Select Committee on European Union Fortieth Report


Letter from Gerry Sutcliffe MP, Minister for Employment Relations and Consumer Affairs, Department of Trade and Industry to the Chairman

  Thank you for your letter of 24 November[215] in which you seek a clearer picture of the final proposal that you are being asked to endorse, before agreeing to lift scrutiny. I am afraid that we are still some way away from being able to see the final picture, but at all events I am now in a position to update the Committee on the latest development, namely the First Reading in the European Parliament on 1 February.

  The Parliament has agreed to propose a number of amendments to the text of the Commission's proposal and I attach a copy of these. Many of the amendments represent relatively minor changes. However, there are some more significant amendments which I would like to bring to the attention of the Committee.

  The Parliament supported the broad deregulatory nature of the proposal put forward by the European Commission, which is to remove mandatory nominal quantities from all but four pre-packed products—those being wines, spirits, white sugar and soluble coffee. However, they agreed to amendments to retain mandatory nominal quantities for six additional products—drinking milk, butter, ground or unground roasted coffee, dried pasta, rice and brown sugar (Amendments 33, 21, 22, 23, 24, 25, and 19). This would have the effect of requiring those products to be sold only in the specified ranges in every Member State (so far as milk is concerned, the ranges specified include both metric and imperial sizes).

  A further amendment (Amendment 32) was agreed to exclude pre-packed bread, spreadable fats and tea from the scope of the Directive and to allow Member States to retain national rules with respect to those products. The effect of that amendment in the UK would be to allow us to retain the existing national rules for those products.

  The net effect of the proposal, with these amendments, would be to remove all size restrictions from over 40 types of products covered by current EC rules, together with all products falling outside these rules except pre-packed bread, spreadable fats and tea.

  The European Parliament also agreed to amendments (Amendments 16 and 11) to require the Commission to review the operation of the Directive eight years after it comes into effect rather than the 20 year sunset clause proposed by the Commission.

  The next stage of the legislative process will be for the Council to adopt a common position in relation to the draft Directive and the European Parliament's proposed amendments.

  As you know the UK's position has been to support the overall deregulation of the proposal and to seek an early agreement. A great deal of work was undertaken during the UK Presidency to seek such an agreement but unfortunately it was not possible to reconcile the initial views of the Parliament and Council at that stage.

  The UK remains committed to seeking an early agreement that will bring the benefits of the deregulation of specified sizes for most products, to UK businesses and consumers as soon as practicable. However, although the Council has not yet adopted its common position, earlier discussions in Council have shown that there is widespread support for deregulation and little support for extending the range of products which would be subject to mandatory restrictions. It therefore seems unlikely that agreement between the European Parliament and Council will be reached quickly. However, we do expect that the proposal for a review clause rather than a sunset clause will be acceptable.

  As I have previously mentioned, our own consultations with business and consumer groups have shown that there is support for the retention of fixed sizes for particular products, or broadly for a wider range of staple products than proposed by the Commission. In particular, there is support from UK trade associations for the retention of mandatory specified quantities for milk, bread, tea, margarine and butter; and consumer groups would also support such changes. The likely effect of the European Parliament's proposed amendments would be to require mandatory specified quantities in all Member States for butter and milk (including imperial sizes in the UK) and to allow the retention of national rules for pre-packed bread, margarine and tea. These amendments will therefore be widely satisfactory to UK interests.

  In your letter, you also ask for a better justification for retaining restrictions in those cases where we would be prepared to support them. I do not think there is, in practice, much I can add, on this point, to what I said in my letter of 10 November. We are firmly in favour of deregulation, and we seek a very large degree of deregulation of package sizes on the basis of the Commission's proposal. However, we also recognise that consumer groups would prefer restrictions to continue for a wider range of products in everyday use, and that producers and packers in certain sectors also see advantage in retaining restrictions. Accordingly, we would be content for restrictions to be maintained for a few sectors additional to those covered by the Commission's proposal, and we do not consider that doing so will materially detract from what will remain a major measure of deregulation. We do, however, agree with you that it would be right to review the situation after a reasonable period of time, and we are quite content with the proposal for a review after eight years which has emerged from the Parliament's consideration.

  In seeking to agree with our partners in the Council on a common position in response to the Parliament's amendments, the UK will therefore be guided first of all by our strong support for the principle of deregulation and by the desirability of removing all unnecessary or outdated restrictions. Naturally we will take full account of the strong support of your Committee on that principle. We will also take full account of the concerns of UK trade associations and consumer groups which I have mentioned. We will be working constructively with the Austrian Presidency and if necessary with their successors, as well as with all members of the Council, with a view to securing the significant advantages of a very substantial measure of deregulation, as soon as may be practicable.

  I will, of course, update your Committee on any further developments on this proposal.

16 February 2006

Letter from the Chairman to Gerry Sutcliffe MP

  Thank you for your letter dated 16 February which was considered by Sub-Committee G on 9 March.

  We note that the European Parliament First Reading has resulted in proposed amendments which include adding drinking milk, butter, ground or unground roasted coffee, dried pasta, rice and brown sugar to the Commission's original list of wine, spirits, white sugar and soluble coffee for which mandatory restrictions would be retained and that Member States would also be allowed to retain national rules on pre-packed bread, spreadable fats and tea.

  You say that these additions are acceptable to the Government and would not materially detract from the essential deregulatory purpose of the Proposal. But we note your comment that you are still some way from being able to see the final picture and that you do not expect early agreement to be reached between the Parliament and the Council. Indeed, your letter suggests that further consideration may well stretch beyond the tenure of the current Presidency.

  You do not mention the Impact Assessment for which the European Parliament had called, according to your letter dated 10 November 2005. We would be glad to know what has happened about this and what effect it might have on the final outcome.

  As it is, we appear to be faced with the prospect of more protracted negotiations about a widening range of exemptions which are contrary to the reforming spirit of the proposed Regulation. It is hard to believe that those negotiations will not produce further demands for yet more exemptions. We would be reluctant to see this process culminate in a package of agreed exemptions that were more the product of political horse-trading than an objective assessment of the justified needs of European producers and consumers.

  We continue to believe that the nettle of deregulation. should be firmly grasped and that all remaining restrictions should be swept away, so long as a reasonable time is allowed for producers, retailers and consumers to adapt to the changes. We consider that, in modern circumstances, the essential safeguards for consumers should be clear, consistent and reliable labelling and product description, buttressed by regular inspection from Trading Standards Officers or their counterparts.

  As you know, the Scotch Whisky Association is the only organisation which has given us an argued case for retention. If you have had similar representations from producers or consumers organisations, we would be glad to see copies so that we may assess their merits. It would also be helpful to know whether the Government has had dialogue with those organisations about what might be a reasonable period for phasing out any restrictions that they advocate.

  In the circumstances, this document will remain under scrutiny pending your reply.

9 March 2006

Letter from Gerry Sutcliffe MP to the Chairman

  Thank you for your letter of 9 March on the above proposal in which you seek more information about the Extended Impact Assessment produced for the European Parliament.

  The European Parliament commissioned an Extended Impact Assessment for this proposal in August 2005 to assess the impact that different policy options would have on consumers, vulnerable consumers and manufacturers. The findings, published in November last year, supported the policy option favoured by the European Parliament of deregulation for most products while retaining fixed sizes for certain basic products (pasta, milk, butter, coffee and sugar). I am attaching a copy of that study, which was taken into account by the Rapporteur appointed by the European Parliament before making his final Report to the Parliament.

  You also ask about representations received from trade associations on this subject. As I have mentioned in earlier correspondence, we have received views from many trade associations on this issue, including some that favour deregulation and others that favour retention of fixed sizes for their sectors. However, no other trade association has put forward the kind of detailed submission which the Scotch Whisky Association have presented to you. We can, of course, invite other trade associations to make their views known to your Committee, if you would find that helpful.

  I will, of course, update your Committee when there are further developments on this proposal.

31 March 2006

Letter from the Chairman to Gerry Sutcliffe MP

  Thank you for your letter dated 31 March which was considered by Sub-Committee G on 4 May.

  We are grateful to you for making available a copy of the European Parliament's Impact Assessment study, which we are still considering. We would be glad to know what you think about the validity of this study and the conclusions it reaches.

  It is surprising that none of the other trade associations that have made representations to the Department have put forward the kind of detailed case which the Scotch Whisky Association have made to the Committee. We would be glad if you would invite them to make a detailed justification of their case, as you have offered. We suggest this should include asking them not only to justify their case but also to consider whether they might be prepared to contemplate a reasonable timescale for phasing-out any requested restrictions in the longer run. That should help you and us to have a fuller understanding of the relevant factors than we currently seem to have.

  To balance those representations, however, we suggest that consumers' organisations should be given a similar opportunity to make a more detailed explanation of their views to the Committee than they appear to have done to the Government so far. Again this should include asking not only why they might want particular restrictions to be retained but also whether it might be reasonable to phase them out in time.

  You have not commented on the suggestion in my letter to you dated 9 March that the continuing negotiations might culminate in a package of agreed exemptions that were more the product of political horse-trading than an objective assessment of the justified needs of European producers and consumers. We continue to believe that such an untidy outcome is more than likely unless all concerned grasp the nettle of deregulation and set a reasonable date for all restrictions to be swept away.

  When you last wrote on 16 February you said that you did not expect early agreement to be reached between Parliament and the Council and that further consideration might well stretch beyond the tenure of the current Presidency. It would be helpful to know whether you now have a clearer idea of how the continuing negotiations are likely to proceed and when a Council decision might be expected.

  We will continue to retain this document under scrutiny pending your reply.

5 May 2006

Letter from the Chairman to Rt Hon Ian McCartney MP, Minister for Trade, Investment and Foreign Affairs, Department of Trade and Industry/Foreign and Commonwealth Office

  Your Explanatory Memoradum (8680/06) dated 13 June was considered by Sub-Committee G on 13 July.

  We note that, although the Government is apparently prepared to accept the Commission's amended Proposal, it would be equally content to go along with a more extensive range of retained specified quantities along the lines proposed by the European Parliament.

  You should be aware from our correspondence with your predecessor that the Sub-Committee has consistently taken the view that:

    (a)  on the whole, simplification and liberalisation would be in the best interests of producers and consumers;

    (b)  the proposal should help to develop a more effective single market in pre-packed products and stimulate innovation and competition;

    (c)  the proposed restrictions are no longer necessary and should be removed completely, so long as reasonable time is allowed for producers, retailers and consumers to adapt; and,

    (d)  in modern circumstances clear and reliable labelling for product description is a much more important and effective safeguard for most consumers.

  Thanks to the intervention of your predecessor and his officials, we have now had detailed statements supporting the case for retention from organisations representing the interest of UK coffee, bread, milk and sugar processors. We have also had representations from Which? and Age Concern on behalf of consumers and are awaiting representations from the RNIB on behalf of the visually-impaired. Copies of all the representations received so far have all been sent to the Department and we will forward a copy of whatever representations are received from the RNIB.

  We understand from your officials that the incoming Finnish Presidency has still not set a timetable for Council decision. Given that the positions of the Commission and the European Parliament are at variance, it seems quite likely that it will be some time yet before a Common Position can be achieved.

  That being so, we suggest that the best way forward might be for you to give oral evidence of the Government's position to Sub-Committee G fairly soon after Parliament resumes from the Summer Recess. We would then take account of that, as well as of the representations we have received and the documentation produced by the European Parliament, and produce a short Report summarising our Conclusions.

  If that is acceptable to you, my staff will be in touch with your officials to make the necessary arrangements.

  In the meantime, we are releasing the original Commission Proposal (reference 15570/04) from scrutiny and maintaining the amended Proposal (8680/06) under scrutiny.

14 July 2006

Letter from Rt Hon Ian McCartney MP to the Chairman

  Thank you for your letter of 14 July, about the above proposal.

  No date has been set down yet for further discussions of this proposal in the Council.

  I have noted the comments you make and I look forward to talking to the Committee about the proposal after the Summer Recess.

2 August 2006

Letter from Rt Hon Ian McCartney MP to the Chairman

  I am writing to inform you of the neccessity for a scrutiny override on the above proposal. I had accepted your invitation to speak to the Committee on this proposal after the recess. However, events in Brussels have moved more quickly than anticipated and the proposal has been added to the agenda for political agreement at the Competitiveness Council on 25 September. As the House of Lords will remain in Recess until 8 October, there will be no opportunity for the Committee to consider the proposal before that date.

  An Explanatory Memorandum on the Commission's revised proposal was submitted to the Committee on 13 June (EM8680/06). That set out the Government's position in support of deregulation for the large majority of products, but which accepted the arguments put forward by particular industry sectors and consumer groups for the retention of specified quantities for a small number of staple products.

  I will, of course, update your Committee on the outcome of discussions after the meeting on the 25 September.

19 September 2006

215   Correspondence with Ministers, 45th Report of Session 2005-06, HL Paper 243, pp 671-672. Back

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