§ The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker)
I beg to move,That this House takes note of European Community Document No. 4296/89 on tariff concessions and import duties on certain imports from the United States of America; and supports the Government in pressing for a negotiated settlement to the dispute between the Community and the United States of America over the Community's prohibition of imports of hormone treated meat as a means of averting trade disruption and damage to wider Community-United States relations, particularly in the context of the current round of multi-lateral trade negotiations in GATT.I am grateful to the Scrutiny Committee for taking such a close interest in this subject. I advise Opposition Members that I am very much aware of recent criticism and anxiety about scrutiny procedures in the House. I assure the House that the Government are looking at this. This debate is particularly opportune, as the Foreign Affairs Council will consider the European Community-United States dispute over hormones next Monday and I am keen to hear the House's views before then.
The EC hormones directive was agreed by the Council by qualified majority in December 1985, to come into effect by 1 January 1988. The United Kingdom voted against that decision and subsequently challenged the directive in the European Court of Justice. Our challenge was on several grounds, including the lack of scientific justification. The court accepted the United Kingdom arguments about the procedural irregularities in the adoption of the measure and annulled the directive. However, it did not rule on the scientific point. A new directive, identical in substance to the earlier one, was agreed by the council in March 1988, by qualified majority vote—with the United Kingdom alone voting against. Although the directive was agreed in the face of strong and consistent United Kingdom objections, it is now part of Community law, and therefore binding on all member states. We have therefore no choice but to implement it.
The concern that produced the ban was directed not only at meat produced in the Community—it was also about meat consumed in the Community. Thus, it had to apply also to imports, wherever they come from. All the usual exporters of meat to the European Community, apart from the United States and Canada, accepted the ban. Each exporter provides guarantees that their beef does not come from hormone-treated animals. The United Kingdom, supported by some other member states, succeeded in getting EC agreement to reduce imports banned by about a quarter to $100 million by exempting petfood. We also prevented damage to pet food manufacturers in the United Kingdom and elsewhere, which depended on imports of United States meat. As the United States and Canada had refused to comply with the requirements of the directive in relation to beef, imports of bovine meat and offal for human consumption from the United States and Canada were banned from 1 January. About one quarter of the trade affected normally conies to the United Kingdom.
On 27 December 1988, the United States Administration responded by announcing the imposition of a prohibitive 100 per cent. tariff on certain EC' exports to the United States, worth about $100 million. to take effect from 1 January. The exports in question—primarily 443 canned tomatoes, fruit juices, instant coffee and low alcohol drinks—come largely from Italy, Germany and Spain. Only 2 per cent. of EC exports affected by United States measures come from the United Kingdom. Following United Kingdom pressure in the Council debate in January, I secured a grace period in action until the end of January, so that United States meat not complying with the directive and EC exports affected by the United States tariff increase, but shipped before the end of December, remained unaffected.
§ Mr. William Cash (Stafford)
Can my right hon. Friend inform me whether with respect to the original directive, which was under article 43 of the treaty of Rome, and the regulation, which is under article 113, the stages which were taken in the Council, which were supposed to be under unanimous procedure, were taken in that way? Did we exercise the veto on either or both those occasions?
§ Mrs. Chalker
We argued that the legal base should include article 100 and not merely article 43. In 1985, that would have required unanimity. My hon. Friend will remember that we took our case to the European court of Justice, but lost on that point. I do not believe that it would have been appropriate in this instance to use the Luxembourg compromise, which has always been reserved for extremely important matters at stake. We took the issue to the European court and, having lost, saw no further extent to which we could take it.
§ Mrs. Chalker
That is what I sought to explain to my hon. Friend.
It is important to have clearly in our minds what is happening now. Since 1 February, the community ban is now in force, as the unilateral United States measures against the EC. Overall, the direct effect on United Kingdom trade is very small, although, inevitably and sadly, some firms may suffer. The United States is an important source of offal for processing and as alternative sources cannot easily be found, some processed meat companies may soon notice the effect of the ban.
We greatly regret this dispute. Although the amount of trade involved is small so far, the dispute is potentially very damaging. There is a real risk of escalation. The United States Agriculture Secretary, Clayton Yeutter, said in his confirmatory hearing on Capitol hill that, if the EC imposed counter-retaliation measures, the United States would counter-counter-retaliate. Such a trade war would make the dispute much more difficult to resolve.
The EC and the United States have major roles to play in the GATT Uruguay round—not least in resolving the current deadlock on agriculture and finding a way forward. Those are the most ambitious and complex 444 multilateral trade negotiations yet. We should not allow attention to be diverted, or the atmosphere to be soured, by a trade dispute.
Our view remains that all trade disputes can be resolved only through negotiation. The sooner a constructive negotiation can be engaged over hormones, the better. The dispute can only get worse with time. The GATT offers three possible routes for the settlement of the dispute—a conventional GATT panel under article XXIII, the dispute settlement procedures of the GATT technical barriers to trade "standards" code, and an ad hoc procedure under the good offices of the director-general.
The Community has not ruled out any of those options, although it recognises that recourse to the dispute settlement procedures of the standards code would require a shift in the entrenched United States position on the scope of the code which the United States, despite evidence to the contrary, believes covers process and production methods such as the hormones directive.
The EC has so far wisely refrained from counter-retaliation against United States action. A list of United States exports—walnuts and dried fruits—on which 100 per cent. tariffs could be imposed has been drawn up. This amounts to about $100 million a year, of which only about 4 per cent. normally comes to the United Kingdom, but pressures remain in the Community for counter-retaliation, especially from those member states worst hit by United States measures. At the January Foreign Affairs Council, the Council agreed to take stock of the situation at its next session on 20 February. We also agreed that the EC counter-measures would be put into effect unless there was satisfactory progress in GATT or in bilateral negotiations with the United States. We shall continue trying to find ways to avoid precipitous EC action when the matter is discussed at the February Foreign Affairs Council
At the GATT Council on 8–9 February, the Community's complaint against the United States unilateral action was considered. The Community asked for a GATT panel to examine the United States measures. The United States rejected the request, but expressed the hope that the issue could be settled bilaterally. The Community offered consultations which the United States welcomed, but would not have them before the Commission talks with United States Trade Representative Hills and United States Agriculture Secretary Yeutter on 18 February. Thus, confrontation was at least delayed, but much now depends on talks in Washington this weekend.
My right hon. and learned Friend the Foreign Secretary discussed the dispute with United States Secretary of State Baker last Sunday. He impressed on him the need for early resolution of the issue—which would need good will on both sides.
If, against our expectations, the outcome from the weekend Washington meetings were absolute deadlock, there would undoubtedly be very strong pressure from some member states at next Monday's Foreign Affairs Council for EC counter-retaliation. I do not believe that counter-retaliation would achieve anything, and I trust that it will not be necessary.
Whether or not there is another twist to the retaliatory spiral, the Government will continue to do everything possible to work for a rapid settlement of the dispute.
§ Mr. Jonathan Aitken (Thanet, South)
I am concerned about the tone of the diplomatic exchanges between my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs and the new United States Secretary of State. My right hon. Friend the Minister of State spoke of backing off, giving way, and retreating, but surely it is the other way round. The European Community must realise the realities of the situation, acknowledge that it is in the wrong and, above all, accept that when it comes to the Uruguay round the United States holds the cards in trade negotiations, and that any retaliation could result in something far worse than has ever been envisaged.
§ Mrs. Chalker
My hon. Friend is being a little unfair. In recent months, we have on many occasions attempted to get a proper discussion under way. My hon. Friend will recall that, a few moments ago, I said that the Community offered consultations which, while they were welcomed by the United States, had been declined before the Commission talks with the United States next weekend. Had talks taken place last week, perhaps we would be on our way to an earlier resolution of the matter than can now be possible.
Everything is now being crowded into the weekend before the meeting of the Foreign Affairs Council. If consultations had taken place after 8 February but before 18 February, there would have been more time to talk matters through calmly, and to reach the solution that we seek. When my right hon. and learned Friend discussed the matter with Secretary of State Baker last Sunday, he tried to impress on the American Secretary of State the need for discussion and for an early resolution—which the Americans, by not agreeing to consultations in the intervening period, effectively refused. We regret that fact because we made constant and repeated efforts to resolve the problem.
Negotiation is the only way forward. I hope that good sense will prevail sooner rather than later, because we can then turn our attention to other important matters within European Community-United States relations. I thoroughly agree that making progress on agriculture in the GATT round is vital and I commend the motion to the House.
§ Mr. George Robertson (Hamilton)
The debate concerns a matter of enormous importance, affecting not just trade matters. Although we are concerned for the moment about only $100 million of trade, within weeks the figure could escalate to considerable multiples of that sum, to $500 million or more. This evening, the Minister said:the dispute is potentially very damaging. There is a real risk of escalation.This debate is also important in health terms, as the debate on whether hormones in meat have an effect on consumption gets lost in a sea of acrimony over trade and trade relations. It does not require an hon. or right hon. Member of any perception to realise that the question of the nation's health in relation to its food supplies dominates the media and Parliament. The debate is also of substantial political and diplomatic importance, as the relationship between the United States and our allies in Europe grows worse and more strained—in marked contrast, remarkably, to the sweet noises that now characterise East-West relations. Emphasising the signal 446 importance of this debate is the fact that it was opened by the deputy Foreign Secretary, and will be wound up by the Minister for Trade.
Remarkably, this debate started after midnight, although in less than a week the deferred decision on retaliation is due to come before the Council of Ministers. Moreover, this is the first time since 1985 that the House has had an opportunity to discuss this far-reaching and momentous subject—and we have probably been given the opportunity now only because of the perceptiveness and insistence of the Select Committee on European Legislation, which has done an excellent job. That is a disgrace. It is an insult to the House of Commons and an affront to parliamentary accountability.
Whatever view we may take of the issue, it serves to highlight and underline the way in which we have not only seen power disappear from the House of Commons, but found in its place no less than a contempt for our right even to advise those Ministers who go to the Council on our behalf. I welcome the Minister's assurance that the Government are conscious of, perhaps even embarrassed by, the way in which scrutiny of European legislation has been allowed to slip. We shall hold her to that commitment.
Although it may be embarrassing for them, I should like to support the Government's position and that of the European Community. We strongly endorse the Community's case—not just the essentials, but the principle. The decision that has been made is not designed to discriminate against any other country's trade. It was made within the Community, and applies as much to Community agriculture as to that of any country, including the United States.
This is a clear indication of consumer preference throughout the Community. Let me quote from the influential magazine Agra Europe, which in many other instances expresses a critical viewpoint. Its edition of 22 December says:The Americans on the other hand would do well to recognise the democratic origins of the EC's hormone legislation: it is one of the few pieces of law in the food and agriculture of the Community which actually reflects the desires of the European electorate—unlike the CAP itself which reflects the interests and demands of a small minority of the population and actively harms the majority.
§ Mr. John Greenway (Ryedale)
Does the hon. Gentleman accept that if we ban products which scientific evidence proves are safe we are on the slippery slope? If, after scientific advice, it is shown that unpasteurised milk is safe, will the Labour party insist on a ban?
§ Mr. Robertson
The hon. Gentleman jumps up too quickly. As that is at the root of the issue, I proposed to come to it. As he has mentioned unpasteurised milk, however, it is interesting to note that the United States, which is making most of the brouhaha here, has banned the import of cheeses made from it on the basis not of scientific evidence but of consumer preference. There is no reason why the European Community, or any individual country within it, should not do the same.
§ Mr. Robertson
No. My time is limited, and I have already dealt with the point. I shall come to the scientific implications in due course, and if the hon. Gentleman wishes to try again then he may be successful.
447 The case is strong, and not only on the basis of consumer preference, although it is perfectly reasonable for anyone in this country or the European Community to come to a conclusion that takes account of scientific practice without following it slavishly. The right hon. Member for Henley (Mr. Heseltine) wrote in an article in
The Times:The council had clearly taken a political decision, as the agriculture commissioner later confirmed.Of course there is an element of politics. The idea that the right hon. Member for Henley can stand apart from political decision is in itself a bit of a joke.
The pace of biotechnology and all its implications does not involve simply the individual reports of one committee or any single series of contemporary evidence. Professor Lamming's report—the basis of the scientific evidence put forward—was careful in its endorsement of the five hormones, and agreed to them onlyunder proper conditions of use".The report contained that important qualification. However, the pace of biotechnology cannot be quantified from one moment to the next. As we have seen during the past few weeks, contemporary views about what is healthy and what is not are open to debate. Ultimately the decision has to be taken by politicians assessing scientific evidence and other considerations.
I strongly support the suggestion by Mr. Ken Collins, the Member of the European Parliament for Strathclyde, East when the European Parliament considered these matters in 1988 that we need a major study both on the biotechnological aspects and on the wider public implications. That is how we shall acquire some conclusive evidence, not from one specific panel of experts.
§ Mr. Lord
The hon. Gentleman is saying that we must be careful about what we do because things can change rapidly and we do not know what will happen in future. But we are dealing with today, and we are dealing with the facts. Does the hon. Gentleman accept that, by and large, scientists are fairly careful and do not take decisions dogmatically or with great emphasis unless they are sure of their facts? In this case, Professor Lamming and his committee had a good look at the matter we are discussing, and concluded that the use of the synthetic hormones presented no cancer risk and constituted no conceivable hazard to human health. If there is to be any sense in our debate about food and all the present problems, surely we must depend on scientific evidence when it is presented in that form.
§ Mr. Robertson
I have a deep affection for the hon. Gentleman, but I shall not give way.
Hon. Members should bear in mind the fact that there are wider implications than Professor Lamming's report. Scientists can be dogmatic. Medical and scientific experts often reach contradictory conclusions. I refer Conservative Members to our continual debates on abortion. Both sides of the argument deploy eminent scientific experts to prove absolutely contradictory arguments. Those who are quite content to rely on Professor Lamming's committee have to discount the 448 opinions of all the members of the European Parliament who voted for the ban and those within the Council of Ministers who made the ultimate decision.
I welcome the belated appearance of the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, since the implications of that decision are considerable. If the hon. Gentleman dissents from the view of the Council of Ministers, it would be nice to have it on record so that the view of the British Government is known. The Minister did not take such a position at the Dispatch Box this evening. She spoke in defence of a Community decision taken by a majority vote, and, as she said, without the United Kingdom veto being used. The Minister must accept collective responsibility with her colleagues in the fight that will take place. The Government of course oppose it.
As in so many cases recently, the health of the nation takes second place to the interests of the farmers and the drug companies. What is all the fuss about? The House and the country have a right to ask this question. Why is it that we are on the brink of a trade war with the Americans over £100 million-worth of what is, after all, mostly offal, which is usually regarded as waste products, and the cheapest cuts of meat? Whey are we on the brink of a trade war over something apparently as trivial as that?
Mr. James Baker, the new US Secretary of State, said that he believed that this dispute was trivial and unworthy. He was quoted this week in the International Herald Tribune as saying that it would have to be solved, because it would get diplomatic relations with Europe off on the wrong foot.
Why are we on the brink of a trade war? The American case is, of course, extremely weak. First, it has the arbitrary ban on non-pasteurised European products entering the United States on the grounds of taste. It has no scientific evidence, but it is doing it on the basis of American health preference.
Secondly, there has been an offer from both Texas and Kansas to supply an equivalent amount of the agricultural produce that is being prevented from coming in from the European Community. Mr. Jim Hightower, who is the Texan Commissioner of Agriculture, from the President's own State, has offered to make up the shortfall in terms which would qualify under the Community's new rules.
Why is the United States willing to breach the GATT rules at this stage when its case is so weak?
The Financial Times this week concluded that the United States finds itself in the wrong. It said:The US must recognise that no system of rules can survive if each participant believes it possesses carte blanche to act in its own behalf.That is a conclusion derived from the fact that the European Community has at least won informal support from its GATT partners for its protest about that unilateral decision.
The question must be legitimately asked, why are we on the brink of a trade war over £100 million-worth of trade in offal when EEC-United States trade amounts to more than £150 billion a year? I suggest that we must look to more sinister forces to get an answer to that question. We are right to do so, because there is no easy explanation of why we are in our present position. Why is the drugs lobby well organised, well financed and well deployed and in the forefront in ensuring that these hormones are used for 449 health? According to the Financial Times of 28 January 1988, the European Federation of Animal Health is a group of 22 major pharmaceutical companieswhich have banded together to try to overturn the EC directive".The article went on to say:The group's defence fund runs into hundreds of thousands of dollars. It claims to have several weapons still in its armoury".Its key weapon, of course, was the British Government's outright hostility to that directive taken through the European Court of Justice, and taken to a vote in the Council of Ministers.
The Financial Times of 8 March, when the directive had finally gone through, said:The directive has inspired fierce criticism from the pharmaceuticals lobby".Of course, in the United States of America, the pharmaceuticals lobby is even more powerful than it is in the European Community. The Animal Health Institute bands together the largest of the multinational drug companies in exercising its influence, too.
Four weeks ago, John Lichfield, in his article in The Independent, said:an EC official also identified 'the power of the pharmaceutical lobby in US government agencies on Capitol Hill' as a principal if not the only cause of the row.We are getting closer to home when we begin to see the power of the industry. The animal hormone industry in Europe accounts for some £100 million-worth of trade. Therefore, the coincidence of a market for £100 million-worth of animal hormones in Europe with a trade war starting over £100 million is too large to discount.
The British Government's position must be clear and straightforward from now. There must be no bending on the right of Europe or individual countries in Europe to reflect genuine concerns and apprehensions among our populations even if the technological and scientific establishment is not, at this moment, in full support of that position. The Government must do something about the decision to ban the hormones. There must be a stricter enforcement regime in this country than is apparently the case today. Much more residue testing has to take place and the research institutes that have had their funding reduced or stopped must have it reinstated. Perhaps the Minister should ask the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, who is beside her on the Front Bench, whether agricultural produce should be put under the product liability directive so that, not only in this area but in others, farmers can be on the same footing as every other producer and subject to the same discipline.
The British and American Governments must abandon their fatal fixation for jumping at every whim of the multinational drug companies. Their voracious appetite for profits, even at the expense of the public good, has rarely been in such open display as in this contrived, artificial and hugely damaging dispute. Drugs and biotechnology should be the servant of the public good and not its master, which seems to be the case now.
§ Sir Peter Hordern (Horsham)
This European Community document is a bad idea and I was glad to hear my right hon. Friend the Minister condemn it. It appears from what she said that the Government have done their best to knock the idea on the head. That is the correct 450 attitude. However, when my right hon. Friend said that in the talks between my right hon. and learned Friend the Foreign Secretary and United States Secretary Baker the Government urged that negotiations should take place, it occurred to me that the Government are on the same side as the Americans in this dispute and we should be negotiating, perhaps together with the Americans, to try to alter the European Community's attitude. If the measure proceeds, it will lead inexorably towards a trade war which will be of no benefit to our country or to the European Community. I am therefore glad to support the attitude adopted by my right hon. Friend the Minister.
I was astonished by the Opposition's attitude. If their view were adopted, we should end up with a protectionist European Community which would be careless of the interests of the people of the European Community.
On the merits of the case, this seems to be a tit-for-tat proposal to put 100 per cent. taxes on $100 million-worth of food imports from the United States, mostly comprising fruit and nuts. Thus, in due course, it will be much more expensive for the consumer. That arises because the United States has put 100 per cent. duties on some European foods, including tinned tomatoes and special hams, in return for $100 million of lost beef sales due to hormone treatment. I should like to ask—
§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)
Does Fisons or any of the other companies to which the hon. Gentleman is a consultant or parliamentary adviser have any interest in the matter thatwe are discussing?
§ Sir Peter Hordern
I certainly am a consultant to Fisons, but that has nothing to do with the debate.
§ Mr. Teddy Taylor (Southend, East)
Does my hon. Friend agree that we should ignore all this nonsense about health and recognise that the reason why the EEC wants to ban beef is the same as its reason for banning apples over-production, to which d mistakenly believes protectionism is the answer? It is shameful for the Opposition to pretend that there is a health problem, especially as the scientific evidence is clear and precise. Let us see health problems for what they are, and protectionism for what it is.
§ Sir Peter Hordern
The safety aspect must be dealt with, and I hope that my hon. Friend the Minister will comment on it. We need to know what the Government think about Professor Lamming's report, which says that hormones present no conceivable hazard. The only hazard that they represent is to the 625,000 tonnes of beef that the European farmers have produced.
The United States would like to submit five main growth hormones to an independent study, but the European Commission has steadfastly refused to allow such a study. The party that is prepared to hold an independent study is more likely to be right than the party that is not.
§ Sir John Stradling Thomas
The Commission took this decision before the Lamming committee had had a chance to report. The decision was based on no scientific evidence at all, and the Lamming committee's conclusions pointed in the opposite direction.
§ Sir Peter Hordern
I am sure that my hon. Friend is right.
These problems are always likely to occur because of the nature of the common agricultural policy. Until it is reformed, they are likely to continue. Perhaps this was not the occasion for my right hon. Friend to use the Luxembourg compromise, but this measure must be seen in the context of the dangers of an escalating trade war with the United States. The new Administration there depend more than the last on the co-operation of Congress and are doing their best to co-operate with it. The new Government are far less steadfast in support of free trade than President Reagan was, so there is a real risk of a trade war.
Unless there is agreement soon, Congress will apply continuous pressure for more restrictions on trade. The reason for the worldwide slump after the crash of 1929 was the trade restraints in force at the time. The money involved in this case—only $100 million—is not the point. United States trade with the European Community is worth $145 billion—an enormous sum. If this tit-for-tat business starts, there will be no reason for it to stop.
I do not quite know how the Government should proceed, but we must get a firm grip on the negotiations in the EEC. This measure will do the Community no good. If America and the rest of the world get the idea that the Community is no more than a protectionist collection of nations, we shall be in serious trouble. I hope that if anything like this occurs again the Government will consider using the Luxembourg compromise.
§ Mr. Ken Hargreaves (Hyndburn)
I am grateful to the Government for the efforts they have made in opposing the hormone ban and for their attempts to find a solution to a dispute which could have been avoided if only those involved had looked at the facts.
There is no medical or scientific evidence to support the ban. The United States and Common Market countries have been using licensed growth hormones without any ill effects for 20 years. The irony of the whole situation is that the ban may bring about the risk to health that presumably it is intended to prevent. That risk to health comes from the use of natural hormones; 1 kg of cabbage has the same hormone content as 200 kg of meat from an implanted steer, and one litre of beer has the same hormone content as 100 g of meat from an implanted steer.
The risk comes from the danger that banning licensed hormones will lead to a black market in illegal unlicensed products. That is the real danger to health that those supporting the ban do not see, or perhaps do not want to see. These illicit substances, unlike the licensed ones, pose a threat to health because their constituents, the dosage and the method of application are uncontrollable and their presence in meat impossible to detect by present methods.
The United States claims to have evidence already that these hormone cocktails are being used illegally in Italy, Belgium and Ireland. That is an unacceptable and unnecessary risk. The directive should be revised to re-allow the use of the five licensed hormone products.
Because the EC meat processing industry is dependent on imported offal, the present ban puts at risk 400 jobs in the United Kingdom, 45 of which are in my constituency. Those workers, at World Foods in Great Harwood, who are likely to lose their jobs have a right to expect that our 452 attitude to the ban should depend on the facts. But sadly, except for the British Government, that is not how policy has been decided.
The European Parliament voted to introduce the ban without waiting for the report of the committee of scientists chaired by Professor Lamming, which had been commissioned to undertake a study of the five substances. The Council of Ministers abruptly dismissed the committee before the report was published, causing the scientists to come together at their own expense and openly and unanimously to declare that the hormones constituted no conceivable hazard to humna health.
The Labour party also stands condemned for its attitude. Mr. Brian Quinn, director of World Foods, wrote to the hon. Member for South Shields (Dr. Clark) on 28 December outlining the problem and asking for his support. Mr. Quinn was amazed to receive a reply from the hon. Gentleman saying:Before giving you my considered response, it would be helpful if you could let me know what response you receive from the Government.Mr. Quinn believes, as I do and as the workers at World Foods believe, that policy should be decided on the facts and not on whether a given situation can be used as a stick to beat the Government. My constituents wonder why their jobs have to be put at risk just to oppose the Government.
Stocks of North American tongues held in the United Kingdom are diminishing fast, bringing even closer the death of this industry and the loss of jobs. A way must be found to allow the United Kingdom tongue processing industry access to North American markets before it is too late.
I hope that the Government, having recognised the dangers of this dispute escalating, will continue to try to find a solution which common sense will bring about and ensure that common sense prevails, so that trade relations between the United States and the European Community can get back to normal.
§ Mr. Jonathan Aitken (Thanet, South)
I wish first to try to place this dispute not just in an agricultural and scientific perspective, important though that is, but in an historical and political perspective for the future.
We should begin by remembering what the role of the United States has been for the last 40 years in Europe. Ever since the Marshall plan and the days just after the war, the United States has consistently been a supporter of European strength, European prosperity, European trade growth and European political integration and cooperation. Yet here we are discussing the possibility of the outbreak of a major trade war. This tiny subject of beef hormones could be the Sarajevo of the trade war of the future. Therefore, it is much more serious than just a mere scientific wrangle, important though that is.
This is a silly and unnecessary dispute. I could not agree more with those of my hon. Friends who have already forcefully made the point that there is no scientific basis for the directive. I am glad that the Government voted against it, although I am mildly concerned by the point raised by my hon. Friend the Member for Stafford (Mr. Cash), which I do not think has yet had a satisfactory answer from the Front Bench, that there was an opportunity for us to exercise our veto at the preliminary stages in the EEC machinations. I hope that the point will be answered by the 453 Minister for Trade, my hon. Friend the Member for Plymouth, Sutton (Mr. Clark), as to why we seemed to be asleep at the switch at the moment when we could have used the veto.
I deplore most strongly the speech of the hon. Member for Hamilton (Mr. Robertson) on behalf of the Opposition. I thought that he was trying in the most opportunistic way possible to leap on a cheap and easy bandwagon. It is not justified. He does not usually agree with the European Commission, but the Commission's fault is that it gave way to political pressures of the most superficial and wrong kind. The European Parliament, too, stands condemned in its attitude because it confused green emotions and health populism with responsible government and diplomacy. What is necessary now is for the EEC to cool it. Of course, I am glad that the countermeasures have been delayed.
I want to press my hon. Friend the Minister on one paragraph of the document issued by the Ministry of Agriculture, Fisheries and Food—a Department which is in trouble for issuing contradictory statements. That paragraph, which seems to contradict the tone of the speech of my right hon. Friend the Minister of State, Foreign and Commonwealth Office says:The Department"—that is MAFF—adds that the proposal reflects the Commission's belief that the United States' measures are not consistent with the GATT, and that measures of an equivalent effect are necessary to protect Community interests.I have two comments on that statement. First, GATT has not pronounced judgment on the matter. I do not see why our Ministry of Agriculture is jumping the gun and pronouncing judgment when GATT has so far scrupulously refrained from doing so. Secondly, I do not agree thatmeasures of an equivalent effect are necessary to protect Community interests.Far from it. The Community should now be back-tracking and going into reverse.
I was somewhat concerned with the tone of the opening speech of my right hon. Friend the Minister of State when she seemed to indicate that Secretary of State Baker had had a jolly good wigging from my right hon. and learned Friend the Foreign Secretary and had been told that he should get his act together, back off and stop his nonsense. That was the general impression that my right hon. Friend's words created.
Our Government should indicate as clearly as possible that the EEC has got this one wrong. Britain, albeit as a lone voice—but, I hope, a strong one—should make it crystal clear that this is an issue on which we not only disagree with the EEC but on which we shall use all our influence to try to achieve a reversal of this foolish and unwise policy.
I am glad that my hon. Friend the Minister for Trade is to reply because he will be aware, perhaps more than anyone else in the House, of the long-term implications of this potential trigger for a trade war. He must play some part on behalf of the United Kingdom Government in the Uruguay round of international trade rules redrafting, which is likely to take place in the early 1990s. This dispute is likely to trigger a hostile reaction in the Uruguay round if we are not extremely careful.
As 1992 is opening Europe up internally it is also in danger of closing doors externally. My worry is that this little dispute is a symptom of a far worse disease—creeping protectionism, perhaps leading to the mortal illness of 454 Fortress Europe. The reciprocity issue is rearing its unattractive head in areas far wider than beef hormones—in the second banking directive, in the social dimension, in the European companies statute, there is one sign after another that Europe is moving towards some form of protectionism. I am pleased to see so many of my hon. Friends here and in such strong voice, making it clear to the Government and to the empty Opposition Benches that what is happening must be stopped as soon as possible.
§ 1.7 am
§ Mr. Tim Smith (Beaconsfield)
I was amazed by the speech the hon. Member for Hamilton (Mr. Robertson). I took part in the debate on the Medicines (Hormone Growth Promoters) (Prohibition of Use) Regulations 1986, which took place in Standing Committee on 3 December. That debate was opened by the hon. Member for Kingston upon Hull, West (Mr. Randall), who said this:Opposition Members support the use of growth promoters or hormones, in principle, providing that there is scientific evidence to suggest that the products are safe to the consumer, the animal and the people who administer them.So what we have heard this evening is the most staggering volte-face on the part of the Opposition in just two years, simply to jump on the health bandwagon.
What is more, in that Standing Committee the hon. Gentleman made some remarks about the pharmaceutical industry.The Parliamentary Secretary knows that these industries manufacture for their own stock and retain stocks for vets and farmers.He went on to complain about the way in which the industry had been treated as a result of the introduction of the directive and the regulations:I have received representations from the pharmaceutical industry, and I am worried about the way that it has been treated.A few sentences later he asked:Will the Government compensate the pharmaceutical industry for the tremendous losses that it incurred…?"—[Official Report, Second Standing Committee on .Statutory Instruments, &c., 3 December 1986; c. 2–6.]So I wonder who actually is the spokesman for the pharmaceutical industry. We have seen the most extraordinary change.
The Government should stick to their guns. Their position is entirely correct—there is no scientific base for the directive. That has always been the Government's position, and the matter could be resolved sensibly if the Government could persuade other members of the EEC to repeal the directive. There is no reason why that should not be done. My understanding is that some member states which originally voted for it have had second thoughts. The question that I wanted to ask my right hon. Friend the Minister of State at the end of her speech was whether she could confirm that.
Perhaps I may put a question to my hon. Friend the Minister for Trade. Is there any prospect of persuading the members of the Council that the measure is nonsense, has no scientific basis and ought to be repealed? That would be the best way forward.
§ 1.9 am
§ Mr. Bowen Wells (Hertford and Stortford)
I wish to support all the contributions of my hon. Friends and to tell my right hon. Friend the Minister of State and my hon. Friend the Minister for Trade that we clearly must find a way out of the impasse.
I agree that to use the Luxembourg compromise, which the Government could have done, would be an excessive use of the veto, but we shall soon have to consider using such an extreme measure in order to nip in the bud this nascent trade war which, as others have said, will tend to escalate into an important and damaging affair between the United States and the EC. When the matter is negotiated over the next two weeks, that may be a way in which to reach a compromise.
It seems clear to us that there is no scientific evidence for the ban. Therefore, the EEC has to face the fact that the imposition of such a ban is protectionism. It is protecting Europe's beef industry against that of the United States.
If that is the case, we might reach agreement by setting up a joint committee with the United States scientists and those supporting the European case in order to decide first whether the scientific evidence is valid and then, after due consideration, to discuss whether, as my hon. Friend the Member for Beaconsfield (Mr. Smith) suggested, the directive should be withdrawn. In that way we may be able to stop the present escalation of the trade war so that all the parties can reconsider their positions. In the meantime, both sides should remove the current trade restrictions.
§ Mr. William Cash (Stafford)
I heard the speech of the hon. Member for Hamilton (Mr. Robertson) with increasing disbelief. It was clear that he had not done his homework. Apart from anything else, he does not seem to have realised that the United States Government have sought to invoke an arbitration agreement within GATT to resolve the question, and the European Commission has obdurately refused.
I had reason to refer to a similar matter last week on reciprocity and the banking directive when the European Commission, despite the unanimous view of the member states, refused to withdraw those provisions. I said then that I thought that it was time that the European Commission was effectively given instructions in such matters. It may be difficult to achieve that, but the bottom line is the Council of Ministers, which, in turn, is accountable to national Parliaments and electorates. The time is coming when we have to put our foot down over the way in which the European Commission is acting because it is getting completely out of hand.
§ Miss Emma Nicholson (Torridge and Devon, West)
Does my hon. Friend agree that the real bottom line is whether the consumer will be prepared to buy the beef if it comes back on sale full of hormones? If the committee mentioned in the excellent proposal put forward by my hon. Friend the Member for Hertford and Stortford (Mr. Wells) a moment ago should be formed and we manage to have the ban lifted, which must be proper if scientific evidence supports it, unless the consumer buys the beef it will all be to no avail. The increasing emphasis on the fears and worries as a result of the greater information given to the consumer on bovine spongiform encephalopathy in 456 recent weeks means that it is in all our interests to ensure that the consumer is confident that the beef on sale is healthy.
Finally, will my hon. Friend comment on whether he feels that the United States will lift its ban if we do not? In conversation two weeks ago, the chairman of the agriculture committee of the Senate made it clear that he thought that we were all silly, and I do not think that the United States will.
§ Mr. Cash
My hon. Friend may recall that during the debate there has been significant reference to Professor Lamming's expert committee. I would prefer to rest my case on that, plus the fact that it is clear that the European Commission is not interested in negotiating such matters. The Commission seems to be making this into an issue of principle. As I shall seek to explain, it is playing a dangerous game.
I have briefly referred to the possibility of having the opportunity at an earlier stage of exercising the veto, but I must remind the House that in 1986 my right hon. and learned Friend the Foreign Secretary reaffirmed the existence of the Luxembourg accord and my right hon. Friend the Minister of State, in her evidence to the House of Lords Select Committee on the European Communities, made the same point. There is a fallback position, so one must weigh up the balance of interests when one is talking about what is a vital interest and one must determine that against the consequences of the veto. I can hardly conceive of any matter that is of more importance or more directly germane to the vital interests of this country, and of the European Community, than that we should be in a trade war with the United States of America. If that is the case, I should have thought that, above all else, this is an occasion on which we should be seriously considering using that reserve power in the Luxembourg accord.
We are here again discussing a matter of the greatest possible importance for Britain and the European Community at an impossibly late hour. However, I am glad to be able to pay due acknowledgement to my right hon. Friend the Leader of the House for arranging this debate, following strong representations by the Select Committee on European Legislation, followed up, if I may say so, by personal repersentations not only by my right hon. Friend the Minister of State but by others, including myself, so that we would be in a position to have this debate before the decision was taken in the Council of Ministers. That is crucial and follows from a resolution of the House in 1980.
Nothing could be more dangerous and counterproductive than a trade war with the United States. I recall taking part in a similar debate a few years ago at the time of the "gin war". Only five hon. Members were present for that debate, which, admittedly, took place on a Thursday night when most hon. Members had returned to their constituencies. My hon. Friend the Minister for Trade may recall that occasion because it was a serious incident, which could easily have led to another trade war. It heartens me to see as many as 60 or 70 hon. Members at one time or another taking part in and listening to this debate.
Last week, we discussed the vital second banking directive at a similar hour. In all sanity, we must take a measured look at our sense of priorities and selectively decide to debate such matters as are now before the House in prime time. This debate will almost certainly pass 457 without notice or comment in the papers or other media, yet it is at the pivot of our economic affairs. That cannot be allowed to continue. I hope that I am right in believing, from all that I have heard, that at last some change in our procedures is imminent—a change made all the more important by the majority voting which is a result of the Single European Act. Especially in the wake of the historic speech at Bruges by my right hon. Friend the Prime Minister, we must surely reassess our procedures and priorities through the other end of the telescope of Bruges.
Even if there had been no speech at Bruges, we would still need to address ourselves urgently to the prospect of a trade war with the United States. Such a war would be economic suicide and would serve no useful purpose. The issue before us is the trigger on the gun which, as my right hon. Friend the Minister has pointed out, was not of our making. Perhaps at this stage it will affect only about £1.5 million-worth of United Kingdom exports, but that is not the point.
I am aware that the United States' retaliation to this hormone regulation was whipped up by the European Parliament on flimsy, unsubstantiated evidence, which has been targeted primarily at Italy, where the impact of the regulations will affect Italians to the tune of £30 million, and West Germany, where really dangerous hormones are being used by some accounts, to the tune of £15 million.
The issue has been handled by the European Commission, which must bear the primary responsibility for this state of affairs, despite the careful and weighty report of Professor Lamming's group of experts, which described the European Commission's actions and those of the European Parliament asa case of legislate in haste and repent at leisure".I do not disagree with their issue of principle, but I do disagree with the notion that it is a case of repent at leisure because. in a nutshell, unless on 20 February the Commission and the Council of Ministers—[Interruption.] We listened to the interminable speech of the hon. Gentleman as he rabbited on about pharmaceutical companies and the rest, so he should have the courtesy to keep quiet for a while.
It should be on the cards that we withdraw this proposal because otherwise the trade war will almost certainly escalate, with an accompanying recession that we shall not merely repent at leisure, but most grievously suffer. We should make no mistake about that.
We have been precipitated into this position without our consent, without our wanting it to happen and despite the attempts of our Ministers in the Council of Ministers up to the present moment. We must sort out this matter as quickly as possible, but if there is no way of shifting the Commission, I ask the Government to exercise the veto because only at that point would we be in a position to protect vital British interests. If it is not possible to exercise the veto—I look to the Minister in this matter of grave urgency—I advise the Government that every conceivable effort should be made to ensure that we negotiate as hard as possible so that other member states realise the serious dangers that we would face if we had a trade war with the United States.
§ Mr. John Greenway (Ryedale)
The seriousness with which Conservative Members and the Government view this matter is evident from the number of hon. Members 458 on our Benches and the fact ghat there are three Ministers representing three Departments on the Front Bench at this late hour.
That suggests that three issues are involved. The first is our relationship with the European Community. I entirely agree with what my hon. Friend the Member for Stafford (Mr. Cash) has just said. I do not propose to go over that, except to say that I hypothesise that, if a Minister of this Government came to the House to report that he had taken the decision that the European Commission has taken, there would rightly be utter uproar. If the European Commission cannot be trusted to come to the right decision, we in this House should be given the opportunity to debate some of these matters in prime time, before the decisions are taken. How that is done is clearly for my right hon. Friend the Leader of the House to decide. However, I note that my right hon. and learned Friend the Chief Whip is on the Front Bench, and I am sure that he will take note of the comments made.
Secondly, I advise my hon. Friend the Minister for Trade—I understand that he will reply to the debate—that my interest in this is purely on behalf of the businesses in my constituency which are deeply frightened at the thought of a trade war with the United States of America. It is an extremely serious matter. Indeed, nothing more serious has come before the House in my time as Member for Ryedale.
The third issue is food hygiene, which is extremely topical. I strongly believe that, unless we stick to scientific advice as the only basis for imposing a ban on products or procedures, we will get into extreme difficulty. As we have seen in the past few weeks, the media are perfectly capable of whipping up a great deal of hysteria and bringing fear into the hearts and minds of many people, including housewives and the elderly. We can deal with the problem of food hygiene by relying on scientific advice. The concern is that the European Commission did not wait for scientific advice. Now that there is that advice, it still chooses to ignore it.
I urge my right hon. Friend the Minister of State, Foreign and Commonwealth Office to encourage the European Commission to reconsider the ban. It needs to be renegotiated. I accept, of course, that it is reasonable to have a ban on hormone products that are unsafe. I am sure that we all wish my right hon. and learned Friend the Foreign Secretary godspeed and every success in the negotiations this weekend. The only short-term way of avoiding a trade dispute is to reach a negotiated settlement with the United States. I urge my right hon. Friend the Minister of State to convey to my right hon. and learned Friend the good wishes of the House. We await the outcome of the negotiations with great concern.
§ Mr. Robertson
With leave of the House, Mr. Deputy Speaker, I wish to reply on behalf of the Opposition.
There has been a perverse unity on the Government Benches this evening. It seems that if the United States, on whatever flimsy pretext, threatens a trade war with the United Kingdom or the European Community, the view of Conservative Members is that we should automatically back off, back down or give in. In this instance, the United States has little or no case. A decision was taken in Europe 459 by the European Parliament—it was elected by all the member countries—whether on scientific evidence or on popular preference, to make a decision.
§ Mr. Robertson
No. I shall not give way to a Conservative Member.
A decision has been made by the consumers in Europe, which has been endorsed by the European Parliament and the Council of Ministers, involving 11 of the 12 nation states of the European Community. The great patriots on the Conservative Benches seem to suggest that we should back down.
§ Mr. Robertson
I am making a brief contribution that will enable the Minister to reply. I do not intend to be interrupted by any more of the contrived cacophony from Conservative Members.
The hon. Member for Torridge and Devon, West (Miss Nicholson) made some perceptive comments in an intervention in a lacklustre speech by the hon. Member for Stafford (Mr. Cash). One of the real reasons for the contrived dispute that we are discussing is the fear of the American drug companies that consumer preference in Europe will spread to the United States, which will lead to an infringement of their profit levels and their markets, in the same way in which the European pharmaceutical companies have been affected.
The hon. Lady makes the valuable point that, at the end of the day, the decision will be made by consumers. If the ban were to be lifted, consumers would still make the choice. Whatever the view of the experts, there is a large lobby in the United States that forced Ronald Reagan to back away from the plans of the Food and Drugs Administration to have similar controls on hormones to those that we are discussing. It tried to head off the European Parliament the European Commission and the Council of Ministers from taking the same course and protecting the European consumers.
My hon. Friend the Member for Kingston upon Hull, West (Mr. Randall) was quoted cleverly by the hon. Member for Beaconsfield (Mr. Smith). My hon. Friend's remarks came from a debate that took place about two years ago, and there was a reference to trying opportunistically to jump on the health bandwagon. If there is a bandwagon worth jumping on at any time in political life, it is the health one. The qualifications which were laid down in that debate stand as validly now as they did then.
§ The Minister for Trade (Mr. Alan Clark)
This has been an important debate. That is testified by the remarkably strong attendance in the House at such a late hour. There is a marked difference between the Government and the party of irresponsible dilettantism—the SLD—because not a single member of that party attended or contributed to this extremely important debate.
As my hon. Friends have explained, a number of extremely important and interrelated issues have been raised in the debate. In a characteristically constructive 460 contribution, my hon. Friend the Member for Horsham (Sir P. Hordern) asked me particularly to respond about the Government's attitude to the Lamming report. We have voted against that measure twice and we took the matter to the European Court of Justice. There was very little more that we could have done.
My hon. Friend the Member for Stafford (Mr. Cash) is unrivalled in his detailed knowledge of this topic and the vigilance with which he addresses the behaviour of the Commission. He argued that we should use the Luxembourg compromise, but the Government's judgment was that it should be deployed only in a dispute of major importance. While I appreciate that many hon. Members believe that the matter was of that dimension, the Government decided that it was not of such a dimension as to require the use of the Luxembourg compromise, which is very complex and the outcome of which is not certain. We may be thankful that it was not used in this case. I would digress on that subject if I had more time.
The central theme running through the anxieties expressed today was that of a trade war developing. My hon. Friends have rather overstated that possibility. There is a genuine feeling in the Community and in the United States that such a trade war must be avoided if possible. Clayton Yeutter is an old acquaintance of mine in his former role as the United States trade representative and I know that he is a convinced free-trader. He is well aware of the dangers and is in an important position in the Administration. Other voices in the Administration are also aware of the dangers and, provided that we do not get into a cycle—this is essential—of counter-retaliation and reciprocal counter-retaliation, the problem should be avoided. Such counter-retaliation is the principal danger and the problem about which the House is most anxious.
My hon. Friend the Member for Hyndburn (Mr. Hargreaves) has raised this subject before on the Adjournment. He has a deep knowledge of the problem and he made the important point that there is an aggravated danger of a black market in illegal hormones and their misuse developing in the absence of proper regulation.
My hon. Friend the Member for Thanet, South (Mr. Aitken) is always vigilant in scrutinising and drawing our attention to the Commission's excesses. He made a number of telling points and was concerned about the prospects of Community protectionism. I do not believe that the regulation is a symptom of protectionism, although some right hon. and hon. Members may like to think so. The future and the prospects after 1992 should be considered separately from the threat to the GATT system and to the development of the Uruguay round, and the danger of war.
§ Mr. Aitken
As my hon. Friend progresses, I am having difficulty understanding precisely the Government's policy. So far, my hon. Friend has indicated, in the clearest language, his belief that it will be dangerous for any further steps to be taken towards attack or defence. However, the sixth report of the Select Committee on European Legislation reported:The Departmentmeaning the Ministry of Agriculture—adds that…measures of an equivalent effect are necessary to protect Community interests.461 That means that the Government, when they made that submission, believed that a further move towards a trade war was necessary. Is that Government policy, or are we now reversing Government policy?
§ Mr. Clark
I will deal with the point made by my hon. Friend the Member for Thanet, South simultaneously with that of my hon. Friend the Member for Beaconsfield (Mr. Smith), who suggested that we should try to have the measure in question repealed or withdrawn. That is not practicable, and I hold out no hope that such a thing is feasible.
As to the suggestion of my hon. Friend the Member for Thanet, South, that the Government wish to encourage or even tacitly support a further round of Community retaliation, I assure him that whatever he may read into the sentence that he quoted, that is not Government policy. We shall continue to encourage the Foreign Affairs Council to delay implementation of any counter-retaliation measures. My hon. Friend will be glad to learn that as a result of bilateral discussions with our partners there are positive signs that every effort will be made to resolve the matter by negotiation and to desist from becoming involved in a retaliatory cycle.
There are serious issues at stake, but I re-emphasise that it is the Americans who challenged the Community's right to ban on a non-discriminatory basis the use of hormones in meat production. That is not illegal in terms of GATT. It is the Americans who resorted to unilateral measures of trade retaliation. The Community rejects those measures which, in the Government's view, are clearly not permissible under GATT. It is vital that matters are looked at in a temperate and rational way, and in the proper forum.
My right hon. Friend the Minister of State, Foreign and Commonwealth Office, indicated the three separate headings under which GATT can consider the matter. We must avoid giving the world at large the message that if one country dislikes the trade policy of another country—never mind the scientific evidence—it can resort to unilateral measures forthwith.
§ Question put and agreed to.
That this House takes note of European Community Document No. 4296/89 on tariff concessions and import duties on certain imports from the United States of America; and supports the Government in pressing for a negotiated settlement to the dispute between the Community and the United States of America over the Community's prohibition of imports of hormone treated meat as a means of averting trade disruption and damage to wider Community-United States relations, particularly in the context of the current round of multi-lateral trade negotiations in GATT.