HL Deb 22 March 1990 vol 517 cc405-7

3.15 p.m.

Lord Mottistone asked Her Majesty's Government:

Whether they will take steps to prevent the European Commission from forfeiting the right to pay refunds to processed food exporters under the common agricultural policy without simultaneously phasing out the two-tier pricing system for raw materials.

The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)

My Lords, the Government are not aware of any proposals from the Commission to end the arrangements for payment of export refunds on processed products. The Community has made it clear that it is not prepared to abandon the two-tier pricing system for agricultural commodities, nor to abolish the export refund system.

Lord Mottistone

My Lords, is my noble friend not aware that there has been considerable pressure from the United States and the Cairns Group— which I believe comprises Australians and New Zealanders— to have export refunds taken out of the Community system within the common agricultural policy and to treat those refunds as subsidies? Is it not the case that there is quite considerable concern that the Commission, in giving consideration to the proposal, is not being sufficiently strong in resisting it? Is it also true that the British Government have not been particularly firm in encouraging the Commission to be strong? Can my noble friend comment on that point?

Baroness Trumpington

My Lords, the EC is currently engaged with other GATT members in the Uruguay round of multilateral trade negotiations. Export refunds are an important issue in the negotiations. My noble friend is quite right. The United States and others are calling for their abolition. The European Community has made clear that that is unacceptable and has put forward alternative proposals to impose greater disciplines on export subsidisation.

The United Kingdon recognises the importance of adequate levels of support for exports of processed products. We have repeatedly emphasised that point in discussions in Brussels. Community proposals do not discriminate against food exports and would maintain the link with export refunds on the relevant raw materials.

Lord Gallacher

My Lords, on this side of the House we are grateful for the assurances which the noble Baroness has given to the noble Lord in her second answer to him. We are very well aware of the difficult task the European negotiators under GATT have with the Cairns Group and the United States. Without prejudice to the outcome of those negotiations, would not the Community be in a stronger position overall if it studied some of the regimes with which it is currently apparently satisfied? In particular, will the noble Baroness urge her right honourable friend the Minister to ask the Community whether it is not possible to have a review of, for example, the sugar regime which is not scheduled to take place before June 1991 and where some of the worst effects of the two-tier system are to be found?

Baroness Trumpington

My Lords, refunds for processed products enable food exporters to benefit from aids which would have been paid on their agricultural raw materials. In fixing them food interests are taken into account as well as the needs of agricultural market management.

Lord Mottistone

My Lords, will my noble friend perhaps take the point made by the noble Lord, Lord Gallacher, and invite her right honourable friend to suggest to the Commission that there is much room for improvement within the common agricultural policy, particularly in the sugar regime? When my noble friend said that the Commission was talking about greater disciplines within the export subsidies— a point which I think she mentioned in

her second answer— was she referring to that as export subsidies within other countries, or is that a hidden way in which the Commission is seeking to bring about what we fear; namely, reducing the export refunds?

Baroness Trumpington

My Lords, the Community proposes that subsidies to food exporters will be clearly limited to the difference between the price of raw materials on the domestic market and that on world markets. Where that difference is minimal, subsidies would not be available. Those proposals, if adopted, would not adversely affect food exporters.

Lord Bruce of Donington

My Lords, in considering those matters, will the noble Baroness bear in mind successive reports of the Court of Auditors, our own Comptroller and Auditor General here and the Select Committee of this House, that it is in precisely that area of export refunds that the greatest frauds against this country and the Community take place?

Baroness Trumpington

My Lords, I am grateful to the noble Lord for lowering his decibels on this occasion. I should point out to him that this country has led the way in the European Community in bringing forward the question of fraud and taking appropriate action.

Lord Elton

My Lords, will my noble friend accept that, when there is a Question on the Order Paper so difficult to understand as this one, it is a pleasure to hear an Answer that is so easy to follow?

Baroness Trumpington

My Lords, it is the only one that I have made up myself.