HL Deb 01 July 1982 vol 432 cc337-42

3.47 p.m.

Lord Belstead

My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

" With permission, Mr. Speaker, I will make a statement about the meeting of the European Council which I attended in Brussels on 28th and 29th June with my right honourable friend the Foreign and Commonwealth Secretary.

"This meeting of the European Council was dominated by external problems of a political and economic kind. The texts of a number of conclusions were agreed and I have placed copies in the Library. They deal with the hostilities in the Middle East, economic relations with the United States, and the economic and social situation.

"As is customary, the meeting discussed current political questions, notably the Middle East. We shared the intense concern at the situation in Lebanon, where the present cease-fire must be preserved and used to secure first disengagement of the forces in and around Beirut, and thereafter full implementation of the recent resolutions of the Security Council.

"In the broader Arab-Israel context we continued to see no alternative to negotiations between the parties, based on the two fundamental principles of the Venice Declaration: security for all states, including Israel, and justice for all peoples, including the Palestinian people.

"The European Council's discussion of economic relations with the United States reflected the concern that all of us felt about certain decisions taken by the United States Government. Their actions in respect of steel imports and the Siberian gas pipe-line could have serious consequences which everyone in the Community wants to avoid.

"The European Council agreed that representatives of the Community should immediately contact the responsible authorities in the United States to see if an acceptable solution could be found.

"The discussion of the economic and social situation was relatively brief. The European Council had already decided at its last meeting in March that industrial questions and unemployment should be a major theme at the meeting to be held in Copenhagen in December under Danish Presidency. During yesterday's discussion the Governments of the member states, the Commission and the Council of Ministers were asked to take certain specific steps between now and December so that the next European Council will be in a good position to review this whole area of policy.

"The question of the enlargement of the Community was discussed informally and we did not seek to reach precise conclusions. It is agreed that the negotiations with Spain and Portugal will continue and the Commission has been asked to make a list of the outstanding problems and to propose solutions to them. All member states recognise that there are problems that must be solved in these negotiations. The position of the United Kingdom is clear —we want these negotiations to succeed as soon as possible and we shall continue to work towards that objective.

"Finally, the Greek Prime Minister made a statement of his Government's reactions to a recent Commission paper about the position of Greece in the Community. This paper, together with the earlier memorandum on the subject by the Greek Government, are now to be studied by the Council of Ministers."

My Lords, that concludes my right honourable friend's Statement.

Lord Cledwyn of Penrhos

My Lords, we are all grateful to the noble Lord for repeating the Statement. The summit meeting seems to have been a fairly dismal and unproductive affair, and no doubt he would agree that it is difficult to derive very much comfort from it, although we welcome the initiatives that will be taken to discuss unemployment and other economic matters at Copenhagen.

Can the noble Lord say whether the Government regard a trade war between the EEC and the USA as an increasingly serious prospect in the light of what has been developing? We welcome what the noble Lord said about the Siberian gas pipe-line and about steel. Is it not the case, for example, that steel imports to the USA from the EEC over the last two years amounted in all to only 5 per cent, of the total US steel consumption, and that this cannot surely make serious inroads into the US steelmakers' markets? Therefore, would he not agree that it is very much in the interests of the Western Alliance that this impost should be cancelled and that the ban on the pipe-line should also be raised?

The communiqué, of which this Statement is an extension, refers specifically to the urgent need to lower interest rates. We on this side of the House warmly support that. Can the Minister say what steps the Government will take to discuss this further with the United States? What immediate and urgent initiative do the Government have in mind on this? Further, can he say whether any progress was made in Paris to clarify the position following the breach of the Luxembourg Compromise on agricultural prices?

In view of the fact that urgent decisions will shortly have to be taken on matters of vital national interest— for example, a common fisheries policy, which will have a very considerable effect on British fishermen and on our economy—can the noble Lord say that it is clear that the veto still stands? Is that the impression of Her Majesty's Government?

Finally, I should like to ask two short questions about the tragic situation in the Lebanon. Can the noble Lord say whether Resolutions 511 and 512 are now being implemented to the satisfaction of the Government and of the Community? Is relief, including medical supplies, getting through to the affected areas? Finally, is there any response from the Israeli Government to the 10 points put to them by the Belgium Presidency on behalf of the Economic Community?

Lord Gladwyn

My Lords, I thank the Minister for repeating that Statement. On the situation in the Middle East, I think we all agree that it is clear that the Council could hardly have gone any further than it did unless, of course, it was the intention to take any measures against Israel as a result of its incursion into the Lebanon, and I imagine that there could not be any unanimity as regards any such proposal.

The passages in the Statement on economic prospects and on our relations with the United States are, of course, very serious. It is pretty obvious that, unless the huge American deficit is substantially reduced, there is little chance of our emerging from the present recession and, on the contrary, every likelihood that unemployment will probably increase. As we all know, the deficit is very largely due to the immensely increased expenditure by the Administration on armaments, and notably on nuclear armaments. We can only hope that talks with the Soviet Union will result in some kind of reduction in this respect.

As regards steel imports and the Siberian gas pipeline, we can also only hope that, unless the Alliance is to be endangered, the steps now taken will result in the United States' Administration seeing the light. Finally, I believe that the noble Lord, Lord Cledwyn, mentioned the Luxembourg Compromise, which does not exactly arise in this context. It seems to me that the recent action of the Danish Government in vetoing the long-drawn-out, and we hope successful, solution to the fisheries problem surely indicates that it cannot go on much longer running this concern under the unanimity rule.

Lord Belstead

My Lords, I am grateful to both the noble Lords, Lord Cledwyn, and Lord Gladwyn, for their replies to the Statement of my right honourable friend the Prime Minister about the European Council. Both noble Lords have referred to the United States' action as regards steel imports into the United States and the Siberian gas pipe-line. The noble Lord, Lord Cledwyn, asked me specifically whether the Government felt that there were serious prospects of what the noble Lord called a trade war. I think that there are three things that it is perhaps right to bear in mind. First, of course, as regards the pipe-line, the main contractors are the Federal Republic of Germany, France and Italy. We are in very close touch with them about this important matter. We are urging on the United States the seriousness of reconsidering this matter, both bilaterally, when my right honourable friend the Prime Minister visited the United States last week, and also, as the Statement says, through the concerted approach from the European Community.

Thirdly, noble Lords may have noticed that my noble friend the Secretary of State for Trade laid an order from the Department of Trade yesterday, the effect of which is to say that the Siberian gas pipe-line action is objectionable. This is really a declaratory order. We very much hope that it will be possible to have our points accepted by the United States.

The Government accept from both noble Lords that these two matters are, indeed, very important matters. On the matter of interest rates and the budget deficit, to which both noble Lords again referred, we support the United States' counter-inflationary objectives and hope that a balance will be found between monetary and fiscal measures to achieve them. We hope that the United States' Administration and Congress will soon reach agreement on details for the budget for the next financial year, as uncertainty about the budget is probably an important factor adding to pressure on interest rates in the United States.

The noble Lord, Lord Cledwyn, asked me specifically whether the Government felt that the veto in the European Community still stands. This was not, in fact, discussed at the European Council, but in the discussion on 20th June at the Foreign Ministers Council opinions were divided, as they have been ever since the issue first started in 1966. Five member states, including the United Kingdom, took the view that the practice of deferring decisions by majority voting, where a member state considers that its important national interests are at stake, should be continued, and five member states felt the other way. I think that we shall have to see how this works out in practice.

Fourthly, the noble Lord, Lord Cledwyn, asked me about the Lebanon. I am sorry, but I have nothing to add to what I sought to say to the House yesterday. Information is patchy on medical supplies and other humanitarian aid getting through. It is patchy partly because my latest news is that we have not received an answer from Israel to the 10 specific questions, to which the noble Lord referred, which the Community had asked; and also we have now had to move the British Embassy from West to East Beirut. The ambassador and his staff have been extremely stalwart but the situation has become impossible and so our lines of communication are not as good as we might have hoped. I believe that that answers the questions which both noble Lords asked me.

4.1 p.m.

Lord Kennet of Avon

My Lords, we on this Bench agree with the formulations in the Statement about the affairs in Lebanon and, like the Government, we can see no alternative to negotiations between the two sides on the stated principles. The noble Lord was not perfectly clear in what he said about the 10 questions of November 14. Could he tell the House whether any answer has been received and, if so, in what way it is unsatisfactory; or whether, on the contrary, he was indicating that no answer at all has been received? It would be useful for the House to know that.

Turning to the pipe-line question, what strikes the eye here is the question of retrospectiveness in the American action. Since that action is retrospective in that the United States has imposed certain duties on American corporations by law which were not law at the time the contract was signed, is the action legal and binding in international law and in private company law? If not, why are we making such a fuss about it? In particular, it is the case, is it not? that the United States is restricting the use of American technology by British companies which is part of a Community consortium deal, and if this can happen at one time it can happen again. How does the noble Lord see the future if it is not rectified by the démarche made by the Community emissaries to the United States, to which we wish success?

The passage in the Statement about unemployment and the recession really says less than any Statement that has been made on any former Summit, at least on this matter. It is weak in itself and it seemed to me that in what the noble Lord was saying he was avoiding the obvious answer, which is that Mr. Heath got it right in his speech last night and that the Government intended to move a bit in that direction, and that this would help the Community to get through the recession and the unemployment quicker if they did so.

Lastly, on Greece, is the paper referred to in the Statement—the Greek Prime Minister's statement— among the papers which are being placed in the Library? Even if it is, could the Government be a little more informative? On reading it, it seems as though the Greeks are teetering on the brink of leaving the Community, but nothing is being said about it. Could the Government help to set the minds of the House at rest on that point?

Lord Belstead

My Lords, again, I am sorry that I cannot be more helpful about further news from Lebanon. We have not received any satisfactory answers to the 10 questions which were asked of the Israeli Government, although I must make it quite clear that of course there have been bilateral exchanges on certain points between the Governments and different ambassadors of the Ten, and the Government of Israel. I am not saying that there has been no contact. What I am saying is that there have not been satisfactory replies to that clutch of questions.

The second question the noble Lord asked me was on the difficult subject of steel and the pipe-line. The noble Lord asked why we were making a fuss unless these matters were justiciable in international law. As we in the Ten see it, the action of the United States so far as companies using United States equipment is concerned—and this particularly affects the firm of John Brown in using US rotors—is retroactive action. As to what would happen if the matter were taken to law, I would be the first to say that I do not know the answer. On the difficult point of the pipeline, and the prevention of firms using US licences, we in the European Community feel that the question of extra territorial jurisdiction is coming into play, and that is the European objection. But once again, what would happen if one took it to law, and whether or not it is justiciable in the courts, is something to which I cannot give a reply.

In relation to the economic and social part of the Statement, I am sorry but I really must part company with the noble Lord's assessment. There are two important things to be found embedded in the communiqué which came out of the council which show that the policies of Her Majesty's Government at the present time are right. One is that the Ten agree that investment can be increased only if resources are shifted from other uses, which is one of the incredibly difficult decisions which the present Government had to take over three years, and to keep on taking; and we have stuck to our guns.

The other point is that the European Council stressed the need for productive investment, with productivity being the key word. This means not vast programmes of public expenditure which do not necessarily increase productivity, but always looking to see whether production is going to be increased; and again this has been a basis of the Government's policy. I am very pleased on behalf of the Government to see that the policies which we have been pursuing, not always with the support of Parliament, are now being reflected in what the Ten say.

Finally, on Greece, I apologise again if I appear unhelpful to the noble Lord, but the papers about Greece are not part of the papers which have been put into the Library. In general terms, Greece was putting forward a paper about the transitional arrangements for Greece as Greece joins the Community, and was putting forward certain proposals which Greece would like to see made.