HL Deb 06 July 1981 vol 422 cc520-5

7.9 p.m.

Lord Lyell rose to move, That the draft order laid before the House on 2nd June be approved.

The noble Lord said: My Lords, I beg to move That the European Communities (Definition of Treaties) (Yugoslavia Agreements) Order 1981 laid before the House on 2nd June 1981 be approved. The order specifies agreements between the European Economic Community, its member states and Yugoslavia as Community treaties in accordance with Section 1(3) of the 1972 European Communities Act.

This rather technical order provides for any directly applicable rights and obligations contained in the agreements to be enforceable in the United Kingdom courts. In a formal sense, we are not here to debate the terms of the agreements themselves: the scrutiny and ratification procedures provide the opportunity for that. But of course, I shall be happy to respond to any points on the content of these agreements, about which I should now like to explain one or two details.

The order has already been considered by the Joint Committee on Statutory Instruments. I should draw your Lordships' attention to the fact that the committee requested an extra memorandum on the likely consequences of these agreements on our bilateral trade; a subject to which I shall revert in a few moments.

The agreements with Yugoslavia follow those concluded over the past decade or so between the Community and other Mediterranean countries. In addition to close geographical links, there are important strategic and political interests for Europe as a whole in the area. Clearly, too, many of the countries involved have close historical ties with one or more member states. Yugoslavia is a country with a special relationship with the United Kingdom in many senses. Her experiences during the last war were unique; the common cause she espoused with us has created lasting bonds of friendship.

In 1973, the Community concluded an agreement with Yugoslavia; but, apart from a minor concession on beef, there were no preferences. When this agreement came up for renewal in 1978, it was clear that Yugoslavia wanted substantial improvements despite her residual doctrinaire objection to the concept of a preferential link.

I have to inform your Lordships that negotiations were not straightforward. The Community needed to retain protection for its most sensitive industries. But we, for our part, wanted to support Yugoslavia and help ensure her economic stability during and after the fatal illness of President Tito. Our export interests are very strong. The United Kingdom's trade surplus with Yugoslavia has recently been running at the rate of over £350-worth of exports for every £100-worth of imports into this country. In addition, Yugoslavia wanted to see a balance in the geographical spread of her trade. The two agreements were finally signed on 2nd April 1980.

The major interest for Yugoslavia lies in the trade provisions. Since external trade policy is a matter of Community competence, it was not necessary to await national ratification of the agreements to implement these provisions. As my noble friend the Minister explained in answer to a written Question from the noble Lord, Lord Brockway, some weeks ago, most of them came into force on 1st July 1980 under an interim agreement.

The EEC agreement offers duty-free access for most Yugoslav industrial products. But, in the case of sensitive products, this is limited by Community-wide tariff ceilings. Imports are monitored and, when the stated import levels are reached in a particular year, the full Common Customs Tariff may be re-imposed for the rest of the year in question. In fact, Yugoslavia was subject previously to much the same system of tariff controls, but under the Community's Generalised Scheme of Preferences to which she retains access. Under the new agreements, fewer products are under restriction and the levels of preferential access permitted are generally rather higher.

Although there are tariff ceilings on textiles under the EEC agreement, the provisions of the existing bilateral agreement under the auspices of the Multi-Fibre Arrangement will also continue to apply. This imposes quantitative limitations on what Yugoslavia can send to the United Kingdom. The European Coal and Steel Community agreement, the trade provisions of which cannot enter into force until all member states have ratified it, provides for similar treatment for ECSC products. In addition, Yugoslavia will be required to observe ECSC price rules.

On the agricultural side, there are certain specific concessions, notably a range of tariff concessions on processed agricultural products and, of most interest to Yugoslavia, preferences on such exotic species as morello cherries, a special Balkan variety of tobacco and slivovitz. But Yugoslavia's main interest is in baby-beef, on which I shall have more to say in a moment. In general, there are no provisions for Yugoslavia to provide preferences for Community exports. Yugoslavia's level of development, while greater than that of many of the countries with preferential links with the Community, is still relatively low. And giving the Community preferences would not have helped Yugoslavia's substantial balance of payments deficit.

The remainder of the agreement is similar to those concluded with other Mediterranean countries. The Community has made available 200 million European Units of Account to be committed in the form of loans from the European Investment Bank. Provision is made for economic and technical co-operation between the Community and Yugoslavia. There is reference to tourism and to fisheries. There are provisions against discrimination against Yugoslav nationals in the fields of social security and health care, and guarantees of equality of treatment for Yugoslavs who have already been admitted to work within the Community.

This said, Yugoslavia does have certain obligations. She must grant the Community most-favoured-nation treatment; she must inform the Community of new trade measures, and the Community can require her to discuss them at ministerial level in a Co-operation Council. She must not discriminate against Community products in the operation of her taxation system.

Finally, the Community has certainly not left itself without protection. In addition to the tariff ceilings on sensitive products, both agreements contain safeguard and anti-dumping clauses allowing for action to be taken in the event of market disruption. These provisions are not to be used lightly, and their existence should assist sensible discussions of any problems in the Co-operation Council at an early stage.

It is far too early to assess the exact effect of the agreements on trade between Yugoslavia and the Community. It is up to Yugoslav enterprises to take advantage of the opportunities offered, and the general state of demand in the Community is not at present propitious. But, in time, these opportunities should stimulate industrial development in Yugoslavia, and thus her demand for imports from the Community.

I now return, as promised, to the question of baby-beef. When the agreements were signed, Greece was not yet in the Community. After she joined, the agreements needed adaptation, and this raised the question of Yugoslav baby-beef exports, a major part of which have in the past gone to Greece. The agreement, which allows for the import of 34,800 tonnes per annum from Yugoslavia, took no account of this special trade, having been negotiated before Greek accession. A substantial increase is therefore needed. The Community, despite repeated discussions in the Foreign Affairs Council, has not yet been able to agree to a mandate for negotiation with Yugoslavia, because of baby-beef's sensitivity in certain member states. Although interim arrangements have been made, the uncertainty is damaging, and Yugoslav trade with Greece is suffering badly. The United Kingdom deplores this and will continue to press for a fair and rapid solution.

The agreements are an improvement on the terms previously available to Yugoslavia. The relationship between the Community and Yugoslavia has been put on a new footing. I am pleased that the United Kingdom has been able to play a worthwhile part in bringing the negotiations to a successful conclusion. Yugoslavia is in a special position: it is European, it is non-aligned and it lies between East and West. It is important that the Community should do what it can bearing in mind the current limits of its own resources. I therefore ask the House to approve the order. My Lords, I beg to move.

Moved, That the draft order laid before the House on 2nd June be approved.—(Lord Lyell.)

7.19 p.m.

Lord Ponsonby of Shulbrede

My Lords, I thank the noble Lord, Lord Lyell, for explaining this order. May I say, on behalf of the Opposition, that we welcome the laying of this order, and that I was glad to learn that it has been considered by the Joint Committee on Statutory Instruments? As the noble Lord said, our relationship with Yugoslavia is a unique one. To demonstrate its uniqueness, I noted that the preamble to the co-operation agreement states that the agreement is between the Community and its member states, on the one hand, and the Socialist Federal Republic of Yugoslavia, a non-aligned, European Mediterranean state and a member of the group of 77 developing countries, on the other hand. This shows the uniqueness of Yugoslavia.

We very much support the policy of establishing closer trade links between the Community and Yugoslavia, since this agreement will extend the preferential trading agreements with the Federal Republic. I was particularly pleased to note when reading the agreement—this was not an aspect of the agreement upon which the noble Lord, Lord Lyell, touched—that the agreement will guarantee equality of treatment as between Yugoslav workers employed in member states and the nationals of those countries as regards working conditions and remuneration and access to social security. Although that may not have been a problem in this country, I know that it has caused considerable concern in other member states of the European Economic Community, particularly in Germany where many Yugoslavs have found employment as immigrant workers.

As the noble Lord said in moving this order, the co-operation agreement provides for non-agricultural products, with certain exceptions, to enter the Comminity free of import duty and quantitative restrictions. I did have some questions to ask the noble Lord regarding the levy concessions on agricultural products, and in particular I had it in mind to ask him about the young male bovine animals known as baby-beef. However, the noble Lord anticipated my question on that subject by explaining the damaging effect on trade which this possibly might have. I wonder whether the noble Lord can say whether the effect of this agreement will be that Yugoslav wine will be pouring into the EEC wine lake or whether the result of this agreement will not add to that wine lake.

In moving the order, the noble Lord said that it had become operative as from 1st July. The information sheet which I have, which admittedly is dated 2nd June, states that the agreements will become operative once they have been ratified by all member states and the necessary Council regulations have been passed. Several other member states have yet to ratify. I wonder whether the noble Lord could confirm that all other member states have in fact ratified these agreements.

7.24 p.m.

Lord Lyell

My Lords, the Government are very grateful for the welcome that has been accorded to this order by the noble Lord, Lord Ponsonby of Shulbrede. I, too, was very interested in the subject of baby-beef when I read the order and thought that I should have to give some description of it. Therefore, I was pleased that the noble Lord did not press me to give a more technical description of male bovine animals of a certain age. I understand, though I am not too sure, that it is a question of how many teeth the beast possesses before it passes into adolescence. Baby-beef is hardly known in the United Kingdom. As I mentioned during my remarks, baby-beef does, however, have significant importance for at least two member states and, from my own knowledge, a third. Therefore the question of exports of baby-beef from Yugoslavia to Greece is of great importance to the Community and to Yugoslavia.

I have two brief answers to the noble Lord's queries. To take his last question first, I am informed that not all member states have yet ratified the agreements. Three have already done so, but the other member states have yet to take that action. I am advised that consideration of the agreements is in progress.

Turning to the noble Lord's first question as to whether Yugoslav wine will be joining the so-called wine lake, I understand that the amount of wine entering the Community from Yugoslavia is limited at the moment to 12,000 hectolitres. I could not give the House, or the noble Lord, Lord Ponsonby of Shulbrede, a description of how many bottles that would be or how far it would stretch along the Benches of your Lordships' Chamber. Nevertheless, I understand that the amount of wine is limited to that quantity.

As the noble Lord and the House will know, the question of wine imports into the Community is still a very serious problem for the wine-producing member states. I do not know whether the United Kingdom is classified as a wine-producing member state. I should not think that the production of wine and its export from the United Kingdom to other member states of the Community is very significant, but 12,000 hectolitres is the limit which may be imported from Yugoslavia into the Community.

We are very grateful for the welcome which has been given to the order by the noble Lord, Lord Ponsonby of Shulbrede, together with his comments on the Federal Socialist Republic, as I think he called it and as is stated, and for our common cause as between East and West and our wish to facilitate Community-Yugoslav trade.

On Question, Motion agreed to.

Lord Lyell

My Lords, I beg to move that the House do now adjourn during pleasure until ten minutes to eight.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.27 to 7.50 p.m.]