Foreign Affairs Council

HC Deb 27 January 1982 vol 16 cc892-9 3.47 pm

The Lord Privy Seal (Mr. Humphrey Atkins)

With permission, Mr. Speaker, I shall make a statement on the progress of the discussions in the informal meetings of Foreign Ministers of the Community following the last European Council. I shall also make a statement on the Foreign Affairs Council that took place in Brussels yesterday.

On 25 January the Foreign Ministers had a lengthy discussion on the four key issues in the negotiations over the mandate that were remitted to them by the European Council. It was the third such discussion and I regret to say that it was not possible to reach agreement.

The main issue preventing agreement was the view of a number of other member States that the refunds to the United Kingdom should be arbitrarily and automatically reduced over time, regardless of the scale of the problem. We made it clear that we could not accept that. In the longer term we hope that the development of Community policies, including the reform of the common agricultural policy, will lead to a reduction in the size of our budget problem and we fully accept that, as that happens, our refunds should be reduced. What we cannot accept is a reduction totally unrelated to the underlying cause of our budgetary imbalance.

That was not the only difficulty. In addition, one or more of our partners had reserves on other aspects of the matters under discussion. For example, there was disagreement as to whether the duration of our budget refunds should be four or five years, with a review. There are also problems on agriculture where the formula proposed for controlling the milk surplus was very weak, and a number of countries, but not the United Kingdom, have reservations about the proposal that agricultural spending should grow less rapidly than the Community's resources.

It is disappointing that after so many rounds of negotiations we can still not reach agreement on the four key issues identified by the European Council, and therefore on the guidelines that were discussed there. But those are complex questions in which major national interests are involved and we never thought that it would be easy to find solutions that would enable each country to feel that it had a reasonable deal. I welcome the intentions of the President of the Council and the President of the Commission to try to find solutions to those problems. We hope they will be able to do so quickly.

To turn to the Foreign Affairs Council, it was decided to end further sales of food to Poland at specially subsidised prices and to use the funds originally earmarked for such sales for humanitarian aid, including food, through non-governmental organisations. There was a wide measure of support in Council for the proposal that the USSR should be upgraded from the "intermediate" to the "relatively rich" category in the OECD export credit concensus. The matter is to be considered further by the Committee of Permanent Representatives tomorrow, when I hope that it will be agreed that the Community should propose such an upgrading to its OECD partners. The Council also instructed permanent representatives in conjunction with the Commission to study the trade policy measures that the Community might take against Soviet exports to the Community and the implications of the undertaking by the Ten on 4 January not to undermine measures taken by the United States of America.

The Council considered the problem that has arisen over the adoption of the 1982 budget. In the view of member States, the European Parliament has not acted correctly over the classification of expenditure and the maximum rate of increase. No final decisions were taken, but it appears to be the view of most member States that as well as opening a dialogue with the European Parliament with a view to resolving the problem by mutual agreement they should, as a precautionary measure, place the matter before the European Court to determine the legality of those parts of the budget about which there is doubt.

I am glad to say that the Council agreed that the storage levy and refund scheme applicable to sugar from African, Caribbean and Pacific States should be suspended for three years, to the benefit of the cane refining industry. In those circumstances, I was able to agree to a revised Commission negotiating mandate on the price to be paid for ACP sugar for 1981–82. I hope that that will enable the present disagreement between the Community and the ACP to be resolved.

My hon. and learned Friend the Minister for Trade represented the United Kingdom for discussion by the Council of policy on imports of low-cost textiles. It was agreed that, to allow work to be completed on calculating the global ceilings, decisions on the various outstanding issues, including the terms for Community participation in the new multi-fibre arrangements, should be held over until 11 February, when there will be a further special meeting of the Council.

Mr. Eric S. Heffer (Liverpool, Walton)

Is the right hon. Gentleman aware that the Opposition support the Government in all their efforts to ensure that Britain's contribution is fair and equitable, and also on the stand that they appear to be making? I say "appear", because the right hon. Gentleman's statement is by no means as forthright as that made by the Foreign Secretary, which was reported in The Times on 26 January. According to that report, he referred to the Community's agricultural prices and said: I do not see anything can be done until we have a solution.

What, precisely, does that mean? I trust that the Government intend to adopt that stance. Too often we hear tough statements from the Government, only to discover that they mean very little. Ultimately, there have been compromises which, in the long run have not been satisfactory to the British people and which have added to their burdens.

The Foreign Secretary has not been as forthright this afternoon in the other place as he was reported as being in The Times. What precisely do the Government mean by the statement? Will they make a stand and ensure that no agreement is reached on agricultural prices—which could mean an extra 10.5 per cent. for the British people—or on other matters until a solution has been found to the problem? For a long time we have staggered from one crisis to another. The British public are pretty fed up with the farcical trips made to Brussels to try to solve the problem. That problem has never been solved satisfactorily.

If the Government are serious, will they do anything about VAT payments? Have they considered other action, such as withholding Customs payments? That is pretty drastic, but we must know whether the Government are serious. The House and the country want a clear statement from the Government that this time they mean what they say and will not agree to anything until they have obtained a solution that is satisfactory to the British people.

Mr. Atkins

I thank the hon. Gentleman for his support of our position. It was unexpected, but most agreeable.

The hon. Gentleman asked me about what my right hon. and noble Friend the Foreign Secretary had said about agriculture. The position is simple. The mandate agreed by the Heads of Government on 30 May linked three areas in which progress had to be made: non-agricultural expenditure, agricultural policies and the budget. The Heads of Government and all the countries involved agreed that those three had to go forward together. There has been no departure from that. Until we have found solutions for all three, we cannot move on any of them

The hon. Gentleman said that we had made tough statements but reached compromises. I remind him of what happened in 1980, when we had discussed our contribution with the Community. In case the hon. Gentleman has forgotten, I remind him that the arrangements that we were eventually able to make resulted in a far better return than anything that his Government negotiated? We are on the same point now, and I have no doubt that we shall achieve what we want.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to allow 20 minutes for questions on the statement, but I remind the House that there is a Ten-Minute Bill to follow and that many hon. Members wish to speak in the debate on employment.

Sir Anthony Meyer (Flint, West)

Is my right hon. Friend aware that there will be general support for the Government's stand, that the question of budgetary refunds must receive not an arbitrary, but an organic solution, which is connected with the Community's progress? Does my right hon. Friend agree that the Government's ability to win acceptance for such an approach would be greatly strengthened if other Departments adopted the energetic attitude of the Foreign Office, which seeks to promote common policies within the Community?

Mr. Atkins

The Government seek to improve the way in which the Community works in relation to agricultural and non-agricultural policies, as well as the budget. I am glad that my hon. Friend supports our position. We have consistently argued with our Community partners that to discharge the mandate agreed by all Heads of Government—that unacceptable budgetary situation should not be allowed to recur—we must produce solutions that stop that from happening. A system under which our refunds fall automatically every year—whatever happens to the rest of the Community's budgetary arrangements—will not necessarily prevent unacceptable situations arising. That is why we stood out against the proposal that that should happen. We believe that the Community's policies will change and that it will spend more, for example on the regional and social funds than before. That may help to solve our problem, but until we know that, we cannot agree to what, in Community jargon, is called "degressivity".

Mr. Russell Johnston (Inverness)

How helpful has the Commission been on the budget, and to what extent does the Government's view differ from that of the Commission? Is the right hon. Gentleman aware that Liberals believe that to link disapproval of general Jaruzelski's regime, martial law and so on with food aid is unconstructive, unhelpful and, almost certainly, ineffective?

Mr. Atkins

The Commission is well seized of our view and seeks to bring forward proposals to deal with the matter, but in the Council we are dealing with the other member States.

I repeat that the Community has decided to end the system of selling food to Poland at a discount, with the Community making up the balance. We have agreed to use the money to send food and other humanitarian aids to the Polish people, not through the military Government, but through non-governmental organisations, such as the Church, the Red Cross, Caritas and so on.

Mr. Jim Spicer (Dorset, West)

My right hon. Friend gave us one piece of good news about the ACP sugar agreement, but can he spell out in a little more detail what it will mean for the United Kingdom sugar refining industry and, over the next three years, for Commonwealth sugar producers, who depend so much upon it?

Mr. Atkins

The suspension of the storage levy will make a considerable difference to United Kingdom cane sugar refiners. As my hon. Friend knows, it mainly involves only one firm, employing about 3, 000 people. It will help to preserve those jobs.

In the discussions that are to take place I believe that our Commonwealth partners will feel that the offer of an increased price will meet their case.

Mr. Nigel Spearing (Newham, South)

Does the Lord Privy Seal recall that about 10 years ago it was said consistently from the Labour Benches that the system of own resources which the EEC is adopting and to which this country would be bound would mean a permanent and continuing deficit on the EEC budget for Britain, and that his hon. Friends said that the Community would change? Who has been proved correct?

Mr. Atkins

The thrust of our arguments with our Community partners on agricultural policy is to reduce the proportion of Community money spent on agriculture in relation to the Community's resources. That is essential. The Community should devote itself more to matters connected with the social and regional funds—relieving unemployment, helping young people and so on. That is the line that we have pursued. It may not be surprising that there have been objections from basically agricultural countries, but we intend to pursue that line, because we believe that it is right.

Mr. Teddy Taylor (Southend, East)

As Britain has already contributed over £3, 000 million more to the EEC than we have received—over £1 million a day net—will my right hon. Friend make it clear to the Community that, in the absence of a rebate agreement, we will not and cannot afford to make the massive payments next year? Although in 1980, after the invasion of Afghanistan, our exports of subsidised food to the Soviet Union broke all previous records, in view of the Polish situation, will our exports of cheap subsidised food to Russia be reduced this year?

Mr. Atkins

That is precisely what we have invited the permanent representatives to study, along with other trade matters concerning Russia. I hope that they will produce a comprehensive list so that we can consider how to handle our future trade with Russia.

I cannot tell my hon. Friend what the current year's contribution to the EEC will be, but our contribution in 1981 works out at not £1 million a day, but about £1 million a week.

Mr. Christopher Brocklebank-Fowler (Norfolk, North-West)

I support the Government's firm stand on the Community budget negotiations generally, but can the right hon. Gentleman assure the House that the part of his statement relating to the agricultural budget does not mean that Her Majesty's Government alone among Community Governments favour a reduction of Community support for her own agriculture?

Mr. Atkins

I said that we believe that expenditure in the Community budget on agriculture is too great and should be reduced in certain areas. We have tried to shift the weight of expenditure from being predominantly agricultural to the other areas that I mentioned, as is right. Many of our Community partners agree with that, although those who derive the greatest benefit from the current arrangement are less than enthusiastic.

Mr. Hugh Dykes (Harrow, East)

As our budgetary contribution has been only about £1 million a week net, should we not keep the problem in perspective? Given the necessary economic revival in Britain, in a few years' time might the problem not appear far less serious?

Mr. Atkins

That is what we all very much hope. In 1980 my right hon. Friend the Prime Minister negotiated an arrangement to ensure that our contributions were not excessive. The arrangement applied in 1980 and 1981 and can—and will, if necessary—be extended to 1982, but we are seeking a more permanent arrangement to ensure that Britain, which, unhappily, is not the richest member of the Community, is not the largest contributor. We shall continue to seek a more permanent arrangement of fairer contributions.

Mr. K. J. Woolmer (Batley and Morley)

In the MFA talks, did the right hon. Gentleman make it clear to the other Ministers that the proposal to base the future growth of imports on 1982 quotas rather than on the existing level of trade would cause substantial further damage to the industries and was unacceptable to both the employers and the trade unions? If the Government intend to withdraw from the MFA in the event of unsatisfactory bilateral negotiations, may we know what the deadline is for the negotiations this year? Will the Minister of State concerned come to the House on 11 February so that we can properly question him?

Mr. Atkins

My hon. and learned Friend the Minister for Trade has consistently made the point about the basis of future growth to our Community colleagues, and he will continue to do so. The Commission is under instructions to report back on the bilateral negotiations—which have not yet started—by the beginning of September. For the present discussions, certain global figures have only just been received by the Commission and we are studying them. They will be considered again at the meeting on 11 February. My hon. and learned Friend has kept the House informed on the progress of the discussions and, as appropriate, he will continue to do so.

Mr. Tim Renton (Mid-Sussex)

In view of the disappointing nature of the recent Council of Ministers' meeting, what will break the log-jam and bring about the fundamental reform of the CAP and the long-term review of Britain's budgetary contribution, which many of us who fully support our membership regard as essential.

Mr. Atkins

In the end, I believe that it will be the realisation by our partners that our case is unanswerable.

Mr. David Ennals (Norwich, North)

I understand the desirability of food aid to Poland going through non-governmental channels, but does it mean that voluntary organisations such as the Salvation Army and the Ockenden Venture, of which I am chairman, will get additional assistance to perform the important task of helping the Polish people at a time of great difficulty?

Mr. Atkins

We have instructed the Commission to examine the best ways of getting the aid to the Polish people. As I said, a certain amount of money was set aside in the Community originally to subsidise the sale of food to the Polish Government. It is now planned to use it in the way that I have described. I cannot say at present precisely how it will be done, but the Commission is actively seeking the best methods of ensuring that the aid gets to the people who really need it, and not just to the Polish Government. That is the important point.

Mr. Tony Marlow (Northampton, North)

Would my right hon. Friend like to take the opportunity to correct his slight slip of the tongue about our contribution to the Community being about £1 million a week? Is he aware that a recent Treasury answer stated that net cash disbursements this year to Brussels would be £500 million a year, which is £10 million a week? Will he tell his Community colleagues that as long as the bulk of Community funds are expended on the CAP neither the House nor the British people find it acceptable to make a significant net contribution to the Community budget?

Mr. Atkins

The figure that I gave was correct. Our net contribution after the adjustments that follow the arrangements arrived at by my right hon. Friend the Prime Minister will amount to approximately £55 million for 1981. That is marginally over £1 million a week, but only just.

Mrs. Shirley Williams (Crosby)

Does the Lord Privy Seal think that the entry of Mediterranean producers to the Community will provide a chance to change the basis of the common agricultural policy, so that it is more likely that we can control the ultimate budget?

Mr. Atkins

Yes, Sir. The arrival of Mediterranean producers inevitably means a change in the way that the common agricultural policy works. That has also been under discussion. Those countries have different problems from those of more temperate producers. As the right hon. Lady knows, we are convinced that far too much of the Community budget is spent on agriculture and not enough on other matters, particularly the social and regional funds of the Community.

Mr. Sydney Chapman (Chipping Barnet)

However disappointing the outcome of the meetings on which my right hon. Friend has reported may have been, will he recognise that there will be wide support for his stance in insisting that the massive budget reductions negotiated by the Prime Minister should not be reduced, at least until the common agricultural policy has been reformed? Given the way in which our trade has increased with other EEC countries in recent years and that our visible balance of trade is now in surplus, and provided that we can get our budget contribution correct, there are wide economic advantages to be had from our belonging to this great home market.

Mr. Atkins

About 43 per cent. of our trade is now with our European partners. It is recognized, not only by the Government but by all the other Heads of Government who were assembled at the European Council meeting on 30 May, that there should be adjustment and reform in three areas of Community activities—the non-agricultural policies, the agriculture policies and the budget. That was agreed by the Heads of Government. What we have been seeking ever since—and are continuing to seek—is the method of implementing that agreement.

Mr. Leslie Spriggs (St. Helens)

Will the Lord Privy Seal inform the House, in view of the agreement reached by the Prime Minister on Britain's budgetary contribution to the EEC, what will happen next year, after that agreement ends later this year? What will follow the present agreement between the Prime Minister and the EEC?

Mr. Atkins

That is precisely what we are negotiating.

Mr. Kenneth Carlisle (Lincoln)

Does my right hon. Friend agree that the satisfactory level of refunds over the past two years resulted from our tenacity over several meetings? Will he therefore reassure the House that this time the Government will show similar tenacity to secure a long-term solution to our contribution problem?

Mr. Atkins

I give my hon. Friend that assurance. It takes a long time to reach a solution, and much discussion and patience with our Community partners, which was shown in 1980, and is being shown by Her Majesty's Ministers now.

Mr. James Lomond (Oldham, East)

Will that determination to stand resolutely shoulder to shoulder against the Soviet Union and trade with that country extend to expecting the West German Government, the French Government and the other Governments of the EEC, who are scrambling to sign the same sort of agreements, to cancel their agreements to buy many hundreds of millions of pounds' worth of natural gas from the Soviet Union, or, as usual can we expect self-interest to prevail?

Mr. Atkins

I cannot give the hon. Gentleman a categoric answer. We are currently exploring in detail through our permanent representatives in Brussels, the areas where we can act together and persuade, and perhaps be persuaded by our Community partners to join in the kind of action that the hon. Gentleman has described.

Mr. David Myles (Banff)

Although, as a farmer, I regret the delay that may be caused to the annual agricultural price-fixing, I congratulate my right hon Friends on the robust stand that they have taken in defence of the nation's interests. May I urge my right hon. Friend to ensure that in any agreement that is made our agriculture industry is in no way disadvantaged? Our agriculture industry has set an example to the other agriculture industries to such an extent that we are now suffering from surpluses, whereas Poland and the Soviet Union are suffering from dreadful scarcities.

Mr. Atkins

I give my hon. Friend the assurance that he seeks. We are seeking to act in defence of the interests of the whole country, including the agriculture industry, which is a much better example of how an agriculture industry should be run than anything east of the Iron Curtain.

Mr. Heffer

I should like to explore a little further the point made in the Lord Privy Seal's statement about Poland. He referred to the undertaking by the Ten not to undermine measures taken by the United States. Will the right hon. Gentleman confirm that that in no way implies that we are accepting a policy that could undermine detente and peace in Europe? Will he make it clear that the British Government, while taking every sensible step with regard to Poland, will not go as far as anything that could undermine peace?

In answer to a question by his hon. Friend the Member for Mid-Sussex (Mr. Renton) the right hon. Gentleman said that our case was unanswerable. That may be so to us, but it may not be unanswerable for our nine Community partners. If they do not find our case unanswerable, what do we intend to do? Are we serious this time, or will we again end up with a compromise so that we do not reach a permanent solution, which the Prime Minister unfortunately failed to obtain in 1980, despite all the brave words at the time?

Mr. Atkins

The hon. Gentleman is making a mistake to attack my right hon. Friend the Prime Minister for what she did in 1980. The agreement was of great benefit to this country than anything ever done by the Labour Government. We are determined to reach an agreement with our colleagues. We believe that our case is unanswerable. At any rate, no one has answered it yet. It is not surprising that we are taking a long time. Each country has its own national interests to consider. If we continue to argue our excellent case, eventually—I cannot tell the hon. Gentleman when—our European partners will agree on the justice and logic of our case and come to an agreement with us.

The hon. Gentleman also asked about Poland. As I said in my statement, we are studying the implications of the undertaking by the Ten, which was given at the meeting on 4 January, not to undermine measures taken by the United States. Much careful consideration is required on how we should proceed. However, I can easily give the hon. Gentleman the assurance that it is in our minds that the prior necessity is to preserve the peace of the world.