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House of Lords

Thursday, 21st October 1999.

The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by Lord Bishop of Lichfield): The LORD CHANCELLOR on the Woolsack.

Viscount Hood --Took the Oath.

North American Free Trade Agreement

Lord Renton of Mount Harry asked Her Majesty's Government:

    Whether there is any prospect of the United Kingdom being admitted to the North American Free Trade Agreement.

The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, the prospects of the United Kingdom being admitted to the North American Free Trade Agreement are non-existent. The United Kingdom is a committed member of the European Union. American foreign policy has, in recent years, consistently encouraged the UK to play a full role in a strong Europe, and the UK Government have no intention now, or in the future, of applying to be admitted to NAFTA.

Lord Renton of Mount Harry: My Lords, I thank the noble Lord for his reply. I ask the Minister to take the point a little further. If the North American Free Trade Agreement were genuinely to stretch its reach to outside the American continent, could it in fact play any part in promoting international free trade in any sense other than that already performed by the World Trade Organisation? Is it correct to say that membership of NAFTA by this country would be totally contrary to our membership of the EU because it would permit duty-free entry of goods from the United States, Canada and Mexico into this country?

Lord Sainsbury of Turville: My Lords, it is quite clear that, under Article 10, membership of NAFTA would not be compatible with our membership of the EU. More important, it appears to make no economic sense whatever, in that 52 per cent of our trade in goods and services is with the EU, and--I believe--18 per cent is with NAFTA. In fact, our trade with Sweden exceeds the total of our trade with Canada and Mexico put together. Eight of our top 10 trade partners are in Europe. On that basis, it would not seem to me to make commercial sense.

Lord Taverne: My Lords, does the Minister agree that the increasing enthusiasm in certain parts of the Conservative Party for a link-up with NAFTA is yet another indication that their strident campaign against the euro is taking them ever closer to rejecting the European Union altogether? Would it not be wise for the Government, in turn, to be somewhat more relaxed

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in their attitude towards the euro; to recognise that it is part of the central project of the European Union; and should they not be a little more bold in expressing, at least in principle, the view that the euro would be good for Britain?

Lord Sainsbury of Turville: My Lords, the question of what the policy of the Conservative Party now is on that issue is obviously very real. It seems to be moving towards rejecting the European Union in its totality. I merely point out what has been said by Malcolm Rifkind, John Major, and the right honourable Member for Henley, Mr Heseltine. Perhaps I may read out their comments. John Major said recently:


    “They were trying to create a certain sense in which there will then one day be no choice but to decide whether we stay in or leave. This is politically crazy. I also think it is economically crazy".

I shall quote what Malcolm Rifkind said. I suppose that this is also to be air blown out of the records. He said that Conservative policy is


    “a call which is little more than an euphemism for us to quit Europe".

Now perhaps I may quote the right honourable Member for Henley--

Noble Lords: Order, order!

Earl Ferrers: My Lords, perhaps I may interrupt the noble Lord and remind him that, as a Minister, he is responsible for answering questions addressed to the Government about government policy, and not for speculating about the policy of other parties?

Noble Lords: Hear, hear!

Lord Moynihan: My Lords, in that totally disappointing and inaccurate answer, the Minister did not even respond to the fairly erroneous comments of the noble Lord, Lord Taverne. Surely the Government must agree that global free trade by the year 2020 should be a vision that we, in all parts of this House, set for the world? If he agrees, surely he should further agree that free trade between Europe and America is an important first step towards realising that vision? Therefore, why does he reject an alliance between the European Union and NAFTA, one of our most significant trading partners, as an important symbol of that free trade commitment?

Lord Sainsbury of Turville: My Lords, I totally agree that global free trade is our aim. That is why the UK is working with the EU towards implementation of the transatlantic economic partnership with the US, the EU-Canada Trade Initiative and the EU-Mexico Free Trade Agreement. We are working towards exactly those goals stated by the noble Lord.

Lord Clinton-Davis: My Lords, is it not abundantly plain that being admitted to NAFTA is quite different from working co-operatively with the member states of NAFTA, which, as I understand it--and perhaps the Minister will confirm--we have done successfully

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since the Labour Government were elected in 1997? Indeed, we continue to work successfully with them. Is it not also a fact that many of our main industrial companies work most co-operatively in mergers, combinations, or alliances with companies operating within the European Union area? Why should we begin to damage that prospect by reason of the internal arguments which seem to be absorbing the Tory Party at the present time?

Lord Sainsbury of Turville: My Lords, I entirely take the point that there is a great difference between extending free trade with free trade agreements to the countries of NAFTA, and the point of the original Question, which was about joining NAFTA. Clearly we could do that only if we ceased to be a member of the European Union.

Lord Waddington: My Lords, is it not right that ever since the start of the Common Market, the United States, in spite of tariff barriers, and because of its lean economy, has managed to increase its exports to Europe, and that in fact since 1990, the US has increased its exports to Europe much faster than we in Britain have increased our own exports? Does that not tend to show that it is not necessary for success in world markets to be a member of an organisation like the European Union, least of all an organisation which seems to believe in high taxes, high regulation, and bureaucracy? What is really important is to have an efficient economy ourselves as free from regulation as possible.

Lord Sainsbury of Turville: My Lords, clearly in all matters of trade the efficiency of one's economy and how well one increases productivity are major factors in whether or not one increases trade. I do not believe that that in any way alters the need for free trade areas or the benefits of the EU.

Third Party Liability Insurance: Businesses

3.10 p.m.

Viscount Mountgarret asked Her Majesty's Government:

    Whether it should be a requirement for companies, small businesses and self-employed persons to have compulsory third party insurance against personal injury caused by negligence.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, many third party liabilities of this kind are already covered through compulsory employers' liability insurance, compulsory motor insurance, licensing requirements, or, indeed, as a condition of membership of a trade association. Therefore, very persuasive arguments would be needed to justify the introduction of a general requirement for businesses to have third party liability insurance. Such a requirement is unlikely to be

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warranted by problems which may exist in particular sectors. The burden of complying with such a regulation would be particularly difficult for small businesses.

Viscount Mountgarret: My Lords, I am grateful to the noble Lord for his reply, which surprises me a little. Is the noble Lord aware that there are many people--particularly those who are self-employed, such as electricians--who unfortunately can and do fail to carry out work properly? That can lead to serious consequences for the person for whom they are working. If those people are not insured against negligence, there is no possible way in which damages can be claimed. I happen to know that that has happened. Will the noble Lord offer me advice?

Lord Whitty: My Lords, the noble Lord's question covers a number of different situations. It is true, for example, that it would be difficult to claim insurance on a property if there were no form of insurance covering that property and if a sub-contractor or a self-employed person working on the property did not have insurance. Nevertheless, if one is concerned about such a situation it should be remembered that in many cases a requirement of membership of or registration with a trade association is that the member firm must protect itself one way or the other against such liabilities. On the other side of the equation, in many sectors the cost of general third party liability insurance would be a great deterrent to the setting up of small firms.


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