EUROPEAN ECONOMIC COMMUNITY

HC Deb 13 December 1962 vol 669 cc653-715

7.10 p.m.

The Lord Privy Seal (Mr. Edward Heath)

I understand that the object of my opening this short debate, which I welcome, is to enable me to make a statement to the House on the Ministerial meeting in Brussels which took place on Monday and Tuesday of this week and from which I have returned this afternoon. At the same time, it will also enable the right hon. Gentleman the Leader of the Opposition and his right hon. and hon. Friends, and right hon. and hon. Members on this side of the House, to ask questions not only about the last ministerial meeting but about the three Meetings on which I reported to the House on 22nd November.

In these circumstances, perhaps it will be for the convenience of the House if I confine myself now to an account, in the usual form and of the customary length, of the recent meeting. I will then endeavour to answer all the questions raised and to add any further comments I wish to make in winding up the debate, if I may do so by leave of the House. I hope that this procedure will give the House the information it requires and, at the same time, also leave the maximum amount of time available to other right hon. and hon. Members who may wish to speak and ask questions.

The Ministerial meeting took place on 10th and 11th December. The subjects discussed included the arrangements for Malaysia and Malta, the use of Article 234 of the Treaty of Rome, the negotiations with the European Free Trade Association countries, and the transitional arrangements for British agriculture. I will deal now with the two Commonwealth items.

First of all, Malaysia. It was agreed that the Community would be prepared to envisage negotiations with a view to concluding a trade agreement with Malaya and the territories which it is planned should constitute the Federation of Malaysia, if the latter so desired it. It is, of course, the case that the bulk of the exports of the Federation of Malaysia, approximately 85 per cent., will continue to enjoy free entry into the Community. This is because the common external tariff on so many of the products of principal interest to the future Federation is already nil.

It was, however, agreed that Malaya and these territories should have the same gradual application of the common external tariff as has already been agreed for India, Pakistan and Ceylon. Discussion on the tariff levels on some of the tropical products in which these territories are interested are still proceeding.

The Ministers of the Community also gave us their preliminary views about the solution of the problems which would face Malta in the event of our joining the Community. This was the consequence of the discussions at our last meeting. The Ministers felt that the arrangements to deal with Malta's problems should be such as to maintain from the beginning a relationship between Malta and the enlarged Community as a whole. While the precise content of the arrangements would have to be examined further, it might include an element of customs union with the Community as a whole, while maintaining a continued free entry for the exports of Malta to the United Kingdom.

While they hoped that there would be an association with the enlarged Community as soon as the constitutional position of Malta made it appropriate, there would probably have to be a special protocol to cover Malta's problems as an interim measure. We are now consulting the Government of Malta about these proposals and we shall return to them with the Ministers of the Community at the next meeting.

We then had a discussion about Article 234 of the Treaty of Rome. This is the article which provides that the rights and obligations arising from agreements between member States and third countries, concluded before the Treaty came into force, should not be affected by the provisions of the Treaty of Rome. Member States should, however, take appropriate steps to eliminate incompatibilities between such agreements and the Treaty. They should, where necessary, assist each other to do this.

The members of the Community considered that Article 234 was not intended to apply to preferential agreements with third countries, but was intended to cover non-preferential agreements, such as the G.A.T.T. I confirmed that we shared this view and that there was no difference between us as regards the scope of Article 234. We accepted that the common external tariff should apply towards all non-member countries, except where special agreements had been negotiated by the time of our accession.

Arising out of the discussion of Article 234, the Ministers of the Six referred to the practical problems affecting the conclusion of the negotiations with our E.F.T.A. partners. They indicated that they thought that if our negotiations were successful there were favourable prospects for a satisfactory outcome of negotiations which have already begun with Denmark and Norway, but for practical reasons they foresaw difficulty in reaching a rapid conclusion with the other E.F.T.A. countries.

This gave me an opportunity to explain again in detail the nature of the obligations which the E.F.T.A. partners have undertaken towards each other. I also pointed out that the other E.F.T.A. countries were anxious to begin negotiations as soon as possible. I expressed the conviction that, once the conclusion of our negotiations and those with Denmark and Norway was clear, it should be possible to complete negotiations with the other E.F.T.A. partners, which would not raise so many problems as our own, within a reasonable time.

I now turn to the questions affecting British agriculture. As the House will remember, the Ministers first discussed the transitional arrangements for British agriculture during the meeting of 25th to 27th October, but no decisions were then reached. At the meeting which has just taken place we had a further exchange of views after I had suggested that we might best handle the matter in a smaller, more restricted meeting. My right hon. Friend the Minister of Agriculture, Fisheries and Food was present at that meeting.

Mr. van Houten, speaking on behalf of the Community, opened the discussion by saying that they had further studied the problem. He made it clear on this occasion that horticulture had been placed on one side for the time being. They were ready to make a major effort to close the gap between us. They were prepared to envisage special transitional arrangements to deal with difficulties for British farmers and to take account of the problems arising out of our existing price levels.

They had seriously considered the difficulties voiced on altering our system of support at the moment of entry into the Community, but still took the view that the arguments in favour of doing so were preponderant. He said that the Six had also considered the British Government's pledge to maintain the percentage limits under the Agriculture Acts during the lifetime of this Parliament and were ready to take this into account. He then recalled the proposals they had put forward at the meeting at the end of October for replacing the present deficiency payments by producer or consumer subsidies.

Finally, he stressed that in the view of the Six any subsidies should be gradually reduced as the farmer obtained a larger part of his return from the market and should end by 1st January, 1970.

Following Mr. van Houten's statement, there was a very full discussion covering both the difficulties which the Six thought would be raised by our own proposals for transitional arrangements and the difficulties which we saw in theirs. This gave me an opportunity of clarifying our own proposals for the gradual phasing-out of deficiency payments and on the length of the transitional period. In addition, I offered assurances to the Community as to the way in which these proposals would be implemented. I also made it clear, once again, that the Government fully accepted the common agricultural policy for the single market period. The proposals we have put forward for this period, which are limited in number, are designed to adapt the methods of implementing this policy to the requirements of an enlarged Community.

At the end of this discussion, the Conference decided to establish a Ministerial study group to examine urgently the practical problems arising from the proposals made by both sides to deal with the transitional arrangements for British agriculture. It will do this commodity by commodity. The group includes the Minister of Agriculture of each of the seven countries participating in the Conference, or his representative, sitting under the chairmanship of Dr. Mansholt, one of the Vice-Presidents of the European Commission. This group will not in any sense be a negotiating group. Its work will be without prejudice to the position of any of the countries participating in the Conference, and it will report back to the Conference as a whole.

The group held its first meeting this morning when my right hon. Friend the Minister of Agriculture and I were present. The meeting is being continued this evening, and my right hon. Friend has asked me to tell the House that he greatly regrets that he will be unable to be here tonight for the debate on the Horticultural Marketing Council (Dissolution) Order, which will be handled by my hon. Friend the Parlia- mentary Secretary to the Ministry of Agriculture.

The Ministerial study group will be meeting again tomorrow. It will submit an interim report to the next Ministerial meeting of the Conference on 19th December and a final report in time for the beginning of the first Ministerial meeting in January. The next Ministerial meeting will take place in Brussels next Wednesday. Thursday and Friday, 19th, 20th and 21st December, at which we shall deal with a number of individual Commonwealth items and hold a preliminary discussion of the institutional questions. It has also been agreed that the Conference will meet on 14th January for the whole of that week until 18th January and again on 28th January for the whole of that week, ending on 1st February.

These two long meetings should give the Conference an opportunity to discuss, with greater continuity than has hitherto been possible, some of the problems outstanding in Commonwealth affairs and British agriculture on which progress has already been made but on which no agreement has yet been reached.

I intend to continue the procedure over the Christmas Recess of publishing White Papers giving accounts of Ministerial meetings held in Brussels while the House is not sitting, and I hope that this will be for the convenience of the House.

7.23 p.m.

Mr. Harold Wilson (Huyton)

The House will be grateful to the Lord Privy Seal for this last of his series of statements to the House on the successive phases of the negotiations. Even if he never has very much success to report to us, at any rate he always reports with the greatest courtesy and gives us as much information as is possible in the time that he takes.

Before I come to the detailed negotiations, the first thing I must do tonight is to underline the very significant change of tone in Ministerial pronouncements about the Common Market during the past few days. We have had the President of the Board of Trade and we have had the Chancellor of the Exchequer. Enthusiasm for joining E.E.C. on anything like present terms now seems very strangely muted. It is certainly very different from the halcyon days of Llandudno. I have referred before to the button marked "Yes"; the President of the Board of Trade was not wearing one last Saturday.

Now Ministers are falling over themselves to stress that it would "not be the end of the world" if we failed to get in. When I used these very words on 7th June, the Secretary of State for Commonwealth Relations took me to task at once from the Box and said that it would be a great misfortune. Ministers are now even hinting that there is a possible alternative—as we have urged at all stages in these negotiations. I wonder whether they troubled to inform the Prime Minister about this possible alternative before he wrote out his Llandudno speech. After all the jibes we heard in October, I feel that even Ministers are now coming to recognise that it was the speech at Brighton and not that at Llandudno which was realistic and responsible on this subject.

Obviously, tonight's statement was an interim report, and I was interested that the Lord Privy Seal said that next week the institutional arrangements are to be discussed. I hope this means that at long last he will come to the vital question of voting and the question of qualified majorities. I hope he will tell us about that tonight, because my right hon. Friend and others of us have emphasised the vital importance of the size of the vote required for a veto in view of the far-ranging effect of qualified majority decisions over the whole economic life of this country. I hope that tonight he will talk about the position of this House and of Parliament under the Treaty of Rome.

We have raised this subject many times. We have been promised answers—we had a promise from the Prime Minister in July—but we have never had a single cheep out of the Government Front Bench on this question. All we have had is a rather meaningless statement by the noble Lord, the Lord Chancellor, addressing someone down in Bristol during the Recess and leaving us in worse confusion than we started.

Tonight, I do not intend to deal with general issues, with arguments for and against going in, which we have debated so often in the past eighteen months. Nor do I want even to restate our own five conditions, the five safeguards, which we have laid down before Britain can consider entering. I propose to deal only with the details of the negotiations over the past month and to assess the position which we have now reached. I will take some of the points in series as the right hon. Gentleman did.

I come first to Asian manufactured goods. The Lord Privy Seal has secured minor concessions—I do not depreciate them—minor reductions in the Common Market external tariff for items such as hand-knotted carpets, coir mats, jute bags and East Indian kips—he had quite a fight over the last. But on textiles, which the whole House recognises as absolutely vital to any programme of Asian economic development, there has been no concession.

The negotiations for trade agreements with these Asian countries, we are told, will open three months after Britain's entry in, say, April, 1964, at the earliest. But when these negotiations open all our defences and all India's defences will be down, because by that time discrimination in the British market in favour of Asian Commonwealth manufactured goods will have ended and discrimination in favour of Europe against the Commonwealth will already be in force.

I ask the Lord Privy Seal—and he has never answered this question—why did he not insist on maintaining these preferences and on relating any concession from us to progress in these negotiations for a comprehensive trade agreement. Why did he not say, "No progress in the negotiations, no concessions in this matter"?

Now there is a question of what the White Paper called décalage. I rather regret this Brussels jargon coming into British White Papers. I looked up décalage in a dictionary and found that it did not mean what I thought it did—it is much less interesting. I found that it means unwedging; throwing a machine out of gear; shifting a pulley off a shaft; or generally getting out of phase. I would have thought that the right hon. Gentleman could have found an English word to express all that in a White Paper.

On this question of what he calls décalage, so far as I can understand it, and the Lord Privy Seal has not given us full details of this, it would appear that Asian textiles have one programme for the application of the tariff, Asian manufactured goods yet another and other Commonwealth manufactured goods a third. I hope that when the right hon. Gentleman winds up tonight he will tell us what those three ranges are, because there is a feeling, on studying the White Papers and trying to correlate them, that in certain respects at least Asian manufactured goods will be worse treated than some of the goods coming from more advanced Commonwealth countries. The right hon. Gentleman realises in any case that to slow up the rate of décalage will simply mean a very heavy imposition of tariffs in the later years before 1970, and what we have been concerned with all along is not how we get to 1970 but what the 1970 position will be when we get there.

The next point is on raw materials. There is still no agreement on aluminium, newsprint, wood pulp, zinc and lead from developed Commonwealth countries Negotiations on aluminium and newsprint were held in November, but, to quote the White Paper, the Conference reached no conclusions". There are reports—I hope that the Lord Privy Seal will comment on them—that the Six have rejected abolition of tariffs, but have agreed to concede a tariff-free quota for Britain for newsprint. and either a tariff-free quota, or a tariff reduction, for aluminium. I hope that tonight the right hon. Gentleman will tell us whether this statement, which has been widely reported, is true. Will the right hon. Gentleman also tell us whether the quota, if there is a tariff-free quota, for example, for newsprint, is intended to equal the whole present level of newsprint imports from the Commonwealth into Britain, or only a small proportion of them, and whether that tariff-free quota is merely a temporary transitional arrangement, or whether it is going to be permanent?

Turning to processed foodstuffs, we have had the kangaroo meat and canned rabbit, but will the right hon. Gentleman tell us something about the processed foodstuffs on which agreements have not been reached and how he sees the chances of agreement on them? As I understand it from the White Paper, there are about 29 quite important processed foodstuffs on which agreement have not yet been reached, and we would like to know not only whether that is so but what is the total volume at the moment of the trade in these processed foodstuffs coming into the United Kingdom.

This list includes canned fruit. I think that the House knows the importance of canned fruit in the Australian economy. These large areas are settled by ex-Servicemen of World Wars I and II, and the importance in the minds of Australian people and the Government far transcends even the value of the trade in monetary terms. I remember negotiations in the G.A.T.T. conference eleven years ago when the Americans were willing to offer a substantial reduction in their tariff on raw wool from Australia, which ought to be one of the biggest prizes the Australian Government could have, but they set against that a reduction—not an abolition, not a reverse discrimination—on Australian canned food, and the Australian Government said that they could not accept even that reduction in the preference on canned foods because of the social importance of this settlement, even though in return they would have got a substantial opening of the American market for raw wool. If that was how they felt then, and I suspect that they have not changed their position on this, I hope the right hon. Gentleman will tell us tonight what he is doing to secure free entry for canned fruits.

We would also like to know about Canadian canned salmon. Again, there is a story that there have been some assurances or hints about tariff-free quotas for Canadian salmon for Australian canned fruit. Is this so? Again, is it proposed that tariff-free quotas would cover a volume of trade equal to the present volume of trade into this country from those areas?

Before I come to the fundamental issues of agriculture and the Commonwealth countries—and really these are two sides of the same medal, and the sooner this is realised the more progress we will make—there are three other questions arising out of the negotiations which I should like to put to the right hon. Gentleman.

First, the right hon. Gentleman referred to Article 234. I gather from Press reports that some of the Six at any rate had unworthy suspicions about the Lord Privy Seal's good faith in regard to Article 234. They thought that, having come to a final settlement about the Commonwealth, he would use Article 234 relating to prior commitments to maintain Commonwealth arrangements that he had agreed in the general negotiations to scrap and would insist on keeping the E.F.T.A. agreement in being whatever else he might have agreed in Brussels. There was a lot of briefing to the Press from the Brussels powers last week that the Lord Privy Seal must be tied hand and foot on Article 234 lest he gets in by the back door what he has failed to get in at the front door of the negotiations. I understand that he has properly denied that he had any such intention, and I think that he was right to do so, because if he cannot win his points about the Commonwealth and E.F.T.A. in the main negotiations by a frontal attack, he should pull out of the negotiations. He should not use the back door, and I am glad that he has made his position clear.

When he gave his assurance about Article 234, did he raise the question of one prior commitment which is affected by this, one of the most important of all the prior agreement, namely, the Commonwealth Sugar Agreement? When I have raised points on the Commonwealth Sugar Agreement before, the Lord Privy Seal, has said, rather tetchily on one occasion, that he had not yet got as far as this. Perhaps he has not, but in view of its vital importance for the West Indies and other parts of the Commonwealth he ought to have, because I think he will realise that neither an offer of association to the West Indian countries, nor any development of the present sugar commodity agreement, will solve this problem. These areas must have the Commonwealth Sugar Agreement, and this must be a sine qua non of any settlement in Brussels. I wonder whether when he gave his assurance on Article 234, which he properly gave, he at the same time specifically reserved the Commonwealth Sugar Agreement?

Would he say a word on Article 234 about East-West trade? Is it the intention that any trade agreement we have with Eastern European countries would have to lapse, would have to go, if Britain entered the Common Market? It is, one understands, a fact—the right hon. Gentleman will perhaps tell us whether this is true—that the Government are refusing to enter into long-term agreements with Eastern European countries and are only prepared to negotiate on a twelve-months basis because of the fact that we should have to scrap and curtail all this trade if we entered the European Economic Community. I hope the right hon. Gentleman can deal with this point. If he cannot, perhaps he might consider publishing in HANSARD the text of assurances that he gave on Article 234.

We would like to know the position on E.F.T.A. We were a little reassured by what the right hon. Gentleman said, because there were inspired stories last week that the Six were holding back even on the Norwegian and Danish applications until we were in. This has been dropped by the Six, but we still have the problem of the neutrals. I was glad to see a Press report that the Lord Privy Seal has been completely firm about the E.F.T.A. position in Brussels. From what he said tonight, that is the impression he was trying to give the House, that Britain cannot enter until the requirements of all our E.F.T.A. partners, neutrals and others, have been specifically met, whether by membership or by association, and I hope that the Six are now in no doubt whatsoever about the British Government's position on this, because we know that the British Government are fully committed.

I have a list of twelve detailed and specific commitments made by Ministers on the subject of E.F.T.A. in this House and elsewhere. Some had to be got out of them, but we got them in the end, and if I thought there was a danger that Her Majesty's Government might go back on the commitments I would read them tonight, even at the risk of wearying the House, but, despite the fact that the Government dishonoured their Commonwealth pledges, I think that the right hon. Gentleman intends to stand firm on the pledges to the E.F.T.A. countries. I am assuming therefore that the Government will stand by their word, and this relates not only to Norway and Denmark, but refers also to the neutrals, and that as regards the neutrals the Government will stand firm not only on the acceptance of the neutrals as associates, but will stand firm on the timing of that acceptance.

On the question of associated overseas territories, the Government have rather given the impression that they have some concessions, that this convention on A.O.T. is remaining open for the African countries to think again. That is what the Convention said. It stands permanently open, so there is no real gain here so far as we can see, and I hope that the Lord Privy Seal will make this clear. If one of the African countries, say, Nigeria, does not accept A.O.T. status—and this is a matter which must be decided by Nigeria alone—and if some separate form of association is negotiated which goes less far than A.O.T. status, does not mean that Britain, on entry into the Common Market, would then be forced to erect discriminatory tariffs against Nigerian produce while allowing free entry of produce from ex-French territories in Africa, in other words, discriminate against Nigeria in favour of, say, Senegal, or other French territories? I hope that that will be made quite clear tonight.

I want to come to the main issue of the negotiations, on which we have now come very near deadlock—the issue of agriculture. As I understand the position—if I may try to summarise it—the Lord Privy Seal, having first sold the pass by accepting the Community's agricultural problem, still hopes that the prices fixed, commodity by commodity, will be reasonable—that is, low enough to permit a full inflow of Commonwealth imparts; while the Minister of Agriculture has sworn by Ceres and Pomona, or whatever gods and goddesses a Minister of Agriculture swears by, that prices will not be low enough to permit any such thing.

Having accepted the E.E.C. agricultural system, I understand that negotiations have reached near deadlock on two things—and I am still only summarising the position. The first of these is the Community's insistence that our two-price system, and its concomitant system of deficiency payments, will be wound up, cut off, dead, the moment that we enter the Common Market—as against the insistence of the Minister of Agriculture on a more lingering death. I have quoted in the House the very, very clear and categorical insistence by the Minister of Agriculture, in that very brave speech of his on 6th June—which I now think that he would like to forget be ever made—that the deficiency payment system must continue for many years.

The second thing, as I understand it, is that although a working party has now been set up we may again be very near deadlock—and here the disagreement is perhaps as much between the members of the Six as between the Six and ourselves—about the financing of the Common Market Agricultural Fund and the ultimate disposition of the hundreds of millions of pounds of which British and other consumers are to be mulcted by the operation of this iniquitous import levy.

That is the position on agriculture, as I understand it. I hope that that brief summary—and I have put it with deliberate restraint—will be accepted by the House as a fair statement of the position that we have now reached.

Let me take these three issues one by one. First, the agriculture programme. Once again—and I am amazed at him—the Lord Privy Seal confirms that he has walked right into it as soon as they drafted it. Why? Has not it occurred to him that by accepting it he has made it impossible to get a price low enough to allow Commonwealth imports except by driving British farmers into bankruptcy? I gave him the whole argument on 8th November, and I repeated it in a letter to The Times last week. It is significant that the vast and highly articulate pro-Common Market lobby, never slow to rush into print, has not raised a single word of disagreement with the argument that I put forward in that letter. Not a single hon. Member of pro-Common Market persuasion, or a single pro-Common Market supporter in the whole country can defend or justify the Common Market agricultural system.

For fifteen years in this country we have reconciled the apparently irreconcilable requirement of cheap Commonwealth food imports with a fair measure of security for the British farming community. We have done it by this two-price system, bridging the gap between the two prices by guaranteed markets and price averaging when we were in power, and by deficiency payments by right hon. Gentlemen opposite. Now we are to have a single price if we go into the Common Market. Ministers delude themselves if they think that we shall get a price which will allow in Commonwealth imports and be fair to British agriculture, because, on a single price system, there is no such price. And for most agricultural commodities European prices are a good deal higher than ours.

Let us take wheat, for example. The French target price for wheat at present is about £35 9s. per ton. In Germany it is £43 3s. Comparable Australian wheat is coming into this country at between £20 and £25 a ton at present. That means that if the Common Market price is no higher than the French price there will be an automatic import levy of at least £10, or 40 per cent., on Australian wheat coming into this country, and if the final price fixed is anywhere near the German price the levy will be at least £18, or 72 per cent.

We have accepted the agricultural programme with the certainty of harming if not destroying either Commonwealth trade or British agriculture. But we have also accepted the likelihood of an increase in food prices of between 8s. and 10s. per head per week. The Lord Privy Seal gave some very revealing figures recently, which were published in the Daily Telegraph. I do not know whether they were meant to be published, but, on any calculation, they suggest an increase of from 8s. to 10s. per head per week. If this happens, what do hon Members think will happen to wages and industrial costs?

Then there is the effect of this levy on our balance of payments. It has been estimated that this would be £250 million a year, and possibly more. The right hon. Gentleman has accepted all this. For what? For fair words—and even some of those fair words have been qualified in the past two months. So we do not now know what they meant. We had some fair words on New Zealand in August. Since then, however, the French have made it clear that they do not accept what we thought was the general interpretation of those offers to New Zealand.

Having swallowed the camel, Ministers are now arguing about the question of transitional provisions. We have been told that the deficiency payments will end on the day that Britain enters the Common Market. There may be an easement for one or two products, where British prices are above the European level. That goes without saying. The Lord Privy Seal hinted that a possible extension will be allowed for a month or two in order to carry the Government up to the election without a too obvious repudiation of yet another pledge to British agriculture.

As for the agricultural fund—here we have a really monstrous proposal. The levies on our food would not accrue as tariff revenue to the Chancellor of the Exchequer. If they did he might use them for paying increased pensions, or for partial compensation of higher living costs, by cutting Purchase Tax on essentials—although, being a Tory, he would probably give the benefit to the Surtax payers, on the ground that they would need better incentives if we entered the Common Market. But he will not have a chance of making this decision, because this enormous revenue will have to go to the European fund, and it will be used partly to subsidise European agriculture and partly to subsidise exports of high-cost European produce in third countries, and so have the effect of penalising still further Commonwealth producers who have already been pushed out of the British market.

Let me tell the Lord Privy Seal what he should have done, and what he should still do. He should recognise that negotiations on detail, from now till Domesday, cannot solve the agricultural problem. We cannot accept the agricultural programme so long as it is based on this penal import levy, and if the Six persist we should join with the majority of the G.A.T.T. countries, including the United States, in declaring it invalid. That is what the right hon. Gentleman should be doing.

On 8th November I reminded him that this policy is contrary to the letter and spirit of the G.A.T.T. He disagreed. I ask him now, who was right? Ten days later the 18-member Committee of the G.A.T.T. condemned the E.E.C. programme out of hand, and fourteen days later the United States Secretary for Agriculture subjected it to a blistering attack. Why does the right hon. Gentleman, having this weapon in his hand, insist on always negotiating from weakness when he could negotiate from strength and insist on accepting something which he must know to be wrong when he could be fighting for what he knows to be right. It is because of this posture that the Government have adopted from the outset; because of the ministerial speeches; because of the spirit of Llandudno, and because of a Prime Minister who insists on treating these vital negotiations as an electoral gimmick, that we are in this weak position.

Let the right hon. Gentleman think again. Let him recognise that while the industrial Common Market can be outward-looking and liberal—and I believe that it is intended to be—the agricultural Common Market is restrictive, autarchic and Schachtian and is an offence to the trading interests of the free world. It will divide, not unite. We should have no part in it. I do not want to rub salt in by saying too much about the Acheson speech. I think Lord Attlee was right yesterday in saying that the Acheson speech was an attack not on Britain but on the Government of Britain. Ministers reacted against that speech last week, and I was rather surprised, because the Acheson speech was in fact Macmillan in an American accent. It was the same thing, the same theme, that we are nothing without Europe. That was the main theme of the Prime Minister's T.V. broadcast and his Llandudno speech. And there was his reply to Lord Chandos. After all the jibes at my right hon. Friend's thousand years of history, we got the lot from the Prime Minister—we got four hundred years of it at any rate, going right back to Philip II of Spain. I ask you!

I do not think that it is quite a parallel. I do not remember the Lord High Admiral of those days, Lord Howard of Effingham, negotiating with another Power for the weapons with which to defeat the Armada; or saying that we must have them if we were to have an independent defence policy. No. While I disagree with the Acheson speech as a description of the real mood and temper of the British people, and I disagree still more with his conclusions, one can see how anyone who has watched this country and the right hon. Gentleman from July, 1961, onwards could get the wrong idea of that temper and that mood. A lot of it derives from the posture of the Government.

It is from this posture that Ministers—I warned the House last May that this would happen—are trading defence and foreign policy for supposed economic advantage. We sabotaged the chance of preventing the spread of nuclear weapons by defending a French nuclear policy for which Ministers in their hearts had nothing but contempt. I make this further forecast. The Minister of Defence will be offering to save President de Gaulle £300 million and four years in time by offering him plutonium, if the Lord Privy Seal thinks this necessary to get another concession on processed food stuffs.

I began by saying that one or two Ministers—not, of course, the Lord Privy Seal—are beginning to lisp the language of alternative policies. We welcome it, but it is a bit late. Eighteen months ago we told the Government that they would negotiate from greater strength if they worked out credible alternative policies to strengthen their hand; policies to fall back on if our negotiating partners proved too obdurate. Earlier this year we indicated more than once what they should do. We set it out in our Brighton document. Let me conclude by opening the eyes of the Lord Privy Seal to wider horizons than those to which he has been confined for the last few months and to the basis of real negotiating strength.

First, whether in or out of Europe, we should turn our eyes towards an Atlantic trading community, indeed, one covering the whole of the free world rather than a community covering part only of Europe. In the last debate I referred to the Clayton-Herter Report to the U.S. Congress which I believe holds the key to the future in this respect. President Kennedy's trade expansion Act envisages negotiations within the spirit of G.A.T.T. with the enlarged Six, including Britain on one side of the table and the United States on the other. So be it, if we get in. But if entry becomes impossible, I recognise that there will be a big traumatic shock in Washington, though—let us be frank—more and more Americans are becoming worried about the implications of the E.E.C. policies especially in relation to agriculture.

When we have all had time to get over the shock, why not have the same negotiations with the United States, with, perhaps, a different shaped table; with the United States Britain, the Commonwealth and Latin America and the E.F.T.A. countries on one side and the Six on the other? I know that this would mean a small change in the United States legislation by including the Douglas Amendment. But after all the Chairman of the Ways and Means Committee of the House of Representatives made it clear that this was envisaged if the Brussels negotiations foundered. Out of the breakdown we could then erect a freer trading community for the whole of the free world, with, one hopes, agreement at long last on measures to increase the volume of international liquidity; with commodity agreements—after all the initiative did not come from the Six in Brussels; it has been on the international agenda for many years—with provision that if the Western world insists on having higher prices, and we do, for agriculture, any resulting surpluses should be made available to the hungry nations of the world. It may be time to reconsider Lord Boyd Orr's pronouncement regarding the World Food Board which was made many years ago at a time when it would have been more difficult to accept it.

It may be said that this is visionary and that American protectionists will never agree. Perhaps I have had as much experience of this kind of negotiation with the United States as anyone in this House. I am not sure, however, that the kind of negotiations which I have mentioned need be more obdurate or difficult than the kind of negotiations which the right hon. Gentleman has been having in Brussels all this time.

Because of this fear that these negotiations may not succeed or because of the greater likelihood that they will take a long time, my second point is that we should consider it all the more urgent that the Government should press on more urgently with improving the links of Commonwealth trade. By this I do not mean a Commonwealth free trade area. I have advocated that in the past, and I wish that we had one. I believe the Government should have made all-out efforts to get one. But I also believe that now the opportunity has passed.

The shock to the Commonwealth resulting from Ministerial treatment of their pledges this year has been too great to be able to get a Commonwealth free trade area now. But I believe that the atmosphere, particularly if the Brussels negotiations break down, would be such that a British Government—may I say that a new British Government would have a 100 per cent. better chance of success than this one—could then call a Commonwealth trade conference, and we could begin with the development plans and see what we could do to help with essential equipment.

I am not only talking of plans for the under-developed areas. What about a big development scheme in New Zealand where a textile mill has just broken down, for which we have some responsibility? What about a development scheme in Australia such as the scheme in the last decade, the Snowy River scheme? Experts and engineers should sit down together to see how our productive capacity could be integrated in these various production schemes. This could lead to a substantial increase in Commonwealth trade. Let us recognise that it could not be a one-way trade. It could not be unilateral. We should have to give guarantees about buying goods both from advanced Commonwealth countries and underdeveloped Commonwealth countries.

If we are to do this, it would mean reversing this laissez faire attitude of the past ten years, and it would mean forsaking our ideological worship of speculative commodity markets and a return to guaranteed markets at fair prices. I have said again and again that I do not accept the decline in Britain's trade with the Commonwealth as due to historically inevitable factors. Our decline in recent years, our relevant decline in Commonwealth trade, has been due first to Conservative ideology and a succession of wrecking measures breaking the links of Commonwealth trade—such as the futile restoration of the Liverpool cotton market, which has never worked anyway.

Secondly, it has been due to the miserable failure of large sections of British industry—there have been honourable exceptions—to capture Commonwealth orders Which were open to us. In the last debate I gave the House some figures showing that the decline has not been in Commonwealth imports as a whole. They have increased steadily. The decline has been in our share. We have lost the markets, despite preference, to exporters from Germany, Italy, Japan and the United States. If we are to win these markets, it will mean a major redeployment of our industrial resources on hard-core goods; the production of the goods which the Commonwealth and other countries want. We shall not win back the markets which we have lost with a soft-centre economy.

I will not develop my third point because it is more appropriate to another debate. It is the need for a virile reconstruction of our economy and industrial life on lines which we have urged for so many years. Every hon. Member in this House knows that, in Europe or outside, we shall be a backwater unless we ourselves, both sides of industry, Government and Parliament, effect a transformation in our economy so that we can recapture that lost dynamic; so that we can get British industry sparking again on all six cylinders instead of idling and misfiring.

I suggest this three-point alternative which we should be preparing. If the Government would even now at this eleventh hour seriously apply themselves to such an alternative, recognising all it would mean for both the external and internal economic policy, they would, at one and the same time, strengthen the hand of the right hon. Gentleman in negotiations and provide an alternative and viable policy to fill the vacuum, the dangerous vacuum, which we may face if, in January or February or March, we are faced with the clear realisation that the terms dictated to us in Brussels cannot be accepted without national humiliation. By failing to prepare such an alternative, the Government, on their own argument, are driving us into a position where there may be no alternative to unconditional surrender.

8.0 p.m.

Sir Anthony Hurd (Newbury)

The right hon. Member for Huyton (Mr. H. Wilson) has given us the benefit of his views at considerable length—much greater length than the Lord Privy Seal's speech. I shall try to follow the example of my right hon. Friend the Lord Privy Seal and speak for only a few minutes. [HON. MEMBERS: "The Lord Privy Seal will speak twice."] I shall get through my speech more quickly if hon. Members do not interrupt me.

My right hon. Friend has invited questions. I should like to be quite sure in my mind that he has been firm this week in making plain to the Six in Europe what is not possible for Britain in terms of food policy as it would affect consumers, as it would affect our own agriculture, and as it would affect Commonwealth agriculture. It seems that a lot of the cross-talk we have had reported to us in recent months has been due to the fact that for one reason or another the Six have not done their homework and have not grasped the elementary facts of political life in this country.

There are certain things which it is not possible for us to do. If the Six really want us to join the Community they must take note of that. They must adjust their ideas to meet us at least halfway. That is not merely a theoretical expression of view. It was one brought home to me in practical direct terms when I went to Brussels and had a talk with Dr. Mansholt at the Commission's office there.

We have this so-called common agricultural policy for Europe. I ask the Lord Privy Seal this. When we said that we accepted a common agricultural policy, we did not, I assume, think just in the terms of what was agreed on 14th January? That is a quite hopeless agricultural policy for an enlarged Community. It makes no sense at all when we have not only Britain, but Denmark, Eire and Norway in, to hinge the whole of agricultural policy on maintaining an extravagantly high grain price. The great majority of producers in the enlarged Community are concerned with livestock. That, also, is of major interest to the consumers in the Community.

It makes no sense for an enlarged Community to which we are now looking forward to hinge everything on a high grain price. It would make nonsense of Article 39 of the Treaty of Rome, which provides for improved conditions for rural communities, and so on. If we have wildly fluctuating prices for eggs and pig meat—to take very ordinary products produced by hundreds of thousands of farmers in Europe and here, commodities on which their livelihood depends—we would not have an agricultural policy which could endure or be tolerable for many years in Europe. I am certain of that.

I am glad that we have this Ministerial study group at work, in which my right hon. Friend the Minister of Agriculture, Fisheries and Food is no doubt taking a very active part. He, I hope, will be able to tell the Ministers of the Six what we mean by an agricultural policy. It is not merely a matter of fixing a high grain price to suit France or us, or something like that, but an overall policy which will ensure a decent pattern of agriculture and a rising standard of living for rural communities. There may be fewer employed on the land, but they should be able to earn a better living and produce more of the quality goods which consumers want at reasonable prices.

That is what we understand as an agricultural policy. We have achieved what we have done in the last twenty years by very different methods from those proposed for Europe. We have to accept the idea that our deficiency payments will have to be phased out, but we want it to be a gradual process. That I hope it will be, at least until 1970. We must not dismantle the Agriculture Acts, not only because it would be hazardous for us to do so, but because there is much in our policy which is set out in those Acts which Europe will need to apply for her own good whether we join the Community or not. Therefore, I say, "Do not throw something on to the scrap heap which has proved valuable to us and which is an object lesson to Europe."

I hope that the Minister of Agriculture, Fisheries and Food is making quite plain to the Six in Brussels what we mean by an agricultural policy and not only an agricultural policy for a transitional period. The Lord Privy Seal spoke of the Ministerial study group and what would happen in the transitional period. I am much more interested in what will happen after it and what Line of thought and principles are likely to guide the development of an agricultural policy in Europe. They have not got a policy at the moment—not what I regard as a policy.

We want to know how their minds are moving and how they are thinking about the longer-term view and not merely of the transitional period of a few years. We can get through that, but we should like an assurance about the future before we go to our constituents and say, "We consider that the Lord Privy Seal and our Ministers as a body have gat acceptable terms for British agriculture," in this instance and, in the wider scope, for Commonwealth trade. It goes much deeper than the transitional period.

Another point I wish to put to the Lord Privy Seal is about Rhodesia. Some of my friends in Rhodesia are very anxious about their future in relation to tobacco and the market in Europe. They see that Greece, by association with the Common Market, has an opportunity to increase her production of tobacco by 20 per cent. They are asking whether there will be a market here or anywhere else for the tobacco they grow in Rhodesia and for the other crops on which they depend. Rhodesia has hardly been mentioned in these talks. We realise the reasons for that. Rhodesia's constitutional future is uncertain. But it would be only right and proper that the Lord Privy Seal should say a word or two about the prospects. Many good friends of ours in Rhodesia should know what future there is for them if we go into the Common Market, and how it may affect them.

My main concern is to get a clear view from the Lord Privy Seal about the Common Market agricultural policy for an enlarged Community. Let us be quite clear that the agreement of 14th January, reached in the small hours of the morning, or the long hours of the night, is not a policy for an enlarged Community which would endure, or which would be tolerable for us or the Community as a whole.

8.10 p.m.

Mr. Guy Barnett (Dorset, South)

It is with a feeling of diffidence that I rise to make my first speech in the House, and to do so in this very important debate. I think that hon. Members are aware that the subject of the debate earned some prominence in the by-election in the constituency which I have the honour to represent, and it was this fact which made me decide to ask the House for its tolerance and indulgence while I make my maiden speech.

I feel particularly honoured to be following the last hon. Member who represented South Dorset. I believe that he was respected on both sides of the House for his great independence of mind and that he has gained greater respect on this side of the House for that quality during recent weeks. May I hope that in representing South Dorset I shall to some extent attempt to follow him in that quality if not in some others?

There are one or two comments which I should like to make about the by-election in South Dorset in connection with this debate. It was said that the by-election campaign itself aroused an interest in the Common Market which did not exist in the constituency before the by-election took place. But I had plenty of opportunity of discovering that many people,in South Dorset were exceedingly worried and confused about the whole question of the Common Market and wanted a great deal more guidance than they were getting on the way in which the negotiations were being conducted and the possible consequences of our entry into the Common Market.

I should also like to point out that the prominence which this subject gained in the constituency is not due only to the fact that agriculture is a very important industry there. In fact, I believe that I am right in saying that there are only about 600 land holders in South Dorset, and, important as it is, agriculture is only one of a number of important industries in South Dorset.

If I may speak for a moment about the constituency itself, South Dorset contains a great variety in its scenery, its industries and its people. I was surprised to discover how many people living in the constituency today originated from elsewhere, and I was particularly surprised to note the many different parts of the British Isles from which they came. As hon. Members are aware, it is a very attractive part of the country, with its great links with pre-history and history and its delightful villages. In fact, I would go as far as to say that there is no other hon. Member on this side of the House—or perhaps only a few—who can claim to represent a constituency as beautiful as that which I represent.

I should also like to point out that South Dorset is a developing constituency. There are the very famous stone quarries at Portland and Purbeck and, of course, the dockyards, but more recently, there have been added engineering establishments and the very exciting development of the atomic energy plant at Winfrith Heath. But I hope that in future in this developing part of the country a real attempt will be made to maintain the natural amenities, upon which the thriving holiday industry of South Dorset depends. This depends ultimately on proper town and country planning of the area to make sure that this is possible.

If I may turn to the issue of the debate, I should like to say a few words about agriculture. Of the 600 land holdings in South Dorset, about two-thirds are farms of less than 100 acres, and the great majority of these depend wholly or to some extent upon dairy produce. These farmers have had increasing difficulty in recent years as a consequence of rising wages and other costs, and they are already beginning to feel the pinch, particularly as the deficiency payments have virtually ended for milk production.

Farm earnings in the United Kingdom are still lagging seriously behind the earnings of industrial workers. I believe that this position is even more acute in Western Europe. Facts of this kind and the fact, too, that almost inevitably our entry into Europe on present terms will involve a rise in the cost of feeding stuffs are all creating great concern among small farmers in South Dorset. I believe that to a great extent they have a right to be apprehensive about the future.

I should like to tell the Lord Privy Seal and the House that this has grave consequences at present. Farmers, as the House is aware, have to invest for the long term, and many small farmers to whom I have spoken are anxious about the wisdom of investing in plant and machinery for their farms, or indeed in livestock, as long as their future remains as uncertain as it seems to be at present, while these negotiations are continuing.

May I add that it is not what one might term merely the bread-and-butter issues with which, as I discovered, people in the country are concerned. In addition to agriculture, people living on retirement pensions are very worried by the prospect of a rise in food prices. Many people expressed to me great fears about the possible development of unemployment and the inability of Her Majesty's Government to cure it. But ultimately, I believe, one of the interesting consequences of the conduct of the negotiations is to make our people more aware of some of the problems which Britain will face in the world and of Britain's place as it will be in the world in the future.

I am certain that whatever course we take about the Common Market, and whatever terms we ultimately succeed in getting, our entry, or otherwise, will have far-reaching consequences throughout the world. I hope that I am not overestimating the importance of the position of this country in this respect, but I should like to illustrate this point of view by mentioning the African Continent, in which I have lived and worked, because I believe that the possibility of African countries accepting associate status is relevant to the point which I am trying to make. It may be possible to get certain African territories to accept associate status, but, as hon. Members are aware, many African territories and some African politicians are opposed to the idea of accepting it.

It may be possible to talk them into taking a step of this kind. After all, I believe that for many of them this would involve certain financial inducements and possibilities of trade with Europe in the future. But I believe that the dangers of this step are to be seen in their own instincts against it which they have shown. It might have grave consequences on the political relationships between African countries in the future and also on the kind of part which African countries will be able to play in future world affairs.

I believe that it is reasons like these which should make us more concerned than perhaps many of us are about the consequences of the way in which we conduct the negotiations—the consequences as they are likely to be for countries in other parts of the world. This is the reason why I should like to end by saying that I believe that these negotiations, and their consequences, are likely to have far-reaching results beyond this island and, indeed, beyond the Continent of Europe.

8.20 p.m.

Mr. John Biggs-Davison (Chigwell)

I am quite young in this House, and this is the first time that it has fallen to my lot to be able to congratulate a maiden speaker. I do so with very great pleasure, because the hon. Member for Dorset, South (Mr. Barnett) has spoken with fluency, with charm, with grace, and with a confidence which some hon. Members like myself who have been longer here may envy. I will not say that I was happy when I heard that the hon. Member had got "sandwiched" into the House. It is customary to say that we hope that we shall hear the hon. Gentleman again here on many occasions. I hope, perhaps, that those occasions will not be too many. I hope that he will forgive me for saying that. I very much appreciated what he said about his constituency. Dorset is a lovely county.

I do not think he knows that among his constituents are my parents. They did not vote for him.

Hon. Members

Who did they vote for?

Mr. Biggs-Davison

I am not going to enter into that, except to say that, as both the former Member for Dorset, South and the unsuccessful Conservative candidate were both friends of mine of long standing, the whole matter was most distressing. My distress has been relieved by the charm of the maiden speech to which we have listened. I hope that the hon. Member will look after my parents well. My father retired from the Army with an officer's pension in the nineteen-twenties, and if the hon. Gentleman can do something to raise it he and I will be tremendously grateful.

Like the right hon. Member for Huyton (Mr. H. Wilson), I detect and welcome a greater degree of realism in considering the question of the Common Market. It no longer appears to everybody as the European Eldorado and no longer do we hear from the City of London and the City of Westminster that British has to go in or go down. I feel sure, and I am glad, that the Government are now considering alternatives, both to give added strength to the Lord Privy Seal's bargaining position and also to provide for the possibility that an honourable entry cannot be obtained.

Some of us on this side of the House offered some suggestions for alternatives in a letter to The Times, which I hope the Government have found helpful. The right hon. Member for Huyton posed some alternatives. I disagree profoundly with his alternative of an Atlantic union. I objected very strongly when the right hon. Member suggested that we should invoke G.A.T.T. against our European allies, because I believe that if we are going really to achieve a satisfactory arrangement as between the Commonwealth and Europe, we may ourselves have to secure some radical modifications of G.A.T.T. Of course. I quite understand that the right hon. Member for Huyton—I am sorry he is not here—has a feeling of paternity for this Agreement, which he signed on behalf of the Labour Government and which I believe has through its "no new preference clause" and its ban on discriminatory trading agreements done a great deal of harm to the Commonwealth and made it very difficult to unify Europe economically.

However, I agreed with the right hon. Gentleman that we should give more weight to E.F.T.A., and in our letter to The Times we stressed the importance of bringing E.F.T.A. and the Commonwealth together. E.F.T.A. has been under-estimated. It is extraordinary how this country is deluged with information and propaganda about E.E.C., to which we do not yet belong, but it is very difficult indeed to get any readable information about E.F.T.A., of which we are a founder member.

E.F.T.A. is useful and important. With the exception, I suppose, of Portugal and the Republic of Ireland, its member States are rich and productive countries. I think that the income per head of population in those countries is higher than in the Six. E.F.T.A. contains two great lending centres in London and Zurich. The merchant fleets of the E.F.T.A. countries have a preponderance of the active shipping of the world. As the hon. Member for Dorset, South pointed out, while in Brussels consideration is being given to how food in this country can be made more expensive, if we were to fall back or if we went forward—that would be a better way of putting it, perhaps—on an E.F.T.A.—Commonwealth basis, our own farmers, the old Dominions and those Scandinavian countries, which are almost honorary members of the Commonwealth, would give us the economic advantage and competitive edge of cheap food. We should also have the advantage that the shipping, air and insurance services of this country would be fully used.

I say to the Government that the Common Market is not all, but I am one of those who profoundly believe in political solidarity in Europe. Disunity in Europe has meant dependence for the nations of Europe. It has been deplorable that the European nations have not been able to organise an orderly process of decolonisation, because disorderly decolonisation in Africa has meant murder and misery for millions of people. It is regrettable that the European nations have not had a common policy at the United Nations Organisation where they have so many common foes.

I deeply deplore what the right hon. Member for Huyton said about France. I deplore what he said about the French deterrent, because I am convinced that, whether it is a British and a French, or an Anglo-French, or a European deterrent, if there is not to be deterrent power on this side of the Atlantic—the right hon. Member talked a lot about soft centres—we shall be a soft centre State condemned to cringe.

I do not agree with Mr. Dean Acheson that our world rôle is ended, but I agree with him that our special relationship with the United States has become top heavy and unequal. We and other European Powers, notably France, have non-European duties to perform. I was recently in Morocco and Algeria. The logic was borne in on me there that the Maghreb must be united but that it must be united, if it is to stand and prosper, at the side of France in a United Europe.

We have our responsibilities in Africa, and I would like to support what was said by my hon. Friend the Member for Newbury (Sir A. Hurd) about the position of the Central African Federation in relation to the E.E.C. negotiations. I have with me a letter from the Rhodesian N.F.U., and I will read just a sentence from it. It states: In view of the fact that our Government"— that is, the Federal Government have indicated their desire to be considered for associate status … it seems remarkable to us that our case should be accorded lower priority than the position of the minor dependencies and the trading arrangements for those Commonwealth countries which have refused association. I hope that the Lord Privy Seal will say something about that when he replies.

This brings me to what the hon. Member for Dorset, South said about other African States. It is to the credit of the Lord Privy Seal and the Community that such favourable terms have been made available to the new African States, but it would be a paradox, having obtained good terms for the African Commonwealth members, though not quite such good terms for the Asian Commonwealth members, if three European nations of the Commonwealth—I mean Canada, New Zealand and Australia—were left a-drift on non-European seas.

To that extent, therefore, the Community must be outward-looking. "Outward-lookingness" is part of the jargon in use nowadays and I think that it is time it got a bit of definition. It seems to me one thing for Europe to look outward to its overseas partners but another for it to have to look outward to countries which are not part of Europe and, what, I hope, will be the Europe—Commonwealth system. It will not be possible for Europe to absorb all the surpluses of the United States, for example.

I was extremely perturbed by a leading article which appeared in The Times on 21st November, not necessarily because The Times expressed the mind of the Government, but because Europeans always seem to think that it does. The leader concerned Mr. Orvile Freeman, the United States Secretary of Agriculture's attack on the wicked protectionism of the Six. The article stated: Thus Britain's negotiations with the Six have quickly pushed the problem … on to a world plane". The leader stated later: The American intervention is timely. I would be grateful if the Lord Privy Seal would comment on this kind of argument because I can imagine nothing more likely to ruin negotiations with the French—which are, clearly, crucial in this business—than to say that "the intervention of the Americans was timely".

It seems, from my discussions with French colleagues, that one of the difficulties is that it is thought on the Continent that we in this country are much more American than we are European. It is necessary, if we are ever to get a Europe-Commonwealth agreement, to establish that we are, firstly, loyal to our Commonwealth kinsmen—I find full understanding of this from Continental colleagues—and that, secondly, we are Europeans not Americans.

I recall the present Prime Minister making a speech in 1949. He spoke of a world dominated by Muscovite and American powers, and my right hon. Friend, who, of course, was not then Prime Minister, went on to say: I know there is room for a third. I am sure there is not room for a fourth. If Community membership can be reconciled with our Commonwealth obligations and can strengthen the special trading relations of the Commonwealth—as the Community is strengthening the special trading relations between other overseas territories of Europe and the European Continent—all well and good. But if not, and if the honourable and essential terms cannot be obtained, then I repeat that the Common Market is not all that E.F.T.A. and the Commonwealth are together a great force and that they could become a greater force, until the logic of events brings together in London these three trading systems to help provide the world with an alternative, to the twin dangers of our time. The first is the catastrophe of an East-West collision. The second—and more present danger—which probably explains this attempted bloodless "Pearl Harbour" by our allies against us over the Skybolt—is a carve-up at our expense between the giants.

8.35 p.m.

Mrs. Barbara Castle (Blackburn)

The Lord Privy Seal was very subdued in his opening speech, and rather unusually so. I think that the House got the impression very rapidly that he was less than enthusiastic about his own report, which is hardly surprising, because if we try to get under its officialese we find that the negotiations are face to face with catastrophe.

I think that the House is being unnecessarily gentle with the Lord Privy Seal tonight, because if he is in a mess, and he certainly is, it is entirely his own fault. It is astonishing to hear some hon. Members opposite, like the hon. Member for Newbury (Sir A. Hurd), coming along to the House tonight with an air of injured astonishment to say that the common agricultural policy will not help this country and cannot apply to it at all, and making the discovery that the British negotiators at Brussels have adopted it. The hon. Member for Newbury said that the common agricultural policy of the Six is not a policy which can apply to the enlarged Community.

When will hon. Members opposite realise that this has not been a question for negotiation at all right from the very beginning of our application to join? It has been a question of supplication, of "For heaven's sake, take us in." When the Lord Privy Seal tries to put a respectable gloss on his present difficulties, let us remember that this great fight that is going on this week, and which will go on next week and for months after in Brussels, is not a titanic fight at all. The fight is over. The right hon. Gentleman has capitulated to the interests of the Six, and all he is asking now is for marginal modifications of his surrender terms.

Realising what he has conceded to the Six in a desperate effort to get Britain in, the humiliation which the right hon. Gentleman is now facing from the refusal even of marginal adjustments to meet Britain's needs is all the greater. What a price this country is now paying for the Llandudno euphoria. The fact is that the Six are at this moment haggling even about the minor things for which the right hon. Gentleman pleaded. That is a measure of the lack of influence and status to which this country has sunk under the leadership of the Government, and also a clear indication that the Six are determined to use Britain's entry into Europe entirely for the purposes of their own advantage, and not ours.

Let us look at what the right hon. Gentleman has already given away. He has agreed to accept the common agricultural policy; and that is an agricultural policy drawn up by the Six in their own interests. It is a bargain struck between French agriculture and German industry, and, when it was struck, no one was concerned with the problems of this country and the Commonwealth. Yet the right hon. Gentleman has accepted it. He has accepted the abandonment of deficiency payments, and what he calls the gradual phasing out. But the principle has been accepted, and this entails, if we go in, having a complete change-over from the British agricultural system to the Continental one—what Mr. Winegarten, of the N.F.U., has described as a "stupendous undertaking"—and this was given away without so much as an attempt to bargain.

Again, the right hon. Gentleman makes no bones at all of accepting the financial regulations. He has seen nothing incongruous or unfair to this country in agreeing that not only should we put import levies on food coming here, but should then pay the proceeds into a common European pool. In other words, the Lord Privy Seal has agreed, quite willingly and not under duress, to tax our imported Commonwealth food.

I agree that he has got one or two exceptions that my right hon. Friend the Member for Huyton (Mr. H. Wilson) mentioned—kangaroo meat, rabbit meat and fish-liver oil—but whenever it has been something of substantial interest to our people the Six have been adamant. I can assure the right hon. Gentleman that to our own consumers, his victories have been laughable. There are not many work-class families that have kangaroo meat for Sunday tea, but very large numbers of them have tinned salmon and canned fruit. The only things on which we can get a victory are those in which no one is interested.

That being so, the Six have got the Lord Privy Seal to agree to a policy of deliberately stimulating imports of European food into the United Kingdom at the expense of the Commonwealth and, therefore, at the same time, of stimulating the high-cost production of Europe at the expense of the output of the world's more efficient and economic producers—a point already adversely commented on by Mr. Orville Freeman and by the G.A.T.T. itself.

Again, as a deliberate act of Conservative policy, the right hon. Gentleman has agreed to push up the British cost of living and, by that, our costs of production. How anyone can imagine that that will help us with our trading problems is beyond the comprehension of the ordinary man and woman in the street. That is why these basic facts are never put in simple words, but in the complicated language of Brussels. It is the death by a thousand details that the right hon. Gentleman is imposing on us.

Finally, the Lord Privy Seal has agreed that by paying import levies on food, levies that will go into the European pool, the British consumer will be putting his hand into his pocket to subsidise European agriculture, particularly that of France. This from a Government who fought elections on a pledge to bring down the cost of living. This from a Government who want to ease the burdens on the British taxpayer.

The Government are prepared to make economies at the expense of the British social services, the needs of our own hard-up people—old-age pensioners, the children, and the rest—but without a query they ask us to put our hands into our pockets to subsidise—and, therefore, to stimulate—the high-cost production of agriculture in Europe, and to subsidise Europe's exports unfairly against the rest of the world.

I should have thought that that was enough, that the Six had won enough—is not the humiliation and the surrender big enough?—but they are still not satisfied. In addition, they want all this immediately, and the signs are that the negotiations will stand or fall on it. They think that they have us by the short hairs, and that the Government have no room for manoeuvre—and, after Llandudno, can we blame them for thinking that? After the pitiable economic performance of the Government, can we blame them? Never has our fighting power or negotiating capacity been brought so low by any Government.

So all this is to come into operation immediately. What that will mean in practical terms, to give only one example, is that the cost of wheat going into our bread will increase by 50 per cent. in a single day. Mr. Winegarten has estimated that butter will jump to 6s. per lb. and that the price of cheese will go up by 50 per cent. All these changes would come in immediately.

The reason for this, given in the agricultural negotiations by the Six, and spelt out most clearly of all by the French negotiator, M. Couve de Murville, is that they know that the present low cost of food in this country gives us a competitive advantage against our European rivals.

Mr. K. Zilliacus (Manchester, Gorton)

They had said so.

Mrs. Castle

M. Couve de Murville has said so. He said, "You cannot phase out your deficiency payment system gradually. You would be at a competitive advantage against the rest of us." What becomes of the wonderful argument that we have to go into Europe in order to sell more? One would never have believed it possible for the party of businessmen, as they call themselves, on the opposite benches to adopt that kind of economic policy. Why should we voluntarily throw away an advantage which our European competitors fear and want to destroy?

When the right hon. Gentleman protests the Six say, "But you can offset the impact of this on the cost of living in your country by introducing subsidies," and the right hon. Gentleman says, "Producer or consumer subsidies". I ask the right hon. Gentleman to be a little more specific when he winds up the debate. Is not there a very important difference between them? Is it not a fact that the Six countries are not prepared to allow us to apply producer subsidies in those cases in which the cost of our food is lower than that of Europe, that it is only consumer subsidies that we should be allowed to introduce except on eggs, pig meat and, perhaps, horticultural produce, the prices of which are higher than those in Europe?

I ask the right hon. Gentleman to tell us whether the Six are insisting that to meet these difficulties of the transitional period we should employ only consumer subsidies and why. There are two great snags here. First and foremost, they could only be transitional, anyway. By 1970 we should have to denude ourselves even of that help in fighting the increased cost of living. Secondly, the great advantage to the Six of the consumer subsidy over the producer subsidy is that it would be paid on imported as well as home-grown food. The Six do not miss a trick. It is we who are losing. That is why I think that the hopes of the farming community that producer subsidies can be continued in various forms will be betrayed by the Government.

It is obvious that these demands are intolerable. That is why we have had a very different tone from the right hon. Gentleman tonight. But it is not only on these marginal points that they are intolerable. The basic principles are intolerable, and the right hon. Gentleman has already accepted these. The fundamentals have been betrayed and it would be ironical if a breakdown should come over a marginal item when the Government were prepared to sell so much. How tragic it would be for the breakdown to come and for the Government to start talking about the need for alternatives when they have by their obvious willingness to betray the interests not only of the British consumer and British farmer, but of the British Commonwealth, done so much damage to the Commonwealth structure.

I do not believe that this Government can retrieve the position if the crunch comes. This is not a Government which could hope to rebuild our relationships with the Commonwealth psychologically or economically, because they have stabbed the Commonwealth in the back and they can never again rally the confidence and sense of emotional unity in the Commonwealth which alone provide the starting point for a constructive alternative.

The effect of the agricultural policy is only one small aspect of the whole Common Market question. It is a measure of the lack of clarity and thought with which the Government entered into all this that we should be so absorbed tonight in these details of agricultural policy over which there is the likelihood of a breakdown coining when we have not even begun as a House of Commons to discuss the far-reaching and wider issues which are involved in Britain joining the Common Market should the negotiations succeed.

The British public have been misled and under-informed about agricultural policy, but how much more have they been misled and under-informed about the wider political implications of Britain's entry. Here again, the Government have deliberately played down the inevitable trend towards complete political union in the Community. They have done it because they have never gone into this business on the basis of wanting to educate the public in the realities of joining Europe. The Government have wanted to lead them in blindfold.

Unfortunately for the Government, however, the people of the Six do not remain silent on this issue. We have just had the latest "blueprint" by the Commission of the Community of its programme for the next phase of development in Europe. The keynote of this report is that the Community must hurry up to complete the process of economic union, that it must hurry up the process of a complete co-ordination and approximation of tax policies within the Community, that it must hurry on to a monetary union and build up a European reserve currency and complete the progress of economic union.

The report goes on to make clear that that is not the final aim, for the logical outcome of that development, as everybody who is honest about this matter knows, is complete political union, also. The Commission makes this clear in its report when it states that It would be unrealistic to see a distinction between economic affairs—pooled in the Economic Community—and political affairs, the essential part of which still remained to be dealt with in a political union. … The European Community is in no way a purely economic venture, now to be paralleled by a political undertaking. On the contrary, it can be said that political integration has already begun". It goes on to state: The Commission cannot but adopt a positive attitude to any extension of European unification to fields other than economic and social policy, and notably to defence, the non-economic sector of foreign affairs, and cultural policy. … Its experience warns it against solutions which would not contain an element embodying the Community interest. That is frank. Anybody who is honest about this European venture would have admitted that from the start.

I disagree with my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), but I respect him for the fact that he has never attempted to disguise that he wants a complete United States of Europe, because that is the only way to get any kind of democratic control of the economic union that is being forged more and more closely with every month that passes.

If Britain joins the Community, it will not only be control of our agricultural policy that passes from the purview of this House. It will be the control of taxation policy, of exchange rate policy and, therefore, of social service policy and of planning policy. This House of Commons will become almost an empty shell and democratic power will become a myth. [Laughter.] Hon. Members opposite may laugh, but the alternative before us is either to recognise that fact and, therefore, try to recreate a democratic dynamic in the heart of Europe itself, or sit back, as the Government are always willing to do, and be ruled by a bureaucracy and a council of ministers. Of course, Members opposite like the unchallenged power of civil servants and of heads of Government. But we on this side of the House are democrats and, therefore, know that where economic power is given democratic control should follow.

A week or two ago I spent a couple of days in Paris, at a meeting of the Socialist parties of the Six, planning their united policy in the Community. Of course, it was not surprising to find that at the very head of their list of demands is one to press ahead as rapidly as posible with the creation of a political union and of a United States of Europe, in which a directly elected European Parliament would make the bureaucrats of Brussels answerable and would take control. This is the only democratic solution, particularly at present when, as the Socialist parties point out, economic union is pressing ahead in the form of increasing concentrations of economic and industrial power into a few stronger and stronger hands.

Are these civil servants in Brussels to remain irresponsible, answerable to no one? We are supposed to be fighting monopoly in this country. Would it not have to be fought and controlled even more in an enlarged Community? Therefore, if we are democrats we must believe that, where economic power goes, political control should follow.

These, then, are the fundamentals of the issue, and it is pathetic to see a few hon. Members opposite uneasily waking up to the fact of how much has already been given away while they have been asking about little details, such as what shall be the programme for the phasing out of deficiency payments, that are fundamentally irrelevant and unimportant when compared with these basic issues. They are overlooking the fact that the Government were willing, nay, anxious, pleading, to be allowed to sell the major passes of British interest and British freedom.

8.58 p.m.

Mr. Stephen Hastings (Mid-Bedfordshire)

The hon. Lady the Member for Blackburn (Mrs. Castle) has made her usual spitfire speech, rather longer than usual and well worthy of the international Socialist brotherhood-sisterhood. She seeks to contrive the failure of the negotiations by any means she can, and, as we all know, a great many other hon. Members opposite see it that way as well. I sometimes wonder what sort of Britain it is that British Socialists of her persuasion look forward to.

I think I know. It is a sort of Titoist-Marxist paradise, neutralist, unaligned and unarmed. From this position they would seek to manipulate the world. I suppose that one is forced to say this of her and her hon. Friends—that perhaps this is a rather more logical position in relation to the Common Market negotiations, should they fail, than that of the right hon. Gentleman the Leader of the Opposition and of the right hon. Member for Huyton (Mr. H. Wilson), who seems to think that having arrogantly thrown over the Six we could suddenly call a world conference and create Atlantis. It is a little early for that.

I speak as one who fervently hopes that the negotiations will succeed. But it is better to be frank and say it—I suppose that many of us at this stage feel that the negotiations have reached a seriously critical point. I must say at the outset of my few remarks that I am not sure that it helps to make speeches which can be interpreted to mean that the situation would be just the same if we failed to get in.

I suggest that my right hon. Friend the Prime Minister engaged in these negotiations because he realised perfectly well that as a major industrial nation we could not continue as we were and as we are. If these negotiations fail, very little will be the same as it was before. As a nation, I suggest that we shall be faced with the most searching reappraisal perhaps in all our long history. This could be the position, more difficult even than the decision to join, difficult as that was, because I am not afraid to say that although there may be alternatives, there is no obvious alternative.

In this reappraisal, we might perhaps also, as my hon. Friend the Member for Chigwell (Mr. Biggs-Davison) hinted earlier, in his most able speech, do well to reread, perhaps in a calmer mood than the country as a whole manifested last week, the speech of Dean Acheson. Although I do not agree with everything he said, there was much which should bring home to Europe and to us what our position could be. At a moment like this, it seems most important for us to look deeply and critically not only into the reasoning of the Six, but into our own as well.

Of course, we all realise, and it has been expressed tonight, that the basic difficulty is over agriculture, and here there is a very real problem on either side. Is there something more which can be described as fundamental at this stage? Have the French really some overall reservation about British entry? It is to this that I should dike to devote my few remarks and to make a plea for an understanding on this side, as well as the other, of the relative position of the French and ourselves. Is there not what I would describe as a chronic difficulty in Englishmen and Frenchmen understanding each other's point of view, even though they may agree about aims? This has been tragically the case before in Europe, and I hope that it will not prove to be an overriding difficulty in these negotiations.

I should like to try to define, as best I can, what I believe to be the French attitude, and I should be most grateful to have from my right hon. Friend the Lord Privy Seal his reactions on this. It seems to me to consist of a compound of two separate views which are in a sense contradictory, but which are, nevertheless, aligned against our position.

The first many of us may associate with General de Gaulle himself, and I suppose that it can most easily be described in such phrases as consideration for the "grandeur de la France"; la mission civilisatrice de la France, and so on. This attitude may seem to us in a sense arrogant, perhaps out of date, but I suggest that it is no more irritating to us than our insistence that we enjoy a special association with the United States has been irritating to the French. Neither of those attitudes, on our part or on theirs, is very positive or helpful in these negotiations at this time.

The second view which I believe the French hold might be associated with those more closely engaged in the negotiations. They hold a passionate belief in the supranational content of the Treaty of Rome, in the entity of the Community. Anything which derogates from the position of the Commission is, therefore, anathema. The reception of funds by the Commission is to them not only an economic exercise, but also a symbol of its authority, a symbol of the reality of the Community. Sadly, our system of deficiency payments appears to them in precisely this light.

I only wish that I could suggest a way round this dilemma of the French position and our own. Our own position on agriculture seems to me impeccable, I must admit, and, of course, the means of support upon which we have engaged to our farmers in this Parliament are rigid and cannot be changed. I find myself wondering, none the less, whether it is impossible to devise an alternative and equally effective means of support during the transitional period without the necessity of creating a new administrative machine. If we could do such a thing without offending the principle upon which the French take their stand, perhaps there might be a way out of the difficulty, but I realise well that what I am suggesting is ill-defined. But since I do not want to take too long, I prefer to leave it at that. What would be tragic, if it took place, would be if this great enterprise were to founder over something as imprecise as the agricultural policy which the E.E.C. has developed so far.

General principles are often as important to the French as precision of detail is to us. We have a perfect right to expect them to look sympathetically on what are our real and particular difficulties, but on their side they also have the right to expect us from time to time to appear to raise our eyes from the price lists and look at the horizon, even if it does not seem to be as closely defined as we could wish.

I should like to observe, in conclusion, that there is a disturbing parallel between our negotiations for entry into E.E.C. at this juncture and the Austrian attempt to join a Customs union, the Prussian zollverein, in the 1830s. Salutary reading it makes at this juncture—salutary for the right hon. Member for Huyton—and I would be glad to lend him the book. One finds the same arguments emerging as those being used today. It is almost uncanny. The Austrians had their reservations over the Eastern territories, their world position, and so forth, and this promising negotiation wandered on for years and then finally failed. It is my hope and prayer that we shall prove, as I am sure we shall, more farsighted and more successful than Austria in her day.

9.8 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

I find myself in the position, not altogether unhappy for someone speaking late in the debate, of being in substantial disagreement with most of the speeches to which I have listened. But not entirely so; I greatly enjoyed the extremely persuasive and able maiden speech of my hon. Friend the Member for Dorset, South (Mr. Barnett). Unlike the hon. Member for Chigwell (Mr. Biggs-Davison), I hope to hear my hon. Friend again on many occasions, and I do not even have some family votes to contribute one way or the other in the South Dorset constituency.

I think that we are all agreed that this is a fairly unhappy stage in the negotiations, but I suspect that we draw different conclusions from that. I do not draw the conclusion that we ought now to go very slowly and not mind how much longer the negotiations take. The negotiations have been going on for much too long already—for fourteen months.

It is an extraordinary situation and it is an extraordinarily unfortunate preparation for our entry into Europe, if that is to take place, that, when negotiations on matters of great detail are being conducted in a great blaze of publicity, a far greater blaze of publicity than ever the Six had directed upon them when they were drawing up the Treaty of Rome, every partial settlement has to be presented as either a victory or a defeat, according to one's point of view. Given this extraordinarily unpropitious beginning, the surprising thing is not that there has been, a movement of opinion in this country against going into Europe, but that there is a substantial body of opinion still in favour of going in, which I am glad to see.

I want to look at what seems to me, with the benefit of hindsight, some of the mistakes which have been made, and some of the dangers which confront us, and I hope that the right hon. Gentleman will not be surprised if I do this in the form of a criticism of the Government's position. I do not think that he will accuse me of having an excessively partisan approach on this subject.

It seems to me to have been a major misappraisal, and one which I hope will not be continued, to believe that we should stay on the threshold of Europe for a very long time, because this seems to me to be our position of maximum weakness. Having failed to go in at the beginning and to be there to play a part in the evolution so far of what we are joining, the position of getting in at this stage is one which I am sure maximises the weakness of this country. I am firmly convinced that once in, given the present balance of power within the Community, we shall be in a very much stronger position to influence its development in the way that we want to see it go.

Some people within the Community even say that we will have a position of leadership as soon as we go in. I think that it is wrong to put it in such strong terms as that, but I think that we will certainly offer a competing pole of leadership to some existing poles of leadership, and will be in a very strong position to influence what happens. But this we cannot do while waiting to get in, and nothing could be worse than to go on prolonging indefinitely this threshold position which has already gone on for far too long.

The second danger and mistake for which the Government are to a large extent, though not exclusively, to blame is that opinion in this country has been encouraged to become obsessed with the terms of our entry as opposed to the principle of whether we go in or not. I think that I carry my hon. Friend the Member for Blackburn (Mrs. Castle) with me on that. There is something much more important than the terms which emerge, and that is the principle of whether we want to go into Europe or not. My hon. Friend does not want to go into Europe—and I am not blaming her for that—because anything to do with the Community is anathema to her. This is understandable, but, whether one wants to go in or not, this is a matter of major importance. This is a decision of major importance, and I say that compared with the terms it is of the order of a hundred compared with five.

By suggesting that we are seeing things out of perspective, we do not, I believe improve our bargaining position in Brussels. It is, of course, difficult to know exactly on what our bargaining position does turn. I do not believe, as some hon. Members think, that it turns on, or is strengthened by, an attitude of complete reluctance to go into Europe at all. I do not think that we improve our position by saying that what is hapenning in Europe is not of major importance, that we do not care whether we go in or not, but, at the same time, the Community should give us terms which are favourable to us.

The strongest position is an attitude of extreme enthusiasm in principle, combined with being firm on particular issues which are of major importance to us, but if the whole thing is allowed to get submerged in an obsession with the terms, and to an increasing extent it appears in Europe that there is no evidence of public enthusiasm for the principle, I think that this makes the Six more reluctant to have us, and more reluctant to ease our conditions of entry.

Even given the decision to concentrate opinion in this country on the terms, I must say that the choice of the most important aspect of the terms which the Government have made is extraordinary. There are three main things which we have been discussing, and will presumably go on discussing. First, the Commonwealth position, secondly, the E.F.T.A. position, and, thirdly, the transitional arrangements for British agriculture. I would have thought that, except from the extremly narrow point of view of the electoral interest of the Government, the transitional arrangements for British agriculture—and they are now only transitional arrangements that we are discussing—were by far the least important of these three aspects. If the Government wish to present themselves as having a bold, forward-looking and visionary approach to this question, to concentrate upon this third aspect is ludicrous.

I also want to refer to the problem of E.F.T.A., although I prefer to see this in terms of problems of particular countries who want to become full or associated members of the Community. If we see it solely in terms of the E.F.T.A. pledge—which I always thought the Government entered into rashly and unthinkingly—Portugal stands on equal terms with Norway. This is not my view. What seems to me to be a more important approach, and one which is more likely to commend itself within the Six, is that we regard certain of these countries as being extremely desirable members of the European Community on their merits, and that we see no reason at all why they should not come in at the time that we do.

But it is important that we should not present this too much in terms—which would be false terms, in my view—that we want these countries in in order to constitute, with us, a sort of permanent blocking minority. If this is the picture that we have of the future—that we shall cluster in a sort of Scandinavian corner, perpetually voting in a minority—there will be little point in our going in. I hope and believe that what we shall try to do is to seek to have an influence on the majority rather than to cluster in a permanent minority.

We want these countries in—it would be extremely difficult to go in without Norway and Denmark coming in as full members on the day we go in—but we want them in as desirable members of the Community, on their merits, and not because we wish constantly to vote with them in a permanent minority bloc. Let me add this. Although the question of voting rights is very important, and it is not unreasonable to think that a situation might arise in which we could block a qualified majority—if, by chance, we voted with the two Scandinavian countries and with Holland—it is not easy to visualise a situation which would allow us to be a blocking minority voting solely with the two Scandinavian countries, and it would be an extremely difficult thing to ask, coming in at this late stage, that with the new members alone we should constitute such a minority.

The next danger, which has become a real one in the last few months, is that these negotiations may drag on to failure in a way not altogether dissimilar from the way in which the old Free Trade Area negotiations dragged on to failure in 1957–58. We all thought that they were going quite well, for a long time. The Government thought that they were going quite well, for a long time. But the Government faded to appraise the position. In those negotiations the Government consistently under-estimated the cohesion of the European Community. In other words, they really thought that Dr. Erhard would eventually deal with France for them and enable a Free Trade Area to be created. It did not happen. Moreover, the cohesion of the Community is a good deal greater now than it was five years ago.

Although it is an important factor, which will greatly influence our power once we are in the Community, that the Italians, the Dutch, the Belgians, and a very large volume of German opinion very much want us in, it would be a great mistake to think that any of them will risk breaking up the Community in order to get us in. Nor do I not think that there will be all that much of a dune if and when Professor Erhard replaces Dr. Adenauer. It would not be a wise thing to wait for that and to say that it is bound to solve our problems for us.

What do we do now? I believe firmly that these negotiations for British entry must either be brought to a successful conclusion by March or April, or they will, shall I say, never be brought to a conclusion? "Never" is a very big word to use in politics, but it is only just too big a word to use in this connection. It is tempting to say, "Let us wait for another Government" and in a way it is a great tragedy that these crucially important negotiations have to be conducted by a Government who are in a state of weakness and at the tail end of their power, as is the state of this Government. At the same time, I do not think that we should minimise the recoil away from Europe which, inevitably, there would be if, by the spring, we were forced to recognise that this set of negotiations had not succeeded.

I do not think that we could go back to the position of negotiating again for quite a long time to come. And by that time I think that the developments in Europe would have hardened to such an extent that we should have very little opportunity to influence them. A solid cliff face of European unity would then confront us. While I do not think that the present terms remotely merit the expression "humiliating", in five or seven years we might have to go in on terms which, while not humiliating, would leave no room for negotiation or for us to influence what was happening in Europe.

I think that the Six should ponder the dangers as well as ourselves. As I have said, I believe that the Government have gone into too much detail in these negotiations. The Government have lost their way in a morass of detail. But, at the same time, they having committed themselves to this position, it must be recognised by the Six that unless the Government are to get something clearly substantial out of the negotiations they will not be able to lead public opinion here into Europe. Equally, I think that the Six should bear in mind, as we should, the consequencies if the negotiations fail in the spring.

I am bound to say that I find it difficult to share the view of my right hon. Friend the Member for Huyton (Mr. H. Wilson) about the vista of cooperation throughout the world which would open up before us in that event. On the contrary, I believe that we shall be in for a decade of recrimination and bickering and weakness throughout the entire West. There will be blame all round. Some members of the Six will blame each other and some will blame us. Some will blame the Americans and the Americans will do their share of apportioning blame, and we shall partly blame the Americans, as perhaps will some of the Six, too. It will be an extremely undesirable situation, all round.

What about the position of this country? Economically I never thought that there was only a fifty-fifty argument for going in, but it is an argument on balance. The overwhelming argument is one of political influence. If we do not go in, our political influence in the world will shrink steadily and nothing which has happened in the past few weeks strengthens my view here. What about the special relationship with America today? There has not been much evidence of that strengthening. There is not much evidence that it is something, upon which we could effectively fall back on. And beyond the question of political influence there is the overwhelmingly important question of the mood in this country.

I do not see how a country making national psychological adjustments as difficult as we have been trying to make in this country during the past few years can get as near to Europe as we have got and then recoil without it having a tremendous effect on public opinion. If that came we shall get into a very bitter, complaining mood about the whole of the world.

I was not at all encouraged by the sort of possible alternative prospect which was opened up by the noble Lord the Minister for Science, speaking in Glasgow yesterday. He criticised all sorts of people. He said we had too much criticism from friends who got too used to friendship and ceased to care for our feelings, too much criticism from neighbours, from former enemies and from countries which are growing up. I think that that is a pitiful approach. If nobody in the world appreciates one it is not a bad idea to look at oneself to see what is wrong. I doubt very much whether, in private or national life, one gets people to appreciate one by complaining that they do not.

Equally, I do not think that one makes oneself a great Power by an exchange of letters between the Prime Minister and the President of the Institute of Directors, particularly if they are based on the view that anyone who criticises us wants to invade us and is to be compared with those who have done so in the past. Of course, many people feel that they would like to fall back on the Dunkirk spirit. The Dunkirk spirit was splendid in 1940, when the world was attacking us and we stood alone, but it is no good trying to stand as a bastion when the world wants to unite and not to attack.

By summoning up the Dunkirk spirit at present we shall achieve nothing for ourselves or for anyone else, except an increasingly isolated position.

Colonel Sir Harwood Harrison (Eye)

rose—

Mr. Jenkins

I cannot give way. I am usually happy to give way, but I am about to conclude my speech.

This is a difficult time in the negotiations, but it is a time for the Government to show rather more courage than they have shown during the past few weeks and not to retreat. The fundamental basis on which I believe, and, I assume, the Government believe, it is right to go into Europe still exists. I hope that the Lord Privy Seal will negotiate toughly and quickly, and that he will not be deceived by the idea of false alternatives.

9.28 p.m.

Mr. Heath

Although this debate has been limited in time, I think everyone will agree that it has been of considerable interest. It has covered many detailed questions, but at the same time some hon. Members have dealt very fully with the wider issues.

Before I say something on each of these matters, perhaps I may be allowed to offer my congratulations also to the hon. Member for Dorset, South (Mr. Barnett) for the excellent maiden speech he made this evening. Like my hon. Friend the Member for Chigwell (Mr. Biggs-Davison), I also know the new hon. Member's constituency well, though not from a farming point of view but as a holiday-maker, a pastime in which one is not able often to indulge in these days.

Mr. Christopher Mayhew (Woolwich, East)

We can arrange that.

Mr. Heath

Not, I hope, in the way in which the hon. Member for Dorset, South took his seat. His speech was extremely fluent and dealt both with local issues and the wider issues of European affairs. I agree entirely with what he said to the effect that, whatever the outcome of these negotiations may be, the effects are going to be very great right across the world. He quoted the case of the African countries, of which he has great personal experience. Let me say here that the African countries of the Commonwealth must decide for themselves what action they will take on the offer of association. They are independent countries, and it is entirely a matter for them. Our obligation in the negotiations has been to make alternative arrangements for those who decide that they do not wish to take advantage of it.

Turning to wider matters, I must say a word about the speech of the hon. Lady the Member for Blackburn (Mrs. Castle), who said that the House has never given proper consideration to the wider problems involved in these negotiations and in the application which we made in July of last year. I do not quite know what the hon. Lady has been doing in the last 21 months in the House, during which it has been debating these great issues. On 17th May, 1961, I devoted almost my whole speech to the wider issues, before we made the application, and I was then rebuked by the hon. Member for Leeds, East (Mr. Healey) for introducing an irrelevant topic into a foreign affairs debate. Since then there have been the great two-day debates in the House in which we have fully discussed the wider issues involved.

The hon. Lady began, as she said, by dealing pretty roughly with the situation and complaining that these negotiations had been a complete capitulation, with marginal attempts to effect surrender terms, and other graphic phrases of this kind which bear absolutely no relation to reality. She said that the negotiations are facing catastrophe. That, too, is far from the case. But what particularly surprised me was that she said that she believed this to be the case because of the arrangements which we have accepted in the Community. These arrangements were announced when the speech of 10th October last year was published; they have been public now for over a year. Suddenly the hon. Lady comes to the House and says that we have accepted the essential characteristics of the Community. Her own party, as quoted b) the hon. Member for Houghton-le-Spring (Mr. Blyton), issued a proclamation saying, "The Labour Party regards the European Community as a great and imaginative con- ception". The characteristics of the Community are its common tariffs, its common commercial policy, the common agricultural policy and the economic union. They are all in the Treaty of Rome.

Mr. H. Wilson

The common agricultural policy?

Mr. Heath

In Article 3 there is a reference to a common agricultural policy. That is in the Treaty of Rome as the objective of the Community.

Mr. Wilson

The right hon. Gentleman is playing with words.

Mr. Heath

The right hon. Gentleman knows that the proposals of the Commission, which were published before we entered into negotiations, the type of agricultural policy was foreseen, because the countries of the Six already had an agricultural policy which was based on the farmer getting his return from the market and not by Treasury subsidies. It was therefore obvious what the nature of a common agricultural policy would be. Consequently, it is surprising that at this stage the hon. Lady says, first of all, that she welcomes this noble concept of the European Economic Community and then that she objects to its characteristics, and then complains that in choosing to attempt to enter the Community we have accepted its major characteristics.

Mr. Wilson

We thought that the Government specifically had not accepted the Commission's proposals before we entered negotiations. In view of the fact that the Commission's proposals involve the import levy and all the rest, is the right hon. Gentleman telling us that before his speech of 10th October he had accepted the principle of an import levy on Commonwealth countries? In that case, how can he explain his demand for comparable outlets in the October speech?

Mr. Heath

I did not accept anything before the October speech. What I said was that the nature of a common agricultural policy could be foreseen from the Commission's proposals, which were published in part before we made the Paris statement. I will deal with comparability and the question of imports from third countries when I deal with the agricultural questions which the right hon. Gentleman raised.

The hon. Member for Stechford (Mr. Roy Jenkins) as usual made a most interesting speech. I wish to comment only briefly on it. He expressed a point of view which is based on considerable experience, and I do not in the least disagree with some of the points which he made. But he has attacked the Government's position in the negotiations. I appreciate the reason. In some cases he rightly refrained from expressing views on the attitude of members of the Community and in other oases he did not wish to attack the views expressed by his own Front Bench.

The hon. Gentleman said that it was a mistake to wait on the threshold. We have been endeavouring to carry on these negotiations, as I have said before, at a reasonable speed, commensurate with thoroughness. Indeed, it was at our suggestion that the objective of reaching the, outline by the end of July was agreed upon by all the members in the conference. It was at our suggestion that after the Commonwealth Conference we went to Ministerial meetings every fortnight instead of every month, as we had been doing previously. It has been at our suggestion that we have speeded up the meetings and got longer meetings, and we are now going to have the two full weekly meetings in January with which to deal with the major outstanding problems.

At the same time I have been pressed by the Opposition Front Bench not to set a deadline, nor to rush on with the negotiations. It has been said that it does not matter if it takes a considerable time. Again, the hon. Gentleman said that it is wrong to concentrate on the question of terms. Hare again, he finds himself at variance with his own Front Bench. In these cases, especially as to the Commonwealth, these matters have to be settled. They have matters of detail, complicated and very technical, and none more so than the matters of agricultural policy which the Ministerial group is considering today and is again considering tomorrow.

However great the decisions of policy are, and however big some of the issues are, the details have to be settled, and it is the members of the Community equally who want to see them settled, as we do ourselves. In exactly the same way, the details of the E.F.T.A. negotiations have also to be settled. I cannot agree with the hon. Gentleman that we are bogged down in detail. There is always that danger, and I am fully aware of that. Nor do I believe that they are dragging on to failure. Of course, everybody recognises the history of the Free Trade Area negotiations, and none more so than those who have studied them before going into these negotiations. The hon. Gentleman advises us that id would not be right to retreat. Nothing is further from our minds than retreat.

I am sorry that the hon. Lady the Member for Blackburn thought that this afternoon in making my report I was somewhat subdued. It is customary in making a report of that kind in the House, which is not a speech, to deliver it in merely a factual form and not a form in Which one is expressing views. That is the explanation.

I turn to the points of detail which have been asked. The right hon. Member for Huyton asked about the institutional questions. When we deal with them next week we shall have a first discussion of these matters, which will include the question of voting rights. That will necessarily mean the qualified majorities. I have told the House on previous occasions that these cannot be settled for the full Community without taking into account fully, and indeed in conference, the other members who are to become full members. Obviously it is easier to settle all these things at one time if one can do so, and the E.F.T.A. countries, as well as Eire, which has also applied for full membership, are involved here.

The right hon. Gentleman went on to mention the Lord Chancellor's speech at Bristol. If the right hon. Gentleman will refer to the Lord Chancellor's speech in the House of Lords at the end of last summer, he will find the question of Parliament and its powers and the effect of the Treaty of Rome dealt with very fully indeed.

Mr. H. Wilson

Why cannot we have a statement here?

Mr. Heath

It is perfectly proper in a Parliament which consists of two Houses for the right hon. Gentleman to be able to read the speech of the Lord Chancellor in the House of Lords. If he wants to have a long and detailed account of the Parliamentary position, in due course I have no doubt at all that he will get it. Meantime, he might like to read the full version of the Lord Chancellor's speech instead of the précis of his speech at Bristol.

The hon. Lady the Member for Blackburn asked about the question of Parliamentary democracy. I suspected from what she said that what she was really indicating was that if these negotiations are successful and we enter the Community, she would like to see a full development of Parliamentary democracy in a European context. She has expressed this view on other occasions elsewhere. There is a great deal of substance in this view. Article 138 of the Treaty of Rome requires the Assembly to draw up proposals for elections by direct universal suffrage. These proposals have been put to the Governments of the Community by the Assembly.

I would have thought that we ourselves had a considerable contribution to make to Parliamentary developments in Europe as and when they occur. I am not here committing myself to any question of direct or indirect elections. It is sometimes thought that this is the only thing which matters. I do not believe that to be the case. I believe that an assembly can have wider powers of influence and control over other bodies without necessarily having direct elections.

As I was reminded the other day in Europe, the American Senate for the first 132 years of its life established its influence on the basis of indirect elections. Therefore, I am not committing myself personally, or as a member of the Government, one way or the other on this question of these important developments in Europe.

Mrs. Castle

Does it not follow from what the right hon. Gentleman has just said that if we were to go into Europe and support the development of a European Parliament with full democratic powers the consequence of that would be pall passu the decline in the powers of the House of Commons and the strength of Parliament here?

Mr. Heath

That is not necessarily the case, and certainly not pari passu because of the structure which has developed under the Treaty of Rome. This is one of the matters to which insufficient attention has been given in the balance of power between the Council of Ministers and the Commission and the Assembly, and it is one of the elements in this situation which deserves not only more thought and consideration but a good deal more examination by the Community itself. There are many members of the Commission who are only too anxious to see that this is done.

I agree with the hon. Member for Stechford in saying that in welcoming members of E.F.T.A. into the Community none of us in E.F.T.A. should look at this from the point of view of operating together as an organised bloc in the Community, any more than new members of the Community should expect to find the Six operating as an organised bloc themselves in the context of the enlarged Community. When one studies the operation of national interest within the Community, one sees that the voting pattern changes constantly according to the interests which are involved and the matters under discussion and I am sure that that state of affairs is bound to continue.

The right hon. Member for Huyton asked some questions about the Asian arrangements. He dealt, firstly, with tariffs and said that some reductions had been made. In fact, we have not reached a settlement on the outstanding remaining ones—and there are five or six of them—including jute goods, leather, kips, carpets and coir mats. Their total value is about the same as cotton textiles and an offer was made by the Six regarding a 15 per cent. reduction across the board, but we have not reached agreement on that basis.

The right hon. Member for Huyton asked about textiles and said that we had achieved no tariff reductions and no safeguards and that all preferences had been lost. That, of course, is not the case. The initial application of the tariff will be, in absolute terms, 3.2 per cent. We shall still be applying a higher duty on Community countries and a higher duty still on textiles from third countries in the world. Thus the right hon. Member's statement on lost preferences, while the negotiations are going on, was not true. It was not true because a preference is still retained by India for textiles over European Community countries three months after entry, when negotiations start.

Mr. Wilson

Does it mean that if the negotiations fail the Government will be free to continue these preferences indefinitely, will there be reductions in the preference we give to India or will there be introduced a system of discrimination against India? Are they not committed whatever the results of these negotiations?

Mr. Heath

The application of the décalage will go on in the way I shall describe later. The right hon. Member for Huyton said that when the negotiations start, this will have been lost. There is bound to be a balance in the trade negotiations and if there had been a complete exemption with no application of the common tariff, then the balance of advantage to India in having no application of the tariff could outweigh the advantage of the trade agreement. In our negotiations this had to be taken into account and our endeavour has been to establish a balance between the two sides in these negotiations. The right hon. Gentleman may not accept that there is a balance, but if he examines both sides he will see that there is.

Then the right hon. Member for Huyton said that there were no safeguards for textiles. This also is not true, and both he and the right hon. Gentleman the Leader of the Opposition are constantly repeating this. The Leader of the Opposition did so in his speech in Paris the other day. The remedial action is to be taken within two months if there is damage to this trade, and remedial action can be taken in a number of ways, including reducing the tariff again, or widening the quotas—or removing them; and the same remedial action is taken for the enlarged Community as a whole and not only for the United Kingdom. It is, therefore, completely untrue to say that there are no safeguards for Indian and Pakistan textiles. These safeguards exist and I hope that the right hon. Gentleman will refrain from repeating what he said.

Mr. Hugh Gaitskell (Leeds, South)

The right hon. Gentleman knows perfectly well that this is totally inadequate, because it comes into operation only if the figures of Indian exports fall below the 1959–60 level, which amounted to about £1 million for the whole of the E.E.C., as against £13 million here; but India wants to increase her exports in +textiles so that she can develop,her country, and that is why it is totally inadequate.

Mr. Heath

The right hon. Gentleman is now confusing safeguards with the present position of trade, with which is combined a 5 per cent. increase each year under the Geneva arrangements towards achieving the expansion which India wants in order to be able to sell many more textiles. The job in these negotiations is to safeguard the interests of the Commonwealth, and that has undoubtedly been done as far as textiles are concerned.

When the right hon. Gentleman says that it is only £1 million as compared with £13 million in the United Kingdom, this is the safeguard of the exports to the United Kingdom and the enlarged Community. It therefore covers all the £14 million. I wish the right hon. Gentleman would not allow his emotional attachments to disturb his economic judgment in a matter like this.

I now wish to go through the moving question of décalage about which the right hon. Gentleman asked me. There are in the negotiations three main groups for industrial goods. For the old Commonwealth they are in three parts; 30 per cent. on accession, 30 per cent. on 1st January, 1967, and 40 per cent. on 1st January, 1970, combined with a trade examination in 1966 and 1969 with Canada, Australia and New Zealand. India and Pakistan, on cotton textiles, have 20 per cent. on accession, 20 per cent. after 18 months, 30 per cent, after a further year and 30 per cent. when member States take the final step for the common external tariff. There is a third rate for the other Asian manufacturers, 15 per cent. on accession, 15 per cent. on 1st July, 1965, 20 per cent. on 1st January, 1967, 20 per cent. on 1st July, 1968, and 30 per cent. on 1st January, 1970.

The position, therefore, is that the Asian countries have the same gentle décalage to begin with, and here again the objective was to retain it in that form while the trade negotiations were going on. It is true that the old Commonwealth countries are slightly better off on non-textiles from 1st July, 1968. When we discussed the whole of this matter following the point raised by the Commonwealth Prime Ministers, at that meeting the members of the Community indicated that they thought that when we got to the end of the negotiations, we should review the whole of the décalage arrangements with the intention of simplifying and improving them, and this was part of the agreement we reached with the Community.

Mr. H. Wilson

The right hon. Gentleman cannot stop it.

Mr. Heath

The right hon. Gentleman says we cannot stop it, but when we are agreeing to the application of a tariff, what we are agreeing to with the Community is to review the application of the three rates, or any other arrangement that should be made in order that they may be simplified and improved.

Mr. Wilson

If the negotiations break down—and they may well do so—the right hon. Gentleman has no power to stop this process of décalage and to stop the introduction of a common external tariff.

Mr. Heath

If the whole negotiation falls through, of course, none of this comes into operation, but the right hon. Gentleman is presumably referring to the India and Pakistan trade negotiations—

Mr. Wilson

The Indian negotiations.

Mr. Heath

I confirmed that with the right hon. Gentleman in our last debate. Neither the Indian Government, the Pakistan Government nor the Community is looking to the negotiations to break down, because it is in the interests of both those countries to see that they are carried through, and the countries of the Community are carrying out a great investment in India and Pakistan—far greater than we are. Their interests there are very great indeed, and they have every concern to see that the negotiations are carried through.

The right hon. Gentleman asked about raw materials and, in particular, about newsprint and aluminium. We are still negotiating here, and I cannot give specific details. In particular, on newsprint and aluminium, we have asked Ole Community and the Commission to clarify the proposals which they put forward only tentatively at the last meeting but one. It is because there was no precision about them that I am unable tonight to give the right hon. Gentleman the information for which he asks.

The right hon. Gentleman asked about the processed foodstuffs and the total volume of trade. There are 24 items left for further discussion, and the overall value of these is about £22 million. For our imports from the Commonwealth, we have not reached any further agreement since the report I made in Cmd. 1882. So far, the Community has offered the slowest rate of décalage on the foodstuffs—that is on these 24 items—but we have not reached agreement upon them. They are, of course, of very great importance, and we have explained to the Community the point which was raised by the right hon. Gentleman especially in regard to canned food and dried fruit from Australia, where the interests of many ex-Service men are involved.

There is the question of Article 234. I do not think that there are any doubts about our good faith. The questions which were rightly asked were in relation to the relationship of Article 234 to the E.F.T.A. countries as a multilateral preferential area and this country's attitude towards it. That is now absolutely clear and we have reached agreement about this.

We raised the Commonwealth Sugar Agreement at an early stage in the negotiations—last spring—and put forward our own proposals for dealing with it. The members of the Community have not yet been ready to enter into negotiations upon this particular commodity.

With regard to the E.F.T.A. countries—

Mr. Gaitskell

Will the right hon. Gentleman clear up one point about which my right hon. Friend asked? It is about the tariff-free quotas. Can he say whether in general or in specific cases the quotas are temporary or permanent? What is the intention of the Six?

Mr. Heath

It depends on the type of quota. In the case of the quotas that are comparable to those on the G list of the Treaty, which the existing member States have, these are quotas that are sometimes without limit. In other cases, they can be changed only by unanimous consent, which means, in effect, that they can be without limit. The arrangements we have made for wood pulp is a List G arrangement. It is already on the List G quota, and this is a case where it is an arrangement for all supplies, and where it can be changed only by unanimous agreement. Some of the other arrangements under Article 25 of the Treaty,—and under Article 25 (3) in particular—are quotas which are arranged by the Commission. They are reviewable, but can continue beyond 1970. They can be either for full requirements or less than full requirements, so it remains to be decided in each case what the form of the quota will be.

With regard to the E.F.T.A. countries, I agree with my hon. Friend the Member for Chigwell that the possibilities of trade in these countries has been under-estimated and that we should try to increase it wherever we can. One point about association which the right hon. Gentleman for Huyton raised was that there was no gain in keeping A.O.T. status open for the Commonwealth countries. But, in fact, we expressed our view about that when the Convention was being drawn up, and it was duly taken note of by the Community.

May I say a word or two about Rhodesia in answer to my hon. Friends the Members for Newbury (Sir A. Hurd) and Chigwell. There is no question of the Federation being accorded a lower priority. I hope that my hon. Friend will reassure his Rhodesian friends about that. In our negotiations we have been in the closest touch with the Government of the Federation. We have expressed their views to the members of the Community and we are waiting to make further progress.

Other parts of the Commonwealth as well as the Federation have interests in tobacco, and the situation concerning the Greek association complicates this item. We may have to deal with that in a separate way.

I turn to agriculture. My hon. Friend the Member for Newbury asked a fundamental question about the policy de- cisions reached on 14th January. Of course, we said right at the beginning that we wished to put forward proposals in order to adapt the policy decisions taken on 14th January for the enlarged Community, and these have been in a number of respects for the regulations on the commodities which have already been dealt with. The agricultural policy is only just developing and is bound to take time to do so. We have already put in our views about the provisions put forward by the Commission for the new regulations and the Community has undertaken to take note of them.

I now deal with the points raised by the right hon. Member for Huyton. Of course, he maintains that only the two-price system can reconcile external trade with an internal agricultural policy. I do not believe this to be the case. Nor can he really quote Mr. Freeman in support of this. What Mr. Freeman emphasised was that it is the internal price—

Mr. H. Wilson

I was not quoting him on that.

Mr. Heath

—which matters when it comes to whether or not there will be room for exports. When the right hon. Gentleman praises in this respect our own policy, which we know has many good qualities, he should know what has been happening to our production with our own system since 1951–52. Our total cereals production has risen from 6,800,000 tons to 9,300,000 tons; egg production has risen from 464,000 tons to 759,000 tons. The effect has been that we have become entirely self-supporting in eggs and we do not import eggs any longer.

I am not arguing about the merits of this in agricultural policy domestically, but it shows that with our own system there is the utmost difficulty in reconciling overseas trade with our domestic production, and the key to it lies in the internal price. It is on this that we must concentrate in the agricultural policy. During the long sittings and long discussions that we had throughout July and the early days of August on this matter we tried to achieve a reasonable price policy. On this will depend whether or not there is room for external trade.

Our position here is fully known by the Community and by the Commonwealth in the agreements which we have so far negotiated. We are now discussing the arrangements for the transitional period. These again are complex and technical, and that is why the Ministerial working group is studying them with great care so that we can make progress, I hope, in the January meeting.

I hope that I have been able to answer the great majority of the questions which have been put by the right hon. Member for Huyton and his hon. Friends and by my hon. Friends. In conclusion, I should like to deal with one point. The right hon. Member for Huyton and the Leader of the Opposition have said that the Government have already frequently dishonoured their Commonwealth pledges in these negotiations. There is not one scrap of truth in those remarks. I ask the right hon. Gentleman to quote the pledges which have been made in these negotiations. The pledge is that we will safeguard the special interests of the Commonwealth. We have never given a pledge to maintain free entry.

Mr. H. Wilson

You have.

Mr. Heath

We have never in these negotiations given a pledge to maintain free entry.

Mr. Wilson

You gave it in the House.

Mr. Heath

I gave no pledge of any kind—

Mr. Wilson

The Prime Minister gave it in the House.

Mr. Heath

No.

Mr. Wilson

Certainly.

Mr. Heath

I am not referring to the Free Trade Area negotiations or to that period. I am referring to pledges given in these negotiations. Only when the negotiations are concluded will the right hon. Gentleman be able to decide whether or not we have safeguarded the special interests of the Commonwealth. I assure the House that it is our determination to continue the negotiations and to bring them to success.

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

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