Third Standing Committee on Statutory Instruments, &c.


Wednesday 6 July 1988



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The Committee consisted of the following Members:

Chairman: Mr. Ted Leadbitter

Abbott, Ms. Diane (Hackney, North and Stoke Newington)

Brandon-Bravo, Mr. Martin M. (Nottingham, South)

Brittan, Mr. Leon (Richmond, Yorks)

Bruce, Mr. Malcolm (Gordon)

Chapman, Mr. Sydney (Chipping Barnet)

Clark, Mr. Alan (Minister for Trade)

Clark, Sir William (Croydon, South)

Cohen, Mr. Harry (Leyton)

Critchley, Mr. Julian (Aldershot)

Day, Mr. Stephen (Cheadle)

Dickens, Mr. Geoffrey (Littleborough and Saddleworth)

Dicks, Mr. Terry (Hayes and Harlington)

Fenner, Dame Peggy (Medway)

Fields, Mr. Terry (Liverpool, Broadgreen)

Hoyle, Mr. Doug (Warrington, North)

Lennox-Boyd, Mr. Mark (Morecambe and Lunesdale)

Mitchell, Mr. Austin (Great Grimsby)

Pike, Mr. Peter (Burnley)

Mr. D. J. Gerhold, Committee Clerk

3 Third Standing Committee on Statutory Instruments, &c. Wednesday 6 July 1988

[MR. TED LEADBITTER in the Chair]

Customs Duties (ECSC) (Amendment No. 1) Order 1988

10.30 am

The Minister for Trade (Mr. Alan Clark): I beg to move, That the Committee has considered the Customs Duties (ECSC) (Amendment No. 1) Order 1988. The order reimposes the Community's normal third-country duty rates on imports of one European Coal and Steel Community category from Yugoslavia until the end of the year. That category covers semi-finished products, angles, shapes and sections, and sheet pilings of iron or steel. Under the ECSC-Yugoslavia agreement of 1980, those products enter the Community free of duty subject to a tariff ceiling of 3,314 tonnes in 1988. When imports into the Community of those Yugoslavian products exceeded the limits, it was agreed by member states to reimpose full customs duties. For most industrial products the Community's external duty can be altered by a Council regulation which is directly applicable in all member states. For technical reasons, however, changes in duty relating to products covered by the European Coal and Steel Community have to be incorporated in United Kingdom law by means of a statutory instrument through the affirmative resolution procedure. Hence the need for today's order.

The Chairman: Before I put the motion to the Committee, I must assure the Minister and members of the Committee that I understand the instrument. I read it and I understood it.

10.33 am

Mr. Austin Mitchell (Great Grimsby): I am glad, Mr. Leadbitter, that you as Chairman understand the instrument. I find it a little difficult to follow, especially after the Minister's passionate explanation. As I have a captive and—as a result of the Government Whip's activities—a compulsory audience, I shall speak briefly. I thought that a couple of hours might be appropriate to deal with the order. We are grateful for the Minister's comprehensive explanation. Clearly, we are moving up-market ministerially. All the other Ministers in the Department of Trade and Industry are out looking for hoarding sites on which to put more advertisements, presumably depicting Sir John Harvey-Jones looking as though he is about to burp, as a consolation prize for being turned down by the Prime Minister.

Mr. Alan Clarke: What is he talking about?


Mr. Mitchell: That was a joke. Such matters have to be underlined for Conservative Members. We are engaged this morning on the Roy Jenkins memorial lecture. The order clearly arises from the impetuous rush in 1980 to demonstrate that the EEC had a foreign policy by fixing a deal with Yugoslavia as rapidly as possible, to punish the Russians for their intervention in Afghanistan. That deal opened up EEC markets to Yugoslavian products. But its steel was subject not to the usual EEC rules but to those of the European Coal and Steel Community. The ECSC requires duties—which in the normal course of events would be altered by Council regulation and which would save us from sitting this morning—to be written into British law. That is why we are here this morning as an uncomprehending body of Members of Parliament. Our attendance is compulsory. We have a massive audience of Yugoslavians to see that their interests are defended. We are considering an order which is in force and which we cannot effectively stop. It is a farce that we should waste everybody's time by this procedure—[Interruption.] I usually have that effect on audiences. I wish that I could have that effect on the hon. Member for Littleborough and Saddleworth (Mr. Dickens), but he has to stay. However, it is a farce that we should devote time this morning to such a minimal matter and that the accumulated brain power on the Government Benches should be tied up here and prevented from going out to earn its living in all the supplementary jobs that Conservative Members do. However, as we must—perforce—go through this procedure, it is as well to ask the Minister a couple of questions. What we are doing is perfectly acceptable. Yugoslavian steel production is increasing substantially. It is interesting to note what is happening, despite the assurances of the Under-Secretary of State for Trade and Industry earlier this year who, in a short debate on the Customs Duties (ECSC) Order 1987—S.I. No. 2184, which came into force on 1 January—spoke of the "past history of imports"— that is, from Yugoslavia— "entering the Community up to and above the level of agreed … commitment"— agreed Community commitment. He went on to say: "Although those imports have never affected the United Kingdom, other member states have complained."—[Official Report; 1st Standing Committee on Statutory Instruments, 27 January 1988; c.4.] Figures for UK imports of steel products from Yugoslavia show a massive increase. In 1978–79 there were none; in 1981 and 1985 there were none; but in 1986, the figure was 16,000 tonnes and that rose to 84,500 tonnes in 1987. Why has there been a huge increase in steel imports from Yugoslavia? Is it simply because the complaints from other EEC countries succeeded in diverting Yugoslavian steel from their markets to our softer market? What is the effect of Yugoslavian steel imports into the European markets? We have just gone through a process of liberalisation in which the last remaining production quotas on steel have been removed. The Paymaster 5 General put that forward as a triumph for the British industry—a competitive market in which, in his view, highly competitive British steel will succeed against European competition. The Opposition have doubts about that. First, other European countries support their steel industries more generously than we do. Although the Community is against direct Government support to steel, clearly it has been unable to stop that with the Italian steel industry. It is clear from the report of the National Economic Development Office about indirect state aid within the EEC that all the other countries support their steel industries through transport and labour-related schemes to a far greater extent—three or four times greater—than we do. So we are not playing on an even playing field. We are playing on a playing field where other industries receive indirect support from their Governments. Other steel industries are more diversified than ours as our industry produces only basic cooking steel in huge quantities. They will therefore be better able to compete if the steel market turns sour. Our Government even impose heavy costs on our steel industry through the increase in power charges—which will impose a massive burden on steel—and through the increase in the exchange rate, particularly against the deutschemark. In real terms, our exchange rate is now up about 18 per cent, against the deutschemark compared with last year. How can the British steel industry compete in such circumstances, particularly if there is to be an increase in imports from Yugoslavia? Instead of the minor modifications that are contained in this order, should we not put up a steel curtain round the Community to keep out competing steel, whether from Yugoslavia or anywhere else? Those are the questions that we put to the Minister, now that we have him here on a compulsory basis.

10.41 am

Mr. Terry Fields (Liverpool, Broadgreen): I am glad to know that at least you, Mr. Leadbitter, have read and understood the statutory instrument and that you will guide us through it. It is clear that my hon. Friend the Member for Great Grimsby (Mr. Mitchell) also knows a bit about it. I have just received my invitation to the dance—not the tea dance—and I came to the Committee in the expectation that, with a quick nod and a wink, it would be over. But when I hear the Minister talking about semi-finished iron and steel products coming into this and other EEC countries, I begin to wonder about the effect on jobs in this country. I am opposed to import controls, particularly in a capitalist system, because they would only give protection to capitalists in this country, perhaps at the expense of jobs in other parts of the world.

Mr. Alan Clark: That is a very advanced view for the hon. Gentleman.

Mr. Fields: It may be. I have heard the Minister speak before. In different circumstances, if we had a Socialist state, it might be necessary to have temporary import 6 controls while we dealt with the people whom Conservative Members represent and started to take over their industries, planning for need instead of the greed that they support.

Mr. Alan Clark: The hon. Gentleman has strayed down a more philosophic path. Does he favour national Socialism or world Socialism?

Mr. Fields: The Minister wants to play games—

The Chairman: Order. If we go down that general broad path, it will be very interesting and very soon we shall all forget about the order. As I understood the hon. Member for Liverpool, Broadgreen (Mr. Fields), on the order before us and the question of duties, he had come to a view which was quite different from the view that he would hold under another system. But that was not a general invitation to have a broad philosophical or political discourse.

Mr. Terry Fields: I accept your strictures on the Minister, Mr. Leadbitter. As an International Socialist, I should like to put a question to the Minister. What effect has this penetration had on British jobs? The Minister said that the limits which applied under the 1980 agreement had been exceeded. It is clear that we now have a further instance of EEC policies and decisions overriding the sovereignty of Parliament, and it is going through on a nod and a wink, at the cost of jobs in British industry. What is the future with regard to the 1980 agreement? Will it be extended even further? What opposition will the Government put up in defence of British jobs and the British manufacturing base against this penetration?

10.44 am

Mr. Geoffrey Dickens (Littleborough and Saddleworth): I take exception to some of the remarks that have been made, because if the Government had not taken the measures that they did over the years, we should have a bankrupt British steel industry. The fact that we are not putting £600 million a year into British Steel and the fact that it is streamlined, profitable and can compete with the rest of the world, does great credit to the industry and to the measures that the Government have taken. Penetration from Yugoslavia is worrying not only the British steel industry's workers generally but our EEC partners. If penetration becomes unacceptable, it will be a straightforward matter to take steps to arrest it, and we will do that in a workmanlike way. Having got the steel industry to its present strong and powerful position, it would be senseless to allow outside influences to penetrate it and undermine the jobs of British workers.

10.45 am

Mr. Alan Clark: The hon. Member for Great Grimsby (Mr. Mitchell), who I believe occupies a shadow role in the Opposition, made an interesting point.

Mr. Mitchell: It is a shadow role, and about as shadowy as the Minister's role.


Mr. Clark: That was a characteristically skilful piece or repartee! The hon. Gentleman appeared to object to the fact that this issue was being brought to a Committee of the House rather than being introduced by regulations. I think that it is always prefereable to bring such issues before a Committee of the House. However, if the hon. Gentleman has any residual doubts about this, perhaps he would like to converse quietly after we have dispersed, together with the hon. Member for Liverpool, Broadgreen (Mr. Fields) who, as he often does, made a valuable point about regulations overriding parliamentary sovereignty. I am surprised that the hon. Gentleman took that line. Perhaps when he reads the Official Report he will think over the implications. On imports, I can put the minds of the hon. Members for Great Grimsby and for Broadgreen at rest. I cannot do that for you, Mr. Leadbitter, or for other members of the Committee whose time has 8 been consumed by this provision. The reason is that, as perhaps I should have revealed earlier, no imports in this category come into the United Kingdom at present. As to the general health of the steel industry, it has increased production from 14.8 million tonnes to 17.4 million tonnes in the past year. The exports of steel from Britain amounted to 6 million tonnes and imports to only 4 million tonnes. The relatively small sums in the order may be measured in thousands. Against the background of an overall trade surplus of more than 2 million tonnes of steel, I hope that the Committee will feel that this relatively minor provision, which does not apply to the United Kingdom's imports, should be given approval.

Question put and agreed to.

Resolved, That the Committee has considered the Customs Duties (ESCSC) (Amendment No. 1) Older 1988.

Committee rose at twelve minutes to Eleven o'clock.


Leadbitter, Mr. Ted (Chairman)

Brandon-Bravo, Mr.

Chapman, Mr.

Clark, Mr. Alan

Critchley, Mr.

Day, Mr.

Dickens, Mr.

Dicks, Mr.

Fields, Mr. Terry

Lennox-Boyd, Mr.

Mitchell, Mr. Austin