'Each Conference shall lodge copies of its list of practices specified in Article 5 of the Code with the Office of the Director General of Fair Trading and any amendments to it and no conference which has not done this shall be entitled to any rights or privileges under this Act or the Code.'—[Mr. Higgins.]
§ Brought up, and read the First time.
§ Mr. Higgins
I beg to move, That the clause be read a Second time.
There has been considerable concern about the provisions in the Bill and the corresponding articles in the code that refer to self-policing by conferences. The extent to which self-policing is likely to be effective is open to doubt. The hon. Member for Hackney, Central (Mr. Davis), with whom I used to debate trade matters, has always taken the view that there is more to be said for self-regulation than legislation when it comes to controlling commercial organisations. However, it is important that the self-policing or self-regulation should be effective. One can judge that only if it is conducted in a comparatively open way.
Therefore, I thought it right to table the new clause, because under article 5 of the code—headed "Self-Policing"—the conference will have toadopt and keep up to date an illustrative list, which shall be as comprehensive as possible, of practices which are regarded as malpractices and/or breaches of the conference agreement".If we are to conduct such matters in a reasonably open way, there is a case for making the list more generally available. Therefore, I suggest that each conference should lodge copies of the list required under article 5 with the Office of the Director General of Fair Trading and that it should be kept up to date. I suggest that unless that is done no benefit should accrue under the Bill or code.
Since these are likely to be restrictive practices of one sort or another—where there is a public interest in how they are being conducted—there is a strong case for knowing what the situation is, even though such matters relate to the international carriage of goods by sea. Therefore, I hope that I can persuade the Minister to accept the new clause. Perhaps for the first time in the context of shipping and the existing restrictive practices legislation there should be some scrutiny by the Director General and others.
538 My hon. Friend mentioned in the context of new clause 1 that some practices might be registrable though not enforceable. The lists to which I referred might well come within that category. I hope, therefore, that my right hon. Friend will accept the new clause.
§ Mr. Woolmer
There is a wider problem here to which the right hon. Member for Worthing (Mr. Higgins) rightly drew attention. But, as I said in Committee, the problem goes beyond article 5 of the code. It also concerns articles 6 and 9. If the matter were put to a vote or if the Minister were searching for the feeling of the House, I should certainly give our support to the new clause but I believe that it is by no means adequate in its coverage and not necessarily the best way of tackling the problem.
Articles 6 and 9 make it clear that not only is there a question of practices that are regarded as malpractices or breaches of the agreement but that conference arrangements and agreements on pooling, berthing, sailing rights, tariffs, regulations and related conditions are also properly matters of public concern.
I do not completely share the view of those who believe that we can endorse private actions in civil courts as the best way of enforcing and reinforcing the public interest. The code and its method of implementation are not satisfactory in the protection of wider interests. After all, the purpose of the Bill is to enable this country to join an international agreement that enables shipping lines to enter into internationally recognised cartels that share out and control certain shipping trade operations.
Although conferences have existed for a long time, there can be no doubt that this is a significant heightening of that system, but:, more importantly, it brings the system within a framework where the intent behind it is consciously and deliberately to enable certain nations to operate shipping lines that would almost certainly not be in operation were it not for the protection afforded by the code. The reason why the Bill causes concern and some unhappiness on both sides of the House is that its purpose inevitably raises worries about the effects that it may have on wider interests.
For that reason, I say today, as I said in Committee, that these proposals will cause increasing anxiety as the code comes into operation. After the first year or two of operation of the code, it will be important to examine with care whether there is a better way of protecting those wider interests. I am happy to support the new clause today because it goes in the right direction. However, the coverage does not satisfy me and the instrument that is chosen in the new clause is not the best way of going about the matter.
Will the Minister assure the House that he will not close his mind to improving the openness and oversight of the operation of the code? That would reassure me, because in Committee he showed himself to be willing to examine points made and to respond to our anxiety. We shall ewer a minefield when the code comes into operation and it would be better for the Minister to consider carefully how the code is operating, not after five years but after one to two years, to see whether the public interest is being properly protected.
Article 52 of the code makes it clear that there will be an international review of the working of the convention after five years. I stressed in Committee that it is important that the Government should lay before the House their 539 assessment of the working of the code before the international review. It is important that the public and the House should realise that nothing is built into the Bill to ensure either a close scrutiny by outside bodies of the public interest or a review process by Parliament. I am sure that Parliament will wish to have a strengthened review and scrutiny process.
I welcomed the Minister's prompt and unreserved commitment to provide the House with the Government's review in the four to five-year review process. I hope that he will respond to the reservations expressed on both sides of the House and will assure us that, whether or not he accepts this way forward, he will examine during the next two years whether the public interest is being properly protected or whether there is a better way of achieving that than has been suggested so far.
§ Mr. Shersby
I support the new clause, which is an important and valuable addition to the Bill. I hope that my hon. Friend the Minister can accept it. It is important to remind ourselves and those who study such matters about the nature of conferences, their lack of accountability and their need to be more transparent. We must also remind ourselves of the way in which conferences are viewed internationally. Unless we do so, today's procedure might seem rather obscure to those who study our words and who take an interest in these important matters.
I remind the House of some considerations that I attempted to put forward in Committee that are highly relevant to what we are now considering. On the question of liner conferences and why we are attempting to improve arrangements—the self-policing described by my right hon. Friend the Member for Worthing (Mr. Higgins)—may I quote a passage from Vol. 13 of the "British Shipping Laws" on liner conferences. It states:Considering the very long history of shipping, conferences are of relatively recent development, originating a hundred years ago. The conference works on the close collaboration of all shipowners who are members of this well-knit private international organisation, which often resorts to pooling and rationalisation of services and, to keep its monopolistic position, works on deferred rebates and dual rates, which are unknown to the tramp world, remaining a special feature of the conference system. Thus a conference, though a non-governmental body comprising private shipping companies, is nevertheless negotiating with shippers as a strong unbending monopoly, and also with sovereign States, assuming a footing of equality. The tramps are in no such position, and in fact no other mode or method of sea transport has been able to work up its way to a position of vantage in relation to the shipper and his State to the same extent as has the conference machinery in the shipping world of today.That is a good quotation because it sets the debate in context. In Committee, the hon. Member for Batley and Morley (Mr. Woolmer) said:At the heart of the matter is the legitimisation of liner conferences—price fixing and market sharing in the shipping industry. Those may be necessary or, at least, supportable, but it makes it even more important to maintain proper oversight over their operation. I note the relevant parts of the code, but an outsider looking at the code may wonder who will watch over and assess the wider consumer national and international interest, and how that is to be done."—[Official Report, Second Reading Committee, 28 April 1982, c. 11–12.]I am therefore pleased that this morning the hon. Member for Batley and Morley has been as good as his word and has supported the new clause.
We are trying to improve the arrangements for self-policing and to ensure that conferences carry out their 540 obligations under the code because we cannot amend the code itself. That is one of the extraordinary features of the Bill. New clause 3 provides thatno conference … shall be entitled to any rights or privilegesunless it has lodged a copy of its list of practices.
Conferences therefore must be seen to be accountable organisations. British legislation should reflect the highest standards of accountability and professionalism, which has always been part of our commercial standing. This can be achieved only if my hon. Friend feels in his wisdom that he is able to accept the new clause. I hope that he will do so. He is a generous man and, quite apart from his generosity, he has paid close attention to the arguments that have been deployed in Committee and elsewhere. Even if there are difficulties about the wording of the new clause or, to use the time-honoured words of all Ministers, it is deficient in its drafting in some way, I hope that he will nevertheless give an assurance to the House that if he cannot accept it now he will cause it to be accepted in another form in another place. Unless the arrangements for self-policing can be improved there will be the greatest concern outside the House among all those who take a professional interest in these matters.
§ Mr. Sproat
I am always susceptible to flattery, particularly when it is expressed so eloquently. However, I must say that for once the springs of generosity have run dry. I shall explain my reasons in a moment. I shall deal generally with the important matter raised by my right hon. Friend the Member for Worthing (Mr. Higgins) in the new clause and then I shall deal with some of the specific points which arose out of discussion of the new clause.
Article 5 of the code deals with the elimination of malpractices and/or breaches of the conference agreement which might undermine a conference's basis of operations. Article 5 certainly requires a conference to draw up a comprehensive and illustrative list of practices which might be regarded as malpractices and/or breaches of the conference agreement. But, more important, it requires effective self-policing machinery to be provided. It is that self-policing machinery that will be of greatest value because it gives rise to a number of enforceable rights and duties.
Under paragraph 1(a) of article 5 penalties levied for malpractice might be required to be reasonably commensurate with the seriousness of the offence. Under paragraph 1(b) a review of action or inaction on a complaint may be demanded. Paragraph 1(c) will also enable the Secretary of State to obtain reports on action taken in connection with complaints about malpractices.
The duties imposed by article 5 on the conference and its members and the right of the Secretary of State to require the conference's report on action taken in relation to complaints represents a reasonable balance. The new clause focuses on only one aspect of the problem and does not, in my view, go to the heart of the matter. The heart of the matter is likely to be the way in which complaints are handled.
§ Mr. Higgins
My hon. Friend says that the heart of the matter is likely to be the way in which complaints are handled. Paragraph 1(b) refers to complaints by persons or bodies unconnected with any of the shipping lines. How are they to know what is in the list if it is not generally available?
§ Mr. Sproat
They will know if they believe that they have grounds for such complaint because they will 541 consider themselves hard done by arising out of the agreement that they made with the conference or conferences. There is no understanding on my part that the list will be a secret document. I am simply resisting any suggestion that it be lodged in the way that new clause 3 seeks it to be lodged. Under article 6, "Conference Agreements", the documents are to be published. There is no question here of people trying to keep the malpractices secret.
§ Mr. Higgins
With great respect to my hon. Friend, article 6 does not state that they are to be published. If that were so, I would be reassured. Article 6 requires that the list, the various provisions and so onshall be made available on request to the appropriate authorities of the countries whose trade is served by the conference and of the countries whose shipping lines are members of the conference.It does not say anything about their being made available to countries which are not signatories to the code or the conference, nor does it say anything about their being made available to other people who are not members of the conference and are not members of the Government. If my hon. Friend can give a clear and categoric assurance that all these matters can be published, I shall be considerably reassured. That was what he said, but it is not true.
§ Mr. Sproat
I admit that I did use the word "published". I was subconsciously reverting to remarks that I made in Committee. I said then that if the Secretary of State were to request the documents there would be no reason why there should not then be put in the Library of the House and made public. I was simply picking up in shorthand form the suggestion that I made in Committee and which I would be happy to carry out.
It is right that we are talking only about documents that relate to the country that is involved in the trade. That is a fair enough restriction under article 6.
§ Mr. Higgins
I am sorry to keep interrupting my hon. Friend, but on Report there is no other way of getting to the bottom of the matter. It is also difficult for us to ascertain what is going through the Minister's mind if he has not referred to it in his speech. In the light of what he said in Committee, can he give a categoric assurance that the list will be published and will be available so that those who might wish to make complaints will be able to do so?
§ Mr. Sproat
At this moment, I can see no objection to these matters being put in the House of Commons Library. I shall check and find out the precise legal position, and will then let my right hon. Friend know. My intention is that nothing should be kept secret that is not commercially confidential. That would be the only restriction relating to this matter.
§ Mr. Higgins
Much of this is likely to be commercially confidential in the sense that those who want to make complaints will want information while those who are making the agreements will prefer the information not to be known. If that is what is meant by "commercially confidential", it is a somewhat doubtful restriction. I am grateful to my hon. Friend for his assurance, but he should have thought this through beforehand.
§ Mr. Woolmer
Did the Minister's slip of the tongue reveal his aspirations? As he has said, under article 5 the appropriate authorities can get information. Article 6 provides that the informationshall be made available … to the appropriate authorities".Article 9 provides that the informationshall be made available … at reasonable cost".Will the hon. Gentleman ensure that all the information that will be available under articles 5, 6, and 9 will be made publicly available by the Government, either by tabling it in the Library or by publishing more widely? If he can give that assurance, he will go a long way to enabling others to do some policing, even if there is no formal machinery.
§ Mr. Sproat
I cannot give that specific assurance. The hon. Member for Batley and Morley (Mr. Woolmer) referred to my slip of the tongue, but I should like to think that it was a true definition of the way in which these procedures should work. However, it showed my intention to be as open as possible. I cannot go any further in defining what "as open as possible" means because we have not started to operate the code. The precise ways in which it will operate the precise details which will be commercially confidential have yet to arise in practice, but it is my intention that as much information as possible should be made widely available. Clearly that cannot contravene commercial confidentially and the precise limits of what car, be laid in the Library will have to be decided by the Secretary of State of the day in the light of practice.
It is my intention that if the Secretary of State calls for reports under article 5, or for a conference agreement under article 6, the relevant information should be made available on request to the extent that he feels proper. This matter can be left to his judgment in the light of the way in which the conference works in practice.
The hon. Member rightly said that he raised these issues in Committee. He is much more worried about policing than the Government are. We believe that the less bureaucratic we can make the procedure the better. The more that we can rely on self-policing the better we shall like it. We are not inclined to introduce any further elements of bureaucracy into the Bill. That is why I cannot be as generous as my hon. Friend the Member for Uxbridge (Mr. Shersby) would like and why I cannot accept the new clause.
The hon. Member for Batley and Morley and my hon. Friend the Member for Uxbridge talked rightly about the need for conferences to be transparent. I hope that they will agree that the new transparency that is provided for in articles 5 and 6 is an advance. I know that there are some who dislike the conference system, but I hope that they will agree that there has been an advance. There will have to be much more openness and discipline in effecting policing.
§ Mr. Woolmer
Does the Minister recognise that the Bill will create private bureaucracies? If they were to be Government bureaucracies the public would expect the Government to be publicly accountable in the House for the way in which they conducted their side of the bureaucratic cartel arrangements. This is not a question whether the House should seek to create a bureaucracy to 543 supervise a procedure. A bureaucracy is being created and the question is whether it will be supervised adequately in the public interest.
§ Mr. Sproat
The hon. Gentleman must distinguish between the bureaucracy created between shipping organisations, shippers and other organisations and the necessity for them to consult and recognise international mandatory conciliation procedures. That is one form of bureaucracy that arises from the Bill. It arose originally from the UNCTAD liner conference code. On the other hand, there is an absence of Government bureaucracy. I do not want to set up a Government bureaucracy. I accept that we are going a short distance down that road. Article 5 provides that the appropriate authorities—in this instance the Secretary of State—will have the right to make inquiries into the results of an inquiry into a malpractice. That is one piece of bureaucracy and I do not wish to go further than that.
I have given the House the assurance that, within the limits of commercial confidentiality and within the limits which experience teaches us to be appropriate, I shall seek to make as open as I can the results of any inquiry into the workings of the liner code in practice. Self-policing is one bulwark against malpractice. Secondly, the Secretary of State will see reports of any inquires into malpractice. The third bulwark is that there will be an international review after five years. Preparations will have to be made for that review after four years. We are not talking about a very long time scale. If the review shows that there is a better way of conducting these procedures, we shall be open-minded about accepting it.
The hon. Member for Batley and Morley asked me to give an assurance that the Government would not close their mind to ways of making examinations more open before the five years have passed. I give him the assurance that it is my intention to operate the code as required by the Bill and to monitor it. Our doors will always be open to the General Council of British Shipping, to the shippers and to the commodity organisations. If they say "This is not working and we want you to improve it before the United Nations five-year review takes place", we shall, of course, try to do so.
My mind is open to ways of improving these procedures that might be open multilaterally to this Government and to suggesting to the conference ways in which self-policing could be improved. I reiterate the undertaking that I gave in Committee that the Government will lay their views before the House of Commons on the way in which the conference has been working in time for the House to make whatever input it thinks best to the Government's views which will be put before the conference.
§ Mr. Ginsburg
The Minister has said that he has an open mind. Although we wish him well personally, he will not be in his present office for ever. Will he consider imposing an obligation on the Government to report in another place along the lines that he has suggested? I leave that thought with him.
§ Mr. Sproat
That is an interesting thought. I hope that I shall not be in my present office for ever—
§ Mr. Sproat
The hon. Gentleman must have spent what seemed to him an eternity in the job that is now mine. I am sure that he knows how I feel about these matters.
I cannot give the hon. Member for Dewsbury (Mr. Ginsburg) the precise assurance that he seeks. However, if, in the other place, a suitable way of tabling an amendment was found, I dare say that the Government would look at it in a friendly and sympathetic light.
§ Mr. Higgins
My hon. Friend seems to be going back on what he was saying earlier, which was reasonable and satisfactory. He said then that he would look carefully at ways in which the information in the lists could be made available to those who might wish to make a complaint, either on the request of the Government, payment of a suitable fee, or whatever. I hope that my hon. Friend is not going back on that—not in the context of the five-year review or before the five-year review, but before the Bill goes through—because, on the basis of good faith, I should be prepared to accept what he has said.
§ Mr. Sproat
I did not intend to say that I would do it before the Bill reached the other place. What I do say is that I am prepared to examine ways in which the Government, or whoever happens to be in my job, can examine these matters as experience tells us how the Bill is operating. I am sorry if I have misled my right hon. Friend.
I cannot go any further today than I have done, first, because of the constraints of commercial confidentiality, and, secondly, because of the common sense constraint that we must see how the Bill will operate. When I see how the Bill is operating, I shall look, in the most open-minded way, at how we can make most widely available such information as does not contraven common sense or commercial confidentiality. However, I do not expect to arrive at any conclusions before the Bill goes to another place, because the liner conference will not have come into practice.
§ Mr. Higgins
I apologise for intervening again, because of the restraints under which we are placed. With regard to commercial confidentiality, one understands that in a narrow sense it might be necessary to impose restraints, but in the broader sense, to which I have referred, they would be unjustifiable. Be that as it may, all that we are asking of my hon. Friend is that, when the Bill gets to the other place and his Department and my noble Friend the Secretary of State have had a chance of examining the matter, they will comment on the point raised in the debate.
That has nothing to do with how the Bill works in practice, or with seeing how it goes. We do not have to know how it works in practice. If people want to make complaints—and they are entitled to make complaints—they should be able to apply for the information that it is necessary for them to have to know whether they have a complaint. It should be made available on request.
I see no earthly reason why my hon. Friend cannot say that my noble Friend will make a statement in the House of Lords on that point when the Bill reaches the other place. That is what I understood him to be saying clearly a few moments ago. I hope that he will not go back on it.
§ Mr. Sproat
I shall not go back on that. I shall lay the onerous obligation of looking at this matter on my noble 545 Friend. I thought that my right hon. Friend was now asking that conclusions should be defined in the other place. We shall certainly comment on this important point when the Bill goes there.
My hon. Friend the Member for Uxbridge listed, succinctly and fairly enough, some of his well-known objections to liner conferences as a whole. Fortunately or unfortunately, that is not the matter that we are discussing in the Bill, although it arises out of the Bill. All that we are discussing is the code and how it could be modified and applied through British law. My hon. Friend may think that liner conferences are not acceptable. However, the Bill, particularly in articles 5 and 6 of the code, makes them less objectionable in so far as it imposes more obligations on the conference.
With those few words, I must advise my right hon. Friend that I cannot accept the new clause, and I hope that he will withdraw it.
§ Question put and negatived.