HL Deb 11 March 1998 vol 587 cc207-10

2.50 p.m.

Lord Judd asked Her Majesty's Government:

What is their policy for protecting the well-being of the peoples of those countries whose economies largely depend on banana exports to the European Union as guaranteed by the Lomé Convention.

Lord Whitty

My Lords, the Government are working hard to ensure that the interests of those countries most dependent on banana exports are taken fully into account in the revision of the EU's current banana regime as we have to do in the light of the ruling from the WTO. In addition, we are also providing support—through the EC and bilaterally—for the banana industry through restructuring and help to improve efficiency; for economic diversification; and for general economic and social development.

Lord Judd

My Lords, does not my noble friend agree that this issue comes close to the heart of the Government's commitment to fight world poverty? Does he agree also that the difficulty with the proposal by the European Commission for a global quota is that the small farmers in the Caribbean will be unable to compete? Is it not therefore essential to have a country-specific quota system? At the same time, can my noble friend assure the House that the Government will be doing everything possible, together with their European Union partners, to persuade the World Trade Organisation to protect the traditional market share of vulnerable, single commodity, dependent countries until at least they have a chance to diversify?

Lord Whitty

My Lords, as my noble friend and other noble Lords are undoubtedly aware, the WTO rules allow preferential treatment, but regrettably not preferential treatment under the Lomé Convention for the banana regime of the EU. The Commission's new proposal must therefore be WTO compatible. It is the Commission's view that a country-allocated quota to traditional ACP producers may not be in conformity with the WTO ruling. There are different legal views on that, and some countries—indeed, the United States—are already challenging the Commission's proposal. It is therefore an extremely complex area, but I agree that the interests of the small producers must he safeguarded.

Lord Redesdale

My Lords, are the Government prepared to support the European Commission's proposals that £340 million should be set aside for technical assistance to help ACP countries to diversify? Do the Government consider that to be an adequate figure?

Lord Whitty

My Lords, we support the proposal from the Commission and are looking at a proposal for 45 million ecu a year to be allocated to help those traditional banana producers not only to improve the efficiency of their banana industry, but also to diversify. They need help to meet the global challenges.

Baroness Young

My Lords, I hear the views expressed by the noble Lord, Lord Judd, on this extremely serious issue for small economies in the Caribbean. However, do the Government recognise that if the banana regime collapses, it is difficult to see what alternative crop can be produced on those islands? Will the Minister not only pursue the suggestions that have already been made, but also recognise that the private sector has a role to play in helping to look for diversification?

Lord Whitty

My Lords, I accept much of what the noble Baroness says. In any medium-term plan for diversification, investment in other areas besides the banana industry is important for the Caribbean producers. We intend to try to mobilise private investment as well as help from the European and British Governments. It is a difficult situation for those economies and we hope to come out on the other side with a better regime to carry them over the immediate period.

Lord Cocks of Hartcliffe

My Lords, will the Minister remind our European allies that had many people not come from the Caribbean during the war, and in many cases died in the war against the Axis powers, they would not now be in a position to make this sort of decision?

Lord Whitty

My Lords, I accept the general point being made by my noble friend that this country owes a lot to our former Caribbean colonies over a long period. We shall certainly not desert them now.

Baroness Oppenheim-Barnes

My Lords, will the Minister also bear in mind when negotiations are taking place that, quite apart from the excellent points that have been made, the result of this piece of Euro-farce—as it is at present—is that consumers in this country will have to pay higher prices and have less choice? As far as I know, there is not a single banana grown in the Community.

Lord Whitty

My Lords, the last point depends on whether we regard the Canary Islands, Guadeloupe and Martinique as being part of the Community. The problem is not primarily a "Euro-farce"; it is a ruling of the WTO panel, whose general principles we accept and support, that the banana regime previously established by Europe is not compatible with those principles. We now have to find between us, on a joint European basis agreed in consultation with the ACP countries, a new regime which protects those vulnerable economies. It is a difficult task, both legally and economically.

Viscount Waverley

My Lords, what is the reaction of the Minister to the contradiction in US policy when President Clinton's adviser on Africa briefed the Addis Forum this past weekend that the president is considering preferential access for African goods to enter the United States against the successful and upheld judicial review of the Lomé Convention brought by the American Government on behalf of a US banana company?

Lord Whitty

My Lords, I shall need to study whether that is in direct contradiction. As the noble Viscount says, the action by the US Government and others on behalf of large producers was not friendly towards countries which have always been friendly, not only towards Great Britain, but also to the United States. However, we are now in this situation and must find a way out.

Lord Peston

My Lords, I am reassured by the excellent answers given by my noble friend. Can he repeat in terms that Her Majesty's Government accept a special responsibility for what were colonies and what are now part of the Commonwealth in this extremely difficult situation of a single product special economy, subject to intense competition from countries which often have other axes to grind when more generally it comes to free trade? Her Majesty's Government have a special responsibility in addition to the responsibility of the EU.

Lord Whitty

My Lords, I accept that the British Government have that responsibility. But we must exert that responsibility both through negotiations with our EU and WTO partners and also through bilateral and multilateral aid to allow the economies to improve their efficiency and, so far as possible, to diversify. I hope that assures the House that we accept the responsibility.

Baroness Hooper

My Lords, can the Minister clarify a point for me? My understanding of the European Union proposal was that it was intended to give financial assistance to banana producers rather than a preferential quota. Does the Minister agree that that principle could well be applied to the tobacco industry also where, instead of giving a quota arrangement to encourage tobacco production, it would be better to give financial assistance for social reasons?

Lord Whitty

My Lords, the tobacco regime is an entirely different matter largely based on production within the European Union. The Government have made their views clear that it needs radical revision, if not effectively abolition.

In relation to the banana regime, the Commission put forward two proposals. The first related to introducing a new regime which is WTO compatible, and the second is a proposal for aid. They are designed to both help the banana industry and diversification into other aspects of the Caribbean economies. Both proposals are important if these small countries are to survive. General principles are not necessarily the best in relation to vulnerable economies.