D. CORRESPONDENCE ABOUT COMMITTEE REPORTS
63. THE EC TOBACCO REGIME (13TH REPORT, SESSION 1996-97)
Letter from Lord Donoughue, Minister for Farming and
the Food Industry, to Lord Tordoff, Chairman of the Committee
I am writing to give the Government's response to the Select
Committee's report of 19 March, which I understand is now to be
debated in the House of Lords on 9 June.
The Government welcomes this timely and well-presented report
as making a constructive contribution to our thinking on the future
of the common organisation of the market in raw tobacco. It agrees
with most of the points made by the Committee and shares their
concern that the Commission's proposals for reform of the tobacco
regime stop well short of what is required. We particularly agree
with the comment in paragraph 41, that, if changes of this kind
are agreed, further substantial reform will soon be needed.
The problems of EU tobacco growers are essentially socio-economic.
It would be better for them to be addressed by the appropriate
structural measures, rather than by continued market subsidies.
The Community should start the process of gradual disengagement
from the tobacco sector. We will do our utmost to persuade our
European partners as to the intrinsic merits of these arguments.
However, it must be recognised that the UK is only one player
in the process, and that, to date, other Member States with the
exception of Sweden and to a lesser extent Denmark have not lent
much support to our concerns. This inevitably limits what we can
hope to achieve.
In the meantime, perhaps I could usefully highlight three
points arising from the Committee's report, which - though falling
short of our own preferred approach - are relevant to that favoured
by the Commission. First, the Government considers that decoupling
of support from production, and a reduction in support levels,
are essential steps which the EU needs to take in preparation
for enlargement and to avoid difficulties in the WTO. We shall
continue to press for this in discussions in Brussels.
Secondly, we are in favour of encouraging voluntary departure
from the regime, so long as this leads to permanent reductions
in quotas. This will be very important in getting the less efficient
producers out of tobacco. In principle, we would support a proposal
which entailed growers who leave tobacco production receiving
payment or bonds. However, we do not think that quota obtained
through a voluntary quota buy-up scheme should be redistributed.
Nor would we wish to see new entrants encouraged in this sector.
We recognise that some schemes to encourage producers to leave
tobacco production may require short-term continuation of aid
in the form of decoupled expenditure in order to achieve long-term
reductions in support.
Thirdly, the Government supports the Commission's ideas for
premia modulated according to quality as far as they go, but we
should prefer to see lower premia to expose producers more to
market price signals. The modulation of premia to reward quality
would serve to increase standards within a producer group, but
we think that assessment between groups is necessary to maintain
an upward movement in quality.
Finally I want to emphasise our commitment to reform the
EU tobacco regime. Your report has made a valuable contribution.
3 June 1997
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