The Chairman: Does a member of the European Scrutiny Committee wish to make a brief explanatory statement?

Mr. David S. Borrow (South Ribble) (Lab): It was not my intention to speak to the Committee, as I understood that my hon. Friend the Member for Chorley (Mr. Hoyle) was due to give the Select Committee’s views.

The document that we are discussing is part of the European Union consultation process regarding the relationships with overseas territories of the four EU countries that will be affected—the UK, France, the Netherlands and Denmark. The EU has published a consultation paper, and the European Scrutiny Committee thought that it should be debated by this Committee before consultation went much further.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Gillian Merron): It is a pleasure to serve under your chairmanship, Mr. Pope. I welcome what is for me an early opportunity to discuss the future relationship between the European Union and the overseas countries and territories of its member states. It is particularly timely that we are here today, because I shall meet Premiers, chief Ministers and other political representatives from overseas territories at the annual Overseas Territories Consultative Council in London this week. Hon. Members will be interested to know that the relationship between the EU and the overseas countries and territories features on the agenda for that important meeting.

Andrew Mackinlay (Thurrock) (Lab) rose—

The Chairman: Order. I think that the hon. Member for Mid-Norfolk was right—this is going to be one of those Committees. May I point out to members of the Committee that there are not usually interventions during the Minister’s opening statement? There will be ample opportunity for hon. Members to ask questions and to make comments later.

Gillian Merron: I am sure that we are all grateful for your guidance, Mr. Pope.

The UK’s unique relationship with our territories is based on a partnership with mutual responsibilities and obligations. That relationship has modernised to become increasingly consultative since the publication of the 1999 White Paper, and it is right that we should welcome discussion with the European Commission on how the relationship between the EU and the overseas countries and territories can be improved and modernised. The Green Paper is a good place to start, and is the reason why we are here. Crucially, it recognises both the special relationship between the EU and the overseas countries and territories, and the principle of mutual interests. The overseas countries and territories benefit from the EU, but they also have much to offer it. This is merely the start of the consultation process and a stimulus for debate on the form that the successor to the overseas association decision should take. A new decision will not come into effect until 2014.

The world has changed significantly during our long and historic relationship with the overseas territories. Most recently, the territories are feeling the effects of globalisation. For many, the financial services and tourism industries are the mainstays of local economies, and are being affected by the current global financial situation. Modernising the relationship between the territories and the EU is an important part of our strategy to manage the specific challenges that globalisation presents for our overseas territories. The EU has also changed, expanding to include 27 member states since the current overseas association decision came into effect in January 2001. None of the 12 new EU members have overseas territories, and per capita gross domestic product in many is lower than that in some of the territories. The review process will be an opportunity to secure among all member states a better understanding of the special relationship between them and their overseas territories.

It may help the Committee if I set out the basic aims of the current overseas association decision. They are, first, to promote economic and social development, and, secondly, to establish close economic relations between the territories and the Community as a whole. That is achieved by offering financial assistance from the European development fund and by provisions, which are included in the decision, on economic co-operation, a trade regime, human and social development, regional co-operation and cultural development.

I shall touch on a couple of the key issues for the Committee’s benefit. First, the Green Paper asks whether the current approach to development is correct. The UK strongly believes that a new decision should not lead to a lessening of development support where it is still needed. Access to development funds, complementing funding provided by the Department for International Development, is vital for some of the UK’s territories and is likely to remain so for some considerable time. Our overseas territories should also have better access to other funding streams to tackle global issues such as the environment and climate change. Climate change and environmental degradation are likely to have a particularly profound effect on all the overseas territories in the coming years.

The second key issue is the paper’s focus on trade arrangements between the EU and the overseas countries and territories. They benefit from a generous tariff regime, and the UK takes the view that they should continue to receive preferential treatment in terms of trade links and trade preferences with the EU under any new association. The UK and our territories will want to consider later whether greater regional integration through the signing of economic partnership agreements would be to their benefit, but currently we do not think that it would.

Although the UK welcomes the Green Paper as the first phase in the discussion between the overseas countries and territories and EU member states and the Commission, we want to make it clear to the Commission that each territory is unique. The territories face a number of common challenges, which stem from being small in size and having a narrow economic base and limited trading opportunities. Many are also constrained by a lack of resources. However, each territory’s economic infrastructure varies considerably, and we have stressed that although any new decision will cover all overseas countries and territories, a one-size-fits-all policy is not possible. The challenges for the Falkland Islands are a world apart from the challenges facing somewhere such as Montserrat.

We shall also be clear that any future relationship must respect the constitutional relationship between each overseas country and territory and their member state. I hope that hon. Members have had the opportunity to look at the Government’s response to the Green Paper, which was prepared in close consultation with other Departments. We have encouraged the territories to put forward their responses—it is their opportunity to help to influence the shape of the future relationship—and we will continue to ensure that our overseas territories are kept informed of developments in Europe which might affect them.

I conclude by assuring the Committee that the Government will work with the territories, the Commission and other member states to achieve a fair and successful outcome for our territories throughout the consultation’s various stages, and that we will listen to and consider any suggestions from the territories and from hon. Members. The Government are committed to seeing progress and prosperity in the overseas territories and to having a strong and well functioning European Union. We will work to ensure that any future relationship between the two works in the best interests of all. I welcome the debates as a contribution to the progress that we seek to make.

The Chairman: We now have until half-past 5 for questions to the Minister. I remind hon. Members that questions should be brief and asked one at a time. I intend to allow people to ask more than one question—perhaps two or three—and I shall try to ensure that everybody gets to ask all the questions that they wish to.

Mr. Keith Simpson (Mid-Norfolk) (Con): It is a pleasure to serve under your chairmanship, Mr. Pope. This is my first debate in a Committee with the Minister.

We welcome the opportunity to debate the Green Paper, and commend the Select Committee on its work. Obviously, I have a number of questions, and I shall start by asking three. Is the Minister satisfied that she has seen sufficiently strong evidence to back the assertion that the current overseas association decision is in need of substantial revision? The Green Paper states unambiguously on page 2 that the current partnership is in need of “a thorough renovation”. However, the explanatory memorandum submitted by the then Minister for Europe on 17 July said that

Does that mean that the Government consider the analysis in the Green Paper to be insufficiently detailed? What additional analysis has Britain requested, has that now been undertaken, and have the Government conducted their own analysis? In a similar vein, the Green Paper concludes that

without making it clear what modernisation would entail.

Finally, the same explanatory memorandum from the Minister’s predecessor states on page 67:

consultation process at a forum

at the end of November. However, there is no indication of what process will go forward, when key decisions will be made, or when the process of negotiating the new overseas association decision will be made. Will the Minister shed light on that, and if the answers to those questions are not yet known, will she assure us that she will pursue the matter with the Commission?

Gillian Merron: I thank the hon. Gentleman for his questions. The Government believe that there is a need to modernise the relationship. As I said, there has been much change since the original decision was made. Our wish is that the situation is, at the minimum, no worse. That is the bottom line for our overseas territories, but perhaps I may go further. I am keen that we do better for them. For example, I want increased access to funding in respect of climate change, and I want greater flexibility in access to EU funding. I assure the hon. Gentleman that I am convinced that there is room for improvement, which is why we are keen to take part.

It may help the Committee if I summarise the Government’s response to the Green Paper because that may deal with some of the important points raised. The UK shares the overall motivation of the Green Paper to establish a stronger relationship with the overseas countries and territories, and we must adapt both our thinking and our practice, because there are new and unavoidable realities in this century. We must seek nothing worse; we must seek improvement. We must also respect the constitutional arrangements between the UK and its overseas territories.

The hon. Gentleman was right in saying that we want the EU to analyse the advantages and disadvantages of the current arrangements, taking account of overseas territories’ limited capacity and vulnerability. That is particularly important for development, support and trade.

The public consultation ended on 17 October, and we expect the Commission to make a statement on the process at the annual forum in the Cayman Islands at the end of next month. I shall be pleased to keep the Committee informed of the process.

Jo Swinson (East Dunbartonshire) (LD): I am delighted to serve under your chairmanship, Mr. Pope.

I want to pick up on a couple of points that the Minister made about financial assistance, and to obtain some clarification. Changes were made to the way in which financial assistance went to overseas territories in 2001 by giving assistance direct to the territories rather than channelling it through member states. Will the Minister confirm that the Government are still in favour of that arrangement, and that they are not suggesting that it is reversed? I know that the Government response states that

but are they concerned that, through their different constitutional basis, the French overseas territories might have an advantage over the UK overseas territories, which means they can access EU funding directly? If so, what proposals does she have for changing the way in which funding is allocated, and how might we encourage the European Commission to take those proposals on board?