Customs Duties (Hansard, 19 May 1992)

§ The Parliamentary Under-Secretary of State for Technology (Mr. Edward Leigh)
I beg to move, That the Customs Duties (ECSC) (Amendment No. 7) Order 1992 (S.I., 1992, No. 792), dated 16th March 1992, a copy of which was laid before this House on 16th March, in the last Session of Parliament, be approved. The order implements a decision of the Governments of the European Coal and Steel Community meeting within the Council on 3 February 1992. The purpose of the decision, which is part of a package of economic measures agreed by the Community to bring an end to the conflict in the Yugoslav region, is to reinforce preferential tariff rates on imports of all ECSC categories of goods originating from Bosnia-Herzegovina, Croatia, Macedonia, Montenegro and Slovenia. Such imports were temporarily subject to normal rates of duty following the denunciation of the ECSC-Yugoslav agreement and implementation of Community decision 91 588. The order does not reintroduce preferences for goods originating in Serbia.
For most industrial products, the Community's external tariff can be amended by Council regulation, which is directly applicable in all member states. For legal reasons, however, changes in the tariff related to products covered by the ECSC have to be incorporated in United Kingdom law by means of a statutory instrument through the affirmative resolution procedure. Hence the need for the order.

§ Ms. Joyce Quin (Gateshead, East)
I begin, Mr. Deputy Speaker, by congratulating you on your appointment. I hope that you have much enjoyment in presiding over our proceedings, whatever the subject and whatever the hour.
The subject with which we are dealing is similar to one that the Minister and I debated in Committee a few months ago when the (Amendment) (No. 6) order was considered. Against that background, perhaps I can take the opportunity to repeat some of the questions which I put to the Minister on that occasion, which I feel were not entirely answered.
We have not had a major debate on Yugoslavia, and I realise that it will not be possible to have one when considering an Order as narrow as the one that is before us. During the debate on the Gracious Speech, however, we dealt with foreign affairs. That provided hon. Members with an opportunity, quite properly, to voice their concerns about Yugoslavia.
I understand the procedure that relates to the Order, which the Minister clarified in his statement. When he replies, perhaps he will be able to say whether there is any way of speeding up the procedure or anything that would make it more effective in the face of the ever changing situation in Yugoslavia—or what, perhaps, more properly should be called the former Yugoslavia.
When we discussed these matters in Committee, several hon. Members referred to the different parts of Yugoslavia and spoke of how we should respond to the emerging republics. Only a few months ago, through the order on ECSC customs duties, we were proceeding on the basis that the whole of Yugoslavia still existed, even though it was clear that different relations with different republics 228 were emerging on the part of the members of the European Community. It worries me that in such a rapidly changing situation some of the measures with which we are dealing through the procedures can quickly become out of date.
The order tackles the problem of trade with the different republics in the former Yugoslavia, and no longer with Yugoslavia as a single unit, but I am not sure that it actually deals with those different republics in an entirely acceptable way. It exempts all the republics from ECSC customs duties, except Serbia. However, I understand that Serbia and Montenegro are operating as one unit, even though Montenegro is exempted under the order. Perhaps the Minister could comment on that, because it appears to be rather strange.
We know that the different republics in the former Yugoslavia have evoked different responses among EC member states. Whereas many of us feel that Slovenia has done a great deal to commend itself to the European Community, there are doubts about some of the developments in Croatia—for example, many people have expressed concern about human rights there.
It is not a simple matter to deal with the different republics, so I wonder whether the Minister could enlarge on his brief statement and say what sort of discussion of these matters has taken place in the European forum and what was the attitude of the British Government to including all the republics except Serbia in the order.
Perhaps the Minister could also say a little about how the measures affect the different countries of the European Community. I know that, on the wider issue of sanctions, Greece, for example, is concerned that it might be more detrimentally affected than the various republics in the former Yugoslavia. I put that point to the Minister when we previously discussed this matter in Committee, but he did not respond. Will he now give us some details on that?
I imagine that the order is of only minor relevance to this country, but as the Minister did not say anything about that aspect, perhaps he could confirm it. Could he also tell us whether he has found it necessary to hold discussions with industry about imposing the duties on steel for Serbia, but removing them for the other republics? What was the practical effect of introducing the previous order that we discussed in Committee? Did it make any major difference to the steel trade between the different republics of Yugoslavia and the different countries of the EC? The Minister has given us no details on that.
I assume that we are dealing with modest measures that are probably insignificant within the overall trading position between the republics of the former Yugoslavia and EC countries. However, I should be grateful if the Minister could give us some feedback on how that overall trading relationship is now viewed within the EC. While I certainly sympathise with the attitude that the EC is taking towards Serbia in particular, I think that all of us believe that it is important to support all the groups in all the republics that are opposed to the war, which are seeking to preserve or to reopen the channels of dialogue and trying to achieve some sort of solidarity between the various national and ethnic groupings. I should like the Minister to deal with that matter when he replies.
Although the order is of minor importance in the overall relationship with Yugoslavia, it allows us to raise various questions—some of which I have tried to raise tonight, to which I hope the Minister will respond. The overall sanctions relating to Yugoslavia are adopted by regulation in the European Community and are 229 immediately binding on all the member states, so they have not given rise to debate in this House. The different procedure that applies to the ECSC allows us to raise some of these issues tonight, and I hope that the Minister will respond.

§ Mr. Leigh
I am grateful to the hon. Member for Gateshead, East (Ms. Quin). She is right to ask those questions. It is also right that the House should be given the opportunity to debate the tragic events in Yugoslavia. I do not intend to deal in detail with those tragic events, because the scope of the order is narrow. All I would say is that Government will continue their twin-track policy in Yugoslavia. They will give all aid, comfort and support to my noble Friend Lord Carrington in his sterling efforts on behalf of the people in that region and will also encourage the different sides in the dispute in Croatia and Bosnia to come together.
I shall do my best to answer the questions that the hon. Lady put to me. If I fail to do so, I shall be happy to write to her. She asked whether my Department had been in contact with United Kingdom importers and exporters. Our exporters face a difficult situation in Yugoslavia. They will need to reassure themselves that their customers have funds to pay for goods or services provided. That will not be easy. Many companies in the former republics have been badly hit by the present conflict, while others have money in banks outside those republics and can fund purchases with that money. Another problem is transportation of goods to the customer. The whole House will appreciate that our exporters face severe problems. My Department is ready to assist in every way that it possibly can.
The hon. Lady asked me about the impact of European Community sanctions on trade with Yugoslavia. That is difficult to quantify. The main impact on trade has been the current conflict in the former republics. That has led to the value of United Kingdom trade declining by 37.5 per cent. in the first four months of 1992, compared with the same period last year. I am afraid that I do not have figures with me relating to the value of trade lost by other European Community members, but I shall be delighted to write to her with that information.
The hon. Lady also asked me about who is to blame in this sad dispute. In our view, no side in Bosnia is without blame. The United Nations Security Council resolution 752 of 15 May calls for the withdrawal of units of the federal army and elements of the Croatian army from Bosnia. Serbs, through the federal army and irregulars, are the major aggressors.
The hon. Lady asked me why, in the light of recent developments, Montenegro is included in the list of republics benefiting from the reintroduction of preferential access. I am sure that she will appreciate that this is a sensitive issue, upon which I should not like to dwell. However, at the time that the decision was taken Montenegro was deemed to be making a positive contribution towards the peace conference. The hon. Lady will recognise that that decision was taken by the European Community's Council of Ministers in December 1991.
That leads me to the first point made by the hon. Member for Gateshead, East. She said that there is a rapidly developing situation and she was asking whether 230 our procedures are sufficiently flexible to deal with it. We are in a difficult position, since we are committed to moving together as a Community. If one were talking about normal trade—for example, textiles—it would be possible to take a decision simply on the basis of the Council of Ministers decision. That is not possible when it comes to matters that relate to the European Coal and Steel Community. The hon. Lady will recognise that that is a much older agreement, dating back to the 1950s.
The House may find it useful if I state the exact legal position. Section 5(3) and schedule 2(4) of the European Communities Act, as amended by section 19 and schedule 2 of the Customs and Excise Duties (General Reliefs) Act 1979, require that, where an order imposes or increases any customs duty, the affirmative resolution procedure has to be used unless the duty is imposed pursuant to a Community obligation. If this order were being made pursuant to a Community obligation, the negative resolution procedure could be followed, but as, instead, the order is made pursuant to a decision of the Governments of the member states, it cannot be followed.
I apologise for that somewhat legalistic language. In layman's terms, it means that, under the European Communities Act, we must use the affirmative procedure. The Council makes a decision which comes into force and, within 28 days, the House must approve it by affirmative resolution. If the House did not approve the course of action, the order would lapse.
Such matters can usually be dealt with far more simply in Committee, but, as the debate is taking place so soon after the general election, the appropriate Committee has not been constituted. It is a rather complex legal point—

§ Ms. Quin
Given that the situation in what was formerly Yugoslavia is changing, is a series of meetings envisaged, within the purview of the European Coal and Steel Community, to monitor what is happening to custom duties and possibly to change the arrangements again if it is felt appropriate to do so?

§ Mr. Leigh
That is a fair point and I shall certainly take it on board. The House recognises that matters are moving quickly. Ministers and those who advise them will keep a close eye on the situation and, if it changes—for instance, if it becomes clear that there is a change in attitude by the Serbian Government—the Government will want to come back to the House, presumably having consulted other members in the Community, to see whether any change is appropriate. For the time being, however, we think that the order represents the best response.
The order is part of a package of measures designed to put pressure on those whom we consider to be the principal aggressors—the Serbians. We think that ours is a balanced approach. I should add that we have also recalled our ambassador to Belgrade, who is now in London. We are determined to do all that we can to help to alleviate the tragedy in Yugoslavia. The order is part of the twin-track policy to which I referred earlier.
I hope that the House will approve the order and will want once again to pay tribute to the tireless efforts of my noble Friend Lord Carrington.