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Lord Sainsbury of Turville: My Lords, I totally agree that our hallmarking system is extremely good. I believe that, if it had not been invented in the Middle Ages, we would now be looking forward to it as a new piece of consumer protection. The situation regarding the EU directive is a little more complicated. It involves all three kinds of marking: that of the manufacturer's declaration, product quality assurance and hallmarking. However, we feel that it would lead to a diminution of consumer protection and that is why we have opposed it thus far.

Lord Bruce of Donington: My Lords, for the convenience of the House, will the Minister make available the draft directive referred to in the Question? My noble friend will be aware that there have been two draft directives: one issued in October 1993 and the other, following a debate in this House, in April 1996. It would be helpful if the document could be identified. Will my noble friend ensure that, in accordance with the Cabinet Office directive of June last year, a regulatory impact assessment is made of the directive and circulated to all those concerned, including Members of this House and larger interested parties in the country?

Lord Sainsbury of Turville: My Lords, I should make it clear that this directive was first discussed in 1992. A compromise was raised in the autumn of, I believe, 1998

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under the Austrian presidency. The Portuguese presidency does not intend to re-open the issue, and it is opposed both by people such as ourselves, who have a very good hallmarking system, and those who do not have one. It is rather difficult to see how both those parties' interests can be met. I shall of course ensure that the documents are produced and, if it appears that a directive is forthcoming, I am sure that a regulatory impact statement will be produced.

Lord Pearson of Rannoch: My Lords, when the Government say that they intend to oppose the directive in any of its present forms, will the Minister confirm to the House that the issue is being taken under single market legislation, which will, of course, allow the United Kingdom, as usual, to be outvoted, and that therefore the Government's opposition is worth nothing in that circumstance?

Lord Sainsbury of Turville: My Lords, as I made clear, the directive was opposed by ourselves, those countries which have strong hallmarking traditions and those which do not have any. Therefore, even under the system of qualified majority voting, a strong group is against the directive and we shall make certain, as far as we can, that the legislation does not go through.

Earl Russell: My Lords, without wishing to dispute anything that the noble Baroness, Lady Trumpington, says about the antiquity of the hallmark, will the Minister confirm that no institution has been British for 700 years and that the adoption of the hallmark as a British institution is the result of a process of harmonisation?

Lord Sainsbury of Turville: My Lords, as always, we are entirely in favour of harmonisation as long as it is on our terms.

Earl Ferrers: My Lords, does the noble Lord agree that, for once, the noble Earl, Lord Russell, is not correct? Has the House of Lords not been a British institution for 700 years?

Lord Sainsbury of Turville: My Lords, I am afraid that for us simple grocers such a historical matter is far too complicated. I was merely concentrating on the commercial aspects.

Lord Swinfen: My Lords, will the Minister confirm that, if the EU directive comes into force, the quality of silver and other precious metal products will be diminished because a lower quantity of silver will be allowable in such products than is allowable at present?

Lord Sainsbury of Turville: My Lords, I do not believe that that issue will be affected. In all cases products will be marked with the amount of fineness in them. Therefore, I do not believe that lower quality

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products will come into the country because of that directive. We are concerned with distinguishing the basis of the quality control or hallmarking.

Lord Swinfen: My Lords, under British hallmarking, do we not have 92.5 per cent silver in products, whereas, under the EU directive, products will contain only 80 per cent pure silver?

Lord Sainsbury of Turville: My Lords, I believe that a system already exists whereby products containing different standards of silver can come in with different amounts of fineness in them.

Transatlantic Aviation Rights

3.20 p.m.

Lord Brabazon of Tara asked Her Majesty's Government:

    Whether they propose to take any action following the decision of the American cargo airline FedEx to cancel flights to Prestwick.

The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): My Lords, the decision of FedEx to cancel its daily Memphis-Prestwick-Paris service within a year of its inauguration will have disappointed all those who had believed that the airline was making a genuine commitment to Scotland. However, although it is not for the Government to question the logic of the company's decision, I am confident that Prestwick will commend itself to competing cargo carriers intent on developing the market.

Lord Brabazon of Tara: My Lords, I am grateful to the Minister for that reply and I am as disappointed as he is that FedEx has decided to pull out. Is it not embarrassing for the Government, having given a unilateral gift to the Americans, for which our airlines received nothing in exchange, that FedEx should have pulled out so soon after commencing the service? Perhaps I can quote the Minister who said that that was,

    "a gesture of goodwill which will see FedEx on our side in their attempts to try and woo the American position because our main priority as we have stressed is still to get the rights for British carriers in the United States".

Can the Minister say precisely what progress was made a couple of weeks ago in talks with the United States Government on aviation rights? How long did those talks last? What can we hope to achieve from them?

Lord Macdonald of Tradeston: My Lords, the rationale behind the Government's original decision was eminently sensible. FedEx's decision to invest in the service promised to deliver benefits to the airport and to Scotland. The decision calls into question not only the regional economic benefits that would have come from the service, but also FedEx's commitment to Prestwick, given that the prize that FedEx really

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sought was fifth freedom rights from Stansted. I believe that we are now entitled to speculate on whether they would have closed their Prestwick operations in any event if and when rights at Stansted were granted. Certainly the company's tenuous commitment to Prestwick tends to support that pessimistic speculation.

In terms of what influence the company brought to bear on the United States Government, it had offered, as others have done, to use its best endeavours to try to bring the Government round to seeing that our policy of liberalisation was preferable to the policy of "open skies" advocated by the Americans. In conducting any negotiations I was always mindful that I had been warned by the noble Lord, Lord Brabazon, that the phrase "open skies" means one thing to us and something different to the Americans. As far as the noble Lord was concerned, it would mean that ownership and control, cabotage, wet leasing, the instruction for American state employees to "fly America" and so forth would all be taken into account in any dealings that we had. Indeed, that was never far from our minds.

We believe that we have shown a flexibility and willingness to help the Americans to solve their problems. However, they still deny our carriers the rights that they demand for theirs.

Lord Clarke of Hampstead: My Lords, given the disappointing news about the FedEx decision to withdraw from Prestwick, will the Minister comment on the general strength of our aviation relationship with the United States? In particular, can he tell the House whether he believes that the Americans are behaving as unreasonably as they appear to be?

Lord Macdonald of Tradeston: My Lords, since the early 1990s the United Kingdom has promoted full liberalisation in transatlantic aviation. We have been willing to help the United States to solve their problems with flights from Pittsburgh to London. Over a number of years, compared with the United States, we have been far more willing to act; for instance, to enable Virgin to operate a service to Las Vegas we have made a number of proposals that would allow it to operate a Pittsburgh-London service--only to be castigated for intransigence and unhelpfulness. However, we remain willing to work for a balanced deal.

Viscount Waverley: My Lords, in future will the Minister enter into only reciprocal agreements, combined with long-term commitments? What success was there in gaining wet lease access by UK carriers into the US market?

Lord Macdonald of Tradeston: My Lords, we had a limited response to the suggestion that our carriers may be allowed the same kind of freedoms that the Americans have in the United Kingdom and in Europe. A suggestion was made that our carriers should be able to fly into America under wet leasing

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arrangements, but after arriving their hire would be restricted. That was not an attractive proposition for us. We believe that we must show flexibility and willingness, but we must also assume that any deal must be a balanced deal.

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