International Tin Council: Funding (Hansard, 12 November 1985)

Lord Bruce of Donington
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ Lord Brabazon of Tara
My Lords, Her Majesty's Government contributed £8 million to the International Tin Council under the Sixth International Tin Agreement. The total of all members' initial contributions in the form of cash or tin metal to the agreement was equivalent to 19,666 tonnes of tin metal at £7,084 a tonne. It is not possible at this stage to assess the impact of recent developments on the United Kingdom's tin mining industry.

Lord Bruce of Donington
My Lords, I thank the noble Lord for that reply. Can he give any indication to the House as to what pressure has been exercised by the British Government's representative on the International Tin Council for the council to honour its obligations? Is the noble Lord able to confirm to the House that, as things stand at the moment, the provisions of the International Organisations Act 1968 apply notwithstanding the order that was published subsequently in 1972, and that 140 consequently there is no legal redress in the event of default by the tin council? Will he give some indication, in the event of certain eventualities, as to what support the Government themselves may offer to the tin mining industry, particularly in Cornwall?

§ Lord Brabazon of Tara
My Lords, in answer to the first question, my right honourable friend the Secretary of State for Trade and Industry has made it clear to the International Tin Council that they should honour their legal commitments to the council up to 24th October when dealings were suspended, and we have certainly said that we shall honour ours.
Regarding the International Organisations Act, our view is that the tin council is liable on any arbitration award made against it under the arbitration clause which is found in the council's London Metal Exchange tin contracts, and there is no immunity in such a case. This is provided for in a headquarter's agreement between Her Majesty's Government and the council which is implemented by an order under the 1968 Act. It is a complicated legal position and we are studying it most carefully.
To turn to the Cornish tin mining industry, as we do not know at this stage at what price the tin may eventually end up, what assistance we might or might not be able to give to that industry is a hypothetical question.

§ Lord Williams of Elvel
My Lords, would the noble Lord agree that this tin council fiasco would never have taken place had the London Metal Exchange a proper, centrally-organised clearing system? The exchange has persistently refused to join the International Commodities Clearing House, which has been owned for some time by the United Kingdom clearing banks, and provides a similar system for the soft commodity markets. What does that say to the noble Lord about the virtues of self-regulation?

§ Lord Brabazon of Tara
My Lords, I am interested in the points that the noble Lord makes. However, I fear that the crisis could well have taken place whether or not the London Metal Exchange had had a central clearing system. The crisis has arisen through the over-production of tin over the years.

§ Lord Mackie of Benshie
My Lords, can the noble Lord clarify his statement that the United Kingdom is willing to stand by its obligations? Does the noble Lord mean that we would stand up to the obligations up to the limit that we said we would? How much more is the loss than the limits set by all the countries?

§ Lord Brabazon of Tara
My Lords, our obligation is as to 4 per cent. of the total amount of the International Tin Agreement.

Lord Bruce of Donington
My Lords, can the noble Lord give the Government's view as to how far the troubles of the countries participating in the tin council are due to their international loan position at the present time and the great burdens of interest they have to pay, which in many cases are as much as 50 per cent. of their total exports?

§ Lord Brabazon of Tara
My Lords, there has been no statement of reluctance by these developing countries to comply with their obligations. We as a Government have tabled firm proposals for settling the council's liabilities, and these are being studied by other member countries. It is hoped that there will be a positive outcome to the council's meeting on Thursday.

Lord Oram
My Lords, is there not a twofold lesson to be learned from the chaotic situation that has developed? Should not the prices set under the commodity agreement have been gradually and in a planned way reduced in line with the decline in the demand for tin? Should not that have been combined with an adequate compensatory financial backing for the third world producers of tin?

§ Lord Brabazon of Tara
My Lords, the noble Lord is right in the first part of his question. As for compensatory backing for the producing countries that is another question that I am unable to answer at this stage.