§ The Secretary of State for Foreign and Commonwealth Affairs (Mr. Francis Pym)
With permission, Mr. Speaker, I will make a statement on the Foreign Affairs Council which met in Brussels yesterday. This was the last Foreign Affairs Council of the Danish Presidency, and I should like to express my appreciation of the chairmanship of the Danish Foreign Minister.
The Council agreed that the Community should continue to participate in the multi-fibre arrangement on the basis of satisfactory new bilateral agreements. A separate statement is being made in another place by my right hon. and noble Friend the Secretary of State for Trade which my hon. and learned Friend the Minister for Trade will shortly repeat to the House.
The Commission reported on its talks on 10 December with the American Secretary of State and a number of his Cabinet colleagues on a wide range of trade matters. Both sides agreed on the importance of avoiding disruption of world markets for agricultural products. There will now he a programme of bilateral discussions on specific problems.
The Council agreed on the steps to be taken in trade relations with Japan. The full text is being deposited in the Library of the House. The main features are a decision to take the case submitted by the Community in the GATT to the second stage of the dispute procedure, to extend import surveillance and to reinforce pressure both for an increase in imports into Japan and for effective and clearly defined restraint of Japanese exports in certain sensitive sectors. There will be a report before the Council at its next meeting.
These measures represent a clear signal by the Community to the new Japanese Government that more action on their part is now urgently required to redress the trade imbalance.
The Commission gave a detailed statement on the problems of the 1970 EC-Spain agreement, which we requested at the November Foreign Affairs Council. It stated its intention of approaching Spain to seek better implementation of the agreement, and undertook to discuss the tariff imbalance with the car industry. We made it clear that we expected early and effective action to remedy the unbalanced trade relationship, and asked the Commission to report again to the January Council.
Ministers discussed the negotiations for a new trade regime between the Community and Cyprus in 1983. We, in common with a majority of our partners, pressed for an improvement in the arrangements being offered to Cyprus. No agreement was reached, and the existing regime will be extended automatically for a further six months.
The Council also discussed the internal market and identified the initial priority areas for work. It was agreed to hold special sessions in the new year to resolve outstanding problems. My hon. and learned Friend the Minister for Trade made clear the importance we attach to early progress towards the completion of the internal market for both services and goods.
It was agreed that a committee of three scientists should urgently review the cost effectiveness of the Super Sara project and produce a report for a final decision early in the new year.
141 There was further discussion of measures to restore stability to the steel market. Support was given to the Commission's actions to strengthen the price regime.
Discussion of the European Parliament's proposals for a common electoral system showed that a number of difficult problems remained. The Council agreed to look at the question again at its next meeting in January.
The Council agreed a duty-free tariff quota for newsprint for 1983, but to our regret was unable to agree to a small supplement in the 1982 quota.
In the margins of the Council, Ministers met in political co-operation to discuss recent developments in Poland. They concluded that it would be premature to form conclusions now on the implications of the measures announced by the Polish Government. We will keep in close touch and continue to follow the situation closely.
§ Mr. Eric S. Heffer (Liverpool, Walton)
I thank the right hon. Gentleman for that statement, but as it is wide-ranging I hope he will forgive me if I do not follow exactly all the subjects that he raised.
I should like to put four major points. Does he not agree that the Community's position is extremely hypocritical in the sense that, while it is protectionist on agriculture through the CAP, it demands free trade for industrial goods? If import penetration by the Japanese is so damaging—and we all agree that it is—will the Government follow the logic of that and accept that import penetration from Community countries into Britain is equally damaging, especially in such key sectors as steel and motor vehicles, and particularly bearing in mind that production in manufacturing industry is at its lowest level for 15 years?
I am sure that the whole House will congratulate the new Spanish Government led by Felipe Gonzalez, the leader of the Spanish Socialist Party. As France seems certain to block Spanish entry until the problem of Mediterranean agriculture is sorted out, what is the Government's attitude? Does the Secretary of State believe that in its present form the CAP could survive the entry of Spain and Portugal? Has he any projections of the budgetary implications of Spanish accession? In other words, how much will it cost?
Did the right hon. Gentleman see this week's Sunday Times magazine, which included photographs of the destruction of fruit and vegetables because of CAP policy? Is he aware that many people in Britain cannot afford to buy those fruit and vegetables and that there is starvation in the Third world? Is it not disgraceful that such a thing should happen?
It is clear that a decision is needed by the end of December on the re-scheduling of Polish debt. What position do the Government adopt, especially as Lloyd's Bank, with the support of the Bank of England, is prepared to grant a loan to the Fascist junta in Argentina? What implications will the "wait and see" policy have for the Polish economy and the world banking system?
§ Mr. Pym
The hon. Gentleman drew a contrast between agricultural policy in the Community and the attitude to other trade. There is no doubt that that was the main subject discussed between the Commission and the United States. The United States Government also give much support to their farming industry. The conclusion 142 was that they must examine this problem in great detail, and that not much progress will be achieved by criticising each other across the Atlantic.
As the hon. Gentleman knows, we have criticised many features of the CAP. The most significant is the way in which it contrives to create surpluses. That is a great problem within the CAP. Although we have not yet been successful in altering that policy, it remains our first objective—as it was with the previous Government—to put that matter right. That will no doubt be a major problem in the future.
We want Spain to accede to the treaty, and France has made it quite clear that she also wants Spain to accede. However, there will be problems, particularly over Mediterranean agriculture, which are in the process of being sorted out in the discussions on accession. Similarly, discussions are at present taking place on the budgetary implications. The Community members feel that we should examine all these issues before accession is achieved.
The Spanish Foreign Minister made a statement on the Spanish Government's position at the Foreign Affairs Council to the effect that they gave a high priority to Community accession.
I share the hon. Gentleman's view about fruit and vegetables. It is unfortunate when events such as the one he described take place. This is another aspect of the CAP that we are constantly trying to reform.
We are in touch with our partners about Polish debt. That is one aspect of the Polish situation, and it is at present being considered with the United States and with other Community countries.
§ Mr. Michael Latham (Melton)
Are we not proceeding at an absolute snail's pace regarding Japan, with more consultations and discussions? Is it not time for some action? How much longer will we put up with the French internal protection campaign without doing something about it?
§ Mr. Pym
On my hon. Friend's first question, the Council took the matter a stage further and agreed to go to the second stage of the disputes procedure. I do not think that that has been done before. It is a significant change, and it is much more effective because it has been done by the Community as a whole rather than by Britain on her own.
I assure my hon. Friend that some of the actions that have been taken inside France are now under review by the Commission, and the Government are watching the matter carefully.
§ Mr. Russell Johnston (Inverness)
The right hon. Gentleman referred to a number of difficult problems over the common electoral system proposed by the European Parliament. Will he be more specific about the problems that the British Government perceive as important? Is it not a fact that the Government are using technical objections to mask their outright opposition in principle to a proportional solution even though everyone else agrees that that is the only fair outcome?
§ Mr. Pym
It is no secret that we have reservations about changing the basic system of elections in this country, but many other issues divide the other Community members who have already adopted a PR 143 system. They cannot agree on the system they want to adopt. Today, there are many differences between members of the Community on this fundamental matter.
§ Mr. Nigel Spearing (Newham, South)
What has happened to the Genscher-Colombo proposals for so-called European union? Where have they got to, and in what form will they re-emerge and when?
§ Sir David Price (Eastleigh)
My right hon. Friend mentioned measures concerning the continuing imbalance of trade between Japan and Europe. Has any progress been made with our European colleagues in considering the possible use of anti-dumping measures should those earlier measures that he announced prove unsuccessful? In the meantime, is he aware that if each of us were to buy British rather than Japanese we would forward the cause of European self-sufficiency?
§ Mr. Pym
I agree with my hon. Friend on the last point. The problem with Japan is not so much dumping as the limited extent to which the Japanese will permit imports and the ruthlessness with which they export their products. Dumping is not the main problem, but it is an aspect that certainly has been considered.
§ Mr. D. N. Campbell-Savours (Workington)
I recognise the nature of the international recession, but what particular measures is the Foreign Secretary impressing upon his European partners to introduce specifically to boost world demand? Or does he believe that we can end the international recession by not boosting world demand?
§ Mr. Pym
Although that extremely important subject was not on the agenda of the Council, I did on this occasion in the margins take an opportunity, as I do at every meeting, to talk to my Foreign Minister colleagues on this critical subject. It is now very much in the forefront of people's minds. It is written about and commented upon a great deal. Western leaders and Western Finance Ministers are exercising their minds very much to see what further steps can be taken to improve the international framework and structure to enable growth to return to the world economy.
§ Mr. Robert Maclennan (Caithness and Sutherland)
Did the Foreign Secretary and his European colleagues take the view that Japanese import penetration is not due to their taking our Prime Minister's advice about greater competitiveness, but is due to a breach of GATT? Why do the Government and the European Community proceed at this snail's pace, as the hon. Member for Melton (Mr. Latham) said, and move from A to B, and not take a leaf out of the book of the United States Administration, who have shown a determination that has already brought positive responses from the Japanese?
§ Viscount Cranborne (Dorset, South)
Did the Council discuss trade with the Soviet Union? I refer particularly to a common approach between the United States and the EC over exports to the USSR, especially of technology.
§ Mr. Pym
The studies on East-West trade that are now to be undertaken are on a much wider basis than just the European Community. Of course, the European Community has a part to play in them. In so far as those discussions and studies relate to Community competence, the Community must have a position. We discussed that position. We had no difficulty in arriving at a procedure by which we can feed the Community view into the wider studies.
§ Mr. Gavin Strang (Edinburgh, East)
Do the Government attach a high political priority to the accession of Spain?
§ Mr. Pym
Yes, indeed, Sir. Spain, like her neighbour Portugal, has become a democratic nation. We believe that it is undoubtedly helpful to nurture the democratic process in those two countries by accession to the European Community, which is a collection of democratic countries. We believe that on a political basis it is a strength to Europe that they should join.
§ Mr. Anthony Nelson (Chichester)
Is my right hon. Friend aware that one of the largest manufacturing companies in the world—Caterpillar Tractors—has recently decided to transfer its production of fork lift trucks from the United States to Britain? Is it not important that in order to retain the prospects of such inward investment and associated jobs, international trade in such products should be free from any prejudicial dumping or subsidised exports by Japan? As fork lift truck production is one of the areas that will be covered by the new survey agreed by the Commission, will my right hon. Friend give an assurance that there will be some finite time limit on the studies that will be undertaken to further substantiate and obtain evidence on the extent to which there is dumping in these products?
§ Mr. Pym
I cannot give my hon. Friend an assurance as to a precise time, but I agree very much with what he said. As he knows, Britain and other countries have taken much trouble to preserve the open trading system, which is threatened by the pressures for protectionism which are a natural concomitant of a deep world recession. That must be stopped and we will do everything we can to prevent it. We want that trade and we want free investment and inward investment into this country. I will certainly take up my hon. Friend's point about time.
§ Mr. Tam Dalyell (West Lothian)
By an oversight the Foreign Secretary did not respond to the last question of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) about loans by Lloyds and 20 other banks to Argentina. Is it right that the Bank of England and the Treasury have agreed to such loans? I am not necessarily critical, but if so, how can we be certain that part of the money is not used to finance that sinister cargo that left St. Nazaire, of longer-range Mirages and properly fused Exocets? How do we know that any bank loan is not used for armaments?
On a separate question, in his original statement the Foreign Secretary referred to the three scientists appointed 145 to examine the Super Sara project. Who are the three scientists, and what exactly are their terms of reference in this important matter?
§ Mr. Pym
On the first point, we did not discuss Argentina but we did discuss Poland and, in relation to that, the Polish debt. That is why I answered the hon. Member for Liverpool, Walton (Mr. Heffer) with regard to that part of his question and did not refer to Argentina. I cannot off the top of my head give the hon. Gentleman the names of the three scientists, but a number of us questioned the cost effectiveness of the project, which has to do with nuclear safety and is an important subject. It is being studied and researched in other countries as well as the EC. Before we continue with a commitment that would last a number of years we want to be entirely satisfied that the project is the right use of scarce resources. We will probably come to a final conclusion about the future of this programme in February.