HC Deb 07 December 1972 vol 847 cc1752-67

7.17 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Anthony Royle)

I beg to move, That the European Communities (Definition of Treaties) Order 1972, a draft of which was laid before the House on 22nd November, be approved. Under the terms of Section 1(3) of the European Communities Act, treaties entered into by the United Kingdom after 22nd January, 1972 cannot be regarded as Community treaties as defined in the Act unless they are specified in an Order in Council. The draft of such Orders in Council must be approved by resolution of each House of Parliament. An Order in Council under Section 1(3) of the Act may specify any number of treaties entered into by Her Majesty's Government. The House may agree that it is most economical of parliamentary time if several treaties are dealt with in one order rather than that there should be a separate order for each.

The present order is the first Order in Council to be introduced specifying Community treaties under Section 1(3) of the Act. The only major treaties which have been entered into by the United Kingdom in a Community context since 22nd January 1972 and which Her Majesty's Government propose should be included in the schedule to the present order are the European Coal and Steel Community agreements which were concluded with Austria, Iceland, Portugal, Sweden and Switzerland, together with an additional agreement concerning the validity for Liechtenstein of the agreement with Switzerland.

The English texts of those agreements were laid before the House on 16th November. They were signed in Brussels on 22nd July 1972 and will enter into force on 1st January 1973, provided that all parties have notified completion of the necessary procedures by that date. Otherwise they will enter into force at a later date, not later than 1st January 1974.

They were all signed by the present member States of the ECSC and the United Kingdom and the other acceding States, which will be member States of the ECSC when the agreements come into force. In the case of Austria, Portugal and Sweden, the ECSC itself also signed.

The order is straightforward. I hope that it can be approved by the House without a prolonged debate, in spite of the early hour at which it is being taken.

The ECSC/EFTA non-candidate agreements to which Her Majesty's Government are signatories are undoubtedly new treaties falling within the scope of Section 1(3) of the Act. The terms of Section 1(3) have been closely followed in tabling this draft Order in Council, which can become a statutory instrument only after it has been approved by both Houses of Parliament.

7.20 p.m.

Mr. Eric G. Varley (Chesterfield)

The Minister has come to the House on a quiet Thursday with an innocent-looking little order to ratify what some believe to be innocent-looking treaties with our ex-EFTA partners. Yet all but one of these treaties, the exception being Iceland, embody a diminution of sovereignty for the British Government and further reduce governmental control over two basic public industries.

The Minister rather complacently gave the impression that the order would go through "on the nod". Furthermore, the treaties prove what many of my right hon. and hon. Friends have contended and what the Government have persistently denied, namely, that many of the benefits associated with the EEC could have been obtained without Britain paying the full and daunting price of full membership, a price which was quantified in Brussels this week by the Minister of State, Treasury at about £250 million in the first year. So we find that customs duties between Austria, Portugal, Sweden, Switzerland and the EEC are to be phased out by 1st July 1977 on a vast range of coal and steel products. The products are detailed in the annexes to the treaties.

Those countries, without paying the price which the Minister of State mentioned, are to enjoy tariff-free trade on all these dozens of products. Britain could have had the same arrangement and I believe that we could have had it with the full-hearted consent of the British Parliament and people. However, the Prime Minister was obsessed with getting full membership. At least the treaties remove from the Prime Minister what was an obsession of his some months ago. Hon. Members will recall that famous Friday when he told the British Steel Corporation that it had to reduce its price increase at a stroke. We all know that on that particular day and for weeks afterwards he would not permit us to forget what he had done.

We believe it is right that the British Government should have control over the pricing policies of the nationalised industries. That is one of the reasons why we advocate public ownership. They can then influence the economy in whatever direction they believe necessary. An examination of the treaties shows that the Government intend to surrender even more control over the National Coal Board and the British Steel Corporation not only to the European Coal and Steel Community, which will happen in 25 days' time, but also to some of the countries mentioned in the order.

What is becoming more and more interesting, however, is what will happen when the Secretary of State for Trade and Industry, for example, comes to the House very soon to tell us about his negotiations with the European Community and with the Commission, particularly concerning the position of steel prices during the freeze period. We all recognise with some fascination the leaks that are coming out of Brussels, not all of them authoritative, I am sure. There was a report in The Times yesterday by Mr. David Cross who informatively revealed that agreement would be reached in a day or two. When these negotiations are complete and agreement is reached, the Government will no doubt heave a sigh of relief.

Assuming, however, that the Secretary of State for Trade and Industry and the Foreign Office get the European Commission and the ECSC to agree to the present freeze on steel prices, will the Minister say—

Mr. Deputy Speaker (Miss Harvie Anderson)

The hon. Member is now moving beyond the scope of the order and it would be wrong not to draw his attention to that fact, because he is now asking the Minister to go out of order in reply. I hope that the hon. Member will restrict his remarks to the order.

Mr. Varley

I had hoped to show the connection in a moment or two, Mr. Deputy Speaker. I was seeking to show that as a result of our entry to Europe on 1st January it will be necessary to reach an agreement with the ECSC. It is common knowledge that we cannot alter our prices unilaterally and that we must go to the Commission for permission. That process is taking place at the moment. Under the treaties there is also provision for the setting up of joint committees. One of the articles in these treaties suggests that there should be no public aid which distorts or threatens to distort competion by favouring certain undertakings or the production of certain goods. If we get that arrangement, we should certainly have to go to those countries for their permission too.

The treaties are categorical. Article 19 of the treaty relating to Austria, Portugal and Sweden and Article 18 of the treaty concerning Switzerland and Liechtenstein give these countries a veto over certain activities by the National Coal Board and the British Steel Corporation. The articles declare that among the practices incompatible with the proper functioning of the Agreement is any public aid which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods. This formula relates directly to the freezing of prices by the BSC which in this situation is requesting compensation for losses incurred as a result of holding down prices under the Counter-Inflation (Temporary Provisions) Act. Such compensation, which is absolutely essential and must be forthcoming, is directly prohibited under the treaties.

No doubt the Minister will claim that Article 23 of the treaty with Austria, Portugal and Sweden and Article 22 of the treaty with Switzerland and Liechtenstein provide for permission to be granted for appropriate measures to be taken if serious disturbances arise in any sector of the economy. The freeze was brought in to cope with precisely such a serious disturbance in the economy.

But there appears to be a loophole in the treaties, so we may be able to breathe freely. The Government are permitted only to take these so-called appropriate measures under conditions and procedures which are laid down in the treaties in great detail. Sanctions can be imposed in specified circumstances and the whole process is supervised by joint committees which are set up separately under each of the relevant treaties. It is necessary, therefore, to ask the Minister certain questions and to have certain replies before we assent to the order.

The treaties come into force on 1st January. Presumably the joint committees will have to convene very soon afterwards. The agreements embodying the treaties were made four months ago. Have preliminary consultations taken place with the countries concerned to ensure that the joint committees will give speedy consent to the freeze arrangements where they are affected by the treaties? What shall we do if the joint committees demand a speedy end to the freeze arrangements as they affect steel and coal? On the one hand the Counter-Inflation (Temporary Provisions) Act over-rides the treaties, but on the other hand the countries concerned can demand through the joint committees that sanctions be imposed. This raises a crucial question. How will the Government's prices policy in the post-freeze period be affected? Will the joint committees be in a position to consider this too? The question needs an urgent answer where our membership of the ECSC is concerned but we now find that we need an answer in relation to the treaties we are at present discussing.

There is another important aspect. The House was promised that within a very short time a Coal Industry Bill would be presented. Only this afternoon the Leader of the House said that there would be a statement on Monday about such a Bill and that it would be given its Second Reading before the Christmas Recess. We anticipate that it will provide the NCB with large sums of money which we consider essential for the proper functioning of the industry. We arc certainly anxious that the Bill should be introduced, and provided that it is sensibly framed we shall assist in getting it through as quickly as possible. But with the best will in the world we cannot get it on to the Statute Book before 1st January.

These treaties come into force on 1st January. They specifically prohibit any public aid which distorts or threatens to distort competition by favouring certain undertakings", and the relevant articles can be invoked. Will the Coal Industry Bill be compatible with the terms of the treaties or will there have to be included in it a clause similar to the provision which appears in the Counter-Inflation (Temporary Provisions) Act?

It is preposterous and intolerable that these questions have to be raised, and I regret that I have to raise them with a Foreign Office Minister. It would have been better had we had assistance from the Department of Trade and Industry which, as the Minister acknowledged, covers a vast range of coal and steel products. This matter has to be raised tonight because of the way in which the European Communities Act was dragooned through Parliament. The questions need to be answered and I hope that the Minister will undertake to answer them, perhaps by writing to me.

We know to our cost that a measure of control over the running of the coal and steel industries has passed from this elected Parliament to the European Commission, but under the order a measure of control over the British Steel Corporation and the National Coal Board is to be exercised by Austria, Sweden, Portugal, Switzerland and tiny Liechtenstein. That is the pickle into which this im- provident Government have got themselves with these industries. We want to know the true position and we should be grateful for answers to our questions.

7.35 p.m.

Mr. Douglas Jay (Battersea, North)

The Minister might have given us rather more information than he gave at the start of the debate. He seemed anxious that the House should not know what the Government are doing and what is going on. If that is not so, I am sure that he will reply to the questions addressed to him.

I wish to ask a formal question arising out of the order. Why is Finland not included amongst the other EFTA countries which appear to have made agreements with the European Coal and Steel Community? I know that Finland is a member of Fin-EFTA and not EFTA proper, but I do not see that that is a substantial reason for Finland not being included. Is there perhaps another agreement that has not seen the light of day here?

The substantial question that I want to ask follows from what my hon. Friend the Member for Chesterfield (Mr. Varley) said. Is the effective consequence of the order that something approaching free trade in iron and steel and coal products will be established between all the EFTA countries mentioned here and the European Coal and Steel Community, which means the EEC for the purpose of this debate?

Mr. Gerald Kaufman (Manchester, Ardwick)

My right hon. Friend is moving on from an interesting point which requires slightly more exploration. He asked why Finland is excluded. Each of the treaties names Norway as a participant, and one can only wonder what is the validity of treaties which name as a member of the European Coal and Steel Community a country which has specifically refused to participate in the EEC.

Mr. Jay

That question is for the Minister to answer, but I suppose that some future arrangement will be made between Norway and the Community. Perhaps we can be enlightened about that also.

Is the effect of these agreements and the order that free trade in the products concerned, both ways, will now be established between the EFTA countries and, in effect, the EEC? For instance, will it be possible for steel products produced in Sweden to be exported into EEC countries tariff free, as they will be from this and other EEC countries and vice versa?

If that is so, the result of the whole transaction is extraordinary. It means that all the other EFTA non-candidate countries obtain exactly the same advantages as we do in the EEC by these agreements, but that they do not have to pay any of the price in terms of contributions to the EEC budget, the restrictions of the common agricultural policy and the corruption of their parliamentary machines by the bureaucratic apparatus in Brussels.

That is an extraordinary result. Here we are looking only at iron and steel and coal products, but the same is true for the whole range of industrial products as between EFTA and EEC countries. Will the Minister confirm that over a large range of products that is the substantial result? If it is, will he explain what advantage Britain has gained compared with non-candidate countries by becoming a member of the EEC?

7.39 p.m.

Mr. John Roper (Farnworth)

I hope that it will always be possible for the House to have as much time as it appears to have tonight to debate EEC orders, particularly when they are concerned with treaties. I hope that I am right in assuming that the affirmative procedure will always be used for future treaties so that the House will be able to have appropriate debates.

My right hon. Friend the Member for Battersea, North (Mr. Jay) has referred to the agreement with Finland. I understand that an agreement with Finland was initialled at the same time as the agreement with other EFTA partners. I assume that when the Finnish Government decide to sign it, it will be possible for the House to consider that agreement in the same way as we are considering the others tonight. Will the Minister confirm that a similar agreement was initialled but that the Finnish Government have not as yet decided to sign it?

Will the House have a chance to discuss before Christmas the EEC agree- ments reached with the EFTA countries on the same day as the ECSC agreements were reached? They are in some ways more important than the treaties which we are considering today. I realise that if I pursue that point further, Mr. Deputy Speaker, I shall incur your wrath and move out of order.

Austria, Portugal and Sweden have agreed to special provisions on prices and transport rates on the lines of the ECSC system which we shall be forced to apply from 1st January unless the Government can get an exception. Article 20 of the treaty relating to Austria, Portugal and Sweden states that the Community will apply Article 60 of the ECSC treaty to pricing and transport rates. Why is Switzerland not forced to apply the pricing and transport rate systems which Austria, Portugal and Sweden have been obliged to apply? One might think initially, given its geographical position, that Switzerland was more likely to be obliged to apply the system. Will the Minister tell us why the Swiss Treaty is different from the others?

Will the Minister explain in detail the reasons for the protocols to the treaties with Austria, Portugal and Sweden? The protocols allow those countries to operate a timetable for the reduction of duties. This applies particularly to Portugal and Austria. There are fewer exceptions for Sweden. It would be helpful to know why Sweden has been allowed a slower rate of reduction in duties than those which I assume will apply to this country as we go into the full ECSC.

The Minister mentioned in moving the order that for three of the EFTA members—Austria, Portugal and Sweden—the agreements have been reached between member States of the enlarged Community, and the Community, and the country concerned. For some reason the Icelandic and Swiss agreements have been made with the member States of the Community alone and not with the Community itself. I realise that an important technical point of international law may be involved, but I hope that the Minister will explain the difference between the various treaties.

7.44 p.m.

Mr. Gerald Kaufman (Manchester, Ardwick)

If I may, I will, through the hon. Member for Norfolk, South-West (Mr. Hawkins), address a brief message to the Patronage Secretary. The Government are fortunate that Opposition Members are so well behaved and orderly that they do not intend to force a Division on the order. If we did force a Division, there is no doubt that the Government would have insufficient Members present and the order would fall and have to be debated on another occasion. The message I send to the Patronage Secretary is that he may not be so fortunate on another occasion—

Mr. Deputy Speaker

Order. We are discussing this occasion.

Mr. Kaufman

It is because of this occasion that I feel it necessary to deliver these admonitory words. It is an abuse of Parliament that an order as weighty as this, on which two of my hon. Friends, one a pro-Marketeer and the other an anti-Marketeer, and my hon. Friend the Member for Chesterfield (Mr. Varley) have asked important questions, for a Foreign Office Minister, and not a Minister who knows about the contents of these treaties, to ask the House to accept the order in a speech lasting four minutes.

The order ties our coal and steel industries hand and foot to the whims of the Prince of Liechtenstein, so that in future he will have a greater say in the pricing policy of the steel industry than Lord Melchett and a greater say in what aid can be given to our coal industry than Mr. Derek Ezrah. I regard this as utterly preposterous.

If this is a foretaste of the way we shall continue while this country is a temporary member of the EEC, we have taken a very bad way. I trust that the Minister, having introduced the order in so insulting a way—four minutes on five treaties of enormous significance—will pay some attention to the weighty questions which have been put in detail about the future of our coal and steel industries. If we cannot get that kind of courtesy on this order then, regardless of our Chief Whip, several of us will have to behave in an entirely different way when similar orders are before the House.

7.47 p.m.

Mr. Anthony Royle

I find the remarks of the hon. Member for Manchester, Ardwick (Mr. Kaufman), who is a dis- tinguished Member of this House of Commons, quite extraordinary. I came to the House 20 minutes ago and introduced the order in what I thought was a perfectly courteous manner. I explained the details and the outline of what the order did. I then sat down and listened to the extremely constructive remarks and questions of his hon. Friends, and I will in due course endeavour to answer them.

The idea that the Government are pushing through the order in two minutes is the most bizarre I have heard in the 15 years I have been in the House. We are able to sit until 11.30 p.m. to discuss the order. I am available and I am only too happy to sit here until 11.30 p.m. If the hon. Gentleman has any constructive suggestions or remarks to make, I shall be happy to sit here until 11.30 p.m.

The hon. Gentleman implies that the Government are pushing through the order and bulldozing the House. I do not see the rest of his hon. Friends sitting on the benches opposite ready to object at the way the Government are bulldozing through the order. I am delighted to see the hon. Gentlemen who have spoken, three of whom have put responsible questions to me, because they are closely interested either in the development of the Community or have views of their own. The hon. Member for Chesterfield (Mr. Varley) rightly spoke for his party in asking certain questions, and I am here to reply.

I cannot accept the suggestion made by the hon. Member for Ardwick, either that the Government are bulldozing through the order or that I have been discourteous. I hope that he will withdraw the remarks that he made in the last few minutes.

Mr. Kaufman

I have clearly upset the hon. Gentleman. I have no desire to do so. I agree that the manner in which he introduced the order was courtesy itself, but a four-minute warning about five treaties with a request that we should pass them through immediately is unsatisfactory. The last thing I wish to do is to offend the hon. Gentleman. I would choose others of his hon. and right hon. Friends to offend rather than him. I gladly give him any apology he requests.

Mr. Royle

I am grateful for the hon. Gentleman's courteous remark, but I have never asked the House to pass the order immediately or in four minutes. Indeed, as I have said, we have three and a half hours left in which to debate it and I am happy to stay here until 11.30 p.m. in order to reply.

But perhaps I can turn now to some of the questions put in the debate. This is not an innocent order. It was never intended to be. It is necessary, as I have said, following the signing of the treaty.

The hon. Member for Chesterfield expressed his strong feeling that we need not have bothered to go through the motions of joining the Community but could have remained outside and got on the bandwagon with the rest of the EFTA countries and involved ourselves with the Community as members of a free trade grouping. That is not realistic. It would not have been possible because those countries were able to negotiate these specific arrangements for themselves with the Community as a result of and in the context of enlargement of the Community with the arrival of Britain, Denmark and the Republic of Ireland as full members. The hon. Gentleman knows that it would not have been possible to have negotiated this matter in isolation.

Mr. Jay

That is a most preposterous argument. If it is possible for these EFTA countries to negotiate a free trade area agreement with a Community of Nine, it would have been just as possible to negotiate it with a Community of Six. There is no technical, economic or political difficulty about that. There is no substance in what the hon. Gentleman is saying.

Mr. Royle

The right hon. Gentleman was a member of the Labour Government who originally applied for agreement of the Community to the enlargement of the Community. I do not recall that Government applying for free trade arrangements as such. I voted with the Labour Government on that occasion. I enjoyed doing it as a staunch supporter of British entry. We voted to open negotiations to join as full members. The present Government continued the process after the General Election.

I know the right hon. Gentleman's views on this subject. But I think that there is another aspect which he did not mention. I respect his views—he has held to them for many years. But these other countries—the EFTA countries—outside the Community do not, as members of a free trade area linked to the Community, have any control or any say in the decisions of the Community. We as full members are in the position of having a say in the development of the Community. The right hon. Gentleman knows that and I hesitate to repeat it because it has been said so many times, but it is another important aspect of our entry into the enlarged Community.

Mr. Jay

The hon. Gentleman may or may not remember correctly what happened five or six years ago, but he has given no reason now for supposing that it would not have been possible for this country to have reached an agreement such as this.

Mr. Royle

The Government's view was that it was unrealistic and indeed not in Britain's interest to appear to try to be a part or to apply to be a part of a free trade area linked with the Community. We wished to be full members and thereby to play an important part in the development of the Community.

The hon. Member for Chesterfield felt that the order was in some way being bulldozed through the House. He will remember the vote which took place in October 1971 on the principle of joining the Community. The majority of 112 consisted of right hon. and hon. Members on both sides of the House. He indicated that the Government might have bulldozed the subsequent legislation through. I cannot accept that. There were very many long debates. There was a long Committee stage. The debate on Second Reading was the longest such debate that I can recall in my parliamentary career. There was another debate on Third Reading. The legislation followed the overwhelming vote in favour of the principle of British entry. There was a very large majority for entry in another place—running into hundreds. A great deal of time was devoted to the legislation, when detailed opposition came from right hon. and hon. Members on both sides of the House. It has now become an Act, and on 1st January Britain will be a member of the Community.

The hon. Gentleman also raised the question of steel prices—a fair point. There is great concern in the House about the matter. I assure him that whether I were a Minister from the Department of Trade and Industry or a Minister from the Foreign and Commonwealth Office the answer would be the same. My right hon. Friend the Secretary of State for Trade and Industry was questioned in the House on the subject on 4th December. He explained that we are involved in discussions on the matter and that a statement will be made soon. It is not for me to go any further than that at present. But I have taken the point put by the hon. Gentleman. I understand the concern which has been expressed, but we must await the statement to be made by my right hon. Friend soon.

Mr. Jay

Next week?

Mr. Royle

That is a matter for my right hon. Friend the Leader of the House. As a distinguished former President of the Board of Trade, the right hon. Gentleman knows that these matters are for the Leader of the House of any Government.

The hon. Member for Chesterfield queried the date on which the treaties come into force. I confirm that it is 1st January 1973. Any preliminary consultations which may take place regarding the freeze arrangements which he mentioned are all included in the statement which my right hon. Friend will make, and there is no need for me to cover that aspect. But the hon. Gentleman can be assured that we have hoisted his concern on board.

The hon. Member for Manchester, Ardwick referred to Leichtenstein, feeling that somehow we were going to come under that Principality. I do not think he believes that. The reason for having an additional agreement for Liechtenstein is that the terms of the agreement establishing a customs union between Switzerland and Leichtenstein would not automatically have extended to the agreement made between the member States of the ECSC and Switzerland and Liechtenstein. An additional agreement extending its validity was therefore necessary. That is why specific mention is made of Liechtenstein.

Mr. Roper

Could the hon. Gentleman make clear whether the membership not of Liechtenstein but of the other countries in the joint committee to be set up between those countries and the Community will permit the governments of those countries to carry out the sort of things which my hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) suggested in relation to coal and steel policy in this country?

Mr. Royle

Of course it will not give them that opportunity.

The right hon. Member for Battersea, North raised the question of the position of Finland and Norway. I am glad he raised these points because they are important. In the case of Norway, the agreements were signed on 2nd July, 1972, while Norway was still an applicant for accession to the Community. That was before the Norwegian referendum.

The texts laid before Parliament are the texts as they were signed. It would not be correct for us unilaterally to make any changes in the documents themselves. They will, however, no doubt be scrutinised in due course by all the signatories, and amendments will be proposed to remove the references to Norway in the texts. They will come into force on 1st January, providing that the contracting parties have informed each other before then that the procedures necessary for this have been completed. Otherwise, in accordance with the provisions in the agreement, they will enter into force at a later date but not later than 1st January, 1974. It is intended to negotiate similar EEC and ECSC agreements with Norway and negotiations will begin in the new year. When this is done we shall consider the need for a further Order in Council.

Mr. Jay

It just shows.

Mr. Royle

What I have explained is the situation in relation to Norway.

Mr. Jay

Is the hon. Gentleman coming to Finland? It was Finland that I asked about.

Mr. Royle

An agreement between the member States of the enlarged ECSC of the one part and of Finland of the other part was initialled on 22nd July, 1972, but cannot be included in the present Order in Council because it has not yet been signed by the contracting parties. The right hon. Gentleman may ask why it has not yet been signed. I anticipate his question by pointing out that it is a matter for the Finnish Government and it is impossible for me as a British Minister to reply on their behalf.

Another question mainly concerned whether other treaties would call for an Order in Council. Treaties which call for Orders in Council under the second limb of Section 1(3)—that is, post-23rd January 1972 treaties entered into by the United Kingdom—must be subject to affirmative resolution. I hope that that meets the point. Treaties entered into by the Community without the United Kingdom as a co-signatory are not subject to affirmative resolution under Section 1(3) for the reasons explained during the passage of the Act.

I ask the House to accept that there is no intention by the Government at any time to bulldoze these important matters through the House. We welcome discussion on treaties and orders such as the one before us tonight.

The agreements provide for the continuation of free trade in coal and most iron and steel products between the United Kingdom and the EFTA non-candidates. In 1971 we exported about £21 million worth of these products to the non-candidates. The agreements provide a means of safeguarding and perhaps increasing this valuable trade. Moreover, they play their part—so far as iron and steel are concerned—in the creation of a wide trading area in Western Europe.

Mr. Roper

I included a number of detailed questions in my speech, particularly referring to the protocols and the reason for the slow reduction of tariff barriers by some of the co-signatories of the treaties. I realise that they are points of detail. I hope that the hon. Gentleman will be able to reply to them in some other way after the debate.

Question put and agreed to.

Resolved, That the European Communities (Definition of Treaties) Order 1972, a draft of which was laid before the House on 22nd November, be approved.