Examination of witnesses
(Questions 40 - 53)
TUESDAY 21 JULY 1998
and MR SIMON
40. Going back to the subject of the European
Courts, one has heard recently about British Airways and Virgin
challenging, through the European Court of Justice, the potential
further subsidy to Air France. One now hears that Budge Mining
have approached the Court in relation to the very heavy subsidies
paid to the German coal industry and the Spanish coal industry.
How does the Government view this kind of development, which I
believe could develop into a rash of activity?
(Mr Henderson) These are matters which have to
be determined in the Courts. There are rules which are laid down.
Our political position is that there should be no unfair state
aids, that there should be a competitive environment, and we will
continue to address that and to persuade and coax colleagues into
stances that are consistent with that. If there are instances
where the unintended has occurred, then it is a matter for the
Courts and they will decide whether or not the rules are being
applied, and it is right and proper that that is the case.
41. I think it is sad, though, as on reflection,
I was battling on the German coal subsidies about ten years ago
both with our Government to take action and directly with the
Commission. Nothing happened then or since. Does one, therefore,
perceive that the Court will be more effective in producing justified
(Mr Henderson) I cannot predict what the Court
is going to do. I am aware of the regime in the coal industry
in Germany. I think it is up for renegotiation in the year 2002,
from memory, and if it is found that the current rules are inconsistent
or if the application is inconsistent with current rules, then
there will have to be a speedy resolve to the issue. If there
is a political disagreement with what has happened rather than
a judicial disagreement, then the matter will be up for discussion
when these things are dealt with, though I think unanimity is
required in relation to this matter.
(Mr Jones Parry) Could I say in terms of the coal
aids decision, which I think is based on Article 4c of the ECSC
Treaty but which legitimises certain sorts of coal and steel aids,
there has been always been a tension between some producing Member
States in the coal industry who wanted to provide aid and the
Commission's wish, retrospectively, which it does, to legitimise
the aid and report annually on it. The Commission has reduced
the level of aid to the coal industry to date but what makes coal
different is that there is, on the whole, very little intra-Community
trade in coal, so that the logic in coal has been less hitherto.
It has only come into sharp focus in the last couple of years
because there has been a wish on the part of British suppliers,
for which we have fought very hard on their behalf, to get access
to the German market and a concern that German coal is being dumped
here to the disadvantage of British producers. Those cases we
are pressing very hard indeed. On the general principle of aid,
the fact of life is that some countries are actually, on the one
hand, arguing for subsidiarity and less Commission control as
a general principle, but the reason underneath it is because they
do not like tough Commission or Court activity against the aids
that they wish to carry out. Our position is very clear. In those
cases across the board we would like to have a tough position
by the Commission applying the rigours of the Treaty, enforced
by the Court as necessary.
42. How does what you have just said stack
up with the report in today's press of Commissioner Kinnock trying
to rewrite, as I understand it, the Treaty or whatever it happens
to be, in order to get round the ruling of the European Court
of Justice in relation to the state aid to France? I do not see
how you can tie these two things together.
(Mr Jones Parry) I was trying to address the coal
industry and I am handicapped because I have not seen the report
of what Mr Kinnock might have said. As I understand it, the Court
in the judgment against Air France ruled that the way in which
it was being done was actually illegal. It is up to the Commission
to address any other device which might be introduced by the French
Government as an alternative, but there is no way Mr Kinnock can
himself try and amend the Treaty; it is not in his competence.
It is his responsibility to apply the Treaty and make sure that
across the board, be it Air France or any other competitor, they
actually comply with what British Airways have to do themselves.
43. It seems to me there is a slight problem
between theory and practice.
(Mr Jones Parry) If you talk to the Commissioner
responsible, the Belgian responsible in DG IV, he will take a
fairly tough line on this issue and I think will be consistent
with what I am saying.
Lord Geddes] I think
one can anticipate considerable disagreement between Commissioners
van Miert and Kinnock on the subject. However, that is getting
outside our brief.
Chairman] We have
a couple of things on the environment which Lord Walpole would
like to ask.
44. Briefly, if I may start, what progress
is being made towards devising workable procedures in the Council
for the "horizontal greening" of policies, and as a
supplementary, do the Deputy Prime Minister's initiatives over
the past year on the domestic front provide any lessons for decision-making
(Mr Henderson) On the horizontal greening, I think
that the Transport Council and the Environment Council have arranged
some joint meetings to deal with issues where there is a common
concern. So I think that is progress that we very much welcome.
On this question I am not quite sure what you are intending, maybe
you could be more specific.
45. I thought you were making rather good
progress in this country, but perhaps it is not for a crossbencher
to say that.
(Mr Henderson) I think that the Union has made
good progress on the environmental front over the last six months,
and that is a principal achievement of our Presidency, especially
on the areas that I referred to in my previous answer. I did not
mention the drift nets to save the dolphins, which was another
achievement that will be very much welcomed by the dolphins if
46. Probably not the Spanish fishermen though.
(Mr Jones Parry) Can I elaborate a little bit,
my Lord Chairman. I thought environment was one of the successes
of the Presidency, modestly so but one of the successes, because
(1) we got positive things out of the Environment Council, (2)
in the other Council we got decisions which had environmental
implications which were rather good, and (3) the Deputy Prime
Minister established the principle which the Austrians will continue
of actually having Joint Councils looking at things like transport
and environment. That will be carried forward, that is not lost.
Fourthly, and perhaps most importantly, at Cardiff we agreed language
which in the jargon mainstreams the environment into other policies.
We have launched it quite well, the Commission is delighted, and
the prospect is that over time we can build on that.
Lord Walpole] I think
that is helpful.
Baroness Hilton of Eggardon
47. I would like to touch on the Arhus Conference
that took place last month. It is perhaps outside your direct
remit but nevertheless do you feel that it was useful or will
push Europe forward on the environmental front?
(Mr Henderson) Yes. There are a number of gains
there. Some of them are procedural as regards guarantees of individual
rights, access to information, public participation and access
to justice in environmental matters. That is welcomed. There were
two protocols which were presented, one on persistent organic
pollutants and the other on heavy metals covering lead, cadmium
and mercury. These were pretty technical matters but still very
important. We were pleased at the progress that was made there
and we want to build on that. As my colleague said, the Austrians
who feel that the environment is an important issue have agreed
to build on some of the changes that we have introduced.
48. Thank you. We are coming towards the
end now but there are a couple of questions I would like to ask.
First of all, has the Government responded to the Commission's
proposals for the twinning of national ministries with their opposite
numbers in the applicant countries? It is obviously important
as part of the general exchange of know-how that we do all we
can in this direction. Are there any specifics coming out of this?
(Mr Henderson) There are many examples. We are
very supportive of the Commission's suggestion on this. The Council
has also discussed it. There are a lot of bilateral arrangements
which have been made at departmental level. I think it is an excellent
idea, I have encouraged it as much as I can in our government
department. We have held meetings where we have exhorted other
departments to become involved. I have talked about it on many
occasions with counterparts in Central and Eastern European countries.
It is a good opportunity for especially younger public servants
to get to know another country's public service and to enjoy the
experience. I think it lays down a sound base for future contacts.
It is a very worthwhile matter. Maybe by the next Council we will
be able to report on the extent of the twinning preparations.
There are some that are already taking place. I think most of
them will begin to have effect from the autumn.
49. I know Lord Wallace would have asked
this question had he been here. He has a former student who is
now in the Ministry of the Interior in Prague and he has got the
impression from there that the Germans and the French are more
enthusiastic about it than we are.
(Mr Henderson) I think I actually met Lord Wallace
in private conference and we talked about the deal that I had
just struck with the Czech Foreign Minister that afternoon for
twinning of government departments, and I think everyone is hopeful
that the deal will become a reality. One cannot just instruct
officials suddenly to up and off to Prague. One has to persuade
them and they want to negotiate their terms and conditions, rightly
so, but we are very keen that that takes place.
(Mr Jones Parry) There are a number of other Member
States who have come very lately to this and they are making a
lot of noise to imply that they have been long interested and
have the market share. The truth is that they do not. Through
the Knowhow Fund I think we have a head start and at a practical
level in the Foreign Office within the enlargement section in
the Department we have actually now a desk officer dedicated just
to twinning and the pulling together of the Whitehall exercise.
50. Finally, we read in The Times
for Monday 20 July that: "Parliamentarians from Westminster
and their European Union counterparts would gain a foothold in
the European Parliament under radical proposals being considered
by Britain to trim the power of Brussels. Up [to] 60 members of
the British and other parliaments would be sent to Strasbourg
to sit in a second chamber ... " and I see that the Foreign
Secretary has asked a powerful group of officials, headed by Robert
Cooper and Nigel Sheinwald, to produce proposals. Can you tell
us anything about this?
(Mr Henderson) I know that you will not believe
everything you read in the newspapers.
51. Especially not Murdoch newspapers!
(Mr Henderson) There is, as I mentioned earlier,
an institutional question. There is a period of thought connected
to some of the reforms that need to take place in the Union, some
of them about practical things that we need to address immediately
in relation to the enlargement process. Other questions are about,
are there better ways in which the European Union can function;
if so, are there reforms that can take place, and I think that
kind of suggestion is in that context and one should not read
any more into that than I am actually indicating.
Chairman] If anybody
would like to come and talk to us at some stage about running
a second chamber, we might well be able to offer some advice there.
Lord Bridges] There
was a second chamber proposal put forward by the French Sénat
a couple of years ago to do with the COSAC machinery.
Chairman] Which we
sat on very heavily.
52. We then got a strong proposal for the
creation of a sort of second chamber of the European Parliament,
in which, of course, the French Senate would play a leading role
and wondered if the House of Lords would care to join in. We examined
it and said no, we did not think it was a good idea at all. So
there is a certain little back history to it.
(Mr Henderson) Yes, I have heard of the proposal
53. I think we must let you go now. Thank
you very much indeed once again for taking the time and trouble
to come here and for answering our questions so frankly and freely.
I hope that you also got a bit of something out of it and we look
forward to seeing you again as soon as possible after the next
summit and that I do not have to wish you a Happy Christmas at
(Mr Henderson) Thanks for your invitation to be
with you today and for your most constructive dialogue. Thank