EUROPEAN COMMUNITY TRADE WITH CYPRUS

HC Deb 22 March 1978 vol 946 cc1677-705

11.10 p.m.

The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd)

I beg to move, That this House takes note of Commission document No. S/2066/77 on trade with Cyprus.

Mr. Speaker

I have selected the amendment in the name of the hon. Member for Lewisham, West (Mr. Price).

Mr. Judd

This document, which the Select Committee on European Legislation recommended on 8th February for early debate, is a draft regulation providing for interim autonomous Community tariff concessions on imports of certain agricultural produce from Cyprus pending conclusion of the negotiations with Cyprus.

In opening this debate, I propose to deal with the Community's negotiations with Cyprus as a whole. First, I should set those negotiations in their historical context. Prior to the United Kingdom accession to the Community, Cyprus, like other Commonwealth countries, enjoyed virtually duty-free access to the United Kingdom market. Upon our accession, those Commonwealth concessions were subsumed in Cyprus's case in a transitional protocol to the association agreement that the Community and Cyprus had negotiated shortly before United Kingdom accession.

The association agreement provided for two stages in the trade relations between the Community and Cyprus, the first terminating, like the transitional protocol, on 30th June 1977, and the second, in principle, five years later. Neither side was in the event ready to move to stage II of the agreement on 30th June 1977. There was no problem about agreeing the principle of extending stage I up to 31st December 1979 and about the terms to apply to industrial trade until then. It has, however, proved much more difficult to reach agreement on the successor arrangements to the transitional protocol as regards agricultural trade.

It was accepted by all parties concerned in these negotiations that the United Kingdom transitional period being over, there could be no question of simply extending the transitional protocol. There had to be a Community-wide agreement.

The United Kingdom position from the outset has been that any new Community-wide agreement must protect Cyprus' traditional trade in agricultural produce with the United Kingdom. This means that we have supported Cyprus's request for better treatment than the Community's other Mediterranean associates. It is important here to recall that the Community, in 1972, adopted what is called the overall Mediterranean approach. Under this, a set of similar trade agreements has been negotiated with most of the developing countries in the Mediterranean region. Since most of these countries export agricultural produce similar to that of the Community's own Mediterranean producers, the concessions on such produce under the overall Mediterranean approach have not been as generous as those granted on industrial products.

Some of our partners in the Community have taken the line that the treatment to be given to Cyprus, now that the United Kingdom transitional period is over, should be closely aligned with that given to other Mediterranean associates under the overall Mediterranean approach.

There has naturally been some very hard bargaining within the Community to try to marry the two sets of interests. I have myself repeatedly stressed at a series of Council discussions in Cyprus that Cyprus must be treated as a special case and must not be treated on the basis of the overall Mediterranean approach. Political considerations alone make this essential. The events of 1974 left the island with a ravaged economy, which needs careful tending if the island is to prosper again. It must be in the political interests of the Community to see an improvement in the Cyprus economy. Otherwise, economic distress will combine with the already present political tensions in the island to create an extremely dangerous situation ripe for exploitation.

If such distress were caused, the hand of those who would be only too glad to see Cyprus turn away from Western Europe would be considerably strengthened. Moreover, economic distress would be bound to complicate the search for a political settlement between the two communities. I have therefore taken any opportunity in the Council to emphasise that at a time when we are all saying in the Nine that we have an obligation to work for a political solution to the Cyprus problem, it would be a great mistake to add economic difficulties to the political uncertainties in the island.

Mr. Christopher Price (Lewisham, West)

My hon. Friend said earlier that last year neither the EEC nor Cyprus was in a position to come to an agreement. Will he confirm that principally it was the inability of the Council of Ministers to agree a mandate among itself that has caused the great delay in coming to any sort of agreement?

Mr. Judd

I understand my hon. Friend's views. If he will bear with me I shall deal with that point.

It is true that we must not overlook the fact that there is a genuine feeling in the Community that when we brought certain traditional relationships with us into the Community, periods of time were determined for us to make adjustments to membership, and for those like the Cypriots—who are dependent upon trade with us—to make their adjustments as well. We must understand that argument, but I have felt that it is not one to which we ourselves could yield. On the one hand we have Cyprus, a small country closely dependent upon the United Kingdom and with all kinds of problems of its own On the other we have the Community, talking about the need for a political solution in Cyprus and the importance of fulfilling its responsibilities to the Third world. It would have been completely unjust for the Community to see the Cyprus trade question solely from the angle of United Kingdom alignment with the Common Customs Tariff.

Besides underlining these political and moral factors, we have urged the Community to make allowance for Cyprus's dependence on agriculture in general and on a small range of agricultural products in particular. While the overall Mediterranean approach may have been adequate for countries with a wide spread of products, for a country such as Cyprus concessions on standard Mediterranean approach terms would have caused severe economic hardship.

For all these reasons we very strongly opposed the draft negotiating mandate discussed in the Community towards the end of last year, even though we were at that time completely isolated. The 40 per cent. concession in the mandate on potatoes—not applicable for a two-week period at the height of the exporting season—was completely inadequate. The timetable for tariff concessions on grapes and carrots made these concessions virtually worthless No provision was made to help Cyprus's newly developed early vegetables trade.

At the November Council I expressed deep concern that the proposed offer would leave Cyprus considerably worse off I stressed our view that past trade between Cyprus and the Community, including the United Kingdom should be the starting point for deciding concessions and not Community concessions to other Mediterranean producers. I also stressed the fact that for various reasons Cyprus was in a different category from other Mediterranean associates.

I regret to inform the House that at that time these arguments met with virtually nil response. Our partners would not consider improving the offer. It became clear that if we maintained our reserve the negotiations with Cyprus would be delayed with possibly even more serious adverse consequences for Cyprus's agricultural exports. We therefore lifted our reserve to allow the negotiations to start and the Cypriots themselves to have their say. We hope that in the subsequent discussions the validity of our case would sink in.

In the event it was not possible to complete the negotiations in time for a new agreement to come into force on 1st January. It was therefore agreed at the December Council that there was no alternative to applying the Community's offer on an interim autonomous basis pending conclusion of the negotiations. Fortunately this was not damaging to Cyprus to any great extent since the bulk of Cypriot produce is exported in the second and third quarters of the year.

I am glad to say that since then tangible improvements have been achieved in the Community's offer. Following two rounds of negotiations with the Cypriots and numerous discussions within the Community in which we pressed vigorously for improvements, agreement was reached at the March Council on a new offer which went considerably beyond the first offer, and beyond what the Community had hitherto offered to its Mediterranean associates under the overall approach.

Whereas other Mediterranean associates of the Community have been granted a 40 per cent. tariff reduction on potatoes, coupled with a timetable excluding their main producing season, Cyprus was offered a 65 per cent. reduction in the 1978 season and 55 per cent. in 1979, with a timetable that includes their main exporting season.

On grapes, compared with a 50 per cent. off-season concession under the overall Mediterranean approach, Cyprus is offered a 60 per cent. tariff reduction covering the first half of the export season. The concessions on citrus—80 per cent. on grapefruit, the main citrus export, 60 per cent. on oranges and 40 per cent. on lemons—are not quite as good as those for the Maghreb countries, which enjoy an 80 per cent. reduction on all citrus products, but are the same as those granted to Israel and the Mashraq countries.

Mr. Peter Emery (Honiton)

I listened with particular interest to the Minister's statement about the increase in the concessions, but when I looked at the draft legislation S/2066/77, I found that these concessions were not listed. Therefore, the concessions that the Minister has detailed are not before the House, and that places us in a difficult situation. Perhaps the Minister could tell the House what reduction in the total value of exports of Cyprus the Foreign Office considers the original concessions would bring about, and the reduced effect caused by those which he has outlined, and which are not before us tonight. We saw the possibility of a reduction in trade in the percentages that are before the House. How much will this position be alleviated by the concessions that the Minister has obtained?

Mr. Judd

We shall do the detailed mathematical calculations, and my right hon. Friend will deal with this matter when he winds up the debate. It is not possible to have all the details before the House because the situation has not yet been finalised.

The concessions on carrots and various early vegetables also go well beyond those offered under the overall Mediterranean approach.

I must be candid with the House. There are elements in the offer which both we and the Cypriots consider deficient. We would obviously have preferred the percentage tariff reductions for all products to be higher, particularly on potatoes. We also dislike the provision in the agreement for reductions in certain tariff concessions and quotas from one year to the next. In our view this contradicts the philosophy of the association agreement, under which stage II is supposed to provide for more liberalisation.

Because of our doubts on this score we have obtained a formal understanding within the Community that the terms offered do not anticipate in any way the arrangements to be adopted after stage I of the agreement expires on 31st December 1979.

We are also not entirely happy about the division of the offer into two protocols. There is to be one protocol embodying those concessions which fall within what have been hitherto the limits of the overall Mediterranean approach, and a second protocol containing those extra concessions which are being granted to Cyprus in token of its special situation. While the Community's explicit recognition of Cyprus' special circumstances is welcome, we should have preferred to avoid a formula implying the existence of rigid limits for the overall Mediterranean approach. We have had to bear in mind, however, the concern of other member States lest precedents be set for other Mediterranean agreements.

The current situation is that the offer has been put to the Cypriots who are in principle ready to accept it. They are not ready to initial the agreement, however, until it is clear that, pending its entry into force after the completion of all the formalities, its provisions will be applied autonomously by the Community. This in turn depends on the Commission putting forward proposals for a satisfactory autonomous regime and the member States accepting it.

A complication arises in this connection, in that one member State is making a connection between the implementation in the autonomous measures of the special concessions on new potatoes and progress towards the establishment of an internal Community regime for this product. We in the British Government believe that it is inconceivable that the concessions which have in principle been agreed with the Cypriots should not be applied in full as soon as possible. We are pressing this matter very hard indeed in Brussels and bilaterally to see that it is satisfactorily resolved.

In weighing up the pros and cons of the proposed agreement, it is important to remember that it will be an interim two-year agreement designed to take us up to stage II of the association agreement. My hon. Friends have helpfully underlined this point in their amendment.

There is a small inaccuracy in the amendment which. I ought to note for the record. It was in fact the agricultural chapter of stage I of the association agreement which expired in June 1977, and not the association agreement itself. This small point apart, the Government are fully in agreement with the spirit of the amendment and intend to base their policy towards the negotiation of stage TI upon the considerations mentioned in that amendment.

However, the negotiations on stage II, which should began in a year or so, are likely to be tough. In those negotiations all possible emphasis must be laid on the agreement reached in 1972 that stage II would usher in greater liberalisation. By the time of ale negotiations the general Mediterranean picture should of course be clearer. At the moment there are too many complicating factors—pending reviews of the Maghreb agreement, negotiations with Spain, discussions within the Community on a package of measures to bring about structural improvements in the Community's own Mediterranean agriculture and, of course, the prospect of enlargement.

But, above all, it will be vital for the Cypriots and ourselves to keep close together at the time of the resumed negotiations. In so far as this proposed new agreement tides Cyprus over the next two years in a way which, despite its drawbacks, is unlikely to lead to serious disruption of traditional trade between Cyprus and the United Kingdom, I think it is reasonable to claim that, if it is implemented, we shall have achieved in the negotiations as satisfactory an out- come as we could realistically have hoped to achieve, bearing in mind the conflicting interests that have clearly existed. But—this is not an insignificant proviso—everything depends on its satisfactory implementation by the Community.

11.30 p.m.

Mr. Douglas Hurd (Mid-Oxon)

The House will be grateful to the Minister of State for that very clear explanation of a complicated position. Obviously, we also pay tribute to his hard work through many meetings to secure a result which is satisfactory for the interests of this country and of the Republic of Cyprus and, I believe, in the long term, of the Community. Nevertheless, I think that we cannot be entirely happy at the story which is unfolded in his speech and in the documents before us.

The Republic of Cyprus has a number of claims on our respect and consideration. It is a Commonwealth country whose economy, through no fault of its own, has to a large extent been moulded to fit the British market. This, as in the case of New Zealand, is an historical fact which the British Government ought to and does take into account. It also means that the British housewife has an interest in the matter, particularly when the exporting season opens in the spring and early summer.

But, more important, it is a country—the Minister touched on this—which has had peculiar misfortunes and disruptions in the last three or four years. It must be a necessary act of statesmanship on the part of the Community to look at that situation, as the Minister of State very fairly did in his speech, and to say that it is in the interest of Europe to temper the wind to Cyprus.

If we are concerned with stability in the eastern Mediterranean, and seriously trying to resolve, with the help of the Community, the political problems of that area, a decent economic arrangement for the Republic of Cyprus is an important part of it, but this consideration is not what the Republic of Cyprus has received over the last few months.

First, there has been delay. I know that this is not peculiar to Cyprus. It is perfectly understandable that the Community finds enormous difficulty in reaching agreement within itself on the terms which the Commission is empowered to negotiate with third countries. But this is a particularly bad example of delay.

The first phase of the association agreement expired on 30th June last year, but the Community was not ready to negotiate the next phase, so there was a six months' interim arrangement covering the period from July to December last year. But even that was not signed until 15th September. Now we are nearly at the end of March and yet there is no agreement within the Community, as the Minister of State made clear, for the arrangements which are designed to cover the two-year period, which is already three months old.

At each stage we have this story of delay. That is the price we pay in the Community for the unanimity rule. Nothing can be done until everyone is in agreement. In consequence, the Community has so far found it very difficult to conduct smoothly its relations with outside countries. Member States—we have been guilty of the same practice on occasion—seek to bring into consideration extraneous matters which concern their own interests but which are not immediately or largely relevant to the negotiation with the outside country, in this case the Republic of Cyprus. That has happened here, and it has postponed over and over again the moment when the Community can say to the Republic of Cyprus "This is what we are prepared to offer."

The Community will not succeed in what is probably at the moment its most important single task—facing the outside world and negotiating with the outside world on behalf of the Community's economic interests—until member States are shamed out of bringing in these rather narrow nationalist points to hold up the negotiations.

I hope that in this case it is possible that we are near the end of this road. It sounded from the Minister as if that were so. But undoubtedly there has also been a certain clumsiness, which is illustrated in the arrangements described in the document before us.

I do not make a great point out of the tact that this document is out of date, but my hon. Friend the Member for Honiton (Mr. Emery) was right to draw attention to this fact. This is the fault of our scrutiny procedures rather than the fault of the Government or the Community. This happens when we have negotiations which are moving all the time. We are subject to rather legalistic procedures, and have at a certain stage to take a photographic view of the situation. The Scrutiny Committee identifies a document, and, two months later, we debate that document.

This document from the Commission, proposing a temporary arrangement, shows a certain insensitivity to the needs of the situation. The Minister of State explained that the Government opposed these proposals fairly strongly, and with some success.

There is one point that I should like to raise. I do not know whether the Minister of State can deal with it, but I hope that the Government will consider it. When drafting this kind of document, what kind of advice does the Commission receive on the situation in Cyprus, or the reaction from Cyprus? It has no Foreign Office. It does not have diplomats. How does it get its information?

This is a highly political document, which got the thing wrong. We need to know how the Commission gets its information. I am not questioning the competence of the officials who drafted the document, because I know that they have an enormous task—a far-flung task—which, on the whole, they are beginning to do quite well. But there is a lack of sensitivity about the document. Do the officials receive political reports from the embassies or high commissions of member States? How do they get their input, or their political feeling for a situation?

If they do not get an adequate feeling for a situation from the permanent representatives or elsewhere they are bound to produce rather clumsy and insensitive documents of this kind. This is an important matter, and I hope that the Foreign Office Ministers will return to it and let us know their thinking about it.

We have the delay, and we have the clumsiness. This leads to a major issue that goes beyond the question of Cyprus. I welcome the fact that now, on the whole, it is the European Community which negotiates on behalf of this country and the other eight in deciding and settling the framework of international trade. Indeed, I believe that this is the most important development of the European Community since we joined it. It is of great importance to millions of workers in this country that these international negotiations whether with the Third world, the textile exporters or the steel exporters, are now conducted on behalf of this country by the largest trading group in the world.

We have the strength of a giant as a Community, but it is not alway sensible to use that strength. This is a case in which it should not have been used in the kind of way in which, in the beginning, it was used. The Community is at the stage of working out this procedure, but the story that the Minister of State told us shows that the Community has not yet got the experience or the machinery to carry out this job smoothly.

Diplomacy—and we are talking about diplomacy—is a matter of protecting one's own interests while accurately gauging the legitimate interests of others, and in this case it is not in our interest to drive too hard a bargain. I hope that the Community—with prodding, where necessary, from the Government—will look again at its machinery for making these sensitive calculations. This is one example, but there are many others going on at this moment in all parts of the world. It is immensely important that the Community should be able to negotiate smoothly and effectively, not just for an immediate or short-term advantage but for the long-term interests of Europe which, in this case, are obviously connected with the prosperity and stability of the Republic of Cyprus.

11.40 p.m.

Mr. Christopher Price (Lewisham, West)

I beg to move, at the end of the Question, to add: notes, however, that the present agricultural agreement between the European Economic Community and Cyprus is a temporary one, pending an extension of the Association Agreement which expired in June 1977; and urges the Government to press for the conclusion of a permanent agreement as soon as possible which takes more account of both the economic problems of Cyprus and the need to secure the United Kingdom's traditional supplies of agricultural products from Cyprus, especially potatoes". The amendment is in the names of myself and my hon. Friend the Member for Holborn and St. Pancras, South (Mrs. Jeger) and I suspect that it is supported by many hon. Members on both sides of the House. We would have been able to get many more signatures to the amendment if the Government had not put down their motion at such a late stage.

I thank the Minister for his clear exposition of the present position and the House should thank him for the doughty battles into which he has put his heart, mind and soul, month by month over the past nine months. Initially, he was in a minority of one, but eventually he had the agreement of eight member States.

I also offer my thanks and sympathy to the hon. Member for Mid-Oxon (Mr. Hurd). It must be difficult for those who used to be Euro-fanatics to try to explain the problems caused by the EEC, but we welcome support from wherever it comes.

My interest in Cyprus started when, somewhat against my expectations, I was put on the Select Committee on Cyprus and I began to understand some of the severe problems facing the island. My interest increased when, after one of those elections in which one does not expect to succeed, I was sent to the European Assembly. I have now left, feeling that it is not the most sensible institution in which to spend much of one's time, but while I was there I was appointed rapporteur on Cyprus and I discovered again the severe problems facing the island and the extent to which they are exacerbated by the association agreement signed with the EEC.

The agreement was signed in the expectation that it would develop Cyprus's economic links with the Community and would lead to lower tariff barriers. In the event, the association has had exactly the opposite effect and has led to raised tariff barriers.

I join the hon. Member for Honiton (Mr. Emery) in his complaints about the document. Not only is it three months old—and it is possible to get more up-to-date documents in the House if we concentrate on EEC debates—but a section of the "Translation" reads: "Il s'agit de remplacer le régime 'Commonwealth' (droits zero ou très faibles) sur les marchés britannique et irlandais. and so on. The House has rules about the language in which documents are presented and they should be in English —even if it is English gobbledegook—and not in French. Despite my accent, I have great regard for the French language, but documents presented to the House should be in English. That is a matter which the Government might like to note the next time they present EEC documents to the House.

My hon. Friend the Minister said that in June 1977, when the first stage of the association agreement ran out, neither side was ready to renew it. He knows that the Council of Europe was in no position—and had not been in a position for the previous nine months—to agree a mandate under which negotiations could begin. The responsibility for the delay in renewing the association agreement rests solely with the Council of Ministers. The Republic of Cyprus had entered into the agreement with the EEC in good faith that the Community meant what is said, but Cyprus was conned. When it came to the renewal of that agreement, that could not take place because the Council of Ministers had not the political will to get on with the job. That is where the responsibility lies, and we should say so.

When our entry into the EEC was being negotiated, a great deal was said about the Commonwealth Sugar Agreement and the problems which the people of the West Indies might suffer. A great deal was also said about our friends in New Zealand and their problems. But in all these negotiations, because they were wide and global and because one could not take in everything, the problems of agricultural exports—problems which would inevitably crop up when the five-year transition agreement came to an end—were overlooked, and indeed forgotten.

We are now facing the results of the dereliction of duty by the Conservative Government in not having envisaged the problems that would inevitably arise at the end of the transition agreement. No account was taken of that aspect, and we are now having to face up to their failure to think about these matters five year ago.

It is fair to point out that when in 1972 the Republic of Cyprus signed this association agreement it looked forward to a reduction of tariffs with the EEC. Because of the running out of Common- wealth preference on 31st December this year, Cyprus has instead suffered a massive increase in tariffs in a year which happens to be the most difficult year for the Republic.

One is not arguing about the relative benefits to people in the North or South of the island. The EEC has made it clear that in all its relations with Cyprus since the first signing of the association agreement any agreements signed between the EEC and Cyprus shall be of equal benefit to both communities in the island. We are not conducting the normal argument over Cyprus involving the position of Greeks and Turks, but in this case we are dealing with the relative priority which the EEC accords to the island of Cyprus as a whole.

My hon. Friend said that he wanted to set the issue in the correct context and against the right background. The context and background this year is that, although we all agree that Cyprus suffered massive disruptions in 1974, the remarkable thing is that in the years since then she has been able to stave off economic collapse—particularly in the South of Cyprus—as a result of the heroic efforts of her people. In only one sense they were lucky. A total of 40 per cent. of Cyprus's exports depend on the potato harvest and for two years Europe had comparatively bad potato harvests while Cyprus had good harvests. The relative prices benefited the island so that, with a nil tariff under the transitional agreement, it was able to sustain its economy and had a somewhat lower rate of inflation than almost any other country in Europe.

This year the position is reversed, with Europe having had a good potato harvest and Cyprus a bad one. I mention potatoes because, although other agricultural products are important, potatoes are central to the economy of the island. The original 40 per cent. reduction offered to Cyprus was not only mean but ludicrous. It meant that there was little chance of Cyprus selling its potatoes anywhere.

In talking of trade between Cyprus and the EEC we are talking of a fiction. Cyprus trades not with the EEC but with the United Kingdom. If we look at the quota arrangements in this document it will be seen that there are minuscule quotas to the Eight and massive quotas to Britain. Although technically we are talking about trade between Cyprus and the EEC, we are really talking about the price of potatoes, grapes and sherry, and other agriculutral products, for the British housewife, not for the French, German or Italian housewives.

I congratulate my hon. Friend on achieving the turn-round in the Council of Ministers and getting it to produce a greater tariff reduction than was originally offered. I warn him that even this tariff reduction to 65 per cent. and 55 per cent. for products of Cyprus makes it doubtful whether this will produce the price which makes it reasonable for the age-old trading relationships between Cyprus and the United Kingdom to continue. It is worth mentioning that the Cypriots have always co-operated with Britain in the potato trade, especially with the Potato Marketing Board. Over the years Cyprus has provided Britain with new potatoes in the months before our own arrive. She has behaved in a totally responsible way.

What the EEC calls a reduction in tariff is a massive increase in tariff over that for the previous year. It is a disruption of a traditional trade with Britain which has provided Britain with a ready supply of agricultural produce. That trade has continued over many years, but it is now being disrupted purely by our entry to the EEC. What I say about potatoes applies in large respect to fresh grapes, carrots and other agricultural products which Cyprus has attempted to continue to supply in its trade with Britain.

The Cypriots are willing to be flexible. They say "If you feel that the market is glutted with potatoes, what about aubergines? Our market is extremely flexible." The EEC says "No" to aubergines, and the Cypriots go right through the whole agricultural market. The truth is that the EEC is so protectionist, is so inward-looking and so determined to protect its own small farmers, who have their problems, that in present economic circumstances it does not want to know about the problems of small countries such as Cyprus. Its trade with the EEC is quite miniscule in terms of Europe as a whole, although the economic relations between Cyprus and Europe are a matter of life and death, a matter of economic survival or economic collapse, for the Cypriots.

The hon. Member for Mid-Oxon asked how the Commission gets its political information. The hon. Gentleman asked an astute question. The Commission is often derided as being an enormous bureaucracy. It is a terrible bureaucracy but it is not an enormous one; it has its problems about getting political information.

I do not often co-operate with the hon. Member for Dorset, West (Mr. Spicer), but we happen to sit on opposite sides of the European Assembly and he and I have done quite a bit in attempting to introduce officials of the Commission to the realities of the problems of Cyprus. I do not say much for the Assembly. I am not especially keen on it. I do not think that it is a very sensible body. However, it was useful in our attempt to try to drag the officialdom of the Commission deep into the reality of problems of Cyprus. If I did anything during my slightly useless year at the Assembly, I suspect that that is the one thing that I helped in doing.

My hon Friend says that one nation of the Nine still has reservations about the problem. It seems that he has problems in naming nations. It may be that the Opposition share that problem. That is because they think that they will have my hon. Friend's problems in the near future, although I suspect that they will not. However, it is well known throughout Europe that the Italians have been making it a principle that they will behave, if I may say so, in a Silkin-like way about European agriculture until they get their way over certain fundamental principles that they want to operate in their favour. In a sense, I do not blame them. That is the Euro game. That is what produces the arthritic stalemate that is now Europe—the business of everybody having a veto if he so choses to play the game produces that stalemate. I do not blame the Italians. The fault lies with the machinery that now exists in Europe.

I understand that the Italians are quite willing to go ahead with the arrangements so long as they can get certain compensatory amounts. I am told that 3 million or 4 million units of account are involved, which in the European budget is a tiny sum. I am told that the nation which objects to making the compromise is not Italy but Germany. That is the compromise of paying a compensatory amount for the loss that might occur to the Italian potato exporters. They say "We must not erode this principle. We must not have any more of these compensatory amounts". There is plenty of precedent. I am told that Guadeloupe pineapples have been established as a principle under which compensation is made to a country which suffers as a resuit of an external agreement of this kind being made.

My hon. Friend said that one nation was creating problems. I suspect that there are wheels within wheels within wheels in this problem. We are up against the idiotic veto upon veto upon veto within the EEC, in the nexus of which the poor Cypriots have got absolutely entwined and do not seem to be able to escape.

Europe offends the Cypriots at its peril in a political as well as an economic sense. My hon. Friend hinted at that in his speech. The Cypriots are immensely resourceful and inventive. If European markets are denied to them, there are other directions in the world in which they can go. There are the Arab and the Eastern European countries.

Political parties in Cyprus have consistently argued against an association agreement. They have argued that Europe was not a good market for the Cypriots and that they should seek their markets elsewhere. If the sole objective of the EEC had been to turn Cyprus away from its orientation with Europe and towards other directions, it need not have acted otherwise than it did in terms of its economic negotiations with Cyprus. If Cyprus should finally decide that Europe is so protectionist, peevish and nasty in its economic relations and that its future lies elsewhere, the political implications for the future of the Middle East are substantial. We should realise that in all these issues there is a connection between economics and politics. If Europe continues to fiddle around, a turn-round in the Middle East could take place which the Nine could bitterly regret in future

I think that historians looking at the relationship between the EEC and Cyprus as a case study will be amazed by the way in which the nine powerful nations of Europe argued among themselves and nit-picked within the legalities of the rules of the EEC about a few potatoes, a few fresh grapes and a few carrots which might be exported from an island which had been devastated by war and a refugee problem which would be quite intolerable to any of the Nine. It is a case study of the pettiness of the EEC in 1978.

I know that the negotiations are not yet complete. But, if all goes sour in the end, the EEC will have only itself to blame for having done not only economic damage to Cyprus and to the British housewife but grave political damage to the situation in the Middle East.

12.5 a.m.

Mr. Peter Emery (Honiton)

Even if I do not endorse all his arguments in moving the amendment, the hon. Member for Lewisham, West (Mr. Price) has my assurance that I am in complete agreement with the amendment, and I am more than pleased that the Government have indicated that that is overall their general view as well.

I am a little sorry that the Minister of State was not able to weave into his opening speech a little more about the long-term political solution in Cyprus. I know that he has had a close connection with that matter, having recently visited the island, and I am sure that the House would have enjoyed an opportunity to hear his views. Perhaps we shall have another occasion when we can question him about that.

Although, as I say, I am basically in agreement with the hon. Member for Lewisham, West, I cannot accept it when he says—I think that these were his words—that after the enlargement of the Community Cyprus was overlooked and forgotten for about five years. I accept a later condemnation which he expressed, but I think that initially, when people saw that the amount of Cypriot agricultural input into the enlarged Community was so small—such a drop in the bucket—they could not believe that there would be all this trouble during the period of association. I must say that I am very discouraged to find that the Community has been so difficult in dealing with what is a vital matter for the economic structure of this small island.

I asked whether the Minister of State could tell us of the effect on the economy, and I wanted that information because certain figures have been put to me. I have no means of knowing whether this is correct, but I am given to understand that the tariff structure now proposed is likely to mean a reduction in sales to the EEC of anything between 25 and 33 per cent. of last year's exports into the Community. If those figures are right, that is a disastrous prospect for the Cypriot economy. Moreover, if they are right, Europe has a heavy burden to bear in pursuing the regulation now before us.

I come now to one or two matters of detail. First, is the 12.6 per cent. tariff reduction on new potatoes shown in Article 2 still 12.6 per cent. or has that been negotiated up as the 40 per cent. has been negotiated up to 60 per cent.?

Next, I should like to have an explanation of something which I cannot understand. In the box at the top of page 8—this also is Article 2—we read: New potatoes: (b) From 16th May to 30th June", and then immediately underneath are the words: From 16th May to 15th June". What the devil does that mean? Is it 30th June or 15th June? It seems incomprehensible to me.

Next, although Britain's dominance of the trade is right, I believe that the hon. Member for Lewisham, West slightly over-estimated that, as he will see from Article 2 and the products there involved—vegetables, fresh or chilled, and new potatoes. The initial allocation is 60 per cent. to Britain but 40 per cent. to the rest of the Community, which, after all, is quite a lot.

The division in Article 2(2) applies to the first tranche. Is the second tranche, which is the much greater amount of 27,000 tons, to be divided in the same way? That is not slated and it is impossible to determine.

May I make the appeal I make about all legislation, whether domestic or European? May we have an end to the gobbledegook? I challenge any hon. Member to explain to me Article 6(1), which reads If 90 per cent or more of a Member State's initial share—as fixed in Articles 2 to 5—or of that share minus any portion returned to the corresponding reserve, where Article 8 has been applied, has been used up, that Member State shall forthwith, by notifying the Commission, draw a second share, to extent that the reserve so permits, equal to 15 per cent. of its initial share, rounded off upwards to the next whole number, if necessary. I defy anyone to tell me what that means. The succeeding paragraphs are equally nonsensical. These regulations have to be interpreted by ordinary traders who are importers. It is important that they should not have to go to their lawyers to find out what they mean.

The whole matter of the relief of tariffs is unsatisfactory. More should have been done. I hope that the Government will press ahead on this as strongly as they have in the past and ensure that a greater concession is gained for Cyprus, otherwise we shall see a steady reduction in this operation. Taken within the context of the whole EEC agricultural trade, this is just a drop in the bucket. We should be generous and help these people.

12.12 a.m.

Mrs. Lena Jeger (Holborn and St. Pancras, South)

I agree very much with the hon. Member for Honiton (Mr. Emery) and my hon. Friend the Member for Lewisham, West (Mr. Price). In the period from 1973 to 1977, EEC exports to Cyprus amounted to more than £560 million. Imports from Cyprus in the same period were only £310 million, giving the island a deficit of £250 million. Why is the EEC so frightened of Cyprus that it has to make these tariff threats and restrictions? This small island is struggling against enormous difficulties of all sorts from all sources, and it now has to face tariff restrictions from the EEC imposed to meet threats which do not exist.

I shall concentrate on one aspect of the Cyprus economy. About 30 per cent. of the people are dependent for their livelihoods on the culture of vines. Anyone who knows the country will recollect how the terraced vineyards go up those dry slopes and how there is no alternative agriculture. It is important to remember when the EEC seeks to impose changes in the crops which certain areas grow that on this sort of terrain there is no alterative. The people of the island have grown these crops since Biblical times. I defy any agronomist to tell them that anything else will respond to that climate and that soil.

About 30 per cent. of the people depend on the growing of vines, whether for table grapes, sherry or wine. I understand that there will be an increase of between 30p and 50p a bottle on Cyprus sherry, and that will have a serious effect on the market. Sherry accounts for about 90 per cent. of the total wine exports to the Community. Therefore, if there are unfavourable tariffs the whole industry will be in jeopardy. That will mean more unemployment in Cyprus and more poverty when a country which has suffered from invasion and all sorts of other difficulties is trying to get its economy going.

I cannot see how it can be in the interests of the EEC to bring in any regulations or restrictions that would make it more difficult for the economy of Cyprus to survive. That cannot help trade between Cyprus and Europe. It can only increase the poverty of the people of Cyprus, and that will contribute to the poverty of the whole Middle East and in turn of the EEC, because of the reduced trading that will be possible. The same applies to the export of table grapes. Again, I emphasise that there is no alternative agriculture.

I thank my hon. Friend the Minister for all that he has done. I realise that he has had a tough battle. Does not the EEC appreciate that it is trying to make a relationship with an impoverished, embattled, small island, which is fighting for its life? Nothing to do with the principles of friendship, co-operation and constructive thinking can apply if the EEC is to knock on the head with restrictions and tariffs this brave, small island, where the people are working and fighting not only to preserve their own livelihood but to live by their own work to export and to trade. Anything that impoverishes and restricts them in doing that is a disgrace to the EEC.

12.18 a.m.

Mr. Jim Spicer (Dorset, West)

I have a feeling that there is a rather unholy alliance between myself and the hon. Member for Lewisham, West (Mr. Price) in this case. He is right in saying that over the past year we have worked and tried our hardest with the European Commission and the Community to see that proper treatment is afforded to the people of Cyprus.

The Minister was absolutely right to say, in opening the debate, that Cyprus was a special case. He, with his special responsibilities, and indeed all of us, should be very concerned about the way in which the Community's Mediterranean policy has developed.

What happens is that an agreement is signed—say, an association agreement with Turkey—and then it is followed by an agreement with the Maghreb countries, then with the Mashraq and then on to Israel, and on each move more concessions are given, so that those who are at the beginning of the agreement suddenly find that they have been outbid in every way. When we are dealing with the larger units there may be some case for that, but Cyprus is a special case, for many reasons. It is special because of its internal problems and special particularly because of its relationship in the past with the United Kingdom. Therefore, we have a bounden duty to support Cyprus all the way down the line, in defiance of anyone else within the Community who would seek to impose a lower tariff reduction on Cyprus than that on anywhere else.

The hon. Member for Lewisham, West said that tonight we were talking only in terms of Cyprus and the people of Cyprus. That is absolutely right. I hope that no one will think that I am introducing a note of dissension or an additional problem when I say that I am a little concerned when we talk about the Republic of Cyprus. I fully accept and understand the legal situation with which we are faced, and that it is impossible to talk other than through the legal Government of Cyprus. But I am worried that the interests of the Turkish Cypriot minority in all these negotiations may be slightly overborne because they have no direct representation to either the Community or the United Kingdom Government and their representation has to be conducted, so to speak, around the back door.

The Minister will know that I have quoted several instances to him in which that has operated to that minority's detriment. I am extremely worried that the people in the North of the island, the Turkish Cypriot area, are suffering far more hardship, because they are economically less viable than those in the South. We have seen in the last few days that they are being pressured all the time.

I take just one instance that is relevant to the document we are debating, which mentions fruit juices. I have tried my best to help the re-establishment of a juice factory, owned by a neutral outside Famagusta, to process fruit juice which is now being wasted. Yet I know that the High Commissioner in London is doing all that he can to block any activity on these lines because he believes that that is in the interests of the Government of Cyprus as opposed to the Turkish Cypriot community.

I can only say that I am in complete accord with the hon. Member for Lewisham, West when he says that we have to work in the interests of both communities in Cyprus. If we are to continue to do that, we must be assured that there will be even-handed treatment for the Turkish community as well, however, that is achieved.

Our problem is that the Community may not, perhaps, understand this matter to the extent that we do. But unless we can give that same treatment to the Turkish Cypriot community, we shall make the achievement of a political settlement in Cyprus that much more difficult. I am sure that that is not in the interests of the Community, it is certainly not in the interests of the people of Cyprus as a whole, and above all—with our long and historic links with Cyprus—it is certainly not in the interests of the United Kingdom. We have a duty to fight for them all the way down the line.

12.23 a.m.

Mr. James Lamond (Oldham, East)

I do not know what you do for late-night reading, Mr. Deputy Speaker, but it is not my habit to read the documents that—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. I always read the speeches that hon. Members have made the previous night, particularly those made after midnight.

Mr. Lamond

I am sure, Mr. Deputy Speaker, that that is most enlightening. Perhaps I shall follow your example tomorrow.

However, normally I leave the perusal of these documents in the safe hands of my hon. Friend the Member for Newham, South (Mr. Spearing), and I follow him into the Lobby if he happens to feel like calling a Division. I have never been let down yet.

I have come to the House tonight because of my particular interest in Cyprus and the political position there. I wanted to see whether my hon. Friend the Minister of State had benefited in any way from his recent visit to that country. Tonight I am quite satisfied that he has fully understood the political position there. He is very sympathetic, in the same way as I am, towards the people of Cyprus. Therefore, I have no quarrel about that.

Having gone to the Vote Office to obtain a copy of this document, and having tried to read it, I cannot agree with those hon. Members who praised my hon. Friend the Minister of State and said that he had made everything very clear. I have no doubt that he made it as clear as anyone possibly could. But in order to understand the matter completely, one would need to have had a pretty good idea of what it was all about even before the debate started.

Several of my points have already been made. For example, there is one page in the document which is written in French. That does not help hon. Members like myself who are struggling at the French classes which are being held to assist us.

Mrs. Jeger

It is also out of order.

Mr. Lamond

Another matter concerns the dates given inside the box on page 8. I cannot understand that at all. I wonder whether the EEC thinks that no one will read these documents.

There are pages of rates of reductions. But the document does not tell us what the tariff is to be. It tells us only by how much the tariff is to be reduced. The percentages that are shown are the percentage rates of reduction. They are all in round figures—40 per cent., 80 per cent., 60 per cent., 50 per cent.—except for one, which is 12.6 per cent. Why was that not made 10 per cent., 15 per cent., or even 12 per cent? A figure of 12.6 per cent. seems to be so much out of line with everything else shown in percentage form that it is difficult to understand.

Having tried to wrestle with this document, I wish to put one question to my right hon. Friend who will shortly be winding up the debate. Does this document mean that, as a consequence of our going into the EEC, the price of new potatoes in my constituency will be higher than it would otherwise have been? My right hon. Friend should not take this matter lightly. About a year ago there was a lot of correspondence in the Oldham Chronicle, which raged for many weeks, about the price of potatoes. That topic certainly seemed to attract much more attention than many of the other things on which we speak in this House.

12.28 a.m.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr E. S. Bishop)

This has been a timely and useful debate, even though it has taken place at this hour. I have listened with great care and interest to the views of Opposition Members as well as those of my hon. Friends. There has been a fair degree of anxiety about the ties, both economic and of sentiment, that bind us to Cyprus. One does not have to visit Cyprus to know the kind of problems with which it is coping. There has been a very long friendship between our two countries.

The hon. Member for Mid-Oxon (Mr. Hurd) rightly recalled the traditional place which Cyprus products have in our markets and the need to maintain that position. I endorse those comments. Such is the courage and resolution of the Cypriot people that they would not relish fulsome expressions of sympathy from us. We respect their pride and independent spirit. At the same time it is right to mention the keen awareness in this country that Cyprus is suffering formidable economic and political difficulties which stem from the happenings of 1974.

These are unwelcome facts. They ought be taken into account in the construction of its future trading relationship with this country and the Community as a whole. Nothing should be done to worsen its position. We recognise that this is not the end of the road, or the end of the story, and that there is still some way to go. We should remember that Cyprus' traditional links are with this country and the West. It would be sad—more than that, it would be politically dangerous—if economic pressures were ever to weaken and perhaps sever those attachments. That is a point which my hon. Friend the Member for Lewisham, West (Mr. Price) made.

The House has expressed its deep concern for Cyprus and its anxiety for our traders and consumers who may be affected by the recently concluded EEC-Cyprus agreement. I do not pretend that what has been agreed is ideal. Far from it. Obstacles have been placed in the way of Cyprus's traditional agricultural trade with this country. These are unwelcome to her—as they are to us.

But while we sympathise with Cyprus we should not forget that there are many producers within the Community whose economic condition is weak and who also deserve sympathetic consideration. But they are supported by able spokesmen, and it is up to us to underline some of the social and economic effects on Cyprus.

I pay tribute to the hon. Member for Mid-Oxon for the way in which he opened the debate for the Opposition. Credit should be given to hon. Members on both sides of the House who have stayed tonight to express their sympathy with Cyprus.

The hon. Members for Mid-Oxon and Honiton (Mr. Emery) made the point about some of the documents being out of date. Events move, and I am glad that they do. I think that we might be more concerned if the documents were always up to date. The fact that they are out of date means that some progress has been made. However, I accept that we have a duty to ensure that hon. Members have the necessary documents for consideration.

Several hon. Members raised the point about the advice the Commission gets on political factors. The Commission has been in direct touch before and during the substantive negotiations. Member States offer opinions on the aims and needs of third countries. The wider remit must be taken into account, and this enables the Commission to form an opinion of the political situation in the country concerned. It is up to member States to show political awareness in amending the Commission's proposals. Tributes have been paid to the Minister of State for his work in ensuring that the links with Cyprus and that country's best interests are preserved.

Close co-ordination is necessary during negotiations. We have been in close touch with the Cyprus Government throughout. The Prime Minister discussed the negotiations with President Kyprianou on the telephone, and the Minister of State discussed the negotiations with various Ministers and officials during his visit to Cyprus this month. Officials in Brussels have also kept in touch. I take the point that one should be aware of increasing the possibility of contacts with the Community in order to represent the interests of the Cypriot people.

The hon. Member for Honiton raised the question of quantifying the improvement in the mandate. It is very difficult to say what the position would be if certain things had not happened. It is a changing situation. The original mandate would have cost the Cypriots about £5 million a year. I am afraid that no estimate is available of the degree of alleviation brought about by the revised offer. However, I can quote the hon. Member the relevant figures on the original mandate for new potatoes. Whereas the original mandate was a 40 per cent. concession in the reforms offered, the concession is 65 per cent. for 1978 and 55 per cent. for the latter part of 1979.

The hon. Member also asked what the box entry at the top of page 8 means. It means that within the period 16th May to 30th June, for items in the common external tariff, the reduction would be 12.6 per cent. for the period 16th May to 15th June, and that in the mandate offered to the Cypriots, which has not yet been formally accepted, the rate of concession has been improved. If other aspects need clarification, perhaps I might write to the hon. Gentleman and others.

My hon. Friend the Member for Holborn and St. Pancras, South (Mrs. Jeger) claimed that this would add between 30p and 50p to a bottle of Cyprus sherry. In fact, the duty would raise the price of sherry by no more than a couple of pence a bottle and that of wine by about 1p a bottle. That should not significantly affect United Kingdom sales. Separate discussions on the reference price are already proceeding in the Community. The Commission says that it fully understands the special needs of Cyprus.

My hon. Friend the Member for Oldham, East (Mr. Lamond) and others asked about the traditional trade in potatoes. We take a substantial part of the Cyprus crop and early in the year we depend on this trade. Assuming an unchanged pattern of imports, the new tariff will add about 11 per cent. and 14 per cent. respectively to the import bill for Cyprus potatoes in 1978 and 1979. The retail trade is likely to be inhibited to some extent, but if the whole tariff increase is passed on to the consumer, we estimate that prices will rise by about 1p or 2p a pound. But I think that the Cypriots and the United Kingdom traders may try to absorb all or a portion of the increased cost. One wants to ensure that the trade is maintained as far as possible.

We believe that the negotiations are satisfactory on sherry and light wine. There is an adequate quota and a substantial tariff reduction. The crucial question is the reference price, which remains to be settled.

For citrus fruit there is a useful tariff reduction, which should help the Cypriots to maintain United Kingdom trade.

The hon. Member for Honiton raised important points about alleviation reforms. This is still a useful concession on potatoes, and the quota covers approximately two-thirds of the supply. The tariff reduction is better than that conceded to other Mediterranean countries and the possible price rise for consumers may be rather small.

With carrots we have a very limited use of the concession. The outcome is disappointing. The tariff reductions cover only about two weeks of the Cypriots' main season.

I emphasise that we are dealing not just with trade between peoples but with the way of life of the Cypriot people. When we are talking about prices and trade within the Community or outside, although we want to get food and to get it cheaply—I have made this point in the recent meetings of the Organisation for Economic Co-operation and Development in Paris—we have to recognise that there are other factors. There are human factors and job factors, and these are important.

Amendment agreed to.

Main Question, as amended, put and agreed to.

Resolved, That this House takes note of Commission document No. S/2066/77 on trade with Cyprus; notes, however, that the present agricultural agreement between the European Economic Community and Cyprus is a temporary one, pending an extension of the Association Agreement which expired in June 1977; and urges the Government to press for the conclusion of a permanent agreement as soon as possible which takes more account of both the economic problems of Cyprus and the need to secure the United Kingdom's traditional supplies of agricultural products from Cyprus, especially potatoes.