HC Deb 10 December 1990 vol 182 cc667-79

4 pm

The Secretary of State for Trade and Industry (Mr. Peter Lilley)

With permission, Mr. Speaker. I wish to make a statement on the general agreement on tariffs and trade Uruguay round negotiations that took place in Brussels last week.

My right hon. Friend the Minister of Agriculture and I attended on behalf of the United Kingdom, together with Ministers from more than 100 countries, to negotiate a package of trade liberalising measures. That followed over four years of negotiations covering 15 subject areas. After four and a half days of discussion, it was decided that the negotiations could not be brought to a conclusion by the end of the week, but should be continued in Geneva, with a view to completing them early in the new year.

The United Kingdom has consistently argued for a substantial outcome to the round. The world economy is slowing down and urgently needs the non-inflationary stimulus that only a successful round can provide. As a major exporter, the United Kingdom stands to benefit more than most from open world markets and to lose more than most from the failure of the round. We want to see the GATT system maintained and strengthened as it provides the best guarantee against protectionism. We stand to gain in particular from extending the GATT system to the new areas of services, intellectual property and investment.

My right hon. Friend and I made strenuous efforts, both within the Community and outside, to urge flexibility on all sides, to discourage premature suspension of the talks and to help secure such progress as was made in the final stages of the week. The European Community was united in wanting to see a successful conclusion to the round. There was recognition that to achieve that, further movement was needed in all sectors, including agriculture. But the conference regrettably did not get down to serious negotiations on the crucial issue of agriculture until too late in the week to enable the process to be completed. The blame cannot be laid entirely at the door of any one participant. All needed to move. They started too late, and moved too little. We remain convinced that agreement is possible in this sector, given more time and the necessary political will from all participants.

I was disappointed that agreement was not reached in Brussels last week. But the round is not over. There is too much at stake to allow it to fail. The outlines of a substantial package emerged at Brussels. Impressive progress was made in many sectors—including some of the most difficult and complex, such as textiles and intellectual property. It would be a major achievement to bring agriculture and textiles under GATT disciplines for the first time and extend the GATT system to include services, intellectual property and investment. We can still achieve those aims.

What we need to do now is consolidate the progress that has already been made and to use the next few weeks to build on it. The United Kingdom will continue to play an active part in that. At the European Council next weekend, and during his visit to Washington later this month, my right hon. Friend the Prime Minister will press participants to show the necessary political will to resolve the outstanding issues and ensure an outcome from which the whole world will benefit.

Ms. Joyce Quin (Gateshead, East)

The failure to reach an agreement in the GATT round is serious and the only sign of hope is that there is, at least, a commitment to resume talks. Will the Secretary of State give us details on the likely timetable of resumed talks and a few more details about what discussions the Government will be involved in between now and when the talks begin? The Secretary of State mentioned the Prime Minister's likely involvement. Would not it have been advisable for the Prime Minister to be involved before now, for example by having urgent talks with Chancellor Kohl and President Mitterrand last week to try to avoid the breakdown that subsequently occurred?

Will the Secretary of State say more about the attitude taken by himself and his colleague, the Minister of Agriculture, Fisheries and Food, in the talks? We know that the Government and the Conservative party are badly split on Europe, with one faction trying to stand in splendid isolation and the other faction trying to be a loyal member of the club. However, the common agricultural policy is not the issue on which to be a loyal member of the club. We feel strongly that the Secretary of State should not support the CAP up to the hilt in the negotiations, but ought to argue for a change of attitude by the Community and in favour of fundamental reforms.

Will the Secretary of State confirm that the Community's agricultural offer of a 30 per cent. cut would in reality be only a 15 per cent. cut, given that 1986 was taken as the base year? Will the right hon. Gentleman say what base year the Government favour?

Why did the Secretary of State and the Minister of Agriculture, Fisheries and Food, together with the Community, fail to table a precise figure on cuts in export subsidies—which cause the greatest problems for world trade? We are not against supporting a vital industry such as agriculture, but the present form of CAP policies is causing problems in world trade as a whole.

The Secretary of State made only a brief reference to the textile industry. Can he guarantee that, if textiles and clothing are brought under GATT rules, those rules will be strengthened to ensure fair trade? We are particularly anxious that they should include a strengthened safeguards clause, anti-dumping provisions, design and copyright protection and a means of opening hitherto closed markets to United Kingdom textile exporters.

If the talks do not resume, or if resumed negotiations fail, what will the Government's attitude be towards drawing up a new multi-fibre arrangement or renewed bilateral agreements?

We welcome the progress on services, but can the Secretary of State give more information about outstanding problems in that sector—particularly given its vital importance to the British economy?

The Secretary of State made no mention of developing countries and that was a remarkable omission. What action was taken in the GATT round to ensure that the poorest developing countries will not lose out? Also, is not it the case that many important issues were largely ignored in the four wasted years of the Uruguay round? I refer to, for example, the environmental aspects of world trade, which concern many right hon. and hon. Members, and social considerations, seeking to ensure that a trading system emerges that does not rely on exploitation or appalling working conditions in the poorest countries. Those are, of course, huge issues and it may be argued that it will be difficult to introduce them into the negotiations at this late stage. However, will the Government at least press that future rounds take account of environmental and social considerations?

Meanwhile, the priority must be to break the deadlock. We urge the Government to make more determined efforts to bring about changes in the Community's attitude to agriculture in particular. By doing so, they will avoid the risk of an even deeper recession at home and prolonged recession throughout the world.

Mr. Lilley

I welcome the hon. Lady's recognition of the seriousness of the postponement and prolongation of the talks. She asked about the likely timetable. The British Government want the talks to resume as soon as possible, and we shall be discussing with Mr. Dunkel and others the means of achieving that. It has been suggested that the talks will resume in mid-January.

The hon. Lady asked also about further discussions. I will be urging in personal discussions and telephonically with our European partners an early resumption of the talks, and maximum flexibility when they do resume. I mentioned earlier that my right hon. Friend the Prime Minister will he raising the matter at the European Council and at his meeting in Washington. The hon. Lady suggested that my right hon. Friend the Prime Minister should have arranged meetings with President Mitterrand and Herr Kohl. In fact, we were closely in touch with the French and German representatives and in our discussions with the Community we succeeded in securing flexibility in interpreting the Community offer. That possibility was always available to my right hon. Friend, should it have been needed.

The hon. Member for Gateshead, East (Ms. Quin) made a little joke about the alleged split in the Conservative party. I assume that she did that to cover up the difficulties that she clearly finds in her own party, not least on this issue.

The Government firmly believe in freedom of trade. We believe that Europe is based on greater freedom of trade. We are wholeheartedly behind the single market, the essence of which is the removal of barriers to trade at an even more advanced scale than that envisaged within the GATT round, and we argued strongly that our partners in Europe should he flexible on all fronts.

The hon. Lady urges me not to be loyal to the common agricultural policy. I am not sure in which camp, in the supposed divisions within the Conservative party, she places me. I am anxious to hear. We urged upon the Community a reformulation of proposals put forward on agriculture to ensure maximum flexibility and to enable us to meet the concerns of other parties within the GATT round, as far as possible. By and large, that message was taken, but, as I said in my statement, it was too little and too late.

The hon. Lady asked for confirmation that the 30 per cent. offer amounts in practice to only 15 per cent. She is correct in saying that the 30 per cent. dates from the beginning of the round. It was agreed at the mid-term talks that that should be the base starting date for cuts in subsidies. We naturally support the agreement reached then—it seems to be a sensible basis for putting forward offers for cuts and subsidies.

In most of the discussions held last week in Brussels, the pressure was not on the Community to increase the 30 per cent. figure, but to reformulate it in such a way as to assure other parties that it would feed through to a reduction in export subsidies, as well as a reduction in totals. That is something which we did support and advocate.

As regards textiles, I can confirm that progress was made. It is waiting to be finalised—since nothing is final in these rounds until everything is finalized—but progress was made on strengthened rules and disciplines and on greater market access for textiles. The worst outcome for the textile industry would be a total collapse of the GATT round. The present MFA ends in July 1991 and, until we agree, there is nothing to replace it. At present, an outline agreement for a transitional phase of about 10 years could result if we conclude the whole round successfully.

The hon. Member for Gateshead, East asked about outstanding problems with services. In the early days of our discussions it was difficult to get any movement from the United States towards accepting that the most-favoured nation principle should extend to all areas, and that all services should be included within the framework agreement. Towards the end of the talks the United States took some steps towards that and we believe that we could have progressed further had the negotiations continued, and we may do so if they resume.

The hon. Lady also mentioned developing countries. I recognise the important part that they have played in these talks so far and their importance for a successful outcome. One of the contributions that the European Community made during the negotiations was to improve its offer on tropical products. That was partly a result of urging by this country and it was well received by the developing countries.

Conditions of employment in less-developed countries are primarily a matter for the countries themselves. If we exclude their products from our markets, we do little to benefit people in less-developed countries. Often, that is simply a hidden form of protectionism, which I do not believe that any Conservative Member would like us to resort to.

Several Hon. Members


Mr. Speaker

Order. As we have had numerous debates on this matter, could hon. Members confine their questions to the breakdown of talks and not mention issues which have been debated previously?

Sir Peter Hordern (Horsham)

Will my right hon. Friend prevail on the Leader of the House to find time for an early debate on the breakdown of the GATT negotiations, as that is a serious and timely matter? Can my right hon. Friend confirm that the breakdown of these talks is primarily due to the common agricultural policy, the worst feature of which are export subsidies, which constitute an abuse to the rest of the world and to trade with the rest of the world? Will my right hon. Friend tell the House whether he believes that, apart from ourselves, the Community has the political will, of which he spoke earlier, to bring about a satisfactory renegotiation of the common agricultural policy so that the GATT negotia-tions can continue?

Mr. Lilley

I will certainly convey to our right hon. Friend the Leader of the House my hon. Friend's point about the importance of an early debate on the subject. I do not think that the breakdown of the talks can be attributed to one party exclusively. I was implicitly critical of those who were slow to move and offer concessions and whose concessions were not great enough. In the course of the week, however, the Community did offer to adopt a more flexible stance—in particular, to try to satisfy the concerns of others about export subsidies, a subject which, as my hon. Friend rightly says, is central to the success or failure of the round. We shall continue to press that point.

I also pointed out to the one or two Community members that were not averse to a suspension of the talks that any such suspension would probably increase the cost of success in the future, as everyone would have to make additional concessions to purchase a resumption of negotiations and, once they had been resumed, further concessions would be in order. I suggested that those who were most willing to countenance a breakdown should perhaps be most forthcoming in making concessions.

Mr. Peter Shore (Bethnal Green and Stepney)

This is a really appalling example of the dangers to world trade, and to producers in both developing and developed countries, of what can be described only as short-sighted European protectionism. Indeed, it is the worst possible example in relation to agricultural policy and agricultural trade.

The Secretary of State will have to accept that he has no power in this regard, as agricultural and trade policies have been handed over to the Commission and the Community for the past, heaven knows, 17 years. Will he at least ensure, however, that the matter is raised and discussed in the European Council meeting later this week? Will he also raise the whole question of agricultural policy, under the heading "subsidiarity", in the political union talks, so that we can discuss seriously the undoubted benefits of leaving to the European Community no further part of agricultural policy that ought to be resumed under national control?

Mr. Lilley

I agree with the right hon. Gentleman that the role played by Community member states is different from that played by other countries that participate directly in the negotiations. We negotiate through the Commission and empower it, broadly, to negotiate on our behalf.

I agree that it is something of a paradox that countries whose Heads of Government seem most willing, in principle, to hand over sovereignty to the Community seem to send to the negotiations Ministers who are most reluctant to empower the Commission to look after their national interests and who seem anxious to claw back control over the Commission. That, however, is one of the rich paradoxes of Community life.

Mr. Norman Tebbit (Chingford)

May I ask my right hon. Friend not to pay too much attention to the comments made by the "Euro-mats" on the Labour Front Bench? They, of course, would limply agree with anything that was the edict of Brussels, and therefore have no standing whatever in these matters.

More to the point, had my right hon. Friend been negotiating with full negotiating powers on behalf of the British Government, would his policy have been in any way different from that with which he was compelled to go along in Brussels last week?

Mr. Lilley

I am sure that, in that happy circumstance, success would have ensued. It is only fair to point out, however, that in general the United Kingdom was offering strong support to the Commissioners who were negotiating on our behalf and seeking to give them the maximum leeway in the broad negotiating envelope that we had developed, so that they could reach agreement with the other side rather than placing obstacles in their way and shackles on their freedom of negotiating power.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

May I press the Secretary of State on the question of textiles? It is difficult to grasp the detail. I should be obliged if he would say a word about the linkage between strengthened rules and disciplines and access to third countries' markets. It might be helpful to put a draft of the text in the Library, so that hon. Members can see for themselves what has been at least tentatively agreed.

In the event of no agreement being reached by July 1991, if the MFA flies off, will that mean no controls after that date, and does the same apply to bilateral agreements that go beyond July 1991?

Mr. Lilley

To respond to the hon. Gentleman's last question, if there were no successful outcome to the round —I hope very much that there will be—the CAP would terminate automatically—[HON. MEMBERS: "CAP?"] I am sorry, the multi-fibre arrangement: that was wishful thinking. The MFA will lapse automatically at the end of July. Textiles will then automatically be treated in the same way as other goods. Bilateral arrangements are largely outlawed under the ordinary GATT agreements. GATT's purpose is to try to phase out and do without such things. I shall try to put any papers that are available in the Library for hon. Members to peruse, though some of them are opaque and include many square bracket entries where agreement has yet to be reached.

On textiles generally, we believe that considerable progress has been made in securing intellectual property rights, which will be of benefit to textiles in outlawing piracy of designs, and so on. That will come into effect before the full phasing out of the multi-fibre arrangement. There should be increased access to overseas markets through tariff reductions and the removal of non-tariff barriers. There should be an improved safeguard mechanism, and other rules and disciplines will come into effect well before the phasing out of the MFA— [Interruption.] Well, it does not need to be a condition. It will be there, before the phasing out of the MFA.

Mr. Steve Norris (Epping Forest)

Given that my right hon. Friend has already referred to the fact that some of the European Community delegates to the talks seemed to be remarkably unwilling to allow the Commission to negotiate on their behalf, does he consider that that might have some interesting ramifications when one takes into account the proposed European central bank?

Mr. Lilley

My hon. Friend makes an important point. It was an interesting experience to participate in last week's negotiations. It is hard to believe that those who are so reluctant to concede sovereignty on a matter which, in principle, has been within the Community's competence for the past two or three decades would be willing to hand over monetary policy to a truly independent central bank.

Dr. Dafydd Elis Thomas (Meirionnydd Nant Conwy)

Does the Minister accept that it comes as no surprise to those of us who have been concerned about the detail and the political framework of the common agricultural policy for a number of years that the talks should have broken down, partly on the basis of failure to reach agreement on a common CAP position between the Community and the other participants? Does he also accept that, in a sense, the European Community brought about the breakdown because of its failure to renegotiate the framework of its CAP? Those of us who share the Minister's view about export subsidies are equally concerned about establishing a framework that will maintain agricultural support in terms of income, environmental and landscape objectives and also the food production objectives of the common agricultural policy. Will the Minister initiate such an attempt within the Community?

Mr. Lilley

My right hon. Friend the Minister of Agriculture, Fisheries and Food is attending a meeting of the Community's Agriculture Council. Doubtless the member states will consider the consequences of the temporary suspension of the round. Such implications as those that the hon. Gentleman raises will be considered. I still think that it is wrong, however, to attribute the breakdown of the talks entirely to the Community or entirely to the common agricultural policy. Everyone must take their share of the blame. Many of the parties were reluctant to make concessions until too late in the week. When the Community showed flexibility, others were unwilling to recognise that it was making movement. There is only limited freedom of action for the Community, given the need to provide some sustenance of farmers' incomes.

Rev. Ian Paisley (Antrim, North)

Does the right hon. Gentleman really believe that the European trade Ministers gave sufficient flexibility to the Commission to reach agreement? Will he confirm that he believes that if the negotiations had continued there could have been a settlement? Will he also confirm that the Government's policy is still that if subsidies to farmers, who face very difficult circumstances, are cut off, there will be adequate compensation for them?

Mr. Lilley

Yes, I believe that we allowed our negotiators considerable flexibility. Had the talks continued and we were arguing against suspension, it might have been possible for other members to draw out that flexibility and to achieve concessions valuable to themselves and acceptable to the Community. It will probably now require greater flexibility by the Community and everyone else to resume negotiations and to bring them to a successful conclusion early in the new year. We shall have to show greater flexibility than if we had concluded negotiations this week.

Mr. Nigel Spearing (Newham, South)

Does the Secretary of State agree that hon. Members on both sides of the House have spotted the common agricultural policy as the problem because that policy is predicated on a political ratchet: first, the decoupling of taxes from control and, secondly, the fact that majority qualified voting has been in operation for 17 years makes it difficult for one nation to make a change? Does he agree that embarking on extended majority voting and embracing principles of common policy without considering what effect they would have on the rest of the world and on each producing state is a terrible warning for the next week or two?

Mr. Lilley

There is considerable logic, as always, in the hon. Member's position. I have no doubt that those who find the operation of the common agricultural policy unacceptable will be reluctant to see those principles extended more widely.

Mr. Roger Knapman (Stroud)

Does my right hon. Friend agree that we shall need to be twice as flexible in future, first, to get talks going again and, secondly, to bring them to a successful conclusion? Does he further agree that France and Ireland were largely responsible for the breakdown of talks? Whatever the outcome of the talks, will he make it quite clear to those Governments that in future British taxpayers' money will not be used to bail out part-time, peasant and inefficient farmers in those countries?

Mr. Lilley

My hon. Friend's first point is an extremely good one, which I hope will be recognised in the Community and among other negotiating partners to the GATT round. I do not want to point the finger at any countries involved in the talks, but those who were most willing to accept suspension and most reluctant to show flexibility should perhaps recognise that, in the next round, when greater flexibility will be needed because of the suspension, they should be the most forthcoming in coughing up the proposed concessions from their budgets and special interests.

Mr. David Trimble (Upper Bann)

I appreciate that the common agricultural policy is very much less than ideal and realise the extent to which it, and reluctance to reform it, led to this interruption, but does the Minister realise that there are matters of substance behind the concerns of many people in this country and in other countries about small agricultural units? Does he appreciate that there is a need to find some other way of providing support? Could he perhaps persuade our Common Market partners to reconsider the old British system of agricultural support that existed prior to 1972? Would not it be easier to operate in the GATT rounds and negotiations? Could not the Government consider taking the initiative of persuading our European partners of the advisability of reforming the CAP in that way?

Mr. Lilley

My hon. Friend the Member for Richmond and Barnes (Mr. Hanley)—I am sure that the House wishes to join me in congratulating him on his elevation to responsibility for agricultural matters in the Province—has heard the hon. Gentleman's remarks and will be discussing them with our right hon. Friend the Minister for Agriculture, Fisheries and Food. There will have to be changes as a result of a successful GATT round and, indeed, if it were to fail, in the evolution of agriculture policy. The hon. Member's ideas will have to be taken into account in that. Given the pressures that have already been felt by the agricultural community in this country, I recognise, like him, that there are constraints on what can be done. We cannot ignore that.

Sir Hector Monro (Dumfries)

In the same way that the textiles industry is concerned about the future, so, too, is agriculture. With falling farm incomes and the greater responsibility for the environment that is being laid on agriculture, how can one accept further cuts?

Mr. Lilley

My hon. Friend makes the point that I was making earlier: the agricultural community has had to bear considerable pressures, which we bore in mind in the negotiations. We sought, within the existing offer on the table, to try to make it more attractive to other partners in the GATT round without adversely affecting the position of farmers at home. We believe that that was possible and that, to a large extent, it will be possible in future.

Mr. Win Griffiths (Bridgend)

As the Minister admitted that further concessions will have to be made, will he expand a little on the alternative methods of supporting agriculture that will be necessary? Given his remarks about the need to reduce export subsidies and the high prices that the food-processing industry pays for raw materials in this country, what help will be given to that industry, which has to rely on restitution when it sells abroad?

Mr. Lilley

The hon. Gentleman should be under no misapprehension. I was not suggesting that additional cuts would have to be made on top of the 30 per cent. cut in export subsidies. Towards the end of the week, we discussed some way of ensuring that a 30 per cent. cut in total subsidies by the EC is reflected quasi-automatically in a 30 per cent. or similar reduction in export subsidies. We discussed other assurances to provide that, in years of falling agricultural prices, there is no ballooning of export subsidies, through volumes or through financial limits on the total amount of money going into those subsidies.

My right hon. Friend the Minister of Agriculture, Fisheries and Food was careful to get into the basic EC agreement an assurance that any reduction should be non-discriminatory so that there is no discriminatory reduction in subsidies for processed food at the expense of basic products.

Mr. Conal Gregory (York)

As the food and drinks industry is the largest manufacturing industry in the United Kingdom, will my right hon. Friend confirm that when an agreement is finally reached it will not jeopardise the £2 billion of exports of food and drink to non-EC countries and the 60,000 jobs in various places, including great centres such as York?

Mr. Lilley

That is certainly a good point. We shall try to ensure in the agreement by Community partners that any change in the support mechanism will be nondiscriminatory, particularly in terms of the support available for exports of processed food products.

Mrs. Alice Mahon (Halifax)

The Minister will recognise the importance of the textile industry to our manufacturing base. What contingency plans has he made in the event of the talks breaking down and nothing resulting for textiles? For instance, has he taken note of the four-point plan for textiles proposed by the textiles division of the Transport and General Workers Union? Will the right hon. Gentleman give us some hope for the industry and its employees?

Mr. Lilley

I am still strongly of the opinion that we can and must achieve a successful outcome to this round, not just because a sudden ending of MFA would have severe effects on and be unacceptable to many countries. We do not think that it would be sensible to start working on the assumption that the round will fail. We shall do all in our power to achieve a successful outcome. If we fail, we shall have to pick up the pieces.

Mr. Teddy Taylor (Southend, East)

Given my right hon. Friend's clarity of vision, does he agree that the alleged 30 per cent. offer made by the EEC was little more than a bogus fraud, because a 15 per cent. cut had allegedly already occurred and because, in respect of the other 15 per cent., the Council of Ministers and the Commission promised fully to compensate farmers for any reduction in protection? Bearing in mind that the EEC's budget for 1991—which has just been agreed and which, at £23 billion, represents the Community's highest-ever expenditure—seems likely to be broken, how can my right hon. Friend have the slightest optimism about the idea that we are likely to make progress? Is not this simply a disaster for British jobs?

Mr. Lilley

My hon. Friend always shows a daunting knowledge of these figures, but the fact is that a 30 per cent. cut over 10 years—even if part is already under our belt—is a considerable reduction in subsidies. If the world can bring agriculture fully within the GATT round, it will be a major achievement. There will need to be further rounds before we can achieve the degree of development of GATT disciplines within the agricultural sector that has been achieved elsewhere. It will be a significant prize to get agriculture within the GATT round and we shall work hard towards that end.

Mr. Max Madden (Bradford, West)

Does the Minister realise that his comments will have set alarm bells ringing in the minds of the men and women who depend on the British textile industry for their livelihoods and who are most anxious about the job losses that are now taking place? Will he give us a clear assurance that there is no prospect of the British Government's agreeing to the phasing out of the MFA, even over a 10-year period, unless the so-called five safeguards are incorporated under GATT? Will he also give a firm assurance that there is no question of the British Government's once again regarding the British textile industry as expendable?

Mr. Lilley

I can absolutely assure the hon. Gentleman that there is no question of that. The outline agreement on textiles that was approaching completion before the round was suspended was the sort of agreement which the British textile industry could have lived with and accepted. It envisaged a transitional period of about 10 years and that is not out of line with what the industry has asked for. It also envisaged considerable improvements in respect of intellectual property, rules and disciplines and market access, although the extent of those improvements will not become absolutely clear until we can finalise the whole round. Nevertheless, they were the sort of thing that the industry wanted. Far from coming in gradually as the MFA was phased out, many of those improvements would take effect more or less immediately and that would be a rather better outcome than that for which many in the industry hoped.

Mr. Jacques Arnold (Gravesham)

The Minister will be aware of the consequences for third-world economies of the failure of the round. Will not last week's shambles fuel those third-world countries' fears of a Fortress Europe? Is not the tragedy of all this that our traditional trading partners in the third world may well be forced into the arms of rival trading blocs?

Mr. Lilley

The less-developed countries certainly stand to gain significantly from a successful round and to lose substantially from a failure to conclude the round. That was constantly in the minds of both the British Government and, I believe, the other parties to the negotiations. I held a number of meetings, including meetings with some of the less-developed countries. In general, although apprehensive about the prospect of trading blocs closing in on themselves—to which my hon. Friend referred—they believed that a successful round would be a major factor in improving their economies. The inclusion of agriculture in the agreement for the first time and the fact that more of the rules and disciplines of GATT will be brought to bear on their economies—something of which they were initially apprehensive—must in the long run benefit their economies, as it has benefited the economies of developed countries.

Mr. Graham Allen (Nottingham, North)

Was not the right hon. Member for Chingford (Mr. Tebbit) right to smell a Eurorat? Will the Minister admit that there has been a significant—one might say, "Major"—U-turn in the past couple of weeks? Three weeks ago, under the former Prime Minister and the Minister of Agriculture, Fisheries and Food, we had a bellicose defence of the American position and free trade, whereas we now have a whispered compliance with the aims of the French and Germans and other farming interests in Europe. That compliance will cost the average British family £14 a week —the amount needed to support the common agricultural policy. Is not that a little too much to pay just to give new Eurocredentials to the Prime Minister?

Mr. Lilley

The Government's position has been consistent throughout. We have sought flexibility within the Community and from other parties to the negotiations and, to the extent that we have attained flexibility in the Community's position and achieved some movement on services from the United States, we were anxious to draw the two sides together. We regret that the talks were suspended when some movement, at least, was being shown on both fronts.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Does my right hon. Friend accept that we have reached this stage with agricultural subsidies because of our failure to define exactly what a farmer is? Everyone seems afraid to tackle a situation whereby British farmers suffer because, in France and Germany, people who would not even be called allotment-holders here are called farmers? They often have jobs in factories during the day and scrabble in the soil at the weekends, but, none the less, receive huge subsidies. Is not it about time that the Common Market got down to defining what a farmer is, so that we can cut those outrageous subsidies? We must have the courage to do that. My right hon. Friend the Minister of Agriculture, Fisheries and Food seemed to say yesterday that it was the Americans' fault. It is not. The fault lies with us and only we can solve the problem. The new Government must have the courage to do that.

Mr. Lilley

My hon. Friend's point lies behind the insistence of my right hon. Friend the Minister of Agriculture, Fisheries and Food that any changes in agricultural support should be non-discriminatory. We are determined that British farmers, who, as my hon. Friend said, are genuine, should not lose out when new forms of support are developed which might otherwise have been oriented to the kind of farmers that he attributed largely to continental countries. We are determined that that should not be the case and that any support arrangements should benefit British farmers fully, along with any help directed to continental farmers.

Mr. Tam Dalyell (Linlithgow)

With regard to intellectual property rights, what was the thinking on the issue of the patenting of living organisms which is a matter of enormous importance to the pharmaceutical industry? Some of us believe that there is a danger of a lawyers' paradise being created around the real interests of innovation.

In connection with tropical forest products, does the Minister accept that those of us who were fortunate enough to participate in the recent Inter-Parliamentary Union visit to Zaire received the impression from Ministers in Kinshasa that too much emphasis was placed on policies that would actually be detrimental to the preservation of the rain forests? Before advantages are given to tropical forest products, will the Community be sure that those are not disadvantages for the rain forest, of which Zaire has 46 per cent. of that which remains in Africa?

Mr. Lilley

The outline agreement on TRIPs— trade-related aspects of intellectual property—envisages that each country shall enforce in its own patent law and other rights. It accepts that those have been beneficial in encouraging the development of new products and, by the same logic, will be beneficial in encouraging the development of new plants and other agricultural products. With regard to the importance of rain forests, I am not sure what provisions in the embryonic GATT round the hon. Gentleman believes would apply to them.

Mr. Jonathan Aitken (Thanet, South)

While we all welcome the notes of flexibility and qualified optimism that my right hon. Friend has struck from the Dispatch Box this afternoon, does not he also fear that the world could be on the edge of an era of trade wars particularly if the Americans begin to use their formidable section 301 powers of their trade legislation to retaliate against what they rightly see as excessive agricultural exports subsidies by the EEC? In that context, are not the discussions of my right hon. Friend the Prime Minister in the Council of Ministers at the weekend absolutely crucial? How can those discussions have great hope of success when agricultural subsidies and the GATT talks have a much lower priority on the agenda for discussions than what many of us consider less important matters, such as economic and monetary union and even political union?

Mr. Lilley

My hon. Friend is absolutely right, particularly about the danger of the outbreak of trade wars if the round were to fail absolutely. If that happens, we should not simply forgo the benefits of what would have been a very important round; we should probably also slip backwards with greater use of grey area measures, as they are called, and voluntary restraint arrangements. We might also slip into a trade war and, as my hon. Friend said, there might be resort to super-301 rights which give rise to great antagonism among other GATT participants.

With regard to this weekend's meeting between European Heads of Government, my hon. Friend is right to state that this time the EC must recognise the importance to the Community, as one of the world's great trading blocs, of a successful outcome to the round. That must be given appropriate priority in the discussions—over and above, if need be, other matters that my hon. Friend would consider less important.

Forward to