EUROPEAN ECONOMIC COMMUNITY

HC Deb 06 June 1962 vol 661 cc484-608

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Redmayne.]

4.5 p.m.

The Lord Privy Seal (Mr. Edward Heath)

On 3rd August last year, the House passed the following Resolution: That this House supports the decision of Her Majesty's Government to make formal application under Article 237 of the Treaty of Rome in order to initiate negotiations to see if satisfactory arrangements can be made to meet the special interests of the United Kingdom, of the Commonwealth and of the European Free Trade Association; and further accepts the undertaking of Her Majesty's Government that no agreement affecting these special interests or involving British sovereignty will be entered into until it has been approved by this House after full consultation with other commonwealth countries, by Whatever procedure they may generally agree. I have read that Resolution in full because I wish to state clearly at the beginning of the debate that this fully represents Her Majesty's Government's position. I hope, therefore, that there will be no question during the debate about the action which it will be necessary to take as far as the Commonwealth is concerned and Parliament is concerned before any final decision is taken. It is on this basis that we are negotiating in Brussels with the member Governments of the European Economic Community. In a debate one does not always use the full formula which I have read out in the Resolution. I hope that the House will understand that what I say is always set in the context of the Resolution passed by Parliament.

On Monday last, the right hon. Member for Huyton (Mr. H. Wilson) rightly reminded us that we are negotiating in the national interest. I assure the House that it is with a very full sense of responsibility that we are carrying on these negotiations in Brussels. Here, I pay a tribute to the work of the officials of the delegation who have earned not only the respect but, it is generally agreed, the admiration of the other officials with whom they are negotiating. I believe that they are serving our country well.

On 10th October, I made a full statement in Paris setting out the position of the British Government in these negotiations. For the past eight months, we have been continuing them in Brussels. It may, perhaps, be unusual in a negotiation of this kind, which must, I think, be the most complex and complicated in which a British Government have ever taken part, to have a debate in midstream. We ought, perhaps, to remember that the direct interests of some 27 independent countries together with some 47 Dependencies of the British Commonwealth are affected by the negotiations in Brussels.

This debate gives me an opportunity to tell the House as much as possible of what has been going on. Much has been told already. My statement in Paris was very full. I have endeavoured to convey to the House from time to time the individual results of the Ministerial meetings. I believe that there has been more public discussion of this issue in the Press, on the radio, on television and by every other means than there has been about any other single issue in British politics since the war. Although some may say that they still fail to realise the issues at stake, there can be no doubt that the media of public information in this country have done more than at any other time to try to clarify the matter—at least in most cases to try to clarify them. There has certainly been widespread public discussion.

I believe that what the House would like to have is an exposition of the situation. In this my right hon. Friends the Secretary of State for Commonwealth Relations and the Minister of Agriculture, Fisheries and Food will take part in those interests which are of particular concern to their Departments. I have no doubt that some hon. Members will wish to go back to the fundamentals of the subject, the meaning of the Treaty of Rome, and so on. For the purposes of this debate, I wish, in the limited time available, to deal as fully as I can with the course of the negotiations. What I wish to do is this. First, I intend, very briefly and without going all over the ground again, to set the context in which, I suggest, the actual negotiations themselves should be seen and the work we have been trying to do should be evaluated. I shall go over the ground we have covered in the first seven months of preparations for the negotiations proper. I shall then turn to the technique of tackling the problems with which we are faced and the progress which we have made. Next, I shall say a few words about the position of our E.F.T.A. partners. Then, as I think the right hon. Gentleman the Leader of the Opposition and his right hon. and hon. Friends would wish, I shall say something about developments towards political union in Europe in which the House takes the closest interest.

I turn now to a brief sketch of the context in which these negotiations are set. We are living in a period of intense change both politically and economically in the world around us. I sometimes doubt that the people of this country altogether realise the extent and the depth of the change which is taking place in the world outside.

I take, first, the political change. Since the last war, we have seen the development of two great Power groupings, the first consequence of which was that other Powers sought protection in an alliance in the West under the deterrent of nuclear power, the greater part of this, as we have always recognised, being in the hands of the United States, some being in the hands of this country. Then we have seen a movement towards nuclear parity. It is as a result of this that European countries have developed a new consciousness about defence, a consciousness which did not exist before in the earlier developments of the great Power groupings and the development of the thermo-nuclear deterrent. We see, today, that Europe has recovered an enormous amount of its strength, and with that recovery has come confidence in itself and a spirit of pride and independence. This has been expressed in the European Economic Community, together with the determination of its members to strengthen their voice and their influence in Europe.

These things are happening. I believe that every impartial observer will accept what I have said. We could not prevent them happening, even if we wished to do so, Which we do not. The pace of these developments may vary, and there may be setbacks from time to time, but the developments, broadly, will continue.

The Community will, therefore, become a centre of strength and influence. It will develop policies and opinions about every matter affecting European and international affairs; policies and opinions affecting relations with the Soviet Union and with the countries of the Eastern bloc, both politically and economically. It will develop an attitude towards neutralism. It will develop policies towards the under-developed countries. The more the Community develops the more powerful will its influence become.

In the sphere of economic change, we see many other processes at the same time. Throughout the world today, there is the emergence of surpluses of raw materials and of foodstuffs, temperate products and tropical products. We see the acute need for stability in the developing countries of the world. In the industrial countries, we have entered a new phase. There is now a genuine desire for a reduction of industrial tariffs between the comparatively few industrialised countries of the world. These countries believe that greater trade between themselves helps the developing countries because of the increased demand for raw materials and many other products which accompanies that increase in trade between the industrialised countries. Moreover, we see in the West the need for a sound economic basis for its political strength in order to maintain its free way of life. These are rapid changes in the economic situation which have taken place recently in the world.

In this context is set economically the development of the Community under the Treaty of Rome. Here, I wish to refer to the general aspects of it in order, again, not to go over the whole ground. In the Community there is a much larger market of nearly 170 million people, a market which permits greater specialisation and greater competition, a market which leads to greater efficiency and permits greater developments in research and technology and which has, moreover, the stimulus for its individual members of taking part in a wider organisation with a commensurate exchange of ideas leading to greater life and vitality in the individual countries. This has been reflected in the high rate of growth.

None of these advantages is automatic to the members, of course. They represent opportunities which have to be used by members if they are to secure the advantages of membership. One aspect of the Treaty of Rome which I should emphasise here, because it has arisen in discussions in this country, is that the purpose of the provisions of the Treaty is to maintain a fairness between the members of the Community in their economic activity. In this, of course, it is distinguished from the forms of free trade which we have known in earlier parts of Western history.

Now comes the question in this context. What is to be our attitude towards the economic and political changes which have taken place so recently? Are we to stay politically outside Europe? Are we to be excluded from these developments? There are some who say that, if we take part in them, we shall not be able to influence them. How much the less one can influence them from the outside. I have no doubt at all about the ability of this country to play its full part in influencing these movements if it should be possible for it to become a member of the European Economic Community. Will the United States or the Commonwealth look upon us as better partners, more valuable partners, if we remain outside the main stream of European growth? The Government believe that, provided that we can make proper arrangements, we should be prepared to play our full part in the Community.

This is no one-sided matter. We believe that we have an enormous amount to contribute to the Community if we are able to play our part in it. We have our political traditions and experience. We have the stability of our own forms of Government. We have the industrial strength, skill and ingenuity of our people to contribute towards this movement in Europe if we play our part in it. Nor do I believe that to do so would be incompatible with our Commonwealth ties or with our influences and friendships with other parts of the world, with the United States or with other countries with which we have close relationships. The members of the Community have retained their own close relationships and historical ties with many countries in Africa, in the West Indies and in the Pacific. That has contributed to the influence not only of themselves but of the Community. I therefore believe that the work of constructive statesmanship should be to reconcile the new movements in Europe with the Commonwealth and all our ties with it to the enrichment of both.

Secondly, on the economic question, what sort of economic base do we wish the United Kingdom to have? Is it to be a comparatively small one limited (to our present activity, or should it spread to a larger one of a market of nearly 250 million people? What sort of trading relationships do we wish to have, not only with the Commonwealth, but with Europe and with the developing countries of the world? Do we wish to have a narrow front with our trading relationships or to spread them widely in the interests of many other countries besides our own and our own Commonwealth?

I have no doubt about the views of the Commonwealth countries on this. They have themselves, quite rightly, been spreading their trading relationships much more widely of recent years, because they believe in the wider outlook of world trade. To those who have asked and who may ask in this debate what are the reasons why the Government have entered into the negotiations, I suggest that those which I have put forward are powerful political and economic reasons for taking part in these negotiations. Economically, there will be opportunities which must be seized, but it remains fundamentally true that only a prosperous United Kingdom can provide an expanding market for the Commonwealth and can provide adequate investment for the Commonwealth. Only a competitive United Kingdom can retain its own place in the Commonwealth markets.

Therefore, for these reasons, Her Majesty's Government believe that it is right to enter these negotiations and to continue the negotiations. Let me assure those of my right hon. Friends and others who this morning indicated in a national newspaper that they believed that these negotiations had now come to a standstill that nothing could be further from the truth and that Her Majesty's Government believe it right to continue the negotiations.

Mr. Paul Williams (Sunderland, South)

That is not what we said at all.

Mr. Heath

It took seven months of preparation before we came to the actual phase of negotiation. What were we doing during that time? We took the major problems involved in the negotiations and broke them down into smaller problems. We conceived methods of analysis and statistical compilation in order to deal with every item of trade of the 27 independent countries and of the 47 dependencies with which we have been dealing.

We took the opportunity in our discussions with the Community to point out the importance and nature of the British Commonwealth. I believe that now there is a greater understanding, although not yet a full understanding, of the nature of the British Commonwealth in the members of the Community. We pointed out the constitutional ties which bind us, the consultation which goes on continually from the Prime Ministers' Conference downwards, the personal association and the fact that the Commonwealth embraces every continent, every colour and every creed and has its own form of influence on world affairs This has been our task.

There is still some misunderstanding, perhaps, that we are endeavouring to bring all the countries of the Commonwealth in as members or associate members of the European Economic Community. That is not our purpose in the negotiations. But if we are to reach satisfactory conclusions and solutions, then we wish to instil a full understanding of the nature of the Commonwealth itself and the ties which bind us.

Let me tell the House some of the points which have been put before us by the members of the Community. I think that this is necessary in order to evaluate the sort of conclusions which we reached and the solutions which we are later to put before Parliament. First of all, the Community emphasises again and again the importance to it of the Treaty of Rome as the framework within which it operates. It is not so rigid as to say that exceptions cannot be made. What it does point out is that the exceptions must not be such as to become the rule. This is the basis on which the Community is operating.

Secondly, it emphasises constantly the importance to the Community of the common tariff which surrounds it and towards which individual countries are moving. This is emphasised because the Community regards it at present as the strong support and framework for its operations. Moreover, it is, of course, true that this is its main argument when it sets out to reduce industrial tariffs by bargaining reciprocally with other industrial countries. Again, therefore, as the Community attaches immense importance to the common tariff, it is not so rigid that it says that exceptions are impossible, but it emphasises that the exceptions must not be of such a kind or of such a size as to become the rule.

The third point which we have come to understand much better in these negotiations is that we are negotiating not with a static organisation but with a rapidly developing and changing one. It is based on what is really, we would term, an enabling treaty which provides a framework the detail of which has to be worked out by its members as it proceeds.

I will not disguise from the House that these points have presented negotiating problems to us in three particular spheres—first, in the sphere of agriculture; secondly, in the developments of association under Part IV of the Treaty for the under-developed countries; and, thirdly, recently in the political developments under the Fouchet, now Cattani, Commission. We have in fact been negotiating with something which is much akin to a moving belt. The dilemma is this, that if we are to take part in the developments and if it should ultimately prove impossible for us to join the Community, the Community would find itself at the end of the day having made no progress during that time. On the other hand, if we do not take part in these individual negotiations, these individual developments, and become members of the Community at that time, adaptations have to be made in the policies which have been worked out.

This is a difficult problem, and it is being solved with good will on both sides by our having the opportunity to express our views as the policies have been developing, and we hope that any adaptations which will be necessary will be made at the time without undue difficulty.

The fourth point with which one has been impressed in the negotiations—and I think that it is of great importance to us—is the confidence which the members of the Community have in their ability to deal with problems in the future through the institutions which have been set up under the Treaty of Rome. They are more and more working together as a community in the interests of their members. It is therefore perhaps understandable that they find it difficult to appreciate why on so many occasions we should ask for specific definitions, or specific arrangements, about events some time in the future, the nature of which cannot at this stage be directly foreseen. They have confidence that, with their existing machinery of the Council of Ministers, the Commission and the European Court, they will be able to deal with problems as they arise and to adapt themselves.

In these negotiations, I believe that there has been a gradual realisation of the attitudes which are required. On our part, an understanding of the nature of the way a community of this kind deals with its problems is required. On their part, what is required is to think no longer in terms of a community of six members but of an enlarged community of seven, nine or ten members, with perhaps associated members, and to think in terms of what is required to handle that situation. Again, that means that with good will on both sides changes and developments in attitude are required, which I believe have been gradually brought about.

There is one particular point on the nature of the Community with which I should like to deal because it has been much discussed in public. Many have urged that the Community should be outward-looking, rather indicating that at the moment this is not so, and urging the United Kingdom to use its voice to bring about an outward-looking aspect to the Community. There is already a great deal of evidence of the outward-looking nature of the Community. It is true that we would be able to reinforce this, but let me look at the questions which indicate this.

First, there is the fact that the general level of the common tariff is lower than that of the United Kingdom tariff. In that respect it is more outward-looking. From the point of view of the Dillon Round the Community showed itself prepared to make very considerable reductions in its industrial tariff on a reciprocal basis, almost up to 20 per cent. It is interesting to look at the percentage of the gross national product devoted by countries through public and private means to the developing countries and through the multilateral agencies. I should like to give the figures for 1960: France, 2.5 per cent.; the Netherlands, 2.13 per cent.; Belgium, 1.47 per cent.; the United Kingdom, 1.36 per cent.; Germany, .93 per cent.; and the United States, .83 per cent. These figures are very revealing as to what the countries of the Community are already doing to help the under-developed countries of the world with aid. This shows I think that they are prepared to go a long way in helping these countries.

Then there is the question of the trade of the Community with the developing countries. It has been said that were we to become members we should endanger much of the trade with the under-developed countries. I have never quite understood why this should be so, because so much of our trade of this kind is in tropical products and other raw materials which we are bound to go on importing because we have no source of them in the United Kingdom nor in the Community countries of Europe. Therefore, this trade is bound to continue. The trade figures of the Community from 1958 to 1961 show that its imports have risen by 27 per cent. It takes 40 per cent. of the world imports of tropical vegetables, oils and oil seeds. I could give many examples from the figures I have here. Its imports of cocoa from Ghana represent 25 per cent. of Ghana's total exports. The United Kingdom's figure is 10 per cent. The Community takes 40 per cent. of the Commonwealth's total exports of cocoa. The United Kingdom takes 20 per cent.

It is therefore quite clear that the Community countries already have a very great interest in Commonwealth trade, particularly in these tropical products to which so many of our own countries contribute. I therefore do not think that the argument that we are negotiating with a Community which is only inward-looking is justified. I believe that what I have said shows that it is already outward-looking, that many of its members wish to carry this further and that we ourselves should be ready to reinforce that tendency.

I now turn to the technique of the negotiations. The fundamental problem with which we are faced—I think that this may lead to an understanding of the solution which is propounded—is to reconcile the Customs Union, which is the basis of the Community by which as I have explained so much store is set, with the preferential trading area which we have in the Commonwealth, even though that itself is not a simple organisation but is infinitely varied and contains within itself a free-trade area and a Customs Union.

Therefore, the fundamental problem is, what sort of solutions are we to find to this problem? There is, in fact, no single simple solution. That is why we have had to break it down into a number of different problems—nine or ten. I should like to go through each in turn in order to show the House how this has been tackled. It has been tackled, of course, with the assistance of the Commonwealth countries themselves. In view of what has often been said in the House, here I should like for my part to thank the Commonwealth Governments for the information which they have continuously given us since the beginning of these negotiations, which has enabled us to form our judgments, and for the views which many of them have expressed on so many occasions on the solutions which we have put to them.

The first problem with which we have had to deal has been the general level of the common tariff. We accepted the structure of this in the statement in Paris. The ultimate level which emerges is of great importance to the Commonwealth and to other third countries. We ourselves have offered to reduce this by up to 20 per cent., including the results now settled by the Dillon Round, because we believe that it would demonstrate to other countries in G.A.T.T. that this was going to be an outward-looking organisation. The position is that no further action can be taken on the level of the common tariff until the end of the negotiations because it will be necessary to take into account all the other individual arrangements which I shall describe to the House as I proceed.

What I think is encouraging is that British industry has accepted the proposals put forward at Paris to accept the level of the common tariff at the moment of the entry of this country into the Community. It has accepted that as a challenge to its production in this country and also as an opportunity for exporting to Europe when we go into the Community.

The second group with which we have been dealing is the request for zero tariffs on a number of raw materials. Many raw materials come into the Community already free of duty. These include such important ones as wool, timber, copper and nickel—all very important to Commonwealth countries. So they will continue to come into the enlarged Community from that date, and they present no trading problem.

But we have put forward proposals for what are known as the Big Five— aluminium, lead, zinc, wood pulp and newsprint—to have a zero tariff, together with a certain number of others. Here we have deployed the argument about the importance of a large industrialised Community obtaining its raw materials without duties upon them. We have also emphasised the need to take into account the new balance between supply and demand within the Community.

If one may give just one example, at the moment the Community produces four-fifths of its aluminium and imports one-fifth. We import four-fifths and produce only one-fifth. There is, therefore, a directly contradictory position between the United Kingdom and the Community in this matter which has to be reconciled. At the same time the Community has pointed out the interests of the producers in the Community itself. Therefore, we are now seeking solutions on each of these items in order to reconcile the position between the producers and the importers.

I now turn to the third group, which is that of the manufactured goods from Canada, Australia and New Zealand, about which I have already made a statement to the House. We put before the Community the importance of this trade to these countries, and emphasised that it is a small part of the trade of the Community as a whole and particularly of what the enlarged Community will be. But there were also the arguments from the Community about the difficulty. which hon. Members opposite who have been in office will well recognise, of segregating industrial goods in a common market, and particularly in the form of discrimination which would be necessary with some form of certification if we were attempting to do that.

So we finally reached a compromise solution which I have already described to the House. It is one in which the members of the Community have moved towards us in order to meet the needs of Australia, New Zealand and Canada. We have reached this arrangement about décalage, the gradual application of the tariff in three stages, together with the undertaking about the reviews in the negotiations in G.A.T.T. on these industrial products and the reviews in 1966 and 1969. This, therefore, is more than the Treaty of Rome provides for. It will be giving the opportunity to these industrial goods of having a period of adaptation longer than would otherwise be granted.

Perhaps I ought to describe here, in view of the item with which I have just been dealing—manufactured goods— what the position is about such solutions as we have found. This is of course, related to the Resolution which I read to the House at the beginning of this debate. This is only one of the main subjects which has to be covered before we can see the main outlines of an agreement. We have already stated, and repeatedly stated—my right hon. Friend the Prime Minister has stated it —that no agreement of this kind can be entered into until it has been approved by the House after full consultation with the Commonwealth in the way that I have already described. We shall try to work out in Brussels solutions to these main problems.

The solution which I have put before the House, and which I have gone over again today, represents the one we have reached in the field of manufactures from the developing Commonwealth. The Prime Ministers' Conference and subsequently Parliament will have to consider this along with all the other proposed solutions in the other field, which I am just going on to, as part of an overall settlement. Therefore, this arrangement which we have reached is, of course, dependent on all the other arrangements which we shall try to reach in the overall solution. They must be considered together, and, I suggest, evaluated together.

I turn now to the next group, which is that of the manufactured or processed foodstuffs. What I want to emphasise here is that they are being treated separately from the industrial or factory goods with which I have just been dealing. They have not yet been discussed in the negotiations.

Now we come to the group that we have also discussed recently, which is that of the products of the Asian members of the Commonwealth, in particular India, Pakistan and Ceylon. The very delicate nature of the position here has been well illustrated in this House both on Monday of this week and again this afternoon with the statement of my right hon. Friend the President of the Board of Trade, because it is to such a large degree concerned with textile products from the Asian countries. Our object here in these negotiations has been to avoid damage in trade from these countries to this country and the Community. It is of great importance to them because of the need to pay for imports for their development plans and to service the loans of their development plans. But we have also been able to emphasise to the members of the Community the very great interest which they themselves already have in the Indian sub-continent. They are contributing some 20 per cent. to the third five-year Indian plan and we are contributing 11 per cent., a total of 31 per cent. from the enlarged Community. They are contributing 10 per cent. to the Pakistan second five-year plan, and we are contributing 5 per cent. They are contributing almost twice as much as ourselves. The total is 16 per cent. from the enlarged Community.

Mr. Hugh Gaitskell (Leeds, South)

Will the right hon. Gentleman make it clear whether these are loans or grants, or both?

Mr. Heath

They are part of the normal consortium in which we take part, and are loans.

So the members have a great interest in seeing that these countries can pay for the imports necessary to carry out these plans and also to service them.

We have, therefore, put forward proposals to meet these two ends. One object is to prevent damage to this trade. I would here point out for the hon. Member for Leeds, East (Mr. Healey) that this includes provision for the element of growth necessary for them in the development of these plans.

There is also the question of tea, for which we have asked for a zero tariff. There are certain other manufactures for which we have asked special arrangements. The members of the Community have, of course, pointed out their continuing anxiety about textile imports from these countries. Therefore, we have to find an arrangement which is acceptable in both ways.

Hong Kong has similar problems. We have not yet discussed this or put forward proposals, but we shall do that in the course of the next few weeks.

I now turn to—

Mr. Sydney Silverman (Nelson and Colne)

Before the right hon. Gentleman leaves that point, I am sure that the House would be glad to be reassured that when he is continuing his negotiations about the problems of the Hong Kong textile trade he will not ignore Lancashire's interest in this matter, because this is fundamental to the continuance of our own industry.

Mr. Heath

I quite understand that point, but, of course, we must respect the position of Hong Kong—its existing rights and so on—as well as the position in this country and the Community.

Those, then, in Asia, are some of the developing countries. The remainder we are considering in the negotiations under the question of association under Part IV of the Treaty.

Mr. Gaitskell

Will the right hon. Gentleman answer one question in connection with this? Would he make it plain that the British Government are themselves negotiating about, for example, possible quotas for India, Pakistan and Hong Kong in the European countries and not simply leaving it to those countries to negotiate themselves?

Mr. Heath

We are negotiating about the arrangements for this country as a member of the Community, if that comes about, in the transitional period and in the longer period, and that obviously affects the present members as well as the United Kingdom.

Mr. Gaitskell

I am sorry to interrupt again, but this is a very important point. What I was asking was not whether we were negotiating on our own basis. Of course we are. But are we not negotiating on behalf of the Commonwealth countries as well?

Mr. Heath

Yes, Sir; of course. That applies to all the negotiations. There would be no anxiety on the part of the members of the Community if we were negotiating only about the products of those countries coming to the United Kingdom. Of course they are concerned about the products from the Commonwealth countries coming into the Community as a whole. That is the position on which we are negotiating. I hope that clears up the point.

Mr. Hector Hughes (Aberdeen, North)

Might I ask the right hon. Gentleman a question? He has mentioned the impact of the Common Market on a great variety of British industries, but he has made no reference to one very important industry which employs thousands of British people and helps to feed the British people, namely, the fishing industry. Will he say what impact he expects Britain's entry into the Common Market will have upon that very important industry?

Mr. Heath

I can easily give the answer to that. It is that the Community has not yet developed a common fishing policy.

May I turn now, after that brief—

Mr. Hughesrose—

Hon. Members

Sit down.

Mr. Deputy-Speaker (Sir William Anstruther-Gray)

Order. The hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) knows the conventions of this House. Mr. Heath.

Mr. Hughes rose—

Mr. Heath

Perhaps I can help the hon. and learned Member by telling him that I fully realise the importance of the matter which he has raised.

Mr. Hughes

It is no joking matter.

Mr. Heath

I was in no way joking about it. I said that the Community has not yet developed a common fishing policy. If we become members of the Community, we shall play our part in working it out. It is a matter of the greatest importance.

I now turn to the question of the other developed members of the Commonwealth. The question of association under Part IV of the Treaty has to be renegotiated before the end of 1962. We have asked for an offer of association for Such developing countries. It is, of course, for the countries within the Commonwealth themselves to say whether or not they wish to take advantage of this. They will also wish to know the nature of the general arrangements before they decide.

Here again is a negotiating dilemma, because, of course, in working out the new arrangements for association with the Community which have to be fixed by the end of 1962, the Community naturally wishes to know which of the countries of the Commonwealth is likely to want to be associated. This is a dilemma that we shall have to resolve in the course of the next few months.

We have made known to the Community our own views as to what the content of an association of this kind should be, the nature of the preferential arrangements, the nature of the financial arrangements and the institutions to be concerned with it. We must recognise, of course, that the Community has its obligations to the existing associates, and it is also—and this is related to what I said earlier about the outward-looking nature of the Community—greatly concerned about the effect of widening a preferential area of this kind with other third countries. That is particularly the case with the tropical products of South America and Central America, and therefore it is of great importance that we should take these into account when we are considering the nature of these arrangements. Alternative arrangements will have to be found in particular commodities if the Commonwealth countries do not wish to take advantage of the arrangements which I have been describing, and if there is a general desire for some tropical product, for example coffee, to work towards worldwide arrangements.

Mrs. Barbara Castle (Blackburn)

Would the right hon. Gentleman say whether the Six have agreed to make an offer of association to any of the underdeveloped countries in our Common-wealth which may wish to have it made to them?

Mr. Heath

We have reached no agreement on the solution of this particular aspect of the matter. There are very good reasons for that. As I have said, it has to be re-negotiated between the Community and the associated territories themselves.

I now come to what is generally agreed to be the most difficult of all the problems that we have to deal with, and that is the import of temperate foodstuffs, which means particularly the products of the old Commonwealth, such as cereals, dairy produce and meat products. Here again, we have emphasised its importance to the Commonwealth, and the House, I think, needs no figures to illustrate that because it is already well known. We have asked for an assurance of comparable outlets. This means an assurance of access, not an assurance of guaranteed sales but an assurance of access for the transitional period and a general assurance thereafter. If I may, I will put the arguments which have been offered in answer to that.

The point of view of the Community is that these are assurances which their individual members have not got in quite this form. There are difficulties again about the relationship between the third countries, particularly the United States and the Argentine, and arrangements at such long range tend to freeze the pattern of trade and also tend to reduce progress towards world-wide arrangements. I think that it is quite right that we should face these difficulties very frankly. This matter is of great importance to the Commonwealth, to Parliament and to these negotiations, and we must find the solution to it however difficult it may be.

The next group I can deal with briefly, because my right hon. Friend the Minister of Agriculture will deal with it later this evening, and that is the arrangements for our own domestic agriculture. The Community have taken hard and difficult decisions in formulating a common agricultural policy. The individual member countries are making the necessary adjustments. What, I think, affects them particularly is any idea that one future member is trying to lay claim to a special position in this respect in the Community as it develops.

We have accepted the concept of a common agricultural policy. The regulations are being worked out for the Community, and my right hon. Friend the Minister of Agriculture will, I think, be able to give the House much information about that tonight. Our object is to ensure that the new supply and demand position which will arise in the enlarged Community is recognised and that the necessary adaptations are made to deal with it, and also to ensure that there is an adequate period for the farmers, traders and consumers to make the necessary adjustments. We also wish to ensure that the provisions of the Treaty of Rome, which give assurances to the agricultural industry as a whole, can be fully carried out. In fact, to sum up, our major concern is to see that the machinery for the concept of a common agricultural policy is operating efficiently and also that the price levels are sound and realistic, especially from the point of view of imports from our own Commonwealth and from third countries.

The last group of problems with which we have to deal is that of the economic union provisions of the Treaty. Perhaps I may define these. They are the provisions of the Treaty listed under Article 3 with the exception of the common tariff and the common agricultural policy. They cover such matters as the free movement of persons, services, and capital, the common rules for the conduct of enterprises, competitive monopolies, restrictive practices, dumping, aids to industries in areas of economic difficulty, social provisions and so on. These exist in order to support the Customs union and to ensure fairness between its members and also to help in the improvements of the standard of living of its people.

The Treaty has been the first step in setting out the framework. The provisions are now being worked out. We are not in fact very far advanced yet. We have not carried out negotiations about these matters. We have so far explored them with the Commission in order to obtain the explanations we required of the regulations that have been issued. We find on exploring these that there are no major points of principle involved in the ground that we have covered, but there are administrative problems which will arise and which will have to be discussed and sorted out. There is also the question of timing in some instances in the application of the policies. It is quite natural that we should also wish to discuss and arrange these with the Community.

Perhaps I may now state the position with the European Free Trade Association. The obligations that we have given to the Association are quite clear and remain and we adhere firmly to them. Norway and Denmark have applied for full membership and the Danish negotiations are under way. I hope that it will soon be possible for the Norwegian Government to meet the members of the Community. The three neutral countries have applied for association, and I hope that it will soon be possible for them to indicate their position to the Community. Portugal has just applied to discuss with the Community what arrangements it should enter into. Therefore, all the members of the European Free Trade Association have now entered into discussions, or at least approached the Community about the arrangements that should be made for them. We have kept in the closest consultation with them throughout. All the E.F.T.A. countries have kept in full communication with each other and we shall have a Ministerial meeting shortly in Copenhagen where we shall be able again to exchange views.

Mr. Harold Wilson (Huyton)

The Lord Privy Seal has been very courteous to the House in giving way. The question of the position of our E.F.T.A. partners is vital, and the whole honour of the House is pledged to it, as he reminded us. Has he made it crystal clear to the people of the Six with whom he is negotiating that we must insist on the position of the neutral countries and that we cannot sell them down the river?

Mr. Heath

The position was fully stated in my Paris statement, not only about the neutral countries but about all the members of E.F.T.A. Our obligations are to keep in consultation with them and to see that the arrangements come into operation at the same time. Those obligations are fully known by the members of the Community.

Mr. Cledwyn Hughes (Anglesey)

Will the Lord Privy Seal say a word about the position of the Republic of Ireland?

Mr. Heath

The Republic of Ireland has made application to the Community for full membership and is carrying on negotiations with it. We have no obligations to the Republic of the kind that we have to the Commonwealth or to E.F.T.A., but we have maintained close consultation with it over these past months.

Finally, I want to turn to the aspects of political union with which the House has been concerned from time to time. In Brussels, we negotiated about the contents of the Rome Treaty. That Treaty expresses in its Preamble the desire to create a greater unity between its members. It contains in its Clauses no provisions for political arrangements dealing, for example, with foreign affairs, defence, education or culture. Its provisions deal only with economic matters. In Bonn, in July last year, the six member Governments together issued a declaration saying that they wished to work more closely together in other than economic spheres—in those of foreign policy, defence and the others that I have mentioned.

Because it was not included in the Treaty of Rome it was necessary for them to create a new instrument if they wished to do that, and if they wished to create it they had to create it by unanimous agreement. They therefore set up a commission—the Fouchet Commission—to prepare texts towards this end. This Commission is now the Cattani Commission—M, Fouchet having gone to a position in Algeria. We are not members of this Commission because we are not members of the Community, and we have not asked to become members of it. But we have been kept fully informed by the six members of the Community of the activities of the Commission, and we are very grateful to the Six for this.

We have asked that we should be able, at the appropriate moment, to discuss these matters with them. On 10th April I made a statement in the Western European Union—in which all seven of us are present as of right—explaining our views about these political developments but not commenting on the texts, because they have not been given to us formally and have not been agreed by the members of the Community. The matters with which the Fouchet and Cattani Commission have been concerned are matters of foreign policy, defence and culture.

The texts which have been prepared —and obviously I cannot give the House details of them, because they are con- fidential—[Interruption.] It is well known publicly that these are texts of the six Governments, which by courtesy have been handed to us.

Mr. E. Shinwell (Easington)

How is it possible to understand what is meant by a political development and a political concept unless the House is furnished with some details? To speak about foreign policy and defence touches only upon the fringe of political development.

Mr. Heath

If the right hon. Gentleman will wait a little longer he will learn from what I have to say. At the meeting of Western European Union I made a general statement explaining our views about the developments in Europe. That was published in a White Paper, and the House will therefore not expect me to go over this in detail at the moment. But it did accept that the countries of Europe were going to work more closely together in these political relationships; that the three Communities—the Economic Community, the Coal and Steel Community and Euratom—would form the basis of the economic developments in Europe; that if there are to be developments in defence these should be within the N.A.T.O. framework, and that Europe itself, as it developed, would maintain its connections with the outside world; not only with the Commonwealth and with the United States but also with the countries which have historical ties with the existing members of the Community.

As for the constitutional developments, I indicated our view that these will grow naturally to meet the requirements of developments in Europe. That is a typical British pragmatic approach. I also indicated to the meeting of the Western European Union that we would like to take part in discussions with them, at the appropriate moment—in other words, when the Ministers have generally agreed the texts between themselves but before there is final agreement we should have the opportunity of discussing with them these developments in the political sphere. That meets the point made by the right hon. Member for Easington (Mr. Shinwell), because that would be the occasion when we would be able to discuss with them the position, and after which we should then be in a better position to give information to the House.

The situation is that since the meeting on 17th April of Ministers of the Community there have been no further developments in this sphere. There has therefore not yet been any specific invitation to us to take part in these discussions. But I believe that this matter is of such importance to Parliament and to the country that it would support me in saying to the Western European Union that we wanted to take part in these discussions on political developments which will affect all our futures if we are to become members of the Economic Community.

I have endeavoured—in what I am afraid has been far too long a time— to describe the negotiations to the House. I have no doubt that the points which hon. Members will make in debate will be of great help to us. The Ministers taking part in these negotiations have all agreed to try to secure the outline of a possible solution by the end of July. We shall work towards that. No doubt there will from time to time be much speculation both ways about the progress of these negotiations, much of which may well be a war of nerves from various quarters. Whatever may happen, our task is to pursue these negotiations with determination and with all the skill that we can muster in order to do our utmost to achieve an honourable success.

5.7 p.m.

Mr. Hugh Gaitskell (Leeds, South)

The House is indebted to the Lord Privy Seal for his comprehensive account of the negotiations. Although he did not tell us all the things that we should like to know, for reasons which we understand, he has nevertheless given the debate a good start. He has told us quite a lot, and it will be the kind of debate that I always wanted when I first proposed it several weeks ago.

I should make it plain to the right hon. Gentleman, however, that the fact that we have not put down a Motion on the Order Paper and do not propose to divide the House must not be misunderstood by him and his right hon. Friends. It does not mean that we necessarily approve of everything that they have done in these negotiations. As he knows, we reserve our position completely when the time comes to decide.

We took this view of what sort of debate there should be, first, because our general position was made plain in the debate last July and again in a recent television broadcast of mine; secondly, because negotiations are in progress, whereas they were not last July, and we must await the results before we decide; and, thirdly, because it was essential to try at least to clarify the issues.

The right hon. Gentleman argued that there had been a great deal of discussion in the British Press. That is true, but if he imagines that this has led to clarity in the public mind generally he is far from the truth. What we have had is a great deal of heat and not nearly enough light. I thank him for having given us a little more light this afternoon, and I hope that he will continue to do so and that, if necessary, we may have a further debate before the House rises for the Summer Recess.

There is a great need for more clarification of the real issues and of the real alternatives facing the country and the Commonwealth. In my opinion, generalisations are now of little use. We know pretty well the broad arguments for and against. but we have to get down to detail and to decide exactly where the sticking points are to be, what kind of solution would be reasonable and what would be unreasonable.

If there were any doubt about the degree of misunderstanding, I can think of no better illustration than the rather remarkable joint statement issued by Mr. Menzies and Mr. Marshall giving their views upon this first piece of agreement which was announced last week. After all, it is not usual for statesmen of the Commonwealth to come out in quite such categorical terms unless they feel very strongly about it. I will quote only one sentence from the statement: Both Australia and New Zealand have had firm expectations that these special trade relations would continue. These they were well entitled to have. The agreement to which this statement relates concerns only manufactured goods from Canada, Australia and New Zealand. I think that the Lord Privy Seal would agree that it was the easiest bit of the negotiations, in the sense that it was unlikely that the Lord Privy Seal would refuse altogether to carry out what were the dear implications of the Treaty of Rome in this connection; and of course, apart from transitional arrangements, he has accepted completely—let us have no illusion about it—what the Treaty of Rome requires. We have a reverse preference. We have taken the preferences, or we intend to take them, away from the three Commonwealth countries and we are to give the preferences in these goods to the members of the European Economic Community. No amount of talking can disguise this fact.

I was not in the least surprised that the Lord Privy Seal made that agreement, but evidently Mr. Menzies and Mr. Marshall were deeply shocked. I venture to say that the reason that they were deeply shocked is that in the earlier stages there was too much disposition to smooth over the difficulties. For instance, the Prime Minister last July said, in the course of his speech in the debate, "It is vital not to damage the Commonwealth economically". What do the Canadians think about that today? Can it possibly be denied that the withdrawal of the preferences and the imposition of the reverse preference is damaging Canada economically? Of course it is.

I am not saying that we can judge it on this single issue, but it is extremely foolish to give the impression that we can carry through the whole of this operation without tears and that there will be no difficulties whatever. Even the Lord Privy Seal, in the statement which he made on 10th October and which he quoted the other day, was guilty, I think, of what I can only describe as too smooth talk. The other day he referred to it. He said, I said in my opening statement in Paris on 10th October that we recognised that indefinite and unlimited continuation of free entry over the whole of this field"— that is, industrial commodities— might not be regarded as compatible with the development of the Common Market."—[OFFICIAL REPORT, 31st May 1962; Vol. 660, c. 1602.] That is a classic understatement if ever there was one. He must have known quite well that he was bound to have to concede this, and it would have been better had he frankly told the Commonwealth and everybody else at that stage, "Here is something which we clearly can do nothing about"—if those were his views, as I think they were, and as, indeed, they must have been.

I hope that in future we shall try to avoid giving the impression that this is all not very difficult and that we shall be able to satisfy everybody, because we shall certainly not be able to satisfy everybody, and at the end of it we shall be faced with very difficult decisions and probably with very evenly balanced issues. Some people will take one view and some another, but it is no use imagining that we shall get the best of all worlds in every way; there is no possibility whatever of that being achieved.

Sir Cyril Osborne (Louth)

In considering the Canadian position, is it not fair to bear in mind that last year Canada sold to this country £350 million of goods and bought from us only £221 million of goods? That is vital in considering this relationship.

Mr. Gaitskell

I do not think that that has very much to do with what I was saying, which was that it is as well to come clean about these issues because we shall have less trouble in the long run, and we should not have had that reaction from Mr. Menzies and Mr. Marshall if they had been publicly and clearly warned that this was likely to happen.

Before I come to the main subject of the debate, I should like to ask some questions about the timetable. The Lord Privy Seal has told us that he still hopes to complete the negotiations for what might be described as a provisional agreement by the end of July.

Mr. Heath

For the outline of a provisional agreement.

Mr. Gaitskell

Very well. The Government have declined our request that they be guided in their decision by the Commonwealth Prime Ministers' Conference. The House will recall that we have asked them that they should agree to go into the Common Market only if the terms are broadly acceptable to the Commonwealth Prime Ministers' Conference, and we have been told by them, "No, we cannot do that, because it must be our own decision".

Very well. I should like to ask, will they give us an absolutely firm assurance that they themselves will not make up their mind—I mean the Government— until after the Commonwealth Prime Ministers' Conference is held? I have asked this once or twice at Question Time but have never had a completely categorical answer. This, at least, would go some way to reassuring the Commonwealth that the matter was not being judged in advance by the British Government.

The second question which I should like to ask is, can we, the Members of the House, have plenty of time and all the information which we need before we reach our own decision? In particular, can we be assured that we shall be fully informed as to the reactions of the Commonwealth, and E.F.T.A. for that matter, and that there will be no attempt to rush this through, and that between the moment that any statement is made about this and any debate which takes place we shall have plenty of time for what is, after all, a momentous decision?

With that, may I have an assurance that there is no question whatever of a Government commitment on this matter while the House is not sitting? The negotiations are taking place in the summer. Then we have the Prime Ministers' Conference. I think that we should not have any decision announced by the Government—I cannot deal with what they decide among themselves— until the House has returned after the Summer Recess.

May I ask another question in this connection? What exactly is the relationship of the decision of the British Government to our E.F.T.A. commitment, because that commitment is complete, as the Lord Privy Seal knows? It amounts to saying, "We will decide together." If that is the case, how can the British Government be committed until they know what is the position of the other E.F.T.A. countries—and when are they likely to know that? After all, the Danish negotiations have only just begun, the Norwegian negotiations have not yet begun and the question of the neutrals has a long way to go before it has been cleared up. Incidentally, does the Lord Privy Seal recall that the E.F.T.A. agreement provides for one year's notice, and therefore before we can in any way start, as it were, with the new situation, if we go into the Common Market, a year has to elapse before the E.F.T.A. arrangements can be superseded?

As I have said, our main purpose in the debate is to seek clarification, but I must begin by very briefly restating our position. I agree with the Lord Privy Seal that whatever we do the Common Market will go on, and it is necessary to recognise this and not to discuss the problem as though we could choose whether the Six would be there or not. It will go on. We have to think of this as choosing between two alternatives— going in or staying out while the Common Market goes on. And in this we have to take into account both the political and economic considerations.

For our part, we are satisfied that neither the case for going in nor the case against going in is so overwhelming that we should or could decide without knowing the conditions. In other words, we will not say, "We go in whatever the conditions are", as some of my hon. Friends and some hon. Members opposite might say. Others say, "Whatever the conditions we should have nothing to do with it". We do not take that view. We say that it must depend on the conditions and that our decision will turn upon that, and we must look at it as a whole.

I will illustrate this by contesting two general arguments which have been put forward, one on each side of the controversy, both of which I believe to be quite wrong. Speaking, first, of those who favour the Common Market, I believe that the economic case for this has been grossly exaggerated, and I detected a good deal of that exaggeration in the Lord Privy Seal's speech today. I do not believe, nor do I think that there is any serious evidence to show it, that it is our economic salvation if we go in and an economic catastrophe if we stay out.

Equally, I think that those who are opposed to the Common Market greatly exaggerate the political dangers of going in as the Treaty of Rome stands today. I must also say that I think they are inclined greatly to exaggerate the possibilities of the Commonwealth being treated as a kind of parallel to the Common Market, a sort of alternative Common Market, because that is just not possible. We may as well rule out these extreme views.

I want to take up, in particular, however, the economic case, because so much of the argument is based on this. It is a complicated argument, and I do not want to try to deal with it in detail. I would simply say that I do not know a single well-known experienced economist who takes the view that the arguments are all on one side. Indeed, almost all of those whose judgment I would trust take the view that there is practically nothing in it on economic grounds.

I will quote only two, but one of them is Sir Donald MacDougall, who has been appointed by the Government to be deputy head of the new planning organisation. I will read what he said in an article, curiously enough, for the Rotterdamsche Bank: Many of the arguments used in favour of joining the Community have been in economic terms but none, in my opinion, is compelling. We can, I believe, prosper and grow more rapidly than in the past whether or not we take this decisive step. It is even possible that entry might aggravate our economic difficulties. At the end of a long and impressive analysis of the various reasons why it is suggested that we ought to go into the Common Market, he says, If the foregoing analysis is correct there is no really compelling economic argument for Britain's joining unless it is thought that without being exposed to the blast of competition from the continent she will never put her house in order. I am sure that a great many of us would not accept that British industry is in such a parlous state that that is the only possible alternative. The other economist is Professor Meade, of Cambridge, whose pamphlet I have here—and it is fairly well known and very interesting, too.

What struck me about both these articles is that they come to precisely the same conclusions. Let me take the House through the argument. First, we get the impression that we must go in because the Common Market is dynamic and growing and has expanded fast in recent years. It is true that the rate of growth of those countries has been much greater than ours, but it does not follow that that was because of the Common Market, and it is creating a wholly false impression to speak as though this were the case. Certainly we could not have a more objectively-minded person than Professor Meade, who basically is favourable to going into Europe, but he is quite categorical about that. Moreover, since all these countries have not had the same rate of progress, it does not mean if we go in that we go at their rate. We may go at a similar rate to that of Belgium, which is rather less than ours.

Consider the position in respect of markets. If we have no tariffs against us in Europe, we gain there, but does anybody suppose that we shall retain our preferences in Commonwealth markets? Is this very likely? Is it not fairly obvious that if they are faced with a loss of preferences in our markets, the Commonwealth will be obliged to bargain for themselves with other countries.

Equally, at the moment we have preferences in E.F.T.A., and we shall lose those. It is true that if the E.F.T.A. countries come in with us, we shall still have free trade with them. It may be summed up like this: we might get a gain of preference of 10 to 15 per cent. over one-sixth of our exports and lose 10 par cent. over one-third of our exports. If anything, the advantages are probably less than the disadvantages.

Then we come to the argument, which the Lord Privy Seal mentioned, about large-scale production, specialisation and all the rest of it. There is something in this argument and I do not dispute that, but it can be enormously exaggerated. People speak as though we are either exporting wholly to Europe or not at all to Europe. Our exports go all over the world and we have fairly large markets as it is. To suppose that specialisation and large-scale production are possible only if we go into Europe simply does not fit the facts, and no other country outside Europe is talking in those terms. No other country is terrified. The Americans are frightened of discrimination, though they are prepared to put up even with that, but they are not using all of these arguments.

Furthermore, most people agree that whatever the long-run case may be, in the short run the balance of payments position is likely to be fairly difficult after we have got into Europe. That may be something which we have to face, but do not let us forget that if we have to clamp on a lot more restrictions all the arguments about growth will look a bit different.

Then there is this business of the shock of competition. If it is thought that British industry is suffering from lack of competition, it is hard to understand how it has not benefited from the diminution in tariffs and quotas and so on in the last few years, a diminution which has been quite considerable. In any event, we do not have to go into Europe to provide more competition if that is what is wanted. It can be done by tariff concessions negotiated through G.A.T.T.

I want to make it quite plain that I am not saying that the balance of argument is against our going in. My own view, and I am on record as having said this, is that in the long run the economic argument may be favourable, largely because of the attraction of foreign and particularly American investment as a result. But it will not do to speak, as the Lord Privy Seal did, as though the assumption were that if we go in we are prosperous, and if we do not we are not.

Mr. Heath

I do not want to interrupt the right hon. Gentleman, because I think that he is trying to state the case very fairly. But, having described the possible advantages of a large market, I said that none of those advantages was automatic. At the most they are opportunities. I said that quite specifically and that is the position.

Mr. Gaitskell

I took down the Lord Privy Seal's words and he spoke of "only a prosperous Britain "and" only a competitive Britain "in relation to going into the Common Market, as though we could not do these things if we did not go in. I beg him to appreciate that I am saying this with a very serious purpose in mind. It has been a grave mistake on the part of the Government —and I think that they did this largely because they were panicked into it last summer by the economic crisis of the time—to exaggerate this argument. It misleads the Commonwealth if it is said to Commonwealth countries that we are going in because, unless we go in, we shall not be able to go on buying vast amounts from them. In other words, this is the same argument as the argument about a prosperous and competitive Britain. That would be all very well if it were certain, but it is one of the big questions in the whole argument.

Secondly, I can think of nothing worse from the point of view of our bargaining position than to give the impression that we are desperate, that we have to go in and that it would be catastrophic if we stayed out. But time and time again Ministers have spoken in that sort of language. They have even brought it in as a kind of political rescue operation. I think that it is a peculiar one to choose, but in any case, even if it were a good argument, it would be a very bad thing to do in relation to the negotiations.

Mr. Norman Cole (Bedfordshire, South)

Will the right hon. Gentleman relate this very good point which he is making about our not showing our desperation, in other words, not giving away our tactical position, to what he said earlier about the Lord Privy Seal having said that we were prepared to damage Commonwealth trade so that we could go in? Surely both are tactical weapons and both should be kept to be fired later?

Mr. Gaitskell

The hon. Gentleman may have a point and I concede that. But I think that my point is much more important. What he says, however, may be a fair answer to what I said earlier.

The political arguments of those who are opposed to the Common Market are equally wrong. The Lord Privy Seal has pointed out that the Treaty of Rome does not carry with it strictly political implications and, as I said, the Commonwealth is not a true parallel of the Common Market. The point is that if we do not go in, it is not a question of building up some other Common Market, but of carrying on, and carrying on in what will not necessarily be a disastrous situation, especially on the basis of the greater growth of free trade in the world as a whole through the Kennedy proposals and the negotiations following them.

I come now to the conditions. We have laid down five conditions—the Commonwealth, British agriculture to be safeguarded, our obligations to E.F.T.A. to be carried out, to be free to continue to conduct our own foreign policy as now, and to be free to carry out the economic planning which we think is necessary. I do not propose to deal with all those. I shall concentrate entirely on the Commonwealth and E.F.T.A., leaving my right hon. and hon. Friends to deal in detail with agriculture when we have heard what the Minister of Agriculture has to say, because, as the right hon. Gentlemon knows, this is a most complicated subject and it is more appropriate that it should be dealt with after he has spoken. My right hon. Friend the Member for Huyton (Mr. H. Wilson) and my right hon. Friend the Member for Belper (Mr. G. Brown) will be dealing with the economic union and planning and matters of that kind.

As the Lord Privy Seal did, I come straight away to the Commonwealth issue, and I agree with him that it has to be broken down into a number of different topics and I shall broadly, although not exactly, follow him. To begin with, when we are talking about the problems of reconciling Commonwealth interests, we must be clear that we are talking about what is a political issue. If we cannot satisfy the Commonwealth on this, we suffer political damage. It is the Commonwealth economic interests and not our own with which we are concerned. Some hon. Members opposite may disagree with me, but the key issue is not that of any particular system. I do not feel that it particularly matters what the system is. What matters is the effect on the countries of the Commonwealth—how are they damaged, or, if it is the case, how are they benefited.

I begin as the Lord Privy Seal did with the manufactured products of Australia, New Zealand and Canada, about which I have already said something. I said that this was a strict application of the principle of the Common Market, and so it is—reverse preference. The only concessions which the Lord Privy Seal has obtained were for the transitional period. He did obtain something in that respect, but it is not a great deal. In that connection I should like him or one of his right hon. Friends to elucidate what he hopes to get from these reviews under G.A.T.T. which are supposed to take place from time to time. Is this a serious proposition, or is it one of those convenient phrases which is thrown in to try to hide what is really a fairly difficult situation?

I cannot say that I am surprised by the reaction of the Prime Minister of Australia, and the Deputy Prime Minister of New Zealand. Of course they feel that this proposal is damaging, Canada much more so. I shall say only that I do not regard this issue as a particularly serious matter simply because the quantities involved are not very great. Not even Canada can say that this is serious or, to use the phrase of Mr. Menzies, that it will do critical damage. It always was—and I said so earlier—the easiest of the various jobs which have to be done.

I have nothing to say so far about raw materials except to urge on the Lord Privy Seal the importance of this matter, because raw materials are the basis of costs and if we have to pay duties on raw materials our competitive ability in the rest of the world will be affected. Incidentally, Canada is very much affected by this issue, what with newsprint and wood pulp and aluminium and its concern over those would be as great as, if not greater than, over its manufactured products.

I now come to the question of tropical products. If it were not for the French overseas territories, the former colonies of France, and the peculiar relationship which has been developed between them and France, personally I would have said that free entry for tropical products was the best solution, by and large, although there may be a few exceptions—world-wide free entry. However, I know that at present that is asking for a great deal, so I will put our proposals a little lower.

First, we could not possibly accept discrimination in favour of the Common Market against the products of our own former African Colonies. I hope that that is absolutely clear. Secondly, this is not limited to Africa because the Caribbean, the West Indian, products are similar and must be covered equally with those of our former African territories and Commonwealth African territories.

There is the further point to which the Lord Privy Seal referred—the danger if there is parity, as it were, between Africa and the West Indies, whatever the origin may be, of discrimination against Latin America, about which the United States and others are very properly concerned. Here, again, one returns to the argument for complete freedom of entry. But if that is impossible, there ought to be parity for the Commonwealth—I see no logical argument against this —in respect of all those products for which preferences are granted to the former French colonies.

Finally, I hope that the Lord Privy Seal will try to get rid of the associate status altogether. I realise that at the moment it carries with it not only preferences, but substantial sums of aid. But it should be possible for the aid to be provided in other ways without the implication that, in order to claim it or the preference, one has to become an associate member, with the political overtones which, at any rate for some of the African States, might be involved. As the Lord Privy Seal knows very well, some of our Commonwealth members might not want to join as associate members, and it would be a terrible pity and totally unnecessary if Nigeria and Ghana, for instance, were for those reasons debarred from preference and aid which would otherwise be open to them. I cannot help feeling that the whole concept of associate status in former colonies is somewhat out of date now. It was originally introduced before the countries concerned had their freedom, and if we could get away from that concept—and I fancy that that might well be the view of the French territories themselves in due course if perhaps not yet—it would be a good thing.

Taking these things in order of increasing difficulty, I pass now to manufactured goods from Asia. All of us in the West and all of us from wealthier countries have a special responsibility in this respect. It is no use talking glibly about being keen on the development of India and other countries in Asia and Africa and saying that we will help and that we are in favour of so much of our national income going there if we then say, "But, my goodness, if you produce anything, we will not buy it". That will not do. It is no use telling those countries that we agree that they should industrialise if we then say, "Sorry, chums, we are not going to take any of the industrial products when you have produced them".

The whole of their economic progress turns on their being able to develop markets for their industrial products. I am well aware that we have a rather good record in this matter. Leaving textiles on one side—and I will come to that later, and that position is not as bad as may be supposed—when all is said and done we have had free entry for these goods from the Commonwealth wherever they came from. We have had these special quotas of textiles, about which there is still a great deal of concern, but that must be expected if there are sudden changes and sudden movements. But at least we can claim to have been far more inclined to take manufactured goods from the underdeveloped countries than our friends in the E.E.C. have been.

One of the main points here is to try to arrange with them some system whereby, at least as a minimum, the kind of voluntary quota arrangements which we have made with the three Asian territories of Pakistan, India and Hong Kong are also made by the other members of the E.E.C. This, incidentally, would relieve us a little of the burden— and it is a burden for Lancashire— which we carry in this at the moment. I see no reason why we should not be pretty tough about this when we come to the negotiations.

I suppose that I shall be told that there must be tariffs against these goods because otherwise it would be inconsistent with Common Market arrangements. Personally, I would not worry too much about that, as compared with quotas, as long as the tariffs are relatively low. Quotas are always worse because they leave the wretched exporter with no chance. At least if he has a tariff he can, if it is not too high, by making himself efficient, get over it. I was glad to have the assurance from the Lord Privy Seal that we are not content simply to say to India, "You can have your quota. Of course there will be a tariff on it and you can make whatever arrangements you like. That is your affair." That will not be good enough. I hope that we shall continue to negotiate on behalf of these countries right up to the end.

What the Common Market does on this will be something of a test case. The Lord Privy Seal said how splendidly outward-looking the Common Market countries were. If they are, he should have no difficulty in negotiating a satisfactory agreement on this part of the problem.

Finally, on temperate foodstuffs, as has been said this is the nub of the problem. These are vital commodities developed in Australia, New Zealand and Canada for the British market, and we all know perfectly well that it is no exaggeration to say that out of these negotiations if they went wrong and the Government agreed to certain things, which I sincerely hope they will not, New Zealand could be literally ruined. We cannot have that. We would all object to that. Australia would be badly hit too.

At the moment we have free entry here, and of course subsidies for British agriculture. Let us have no misunderstanding about it, however—the basic E.E.C. proposals are pretty frightening. They are that there should be a so called threshold price which is above the target price within the E.E.C, and then an import levy which is sufficiently high at all time to carry the difference between that so-called threshold price, the price at which a thing can be sold, and the import price. It means, I under stand, that in effect we are being asked, and I think that I am right, though I know that these things are very complicated——

Mr. R. H. Turton (Thirsk and Malton)

The threshold price is lower than the target price.

Mr. Gaitskell

All right. Let us say the target price. There is a price in the home market and an import price, and the levy is to bridge the difference between them so as to make it impossible for these products coming from outside the Common Market ever to compete at lower prices with products of the Common Market itself. Everybody in the Chamber is nodding, so I hope that that is all right. I shall not go into too much detail, as I have already warned the Minister of Agriculture. I should have thought that this was pretty intolerable. First, British consumers have to pay higher prices. I know that this can be exaggerated and I am not putting it as a main objection, although it is not to be entirely disregarded.

Secondly, with regard to quantities, all that the Commonwealth, under this system, would be allowed would be to make up whatever difference there might be, at whatever price is fixed, between the total demand and the supply from the E.E.C. countries. They are more or less saying, "We will let you have a bit in if we want it", but we cannot call that by any description fair competition. It is the toughest kind of protection that one can imagine. It is tougher than anything we have done or the Europeans do today. When on top of that we are expected to import higher cost food from the Continent and, in so far as we bring in the Commonwealth foodstuffs, to pay a levy the process of which go for the benefit of European agriculture, then honestly I think that this is really too steep altogether. Let us have no nonsense about the moral idealism involved in this. This is strict protectionism for European agriculture. I know that we protect our own agriculture, but I do not think that we have ever done anything quite as bad as this. I hope, therefore, that the Government are not contemplating, even in the long run, agreeing to anything of this sort. They really must resist it.

Moreover, I do not think that a temporary solution here is good enough. I do not want to prejudge too much. I am aware of the danger of doing that, but we could not have a position in which we say to New Zealand and Australia, "It is all right. You can carry on for a bit. We will go on buying from you. You can have a levy-free quota for a period but, after that, chums, you are out." We cannot keep the Commonwealth together on that basis. We may keep the Commonwealth countries together for a few years but we may not keep them even for that long, because they will look for other markets all the time.

A temporary solution, therefore, will not do here, and I say that we should have information about what the Lord Privy Seal meant by "comparable outlets". He told us he meant "access" and not "sales", but the whole thing turns on the terms of access and until we know that I do not see that we are much further forward. The Lord Privy Seal said that we should have temporary arrangements and after that a series of international marketing schemes. I have heard all that before, and I am doubtful whether it means a great deal. Anybody who has had experience knows the difficulties.

I am rather in favour of these international schemes. We tried to arrange some in the simplest commodities— rubber and tin—when we on this side of the House were in office, in order to try and get more stable prices. But how we can get international guarantees covering butter, cheese, beef and that kind of thing is beyond me. I hope we shall not be fobbed off with a meaningless phrase which is meant to disguise the fact—and let us not beat about the bush—that we are selling the Commonwealth down the river on this issue.

We should say to the E.E.C. countries that if they want to sell more here, as they do—and this is one of our strongest bargaining points—they must take more from the Commonwealth. This is one of the basic principles that should be followed. I commend to the Lord Privy Seal Professor Meade's suggestion of quotas not fixed but related to and growing with European consumption. That may be a possible way out.

I turn now to E.F.T.A. and I want to remind the House in particular of the very far-reaching commitments we have here. The Lord Privy Seal read the original Motion, and I think that I must read it. It is worth reading. It says: Ministers agreed that … the members of E.F.T.A. should co-ordinate their actions and remain united throughout the negotiations. Ministers resolved that the European Free Trade Association, the obligations created by the Convention between the members, and the momentum towards integration within the association, would be maintained at least until satisfactory arrangements have been worked out in negotiations to meet the various legitimate interests of all members of E.F.T.A., and thus enable them "— let the House please note— all to participate from the same date in an integrated European market. They agreed that a partial solution which created a new economic division within Western Europe could not in any circumstances be regarded as satisfactory. That is pretty flat and we are bound by it. I hope that we shall stand by it. It is justified overwhelmingly by the close association we have with the Scandinavian States. We have had it for years and it is valuable to us, and we like it. Secondly, our trade with E.F.T.A. is 13 per cent. of total exports, as against 16 per cent. with the Common Market, and it is therefore extremely important. Thirdly, and last but not least, if we go in without any of the E.F.T.A. countries our voting position in practice within the Council of Ministers is likely to be gravely affected. Therefore, we must stand by them.

It may be said that Norway and Denmark will come in if we go in. I hope so. Then there are the neutrals. The Lord Privy Seal dismissed this question too easily. He must know very well that the Americans are throwing all their weight at the moment against the association of the neutrals with the E.E.C, and especially against the association of Switzerland and Sweden.

I think that this is a silly point of view. I think that they are foolish to take this line. We want these countries to be with us. We do not want them isolated, and it is confusing a political and defence set up—because they happen to be neutrals—with what is basically an economic set up. It is not proposed that they should be full members. But why should not they have economic arrangements which enable them to participate in other ways?

I should like to add this argument, which I think is of some importance. If Sweden does not come in, if the Six turn down her application for association, is it really likely that Norway and Denmark will come in? I assure the House that according to my information the Norwegian Government would not expect, even if they tried, to carry through the referendum which they would have to have on any proposal for them to come in without Sweden. The reason is simple. They would have to erect tariff barriers against Sweden. This therefore is of great importance to us, because it is greatly in our interest that Norway and Denmark should come in.

I want an assurance that pending all this we will keep E.F.T.A. going. Do let us keep something in reserve. I know that it is the custom to say that it does not really matter, that it is not important, but I think that it is of some importance. It affects a lot of our trade, and we may be glad to have it if the negotiations do not proceed very well.

I should like now to say a word about the legal and constitutional position. I have never been much impressed with the argument about loss of sovereignty, One always loses sovereignty if one signs a treaty. There is nothing peculiar about that, but there is a difference in one respect, and a very important one. If we sign the Treaty of Rome, we not only bind ourselves to do certain things; we bind ourselves to accept certain decisions subsequently made, notably majority decisions, because to accept unanimous decisions does not matter since one has to participate in them.

Here I must ask a question. Is it the case that regulations made under the Treaty of Rome by the Council of Ministers are to be automatically law in this country without them ever being considered by this House? I am not saying that this is necessarily a crucial point but it is necessary to know where we stand because if this is to happen it is a complete departure from any precedent. It is not necessarily fatal, because one has to remember that the other countries are in the same position, and some of these regulations about fair competition may be to our advantage. All the same, it is a big difference if we are now to have bits of out law made for us by majority decisions of the Council of Ministers.

The main point is the enormous importance of the voting arrangements in the Council of Ministers. Take, for instance, all the agricultural matters which fall to be settled by a qualified majority, or the question of any possible foreign exchange crisis where we wanted to reimpose restrictions. It goes to the Council of Ministers which by a qualified majority can tell us not to do it.

The present position is that France, Italy and Germany have four votes each. Belgium and Holland have two, and Luxembourg has one. One-third vetoes. Therefore, France plus Belgium can veto anything—one Power plus either Holland or Belgium.

When we come in, supposing we get four votes, and supposing, which may be optimistic, that Norway and Denmark, and Ireland for that matter, get two each. That is another ten votes, make a total of 27. If we apply the two-thirds majority to that one has to get nine votes on one's side to veto. One does not get it with Norway, or even with Norway and Denmark. One needs at least one other country, Luxembourg for one, or one of the others for two. One cannot veto unless one has, in practical terms, three other countries on one's side.

I hope that the House realises the enormous importance of this and I should like to hear the views of the Government on it. This is a matter on which I should be very loath to give way without ensuring that the right of veto remains one large and one small Power, as it is today. We might get some help on this from General de Gaulle because I do not suppose that he would like to be overridden either. This is something at which the Government ought to look.

On the constitutional side, I am not going into the considerations of the Fouchet Committee, the Bonn declaration, and all that. I am glad to say that we have not yet committed ourselves to anything here. But undeniably those who are enthusiastic about European federation will use the peculiar independent position of the Commission to lead on to the argument that therefore it must be put under Parliamentary control and that therefore there must be a Federal Parliament. I am sure that the Lord Privy Seal has heard this argument. I heard it last week, and I put forward a proposition here. I am all in favour of Parliamentary control of national Governments, but if it comes to the kind of set up that we are going to have there, while I do not like the independent position of the Commission, it ought to be, not under a Federal Parliament, but under a stronger Council of Ministers. This would fall in with the British tradition of putting civil servants under Ministers. So I hope that the right hon. Gentleman will follow this advice.

Finally, on the basic political issue, we have to ask ourselves a question—in or out? What are the alternatives? The Rome Treaty brings with it no commitment. Right. So if we go in on present terms we can veto any further advance towards federation. I was a little worried about some of the phraseology used by the right hon. Gentleman, because he spoke with such enthusiasm about greater political union in Europe. Would not he agree that if it came to European federation, to a European Federal State, that would mean the end of the Commonwealth? I cannot conceive of it going on in those circumstances.

There must be a point at which a political move of this kind could be so dangerous to the Commonwealth as really to be something we could not contemplate. I will be frank with the House. For my part I do not want any more political moves at this stage. I think that we should stand where we are. I hope that the Government will make it plain that they are not enthusiastic about any swift move in this direction. But if we stay out, there are certain dangers. After 10 or 20 years we may find that the Commonwealth as we know it today, not through any fault of our own, changes, declines, and does not count in the way that it does today. This might happen and we might find ourselves excluded from a tough, strong, European State, a little island off Europe with nothing else. This is the risk, the danger.

There is another risk. If we stay out and the E.F.T.A. countries stay out, as they will, with the danger of the Common Market countries becoming a Federal State, certainly after General de Gaulle has ceased to prevent it, or if he were to change his mind, there would be a greater danger of this State being inward-looking, despite what the Lord Privy Seal said. There would be a greater danger of it being indifferent, not interested in the rest of the world, nationalistic in outlook, a third force wanting its own nuclear weapons and wanting to break away. The effect of this on the Western Alliance could be serious.

As things are, if we went in we could probably stop that happening, but on the one condition only, that as we go in we maintain our links with the Commonwealth. This is essential. If we go in breaking those links, breaking them with E.F.T.A., our capacity for doing what I think we might be able to do in Europe would be enormously reduced. Let us be under no illusions about this. We could destroy the Commonwealth in two ways. Either by a political commitment which went much too far, or by making an agreement which, to use Mr. Menzies' words, did critical economic damage to the Commonwealth.

I do not often quote myself, but I cannot think of anything better to end this speech than to say what I said at the end of my broadcast the other day: To go in on good terms would, I believe, be the best solution to this difficult problem, and let us hope we can get them. Not to go in would be a pity, but it would not be a catastrophe. To go in on bad terms which really meant the end of the Commonwealth would be a step which I think we would regret all our lives, and for which history would not forgive us.

6.0 p.m.

Mr, Aubrey Jones (Birmingham, Hall Green)

The basic position underlying the speech just made by the right hon. Gentleman the Leader of the Opposition is, I think, substantially the same as the position underlying the speech of my right hon. Friend the Lord Privy Seal. In other words, the right hon. Gentleman favours an application for entry into the European Community, subject to certain conditions being met. By conditions I think he means—certainly I mean—not that we should not face change, but that, in facing change, we should secure for ourselves and our associates in E.F.T.A. and the Commonwealth terms not less fair than the Six secured for themselves when they undertook, the act of change which constituted the new Community.

I agree with this basic position. I agree also with both speakers so far that we are very far from knowing whether or not those conditions are likely to be realised. In this respect, I agree with both the previous speakers. Where, however, I would differ from the right hon. Gentleman is in this. I would question the wisdom, from a national point of view, of the emphasis which he placed on the conditions and the difficulties, and I would question his wisdom for this reason. Since I am in favour of the application to join the Community, I naturally want the negotiations to succeed, but, even had I not been in favour of the application for entry, I could not but note the fact that my country has entered upon certain negotiations, and were those negotiations now to fail, or to spin out endlessly without coming to any conclusion, nationally we should have suffered a considerable rebuff.

I want the conditions to be realised, but, paradoxically enough, I think that we should stand a better chance of realising the conditions, not by elaborating them, but by indicating to the Community what our basic attitude to the Community is. If our attitude to the Community is judged by the Community to be sympathetic, I think the chances are that the negotiations will succeed. If our attitude is judged by the Community to be unsympathetic, then, in my view, they will fail. The real importance of this debate is that what is said today will determine in part the course of these negotiations, and, in this sense, each one of us taking part in the debate is an ambassador for his country.

If I am right in this judgment, I think it requires that we should dwell today, not on the conditions but on the fundamentals, to use the term adopted by my right hon. Friend. It requires that we restate the reasons why we have applied for entry, and describe the rôle which we see our country playing in the Community of which we should like to form part. In my judgment, this is all the more necessary because there has been a certain equivocal air over-hanging our application for entry into the European Community.

Rightly or wrongly, one has been told —at least, one was told before this last week-end when the Prime Minister went to France—that General de Gaulle is the great obstacle to our entry into the Community. One is also told that General de Gaulle favours a loose, and not a tight, arrangement within Europe. Therefore, we are inclined to say, implicitly if not explicitly, that that is what we want, too, a loose arrangement. By intimating this, in my judgment, we do nothing to win favour with General de Gaulle, but we do cast doubts in the minds of those in Europe who want to see us as members of the Community and make their support of us half-hearted rather than whole-hearted.

As an illustration, when my right hon. Friend made his statement on 10th April indicating that, at a certain stage, quite reasonably, we should like to be consulted on the talks for a new political organisation now going on, his request was received with a certain amount of suspicion, and that suspicion hardly constituted a happy prelude to the negotiations. In other words, I suggest that we should speak, not to those in Europe who do not want us in, but to those who do want us in, and it was in this respect, it seemed to me, that the speech of the right hon. Gentleman fell short.

I can only give my own personal reasons Why I am in favour of my country seeking entry to the European Community, and I am speaking entirely for myself. I am in favour of my country seeking entry into the European Community because I see in the Community an experiment of such enormous economic and political significance that not only can we not ignore it, but, as a country which has played a very considerable part in international affairs, we have a duty to further this experiment. I should like to say a word or two first about the economic significance of the Community, and, a little later, its political significance.

First, its economic significance. As my right hon. Friend said, the Common Market is more than a free trade area or even a customs union. Its real significance is that it recognises that, having lowered the barriers to trade, one must do something more. One must try to meet in common all the resulting problems. For instance, the unemployment which may arise in an industry or an area which cannot stand up to the resulting competition; the problem of the balance of payments which may arise for a whole country which is unable to stand up to the resulting competition; and the problem of concerting full employment policies so that one country does not take advantage of lowered barriers to export its own depression. This is utterly new and novel, and is away beyond our original concept of a European free trade area. This is a superior concept, and it was for this reason that I think it was right that our concept of a European free trade area should give way to it.

I think that the right hon. Gentleman under-estimated the importance of this. It is for this reason that I would rate the chance of growth and the chance of a more productive reallocation of resources as being greater in the Common Market than in a free trade area of comparable size. Like the right hon. Gentleman, I do not regard the growth that has taken place in the Common Market as being entirely due to the Common Market itself. I think that one of the important reasons is that continental countries in times of boom have been able to draw on continuing supplies of labour, something which has been denied to us, but I think that these supplies of labour are coming to an end and that there will be a tendency for growth in the Common Market to slow down. Despite that, and, to use a phrase which will be familiar to the right hon. Gentleman, other things being equal, the chances of growth are higher in a community undertaking this form of common action than in a free trade area of comparable size. Of course, I need hardly emphasise that the key to a successful incomes policy is growth and not mere containment of incomes.

That is, in my view, the economic significance of the Community. I turn to what I think is the greater significance, the political significance. It lies, it seems to me, in this, that the other international organisations of which we form part, the United Nations, N.A.T.O., etc., are all associations of independent sovereign States, and in any such association any proposal for action, though it may have been born originally in some neutral secretariat, is the responsibility of one Power. It, therefore, runs the risk of being identified with vested interests of that one Power. Action is possible only if there is a unanimous endorsement of the proposal. Everybody has to agree with it—the so-called rule of unanimity.

I think it is self-evident that the capacity of an international organisation of this kind to accomplish something is extremely limited and it is no surprise, I think, that all the glistening proposals for international economic and political co-operation which were born on the morrow of the war now lie dust-laden on the shelves.

It is in this respect that I suggest that the European Community constitutes quite a new departure. As the right hon. Gentleman said, the initiative in proposing action in the Community stems from an independent body, a neutral body, the Commission. The proposal, being impartial, stands, therefore, a better chance of acceptance, and action on the proposal requires, as he said, not unanimity, but a weighted majority.

Of these two things, the origination of the proposal in an independent body, and then action on approval by a weighted majority, the more important, to my mind, is the first, the independent origin, and not the second. The fact of the independent origin makes a proposal more acceptable than it would otherwise be, and there is, therefore, a better chance of securing unanimous acceptance. In other words, what we see in the Community is a nice balancing of relationships between sovereign States and an independent body.

Mr. Maurice Edelman (Coventry, North)

The right hon. Gentleman made a distinction between war-time and postwar bodies such as the O.E.E.C. which planned by consent between sovereign States and the Commission which is going to exercise authority through its own initiative, but is it not the case that bodies like the O.E.E.C. were in fact bodies which planned and acted with the adherence of units which came together unanimously for a common purpose, whereas the exercise by the Commission of its functions would be to impose on the subject members of the association autocratic decisions which they may not accept?

Mr. Jones

With respect, I think the hon. Gentleman is going too far. The constitutional position, as I understand it, is that an independent body takes the initiative in proposing action, but action does not follow unless the proposal secures a weighted majority. This is not the exercise of authority. It is a delicate balancing of relations. I do not deny, of course, that this kind of constitution gives rise to problems—the problem, for instance, to whom is the independent body responsible? That was the question the right hon. Gentleman mentioned. Without going into that, the essential point surely is—and it is an undeniable one—that the capacity for joint action in an organisation of this kind is greater than in a mere association of sovereign States. This is why the European Community is able to take joint action on all the problems resulting from lower tariff barriers, as I mentioned earlier. This is why I suggest the European Community is an experiment of great political significance.

Now our problem is, of course, that the Commonwealth is not an organisation of this kind. The Commonwealth is an association of independent sovereign States, more closely co-operating than other such associations, because we are partakers in a common history; but none, the less the Commonwealth organisation is a loose organisation of co-operation between independent sovereign bodies. The question with which we are faced, the question which the right hon. Gentleman posed towards the end of his speech, is this. If we enter a tight organisation such as the European Community, will it mean our increasing detachment from the looser organisation of the Commonwealth? It is this which, I think, many of my right hon. and hon. Friends, and I myself— indeed, most of us, all of us—find the disturbing thought.

I do not pretend that the reconciliation of these two things is going to be easy, and I agree entirely with the right hon. Gentleman that a mistake has been made in the past in suggesting that the reconciliation may be easy. Reconciliation is something which we have to look to very conscientiously and attentively, but despite my consciousness of the difficulty of this reconciliation I cannot conclude that we should not apply for entry into the European Community. We cannot, just because we are the leaders of a loose association, say that we should not on that account enter into a tighter organisation. That would be tantamount to saying that we in this country cannot enter any more progressive international organisation than a mere co-operative association of independent sovereign bodies. This in effect— and this is in fact what the right hon. Gentleman was suggesting at the end of his speech—would be citing the Commonwealth as a bar to any progress and any advance in international organisation. I cannot think that would be writing a creditable page in the history of the Commonwealth.

This, if hon. Members like, is the negative reason why in the name of Commonwealth I am in favour of my country's applying for entry into European Community. But there is also, in my view, a positive reason why in the name of Commonwealth we should apply for entry into the Community. The purpose of the kind of constitution which I have tried to describe is, of course, to forge a new political unit in Europe, but we are no longer in the eighteenth century when it was possible to forge, isolated from the rest of the world, a new political unit in the North American Continent. Today, Europe is enmeshed with the rest of the world, and the technique—and this is the point I want to make—which lies at the heart of the European community can be extended outside the Community to solve a whole range of Commonwealth—indeed, world—problems. This, I think, is the future rôle of the Commonwealth, and by undertaking this rôle we should, I think, be opening a new chapter in Commonwealth history and providing a new Commonwealth contribution to the solution of world problems.

I will try to clarify what I mean. We cannot, of course, make the Commonwealth part of Europe because the Commonwealth is too diverse and because of its diversity it has not been able to carry integration as far as it is being carried on the European continent, but we can envisage relations between the Commonwealth and the European Community, a community of which, I hope, we shall form a part, in two phases. In the first phase I see no reason why, as the consolidation of Europe proceeds, we should not be able to promote between the Commonwealth and Europe the same kind of association between independent sovereign bodies as exists between the United Kingdom and the rest of the Commonwealth. In other words, there is no reason why we should not, for instance, have joint meetings of Community and Commonwealth trade and finance Ministers or, for that matter, joint meetings of Community and Commonwealth Prime Ministers. True, this would be a new departure in the history of the Commonwealth. We should be extending some of the practices of the Commonwealth outside the Commonwealth, outside the partakers in the common Commonwealth history, but there is no reason why we should not attempt it.

I would also go beyond this. I would suggest that in a later phase we could apply to Commonwealth and world problems this technique which I have described as unique to the European Community, the technique, in other words, of acting on proposals which are initiated by an independent body.

I wish to give two such examples. Take the question of temperate foodstuffs. We in this country maintain agriculture and feel forced to maintain agriculture as part of the Welfare State. We try to maintain agricultural incomes roughly at the level of industrial incomes. The countries of the Continent do the same and we both subsidise our agriculture. Australia subsidises her agriculture. So does Canada and other Dominions who are our kith and kin, and so does the United States. We all have conflicting interests. We all indulge in subsidised competitive and, I suggest, mutually ruinous surpluses.

How on earth are we to extricate ourselves from this problem? Merely by an association of sovereign independent States? Is there not a better chance for action on this problem if the proposal comes in the first instance from an independent commission having power to make proposals, even if it has at first no power of surveillance over the execution of those proposals? Do we not stand a better chance of tackling the problem by applying the European technique?

Take another problem, the underdeveloped part of the world. This is one respect in which, unfortunately, Marx has been vindicated. It is no longer true, as Marx suggested, that within one country the rich are getting richer and the poor poorer, but that is true of the world as a whole and of the Commonwealth. In the world as a whole, while rich countries become richer, the poor countries remain poor and are becoming relatively poorer. That is overwhelmingly a Commonwealth problem. In other words, the problem of redistributive justice with which the party opposite has identified itself has been pushed out and is transposed to quite a different plane—the international plane.

I read in one of the Sunday newspapers at the weekend—I have forgotten which it was—a report that the Treasury looks forward this summer to an improvement in the terms of trade which would better our balance of payments position. That is all very well, but do we realise that every time we look forward to an improvement in the terms of trade we aggravate the problem of poverty in the under-developed countries? Do we realise that every time the competitive industrial countries of Western Europe look forward to an improvement in the terms of trade it aggravates the problem of world poverty many times?

How are we to deal with this problem? Surely it requires that the industrial countries of the West should do something terribly difficult. It requires that we should deliberately turn the terms of trade against ourselves. The problem requires that the jostling competitive economies of the West should deliberately turn the terms of trade against themselves and follow a concerted trading policy. Are we going to do this purely by co-operation between sovereign States? Do we not stand a better chance if we invoke the technique of the independent body, the European technique, and get an independent body to make proposals even though we do not in the first instance give it authority to supervise the action?

I am trying to make a two-fold point. First, I am trying to suggest that it is not what is happening in Europe, in the European Community, which is jeopardising the neat frontiers of the Commonwealth. It is the fact that the basic problems of the Commonwealth transcend the Commonwealth. They are world problems, and in facing them on a world-wide scale inevitably we are driven to fuse the Commonwealth into a larger structure and a wider frame-work. I will use an analogy which I hope will not make people too indignant. Just as the march of technology by making it more difficult, if not impossible, to provide for our own defence is compelling us to merge the national loyalty to which we have become accustomed into a wider loyalty. This tension, this tug, between change and the attachments of our hearts, the attachments with which we have grown up, it is this which goes to the core of our great political problems.

The problems of the Commonwealth transcend the Commonwealth. Secondly, these problems which go beyond the Commonwealth stand a better chance of solution if we go beyond the mere intergovernmental co-operation which the Commonwealth as we know it represents. It is for these reasons that I do not think that in the name of Commonwealth we should shy away from the European concept and try to protect the Commonwealth concept as we have known it. I think that what we have to do is to embrace the European concept and, in embracing it, to accept the challenge which it poses to our political inventiveness and ingenuity. In other words, we have deliberately to set out to use the European technique to solve Commonwealth, and indeed world, problems which the Commonwealth alone in itself cannot solve.

I concede, and I hope most other people would concede, that over the past ten years, I am sad to say, Europeans have seized the initiative over us in giving birth to new economic and political ideas. In applying for entry to the European community, I suggest that we are belatedly adjusting ourselves to this fact, but I make this plea. In adjusting ourselves to the fact and endeavouring now to accept the European Community, do not let us accept it half-heartedly. Do not let us give the impression that we are out to keep the Europeans back from where they want to go. Let us accept it whole-heartedly, confident that, although we may have lost a great deal, there is still enough political genius left in this country to give the new ideas in Europe a wider significance, a significance which otherwise I think they would far less easily acquire.

6.27 p..m.

Mr. F. J. Bellenger (Bassetlaw)

I congratulate the right hon. Member for Birmingham, Hall Green (Mr. Aubrey Jones) on his robust speech and his form of thinking. Obviously it will be important at some time to extend the experiment of the European Economic Community into far wider fields, but I think that for the purpose of today's debate it is sufficient if we try to concentrate on what the Lord Privy Seal and my right hon. Friend the Leader of the Opposition said.

I join with my right hon. Friend in saying that the Lord Privy Seal today has thrown considerable light on the negotiations which he is carrying on in Brussels. Nevertheless, we in the House of Commons today are rather in the position of shareholders meeting without a complete balance-sheet being put before us. It is as if the chairman of the board addressed the shareholders and said, "These are some of the debits." Obviously, from the point of view of the Commonwealth, the statement made by the Lord Privy Seal the other day is a debit item in the balance-sheet—the throwing over of Imperial Preference for Commonwealth exports to this country—but he was not disclosing to the shareholders some of the considerable credits.

The right hon. Gentleman, in what I thought a very comprehensive speech, in his opening remarks hinted at a lot of the long-term advantages which Britain will get in the end, assuming that these negotiations are satisfactory in the context of the authority which the House of Commons has given to the Government to negotiate terms. I am not one of those to whom my right hon. Friend referred when he said that there are hon. and right hon. Members on both sides of the House who are in favour of accepting the Rome Treaty as it now stands. In a previous speech which I made in this House I agreed with the limitations which the House imposed on the Government, but we must be realistic.

From what the right hon. Gentleman has told us today, there has been at least a considerable study of the problems which we all know are there and which embodied in the Motion which this House accepted when it gave authority to the Government to enter into negotiations last autumn. The right hon. Gentleman has given an indication as to when, if I may call it such, the extraordinary general meeting of the shareholders might be held. He has told us today that he hopes by the end of July to get what the lawyers call the heads of agreement before the whole thing is transposed and put into proper legal language. If he can do that, he will have been very successful in convincing his opposite numbers in Brussels.

Let us all think back to the time which it took before the six countries of the Community were able to agree and then to sign the Treaty of Rome. It was fax longer than the time taken, if the right hon. Gentleman is right, up to the end of July, which, roughly speaking, is the dateline. It was far longer than it has taken the Government in these negotiations to reach a point at which they can come to the House and, as they must, put point blank to the House, "This is what we propose. We propose to go in on these terms. Does the House of Commons say yes or no?" When that time comes, of course, there will be imposed on us a very grave decision.

Today, all one can do after the right hon. Gentleman's speech is to comment on a few of the points he put before us and perhaps to emphasise to those hon. Members on both sides of the House who may be wavering and who may not be committed or, as a certain number of my hon. Friends and hon. and right hon. Members opposite are, opposing our entry into the Common Market.

I should have put on the credit side of the balance-sheet an intangible asset which cannot be valued. The Government cannot say to this House in precise terms what its value is, but it is a tremendous advantage for this country in joining the Common Market. Surely the coming together of two enemies such as Germany and France have been in the past decades which have involved this country, willy-nilly with all our sovereignty, in two devastating wars, is an asset which ought to be weighed in the balance when we are discussing the credits and debits. I do not think anyone can say any more about that except that it is a fact of some importance.

Mr. Emrys Hughes (South Ayrshire)

If this is the argument, that France and Germany have become agreed in the Common Market, and that this has dissolved international enmities, is it not an argument for bringing Russia in as well?

Mr. Bellenger

Certainly, except that Russia is not a European country and this is a European Community. Russia has had that opportunity in the wider context in the United Nations. We know only too well, so does the Community— that was one of the reasons for setting up the Community—the obstacles which have been put in the way of the orderly, peaceful progress of the Western nations since the war. I do not want to argue that with my hon. Friend except to say that I would welcome in a wider context the adhesion of Russia to some community, although it would not be the European Economic Community. If Russia joined—and I hope this country will join the E.E.C—it would be a further guarantee of the factor of peace which I have just brought to the attention of the House, the coming together of France and Germany.

The Lord Privy Seal gave some useful figures. I appreciate that he did not want to take up too much time, but I wish that he could, in the OFFICIAL REPORT or in some other way, let us know many of the other figures which he has. He hinted that the Commonwealth is not such a wonderful advantage to this country. In political concept there is no doubt that it is, although, as I said on another occasion, I prefer the white Commonwealth, which has shown its practical adherence to the mother country when the mother country has been in danger, to the 53 million emerging black people in Africa who at present, as we all know, are not following some of the well-defined democratic practices for which we stand and for which I hope the European Economic Community stands.

There is no doubt—the facts are there—that Commonwealth trade with this country has been decreasing in the last few years. Those who say that we can boost it do not face realities. For example, what happens when Australia feels a financial draught? What does she do against this country? She immediately puts a bar down to many of the imports which she has been taking from this country, particularly motor cars. She is entitled to do this, but any hon. Member who over-plays what I would call the Commonwealth hand should remember that he is elected by the electors of this country to represent their interests in the main. Although we cannot ignore these other factors, we must put them into their right perspective.

I can well understand visitors from other countries taking a rather cynical view of Britain, as they have done for a long time—hence the expression Albion perfide. I wish they had come to the House this afternoon and listened to the President of the Board of Trade making his statement about imports of cotton textiles. I wish they had heard how fiercely the President of the Board of Trade was attacked from both sides of the House for allowing these cheap imports to come into the country in such a volume.

I prefer the much more robust outlook set out in the Fourth Report from the Estimates Committee. A gentleman from Lancashire was asked how he viewed competition between the Common Market and Lancashire. Mr. Cart-wright, who is a very important and practical businessman in Lancashire, said: I have no fear of competition with the Continent. He said also, I cannot compete with the cheap imports which are coming from Hong Kong and India where wages are only 25 per cent. of what they are in this country. What do hon. Members representing Lancashire constituencies say to that? Is there not another side to the Commonwealth picture in addition to the oft-repeated argument that we must not let it down but must at all costs ensure that the Commonwealth is accepted by the E.E.C.? The fact remains that many of these cheap cotton textiles are being imported without any tariff into some E.E.C. countries. The Lord Privy Seal rightly said that the E.E.C. is outward-looking. There is no reason to believe that if we join it will have a narrower concept.

There is one subject which disturbs many of us. This is why I am not one of those who believe that we should accede to the Treaty of Rome without conditions. I am concerned about New Zealand. I am not so worried about Australia or Canada. Hon. Members who read the Canadian Press will know that there is quite a lot of opinion there which also is not worried about Britain joining the Common Market. They say so, too. Australia is perhaps worried, for well-understood reasons. When a Government have a majority of only one, the Prime Minister has to take up some attitude on matters like this, but we as politicians know that what we say does not necessarily always represent the true state of affairs. I believe that Mr. Menzies is too great a states- man to view this matter in a narrow Australian light. He of all people must know that, if Britain is not prosperous and progressive, we shall be in a worse position to take imports from Australia.

Mr. Brian Harrison (Maldon)

If the right hon. Gentleman really believes that Mr. Menzies is as big a man as he says, why does he make the accusation that Mr. Menzies is playing party politics with the Commonwealth because he has a majority of only one?

Mr. Bellenger

I cannot enter into the thoughts actuating many politicians. I can only present my point of view. I remember Mr. Menzies' efforts during the Suez crisis. That is why I put him in the position of a world statesman. He had a much larger majority then than he has now. However, I do not want to pursue the point too far.

I do not know how we are going to solve the problem of New Zealand. New Zealand has built up its whole industry and livelihood on one market—Britain. There is no doubt that as time goes on agricultural efficiency will increase in the E.E.C. and it will be more self-sufficient. If we are in, presumably we shall not need the same quantities of New Zealand dairy produce. The Lord Privy Seal did not mention this explicitly, but I am sure that this point is constantly before him. I do not know what solution he will find.

I am a little sceptical about the so-called comparable markets. What does that phrase mean? New Zealand can export her goods to us on preferential terms at present. We know that there will not be the same preferential terms in the Community. Therefore, I want to stress as strongly as I can, as no doubt many hon. Members opposite will, that some compensation in some way or other must be made to New Zealand. I think particularly in the case of New Zealand, it would be well worth the while of our taxpayers, and perhaps even worth the while of taxpayers in the Community, to compensate New Zealand for the long transitional period which she will need before she can sell her produce in other markets, as I am afraid that she will have to do at some time.

We pay about £350 million a year to compensate our own agriculture. This is not entirely, as the right hon. Member for Birmingham, Hall Green said, because it is part of the Welfare State. We do this for the reason which every country, including the countries in the E.E.C., subscribes to, namely to maintain a prosperous agriculture. It arises from a well known historical fact. If the peasants or the agricultural community in any country are dissatisfied, even in Russia, there are all the possibilities of rebellion and explosion. If we can afford to pay £350 million a year of the taxpayer's money to the agricultural community, as we do at present, it surely is not beyond the wit of man to find some money to compensate New Zealand for the hardship which I am afraid she will have to undergo, temporarily at any rate, if we join the E.E.C.

It is interesting to compare the agricultural communities of Britain and E.E.C. A far larger proportion of the population of the Community is engaged in agriculture than is the case in this country. In the E.E.C. about 20 per cent. of the working population is engaged in agriculture. In this country it is about 4 or 5 per cent. What will happen as time goes on? Everybody who reads the newspapers or meets people in other countries knows that there is a shortage of labour in all the industrial countries of the E.E.C. The same thing will happen there as has happened in this country over the past century or more. Whereas 100 years ago we were a rural community, we have now swung over to an industrial community. The same will happen in the E.E.C. More people will leave the land, and are leaving the land at present, and go into industry. Is that a good thing or a bad thing? The right hon. Member for Thirsk and Malton (Mr. Turton) may say that it is a bad thing. I do not think that it is. We have operated on this system for years past.

Mr. Turton

The result is that we have trebled our agricultural production.

Mr. Bellenger

The same may easily happen overseas. The great thing is to keep the matter in proper balance. As I understand it, successive Governments have dealt with our farmers ever since the war, and even during the war, on the basis of obtaining a balanced output. Directions were issued by agricultural committees during the war, and since the war there have been indirect directions through the nature of the subsidies, so that a balance of the agricultural produce of this country is achieved. I agree with the right hon. Member for Thirsk and Malton that there will come a time—this is implicit in what I am saying—when the agriculture of the Six or the seven or the ten, as it may be, will be sufficient for the needs of the Community. It may produce a surplus. One can only hope that the demands from the consumers will increase as prosperity grows in these countries. That is happening all over the world, particularly in India, where the per capita income is very low.

However, we should not be too pessimistic. Debating points can be made, but the fact remains, as the Lord Privy Seal and the right hon. Member for Hall Green indicated, that the whole pattern of the world economy is changing. If we do not keep up with the change we may be left behind in the world.

I want to say a few words about sovereignty, which is a subject dear to the heart of the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith). The subject of sovereignty is very dangerous, or can be presented as very dangerous, when it is dealt with in legal language. In practical affairs, especially is business, we know how sovereignty has been surrendered in the integrations and amalgamations of companies. Often directors who thought they had a job for life have been removed from a board on an amalgamation. The principal thing to consider is the views and the rights of the shareholders and not necessarily those of the directors.

Two factors pre-dispose me in favour of joining the Common Market eventually. I am waiting to hear what are the best terms that the right hon. Gentleman can get. First, there are two large blocs, to which the right hon. Gentleman referred—the United States of America and Russia. Geographically, Russia is much nearer the Community than is America, and the Community, in its own interests, has had to take steps to protect itself against events of the kind that have occurred even since the war in places like Czechoslovakia. What Russia has today is what one might call an economic community, but it is not an economic community of a voluntary kind, with willing partners. It is an economic community of nations that have been forced to join the economic set-up of Russia. Today, the economies of those countries are all attuned to the Russian economy, and we can see in various ways how successful the scheme is. It is successful because that large trading community can be turned in any direction against other countries with whom it is not friendly.

Would it have been possible for Russia to have made such great advances in the sputnik sphere if she had not had tremendous economic means? We may decry such experiments, but they are all part of the change that the world is undergoing. How can Britain maintain her own independent nuclear weapon—and whether it is right or wrong is another matter—or her vast research into electronics and atomic matters unless she has considerable means? These means can be obtained only if Britain joins in a wider constellation and co-operates, as she does at present, with the EEC.

I am told that even some of the undertakings that we are carrying on here— such as that at Winfrith Heath—are to some extent subsidised by some European countries. At any rate, that is what I was told when I went to Brussels. I talked to officials at Brussels who are presumably neutral, although they are the nominees of the various nations comprising the Community. From what they have told me it would appear that the studies and consultations which are now going on in the labour and industrial spheres between employers and trade unionists are far closer than in this country. A certain amount of progress has been made here, but there is far more co-operation there, and that co-operation is bound to lead to successful results.

I noticed that when the Rome Treaty was going through the various Parliaments for ratification the largest majorities against it were in France and Italy. It is no coincidence that France and Italy have the two largest Communist political parties in Europe. Therefore I view with some sadness—perhaps even with alarm—the alliance, in this kind of cold warfare, of a field marshal who during the war earned a glorious name for himself—his name will live in history—with newspaper advertisements which were paid for by those who are rabidly opponents of our entry into the Common Market. That is not the sort of argument that this House should listen to for a moment. It should make up its own mind without the need of paid advertisements using the name of a great field marshal.

Mr. S. Silverman

I appreciate that there is a difference between paying a newspaper to print an article and a newspaper paying a contributor to write and publish an article, but is there any other difference between the article of the field marshal and the article of an ex-diplomat which was published in the Daily Herald this morning? If we are to choose between a half-pay field marshal and a superannuated diplomat, is there any way of distinguishing between the two?

Mr. Bellenger

I would have thought that there was one vast difference, namely, that the coverage which the ex-diplomat received in the Daily Herald was nowhere near as much as that which the field marshal got through all the paid advertisements in the newspapers in which they appeared.

Mr. Edelman

Is not my right hon. Friend making an extremely unfair equation between certain opponents of the Common Market and the field marshal? If we are to balance equations, is it not also true that one of the chief supporters of the Common Market is himself now engaged in a political activity which I am sure my right hon. Friend would deplore? Is not M. Bidault now the political head of O.A.S.?

Mr. Bellenger

I do not know what the comparison is between an ex-politician—or perhaps he is still a practising politician—and the field marshal. Although I have certain strictures to make about the field marshal and his utter naivete in these matters, I put his bona fides on a more substantial ground than those of M. Bidault.

Much evidence could be produced to be placed on the credit side of joining the Common Market. The right hon. Gentleman produced some, for our edification. But we are not in a position to come to a decision today. As my right hon. Friend the Leader of the Opposition said, that is the reason why we have not put down a Motion on the Order Paper. We have not even been as bold as some right hon. Gentlemen who sit opposite, who wrote to The Times about it—as they are quite entitled to do. I look forward with a great deal of interest to what they are going to say to back up the statements they made in their letter this morning. It was an ultimatum to the Government to stop these negotiations, although they were part and parcel of the Resolution which the House passed authorising the Government to proceed. I do not believe that those right hon. Gentlemen voted against the Resolution, but they must now give their reasons for having written the letter. At the moment the House is bound by the Resolution which was passed overwhelmingly last August, authorising the Government to carry on these negotiations.

From what I have heard from various quarters, the negotiations have proceeded smoothly because of the patience and the obvious sincerity displayed by the Lord Privy Seal in his conduct at Brussels. I have heard from many people, expressing all sorts of points of view, that they believe in the right hon. Gentleman's sincerity. If he has only put England on the map as a sincere nation—as we were not in the so-called Maudling negotiations—he has gone far towards achieving a position that this House will recognise after he reports at the end of July.

6.59 p.m.

Mr. R. H. Turton (Thirsk and Malton)

I agree entirely with the right hon. Member for Bassetlaw (Mr. Bellenger) that the great danger is—as I thought he said—that my right hon. Friend is going to put England on the mat. The two speeches that I have listened to, apart from those of my right hon. Friend and the Leader of the Opposition, have been from Members who are anxious to get Britain into the Common Market as quickly as possible, with or without conditions. My right hon. Friend the Member for Birming- ham, Hall Green (Mr. Aubrey Jones) even said that if the negotiations were prolonged it might be taken to be a severe rebuff.

I know that this is the beginning of a series of debates which will show the deep cleavage of opinion which exists between hon. Members who hold different views on this matter. I welcome that, because that is what Parliament is for. But I object to the attitude which the right hon. Member for Bassetlaw displayed When he talked about the Commonwealth. At all times the Commonwealth has been regarded quite apart from party politics. Except in the view of a small, extreme fringe on the Left of the Socialist Party, all hon. Members have expressed belief in the Commonwealth partnership. I am happy to see that now even the extreme Left has been converted to this view.

Mr. S. Silverman

In order that there shall be no further misconception on the point, those to whom the right hon. Gentleman refers as being on the Left of the Labour Party believe in the Commonwealth more than ever now that it has become more of a free association of free peoples than it was in the old days.

Mr. Turton

I was not including the hon. Member for Nelson and Colne (Mr. S. Silverman). I thought that he was the outside-left.

The right hon. Member for Bassetlaw made three charges in his speech. First, he talked about over-playing the Commonwealth hand; secondly, he jeered and sneered at the attitude of Mr. Menzies, the Prime Minister of Australia and, thirdly, he talked with contempt of what he described as the black Commonwealth.

I hope that we shall try to conduct this series of debates on a rather higher level. We must remember our links with the Commonwealth. Let us remember the loyalty and friendship that the Prime Ministers and peoples of the Commonwealth have always extended to this country in good times and bad. If that does not appeal to the right hon. Gentleman, let him remember the amount of trade that his own constituents get from Britain's exports to the Commonwealth.

Mr. Bellenger

I have no objection to the right hon. Gentleman's criticising me for what I have said, but I hope that he will not misunderstand me in relation to my reference to the black Commonwealth. That was not meant to be a derogatory term. It was a term which I used to distinguish my feelings for what I call the old Dominions, which are mainly white, from my feelings about the new Dominions, which are undoubtedly black.

Mr. Turton

I will leave the right hon. Gentleman. HANSARD will record his speech, and I know that many other hon. Members wish to speak.

I want to limit my remarks to the Commonwealth. The Leader of the Opposition said that the question of manufactured goods is not the major issue, but I regard it as a very important issue, which goes to the heart of the Commonwealth situation. I do not believe that the Government realise what a shock that decision gave to the country as well as to the Prime Minister of Australia and the Deputy Prime Minister of New Zealand. If we are going to be the head of a growing Commonwealth—and the growth factor in the Commonwealth is much higher than it is in any other part of the world today— we must bear in mind the difficulty of Commonwealth association with the Six.

I was concerned when my right hon. Friend answered a Question put by my hon. Friend the Member for Sunderland, South (Mr. P. Williams) on Monday and, speaking of this provisional decision to abandon preferences in respect of manufacturered products from those three countries, said: When he speaks of a breach of principle, I would ask him to recognise that the pattern of Imperial Preference has been changing for a very large number of years, and is changing the whole time."—[OFFICIAL REPORT, 4th June, 1962; Vol. 661, c. 16.] Of course that is absolutely true, but let us remember—and let the right hon. Gentleman remember—that these preferences are bi-lateral agreements between sovereign Commonwealth countries. I should be glad to be corrected if I am wrong, but I have never known an occasion when these preferences have been altered except with the approval and consent of the parties concerned. I remind the House that when the present Minister of Aviation brought in the changes in the Australian-British preferences on 12th November, 1956, it was because Britain and Australia had agreed to the changes. The danger about this matter of the preferences on manufactured goods is that these changes have not been agreed by the countries concerned, as is evidenced by the observations of Mr. Menzies and Mr. Marshall but have been stimulated by our negotiations with third party countries. That, as I see it, is the issue in this problem.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Can my right hon. Friend say whether the Australian and Canadian Governments consulted us when they subsidised their shipbuilding to the extent of 40 or 33 per cent., which was very harmful to British trading interests?

Mr. Turton

I am at the moment talking about Commonwealth preferences, which are bi-lateral arrangements. It may well be that there are many things that we have done wrong and many things that Commonwealth countries have done wrong. I am not arguing that. But the damage done on this very small issue—to the extent of £55 million, the Lord Privy Seal said—is that here we are breaking a bilateral agreement between two Commonwealth countries in the Commonwealth partnership. That is what is causing the shock to people in this country and to people in the Commonwealth countries.

This is the first round. What about the next step? We are all concerned, as the Leader of the Opposition so very clearly put it, on what is going to happen to the temperate products. Are we going to ask for free entry for Commonwealth produce, such as butter, lamb, beef and so forth? A great deal depends on this. I am certain that the whole economy of New Zealand and a great deal of the economy of Australia and Canada depends on whether we are going to take the stand that we will have continued free entry for such produce.

I think that if the housewives of this country were asked to register their opinion they would be unanimously in favour of continued free entry for that produce. I do not think that those who are keen Common Marketeers have really worked out what the shock would be to the people of this country if we had to apply a duty of 24 per cent. to butter and 20 per cent. to meat, to give two specific items.

If we are to abandon the free entry of Commonwealth produce, which I think would be deplorable, we come to the question whether we are going to get comparable outlets for the produce. I was puzzled by what the Lord Privy Seal said on that subject. If I understood him correctly, he said that the comparable outlets are not guaranteed sales but assurances of access. This means that New Zealand would lose the free entry for her butter and we should get from the Six no guarantee that she would be able to sell her butter there. All we should have would be that she would not be cut out as she is at present from the French and other markets. I think the position is that there is a prohibition on New Zealand butter exports to certain countries of the Six but not to others.

I would say that that is a denial of all that we mean by "comparable outlets". If we are going to ride roughshod over the Commonwealth to that extent, I believe we had far better give up the negotiations now, because I do not believe that this country will stand for the destruction of the New Zealand economy.

Mr. Heath

My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) must be labouring under a complete misunderstanding. There has been no question of deceiving the Commonwealth in this way. There is no assurance at the moment to a Commonwealth country — with one exception, which is the Australian wheat agreement—that its produce will be bought in this country. The Commonwealth countries have free access here, but that does not mean an undertaking to a Commonwealth country that its produce is going to be bought. All I was saying in my remarks was that they should have access so that people may buy their produce if they wish to. There is no compulsion on people at the moment to buy Commonwealth produce. But they do it at the moment, and I have no doubt that they will go on doing it in the future.

Mr. Turton

I do not think that my right hon. Friend has yet appreciated the position. The position is that it seems that we are going to destroy Commonwealth free entry. Up to the moment it has been believed that "comparable outlets" meant that New Zealand would be able to sell a similar quantity of produce in the countries of the Six. I believe that my right hon. Friend should fight for that in the negotiations.

Mr. Heath

I do not think that my right hon. Friend recognises the difference between freedom to sell and a guarantee that a certain amount is going to be purchased.

Mr. A. R. Wise (Rugby)

The discussion at the moment seems to be a little academic. We have the pledged word of at least four members of the present Government that the principle of Commonwealth free entry cannot be done away with. I hope that those members will be prepared to leave the Government if they are proved to be wrong.

Mr. Turton

In my view, there is no uncertainty. This country believes in continued free entry for Commonwealth dairy produce. There is the aspect of the system of having our food at or near the world price. Suppose we go over to the other system. Let us remember the effect on, for instance, butter. If we start going up to the continental price level for butter, our people will not be able to eat butter because the price will be too high. In that case, not only will our standard of living fall, but New Zealand will also be ruined.

However, I leave that and go straight to another point that I want to make. I refer here to the question of the transitional period. One of the dangers of the provisional decision announced last week was the so-called transitional period. I believe that my quickest way to deal with this is to refer to the words that Mr. McEwen used on 17th April in London when he talked about phasing of the preferences over a transitional period. He said: To Australian producers this could only bring the stark prospect that they are to be given merely a reprieve and, instead of facing serious damage on the day of the United Kingdom's entry into the Common Market, would meet it after the lapse after this so-called transitional period. This is no safeguard at all. We will not be tranquilised by a transitional period. I am certain that this is the wrong way of working these negotiations. We cannot have the Commonwealth economy bleeding to death over a period. I believe that the Lord Privy Seal—I have great admiration for the way in which he has conducted many of the negotiations —must be very tough on the question of temperate products and the transitional period. I became more certain of that when I read in the newspapers at the week-end that Dr. Adenauer, the Federal German Chancellor, had said that Britain would be welcomed into the Common Market but the Common Market could not digest the Commonwealth. If this is the attitude and the considered view of the Six, then I again tell my right hon. Friend that the sooner we end the negotiations the better, because they are merely wasting time.

There is no question about it that while these negotiations are being prolonged the only effect in the Commonwealth countries is to make them realise that they must look round and try to find alternative markets which will take a little of their produce—alternative markets in which they can replace their own imports of British manufactured goods.

Sir C. Osborne

That is what we have to do, too.

Mr. Turton

I am not too sure. We shall have tremendous opportunities if Britain will really get down to it and help to build up the economies in the fast-growing, young, developing Commonwealth countries.

I agree a great deal with what was said my my right hon. Friend the Member for Birmingham, Hall Green. I think that he was on a very sound point when he said that the rich countries are becoming richer and the poor countries poorer and that we have to put that right. It will mean that we should be studying with the Commonwealth means by which we can get stability of prices, the disposal of surpluses, the building up of their economies and the creation of more trade.

Mr. Anthony Kershaw (Stroud)

In this country.

Mr. Turton

I hope that my hon. Friend will not interrupt. If he will not, it will help a great deal.

Mr. Kershaw

My right hon. Friend indicated just now that he would not give way. This is the only way I can interrupt him.

Mr. Turton

I have given way about four times. I am trying to take less time than other hon. and right hon. Gentlemen have done. As I was trying to get to my peroration I felt I should not give way.

Clearly, there is an opportunity. We have the Commonwealth Prime Ministers coming here in September. When we have got them together, that should be the occasion to try to work out how we can increase trade between the Commonwealth countries, not merely between this country and each individual Commonwealth country but also the intra-Commonwealth trade. I hope that my right hon. Friends the Lord Privy Seal and the Prime Minister will consider that at this time. I believe that then these negotiations, these battles, however prolonged, will not have been wasted, and I believe that we shall then be able to make a great contribution to the world.

7.18 p.m.

Mr. J. Grimond (Orkney and Shetland)

The negotiations now going on are a matter of bargaining, and detailed bargaining, and, like other hon. Members, I congratulate the Lord Privy Seal on the reputation which he has earned in this process. But in this debate, which is probably the most important debate this country has had for at least a generation—[HON. MEMBERS: "Oh."]—the general debate about the Common Market I mean; not this particular House of Commons debate— the heart as well as the head is involved. The future of this country and the Commonwealth and the future of Europe is involved.

The right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton) is devoted to the ideal of the Commonwealth, and I respect him for that, but I really think that this is a far more important matter than his argument about butter. We can probably settle the butter business. But the future of the Commonwealth is a matter of the greatest importance, and will remain so for a long time. All I would say to the right hon. Gentleman, in all sincerity, is that I doubt the reality of the type of Commonwealth in which he tries to believe. He says that the Commonwealth Prime Ministers are coming here in September and we can then discuss the encouragement of intra-Commonwealth trade. Of course we can. But the Commonwealth Prime Ministers have been coming here year after year. In fact, we know quite well that if Australia gets into economic difficulties she not unnaturally puts up her tariffs, and that when Canada wishes to devalue her dollar she does so and does not consult us.

I have spoken to people who come to these conferences, and I have not found this enthusiasm for anything like a Commonwealth Free Trade Area. I think that we are deluding ourselves if we think that the development of the Commonwealth can be along those lines. I believe that it has a great future, and that we can contribute more to that future.

The right hon. Gentleman the Member for Birmingham, Hall Green (Mr. Aubrey Jones) said, and the right hon. Member for Thirsk and Malton agreed, that Britain within Europe might well be able to develop new ways and machinery for helping the Commonwealth which might be denied to Britain outside Europe. To my mind, we have to look more to the question of services to the Commonwealth, of aid by way of capital development to the Commonwealth, and we have to remember that the Commonwealth is a multi-racial society of countries which are very unequal in their demands and outlook. I do not think that we can regard it as an alternative or a rival to Europe.

I am in favour of these negotiations, and I hope they will succeed. I think that one has to have a certain emotional response about this matter. I do not think that one can look simply at the terms, although I agree that the terms are very important. It is like a person buying a house. First, he has to make up his mind what sort of house he wants to live in. Then he has to look at the price. The price may be impossible. I do not deny that these negotiations may fail. But to my mind Europe is the sort of house into which the British people should go.

Why do I say that? I do so primarily because I think that a united Europe with Britain in it can be and is a force for peace. I think that the old enmity between France and Germany may be discounted to some extent because that is perhaps not a serious cause of friction today. But do not let us discount it entirely. The elimination of friction inside Europe is not something to be lightly written off. This friction has been the cause of more suffering to the human race than probably any other factor in the world.

Mr. S. Silverman

We are going to make it worse.

Mr. Grimond

I do not accept that. I may be quite wrong, but I believe that a united Europe could be a factor for peace, a useful negotiator between America and Russia.

Mr. Silverman

But it is not a united Europe.

Mr. Grimond

The second point that influences me in favour of a united Europe is that I believe we shall be contributing to a great advance in European civilisation. European civilisation is the greatest civilisation the world has ever seen. I think that we can ill afford to allow this country, which is a European country, to be outside this great movement.

Thirdly, there is the possibility of political and economic expansion. The Leader of the Opposition said that the economic advantages of going into Europe could be exaggerated. I accept that that is true. But we have to look at the political and economic possibilities together. We have to think of what has been possible in a great united area like the United States of America and take into account the growing trade of this country with Europe, a trade which when we have gone in, will be internal, home trade, no longer export trade but trade in a home market.

I would agree that the difficulties of expansion in Europe may be greater over the next decade than over the last decade. Nevertheless, joint planning may give us an economic strength which we could not achieve otherwise. It might be a great help in dealing with the problem of sterling if we could pool the resources of Europe and were able to accumulate a surplus for investment overseas. I am not saying that all these things will inevitably follow; of course they will not. But I think that the opportunities will be there and unless we do go in, I do not see how we are to get them.

I entirely agree with those who say that we should not go into Europe as a means of curing all the ills of the British economy. I do not think that we should be wise to throw the British economy into the deep end of the swimming bath to see whether it sinks or swims. We have to get our economy right before we go in, but if we can get it right then we shall have great advantages from the European market.

I disagree with the Leader of the Opposition when he says that if the negotiations fail we can go on as before. I think that the country would be most unwise to think that. For one thing, capital in this country would go into Europe and we have no means of stopping it. We might make a great effort in another direction. It may be that there would be the possibility of a new rôle for Britain in the world, but we might sink back into a small inward-looking and uninfluential nation lying off the shores of Europe. I do not believe that we can go on just as before. The decisions taken in the next year or two will be vital decisions, whether we think them good or bad, and it is no good blinking the facts.

As for the negotiations, I have no doubt that there will be moments of great difficulty in which we shall need extremely cool nerves. I do not believe that we shall get the best terms by laying down a list of detailed conditions, and I do not believe that we shall make the Government's task easier by providing them with a list of such basic conditions. We have, I am sure, to show enthusiasm for the European idea, and if the Prime Minister has convinced President de Gaulle that we are going into Europe with enthusiasm, then he has done a good job. If we seem to quibble too much over the details of the negotiation, we shall damage the possibility of getting a good all-round bargain. It is an all-round bargain that we want. That is important not only to us but to the Commonwealth.

Mr. Shinwell

The right hon. Gentleman has remarkable facilities for contradicting himself. First he tells us that we must not lay down conditions. That is his argument based on the newly founded enthusiasm of President de Gaulle and the Prime Minister. Then he said that we must bargain. About what shall we bargain?

Mr. Grimond

The right hon. Gentleman cannot be as simple as all that. Of course we must bargain. The question is whether we tie round the Government's neck a whole lot of detailed basic conditions before they start bargaining, which can be used to beat them about the ears later. I hope to give some general ideas of the sort of conditions on which the bargaining should take place. All that I am saying is that we should not lay down detailed basic conditions. It is wrong to believe that we can go into Europe and get better terms by showing no real enthusiasm for the idea which is animating, for better or worse, the whole spirit of Europe today.

Mr. Percy Collick (Birkenhead)

Will the right hon. Gentleman make the position quite clear? He has made statements in the country again and again that we should enter the Common Market unconditionally. Now he talks about bargaining and coming to terms.

Mr. Grimond

I am grateful for that intervention, because I am glad to make it clear that I have never said that we should go into Europe unconditionally. I wish to make that quite clear and then to get on with my speech.

We are in a certain difficulty about the form of the negotiations, because what will ultimately be important is how the pieces fit together. As I understand it, the pieces are bound to come out one by one, as the agreement over industrial manufactures has come out. Every time the pieces come out, somebody will raise his voice in criticism. That is bound to happen. I foresee that the Commonwealth Prime Ministers will be in a position continually of being forced to criticise the development of the agreement before they have seen the whole picture.

in this situation, what is important is that we should look ahead at the ultimate result which we hope to achieve. It should be generally agreed that what we want to achieve is entrance on fair terms into the Common Market, and then to make it an outward-looking organisation. The Lord Privy Seal said that it was an outward-looking organisation, and I agree, but there is one aspect which I want to mention—a tendency in Europe to regard the Community as simply a defence against Communism. No doubt it is valuable to have a defence against Communism, but this should not be the prime argument, to my mind, for the Common Market. There would be a strong argument for it whether the Communist menace existed or not, and I very much hope that our influence will be exerted in seeing that it does not become a barrier to a settlement in middle Europe.

We come, next, to the question of the directions in which we hope to see the negotiations move in respect of the Commonwealth. On the general lines of this I certainly agree that we ought to press for some association of the African and West Indian countries, and similar members of the Commonwealth, with the Common Market, on the lines which France achieved for her ex-colonies. The Leader of the Opposition does not like the word "association" and I sympathise with his views about it, and perhaps during the negotiations we may get "association" altered. It is, however, what as likely to the offered. He seemed to imply at one moment that association involved some political relationship with Europe, but this, I think, is not so. I am glad that the Lord Privy Seal nods his head.

I turn to the necessity of the enlarged Community absorbing as large a quantity of manufactures from the new industries in Asia as Britain and Europe, do now. A very good test of the intentions of the Community will be their willingness to reduce tariffs on raw materials. If they are willing to have zero tariffs on wood pulp, newsprint and aluminium, for example, this is a very good test of whether they will be an outward-looking Community, and it would be a great assistance to Canada.

I come to what by common consent is the most difficult question—temperate products, particularly those of New Zealand.

Mr. William Baxter (West Stirlingshire)

The right hon. Gentleman talks about wood pulp from Canada being taken into the Common Market. What effect would that have on the future of the industry in Scotland?

Mr. Grimond

I could not say in detail. If we went into 'the Common Market we should settle that point. At the moment it might put us in difficulty.

I want to come to the question of temperate products, and it is worth stressing again that the world is changing very rapidly and that the patterns of world trade will change even more in the next ten years. The provision of new capital may be more important than a particular level of a particular duty.

I hope that new markets will be found and new commodity agreements negotiated. Already Australian wheat is being sent to China. I believe that we shall be in a better position inside Europe to influence the new patterns of world trade and, for instance, to bring pressure upon the Americans to bring down their tariffs as a compensation for reducing European tariffs. I believe that we shall be in a far stronger position inside Europe to do this than we shall be outside. In addition, we shall have the opportunity in Europe of following the suggestions made by Marjohn and others for another development of European planning and for the pooling of reserves, which will be much more effective in helping sterling than any restrictive measures in this country.

May I comment on the political implications? I welcome the Lord Privy Seal's declaration that the British Government are prepared to participate in the discussions on the political unity of Europe. He also said that he foresees a European Parliament playing an important part. We should not delude ourselves about this. My impression is that Europeans intend to have a European Parliament. I took part in a television programme with the Lord Privy Seal in which this became crystal clear, and I do not think that we should try to conceal it from the people of this country. The Leader of the Opposition said that he would prefer an expansion of the Ministers' powers. That may be a better way of doing it, but it is not the way in which Europe is thinking, and I shall be interested, when the Lord Privy Seal winds up the debate, to hear whether he is prepared to confirm that if we are going into Europe, we are going into a political unit and into a Continent which is looking, perhaps twenty years ahead, to the time when it has an elected Parliament.

I should like to follow the suggestions made by the right hon. Member for Hall Green. I was not entirely sure, when he spoke of the new agencies which he thought could be applied to our Commonwealth, whether he regarded these as being bureaucratic agencies or whether he was speaking of agencies with some democratic control over them. In speaking in this way we should be clear that if these are European agencies, and if the Commonwealth is getting primarily European capital, even though Britain may be contributing largely to it, the special relationship of this country with the Commonwealth will alter. People from the Commonwealth who wish to do business or to get aid will go to Brussels and elsewhere and will not come to London. We shall have to think in entirely new terms of the relationship between this country and the Commonwealth.

I accept that some people are against the whole idea.

Mr. Shinwell

I am one.

Mr. Grimond

A strong suspicion was growing in my mind that the right hon. Gentleman was opposed to the Common Market. I was beginning to think so.

Mr. Shinwell

I would not touch the Common Market with a barge-pole.

Mr. Grimond

The right hon. Gentleman is not in very good company, but I will not draw attention to that.

To those who are waiting to make up their minds, I will say that it is no good going into Europe holding one's nose, so to speak. We must go into Europe seeing the opportunities larger than the difficulties. This is the moment, I think, for stressing the contribution which we can make to Europe and stressing the excitement of taking part in a new chapter of European civilisation. We should emphasise that we shall be strengthening Europe and the possibilities of what Europe can do for the world.

It may well be that the negotiations now going on will take a long time. The Government will be very lucky to complete them by the end of July. If they take longer, I hope that the Government will continue with them and will not be jockeyed into any premature rupture of the negotiations. I hope that, having embarked on this adventure, they will go through with it.

Ultimately, the decision will depend on the whole shape of the terms which we are offered to go into the European Community. If we achieve suitable terms, I do not despair of having a new relationship with the Commonwealth and of being able to provide the Commonwealth with much greater aid than we alone can provide—and of using our prestige and influence in Europe to increase our general influence throughout the world.

7.40 p.m.

Mr. Maurice Macmillan (Halifax)

It is by no means always that I agree with the right hon. Member for Orkney and Shetland (Mr. Grimond), the Leader of the Liberal Party, but we must all be pleased to know that whatever the attitude of the Liberals in the past, they have come round to the side of those who would impose conditions on our entry into the Common Market.

I congratulate the right hon. Gentleman on the enthusiasm which he has shown, because it is a quality which has been lacking in some of the speeches, particularly from those who are opposed to Britain's entry into the Common Market. I have just returned from a meeting of the Western European Union Assembly. Not only was the British delegation there delighted with the firm and definite statement made by the Lord Privy Seal on safeguards for Commonwealth trade, and his repetition of it, but the European Parliamentary delegates at that meeting showed a growing understanding of the problems of the Commonwealth.

They showed great fears, too— because there are fears on the European side as well as on the side of the United Kingdom and the Commonwealth. They were curiously similar in tone and in manner of expression as they are here, and they centred largely on the arrangements for the transitional period of Commonwealth association. The attitude to the long-term solution of all these problems varies partly ideologically in Europe, as it does in this House, but I think with even more determination. Dr. Adenauer was quoted as saying that the Common Market cannot digest the Commonwealth. Some of my hon. Friends this afternoon seemed to fear that the Common Market can engulf the Commonwealth only too easily. I think that they are all suffering from a misapprehension as to the nature of the problem.

If it is viewed as a series of difficulties to be overcome, a series of obstacles which two groups of people are persistently and with determination intending to put in each other's way; if it is seen as two camps which are inevitably mutually opposed, then I have no doubt that the interests of the Commonwealth and the Common Market will be totally irreconcilable. But that is a great distortion of the facts, and it is becoming clearer as time goes on, despite the efforts of many to prove otherwise, that the long-range interests, whatever may be the transitional difficulties, of both Europe and the Commonwealth are in accord and that the future of a great deal of the rest of the world depends upon our success now in translating that accord into agreement and eventually into action.

Perhaps the real division is between those whose ideas are so firmly rooted in the past that they cannot even look a year or two into the future and those whose conception of the world in which they have lived is projected so definitely into the future that they are not able to grasp what my right hon. Friend the Member for Flint, West (Mr. Birch), in an eloquent speech some time ago, described as a new problem of scale in the European political and economic arrangements.

Although even in Europe there is general agreement that the problem of the Commonwealth is of vital importance to the United Kingdom and to Europe, there is also general agreement that the details of these problems are bigger than merely the Common- wealth itself, that they concern every part of the world and that their long-range solution is more global than local. It is necessary, as the right hon. Member for Bassetlaw (Mr. Bellenger) said, to develop third markets for the temperate foodstuffs and for the increasing European surplus of food production. This is being discussed and considered under O.E.C.D. arrangements. I for one am convinced that it is easier for us in the United Kingdom to fit the Commonwealth into these plans as a member of the Common Market than as an outsider. It is the same with the related problem of subsidised exports at below world market prices. This is not a problem which concerns merely the Commonwealth, although perhaps the chief duty of hon. Members in this respect is towards the Commonwealth.

The third point of world importance is the extension of the existing arrangements to world commodity agreements. A market for new industries in underdeveloped countries is a European as well as a United Kingdom problem. As has been said, the arguments which we have had today and yesterday about the cotton industry show that it might be much more easily resolved by the United Kingdom in the context of Europe than by ourselves.

Mr. J. T. Price (Westhoughton)

Would the hon. Member for Halifax (Mr. Maurice Macmillan) relate to his arguments the figures for Asiatic textile goods exported from Hong Kong and elsewhere and now being absorbed by the six countries of the Common Market as compared with the amount being taken by this country? What prospect does he think there is of these figures being reversed in our favour?

Mr. Macmillan

I have no doubt that, despite the objections of the hon. Member for Nelson and Colne (Mr. S. Silverman), this country is taking far more than its fair share of the surplus production of cotton goods from Asia, and I have no doubt that so long as we remain outside the Common Market there is no hope whatever of getting any European help in dealing with this problem. But it is a problem which is being accepted as basically European, continental in scope, by the countries of the Community and it is a problem which the countries of Europe are studying together to produce what they call a Community solution. I, for one, do not think that our position will be any harder within that Community than it is now, because it is not very easy at the moment, with hon. Members on both sides of the House demanding free entry into the country for Commonwealth goods and others demanding that Commonwealth goods should be kept out.

Let there be no mistake about it: if we are to develop industries in underdeveloped countries, the early products of those industries are, by definition, bound to be the products of cheap labour. It cannot be otherwise. If we are to deny entry into Europe and into other sophisticated economies to all the products of Asiatic, African and other areas of development, then we might as well keep our capital at home and stop wasting our effort, because there is no point in developing industries and then refusing to buy their goods.

There is a parallel problem in what has been called the old Dominions. They, too, are developing new industries —aluminium in New Zealand, motor cars in Australia and so on. They can do so only in competiton with the bigger markets and more sophisticated methods of production of the older economies, and they do it, when necessary, behind tariff barriers. If they are to deny us outlets for our goods in Europe, it will be very hard for us to accept free entry of their goods against corresponding tariff barriers put up by them.

I remind the hon. Member for West-houghton (Mr. J. T. Price) of the Canadian reaction when we found it difficult to buy paper from Sweden. The Canadians, as they were entitled to do, took advantage of that situation and put up their prices. My own constituency finds that Commonwealth free entry and Commonwealth preference with wool is a very one-sided arrangement. I am not grumbling about that. These Commonwealth countries need to buy in the cheapest markets and we have all had figures quoted from time to time to show how the preferences for United Kingdom goods are being slowly reduced, not out of malice or wickedness, but to meet the needs and demands of a modern situation. It is only logical that in re- turn we in the United Kingdom should try at least to keep ourselves up to date with those countries in the Commonwealth. We in this country can have no complaints, but we must recognise and accept the implications. We must not seek to limit the Commonwealth. We must not seek to limit its markets and to cut it off from sources of investment other than this country, but neither must we try to limit the development of backward countries and backward industries.

Europe fears the Commonwealth as being associated with the Common Market, and it is not a question of Europe resenting the Commonwealth or resenting the United Kingdom. I think that Europe fears the prospects of such an association because for a long time it has seen how we in this country, quite rightly and properly, have allowed the Commonwealth to have its cake and eat it. Up to now, it has been the United Kingdom which has paid. The fear in Europe is that now that we are finding it difficult, we may use the Common Market to try to make the Europeans pay. I must say quite frankly that violent expressions of opinion, not on an agreement, but on a proposed agreement on manufactured goods, from those who are least affected by it merely add to the atmosphere of misunderstanding in Europe itself.

I agree with my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) that we must be tough in the transitional period, but we must also be fair, and it is hardly fair to say that agreements have been made behind the back of the Commonwealth when nothing has yet been agreed and it is only a proposal. This is one of the disadvantages of keeping the Commonwealth informed. There are two ways of doing it. We can conclude a whole series of arrangements and then put them complete before the Commonwealth—take it or leave it—or we can keep the Commonwealth informed, as has been done, piecemeal. But it is not fair to say when one part of a proposed arrangement has been just proposed, not after, that that is an agreement entered into behind the back of the Commonwealth and without its consent, because the question of Commonwealth agreement and consent does not arise until the proposition is complete.

There is no doubt that the practical difficulties, in whatever atmosphere they are met, are very considerable. But they have all been met before and if it is worth reminding the Commonwealth that it must not expect more than is reasonable from the United Kingdom, it is even more important to remind Europe that it has dealt generously with its own problems and that we have every right to expect that it will deal equally generously with ours.

In his opening statement to the Six on 10th October, 1961, my right hon. Friend the Lord Privy Seal said: It is a striking fact, and very relevant to the Commonwealth problem, that in no case was a tariff imposed on trade where one had not been in force before the Treaty was signed. It is worth reminding the House, and perhaps it would be worth the time of the Lord Privy Seal to remind the people in the negotiations, of the Morocco Protocol which exempted from the common tariff exports from Morocco, Tunisia, Vietnam, Cambodia, Laos and the French settlements in the New Hebrides.

In 1960, under that protocol, £96 million worth of goods were imported into France from Morocco free of tariff, and £25 million from Tunisia, free of tariff. The same arrangement under the Morocco Protocol applied to imports into the Benelux countries from Surinan and the Netherlands Antilles and into Italy from Libya and Italian Somalia. Under the German Trade Problem Protocol, trade between East and West Germany for the purpose of the European Economic Community counted as internal, and the 1960 figure for imports into Western Germany from Eastern Germany was some £85 million. Under Part IV of the Treaty and the implementing convention, the Frence dependencies, Madagascar, the Congo, Italian Somalia and Netherlands New Guinea were all counted as associate territories. The imports from the French overseas territories alone in 1960 were £228 million.

I have not been able to obtain all the figures for these various exclusions from the Treaty of Rome, but those which I have quoted, together with a few which I have not mentioned, total about £440 million free imports into the Common Market under the various protocols and special arrangements which I have mentioned. In the pamphlet which the Government have just produced, the total of temperate foodstuffs quoted is £445 million.

These are comparable figures and show that if the problem has been dealt with successfully once, it is not a technical problem which is preventing any solution now. The figures are evidence, in addition to those quoted by the Lord Privy Seal, that the Common Market is alive to these problems and has found a method of dealing with them. If we are to show understanding in the sense of realising that exceptions cannot be made in circumstances which will turn those exceptions themselves into the rule, at least we can ask that in face of these exceptions our proposals can be considered sympathetically and brought to a conclusion which is genuinely satisfactory to the needs of the Commonwealth. If I might divert for one moment from the question of the Commonwealth, this is also an argument for saying that it will not be as difficult as all that to meet the needs of the neutral countries, especially the probable consequences to their right to make independent trade treaties which their neutrality demands.

These are figures and details and they are important but, as the right hon. Gentleman the Leader of the Liberal Party recognised, there is more to it than the details and more to it than the figures. We can all be grateful that, while the Lord Privy Seal has shown that we, too, must approach this in a manner combining practicality with enthusiasm, he has not quite the right hon. Gentleman's rather lofty disregard of some of the details. I hope that both his practicality and his enthusiasm will be reinforced and not diminished by the course of the debate.

8.0 p.m.

Mr. William Blyton (Houghton-le-Spring)

I listened to the hon. Member for Halifax (Mr. Maurice Macmillan) with great interest. I am still unrepentant on my attitude towards Britain entering the Common Market. I am for the Commonwealth and the hon. Member is a European. That sums up the difference between us. Shortly we have to face in the House a decision of grave importance and consequence to every home and every family in these islands. It is the decision whether we sign not only the Treaty of Rome of which everyone has spoken today, but whether we join the Common Market in coal and steel and also in Euratom, because we cannot discuss the Treaty of Rome alone. All these things are linked together.

We ought not to deny the political implications of the aim of the Europeans to have a federalist State for Europe. To deny it would be not only futile but dishonest. Government Front Bench spokesmen should tell the people with whom they are negotiating that the constitution of this country provides that the Government cannot commit any future Government that may sit opposite. Therefore, what the Government are doing now can in no way commit any future Government which may be elected to succeed them.

How is it that the Common Market is now such a good thing for us when no one said before April, 1961, that it was good for us at all? The Treaty of Rome was signed in 1957 and has operated from 1959. Euratom has operated from 1956 and the Coal and Steel Agreement from 1952. No campaigns were run then to tell us how necessary and advantageous it was for us to join. On the contrary, the Labour Party and the Tory Party were telling everyone in the country that because of Britain's position in the world she had to stay outside the Common Market as a full member. How it is that what was considered unfavourable before 1961 should have suddenly become so terribly urgent, as the hon. Member for Halifax tried to depict a few moments ago?

Did America change the Prime Minister's mind? Last year our economy was so weak that we had to borrow £760 million from the International Monetary Fund to safeguard our currency. Did the international moneylenders tell the Government and lay down as one of the conditions that we could only have a loan if we entered the Common Market? It seems to me that during the last 12 months important aspects of British policy have not been decided by the democratic processes of Parliament but dictated to us by foreign bankers.

Since April, 1961, we have had this flood of pro-Common Market propa- ganda dealt with by public relations campaigns designed to get the British people to believe that the Common Market is some E1 Dorado which will solve all our economic problems. Even the Government themselves in many ways have tried to arouse unreasonable fears of Britain perishing if we stay out and equally wild hopes of miraculous benefits if we join. The Government must face the charge that in the last 12 months they have been trying to stampede a bewildered nation into the Common Market.

I have strong views on this subject, and I intend to express them in the course of my remarks. I say to my own side of the House that I shall speak on this issue as a lifelong Socialist and as one who believes that this country is still a great nation no matter how it may be decried. I want to speak about how Socialist economic planning is to fit into the Treaty of Rome, the Coal and Steel Community and Euratom.

When I spoke last year I said that the powers held by the High Authority would even thwart any attempt by us to nationalise steel and would prevent our having Socialist planning. I have some evidence to support this view. There have been two examples of this, one in Belgium and one in the Ruhr Valley under the Coal and Steel Agreement, the institutions of which are exactly the same as those in the Treaty of Rome.

The Belgian Government passed a law setting up a directoire as a public body to administer Belgium's coal distribution. It was a planning measure. It set up a marketing board which would control the sales of Belgian coal and fix quotas for the mines. The High Authority instructed the Belgian Government that under Article 88 of the Treaty they could not do this. The case against Belgium made out by the High Authority was that to set up the directoire to control sales was against the rules of competition and would distort the Coal and Steel Community's economy

In trying to get out of this difficulty, the Belgians replied by justifying their action on the basis that the fixing of quotas and prices was the right of management. But the High Authority replied by saying that the fixing of quotas and prices was not the right of management but was an aspect of the economic policy of the State and, according to the Treaty, power to make economic policy decisions rested with the High Authority and not with the national Parliament of Belgium.

The High Authority has given Belgium till the end of June to conform to the instruction to end the directoire or to appear before its Court of Justice. But this matter has not ended there. The Authority has said to Belgium that to set up in Belgium a body to control sales from Belgium's coal mines on the basis of a marketing board run as a public service would limit the power of the Authority and would violate the principle of the Treaty and the liberty of private enterprise and competition.

Belgium now, as a full member of this Treaty, faces penalties under Clause 88. If she does not comply, the Authority will evoke Article 4 which defines conditions which are incompatible with the Common Market and steps will be taken to deal with Belgium in that way. Therefore, Belgium is regarded as a defaulter because she has tried to set up a plan for the sale of her coal inside her own national boundaries. Here is a case where an elected Government of a Common Market country make a planning decision which they believed would help the country and now they have to rescind it on the instructions of the High Authority.

There is another case, and I quote these cases to show what the effect will be on us if we as a Labour Party gain power at the next election and we sit on the Treasury benches opposite and we have been committed to the Treaty of Rome by the present Government. The other case is that of the Ruhr coal sales agencies, which has been taken to the Court of Justice by the High Authority. The Court has ruled that the High Authority was right in refusing to allow the Ruhr sales agencies to combine into a single sales organisation for coal, bearing in mind the fact that the Treaty upholds the idea of competition.

The judgment further states: A single sales agency for the Ruhr would in effect amount to price control for the whole market, and thus eliminate the element of competition. It concluded by saying: That such a sales organisation should be so big was incompatible with the Treaty in its present form.

Mr. David Webster (Weston-super-Mare)

Is it not a fact that the Coal Marketing Board in Germany is anxious that we should get into the Coal and Steel Community to counterbalance that type of position?

Mr. Blyton

The hon. Gentleman does not seem to be following my argument. My party stands for renationalisation of the steel industry. On the two decisions to which I have referred, I ask the question—because it is case law that is being made—how can we, if we get power, having transferred our sovereignty under these treaties to a high authority, possibly nationalise the steel industry?

I leave that with this comment to my hon. Friends who are pro-Common Marketeers. If we adopt the Treaty of Rome—and I shall deal with this in a moment—or the Coal and Steel Community Treaty, we may as well renounce Labour in the 'sixties because we will be handcuffed and hamstrung by the High Authority on the Continent and we will not be able to do anything.

Mr. K. Zilliacus (Manchester, Gorton)

In support of what my hon. Friend has said, has he seen the article in the Guardian of 29th May by John Dunkley analysing the reaction of the European steel industries to the prospect of Britain coming into the Common Market? The article concludes by saying that whereas the coal and steel High Authority will favour bigger mergers one thing that does seem to be ruled out is the renationalisation of the British steel industry by a future Labour Government. Coal is one thing: steel is another: and private enterprise in Europe is anxious to keep it that way. That confirms what my hon. Friend was saying.

Mr. Austen Albu (Edmonton)

That means absolutely nothing at all. It is absolute nonsense.

Mr. Blyton

I have quoted the decisions of the Court of Justice and on that I rest my case. I will not argue the point with hon. Gentlemen opposite because they believe that by going into the Common Market they will stop nationalisation.

I come now to the Treaty of Rome. This Treaty is based on the same institutions as the Coal and Steel Treaty. It has a High Authority, a common Assembly, a Council of Ministers and a Court of Justice. I do not propose to deal with every aspect of the Treaty of Rome. If I did so I should be here until 12 o'clock. I do, however, intend to deal with economic planning in relation to this Treaty.

My first point relates to the free movement of capital within the Treaty of Rome countries. The European market is not merely a device for the reduction of trade barriers between the participating countries and the erection of a common external tariff wall. It is much more than that. It provides for far-reaching measures of economic integration which would take from us essentail powers to maintain full employment when faced with a capitalist recession, and to provide for smooth economic expansion of the basis of the planned control of our resources.

Consider the free movement of traffic. The explicit aim of the Treaty of Rome is to remove restrictions on the free movement of capital between the participating countries. I may be told that these are permissive clauses which might enable the countries concerned to take protective measures if the movement of capital was likely to disturb their economies. But the application of these protective measures, which are limited, are to be supervised by the High Authority which stands above Governments.

The free movement of capital as envisaged in the Treaty of Rome is incompatible with real economic planning in the interests of working people. The fact is that for full employment and economic expansion it is essential to control the flow of capital. I believe that this is the necessary accompaniment to the extension of social ownership to key industries in this country. Therefore, the free movement of capital envisaged in the Treaty of Rome is, in my opinion, a negation of the policies of the trade union and labour movements for controlled and planned investment.

During the last election our party stated that to ensure full employment and economic growth the investment policies of the big businesses must be publicly controlled. In fighting that election we also stated that to check a slump there were measures which we as a Government could take, such as stimulating investment and lending capital by the State to finance particular projects. But it will not be possible to do this under the Treaty of Rome, because one of the aims of this Treaty is to prohibit State subsidies which distort or threaten to distort competition.

We have always argued in this House for a better Distribution of Industry Act than we have now. Our purpose is to steer capital resources to the areas where there is heavy unemployment and thus try to create new industries and new jobs. When we had power we gave various forms of inducement to industrialists to establish new industries in depressed areas and provision was made for State assistance towards the establishment of trading estates.

Our Act was better than the present one, although we had no powers of direction. What fools we would be to embrace this reactionary dogma of the free movement of capital referred to in the Treaty of Rome and stop advocating the planned distribution of industry and controlled investment.

Mr. Christopher Chataway (Lewis-ham, North)

As I understand it, there is nothing in the Treaty of Rome which prevents the planned distribution of industry. This is permitted by Article 93.

Mr. Blyton

I have said that there are permissive Clauses, but the decision to permit the movement of capital will not be in the hands of an elected Government. It will be in the hands of the High Authority. It is this Authority which will determine the distribution of industry and not the elected Government on the Front Bench opposite.

In 1956 the T.U.C. General Council issued a policy statement "Economic Association with Europe". That document stresses that the British Government should insist on reserving for itself whatever powers may be necessary to ensure full employment and the most efficient use of our economic resources. That is as true today as when it was written in 1956. We do not want to accept these handcuffs on our party when we get power, because the Government will be defeated in the next election, and therefore we want to watch where we are moving in regard to the antics of the Tory Government concerning the Common Market.

I have always taken the view that we do not want to erect more barriers in the world but to try to lessen them. Then, in our colonial policy, we have always pleaded for independence and we have always helped the economies of the countries within the British Commonwealth to the best of our ability. Here again, how can we do it if we have the free movement of capital? I listened to the figures of percentages of national product given to under-developed areas which were quoted by the hon. Member for Halifax, showing Germany with 93 and the Netherlands, the highest, with 2.6. Surely, if we compare our 1.6 with the Netherlands' 2.6 our figures are considerably better than those for the Netherlands, which the hon. Gentleman quoted as an illustration?

What of the Commonwealth, the primary products of which come to us tariff-free? The economies of the Commonwealth countries have been interwoven with ours for years. Under this proposal, we should have to put a tariff on their goods, and then, after that, we should say to Germany, France, Italy and the rest, "We have put a tariff on our colleagues of the Commonwealth, but you can all come in and bring your foodstuffs tariff-free."

What of the trade unions? They had better be careful about joining the Common Market. There is to 'be the "free-for-all" competition so beloved of the Liberal Party—laissez-faire. There will be a price war, as we had in the thirties, and we know where it led us. Many of these industries are competing with the same goods in this market, and I am sure that there will be a shook in store for those who live and work in some of our industries if they think that they will have a good time in the Common Market.

Mr. Arthur Holt (Bolton, West)

I have been listening carefully to all the hon. Gentleman's arguments. Would he say why it is, if these are his views, which I am sure they are, that they are not shared by the German and French Socialists, who are just as keen on the things which he has mentioned as he is? [HON. MEMBERS: "They are."] In their pronouncements, they have indicated that the Common Market is an excellent weapon for carrying out the plans they want.

Mr. Blyton

I am not prepared to argue the merits or demerits of the Socialists of Europe, but I can tell the hon. Gentleman that I am terrified of linking up with President de Gaulle and Dr. Adenauer. I am afraid of what is going to happen in Italy in ten years' time, and of what may happen in Germany, and in France, and I am not prepared to throw the Commonwealth overboard for this set-up. That is my answer to the hon. Gentleman.

I have had many interruptions, but I do not want to speak much longer. I regard the common external tariff of the Common Market as a threat to the under-developed countries of the world, just as I regard it as a threat to us. We are now seeing our Colonies getting independence, and we are not prepared to abandon them for Europe alone. Hon. Members may call me a Little Englander if they like, but these are my views, and to me the Commonwealth, while it is a great heritage from the past, is, I believe, the hope for the future, and has a vital part to play in improving East-West relations by helping to develop international co-operation.

If society is to survive it must be realised that the centres of influence shift and they may not always be tied to Europe. A new world in Asia and Africa is coming in the not-too-distant future to redress the balance of the old, and I believe that it should be our aim to give them help.

This is a matter of very grave importance to this country—

Mr. Edwin Wainwright (Dearne Valley)

Most important.

Mr. Blyton:

—and this Government, before they take this country into the Treaty of Rome, which is for ever— once one joins one cannot come out, according to this agreement—they ought to go to the country and let the country decide, because when they were elected they had no mandate at all for this.

8.26 p.m.

Mr. Peter Walker (Worcester)

I think that the hon. Member for Houghton-le-Spring (Mr. Blyton) will understand it when I say that whilst I share his view on the Common Market in general, the reason which he gave for his view, of its being a barrier to the extension of Socialism, if that be true, is to me about the only attractive feature I can find for joining the Common Market.

I think there have been two considerable changes of emphasis in the debate we have enjoyed today, compared with the debate last August. First, there has not been one speaker advocating our entry into the Common Market who has given the expansive and flattering picture of the potentialities of economic expansion which we had last August when this subject was debated. Nor has there been the same emphasis—alas—from the Front Bench on the safeguards for the Commonwealth of which we heard last August. It is on those two aspects of the debate that I should like to say a few words.

Firstly, as to economic expansion, we must recognise that Europe has gone through a decade of economic boom, primarily resulting from the capital investment boom in those countries, a period of tremendous economic revival after the war, with an immense amount of American investment, which in itself created boom conditions which attracted investment from other parts of the world. During that decade, quite obviously, the production and the economies of the Common Market countries expanded.

But let us learn a lesson from the Canadian picture. It was but a few years ago that all those economists who today support our entry into the Common Market for economic reasons were describing the beauties and excellencies of the Canadian market. They were talking about Canada in the same economic terms as economists speak about the Common Market today.

Canada enjoyed a capital investment boom similar to that of Europe. Then, as do all capital investment booms, it went into a period in which certain com- modities were suffering through overproduction. There are many indications today that the Common Market countries may well be entering a period when in many commodities they will be suffering from over-production. If we are not careful we shall not be part of the Common Market in the boom conditions like those of the fifties but in the more difficult period of the sixties.

One of the features of this debate has been the constant reference by those who support entry into the Common-Market to the Commonwealth as something rather out of date and economically in decline. I wish to draw the attention of the House to the basic facts of Commonwealth trade as opposed to the general impression that has been created that Commonwealth trade is in decline and of diminishing importance. The Leader of the Liberal Party made reference to the fact that the moment Australia has difficulties it puts up tariff barriers and the moment Canada has problems she puts up tariff" barriers against British trade. He was suggesting that the picture was a diminishing Commonwealth economy.

The right hon. Member for Bassetlaw (Mr. Bellenger) referred to the decline of Commonwealth trade in recent years, but what are the basic facts? A glance at the Trade and Navigation Returns shows that in the last three years when everyone has been given this impression of declining Commonwealth trade our exports to the Commonwealth have risen from £1,400 million to £1,450 million, not a decline but an increase. The fair thing to do is not to judge the trend of trade by figures for a year or a quarter. Taking the longer period—

Mr. Wainwright

Will the hon. Member say why the N.E.D.C. advocates a 4 per cent. increase when the increase he has mentioned is far less than that?

Mr. Walker

Those are two different things. One happens to refer to production and the other to exports. Let us examine the Commonwealth pattern of trade over the period of the decade in which Europe was enjoying boom conditions and the Commonwealth was suffering from the difficulties of low commodity prices and political uncertainties in certain spheres. Take the period from 1950 to 1960. It was good for Europe and bad for the Commonwealth, but what was the pattern of trade in that period? Our exports to the Common Market countries increased by £280 million, but our exports to the Commonwealth increased by £451 million.

Mr. Wainwright

What was the percentage?

Mr. Walker

The hon. Member may quote percentages if he wishes. On the suggestion about percentages we should join a common market with Mauritius where our exports went up by 500 per cent. There is a false and dishonest use of percentages in relation to this question. It is time to make clear to the British public that at the moment our exports to the Commonwealth are of the order of £1,400 million a year and those to the Common Market are £611 million a year.

What about the balance of trade, which is all-important? If we take last year's figures it is true that we had an adverse balance of trade in visible exports of something like £200 million with Commonwealth countries, but that was more than balanced by the favourable balance of invisible earnings of more than £230 million in that period. If we look at the Common Market position we see that last year we had an adverse balance of trade of something like £75 million in visible trade and with the non-sterling countries an adverse balance of invisible trade of something like £230 million.

What of the argument that we must go into the Common Market because the Commonwealth wants capital and only by going into the Common Market can we get a strong economy which can provide investment for the underdeveloped territories? We have the Chief Economic Adviser to "Neddy" saying that if we go into the Common Market it is likely that our adverse balance of trade will increase. Are we to invest our increased adverse balance of trade? If we examine the possibilities and look at the economic balance sheet we find that probably we will increase exports to the Common Market countries and we also find the possibility from a balance of trade point of view that we shall be importing less from Commonwealth countries.

Those are the advantages in the balance of trade problem, but what are the disadvantages? First, we shall be importing far more from the Common Market than ever before. Secondly, we shall certainly lose a substantial part of our exports to the Commonwealth. That is our major export market. It is all right for hon. Members eager to join the Common Market to point out that this is a declining feature, but it is so gigantic a feature of our whole economic position that if it goes into decline because of our policies in entering the Common Market there will be serious economic and social disturbance and unemployment in this country.

We are told that the possibilities of going into the Common Market are for some mystical reason not going to have that effect on Commonwealth trade. I say this in no spirit of hostility to the United States. I believe that our relationships with the United States and with the Common Market countries are of maximum importance in the context of the general struggle against Communism. Yet every time the Prime Minister returns from talking to President Kennedy and says with enthusiasm how President Kennedy is pleased—in spite of any adverse effects on the American economy—that we are going into the Common Market; while he is saying that in this country, all the American financial, business and economic experts are pointing out the great economic advantages to the United States of their capturing our Commonwealth markets.

What is the balance of all these arguments? Obviously we want a friendly and cordial relationship with our friends in the Common Market countries, but we want the right sense of proportion. We must see that in this problem our economy is more tied in and more connected with the Commonwealth than with any other economic group. That is why I reject the accusation that those of us who are Commonwealth-minded are out-dated. I believe that the Commonwealth offers the most imaginative, positive and progressive opportunities to the younger generation available to this country, far more rewarding in terms of service and economic expansion than those which are offered by the already developed markets of Europe.

Here is our main economic position. We should endeavour to get together with the Prime Ministers of Commonwealth countries to see what general Commonwealth attitude we can take both to the United States and to the Common Market. It was suggested by my right hon. Friend the Member for Birmingham, Hall Green (Mr. Aubrey Jones) that it would be a great thing for the Commonwealth countries to have consultations with the Common Market. I agree with him. The difference between my right hon. Friend and myself is that I consider that in those consultations we should be part of the Commonwealth and not part of the Common Market, for as part of the Commonwealth in such negotiations, talks and agreements we can obviously give weight to the Commonwealth point of view.

I conclude by asking the Government to answer what I consider are two basic questions which as yet are unanswered and which were avoided by my right hon. Friend the Lord Privy Seal. First, are the Government genuinely enthusiastic about going into a system of political federation in Europe? The Leader of the Liberal Party was quite correct in stating that as yet the Government have avoided facing the reality that much of Europe wants political federation and a European Parliament. If that is so, it would be a tragedy from the point of view of Europe, for this Government, if they do not wish to see such a federation, to join the Common Market and sabotage the movement towards federation. On the other hand, if the Government are enthusiastic for the cause of European federation, let my right hon. Friend state it perfectly clearly so that the country can understand that what is being offered to it is, over a period of years, joining a federation of Europe—not becoming an offshore island, but becoming an off-shore province of the European federation.

Secondly, do the Government intend to stick to their original pledge to safeguard the Commonwealth situation, and safeguard it permanently? Over the past 12 months we have seen a constant lessening of emphasis in assurances to the Commonwealth. It commenced with the original promise that we would safeguard the Commonwealth position. It then diminished to saying that we would safeguard its important interests. It then diminished to saying that we would safeguard its vital interests. It has now diminished to saying that we will safeguard its vital interests for a temporary period, provided that it does not upset our friends in the Common Market too much.

Mr. Chataway

Is not this absolute nonsense, because the initial guarantee was repeated today?

Mr. Walker

If my hon. Friend heard repeated today the guarantee that the rest of us heard 12 months ago, he is the exception. As to guarantees, the Government have already made terms about manufactured goods. At the end of 1970 the United Kingdom will be putting a common external tariff against Commonwealth imports and allowing free entry from the Common Market. That is the first indication of what future trends may be. I hope that I am wrong in my view about the indications.

I ask this as a final question. I ask my right hon. Friend when he winds up the debate to say quite clearly that he wants to obtain permanent safeguards for Commonwealth trade. If he answers these two questions satisfactorily—by saying, first, that he is opposed to political federation and will if necessary veto a move towards European federation and, secondly, that he will permanently safeguard the Commonwealth interests—I shall certainly be far happier than I am at the moment.

8.41 p.m.

Mr. Maurice Edelman (Coventry, North)

It has been extremely refreshing to listen to the hon. Member for Worcester (Mr. Walker), particularly as nowadays it is becoming more and more rare to hear a Tory talk in terms of the expanding Commonwealth. On the contrary, it would seem from some of the speeches made by Tories that they have accepted in a wholly defeatist spirit the idea that the Commonwealth must shrivel away. Listening to the hon. Member for Halifax (Mr. Maurice Macmillan), I could not help feeling when he offered strictures against the Commonwealth for occasionally taking measures of protection that he was the one suffering from a guilty conscience. rather like a husband who about to desert his wife and children accuses his wife of over-cooking the dinner. The charges which the hon. Member made were trivial. The charge that the Commonwealth from time to time has found it necessary to take certain measures to adjust its trade is of total unimportance compared with the tremendous amount of trade of mutual benefit, to which the hon. Member for Worcester properly referred.

Before I come to my main theme, I want to refer to the speech of my right hon. Friend the Member for Bassetlaw (Mr. Ballenger) who, in the course of his strictures against the Commonwealth, took exception to the fact that the Daily Express had promoted the advertisement of Lord Montgomery's views in opposition to the Common Market. I hold no brief for the Daily Express, but I am obliged to say that in terms of lobbies promoting special interests the European movement has assembled more money and resources than any lobby I have ever heard of. Indeed, looking at the list of sponsors, the list of entertainments, and the list of publications, it is interesting to see how the names of certain bankers keep recurring, as if they are interested in European unity only because of the prospect of the freer exchange of capital so that they themselves might derive a specific benefit from it.

We have heard today many references to European unity. I want briefly to touch on them, for two reasons. The first is that the Lord Privy Seal in his opening remarks understandably said that he would talk about negotiations and leave fundamentals to later speakers. It is necessary to talk about fundamentals, because most Members of Parliament know that talk to the ordinary man in the street reveals the fact that knowledge of what the Common Market is is conspicuous by its absence. He regards it as being a highly complex, technical problem, without recognising that what the Government are doing today is leading the nation into probably the most momentous decision in contemporary British history.

Like many other hon. Members who are present today, I happened to be a delegate to the Council of Europe when it was first formed in 1949. On that occasion I had the opportunity of listening to some of the debates on the basic themes which are now coming to fruition in the form of institutions. One of the words which were constantly in the mouths of delegates at the Council of Europe was the word "unity". At the time the Labour delegation was charged with dragging its feet on the question of unity. But nobody knew what it meant. Did it mean a federal Europe? Did it mean a united Europe, or did it simply mean an economic association, or a Europe in which there would be no barriers to the movement of men, materials and money? What European unity really meant was unspecified.

When we began to understand a little more what it might mean the Conservative delegation at Strasburg had to state exactly what it meant by its charge against the Labour delegation of dragging its feet. It was asked if it was in favour of a federal Europe. The answer was, "No". It was asked if it was in favour of what at that time was the concept of European unity as it is today—although then it had not been formulated—and once again the answer was "No". This was because the present Minister of Education and the present Prime Minister realised that to try to reconcile the idea of a Commonwealth in a united Europe, in the form in which the Strasburg Assembly wanted it, was like trying to square the circle.

Today, listening to the attempts to reconcile, by a tariff adjustment here and a quota adjustment there, the idea of a Commonwealth in the form of the European Economic Community as its present participants want it to be, is to hear exactly what one heard in 1949. I do not believe that it is possible to reconcile the existence of a Commonwealth in the form in which we know it with the prospects in the minds of those leading the Six today.

How did the Six come into being? If the House will bear with me, I will offer it a few sentences setting out the history of those days. It came into being because many people in the Assembly, including the whole British delegation—Conservatives and Socialists alike—were opposed to the federal idea. Only one person took a different view— the late R. W. G. Mackay, a fervent participant in the argument for federalism, who did a great deal to bring to life the great idea of the European Economic Community. On the whole, however, the delegations of both parties were opposed to the idea of European unity in the form put forward by those who today constitute the Six. As a result, there was a schism inside the Council. The Six broke away, and it was that break-away—the creation of the Little Europe—which was ultimately to lead to the Rome Treaty and the creation of the European Economic Community. I am sure that the Lord Privy Seal agrees that that is the history of the matter.

The hon. Member for Worcester very properly asked the Lord Privy Seal to say to what extent the United Kingdom will be committed. to the concept of federalism which is so dear to the hearts of those who today control the Six. Only the other day we saw how the members of M.R.P. who entered the Pompidou Government in France resigned en bloc because they did not believe that President de Gaulle's federal idea for Europe went sufficiently far along the road to the kind of federalism which they favoured. General de Gaulle, for whom my admiration is second to no one, will not live for ever. One day he will yield, in the natural course of events, to others Whose view of Europe and whose administration of the E.E.C. must certainly be in the direction of a federal Europe. Therefore, I ask the Lord Privy Seal to consider whether he is not setting this country on the rails to a federal Europe, which will ultimately be the goal at which we will arrive if we follow present courses.

Mr. John Harvey (Walthamstow, East)

Even if what the hon. Member says were vaguely true, does not he agree that a decision of that sort would be subject to a unanimous vote in the Council of Ministers—not to a qualified majority, but to a unanimous vote—and that therefore our own say and that of any of our E.F.T.A. friends who may come in with us would have a great deal of effect on the decision?

Mr. Edelman

Whatever the constitutional settlement might be, it is certain that once we are in we are inside the Community, and consequently all economic arrangements will ultimately produce political institutions—and those political institutions can be none other than federal institutions.

I need only refer to what happened in the nineteenth century in Germany, with the Zollverein Customs Union, which led to the Confederation of States and ultimately to the German Empire. That is the natural development. First there are the economic associations and institutions, but ultimately these give way to federal, political institutions.

There were other reasons why the Labour delegation at Strasbourg opposed the project which has resulted in the Common Market. My hon. Friend the Member for Houghton-le-Spring (Mr. Blyton), in his brilliant speech, very properly referred to the opposition which many of us felt about the laisser-faire passage of men and money throughout Europe in a way which will mean that Great Britain will certainly not be able to protect her economy in that respect. Indeed, when the Lord Privy Seal and the propagandists of the Common Market talk of the vast economic benefits which are to be obtained from our entry into the E.E.C. we must remember that the effect of our entry will be not merely to create a productive movement accumulating wealth for us in Europe. It will be a two-way movement. There will be a movement of products from Europe into Great Britain. Those products will be produced at costs which, in my opinion, will be substantially lower than the costs of production in Britain.

When we talk about the benefits which are likely to accrue to the motor industry—an industry with which I happen to have been closely associated for seventeen years—from our entry into the Community, I must confess that I am dubious. In the first place, the countries of Europe in building up their motor industries have had a number of advantages. Germany has had the great influx of refugees which has provided a labour force and cheap rates. Germany has also been able to re-equip her industry after the dismantling which took place at the end of the war. The result is that if we go into the Common Market we shall be competing on extremely unfavourable terms, and if we are not allowed to impose those tariffs which are, alter all, merely the adjustment necessary in order to do away with certain forms of, possibly, unfair or unfavourable competition, we shall be in serious difficulties.

I turn now to the counterpart question of the Commonwealth. Does anybody seriously believe that it is possible for the Lord Privy Seal, on behalf of the Government, to negotiate away so many of the preferences which the Commonwealth enjoys in trade with us and still retain the Commonwealth in the same form and with the same sympathies as it has possessed in the past? We all know that the Commonwealth today, having been transformed from an empire, is a Commonwealth which has two fundamental forms of cement. The first is the Crown, which is the sentimental link between the members of the Commonwealth. The other, clearly, is the economic and material benefit which the Commonwealth countries derive from their association with Great Britain. There is the material advantage which they receive from the fact that as associates with the mother country they are able to enjoy preferential benefits which focus and direct them towards Great Britain.

I am convinced that once these preferences are done away with, even if certain transitional benefits are negotiated, the Commonwealth will disintegrate. I cannot believe for one moment that if the cement of Commonwealth preferences is dug away by the process of negotiating with the Common Market in the form in which it has been taking place the structure of the Commonwealth will hold out. However important the symbol of the Crown may be, I do not believe that that alone is capable of uniting the very different peoples of the Commonwealth and binding them to the mother country.

I happen to believe—my hon. Friends do so, too—that the transformation of the empire into the Commonwealth has been one of the great progressive manifestations of the history of mankind. The way in which countries formerly dominated have turned with sympathy and respect to the mother country which gave them liberty is something which I am sure has been the admiration of peoples all over the world. Indeed, our example has been followed by France. There we see a mother country which has given liberty to countries which it formerly dominated.

But I am convinced that the forces which are tugging the countries of the Commonwealth away from association with Great Britain are very powerful. The United States is drawing Canada and Australia to herself. The Soviet Union is making great efforts to attract to herself what my right hon. Friend the Member for Bassetlaw unfortunately called the black countries of the Commonwealth. These activities are going on simultaneously. They are drawing the countries of the Commonwealth away from Great Britain.

Does anyone imagine that if there ceases to be any real, valid material link between the countries of the Commonwealth and Great Britain the association—which, after all, is one without a constitution; it is an association which functions by consent alone—can possibly hold together? What is the alternative that is offered? It is entry into an association with countries which may well, after all the propaganda which has been put out in respect of their so-called boom, find themselves in the next decade in serious economic difficulties.

If one looks at the nature of the progress which has been made within the Common Market countries, it is obvious that a great deal of it has been due to an influx of capital and other resources. It has been due to an influx of labour force from the refugees. It has been due to the Monnet Plan which was started as long ago as 1944 and re-equipped the whole of the French industry. It has been due to the aid which the Americans gave Italy. All these are factors of the greatest importance. I value them, and I believe they were worth while doing. But let us not delude ourselves and believe that there is something mystical about the Common Market which has somehow or other so elevated the spirit of the Common Market countries that they have made these staggering advances in production.

I now part company from the hon. Member for Worcester. The reason for the defeatism which has crept into the country and made the right hon. Gentleman go crawling to the countries of the Common Market to obtain favourable terms, is that during the last ten years the economy of Britain has stagnated. It is because while we should have preoccupied ourselves with revitalising Commonwealth trade we have allowed it to go by default. Our industrialists have been apathetic. They turned to the easy markets of the world. The result has been stagnation in production and trade.

Is the alternative to going into the Common Market merely to accept the status quo? Is it merely to accept the fact that we must sit passively while our economies dwindle? I do not believe that to be the case. I believe that it is possible under a dynamic Government —which the present Government certainly is not—for Britain so to revitalise her links with the Commonwealth that we shall really have the concept of the expanding Commonwealth which was once, I believe, a principle of the Conservative Party.

I think that in the age in which we live when electronics and space discoveries have opened great new vistas to mankind, where despite the fact that the countries of the Commonwealth are, very properly, industrialising themselves, we as the mother country should be leading them and giving them guidance to open up new prospects of trade and production and techniques which, after all, it should be our destiny to offer.

I do not believe that if we go into the Common Market our Commonwealth can survive. I believe that will be a disaster not only for Britain but for the whole world. I believe that if we go into the Common Market our fate will not be the stimulating force which some hon. Members very sincerely believe it might be. I believe that we shall merely become a small marginal State on the fringe of a great Continental federation. I can well believe that Dr. Adenauer and President de Gaulle smile when they say good-bye to our Prime Minister. After all, at the end of the war it was the representatives of those defeated countries which came together in order to form this so-called united Europe. Let us not forget that the concept of the United Europe was a concept of the defeated and the occupied. One of the reasons why Great Britain and the neutral countries stood aside was that we with the satisfaction of victory and the neutrals with the satisfaction of abstinence felt that we had the power and the authority to go our own way pursuing our own policies and our own courses.

But I believe that the prospect of a Britain without a Commonwealth, or with perhaps only the rump of a Commonwealth, is a very bleak one indeed. I believe it is a prospect of a Britain made powerless because the links of the European Economic Community may well prove to be bonds. I believe that we shall be powerless because we shall have been reduced to a "Little England" on the margin of a Continent, powerless because our world-wide allies will have drifted into new associations. I believe that we shall be powerless because whereas we once spoke as the leader of a great Commonwealth, inside the European Economic Community we shall merely have become a single unit.

I believe in European unity, but I do not believe that the way in which the Lord Privy Seal and the present Government have gone about it is the right way. I believe that there are other ways to European unity. There are many roads to Rome, but I believe that the Treaty of Rome is the wrong way to get there. I believe that the Treaty of Rome is merely a map showing the way to destruction. Because of that, I oppose the Common Market in its present form.

9.2 p.m.

Sir Alexander Spearman (Scarborough and Whitby)

The hon. Member for Coventry, North (Mr. Edelman) and I agree in our wish to help the Commonwealth. One of the many things on which we disagree is how to help it. I believe that if we do not join we shall be able to help it much less than we do today, and that if we do join it we shall be able to help it much more than we do today.

The Leader of the Opposition attempted in his speech today to minimise the economic advantages or disadvantages of going in. Perhaps he had to take that line to justify his position of being much more neutral in this matter than many of his hon. Friends. I thought that he went rather far in saying that no economist of any repute had advocated going in for its great economic advantages. Sir Geoffrey Crowther, Lord Robbins, Lord Plowden and Lord Franks have all put on record their belief that there are enormous economic advantages in going in and disasters in staying out. They are all men of very wide economic experience in Government service.

The hon. Member for Coventry, North like others on both sides of the House who oppose our entry into the Common Market, appeared to assume that things will remain very much as they are if we do not enter the Market, and that we shall 'be just as well off and just as able to help the Commonwealth as we are today. I believe that that is entirely wrong, and I will try to give my reasons why I believe that if we do not enter, our experience in the 1960s and 1970s will be entirely different from our experience in the 1950s.

I believe that it will be ever-increasingly difficult to find an adequate market for our industrial exports. I do not feel at all confident that we shall be able to retain our present position in the world or indeed in the Commonwealth. If we are to retain that position, it is clear that there are at least four things which we must do. First, we must maintain the stability of sterling. I think that the whole House agrees about that. Secondly, we must take our full share in the defence of the West. Thirdly, we must make our proper contribution towards the development of the poorer areas. Fourthly, and in particular, we have to be able to buy the exports of the Commonwealth and to provide the Commonwealth with capital. This will be possible only if we have a far bigger surplus on our balance of payments than we have had since the war. That means that we must achieve a massive increase in our exports.

I want to examine what are the chances of achieving that increase in the Commonwealth. Recent history in respect of the old Commonwealth-Canada, Australia and New Zealand—is not encouraging. The prospects are not good. Their imports are rising much more slowly than those elsewhere. In the last few years world exports to Western Europe and the United States have more than doubled, whereas exports to the sterling area and Canada have risen by less than half. Between 1954 and 1961, United Kingdom exports to Western Europe rose by 60 per cent. and to the Sterling area and Canada by 16 per cent. Today the Commonwealth countries—and we can all understand it —are determined to industrialise so as to raise their standard of living by creating industries; and those infant industries require protection—hence their tariffs and hence the erosion of our preferences. There is no indication whatever that they are prepared to throw their industries open to competition from this country. Canada is buying more and more from the United States and Australia is buying more and more from Japan, with the result that they are buying a smaller proportion from this country. That is why Canada refused the suggestion of free trade between us and them at the Montreal conference.

If we take the new Commonwealth, the African and Asian countries, I accept that there are immense prospects in the distant future of enormous trade with them, but it will be impossible for them to buy and pay for vast imports from us or anyone else until there has been a huge injection of capital to build up their factories and equipment—and that is a long way off.

Exports from this country have been changing their direction. For the first four months of this year, 31.6 per cent. of our exports went to the Commonwealth and 38.6 per cent. went to Western Europe. If we are out of the Common Market when the full rigour of the change in tariffs takes place, can we hope to keep our place in that expanding market? How can we hope that our manufacturers will be able to jump those tariffs when their competitors will be able to send in their goods free?

First, there must be a great risk that if we are out of the Common Market when they have abolished the tariffs between themselves, in order to make the necessary cut in prices, we shall either have to devalue or have such a violent deflation here as immensely to depress the standard of living. Secondly, our rivals in the Common Market, as they then would be, could reduce their costs by mass-production methods. Thirdly, there is no doubt that an enormous amount of investment will be diverted away from this country into the Common Market, with a consequent effect on the standard of living and employment in this country.

I realise that our entry into the Common Market does not guarantee that we shall get these exports, but it gives us an opportunity to compete on level terms, and it means that for the first time we shall have access to a mass market. There are many industries in this country for which the home market alone will not support units of the most economic size. Moreover, spreading research expenditure over a much wider volume of sales reduces unit costs, so that if we enter the community and have this mass market I believe that it will make a big contribution towards greater growth in the economy, because it will be possible to extend research. We should remember that the United States is the richest country in the world, not because she has greater resources or greater ingenuity but because she has a huge home market. But the markets of Western Europe and this country together would be far bigger than that of the United States.

If only we can increase our exports, we can be far more valuable to the Commonwealth whether we are in the Market or not. But if we cannot get those exports, inevitably we shall have to buy less and inevitably we shall be able to supply the Commonwealth with less capital. In those circumstances, we shall not get much gratitude from, or make much closer links with, the Commonwealth for having stayed out of the Common Market.

Sometimes I think that hon. Members who oppose our entry on the grounds of the Commonwealth are too concerned with the proportion of our imports from the Commonwealth. It is not that that matters but how much they sell. To take an extreme case supposing that 100 per cent. of our imports come from the Commonwealth I am sure that we would help the Commonwealth much less because we would be so much poorer. It is better for the Commonwealth to have one slice of a big cake than the whole of a minute one.

If the economic reasons for going in seem to me to be very strong, the political reasons are overwhelming. I believe that the origin of the Common Market was not economic but political. I quote from The Times of 3rd March a speech by the French Foreign Secretary: Our objective is first and essentially political … He added: Western Europe, united and solidly allied to the United States, will become one of the essential elements of the free world: with the Americans, it will be the guarantee of survival. I believe that the formation of the Common Market was the realisation by the Six—and this was put very clearly by my right hon. Friend the Member for Flint, West (Mr. Birch) in his admirable speech last August—that their quarrels, which had divided Europe so often in the past and led to so many wars, made no sense today. They knew that today there was nothing to gain but everything to lose by war, nothing to gain because none of them could have any hope of dominating Europe—at least, I hope that that is true—and everything to lose because now war is totally destructive. Therefore, they decided so to interweave their economies that war between them would be impossible. That is an ideal which we ought most enthusiastically to support.

To me, the dominating question today which must be paramount above everything else is how we are to defend our free way of life from the threat of Communist tyranny and how we are to keep the peace. Economic barriers must lead to political divisions and then we should be far more vulnerable to the Communist threat. If Western Europe were politically and economically united, it would be not only a richer but, far more important, a far safer place to live in; certainly all the Kremlin sympathisers and Kremlin dupes seam to think that in their opposition to the uniting of the West.

We have to face the fact that we cannot insulate ourselves from Europe. We have tried often enough in the past to keep out, but whenever trouble has come, we have been in it. Why not make every conceivable contribution now to preventing that trouble from occurring? If anyone has doubts of the wisdom of the leadership of the Common Market countries, that seems the greater reason why we should be taking part in its councils and doing all we can to shape policy.

Walter Lippmann put this very well when he wrote of the British entry into the Common Market in these words: But I count on her great political experience, wisdom and her tradition of moderation —and her world-wide interest—to be a very enlightening Power in Europe which otherwise might tend to become parochial. Powerful but parochial. Powerful it is bound to be. It is our job to see that it is not parochial, and that is primarily how we can help the Commonwealth.

We have been a great nation for a very long time. Perhaps that has been due to our sterling qualities, but I suggest that it may be due to a rather more humdrum quality—our ability to adapt ourselves to changing circumstances, and all history shows that we have done that. Circumstances have changed a great deal. We are no longer richer than other countries. Let us face the fact that we are no longer able to defend ourselves by ourselves. In this world of three giants, America, Western Europe and Russia, we are not big enough to exert the influence which we used to have, and it is mere pretence to think that we are.

What are we to do? Shall we go to the United States and try to form a link with it, going as a poor relation? It may be we shall have to do that if we do not go into the Common Market. But here we have the opportunity of becoming a powerful partner of a powerful group. I profoundly hope that these negotiations succeed. I pay great tribute to my right hon. Friend for his skill and his determination, and I wish him all success.

9.18 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames)

It is natural that attention in the debate should have been concentrated on the broad and great issues which concern us, on the Commonwealth connection and on the relationship between this country and Europe and on the future role of Britain in world affairs. But the outcome of these negotiations will turn as much as on anything else on the question of agriculture and food from the Commonwealth and from our own land.

My right hon. Friend the Secretary of State for Commonwealth Relations will be talking tomorrow about the Commonwealth aspect of these matters. Anyone who has studied the arrangements hitherto reached by the Six for a common agricultural policy will appreciate their considerable complications, and it might be of help if I say something in the middle of the debate on these arrangements, how they would affect our home agriculture, the extent of, and the reasons for, the adaptations to these policies and the extensions of them which my right hon. Friend the Lord Privy Seal is putting to the Six in his negotiations.

We have to start from the proposition that the system of agricultural protection through deficiency payments which we have is not one which the Six would themselves be ready to adopt. It has served us well, with only 4 per cent. of our population engaged in agriculture and importing a high proportion of our foodstuffs. But even here in this country the pressures are growing on this system as the level of food supplies on the free market increases. Such a system of agricultural support would not be acceptable to the Community with about 20 per cant. of its population involved in agriculture.

The Community's system of support is based on management of the home market in such a way as to provide the farmer with his return from the market itself. From the farmer's point of view, this is in itself not a cause for worry, for what matters to him is the return that he gets for his products rather than the source from which the payment comes. Under the Community's system what is also of the greatest importance to him is that the market should be managed in such a way that he can expect to obtain fair and proper prices for his produce.

It would only be possible to bring about the changeover from our system to that of the Community gradually, for as we raise market prices here at home to fit in with the Community's system so that producers get an increasing part of their return as the years go on from the market, as opposed to obtaining it from deficiency payments, so will retail prices have to rise. This will be accompanied by reductions to the taxpayer in the deficiency payments bill, but—and this point has been made more than once in the debate—if consumption is not to be affected the price rises must be as gradual as possible and over a long period. It is this aspect of the matter, together with the question of the time which we shall need to make a gradual and orderly transition from our agricultural system to theirs, that was in our minds when we sought from the Six a long transitional period.

The timetable which the Six have set themselves for the commodities on which they have already made regulations involves reaching the full Common Market stage by 1970. For certain other commodities, notably beef and veal, still in the stage of proposals by Commission but not yet having gone before the Council of Ministers, there are even earlier dates.

We do not seek to change the timetable for the Six but to get some greater latitude where this is essential to meet our special problems both in regard to the considerable extent of the change which we will have to bring about in our agricultural system of support, and also with regard to the considerable extra increase of prices which will occur on our market us opposed to the markets of the European countries whose systems are not all that different from that which the Community is proposing in this respect.

What of the agricultural policies of the Six within this system? So far they have not evolved a full agricultural policy in our sense of the term. What they have up to the moment is a series of arrangements for different commodities, some agreed upon, and others in the proposal stage. It is a series of decisions or proposals for specific commodities. It is not a full agricultural policy in our sense of the term.

It is our case that some of the commodity arrangements will need to be adapted to suit the changed conditions of an enlarged Community. But, more important still, we believe that these series of arrangements need to be pulled together within a comprehensive agricultural policy, and it is on these two points—individual commodity arrangements and the concept of a comprehen- sive agricultural policy—that l wish to say something.

Firstly, the different commodity arrangements. The cereals arrangements provide for maintaining the internal price of cereals within the Community market at target levels which have yet to be determined, and insulating those target prices from movements in world market prices by means of a system of variable levies on imports.

The levies will be broadly equal to the difference between the world market price of the cereal in question and the corresponding target price within the Community. In addition, there will be an intervention price fixed at between 5 and 10 per cent. below the target price, and this is the price at which the intervention authority within the Community—which will be a cereals office as part of the Community organisation—will be required to buy any wheat, barley, or rye, of the required quality offered by growers at this intervention price. This is to ensure that the market price does not fall below the intervention price. During the transitional period a preferential rate of levy will apply to trade among Community countries, but thereafter there will be common prices within the Community.

Generally speaking, we believe that this machinery has within it the means of preserving a balance between producer interests and the Community's interest as a major importer. Here I take up the point made by the Leader of the Opposition who said that this was taking protection to an almost absurd degree with all these arrangements of target prices, levies, intervention prices, and so on. The point I would put to him is that it is not something which is illiberal of itself. The system of ensuring that a farmer gets his return from a market is not necessarily any more liberal or illiberal than is the system of guaranteed prices.

What will determine the amount of any particular cereal which is grown within the Community, and, therefore, the amount which the Community requires to import from outside, is the price at which the target price is set. It is the price policies they pursue which will determine it and not the system.

Where the levies are concerned, I think one must differentiate between the levy system, which is a system devised to ensure that the price within the Community is the price which is desired, on the one hand, and what happens to the levy, on the other, and it was the latter to which the right hon. Gentleman referred.

What we have to put to the Six is that it must be right that the distribution of this levy within the Community, is fair as between the different countries. The Six ran into trouble when discussing proposals put up by the Commission on the use of the levy, but they have decided on what is to be done for two, or at the most three, years ahead, and it is open, after that. My right hon. Friend will be putting to the Six that the way in which these levies are used, and the contributions made to the central Community funds out of the levy by the different countries, should be in a fair proportion as between countries.

Mr. Gaitskell

Is it not the case that, because we shall be much the largest country within the Common Market—if we went into it—we should also be by far the biggest contributors to this levy? What exactly is proposed? Is it that some of this should come back to us, or is it that what we pay would in some way come back? What is fair, in the right hon. Gentleman's mind? For instance, would it be fair if a large part of what we paid nevertheless went to European agriculture?

Mr. Soames

This is very much like the situation with which Germany was faced within the existing Community. Germany had the same difficulty, but they found a way to deal with it. The fact that we are a large importer means that we will be raising large levies. It means that what we have to ensure is that the proportion of these levies which we have to pay to the Community fund is fair as between this country and those importing less in terms of quantities. But the levy is only part of the Community funds, which also come from budgetary and Exchequer contributions, and these have to be taken into account together.

As the Community moves over to a common price, it will mean some adjustments in cereal price levels in all countries' markets, but, so far as producer prices are concerned, although the level of future prices in the Common Market stage has not yet been decided, it seems likely, from the evidence so far before us, that our growers could expect to get considerably more for the wheat and something more for the barley than they get under the present guaranteed prices.

Mr. Turton

Will my right hon. Friend clear up this point, which is very important? In the Common Market agricultural policy, is it not laid down that the size of the budgetary contribution and the amount of the levy paid over after the initial period depends on the quantity of food which a particular country imports?

Mr. Soames

No, Sir. This was in the original proposal, but what has been decided in the Council of Ministers when they examined this is that they should fix a proportion for two or three years' ahead, and after that, it is open for decision by the Council of Ministers as to what the proportion should be as between the countries. It will not be the same, necessarily, as was originally proposed by the Commission.

Mr. Gaitskell

Was that decision taken by a qualified majority vote?

Mr. Soames

No. It will be the figure within the next three years, whatever is ruling at the time.

Mr. Gaitskell

Was the decision taken by a qualified majority?

Mr. Soames

I should require notice of that.

Of course, it would not be in the interests of either our consumers or our livestock producers or of our Commonwealth suppliers to see the prices of cereals too high, but whatever the price level may be, because we have had hitherto a free market with deficiency payments, there is bound to be a large upward movement in market prices—greater than applies to other countries—and we would need time for the levy system to take over from that deficiency payment, so that the consequent rise in the price of bread and animal feeding-stuffs is not too steep.

In the same way as with cereals, a regulation approved by the Council of Ministers for pigmeat is due to come Into effect on 1st July this year. During the transitional period, trade between member countries is to be regulated by means of a system of gradually reducing levies.

After the transitional period there will, of course, be no barrier to trade within the Community, but trade with other countries will be regulated by levies and also a form of minimum import prices. The present regulation was drafted by the Six to meet the needs of the Community, as it is, but if the United Kingdom and Denmark enter the Community, then the Community will include all the major importers and exporters of pigmeat, and this will create a different situation. Denmark is one of the major producers, and we ourselves are big producers and importers, and if we came in this would require, as we see it, a fresh look at the regulations, in order to fit them for the purpose of an enlarged Community where there will be few imports and also negligible outlets for any surpluses.

Mr. W. Baxter

I should like some clarification of this. The right hon. Gentleman said that there would be a central buying authority for wheat and barley. We in Scotland depend a great deal on the production of oats. What are the right hon. Gentleman's proposals for that?

Mr. Soames

The proposals for oats at the moment within the Six are that, as the prices of wheat and barley and rye are all to be controlled by means of the levy and target prices and intervention prices, oats, of which they are, of course, comparatively small consumers, will be controlled by the normal pull of the market, according to the prices of other cereals. This is the viewpoint of the Six as at present. Our view is that, if this should prove sufficient to ensure that the market for oats is at a reasonably stable level, as the Six think it will be, that will fit our bill; but if it is not, then we have got to ensure that some type of arrangements are made for oats, if it be necessary.

The pigmeat situation will be changed very considerably by the entry of ourselves and Denmark into the Community and will require, as I was saying, some modifications and adaptations in what was drawn up for the Community of the Six.

The story is much the same, indeed, for eggs, since this is another commodity of which the Six alone are considerable importers, whereas an enlarged Community, including ourselves and Denmark, would be nearly self-sufficient from the start. So this, again, will need, we believe, a fresh look. From our point of view there will certainly be much stricter control than at present over imports of eggs into this country from countries outside the Community.

The Commission in Brussels has recently put forward draft regulations for dairy products. The proposals are not yet complete and they have not yet been agreed by the Six, but they envisage for milk a target price at the farm gate coupled with threshold prices for milk products entering at the frontier—and intervention prices on the Community market for butter.

The market for manufacturing milk is, of course, of much greater relative importance on the Continent than here where a much higher proportion of milk goes for liquid consumption at the more profitable levels. Roughly speaking, 70 per cent. to 75 per cent. of our milk goes for liquid consumption, whereas about 70 per cent. of the Continental milk production goes for manufacture. What we have to agree with the Six is how to reconcile these interests of the liquid market and the manufacturing market together with the interests of our Commonwealth suppliers, especially New Zealand.

Our negotiations are taking place at a time when the general surplus of butter in the Western World has forced us to quota imports to this country. If we joined the Community we should have the further problem of harmonising the price of butter here with the price in the Six. This process of adjustment must be very gradual if we are to avoid a pronounced switch away from butter consumption and therefore smaller outlets for the Commonwealth in this market.

So far as concerns our own affairs, a key feature will be the arrangements for the liquid milk market and on this the Commission has yet to put forward its proposal. We believe that there is a lesson to be learned for the Community from the highly successful activities of the Milk Marketing Board and the distributive trades in recent years in cultivating the liquid milk market at profitable price levels. It must be in the interests of producers, not only in this country, to encourage increasing consumption especially of liquid milk. These are the thoughts which will guide us in our talks with the Six on this section acknowledged to be particularly difficult.

For beef, too, the Commission has recently introduced draft regulations—

Mr. John Morris (Aberavon)

Before the right hon. Gentleman leaves the question of milk, will he tell the House, having regard to the decreasing profitability of milk in the last few years, what dangers there are of liquid milk being imported from the Continent if we enter the Common Market?

Mr. Soames

There would be a considerable extra haulage cost if it were to come in. To get his milk distributed in any of the big conurbations here would cost the producer in, say, Holland or Denmark infinitely more than it would cost our home producers to do the same. We have in this country an organisation of producers and distributors which is very closely knit and efficiently organised. I should not expect the prospects to be high for what the hon. Member has suggested.

For beef, too, the Commission has recently issued a draft regulations for consideration—

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

Has the right hon. Gentleman finished with butter? I am not quite clear what the relationship is between New Zealand butter and Danish butter and how it is reconciled with the switch which might come to margarine.

Mr. Soames

We have, of course, very much in our minds the problem of the increase over the years in our price of butter which will be entailed in moving over to a harmonised price in the Community, whatever that price may be. It is in our interests that it should be not too high a price compared with what it is now in some countries of Europe. It should be a gradual change over a long enough period so that the move upwards in prices is not likely to detract from the consumption levels of butter to which we have been accustomed in this country.

The price of butter has moved considerably in the past years at home and we have seen how that has affected consumption, but it has been notable that when it has moved gradually the effect on consumption has been considerably less than when the movement has been rapid. This is a mast important feature in the harmonisation of our arrangements with those of the Six. Of course access far New Zealand butter into this country, to which the right hon. Member has referred, is a vital point in our negotiations with them.

For beef the Commission has issued draft regulations for consideration by the Council of Ministers. Imports will be regulated by means of the common external tariff, levies, and by import licensing of frozen beef and other beef products. Their objectives include maintaining the output of beef and veal, from within the Community supporting farm income and helping to reduce pressure in the dairy sector.

Since Community prices are at present considerably well above our market prices here it may well be that the Community guide price they intend to set for beef would be at a satisfactory level for our producers. But even granted that the rise in retail prices would be smaller than the rise in market or wholesale prices, for the sake of the consumer we should need to bring about this rise—as in the case of butter—over a long period of time. We also want to be sure that the proposed mechanisms will be adequate to maintain producers' returns within reasonable tolerances at the level of the guide price.

Where mutton and lamb is concerned there are virtually no arrangements made yet, except for a 20 per cent. tariff. That is understandable as it is a commodity Which has little interest for the Six. It is essentially a United Kingdom and Commonwealth problem. We believe that it should be possible to devise arrangements which could give reasonable protection for producers here and in the Commonwealth and at the same time satisfy the Six that the price level for mutton and lamb will not be allowed to undermine the price level of other meats of primary concern to them.

Our horticulture has been supported through tariffs or other restrictions on imports rather than through guaranteed prices and deficiency payments. It comes into a special category and a separate working party in Brussels is examining our problems, which are considerable.

The decision adopted by the Community for fruit and vegetables has three main features—the compulsory grading of all produce sold; the abolition by the end of 1965 of quantitative restrictions on mast imports from other member countries; and the progressive reduction and abolition by the end of 1969 of the tariff against other member countries, coupled with the imposition of a common tariff on imports from third countries.

The timetable that the Community has adopted for the application of grading standards and for the removal of tariffs and import restrictions may be suitable for the present member countries, which have already had about five years to prepare themselves for this. But it is certainly not suitable for us. We must ensure that our industry is given sufficient time to adjust itself and that we can help the industry to make the best use of that time by equipping itself to meet the changed circumstances. In a word, we have put to the Six that the transition from our present horticultural policies to a Common Market regime must be carried out over a long period of time and in such a way as to enable the efficient grower in this country to continue to make a satisfactory living.

Mr. Frederick Peart (Workington)

How long?

Mr. Soames

Considerably longer than they themselves will have. It is a complicated question. It is not a question of a given period of time during which there is to be a particular occurrence. It is a question of a series of events drawn out over a period of years. What matters is the rate at which the tariff has to be reduced over the years.

Arrangements for individual commodities, important as they are, are only part of the story of an agricultural policy. The enlarged Community will be such a formidable agricultural trading bloc that it will need to strike a fine balance between its responsibilities towards its own agricultural com- munity, on the one hand, and its responsibilities as a major importer of foodstuffs, with all that that means in terms of world trade, on the other. We think that these individual commodity arrangements must be drawn together into a co-ordinated and comprehensive policy based on the objectives set out in the Treaty of Rome.

To achieve this, we are persuaded that the Community will need a system of annual reviews in order to look, not only at the trends of production and returns for individual commodities, but at the economic conditions and prospects of agriculture as a whole, its relationship to the whole economy, and how the pricing policies which have been pursued in the past have affected the levels of production within the Community, and also the trade in foodstuffs with the outside world

We see annual reviews working in the following way. They would be carried out for each member country based on an agreed framework of criteria and statistics. These reviews, together with any comments which national Governments might wish to make upon them, would be forwarded to the Commission, which would be responsible for collating them into a Community review. It would be as a result of this review, which would take into account the internal and external effects of the pricing policies and other arrangements of the past year, that the Council of Ministers would take decisions which would become effective in the year ahead. An annual review is not an end in itself. To be effective, the regulations for the different commodities must enable the Council of Ministers to influence prices and production levels and ensure that within reasonable tolerances producers can achieve the prices which are set.

Without these means we do not see how the Community could implement the objectives in the Treaty of Rome, particularly those Articles which are designed to safeguard the standard of living of the agricultural industries in the member countries.

We are making proposals on the length of the transitional period. We are making proposals on individual commodities and on the annual review. These proposals are designed to add up to a constructive and responsible agricultural policy in the interests of the Community as a whole. We accept that it must be based on the management of markets. We believe that the concept inherent in our system of agricultural policy, namely of it being an agricultural policy as an entity in itself, to be looked at in the round through the medium of an annual review and all that flows from it, should be embodied in a Community agricultural policy. We must not forget that such a policy must be effective against a background of growing production of food in the Western world as a whole, and a considerable agricultural potential for greater production both in Europe and throughout the Western world.

This will require liberal price policies within the Community, and will also call for a careful balance between the Community's external responsibilities and its declared objectives for agriculture. We attach great importance to seeing that the greater measure of competition inherent in the common policy leads to a levelling up of the standard of living in agriculture, which indeed is written into the Rome Treaty. The fact is that a Community of 250 million people, including within it the greatest single commercial importer of food in the world, will have to have a highly responsible agricultural policy to balance the interests of the trade between this great Community and the outside world—with all that it could mean and all the effect it could have upon third countries—on the one hand with, on the other, its responsibilities towards its agricultural communities. The fact that such a delicate balance will have to be drawn means that it must be a total, comprehensive and pretty sophisticated agricultural policy as a whole, by means of which influence can be brought to bear both upon pricing policies and also upon levels of production.

I know that voices on the Continent have said that what we are aiming at is to bring about a greater degree of assurance for agriculture. What we are really trying to do is to put to them the sort of policy which we believe is the right one for the whole Community. We are looking at the question through those eyes and from that point of view. We believe that the sort of policy we have put forward will be needed by the enlarged Community if it is to follow the way of responsibility in its agricultural affairs.

Sir Harry Legge-Bourke (Isle of Ely)

As agricultural progress has been so slow among the Six, and in view of the enormous complexity of what is yet to be done, can we have an assurance that if an agricultural policy has not been arrived at by the time we have the Prime Ministers' Conference the Prime Ministers of the Commonwealth will not be asked to agree blindly to our going into the Six?

Mr. Soames

There are two aspects to this matter. There is the effect of the agricultural policies on the levels of imports into this country and the Community from the Commonwealth, and also the effect of the agricultural policies upon our home industry. On both these points assurances have been given many times by my right hon. Friends, including the Prime Minister. We have said that we could not suggest to the House that negotiations should be concluded unless we can see from both points of view, that satisfactory arrangements are made.

Mr. Peart

The Minister has said that this a sophisticated policy. When the details are worked out, shall we be presented with them? There is a lot of uncertainty in the matter. Are we going to decide to go in when the details are presented? The Minister has been very vague. He has given merely vague generalisations about the European set-up.

Mr. Soames

The hon. Member knows well that they have only got through a handful of commodities in the arrangements which they have already decided upon themselves. Others will be resolved in the course of the next few months—

It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.