HC Deb 14 April 1960 vol 621 cc1521-43

2.19 p.m.

Mr. J. Grimond (Orkney and Shetland)

Ever since the Coal and Steel Community was first suggested, the Liberal Party has urged successive Governments, both Labour and Tory, to wake up to what was happening in Europe. It is now more and more widely agreed that we were right.

We suggested that the Government had miscalculated the forces behind the Treaty of Rome. We urged them to go in and take the place which this country could claim, as a leading European Power. But Governments proved unworthy of the opportunities offered to them. They chose to magnify the difficulties of associaton with the Messina Powers. They seemed sometimes even to pretend that the European movement did not exist. It is becoming more and more obvious that they gravely miscalculated events.

The Common Market is a reality. Many of the fears about it have proved illusory. Its members are not being rushed into a fully-fledged federation. Its field of action is economic, but of course to harmonise economic policies one must accept some political decisions. I think that while there remains a very wide field in which national tradition and Government must hold sway, national sovereignty is visibly breaking down in certain spheres and in economics and defence this breakdown should be encouraged.

Nor is it true that our Commonwealth obligations justify us cutting ourselves off from Europe. The Commonwealth wants two things—trade and capital. It is important for the Commonwealth not to be cut off from the most rapidly expanding market in the world. There are 170 million people in the countries of the Six. Further, the Six have devised a joint approach to supply capital for colonial territories. Britain, by herself, cannot supply capital for all her dependencies. Western Germany is making £70 million available to the colonial territories of the Six, most of which will, in fact, go to those of France.

Surely it is desirable that Britain and her Commonwealth should share in this European development. If we do not we may well find that the Commonwealth will look more to Washington and even to Bonn. Many people have said that if we join the Common Market we should deal a body blow at Commonwealth trade. But the Six would almost certainly agree to arrangements which would safeguard our Commonwealth trade, just as France is allowed to continue free entry for imports from Morocco and other countries associated with her. Indeed, the reverse of this is true. If we in the Commonwealth are not closely associated with this area of rapid growth, in the long run the whole Commonwealth can only be the loser.

Nor does the excuse that to join the Common Market would be harmful to British agriculture look very convincing now. It was summarily dismissed in the leading article of yesterday's Guardian. It is apparent that the countries of the Six intend to look after their own agriculture and our agriculture would gain as a reduction by being associated with them —and gain with some reduction in cost to the taxpayer. Clearly, the Common Market will expand its agriculture and it is looking for possible markets for it.

Lord Netherthorpe, whom no one could accuse of being unfriendly to agriculture said: I am extremely anxious about a Europe divided between the Six and the Seven. He also said, If the Six expand their production there will be nothing to stop the surplus from arriving in our market. We already know that our pig industry is running into difficulties because of the need of the Danes to find a market to compensate for the loss of part of their German market.

We used to be told that our special relationship with the United States of America would go against us. That has proved to be entirely wrong. The United States has made it all too clear that she is anxious to deal with a more unified Europe. If we are not careful we shall find in a few years that the Six are America's ally number two and we are a long way behind. The recent fracas at Washington is a pointer towards this unhappy type of development.

It was argued that the European Free Trade Association would be the beginning of a bridge towards the Six. That has not turned out as expected. This Association, I am afraid, has tied our hands and, in some respects, has deepened the split. I do not think we shall get any agreement in Europe unless we are prepared to accept the same integration as the Six. We have the task of bringing our partners in the European Free Trade Association along with us.

Sir Hendrie Oakshott (Bebington)

I am following with interest the argument advanced by the horn. Gentleman. If it be a question of joining the Common Market, surely he must realise that the condition precedent for joining it is a willingness to apply a tariff against all outside.

Mr. Grimond

That I understand. It is fundamental to the Common Market to start from there.

At present the Government find themselves in a cul-de-sac. They do not know which way to go. Sometimes they say they are willing to join any functional approach to European problems, but whenever they are asked to join anything in particular they refuse to do so. The Prime Minister's reputed statement in Washington has had a disastrous effect in Europe. It may have been exaggerated or wrongly reported. But whether rightly or wrongly reported it has confirmed Europeans in their views and suspicions that fundamentally we are out to sabotage their aims while paying lip service in a vague, wishy-washy way to the ideal of European unity.

It is no use the Prime Minister going on smugly reiterating that we will support any suggestions for a way out of the divisions in Europe. If any disunity is being created, we are creating it. If we wish to cure it, it is for us to make some proposals instead of raising objections whenever the bulk of the Europeans want to move rather quicker than we do. I regard the handling of the European situation as the worst mistake of British diplomacy since the war.

The hon. Member for Bebington (Sir H. Oakshott) is horrified at the idea that we should join the Six in any way, but this is an idea which is becoming more and more widely accepted. In its leading article the Guardian says that perhaps it is not possible just now but it is an idea which should be by no means rejected. The Economist is now coming round to our point of view that we must make some agreement at least with them. Even the good old Bow Group is climbing on to the bandwagon. I hope that the Government will not be too far behind the Bow Group. Over Africa they have been catching up and I hope that they will do the same over Europe.

If we joined the Community we could exercise a great influence. People sometimes forget that in the consultations which precede decisions in the Community a great Power is hardly ever in a minority. Instead of our national policies being frustrated, we should find that with some adaptation, they would cover the policies of the whole of Western Europe and be more effective than they are now.

The President of the Board of Trade once said that Britain would have to accept majority voting which might overrule them. Looking at Western Europe today, it seems plain that there is a strong majority opinion in favour of the liberal trading attitudes which are supposed to be held by our own Government. It is sometimes said that even if that is true, the Six would not welcome us, and I think there is something in that. The Six have worked out their treaty and they might not be so keen to have us as we might be to get in.

But although we have created suspicion on the Continent about our motives, we must remember that M. Monnet, the architect of the Communities, wrote in the Financial Times that everybody, and I mean everybody would welcome Britain in, if Britain agreed to the principles of the Common Market. He reiterated this in an interview on "Panorama" not long ago.

They are preparing to accelerate their programme of tariff reduction and solidation. Once again we are pressing them to go slow. I should like to know what we think we shall achieve and what use we hope to make of the time which is gained. If there be a recession, or if some other cause puts a strain on the Common Market in a year or two, and its solidarity is not far enough advanced to stand it, the Franco-German alliance, which is the keystone of the Western alliance, might fall apart with unhappy consequences for Europe. We might be much blamed if we held up progress in the Common Market. Instead of always trying to sew up the Common Market and frustrate it, we should be associating ourselves with its endeavours.

Mr. James Scott-Hopkins (Cornwall, North)

I am not clear about what the hon. Gentleman is advocating. Does he wish us to join the Common Market unilaterally now, immediately?

Mr. Grimond

I shall come to that. We are told that this is not the moment to do what the hon. Member suggests and that we should not attempt to join the Common Market because the Six and the Americans are already negotiating, but we have to make a few basic decisions now.

One of the decisions we have to make now is to bring our policy into line with the new realities on terms which it is possible to get. We should let it be known that at the right moment we are now ready to join the Common Market —that is the answer to the hon. Member —when mutually agreeable terms have been negotiated, but the Government have not made this decision. In the mean- time, we should cease to hold up their progress and we should discuss with our Commonwealth at the forthcoming meeting of Prime Ministers how the Commonwealth can be associated with the Common Market in such a way that countries of the Commonwealth can share in its trade.

In addition to that decision—that in principle we are ready to go into the Common Market—we should make some other moves even though they might not take us so far. I appreciate the doubts of hon. Members like the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) on whether this is the right moment to press our application for membership right home, but there are other moves we could make. First, I suggest that instead of trying to pretend that the Common Market will eventually come to an agreement on our terms, we must make an effort to establish better relations with it.

To say that this is a job which should not be entirely left to the Board of Trade is not to be critical personally of the President of the Board of Trade, but it is true that in Europe he and his predecessor are inextricably linked with the worst period of British obtuseness. I suggest that it would be very good for the Foreign Office to have to take an initiative. This is now a problem of first-class importance to the foreign relations of this country and, in so far as it would raise the level, so to speak, we should make it an affair of prime importance in our foreign policy.

I shall give an example of our obtuse-ness. One way in which we have annoyed the Six was our delay in appointing an ambassador to the European Economic Community. For nine months after the Community had been in existence we failed to be thus represented, unlike the Americans who appointed their ambassador immediately. Again, we have always tried to keep the European Commission out of negotiations in O.E.E.C. thus needlessly building up ill-will against ourselves and irritating its members. These may seem small matters, but they reflect a fundamental attitude—the wish to avoid direct negotiations with the European Economic Community as such and to keep negotiations in the framework of other existing institutions whose character could be imposed on the European edifice.

Secondly, we should accept that there will be tariffs round Common Market countries. I refer again to the intervention by the hon. Member for Bebington. This is what the Common Market is about. It is no good trying to deny it. We should give up trying to revive the Free Trade Area. Instead, we should open negotiations on particular commodities such as motor cars, machinery and so on. We should form a negotiating group from the Seven on particular goods. There is great anxiety in industry and many firms in this country about how they are going to be placed. Some are joining with firms on the Continent. Some are building factories there. I believe the Seven and Six could get down to negotiations on particular commodities more usefully than in trying to fight each other with the Free Trade Area and the Common Market.

It must be remembered that the danger is not that the Common Market will have higher tariffs. On the contrary, the general tariff in many cases will be lower than tariffs most particular countries within the Community and lower also than our own. The danger is that there will be a large Free Trade Area in which our goods will find it very difficult to compete and from this base there will be a large export surplus competing with us in other markets.

The danger which is becoming acutely felt by various companies in the metal trade, engineering, cars and so on is something which public opinion in this country has greatly underestimated. Are our proposals, which are being put forward by the Seven, genuine, negotiating proposals designed to reduce the tariffs of the Six, or are they a sort of weapon with which to try to beat the Six? Whenever we have tried to use the European Free Trade Association or its proposal as weapons, they have broken in our hands, and it would be futile to go forward with them if they were intended for that purpose.

The third suggestion which I want to make is that we should join Euratom and the Coal and Steel Community. I remind the House that only this January the Foreign Secretary said not only that he accepted the Six but that it was a pity that we had not joined the Coal and Steel Community.

I want to ask the Government one or two questions about their attitude, having, I hope, made my attitude clear. I have given the Economic Secretary previous warning of these questions, and no doubt he will have precise and definite answers to give. First, do the Government still rule out the possibility of accepting in principle the Common Market and then going in and seeing what bargains we can get and what arrangements we can make for the Commonwealth? Do they completely rule that out? Do they still hope for a Free Trade Area? I think we must get that out of the way. Do they think that the creation of the Seven is a lever to help get a Free Trade Area? If they do, they are making a fundamental mistake. It would be interesting to know if that is one of their objectives. If it is, how long do they think that the Swiss, the Austrians and the Danes will remain in the European Free Trade Association if we do not find a solution to the problems between it and the Common Market?

Do they feel that the Six are too protectionist for us? Do they maintain that, even though their common tariff is already lower than out tariff in many ways and they are proposing further to lower it by 20 per cent.? Do they want to stop the acceleration? If they do, this is presumably to gain time. I do not say that I am against slowing up the acceleration, but I want to know what they intend to do with the time gained. What policies do they propose to suggest? It is not good enough simply to say, "We will see what the negotiating committee produces and we will support anything which we believe is good." We have said this for years, and I do not think that even the Government pretend that the results are very happy.

Do the Government accept the kind of proposals which I have outlined—that we should join some of the functional organisations, try to raise the diplomatic level and to improve relations and enter into negotiations over the tariffs on specific goods?

The sad feature is that fifteen years ago Britain was at the peak of her power and influence, and the leadership of Europe was hers for the asking. We have thrown it away on grounds which have largely proved wrong. We now see America putting the good Europeans before ourselves, and I fear that the Commonwealth will be bound to come to terms with Europe unless we take steps to right the position. I believe that we may see Germany take our position as the leading power in Europe.

If we do not join even at this late stage in the movement for European unity —and join with enthusiasm—if we try jealously to guard our independence, which in many ways is disappearing in any case, we shall find that the centrifugal forces which are blowing on this country will grow stronger and stronger, and in fifteen years' time it may well be that we shall have no special relationship with Europe or with America—or even, possibly, with our own Commonwealth.

2.39 p.m.

Mr. Ronald Russell (Wembley, South)

I will be brief because I know that other hon. Members want to take part in the debate. The hon. Member for Orkney and Shetland (Mr. Grimond) began by saying that Britain had not been awake to what has been happening in Europe. I remind him that the British delegation to Strasbourg in 1952 was so far awake as to what was happening that it was very much in advance of the Common Market. It put forward a plan, called the Strasbourg Plan, for bridging the gap between Europe, the Commonwealth and ourselves. This was done very much in advance of the Common Market idea. It is because I want to make a plea that at least this plan should not be ruled out or that we should consider reviving it that I have intervened in the debate for a moment or two.

The hon. Member for Orkney and Shetland said that he was in favour of a common external tariff. Does he realise that this means giving free trade to the countries of the Common Market and putting their common external tariff on all goods from the Commonwealth? If so, that is an amazing and astounding plan for anyone to advocate, even a member of the Liberal Party.

I ask my hon. Friend the Economic Secretary to ask his right hon. Friend not to rule out reconsideration of the Strasbourg Plan, because it is a bridge between ourselves and Europe, ourselves and the Commonwealth, and the Commonwealth and Europe, and the Free Trade Area, as well. It has more significance now than it had at that time, because the Overseas Territories Clause of the Treaty of Rome has made a great difference. After the Strasbourg Plan was passed by the Council of Europe by 84 votes to nil, with six abstentions, the abstainers being the Italian delegates who were not against the Plan in principle, but only against the detail of it, it was sent to O.E.E.C. In O.E.E.C, it was smothered because it is a violation of G.A.T.T. and of the principle of non-discrimination which has governed international trade since the war.

But there is a difference now. The Overseas Territories Clause of the Treaty of Rome is itself a violation of G.A.T.T. It would introduce a new preferential area between the Common Market and the French overseas territories. Therefore, I suggest that, if that is not frowned upon by O.E.E.C, the Americans, the G.A.T.T. organisation or anybody else, they cannot in logic frown on the Strasbourg Plan, which would have set up a preferential area inside Europe and enabled us to give a system of secondary preferences to the countries of Western Europe at a lower rate than those we give to the Commonwealth. They, in turn, would have been able to do the same.

I suggest that that Plan be revived I have made this plea many times before. I make no apology for making it again, because conditions have changed. There has been a violation of G.A.T.T. by the Common Market countries. The Strasbourg Plan is the only means of bridging the gap between the Commonwealth, Europe and ourselves. I ask my hon. Friend to have it reconsidered, particularly in the light of the history of the last few years and what happened over the Overseas Territories Clause of the Treaty of Rome.

2.42 p.m.

Mr. Anthony Kershaw (Stroud)

With his customary efficiency, the hon. Member for Orkney and Shetland (Mr. Grimond) outlined all the difficulties and harms which at present flow from the economic division of Europe. However, I thought that in his analysis he attached insufficient weight to the difficulties which face this country in joining the Common Market. I was sure that I detected most clearly the usual approach of the Liberal Party—and indeed some others—which has to prove its liberalism and open-mindedness by always blaming its own country for everything that happens.

The hon. Member for Orkney and Shetland admitted that one of the conditions of the Common Market was that there should be a common external tariff. I do not think that he faced up to the natural consequences of that position. He shaded it afterwards by saying that, admittedly, there has to be a common external tariff, but that starting from there we could go on and negotiate on individual commodities. For example, it might be possible to make individual arrangements on individual items such as motor cars, which the hon. Gentleman mentioned, and perhaps other items.

That approach does not comprehend the nature of the European Economic Community, which is fundamentally political, and not economic, in nature. Its member countries cannot afford to break down this external tariff wall, which is the buckler of their existence, because if they do the political content of their arrangement ceases. They have said over and over again that they will not do that. The idea that we can eat away this tariff wall outside Europe and in some way induce them, commodity by commodity, to throw overboard the whole of their political structure is an illusion and should not be entertained for one single moment.

If we are to have this common external tariff, it must be imposed on Commonwealth countries. If we had joined the Common Market, should we have joined it with the Commonwealth or without? I imagine we would suggest that it would be more appropriate to have joined with the Commonwealth, but would the Common Market have had the Commonwealth? The wider the association becomes the more watered down does its political content become. I feel certain that it would not have had the Commonwealth, with all its primary commodities coming into the Common Market free of duty or with the appropriate low duty. It would not have been ready to accept cheap cloth from Hong Kong or primary produce from Australia, Canada and elsewhere.

Furthermore, would the Commonwealth countries have been willing to come in? Would Canada, Australia or India have been willing to submit to European direction of their economic life? Would they have been willing to accept that a gentleman in Brussels, whose name they cannot pronounce and of whom they have never heard, should be the final economic arbiter of their destiny? I do not think we could have brought in the Commonwealth countries even if we had wished to, and if they had been acceptable to the European countries.

Should we have gone in without the Commonwealth countries? That is an economic possibility. I accept what the hon. Member for Bolton, West (Mr. Holt) has said more than once, that the economic consequences of getting over this tariff wall are not so great to some of our more developed Commonwealth countries. Australia and Canada do not attach the same importance to tariffs as they did when they were primary producing countries.

But it is to the political side that we should look. Is it possible for us to say to India, with her starving millions, to Pakistan, with her empty treasury, and to other nations in the Commonwealth which are emerging or just about to emerge, "We are extremely pleased to have you as members of the Commonwealth. We are extremely glad that you accept the Queen as head of the Commonwealth, and we want to do everything for you. We intend to step up investments in your country. As from next week, however, we propose to impose a 20 per cent. tariff on your primary goods which come into this country." I am sure that India would say, "That is that. The Commonwealth has had it. We shall join some other outfit."

Mr. Arthur Holt (Bolton, West)

Does not the hon. Member agree that once we have accepted the principle of entry into the organisation of the Six it is conceivable that we could negotiate upon such a question with the Six?

Mr. Kershaw

That is the hope, but if we are to believe what the Six say it is clear that they will insist on a minimum standard of political control. There is no other reason for their existence. They would never agree to any washing away of a common external tariff. They have said so, in terms, over and over again.

The hon. Member for Orkney and Shetland also said that the United States is turning from us and now wishes to support the Six, and that it is entirely our fault. I agree that the United States is showing favouritism to the Six, but I do not think that it is our fault. The United States has its own interests. It would like to see a United States of Europe, overlooking the fact that entirely different circumstances govern Europe. I believe that the United States is really scared of Europe ganging up against it. Now that its balance of payments is not looking so hot it is afraid that it might find an external tariff over the whole of Europe operating against it.

I believe that the inspired leak in Washington when the Prime Minister was there was an effort to keep Europe divided until after the Presidential election, and after the Congressional election, when the United States was ready to say what it could do, to come in with an Atlantic alliance conception of trade. Both politically and economically it is the immediate interest of the United States to keep Europe apart, and it is for that reason that it favours now one side and now the other.

I agree with the hon. Member for Orkney and Shetland about the functional approach. There we can do something. I agree that we can do more in future than we have been willing to do in the past. We can have a more convincing association with Euratom and with the Coal and Steel Community. That would be to our economic advantage, and it would show our willingness to co-operate.

Apart from that, surely the way in which we can overcome this split in Europe is not on the economic side, because the split in Europe is not fundamentally based on economic premises; it is a political split. We ought to approach it on the political side. I think that we have scope within the political possibilities open to us today to be able to offer to Europe various political forms of co-operation.

The announcement that we had yesterday in the House about Blue Streak indicates at least one way in which it might be possible for this country to co-operate with Europe in greater detail. And I hope that we shall not feel ourselves inhibited in future from co-operating with Europe on the supply of atomic secrets, both for peaceful and warlike uses, by American legislation to which at one time we were forced to agree because of necessity and which ought not to continue in being. If it continues in being it has the effect of dividing the Six and the Seven in Europe.

I believe that an alliance working together with France and Germany could be made infinitely easier if the difficulty about American legislation could be got over. That is the way we can overcome this split which will have economic consequences, but the political consequences will be inevitably more severe. We should address ourselves to the political side of the question.

2.52 p.m.

Major H. Legge-Bourke (Isle of Ely)

I agree with my hon. Friend the Member for Stroud (Mr. Kershaw) that this is a question which we have to consider primarily from the political point of view. The hon. Member for Orkney and Shetland (Mr. Grimond), in recommending that we should eventually become a full member of the Common Market, approached it principally from an economic point of view. That is where the fallacy of his argument lies. In his previous utterances, and, indeed, in the interview which he gave on "Panorama" on the B.B.C. this week, M. Monnet made quite clear that the principal object of the Common Market project is political union in Europe.

We have seriously to consider what would be the position of Che United Kingdom and the Commonwealth if we were to find, having wrapped ourselves so much in the economic machinery of the Common Market, we were unavoidably drawn into a political federation of Europe or part of Europe. I think that it is constitutionally impossible for us to accept that. The moment we do that we are bound to see eventually a complete break-up of the whole Commonwealth structure. It was for that reason that at the time of the discussions on the Schumann Plan I felt unable to go with my party. There were six of us at that time in the House, when the Conservative Party, then in opposition, wanted the Labour Government of that day to go in right at the beginning of the Schumann Plan.

Mr. Alfred Robens (Blyth)

I followed the argument of the hon. and gallant Member with great interest, and I agree with it. It was because the French laid down that we could not even attend the first conference unless we accepted the principle of a supra-national authority.

Major Legge-Bourke

It was because of its supra-nationality that I disliked it so much. It was for that reason that I felt that the whole supra-national concept being built up in Europe was something which we should do our best to resist. I think that it is completely inalienable to the Commonwealth idea that we have always had. It comes down to this. Even supposing we were to accept the economic obligations to the Common Market, that in itself would at once mean a complete revision of a great deal of our internal policies, and not least our agricultural policy in this country.

I am certain that we must always be prepared to change and adjust our views to changing circumstances. It may be that we shall have to make a considerable revision of many aspects of our policy in the light of what has happened in Europe. But until we have worked out what sort of agriculture we want, the consequences of Part II of the Rome Treaty and matters of that kind, it would be suicidal for us to go into the Common Market as the hon. Member for Orkney and Shetland suggests, apart altogether from the political considerations and the constitutional difficulties with which we could be confronted and which could put us in a most invidious position.

What worries me most of all about what is happening in Europe at the moment is the situation in the light of the history of this matter. There is no doubt that the Americans solemnly believed after the Second World War that they could bring about a political federation in Europe. They did their best to promote it, and many of the utterances of President Eisenhower when he was in Europe showed that he had it in mind. He said that unless Europe was prepared to work together, obviously on federal lines, Europe could not be sure of American military support any more. I know that pressure has been brought to bear, and I am certain that if it came to America choosing between the Six and the Seven she would choose the Six every time because that is consistent with the sort of federation which exists in the United States. America believes that because the new world and federation get on all right, it must also apply in the old world too. One could quote many precedents on this point, not least from Disraeli.

I am sure that the Common Market, having come about in the way that it has, we shall now have a wrangle to try to divide the remaining Seven and to drag as many of the Seven into that Common Market with a view ultimately to a political federation of the States in that Common Market. For that reason, I have regretted our being so ready to Damn with faint praise, assent with civil leer to the Common Market idea. We have blown neither hot nor cold over it, whereas we ought to have opposed it all along. We have said that we welcome it, and all the time we know that we would hate to be in a position in which we were forced to choose between entering it or breaking it up. It would be impossible to come to a decision without risking the break up of the Commonwealth.

I hope my hon. Friend the Economic Secretary to the Treasury will not concede the point which the hon. Member for Orkney and Shetland has asked him to do, but will make sure that we have got our own policies right in this country first, that in any step that we take in this direction we will have full Commonwealth agreement and will preserve the rights which have proved so valuable in the past.

2.58 p.m.

The Economic Secretary to the Treasury (Mr. Anthony Barber)

I am grateful to the hon. Member for Orkney and Shetland (Mr. Grimond) for choosing to raise this matter of European economic affairs. As he said, he courteously let me know of some questions that he intended to ask, although I am bound to say that I detected one or two more. At any rate, in the short time available I shall do my best to cover the ground.

This matter is most important. As I think most hon. Members will agree, there have been some misconceptions. This occasion provides a good opportunity to clarify the Government's policy in relation to both our past attitude and our present endeavours.

The hon. Member seemed to imply that we have been too slow in our reaction to developments in Europe. He said that we have not awakened to what is happening in Europe. But many months before the Treaty of Rome was signed—indeed, in the summer of 1956— an O.E.E.C. working party was set up, with our full support, to consider the possibility of wider free trade arrangements embracing all the members of O.E.E.C. Our intention to support this arrangement was announced in the House before the end of 1956. Again, within a year of the ending of discussions on a wider Free Trade Area, the E.F.T.A. Convention was initialled.

These were not slow reactions in matters of such paramount importance. I think that there are many people outside the E.F.T.A. countries who were very surprised that we had been able to reach agreement so quickly.

If I have time, I shall deal with some of the lesser matters which the hon. Member mentioned, relations with O.E.E.C, and so on, but I think that it would be for the convenience of the House if I were to turn straight away to the more substantial point of criticism he made, that the United Kingdom ought to have joined the Common Market or ought to do so now.

This course was favoured by the hon. Member for Bolton, West (Mr. Holt). I heard his speech in the Budget debate, and, once again today, the same argument has been advanced by the hon. Member for Orkney and Shetland. It is most important to draw a distinction between our attitude to what others have done and the possibility of joining the Common Market ourselves. The hon. Member for Orkney and Shetland said that the Common Market is a reality. Again and again, we have made it plain not only that we accept the Treaty of Rome but that we welcome it as a major contribution to the consolidation of Europe.

The hon. Gentleman said—I took his words down—that we were trying to frustrate the Common Market. I hope that that was a slip of the tongue. It is not so at all. What we do believe is that it would be of great benefit to all if there were complementary provisions embracing the rest of Europe as well.

I shall not weary the House with a long rehearsal of the arguments against our joining the Common Market. The hon. Member, in opening the debate, said that we chose to magnify the difficulties of association with the Common Market. The difficulties are very real. The objections to it still exist and it is absolutely vital that they should be understood. My hon. Friend the Member for Bebington (Sir H. Oakshott) pointed out that one of the essential features of the European Economic Community is the common external tariff. This is of paramount importance. If we agreed to bring our tariff into line with the common external tariff, Commonwealth Preference would inevitably go and so would Commonwealth free entry except in respect of those items where the common tariff is nil.

This would be the inevitable consequence of following the suggestion which has been made. The point has been made by my hon. Friends the Members for Stroud (Mr. Kershaw) and Wembley, South (Mr. Russell), so I shall not elaborate it now.

My hon. Friend the Member for Wembley, South asked me to draw, once again, to the attention of my right hon. Friend the Chancellor of the Exchequer, what he said about the Strasbourg Plan. I will certainly do that. I hope he will forgive me if I do not deal with it in any detail this afternoon, in view of the limited time available.

As the House knows, within the E.E.C. tariffs are being removed on foodstuffs as well as on industrial products. For us to conform with this policy would certainly mean removing from our agricultural and horticultural producers the tariff protection which they at present have against exports from the Six. In his speech, the hon. Member for Orkney and Shetland quoted the words of Lord Netherthorpe, when he said that he was anxious about a Europe divided between the Six and the Seven. I agree, and nothing that I have said about the difficulties which the hon. Gentleman's proposals would raise for our agricultural and horticultural industries conflicts with what the hon. Gentleman quoted from Lord Netherthorpe.

Although there has been an increasing appreciation in this country of the need for a closer approach to Europe, there is much force in what my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke) said. We have not yet in this country reached a stage where it could be said that there was general support for the aims of political federation which undoubtedly lie behind the Treaty of Rome. Moreover—I say this with great humility—I really believe that we must keep a sense of proportion in all this. After all, the fact is that our major trading interests are outside Europe, the major trading interests of the Six are inside Europe.

We must ask ourselves whether, in these circumstances, it would be wise to surrender the freedom of our world-wide commercial policy to the decision of a European grouping. We have not been able to find any practicable way of overcoming these obstacles to membership of the European Economic Community. I would invite those who advocate that course to consider the consequences very seriously and to tell us some time—I realise that this afternoon the hon. Member for Orkney and Shetland has not had enough time—in a little greater detail how they would deal with them.

The hon. Members for Orkney and Shetland and Bolton, West have advocated unilateral reduction or removal of tariffs by the United Kingdom, because, they say, this would be the best means of furthering progress. I respect their views, but I hope that they will forgive me if I do not embark at this juncture on the merits or demerits of returning to complete free trade with all countries. I do not think that a unilateral gesture of this kind would solve our problems in Europe. Whatever benefits there might be for our economy, we should not thereby remove the discrimination which we face in the Common Market.

I would have thought that the best course is to secure what advantage we can from reducing our most-favoured-nation tariffs on individual items in the G.A.T.T. tariff negotiations which are to begin next winter.

Mr. Grimond indicated assent.

Mr. Barber

I am grateful that that is acceptable to the Liberal Party.

Mr. Grimond

That is what the Government propose to do, is it? That is a statement of policy?

Mr. Barber

Certainly. I would not have said it if it had not been.

The hon. Member for Orkney and Shetland referred to the question of acceleration. It is right that he should have drawn the attention of the House to the concrete difficulties which face us in the immediate future.

I should like briefly to tell the House about the consequences which would follow if the so-called Hallstein proposals were to go through. As the House knows, the Governments of the Six have not yet accepted these proposals, but we must consider the consequences if the Treaty of Rome were accelerated in accordance with those proposals. If that were to happen, the Six would reduce their internal tariffs on 1st July next by 20 per cent. instead of 10 per cent. Taking into account the reduction of 10 per cent. which was made at the beginning of 1959, there would then be a 30 per cent. reduction in tariffs covering trade within the group. On the same date, 1st July, the Six would also make their first move towards a common external tariff.

I do not want to elaborate, but, very broadly, that means that for imports from outside the group the tariff of the Six would rise or fall by 30 per cent. of the difference between the basic levels of 1957 and the level of the eventual common tariff. Obviously, where the national tariff is below the common tariff—I am speaking in terms of the Six—it would go up. Where it is above, it would go down. These changes would be made on the basis that the eventual level of the common tariff would be reduced by 20 per cent. subject to reciprocity from third countries.

It is perfectly true that under these arrangements we should gain some advantage in the French and Italian markets, because, in general, the tariff level in those markets is above that of the common tariff. Four-and-a-half per cent. of our exports, worth about £160 million, in 1959 went to these markets where we get some benefits, but these benefits would fall far short of compensating for the losses we should suffer in the German and Benelux markets. These countries take 10 per cent. of our exports, which, in 1959, amounted to more than £340 million. In these countries, there would be a sharp increase in the external tariff, while the internal tariff would be reduced.

The increase in tariffs by Germany would be particularly severe. As the House may remember, Germany reduced her industrial tariff by 25 per cent. in 1957, and to restore this cut and to move upwards towards the common tariff would, in some cases, mean doubling the external tariff, while the internal tariff would be reduced. I have with me a number of instances of the way in which this would work, but, again, I do not think the House would wish me to go into them in detail now.

I have referred to the immediate consequences for our trade, but there is also the wider consideration that acceleration as proposed by Professor Hallstein would deprive us of the breathing space which would otherwise be provided up to 1st January, 1962, which is the date laid down in the Treaty of Rome for the first move towards the common tariff.

The hon. Member for Orkney and Shetland asked what we would do during the eighteen months. This is a matter which we have considered a great deal with our partners in the E.F.T.A. and I believe that in those eighteen months, given good will on both sides, the Six and the Seven, we could make much progress towards a permanent and com-prehensive settlement of this European trade problem. The hon. Member asked, in passing, whether we still hoped for a wider free trade area. I assure him that the creation of a single European market is still our objective.

The hon. Member said that the Government did not know which way to turn. This simply is not true. As I mentioned to the House during my speech in the Budget debate on 6th April, we and the other representatives of the Seven have already put forward in Paris a proposal which, I believe, any fair-minded person could describe as imaginative, and certainly outward-looking, for dealing with the situation which will arise on 1st July next. Again, I do not wish to go into detail. I would only add, in view of what the hon. Member said, that these are genuine proposals.

We have said that we—that is, the Seven—would be prepared to discuss extending on 1st July, not only to the Six, but also to all other countries who are members of G.A.T.T., in accordance with the principles of G.A.T.T., the tariff cuts which we are due to make on that date to the extent that the Six are prepared to act on a reciprocal basis.

That proposal, which assumes that the original Treaty of Rome timetable will be followed, does not seek any special privilege for the Seven in the E.E.C. countries. It does not contemplate a special position for the Six in the E.F.T.A. countries. What it envisages is a world-wide tariff reduction by both groups. It would obviously, therefore, be of great benefit to world trade as a whole, both directly as regards imports into the thirteen countries and indirectly as regards trade with third countries in so far as they were induced to offer compensating reductions in their tariffs in return.

The hon. Member asked whether we still regarded the Seven as a lever. The fact is that the Seven, acting as a unit, has made what I believe to be an imaginative and sensible offer. That in itself shows its value in any further negotiations for freeing trade in Europe.

The next question by the hon. Member was whether we would be prepared to negotiate on particular commodities. Whether there will be negotiation in respect of particular commodities in the Trade Committee, which is considering the matter, we must wait and see. In the absence, however, of a free trade area between the Six and the Seven, any reductions in tariffs would have to take place on a most-favoured-nation basis. I should have thought that G.A.T.T. would be the better place for that.

The hon. Member then asked how long the Austrians and the Swiss and some other country would wait for a wider solution. I can only tell him that I went to the last ministerial meeting in Vienna and that I can assure the House, from my own experience there, that there is no reason whatever to doubt the solidarity of the European Free Trade Association. Indeed, I stress the great opportunity which the E.F.T.A. market offers us. It embraces some very rich countries. National income per head in Switzerland and the Scandinavian countries ranges between £300 and £450 as against about £350 in this country in 1958. Another factor of great importance is that these countries obtain from abroad a relatively large proportion of the goods they require.

I wanted to end on this note, because there are great opportunities—

Mr. Grimond

Has the hon. Gentleman nothing to say about functional organisations such as Euratom?

Mr. Barber

I have a considerable amount, but time is so short. I shall be very happy to write to the hon. Gentleman about it. I have a lot of information here, and about our relations with it and the way it was built up, but in view of the limits of time I think that I ought to conclude on the note I have just struck.

Mr. Robens

The hon. Gentleman will write a nice long letter.

Mr. Barber

Yes, a nice long letter as the right hon. Gentleman says.

Although the population of the European Free Trade Association is little more than half that of the Economic Community its combined national income is about two-thirds of the other and its combined imports and exports three-quarters. The annual import bill of our partners in the E.F.T.A. is about £3,000 million a year, nearly two-thirds of those imports being manufactured goods. Our exports to them at present are only about £250 million worth. I think that these figures indicate the extent of the opportunities before us; but, of course, the importance of the E.F.T.A. lies not only in the commercial benefits which it holds for us. I believe that the Association provides also a new way of carrying forward European co-operation.