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Column 441

Trotter, Neville

Twinn, Dr Ian

Vaughan, Sir Gerard

Viggers, Peter

Waddington, Rt Hon David

Wakeham, Rt Hon John

Walden, George

Walker, Bill (T'side North)

Waller, Gary

Wardle, Charles (Bexhill)

Warren, Kenneth

Watts, John

Wells, Bowen

Wheeler, John

Whitney, Ray

Widdecombe, Ann

Wiggin, Jerry

Wilkinson, John

Wilshire, David

Winterton, Mrs Ann

Winterton, Nicholas

Wolfson, Mark

Wood, Timothy

Woodcock, Mike

Yeo, Tim

Young, Sir George (Acton)

Younger, Rt Hon George

Tellers for the Noes :

Mr. Tristan Garel-Jones and

Mr. Tony Durant.

Question accordingly negatived.

Clause 3 ordered to stand part of the Bill.

To report Progress and ask leave to sit again.-- [Mr. John M. Taylor.]

Committee report Progress ; to sit again this day.

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Beef Imports (United States)

12.11 am

The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker) : I beg to move

That this House takes note of European Community Document No. 4296/89 on tariff concessions and import duties on certain imports from the United States of America ; and supports the Government in pressing for a negotiated settlement to the dispute between the Community and the United States of America over the Community's prohibition of imports of hormone treated meat as a means of averting trade disruption and damage to wider Community-United States relations, particularly in the context of the current round of multi-lateral trade negotiations in GATT.

I am grateful to the Scrutiny Committee for taking such a close interest in this subject. I advise Opposition Members that I am very much aware of recent criticism and anxiety about scrutiny procedures in the House. I assure the House that the Government are looking at this. This debate is particularly opportune, as the Foreign Affairs Council will consider the European Community-United States dispute over hormones next Monday and I am keen to hear the House's views before then.

The EC hormones directive was agreed by the Council by qualified majority in December 1985, to come into effect by 1 January 1988. The United Kingdom voted against that decision and subsequently challenged the directive in the European Court of Justice. Our challenge was on several grounds, including the lack of scientific justification. The court accepted the United Kingdom arguments about the procedural irregularities in the adoption of the measure and annulled the directive. However, it did not rule on the scientific point. A new directive, identical in substance to the earlier one, was agreed by the council in March 1988, by qualified majority vote--with the United Kingdom alone voting against. Although the directive was agreed in the face of strong and consistent United Kingdom objections, it is now part of Community law, and therefore binding on all member states. We have therefore no choice but to implement it.

The concern that produced the ban was directed not only at meat produced in the Community--it was also about meat consumed in the Community. Thus, it had to apply also to imports, wherever they come from. All the usual exporters of meat to the European Community, apart from the United States and Canada, accepted the ban. Each exporter provides guarantees that their beef does not come from hormone-treated animals. The United Kingdom, supported by some other member states, succeeded in getting EC agreement to reduce imports banned by about a quarter to $100 million by exempting petfood. We also prevented damage to pet food manufacturers in the United Kingdom and elsewhere, which depended on imports of United States meat. As the United States and Canada had refused to comply with the requirements of the directive in relation to beef, imports of bovine meat and offal for human consumption from the United States and Canada were banned from 1 January. About one quarter of the trade affected normally comes to the United Kingdom.

On 27 December 1988, the United States Administration responded by announcing the imposition of a prohibitive 100 per cent. tariff on certain EC exports to the United States, worth about $100 million, to take effect from 1 January. The exports in question--primarily canned tomatoes, fruit juices, instant coffee and low

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alcohol drinks--come largely from Italy, Germany and Spain. Only 2 per cent. of EC exports affected by United States measures come from the United Kingdom. Following United Kingdom pressure in the Council debate in January, I secured a grace period in action until the end of January, so that United States meat not complying with the directive and EC exports affected by the United States tariff increase, but shipped before the end of December, remained unaffected.

Mr. William Cash (Stafford) : Can my right hon. Friend inform me whether with respect to the original directive, which was under article 43 of the treaty of Rome, and the regulation, which is under article 113, the stages which were taken in the Council, which were supposed to be under unanimous procedure, were taken in that way? Did we exercise the veto on either or both those occasions?

Mrs. Chalker : We argued that the legal base should include article 100 and not merely article 43. In 1985, that would have required unanimity. My hon. Friend will remember that we took our case to the European court of Justice, but lost on that point. I do not believe that it would have been appropriate in this instance to use the Luxembourg compromise, which has always been reserved for extremely important matters at stake. We took the issue to the European court and, having lost, saw no further extent to which we could take it.

Mr. Cash : Will my right hon. Friend allow me to intervene once more?

Mrs. Chalker : I do not think that I can take the point any further.

Mr. Cash : Article 43, which was the basis on which the issue was being decided, states clearly that the Council, under proposals from the Commission shall act unanimously during the first two stages. I merely ask the question again : did we exercise our veto under article 43?

Mrs. Chalker : That is what I sought to explain to my hon. Friend. It is important to have clearly in our minds what is happening now. Since 1 February, the community ban is now in force, as the unilateral United States measures against the EC. Overall, the direct effect on United Kingdom trade is very small, although, inevitably and sadly, some firms may suffer. The United States is an important source of offal for processing and as alternative sources cannot easily be found, some processed meat companies may soon notice the effect of the ban.

We greatly regret this dispute. Although the amount of trade involved is small so far, the dispute is potentially very damaging. There is a real risk of escalation. The United States Agriculture Secretary, Clayton Yeutter, said in his confirmatory hearing on Capitol hill that, if the EC imposed counter-retaliation measures, the United States would counter- counter-retaliate. Such a trade war would make the dispute much more difficult to resolve.

The EC and the United States have major roles to play in the GATT Uruguay round--not least in resolving the current deadlock on agriculture and finding a way forward. Those are the most ambitious and complex

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multilateral trade negotiations yet. We should not allow attention to be diverted, or the atmosphere to be soured, by a trade dispute. Our view remains that all trade disputes can be resolved only through negotiation. The sooner a constructive negotiation can be engaged over hormones, the better. The dispute can only get worse with time. The GATT offers three possible routes for the settlement of the dispute--a conventional GATT panel under article XXIII, the dispute settlement procedures of the GATT technical barriers to trade "standards" code, and an ad hoc procedure under the good offices of the director- general.

The Community has not ruled out any of those options, although it recognises that recourse to the dispute settlement procedures of the standards code would require a shift in the entrenched United States position on the scope of the code which the United States, despite evidence to the contrary, believes covers process and production methods such as the hormones directive.

The EC has so far wisely refrained from counter-retaliation against United States action. A list of United States exports--walnuts and dried fruits-- on which 100 per cent. tariffs could be imposed has been drawn up. This amounts to about $100 million a year, of which only about 4 per cent. normally comes to the United Kingdom, but pressures remain in the Community for counter-retaliation, especially from those member states worst hit by United States measures. At the January Foreign Affairs Council, the Council agreed to take stock of the situation at its next session on 20 February. We also agreed that the EC counter-measures would be put into effect unless there was satisfactory progress in GATT or in bilateral negotiations with the United States. We shall continue trying to find ways to avoid precipitous EC action when the matter is discussed at the February Foreign Affairs Council

At the GATT Council on 8-9 February, the Community's complaint against the United States unilateral action was considered. The Community asked for a GATT panel to examine the United States measures. The United States rejected the request, but expressed the hope that the issue could be settled bilaterally. The Community offered consultations which the United States welcomed, but would not have them before the Commission talks with United States Trade Representative Hills and United States Agriculture Secretary Yeutter on 18 February. Thus, confrontation was at least delayed, but much now depends on talks in Washington this weekend.

My right hon. and learned Friend the Foreign Secretary discussed the dispute with United States Secretary of State Baker last Sunday. He impressed on him the need for early resolution of the issue--which would need good will on both sides.

If, against our expectations, the outcome from the weekend Washington meetings were absolute deadlock, there would undoubtedly be very strong pressure from some member states at next Monday's Foreign Affairs Council for EC counter-retaliation. I do not believe that counter-retaliation would achieve anything, and I trust that it will not be necessary.

Whether or not there is another twist to the retaliatory spiral, the Government will continue to do everything possible to work for a rapid settlement of the dispute.

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Mr. Jonathan Aitken (Thanet, South) : I am concerned about the tone of the diplomatic exchanges between my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs and the new United States Secretary of State. My right hon. Friend the Minister of State spoke of backing off, giving way, and retreating, but surely it is the other way round. The European Community must realise the realities of the situation, acknowledge that it is in the wrong and, above all, accept that when it comes to the Uruquay round the United States holds the cards in trade negotiations, and that any retaliation could result in something far worse than has ever been envisaged.

Mrs. Chalker : My hon. Friend is being a little unfair. In recent months, we have on many occasions attempted to get a proper discussion under way. My hon. Friend will recall that, a few moments ago, I said that the Community offered consultations which, while they were welcomed by the United States, had been declined before the Commission talks with the United States next weekend. Had talks taken place last week, perhaps we would be on our way to an earlier resolution of the matter than can now be possible.

Everything is now being crowded into the weekend before the meeting of the Foreign Affairs Council. If consultations had taken place after 8 February but before 18 February, there would have been more time to talk matters through calmly, and to reach the solution that we seek. When my right hon. and learned Friend discussed the matter with Secretary of State Baker last Sunday, he tried to impress on the American Secretary of State the need for discussion and for an early resolution--which the Americans, by not agreeing to consultations in the intervening period, effectively refused. We regret that fact because we made constant and repeated efforts to resolve the problem.

Negotiation is the only way forward. I hope that good sense will prevail sooner rather than later, because we can then turn our attention to other important matters within European Community-United States relations. Ithoroughly agree that making progress on agriculture in the GATT round is vital and I commend the motion to the House.

12.27 am

Mr. George Robertson (Hamilton) : The debate concerns a matter of enormous importance, affecting not just trade matters. Although we are concerned for the moment about only $100 million of trade, within weeks the figure could escalate to considerable multiples of that sum, to $500 million or more. This evening, the Minister said : "the dispute is potentially very damaging. There is a real risk of escalation."

This debate is also important in health terms, as the debate on whether hormones in meat have an effect on consumption gets lost in a sea of acrimony over trade and trade relations. It does not require an hon. or right hon. Member of any perception to realise that the question of the nation's health in relation to its food supplies dominates the media and Parliament. The debate is also of substantial political and diplomatic importance, as the relationship between the United States and our allies in Europe grows worse and more strained--in marked contrast, remarkably, to the sweet noises that now characterise East-West relations. Emphasising the signal

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importance of this debate is the fact that it was opened by the deputy Foreign Secretary, and will be wound up by the Minister for Trade.

Remarkably, this debate started after midnight, although in less than a week the deferred decision on retaliation is due to come before the Council of Ministers. Moreover, this is the first time since 1985 that the House has had an opportunity to discuss this far-reaching and momentous subject-- and we have probably been given the opportunity now only because of the perceptiveness and insistence of the Select Committee on European Legislation, which has done an excellent job. That is a disgrace. It is an insult to the House of Commons and an affront to parliamentary accountability.

Whatever view we may take of the issue, it serves to highlight and underline the way in which we have not only seen power disappear from the House of Commons, but found in its place no less than a contempt for our right even to advise those Ministers who go to the Council on our behalf. I welcome the Minister's assurance that the Government are conscious of, perhaps even embarrassed by, the way in which scrutiny of European legislation has been allowed to slip. We shall hold her to that commitment.

Although it may be embarrassing for them, I should like to support the Government's position and that of the European Community. We strongly endorse the Community's case--not just the essentials, but the principle. The decision that has been made is not designed to discriminate against any other country's trade. It was made within the Community, and applies as much to Community agriculture as to that of any country, including the United States.

This is a clear indication of consumer preference throughout the Community. Let me quote from the influential magazine Agra Europe, which in many other instances expresses a critical viewpoint. Its edition of 22 December says :

"The Americans on the other hand would do well to recognise the democratic origins of the EC's hormone legislation : it is one of the few pieces of law in the food and agriculture of the Community which actually reflects the desires of the European electorate--unlike the CAP itself which reflects the interests and demands of a small minority of the population and actively harms the majority."

Mr. John Greenway (Ryedale) : Does the hon. Gentleman accept that if we ban products which scientific evidence proves are safe we are on the slippery slope? If, after scientific advice, it is shown that unpasteurised milk is safe, will the Labour party insist on a ban?

Mr. Robertson : The hon. Gentleman jumps up too quickly. As that is at the root of the issue, I proposed to come to it. As he has mentioned unpasteurised milk, however, it is interesting to note that the United States, which is making most of the brouhaha here, has banned the import of cheeses made from it on the basis not of scientific evidence but of consumer preference. There is no reason why the European Community, or any individual country within it, should not do the same.

Mr. Michael Lord (Suffolk, Central) : Will the hon. Gentleman give way?

Mr. Robertson : No. My time is limited, and I have already dealt with the point. I shall come to the scientific implications in due course, and if the hon. Gentleman wishes to try again then he may be successful.

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The case is strong, and not only on the basis of consumer preference, although it is perfectly reasonable for anyone in this country or the European Community to come to a conclusion that takes account of scientific practice without following it slavishly. The right hon. Member for Henley (Mr. Heseltine) wrote in an article in The Times : "The council had clearly taken a political decision, as the agriculture commissioner later confirmed."

Of course there is an element of politics. The idea that the right hon. Member for Henley can stand apart from political decision is in itself a bit of a joke.

The pace of biotechnology and all its implications does not involve simply the individual reports of one committee or any single series of contemporary evidence. Professor Lamming's report--the basis of the scientific evidence put forward--was careful in its endorsement of the five hormones, and agreed to them only

"under proper conditions of use".

The report contained that important qualification. However, the pace of biotechnology cannot be quantified from one moment to the next. As we have seen during the past few weeks, contemporary views about what is healthy and what is not are open to debate. Ultimately the decision has to be taken by politicians assessing scientific evidence and other considerations.

I strongly support the suggestion by Mr. Ken Collins, the Member of the European Parliament for Strathclyde, East when the European Parliament considered these matters in 1988 that we need a major study both on the biotechnological aspects and on the wider public implications. That is how we shall acquire some conclusive evidence, not from one specific panel of experts.

Mr. Lord : The hon. Gentleman is saying that we must be careful about what we do because things can change rapidly and we do not know what will happen in future. But we are dealing with today, and we are dealing with the facts. Does the hon. Gentleman accept that, by and large, scientists are fairly careful and do not take decisions dogmatically or with great emphasis unless they are sure of their facts? In this case, Professor Lamming and his committee had a good look at the matter we are discussing, and concluded that the use of the synthetic hormones presented no cancer risk and constituted no conceivable hazard to human health. If there is to be any sense in our debate about food and all the present problems, surely we must depend on scientific evidence when it is presented in that form. Mr. Robertson rose--

Sir John Stradling Thomas (Monmouth) : Will the hon. Gentleman give way on that point?

Mr. Robertson : I have a deep affection for the hon. Gentleman, but I shall not give way.

Hon. Members should bear in mind the fact that there are wider implications than Professor Lamming's report. Scientists can be dogmatic. Medical and scientific experts often reach contradictory conclusions. I refer Conservative Members to our continual debates on abortion. Both sides of the argument deploy eminent scientific experts to prove absolutely contradictory arguments. Those who are quite content to rely on Professor Lamming's committee have to discount the

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opinions of all the members of the European Parliament who voted for the ban and those within the Council of Ministers who made the ultimate decision.

I welcome the belated appearance of the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, since the implications of that decision are considerable. If the hon. Gentleman dissents from the view of the Council of Ministers, it would be nice to have it on record so that the view of the British Government is known. The Minister did not take such a position at the Dispatch Box this evening. She spoke in defence of a Community decision taken by a majority vote, and, as she said, without the United Kingdom veto being used. The Minister must accept collective responsibility with her colleagues in the fight that will take place. The Government of course oppose it.

As in so many cases recently, the health of the nation takes second place to the interests of the farmers and the drug companies. What is all the fuss about? The House and the country have a right to ask this question. Why is it that we are on the brink of a trade war with the Americans over £100 million-worth of what is, after all, mostly offal, which is usually regarded as waste products, and the cheapest cuts of meat? Whey are we on the brink of a trade war over something apparently as trivial as that?

Mr. James Baker, the new US Secretary of State, said that he believed that this dispute was trivial and unworthy. He was quoted this week in the International Herald Tribune as saying that it would have to be solved, because it would get diplomatic relations with Europe off on the wrong foot.

Why are we on the brink of a trade war? The American case is, of course, extremely weak. First, it has the arbitrary ban on non-pasteurised European products entering the United States on the grounds of taste. It has no scientific evidence, but it is doing it on the basis of American health preference.

Secondly, there has been an offer from both Texas and Kansas to supply an equivalent amount of the agricultural produce that is being prevented from coming in from the European Community. Mr. Jim Hightower, who is the Texan Commissioner of Agriculture, from the President's own State, has offered to make up the shortfall in terms which would qualify under the Community's new rules.

Why is the United States willing to breach the GATT rules at this stage when its case is so weak?

The Financial Times this week concluded that the United States finds itself in the wrong. It said :

"The US must recognise that no system of rules can survive if each participant believes it possesses carte blanche to act in its own behalf."

That is a conclusion derived from the fact that the European Community has at least won informal support from its GATT partners for its protest about that unilateral decision.

The question must be legitimately asked, why are we on the brink of a trade war over £100 million-worth of trade in offal when EEC-United States trade amounts to more than £150 billion a year? I suggest that we must look to more sinister forces to get an answer to that question. We are right to do so, because there is no easy explanation of why we are in our present position. Why is the drugs lobby well organised, well financed and well deployed and in the forefront in ensuring that these hormones are used for

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health? According to the Financial Times of 28 January 1988, the European Federation of Animal Health is a group of 22 major pharmaceutical companies

"which have banded together to try to overturn the EC directive". The article went on to say :

"The group's defence fund runs into hundreds of thousands of dollars. It claims to have several weapons still in its armoury". Its key weapon, of course, was the British Government's outright hostility to that directive taken through the European Court of Justice, and taken to a vote in the Council of Ministers. The Financial Times of 8 March, when the directive had finally gone through, said :

"The directive has inspired fierce criticism from the pharmaceuticals lobby".

Of course, in the United States of America, the pharmaceuticals lobby is even more powerful than it is in the European Community. The Animal Health Institute bands together the largest of the multinational drug companies in exercising its influence, too. Four weeks ago, John Lichfield, in his article in The Independent, said :

"an EC official also identified the power of the pharmaceutical lobby in US government agencies on Capitol Hill' as a principal if not the only cause of the row."

We are getting closer to home when we begin to see the power of the industry. The animal hormone industry in Europe accounts for some £100 million-worth of trade. Therefore, the coincidence of a market for £100 million-worth of animal hormones in Europe with a trade war starting over £100 million is too large to discount.

The British Government's position must be clear and straightforward from now. There must be no bending on the right of Europe or individual countries in Europe to reflect genuine concerns and apprehensions among our populations even if the technological and scientific establishment is not, at this moment, in full support of that position. The Government must do something about the decision to ban the hormones. There must be a stricter enforcement regime in this country than is apparently the case today. Much more residue testing has to take place and the research institutes that have had their funding reduced or stopped must have it reinstated. Perhaps the Minister should ask the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, who is beside her on the Front Bench, whether agricultural produce should be put under the product liability directive so that, not only in this area but in others, farmers can be on the same footing as every other producer and subject to the same discipline.

The British and American Governments must abandon their fatal fixation for jumping at every whim of the multinational drug companies. Their voracious appetite for profits, even at the expense of the public good, has rarely been in such open display as in this contrived, artificial and hugely damaging dispute. Drugs and biotechnology should be the servant of the public good and not its master, which seems to be the case now.

12.46 am

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