§ Mr. Ron DaviesTo ask the Minister of Agriculture, Fisheries and Food whether he has made any assessment of the impact on British agriculture of Britain becoming a member of the European monetary system; and if he will make a statement.
§ Mr. MacGregorThe United Kingdom is already a member of the European monetary system (EMS). Were we to join the exchange rate mechanism (ERM) of the EMS, within what is known as narrow-band divergence limits, there would be implications for the monetary compensatory amounts (MCAs) applied to trade in agricultural products.
744WCurrently MCAs applied in the United Kingdom can vary weekly if sterling's market exchange rate varies. If we joined the ERM, our MCAs would become fixed, changing only at EMS realignments or following changes in the "green rates" which apply to the conversion of ECU prices into sterling. The green rates themselves would not be directly affected by membership of the ERM, and changes to them would continue to be subject to decisions by the Council. Joining the ERM would not, in itself, affect our CAP support level, expressed in sterling, either way.