HC Deb 11 November 1958 vol 595 cc345-54

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

11.20 p.m.

Sir James Hutchison (Glasgow, Scotstoun)

During the past few months there has settled over the European scene a cloud of deep anxiety. It is the product of the protracted negotiations on the question of the establishment of the European Free Trade Area. Many people feel not only anxiety but dismay at seeing the negotiations grinding, apparently, to a disastrous stop. That being so, perhaps I may be allowed to give a short summary of the history of these negotiations.

Quite a time ago, the seventeen countries of the Organisation for European Economic Co-operation decided to negotiate on a Free Trade Area and the principle contained in it, and, at the same time, agreed that there was very considerable importance in the date, 1st January, 1959. They recognised that without a Free Trade Area in some form, there would be serious economic divisions within Europe, and that there was a grave risk of the ten years of progress towards European unity being destroyed.

The six countries of the European Economic Community—or, as I shall call them in the rest of what I have to say, the six Common Market countries—decided that on 1st January tariffs will be reduced and quotas expanded, but the benefit of this action will not apply to any of the countries of the 0.E.E.C. outside the Six. So, at once, there is broken down the fundamental concept and principle of nondiscrimination that is at the basis of the O.E.E.C., the European Payments Union, and, indeed, of the G.A.T.T. itself. It is expecting a good deal to expect that these organisations should continue to exist if, in fact, their fundamental concept is taken from them. The consequences that might flow from that are almost unforeseeable. We are, therefore, faced with a very serious situation.

In the October debates of the Council of Europe, Recommendation No. 186 was passed by 87 votes to 2, with one abstention, and I should just like to read part of that Recommendation. Speaking of the consequences of failure to reach agreement, it points out that insufficient attention has been paid by Europe …to the consequences of failure to reach agreement…and that these might well be…to weaken economic collaboration in Europe; to mark the abandonment of the principle of equal treatment which has been basic to O.E.E.C.'s efforts for freeing intra European trade; to hazard the continuance of the European Payments Union; and to jeopardise the present export position of the countries of the European Economic Community in respect of their trade with the other countries of Europe…to create serious division in Western Europe arising from the inevitable formation of at least two groups of countries pursuing conflicting trade policies… It is, I think, no secret that this sad situation has come about as a result of the attitude of the French Government. The need for a Free Trade Area in some form has never, in fact, been seriously disputed, even by the Six themselves, and back in February of this year the French Government indicated their intention to put forward alternative proposals. Those proposals were forthcoming only last month.

In July, the French Government declared that they were prepared to negotiate, provided that trade problems were treated sector by sector. This was accepted by us, but, in the three months that have since passed, they have shown no willingness to discuss the substance of any technical problem. What are the reasons—we must try to understand them—behind the French Government's attitude?

One of the arguments one hears put forward frequently is that the establishment of a Free Trade Area would weaken the cohesion of the Six—the Common Market—and would undermine the Rome Treaties. Nothing could be further from the truth. We recognise that the Rome Treaties are not simply treaties bringing about trade advantages reciprocally between the nations, but are, in fact, far-reaching economic and political treaties destined to bring about an ultimate unity. We recognise the right of any nation to pursue an objective of that kind, and we welcome the fact that the Common Market does exist. There is, in my view, nothing in the Free Trade Area inimical to the continued existence of the Common Market. Indeed, the absence of the Free Trade Area would very considerably cripple the Common Market conception.

The next reason given is that France fears the competitive position which would be created by the Free Trade Area as well as by the Common Market. Since she has always been an intensely protectionist country, she says that she has already bitten off as much as she can swallow in accepting the Common Market. But has she stopped to think that the steps necessary for her to take in order to make herself competitive within the Common Market are identical with the steps which would make her competitive within the Free Trade Area? As all countries will, we shall feel the pressure of competition, but we are not afraid of that, because we believe that it will lead to modernisation in industry, large-scale production and investment.

The French industrialists have never liked the Free Trade Area, and the rest of the French people 'have never understood it. How can they, when the Press, which is strongly under the influence of the industrialists, has never put the problem to the French people objectively? Earlier this year, I made a speech in the Council of Europe, in which I welcomed the arrival of the Common Market. I said that I believed that my countrymen felt the same, that we regarded it as a contribution to the unity of Europe which we were seeking to bring about, and nothing was further from our thoughts than an intention to damage the Common Market. We wished it success. But I went on to ask why people wanted to stop there—why not go the further step and agree to the Free Trade Area?

Only two organs of the French Press troubled to report the debate, and those two stated that the British spokesmen made speeches hostile to the Common Market. How, then, can we expect the French people to know accurately, to weigh fairly, and decide wisely on this important question, when it is put to them in that sort of way? We understand French difficulties, and we wish to take account of them, but isolationism does not pay. Not even the United States of America feels herself, in the rough and tumble of today, to be completely self-sufficient.

There remain to my right hon. Friend the Paymaster-General under two months of intensive negotiations still on fundamental problems. Does he feel that there is, on the part of France, a genuine will to negotiate at all? Every country wants to prevent a breakdown in negotiations, but it would be wrong to spin out and protract negotiations merely for the sake of avoiding the responsibility that France would incur if negotiations broke down. Such an attitude would be unworthy of the great position which France holds in Europe.

But we must face the possibility of such a breakdown. There must be talk of alternatives, of measures taken by other nations to protect themselves against the very discrimination which 1st January will bring, unless something is done to change the situation. May I recall to the nations of the Six just how large a favourable trade balance they have with the Scandinavian countries, with Switzerland, and, if one adds agriculture, with us also? If countries are to be excluded by discriminatory tariffs from the markets of the Six, what action will they be likely to take?

No series of bilateral agreements, even if the countries were prepared to enter into them, would compensate for such a breakdown. There is great danger that Europe could lapse into a state where there was a number of protected blocs, with serious effects on Europe's development, on the competitive position of Europe—which will be tested very gravely, as time passes, by the trade assaults of Russia—and, finally, on her very unity. Repercussions could easily flow from actions like this on to the whole problem of co-operation, and, indeed, of defence.

One turns away sadly from a picture of such weakness and disarray which is nothing less than the equivalent of the failure of the whole conception of Western political co-operation. How the Russians must be rejoicing.

No one, I believe, could accuse me personally of being anything else than a lifelong friend of France.. I have been in her land in two wars. I beg her, as a friend, not now to take such action as will in the process of time leave her with deep regrets, with a weakened position and with a very uneasy conscience.

11.30 p.m.

Mr. Christopher Boyd (Bristol, North-West)

I have no desire to delay for many minutes the reply to this debate which we all look forward to hearing from the Paymaster-General. I was very glad that towards the close of his remarks the hon. Member for Scotstoun (Sir J. Hutchison) had some kinder thoughts for our closest ally and friend among the other nations of Europe and among all the nations outside the Commonwealth.

We must try to understand the position of the French. They have been going through a difficult constitutional transformation which is by no means complete, and we cannot very well expect difficult decisions to be taken by France before the French elections are over. Unfortunately, that leaves only a very short space of time before the tariff provisions of the Treaty of Rome come into operation on 1st January.

I hope it will be possible for something to be negotiated during the intervening month. I believe that there will be a meeting of the N.A.T.O. Council in Paris at that time, and, perhaps, aside from that, some meeting of those principally concerned in getting a provisional agreement may take place which will be able to agree in an atmosphere and at a lime that will at least be more favourable than hitherto.

General de Gaulle, many of us believe, shares many of the ideals and aims and wishes which we hope can be fulfilled in Europe. Then, at least, General de Gaulle should be in a stronger position to carry his country over a very great difficulty.

I do not want unduly to stress the party point when I say that the British negotiations have been handicapped by the phrase "Free Trade Area." It was an unfortunate accident, perhaps, at the beginning, and if we could extricate ourselves from that phrase it would be a great help to French public opinion.

I wonder if it would help if we could get away from too much emphasis on the economic side in this matter, if Britain could come forward much more visibly with propositions for the political unification of Europe, if we could look much more determined in our military participation in the defence of Europe and if we could strengthen our diminished forces on the Continent.

Perhaps we should suggest that Article 2 of the N.A.T.O. Treaty should be taken up seriously and that the whole N.A.T.O. community should take part in this first 10 per cent. reduction of tariffs on 1st January. That may be a big negotiation, but the mention of these ideas and a growing willingness of this country to go into Europe politically, to stay in Europe militarily, to distract attention a little from the economic side, which is so difficult for the French, might help the final negotiations.

11.35 p.m.

The Paymaster-General (Mr. Reginald Maudling)

The subject raised by my hon. Friend the Member for Glasgow, Scotstoun (Sir J. Hutchison) is one of very great importance and I am sure that by reason both of his friendship with the French people, to which he has referred, and of his long-established interest in these matters, no one is better qualified than my hon. Friend to raise this matter this evening.

It is true that the negotiations for a Free Trade Area have reached a serious position. The hon. Member for Bristol, North-West (Mr. Boyd) asked whether we cannot find another name. For my part, if the hon. Member can find another name, so much the better. I am not wedded to the existing name. The phrase "Free Trade Area" is taken from the G.A.T.T. documents. If anybody can think of a better name, so much the better for all concerned.

My hon. Friend has referred to the many delays which have occurred and I am sure that we would all share his disappointment that this should have been so. In May, 1957, we were asked to delay the negotiations that were then proceeding until the Treaty of Rome was ratified, on the clear understanding that thereafter negotiations would proceed rapidly. More than a year ago, all seventeen nations of the O.E.E.C. recorded their determination to secure the establishment of a Free Trade Area that would take effect parallel with the Treaty of Rome.

As recently as July this year, hopes were awakened throughout Europe that substantial progress would be made, but these hopes, like others, were born only to be dashed. Therefore, we can claim with justice that these negotiations have dargged on a weary, disappointing and almost unconscionable time. Disappointment, however, must not lead us to despair. The objective that we all have before us is far too important for that.

The situation is complicated by what will happen on 1st January, as has been mentioned already. Then, the first tariff and quota reductions under the Treaty of Rome will be made by the six countries for their mutual benefit but will not be extended to the other eleven countries of Western Europe. This means, unless something is done to prevent it, that the six countries will be treating one another's trade on a different basis from their trade with the other members of the O.E.E.C. Whatever the legal niceties of this, it can be regarded by traders and business men in the other eleven countries only as a form of discrimination. It is bound to threaten the very foundations of the O.E.E.C., an organisation dedicated to the elimination of discrimination in Western Europe.

It is the approach of 1st January that makes our negotiations now so urgent, and 1st January is the date chosen by the six countries. I am sure they recognise, as well as do the rest of us, the serious implications for all Europe and the need to do something to meet the problem thereby created.

It is fashionable now, in the Press and elsewhere, to talk of an Anglo-French dispute. This is not really accurate and, I am sure, the whole House would regard an Anglo-French dispute as indeed a tragedy. There are not two partners to this negotiation, but seventeen—seventeen countries all with differing national interests and differing points of view. although the six certainly seek to harmonise their points of view in advance of discussions with the rest of us.

It is true to say, for example, that with our Scandinavian friends we have few and limited points of difference. To take another example, I have never discerned any substantial difference in the views of the United Kingdom and West German Governments as to the sort of Free Trade Area that we wish to see established. With other Governments, there are problems to be solved, but none of these problems seems to be incapable of solution.

The French Government have all along seen greater difficulties in the establishment of a Free Trade Area than have the others. It is, I believe, because their difficulties are greater than those of the others that this idea of an Anglo-French dispute has arisen.

We all recognise that France faces problems of a particularly serious character, and I am sure that all friends of France must seek to help her to meet these serious problems. I would like to repeat, if I may weary the House, what I said in this House on 28th March on this subject. I said then: It is also important to realise that the French Government face many economic difficulties of a serious and particular character, though fundamentally their economy is an extremely strong one. The special character of the French difficulties was recognised in the Treaty of Rome itself. It is right that we should take full account of these difficulties and of the strains to which the French economy is subject. It is right not only because of our duty to have regard for the interests of our old friends and Allies, but also because it is clearly in the fundamental interests of Europe as a whole that the French economy should be as strong and sound as possible, and that the great developments in our industrial and economic strength that can now be foreshadowed should go forward with the minimum of disturbance. What we must seek in our negotiations, therefore, is a means of meeting the difficulties which the French foresee, without preventing the launching of the kind of Free Trade Area which it clearly is the general desire of the countries concerned in the negotiations to see established."—[OFFICIAL REPORT: 28th March, 1958; Vol. 585, c. 802–3.] That I said on 28th March. That has always been and remains the attitude of Her Majesty's Government in this matter, and I am glad to have the opportunity given to me by my hon. Friend of recording once again the very clear position of the Government in this important matter.

There are two further things with which, if I may, I should like to deal, because some misunderstanding has arisen with our European friends. In the first place, it is sometimes argued that the Free Trade Area is either designed to undermine or would undermine the Treaty of Rome, the Common Market of the Six, to which my hon. Friend referred. This we do not accept and have never accepted. Nor do I believe that this view is in practice held by the six Governments themselves. Otherwise, surely they would never have embarked as they have done, and as they have continued to do over such a long period, upon the attempt to negotiate a Free Trade Area. They would certainly, these six Governments, not have continued to try to negotiate something which would undermine the Treaty to which they attach such fundamental importance. Therefore, I am convinced that there is nothing whatsoever in the argument that the Free Trade Area is either designed to undermine the Common Market or would undermine the Common Market. E that were so the six Governments themselves would not now be parties to this negotiation which has been taking place over this last eighteen months and more.

Secondly, it is sometimes said that the United Kingdom's negotiating position has been unduly rigid. That, I submit, is not true. We have departed in many ways from our original concept, as the record will show. We have accepted, for example, the desirability of negotiating an agreement on agriculture. We have broadened the entire concept from the original idea merely of a reduction of tariffs and quotas. We have broadened our ideas to the establishment of a whole European economic system, maintaining and strengthening the co-operation which already exists in the O.E.E.C. We agreed in the summer, to the approval of many of our European partners, and in particular to the approval of the Six, that there should be a system of majority voting over a substantial part of the Free Trade Area agreement.

All these facts represent real concessions made by the United Kingdom. I think it is well that they should be placed upon record, because sometimes it is suggested that we have not departed in any way from our original position. We recognise that the process of negotiation involves concessions and will involve concessions. In fact, the process of negotiation is meaningless otherwise. If one does not make concessions one does not have negotiations. The two things run together. It is most important to make this clear. Concessions are a part of negotiation, but concessions must be mutual and they can be made only in circumstances where all parties genuinely desire to reach an agreement and are genuinely seeking an agreement. Otherwise, if there is not that genuine desire on the part of all parties to reach final agreement, concessions are meaningless and clearly cannot be made with any advantage either to the giver or to the receiver.

I am very grateful to my hon. Friend for raising this extremely important matter. We are embarking again in Paris on a series of meetings which start on Thursday and will continue with very little intermission for some time thereafter. The purpose of the programme of work which we have devised is to maintain the possibility of agreement on the Free Trade Area before 1st January, that being a date which, as my hon. Friend has explained, is of importance not because it is a date on the calendar but because it is the day on which certain action will be taken by the six countries which, if it remains alone and unaccompanied by anything else, can lead to very serious problems and divisions in Europe. We have devised a programme of work and of meetings which will make it possible to reach agreement still by the end of this year, not in detail but in principle and on principle, if the real will to agree still remains all round.

We shall see in the course of the next few weeks whether that general will still exists. I still believe it does because, looking at this problem, as I have over a long period now, I feel completely convinced that the dangers to Europe of failure in these negotiations are so great that we who are responsible as elected representatives of the European peoples cannot afford to allow them to fail.

Question put and agreed to.

Adjourned accordingly at thirteen minutes to Twelve o'clock.