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Lord Hacking: My Lords, before my noble friend sits down, perhaps I may be of some assistance to him. In his remarks to the House he referred to the dangers of new tariffs in the form of health barriers and he also referred to the 10-year beef ban. I offer this assistance to my noble friend: the directive for the ban on meat--that is any meat from cattle which have had hormones administered to them--was not made even on health grounds. It was made on perceived public concern about health.

Lord Shore of Stepney: My Lords, I will not take more than a moment. That is part of the problem: the difference between assessing the objective reality and mobilising the best evidence, and the public perception of the problem. That somehow has to be solved and, frankly, in the end only politicians can help to do it.

4.30 p.m.

Lord Fraser of Carmyllie: My Lords, I should like to join others in thanking the noble Lord, Lord Clinton-Davis, for introducing this important debate. It has undoubtedly been of great value to the House that someone of his expertise should have set the context for that which followed. At the outset it would seem to me worth reflecting that some three years ago, rather than having in contemplation the threat of a continuing trade war, the then Foreign Secretary, Malcolm Rifkind, and the then President of the Board of Trade, Ian Lang, were articulating ideas of a greater North Atlantic Free Trade Area. Forceful intellectual content was given to the concept by that most outstanding of Canadians, Mr. Roy Mclaren, who was then Trade Minister and who is now the Canadian High Commissioner here in London.

It was also a time, just three years ago, when the dangerous notions of the Helms-Burton legislation were close to ruinous and futile implementation, and the United Kingdom and the European Union firmly resisted the pressure to join in that anti-Cuban initiative, and rightly so. I record my gratitude for the unanimity of support that there was in this House in opposition to the nonsense of that suggestion.

It is therefore exceptionally unfortunate that, having held the high ground on that issue and having been prepared to contemplate the extraordinary and exciting expansion of greater free trading across the North Atlantic, we now find ourselves in such a relatively short space of time on the back foot and dangerously

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close to trying to defend an indefensible position. Without the immense negotiating skills of Sir Leon Brittan, it must be doubtful whether the great liberalising of world trade that the WTO ought to bring about would ever have been achieved. Few have a greater clarity of vision of what is required.

Accordingly, I share, I think with the noble Lord, Lord Grenfell, some discomfort as we have watched him on the back foot, playing the game out as long as he could over the latest WTO ruling on bananas. The noble Lord, Lord Grenfell, indicated that perhaps the Americans would take some blame because they ultimately acted precipitately or prematurely. I am bound to say, without trying to justify the Washington position, that one is bound to have some sympathy for them when one has regard to the chronology that the noble Lord, Lord Shore, spelt out and to the response that the European Union then offered--that it would take months, if not years, before we could bring into place anything that approximated to a scheme that would meet with WTO compliance.

If that is the position, we have to be careful about pretending that there is any high ground left for us to hold. I appreciate that the Government have had some success in restricting the range of goods put at risk by the American counter to the European Union banana regime, and pre-eminently among those successes was that of Scottish cashmere. I am sure that my noble friend Lady Miller is absolutely right in her suspicions, wondering why it should be at this particular point in time Mr. Donald Dewar who, however eminent he may be in other spheres of politics, has not been prominent in negotiating trade matters across the North Atlantic in the past. However, we will set that aside. Our success must not be simply in relation to that; nor should our objective be to ensure that any United States response is no more than proportionate.

I believe that our objective is a simple one. It is this: we must go back to the root of the disagreement and settle that. The noble Lord, Lord Clinton-Davis, said that he feared we were in the middle of, or were about to begin, an even greater trade war. He identified some areas where such conflicts might emerge with the United States. There may be some force in what he said and there may indeed loom some issues of greater significance than the banana regime itself. The reason why we have got into disagreement with the United States has been over the European Union banana regime and the way that the European Union has responded to the rulings of the WTO.

It simply will not do to squeak with some moral indignation that Chiquita has bought its influence in Washington. It did not buy the WTO. And however much we might like to blind ourselves to that reality and to that fact, the point has not been lost on policy-makers in the United States. If there is a concern in your Lordships' House and, more broadly, in the United Kingdom and the European Union that there lurks in Washington and in the United States a spirit of protectionism, is it surprising that that spirit of protectionism is engendered further if, on the first occasion that we have a major ruling of the WTO, we react in an illogical fashion? If they wish to believe that

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we are going to operate in a genuinely global way in a spirit of enhancing world trade, they simply will not believe us if on that very first occasion we procrastinated and pretended that in some way what we were doing complied with what was required of us. It will get us nowhere if we persist with that notion.

Nor do I believe it will do any good to mislead our friends in the Caribbean with false promises that the EU's intransigence alone will safeguard their fragile economies. When I was a Minister in the DTI no one was more vigorous in support of those countries and islands than my noble friend Lady Young. I shared her sentiment that their economies should survive and prosper, and I continue to do so. Where I would rather not part company with her, but do, is that I do not see that it does those fragile economies any good whatsoever to pretend that we can protect them, when we do so with little more than bluster and a prayer. If we are going to achieve something that is satisfactory and lasting for them--and I would wish to see that achieved--we must undoubtedly do so by reaching agreement with the United States on a basis that is compatible with the WTO responsibilities that we have.

Accordingly, it seems to me to be fundamental that our primary policy should be to persuade the United States that it is not just in the Caribbean's best interests, or Europe's best interests, but it is in the best interests of the United States also that the small economies in the Caribbean, possibly over-dependent on the single commodity as they may be, should flourish. I am not always sure that I share the gloomiest of prognostications that if they cannot prosper with that single commodity of bananas their only alternatives are to become staging posts on the trade route of other internationally illegal commodities such as drugs destined primarily for the United States itself. Undoubtedly that is a very real risk. No one in America who looks at the position in the battle over drugs in his own country at this point in time would say that any sort of victory was about to be secured. It would seem logical for the policy makers in Washington to understand that the fewer battlegrounds on which they had to wage that war against drugs the better their chances of success at the end of the day.

We must attempt to persuade Washington that it is not in its best interests to be preoccupied with the weakening of one larger island in the Caribbean but rather of strengthening the smaller economies that surround it.

As my noble friend Lady Young pointed out, some expressions of opinion from the United States indicate a possibility of reaching a negotiated settlement on the matter of the regime. I am sure the House will be grateful to the noble Lord, Lord Shore, for spelling out exactly what has been cut down by the WTO decision and what remains open for the European Union to keep in place. If the Prime Minister has the influence in Washington that we are repeatedly told he has, I hope that that influence will be exercised in such a fashion that there will be genuine and positive negotiations over that issue.

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I conclude, as did the noble Lord, Lord Shore, that the last thing the European Union needs to do at this time is to pick another fight with the United States, in particular over such issues as beef, if 10 years is to be the period that we seek to defend. There may be other bases on which we should be able to challenge what they wish to do--I do not know--but let us be sure that if we are to enter a fight on this occasion we know our international legal position and understand how to take it forward.

I would prefer to avoid such a battle. I would rather that the United Kingdom and the European Union took up this position: that we go into the next round--the millennium round--with a reputation not only vis-a-vis the United States but also the rest of the world that we are genuine and forceful in the liberalising tendencies that we wish to adopt as regards international trade. We want to be in a position to achieve a number of important reforms. If we are seen as the group in the world keenest to have squabbles that do not have a proper legal base in international law I fear our negotiating position will be very much weakened.

4.44 p.m.

Lord Montague of Oxford: My Lords, I join previous speakers in congratulating my noble friend Lord Clinton-Davis on the strong efforts he took on this side of the House to ensure that this subject is considered by us today. It is timely and appropriate. Unfortunately, I cannot differ from other speakers and begin with a subject other than bananas. It is a high profile issue.

We must be careful that we do not appear to be bad losers. From some of the points made we may seem to give that impression. One suspects that the judgment of the WTO was not influenced by heavy payments to political parties in America. It was assessed rationally. By responding that it would take us at least eight months to sort it all out hardly shows that we have understood the lesson we have been taught.

Americans should also remember something at this time as they savour their victory. We have heard that this is only the second time in 50 years that a WTO decision of this kind has been decided. It is worth remembering that 50 years ago was the first time; and the Americans lost. Whether this is the first or second of the two strikes, I am not sure. It is a salutary reminder that 50 years ago it was decided by the WTO that the Netherlands was right to restrict wheat imports from America because of America's import policy on dairy products from the Netherlands. So they are not always the winners. But it is a harsh warning for us to be careful.

Another issue has been referred to; the matter is imminent. I have in mind the situation with the hush kits and the banning of Concorde. I am not sure how many Members of this House are aware that the banning of Concorde is due to come into effect within seven days. The latest information is that the next discussion on the matter will take place with the Council of Ministers at

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the weekend. If it does not come up with an acceptable proposal which either buys time or solves the matter, then Concorde may not be flying next week.

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