Mr Major’s Commons Statement on the 1993 GATT Negotiations – 16 December 1993
Below is the text of Mr Major’s statement made in the House of Commons on 16th December 1993 on the GATT Negotiations.
PRIME MINISTER:
The Prime Minister (Mr John Major): With permission, Madam Speaker, I would like to make a statement on the successful conclusion of the world trade negotiations.
In Geneva yesterday, trade negotiators from 117 countries reached the most wide-ranging agreement ever. After seven years of long, hard and often fraught negotiations, it is a superb outcome. It is a result for which industry, commerce and consumers alike have pressed; it is a conclusion for which this Government have worked tirelessly through many crises, when protectionism threatened British markets and British jobs.
The new GATT settlement will help British industry by bringing down barriers to exports of manufactured goods and services. It will give manufacturers greater protection against piracy of their copyright, patents and designs. It will bring down prices for consumers – particularly of food, electronics and other manufactured goods; and it will strengthen the world trading system against unfair practices by individual countries.
Britain is the fifth largest exporter in the world of goods and commercial services. We export more per person than either the United States or Japan. Our markets are already among the most open. We stand, therefore, to be one of the biggest gainers from cuts in worldwide tariffs, quotas and other restrictions.
Sharp reductions in some very high tariffs in the United States and Japan will help Britain in strategic markets. The overall tariff reductions, across all countries of the world, will be around 40 per cent. An independent study by McGraw-Hill has indicated that a new GATT agreement could add up to 4 per cent. to our national output, generating up to 400,000 extra jobs over the next decade.
The European economies, as a group, are estimated to be the biggest single gainer; so the GATT deal can be expected to give a much-needed boost to confidence and recovery in our biggest export markets.
As late as last weekend, there was a real and frightening danger that negotiations might unravel. The world faced a choice between a retreat into protectionism, slump and higher unemployment, and free trade, growth and jobs. Happily, the right choice has been made. The director general of the CBI has rightly called this outcome ‘a momentous and welcome event”.’ This Government have fought consistently to keep the negotiations going. It has been a long struggle. Last year, we faced the prospect not only of failure, but of a lurch into trade war between Europe and the United States.
Exports from Europe were threatened by new and punitive American tariffs. We were able to use our presidency of the European Community to get both sides back to the negotiating table and make progress on farm trade. We encouraged the new United States Administration to extend congressional authority in order to permit the GATT round to be concluded. We pressed for the agreement on tariffs at last summer’s Tokyo summit – another crucial meeting and another crucial building block in the final result.
At this autumn’s Commonwealth summit, we launched a special mission to all the key Governments of the developed world. This sent the clearest possible signal on behalf of one quarter of the world’s population that free trade was a prize for developing countries too. Trade, more than aid, is the most certain route to economic development.
I believe that very great credit is due to Sir Leon Brittan, the European Community’s negotiator; and to Peter Sutherland, the director general of GATT. But others have played a crucial part, including the United States negotiator, Micky Kantor. All three had the courage to take on their tasks at a time when it was far from certain that they would be rewarded by success.
Let me outline the main features of the agreement. First, excellent progress has been made on industrial goods but final details are still being worked out. A number of our largest export markets will move towards the total abolition of tariffs in industries which include pharmaceuticals, steel products and spirits. For example, the Scotch whisky industry, which already has exports totalling about £2 billion a year, will benefit from the complete abolition of Japanese tariffs.
Cuts in high United States tariffs on scientific equipment, chemicals, steel and ceramics, for example, will help in one of our biggest markets. Our textile manufacturers will gain from tariff cuts in the United States, and gain greater access to many economies along the Pacific rim.
Secondly, for the first time agriculture will be fully covered by GATT rules. Tariffs are being cut and subsidies reduced substantially, offering families in this country the prospect of lower prices of staple foods. In Europe, we have already begun the process of reducing farm production subsidies. Overall, those subsidies cost every family around £20 a week. The changes to the common agricultural policy which are already agreed, should – if passed on to the consumer – over a period lead to price cuts equal to 20p off a pound of beef or 6p off a pound of butter. Under the GATT agreement, other countries – notably, Japan and the United States – will now have to cut their agriculture tariff subsidies as well.
Thirdly, for the first time we have an international set of rules for free trade in services – the fastest growing sector of the world economy. Services account for two thirds of our output in the United Kingdom but only about one quarter of our exports; so, if we can break down barriers to trade, there is great potential for growth. The services covered range from insurance to consultancy. Many countries have made commitments on financial, telecommunication and transport services. This is only a start. Further negotiations with the United States must follow on maritime and financial services. But in the meantime we have maintained the City of London in a position in which it will attract new international business.
Fourthly, with regard to so-called intellectual property, the law of the jungle still rules in too much of the world. Expensive research and development by British pharmaceutical companies can be pirated – in effect, stolen – by countries which offer no protection for patents. The same is true of Britain’s record industry, which estimates that as much as half of its market in the developing world is stolen by pirates. For the first time, we now have an agreed set of international rules on which we can begin to rely in our fight to give these industries the markets which they have a right to expect.
Free trade increases the need for businesses to be internationally competitive, but in Britain, we have world-class companies ready for the challenge. This new GATT settlement removes the threat of collapse in the world trade system – a system on which economic growth has been based for nearly half a century. It extends the benefits of trading rules into vast new areas of business. It brings further welcome reductions in tariffs on British goods. it is a platform for recovery, growth and jobs in Britain, the European Community and the rest of the world. I commend it to the House.
Mr. John Smith (Monklands, East) I thank the Prime Minister for his statement. The Opposition also welcome the successful conclusion of the Uruguay round. It has been a long and torturous negotiation, but the result, although long overdue, is an important step forward for the world economy. Having had responsibility for the Tokyo round, I know how difficult and detailed such negotiations can be.
Preserving an open and fair trading system is vital for growth, jobs and prosperity not just in this country but round the world. The dangers of beggar-my-neighbour protectionism must always be resisted.
The GATT agreement is, however, only a start. Does the Prime Minister agree that, for Britain to succeed, we must put far more effort into promoting our export performance in manufacturing and services? Will the Government recognise that following the deal, it is now even more vital that we invest in people and in their skills to ensure that we succeed in international trade by competing on the quality of the goods that we produce and the skills of our work force rather than on low wages and a self-defeating spiral of low skills and poor job security?
On the details of the Geneva agreement, I welcome the new agreements on intellectual property, which tackle the piracy of counterfeit goods and provide security for British companies that invest in the research and development of new products.
On the failure to reach a settlement on trade in financial services, is it the case that access to trade in those services in the United States will remain restricted? That is clearly a matter of considerable concern to the financial services industry in Britain. What steps do the Government intend to take to push forward negotiations to include financial services fully within the GATT framework?
On the environment, will the new Multilateral Trade Organisation be given a remit to recognise the importance in the modern world of linking economic development with environmental protection?
What changes have been made to the Blair house agreement to accommodate French agricultural interests? Can the Prime Minister assure the House that the deal in no way prejudices the urgent need to continue to reform and control the costs of the common agricultural policy? In relation to the proposed MTO, which will supersede the GATT secretariat, are we satisfied with the procedures for trade disputes? Can we be assured that the MTO will cover concerns for environmental protection and fair employment standards?
Does the Prime Minister agree that steps should also be taken to strengthen the role of the International Labour Organisation, and in particular to encourage enforcement of its conventions on fair labour standards and especially to help stamp out child labour? Although we welcome the benefits to consumers at the prospect of reduced tariffs on textile imports, surely no one in this country wants to buy products made by children in sweatshops that have no concern for basic human rights.
Although GATT offers important trading benefits for the developing world as a whole, do the Government recognise the special difficulties for Africa, which will probably gain little from this specific agreement? For that reason, can I urge the Government and the international community to do much more to reduce and write off the outstanding debts of the poorest countries? While trade is vital to the expansion of the world economy, can more be done to encourage new lending, investment and official aid so that all regions in the world can participate in the economic growth that we hope will occur?
The Prime Minister Let me deal with the specific points that the right hon. and learned Member for Monklands, East (Mr. Smith) has raised.
On the question of promoting exports, I am delighted to tell the right hon. and learned Gentleman that, at present, our exports are running at record levels. As he will know, we have provided more extensive and cheaper export cover to assist our export promotion. We have reorganised most of our overseas postings to ensure that greater assistance is given to British business men abroad.
A large number of trade missions have been led by senior Ministers and others in the Government, most of whom have come back with substantial order books. At the moment, we are examining what further measures can be taken to provide an even better service for our exporters in the future. I have no doubt that, with the reduction of tariffs overseas and the increased scope in services and in manufacturing, there is a remarkable opportunity for British companies, at a time when they are competitive and in a position to take advantage of that opportunity. We shall certainly proceed with that.
I share with the right hon. and learned Gentleman the regret that we did not get further on financial services, because it was not possible for the various countries to agree on a final conclusion. Some progress has been made. The sector is now covered by trade rules and there have been a number of major gains for United Kingdom companies. For example, United Kingdom banks and insurance companies will be guaranteed the right to do business in Canada on the same basis as United States and Canadian firms, although it is disappointing that a fuller result for that sector has not been achieved. We have fought hard to ensure that openness in the European Community market will be maintained and we won that battle in Brussels.
There is no question that development will be at the expense of the environment, and I do not believe that anyone seriously imagines that that will be a problem.
There were detailed renegotiations on Blair house at the margins some time ago. There were no changes to the Blair house agreement as a result of the European Community meeting over the weekend and expenditure on the common agricultural policy will be restrained under the ceilings that were agreed at the Edinburgh summit, in terms of the financial perspective of the Community.
I do not have any quarrel with the outcome on the trade dispute mechanism. I do not have the same affection for the ILO as the right hon. and learned Gentleman – that is a difference between us, as I am sure that he knows – but I share his views about child labour–[Interruption.] I am about to tell the right hon. and learned Gentleman precisely what has been done about it, if he will listen. The activities of child labour lead to dumping. In the Community we have powerful mechanisms to act against dumping and they were improved so that action could be taken more speedily at the Foreign Affairs Council yesterday, which was attended by my right hon. Friend the Foreign Secretary.
As for Africa, it is the view of the African states that this GATT round is of assistance to them. They made that perfectly clear at the Commonwealth conference where a large number of African states, both rich and poor – [Interruption.] Hon. Members may be interested to know that those members of the Commonwealth wholly support the outcome of the GATT round. The area of greatest difficulty, as the hon. Member for Hampstead and Highgate (Ms Jackson), who is not in her place, has said, is sub-Saharan Africa. As I said to the hon. Lady, if it turns out that the sub-Saharan countries face particular difficulty, our long historical connection means that we shall certainly do what we can to provide further assistance, both bilaterally and in other ways.
To ensure that they get further assistance with their debt, Opposition Members may be aware of the Trinidad terms initiative that I launched in 1989-90, which is by far the most generous write-off of debt that the world has ever seen. We have written off a large amount of debt under than and we are still pressing some people in the Paris Club to do so. I believe that we shall be successful. It is the view of the countries that benefit under those Trinidad terms that it is by far the most comprehensive and most generous write-off of capital and revenue debt that has ever been proposed and carried through.
Mr. Paul Channon (Southend, West) Is my right hon. Friend aware that it is a long time since the start of the negotiations, when I spent a happy week in Punta del Este with Mr. Alan Clark, among others? He has not yet described it in his diaries. May I congratulate my right hon. Friend and his colleagues on the achievements of the British delegation? I especially congratulate Sir Leon Brittan, as my right hon. Friend rightly did, and we must not forget Mr. Arthur Dunkel, who was the director general of GATT for many years, and who was a tremendous support in the early days of this round.
In agreeing with my right hon. Friend about the importance of the conclusions to trade throughout the world and to prosperity, may I ask him to say a little more about what will happen to financial services? At the start of the negotiations, the American delegation was among the keenest that there should be freedom of trade in financial services. What has happened? Are there now proposals to proceed with the negotiations at a later date in some other forum? What will happen on financial services? It must be very much in the interests of Britain, as well as of many other delegations, that the process should not come to an end and that further steps should be taken.
The Prime Minister I agree with my right hon. Friend about that point. He is right in his supposition that there will be further negotiations on financial services; I hope that they can be carried forward speedily. It is unsatisfactory that we did not get further on financial services on this occasion. Having voiced that disappointment, I believe that one should not lose sight of the fact that this is by far the widest and most comprehensive world trade settlement, with large areas previously not within GATT now brought within it. It provides for a much more liberal world trading system and it is the biggest single advance in free trade for many years.
My right hon. Friend speaks with some knowledge of the matter. He was Minister for Trade and President of the Council of Ministers during the early stages of the GATT round. I join in his congratulations to Sir Leon Brittan and to Arthur Dunkel. They can both be proud of what they have achieved.
Mr. Paddy Ashdown (Yeovil) The Prime Minister is right to say that this is a good day for the world and a good day for Britain. However, is it not the case that, for Britain to take advantage of increasingly open world markets, we shall have to do much more to build a high-value-added, high-investment, high-skill economy than has been done so far under this Government?
The Prime Minister is right to welcome the extensive debt write-off and the development assistance. However, if third-world countries are to have access to the opportunities that the end of the Uruguay round has presented, more attention will have to be paid to that area.
Many people will have greatly welcomed the Prime Minister’s comment to the leader of the Labour party that he recognised that development damaged the environment. Does he, therefore, agree that almost the first task of the new Multilateral Trade Organisation should be seriously to consider environmental factors and the means by which we can incorporate environmental costs into the world trading system?
The Prime Minister The fact that our exports are growing at a remarkable rate while overseas markets are very flat, especially in the European Community, suggests that to an extent greater than that for which the right hon. Gentleman gives them credit, our British exports are adding substantial value and are penetrating markets deeply as a result. One illustration is the German market. It is in substantial decline at the moment, yet British exports to Germany have increased; we have taken a much larger share of a much smaller market. That is substantially because of our competitiveness and because of the high-value-added nature of so many British exports.
There is sometimes a tendency – I do not attribute this to the right hon gentleman – to think especially of manufacturing in the old sense of large, labour-intensive manufacturing industries. In the constituencies of almost every hon. Member, there are now small, medium and high technology businesses which are, in essence, manufacturing industries. They now export around the world, not least to such places as Japan, against very stiff competition.
I agree with the right hon. Gentleman about debt write-off. The original Toronto terms, introduced by Lord Lawson when he was Chancellor of the Exchequer, and the Trinidad terms have been well ahead of what the rest of the world was prepared to contemplate in terms of debt write-off at that time.
The right hon. Gentleman referred to the third world. One of the most comprehensive ways in which we can help countries in the third world is not to close our markets to their exports. That is why I welcome so much of the Uruguay round outcome. It opens markets to the third world to a far greater extent than ever before. The outcome is not perfect; it does not go all the way. However, it does a great deal more than ever before and offers substantial incentives to third-world countries to develop their exports.
Mr. John Townend (Bridlington) I congratulate my right hon. Friend on the enormous effort that he has put into the agreement which is of great benefit to Britain. Does he agree, however, that there is considerable resentment in this country at the intransigence of the French, who demanded compensation for their farmers from the Community budget as a condition of agreeing to the GATT talks? Will he tell us how much that that will cost the EC budget, and what our proportion will be?
The Prime Minister A number of countries during the round were pretty intransigent from time to time, although perhaps the difficulties faced in France got rather higher profile publicity than most. I know that the GATT agreement has caused the French Prime Minister considerable domestic difficulties. I do not particularly wish to add to them now. It is worth looking at what the agricultural agreement does: it reduces Community tariffs by 36 per cent. and cuts exports subsidies substantially. That was the essence of the Blair house agreement, and that has been maintained despite what may be said in other capitals.
Mr. Barry Jones (Alyn and Deeside) Where does the British aerospace industry stand? What is the fate of the airbus? Why was the issue of aerospace taken out of GATT? Is the vendetta by the American President against airbus now over?
The Prime Minister The reason why those aspects of civil aviation were taken out of the round at the last minute was simply that agreement on them could not be reached. But the British aerospace industry will continue to be covered by the present Community and United States bilateral arrangements. That means that the position stays as it is now and that it has not – as the hon. Gentleman and many others feared–been worsened by the outcome of this round.
It has been agreed that the Community and the United States will now negotiate for another year. I should say, for it might reassure the hon. Gentleman, that the United States has agreed to negotiate on the basis of the GATT Committee chairman’s draft text, which currently provides for a reduction in United States indirect support for its industry. The Commission, as our negotiator, will continue to insist on the inclusion of aero engines and indirect support. The outcome should protect United Kingdom interests. The hon. Gentleman need have no doubt that we will press our negotiators very firmly on that point.
Mr. Edward Garnier (Harborough) My right hon. Friend will recall that my constituency in Leicestershire has many farmers and many people who are engaged in the knitwear, hosiery and textile industries. Does he recall that, following the Tokyo summit, he informed the House about his hopes for a reduction of the United States tariff barriers for British textiles? Will his hopes that we shared when he returned from Tokyo be realised following the GATT agreement? I join other hon. Members in congratulating him and his team, particularly Sir Leon Brittan, in their achievement.
The Prime Minister The changes to the textile industry are helpful, but not as helpful as we expected them to be when we returned from Tokyo. The changes since Tokyo have meant that the extremely favourable changes that we had then are now less favourable. Securing improved market access for our textile exports was a priority for us in the negotiations.
The agreement that the industry negotiated some months ago improved market access. We have been able to build on that in the Uruguay round and significant cuts have been agreed in a number of United States textile peaks. That is very valuable for our textile exporters and it is something that they have long sought. That is undiluted good news. It is not as good news as it looked as though it would be after Tokyo. Good news it is; superb news it is not.
Mr. Bob Cryer (Bradford, South) Will the Prime Minister explain the phrase “unfair practices” which, according to his statement, are controlled under GATT? Does it, for example, include any control of child labour, or is he relying entirely on anti-dumping practices? He should know that, when dealing with the EC, most industries find it dilatory and inefficient in dealing with anti-dumping practices. Should not GATT have a social clause to give people in other countries health and safety at work rights, and trade union rights to ensure that they are employed under proper and decent working conditions? Are we not exploiting workers and child labour badly in order to receive their products in this country?
The Prime Minister As I said in reply to the Leader of the Opposition, just today the Community improved its mechanisms for dealing with dumping, in terms of producing a more speedy response. I share the hon. Gentleman’s view that, sometimes, across the Community, it has taken longer to respond to dumping than might ideally have been the case. I believe that that was corrected in the agreements made by my right hon. Friend the other day. We are trying to deal with the problem. The other circumstances that he set out lead to goods being produced and then sold at below the proper world market level. That is the definition of dumping, so I believe that we shall catch the practices about which the hon. Gentleman is concerned.
Mr. James Paice (Cambridgeshire, South-East) I add my congratulations to my right hon. Friend the Prime Minister on what has been achieved, particularly in agriculture, heralding as it does the end of competitively subsidised dumping on the world market and, we hope, the gradual phasing out of price support and the iniquitous set-aside scheme with which we in Europe have got stuck. While I recognise that it was probably inevitable, although regrettable, that the French had to be bought off with extra compensation, if necessary, for their small farmers, will he ensure that not only does that not exceed the guidelines already laid down for expenditure but that it is not paid out at the expense of compensation already agreed for British farmers?
The Prime Minister Perhaps I should make clear to the House what happened with the French over the weekend. No agreement to provide the French with what I saw described in one Sunday newspaper as “billions of pounds” was made last weekend. The agreement reached was that the ceilings on expenditure in the Community will remain as agreed at Edinburgh before the Blair house agreement was renegotiated. The view of the Commission and most of the member states, is that the GATT agreement is compatible with common agricultural policy reform, so the question of extra compensation will not arise.
Even if it were to arise, it is agreed that there is no question of increasing the sums of expenditure. It is a free expression to suggest that there will be billions of extra pounds for French farmers. That flatly is not the case. When asked, after the conclusion of the European Council, whether French farmers had won extra money during the Council, I replied, “Not a penny.” I reply again, “Not a penny.”
Mr. Derek Enright (Hemsworth) I congratulate the Prime Minister on his recognition that sub-Saharan Africa will benefit little if at all from the GATT negotiations. That is a positive start. Will he look at the wretched rules of origin, which cause so many difficulties for such countries as Guinea-Bissau and Guinea-Conakry in terms of the export of their agricultural and fishery products?
The Prime Minister I am not familiar with the details of that problem, but I shall seek advice on the rules of origin and have a look at them. To pick up the earlier point about the poorest countries – as I said, a large number of them are sub-Saharan countries – 19 of them have benefited from the reduction of $1.75 billion of their debt, under the Trinidad terms.
Mr. Phillip Oppenheim (Amber Valley) Is European culture really such a pathetic withering little flower that it needs protection by the state? If French films are so good, surely people will flock to see them without state intervention. While the role of Great Britain and the Prime Minister in securing the GATT round was crucial, is it not a shame, given that we believe in free choice and open markets, that we backed that French demand which, in whatever sophistry it is cloaked, is nothing more than an unpleasant combination of censorship and protectionism?
The Prime Minister As my hon. Friend knows, we would have preferred to have reached an agreement on audiovisual matters. A number of others would have preferred such an agreement to be reached. It was not possible. In the circumstances, the only option to protect the gains in the round was to take the audio-visual matters entirely out of the GATT agreement. Like my hon. Friend, I regret that. I hope that we can negotiate a satisfactory arrangement soon.
Mr. Brian H. Donohoe (Cunninghame, South) Given the Prime Minister’s earlier answer to the question on the aerospace industry, can he tell us how small aircraft will be affected? There is a potential problem with Jetstream in the Ayrshire area. Will the Prime Minister assure us that that matter will be included in any negotiations with the United States?
The Prime Minister Small aircraft and engines are included in the discussions. As I understand it, until those discussions are concluded there is no change from the present position.
Sir Michael Grylls (Surrey, North-West) Does my right hon. Friend agree that this settlement of the GATT round comes at a crucial time to give the world economies that extra boost to get them moving again and that, as he has said, we shall benefit from it? Will he use his influence as Prime Minister to continue to encourage through the export services with the President of the Board of Trade the many – rather too many – small and medium-sized companies that could but do not yet export? If their hand were held a little, they might do that much better.
The Prime Minister On that last point, my right hon. Friend and his colleagues are making a special effort through the business link scheme to do precisely that. My hon. Friend touches on an important point. One should make it clear that the GATT round now having been agreed is not immediately implemented. There will be a ministerial signing session, probably in April 1994. The final Act will need to be ratified by a number of countries. Then it will come into force, probably in late 1995 but conceivably as late as the beginning of 1996.
Mr. Dennis Skinner (Bolsover) How can everybody be with us? There are 113 countries that have signed the agreement. Some are bound to be losers. Why does not the Prime Minister admit that the multinational companies are the driving force behind GATT? Britain will be gatted. Of the top 500 multinationals, 278 are either in the United States or Japan and the rest are divided between all the other industrial countries on the Pacific rim. It is a joke if the Prime Minister is trying to convey to the people of Britain that we will benefit. He said the same when the multinationals wanted the common market in 1973; unemployment increased. He said the same about the single market four years ago; again unemployment increased–
Madam Speaker Order. This is not the time for speeches. This is the time for questions. If the hon. Gentleman has a question to put to the Prime Minister, he should do so and then sit down and let us hear the answer.
Mr. Skinner Why does not the Prime Minister answer this question: since Britain’s manufacturing base is now down to 4 million, how on earth can this country leap across the boundaries to increase production? Why does not the Prime Minister tell the truth about what he said about jobs the other day? When I asked him how many jobs had been created, he said 400,000. Already he has stretched the number.
The Prime Minister The hon. Gentleman has taken leave of what passes for his senses. I said 400,000 the other day and I said 400,000 today. He should get his facts right for a change. He is wrong again on other matters. Not only is he wrong, but he does not seem to carry with him his hon. Friend the Member for Livingston (Mr. Cook) or the right hon. and learned Member for Monklands, East (Mr. Smith), who have said precisely the reverse.
Mr. Skinner So what? [HON. MEMBERS: “Oh.”] I shall be proved right.
The Prime Minister If anybody else were as confident about anything as the hon. Gentleman is confident about everything, we would all be rather well off. I for once am prepared to make common cause with the hon. Member for Livingston. I entirely agree with him when, in welcoming the GATT trade deal, he said: ‘This will create substantial opportunities for developing countries.’ Not only does the hon. Gentleman think that, and he is entirely right, but so do the developing countries. But they, of course, also know less about their interests than the hon. Member for Bolsover (Mr. Skinner). If perhaps the hon. Gentleman had listened a little more carefully – he clearly did not listen the other day about jobs either – he would know that the developing countries in the Commonwealth sent a number of representatives to the main capitals to say how important it was for them to have a GATT agreement. Every single thing that the hon. Gentleman said was copper-bottomed, gold-plated rubbish.
Mr. Nicholas Winterton (Macclesfield) I warmly welcome the successful outcome of the Uruguay round and pay tribute to the Government for the role that they have played in bringing it to a successful conclusion. Does my right hon. Friend accept that there is a downside to this agreement – he referred to it when answering some supplementary questions earlier? Does he accept that, if Britain is to be successful and competitive, it is important that for industries such as textiles and clothing – I could name others – the Government assist by providing an investment incentive? Will my right hon. Friend and my right hon. Friend the President of the Board of Trade do what they can to put pressure on the Treasury to ensure that there are incentives for investment so that British industry can take advantage of the Uruguay round and its successful outcome?
The Prime Minister We certainly wish to ensure that British manufacturing industry both invests and exports. While my hon. Friend is right that the outcome for the textiles industry was less satisfactory than we had hoped it would be some time ago, the successful conclusion to the round does include a reduction in tariffs in the United Kingdom’s main export textiles markets, most crucially, of course, in that of the United States. Therefore there is a better circumstance for textiles, but, as my hon. Friend implied, it is not as good as we had hoped it would be.
Mrs. Margaret Ewing (Moray) Does the Prime Minister accept that there will be a general and warm welcome for the decision to reduce tariff barriers against Scotch whisky – an important, high-quality export-winning product, not least in my constituency, where so many jobs depend on it? Is the Prime Minister aware that there is a need to build on the agreement to eradicate the internal excise discrimination in Japan, which continues to breach the 1987 GATT agreement because scotch is protected by a much lower level of tax than Scotch whisky? I believe that the differential between the two products ranges between six and nine.
The Prime Minister The hon. Lady is right on both points. The tariff reduction on whisky in Japan is from 250 per cent. to zero – it has gone entirely. That is only part of the barrier against Scotch whisky exports in Japan. There are still substantial internal tax barriers. I raised those with Prime Minister Hosokawa when I was in Tokyo some time ago and we wrote to him again last week. We hope to see some movement in the comprehensive tax reform that the Japanese Government are now planning. The present position on internal tax discrimination against Scotch whisky is not satisfactory, and the Government continue to pursue it with the Japanese Government.
Mr. Iain Duncan-Smith (Chingford) I congratulate my right hon. Friend on the successful conclusion to the GATT round, which is a great success for Britain, particularly Conservative Britain which believes and is foremost in free trade. May I press my right hon. Friend on the common agricultural policy? We all believe that the CAP is far too heavy and costs far too much. In many respects, that may have restricted our negotiating position on the financial services area. Will he assure hon. Members, particularly Conservative Members, that we will now press further for greater reductions and a greater freeing of the financial services business in the world?
The Prime Minister We shall certainly press for greater freeing of financial services. It is very much in our interests. We are one of the world’s great providers of financial services, and the more that we can open up European markets – which is now happening – and Japanese and United States markets in particular, the greater the opportunity for the export of British financial services. My hon. Friend is quite right: it is a matter of critical interest to us and I give him my undertaking that we shall pursue it.
Mr. Alan Simpson (Nottingham, South) May I pursue the downside a bit further and refer the Prime Minister to the McGraw-Hill study that he mentioned earlier? What did the study say about identifying the sector of British industry that can now anticipate job losses, and what will be the scale of those job losses?
The Prime Minister As the hon. Gentleman knows, the net position is estimated to be a growth over 10 years of around 400,000 jobs. Beyond that, it is not really possible to identify in any great detail where there will be growth and contraction. That depends on too many factors for the statistics to have any real value. The calculation of 400,000 jobs is derived from the growth of world trade generally and the implications that that will have for manufacturing industry and the service sector in particular.
Mr. Richard Alexander (Newark) I compliment my right hon. Friend on his mastery of his brief this afternoon. Many countries gain an unfair competitive advantage by subsidising their exports. Did the new GATT settlement deal directly with that hidden barrier to free trade?
The Prime Minister Yes, there are new rules on subsidies, anti-dumping and safeguard action. There are texts in all those areas to deal with unfair practices. They are a good outcome for Britain in particular, and the EC more generally. Disciplines, including a reasonable constraint on developing countries, have been tightened, but the texts are a great improvement on the current GATT rules.
Mr. John McAllion (Dundee, East) If, as the Prime Minister claims, the Government champion free trade as a means of helping the developing world, why did Britain abstain in the recent overwhelming vote at the United Nations condemning the United States Government for its illegal and inhuman economic blockade of the Republic of Cuba?
The Prime Minister I am not sure that the hon. Gentleman is comparing like with like. I do not know of any country that would deny that this British Conservative Government is one of the most free-trading Governments, in philosophy and practice, of any Government in the world. I am pleased to see the hon. Member for Middlesbrough (Mr. Bell) nodding in agreement. He may not necessarily approve, but he does agree.
Mr. Phil Gallie (Ayr) Will my right hon. Friend accept my congratulations on his outstanding statesmanship during the past two days? Does be accept that his earlier comments on aviation policy suggest that the advantage of current levels of launch aid for aircraft manufacturers who manufacture planes of 100 seats or fewer will remain despite strong USA pressure to do away with that? Does he further accept that my constituents will warmly welcome that on the basis that Jetstream Aircraft is a manufacturer of turbo-prop aircraft?
The Prime Minister I can confirm that there will be no change and I reiterate that the Commission will continue to insist on the inclusion of aero engines and indirect support. As I said a moment ago to the hon. Member for Cunninghame, South (Mr. Donohoe), the outcome should be to protect the legitimate interests of the United Kingdom industry.
Mr. George Stevenson (Stoke-on-Trent, South) I share the Prime Minister’s relief at the outcome of the GATT negotiations and his view of the need to reduce support and subsidies for agriculture, but how does that square with the fact that, on 15 November this year, the Government agreed to an increase of half a billion pounds in the draft EC budget for 1994, most of which will subsidise agriculture? Will the Prime Minister give us a clear commitment that there will be no extra support for French agriculture, either within the guideline or otherwise, and that, if there is any prospect of such support, it will not be transferred from other areas of the EC budget, such as the structural fund that is designed to encourage employment?
The Prime Minister A number of other countries apart from the United Kingdom, such as Spain, Portugal and Greece, would strongly resist any suggestion that money to support agriculture should come from the structural or cohesion funds. In our discussions at the weekend at the European Council, Prime Ministers of some of the southern states made it perfectly clear that, were there any suggestions from any of the northern states-it would certainly not come from this northern state – that money to fund agriculture should come out of the structural or cohesion funds, they would strongly oppose that, and they would be right to do so.
Mr. Jacques Arnold (Gravesham) Is not the consequence of the GATT that third-world countries will be able to earn far more foreign exchange for themselves and therefore far more self-respect? Is not that better than the begging bowl approach so favoured by the Opposition?
The Prime Minister Yes, my hon. Friend is right. Independent calculations are that the gain to developing countries from opening markets under these GATT round considerations will be greater than the total amount of aid from all the western democracies and Japan added together.
Mr. Roy Hughes (Newport, East) With all the euphoria following the GATT, may I remind the Prime Minister that, some ten years ago, there was a traumatic upheaval in the British steel industry, when many thousands of people were made redundant and whole communities were decimated? The same development does not appear to have taken place in Germany, France or Italy, where subsidies still abound. When will the Government take firm action to look after our steel industry and prevent further redundancies?
The Prime Minister I am surprised that the hon. Gentleman did not draw the conclusion that most other people would have drawn, which is that British Steel is now a world-class company trading profitably because it is under private ownership. I hope, therefore, that there will be a good deal of support from Opposition Members in future for the privatisation of industries. The large number of industries that were in the public sector and very expensive to taxpayers are now in the private sector yielding resources to taxpayers.
Several hon. Members rose –
Madam Speaker Order. I am sorry, but we must now move on.