HL Deb 12 July 1993 vol 548 cc24-35

3.57 p.m.

The Lord Privy Seal (Lord Wakeham)

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 about the Economic Summit on 7th–9th July. The Statement is as follows: "With permission, I should like to make a Statement on the Economic Summit in Tokyo and the Group of Seven meeting with President Yeltsin. I attended the summit with my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer. During the three days I also had bilateral meetings with our host, Prime Minister Miyazawa, and with the Presidents of the United States and Russia and the Prime Minister of Canada.

"The summit produced significant achievements. These are set out in the economic and political declarations which I have placed in the Library of the House.

"Before the Tokyo summit, the GATT talks had been stalled for several months. The summit acted as a catalyst. The United States, Japan and the European Community negotiated a report on access to each other's markets which has led to the resumption of GATT negotiations in Geneva.

"The report offers large benefits to British industry. In six of the eight categories where tariffs are to be abolished entirely, Britain is a net exporter. These include pharmaceutical and construction equipment. Japan's agreement to abolish all the import duty on whisky will give a welcome boost to sales in a market which is already worth over £170 million a year to Scotland. Many other particularly high tariffs faced by British exporters will be cut by 50 per cent. or more. These include punitive United States tariffs on ceramics, glassware and high quality textiles. In other categories of manufactured goods, there was agreement to cut as many tariffs as possible by a third, or to harmonise them at low levels.

"The Uruguay Round is far wider in scope than previous multilateral trade negotiations. It still has a long way to go. But the Tokyo meetings have injected much-needed momentum and real progress on substantive issues—action as well as words—and the worldwide prospect of more trade and more jobs, especially for a trading nation like the British. With low interest rates and firm control of costs, British industry is exceptionally well placed to benefit from a successful GATT round.

"Madam Speaker, each summit country, except Japan, is facing a serious fiscal problem. With the exception of the UK, the European participants are not expecting economic growth this year. Against this background, the Summit identified barriers to growth which have developed in much of the industrialised world.

"As at the European Community's Copenhagen Council, I found a new willingness among our partners to address some of the hard lessons which we learnt in the United Kingdom during the recession. Three points in particular were generally accepted: that there is a long term upward structural trend in unemployment in addition to the cyclical effect of the recession; that, on present forecasts, the cost of social provisions is likely to exceed the capacity to meet them in all the main industrial economies; and that deregulation and labour market flexibility are vital to get unemployment down.

"It was agreed that Europe should implement the firm budgetary and other measures needed to facilitate the rapid reductions in interest rates which are now required in many countries on the Continent. In North America, strong action was being taken to bring down fiscal deficits over the medium term with the objective of securing higher saving and investment. Japan, meanwhile, wilil implement fiscal and monetary measures to ensure sustained growth led by strong domestic demand. This will help to reduce Japan's large current account surplus.

"All of these measures are intended to help growth around the world. The Summit's accent on jobs was reflected in agreement to send high level representatives to a special meeting which President. Clinton is convening in the autumn. This will study the causes of unemployment and pool experience in seeking solutions.

"Madam Speaker, in April the Group of Seven put together an unprecedented set of measures to help Russia through its deep transformation. At Tokyo, the Heads of Government confirmed that approach, and noted that some large financial flows were already being made available, including 1.5 billion dollars in a new IMF facility. We set out a programme worth some three billion dollars to help privatisation and restructuring. There are some encouraging signs of a spreading enterprise culture in Russia. The summit leaders told President Yeltsin that they were determined to sustain the huge support they had given to reform in his country.

"Of equal importance, we have reinforced our political partnership with Russia. As an innovation this year, our agenda included a joint review with President Yeltsin of international problems. At my suggestion, the meeting concluded with an invitation to the Russian President to join us again next year in Italy.

"The political declaration touches on many of the problems we discussed with President Yeltsin, or beforehand among the Seven. We supported a negotiated settlement for Bosnia, but only on the basis that it would be acceptable to the Moslem people and not imposed on them. We highlighted the importance of the non-proliferation treaty; supported the constitutional talks in South Africa; and expressed concern about the behaviour of Iraq, Iran and Libya.

"The Summit paid close attention to problems of the developing world and of the environment. I secured agreement that improved debt reduction terms should be considered for the poorest and most indebted countries. I hope this will carry implementation of the Trinidad terms further. On the environment, the Summit reaffirmed its commitment to sustainable development and implementation of the Rio decisions.

"Finally, Madam Speaker, a word about the summit process itself. Over 19 meetings, the summits have evolved from an informal discussion between Heads of Government into an enormously expensive and over-structured international event. I believe that radical change is necessary if we are to get the best out of this process. I proposed innovations last year, and I made further proposals in Tokyo. These were widely supported. I hope that, as a result, future summits will be more informal; less pre-prepared; and will provide even more opportunities for spontaneous discussion between the summit heads.

"Despite the procedural weaknesses I have mentioned, the Tokyo Summit produced results of particular benefit to the United Kingdom as an exporting nation and a leading advocate of free trade. It concentrated on problems which are causing deep concern around the world. It helped to bring leaders who are addressing these problems in common closer together. And it laid the groundwork, I believe, for productive work at future summits."

My Lords, that concludes my right honourable friend's Statement.

4.6 p.m.

Lord Richard

My Lords, we are grateful to the Leader of the House for repeating the Statement made in another place by his right honourable friend the Prime Minister.

The Summit was clearly held at a critical juncture in the development of the world economy, which has been hit by recession and by unemployment. In the industrialised countries alone, 35 million people are now unemployed, with more out of work across the world. We therefore welcome President Clinton's initiative to combat unemployment, and hope that the Group of Seven countries will be prepared to take co-ordinated action to boost growth and to create jobs.

However, my regret is that it has taken so long for our own Government to recognise the importance of increased international planning and co-operation to safeguard jobs and to create new ones, and not merely to rely upon the operation of the market. I believe that that change of mind by the Government will give any proposals that they make at Mr. Clinton's proposed conclave on unemployment a special piquancy.

We also welcome the partial agreement on GATT and pay tribute to the important work undertaken by Sir Leon Brittan in helping to promote the agreement. Admittedly, certain difficulties remain. In particular, problems relating to agriculture still have to be addressed. The dispute over agriculture will not go away; it still exists. It has raged within the Group of Seven, and within the European Community. In that respect it is perhaps unfortunate that the Summit was not successful in resolving those problems over agriculture.

I should be grateful if the noble Lord will outline any new initiatives that the Government may have for resolving the dispute in the field of agriculture. Procedurally, what are the next steps to be taken following the partial understandings that were reached at Tokyo?

The Summit discussed, too, current developments within Russia, and apparently agreed a three billion dollar aid package for that country. We hope with the Government that that package will assist President Yeltsin to promote economic reform and political stability within his country. Perhaps the noble Lord will elaborate a little on the thinking behind the granting of the three billion dollar package. When the Finance Ministers met in April, the figure apparently was to be four billion dollars. There is an apparent discrepancy between the two figures, but is there a discrepancy in reality? I shall be grateful to know how much of the three billion dollar aid package which was apparently agreed in Tokyo is new money; and how much of that is money that is already pledged, or in some cases has already gone.

The Summit also agreed what it called a comprehensive approach to the problems affecting the developing world. To be effective, that strategy must include the speedy implementation of the Trinidad terms on debt relief. Can the Minister outline what the Government are doing to secure that and, perhaps most importantly, to persuade the Japanese Government that it ultimately lies in their own interests to play a more positive role in promoting agreement on international debt relief? We on these Benches would also like to see the Government reverse their reduction in the United Kingdom's overseas aid programme to 0.31 per cent. and take definable and progressive steps towards reaching the United Nations aid target of 0.7 per cent. of GNP.

The fighting in Bosnia seems, understandably, to have cast a shadow over the summit. The Vance-Owen plan seems well and truly dead: numerous ceasefires have been broken and the killing goes on with no apparent end in sight. Sadly, the summit offered no new ideas or initiatives to bring an end to the anarchy in Bosnia. We need urgent international action to stop the fighting. As a matter of immediacy, sanctions must be strengthened and urgent consideration given to extending them to Croatia. The United Nations has to give practical meaning to the safeguarded areas and use the threat of air strikes to deter aggression. Was any of that discussed at the summit? If so, how far were any understandings reached?

We are also concerned by North Korea's withdrawal from the Nuclear Non-Proliferation Treaty, although that, again, may be more apparent than real. I should welcome the Minister's comment on that, too. We welcome the fact that President Clinton has extended the moratorium on nuclear tests for a year. We hope that the Government will play a more positive role in working towards the implementation of a comprehensive test ban treaty.

Looking at the Summit as a whole, it would seem that it was one of those meetings that did not solely rely upon producing a verbal communique at the end, but, particularly in terms of the GATT, seems to have taken one or two practical steps, which I am bound to say is refreshing.

4.11 p.m.

Lord Holme of Cheltenham

My Lords, from these Benches, may I also welcome the Statement, from the noble Lord's right honourable friend the Prime Minister, which he read to the House. This was a Summit for which the expectations were extremely low and, by contrast, I think we may all take some pleasure in the outcome. Certainly, there is a welcome sign that the sclerosis which has afflicted the international scene over the past 18 months has had some remission. In that sense, the summit should be counted at least as a partial success. I suppose a cynic might say that seven leaders all in search of good news for domestic purposes will probably find a silver lining and so they managed to do so.

However, particularly welcome is the pressure that the summit engendered on the so-called Quad countries for the agreement on better market access, not least Japan's agreement in principle to abolish the remaining duty on Scotch. Perhaps I may ask the Leader of the House how definite is Japan's agreement to remove the import duty on Scotch. I understand his right honourable friend the Prime Minister will visit Japan in September. Will he by then be able to raise a glass of Scotch with Mr. Miyazawa's successor, to celebrate the removal of the final import duty? Perhaps he could be as specific as possible in replying to that.

On the Uruguay Round, we are still not out of the woods, as the noble Lord, Lord Richard, said. I am sure that the Government know that we on these Benches give complete support for the Uruguay Round and for the resumption of freer trade in the world. Can the noble Lord give us some prognosis of what is now likely to happen with the Uruguay Round negotiations in Geneva? Like the noble Lord, Lord Richard, we welcome the aspirations on debt reductions and the hope that the Trinidad terms will be taken further, but I notice that the language used in the Statement is quite weak. It merely says that that will he considered. What news has the Minister for us of definite progress there?

Then we come to the important question of unemployment. There is certainly a welcome sign of a more positive international approach. It is also welcome that all industrialised countries now accept that there are deep structural problems and not simply temporary problems of recession to be dealt with. I believe that it is a fair criticism that in the past the United Kingdom Government have had a rather more limited approach than some other countries on the matter, certainly more limited than the proactive Clinton approach. It seems that the international community will need the full gamut of supply-side measures, rather than confining its hopes simply to freeing up markets. In that context, our active membership of the European Community, which is currently being discussed in the House, is crucial. How do the Government see the Clinton initiative relating to the Delors initiative on unemployment?

Then there is the question of Bosnia. In that context, I was concerned, as I am sure other noble Lords were, to see what seemed to be back-tracking by the noble Lord's right honourable friend the Foreign Secretary on removing the arms embargo in Bosnia. That has not appeared in the Statement this afternoon and I am unclear as to its status in the final communiqué. Perhaps the noble Lord will reassure us that the Government's policy has not changed and that the arms embargo should not be lifted.

A question to which the noble Lord, Lord Richard, referred is nuclear proliferation. The communiqué reiterated the objective of universal adherence to the Nuclear Non-Proliferation Treaty and to its indefinite extension in 1995, as well as to nuclear arms reductions. In that context, perhaps I may urge the Government to find an early opportunity to restate their commitment to nuclear testing restraint. Perhaps the noble Lord could do that when he replies. In particular, will the Minister welcome President Clinton's decision to extend the moratorium on US nuclear tests until September 1994? Will he support President Clinton's objective of achieving a comprehensive test ban treaty by September 1996? Will he declare the willingness of Her Majesty's Government to participate in talks towards achieving a comprehensive test ban treaty by 1996, when the talks resume later this year?

There was a reference in the Statement to the costs of social provisions exceeding the capacity of the signatories to meet them. Is that something on which the Minister would like to expand to the House? What particular cuts do the Government have in mind in the level of social provisions as a result of the Tokyo Summit? It would be useful if the Minister could share the Government's intentions more fully with the House.

Finally, at the end of the Statement there was a sensible reference to the Summit being less elaborate, "more informal". That is surely to be welcomed. The Summit has become a three-ring circus, with tens of thousands of media people swarming round plus many officials. It is easy to support it being more informal, but I wonder why the Government want it to be less well prepared. Is lack of preparation now to be considered a political vice? Conversely, has it become a virtue to go into meetings without being properly prepared? Perhaps the noble Lord can enlighten us on that.

Lord Wakeham

My Lords, I am grateful to both noble Lords, Lord Richard and Lord Holme, for their general welcome to much of what went on in Tokyo. They asked a great many questions which I shall do my best to answer, although I have a fair number of bits of paper here. Perhaps I may start with the last but not necessarily the most important point. The proposal for the Summit is that there should be less ceremonial, fewer people, less paper and more time for leaders to meet in person to exchange views and help build a consensus. That is what is meant by less pre-preparation; that leaders go there with fewer preconceived notions as to what are necessarily the solutions, but have a proper free discussion to try to learn something. The important point is that this Summit, in spite of the difficulties—which are highlighted perhaps by the fact that there were some 11,000 media men at Tokyo, which works out at something like 1,600 media men for every one head of government who was present—was serious, realistic and businesslike. It was not a decision-making forum, but a forum for harmonising thinking. It was an opportunity to exchange views, build consensus and develop and deepen understanding. It was in that context that a number of the points raised by both noble Lords were discussed.

Obviously, the questions about unemployment were among the most important that were discussed. The tone and wording of the declaration afterwards on the question of unemployment had clear echoes of some of the points made by the Prime Minister both at the Copenhagen Summit and at Tokyo: namely, that high unemployment was caused by inflexible labour markets; there was commitment to measures that increase flexibility and encourage enterprise; and the Government particularly welcomed President Clinton's suggestion of a high level meeting to discuss these matters in relation to unemployment later in the year. I do not believe that there is any conflict between that meeting and any initiatives which M. Delors may propose for the European Community, which will be examined within the European Community discussions.

One important point about the GATT arrangements applied to agriculture as well. The market-access package was not about agriculture. But it was thought (and I agree) important for all the dossiers to be reactivated in Geneva for the multi-national negotiation. Steps were taken at Tokyo on the question of the Quad countries reporting back to other countries. Obviously, they did not settle the agreement. This is the answer to the question about the price of Scotch. The agreement reached in Tokyo is conditional upon getting full agreement in the multi-lateral talks in Geneva. But it was a very significant move forward that the major countries at Tokyo should agree that together they would push for the round of tariff reductions, many of which will be beneficial to this country. It is important in relation to the position of the French, mentioned in exchanges just a few moments ago. The French particularly welcome the Quad report, but the Community only takes a formal decision once that has been negotiated. As my noble friend Lady Chalker said, it is difficult for any member state to hold out against a balanced deal which offers benefits both to developed and developing world alike. I gather that there are, particularly, in this agreement some significant advantages for the French economy, which is encouraging from that country's point of view. For example, the agreement on services is particularly valuable to the French as well as to this country. The agreement on Scotch was also matched, I believe, by an agreement on what is known as brown spirits. I believe that most noble Lords would know that as brandy and subjects of that sort.

The noble Lord, Lord Richard, raised the question of debt and of the progress that was made in that respect. The Prime Minister raised that subject and the Summit welcomed the call to the Paris Club to look again at the relief for the poorest and heavily indebted countries; especially to get earlier action case by case on reducing debt stock, as proposed by the United Kingdom. We are still pressing for the full Trinidad terms to be brought into operation; but there was some significant progress, at least in the understanding between the countries represented at the Summit.

With regard to Yugoslavia, which both noble Lords raised, the position was not taken further in the sense that there were new initiatives. But there was a clear warning both to Serbia and to Croatia from the G7 that the dismemberment of Bosnia is unacceptable; the safe area resolutions must be implemented fully and immediately. There was a warning that stronger measures beyond sanctions have not been ruled out.

With regard to the non-proliferation treaty, which both noble Lords raised, there was a considerable section in the political declaration covering the key international concerns. That too was based very much upon the suggested language from the United Kingdom delegation. It sends clear signals to North Korea, Ukraine and Kazakhstan.

With regard to the point made by the noble Lord, Lord Holme, about social security, the point in the Prime Minister's Statement referring to the rising cost of social provision in all the countries of the G7 was discussed, and was part of the communique. I should make it clear that the Government have an absolute commitment to helping the most needy and vulnerable in society. But as the discussions in Tokyo showed, countries need to control ever increasing bills for social welfare. Otherwise, an intolerable rise in tax burden, diverting resources from private investment, would be inevitable. Across the whole of the G7 countries that problem is a matter that will have to be addressed over the years. There is no intention on the part of the Government to cease the help that we give to the needy and the most vulnerable in our society. I believe that I have covered most of the points raised by noble Lords.

Lord Richard

My Lords, I wonder if I may put to the noble Lord the Leader of the' House a point that he did not answer: how much of the Russian money is new money?

Lord Wakeham

My Lords, I beg the noble Lord's pardon. I did not include the position on the new money. There are two amounts of assistance. There is 1.5 billion dollars of international monetary fund stand-by credits which have now been agreed, and an agreed programme of a 3 billion dollar contribution to technical assistance. That 3 billion dollars is largely from technical assistance, export credit and loans from international financial contributors. Much of the resources were already announced, but this will provide accelerated implementation, co-ordination and targeting. That is what was agreed.

Lord Holme of Cheltenham

My Lords, before the noble Lord sits down perhaps I may put to him a question that he was not able to answer. It is the question of whether the Government's policy remains unchanged on the arms embargo in Bosnia.

Lord Wakeham

My Lords, I did make that point quite clear in my answer. I said that there was no change in the policy announced but there was a warning, which has been made before, that stronger measures beyond sanctions have not been ruled out.

Lord Boyd-Carpenter

My Lords, is my noble friend aware that many of us feel that the Prime Minister is to be warmly congratulated on the distinguished part that he played in achieving the considerable measure of success which this conference achieved? That is very gratifying to many of us in this country. However, can my noble friend go a little further on the question of the common agricultural policy and agricultural protection? In particular, has there been any modification of the attitude of the French Government which, as I understand it, has for some time been the main obstacle to achieving progress in that direction?

Lord Wakeham

My Lords, that was not a question that was directly discussed at Tokyo. The point that was discussed at Tokyo was the Quad countries' agreement for tariff reductions. But the Government believe that the reduction in tariffs, which is now going to the revitalised Geneva talks, gives benefits to everybody, including the French. Therefore, it is hopeful that it will make the negotiations in Geneva more likely to be successful.

Lord Taylor of Gryfe

My Lords, perhaps I can press the Minister on the point raised by my noble friend on the Front Bench concerning the credits which are now to be made available. In the case of earlier credits from the German Government to the Soviet Union as part of aid, a substantial proportion of those credits were used for the repayment of debts to German banks and German industries and did not in fact represent new money for new investment. Can I have the assurance that the moneys referred to in the Statement will be direct moneys for technical assistance in the former Soviet Union and will not necessarily be used to repay the substantial debts that are due from the Soviet Union?

Lord Wakeham

My Lords, I know nothing about the repayment of substantial debts. I know that the figures that have been agreed have been designed for privatisation and the restructuring programme. That is my understanding of the position.

Lord Harmar-Nicholls

My Lords, the Statement reports back to Parliament what has transpired. I should like to follow up the point made by my noble friend Lord Boyd-Carpenter about whether or not the French have reformed. They very clearly had certain views before the summit took place. They seemed dangerous and difficult views in some respects. Although a decision may not have been made one way or another arising out of their past views, did they give any indication at all about their feelings at this minute compared with the previous statement or were they using the right of silence?

Lord Wakeham

Absolutely not, my Lords. The French took a full part in the Quad countries' discussions about tariff reductions. They agreed fully with those tariff reductions, which are to be submitted to the meeting in Geneva. It is to be hoped that that meeting will now have a new impetus for agreement. That is an encouraging round. As regards the position that the French will take over the whole package, we do not know what their views will be over the whole package. All I can say is that the discussions that took place in Tokyo are thought—I believe correctly—to make a distinct improvement in the prospects of getting the overall package agreed at Geneva.

Lord Molloy

My Lords, I acknowledge that it was quite right of the Prime Minister to stress the importance of unemployment, which is the curse of Europe and indeed nearly all the world. However, can we now expect to see a change in policy in order to reduce unemployment in this country'? It was right for the Prime Minister to acknowledge that we have to help the Russians. But does he agree that we must bear in mind that there are other former Soviet Union countries as well as Russia that are affected and it would be quite wrong to concentrate on aid just for Russia and neglect the others? Does he also agree that the abolition of nuclear weapons must be an international endeavour and that we can in no way get rid of our weapons unless we know full well that the rest of the world will dispose of theirs?

Lord Wakeham

My Lords, the noble Lord asked a question about a change in policy in regard to unemployment. I should have thought that the message that came out of the Tokyo Summit was that there was a greater realisation that the policies being pursued by Her Majesty's Government in this country are the right policies to reduce unemployment by providing sustainable long-term jobs in this country. Each country in the G7 agreed to tackle the problems for economic growth in its own way in the face of its own particular problems. For example, the United States has to tackle its budget deficit; Japan, in particular, has to support domestic demand (an area where it can assist); and the continental countries have to work towards lower interest rates. There was no suggestion that everybody's policies should be the same. Each country agreed to tackle the problems of unemployment in the ways best for its own circumstances. A great deal of notice was taken of what our Prime Minister suggested as to ways forward which are proving successful in this country.

With regard to the other countries in the former Soviet Union, the noble Lord is right. There are massive problems in many if not all of them. Considerable efforts are being made by British industry and the British Government through the know-how fund and so on to try to stimulate activities in those countries. In my previous incarnation, I played a modest part in trying to encourage the energy industries. There was no suggestion that the role of the United Kingdom with regard to nuclear weapons was in any way to be called in question at the summit. The noble Lord is quite right that disarmament is a matter for world agreement and not for a unilateral step by us or the United States.

Lord Marlesford

My Lords, does my noble friend agree that it is ironic that the French economy and currency at present are facing problems in relation to the German currency and that those problems are very similar to the problems that we faced last September? Those problems were due to the refusal of the French to allow the Germans to revalue. Will he assure us that Her Majesty's Government will resist the pressures, which were widely reported this weekend to have been exerted at Tokyo, for Britain to rejoin the ERM in order to help the French?

Lord Wakeham

My Lords, I can assure my noble friend that there was no debate at Tokyo about whether we rejoin the ERM.

Lord Sanderson of Bowden

My Lords, I congratulate my right honourable friend the Prime Minister on the Statement and its repetition in this House. Will my noble friend say whether there is anything further that he can say about the reductions in tariffs for high quality textiles which are obviously coming from the United States? That is a very welcome move from a country that is well known for its protectionism in that area. Do I take it that any agreement of that kind has to await further discussion at the GATT round?

Lord Wakeham

My Lords, my noble friend is absolutely right. There are high tariffs faced by British exporters, particularly in the United States. As a result of the Quad agreement, the proposal going to Geneva is that they should be cut by 50 per cent. or more. That will be of particular benefit to a number of companies in this country which produce high quality textiles.