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Duty-Free Trading And The Ec

Volume 490: debated on Thursday 3 December 1987

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3.24 p.m.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether, in view of the implications for employment, they will oppose any EC proposals, ahead of harmonisation, that end all or part of duty-free trading.

My Lords, the Government have no plans to end all or part of duty-free trading. My right honourable friend the Chancellor of the Exchequer made clear that discussions within the Economic and Finance Council of the European Communities were based on its acceptance of the continuing existence of duty and tax free facilities as long as fiscal frontiers remain within the European Community.

My Lords, I thank my noble friend for that very satisfactory and reassuring reply, but do the Government accept that any proposal to end any part of internal EC duty-free trading is not a health issue but a fiscal measure and therefore requires unanimous agreement by the Council of Ministers?

My Lords, my noble friend is correct. As a fiscal measure it will require unanimity among Ministers.

My Lords, will the Minister make it clear that the Government do not concede the implication contained in the Question addressed to him as regards "ahead of harmonisation"? Will he give the House an undertaking that there will be no government consent to harmonisation affecting the United Kingdom without due consideration being given to it by Parliament?

My Lords, I can do little more than refer the noble Lord to what I said in my original Answer. My right honourable friend made clear that discussions within the Council of the Communities were based on its acceptance of the continuing existence of duty and tax free facilities as long as fiscal frontiers remain within the European Community.

My Lords, can my noble friend confirm that that Answer makes it clear that in the event of achieving our objective, as we understand it, of a single market in 1992, automatically and logically duty-free facilities will disappear?

My Lords, that will be correct provided there is fiscal harmonisation at that time.

My Lords, can my noble friend address himself to the other implication behind the Question—that there are EC proposals in consideration that any or all of duty-free trading should be abandoned before harmonisation?

My Lords, my noble friend is perhaps referring to the Commission's suggestions to end the sale of duty-free tobacco as part of its initiative for reducing the incidence of cancer. No formal proposals have yet been made. Although action against cancer is being handled by health Ministers, finance Ministers will be dealing with detailed tax proposals. The wider economic implications are being kept in mind.

My Lords, does my noble friend accept that if there are to be penalties in this area, it is best to attack areas which are carcinogenic?