European Union/US Banana Dispute (Hansard, 12 July 1999)

§ The Minister of State, Department of Trade and Industry (Lord Simon of Highbury)
My Lords, in response to pressure from the UK and other member states, the European Commission came forward with a paper on 26th May reporting the results of initial discussions with the US and other parties in setting out a range of options for revising the EU's banana regime. The Council of Ministers has encouraged the European Commission to continue its discussions with the US and other parties and to submit formal proposals on the adaptation of the arrangements for bananas as soon as possible. The UK has made it clear that it is open-minded on options, provided the solution is clearly WTO-compatible, ends the dispute conclusively and provides suitable support for the Caribbean.

Lord Renton
My Lords, while thanking the noble Lord for that reply and welcoming the steps that have been taken so far as they have achieved anything, may I remind him that our export trade is still suffering very severely? I give the example of carton manufacturing in my old constituency of Huntingdonshire where the threat of unemployment is now serious. Will the Government press this matter to a satisfactory conclusion?

§ Lord Simon of Highbury
My Lords, as the noble Lord has rightly outlined, carton manufacturing is one 7 of those areas where retaliation has been taken by the United States to the value of £1.4 million in turnover out of a total of £27 million. We are doing everything in our power to hasten the European Union's negotiation so that it reaches a successful conclusion.

§ Viscount Waverley
My Lords, does the Minister agree that one of the principal difficulties is that in general US congressmen have little idea of the consequences of United States actions? Can the UK assist in strengthening the ACP secretariat in Brussels, for example, to allow it to play a more effective role in this regard?

§ Lord Simon of Highbury
My Lords, I do not believe that the negotiating process is lacking. In the European Union and in individual member states we have sufficient capacity and know-how to conclude a successful negotiation. I do not believe that extra bureaucracy will help at this time. I agree that on occasions the American process of lobbying between company and government is much more strident than our own, but, as in the case of "hushkits", sensible compromises can be found, and I believe that one will be found in this case as well.

Lord Bruce of Donington
My Lords, my noble friend will be aware that the European Commission is in the process of reorganisation. Whether or not it is yet finalised, one does not know; but can the Minister give any indication of whether the Government have yet been informed which of the new commissioners, if approved, will deal with this matter? Can he identify, in order that we may trace the matter thoroughly, which directorates-general are likely to be involved in the negotiations in their final form?

§ Lord Simon of Highbury
My Lords, as far as we understand it, the Commissioner for Trade Relations who will take over from our own commissioner will be Pascal Lamy, the French nomination. He is widely experienced in trade negotiations through his current role at Crédit Lyonnais. I do not believe that we can yet provide details about individual directorates-general. One of the first utterances of Professor Prodi was that it would be a lot easier for people generally if directorates were given titles that described what they did rather than a number of numbers, if I may put it that way.

§ Baroness Gardner of Parkes
My Lords, we were told initially that the cashmere industry was just as badly affected. We now read in the press that the Americans have reversed their position on that industry. Was that simply because they liked cashmere, or was a very clever technique employed from which we can learn, and which we can perhaps apply, in the trade war?

§ Lord Simon of Highbury
I do not believe that it was due to anything particularly clever other than consistently sound negotiating by our side in bringing to the attention of the Americans the fact that this particular trade is seasonal and that once we had gone 8 through the seasonal peak, which we were doing at the time of the dispute, that particular problem would be resolved and they would gain nothing.

§ Lord Clinton-Davis
My Lords, on the assumption that the hearings before the European Parliament on the new Commission will be completed by September, can my noble friend indicate when he believes it is likely that specific proposals will be forthcoming from the Commission to deal with this very protracted issue? Perhaps I should declare an interest because of my involvement in this matter until last July.

§ Lord Simon of Highbury
My Lords, as I said in my initial response to the noble Lord, Lord Renton, we hope to have formal recommendations soon. I think that the soonest date would be late September as and when the new Commission has gone through the process of parliamentary approval. However, as we can present proposals before that, I think that late September would be a good date.

§ Lord Razzall
My Lords, does the Minister agree that whatever the outcome of the negotiations, it is inevitable that there will be a serious problem for a number of Caribbean islands? Will he confirm that the Government will be at the forefront in putting together the appropriate package of guarantees, soft loans and grants to enable those islands to make the natural transition from bananas to other products?

§ Lord Simon of Highbury
My Lords, it is uppermost in the Government's mind that the regime which substitutes the existing illegal regime, as found by the WTO, will have to span one of three options: tariff, licence or quota. I think it most likely that tariffs will be used. Uppermost in our minds in the negotiations will be the fact that we shall have to make good some income to our fellow citizens who are deeply affected by the banana trade.

Lord Renton
My Lords, bearing in mind that the World Trade Organisation criticised the agreement which led to the banana war as long ago as 12th April, why do we have to wait until September until the matter is satisfactorily resolved? Will the Minister bear in mind that much damage could be done to our export industry meanwhile?

§ Lord Simon of Highbury
My Lords, as we have often said, that is the nature of complex international trade negotiations when upwards of 20 or 30 people want to see a successful outcome. We are taking very seriously the impact on our own industries. The Department of Trade and Industry has had several discussions with people who are affected by the first stages of the retaliation about which we speak.