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Lord Monson: My Lords, is the noble Lord aware that vegetable fats are already listed among the ingredients? What the noble Lord suggests would introduce nothing new. They are already listed among the ingredients upon any bar of chocolate that can be purchased in this country.

Lord Redesdale: My Lords, that just emphasises the point. I do not believe that there is any need for vegetable fats to be highlighted to the extent that the amendments pushed for. I believe that people within Europe already travel, and taste and test different types of chocolate, without significant labelling, in countries throughout the European Union without harmful consequences.

I understand the worry expressed by chocolate manufacturers in other countries: that there will be a flood of imported chocolate which would be significantly cheaper and therefore would undercut their traditional markets.

As overseas development spokesman I also take on board the important point raised that countries which produce cocoa are worried about the threat to the price of what is a staple product. The effect that the disease to the plants in Brazil has had in reducing supply should not be underestimated. That has sent up the price recently. However, there are other African countries, some of the poorest in the world, Mali and Burkina Faso, which could happily profit from the production of vegetable fats. I support the view that an increase in the range of products will automatically lead to an increase in consumption. There are few people in this country who eat less chocolate than they did a few years ago.

I believe that the aim of the report, to support the directive, is going in the right direction. I hope that reason will prevail and open markets will be the way of the future.

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I conclude by asking the Minister whether he can give the House an assurance that he will look closely at any recommendations that are to be discussed as regards drinking chocolate and the use of the word "chocolate cake".

8.21 p.m.

Baroness Anelay of St Johns: My Lords, I, too, add my congratulations to the committee for all its work on producing such a robust and clearly argued report and in particular to the chairman, my noble friend Lord Reay, for giving the House the opportunity to debate the issues covered in that report this evening.

This debate goes to the heart of what should comprise the functions of a European trading community. The questions to be answered are these. What powers should be exercised by the Commission and Parliament in determining three things: what manufacturers can make and sell in the United Kingdom; whether they can sell that product freely to others within the European Union, and whether they can sell those products without being forced to adopt labelling which makes them appear to the consumer to be a second class product. These questions fall to be answered with respect to the chocolate directive. There are two main issues, as noble Lords have outlined tonight: the use of non-cocoa vegetable fat, and the sales name for our style of milk chocolate with its high milk content.

I welcome in most respects the Commission's 1996 proposal to revise the cocoa and chocolate products directive. It makes the single market more of a reality. It would allow chocolate with up to 5 per cent. vegetable fat to move freely within the European Union provided that it is properly labelled, although some member states may prohibit its domestic production. I note as others have this evening, that the Commission's proposal for labelling was neutral. A simple statement adjacent to the list of ingredients which informed the consumer that the product contained vegetable fat would surely be sufficient. Several of those who submitted evidence to the committee pointed out that this would introduce 'double labelling', but that it would be acceptable as a sensible way out of arguments over labelling. They argue that after all, those manufacturers who do not use vegetable fats could always be free to make a claim to that effect if they so wished.

I note that the committee's report states that it is willing to accept the double labelling as a temporary measure, whereas it is against the matter continuing on a long-term basis. I find arguments against long-term existence of double labelling persuasive. I would, however, go further and say that I believe there is no argument for double labelling to exist in any form. As the noble Lord, Lord Reay, mentioned in opening this debate, double labelling is inherently unnecessary. If so, I could not recommend it to persist now.

Before I entered the Chamber this evening I approached my noble friend Lord Pearson of Rannoch and said that I was to make a statement with regard to my European beliefs which might dismay him. But we have recognised that we are happy to be part of the same party. We have the same objectives, I would imagine, on

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99.9 per cent., if not 100 per cent., of issues. Tonight, although we may come from slightly different approaches towards our views on the European Community, I am sure that we agree on the ultimate objective. I consider myself to be very much a European in the sense that I feel at home with the culture and structures of countries within the European Union. I note some scepticism tonight about how one might define culture. All I can say is that, wherever I am within the European Community, I feel that I have some commonality with it.

It is from that angle that I approached the question of this directive and the amendments that were proposed by the European Parliament. I was deeply disappointed by the fact that the European Parliament had decided to vote for an amendment which would discriminate so unfairly against UK producers in two significant ways. First, it would have required front-of-pack labelling of the fact that the chocolate contains vegetable fat. This was clearly intended to make UK chocolate with vegetable fat appear inferior. I cannot believe that it was done for any other purpose. As the report points out, front-of-pack labelling in this country is associated in the public mind only with health warnings. Secondly, the amendment would have meant that the UK designation "milk chocolate" would be replaced in the UK by the term "milk chocolate with high milk content"--gobbledegook that would have served only to confuse consumers.

As the noble Lord, Lord Borrie, mentioned, the Consumers' Association responded, perhaps not with sufficient length to provide him with the information he might have been happy to see. But I noted that one of its comments in its submission was that,

    "one recipe is not inferior to the other, they are just different".

With that, I agree. It is not the case that one chocolate is pure and therefore conversely the other must be impure or that one is adulterated and one is real chocolate. They are simply different types of chocolate.

Thirdly, I was disappointed, to say the least, that the definition of United Kingdom milk chocolate was to be confirmed for use in other European languages as "household chocolate", a name which conjures up the idea that it is only suitable for cooking. Certainly, I would say that some cooking chocolates are extremely good, but if one talks of "household chocolate" as a general description, it is certainly one which would appear to denigrate the contents of that chocolate.

Chocolate with a high milk content is traditionally very popular in the United Kingdom and reflects our dairying tradition. I have grown up in the post-war period when "Milk is good for you" was the accepted wisdom--accepted by my parents, at least. Wise or not--and of course I believe they were wise--the taste of our milk chocolate is excellent. I note that the Minister agrees, and he is quite right: it is an excellent taste. I note that in the United Kingdom we consume up to ½ million tonnes a year--over 9 kilograms a person--and I confess, as I stand here, that I enjoy my fair share.

On a more practical note, vegetable fats have been used for many years in small quantities to complement the cocoa butter to give the chocolate characteristics we

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consumers like. My noble friend Lord Reay explained the technical advantages that such use can give to the chocolate.

The amendment moved by the European Parliament and other attempts to denigrate the traditional United Kingdom product ignore the fact that it is in the ultimate interests of all, including cocoa producers, to ensure that the production of chocolate responds flexibly to consumer demand. I understand that many Members of the European Parliament voted for that amendment because they said that they were persuaded that the reduced portions of cocoa in chocolate would damage the economies of developing countries, such as the Ivory Coast and Ghana. I believe that to be a fallacious argument on two counts.

First, as my noble friend Lord Reay said, any expansion of world trade in chocolate and cocoa products is good for primary producers of cocoa beans; it has to be. Whether or not chocolate contains 5 per cent. vegetable fat, any expansion of the market will still require more cocoa to be used. Secondly, the raw materials used to produce the speciality non-cocoa fats also come from developing countries. The shea nuts harvested in Burkina Faso, in villages where the work is carried out almost entirely by women, are a case in point. The trade there has important social and progressive consequences. The women do most of the work. They combine to form village co-operatives to shell and paste the nuts. The profits that they achieve make it possible for them to send their children to school and achieve some measure of economic independence; for example, by forming small businesses such as market gardening. The shea nut trade is at least as important to the economies of countries like Burkina Faso and Mali as cocoa is to the Cote d'Ivoire and Ghana.

A more cynical mind than mine--and I heard echoes of this from the Benches to my right from the noble Lord, Lord Redesdale--might come to the conclusion that some Members of the European Parliament were hiding the pursuit of their own national advantage behind the camouflage of a professed concern for the economies of certain developing countries. I hope that we have seen the end of such arguments and the end of those amendments.

Of course, as has been mentioned tonight, there are some producers in the United Kingdom who do not use vegetable fats in their production of chocolate. They are notable, as the noble Lord, Lord Monson, commented, for the high quality of their product. As so many products have been bandied around in the debate, perhaps I may add the name of Thorntons to those already mentioned. However, I regret to say that I did no market testing before entering the Chamber; but perhaps I will do so later. There is no reason to believe that they or their continental counterparts will be at a disadvantage in trading or that they will change their recipes if they have to compete equally with traditional UK milk chocolate in the EU. I note that Thorntons recognised that fact on giving evidence to the committee.

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It is essential that we avoid putting the interests of individual classes of producers above those of the consumer. The European Parliament amendment was indeed an unwarranted discrimination against an excellent product that our consumers have enjoyed for over 100 years. As I said, I hope that we have seen the end of it.

We on these Benches support and welcome the Government's general approach, which is generally the line that we took when in office. Can the Minister tell the House tonight what progress Her Majesty's Government have made during their presidency of the European Union towards reaching agreement on a new directive, especially bearing in mind the Commission's recent pronouncements? Can the Minister also tell us what bilateral meetings the Government have been able to hold with other member states? Further, can the noble Lord say when the Government expect an agreement to be reached?

On a practical level, if by any chance there were a failure to reach such an agreement--I hope that that will not be the case and I understand that the Government are making all best efforts in that respect--what would the legal position be for our UK manufacturers? Would they return to the status quo? Further, what would they be allowed to manufacture and under what conditions? Above all, we on these Benches would urge that any new legislation on chocolate should allow different chocolate-making traditions to co-exist in a market where EU consumers are free to choose from a wide range of chocolate products.

8.34 p.m.

The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Lord Donoughue): My Lords, this has been an excellent debate, marked by a near consensus, although I noticed some faint inclination towards the margin of differentiation from my noble friend sitting behind me, and greatly assisted by contributions from three members of this distinguished committee which has produced such a fine report.

I should like, first, to thank the chairman of the committee, the noble Lord, Lord Reay, for providing me with a welcome opportunity to respond formally on behalf of the Government to the Select Committee's report on the proposed new directive on cocoa and chocolate products for human consumption. My speech tonight should be viewed as our formal response to the committee.

I shall begin by congratulating the committee. The report provides an excellent summary of a complex subject and a useful analysis of the issues involved which are of particular importance to the United Kingdom. The written evidence also makes interesting reading and demonstrates the range of interests that have been consulted.

The Government are pleased to note that the committee welcomes the stated objectives of the proposed directive, the most important of which is to secure free circulation of chocolate containing

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non-cocoa vegetable fats, as a measure to implement the single market. Like the previous administration, we firmly believe that different chocolate-making traditions within the European Community should be allowed to co-exist in a genuine single market.

We welcome the committee's rejection of the European Parliament's amendments. I can confirm that, as anticipated, the Commission's amended proposal for the directive (which was finally published in the Official Journal on 17th April) also rejected the majority of the Parliament's amendments. As indicated in the explanatory memorandum that we have submitted to the scrutiny committee, the amended proposal takes account of part of the Parliament's amendment on the labelling of products containing non-cocoa vegetable fats. It now requires such products to be labelled with a "conspicuous and clearly legible" statement, in addition to the list of ingredients and clearly distinct from it, that the product,

    "contains vegetable fats other than cocoa butter".

However, contrary to the Parliament's view that the statement should be on the front of the package, the Commission has sensibly concluded that the location of the statement should be left to the manufacturer. Your Lordships' committee has suggested that any requirement for manufacturers to include a separate statement indicating the presence of non-cocoa vegetable fats should be a temporary measure as a possible compromise. The Government understand the merits of this suggestion but remain of the view--and I stress this to my noble friend Lord Borrie, while respecting his opposing view--that additional labelling is unnecessary and are opposed to it in principle. But, like the committee, we fully recognise the need to seek to ensure that manufacturers have adequate time to implement any changes in labelling, or otherwise, in a new directive.

It may be helpful if I confirm that the Commission's amended proposal only takes account of three other minor amendments proposed by the European Parliament. These clarify the reference in the text to the Community rules on additives used in foodstuffs and would provide a clearer definition of two specialist types of chocolate--I hope that I pronounce them correctly--"Gianduia" and "Gianduia milk chocolate". All the other amendments proposed by the European Parliament, including the removal of the current derogation for UK milk chocolate, have been rejected by the Commission.

The Government note the importance that the committee attaches to the retention of the derogation for UK milk chocolate and its view that ultimately there should be a single definition of milk chocolate. I should like to assure your Lordships that we will take a robust stance in relation to our own "milkier" milk chocolate and will do all we can to ensure that when the product is sold in other member states it is not labelled in a derogatory manner. I think a point that is often overlooked by our European neighbours is that the higher milk content of our milk chocolate provides a higher value product. It is also "farming friendly" by providing an additional outlet for the milk produced by European farmers.

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The Government welcome the conclusion of the committee that the option of using non-cocoa vegetable fats in chocolate throughout the European Union will not necessarily have a negative impact on cocoa-producing countries; and that those developing countries which produce the raw materials for non-cocoa vegetable fats will benefit. There are, of course, significant uncertainties about the possible effect of the proposed directive on cocoa producers and other developing countries. The Government share the view of the committee that long-term development strategies should be based on helping countries respond to shifts in consumer demand patterns.

With regard to methods of measurement for non-cocoa butter vegetable fats, the Government fully agree with the committee's view that there is no need to delay implementation of the proposed directive until more accurate tests are available. Methods which already exist for those fats are no less precise than those for other components in chocolate and these are complemented by in-factory checks of records and recipes, which provide far better reassurance and would be capable of being undertaken on a pan-European basis if genuinely harmonised provisions can be agreed.

I now turn to some of the points raised during the debate. The noble Baroness, Lady Anelay, and the noble Lord, Lord Willoughby de Broke, asked about progress towards reaching agreement on the directive. I assure the noble Baroness and the noble Lord that my right honourable friend the Minister of Agriculture, Fisheries and Food and other colleagues, especially the Minister for Trade and Competitiveness in Europe, my noble friend Lord Simon of Highbury, have taken every opportunity to raise the subject in bilateral talks with their counterparts. At a debate in the internal market Council last November we were only five votes short of the necessary qualified majority in favour of the use of vegetable fats. We want to do all that we can to ensure that other member states understand our concerns and to see whether we can find a solution to this matter during our presidency. I hope the noble Baroness will agree that it would not be appropriate to disclose details of negotiations at this stage. As regards timing--

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