industry, and the internal inquiry of the Royal Navy will be more concerned about whether the right responses were made in the submarine and aspects of what occurred.

The Royal Navy's submarines operate to the highest standards. The reaction of Trenchant, tragic accident though it may have been, was as the Royal Navy would have required: she surfaced and looked around the area to see whether anything could be done. It seems that the fishing vessel concerned had sunk so quickly that she was not visible on the surface.

Would not the submarine's detection equipment have identified in advance how many vessels should have been in the area? When it surfaced, it would have been absolutely clear that a vessel was missing. Therefore, will the Minister say how much time elapsed between the first awareness of the incident and the first contact with the rescue services?

On the point made by the hon. Member for Argyll and Bute (Mrs. Michie) about the temporary suspension of activities—we all understood the long-term problems of suspension—is not the submarine such a specific piece of equipment that, in the present international context, it is difficult to conceive that temporary suspension would cause any hardship?

I do not think that we can take that view, because it is important that our submarines keep training for an emergency. We would be running risks by suspending their activities. We must bear in mind the defence interests of keeping our crews properly trained.

The right hon. Gentleman said that the submarine should have known how many fishing vessels were in the area. That is the question that arises, but we must leave it toi the board of inquiry. Submarines are required to listen for engine noise and, as a result of being able to pick them up, to avoid fishing vessels. The inquiry will have to consider that point and why the submarine, if it was responsible for snagging the nets, had not identified the fishing vessel earlier.

I am afraid that I do not know the answer to that, but I shall write to the right hon. Gentleman.

Will the Minister confirm that this is another incident in a catalogue of catastrophes that have characterised this Government in the past 11 years? People will ask, if the Minister says that bleepers can be used to assist in operations and to prevent such incidents from taking place, why it is necessary to proceed with operations until bleepers can be fitted? Secondly, if there have been other incidents involving Irish boats and perhaps others, surely bleepers should have been fitted before now?

The whole business of bleepers arose on an earlier incident, and we have been pressing ahead to develop them in the light of that.

The hon. Gentleman said that this is a catalogue of disasters, but it is not. There has been no evidence——

This is hardly the time to discuss broader aspects of Government policy, and I do not think that this is the right context in which to do so. No loss of life has been associated with Royal Navy submarines prior to this, but we have pressed on with the development of bleepers, which offer an answer for the future.

May I first express sympathy to the bereaved and identify with the great sadness which yesterday descended on Kintyre? The Rev. Alistair Dunlop of Saddell and Carradale parish church said:

"Some tragedies can never be prevented, but this kind can. If it's a freak wave you can do nothing. If it is a submarine, you can."
Will the Minister recognise that fishermen working in waters off the west coast of Scotland and in the Irish sea have for too long had to live with this unnatural threat to their lives, on top of all the other dangers that they daily confront? Will the Ministry of Defence finally abandon denials and silences in order to recognise, and thus deal with, the persistent scale of this problem?

Will the Minister confirm that technology exists which has been researched in this country for submarines to recognise and thus avoid fishing nets? Will he confirm, in particular, that the Net Nay system, which has been developed by a firm called Sea Metrics, was discounted in March by the Department of Transport, presumably after discussion with the Ministry, on grounds of complexity and cost? As we mourn the loss of the Antares, does he agree that neither of those grounds appears adequate today?

Will the Minister accept the view of the secretary of the Clyde Fishermen's Association, with whom I spoke this morning, that the search for a solution has been retarded by the Ministry of Defence's refusal to admit responsibility for the problem—an attitude which, I regret to say, he appears to be perpetuating this morning by discounting the possibility of naval involvement in previous, as yet unexplained, incidents?

On the specific events of yesterday morning, will the Minister inquire closely into the response of the submarine Trenchant after its master became aware that something had indeed been struck? What breakdown in communications prevented the true fate of the Antares from being revealed during that crucial period? Why was it not recognised that where previously there were three fishing boats, only two were visible to her?

Will the Minister reconsider his response this morning and give an immediate undertaking, out of sympathy and understanding for the fishing families in the area and along that coast, to divert submarines away from recognised areas of fishing activity until measures can be introduced to safeguard against such tragedies? Never again must fishermen working in flat calm, diligently pursuing their livelihood in coastal waters, lose their lives in such circumstances.

The hon. Gentleman suggests that we should abandon our policy of denial. I stand here in the House making a statement precisely spelling out what happened but denying nothing whatever. The hon. Gentleman's comment was inopportune. On admitting responsibility, it must he for the board of inquiry to conclude who was responsible for the incident. I have outlined all the details of the case as I know them. In those curcumstances, we can reach our own conclusions, but it is impossible to say that it was definitely the responsibility of the submarine, because we do not know what findings the board of inquiry will make.

The hon. Gentleman asked whether we intended to admit to previous unexplained incidents. If we take that logic through to its conclusion, the Royal Navy would have to take responsibility for any fishing vessel which for some reason or other happened to be involved in a tragedy and sank, simply because no one else could be found responsible. That would be nonsense. We have gone into the most incredible detail in examining where our submarines were operating, whenever incidents took place in the past. If there was a submarine in the area, we have admitted it. But in some of the cases that we investigated, people accused submarines of sinking fishing vessels in waters which were too shallow for submarines to operate in.

We shall not admit liability for every fishing vessel that gets into trouble. I am afraid that there are cases in which fishing vessels go down with no explanation whatever. Such cases are great tragedies, but we cannot expect the Royal Navy to take responsibility simply because no other outcome can be found.

The hon. Gentleman said that, previously, there were three fishing vessels in the area and then only two could be found. I gather that such fishing vessels do not necessarily keep in contact with their colleagues in other boats. Fishing vessels can go down without people being aware of it. We reported back as soon as we possibly could. A search was carried out and the wreck has been found.

I am grateful to the hon. Gentleman for the sympathy that he expressed for the. families. We all share that sympathy in the House today.

General Agreement On Tariffs And Trade

Question again proposed, That this House do now adjourn.

11.22 am

I was being drawn by the hon. Member for Bradford, South (Mr. Cryer) on the multi-fibre arrangement. I misled him. I have had an opportunity to check my figures. The Silberston report estimated that the MFA costs United Kingdom consumers £980 million a year and that the cost of each job saved works out at about £29,700, which is three or four times the average earnings in the two industries. It would not be profitable for us to have a quid pro quo argument about it. If one has textile workers, one supports the common agricultural policy as long as one keeps in line on the MFA. There are similar arguments about the CAP and the MFA and about whether one should give a sector of industry special support.

I defend the CAP on the ground that it is not as costly or damaging as its critics would have the world believe. My right hon. Friend the Minister of Agriculture, Fisheries and Food spelt out that to compare current world prices with the price that the consumer pays is a wholly artificial exercise. I am sorry that farmers have not been swifter to make capital ,out of the accusations. Instead they have allowed them to become established as folklore.

Sugar has been mentioned. I work for British Sugar plc. We produce only half the sugar that we eat in Britain. We could produce it all, but we have various arrangements that involve supporting third-world countries. Some 5 per cent. of world sugar is traded on the world market and it is cheap. The Americans are in the forefront of protecting their sugar growers. They are an absolute model of protecting a sector of industry. I do not hear too much about them volunteering to undo those arrangements.

In my travels I have heard almost unanimous complaints from countries outside Europe about export restitutions. I have visited New Zealand on several occasions and I keep in close touch with its representatives. Only yesterday we were discussing its difficulty in operating on a world market with wholly unsubsidised agriculture. Perhaps I should remind the hon. Member for South Shields what happened to the Government who swept away subsidies in New Zealand. They were swept out of office. New Zealand's representatives rightly say that it is unfair for them to sell their butter on a world market subsidised by the taxpayers of Europe. They struggle to operate in that environment. I have some sympathy with that.

I did not get an answer from the hon. Member for South Shields on the problem of what should be done about surpluses. The National Farmers Union is technically correct to talk about supply management. I prefer to call it quotas because it is a simpler and more easily understood phrase. Quotas have worked for years for milk and sugar and previously worked well for hops. A quota system could be introduced for many commodities. I am sorry that the NFU did not subscribe to that view many years ago. It has come round to it only recently—so recently as to be disruptive in the negotiations that my right hon. Friend the Minister seeks to hold. If we could all agree that the problem of surpluses, not the concept of the CAP itself, causes difficulty, we could make progress.

The food industry has been incredibly slow to remind us how important export restitutions are to that industry. It happens to be a fairly strong element of our export contribution. Confectionery and biscuits are a particularly strong element. The proportion of the value of those goods represented by export restitutions has been demonstrated to be considerable. We must be cautious. I share the view of my right hon. Friend the Minister that our Community partners will not lightly change their political attitude at this stage.

I am reminded that 100 years ago the political debate was very much about protectionism. Indeed, the modern Conservative party, founded by Chamberlain, my great-grandfather and his friends in Birmingham in the late 19th century, was founded on the basis of protecting our manufacturing industry. In those days we were a protectionist party. As circumstances have changed and because we manufacture less, it has become in our interest to take a wholly different view.

I am persuaded by many of the arguments that a successful conclusion of the GATT round will be very much in the interest of not only Britain but all trading nations, especially third-world countries, which currently suffer such deleterious effects from constraints not only on fibres and food but on many other products where there are restrictive practices—none so severe as those of the Japanese and the Americans.

With considerable cheek, the Americans have asked for a huge reduction in subsidies when they are perfectly well aware of the political problems that we shall face even in achieving a 30 per cent. reduction in support prices. The Canadians take the rather more sensible view that it should be 55 per cent. We must bear it in mind that Canada currently subsidises transport and milk and plenty of other goods and services. Once one assists one part of agriculture, there is a knock-on effect on the rest of the industry.

Agriculture is our core industry. Historically it has always been disastrous to allow agriculture to sink into too poor an economic condition because shortly other industries follow. We must remember the lessons of history. One is that it is sensible and wholly in the national interest to maintain a viable and prosperous countryside and farming community.

11.29 am

Both opening spokesmen employed some competent arguments, but I disagreed with one statement which they both made. They said that farmers were there to protect the interests of the countryside. We should not let that assumption go unchallenged. In East Anglia there has been vandalism. In the counties in the north, dry walls are left crumbling. Everywhere we see tractor damage to our public highways and pollution of our rivers and streams by the farming industry. So that statement must be qualified.

I have always had an interest in agriculture, although admittedly somewhat low key. Older hon. Members will remember that the first Select Committee on Agriculture was created by the Labour Government under Harold Wilson. I served on that Committee with some Tory Members, and it was an exciting one. It is a matter of history now that the Labour Government abolished the first three Select Committees on Agriculture, on Science and Technology and on Education and Science—because we had the audacity to ask to go to Brussels to view agriculture abroad. George Brown, then Foreign Secretary, assisted in their abolition. It was left to the incoming Conservative Government rightly to reinstitute Select Committees, which are now firmly established.

I am sorry that the Minister of Agriculture, Fisheries and Food has left the Chamber. I have some sympathy with his case. For the past 12 years I have been a member of the Council of Europe and I serve on its agriculture committee. It is the most difficult thing in the world to get the committee to agree on any report. It is the most conservative organisation that it has ever been my misfortune to serve on. I understand the problem. I see politicians from Germany, France, Austria, the Baltic states and the Iberian peninsula. We deliberate and argue, but once it comes to making a decision to improve the agricultural interests of Europe, they will not support it. We all know that it would be political suicide for them to do so. Unless we can find a way round that, our Minister, of whichever party, faces insufferable difficulties. The same problem translates into the European Economic Community.

I tremble at the prospect of the failure of the general agreement on tariffs and trade round. It would be disastrous for Britain and for all those who work in our different businesses. If the Uruguay round fails we can only expect our growth prospects to diminish. I am lucky that the Secretary of State for Trade and Industry is present for my speech, I hope that he may reply to it favourably.

It is an elementary fact that as a nation we must depend on exports, and now more than ever. As an island nation we depend more than most countries on openness and the freedom to sell goods and services. Those are simple economic premises. The Minister of Agriculture, Fisheries and Food was right that the current GATT round is in crisis. it has major problems to tackle, not least in agriculture. There are vested interests in agriculture which are concerned to ensure not that more jobs are created but that the rotten status quo is maintained.

I do not want to spend valuable time going over old ground. I want to draw attention to what is at stake in this Uruguay round. The United Kingdom is a world leader in many areas, particularly in services. Services is an umbrella word which covers sectors as diverse as telecommunications, insurance, computing and banking. They are growth areas in which we as a nation can take a lead. Agriculture pales into insignificance compared with the service sector.

In the EEC, agriculture accounts for only 3 per cent. of gross domestic product. In this country services account for more than 50 per cent. In the United Kingdom, banking, insurance and finance account for 12 per cent. of our total work force. Services are important to our future interests. At a time when eastern Europe is opening up, British businesses have wonderful opportunities to sell their services, technology, electronics and engineering and civil engineering expertise. If we can put those aspects of our society in the front line, we shall do the nation a great service. I wish the Secretary of State well in his new job. He has tremendous responsibility. I urge him to give priority to those matters in his work at the Department.

It would be criminal if the EEC stumbled over agriculture and sacrificed all the other business interests that are at stake.

Does my hon. Friend agree that it would be terrible if the interests of the textile industry were ignored because, as a Conservative Member said today, we shall somehow save money if we import clothing and textiles from countries which have child labour, no health and safety at work legislation, no trade union rights and no limitation on the hours worked? Does he agree that if we imported clothing and textiles produced through massive exploitation, therefore at low cost, it would be unfair to the decent standards of our industry?

I wholly agree with that statement.

I am not alone in expressing some of these views. This is one area where I wholly agree with the Prime Minister. Some weeks ago when I asked a parliamentary question I was in the unique position of receiving frowns from my hon. Friends and praise from some others for my views. Hon. Members who were in the House that day will recall that most of those who congratulated me were Tory Members. When I think about the Prime Minister's position today and about that time, I feel a certain sadness.

As I said, we must not allow agriculture to hamper the development of business. I recognise that we need good GATT rules. If we do nothing else, we must send a strong message to the negotiators. The people who slog behind the scenes and spend interminable hours in committees are good negotiators. They must be made to realise that our national long-term well-being is at stake, and the House should support their efforts.

11.39 am

I agree with much of what the hon. Member for Wallsend (Mr. Garrett) said, particularly his remarks about the importance of the trade in services. The new GATT round provides the opportunity to make a breakthrough, although perhaps we shall hear more about whether it will succeed. Such a breakthrough would be of immeasurable benefit to the United Kingdom and many other countries.

The GATT round discussions about which we have been talking are largely about agriculture, but that is not the only item on the agenda. Textiles, about which the hon. Member for Bradford, South (Mr. Cryer) speaks, are not the only other issue on the agenda. I have noticed in trade debates over the years that hon. Members whose constituents have a vital interest in these matters contribute, but hon. Members do not usually speak from a more generous point of view and talk about the GATT round as a whole. I want to address myself to that aspect.

It is essential that the GATT round should succeed. If it does not, long-term trading prospects will be in danger. I should like to put a specific point to my right hon. Friend the Secretary of State for Trade and Industry. My right hon. Friend the Minister of Agriculture, Fisheries and Food made an encouraging speech. I did not get the impression from him that the GATT talks were likely to fail. However, every time I open a newspaper, I read that the GATT round is in a state of crisis.

I wonder whether my right hon. Friend the Secretary of State will tell us how he views the prospects. Is there to be an agreement in December? Is this agreement wishful thinking, or is there still a real chance? Are efforts being made to postpone the date, if necessary? What is so magic about 3 to 8 December? It is far more important to reach a solution than to stick arbitrarily to a date by which the GATT round is meant to end. I am all for keeping that date as a discipline, if that is what is being done, but I hope that, if necessary, the talks will be extended.

There is concern that the fast-track approach of the United States Congress may end. I suspect that, if Congress debates these issues in detail while they are being negotiated rather than having a fast-track approach, the GATT round would be in grave difficulties. As I understand it, the fast-track approach does not expire until March. It would be helpful if my right hon. Friend the Secretary of State would estimate the likely prospects of success and the dates involved. I, too, wish my right hon. Friend extremely well in his task, particularly in these negotiations.

The House is probably aware that, if the talks fail, there is a great danger that, over the next few years, protectionism will grow strongly in the United States of America. Protectionism is already strong enough in Japan, although the situation may be better than it was in the past. Anyone who has negotiated for a long period, as I have, on such tricky issues as whisky and entry to the stock exchange—I am glad to say that the position on both is much better now—will know just how protectionist the Japanese are. We all know from our study of history just how protectionist the United States can be, and frequently has been in the past.

Let us be under no illusions—given half a chance, the European Community would go protectionist. One of the British Government's major achievements over the years has been the fact that we have managed to keep the Community on a free trading basis, with the support of the northern countries and often without the support of the southern countries. I believe that, given half a chance, the French and Italians would wish to see a fortress Europe and much more protection. That would be a great mistake for us and Europe, and it would be disastrous for the Third world. It would be a disaster politically as well. I urge my right hon. Friend the Secretary of State to use his influence in the Community to persuade it to do a deal, even if it is not perfect. It is better to have an imperfect deal than no deal.

When I went with the then Minister for Trade—my hon. Friend the Member for Plymouth, Sutton (Mr. Clark)—to Punta del Este for the negotiations, we aimed to get a successful round going and to defend our vital interests, and we did that. We also wanted to make progress on services and on intellectual property. It was difficult to define "services". I do not think that at that time anyone was precise about exactly how many services could be included in the GATT round, how many it was practical to imagine or about the timetable. In principle, there should be fair trade in not only goods but services.

In those days, the United States was fanatically keen on free trade in services and on including them in the GATT round, but I now read that it is much less keen. I should be grateful if my right hon. Friend the Secretary of State would spare a few moments to tell us about negotiations on services. We are entitled to argue our corner.

As the hon. Member for Wallsend pointed out, this could be good for the United Kingdom in terms of banking and insurance. The House should be under no illusion that banking and insurance do well throughout the world already, although they could do better. Often, the most difficult place for them to do well is the European Community, where so many protectionist measures still exist. Look at the scandal of shipping in the European Community. It is ridiculous that, although there are free seas around Britain, it is impossible for us to get cabotage or make progress on shipping negotiations in the Community. The negotiations on aviation are much better, but they are not improving sufficiently fast. We must convince not only the developing world but the Community.

I shall not enter into the detailed discussion on agriculture which we have had this morning. When we were negotiating this round, we had immense difficulty in getting Community agreement, but in those days only the French held out. The French Agriculture Minister flew to Uruguay to put some backbone into the French negotiators, and it was only with great difficulty that we managed to have an agreed Community line. It is a great pity that the Germans have joined the side of those who argue for more protection.

Of course there must be transition. Of course the rights of farmers must be protected. Of course we cannot have our countryside laid waste. Luckily, most of my farming friends seem to have left the Chamber for the moment, but I must say that I share the doubts of those who do not like the common agricultural policy. It needs major reform, even if we do not go as far as abolition.

No doubt we shall soon hear about textiles from the hon. Member for Bradford, South—good luck to him and to any of my hon. Friends who want to speak about textiles. But they must face the fact that there has been protection for textiles for about 16 years under the MFA. That must be phased out. Of course, it must be done in a way that does not do grave damage to the textile and clothing industries, but I believe that that can be done. There is not necessarily great disagreement between us on that point.

In any case, am I not right in saying that the penetration of our market by foreign textile and clothing industries comes much more from developed countries than from the countries with whom we have the MFA? The French, Italians and Portuguese penetrate markets.

I am sure that the spokesmen for the textile and clothing industries—not the hon. Member for Bradford, South—often exaggerate the effect that gradual withdrawal of the MFA would have on those industries. As time goes by, our real competition will be from the much more up-market industries of the European Community, Hong Kong and a few other areas. Be that as it may, I hope that a deal will be struck that will not fatally wound our textile and clothing industries or agriculture but will allow us to make some progress.

Not surprisingly, GATT must be seen as a package. It must be acceptable to developed and developing countries alike. Everyone must gain from it; otherwise, why on earth should people sign up to it? We must gain from it. The developing world, including the Americans and the Japanese, must gain, for unless every country has some benefit from the GATT round, they will have no interest in reaching a satisfactory conclusion.

The GATT negotiations are not fair. While the discussions are portrayed as a battle between the United States and western Europe, in reality the people who are losing out worst on the food and farm production side are Third-world producers, who are not in a position to negotiate against dumping because of the debt crisis and the economic power that the United States uses against them.

There must be some benefit for the developing countries from GATT; otherwise, they will not agree. Indeed, they were suspicious from the start. But with the increased access of their goods into the developed world, there should be something in it for the developing world as well. If that does not happen, it is unlikely that the round will succeed. There must be something in the package to make the developing countries feel that they too are benefiting. That is likely to happen, due to better access for their goods in the developed world, and no doubt there will be other benefits as well.

Will the Minister give a realistic assessment of what is going on in the negotiations? I am sure we are unanimous in believing that, if the talks fail, that could in the long term lead to disaster for Britain, which exports more of its GDP than many other countries, and for the other countries. I urge the Government to press for a solution, if necessary an imperfect one. Nothing would be worse than a final breakdown, with the world breaking up into bilateralism or great trading blocs, with protectionism returning. That would damage the interests of developed and developing countries alike.

11.51 am

Agriculture is a vital issue in my constituency and I am an agriculturist. It is clear that, under the GATT round, we welcome the principle of the liberalisation of world trade. The free access of goods to markets and the free flow of goods and services are highly desirable aims, but I fear that the real world will make those aims difficult to achieve. In France, for example, there are few Japanese cars, and in Japan there are few British cars. Trade is distorted throughout the world and that will remain the case for many years to come. Even so, we must try to do something to remedy the situation.

The way in which such distortions impact on industry in general, and on food and farming commodities in particular, can be severe. That is particularly so in agriculture in the third world. As the hon. Member for Weston-super-Mare (Mr. Wiggin) pointed out in his capacity as Chairman of the Select Committee on Agriculture, the effect on agriculture in the United Kingdom can be equally severe. It is easy to say that the CAP has many faults and should be scrapped. I would not say that. The CAP has been a great success to the agricultural communities. The policy has faults and must be reformed, but it has led to the success of rural areas.

The trouble is that we all want to play on a level playing field. We discuss world prices, but in reality there are none, because such prices are distorted by subsidies. It is impossible in agricultural terms to discuss real world prices, for not only can we not define such prices but they do not exist because of the hidden subsidies that distort them.

Any negotiations concerning agriculture are made difficult because, for the last 40 to 45 years, most developed western countries have had intricate agricultural support systems. We have had the Agriculture Act 1947, United States legislation since 1948 has supported that nation's agricultural community, and the 1960s saw the creation of the CAP, all aiming to support agriculture and rural communities.

The present negotiations are bound to be difficult when, for example, we have the United States speaking with a forked tongue in requiring a 75 per cent. reduction on the GATT round, yet Congress has not even discussed the matter. It is doubtful whether Congress would support such a radical proposal, even in American terms.

The European Community proposal is for a 30 per cent. cut in agricultural support, at a time when British farmers are receiving 1980 prices for their livestock and when they have suffered a reduction of up to 25 per cent. in their incomes in the last 12 months. A proposal of that kind represents a difficult pill for them to swallow, if they can swallow it at all. In other words, we are dealing with an extremely complex matter.

The proposals put forward by the European Community in the GATT round are aimed at progressive reductions in agricultural support, and the 30 per cent. reduction would relate to the main agricultural products of the Community and deal with adjustments of export restitutions. The European Community wants recognition of the progress that has been made since 1984 in reducing agricultural support in the EC. Such progress has been successful in relation to milk quotas, extensification and the stabilisation of many products. In other words, it is inaccurate to say that the EC has not attempted at least to begin to put its house in order.

In its proposals to the GATT round, the Community states categorically that it wants support levels to be frozen on the 1988 basis. There is no question but that support prices will be reduced, with a reduction in production in Europe. One is bound to wonder whether other countries that are negotiating as part of the GATT round will make equivalent efforts. Will they implement any measures that are agreed, and will such measures be politically acceptable in their countries? For example, my reading of EC documents relating to the livestock sectors leads me to believe that we are expected to see a support price change of at least 4·7 per cent. less per annum up to 1996. That will be a large cut for the industry to sustain.

Many of my hon. Friends represent areas in which textiles and the woollen industry are of vital importance. They wish me to say that we must have a 10-year programme which guarantees equivalent access to third-country markets which at present place barriers against our products. They want to see access for textile products in those markets within that timescale. They believe that it is possible to export one's way through the present maze, so long as there is a level playing field.

We do not want the MFA to be abolished immediately. It should be phased out over, say, 10 years, and the phasing-out process must be very gradual indeed. We need fair trade as well as free trade in that respect.

Returning to the subject of agriculture, it is worrying to note the disparity that exists between the United Kingdom and the Community at large. There is no fairness in the pricing system in the Community and in Britain. For the Community, with the CAP, to negotiate on the GATT round with existing disparities, such as the green pound and the monetary compensatory amounts, represents a worrying scenario for British agriculture.

What worries me particularly is how British agriculture—and especially agriculture in Wales, which is the part of the country that I represent—will move from the present disastrous price reductions that we have witnessed in the autumn of 1990 even as far as 1992, when the single market comes into being? It is not good enough for the Minister of Agriculture, Fisheries and Food to say that he will accept the 30 per cent. cuts without enacting some domestic support for United Kingdom farmers who are extremely hard pressed and many of whom will go out of business.

A survey conducted by the agricultural economics department at Aberystwyth university has stated clearly that, if things go on as they are, at least 12,000 farmers will go out of business in Wales in the next three years. That will devastate the rural areas in Wales and will have a knock-on effect on the rural communities. We cannot ignore that. That is the result of the present situation, let alone of accepting the 30 per cent. GATT cuts.

We must not only have environmental payments; we must accept social responsibility for the rural areas, and especially for our family farms. Some form of income support must be introduced to ensure that our rural areas are not devastated. I agree entirely that surpluses are a major part of the problem and that they must be tackled within the context of the CAP. However, some of those resources must be switched back into support for our family farming units otherwise, as I have said, devastation will be the order of the day.

Hon. Members have talked about increasing Community surpluses. Access from the eastern European countries into the European Community is adding to surpluses in the beef sector. Why do we hear stories about the USSR facing famine this winter because of its immense problems of food production, when eastern Europe is exporting to a market that is already over-supplied? Why can we not find the money to switch that production and to pay the eastern European producers for that production in good currency? Production should be switched to Russia to save its people, literally, from starvation this winter. We must address that scenario.

There are also disparities within the Community on agricultural credit. Why can farmers in the Community have access to credit at half the rates that currently prevail in the United Kingdom—at anything from 5 to 7 per cent., compared with 15 per cent. in the United Kingdom? That is unfair competition, and it must be sorted out.

Why are our sheep farmers facing great cuts in their receipts this autumn of up to 30 per cent., but not receiving the same ewe premium payments as the farmers in the rest of the Community, at over £20 per head? I do not agree with that; I agreed with variable premiums in the past, but we must accept that the system that has been imposed within the CAP is one in which our farmers are losing a great deal.

I make a plea for time in which to adjust. We cannot have these sudden switches and changes. Farms in Wales are half the size of those in England, and farm incomes in Wales average £9,000 and less per annum, which is not a proper living wage and which does not give an adequate return on the capital invested.

We must take account of the knock-on effects on the rural communities, on the villages, shops, transport contractors and all the rest. There must be a gradual change; otherwise, I fear complete disaster for the rural areas of this country.

12.4 pm

I shall decline the invitation of my right hon. Friend the Minister of Agriculture, Fisheries and Food to enter into a discussion with him at this stage on the relationship between good farming practice and the rural environment, important though that is. I wish to take up the much narrower point raised by my right hon. Friend the Member for Southend, West (Mr. Channon), who referred to the importance of a serious discussion of service industries at the Uruguay round.

I raise this point, which is specific and narrow, in my capacity as chairman of the Lords and Commons solicitors group. We are concerned about the issue of foreign legal consultant regimes. I start with the proposition that legal services are a critical part of international trade. Immediate access to advice on the variety of laws and the variations in laws from one country to another, and on international law, are often vital to firms that are seeking to trade in other countries.

It is important that United Kingdom solicitors should be able to provide their services outside the United Kingdom, either by regular visits or by the establishment of offices under their own professional title and names, without—this is the important consideration—having to satisfy the requirements for admission to the host state's legal profession. Indeed, it is not necessary for them to do so, because they are not concerned to have access to the activities that are properly reserved for the host state's legal profession, such as access to the courts there or to real estate transactions. They are there to advise on the laws of our country and on international law, to enable foreign countries to trade with us more readily and easily.

At the Geneva round, the prevailing view was that the professions as a whole did not require a sectoral annexe that would provide special interpretation or exemption from the framework principles. No doubt that is true for medicine, engineering and architecture, for which the laws of nature which govern the human body, or of physics or mathematics, are universal, but it is not true of man-made laws, where there is disparity and variation between one nation and another and where experts must be in place personally in order to give the necessary advice and services and to facilitate trade. That was recognised by the United States negotiators at Geneva, who proposed an annexe applying the principles that I have tried to enunciate. Probably their annexe was too wide for acceptance.

Therefore, I advance a possible solution, which is that the concept of foreign legal consultant regimes should be recognised in an annexe, with suitable definition, so that there is a peg upon which to hang subsequent negotiations on matters within the GATT framework. The central element in such a definition would be along the following lines: "'foreign legal consultant regime' means a regime under which foreign lawyers are permitted to be established in a host state to provide foreign and international legal services under their own home state title and firm name without having to satisfy the requirements for admission to the host state legal profession". I offer that to my right hon. Friend the Secretary of State for Trade and Industry, and I urge him to raise it and to press it at the Uruguay round.

12.8 pm

I welcome the debate, not least because GATT and trade issues are one of the areas in which it is often difficult to get one's mind round the subject because it is so far-reaching and fundamental. It is often easier to tackle the simpler and more local questions. I have found the issues to be very complex and I put forward my comments in all humility.

I shall touch first on some of the fundamental economic consequences of the GATT round, and then on the philosophical basis of our policy towards trade—whether free trade or protected trade—which has made and unmade Governments in Britain and elsewhere. I shall also refer to the politics of subsidy. To some extent, and in some form, all the nations of the world subsidise and protect the areas that they regard as important. Finally, I shall deal with the whole question of intergovernmental co-operation, of which GATT is one example and for which I hope the new post-cold war era will offer many opportunities, not only in trade but in wider respects.

The specific consequences of GATT and the outcome of the negotiations starting on 3 December among Trade Ministers—in an attempt to find some solution in the final stage of the GATT negotiations—will have specific consequences for my area. A number of hon. Members on both sides of the House have referred to the consequences for the textile industry. I have received a number of constituency-based representations from trade unions, local authorities and employers on the consequences that will flow for the local textile industry if the multi-fibre arrangement is not renegotiated on a satisfactory basis. I know that my hon. Friends will press that further. The GATT round will also have specific consequences for the Third world, which will be penalised if we fail to secure an appropriate outcome from the negotiations. I know that my hon. Friend the Member for Islington, North (Mr. Corbyn) will seek to discuss that further. That consequence is so evident that Mr. Barber Conable, the president of the World bank, was moved to say that the world's poor stand to lose most from the failure of GATT. I hope that all hon. Members will bear that in mind.

Let me start with the philosophy of trade. The choice between free trade and protectionism cannot always be seen in terms of black and white. There are degrees of free trade and degrees of protectionism and it is for nation states to get the best deal from international negotiations. All such negotiations are a function not of altruism or of wider human values but of the political and economic needs, and the interests of the people and nations participating. If it benefits a nation state or a trading bloc, free trade—or protected trade—will be adopted.

However, circumstances change and it may be difficult, in the short term, to change one's position because, in adopting free trade, one adopts the rhetoric of free trade and one educates and trains people to respond to the weasel words of that rhetoric. The same applies to protected trade. When economic circumstances demand that a change be made, rhetoric may obstruct the movement towards it. That is what has happened in the Uruguay round. That is why the round has been so protracted. It is also a reason why the round is in some trouble.

The most powerful seek to set the agenda according to the self-interest of nations and national trading blocs. The one exception to that may be the United Kingdom because the overlying rhetoric has been believed by our Government and our politicians. Being dogma-driven, they have not seen the necessity for subsidy in industry. We are playing by the rules laid down in our own rhetoric. We are playing cricket and everyone else is happy to allow us to do so because they are playing football in the World cup and they are playing to win.

That cannot be said to apply to the United States' negotiating stance. The United States has moved its position considerably in recent years and Carla Hills has now stated that the official position is that the United States is in favour of free competitive trade in which Michael Porter's "competitive advantage of nations" can work to its fullest extent and, it is to be hoped, to the unrestrained benefit of everyone. It is up to our negotiators to ensure that that flood of fine free market rhetoric is made reality for those participating in the GATT round.

That position is a far cry from the United States' protectionist view—above all on agriculture but also in steel, textiles and sugar—alluded to by the hon. Member for Weston-super-Mare (Mr. Wiggin). I understand from today's newspapers that the United States is even going so far as almost to abolish most-favoured nation trading status. The concept is still there as a carrot to try to bring people on board in GATT, but it seems that one of the cherished weapons of the protectionist era is on its way out.

Why has that change taken place? Hon. Members on both sides of the House have referred to GATT in general, and I understand that the right hon. Member for Southend, West (Mr. Channon) talked about the subject at length. But the major driving force for the current GATT round is agriculture, and agriculture lies at the political heart of the debate. There is one simple political reason for that. In most nation states, farmers have traditionally been at the centre of the conservative electoral coalition and that fact has been most obvious in western Europe and the United States. But in the United States, that central part of the coalition has diminished in political value. In 1930, 30 per cent. of people in the United States worked on the land. The figure is now down to 3 per cent., so the electoral pay-off for over-defending the inflated incomes of highly protected farmers no longer outweighs the financial penalties incurred in that defence. That is not so in Europe. Europe has 10 million farmers who would be up in arms if the Governments of Europe accepted the demands of the United States. The Christian democratic and Conservative parties would suffer massive electoral consequences which would put the social democrats or democratic socialists in power for more than a generation.

The new Prime Minister will therefore have a difficult decision to make. I think that the pro-American stance adopted by the current Prime Minister will change and that, in future, the Government will adopt an increasingly Community-based position. That may affect the support given by the Minister of Agriculture, Fisheries and Food and the Secretary of State for Trade and Industry to the current American position in the GATT round. Whoever wins the contest for the Conservative party leadership, there will certainly be changes.

Through CAP and other supports, a massive and illegitimate political tax is being levied to sustain the electoral base of a number of political parties including, historically, the Conservative party. Some Conservative Members are finally beginning to realise, in their own interests, that there is more to be gained by reducing the £14 per week food tax that is levied on every family in the United Kingdom than by buying off, and continuing to buy off, a shrinking farming constituency. That is why the debate about Europe will focus increasingly on the 60 per cent. of the European Community budget that is wasted on an inefficient means of supporting farmers and farm prices. No one objects to the rational, logical support of farmers and the food industry. However, 60 per cent. of that support does not go to the farmers but is used to pay for storage, transportation and other matters. That is not the best way to support our food industry.

Despite all the wind from the Secretary of State, the Government should be ashamed of their failure over 11 years seriously to make an impact on the common agricultural policy. There must be a far greater attack on the problem, whatever party is in power, over the next five or 10 years so that money may be properly spent. I am sure that all hon. Members have learnt from the European experience that there should by all means be a subsidy of one sort or another. However, initially there must be an attempt to track the real market price so that the subsidy can be effectively administered. Where there are three, four or five different layers of subsidy or protection, it is difficult to track back and discover the original market price on which to base a sensible judgment about support and subsidy.

I hope that the GATT round will be used assiduously by the relevant Ministers to ensure that real pressure is brought to bear on the common agricultural policy. The GATT round is a weapon that can be used, at least on the table if not in reality, to impose some sense on the CAP. The arguments can again be opened and won over two, three, five, or 10 years.

Either an incoming Labour Government or the present Government must address food price levels, the efficiency of farming for consumers' benefit and the political reasons why subsidy works to the benefit of conservative parties. A Labour Government must do that on the basis not of free trade, but of fair trade. Free trade can be a misnomer. It can be expensive, not least for the Third world, a matter with which my hon. Friend the Member for Islington, North will deal. Some of the basic principles of fair trade can be agreed by all countries. Where support is necessary, for social reasons or for small farmers, it could be paid directly, perhaps by some form of income support. Fair trade also needs to encompass all that has been said about textile imports which can undercut domestic industry, not because of better quality but essentially because of lower wages, sometimes slave wages, child labour and poor working conditions. Such things lead to disbenefits for the producers and for our domestic economy because people may be thrown out of work.

Conservative Members have problems with the social charter of the European Community, but in a sense this is the social charter aspect of GATT. We need to look at the other side of the argument, not just at the straightforward bottom-line subsidy costs of trade agreements. We must look at the social costs which inevitably lead to the undercutting of our domestic industries.

Japan is a difficult area and the difficulties are often cultural. We should try to understand those difficulties and not merely dismiss them as restrictive practices. They need to be respected to a degree that has not so far been apparent. If not, they will not be understood and we will not be able to negotiate those practices away.

So far GATT has been quite successful in its examination of tariff barriers, but it has not yet tackled the main problems of non-tariff barriers, export subsidies, import protection, access barriers and price supports. We must make GATT work because if we fail we may have to accept alternatives that will be less palatable than a properly worked-out GATT round. For example, a subsidy war would be an even more expensive CAP. We could see a retreat into trading blocs by Europe and north America and possibly the Pacific rim or even, as has been floated in the past couple of months, a strengthened OECD taking on some of the trade negotiating powers of GATT.

We must accept that, in relation to GATT, we shall have to give up some degree of national sovereignty. That is the basis of negotiation and agreement. Give and take by all parties, all trading states, is essential if GATT is to be made to work. However, at present GATT is not tackling the central problem of agricultural subsidies. I understand that those subsidies currently cost about $500 billion. Part of that money could certainly be better spent in other areas to reduce overproduction, end the squeeze on the Third world and third-world prices and assist Third-world development.

GATT needs to be kept afloat because it is the embryo of future intergovernmental organisations that could tackle world problems. GATT is failing because in itself it is illegitimate. It does not have the support of the nation state parliaments and faces the problems that we sometimes face in the European Commission. We send people to negotiate on matters that our Parliament has not had an opportunity to discuss. In many ways we behave like a multinational company which sends directors to a board meeting rather than involving all the people who will have to participate in taking decisions. The illegitimacy and the undemocratic and unaccountable nature of many intergovernmental conferences leads to many of the problems which arise because people have not participated in initial discussions. That undermines the basis of decisions.

It is crucial for the next Labour Government to build on democratically accountable intergovernmental organisations. Only then will we be able to tackle problems that go far beyond trade difficulties. Those problems reach into international debt, currency trading, the movement of capital round the world, assistance to the newly democratised countries of eastern Europe, the environment and above all the Third world, not least in terms of wages. Those matters need proper enforcement and policing, and it will be for the next Labour Government not only to conclude this GATT trading round but to build on it and to extend the concept of world co-operation through intergovernmental organisations so that we may tackle some of the even bigger problems facing the world.

12.27 pm

I must make my apologies in advance to my right hon. and hon. Friends on the Front Bench, because I shall be dashing off to catch a plane to Scotland.

The successful conclusion of the GATT round is critical for both Scotland's farmers and manufacturers. Scotland's splendid export achievements are at risk if restrictive trade practices and protectionist policies are implemented by individual trading blocs such as the European Community or the Cairns group.

The hon. Member for South Shields (Dr. Clark) spoke critically about the Government's policy, but he did not take into account the fact that Scotland's premier exporting industry is the Scotch whisky industry. The status of that industry in 1979, when the Government came to office, should be remembered. It was overstocked, distilleries and bottling and blending plants were being closed, and home and export sales were flagging. The situation today is vastly different. Stocks are more in balance, sales at home and abroad are buoyant, distilleries are reopening and the jobs in the bottling and blending plants are more secure.

The hon. Member for Wallsend (Mr. Garrett). in his thoughtful and constructive speech, mentioned my right hon. Friend the Prime Minister. I shall also mention her, because I believe that she has been the best Prime Minister that the country has had this century. It is thanks to her policies and the determination of her Government that Scotland's premier exporting industry is in better shape. Competition, both at home and abroad, but particularly that from the European Community, has contributed to that.

Exports of Scotch whisky are £1,400 million. 'Nell in excess of £1,000 million is paid by the industry to the Chancellor of the Exchequer. It exports at least 90 per cent. of everything that it produces outside Scotland. When I listen to some of the theoretical humbug from the Labour party, I think that it has forgotten how important are such industries. The Scotch whisky industry directly employs 14,000 people and many more thousands are employed indirectly.

I have two examples of countries operating tariff barriers that were detrimental to the Scotch whisky industry, both of which export massively to the United Kingdom and Europe. The first is Japan, where, after tough negotiations, the situation has been much improved. However, in South Korea, much improvement is still required. We shall not obtain that by erecting tariff barriers in the United Kingdom. The Scotch Whisky Act 1988, for which I can claim some responsibility, has also made a contribution to maintaining the quality and standards of our premier export.

The Scotch Whisky Association has two questions to which it would like answers. The first is what steps have the Government taken to ensure that the EC Commission's negotiating position in the current GATT round takes account of the objective of the Scotch whisky industry and others to eliminate, or at least reduce, tariff and non-tariff barriers facing products in world markets? Secondly, are the Government aware that the United States Government's proposed "zero for zero" approach for the elimination of tariffs on distilled spirits has the full support of Community spirits producers, including the Scotch whisky industry, and will the Government take steps to ensure that the EC responds in kind? The Scotch whisky industry considers these matters to be of major significance. A reduction in tariffs, especially the "zero for zero" approach, would help exports and is the way forward.

In a debate such as this, one must mention the farming industry. Every farmer in Scotland recognises that barley is one of the major components of Scotch whisky. A healthy Scotch whisky industry is therefore good for Scottish barley farmers. Farming industry problems can be removed only by realistic Community policies, and the Government are right to demand a fair deal within Europe for British agriculture. They must also ensure that we get a fair deal in world markets.

We must never forget Scottish and British dependence on our manufacturing industry. We hear much about the so-called destruction of manufacturing industry, but in Scotland our manufacturing industry is producing more in real terms than at any time, and we are exporting more. We want a fair deal for British industry, both within the Community and outwith it. We want to see positive proposals put forward by the Community in the GATT round.

We in Scotland recognise the difficulties that the Government face. If, by chance, the deadline date cannot be met, we must continue with the present arrangements until a new regime can be put in place.

12.35 pm

Hon. Members on both sides of the House have acknowledged the importance of the Uruguay round of the GATT negotiations. It is important for industry, the Third world and consumers. Restrictions on trade, whether by tariffs, quotas, voluntary restraints or administrative barriers, raise prices and reduce consumer choice. Protectionist measures often have a disproportionate effect on poorer consumers, but not only consumers will suffer if the round fails. Failure of the round would be disastrous for international relations and the British economy. Increased protectionism and trade disputes would lead to slower growth and reduced export earnings. There would be damaging consequences for employment in industry and commerce.

A recent study by the Centre for International Economics in Canberra suggests that, if fortress Europe becomes a reality, it will cost the Community $52 billion a year. If the Community's protectionism was met by United States retaliation, the Community would lose $132 billion, while the United States would lose $64 billion. Protectionist measures hurt the countries that use them as much as their trading partners.

The Minister implied that the concessions made by the EC, including a 30 per cent. cut in agricultural support—that is the major barrier to an agreement in the GATT round—would not harm British farming unduly, and that this will result in an agreement. It will not. The United States will not be satisfied. I visited the United States with the hon. Member for Weston-super-Mare (Mr. Wiggin), and I share his feeling that United States and Canadian farmers will not accept a 30 per cent. cut in agricultural support. They know, as the Minister said this morning, that we are halfway along that route already. I would dispute his assertion that we are going that way already because of GATT. We are doing so because of the problems within the CAP and the collapse of its financial basis. There is a determination to press the point that 15 per cent. is not enough.

The Minister acknowledged in an intervention in the speech of my hon. Friend the Member for South Shields (Dr. Clark), who spoke from the Opposition Front Bench, that farmers will have trouble meeting the reduction in support. The farmers that I meet will not survive such a cut under the present system of support. I repeat that the proposed cut will not be enough to meet the demands of the United States. After all, it is calling for a 70 per cent. reduction in European Community support.

The United States route to an agreement will be a continuing disaster for United Kingdom farming. It has been put to me by many farmers in my constituency that the present position is a catastrophe. Prices in the local markets in my constituency are lower now than they were last year, and they were poor last year. Farmers are facing bankruptcy throughout my constituency.

Does the hon. Gentleman agree that the problems of the livestock industry, especially in the area that the hon. Gentleman represents, were exacerbated by the attitude taken by the Labour party to the bovine spongiform encephalopathy scare?

As most of my farmers are sheep farmers, that is hardly likely. The hon. Gentleman would do well to study my speeches in Hansard. I was deeply involved in the study on BSE, and I know a good deal about the disease. I say with some humility that, as someone who knows something about the disease, I could not dispute the stance taken by my hon. Friend the Member for South Shields. The disease is worrying and needs to be studied. The Government did not move quickly enough to allay people's fears. I hope that those fears have now been allayed. Beef is safe, although I am not so sure about offal. There is a question mark over specified offals that are banned, and I hope that that ban will continue.

The farmers in my area are suffering. The price for sheep is devastatingly low, and beef is another problem. It is interesting to note that the prices in the shops have not come down for either of those commodities. [HON. MEMBERS: "Hear, hear."] I am glad that Conservative Members agree with me. It says a great deal for profiteering in the middle areas of distribution to the consumers.

Sometimes farmers cry wolf and complain. There is always something wrong with farming, whether it be the weather or the markets. However, in this case the figures prove that their concerns are justified. There has been a rapid increase in farming support, from 11 billion ecu in 1980 to 280 billion ecu in 1990. However, that has been accompanied by a collapse in the United Kingdom's farming economy. In real terms, it is down to a half of its level 10 years ago, and investment has also dropped by a half during the 1980s. Those figures, together with the problems created by interest rates and the effect of inflation on the input into farming, make it clear that the industry is in deep recession, and it can only get worse.

The GATT negotiations threaten the interests of all EC farmers. A settlement would involve cuts in EC support of 30 per cent.—or 75 per cent. if we agree to the demands of the United States. It would involve freer access for Third-world products into the EC market, clarification of existing import controls and their reduction by 30 per cent.—or 75 per cent., if we follow the USA line; God forbid. It would involve cuts in EC export refunds and cuts in internal support.

United Kingdom agriculture cannot stand all that. All the palliatives suggested by the Commission would not benefit even the lowland farmers of England and Wales, most of whom are too large to benefit from structural measures and too rich to benefit from regional measures. The palliatives certainly would not benefit farming in the highlands of the United Kingdom, including my constituency.

Farmers are aware that the Uruguay round is about reducing support levels, and they are not surprised that the EC is offering concessions. However, the EC and the other parties to GATT must concentrate not on cuts for cuts' sake, but on putting world trade in agricultural products on a sound basis. The great criticism of the CAP arises from its subsidised export of surpluses, as support for those surpluses represents by far the greatest element of EC spending on farm support. If that could be eliminated, a considerable amount could be saved on support measures. That may go some way towards meeting the demands at the GATT negotiations.

Supply management could be the way to remove surpluses, while maintaining internal EC prices. That would make economic farming possible. It could be designed to enable the EC to meet its GATT commitments and to keep EC farm support spending at politically acceptable levels. Farmers would need to continue their efforts to improve efficiency and to ensure that production meets the ever-changing requirements of the market. Supply management is not an easy option, but under it the evolution of farm practices, land use and farm structure will continue. There must be an orderly transition into the 1990s, not a catastrophic collapse of the rural economy, which is what is now happening.

Agreement on the EC's GATT offer is only the first stage. We do not know the terms of the final settlement or how it will be implemented in the EC, but we do know that the EC surpluses and budgetary problems are intensifying and that the Government want to make further cuts. With or without the new GATT commitments, the EC will need to change the direction of its agricultural policy if there is not to be irreparable damage to farming.

The Government must reject the idea of moving towards a completely free market and instead develop a new system that will keep farmers farming. We must pay the social price for our countryside and for ecologically friendly farming. We missed a valuable opportunity to do that in reforming the common agricultural policy by insisting on support cuts of 30 per cent., which will in any case be insufficient, and which will do drastic harm to the farmers in my constituency.

12.44 pm

I was sorry to learn on Tuesday that the House was not to have its planned debate on the textile industry on Wednesday evening. Having sat here today for three and a quarter hours and heard hardly a mention of textiles, I am even more sorry. We have heard a lot about agriculture, but although we realise its importance, other aspects of the GATT round should have a strong voice in this debate.

All aspects of GATT are important, but I have a particular interest in strengthening the GATT rules in respect of textiles and clothing. The textile industry is looking not for protectionism but only for free and fair trading and a strong linkage between the phasing out of the multi-fibre arrangement and the phasing in of strengthened GATT rules.

The industry has annual sales of £15 billion, and exports this year are likely to reach £4·5 billion. It also has a work force of 480,000, which emphasises the industry's importance to the British economy. It has invested heavily, to the extent of £2 billion over the past five years, and is a world leader in design, quality, innovation and exports. When my hon. Friend the Minister for Trade visited Yorkshire, he had an opportunity to see for himself some of the investment made in high technology.

In another place recently, the American ambassador, Mr. Henry Catto, addressing a dinner, said of GATT that it is a high-stake poker game. I do not play poker, but I understand from its rules that something is always thrown away on a bluff. I hope that, in the GATT round, textiles will not be thrown away to safeguard another agreement, because that would be disastrous for Britain.

I will quote briefly from a letter that many right hon. and hon. Members received from the secretary-general of the Apparel, Knitting and Textiles Alliance:
"We strongly support fair and free international trade in textiles and clothing. However, we are not prepared to see our industry seriously damaged by distorted trading practices which benefit our overseas competitors, nor traded off to ensure that a Uruguay Round agreement is reached at all costs. Textile and clothing issues in the Round must be assessed on their own merits."
That is all that the industry has ever asked of the Government.

The Punta del Este declaration, which opened the round in 1986, explicitly stated that textile and clothing trade should be integrated into GATT
"on the basis of strengthened GATT rules and disciplines."
That is a key phrase. In 1986, the then Secretary of State for Trade and Industry, my right hon. Friend the Member for Southend, West (Mr. Channon), was instrumental in obtaining international acceptance of that wording, which at that time was regarded by the Government as being of major importance.

In 1988, the then Minister for Trade, my hon. Friend the Member for Plymouth, Sutton (Mr. Clark), said in a debate on the multi-fibre arrangement:
"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."—[Official Report, 9 December 1988; Vol. 143, c. 620.]
We realise that he is no longer the person to make such an announcement, but I hope that, when my right hon. Friend the Secretary of State winds up, he can assure the House that no Minister will come to the Dispatch Box to make such a declaration.

The multi-fibre arrangement plays an essential role in allowing some regulation of the growth in imports, although not always enough to prevent damage to the British industry of the kind seen in my constituency, with the importing of acrylic yarn from Turkey. It prevented a war in a sensitive sector of trade and provided guaranteed access for poorer developing countries. However, we are not protectionist and accept that it should be phased out over an adequate period. I emphasise to my right hon. Friend the Secretary of State and to my hon. Friend the Minister that the industry agrees that the MFA should be phased out, but is looking for a strong link to strengthen GATT rules and disciplines at the same time. It would be helpful to receive that assurance today.

We are looking for a phasing-out period for the MFA of at least 10 years, and most Community Governments agree with that time scale. Some textile and clothing industries in the community, the United States and Canada have asked for 15 years. Many developing countries would support 10 years. We support the EC proposal that increases in import growth rates should be limited in the first stage of the phasing-out period and increased gradually. There must be an effective means of enforcing respect for the GATT rules and disciplines at each stage of the phasing-out period—perhaps, I suggest, by suspending further import growth of any supplying country that fails to open its market.

The United Kingdom clothing and textile industries are strongly in favour of fair and free international trade. They are efficient and are using modern equipment and high technology to produce goods of high quality and good design for an increasingly international market. Thousands of metres of high-quality worsted cloth are sitting in warehouses in west Yorkshire which were all made with special personalised selvedges for sheikhs in the Gulf. Money has been invested, and when the Gulf crisis is resolved, we hope to be able to re-establish that trade. It is not possible to send that fabric to any other country, because it is personalised, and those sheikhs paid highly for it.

It is not acceptable that the MFA should be phased out without significant strengthening of the GATT rules and disciplines. I know that Ministers will probably be sick and tired of hearing me say that, but it cannot be said too often or too strongly, because it is very important.

The terms of the MFA phase-out period must be tightly drawn and linked at each stage to progress in implementing strengthened rules and disciplines. The Government's approach in Community discussions must be vigorous and they must continue to fight for the interests of our industry. A case for fairness and balance in international textile and clothing trade must be approached on its merits in the closing stages of the round, which in the next couple of weeks will be very important indeed.

We all agree that a strong manufacturing base is crucial to the nation's future and prosperity. A strong home manufacturing market is central to a strong export market. Some people may say, "You would say that, because you represent a manufacturing area," but it is more than that. I was born and brought up and have lived for most of my life in manufacturing areas, and I therefore feel with some humility, as the hon. Member for Clwyd, South-West (Mr. Jones) said, that I have some knowledge of what we are discussing.

I was much encouraged by my discussions with my right hon. Friend the Secretary of State and my hon. Friend the Minister on Wednesday. When my right hon. Friend replies to the debate, I hope that he will give the House and the textile and clothing industry, which is listening carefully and will carefully read what has been said, the Government's position on the phasing out of the MFA and the phasing in of the strengthened GATT rules. If he assures us that the Government are fighting for a long phasing-out period—that was my impression from speaking to them both this week—it would encourage the textile industry to invest even more. Someone is on the verge of announcing a £1 million investment in a project not many yards from my boundary, not because he sees that the wool textile industry is at its best now, but because he sees a future for it. Some reassuring comments from my right hon. Friend the Secretary of State today would help to release that £1 million investment, which we desperately need.

I apologise to my right hon. Friend for the fact that, regrettably, I cannot be here to hear his reply to the debate. Like many hon. Members this morning, I have cancelled constituency engagements at short notice to be here. With the help of British Rail, if its trains are running again, I must go back north to continue my constituency work. I hope that my right hon. Friend will accept my apology. I assure him that on Monday I shall read extremely carefully in Hansard what he says, in the hope that we can all reassure the textile and clothing industry that it is of prime importance not only to the Members of Parliament who represent textile areas but to Ministers, who will put emphasis on the negotiations as we approach 3 December.

12.55 pm

I shall address most of my remarks to the implications for agriculture of the GATT negotiations. It is critically important to Britain that GATT succeeds and that the latest round produces tangible results.

Britain has stood for free trade for centuries. Indeed, we could even claim to have invented world trade back in the 18th and 19th centuries in the colonies. Britain devotes a larger proportion of its GDP to trade—imports and exports—than any other country. We devote about 30 per cent., so liberalising trade is important to us.

This morning, many hon. Members have alluded to the intricate web of subsidies in world agriculture. I have read an estimate that about $200 billion-worth of subsidies have evolved worldwide. To get rid of those subsidies over a period of 10 or 15 years would offer almost as much saving in Government expenditure internationally as defence cuts.

The way in which we insulate agriculture but no other industry is incredible. I represent a constituency which has been at the sharp end of the rundown of the coal industry in the past five or six years. The coal industry has no subsidies. Nor does the motor industry. In no other industry do we guarantee a price well above world prices and guarantee a market even when there is no market for any surplus products.

The common agricultural policy is in desperate need of reform or scrapping. It costs £20 billion—or, in terms which the housewife will appreciate, £16 a week for every household in Britain. To guarantee prices way above world prices—not 10 or 20 per cent. above world prices but sometimes treble or four times those prices—stimulates the production of unwanted surpluses. In turn, those surpluses are dumped on the world markets. They are subsidised exports which undermine the exports of other economies.

The United States is perhaps the motor for changes in agricultural subsidy. Subsidies frustrate American export efforts, given that country's balance of payments deficit. I returned a couple of weeks ago from a short visit to the United States. I was struck forcibly by the price of food there, both to buy in supermarkets and to eat in restaurants. That vast continent can produce huge amounts of food, but the Americans deliberately under-utilise their vast potential.

Dumping on world markets automatically affects Third-world economies. Such countries are poor and often some specialist food is the only commodity they can export. We undermine and undercut their market and frustrate their development.

We have already heard that the storage and disposal of those surpluses uses up more than half of that £20 billion. What is most absurd about this absurd policy is that rich farmers get the largest subsidies. The September newsletter from the Commission of the European Communities office in Cardiff talks about the MacSharry proposals and says:
"At present 80 per cent. of the EC's resources go to 20 per cent. of the recipients."
Last month's newsletter from the National Consumer Council, which we all received, tells the same tale with different statistics. It said of the CAP:
"Around two thirds of CAP price policy support goes to the largest 28 per cent. of Community farms."
It is absurd that two-thirds of the subsidies go to a quarter of Community farms. It means that the other three quarters receive only one third of the total between them. That means that the average big farm receives in subsidy five times as much as those among the other three quarters. It is a crazy policy which allocates bigger subsidies to the largest farms and richest farmers because they produce more. All the subsidies are production-based, so if a farmer has 500 cows, he receives five times the subsidy of a farmer with 100 cows. To add insult to injury, our poorest households spend relatively the most on food. Therefore, the price of the CAP is paid for by low-income families and the benefits go disproportionately to rich farmers.

There is a strong environmental argument against the CAP. In the past few decades, agribusiness has grown up parallel to it. It involves destroying hedgerows to make larger fields, spraying, and the extensive use of fertilizers, pesticides and so on. The CAP is the most destructive environmental policy that could be invented for agriculture and should unquestionably be dramatically reformed or scrapped. As my hon. Friend the Member for South Shields (Dr. Clark) said in his opening remarks, it is a tragedy that the Government and Europe have not used the opportunity of this round of GATT negotiations dramatically to reform the CAP.

I fully support the 30 per cent. policy that the Government have pursued in Europe, but we must protect small farmers during the transition that should take place in the next decade. Another problem with the CAP is that it is remorselessly driving farmers out of business. I represent a rural constituency and many small farmers. There are probably more farmers in my constituency than in any other in England and Wales and, probably, in Scotland. My constituents have small dairy farms, but more and more sheep have been introduced since the quotas. As the hon. Member for Brecon and Radnor (Mr. Livsey) said, the past year has been traumatic, with big decreases in the price of lamb and beef. If there are 30 per cent. cuts in agricultural support across the board, many of those farmers will be driven to bankruptcy. There is no question about that.

Small farmers are important because they form the fabric of rural communities. Their support is critical for rural schools. The Welsh language is under attack in my part of Wales when agriculture is under threat. I was brought up in the country and have lived all my life in my constituency. Many of my relatives are farmers. Over my lifetime, I have seen the amalgamation of small farms. As they come on to the market, they are gobbled up by larger farms. That amalgamation in Britain has gone ahead in a way that has not occurred in France, Germany or Italy. The average farm size in Europe is much smaller than in Britain. The last thing that we want in agreeing to the 30 per cent. cuts is for those cuts to be imposed across the board. That would drive small farmers out of business.

We should support small farms, because that is environmentally friendly agriculture. It is less intensive agriculture. It works with nature rather than attacking it. We need to reform agricultural support. Historically, the common agricultural policy has been production-based. We need to change the emphasis, so that it is environment-based. The purpose of the CAP should be to protect the countryside and the livelihoods of small farmers, to keep them in the countryside and to protect the landscape that they look after. That means giving conservation grants and support for less intensive agriculture. It means attacks on pesticides, a penalty on the use of fertilizers and support for organic farming.

We need to consider giving deficiency payments and income aids for small farmers. The present policy gives most to the largest farmers, but if we had a more uniform policy which worked more on a per farmer basis, the cost would be far less than the cost of the CAP. About £2,000 or £3,000 a year per farmer could be given through income support, income aids, conservation grants and green premium payments to protect the countryside rather than to produce unwanted supluses.

Internationally, we need to get rid of all agricultural subsidies. We need to develop free markets and a free trade in agricultural products. Britain has nothing to fear from that free trade, because of our efficient agricultural sector. In making these changes, we must protect small farmers. Public opinion is overwhelmingly hostile about the absurdities of the CAP, but the public would support some of the money—this proposal would cost about £1 billion—being used to protect the countryside.

1.8 pm

Having asked my right hon. and learned Friend the former Leader of the House for an urgent debate on agriculture and the GATT round, I warmly welcome this debate and the opportunity to contribute to it, but I find it difficult, if not impossible, to concentrate and comment on this important GATT issue without some reference to yesterday's events.

We have lost a great Prime Minister. Yesterday, she put the country and the party first, something that many people said she would never do. It is ironic—as my right hon. Friend said, it is a funny old world—that we are debating this matter.

I was in Rome this week. A month ago my right hon. Friend the Prime Minister was in Rome. I believe that what occurred at the Rome summit might be called the catalyst for her ultimate resignation. History will show that she was right when she said in Rome that the priority for the EC now is not to set an agenda for further developments in the Community but to demonstrate that the member countries can work together and reach practical and sensible positions on the issues that are of real concern.

The threat of a trade war if the GATT negotiations break down must be of greater concern to the people of Europe, and of the wider world, than plotting some further development in economic and monetary union. It was essential to reach agreement on GATT, and the Minister of Agriculture, Fisheries and Food deserves credit for his persistence in the negotiations. Unfortunately, those negotiations took too long to complete and the speeches today have demonstrated the concern that is felt about British agriculture. The time that it took to reach agreement in the EC on GATT and farm prices served only to strengthen anti-farming sentiment, and that has been bad for farmers everywhere.

We need to reach agreement in the Community on how to resolve internal trade disputes. The disputes that occurred this year with, for example, the German and French ban on beef and, more recently, over the export of livestock into France demonstrate the protectionism that exists in Europe. Protectionism in the Community cannot be tolerated, so we must establish a better mechanism to ensure that when disputes arise they can be quickly settled. The United Kingdom has been communautaire throughout the negotiations this year on farm policy and that has been the test of our Euro credentials. Collaborative action, rather than rhetoric and ideology, must be the principle that guides us in the development of the EC and the single market.

Hon. Members on both sides have said that the proposed reduction in farming support is hard for agriculture to grasp at this time. I am in no doubt that agriculture is in crisis. The cost of the CAP is growing, yet farmers in my constituency, as in the constituencies of other hon. Members, face ruin and bankruptcy. So reform of the CAP is essential, but how are we to achieve it? Reaching a settlement in the GATT round is the first step to CAP reform, because unless we establish the size of the budget and the terms for world agricultural trade, we cannot begin to consider the changes that are needed in the CAP.

Although I say that agriculture is in crisis, I agree with others that much of the cost of the CAP does not go to farmers. I am not convinced that reductions in support for farmers would result in major reductions in food prices in the shops. For example, although the prices being reached for livestock in markets in my constituency and elsewhere—for beef, lamb and livestock generally—have shown a substantial reduction this year, the housewives in my constituency tell me that they have not noticed much of a reduction in prices in the shops. The answer is all too obvious. The cost of the raw materials—the animals that are sent to the slaughterhouse—is such a small part of what housewives pay in the supermarket these days——

Does the hon. Gentleman agree that it is intolerable that farmers in my constituency are selling lamb at 82p per pound but that in the past fortnight housewives in the supermarket have had to pay £3·99 per pound for the same product?

That reflects what I have seen in my constituency. Perhaps we shall need a debate on another day about the structure of the livestock market and the number of people involved in the chain to try to find a better way of ensuring the lower prices that the housewife wants. Many hon. Members of all parties seem to think that by reducing agricultural support we shall see a substantial reduction in prices in the shops, but all logic dictates that that is not the case.

If we need to reform the CAP, how do we go about it? First, we must recognise that we belong to a club of 12. Competence in agricultural policy rests with the European Commission, not with national Governments. Whatever we seek to achieve must be approved by all our colleagues in Europe. I do not believe, and never have believed, that the collapse or wholesale destruction of the CAP is the answer. Hon. Members have referred to the fact that we had the opportunity in Copenhagen in 1988, but that it was not taken. I fundamentally disagree with that view. The past three years have proved that that was not the correct judgment. Our Prime Minister went as far as she could at that time to press our colleagues in Europe about CAP reform. All that has happened since has served only to demonstrate that the wholesale collapse of the CAP would mean wholesale bankruptcies for farmers, the collapse of that industry and higher—not lower—prices in the shops.

Although the task that we face is urgent, change must evolve. There needs to be a change of emphasis. I remember saying to some farmers three and a half years ago in the election campaign that we should recognize—far more than we do—the important role that they play in protecting our environment. Suddenly, everybody is suggesting that that is part of the solution.

There is much debate about the alternatives—whether we should continue to pursue an open market philosophy or whether some form of supply management would be a better bet. The attractions of the two are clear. However, British agriculture has endured the financial effects of a long and painful restructuring process. If all goes according to plan—I accept that that is a big if—we should be on the verge of reaping the reward of that painful restructuring. I am reluctant to see us throw all that away. I think back to the debates that we have had in the House in the past three years about the need to persuade our colleagues in Europe about the merits of a fair deal in terms of the green pound. All that is within our grasp.

It is appropriate that my right hon. Friend the Secretary of State for Trade and Industry is to reply to the debate because, from talking to farmers, I have found that it is the effects of inflation, high interest rates and the uniform business rate on some of their diversified occupations—as much as anything else—that are causing them concern. That dictates that we must get our economic management policies right, as well as looking at the policies that affect agriculture alone.

An open market does not mean that there should be no support. Appropriate measures for the environment are being developed. It was the Conservative Government who first proposed the establishment of environmentally sensitive areas. We are right to use the hill livestock compensatory allowances scheme to support less-favoured areas.

Let me take this opportunity to refer once again to the north York moors farm scheme, launched in my constituency earlier this year by my hon. Friend the Member for Skipton and Ripon (Mr. Curry), the Parliamentary Secretary in the Ministry of Agriculture, Fisheries and Food. That scheme has been on the back burner for two or three years. We want farmers to realise that the presence of sheep and suckling cows on the moors is crucial if we are to maintain the moors in their present state but that the numbers need to be limited. We must make environmental payments to support that policy. Similarly, Government support is required if we are to keep our landscape and our buildings, stone walls and hedgerows. We should take the opportunities that we have not taken in the past.

There are dangers in a control of output policy. Britain tends to play fair; others do not. I was arguing with a representative of a British company in Italy this week. He seemed to feel that all that mattereed was that one should agree with the principle and make it appear as though one was going along with everything. I do not believe that that is the answer for the Europe of the future.

The control of output will also freeze the farm structure. Are we satisfied that the present structure is entirely in Britain's interests, especially given that it is almost impossible for youngsters to go into agriculture? If we freeze that structure by controlling output, we shall prevent the United Kingdom from exploiting the more efficient methods that we all know exist.

With hindsight, milk quotas are often cited as having been a success. They certainly brought profitabiity back to the dairy industry but their introduction was a rather different experience. It was very traumatic and I remember it being extremely unpopular during the Ryedale by-election in 1986. We must face the fact that there are still major problems in our dairy industry and that even our present quota arrangements cannot continue completely unchanged.

There is a danger that output control may be used by other member states to protect small farmers. Pressure for the protection of small farmers has been seen all too clearly this year, with the outrageous attacks in France on British consignments of lambs. Two of the attacks by demonstrators, seen on television throughout the world, were on consignments of lambs from my constituency. This is perhaps not the time to enter into a detailed debate about the merits of live exports. I fully understand concerns about animal welfare, but I cannot let this opportunity pass without suggesting that if we stopped the export of live sheep and lambs to the continent, there would be disastrous consequences for sheep farmers in my constituency and, I dare say, in the constituency of the hon. Member for Carmarthen (Mr. Williams).

We should recognise the need to develop policy and take note of the fact that under GATT, restrictions would apply only to support that aids production. We can do much to help farmers that does not involve directly giving aid or encouragement to production.

In the proposals of my right hon. Friend the Minister of Agriculture, Fisheries and Food—in the position that the Government have taken in the Community and GATT—we have gone as far as we should go. They are enough. We need no more, and fairness has to be the watchword. Agriculture in Britain is undoubtedly at a watershed. We now have the opportunity of a generation to ensure the future profitability of agriculture. That issue is far too important for us to allow our rural communities to be used as a political football. It is the responsibility of the House to ensure that we are successful in the negotiations and in the reform of the CAP. That is a great responsibility, and what we do now will dictate the pattern of our rural economy for many generations.

As my right hon. Friend the Minister said, we have a moral responsibility to the rest of the world. At prayers every day in the House we say:
"Give us this day our daily bread"
The CAP has ensured that not only has Europe been fed but housewives have been offered a greater and wider choice of food than ever before. In the GATT round we must defend our own interests and we shall. We should also work to ensure that the world is fed and success in the GATT round is the key to that.

1.25 pm

This is an interesting and extremely important debate. It affects everybody in Britain, and in a short time the outcome of the GATT negotiations will affect the world. We are debating a serious issue, which plainly affects jobs in many parts of Britain. It also affects the world's environment and the relationship between the northern and southern countries.

It is disturbing that the whole issue is presented as if it were a question of negotiations between, primarily at the moment, the United States and the European Community and that when they sit at the negotiating table they start talking to representatives from the southern, mainly Third-world, countries. There is an extremely important and powerful missing player representing the interests of multinational corporations, most of which are in the United States but some of which are in Europe.

I should like to quote from a fascinating article by Chakravarthi Raghavan in the most recent issue of Resurgence, a magazine produced in Penang, Malaysia, by the Third World Network. He said:
"It is really a worldwide economic charter for transnational companies to gain 'extraterritorial rights' in all countries, and for foreigners to have untrammelled rights to property not known since the end of the colonial era''.
That was the comment of an American observer who was watching what was going on in the early stages in this Uruguay round of GATT negotiations.

We must look at the matter in the light of the world's present state. Two thirds of the world's population do not enjoy anything like the standard of living enjoyed by the majority of people in north American and western Europe. There is an annual capital flow of $150 billion from the poor southern countries to the banking systems of the north. That is mainly interest paid on the huge debt of southern countries, and that debt has been brought about by a mixture of circumstances—the very high interest rates charged in the northern countries, dominated in particular by the federal deficit of the United States, and by historically low prices for Third-world commodities. Commodities from the Third world are at their lowest price for 20 years.

There is increasing impoverishment in a large part of the world. To some extent, the GATT negotiations undermine what should be going on through the United Nations Conference on Trade and Development, because the motor driving the GATT negotiations is the free-market policy of the United States and British Governments. At the end of the day, that policy leads to the loss of jobs in Britain's older industries, bankruptcies among Britain's small farmers and impoverishment in Zimbabwe, west Africa and Latin America. We are seeing a struggle between the rich, the big and the powerful, and the small and voiceless who will suffer at the end of the process.

The transnational corporations are certainly prepared. In July this year, they had their first outing at the Group of Seven industrial leaders' summit meeting in Houston. The multilateral trade negotiations coalition is chaired by the former United States trade representative, William Brock. It includes American Express, General Motors, IBM, General Electric, Cargill, Citicorp, Procter and Gamble, and other companies, as well as the United States Council for International Business, the American Business Conference, the National Association of Manufacturers, the Coalition of Service Industries and others. It describes itself as
"a broad alliance of American private sector interests committed to a strengthened and more effective multilateral trading system. The Coalition includes an array of business, farm, consumer and trade associations".
They have joined together to try to influence or dominate the GATT round. They are powerful, well financed and effective. One can see from the initial stages of the GATT negotiations just what effects they are having.

At the end of the sessions, the Brazilian ambassador, Rubens Ricupero, issued a statement on behalf of the Third-world delegation, in which he said:
"Developing countries wish to reaffirm their readiness to negotiate constructively … (but) will reject any attempt to impose upon them a pre-negotiation package agreed only by a few. It is with profound concern that developing countries find themselves compelled to declare that, if the current situation is not changed soon, the Uruguay Round will be in serious jeopardy as a result of the lack of political will of the major participants."
He quite correctly makes that rather guarded comment because the demands that have been put on the table will have enormous effects in many cases.

For example, the transnational corporations want larger markets for their goods. They want to be able to control those markets, and above all they want to control the ability of Third-world producers to compete. There is growing evidence that the multinational corporations that own patent rights to new manufacturing processes carry them out in western Europe or north America, but do not allow local manufacturers in Third-world countries to operate them. That is a kind of economic colonialism in manufacturing ability. This has been demonstrated in the production of CFC alternatives, and time and time again in high-tech industries, particularly electronics. These corporations are permanently trying to dominate what goes on.

Can the hon. Gentleman give examples of this phenomenon? As I understand it, it would require a national Government to uphold a patent the use of which was deliberately suppressed in satisfying the needs of its consumers nationally, which would be a rather unusual practice.

The most obvious example is the one that I have already given—the production of CFC alternatives. They can be manufactured only under licence granted by the owner of the patent, so if a Third-world country wishes to encourage the development of the CFC alternative—an ozone-friendly product, for want of a better word—it can do so only by paying a large fee to the original manufacturer. That was one of the issues raised by Mrs. Gandhi at the conference on global warming and the destruction of the ozone layer. There are many other examples.

We should also be concerned about the effect on the environment of the growth of free trade policies. There is understandably a welcome growing concern about the effects on the environment of the destruction not just of the rain forests, tragic though that is, but of the temperate forests and the savannah grasslands, and the pollution of the southern oceans. These are the three major areas of the change of carbon dioxide into oxygen. We are right to be concerned about this.

If we adopt a trade model that encourages the maximisation of the use for agricultural purposes of land that provides an immediate return on capital rather than a long return, the result is the destruction of more rain forests, because one can produce a little more beef for a short time, never mind that in the long term it is disastrous.

I hope that the Secretary of State will tell us what work has been done on the environmental effects of the free trade policies being promoted. It is all very well for the British Government to increase the funds that they make available to the environment commission of the United Nations. I am glad they have. I welcome that move, but there must be a recognition that the destruction of the environment comes from many sources, including the trade policies that are now being followed.

The development of free trade policies benefits the richest and the most powerful throughout the world. We are not dealing with free trade that is fair. There is a contrast between a large grain-producing operation in the mid-west of the United States, or Canada, with all the cheap production facilities that are available to it, along with a high degree of mechanisation, good transport infrastructure and everything else, and a small farmer in Zimbabwe attempting to grow maize for the local market.

We find throughout the world that large subsidies are given to large producers. We find also that many of the products of Europe and north America end up being dumped into third world markets. For example, wheat is sold for $160 a tonne as a guaranteed price in Europe or north America, and it finds its way to Nigeria as a dumped product, where it is sold for $60 a tonne. That depresses local productive ability, because the local product cannot be sold at that sort of figure. Local farmers go out of business because of the impact of imported wheat.

It is ironic to find in Zimbabwe and throughout southern Africa, which is a beef-producing area, that European beef is being sold while local farmers go out of business. If self-reliance in Third-world agriculture is to be promoted, as the United Nations and many others suggest, trade policies and the trade environment will have to reflect that. The United States Secretary of Agriculture John Brock, has said:
"Self-reliance in Africa is a romantic anachronism."
His agenda is extremely clear.

There will have to be three objects for farming and farm products. First, we must end over-production. The over-production that is taking place in Europe and the United States is damaging and obscenely wasteful. It is damaging to the environment, and it is obviously obscenely wasteful when products that are the result of over-production are being burnt in an attempt to maintain prices. The 30 per cent. reduction in subsidy will mean that farmgate prices will increase by about 7 per cent. in real terms over the next five years. The people who will suffer most as a result of that are the small farmers that my hon. Friend the Member for Carmarthen (Mr. Williams) was talking about, not the large producers in Europe or north America.

Secondly, we must end export dumping. Instead, we must promote aid and trade policies that encourage self-reliant production, which is more protective of the local economy and less dependent on the economies of western Europe and of the United States. Such production would obviously require less transportation.

Thirdly, what happens to the political sovereignty of poor countries that do not have the infrastructure that is available in Europe and north America when they are told that, because of the debt crisis, they must open up their economies to multinational capital to do whatever it will, and when the IMF and the World bank tell them that they must cut social expenditure? They are now told that they must pursue free trade policies for farm products. Those policies add up to disaster for poor countries.

I hope that the Secretary of State will show when he replies that he recognises that the policies that are being promoted by the Government that he represents, by the United States Administration and by the European Community are not beneficial to environmental protection throughout the world or to the poorest people in the poorest countries. They are a continuation and extension of the growing impoverishment of two thirds of the world, which has been going on ever since the end of the second world war.

We need to think about the world in a global sense, about the obscenity of poverty throughout the world, and about the danger that environmental destruction creates for every person in this world. The GATT round provides the opportunity to deal with some, if not all, of those issues.

1.40 pm

I am sorry that, during this important debate, so little time has been devoted to discussing textile issues. I remind my right hon. Friend the Secretary of State that the textile and clothing industry still employs 480,000 people—many fewer than the 700,000 that it employed when I came to the House, but nevertheless a substantial number.

No one could exaggerate the importance of pending decisions to be taken by the Government and their European partners as they approach the climax of the Uruguay round during the next few days. If the right decisions are taken, the industry will continue to be one of the great contributors to our future economic growth. But if our industry is betrayed, there will be empty shells of once-thriving mills, a serious contraction in the industry, and many more of its work force walking the streets. Those directly employed in the industry and their dependants add up to well over 1 million people, most living in the midlands, the north and in Scotland, and a large percentage of them currently represented by Conservative Members. They will pay close attention to the words of my right hon. Friend when he replies to the debate.

Matters of the utmost national importance are involved. I hope that my right hon. Friends the Members for Henley (Mr. Heseltine), for Huntingdon (Mr. Major) and for Witney (Mr. Hurd) will also give some thought to those issues during the next few days, even though I fully appreciate that they have many other matters on their minds. I shall draw my remarks and those of other hon. Members who have spoken in the debate to the attention of my right hon. Friends. I am sure that they will wish to remember just how many of our fellow citizens will be affected by the GATT decisions.

The textile industry knows full well, from bitter experience, that many other countries that erect barriers to our exports and put obstacles in the way of free trade have never ceased to drag their feet when pressed to do so. By now, it should be fully understood that they will not yield ground voluntarily. A tough negotiating stance, linking the gradual ending of the multi-fibre arrangement derogation with a GATT agreement that really points towards free and fair trade, is vital. That appears to be well understood by a number of our EC partners, which are arguing in favour of a phasing-out period of 10 to 15 years. Compared with the position when MFA4 was negotiated four years ago, we now appear to be taking a less robust line.

I am afraid that my right hon. Friend, in his speech to the British Clothing Industry Association, blew a hole in our negotiating stance when he said that the Government continue to argue that 10 years would be too long a transitional period. I understand that because of divisions among members of the Community on that issue, the British stance could prove to be decisive. We should be arguing in favour of a longer, rather than a shorter, phase-out period. It should be clearly understood that the speed of its implementation is linked to the willingness of other countries to abide by more open trading rules.

It is essential that a strong mechanism should link the stages in the phasing out of the MFA with clear signs that progress has been made in implementing strengthened GATT rules and disciplines. Unless a formal mechanism exists, it is unlikely that some states will abide by their obligations. If they believe that the MFA will be abolished regardless of compliance with the rules, they will merely wait for that development. It would also be disastrous for substantial additional access to be given to the import of textiles and clothing in the first stage of the phasing-out period, and for excessively large increases in import growth rates to be given before the existing distortions in world trade have been affected by the new GATT regime.

We must point to the many, many examples—I do not have time to cite them—of countries with enormous barriers to our exports. For example, India has a substantial number of potential purchasers for our high-quality goods, but it prohibits the import of textiles and clothing similar to those produced domestically, and it charges tariffs of 200 per cent. and more on the remainder. How can anyone excuse the United States for charging 36 per cent. import duties on British wool cloth—more than twice as much as the duty imposed on any goods flowing the other way across the Atlantic? The United States has graciously offered to knock off a few percentage points, but nothing off such important British exports as sweaters.

It is all very well to talk glibly of strengthened rules and disciplines. We hear words, but commitments are strangely lacking in respect of subsidies, the theft of designs—which is all too prevalent—dumping and safeguards. We are still miles away from reaching a satisfactory conclusion.

Will my right hon. Friend aim at a 10-year phasing-out period for the multi-fibre arrangement? Until recently, the Government argued for six years, and my right hon. Friend the Secretary of State said that 10 years would be too long. However, a few days ago, he seemed to imply that 10 years might be about right.

When the fourth multi-fibre arrangement was negotiated, we seemed to be in the middle range of EC countries in terms of the objectives sought, but many others are now being much more robust than we are. Their textile and clothing industries are arguing for as long as 15 years to phases out the MFA, as are the United States and Canada. It is illogical to abandon all its safeguards well before GATT rules and disciplines can properly be put into effect.

Will my right hon. Friend the Secretary of State make reciprocity a central tenet of his policy, so that any country that fails to open up its market will be denied import growth into the Community? Will he advocate a staged phasing-out of the MFA, so that import and export growth rates are gradual, as stronger GATT rules and disciplines take effect, with appropriate safeguards against import surges?

Let no one doubt the impact that failure would have. If agreement is reached to phase out the MFA without a strong successor regime to replace it, our counterparts in the United States Congress will inevitably insist on overruling the presidential veto and, by rejecting the Uruguay round, create a cocoon of even greater protectionism round America. That would bring in its wake a diversion of trade to which the United Kingdom market would be more vulnerable than any of its fellow European member states.

If such developments come to pass as a result of inadequate and indeed spineless action on our part, who knows what the effect will be in terms of job losses? Will the number be only 33,000, as Professor Silberston estimates—although his figures are challenged by almost everyone in the industry—or 100,000, as the Trades Union Congress suggests?

I plead with my right hon. Friend the Secretary of State never to say again, as he did recently, that over the economy as a whole, the gains to employment from freer trade would exceed the losses. Fair trade would probably create more jobs, rather than bring unemployment—but one-sided free trade will certainly bring job losses in textiles that could never be replaced. Such losses, which would be concentrated in areas where no other employment is available, could never be compensated for by the vague prospect of a marginal increase in jobs spread thinly throughout the country.

God forbid that any Minister should be allowed to think that the British textile industry can be traded off against others. It follows that any agreement to phase out existing protection, however desirable, must be accompanied by a genuine commitment on the part of all concerned to fair and free trade, must be conditional on the latter—and should not be regarded as the prior condition for it.

We heard on the radio this morning that the contenders for the leadership of the Conservative party would not have to concentrate on the House of Commons today because it was not holding an important debate. Perhaps this debate is more important than some people think. If the textile and clothing industries, which are vital to so many people, are driven towards the precipice, that folly would blight irretrievably the honeymoon period of any incoming Prime Minister. The subject of today's debate may be his first vital test, and one that he and other members of the Cabinet must not fail.

1.49 pm

After the heady days of the past week, it is a welcome return to the real world of debating a major issue of much importance to my constituents—the final outcome of the Uruguay GATT negotiations.

A successful outcome is paramount for two major industries—agriculture and apparel knitwear and textiles. Those industries employ more than 5,000 people in Sherwood, whose jobs are at risk in the European Commission's position weakens in favour of our competitors.

A battery of television cameras, the like of which we have never seen before, was assembled outside the House on Tuesday night because of interest in one job. Can you imagine, Mr. Deputy Speaker, the success that we would have in achieving our aims if pro rata coverage were given for the 1 million jobs that depend on prosperous agriculture and AKT industries? As that clearly would not happen, I felt duty-bound to be here today to remind my right hon. Friend the Secretary of State of the crisis in agriculture and the views of the AKT industries, which lie beyond the end of the multi-fibre arrangement.

My right hon. Friend the Minister of Agriculture, Fisheries and Food is aware of the near panic among farmers about declining profitability and uncertainty. Since 1979, farmgate prices have risen by only 60 per cent., whereas the retail prices index has risen by 150 per cent. Real farming income has fallen at an average annual rate of 24 per cent. since 1979. Compare that with one supermarket chain that recently announced half-yearly profits of £273 million—a return on capital of 7·3 per cent. In agriculture, the figure is nearer 2 per cent., but for many farmers there is no return at all.

I believe that there is a future for agriculture, but my right hon. Friend the Minister must ensure that that is so by insisting, when the GATT negotiations are completed, that the settlement bears equally on farmers in the United States, the European Community and worldwide. It must be implemented within the EEC in a way that does not discriminate against Britain's farmers.

Working alongside the mining industry in my constituency's towns and villages is the textile and clothing industry, which employs 2,300 people. They are concerned about the removal of the multi-fibre arrangement. I must thank my hon. Friend the Minister for Trade, who is responsible for this industry, for visiting my constituency on 1 November to hear the views and concerns of constituents who are dependent on the AKT industry. To restate the case against is unnecessary, but I must remind my right hon. Friend the Secretary of State that an MFA phase-out period of less than 10 years would be unacceptable. It would be intolerable if an agreement were reached to phase out the MFA while leaving the textile and clothing industries exposed to grossly unfair conditions of competition.

The results would be disastrous, with a huge loss of jobs in the United Kingdom. That would be a double blow to employment in my constituency, which has lost 8,000 mining jobs—a loss from which we are just beginning to recover. Therefore, I and my constituents who work in the AKT industries want from GATT the elimination of abuses such as prohibitive tariff barriers, trade distortions, subsidies and dumping and, more generally, the strengthening of competition. Given that, the clothing and textile industries would accept any challenge.

1.53 pm

This has been a wide-ranging debate and many important issues have been raised.

To some, the GATT round may seem an obscure subject. Indeed, one newspaper article that I read suggested that if anyone heard the expression "Uruguay round" he might think that it was an obscure form of the rhumba. Despite that, GATT and the Uruguay round is crucial to the future of world trade.

Our debate is timely in one sense. It is intended that the negotiations will conclude in December. I had some sympathy with the view expressed by the hon. Member for Weston-super-Mare (Mr. Wiggin). He lamented the fact that we had not had more detailed debates on the subject at an earlier stage. Given the complexity of many of the issues, I concur with that judgment.

It is worrying that we are close to a conclusion on the GATT round when so many issues have not been properly thought through and worked out. The details are still not available to us. Perhaps the Secretary of State can reassure us on some of those points. Various accounts in the press in recent weeks have alleged that the talks were about to break up without conclusion, when many issues remained to be resolved.

An evaluation has been carried out of the likely effect of the conclusion of the GATT round on certain sectors of the United Kingdom economy. Perhaps the Secretary of State can give us more details of that and the consultations that he has had with industry and the many people from groups within the United Kingdom who are concerned to see a successful conclusion to the round of talks.

For industry the outcome is particularly crucial. Industry faces a difficult future in Britain, as several hon. Members pointed out. High interest rates, high inflation, the need to adjust to membership of the exchange rate mechanism of the European monetary system and, of course, the competition that industry expects to face as a result of the completion of the large European single market in 1992 already put pressures on industry. So the additional effect of GATT must be borne in mind.

I accept the argument that there is a wide and general acceptance of the overall benefits of trade liberalisation. It will bring benefits to us in the United Kingdom and, indeed, to the rest of the world. The president of the World bank, Mr. Barber Connable, said:
"protection by industrial nations costs developing countries more than twice as much as they receive in aid."
Again, there are worries about trade liberalisation. I was glad that my hon. Friend the Member for Islington, North (Mr. Corbyn) laid such stress on the needs of developing countries. This year's World bank development report expresses anxiety that some of the benefits of the round for developing countries will be unequally divided, and that while certain middle-income countries, and even some poorer ones will benefit, unless the rules are framed in a particular way, the losers could be poor countries such as Somalia, which are heavily dependent on basic commodity exports. Such countries might lose the relative advantage that they now enjoy through special trade preferences. Trade liberalisation must not mean that the poorest suffer. That would be a terrible indictment on GATT. Countries that allowed that to happen would bear a grave responsibility.

Trade liberalisation also brings some minor dangers. This week I was reading about the difficulty that Thailand faces in stopping imports of cigarettes from the United States. Its commitment to introduce free trade may mean that it will have to accept imports that it does not want. That shows a health aspect of trade liberalisation. It may be a minor point, but such examples may be repeated in many parts of the world.

Many hon. Members said that we are talking about not only free but lair trade. The expression "level playing field" was used once again. It was used by the Minister of Agriculture, Fisheries and Food in his opening remarks. Even in the European Community a level playing field can be notoriously difficult to achieve, so it will not be easy to achieve level playing fields in the many policy areas dealt with in the GATT negotiations. However, the effort must be made.

One point that I should like to put to the Secretary of State is the problem that trade negotiations which we may conduct bilaterally or between ourselves and groups of countries could cut across the GATT negotiations. That should be avoided if at all possible. For example, the European Community is trying to negotiate a free trade agreement with certain Gulf countries, partly for political reasons. We are worried about the possible effects on our petrochemicals industry and that such negotiations may cut across GATT and some of the principles embodied in it. Perhaps the Secretary of State will comment on that.

Some countries are not members of GATT. Because the former eastern bloc and the Soviet Union now need access to the wider trading community, it is important that we frame the GATT rules in such a way that their interests, too, are taken into account in future. The short-term and long-term needs of eastern Europe and the Soviet Union need to be borne in mind.

A theme mentioned frequently in the debate has been the position of developing countries. As I have said, I am worried that in certain instances the poorest countries could be adversely affected by some of the negotiations. Can the Secretary of State update us on and tell us what discussions there have been about the different categories of developing countries and the need to ensure that the losers are not the poorest developing countries?

My hon. Friend the Member for Cynon Valley (Mrs. Clwyd) wrote to the Minister for Trade expressing concern about the effect of opening up the market in services on certain developing countries. The reply stated:
"we believe that all countries stand to benefit from the introduction of a set of fair multilateral rules, which will take account of the needs of different parties and provide a stable environment for growth and development."
I should like more details about how the Government have sought to promote a stable environment for growth and development as part of the discussions on opening up GATT to areas that have previously not been included in the negotiations.

The Uruguay round needs to be sensitive not only to trade, but to world social and environmental considerations. I was pleased that several hon. Members referred to the environment in their speeches. The Minister mentioned the need for agriculture to be more environmentally sensitive. That is certainly something for which we have called for many years. My hon. Friend the Member for Islington, North referred to the environmental aspect of trading issues, which, too, is important and needs to be borne in mind.

I am a little worried at the reply from the Department of Trade and Industry to my hon. Friend the Member for Linlithgow (Mr. Dalyell) who, in a written question, urged that environmental aspects should be taken into account in the Uruguay round. The Government's reply was:
"it would not be practical to seek to introduce any major new initiatives at this stage."—[Official Report, 1 November 1990; Vol. 178, c. 772.]
Despite the dangers of making the issues even more complex, environmental considerations must not be overlooked because they are vital to the survival of the planet. The reply is disappointing. It also seems to be at variance with earlier promises made by the Prime Minister in the wake of the publication of the Bruntland report, that environmental considerations should be brought into the GATT negotiations. Her statements were subsequently repeated by the Secretary of State for the Environment in May this year. The idea of "environmental conditionality"—countries should not be penalised for taking measures if the main purpose is to protect the environment—is an important principle. I wonder whether the Secretary of State would care to comment on that important aspect, about which we are particularly concerned.

With so many complications, it is perhaps not surprising that the right hon. Member for Southend, West (Mr. Channon) referred to the timetable of the GATT negotiations and expressed concern that it would not be possible to sort out all those issues in December. The momentum towards the conclusion of the agreement should not be lost, but all the issues need to be tackled. If that means postponing the talks while giving a clear timetable for the final agreement and doing so in a positive rather than negative sense, that should be considered. Perhaps the Secretary of State is in a better position to inform us on that aspect.

Not surprisingly, agricultural matters have figured large in the debate. My hon. Friend the Member for South Shields (Dr. Clark) dealt with those matters at length, as did the Minister of Agriculture, Fisheries and Food. We believe that it is important to include agricultural issues within GATT. Many critical comments have rightly been made about the CAP and some of its worst features. I admit that I have done little work on agricultural issues in recent years, but I was a member of the European Parliament's agriculture committee and I remember how strong the agricultural lobby was at that stage. Our agriculture committee included Members of the European Parliament who were beef, pig or dairy farmers, cereal producers, oilseed rape growers, wine producers, sugar beet growers and even, much to my surprise, a buffalo farmer.

At that stage, the agricultural lobby was perhaps stronger in the European Parliament and European institutions than it is now. I strongly believe that agriculture is a vital sector of our economy and that healthy agriculture and environmentally friendly agriculture are extremely important. Some of the provisions of the CAP represent a particularly damaging form of protection and we need to be concerned about those aspects. We all have an interest in reform because of the misdirection of resources in the European budget in terms of agriculture and the effect of export refunds on some of the poorest countries, although hon. Members are perhaps divided on the issue of the pace of reform.

Considerable reference has been made in the debate to textiles. The Minister of Agriculture, Fisheries and Food said that hon. Members should not be constrained about putting forward their special constituency interests. They have certainly not been constrained. Hon. Members have eloquently expressed the interests of their constituents, particularly those employed in the textile and clothing industries. Like agriculture, that is an important sector, involving more than 400,000 jobs. It is the fifth largest manufacturing sector and an important export earner. It should be said, lest people feel that the multi-fibre arrangement has been the cause of total protection, that we have a considerable trade deficit in textiles, with £3·6 billion of our annual deficit being accounted for by the deficit in the textile and allied industries. Given our bad balance of payments, it is not surprising that hon. Members who spoke in support of the textile industry are conscious of the effect of a further deterioration in that industry and a consequent deterioration in our balance of payments.

The textile industry is vital to United Kingdom regions, particularly the north-west, Yorkshire and Humberside and the east midlands. Hon. Members from those areas have put the regional aspects to us. They are not among the most prosperous British regions. For that reason also the representations that have been made on behalf of the textile industry must be taken strongly into account. The Opposition's line on textiles has been supported by many Conservative Members in the two early-day motions on the Order Paper.

Perhaps I might correct the hon. Lady. Early-day motion I was tabled by me, a Conservative, although I am glad that it has been supported by many Opposition Members.

I am not sure that I claimed for the Opposition the authorship of both early-day motions. I confirm that both have a large number of signatures from both sides of the House.

Within the textile arrangement that manages the growth of imports—it does not prevent the growth of imports in textiles—we must be sensitive to the position of poorer countries. Many of the poorest are worried about a free-for-all in textiles because they feel that they will be excluded by the middle-income textile producers and that their relative position will become even worse.

I do not have time to mention many other issues with which I should like to deal. My hon. Friend the Member for Nottingham, North (Mr. Allen) raised an interesting aspect when he referred to the social dimension of trade negotiations. While opening up trade, we should not simply increase the possibilities of exploitation of people who earn little or who work in appalling conditions. It is important to remember the need to improve wages and conditions, although I do not expect much joy from the Government on that, given their well-known objection to the conclusion of the European social charter.

My hon. Friend the Member for Wallsend (Mr. Garrett) rightly pointed out the importance to the United Kingdom of the service sector and the negotiations in that area. The opening up of GATT to include services could be beneficial, but what help will there be for developing countries in the transition to an open market? Will the Secretary of State comment on the attitude of the United States, which seems to be dragging its feet on services, despite the fact that it was initially in favour of the opening up of the market in services? Indeed, the Financial Times today carries a worrying article saying:
"Financial services have been left out of the draft text of an agreement to liberalise world trade in services."

While my hon. Friend is being critical of America, would she extend her criticism to the unified Germany and its reluctance to move on insurance and other allied services?

That aspect was mentioned in the debate that we had a few weeks ago on the opening up of the European market in services.

All parties to the GATT negotiations still have some concessions to make to ensure that agreement is reached. Like others, I hope that the negotiations are successful. It would be a tragedy if, after political barriers had come down, the world was faced with trading blocks and new trade barriers. The goal of one world is economically and politically important. The GATT negotiations should keep that goal constantly in mind.

2.13 pm

The hon. Member for Gateshead, East (Ms. Quin) is right to emphasise the importance of the Uruguay round and to regret the lack of understanding of it in many quarters. That was brought home to my by a business man who said that I was spending too much time on the affairs of one Latin American country and should get on with the business of extending free trade world wide. It is important, and it is in recognition of its importance that, as my hon. Friend the Member for Keighley (Mr. Waller) pointed out, Cabinet Ministers are opening and closing today's debate, which is not normal on a Friday.

Why is the GATT round so important? First, because we cannot afford to let it fail. Failure would mean not only a continuation of the status quo, but the erosion of the multilateral trading system that has served us so well for over 40 years. It would also mean an increase in protectionism and beggar-my-neighbour policies, rival trading blocs and trade wars. The great depression of the 1930s is a salutary reminder of what can happen in the absence of multilateral trading rules. The stock market crash of 1929 led to an escalation of trade protection. The result was a reduction in world trade in manufactures of 40 per cent. and in world manufacturing output of 35 per cent. over the next three years.

Secondly, the round is important because of the positive benefits that a successful outcome will bring, as my right hon. Friend the Member for Southend, West (Mr. Channon) brought to the attention of the House in his distinguished speech. Statistics are a dangerous tool and one cannot quantify the benefits of liberalisation with any precision, but the lowest estimate that I have seen is that a 30 per cent. cut in all tariff and non-tariff barriers, which is what the Uruguay round sets out to achieve, would increase Community and British exports to the rest of the world by 2 per cent. in volume terms. That is a large amount of trade. I have seen estimates for the Community of as high as 8 per cent., which would be consistent with an increase in income—in the GDP of the Community—of no less than 3 per cent.

Thirdly, the round matters because the former state-controlled economies of eastern Europe are turning to the market and looking for a place in the world trading system. It would be tragic if we failed them now.

My right hon. Friend the Member for Southend, West asked a number of questions, especially whether I could inform the House of the prospects and the time deadline. The round faces several considerable difficulties, as is well known, especially because of the Community's recent problems in formulating its offer on agriculture by the agreed deadline, which put pressure on the whole timetable. Negotiations are so complex and involve such difficult political decisions that without the discipline of a deadline, we would never reach agreement. The December ministerial meeting has been the agreed deadline for the past two years. It is important that we respect that deadline and make it the key to political decisions in Brussels in December. That does not rule out some tidying up of the technical details following those key decisions during January.

However, we are under an absolute deadline of 1 March when the fast-track procedure of the American Congress expires. We must have everything converted into legislative form by then, or it will be subject to detailed debate and voting in the United States Congress, and the whole thing could become unravelled. As that will take several months, the deadline by which we must make the key political decisions is the end of this year.

There is still a lot of work to do and success is far from guaranteed, but I believe that it will be possible to reach a successful outcome. We had a meeting of Trade Ministers in Brussels on 15 November and all were agreed that we had to be committed to a successful outcome. No country has introduced new road blocks or non-negotiable demands into the process.

If the House will forgive me, I shall not dwell on agriculture because my right hon. Friend the Minister of Agriculture, Fisheries and Food dealt with that subject with immense expertise and ability at the beginning of the debate. There have been several interesting speeches on it, not least from my hon. Friend the Member for Weston-super-Mare (Mr. Wiggin), who brings to bear his expertise as Chairman of the Select Committee on Agriculture, which is matched and balanced by the fact that he is Chamberlain's great-grandson, giving him some understanding of industrial issues also. Several other hon. Members, including my hon. Friend the Member for Sherwood (Mr. Stewart), have spoken on that matter.

Several significant speeches have been made on the textile industry. My hon. Friends the Members for Batley and Spen (Mrs. Peacock), for Keighley, for Pudsey (Sir G. Shaw) and for Nottingham, South (Mr. Brandon-Bravo) recently came to see me about that subject. My hon. Friends the Members for Batley and Spen and for Keighley argued forcefully for their constituents and for that important industry. I recognise that the textile and clothing industry is vital not just to the Community but, more important, to the United Kingdom—in terms of output, exports and the number of people employed. That is why, when we agreed to phase out the MFA, we insisted on strengthening the rules and disciplines and on better market access. That was the commitment made at the start of the Uruguay round and it is one to which we adhere.

My hon. Friends and the industry have three key concerns. The first is the timing of the integration of textiles into the GATT round and the normal GATT procedures. The second concerns the linkage of that phase-out with strengthened rules and disciplines. The third concerns the extent to which it will have an impact on jobs and the industry in this country.

The length of the transitional period has to be negotiated in GATT. However, in deciding how we would argue for the establishment of the European Community's position, we took into account three considerations. First, the length of the transitional period must be realistic and we must obtain overall agreement from the underdeveloped and developing countries to ensure that they join in the whole Uruguay round and that we get a satisfactory settlement out of the round as a whole, not just for the textile industry.

Secondly, we must provide a proper time scale and pace of adjustment for the United Kingdom industry, which must have time to adjust satisfactorily.

Thirdly, as in any negotiations, we must recognise that we will not get everything for which we ask—nor will others. The British industry has tended to say that it would be satisfied with a minimum phase-out period of 10 years. Some countries have demanded 15 years or more, which would probably wreck the chances of agreement on the GATT round as a whole. We have argued for a phase-out period of less than 10 years, but that is a natural part of the bargaining process and it would be absurd to suggest what the final position will be. We have left the Community with a negotiating position and some flexibility in negotiating within the GATT round. I hope that my hon. Friends will agree that that is a sensible approach.

If one is negotiating, surely one's most likely approach is to ask for at least as much as one wants. It is unusual to ask for less. A number of countries in the Community are asking for more than 10 years. If we want an MFA phase-out period approaching 10 years, it is not very sensible of us to say that we would be satisfied with considerably less.

It is a two-stage process. First, we have to reach a settlement within the Community on a range within which it can negotiate. The second stage is GATT. We must ensure that the Community does not establish a target that will make success in the wider GATT round impossible. Some countries in the Community are less attached to the success of the overall GATT round than we are. We have the greatest interest in the successful outcome of the round because 25 per cent. of all our goods and services are exported. It is vital—not least to the textile industry—that we should have access to world markets.

The industry is also concerned about the mechanism for phasing out restrictions. It is important that the process should be reasonably smooth. If we leave too much to the last minute, the adjustment will be abrupt and unpalatable.

Prospects for linkage are brighter in some respects than the industry fears. It is not a matter of the MFA ending before tougher rules and disciplines are brought in, because some of those rules and disciplines will come into effect from the start. For example, changes in the anti-dumping rules and the revised system of safeguards should come in immediately, and important steps should be taken to improve access to overseas markets for our exporters. We want to see export subsidies phased out over the same time span. Naturally, we would like them phased out in a shorter time, but we would accept the time span over which textiles are phased into the MFA.

Some people argue that it is not so much a question of agreeing in principle to stronger rules and disciplines, but of seeing them work in practice. The whole point of rules and disciplines is that they allow infractions to be dealt with through the GATT machinery for dispute settlement. If in the last resort breaches persist and people do not comply with the rules, the Community has the right of retaliation, if necessary on a cross-sectoral basis. Naturally, one hopes to avoid that because we want peace in the trade world, not trade wars. I am confident that the general GATT dispute settlement procedures will be greatly improved.

There are good chances of a satisfactory text in the textiles agreement which will provide for the monitoring of commitments undertaken in other GATT areas.

It is important for industry to know to what extent it will find new textile markets overseas. The industry has a good export record and in some areas where tariffs have come down for one reason or another the textile industry has substantially increased its exports. We want that to happen more widely. However, we must recognise that much of the penetration of the British market has not been by less developed countries but by other countries in the Community. Some 53 per cent. of our imports of clothing and textiles come from other Community countries. They will face the greatest intensification of competition as the MFA is phased out, and we may see some change of source of exports to Britain rather than a continuing increase in imports. I hope that the industry will continue with great energy and determination to upgrade products, quality, design and fashionability so that it can win higher-value markets at home and abroad.

One of the most important sectors is, of course, services. The hon. Member for Gateshead, East asked about the prospects for services and the attitude of the Americans. It is regrettable that America, which initially pressed for services to be included in the round, is now saying that some sectors should be taken out. It is important that the most-favoured nation principle should be accepted in principle for the whole service area, even though to start with there may have to be derogations for specific sectors such as civil aviation which is almost inherently dealt with bilaterally.

Time is so short that we want to get the whole GATT round committed to the principle of including services in the multilateral trading system. We accept that more may have to be negotiated in detail over a longer period. We are still going for success in that area which we think is immensely important for Britain and the Community.

There are some other important new areas, such as intellectual property rights, which are of interest to the textile industry. The protection of patents, trade marks, copyright and designs is an increasingly important aspect of international trade and not only in high-technology goods. The absence of protection for these intellectual property rights in overseas markets can distort trade, and lead to serious loss of revenue for British firms.

Part of the problem is piracy and counterfeiting. Trade in counterfeit goods accounts for between 3 and 6 per cent. of world trade. United Kingdom drug companies lose about £50 million, the record industry $1 billion, and the European motor parts industry $200 million each year through counterfeiting or piracy. We want more countries, especially in the developing world, to establish laws for protecting patents and other intellectual property rights. Without this our companies have no legal remedy if their products are reproduced without their agreement. This is just as much a barrier to trade as a quota or a tariff. It is unfair trade, and unfair trade is unacceptable.

An agreement on adequate protection would open up new markets for many of our companies. There is still a lot of work to be done to agree on standards of protection and means of enforcing these, but agreement is high on our list of priorities.

Time does not permit me to cover all the other important questions raised in the debate, but I shall end by underlining how important this is. The Uruguay round is probably the most complex trade negotiation ever attempted. It covers 15 major areas and involves 105 countries and territories. At stake is the future of the world trading system, which has brought us unprecedented growth and prosperity. The outcome must be a package that satisfies and includes everyone. All Governments need to take difficult decisions if we are to achieve this. We cannot simply take what we want and ignore what we dislike. If we succeed, everyone will gain, and if we fail everyone will be the poorer.

It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Import And Export Control Bill


That, in respect of the Import and Export Control Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—[Mr. Nicholas Baker.]

Caravans (Standard Community Charge And Rating) Bill


That, in respect of the Caravans (Standard Community Charge and Rating) Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time.—[Mr. Nicholas Baker.]

M20 (Widening)

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Nicholas Baker.]

2.31 pm

I am delighted that we have left until last the major issue of the week—the widening of the M20 between junctions 3 and 5. I am also delighted to see that my hon. Friend the Parliamentary Under-Secretary of State for the Environment is to reply to the debate.

I understand the need for the widening scheme, as do the majority of my constituents. This section of the M20 is the point at which all the traffic from the M25 north and south going both to and from the Channel tunnel will be funnelled. Therefore, it is no surprise that the Department of Transport feels that it is necessary to widen the motorway from three to four lanes.

I have four specific aspects of the scheme to raise. The first is what appears to be an inordinate delay by the Department of Transport in publishing its proposals. I find it hard to understand why it has taken so long. This is not a new motorway. It is a matter simply of constructing an additional carriageway to the motorway. The press notice issued by the Department on 25 August 1989 assured us:
"The improvements will be contained within the existing highway boundary wherever possible."
Therefore, no material additional land should be required, and one would have thought that the detailed line of the scheme could be published quickly.

The consultant engineers acting for the Department—Gifford Graham and Partners—were appointed last August. The latest information that I have from my right hon. Friend the Secretary of State for Transport is:
"We hope"—
not we will—
"to announce detailed proposals next year."
I do not understand why it is taking two years or possibly longer for the Department to publish its proposals as to where the extra lane will be fitted into the motorway. I should be grateful if my hon. Friend could tell us what the timing will be for the publication of those proposals. I hope that he will do all that he can to accelerate their publication.

I have a letter from Mr. A. D. Springett of the Department, dated 31 May 1989, in which he says:
"The Department hopes that the widening will be completed in time for the opening of the Channel Tunnel in 1993."
If that is the position, I think that my hon. Friend will recognise that the Department must get its skates on, especially if it is not intending to publish the line until some time next year.

Secondly, I consider that there is a glaring inadequacy in the 67 m distance within which, and only within which, it is possible to serve blight notices on the Department of Transport by home owners whose properties have effectively been rendered unsaleable by the scheme. Blight notices are, of course, an important protection for individual home owners whose properties are effectively rendered unsaleable by a firm highway proposal. As I understand it, a person whose property is rendered effectively unsaleable by a firm highway proposal has a legal entitlement to serve a blight notice on the highway authority, secure the full unblighted value of his property and be enabled to move. That is entirely right, but I must tell my hon. Friend that the theory is not working out properly in practice in this circumstance.

Very many of my constituents whose homes are beyond the 67 m blight line have found that their properties have been rendered unsaleable by the publication of the Department's proposals. They have been rendered unsaleable by the publication of the intention to embark on the scheme, but they are doubly unsaleable because of the step that the Department has entirely properly and correctly taken, which is to instruct the local planning authority, Tonbridge and Mailing borough council, that when prospective purchasers try to buy a property that is up to 200 m from the motorway, it is to reveal in its response to purchasers' solicitors' searches that a motorway widening scheme is envisaged. That makes it virtually impossible for anyone living between 67 and 200 m to sell his property.

There has been created what amounts to an invisible Berlin wall on both sides of the relevant section of motorway in my constituency. Those who live 67 m from the motorway have the freedom to move. They are paid the full value of their house and they can bank their cheque and go and buy elsewhere. On the other side of the invisible wall, just beyond the 67 m line, people are unable to sell their major asset. They are unable to realise the cash value of their homes. They are effectively imprisoned or trapped within their homes while the uncertainty continues.

The Department interprets the 67 m limit with extreme and total strictness. I know of instances where there is a semi-detached property and the Department of Transport has bought out one half of it under the blight notice procedure but refuses to buy out the other half because it is a fractional distance beyond the 67 m line. I should be grateful to my hon. Friend if he would examine the fairness of the 67 m line.

I have carried out some research with the great aid of the Library. The origins of the 67 m line are interesting. Apparently they go back to a limit of 220 ft—my hon. Friend will say immediately that 220 ft is the equivalent of 67 m—which is the limit that is provided in section 2 of the Restriction of Ribbon Development Act 1935. The Second Reading of that measure was moved by Mr. Hore-Belisha of pedestrian crossing fame. That is the origin of the 67 m line. My hon. Friend will be the first to appreciate that in 1935 we were barely into building dual-carriageways. Motorways had not even been thought of—they were some 20 years away—let alone four-lane motorways in each direction, as is proposed for my area.

The 67 m line is an anachronism. It is unfair for another reason—it is measured not from the edge of the motorway—which it should be so that the width of the motorway is taken into account—but from the centre line, so that the wider the road, the more traffic on the road, and the greater the noise and disturbance, the smaller is the land area within which people can serve blight notices. My hon. Friend and our right hon. Friend should urgently consider the sense of the 67 m blight line for such major road schemes. I am happy to tell my hon. Friend that it will require only a minor decision by his Department to change the blight line for this or, indeed, other schemes. Happily our right hon. Friend has powers under paragraph 15(1)(b) of the Town and Country Planning General Development Order 1988 to vary the 67 m distance. I urge my right hon. Friend to do that rapidly for this and for comparable schemes.

Can my hon. Friend tell me whether there is possible help on the way for my constituents, who are effectively unable to sell their houses and move beyond the blight line, in the Planning and Compensation Bill that has just been introduced in another place? In particular, is my understanding of clause 51 correct, that is, that it will extend the discretionary powers of the Department to buy properties by voluntary agreement if they would be seriously affected by new roadworks? If that is so, it could be of some help.

Can my hon. Friend confirm whether what our right hon. Friend said in a letter to me on 29 March about the timing of the operation of those enlarged discretionary powers still holds good? He said:
"It was intended that these powers would be available once the line of the road had been announced: in the context of this section of the M20 this means when we publicise our decisions on how the widening is intended to be carried out."
If that undertaking holds good, I hope that my hon. Friend can confirm that when the detailed scheme is publicised next year, it will be possible to operate clause 51 of the Planning and Compensation Bill and give those who are seriously affected by the scheme, but beyond the 67 m blight line, the opportunity to have their houses purchased by the Department.

I want to raise the issue of the management of the considerable number of houses within the 67 m blight line that have now been acquired by the Department. They number about 250, and more may come into the Department's ownership. I understand that the houses will be managed by the North British Housing Association. I have nothing against that association; indeed, I remember that when I was Minister for Housing it was a good association and I visited a number of its schemes in different parts of the country. The local view, and it is my initial view, is that the role of that association in managing the properties is both unnecessary and probably undesirable. It is unnecessary because a better alternative is available to the Department of Transport, and it is undesirable because the association will not, I believe, give the same local priority in allocating the properties for short-term renting as would the arrangements that I shall outline.

Tonbridge and Mailing borough council is interested in managing about one quarter of the properties for its own social housing needs. The remaining three quarters would be better managed on commercial terms by local estate agents. I believe that approaches have been made to national estate agents, but in his latest letter to me, my right hon. Friend the Secretary of State says that no approaches have been made locally. In anticipation of this debate, Tonbridge and Malling borough council this week approached the area's eight largest estate agents. I shall give my hon. Friend the details after the debate, but seven of those estate agents said that they would be very interested in managing the properties on behalf of the Department of Transport.

Whether the properties are ultimately managed by estate agents or the North British Housing Association, I hope that my hon. Friend the Minister will give a clear assurance that the terms under which the properties are managed will not result in a statutory rehousing obligation falling on Tonbridge and Mailing borough council when the properties are eventually vacated and sold by the Department, when the widening scheme is completed. I hope that my hon. Friend agrees that it would be grossly unfair to local inhabitants who may have spent a considerable number of years on the local housing authority's waiting list to be displaced by a large number of people who want to occupy on a short-term basis the properties acquired by the Department.

2.46 pm

My right hon. Friend the Member for Tonbridge and Malling (Sir J. Stanley) has used the opportunity provided by his Adjournment debate to raise matters of importance to those of his constituents affected by the Department of Transport's plans to widen the M20 between junctions 3 and 5. As he acknowledges, with the advent of the Channel tunnel and of the single European market, the M20 will become a motorway of international significance. It is therefore imperative that early action is taken to upgrade and widen the section in question from the existing dual three lanes to dual four lanes, to meet forecast demand well into the next century.

I will bring the House up to date with other major improvements to the M20/A20 route. Construction of the "missing link" between Maidstone and Ashford is already well under way and is due for completion next year. The decision to proceed with the widening of the M20 between junctions 5 and 8 following a public inquiry was announced earlier this week. Work is due to start next summer for completion in mid-1993, in time for the opening of the Channel tunnel.

The proposed new A20 route between Folkestone and Dover is also due for completion by the time that the tunnel is opened. Together with the proposed widening of the M20 between junctions 3 and 5, those improvements will provide the main high-quality road artery that will link Dover, Folkestone and the tunnel with the M25–M26, London, and the rest of the United Kingdom network.

My right hon. Friend asked about the time taken to announce the proposed form of the widening between junctions 3 and 5. The addition of that scheme to the roads programme was announced in the May 1989 White Paper, "Roads for Prosperity." As my right hon. Friend said, consulting engineers were appointed in October 1989 to identify options for achieving widening. They are now studying the matter in detail, and are making what I would describe as good progress. However, it is fair to say that the scheme is a lot more complicated than originally expected. Notwithstanding that, I hope that it will be possible to make an announcement about it by next spring. I know that my right hon. Friend will not be satisfied with the vagueness of that commitment, but I assure him that I will do all in my power to monitor the situation, and I will bring him up to date on the rate of progress as soon as possible.

I recognise the concern felt by many of my right hon. Friend's constituents about several aspects of the Department's acquisition policy for properties situated alongside the existing road and the arrangements for its subsequent management. I should like to explain the rationale behind the rules governing planning blight acquisitions. However one frames the rules, there will be cases that fall just outside them. Under the current powers and policies, before the Department can acquire, a genuine possibility must exist that the property will be required for the roadworks at some stage. If a totally unrestricted acquisition policy were to operate, distress and hardship would be spread over an unacceptably wide area. It would mean acquiring property which there was no prospect of our needing for roadworks. The Department could not justify the use of scarce public funds for that purpose.

My right hon. Friend rightly drew attention to the draft legislation in the Planning and Compensation Bill. If enacted, it would confer a discretionary power of acquisition which, prima facie, would not specify any distance limit. No criteria have been established to define how that discretion would be exercised. Much will depend on the degree to which we are successful in curtailing the adverse effects of the M20 in its widened form in my right hon. Friend's constituency.

I note the point that my right hon. Friend made about the power of my right hon. Friend the Secretary of State to vary the existing order and his point about origins, to which the House listened with interest. In about 1935, the first purpose-built bypass—the Winchester bypass—was constructed. When one considers the point that my right hon. Friend made, one realises that since then times have changed significantly.

I appreciate and share my right hon. Friend's concern about the length of time for which some houses under blight remain empty. Unnecessarily vacant properties cannot and should not be tolerated. My right hon. Friend's distinguished record when he was Minister for Housing made a substantial impact on that problem, particularly in the local authority sector. Much has since been done to reduce the number of empty Government-owned properties. I assure my right hon. Friend that I am not complacent about this. Indeed, one of my first actions on becoming Minister for Roads and Traffic was to give extra priority within the Department for making the best use of its properties. I shall have my right hon. Friend's points considered with a view to making further procedural changes.

My right hon. Friend is a little concerned about the role of the North British Housing Association in property management. I hope that I can assure him that local housing authorities were carefully considered when the Department decided on its contracting-out arrangements. It was decided that it would not be appropriate to use local authorities and the possible use of private firms of estate agents was our first line of inquiry. Local branches were not approached directly, but their interest was assessed through their offices at national level. On that basis, none could offer the type of agency that we required.

It seems that my right hon. Friend is saying that that was a mistake by the Department and that it should have contacted local offices. Given what he said about local interest, I look forward to receiving the details that he mentioned.

Housing associations were invited to tender their services against a form of contract. In the event, the NBHA was the only housing association to tender. On the section of the M20 between junctions 3 and 5, we have, to date, acquired 92 properties under the blight provisions, and a further 136 are in the process of acquisition.

I confirm our intention that those properties will be made available to people living in mid or west Kent. I do not expect the NBHA to operate a priority scheme, but local people should have the advantage of being on the spot and of being able to keep in close contact with the NBHA about availability. As all its tenants to date are nominees of Tonbridge and Mailing borough council, there does not appear to be a problem. I understand that a batch of properties available at higher market rents has been advertised in this week's Kent Messenger. I hope that that will ensure that some of them are occupied soon. I assure my right hon. Friend that I shall take a personal interest in ensuring that the properties are brought back into use as quickly as possible. From my correspondence, I am well aware of the anxiety caused to people living in properties next door to houses which become empty and in some circumstances squatted or vandalised.

I assure my right hon. Friend that our tenancy agreements do not place a statutory rehousing obligation on the local authority when the Department's properties are required back for sale or demolition. That should be welcome news in the light of what he said.

I accept that there have been teething troubles with the NBHA, partly due to the way in which it interpreted the managing agreement as permitting it to limit its choice of tenants to those in housing need and to let the properties at rents well below an economic market level. The number of properties which have been acquired was much higher than originally envisaged. We are reviewing the position with the NBHA and during the review the letting of properties was suspended. We are going ahead with advertising and I hope that the properties will soon be occupied.

I hope that I have dealt with many of my right hon. Friend's points.

Before my hon. Friend sits down, will he return to my point about the 67m line? I hope that he agrees that what I said bears further consideration. I hoped that he would assure me that he and the Secretary of State would consider carefully what I said about the possible use of the powers that are available to him under the general development order. Will he consider whether it would be appropriate to change the 67m distance in the context of the four-lane motorway scheme? I do not expect him to make a commitment from the Dispatch Box on that issue, but I hope that he will agree to consider it and discuss it with my right hon. Friend.

I shall certainly do so. I am sorry if I did not make that clear in my initial response.

Question put and agreed to.

Adjourned accordingly at three minutes to Three o'clock.