Michael Meacher – 1978 Statement on the European Community’s Textile Policy

Below is the text of the statement made by Michael Meacher, the then Under-Secretary of State for Trade, in the House of Commons on 11 April 1978.

I beg to move,

That this House takes note of Community Documents Nos. S/139/77, S/183/78, R/3375/77 and R/513/78 (and the Supplementary Memorandum submitted on 21st March 1978) on Community Textile Policy.

I am glad that we have an opportunity today to consider these documents which, together, establish the framework for trade in textile products over the next five years. They all arise from the multifibre negotiations which took place at the end of last year, and may be regarded as the practical outcome of those negotiations.

When hon. Members last debated textile policy during the debate on the Consolidated Fund Bill on 14th December, the EEC had not taken its final decision about renewal of the MFA. That decision was taken by the EEC Council of Ministers a few days later, on the 20th, when Ministers decided to accept the results of the negotiations and agreed that the Community should renew the MFA. In taking this decision, they agreed to some increase in the ceilings set in the negotiating mandate for cotton yarn and cloth in order to reach agreement with certain countries. To have done otherwise would have put at risk the whole package of negotiations. But before going along with that decision, we secured a useful reduction in the United Kingdom share of the cotton cloth increase, together with other important assurances from the Commission, which I shall come back to in a moment.

The decision to accept the new bilateral agreements was described by my right hon. Friend as a “historic turning point” in the fortunes of the United Kingdom textile and clothing industries. For the first time, we and our trading partners in textiles know where we stand for the next five years. And within this overall framework there are new rules to control the flow of imports which are an enormous improvement over anything that we have had in the past.

In the first place, there are many more bilateral agreements or other special arrangements with low-cost suppliers—28 to date, compared with only 14 previously. ​ The coverage of these new arrangements will be much more comprehensive than in the past. In 1977, about 75 per cent. of our low-cost imports were covered by quotas. The new arrangements cover, either by quotas or by special safeguard provisions, about 95 per cent. of our low-cost imports.

Mr. John Roper (Farnworth)

Can my hon. Friend say how much of the remaining 5 per cent. is with State trading companies and therefore also covered in some way?

Mr. Meacher

My hon. Friend must have read my speech, because that point is covered in the next sentence. If we include the separate quotas that operate outside the MFA or the State trading countries, the coverage rises to 98 per cent. The arrangements with State trading countries account for a further 3 per cent. of the remaining 5 per cent. Virtually all of the United Kingdom’s low-cost imports of textiles and clothing are subject to actual or potential control.

We have paid particular attention to the most sensitive products. These are a familiar list for hon. Members—cotton yarn, cotton cloth, synthetic cloth, knitted shirts, jumpers, trousers, woven blouses and woven shirts—and are all products where import penetration is high. All low-cost imports of these eight products are now restricted within global ceilings, both for the EEC as a whole and for each member State. The effect of these ceilings should be that import penetration will be virtually stabilised, because imports from new suppliers will have to be contained within the overall limits. This is a significant departure for the EEC and, because these eight products represent about 60 per cent. of our total low-cost imports, this should be of great benefit to our own industry.

In general, the quotas are based on actual trade in 1976. Trade in 1977 was, in some cases, lower than in 1976, and I know that some hon. Members are therefore concerned about the level of the 1978 quotas. I understand that concern, but I insist that there was no alternative to using the 1976 base line.

As negotiations took place during the latter half of last year, 1976 was the latest year for which complete EEC statistics were available. The 1977 statistics were not available until the beginning of ​ April this year. To have chosen a base year before 1976 would have been contrary to the spirit of the MFA and on practical grounds it would not have been possible to justify using different base periods for different products or suppliers.

Documents S/139/77 and S/183/78 set out the quota levels for the member States for 1978. In the case of Taiwan, the quota levels for 1978 to 1982 are shown. Both documents were approved by the Council of Ministers on 7th February and both have now been published in the Official Journal. Our own notice to importers will be published in Trade and Industry on 14th April. I should also say that in the case of the regulation covering Taiwan—this is a more technical matter—where no negotiations took place because Taiwan is not a GATT signatory, the Taiwanese authorities have made representations to the Commission about the low level of some of the quotas. If any changes are proposed as a result of these representations, the Select Committee on European Secondary Legislation will, of course, have an opportunity to consider them.

Mr. Dan Jones (Burnley)

I completely agree with my hon. Friend that the new regulations are a valuable safeguard However, what steps have been taken to ensure that the safeguards are ironed out securely for the textile industry in future?

Mr. Meacher

My hon. Friend raises a key point. It is all very well to have a set of regulations, but we must be concerned about efficiency in implementing them and the prevention of loopholes and possible abuse. I assure my hon. Friend that later I shall turn to the whole issue of surveillance, the blocking of loopholes and the prevention of potential abuse. When I reach that stage in my speech, he will understand that the arrangements are extremely comprehensive.

Mr. J. Enoch Powell (Down, South)

Is this one of the cases where approval was given to EEC documents by the Council of Ministers before instead of after the documents had been debated in the House?

Mr. Meacher

This is one of the cases where the decision is taken by the Council of Ministers because it is felt to be in the interests of each of the member ​ States that action should be taken as soon as possible. However, the Select Committee on European Secondary Legislation will have a full opportunity to examine the matter. As we are talking about the imposition of levels of quota that will benefit a particular industry, the urgency of the matter is sometimes overriding. This is not the first time that it has happened, but I do not believe that it has caused matters to be taken amiss by the Select Committee. It has an opportunity to make representations if it takes that view.

Mr. Roper

My recollection is that this is an instrument that the Scrutiny Committee did not recommend for debate in the House before the decision was taken. It merely recommended that it should be debated at some stage in the context of a debate on textiles.

Mr. Meacher

I am grateful to my hon. Friend for giving the House that information. This is quite regular practice, as I have indicated, in the circumstances that I have outlined. It is not that there is any attempt by the Government in any way by sleight of hand to put through a measure before there is a proper opportunity to discuss it. When it is beneficial to the home industry for action to be taken more quickly, that is the procedure that has been followed. That is well understood by the Select Committee.

With one or two exceptions, the quotas are now all subject to dual control—that is, that an import licence is granted here only on production of a valid export licence issued by the supplying country. The exceptions are Taiwan, where the quotas continue to be import-administered: Malaysia and the Philippines, where export-administration will begin on 1st May; and Peru and Mexico, where export administration will begin on 1st July.

Another very important advantage in the new agreement is the introduction of more precise safeguard procedures which cover all products from bilateral agreement countries which are not subject to immediate quotas. These procedures are most often described as a “trigger mechanism”, under which new quotas can be introduced following consultation if imports of unrestricted products reach certain specified levels compared with ​ imports into the EEC in the previous calendar year. That is one of the most important aspects of the new agreement.

I mentioned earlier the assurances that we secured from the Council on 20th December. One was that similar procedures would be applied to countries which have not concluded bilateral agreements. This is an assurance to which we attach great importance because the ability to introduce quotas when imports rise above a certain level, whether or not the country concerned has entered into a bilateral agreement, is clearly a crucial element in the new framework, and clearly in respect of new suppliers. I know that that is a matter of great concern to the industry and to Members on both sides of the House. Therefore, I shall spell it out briefly.

As a result of their preferential relationship with the EEC, none of the Mediterranean suppliers was prepared to enter into separate textile agreements, with the exception of Egypt. Instead, the Commission secured a series of informal understandings. That is a word that is used in the technical sense. It is, perhaps, a term of art within the trade. In the case of Morocco and Tunisia, the Governments of those countries have agreed to a voluntary restraint on their exports of certain sensitive products. Similar arrangements have been agreed with the textile and clothing industries in Greece and Turkey. Discussions are continuing with Spain and Portugal in the hope that similar arrangements can be agreed with them. In the meantime, both countries have been notified of levels which should not be exceeded and have been warned of possible safeguard action. All these arrangements apply in the first instance to 1978, but the Commission intends to make similar arrangements in subsequent years.

Mr. Mike Noble (Rossendale)

My hon. Friend said that the Commission intends to make similar arrangements in subsequent years. Will he confirm that the arrangements will mean no increase in quota levels for these countries in subsequent years, and will not merely imply the creation of further informal understandings, albeit at a different level?

Mr. Meacher

The proposal is that the basis on which existing informal understandings are made shall be continned, ​ although this is no doubt dependent on future negotiations. There will be the same basis for limitation as exists in 1978. The basis of restriction will remain the same. There is no suggestion that there will be an increase in future years, although, as I repeat, that is a matter for negotiation. The fact that it is not written into the specific framework of the MFA means that it is open to negotiation. The Commission has made it clear that it is not allowing non-signatory countries any easier conditions than those that apply to countries that sign the bilateral agreements.

Mr. Nicholas Winterton (Macclesfield)

What if the situation were changed and, for example, two of the four countries became signatories to the Treaty of Rome? What protection would the British textile industry have within that changed circumstance?

Mr. Meacher

If the hon. Gentleman is referring to Greece, Spain and Portugal, these are all countries where membership is being contemplated and arrangements are being made to that end. If they became members of the EEC they would have to abide by the same rules that govern existing member States, especially in terms of the abolition of quotas or tariffs and any special aids that they might now give to their industries. Such measures would have to be done away with as a result of the competition rules under the Treaty of Rome. That would certainly make a good deal of difference in terms of intra-Community trade in respect of those countries. We are talking about a situation well into the middle or late 1980s. If accession were to come about for those countries in the 1980s, there would be a transitional period, as there was for Britain, so we are talking of a period five, eight or 10 years on.

I was saying that because of the voluntary nature of these arrangements we have not published details in a notice to importers. However, I assure the House that a close watch is being kept on the level of imports from these Mediterranean suppliers, so that the Commission can be alerted in good time if the agreed levels are threatened. The Commission, for its part, gave an undertaking at the Council on 20th December that appropriate action would be taken promptly if it became necessary. That is an assurance to ​ which we attach great importance and certainly intend to utilise if need be.

This brings me to the question of surveillance and the intervention by my hon. Friend the Member for Burnley (Mr. Jones). This is obviously a key factor in ensuring that the safeguards are operated satisfactorily. We shall need to know in advance when trigger levels are likely to be reached so that the safeguard machinery can be set in motion in Brussels. To this end, our own surveillance licensing of non-restricted textiles is being brought into line with the new MFA product categories, and we plan to introduce an early warning system which will give us time to act. At the same time, a Community-wide surveillance system based on early information about actual imports is being set up which should help to draw the net still tighter.

This surveillance will be based on new product categories which are common to all the agreements and other arrangements. These new categories—no fewer than 123 in all—are much more precise than the 60 categories which applied in the past. This will greatly reduce the amount of flexibility between quotas—that is the transfer of unused portions in the one quota to increase trade in another which has been fully used up—and it should also reduce considerably the scope for evasion. I hope that my hon. Friend is satisfied with what I think is a comprehensive answer to his question in terms of the new arrangements.

Mr. Max Madden (Sowerby)

Is my hon. Friend satisfied with the disparity that seems to exist within the Common Market between the delays that occur in submitting import data? I understand that it is 16 days for the United Kingdom, which is the quickest country, and goes up to 10 weeks for Italy. Can my hon. Friend foresee any standardisation in these arrangements to ensure that import information is passed much more quickly than appears to be the case today?

Mr. Meacher

We certainly intend to be as efficient as possible in passing this information to the Commission. One of the problems in textiles has always been the great delays in the information pipeline. As I indicated, we did not get the full figures for 1977 import levels until ​ the beginning of April. There are considerable delays in getting information quickly. I think that the United Kingdom is rather better than other countries in this respect. Subject to our capacity to collect that information more quickly, we certainly intend to process it and to pass it to the Commission as quickly as we can. If my hon. Friend is aware of unreasonable delays in that respect, I hope that he will let us know.

Mr. Dan Jones

The Minister asked me whether I was satisfied with regard to the Mediterranean relationship. Frankly, I am not. I think that the agreement with the EEC is remarkable and must, if left to that device, be of immense good for the textile industry. But if the Mediterranean countries are allowed freedom, I believe that that could undermine that good effect. Are we prepared to take steps now to bring under control, in the same way as the EEC has done with other countries, the situation concerning the Mediterranean countries, or, put another way, is the EEC prepared to allow them to participate in the control of the Mediterranean countries?

Mr. Meacher

There are preferential agreements with the Mediterranean suppliers. That is the different relationship that they have with the EEC. I am not convinced that, because of that special relationship, the Mediterranean suppliers will be able to increase their exports beyond what is permitted to the normal bilateral signatories. In effect, we are concerned about the level of imports, particularly of cotton yarn and cloth, from a number of the Mediterranean suppliers. We have given this information to the Commission. I understand that it is at present carrying out consultations with the supplying countries. That is a term of art. It means that the Commission is making it very clear that it does not expect these levels to be exceeded. In certain Mediterranean supply agreements—for example, with Turkey—there are safeguard clauses which we can invoke if need be. We are examining ways in which we can close that gap in relation to other countries where there are not such safeguard clauses.

Another important element of the revised MFA—this is the last point that I want to make—is the introduction—

Mr. Nicholas Winterton

Is the hon. Gentleman leaving the question of surveillance?

Mr. Meacher

I am leaving surveillance. Does the hon. Gentleman wish to make a further point?

Mr. Winterton

Is the Minister aware that the figures quoted by his hon. Friend the Member for Sowerby (Mr. Madden) were based on a paper recently issued by Comitextil? If there is this tremendous disparity in the notification of this import data—for the United Kingdom 16 days, but for the Netherlands and Italy anything between six, eight and 10 weeks—how can Europe in the present situation efficiently implement a surveillance system and procedure? Will he look at this matter rather more seriously and perhaps take to a European table the fact that we in this House are dissatisfied with the length of time that it takes some of our European partners to supply the import data which is so vital to an efficient and effective implementation of a surveillance procedure?

Mr. Meacher

I agree about the importance of making sure that information is made available so that action can follow. If this is a paper by Comitextil, the remedy lies in its hands. These are the textile manufacturers of the EEC. If they stand to gain from processing this information quickly to the Commission, it is up to them to ensure that their Governments act quickly. I suggest that they put more pressure on their Governments. Certainly the United Kingdom Government cannot require or induce the Netherlands or Italian Governments to operate more quickly. We can indicate by our own example that it can be done by us in a shorter time than by them. I hope that the industries in those countries will put a lot of pressure on their Governments to act more quickly. It is mainly for them to do that.

Another important element of the revised MFA is the introduction of more precise rules of origin and of measures that will require documentary proof of origin to be produced at the lime of importation in respect of imports from all non-EEC countries. These provisions are the subject of the other documents on the Order Paper, R/3375/77 and ​ R/513/78. Essentially, and at some risk of over-simplification, the former document sets out the new provisions and the latter modifies those relating to proof of origin.

The amended proof of origin provisions have been published in the Official Journal as Council regulation 616/78 and will come into effect on 1st May. It may help the House if I explain that the rules of origin determine the country of origin of a product. The proof of origin is the documentary statement of that origin which is presented to Customs. The combined effect, with some differences in detail between restricted and non-restricted sources of supply, will be that documentary proof of origin will need to be supplied by the exporter and produced by the importer at the time of importation in respect of all commercial imports of textile products of categories covered by the bilateral MFA agreements.

This is a very important point. Without rules of origin it would be possible, for example, for a country with a product under quota to evade the quota ceiling by shipping goods through a country where the same product was not subject to any restriction. The present origin rules lack precision and are open to differing interpretations. This will be avoided by the introduction of precise rules based on the concept that the origin of all textile products will be determined—with certain minor exceptions—by the carrying out of one complete process. For some products, the present origin criteria will be changed. The new rules will also apply to trade within the Community to determine whether goods traded between member States are of EEC origin and thus free from restriction, or of third country origin and thus susceptible in certain circumstances to restriction under Article 115 of the Treaty of Rome.

This is a complex subject. I have not attempted to give more than the barest outline of the purpose of the new regulations and how they will work. But we are satisfied that the combined effect of the revised origin rules will be to close the loopholes, to resolve the ambiguities in the existing rules and to ensure that the intentions of the MFA cannot be evaded by manipulation of the country of origin. If we have succeeded, as I think we have, that is an important point.

The documents that are the subject of todays motion are the outcome of a years’ hard bargaining and negotiating both within the EEC and outside it. They are proof of the Government’s determination to remedy the defects of the old MFA agreements and to provide our textile industry with adequate protection. As I have already said, there are now agreements or other special arrangements with 28 low-cost suppliers. These agreements provide for over 400 separate quotas, covering 123 separate product categories. These quotas, together with the new safeguard provisions, mean that about 95 per cent. of our low-cost imports of textiles are now under control. If the separate arrangements for State-trading countries are added, this brings the coverage up to 98 per cent.

It is perhaps too early, after only three months’ experience of arrangements that will last for five years in most cases, to come to any final judgment. I would not wish to claim that the results are perfect; I am sure that they are not. This is clearly no time to become complacent or to relax our efforts. On the contrary, vigilance must and will continue.

I again pay tribute to the determination and dedication of members of the textile lobby on both sides of the House who provided the Government with the determination that was needed for these negotiations. But I urge the industry to take advantage of the new arrangements and the valuable breathing space that they provide.

We have done all that we could to secure our objectives of adequate protection against disruptive imports and security and protection for those who work in our textile industry. I think that they, and we, must look now towards the textile employers to do their bit and start expanding and investing for the future, so that if demand picks up—as I hope it will—it will be British manufacturers who have the capacity to fill the gap. Much will obviously depend on the general economic climate about which my right hon. Friend has spoken so encouragingly this afternoon. But the Government have recognised the special difficulties facing the textile industry and have taken unprecedented steps to provide help. I have not mentioned the many other areas in which help is provided, such as Industry ​ Act assistance, TES and other aspects, as these are mainly matters for my hon. Friend who will wind up this debate.

We have done our best to meet the objectives that we set ourselves in February last year. The documents before the House show our concern for the textile industry and those who work in it. We now look to the industry for a positive and determined response.