HL Deb 26 July 1978 vol 395 cc871-8

3.28 p.m.

Lord GORONWY-ROBERTS rose to move, That the draft European Communities (Definition of Treaties) (No. 6) (International Development Association) Order 1978, laid before the House on 13th July, be approved. The noble Lord said: My Lords, I beg to move that the European Communities (Definition of Treaties) (No. 6) (International Development Association) Order 1978, which was laid before this House on 13th July 1978, be approved. With the permission of the House, I should like at the same time to speak on the European Communities (Definition of Treaties) (No. 7) (International Wheat Agreement) Order 1978, also laid before the House on 13th July 1978. In speaking to both orders at the same time I shall, of course, move them separately.

The House is, I think, now quite familiar with Orders in Council made under Section 1(3) of the European Communities Act, 1972. Your Lordships will recall that the object of introducing these orders is to define formally or specify certain Community instruments as Community Treaties under Section 1 of the 1972 Act. The Schedule to the (No. 6) Order, specifies the Agreement between the European Economic Community, its Member States and the International Development Association, which was signed on 2nd May 1978 at Brussels.

The Schedule to the (No. 7) Order specifies two Protocols extending the Wheat Trade Convention and the Food Aid Convention. Together, these Conventions constitute the Fourth Extenson to the parent Agreement. The Protocols were opened for signature in Washington on 26th April 1978. The House debated and approved a similar extension of the Agreement last year, when it considered the European Communities (Definition of Treaties) (No. 2) Order, 1977.

I should like, first, to provide the House with information on the (No. 6) Order—the first on the Order Paper—relating to the International Development Association. The Agreement between the Community and the International Development Association, which is the subject of the (No. 6) Order, takes the form of a contract between the EEC, its Member States and the IDA under which the Member States undertake to make payments to the IDA's special action account, which is to be operated to benefit the poorer developing countries. It is necessary to specify the Agreement as a Community Treaty, to enable the United Kingdom to contribute its agreed share to that account.

The House will recall that the idea of a special action programme to help the poorer developing countries was conceived by the Community during the discussions which took place in the Paris Conference on International Economic Co-operation throughout 1976 and into the first half of 1977. These discussions centred on all main aspects of economic relations between the Western industrial nations and the developing countries—energy, raw materials, development and finance—and the worldwide problems which had arisen as a result of large increases in the price of oil, inflation, and dramatic fluctuations in commodity prices. It rapidly became clear at the Conference that some of the 29 countries recognised by the United Nations as "least developed", and some other poorer countries, were not able to cope effectively with these problems and maintain the pace of their development without increased aid transfers, preferably in a form they could expend effectively and quickly.

During the British Presidency of the EC Council of Ministers, therefore, the Community took the lead in proposing to other industrial participants in the CIEC—that is, the Paris talks—an initiative for special action to provide additional aid to those poorer countries with special needs for such help. We were finally able to agree such a proposal and to table it in the last hours of the Paris Conference. The result was a "special action programme" of 1,000 million dollars, to which the Community undertook to contribute 385 million dollars, the United States 375 million dollars, Japan 114 million dollars, and Canada, Australia, Sweden, Switzerland and Spain together the remaining 126 million dollars. So that the Community is contributing 385 million dollars of the billion dollars, which has been agreed on. Subsequently, further contributions were promised to the programme by Austria and Norway. The Community took the view that to be fully effective this assistance had to be fast-spending, untied and additional to other aid flows.

For that reason, it consistently proposed that special action contributions should he channelled through multilateral bodies, and particularly through the International Development Association, which is the soft-loan arm of the World Bank and for which a new three-year replenishment of 7,600 million dollars had already been negotiated. In the event, most other industrial donors decided to provide bilateral assistance. Despite this, the Community felt its own reasoning to be valid, and decided to enter negotiations with the IDA to provide an additional special action account on top of its ordinary resources. These negotiations were successful and the Agreement between the Community, its Member States and the IDA was signed on 2nd May 1978.

There are strong reasons why We supported the IDA as the hest channel for the Community's contribution. The World Bank and the IDA have a deservedly high reputation for administrative efficiency and for securing really practical and well-conceived developmental programmes and projects. The expenditure of this money, therefore, will be hacked by all the experience and capacity of the World Bank's machinery. It should he possible for at least part of the account to be committed to purposes for which the Bank staff have already done most of the preparatory appraisal.

We and other members of the Community will also be able to monitor progress on loans made both through the operation of consultation between the IDA and the Commission, and through our own representation on the World Bank's Executive Board. Because the money will flow through the IDA, no complicated new machinery will be needed. All the recipient countries will be well aware of how the IDA's machinery operates, and will know how to use it.

Ninety per cent. of the IDA's lending already goes to the poorest countries. This group of countries contains about four-fifths of the population of the developing world. We expect virtually all of the Community's contribution of 385 million dollars to go to them, and a good proportion of this is likely, in particular, to go to the poorer countries of Asia which do not benefit from aid under the Lomé Convention. Account will be taken of the special needs of individual countries, and the way in which they have been affected by adverse developments in the world economy. The loans will be interest free and the principal will be repaid within 50 years; in other words, these will be very soft loans indeed, as I suppose all loans, personal and otherwise, ought to he. Our own share of the 385 million dollars is 115 million dollars, and it is the largest to be made by any Member State, except the Federal Republic of Germany. This arrangement is ad hoc and creates no precedent. But it broadly reflects our position in, and strong support for, the IDA, and its effectiveness in distributing aid.

The Agreement contains one special provision which does not apply to ordinary IDA loans. Because, in the end, the Community was virtually alone in choosing to channel its special action through the IDA, the Council of Ministers decided that only Member States, and those developing countries eligible to benefit from the account, should be able to tender for orders when credits were granted. This condition has been accepted by the IDA. I hope that I have been able to convince the House that by adopting this draft order we shall be fulfilling a significant political commitment, in which we ourselves played a leading part, in collaboration with our Community partners, and that the money we shall provide, which will be the equivalent of 115 million dollars, or about £67 million, will be used effectively to benefit the people and countries most in need.

I should like to turn now to the (No. 7) Order and the two Protocols specified therein. As I have already mentioned, the Wheat Trade Convention, together with the Food Aid Convention, comprises the International Wheat Agreement. The agreement came into operation on 1st July 1971 for a period of three years to 30th June 1974. It has been extended three times since then by Protocols, on the first two occasions by a period of one year and last time for two years expiring on 30th June 1978. Protocols extending the convention for a fourth time, for a further year, came into operation on 1st July 1978. That will take us to July 1979.

The objectives of the present Wheat Trade Convention are to further international co-operation on wheat problems, to expand international trade and to contribute to the stability of the international market. The objective of the Food Aid Convention is to guarantee a minimum annual supply of food aid in cereals to the developing countries.

It has been necessary to keep the 1971 agreement in operation until such time as a new international agreement on grains, with economic provisions, and a new Food Aid Convention can be worked out. As the noble Baroness knows, this is in counterpart to what we hope to work out under those two separate headings. The two arrangements are basically complementary; that is the word I wanted. They fit in. In one way or another, both should contribute to improved world food security, not least for the developing countries.

It is a remarkable fact that while so many of the developing countries, including the poorest among them, are dependent upon commodities—and frequently upon single commodities—nevertheless, in many cases it is those countries which suffer from the lack of food. It is a matter of variety and, indeed, of distribution. Aid in the form of food is not, for us, additional to other kinds of aid, and in some ways it is not so useful a tool for development. But it has a special role to play, both in sudden emergencies and as a means of directly improving nutrition among the poorer and more vulnerable sections of the population. On top of this, if we help to subsidise part of the food import bill of the poorer countries, we can help indirectly to generate wider development.

Following several years of preliminary work in the International Wheat Council, a negotiating conference was held in Geneva, under UNCTAD auspices, in February-March of this year to negotiate a new international agreement to replace the International Wheat Agreement. Work is continuing, and negotiations seem likely to be resumed in a second conference in Geneva in the autumn of this year. If successful, a new agreement should take effect from 1st July 1979.

I have already referred to the fact that we are taken up to 1979. The situation beyond that depends—and depends confidently, I think—on the present and the autumn negotiations. In the meantime, it is most desirable that international cooperation on wheat and food aid matters should be continued. For this reason, we propose that the International Wheat Agreement should be extended for another year up to 30th June 1979. I am confident that the House, which on three earlier occasions has agreed to Orders in Council specifying Protocols extending for another year the life of the International Wheat Agreement, will do so again on this occasion. I beg to move.

Moved, That the draft European Communities (Definition of Treaties) (No. 6) (International Development Association) Order 1978, laid before the House on 13th July, be approved.—(Lord Goronwv-Roberts.)

3.45 p.m.

Baroness ELLES

My Lords, I am aware that the House is waiting for a Statement from the Government Benches. Very briefly, therefore, I shall make five points. First, may I thank the noble Lord, Lord Goronwy-Roberts, for explaining as fully as he has, and with the care that he always takes in putting matters before your Lordships, the purpose of these orders. May I also say from these Benches that we welcome them. Secondly, we are pleased to see that the North-South dialogue has, in fact, come out with something concrete in the way of aid to those countries which need it most.

Thirdly, we read with the greatest of pleasure in the Explanatory Note on page 2 of the order relating to the International Wheat Agreement that the United Kingdom has supported this move in favour of Community action. We on this side of the House welcome the fact that these contributions to Third World countries should be made through the Community rather than on a bilateral basis. Fourthly, so often we hear condemnation of surpluses. It would be beneficial if those who condemn them were to know that when there are surplus sales they can be used effectively and distributed to those areas of the world which need them and that surpluses are not necessarily in themselves a defect in our agricultural policy.

Finally, although I shall not expect the noble Lord to answer now, may I request that the food, aid and financial benefits which have been given to these countries should be monitored not only by the donor countries but by the receiving countries because, as the noble Lord has rightly said, very often the problem is a matter of distribution. So often we find that there are vast stores in those countries which need both food and finance, yet they do not reach the poorest element in the poorest countries. I know that we do not have time to debate this problem now, but may I ask the noble Lord to take on board the fact that when European Community countries are giving assistance to Third World countries they should ensure that the poorest people in the poorest countries benefit from the efforts of the Community. I support the orders.

Lord GORONWY-ROBERTS

My Lords, on the first point—the welcome given by the noble Baroness to these two orders, in particular to No. 7—I was delighted to hear the terms in which she expressed both her views and those of the Opposition. Regarding her second point —the North-South dialogue—it is perfectly true that this is an example of practical results flowing from the endless talk about how the developed can help the developing countries. It is a very good and a very substantial example of how practical results can flow from meaningful discussions.

To turn to the third point made by the noble Baroness regarding the example given by Community action, certainly we hope that on future occasions the Community will emulate its own outstandingly good performance. I am sure that the noble Baroness will not mind if I add to her third point that the United Kingdom took a leading role in achieving this joint action by the Community through the Paris talks and as a result of those talks. On her fourth point regarding surpluses, one is tempted to discuss it not in any adversary sense. The noble Baroness will agree with me that the basic purpose is developmental and, therefore, that the criterion must be developmental—and the needs for development. I am bound to say that I agree entirely with her that the more intelligent the organisation of the disposal of surpluses is, the better it is for all concerned—for the developed as well as for the developing world.

If I may turn to the noble Baroness's fifth point about distribution, of course we are all aware of the hiccups, hitches, frustrations, and worse, in the distribution of substantial aid to various countries. This is why it was decided that the IDA, as the appropriate arm of the World Bank, should be chosen as the vehicle for this special action programme. As I have said, its machinery is well understood in the developing countries as well as in the donor countries. Nevertheless, it is right and helpful that the noble Baroness and I should, from our respective positions on behalf of the whole House, emphasise the need that these very substantial sums of money and these very useful goods and services should find their way to the individuals as well as to the countries whose need has been proven.

On Question, Motion agreed to.