Economic Summit

HL Deb 19 July 1991 vol 531 cc367-74

11.32 a.m.

The Lord Privy Seal (Lord Waddington)

My Lords, with the leave of the House I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the Economic Summit which took place from 15th to 17th July 1991. The Statement is as follows:

"With permission, Mr. Speaker, I will make a Statement on the Economic Summit held in London from 15th to 17th July and the subsequent meeting with President Gorbachev. I was accompanied at the summit by my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer. The economic declaration and the separate political declarations issued at the summit have been placed in the Library of the House.

"The themes of this summit were 'Building World Partnership' and 'Strengthening the International Order'. Our common aim was to build on the movement towards freedom, democracy and the open economy which was the theme at last year's Houston Summit. I believe that we have achieved valuable and productive results.

"In the political discussion there was full support for our proposal for a UN register of arms sales. We agreed to consult on the guidelines that apply to conventional arms sales. And we agreed on restraint in the transfer of advanced technology weapons. We agreed that donor countries should take account of military expenditure when deciding on aid programmes. We also agreed a number of steps in preventing the proliferation of nuclear, biological and chemical weapons.

"We agreed that we should make preventive diplomacy a top priority in the United Nations. We proposed the establishment of a UN disaster relief co-ordinator so that the UN can in future take the early action that has sometimes been missing in the past.

"We agreed on the need for confidence-building measures by both sides on the Arab-Israel dispute including the suspension of the Arab boycott and of the Israeli policy of settlement in the occupied territories. We encouraged South Africa to pursue policies which will permit normal access to all sources of foreign borrowing. That is vital to enable the economic growth that will be necessary for a successful conclusion to the political negotiations.

"In our debate on the world economy we recognised increasing signs of economic recovery. These are welcome but require us to maintain policies aimed at sustained recovery and price stability. This means prudent and vigilant fiscal and monetary policies to bear down on inflation.

"All the summit leaders recognised that the world cannot afford a failure in the Uruguay Round of trade negotiations. We committed ourselves to completing the round by the end of this year. Crucially, we committed ourselves to remain personally involved and to intervene if necessary to ensure that that happens, and to intervene to resolve any disputes. Action will be needed on services, intellectual property, trade access and agriculture.

"We reaffirmed our commitment to support reform in the countries of Central and Eastern Europe. For them trade access is vital. We cannot encourage them to build market economies and then deny them a market place. The European Community has led the way in offering access through these association agreements which are now being negotiated.

"We devoted a lot of time to the problems of developing countries and secured agreement on the need for additional debt relief measures for the poorest, most indebted countries, going well beyond the 'Toronto' agreed in 1988. I have been pressing for this since I launched the Trinidad initiative as Chancellor.

"At the summit, we committed ourselves to work for a successful United Nations Conference on Environment and Development in June next year. By the time of the conference, we aim to have achieved, in particular, a framework convention on climate change and agreement on principles for forest conservation. We also hope to negotiate by the end of next year a framework convention on biodiversity. And we agreed to support financially the implementation of the preliminary stage of a pilot programme for the conservation of the Brazilian rain forests.

"Earlier summits have stimulated effective action in tackling the trade in illicit drugs. This year, we asked the Customs Co-operation Council—on the basis of an initiative put forward by the UK—to intensify its work and liaise with international traders and carriers to curb the spread of drugs.

"These global issues require the involvement of all. Developing countries and East European nations are playing an increasingly active part. But one great country has been until now largely detached from the international economic system. That is the Soviet Union. We had a productive, substantive session with President Gorbachev. It was an historic occasion. The emphasis was on informal, frank and direct discussions. We reached agreement on six specific points.

"The first was special association with the IMF and World Bank. Both the fund and the bank have a wealth of experience in helping governments to work out their own economic reform programmes, especially in the crucial areas of fiscal, monetary and structural policies.

"Secondly, the international institutions—the OECD and the EBRD, as well as the IMF and the World Bank—are to be asked to work closely together in their support of the Soviet Union. They can provide the Soviet Union with practical advice, know-how and expertise to help create a market economy.

"The third agreement was intensified technical assistance. We believe there should be greater co-operation in the following sectors in particular: energy, defence conversion, food distribution, nuclear safety and transport. Yesterday, I announced an increase in Britain's know-how fund assistance from £20 million to £50 million.

"Fourthly, there was agreement on improved trade access to markets for Soviet goods and services. That would also help to attract more inward private investment.

"Fifthly, it was agreed that, as chairman of the summit, I should, on behalf of summit colleagues, follow up our meeting and visit Moscow before the end of the year to review progress. I look forward to doing so. Sixthly, we agreed in response to President Gorbachev's invitation, that Ministers of Finance and of Small Business should go to Moscow for discussions with their Soviet counterparts. My right honourable friend the Chancellor hopes to do so soon.

"This was a landmark meeting with President Gorbachev. It will, I believe, be seen as a first step towards helping the Soviet Union become a full member of the world economic community. I believe that it was a successful summit and I commend the outcome to the House".

My Lords, that concludes the Statement.

11.40 a.m.

Lord Williams of Elvel

My Lords, the House will be grateful to the noble Lord the Lord Privy Seal for repeating the Statement made by the Prime Minister in another place. We agree that the meeting with President Gorbachev was a landmark and welcome it.

There are other points in the Statement, and indeed in the G7 communiqué, which we also welcome. We welcome the commitment to completion of the Uruguay Round of GATT, although I shall have some questions about that. We welcome the strength of, and commitment to, the United Nations. We welcome the agreement on arms sales and transfer. We welcome initiatives on the Gulf and the Middle East. There is much in the Statement that we welcome and support.

I have specific questions on GATT. Will the noble Lord help me on one point? It is my understanding that in order to benefit from the fast track arrangements that Congress in the United States has approved, the Uruguay Round has to reach agreement before the end of the year. The end of the year is not just an aim, as expressed in the communiqué. It is an absolute, final deadline; otherwise, the fast track procedure has to go back to Congress and it is hardly likely that Congress will approve it for next year. We therefore need—and I hope that the noble Lord will be able to add strength to the commitment—not just a target at the end of the year but a commitment from the G7 countries that they will reach agreement.

The problem is the status of the European Commission because it is the Commission which negotiates on behalf of the Community. Will the noble Lord tell the House whether the Commission, in whatever shape or form, was involved in discussions on the Uruguay Round that took place at the G7 summit? It seems important that they should have been at least aware of what was going on.

Again, we welcome the commitment to the United Nations. However, I have a question for the noble Lord. It seems to us that the G7—which started off as an economic group holding economic summits—is looking perilously as though it is becoming a political group holding political summits. Is it the case that the French in particular regard this development as undesirable? They do not wish to see the world's richest countries constituting what they call a directoire of the political world. Is not the proper place for all discussions of political matters the United Nations?

Possibly the greater disappointment of the summit was movement on the environment. Is it the case, as one newspaper reported, that only 15 minutes were spent on the environment during the whole of the summit after all that we have heard from the Prime Minister about its importance?

The third world debt problem will need to be much more carefully scrutinised than it was at the summit. In the communiqué, the G7 leaders simply called on the Paris Club to continue its discussions on how the debt relief measures can be implemented properly. Will the noble Lord give more detail of the measures and the instructions given to the Paris Club? For instance, were the so-called Trinidad terms secured or are they still left in the air?

On the world economy, apart from the commitment to GATT—which we welcome—there seems to be a good deal of doubt about what the G7 view of world economic growth is. The Statement that the noble Lord the Lord Privy Seal repeated picks up the words of the communiqué, which require, as I understand it—and I shall be grateful for confirmation from the noble Lord—continued monetary tightness. In other words, there was no attempt at the summit to co-ordinate a concerted plan to reduce interest rates and thus promote world economic growth. Will the noble Lord confirm that there is now no G7 concerted plan for lower interest rates and world economic growth?

On the Soviet Union, we welcome very much the visit of President Gorbachev and, so far as they go, the arrangements that were agreed. However, will the noble Lord say why full membership of the IMF was not suggested? Indeed it was turned down. Will he say why no arrangement was made to promote the convertibility of the rouble? That would be an important step forward. Those arrangements have worked well in the case of Poland. Can he further say why the G7 countries refused to remove the COCOM trade restrictions on high technology goods to the Soviet Union? All those are steps which, if carried out, would indicate the earnest of the commitment of the G7 towards the Soviet Union. It is a question of the commitment towards the Soviet Union which is important. I have asked many questions of the noble Lord the Lord Privy Seal. I hope that he will forgive me. However, it is an important Statement, and it has been an important summit.

Finally, in view of the need to avoid doing anything which would make the parlous condition of the Soviet economy even worse, will the Prime Minister speedily reverse his decision to send the Chancellor of the Exchequer to Moscow?

Lord Jenkins of Hillhead

My Lords, I too thank the noble Lord the Lord Privy Seal for repeating the Statement. We can all take some satisfaction from the fact that Mr. Major seems to have acquitted himself well both as host and as chairman, although it must be said that it is rare—though not unheard of—in the now 16 year-old history of summit meetings for visitors not to express satisfaction with the maître d'hotel at the end of the proceedings.

Over the 16 years, summits have changed their character enormously. Apart from the move into the political field, referred to by the noble Lord, Lord Williams, when the first meeting took place at Rambouillet, President Giscard's idea was to have a fireside chat without staff or international circus trappings. We have clearly moved a considerable way from that idea.

However, the essential but limited value of summits remains the same. I do not believe that they can be expected to make many hard decisions. They are not geared to that. They are geared to open the minds of world leaders to world problems for a few days and thus encourage them to be less domestically concentrated and selfish in their outlook. That is a limited but worthwhile objective. It is perhaps the reason why the almost indefinite escalation of razzmatazz has certain dangers.

There are one or two hard issues on which more can be expected. I believe that the key test of the summit, the Gorbachev supplement apart, is whether it unravels the GATT knot. That is the hard criterion by which I guess that the success of the summit will be judged in six months' time. Will the noble Lord tell us whether it is the intention of the Prime Minister to resummon the summit in the autumn if progress is not being made towards a GATT solution?

The Gorbachev visit stole much of the thunder. I noted with amusement that he was the first person to be half invited to a summit since I had my joust with President Giscard at the London Summit of 1977. The question was whether I, as President of the Commission, should be invited. On that occasion I was half invited but that led to a full invitation to Bonn the following year and in subsequent years.

Mt. Gorbachev, as a half invited guest, succeeded in dominating the proceedings in the press to an extent which eluded me. Does the Leader of the House expect Mr. Gorbachev to become a full guest next year? Do the Government envisage a group of eight? What is the noble Lord's appraisal of what Mr. Gorbachev took back? Was it worthwhile? And was it as much as the British Government intended?

Lord Waddington

My Lords, I am grateful to the noble Lords, Lord Williams of Elvel and Lord Jenkins of Hillhead, for their comments. The noble Lord, Lord Williams, gave a general welcome to the outcome of the summit. I am sure that the majority of people recognise that it was a historic occasion and that important progress was made. I am grateful to the noble Lord, Lord Jenkins, for his congratulations to my right honourable friend the Prime Minister.

The importance to the GATT round of what happened at the summit was the personal commitment of each head of state or government to complete the round successfully by the end of the year. That is the aim. M. Delors was present throughout as was the President of the European Council. Therefore there is no doubt about the involvement of the European Community.

The noble Lord, Lord Williams, was right to point to the fact that what began as an economic grouping is now making a substantial contribution to political developments. However, the proof of the pudding is in the eating. Many of the agreements reached at the summit are of the greatest importance. No one would doubt that the agreement to establish a UN disaster relief co-ordinator is a substantial development as a result of work undertaken at the summit.

As regards the environment, I believe that the foremost message that comes from the summit is that an open market helps to create the resources needed to protect the environment. One cannot look at the problems of the environment in isolation and say, "We will have just one little session dealing with the problems of the environment". We shall never sort out the problems of the environment in Eastern and Central Europe and in Russia unless those countries are fully integrated into the world economy with its free market creating the wealth without which we shall not be able to do all that is necessary.

I do not know how many minutes were spent dealing specifically with the environment. Its problems permeated all the discussions at the summit. However, there is no doubt that the summit established the aim to achieve a framework convention on climate change and agreement on the principles for forest conservation. It was also agreed that that should be done in time for the UN Conference on Environment and Development in Rio in 1992. It is also hoped to negotiate a framework convention on bio-diversity. It was agreed to support the implementation of the preliminary stage of a pilot programme for conservation of the Brazilian rain forests. No one can seriously contend that the outcome of the summit as regards the environment was puny and unimportant.

Initiatives on debt relief were pioneered by the British Government. I cannot give the noble Lord all the details because I do not have them in front of me. However, I know that it is intended not only to preserve the Trinidad terms but to go much further and to make additional progress.

It was said at the summit that there was a recognition of increasing signs of economic recovery. However, there was also a recognition of the need for prudent and vigilant fiscal and monetary policies to bear down on inflation. The British Government believe that to be right and are often attacked for making that their priority. It is comforting and reassuring to see that the Government are not alone in the world in doing so; indeed, ever major country takes the same view.

I do not know the detailed argument for full membership of the IMF for the Soviet Union. We all know that a great deal of progress has yet to be made in the Soviet Union before it can take its place alongside the G7 nations in the sense of having achieved a market economy. Unfortunately, it still has a long way to go. Our job is to assist the Soviet Union along that road and to help it to mobilise its enormous resources which it has not been able to use as a result of the highly inefficient socialist system that has existed for many years to its enormous disadvantage.

The noble Lord, Lord Jenkins of Hillhead, was right to say that summits are not for detailed negations. On the other hand, there is a place at international conferences for ringing declarations and the reaffirmation of commitments. It is important that that should be done by the world's leaders. I cannot answer the noble Lord's question about the possibility of a resummoning of the summit if no GATT outcome is likely by the autumn. However, I shall pass on his remarks to my right honourable friend.

11.58 a.m.

Lord Boyd-Carpenter

My Lords, is my noble friend aware that many of us will wish to join the noble Lord, Lord Jenkins of Hillhead, in congratulating Her Majesty's Government in general and the Prime Minister in particular on the great success of the meeting? Many of us believe that the success was due largely to the leadership of my right honourable friend the Prime Minister who served this country and the world with great distinction.

I wish to ask two questions, the first of which relates to a point made by the noble Lord, Lord Williams. Is it not right that summit meetings should not seek to confine themselves strictly to economic problems? It is impossible to draw an arbitrary line between economic and political problems. Does my noble friend agree that if the summits are to maintain and expand their significance they must deal with strictly political matters as well as strictly economic matters?

Can my noble friend say whether there was any indication at the meeting that our friends in Europe are prepared to accept, in order that the Uruguay Round should be successful, a radical review of the common agricultural policy? Is my noble friend aware that those of us who view these matters from outside have seen no indication of such willingness and it is plain that the success of the Uruguay Round will depend in large measure on considerable flexibility being shown by Europe as regards agricultural policy?

Lord Waddington

My Lords, I am grateful to my noble friend for his remarks about the leadership of the Prime Minister. His contribution throughout the summit has been quite outstanding.

I agree with my noble friend that it would be a great pity if such a gathering were to concentrate only on economic matters when important world events are taking place around it. Indeed, it would be artificial if it were to try to do so. In any event, almost every economic circumstance has a bearing on the political situation in one country or another.

At the summit we were not engaged in negotiations with individual members of the EC. Therefore, it is impossible to say that during the course of that meeting there were indications that individual European countries, which are perhaps not showing the same enthusiasm as we are for reform of the agricultural policy, have changed their ways.

Lord John-Mackie

My Lords, is the noble Lord aware that in the Statement quite a lot was said about the environment and the saving of forests in various countries? Does he appreciate that government policy in this country has reduced planting by over 50 per cent. both by the Forestry Commission and private forestry? He should do something to see that that is reversed.

Lord Waddington

My Lords, I am sure that now the noble Lord has put that matter on the record it will be read. One cannot compare any problems which may arise in this country because of our reluctance to plant more forests with the situation in Amazonia.

Lord John-Mackie

My Lords, does the noble Lord not believe that it is rather unwise to make that statement? He must know that an acre of trees—for example, conifers—sucks in something like five tonnes of CO₂ per year which takes a lot out of the atmosphere. Has he not noticed in the newspapers today that scientists are saying that the ozone layer is much thinner than was originally thought to be the case?

Lord Waddington

My Lords, I have no doubt that the noble Lord has a point. However, on reflection perhaps he will recognise that the conference was not designed to discuss whether we should have more acres of forest in the United Kingdom.