Select Committee on European Communities First Report

Examination of witnesses (Questions 40 - 53)



Lord Haslam

  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 action?
  (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.

Lord Geddes

  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.

Lord Walpole

  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 in Europe?
  (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 no-one else.

  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.

Lord Bridges

  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 before.


  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 this stage!
  (Mr Henderson)  Thanks for your invitation to be with you today and for your most constructive dialogue. Thank you.

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