HC Deb 22 November 1962 vol 667 cc1416-27
The Lord Privy Seal (Mr. Edward Heath)

With your permission, Mr. Speaker, and that of the House, I wish to make a statement about the recent ministerial meetings in the negotiations with the three European Communities. I hope that it will also be for the convenience of the House if I publish a more detailed account of these meetings as a White Paper later this afternoon.

At the ministerial meeting with the European Atomic Energy Community in Brussels on 14th November, the Chairman, on behalf of the Six member Governments, and the President of the Commission made replies to my opening statement of 3rd July. The text of these replies were later published by the Community, and English translations will shortly be placed in the Vote Office.

Discussions between officials began yesterday with an examination of the Euratom Treaty, chapter by chapter. The next meeting of Ministers will be arranged through the deputies.

The ministerial meeting with the members of the European Economic Community was held in Brussels on 15th, 16th and 17th November. Agreement was reached on alternative arrangements for those Commonwealth countries which decline the offer of Association under Part IV of the Treaty of Rome. First, the opportunity to associate with the Community would remain open. Secondly, the enlarged Community would declare its readiness to negotiate commercial agreements with any of these countries wishing to do so. Thirdly, there would be a very gradual application of the Common External Tariff to all the exports of these countries. Fourthly, the Common External Tariff on tropical hardwoods, which are of major interest to Ghana and Nigeria, should be reduced from 10 per cent. to nil. Fifthly, it would be the policy of the enlarged Community to work towards commodity stabilisation agreements where practicable in the commodities produced by these countries.

It was agreed that an offer of association should be made for Aden with the addition of a protocol dealing with the export of petroleum products from Aden to the Community. There was a full discussion of the problems affecting Malta and the High Commission Territories. Ministers will consider solutions to these at a future meeting.

We discussed processed agricultural products from Canada, Australia and New Zealand for the first time. I was able to agree with the Community that its offer of a very gradual application of the Common External Tariff would be an adequate arrangement for some of the smaller items. I maintained our proposals for tariff reductions and duty quotas on others. Ministers will revert to this subject later.

Ministers also discussed for the first time the possible arrangements for mutton and lamb. It was agreed that the proposals of the Community for the application of the Common External Tariff by stages combined with the possibility of suspenson of the duty under Article 25 (3) of the Treaty of Rome should be studied further.

The Ministers of the Community stated that they were not in a position to discuss the agricultural finance regulation with us. A brief discussion did take place on our request for nil duties on newsprint and aluminium.

It was arranged that the next ministerial meeting will take place from 10th to 12th December, followed by a meeting from 19th to 21st December.

In Luxembourg, on 19th November, negotiations were continued with the European Coal and Steel Community. Ministers noted the interim report of their officials, who had not been able to conclude their examination of possible incompatibilities between arrangements in the United Kingdom for the coal and steel industries and the Treaty of Paris. The officials will continue their work on these subjects, together with two additional ones, a study of sea transport from the point of view of the pricing rules of the Treaty, and an examination of the level of the external tariffs on steel.

The next ministerial meeting will be on 15th January.

Mr. H. Wilson

In view of my past criticisms of the right hon. Gentlman, may I now congratulate him on his triumph in getting the abolition and remission of external tariffs on canned kangaroo meat and tinned rabbit?

As to the other part of his statement—first, in the matter of the negotiations with the Coal and Steel Community, will he say whether he is satisfied that those with whom he is negotiating are prepared to accept the present structure and policies both of the National Coal Board and the Steel Board, set up by the present Government?

Secondly, in view of the new deadlock which has arisen about the financing of import levies and the ultimate use of those finances, has he by this time represented to the Six the utter impossibility of solving problems of low-priced imports of Commonwealth produce and adequate prices for British farmers so long as they insist on having a single price system? Is he pressing for the two-price system that we have had for the last fifteen years?

Thirdly, in view of the strong attack that is being made both by the sub-committee of G.A.T.T. and by the United States Secretary for Agriculture on the whole agricultural policy and establishment of the Six, will he tell the House whether he still accepts the Common Market agricultural policy in the future as a basis for negotiations, or whether he will now use these attacks on it to get some fresh thinking done on agricultural policy?

Mr. Heath

On the first point raised by the right hon. Member, the trade in these three items is worth more than 6 million dollars to Australia in particular, and also to Canada In two cases, tariffs of 19 per cent. would be abolished and in the other case the tariff is 8 per cent. It was of interest to these Commonwealth countries and, therefore, we accepted that arrangement. This is only a very small part of the whole programme of processed foodstuffs.

As for the negotiations with the Coal and Steel Community, the examination of possible incompatibilities between the coal and steel industries of this country and the Comumnity's organisations is not yet concluded. We have accepted that at the moment there are incompatibilities between our own arrangements for steel, and the Treaty of Paris—in particular, with regard to the pricing system and also the control of investments. As for the question of the Coal Board, discussion of that matter continues.

We have not urged that there should be a two-tier system in agriculture to deal with the question between the United Kingdom and the Economic Community.

As for the right hon. Member's last point, and the speech made by the American Secretary for Agriculture at O.E.C.D., when we were discussing this at the end of July and urging upon the Community that arrangements must be made for imports from the food-producing countries into the Community, what we were doing was affecting not only Commonwealth countries but all the supplying countries in the world. We made our position absolutely plain, and that remains our position.

But it also emerges that with the American trade legislation there is to be an opportunity of negotiating about these problems. The difficulties affect Europe and the United States together, and this only emphasises the need to deal with these matters by some world commodity arrangements if they can be produced. [HON. MEMBERS: "Hear, hear."] I am glad to hear hon. Members opposite cheering, because that is part of the Brussels arrangement.

Mr. H. Wilson

We have always said that we want to see long-term commodity arrangements, but does or does not the right hon. Gentleman agree with the strong criticisms made by the United States Secretary for Agriculture, especially in relation to a variable import levy, the level of internal prices and the general system of autarchy?

Secondly, does he or does he not accept the fact that the whole agricultural set-up of the Six is totally incompatible with the letter and spirit of G.A.T.T., as has been said by the G.A.T.T. sub-committee this week?

Mr. Heath

These matters have been examined in G.A.T.T., as the right hon. Member knows, by the Second Committee of G.A.T.T., which is the proper forum for discussing them. The question whether Europe will or will not IN autarchic in its agricultural production will depend on the price levels fixed and not on the machinery used for governing imports into the Community. That is why we place so much emphasis on the price level fixed for these agricultural commodities in the enlarged Community—including ourselves.

Mr. Grimond

As the success of our application to join the Common Market depends upon parallel success for the other E.F.T.A. countries, can the Lord Privy Seal tell us whether conversations are going on between these countries and the Six and, if so, between which E.F.T.A. countries and the Six? Has he anything to tell us about these negotiations and, if they are suspended meanwhile, when they will be resumed?

Mr. Heath

The position of the E.F.T.A. countries is that Denmark entered into negotiations for full membership at the same time as ourselves. Their negotiations are comparatively far advanced and about ten days ago, I think, they had their latest Ministerial meeting with the Community. The Norwegian Government have also applied for full membership. They have made their original presentation, and again, ten days ago, on the same day as the Danish Government, discussed the negotiations with the Community.

As for the three neutral countries—Austria, Sweden and Switzerland—each has made application for association under Article 238 of the Treaty of Rome and each has made its original presentation. The Portuguese Government have also made application to enter into arrangements with the Community under Article 238, but have not yet made their presentation.

Dame Irene Ward

In connection with the discussions on sea transport that my right hon. Friend is having, can he say whether our shipping interests are being put fully into the picture before any negotiations or discussions are opened on this very important matter?

Mr. Heath

Yes, we are in the closest consultation with all the interests involved in the coal and steel negotiations.

Mr. Oram

The Lord Privy Seal has confirmed the report that it has been agreed that there is incompatibility between the Treaty of Paris and the 1953 Iron and Steel Act, in respect of powers of control over investment and, I understand, the fixing of maximum prices. Can he assure the House that all that has been agreed so far is that these things are incompatible, and that he has not yet surrendered this country's powers in these matters?

Mr. Heath

There can be no surrender of this country's powers until the Act is altered, and that would mean after the approval of Parliament, at the conclusion of any negotiations. We have accepted that if we were to enter the Coal and Steel Community alterations in the Act would be necessary to deal with these two items.

Sir C. Osborne

I congratulate my right hon. Friend on the patience and courage with which he has defended British and Commonwealth interests in Brussels. Three times he said that there would be a gradual application of external tariffs. Can he say how many years that will cover?

Mr. Heath

Yes, from the time of accession to 1970 there will be five stages. The first, on accession, of 15 per cent.; the second, on 1st July, 1965, of 15 per cent.; the third, on 1st January, 1967, of 20 per cent.; the fourth, on 1st July, 1969, of 20 per cent.; and the last of 30 per cent., in 1970.

Mr. Turton

Can my right hon. Friend say what was the attitude of the Community to our request that Australian canned fruit should enter duty-free?

Mr. Heath

On the points of fruits, both canned and dried, and the remaining processed foodstuffs, we have not yet reached agreement.

Mr. Healey

On the question of processed foodstuffs, has not the right hon. Gentleman agreed that there will be a preference against the Commonwealth by 1970 in respect of 50 out of the 75 items concerned? Can he assure the House that on the most important question of dried fruit, canned fruit and canned salmon, he will insist that in one way or another the Common Market countries will provide Commonwealth countries overseas with outlets equal to those they now possess in Britain—bearing in mind the fact that some of these products are vital to communities of war veterans who have served this country—as well as their own country—well in the past?

Mr. Heath

We fully realise the importance of these items to the countries concerned, and we have made this plain in the negotiations. As I said in my statement, and as is explained in more detail in the White Paper, we have maintained our position not only over these, but also on the other important items.

As for the gradual décalage, the gradual application of the common tariff, that means that when we go into the Community, Commonwealth preference will disappear as far as Europe is concerned but will be maintained until 1970 against third countries.

Mr. Roy Jenkins

Is the right hon. Gentleman aware that there are some of us who while in no way abating our view that it would be a great misfortune both for Europe and for this country if we failed to enter the E.E.C., and while also not minimising the concessions which are from time to time obtained, nevertheless feel that the words of Mr. Orville Freeman might act as a useful corrective to the spirit of Llandudno and that we shall think none the less of him if he produces a good agreement in January or February rather than in December?

Mr. Heath

I thank the hon. Gentleman for the remarks which he has made. I do not think that there is any difference between our desire in these negotiations and those of the American Secretary for Agriculture to ensure that there is room in the enlarged Community for these foodstuffs. That was the purpose of our long negotiations at the end of July and the beginning of August and that remains our purpose and would be our policy in the Community.

Mr. Walker

My right hon. Friend referred to aluminium and newsprint. Would he confirm whether he is optimistic that major concessions will be made on these two commodities?

Mr. Heath

I do not think that my hon. Friend will expect me to go into the details of these rather complicated negotiations about aluminium and newsprint until we are rather further advanced. We have asked the Community to be more specific about their proposals in this respect and we are now awaiting their reply.

Mr. Gaitskell

While I appreciate the right hon. Gentleman's courtesy in not making too long a statement and in providing part of the information in the White Paper, may I ask whether he is aware that it is not satisfactory to hon. Members simply to have this opportunity, perhaps in a quarter of an hour or so, of putting questions on such an enormous range of negotiations as those covered by his statement? Will he consult the Leader of the House to see whether before Christmas, possibly after the next round of negotiations, we may have a further debate?

There are a great many questions which I personally should like to put, but I will restrict myself, because of the lack of time, to only two or three. As far as Mr. Orville Freeman is concerned, is the right hon. Gentleman aware that what we on this side of the House are urging him to do, in the light of Mr. Orville Freeman's very severe criticism of the variable levy and his support for what the right hon. Gentleman originally proposed but then abandoned in respect of Commonwealth agricultural products, is to reopen those questions?

If the right hon. Gentleman is puzzled by this, may I remind him of the insistence on maximum variable levies and the assurance that exporters would retain a percentage share of the market? This is the sort of thing I have in mind. In the light of all this, is he aware that what we want him to do, supported by Mr. Orville Freeman, is to go back and to say that we must reopen these questions which appeared to be settled in August? That is my first question.

The second is a specific question on the countries which do not want A.O.T. status. Is it not the case that the opportunity to associate with the Community being continued is something which, in any case, is involved in the convention between the Six and the A.O.T. countries which have already joined and, therefore, that all that has happened is that this is now extended, as it was bound to be, to our Commonwealth members in the same position?

Thirdly, may I ask the right hon. Gentleman whether the negotiations on commercial agreements which are to take place with those countries may go as far as to put them in no worse position as far as tariffs are concerned than the A.O.T. countries themselves? Has there been a discussion about this? Is it the case, as reported, for instance, that the right hon. Gentleman has agreed that they could not be put in such a favourable position? May I ask him whether it is not the case that the zero tariff on tropical hardwoods was proposed at G.A.T.T. two years ago and then rejected by Her Majesty's Government?

May I also ask him two other questions, one about mutton and lamb, which is very important. Is it permissible for Her Majesty's Government to continue deficiency payments in respect of these two commodities? Otherwise, the 20 per cent. tariff will obviously not be adequate for the British farmer. Finally, is he aware that Dr. Luns, in a statement in New York yesterday, said that there was an absolute deadline on these talks which lies in the British elections? The right hon. Gentleman is aware that this is very different from his assurance to us that there was no deadline. Will he therefore either contradict what Dr. Luns said, or admit that he himself was wrong?

Mr. Heath

I think that the right hon. Gentleman recognises the difficulties of reporting on negotiations of this size and this complexity. We negotiated from the Wednesday of last week until Monday with the three Communities, as I have described. On this occasion I adopted what seemed to me to be the most convenient form for the House by making a comparatively short statement and setting out the detail in the White Paper. I will draw the attention of my right hon. Friend the Leader of the House to the right hon. Gentleman's request, but there are also two days a week in which Foreign Office Questions are down, and we reach a very large number of them. We can no doubt deal with many of the points which the right hon. Gentleman wishes to raise between now and the next Ministerial meeting.

Dealing, first, with his comment on agricultural policy, I explained to the House in the debate after our resumption following the Summer Recess the problem of making quantitative arrangements for a common agricultural policy which did not contain any quantitative element. When Mr. Orville Freeman asks that the Community should guarantee a percentage or the same percentage of trade to individual countries, he is, in fact, asking that the pattern of trade should be frozen.

Mr. Gaitskell

That was involved in the right hon. Gentleman's own proposal on comparable outlets.

Mr. Heath

This has always been the problem in these negotiations in arranging for comparable outlets. We have described them in a way which we thought would not lead to the freezing of the pattern of trade. But if the American Secretary for Agriculture is asking for a percentage to be fixed in that way, he is asking for a freezing of the pattern of trade. It was for that reason that we adopted the alternative approach of deciding by the price level what the internal production would be and, therefore, what the room for imports would be. That is important just as much for the Commonwealth countries as for countries such as the United States.

When we come to the question of the alternative arrangements, the Community explained, in the same way as it was explained to the Ministers of the Commonwealth, the difficulty of making individual trading agreements which have the exact content of association, because association under Part IV of the Treaty of Rome is based on a free trade area arrangement with the Community. It has been put forward in that form to G.A.T.T. and it has, therefore, been accepted that the commercial agreements to be negotiated cannot have the same content as association for those countries which are members.

Nor can they be in the same form as the arrangements so far negotiated for India and Pakistan, because the state of the economies of these countries is quite different from that of India and Pakistan. It therefore remains that the request of these countries, which they made at the Commonwealth Prime Ministers' meeting, to be allowed to negotiate their own commercial agreements is accepted in the form in which we have agreed it in Brussels.

The right hon. Gentleman asked about hardwood. At that time we did not accept it because of the particular Commonwealth interests here. It is agreed that, with our membership of the Community, the most advantageous thing for Ghana and Nigeria is to abolish this tariff. This gives them an outlet into the enlarged Community as a whole instead of maintaining the preference which they would have had in the United Kingdom alone. This means that they lose a preference here of 10 per cent., but they have an entry into the whole of Europe, and this they must balance out. It is second in importance, for Ghana's export trade, only to cocoa. As far as Nigeria is concerned, it is the sixth in importance, except for the items on which there was already no tariff.

There is no agricultural regulation for mutton and lamb and the Community does not foresee there being one by the possible time of entry for us into the Community. There is nothing in the Treaty of Rome which makes it impossible to have a deficiency payment system, and an arrangement is changed if there is an agricultural regulation which changes that particular arrangement. If we became members we would have full rights in drafting the agricultural regulation.

Dr. Luns was speaking for himself. He would not claim to be speaking for the Community and he was not speaking for the British Government, but any Foreign Minister is able to form his own opinion about these matters. The right hon. Gentleman the Leader of the Opposition often expresses opinions about the affairs of other countries. He is fully aware of the amount of time which exists before it is necessary for Her Majesty's Government to have a General Election.

Mr. Gaitskell

The right hon. Gentleman is, in fact, saying that there is no deadline and that Dr. Luns is wrong?

Mr. Heath indicated assent.

Mr. Gaitskell

I thank the right hon. Gentleman very much.

On the question of deficiency payments, is he quite sure that they are not included in the agricultural policy and not inhibited by the general prohibition on subsidies under the Treaty? I forget the exact number of the Article.

Mr. Heath

I have expressed our view on this matter.