§ The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith)I beg to move,
That this House takes note of European Community Documents 8832/79 and 8476/80 on access for New Zealand butter to the European Community and supports the Government's intention to secure satisfactory arrangements for the importation of New Zealand butter into the European Community after 1980.
§ Mr. SpeakerI have selected the amendment in the name of the Leader of the Opposition.
§ Mr. Buchanan-SmithI wish to remind the House very briefly of the historical setting. During the accession negotiations the Conservative Government, conscious of the extent to which New Zealand relied on its exports of butter and cheese to the United Kingdom for its export earnings, negotiated special arrangements for the access of New Zealand dairy products to out market. Under protocol 18 of the Act of Accession the United Kingdom was authorised to import 166,000 tonnes of butter in 1973. gradually reducing to 138,000 tonnes in 1977, and 69,000 tonnes of cheese in 1973, reducing over the same period to 15,000 tonnes. Those arrangements were subject to the observance of a minimum cif price and the payment of a special levy substantially below the full rate. The 920 intention was to set the cif price and the special levy at levels designed to allow New Zealand to sell the specified quantities without disrupting the British market. The protocol also provided for the extension of the arrangements for butter. At their meeting in Dublin in 1975, the Heads of Government underlined the importance that they attached to protocol 18 and the maintenance of the special arrangements after 1977. As a result, the Council agreed in 1976 to grant New Zealand access for 125,000 tonnes in 1978, declining to 115,000 tonnes in 1980. Although the protocol 18 arrangements for cheese ended in 1977, the Community has now agreed to import almost 10,000 tonnes a year with a reduced levy under a bilateral GATT arrangement.
I now turn to the two documents. The House will know from the explanatory memorandum that the first is a report by the Commission to the Council on the milk products position in the Community, on the world market and in New Zealand in relation to the import of New Zealand butter into the United Kingdom. It is a good report, and I congratulate the Commission on identifying the essential points to be considered and presenting them in such a clear way to the Council. The second document contains the Commission's specific proposals in the form of a draft regulation.
Although, at the end of the day, it is the regulation that the Council adopts that will determine the quantities that New Zealand can sell in the Community, it is well worth considering the Commission's report to the Council. Part I of the report notes the desire expressed by the European Council in 1975 for even closer co-operation between the Community and New Zealand with the objective of promoting an orderly operation of world markets. That, of course, is highly relevant to today's debate, and I shall return to the point later. Part II draws attention to the continuing imbalance on the Community market, despite the various measures that have been taken to reduce supply and stimulate demand, but it reaffirms that the long-term solution to the Community's surplus problem does not lie in stopping imports of New Zealand butter. That part of the report also notes that the world market for dairy products improved between 1976 and 1978. I am glad to be able to say that 921 that improvement has been maintained with world prices at improved levels, but still far below Community support prices.
The report goes on to deal with the continuing importance of dairying to the New Zealand economy, and it is significant that this is dealt with so specifically. Seventeen per cent. of New Zealand's foreign exchange is earned by dairy exports, and butter exports to the United Kingdom alone contribute about 5 per cent. The final two sections of the report contain an assessment of the difficulties that have been encountered in operating the present arrangements.
The Commission refers particularly to the problem of setting the special levy on New Zealand butter at an appropriate level. This requires further explanation. The problem arises because under the present regulation the levy has to be set by the dairy management committee on the basis of the difference between the cif price and the market price of New Zealand butter in the United Kingdom taking account of costs between the cif stage and the point of first sale. A judgment, therefore, has to be made about the price at which New Zealand butter will sell and. since there can be a considerable time lag between the time the levy is paid and the time the butter is sold, the judgment has to extend to future market prices. In those circumstances the wisdom of Solomon is required. Wise though the management committee may be, it simply cannot be expected to make judgments on this question that are generally correct. The result has been that the levy has frequently been set too high and has subsequently had to be reduced to enable New Zealand to dispose not only of normal quantities of butter but stocks that have built up as a consequence.
Inevitably this factor, more than any other, has led to instability on our market. It is fashionable—and one sees this in various reports—to "blame the system" when things go wrong, but in this case I am sure that this is where the blame lies. I wish to make it absolutely clear that the problem of instability certainly does not lie with New Zealand. I am pleased to say that in its report, and now in its proposals, the Commission has found a satisfactory solution in removing the minimum cif price and setting a fixed levy, 922 thus leaving New Zealand to get the most out of the market.
§ Mr. Nigel Spearing (Newham, South)The Minister will know that twice in the last week the Minister of Agriculture himself has agreed that this is one of the most crucial points that must be covered. Is he satisfied that if the modified scheme that he has just mentioned does not do the trick there is still room, in any final regulation that was agreed yesterday, for further modification in order to achieve the just ends that he has just described?
§ Mr. Buchanan-SmithOur assessment of the position is that this should do the trick. In our consultations with the New Zealand Government this was regarded as a considerable step forward. However, if it did not work we would have to consider whether further modification would be necessary. I am reasonably confident that it should work, as I have said.
I do not want to labour this point, but it is at the heart of the misunderstanding about the effect on the United Kingdom butter market of New Zealand imports. I have explained how sales of New Zealand butter have in the past caused some instability on our market. This has been due not to her annual entitlement being excessive but to the unsatisfactory measures of the mechanism for setting the levy.
I shall now deal with the proposals. Basically, they are in two parts. First, there is the proposal for a reduction in the New Zealand entitlement for 1980 compensated by a reduced rate of levy. This part of the proposals has now been overtaken by the events reported by my right hon. Friend yesterday.
Secondly, there is the more important aspect of the arrangements. For the period after the end of this year the Commission has proposed that the annual quantities of 97,500 tonnes in 1981, reducing to 90,000 tonnes in 1984 and subsequent years, may be imported into the Community as a whole, rather than specifically the United Kingdom under special arrangements. In any event, the Council would review the functioning of these arrangements, on the basis of a Commission report, before 1 August 1984.
§ Sir Ronald Bell (Beaconsfield)My hon. Friend said that we would be compensated by, among other things, the fact 923 that butter could be imported into any part of the Community. Can my hon. Friend explain how that is any compensation for New Zealand?
§ Mr. Buchanan-SmithI did not say that it was full compensation for New Zealand, but it is a considerable step forward. I put that point in order to provide a balance, which I hope that my hon. and learned Friend will accept in his balanced way. This is one gain in the current arrangements.
§ Mr. Douglas Jay (Battersea, North)As I understand it, the amount that has been agreed in Brussels is a figure for 1980. The figures for 1981 to 1984 still await agreement. I am not sure whether that is what the Minister said. Is that correct?
§ Mr. Buchanan-SmithThe right hon. Gentleman is wholly correct. All that has been agreed so far is the arrangement for 1980.
§ Mr. Buchanan-SmithI am sorry, I must get on. Knowing the hon. Member, I am sure that he will be able to ask his question later and I will be delighted to answer it when I wind up the debate.
The Commission has proposed the abolition of the minimum cif price with the rate of special levy to be fixed at £430.02 per tonne representing 25 per cent. of the intervention price but without deduction of butter subsidy, which would be paid later. This would provide New Zealand with a substantial improvement in her net returns from the United Kingdom market. The proposed regulation also includes, for the first time, a definition of New Zealand butter in terms of fat content, which effectively precludes New Zealand from the Continental packed market but does allow access to the processing market.
Rather than go through the proposals item by item, I think that it would be preferable for me to explain to the House the Government's attitude to them. First, let me say that the Government attach great importance to obtaining access for reasonable quantities of New Zealand butter on satisfactory terms. There is no doubt that New Zealand is an important Western ally and in an important strategic area. She is a major trading partner of the Community and it is of vital import- 924 ance, not only to the United Kingdom but to the Community, that her economy should not be damaged by the CAP. We have repeatedly put that point to the Council. The importance of dairy products, and the United Kingdom market in particular, to the New Zealand economy is not in doubt.
Secondly, the Government do not believe that New Zealand is in any way responsible for the difficult conditions on the Community and world dairy products markets. Nor do I believe that cutting New Zealand supplies out of the Community market would do anything to solve the overall surplus problem. I am sure that the House will have heard some grumblings—I have certainly heard them in the Council of Ministers—from our partners in the Community that the terms and particularly the quantities are too generous to New Zealand and that there should be a terminal date for the proposed arrangements.
I remind the House, and those who grumble, of the desire expressed by the European Council for even closer cooperation between the Community and New Zealand with the objective of promoting an orderly operation of world markets. Refusal to give reasonable terms for access of New Zealand butter would rightly be seen as an act of great selfishness on the part of the Community and we are simply not prepared to be part of any such deal.
Turning to the proposals themselves, my right hon. Friend reported to the House yesterday that agreement had been reached on the proposals relating to 1980 and explained why he had agreed to this prior to the debate today. On the proposals for the period after 1980, the Government see no justification for any substantial reduction in the New Zealand quantity. However, we have to recognise that the proposals contain some attractive features for New Zealand, in particular the permanency of access, the improved mechanism for setting the levy and the reduced level of the levy, which should have the effect of giving New Zealand a substantially higher return per tonne.
Our position on the issues is clear. We are determined to secure arrangements which, both in terms of quantities and of duration, are acceptable to the New Zealand Government. There should be no 925 doubt at all about our commitment. I have no hesitation in asking the House to endorse fully the motion before it.
§ Mr. Gavin Strang (Edinburgh, East)I beg to move, at the end of the Question, to add:
so long as these arrangements include the principle of permanent access with a quota for 1984 of not less than 90,000 tonnes".The amendment reflects our commitment to the people of New Zealand—a commitment that stems from the historic and close relationship between our two peoples. When the Labour Government renegotiated Britain's terms of entry into the EEC the continued access of New Zealand butter into the United Kingdom was an important element of the settlement. The basis for continued access of satisfactory quantities of butter from New Zealand into the United Kingdom between 1978 and 1980 was agreed by my right hon. Friend the Member for Huyton (Sir H. Wilson) at the Dublin summit in 1975. The commitment that I believe the House has towards New Zealand derives from our common origin. No one would deny that the British people hold New Zealanders in great respect and affection. The New Zealand economy was developed as an extension of the United Kingdom economy. Despite efforts at diversification with considerable success and despite new markets that New Zealand has developed, the fact is that New Zealand's economy is still heavily dependent on agricultural exports to the United Kingdom.
§ Sir Ronald BellWill the hon. Gentleman add that there are more Scotsmen in New Zealand and Australia than in Scotland?
§ Mr. StrangMy affection for New Zealand may to some extent reflect the fact that many Scots went out there. The other point that I wish to make, which I think the hon. and learned Gentleman will find equally telling, is that if there is any rational basis whatever for international trade, surely a country that, for climatic reasons, can produce a product so much cheaper than we can produce it in Europe ought to be enabled to supply part of our needs. We should have no doubts about New Zealand being a low- 926 cost producer. After all, despite the fact that the stuff is shipped thousands of miles and despite the fact that we have been applying a levy of over £ 500 a tonne, New Zealand has still been making a profit out of sales in the United Kingdom market and still wants to continue to supply us.
§ Sir Anthony Meyer (Flint, West)Would the hon. Gentleman apply the same argument to imports of Australian coal?
§ Mr. StrangNo, I would not. One has to strike a balance between the national interest and one's commitment to other countries. To import coal, which is a finite resource, is folly when we can produce it with people well placed to do so. I must not be drawn further. I must press ahead with my speech. I know that a number of hon. Members wish to take part in the debate.
New Zealand must be entitled to supply part of our needs. I say "part of our needs" because the Opposition have a commitment to home production. Indeed, the Labour Government were committed to increasing our share of the United Kingdom market. We pursued policies aimed at increasing the British dairy industry's proportionate contribution to EEC milk production. We were successful in these policies. In 1974 and 1975 our self-sufficiency in butter was 11 per cent. and 9 per cent. respectively, whereas in 1978 and 1979 the figures were 40 per cent. and 43 per cent. respectively. We are now manufacturing more than half our butter in the United Kingdom. We welcome that situation. There is scope for New Zealand imports, which have been running at just over 30 per cent. in recent years. There is also scope for the increased United Kingdom production of butter.
I am, however, concerned that the success of the United Kingdom dairy industry is not going to be sustained. The high interest rates and the strong pound make it increasingly hard for our United Kingdom industry to compete successfully with our Continental partners. We can succeed. We are exporting thousands of tonnes of butter to Holland. But the way forward is to maintain our commitment to New Zealand. It is in our interests to import some butter from New Zealand but at the same time to support 927 our own industry. This means that someone has to be the loser. It means the exclusion of EEC countries from the British market, as has been happening in recent years.
§ Mr. Richard Body (Holland with Boston)Would the domestic butter industry still have this success if it were not for the near-100 per cent. tax on imported New Zealand butter? Would the hon. Gentleman not agree that any industry here can succeed if given that level of protection?
§ Mr. StrangWe could go a long way down this road. I am not in favour of entering into an agreement whereby New Zealand will supply all our butter. I am in favour of a balance. I also have considerable sympathy for the dairy industry when it argues that New Zealand access has to be related to the size of the United Kingdom market. If the United Kingdom market is shrinking, the access of New Zealand butter should bear some relation to the United Kingdom position. The crucial factor is to provide for permanent access at reasonable prices in amounts that are acceptable and fair to New Zealand.
I turn now to the question of the EEC surplus and to the argument that we should exclude New Zealand imports of butter because they exacerbate the current enormously costly surplus of milk products in the Community.
As the Minister himself acknowledged, the French and Irish especially, but other member States as well, are very quick to complain about imports into the Community from New Zealand when they are discussing the milk surplus. It is no exaggeration to say that imports from New Zealand are an emotive issue with French farmers. The French Minister of Agriculture is vigorous and aggressive about this issue and has been for years in the Council of Ministers.
Let us put the matter in perspective. We are discussing the access of 90,000 tonnes of New Zealand butter in 1984. Production of butter in the Community in 1979 was 1,789,000 tonnes. It will be sold on the world market in competition with subsidised EEC exports. Let us be under no illusions about the scale of the subsidy that we have been applying to these exports from the Community. A 928 subsidy of about £ 1,200 a tonne compares with the levy of over £ 500 a tonne that we have applied to New Zealand butter in the past. These subsidised exports—those to the Soviet Union are much publicised—to any developed country represent a real transfer of resources from the Community. By any stretch of the imagination that is not in the interests of the people of the European Community.
Milk surpluses in the EEC cost more than £3,000 million. The milk regime alone accounts for over 30 per cent. of the total Community budget. I am speaking not of the CAP but of the milk sector only. That sector accounts for 30 per cent. of total Community expenditure, including the regional fund, the social fund and administration.
That, of course, is nonsense. It is a monstrous misuse of resources. It can be tackled only in the ways recommended by the Select Committee in its report yesterday. We can in no way solve the problem by excluding New Zealand butter from the British market. To try to solve the problem by doing that will simply damage the New Zealand economy.
I shall not go into detail on the access figures. However, we attach great importance to the figure of 90,000 tonnes in 1984 and to the principle of permanent access. Our amendment does not refer to the levy, but we recognise that there has been a gentleman's agreement, particularly for the current year, whereby the levy has been substantially reduced in return for reduced sales in the United Kingdom market.
We support the replacement of the variable levy by a fixed levy. Perhaps the Minister of State can say whether the variable levy will operate for this year or a new fixed levy will be agreed. We support the proposed fixed levy in relation to the proposals for 1981 to 1984. We regard it as a sensible improvement in arrangements.
The Minister of State spoke of the Government's determination to protect the interests of New Zealand in forthcoming negotiations. I welcome that, but I must say that the Minister's right hon. Friend has not been as successful as we have liked in achieving some of his objectives. The right hon. Gentleman has been rather 929 better at expressing his determination and giving undertakings to the House than in delivering the goods.
I refer to the statement on the proposed EEC sheepmeat regime and the right hon. Gentleman's insistence that we were totally opposed to a system of costly intervention buying. It is true that the proposed regime does not involve intervention buying in the United Kingdom, but it does involve intervention buying in France and Ireland, for which we shall have to pay along with the rest. The Minister's right hon. Friend committed himself to securing a freeze on products in structural surplus and a plan for the reduction of that surplus. Again, I have to say that the right hon. Gentleman failed to achieve those objectives.
However, we support the stand that the Government are taking on this matter. Their success in securing continued access of reasonable quantities of New Zealand butter to the United Kingdom serves the interests of New Zealand and the interests of the British people at the same time.
§ 10.5 am
§ Sir Bernard Braine (Essex, South-East)However diligent individual hon. Members may be we get far too few opportunities to question trends that are damaging to the country's interests in the long run and which, if allowed to go unchallenged, become irreversible. We have such an opportunity today.
Let me make my position plain. I believe profoundly in the concept of European unity. I believe that our survival as a free nation in a bitterly divided world, overshadowed by the rivalry of the two super-Powers, depends more than ever on the democratic nations of Western Europe pooling their resources and speaking and acting as one on the world stage. In short, if the European Community did not exist, it would be necessary to create it
Doubts creep in only when one looks at the idiotic way in which the EEC sometimes organises its economic affairs and, in particular, its agriculture. We have had illustrations of that in the excellent speech by the hon. Member for Edinburgh, East (Mr. Strang).
We are being asked to approve an EEC proposal for a modest increase in New Zealand's take-home pay for the butter 930 that she will be selling to us in the remaining months of 1980. In return for that she is then to reduce her exports from 115,000 tonnes to 95,000 tonnes. That is a sharp reduction. If one looks at it against what New Zealand used to send to this country not so many years ago, it is a very sharp reduction indeed.
We are also being asked to approve still further reductions so that only 90,000 tonnes would be allowed in from 1984 onwards. Even that quantity will be reduced temporarily
to prevent disturbance of the marketWhat sort of deal is that for our New Zealand friends, and what sort of deal is it for the British housewife?New Zealand produces high-quality butter at lower cost than anywhere else in the world. This enforced reduction in a traditional trade that has served the British economy well for nearly a century means that butter turned away from Europe, and Britain in particular, will have to be sold elsewhere. The chairman of the New Zealand Dairy Board said a few days ago about the Community's proposals—
§ Mr. David Stoddart (Swindon)Will the hon. Gentleman give way?
§ Sir B. BraineI am in the middle of a sentence, and I shall give way in a moment. I think that it is better, if not a matter of courtesy, that I be allowed to finish. The chairman of that board said:
whether we gain or lose from the deal as a whole will depend entirely on restraint by the Community in the subsidies on exports to outside markets.New Zealand has made strenuous efforts to develop new markets for dairy produce which we are no longer permitted to take. Two-thirds by volume of her exports now go to markets in Asia, Latin America, Africa and the Middle East. But the key factor is butter. Unless the milk fat component can be sold profitably, the industry as a whole cannot survive. Sales of butter, therefore, are the key to the survival of the New Zealand dairy industry.It has been argued that New Zealand must find new outlets—Japan, for example. There is a significant passage in the letter which Commissioner Tugendhat sent to the Council of the European Communities on 10 September last year.
931 Speaking on New Zealand's efforts to diversify her trade in butter, he writes:
at this moment there is no tangible evidence of a new stable outlet for New Zealand dairy products in Japan.So we have the ludicrous position in which, as a result of these arrangements, not only has the British housewife been forced to pay an unnecessarily high price for butter which New Zealand farmers can produce more cheaply than anyone else—and without subsidy—but our New Zealand friends are being damaged in third markets because subsidised butter from the Community is affecting them there.
§ Mr. StoddartBearing all that in mind—and what the hon. Gentleman says is absolutely right—bearing in mind that there is no guarantee, and bearing in mind that when we discussed this matter in 1972 there was still no guarantee and that some of us warned what would happen, why did the hon. Gentleman vote for us to go into the EEC?
§ Sir B. BraineI do not know whether the hon. Member for Swindon (Mr. Stoddart) was in the House at the time—
§ Mr. StoddartI was.
§ Sir B. BraineIn that event, he will know that I took the chair at a meeting of hon. Members of all parties and of both Houses which was addressed by Chancellor Brandt and that in the course of it I said, in advance of our going into the Community, that for me exports of New Zealand dairy products was a key question. Obviously it had to be taken on trust. We had to take a great deal on trust.
§ Mr. StoddartBut the hon. Gentleman voted for us to go in.
§ Sir B. BraineI have been completely consistent. For many years I was chairman of the Commonwealth producers' organisation, which represented Commonwealth primary producers. It does not lie in the mouth of the hon. Member for Swindon, because of these trends against which I have complained constantly, to make accusations of that kind now.
§ Mr. StoddartBut the hon. Gentleman voted to go in.
§ Sir B. BraineHaving regard to the hon. Gentleman's views, I should have thought that he would welcome my taking the stand that I am taking now and have taken consistently down the years.
If the effect of all this was, nevertheless, to ensure an expanding market for our Community partners' butter exports to Britain, there might be some sense in it. On the contrary, this idiocy has had the effect of diminishing butter consumption here. Between 1975 and 1979 the price of butter in Britain more than doubled, thanks to the Community's agricultural policy. Consumption fell by 25 per cent.—from more than 500,000 tonnes in 1975 to less than 400,000 tonnes in 1979. Consumers have turned instead to margarine, the ingredients of which, ironically, are imported from countries outside the Community. The result is that the market for butter in this country is at saturation point. Speaking about the prospects, Commissioner Gundelach told the European Parliament in March:
The truth is that our butter exports have reached their physical limits; we can only export more by practically giving it away and paying the transport costs.If the surplus were given away to the poor of the Community there might be some merit in it. But, no. It has to be sold below the cost of production to the Russians so that they in turn can buy more guns. I am tempted to quote Shakespeare, because he usually had an expression for it:Lord, what fools these mortals be!It disturbs me, too, that so little attention is paid to the devastating effect that these arrangements have had on New Zealand's economy. When I was in New Zealand last year it was manifest to me that there had been a sharp decline in the living standards of the New Zealand people. Whitsun saw the anniversary of the battle of Crete, where 39 years ago a gallant little army of Greeks, Britons, Australians and New Zealanders delayed the German attack upon Russia. The Nazis never got to Moscow because their tanks were bogged down just as the winter closed in upon them. We should never forget the significance of the battle of Crete—
§ Mr. StoddartWe did not. The hon. Gentleman did.
§ Sir B. BraineNo. This is a serious matter. It is not one to be treated with levity.
I was present at the wreath-laying ceremony at Suda Bay when an all-party delegation paid its respects to the fallen. We saw a company of survivors of the New Zealand infantry regiment which had fought in that area marching down the road. It was a vivid reminder to us all of how, twice in a lifetime, young New Zealanders had come from the other side of the world—many of them not to return—to stand by our side in European conflicts. It was a vivid reminder, too, of the way, when this island was beleagured, New Zealand sent us food and continued for some years after the war to ration her own people to meet her commitment to us.
To those who argued—and I was not one of them—that, once we joined the Community, New Zealand's traditional trade with Britain had to be phased out after a period of adjustment, the answer is that special and permanent arrangements were made for West Germany to trade with East Germany, and there is vastly more in common between Britain and New Zealand than there is between the two Germanys.
If there is a will, there is a way. The reason why I intervene in this debate is that I believe that we should insist that there should be no further erosion of the natural and beneficial trade between Britain and New Zealand. I hope that we shall have that assurance from the Minister.
Trade is two-way. New Zealand still imports more from Britain than any other country save her next door neighbour, Australia. New Zealand's dairy trade is also especially important for us in the creation of invisible earnings. Our investment in shipping and in container facilities for the butter and meat trades alone is estimated currently at £ 314 million. Our export earnings from trade with New Zealand totalled £ 600 million in the last year for which I have figures. The balance of trade has been significantly in our favour ever since we joined the Community.
§ Mr. Roger Moate (Faversham)I am sorry to intervene in my hon. Friend's powerful speech, but if what he. says is right, are not even these proposals totally 934 inadequate? With imports of New Zealand cheese reduced from 100,000 tonnes to 10,000 tonnes, and with imports of New Zealand butter being cut almost by half over these years, surely we should seek some way of changing fundamentally the Community's agricultural policy to allow the balance to be restored?
§ Sir B. BraineOf course. I agree entirely with my hon. Friend. However, I am constrained by the limits of the debate and therefore unable to range more widely.
It is true that we now have a grudging agreement from the Community to permit access by New Zealand to our market after 1984. That is a gain, but that access will be at much restricted figures, and that is a loss. If New Zealand cannot export at a reasonable profit she will be obliged to import fewer goods from Britain and, as trade declines in both directions, our invisible earnings will fall dramatically.
It does not make political or economic sense to travel down that road. It is unnecessary. For the reasons that I have given, it is morally wrong. This House should insist that our representatives in the Community block any further steps to erode what is a valued, traditionally, healthy and natural relationship between two like-minded peoples.
§ Mr. Douglas Jay (Battersea, North)The hon. Member for Essex, South-East (Sir B. Braine) described the EEC's economic policies as ludicrous and idiotic. It would have been valuable had he discovered that before 1972, as a few of us from both sides of the House had the intelligence to do. I welcome the fact that the hon. Member, like so many members of the Tory Party, is now, happily, in transition.
The decision by the Minister of Agriculture, Fisheries and Food to agree to the Brussels proposals in advance of today's debate was a clear breach of the pledge given by all Governments that when the Scrutiny Committee recommends that a major EEC legislative proposal be debated in the House, assent to the proposal will not be given before the debate. This episode has shown how right some of us were to argue that such an assurance should be embodied in a proper parliamentary resolution.
935 It is no excuse for the Minister to say that the meeting in Brussels occurred on Wednesday and that he thought that no better agreement could be reached. The Government should not have arranged the debate to occur after the meeting in Brussels and then argued that because the meeting came first they had to reach an agreement. This is no minor matter. We are discussing not negotiation alone but legislation. If we allow the procedure to slip further, parliamentary control over EEC legislation will be weakened even further.
We are confronted with a fait accompli. A further cut has been made in New Zealand supplies of butter. So far, no guarantee of permanent access has been achieved. In effect, a further cut has been made in imports of New Zealand butter, which are already far too low. There is also a further rise in price, which is already extortionately high.
The unrestricted and untaxed import into the United Kingdom of food from New Zealand has been, and still could be, highly beneficial for both countries. The United Kingdom consumer used to gain at low cost large supplies of the most efficiently produced and high-quality food in the world. New Zealand made the best possible use of its own natural resources and earned a large and dependable foreign exchange income. It is almost the best example this century of the real benefits of international trade, intelligently managed by both sides and benefiting both sides.
In 1966 I had the happy experience at the Board of Trade of renewing a trade agreement with New Zealand for continued, unrestricted free access of New Zealand food exports to Britain. It is sad to look back on that now. All that has been thrown aside by the vicious restrictions and protectionism imposed by the Common Market.
Under the Treaty of Accession which was negotiated by the Conservative Party, cheese from New Zealand was excluded from the British market. In 1973 the United Kingdom imported 68,000 tonnes of cheese from New Zealand. By 1977 that had been reduced to nothing. This year a meagre 9,500 tonnes have been imported, and that involved using the vast machinery of the GATT Tokyo round.
936 In 1973, before the EEC fastened its stranglehold on the British economy, the United Kingdom imported 165,000 tonnes of butter. That amount has been steadily reduced by deliberate restrictions to a proposed 115,000 tonnes this year. As a result, according to the EEC's figures, the price of butter in the EEC is now about four times higher than the world price. The latest figure from the EEC's agriculture report shows that last year EEC prices were 399 per cent. world prices. Before the present changes butter which could have been sold to the ordinary British consumer at 27p per packet if freely imported cost him 40p and that was after all the subsidy and other arrangements.
Thanks to excessive prices, consumption of butter in Britain has fallen heavily since we joined the EEC. Consumption of butter in Britain fell from 8.7 kg per head in 1970 to 6.6 kg per head in 1979—a fall of about 25 per cent.
§ Mr. Hugh Dykes (Harrow, East)Can the right hon. Gentleman say why?
§ Mr. JayThe reason is that the price has risen threefold. The hon. Gentleman knows enough economics to know that if a price is multiplied by three times there will be some fall in consumption.
In plain English, the drop of about 25 per cent. in consumption means a major fall in real British living standards, engineered by restrictions on imports. There is to be a further drop this year from 115,000 tonnes to 95,000 tonnes.
Further falls must lead to a further rise in price and a further fall in consumption. The 95,000 tonnes proposed is not much more than half the 165,000 tonnes which we imported under free market conditions in the early 1970s. That is not a fundamental reform of the common agricultural policy. It is not a reform at all, but a minor tightening of the screw and a further injury to Britain.
Damaging as all the restrictions are to New Zealand, they are no less damaging to the British people. It is strange that Government Members, who always deplore the suggestion of import controls and protectionism never seem to raise a voice against this most vicious of all forms of protectionism. Cheese from New Zealand is almost totally excluded from the British market. We should hear more about the doctrine of free market forces being applied to food imports.
937 I trust that in further negotiations the Government will insist at last on a permanent right of access for New Zealand's supplies of butter and cheese. We are not discussing sheepmeat today. May we have an assurance that the proposed 95,000 tonnes of butter from New Zealand will be an absolute minimum? In the interests of both this country and New Zealand, the figure should be much higher, and on a rising rather than a falling scale.
In a sane world, we should, of course, be fighting for an increase and, indeed, for no restrictions at all. Each artificial restriction on our food supplies, and each artificial increase in prices, eats further into our standard of living. In addition, as a result of the inevitable effect on pay claims, this policy of dearer and dearer food worsens industrial relations and raises the labour cost of our exports. The Prime Minister never mentions that when she lectures us about productivity and excessive pay claims.
For as long as we stay in the EEC—I hope it will not be much longer—I trust that the Government will resist resolutely any further damaging cuts or restrictions of this kind.
§ Mr. Tim Eggar (Enfield, North)Unlike some hon. Members on both sides of the House, I speak as a committed European and a long-time supporter of our membership of the EEC. I also speak as someone who, over a period of about five years, has paid about eight visits to New Zealand and who at least claims to know something about the problems that New Zealand faces. I make no apology for trying to describe some of those difficulties this morning.
It is important to put New Zealand's problems into perspective. Its people inhabit a country that is equal in land mass to the United Kingdom, but there are a mere 31 million people. New Zealand has an economy that has been developed since the end of the nineteenth century on mutual trading between the United Kingdom and itself. It is a trading pattern that has benefited both countries consistently over a lengthy period. New Zealand is also a country that has suffered a greater reverse in its terms of trade since the 1974 OPEC price rise 938 than any other OECD country. The right hon. Member for Battersea, North (Mr. Jay) mentioned access to the EEC. It is true that our joining the EEC further worsened New Zealand's terms of trade, but the increase in the oil price—and all oil must be imported into New Zealand—had a much greater impact on its terms of trade.
§ Mr. JayAs the oil increase was inevitable anyway, was not that all the more reason for not imposing on New Zealand a further disadvantage that was not inevitable?
§ Mr. EggarAs I pointed out before the right hon. Gentleman's intervention, New Zealand's terms of trade were adversely affected by our joining the EEC, but I was arguing that, quantitatively, the OPEC price rise was far more important. As my hon. Friend the Member for Essex, South-East (Sir B. Braine) mentioned earlier, New Zealand's real standard of living has been falling significantly and consistently since 1973. In addition—we should not forget this, or ignore it—New Zealand has been losing 30,000 people a year, the majority of them skilled people, who have had to emigrate because of the lack of job opporunities there.
New Zealand has one natural advantage, and one natural advantage only, at the present time—its grass grows quicker than anywhere else in the world. That fact, and that fact alone, enables New Zealand to be able to retail butter in this country at 27p per ½ lb as opposed to the minimum EEC retail price of 47p per ½ 1b. Therefore, New Zealand can shift butter half way round the world and still undersell EEC-produced butter by 20p per ½ lb. That is the extent of New Zealand's natural advantage. We should also not forget that New Zealand's exports of butter to this country are responsible for 5 per cent. of all its overseas earnings—a significant portion.
New Zealand is a country that has additional problems. For historical reasons, it has a high wage structure compared with the wage structure in the rest of the Pacific area. It is making valiant attempts to diversify its manufacturing base and to extend into the processing of forestry products and so on, but 939 the fact is that it has a very limited internal market. Its transport problems and highway structures mean that it is unlikely ever to be able to compete satisfactorily in the production of manufactured goods.
Another point that we should not ignore is that since the early 1970s New Zealand has made dramatic attempts to diversify the marketing of its agriculture services. It probably has the most sophisticated marketing capability of any agricultural country in the world. There is hardly a country that the representatives of the New Zealand agricultural boards have not visited. Despite that, New Zealand has not been able significantly to increase its exports to other countries, first, because of the tariff barriers put up by virtually all countries against the import of agricultural produce and, secondly, because it has found consistently that it has to compete with surpluses from the EEC, which have been dumped and sold at almost any price. Therefore, as well as finding that its access to the United Kingdom market is restricted New Zealand is finding that the EEC system is minimising its capability of exporting to third countries. We should not forget that.
We must not—and I do not think that New Zealanders do—despair about the future economy of that country. It has a significant natural gas find, which by late 1984 will probably mean that it is not nearly so dependent on imported energy. There is significant available hydro power, which it is using. New Zealand is also expanding its forestry products. Nevertheless, the House must recognise that decisions taken here and in Brussels with regard to the continued right of access to the United Kingdom market for both sheepmeat and dairy products have a far greater effect on the New Zealand economy than any decisions that we take have on our own economy. If we significantly further reduce the access of dairy products and sheepmeat into the United Kingdom by actions in this House or in Brussels we have the power to destroy the New Zealand economy. We should never forget that.
§ Mr. EggarI have almost completed my remarks. I shall not give way.
940 It says a great deal for hon. Members on both sides of the House, and on both sides of the argument whether we should be members of the European Community, that we have fought consistently for continued access to the United Kingdom for New Zealand produce. We are now getting to a bedrock, and I do not believe that we can in all conscience go any further in reducing access for New Zealand.
§ Mr. SpearingBefore the hon. Gentleman resumes his seat—
§ Mr. Laurie Pavitt (Brent, South)I agree with much of the contribution of the hon. Member for Enfield, North (Mr. Eggar). I disagree with him, as I disagreed with the hon. Member for Essex, South-East (Sir B. Braine), on the European commitment. However, although I am an anti-Marketeer I am a committed European. Those of us who want to see a more united Europe could pursue that aim within the wider European institutions if it were not for the disastrous commitment to tariff barriers and other economic nonsense by membership of the European Economic Community. I remind the House that the Council of Europe, which we formed in 1947, consists of 21 member States.
I intervene rarely in these debates. I am a member of the co-operative movement—I have no financial interest to declare in that respect—and I am a champion of the housewife. The price of entry to the European Community, which has proved to be outrageously expensive for Britain, has been met largely by the British housewife. She has had to meet the bills for the mistakes that the politicians have made. One of the housewife's prime concerns is food, and the price rises have been inordinate.
A theme that has run throughout the debate has been the need to understand the position of our New Zealand colleagues. Blake wrote about our dark Satanic mills and a green and pleasant land. We may still retain our Satanic mills, but New Zealand remains a green and pleasant land. It enjoys low-cost food production from which Britain has benefited year after year but in the past 10 years that benefit has been thrown aside in spite of the great commitment that New Zealand has always had to Britain.
941 One of the facts of life is that the awkward customer gets more attention than the good customer. That applies to our constituents. Those who are prepared to be patient do not get quite so much attention as those who ring up up at midnight to ascertain what we are doing about their housing problems.
Mr. PaviftNew Zealand suffers from this fact because it has been especially understanding and helpful. It has tried to understand our point of view. That has not done it very much good for the past 10 years. The Minister made a reasonable speech. He mentioned on two or three occasions the reasonable approach that will be adopted, and a reasonable right of entry for butter and dairy produce. In 1972 we were talking about copper-bottomed backed guarantees. As my right hon. Friend the Member for Battersea, North (Mr. Jay) said, we have reached the position where a decision is taken on Wednesday, we have a ministerial statement on Thursday, it is debated on Friday, and still no assurances are forthcoming. It is the wish of the whole House not to clobber New Zealand. We want it to remain economically viable.
We think of New Zealand as a prosperous agricultural country. We sometimes make the mistake of assuming that New Zealand farmers are particularly prosperous. The average income per farm in New Zealand is still only £ 5,700. That should be born in mind when we hear about the farmers of Europe.
Like the hon. Member for Essex, South-East, I approach these matters from a Commonwealth point of view. It was the famous French statesman Couve de Murville who said that Britain had to make up its mind whether it would have the Commonwealth or the Common Market. He said that we would have great difficulty in retaining both. Thanks to New Zealand, Australia and other Commonwealth countries, we have been able to retain what I consider to be the greatest experiment in community living that the world has produced, namely, the Commonwealth. That has been done despite the economic disadvantages to the Commonwealth of our joining the EEC. It has been achieved because of the sup- 942 port that we have received from the Commonwealth.
Can we retain the Commonwealth for the next decade despite the impositions that are now emerging? I support the amendment, but it is not enough to make provision for a quota of 90,000 tonnes after 1984. There should be much greater provision. In our debates and negotiations in Brussels and in the House there must be constant demands to increase the quota. That should be the basis of our negotiations.
When discussing dairy farming we should not confine ourselves to butter and milk. We must take into account cheese and other products. New Zealand cheese is being severely restricted by the Common Market. Cheese, of course, is another imported food commodity. The sheer nonsense of the common agricultural policy of the Community has emerged during the debate. It is a ridiculous arrangement, which distorts the flow of food production and export and import throughout the world. The sooner that we are able to get rid of the policy the more likely we are to be able to solve the problem of New Zealand and to recognise positively its need to export its excellent products.
Commissioner Tugendhat has exposed the nonsense of New Zealand seeking to diversify its trading by turning to Japan. It is a nonsensical proposition from all moral and economic points of view. I am not happy about giving the West Midlands car industry to Japan. I shall be even less happy if we give away New Zealand dairy produce at the same time as we dispose of the other assets that the nation has at its command.
The Commission's proposals will undoubtedly be received with a considerable degree of disappointment in New Zealand. It is unthinkable that Britain should permit the Common Market to cut back any further the trading links with New Zealand. The present proposals must be regarded as the maximum cutback rather than the minimum. There is no alternative outlet for New Zealand butterfat that now comes to the Common Market. The sales of other dairy products are underpinned by New Zealand's butterfat sales to the Common Market. If there are further cutbacks, the New Zealand industry will find it difficult to survive.
943 Are we elected to this place to eliminate the economy of one of our greatest allies in two world wars? I think not. The House must be prepared to take a firm line. Common Market interests are scarcely affected by New Zealand's exports. There is not much argument about that. I resent the attitude that is taken by some, who seem to feel a need to find a scapegoat for the inefficient production of French farmers and others.
If we are not careful the Common Market will use the Commonwealth as a scapegoat in all the arguments about not ony butter and sheepmeat but every other commodity. All hon. Members appreciate that there is a burden of adjustment. The House will know that I am not an agricultural man. There is only one farm in my constituency, and although it does produce milk, as it belongs to Guinness it produces a brown liquid in far greater quantities.
The House should not accept this haphazard way of proceeding—a ministerial meeting in Brussels on Wednesday, a Commons statement from the Minister on Thursday afternoon when hon. Members are deeply involved in a whole series of other important issues, and a debate in a thin House on a Friday morning on a series of EEC instruments. That is no way for the country to treat issues as important as the future livelihood of New Zealand and the future availability to the British housewife of cheap food.
One of the great mistakes about the Common Market was that we were bamboozled by economists—
§ Mr. SpearingWe were not. The hon. Member for Essex, South-East (Sir B. Braine) was.
§ Mr. PavittI have had no great faith in economists since they found that the 1930 slump was caused by sunspots. The basic flaw in the economic argument was that it claimed that it made no difference if we had high prices and high wages, than if we had low prices and low wages. It failed to foresee, however, that high prices would speedily hit the housewife but that the high wages would never materialise.
I hope that we shall have from the Minister today a solid, copper-bottomed commitment, not a promise just to do his best and to be reasonable, and to 944 plead that Britain is after all only one out of nine. Let: him speak up for the British housefiwe today and for New Zealand, and follow his words with positive deeds.
§ Sir Ronald Bell (Beaconsfield)I have always taken the view that New Zealand was shabbily treated throughout the whole Common Market business—[Hon. Members: "Hear, hear."] It is wrong to particularise the blame for that. The original negotiations completely neglected the the future of New Zealand. We were given phrases instead of realities. The renegotiations conducted by the leaders of the Labour Government were an empty farce. They were a cosmetic operation before a disingenuously conducted referendum, and the Labour leaders had the referendum in mind.
The trouble, as the hon. Member for Brent, South (Mr. Pavitt) explained, is that New Zealanders have been too decent about this issue all the way through. At the time I tried to stir them to put up a fight. They said "No, if Britain feels that this is the best thing for it, we must feel that that must be best for New Zealand". That was the attitude that New Zealand most generously adopted. We are not debating Australia, but one could say the same about that country. It woke up much too late to what was being done.
The safeguards that we secured for New Zealand were grossly inadequate. Those for Australia were almost nonexistent. That was unnecessary, because Britain was—and still is—the biggest food importer in the world. We were a treasure house for the Six. They constituted a great food surplus body. They were trying to weave the troubles of their surpluses into their Common Market theories. Suddenly, the biggest food market in the world came along and offered to join. We greatly underestimated the strength of our position, and we are now suffering for that.
The whole concept of the Rome Treaty is wrong from our point of view. It was supposed to be a free market—a common market. Its articles are designed to prevent the distortion of competition, but the whole purpose of the organisation is to distort agricultural competition. Its aim is for free trade in industrial goods, but the opposite in agricultural goods. I 945 do not criticise that as an arrangement for the Six. It may have suited them. One always has to buy off France. The French are the chauvinists who have managed to represent French chauvinism as international idealism, and I admire them for that. The Six have to pay the price, but why did we have to pay it? More especially, why did New Zealand have to pay it?
Agriculture is an important interest for us, but we can manage in the face of this policy. For New Zealand, however, agriculture is vital. Make no mistake, New Zealand is in real trouble. Its economy, while not collapsing, is sliding down, and people are beginning to slide out. That is not all, because, having diagnosed the position, one must ask what New Zealand can do about it. One quickly realises that there is nothing obvious that it can do. That is the significant point about New Zealand.
New Zealand is a nation richly endowed with a certain characteristic. It is not just that the grass grows more quickly; it grows for about nine or 10 months of the year. New Zealand producers, therefore, do not have the winter feed costs that other producers elsewhere in the world have to meet. It has tremendous advantages in the production of dairy commodities. If there is any sense in the world, a nation endowed as New Zealand is—the most efficient producer in the world—will be allowed to produce and sell its dairy goods throughout the world.
So much for the New Zealand side of the problem. There is also the British side. What are we up to, raising the cost of our food in this way? The hon. Member for Brent, South said that he did not think that it made sense to give the New Zealand dairy industry away to Japan. We are worried about Japanese competition in motor cars, motor cycles, textiles and a whole range of other goods. If we give the Japanese the advantage of cheap food while we opt for dear food, where will that get us?
I was always puzzled why we signed the Treaty of Rome. We have many disadvantages—I will not go into them because I do not want to disturb the harmony between the two sides of the House. We had certain advantages as 946 well, however. One was cheap food. It gave our manufacturers an edge in many markets. The other advantage was our high tariffs—about half as high again as those applying in the Six. We chose to throw away those two advantages, and then we wondered why we were not prospering.
Therefore, imports of New Zealand food at about a third the world price are an essential element in the prosperity of the British economy.
§ Mr. JayDoes the hon. and learned Gentleman agree that it is not very sensible that the British taxpayer should have to subsidise butter supplies for the Soviet troops in Afghanistan?
§ Sir R. BellThat is another aspect, but I was not proposing to cover the whole range of this issue in a short speech. I must leave some good points for other hon. Members who have yet to speak.
§ Sir Bernard BraineI have already made that point.
§ Sir R. BellYes, I am sure. I was proposing to limit myself to the economic arguments.
A gradation downwards to 90,000 tonnes of butter—and they are "Froggy" tonnes, not real tons—is simply not good enough. We are cutting New Zealand butter exports to Britain over the period to about half what they ought to be. We have virtually wiped out imports of cheese. Nor are butter and cheese the only dairy products that used to come to Britain from New Zealand. Others included milk powder, and in all of them the Common Market has the most enormous mountains. I should think that the milk powder mountains must now rival the Alps.
New Zealand has been severely hit. Sympathy, understanding and well-drafted phrases are simply not good enough. Something must be done by the British Government. Otherwise, they will be put in the position of the walrus who wept as he ate the oysters. We have said that we will stand up for New Zealand, but the result has been that we have planned and itemised its decline. That is no way of helping that country.
I make no distinction between British people, whether they live in Britain, Australia or New Zealand. Our responsibility to British people in New Zealand is as 947 great as our responsibility to people who live in this country—some of whom are very odd indeed. To put it in a neutral way, I have a strong emotional attachment to the people of Australia and New Zealand, whom I recognise as British in the way that I am British. That is the way in which I expect the Government to look after them. There are people on the other side of the Channel who look after themselves and who would sacrifice us. It is almost as though their first desire is to see Britain sink. Let us do something now for New Zealand, which is in real difficulty, and even danger.
§ 11.2 am
§ Mr. Thomas Torney (Bradford, South)I should like the Minister to clarify certain points about the levy. We clearly understand—I think that our friends from New Zealand clear understand—that for 1980 the quota has been reduced to 95,000 tonnes, but our New Zealand friends and I do not understand why it has been agreed to reduce the levy from £ 520 per tonne—that is a "Froggy" tonne—to £ 320. Will the Minister clarify that point in his reply?
Further reductions—which are far too great—are planned for the New Zealand butter quotas between now and 1984, but the levy is being raised to £ 430, according to the document. If the levy has been reduced to £ 320 for the 1980 quota, why are we reducing the quota still further for 1984 and increasing the levy? The levy is scant compensation to the New Zealanders for a reduction in the quota, but it will not even be that if we decrease it, then raise it again. Will the Minister clarify that point?
I am pleasantly surprised that there is so much agreement on both sides of the House on the question of the ill-treatment of our New Zealand allies and friends. I agree wholeheartedly with the sentiments that have already been expressed. I was struck by the excellent resumé of the hon. Member for Enfield, North (Mr. Eggar), who said that he had been to New Zealand several times. He told us about the problems of the New Zealand economy and its dependence on selling its foodstuffs, including butter, to the United Kingdom, as it has been doing for many years.
However, I hope that I shall not strike a note of controversy when I say that it 948 is a pity that in the original negotiations for our entry of the Common Market the Conservative Government did not understand what they were doing to New Zealand. It must have been patently clear that New Zealand and other Commonwealth countries—even Britain—would suffer. I cannot believe that Conservative Ministers could have been so naive at that time.
§ Sir Bernard BraineWill the hon. Gentleman give way?
§ Mr. TorneyI shall give way in a moment.
I know that the Labour Government renegotiated the terms, but I am as dissatisfied with the new terms as I was with the original terms. The real crime was accepting the common agricultural policy for Britain, when we are not self-supporting in food and when most of the other Common Market countries are.
§ Sir. B. BraineThe hon. Member for Bradford, South (Mr. Torney) is fair-minded, and to some extent he put the record right after I sought to intervene. The Conservative Government received assurances which they accepted in good faith, and which were accepted by the New Zealand Government of the day in good faith. Subsequently, an opportunity occurred for a renegotiation of the terms, and the Labour Government gave their advice that the terms were reasonable and should be accepted. It is pointless for the hon. Gentleman to throw out those charges now. There were several reasons for entering the Common Market. The issue had to be looked at in its entirety. Those hon. Members who really care-there are enough on both sides of the House—that New Zealand should have permanent guarantees should make their views heard, so that in the light of experience our representatives at Brussels can insist that they are achieved.
§ Mr. TorneyI thank the hon. Gentleman for his telling remarks about our commitment to New Zealand.
My hon. Friend the Member for Edinburgh, East (Mr. Strang) has already referred to the French farmers as being emotive. I entirely agree. On a recent visit to France with the Select Committee on Agriculture not many months ago, we had the pleasure—or perhaps the pain—of 949 meeting top officials of the French Ministry of Agriculture. We also met the French Minister of Agriculture, who was extremely vocal in his demands for a reduction in imports of New Zealand butter by Britain. The majority of us did not agree with him, but the French Minister and his civil servants surely cannot have been so naive as to believe that the cutting down of New Zealand butter coming to Britain would have any appreciable effect on the massive dairy surplus in the EEC.
§ Sir William Elliott (Newcastle-upon-Tyne, North)If the hon. Member will search his memory he may recall that the discussion with the French Minister, which I remember well—we were also vocal—was in the context of the lamb problem.
§ Mr. TorneyI do not remember it in that context. I clearly heard the representatives of the French Government at that time saying that we should reduce our imports of New Zealand butter. I reiterate that they surely cannot be so naive as to believe that that would appreciably affect the massive surplus in the EEC. The French would like to see the substitution on the British housewife's table of French butter for New Zealand butter.
I hope that the Government will try to ensure that an even better deal than the one envisaged in the order is given to New Zealand and that we shall never injure our New Zealand friends and allies by allowing French surplus butter to come into Britain.
It has already been amply explained that our New Zealand friends have little chance of disposing of their surplus in other parts of the world. They have been trying hard to dispose of it, but without much success. Every time that they try to dispose of their surplus in other places they come up against the barrier of the massive subsidies that Britain has to pay to enable French and German surpluses to be sold so cheaply to third countries that even the cheap, good quality and efficiently produced New Zealand butter cannot compete with them.
It has been suggested to me by various sources in our own dairy industry that the New Zealanders are trying to sell their butter in the Common Market. We know 950 that the New Zealanders do not produce the lactic butter that the French and others in Europe like to eat It has been suggested, therefore, that New Zealand butter should be sold for manufacturing purposes—for biscuits, confectionery, and so on. It has also been suggested to me that I should ask the Government to urge this on the EEC.
I can see very little hope of New Zealand being able to sell its butter to countries in Europe which already want a reduction in New Zealand exports to the United Kingdom in order to make way for their own massive surpluses. That is not a viable proposition for New Zealand; it is just another wild promise of hope when there is no hope at all.
The British dairy industry as a whole must also look to its laurels and consider what the common agricultural policy really means for it. At the moment, our dairy production in Britain is increasing, which is good, but the consumption of dairy products is going down, mainly because of the high prices.
It should be remembered that the Common Market levies on Community farmers hit British farmers far more than farmers in other European countries. British farmers would be forced into bankruptcy—or at least out of business—with a consequent fall in our milk production, if we complied with the ridiculous suggestion that we should help to reduce a surplus that is produced not by us but by other European countries.
The only way effectively to reduce the surplus in the EEC is to ensure that the countries which produce it dispose of it themselves and that any payment comes from their own national exchequers.
We cannot and must not let New Zealand down. She has been our ally, as has been said already, in two world wars. She already buys more from us than we buy from her. She has always been our friend in need. I agree with those hon. Members who regard every New Zealander as another Briton who lives in a different part of the world. We have a moral responsibility not to allow the New Zealand economy to collapse simply to bolster the French farmer.
We know that because of the political implications in France the French cannot and will not make agreements that are helpful to the United Kingdom, New 951 Zealand and other Commonwealth countries. Politically the farmer in France is a far greater force than the farmer in this country.
I hope that the Government will try to get something more for New Zealand than the 90,000 tonnes that is envisaged for 1984, because that is not enough.
I hope that my words ring in the Minister's ears, and that he will now do something about the problem.
§ Sir Anthony Meyer (Flint, West)It is always difficult to argue for the general rather than for any particular interests, and it is always difficult to argue for long-term advantages rather than short-term ones, even in this House, where we should be able to consider the general interest above all. I find that very sad.
I am sorry that my hon. Friend the Member for Newcastle-upon-Tyne, North (Sir W. Elliott) cannot remain long enough to intervene in this debate and expose the extraordinary partiality with which the hon. Member for Bradford, South (Mr. Torney) attempted to suggest that the workings of the common agricultural policy operate solely to the disadvantage of this country. I do not have my hon. Friend's expertise, and I do not propose to engage the hon. Gentleman in that argument.
As I understand it—I should be glad to be corrected by my hon. Friend—the CAP has always been considered to be, on balance, part of the price that this country had to pay to participate in the European Community. We always recognised that it was a policy that was not made originally with our interests in mind, and that we therefore had the uphill task of trying to adapt it in order for it to be less disadvantageous to us.
My right hon. Friend the Minister of Agriculture, Fisheries and Food has had extraordinary success in his persistent, dogged battle to amend the policy the better to suit our interests, a success that contrasts staggeringly with the failure of the right hon. Member for Deptford (Mr. Silkin), who set out saying that he intended to fling out of the Common Market if he could not get his way, wrongly imagining that that would strengthen his bargaining position, and discovering that in fact it stopped him from achieving 952 anything for the defence of British interests, other than striking many heroic attitudes.
As I said, it is not as easy as it should be to argue the general interest in the House. Furthermore, there is a powerful incentive to advocate impossible solutions. The hon. Member for Edinburgh, East (Mr. Strang), who opened the debate for the Opposition, advocated, with his customary skill and dialectic ingenuity, a series of impossible solutions: that we should continue to import New Zealand butter in unlimited quantities in the name of free trade, in the name of our ties—our emotional, sentimental ties—with the Commonwealth, and in the name of a lower price for our consumers; that, on those same principles, we should continue to shut out Australian coal, in the name of free trade, in the name of our Commonwealth ties, in the name of lower prices for our consumers; that, by the same token, we should shut out textile imports from the Third world, again in the name of free trade, in the name of the doctrine of trying to promote the development of the Third world, for the long-term advantage of the British economy.
§ Mr. Strang rose—
§ Sir A. MeyerI am reluctant to give way, because I want to be brief.
§ Mr. StrangI shall be brief, too. The hon. Gentleman may recall that I stated explicitly that I was not in favour of our industry being wiped out by New Zealand butter imports. I am in favour of a balance being struck. I supported our old arrangements for supporting our dairy industry. We can reconcile New Zealand's interests with our own, just as we can reconcile the interests of our own mining industry with those of the rest of the world. It would be nonsense to allow collieries to be decimated for the sake of the temporary solution of importing cheap coal. I am not advocating that we dicimate agriculture, either.
§ Sir A. MeyerThe hon. Gentleman must not emulate my hon. Friend the Member for Essex, South-East (Sir B. Braine), who has tried to make more than two speeches in the debate.
The plain fact is that the Labour Party demands the freedom to export our goods tariff-free to Europe, which is still the largest and is now the fastest growing of 953 our export markets, without having to accept in exchange any industrial goods from Europe. It is not quite the nonsense rhyme that we used to have from the Opposition. In the old days it used to be that they were all in favour of free trade with Europe in industrial goods, as long as we did not have to have any free trade in agricultural goods or take part in the CAP. The new nonsense rhyme at least has the merit of being transparent to even the veriest infant as being impossible.
The truth is that the Labour Party wants to wreck the EEC, or at any rate to make it impossible for Britain to remain within it.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)Order. The hon. Gentleman is going a little wide, when we are supposed to be discussing New Zealand butter.
§ Sir A. MeyerI am grateful to you, Mr. Deputy Speaker, for taking me on to my next sentence, which is a reference to New Zealand and its problems.
All hon. Members wish New Zealand well. We were all very impressed by the speech of my hon. Friend the Member for Enfield, North (Mr. Eggar), with his close personal knowledge of the matter, with his knowledge both of the problems facing New Zealand and of the vital importance for this country of remaining a member of the EEC and playing an active part in it. But we in this country face the necessity of making painful changes. The events of the past few weeks have shown just how painful those changes will be, as one after another of our basic industries ceases to be competitive in world markets.
New Zealand faces a similar problem of adaptation of its principal industry.
§ Sir Ronald Bell rose—
§ Sir A. MeyerI shall not give way any more, because to do so would only spin out my speech. I question how far we are morally obliged—we are certainly not legally obliged—to give priority to the problems of New Zealand in this regard over our own.
My hon. Friend the Minister of State said that cutting New Zealand's supplies 954 of butter out of the EEC altogether would do nothing to solve the problems of surplus dairy products in Europe. I agree. I am sure that my hon. Friend is right, but it is certainly not the view of dairy farmers in my constituency, who, by and large, are happy that New Zealand lamb should continue to come into this country but would be delighted if a way could be found of sharply reducing the amount of New Zealand butter coming in. I do not necessarily endorse that view, but I am bound to record it as being the view of dairy farmers in my constituency.
As a background to this debate—perhaps it is really a foreground, because in a sense the debate has been overtaken by it—there is the agreement reached yesterday by my right hon. Friend the Minister, an agreement which the right hon. Member for Battersea, North (Mr. Jay) would have us reject on the ground that it somehow infringes parliamentary procedures. I am sure that we do well to be jealous of our procedures, but we should not allow them to stand in the way of the national interest, particularly when the national interest coincides with the interests of New Zealand.
My right hon. Friend made the position plain yesterday in reply to questions:
As I made clear in my statement, New Zealand Government officials were present in Luxembourg and we were in close consultation with them throughout. It was their wish that we should agree to this arrangement.
§ Mr. JayDoes the hon. Gentleman agree that whatever the national interest it would have been more sensible to have the debate here one or two days before the debate in Brussels, and not afterwards?
§ Sir A. MeyerI most certainly do not agree. I continue to quote from what my right hon. Friend said:
I think that, on reflection, the hon. Gentleman will agree that it would have been wrong had I left the position uncertain until a later time when other countries could come back and object. I did what I did in the in-interests of… New Zealand".— [Official Report, 24 July 1980; Vol. 989, c. 787-96.]The agreement that was reached was under fire—of course it was—from dairy interests in Continental countries which were cross that so much had been secured for New Zealand. It would have been crazy for my right hon. Friend to reject so satisfactory an offer. I congratulate 955 him on the boldness and decision that he showed. All that must be a matter of balance—
§ Mr. Jay rose—
§ Sir A. MeyerI shall not give way.
§ Sir A. MeyerI believe that the Government have the matter right with the present agreement. The balance must be an equilibrium of forces. Because the forces deployed so far in the debate—including even my hon. Friend the Member for Enfield, North—have urged the Government to fight for even more generous access to the European market for New Zealand butter. I must, of necessity, intervene on the other side and tell my hon. Friend the Minister that he will have my support, and the support of the Conservative Party, if he decides that he must preserve at least as much elbow room in the negotiations as he has managed to secure so far.
The difficulty is to argue the general rather than the particular. Quite clearly, Mr. Deputy Speaker, you would call me to order if I were to say more than one sentence in support of the general interest, but in a debate on one aspect of agricultural policy it is not easy to make it plain that the continuing general interest of Britain—on political grounds, general economic grounds and on the ground of Britain's long-term interests—is that we should remain an active participating member of the EEC. That necessarily entails disadvantages in certain sectors. The EEC is an arrangement whereby some countries have to forfeit some of their national interests. We see the French pursuing their national interests with the same narrow-minded determination to secure short-term advantage that we see consistently displayed by Opposition Members on each and every occasion.
It is for the Government to make the general interest prevail, whether it be on butter, on the common agricultural policy or on Britain's attitude towards the European Community, of which we are, and will remain, a member.
§ Mr. Ron Leighton (Newham, North-East)In considering the matter of New Zealand butter I am driven to the conclusion that some of the most objectionable and unpalatable consequences of our membership of the EEC are the divisions that it is causing within the Commonwealth, and the damage that it is doing to Commonwealth trade. The hon. Member for Essex, South-East (Sir B. Braine), whose constituent I once was, referred to his connection with the Commonwealth Producers Organisation. As the hon. and learned Member for Beaconsfield (Sir R. Bell) said, we are not discussing Australia today, but I wonder what the hon. Member for Essex, South-East thinks about the supplies of butter, cheese, sugar, fruit—both fresh and canned—beef and wheat from Australia that have been virtually phased out
Because of the proposed sheepmeat regime we understand that the Australians propose to replace £ 500 million-worth of exports from the EEC, most of which come from Britain. We face a possible trade war between Australia and Britain as a result of our membership of the EEC. I shall not pursue that point further because we are primarily considering New Zealand and the damage to our trade with that country.
If the New Zealanders have a product of good quality and the right price, which they want to sell and we want to buy, I do not understand why any extraneous agency should intervene, interfere and tell us that we cannot conduct that trade. As has been said, it is a perfect example of mutually beneficial international trade. If the purpose of international trade is to allow countries to specialise, to encourage countries to do what they do best, to lead to an international division of labour, surely that is the best example that can be quoted.
New Zealand has by far the most efficient dairy industry in the world. We are helping to strangle it. It is blessed by the right climate and terrain, and it has abundant land. The country is ideal for grassland farming. It can send butter across the ocean to Britain at half the price that it is produced here. In return, it takes our manufactured goods; it will take fewer in future. We also gain from shipping and insurance. All that is being seriously damaged.
957 The figures are not in dispute. In 1973 New Zealand sent us 165,000 tonnes. This year, it will be 95,000 tonnes. That beautiful trade has been virtually cut in half. In 1977 New Zealand sent us 65,500 tonnes of cheese. That was whittled down to nothing for two years. As a result of the GATT negotiations it will be less than 10,000 tonnes this year. That creates a problem for New Zealand. The milk equivalent for the production of 55,000 tonnes of butter and 65,000 tonnes of cheese has to go somewhere. Where will it go? Will the New Zealanders have to slaughter their dairy herds?
The stark truth is that only one part of the world is willing to take those dairy supplies—the Soviet Union. I understand that the New Zealanders are holding back from that because of the international position, but, inevitably, they will be driven increasingly to dependence upon the Eastern bloc. I do not know whether that pleases the Conservative Party. New Zealand is being shut out of our markets and those of Western Europe, and there is nowhere else for it to go.
The obscene levy on New Zealand butter to increase the price—to the consumer, not to New Zealand—is currently about 60 per cent. of the landed price. What nonsense that is. We know that the butter comes in at half the price of the minimum selling price on the Continent. As the Minister pointed out, hitherto the levy was hot a fixed quantity. It was set in advance in an unpredictable market. Quite often the EEC over-estimated the levy. As a result, New Zealand's trade in butter has often been uneconomic. That is why it has often failed to fulfil even its existing quota—not because it could not physically supply, but because it was losing money on the trade. New Zealand could physically send us 170,000 tonnes, or even 200,000 tonnes, if we were willing to allow it, but instead, the proposal before us is that we should cut the trade by 20,000 tonnes.
I hope that no Minister will claim that the New Zealand Government are enthusiastic about that. We have heard that they have agreed to it. Let us say rather that they acquiesce in it. The New Zealand Government were negotiating against a time limit, they were forced 958 into a corner and they were beaten and intimidated. They played the game and agreed to the terms, but let no one suggest that they agreed enthusiastically. They do not like it—they are opposed to it—but they have been forced to agree.
It is a favourite negotiating tactic of the French, is it not, to set a time limit? They are doing that on fish. I am afraid that we shall have a similar sell-out on fish.
§ Mr. DykesWill the hon. Member accept that after the Minister's words yesterday the Opposition spokesman did not refute the assertion that the New Zealanders had accepted the agreement. He simply asked questions about it; he did not say that it was unacceptable to New Zealand.
§ Mr. LeightonWhen superior force is brought to bear on a small country, it often gives way. Does the hon. Member really think that the New Zealanders are happy or enthusiastic about this agreement, that they like to have their quotas cut by 20,000 tonnes? Does he not think that they would like to trade freely with us? Certainly that is the information that I have received from my talks with New Zealanders.
This agreement is. of course, for one year only. What happens then? I hope that eventually this country will come to its senses and we shall succeed in extricating ourselves from this lunacy. I hope that we can then get back to a sensible arrangement with our New Zealand brothers. But in the interim, although 90,000 tonnes is far too low, I hope that the Government will give an assurance that they will stick to that figure virtually throughout the foreseeable future.
Can we rely on the Government? I am not speaking so much to the Minister of State who is on the Front Bench now, but I have the gravest suspicions about his right hon. Friend the Minister of Agriculture. We have heard him repeatedly give assurances from the Dispatch Box, particularly to the hon. Member for Holland with Boston (Mr. Body) that he would not agree to increasing the prices for those goods that are in structural surplus. Those were clear unambiguous statements—absolutely firm assurances. He gave them two years running and two years running he reneged.
959 Can we believe anything that he says? Has he any credibility in the House? Have the Government any credibility at all over the CAP? They are certainly not reforming it. If they were to give way further and go below this low figure of 90,000 tonnes, they would never be forgiven.
The EEC does not give a tuppenny damn about New Zealand. It does not give a row of beans. When a few of us had the chance to go to Luxembourg and Brussels a few days ago, I sat next to a senior Commission official, a splendid fellow of Dutch origin. We discussed matters in a very convivial manner. He said "The arrangements for New Zealand come to an end in 1980." I said" Oh yes, but of course you will negotiate a follow-on agreement." He said "Why? Why should we? The agreement was to end in 1980." I was rather shocked and I did not know whether he was joking or not. He went on "They send their butter across the ocean and land it at half the price. Therefore, it must be subsidised; it is being dumped. Why should we have dumped butter?" I then asked what he know about New Zealand. His answers showed that he did not have a clue. I asked him what he thought the population of New Zealand was. He said "Ten million." I asked him where he went to school and he told me that he went to the University of Amsterdam. I suggested that he had never learnt geography.
§ Mr. Buchanan-SmithIt might help the House if the hon. Member would give us the name and the position of that official in the Commission.
§ Mr. LeightonYes. Yesterday I met some people from the New Zealand High Commission. I had asked this gentleman to write his name and address on a piece of paper so that the facts about New Zealand could be sent to him. I have given that piece of paper to one of the trade attaches at the New Zealand High Commission. I cannot remember the man's name offhand, but if the Minister wishes I shall get it and let him have it. But I have ensured, via the New Zealand High Commission, that the education of this high official is taken further.
I then said to this official "I am afraid that you are wrong; the population is not 10 million. Have another estimate." He then guessed 15 million and then 20 million. My point is that these people 960 do not worry about New Zealand at all. I have no faith in the Commission. I want to have faith in the British Government, and I have some faith in the Minister of State. But after the promises which have been betrayed by his right hon. Friend, I have my doubts.
§ Mr. Buchanan-SmithI thoroughly commend the efforts that the hon. Member has made to educate this member of the Commission. It would be interesting if he could give us the position of the official so that we can know what influence he has on policy in relation to New Zealand. I should be very surprised to find that he influenced anything.
§ Mr. LeightonI shall certainly respond to that. I shall get the information and give it to you as soon as possible. I shall send you his particulars and I hope that you can send him some information the next time that you are over there. I hope that you can take him by the hand and continue his education.
§ Mr. LeightonI apologise, Mr. Deputy Speaker.
§ Mr. DykesWill the hon. Gentleman give way? I was sitting at the same table with him and the Commission official.
§ Mr. LeightonThe hon. Member was sitting up the other end of the table and he never heard our conversation; nevertheless, I shall give way.
§ Mr. DykesI think it will help the House to record that the official concerned was a Dutch member of the Court of Accounts, concerned with the Community accounts and that therefore he would not necessarily be an expert on the population of New Zealand. Equally, I could ask the hon Member if he is so well informed about the population of Martinique.
§ Mr. LeightonI shall treat that interesting intervention in the manner that it deserves. This agreement that we have arrived at is not even second-best; it is third-best. I hope that when it runs out the Government will stick to it for the foreseeable future and ensure that in the horrible Euro-jargon, there is no more "digressivity" over New Zealand—that is what they call it.
961 The Europeans talk about a review if consumption declines. Of course consumption will decline, primarily because of price. I suppose that we shall hear from some Conservative Members that people are not eating butter because it gives them high cholesterol, or something like that, but I am sure that the vast majority of people—certainly my working-class constituents—look at the price of butter and compare it with the price of margarine. Perhaps in the reaches of other suburban areas they worry about cholesterol, but in my area they worry about price.
I hope that as consumption declines there will be no question of the United Kingdom Government giving way and saying that the New Zealand figure must be reduced. The cause of the trouble in dairy products is not New Zealand. According to document No. 8832, in 1978 EEC production was 156,000 tonnes more than the year before, and consumption in the same period was 80,000 tonnes less. That is the problem. The high price regime in the CAP has caused all the trouble. Then the butter is exported with a subsidy or restitution of 70 per cent. of the value. That crazy arrangement is the real cause of the problem entrenched by this agreement. We want a firm guarantee that after this year's agreement is out of the way New Zealand can rely on 90,000 tonnes in perpetuity.
§ Mr. Richard Body (Holland with Boston)It may be out of order, but I am glad that the hon. Member for Newham, North-East, (Mr. Leighton) referred to Australia. It needs to be recorded yet again that no less than one-third of the efficient dairy producers of Australia have gone out of business. In the words of the Prime Minister of Australia, they have been driven out of business because of our membership of the EEC. It is shameful that we have overlooked the interests of Australia.
We have struggled hard in the last few days to look after the interests of New Zealand. As the hon. Member for Newham, North-East emphasised, the agreement is for only one year. There can be no doubt that we shall be debating the issue again in 12 months' time, if not before. In 12 months' time the prob- 962 lem will be worse for New Zealand, because the production of dairy products in the Community will have increased yet again.
I should like to refer to the report of the Select Committee on agriculture, published yesterday. We have spent many hours in the Select Committee considering the problems of surplus production. We recognise the undoubted fact that surplus production will increase and not diminish. The potential for increased production of dairy products in the Community is phenomenal. The dairy industry in the Community is where ours was 30 years ago. Just as ours has been able to expand considerably over the last 30 years, so can the Community's in the next decade.
The Select Committee report, in paragraph 23, says:
No witness dissented from the view of the Centre for Agricultural Strategy that overproduction is increasing, or from Professor Benyon's grim prophecy that unless something is done about it ' the present structural surpluses will pale into insignificance during the '80s.'Those surpluses are now costing us more than £ 2,000 million. The amount could be doubled if we do not take forthright action. As the hon. Member for Newham, North-East indicated, there would have to be unilateral action. We shall not curb this excess production and these mountains, which get larger year by year, by the more modest proposals set out in the Select Committee report, supported, I understand, by the hon. Member for Edinburgh, East (Mr. Strang), on behalf of the Opposition. As production increases, and as we dump still more on the world market, so will Australian farmers increasingly go out of business. The same consideration applies to New Zealand. That must be self-evident. We in this House will bear a heavy responsibility if we allow this situation to continue, as I fear will happen.The debate would not be necessary if it were not for the single fact that British people like to buy New Zealand butter. They like to eat it. What we are saying, and what the Community is saying, is that they shall not eat—that they shall not have the freedom to buy what they want to eat. The agreement just reached means, in effect, that the British people will not be allowed to eat their 20,000 963 tonnes of butter, and that they are to eat less. I do not see how hon. Members can justify this situation to their constituents. My hon. Friend the Member for Harrow, East (Mr. Dykes), who is poised to catch your eye, Mr. Deputy Speaker, will no doubt have persuasive arguments to put forward to his constituents to explain why they should not be allowed this modest freedom to buy the butter that they wish to buy. I hope that he will touch on this matter in his speech. I am opposed to quotas. Any quota is an assault on the essential freedom of the consumer to buy what he wishes.
There is no doubt that the New Zealanders would like to send us much more butter. The hon. Member for New-ham, North-East was right to express disquiet on their behalf. I should like to refer again to the Select Committee report. I moved an amendment that did not quite secure the necessary majority. I am glad to see that the hon. Member for Durham (Mr. Hughes) is present. He voted against it, and the amendment did not get through. The amendment sought to make the point that New Zealand, as its high commissioner told the Committee, would be delighted to send us whatever quantities of butter and cheese we desired. His country would gladly go back to sending us as much butter and cheese as we used to be able to buy from New Zealand a few years ago. The high commissioner went on to say that the restrictions existing in this country, through our membership of the Community, have caused New Zealand farmers to cut back their production. Is it not amazing that in a world where, we are told, there is a shortage of food, we should be cutting back on production in countries that can produce it more cheaply?
§ Mr. SpearingIt is evil.
§ Mr. LeightonImmoral.
§ Mr. BodyAnd immoral. The high commissioner for New Zealand explained that because of the restrictions imposed on New Zealand, it would take some time—perhaps two or three years—before New Zealand farmers would be able to expand production to enable them to meet the demand that would come from this country were we allowed once more to buy 964 whatever amounts of food we wished from New Zealand, given the removal of quotas and levies that have the effect of roughly doubling the price of butter that the housewife in this country wishes to buy from New Zealand. I have no doubt that my hon. Friend the Member for Harrow, East has plausible reasons for doubling the price of butter for housewives in his constituency.
This debate would be unnecessary were it not for the fact that the housewives of South Brent, East Harrow and elsewhere wish to buy this butter. We are standing in the way of willing buyers and willing sellers. We are saying to New Zealand, which is willing, in the words of the high commissioner, to sell us all the butter and cheese that we want, "We do not want your nasty cheap butter and cheese. We want the expensive kinds. We want more of the kind that the housewife would not prefer, given freedom of choice".
We are saying the same to the housewife. It is difficult to see how hon. Members can explain to their constituents that this simple freedom should be taken away from them. I would have thought that British people, listening to the debate and reflecting on how we are seeking to stand between them and the New Zealanders, would shake their heads and wonder what possible arguments we can advance for this nonsense.
We have heard already, but it merits repetition, that we are still exporting to New Zealand, in the form of manufactured goods, more than we import from New Zealand. The New Zealanders have a balance of payments deficit with us. They have warned us that this is serious for them and that if it persists they may have to take steps against our trade with them. This will inhibit our trade, and that cannot be for the welfare of the British people.
We know from the figures that have been published that every week we are paying considerably more than we need for food. The figures that came out recently indicated that the average family was now paying about £5 a week more than they need. That means £5 a week less to spend on other items. It means less to spend on holidays and all those manufactured items that go towards improving the standard of living. However, those same manufactured items also go towards maintaining full employment.
965 If every family had £5 a week more to spend I wonder whether there would be the level of unemployment that we see today.
We are concerned, therefore, not just with the welfare of New Zealand. It may be that on this occasion New Zealand farmers will say "We accept this. We shall have more money in our pockets for sending less butter to the United Kingdom. "That might be to their short-term advantage, but it is not to the advantage of the British people. Even the charming advocacy of my hon. Friend the Member for Harrow, East, whose contributions to these debates I always listen to with fascination, will not persuade me that what we are doing by imposing quotas of this kind is right for the British people.
§ 12.2 pm
§ Mr. David Stoddart (Swindon)The hon. Member for Holland with Boston (Mr. Body) was right to say that the restriction of butter production where it can be produced most cheaply is an evil. It is an evil when there are so many starving people in the world, and it is an evil when imports on an unrestricted basis or even on a higher basis than that proposed would help to reduce our food costs and therefore improve the economy generally and assist in getting down the level of unemployment.
This debate has been interesting, in that we have heard comments from rather unusual quarters. Those people who were so vociferous at the time we entered the EEC have now understood exactly what it means for the Commonwealth, and especially for New Zealand. They now realise that the copper-bottomed guarantees that were given at the time are worthless.
The hon. Member for Essex, South-East (Sir B. Braine) is not in the Chamber at present, unfortunately, but I must refer to some comments of his. I do not need to be lectured by him about the contribution that New Zealand made to this country during the last war, or about the amazing and valuable contribution that both New Zealand and Australia made to post-war reconstruction. I hate to think what would have happened to our food supplies in the immediate postwar period but for the co-operation and 966 generosity of our Commonwealth friends in Australia, New Zealand and Canada.
The new agreement that is proposed is completely unsatisfactory. The assurances that were given about the continued access of New Zealand dairy produce have been reneged upon. In my view the position put to us this morning is good neither for New Zealand nor for this country. There is no guarantee in the Opposition amendment—certainly there is not in the motion—that the 90,000 tonnes quota will continue after 1984. We do not know what the figure will be after 1984. It is true that the amendment asks for guarantees about the permanent access of New Zealand butter, but at what rate is not stated. That is not good enough, and I hope that the House will be highly suspicious of these proposals.
My constituents pack New Zealand Anchor butter. If the quota amount is reduced very much further than the 90,000 tonnes my constituency will lose a number of jobs, and that concerns me greatly. It will mean a considerable addition to Swindon's unemployment. We have lost enough jobs already. I do not want to see any more go.
The Minister has been congratulated by one or two Government supporters, but in my view he is a soft touch. He has already given way on farm prices, and he is about to sell our fishermen down the river. The Minister is an india-rubber man, whom the French can twist round their little fingers at will. If this quota is agreed it will not be long before our so-called partners are hammering at the door for further reductions in the agreed quota of New Zealand butter.
New Zealand will be kept in a state of permanent suspense. It is no good hon. Members prating on about New Zealand's having agreed to the new arrangements. She has done so because she has a pistol at her head. The New Zealanders are agreeing to these arrangements not because they think that they are good for the New Zealand economy and not because they trust Government guarantees about the future but because a pistol is being held at their heads and they are at the mercy of the European Commission.
§ Sir Anthony MeyerIt is in our national interest.
§ Mr. StoddartThe hon. Member for Flint, West (Sir A. Meyer) is one of the Euro-maniacs about whom we talk from time to time. He has made it quite clear that the interests of New Zealand and the best interests of this country take second place to his desire for a federated State of Europe. I can assure him that the British electorate did not vote for that in the referendum and that they would not tolerate it, even though he seems to believe that they would.
The problem of surplus butter in the Community is caused not by New Zealand but by the crazy common agricultural policy to which we subscribed when we went into the Common Market and which hon. Members such as the hon. Member for Essex, South-East knew about when they voted to go in.
The Community is producing more and more butter, which cannot be sold because the price is far too high. The New Zealanders can produce a packet of butter at roughly half the price of a similar pack produced in the Community. There is a huge surplus, but it cannot be sold at a cheaper price other than to the Russians. Cutting the New Zealand quota will neither affect nor help the problem that the Community has created for itself.
Before we entered this disreputable organisation we had a perfectly good arrangement with the New Zealanders, whereby our farmers were given a reasonable living. They were protected and New Zealand interests were safeguarded at the same time as the British housewife had cheap butter and cheese.
We need to continue to supply our goods to New Zealand. It has already been said that New Zealand is a good market for our products. It is therefore essential that at a time of recession, with 1.9 million people on the dole, we continue to have access to that market and to improve our position in it. The more that the EEC restricts the access of New Zealand and Australian products to Britain and the rest of the Community and competes in their markets by dumping surplus dairy products the less New Zealand and Australia are able to take our manufactured goods from us.
It is essential for our survival that we continue to allow New Zealand products into this country in large quantities. What is more, New Zealand is expected to 968 contribute to the stability of the Asian Pacific area. But the weaker New Zealand becomes, economically, the less able she is to perform that role. Community documents comment upon that fact.
There are some lessons to be drawn from the Australian situation. Not content with smashing the Australian beef trade, the EEC now wishes to make inroads into the Australian lamb trade. However, the EEC has come up against stiff opposition from Australia and has discovered that that country can be a tough customer. Australia has some pretty good bargaining counters, including 17 per cent. of the world's uranium supplies.
Mr. Gundelach recently visited the Australians, no doubt expecting to be able to browbeat them into submission. I am glad to say that that European mountebank came away with a bloody nose. That is precisely what the EEC Commissioners are—complete mountebanks. It was made quite clear to Mr. Gundelach by the Australians that if the Europeans did not watch it they would come off badly. Mr. Gundelach apparently said that he had never been treated in that way before. He had never been spoken to so forthrightly.
It is about time that these overpaid, vain, bureaucratic bully-boys were put in their place and it is a great pity that British Ministers do not do more of what the Australians did. Unfortunately, all that our Ministers seem to do is to dance to the EEC tune, like a bunch of weak-minded flunkeys.
Perhaps, in time, Australia and New Zealand will so arrange their affairs as to be able to make a complete break with this country, which has so disgracefully ratted on them. They may be able to distance themselves completely from the EEC. The loss will not be theirs but ours.
The Government are supposed to believe in free market forces, yet they have agreed to a completely rigged market in food which oppresses consumers in this country as well as our Commonwealth kith and kin. New Zealand can supply butter at roughly half the present price in the shops, but she is not allowed to do so. Instead, a 60 per cent. tax is put on that butter. That tax is handed over to the Brussels bureaucrats to squander on themselves and on other minutiae.
969 That means that prices are increased for the British housewife.
The British housewife wishes to continue to buy Anchor butter, much of which is packed in my constituency, but her opportunity to do that will be reduced by this agreement. I do not think that I can divide the House on this issue, but I am bitterly disappointed at this new sellout. I am disillusioned that we have a Government and an Establishment in this country who not only sell Britain short but treacherously betray our Commonwealth friends. We have been doing that for a long time, and it is about time that we brought it to an end, in the interests of this country, of our Commonwealth friends, and of the British consumer.
§ Mr. Hugh Dykes (Harrow, East)Once again we have had the usual xenophobic tirade from the hon. Member for Swindon (Mr. Stoddart). His remarks were rather like the comments of the hon. Member for Bradford, South (Mr. Torney), in that they revealed a deep hatred of foreigners as well as of the European Community. Sensible, pragmatic people in this country find that disturbing.
§ Mr. StoddartWill the hon. Gentleman give way?
§ Mr. StoddartThe hon. Gentleman has made an accusation.
§ Mr. DykesVery well, I shall give way in a moment. First, I must say that it seems a pity that on the Opposition Benches the small corpus of ferocious anti-Marketeers continue to use our debates to go back to fundamental first principles in an attempt to revive the central issues which arose when we first became members of the Community. Understandably, though I believe that it is an imposition upon the House, they oblige us, as balanced supporters of the Community, who like, none the less, to criticise many aspects of Community policy, without reaching the absurd existentialist conclusions reached by Opposition antis and by some of my hon. Friends, to listen to them. We are prevented from sensible discussion, because the whole matter was distorted in the original debate. I greatly regret that.
§ Mr. StoddartI am not xenophobic, nor do I hate foreigners. The hon. Gentleman should understand that I believe in world-wide co-operation. I do not believe that such co-operation can be assisted by our ignoring the best economic interests of this country.
§ Mr. DykesIn that case, I hope that the hon. Member will be enthusiastically in favour of increasing textile imports from low-cost countries without complaint, which, of course, we never get from Labour Members.
This discussion once again shows the distortions and contradictions that continually arise in our debates. I think that that does the House a lot of harm, because the scrutiny process should be much more objective. It should be based on fact rather than on the hysterical prejudices of the Opposition.
The expression on your face, Mr. Deputy Speaker, indicates that I shall stray out of order if I continue in this vein. However, I suppose that 1 can, none the less, provide some immediate background to the debate without going out of order.
A compendium of some of the impressions that we have gained from scrutiny debates in the last few months would be that these horned foreigners with devils' tails are always cheating this country, doing us down, and are now going to new sinister depths of conspiracy and hostile action against the United Kingdom. I quote from a recent article:
The EEC is really a plot by the Pope to get the French to put fluoride in our water, and so sap our national morale and will. The French are going to introduce a new EEC law to make us install compulsory bidets in British bathrooms. The Germans and the Dutch are secretly buying up all our farmland. The Commission want to revive the old directive on lawnmowers".
§ What a terrible plot!
§ Mr. JayOn a point of order, Mr. Deputy Speaker. In a debate on New Zealand butter, is it really in order for the hon. Member for Harrow, East (Mr. Dykes) to read out a lot of nonsense that has nothing to do with New Zealand or butter?
Mr. Deputy SpeakerI think that the hon. Member for Harrow, East (Mr. Dykes) is fully aware that he is out of order and is bringing himself back into order very speedily.
§ Mr. DykesI am bringing myself back into order with extreme celerity, Mr. Deputy Speaker. I was quoting from that source to demonstrate precisely the nonsense referred to by the right hon. Member for Battersea, North (Mr. Jay). It does a continued disservice to the House when Opposition Members continue in that way.
I, too, have reservations about the position of New Zealand in the future. I am worried about many aspects. That should not mean that we should do a disservice to the House and the country by indulging in gross denunciatory politics and criticising everything in the Community as if none of it were any good.
As a result of the development side of the CAP, Britain's dairy industry has derived considerable funds for development and expansion. At the margin, the whole of the dairy industry in Britain has been financed out of Community money. The dairy industry repeatedly has paid tribute to that. That reveals the hypocrisy and contradiction in the arguments which refuse to acknowledge the realities of the conflicts which must be ironed out, or at least reduced, in the inevitable political and economic compromise which is the sum total of interaction between nations—be they European, members of the old Commonwealth or in the newly emergent Third world.
Mr. Deputy SpeakerOrder. Will the hon. Gentleman now begin the New Zealand butter part of his speech?
§ Mr. DykesOur dairy industry is most anxious for a reduction in New Zealand supplies. That is understandable. That does not mean that the Government should allow it to happen. The first agreed transitional period has come to an end. I do not share the view, but some people—and I do not wish to be too critical of them—question whether the New Zealanders themselves have done enough to adapt to new world conditions and new markets. I pay obeisance to the fact that New Zealand is a small country which, by reason of its special characteristics in history, needs special help. Many people in the other member States understandably regard New Zealand as a remote country, unconnected with them, in the same way as we regard the French overseas territories in the Caribbean. We often grumble when special aid is given 972 to them. There is a lack of understanding and failure to see the other country's view.
When Britain joined the Community, a striking agreement was reached to guarantee access and to form a quota system for New Zealand butter and other products at a level which, in spite of the initial New Zealand anxiety, was later regarded as acceptable by New Zealand representatives. All parties agreed that it was reasonable, at the end of that seven-year transitional period, to negotiate longer-term arrangements which perhaps would not be as generous because the European dairy industries were building up. Why should it be said that a New Zealand surplus is heroic and virtuous and that other surpluses are wicked? All surpluses are awkward. We must balance price, quantity and availability. It is unpalatable for Opposition Members to accept—
§ Mr. LeightonWill the hon. Gentleman give way?
§ Mr. DykesI want to develop my theme. I do not want to speak for too long. Butter suplies have declined relatively and absolutely in Britain and elsewhere, not only because of the price increase. We no longer live in a world of cheap food.
§ Mr. LeightonGive way.
§ Mr. DykesI shall not give way now. Even in quantitative terms the hon. Gentleman need not worry too much, because more hon. Members wish in the Chamber now to deploy the anti-EEC arguments than to draw a balanced, objective picture.
Another reason for the fall in the consumption of butter is that many people have come to the conclusion that eating excessive quantities of butter, as they used to, might be a health hazard. I put it no higher than that. There is a fear about the effects of building up too much cholesterol in the body. That is one reason why people have switched. [Hon. Members: "Rubbish."] It is no earthly good our latter-day nineteenth century nationalists opposite denying the evidence. A huge campaign has been mounted on television and elsewhere in favour of Flora and other margarines. There has been an increase in the consumption of 973 such products in place of butter. The dairy industry should bear that in mind.
I welcome the negotiation of the agreement in Brussels. I thank my hon. Friend the Minister of State for what he said today. Of course it is not a perfect agreement, nor is it supremely satisfactory, for New Zealand. After weighing up all the difficulties and the pros and cons many people more sagacious than Opposition Members will say that it is not bad at all for New Zealand in the circumstances.
I am particularly anxious that New Zealand should have a continuing arrangement in the Community beyond 1984. One of the reasons for the decline from 165,000 tonnes in recent years to the 90,000 tonnes established in the new arrangement is that there has been some switching already below the old quota. If people in Australia regard the scene with objectivity as well as with emotion, they might consider whether they can take more New Zealand butter, since they are so much closer to New Zealand. However, Australia wishes to expand its own dairy industry. There is nothing wicked or conspiratorial in that. In all the circumstances, the Commission has produced a fair and balanced deal.
Some people will wish to ensure that New Zealand develops other activities and products, even other agricultural products. Many people in New Zealand recognise that the country must spread its trade more with other territories rather than rely on an old-fashioned dependence on the United Kingdom. In the harsh world of international trade, New Zealand, like other countries, must look elsewhere for new markets with new products. I do not put it stronger than that. The whole House is imbued with a profound sympathy for New Zealand and a profound gratitude for what that country did for Britain and the allies during the war.
These things go both ways. Even old historical friends do not have an automatic right to a frozen-in-aspic position in international trade, guaranteed for all time at whatever level. The price increase has been welcomed by New Zealand. It is in many ways a sufficient counterweight to the fact that the quota has been reduced. That shows that the European Commission, the Community 974 and our representatives are far more internationalist and outward looking than hon. Members who take a narrow-minded and bigoted view of our role as a modern country in Europe. It shows in the whole of the Community effort to build up more trade and aid with the Third world. Britain is fully participating in that effort, not to the exclusion of national aid efforts. That effort is a useful international supplement to the national effort. I hope that that will result in surpluses of dairy products going to such countries in larger quantities.
Let us be balanced and restrained, but let us, with justification, criticise aspects of the Community, as we do national Governments and the House of Commons. Let us not draw absurd conclusions relating to abolition or withdrawal. Everybody in the Community agrees that the CAP requires a major and tangible adjustment. That is bound to happen, because the VAT equivalent figure is now building up. It is already 0.95 per cent. in the latest budget proposals.
I think that there will be a considerable recasting of many aspects of the agreement within the common agricultural policy which produce some of these surpluses. The dairy surpluses are the worst, but do not let us think for a moment that this country does not contribute to them. There are people in this country who believe that British agriculture is still the most efficient in the Community, although some research figures now question that and suggest that Belgium is perhaps overtaking us in terms of output per unit. However, assuming that that is still the general position, those people would like to see the United Kingdom achieve self-sufficiency in agricultural products, as the Germans have already done. We also know that the French are exporters.
That will change the whole position and will cause difficulties in the future for other outside exporters such as New Zealand. However, given good will and co-operative, constructive behaviour between the Community and countries such as New Zealand, I believe that we shall reach agreement beyond 1984. It should be remembered that when we first joined the Community many pessimists said that it would be impossible to negotiate a proper agreement with New Zealand. It 975 is a tribute to the EEC that that was possible. New Zealand is a country that is remote from the original Six, and it is understandable that there was some hesitation when the idea of a perpetual structure of protection was first enunciated by some ferocious anti-Marketeers in this country, because it was felt that that was totally unrealistic.
I welcome this agreement, although 1, too, am sorry that the House was not able to debate it before it was concluded. However, I understand the circumstances surrounding it, and I believe that it was necessary to reassure the New Zealand representatives in Brussels by coming to that agreement in order to achieve a quota figure for 1980-84. I am glad that that was done, and I again thank the Minister.
§ Mr. Mark Hughes (Durham)I should like to start by comparing conditions in 1975 with what they look like being this year. In 1975, total United Kingdom consumption of butter by humans, and also in all sorts of manufacturing ways, was about 510,000 tonnes, of which home production represented less than 9 per cent.—about 40,000 tonnes. This year, consumption has dropped to about 310,000 tonnes. Domestic production now accounts for more than 50 per cent. of potential consumption. Therefore, between 1975 and 1980 production in this country has risen from about 40,000 tonnes to more than 160,000 tonnes.
That is the first and major change. Our own domestic producers, cushioned by the over-high price within the CAP, have expanded their production massively. They have now invested large sums in creameries and butter manufacturing capacity. It was suggested earlier that we should allow twice as much butter to come in from New Zealand. That is worrying, because it would mean that we would import 180,000 tonnes from New Zealand, produce 170,000 tonnes ourselves, and consume only 300,000 tonnes at present price levels. Alternatively, one would have to drop the price levels, but if one did that one would have to spend money to support the British farmer and the butter manufacturers at the same time. Therefore, problems arise.
Another curious aspect of the situation in 1980 is that Britain is now a net 976 exporter of butter to France. More British butter is sold to France than French butter is sold to us, which does not greatly delight the French agriculture press or interests. Through intervention and by subsidised export restitutions we shall export more than 50,000 tonnes of butter this year. If we import 90,000 tonnes or 120,000 tonnes of butter from New Zealand and, with export restitutions, export 50,000 tonnes from our own country, the taxpayer and the consumer will pay doubly on that set of transactions.
The great condemnation of the present CAP arrangement is that the United Kingdom is simultaneously the largest market for New Zealand butter and one of the major competitors with New Zealand butter in Third world markets. When the New Zealanders try to sell their butter in Third world markets they find that it is British butter, subsidised by the British taxpayer and the rest of the Community, that is their major competitor. That is a silly situation to have got into.
One of the classic problems is that butter is not the same product on the Continent as it is here. To open a Community quota for New Zealand butter for direct human consumption on a Community basis is to delude ourselves, because the Community is used to a lactose butter, in which the cream is allowed to sour before it is churned. Our domestic and New Zealand butter is fresh cream butter, in which salt is used to give it longer life. Traditional German, French and Dutch butters are eaten within a short time of production. They are not long-life butters. Those butters have a different taste.
To suggest that unless there were a massive price differential the consumer on the Continent would switch readily to New Zealand butter for human consumption is improbable, to say the least. Therefore, any Community quota for New Zealand must end up in this country, unless—this is a suggestion that certain interests in this country are putting forward—part of it is earmarked for the bulk butter market within the Community, where it would receive a subsidy for manufacturing purposes. That would relieve some of the intensity of competition between our own butter manufacturers and New Zealand imports. On present trends, we 977 shall be more than 60 per cent. self-sufficient in butter within the next couple of years. Consequently, there will be problems in fitting in the New Zealand quantity.
The Dutch have strongly urged continued access to New Zealand butter, but only to the United Kingdom. They want it done on a percentage basis of our consumption rather than on a fixed quota. The same was suggested in evidence to the Select Committee, from other domestic interests. It was suggested that to give New Zealand a tonnage in absolute terms while consumption was falling would be to give it the first slice of the market, to the detriment of the domestic producer. I reject that argument. I believe that it is in the interests of New Zealand to have an absolutely fixed, guaranteed quota quantity.
That is why my name appears in support of the amendment. I hope that the Government will accept it and that they will strive rather more effectively to ensure that the arrangements introduced after 1984 are watertight. We cannot turn off New Zealand dairy products like a tap. I urge the Government carefully to consider the quota that is being earmarked for the bulk butter market within the Community.
Between 1973 and 1977 neither the New Zealand Government nor their dairy board sent their allocated quota to the United Kingdom. Every year they undersold their quota to Britain. In 1975 the quota was 152,000 tonnes. We were sent 124,000 tonnes. In that year New Zealand's share of our market was 24 per cent. Last year its share was 31.6 per cent. Its share of the British market under a much reviled arrangement has increased. I accept that it is a smaller market.
When we urge the Government to give a quantitative guarantee to New Zealand we are doing so in the knowledge that we are giving New Zealanders an advantage that we are not prepared to give to our domestic producers.
The flow of butter from New Zealand should not be too haphazard, bearing in mind its effect on prices and trade in recent years. There have been periods when there has been a low Anchor butter price, followed by huge quantities being 978 sold. That has meant that we have had to buy into intervention, which has distorted trade. In addition to the firm quota, I hope that methods can be found to even out the competition between New Zealand and butter producers in the Community.
§ Mr. Nigel Spearing (Newham, South)I start on a procedural note. The hon. Member for Enfield, North (Mr. Eggar) referred to decisions taken in this place and in Brussels. It may be that technically the House will reach a procedural decision. However, the hon. Gentleman should recognise, as should everyone else in the House and throughout the United Kingdom, that the House no longer takes decisions on these matters. Decisions are made in Brussels. Although the motion and the amendment may be agreed to, the ultimate decision will not be that of the House. It will not be that of the Minister of Agriculture, Fisheries and Food. It will be that of the Council of Ministers.
The second procedural matter that I wish to mention is that the debate is taking place following the Minister's agreement this week in Brussels. I understand the reasons that have been given. It might have been much better for the Government if the debate had taken place a week ago. If that had happened, the debate would have preceded the relevant council and the Minister would have gone to Brussels with the backing of the House.
Last Friday there was a debate on the Northern Ireland Appropriation (No. 2) Order. It would not have made much difference to the appropriations if that debate had taken place a week later, but it might have made a considerable difference to these issues if this debate had taken place a week ago. My right hon. Friend the Member for Battersea, North (Mr. Jay) made valid criticisms about the good faith of the Government in giving an assurance that unless there were exceptional circumstances there would be a debate in the House prior to the decision in Brussels. The spirit of the agreement has been breached on this occasion.
I am sorry that the Minister did not refer to the amendment. I shall be sorry if only at the end of a long debate do we hear that the Minister is prepared to 979 accept the amendment. I hope that he will accept it, but I do not see even a nod to indicate his intention.
The amendment does not go as far as many of my hon. Friends would wish. I think that some of my hon. Friends have read more into it than the words carry. It does not request the Government to ensure a permanent 90,000 tonnes quota; it merely asks them to write in that figure for 1984. The permanent access that is referred to in the amendment is not qualified by that or any other figure. We shall be back at some time conducting a similar debate and we may then have to accept much less than 90,000 tonnes for the period after 1984—perhaps for the reasons outlined by my hon. Friend the Member for Durham (Mr. Hughes), but also for reasons arising in the Community.
Perhaps the House is to some extent being misled about the future in the same way as, I charitably suspect, the hon. Member for Essex, South-East (Sir B. Braine) may have been misled about our terms of entry. Certainly that is the only construction I can put upon his speech. My evidence for this assertion comes from publications entitled "Fact Sheets on Britain and Europe" which were issued in a complete series by the Government in 1971. Fact sheet No. 5 states:
There are cases where Commonwealth countries are still greatly dependent on the UK market, and the future of New Zealand dairy exports and of sugar from the developing Commonwealth are special problems"—I stress the next few words—that are being dealt with in the negotiations between Britain and the EEC.We know that they were not dealt with—at least not satisfactorily. If they had been we would not now be having the debate. The words "are being dealt with" sought to imply that they were being dealt with satisfactorily. However, the White Paper showed clearly that there would be no guarantee after the first five years.Fact sheet No. 10 states:
Commonwealth countries are also finding new markets. Today Japan is Australia's largest export market, followed by the USA. The USA has long been Canada's most important customer. Even New Zealand, for whose dairy products we seek special arrangements, has diversified her export trade considerably. Furthermore, a strengthening of 980 Britain's economy will make her a better trading partner.That passage contains many assumptions—one of which was that joining the EEC would strengthen our economy. Even if it had, would we have been "a better trading partner" when the arrangement was that New Zealand would send us less?Many people were misled by this sort of propaganda, which was paid for by the taxpayer and issued under the imprimatur of Her Majesty's Government. I am reminded of the definition of "propaganda" given by Dr. Goebbels. He said that propaganda was not telling lies; it was telling the truth, but only that aspect of it that fitted the picture that one wished to project. I believe that much of the "information" that we have had and are still getting has not reached Dr. Goebbels' standard, because the quotations that I have given gave people the impression that everything was all right, that New Zealand was diversifying and that everything would be well.
I give the Minister a warning that I hope he will pass to the Lord Privy Seal, who, I hope, will pass it on to the news department of the Foreign Office. We hear that the Government are to start a major information programme about the EEC. I warn the Minister that if attempts are made to produce the sort of material that I have just quoted it will be shadowed and the matter will be raised repeatedly in the House. I hope that the news department of the Foreign Office will not follow the path mapped so ably by Dr. Goebbels and that if information is issued about the Common Market it will be objective and fair and will not make implications that are not borne out by the facts.
I now turn to the year 1984, which has a particular ring about it. After my comments on Eurospeak, it is appropriate that I should speak about 1984. That is the year in which this agreement runs out. As my hon. Friend the Member for Swindon (Mr. Stoddart) said, there is no guarantee of any figure after that date. My hon. Friend the Member for Durham explained why even a cautious Government may not be able to go beyond that.
Butter production in Britain has increased to nearly 60 per cent. of our consumption, at a time when demand 981 has shrunk. That is because of the obscene surpluses and financial structure of the common agricultural policy. We buy butter from New Zealand at 27p a packet, while it costs the EEC 47p a packet to produce—and there is a 7p subsidy on EEC butter to be taken into account. The EEC is spending almost £3,000 million disposing of dairy surpluses.
The report of the United Kingdom intervention board includes some extremely interesting figures, which are relevant to this debate. I referred to the subsidies paid on butter produced in the EEC. In 1979 the United Kingdom intervention board spent £ 50 million providing those subsidies. At the end of 1979 30,000 tonnes of United Kingdom butter was in intervention.
In 1979 the United Kingdom intervention board spent a total of £ 213 million assisting or suppressing the production of milk in this country. It is illogical that while part of that money was spent to ensure production of milk, more money is being spent on buying farmers out of milk production. It was stated in press reports that the Earl of Iveagh in Elvedon, Norfolk received a grant of £1 million to take his land out of milk production.
§ Mr. PavittIs it not an even greater nonsense that deliveries of milk to our doorsteps may have to stop, as UHT is forced upon us by our Common Market partners?
§ Mr. SpearingI am glad that my hon. Friend raised that point.
New Zealand is being squeezed out of a market that is not a market. The interests of almost everyone are being prejudiced by the common agricultural policy, even those of the dairy men.
Even the dairy men, who may benefit to some extent from increased butter sales, are uncertain, not only about milk deliveries but about the future of our dairy structure. Dairy farmers, despite their increased returns, are no less certain. Almost everyone loses, including the taxpayers who support the dairy surplus. The total structure of the CAP benefits no one except a few farmers on mainland Europe and the distributors. Everyone loses, and New Zealand is liable to lose most.
§ Mr. DykesWill the hon. Gentleman agree that he has just shown amazing contradiction and self-delusion? He is fair-minded and I am sure that he will agree that a little earlier he nodded vigorously when an anti-marketeer on the Conservative Benches was saying how wicked it was for us to be deprived of the opportunity of buying cheaper New Zealand butter. Then, a few moments ago, he again nodded vigorously when his hon. Friend the Member for Brent, South (Mr. Pavitt) said that cheaper UHT milk coming into this country would be an imposition on us and would deprive us of milk on the doorstep. Why not increase consumer choice by having both sources available?
§ Mr. SpearingThe hon. Gentleman should realise that a managed market can sometimes provide advantages for everybody. The previous market in butter from New Zealand, among other places, and in liquid milk in this country, provided just that advantage. In other words, an intervention in market forces can sometimes—indeed, frequently, in my opinion—provide benefits for all.
The trouble is that the managed market of the common agricultural policy does not do that; it does the opposite and harms virtually everybody—most of all, New Zealand. This House, having voted away its powers—by the votes, among others, of the hon. Members for Harrow, East (Mr. Dykes) and Essex, South-East—can do little about it.
§ Mr. Buchanan-SmithI must confess that sometimes, in debates such as this, I feel as though I have been here before. I am sure that other hon. Members must have exactly the same feeling. In that sense, I particularly welcome two speeches in the debate. First, my hon. Friend the Member for Harrow, East (Mr. Dykes) managed to bring the debate, in its latter stages, back into perspective in terms of the United Kingdom and Europe, and also Europe's place in the world. It was salutary to the House that he should have spelt it out in the way that he did at that stage in the debate.
Secondly, I pay tribute to the speech of the hon. Member for Durham (Mr. Hughes). He brought us back to reality 983 in terms of what is involved in the dairy industries concerned.
I do not for a moment want to underestimate the strength of feeling within the House with regard to support for New Zealand and our efforts to ensure that New Zealand is fairly and rightly treated. I hope that I made it absolutely plain in my opening speech that I share, and the Government share, those sentiments, feelings and intentions. At the same time, one cannot help feeling, occasionally, some slight difficulty in distinguishing between genuine attempts to achieve the best deal for New Zealand and attacks on the EEC.
I reiterate that I wholly accept the strength of feeling within the House, and I know that our colleagues in Europe who read these debates will equally be left in no doubt as to that feeling. At the same time, I hope that the people of New Zealand and their Government will be encouraged to know that not only the British Government but hon. Members in all parts of the House are ready to speak out for their interests.
I accept the criticisms made by, among others, the right hon. Member for Batter-sea, North (Mr. Jay) and the hon. Member for Newham, South (Mr. Spearing) about the procedures involved—the fact that my right hon. Friend the Minister of Agriculture had to announce to the House that decisions for 1980 had been taken before the debate on the document could take place. Unfortunately, circumstance are not always ideal, but in ideal circumstances the Government do their best to fulfil the undertaking that was given. The business of the House has not been exactly light over recent weeks. The Government have taken the first opportunity to debate these matters. I apologise to the right hon. Gentleman if he thinks that the undertaking was not properly honoured, but in the circumstances, and given the result of the negotiation as regards 1980, I believe that my right hon. Friend was absolutely right to accept the agreement reached in Luxembourg on Tuesday.
Two matters must be borne in mind about our decision to accept what was proposed in Luxembourg, where I was present. First, when Mr. Gundelach, the Agriculture Commissioner, proposed the arrangements to the Council of Ministers, 984 he said that they had already been agreed with the new Zealand Government. Secondly, as my right hon. Friend pointed out yesterday, there were representatives of the New Zealand Government present in Luxembourg, with whom we were in consultation throughout the Council meeting. They indicated that it was in everyone's best interests, including their own, that what was being discussed in Luxembourg should be accepted.
It is important to get those points on the record.
§ Mr. JayIt should also be on the record—because, together with some of my hon. Friends I, too, have met representations of the New Zealand Government in the past 48 hours—that the New Zealand Government did not welcome the arrangements, but accepted them simply because, in all the circumstances, it seemed unlikely that they would receive any assistance to get any better arrangements.
§ Mr. Buchanan-SmithI accept what the hon. Gentleman says. In all deals we should like to get better arrangements. That applies to almost every kind of deal that one makes. The important thing is that, given the circumstances, the New Zealand Government believed that it was right on that occasion that the agreement should be accepted by the United Kingdom Government along with the others. That is what happened, and that is why we did it.
I should like now to deal with some points of detail about the 1980 arrangement. The hon. Member for Edinburgh, East (Mr. Strang) asked me whether it was for a fixed levy or whether the same arrangements applied as had applied through the earlier part of this year. The new arrangements that I mentioned in my opening speech apply only from the beginning of next year. For the rest of this year the current arrangements for fixing the levy still apply. The fixing will probably be done next week, at the dairy management committee. We do not know precisely what the figure will be but in the committee, we shall certainly argue to ensure that it is at a level that makes sure that what we agreed in Luxembourg this week is achieved.
The hon. Member for Bradford, South (Mr. Torney) mentioned a figure of £ 320 per tonne as the size of the levy during 985 1980. That was the figure originally proposed by the Commission. However, the deal that is now being done should result in a levy that is considerably lower. Taken as net, particularly net of the butter subsidy, it will be about £100.
The major point that I should like to make before leaving the question of the 1980 arrangements is that we believe, and I think that the New Zealand Government also accept, that what has been agreed—having the reduction of 20,000 tonnes plus the adjustment in price—is much more satisfactory to New Zealand than simply allowing the existing arrangements to run on to the end of the year.
We must accept the fact of the current position, which is that because of the unsatisfactory current arrangements—a point made by the hon. Member for Newham, South, in an intervention—New Zealand has not sold the quantity of butter that it was entitled to sell in the course of this year. Given those arrangements, it is extremely unlikely that New Zealand would ever have been able to reach that figure by the end of the year. It was an unsatisfactory arrangement. It is better to accept that than to stand on one's dignity and maintain an unrealistic figure. It is better to have a realistic figure for the amount of butter, which can be sold at a higher price, with the result that not only will New Zealand take home more hard cash than it would otherwise have been able to do, but it will have the ability to sell the balance of unsold butter in other markets. For those reasons I believe that the agreement, although perhaps not ideal—rarely are agreements ideal—is a good agreement. It was right for my hon. Friend the Minister to accept it in the way that he did.
§ Mr. LeightonWill the Minister confirm that the New Zealanders failed to fulfil their quota not because they were physically unable to do so but because of the workings of the levy?
§ Mr. Buchanan-SmithIf the hon. Gentleman had listened to me he would have realised that that was precisely what I said. It was not the fault of the New Zealand Government. I said that in my earlier speech. Whatever the reasons for getting into a certain position, it should not be ignored. It is better to take action, 986 and we did that. In the circumstances it is a good arrangement for New Zealand, covering the period from now to the end of the year. At the management committee meeting next week we shall argue to ensure that the arrangement is implemented in the intended way.
I turn to an important matter, namely, the arrangements after the end of this year. A number of points were raised about that. I shall deal specifically with two points—first, the position of the United Kingdom dairy industry and, secondly, the attitude of the EEC towards New Zealand, which underlies the whole issue. Those two points were touched on in almost every speech.
Any industry, whether agriculture or manufacturing, is always anxious to reduce the amount of competition and imports. But the level of New Zealand imports over recent years, and the level that is now proposed by the Commission, do not in any desperately serious way affect the United Kingdom dairy industry. As I said earlier, in 1973 we imported about 166,000 tonnes of butter from New Zealand. That has been reduced to 95,000 tonnes for the current year. That is a massive reduction for the dairy industry. The effects of that can to some extent be exaggerated. It is important that we put the matter in perspective. The quantity involved is very small—we are talking of under 100,000 tonnes—in relation to the quantity of butter produced throughout the EEC. In proportionate terms it is much less than our previous imports.
I listened to the remarks of the hon. Member for Durham, whose views I share. In future we should try to agree New Zealand imports at a certain figure and not at a proportionate figure of the United Kingdom market. Because of the sacrifice that has already been made we owe it to New Zealand to set a definite figure. For those reasons it is important that the United Kingdom dairy industry, while it must put up with the extra competition from New Zealand, should put the figures into perspective. I do not believe that things are nearly as bad as has been claimed.
I turn now to the question of the EEC itself. We must also put this into perspective. New Zealand butter comprises about 7 per cent. of total EEC butter 987 production. At the same time a fall in New Zealand supplies of the order of 10 per cent. is equivalent to a reduction of only about one-quarter of 1 per cent. in EEC butter production. Therefore, we are talking about a relatively small area of production for the EEC as a whole.
That puts the onus very firmly on the EEC. If it is serious about disposing of its surplus butter production there is far greater scope for doing so in relation to its own production than by straining at the gnat—if I may put it like that—of New Zealand imports into Britain.
§ Mr. JayIs that not an argument for claiming that the reduction to 90,000 tonnes need never have been made?
§ Mr. Buchanan-SmithI have come back to the practical point. The reason why it had to be made was the unsatisfactory arrangement. That quantity could not be reached this year, and I am glad that that has been corrected.
Some hon. Members tried to make out that the EEC was implacably opposed to New Zealand. Certainly there are some countries that are more critical of the entry of New Zealand butter than others, but it is worth remembering that the balance of payments on both visible and invisible trade between the EEC and New Zealand is very much in favour of the EEC. I assure hon. Members that my right hon. Friend and I have made this point on every possible occasion, both within the Council and individually with Ministers. We have been at pains to point out that if the economy of New Zealand is damaged by the EEC's refusing to take a reasonable share, that in turn will damage the economy of the EEC and its constituent parts.
For an example let us take the case of West Germany. It had a favourable balance last year of about $NZ92 million, which is the equivalent of about £ 45 million. Many other countries are in the same position. It is true that some, such as France, find the opposite, but overall, many countries—not only Britain—benefit from this trade.
We also remind our EEC colleagues that New Zealand itself is suffering a deficit on its overall trade balance. In recent years the terms of trade have been going 988 against it. If the EEC willingly hurts the New Zealand economy that will not just affect the direct trading position between New Zealand and the EEC; it will make New Zealand's overall world trading position more difficult. That will weaken the New Zealand economy still further and hurt its ability to buy from the EEC. I make no apologies for emphasising this point.
The reasons for supporting trade between New Zealand and the EEC are not merely historical, emotional or nostalgic. It is in the interests of the EEC as a whole, and particularly countries such as West Germany, to maintain and continue that trade for the benefit of all our economies across the board. I accept what many hon. Members from both sides of the House have said.
I should now like to turn to the position after 1980. I do not think that it is clear to all hon. Members that the post-1980 period has still to be negotiated. No decisions have yet been taken in relation to the period after the end of this year. That is what the second document that we are discussing is all about. I have taken into account everything that has been said in this debate. Figures have been recommended by the Commission. It is the firm intention of the Government to negotiate a deal at the best possible figure that can be obtained. I go into these negotiations endeavouring to get a figure that is better than those that have been suggested by the Commission.
One of the benefits of the recommendations made by the Commission is that the arrangements for the access of New Zealand butter should continue after the end of the currency of the particular period of agreement proposed. We strongly support that recommendation. To do it for a short time and then to cut off would be totally unacceptable to the Government. On the ground of continuing access of New Zealand butter to the Community and to the United Kingdom and on the ground of the levels, I assure the House that it is the intention of the United Kingdom Government that we should get the best possible deal. The deal for which we shall be aiming is above the figures that have so far been mentioned by the Commission. I have no hesitation in accepting the Opposition amendment proposed by the hon. Member for Edinburgh, 989 East. It fulfils the spirit of what the Government are seeking to achieve.
§ Amendment agreed to.
§ Main Question, as amended, put and agreed to.
§ Resolved,
§ That this House takes note of European Community documents 8832/79 and 8476/80 on access for New Zealand butter to the European Community and supports the Government's intention to secure satisfactory arrangements for the imporation of New Zealand butter into the European Community after 1980, so long as these arrangements include the principle of permanent access with a quota for 1984 of not less than 90,000 tonnes.