HL Deb 09 July 1959 vol 217 cc954-63

3.47 p.m.


My Lords, with the permission of the House I will make a Statement similar to one being made by my right honourable friend the Chancellor of the Exchequer in another place, and with your Lordships' permission I will use his exact words:

"The House will recall that from 1st to 13th June a Working Party of Officials, on which the United Kingdom was represented, met at Stockholm to examine the problems involved in creating intimate trading arrangements between the seven countries represented there, and whether such arrangements could be so devised as to promote subsequent negotiations for a wider European settlement. I need not emphasise the importance of this for the future of this country and of Europe. The seven countries which are now moving towards association have a considerable trade among themselves which could grow very substantially. And even more important, the formation of this association gives us the best hope that we can now see of achieving an all-European settlement and the opportunities which will flow from this. The Plan elaborated by officials provided for a Special Agreement on Agriculture and proposed that, as a first step towards the elaboration of it, there should be discussions between the interested countries on trade in specific agricultural products of importance to exporting countries. It is in that context that there have been discussions between United Kingdom and Danish Ministers over the last three weeks, which I am glad to tell the House ended yesterday in complete agreement. I will arrange for the text of the Agreement to be circulated in the OFFICIAL REPORT.

"The object of the discussions was to deal with a question of fundamental importance to the proposed free trading arrangements between the Stockholm Group of countries On the one hand, we and all the members of the Stockholm Group have firm obligations to our domestic food producers. On the other hand, while Denmark has a developing industry, her export trade is predominantly in agricultural products. She cannot reasonably be expected to open her market freely to imports of industrial goods from her partners within the Stockholm Group unless she has some reasonable assurances about prospects for her own agricultural exports. The Agreement reached between the United Kingdom and Danish Ministers is a sensible solution to this problem.

"The proposed arrangements do not detract in any way from the Government's obligation to the farmer by which we are bound and will continue to be bound. The present guaranteed price system deriving from the Agriculture Acts of 1947 and 1957 remains intact. In particular the Government will not take into account in fixing the guaranteed price of pigs, either the loss of revenue to the Exchequer arising from the removal of the tariff on bacon or any reduction in the market price caused by the tariff change.

"The specific tariff concessions which we have proposed, namely, on bacon, pork luncheon meat, canned cream and blue veined cheese have been carefully chosen so as to have the minimum impact on trade with Commonwealth countries; there are only limited Commonwealth interests in any of these four products. We have of course kept Commonwealth countries informed throughout the discussions. On the other hand, we believe that these arrangements will be of material advantage to Denmark.

"The Danish Ministers are now engaged in recommending these pro-proposals to their Government. I am glad to say now that if the Danish Government is able to accept them so also will Her Majesty's Government.

"The next step will be the Ministerial Meeting at Stockholm on July 20. If agreement can there be reached to proceed to set up free trading arrangements with the Stockholm Group, the agreements worked out between United Kingdom and Danish Ministers will form the agricultural content of those arrangements so far as relations between the United Kingdom and Denmark are concerned. Of course if there is no decision to create such arrangements in the Stockholm Group, this agreement with the Danish Government will lapse. Her Majesty's Government have every hope that it will be possible to proceed and thus create a new basis for further negotiations with other countries in O.E.E.C., including the six countries of the European Economic Community."

Following is the text of an Agreed Statement by United Kingdom and Danish Ministers: In preparation for the meeting on 20th July when the Ministers of the seven countries of the Stockholm Group will consider whether to establish free trading arrangements within the Group, Danish and United Kingdom Ministers met in London on 6th, 7th and 8th July. The Danish Ministers were Mr. Krag, Minister for Foreign Affairs, and Mr. Skytte, Minister of Agriculture. The United Kingdom Ministers were Mr. Maudling, Paymaster-General, and Mr. Hare, Minister of Agriculture. The Ministers discussed the problem of trade in agricultural products bearing in mind the need for reasonable reciprocity for agricultural exporters within the Group. Similar discussions were taking place between Denmark and other members of the Stockholm Group. The Danish Ministers asked that the United Kingdom Government should give undertakings about their import and support policy in respect of those agricultural products in which Denmark has an export interest. These undertakings should provide safeguards against frustration of the objectives of any agreement concluded between Denmark and the United Kingdom including any specific tariff concessions contained therein. Furthermore they asked that any agreement between the two countries should facilitate freer and increased trade in agricultural products by opening to Danish producers increased opportunities in the United Kingdom market. The United Kingdom Ministers referred to their obligations to home producers and particularly to Close arising from the 1947 and 1957 Agriculture Acts, by which they are bound. The United Kingdom Government, recognising the traditional nature of the trade relations between Denmark and the United Kingdom, did not intend to adopt policies likely to deny Danish producers the opportunity to maintain their market in the United Kingdom for commodities of concern to them or to share in any increase in the United Kingdom market for those products. Further, the United Kingdom Ministers undertook to recommend to their colleagues that, as part of the proposed arrangements within the Stockholm Group, the United Kingdom tariff on imports of the following products from Denmark and the other members of the Group should be abolished according to the following timetable.*

Bacon and canned pork luncheon meat†

Reduction of 50 per cent. on July 1, 1960.

Reduction of 50 per cent. on July 1, 1961.

Blue Veined Cheese To be abolished on
July 1. 1960.

Canned Cream Danish Ministers asked for a statement of the United Kingdom Government's policy regarding the production of pigmeat, eggs and milk. United Kingdom Ministers replied that on eggs, milk and pigmeat it is the Government's objective that production should be more economic. On the volume of the output of eggs, the Government's policy continues to be that less eggs should be produced, as was stated in the White Paper Cmnd. 696 of March, 1959. On milk the United Kingdom Ministers recalled that both in 1958 and 1959, at the time of the annual price reviews, the policy had been that less milk than was then in prospect should be produced. The Government's policy continues to be that producers of milk in the United Kingdom should not * For planning purposes it is assumed that the first tariff reductions under any free trade arrangements agreed between the Stockholm Group countries will take place on July 1, 1960. †Definition of canned pork luncheon meat; Tariff Subheadings 16. 02 (c) (1) (b) (i) and (iii): Canned meat consisting wholly of ground or chopped pork with or without curing or seasoning ingredients or farinaceous fillers. in general he encouraged to produce more milk than is required for the liquid milk market, after allowing for a sufficient reserve to ensure that the market is adequately supplied throughout the year. It is also the Government's policy that increased consumption of liquid milk should be encouraged. On pigmeat the Government's policy continues to be as stated in the 1958 and 1959 White Papers. Danish Ministers also asked for an undertaking that the removal of the United Kingdom tariff on bacon would not be frustrated by subsidies. United Kingdom Ministers reserved their right to determine annually the guaranteed prices for pigs, with due regard inter alia to changes in costs. But they agreed to recommend that subsidy policy should not be used in such a way as to render mugatory the opportunity given to Danish producers in the United Kingdom market under this agreement. The United Kingdom and Danish Ministers recognised that industries in each country engaged in trade with the other may be materially injured by the competition of dumped or subsidised exports from third countries. The United Kingdom Government has powers under the Customs Duties (Dumping and Subsidies) Act, 1957, to impose, consistently with its international obligations, anti-dumping of countervailing duties where such material injury is caused or threatened. Ministers agreed to recommend that, if after consultation it is established that such injury is caused or threatened, their Governments should consider taking action consistent with their own legislation and with their international obligations to remedy the injury or prevent the threatened injury; any matters arising in this connection should be dealt with as expeditiously as possible. Ministers agreed to recommend that provision should be made within any agreement between the two Governments covering the matters dealt with in this statement for the periodic examination of its operation and of any particular difficulties that may arise. The Ministers agreed that if it is decided to establish free trading arrangements among members of the Stockholm Group, the agricultural content, so far as the United Kingdom and Denmark are concerned, will be as set out in this joint statement.


My Lords, while expressing gratitude for the statement, should like to say that most of this has already been reported in the morning Press, and some of it in the course of the last few days; so that the facts come as no great surprise. It is a little unfortunate that this agreement should be made without either House having an opportunity of expressing its view about it: but perhaps there may be an opportunity of having a discussion before we rise.

I should like to comment—and here I must declare an interest—on the question of pigs, and on the abolition of the import duty of 10 per cent. In my view, unless something more is done than is set out in this statement, it is going to mean ruin to the large number of people who are engaged in the pig industry in this country. Whether or not the Government regard the pig industry as expendable, and whether they regard it as justifiable that this industry should die in the interests of arriving at a seven-Power agreement, I do not know: and there may b; something to be said for that view. But I do want the Government to appreciate that, in the view of the big producers—and I have had a great many representations from them on the subject—this does mean the end of the pig industry in this country unless more is done for the pig industry than is set out in the Statement.

I do not want to urge the matter at any length this afternoon, because I think it is worthy of a much fuller discussion. But the fact is that, with the 10 per cent. duty, the pig producers are barely able to keep going, and the curers are finding it almost impossible to keep going at all. With the increase in bacon imports from Denmark—and, so far as I can see, there is no reason why they should not entirely swamp the market—the curer, the producer, and the breeder will all go out of business. I do not know whether the noble Earl is in a position to give a final answer on this question this afternoon, but we do regard this as a very serious matter; and I personally should like to return to the attack at some time between now and the end of the month—certainly before the agreement is finally concluded.


My Lords, I agree with the noble Lord, Lord Silkin, particularly as to the first part of his remarks, in which he said that it was rather unfortunate that neither House has had an opportunity of studying this matter. At the same time, we are glad that an agreement has been reached, and that the matter seems to be going forward suitably. As regards the noble Lord's reference to the damage which the agreement is going to cause to the pig industry, I think that probably, generally speaking, the answer to that is the general Government policy of not reducing the raw material price to farmers while keeping up a very high tariff on the things he needs in order to pursue his occupation. But, there again, as the noble Lord, Lord Silkin, has said, that is a much wider question, and must be dealt with on another occasion. In the meantime, I hope that this House will have an opportunity of going further into this matter on the Resolution of the noble Earl, Lord Swinton, at the end of this month.


My Lords, before the noble Earl replies, I should like to endorse what has been said from this side of the House. From an agricultural point of view, I regard this as a very serious matter. I therefore hope, as we all hope, that the Government will see fit to have a discussion in your Lordships' House before July 20—when, as I understand it, the agreement is likely to be finalised. There was one point that I was pleased to note in the announcement by the Minister, and that was with reference to the obligation to our agricultural producers. I am wondering whether the Government will be able to meet this obligation if this new order of things comes into operation. The Government have no doubt seen in the papers during the last few days that some objections have been taken to this particular procedure. I am also wondering whether the Government, before they arrived at this position, consulted not only the producers but the curers and those whose livelihood rests upon the pig-producing industry. I therefore hope that we may have a full discussion upon the matter.


My Lords, I wonder whether I could ask the noble Earl to keep one point in mind? Those of us who have taken some interest in the whole problem of European unity have been increasingly disturbed recently at the danger of dividing further an already truncated Continent. There are elements—they are only elements, but they are both political and economic—both in Paris and Bonn, which I think saw some advantage, until quite recently, in getting Britain out of the Continent of Europe, not only as regards political influence but commercially as well. It seems to me that if this seven-country agreement could be brought off, it would make the possibility of a real, comprehensive agreement between the seven Powers and the Common Market Powers far more easy than it would otherwise be, and that the negotiations might be much more successful subsequently than they were at the time when we were trying to negotiate a Free Trade Area: and, in that way, this rift in Europe, which some of us have so long dreaded, might easily be healed over as the result of the Seven Power Treaty. I would ask whether Her Majesty's Government would bear that factor very much in mind.


My Lords, I should hope that the noble Lord, Lord Boothby, who has quite a good line on the European position, will not overlook the fact that the statement that has been made says that particular care is being taken not to indulge in a change with regard to commodities in which the wider Commonwealth are likely to be mainly affected and that therefore they will be protected against any injury coming from this agreement. The items mentioned by the noble Earl in his statement are all vastly important to the British farm producer, and while I do not lose sight of the objective that the noble Lord, Lord Boothby, has in mind, I consider that before any agreement is made we ought to get a guarantee from the Government that the British producer is not going to be any more damnified in this matter than the Commonwealth producer. It should be specifically stated that, whatever disadvantage comes to the farmer as the result of the adoption of inter-Continental trading, he will be guaranteed in his prices by the Government.


My Lords, I must disagree with the noble Lords, Lord Silkin and Lord Wise. I can see no reason why the British producer should be any worse off now, because his main support is through the guarantee system and, as I said in my statement, his position will not be affected by anything that arises out of this agreement. My right honourable friend himself made it clear in another place that anything arising out of this agreement would not affect the guarantee to the British producer.


My Lords, would the noble Earl allow me to ask him this question? Assuming that the 10 per cent. duty on Danish bacon is withdrawn, does that not mean that Danish bacon comes into this country considerably cheaper than before and in larger quantities, and therefore will be in a position to oust British bacon from the market? The guarantee will remain at its present price, but it will be valueless if the British producer cannot sell his bacon because Danish bacon is coming in in larger quantities and at lower prices.


My Lords, supplementing my noble friend's question, can I put it in this concrete form? I understand that the duties amount to £6 million and presumably prices will fall to that extent. Does the noble Earl mean that the amount of subsidy to pig producers will be increased by £6 million, so that their position is relatively no worse? Does the statement mean that? If not, what does the noble Earl mean by saying that they will be no worse off, when prices are going to drop by £6 million?


My Lords, before the noble Earl replies, I wonder whether it is now the policy of the Labour Party to oppose the cheapening of Danish bacon to the housewives of this country.


My Lords, I should like to make it clear that I was asking the noble Earl a question and was not by any means opposing the reduction of prices. I think that they are far too high already. The only trouble is that the farmers do not get enough of what the housewives pay.


My Lords, obviously I cannot say, if the loss of revenue to the Chancellor is £6 million, that that will be added to the guarantee. All I am saying is that the guarantee to farmers will not be affected by this. They have a guaranteed price and that price will be paid, although obviously the Exchequer will have to contribute more than it has in the past. What the amount of that will be, I cannot say. The noble Lord, Lord Boothby, raised the question of further negotiations with other European countries. I said at the end of my statement that Her Majesty's Government have every hope that it will be possible to have a new basis for further negotiations with other countries in O.E.E.C., including the six countries of the European Economic Union.


My Lords, there is one other question that I would put to the noble Earl, though I do not want to worry him this afternoon. The fundamental question is: how are we going to deal with our general agricultural policy in this matter? We are making grants to farmers for the improvement of buildings and of breeding methods to develop our pig production. We shall not require more than x quantity of pig meat, bacon and the like in this country, and if there is to be freer entry and a larger proportion of the business is taken by Denmark, how is that going to fit in with the general policy? Millions of pounds are being spent on new types of feeding, new breeding systems and all the rest, and this new proposal is going to reduce the size of the British pig producing industry. How are the Government going to make it up to the farmer—pay him more money for a smaller number of pigs?


My Lords, the noble Viscount is fully aware, and to the best of my knowledge supported, the Government's intention of improving the efficiency of the pig industry in this country—that is, of those producing the actual bacon. I am sure that he would agree with me that there is a good deal of work to be done in this sphere, particularly on the curing side, in order to get more uniformity. We have set up the Pig Industry Development Authority, in which I know the noble Viscount is interested, which is starting to work in that direction, and which I hope within a foreseeable time will have some satisfactory results. Several noble Lords have asked whether we could have a debate on this matter. Perhaps that could he arranged through the usual channels.