HL Deb 13 November 1974 vol 354 cc798-808

3.51 p.m.

LORD GORONWY-ROBERTS

My Lords, with the permission of the House, I should like to repeat a Statement being made in another place by my right honourable friend the Foreign and Commonwealth Secretary. The Statement reads as follows: "At the meeting of the Council of Ministers on November 12 I discussed with my Community colleagues the long-term problems we are facing over sugar and also our renegotiation request concerning the British contribution to the Community budget. The remaining items on the agenda were dealt with by right honourable friend the Secretary of State for Trade and by my honourable friend Mr. Roy Hattersley, Minister of State at the Foreign and Commonwealth Office.

"The House will be glad to know that the Council reached provisional agreement on a mandate to the Commission for negotiations with the developing Commonwealth sugar producing countries. The mandate concerns the arrangements for their sugar exports to the Community from 1975 onwards.

"It was agreed that the Community should offer access for 1.4 million tons of sugar a year on a continuing basis.

"The Government were also anxious to secure that the bulk of the 1.4 million tons should come to the United Kingdom for refining in order to assist the cane refining industry. I am glad to say that the Council accepted that in practice the great bulk of the sugar would be exported to the Community in accordance with traditional channels of trade. It follows that British refineries will get the bulk of the sugar delivered to Europe by the Common-wealth producers.

"There was considerable discussion on the price that should be paid for the sugar. It was understood that a fair price will have to be offered if supplies are to be secured. But this is a matter which is closely related to the Community's internal sugar regime and it was decided that the Agriculture Ministers should settle this at their meeting on November 18–19.

"The Agriculture Ministers will also have to look at the question of the duration of the agreement with the sugar supplying countries. We take the view that the arrangement should be for a number of years in order to safeguard the interests of both our traditional Commonwealth suppliers and our own cane refining industry. This view is accepted by the other members.

"When the Council of Agriculture Ministers reach agreement on a final mandate at their meeting next week the informal consultations which the Commission has already been conducting with the supplying countries will then be turned into formal negotiations with a view to reaching an early agreement.

"I also carried further the discussion of our contribution to the Community budget. The House will recall that the Commission were asked by the Council on June 4 to produce a Report. A copy of this was placed in the Library of the House on October 29, and was before the Council yesterday. It broadly supported the two main contentions in my speech of June 4. First, Britain is already below the Community average as far as income per head is concerned and, because it is expected that our growth rate will continue to be below the Community average, for the time being, our income per head will decline further before, as we hope, it starts to climb back again. Second, our contribution to the Community budget is going to be substantially above our fair share in relation to the Community's total GDP. This situation must be remedied. Though I made it clear that we were ready to consider solutions to deal with the problem, I suggested that the Community might accept as a principle that member states with below-average GDP per head should not bear a share of the burden of financing the Community budget disproportionate with their share of the Community's GDP.

"The first reactions of the other Governments were varied. But I noted in a number of speeches round the table that my analysis was not disputed. There is still a long way to go before we find out whether all concerned are ready to agree to a solution which we can accept. The matter will now be discussed intensively in the Community. I would like to be able to make progress towards a solution at the next Council meeting on December 2/3, or, failing that, at the Summit in Paris the following week."

My Lords, that concludes the Statement.

3.57 p.m.

EARL FERRERS

My Lords, I am sure that your Lordships will be grateful to the noble Lord, Lord Goronwy-Roberts, for repeating that Statement made by his right honourable friend. Regarding the latter part of it which concerned our contribution to the EEC budget, I am sure that it will meet with the accord of most people if a formula i can be found for re-adjusting a contribution made by any member State if the country's share of the community's total GDP is out of line. In a developing and flexible Community that must be so. Am I to understand that there is general agreement within the Community on that principle, and that the only difference arises on the specific issue of what our contribution should be?

Regarding sugar—and this was a very important Statement—the House will be glad to know that the Community agrees in principle to accept 1.4 million tons from the developing countries. The noble Lord will agree that the problem now is to get the developing countries to sell that sugar to the community, and the operative factor there will be price. The Statement says that there should be a fair price. Do I understand correctly that the price will be fixed at the next meeting of the Agricultural Ministers and will then be announced? Or will the price be a negotiable one based on the agreement arrived at with the Ministers on the one hand, and the Caribbean countries on the other? Can the noble Lord say what is the anticipated date for the conclusion of these formal negotiations after the agreement? As I understand it, the Agricultural Ministers are to make their agreement on November 18 and 19 and then give to the Commission the powers to negotiate with the Caribbean countries, and thereafter there will be an agreement. Can the noble Lord give us any idea of when that agreement is likely to be arrived at? As I understand it, until that agreement is arrived at no refiners are in a position to be able to import any sugar into this country—and the time-scale is already extremely short, being only two months between now and February 1. Can the noble Lord give us the assurance that the time-scale will be such as to ensure that there will be adequate time for this sugar to be loaded and brought into the country and into the refineries before February 1?

4 p.m.

LORD LLOYD OF KILGERRAN

My Lords, may I thank the noble Lord the Minister for repeating the Statement here, and may I also ask a few questions in regard to the time element and the price element? The Statement says that it was agreed that the Community should offer access for 1.4 million tons. Would the Minister be able to say to whom this offer will be made? Will it be made to the new Association which I think has been formed of about 44 different countries—countries in Africa, the Caribbean and the Pacific—and can he give any indication as to the time element involved in making this offer? Then there is the second aspect of the continuing basis of that Agreement. Are the EEC Ministers going to propose to that Association or to any particular country that the basis should be for a period of five or seven years? As to price, would it be possible for the noble Lord to indicate that the price which will have to be paid by the United Kingdom will be much less than the fair price which may have to be paid by the EEC?

LORD HAWKE

My Lords, would the noble Lord—

LORD GORONWY-ROBERTS

My Lords, perhaps it would be for the con- venience of the House if I addressed myself to the two rather substantial contributions which we have just heard. I am grateful to both noble Lords, and to the noble Lord opposite who has deferred his contribution for the moment. In reply to the noble Earl, Lord Ferrers, may I say that we have no preferred solution in regard to tackling the budgetary imbalance with which we are concerned. As I think he impliedly hoped we would, we shall certainly listen to and consider any proposal which will implement the principle of equity of contribution. This will in no way affect the question of the gestre tour which concerned some of our friends in the Community, and i think it is the right way to go about it to establish a basic equity of contribution, whichever way it is done. We shall consider any proposal to that effect.

I turn now to sugar. We believe there is agreement in principle. It is, as the noble Earl said, a question of supply. Access is one thing; availability may well be another. However, we have fair confidence that up to 1.4 million tons will be available as well as capable of access during the period that we mentioned. The operative factor is, as he has said, that of price. We define it as a fair and realistic price to the countries concerned, which invariably depend, perhaps disproportionately, on this commodity. We would hope, therefore—we would expect, therefore—that the Community will have regard to the dependence of these countries on this one commodity when they approach the question of price. As the noble Earl knows, we ourselves have said that we will start at £140 a ton, which is somewhat in excess of the existing commodity price per ton. But as he pointed out, duration is also operative here. I would not wish to prejudge the discussions of next Monday or the negotiations that will follow on the meeting of the Council of Agriculture Ministers next Monday, but I think he made an important point about duration. It could be that these countries would find in a fairly long duration of guarantee of access and of supply a reason for perhaps being fairly flexible on price. One would not wish to prejudge the negotiations.

As to the date of conclusion, I agree that this is immensely important both from the point of view of our refineries, which depend on the availability of this sugar, and also from the point of view of our housewives. I cannot give a firm guarantee, but this much I can say with confidence: we expect that as soon as the parameters of negotiation have been settled next Monday and the Commission then proceed on the authority of the Agriculture Ministers to the actual negotiations, conclusion will be reached fairly soon so that the implementation of the new Agreement can follow equally soon after that. The noble Earl has underlined the need for swiftness in these negotiations; and I believe that my right honourable friend has impressed this upon our partners in the Community.

To turn to my noble friend Lord Lloyd of Kilgerran, I agree with him also that access is one thing; availability may well be another with the world price being what it is, escalating almost every day. However, for the reasons I have just given to the noble Earl, we have reasonable confidence that the countries which depend upon the sale of this commodity, not now but for the indefinite future, will measure their demands as to price and their willingness to supply against that background. This brings me to the noble Lord's second point, equally important: how long would the time-scale of undertaking to purchase be? Would it be for some years—five years? I would say at least five years, and, we would hope, indefinitely. We interpret the words, "on a continuing basis" as being indefinitely. These are countries which the Community, like the United Kingdom, recognise as being overly dependent upon this sugar industry. I have dealt with price in what I said in reply to the noble Earl.

LORD HAWKE

My Lords, the noble Lord is very optimistic about supply. The present price of sugar would repre-sent an import cost of at least £700 million. Neither Britain nor Europe can possibly afford that. From the bargaining point of view, would it not be much better to have sugar rationing in this country so that we could show to the producers that we really mean business to get sugar at a reasonable price? Otherwise I think we shall not get the sugar unless we pay the world price.

LORD GORONWY-ROBERTS

My Lords, Her Majesty's Government are not yet persuaded that there is a case for sugar rationing. As to the price, we all know of course that the world price is very high indeed and may go higher yet. However, in regard to making good the shortfall of supply to this country as a Member of the EEC, as the noble Lord knows, the Community has agreed to make a subsidy available.

LORD LEE OF NEWTON

My Lords, is the noble Lord aware that some of us are happy that he saw the point of the enormous importance of this Agreement to our friends in the Pacific and in the Caribbean? But is he further aware that sugar refining capacity in this country alone is some 1.7 milliontons—in other words we have 300,000 tons from Australia which are not now under consideration—and it is therefore vital that we should stress the need for practically the whole of the 1.4 million tons to come into this country for refining? Otherwise, there will be pretty heavy unemployment in the refining industry.

LORD GORONWY-ROBERTS

My Lords, the Statement I read made it clear that the great bulk of the 1.4 million tons, which is now guaranteed to have access to this country, would in fact come to us through the normal channels of trade and in that way be available to our refining industry. This is one of the primary objectives of our negotiations earlier this week in Brussels.

My noble friend is quite right when he says that the normal amount of sugar from both ECP and Australian sources is not 1.4 million but 1.7 million tons. The 1.4 million tons is the guarantee which in every part of the House we have all agreed we should try to get in order to sustain the economy and the wellbeing of the countries to which I have referred. However, the 300,000 tons—the 0.3 million represented by the, so far, non-availability of Australian sugar—will be the subject of discussion, possibly of negotiation, in the coming weeks. My right honourable friend the Prime Minister made it clear in the House on November 7 that that is still a very live possibility.

LORD DAVIES OF LEEK

My Lords, may I refer to the question of rationing. Is my noble friend aware that some of us pointed out this difficulty during the debates upon our entry into the Common Market? The question was not studied in depth. I do not wish evil upon those who voted for entry, but I hope that they go without any sugar in their Christmas puddings this Christmas! May I ask the noble Lord whether any further discussion was carried on regarding the acreage of sugar beet, because, as my noble friend has pointed out, there will be in the region of tens of thousands of jobs which will not be held unless we can obtain about 1.7 million tons of sugar. This was pointed out in an excellent and constructive article in the Sunday Times on the sugar problem. I should like to know whether the sugar beet position, and acreage, were discussed at the Common Market discussions this week.

LORD GORONWY-ROBERTS

My Lords, they were not discussed specifically, but the background contains the facts about our own beet shortfalls in production to which my noble friend has referred. We are some 300,000 tons down on what we would normally expect to achieve from our own beet production. That is because of disease. However, the A and B quotas which the Community has granted to this country are very favourable indeed if we can. or care, to achieve them. Under the A category we shall go from 900,000 to 1,050,000 tons (which is a substantial percentage increase in terms of the resources of the industry, manpower and all the rest); and under the B category there will be another 460,000 tons, which represents a very big jump indeed. Therefore one is not unduly anxious about the future of the beet sugar contribution to our requirements in this country. What I think we must increasingly consider is how we in this country, and secondly the Community, so arrange our indigenous production as to make full use of our resources for this purpose in land, manpower and machinery and at the same time honour our pledge, which is a moral and practical one, to the countries which overwhelmingly depend upon the production of cane sugar for their very existence.

LORD MERRIVALE

My Lords, are there not two very important elements which would have to be very seriously considered with a view to reaching a reasonable price?—and that is a reasonable price for the Community and also for the sugar producing countries. One is that these countries are relying mainly upon the production of cane sugar for their existence. The fact is that over the last two or three years there has been a very high increase in the price of other raw materials and commodities which they would need to sustain their livelihood. Secondly, due to inflation, is it not also a fact that they have had to pay much higher prices for vehicles and tractors—that is, for the equipment which they need for developing the production of their cane sugar?

LORD G0R0NWY-R0BERTS

My Lords, that is all very true, and I am grateful to the noble Lord for drawing the attention of the House to those factors.

LORD GORE-BOOTH

My Lords, may I suggest with great respect that the Foreign and Commonwealth Secretary is deserving of our congratulations for the progress he has made at this very important meeting. May I also make the comment that I was very glad to hear in the Statement that our relative poverty is described as something in regard to which we shall eventually turn the corner. I say this because in other Statements it has been suggested that we should remain in perpetual poverty. Finally, with even more respect, the Foreign and Commonwealth Secretary used some battle metaphors in his public relations; and, of course, if one is negotiating within a few miles of Waterloo that is quite natural. However, may I suggest that it should be made clear constantly that this is a battle among friends.

LORD GORONWY-ROBERTS

My Lords, I think that has become increasingly obvious as the renegotiation has proceeded. I recall saying in this House that my right honourable friend speaks frankly and precisely at the conference table, and I believe that the great respect that his partners in Europe hold for him rests upon this fact. May I also agree entirely with my former mentor in the faith which indicates that we are confident that this country will achieve a much bigger percentage GDP in the years that lie ahead than unfortunately we have at the moment.

LORD BURTON

My Lords, may I ask the noble Lord whether, in view of the heavy cost of sugar now and the heavy cost to our balance of payments, the Government will consider re-opening the sugar beet factory at Cupar?

LORD GORONWY-ROBERTS

My Lords, that is a question of which I should like further notice.

EARL FERRERS

My Lords, may I ask the noble Lord one further question? I am very grateful to him for the way in which he replied to my other question. However, this question is important and it underlines the importance of an earlier settlement. Do I understand that in fact the refiners are not in a position to order any more sugar after February 1 until this settlement has been arrived at between the EEC and the developing countries? If the noble Lord could explain that, I should be grateful.

LORD GORONWY-ROBERTS

My Lords, my understanding is that that is not the position. However, it is a question which is of such importance that I should like to confirm my impression, if the noble Earl will allow me to proceed in that way.

LORD CHELWOOD

My Lords, the noble Lord has told us that other important questions were discussed at this meeting. I hope I may raise one other matter with him. Can the noble Lord say whether the question of Parliament's powers was discussed at this meeting? Will it be on the agenda of the Summit meeting? And is the noble Lord aware that successive Summit meetings have paid lip service to the importance of increasing Parliament's powers but that the attitude of the Council of Ministers has been, to put it mildly, lackadaisical? Will Her Majesty's Government use all their influence, therefore, to ensure that there is a real increase in the powers of the European Parliament, particularly where budgetary questions are concerned?

LORD WIGG

My Lords, before the noble Lord replies, will he take it that there is a section of Members of this House—not only members of the Labour Party but others who are outside the Labour Party—who would take the gravest possible exception to the giving of any such assurance?

LORD GORONWY-ROBERTS

My Lords, I should take very grave exception to being prevented from giving certain assurances, including that important questions of the kind which the noble Lord has raised should not have their place on any agenda at which Heads of State meet for discussions.

BARONESS TWEEDSMUIR OF BELHELVIE

My Lords, may I ask the Minister whether, under the heading of "Other Trade Matters" to which he referred in his Statement, regional policy is to be discussed? The previous Select Committee on European Community matters decided not to pursue the papers on regional policy because discussion in the Council was in abeyance. It would be of great help to the new Select Committee if the noble Lord could tell this House whether there is a definite timetable when regional policy will be discussed?

LORD GORONWY-ROBERTS

My Lords, the agenda for the meeting at which the two points which are the content of the Statement were discussed did, indeed, include such questions as those raised by the noble Lord and regional development questions. How far those questions were discussed, having regard to the urgency of the two matters to which I referred in the Statement, I could not say. However, I should be very glad to make a Statement in one form or another indicating the pace at which these matters were discussed.

Forward to