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Lord Hoyle: My Lords, I beg to move that the House do now adjourn during pleasure until 8.50 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.46 to 8.50 p.m.]

European Communities (Amendment) Bill

House again in Committee.

Lord Moynihan moved Amendment No. 43A:

After Clause 1, insert the following new clause--

Declaration on Overseas Countries and Territories

(" . Within six months of the passing of this Act a Minister of the Crown shall lay before both Houses of Parliament a report on the budgetary implications for the United Kingdom of Declaration 36 (on the Overseas Countries and Territories) appended to the Treaty of Amsterdam.").

The noble Lord said: I beg leave to move the amendment standing in my name and, with the agreement of the Committee, I shall refer also to Amendment No. 43B. I accept that that amendment is separately listed, but it will assist the Committee. I know that the Government Benches are content with that. I shall not be moving Amendment No. 43B because I shall be covering the points that I wish to make under Amendment No. 43A, which relates to the Declaration on Overseas Countries and Territories.

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The proposed new Clause that I have tabled requires a report to both Houses of Parliament on the budgetary implications for the United Kingdom of Declaration 36 on Overseas Countries and Territories which is appended to the Treaty of Amsterdam. This declaration recognises the need for special arrangements for Overseas Countries and Territories. It notes that the number of OCTs has declined significantly since the existing arrangements were first established in 1957. The declaration points out that these arrangements for association of OCTs were designed for countries and territories which were numerous, covered vast areas and had large populations. Today, however, there are only 20 OCTs and they are extremely scattered island territories with a total population of approximately 900,000.

This reduction in numbers of OCTs came about because member states no longer have empires and many of the territories referred to have since become welcome independent countries. The special association arrangements in place have hardly changed for decades and the Council has therefore been invited to review the association agreements between the Community and the OCTs and to come forward with proposals on how to assist the remaining 20 or so more effectively.

The review has a four-fold objective. Promoting the economic and social development of the OCTs more effectively; developing economic relations between the OCTs and the European Union; taking greater account of the diversity and specific characteristics of the individual OCTs, including aspects relating to freedom of establishment; and ensuring that the effectiveness of the financial instrument is improved. The review will be concluded before February 2000, at which point the old arrangement runs out. Decisions on the review in the council will be taken by unanimity.

Did the Prime Minister or Foreign Secretary, during the negotiations at Amsterdam which led to the inclusion of this declaration, raise the possibility that Spain might veto a future deal on the Community's association arrangements for OCTs because of the status of Gibraltar?

The Committee will have noticed that my brief consultation on Gibraltar in this context is very different to my earlier, somewhat forensic, assessment of the Government's hole-in-the-wall debacle and the secret Amsterdam tapes. This is a very different issue. Up against the threat of a Spanish veto, the Government would be faced with a choice between resisting such a threat and potentially allowing the OCT agreement to fold without a replacement, or giving in to Spanish demands. In such circumstances I am keen to elicit a response from the Government.

This is far from a fanciful scenario. Certainly the Chief Minister of Gibraltar, Peter Caruana, has no doubt that Spain would have no hesitation in deploying its veto. The Chief Minister said:

    "We in Gibraltar have no doubt whatsoever that Spain will deploy her veto unless the UK agree to exclude Gibraltar from the application of the Schengen arrangements.

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    "Our fears and concerns of the existence of the Spanish veto on a future British entry into the Schengen arrangements are not imaginary. Spain will exercise the veto, just as she did in relation to the application of air liberalisation to Gibraltar, from which we are still excluded, and just as she vetoed the External Frontiers Convention unless Gibraltar was excluded from it."

He continued:

    "As far as Spain is concerned the very same issues arise in respect of Schengen."

Mr. Peter Caruana also commented that:

    "A future British government would be placed in the invidious position of having to choose between advancing the UK's greater interests at Gibraltar's substantial expense or sacrificing the UK's greater interest for the benefit of Gibraltar. The last time the UK found itself in this position related to the air liberalisation directives and Gibraltar was indeed excluded."

What guarantees did the Government seek in order to avoid potentially placing the United Kingdom in such an invidious position? What guarantees did the Government get that Spain will not use its veto again in respect of the Overseas Countries and Territories review? What assurances can the Minister give to the people of Gibraltar in this context?

The Committee will agree that this assurance is vitally important because, as it knows well, the status of Gibraltar has been a matter of disagreement between the United Kingdom and Spain for nearly 300 years, ever since the rocky promontory at the foot of the Iberian Peninsula was ceded to the United Kingdom in perpetuity under the terms of the Treaty of Utrecht.

Spain has always laid claim to Gibraltar and has sometimes used its notoriously hostile strong-arm tactics in staking its assertion of sovereignty to the Rock, culminating in General Franco's unilateral decision to close the border between Spain and Gibraltar in 1969, effectively severing links between the Rock and the mainland for over 13 years.

Despite the Brussels process established in 1984 to discuss a range of Gibraltar-related issues, including sovereignty, the people of Gibraltar are still beset by an unsubtle blend of harassment, threats and restrictions contrived by Spain. Spain continues to create practical difficulties for Gibraltar, and Spanish tactics include unacceptable delays at the Spain-Gibraltar frontier and discrimination between European Union nationalities; incursion into Gibraltar's waters and air space, obstacles to cross-border development; effective prohibition of transport links between two territories of the European Union, since there are no ferry services between Gibraltar and Algeciras and no direct flights between Gibraltar and Madrid; exclusion from the European Union open-skies policy; refusal to recognise Gibraltar's international direct-dial code; impediments to the expansion of Gibraltar's telephone system; refusal to recognise Gibraltar's identity cards, which have been accepted by the European Commission; insistence that Gibraltar should be excluded from the European Union Convention on External Frontiers and insistence that Gibraltar should be excluded from certain European Union directives.

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Those are critically important points in the context of the overseas countries and territories. I have focused on one example this evening and I shall now make a few comments on the island regions and turn to my amendment on that subject.

The Amsterdam Treaty amends Article 227 of the TEC, Article 299 of the consolidated version. Paragraph 2 now provides for the phasing in of the application of the provisions of the TEC in French overseas departments. The new article recognises the particular social and economic situation of the French departments--the Azores, Madeira and the Canary Islands--and provides for specific conditions in applying provisions of the treaty. For example, it instructs the Council to take into account areas such as customs and trade policies, fiscal policies, free zones, agricultural and fisheries policies, conditions for supply of raw materials and essential consumer goods, state aid and conditions of access to structural funds and to horizontal Community projects.

Just as the declaration on OCTs states that the purpose of association is to promote the economic and social development of the countries and territories, it recognises also that as a result of their severe geographical and economic handicaps, most OCTs lag far behind in structural terms. Article 227 acknowledges that factors of remoteness, insularity, small size, difficult topography and dependence on a few products can adversely affect the structural, social and economic situation of the island regions. The permanence and combination of those factors can severely constrain their development.

Moreover, the declaration on island regions acknowledges that Community legislation should take into account the specific structural handicaps faced by island regions and provides for specific measures to be taken in favour of those regions. The declaration states:

    "The Conference recognises that island regions suffer from structural handicaps linked to their status, the permanence of which impairs their economic and social development. The Conference accordingly acknowledges that Community legislation must take account of these handicaps and that specific measures may be taken where justified in favour of these regions in order to integrate them better into the internal market on fair conditions".

Most importantly, and again in the context of Gibraltar, paragraph 3 of Article 227 refers to the list of overseas countries and territories with special arrangements for association set out in Annex 2 to which Part IV of the TEC applies. Members of the Committee can read that list and it will be immediately clear that the lengthy list leaves out some of Britain dependent territories. That is because the treaty does not apply to those overseas countries and territories having special relations with the United Kingdom of Great Britain and Northern Ireland which are not included in the aforementioned list.

As Members of the Committee will know, Gibraltar's omission from that list is a serious bone of contention. I should very much like to see a clarification of the Government's policy on that issue. Do the Government consider that Gibraltar has structural handicaps and that therefore specific measures should be taken in favour of Gibraltar to integrate it better into the internal market

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on fair conditions in accordance with that declaration? What response did the Government make to the Chief Minister of Gibraltar when we asked whether that treaty provision, giving special attention to the outermost island regions, could be extended to include Gibraltar? Does the Minister agree with Mr. Caruana that Gibraltar shares with many of the named places the same structural, social and economic situation, and that the situation is likewise compounded by remoteness, virtual insularity, small size and economic dependence on a few products, all of which serve to hamper Gibraltar's development? Does the Minister agree further that Spanish actions have adversely affected Gibraltar's development, that Spain's tactics have had serious practical consequences for the people of Gibraltar, and that as a result, many people have regarded Gibraltar as existing in a state of relative economic siege--with its development impeded and its potential unfulfilled?

What is the Minister's response to the Chief Minister's assertion that Gibraltar is likewise a small territory severely burdened and constrained by the need to apply certain Community obligations? Although those burdens have now been recognised in respect of the above-mentioned European Union territories, that excludes Gibraltar. Did the Government negotiate to extend that new regime to Gibraltar? If not, why not? Does the Minister agree with the Chief Minister of Gibraltar that that represents a missed opportunity to benefit Gibraltar in a way which recognises that it too suffers many of the disadvantages mentioned in Article 227 and in Declaration 30? I should be very grateful for any assistance which the Minister can give me on government policy in relation to those points, believing, as I do, that the two amendments calling for reports on the budgetary implications will provide both Houses with the necessary opportunity to consider the important position of Gibraltar, on a regular basis.

9 p.m.

Lord Whitty: I propose to comment on the amendments as they stand. The noble Lord has, by concentrating on Gibraltar, mixed up three rather than two separate areas. First, we are talking about the overseas territories of member states which are those islands dotted all around the world; secondly, the island regions, which are regions of the EU like the Azores, and so on; and, thirdly, the outermost regions which include some of the same but also some continental areas of Europe.

The second amendment relates to island regions. However, the first amendment relates to overseas countries and territories. It requires that we give a report on the budgetary implications of the declaration on overseas countries and territories. I argue that that is an otiose amendment because there will not be any budgetary implications arising from that declaration. As the noble Lord said, the association agreement has existed since 1957 and the EU has provided funds for those countries from the European Development Fund. It includes generous trade provisions and Community grants similar to those of other groups of developing countries, duty-free tariffs and so on. In the course of

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the Amsterdam negotiations, France put forward a draft declaration that simply reaffirmed the objectives of the OCT Association. That was prompted by the need to renegotiate the association decision in 1999, partly for the reasons that the noble Lord described--the great reduction in the populations of those territories. The French were anxious that we should reaffirm the position that had existed since the 1950s, whereby the European Union would take special responsibility for the territories of colonial powers that are members of the EU.

The declaration on the Final Act, which is an annex to the treaty, was based on that draft and is a useful agreed political statement of the continuing commitment. It commits us to review the association agreements by February 2000. It should be useful in helping us to preserve the benefits that our overseas territories enjoy. The amendment does not in any sense change the force of the declaration. It will oblige us to provide a report. As I said, there are no direct budgetary consequences because we are already meeting the financial costs.

We debated the Gibraltar issue at great length the other night. Gibraltar is not one of the OCTs because it is part of the European Union and is treated for most purposes as part of the European Union, despite the difficult circumstances that exist in respect of Spain. The provisions of the declaration do not apply to Gibraltar, so it is difficult to see that Spain would veto or attempt to veto any OCT agreement.

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