EUROPE

HC Deb 17 November 1966 vol 736 cc651-89

Mr. Speaker

May I remind the House again that there are still more than 70 hon. Members who wish to take part in this debate. Most right hon. and hon. Members co-operated yesterday—some hon. Members did not—and as a result we were able to get more Members into yesterday's debate than we might have done if hon. Members had made long speeches.

4.5 p.m.

Mr. Edward Heath (Bexley)

I have already welcomed the Prime Minister's statement that he and the Foreign Secretary are to make a still deeper probe into the question of Britain becoming a member of the European Economic Community. I have assured the right hon. Gentleman of our support for any genuine attempt to achieve this, and I repeat both that welcome and that assurance now.

During the last few days we have heard from Ministers a complete change of words. I must confess to the House that this has been music in my ears. Things which were wholeheartedly damned during the previous negotiations, and in the intervening years, and, indeed, right up to a fortnight ago, are now tolerable, and at times almost attractive to the Treasury Bench opposite.

The Community, I am delighted to know, is now found to be outward-looking. It has been discovered that, after all, it does a considerable amount of trade with Eastern Socialist countries. This is very welcome. The association of the African and West Indian Commonwealth is not now a great colonial plot, but is helpful to all the developing countries. I think that one can sum it up by saying that what, five years ago, was about to be abject surrender has become at least a merchant adventure. All of this is welcome. How much sweeter the words would have been five years ago, but I am grateful for them now.

I think that the Government still have some way to go, and I should like to deal with three things. I do not propose to try to cover all the ground. I just want to address myself to certain points. I must confess to the Prime Minister that I found the speeches of Ministers yesterday somewhat lacking in reality. I had a feeling that over the House there hung an atmosphere of scepticism, and I am sure that it is the desire of the Prime Minister and his right hon. Friends to dispel this.

I think that there are two reasons for it. First, that the Ministers who spoke yesterday showed some lack of understanding of the real nature and purpose of the European Economic Community with whom they wish to negotiate. Secondly, because Ministers have so far refused to discuss publicly the policy of the French Government and the President of France. This is the key to the whole situation this time, as it proved to be last time. I was interested to hear the Prime Minister say that he would touch on this in passing when winding up the debate tonight, but I hope, for the reasons which I shall give, that he will touch on it in considerable detail.

The third thing which I should like to do is to put forward a programme which I hope the Government will follow in the path on which they have now embarked.

May I, first, say something about the European Economic Community. I have used the somewhat cumbersome word "Community", because the Community is so much more than a market. I have constantly felt that the phrase "Common Market" under-estimates and undervalues the Community, and, for this reason, tends to mislead those who have to deal with it. These countries are living and working together, and have made common rules and regulations to cover the whole sphere of their economic lives.

My right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), as he has so often done in the past, called attention to the question of sovereignty which arises from this, and I believe that he does so quite rightly. We have differed in the past, and no doubt we shall differ again today about it. Those who say that the British people must realise what is involved in this are absolutely right. There is a pooling of sovereignty. Member countries of the Community have deliberately undertaken this to achieve their objectives, and, because they believe that the objectives are worth that degree of surrender of sovereignty, they have done it quite deliberately. Why? Because the original organisations, such as O.E.E.C., which did not involve the surrender of sovereignty, did not produce the answer that was required. They did not produce prosperity, economic growth, or the political purpose that those who created the Communities wanted.

It is important that we should frankly recognise this surrender of sovereignty and its purpose. I, together with most of my hon. and right hon. Friends, have always made it plain that we should approach this matter in the same way. Is it valuable enough for us to go into the Community and be prepared to make the required surrender of sovereignty? This is all set out in detail in the Treaty of Rome, and is governed by that Treaty. I believe that it is worth while.

I want to touch briefly upon the question of the agreement which was arrived at at Luxembourg last February among the members of the Community. This is in the minds of Ministers when they talk about the position of sovereignty or the position of the E.F.T.A. countries. The French position was quite clear, namely, that very important matters ought to be agreed unanimously. That does not alter the fact that the Community, in its life today under the Treaty of Rome, is carrying on its work by qualified majority voting. This is now going on, and we should recognise that, because that is how the members of the Community make their decisions at the moment. When we surrender some sovereignty we shall have a share in the sovereignty of the Community as a whole, and of other members of it. It is not just, as is sometimes thought, an abandonment of sovereignty to other countries; it is a sharing of other people's sovereignty as well as a pooling of our own.

As for the question of the nature of the Community, its members have set up, under a framework of law—the Treaty of Rome—certain characteristics which they believe to be essential to it. This is fundamental to any negotiation carried on with the Community, for the reason that its members believe that those characteristics are essential to its future success. Although they will in some cases welcome new members they do not believe that the advantages to be gained from new members outweigh the difficulties or justify changing the nature of the Community as they have created it. That is certain. If we are to negotiate with the Community, we have to accept this fact.

This leads me to the statements so far made with regard to a number of items. I am certain that the members of the Community regard as essential the Treaty of Rome and the Protocols in their present form. They believe that the common external tariff, as a tariff structure, is essential to them, as well as the abolition of internal tariffs. They believe that the common agricultural policy, as it has been created, is essential, as is economic union and the rules and regulations governing the whole economic life of the Community. As they regard this structure as essential they expect new members to join the Community as it is, with that structure intact. They do not believe that it is justifiable to alter it.

This, again, is fundamental to the present Government's position, and their approach. This view is not just the view of the French Government; it is also the view of the Five, and of the Commission in Brussels. Therefore, the first part of the Government's programme—perhaps the Prime Minister does not wish to do it now—after his visits, if he still wishes to go ahead, should be to announce that the Government accept these features of the Community and are prepared to work with a Community of this nature.

The Prime Minister mentioned the creation of a technological community. I fully accept that we have much to contribute technologically, but Signor Fanfani and others have already put forward a similar proposal for N.A.T.O., and this is welcome. But we must recognise that we are now in a state in which the Six are prepared to fuse the Executives of the existing three Communities. It is, therefore, unlikely that they will wish to create a fourth community of the kind that the Prime Minister has put forward.

The position taken up by the Foreign Secretary—that if the Government accept the basic nature of the Community they are giving away a negotiating position—is a false one, for the reason that I have tried to explain. If anybody is going to join the Community he must accept it as it is. It is not a question of bargaining in the market and saying, "Will you alter this?", or, "If we give up asking you to alter this we expect something in return". The plain and hard fact is that negotiations do not begin unless we accept the nature of the Community.

What is more, we ourselves accepted it in the last negotiations. In a graphic phrase in his speech at the Guildhall the Prime Minister said that he was setting out on uncharted seas. In fact, these seas are just about the best charted, in international diplomacy, of any item in the post-war world. What we have to know is how to read the chart. That is the important thing. I hope that the Government will be prepared to look at the question from this point of view. There is nothing to be lost by saying firmly and unequivocally, "We accept this framework and structure of the Community", as we accepted it. Europe will certainly not expect this Government to go back on the position that we reached then.

We accepted the Treaty of Rome unequivocally. We accepted a common tariff, and said, "We are prepared to go straight in at the level which you have got at the moment". That is no longer the position. We accepted, at the beginning of the negotiations, a common agricultural policy—because none of it then existed—but as the negotiations went on, and the common agricultural policy began to take shape, we accepted the common agricultural policy. So that stage was already passed in the last negotiations.

We accepted economic union. We went through all the regulations, and found that there was not one to which we had to ask for exemption. That might not be the case now, but it was the position then.

Mr. J. J. Mendelson (Penistone)

The right hon. Gentleman keeps on saying, "We accepted". Did not he realise at the time that even if General de Gaulle had not introduced his veto at the end there was no majority in this House for what the right hon. Gentleman was negotiating for at that time?

Mr. Heath

That is no doubt a matter of opinion. In my view there was.

I urge the Government to take up this position, and when they have done that to enter into discussions about the very large area which still remains for negotiations. Having taken up a firm and unequivocal position about the Community, their chances on the negotiable part are very much greater than they would be if they question the basic structure of the Community.

What are the paths on which there should be negotiation? There are all the transitional arrangements. I hope that the Government will be realistic about these. The Government know the length of time it took the members of the Community to make their changes, and that it is unlikely that they will be prepared to work on the basis of the treaty when their own time was so much shorter than the treaty. If we are going in they will want us to be a full member, without additional barriers to Britain or the other E.F.T.A. countries, at the earliest possible moment.

On the common agricultural policy, it is necessary to supplement it, and that is a field for negotiation. We supplemented it by the creation of a price review for the Community as a whole. The long-term assurances have been most desirable, in everybody's interest. It is difficult to negotiate a regulation based on the supply-demand position from outside the Community, because we have to convince many people about future forecasts. What is essential is that there should be machinery existing in the Community to adjust for the whole agricultural field, if it becomes necessary, when new members join. This is the important thing—to see that the machinery is there and can be used to the full and to make all the adjustments which from time to time are required for agriculture.

I return to the question of unanimity of action. In reference to the Luxembourg Agreement, the President of France has stated that this means that all the agricultural regulations, including those relating to prices, can be altered only with unanimity. The Prime Minister and others will know that, very often, the French Government are critical of the present level of prices, but the enforcement of unanimity means that the German Government also have the right to keep prices high so long as they want to do so. I hope that the Government will face this fact frankly as well.

The next thing to negotiate is all the Commonwealth arrangements. I hope that, after his tour of the capitals, the Prime Minister will have not only consultation but personal meetings with Commonwealth representatives and Ministers to discuss these matters. I am sure that he realises the importance of that, and that the Commonwealth arrangements are not only for association—Africa and the West Indies, the very important Asian arrangements negotiated last time, and, of course, the arrangements with Canada, Australia and New Zealand, some transitional and some permanent. In addition, the Government could negotiate about individual tariff items if they want to do so in the common tariff and individual matters of this kind. All these negotiable areas are also governed by the nature of the Community, to which I must return.

The solutions which the Government have to work out must be compatible with that structure; otherwise, they will not be acceptable. I suppose that the classic example to give of this is the matter mentioned by the Prime Minister in his Bristol speech—the free access of foodstuffs from Commonwealth countries. What is the position here? If this were to be requested, it would, of course, mean that foodstuffs coming into this country will exclude foodstuffs coming from the other member countries of the Community because of the difference in price levels, unless, of course, the Community subsidises its own foodstuffs which come to Britain. Obviously, it will not do that. Therefore, there is a fundamental reason why it is not compatible with the nature of the Community.

The second thing, of course, is that if one country has cheap foodstuffs and the other has foodstuffs at the price level of the other countries—the economic conditions in the Community are not comparable—obviously, the industrial working costs of one would be on a fundamentally cheaper base than the others. This therefore points the reason why such adjustments as the Government want must be compatible with the nature of the Community.

I urge the Government, again, to be realistic about this. In all these negotiations I have no doubt that the Five will welcome the British Government, but I would also tell the right hon. Gentleman that he will find that they will negotiate as hard as they possibly can—rightly and naturally—in the maintenance of their own interest. Let the Prime Minister be under no illusion about that; he must be prepared for it. That will be the second part of the programme.

The third is the one about which Ministers have so far been silent and which, I believe, is the most important part of the programme in this situation. There are further measures to be dealt with, particularly with France. The first is our indebtedness to the International Monetary Fund, of which I believe £300 million to £400 million must be repaid by the end of 1967 and another £300 million by 1970. Second, there is the future operation of the Sterling Area and the future of our balance of payments.

Why are these vital matters? First of all because, under Article 108 of the Treaty, the member countries undertook obligations to each other in the case of balance of payments difficulties. This was, of course, shown in the case of Italy three years ago. These are major obligations and I am certain that we cannot know the future of any negotiations until these matters have been discussed.

The third and fourth topics in this respect are defence and political arrangements. I could not understand the Prime Minister's statement last Thursday, when he said that he did not propose to discuss these four matters during his tour of the capitals. I believe that they are the most essential part of the talks which he will have—absolutely essential and vital. Most of the answers to the earlier parts—negotiable and non-negotiable—are known already. They are on record in every Chancery of the Six and in the offices of the Commission at Brussels, but these are the all-important matters which must be dealt with.

I therefore ask the right hon. Gentle man to reconsider this matter when planning his tour. He will also have to discuss with them the position of the E.F.T.A. countries and their willingness to negotiate with them and with the neutrals—

The Prime Minister (Mr. Harold Wilson)

I should like to clear this up, as the right hon. Gentleman might have misunderstood what I said last week, which may be my fault. I agree with the right hon. Gentleman about the great importance of defence matters and most of all in the French context—of course. As he will remember, as we all know, what I was trying to say in answer to my right hon. Friend the Member for Easing-ton (Mr. Shinwell) was that I do not think that it is necessarily accepted by any hon. Member in the House that now, as compared with many views expressed three or four years ago, to join the European Economic Community automatically carries with it the implication that it will become a European defence community—the third stage of what Professor Hallstein called the "three-stage rocket of economics, politics and defence". I am not under-rating in any sense the importance of defence in the bilateral talks during the next three or four months, particularly with France.

Mr. Heath

I am glad to hear that from the right hon. Gentleman and I agree with what he said about the defence communiy. On the E.F.T.A. position, it is important that he should have a very clear view of the attitude of the Six countries and, again in particular, France, towards the member countries of E.F.T.A. and especially the neutrals.

As far as the neutrals are concerned, I would issue this warning—that the Luxembourg Agreement has not removed the problems of sovereignty from the neutrals. It does not take away from them anxieties about neutrality. At the moment, Austria has been negotiating for nearly three years and the treatment which it is receiving from the Soviet Union is quite firm on this point, and, some of us would think, harsh. The Swiss have similar problems about neutrality, as have the Swedes.

The Government have not so far given the E.F.T.A. countries—the first Secretary refused to give them—the undertaking which we gave, and to which we adhered, that the negotiations would all be completed at the same time. It may be that they are wise to do this from a negotiating point of view, but there should be a clear understanding about the future of the E.F.T.A. countries, our friends and allies.

There is one further difficulty which has now arisen about E.F.T.A., which is that, as we will have a complete free trade area from 1st January, 1967, onwards, if any country goes into the Community on its own, it will have to raise its tariffs against the other E.F.T.A. members. This is of great importance for the member countries of E.F.T.A.

I hope that the Prime Minister will also discuss very frankly—particularly in Paris—the timetable for his present talks and for the future and to inquire and receive a clear answer about when negotiations, if he wishes to proceed, can begin, We sometimes hear, "After the Kennedy Round." Will that be acceptable or will it have to wait until 1st July 1968, when the tariffs and agricultural policy transitional period is over, or will it have to wait until 1st January, 1970, when the agricultural financial regulation and the common agricultural policy is settled?

These two last matters are again of vital importance to the French Government. There was no more complicated or difficult negotiation in the whole of the Brussels episode than the one on the agricultural financial regulation. It is absolutely at the heart of the Community's life, because of agriculture and finance, and there must be a clear understanding about this in the timetable.

The Prime Minister has made it plain that he does not wish to start until the economy is strong. With that, we would agree. He said that sterling must be at least as high as it is now. It was 2.79⅛ on the day that he made his statement, which is not asking a great deal. He will recognise that those studying the economic problem very closely will not be satisfied simply with a surplus on the balance of payments with a deflationary policy at the same time. That will be limiting their trade with us. What they will want to know is how will the United Kingdom Government maintain the balance of payments when expansion begins in the enonomy. That is the real problem and question with which the Prime Minister will be faced.

I turn now to the political arrangements and defence. Again, these stem from the fact that the Community is much more than a market. After all, the Coal and Steel Community was started for a political purpose—to prevent France and German)' ever going to war again, by bringing closer together those basic industries. Mr. Macmillan, when he made his statement in the House on the opening of negotiations, said that this was a political as well as an economic matter. Those were his opening words to a very substantial part of his statement.

On 10th April, 1962, I made a long, detailed statement about the political arrangements in the Community, if we became a member. We must face the fact that this is a political matter. Where the confusion arises is in the argument whether there is to be a supranational federal superstructure. This is not a matter on which the countries of the Community are agreed, nor on which we necessarily may express a view.

What I would like to do here is to turn to President de Gaulle's position, because he has emphasised quite clearly his view that the Six is a political grouping. At his Press conference on 29th October last, only a few weeks ago, in which he made a considered statement, as he always does at Press conferences, he said—talking about his European policy: This is the keystone of our European policy, be it in our relations with Germany, our former enemy, or in our efforts for the organisation of an economic and, perhaps one day, a political grouping of the Six. This is a clear statement, which is only the last in a long line of statements at his Press conferences, that he believes in the political grouping of the Six.

Perhaps I could refer to President de Gaulle's earlier Press conference of 21st February, 1966, when he dealt with the security of the Six. He said: Taking into account the fact that they are neighbours, their geographical and, consequently, strategic position, their relations with peoples close to them, whom he specifies, their combined action in the scientific, technical, cultural and spatial fields, etc. on which the future of mankind depends, these, in our view, are the matters with which the Six must concern themselves. And the first of those is the security of the Six.

Let us recognise that President de Gaulle's view of the Six, and of European unity based on the Six, includes security, which is defence, and includes the political relationships with the other countries of the world. It is encouraging that he spells out, in the other countries of the world, the developing countries of Africa and Asia, with whom they have been closely associated. It is of vital importance in the talks which the Prime Minister will have that he should discuss with the French Government the whole political arrangements for Europe. Unless that is done I do not believe that a settlement will be reached. This is of vital importance.

Mr. E. Shinwell (Easington)

Could the hon. Gentleman elucidate a point for me? It has to do with the question of security. Is it not quite clear that what President de Gaulle has in mind, in the context of security, is not to be associated any longer with N.A.T.O.?

Mr. Heath

With great respect to the right hon. Gentleman, I think that it is much more than that, but this is one of the things which has to be found out. No one has yet found this out, and there will not be an answer to the problem of Britain's membership of the Common Market until this is discovered and settled.

After the negotiations in 1963 I said that the reason for the negotiations not being continued was a political decision. This I believe to be right. I went on to say that there was a difference of view about the future political organisation of Europe. There may be two kinds of view about Europe. One was broadly represented by the Five and ourselves and the other by the President of France and the French Government.

Largely as a result of the break up of our own negotiations, the political harmony of Europe has been damaged. The German-Franco Treaty has not worked in the way in which not only the French and Germans, but many others in Europe, hoped that it would work. As a result, Europe has got neither kind of political unity. It has not got the kind of unity which the Five were wanting and it has not got the kind which President de Gaulle seemed to want. There are now signs of disintegration in Europe which I believe are alarming.

The sort of results which we see in the Hesse elections in the Federal Republic cannot give anyone any comfort or encouragement. We see that there are also signs of disarray in N.A.T.O. These are the problems from which Europe today is suffering. The problem which now faces us is: can European unity be created, can an agreement be reached upon it? This is the big question which faces the Prime Minister in his talks, above all in Paris.

With the developing situation in Germany we may see a closer accord again between France and the Federal Republic. We may see the Franco-German Treaty beginning to work more smoothly at the top level than it has done in the past. This remains to be seen, but, if so, it is a way of moving towards one view of the political Europe which we want to create.

This brings us to the French view of defence. It has been placed on the record very clearly in relation to ourselves. On 29th October, at his Press conference, President de Gaulle said, when talking of our own negotiations: … the fact is that it"— that is, Britain— was not at the time in a position to apply the common rules, … This is his view and it states very clearly that in future the common rules have to be accepted. He went on to say: … and it had just declared in Nassau an allegiance that was foreign to a Europe which would really be one. There cannot be a clearer statement by the President of France about his views of the relations between this country and the United States, and on these questions of defence. This, again, is why it is so important that the Prime Minister should discuss these matters very frankly. From the points of view of the financial position and defence and aircraft supply, his own Government are more dependent on the United States than was the Government when I was negotiating.

This leads to the point that the Prime Minister really must thrash out this question in Paris to find out what the situation is. I agree that that involves—

The Prime Minister

I apologise to the right hon. Gentleman for intervening again. On my previous visit to President de Gaulle I went into these questions about purchases from America very frankly with him. This is not meant to be a trick question, but I am not quite clear about one thing. We want to know what the right hon. Gentleman feels about this.

Is the right hon. Gentleman now saying that, from his experience, because Britain and the Five took a different view from the French, and because the French intervention was so fundamental—and could again be so—on political and defence matters, he feels that we ought to move closer to the position of France?

Since the right hon. Gentleman mentions Nassau, would it be his position that Nassau now represents an impediment, perhaps a fatal obstacle, to our getting into the Common Market on acceptable terms? It would be useful if he could tell us how he feels that the position has changed since then.

Mr. Heath

I, too, have discussed this very frankly with President de Gaulle and the position that I am putting to the Prime Minister is that no one in the West has yet had a detailed discussion with the President of the France about the sort of defence organisation which would be acceptable to him. That does not necessarily mean that we or anyone else have to accept it, but it is at least a matter which has to be thoroughly explored, in so far as he is willing to do so.

I do not believe, as my right hon. Friend the Member for Kinross and West Perthshire (Sir A. Douglas-Home) said yesterday, that President de Gaulle wants a defence community in Europe, but I do believe that these discussions involve the question of nuclear power, the relationship between our own nuclear power and that of France and the relationship of this with American nuclear power. This means that these matters cannot be satisfactorily settled other than through very detailed discussions with the Americans. This, too, is fundamental to the whole position.

The reason I am saying this is that I believe that the whole of the future negotiations are too big to be entered upon this time unless these matters have first been settled. That is why I said that of these three separate matters I believed the second to be infinitely more urgent and important than the others which I have mentioned.

When looking at the size of the negotiations, what I felt most acutely when I was negotiating was that the fate of so many other Governments were involved in addition to that of the British Government. Already, the Governments of the E.F.T.A. countries are having to declare positions at a time which their Prime Ministers may not feel is necessarily the best time to declare them. We have to show an understanding of this from the point of view of the other Governments involved.

I would just say to the Prime Minister that there is sometimes a temptation to think that the Five can bring pressure to bear upon the President of France and that, if we negotiate successfully with the Five, he will not be able to withstand that pressure. I hope that no one is under that illusion now. Nor do I think that anyone should be under the illusion that, if we start negotiations without seeing a successful ending, and they fail, the Five will abandon France. That will not happen, because their interests are too closely bound up together.

Then we have to consider the American position. The last speech of President Johnson about Europe was an encouraging one. I should like to quote from his speech, because he has a very clear view of Europe. He said: The outlines of the new Europe are clearly discernible. It is a stronger, increasingly united but open Europe—with Great Britain a part of it—and with close ties to America. That, therefore, is an American approach of a special relationship with Europe based on the Community. That is what the President means and that involves an adjustment in our own relationship with the United States. That is fundamental to the French position, and to the whole European and American position.

I hope that the Government will now frankly discuss this matter. President de Gaulle's position is that we must accept the rules. That is the first thing. Secondly, there must not be what he terms an allegiance foreign to Europe. Thirdly, there will be political developments in which he wants the people who are members of the Six to join. If they are not prepared to join in them, it is unlikely that he will want them to become members of the Community. Finally, I believe that these changes are necessary, not only from the negotiating position but for something which is much more fundamental. It is really what Europe is all about today.

What Europe is about is redressing the balance on the two sides of the Atlantic—redressing the balance in trade, finance, defence and in political influence. What they ask themselves is: is Britain prepared to be a member of a Community which is deliberately setting out to do that, and to accept the changes in its own relationship which are involved? That is the question which they are asking, and it is the question to which this country has to give an answer.

It is happening in trade, in the Kennedy Round. I do not think that the Prime Minister quite meant to say that the Kennedy Round will be one test of the integrity of the Community, because the view which the Community takes is that the time has come to redress the balance of trade between the two sides of the Atlantic. For far too long the prairies, whether of North America or Australasia, have been able to ship their food to Europe, and European agriculture, which has been broken up through systems of land tenure, under-capitalised, under-fertilised and out of date, has been unable to compete with them. They want to see their own agriculture supported, and they take the view that this should be no longer a purely one-way traffic. That is what lies at the bottom of the whole agricultural policy, and we must recognise it. That is what is going on in the Kennedy Round.

In finance, in monetary policy, the whole purpose of French policy is to redress the balance against the two reserve currencies and, in particular, against the dollar. That is not only the French view, because it is supported by many others in Europe with considerable financial power. This is part of redressing the balance.

Exactly the same applies to defence. It is felt that there should be a European strength in defence so that, as President Kennedy himself put it, there are the two pillars in the Atlantic Alliance, one from Europe and one from the United States. The question is: is the defence policy which the President of France wishes to pursue compatible with that two-pillar approach? That is what has to be found out.

Finally, politically, Europe should be able to exert its political influence in the world as a continent, if possible. This is what Europe is trying to achieve in a very painful and hard way.

This is the reason why I believe in a European policy, because it is desirable and it is for the good of the Western world as a whole that Europe should be developed, should be strengthened, should be more prosperous, and should be a counter-balance to the other side of the Atlantic. This cannot happen at once. But Europe is thinking in those terms, and, unless we show that we are thinking in those terms we shall not be acceptable to the Europe which is developing today.

Some hon. Gentlemen opposite have mentioned the Eastern Socialist States. It may be that, in time, as their economies liberalise, they will come into a closer relationship with the European Community. I do not believe that the movement which we see at the moment is any reason for delaying our own attempts to expand the Community. Some people suggest that it is, in case it interferes with the movement of the Eastern European States. But why are they moving at the moment? They are moving because they have been attracted by the wealth and prosperity of the Community, and the Community is moving towards them with credit terms.

We might at least take credit for the fact that we ourselves did this long before the Community. I made arrangements for very substantial credits to the Soviet Union and the Eastern Socialist countries which the Americans and members of the Community themselves attacked in N.A.T.O. Now they, too, have to move towards this policy, and it shows that the policy was right, even though we ourselves can no longer do it.

Then, the Community is moving towards the developing countries. I welcome that, because I have always felt that one of the most important aspects of our negotiations was that a closer European unity would be able to help the developing countries of the world more and, in the form of the associated States and the Commonwealth countries, would be able to break down some of the barriers which the European colonial Powers themselves created. In that way, we would wipe out some of the history of the past and create a better future for those people. Those are all aspects of the development of the European Community. Above all, there are the opportunities for our own people to realise their aspirations in a way in which they are not able to at the moment.

To be able to achieve all this would be a splendid prize, and that is why the Prime Minister is right to see whether it can be done. But he will be only able to see if he carries out the programme which I have suggested to him. It will require from him and the Government courage, vision, and a preparedness to thrash out these problems which perhaps on this side of the House we have not always felt were there. If he can produce that, then he will be able to achieve this prize, and I wish him well in the doing.

4.47 p.m.

The First Secretary of State and Secretary of State for Economic Affairs (Mr. Michael Stewart)

In this debate, we are concerned with an approach by this country and by our E.F.T.A. partners to the European Economic Community. I stress that it is an approach by us and our E.F.T.A. partners. It should not be described, as my hon. Friend the Member for Salford, West (Mr. Orme) described it in yesterday's debate, as merely an operation to turn six into seven. At the recent E.F.T.A. Conference at Lisbon, we were reminded that when E.F.T.A. itself was created, it was intended to proceed to a wider integration of Europe. It was apparent, too, at that conference, that our E.F.T.A. partners were anxious that this process should now go ahead, and they regarded this country as the one which must be the pioneer in that process. That is why I am certain that it was right that this new approach should begin by consultations with the heads of the E.F.T.A. Governments.

The right hon. Member for Bexley (Mr. Heath) questioned my right hon. Friend the Prime Minister's choice of words when he said that this was an approach to be made across uncharted seas. The right hon. Gentleman said that these were the best charted of all seas. But navigators will tell him that there are sometimes changes if one's chart is not up to date. He will recognise that, since the time when he sailed these seas, some of the currents have changed, some of the rocks have changed their positions and the navigator now passes by the wreck of a previous enterprise which was not there when the right hon. Gentleman embarked on the voyage. He himself showed that he was aware of that in the section of his speech—and a most important section it was—in which he set out what he believed were the matters which my right hon. Friends must discuss when they visit the capitals of the Six countries.

It was a wide-ranging list—E.F.T.A., defence and sterling. The Government recognise that these are certainly matters that must be discussed, but I am sure that the right hon. Gentleman will agree that this debate is not the time or place to give the answers to all the questions he raised. They must be answered elsewhere because, for example, when describing what he believed to be the French Government's position on defence, he said that it did not follow that one must necessarily accept that position, and he urged that further examination was necessary to find out exactly what it was, and how it was compatible with the views of others about the security of Western Europe.

He will agree that here is certainly a part of the sea that is still uncharted, and the furthest we can get in this debate is that the Government should be reminded by hon. Members of all the considerations we must take into account, and that the Government should satisfy the House that they are aware of the relevance of these issues to the whole problem. We could not take, and I am sure that the right hon. Gentleman would not expect us to take, the further step of trying to outline now what our answers might be to questions which may be put to my right hon. Friends on these and other matters.

While one must accept that the European Economic Community—like the right hon. Gentleman I prefer that phrase to describe it—has aspects and aspirations beyond those of economics, it is in the first instance an economic community and it is with that aspect, in view of the office I now hold, that I shall particularly deal today, though not exclusively. When one examines economic aspects, one must say straightaway that the adherence of this country to the European Economic Community, whenever it occurs, is bound to impose considerable problems and strains on our economy. One may in almost all things reverse the familiar proverb and say that there is no wind so good that it does not blow somebody some ill.

There is no change so beneficial that it does not create anxieties and difficulties for someone, and it is important that we should be aware of that at the outset. For example, there is no doubt that the Community's agricultural policy creates considerable problems and strains for us. Its impact on different sections of our agriculture would vary very greatly from section to section, creating difficulties for some and greater opportunities for others. For the country as a whole, it would undoubtedly impose a balance of payments problem, and this matter was raised by the right hon. Member for Kinross and West Perthshire (Sir Alec Douglas-Home) yesterday.

The right hon. Member for Bexley and other speakers have pressed the question of acceptance of the agricultural policy, and the right hon. Gentleman laid great emphasis on the need to accept, as he put it, the basic structure of the Community. I would not dispute that one could not approach the Community saying that as a condition of entry one desired that its basic structure should be altered. But one must examine this question a little more narrowly than the use of a phrase like "the basic structure" implies. For example, on the question of the Community's agricultural policy, it will be within the recollection of the House that when the French Foreign Minister, M. Couve de Murville, was here, he said in a public statement that he thought that there were two ways in which the problem of British entry and the agricultural policy might be dealt with. One was by adaptations of that policy, and one was by transitional arrangements. He made it clear that his own undoubted preference was the second way, but he did not rule out either.

It is exactly on this point that it would clearly be unsuitable to try to argue out here what length of transitional period one thinks about, and what exact connotation one gives to the word "adaptations". These are exactly the things that must be made clearer during the process of probing which my right hon. Friends will be carrying out, and if all goes well with that, in the process of negotiation later.

The right hon. Gentleman was very anxious that we should not go in with the delusion that the Six would be prepared to make vast rearrangements of the whole structure of the Community on our account. Neither should we go in with too low a view of how far they are prepared to go to meet us. That could be almost as great an error as that against which the right hon. Gentleman warned us.

The right hon. Member for Kinross and West Perthshire asked yesterday if I could give a quantitative assessment of the effect on our balance of payments of entry into the Common Market. He has explained to me that unfortunately it is impossible for him to be here today. In answer to his question I do not propose to go any further in figures than to repeat the figure given by my right hon. Friend the Prime Minister that the impact of the agricultural policy on our balance of payments might be from £175 million to £250 million. But the moment a figure of that kind has been mentioned one must notice how many qualifications there are to it.

What will prove to be the figure in the end must depend on the date of our entry, the nature of any adaptations that may be arranged, the length of a transitional period, and world and Community prices at that time. Similar considerations arise every time one tries to express in figures what the result of entry might be. I do not believe that this is a profitable road to tread, at any rate at this stage. We shall certainly have a clearer idea later in the day of what the right figures might be, and we shall have that clearer idea in time for judgment. But it would prejudice the whole process if we tried to go into precision where precision is not to be obtained.

Mr. J. E. B. Hill (Norfolk, South)

In his estimate of the agricultural effect on our balance of payments, is the right hon. Gentleman allowing anything for the likely expansion of British agriculture which obviously would show a credit?

Mr. Stewart

Indeed, that is another factor that must be taken into account. But the hon. Gentleman will notice that the figure I gave contained a very wide margin, and it did so for the reasons I have just mentioned, the reason which the right hon. Gentleman has mentioned, and many other factors which will occur to hon. Members.

I was saying that the process of entry involves strains and anxieties, including those about the balance of payments. There is also the fact that the advantage we now enjoy in E.F.T.A. markets must be shared with a wider group of nations in the future if some of our E.F.T.A. partners come in with us. There will be tariffs on imports into this country from Commonwealth countries, there will be a loss of Commonwealth preference, and there will be the effect of our entry on certain Commonwealth countries. As was pointed out by several speakers in the debate yesterday, this is one of the things for which we must seek to provide in the process of probing and later in the process of negotiation.

The right hon. Gentleman did ask whether my right hon. Friend the Prime Minister would be having conversations with Commonwealth Governments on this matter. Certainly. There is, of course, this difference between our E.F.T.A. partners and the Commonwealth countries: that there is the prospect of our E.F.T.A. partners entering with us, and that was an important reason, I think, for beginning the whole process with the conference of E.F.T.A. Heads of Government.

I have stressed—I hope not unduly—those undoubted difficulties that would face this country, because, as I was emphasising, one purpose of the debate is to make it clear to the House that the Government are aware of the difficulties involved and to give hon. Members the opportunity of drawing the Government's attention to all the particular anxieties that exist. It will be the task of my right hon. Friends, in the probing, in the negotiations, to seek by every means compatible with the basic structure of the Community to minimise those strains and anxieties for us.

Clearly, against those strains and anxieties, one must set the very great opportunities which entry into the European Economic Community would open for our industry, for the people of our country as a whole. The right hon. and learned Gentleman the Member for Hertfordshire, East (Sir D. Walker-Smith) was dealing with this point yesterday. He admitted that entry into a market of 300 million people, as compared with E.F.T.A.'s 100 million, must undoubtedly be a great opportunity, a great advantage for many of our industries. The right hon. and learned Gentleman argued, of course, that this was not true of all our industries, that the advantage given by a larger market varies much from one industry to another. That is true; but if we look at the kind of industries in this country which are likely to benefit, we find that they are those where science is an outstanding factor, and they are those where growth is most apparent. They are industries with which the prosperity of this country is most closely connected. One could list chemicals, plastics, electronics, synthetic fibres, motor cars, computers.

I noticed that my hon. Friend the Member for Dewsbury (Mr. Ginsburg) referred to the wool textile industry, to both its anxieties and its opportunities. It was his view that in the judgment of the industry the opportunity for a greater market outweighed the fear of competition. We should notice too that we in this country have been concerned with the economic problem. How does one get firms in an industry to grow to a size which gives maximum efficiency without the danger of monopoly? When we enter a larger market it is possible to conceive of the possibilities of growth without the same danger of growth reaching to the point where the whole market could be monopolised. This problem then becomes somewhat easier of solution in a great community than in a single country.

We should notice, also, that with the greater competitive strength which can come from the better management of an industry, consequent on the opportunity of a greater market, the advantage is not merely in the opportunities we would have for sales in the countries of a larger European Economic Community alone—it would mean an accession of strength to our industries and increase the prospects of sales in world markets, and any opportunity—I say this mindful of the speech of the right hon. Member for Wolverhampton, South-West (Mr. Powell)—it would increase the opportunities of trade with Eastearn Europe. It is, I am certain, an error to assume that if we enter into closer economic relationship with Western Europe that it will of necessity, create a barrier between us and the other half of the Continent. In this matter of trade it will actually put our industries in a position where the opportunity of trade, both in Eastern Europe and in the world as a whole, is greater.

I should also refer to a point made by my right hon. Friend the Chancellor of the Duchy of Lancaster in winding up yesterday, that in technological knowledge this country is well in advance of the countries of the Common Market. This was a matter referred to recently by the Vice-President of the Commission in a speech to the European Parliament. Although we have this advantage in the field of knowledge, it is still difficult for us to find sufficient scope for the application of that knowledge. One of the opportunities created by entry into the Common Market would give us that possibility of applying the exceptional degree of knowledge which we have in this field.

I have used throughout the phrase "opportunity", because we must be clear that entry into the European Economic Community will give our industries the opportunity of greater efficiency and the opportunity of a larger market. The beneficial results do not follow automatically from entry. Entry creates the opportunity for those who have the determination to seize it.

One of the purposes of the Committee which I shall chair to keep in touch with both sides of industry on the problems which have to be considered during the process of probing will be to endeavour to assess more exactly what steps can be taken by industry to see that if this opportunity comes to us it is not thrown away.

Many speakers have rejected the idea that going into the European Economic Community is the way to solve our economic problems. It is right to reject that idea, because we have to solve those problems by our own efforts, anyway. That process will be a difficult one, requiring both exertion and discipline by us, but if we can achieve entry into the European Economic Community the reward for those efforts, the reward for that self-discipline, will be much more increased. That, I believe, is the real relationship between entry into the Community and the problem of our own economy.

I have said that there are anxieties about our entry. However, the House should notice that for every anxiety and difficulty which may arise if we enter the European Economic Community, there is the companion question to be asked: what anxieties are there, what troubles may we face, if months and years go by and we still remain outside, and Western Europe still remains divided? The argument is not complete until that question has been asked. Some hon. Members like the right hon. and learned Gentleman the Member for Hertfordshire, East, who stressed the difficulties and problems of going in, have not sufficiently asked this companion question: what is our position, if years go by and we still remain outside a great and powerful Community—becoming possibly more cohesive, and more powerful competitively—and if, during those years, because we remained outside, our E.F.T.A. partners become increasingly impatient, remembering that they themselves believe E.F.T.A. to be the prelude of a wider European integration? What happens, also, if the tendency noticeable among some Commonwealth countries to make their own approaches to the Community becomes more widespread while we stand outside? Anyone who is anxious about the consequences of going in must also be anxious about these questions.

I have spoken of an economic community, and there have been many references to the possible political future of the Community. Frankly, I do not believe that any of us at this stage can make much in the way of worth-while prophecy of what the form of tuture political relationships between the countries of the Community may be, but here, again, I think that it would be more to the advantage of this country to be inside, playing a part in the development, whatever it may be, than for that development to proceed independently of us and with ourselves able to exercise no influence upon it.

We must think of entry not only as something that imposes certain requirements upon us but as something that gives us an opportunity to influence future policy, for if it be true, as the right hon. Gentleman said, that there is a basic structure to the Community, it is also true, as my hon. Friend the Member for Dewsbury said, that the Community has been in what he described as a process of almost continuous negotiation. That must, indeed, be so as every new change in the economic sphere produces new problems for the Six to solve.

Are we to be in a position to take a part in the future formulation of policy? That, I think, is what is meant by the right hon. Gentleman's phrase "a pooling of sovereignty". I accept this phrase. It is something that we are already used to on a small scale. To some extent, every treaty we sign limits our right to handle our own affairs as though they were our own affairs and no one else's. It is true, of course, that some treaties impose very limited obligations, or obligations that can be altered or renounced after a period.

What we are now considering is a very much greater pooling of sovereignty than before. The right hon. and learned Member for Hertfordshire, East sought to alarm us by pointing out the many matters on which the Community might make regulations, but let us take certain matters which are under discussion and on which Community decisions may be made—patents, insurance and industrial standards. It is true that if, at some future date, we are a member of the Community, any regulations made on these matters in the Community will be binding on us, but what will be the position if time goes by and these important matters are settled by a great bloc of European countries, with us outside, in a manner in which we have no say and over which he have no influence? The ill effects of that on our trade, commerce and industry might be very much more onerous than any restrictions that might be imposed by the legal, formal membership of the Community, and all that it implies.

This, I think, in this whole question of sovereignty, is what we have to bear in mind. Do not let us imagine that independence of action can be secured by nominal sovereignty and separateness and independence alone. The degree of independence a country enjoys in all its economic policy is, in the main, determined by the facts. A great trading nation like ourselves cannot behave as though it were completely independent in the ordering of its economy. It is obliged to pay attention to what is happening elsewhere, and to what is decided elsewhere. It does not lie on our power to argue with that, because that is a fact. What does lie in our power is to determine how we shall come to terms with this fact that faces any great trading nation.

We can seek to come to terms with it by standing alone, by being aloof from the growth, notonly in Western Europe but elsewhere in the world of great united communities. I am not one of those who say that it would be impossible—if, despite all our efforts, we were unsuccessful—for the British people to continue to manage their affairs aloof from a greater community, but I do say that the attempt to do that would mean that the solid facts would impose on us and on our freedom of action restrictions heavier than any likely to be imposed by memberships of the Community. That is the choice we have to make. The prospect of being completely independent in fact as well as in law is not open to us or to any nation that hopes to make its living by international trade.

A number of my hon. Friends have been particularly concerned in this debate that economic and social policies we desire should not be restricted by membership of the Community. If we look at Articles 2 and 104 of the Treaty of Rome, we find set out objectives that are very familiar to us. There is the desire to maintain a high level of employment consistently with stability of prices. There is the desire to plan a continually rising standard of life. As to the process of economic planning, the experience of countries already in the Community shows that this concept is not inconsistent with membership of the Community. There are instances where certain particular methods or instruments of planning cannot be employed consistently with the rules of the Community, but the concept of planning itself is by no means inconsistent.

At one time the question was raised whether public ownership of great industries is consistent with membership of the Community, but one has only to look at the Community as it now stands to see that there is nothing inconsistent there. It is an interesting fact that when the present Government's plans for the steel industry are carried through, the resulting legal position will be a good deal more compatible with the Treaty of Rome than is the present arrangement of the steel industry. If one attempted, with the steel industry under its present set-up, to enter the Community, it would be necessary so to reduce the powers of the Iron and Steel Board that it might as well not exist. I therefore do not think that on this score of public ownership there need be any anxieties.

I suggested earlier in reply to my hon. Friend the Member for Wolverhampton, North-East (Mrs. Renée Short) that there is no reason to suppose that the bringing together of the two parts of Western Europe is in itself a barrier to a better understanding and a greater volume of trade between Eastern and Western Europe. Here, again, it does not automatically follow that the bringing together of the two parts of Western Europe would lead us to greater trade or better relations with the Eastern Europe, but it certainly imposes no barrier, and it certainly provides the opportunity for these improvements. It will be for the wisdom of statesmen to see that those opportunities are used.

In an intervention nearly at the end of yesterday's debate, my right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) hoped that we would not consider this matter too narrowly in terms of what is of economic advantage to this country. He said that there should be something further and nobler than simply being "on the make" in this matter. With that I heartily agree, even if, in view of my office, I must concentrate mainly on economic topics.

To my right hon. Friend the Member for East Stirlingshire I say two things. First, greater wealth brings the opportunity for greater generosity. It brings only the opportunity, but without the opportunity—without the resources—we cannot be as generous as we would wish to be towards the poorer sections of mankind. To try to create a greater community which will bring us greater material wealth need not be an ignoble aim in a world in which so many millions of people still live side by side with poverty and famine. I trust that if the venture on which we are now embarked is successful—if it results over the years in greater wealth for Western Europe—the obligations of greater wealth will not be forgotten.

Secondly, we must certainly accept that while the Community is, in the first instance, an Economic Community, the mere membership of it—the formulation and observance of rules on economic matters for the common good—is bound to breed among the nations concerned a greater depth of understanding and a greater exchange of ideas in every sphere of human knowledge.

If one looks at the wide range of topics now discussed at the Council of Europe, one realises that there is bound to be a greater approach to common understanding on these matters. This is inevitable in the process of history because, despite their many wars and conflicts with each other, the nations of Europe still have a great deal in common. Ever since the dismemberment of Europe with the fall of the Roman Empire, the nations of Europe have been fumbling in one way or another to try to get greater unity among themselves. If there is any lesson we can discover from history, it is that if the solid facts require a change of some kind to be carried out, and if the right way of carrying it out is not found, then evil, violent and ugly ways of carrying it out will emerge and various ways have been tried; the grandoise, fantastic structure of the Roman Empire, the harsh militarism of Napoleon and the appalling cruelties of Hitler.

We, our E.F.T.A. partners, the countries of the Community, now have the opportunity of finding a way, less grandiose and less spectacular, but more practical and humane, of achieving greater unity, which might include, in time, the possibility of an approach to and better understanding with Eastern Europe.

5.24 p.m.

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

Yesterday, my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) gave his views on the constitutional and political aspects of Thursday's announcement by the Prime Minister. As I agree and endorse every word he said, I will restrict my remarks to the economic aspects, although I am tempted to deal with the despairing passage in the First Secretary's speech when he said that Britain had no hope unless we joined in the political union of Europe.

Mr. M. Stewart

The right hon. Gentleman must not misrepresent me. I was careful to say that I did not believe that it would be impossible for us to stand alone. I said that there would be great difficulties and that our freedom of action would be restricted. However. I did not say that it would be impossible, or that there would be no hope.

Mr. Turton

I had to give way to the right hon. Gentleman, but, since many hon. Members wish to take part in the debate, the fewer interventions there are the better.

Looking back to previous debates, when the present Prime Minister made certain observations on the economic argument I found myself in a great deal of agreement with him. But that was in the past. I therefore ask the Prime Minister to deal, when he replies tonight, with certain points which have disturbed me about what appears to be a change of view and policy on his part between 1961 and 1966.

For example, I begin with the right hon. Gentleman's observations made in the debate in August, 1961, when he said: The Common Market, whether we are inside or outside, is restrictive in intent". Is that the right hon. Gentleman's view today? He went on: … if joining the Common Market means a reduced ability to trade with the Soviet Union or other Eastern European countries, or China, I submit that this will be detrimental to our economic welfare and to the prospects of full employment…"—[OFFICIAL REPORT, 3rd August, 1961; Vol. 645, c. 1665.] It is no wonder that the hon. Lady the Member for Wolverhampton, North-East (Mrs. Renée Short) feels some consternation at what appears to have been a complete change of opinion on the part of the present Prime Minister.

But surely that is dealing only with exports to those countries, which last year, amounted to £141 million. I am deeply concerned about what effect joining will have on our exports to the Commonwealth, the sterling area and the United States, which, last year, amounted to £2,404 million. If the present Prime Minister thought, in 1961, that the effect of joining, owing to the restrictionist character of the Community, would endanger employment as a result of lack of trading with Eastern Europe, what will the effect be if we are shut out from exporting to this wider area outside Europe?

Certainly, times and views have changed since 1961. My right hon. Friend the Leader of the Opposition, in an extremely able speech, explained some of the changes. One of the great changes is that in 1961, rightly or wrongly—I thought wrongly—the then Government were negotiating from a basis of full employment. Any negotiations now will be taking place at a time when unemployment is rising, to the concern of all hon. Members.

There have been great changes in Europe. In 1961, the Community, had strong Governments and they were at the height of their power. Today, there is hardly a Government in West Germany, the Governments of Holland and Belgium are weak and even the Government of France is expecting a general election next year.

The Prime Minister

There is one point on which the right hon. Gentleman should not go unchallenged, although I could challenge much of what he said. It is that he will surely remember, when he refers to unemployment, that the very month in which the negotiations were broken off, in 1963, was the post-war peak for unemployment in Britain. In other words, if one ignores the freeze-up in 1947, it was the highest level that this country had seen since the war. It is, therefore, wrong for the right hon. Gentleman to draw the contrast which he drew.

Mr. Turton

I do not believe that it will be the highest level. What about this coming winter? In any case, I was referring to the negotiations in 1961, at which time the right hon. Gentleman made the speech from which I quoted.

My right hon. Friend the Leader of the Opposition referred to other changes. A common external tariff is well towards implementation. A common agricultural policy has been worked out after many hours of burning the midnight oil. That is fixed and cannot be changed. This makes the whole pattern of our negotiations and the whole problem of it even harder than before. We should be trying to come into a community of competitive economies at the same time as we were erecting tariff barriers against our former trading partners who have complementary economies.

This country lives a great deal on what we get, not from Europe, but from the countries in the Commonwealth, the sterling area, and North America. Last year, we imported £1,700 million worth of food and drink, principally from the Commonwealth and the sterling area. What is to happen if we erect a common external tariff against them? There will be diversion from the Commonwealth and the sterling area into Europe. The Prime Minister, last week, gave us his estimate of what would be the cost of that diversion to our balance of payments. He put it at £175 million to £250 million, and put it in terms of a rise in the cost of food from 10 to 14 per cent. I believe that these are gross underestimates.

I give the House one example. It has been worked out by the agricultural statisticians that if we put a common external tariff on our imports of feeding-stuffs that in itself will cost £100 million for that one item. But, accepting the Prime Minister's figures and putting the rise in the cost of living, not at 14 per cent. but 12 per cent., that, as the hon. Member for Wolverhampton, North-East mentioned yesterday, means a rise in the cost of living of 25s. a week for every family of four in this country. That will be very hard on those living on fixed incomes and for old-age pensioners trying to scrape a living on under £7 a week.

Mr. Stanley Henig (Lancaster) rose—

Mr. Turton

I hope that the hon. Member, who has been notable in his occasions of rising, will eventually rise successfully to make a speech.

That is the effect on the cost of living. I hope that the Government will make quite clear to the people of this country what will be the effect on our former trading partners, in particular, Australia and New Zealand.

This is no small matter, quite apart from the matter of sentiment which I, and I know hon. Members on both sides of the House, hold strongly. Our exports to Australia and New Zealand amounted to £400 million last year. The Deputy Prime Minister of New Zealand, speaking last Tuesday, said that Australia had plenty to fear from Britain's proposed entry into the European Economic Community and the outcome of the Kennedy Round of tariff cutting negotiation. He went on to say that he had always been sceptical of the outcome of assurances by British Ministers that they would join the Common Market only if Commonwealth interests could be safeguarded.

I interrupted the Foreign Secretary yesterday because I was disturbed that although we are inviting to this country the Heads of Governments of the E.F.T.A. countries, we are consulting with the Commonwealth—as I learned from the First Secretary of State—only after the Prime Minister and Foreign Secretary have had their tour of Europe. Surely, in view of our close association with Australia and New Zealand, after we have seen the Heads of Government we should ask the Australian and New Zealand Prime Ministers if they would come.

We are talking about the safeguarding of these interests. What form will the safeguard take? I listened carefully to the First Secretary of State. I hope I have not again got him wrong, but he appeared to be talking merely of transitional arrangements. We ought to be making permanent arrangements in our negotiations for the benefit of both Australia and New Zealand. I hope that the Prime Minister will not forget the words that he used in the House of Commons on 1st August, 1962. He said: There are two main issues to be dealt with here. The first is the ultimate settlement, the position of Commonwealth imports after 1970". He went on to say: We have said repeatedly … that no amount of temporary relief will solve the problem. This is not a problem for some kind of European national assistance board. What matters is the position of Commonwealth trade and Commonwealth imports after 1970, and we shall judge the outcome of the negotiations by what these things look like after 1970 and not by the means of temporary relief that might be introduced between now and 1970."—[OFFICIAL REPORT, 1st August, 1962; Vol. 664, c. 706–7.] I hope that when he replies tonight the Prime Minister will state quite clearly whether he has changed his view on the question of whether Australia and New Zealand should have temporary or permanent relief.

Let us see where we stand. I agree, and I have always agreed, that Britain can never dissociate herself from Europe. I also agree that Britain requires a larger market for her competitive economy. Both the hon. Member for Colne Valley (Mr. Richard Wainwright) yesterday and the First Secretary of State today, said that it is no good those of us who have our doubts speaking without giving some hint of an alternative. I draw the attention of the House to a speech that was made in London on 3rd October by Dr. Danielian, the President of the International Economic Policy Association. He said: In the years since 1962, the advantages of Great Britain going into the Common Market have always eluded me, particularly from the U.S. point of view, and even from your vantage point. He went on to say: We propose … that serious consideration be given to the organisation of an Atlantic Free Trade association among the United States, Canada, the United Kingdom and other E.F.T.A. countries expanding … to include Australia and New Zealand…. On 15th October the Washington Post said, in a leading article: Why not a free trading bloc that in addition to the free North American countries, includes Australia, New Zealand, Japan and, if possible Britain and her fellow members of the European Free Trade Association? While we are debating this issue in the House of Commons, this week in Montreal the Canadian-American Committee sponsored by the Ford Foundation is considering this very proposal of an open-ended free trade arrangement embracing the United States, Canada, Britain and other E.F.T.A. countries. In that report it is said that they had some doubt whether Britain could be included in this consideration because of the Prime Minister's announcement last Thursday.

What I would like the Prime Minister to do when he replies tonight is to make clear what is Her Majesty's Government's attitude to these proposals and how far his attempts to enter the Community will preclude some extension of European free trade to the Commonwealth and the Atlantic areas.

The greatness of this country has been built on free trade and preferential trading with the Commonwealth. The whole of our invisible system of exports has been geared to that trade with the Commonwealth and the sterling area. That is how Britain, in the past, has maintained her credit and her balance of payments. Therefore, we are vitally interested in the success of the Kennedy Round in the G.A.T.T. As I see the position, if the Kennedy Round fails we must, as a country, take immediate steps to extend our area of free and preferential trade and not, on the other hand, try to creep into a protectionist community. If the Kennedy Round succeeds, the advantages of going into the Community, which those who disagree with my point of view are advocating, will become minimal.

That is my summing up. What I was struck by in the speech of the hon. Lady the Member for Wolverhampton, North-East was her account of how arguments against the negotiations had not received very much publicity in the country. She talked of brainwashing. I would not use that ugly term, which is rather connected with Eastern Europe. I have always been surprised at the amount of financial effort which has been devoted to promoting the advantages of going into Europe, without putting the other point of view.

The House should be told the facts. I ask the Government to publish a White Paper in the near future setting out clearly, so that the ordinary people of this country can understand it, setting out the relative advantages and disadvantages of Britain entering the Community. I give my warning. I believe that, if Britain goes into the Community under the conditions that I envisage will be offered by the Six, it will do great harm to our economy and that we will take a very long time to recover from it, if we ever do. I believe that the approach of the Prime Minister as demonstrated last Thursday was born out of a sense of desperation or defeatism as a result of the failures of his economic policy, or, if it was not that, was it a sense of political opportunism as a result of the speech of my right hon. Friend the Leader of the Opposition at Harrogate on 5th November?

I believe that it is badly timed. I believe that until what happens in the Kennedy Round is known the advantages or disadvantages cannot be assessed. Until what will happen in Germany is known, and until what is happening generally on the Continent is fully understood, I believe that it is unwise for Britain to take this step. I believe that this approach shows a lack of appreciation of Britain's rôle in the world and a lamentable failure to seize the opportunities presented by greater links with our partners in the Commonwealth, our partners in the European Free Trade area, and with our allies across the Atlantic.

5.45 p.m.

Mr. E. Shinwell (Easington)

Usually when I venture to address the House I find myself in disagreement, indeed sometimes in violent disagreement, with the other side of the House. On this occasion I am in disagreement with both sides, with the qualification that my disagreement applies primarily and fundamentally to the Front Bench. If it is any consolation to my right hon. Friend the Prime Minister, whose absence I understand and who, no doubt, will hear my views at a later stage indirectly, it will in no way diminish my loyalty to the Government.

Governments make mistakes. This is an error of judgment. Moreover, it will not succeed. There are too many difficulties and obstacles in the path. Some of them were indicated by the Leader of the Opposition. Though I frequently am at loggerheads with the Leader of the Opposition, that in no way detracts from my appreciation of a speech with most of which I disagreed but which was one of the best speeches the right hon. Gentleman has ever made. Much as I disagreed with the right hon. Gentleman several years ago when he was engaged in negotiations on the matter of association with the European Economic Community, I never for a moment doubted his sincerity and integrity.

This is a strange debate. It is a very strange affair indeed. There is a variety of oscillations, reservations, qualifications, doubts, queries. There is a good deal of confusion, except in the case of those who are ready to sign on the dotted line and accept the Treaty of Rome with all its implications—economic, political and defence. Some hon. Members opposite, and some hon. Members on this side, are fanatical and hysterical Europeans. I do not say that in any spirit of rancour. They have been engaged in a vigorous campaign over many months, supported by vast funds not at the disposal of the anti-Common Marketeers. We have not a penny to bless ourselves with; but we have something more valuable; we have a case.

I fully understand the need for concentrating in this debate on as few items as possible, because many of my colleagues and many hon. Members opposite wish to speak. There is one matter to which I wish to refer, and it was mentioned by the right hon. Member for Thirsk and Malton (Mr. Turton). I refer to the need to demonstrate adequately, fully, conclusively, so far as practicable, what is involved in association with the E.E.C. Indeed, the Leader of the Opposition pleaded that the public should be made knowledgeable of all that is involved in our association—our proposed association. That is what the right hon. Gentleman said, and I agree with him.

I noted yesterday, when my right hon. Friend the Foreign Secretary was addressing the House, in a speech which was irreproachable, except in parts, he consoled himself, in spite of all the reservations, qualifications, queries and the like, with the public opinion polls on the subject. He said that a public opinion poll demonstrated that a substantial majority of the people of this country are ready to enter the Common Market.

This morning—I provide it with a gratuitous advertisement—the Daily Telegraph shows the result of the Gallup Poll, and one finds there the question which was addressed to the general public. For the edification of hon. Members, I shall recite it. Everyone wants the facts, and here are the facts. The question was: If the British Government were to decide that Britain's interests would best be served by joining the European Common Market, would you approve or disapprove? I make the suggestion, without hope of fee or reward, a suggestion which, no doubt, Dr. Gallup will take into account, that the question should be phrased rather more adequately.

For example, when a housewife is questioned by one of these expert interrogators on the subject of our entering the Common Market, the interrogator might mention that it is not at all unlikely—I am fortified by the Prime Minister's statement and by many others on this—that the price of food will go up. [An HON. MEMBER: "Fourteen per cent."] Who can tell?—12½ per cent. or 15 per cent.—but it will go up in our association with the Common Market. I should like to hear what the housewife would say to that.

I can imagine the interrogator going to a market town on market day and asking the farmers whether they are prepared to associate with the E.E.C. and mentioning, in passing, in a somewhat subdued tone of voice, of course, that our agricultural system will have to be completely reorientated. I hope that that is the correct description. Some farmers use another term. I should like to hear what the farmers would say to that.

In searching for an adequate answer to the question, "Should we associate with the Common Market?", the interrogator might address himself to some of the many unemployed in the Midlands of Britain. I am not raising a political issue here or in any way condemning the Government. I merely mention it in passing as an illustration. If some of the unemployed were asked, "Are you prepared to enter the Common Market", and they were then told that there was to be free movement of labour, which, presumably, means that unemployed workers in Italy or elsewhere on the Continent could enter this country without any restriction, although, on the other hand, Commonwealth subjects cannot enter without restriction and even Australians have to seek a work permit, I wonder what their answer would be.

Some of my Left-wing friends—I mean no offence—are anxious to go in, ignoring the rigidity, the tightness and the discipline of the E.E.C. to which the right hon. Gentleman the Leader of the Opposition referred today. Do they understand that there would be no question of abstention? Let it be noted that above the portals of the E.E.C. there is inscribed, "Abstainers abandon hope". I could pursue this matter at great length, but I forbear except to say that the public are entitled to be told what this involves. Even the intellectuals on this side of the House, for whom I have great regard and who have taught me a great deal since I left school at the age of 11, might use the opportunity to inform their constituents at the wayside and on the doorstep what association with the E.E.C. really involves. Let them state the facts and not be coy about it.

I come now to the question of the political objective. My right hon. Friend the Prime Minister has returned to his place. Perhaps I may tell him that I reminded the House earlier that he could console himself with the knowledge that, although I disagree with what I regard as an error of judgment on this occasion, he has my full support on every other subject. But the other day, when I ventured to suggest that we should have an assurance that, if we entered the Common Market or engaged in negotiation with de Gaulle or anyone else on the Continent associated with the European Economic Community, there would be no question of proceeding any further than an economic arrangement, an arrangement on trade, tariffs or what have you, and that we would not proceed in the direction of a supranational Government and a European Parliament, my right hon. Friend said that that never was contemplated. I remember what he said, and it is in HANSARD. I have no notes with me to fortify my contention, but reference can be made to it. My right hon. Friend said that it never was contemplated and it is not contemplated in these negotiations.

The House heard what the right hon. Gentleman the Leader of the Opposition said today—