HC Deb 12 December 1977 vol 941 cc203-18

[Commission Documents Nos. S/799/77 and S/1151/77]

11.46 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson)

I beg to move, That the draft European Communities (Definition of Treaties) (No. 6) Order 1977, which was laid before this House on 14th November, be approved. The schedule to the order contains two financial protocols between the European Economic Community and Greece and Turkey respectively.

Hon. Members will be aware that the (No. 3), (No. 4) and (No. 5) Orders of 1977 have recently been approved by the House after consideration by Standing Committees on Statutory Instruments. These were the first orders to be considered since April last, when, during a debate on these orders, Members expressed concern about the difficulties which they had experienced in considering the draft orders then presented and also the manner in which they were, put to Parliament. I gave an assurance to the House at that time that the Government would take note of the views which were expressed and consider how best to respond.

I apologise to those who were members of the Standing Committees which considered the (No. 3), (No. 4) and (No. 5) Orders for repeating this information. I do so, however, for the benefit of Members who may not have had the opportunity to read the report of the debates held in Committee.

It was decided that the most suitable manner in which information about the contents of the Treaties contained in the draft orders could be given to Members would be via an expanded version of the explanatory memorandum which is produced for the Joint Committee on Statutory Instruments. The memoranda now include the Government's opinion on the articles of the Treaties which might be held to be directly applicable in the United Kingdom as well as background information and a summary of the content of the Treaties. Arrangements have been made for the memoranda to be available for hon. Members at the Vote Office together with the draft order.

I hope that, as a result of the Government's action, Members will have been able to come to tonight's debate with the information they require and which they complained they lacked last time we debated these orders in April. As the purpose and scope of the Treaties is already set out in the explanatory memorandum, I shall not take the time of the House to deal with the details of the Treaties but will set them in their political context.

The first of the Treaties listed in the schedule to the order is the protocol between the Community and Greece. There is a long-standing link between the Community and Greece which began with the signing of an association agreement in 1961. The agreement provides for economic harmonisation which will lead to a complete customs union by 1984.

The agreement also holds the prospect of eventual membership of the Community. Greece, indeed, submitted an application to join the Community in June 1975 and negotiations began in July 1976. These negotiations are progressing steadily and have reached the stage of the exchange of information on particular economic sectors. When the Community has considered the information, it will be in a position to draw up its detailed negotiating mandate.

The House will be aware that the Government have welcomed Greece's application for Community membership. The Government attach great importance to the Community's relations with Greece and consider that membership of the Community will be a great assistance to the continuation of a democratic regime in that country.

The association agreement of 1961 allowed for the provision of a financial protocol to the agreement to encourage the development of the Greek economy. Under the first EEC/Greece financial protocol of 1961, loans of up to 125 million dollars were provided. During the period of dictatorship in Greece, the allocation of funds under this protocol was halted and the small remaining balance was quickly used after democracy was reestablished in Greece in 1974. This second financial protocol was agreed with the intention of further assisting development of the Greek economy. The assistance provided under the protocol will help to bring Greece economically closer to the Community while at the same time assisting in the reduction of barriers to trade.

Projects provided for under the terms of the protocol will be proposed by Greek development agencies. They will be specifically aimed at building up economic infrastructure, including industrial processes and redevelopment. Some 280 million units of account are provided for under the terms of the protocol. Of this, some 225 million will be in the form of loans provided by the European Investment Bank and the balance will be in the form of grants and special loans for a long period with a low rate of interest.

The Government look forward to closer relations between the Community and Greece both through the association agreement and the associated financial protocol which we are considering tonight and later as a result of Greece's application for full membership.

I now turn to the financial protocol between the EEC and Turkey. This protocol also follows on from the association agreement signed in September 1963, as a result of which a first financial protocol signed at the same time provided for loans of up to a total of 175 million units of account. A second financial protocol with Turkey, signed in 1970, provided further loans of up to 195 million units of account. This was further increased by 47 million units of account on the accession of the United Kingdom, Denmark and Ireland to the Community. A supplementary internal financial agreement covered that further contribution and was considered under the Section 1(3) procedure in this House in April of this year.

The protocol with Turkey which we are discussing tonight provides for a total of 310 million units of account, of which 90 million would be from the European Investment Bank and 220 million would be special loans over a long period with a low rate of interest.

Hon. Members may note that there is a difference in the terms of the assistance being given to Greece and Turkey. While the agreement with Greece provides for the majority of loans to be from the European Investment Bank with an element of interest rate subsidy, the Turkish protocol provides for the bulk of the loans to be in the form of special loans at low interest over a long repayment period. The difference in terms is due to Turkey's level of economic development being lower than that of Greece. Great importance is attached by the Government to the Community's relationship with Turkey, and we look forward to progress under the terms of the association agreement and related financial protocols.

I hope that hon. Members will endorse the Government's belief that the Community is providing valuable assistance to these two countries through the medium of the financial help that it is able to give them. Due to its membership of the Community the United Kingdom is able to contribute to this assistance, which should lead to the development of stronger economic and political links between the Community and Greece and Turkey. I hope that the House will tonight approve the order.

11.55 p.m.

Mr. Malcolm Rifkind (Edinburgh, Pentlands)

This is the sixth order of its type to come before Parliament during the course of 1977. The frequency of these orders gives added justification to those who press upon the Government the need to provide detailed explanatory memoranda in order that the bare bones found in the orders themselves can be given some elucidation, so that hon. Members and the public at large may understand their purpose.

The Government have responded by providing very detailed information, and compliments have been paid on another occasion to the Minister for this. But it would be appropriate if tribute were paid this evening to those right hon. and hon. Members on both sides of the House but for whose persistence in representations to the Government this important reform would not have been made.

The explanatory memoranda give detailed information. I hope, however, that the Minister will forgive me if I put one matter to him about the method by which the Government have decided to give information to the House on these matters.

It has been pointed out on a number of occasions that when the House is dealing with orders of this type it is not simply giving its advice or views to the Government. It is acting as a legislature and, therefore, the decision that it takes is of major importance. On this basis, I put it to the Minister that the use of explanatory memoranda as being the sole way in which future generations may understand the background to orders of this kind is not the most satisfactory way of dealing with the problem.

On a previous occasion, my right hon. Friend the Member for Crosby (Mr. Page) put an interesting suggestion to the Government. He suggested that, as at the time that the orders were considered the Government tabled Command Papers giving details of the protocols concerned, those Command Papers might be a useful way of indicating the Government's views on the protocols and their likely effects on United Kingdom legislation. By being put into Command Papers rather than explanatory memoranda, those views would be given greater authority and would be a permanent record rather than the informal method of using explanatory memoranda.

I do not know whether the Government have considered my right hon. Friend's proposal. If they have, I hope that the Minister will tell us why they felt it necessary to reject what I thought was a very constructive suggestion. If they have not considered it, I hope that the Minister will promise to do so.

I wonder whether the hon. Gentleman can give greater clarification about why the procedure for designation under Section 1 (3) of the 1972 Act is being used in this case. The hon. Gentleman indicated on previous occasions that this designation procedure was required when the order in question might affect United Kingdom law and might have to be dealt with in the United Kingdom courts. It was necessary, therefore, to protect the rights of United Kingdom citizens to go to courts of law on these matters. How ever, in this explanatory memorandum the Government make it clear that, so far as they are able to decide these matters they do not believe that there is any effect on United Kingdom law and that designation is required to enable disbursement of the funds provided for in the protocols to be made.

This is a new reason for designation, and perhaps the Minister will say what are the general criteria applied by the Government in deciding whether the procedure in Section 1 (3) of the 1972 Act is necessary. Clearly, it goes beyond whether there are implications for United Kingdom law. In these protocols we have the question solely of disbursements requiring this procedure to be applied.

On previous occasions, comment has been made about lumping together various orders concerning widely separate countries. I do not think that any proper criticism could be made in this case. In the view of most people in the United Kingdom, it is not unusual to lump Greece and Turkey together as being countries with common interests. In passing, I might say that I am not convinced that the Greeks and Turks themselves see it as being necessarily appropriate that they should be associated with one another as having a common harmony of interests which would require matters affecting them to be dealt with jointly by this House.

I turn briefly to the contents of the protocols themselves and to the matters which the House is being asked to approve. According to the protocols, these two sets of provisions will expire on 31st October 1981. It is clearly no coincidence that the same date has been provided for both countries, although the nature of the agreements is different and although the other factors are quite separate. Could the Minister elucidate the significance of 31st October 1981 and the reason why exactly the same date has been provided in respect of both countries?

Secondly, there is a substantial difference between the aid being provided for Greece, which is primarily in the form of loans from the European Investment Bank, and the aid for Turkey, which is primarily in the form of special loans. The Minister said that the reason was the lower level of economic activity in Turkey, but he did not indicate why this should lead to the change provided for by the Government. Did the Turks request a different form of aid to be provided, or was this something that the Community felt to be appropriate?

Thirdly, the memorandum states that at the time it was prepared the total British contribution to the funds to be made available to Greece and Turkey under the protocols was not known. Can any information on the British commitment now be provided? There is an implication in the protocols that there is no information yet as to whether Greece and Turkey intend to take up the full amount of aid to which they are to be entitled as a result of the protocols. What is the likelihood of the full amount being allocated before 1981?

Greece and Turkey are both countries of substantial interest to the United Kingdom. They are both allies in the North Atlantic Alliance and they are both drawing closer and closer to the European Community. If Greece in particular is to join the Community, it is very important that at the time of its accession its agriculture and other economic conditions should be as close as possible to those of the other member countries. The protocols will help in some small way towards that end, and for that reason they deserve to be welcomed.

12.2 a.m.

Mr. Nigel Spearing (Newham, South)

I give a qualified welcome to the additional memoranda provided by the Government. It is qualified because they are available only to Members of Parliament and not to members of the public. Therefore, I commend to the Government the suggestion made by the right hon. Member for Crosby (Mr. Page) that their explanations should be in a foreword to the appropriate Command Paper.

It is there that my encomiums of the Government cease, because the Command Paper, under the procedure still being adopted by the House, is not referred to in the motion, and is not even mentioned in italics underneath. We very properly have references to Commission Documents S/799/77 and S/1151/77, the typescript Community draft recommendations, which have been converted into Command Papers, but until now Cmnd 6917, relating to Greece, and Cmnd 6981, relating to Turkey, have not been mentioned in the debate. Therefore, I believe that my adjective "clandestine" still applies, because there is a reliance on Back Benchers to put these matters on the record. The Government have room to improve still further. I understand that our decision on the Question which is put at the end of the debate is our means of ratifying the Treaties.

In respect of Greece, article 1 of the financial protocol in the case of Greece refers to the accelerated development of the Greek economy and the complementarity of Greek agriculture with that of the Community. It may be that the Minister can give us some guidance on how the Government or the EEC Commission see the complementarity of Greek agriculture with that of the Community. I should have thought that some traditional Greek products would be in direct competition with certain products of Southern France, and certainly with those of another possible applicant, Spain, as well as with some of the associated Maghreb countries with which Treaties have already been signed.

"Complementarity" is not a happy expression, but much investment will be based on it. The criteria are hazy to say the least. That is also true of article 4, which refers to detailed rules, conditions and procedures laid down by the Bank's Statute. That refers to the European Investment Bank. Can we hear more of the criteria upon which these significant sums will be invested? We heard about 280 million European units of account—that is, new units of account—and 310 million units. What is that in sterling at current exchange rates? Some of us are confused by the change in the units of account. I believe that the documents say that this will be based on the new unit.

Article 6 of the protocol relating to Greece talks about the need for exemption of these repayments from national and local taxes. From reading the documents, which refer to the investments of the European Investment Bank in terms of 3 per cent., it seems that soft interest rates are to be paid which, together with freedom from national and local taxes, will put the investors and prospective investors in a position of advantage and privilege in both these countries, which will mean, presumably, that the Community will have some political clout or interest in the Governments of both countries. This has happened in respect of Third world countries in receipt of soft loan conditions and there could be political difficulties in the future, particularly concerning different views of existing members of the Community in relation to, say, Turkish policy in Cyprus. This raises all sorts of implications for Commonwealth countries, particularly Cyprus, where there are differing interests between the two countries concerned in these documents. There are political implications in these Treaties.

I have mentioned some of the pressures and advantages that could arise. This puts the Community collectively in a political position that might be of some complexity when member States' individual interests, particularly in relation to the Cyprus question, are under discussion. I therefore hope that the Minister will have some words to say about that, because it may be that in the future he will have to look at some of the problems that may result from the Treaties that the House is now going through the procedure of ratifying.

12.9 a.m.

Mr. Roger Moate (Faversham)

I wish to make some points briefly. I add my thanks to those which have already been expressed to the Government for having made progress with the documentation that is placed before the House on these occasions. The documents are full and helpful and we owe thanks to those who have taken part in late-night debates, particularly my right hon. Friend the Member for Crosby (Mr. Page), whose work on the Select Committee on Statutory Instruments has had some influence in this matter.

The explanatory memoranda are clear and helpful. Nevertheless, we could make even further progress by adopting the suggestion that we should have a White Paper. Brief though it would be, it would be a very sensible development, and I am glad that my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) made that suggestion. I hope that the Government will take it on board.

The Government have taken note of the objections raised earlier to the grouping of a large number of often disparate Treaties in one order. I do not think one would object to these two Treaties being dealt with in the same order. The proposals are similar, although I cannot see any great objection to having separate documents for each. It would not involve that much extra bureaucracy, paperwork and cost. That might be a logical approach. However, the Government have been helpful and have made progress, and we should express our appreciation.

I welcome the order on its merits. Those of us who want the Community to be enlarged must welcome the preparatory assistance to Greece. The same applies to Turkey. I hope that before long Turkey will apply for membership. I hope that this type of assistance will help to pave the way towards that development.

I am interested in one or two technical points. Why is the order made under Section 1(3) of the European Communities Act 1972? I understood from previous debates that we had to have such a procedure when there were implications for United Kingdom internal law. It is not immediately apparent why this legislative form is required for an external aid matter unless the funds we are contributing do not come from the Community budget. Perhaps the Minister could clarify that matter.

Paragraph 1 of the explanatory memorandum relating to Greece states: The Community has agreed in principle that Members States' shares of the grants and special loans will be provided from the reformed Community budget. I assume that it would come out of the sums we have contributed to the Community and would not require separate United Kingdom enactment.

Paragraph 2 states: The UK contribution to the grants and special loans will be attributed to the Aid Programme. It should be made clear that we are not being asked to authorise spending over and above the contributions we already make to the Community budget. I suspect that we are not doing so, but if that is not so I wonder why a separate instrument is required.

Another technical point concerns the question of the 2.5 per cent. If we are involved in giving external aid to third countries, should not we be in a position to compare the terms on which we are offering these loans with loans granted to other countries throughout the world? I wonder how the figure of 2.5 per cent. has been decided. It is such a low figure that one might say it is not worth charging. It is not a commercial rate. How does the 2.5 per cent. compare with the rate for loans we normally grant to Third world countries?

The Minister mentioned the progress being made on the negotiations for Greek accession. I understand that the next step in the negotiations is that the Commission must produce an opinion. There has been some talk that the Commission might be dragging its feet in this respect. Will the Minister say whether we can still expect, in February or the spring of 1978, a Commission opinion on the question of Greek accession? That is the next crucial turning point in this matter, which is virtually important not only to Greece but to the question of how the Community develops.

I should be grateful for the Minister's comments on those points.

12.15 a.m.

Mr. Tomlinson

In this brief debate we have considered some limited aspects of the Community relationship with two countries, with both of whom we have long associations. Through its financial protocols the Community has been able to translate into monetary terms the good intentions set out in the original association agreements.

Hon. Members have asked a variety of questions on different aspects, and I shall try to deal with them individually. The hon. Member for Edinburgh, Pentlands (Mr Rifkind) made some welcome observations on the new procedure, and I join him in saying that the House is grateful to all those hon. Members who on previous occasions have pressed for improved procedures—improvements which have been widely welcomed.

The hon. Gentleman asked, as did my hon. Friend the Member for Newham, South (Mr. Spearing), why we use explanatory memoranda rather than give more authority by using Command Papers. After the extensive criticism about the procedures expressed in all quarters in the debate in April, the Government considered the various proposals put forward in that debate, those considerations included the proposals put by the right hon. Member for Crosby (Mr. Page). But after considering all the suggestions we decided that the explanatory memorandum was the most appropriate form and the Joint Committee on Statutory Instruments accepted it as the appropriate means. The decision was welcomed on all sides. It, however, hon. Members think that there is room for improvement, I undertake to reexamine the matter. It is in everybody's interests to find the most appropriate and satisfactory means of resolving the difficulties in which Members find themselves.

Mr. Rifkind

I am grateful for the Minister's constructive response. When the Government considered the possibility of using Command Papers as suggested by my right hon. Friend the Member for Crosby (Mr. Page), what led them to decide to give preference to explanatory memoranda?

Mr. Tomlinson

I cannot say at this stage. Until tonight I was not aware of any particular difficulty in the use of explanatory memoranda.

Mr. Spearing


Mr. Tomlinson

My hon. Friend says "Ah", but I must tell him that an embarrassing amount of praise was heaped on the Government from all quarters in the Joint Committee on Statutory Instruments. I shall examine the difficulties and if there are any particular difficulties I shall ensure by appropriate means to inform hon. Members.

I was asked—this was a point mentioned by the hon. Member for Faversham (Mr. Moate) in particular—about the reason for specifying the (No. 6) Order under Section 1(3) of the Act. Direct applicability is one of the criteria, but it is not the only one. Paragraph 8 of the explanatory memorandum on page 4 makes clear that the Government are specifying these matters because of the association agreements on Community Treaties under the European Communities Act 1972 and the protocols that follow from those agreements. This is necessary to allow action to be taken in the United Kingdom, and that is why the Government decided that this should be specified.

The hon. Member for Pentlands asked whether Greece and Turkey will take up the full amount. All one can say is that in the case of previous financial protocols the full amount has been taken up; but it is impossible to speculate on the situation between now and 1981.

I was asked about the expiry date of 31st October 1981 and why there was a common expiry date. The reason is that this is part of a package of financial protocols agreed by the Community with Mediterranean countries, and all the protocols are dated to expire at the same time.

The hon. Gentleman asked about differences in aid between Greece and Turkey, and, in particular, at whose request the differences occur. I do not know, but I shall write to the hon. Gentleman. As I explained, the main thing is that the terms in connection with Turkey are more generous. There was a Community feeling that the Turkish economy was such that Turkey needed the greater assistance. I shall be in touch with the hon. Gentleman on that matter.

The hon. Gentleman asked about the total British contribution. I cannot add anything to knowledge about that. It has to be decided as part of our contribution to the total Community budget. Until that is resolved. I cannot go any further into the total British contribution. I think that that covers the hon. Gentleman's specific questions.

My hon. Friend the Member for Newham, South referred to the Command Paper. I shall consider that matter further. It was important to hear him remark that we have improved, but we could do better. I take my hon. Friend's remark as a compliment on an improved procedure. I accept the implied need to go further.

My hon. Friend asked about the current exchange rate of the European unit of account. The rate used is one unit equalling 65p. If we translate the figures for the EEC/Turkey third financial protocol, it comes out at approximately £202 million. For the EEC Greek second financial protocol it comes out at appproximately £182 million. However, if my hon. Friend uses the present exchange rate of 65p to one unit of account, that is very close.

My hon. Friend asked about Cyprus. He was right to draw the attention of hon. Members to the particular problems of Cyprus. The Community has made provision for a separate financial protocol with Cyprus. The Community decided that that should be to the benefit of both communities on the island. I do not anticipate that the financial protocols that we are discussing will do anything to create further tensions on the island. We are considering the problems of Cyprus, and the Community has made provision for a separate financial protocol.

My hon. Friend raised the question of the wretched word "complementarity" as regards Greek agriculture. He is right to have drawn the attention of the House to its significance. It may well be the most important problem when we have the substantive negotiations for the full membership of Greece. I do not want to go beyond that. That will be one of the major areas of the negotiations.

The hon. Member for Faversham asked about the special loans and how they are financed. The interest rate for Greece is 2.55 per cent. and for Turkey it is 2.5 per cent. These special low interest rates are provided by the member States. The United Kingdom's contribution is attributed to the aid budget. As for Commission opinion, I am not sure what the position is in relation to that. I shall have to write to the hon. Gentleman.

Mr. Moate

I still do not understand why any action is required in this country, as is implicit in the procedure we are discussing, when it would appear that the funds are coming from the Community budget.

Mr. Tomlinson

It is not all coming from the Community budget. As I have said, the financing of the special low rates provided by the member States is, in the case of the United Kingdom, directly attributable to the United Kingdom aid budget. That raises a specific example for which the hon. Gentleman was looking.

Mr. Moate

I am sorry to interrupt again. Is the Minister saying that the moneys we are authorising tonight are additional to our Community contribution and that we do not know exactly what money we are being asked to authorise because the precise figure is not available?

Mr. Tomlinson

If I am honest with the hon. Gentleman, I must say that I am not quite sure whether I am saying that. The EEC's contribution is not yet known because of the discussions that are now taking place on the Community budget. The part of the contribution relating to low interest loans and how they are financed will come from cash directly attributable to the United Kingdom aid budget.

I think that I have answered the specific questions that were posed. I hope that the House will therefore approve the order.

Question put and agreed to.

Resolved, That the draft European Communities (Definition of Treaties) (No. 6) Order 1977, which was laid before this House on 14th November, be approved.