EUROPEAN ECONOMIC COMMUNITY

HC Deb 03 August 1961 vol 645 cc1651-714

Order read for resuming adjourned debate on Amendment to Question [2nd August]: That this House supports the decision of Her Majesty's Government to make formal application under Article 237 of the Treaty of Rome in order to initiate negotiations to see if satisfactory arrangements can be made to meet the special interests of the United Kingdom, of the Commonwealth and of the European Free Trade Association; and further accepts the undertaking of Her Majesty's Government that no agreement affecting these special interests or involving British sovereignty will be entered into until it has been approved by this House after full consultation with other Commonwealth countries, by whatever procedure they may generally agree.—[The Prime Minister.]

Which Amendment was, to leave out from "House" to the end of the Question and to add instead thereof: notes the decision of Her Majesty's Government to make formal application under Article 237 of the Treaty of Rome in order to initiate negotiations to see if satisfactory arrangements can be made to meet the special interests of the United Kingdom, of the Commonwealth and of the European Free Trade Association; regrets that Her Majesty's Government will be conducting these negotiations from a position of grave economic weakness; and declares that Great Britain should ewer the European Economic Community only if this House gives its approval and if the conditions negotiated are generally acceptable to a Commonwealth Prime Ministers' Conference and accord with our obligations and pledges to other members of the European Free Trade Association ".—[Mr. Gaitskell.]

Question again proposed, That the words proposed to be left out stand part of the Question.

3.37 p.m.

Mr. Harold Wilson (Huyton)

Not one speaker in this debate so far, I think, has failed to realise the momentous nature of the issue which we are discussing and deciding in this two-day debate. Even though we sometimes find him lacking in certain of the qualities which we consider essential to statesmanship, the Prime Minister does not possess in a large degree one quality which is essential, and that is a deep sense of history. I do not think that he will have missed the parallel between this decision which has now to be taken and that which faced Sir Robert Peel 115 years ago, though I think that, for some of the reasons which the right hon. Gentleman and my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) stated, in the sphere of world politics the importance of this issue transcends even that of the Free Trade issue of 1846.

Our position has been stated by my right hon. Friend yesterday in his speech. We do not oppose the decision of the Government to embark on negotiations to ascertain the conditions on which Britain can join the European Economic Community, but we do utterly reserve our position on the decision which must be taken when the Government return to this House from the negotiations. We set out in our Amendment some of the conditions we regard as fundamental. Frankly, until we know what terms we can get, anyone who can claim to see this issue in simple black and white terms, in or out, is either a charlatan or a simpleton.

I regard it as my duty this afternoon to set out some of our anxieties particularly, but not exclusively, in the field of economics and trade, anxieties which, in our view, must be resolved if the final outcome is to be regarded as acceptable. Our Amendment refers without qualification and without apology to the fact that we shall be negotiating from a position of grave economic weakness. It is no good bucking this fact. It will profoundly affect the negotiations. Equally, without going over all the ground of the debates we have had in the last few weeks, the clear responsibility for this weakness lies with the Government who, in unprecedentedly favourable economic conditions, have created weakness out of great potential strength. To be on one's knees through the crippling blows which our economy has sustained and is sustaining is not the right Posture for negotiations which can decide our entire future.

The Prime Minister referred to the historical fact that over the centuries Britain has intervened in Europe at times of great crisis, and I think that that is true. He no doubt had in mind, in reviewing the centuries of the past, as other speakers have said, the actions of this country in the reign of Elizabeth I against Philip of Spain and the actions of Chatham and the younger Pitt, two centuries later, but his sense of history sometimes leads him astray. In the reign of Elizabeth I our invisible exports were powerfully aided by the proceeds of piracy—State-supported piracy at that. Today, the pirates are satisfied to batten on the home market, again with State support. The older and the younger Pitt organised the great European coalitions with vast subventions from our national Treasury, but today we have to go cap in hand to the bankers of Europe for loans. So there is a difference this time.

In the economic debate, I warned the Government not to regard their decision about Europe as an exercise in economic escapism. We shall survive—inside or outside Europe—only as a result of our own efforts, our own ability to increase production and exports and to restrain costs. There is no escape and certainly no justification for escapism, but what a difference there would be if we were taking the decision not from weakness, but from the strength which should have been ours to command.

There has been great argument about the economic consequences of going into Europe or staying out—because the decision to stay out would have economic consequences no less profound than the decision to go in. I shall give my views. We already feel some of the effects. As I said in the Common Market debate a year ago, so far we feel them more in terms of a diversion of investment than in a diversion of trade. From the long-term point of view, I think that there is a strong case for saying that in terms of our own industry and our trade in Europe we may gain from being in Europe.

When British industry, which is, perhaps, a little more versatile and adaptable than sometimes appears, has made the changes necessary, we may, and I think that, on balance, we should, gain. But precisely because of our present weakness, I hope that the House will bear me if I do not spend so much time on the long-term economic position, but spend a little time on the short-term position which would result from a decision to go in now.

Yesterday, the Government announced a loss of £114 million from our gold reserves in July, almost the worst month ever recorded. It was more than 10 per cent of our total reserves gone in a single mouth despite the special help we are getting from the European central banks. We also read the news of the humiliating necessity of having to borrow—we have not been told officially yet—£700 million from the International Monetary Fund. If that figure is correct it is only £200 million less than we had to borrow in 1946, a year after the war, when our export trade had not been rebuilt and we were still suffering from the shortages caused by the war. Now, sixteen years afterwards, if these figures are right, we are borrowing a sum only a little less than what we borrowed just after the war and which has provided a field of propaganda for hon. Members opposite for the last fifteen years.

The reason why I mention this and the amount of "hot" money which is pouring in because of the excessive Bank Rate is its relevance to whether we should go into the Common Market or not. I wonder what calculations the Government have made about the short-term effects on sterling if we go in. We can only guess. My view is that the short-term increase in exports will not be as great as the short-term increase in imports to this country. I hope that I am wrong.

In the economic debate, I said that British industry, at any rate in the short-term, is not very responsive to the cold draught of import competition which we hear so much about. If we look at the figures for 1958 to 1960, following the liberalisation of a great deal of our import trade, we find that our imports of manufactured goods from the Common Market countries have risen from a monthly average of £23½ million to £34.9, an increase of 49 per cent., while exports of the same kind of goods, Class D manufactures, rose from £27½ million to £34½ million, an increase of 25 per cent. This may be the pattern if we go in.

What of capital movements? Can anyone challenge the view that if British investments and speculators were free to invest in Europe there would be in the short term a massive withdrawal of funds from this country? As long as there is this grave weakness and this imminent fear of devaluation there will always be those, perhaps in high places, who may say that it is anti-British or derogatory to sterling but it makes sense to them.

The premium on the soft dollar, the only legal route into Europe in recent months, is one measure of the design. Even if there were no possibility of devaluation, the initial freedom to get into Belgian, French and German securities would mean a fairly big net outflow unbalanced by an equal inflow. Most of these countries have had considerable freedom to bank funds here.

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

The fact is, as the right hon. Gentleman knows, that British investors are perfectly free, through the medium of the soft dollar, to invest in Europe. There is no reason to suppose that after this change they will invest more or less.

Mr. Wilson

The point about investing in soft dollars is that there is a likelihood that as it gets harder and harder there is a premium on the soft dollar, but I do not think that anyone would maintain that there is freedom of capital movement into Europe as there would be under the Treaty of Rome. Of course there is not. If there is, the Government had better look to its economic defences. On balance, I should judge—and I should like to know whether the Government agree—that there would be an immediate and dangerous outflow on current capital account which could quickly exhaust our £700 million loan.

Recently, in the economic debate the President of the Board of Trade stressed the special vulnerability of sterling because of our position as an international banker. He was right, of course. I wonder how the Government view the position of Britain as banker for the sterling area if we went into Europe. Could we still remain as banker for the sterling area? This is an important question, but we have had no guidance at all from the Government about it. The sterling area depends on sentiment as well as on hard cash. It could hardly survive otherwise.

If this sentiment is impaired, and countries such as Ghana or Malaya saw us turning to Europe and felt that it would be from Europe, not from Britain, that they would get more and more developmental capital, if they felt that the currencies of the countries which would be supplying them with capital equipment—such as Germany—offered better long-term security than sterling, would there not be a rush to convert their sterling balances at present held in this country, at any rate sufficiently to break Britain's position as banker of the sterling area?

This is a very serious problem and I know that the House will take it seriously. I hope that we shall have a serious reply from the Government today. There we have the possible combined effects of a worsening trade balance for a year or two, an outflow of capital from Britain and the breaking up of our position as sterling area bankers—all this happening in the first year or two; it is a formidable prospect.

We are told that our capital problems are understood in Europe, that they are willing to waive or defer the operation of greater freedom of capital movement and that they would not be as quick as might be thought to rush into applying that part of the Treaty. I profoundly hope that there is this view in Europe and that it will be made a sticking point by the Government in the negotiations, otherwise none of us can be answerable for the consequences. So much for the short term.

I have referred to the long term. I believe that we could gain, but not on the basis of the degree of lethargy and sloth which is still characteristic of so much of British industry today. There is no more dangerous illusion than that laissez-faire and the cold east wind will do the trick. Positive, purposive, economic planning will be needed, as we have frequently and recently stated If I may adapt a phrase from our policy statement, "Signpost to the Sixties", if there is no fundamental change in our internal economic policies, what we are debating today is whether we shall be a backwater in Europe or a backwater outside Europe, and both are an equally dangerous position to occupy.

We see evidence that a number of the more progressive businessmen in the country want to go in. I think that that is true, especially some who are efficient and confident that once they are presented with a very big market they will be able to earn a great deal more foreign exchange and to sell more goods. But they are not representative of the entire community, and I do not think that hon. Members can deny for one minute that there are some who are anxious to get in with one reason only—to have a wages showdown which they have not been able to have in the last four years.

It is five years since the Prime Minister, when Chancellor, announced his restrictive policy and in collusion, I think, with the the Chairman of the Engineering Employers' Federation had a showdown on engineering wages. That was in 1956. That, of course, failed and ever since attempts to have a wage freeze and a wage showdown have not succeeded. There are some people, I do not say on the Conservative benches, who resent that. One hears murmurings from time to time that we had better get into Europe so that we can have this showdown once and for all.

I do not want to identify myself with any particular industrial view on this, but I must, in fairness to the Government, right away give a pledge, While hon. Members on both sides of the House have their constituency responsibilities, I want to give a pledge which we gave over four years ago, when we first debated the original Free Trade Area proposals. We give a pledge that as a party, whatever decision we might take on the broad essential principles to go in or not to go in, we do not intend, whether we decide to go in the Common Market or not, to make common cause with protectionist industrial interests in this country. We will not make mischief about whatever decision is taken by allying ourselves with individual protectionist interests. I gave that pledge four years ago and I repeat it.

I have referred to the need for planning. I ask the Government: how far, under the Treaty of Rome as it is, could we undertake the degree of centralised economic management that we on this side of the House feel is needed? Hon. Members will form their own view. I say frankly to the House that as I read the Treaty of Rome, and the intentions of those who at present operate it, the measures necessary to fulfil the policies set out, for example, in "Signpost to the Sixties" cannot be implemented without substantial amendments to the relevant articles to the Treaty. That is my own personal view. This may not worry the Prime Minister very much. I think that that was shown by the levity with which he answered questions put to him by my hon. Friend the Member for Nuneaton (Mr. Bowles) on Monday.

But if this is his attitude, do not let him talk, as he did on Monday, of this being an all-party operation. In these negotiations he is acting on behalf of the whole nation, including the 12 million who voted Labour and who voted for planning and purposive economic policies. Even the Prime Minister can claim to be Prime Minister for the whole nation and not just for the Conservative Party, or he would be representing a very small minority of the electorate at the present time. He is negotiating on behalf of those 12 million and millions more who would be voting for these policies if they had a chance of electoral expression today.

I hope that the Prime Minister accepts this responsibility. If he is negotiating simply the terms on which a Conservative laissez-faire Administration can enter the Common Market, if that is all he is doing, he will understand if we reserve our right here and now, clearly and unequivocally, to judge the final outcome of the negotiations on that criterion as well as on the other criteria which my right hon. Friend mentioned yesterday.

I hope that the Prime Minister will be careful to see how far even the minimal amount of planning which the Government do would be permitted under the Treaty of Rome—exchange controls, control over capital movements and the import controls which may one day have to be introduced, although we all hope not. Even Bank Rate, on which the Government rely, would be susceptible to challenge in the Commission or in the Council of Ministers under the Treaty of Rome.

I hope that the Prime Minister will not think me too hag-ridden by references to 1931 if I conjure up the possibility of a situation in which, perhaps, our exports do not increase as much as it is hoped and we go to Europe in a weak condition, needing economic assistance, and in which the central bankers of Europe tell us that we must change our financial, economic and perhaps social policies before they give the assistance. The bankers of 1961 might. might become a central bankers' ramp now. I do not think that this is entirely imaginary. It is a possibility—just as much under a Conservative Government as under a Labour Government, and I hope that the Government are taking it seriously.

I intend to say little about agriculture. As far as I can judge—although I am not qualified to judge at all—though big changes would be inevitable, though some sectors such as horticulture and the production of individual commodities such as potatoes might suffer grave damage, in general, as far as it is legitimate for me to express an opinion I feel that the problem of agriculture is not insoluble—though I recognise that some of my hon. Friends with far greater knowledge of, and interest in, agriculture, take a different view.

Our present system of support prices and deficiency payments, at least on a national basis, would have to go. But I feel like my right hon. Friend, who said yesterday that when the obvious adjustments have been made it will be the housewife rather than the farmer and the farm worker who will be feeling the draught. I think that that is probably fair. The fundamental issue in the question of imports of food and agricultural products relates not to the British farmer, but to the Commonwealth, and to this subject, which is the central theme of our Amendment, I now turn.

During the debate some hon. Members on both sides of the House have accepted rather too easily the decline in recent years of our trade with the Commonwealth, as though it were something inevitable. Last night, the President of the Board of Trade took a slightly different view and was more hopeful, but he went so far as to explain the decline in recent years as being due to what he called historical reasons. He is flattering himself and his two predecessors when he uses that phrase "historical reasons. The cause, in the main, is the Government's ineptitude and their doctrinaire approach to certain problems which I shall describe.

Under the Labour Government trade with the Commonwealth as a percentage of our total trade was an all-time high, higher than ever before and certainly higher than it has been since. Right hon. Gentlemen opposite, scrapping bulk buying and long-term agreements and bilateral arrangements, destroying, as they have, the sterling area as a trading entity—that is what they have done—bear the first responsibility for the decline of Commonwealth trade over the past ten years.

The second reason is the lack of enterprise and drive on the part of many of our manufacturers. Repeatedly in these debates I have given the figures of the imports of Commonwealth countries into the sterling area, showing how much of the increase which has taken place has been scooped by Japan, Germany and the United States, while our exports to those areas, through sheer lack of enterprise, have been falling.

It is no good Ministers standing at the Dispatch Box and complaining about the decline in Commonwealth trade and shrugging their shoulders, because they are very largely responsible for it. It is utterly defeatist to accept as inevitable the recent decline in Commonwealth trade. With the right priorities and drive, it could be sharply reversed. I make no apology for saying that in present circumstances the three Ministers who recently toured the Commonwealth should have been authorized—as Ernest Bevin, Stafford Cripps and I were authorised fourteen years ago—to propose a free trade area to the Commonwealth first, before taking the final decision about Europe. The offer might have been refused, as it was refused fourteen years ago, but at any rate it should have been tried. It has been suggested from these benches a number of times in the past few years.

Let us examine this problem of the Commonwealth and Europe. I would like to say how much I welcome the statements by prominent European statesmen that they recognise our obligation to the Commonwealth. M. Spaak said in the Belgian Assembly on 14th June, 1961—I have the text in French and this will be a somewhat limping translation: If the Commonwealth is one of the essential facts of our time, I understand this perfectly clearly and no one would wish to face Great Britain with a choice between the Commonwealth and Europe. That is why it is necessary to find a technical solution which will enable us to make effective the maintenance of the Commonwealth and the adhesion of Great Britain to the Common Market. It may not be a very good translation, but the idea is there. I very much welcome a statement of that kind from M. Spaak.

Now let us see what needs to be done to make those phrases a reality. The whole House will agree that there is not one Commonwealth problem, but at least three. First, I take it as inconceivable that Europe could fail to offer, or that the Government could fail to insist on getting, a protocol guaranteeing our dependencies and former dependencies, in Africa for example, the same terms as the former French territories are granted. That would be automatic. Kenya coffee and Ghana cocoa should not be prejudiced as compared with the products of Belgian or French territories, or former territories.

Secondly, there is the major problem of the products of temperate zone countries. This is very difficult. New Zealand, Australian and Canadian products face the likelihood of a 20 to 24 per cent. tariff compared with duty-free entry today.

That is the essence of the problem, but it is not the whole of the problem, because anyone reading the trading and economic clauses of the Treaty will realise the highly restrictive, even autarkic motivation of the Community. Non-discrimination within the area, yes, but a whole panoply of tariff quotas, import levies and other methods to supplement the tariff provisions, if, contrary to the intentions of the signatories, outside products come in on any scale.

All this suggests that there will be a very formidable series of weapons designed to limit the imports into Europe, and into Britain, of the products of many Commonwealth countries. Free trade within the area, yes, but vis-à-vis the outside world—let us be frank about it—this is a highly restrictive, discriminating trading bloc. We should have no illusions about it. It is the sort of bloc which, perhaps, the Conservatives can join and perhaps, with the right safeguards and assurances, the Labour Party could support joining, but why in heaven's name the Liberal Party supports it I find it extremely difficult to follow.

It will fairly be argued that the agricultural proposals are still to be agreed and that we can do more to influence from the inside than we can from the outside looking in. It would be unrealistic, when talking of the influence we could exercise about Commonwealth imports over this panoply of tariff walls and the rest, to assume that on this issue Denmark and the Netherlands would necessarily be on our side. This is the most important of the matters for negotiation on the economic side.

We are told that the Commonwealth will not suffer. Last night, the President of the Board of Trade sought to console us—and, I suspect, to console himself—with the rather meaningless piece of fluff which he held out to us— We must not get into the frame of mind of choosing between the Commonwealth and Europe. It would be tragic if this country were forced to make that choice."—[OFFICIAL REPORT, 2nd August, 1961; Vol. 645, c. 1604.] I would like to be certain that we are not to have to make that choice. I would like to be certain that the Government have not already made that choice in their own mind.

Let us strip the problem of all these fair words and get down to realities. I want to put this question, because the Government ought to put it in the negotiations. In, say, seven years from now, on the assumption of going in, do we expect to see as much Australian and Canadian wheat coming to Britain as today, or will it be wholly or substantially replaced by French wheat? The French make no secret of their aim to be the granary of Europe.

This question should be put, for it is the acid test of the words about the Commonwealth. Shall we have as much of those commodities coming into Britain seven years from now—or coming in to Europe seven years from now —as at present? Will there be the same amount of New Zealand meat, or will it be replaced by French production? New Zealand butter? This question must be put and answered, because it is the only criterion by which these fair words about the Commonwealth can be judged.

This question and the answer to it are vital for us, and many of our friends in Europe recognise that. I understand that some of them, same of the most powerful figures in Europe, are now privately talking of a five or seven-year contract for New Zealand butter and other Commonwealth commodities, just as Germany concluded a seven-year agreement—secret agreement as it was then—with Denmark when the two parted company on the formation of the Common Market.

If measures on those lines could be taken, they would greatly assist the solution of the problem, at any rate for a time, and I hope that the Government will not be put off with words, but will ask the question which I have asked and will get a firm answer to it, and that, if the answer is not satisfactory and if some measures of that kind are not suggested, such as long-term purchase from New Zealand, they will come here and frankly tell the House.

There is one other equally fundamental question I would like to ask. We have not been told about this. Yesterday, the President of the Board of Trade referred to the position of the French territories as associate members, what the Prime Minister calls "country members". Do the Government intend to press for self-governing Commonwealth countries to be admitted on a basis of association with the Community. Is that suggestion being put forward?

Although Article 237 of the Treaty restricts full membership to European countries, Article 238 makes no such restriction and under the Treaty it would not be inappropriate for Commonwealth countries outside Europe to enter this obligation. Can we be told whether the Commonwealth countries told the ministerial visitors that they wanted to be associated with the Common Market in this way? I hope that we shall be given a clear answer to that tonight.

I turn to the third aspect of the Commonwealth problem, the problem of tropical agricultural products. What pledges have the Government given, or what are they willing to give, about the Commonwealth Sugar Agreement? That is a clear question and we must have an answer to it. This is one of the vital pillars in the structure of Commonwealth economic prosperity and the establishment of colonial economic prosperity after the war.

There was a great fuss in the Chamber, before the change of Government, about the "Black Pact" with Cuba, but at the same time as that was negotiated we had the Commonwealth Sugar Agreement, which owed, and owes, a great deal to the statesmanship and negotiating ability of our right hon. Friend and former colleague in the House, Arthur Bottomley, whom we miss and whom the Commonwealth misses from this debate today, as he was largely responsible for that measure.

The Government have continued the Commonwealth Sugar Agreement in their peculiar manner—through free enterprise and operated through a monopoly with a levy and a subsidy and all the rest of the very clumsy and complicated Heath Robinson machinery, but at any rate in a form they have continued it. Will they give a pledge that they intend to maintain it after these negotiations with Europe are completed? Also, what do they intend about citrus fruits, on which the economies of important Colonial Territories depend?

We are entitled to know, because it really is nonsense for the Prime Minister to talk about a holy war against Communism. He did not quite use that phrase, but it was sticking out from a lot of what he said yesterday. It is nonsense for him to talk in those terms if he is wantonly embarking on a course which by undermining, for example, the Commonwealth Sugar Agreement and the citrus fruits arrangements will knock out the props which underpin the prosperity of struggling colonial economies.

I have stated these Commonwealth problems in terms of hard economic facts, but I should be the last to disagree with those hon. Members on both sides of the House who put the problem in yesterday's debate in terms more of sentiment, kinship and bonds of a less materialistic character than those that I have been describing.

The public Press has inevitably been filled with countless articles and letters for months past about all these problems, but for me—and, I think, for many others—the most pointed and moving of all of them was the letter written to the Guardian by my right hon. Friend the Member for Middlesbrough, East (Mr. Marquand), about three weeks ago. My right hon. Friend was Secretary for Overseas Trade immediately after the war. I followed him in that capacity, and I know the kind of problems with which he was dealing. In the letter he referred to the difficult negotiations this country had in the immediate post-war years when we sought to get the food and raw materials that we needed with very little to offer in terms of the steel, chemicals and engineering goods that other countries so desperate needed and that we could ill-afford.

My right hon. Friend wrote: Then one day I sat down with the New Zealand delegation. I expected a bargaining session as difficult as any other. Instead, the leader of the New Zealand delegation"— a very good friend of this country's, Walter Nash— opened the proceedings in words I shall never forget. 'We have not come to ask you "What can you give?" but simply "What do you need?" When you stood alone you preserved our freedom for us. Now tell us what butter, what neat, what grains you need, and—whatever the sacrifice may be for the New Zealand people—we will supply it.'

Hon. Members

Hear, hear.

Mr. Wilson

I submit to the House that we cannot consistently with the honour of this country take any action now that would betray friends such as those. All this and Europe, too—if you can get it. The President of the Board of Trade last night seemed to think that we can. I hope that he is right, but if there has to be a choice we are not entitled to sell our friends and kinsmen down the river for a problematical and marginal advantage in selling washing machines in Dusseldorf.

Before I leave the economic aspects of the problem—I do not want to go on for more than a few minutes more—there are two other questions that I want to raise. The first is East-West trade. The Common Market, whether we are inside or outside, is restrictive in intent. We all know that Eastern Europe, too, has its common market, a tighter and still more restrictive bloc than anything we are thinking about. All the same, if joining the Common Market means a reduced ability to trade with the Soviet Union or other Eastern European countries, or China, I submit that this will be detrimental to our economic welfare and to the prospects of full employment —and it will make real peace more remote.

So, when the Prime Minister talks in terms of a political grouping against the Communist threat, when I recall the way Dr. Adenauer last year forbade us to trade with East Germany while his own businessmen flocked across the frontier to filch our orders, I must admit that I am apprehensive about East-West trade relations. I therefore trust that the Government will tell us that they will seek assurances on this question.

The other question relates to the Coal and Steel Community and Euratom. This is a problem which was dealt with by my hon. Friend the Member for Houghton-le-Spring (Mr. Blyton) last night in a speech which drew, I think, a great deal of support from both sides of the House. Presumably it is intended that we should join both these bodies as well as the Common Market, though little has been said from the Government Front Bench about either of them. We ought to he told a lot more about it.

Hon. Friends of mine have made it clear that there is great anxiety in the coalfields about joining the E.C.S.C., probably far more than there is about our joining the Common Market. I am bound to ask: what safeguards would we have, if we are to go in, that British coal will not be sacrificed to the special discriminations which will be introduced in favour of Saharan oil? That is a problem—subsidised pipelines, and all the rest of it. We know that there will be competition between British and European coal. That is a problem which has to be faced in one way or another, but now we shall be up against subsidised Saharan oil. This raises some very fundamental questions on which I hope we shall get an answer tonight.

Also on the broader question, we should like much more specific assurances than the Treaty gives against the growth of private or even Government-supported cartels in Europe. Some Continental industries take to cartelistic activities like ducks to water, and there are some British businessmen who would be only too anxious to get in on that kind of organisation. I hope that this is very much in the minds of the Government.

Before I sit down I should like to turn briefly to one or two of the wider issues which have been raised in the debate, because it is clear that, for the Prime Minister at any rate, the motive is not economic but political. I think that was clear from his speech. Important as the economic issues, of course, are, and the Commonwealth issues with which I have been dealing, I think that our expectations or fears about the political aspects are even more fundamental.

First, I should like to take issue straight away with some right hon. and hon. Gentlemen, sitting below the Gangway opposite, who quite simply regard it as an issue of sovereignty. I respect their arguments, but they—and even the word itself, I think—are really out of harmony with this modern age. The whole history of political progress is a history of gradual abandonment of national sovereignty. We abrogate it when we have a French referee at Twickenham. We abrogated it—some would say that we did not abrogate it enough—when we joined the United Nations. One cannot talk about world government in one breath and then start drooling about the need to preserve national sovereignty in the next.

Mr. John Biggs-Davison (Chigwell)

rose—

Mr. Wilson

I will give way when I have finished this. Perhaps the hon. Gentleman will wait a moment. All of us have the difficult task of trying, as far as we can, to speak for Britain, but not all of us can speak on behalf of some of the Ancient Britons who sit on the benches opposite.

Mr. Biggs-Davison

I am hardly one of them. Will the right hon. Gentleman give way?

Mr. Wilson

In a moment. I may satisfy the hon. Gentleman in what I am about to say.

The question is not whether sovereignty remains absolute or not, but in what way one is prepared to sacrifice sovereignty, to whom and for what purpose. That is the real issue before us. The question is whether any proposed surrender of sovereignty will advance or retard our progress to the kind of world we all want to see.

Mr. Biggs-Davison

I am much obliged to the right hon. Gentleman for giving way. I do not want to intervene on behalf of ancient Britons, nor about nineteenth century Liberal ideas on supra-nationality or world government. But what about the new Britons spread around the world What about the modern Commonwealth, whose common principle is national sovereignty?

Mr. Wilson

I have been discussing the economic problems of the Commonwealth countries. In a moment I hope to say a word or two about the political aspects and importance of these new countries. What I am objecting to is the old-world style of talking of national sovereignty when really we should be dealing with much more fundamental issues in this debate.

Equally, I do not join with those extremists who have been trying to estimate what Britain will become if we do or do not join the Common Market. Stay out, some say, and we shall be powerless and become another Sweden or Portugal. Go in, say the others, and we shall become another Idaho. But I think that these arguments grossly understate the position and rôle of what Britain is and what Britain could be under the right kind of leadership. The vital issue in the political sense is whether to join the Common Market explicitly or implicitly means a move towards a federal Europe. There is nothing in the Treaty of Rome enjoining federalism, although there is a great deal of supranationalism.

But we are right to be concerned about the express intentions of many leading figures in the Six. Yesterday, the Prime Minister quoted President de Gaulle concerning the confederation des patries. We all welcomed that phrase when it was used by the French President, but there are the cautious, but far from meaningless, words of Dr. Adenauer who said that political unity remained the common aim of the Common Market countries, but that he favoured a pragmatic rather than a theoretical approval. One day, he said; it would be found that European unity had been reached. On 8th February the Guardian reported him as aiming at a federation with one Prime Minister and a unified policy towards the rest of the world". Monsieur Spaak, on 14th June, made a statement and Professor Hallstein has said many times that the final aim is the integration of Europe. On 22nd May, Professor Hallstein said: We are not in business to promote tariff preferences, or to establish a discriminatory club to form a larger unit to make us richer, or a trading block to further our commercial interests. We are not in business at all. We are in politics. In view of these statements and others —and it is for us to select which of these various statements we should accept as correct—it is a little myopic of the Prime Minister to refer to it as …a purely economic and trading negotiation and not a political and foreign policy negotiation".—[OFFICIAL REPORT, 31st July, 1961; Vol. 645, c. 937.] But, all the same, we warmly welcome his statement of yesterday associating himself with President de Gaulle's approach and I repeat the declaration of my right hon. Friend the Leader of the Opposition yesterday, when he said: …there is no question whatever of Britain entering into a federal Europe now."—[OFFICIAL REPORT, 2nd August, 1961; Vol. 645, c. 1501–2.] I hope that the Government will be clear about this. There should be no doubt on this federal issue. There should be no double talk with Europe about it. Our position should be stated so that there is no accusation of bad faith, of dragging our feet, of perfidious Albion, if, subsequently, Europe seeks to move towards federation and then, and only then, we make clear our opposition to it. Whatever view may be taken concerning these economic negotiations, I hope that we make it clear that we shall not go into a federal system.

I very much welcomed the Prime Minister's condemnation of what the right hon. Gentleman called "little Europeans." We must be outward looking. The Prime Minister is right. This is an issue on which every hon. Member must make up his mind. We have a rôle to play in the world, perhaps a decisive rôle, at some historic moment; in building a bridge between East and West—between America and Russia, perhaps America and China, and we must search our hearts and ask whether going in, or not going in, will best help in that rôle.

It is no secret that the United States Government feel that Britain must retire from the task of organising summits. They have told the Prime Minister that. They consider our rôle to be in Europe. I would not deny that that is an important rôle. No one who recalls that the two world wars have begun on the Franco-German frontier will underestimate it. If that is the rôle that the Prime Minister has chosen, can we, playing a leading part in Europe, fulfil the rôle of bridge builders in the second half of the twentieth century?

I have referred to the position of the American Government and I understand that it is the firm view of the United States that negotiations aimed at a modification of the Rome Treaty would appear unacceptable to them and that they would be opposed to such a step. Protocols yes, but a redrafting of the Rome Treaty—and I understand that this is being said in Washington officially now—would be ruled out as far as they are concerned. I realise that they are not in the negotiations, but they have a veto in G.A.T.T. It is, therefore, extremely important that we should understand what the position will be.

But what of our rôle in the Commonwealth, particularly the newly emerging Commonwealth in Asia and Africa, where our partners will be, and already are being, called upon to play a leading part in Afro-Asian and United Nations politics? These are the questions—the ultimate decisions—which will be as momentous as any in our history.

I repeat, we do not oppose the negotiations, but on the Government's success in meeting the economic and political anxieties which my right hon. Friend and I have expressed—and we wish the Government well in the negotiations—we utterly reserve our position about the package that the Government will bring back. On the Government's success in this will depend not only our decision on joining Europe but, I believe, the future standing and influence of this country in making its decisive and unique contribution to the peace of the world.

4.25 p.m.

The Lord Privy Seal (Mr. Edward Heath)

The right hon. Gentleman the Member for Huyton (Mr. Wilson) ended his speech as he began, by reserving his position as to the decision which he and his right hon. and hon. Friends will take as a result of these negotiations. That, of course, is the position which the whole House is in.

The House is being asked to reserve its position until the end of the negotiations before making a final decision about it. At the same time, it is asked to authorise Her Majesty's Government to enter into negotiations on the basis which we have stated. The right hon. Gentleman went so far as to wish us well in these negotiations and I am grateful to him for his good wishes. But that raises at once the question whether, in view of his good wishes and his own view—which he expressed as long ago as July last year, and which he reiterated today—that it is in the long-term interests of this country to have these arrangements, he should not have supported the Motion, rather than merely taking no part and abstaining or voting on his own Amendment against it.

However, I am grateful to the right hon. Gentleman for his good wishes. In his speech he raised a large number of very important points and I am glad that he did so. They are, in fact—many of them—the points on which the negotiations will turn. They are, in fact, the crux of the whole matter; the things about which we shall seek to find arrangements. He will, therefore, not expect me now to say, about many of them, exactly what proposals will be put forward in respect of each of the questions he posed. It is valuable that the right hon. Gentleman should have posed them, but I am sure that he will agree that it would be wrong for me to state any decision on some of those matters at present. I hope, however, that I shall be able to deal with some of the points that he raised.

The right hon. Gentleman showed his own sense of history at the beginning of his speech and I think that he was, in many ways, correct. From my point of view, the history is that the first Lord Privy Seal took office in 1275 and, at that time, the lands of Gascony and a considerable part of the Continent came under the British Crown, so that the then Lord Privy Seal was not faced with the problem of how to get a foot in Europe because he had a very substantial foot there already. But we are now faced with the problem of how to reach an arrangement.

About one matter which the right hon. Gentleman raised—his statements about the attitude of the United States—I must say that it is, of course, completely untrue that the President of the United States, or any members of that Adminis- tration, have said what the right hon. Gentleman said as far as my right hon. Friend the Prime Minister and as far as the foreign policy of this country is concerned. It is completely untrue and quite unjustifiable for the right hon. Gentleman to have said it.

The position of the United States is perfectly clear in this matter: that in various forms of economic arrangements which would be possible in Europe there could be economic discrimination against the United States—in fact, in almost all of them. The view of the United States is that if they can see a strengthening of the political unity of Europe it is justified from this point of view in accepting that degree of discrimination. That is the position and it it quite clear.

The right hon. Gentleman the Leader of the Opposition, in opening the debate yesterday, asked why it was considered in Europe and in many other places that in making an application under Article 237 for negotiations this should be a matter of decisive importance. The reason is that Europe recognises—as do most other countries—that if the negotiations were successful and we could secure an arrangement which we are seeking, we should at the same time be undertaking obligations under the Treaty of Rome.

It was, therefore, absolutely right that many speakers in the debate yesterday, including my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), in a speech which, if I may say so, was powerful and beautifully phrased, dealt with this question of the obligations under the Treaty of Rome and, in particular, with the politico-economic interactions under that Treaty. It is with that part of this complex matter that I wish to deal in the first part of my speech this afternoon, because I believe that it is of very great importance.

The three Communities are fundamentally economic Communities, as has often been emphasised—the Coal and Steel Community, Euratom and the Economic Community. At the same time—and I think that this is the first political aspect—they were formed with one primary political purpose, which was, through the economic arrangements, so to bind together France and Germany that they could not again come into open conflict. That was a simple political purpose which we recognise and which we have welcomed. It was because that fundamental political purpose lay behind it that the first Community was the Coal and Steel Community, dealing with the basic industries in those countries.

Perhaps I may here say to the right hon. Member for Huyton in answer to the question which he raised—namely, what is the view of Her Majesty's Government?—which I also explained at the meeting of W.E.U. Ministers on Tuesday, that, if it is required, at the appropriate moment we are prepared to enter into negotiations about accession to the other two Communities, Coal and Steel and Euratom. But, of course, it must be realised that the Communities themselves are in the process of considering what their future organisation should be, and they themselves, therefore, are not clear at this moment how they are to develop.

Looking at the three Communities, the economic purpose is plain. It is to create a Common Market with common purposes and it is, therefore, necessary to have common institutions in order to avoid unfairness in the operations of these Communities. But if that aspect is clear, then I think that the political aspect needs elucidation.

It has always seemed to me that there is confusion between the three different political aspects of the Communities and their work. The first is what I much prefer to call the institutional; it has the machinery necessary for dealing with the economic aspects of the Community and it involves sovereignty. The second aspect is that of political consultation among the Members of the Communities about European affairs, world affairs and the interactions of the two. That aspect does not involve sovereignty—it is consultation between the countries concerned—but it is a most important political aspect of all the actions of the Communities.

The third political aspect is the longterm future as to whether these economic and consultational aspects—I apologise to hon. Members; I shuddered myself at the word—of the economics and consultation between the Communities are to lead to a further constitutional development along the lines of federalism or con- federalism, or in some other sphere. Here again, sovereignty could be involved.

It seems to me to be important to separate those three different aspects of the political relationships of the Communities. I should like, first, to say something about the institutional aspect and its relevance to sovereignty, because my right hon. Friend the Member for Thirsk and Mahon (Mr. Turton) and some of his right hon. and hon. Friends have put down on the Order Paper an addendum dealing with this matter. The Communities are, in fact, an example of a partnership in action with common policies. It is a common operation, a common commercial policy and a common agricultural policy. It is not a common fiscal policy or a common financial policy. This deals in part with the right hon. Gentleman's questions this afternoon.

From the point of view of sovereignty, although we have heard very often in the last 24 hours about surrendering sovereignty, it seems to me that it is a conception much more of pooling sovereignty with others who are occupied in the same joint enterprise. Surrender means the abandonment of sovereignty to others. Pooling seems to me to share sovereignty with other people for a common purpose, and there seems to me to be a firm distinction between those two. It is a pooling of sovereignty over a strictly defined field, and that is laid down in the Treaty itself.

I need not go over the scope of Articles 2 and 3, because they will be well known to hon. Members, but it is clearly defined there what is the scope of this pooling of sovereignty. There are, of course, various degrees of pooling. Until the end of the transitional periods there has to be a unanimous vote, and there is, therefore, a veto. To that extent one can say that sovereignty has not been pooled. After that, there is the question of the weighted majority.

The Leader of the Opposition asked yesterday about the reorganisation of the weighted majority voting during these negotiations if we are to become members. That is, of course, a matter for negotiation, but I must say that I see no reason to visualise the sort of situation which he mentioned, which is that in the existing situation one great Power and one small Power, under the weighted majority, would be able to veto a proposition, but that if we became members with Denmark we would not have a comparable position to other Powers in the community. I see no reason at all to support the apprehensions which he expressed.

The right hon. Gentleman, at the same time, asked about the responsibility of the Commission and said that it was responsible to the Assembly. It is responsible to the Assembly in this degree, that by a two-thirds majority of the Assembly the Commission can be called upon to resign, but of course, from the point of view of policy—the whole policy of the Communities—the Commission puts forward proposals, and it is the Council of Ministers which decides whether those policies are to be implemented or not. So it is the case that the Commission proposes and the Ministers dispose. I hope, therefore, that I have answered the point which the Leader of the Opposition raised yesterday about the independence of the Commission. Although it has certain functions clearly laid down to supervise arrangements which are carried on, it is responsible to the Council of Ministers as far as policy making is concerned.

The other point raised by the right hon. Gentleman was whether the Assembly is to be directly elected or not. That is a recommendation from the Assembly. If we are to take part in this, we shall have to discuss it with the other members of the Six and we would not be expected to express views about the policy at the moment. But I do not believe that whether or not the Assembly is to be directly elected is a fundamental matter at this time, because the capacity of the Assembly is only advisory, and therefore, whether it is directly elected or is elected in an alternative way is not a fundamental question at the moment. The alternative way could, presumably, be that hon. Members would be selected by the Whips. It is entirely up to them. I hope that I have now secured complete support for the electoral processes.

On this question of the pooling of sovereignty, as my right hon. Friend the Prime Minister said yesterday, and on which the right hon. Gentleman for Huyton commented today, in a number of other spheres sovereignty has been pooled for the benefit of the general policy to be followed by a number of countries, and I am not required to go into that. In the case of N.A.T.O. we have committed ourselves to the fact that an attack on one country is an attack on all. In Western European Union we have committed ourselves for fifty years to keep troops in Europe. In G.A.T.T. we have accepted other certain limited obligations. I do not want to go into this in detail, except to say that this is another example of pooling of sovereignty, although it has particular characteristics in that it is over the commercial and economic field.

My right hon. and learned Friend the Member for Hertfordshire, East raised a question about municipal law, approximating it, and so forth. We do this in other organisations. In the I.L.O., for instance, if we accept a convention we approximate our law in order to carry it out. There is nothing unusual in it. It springs from the original fact that we shall be in a joint purpose together in which we are carrying out the same operations. But the approximation is necessary only in so far as it is for the functioning of the Common Market, and there is, therefore, another specific limitation on that.

We have examined the general group of miscellaneous provisions under Article 3 with great care. We find that in a large number of cases there will be no difficulty because they correspond to the obligations we are already carrying out. In others it will be a matter for negotiation and, if necessary, seeing that we exert our influence in the administrative working out of policies with other members of the group.

Mr. William Warbey (Ashfield)

Is the right hon. Gentleman proposing, on this very important subject of political institutions, to say nothing about the declaration issued by the six heads of Government of the Common Market countries in Bonn only two weeks ago, on 18th July, a declaration which was more than a declaration, it being really a confederal political act? I do not wish to take too long, so I will summarise it. The six heads of Government decided to instruct their Commission—I ask the House to note the wording—to present to them proposals for giving as soon as possible a statutory character to the union of their people.

Will the right hon. Gentleman go into the negotiations repudiating that declaration or accepting it as the basis of negotiations?

Mr. Heath

I intend to deal with that a little later in the part of my speech devoted to the three political factors, because that is not one of the institutional factors concerned with the economic side of the Communities.

The second aspect is political consultation. This springs from the Six, but, as I have said, there are no questions of sovereignty involved. It is consultation between Foreign Ministers at regular intervals and between the heads of Government at regular intervals. It is growing. It will continue. It is to be organised. It deals with European problems and their effect on world problems. In this, which does not affect sovereignty, we should consider that we could play a full part because we believe that it is necessary in this consultation that our views should be known. Otherwise, if it develops, we may see decisions which would affect us being taken without our interests being fully considered.

I do not believe that it can in any way impede consultation with the Commonwealth. Exactly the reverse would be true. Our consultations with the Commonwealth would be strengthened by our close consultations with members of the Six on a political level and, similarly, we should be able to express views to the Six themselves after our experience with the Commonwealth. This we have already discovered in our experience with W.E.U. consultation.

I turn now to the third aspect of political relations with the Communities. What is the position in regard to the future. The hon. Member for Ashfield (Mr. Warbey) has just referred to the Bonn communiqué. Will it lead to some other form of organisation? In the Treaty of Rome itself, there is no commitment either explicit or implicit leading to any particular form of constitutional development above the Rome Treaty itself. That is quite clear. It speaks in the Preamble of an ever closer union and it is quite true that that union is coming about through the economic arrangements of the Communities. We see the new organisations working closely together and Ministers working closely together, but there is no commitment in it.

That, I think, deals with the second part of the Amendment put down by my right hon. Friend the Member for Thirsk and Malton and others of my right hon. and hon. Friends relating to any implied undertaking to proceed to political union or federation … in any way inconsistent with the continuance by the United Kingdom of its traditional rôle …". There is nothing implied, and there has been nothing undertaken by Her Majesty's Government in any of the talks we have carried on so far.

No one can foresee the future. If hon. Members have been able to discuss with people within the Six what was to happen as a result of this work, he will, of course, have found that there are widely divergent views among the countries of the Six about how it will develop and to what extent there will be any agreement about the future. Of course, the political consultation is being formalised and an organisation is being created for it gradually, but this, again, is a matter in regard to which no one can fortell the future.

If we were to go into it, there would be no obligation on us to accept any particular view. Naturally, we should then be able to use our influence in any developments of that kind which took place. The important thing is that none of this can happen unless there is either an extension of the Treaty of Rome, with additional Articles added to it, or there is a new Treaty. Both these things have to be done by unanimous consent.

Our position, therefore, is quite plain. I agree wholeheartedly with my right hon. and learned Friend the Member for Hertfordshire, East that there must be no misunderstanding whatever about it between the United Kingdom and the members of the Six. Our position is plain, as is the position of member countries already in the Six or any country which accedes to the Six. The original members of the Six undertook no obligations, and the position of any newcomers to the Six is exactly the same. They can play their part in working out any developments, but the final conclusion needs to have unanimous consent either in the form of Articles additional to the Treaty or in a new Treaty itself. I hope that that has made the position absolutely plain.

Mr. Warbey

Will the right hon. Gentleman—

Mr. Heath

No. I am sorry. I cannot give way again. I propose to deal in some detail with this matter, because I believe that it is of great importance of the minds of very many hon. Members of the House.

On the question of pooling of sovereignty for the economic arrangements, my right hon. and hon. Friends, in their Amendment, ask that there shall be no material derogation of British sovereignty". They are quite right to draw attention to this matter. We have to ask ourselves: how is a material derogation to be defined? What exactly is meant by a material derogation? It is up to my right hon. and hon. Friends and all hon. Members to decide for themselves what they mean by material derogation, but no one will, in fact, be able to decide until we reach the end of the negotiations. That is a decision which one can take only when we can look again at the undertakings which we should have been required to give and at the machinery which would then be in the state it had reached after our negotiations.

What one can deduce from the Amendment is that my right hon. and hon. Friends are not absolutist about sovereignty. It is clear from the wording of the Amendment that they are prepared to see some contribution of sovereignty for these purposes. They are not absolutist in saying that there must be no contribution. [Interruption.] Perhaps the hon. Member for Nelson and Colne (Mr. S. Silverman) is absolutist. Others are not; they are prepared to make some contribution. The question then is: how much should that contribution be?

I suggest to the House that the only way to form a conclusion on this question is to ask whether the contribution is worth while for the common purposes which we have in mind. This leads to the question: is it worth while to achieve a greater unity in Europe, and is it worth while for the economic future of this country and all that depends upon it? I suggest that those are the two criteria by which one judges whether it is a material derogation of sovereignty and whether it is worth while.

In his opening remarks, my right hon. and learned Friend said—this was a place where I disagreed with him—that the need for unity in Western Europe had reeve; been put forward as one of the reasons for undertaking these negotiations. I must differ from him about that. During the past year, both in public and to the members of the Six, we have always emphasised how much we regretted the economic split between the members of E.F.T.A. and the members of the Community and how our great anxiety was that this economic split would lead to a political division which would weaken Europe.

It is true that so much of the energy of Europe has been taken up during the past few years in organising the two groups and in trying to find a solution to the differences between them that Europe must have suffered already in that way. Therefore, we have always emphasised that the need to secure unity in Western Europe is one of our prime purposes in what we are doing. Therefore, that must be one of the criteria as to whether the material contribution is justified or not.

Sir Derek Walker-Smith (Hertfordshire, East)

The point I was making at that stage was that it was not put forward as indispensably necessary for the defence of the free world against Communism. If it had been so necessary, then presumably we should have signed the Treaty of Rome in 1957.

Mr. Heath

Obviously, the matter is bound to be one of comparison. We have been trying since 1957 to get an arrangement which would prevent this rift. It is only since we failed to get a Free Trade Area or a European Free Trade Association that the rift has become more apparent. Therefore, it is a contribution towards the unity of the West.

The hon. Lady the Member for Cannock (Miss Lee) said that this proposal was dividing Europe. I cannot believe that. I know that the hon. Lady sincerely holds that view. In fact, Europe is divided by the Iron Curtain. It will be divided a second time unless we find a solution to this problem. It is to prevent this second division that we are taking this step. One might also recall that, if the Soviet Union had accepted the invitation to take part in the original negotiations about the formation of the O.E.E.C. and had not dragged Czechoslovakia back from taking part in them the whole future of Europe might have been very different today.

The other criterion is our own economic interest. My right hon. and learned Friend the Member for Hertfordshire, East and the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) referred to this yesterday. They said that we had not received a specific balance sheet. I think that the right hon. Member for Huyton would agree that it is not possible to set out a specific balance sheet on each industry in this country, which is what the right hon. Gentleman suggested if we are to take these steps.

One has to look at the broad general advantage, which the right hon. Gentleman mentioned, over the long term, of allowing British industry not to be at a disadvantage with its competitors in Europe by having a small market and a common tariff wall against it and fierce competition in the third markets of the world. I agree with the right hon. Gentleman about the importance of the change in the pattern of investment which has come about since the creation of the Six. These are economic things of importance.

Of course, the Government's decision will mean changes. Some people will have to adapt themselves, or they will suffer defeat. That is absolutely true. But we cannot maintain a static position, as the hon. Member for Leicester, North-East seemed to suggest—

Sir Lynn Ungoed-Thomas (Leicester, North-East)

I do not suggest that we should maintain a static position. I suggest that in the dynamic developments to which the Lord Privy Seal referred there should be an indication of the eventual balance of loss and gain to particular industries in this country. The right hon. Gentleman must have envisaged what that might be, and those industries are entitled to know the calculation which has been made.

Mr. Heath

It is not only the job of, but it also lies within the power of, those industries to work it out for themselves. Most of them have done it. The great majority have come to the conclusion that they want the advantages of a broad market in Europe so that they can all compete on equal terms.

Sir L. Ungoed-Thomas

Which ones will suffer?

Mr. Heath

Some industries have indicated that they fear competition, but the great majority of them wish to have the spur of this additional market.

In considering this criterion of the contribution of sovereignty, we must ask ourselves: could this be done in another way? We have had suggestions from right hon. and hon. Members about how it could be done in another way, and I wish to deal briefly with them.

The first concerns additional activity to inspire Commonwealth trade. Of course, we are fully in support of that. There can be no division between the two sides of the House about it. What is perhaps in doubt in hon. Members' minds is the extent to which that will produce an increase in trade. Let there be no difference about the desirability of doing our utmost to ensure that.

The second suggestion was that there could be a purely economic arrangement between two groups—the Community and E.F.T.A. This would avoid the apprenhensions of my right hon. Friend the Member for Thirsk and Malton and my right hon. and learned Friend the Member for Hertfordshire, East and others about sovereignty. We examined this carefully in the confidential talks that we had over the past year. It became apparent in the spring that it was not possible to secure an arrangement between two separate economic groups. I am afraid that that was the conclusion to which we came. It was obviously based on evidence that the Community is not prepared to enter into an agreement between two groups of that kind, and their reason for that is understandable, namely, that they fear the undermining and debilitation of the Community. That is one of the facts which we have to face.

The third suggested solution was that the Community as a whole should become a member of E.F.T.A. That, too, would have avoided many problems. In many ways, it would have been, as my right hon. Friend the President of the Board of Trade will, I am sure, agree, the simplest, cleanest and easiest solution to the trade problems, but that, too, was unacceptable. It therefore had to be rejected as a possible way of dealing with this problem.

The fourth suggestion was that we should apply under Article 238 of the Treaty of Rome for association rather than under Article 237. My right hon. and learned Friend the Member for Hertfordshire, East, at the end of his speech, raised considerable doubt about various aspects of the Community and the Treaty. He said that his advice to the Government was to wish the Community well and to seek application for association under Article 238. I wish to deal with that in some detail.

If my right hon. and learned Friend wants association under Article 238, he is presumably of the opinion that an economic association with the Community is worth while, and that the other matters which we have been discussing—the long-term and short-term interests—justify an economic association with the Community. He would not have suggested it otherwise. This is one of the things which raises the deepest suspicions of everyone in Europe. It has been one of the major factors in relations between the United Kingdom and Europe for the past four years.

I hope that my right hon. and learned Friend will not mind my saying this, but that is simply the belief that we want all the advantages of the developments in Europe without undertaking any of the obligations of the other members of the Community. It is that belief which has caused considerable difficulty in our relations with Europe.

Mr. George Brown (Belper)

That is the fault of the President of the Board of Trade.

Mr. Heath

My right hon. Friend is in no way responsible.

I therefore suggest to my right hon. and learned Friend the Member for Hertfordshire, East that we must look at the matter from that point of view, also. Technically, it is open to us to make application for association in this way. Each association agreement has to be negotiated separately. To be within G.A.T.T., it has to be either a Free Trade Area or a Customs union. My right hon. Friend the President of the Board of Trade tried, with all his energies, to get a Free Trade Area. It was impossible.

Therefore, any association agreement would have to be part of a Customs union, although one might be able to get exemption for specific articles, as Greece has done in its own association treaty. Exactly the same problems would face us in trying to arrive at a Commonwealth or E.F.T.A. arrangement with a common tariff and Customs union through association as it does through membership. Therefore, there would be no advantage in applying for association from that point of view.

As it would be a Customs union, there would be a common tariff. But as ant associate member, we should not have representation in the organs which decided that common tariff. Therefore, we should be giving up our sovereignty for a common tariff but we should not have a say in how it was fixed. To that extent, our position vis-à-vis sovereignty would be worse than if we were a member fixing these things and had our full share as to how they were arranged.

Sir D. Walker-Smith

Where does my right hon. Friend find in Article 238 anything, either expressed or implied, as to the creation of a common external tariff? In addition, if there are deep suspicions about an association, why is Article 238 in the Treaty and why was my right hon. Friend the President of the Board of Trade trying to get such an association for all this time?

Mr. Heath

The answer to the first point raised by my right hon. and learned Friend is that it has to be a Customs union or a Free Trade Area under the G.A.T.T. That is unavoidable. That is why there are only two courses. It was created by the Community to suit, first, the small countries, and, secondly, the underdeveloped countries in Europe.

There are two of those countries. One has just succeeded in completing the negotiations, and the other one is carrying them through at the moment. We hope that this can also be used for some neutral countries in Europe which, though admittedly small are highly industrialised, and we hope that in the negotiations it will be possible for them to be fitted into the association, if they so wish, and are prepared, as I hope, under Article 238 for association.

Mr. Sydney Silverman (Nelson and Colne)

I am interested in the first of the right hon. Gentleman's three objections to application under Article 238, and I apprehend that he, too, thinks that this is the most important of the three. What he said was that it aroused so much suspicion among possible future partners that they felt that we were trying to get all the advantages and exempt ourselves from paying the necessary price in the consequent disadvantages. I understand that, but what are the negotiations to be about which he is asking the authority of the House to conduct, unless they are to produce that result?

Mr. Heath

The negotiations themselves, and I will say more about them in a few minutes, are to reconcile the different interests which exist at the moment in the Community and in those countries which are asking to accede to it. That is the normal form of negotiations. The other point raised by my right hon. and learned Friend was why we tried to get a free trade area with the Community. It was an attempt with other countries on a basis which we thought at that time was perfectly justifiable. That was was in perfectly good faith. The view now taken by the Six is that a great industrial country of 50 million people like ours should not seek to obtain the advantages of association without at the same time undertaking the common obligations.

The last point is that, with a form of association, we do not have the same influence over general policy. In fact, we have very little, and no influence at all over political consultation.

Mr. Biggs-Davison

Does not all this show that G.A.T.T., as it stands, is the enemy of European unity, just as it has proved the enemy of Commonwealth development? Should we not, therefore, tackle G.A.T.T. in this connection and try to get it revised?

Mr. Heath

I know the views of my hon. Friend on G.A.T.T. Whatever our views about G.A.T.T., it is certainly the view of the Community with which we have to deal, but there are two possible ways of dealing with it. I have been into this in some detail, and I hope my right hon. Friends will realise why we have come to the conclusion we did about application under Article 237 and about the nature of the obligations which we are undertaking. I hope they will feel justified in waiting to see what the material derogation of sovereignty, to which they referred, amounts to, and to what extent we can succeed in our other purposes, both economic, for this country, and political, from the point of view of Western Europe as a whole, before they then make the final decision as to whether the contribution of sovereignty is material, in their view, and as to what its consequences are.

Now I wish to say a few words about the negotiations. Some hon. Members have asked what has been going on over the past year in the talks which we have had. I do not want to go over it in detail, but three things have happened which are important. The first is that I believe that now there is confidence between the countries of the Six and the countries of the Seven about the future, and I believe that that is very important in trying to get an arrangement between them. The suspicions have been removed, and there is now faith in the future in trying to get an agreement. Secondly, I believe that we have been able to create a greater understanding of each other's problems, and, in particular, an understanding of the Commonwealth, its nature, the importance of its trade, the extent to which some countries are dependent on their trade with us, and also on its political nature and its value to the world. I believe that there is a much greater understanding of that among the countries of Europe.

Thirdly, we have explored different ways by which technical problems can be settled. We have not found all the answers. We cannot decide which are the most suitable, which is what the right hon. Gentleman asked me about, until we get into the business of negotiation, and that is why we have now reached the stage where we shall enter negotiations and where countries can see what the firm arrangements would be.

On the question of timing, there is great interest in this, and my right hon. and learned Friend said "Do not rush it." I think it is now eleven years since we first debated in this House the question of the Schuman Plan, and at that time the party opposite stood aside. My noble Friend the Earl of Avon, Mr. Eden as he then was, proposed an Amendment to the Government Motion, on which we on this side of the House urged that we should take part in discussions on the Schuman Plan on the first initiation, and that was defeated by hon. and right hon. Gentleman opposite, who stood aside then, and who are standing aside today.

From the point of view of the negotiations, at the moment, there is another reason why we should take these steps now. The communities are in a formative period in four ways. First, the common agricultural policy is about to be worked out. Secondly, discussions on the status of the overseas territories and their problems are also about to begin. Here I agree entirely with what the right hon. Gentleman said about the importance of many of our own territories, dependent and independent, being able to come in, if they so wish, as many of them do, with new arrangements for territories in this position. I agree with my right hon. and learned Friend entirely on the importance of that. Thirdly, the details of social policy are about to be worked out—the miscellaneous provisions under Article 3 of the Treaty. Fourthly, the formation of the machinery for political consultation. These are four powerful reasons why we should take an initiative at this time.

So far as the date of the actual negotiations is concerned, I gained the impression from my discussions at the Western European Union meeting on Tuesday, that it was quite possible that they could start about the first week in October, and that by that time the countries will have been able to make the initial preparations for so doing. That is not a hard and fast date, but the impression that I got as to when they might be able to begin. They will be complicated and will take some time. The Government's decision was warmly welcomed by the members of the Six in W.E.U. and, in the communiqué they published, indicated that they wished to start the negotiations as soon as possible, to carry them out with a spirit of goodwill and to make every effort possible to reach a successful conclusion.

On the E.F.T.A. meeting, to which my right hon. Friend the President of the Board of Trade and I went last Friday. This was one of many discussions we have had with them as to the future arrangements which might be made. Again, in their communiqué, they expressed the view that the initiative of the British Government could lead to a solution of these problems, and they said that it was the duty of each member country of E.F.T.A. to play its part in so doing. Denmark has already made her position plain by asking for accession under Article 237, and the other E.F.T.A. countries will be making their positon clear in due course. I should like to emphasise that it must be negotiations. It will be an attempt to reconcile conflicting interests.

I was asked yesterday about "adaptations" under Article 237. We view this as making consequential changes in the Treaty necessary on the accession of new members. There are other ways of dealing with other problems, either in the framework of the Treaty or by protocol, which can be used. Members of the Six have their own difficulties about negotiations, and sometimes we tend to overlook those difficulties. They have anxieties whether the accession of new members will impede the progress which they themselves are making. They also have anxieties about whether this will lead to a change of balance in the Community, and how it is to be adjusted. We have to take account of that in the negotiations, but we are determined to try to make a success of them. The objective is quite simple. It is to prevent a further division of Western Europe and create a wider partnership West of the Iron Curtain. We should have confidence in ourselves and in our partners that we can take advantage of this in an expanding and growing community. This will not only help us. It will enable us to help other parts of the world. I believe this to be of the greatest importance.

Mr. Robert Mathew (Honiton)

Before my right hon. Friend leaves the mechanics of negotiation, will he confirm that all negotiations will be carried out on a political level—that is to say, by Ministers—and not on the Commission level by officials? Where appropriate during the negotiations, will a Commonwealth representative be present to take part?

Mr. Heath

The actual details of the negotiations will have to be arranged with the Six. There has not yet been time for them to be arranged.

Mr. E. Shinwell (Easington)

The Lord Privy Seal has spoken for nearly an hour but has not said a single word about the specific conditions to be laid down which would induce the British Government to enter the Common Market.

Mr. Heath

I explained my position at the beginning of my speech. Surely the right hon. Gentleman does not expect me to explain in public today the position which we will take up in negotiations. No Government have ever been asked to do that. We have given the House an assurance that we will give it the fullest possible details when we reach that stage of the negotiations. On the details, my impression is that the negotiations will be carried on between Governments at Government level. We have given the firm undertaking that the Commonwealth will be consulted the whole time.

We must try to achieve this wider partnership in Europe. We must not be dominated by fears and anxieties. Many have been expressed in the last twenty-four hours, and I have no doubt that many more will be expressed in the rest of the debate. We must have faith that we can deal with these new problems. I believe that if we can secure an arrangement successfully with the Community this country will indeed respond, not only for the benefit of itself but also—I fundamentally believe this—for the benefit of our partners in the Commonwealth.

5.12 p.m.

Mr. F. J. Bellenger (Bassetlaw)

It must be obvious to the Government after the speeches by some of their supporters and by Members on this side of the House that a good deal of educational work on the facts of the situation must be carried out if the House eventually is to give a balanced judgment on whether we should join the Common Market. Although The Times has done good work by publishing certain parts of the Treaty of Rome, Members of Parliament are not able to get a full copy of the Treaty through the usual channels in this House. It is true that a copy is in the Library, but in order to speak authoritatively on the different articles in the Treaty and relate the Treaty to all our fears and apprehensions we should each have a copy of the Treaty in order that we can consider what, either politically or economically, is imposed under its various articles.

Although I am well disposed towards the E.E.C. and am in favour generally of Britain's entering it, I have never been in favour of Britain accepting the Treaty of Rome as it stands today. We were not there when the Treaty was negotiated. It was negotiated between the six Powers. Therefore, it is only fair that we should have a say now in either the modification of various articles or the amendment or extension of the Treaty. I sincerely hope that the six will look upon such suggestions with favour. I realise that the right hon. Gentleman cannot tell us the result of his preliminary inquiries, but it would have been interesting to have had some information about the reactions of the Six in the talks which have been going on between the Six and the British Government during the past year. It is a close secret. It is small wonder that some right hon. and hon. Gentlemen have voiced apprehensions, fears and suspicions, some of which may not be based on reality.

It is clear that the House cannot present heads of agreement to the Government so that they can take them with them when negotiating. I suspect that certain right hon. and hon. Members have such special interests that they are opposed entirely to Britain's entry into the Common Market. But there are many legitimate interests which concern us as representatives of the electors and which need clearing up. I do not think that this is the time to clear them up. All that the Government ask in their Motion, on which we shall probably vote tonight, is that we give them the power to go and negotiate.

It is useless for my right hon. Friend the Member for Easington (Mr. Shinwell) to ask what are the conditions on which the Government are to negotiate. The Government themselves know. We do not, but we are not asked to give a decision today on the conditions. The Government will obviously have to come to the House and ask for our approval of their negotiations. Together with my right hon. Friend the Member for Huyton (Mr. H. Wilson) who also expressed the same sentiments in his concluding remarks, I am quite prepared to wish them good luck, God speed and a quick result. I do not think for one moment that we shall get a quick result. It took Greece about two years to negotiate the association that it is now getting under Article 238. It took the six Powers themselves quite a long time before they were able to agree on the Rome Treaty.

We have received quite a lot of advice from different right hon. and hon. Members. We have even had an elder statesman in the other place advising us how we should react to the Government Motion. All that advice should be given in good faith. When the question of federal union is raised as an Aunt Sally to be knocked down by my right hon. and hon. Friends, we should look at some of the published statements by prominent members of the Labour Party. I refer particularly to Lord Attlee, an ex-Prime Minister who, so I am told, still wields considerable authority in my party.

On the 21st anniversary of Federal Union Lord Attlee said this in his message to them: I welcome the opportunity to congratulate Federal Union … He went on to say: The real challenge for the future is how far we are prepared to surrender the old concepts of absolute national sovereignty. He said later: Europe now has to serve the world. And the people of Europe must get together to put their long traditions to the service of humanity as a whole If that is an honest expression of an honestly held opinion, I shall look with much interest to what my noble Friend has to say in another place today. How does he make this message to Federal Union coincide with what I understand to be his opposition to Britain even entering into negotiations? Perhaps his real motive is, as he said, that the Government are digging their own grave and he wants them to do the job thoroughly. I have no objection to the Government digging their grave, but I have considerable objection to them burying me and others at the same time.

That is one reason why I support the Government's decision to negotiate. Neither "support" nor "approve" is really the right word to describe my attitude. I do not dissent from the Government's entering into negotiations. But what do words matter when we are dealing with problems of this nature, which are of such profound importance not only to this country but to the rest of the world?

The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) talked about sovereignty yesterday. In his usual cogent way, as an advocate not only in the House but in other places, he presented the whole issue of sovereignty in a nice, compact, lawyer-like, watertight package. He tried to show the rest of Europe that British sovereignty, with its constitution based on common law and evolved throughout the ages, was the real thing, and that other constitutions, based, as he said, on Roman law, which operate abroad, should be looked upon with a certain amount of suspicion. It is just that sort of utterance that causes tremendous fury in the minds of the people of Europe and elsewhere.

Many right hon. and hon. Members have legitimate fears in regard to the Commonwealth and agriculture, and I understand those fears. They are right to express them, but they must bear in mind that there is a much weightier problem with which we have to deal in discussing this matter. How did sovereignty avail us in the two world wars in which we have been involved in the lifetime of many of us? Our sovereignty might have been overwhelmed if Hitler had had his way, and in order that it should not be, we were prepared, at one moment—and I remember the historic occasion when the right hon. Member for Woodford (Sir W. Churchill) made the announcement —to pool our sovereignty with France, in common citizenship. I also remember that on that occasion not one voice was raised against the proposal in this House. Under the force of circumstances we were in full agreement with the Government of the day.

I do not think that it would be possible for any Government to suggest that we should surrender our sovereignty today, but the Lord Privy Seal was right when he said that it will be necessary to pool some of our sovereignty under a revised arrangement with the European Economic Community if we are going to enter it. I see no reason why we should not do so. We use words as though they are talismen, and as if something will happen if we make use of them. But things do not happen in the way we want them to. A word like "sovereignty" should not be bandied about as it is by astute and plausible men, or hon. Members with legally-trained minds. Most of us are not in that category. We must consider the matter from the angle at which our constituents will look at it, and they do not have trained legal minds. We have to present to them, in as concise and as easily understood terms as possible, what it is that we propose Britain should do if she enters the Common Market.

I pay great attention to what my right hon. Friend the Member for Huyton says, because on economic matters he speaks with a good deal of authority and knowledge. I was interested to hear him say that from the long-term point of view he thought that it would be to the advantage of this country to enter the Common Market. I have long thought that, because I have read the various analyses which have been made of the situation by various trade associations and organisations, and have seen the conclusions to which they have come. The majority opinion in industrial circles is in favour of Britain's going in; indeed, manufacturers are already lining up to go in.

Many of our leading companies have not waited for the Government to act. Like Her Majesty's Opposition, they have probably been somewhat frustrated by the apparent inactivity and laissez faire attitude of the Government in recent years. Many of them have gone in, and have made arrangements with their competitors in one or other of the Six countries, thereby presumably transferring a certain amount of capital—one of the objects of the Rome Treaty being the mobility of capital—and giving employment to foreign and not British labour. They are doing this because they think that it is worth while. Indeed, it may save some of those industries in the present situation of declining trade, of which we know only too well from some of the published figures.

Much has been said about the Commonwealth. It is obvious that we cannot ignore sentiment and tradition. Many of us have relatives in Commonwealth countries. In the older Dominions especially we have our kith and kin. There are still many intimate links between the older Dominions and this country. My right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) said that there were 20 million Scotsmen abroad, and there must be many links between some of them and the people of Scotland. For those people I have a good deal of sentiment, because when the Mother Country was in trouble they did not ask when they should come in; they came in at once. My right hon. Friend quoted from a letter which appeared in the Guardian, referring to the time when Mr. Nash, the then Prime Minister of New Zealand, who was negotiating with one of my right hon. Friend's who was a Minister, said, "Tell me what you want, and New Zealand will endeavour to get it for you."

But I have my doubts about some of the newly emerging members of the Commonwealth. I cannot go into their bona fides; they are members of the Commonwealth, and presumably they accept the system. But I have noted with considerable interest how some of their leaders do nothing but denigrate this country when they go abroad, especially to the Communist countries. We heard only recently of the tirade expressed in Hungary, or another of the satellite countries, by the President or Prime Minister of a Commonwealth country. That is not the way to get my support.

When I have to fight battles, as I have done in two world wars—and as many other hon. Members have also done—I look round to see who are my true comrades. If this country is in trouble again I hope that some of the newer Commonwealth countries will come to our aid in the same way as the older Dominions have done so often. If they do that I shall feel the same sentiment towards them that I feel for Australia, New Zealand and Canada. I have lived a good many years now. I have tested the value of friendship in the different spheres in which I have been engaged, I know the meaning of the word "comradeship", which is so often bandied about without its spirit being carried out. Anybody who has fought in a war and has been in the Army knows the true meaning of that word.

That is the test. This holds good not only in a hot, military war but in the war that is constantly going on now—the cold war. We shall have a good bit of the cold war, in connection with Berlin, before we resume after the Recess. We shall then see who is prepared to stand shoulder to shoulder with us in our attitude to that matter.

I have no doubt that the right hon. Member for Thirsk and Malton (Mr. Turton) will refer to the question of agriculture. He has a far better knowledge of the matter than I have, although I have some good agricultural land in my constituency, which also has a lot of coal in it. Although the farmers may not support me in the numbers I would wish it is my duty to try to understand their problem. Let the House note that the position which agriculture is in today, and which it wants to maintain, was first made possible by a Labour Government, under the 1947 Agriculture Act.

The guaranteed prices which put the farming community on its feet were our business, and the farmers know it and say so. That is why Lord Williams of Barnburgh, as he is now called, is a hero among the farmers. In 1957, of course, that principle was continued in that Statute.

Every year there are negotiations about prices in the Price Review. I do not believe that that system is necessarily the final system. After all, who is going to say that the guaranteed price system as in the 1947 Act is the only one that can satisfy the farmers? I do not know the answer. I know that other countries have the same difficulties with their farmers. Germany has very considerable difficulties with her farmers. Other countries have a different system for maintaining a certain standard of living in their agricultural industry

As the Prime Minister said yesterday, it may very well be that our system may have to be modified. But what does that matter so long as we do not prejudice the industry or, when it comes to the Commonwealth, as long as we do not reduce its standard of living by entering the Common Market? It is true that the enlarged market will be mainly for British manufactured goods. But I cannot believe that as the years go on—particularly in Australia—and as countries turn from being primary producing countries to manufacturing countries—as they are already doing, though, of course, in a small way compared with their primary industry—that some of them which are now mainly food producing countries may not also have an interest with their growing industrial production in Britain being a member of the Common Market.

The only question, however, that we have to decide tonight is whether we approve or not the Government entering into negotiations with the Six. I reiterate and echo the words of my right hon. Friend the Member for Huyton, although in most of his speech he gave expression to the difficulties which the Government would face. Nevertheless, I wholeheartedly wish the Government good luck. I do it on one ground only. It is not that I want the Government as such to have success. Although I may differ from some of my right hon. and hon. Friends, there is one thing with which I agree with them entirely and that is that a change of Government is necessary. But those of my hon. and right hon. Friends who talk so glibly about putting this issue to the electorate at an early date need have no fear that that will be done. This issue will go to the electorate but not until the next General Election if I am any judge of the length of time that the Government will need in order to give us the result of their negotiations. It is not going to be a quick process.

I believe that the main issue at the next election will be the question of whether Britain enters the Common Market. I only hope that hon. Members will make up their minds on the facts and will not have any preconceived or prejudiced views about Britain going in. In my view, the issue is whether in going in we should benefit our own people and those associated with us. That is why I shall support the Government tonight as, indeed, will many of my hon. Friends, in their effort to get some sort of agreement which will enable us to go into the Common Market as free and as sovereign as possible.

5.34 p.m.

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

I thought that the right hon. Member for Bassetlaw (Mr. Bellenger) found the problems in this matter fairly easy to determine. He really only got very worked up when he was discussing his late colleague Lord Attlee and his views in the House of Lords. My right hon. and hon. Friends and I have been gravely concerned at the Government's decision to try to enter the Common Market. Because of that concern we placed on the Order Paper an Amendment setting out what we thought were important questions—the derogation of sovereignly, the position of the Commonwealth and the position of agriculture.

I notice that in their Motion the Government recognise the vital importance of those considerations, but, having done that, they then go on to say in the Motion that if these three principles, the principle of sovereignty, the principle of Commonwealth and the principle of agriculture are going to be sacrificed by us entering the Common Market they will come to the House and ask for its approval. It is because we do not think that that is a sufficient assurance that we tried to put down an addendum to the Government's Motion, which, unfortunately, Mr. Speaker was unable to find time to call.

In that addendum we ask the Government, before the negotiations start, to give definite assurances that certain things will not be bargained away. There is the political side, the Commonwealth side and E.F.T.A., and the agricultural side. I have listened very carefully to almost the whole of this debate, but no assurance has been given by any right lion. Gentleman speaking from the Government Front Bench that he will go to the negotiations having declared beforehand that these matters are not to be bar-gained away by him as a negotiator.

I must tell my right hon. Friend that unless we can, before this debate is ended, have clear assurances on these three matters—sovereignty, the Commonwealth and E.F.T.A. and agriculture—we shall not be able to support Her Majesty's Government in the Division Lobbies tonight. Let us deal with these three matters in turn.

First, on the political side. Yesterday, my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), in what I believe to be the most brilliant speech that has so far been made in this debate, defined our attitude on the question of sovereignty. As I regard the matter, it is really the freedom of the people of this country to choose their fate and also not to be tied up in any political federation or union.

In his speech, my right hon. Friend the Lord Privy Seal divided this political question into what he called long-term and short-term questions of sovereignty. He declared, as did my right hon. Friend the President of the Board of Trade last night, that there were overtones in this question of political federation or union with Europe, which he admitted, but he said that it would require an amendment of the Rome Treaty for it to be introduced. If that is the case, what is there to stop the Government from giving a firm assurance that in negotiations they will make it clear that this country will never go into a political federation or union with Europe? That is the first request which I make to Her Majesty's Government.

On the short-term question, I find it rather hard to understand the arguments of my right hon. Friend the Lord Privy Seal. He must remember that I, unlike my right hon. and learned Friend the Member for Hertfordshire, East, am not a practising lawyer. But my right hon. Friend told us, and I took a note and I hope that he will correct me if I am wrong, that surrendering sovereignty was merely pooling sovereignty. That is merely begging the question. If we pool sovereignty we surrender our sovereignty in exchange for somebody else surrendering theirs.

Then my right hon. Friend spoke about the Commission under the Rome Treaty as not being an independent body which can act. I understood him to say the Commission is under the Council of Ministers, but if he will refer to Article 155 of the Treaty my right hon. Friend will find that it says: …the Commission shall…dispose of a power of decision of its own…"— and Article 157 provides that …they shall not seek or accept instructions from any Government or other body. I do not want to go further on this question of sovereignty. It has been well argued and far better argued than I can argue it by my right hon. and learned Friend the Member for Hertfordshire, East.

I turn now to the question of the Commonwealth. In his speech yesterday my right hon. Friend the Prime Minister used these words: If I thought that our entry into Europe would injure our relations with and influence in the Commonwealth or be against the true interest of the Commonwealth, I would not ask the House to support this step."—[OFFICIAL] REPORT. 2nd August, 1961; Vol. 645, c. 1493.] That puts our point of view very clearly.

In order to test the effect of what entering the Rome Treaty would have in the Commonwealth, the Prime Minister sent out what I have always called "the Ministerial doves" out of the ark. They have brought back not a twig but communiqués, and I want to read the effect of those communiqués. I shall quote the actual words and I am very glad that the Secretary of State for Commonwealth Relations, one of the doves, has now returned to the Chamber.

First, Canada …expressed the grave concern of the Canadian Government about the implications of possible negotiations between Britain and the European Economic Community, and about the political"— and I emphasise the word "political"— and economic effects which British membership in the European Economic Community would have on Canada and on the Commonwealth as a whole. Australia said: …avoidance of a divided Western Europe…should not be accomplished at the cost of division within the Commonwealth or elsewhere in the free world. Australian Ministers expressed their concern at the weakening effect they believed this development would have on the Commonwealth relationship. New Zealand …stressed the grave consequences… India said that the Treaty of Rome might weaken existing Commonwealth links… Pakistan was ..concerned about the adverse consequences that were likely to follow on the United Kingdom joining the Common Market… Even Cyprus expressed fear. The Federation of Rhodesia and Nyasaland expressed concern about the possible effects on the Commonwealth as a whole of Britain's entry into the European Common Market. The West Indies pointed out that accession posed a serious threat to vital West Indies interests… If there was any purpose in those doves going out of the ark surely this House should pay some attention to their message. It is quite true that the various communiqués were dressed up in different words but there is a curious similarity in their form. I have a suspicion that in this case Noah sent out a prepared twig for the doves to bring back but there were some alterations in it which I have read out.

If, however, we do not wish to rely on the communiqués we might rely on what has been said by Prime Ministers who have been good friends of Britain in the past. Their message is even clearer. Mr. Menzies said on 13th July: The political implications of British participation in the Common Market were very great. Britain would be involved in European politics for the first time and could not remain as individual and detached as she was today. Mr. Sandys felt that none of these things would affect the Commonwealth relationship—well, we think it will ! Mr. Holyoake said on 1st July: New Zealand claims the continued right of unrestricted and duty-free access to the U.K. market for our meat and dairy produce. This is the whole basis of our economy. We have not been able to discover, and nobody has been able to show us, any alternative that would avoid disaster for our economy". So that we may have both political sides I quote what was said by Mr. F. P. Walsh, President of the New Zealand Federation of Labour, on 10th July: I know I am right in saying that the people of New Zealand, when they realise what is involved, will be utterly opposed to British entry into the European Common Market. Surely from these comments the House will acknowledge that we have caused by our action grave concern in the Commonwealth.

Can we not get the Secretary of State for Commonwealth Relations when he winds up the debate tonight to tell the House and the country and the Common Market that there are certain vital Commonwealth principles which we will stand by in the negotiations? First, that the right of free entry for the Commonwealth product will not be bartered away in any negotiations. Secondly, the system of Commonwealth preferences will be substantially maintained. Thirdly, we will preserve the traditional rôle of the Commonwealth with all that that means in the political field.

I beg the Government to realise that in this question of the Commonwealth what is in jeopardy is really the whole political concept of the Commonwealth. I believe that in the next twenty years the future of the world will depend a great deal on how far by this multi-racial partnership we can bring the continents together. If through our imprisonment behind the tariff barriers of this continental system we lose the opportunity of drawing the multi-racial Commonwealth partnership of the continents together and by this means we split the Commonwealth, I believe that those who are responsible for the Government of this country will have failed gravely in their responsibilities and duties.

I believe that there is an opportunity here for a positive new Commonwealth trade policy. Last night my right hon. Friend the President of the Board of Trade said, "Well, the only alternative to this is a Commonwealth free trade policy and nobody wants that". There he was falling into the same error as my right hon. Friend the Minister of Aviation perpetrated when he made the great blunder in Canada just before the Commonwealth Economic Conference. I believe that we have opportunities if we seek to revise the provisions of G.A.T.T., as my hon. Friend the Member for Wembley. South (Mr. Russell) has mentioned, for a greater expanding Commonwealth trade to our benefit and to the benefit of the Commonwealth.

There is, of course, the difficulty of G.A.T.T. Let us remember the history of G.A.T.T. The Socialist Government had to take that loan from America which I opposed in 1946. I thought that it was wrong, and then they paid the price of that loan in the provisions of G.A.T.T., under which we cannot alter our Commonwealth trading arrangements to our benefit although any new free trade area or common market, like the European Economic Community and the Latin-American Common Market, are absolutely free to do so. That is wrong and unfair. We are frozen to our pre-war trading arrangements.

It is significant that now, in the very week that we are asking the United States and the International Monetary Fund for a loan of £716 million, we find ourselves also asking to enter the Common Market. Although my right hon. Friend the Lord Privy Seal repudiated that this move had been openly advocated by President Kennedy, it is well known that, for a long time, America has been trying to drive Britain into entering into the Common Market. To use the words of my hon. Friend the Member for Hertfordshire, South-West (Mr. Longden) in another connection, it would appear that Britain is tonight being dragged kicking and screaming into the Common Market in the arms of her American financial nurse. That is the danger.

I do not believe that in the interests of the Commonwealth or of Britain we should neglect Commonwealth trade and get too tied up with the trade of Europe. For four years, we have been trying to get closer in trade to Europe, trying to see how through the Free Trade Area proposal and E.F.T.A. we can get more trade with Europe. Look at the results. In those four years, comparing 1956 with 1960, our exports to the Common Market countries have gone up by £86 million, but our imports went up by £170 million, so in that operation our balance of trade has gone to the bad by about £100 million. If we then take the six leading Commonwealth countries, we find that our exports were about double what they were to the Common Market countries. In those four years they went up by £46 million, but our imports dropped by £18 million. If only the Government in those last four years had paid as much attention to Commonwealth trade as they have to European trade, our balance of payments position today would be very different, and also the health, economy and prosperity of our Commonwealth would have been greatly improved.

Let me say a few words on agriculture. In my view, we have given agriculture explicit assurances that during the lifetime of this Parliament the 1957 Act shall be continued. In my view, it would be politically dishonourable and economically unwise in our negotiations to argue for our agriculture on any other basis. I want to make it absolutely clear that I am not saying that for all time and for all commodities the present methods of support have to be continued, but I am saying that I do not believe that this country will tolerate the Government abandoning the broad basis of our agricultural support that both parties in this House have given before, during and after the war.

I would say that in agriculture there are two essential principles that the Government ought to make quite clear in their negotiations. The first is that we should continue to give to agriculture the pledge of remunerative prices and assured markets for its products. That case ought to be made quite clear to those with whom we are to negotiate. The second pledge is that we retain the right to work out our own agricultural policy here for the interests of British agriculture and not have our policy dictated for British agriculture by any outside body in the interests of Continental agriculture. Those are the assurances on agriculture that I wish the Government to give to the House tonight.

I touch on one other matter that I should like, at this stage, to be cleared up. I am not at all happy about one reply that my right hon. Friend the Prime Minister gave last Monday to my hon. and gallant Friend the Member for the Isle of Ely (Sir H. Legge-Bourke). He was asked what would happen if the negotiations failed. The Prime Minister replied that if our negotiations fail quite a lot of things will happen and quite major chances may have to be made in the foreign policy and in the commitments of Great Britain "—[OFFICIAL REPORT, 31st July, 1961; Vol 645, c. 937–8.] I think that the House and the country would like to have that clarified. [HON. MEMBERS: "Hear hear."] We want to know if this is a pistol poised at the head of France, if it is a fully loaded pistol or if the Prime Minister is playing some form of Russian roulette. There is a great danger in this. There are two sides to the danger. By that remark, the Prime Minister may force us into a position of being in a dilemma when either we have to sacrifice some principles that we in this country deem essential or take the course of breaking up the Western Alliance and the Atlantic Treaty.

I have grave doubts about these negotiations. I have fears that we shall be sacrificing so much that I value and am proud of in this country. I have also fears that, if my right hon. Friends are resolute in defence of these principles, we shall end in estranging Britain from those countries in Western Europe just at the time when they have estranged the Commonwealth by trying to explain what they intend to do. For those reasons, I beg the Government to think again. I have always wanted the Government to get down early to negotiations, but not in the way that Article 237 would commit them, and I always hoped that the right way was for us and the Commonwealth to negotiate together under Article 238.

I listened with great surprise to what my right hon. Friend the Lord Privy Seal said about Article 238. He told us that it was only devised for some agreement with a small nation or a neutral nation. Article 238 states: The Community may conclude with a third country, a union of States or an international organisation agreements creating an association embodying reciprocal rights and obligations… I do not see any mention there of the small nation or of the neutral nation. This is a device for seeing whether certain economic advantages cannot be worked out in negotiation—

Mr. Heath

What I said was that that was the general view resulting from the discussions we have had. It is perfectly true that that is the situation according to the article, but the idea behind the conception of that article, and the general view about it among those who have to operate it, is as I have described. I did not say that it was for neutral nations. I said that I hoped it would be possible for the neutral nations in E.F.T.A. to take advantage of it, but that is still a matter of negotiation.

Mr. Turton

It may well be that my right hon. Friend will find that the view of the Common Market countries of what is meant by entry into the Common Market is something rather different from what I, certainly, envisage. We are still a sovereign nation. Cannot we say to the Common Market that we want to be friends, and that we want to encourage more trade if they will trade more with the Commonwealth and do a deal? Otherwise, we shall be landed in a very difficult position.

I beg the Government to think again, and, before the negotiations start, to give us assurances of what will not be bartered away. There must, of course, be many matters that will be the subject of negotiation, but there are some things that my constituents and those of many of my hon. Friends would not wish to see bartered away.

Those of us who have signed this Amendment are hon. Members who have been loyal Conservatives far a long time, trying to follow Conservative principles and policy. Some of us have, at times, had a snare in framing that policy. I beg the Government to realise that it is not easy for us to take our present line over this problem of the Common Market. In regard to Commonwealth policy, during my time in this House I have found no difficulty in following loyally the ideas and principles of men like Leo Amery, Oliver Stanley, Oliver Lyttelton and, more recently, Alan Lennox-Boyd: or, indeed, the leadership of my right hon. Friend the Member for Woodford (Sir W. Churchill), who declared that he did not intend to preside over the liquidation of the British Empire; or, indeed, of Sir Anthony Eden. No one could accuse him of being slow in friendship to Europe and of giving it support, but all the time he gave inspired and inspiring leadership to the Commonwealth.

We may be a few hon. Members in this House of Commons, but I warn the Government that, outside, there are hundreds of thousands of Conservatives who hold the views I hold. If the Government cannot give these assurances, and if those people feel that in this way the Government have betrayed the Commonwealth and our sovereignty, I fear that the Government will split not only the Commonwealth but the Conservative Party.

6.5 p.m.

Mr. Charles Pannell (Leeds, West)

I am sure that the whole House will have listened with great interest and respect to the right hon. Member for Thirsk and Malton (Mr. Turton). We have listened with respect, particularly, because of the great difficulty that people find when their views put them without the general comradeship of their own party, but I ask the right hon. Gentleman to believe that those who take a view contrary to his are motivated by thoughts just as sincere and by study over just as long a period, but who, nevertheless, approach the problem from an altogether different angle.

I do not think that we can afford to be oblivious of what is happening in Europe today. That is why the Prime Minister is being dragged in now, instead of going in a year ago. When the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) spoke yesterday—giving what was, if he will allow me to say so, an outstanding performance—I thought that his speech was out of its time context. It would have been even better and more characteristic in 1906 than in 1961.

He was speaking from a presumption of power, and with the idea that we hold international aces today. I do not think that we do hold them. That speech was not made on a basis of the weakness with which we have to go into these negotiations. Nobody can deny that, in 1961, we see the slow decline of the United Kingdom as an economic and political power. That, after all, was the burden of the Chancellor's message last week.

We have to ask ourselves the following questions. What is the end of all our political efforts? What do we stand for? Why are we in this place at all? That is a question that men have asked since the beginning of time, and I suppose that those who asked it in ancient days said that the object was the good life, so providing the answer that we accept today. Perhaps I may, therefore, spend a minute or two in telling the House what I consider to be the good life.

I say that the good life can today only be founded on a sound economic basis which will maintain full employment for the 50 million people in these islands. When people stop speaking about agriculture—which may, of course, be the livelihood of most of their constituents—and when they stop speaking about the Commonwealth and all the other interests, what any Prime Minister has to consider as the first priority is the life and livelihood and economic well-being of the natives of these islands-50 million of them. That is the first thing, and I start from that point.

What is the greatest misery for 50 million people? I suggest that it is a declining economy resulting in unemployment. I made this same point in my maiden speech twelve years ago on the question of why full employment must be the first priority of all our domestic policy. I said then that full employment does not just mean giving the wife enough at the end of the week, bringing up the children and putting them to bed at night in comfort. More than anything else, full employment means a man on his feet instead of a supplicant on his knees.

It has always been my claim that when we ask what we mean by the good life we must start with full employment. I say to hon. Gentlemen opposite who have not had the experience of one who has had a very long spell of unemployment—two years of it in the first three years of married life—that it enters into one's being and takes away from one a sense of security that one never fully recovers.

When people speak about a "spot of unemployment" here and there, however small, to give balance to the economy, it sends a shiver down my spine. I would give them a taste of it themselves, because it is always someone else who has to be out of a job when we get economists and cranks using such a phrase and the Chancellor of the Exchequer giving colour to it.

How do we maintain the viability of this island? To do so, we must continue to be a market and a source of capital for the Commonwealth and for the sterling area. As hon. Members opposite have said, we have to be masters in our own house, but I find that the arguments put forward by those who wish to stay out of the Common Market on grounds both of sovereignty and of the Commonwealth to be wholly conflicting. The people who say that we can do nothing without the Commonwealth have even quoted what Archbishop Makarios would have us do. Incidentally, I find that a bit much coming from hon. Members opposite.

I find it rather curious to hear Members opposite put up the argument of sovereignty. At least I grant to my colleagues on this side of the House who disagree with me about the Common Market that the conception of the Commonwealth on the benches opposite is different from the conception of the Commonwealth on this side of the House. When the right hon. Member for Thirsk and Malton speaks of the Commonwealth, what does he speak of? Sir Roy Welensky's rights? He has been backing them up recently. I doubt whether my hon. Friends who use the Commonwealth as an argument will use the same people as examples. Do we speak of Jomo Kenyatta's Commonwealth? He may be in a responsible position before we have finished.

What do we really mean by the Commonwealth in this context, and in the question of sovereignty? The very form of the Commonwealth itself is an argument for the pooling of sovereignty. We pool our sovereignty in the Commonwealth. Do we call ourselves first among equals, or do we call ourselves partners in the Commonwealth?

Mr. Turton

We do not pool our sovereignty in the Commonwealth. We are all sovereign States.

Mr. Pannell

That is curious casuistry, since people speak of economic preference and of the Ottawa Agreement, and the rest. Of course, it is a pool of sovereignty. It may be a willing pool, but it is nevertheless an abrogation of sovereignty.

In parenthesis, I want to say something about agriculture. I recognise that the right hon. Member for Thirsk and Malton speaks for one of the great agricultural constituencies. But there are only four or five constituencies in which the agricultural vote predominates, and his is one. I make no aspersion on him when I say that he is very much alive to the views of his constituents. My only agricultural point is to mention that when I was coming to the House I heard a statement over the radio, which I have verified and which will probably answer those people who have been overstating the case for the Commonwealth. This is the news which went over the B.B.C. this morning: The Chairman of the Australian Wheat Board, Sir John Teasdale, has said that if Britain joins the Common Market there should be no immediate setback to Australia's wheat trade. If my right hon. Friend the Member for Huyton (Mr. H. Wilson) had heard that this morning, perhaps he would not have taken the line that he did. The radio went on. Even if the Common Market imposed a tariff on wheat, Australia would be in much the same position as before, because the tariff would apparently also apply to the other main wheat suppliers of Europe, the United States, Canada and Russia. Sir John said that it was unlikely that the European countries themselves would be able to increase their output of wheat. That was Sir John Teasdale's view. I rather fancy that a great deal of propaganda has to be accounted for.

How do we envisage the Commonwealth in thirty years' time? Dr. Nkrumah has been speaking in Eastern Europe. How does he visualise the future? In parenthesis,I should add that I believe that South Africa will still be a running sore in the Commonwealth long after she has gone out and that we may well find, before the end of the century, an African Common Market. That is what I have gathered from my African friends, because they do not consider themselves to be for all time in association with these islands.

They will follow the some pattern as Australia. They will build up their own heavy industries first, and then light industries. It is a characteristic of emerging Powers that they sometimes get their priorities wrong. When they first emerge and begin to educate their nationals, the leaders all want to be politicians. Afterwards come the professional men—the lawyers and the civil servants. Eventually these Governments get down to the fundamental truth that prosperity depends upon their technicians and engineers and upon the building up of a craftsman class. When I give a helping hand to a young Nigerian I rejoice rather more if he is a civil engineer than if he has passed a law degree.

I do not think that Africa looks at the Commonwealth as we do. Have hon. Members opposite considered all that is left of the world surface? With the up-surging of world population, Africa is the one continent left which might have the resources to feed all its own children. We may well see a Common Market in Latin America. Cuba may be the beginning of the end for the United States and a threat to the Monroe Doctrine.

I am sad that in this sort of economic argument all sorts of things are raised which outrage me as a Socialist. There was recently a letter in The Times which gave as a reason for staying out of the Common Market what it called: …a divided Germany, seething with bitterness and ideological differences… It spoke of the yearning in Germany for the lost territories. It also referred to the internal revolts of the peasants in France. But, after all, we had our last labourers revolt in 1830. The letter added that the Belgian coal industry was in ruins.

The letter started off by giving as one of the reasons why we should not go into the Common Market the spectacle of Italy harassed by over-population and unemployment. But the fact that there is a distressed area in Europe should be a reason for Socialism and for aid, just as we speak of aid to the emerging territories. It is as though we were to argue that Ulster is no concern of ours, but Ulster has a higher level of unemployment than at least one of the Six.

I have always preached that a spot of unemployment anywhere is a threat to full employment everywhere. Hon. Members speak of the fear of immigration. One would think that no immigrants were coming into the country now. There is terror at the prospect of Italians coming in, but 11,000 of them came last year and nobody noticed them. What about the Germans? There is a lot of fuss about 500 German troops coming to a range in South Wales.

These men may well be the sons and grandsons of German Socialists, and some of my colleagues tend to forget that the first people who suffered under Hitler were not the Jews but Germans—the German Socialists. Nearly 10,000 Germans came here on permit last year, and nobody noticed them. There were no Adjournment debates and no one was outraged. But take 500 German troops and put them in South Wales and we have resolutions all over the place. It is all sheer bilge and poppycock, self-delusion and humbug.

There are those who do not like de Gaulle. Last year 3,400 Frenchmen came here. I take it that they were assimilated largely on the South Coast. When I have been down to places like Bournemouth, I have seen them in the music shops. In addition, there were 2,400 Dutch immigrants.

Then we get the argument that there are differences in wages and conditions. But it has to be a severe difference to cause a man to uproot himself, his family and his livelihood and come to a new country and learn a foreign language. Are we under such a threat? We shall have to provide much better conditions before we shall get a flood of immigrants from Europe.

The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), who is not now in his place, told the story yesterday about the Welfare State being dismantled because the building workers would have to do away with one of their tea-breaks. He went on to rebuke the philosophy of what he called Mr. Butskell. Generally speaking, when I see today's Order Paper I consider Mr. Butskell far more rational than Mr. Silverbrooke.

People who have been making speeches since the time of the Schuman Plan had better look up their statistics since that time and find out what has happened in Europe. Consider public holidays. In France, the total of annual and public holidays together—I have telescoped the statistics to save time—is between 25 and 31 days; in Germany it is between 25 and 28; in Italy it is 31, and in the Netherlands it is between 18 and 28. We give our workers about 18 days' holiday a year. Therefore, that argument surely fails.

Sir James Duncan (South Angus)

Paid holidays.

Mr. Pannell

Yes. Then we have had the argument that; somehow, we shall be undercut in world markets. Let us consider wages and their value, which is more important than the wages themselves, compared with the cost of living and see how they are improving in some of the Six faster than they are here. The gross hourly wages run like this. Last year in Germany there was an increase of 10 per cent., in France of 6½ per cent., in Italy of 5 per cent., in the Netherlands of 9 per cent. and in Britain of 3 per cent. In Germany, the cost of living has gone up 2 per cent., France 4 per cent., in Italy 2 per cent., in the Netherlands, 1 per cent. and in the United Kingdom 1 per cent. If one takes the value of hourly wages, in Germany it is plus 8 per cent., in France 2½ per cent., in Italy 3 per cent., in the Netherlands 8 per cent. and in the United Kingdom, 2 per cent. We are not exactly keeping up in the league.

Taking the purchasing power of the weekly wage by the best comparisons available—I am quoting from the European Labour Bulletin—it has gone up in Germany by 8½ per cent., in France by 4 per cent., in Italy by 5 per cent., in the Netherlands by approximately 2½ per cent. and in this country by 1 per cent. The only argument I am making is that people in these other countries are bringing themselves up. Social benefits are being increasingly bestowed. It is a great mistake to try to judge Europe from the time that the Labour Government introduced the Welfare State. Its example has been followed in other places.

I have not as yet made many quotations, but I call in aid the president of my own union when speaking this year to the Engineering and Shipbuilding Confederation. Talking of the Common Market, Mr. William Carron spoke of the main question of a Britain Government retaining full and adequate economic powers to maintain full employment, which is the text of the speech I am making now, and said: We should face the fact, squarely, that no economic control or device yet invented can maintain full employment in a country like Britain, which relies on a large overseas trade to make a living, if it chooses to live in comparative isolation from the fastest expanding and the most dynamic economic groupings of the world such as the Economic Community of the Six. And let nobody try any longer to make us believe that it is either the Commonwealth or Europe with whom we have to develop trade. Both can be done simultaneously. There is little doubt that if Britain expresses her desire to join the Common Market, her special Commonwealth commitments can be provided for by negotiation just as were the commitments of other members with regard to their associated overseas territories when the Rome Treaty was signed in 1957. Let me revert to full employment. The other thing is that in Article 3 the Rome Treaty specifically dedicated, among other policies, to improving the employment position and to the raising of living standards in the Community, and in Article 123 to establishing and using a special European social fund for promoting employment facilities and the geographical and occupational mobility of workers". a fact which has been welcomed by the Continental unions.

Although the European Free Trade Association Treaty, of which Britain is a member, also declares its faith in full employment and in improved living standards, it falls far short of the Rome Treaty in that it does not make provision for a social fund or, indeed, any positive measure to back up its declared aim of full employment. In view of this, I find it difficult to understand why some people take a more favourable view of the Free Trade Association than of the Common Market.

When we discuss full employment I am still puzzled why people continually imply that association with the Common Market will threaten full employment here. In 1960 the average unemployment in West Germany was 1.2 per cent. In France it was even lower, and in the United Kingdom last year's average rate was 1.7 per cent. I also find it remarkable that people of the Atlantic community and our allies in N.A.T.O. get so alarmed that those citizens who come here and work are the same people—and I am among them—who would die at the last ditch for the right of Commonwealth citizens, whatever their colour, to come into this country. People do not want to keep the Commonwealth out. I do not. There are certain hon. Members opposite who had better search their consciences when they plead about the Commonwealth. Some hon. Members opposite would restrict immigration. We on this side would not. As long as there is a job to be done, it should be done. Our economy would not have kept going very well in the public sector, on British Railways and other places, unless West Indian citizens had come here.

We have had another argument. I beg the pardon of hon. Members opposite if I deal with the philosophy of my own party, but I am far more susceptible to the criticism of my hon. Friends than of hon. Members opposite, to whom I am largely indifferent. I have heard it said from these benches that association with Europe would make it difficult for a British Government to bring industries under public ownership. Nobody who is a Socialist would argue with that—I certainly do not. We must, however, bear in mind that although we have 20 per cent. of our industries under public ownership, there are far greater percentages than that in other countries of Western Europe. France and Italy have a far higher proportion of industries under public ownership. They would not welcome restrictions to it at all.

The question is whether it would restrict us from bringing new industries under public ownership. It would not. In spite of the propaganda put out by people who have never read it, the Rome Treaty is completely neutral about whether industries should be publicly or privately owned. There are no restrictive articles in respect of the nationalised industries. In fact, the only occasion on which they are mentioned is in Article 90, which makes it clear that they are subject to the same rules as privately-owned enterprises.

Mr. Warbey

Exactly.

Mr. Pannell

I am glad that I carry even my hon. Friend with me.

Mr. Warbey

If my hon. Friend studies that article, he will see that it will be impossible for a Socialist Government to favour publicly-owned industries in the interests of the community.

Mr. Pannell

Only with regard to a tariff on exports. I have also read it. I can give my hon. Friend knowledge but I cannot give him understanding.

In the main, this argument between the Commonwealth and the Common Market is largely "phoney". It is an argument between joining the Common Market and isolation from Europe.