§ Mr. Kenneth Clarke
I attended a meeting of the Council of Industry Ministers in Brussels on 8 December and took part in a discussion on the future of the steel market after the present quota arrangements end on 31 December 1987. I pressed for the earliest practicable return to a quota-free market in all categories of steel products and for progress with the further restructuring of the European industry that is necessary for the return to free market conditions to be orderly. I argued the case for steel users in British industry to be able to purchase steel at competitive and not artificial prices. I also underlined the point that the British Steel Corporation has carried out very extensive restructuring of its plants, has raised its performance and productivity, and is now inhibited by the present quota regime from taking full advantage of its competitive position. So far as the British position on further restructuring is concerned, I adhered to the position I outlined to the House in my statement on 3 December.
The Council and the Commission are agreed on the need to restructure the European industry and to end the quota system at the earliest suitable moment. Considerable 164W discussion took place, however, on the pace of change and on the details, on which a wide range of views emerged. No final decisions could be reached, but the following conclusions were agreed unanimously as the basis for further discussion at another meeting of the Council on 22 December:
- (a) The Council will take a decision on the basis of a Commission proposal on 22 December 1987 on whether the quota system should be continued beyond 31 December 1987. It will take its decision in the light of the efforts that each member state concerned has undertaken to make in the meantime concerning reduction of excess capacity in each of the categories Ia and Ib, II and III. To that end the Commission will arrange for appropriate consultations of member states before 22 December 1987, with a view to producing clear and credible indications by 22 December 1987 of the willingness of Governments, after consultation with their industries, to undertake a sufficient reduction of capacity in both state and private sector undertakings by means of closures.
- (b) On 22 December the Council and the Commission will consider whether the result of the efforts referred to in (a) is satisfactory. Before 22 December 1987, the Commission will consider the situation of category I in the light of the comments of Ministers. If the results have been satisfactory the Council will consider the Commission's proposals for the extension of the quota system for categories I, II and III until 30 June 1988.
- (c) Before 10 June 1988, all member states concerned should produce specific and binding undertakings by Government and industries as to the share of their state-owned and private sector industries in the reduction of the surplus.
- (d) The reference of the quota system should be updated and simplified in the context of the decision to be taken before the end of June on the extension of the quota system.
- The extension covering categories II and III should run until 31 December 1990, provided the necessary undertakings on reduction of production capacity mentioned under (c) is achieved. As regards category I, the Commission will make proposals in the light of the situation in this category and of the undertakings of the industry concerning closures and in the perspective of parallel treatment of this category with categories II and III.
- (e) Should the above-mentioned procedure fail to produce the undertakings mentioned under (c), the quota system expires automatically by the end of June 1988.
The Commission also made the following declaration to clarify the effect of point (a) of these conclusions, in terms accepted by the Council:With regard to point (a) of the conclusions of the Council, the Commission confirms that 'sufficient reduction' means capacity reductions of the scale indicated by the Three Wise Men in their final report, and by the Commission in the communication to the Council.In my opinion, the progress of these negotiations so far poses no problem at all for the preparations for privatisation of the British Steel Corporation which I announced last week.