Third Standing Committee on Statutory Instruments, &c.



Wednesday 25 January 1995


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The Committee consisted of the following Members:


Allason, Mr. Rupert (Torbay)

Baldry, Mr. Tony (Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs)

Brazier, Mr. Julian (Canterbury)

Brown, Mr. Michael (Brigg and Cleethorpes)

Canavan, Mr. Dennis (Falkirk, West)

Clark, Dr. Michael (Rochford)

Cohen, Mr. Harry (Leyton)

Corbyn, Mr. Jeremy (Islington, North)

Cousins, Mr. Jim (Newcastle upon Tyne, Central)

Dicks, Mr. Terry (Hayes and Harlington)

Gordon, Ms Mildred (Bow and Poplar)

Hanson, Mr. David (Delyn)

Jackson, Helen (Sheffield, Hillsborough)

Kennedy, Mr. Charles (Ross, Cromarty and Skye)

Lamont, Mr. Norman (Kingston upon Thames)

Lennox-Boyd, Sir Mark (Morecambe and Lunesdale)

Renton, Mr. Tim (Mid-Sussex)

Wood, Mr. Timothy (Stevenage)

Mr. M. Hennessy, Committee Clerk

3 Third Standing Committee on Statutory Instruments, &c. Wednesday 25 January 1995

[MR. ROLAND BOYES in the Chair]

Draft World Trade Organisation (Immunities and Privileges) Order 1994

4.30 pm

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tony Baldry): I beg to move, "That the Committee has considered the draft World Trade Organisation (Immunities and Privileges) Order 1994."

The Chairman: With this it will be convenient to consider the draft European Communities (Definition of Treaties) (Agreement Establishing the World Trade Organisation) Order 1994.

Mr. Baldry: The Uruguay round of multilateral trade negotiations which took place within the framework of the General Agreement on Tariffs and Trade between 1986 and 1993 was formally concluded at Marrakesh on 15 April 1994. The GATT provides a framework of agreed multilateral rules for world trade and the Uruguay round marks an important step forward in the liberalisation of such trade. The legal vehicles for bringing the results of the round into force is the agreement establishing the World Trade Organisation which came into effect on 1 January this year. The WTO provides an institutional structure for the operation of the various trade agreements covered by the agreement that estabilishes the WTO. It provides a framework for the accession of new members, the settlement of disputes, the amendment of various trade agreements and for other decisions and waivers. The secretariat comprises the director general and some 400 officials, and it is located in Geneva. Full details of the WTO agreement and the agreements annexed to it are given in the Department of Trade and Industry's White Paper, entitled "The Uruguay Round of Multilateral Trade Negotiations 1986 to 1994". I have made copies available to all members of the Committee. The full text of the agreements have been published as Command Papers in the miscellaneous series. The European Commission conducted the negotiations on behalf of the European Community and the member states under the direction of the Council and in consultation with the member states. This debate is about the privileges and immunities accorded under the draft order that need to be conferred in order for the Government to fulfil their obligations under article VIII of the agreement establishing the WTO. The article provides that the WTO shall be accorded by each of its members such legal capacity, privileges and immunities as are necessary for the exercise of its functions. Privileges and immunities are also to be accorded to officials of the WTO and the representatives of members. In both respects, 4 these are to be similar to those provided for in the convention of the privileges and immunities of the specialised agencies of the United Nations 1947. However, as the WTO is located in Geneva, many of the privileges and immunities set out in the draft Order in Council will never need to be relied upon by the WTO, its officials and representatives of members. The WTO is, in practice, likely to claim only refunds of VAT on goods and services purchased in the United Kingdom for the official purposes of the organisation. We will need only to accord the relevant privileges and immunities to its officials and representatives of members if they attend any WTO meetings or conferences held in the United Kingdom. I would like to emphasise to the Committee that the privileges and immunities provided for in the order are granted in accordance with the limitations imposed by the International Organisations Act 1968, as amended, under whose provisions the order is made. The Joint Committee on Statutory Instruments considered the draft instruments and made no comments. A motion similar to the present one was put and agreed to in another place on 13 December last year. It is proposed that the draft order should be made under section 1(3) of the European Communities Act 1972. This provides that a treaty entered into by the United Kingdom after 22 January 1972 shall not be regarded as a Community treaty unless it is specified as such by Order in Council.

Mr. Dennis Canavan (Falkirk, West): On a point of order, Mr. Boyes. I wonder whether private conversations between Conservative Members in Committee could be stopped and whether the Minister could speak more quickly?

Mr. Baldry: I shall detain the Committee no longer than necessary. I shall endeavour to accord with the wishes of the hon. Member for Falkirk, West (Mr. Canavan). The draft order specifies the WTO agreement as a Community treaty from the time the agreement is in force for the United Kingdom. The principal effect of declaring the agreement to be a Community treaty is to bring into play the provisions of section 2 of the Act which provides for the implementation of treaties specified as Community treaties. I hope that I have explained the draft orders fully and comprehensibly to the Committee. I commend them to the Committee.

4.35 pm

Mr. Jim Cousins (Newcastle upon Tyne, Central): I do not want to detain the Committee unduly, nor do I want to make a speech that sounds like a railway timetable. Some matters ought to be considered, however briefly, by us. The Minister pointed out that this is to be a Community treaty as provided for in the 1972 accession treaty. The United Kingdom is thus both an individual member of the World Trade Organisation and is at the same time dealing with the matter as a Community treaty. That could create some if not unduly difficult, nevertheless interesting situations. The WTO procedures are quite robust. We welcome that. It means that there is the possibility of disputes procedures and disputes panels. 5 The United States in its accession to the WTO made a specific provision for monitoring the results of those disputes panels. Some provision in that acknowledgement of membership of the WTO is called, with typical North American robustness, "Three strikes and we're out". By that the Americans apparently mean that if three successive cases are taken to the disputes panel and go against them, they will consider withdrawing from the WTO. How do the British Government view such matters? Do we regard the monitoring of disputes taken to the WTO as matters for the Community alone, or are they matters which the United Kingdom as an individual member of the WTO is also taking into account? What view do we take of negotiations between the European Union and other members of the WTO on matters in which this country has a considerable interest like the liberalisation of financial services arrangements and regimes? Do the Government believe that such liberalisation is being conducted on behalf of all the nations of the European Union by the relevant Commissioner or are they pursuing the matter separately as an individual member of the WTO? Are they expressing their own interests? How do the Government propose to deal with situations that have not yet arisen—I hope that they will not arise—but could readily arise, involving such matters as indirect assistance to the aerospace industry. The Government might have reservations about something that the Germans might be doing in the European Union which involved offering indirect assistance to the aerospace industry and might at the same time have a similar issue to raise with the United States. This would be subject to a Community treaty yet the United Kingdom is an individual member of the WTO. How would we deal with an issue of that kind? Would we take it through the procedures of the Community or would we decide that under the terms of the Community treaty it was a matter on which the Community should act on our behalf with the United States? Finally, there is the example of the banana. The banana is becoming a very controversial item in debates between the WTO, the European Union, the United States and many countries of Latin and Central America. What position do the Government take? Are they pursuing discussions on the rights to import bananas into this country as though they are entirely constrained by the European Community, which is acting here with Britain's interests entirely in play? Alternatively, as an individual member of the WTO, are the Government trying to strike a separate attitude through our membership of that organisation? All of those difficulties—none insuperable, all interesting—are raised by the fact that this is a European Community treaty within the 1972 definition. It would be interesting to have the Minister's, and the Government's, views on those matters.

Mr. Baldry: It is important to make it clear that the World Trade Organisation is of considerable benefit to the United Kingdom and to the world. The latest GATT studies suggest that the Uruguay round will increase world 6 income by more than $500 billion per annum. The benefits will be shared by developed and developing countries alike. For us, the benefits will include increased opportunities for the export of goods and services, lower raw material and component costs for firms and lower prices for consumers, and significant numbers—probably in the hundreds of thousands—of new jobs. We obviously want to see the WTO succeed. The draft order that we are discussing this afternoon ensures that the treaty is seen as a European Community treaty and specifies that, as a Community treaty, it enables any provisions having a direct effect to be given direct effect in the United Kingdom. That is perfectly straightforward. The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) asked about the relationship with the European Commission. As I explained to the Committee, the Commission conducted negotiations on behalf of the European Community and member states under the direction of the Council after consultation with the member states. That is not unusual. Increasingly, where the European Union is acting together, the Council of Ministers and others, working with the Commission, conduct negotiations on behalf of the European Community. Bananas are obviously a serious issue for a significant number of people. The central power of the European Community bananas regime tariff preference for African, Caribbean and Pacific countries' and European Union bananas is in fact covered by the GATT waiver which was secured at the Lomé Convention. Other elements may be vulnerable to challenge, but that issue can be tackled if and when it arises. We support the position that the European Commission has made clear to the United States Administration: any unilateral action by the United States would be against both the letter and the spirit of the WTO. There are rules and mechanisms within the WTO for the settlement of multi-lateral trade disputes and it would be most disappointing if the US were to disregard those at the outset of the new organisation. I hope that, with that clarification, the Committee will feel able to pass the draft orders.

Question put and agreed to.

Resolved, "That the Committee has considered the draft World Trade Organisation (Immunities and Privileges) Order 1994."

Draft European Communities (Definition of Treaties) (Agreement Establishing the World Trade Organisation) Order 1994

Resolved, "That the Committee has considered the draft European Communities (Definition of Treaties) (Agreement Establishing the World Trade Organisation) Order 1994."—(Mr. Baldry.)

Committee rose at seventeen minutes to Five o'clock.



Boyes, Mr. Roland (Chairman)

Allason, Mr.

Baldry, Mr.

Brazier, Mr.

Brown, Mr. Michael

Canavan, Mr.

Cousins, Mr.

Dicks, Mr.

Hanson, Mr.

Jackson, Mrs. Helen

Kennedy, Mr. Charles

Lennox-Boyd, Sir Mark

Renton, Mr.

Wood, Mr.