HC Deb 26 February 1971 vol 812 cc1182-92

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

4.2 p.m.

Mr. John Fraser (Norwood)

This Adjournment debate is on the subject of negotiations at present in progress between Fyffes, the Government of Jamaica and to some extent the British Government. Since negotiations are in progress I do not want to say anything which would injure the chances of the success of those talks, and I will therefore not quote from Ernest Hemingway. Fyffes, one of the parties to the negotiations, is a wholly-owned subsidiary of the United Fruit Co. It is important to bear in mind that the rôle played by the United Fruit Co. because of its purchasing power in these islands and therefore its power over the economy of these countries needs to be matched by protection from Government sources.

There is one thing I am bound to say about the result of the negotiations both long-term and short-term. I hope that they will result, in the words of the Minister of Trade and Industry for Jamaica, in "a bankable assurance" that the Jamaican and Windward Island producers should have an assured market in the United Kingdom for their bananas at a reasonable price. This will have no effect on the British housewife because the price varies little in this country, no matter what price is paid by the producer. The arguments I hope to put forward this afternoon are shared in every part of the House and in every party. This is a matter which I have discussed extensively with hon. Members of all parties and there is a unity of interest—this is not a political matter—about wanting to get a good conclusion to these negotiations and to have a long-term assurance to the Windward Islands and Jamaica on their chances of being able to sell bananas here.

The word "banana" is a trigger word for odd anecdotes that evoke smiles and giggles. It is a matter of deadly seriousness, however, to the Caribbean Commonwealth. Banana production supports 80,000 workers in Jamaica, let alone their wives and children, and is responsible for 7 per cent. of Jamaica's export earnings. In the Windward Islands banana production provides work for 75,000 workers and is responsible for at least 70 per cent. of the island's export earnings.

It is understandable that, if this pattern of employment and trade were disturbed, it would have extremely grave social and political effects which would be felt well outside the islands.

This country has a special responsibility in the Windward Islands. They are not an independent State. We are responsible for their external affairs. We also have a joint responsibility to both Jamaica and the Windward Islands because they are our traditional suppliers of bananas and they have relied and built up their industry on their being exclusive suppliers to Britain.

They are also good friends of Britain's and as members of the Commonwealth family of nations they have come to a point at which they turn to the elder and stronger member of the family for support and protection.

Jamaica and the Windward Islands have two problems. There is the immediate problem facing Jamaica and indirectly the Windward Islands arising out of Fyffe's ending of its contract with Jamaica for the supply of bananas to this country. There is also a long-term problem which is tied up with the short-term problem. It arises from our proposed entry into the Common Market and the question of guarantees for the continuation of supplies to Britain if that were to come about. Unless the short-term problem is solved and unless these countries can rely on assured markets here, if it came to negotiations on this issue at Brussels there are situations in which there could be little to negotiate. If their market had been undercut and they did not have an extensive entry to the British market, it would considerably weaken the position at Brussels.

In 1966 the banana war, as it is called, broke out. It was a price-cutting war which, according to the report in the Sunday Times on 24th January, 1971, was embarked upon by Fyffe's. It had ruinous results for Jamaican growers. If the banana war broke out again, it would have equally ruinous results for those in the Windward Islands; because price cutting, like a hurricane, can spread desolation widely and rapidly throughout the banana growing islands.

In 1966 an agreement was reached. Jamaica and the Windward Islands split up Britain's banana trade roughly speaking 52 per cent. to Jamaica and 48 per cent. to the Windward Islands. Geest, who are held in very high esteem in the Caribbean, imported from the Windward Islands. I could list other shippers, but that broadly speaking describes the position.

The essential element of the 1966 agreement was that— Fyffes and Geest undertook not to ship in bananas from other sources unless, between them, the Caribbean countries could not fill the British market. These arrangements gave effective guarantees for trade with Great Britain until Fyffes again ended the agreement last year. Unless some guarantee can be given of the right to import without price cutting from other islands and without dumping, the results for the market in Jamaica could again be ruinous.

As regards the present statutory restrictions, there is a dollar area restriction on imports. No more than 4,000 tons are allowed in from the dollar area, but this does not restrict imports from Guatemala, Ecuador, Ivory Coast, and other countries, some of which already have guaranteed entry into France under the Common Market provisions and others of which are under the control in some cases of the United Fruit Company and where the wages paid on the plantations and the conditions of work are so low that the other assistance to Jamaica and the Windward Islands—namely, Commonwealth preferences—does not make all that much difference. Commonwealth preference at a level of £7 10s. per ton has been eroded by inflation and, because of the world surpluses, does not afford any effective protection.

The problem facing these countries was very fairly put by the Chancellor of the Duchy of Lancaster. When talking on 22nd February about the entry of bananas into this country the Chancellor of the Duchy of Lancaster said: Without such access—especially for bananas—grave damage would be done to the economies concerned. These developing countries, who have for centuries been dependent on the British market. …"—[OFFICIAL REPORT. 27th February, 1971; Vol. 812, c. 45.] If they do not get the protection that they need, there will be devastating effects. I have mentioned political and social upheaval. It would go further and interfere with the overseas aid calculations and overseas aid remittances to those countries. To fail to give protection to the Windward Islands and Jamaica and to assist the entry of their bananas into this country could have adverse effects on Great Britain. There would be no bad effects in giving this protection but there could be bad effects if the protection was not given. It would mean money being paid across the exchanges outside the sterling area and would be no advantage to the housewife. Fyffes have threatened to buy elsewhere at cheaper prices, and the moment one starts cutting into the market and the price drops in Jamaica and the Windward Islands, many people can be thrown out of business.

What happened when the problem arose last year was that the previous Government appointed Lord Denning to act as a mediator, not an arbitrator. Lord Denning's reputation for fairness and justice goes well beyond this country. This appointment was approved by all parties, and, although the report is private, many of the recommendations are now an open secret. I should like to quote from a report—not from the report itself but from a report of the recommendations which appeared in the Sunday Times, as follows: There must be some agreement restricting the right of Fyffes to import from other countries. If none is forthcoming it may be necessary for the United Kingdom Government to interfere. His 'best solution' is the establishment of an 'advisory committee' to control the banana trade. It would be modelled on the system operating in France, where a group of growers, shippers, importers, ripeners and retailers manages the entire market under the eye of the French Government. Denning envisages a similar committee in Britain under the Minister of Agriculture. That solution has already been accepted by France, and a similar kind of arrangement exists between Italy and Somalia. I am suggesting that that solution be accepted by this country. It is a solution which does not run contrary to our international view about trade with developing countries. It has the commendation of the United Nations Food and Agriculture Organisation, which recognises that protection is needed and that the growers can soon be faced with devastation if the market is not controlled, protected and assured.

I hope the Government will discharge the duty which the United Kingdom owes to the Caribbean, which has been recognised by the Government in that statement by the Chancellor of the Duchy of Lancaster; I hope it will discharge that duty to the Caribbean, which involves no burden. It does not involve the housewife in paying more money. It is the discharge of a duty without cost to ourselves. Such a solution would mean that the Caribbean would be allowed to fulfil the demands of the British market and that supplies would only be made from elsewhere when there was a shortfall from the Caribbean Islands. Even those supplies which did come in from elsewhere would do so at such a price that would not undercut and ruin the market of the Caribbean.

Therefore, I am urging a solution along those lines in the short term. I ask the Government to use their influence, and if necessary their powers to impose protection and restrictions to benefit these countries and to have a national banana policy which will give long-term assurances to those countries.

I know that negotiations are in train at the moment and I do not press the Minister to make a definitive and final statement this afternoon. I appreciate the difficulties. If he will only say that he will take these views into account I shall be grateful, and, of course, if he can say more I shall be even more grateful. I only ask him to say nothing which will cut out the possibility of examining these views in future.

If this solution is accepted it will make matters much easier in the Common Market negotiations because such a banana council exists already in France and would fit into the pattern of Common Market arrangements with developing countries. I hope that the hon. Gentleman will say something sympathetic and helpful to the needs of these nations. I emphasise that the plea I am making has wide support among hon. Members on both sides of the House. We hope that these nations can rely upon the Minister's assistance in the present negotiations and have assurances for their long-term future prosperity.

4.15 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Royle)

I am grateful to the hon. Member for Norwood (Mr. John Fraser) for the opportunity to set out the Government's views on a subject which is of great interest to lion. Members on both sides, as the hon. Gentleman made plain in his speech. I assure him at the outset that I appreciate, as people outside will appreciate, his wish, which is my wish, that nothing we say this afternoon should in any way damage the talks which are now taking place and which all of us hope will be successful.

I shall look carefully at all the points which the hon. Gentleman has made. I think that it will be helpful if I were this afternoon to explain the background as we see it and then set out our policy. Much of the background has been covered already by the hon. Gentleman in his skilful exposition of the events of the last few years, but I think that I may be able to add to it.

Our imports of bananas are in excess of 300,000 tons a year, and about 90 per cent. of our supplies come from Jamaica and the Windward Islands. Last year, imports from these two were about equal in quantity, as the hon. Gentleman said. The balance of our requirements, which came from various sources, faced two barriers. First, there was the tariff of £7.50 per ton, and second, supplies from dollar areas were controlled by licences.

The basic annual quota for these Latin American bananas is about 4,000 tons, or 1 per cent. of our total imports. Obviously, this is a severe restriction, it has caused difficulties in trade relations with Latin American banana producers, and has restricted the choice for the British consumer, which all of us wish to see maintained.

Restrictions on imports from the dollar area were imposed during the war for balance of payment reasons—that was their origin—and, as the British economy became stronger, the restrictions have been reduced. By 1958, the dollar quotas were only for fruit, rum and cigars. However, another effect of the quotas was to give protection to Commonwealth suppliers against Latin America, and this continued despite international trading obligations which British Governments have had. We have maintained these arrangements for the benefit of Commonwealth suppliers although they have been in breach of our G.A.T.T. responsibilities.

In the 1950s and early 1960s, we imported bananas from other sources, in particular, prior to 1963, from the Cameroons. The Cameroons ceased to benefit under the Commonwealth Preference Area and hence faced the tariff of £7.50 per ton which I mentioned. The opportunity, therefore, emerged for Commonwealth Caribbean suppliers to take an increased share. This was particularly helpful to the Windward Islands, which took advantage of that opportunity and succeeded in replacing supplies from the Cameroons from their own increased production. Hurtful price competition, in fact, developed between them and Jamaica.

This created problems, so meetings were held in London in 1966, under the previous Administration, as the hon. Gentleman said. They were held between the last Government and delegations from Jamaica and the Windward Islands. Then the Jamaican and Windward Islands producers got together, and, with the principal agents involved, Fyffes for Jamaica and Geest's Industries for the Windwards, they worked out satisfactory arrangements. Under these arrangements, which of course were entered into between the parties concerned and in which Her Majesty's Government had no part, Fyffes and Geests agreed to limit their import of bananas to Jamaican and Windward Islands sources, unless these could not supply a sufficient quantity to satisfy market demands.

This arrangement worked well for some time, but difficulties began to appear. These arose from a variety of causes. Some were not caused by the Governments of Jamaica or the Windward Islands, by Her Majesty's Government, Fyffes or Geest's Industries, but were acts of God. There were inevitable difficulties like bad weather and hurricanes, which had quite a serious effect on the situation in both the Windward Islands and Jamaica. As the Jamaican Government acknowledged, some difficulties in providing an adequate supply of bananas were due to the way in which the Jamaican banana industry functions. it is an old industry and consequently so are some of its methods. Improvements cost money, and mechanisation, even if possible in an industry supported by smallholdings, would inevitably create problems in an island where unemployment is high. But Fyffes must operate on a commercial basis, and it felt its responsibility to its shareholders and the need to ensure a regular supply of good quality bananas. So as the arrangements neared the end of the initial three-year period Fyffes stated that because of the unsatisfactory arrangements with the Jamaicans it must have greater freedom in planning its imports. Therefore, it was not able to continue the arrangements for Jamaican bananas after the end of 1969.

Fyffes was concerned to maintain other sources, and naturally the Jamaican Banana Board, whose industry depends upon the British market, became extremely anxious and tried to reach a new agreement. It was not successful. Therefore, a further Ministerial meeting in London was held last February between the last Government and the Jamaican and Windward Islands Administrations. The meeting led to the appointment of Lord Denning as a conciliator between the Jamaican Banana Board and Fyffes. Lord Denning began his task last March. Despite many meetings, those efforts did not lead to success. He submitted his report to my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs in November, and the new Government gave thought to what our next step should be.

After we had received Lord Denning's report my right hon. Friend the Prime Minister invited Jamaican and Windward Islands delegations for further talks, and he discussed with the Prime Minister of Jamaica at the Commonwealth Prime Ministers' meeting in Singapore the problems which were being faced. As my right hon. Friend explained to the hon. Gentleman on 16th February, he proposed that there should be a further attempt to secure agreement between the Jamaica Banana Board and Fyffes, and undertook to make our good offices available to that end.

These meetings are taking place this week. So far we have had no report of what has occurred. No representative of Her Majesty's Government is present, since the question is one of securing a commercial arrangement. We all hope that this will be achieved. We believe that the difference between the Jamaica Banana Board and Fyffes must be resolved by the parties themselves. Nevertheless, we are fully aware of the importance of banana industries to the economies of both Jamaica and the Windward Islands and are alive particularly to the position of the latter as associated States. The hon. Gentleman will know that Dominica and St. Vincent are receiving some budgetary aid, and, clearly, the dependence of the Windward Islands on the banana industry has most serious economic and social implications for all who live and work in those beautiful islands.

The hon. Gentleman asked some questions about aspects of the negotiations relating to the possibility of British entry into the European Economic Community. He expressed fears about the prospects for some Commonwealth suppliers. These were the subject, of course, of discussion by my right hon. and learned Friend the Chancellor of the Duchy of Lancaster when he met Caribbean Ministers in the Caribbean during the last two weeks. He explained in a statement to the House on 22nd February and in reply to my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) that the Community has agreed to an offer of association for States whose external affairs are the responsibility of Her Majesty's Government. If the Windward Islands accept, we feel that their interests will he safeguarded.

The common external tariff from which associated States are exempt is 20 per cent. Once decisions are reached on the type of association, we expect the treatment of Caribbean Commonwealth producers to be no less favourable than that which the Community at present affords to traditional suppliers. There is, of course, no common Community policy on bananas, so it is not possible to be more specific than that. But I hope that I have reassured hon. Members that the Government are aware of the social and the economic implications for suppliers of bananas and of the difficulties of Messrs. Fyffes and Jamaica.

We have watched developments carefully and have offered to help where we can properly do so, but there are many conflicting interests. Britain alone is not solely responsible for sustaining these industries. They must adjust to present-day conditions and needs. It is essentiai that banana producers go ahead with the necessary improvements which will enable their industries to play a rôle in the years ahead.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes past Four o'clock.