HL Deb 01 August 1962 vol 243 cc259-86

2.54 p.m.

VISCOUNT ALEXANDER of HILLS-BOROUGH rose to call attention to the current negotiations with the European Economic Community; and to move for Papers. The noble Viscount said: My Lords, I beg to move the Motion which stands in my name upon the Order Paper. There was a suggestion the other day that we might, perhaps, in the existing circumstances of negotiations concerning the Common Market, postpone this debate. I felt at the time, and I feel now, that this would have been very inadvisable. Your Lordships' House has not had the opportunity which has already been taken by the other place of discussing this matter at any substantial length. It is, however, of such importance that I feel in my heart, as I look back over my Parliamentary experience, that in peace time we have had no more critical a decision to take since Munich, in 1938.

We older people are sometimes charged with always looking backwards and not forwards. Sometimes we get our inspiration for stating what we really think from the events of the past. After the Munich decision was over, and we had that two-day debate, in which Mr. Churchill (as he then was) spoke so forthrightly, I had the task of winding up the debate, and I made this forecast: that, as a result of the decision taken, we were being driven into war, and that soon after we were in it we should stand alone. Therefore, when we are to take the kind of decisions that we shall be asked to take when the Government have finished their negotiations, and if it is (as is now being suggested) that the Commonwealth question is the greatest problem of all in the negotiations, I think it is as well to remember that when we did stand alone we had the most remarkable and spontaneous support from the countries of the Commonwealth; and without that support we could not have got through those first eighteen months.

The other thing that I should like to say is this. On such occasions, very often, Party loyalties are strained. They were strained then, in 1938. There were those Who wanted to be completely pacifist; there were those who wanted to negotiate for peace in any way, in any circumstances; there were those who wanted to prepare for what they considered was certain to be an armed conflict. There were great strains on Party loyalties—and there are in this case. I have to speak as the Leader of the Labour Opposition in this House. I have seen many of the strains on Party loyalties in my own Party: but neither are the Government without their strains. Apparently, the only people who ate actually united on the question of the Common Market are the Liberal Party, so far as I can tell.

The fairest thing I can do, therefore, at the opening, is, I think, to say that I heartily approve of the decision of the leaders of the Labour Party not to decide for or against until further information is available. In spite of the leading articles in the Daily Herald this morning, I believe that that decision was right, although it was quite contrary to what the Daily Herald wanted at the time. I think also that the broadcast which was made by Mr. Gaitskell on May 8 set forth quite conclusively what were the essentials that we should have to secure from the negotiations which, of course, were certain to take place as a result of the decision of Parliament in July, 1961. In those circumstances, we laid down, through the Party, the essentials.

On that occasion, Mr. Gaitskell said one or two very important things. He dealt first with the economic possibilities arising out of the negotiations. From the title of the Community, the European Economic Community, you would think at first sight that this was just a political conference set up by agreement, a permanent sort of conference, for economic purposes. You might well be misled if you thought that and that alone, as I shall hope to show later on. But the economic position has been heavily canvassed in both directions by different groups of economists.

I must say that in my pretty long Parliamentary life I have usually had a fair suspicion of economists—not about their cleverness in memorising and applying statistics; but when they come down to political dogmas then I usually distrust them very much. However, what Mr. Gaitskell said in that broadcast was this: that with all the close friends he had among economists (he being an economist himself) of whose views he had taken account, the average of the whole lot was that the economic effects of going into the Common Market might be regarded as fifty-fifty: we might lose some trade with the Commonwealth; we might gain a bit by going into the Economic Community: or vice versa. So that all the drive about the enormous economic gains that might be expected is as yet quite ephemeral. Whichever way our country goes, of course, we shall all hope and wish for the greatest blessing possible in the circumstances, and we hope that it will inure to our advantage. But that is not quite sufficient for me, as I shall show later on.

Then Mr. Gaitskell went on to say that we can lay down what, in the view of Labour, are the essential conditions which we think ought to be met before we go in; and he said, to be fair, that the Government also have laid down certain conditions. There is no doubt that going into the Common Market will mean a lot of changes for agriculture, and we could not see our entering the Economic Community to the ruin of British agriculture. We have not yet very much hope to build upon, so far as we are given information, for the adequate protection of agriculture. Mr. Gaitskell then laid down our commitments to our Scandinavian friends and other countries in E.F.T.A. He said, "We are pledged not to go in unless, in effect, they are satisfied too ". Then he went on to deal, pretty briefly, with foreign policy. So far as the actual terms of the Rome Treaty are concerned, he felt that, whilst that was not likely seriously to affect the independence of this country in dealing with its foreign policy, nevertheless we must be sure about it. We should not go in unless we are free to plan our economy for the benefit, as we see it, of the United Kingdom. You might very well be affected in your overseas lookout by decisions which some people consider could, and can, and already have been, made—decisions of the Commission or the Council or the High Court of the Common Market.

This brought Mr. Gaitskell to the final condition, which in his broadcast he stressed was perhaps the nub of the whole question; that is, the question of the position of the Commonwealth. He said: "We emphasise the Commonwealth." Why do we care about it in the first place? Remember that some of the Commonwealth countries, Australia, Canada and New Zealand, are very British indeed, and they remain British. I had an airmail letter from a cousin of mine in Melbourne, who is deputy headmaster of a very large public school, and in the course of his letter he said: We have had many additions to our population in the last fifteen years, but it is astounding how they are assimilated and what good Australians they become. So whilst we have been adding at the same time British settlers and populations, taking the two factors together I do not see any great change.

Canada is actually our active partner in the North Atlantic Treaty Organisation. It has been ready at all times from the moment I first had discussions with the Canadian Minister of Defence, at the end of 1947 and the beginning of 1948, long before there was any wide extension of the NATO organisation in Europe as a whole, to share with us our liabilities, our growing responsibilities and our increasing dangers. That is one good reason., in any case, Why we are sticking to it. In the words of Mr. Gaitskell, There must be a proper satisfaction for the claims of the Commonwealth ".

I come next to the passing of one or two remarks to the effect: Where do we stand to-day in regard to negotiations? Believe me, my Lords, Still only a very small percentage of people in this country know anything real about what is going on; they do not know. The negotiations have now been going on for months. I suppose since last April they have been fairly intensive. We get a statement about the opening of the negotiations foreshadowed on October 10. I am bound to say that I think there was a fundamental error made by the Lord Privy Seal on October 10 last year. If you look at the Treaty of Rome, you will find that although in one or two cases existing members of the Community are safeguarded by name in the Treaty, the Lord Privy Seal said he accepted the Rome Treaty in toto and did not want to move any amendments to the Treaty.

When it comes to dealing with really important questions that we should like to see safeguarded by an international agreement which is the equivalent of a Statute, we could have had an amendment and put it in. So at the very start that was a mistake. Again, of course, we do not know all the facts. We do not know how far the application by the Government for our entry into the Common Market goes. They would not have been able to start conversations unless they had agreed in toto to the Treaty as a whole as it stood. If that is so, we ought to have been told at the time.

If we look at the situation as it is now, I think I have made a fair summary here. First, there was a deadlock on temperate zone grains, wheat and barley, with apparent disagreement on arrangements both for the transitional period and for the period after it, say from 1970 onwards. The Lord Privy Seal is back again to continue discussions on this matter on the basis used when he left off, if I remember rightly, somewhere near midnight last Saturday. I am bound to say that, after re-reading the statement made in both Houses last Monday, I am concerned about how far things have gone as yet, but we must have more information before we can judge.

Then, no serious discussion has yet taken place on meat and dairy produce. No agreement has been reached on overseas association between the Six and the existing A.O.T.s, let alone between the Six and possible Commonwealth association. There is only a vague and, we think, unsatisfactory outline of a comprehensive agreement for the Asian Commonwealth countries. I have seen nothing of this myself, except a short statement that was issued by the Indians, I believe, saying that conversations were going on and seemed to be progressing. Apart from Denmark, negotiations with our E.F.T.A. partners have scarcely begun.

Here we are, on August 1, at this very late date, and it is not surprising if I remind your Lordships that in Paris on June 13 M. de Murville said that perhaps we should know something more by the summer, but more probably by the autumn. To those of us Who are critical of the Government's handling of this matter, it seems that all the time the Government have been in far too great a hurry, to get in at once without further question and without an adequate assessment of what we are committed to. We ought not to be rushed; we ought to have time to re-examine our own problems in the light of the decisions which may be arrived at. It might be said that possibly there Will not be sufficient overall agreement for a statement to be made at the date at present suggested for the Conference of the Commonwealth Premiers, and it might well be that we shall have to postpone that date also. Rather than go like a gambler—and the whole thing is a gamble—to the next throw, we ought to know what our resources are for dealing with the matter. To me that is vastly important.

I should like to say a few words about agriculture. Speaking from this Box, it is necessary for me to say that I am a farmer and have an interest, but that interest is shared by 350,000 farmers and smallholders and 650,000 workers in the industry. It is unfortunate that we received additional aids to our study of the position of agriculture from the National Farmers' Union only this morning. They made a good statement last year, summarising their possible relation to an application to go into the Common Market. I have been able to study only a summary of what they say and I commend its study to all noble Lords who are going to speak before to-morrow evening. It is clear that the rather high praise that was given to an agreement recently is not scorned by the National Farmers' Union, but they are also clearly of the opinion that it does not go far enough and does not bring them the security which they want. As yet the question is largely organisational, and they have not come down to a real discussion of their general policy on the main commodities, their exchange and price.

Here again we were handicapped from the start by the admission of Mr. Heath on October 10 last year that he did not want any amendment to the Treaty of Rome and that the Government were willing to accept the basis of a common agricultural policy for the whole of the Community. So that whatever is finally agreed in the Commission or Council of Ministers, whether by unanimous vote or by qualified majority, the farmers are up against it. So not much progress has yet been made, and we cannot find out what is going on.

On July 25, the Minister of Agriculture was asked a number of Questions, but in reply he referred only to the preliminary statements made when the Government were going into negotiations and said that they had not announced at any time the Government's policy in these matters. Nobody in the industry or in the country at large knows what the position is. Again it is a question of "Wait and see." But many of the people concerned are greatly disturbed. When we study the Treaty of Rome, we can see that we may be brought up against damaging results. For example, if the Milk Marketing Board were treated as a State organisation with a monopoly, under the general legislative powers of the Treaty of Rome, what would happen? It is not to be wondered at that the Chairman of the Milk Marketing Board has asked exactly where we are going. With the assistance of the Government, and all sections of the milk producing and distributing industry, the Board have brought up the liquid consumption of milk in this country to a higher level than that of almost every other country in Europe. But now it may be faced with the threat of the importation of Liquid milk from Europe, certainly from France, which, so far as I can gather from the statistics, is turning not much more than 20 per cent. of its milk production into the liquid market. The rest is going into manufacture, and part of the surplus could easily be diverted into the liquid market here. This possibility gives cause for considerable doubts in the dairying side of agriculture.

Then during the last ten years we have been struggling to have Reviews of farm prices which would be likely to keep up the level of the standard of living in the industry. I think that the position of the workers is just about being met, but a large proportion of farmers' incomes today are less than they were ten years ago. When it comes, therefore, to dealing with questions of grain and other products these things are vastly important. We do not know what the Minister of Agriculture and the Lord Privy Seal are saying to them. We are not told what are the limits to which they can go. The general talk and conversation among the farmers as you meet them to-day is this: "What we fear is that we are going to be faced with a fait accompli in which the Government have made a provisional agreement and for which their excuse will be, ' We have done our best. It is not as good, perhaps, as it ought to be; but there it is; we go in on that basis '."

We go in on the basis of x industry perhaps being either reduced in prosperity or sent to ruin and another industry becoming perhaps 100 per cent. more efficient, doing better work and getting better profits. All this is a complete gamble in these matters and at this stage of the negotiations, so far as I can see them at the present moment. If I had the time I would say a lot more about it, but I have to be careful not to go on for too long. On the other hand, I have two or three very important things yet to say and the House must forgive me if I am a little longer to-day than usual.

I come next to the question of the Commonwealth. I must say that when I look back over the past and at the evidence of it, I am completely astounded at the volte face of the Conservative Government in relation to the Commonwealth. I do not know whether this particular quotation I am going to make was issued in the time of the Chairmanship of the Tory Party by the noble and learned Viscount the Leader of the House, or whether it was before, but this statement was certainly made since the war. It is from a document under the title Imperial Policy, issued by the headquarters of the Conservative Party. It says: The Conservative Party regards the British Empire of Nations as the supreme achievement of the British people. Throughout its vast area reign three of the four Freedoms—freedom from fear, freedom of expression, and freedom of conscience. A great and unique brotherhood has been built up which has been tried in the white hot fire of the two great wars, and has stood the test. It is the most successful experiment in international relations which the world has ever known.

That is pretty strong. I wonder what the members of the Government feel in relation to that now? Does that still stand? Is the abolition of the Ottawa Treaty, in effect, by going into the European Community, something which they want? Is the destruction of Imperial Preference—to be replaced by special reverse preferences to those European countries with free entry; that is, to destroy one preference and put on another one in the other direction—likely to uphold what was announced as Imperial policy by the Conservative Party headquarters? I think it is exceedingly doubtful myself.

I have so much material here and I have not been able to cover it all, but if we look at certain other things and take first of all what was said by Mr. Macmillan at the opening assembly of the Western European Union in May of last year, we find this: Above all, there is the Commonwealth—not merely a point of honour and tradition and interest to us British people, but an important, indeed vital, element of strength and stability to the whole Free World. This association of peoples of many races is buttressed by its trade pattern. Moreover, the Commonwealth includes countries with a strong claim upon our help to enable them to develop—diversify their economics and build a better standard of living for their own people. We cannot just create our own prosperity and ignore their interests which over the years have become more interwoven with our own. That is pretty specific. It is not much wonder that Mr. Menzies felt he had to get rid of the one black sheep in his Cabinet who apparently held a view in favour of what the British Government were doing now and to leave them united upon their ordinary basis of feeling about the Old Country. This is a case that wants a lot of answering. And if we are going to be successful one way or the other—either successful in keeping out because it is going to be better for the Free World, or in going in with the largest amount of success, not only to the economy of our own country but in enlarging the powers and interests of the Commonwealth countries—we had better look at this case pretty carefully all round and insist that we get the conditions which have been demanded, and, therefore, restore that point of honour which the Prime Minister himself referred to in his statement of last year.

The effect upon British industry is difficult to assess, but I think that, because of the cheap food we have been having, for two reasons—first, by our agricultural support system, the burden of which is spread over the whole community by taxation, and, secondly and largely, by the Imperial Preference granted to foodstuffs from the Commonwealth countries—we have had lower costs of living than have many of the other countries which have been in competition with us. This we shall largely lose in one direction, at any rate. It has been suggested from time to time that, of course, we should gain because we should add to our imports a great deal of food from the European Economic Community area and there would be some compensation therefore in that direction. But when you consider the external tariff on food which will be insisted upon by the European Economic Community, and which has been variously assessed as being from 3 per cent. to 10 per cent.—certainly much more than 3 per cent. on overall commodities and 10 per cent. in one or two specific instances only, but varying from 3 to 10 per cent.—you realise it is bound to add to the cost of all our industrial production in this country, as it will, of course, increase the cost of living and the demand for wage increases. And that is not going to help us.

Another factor I am concerned about is the general assumption of some of the people who support the Common Market in these matters that we are going to do much better in trade by joining the European Community than we do by sticking to our basis of world trade, with the heavy buttress to our world trade by our business with the Commonwealth. It is surely common knowledge that, although the figure may have decreased a little this year, we have at least been maintaining an export to the Commonwealth countries of something like £1,400 million—the figure varies between £1,400 million and £1,500 million—compared to the trade that we have been doing this last year with the European Economic Community which, so far as I can gather, has been increasing in our favour while we are still climbing over its tariff barriers. I believe the figure has been increasing in our favour by quite a percentage each year and amounts now to something over £500 million. Nor am I yet persuaded that putting these disabilities upon the maintenance of our trade to the Commonwealth is likely to be beneficial all round. We have heard a great deal about how, as a result of the war, we have lost many of our, what I call, hidden exports—general services, insurance, interest, shipping. And let me say this; from all the information I can get, whereas our overseas Commonwealth trade is carried as to two-thirds of it by British ships, in the case of trade done with the European Economic Community the proportion is two-thirds in exactly the opposite direction; in that case two-thirds of that tonnage is carried in foreign ships. And it is likely that principle will be extended. I feel bound to draw your Lordships' attention to these facts.

Now I come to say this. I still think, in my own mind, that, not only as important but probably much more important in this matter is the political issue. Are we wise, in the light of what has been happening in the last few months, for example, to be ready to rush in on purely economic grounds, without knowing what the political consequences are likely to be? The political position is exceedingly difficult. Take the Articles of the Treaty itself. I am quite sure of this: that the Government may have examined them carefully and think it is all right: they can accept the whole lot. But there is Article after Article in which different rulings can be given. I have set down in the different spheres Article 37, right the way through. I have put down Articles 67 to 73; and I have put down the Articles from 85 to 94 and from 101 to 105. Whilst, of course, they are very cleverly drawn, there are competent lawyers in this country who cannot guarantee to us that if, as is most likely, we have to have regard to every decision of the High Authority—whether it goes first of all as a regulation of the Commission, or a decision of the Council of Ministers or, maybe, a decision by the High Court— it will not become, ipso facto, law in this country. And that may be quite serious.

The other point I should like to draw attention to is: what is the real objective? In order to save time I am going to try to put it from memory, although I have the quotations if anybody wants to look them up. There was the statement about three months ago, in reply to a question put to Professor Hallstein in the Press Club in Washington, in which he said that of course they had talked about the British Commonwealth; they had felt that it was not only a great trading organisation but was also valuable to the Free World. But, on being further pressed, he said that there is a school of thought in Europe which takes the line that if the Commonwealth comes with Britain into the Market, the Market is finished; if England comes into the Market without the Commonwealth, the Commonwealth is finished. That is the view, apparently, of the President, or at least of those he was quoting on that matter.

But, my Lords, he went even further than that some months before, when he was lecturing at Harvard University, When he said, in essence: "It is an economic organisation; we are not in this for trade or commerce; we are not in this for that; we are in this for politics." So you see the things that emerge from time to time. I go back again in my mind to the speech of Mr. Couve de Murville, on June 13, in Paris, When he said exactly what General de Gaulle had said as long ago as May 30, 1960. You remember that General de Gaulle said he was for a powerful confederation of Europe from the Atlantic to the Urals. Note "the Urals ", my Lords. If you examine what Mr. Couve de Murville said in Paris, you will find that he agreed with that, in principle, at any rate, although the words were not exactly the same. If you read the bulletins issued to you from the German Embassy, the German bulletins, you will find an article which says, "One Germany—the bridge". To the completion of what? That Community, from the Atlantic to the Urals? The restoration of Europe? At what cost? Who knows? What risks can you conjecture, what likely military expenditure? Nobody can say. The political aspects of this thing are staggering until you really get down to it and sit and think and think about them, as some of us have done.

So we wait for the further report as to the negotiations in Brussels. We are waiting. Nobody knows what they are going to be. But I hope that we shall all pray that whatever is done in this matter we shall not have to put our own country into further depression and danger and we shall not have done as Mr. Macmillan thought we should do in 1957 on this particular matter—damage our Commonwealth permanently if we were to go into this European Economic Community. Let us pray, whatever we do, these things will not occur. I beg to move for Papers.

3.37 p.m.

THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF HOME)

My Lords, the House, I am sure, will agree with the noble Viscount the Leader of the Opposition that it is timely that we in this place should debate the issues of the Common Market, because so far we have not been able to do so. Nor (because I know how strongly the noble Viscount feels on this matter of the Common Market) have I any complaint about the tone of his speech and the way in which he put his case to the House. I must just remind him, and the House, of one thing, and that is that on August 3, 1961—that is, a year ago almost to-day—the House approved a Resolution which supported the Government's decision—and I read the words [OFFICIAL REPORT, Vol. 234, col. 217]: 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 … We start from there: that we have the leave of Parliament to go and negotiate. The question, therefore, is not whether we should try to get into the Common Market; Parliament has decided that we should try to enter, if the terms are right. The real question to-day is whether we are likely to get a good or a bad bargain.

The noble Viscount opposite described the decision to try to enter the Common Market as a gamble. I think I should reject that. I would say that it is not a gamble, but it certainly is an adventure. There is a great deal of difference between the two. For better or worse, then, we have applied for membership; and we are at present in negotiation to see whether we can find terms of entry which will be acceptable.

As I listened to the noble Viscount, it seemed to me that he was warning your Lordships that if we went into the Common Market nothing would ever be the same again for this country. But if we do not go in, nothing will ever be the same, either. I think we must recognise that, because the Common Market is here: it exists, and it is already having an increasing influence on the structure of Europe. It is not some theoretical exercise in political and economic relations conjured up by a number of intellectual busybodies; it is not that. The European movement towards economic and political union is on. It is at present taking place and taking very solid shape, too.

It has already altered the facts of life. It is altering the facts of life in such a way that other countries will have to react to the action which the Six have taken and, because of geography and history, the United Kingdom is one of the first which will have to react to the new situation. Nor can others possibly ignore these events on the Continent. As the noble Viscount reminded us, the Commonwealth has been involved in two world wars owing to the divisions of Europe. The United States was sucked into both these wars, and now has a permanent garrison on the Continent. All the other Commonwealth countries are basically projections of Europe overseas. Neither they nor we can be indifferent to events which have had such a continuing impact and influence on our lives. After the Six got together and created the Treaty of Rome, nothing for any of us could be quite the same.

As the noble Viscount has truly said, it is a most complicated matter. It is a matter in Which in many ways it is easier to see the trees than the wood. Therefore, if I may, I am going to follow the noble Viscount in two respects and to divide my speech into two parts. First, I shall attempt to deploy some of the arguments against those which he used in the wider aspect of the question, and then to give an account of the state of play of the negotiations as I know it, and as I should like the House to have it. These are some considerations which I want to put forward, which I think we in this country, the Six in Europe, the Commonwealth and all those Who are responsible for guiding public opinion and making decisions should certainly have in mind.

The British Government must in the first place look at this Common Market situation through British eyes. I make no apology for saying this at all: that the first duty of a British Government in this matter is to see where British interests lie. I want to state that plainly, because although sentiment may play a legitimate part in this matter, the British Government cannot ignore the fact that we are responsible for the lives and well-being of 50 million people packed into an over-crowded island and we have got to look and see what our fortunes are likely to be in the next 50 years. Our people in this country have a very high standard of living which they want to see not only sustained but expanded; and they are people, let us remember, who have exercised power in the world. Although we have not got the power that we had at one time, nevertheless our people want to see our country still exercise its influence.

And the noble Viscount did not deal with this part of the question: what has made Britain great in the past? I am going to reply, despite the danger of over-simplification, in a sentence. It was the decision, through generation after generation of British people and British Governments, that Britain should always be at the centre of markets and at the centre of power. That is what has made the greatness of Britain. If you isolate Britain from the centre of markets or from the centre of power she will become an off-shore island, and her economy will either he static or will weaken. But if you keep her in the mainstream of markets and power, although we have not got the physical or military power that we had, nevertheless we can hope to sustain enough power to carry great influence in the counsels of the world. I said in another context the other day that I thought it essential, wherever great matters of peace or war were discussed, that the British voice should he heard. If that is true, then we have to determine the broad: are we to enter into a market which is rapidly expanding—there is no doubt about that—or are we to remain outside, outside the external tariff of the Six, outside the external tariff of the United States, with the great difficulty, which noble Lords know perfectly well, of being able to trade with the Communist bloc where trading is strictly circumscribed by State trading? Therefore, whether we go into Europe or not, we must take into account, in making our decision, this question of whether or not we are going to place Britain at the centre of markets and the centre of power.

The noble Viscount quite rightly insisted that when we were coldly calculating, as we must do, British interests, we should take into account our obligations to the Commonwealth. That is perfectly right. I was Commonwealth Secretary for five years and I am not likely to neglect that obligation. But I do suggest that the Commonwealth countries themselves have got to do some hard thinking in terms of hard reality, because it seems to me that their own expansion in this time of the 20th century is directly concerned with the expansion of Britain, and if Britain has limited opportunities for expansion, then we are not going to be much good to them, or indeed they to us.

Where, in the next twenty or thirty years, are going to be the centre of markets and the centre of power? The answer is quite clear so far as the Free World is concerned—in the United States and in Europe. The Commonwealth has many good aspects and I am going to speak about them in terms, I hope, no less enthusiastic than those of the noble Viscount who leads the Opposition. But the Commonwealth is not a centre of power—it cannot be. It has always refused to institutionalise itself It is certainly a wide political influence, but it is not a centre of power; and if as is certain, power is to lie in Europe, then I think it is there that Britain ought to be. We are already deeply committed in the military field, as the noble Viscount reminded us, through the NATO Alliance, of which he was one of the architects, to meet the challenge of Communism. The question that we have to ask ourselves to-day is: can we stand aloof from economic and political associations of a more intimate kind?

Economically, too, I think we have to be clear what we are doing. As I have said, we have to maintain our population at a very high standard of living. If we could not enter the Common Market we should have to do our best. I listened to the noble Viscount and I thought he rather under-estimated the effect on Britain of staying outside the Common Market. Surely there are two things which would happen. First of all our exports would have to climb the tariffs. They might be able to do that. But our expansion would obviously be much slower than if we had not to do so. But, surely, is not the real point that if we were not in the Common Market we should have to compete in other markets, with a trading community which has a much larger industrial base? That seems to me to be one of the arguments which is most telling. Instead, therefore, of our people and industrialists being able to rely on a base of some 240 million people, we should be thrown back upon the 50 million people in our own island. That seems to me one of the most telling economic arguments in favour of our going in.

I do not want to be trapped—I must not be trapped, and I hope none of us will be—into posing alternatives between Europe and the Commonwealth. I believe, with the noble Viscount, that the Commonwealth is a unique contribution to the art of living together, and I endorse, therefore, the statement of the Central Office and the statement of the Prime Minister that that still holds. It is also a real political influence, giving an example of how different races can in fact co-operate constructively. The economic association in the Commonwealth is certainly a great part of its strength, and, as the noble Viscount has pointed out, there is an immense trade between the United Kingdom and the different Commonwealth countries. And, of course, we shall never forget that they stood beside us in two world wars.

My Lords, where I differ, I think, from what I would call the "go-it-alone-in-the-Commonwealth" school is that I do not believe that the Commonwealth is a sufficient answer in itself to Britain's needs in the next 50 years; nor are we a sufficient answer to the Commonwealth's needs in the next 50 years if we stand alone. In this connection there are certain factors which we ought to recognise and which must enter into our calculation. The Commonwealth is no longer held together by authority, and therefore it has developed in a way in which each Commonwealth country now has legitimate interests beyond its borders and beyond the Commonwealth circle. Canada has to take account of its proximity to the United States; that has had very severe repercussions on British trade. Australia must consider selling her goods in Japan and South-East Asia; that has meant an erosion of British preferences. Australia and New Zealand are very dependent on the United States for defence, and the Asian nations are greatly in need of United States capital to finance their development plans. The African countries in the Commonwealth are now looking for indigenous solutions to their own particular needs.

My Lords, the Ottawa arrangements—my noble friend, Lord Swinton, will remember this very well—one must remember, were an answer to the conditions of slump in the 1930s. They were good. But the Commonwealth then got together to stimulate trade among the Commonwealth countries, and it was an exclusive arrangement; the preferences were for Commonwealth countries only. Therefore, I think that it would be a mistake, although Ottawa was immensely valuable, to elevate at this stage the Agreements into, so to speak, the Tablets of the Law, because the organisation and structure of world trade have changed and the modern Commonwealth is essentially an extrovert organisation, and an extrovert organisation it must remain.

The noble Viscount should not forget, I think, that every country in the Commonwealth is an importer of capital, except the United Kingdom, and they must remain so for years ahead. Therefore, each Commonwealth country, including Britain, has its own interests in different parts of the world, for which others must make allowance; and none can be introspective, and none can be exclusive. I was trying to think, while the noble Viscount was speaking, how I would put this rather wider aspect of Commonwealth/British/European relations which I am trying to visualise. I think I should put it something like this. Europe needs the Commonwealth, and the Commonwealth needs Europe; Britain needs both, and both need Britain. Now if that is not complicated, I do not know what is; but it is no more complicated than the Common Market!

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I am enormously interested in the argument and I will read it very carefully, but there is one thing which has not occurred in the remarks of the Foreign Secretary. I know all about the population and industrialisation of Europe, but how far is that going to increase in terms of population, or how far can it increase compared to the increase in population of the Commonwealth which is certainly bound to come, with the primary and industrial products arising therefrom? We could have the leadership of that Commonwealth, if we liked. One other thing, my Lords. The noble Earl has overlooked in his answer so far something which I think he might tell me. How do you propose to assess the value of the changeover when you are going to give free entry to those large industrialists of Europe into your own market, and how far do you think you are going to be recouped?

THE EARL OF HOME

My Lords, I do not think I necessarily find myself alt difference with the noble Viscount here, because, of course, I recognise that Britain's trade with the Commonwealth will go on, and "I hope it will expand. But there can be no denying—and I do not think that anybody who looks at the facts can deny—that this European Market has the most enormous potential, and the base of it is something like 240 to 250 million people. But I still have quite a bit of my speech left to make, and I think that some of the questions the noble Viscount asked will be answered as I go along.

Therefore, it was on these broad grounds of policy that the United Kingdom Government decided to try to negotiate entry, knowing that we might fail, but hoping that we may succeed. I should like to turn, if I may, at this point—it will enable me to answer some of the noble Viscount's questions—to the main considerations which are in the minds of the Government's chief negotiator, the Lord Privy Seal, who conducted these negotiations with the greatest skill——

SEVERAL NOBLE LORDS

Hear, hear!

THE EARL OF HOME

—and also to the state of play in the negotiations. I would divide this very short report into sections: the political considerations, on which the noble Viscount touched; the objectives we hope to achieve in respect of British agriculture; and the assurances that we seek for Commonwealth trade.

My Lords, taking account of the political considerations, we must distinguish very clearly indeed between the political implications of joining the Treaty of Rome—that is, the Common Market—and the discussion now taking place among the Six, which is for European Political Union. A distinction must be made there. The Treaty of Rome is an economic instrument with some political overtones. The European Political Union would be a treaty of political co-operation. To-morrow the House will have the great advantage of hearing a speech by the noble and learned Lord, the Lord Chancellor, who will deal with many of the questions raised by the noble Viscount in regard to the political implications of the Treaty of Rome, and in particular the impact on the sovereignty of the member countries. I think it will be valuable to the House to have that.

In the meantime, I shall be content with saying this. The obligations we accept in the Treaty of Rome itself are precise and defined, and, once in it, they cannot be altered without consent. But, my Lords, nothing in them that we have seen could affect the position of the Crown—there has been great anxiety in this country about the Monarchy—and nothing that we can see could infringe the sovereignty of Parliament, except in the field laid down in the Articles of the Treaty. The noble Viscount has said, quite truly, that that is quite a wide field, and I remember that the same point was made a year ago by the noble Lord, Lord Strang. That is perfectly true, and I have no doubt myself that Parliament will feel that it is right within that field to make certain surrenders of sovereignty from time to time. But I would judge that each of those surrenders of sovereignty at the time will be judged in the light of whether or not there are compensating gains. The matter will therefore be in Parliament's hands.

The second separate but, nevertheless, important question is that raised by the possibility of a European political union, about which the Six have now been talking for a year. In a sense this is the political counterpart of the economic arrangements in the Treaty of Rome. We have not taken part in these discussions, although we have been informed at all stages of progress. One thing I should like to make clear is that the documents we have seen, which have been given to us by the Six, bear no relation to federalism at all, nor do they seek to introduce any federal institutions. So there is no question that we should be asked to put our signature to a federal structure already agreed between the Six, and we hope to have a hand in shaping the final political solution, whatever it may be. Her Majesty's Government have welcomed the efforts of the Six towards greater political union, and we look forward to joining in the task if and when we are members of the Community.

My Lords, I will now turn, if I may, for a short time to the second section of this review, and that is British agriculture. I may tell the noble Viscount that, although I do not have much time for it, I am a farmer, too, and so these are two farmers putting, perhaps, opposite points of view although engaged in the same activity. I want to put this broad consideration, that the farmers' increasing prosperity in this country, and our ability to maintain a healthy population on the land, depend directly upon the increased purchasing power of the consumers who are earning wages in industry. That must be so. Therefore, if we are to improve the state of British agriculture, and not just allow it to remain static, we must raise the income per head of our population or find new markets, or have a combination of both. Nor do I believe that, provided conditions of production are equal—and this is one of the objectives of the Treaty of Rome—there is any reason at all why our farmers should not produce at competitive prices. In fact, if we were not to go into the Common Market it would be a very poor look-out indeed for the farming community in Britain if they could not make their prices competitive. So I have no reason to think that the broad objectives of the Community, so far as agriculture is concerned, differ from ours.

This, I think, is rather confirmed by the fact that it has been provisionally agreed to proceed by the method which we ourselves have adopted, and that is by the method of an annual review. The object of the review would be the same as the object of our annual agricultural Reviews—namely, that the farmers in all areas of the Community should be guaranteed a fair living from the soil. Our own national Reviews would continue, and they would provide the basic information which would enable us to ensure that the needs of our own agricultural industry were taken fully into account in determining Community policy.

It is true, as the noble Viscount has said, that we are still discussing arrangements for individual commodities, and on a number of those commodities the Six have adopted regulations for themselves, particularly pigs, eggs and horticulture. The beef policy is still to be formulated by the Community. We are anxious that in these matters our voice should be heard. I cannot give further details, and all I can say is that on all these matters, and for all these commodities, the Lord Privy Seal is fully armed with the facts; the Minister of Agriculture is, of course, a party to his negotiations, and any further provisional agreements that are made will be made with the full knowledge of the importance of a flourishing agriculture to this country as part of a flourishing agriculture of the whole.

The final section to which I would come, then, is the whole complex of questions which the noble Viscount raised, related to Commonwealth preference and Commonwealth trade. In the context of industrial manufactured goods, it has already been widely recognised that preferences, which already have been much eroded, could not be maintained at their present levels in perpetuity, and therefore, it is envisaged that by degrees—and the House knows this—the common external tariff will apply. Turning from industrial goods, the focus was then turned on two further aspects of the matter, the aspects of the Common Market which affected the Asian and African countries and the dependent territories, with the emphasis on tropical foodstuffs; and, secondly, upon the old Commonwealth countries and their particular problem of the imports of temperate foodstuffs into the United Kingdom and the Common Market.

So far as the African and the West Indian countries are concerned, countries both independent and dependent, we hope that they will be able to join the Community as associate members. They will thus enjoy the benefits on exactly the same terms as the ex-French territories enjoy benefits under the Community now. As one reviews the opportunities in an expanding European market, it would seem to give them opportunities for increasing their trade, provided their prices are competitive. So far as India, Pakistan and Ceylon are concerned, we are seeking several things: adjustments in the application of the common tariff to their exports; in certain cases to reduce to zero the tariff, for instance on tea and spices; special arrangements to cover their export of textiles, and to remedy damage that might be done to them. Detailed arrangements will be subject to trade negotiations between those countries and an enlarged Community. I believe—and I have looked at this fairly carefully—that the opportunities for expansion which this will give them, and the opportunities to earn additional foreign exchange which they so badly need for their development, will be increased as a result of their association with the Common Market.

Now I come, if I may, to the nub of the matter; that is, the prospect for exports of temperate foodstuffs to the Community, both in the transitional stage, between now and 1970, and thereafter. When we are thinking in terms of commodities like wheat, butter and meat—all of which the noble Viscount has mentioned—there are certain factors that I think we must keep in mind. The first of these is the price policy of the Community, which is all-important. If the Community were to fix the price of agricultural produce very high, there would clearly be little room left for the import of comparable goods from outside. So the object of the Community must be to fix prices which are not so low as to deny the farmers of the Community a fair return for their labour, but not so high as to stimulate production to a point where there is no room for outside sellers. This is the centre of the problem, and the attitude of the Commonwealth countries towards the Common Market, and British membership of it, will be very much affected by the language in which the price policy is expressed as forecasting the practice of the Community. This is of really overriding importance.

There is a special and particular vocabulary which is used in G.A.T.T., in connection with trade arrangements of this kind, where the word "reasonable", for instance, has a much more precise meaning than it has in ordinary language—such as when used between me and the Leader of the Opposition, for example. The words, therefore, my Lords, will be very important, and our aim must be to give confidence to the Commonwealth in the intentions of the Community whilst still allowing room for movement to take account of changing circumstances within and without the Community.

The Commonwealth countries have for a very long time been interested (and I know that a number of your Lordships, too, have been interested) in world commodity arrangements, because stable prices for primary producers are very much better than aid. Of course, they are very difficult to contrive—immensely difficult; but, still, the existence of the Common Market is, I think, going to give additional urgency to exploring their possibility. Not only is there great interest now in the Commonwealth about the possibility of these world arrangements, but there is increasing interest, I think, in the United States of America, which is very significant. But, pending such world agreements, I agree with the noble Viscount that what we have to do is to try to ensure access for Commonwealth temperate foodstuffs and to make sure that, if world-wide agreements are impossible, suitable alternative arrangements are made.

My Lords, there has been a great deal of talk in the last few days of a deadlock in the negotiations in Brussels. I hope that your Lordships will not look on it as that, and for this reason: that there is an intellectual and a practical problem here to which the Commonwealth countries, ourselves and the Six must give their attention. It is this: how can words be found to give reasonable assurance to traditional sellers, Commonwealth countries included, without importing an absolute rigidity into world trade? That is the problem, and it is a real problem, about which we must think. It is obviously quite impossible to-day to fix world trade at the levels of to-day for all time. We cannot do that. Nor can we fix compensation for damage so certainly that it can be claimed from the Community, even if the fall-off in exports from a particular country is due, for instance, to inefficiency or other causes. We could not do that. Therefore what we have to do, as I say, is to take account of a problem which is very real, and the Six and the Commonwealth countries must help us in this. The problem is to contrive the maximum assurance and safeguard for Commonwealth producers without putting world trade into a strait jacket. That is what the problem is about in Brussels now, as the Lord Privy Seal negotiates. It is not a deadlock: it is a problem to Which all of us must apply our minds.

My Lords, I do not know that your Lordships will wish me to go into the question of the individual commodities. I probably ought to say something, but I will say it as fast as I can. So far as wool is concerned, which benefits Australia, no import tariff or quantity restriction is envisaged. There is no tariff or preference on wheat in the United Kingdom market, and the problem here, therefore, is one which is related to the fact that Australia, under a gentlemen's agreement, brings 750,000 tons of soft wheat into the country every year. That competes with the soft wheat of America and the soft wheat of France; and it is a question of accommodating the Australians on this. So far as wheat is concerned, as the Community external tariff is to be abolished, no problem of Commonwealth tariff preference is involved.

Apart from the wheat, therefore, the commodities most important to the Commonwealth are meat; milk products, particularly butter; and mutton. Those, of course, are the problems which are of particular concern to New Zealand, and, therefore, problems in which both Houses of Parliament, I hope, will be particularly concerned. In the Commonwealth context, too, there are processed foods, tinned fruit and vegetables, fish and raisins, and other products. We want to ensure—and this is the objective of our negotiations—that fair trading facilities will remain open for these.

It is all immensely complicated, my Lords. The noble Viscount says that this has taken some time, and probably it ought to take more. Possibly; but I should just like to illustrate to the House the trouble which we have taken to go into these problems. We have gone into the problems of Canada, Australia and New Zealand, which are dependent on meat, grain, wool and dairy produce. The African States are dependent on coffee, cocoa, oil seeds and tropical fruits, like bananas. We have gone into the problem of sugar, which affects the West Indies so much; of Hong Kong, which is entirely dependent on the export of manufactures; India, Pakistan and Ceylon, where a substantial proportion of their export is textiles; Malaya, which exports rubber and tin; and Cyprus, which is concerned with fruit and other things. I can promise your Lordships absolutely that the problems presented to each of these countries have been foreseen by us. We have talked to their representatives on every possible occasion about the solutions that might be made. And, although, of course, it is very unlikely that we shall get all that we want, we are going out as hard as we can to get a fair deal for these countries, so that their people will be able to sell their goods in fair competition. What we want from the Community, my Lords, is something which we have been able to give to the Commonwealth countries, and are able to give them now. We have never been able to say to the Commonwealth countries, "We will guarantee markets for a given proportion of your produce in perpetuity ahead." We have never been able to say that ourselves, to our own Commonwealth countries—never. But what we have been able to give them is the reasonable confidence that Commonwealth traders can plan ahead in fair competition, and that their plans would not be interfered with by the British Government by arbitrary action: and that is what we want the Community to do.

So far as EFTA is concerned, we are confident that if we reach success at the conclusion of our own negotiations there will be the will on all sides to bring about successful arrangements for the EFTA countries. The noble Viscount mentioned, I think, one of the EFTA countries. But Norway and Denmark, like ourselves, have applied for full membership; Sweden and Austria are making their opening statements for association now; Switzerland intends to do so after the Summer Recess; and Portugal has asked to establish appropriate relations. My Lords, to complete the picture, we have opened negotiations to accede to the European Atomic Energy Community and to the Coal and Steel Community. So we are now in negotiation over the whole field of the existing European Community.

Then I return to the question that I asked at the beginning: where do the wealth and power of the Free World reside? Because where the power of the Free World resides there the economic development will be; there the political influences will be concentrated; and there Britain must place her weight. Some feel that Britain might fall so much under the influence of Europe that we should lose our special relation with the old Commonwealth countries, and that we might drift apart. My Lords, it would be a terrible thing if that should happen. But I do not believe it to be true, because I do not know what Britain has been doing in the last 300 years unless it is to equip ourselves to lead this wider form of interdependence. Therefore I do not want to talk in terms —and I hope we shall hear nothing of it in this debate—of the Commonwealth versus Europe, because in an interdependent world we are all on the same side, and our objective is to create a design in which Europe and the Commonwealth will come closer together in a Community which is outward-looking towards the world. I look forward to this debate, and to the benefit of the penetrating analyses which the list of eminent speakers promises to bring to bear on this historic occasion; and I am grateful to the noble Viscount opposite for having put the Motion on the Paper, and for having opened the debate himself.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, may I just ask a question? If the Lord Chancellor is to speak to-morrow, should he not also perhaps deal widely with such legal questions as to whether the British Parliament is going to be able to move Amendments to measures during our membership of the Community, if we go in? What would be the position of the British Parliament in regard to moving an Amendment?

THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM)

My Lords, I think my noble and learned friend on the Woolsack will have heard the noble Viscount's question. In this House one can communicate with one's colleague on the Woolsack only by means of Telstar. I hope that the "come-back" will be coming in due course.