HL Deb 12 November 1998 vol 594 cc843-6

3.25 p.m.

Lord Clinton-Davis asked Her Majesty's Government:

Whether they have received any representations from the United States Government concerning threatened trade sanctions over the European Union's banana import regime; and, if so, what has been their response.

Lord Sainsbury of Turville

My Lords, on 10th November, the United States Government published for domestic consultation a list of EU products which might be targeted for retaliatory trade action in pursuance of their dispute with the EU over banana import arrangements. Her Majesty's Government very much regret this threat of unilateral action by the United States Government. We do not believe that it will help to resolve the problem. We would urge the United States scrupulously to follow the procedures provided by the WTO dispute settlement understanding. The Commission has agreed to accept an expedited panel procedure under which a final ruling could be reached in 90 days if the US withdraws its threat of unilateral retaliation.

Lord Clinton-Davis

My Lords, I thank my noble friend the Minister for that most helpful and positive reply. Is it not absolutely deplorable that, having established a panel for the resolution of disputes of this character, the American Government should see fit to bypass it on this occasion? Is there not a real threat of a trade war if this sort of conduct continues? Does my noble friend agree that perhaps the American Congress, rather than the American Government, seems to have rather more compassion for Chiquita than the Caribbean banana growers who are very vulnerable and poor?

Lord Sainsbury of Turville

My Lords, in the absence of any hard information I would not want to comment on the motives behind this move or on American politics. However, I am aware that such concerns have been voiced. I find it difficult to see how the US economy would be damaged by a 90-day delay in resolving the matter properly through an expedited panel. I am sure that all Members of this House will realise that the issue is of the greatest importance for islands such as Dominica, where the sale of bananas represents 20 per cent. of its GDP, and St. Vincent 19 per cent. I am sure noble Lords will also be aware that the Government have made clear on a number of occasions that they will stand by their commitments to the ACP producers.

Baroness Williams of Crosby

My Lords, is this not a matter which should be discussed at the highest level between the European Union and the US Government? The likely alternative for these desperate small islands in the Caribbean, if they are unable to live healthily on the sale of bananas, is a move towards producing plants related to drugs. Can the Minister confirm that Her Majesty's Government will also consider carefully whether what I propose might not be a better channel than the WTO where, as we know, the developing countries have representation by only one person compared to 200 for the United States?

Lord Sainsbury of Turville

My Lords, I thank the noble Baroness for her comments. She can be certain that this matter is being taken very seriously at the highest level. Indeed, on a number of occasions we have made clear our views on the matter to the American ambassador and to the State Department. I totally agree with the noble Baroness that there is a very real danger that, if the exports of these countries are decimated, they will indeed turn to some of these other activities. That would be very deplorable.

Lord Peston

My Lords, although I am probably ill-advised to use the words "economics" and "bananas" in the same sentence, I carried out a study some years ago on the economics of bananas in the countries we are discussing. Is my noble friend aware that almost all reasonable research would show that Her Majesty's Government can fulfil their moral obligation to those countries with minimal interference in free trade, much as we believe in free trade? Is he aware how appalled those of us who are strong supporters of the United States are at its reaction at this time? It is shocking. Will my noble friend reassure us that our Government, together with the other EU governments, will stand absolutely firm?

Lord Sainsbury of Turville

My Lords, the WTO has clearly accepted that we have commitments to these islands under the Lomé Convention. We shall stand by those commitments which we take extremely seriously. We shall make it clear to the Americans how strongly we feel on the matter.

Baroness Young

My Lords, while I greatly welcome what the Minister has said on this extremely serious issue—I speak as someone who is a supporter of both the Caribbean and of America—I urge the Government to take all the steps that are possible within the World Trade Organisation and particularly to draw to the attention of the Americans that one arm of their government appears to be supporting unlimited free trade while another is trying to deal with the narcotics problem. They are likely to have a completely contradictory policy as regards what will happen in the eastern Caribbean if those small islands are unable to grow the only crop which provides them with a suitable income.

Lord Sainsbury of Turville

My Lords, I thank the noble Baroness for those remarks. I agree totally that there is real incompatibility in the Americans' approach as between their different arms of government.

Lord Callaghan of Cardiff

My Lords, I believe the whole House is united on this matter. Will my noble friend convey the thought to the Prime Minister that when he next speaks on the telephone to President Clinton he might tell him that his trade negotiators betray an absurd lack of proportion in the way this dispute has been elevated, especially at a time when maximum unity is needed between the allies whose armed forces may shortly be engaged in an issue in the Middle East of far greater significance than this matter?

Lord Sainsbury of Turville

My Lords, it would be a great pleasure to convey that message to the Prime Minister.

Lord Redesdale

My Lords, does the Minister agree that the needs of multi-nationals seem to far outweigh the needs of developing countries and that it may be time to renegotiate representation at the WTO?

Lord Sainsbury of Turville

My Lords, that is an extremely interesting point but we would need to consider whether it is a practical and useful way forward.

Lord Fraser of Carmyllie

My Lords, we on this side of the House wholly agree with the question put to the noble Lord by the noble Lords, Lord Peston and Lord Callaghan. This is a matter on which I believe the House is united. There is good cause for maintaining our position. Having regard to the list of goods threatened with being subject to 100 per cent. tariff, does the noble Lord have any suspicion of other ulterior motives beyond bananas that lie behind the threatened trade war? After all, the United States is not exactly a major producer of bananas.

Lord Sainsbury of Turville

My Lords, I think I have made clear what we regard as a grave over-reaction to the situation. I also agree that the list of products is somewhat bizarre, but I do not think anything more should be read into that other than the fact that it is a bizarre list.

Lord Tomlinson

My Lords, will my noble friend the Minister welcome the steps taken by President Santer in writing to President Clinton pointing out clearly that the steps taken or threatened by the American Administration not only risk an international trade war but are also in breach of its obligations to the WTO? Will he also make clear in all these discussions that the responsibility of the world community is to make sure this issue is resolved without damage to the Caribbean states which, if encouraged to diversify any further into agriculture, will have the option only of drugs production?

Lord Sainsbury of Turville

My Lords, I think I have made it clear that this is an unfortunate episode, particularly at a moment of great economic insecurity. The WTO should be allowed to resolve the matter through the proper procedures.

Lord Monson

My Lords, does the Minister agree that Dominica and St. Lucia, which are highly dependent on banana exports, took the risk of backing the United States at the time of the latter country's controversial invasion of Grenada? Should not the Americans be urged to show some gratitude to those countries for their support?

Lord Sainsbury of Turville

My Lords, I thank the noble Lord for those comments. It is inappropriate to take this action in view of the support that has been given.

Lord Judd

My Lords, does my noble friend agree that, as with the previous Question on the multilateral agreement on investment, this case illustrates the absurdity of approaching world trade from the over-simplified standpoint of level playing fields? If we are taking seriously sustained development in the poorest developing countries, the overriding challenge is how we enable countries to reach the point at which they can participate on equal terms in world trade.

Lord Sainsbury of Turville

My Lords, I remind the House that the WTO has conceded the point that we should abide by our obligations to the Lomé Convention which allows the ACP producers to have a privileged position. What is in debate is the exact way the quotas are designated. This is a matter which should be resolved through the procedures for disputes.