§ 3.45 p.m.
§ The Minister of State, Foreign and Commonwealth Office (Baroness Young)
My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable and learned friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:
"With permission, Mr. Speaker, I will make a statement on the outcome of the Foreign Affairs Council held in Brussels on 18th July at which I represented the United Kingdom and at which my right honourable friend the Minister for Overseas Development was also present. I will also take this opportunity to say a few words about the Special Council which met on 19th July to discuss the future financing of the Community.
"I shall deal first with the discussion about the decision of the United States Administration to impose import curbs on certain special steel products. Coming so soon after the Williamsburg commitment against protectionism this decision has caused great dissatisfaction within the Community. I made this quite clear both to President Reagan and to Secretary of State Shultz during my visit to the United States last week. The European Commission has already taken this up with the United States Administration on behalf of the Community. but there has been no sign of American willingness to reconsider or amend the decision. The Commission therefore proposed to seek consultation in the GATT and also to raise the issue in the Organisation for Economic Co-operation and Development.
"The Council strongly supported the Commission's proposals and agreed to issue a statement of conclusions setting out the Community's position. A copy of this has been placed in the Library of the House.
"The Council made satisfactory progress towards agreeing its position on negotiations with the African, Caribbean and Pacific countries on a successor to the Lomé Convention, which are due to open in October. There will be further discussions on the outstanding points of the Commission's negotiating mandate at the September meeting of the Council.
"The annual report of the Committee of Permanent Representatives on relations between the Community and the countries of EFTA was accepted by Ministers, who expressed their support for the strengthening of the relationship.
"The Council reviewed progress on Greenland's application to withdraw from the Community. Ministers agreed the need to make progress in the negotiations and, in particular, the desirability of an agreement which satisfactorily balanced the 1171 development of Greenland's fisheries with the proper needs of the Community.
"In informal discussion of United Kingdom refunds in respect of 1982 and 1983, decisions on which are for the Budget Council which is meeting today and tomorrow. I underlined the need for full and correct implementation of what was agreed in October 1982 and at Stuttgart.
"In the context of political co-operation Ministers of the Ten also briefly discussed progress at the Madrid meeting on the Conference on Security and Co-operation in Europe and the situation in Central America and in Poland.
"Finally, the ministerial meeting with the Portuguese, held in the margins of the Council, reviewed progress in Portugal's accession negotiations.
"Yesterday, my right honourable friend the Financial Secretary to the Treasury and I took part in a meeting of the Special Council to discuss the future financing of the Community and other issues covered in the Stuttgart Declaration. I explained our views on a number of issues, particularly on a safety net scheme for limiting net contributions to the Community budget and on strict financial guidelines for controlling agricultural expenditure".
My Lords, that concludes the Statement.
§ Lord Cledwyn of Penrhos
My Lords, we are grateful to the noble Baroness for repeating the Statement. We shall need to study the council's full statement, which we note has been placed in the Library. I note that the Foreign and Commonwealth Secretary has made a number of new proposals in the special council meeting referred to in the Statement, related especially to the common agricultural policy and the Community budget. In view of the fact that unemployment is the biggest single problem in this country and in the Community, can the noble Baronesss say how the proposals of the Foreign Secretary will help to reduce unemployment in this country and elsewhere in the near future?
We accept the need to reform the common agricultural policy, but can the noble Baroness confirm that the Government agree with the Commission's proposals to cut CAP spending by 20 per cent.? Do the Government agree that tough quota levels should be imposed on surplus products, especially on cereals, and that a supertax of 75 per cent. should be imposed for all milk produced in excess of 1981 levels? As I understand it, although it is not in the Statement, that is what the Commission is proposing. I think it is very important that the House should be aware of the Government's attitude to what the Commission is in fact saying.
We regard the safety net proposal as very important. Does the noble Baroness think that this has any prospect of success? In what sort of time-scale are the Government thinking? How long does the noble Baroness think that the negotiations will go on?
Again, on the question of the Lomé Convention successor. is it true that a new clause in the EEC aid rules formally linking aid with human rights is to be introduced? I ask that question not because the matter 1172 is in the Statement but because I read it in The Times this morning. If it is the case, it is something which we on this side of the House, in all parts, would welcome very warmly indeed. Can the noble Baroness say when the council will decide which countries will be suspended from Lome deals? One assumes that direct food aid in conditions of crisis will be exempted from this.
Finally, the Statement refers to progress at the Madrid Conference on Security and Co-operation in Europe. Can the noble Baroness say whether the Government are satisfied with the progress which is being made in these talks?
§ Lord Gladwyn
My Lords. I think we shall all welcome the reaction of the Ministers, and indeed of the Community. to the most unfortunate United States curbs on imports of certain types of steel and wish them well in their efforts to change or indeed discard these altogether. Likewise, we welcome progress towards Lomé 2. I shall be most interested to hear the reply of the noble Baroness to the specific question put by the noble Lord, Lord Cledwyn.
The Statement reveals very little about what happened on the major and considerably more important issues of our contribution to the budget and the future budget of the whole organisation. We have read much more in the press this morning than is in the Statement. In principle I feel that most of your Lordships would be in favour—certainly on these Benches—in the first place, of our duly receiving our agreed refund and, secondly, of our pressing for some reform of the common agricultural policy, without which it looks as if the Community will run out of funds before the end of the present year.
Would not the Government agree to make it clear at once, and here and now, on the assumption that we reach a reasonable solution of both these important problems, that we should favour a considerable increase in the own resources of the Community, thus enabling progress to be made on such highly important matters as a common industrial and indeed a common social policy, designed to place the Community in the forefront of the world's trading blocs, thus contributing greatly to recovery from the present world recession. and indeed, as the noble Lord has suggested, to the diminution of unemployment in this country?
§ 3.54 p.m.
§ Baroness Young
My Lords, I should like to thank both the noble Lords, Lord Cledwyn of Penrhos and Lord Gladwyn, for their reception of this Statement. If I may deal with the questions they have asked in the order in which they have put them, the noble Lord, Lord Cledwyn of Penrhos, asked a question about unemployment. As he recognises, this is not specifically covered in the Statement, but, as he will know, one of our concerns about the whole question of denying steel imports to the United States is that it affects our steel industry and has an indirect effect on employment in this country. All aspects of our discussions about the budget—Britain's contribution to it, the amount of money that we might receive back from it and of course the regional funds—affect 1173 employment in this country and are therefore indirectly a part of it.
The noble Lord asked me a number of other specific questions, particularly about the safety net proposal of my right honourable friend and what success this might achieve. It is very early days to comment on how it might eventually be received, but we hope that other member states will accept the basic principle, which is that the more prosperous should bear a larger net budgetary burden than the less prosperous, provided there is an appropriate upper limit on the net budgetary burden which any member state would be expected to bear.
Both noble Lords asked about the renegotiation of the Lome Convention and quite specifically about human rights. The Community agreed to reserve, in the case of extreme violation of human rights, the possibility of ensuring that aid could not be used for purposes of a repressive regime by freezing all aid which did not directly serve the needs of local populations. I think that that is a very helpful conclusion to have reached.
On the CSCE proposals, which I was also asked about, there is at present provisional agreement among 34 of the 35 participants on the text of the concluding document. We hope that a consensus may soon be reached so that the meeting may be brought to a conclusion.
On the last point that the noble Lord, Lord Gladwyn, raised about an increase in our own resources, at the moment we are too involved in the question of trying to resolve our own budget problems without increasing our own resources.
§ Lord Cledwyn of Penrhos
My Lords, I wonder whether the noble Baroness would deal with the question that I asked about the common agricultural policy.
§ Baroness Young
My Lords, I apologise to the noble Lord for not answering his question. The Stuttgart declaration includes a remit to the Commission to examine "the need for strict financial guidelines", and the review of the common agricultural policy over the autumn is to result in concrete steps "to ensure effective control of agricultural expenditure". We believe that a guideline of some kind is essential if this objective is to be achieved.
§ Lord Gladwyn
My Lords, I am afraid that the noble Baroness did not quite understand my question. I asked whether the Government would say here and now that, in principle, provided we got agreement on the major outstanding issues, we should favour an increase in the general resources of the Community—not our own resources—in order to finance an industrial and regional policy.
§ Baroness Young
Yes, my Lords; but I do not wish this afternoon to get drawn into a great discussion about favouring an increase in the Community's own resources. As I have indicated from the Statement that we made, although the Community's own resources may in fact increase, what we have been discussing is the proportion of the common agricultural policy, 1174 which should not increase as fast as the Community's own resources.
§ Lord Harmar-Nicholls
My Lords, I hope that my noble friend's last reply to the noble Lord that she did not want to be dragged into talking about increasing own resources does not reflect any weakening on the necessity of not agreeing to the increase in own resources until greater efficiency relating to the common agricultural policy has come into operation. The Statement today is in general terms, but in the reports one has read in the newspapers one sees a couple of sentences from the Foreign Secretary which could give the impression that the Government would agree to increasing own resources before the actual efficiency has been brought into operation. A mere promise to do something is not good enough, in view of the absolute necessity to clear away the wasteful surpluses which flow from the present way that the system is being worked.
§ Baroness Young
My Lords, I am in general agreement with what my noble friend has said on this matter, but I think that it is very difficult to make a hard and fast rule that one will absolutely resolve the matter of the surpluses before there is any question of looking at the Community's resources.
§ Lord Diamond
My Lords, is the noble Baroness aware that all of us on these Benches would support the Government to the utmost—I repeat, to the utmost—in their pursuit of the avoidance of protectionism, especially when—or should I say, even though?—the country involved is the United States and is our close ally, having regard to the fact that the United States so recently expressed its determination to do exactly that? Is it not quite incomprehensible that in those circumstances the United States should submit to short-term pressure and should apparently commit a breach of the undertakings given through GATT and the policy expressed so recently by its own Government? Has the noble Baroness any explanation to give us from the United States as to this extraordinary conduct? Since I regard this as so much more important than the other matters that are disclosed in the Statement, I will limit my questions to that single point.
§ Baroness Young
My Lords, as the Statement makes clear, it was a matter of regret to those meeting at the council that the United States Administration took the decision that it did so soon after the commitment which was given at Williamsburg against protectionism, and, naturally enough, it has caused great concern and dissatisfaction within the Community. We have noted the President's offer to negotiate orderly marketing arrangements for some of the steel products, but there is no disposition on the part of the Community to move ahead on this at this particular stage. I do not think that I should at all like to speculate on what has led the United States Administration to take this view. I believe that overall one must regard this as one question which is a matter for regret, but it does not of course alter our basic alliance with the United States and the importance of that alliance in our general foreign policy.
My Lords, with great respect to the noble Lord opposite, would he not think that it is the ordinary steel worker in Bethlehem. in the United States, who, rightly or wrongly—I do not know—considers that subsidised Common Market special steel is imported into his country? I assure the noble Lord opposite, and I should like to make it clear to the noble Baroness, that very many people in the agricultural industry here would consider that own resource subsidies from Common Market countries would be most unfair to our agricultural industry, which is reasonably efficient, I hope—I think—if no own resources are put in by the taxpayer of this country. I think that the situation would be exactly the same for the steel worker in the United States and the agricultural worker or the farmer in this country if own resource subsidies apply in the Common Market without some kind of, shall I say, protection—not a very good word—or some kind of arrangement to see that subsidised products do not come in unfairly.
§ Baroness Young
My Lords, I think that what may well have provoked the American Administration to act has been concern about the workers in the steel industry in America. Nevertheless our concern has been about the very serious effect on United Kingdom industry: the stainless steel plate which accounts for the bulk of the British Steel Corporation's exports of special steel to the United States has been subject to the double penalty of an 8 per cent. tariff on top of the 19.3 per cent. countervailing duty, and that would effectively shut them out of the market for this product. Even the new tariffs on sheet and strip metals, which are not subject to countervailing duties, would be very hard to surmount. The effect of this has been very serious on some private producers, in particular those concentrated in Sheffield, who have already contracted to a fraction of their size 10 years ago. So, in effect, we have made ourselves efficient, but we are paying a double penalty as a result of that.
§ The Principal Deputy Chairman of Committees (Baroness Llewelyn-Davies of Hastoe)
My Lords, I should like to follow up with the noble Baroness the Minister the remarks made by my noble friend Lord Cledwyn and by the noble Lord, Lord Gladwyn. Is the noble Baroness aware—I am sure she is—that the House welcomes the Foreign Secretary's attempt to grasp the nettle of the crucial financial difficulties of the EEC, and the fact that it appears that the Government are not limiting their proposals only to the simple issue of the United Kingdom refund, but are continuing discussions on lasting solutions for the whole Community? I think that it would clear up the matter of the Community's new own resources if the noble Baroness could say whether the Government are considering the draft decision of the Commission, and whether the report in The Times today that the Commission's proposals are along the same lines as the Government's thinking is correct.
§ Baroness Young
My Lords, I think that on these matters I cannot go further than I have already gone in the Statement. Negotiations are continuing, and it would not he the practice to table papers, or any such documents, while negotiations are going on. I have tried to indicate that my right honourable and learned 1176 friend has in fact made a proposal about a safety net scheme, and that we will be tabling a paper on the common agricultural policy in about two weeks' time. So we are seeking to deal with both the budget question and the common agricultural policy.
However, in making these remarks, I should make it plain that we support the objectives of the common agricultural policy, and we recognise the benefits that it has brought to British and European agriculture. At the same time. we recognise that as it is currently operated it is wasteful and can cause frictions in the Community's relations with its major trading partners, including those in the third world. If we are to secure the achievements of the common agricultural policy and build on them. we must both control expenditure under the policy and adapt the operation of the policy to reduce its structural surpluses.