Successor to the Second Lomé Convention: ECC Report

HL Deb 06 June 1984 vol 452 cc628-90

3.5 p.m.

Lord Brimelow rose to move, That this House takes note of the Report of the European Communities Committee on the Successor to the Second Lomé Convention (15th Report, 1983–84, H.L. 168.)

The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. The Motion asks this House to take note of the Report of the Select Committee on the European Communities on the Successor to the Second Lomé Convention. That title calls for a word of explanation. Had it been possible to entitle the report, "The negotiations for a Third Lomé Convention", that would have given a clear and exact indication of its contents. But agreement on the designation of the agreement, if any, which is to succeed the Second LoméConvention has not yet been reached. The Select Committee had, therefore, to content itself with the vague and noncommittal title, A Successor to the Second LoméConvention.

Few people in this country are thoroughly familiar with the two Lomé Conventions, the second of which now links the European Community with 64 African. Caribbean and Pacific countries, normally referred to as the ACP countries. Of those who have some knowledge of the Lomé Conventions, but not a detailed knowledge, the impression is prevalent that they relate to aid. It is quite true that aid does loom large in the Second Lomé Convention and in the negotiations which have been in progress since October 1983 for a successor agreement. But the ACP Governments do not regard themselves, and do not like it when they are regarded by us, primarily as suppliants for aid.

The Community is dependent for certain commodities on imports and of those imports the ACP countries are, for some commodities, important suppliers. I have in mind particularly tropical agricultural produce, some minerals, and oil. Conversely, the ACP countries are important markets for our exporters. They regard themselves as part of an interdependent system of states and they should like to see that economic interdependence developed to the mutual advantage of every participating state. For this reason the current negotiations cover far more than the formulation of future aid programmes.

The range of these negotiations is shown by the terms of the working parties which have been preparing recommendations for consideration by Ministers. One group has been addressing the problems of agricultural co-operation, integrated rural development, food self-sufficiency, and food security. A second group has been considering trade, commodities and the problems of an organisation known as STABEX, which was set up under the First Lomé Convention to help to smooth out the fluctuations in income derived from the export of certain agricultural products and iron ore.

A third group has been considering the development of mineral and energy resources. This group has also been reviewing the problems of an organisation known as SYSMIN, which was set up under the Second Lomé Convention and which so far has helped Zaire and Zambia, in a period of recession, to maintain (but not to develop) their capacity to produce minerals.

A fourth group has been considering how to develop industries, fisheries, technology and tourism. A fifth group has been studying how financial and technical co-operation can be developed. A sixth group has been examining how trade could be facilitated by customs co-operation and by some relaxation of the rules of origin which determine the entitlement of imports of goods from ACP countries to customs privileges in the Community.

A seventh group has been reviewing the possibility of improving transport and comunications, with special reference to the needs in those two fields of the least developed, landlocked and island ACP states. An eighth group has been charged with a miscellany of subjects—social conditions, research, training, cultural co-operation, and co-operation between the ACP countries themselves, with special reference to the feasibility of more regional co-operation. The ninth, and last, group has been reviewing institutional and legal questions.

Any increase in the pace of development across so wide a front in so many countries would call for resources on a scale of which there is at present little prospect. In recent years most of the governments of the European Community have been trying to curb inflation. To this end they have followed policies of budgetary stringency. These have contributed, at least in the short term, to the depression of trade. They have also. in most Community countries, limited the funds available for aid. It has been possible to give the ACP countries full protection against adverse changes in their terms of trade, against increases in the cost of energy, and against the growing cost of servicing their debts. Some of them, far from enjoying development, have had to suffer retrogression.

In the current negotiations two meetings, apart from the opening session, have so far been held at ministerial level. Nothing in what has been published about these two ministerial meetings warrants the expectation of a sharp increase either in aid or in the earnings of ACP countries from their exports to the Community.

The importance for the developing countries of the world of the expansion of their foreign trade was discussed in your Lordships' House on 23rd May. I was abroad at the time and therefore, to my regret, I was unable to take part in that debate. The broad issues which were then discussed—protectionism, the effects of the common agricultural policy, interest rates, the debt burden, et cetera—lay outside the terms of reference of Sub-Committee B in preparing the report which we are debating today. The subcommittee's terms of reference were limited to the negotiations now in progress with the ACP governments. Accepting that limitation, in its report the sub-committee made only a small number of recommendations, most of them quite modest, in the hope that some of them at least might find acceptance and be embodied in whatever agreement may succeed the Second Lomé Convention.

I shall take first the sub-committee's recommendations in the field of trade. For some ACP countries, though not for all, the expansion of exports to the European Community appears to be the best route to further economic development. Most of the industrial products which they export to us are already duty free. But entitlement to that privilege is governed by the detailed and very strict provisions of the Second Lomé Convention about rules of origin. Since derogations from these rules could be abused, the sub-committee accepts that the Commission has been justified in subjecting applications for derogations to careful scrutiny, but it nonetheless considers that this is a field where the Community could afford to be more generous and more expeditious than it has been hitherto.

It would like to see the ACP countries permitted to export to the Community as their own products goods containing imported components and parts originating in other developing countries where these are an obvious source of supply. It would favour the utmost simplification of procedures when incorporated components would themselves face no tariff barriers if they had been exported direct to the European Community.

The STABEX scheme provides some compensation, but not necessarily full compensation, for falls in the income derived from certain exports. It has hitherto included iron ore, but at the end of this year iron ore will be transferred to SYSMIN and thereafter STABEX will cover only agricultural products. The funds earmarked for STABEX are subject to a ceiling, and that ceiling did not suffice to provide complete compensation for the falls in export earnings experienced in 1980 and 1981. The unpaid claims amount to about 367 million European currency units, which is roughly £200 million. If commodity prices rise during the period of the next agreement and if in consequence STABEX has unused funds, the subcommittee would like to see those deficits made good.

Under the existing convention, ACP countries which have benefited from STABEX payments may be required to make refunds when increased export earnings permit. It would be equitable for the European Community to assume a corresponding liability when reduced calls on STABEX funds make it possible to compensate for past deficits.

The ACP governments which have received STABEX payments have been at liberty to use them as they wished. They have often regarded them as free foreign exchange. In general, these payments have not been used to remedy the difficulties which made them necessary. This has been a cause of concern to Her Majesty's Government, who should like to see STABEX used to remedy shortcomings in development programmes. The sub-committee thought that that was right.

Given that under the successor agreement STABEX will relate exclusively to agriculture, the subcommittee hopes that the current negotiations will be used to include some products not at present covered—principally tobacco, on which some ACP countries are highly dependent. The sub-committee also hopes that thought will be given to the possibility of including in the successor agreement processed products derived from sisal and timber.

More generally, the sub-committee felt that the possibilities for using STABEX to promote the growth of processing industries had not been fully explored. If, as we all hope, world trade picks up from now on, there is a possibility that some of the funds earmarked for STABEX and SYSMIN may not be used. The sub-committee would not like to see substantial potential investment resources kept lying idle because of over-rigid regulations. They would welcome the introduction of a flexibility which would make such funds available for the operations of the European Development Fund, and which would facilitate transfers between STABEX and SYSMIN.

Turning to SYSMIN, the sub-committee were somewhat critical of the way SYSMIN has operated hitherto. Just as they wished to see STABEX payments used for the solution of development problems, so they wished to see SYSMIN payments made available for the diversification of development of mineral-dependent economies. In brief, they would like to see STABEX and SYSMIN operating on parallel lines.

On a minor point, of interest in this country only to rum drinkers, the sub-committee think that ACP rum producers should have quota-free access to the Community market. The present complicated system of annual quotas is a nonsense that should be brought to an end.

The Community's common agricultural policy limits the concessions which the Commission can offer to the ACP countries in the field of agricultural produce. Where markets are distorted by the existence of Community surpluses, the sub-committee were not able to make specific recommendations. They simply expressed the hope that during the current negotiations the Community will offer concessions wherever it is possible to do so. The reform of the common agricultural policy—which is a necessary pre-condition of rational international trade in some agricultural products did not lie within the subcommittee's terms of reference.

I now turn to the sub-committee's recommendations in the field of aid. The sub-committee accepted that for some ACP countries a revival of the world economy and an upsurge in world trade will be more beneficial than any foreseeable provisions of a successor to the Second Lomé Convention. But some of the ACP states are among the poorest and most disadvantaged in the world. For them the need for aid is likely to persist.

The problem which calls for the urgent attention of all aid donors is that of hunger, particularly in Africa. In October 1983, the month that the current negotiations for the successor convention began, the Food and Agricultural Organisation held a conference on African food problems. It reported that 24 African countries, all of them ACP states, were affected by food shortages. Given this background, the subcommittee welcomed Commissioner Pisani's wish to move away from large-scale project aid and to devote a greater part of the resources at his disposal towards the achievement of adequate and secure food production, particularly in the areas threatened by food shortages. One member of the sub-committee was already pressing for this change of emphasis many years ago when he was Parliamentary Under-Secretary in the overseas development ministry.

But the shift of emphasis for which Commissioner Pisani is now working will not be appropriate for all ACP countries, some of which are self-sufficient in food: and where it is appropriate it will not be free of problems. The difficulties and the qualifications are reviewed in paragraphs 65 to 70 of the report, and I shall not repeat them here.

One thing is certain. Food sector strategies will call for differing approaches in the countries which adopt them. The possibilities and the problems vary from one country to another and, in some countries, from one region to another. From the outset, Commissioner Pisani has emphasised that when an ACP government decides to opt for the food sector strategy, it will be essential for that government to enter into careful discussions with the Commission about the whole range of policy decisions which will be needed to make that strategy a success. From the point of view of the Community this makes sense.

Community aid to many ACP states is only a small fraction of the total aid they receive, and Community aid in itself is not sufficient, and will not be sufficient, to finance a switch to food sector strategies. Coordination with other aid donors will be essential, and the Commission, for that purpose, will need to be well informed of all relevant needs. But in some ACP states the reaction to the Commission's insistence on the need to discuss policies has been suspicious. Hitherto, any conditions attached to aid received from the European Development Fund have, as a rule, been limited to the project for which that aid is given. But the need to ensure the success of food strategies affects a wide range of domestic policies. In some ACP states the Commission's request for the discussion of policies has been interpreted as an attempt to impose new conditions on the grant of aid and as an infringement of the sovereignty of the receiving government.

Pilot studies in food sector strategies are now under way in four countries. In Mali and Rwanda they seem to be going well. In Kenya they have given rise to misgivings. In Zambia the disparity between the extensive changes required of the government, the modest amount of Community aid, and its slow dispersement, together caused strain. We are told (Question 619) that of late the strain has eased. At the recent ministerial meeting in Suva the doubts and sensitivities of the ACP governments were discussed, and a search is now in progress for formulae which will allay, ACP misgivings.

For some of the areas threatened by hunger, food aid may continue to be necessary for a long time to come. But the sub-committee were well aware that food aid can, in certain circumstances, discourage local food production, and they were not happy that the surpluses produced by the common agricultural policy create a constant incentive to give food aid where other forms of aid might be more appropriate. Food aid needs to be carefully co-ordinated with food sector strategies. For this reason the sub-committee support the suggestion already made by Her Majesty's Government that in the successor agreement everything relating to food should be brought together in a single chapter.

Some non-governmental organisations have acquired considerable expertise in developing food production in areas of subsistence farming. The subcommittee would like to see the Community making the best use of their services, but care will be needed. The Community is bureaucratic. To some extent the success of the non-governmental organisations has, stemmed precisely from the facts that they are independent and not bureaucratic.

The Overseas Development Administration announced on 16th February of this year that in the financial year 1984–85 there would be a small rise to £1,174 million in the funds allocated to all United Kingdom aid. Since the increase is small, it has to be assumed that the United Kingdom Government will not advocate any substantial increase in the total of Community aid under the successor convention. Nor were the sub-committee given any grounds for believing that the other member governments of the Community would recommend substantial increases in Community aid.

Meanwhile, the United States' contribution to the International Development Agency has been reduced and that reduction has not yet been made good by other governments. The ACP governments have made clear their hope that the resources transferred to them under the successor agreement will be much increased, but the view of the sub-committee is that the funds from which such an increase could be financed will not be there.

Within the ceiling of United Kingdom aid it will be possible to increase the allocation to Community aid, but that, given the ceiling, would mean reducing the allocations to the World Bank group to our bilateral aid programmes. The sub-committee have not recommended that. As aid givers, the World Bank group are experienced and efficient and the subcommittee view with approval the efforts of the United Kingdom Government to mobilise additional resources for the International Development Agency.

As for our bilateral aid programmes, they help to meet needs in areas not covered by the Lomé Conventions. Because of the existence of an aid ceiling, these bilateral aid programmes are being squeezed by the increase in our contributions to the international aid donors. In recent years the value in constant prices of all aid given throughout the world has been falling, but with population growth and the depression in world trade, the need for aid has been increasing. In the opinion of the sub-committee, the time has come for the United Kingdom Government to accord higher priority to aid in the general pattern of its expenditure. The efforts which the Government have been making on behalf of the International Development Agency could perhaps be interpreted as a recognition of that need.

Although the sub-committee's recommendations are so modest and so temperately worded that they might be regarded as anodyne, when I presented the sub-committee's report to the Select Committee for its approval, I felt bound to point out that its recommendations were in fact controversial. A Government who have given priority to the fight against inflation and who have already determined the aid ceiling for the present financial year can hardly be expected to agree without qualification to a recommendation that they should now give higher priority to aid. Those who think that the best thing the Community could do to help the developing countries would be to buy more from them are likely to be critical of the report's acceptance that early and rapid progress is unlikely in this field.

Those who have studied the ineffectiveness of some past aid programmes, those who have drawn attention to the examples of the waste of aid resources, those who have condemned the deleterious effects of some forms of food aid, those who are conscious of the manifold sources of resistance to change and of the difficulty of changing the emphasis of aid programmes—all of these people may well be of the opinion that in five years' time, when the performance of Community aid under the successor agreement is scrutinised, many of the old criticisms will be found still to be valid. The governments of the ACP countries and their negotiators may be disappointed that the report has not been more outspoken in support of their aspirations, criticisms and demands. The view of the Select Committee, when it gave its approval to the report, was that such issues are best debated on the Floor of this House.

When some of the ACP ambassadors in Brussels, who are the day-to-day negotiators for the ACP countries, gave oral evidence to the sub-committee, they asked what was the attitude of your Lordships' House towards development and development aid: towards protectionism, especially in relation to agricultural produce and in relation to the poorest countries; towards the need for an increase in aid; towards the reform of the common agricultural policy, with special reference to the production of sugar beet in the Community, and to the Commission's proposal for the taxation of imported vegetable oils; towards a suggestion that the successor agreement be ratified by the joint EC-ACP Parliamentary Assembly on behalf of the EC-ACP member states; and towards the reinforcement of the various EC-ACP institutions. Many of these questions lay quite outside the terms of reference of the sub-committee and, indeed, of the Select Committee. Such replies as we were able to give will be found on pages 260 and 261 of the minutes of evidence. If the noble Baroness who is to reply has anything additional to say in answer to these questions, I am sure her words will be studied most attentively by the ACP negotiators.

I am conscious that I have passed over in silence quite a number of the recommendations of the report. Most of them were suggestions which might improve the administration and effectiveness of Community aid. To have covered them all would have made this introduction inordinately long.

Before I sit down I wish to express the gratitude of the sub-committee to its specialist adviser. He had previously been the sub-committee's specialist adviser for its earlier, and much more extensive, report on development aid in general. His advice on the choice of witnesses, on the formulation of issues, and on the shaping of a report which covers an intractably broad and diverse field gave great assistance to us.

I also wish to thank our clerk, who was new to his job, and who worked like a Trojan to ensure that copies of the report were ready in time for the ministerial meeting in Suva last month. Lastly, I express the thanks of the sub-committee to all the witnesses—ambassadorial, private, ministerial, and official—who so generously made their knowledge and experience available to us.

And now, having presented the report, I shall listen with attention and interest to what your Lordships and the noble Baroness who is to reply have to say about it and about the issues which it raises. My Lords, I beg to move.

Moved, That this House takes note of the Report of the European Communities Committee on the Successor to the Second LoméConvention (15th Report, 1983–84. H.L.168)—(Lord Brimelow).

3.38 p.m.

Baroness Young

My Lords, I am sure the whole House will be grateful to the noble Lord, Lord Brimelow, for introducing this debate today. I am grateful, too, for the opportunity provided by the Select Committee's report to stress the importance that the Government attach to the current negotiations on a successor to the second Lomé Convention. Your Lordships will notice that I, like the noble Lord, Lord Brimelow, deliberately avoid the shorthand "Lomé III", because no decision has vet been taken as to where the next convention will be signed. That will be a matter for the African, Caribbean and Pacific states to decide among themselves; but the Government would certainly be happy to see a Commonwealth country act as host to the signing ceremony.

I should like first to welcome the Select Committee's report and to congratulate the noble Lords involved on the thoroughness and excellence of their work. Three years ago the same Select Committee produced a volume of similar proportions to the one which we have before us today on the more general question of the European Community's development aid policy. That has since become a standard work on the subject. I have little doubt that the present report will soon attain the same status.

The report rightly addresses itself to the political nature of the Lomé relationship. Lomé is the Community's major aid and trade pact with the developing world. More than half the world's developing countries are party to the convention, which, with the expected accession of Angola and Mozambique, will soon include the whole of independent black Africa as well as all the former British colonies in the Caribbean and Pacific. Of the present convention's 64 signatories, 35—the majority—are members of the Commonwealth. Or, put another way, three-quarters of Commonwealth members are in Lomé. Small wonder, therefore, that we want the current negotiations to succeed.

The committee consider that both trade and aid are important to the development of the ACP economies. The Government agree. For the ACP group as a whole, the financial flows resulting from trade with the Community are between two and three times as great as those from aid from all sources. The Government believe that it is essential to increase the opportunities for the ACP to sell their products to the Community, and in the long run to decrease their reliance on external aid for funding their development investments. The Government agree that the Community should offer trade concessions wherever it can, and consider that removal of the few remaining tariffs on imports of agricultural products from the ACP countries would be of mutual benefit to both the Community and the ACP. The Government, like the committee, also consider that European Development Fund (EDF) aid can make an important contribution to the promotion of ACP exports and to the development of regional ACP markets.

The Government also share the view of the committee that the encouragement of food processing and development of industry in the ACP require changes in the Lomé rules of origin. Possibilities are the extension of allowable non-ACP content to include that from those Generalised Scheme of Preferences (GSP) and Mediterranean countries at a similar level of economic development, changes in the required percentage of value-added in the ACP, and simplification and expedition of the derogation procedures to allow for deserving exceptions. We have tabled proposals to this effect in Brussels: these have made some headway, but there is still room for further improvement in the Community's position.

In the Government's view such changes to the origin rules would increase the incentives to private Community investment in the ACP. We consider private investment an essential source of finance for ACP development, and have also proposed that the next convention should contain clearer provisions to encourage private investors.

If we turn to aid, it is convenient to look first, as the report does, at the Lomé STABEX and SYSMIN schemes, which are specifically intended to help particular commodity production sectors. The Government agree with the committee that it is preferable not to tie up too great a share of the EDF in specialist schemes like these, where funds may lie unused (as they have under the current SYSMIN scheme) or be inequitably distributed; but the level of resources to be devoted to these schemes under the next convention will not be decided until the size of EDF VI is agreed at the end of the negotiations. As to changes in the schemes, the Government, in accordance with our view on the need to improve the quality of EDF aid, support the Community position that STABEX transfers should contribute to the remedy of production problems in the sector which has triggered a STABEX claim, or diversification where appropriate. The ways in which this can be achieved are currently being negotiated with the ACP. The Community also consider that the ACP should, retain their right to propose the addition of new products to the list covered by STABEX; the scheme should however retain its tropical agricultural coverage.

Finally, the noble Lord, Lord Brimelow, expressed the wish of the sub-committee that the unpaid ST ABEX claims for 1980 and 1981 be made good if funds allow under the next convention. I see difficulties in this. It would mean, in 1991, when the balance sheet for the next STABEX scheme was clear, making good shortfalls from 8 and 10 years earlier. Shortfalls from so long back will be a matter of history, and it is likely that by then there will be other issues to which the ACP and the Community might wish to put unused STABEX funds. I can however say that the Community has already agreed to reconsider this question at the end of the current convention, when it will be clear whether there is any unused balance in the current STABEX scheme.

The SYSMIN scheme for rehabilitation of capacity for the mining of selected minerals has to date been used only twice, and it is consequently difficult to evaluate its effectiveness at a time when there is an international over-capacity in the production of many minerals. The Government have, however, proposed changes to the scheme, including coverage for nickel, inclusion of related products in the calculation of SYSMIN claims, and greater flexibility for use of transfers, in recognition of the need to render the scheme more accessible to ACP states.

I mentioned the Community's concern to ensure that development aid makes the most effective possible contribution to ACP development under the new convention. We have proposed to the ACP that there should be a dialogue with them on their sectoral economic policies, which are crucial to the context in which aid is required to work. As experience has shown, the effects of aid can be minimal or even harmful if it is provided where local policies are inimical to its objectives. A commonly cited example is where local prices for farmers give inadequate incentives to them to make full use of development aid for agricultural production. Another example is provided by food aid which, while essential in emergencies for relief of famine, is all too often supplied with no regard to its integration with local agricultural policy, so that local farmers are under-cut, food consumption patterns changed and the capacity of local agriculture severely diminished. To overcome such difficulties and unintended consequences of aid, the Community has proposed to the ACP that they should discuss the local policy context in the areas most suitable for EDF aid. In this way both sides can establish where Community aid may be used to greatest effect.

The examples I have mentioned have been drawn from agriculture, and with very good reason. Agriculture remains for most of the ACP the principal contributor to their economic production. For most ACP it is the major employer. And, of course, if the continuing exodus of rural populations to cities where there are no jobs, no housing and inadequate sanitation is to be stemmed, the conditions of life in the countryside must be improved. The first requirement is that the ACP countries should be self-reliant in food, whether by their own production of food or by purchase, using earnings from their export of agricultural commodities and processed products.

This serves to highlight the inter-related nature of aid and trade policies. ACP exports will require markets in the Community and elsewhere. It is evident that the food sector strategies already being implemented in selected ACP states will be of major importance in the new convention. We see it as a necessary condition of successful food strategies that all forms of Community aid should be effectively coordinated; and we welcome the committee's support for the Government's proposal that a separate food chapter in the next convention could usefully serve to highlight the interdependent nature of the various aspects of Community aid—including food aid—in the pursuit of food self-reliance.

Not all of the ACP will give equal prominence to agriculture. For many the development of other sectors—for example, mining, industry or transport—will be important. The policy dialogue will aim to establish where the need is greatest and the contribution likely to be best used. Like the committee, we see a major role for the Commission delegations, presently all too often under-used, in establishing the groundwork for this sort of discussion. It will also be important to ensure co-ordination, not merely of the various elements of the Community's trade and aid relationship with the ACP but also with the aid efforts of individual member states and with other donors. The dialogue, which we envisage as a continuing and flexible process, will offer opportunity for this.

It will now be rather evident that the Government place great faith in constructive dialogue with the ACP as a means of increasing the effectiveness of Community aid. We would also agree, however, with another important change recommended by the committee concerning the evaluation of completed projects. There is at present no regular evaluation of major Community aid projects. Nor is such evaluation made available to member states, the ACP, or the interested public. In both respects this contrasts with the practice of the leading multilateral aid agencies. The Government are pressing—with some success—for more evaluation of EDF aid under the new convention, to act both as an audit of performance and guide to the future based on experience. Perhaps both an enlarged evaluation unit within the Commission itself, and/or a greater role for the Court of Auditors, offer the greatest prospects for improvement.

I should not go on without reference to the next European Development Fund itself. The Government believe it is right that this should not be discussed with the ACP until the end of the negotiations on the substance of the new convention. However, I can say now that a principal factor in the Community's decision will be the ability of its member states to pay. The United Kingdom share of the EDF comes of course from our own aid programme. In considering their position, the Government must therefore take account of the other competing calls on a total aid programme necessarily contained within a given ceiling. Although that ceiling, like all Government expenditure, is reviewed regularly, it is right and necessary that it should be subject to the same disciplines as other areas of public expenditure. It remains the Government's policy to maximise the room for manoeuvre for our own bilateral aid effort by looking critically at expenditure on all our contributions to multilateral programmes.

The committee has pointed out that a significant increase in real terms in the size of the EDF would require the diversion of United Kingdom funds from other uses, particularly our own bilateral programme or our contributions to other international bodies. The Government note that the committee would deprecate such a diversion. In fact any increase, even in cash terms, would have this effect, so we are faced with a difficult choice. The final judgment on our contribution to the next EDF will be taken in the light of all the financial and political factors.

There are several other important recommendations which shortage of time prevents me from dealing with as fully as they deserve. Perhaps I may mention some of them briefly. The Government agree that EDF procedures can be slow and complex. An improvement will be necessary if the ACP are to be enabled to spend their EDF allocations as quickly as intended. We also hope that reforms in internal Community procedures—notably in provision of better advance information in EDF contracts, in the abolition of quotas for consultancy contracts, and in improved payment procedures—will result in an even greater share of contracts for United Kingdom firms, although our performance in this field has shown a steady and encouraging upward trend.

The Government share the view that nongovernmental organisations have a valuable role in tackling the problems of ACP development, and have also done a very effective job in publicising the issues involved in the Lomé negotiations. I am thinking in particular of the excellent series of "Lomé Briefing" papers produced under the auspices of the Liaison Committee of Development NGOs. There must however he a doubt about whether the NGOs could realistically absorb a large injection of Community financial assistance without fundamental change to their independent character.

The Government agree that some major ACP problems—for example, the fight against decertification—will need to be dealt with on a regional basis. To deal with the most important issues is precisely the purpose of the EDF, which has a pocket of money specially set aside for regional projects. The Government also agree that cultural aspects of development are important and may be aided from the EDF.

On the question of rum, which was raised by the noble Lord, Lord Brimelow, I can assure the House that the Government share the sub-committee's views about the drawbacks of the present system. We have continually pressed for the removal of the least defensible aspect of the current regime, the separation of the United Kingdom market from the rest of the Community, with separate quotas for each. So far, we have met with little success. but the question is still under negotiation.

Near the end of his speech, the noble Lord, Lord Brimelow, referred to the request from ACP Ambassadors for guidance as to the attitude of your Lordships' House towards a number of issues. He noted that anything additional I might have to say on these issues would be studied intensively by the ACP negotiators. I believe that I have covered most of these points in my reply. There are however a couple of additional points which I could usefully make. The common agricultural policy was, as the noble Lord rightly noted, outside the remit of the Select Committee's report. I need hardly remind your Lordships of the Government's efforts to reform that policy. On sugar beet, the Community has already taken a number of steps to reduce its production and is actively participating in discussions for a new International Sugar Agreement. We very much hope that an effective international agreement can be negotiated. At the end of the day, this will be the best contribution to the stabilisation of world sugar prices to the advantage of both importing and exporting developing countries. As for the Commission's proposal for the taxation of imported vegetable oils, I can assure your Lordships that the Government are firmly opposed to this, and I do not believe the Community will ever agree to such a tax.

I note the suggestion that a successor agreement might be ratified by the joint ECP/ACP Parliamentary Assembly. As a matter of constitutional practice, however, since the next convention will be a mixed agreement to which the Community, member states and ACP states will be party, it will have to be ratified by each signatory according to its own procedures. The Government support the suggestion that EC/ACP institutions should be reinforced to make them more effective. It has already been agreed in the negotiations with the ACP that there should be a consolidation of the present two parliamentary bodies, the EC/ACP Consultative Assembly and the Joint Committee.

Finally, it has been suggested, notably by Commissioner Pisani himself, that the next convention should be of unlimited duration, with a number of time-limited protocols covering particular issues—for example, trade co-operation or STABEX. This question has not yet been tackled in the negotiations, but the Government share the committee's scepticism about the value of such a change.

I trust that I have shown that the Government warmly welcome the contribution that this report has made both to the development of Government thinking and to public debate on the Lomé relationship. There is scarcely a recommendation in it with which the Government would wish to disagree.

3.57 p.m.

Lord Banks

My Lords, the House will be grateful to the noble Lord, Lord Brimelow, and to the Select Committee for the very thorough and comprehensive examination which they made of the negotiation to secure a successor to Lomé II, and it has been very useful at the beginning of our discussion to have this statement of the view of the Government which has just been given to us by the noble Baroness, Lady Young. It is clear that this is an important subject; yet it is equally clear—I think the report brings this out—that the Lomé Convention is of a limited nature. I think a few facts will support that contention.

The 64 ACP countries involved in the convention represent only one-eighth of the third world population. Only five of the 25 most populous nations are included and the EEC of course has a series of aid and trade agreements with the rest of the developing world. Lomé accounts for only half of the EEC's own development aid and it accounts for only 12 per cent. of the development aid provided by the EEC member states, most of which is bilateral. Developing countries are naturally affected by the other policies in which the EEC is involved—for example, the common agricultural policy, as we have heard this afternoon, and the multi-fibre arrangement. The EEC generalised system of preferences applies to all developing countries. While it is true that more than 95 per cent. of Lomé exports come to the EEC duty free, most of them would in any case—I believe it is about 30 per cent. which actually benefits from the Lomé Convention in this respect. The money provided for all Lomé purposes, as one of the representatives of the ACP countries pointed out in evidence to the committee, is the same as the export earnings of British Steel. To say all this is not to criticise Lomé but to get it into perspective.

In spite of their limited nature, I believe that Lomé I and Lomé II have been very important experiments. I think there has been particular value in the institutional structure and the philosophy of equality which inspires it. There has been the specific experiment of STABEX which is designed to support earnings rather than prices. That was a distinctive change in the normal practice in these matters and that is a principle which I would think is capable of considerable expansion, as the report suggests. I regret that it has been used to some extent as a balance of payments relief, as the noble Lord, Lord Brimelow, explained to us, rather than to help particular producers affected. Nevertheless it is something that has been attempted on a small scale which could with value be extended further.

If the report makes clear that there is much to Lomé's credit, it also makes clear that nevertheless, particularly during the period of Lomé II, there has been growing disappointment and disillusionment with it. Recession, inflation, population outstripping food production, high interest rates and increasing debt have created an unfavourable economic background. STABEX has twice run out of funds, as we have heard, to meet legitimate claims and the balance of trade has moved strongly in favour of the EEC'. There have been complaints that the European Development Fund is under-funded and there have been the complaints to which reference has already been made of bureaucratic procedures for disbursement on the part of the Community. But, perhaps most disappointing of all, Lomé countries have failed to maintain their share in EEC markets even in comparison with other developing countries.

But I do not think that we should despair because there have been these disappointments. I think we must learn from experience and seek to make the successor convention wider in scope and more effective. Turning for a minute to aid, the EEC member states provide 39 per cent. of the aid which the ACP countries receive. The EEC itself as a group, as an entity, provides a further 9 per cent. and, of course, it is largely that 9 per cent. that we are concerned with when we are thinking about Lomé

I understand that the figure which is available is not negotiable and that this is resented by the ACP countries. Last time they got half of what they asked for. This time, as I understand it, there is to be no discussion. The noble Baroness, Lady Young, if I understood her aright, said that there would be discussion at the end when all the other talking has taken place. One wonders if that is perhaps entirely the right order in which things should occur. And there is the related problem, to which the noble Lord, Lord Brimelow, referred, that if the United Kingdom increases its contribution to Lomé it decreases it elsewhere, so what we have to press for if we want to increase the amount available for Lomé is an overall increase in United Kingdom aid. I would support the plea which the noble Lord, Lord Brimelow, made for a higher priority to be given to aid.

Clearly the EEC must have the last word on the EEC figure, but I should have thought it should be discussed, and discussed in relation to overall total aid from all sources, with the ACP countries. The European Development Fund's real value has declined over the years. I should like to ask the noble Baroness when she comes to reply whether the new European Development Fund allocation is going to offer increased real value. We have already heard mention of the need for larger allocations for STABEX.

The report deals with the views of Commissioner Pisani that there should be a concentration now, so far as aid is concerned, on improving agricultural production. I am sure that there is much sense in that and that what both speakers so far have said about food aid and its effect on self-reliance in food must be given proper weight; and, in order that this matter should be discussed with the ACP countries, there is the proposal on which the noble Baroness put great stress for policy dialogue. But, as the noble Lord, Lord Brimelow, pointed out, this has problems and it needs sensitive handling because some of the ACP countries, at any rate, fear that this is just one way of attaching conditions which would be an infringement of their sovereignty.

Then there is the question of industrialisation. We cannot altogether neglect that, although it is right to make agriculture the priority in the conditions of today. But only 4 per cent. of exports to the EEC from the ACP countries are manufactured goods. I wonder whether the Government are anticipating that there will be any increase in that. I am aware that there is very little restriction—there is some, particularly in the field of textiles on the import of manufactured goods; but this is a matter which involves development and aid as well as trade. I was glad that the noble Baroness spoke strongly about the need to have more effective disbursement. It was hopeful that this could be achieved. Comparing aid and trade, in 1982 the disbursements from the European Development Fund were equal to about 3 per cent. of the value of the ACP countries' trade with the EEC.

It will be seen that the benefits of aid can easily be cancelled by marginal changes in EEC trade policy. In 1982 the 64 ACP countries received £400 million in aid from the European Development Fund. In the same year they received £10,000 million from the sale of exports to EEC countries, so it would seem to be right as a general proposition that trade is more important than aid, important though aid is. I accept what the report says, that this would not apply to every ACP country, but I put it forward as a generality. It has been suggested that aid not trade might well be the motto of the EEC countries in their approach to the current negotiation. I would wonder if the noble Baroness would think that that was fair or whether that gives an unbalanced view of what the governments of the EEC have in mind at the moment. I would think that there is a need for freer access for produce which competes with the common agricultural policy; and the noble Lord, Lord Brimelow, touched on that.

I noted the evidence in the report from the Consumers in the European Community Group, who said that, by and large, the EEC is only prepared to allow duty free imports from ACP countries of food that cannot be grown in the EEC. They went on to say that there are cases where the Community does tax food imports from ACP countries even when the EEC does not produce the food concerned. That would not seem to be justified. There is the question, too, of the impact on developing countries generally of the agricultural export policy of the EEC. That, too, has already been mentioned this afternoon. I think that perhaps it might be wise to look again at the operation of the safeguards clause. One wonders to what extent the threat of its use is used to achieve what is perhaps euphemistically described as voluntary restraint.

I was glad to hear that the noble Baroness, Lady Young, was in agreement with the report over the relaxation of rules of origin. I would hope that now something will be achieved in that sphere. It seems to me also that in thinking of these problems we cannot leave out of account the effect on ACP countries and other developing countries of the economic policies which are followed in the countries of the developed world; and that if the EEC countries were able to come together to give some stimulus to their economy—to investment in their infrastructure, for example—this in turn being the engine which drew their own economies more speedily out of the recession, they might at the same time provide an engine to do the same for the third world.

Then finally there is the problem of the overall coordination of all aid from all sources. Ideally, of course, the greatest help should go to the severest poverty anywhere in the world. That conflicts with the principle of selecting 64 nations, mostly with historical ties, for favoured treatment. That is now an established policy. It is understandable that the EEC should want to maintain these relations and close connections that have been built up, but a compromise is obviously necessary and it will not always be easy to achieve. However, I believe that the British influence should lead towards a universal approach rather than a selective approach and that we should be seeking, where possible, to include more people and more countries within the scope of the provisions of the Lomé Convention and its successor.

I hope that the EEC and ACP countries will be able to rise above past disappointments and recapture something of the original vision, and create together a more satisfactory and satisfying outward-looking relationship in the future.

4.11 p.m.

The Lord Bishop of Chichester

My Lords, I am sure we must all be grateful to the noble Lord, Lord Brimelow, for this Motion and for giving us the opportunity to debate this report. The existence of the first Lomé Convention was for many of us an important factor in commending the European Community at the time of the referendum. I am sure we are also grateful for the encouragement which has been given to the recommendations of the report by the noble Baroness, Lady Young.

I claim no expertise in the technicalities of this matter, but we on these Benches have a special concern for the current negotiations with which the report deals because we are members of the worldwide Anglican Communion, in which we are partners with bishops and others in many of the ACP countries. My own diocese has a special link, along with Guildford and Portsmouth, with the provinces of Nigeria and West Africa. The Bishop of Accra has been for the last month in Sussex, visiting parishes and addressing meetings; and he will be staying with me this coming weekend. So we are acutely aware at a personal level of the appalling problems of poverty, hunger and disease in many of the ACP countries. I am not so widely travelled as many of my colleagues. but I shall never forget the impression made upon me by a visit to Sierra Leone and Ghana, and by the enormous contrasts in riches and poverty that one sees walking through the streets of, for example, Freetown.

Therefore, for us "partnership" is a very important word in relation to this whole field of concern, and that is what I particularly want to emphasise in today's debate. It is what I understand to be spoken about expecially in Part 3 of the report. Some of your Lordships will no doubt have read Schumacher's last book, and may well remember a particular story that he tells of a family—a father, mother and a bright little boy of eight or ten—who went into a restaurant. They sat down, and the waitress brought three menus. The little boy looked at his menu and said, "I'll have liver and bacon". The father looked at the menu and mother looked at the menu, and the father then said to the waitress, "Three steaks, please". The waitress, writing it down, said, "Two steaks and one liver and bacon". After she had gone the little boy turned to his mother and said, "Mummy, she thinks I'm real".

I think that story has an important moral for us, because we are all tempted to think that we know what is best for other countries. It is vital that all discussions about aid to developing countries should be conducted and thought of in ways which respect the human dignity of those being aided. This, as I see it, involves for the giver that he must give freely and not because he expects to get some advantage in return, and also that he accepts that what he gives will be freely used by the recipient, possibly even in ways that the giver thinks unwise or does not much like. Obviously there are some limits to this, but there is an important principle at stake about the kind of relationship there should be: it should be one of partnership.

I want to stress in this field the importance of the voluntary contributions of individuals in this whole range of aid—the non-governmental contributions which, because they involve a large number of people, I believe help to build up the right sense of relationship. We in the Church of England have tried to make a contribution to overseas aid by asking all our members to give 1 per cent. of their net take-home pay for this purpose. A resolution to that effect was passed as long ago as 1975 by the General Synod in a Motion promoted by the present Archbishop of Canterbury. I may say that the Archbishop would very much have liked to have been present here today to speak in this debate, but he has to be in the chair at a meeting of the House of Bishops outside London, at a place which perhaps I should hasten to say is not Epsom. The General Synod, in taking this action, was following the example of the Methodist and the United Reformed Churches.

It is difficult to be precise about the response to this, because different dioceses deal with the matter in different ways: some by a process of direct grant through the diocesan budget and others by appeals to parishes. However, every diocese now has its own diocesan development representative, and there is a central committee trying to keep them all up to the mark. I am quite sure we could do more than we do, but it is in fact increasing.

This cannot, of course, take the place of governmental contributions, and therefore it must be a cause of some concern to read statements made by the director of Christian Aid to the effect that the 1984–85 expenditure on the net aid programme will be 17 per cent. lower in real terms than the aid given in 1978–79. Also, we learn that nearly two-thirds of the British bilateral aid programme is tied to the export of British goods, and in a way which benefits British companies. It is doubtful whether it really helps the poorest.

Again, between 1978 and 1982 British aid to the United Nations development programmes fell 56 per cent.; and in 1981, at the Paris Conference, Britain refused to give 0.15 per cent. of national income to the least developed countries. At the same time, we are grateful for what the noble Baroness has told us, and it is cause for pleasure that in March this year Britain agreed to spend £106,000 million on development education up to 1987, and that the Government have committed themselves to increase the benefits which projects bring to the developing countries and, in particular, to the poorest sections of the world community.

This last point touches on the problems of how, without infringing the proper independence of the countries to which aid is being given, we can try to ensure that the poor do not get poorer and the rich richer. One way may be, as the noble Lord, Lord Brimelow, said, by assisting in long-term development projects for food production as against simply exporting large quantities of food. Reference has been made to the four African countries, in which, since 1982, there have been pilot projects of this kind. Paragraph 65 of the report indicates that there are some qualifications and hesitations in what is to be said about these, but it is notable that other ACP countries, seeing this, have requested help of a similar kind. That is an important example of the sort of partnership that I have had in mind in what I have been saying.

I should like to end with a word about the importance of the two Lomé Conventions and of these current negotiations for the European Community itself, because partnership is a two-way thing. Many of us who were enthusiastic supporters of Britain's entry into the European Community have been greatly saddened by the way in which the European vision, the thought of what Europe has to give to the world—its potential contribution to world peace, the rule of law in the affairs of nations and above all, the European religious and cultural tradition—has all been submerged (indeed, it has almost vanished from sight) under the perpetual arguments and conflicts over internal economic policies. To be compelled to direct our attention to the Lomé Convention and to the needs of the developing countries will at least, if only for a moment; lift our eyes above these preoccupations to the needs of others and to what Europe ought to be contributing to the world.

As I said, partnership is a two-way thing, and, indeed, our ACP partners may help us to think a little more critically about what we expect as of right to be our standard of living, and perhaps remind us, as in a different way this week does, of the spirit of service and sacrifice called for from all of us at all times in the cause of human dignity and freedom. I hope that Her Majesty's Government will do everything they can to give strong support to the current negotiations and to stress their urgency.

4.24 p.m.

Lord Pitt of Hampstead

My Lords, like other noble Lords, I am very grateful to the noble Lord, Lord Brimelow, for giving us an opportunity to discuss this matter. I also wish to compliment him on his chairmanship of the sub-committee and thank him for permitting me to exercise my right as a Member of this House to attend meetings of the sub-committee. Of course, not being a member of the sub-committee, I am not responsible for the report. However, I welcome it. Much of it is in the spirit in which I would have written such a report, and therefore I welcome it. There are one or two points on which I would not ncessarily go 100 per cent. with the sub-committee, but these will emerge in the course of my remarks.

I was an observer in Brussels when the very first Lomé conference started and there were great hopes as to what would emerge as a consequence. It is fair to say that 10 years later our faith is not as strong as it was, because the results have not been as good as any of us had hoped. At this stage, therefore, we must see how in the course of the negotiations upon the next agreement we can remedy any defects that there may have been and move forward and revive the hopes that we had 10 years ago.

I shall comment on a few of the issues, starting with the volume of financial resources. I do not disagree with the suggestion that the volume of aid should be declared at the end of negotiations. I am not against that. I am, however, very critical of the fact that all the information that I obtain suggests that, while the EEC Governments are insisting that they will not declare what will be the volume of aid until the end of the negotiations, they have nevertheless given a very limiting financial brief to the negotiators. That I would have to criticise. If we were looking at the issues, deciding how we would deal with them and, in the end, provide the resources for dealing with them, then the approach of the EEC Ministers would be right. If, however, they are definitely going to limit funds, they ought to begin by making it clear that the funds are limited and thus, in the course of the negotiations, allow the ACP countries to decide which of the policies they would wish to push. To leave the level of funds to the end, and allow them to negotiate in the expectation of higher funds than they will receive, is quite wrong.

Therefore, I hope that Her Majesty's Government for their part, will make sure that the role they play in this is correct—either that there will be limited funds, and saying so, with the negotiations based on that, or, alternatively, negotiate and, at the end of the day, provide the funds to meet the agreements that have been made. It seems to me that it cannot be done in the way that it is being done.

The last Lomé agreement was in per capita terms 20 per cent. lower than the first one. As I have been saying, what the level will be with this one we do not know. At least, we should try to match the last Lomé agreement. But in fact we ought to be matching the first one, because, if in 1974 we thought that a particular level of funds was necessary in order to attain the objectives that we had in mind, then, unless those objectives have been attained, or are being attained, a reduction in funds is not a logical course. Therefore the objective should be to try to raise the level of contribution to what it would have been had we kept to the level which existed in the first Lomé Convention. My hopes are not very high. Nevertheless, I hope that this point will be borne in mind and that the Government, with this objective in mind, will try to be a little more liberal when making funds available.

We are speaking about the period from 1985 to 1990. A large increase in aid would not be required in 1985–1986 in order to start off the process. The process could be started off by a small increase in 1985–1986, followed by another increase in 1986–1987. and further increases in 1987–1988 and 1988–1989. The funds have to be declared now, but they could be made available on that understanding. Although the economic situation is not very good, I hope that, nevertheless, the appropriate funds will be allocated and that the economic situation will not be allowed to dominate the whole issue.

I am pleased that the Government's attitude to trade is not too bad. As this is a trade and aid agreement, I believe that we should try to do the best we can at both levels. It is perfectly true that for many of the territories it is the trade, rather than the aid, agreement which matters. What is required, therefore, is a trade regime which is capable of stimulating ACP trade. It is in that context that our whole attitude to trade should be examined.

I am glad that the Government are willing to look at the rules of origin and that they support their revision. I had hoped that the Minister would say that the Government support the recommendations contained in the report. It should not be too difficult to do so. The present position is that materials from either ACP or EEC countries are allowed in. We are asking that, in addition, goods should be allowed in from other developing countries, as well as from EFTA countries. EFTA goods already have free entry into the EEC. Therefore, it should not be very difficult for the Government to say that they will back this approach in the negotiations. I hope that, even though the Government do not say so, they will nevertheless back this approach because it would be a way of helping the developing countries.

It is particularly important that we should liberalise the rules of origin for the fishing industry. Many of these countries will soon have a further economic zone which they will wish to exploit, but there is no way in which they will be able to provide the fishing fleet with which to export their fish. It will have to be exported by the fishing fleets of other countries. In effect, therefore, there must be some liberalisation in order to allow such countries to benefit. I hope that all these matters will be borne in mind and that the rules of origin will be liberalised sufficiently to enable these countries to benefit from them.

The STABEX scheme needs to be improved. STABEX is one of the Lomé successes. On the other hand, it is quite clear that the funds made available have been insufficient. I do not see why it should be difficult to use the interest from EDF, which belongs to the ACP states, in order to replace the STABEX funds when they run out. There is always in hand a large amount of interest from EDF which could be used for this purpose. I hope that there will be an examination of this approach in order to meet the shortage of funds for STABEX.

In addition, STABEX needs to be improved by expanding the range of products which are available for it. The noble Lord, Lord Brimelow, mentioned tobacco. I shall mention citrus. I see no reason why citrus products should not be part of the STABEX scheme. Furthermore, the dependence and fluctuation thresholds were intended to limit the funds. I hope that this problem will be looked at very carefully in order to examine whether they are necessary, or at what level they are necessary. For example, is 2 per cent. necessary in the case of the least developed territories? In the case of the better developed territories, is 6.5 per cent. necessary? Perhaps it ought to be 5 per cent., or 4 per cent. This problem ought to be looked at because more territories ought to be able to benefit. STABEX has been criticised by the Court of Auditors. I hope that their criticisms will be borne in mind, in particular their criticism that there are inconsistencies in the way in which it is calculated and administered. As the Court of Auditors have said, there should be greater transparency in calculation and greater predictability in operation. I hope that it will be looked at in that light so that an improvement can be made to the STABEX scheme.

I now turn to SYSMIN. Some degree of compensation is required because, as at present administered, the SYSMIN scheme does not allow for any degree of compensation. In addition, in order to maintain its present export capacity a certain measure of compensation—I am not suggesting that it should be total—should be added to the SYSMIN scheme. I hope that this point will be seriously considered.

Since I come from the Caribbean, I have to say I hope that serious consideration will be given to tourism and to the way in which the EEC can help territories whose main asset is their beauty to benefit from that. A regime to help tourism could be agreed. I hope that serious consideration will be given to this point.

Serious consideration should also be given to shipping. I regret that the sub-committee did not have an opportunity to tackle this serious issue, in terms of how these territories will benefit from any trade preferences which are given to them. Whatever benefit they may gain can be absorbed—just like that—in the cost of shipping goods to Europe. Shipping, therefore, is a question which requires serious consideration.

Regional co-operation is of the utmost importance. It is important to the Southern African Development Conference. It is also important to the Caribbean—to CARICOM. I spoke earlier about such territories exploiting their exclusive economic zones. Many of these territories cannot individually exploit their exclusive economic zones; that will have to be done on a regional basis. Therefore, assistance with regional activities should be given a great deal of support within the agreement.

Also, I believe that the EDF could use the regional financial institutions to better effect. I do not refer only to the distribution of funds but also to the knowledge they have of the areas concerned and to their value as people who can help in assessing the value of a particular project. It seems to me that that is an area in which the present regime is lacking. I believe also that in the management of the fund all told, more could be done not only by using the delegations but also by using local people; not only on the staff of the delegations but having some ACP experts in Brussels. From what I hear, it seems that there is a need for more sensitivity in DG VIII to the actual needs and conditions of the territories with which they are dealing. Therefore, to have some ACP experts in DG VIII would be of value. It may not be in keeping with the constitution to have them there, but if one had them in delegate offices and used them, that would be just as good.

I want to comment now on three or four products of importance to individual territories. In the case of beef, for example, those territories permitted to export beef to Europe were given a quota of 30,000 tonnes before Zimbabwe joined. When Zimbabwe joined, the quota was increased to only 38,000 tonnes. I gather that the territories requested a quota of 44,000 tonnes but that they have been given only 30,000 tonnes. This seems to be absurd. I hope that the information I have received is wrong and that this will not be the way in which the matter is handled.

Bananas are an absolutely essential export commodity for the Windward Islands. The retention of the export structure for bananas is therefore of the utmost importance. Wherever possible, the provisions should be extended, and I hope that will be considered. Sugar has been mentioned before. This is an area of serious conflict. We have the EEC accepting a certain sugar quota from these territories and then dumping its surplus sugar on the world market. As a consequence, the world price of sugar is made very low, so that the territories which depend on sugar exports find themselves in difficulty.

It should not be so difficult for the EEC to find a way of helping those territories. I agree that if they join the international sugar agreement, that will be a first-class development. I know that the British Government have been pushing them to do so and I was glad to hear from the Minister that there seems to be some hope that they will. Even if they do not do so, there are opportunities for them. Sugar can be included in other products, for example. If one asks what percentage of exports a particular commodity represents, I can assure your Lordships that sugar represents more than 6.5 per cent. of the exports of Barbados, because its main export is probably sugar and rum. If there is a fall in the world price of sugar, territories relying on sugar exports are really and truly hit.

It seems to me that something could be done, even if it is only in assessing the price at which that sugar is bought. One could take account of the fact that a volume of sugar was about to be dropped upon the world market, thus forcing prices lower. One could then pay those territories a compensatory price. They would be paid a little more than they receive now. The price that they receive now is analogous to the price paid to European sugar beet producers. The territories could be paid an extra penny or two, to compensate them for the fact that they will lose when there is dumping. The real solution, of course, is not to dump sugar on the world market, and we hope that will be achieved one day. In the meantime, we must find ways of helping the territories which are hit in the way I have described.

Again, I was glad to hear the support from all sides of the House for the rum regime. There is no reason why there should be any problems or any quota. What is more, there is no reason why rum should not move from one EEC territory to another quite freely. One ought to be able to achieve agreements of that kind, and I hope that the British Government will be pressing very hard for such agreements.

Finally, I wish to comment on the policy dialogue which everybody seems to be so happy about. I am not saying that we should not have it, but I am saying that we should be careful how it is done. It must be a dialogue between equals. When all is said and done, the EEC is providing only 9 per cent. of the aid which goes to the territories in question. If all the others providing the remaining 91 per cent. also insist on policy dialogues, it may be found that their attitude is not the same as that of the EEC. Where will the territories stand then? All the territories will have to conform because they are compelled to do so. They do not receive money from the IMF unless they conform with whatever policy is laid down. Supposing the policy suggested was different from that of the IMF, where would the territories stand then? Although a policy dialogue looks to be a sensible idea, one must approach it with caution.

I have spoken for long enough, but I hope that I have given the Minister some points which she will be able to give to her right honourable friend to take to the various meetings. I believe that Britain needs to play a forceful part in the negotiations. When all is said and done, the majority of the ACP countries are Commonwealth countries.

4.48 p.m.

Viscount Rochdale

My Lords, it was a great satisfaction to me to be able to serve on the subcommittee under the very penetrating chairmanship of the noble Lord, Lord Brimelow. I should also like to congratulate him, as other noble Lords have done, on the very skilful way in which he has introduced this debate. This debate follows closely on that introduced by the noble Lord, Lord Hatch of Lusby, on 22nd May, to which reference has also been made. Unfortunately, I was not able to listen to all of that debate but I have read Hansard very carefully and it was quite clear that it emphasised very much the importance of the subject we are now discussing. There was a great deal in that debate which impinges directly on the work of the report.

The report, as I understand it, can be divided under two main headings. The first is the subject of aid—whether in cash or in kind. The second is the subject of trade between the ACP states and Community members. While the relative importance of these will vary with the circumstances of individual recipient countries, I suppose one can safely hope that—except in the case of emergencies such as drought, crop failure or earthquakes—the need for aid as time goes on will come to be regarded as a transitional demand only. Ultimately, as self-sufficiency in food becomes more of a reality—however long that may take, perhaps many decades—the need for aid will gradually diminish and perhaps come to an end. On the other hand, increasing trade must surely be regarded as essentially a continuing, important and necessary way of life for the mutual benefit of the ACP countries and the members of the Commission.

In the short time that I propose to speak I should like, first, to give one or two general impressions that I received from the evidence that we were given, both oral and written. The aid received from the Commission through the EDF is, of course, as the noble Lord, Lord Pitt, mentioned only a moment ago, a relatively small part of the total aid from all world sources. Small as it is—and I say this with great regret—1 doubt whether as a general rule the best use is always made of the limited resources available; or, to put it in other words, I doubt whether those at the receiving end always get the best value for the money allocated to them by the donors.

I hasten to say that I am not seeking to criticise the efforts of the many men and women who work for the Community, whether in Brussels or in the delegations overseas. I imagine that they may well be overworked and probably are, but I get the impression that some of the procedures that have to be used and followed are too cumbersome, and that there is room for simpler procedures, for more flexible administrative arrangements and for more co-ordination between the various sources from which aid comes. There could be more delegation to those on the ground and, as has already been mentioned—and this is one of the most important things—better evaluation and monitoring of what actually is being achieved on the ground in the ACP states.

One realises that if one pursues this a long way it could result either in an unacceptable increase in workload for those who have to carry it out or in higher administrative costs. But I still wonder whether, even if those costs were increased, it might not result in an important net gain at the receiving end. I feel that this is something that should be looked at. In this field I get the impression that the bilateral aid and the aid from the NGOs can often be more effective. For that reason I deprecate—as, indeed, paragraph 103 does—any diversion of funds away from the United Kingdom bilateral aid to Community aid. Similarly, with the pattern of world trade constantly and inevitably changing—with all that that involves, which is a pretty considerable matter—there will be a need, as I see it, for periodic review of arrangements, with perhaps fairly substantial adjustment to them. Therefore I would not favour the successor convention being of unlimited duration. That, too, is referred to in the report.

Having given those general impressions, I now turn to the matter of trade. The importance of trade must vary with the individual ACP countries: with their stage of development: their natural resources, whether mineral or crops; and the stage of development of their human resources, whether in the field or in industry, or in their government institutions. In the long term a worldwide network of trade-flows must be to the advantage of all and must be our constant objective. The problems inherent in the development of this kind of trade are many and varied. They are discussed in the report at some length in paragraphs 37 to 49. In so far as they deal with, shall we say, industrial or processed goods from the ACP countries to the Community—to the old industrial countries—they can at times be painful. Any one of your Lordships who like myself, has been in any way associated in the past with the textile industries will know only too well what that can mean. However, I do not intend to pursue that line of thought, although other noble Lords may wish to do so.

I want to refer, in particular, to paragraph 86, which the noble Lord, Lord Pitt, mentioned and which deals very briefly indeed with shipping. It is the question of the shipping interests of the ACP countries and the countries of the Community. International trade—and that is what we want to promote—demands, as a necessity, efficient, reliable and rapid shipping services to transport the cargoes concerned. Unfortunately, however, the written evidence that the sub-committee received from the General Council of British Shipping on behalf of itself, and also from CAACE, its opposite number in Europe dealing with the European countries' shipping bodies, did not arrive in time for it to be fitted into the programme for the hearing of oral evidence that we were able to carry out. The written memorandum submitted by the General Council of British Shipping is printed in the report on page 313, and I should like to comment a little on it. However, I must emphasise that, as this could not be discussed in any detail by the sub-committee, what I have to say can only be my own views and not necessarily those of the sub-committee.

In the Lomé II convention, at Annexe 19, there is a declaration recognising the need for harmonious development of efficient and reliable shipping services on economically satisfactory terms between the ACP countries and European states. Unfortunately, this declaration carried no obligation with it for signatories to the convention to follow up. So it is that we see a number of ACP countries who were involved in the negotiations, and who were actually signatories to the convention, pursuing a protectionist maritime policy which must not only be a disadvantage to the shipping lines in Europe, including our own, but also, from their point of view, reduce competition and increase costs, and so be of no help at all, whether to exporters or importers, whether in ACP countries or in Europe.

I find this very disturbing. With the emphasis, which we heard very clearly in other evidence that we received, that ACP countries reasonably wish the negotiations to be regarded (and I am using their own words) as between equals, and with the United Nations liner code having come into force last autumn with all its possible teething troubles, it seems only equitable that shipping should feature in the negotiations that are now going on and in some way be built into the new convention on a give-and-take basis. To date, that has not been the practice. Despite, as I understand it, some diplomatic approaches to the offending countries, they seem to have had no effect at all.

The General Council's memorandum urges an undertaking on the part of all signatories not to discriminate against each other's shipping. It makes six specific suggestions, which can be read in the report. I am not going to develop them in detail today, but they can be developed. There is a good deal to be said for each of them. They deal with different undesirable practices, but what they all amount to, in effect, is one form or another of discrimination against each other's shipping lines.

One final point on this matter is: could there not be an assurance that Community aid cargoes will be equitably divided between ships operated by the Community, on the one hand, and ACP lines, on the other—always provided, of course, that they can produce an efficient and competitive service? Too often we have found Community aid cargo having been either reserved by the recipient ACP countries exclusively to its own ships or shipped by state-subsidised Eastern bloc shipping. I cannot imagine that that sort of reservation of aid cargoes is really in the spirit of the original Lomé Therefore, all I hope is that this question of shipping is discussed in the negotiations, and that something will be written into the new convention, just as it has been written into Lomé II.

5.3 p.m.

Lord Seebohm

My Lords, although I am a member of the Select Committee, I was not on Sub-Committee B, so I think it is quite appropriate to say how much I value this report. In fact, I think it is one of the best we have produced in the last few years. I am sure the House would agree that Lord Brimelow deserves much praise, not only for producing this report but for the amount of work that he personally put into it, to which I was a witness.

A great many of the things I was going to say have been dealt with, so my speech is going to be very short, but I have one or two points which have not been raised. The first point that I was very glad has been raised and has been stressed is the fact that the Lomé Convention is not just a matter of aid. In actual figures, I believe the total is about 3 per cent. of volume in proportion to the volume of trade between the EEC and the ACP countries. In my view, there can be no doubt that it is a very valuable instrument for both diplomatic and economic reasons, and it highlights the interdependence of the first and third worlds.

However, I think it could be much improved. This was very well summed up by the Foreign and Commonwealth Office, whose officials told the committee on 26th October that their major worry about the Community Aid Programme was the disproportionate share which goes on food aid and the purposes to which it is put. This has been already been mentioned, but I think it is a very important point. They went on to say that, while they accepted the role of food aid in emergencies, most of the food aid is not to remedy disaster, but goes rather to provide for imports to the recipient countries, thus reducing the incentive to increase domestic production, distorting market forces and consumption habits and delaying necessary reforms. As your Lordships may remember, this was the theme of the debate on world hunger that took place in this House last July. I make this point now because most of the criticisms are administrative criticisms, but I believe that the actual policy of the aid giving also deserves some further examination to decide whether the policies are right.

The other matter that slightly disappointed me was that there seemed to be very little, if any, reference to any priority being given to areas of the greatest devastation caused by lack of water control, desertification, soil erosion and destruction of forests. In 1981 the World Bank pointed out that there is a declining growth rate in agricultural production below the rate of population growth and underlined the urgent need to reverse this process. The ACP countries do not appear to give this problem the very high priority is should command. I think the actual figures for this are rather interesting: in the Community only 10 per cent. of the population are engaged in agriculture, yet it has the highest priority of everything in the Community budget. In Africa, 80 per cent. of the population are engaged in agriculture and up until recently it has received virtually no priority at all. I am sure that this is well appreciated by the Commission and the Council of Ministers, but it is difficult to do much about it unless the ACP countries can be persuaded or convinced that it is agriculture in general and the special problem that I have described that should be given priority.

This brings us once again to the very sensitive area of conditionality. When oral evidence was given by a group of ACP ambassadors, their leader, His Excellency Ambassador Kazunga of Zambia, said in no uncertain terms: Nor are we amenable to the introduction of conditionality in our arrangements which have always been predicated on a basis of complete equality of partnership". How they are to be persuaded to ask for these urgent and fundamental reforms of aid I do not know. However, I believe that the matter is so important that discussions should take place at the highest possible level and that in the last resort these priorities should be insisted on. I further believe that any country that produces a plan that seriously meets these criteria should receive massive financial and technical support to ensure success. I would remind your Lordships that the reinforcement of success is not only a principle of war.

Another worry that I have is the extent to which this country seems to favour increasing multilateral aid through the EDF. I stress this again. The point has been well made that any reduction in bilateral aid could act very seriously against both our interests and the interests of the recipients. On the face of it, it appears that multilateral aid has much to be said for it. It could make a larger impact. It is more acceptable. But against this there is the cumbersome administrative machinery which we see particularly in connection with the Community, where we have so many different directorates engaged in all these policies of aid.

So far as the United Kingdom is concerned, I have no doubt that we have a greater expertise in development matters than any other member of the EEC, if not any other country in the world. I think many of your Lordships may have seen the report of the CDC which appeared a few days ago—a most remarkable document, which I commend to your Lordships' attention. Although I know it is not a private sector enterprise in that sense, but it is run on normal private sector principles, using equity, and so on. it has, in fact, succeeded in the most astonishing manner, and this last year has made a net profit, after all expenses, of £11 million which has been added to its reserves, bringing them up now to £93 million. I believe the earnings ratio is now about I0 per cent. on the capital employed.

It is important when we are talking about aid to think in terms of what is done by such bodies as the CDC. Too often. I believe, questions have been asked in your Lordships' House about the amount of aid in cash terms. If one thinks of the CDC, this is not done in disbursements from the Treasury, although there might have been a few millions involved in topping up over the last few years. By simply giving a guarantee, extended in this House the other day to £750 million, it is possible to provide aid of that amount on a rollover basis. The amount of aid that the CDC has produced over the last ten or 20 years is far greater than that. When we think of the volume of assistance we give to ACP countries, where the CDC largely operates, that has to be taken into consideration.

I wish now to discuss private investment, which brings with it so much essential skill. This aspect, although not described as aid is potentially even more important than all the activities of the EDF. It has often rightly been said—I have perhaps used the argument too often myself but I repeat it without shame—that equity investment is the cheapest and most effective form of finance. It costs nothing until it has earned profit and a sufficient cash flow from which dividends can be paid. It costs nothing if the project fails. Those who have put it up lose their money but there is no debt left in the form of Government loans that have to be repaid out of taxation and carried forward in due course.

If I have any criticism of the Select Committee report, it is that it does not emphasise enough the importance of private investment. I shall be interested to know whether noble Lords such as the noble Lord, Lord Bauer, and the noble Lord, Lord Hams of High Cross, will support what I am about to say on this. Paragraph 83 of the report states that, given the vagueness of the references to this subject in Lomé II, there would be advantage in seeking the inclusion in the successor Convention of 'sensible, effective and clear provisions that would help to create a better climate for Community investment'. We should have said more. I hope that the Commission will be much more specific and negotiate a code of practice that will include, inter alia, these points. First, there must be freedom for firms to employ expatriates with special skills in management, marketing and technical services; and, secondly, there must be freedom to repatriate a reasonable proportion of profits, employee savings and capital that becomes surplus to requirements. Thirdly, those responsible must refrain from imposing penal taxation on profits or employees' salaries—something which I am afraid I have seen only too often in the countries where I have operated. Fourthly, there must be a guarantee not to nationalise or expropriate undertakings without full compensation. Fifthly, there should be no insistence on a minimum 50 per cent. holding in the equity by the ACP country concerned. Sixthly, the code should be applied equally to all existing private sector firms. Lastly, there must be agreement on how dispute settlement procedures are arranged.

If some agreement on these lines proves negotiable, the Community, as a quid pro quo, should relax some of the rules on origin, include additional products in the STABEX scheme and allow more flexibility in the SYSMIN scheme in order to encourage diversification and help to finance new undertakings. There was an agreed statement by the ACP countries on the second Lomé that private investment would be welcome. It would appear to be timely to take them up on this in the hope of making progress on agreement of a really genuine code of practice.

5.14 p.m.

Lord Sainsbury

My Lords. may I first offer my congratulations to the committee and to its chairman for having compiled an excellent and comprehensive report on a subject that noble Lords must admit is both extremely complex and politically sensitive. Statistically, trade with the EEC is vastly more important to the African, Caribbean and Pacific states than Community aid—a fact to which many noble Lords have already referred. In fact, the value of the ACP countries' annual exports to the Community is well over twenty times that of the total aid available from the European Development Fund. Thus, in preparing for the Lomé renegotiations, in my opinion the EEC has paid undue attention to aid policies in relation to the resources that they are willing to make available. Much as these policies may be commendable, I am sure that noble Lords will agree that there are already many organisations, both governmental and non-governmental, better qualified and more experienced than the EEC in developing and administering aid programmes.

It must also be recognised that, however much aid programmes increase domestic production. many of the ACP states will still depend on exports to meet their outstanding debt obligations and to buy essential imports. Therefore, a "trade sector strategy", as suggested by the Overseas Development Institute, may be a better approach for the EEC to adopt than Commissioner Pisani's "food sector strategy". Evidently, such a trade policy cannot be applied in the same form to everybody. In any case, there is a need for a flexible approach, given the great disparities in the nature and stages of development of the ACP states.

In many of these states there is undoubtedly scope for encouraging and improving the first-stage processing of foodstuffs, as well as their standardisation, packaging, storage and marketing. For example, very recently the Ivory Coast has developed techniques for long-term storage of cocoa. If adopted on a commercial scale this would allow producers to increase their control over the flow of cocoa shipments and thus improve their marketing.

Within the ACP, a growing population and the rising expectations of urban dwellers may, given time, lead to increased domestic demand for value-added processed food and drink products. As it is, the Food and Agriculture Organisation has warned that weaknesses in Africa's infrastructure, marketing and processing will limit the extent to which the demand for food can be met from their own rural resources.

As to export markets and especially those in the EEC, there is the question as to whether the ACP states will be able to find and penetrate these. The Coffee Trade Federation emphasises that industrialisation to give value added should not be indulged in unless a full market study reveals a potential profitable market for the end product. And, as many noble Lords may be aware, this applies to products other than coffee.

In the past, ACP exports have shown a poor performance in the EEC markets. Certainly, part of the blame rests with the EEC's imposition of levies on some processed agricultural exports, stiff rules of origin, and other non-tariff barriers. Naturally, the EEC has been anxious to protect its own manufacturing industry. According to the Food and Drink Industries Council, the ACP have supplied to the United Kingdom semi-processed products, such as cocoa butter and paste, which have not caused competitive difficulties. However—and I quote from their evidence: It is a sad reflection on the relative lack of progress under the Lomérelationship that ACP countries are not yet seen as capable of offering serious or damaging competition in finished or semi-processed food and drink products, though their potential for doing so is recognised in one or two sectors. Not all the blame for the ACP states, failure to expand exports of food products to the EEC can be placed on the existence of tariff and non-tariff barriers. There are, of course, certain absurdities in the operation of tariff preferences which must be rectified. The case of the out-of-season strawberries from Kenya has been the most frequently quoted, and evoked considerable indignation. This is because the Kenyans were not granted the same tariff concessions as those given to the Mediterranean countries. However, there has been little mention, if any, of the fact that quality may be as important a determinant as price in the development of a market for fruit. Quality refers not only to good eating characteristics, but also to standardisation of the product, regularity of supply, packaging and presentation. The Mediterranean countries, and particularly Israel, have secured markets in the EEC by adopting a very successful marketing strategy. The ACP states will need some marketing assistance if they are going to produce goods which can compete against those from the Mediterranean.

A plan to improve the marketability of food products and to encourage first-stage processing of agricultural products cannot be divorced from plans to improve agricultural production. A chain is only as strong as its weakest link. This is well illustrated by the corned beef canning industry in Botswana. Supplies of corned beef from Botswana tend to be irregular, not because of any deficiency in the canning operation, but because of great fluctuations in the numbers of cattle. The severe drought of the last few years has reduced the herd considerably. The prevalence of disease, notably foot and mouth, also impedes export trade. Faced with intense competition from Brazil, Botswana, even though benefiting from duty-free entry, can only hope to maintain and expand its corned beef market in Europe by ensuring more regular supplies. This will depend on the success of agricultural development programmes and the animal health operation currently in progress there.

At the other end of the chain, the EEC should offer greater help with port construction, warehousing, and the material handling of exports, as was suggested by the London Commodity Exchange in their submission to the committee. To return to the corned beef canning industry, I understand that production in Kenya is being constrained by lack of cold storage facilities.

Undoubtedly, there is room for investment in the food processing industries of the ACP countries. And there would seem to be a role for the EEC in providing that investment, as the noble Lord, Lord Seebohm, has already pointed out. However, the necessary safeguards will have to be provided in order to attract investors. Perhaps something along the lines of the code of practice suggested by the Food and Drink Industries Council could be embodied in the Lomé Convention.

Even though the Community should place more emphasis on the trade aspects of the Lomé Convention, this by no means implies that aid should be neglected. But a distinction must be made between food aid and disaster relief. As I have said in earlier speeches, food aid is a subject of strong emotive appeal, one which many regard as a humanitarian and high-minded way of getting rid of surpluses. It is not an adequate substitute for food production in those countries which are suffering from food deficiencies.

In my opinion there is no doubt that the Community has been misguided in dumping some of its surpluses in the third world. Leaving aside any moral judgments that one might make, this type of action should be condemned for leading to a severe misuse of resources. For example, the ODI found that the cost to the Community of funding cereal aid to Mauritania was over twice as much as it would have cost Mauritania to buy the cereals from the cheapest source. Surely it is time that the EEC stopped burdening the third world with its own problems.

My Lords, in concentrating on the trade aspects of the Lomé Convention, and particularly on the potential for increasing value-added, one must always be conscious that these will not solve the poverty and hunger problems of the rural populations in the ACP countries. However, it can be hoped that the EEC can contribute to development by operating a suitable trade sector policy alongside, and not at cross-purposes with, appropriate development programmes administered by other organisations.

In conclusion, may I say that the liberalisation of international trade should be part and parcel of any trade policy. The interdependent world's economic problems are being prolonged and aggravated by protectionism based on narrow, national self-interest. Let us hope that, in time, a wider, wiser vision will prevail.

5.31 p.m.

Lord Hatch of Lusby

My Lords, I have never tried to hide my opposition to the entry of Great Britain into the EEC. It is an opposition which is based on premises different from those of most of my fellow opponents on this side of the House and, I should say, different from those of all the opponents of that entry on the other side of the House. It is an opposition based upon my concept of internationalism. I would fully accept that Mrs. Shirley Williams, one of the founders of the SDP, was sincere in her concept of internationalism when she used that as her reason for supporting entry into the EEC. In my view she was wrong, and certainly her views were not shared by the other members of the Gang of Four or by many others who have since joined the SDP.

However, my concept leads me to thank the noble Lord. Lord Brimelow, for giving us this afternoon the opportunity to debate what has always been claimed by internationalists to be the brightest jewel in the EEC crown that was offered to us by them. I have always conceived—indeed, more than that, I have discovered by analysis—that the EEC is essentially an exploitive institution. It has been subsidised, and is being subsidised, by a number of members of the third world. That was my belief at the time of the referendum in 1975, and in my view it is a belief which has been borne out by experience. We have seen transfers of resources from the third world countries to Europe. We have seen the lesser developed countries maintained in their position as the suppliers of raw materials. We have seen the inhibitions which have been placed on them in regard to any development of the industrial and manufacturing processes within them.

Now we are seeing something further—something which is, to any rational mind, incredible. We are now seeing the transfer of capital from the third world to the EEC. We are seeing, through the payment of debt interest, greater sums being paid from third world countries to Europe than the whole total of overseas aid and investment going from Europe into those countries. In fact, as I understand it, in the last year the net loss of third world countries vis-á-vis the EEC countries was in the region of 21 billion dollars; I repeat that that was the net loss.

I well remember when we were debating and discussing the question of entry of the United Kingdom into the EEC, how at that time the Ivory Coast was given as the great economic success story of Africa. But at that time—the best time for both the EEC and the Ivory Coast—twice as much capital was leaving the Ivory Coast every year for France as was being either invested, or given, as aid to the Ivory Coast. So I claim that the case that I am making that the EEC has been subsidised, and is being subsidised, by the peoples of the third world is a valid one. Of course, since then we have also seen a growing balance of trade deficit between the ACP countries—the African, Caribbean and Pacific countries—and the EEC.

Two weeks ago this afternoon the House was kind enough to grant me the privilege of introducing a Motion for debate on trade between this country and the developing countries. I very much appreciated the participation of those noble Lords who spoke and the Minister who replied. I do not want to repeat the arguments put forward in that debate, with one exception. However, I am a little surprised that the noble Lord, Lord Brimelow, in introducing the debate on this report, told us that the terms of reference did not allow for a consideration of what I would have thought was essential; namely, recognition of the context within which the negotiations for a new Lomé convention, or the continuation of the Lomé agreement, are taking place.

If we are going to consider those negotiations and if we are going to ask Her Majesty's Government what is their attitude to those negotiations, surely it is essential—and surely it was essential for the Committee—to consider the context in which we have to analyse the arguments within the range of those negotiations. I would simply refer to that last debate in the terms of that context.

Is it not the case that the third world is being prevented from developing and from increasing its purchasing power by the growing walls of protectionism, by the rising rates of interest, and by the operation of the International Monetary Fund whenever any of these countries is in difficulties in its balance of payments? Is it not the case that the squeeze on production within these countries, through those means, is not only depressing their purchasing power, but at the same time distorting their economies? Interest rates alone are forcing such countries to turn increasingly to cash crops and to neglect the agriculture which supplies their own people. They are forcing countries to take desperate measures in order to export at all costs, even when prices are below the cost of production. I have so often referred here to the case of copper and Zambia. They are forced to export in order to pay for the interest charges on their foreign debts. In the case of Zambia, last year 65 per cent. of their exports had to be paid out in interest on their foreign debts. So only 35 per cent. was left to buy the goods of the industrialised world, including those of this country.

Therefore, I cannot leave the debate of two weeks ago without recognising what the effect will be on the people of Bathgate; they will say that 40 per cent. of the people of West Lothian will be unemployed, and will have no chance and no prospect whatever of being employed again, with all that that means to themselves, their families and their children. So, on the one hand we are having unemployment here in the industrialised world and, on the other hand, in the third world hunger, unemployment and dangerously bad health continue to increase through lack of resources.

Lomé was intended to try to bridge that gap. Lomé was intended to deal with these issues. I should have thought that that is why this context was crucial to any consideration of the negotiations for a future Lomé. But, as my noble friend Lord Pitt pointed out, Lomé has not fulfilled the expectations of any of its erstwhile supporters. Mr. Ramphal, the Secretary-General of the Commonwealth, who himself had taken part in the negotiations for the first Lomé Convention, now agrees that: the Convention's cumulative impact on the economic development of the ACP has been remarkably small". It was Jean-Pierre Cot, the former French Development Minister, who noted that certain parts of Africa, which putatively enjoy the benefits of Anglo relationships with Europe, were actually undeveloping, and he concluded in his article that: we have to admit that the Lomé Convention has failed or, to be more precise, that the Lomé Convention is unsufficient to guarantee the development of the ACP countries". Finally, the chairman of the APC itself, Archibald Mogwe of Botswana, summed up this whole position at the beginning of these negotiations in these words: Our situation threatens to be a permanent one. There are no signs of a respite. Lomé has not succeeded. For despite its preferential nature, not one of the 63 ACP states… has been able to emerge as a newly industrialising or semi-industrial country". So I am by no means alone in saying that this bright jewel of Lomé has certainly not justified either our membership of the EEC or the claims that the EEC represents an international policy for the United Kingdom.

As has already been pointed out, most of the goods that are exported from ACP countries to the EEC are duty free, anyway; it is reckoned that about 75 per cent. of them are duty free because they do not compete with European goods. But where there is control, that control is exercised particularly over agricultural goods—foodstuffs—which compete with European production. Yet we should observe the trend as well as the absolute figures, and the trend shows that only 4 per cent. of ACP exports to Europe are manufactures, underlining the issues which Mr. Mogwe had pointed out, that still the ACP countries are basically the providers of the raw materials to the European continent and that still they are unable to develop their manufacturing industry, which is essential for development and growth.

Let us look at the recent trend as regards the relationship between the ACP countries and the EEC. In 1977 the ACP share of imports into EEC countries was 7.3 per cent. In 1982—and these are the latest figures which I have been able to obtain—that had fallen from 7.3 per cent. to 5.5 per cent. It was a very substantial fall.

I want to say a few brief words on the question of aid. I should like to ask the noble Baroness who is to wind up for the Government to answer a specific question on this. If we look at the operation of the European Development Fund, we might ask: "What on earth has happened to the money? Where is that money?" According to my information, at the end of 1981 only a half of the Lomé I funds, which commenced in 1975, had been disbursed. What happened to the other half? At the end of 1982, when we were into Lomé II, which started in 1980, only 10 per cent. of those aid funds had been committed. I should like to ask the noble Baroness what has happened to the rest.

I believe it is estimated that by next year the backlog on the committal of those aid funds will be as much as 3,000 million European currency units or in American terminology 3 billion. These funds are not index-linked so they are losing value all the time. While they stay in whatever bank they are invested in, inflation reduces their value. It may seem strange to beg the Government to do something contradictory to the French Socialist government representative in Brussels, Mr. Edgard Pisani, but I would beg the Government to ignore his claim for the communitisation of aid funds, because I believe that even under this Government the bilateral disbursal of aid funds is much more efficient, it is less bureaucratic-ridden, it is not delayed so much, and it is better allocated than through the European Development Fund.

My argument is well borne out by the European fund's own court of auditors, which has publicly upbraided the Commission for the slow spending and for often financing projects inside the ACP for questionable development value. I would suggest that that is conclusive evidence that the EDF is in a very bad way, and I should like the noble Baroness to tell us what Her Majesty's Government's attitude is to the EDF, what they are doing to try to end what is a scandal in not just the misuse but the lack of use of funds which have been provided for aid to the ACP countries.

My noble friend Lord Pitt has enabled me to leave aside the consideration that I wanted to give to STABEX, with this one exception, that again on STABEX there is some bureaucratic delay. How was it that in 1981 STABEX provided only for 50 per cent. of the legitimate claims made, and how was it that in the following year, 1982, that figure fell from 50 per cent. to 40 per cent.?

I would agree with my noble friend Lord Pitt and other noble Lords who have said that STABEX plus SYSMIN are probably the two most promising, most constructive institutions within the framework of the Lomé Convention, provided that they have increased finance—perhaps at the expense of the European Development Fund—and that they are able to increase the commodities that they can cover (whereas today sugar beet, citrus fruits and tobacco are all excluded), and that the SYSMIN combination with STABEX is extended to the mineral producers who are among those suffering the greatest hardship for the collapse of commodity prices.

In these negotiations let us transfer what is being spent, or a great deal of what is being spent, on food aid. Again I agree with so many noble Lords that this should be emergency aid only and should not be undermining the farmers themselves. It should be used only in an emergency, or drought, or political upheaval, and so on. It should certainly not be allowed, as it is today, to be a dumping medium for the common agricultural policy which, as my noble friend Lord Pitt pointed out. in the case of sugar and indeed of other agricultural products is a world-wide scandal. Again what is the policy of Her Majesty's Government towards agriculture in this country within the CAP in so far as it affects the ACP countries and their necessity to continue to produce agricultural products?—because at the moment that food aid programme, I understand, is four times as large in monetary terms as STABEX itself.

Finally, may I ask the noble Baroness another question? Is it not the case that this report demonstrates once again the much greater emphasis that needs to be put on trade between this country and the developing world than upon the aid issue? If that is so, is there not a crying need, as there has been not just with this Government but with every Government since the war, for much greater co-ordination in the economic relations between this country and the third world? Should there not be co-ordinated policy through the Foreign and Commonwealth Office, through the Treasury, through the Department of Trade and Industry, and, as I have suggested before, including also the Ministry of Education referred to so clearly by the right reverend Prelate the Bishop of Chichester?

There must be co-ordination of Government policy if the Government are going to stand up to that industrial lobby, to the large farmers, to the landowners who today are benefiting from the wasteful CAP policy raising food prices in this country and starving farmers and their families in the third world countries. The European Community will have to be radically reformed if it is to meet this major challenge of our age. It is the challenge to the wealthy, comfortable Europeans which will determine the character of the world in which our children will live, and whether they are allowed to live there at all.

5.54 p.m.

Lord Harris of High Cross

My Lords, I am afraid that I must start with an apology: that owing to the record length of many contributions—if I may say so, particularly from the Labour Benches—I shall almost certainly have to leave before the closing speeches, which I shall have to content myself with reading in Hansard. As a penance, I shall speak even more briefly than usual. My anxiety from the Cross-Benches is that the formidable expertise represented by the members of the European Communities Committee and other speakers in this debate may be in danger of being dissipated in coded exchanges about such mysteries as STABEX, SYSMIN, derogations, the distinction between "dialogues on policies" and "discussions of strategies", and the great issue of whether or not we should go for "budgetisation". The chief exception so far has been my noble friend Lord Seebohm, with whom I am in close agreement.

I found it most difficult to follow the noble Lord, Lord Hatch, who has now persuaded himself that countries that pay interest, or repay their debts, are subsidising their creditors. As my noble friend Lord Seebohm explained, private equity capital has the great advantage for the recipients that it imposes no burden since there is no charge against a project unless the investment yields a surplus above its cost. I persist in believing that the central issue buried in this report is whether the continuation of decades of foreign aid to centrally mismanaged economies is really helping the millions of people who have most claim on our charity and whose lot remains wretched.

The committee calls for higher priority for aid in paragraph 102, and yet goes on in paragraph 108 to call for more thorough evaluation of past results. This plainly puts the cart well ahead of the horse. It seems to me that the never-ending demand by recipients for ever more aid suggests that past subsidies of this kind have not done the trick. The best up-to-date evidence of failure is provided in the recently published study entitled The Economics of West Africa, by Douglas Rimmer of Birmingham, whom I regard as one of the most authoritative and dispassionate students of the theory and practice of development in a dozen of the 64 African, Caribbean, and Pacific states. He shows in quite short compass how countries as well-endowed as Ghana, Nigeria, and to a lesser extent even the Ivory Coast, have misdirected their own resources, along with foreign aid, by neglecting the fundamental principle of comparative advantage.

No independent country is obliged to give first priority to economic development. But what if instead they pursue quite different goals hostile to the long-run material prosperity of their people? The noble Baroness, Lady Young, illustrated ways in which aid recipients damage their own efficiency and progress by perverse policies. Among the many more baneful examples given by Mr. Rimmer are the following: forced industrialisation; pervasive price control; self-sufficiency; import substitution; political centralism; equality; the persecution of minorities: the politicisation of economic life; utopian resettlement of rural populations; punitive taxation; statutory monopolies: nationalisation: and. most ugly of all. "indigenisation". No wonder these countries are not exactly flourishing.

Perhaps the strongest ground for offering them subsidies is to assuage the guilt of the old colonial administrators and the new tribe of development economists who taught African rulers that central planning and indiscriminate investment would lead to the take-off into self-sustained growth that would make aid redundant. But there must surely be some limit to the continuation of this reverse Danegeld.

Taught by that other international authority, the noble Lord, Lord Bauer, I no longer call for an immediate end to these damaging and distortionary subsidies. Instead I start by following another disillusioned observer Gunnar Myrdal, formerly the Swedish champion of aid, who suggested two or three years ago that aid should in future be concentrated on emergency relief only. For the rest it should be phased out—this is my view and not Gunnar Myrdal's over five years whilst we redirect our efforts to increasing mutually beneficial trade. Thus we should remove tariffs and other barriers, including bureaucratic customs formalities exposed in the impressive evidence of Mr. John Raven, reproduced on pages 298 to 304 in the report before us.

We should, I think, take on the intellectual and professional interest groups that have battened on foreign aid in both donor and recipient countries. I believe it would simplify and purify our dealings if such aid as continues during the transitional period were confined to bilateral, untied cash transfers. Future gifts should be made conditional upon the adoption by recipient governments of policies consistent with the long-run economic welfare of their own people. If it is said that this would be interfering with their domestic affairs, we must frankly confess that we have already been interfering, with rather disastrous results. Indeed, our past indulgence in aid has led them sadly astray. We have encouraged their amateur planners to persist with misguided policies which anyway our own academics taught them and which have made them abjectly dependent on indefinite continuation of subventions.

In conclusion, if asked what criterion we should henceforth apply in giving aid, I would suggest simply that favoured governments must recreate the conditions of safety and security for life and property essential to encourage commercial development by harnessing domestic, no less than international, enterprise and investment.

I urge Her Majesty's Government to give thought to the code of practice to attract foreign private investment as outlined by my noble friend Lord Seebohm from his unrivalled experience in fruitful, successful commercial banking throughout the Commonwealth. By way of encouragement and inspiration to the frustrated non-recipients of aid in future, I would offer the shining example of Hong Kong and other Asian oases. They show what people can achieve for themselves when governments are content to establish the stable environment so notably lacking in much of the third world.

6.3 p.m.

Lord Kissin

My Lords, I also had the privilege to serve on the committee that was so ably guided by the noble Lord, Lord Brimelow, and which has skilfully brought us face to face with the problems that the negotiators for the next Lomé Convention have to analyse. In today's climate the international community is not terribly concerned with Lomé III, but for the last eight years the European Community, with the African, Caribbean and Pacific countries, has conducted within the framework of the first and second Lomé Conventions a fruitful trade and aid experience which we all know has not, however, achieved the results that were hoped for.

The committee's work was concerned with the question whether the previous Lomé Conventions represented a statement of principle adopted by the two parties to the agreement, or whether it was intended to create an equal partnership. The committee inquired what kind of partnership had been established and what kind of partnership the parties were aiming for now. I think it became clear during the committee's deliberations that the rhetoric of the term "co-operation and development" has far outstripped the actual achievements. The fact is that in the last few years the ACP countries have been running a considerable trade deficit, and the concept of a balanced economic relationship has not been achieved.

The statement of general principles does not provide the dynamics for economic development. In my view, aid and trade are the main factors of the Lomé Convention, but however hopeful we are and whatever wishful thinking we express in this House, I do not believe that the governments of the European Community will increase substantially the cash element of the aid programme. The new Lomé Convention must be negotiated within the terms of a better trade relationship. The real question, therefore, is: how can trade be so rationalised that the parties to the convention become real and equal partners? This was the original aim of Lomé

The new agreement must create guidelines for free enterprise and trade, both in the Community and in the developing countries, and it must be established in a way that the parties can operate in terms advantageous to both. I fear that, contrary to what many speakers have said in this House, as a first step the European Community is required to attempt to eliminate legislation within the Community which perpetuates the vicious circle of denying ACP products access to European markets. Given the many agreements within Lomé there is insufficient realisation that consumers rather than governments provide the operating basis for economic development. Agreements about particular products and commodities can be of value only if they make it possible for private initiative and private enterprise to derive an advantage from trade with each other.

One of the main questions that the committee had to consider was how to improve trade between the Community and ACP countries, and whether it is realistic to think in terms of improvement when the Community members themselves find considerable problems in maintaining a liberal trade regime within the European Community. The experience of Lomé I and II has shown that there are limits to how far negotiations with ACP countries can in reality lead to liberalised trade before they are confronted with the immovable obstacle created by some of the Community's internal problems and policies.

The common agricultural policy, which is constantly debated in the Community, is, in its present form, working directly against the interests of the ACP countries and developing countries. Although the Community allows duty-free imports of tropical commodities that cannot be grown in Europe, such as coffee and cocoa, it restricts access to those products when it can produce them itself. It appears that ACP producers face restrictions even when, as for instance in the case of beef, Community producers cannot fulfil the requirements of the European food processing industry. Somehow, this does not appear to make sense. It must be in both parties' interests to create jobs—and how many could be created, both in Europe and in the developing countries, if the processing industry were allowed as the noble Lord, Lord Sainsbury, has said, to buy its raw materials at competitive prices from efficient low-cost producers wherever they are located?

Although the sugar protocol was not part of the consideration of the committee, I want to make a brief reference in view of the letter that the noble Earl, Lord Jellicoe, and the noble Lord, Lord Campbell of Eskan, have written today in The Times. I am entirely in sympathy with the contents of the letter, and the sugar situation is in a way significant as an indication of the problem that arises between the interests of the European Community and the ACP countries.

Many ACP countries depend on the export of sugar for their livelihood, but since our accession to the Common Market in 1974 the supply position of sugar has totally changed. Just as an illustration, I would mention that when we entered the Common Market there was a boom in the sugar price and the cost of white sugar was 60 cents per pound. Since then the Community has increased its own production of sugar by 60 per cent. from 8.5 million tons to about 14 million tons a year and during the same period consumption has dropped from 10.7 million tons to 9.5 million tons. The price today for white sugar is 6 cents per pound. The Community had therefore exported the surplus, irrespective of the cost which often exceeds by several times the intrinsic value of the commodity involved.

Consumers in the Community are disadvantaged by paying high prices for commodities produced in Europe and by having to subsidise exports. I consider that the aid could be given by the Community if it were to stop subsidised exports of cheap, European-produced commodities, knowing that ACP producers suffer from restrictions placed on their exports.

I am making this point in order to give an example of the unresolved problems which exist in the philosophy of the Community vis-á-vis the developing countries. In fairness, the Community has started to face up to some of the problems created by the common agricultural policy, but there is still a reluctance to make fundamental and vital reforms. The reforms at present contemplated do not appear to me to solve the problems that we face.

It is understandable that the Commission wishes to negotiate long-term contracts to supply agricultural products in surplus in the Community, but is this the way to create an equitable partnership between the ACP countries and the Community? It may be an expedient way to dispose of food mountains, but it simply delays the day when the Community will have to tackle the underlying problem of over-production which prevents the ACP countries from developing their own food self-sufficiency.

I am not an expert in many of the commodities covered in the Lomé Agreement, but from evidence before the committee I have learned that import restrictions, such as the multi-fibre arrangement, prevent ACP countries from expanding and diversifying their industries. Attention was drawn to the case of Mauritius, whose export of textiles to Britain in the 1970s led to these countries imposing what euphemistically became know as "[...]1untary restraint agreements". The negative consequences of such agreements are now widely felt. They affect not only those countries involved, but also those countries who would expand their own industries further if they had access to the European market.

The same considerations apply to the rules of origin for materials used by ACP industries. Noble Lords have already referred to this, and the noble Lord, Lord Harris of High Cross, has specially mentioned the term "derogation", and so I shall not bore the House by giving further examples. But the restrictions that exist disrupt economic developments. The Community is inclined to make short-term concessions, but there are such constant domestic political pressures for protectionism within the community member states, which make long-term agreements very difficult, that I fear that there are no easy solutions.

Member states feel differently about the effects of low-cost imports of their own industries. But if the aspirations of Lomé are to be realised, then it is essential to develop a more coherent Community strategy to trade. The Community has to analyse and pinpoint those industrial sectors which are of importance to ACP countries and which do not increase the pressure for protectionist demands within Europe. This will be an important test of the Commission's "dialogue on policies". Member states should be prepared to give the Commission some flexibility in how it_conducts these negotiations.

Tribute has been paid to the existence of SYSMIN and STABEX. They have been of great importance, but the committee has also learned of the bureaucracy that has interfered with the work and with the success of these institutions. In addition—and this I consider important—money has often been invested (and we all know of such instances) in large prestige. capital projects which produce few benefits for the majority of the population, and aid is often given to improve and seal political relationships, rather than to promote economic growth.

Personally, I welcome the new initiative from the Community's commissioner, Mr. Pisani. But putting emphasis on aid for rural development and, in the commissioner's own words, "food sector strategies", the Community has begun to realise how ill-utilised much development aid has been in often fragile ACP economies. One must watch the experimental schemes in Kenya and other countries, with much interest.

I do not underestimate that aid is an important component of the aims of the Lomé relationship, but real aid can come only from better trading facilities. Attention must be focused on the role of the private sector in promoting development in ACP countries.

I would suggest that it is important to give consideration to some ways of creating incentives for private companies to commit resources to countries which have, by our standards, been politically unstable and hostile to foreign investors. The noble Lord, Lord Seebohm, has given us many examples of what is required.

ACP countries must play their part. If they wish to benefit from the expertise and capital that a foreign company can bring, they must give clear signs to the Community that they are prepared to allow them to operate freely. Developing countries ask us in the Community to be both consistent and flexible. We have the right to ask the same of them.

In times of international debt problems there are open to us solutions which ought to be investigated by introducing an insurance mechanism as a positive aid. Companies within the European Community require the security of some realistic insurance scheme that protects their investments overseas. Some discussion on this is urgently needed.

The Lomé principles are now an integral part of Europe's political and economic relations with the third world, but the need is for better definition and therefore for better performance. This has become clear from the committee's report. If we do not succeed in this, we shall foster resentment within the developing world.

One must fully realise that this will involve difficult adjustments within the Community. The current negotiations, however, afford an opportunity to reconsider the protectionist policies and trade barriers which, in the long run, harm both Europe and the developing countries.

The signatories to the Lomé Convention are committed, in the words of the convention, to, reinforce on the basis of complete equality between partners, and in their mutual interest, close and continuing co-operation in the spirit of international solidarity". If we wish to adhere to this, we must accept the responsibility for changing some of our policies within the Community in a practical attempt to create an equal partnership.

We have all had sufficient experience over the last eight years to know the way to give real aid to the extent of our ability to assist. This assistance must come, I suggest, through mutual trade. Undoubtedly from this both sides have a great deal to gain.

6.20 p.m.

Lord Bauer

My Lords, I too most warmly thank the sub-committee for its lucid, concise and wide-ranging report. The main issues fall into three broad categories: first, the general case for official aid; secondly, bilateral versus multilateral aid; and, thirdly, the complexities of Lomé. The report takes for granted the case for official aid. I disagree with this axiomatic approach. But, following Carlyle's advice, I accept the universe.

In the context of the European Development Fund, the sub-committee shares the Government's repeated preference for bilateral aid. Is it not, therefore, baffling that the share of multilateral aid in United Kingdom aid, already about 40 per cent. will soon rise to 50 per cent? I wish the committee had examined this issue. Donors have no effective control over multilateral aid. In FAO and UNESCO the impotence of the major donors is familiar. During the Falklands War, the United Kingdom delegation unsuccessfully protested to the United Nations Development Programme against its aid to Argentina. Under bilateral aid, support for barbarous policies can at times be checked more effectively, as we saw when our aid to President Amin stopped, while EEC aid continued. Is not such unconditional aid objectionable on moral, no less than on political, grounds? By severing contact between donors and recipients, multilateral aid is also less efficient.

Nor is multilateral aid disinterested and objective simply by being freed from domestic pressures. The staffs of international aid organisations have their own political and professional interests. Their constituents are most third world rulers whom the officials understandably wish to please, besides wishing to enlarge their number, resources and power. Aid goes to governments and not to the people at large, which may help to explain why small countries tend to get more aid per head than large ones—a given volume of aid supports more constituents. Of course, where bilateral aid is tied, it is in part an export subsidy. Hence my preference for untied grants, clearly distinguishable from domestic subsidies.

These considerations are reinforced by the subcommittee's unduly mild reservations about the EDF. The evaluation procedure is altogether inadequate. Last year, I visited a major EDF-supported tea project in the warring region of southern Sudan. The project was managed by expatriates. It was well behind schedule and the large budget already overspent. It will not yield a return in the foreseeable future, if ever. Any output will compete with tea production in neighbouring Kenya. I was accompanied by a Western ambassador, who was critical both of the concept and of the conduct of the project, notably the lack of effective EDF control, but thought that that criticism would have no effect except to arouse resentment against his country. I strongly support the committee's suggestion that EDF resources should not be expanded.

The much-applauded STABEX scheme compensates for a decline in exchange earnings from agricultural exports. This instrument confuses the smoothing of fluctuations in exchange earnings with raising them. The smoothing of income fluctuations is ambiguous for such reasons as the distinction between movements of real and money prices and incomes and the changing composition of the body of producers, but in any case it is distinct from raising exchange earnings. How could the huge African and Asian-owned cocoa and rubber industries have developed before the war if fluctuations in export earnings were so damaging? What about the damage done by Government policies, including special taxation of exports? Why should governments in prosperous times not set aside contingency reserves against adversity? Are we not in danger of displaying contempt for third world people whose ability to take a long view is shown by their readiness to plant tree crops which take many years before yielding an income?

Furthermore, the error of imagining that the terms of trade move systematically against the third world is proved by their large improvement between the early 1960s and the late 1970s both for the third world as a whole and for major ACP countries. A more revealing truth is that since the war producer prices in many ACP countries have been set, not by the market but by governments, well below world market levels for various political reasons. Schemes such as STABEX divert attention and money from the more pressing needs of near-subsistence producers who live in extreme poverty and insecurity. Indeed, in many ACP countries, emergence from these conditions is obstructed and misery aggravated by government policies, including underpayment of producers, persecution of traders, suppression of trade, and the neglect both of public security and of the infrastructure, especially roads. Government policies are often behind famine in Africa—not that governments cause drought, but they certainly aggravate its consequences.

My Lords, the ACP is a collection of highly diverse countries. The Lomé arrangements, notably STABEX and the EDF, are complex, cumbersome, even obscure. They also set up various tensions and conflicts, notably between donors and recipients. We should work towards a running down of these arrangements, which do little for the poorest. They should gradually be replaced by freer trade, lubricated by bilateral aid, preferably in the form of terminable cash grants to governments of poor countries which genuinely try to improve the lot of the needy.

6.27 p.m.

Lord Saint Brides

My Lords, the sub-committee's report is a shrewd and thorough one and its authors have served the House well. Britain was a latecomer to the EEC and its aid arrangements. In consequence, it has been an uphill struggle to make our influence felt in working a system which in its original form—that is to say, during the Yaoundé epoch—was devised without us. We have done well to secure its extension to so many Anglophone territories but even so it still does not cover three very large Anglophone ex-colonies of Britain, India, Pakistan and Bangladesh, whereas it does cover virtually all the French, Dutch, Belgian and ex-Italian colonies. It follows that Britain needs to be especially careful to ensure that the direction of our global aid flows is not for this reason distorted.

We must also do our utmost to ensure that our own especially British blend of pragmatic concern for particulars and intuitive grasp of how best to cope with the feelings and predilections of local people (gained by reason of our long and close national experience in dealing with the third world) is given its chance to operate in the EEC context as elsewhere. At governmental level, this long and close national experience used to centre in the Colonial Office, the India Office and the British overseas services that they controlled and maintained and, in the past, generations of young Britons found a worthy, personal goal in service to the Empire and people. Their work finds its counterpart today in what that knowledgable and highly competent body of men and women, the ODA, is trying in very different circumstances to achieve through the judicious application of British aid.

The grant of independence to virtually all our former territories has not meant that we as a country have lost interest in their welfare. On the contrary, in Britain the level of informed concern about them remains remarkably high. Incidentally, this is in sharp contrast with the state of public opinion in the United States, where, as I know from recent personal experience. the level of interest in, and understanding of, third world countries is, to say the least, a good deal lower than it is here.

The Minister for Overseas Development told the sub-committee that over the next year or two Britain would focus its contribution to Lomé aid on making that aid more effective. As he said, it is not enough to offer resources; we need to see results. But, in order to get results, it is necessary to recognise, take into account, and adapt to, the individual circumstances of each recipient country—each ACP country in this case—and sometimes of individual regions within that country. If so much was achieved—and a great deal was achieved—by Britain during the colonial period, although it is unfashionable to say so, it was because that kind of detailed thought and study was given continuously, both on the spot and here in London, to the special problems of each individual territory.

As the noble Lord, Lord Brimelow, said, very wisely I thought, during the proceedings of the subcommittee: If good is to be done it has to be done in minute particulars". The trouble about multilateral aid-giving, as several noble Lords have already said during this debate, by international organisations to an artificially assembled group of highly heterogeneous clients—and what could be more artificial or more heterogeneous than the ACP countries—is that too often procedures are devised and policy decisions taken as if the recipient countries were a much more homogeneous group than they actually are. Matters are not made easier by the recipient countries themselves, who, believing that their strength resides in their numbers, choose to play down their differences in order to maintain the common front by which alone they believe they can obtain the concessions which they seek.

On the basis of my own fairly prolonged and intimate experience of aid administration, though admittedly it was in the South Asian sub-continent and not in any of the ACP countries, I believe unrepentently that, as several noble Lords have already said, bilaterally given aid is generally more effectively directed and more effectively deployed aid. Our own bilateral record of success—this is a point on which I was happy to find myself in agreement for once with the noble Lord, Lord Hatch of Lusby—in providing the appropriate type of aid in timely disbursement, in the efficient organisation of technical assistance, and in the evaluation of projects, is at all points superior to that of EDF or Lomé aid so far. While recognising that multilateral aid-giving, not least in the EEC context, has come to stay, I wholeheartedly wish the Minister success in his arduous task of seeing that British standards of efficiency in aid-giving—to which the noble Lord, Lord Seebohm, made eloquent reference—are applied in the EEC multilateral context, too.

Of course, I recognise the problem which confronts rich countries, or relatively rich ones, in this post-colonial area when transferring resources to fiercely independent poor ones. In the process of doing so we the rich, or relatively rich, countries are assuming a measure of involvement with the internal economic and social affairs of the recipient countries, but without any longer possessing, as we once did, the power to ensure that our intentions in providing the resources are in fact met.

We in Britain cannot change this state of affairs. We cannot put back the clock and nor would the great majority of us do so even if we could. But this situation creates a certain inescapable tension with the recipient countries which, while anxious to receive as much aid as they can get, are anxious to get it in ways which set the least possible limits on their freedom to spend it as they wish. If their chosen priorities are not those of the aid donors, so much the worse for the aid donors. We shall certainly have a tussle over the improvement of food production within some African countries where, as the Sussex academics' Institute of Development Studies told the sub-committee, The role of agriculture"— they refer to these countries— as a milch cow to support a dubiously productive urban élite—produces price distortions that harm efficiency and equity alike". The noble Lord, Lord Bauer, also made telling reference to this point. As I believe Commissioner Pisani himself has said, to "parachute"—that is the expression I am told he used—surplus EEC food supplies into some African countries could well have the unintended effect of depressing indigenous agricultural enterprise still further. I was much encouraged to hear the noble Baroness, Lady Young, speak to your Lordships on similar lines, and the noble Lord, Lord Seebohm, also referred to it in his speech.

In conclusion, I wonder whether we ought not, if we can, to channel a good deal more EDF aid through the NGO's such as Oxfam with its flexibility and its modest low-profile and low-key approach. Oxfam and the other similar organisations in this country, in the Federal Republic of Germany and in Holland have a remarkable record of constructive achievement at the grass roots precisely because they are nongovernmental and non-bureaucratic and cannot plausibly be accused of neo-colonialism. The World Bank has stressed the need to reverse the decline in food production in Africa by reforming local policies and concentrating on smallholder production. The Overseas Development Institute suggested in its evidence to the committee that where small projects are appropriate the EEC should sub-contract more to grass-roots organisations such as the voluntary agencies. If we wait for the recipient countries themselves to suggest this to us we may have to wait a very long time by reason of their natural desire to have full control over the spending of all aid funds; but we need to balance regard for this desire of theirs against our own strong desire to see Lomé aid disbursed more speedily and effectively. I believe that this is an area in which our concern for effectiveness should come first.

6.38 p.m.

Lord Rhodes

My Lords, the noble Lord, Lord Brimelow, has been a delightful chairman of our subcommittee. He has not spared himself or us in the compilation of this report. If one is ideologically against the Common Market Lomé is not a good thing, but if one is committed to the Common Market, as I believe we are for all time—we ought to give it a chance because it takes a long time for human behaviour to change—Lomé is a good thing. What we have been trying to do while we have been discussing it upstairs is to improve it.

I want to go on to one or two practical things. There we are upstairs studying Lomé week after week, and then we get a big report like this. And I question what happens to it. I shall tell your Lordships what has happened to it to date. Manchester's Stationery Office has eight copies; Edinburgh's Stationery Office has 10; Bristol, two; Birmingham, one; Belfast, two; Holborn bookshop 100; the House of Commons, 30; the Printed Paper Office, House of Lords, 100; and Mr. Phelps (our clerk), 200. That makes a total of 453 copies,

We have not sent any to Members of the European Parliament—perhaps we do not like them. But, on the other hand, neither have we sent any copies of this report to anybody on the continent. We do not know, for instance, whether there are on the continent comparable organisations considering this kind of question in this kind of way. But I think it would be a good thing if these reports, which are churned out upstairs by first-class people, had a record placed on them every six months, say, to show where they have gone or to show whether we have wasted our time by leaving a thousand of them in some warehouse or other.

A thread runs through this report: it is the need for the evaluation of the aid given under Lomé II and how to use the lessons learned to create a better Lomé III. It is perfectly right and proper that donor countries in Europe should query whether or not they are getting value for money. We have found that the resources devoted by the Commission to evaluation are smaller than those of any other comparable source, such as United Kingdom bilateral aid or those of other World Bank operations. Indeed, we heard in evidence that the resources for evaluating European Development Fund activities have been reduced during the past two years and that one man and half a secretary were the sum total of the evaluation taking place at the time the evidence was given.

We are not alone in highlighting the problems of procedure and effectiveness. Many outside observers have drawn attention to it, and the European Court of Auditors covered the same ground in their annual report for 1982.

Readers of the report will have seen that in paragraph 76 we draw attention to the need for reforms of the European Development Fund. It is worth looking at. This is a multilateral fund, supported by European member states, and it is located in the European Commission. But it is not funded from the Community's own resources, and it is not subject to scrutiny by the European Parliament, as are other Community funds. Also, because of the way it was set up originally, the European Development Fund suffers from complex and cumbersome procedures which have made its disbursements far too slow. This has been explained by Brussels on the grounds that high standards of accountability have to be maintained.

It has also been suggested that the administration in many of the recipient countries leaves much to be desired. Of course it does. The Community started a large aid programme with inadequate administrative resources 10 years ago, and it has never been able to catch up. In consequence, it has been feeling its way ever since with countries particularly low down on the development list.

But everybody concerned with the report has no doubt whatever that the procedures are unduly rigid and laborious and should be simplified forthwith. It could be that simplification would follow the inclusion of the European Development Fund in the Community Budget. Indeed, the Commission and the European Parliament would like to see this happen and they regard it as anomalous that there should be a separate aid fund with a separate procedure solely for EDF aid to ACP states.

The weight of opinion in the committee is that the present financial crisis in the EEC must be resolved before incorporating the EDF into the Community Budget. Perhaps when the Minister comes to reply she will comment on this matter. I think she already touched on it in what she said earlier.

That leads me to the recommendations in paragraph 78. There are, apparently, Commission delegations in 42 countries, with personnel of up to 250 people. Up to now no decisions have been taken as to their role in policy dialogues; yet potentially these delegations are one of the most valuable features of EEC arrangements. They comprise technical specialists who could play an invaluable role by being able to take decisions on the spot and by being a source of information to the Commission in Brussels.

In practice, little use has been made of these delegations, and the net effect to date has been negative rather than positive because, without anything to do, they tend to form another tier of bureaucracy. The result is that the most trivial decisions are referred to Brussels, which sometimes take months and months to negotiate.

The committee is therefore of the opinion that they should be encouraged to take a lead in recommending the type of aid which is suitable for their particular recipient country. We also think that these delegations should, and could, be used to monitor and to help with the evaluation of projects, and to make policy recommendations.

My next point—a short one—concerns coordination. In this connection it must be remembered that if the Commission succeeds in changing the direction of its aid, the administration of aid is bound to be more complex: and it is highly desirable that there should be co-ordination between all participating donors, such as the World Bank, the IMF, the United States, and other donors, with the countries they are trying to help. We also believe that there should be complete co-ordination between Community aid and the bilateral aid policies of the member states. Surely there is a role here for the Commission delegation in ACP—countries which are well placed to do a local co-ordinating job, always provided that they are given adequate instructions and authority.

Now I come to my most serious point, and I regard it with such sincerity that I hope the House will take notice of it. We have been told about the shortcomings of Lomé and we have heard about the shortcomings of the EEC. But almost on the last day of our deliberations on Lomé we found some information that is absolutely and utterly vital to anything which is designed to help the Lomé countries with information, et cetera. As I said, it came at the end of the committee's deliberations. We received a short memorandum from the European Institute for The Media, based on the University of Manchester. It brought to our notice the issues in media development in ACP countries relevant to Lomé III. The memorandum highlights the importance of radio in developing countries.

The print media is often difficult because of low literacy and/or poor surface communication. Television is expensive, so radio remains the instrument of contact between government and governed. It is used for agriculture extension, health education, political education and a whole series of related activities. But let me quote to your Lordships from the memorandum, which gives a far more graphic description than ever my words could give. It reads: The declining economic conditions in many ACP countries have also had negative effect on their media systems. Resources which were previously scarce have all but dried up. Even the basic resource of sound radio, the transistor battery, has become virtually extinct. Battery production units in Tanzania and Ghana, for example, have had to be closed down for lack of raw materials for production. In Zambia, among other countries, we are told that boiled-up batteries are sold at a premium on the black market. Shortage of foreign exchange also inhibits the maintenance of production, transmission and reception equipment. Spare parts, hard to come by at the best of times, can no longer be afforded. Little is said, but whole sectors of the communication system are closed down because an essential piece of equipment is broken. This decline in standards of operation extends to the production field; the absence of maintenance resources makes studios unusable. Static budgets become progressively less capable of paying for the escalating prices of marketing products. Persistent efforts in the field of programme exchange fail to materialise; and the optimisation of production resources by means of co-production arrangement tends to be inhibited by political constraints.". That is the result of investigations, seminars, et tetra, by the Institute for The Media which, if we were not in the Common Market. would not be available. This is one of the most important items that there are in this report. We have had a Derby Day today. What is the Derby called? It is called the Ever Ready Stakes—batteries. The West can give £207,000 for a first prize in a horse race. Why can it not do something more for the people who need it most?

6.54 p.m.

Lord Walston

My Lords, I start with an apology for not having been here at the opening of the debate, and particularly an apology to the noble Lord, Lord Brimelow. I plead a prior engagement which I can claim had its origins 50 years ago today. Specifically, I was helping in the celebration of the Golden Wedding of our noble friend Lord John-Mackie and Lady John-Mackie. I hope your Lordships will think that that is sufficient reason for my not having been here at the outset of the debate. I shall certainly read the report of it, although I would have preferred to listen to it.

I should like to pay tribute to the noble Lord, Lord Brimelow, and his colleagues for this very valuable report on a very important matter. It is a balanced and well-informed report, and it is good that we have a chance today of discussing it. I certainly went along with the noble Lord, Lord Rhodes, when he said that Lomé is a good thing. It is a good thing. Some people may prefer direct bilateral aid. We certainly do not wish to stop giving that, and we may in our conceit, or from our own experience, believe that bilateral aid from this country is more efficiently made use of than aid from Lomé But as the noble Lord. Lord Rhodes, so rightly said, we are part of the Community. It is a duty of the Community to help with the problems of the third world. We as a member of the Community, and the member with the greatest colonial past and knowledge of overseas territories, must play a leading part in the promotion of Lomé.

I should also like to pay tribute to what I would call the founding father of Lomé, M. Claude Cheysson, now the French Foreign Minister but at that time the commissioner in charge of these matters. I would say it is due almost entirely to his vision, his enthusiasm and his personality that we have got as far as we have with Lomé, and I hope that your Lordships go along with me in expressing our gratitude to him for that.

But having said that, I certainly would not maintain that the success of Lomé to date has been altogether unmitigated. In fact, it has had very many disappointments, and I do not believe it has lived up to the expectations of any of us who were involved in its earliest days. It has been in some respects disappointing, and it has certainly shown that there are many aspects of it which can and must be improved if it is to go on and achieve the purposes which most of us—though I am afraid, from listening to some of the speeches, not all of us—believe it should achieve.

The main reason for its failure is the very simple one of shortage of cash. There has not been enough money available. That is something which is very well pointed out by this report, and in its conclusions and recommendations at the end it is made absolutely clear that more money should be made available. Again quoting the noble Lord, Lord Rhodes, we cannot in this country plead poverty when we see money that is spent on not altogether productive purposes, however much pleasure losing money on the Derby may give to certain people. The same applies to the other member states.

Another reason why Lomé has not been as successful as one had hoped is inflation. The money which was made available in its initial stages has been overtaken by inflation and is worth a great deal less at the time it is disbursed than it was at the time the sum was voted. A third reason—and one has to say this with some regret—has been both the central and the regional administration. That is not surprising. You cannot create an organisation of this sort de novo and expect it to reach the pinnacles of administrative success; but it is only fair to point out that there are many ways in which it could be improved.

One of the points which the report makes, which is very close to my heart, relates to regional administration. I do not have sufficient personal experience throughout the ACP countries to pass judgment on the calibre of the regional officers. However, either they should be improved in calibre or they should be given more independence from the centre. They should be good enough (some of them undoubtedly are) to be able to do the job without continual reference back to Brussels. All of us can think of examples of inordinate delays over perfectly sound projects—projects which undoubtedly ought to be looked at carefully but which do not need the minute and bureaucratic interventions and interferences to which they are submitted at present.

Many noble Lords have quite rightly referred to STABEX, one of the most exciting ideas of the first Lomé Convention. It would not excite or please the noble Lord, Lord Bauer, because, as I understand him, he does not believe in stability. However, with the greatest respect I would suggest to him that he may be living somewhat in the past. In the old days, when copper was dug by people with picks and shovels and when rubber was produced in a fairly primitive way from a plantation of low-producing and ill-fertilised rubber trees, perhaps one could say that if one disregarded the standard of living of the people engaged in the production it did not matter very much whether there was stability. If the price rose, all one needed to do was to give people a few more picks and shovels, or to plant a few more trees; in due course the trees would grow up and produce something and the price might still be high enough. But we have moved out of that age of primary production, and it is essential that we should move out of it.

As the noble Lord knows perfectly well, copper mining requires enormous capital investment. For proper rubber cultivation, investment in research, in breeding and in machinery for producing and processing the latex is needed. No firm in its senses will invest the kind of money that is needed unless there is some degree of stability. That applies to the whole development of the third world. Therefore, we should rely more on STABEX and more money should be allocated to it.

Nevertheless, I would suggest that there is a weakness in STABEX. If, as I understand it, a country warrants payment from the STABEX fund, the payment is not made in such a way as to go eventually to the producers of the commodity; it goes to the central government and it can be used by that central government in any way they may wish. They can use it for paying the interest on their national debt. I know of one particular example where the payment was used in order to create short-term employment in the area of the Minister concerned where a crucial by-election was to take place. The payments can be used in a variety of ways which are very far from what was in the minds of those who originally thought up the scheme. There should be a considerable strengthening not only of the amount of money that is made available but of the way in which it is distributed.

I agree very much with the noble Lord, Lord Saint Brides, and other speakers—and the report—in stressing the importance of voluntary organisations and non-governmental organisations. They have a great deal of expertise. I would specifically mention the Commonwealth Development Corporation in this country which has vast experience, extending over many years, of profitable investment. If larger sums of money than are available at present were to be made available to these organisations by Brussels, it would be put to very good use indeed.

There is one specific point which I hope your Lordships will forgive me for mentioning. As your Lordships know, one is frequently asked to do certain things and frequently one does not, but in this case I believe it to be important to do so. At page 292 of the report, paragraph 5 states that: Sugar traders were adamant that there must not be any increase in the ACP sugar quota, even if Portugal joins the EEC". I have received a letter from Tate and Lyle who, as your Lordships know, are not unconnected with sugar. It says: The source of this statement has not been traced, but the London Sugar Brokers' Association have asked to change the record of their evidence in accordance with the attached statement from the secretary". I hope that the record can be put straight, because it is of considerable concern not only to Portugal but to the ACP countries, Portugal at present being a consumer of approximately 100,000 tonnes of sugar. If that amount were to be taken into existing quotas, it would be to the detriment of the ACP countries.

Various points have been raised. The noble Lord, Lord Hams of High Cross, stressed the importance of persuading governments to adopt wiser policies. He said that this might be called interference but that we had interfered frequently in the past and this would be a wise form of interference. I shall not dispute with the noble Lord whether or not it would be a wise form of interference. However, I would suggest to him that enormous difficulties face any Western country, whether it is the Community or individual countries, when trying, on the one hand, to persuade governments to adopt wise, to our mind, policies and when trying, on the other hand, to persuade them to adopt more democratic policies, thus keeping them away from the one-party state.

We in our somewhat sophisticated democracy know, especially when elections are looming (we may be witnessing some transatlantic examples at present) that there is a great temptation for the Government to introduce legislation which is attractive to the voter, or to fail to introduce legislation which is unattractive to the voter. If we are to promote democracy, we must realise that this is what will happen. We must realise that persuasion, by whatever means one sets about it, to adopt wiser methods simply does not go hand in hand with democracy. It is only where there is a fairly authoritarian government that this can be achieved.

The noble Lord, Lord Kissin, referred to sugar and the common agricultural policy. I do not want to defend the CAP—I have criticised it often enough before your Lordships, and elsewhere—and I certainly do not want to defend the present sugar regime. However, it is worth pointing out to those of your Lordships who may have forgotten it that the vast majority of sugar on the world market—over 80 per cent. in most years—is subject to special negotiations and is sold at special prices which bear little, if any, relationship to what is called "the world market". It is only a relatively small amount—between 15 per cent. and 20 per cent.—that actually comes onto the world market.

In general—and I repeat that I am not defending the common agricultural policy—the great majority of the commodities which are produced under the CAP in such surpluses are those which do not in any way compete with the third world. So a reform of the common agricultural policy would in no way solve the problems which are facing the third world.

We cannot get away from the fact—and this has been said so often in our debates on the subject—that there are two things above all which the third world needs. It needs more investment, and it needs more aid. It needs more aid for its infrastructure. I am speaking of those things which cannot pay an immediate dividend and which certainly cannot make interest-free payments—the schools and all the rest, which I shall not detain your Lordships in describing because you have heard of them often enough.

There must also be an increasing tendency for the Community and the rich countries, when they invest in the third world, to invest not at fixed interest rates. They may be attractive at certain times but they can, as we are seeing now, plunge large sections of the third world into a position where it is impossible to meet those interest payments. There must be participation instead by way of equity in the undertaking; and money should not be put into undertakings which are not likely to be able to declare a dividend within five, six or eight years or some other reasonable period of time.

If all that is done, I believe that we shall have gone a long way towards solving the problems from which the third world is suffering at the present time. I hope very much that the discussions which are taking place, and which will continue to take place until Lomé III is finalised, will give thought to the overriding problems I have described. I believe that the report which the noble Lord, Lord Brimelow, and his colleagues have produced will help those concerned along the right path.

7.12 p.m.

Lord Oram

My Lords, it was a privilege for me to serve under the chairmanship of my noble friend Lord Brimelow on the sub-committee that has produced this report. If, as a chairman, he had a fault it was that he made the members of his sub-committee and the witnesses work most unusually hard. But in doing so he certainly set a good example, because he worked hard and he was always master of the particular aspect of the subject that we were examining in any particular session. I am also glad to have this opportunity of joining at the Dispatch Box the debate he introduced so effectively.

I will begin by suggesting why the Lomé Convention is of particular interest and significance within that vast complex of national and international machinery concerned with the economic relationships between the developed and the less developed countries of the world. It is because the provisions of the Lomé Convention are much more than an aid programme, for they constitute—at least in principle—comprehensive coverage of the economic relationships between its member countries. For example, many noble Lords have referred to the STABEX scheme, which provides for some rectification of a loss in the export earnings of ACP countries due to reductions in commodity prices. Moreover, the convention—unlike many of the instruments of aid and development—is a formal and contractural relationship on equal terms between its European members and their former colonies.

In my view, those factors make the convention stand out as a distinctive and imaginative scheme, potentially superior to other development organisations. but I advisedly use the words "in principle" and "potentially" because, as has been made clear in this debate, it is impossible to claim that the Lomé Convention has been in practice fully successful. For instance, although it is claimed that it is a contractual relationship between equals, this is not—and perhaps it cannot be—the truth of the matter. When one person in a bargain holds the purse strings and the other person wants some of the purse's contents, then the former clearly dominates the situation. The same is true of nations; if some are characterised as the "haves" and the others are characterised as the "have nots", then one cannot, however theoretical the equality may be, have equality between members of this convention is such different circumstances.

The committee states in the report, and I quote from paragraph 35: In such circumstances it is incumbent on the stronger negotiating partner to exercise restraint and to accept responsibility for a fair outcome". I hope very much that this advice from our committee is being followed during the official negotiations and that the advanced countries—the European members—will not only listen with sympathy to the case put forward by the ACP countries but will make a conscious and generous effort to meet the needs expressed on the other side of the table.

I believe that our sub-committee can claim that we did take that attitude and that we were right to do so. When a few of us from the sub-committee went to Brussels to see Mr. Pisani, the commissioner for development, we took the opportunity to meet the ambassadors from the ACP countries. We had such a fruitful, although limited, exchange that we were glad it was possible for them to come to London for a further exchange. We had a formal session with them here, at the Palace of Westminster, and their evidence is printed on pages 242 to 263 of the report. I believe that that section is a most important part of the published volume.

In my view, it is also very much to be hoped that the ideas of the Commissioner for Development, Mr. Pisani, which were put forward in his original memorandum, will find a place in the final outcome of the negotiations which are now proceeding. I express this hope despite the less than warm welcome which his ideas first received from the Council of Ministers and from the representatives of the ACP countries as well. That makes me think that he might well have been right, and it is why I hope that his ideas will prevail. Those ideas—and particulary Mr. Pisani's call for food self-sufficiency and the use of local resources—are summarised adequately in paragraph 15.1 believe that that, too, is an important part of what we have to report. I must say that I was a bit taken aback when, in one of the documents we received, the Pisani thesis was described as "new dogma". As my noble friend Lord Brimelow has pointed out, since I had been saying much the same thing for the past 20 years, beginning when I was a junior Minister at the Ministry of Overseas Development, I could not readily accept that it was either "new" or "dogma". But it was not altogether suprising, in my view, that the first reaction of the ACP countries to the Pisani memorandum was one of caution and suspicion. They are ever watchful—and rightly so—for any renewal in today's world of the economic exploitation which characterised the era of imperialism. When they are told by industrial countries that they should stick to agriculture third world countries are naturally very wary lest their population should become forever the hewers of wood and the drawers of water. In fact, I believe, and I believe Commissioner Pisani believes, that his approach is the most certain way of lifting their populations out of their inferior status in world society.

It is on the basis of sound agricultural and rural development that appropriate methods of industialisation can be built and that is the path to higher living standards for their people. That, I believe, is what Commissioner Pisani is advocating and pursuing. As I have said, it is understandable that the developing countries do not readily accept this message. The noble Lord, Lord Walston, referred to M. Cheysson as the originator of the Lomé Convention. He has played a part in the current negotiations. I believe it is true to say that it was a statement from him that helped to remove some of the misundertanding that existed in the minds of the ACP representatives. Indeed, as I have mentioned, when a few of us went to Brussels and met the ambassadors from the ACP countries we sensed at first an atmosphere of stiffness, of suspicion and of obvious misunderstanding. In the first place, the fact that we were Peers of the Realm seemed to make an undue impression of our importance. Secondly, we seemed to be regarded as representatives of Her Majesty's Government; and naturally some of us were only too anxious to defend ourselves against any such accusation. However, before long we had disabused them of the notion and the combined charm of my noble friends Lord Brimelow and Lady LlewelynDavies soon established the possibility of a very cordial and constructive interchange.

These ACP countries are wary when proposals are put to them from the developed countries, and understandably so when you consider their present situation in relation to their European partners. I should like to quote, because I cannot express it better in my own words, from an excellent small pamphlet on the Lomé negotiations published by the Catholic Institute for International Relations. Its publication Comment states on page 16: The ACP stress that the Lomé Convention is but one part of the multi-faceted interdependence between themselves and the Community from which the Community benefits. They argue that this interdependence creates a net flow of resources from the ACP to the EEC through the remittance of profits by European firms working in ACP countries, through the interest paid on ACP debt to European financial institutions, through the Community's trade surplus with the ACP, and through terms of trade under which the ACP have to produce more and more exports in order simply to stand still and maintain current levels of imports from the Community. Starting up as they do from that inferior position it is, I suggest, understandable that they are going to look warily at any proposals which might make their situation worse.

But it was not only the Community's development proposals which roused their suspicions, it was also the suggestion that there should be the so-called "policy dialogues" prior to the provision of development aid. This must have sounded like the laying down of conditions before aid could be provided. It was here, as I have already indicated, that the intervention of M. Claude Cheysson was so helpful. He said: For us it is clear that the definition of sectoral policies—whatever the ideological nature of the government in power—is within the competence of the countries concerned. It is important that our negotiators should make that clear when they are advocating policy dialogues.

It would also help if this concept of policy dialogues was seen to be a two-way process, which is a suggestion that has been adopted by the European Parliament. I accept entirely that the policies of the developing countries need to be examined and improved, but could it not also be the case that the policies of the European partners towards the ACP partners are also capable of critical examination. I recall, for example, that soon after the present Government took office they declared that their aid programme would in future be conducted so as as to secure political and commercial advantages for this country. Could it not be that a policy dialogue about that declaration of policy could be conducted by members of the Lomé Convention from both sides of the bargain, particularly since that convention is supposed to be between equal partners?

Thinking of this particular week, is it too much to hope that self-examination and critical reappraisal of the policies of the industrial world towards the developing world will be the main subject of discussion at this week's London summit? I suggest that it is impossible to imagine the the indebtedness of Latin American countries to Western banks will not be prominent on the agenda of that summit conference. But let us not forget, since Lomé is largely concerned not with Latin America but with African countries, that the debt problem about which we are reading and hearing so much has a Lomé dimension. The individual debts of African countries may be small compared with those of Latin America, and therefore may not trouble the Western banking system so much, but the debt problem of the ACP countries is indeed serious for them. Wrestling with that problem may force them to adopt policies which they would not wish to adopt and which would have the effect of making their poor people poorer still. That is why I hope that these matters of the relationship between the West and the South, or the developing countries, will be taken on board in this week's summit conference.

I come finally to the point about the size of the resources available at the end of the negotiations. I am very glad that in the report of the committee which we are considering, it is clearly stated—and my noble friend Lord Brimelow and others have quoted it—that: We would like to see higher priority accorded to aid in the general pattern of United Kingdom Government expenditure". I believe that that is a vital part of the recommendations which our committee has put forward. The noble Lord, Lord Banks, and my noble friend Lord Pitt had important things to say about this principle of putting the decision about the size of the resources at the end of the negotiations rather than taking it on board earlier in the negotiations. I took this question up with the financial spokesman of the ambassadors who came to see us. I suggested to him that, as I understood it, their position was not that they wanted right at the beginning a sum of money to be agreed upon but that the criteria by which that sum of money was to be negotiated should be established early in the negotiations.

Perhaps the noble Baroness can help us. I was wondering whether any progress was made in the recent Fiji conference in this respect. Was any progress made towards establishing not a global sum but the criteria by which that global sum could be calculated? This is vital. It is a question of what resources will be available at the end of the day. Otherwise one could go from one item on the agenda to the next item on the agenda and get harmony and agreement and then, when one came to the very last item of the agenda, all would be thrown aside because it would be found that no agreement could be reached about the global amount.

That is why the question of the negotiations for a new Lomé Convention relates very much to the attitude of our Government to aid and development policy in general. I believe that it will have to face the fact—as our committee has recommended—that more resources should be put into our efforts to help the third world and particularly the partners of the Lomé Convention, otherwise the outcome of the negotiations will be a failure.

7.33 p.m.

Baroness Young

My Lords, this has been a most useful debate, concentrating, as it has, on the many important issues in the current negotiations. I very much welcome the support which the Select Committee has given to the Government's approach. A very wide range of issues has been raised this afternoon. Many of your Lordships have said that in the next convention priority should be given to supporting agriculture. The Community must get away from prestige projects, which Commissioner Pisani has graphically termed "cathedrals of the desert" and which are of little relevance to the vast bulk of ACP populations.

I also welcome the general recognition that it is right for the Community to press for more dialogue with ACP countries to ensure that the substantial aid which the EDF disperses is used to proper effect—a point that has been made by a great many of your Lordships today. In the early stages of the negotiations the ACP were wary of the concept of policy dialogue—a point made by the noble Lord, Lord Oram—which they believed was an attempt by the Community somehow to undermine their sovereignty. I am pleased that they have now appreciated that the European Community had no such intention and are participating pragmatically in a consideration of how the Community's ideas might best be reflected in the text of the next convention.

Furthermore, an improvement in the effectiveness of EDF aid can only be to the benefit of the recipients of that aid. Many of your Lordships agreed with the Government's conviction that trade rather than aid is the most effective developmental tool. Lomé already offered extensive preferences to the ACP countries—around 98 per cent. of their exports into the Community free of tariffs and of any form of quantitative restriction—but the Government believe that more can and ought to be done. We shall, therefore, reinforced by the Select Committee's report and by those noble Lords who have spoken today, continue to press within the Community for some further movement in this field.

I should like to say a word about the state of play in the negotiations. Useful progress was made at the last ministerial negotiating conference in Fiji at the beginning of May. Officials are now working hard to refine the conclusions of this meeting and to turn them into texts. The next negotiating conference is scheduled for 28th and 29th of June in Luxembourg. The French presidency has given notice that its aim is to settle the main outstanding issues under negotiation at this conference. We fully support that objective, while recognising that a further session is likely to be necessary before the summer break.

A great many detailed points have been raised in the course of the debate this afternoon on which I should like to comment as far as I can. I regret that time does not allow me to take up all the points that have been raised. The noble Lord, Lord Banks, and the noble Lord, Lord Oram, were both concerned that we should discuss the size of the next EDF sooner than agreed by the Community. But it would not be sensible to discuss the size of the EDF until negotiations on substance—that is, on its use—have been concluded.

Both noble Lords were also concerned about the need to maintain the value of the EDF. The Community cannot yet, however, commit itself to any figure for the new EDF, but it would be right for me to say today that even maintenance in cash terms would be difficult for the United Kindom. As the noble Lord, Lord Banks, suggested, some critics have dubbed the EEC approach as aid, not trade. But as I think I have made clear, the Government do not take this view and we have advocated improvements to the trade regime. Trade is much more important than aid.

The right reverend Prelate the Bishop of Chichester stressed the importance of interdependence and partnership, and the Government accept the message of the second Brandt Report, Common Crisis, that we live in an interdependent world. The economies of the industrialised nations and developing countries are closely interwoven. This inter-relationship is underlined in the truly joint nature of the Lomé institutions. As for partnership, the Government share the right reverend Prelate's concern. He mentioned the exemplary nature of the food strategy exercise in four African countries. Although these have not been without their problems, we see them acting as a precedent for what the Community understands by policy dialogue. It must make sense for the two sides, the European Community and ACP, to sit down together and talk about the context within which individual aid projects are set.

The Government also agree with the noble Lord, Lord Pitt, that the Lomé regime should stimulate ACP trade, both with the Community and with each other. The Community of course provides aid to trade promotion to encourage the ACP countries to use fully the concessions of the Lomé trade regime, and we are working to improve these. The noble Lord, Lord Pitt, made a plea for the use of EDF interest to pay STABEX claims. The excess claims in 1981 were in fact partly settled from this source. However, these funds are limited and, as I said in my opening speech, the Community will reconsider the question of unpaid claims when the current scheme comes to an end.

I very much welcome what my noble friend Lord Rochdale said in support of the Government's view that the proper valuation of EDF is vital. As I have indicated, this was a point made by many other noble Lords. We have been pressing for this within the Community for some time and we are pleased that we have made some progress with our partners. I am confident that appropriate provisions will be written into either the next convention itself or the Community's own internal procedures.

My noble friend Lord Rochdale also made a number of points about shipping. I can assure my noble friend that the Government have studied with care the memorandum submitted to the subcommittee by the General Council of British Shipping. This issue has not yet been discussed in the negotiations, but I believe that the next convention will, as the noble Lord favoured, contain appropriate provisions, as did Lomé II. My noble friend suggested that these should comprise a formal arrangement under which the Community aid cargoes would be divided evenly between EC and ACP. The important thing is to ensure that Community aid is transported in the most effective way possible, whether the shipper is ACP or EC.

The noble Lord, Lord Seebohm, in what I thought a most interesting speech, mentioned the harmful effects of food aid. This form of aid is not provided under the Lomé Convention, but many ACP countries receive food aid. The United Kingdom considers it vital to replace this kind of aid with the most appropriate agricultural imports—such things as seeds and fertilisers—and to ensure that this is fully co-ordinated with the recipient agricultural policy. We think that a food chapter might be of value in achieving this in the new convention.

The noble Lord, Lord Seebohm, also drew attention to the importance of the CDC, and I have recently looked at its very interesting annual report. I welcome very much the tribute of the noble Lord, Lord Seebohm, to the kind of development assistance that is provided by the CDC. This is a salutary reminder that the quality of aid is much more important than its quantity.

I hope that the noble Lord, Lord Sainsbury, will recognise that I have already made clear in my remarks that the Govenment have no difficulty with the suggestion that he made that it would be appropriate for Community aid to certain ACP countries to focus on trade development rather than agriculture. Each ACP country's indicative aid programme is spent according to the priorities of the ACP country itself. I have no doubt that it will be right for a number of ACP countries to concentrate on the development of processing industries, port facilities, cold storage facilities and other matters that he mentioned. The Government fully agree that one of the tasks of the negotiators will be to ensure that ACP countries can take full advantage of the trade opportunities available to them.

The noble Lord. Lord Hatch, asked about the slowness of EDF disbursements. I can tell the House that at the end of March 1984 just over 50 per cent. of EDF 5 had been committed and only some 20 per cent. spent. This, I agree, is a very poor rate of disbursement. The Government have proposed that EDF procedure be simplified to improve on this record. Greater delegation of authority to the Commission delegations and ACP would help. This is something that again has been referred to by many noble Lords, in particular the noble Lords, Lord Saint Brides and Lord Rhodes.

The noble Lords, Lord Hams and Lord Bauer, expressed concern about the effect of aid on ACP development. I think, however, that it is important to get aid in perspective. It is only one relatively minor element in the global flow of finance to developing countries. It is. however, disproportionately important to the low income, non-oil producing countries, many of them ACP members. In the present international climate it would be unrealistic to expect either private investors or commercial lenders to substitute for these aid flows. My noble friend Lord Bauer rightly drew attention to the damage done to ACP development by inappropriate policies, especially in the areas of pricing and marketing. The Government share the concern of the Community at this problem. We hope that the pricing dialogue proposed in the new convention will ensure that EDF aid is provided only to those sectors where local policies are conducive to success.

The noble Lord, Lord Kissin, will not be surprised to learn that I agree with very much of what he said about the excesses of the common agricultural policy. Since we joined the Community the Government have been pressing consistently for improvements. In particular, the Government share his concern about the concept of long-term agricultural contracts. We agree that such contracts would only serve to institutionalise the surpluses that we believe must be reduced. We are therefore firmly resisting this idea.

The noble Lord, Lord Kissin, the noble Lord, Lord Seebohm, and a number of other noble Lords, mentioned the need for better provisions in the convention to promote and protect private investment in ACP countries. The Government agree, and we have submitted proposals as to how the imprecise provisions of the present convention could be tightened up to make it easier to negotiate effective bilateral investment promotion and protection agreements. These are, we believe, the best instruments for achieving the desired objective.

As for the suggestion of the noble Lord, Lord Kissin, that we should examine the possibility of an investment insurance scheme, I can say that the Community is currently studying this very idea. If such a scheme were to be introduced, it would be essential for it to be self-financing, as is our own national insurance investment scheme.

The noble Lord, Lord Saint Brides, referred to the exclusion of India, Pakistan and Bangladesh from the Lomé Conventions. These major Commonwealth nations do, however, receive substantial development aid from the Community under its non-associates programme. Indeed, India is the largest recipient of EC aid, including food aid. The Government will continue to press for a significant share of Community aid to be devoted to these countries within available resources. I was interested to hear what the noble Lord had to say about voluntary organisations and the effectiveness of their way of using aid money.

This will be the third convention between the ACP and the Community and will take the special relationship between them to 1990. There is no denying that economic progress in the developing countries, not least the ACP, has been disappointing over the life of the first two conventions. But there is equally no denying that the aid, trade preferences, and other help, provided under Lomé have made the position of the participant countries better than it would otherwise have been. The third convention will no more solve their problems than have the first two conventions. Solutions lie more in the state of the world economy and in the way individual countries manage their own affairs than in such external factors as Lomé. But through the Lomé relationship the Community and the United Kingdom can make a significant contribution. It has been valuable to have this debate. I should like to conclude by thanking once again the noble Lord, Lord Brimelow and his committee for the report on the successor to the second Lomé Convention.

Lord Hatch of Lusby

My Lords, before the noble Baroness sits down, may I thank her for answering one of my questions. I remind her, however, that I asked another specific question about what Her Majesty's Government were doing in the agricultural field in relation to the production of food in this country and the production of food in the third world. Is it not the case that this Government are spending as much on subsidies to food in this country as on every other aspect of life in this country, and that this subsidy is undermining the production of food in the third world and the export of that food to this country?

Baroness Young

My Lords, I thought that I had answered that in the reply that I made to the noble Lord, Lord Kissin, when I talked about the common agricultural policy. On innumerable occasions the Government have made it perfectly plain that we are working for a reform of this policy. What the noble Lord, Lord Hatch, is I think concerned about is the effect of the common agricultural policy, to which, as a member of the European Community, we belong. on the agricultural economies of ACP countries.

Lord Hatch of Lusby

And the prices, my Lords.

Baroness Young

And the prices as well, my Lords.

Lord Bauer

My Lords. I had hoped that the noble Baroness would say something about bilateral and multilateral aid. As the Government have repeatedly expressed their preference for bilateral aid. and as a number of noble Lords have given good reason for supporting it. why is it that multilateral aid is expected to rise from 40 per cent. to 50 per cent., as mentioned in the report of the sub-committee?

Baroness Young

My Lords, as I indicated—I think it was in response to the point raised both by the noble Lord, Lord Banks, and the noble Lord, Lord Oram, on the amounts of money that were involved in this—we have not yet taken a decision on this matter. The most important question on the EDF is how it is going to be used, and I think it would be better to let the discussion rest at that point.

7.51 p.m.

Lord Brimelow

My Lords, since the noble Baroness the Minister has replied so fully and so courteously to the debate, my duty is simply to thank those noble Lords who have taken part in the debate and the other noble Lords who have listened so patiently. They have given us their support, and we appreciate it.

It would be ungracious of me if I did not pay a special tribute to the noble Baroness, Lady Young, who has spoken twice. Her first intervention answered every point in my opening speech. It was full, relevant, precise and highly informative, and I listened to it with great pleasure. In her second intervention she has dealt very fairly with the points that were made in the debate.

In the speech by the right reverend Prelate the Bishop of Chichester reference was made to the fact that the most reverend Primate the Archbishop of Canterbury would have wished to take part in the debate had he not been prevented by another of his many duties. That remark will not have passed unnoticed and unappreciated in your Lordships' House. But I am grateful to the right reverend Prelate himself for bringing into the debate a dimension of human dignity with which we are concerned all too seldom.

I should like to thank the noble Lord, Lord Saint Brides, for being here. He wrote to me from France to say that he would come specially for the debate. That was good of him. I am sorry that we dragged the noble Lord, Lord Walston, away from a golden wedding which we should all have liked to attend.

Many years ago my attention was arrested by an article by the noble Lord, Lord Bauer. Its title was a question: "Trickle Down for Ever?" "Ever" and "never" are big words which men brought up in the Foreign and Commonwealth Office seldom use. Your Lordships may not be aware that the oldest dipLoméatic archive in this country is not to be found in the Public Record Office, now happily re-opened to the public: it is in the British Museum. It is a collection of clay tablets found at Tel-el-Amarna in Egypt. This collection contains a number of messages from princelings in Syria and Egypt to the Pharaohs of the Eighteenth Dynasty—shall we say fifteenth and fourteenth century BC?

The gist of these messages was: O great king, send us presents; send us military assistance, and send us gold"— which in Egypt is as plentiful as sand. Substitute "credits" for "gold" and the messages have a fairly modern ring. So the circumstances which give rise to the demands for aid and the demands themselves, and the failure of the aid sent to get rid of the circumstances which give rise to the demands, have been going on for (shall we say?) three thousand five hundred years, which is all the records show. Probably they have gone on for much longer. Will they go on for ever? I do not know. I think our job is to try to chip away, to reduce the need for aid, and thus gradually to reduce the scope for aid itself.

But in this debate we have also dwelt on the need to expand trade. I am not at all convinced that the world yet knows how to cope with the re-expansion of trade without finding a resurgence of inflation. But that is a matter for another debate. The Motion before the House is to take note of the Select Committee's report on the successor to the Lomé Convention. My Lords, I beg to move.

On Question, Motion agreed to.