EUROPEAN COMMUNITIES (DEFINITION OF TREATIES)

HC Deb 07 November 1975 vol 899 cc871-84

The Minister for Overseas Development (Mr. Reg Prentice)

I beg to move: That the European Communities (Definition of Treaties) (No. 2) Order 1975, a draft of which was laid before this House on 13th October, be approved. It is fitting that the historic Lomé Convention should be the subject of a separate debate. In saying that, I may be being disloyal to the Government in the sense that a motion was tabled to send the matter to Committee. If it is not an improper thing to say, I am glad that my right hon. and hon. Friends insisted that we should have a debate on the Floor of the House, bearing in mind the intrinsic importance of this subject.

I propose to speak briefly on the motion. Many of the issues raised by the agreement are a microcosm of the issues raised in the previous debate. The effect of the motion is to give an effect in United Kingdom law to the treaties and agreements which are listed in the schedule to the Order. In all, there are seven treaties and agreements. The first two relate to the International Wheat Agreement and the Food Aid Convention. I need not dwell on those matters as they do not involve any new policy.

The agreement and the convention are already in existence. Discussions are going on with a view to a possible new wheat agreement and a new food aid convention. In the meantime, the only practical effect of items 1 and 2 is to extend the existing arrangement for a year. I shall not take up the time of the House by saying anything further about them.

The remainder of the items relate to the Lomé Convention, item 4 being that which is directly concerned with the Lomé Convention. Items 3 and 5 provide for tariff-free access of ACP products in the area covered by the European Coal and Steel Community which has separate juridicial arrangements and needs to be mentioned separately.

Items 6 and 7 deal with the manner in which the Community's obligations under the Lomé Convention will be implemented. Everyone regards Lomé as a historic agreement. Rather it is a complex arrangement of different agreements. It arose partly historically from the arrangements which the original six members of the Community had with their associated countries. In that sense it is a historical arrangement replacing the second Yaoundé Convention. It involves a much wider list of countries and in particular the 22 independent Commonwealth countries all of which were given during the negotiating period the option of joining in the negotiation of the Convention and all of which accepted that that was the right thing to do.

We are speaking, therefore, about a new agreement in which Britain played a distinguished part. If it were not for the embarrassment, which has already been referred to, I would pay tribute to my right hon. Friend the Member for Lanark (Mrs. Hart) for her part in this. The Commonwealth as a whole, the 22 countries to which I have referred, also played a distinguished part.

I want to underline some of the distinctive and relatively new—in some cases completely new—features of this arrangement. I begin with trade. I am abbreviating and simplifying what is in the Convention. Nearly all ACP products will be able to enter the EEC duty-free. There are a few exceptions, amounting to about 4 per cent. of trade in certain agricultural products. The vital point is that there is no element of reciprocity. In other words, EEC countries are not asking for similar facilities in the ACP countries. In that sense the arrangement is a revolutionary improvement both on previous EEC arrangements and on the old Commonwealth preferences with which we are familiar.

The aid agreement provides for flexible arrangements to be made and to be worked out in detail as to the instruments for administration of aid and the terms of that aid, and in particular for programming by criteria to be worked out with the 46 countries concerned. The important thing here is the emphasis on the part to be played by the recipient countries in working out the arrangements.

Another important aspect of Lomé is the proposed Stabex scheme for stabilising export earnings of a number of key products of the developing countries concerned. This will apply in the first instance to groups of products of particular importance to these countries—coffee, cocoa, cotton, coconut, palm, palm kernel, raw hides, skin and leather, wood, bananas, tea, sisal and iron ore products. There is provision for extending the list by further agreement.

This is a new scheme in practice although it has been discussed as a possibility for a long time at development conferences. It provides for compensatory transfer of resources if there is a fall in receipts from these products to the extent of 7.5 per cent. or more below a moving average level of the previous four years. This is to be repayable without interest for those in the higher income brackets among the ACP countries. For the 24 least developed countries no payment will be required.

Another important feature of Lomé is the provision for industrial co-operation, for the promotion of more diversified industry within the developing countries concerned and for the transfer of technology. Here there are two key instruments provided in the convention. One is a committee on industrial cooperation, which will provide overall supervision of these arrangements. The other is a new centre for industrial development, which will gather and disseminate information, carry out studies and organise contacts between firms in the EEC and the ACP countries.

The decision of the Council of Ministers on 24th June enabled the end of tariff restrictions to commence on 1st July this year. Other aspects of the convention will take legal force when they are ratified by the nine countries of the Community and by at least two-thirds of the ACP countries. The practical impact of the arrangements will clearly depend on which part of the convention we are considering. A number of committees are being or have been established on various aspects of the matter to work out the practical details.

I conclude with three comments. First, as many hon. Members said in our earlier debate, the situation of the EEC in relation to the developing world remains unsatisfactory in that as yet there is no practicable provision for aid to be given to non-associates. No one will suggest that Lomé is in any sense a substitute for that.

Secondly, Lomé represents many new and potentially exciting developments in co-operation. Earlier, a number of hon. Members referred to the prospects for UNCTAD 4. It is worth putting on record that many of the practical problems which the global community in UNCTAD 4 will face have been tackled in the discussions on Lomé and the answers produced in the Lomé context could be of great value and, in many cases—plainly they would not always apply—be a model for wider agreements in the UNCTAD context.

Thirdly, a distinctive feature of the negotiations on Lomé was the cohesion of the ACP countries. They negotiated successfully and powerfully as a team. That underlines a point which arose in our earlier debate, namely, that the future of successful developments in the developing countries depends among other things on greater co-operation between developing countries. I think that that has been working out in practice in connection with Lomé.

The Lomé Convention is of historic significance. Britain played a distinctive and powerful part in it. I ask the House to give its assent to it by approving the Order.

4.8 p.m.

Mr. Christopher Tugendhat (City of London and Westminster, South)

I agree with the Minister that the Lomé Convention is a historic step forward, and I welcome the Government's support for it. Even now it is acting as an inspiration and model for more ambitious plans.

The criticism was expressed in our earlier debate that the convention did not go far enough, and we should like it to go further, but we must all be pleased at the extremely ambitious variant on the Stabex proposition which the American Secretary of State put to the seventh Special Session of the United Nations in September, which was on a much larger scale. It envisaged the creation of a facility capable of lending up to $2.5 billion in a single year and LDCs would be eligible for assistance if their total export earnings fell below a given level. We all applaud the scheme, and I very much doubt whether it would have been brought forward without the successful example of the Lomé Stabex scheme to inspire it.

I have only one criticism to make. I wish that the British Government would speak more forcefully in favour of the Stabex form of earnings stabilisation system when questions of international development arise. I was disappointed at the speech made by the Secretary of State for Foreign and Commonwealth Affairs to the Special Session as his remarks on this issue were rather weaker than I should have wished. The report produced by the Commonwealth Secretariat was signed by our present Ambassador in Brussels. I realise that he signed in his private capacity and, therefore, I do not hold the Government responsible for what he said. We did not put as much weight behind the scheme as I should have liked.

I hope that the strong words used by the Minister today in supporting Stabex will be echoed by British Ministers and officials on every possible occasion and that this will prove an inspiration for the future.

4.11 p.m.

Mrs. Judith Hart (Lanark)

As the Minister recognised, a major principle involved in this debate is that an instrument of the Community of such importance as this convention should at least have the honour and the privilege of being taken on the Floor of the House. My hon. Friend the Member for Newham, South (Mr. Spearing) deserves the gratitude of the House for noting this document among the many other instruments down for discussion in Committee and for drawing the attention of some of his colleagues to the fact that we should insist that it came to the Floor of the House.

We have a system for dealing with European secondary legislation. Surely we can distinguish between instruments and pay due regard to those which it would be totally discreditable to refer to Committee for an unknown and unheard discussion lasting half an hour and the reports of which nobody will read.

I am a little taken aback. I do not by any means wish to go back to the tense days of the referendum debates. I recall the immense emphasis and importance given to the Lomé Convention by a considerable number of right hon. and hon. Gentlemen who are not present today, and indeed by a number of my right hon. and hon. Friends who also are not present. It is surprising that a subject which engaged the support of so many Members of Parliament at that crucial point in time seems to have escaped their notice when the relevant document comes forward for ratification by Parliament.

I recall the important moments in the Lomé negotiations, which I suppose one of these days we shall be able to reveal. Those moments were surprising. I remember a crucial hour at about 4 a.m. in Jamaica 15 months ago when the main task was to convince the French Foreign Minister of one or two virtues of the developing countries' proposals. I remember those discussions. I also remember when, at 5 a.m. after about 36 hours of non-stop discussions in Brussels last January, we almost foundered on the issue of the access of white rum to our markets. I do not like white rum and I had not partaken of it. An agreement was due to be signed at 9.30 a.m. or 10 a.m. Valiant efforts by many people, who at this moment shall be nameless, saved the situation. There is a great history attached to the intricacies of the Lomé Convention, which I describe as of historic importance not so much for what it does but for its value in setting possible precedents.

The earnings stabilisation scheme does not have all the virtues which have been claimed for it, and that is partly why British Ministers have not greeted it with undiluted enthusiasm. Its great disadvantage is that it is of primary benefit to countries which are not in the category of the poorest countries. Nevertheless, even with that disadvantage the scheme may be used as a precedent. If nine industrialised countries can reach agreement in this area with 46 developing countries, that provides a precedent for world-wide agreement under the new international economic order. I hope that Dr. Kissinger's speech will be followed by action by American delegations in appropriate places. That has not always happened.

The European Development Fund is part of the Lomé Convention and adds a new multilateral dimension to British aid. Multilateral aid comes from the IDA, the World Bank, the United Nations development programme and other minor United Nations agencies. We have to be careful about one matter on which I am sure my right hon. Friend places due emphasis in all his meetings in Brussels and Luxembourg. EDF aid is not governed by a clear set of criteria. It is allocated on the basis of "Spot something that looks promising and give it some money" rather than on a coherent logical set of criteria. That position needs to be watched, and it is necessary to press our concept of what the criteria should be.

Money from the EDF is distinctly slower in disbursement than is our own aid programme. Therefore, the commitment of funds to the EDF could lead to under-spending or not using our own aid programme to maximum benefit. Considerable Commission bureaucracy is involved The intentions of the Commissioners concerned with the fund are good, but they come up against all the Ministers and all the Governments and this leads to a slowing down. Those two items will need to be carefully watched. We should not be uncritical in our approach to the implementation of the Lomé Convention.

I have one other slight concern although I am not sure how well-founded it is. One hears that arrangements between ACP countries and Community countries do not always go as smoothly as they should. I hope that this position will improve.

It has been, and is a good experience to see the inter-mixture of the former Yaoundé countries and the Commonwealth countries which are all part of the exercise. The Yauondé countries, the Francophone former colonies, had suffered a good deal from French dominance and French paternalism, whereas the Commonwealth countries showed a vigour, robustness and determination not only to exercise their own independent voice but to take these little French children along with them. They have totally changed the character of the ACP.

There are some in the Community who did not quite realise what was going to happen as a result of this new admixture of countries. It is of great benefit to the Francophone ACP countries, and, while it is a little frustrating for the Commonwealth members of the ACP, things will never be quite the same again in the Community as a result. It is good that that should be so.

4.21 p.m.

Sir Geoffrey de Freitas (Kettering)

I entirely agree with my right hon. Friend the Member for Lanark (Mrs. Hart) that it was important to have this debate, for two particular reasons. First, we must show people how highly we regard this subject as one which should be discussed and which should not just go through on the nod or upstairs to some Committee. Secondly, it gives us an opportunity to pay tribute to my right hon. Friend herself, who had so much to do with this.

Under the Lomé Agreement, the European Parliament has a special rôle to play. This may go some way towards dealing with the last but one point my right hon. Friend made. The European Parliament is to set up, together with representatives of the 46 ACP countries, a form of consultative assembly to discuss the problems of aid. A meeting will take place later this month in Luxembourg at which they will try to work out what form this consultative assembly will take.

At first sight, such a body would be rather incongruous because less than half of these 46 African, Caribbean and Pacific countries are parliamentary democracies. Their 46 representatives will meet 46 members of the European Parliament, all of whom are members of national Parliaments in the Community. The representation from the European Parliament will be the 35 members of the Development and Co-operation Committee plus 11 others chosen by the political groups.

Thus, in many cases, there will be officials from developing countries sitting with European Members of Parliament, and they have to consider together what sort of forum there shall be in future to discuss these aid problems. Since such a forum is in the Lomé Agreement, it is important that we should work it and not pay too much attention to the wording, which implies that everyone in it shall be a parliamentarian, since probably about 25 per cent. of the membership will not be Members of Parliament.

I hope that, as a result of these meetings, members of the European Parliament will be fortified and able to influence the Council of Ministers and the Commission to use their resources not only for the ACP countries, but for others, the poorest in the Third World, for, as my right hon. Friend the Member for Lanark said, it is the poorest countries that are outside.

This consultative assembly must be used over the years to develop informed and critical comment on the work of Governments of the Community, and I am certain that members of the national Parliaments in Europe, given any encouragement at all, will not allow our Governments to forget that they are Governments of the richest community in the world and that they have obligations towards the Third World.

I am glad of the Lomé Agreement. The consultative forum is a by-product of the agreement. Although I do not think that it is very carefully thought out, it may be of enormous significance in the long run in educating European Members of Parliament in the facts of life in the poorest parts of the world. I hope that it will have great influence on the Governments of the Community.

4.25 p.m.

Mr. Nigel Spearing (Newham, South)

I am grateful to my right hon. Friend the Member for Lanark (Mrs. Hart) for mentioning the small part that I played in securing this debate. I emphasise that it was through no systematic perusal of the Papers of the House. It was by chance that I noticed the motion on the Order Paper to refer the European Communities (Definition of Treaties) (No. 2) Order 1975 to a Standing Committee. There was no mention of Lomé in the motion; neither did it say that it was Cmnd. 6220, which is 180 pages long.

Our procedures are somewhat lacking if the holding of this debate today depends upon being able to translate a legally worded motion which does not mention Lomé or overseas development or anything of that kind. Therefore, although I am grateful to my right hon. Friend, I assure her that it was a matter of chance and not of design that my eye caught the motion.

Indeed, it is the second time that such a motion has come before the House. The first was on a number of relatively small EEC international treaties which were debated in Committee for precisely 30 minutes last summer.

There may be something wrong, too, in the fact that the motion on the Order Paper today does not mention either Lomé or Cmnd. 6220. Neither does the business notice in The Times. So anybody wanting to know what we were discussing at this time would have no way of discovering from perusal of the public notifications concerning this debate.

I, too, acknowledge the great efforts made by my right hon. Friend the Member for Lanark in getting this important international treaty. We are all agreed on that. I have not joined, and do not intend to join now, the chorus of praise which attached to the treaty. Modified caution would be a better description. The treaty was not achieved out of the blue. Lomé did not appear ab initio. It is but a development of the successive Yaoundé Conventions of the EEC which have been going for some years and which were due for renewal. Therefore, although I would not suggest that it is necessarily entirely based on the Yaoundé Conventions, it is at least an enlargement of that situation to accommodate the new situation inside the EEC.

In my constituency rôle I find it a little ironic, because part of the Lomé package was in relation to the import of cane sugar. We had to give up the Commonwealth Sugar Agreement to gain access to the EEC. We have replaced it within the Lomé Convention by an arrangement whereby some sugar will come in, but it will not be 1.4 million tons and the long-term price will not be negotiated. That is a worse arrangement than we had with the Commonwealth.

At the same time, in Kingston this year my right hon. Friend the Prime Minister brought forth an initiative to stabilise raw material prices—the very thing which hon. Members on both sides this afternoon have been pressing for as a means of helping the Third World. So we have here both a step backwards as regards sugar and half a step forwards in Kingston by the Prime Minister.

Reference has been made to the Stabex scheme, which in principle sounds good. I suppose that in ordinary language it is an insurance scheme for exporting countries to keep up their exporting rate of exchange, or their earnings of overseas exchange. I understand—this was referred to by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) in the previous debate—that the amount of funds in this scheme is not very great in relation to the possible calls upon it. It is rather like saying that an insurance scheme is fine and then discovering that one has paid too small a premium and rated the risk too low. I am told that, if prices fall by as much as 7.5 per cent., all the funds at present allocated to Stabex will be used up and, therefore, some sort of rationing system will have to come in. Therefore, whatever the merits of the principle—I would not like to pronounce upon it definitively, because it is somewhat of a client relationship which we want to try to get away from—the scheme has defects even as at present presented.

I think that there is a possible greater defect in the development arrangements under the Lomé Convention. My right hon. Friend reminded us that there is a European Development Fund which was in operation under the previous Yaoundé Convention. A Select Committee of this House took evidence about the work of that fund before we went to the EEC. We on the Select Committee had some doubts about how the European Development Fund was operated. It depended upon applicants putting forward an application which suited those who decided where the funds should go. There was no national split.

We found that some countries with a relatively high income per head were getting a large amount of support from the European Development Fund. We have been discussing these matters in an earlier debate. We now have a policy which we have ratified and have encouraged my right hon. Friend to pursue. In that new fund, which is under the Lomé Convention, there is an enlargement from the last Yaoundé Convention from 828 million units of account to 3,000 million units of account. But when one takes into consideration the greatly enlarged population, largely in the terrorities of the British Commonwealth which are involved, it is, I am told—the Overseas Development Institute has done the sums—an increase of £11.85 to £12.75 per head of the population in the Lomé ACP territories. That is an increase, but I suggest it is almost certainly not an increase in relation to world-wide inflation. Therefore, it may well be a stationary situation, or even worse, as regards the amounts per head in the developing countries.

My second concern over the rules of what is in effect the European Development Fund is how to choose the projects. I was in a Third World country a few weeks ago and I was told that an EDF team would be visiting the country to look at a particular project. When I got back here I made it my business to find out what sort of criteria would be used in respect of that country. In reply to a parliamentary Question, my right hon. Friend properly pointed out that the existing rules under Yaoundé still operate—that is, Article 19—and that they do not place the sort of emphasis on rural development with which all of us were agreeing earlier.

I quote from Article 19: investments in the fields of production and of the economic and social infrastructure, in particular with a view to diversifying the economic structure of the Associated States and, especially, to promoting their industrialisation and their agricultural development. That is part of it. It does not refer to rural development. Industrialisation and agricultural development are mentioned specifically, but that is not quite what we have been talking about today in terms of rural development.

This will be succeeded, when the treaty has been ratified by this rather curious procedure which we are adopting today, and will be replaced by Article 43 of the Lomé Convention, which has this curious phraseology: The definitive choice of methods of financing for projects and programmes shall be made only at an appropriate stage in the appraisal of such projects and programmes. Account shall also be taken of the nature of the project or programme, of its prospects of economic and financial profitability and of its economic and social impact. The definitions for the choice of projects which shall receive assistance from the EDF under Lomé are not very clear. They are similar to the previous criteria which I have read out, but they do not give anything like the sort of criteria which hon. Members have been suggesting today.

Article 46 refers to capital projects in the fields of rural development, industrialisation, energy, mining, tourism, and economic and social infrastructure. But if it is to be judged, as the EDF has been in the past, from its immediate financial results, I suggest that there has not been much progress on this part of Lomé.

Article 48 provides: In the implementation of financial and technical co-operation, special attention shall be paid to the needs of the least-developed ACP States so as to reduce the specific obstacles which impede their development and prevent them from taking full advantage of the opportunities offered by financial and technical co-operation. I presume that that means that those which cannot make use of the other financial and technical co-operation funds, either from multilateral agencies or from Lomé sources, shall be given what is termed "special attention". I do not know whether my hon. Friend the Parliamentary Secretary can tell me at this stage—perhaps he will write to me—what special attention will be paid.

It is early days yet in the Lomé story, but I hope that special attention will be paid to the criteria which I know my right hon. Friend supports and in which he had the support of the whole House earlier this afternoon.

Question put and agreed to.

Resolved, That the European Communities (Definition of Treaties) (No. 2) Order 1975, a draft of which was laid before this House on 13th October, be approved.

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