§ 1.6 pm
§ Mr. John P. Smith (Vale of Glamorgan)
I am delighted to have a second opportunity this week to draw the attention of the House to problems associated with the Lomé protocol after 1992. I shall discuss some of the details of what I think the effect could be on the British fruit trade in general and on the banana trade in particular. I shall then make some suggestions—I hope that the Government still have an open mind on the subject—about what we should be doing now to ensure that we not only protect our trade and industries but protect the interests of countries with which we trade and have traded for a long time.
In the Lomé protocol, which regulates the trade between the European Community and Afro-Caribbean and Pacific countries, there are a number of mechanisms under the banana protocol that ensures that preferential trading relationships exist with our historic trading partners. About 50 per cent. of all the bananas that come into European Community countries come from dollar fruit countries primarily in southern and central America. About 30 per cent. is home produced in southern European countries and about 20 per cent. comes from ACP countries.
Nearly all the bananas that come to the United Kingdom come from Jamaica and the Windward Islands through two major companies, Geest, which trades from my constituency at the port of Barry, and Fyffe. We in Britain, being the second largest consumers of bananas in the EC, consume 300,000 tonnes of bananas a year. Everybody will be delighted to hear that. It works out at about one banana per person per week. I hope that that rate of consumption continues and that we will continue to eat Caribbean bananas, because we shall thereby support not only British industry but our former colonies in the area.
I am delighted to say that the Prime Minister gave a categorical commitment in Jamaica in 1987 to do everything possible to protect our trading relationship. She said:We shall continue to fight hard in the European Community to … make sure that Jamaica and other Caribbean countries go on enjoying the preferential arrangements for … bananas under the Lomé Convention.Lomé IV protects the ACP countries and states that no country should be worse off under any arrangement reached in the EC than they are at present.
I was delighted when, on Monday, the Lord President of the Council gave a commitment and stressed the importance of protecting those markets. He said:The Community is fully aware of its commitments to the traditional suppliers under the Lomé convention. We consider strongly that these should be taken fully into account, together with other factors, in drawing up future arrangements for banana imports after 1992."—[Official Report, 23 July 1990; Vol. 177, c. 105.]That was a fairly strong commitment. But the problem is that the Government produced a discussion document this March that was circulated to other member states in the EC, ACP countries and interested parties and which will, if it is deployed, have the opposite effect.
While we welcome the suggestion in the discussion paper of continuing quotas after 1992 for banana imports from our traditional trading partners—for us, Jamaica and the Windward Islands, and for France and the 704 southern European countries, west Africa, Somalia, the Canaries; by and large, former colonies—the problem is that under the price mechanism proposed in the discussion document, it will have precisely the opposite effect. The British Government are saying that they will give equal access to Caribbean countries to the existing dollar fruit share of the market—the 50 per cent. to which I referred—which goes largely to northern European countries and Germany. We must consider the implications of that and we should bear in mind the fact that the Germans are far and away the single largest consumers of bananas.
If those Caribbean countries are forced to compete on an equal basis, there is no question but that dollar bananas from central and southern America will swamp not only other European markets, but Britain. The reasons for that are fairly well established. The banana plantations in central and southern America are vast and situated on plains. They are run by large, multinational corporations and survive on extremely cheap, exploited labour. The House will be horrified to hear that in the last wage negotiations in Colombia between the plantation labourers and owners, no fewer than 200 plantation labourers were murdered during the process of negotiating their wages. That sort of incident, as well as other disturbing events, happens in that part of the world, compared to the Caribbean, where a collection of small producers produce bananas in difficult circumstances—the plantations tend to be on hillsides.
The banana is an attractive crop. It is the mainstay crop for most of the Windward Islands and represents 70 per cent. of St. Lucia's entire exports. It is a useful crop because, if it is destroyed by the weather, particularly the hurricanes that are experienced in that part of the world, it can be replanted and grown within nine months—a relatively short period.
The process for negotiating prices and payment with the Geest company in the Windward Islands—St. Lucia, St. Vincent, Dominica and Grenada—is democratic. The growers from those islands meet Geest to discuss the rates and reach a settlement on payment in that district. The opposite applies to central and southern America. It is clear that the Caribbean will find it difficult to compete equally with Colombia and other countries. We should take steps either to continue to protect those markets or —and this is possibly the best course—to ensure a lengthy transitional period to allow those countries to adapt to other products, and to allow industries in this country to diversify production; as I have explained, I have a clear constituency interest. If we do not do that, the consequences may be devastating.
I am delighted by the effort being made by the British retailer Marks and Spencer. It has an experimental station in the Windward Islands to examine the development of tropical fruit, which has become a much more popular food lately. I know of an example dear to your heart, Mr. Deputy Speaker: the kiwi fruit, which a few years ago was hardly available in this country, is now a regular part of our diet and can be bought from most supermarket shelves.
If we were swamped with dollar fruit, the consequences would be devastating. In the port of Barry in my constituency, which imports over 70 per cent. of all the bananas that come into this country from the Caribbean, the undermining or even loss of that trade would result in huge job losses. That would be a tragedy for the local work force and the local economy and would affect the 705 long-standing relationship between Geest and Barry. I know from the comments made by the Lord President of the Council on Monday that that relationship is also dear to his heart. He spoke of his recollections of seeing the banana boats sailing out of the port of Barry when he was a child. I am sure that the Government do not want such a tragedy to happen, and will be prepared to do something to prevent it from happening.
We should praise the dock workers in the port of Barry, who have had a tremendous relationship with the Geest company for many years, and also have a tremendous industrial relations record. They are some of the most skilled dock workers in the country. Since the abolition of the dock labour scheme earlier this year, they have formed a successful co-operative—Barry Stevedores Ltd.—which is now handling the banana cargoes. The Geest company has a contract with Associated British Ports, which lasts until 1994. Then it must renegotiate the leases and the contracts to bring the bananas in, which of course involves the stevedores.
The danger is that, in the run-up to the renegotiation of that contract, the Government are not able to guarantee the market in the Caribbean. We could lose Geest once again. We lost it for a short time a few years ago, when it was attracted by better port facilities and better deals across the channel in Avon. However, I am delighted to say that did not last long, and it was soon back in Barry, because it knew that it was on to a good thing relying on our dock workers and the Barry community.
There could also be an effect in other constituencies from which the two major companies—Geest and Fyffe—operate, which could substantially diminish their operations and have consequences for jobs and the local economics. However, that is nothing compared with the effect that it would have on the Caribbean. Those countries are almost totally dependent on the one product—bananas. That is partly because of the devastating effect on their sugar industry some years ago, which also arose from our trading relationship with the rest of the European Community. In some cases that forced them to rely on bananas. If they lost that their economies could be devastated.
The Geest company provides vital communication and social links with the islands and those links would be lost if the company were forced to look elsewhere in central southern America for its products. My local Vale of Glamorgan borough council elected to sell to St. Lucia at a nominal price two second-hand dust carts. That may not mean much to hon. Members, but to the people of St. Lucia the dust carts were vital in keeping their island clean. The skilled dock workers in Barry packed the trucks into the hold of a ship that normally carried bananas. A range of items are shipped in that way at low cost to support those island communities. That facility could be lost.
It is in our own interests to support the industry, but we also have a moral obligation to our former colonies from whom we have done so well over the years. It would be a tragedy if the people in those former colonies were allowed to suffer. The end of the trade would also have an impact on the British shipbuilding industry, because some companies may be reluctant to order new ships if they are uncertain about the situation in 1993. That could affect other parts of the country. The drastic cut in British shipping over the past 10 years has worried all hon. Members.
706 If we remove the sole source of income of these islands, there is a danger of illicit drugs being produced. Such drugs could be grown in that part of the world and their production might attract the relatively poor banana growers. My hon. Friend the Member for Newport, West (Mr. Flynn) is worried about any substantial increase in banana boats coming to Britain from Colombia, a country which is notorious for drugs and drug barons. My hon. Friend tells me that some Colombian banana boats docking at his port have carried substantial quantities of cocaine. In some cases the cocaine was more valuable than the banana cargoes. The drugs can be seized and taken away, but the ships cannot be impounded because the Government could be held liable for the value of the cargo. That is a separate issue, but I am sure that it worries hon. Members.
What are our responsibilities and what should we do? We have produced a discussion paper and, in line with the traditional British character, we have said that we should play by the rules and head towards an open market. As long as it serves the interests of the consumers and meets our international obligations, we all agree in principle with the open market. The Government's proposals are ideal for the Germans. They are the biggest consumers of bananas and their primary source is dollar fruit. They would be happy to see the ACP share of the market collapse. France and other southern European countries are already taking steps to protect their interests.
It is incumbent upon the Government to be in the game of protecting our great British companies and our existing trade. I do not suggest that that can be done indefinitely, but transitional arrangements should be made. The countries affected and our industries should have an opportunity to diversify into other products and activities. We must ensure that in the short term we do not suffer again because we are not prepared to take the action that the Germans and French are prepared to pursue in Europe, to ensure that their industries, employers, historic trading links and commitments are protected. I ask for no more, and for no less, for the British.
§ The Minister for Overseas Development (Mrs. Lynda Chalker)
I congratulate the hon. Member for the Vale of Glamorgan (Mr. Smith) on managing to debate the banana situation for the second time in a week, which must be a record. That shows how concerned the hon. Gentleman is about the trade in the West Indies and about his own port and workers.
Nineteen ninety-two and the single market process will bring widespread benefits, and perhaps the hon. Gentleman was a little unfair not to point that out. Not only the Community stands to gain from an open market. The door of opportunity will open further for our trading partners. That includes our partners in the African, Caribbean and Pacific countries of the Lomé convention. Freer and increased trade will mean more prosperity and more freedom. The removal of internal barriers and greater economic dynamism within the Community will provide greater access for developing country exporters—not less.
Nineteen ninety-two does not mean that Europe has in any way turned its back on the developing countries, but the very opposite. We stand by our commitment to the developing world. It will march side by side with changes 707 in the Community and with the events in eastern and central Europe, which will also provide new markets for the specific Caribbean products in question. Nineteen ninety-two represents an opportunity, not a threat.
There is no fortress Europe, and there will not be one. Such a thing would be in no one's interest. We are committed to making 1992 a force for liberalisation. The strength of our commitment to our Lomé partners is reflected in the fourth Lomé convention, which we expect to come into force early next year, and in whose final negotiations I played a large part. The new European development fund is nearly 50 per cent. larger than its predecessor, and the United Kingdom's contribution to it, at about £1.3 billion, is our largest ever single aid commitment.
The new convention provides further improvements to what were already liberal trade and access provisions in respect of both the industrial and agricultural products of the ACP countries. For example, further concessions have been made on the few agricultural products that are still subject to some form of restriction, by a combination of reducing or dismantling tariffs while increasing or abolishing quotas. Improvements have also been made in the important area of rules of origin.
All that means that the Lomé convention is already providing for 1992 in a number of respects, allowing our Lomé partners to take advantage of faster economic growth and the increased demand anticipated within the Community as a consequence of the single market. It will be far easier for importers to meet the single standard, with one almost certainly in place in one or more member states, than to address to a whole range of diverse requirements, which was the situation until we really made progress with the single market. So that in turn will mean economies of scale for producers, whether of industrial or of agricultural products.
I shall mention some of the single market initiatives before I come to bananas, about which the hon. Gentleman is so rightly concerned. To ensure that the developing world benefits fully from single market initiatives, Britain will continue to press our Community partners for greater openness in trading. In particular we are encouraging a constructive Community contribution to ensure the success of the GATT Uruguay round, which will be of great benefit to the developing countries.
Obviously, the move towards the single market will bring changes, but, where these are in sensitive areas, they must be carefully managed. We realise—and have always realised—that this is particularly true of bananas.
I am grateful for the opportunity to explain to the House in a little more detail than the Lord President did on Monday this week what we are doing to protect our traditional Caribbean suppliers of bananas. The latest Lomé convention again contains a protocol on bananas which enshrines the EC's commitment to traditional African, Caribbean and Pacific suppliers of bananas. We fought hard and successfully to renew the protection which that protocol provided to our traditional suppliers. Annexed to the convention we now have a joint declaration between Community and the ACP states which recognises the fact that the Community will try to 708 establish common rules for bananas post–1992 but in full consultation with the ACP—which is the matter about which the hon. Gentleman is so concerned.
The United Kingdom remains committed to fighting to maintain effective preferential access arrangements for Caribbean bananas to the Community market, which are consistent with our Lomé obligations. As the hon. Gentleman has rightly pointed out, the Prime Minister has made this undertaking many times. As recently as the end of April this year, my right hon. Friend wrote to the Prime Ministers of our Caribbean banana growers:
We defended your interests resolutely in the Lomé renegotiations and shall continue to fight hard to make sure that you go on enjoying the preferential arrangements for bananas under the Lomé Convention.I acknowledge the hon. Gentleman's particular interest and concern in this issue but it arises from the fact that all our Windward's bananas come into the United Kingdom through the port of Barry in his constituency.
At present, the United Kingdom market is kept separate from the remainder of the European Community. ACP and EC bananas have free access to the United Kingdom. Other bananas, such as those from Latin America, are subject to import licensing.
A single market in bananas, which the ACP has accepted in principle in the Lomé convention, is necessary essentially because such internal Community barriers have to be removed from 1993 onwards. The current national arrangements will therefore no longer be enforceable. We have to devise common arrangements for bananas, and we have to strike a balance between a number of priorities in doing so. They are commitments to Community and ACP producers—the preferential suppliers; consumer interests; trade and competition policy: objectives in the GATT round; and, budgetary restraint.
The difficulties of reconciling the various objectives cannot be underestimated. After all, the Commission has been trying for about three years to come up with a proposal to bridge that gap, and has not yet done so. That was why we felt it worth while to get the debate going. So we circulated a discussion document, but it was only a contribution to the debate in the Community, because it is for the Commission to table a proposal.
As the hon. Gentleman well understands, it will take us some time to resolve this issue. The United Kingdom idea for a dollar quota would meet conflicting objectives better than any other suggestion so far, and would protect our traditional suppliers, whom we are pledged to protect. I do not think that we shall have the problems about which the hon. Gentleman has been worrying, although I respect his right to refer to those concerns in the House, as he has done twice this week. We shall provide for possible aid over a transitional period. That may be the way to proceed, but it has not yet been decided and all suggestions are therefore welcome.
At this point, perhaps I could reassure the hon. Gentleman about the position on tariffs. The current arrangements for EC trade in bananas include a GATT-bound 20 per cent. tariff on imports from what is known as the dollar area—central and south America—but not on imports from Lomé countries, which come in tariff-free. The way in which other countries will view the mechanisms that might be erected to ensure protection is not yet clear. However, we envisage that a tariff advantage will be maintained. We are not likely to be facing the prospect of a uniform tariff on ACP and dollar bananas.
709 The hon. Gentleman was right to say that the United Kingdom is not alone in the Community in having its own traditional suppliers to protect. It is true that other countries will seek to protect their traditional suppliers. Cameroon and the Ivory Coast supply France, while Spain imports from the Canary islands and Madeira supplies Portugal. All those sources of bananas face considerably higher production costs than the producers of dollar fruit.
In contrast, the Commission has to cater also for the needs of Germany and the Netherlands, the first of which the hon. Gentleman mentioned. Their customers are used to paying lower retail prices than those in countries with protected, higher-priced markets. The common arrangements for post-1992 trade in bananas will have to offer something to everyone if they are to command the support of a majority of member states.
We await the Commission's proposals, which should be tabled in the autumn. We shall then consider the proposals against the need to balance out the different and important objectives.
Our objective is to safeguard continuing preferential access for the Windwards and Jamaican suppliers after 1992. We want to build a framework within which they can assure the long-term futures of their banana industry. We remain in close touch with the Caribbean Governments and representatives of producers and importers about ways of achieving this.
Undoubtedly, the single market will bring with it many challenges, but it also provides tremendous opportunities. I have talked with some of the Caribbean producers and their leaders about the way in which they may benefit from the single market and enjoy the benefits of the wider market with easier access and a lack of barriers. I believe that, if they continue to work at the problems that they currently face in terms of quality and productivity, great gains can he made.
710 Although the Government will continue to support the Caribbean producers in the way that I have described, their success post-1992 in trade in bananas depends in no small measure on the producers' own efforts to overcome the severe quality problems at certain times of the year, which can make their bananas difficult to market. We understand that, and are seeking to help.
However, it is right that they should be encouraged —I have been encouraging them in my meetings with them —to diversify and to rely on products other than bananas. The Government have a long-standing programme to assist diversification into other edible crops in the Caribbean. We would hate to see any country start to produce coca or any other drug substance. That is not what we are in business for—we are in business to ensure that such countries have viable produce to sell on the open market as well as to offer access to our markets.
The hon. Gentleman might like to know that over the past 15 years or so we have committed over £4 million of our bilateral aid to assist in diversification with around £2 million committed to current projects. That is a measure of how seriously the need we are addressing the issue of diversification from bananas in the region.
In conclusion, it is too early to predict in detail the precise benefits that 1992 will bring individual countries. Although two thirds of the single market measures have now been agreed by the Council, many decisions have yet to be taken. Many measures will not come into force before the end of 1992. I assure the hon. Gentleman that we shall continue to encourage progress towards completion of a market and we shall maintain our vigilance to ensure that it remains open and liberal and has the right solutions for the banana producers. It is an opportunity, not a threat. I urge our Lomé partners to rise to the challenge because those who grasp the opportunity will reap the rewards.