HL Deb 25 June 1980 vol 410 cc1649-61

5.12 p.m.

Lord TREFGARNE rose to move, That the draft order laid before the House on 3rd June be approved. The noble Lord said: My Lords, I beg to move that the draft European Communities (Definition of Treaties) (Second ACP-EEC Convention of Lomé) Order 1980, which was laid before this House on 3rd June, be approved. I would also draw the attention of your Lordships to the three treaties listed in the schedule to the order, which were laid before the House on the same day. These are the new Convention itself, the provisions for tariff-free access for ACP products in the area covered by the European Coal and Steel Community, and the arrangements for the implementation of the Community's aid obligations under the new Convention. The text of all these treaties is contained in Command Paper No. 7895.

In addition, I gather that the House has asked for consideration to be given in the context of this debate to three other documents, as follows: Document 11817/79, which provides for the maintenance in force of the main provisions of Lomé I, pending completion of the ratification procedure for Lomé II; Document 11932/79, which provides, on the basis of the Lomé II model, for the renewal of the 1976 Overseas Countries and Territories Decision governing relations between the Community and the dependent territories of the member states; and Document 6204/80, which provides for Community ratification of the new Convention.

The first Lomé Convention, which expired in March, established a treaty relationship between an important part of the industrialised world and a considerable number (originally 46) of developing countries, known as the African, Caribbean and Pacific Group (or ACP for short). The Convention contained provisions for both large-scale aid from the Community, channelled through the European Development Fund, and important trade advantages for the ACP, including free access to Community markets for over 99 per cent. of ACP products and a novel scheme, known as Stabex, for compensating shortfalls in export receipts for certain, mainly tropical, agricultural products. A Centre for Industrial Development was set up to promote industrial co-operation, and joint ACP/EEC institutions were established, notably a Joint Council of Ministers and a Consultative Assembly. Special provision was made for the access of sugar, rum, bananas and beef from the ACP producers of these commodities, many of whom are Commonwealth members.

Inevitably the new Convention cannot be a landmark of the same historic significance as the first Lomé Convention, which can fairly be said to have broken new ground in the relationship between developed and developing countries. But it is nevertheless of major importance, and it is fitting that it should be debated on the Floor of the House. Lomé II is neither the radical advance on Lomé I which the ACP wanted, nor a mere consolidation of it. The prevailing world economic situation in effect ruled out a more generous settlement, but the extent of the improvements should not be underestimated. Against the present background of rising oil prices and a slow-moving North-South dialogue, Lomé II is likely to seem more valuable to the ACP with every year that passes.

For the ACP, Lomé II, as well as confirming all the benefits of Lomé I, also contained significant additional gains. On the trade side the ACP have obtained better access to the Community market for several important agricultural products, including notably rum (of particular significance to Commonwealth Caribbean producers) and beef (which is important to Botswana, Swaziland and Kenya). The Banana Protocol has also been revised and improved. The provisions governing the operation of the rules of origin have also been revised and made more flexible, particularly as regards requests for derogations put forward by least developed members of the ACP. These changes will make access to Community markets easier for the ACP, while still ensuring that they are not merely used as a back door entry for non-ACP goods.

The Stabex scheme, which stabilises export earnings for countries dependent on certain products, has also been improved. The new scheme will cover an expanded list of products, including for the first time rubber, pepper, cashew kernels, cotton seed, oil cakes, peas, beans and lentils. The Community has also agreed to consider in the future the possibility of including tobacco (this is of special interest to Malawi and Zimbabwe) and sisal products (which are important to Tanzania). A number of new provisions, notably over energy matters, have been added to the range of industrial co-operation between the Community and the ACP.

The aid provisions of the Convention have also been improved. Community aid and European Investment Bank lending have been increased to a total of 5,227 million European Units of Account (equivalent to £3,136 million). This represents a substantial increase over Lomé I, and is more than enough to make up for inflation. The United Kingdom's share of the European Development Fund for Lomé II is 18 per cent. At £523 million this represents a contribution of over £100 million per year. The new Convention will also provide for more flexible aid programming procedures, designed to meet the ACP's needs.

A new arrangement has been drawn up which is designed to cover the special problems of ACP mineral producers (notably Zambia and Zaire) by assisting them to remedy harmful effects on their income of serious temporary disruptions beyond their control. On investment, new commitments have been made on both sides concerning the promotion and protection of investments made in ACP countries by both the Community and individual member states. The new Convention contains a chapter on the new subject of agricultural co-operation, and a new technical centre for agricultural and rural co-operation is to be established. The joint European Community/ACP Declaration on Sea Fishing, in the old Convention, has been considerably expanded. It now provides for the possibility of bilateral fishery agreements between ACP states and the Community.

We must, of course, ask ourselves if the new Convention represents a satis- factory outcome for the United Kingdom? The answer must be, yes. Our main aim was a new Convention which would reaffirm the Lomé relationship, and that has been achieved. We also sought to confirm and extend the benefits available to the 29 Commonwealth members who belong to the ACP, and we have succeeded. The Sugar Protocol, which is of immense importance to Commonwealth sugar producers, was confirmed; some progress was made on beef, bananas and rum. A new feature of the Convention is minerals, for which a new scheme has been agreed, admittedly falling short of ACP demands but nonetheless significant. On Stabex the United Kingdom achieved its aim of tying the use of transfers to development objectives.

The main disappointment for us was the absence from the final text of a human rights provision. A specific reference to human rights was unacceptable to ACP, who argued that it was not appropriate in a Convention of an economic character. But there is a reference to the principles of the United Nations Charter, which covers human rights, and the preamble to the new convention describes one of its aims as being to promote the well-being of the populations in ACP states. The question whether the Community would be able to stop aid if there were gross and persistent violations of human rights in one of the ACP states has naturally been considered. The Community will be bound contractually to give aid to all the ACP. But in cases of flagrant violation, the Community intends to take particular care to ensure that its aid benefits the people, and not the régime responsible for such violations.

To sum up, the Government take the view that Lomé II should be seen as a successful consolidation and development of Lomé I. It is certainly possible to criticise the new convention. In an ideal world many things in it would have been made bigger and better. It is also true that the Lomé relationship continues to favour the ACP much more than the Community favours other developing countries. It would be better if the Community's development policy were applied to all developing countries on an equal basis. But, in the real world, Lomé is much better than nothing, and radical extensions of it were simply not practicable.

Criticisms of Lomé should in any event not blind to its virtues. The convention brings together nine developed and 58 developing countries, including 29 members of the Commonwealth, with a total population of some 600 million. It makes a very useful contribution to the North-South dialogue. It has a major impact on Africa in particular, bringing anglophones and francophones closer together on a basis of co-operation. However far the Lomé achievement has so far fallen short of the aim—the establishment of a new model for relations between developed and developing countries—the promise of the venture has certainly not faded. On the contrary, it remains very much alive.

Lomé remains, too, of special interest for the United Kingdom, perhaps even more than before. Lomé now includes two-thirds of the Commonwealth. The Anglophone ACP have increasingly asserted their influence in the ACP group; the new ACP Secretary-General is a Kenyan and his deputy is from Trinidad. There is a major role for the United Kingdom to play in promoting the success of Lomé II through both Community and Commonwealth links.

I should also like to draw attention to the opportunities for United Kingdom firms available under the Lomé II. Community aid under Lomé II to the ACP States—in the form of both EDF grants and EIB loans—offers a virtually captive market for firms in the Community and ACP States. Over £2,200 million will be available under the new convention. There is also some 20 per cent. of Lomé I money, roughly £430 million, still to be taken up, particularly in the 29 Commonwealth ACP countries. Contracts are let by the European Development Fund and administered by the European Commission in Brussels. They offer complete financial and legal security. But so far British firms have failed to win anything like the share of business which we had hoped and expected, given the traditional British involvement in overseas markets and given the fact that 29 of the 58 ACP states are Commonwealth countries. Up to the end of 1979 only 10.2 per cent. of all the EDF business won by firms in the Community had gone to British firms; this represents 7 per cent. of all EDF business, an increasing share gradually being won by the ACP themselves.

Some firms have been put off by unfamiliar procedures, but the opportunities available justify an extra effort to master them. Since we were returned to office the Government have laid great emphasis on the need to improve our performance. Our export promotion services here in Britain and abroad have been working to improve the flow of information and to assist British businessmen in every possible way. Our efforts may be beginning to pay off. According to our latest figures, British firms won nearly 13 per cent. of all EDF business won by member states in the second half of 1979. We shall continue our efforts and hope that this success will encourage more firms to have a go. At the end of the day, however, we have to depend on the enterprise and tenacity of our firms to secure the share of this business which we should be able to obtain; there is a limit to what the Government by themselves can do. I hope the order will commend itself to your Lordships. I beg to move.

Moved, That the draft order laid before the House on 3rd June be approved.—(Lord Trefgarne.)

5.26 p.m.

Lord BRUCE of DONINGTON

My Lords, we on this side of the House support the Motion, and we do so willingly in the light of the clear and lucid exposition given by the noble Lord, Lord Trefgarne. We feel that within the whole concept as put forward in the recent Brandt Commission Report, the new steps taken under the second Lomé Convention represent only a step in the direction in which we must tread over the next few years if far greater calamities are to be avoided. But it would be churlish to deny that the second convention presents a significant step forward, and we therefore support it.

We were a little surprised to hear from the noble Lord that the initiative and enterprise shown by British firms for the opportunities offered to them in these territories was not being taken up to the degree which even the noble Lord would regard as completely satisfactory. We are more than a little worried about that in view of the budget incentives that were offered a year ago with the precise objective of encouraging enterprise, initiative, enthusiasm and drive, and we hope the firms and industries concerned will take careful note of the very wise comments made by the noble Lord. My noble friends and I support the Motion which was so ably moved by the noble Lord.

5.28 p.m.

Lord BANKS

My Lords, I too join in thanking the noble Lord, Lord Trefgarne, for his very comprehensive summary of the provisions of the second Lomé Convention. When we debated the first Lomé Convention in this House on 27th November 1975 I said at that time that it was a valuable experiment of great significance, and I think we can say today that it has been a successful experiment. The fact that 58 ACP countries have sought to renew it is proof of that. The President of the ACP Council of Ministers, at the signing of the second Lomé Convention, said: The first Convention of Lomé was indeed a first step, albeit a significant one, towards a fundamental restructuring of the internal economic system and global Power relations". It is generally agreed by representatives of both EEC and ACP countries that, on balance, Lomé II is better than Lomé I, and the Governments of the 58 ACP countries and the nine EEC countries, and the Commissioner responsible, Mr. Claude Cheysson, deserve to be congratulated on that. I welcome what the noble Lord said about human rights, athough I would not want to pursue that further this afternoon.

At the time of the first Lomé Convention much interest was expressed in the Stabex arrangement for income support. This has proved extremely useful, and I am glad to learn that it is to be improved; that it is to have increased financial resources and is to cover a wider range of products. Originally only 12 products were covered by this facility. Now that has grown, and under the new Convention 44 will be covered. It is interesting to note that the benefits paid under the Stabex system to the 35 poorest countries are made by way of grant. The Brandt Report comments on this and on the similar facility of the International Monetary Fund which provides the benefit by means of soft loans. The Brandt Report expressed the hope that the International Monetary Fund facility will develop on the lines of the Lomé provision.

It is encouraging to see that the new facility has been made available for minerals. The Brandt Report sees these income support arrangements—Stabex, Minex (as the arrangement for minerals is called) and the International Monetary Fund facility—as working together with price stabilisation arrangements, such as it is proposed to have under the common fund arrangements. It sees both of these sets of arrangements being necessary in many cases. There will be some cases where price stabilisation is not possible, and a Stabex arrangement can then take its place. However, according to the Brandt Report there are other cases where both these methods will be essential, working in co-operation for one particular product.

The noble Lord, Lord Trefgarne, has outlined the other improvements in the Convention: the fact that the European Development Fund will have more money; that it will show an increase in the real value of the resources; that free access for the Lomé nations, which previously existed for 99.5 per cent. of the goods imported into this country, will in fact be increased marginally.

I think it is a considerable achievement to have reached this agreement, in view of the fact that, as the noble Lord hinted, the negotiations were difficult. There was a difference of standpoint between the two sides. As the noble Lord pointed out, the EEC, faced with the movement into recession, rising oil prices and financial stringency, were looking for consolidation and marginal improvement. The ACP countries were looking for a decisive step forward towards a new economic order; and in the end there was a compromise. The EEC were pushed farther than they had intended to go, and the ACP countries were left with some not inconsiderable frustrations.

The ACP countries objected to the fact that there was no unhindered access for agricultural products, though in fact the bulk of their agricultural products do enjoy access. They would have preferred greater liberalisation in the structure of the rules of origin for their semi-processed goods, although there has been improvement there, as the noble Lord, Lord Trefgarne, pointed out. They pointed out that Stabex does not help ACP economies which are heavily dependent on the export of services. As the noble Lord reported, they were not entirely satisfied with the new arrangement for minerals. They claimed—and this rather surprises me—that the volume of aid will make a smaller contribution per head of the population than was made by Lomé I. They expressed a fear that there would be inadequate financial resources to implement the chapter on industrial co-operation.

Nevertheless, the ACP countries recognised the improvements. The Secretary General of the ACP Group said: The ACP countries consider Lomé II to be a substantial improvement on Lomé I". But it is of course limited in scale and scope, as the noble Lord, Lord Bruce of Donington, suggested, when compared with the need of not only the ACP countries, but the Third World as a whole. As the noble Lord, Lord Bruce of Donington, indicated, I am quite sure that something on the scale and with the scope of the proposals of the Brandt Report is necessary to cope with the situation. I regret that the Summit of the Seven, which has just concluded, was not in this connection more positive than it turned out to be.

I hope that some steps will be taken to arrange for a summit of a few leaders from the West, from the oil producing countries (OPEC) and from the Third World, as the Brandt Commission has suggested, in order to try to take this report and its proposals a practical step further. In the meantime, I wish the second Lomé Convention, with its more moderate scope, a useful and successful five years.

Lord WALSTON

My Lords, very briefly, as one who, when a Member of the European Parliament, was a member of the Committee of that Parliament which dealt with these matters and who has visited Lomé for discussions of this kind, I wish to welcome the order as proposed by the noble Lord, Lord Trefgarne. We hear so much of the failures and the shortcomings of the Community that at times it is good for us to remind ourselves of some of its positive achievements. To my mind, the original Lomé concept, and particularly the concept of Stabex, is one of the very real achievements of the EEC. It is modest—far too modest; it should go very much farther—but within the constraints imposed upon it (and for this the Commissioner, M. Claude Cheysson, deserves much credit) Lomé has taken a very big step forward in the practical implementation of pious hopes, which we so often hear from all sides, of bridging the gap between the rich and the poor, the North and the South.

I welcome this second convention, particularly in the hope that before too long it will lead on to a considerably stronger and more generous effort to implement the findings of the Brandt Commission and to some extent to reduce the gap between the rich and the poor countries, instead of allowing it still further to increase.

5.39 p.m.

Lord PITT of HAMPSTEAD

My Lords, I fear that I am prepared to give Lomé II only a guarded welcome. We are having this debate today only one day after the announcement of the largest unemployment figure in this country since the war. It may well he that Britain's journey in the field of increasing unemployment is faster than that of her partners in the Community, but the fact remains that this increase in unemployment is part of a pattern. Therefore, it seemed to me that the Lomé agreement, as we now have it, is a missed opportunity. There was an opportunity to have transferred much larger resources to the ACP countries.

That point brings me, first, to the European Development Fund. The Minister pointed out, quite rightly, that the fund has been increased. But the fund has not been increased nearly as much as all the arguments indicated that it ought to be. What is more, I speak subject to correction but I gather that some of the funds which were not used in Lomé I were taken into account in deciding the level of funds for Lomé II. To my way of thinking, that was a gross error. For one thing, the reason why there was a left-over of funds from Lomé I was the amount of bureaucracy; the rigid way in which the funds were being administered, and the amount of time that was being taken to process applications.

My first suggestion to the Government—because we have agreed that the sums are there, the agreement is signed and, there- fore, one can only make suggestions which are within the confines of the agreement—is that on this occasion some attempt should be made at greater flexibility and that there should be a greater reduction in the bureaucratic approach of the administration of the EDF. This is a feasible and quite practicable suggestion, and I hope that the Minister will be able to impress on his colleagues the need to work along those lines, because I know that the real criticism of the EDF from the point of view of the ACP countries is that there has been too much bureaucracy and the processing has been too slow—and also, of course, that the funds are not enough.

I join with the noble Lord, Lord Walston, in commending the introduction of Stabex. Stabex was an imaginative act on the part of the EEC in agreement with the ACP countries. The trouble with Stabex, however, is that the commodities were arbitrarily chosen, and it is still so. Although the number has been increased from 12 to 44, there is still this arbitrariness about the selection of commodities that are acceptable for Stabex. Therefore, my second suggestion is tied up with the first one. It is that the EEC should try to be more flexible in its administration of Stabex, too. Again, as I see it, that is not an impracticable suggestion.

The third criticism that the ACP countries have always had, and still have, is that although in theory they have access for their processed and manufactured goods to the European Community markets, in practice it is proving much more difficult than was ever thought. They are inclined to blame the safeguard clauses; the invisible, non-tariff barriers and the increasing protectionist attitudes of the EEC. The Minister has himself mentioned the rules of origin. The ACP countries have been very concerned that, because of the way in which the rules of origin have been defined, there has been great difficulty, and, rather than their benefiting in terms of building up a certain amount of industrialisation on a light scale, they have had to be very careful, because unless it fell strictly within these rules of origin then they did not have this free access. Therefore, again my first suggestion is along the same lines: that we should try to be more flexible on that one, too, because it is the rigidities which are in fact preventing us—I use the term advisedly, because I mean both the EEC and the ACP—from benefiting from the agreement to the extent to which we ought.

In saying that, I am not suggesting that that is the whole story, because it is also my view, for what it is worth, that the ACP countries have some blame to bear in that they have not made sufficient use of the facilities which are available to them. That is also my view; and one of the thoughts that I would throw out is that they ought to do some research as to what the obstacles are to their better use of this facility. Because, when all is said and done, it was always thought that some degree of capital formation would be able to arise as a result of their being able to export their processed and manufactured goods into this large market, and there is no evidence that that is happening at all. Therefore, in effect, I think they ought to be doing some researches to discover in what way they can remove the obstacles. I know from experience that it is always easy to pick the most obvious obstacle and say that that is why something does not happen, but after careful research you discover that it is not that obvious obstacle at all; there is something else, much more fundamental and much more important.

The noble Lord, Lord Banks, also touched on this question of industrial co-operation. That has been very slow in moving, but I think that is understandable in the circumstance. One hopes that in fact it will move forward much more quickly than it has done so far. I want to conclude as I began, by saying that I agree with the Minister that Lomé II is better than nothing. I also agree with the Minister that, in spite of whatever criticisms we may have of the convention, it is a very worthwhile agreement. What I hope—and this is my plea—is that in administering it the EEC will be more flexible than it was with Lomé I, and so enable both sides to gain.

5.48 p.m.

Lord TREFGARNE

My Lords, I will not detain your Lordships for more than a moment in concluding this short debate, but I should like to say to the noble Lord, Lord Pitt, that it is not in fact correct that the unspent Lomé I funds were taken into account in considering the size of Lomé II It is quite normal, I think, for a period of expenditure to extend beyond the five years of the convention, and that is what happened in this case. As for the time taken by the authorities to consider applications it is also the case that in many instances the Commission require details to be given and studies to be carried out by the recipient countries, and I understand that some of these studies relating to applications made have indeed taken rather a long time. But it was in most cases the recipients themselves who took a little while to complete their studies, and that is why the time-scale was sometimes rather longer than expected. In any event, I think it is right that these applications should be properly and carefully considered, and if the alternative to the slow and careful consideration that I have described is swift but less careful consideration, then I think I prefer the former.

As for access to Community markets, the safeguard clause has never in fact been used. It is there as a backstop, necessary to allow emergency short-term protection to deal with disruption in industries such as textiles, which are already badly affected by low-cost imports and are thus highly sensitive. I think that apart from the noble Lord, Lord Pitt, the order has been accorded at least two cheers from your Lordships, and I hope the House will now approve it.

On Question, Motion agreed to.