§ 4.12 p.m.
§ Lord TREFGARNE
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Trefgarne.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD ABERDARE in the Chair.]
§ Clause [Extended meaning of "the Treaties" and "the Community Treaties"]:
§ On Question, Whether the clause shall stand Part of the Bill?
§ Lord MAYBRAY-KING
I intervene for one minute to express what I was not able to express at Second Reading; my personal delight that Greece is joining the European Community. I believe she has much to give Europe and much to receive from Europe. I am especially happy to welcome home my dear Greek democratic friends who came from prison and from exile, Ministers now and ex-Ministers, and especially my personal friend the Speaker of the Greek Parliament, Mr. Papaspyrou. Greece is now free and now joins a free Europe. Democracy began in Greece. She invented the word. She created the word, "Europe", and all the friends of freedom throughout Europe are happy that this Bill is going through the House.
Lord CAMPBELL of CROY
I am very glad to follow the noble Lord, Lord Maybray-King. I was able at Second Reading to express my pleasure at the impending accession of Greece and I will not repeat my words, but this is the appropriate stage of the passage of this Bill at which to elicit the Government's views on certain matters which will arise when Greece does accede. There will be consequences and repercussions for British industry, some of them good, such as the new opportunities which the Greek market will afford, others difficult. I made reference to this subject briefly at Second Reading, as did one or two other speakers.
996 That debate naturally covered a very wide area. It touched on the general effect of the accession of Greece as well as the expected membership of Spain and Portugal afterwards. The enlargement of the Community from nine members to twelve will require changes in the institutions and in the methods of the work of the EEC. All this was discussed, but, above all, the political reasons for accepting the three new members. In the reply from the spokesman for the Government on 27th November he could not, and of course was not expected to, deal with particular points affecting industry in the United Kingdom. This Committee stage today must be the proper occasion for this, as I reminded the Government at the beginning of last week. But it need not occupy much of the time of the House this afternoon. I support the Bill, as I made clear, and I hope it will be on the statute book before Christmas.
The transitional periods in the treaties for Greece of five and seven years, and the special mechanism to ensure that Greece is not a net contributor during the first five years are important. The United Kingdom industry which is likely to be the most vulnerable to damage during this period is the textile industry. Greece has for some years enjoyed associate membership of the EEC. Those customs barriers which now exist are to be reduced during the transitional periods. There is one situation, for example, which could all too easily ensue. The reduction could lead to a rapid rise in imports in cotton yarn within the present area of the EEC. That would cause serious disruption for the United Kingdom textile and clothing industries. This is one example of what may happen.
There is a general safeguard in the main Treaty of Accession in Article 130, but my noble friend Lord Trefgarne at Second Reading made a significant general statement. He said that in a serious situation the Commission can, under Article 130, authorise the United Kingdom Government during the transitional period to take protective measures. That is an important safety measure. I trust that there would be no delay and that the United Kingdom Government would press for the use of this safeguard, if such a situation did arise, on behalf of the textile or any other United Kingdom industry which found itself suddenly 997 threatened. There is some additional action that the Government can take now. It would also be prudent to negotiate special arrangements with Greece for textiles and clothing. What is the Government's attitude to this proposal, which has been put to them before, for these direct negotiations, as well as the safeguard clause?
Then there is another matter which needs the Government's attention and on which a statement would be welcome today. Under Protocol 7 of the Treaty of Accession of Greece very generous investment aid and tax concessions could be made available to firms from outside the EEC who established themselves or expanded in Greece. There were similar provisions in the Irish Treaty of Accession, and those resulted in unfair competition and damage to our textile industry after January 1973 when Ireland became a member of the EEC. What do the Government propose to do to ensure that there is no repetition of that in the case of Greece? It would be provident to consider this now, because similar provisions are likely to he included in the accession treaties for Portugal and Spain. Indeed, Portugal will pose broadly the same problems as Greece for the British textile and clothing industries. It is timely and vital now, on the accession of the first of these three new members, to determine how fair trade is to be maintained and how sudden and serious disruptions or distortions of markets can be handled, and handled quickly.
This is a short Bill and its substance is all contained in Clause 1. The clause accepts for the United Kingdom the results of long and complex negotiations: pages of the Treaty of Accession for Greece—with all its appendages—to the EEC, and also the Treaty of Accession to the European Atomic Energy Community and the Council's decision on accession to the Coal and Steel Community. It is short, but it is the most important measure that this House has been asked to pass in this session so far.
From the United Kingdom's experience with the EEC over the last nine years, I suggest that some lessons can be learnt. I refer to the period of negotiation—1970 to 1972—and then our membership since January 1973. It is worth while to 998 consider at very early stages the problems likely to arise and to anticipate them: know the rules of the club and assess the effects of their application. That maxim applies especially where there are transitional periods and temporary financial mechanisms. It is not too soon now to be determining the courses of action open to our Government in circumstances which, as I have pointed out, can clearly be foreseen. That is what I am asking the Government to do.
§ 4.23 p.m.
§ Lord TREFGARNE
My noble friend has once more raised some extremely pertinent and valid points. I shall endeavour to give as full and frank an answer as possible without trespassing, too far, I hope, on your Lordships' patience. On the general question of safeguard arrangements for textiles, I must make it clear at the outset that the Government are acutely conscious of the need for adequate safeguards for the United Kingdom textile industry in the face of low cost imports from abroad. One such provision, as my noble friend mentioned, has been negotiated with Greece in the shape of Article 130 of the Act of Accession. That article will permit the Commission to authorise a Member State to take protective measures if serious difficulties arise in the textile sector, or indeed any other sector, as a result of Greek exports. This was the best safeguard which it was possible to negotiate, but it does not mean that we are entirely happy. A gradual phasing out of import controls would clearly have been preferable, but the obstacle to that was the fact that there are no formal quota restrictions under the present arrangements.
For the last few years Greece has been voluntarily restraining exports to the Community, but any formal or even informal continuation of this arrangement after accession could face legal difficulties because of the provisions of the Treaty of Rome on the free movement of goods. Nevertheless, we wish to make it quite clear to the Greek Government that they must leave the Greek textile industry in no doubt of the dangers of building up too rapid an increase in exports of sensitive products, and of our determination to invoke the safeguard clause should that be necessary.
999 It is not clear whether our Community partners will be speaking in similar terms to the Greeks. In general, the United Kingdom is more sensitive on the question of textile imports than most of our Community partners, because of the importance of our textile industry and the degree to which it has suffered from low cost competition in recent years. I am sure that the Greeks will understand our special position.
I turn now to the question raised by my noble friend, of State aids to industry. The Government fully agree that Greece must not be allowed to exploit unfairly the discretion over State aids for which Protocol 7 in the Act of Accession provides. It is, however, important to bear in mind that the purpose of Protocol 7 is to help Greece to bear the full brunt of Community competition in Greek industries which are relatively weak. This is not at all the case with the Greek textile industry. I am sure that the Commission, who will have to authorise Greek State aids, is well aware of this and will be keen to avoid worsening the distressed condition of the textile industry in the Community as a whole.
The Irish case, to which my noble friend referred, is not a close parallel in this respect, since our textile industry is now in a much more parlous state than when Ireland was authorised to give aids to its textile industry. It is also worth bearing in mind that the United Kingdom, which has not infrequently sought and received authorisation to grant State aids to industry, could be accused of inconsistency were it to complain too loudly of others being granted similar discretion.
Finally, I think that it is worth recalling that we have always recognised that Greek accession, and enlargement as a whole, would bring not only political and economic benefits, but also certain economic costs. In general, our traders have more to gain than to lose from Greek accession. However, textiles is an exception. We should not forget that, although Greek exports may increase to some extent after accession, at present Greece comes well down in the league of low cost suppliers in the United Kingdom, providing only 1 per cent. of our textile imports in 1978, worth £19 million, and incidentally taking £12 million worth of our textile exports. It is, therefore, 1000 important to see the problem in that wider perspective. I hope that that further clarification will help my noble friend and that your Lordships will agree that this clause should stand part of the Bill.
§ Baroness HORNSBY-SMITH
Before the noble Lord sits down, can he say whether entering the Common Market will make it necessary for the Greek Government to stop subsidising, as they have done for some years, by reduced taxation on goods exported in the textile industry?
§ Lord TREFGARNE
I could not answer that question without looking into the matter. I think that it probably would be, but I shall look into the matter and write to the noble Baroness.
Lord CAMPBELL of CROY
I am so sorry. Does someone else wish to speak? We are in Committee. I thought that, as the noble Lord, Lord Wells-Pestell, was rising to his feet, he wished to address us on Clause 1. However, I understand that he does not wish to address the Committee at this stage. Therefore, I shall speak on Clause 1 in this Committee stage.
I wish, of course, to thank my noble friend Lord Trefgarne, who has given a very full reply to the points which I raised. I had, of course, given him notice of the points that I wished to raise and I am glad that he has been able to go as far as he has gone because there are a number of Government departments involved in this matter. He confirmed that the voluntary agreements which now exist cannot continue after Greece has become a Member of the EEC, because they would be illegal. However, I do not think that he dealt with the suggestion that I made—if he did deal with it, I missed it—that it might be possible for the United Kingdom to enter into direct negotiations to reach an agreement which was not a voluntary one.
§ Lord TREFGARNE
I am sorry that I was not clear to my noble friend. Our understanding is that it would not be 1001 possible to do what my noble friend is suggesting without contravening provisions of the Treaty of Rome.
Lord CAMPBELL of CROY
I am grateful for that addition because I understood that the present voluntary agreements would have to come to an end. However, I had thought, and certainly some sections of the industry had thought, that it would be legal to conclude a new agreement direct with Greece. My noble friend then dealt with Protocol 7. I was glad that he recognised that there is a possible source of difficulty there. He pointed out that at the time of the accession of the Republic of Ireland at the beginning of 1973 the United Kingdom textile industry appeared to be in a much more robust position to be able to compete with new investment coming in on a large scale, with unfair assistance in Ireland. But in saying that he clearly accepts that the position is different now and that the position of the United Kingdom would be damaged if similar action were to take place in Greece.
My noble friend gave the figures for trade with Greece in textiles, and I remind him that Greece will be setting the pace for Portugal and that what we are discussing today will also have direct relevance to the other two prospective members. Therefore, I am grateful to my noble friend for giving those assurances, which are the most important ones that the British industry as a whole needs with the accession of these three countries.
§ Lord WELLS-PESTELL
With your Lordships' permission, I should like to apologise to the noble Lord, Lord Campbell of Croy, for almost interrupting him. However, there were at least three Members of your Lordships' Committee, on both sides, who still thought that we were on Report, having regard to the previous five Bills which were, of course, considered on Report.
§ On Question, Clause 1 agreed to.
§ Remaining clause agreed to.
§ House resumed: Bill reported without amendment: Report received.