EUROPEAN COMMUNITIES (DEVELOPMENT)

HC Deb 17 June 1976 vol 913 cc767-884

[Commission documents: Commission Report on European Union (RI/1815/75),s Greek Application—Commission opinion (S/227/76), Textile Imports—EEC/Macao (S/334/76), Textile Imports—EEC/Korea (S/383/76), Textile Imports—EEC/Malaysia (S/504/76), Textile Imports—EEC/Singapore (5/384/76), Textile Imports—EEC|Japan (S/644/76), Financial and Technical Aid to Non-Associated Countries (S/438/76), Arrangements for the Community Imports of New Zealand Butter (Unnumbered), Food Aid Programme in dried skimmed milk (R/534/76) and Ministry of Overseas Development Report on Food Aid (Unnumbered).]

4.38 p.m.

The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley)

I beg to move, That this House takes note of the Report on Development in the European Communities, November 1975-April 1976 (Command Paper No. 6497).

Mr. Deputy Speaker (Mr. Oscar Murton)

Mr. Speaker has selected the amendment in the name of the hon. Member for Southampton, Test (Mr. Gould) and other right hon. and hon. Members.

Mr. Hattersley

The six months covered by the White Paper we discuss today have been widely represented as a period of failure for the Common Market. In fact, the problems of that period have been grossly exaggerated. Inevitably, they have been overstated by those who looked for stagnation, hoped to see disintegration, and chose to describe disappointment as if it were disillusion. That we must face as bravely as we can. More important, the difficulties of 1976 have been magnified by some of the Community's most passionate supporters, who have continued to expect the EEC to achieve unrealistic goals at unreasonable speeds, and who despair when their aspirations have proved unattainable. In fact, over a wide range of practical policies the Community has made progress.

Let me give one example. The Regional Development Fund made its first grant during the first month covered by the White Paper. By April, commitments to Britain from the fund totalled more than £56 million. This assistance is being used for industry as well as infrastructure—for die casting machines at Pontypool, for an access road from the A96 to the Dyce airport industrial estate, for the construction of sewers in County Antrim, and for chemical production in the East Midlands. I admit at once that that is not part of the grand design for European unity. But it is a real practical benefit of British membership, which seems to me to be a great deal more important.

Certainly during the last six months there have been areas where we might have proceeded at greater speed—notably in the organisation of direct elections. But even there, the success of the Community should not be judged by its ability to move as rapidly as the Community's most passionate ideologues believe to be right.

We cannot be either guided or judged by those who see the EEC exclusively in terms of the heroic vision. In my view, they do the Common Market cause no service. Their unhappy habit of setting the Community impossible goals began in Paris in the autumn of 1972, when the European Summit committed the EEC to monetary union by 1980. No doubt they intended to add an extra impetus to the drive towards an integrated Community. In fact, they did much damage to the Community's morale and reputation.

Attempting the impossible is a certain prescription for failure. The Community will not be revitalised by eloquent declarations. Its real success will be measured by its achievements on behalf of the citizens of the Community. That is a practical—indeed, perhaps a prosaic—test. But it is the one the Government intend consistently to apply. It is against that criterion that the last six months must be judged. Our judgment is that there has been no spectacular progress but much important work.

By the establishment of that criterion I do not intend to minimise the need to make progress on the institutional reforms with which the White Paper deals in Section XII. But they have to be practical and desirable institutional reforms

The Commission's Report on European Union does not come into this category. An amendment has been proposed to the motion before the House today, calling on the Government to disagree with the Commission's report on European Union. This report was one of those which the institutions of the Community were asked to submit by the end of June last year, so that the Belgian Prime Minister could take them into account in the preparation for his report on European Union. The Commission's report sketched out a frankly federalist view, which we, the British Government, regard as wholly unacceptable. For that reason the Government are, therefore, perfectly willing to accept the amendment tabled on that subject.

Direct elections and the Tindemans Report, on the other hand, raise issues of practical reality and crucial importance. The House debated direct elections in March. Following that debate, a Select Committee was set up to examine the whole question. Within the Community there is still considerable dispute about how and when direct elections should be organised. But we hope that before the summer agreement will be possible on at least the major questions of the Assembly's size and the distribution of seats among the member nations.

On these matters Parliament is bound to have the last word. Direct elections cannot be held in Britain until a Bill has been passed by the House, but we, the Government, are anxious for Parliament to possess a more creative influence than the simple right to reject what the Government propose. The Select Committee's report and the reaction of the House to it—which I hope will be debated—will obviously influence the position taken up by the Government during future negotiations on direct elections within the EEC.

Mr. Neil Marten (Banbury)

On the point of timing, when is the crunch meeting of either the Foreign Ministers or the Prime Ministers of the Community on this question supposed to be? We are always being told that it must be done by a certain date and that if it is not all agreed by a certain date, 1978 will be a lost cause, and so on. Will the Minister address us on that point?

Mr. Hattersley

I am not sure who told the hon. Gentleman that. I certainly did not. In the last five minutes I have addressed myself to the unwisdom of making such declarations. To put it in rather less dramatic terms, the Heads of Government and the President of France will be meeting on 12th and 13th July, and it is hoped that on that occasion it will be possible to achieve agreement on the two crucial questions I have described—the number of seats and the distribution of the seats between the nations of the EEC. I do not believe it is certain that we shall achieve success then. I certainly hope we shall, but I do not regard it as a cataclysmic occasion. We shall achieve success if we can, and if there are national interests that cannot be preserved, we look forward to a future occasion. It is important to be comparatively relaxed about these things.

The White Paper deals with a second major institutional question — the Tindemans Report. I know that many right hon. and hon. Members are anxious for the Government to make precise judgments on each of the report's many recommendations. I fear that it is not possible to go through the report proposal by proposal, endorsing some and rejecting others. Our final view on each of the paragraphs will be determined by a number of factors—not least the recommendation on each paragraph made by this House. I can, however, describe the Government's general reaction both to the tone and spirit of the report and to the main areas of policy with which it deals.

I begin by commending to the House Mr. Tindemans' general approach. He has not offered a vision of distant political union, but has attempted to focus our attention on practical steps which could bring us closer together during the next five years. He makes no proposals for radical constitutional change. He does not seek to create the first steps towards a federal State or an incipient European Government. He accepts the reality of our condition. We are nine individual States. We are committed by treaty and mutual self-interest to increasing our common action. But we are nine individual States, nevertheless.

The Tindemans Report lays particular stress on the need for the Community to take up common positions on foreign policy. That recommendation is wholeheartedly endorsed by the Government. During the last year the EEC has established common attitudes in the United Nations, during the North-South dialogue, and towards the Middle East and Cyprus. Clearly there are occasions when national interests prevent complete agreement on international matters. But the British Government will consistently work towards achieving common policies on external relations.

The Community as a whole can speak with greater force and greater authority than any of its constituent members. Where the Community has spoken with one voice it has spoken with great effect. Our obvious ambition is to influence the course of EEC foreign policy and then see it implemented with the strength that comes from support by nine member nations, representing 250 million people.

Mr. Christopher Price (Lewisham, West)

My right hon. Friend has mentioned the EEC taking foreign policy initiatives, and has specifically mentioned Cyprus. Has he seen the sentence in the consultative document, Mr. Ortoli's letter, which says that The European Community is not and should not become a party to the disputes between Greece and Turkey."? Is that a piece of infelicitous translation, or what exactly does it mean in the context of what my right hon. Friend has just said?

Mr. Hattersley

It means that it is the view of President Ortoli, and certainly of Her Majesty's Government, that the Community should not take a partisan position on one side or other of that dispute. All nine members of the Community—this is what I meant by co-ordinated action—have worked consistently towards the reorganisation and the continued operation of the inter-communal talks. In that we have a common foreign policy, and the other eight members of the EEC share our view. We have operated in concert in these matters.

I applaud that co-operation, and therefore endorse, on behalf of the Government, the section dealing with it in the Tindemans Report, but I fear that the Government cannot welcome Mr. Tindemans' paragraphs on economic, monetary and social matters with the same degree of enthusiasm.

We cannot see the "snake" as an essential or, indeed, an ideal instrument for the movement towards economic and monetary union. Perhaps I am understating our criticisms if I say that the success that the "snake" has enjoyed during the last few months has done nothing to increase our enthusiasm for participation within its organisation. Nor can we support the idea of a two-tier Community within which the prosperous nations move more quickly towards economic union than their poorer partners.

The concept of a two-tier Community has been unanimously—or virtually unanimously—rejected within the EEC. But in my view it is not enough simply to reject the unacceptable policies of further economic integration. Our hope is that the Community will become committed to a different sort of economic co-operation. If the Community is to make progress towards political integration, it must concentrate its efforts on ironing out the great disparities in wealth and prosperity between different parts of the EEC.

Mr. Tindemans recognises the need for transfers of resources from the more prosperous to the less prosperous regions within the Community. That has to be done through the Social and Regional Fund, through the more effective operation of the European Investment Bank and through a more positive attempt to make agricultural policy benefit the least prosperous areas. It cannot be done if the richer nations within the EEC forge ahead towards economic integration at a speed which is beyond the less prosperous countries.

Of course, I admit that I have an ideological enthusiasm for a redistributive Community in which the wealthy nations make increasing contributions to the poorer areas. But even those politicians within the Community who do not share my general political belief must understand that a more integrated Europe is only possible when the regions of the Community enjoy approximately equal economic prospects. It is towards that objective that the British Government will constantly turn the Community's attention.

Mrs. Gwyneth Dunwoody (Crewe)

I agree absolutely with what my right hon. Friend said. Perhaps he will direct his attention urgently to the fact that the intervention appropriations are such that agriculture gets about 5,000 mua, social affairs 185 mua and regional affairs 500 mua. That is an imbalance that is totally unacceptable.

Mr. Hattersley

My right hon. Friend the Minister of Agriculture and I understand exactly my hon. Friend's point. What I said a moment ago was intended to imply that in some particulars the agricultural fund is not working in the same direction towards equalising prosperity within the Community. I hope that she, in the European Parliament, and my right hon. Friend and I in the Council of Ministers, will do our best to remedy that imbalance. My right hon. Friend and I do not disagree with her on that fundamental judgment.

Mr. Tindemans has properly included in his report a section entitled "A Citizens' Europe". Certainly, the Government endorse the title, which implies the concept that Europe must mean something to the ordinary voters within its boundaries.

Let me give two examples of areas in which the Community can respond immediately to the real needs of its members—both are items about which the House has specifically asked for information during the debate.

The first is textiles. During the period under review the Community has negotiated textile agreements with a number of countries under the International Multi-Fibre Arrangement. The object of those agreements is to establish control over Community imports of foreign textiles. I know that some hon. Members are dissatisfied about the effectiveness of these controls. However, under the terms of the Multi-Fibre Arrangement we have been able to maintain most of our previous restrictions on imports from the major low-cost countries and also to extend them to textiles on which there were no previous restrictions. To act outside the terms of this generally beneficial agreement would expose us to the risk of retaliation, which could cause serious damage to the prospects for British industry generally.

Mr. Max Madden (Sowerby)

Does my right hon. Friend agree that the penetration of cheap textile imports to this country is far higher than it is in other member States and, therefore, the base year figure is unrealistic? Will my right hon. Friend explain why all the quota ceilings in the agreement we are discussing have been substantially increased for the United Kingdom, whereas reductions have been achieved by member States whose textile industries are not undergoing the difficulties of our textile industry?

Mr. Hattersley

I can answer my hon. Friend only in terms of the statement I have already made. Within the terms of the agreement we are free to operate the sort of restrictions that we operated before we entered the Community. We are free to make the national judgments that we think right about the general trading condition of this country and the protection of individual areas. I have no doubt that the balance that my right hon. Friends have struck between those two interests is right.

I take a second example of the way in which the EEC can, and we hope will, operate in the interests of member nations and the individuals who live therein. The example I take is of the common fisheries policy. There is no item on the EEC's future agenda which has a greater importance for the United Kingdom. The needs of the British fishing industry are now well known to the Community. Were the Community to fail to respond to those needs it would be a denial of the spirit on which the Community is based and would strike such a severe blow at the British fishing industry that the Community's reputation could not easily recover.

The difficulty that we face results from one simple fact. The present common fisheries policy is not a proposal that we can prevent by veto; it is an established policy which was accepted by the Conservative Government shortly before they signed the Treaty of Accession. A revision of that policy requires the unanimous agreement of our eight partners. Any one of them could block every proposal for change that we make. It is not legally within our power to refuse to operate the common fisheries policy. I must make it absolutely clear that the British Government cannot see a revision of the common fisheries policy in isolation. Certainly we need the support of our colleagues to achieve its improvement. Equally certainly, we are well aware that as the months wear on each one of them will need our support in some other way, and the two things must be matched together.

Mr. John Prescott (Kingston upon Hull, East)

My right hon. Friend has made clear the exact legal position about the changing of treaties to achieve the Government's objective of a 50-mile fishing limit. If I understand him correctly, he is saying that we depend on the bargains that we can make in the trade-off. The evidence of the past 12 months has not convinced me that we are doing too well in trade-offs. Will my hon. Friend confirm that we shall not move from that requirement of a 50-mile limit, come what may, and that that will be our position or there will be no common fisheries policy?

Mr. Hattersley

I cannot promise, under any circumstances, that there will be no common fisheries policy. There is a common fisheries policy, and we are legally committed to it. The Government that my hon. Friend supports, and of which I am a member, discovered the common fisheries policy on our accession to power. I can promise my hon. Friend that we shall do our best to revise it within the terms of my statement to the Council of Ministers two months ago. That statement was precise about our needs, it appears in detail in the Council's minutes, and is obtainable in the Library of the House. I made clear to the right hon. Member for Saffron Waldon (Sir. P. Kirk) when he asked me, that that is not our negotiating position, it is the position that we need. I promise my right hon. Friend that were we not to obtain that position, our judgment about the behaviour of the Community would be such that it would result in a great deal of difficulty in the Community as a whole during the months that follow.

I move from that to talk about the extension of the Community. I have spoken so far of a Community of nine nations. But I know it is the wish of the House that part of the debate should deal with the Greek application for membership.

The United Kingdom Government are in wholehearted support of Greek member- bership of the EEC. The case for Greek membership is primarily and overwhelmingly political. Two years ago, Greece—the State that conceived and first practised democracy—returned to democratic government after seven years of tyranny. The preservation of democracy, no less than the extension of prosperity, is an essential objective of the EEC. All the judgments confirm that membership of the Community will add to the strength and permanence of democracy in Greece.

Were membership to be denied simply because the admission of Greece might cost the EEC a few million units of account we would not be simply breaking the Treaty of Rome, which welcomes all European democracies into membership. We would be denying the fundamental spirit of European unity, and we would be operating against our own best interests.

There are, of course, two arguments advanced against Greek membership. The first is that it will cost the existing members money. The second is that it will divert the EEC from its remorseless pursuit of a closely-knit homogenous Europe, with each virtually contiguous State working away to build a common European identity. [Interruption.] I knew that the second argument would not be altogether attractive to my hon. Friends behind me.

Both these arguments, irrespective of the weight which we attach to them, are to some degree true. But, despite their validity, the case for Greek membership is so strong that to deny it inclusion would be short-sighted as well as selfish. All Europe will benefit from a strong and stable Greece. EEC membership will help to create that condition. The British Government hope that a formal opening of the negotiations for Greek membership can start during the summer. We saw no merit in the Commission proposal for a pre-accession period when Greece hovered in a half-world, a part in, part out of the EEC. But we do not pretend that the months, indeed, perhaps, years, which follow will be easy. The accession negotiations between the EEC and Greece will be invariably complicated and occasionally painful.

Greece will pay a substantial short-term price for Community membership. Existing members of the Community will have considerable cost to meet if the price to Greece is not to be intolerably high. If we talk as if Greece can slip effortlessly into the EEC, we deceive ourselves and delude others. Worse, we pursue a policy that can end only in disillusionment in Athens and resentment in Community capitals.

The conversion of Greek agriculture to conditions suitable for Common Market membership will not be easy. The industrial benefits that Greece will enjoy will not be equally spread throughout the Greek economy. Some sectors will thrive and grow, others will dwindle and decline.

The Community offers Greece the prospect of expansion, not the certainty of improved prosperity. To take advantage of the prospects that Community membership can provide there will have to be substantial adjustments in the Greek economy. None of that seems to me a reason for rejecting the Greek application. But it is obviously an argument for beginning the access negotiations at the first reasonable opportunity, and pursuing them with a thoroughness which is indicative of both our wish to see Greece become a Member and our determination that she should join on the right terms.

Mr.IanGrist (Cardiff, North)

Earlier in his remarks the Minister said that one of the aims of the EEC as at present constituted was not to take one side or the other in the dispute on Cyprus. How on earth is that maintained if Greece is a member of the EEC?

Mr. Tam Dalyell (West Lothian)

rose—

Mr. Deputy Speaker

I think it is difficult for the House if we have intervention upon intervention.

Mr. Dalyell

I am in the impeccable company of the Dutch Socialists when I express concern on this matter. My worry is not the social cost of Greek membership. But those of us who went as delegates from the European Parliament to talk to the Greeks felt very uncomfortable about the way in which those people seem determined to pursue their difficulties with Turkey. Some of us had the impression—indeed the terrible suspicion—that any resources that go to the Greeks to help farmers and agriculture will be used to free other resources to put yet more money into the creation of armaments for a possible war with Turkey. Before any undertakings are given I would like to see a clear policy on the relationship between Greece and Turkey.

Mr. Hattersley

Replying first to the hon. Member for Cardiff, North (Mr. Grist), I said that the access negotiations could last many months, and perhaps several years. Even the most pessimistic hon. Member would hope and expect that there would be an end to the Cyprus dispute by then. We hope that the inter-communal talks will begin again and will make progress. My fear about the Greek application is very different from that of my hon. Friend the Member for West Lothian (Mr. Dalyell). When I talked to the Prime Minister of Greece 10 days ago I saw no disposition to transfer to the EEC the difficulties between the Greeks and the Turks, or to use resources from the Community to further that dispute. My fear is that membership of the Community might be achieved too easily for the Greeks. I think they might believe that they can pay any price, enter, and then make adjustments afterwards. Greece will have to pay a considerable price for entry, and that involves a long negotiating period.

Mr. Mike Noble (Rossendale)

The Minister outlined at great lengths the difficulties that will arise for industry and agriculture in Greece. Are these observations based on the direct experience we have had since we entered the Common Market?

Mr. Marten

rose—

Mr. Hattersley

I have been reproved already for taking two interventions at once, and I do not propose to do it again. I accept the point put by my hon. Friend the Member for Rossendale (Mr. Noble). I told the Greek Prime Minister that we were in a strong position to advise him to take entry negotiations seriously. I pointed out that we had to do it twice because the terms we got in the first place were not good enough to justify continuing our membership. We made quite sure that the terms were acceptable to our people and we demonstrated this on 5th June 1975.

Today's debate is intended to provide the House with an opportunity to examine the report on "Six Months in the Life of the Community" and to express its opinion on a number of Community documents that are listed on the Order Paper. To deal with each of the listed items would require me to make an intolerable intrusion into the time of the House, and I have therefore dealt with only some of the most important themes of today's debate. I recognise the omission and apologise for it.

I cannot conclude without saying a word about the subject of the importation of New Zealand butter into the Community. If the Under-Secretary captures your eye, Mr. Deputy Speaker, later tonight he will deal in more detail with this matter. However I will put the position on the record. My right hon. Friend the Minister for Agriculture, Fisheries, and Food told the House on 19th May that the EEC Commission had put forward a new proposal for the 1978–80 period and that proposal would be put forward at the May meeting of the Agricultural Council of Ministers. It will give New Zealand assurances that fixed quantities of butter will find a market here but it provided that some would be sold for non-retail market purposes if the retail market declined. My right hon. Friend has not accepted or rejected these proposals. It was not possible to consult New Zealand about them or to make an adequate assessment until more details were available. Further details are now available, and the proposals will be available to hon. Members in the Vote Office.

The Government have not yet had time to study them or to consult our New Zealand friends, though we hope to do both as a matter of urgency. We certainly hope that it will be possible for this matter to be settled at the June Council meeting in the light of our resolve to fulfil our obligations to New Zealand. Because of that resolve and because of that obligation we are able to accept the second part of the amendment put down in the name of my hon. Friends, which not so much makes our position over New Zealand clear as reaffirms the position of the Government of the last 18 months.

I simply conclude by—

Mr. Douglas Jay (Battersea, North)

Does my right hon. Friend intend to say nothing today about the control of this Parliament over EEC legislation, in view of the discussions that we had here after the fiasco on the skimmed milk order?

Mr. Hattersley

We have had a debate on procedures since what my right hon. Friend described as the fiasco. If my memory serves me correctly we have had two debates. No doubt my right hon. Friend would like a third, but if that is his wish he must press that earlier on a Thursday afternoon, not during a debate on the substance of EEC policy.

I believe that there are now five major targets that we should set ourselves in the EEC, and each of them is practical. The first is to achieve more common positions within the area of external relations. The second is, through a thorough and constant revision of agriculture policies, to make our agricultural decisions more clearly represent the needs of the consumers. Third, through the Social and Regional Fund, through the more effective operation of the European Investment Bank, and through a more positive attempt to make agricultural policy help the poorer areas, we must even out the great disparities of regional prosperity. Fourth, we need to provide aid and preferential trade for those developing countries on whom the Community has not concentrated in the past—among them some of the poorest countries in the world. Fifth, through the coordinated action of our Governments we need to conceive and implement a strategy to combat unemployment—a disease which affects all of us to a greater or lesser degree.

I believe that all these things are within the Community's power, and whether the EEC exercises that power depends on the individual member States, Great Britain no less than the rest. We in Britain have passed from the time when we could view the EEC with the detached impotence of the interested outsider. We are part of the Community, and the Community is part of us. Its successes are our successes, and its failures are our failures. I believe that the most passionate critic of the EEC now has nothing to gain from either its stagnation or its immobility. If the Community is to move forward, Great Britain must supply some of the motive power and give a clear and precise indication of the direction which the Community must take. I promise the House that the Government believes that the Community must commit itself to a practical, pragmatic and, perhaps occasionally, prosaic course. That is the policy we will endeavour to establish, and that is the policy that we shall consistently pursue.

5.14 p.m.

Sir Peter Kirk (Saffron Walden)

There was an exchange before this debate began between the Leader of the House and a number of hon. Members about the form that the debate is to take. I do not wish to reopen that argument except to say that I think the House will be in some difficulty if it is to have to debate Community papers in this quantity on what in effect was one of the six "Foster" days promised for general discussion of European legislation. Surely it would be better if a better procedure had been adopted.

If the Minister of State had gone into all the matters that stand on the Order Paper today, or even all the matter in Cmnd 6497, which is the first of the documents that we are to discuss, he would have spoken for an intolerably long time, and so would all other hon. Members who wished to discuss all those matters. I realise that this is a matter for the Leader of the House and not for the right hon. Gentleman, and I hope that it will be taken on board that this is not a satisfactory procedure and that it will not be repeated in future.

The White Paper and the other documents cover so wide a field that it is really open to almost any hon. or right hon. Member to choose what he wants to talk about in the debate. I hope that the Minister of State will not take it as a reflection upon him if I refer to one or two things that he did not mention, and if I do not refer to one or two things that he did.

The right hon. Gentleman warned in stern terms that we must not be ideologues, that dewy-eyed emotionalism must be no part of our thoughts, and he elevated pragmatism to an ideology of its own. No doubt that is the correct way of examining the Community and a dewy-eyed ideologue like myself can be regarded as out of place in a debate of this kind. But we must not forget that the purpose of the Community is not just to deal with the bread and butter issues which, quite rightly, the right hon. Gentle- man dealt with; it is also to make progress in a considerable and great experiment in creating an international democratic Community, and it is in the light of that as well as of the individual programmes to which he drew attention that we have to judge the past six months and progress generally since we entered the Community.

The most disappointing area is that of political co-operation. I realise, of course, that this is the most difficult area, and although the right hon. Gentleman cited one or two instances I do not think that anyone can really be greatly pleased with the progress of the Community in, for example, the recognition of Angola, which showed that national self-interest still plays a considerable part in the foreign policies of the nine member States.

I wonder whether the Under-Secretary will say something about the proposal, made some years ago and now forgotten, for the creation of a political secretariat. It does not seem to me that much progress will be made in this matter as long as it is left to the presidency of the Council and the national Foreign Offices to co-ordinate. I am not suggesting a major and enormous new bureaucracy. I have always maintained that, if handled properly, it could be done through the present services of the Commission. But it will be necessary to do it, and for one major reason. The question of political co-operation will impose itself on the Community fairly soon because of the network of external economic arrangements being made by the Community on behalf of the member States.

In looking at this document and at events that have taken place since it was published, we can see what these developments are. We have had the approach from Comecon. The Minister of State did not refer to it, and I can understand that the Under-Secretary may not want to either. This matter is still under discussion in the Council of Ministers and is not one on which we may wish to make speedy progress at the moment. Nevertheless, after 15 years in which those countries have rigorously tried to pretend the Community did not exist, we find for the first time in response to a visit by a Corn-mission official some two years ago to Moscow that they are now approaching us.

We have had initialled—I hope, to be ratified—the agreement with Canada. All hon. Members will welcome that. We called for a Euro-Arab dialogue, and I hope that something may be said about this at a later stage, because it represents a significant development in the Community's relations. The general Commission met only a few weeks ago and there were difficulties here as there are in dialogues of this kind between the Community and Arab States on the one hand and the Community and Israel on the other. This is a further development in the representation of the Community in economic and, therefore, eventually, in political terms with the outside world.

Unless we are prepared to back that up with some kind of political infrastructure I believe that we may find that in a year or two we shall be in considerable difficulties as to the best way in which we can handle the political overtones of the economic relationships we are creating. I hope that this is sufficiently pragmatic for the Minister of State. It seems to me something which will emerge of itself and is not an ideological and federalistic viewpoint of mine. It is something that I think will impose itself on the Community as such, and on the members of the Community. If it is to impose itself, we should look at it as carefully as we can. I see a great need for action to be taken in political co-operation. That may need a secretariat or a different method of working. I hope that we shall be told something about the Government's thinking in that regard before we finish the debate.

My second theme, to which the right hon. Gentleman referred in his four priorities for action, is agriculture. The hon. Member for Crewe (Mrs. Dunwoody) rightly pointed out that Community action is totally unbalanced in the social sphere in favour of agriculture, agriculture taking 73 per cent. of the total Community budget. That can be justified only on the ground that the agricultural sector is far further advanced in integration than any other sector. The hon. Lady, had she been in Strasbourg—her hon. Friend the Member for West Lothian (Mr. Dalyell) was in Strasbourg earlier this week—would have realised that agricultural matters caused a certain amount of anxiety to my hon. Friends.

There were moments in the course of this week when I never wanted to hear the words "skimmed milk" spoken again. I am sure that that applies to a number of other hon. Members. I take the skimmed milk question as being illustrative of what is wrong with the common agricultural policy. I think there are two things that are wrong that must be cleared up.

Commissioner Lardinois has said that we cannot go through another price review such as the one that took place this year. I am sure that the Minister of Agriculture, Fisheries and Food would agree with him. Under those circumstances, we must look at what is wrong.

One matter that is wrong has nothing to do with agriculture—namely, the monetary problem. We all know that it exists and that inevitably it will undermine any sort of agricultural policy. Whatever our view about economic and monetary union, until the monetary problem is solved it is unfair to blame the agricultural sector for many of the troubles that fall upon it.

The other and possibly more important matter that is wrong concerns the structural problem. That is something that should be tackled now. Skimmed milk is a large part of the problem. The fact that dairy production within the Community is constantly in surplus, and the fact that the restructuring measures taken by the Council of Ministers and the Commission will do nothing to reduce the surplus—in fact, they will increase it—are matters that must be tackled straightaway.

Mrs. Dunwoody

In some respects I am totally in agreement with the hon. Gentleman, but will he explain why he and his group voted for an increase in the milk price, which will contribute to an even greater skimmed milk mountain, if he feels so strongly that we should do something radical by way of reorganisation?

Sir P. Kirk

Because we believe that structure and not price is at the root of the problem. The problem will remain for as long as the existing structure is condoned.

It is as long ago as 1967 since Dr. Mansholt called for urgent reform in the dairy sector, but as yet nothing has been done. However, we must provide those operating within the structure with a reasonable been done. However, we must provide those operating within the structure with a reasonable income. If we are prepared to undertake structual reform, we must compensate those who are affected by a reduction of the dairy herd within the Community. Only then are we entitled to deal with the price problem. Until the structural problem has been satisfactorily resolved the price problem will not be solved. If we do not have regard to the structural problem while tackling the price problem, we shall have a further social problem in that many small farmers will be thrown out of business and will land on the Community for compensation.

Mr. Marten

I remember being told in 1971 and 1972 that once we joined the Community we should get things altered and sorted out, yet yesterday, or the day before, when there was a vote, according to the Press only 18 of the 198 people in the Common Market assembly seemed to want to make this alteration. Will my hon. Friend explain what has happened?

Sir P. Kirk

That is a question that should be addressed to Labour Members. My hon. Friend should ask them why they did not turn up, or why they preferred that their vote should not follow their voice, rather than address the question to me.

Mr. Prescott

In fairness to the argument, the hon. Gentleman must concede that the European Conservative group wrongly addressed its criticism. It wanted to attack the Council of Ministers, but it seems that it wanted to strengthen the power of the Commission against the Council of Ministers. That raises the concept of a federal Europe, which is objected to much more fundamentally than the CAP itself.

Sir P. Kirk

The motives of the hon. Gentleman, who left Strasbourg before the vote and cannot be blamed for anything that happened, may have been mixed. It is true that we wished to strengthen the power of the Commission, but that is not why we put down a motion or voted upon it. We did so because we believed that the scheme produced by the Commission, with the blessing of the Council of Ministers, was wrongly conceived in the first place, and resulted in such maladministration as to be worthy of censure.

I was making a more general point that went wider than what happened earlier this week. Until some effort is made both by the Commission and the Agricultural Council to make a structural reform of the CAP, we shall get problems of this kind that will bedevil progress in the Community, especially in agriculture.

I agree that that is only half the problem. The Minister of Agriculture, Fisheries and Food would be right to say that until we solve the monetary problem he will still be in difficulty in negotiating with his colleagues. But he is creating difficulties for himself by agreeing to schemes of a kind which do not work, which cannot work and which merely make the situation worse.

I now say a word about the budget, which also appears in the White Paper. I understand that agreement has now been reached on a new budgetary timetable. Perhaps it will be confirmed that we shall be having a debate on the budget between now and the House rising at the end of July. If so, there is little need for me to go into detail on budgetary problems today.

The whole point of the reform was to enable us to have a debate in the House. I hope that, despite pressure of business we shall have an undertaking from the Government that time will be made available for a debate on the budget.

It has been pointed out that the proposals that have emanated from the House, from the Opposition as well as rather belatedly from Government Members, for control over the budget by Parliament are now being implemented. Perhaps they are not being implemented as satisfactorily as we should like, but a sub-committee on control has been set up, with the hon. Member for West Lothian as one of its vice-chairmen, my hon. Friend the Member for Scarborough (Mr. Shaw) being the other. The committee has a good element of British PAC sense in it, but it will not work until ratification of the budget treaty of last year. I understand that the United Kingdom and Denmark have ratified, but when shall we have further information on the process of ratification of the other member States? We are all anxious to move ahead with the ratification. If there is delay because of dilatory ratification procedures in other countries we shall be in something of a problem.

There is a notable gap in the White Paper on page 12, where reference is made to transport. There are two short paragraphs, one dealing with drivers' hours and one with the operation of the freight market. The fact that there is still no common transport policy is totally ignored, although the treaty has called for one. May we have some information as to the progress of negotiations in that sector? That is a vital part of the integration of the Community as a whole.

The right hon. Gentleman referred to the Tindemans Report. I agree that it is essentially a pragmatic report, which in the right hon. Gentleman's eyes, at any rate—he being the master pragmatist of all of us—is a great advantage. In my humble submission, that is so. It is not in any way a federalist concept, although my hon. Friend the Member for Banbury (Mr. Marten) is fond of quoting the introductory letter in which Mr. Tindemans puts forward his personal belief that the problems of European integration will not be solved without federalism.

I think that Mr. Tindemans is taking roughly the same view as many others would take. Many would like to see a federal solution at the end of the day, but we are not working for it now, merely seeking to improve the present system. I think that that is what the report is designed to do.

I think that in one respect the report has been misunderstood. The right hon. Gentleman referred to the suggestion of a two-tier Europe in monetary matters. What Mr. Tindemans put in his report was not a proposal for a two-tier Europe but a recognition that such a Europe already exists. I think he recognised that there are States within the "snake" and outside it that seem to move backwards and forwards inside and outside with bewildering rapidity.

Some States are prepared to go at a faster speed towards monetary integration and monetary and economic union than others. If they are prepared to do so, surely it is to the benefit of the Community as a whole that they should be encouraged in that direction, provided—this was the point that Mr. Tindemans made—that at the end of the day we all end up at the same place at roughly the same time.

I come back to the agriculture point, which involves a number of other points. The problems of the Community, like the problems of the economy of the western world as a whole, will not be solved until the monetary problem is solved. If the Community can help, either at two-tier or one-tier speed, towards solving the monetary problem, it should be allowed to do so.

Another problem that arises from the Tindemans Report and from the practice of the Community is the inauguration of the European Council, or the meetings of the Heads of Government as I think they are called. M. Giscard d'Estaing, the French President, accepts that on those occasions he meets as the Head of Government rather than the Head of State.

The original idea—the Minister will correct me if I am wrong—was that the only way in which progress could be made within the Community was by the Heads of Government meeting informally from time to time and injecting a little punch behind the progress of the other councils. What seems to have happened is that, instead of acting as a spur, they are acting as a brake. Ministers now find it almost impossible to take decisions. Everything must be put back until the Heads of Government meeting every four months or so.

A classic example was the question of direct elections. We are none of us told how much progress was made at Senningen last weekend. We have had a report in the European Parliament from M. Thorn and a few hints from the right hon. Gentleman. We are told that everybody is optimistic that a solution will be found at the meeting of the European Council on 12th and 13th July. There was certainly a suggestion at one point that, even if agreement had been reached at Senningen last weekend, it would not have been announced until the Heads of Government had been able to meet and ratify it. This could be a dangerous development.

According to my last calculation, there are 12 different councils of the European Community—the Foreign Affairs Council, the Economic Council, the Budget Council, the Social Council, and so on. That is too many to begin with. If, as top hamper, we add to that a European Council which, by its nature, because it is a meeting of Heads of Government, can meet only rarely and insist that any business of prime importance is put back until the meetings of that European Council, progress, which is already slow enough, will slow down and come to a grinding halt without much difficulty. Therefore, I hope that the Heads of Government will be able to revert to the original concept of the European Council as put forward in 1974—namely, that essentially it should be a body of review rather than of decision and that its job should be to see how the other councils are getting on and to urge them to make further and quicker progress.

That is clearly Mr. Tindemans' view in his report. I should have thought that view would commend itself to the Government.

On direct elections, as such, the position on the Opposition side of the House remains roughly the same as the Government's position. I hope that we shall have the support of the Select Committee when it reports, as I understand, shortly. We hope to achieve the target date of 1978. We believe that it can be done. We believe that the Parliament should consist of between 350 and 400 seats to give the necessary representation to all the regions and areas involved. We should be prepared to expedite as fast as possible any legislation that the Government may bring forward on that issue. Indeed, we should be prepared to see the Government drop other issues in order to expedite it even faster than we would otherwise do. [Interruption.] My hon. Friend the Member for Banbury will be slowing things down. but he normally does.

I do not want to delay the House any further—we were rather late starting—but I should like to mention the Greek application and the enlargement of the Community. Whilst I must accept the right hon. Gentleman's arguments—I do not think that hon. Members on this side of the House would wish to delay the Greek application in any way—there are considerations which go wider than the purely short term political considerations put forward by the right hon. Gentleman.

The question of Cyprus has been raised by Back Benchers on both sides. The right hon. Gentleman, at the beginning of his speech, said that the Community will not get involved in the Cyprus problem. It is a little too innocent to pretend that if Greece joins the Community and Turkey does not we are not involved in the Cyprus problem. Of course we are. We are bound to be involved. It may be that will contribute to a solution. It may be a reasonable argument to put forward if the right hon. Gentleman can back it with the necessary evidence, but to try to pretend that it does not reflect upon the whole question of the Greek application is expecting us to be a little more naive than most of us are.

Another point has to be borne in mind. It is not just Greece, After all, Turkey has shown an interest in joining the Community. Spain, we hope, is now on the road to democracy and is in a much better economic state to join the Community than is Greece. Portugal, happily now rescued from a Fascist dictatorship after 45 years, will probably be knocking on the door fairly shortly. Being late joiners ourselves, we should not complain about others wishing to join the Community. However, it needs a bit more than the kind of piecemeal policy that the right hon. Gentleman appeared to be reflecting today.

Mr. Dalyell

Some of us are a little disconcerted because, when pressing the Greek politicians informally late at night and asking "Why not Turkey?", they stumbled a bit and then said "All right, Turkey, too." When we then said "Why not Syria?", they said "If Syria joins the Community that will help to solve the problem of the Ba'athist Party and its opponents."

Sir P. Kirk

That must have been a conversation very late at night, judging by the sound of it.

I hope that, as the Greek negotiations proceed—I accept the Minister's assurance that nothing will be rushed—we shall have time to reflect, both in this House and within the Government, on the general concept of enlargement and the type of Community that may bring with it. I do not wish to say anything more on that subject this afternoon, because many differing points of view must be considered in approaching the question of the Greek application.

I should like to end by endorsing what the Minister said at the beginning of his speech. Although it is customary to decry the Community as a stagnating organisation, a quick look at the White Paper is enough to show that progress is being made in many areas. That progress may not be fast enough to suit some of us and it may be too fast to suit others. Nevertheless, it is happening. The Community is progressing and changing. I have been devoted to the concept of Britain in Europe throughout the whole of my political life, and I welcome it. However, it is essential that we in this House, particularly those who represent this House in the European Parliament—

Mr. Prescott

Why?

Sir P. Kirk

I shall come to that point. It is essential that we should be concerned with ensuring that progress is made.

I come to the last small point made by the hon. Member for Kingston upon Hull, East (Mr. Prescott). Why? Even the French Government are prepared to talk about the European Parliament. If a delegation from the European Parliament goes to the Council of Ministers, it sits at a table behind a label "European Parliament". Why do the Government go on calling it the European Assembly?

Mr. Prescott

Because it is in the Treaty of Rome.

Sir P. Kirk

It is not dependent on or part of the treaty. If the Council of Ministers is prepared to call it the European Parliament, why cannot the British Government? Let them take their courage in their hands, defy the hon. Member for Kingston upon Hull, East, and take this modest step—

Mr. Prescott

It is not modest.

Sir P. Kirk

—towards progress in realism and democracy.

5.39 p.m.

Mr. Bryan Gould (Southampton, Test)

I beg to move, at the end of the Question to add: calls on the Government to ensure that the EEC fully honours the Dublin Agreement of March 1975 on imports of New Zealand butter into the United Kingdom, and disagrees with the Commission Report on 'European Union' (R/1815/75)". There are some simple souls, amongst whom I number The Times and members of the European Movement, who seem to think that it is possible to make a proper and adequate assessment of the effects of our membership of the Common Market by listing the various loans and grants that have been made by Community institutions to this country. They exclaim with surprise and delight at the fact that last year we made a modest surplus on direct payments of £54 million. The £54 million is welcome, but let us try to get it in perspective. It would build about two miles of urban motorway.

While the Government placed great emphasis in the renegotiations on the issue of direct payments, no serious critic of Common Market membership has ever argued that the real costs lie in direct payments. If we draw up a proper balance sheet, we see that the real costs lie in indirect costs, which arise from the distortion which Community membership means for our most natural and advantageous trading patterns.

Mr. Nick Budgen (Wolverhampton, South-West)

Will the hon. Gentleman comment on the view that many of those innocent souls to whom he refers have put forward the view that there is now something for nothing that can be got in Europe? The idea of the bottomless pit here has, unhappily, now evaporated, and there is a belief that there is a new bottomless pit in Europe from which we can gain material benefits without paying for them either in other material benefits or in political disadvantages.

Mr. Gould

I am happy to agree on that point. The same argument applies to monetary compensatory amounts in agricultural matters. If we are to draw up such a balance sheet, we must take account of the fact that we are now paying, by virtue of Community membership, far more for a range of basic foodstuffs than we need have done if we had stayed out. Even the Commission recognises the fact that a vast range of basic foodstuffs is far more expensive now inside the Community than it is in the world outside.

If hon. Members are not content to accept the statements made by the Commission, let them ask the British Government. They will find, for example, that we are simply not allowed to import beef from cheap producers abroad: that we pay a duty of 16 per cent. on imports of New Zealand lamb, which duty will rise to 20 per cent. next year; and that on imports of New Zealand butter and cheese we pay import levies amounting to 9p a pound for butter and 12p a pound for cheese. That is the figure that applies to the special regime that was negotiated for New Zealand. It applies only part way through a transition period, and it is a figure that is net of monetary compensatory amounts.

Let us dispose once and for all of the ridiculous argument that monetary compensatory amounts are a net gain. They are a small discount on a substantially increased price which we do not need to pay.

The real importance of these increased food costs is not merely the burden that it places on the housewives' shopping baskets but its effect on our competitiveness as a trading nation. They raise our costs quite unnecessarily. They make the Government's task of trying to deal with inflation far more difficult. It means that the Government are engaged in a battle with one hand tied behind their backs, because a major area of the economy, the structure and level of food prices, is simply beyond their control—as my right hon. Friend the Minister of Agriculture demonstrated when he returned from Brussels in March this year.

In case hon. Members are still tempted to believe their own propaganda—that we need to pay these high prices in order to ensure stable supplies—let them look for a moment at the way in which our traditional suppliers constantly express their willingness and, indeed eagerness to continue to supply us on a long-term basis. In that context, let me mention particularly the situation in regard to New Zealand butter. Two points are perhaps not always understood. From my recent conversations with New Zealand officials, it is perfectly clear to me—and to them, I need hardly say—that New Zealand remains very substantially dependent on her exports of agricultural products and that in that trade she remains still substantially dependent on this market.

There was a comfortable myth that had gained some currency that somehow or other the New Zealanders had managed to diversify their production and had found new markets. However, that is not so. New Zealand desperately needs this market and that trade, both in dairy products and even more so in the case of sheepmeat.

Secondly, that dependence on our market means that New Zealand's negotiating ability is very greatly diminished. She has no bargaining counter save that of rational argument, since she can only sit and watch as an observer a bargain that is struck by parties committed to an irrational system. Therefore, we cannot expect New Zealand, which depends solely on the good will of these parties, to jeopardise that good will by speaking out too loudly in her own interests. There is a special responsibility on this House and the Government, in New Zealand's interests and our own, particularly that of our consumers, to make sure that the Dublin Agreement is properly implemented.

I should like to ask a specific question about negotiations. I hope that my hon. Friend the Under-Secretary will be able to answer it or to get someone from the Ministry of Agriculture to provide the answer. In the context of any agreement that may emerge, I want to know whether the principle of "degressivity"—one of the horrible words that seem to abound in Community affairs—has been simply accepted as the basis for all future imports of New Zealand butter. If that is so, it is simply a matter of time before that trade is choked off.

Mr. Nicholas Winterton (Macclesfield)

Is the hon. Gentleman aware that last year we imported about £528 million worth of dairy products, a great deal of them from New Zealand? Is he also aware that successive Governments have urged us to rely less upon imports and to produce more ourselves? Bearing in mind that we shall have to continue to pay certain moneys into the European situation, does he not feel that we should try to reduce our vast dependence upon imported dairy products?

Mr. Gould

I am grateful to the hon. Gentleman. It may be somewhat surprising to him, but I am happy to agree. I shall come to the point about our dairy industry shortly. However, so far as we are to import dairy products—I do not think anyone would seriously suggest that that will not happen—it is important both in our own interest and in that of New Zealand that we should implement the Dublin Agreement. We ought to recognise the pressures that the New Zealanders are under. For example, they are under great pressure to reduce the volume of their exports if they are to get anything on the question of price. It is that sort of ruthless exploitation of their dependence on our market that we ought to understand.

Mr. Dalyell

What is degressivity?

Mr. Gould

Degressivity is the principle which has so far characterised our trade with New Zealand, whereby the total permissible quota decreases year by year.

Butter is one of the items which show the way in which the common agricultural policy works against our interest. Time and again we see proposals within the context of that policy which are totally in appropriate to our situation, either by virtue of the quite different structure of our agriculture industry or by virtue of the quite different patterns of our trading in agricultural products.

I understand that the problem with regard to sheepmeat has arisen because of a decision by the European Court of Justice, which tells the French that their import restrictions on English and Irish lamb must be dismantled; and then we are told by the French that as the price for obeying that decision we must accept a Common Market regime on sheepmeat which will raise prices to consumers by 50 per cent. and choke off all trade with New Zealand in that important commodity.

Can we not tell the French that, if it is a matter of being Communautaire on this question, surely we are entitled to expect the French to obey the simple obligation of membership, which is to recognise and abide by a decision of the European Court.

The distortion is true of European dairy products as well. The European industry is constantly in surplus. Ours is not. Our White Papers ask us to increase production. The distortion is true of glasshouse products, hops and wine, where proposals have been brought forward that are quite inappropriate to our situation. It is even true of a Commision draft regulation about potatoes, which would overturn a marketing arrangement which has worked pretty successfully in Britain. That is a draft proposal about which the Commission consulted absolutely no one, certainly not our own Ministry of Agriculture or, as far as we know, any of the farmers' organisations. It is intolerable for the Commission to dream up such proposals out of the blue, when we then recognise that our own Ministers are unable to defend us against them in the Council of Ministers, as has been amply demonstrated over the question of skimmed milk.

Mrs. Dunwoody

I hesitate to interrupt my hon. Friend. He is putting his case so succinctly. However, there is a move inside the Commission to do away with the whole marketing board structure, and this would not only materially damage our situation in regard to hops, potatoes and the Milk Marketing Boards but would cause great trials and travails to the industry and the housewife.

Mr. Gould

I am happy to agree with my hon. Friend on that point.

I wish to make the comment on the White Paper that it does not help to be mealy-mouthed about these issues. I very much regret that paragraph 29 of the White Paper, dealing with the skimmed milk fiasco—which was unanimously condemned by the House and disowned by the Minister because of the compulsory nature of the scheme—mentions the release of intervention stocks and the disposing of the stocks we now have. There is no indication in the White Paper that there is anything unacceptable or intolerable about that proposal. Therefore, it does not help us to debate these issues in that sort of manner. These considerations lead to a distortion of our whole trading pattern and of our trade balance with the Community.

In addition to the substantially increased amounts we must now pay for more expensive food, we run a much swollen deficit in manufactured goods amounting to a figure of nearly £1,000 million. That is a major component of the overall deficit with Community countries of £2,386 million last year. What has happened is that, instead of following the natural pattern of buying our food and raw materials from the cheapest producers abroad, who in turn provide us with preferential markets for our manufactured goods, we are now having to pay substantially more for food which is more expensive than we need to buy from precisely the same people who are outselling us in manufactured goods.

Mr. Douglas Hurd (Mid-Oxon.)

Since the hon. Gentleman is referring nostalgically to the natural pattern of buying, may I say that that pattern involves farm incomes in this country sustained by taxpayers' subsidies? If we return to that system, has he made any calculation of the addition to our borrowing requirement, under which we are already labouring with such difficulty?

Mr. Gould

The hon. Gentleman does not make a point of substance, because both the system of intervention and that of deficiency payments cost a great deal of money. The only point that is of significance as between the two systems is that one pushes up consumer prices and produces surpluses that are unsaleable whereas the other keeps prices down.

I return to the subject of the trade deficit. It does not require a skilled economist to say that a deficit of that size, particularly in manufactured goods, is of major significance, not only for our balance of payments but also for jobs, investment and the £ sterling.

Considerations of time prevent me from going further into those issues, and I pause only to speculate about what might have happened, given the dire warnings that we were given in the referendum about the consequences to this country if we withdrew, if we had withdrawn from the Community and had then found that the pound had dropped from $2.32 to $1.80, with unemployment being increased by 30 per cent. and investment continuing to lag.

I wish to mention one further point which should be taken into account when drawing up the balance sheet. This matter is not easily quantifiable in economic terms but is of great impor- tance. We were at one time assured that we would gain by a pooling of our sovereignty and we were told that our fundamental interests could always be protected by veto. In the sphere of international negotiations, we have already seen that, in reality, experience is different.

We know that in regard to North Sea oil we had to struggle hard for a few minutes in which to represent our opinion at the International Energy Conference. In regard to the common fisheries policy, we have handed over to the Community the ability and the right to decide these matters for us. My right hon. Friend the Minister must appreciate that the more firmly he insists on obtaining something as a result of the common fisheries policy to which we are not legally entitled, the more he will guarantee that we will have to pay a high price indeed for that concession.

These problems do not occur only in terms of international negotiation. We also know that there are difficulties on the subject of textiles. How many people recognise that the ability of the British Government to take anti-dumping measures will pass from us in July of next year? Under the Treaty of Accession we have ceded to the Community our right to take action. In terms of domestic legislation, from turkeys to transport we have given away the power to decide what is best for the people of this country. The most striking recent example was the skimmed milk situation. The House condemned it and the Minister disclaimed responsibility for it, but it remains law.

In case I am accused of drawing up this balance sheet on grounds of narrow nationalism and of concentrating on the undoubted damage which membership has meant for us, let me also say that the six-month period covered by the White Paper has been a bad period for the Community. The growing divergence of the economies of member States has burst asunder the currency snake and brought to a dead stop any prospect of economic and monetary union. The Tindemans solution for this problem—the two-speed Community—is perhaps the most unsatisfactory of a whole range of unsatisfactory compromises and destroys the only benefit ever promised to us by pro-Marketeers.

That benefit was thought to be a magical and mysterious process by which we would be dragged along on the coat tails of the more prosperous members. I never understood the argument that it would be possible for different Community members to proceed at different speeds and still arrive at the same place at the same time. Apart from economic difficulties and the problems of economic and monetary union, the Community as a whole has experienced substantial recession and a high level of unemployment. It has been notably unsuccessful in dealing with those problems. The common agricultural policy contains many lunacies which have become increasingly apparent even to one of its prime advocates, Commissioner Lardinois, who is to resign from the struggle of grappling with the inconsistencies of the policy.

Furthermore, the Community has failed to co-ordinate its policies—foreign policy, aid and notably any common approach to UNCTAD. There must have been many raised eyebrows at the recent statement by President Giscard d'Estaing to the effect that the French must have an army at least as powerful and numerous as that of the Germans. That is hardly the sort of comment one would expect from a leading partner in a body that is supposed to outlaw national rivalries.

The reaction to these difficulties has been two-fold, at least on the part of those committed to the idea of further European integration. On the one hand they have set about harmonising everything in sight, giving the illusion that something is happening and that matters are progressing, even if only about the contents of mayonnaise.

The second reaction has been an attempt to conceal the widening cracks imposed on the whole shaky foundation by imposing a tottering superstructure of federal institutions. I was delighted to hear the Minister agree that the Commission's document on European union is a blueprint for European union the day after tomorrow, a blueprint which has not even been contemplated, let alone endorsed, by the British people. The danger is that the British Government may react to these proposals and concessions with passivity and reluctance but nevertheless will find themselves feet-dragging and being edged along the path towards a destination which they will not or cannot perceive.

I confess that I regard direct elections as a step along that path, but I do not intend to develop that point. I share the Minister's view that the House should have the opportunity to debate that matter before a binding commitment is entered into. I believe that it is important that the Government should take the opportunity that now presents itself and should recognise that in European affairs we now stand at the crossroads.

There are two models of Europe to which we can work. On the one hand is the Europe of the federalists; perhaps I ought to say, the Europe of the unionists. That is the Europe which my right hon. Friend himself has said flies in the face of reality and all recent experience. It is a political dream which is simply doomed to failure. It proposes the prospect of a massive, centralised, autocratic, political, military and economic block, a sort of European super-State motivated by a form of super-nationalism. It is a prospect which I and many of my hon. Friends instinctively dislike.

The other model is that of a confederal Europe in which mature and friendly nation States recognise their community of interest and agree wherever it is sensible to do so—where decisions are made at intergovernmental level in the Council of Ministers, where views are notified and national interests are, in the last resort, protected by the veto, where democracy, which is so sadly lacking, must be introduced by virtue of the control which national Parliaments exercise over Ministers in Brussels. That is why it is important not to give up the battle, which we have hardly begun, to develop our own rules and institutions to make Ministers accountable to this House for what they do in Brussels. It is something to which the Government ought to pay a great deal more attention.

It is that second model of Europe which provides the Government with a great opportunity. The Government can come forward with a positive, clear, constructive alternative to the wilder fantasies of the Eurofanatics and say "We shall work towards the greatest possible degree of co-operation in areas like foreign policy, aid, defence policy and all the great economic problems, including unemployment and the disparity in our balance of payments." All this could be done by using the EEC as the foundation but not limited to the Common Market and—looking forward to the day perhaps when the Common Market itself will expand—to include other countries in Western Europe and our friends abroad.

It is significant that the recent arrangement made by the Chancellor of the Exchequer was not based on the special relationship or membership of the Common Market. It would have been possible, no doubt, quite apart from the question of whether we were members. I believe we must work for the extension of the Community. We must welcome the Greek application and look forward to the day when the Spaniards, the Portuguese and the Turks will also wish to join.

There is a test to be applied to those who used to resist the charge that the Common Market was a rich man's club. Let them now prove it. For those who claim that membership of the Common Market was an exercise in internationalism, let them now prove it. Those of us who are not happy with the Common Market want to see the widest possible membership and the widest possible opportunity of free trade. We must work to remove these obstacles to profitable and useful co-operation such as the irrational, wasteful and expensive CAP. We must try not only to reform it but to get rid of it. I recognise the political problems, but that must be our objective.

We must also avoid any woolly-minded tendency to be misguidedly Communantaire when our national interests dictate a different course. No other member of the Community makes that mistake. We should do much more to help the process of European co-operation if we followed a policy of enlightened self-interest—a phrase of which I believe my right hon. Friend the Chancellor is particularly fond and has used to good effect recently.

In other words, I believe that the Government should be working for those things which are sensible, practical and acceptable within the Common Market and a wider European context. We hear less these days of the argument advanced 10 or so years ago that by virtue of joining the Community we should somehow or other be able to give leadership to Europe. The fact that we hear less of it is perhaps a further reflection of the lack of national self-confidence which in my view led us to confirm our membership last year. Although we hear that argument no more, I believe that we have an opportunity to take a lead in Europe in the sense that we could point the Common Market and Europe in a more sensible and pragmatic direction. That is the particular contribution that we could make.

I believe that if the Government followed that course they would have very wide support not only from those who have always favoured Community membership but also from those who, recognising our membership, nevertheless feel that there is a possibility for European affairs to develop in a way which would suit our own interests. I hope that the fact that my right hon. Friend and the Government have indicated acceptance of the amendment on the Order Paper will represent an important first step in that direction.

6.5 p.m.

Sir Derek Walker-Smith (Hertfordshire, East)

The hon. Member for Southampton, Test (Mr. Gould) is in the unusual and agreeable position for a Back Bench Member of this House of having his propositions accepted even before he has made them. I congratulate him on that, and I would also congratulate him on the vigour, fluency and attractive way in which he put his arguments forward. He covered, as he was clearly entitled to do as the mover of this important amendment, a considerable area of ground and in particular three matters—the New Zealand matter, the institutional matters and finally, the Greek position.

I do not intend to follow him at all on the first of those points. I shall be making observations on the second, but, before I do so, I would just say parenthetically, in a sentence, a word in regard to the Greek application.

Of course I sympathise with this application and I hope to see the Community expanded in due course with nations like Greece which seek to join, but I wish to emphasise and reinforce what was said so eloquently by my hon. Friend the Member for Saffron Walden (Sir P. Kirk), that this application, at this time, has to be assessed in the full context of the implications of the position of Turkey in general and the position in regard to Cyprus in particular. I have an interest in and affection for that island—that lovely land for which nature has done so much and events have served so ill. I hope that in the not too distant future we shall have an opportunity for a more concentrated discussion on those particular aspects of the matter and, therefore, I say no more of it at present.

I wish to address my observations, in particular, to Section XII of the White Paper which forms the main subject of this debate and in which the institutional aspects are dealt with. That section starts, and rightly so, with a reference to the Tindemans report.

The terms of reference he was given are quoted in his report. It says: At the Conference of Heads of State and Heads of Government of the European Communities, which was held in Paris on 10/11 December, 1974, you"— he is addressing his ministerial colleagues— asked me to define what was meant by the term European Union'. That much used and much abused term means different things to different people. Of course, all sensible people want European union in a general sense. They want the maximum co-operation, the maximum common purpose and common action, not only in the economic and social matters covered by the Treaty, but in matters of defence and external relations. Unfortunately, the question is beclouded and bedevilled by the use of capital letters, by bandying about the term European Union with a capital "U" and by the encouragement which that gives to what I think were called dewy-eyed politicians or centralising politicians—not so many in this country but fairly numerous in other countries of the Community—to advocate and expect the early attainment of a tightly centralised institutional structure.

I am against that sort of structure. I am against the concept of a centralised European super-State. I doubt whether the peoples of Western Europe favour such a concept, at any rate at present, and I am reasonably sure that the British people do not.

Of course I am aware that federalism does not necessarily connote a tightly centralised super-State, that the term "federalism" has different connotations, or may have, according to whether one lives in a federal State like Germany, where it has implications for the preservation of the rights of the Lander against the central State, or whether one lives in a non-federal unitary national State like Britain.

In proclaiming his personal preference for federalism Mr. Tindemans may have some less absolute concept in mind, but in Britain, "federation" or "a federal State" has been adopted as a convenient shorthand for a centralised form of government to cover all the activities in the countries of the Community.

As such, the British people reject that concept. When I say that, I am, of course, speaking of the present, and of the predictable future. I do not profess to read the future 50 years ahead, when I shall not be in a position either to have to eat my words or alternatively to have the melancholy satisfaction of saying "I told you so." For the present, rebus sic stantibus, as the lawyers say, this is not the path for the British people. Ours is the pragmatic path which was sketched by Robert Schumann, one of the founding fathers of the Community—the step-by-step approach. That is a very sensible approach. For myself, in the words of the hymnographer, I do not ask to see The distant scene; One step enough for me. That does not mean that we should not seek to extend co-operation, common policies and concerted action among the Nine. Of course we should, and we should seek to devise mechanisms to do so, particularly in defence and external relations, having regard to the insistent and insidious growth of Soviet imperialism and to the need to capture the hearts and minds of the Third World. That last aspect, relations with the Third World, has its economic aspect also, making it a fitting subject for the EEC because, as we know on the highest authority, Where your treasure is, there will your heart be also. The evolution of the Community, the strengthening of its base, and the invigoration of its activity must proceed by way of consent and respect for the Treaties. I say this because it is only by the Treaties that Britain is bound and it is only to accession on the basis of the Treaties that Parliament has given its consent. Expansion or reconstruction of the institutions of the Community requires amendment under Article 236 of the Treaty, which, in turn, requires ratification by the constitutional procedures of the member States, and that, in the United Kingdom, in fact if not in form, under the Ponsonby rules, requires the consent of Parliament.

Indeed, this allocation of responsibility recognised by the Commission is seen in a recent European parliamentary answer on 19th February: The Commission would point out however that it is competent to pronounce on possible infringements of the fundamental rights set out in the Convention only in connection with the application of Community law. Where national law is involved, the question of infringement depends entirely on the rules regulating the Convention's applicability, and national guarantees of legal protection, in the member State concerned. We have, then, two spheres—a sphere of national responsibility and a sphere of Community responsibility—and two Parliaments, a national Parliament and a European Parliament. The two are neither contradictory nor competitive. They are, or should be, complementary. It is necessary that each works efficiently and harmoniously with the other to ensure that all executive action which is taken is brought under maximum parliamentary scrutiny and safeguards, as becomes our democratic processes.

These, then, are the lines on which I think we must seek to evolve and advance—recognition of common purpose and common interest, respect for the Treaties which give effect to them, and for the rights of the national Parliaments as directly representing the general will of the countries comprising the Community.

There are two dangers in particular which threaten the Community. They arise, as it were, at opposite ends of the spectrum and constitute the Scylla and Charybdis through which the Community and the component States must seek to steer their craft.

The first of these dangers is the habit of proclaiming vague and generalised aspirations couched in high-sounding language and asking that they be treated as serious and precise proclamations of policy. These are mainly the proclamations of the so-called "summits"—a word which does not appeal to me because it seems to be lacking in constitutional significance.

Mr. Geoffrey Rippon (Hexham)indicated assent.

Sir D. Walker-Smith

I am glad to see that my right hon. and learned Friend nods assent to that proposition.

The vague references to European union, and in particular the ill-fated call for economic and monetary union by a fixed date, are the sorts of things I have in mind. Every target proclaimed and missed is a setback for more practical and pedestrian progress. It is significant, and perhaps no accident, that none of the Heads of Government who participated in the 1972 summit and who helped to formulate these general propositions is a Head of Government today.

The second danger is the danger of excessive particularism, of undue interference in and regulation of the lives of the citizens. Mr. Tindemans said in his report: No one wants to see a technocratic Europe. That is surely correct and, I think, would carry general assent.

Article 100 of the Treaty gives a power to approximate laws, the power to effect harmonisation for harmonisation's sake, as it is called. But, of course, it is not necessary to harmonise all laws coming within the permitted powers of Article 100. Indeed, it is necessary not to. I have preached the doctrine of no harmonisation for harmonisation's sake ever since our entry into the Community in January 1973, and I am glad to say that the point is now clearly registered with the Commission, at any rate in principle. We hope to see further progress in this regard.

We have, then, to try to steer the Community on the right course between the Scylla of cloudy generalisation and the Charybdis of excessive harmonisation and regulation. In that, I believe that parliamentarians sitting here and in Strasbourg have a clear duty and a continuing opportunity. These, then, are the general lines on which I believe it would be wise for the Community as a whole and Britain as a member to seek to advance.

Time forbids reference to any other aspects save only one, if I may deal with it very shortly. Paragraph 86 of the White Paper refers to the protection of fundamental rights. I believe this to be of great importance both in the Community context and in our national context here in Britain. The Legal Affairs Committee of the European Parliament is engaged at the moment in an active consideration of this question of fundamental rights both in the context of the voluminous report which the Commission has produced on the subject and in its general context.

Whether the Community is yet in a position to embark upon the formulation of a written code of rights for the protection of the individual citizen covering all those socio-economic matters that are not covered by the European Convention of Human Rights, I am not certain; but I am certain that we must not lose sight of that possibility as a target and as a contribution which can be made to the well-being of the individual citizen. Meanwhile, we may have to rely on the development of case law in the European Court of Justice rather as our own law has evolved as judge-made in the United Kingdom. The protection of the rights of the citizens is a sine qua non of a free and democratic society, and I hope that we shall make speedy and significant progress both in this country and in the Community, and that our endeavours in each will help the other.

6.22 p.m.

Mr. Michael Stewart (Fulham)

I do not think that it can be disputed that the six months to which this document refers have been a dull six months for the Community. "Disappointment" may be too strong a word, but certainly when one looks at what happened at the end of that period—the very depressing Summit meeting in April—one is obliged to conclude that this has been one of the Community's dull periods. But it is all the more significant that, as one looks through the document, one finds that throughout that time, even during one of the duller periods of the Community, the process of making trade agreements all over the world has continued with the State trading countries, with Canada and with Mediterranean countries and that with trade agreements has gone also the political influence of the Community.

I do not think that it can be disputed that the existence of the Community and the desire of both Spain and Portugal to enter it have given it a power or a leverage to move those countries in the direction of the restoration of democracy. The Community, in other words, has been showing itself to be what many of us believed it would be—a magnet attracting attention throughout the world. To many of us, apart from political reasons, this was one of the considerations that we had in mind when asserting that it was right for this country to join the Community.

If we had stayed out, the Community would not have ceased to exist. Activities of the kind described in this White Paper would have gone on and Britain would have been excluded from all their results. Increasingly, as time went on, we should have become an afterthought in the eyes of the great countries of the world and of the Community of Europe itself.

I listened with great interest to the speech of my hon. Friend the Member for Southampton, Test (Mr. Gould). I am sorry that it is not possible for him to be with us at the moment. But I was glad that he spoke in terms of the kind of Europe that he wanted to see and how that could be built through the Community and other countries. The important factor to realise is that any realistic vision that anyone may have for the future of Europe has to be seen in the Community framework. The point that I was making earlier that the Community is a magnet affecting virtually all the countries in the world and that a Britain excluded from it would be a Britain without influence means that we have all to accept now that any idea that the Community itself will cease to exist or that it is sensible to think of taking Britain out of it must be regarded, to coin a phrase, as a dead duck. Whatever may have been our views in the past, we have to look forward to the development of the Community with Britain in it. It is to that that we must now direct our attention.

Let me give another example which illustrates what I mean. In paragraph 76 of the White Paper, there is a reference to the energy policy of the Community: The Commission responded with outlined proposals including, inter alia, a Community system for a minimum import price for oil. That is a matter of great interest to Britain. But we need not imagine that, if we were outside the Community, the Community would not have an energy policy. It certainly would, but it would not be so interested in a minimum import price for oil as a Community with us in it would be. This would happen all along the line. Therefore, I repeat and emphasise that it is no longer realistic to attempt to fight the battle of the referendum over and over again; Britain's membership of the Community has now to be accepted as a fact.

Mr. John Lee (Birmingham, Handsworth)

Is not my right hon. Friend allowing his enthusiasm to run away with him? If he looks at the history of almost every federation to have been formed since the Second World War—the West Indies, Rhodesia and the South Arabian Federation, for example—he will find that, whether good or bad in their intentions, they have all broken up.

Mr. Stewart

That is an extraordinary argument. We are not restricted, in our judgments about future political institutions, to federations formed after the war, I remind my hon. Friend that 200 years ago there was a federation formed which is celebrating its 200th anniversary. The Swiss federation also goes back some considerable time. What is more, I have never believed in the attempt to argue by analogy from history as though history was a person and remembered what it had done last time and decided to do it again. We have to judge what may happen in Europe on the basis of the present European facts—quite apart from the fact that the EEC is not a federation. I do not know whether it will ever become one, but that is not what we are discussing at present.

In what must be admitted to have been a depressing six months, there are one or two matters on which we may be able to go forward. I mention here the question of direct elections and, in a few moments, I shall develop why I think direct elections to a real European Parliament will be important.

But one matter that would cheer up Europe would be if Ministers could at last solve the not absolutely Herculean problem of the numbers and allocation of seats. That is all that there is to it; we need not bother about setting unrealistic target dates. The plain fact is that, if we want direct elections in the spring or early summer of 1978, Ministers have to reach a decision about the number and allocation of seats fairly quickly. It is to he hoped that they will do that in July. If they do not, it will not be possible to reach the target of 1978, though I accept that that would not matter all that much. If it means waiting another year to get full-hearted agreement, it does not matter. But Ministers should not behave as though there is all the time in the world to spare and go on postponing the decision from one conference to the next.

My right hon. Friend the Minister of State knows that, some time ago, I put forward a proposal whereby we could have direct elections to the European Parliament in this country without any alteration of the treaties. I did not press that idea because I felt that, now that we were in reach of real direct elections, there was no point in pressing it further. If Ministers go on from one conference to the next unable to agree on real direct elections there may be a case for looking at my plan again. The present arrangement of people like myself, trying to fulfil a dual mandate, cannot be expected to go on indefinitely. The situation is not satisfactory either for hon. Members or for the proper working of the European Parliament.

I have a special interest in paragraph 84 entitled "Uniform Passport and Passport Union". I shall concentrate on the mild objective of uniform passports, which means that all citizens of countries in the Community have for their passport a document shsowing clearly which Government have issued it. It would also be designed to clearly show that the issuing State is a member of the Community, so that any official on frontiers all over the world will know that he is dealing with a Community citizen. That is a mild task. We have to agree on the size of the document and on the design on the front. The paper says that the introduction of uniform passports will depend on the conclusion of the review of nationality. I wonder why. That review might determine who will be entitled to a passport but the uniform passport involves only a decision about the type of document that it should be. That decision could be made in a couple of week's time. The design of the document does not require a decision from the review of nationality. I hope that Ministers will get on with that matter because if they cannot do that they cannot get on with anything.

Mr. Jay

I hope not.

Mr. Stewart

I might have expected that kind of remark from my right hon. Friend the Member for Battersea, North (Mr. Jay).

Those of us who believed and still believe in British membership of the Community are not obliged to argue that everything in the Community is perfect, any more than those who believe in the integrity of the United Kingdom are obliged to argue that everything in the United Kingdom is perfect. My right hon. Friend the Member for Battersea, North will go on hoping not, but the tide of events will diverge from his thinking in the future as much as it has in the past.

Hon. Members who disagree with British membership of the Community often point out to the rest of us how things have not gone as well as were predicted and how some of us were overoptimistic.

Mr. Noble

He can say that again.

Mr. Stewart

They can sober themselves with the thought that their thinking has been rejected by the people of the country. I find it interesting to note that the people who wanted us out were those who wanted a referendum. We had that referendum and we know the result.

Mr. Prescott

In the referendum the people were asked to judge on an extremely complex matter. They had to make a decision between two parties—one optimistically in favour of our membership and the other pessimistically against it. The people made a judgment in favour of the case made by those who were more optimistic and we are entitled to argue that they made a mistake.

Mr. Stewart

The people made a judgment on the two cases presented by the two parties, and they made their judgment emphatically. It makes no sense for anyone to try to reverse that judgment. We must consider the kind of future that we want for Europe.

I now turn to the Tindemans Report. I look forward to the time when the nations of the Community can enjoy monetary union. The plaguing of trade between them by varying currencies is a misfortune but much must happen before we achieve monetary union. It is an admirable goal, but there is no need to put unrealistic dates to it. In order to get there it is necessary to have a more effective and generous use of regional policy by the Community.

That brings me to the other social, and in some cases political, functions that the Community should be serving. One of the weaknesses of the Tindemans Report is that there is much in it about institutions but it is not emphatic on what the machinery will turn out, or what it is for. One should add to Tindemans a more imaginative concept of the social objectives of the Community. We need effective control over institutions, such as multi-national companies and the pushing ahead of Community-wide regulations on health and safety at work, the protection of migrant workers and—to go with monetary union—the preservation of a high level of employment. Those are reasonable objectives. They should be of particular interest to my hon. Friends because sooner or later we shall have direct elections that will be fought on party lines.

If, therefore, we in our party, whatever our previous disagreements about the Community, have any regard for the standing of our party, we should want to see it working with its sister parties in Western Europe. We shall need to work out with them a common attitude on the social and economic future of the Community. That is an imaginative and valuable task to which we should be addressing ourselves. That future now matters, and the arguments about whether Britain should be in or out of the Community can be relegated to the shelves and the history books, where they properly belong.

6.39 p.m.

Mr. Ian Grist (Cardiff, North)

The debate is an odd one. As my hon. Friend the Member for Saffron Walden (Sir P. Kirk) said, we are attempting to cover an extraordinarily wide field. I am glad to see that the hon. Member for Southampton, Test (Mr. Gould) is back in the Chamber, because he made a good speech and covered a wide range. His strictures on the EEC would have been more convincing, however, if he had shown an awareness that we were going to remain in the EEC, which is based on the Treaty of Rome, and not some kind of quasi-EFTA.

I wish to talk about the application by Greece for membership of the Community. Hon. Members will know that that began in 1962 when Greece made an association agreement with the then Community and there was an understanding that Greece would eventually achieve full membership. That was frozen during the dictatorship of the colonels and became unfrozen with their overthrow and the advent of Mr. Karamanlis. The result of the association has been that one-third of Greece's exports and half her imports are already with the rest of the Community. Therefore, there is already a powerful trading arrangement between them.

Last year there was the application for full membership. In January this year the Commission produced an opinion on membership. In February the Council of Ministers, I think rashly and for Greece's internal political reasons, seemed to overthrow that opinion and go for rather rapid discussions.

There appear to be two main arguments in favour of Greece's membership. The first is that we wish to encourage the establishment of democracy in Greece and stabilise it, and it is thought that her membership of the Community will serve to cement the new democratic regime. That is arguable, but I do not think it is provable. We may yet see in older members of the EEC that that is not necessarily so.

There is also the argument that in order to survive the Community must grow, that somehow the two go together: that it is like a yeast that starts dying if it stops growing. I believe that to be dangerous rubbish.

We have already heard several times that in the past six months the EEC has been at something of a standstill and that they have been a disappointing six months. So they have been, but they have in any case been a very difficult six months internationally. It should not be held at the head of the EEC that it has failed. In fact, there has been quite a lot of movement forward, steadily and gradually. It is only foolish people who oversell the EEC and believe that miracles will happen in the short term.

If there has been difficulty, surely it has been contributed to by the indigestibility of this country in the institutions of the EEC. If growth is to be the criterion of whether the EEC is a living institution, why not have Turkey and Portugal as well, and why not renegotiate with Norway? Why not have Spain if it produces a democratic regime? People have mentioned the possibility of having Israel as a member. It meets the Ministers' insistence that all members should be democracies, and it is certainly Western in nearly all its outlooks.

As each new member joins the EEC, however, the Community's institutions come under increasing strain, because it is not just a free trade area. If we are to admit Greece, with its proud language, is Greek to be one of the languages of the Community? If not, why not? How many more interpreters shall we need, how many more documents and how many more seats in the European Parliament?

I represent a Welsh constituency. There is the argument about the size of the European Parliament to accommodate enough representatives from Scotland and Wales. If we continue to demand the maximum numbers in the Parliament so that Wales and Scotland have their representation, what size will it be by the time we have admitted all the other countries? The matter has not been properly thought out.

But is Greek entry altogether wise in Greece's own interests? The economy of Greece is still structurally very badly out of accord with that of the rest of the Community. Income per head is still under half the average of the rest of the Community. Greece has 35.7 per cent. of her total working population still engaged in agriculture, an enormous percentage, quite out of accord even with the more agricultural members of the present Community. If she entered the EEC, there would be a major claim on the Regional and Social Funds, at the expense of this country as a recipient and putting an intolerable strain on the patience of the West Germans, who are beginning to be just a little fed up with beggar countries such as us.

Mr. Lee

Is not the hon. Gentleman perhaps subconsciously reinforcing one of the criticisms that many of us have made of the EEC, that it is a rich man's club? Greece is a poor nation knocking at the door. Is that right?

Mr. Grist

Not at all. The very size of the trade between Greece and the Community indicates that a strong Community can do better trading with Greece and aiding Greece as an associate outside full membership than inside, where she will be subject to all the rigours and disciplines of full membership, until her economy more nearly equates to that of the rest of the Community.

That was the opinion of the Commission in January, when it said at paragraph 11 of its report: Although in 1975 the work of agricultural harmonisation has been taken up again, the fact is that Greece's position is still far from being that of a near Member State. Complex political and social considerations will mean that integration of Greek agriculture with that of the Community, whether within the framework of Association or of membership, will take time: and the faster the process, the greater the cost. … Greece is currently to a great extent free to conduct its trade policy towards third countries. Even with regard to trade with Member States, special mechanisms could be allowed if grave difficulties were to arise. In the case of full membership, however, the same degree of flexibility could not be allowed without disrupting the common market. Everything possible should of course be done to avoid such a risk, especially in view of the likelihood of further applications for membership from countries in a similar economic position to that of Greece, for whom the arrangements concluded within the framework of Greek accession would create a precedent. In its conclusion to this section it said: The Community's experience has already shown the need for a transitional period of some years even for countries with a highly developed industrial base and an agricultural structure comparable to the other Member States. In the case of Greece, where structural changes of a considerable magnitude are needed, it would seem desirable to envisage a period of time before the obligations of membership, even subject to transitional arrangements, are undertaken. That seems to me to be an extremely wise conclusion, reached on the basis of just how strong Greece is industrially and agriculturally.

The Council of Ministers would have done well to treat that opinion with a little more respect. It seems to have panicked slightly under the pressure of Mr. Karamanlis and his fellow Greek politicians, who suggested that the Commission was spitting in the face of Greek aspirations. I do not believe that it was. I believe that the opinion was in the best interests of the Greek people.

Mr. Christopher Price

Does the hon. Gentleman think that we in this country are the best people to read economic lessons to other countries? Is not the nub of his argument that we, having squeezed into the club ourselves, wish to blackball anybody else who applies?

Mr. Grist

Not at all. The hon. Gentleman missed my earlier point about what happens if the club goes on and on getting bigger. We should have been a founder member. We were blackballed because we were a little slow in our original thinking on Europe, but we are a heart member of the Community. I am sure most hon. Members will agree that Europe without Britain but with Greece would not be the same as Europe without Greece but with Britain. There is no doubt that we are a heart member of the EEC. We have to be at the core of any European unity. Of that there can be no doubt whatever.

We ought to consider also the effect on the EEC's dealings with the countries of the Maghreb and the Eastern Mediterranean if Greece were to become a member—the trading agreements relating to the agricultural products of Greece and the Maghreb.

Finally, we ought to look at the effect on relations with Turkey. I thought that the Minister was extraordinarily optimistic in thinking that if Greece were to become a full member of the EEC—I wonder whether the negotiations would last for three. four or five years—somehow or other historical hatreds would die out along that border and in Cyprus itself. I cannot believe that that would be so. I should have thought the hostilities there were comparable to those in Northern Ireland. Anyone who thinks that that sort of historical hostility dies in less than two or three generations is a great optimist.

If we were to have Greece within the EEC, we would be buying ourselves a very real bundle of trouble. Of course, Mr. Karamanlis has said that he would not oppose Turkey's application for membership. But there is the question of what we mean by a democracy? Even within the EEC, could we be assured that those two countries, just because they were members, would cease to wrangle and be hostile? I believe that it could tear apart the fabric of the EEC itself.

We should be extremely careful—much more careful than Ministers have so far shown themselves to be—before accepting this particular application for membership. It would provide considerable difficulties in its own right. It would impose a great strain on the EEC's institutions. It would damage the development of the EEC, especially in foreign affairs, where, after all, the Minister has already told us that we should seek to speak with a single voice. I cannot conceive of that continuing to happen.

It would set a highly troublesome precedent for the application of other countries. It could lead to a form of gigantism and to internal wrangling which in my opinion could lead to the ultimate collapse of the Community—and that collapse would itself lead to the most fearful political consequences.

6.53 p.m.

Mrs. Gwyneth Dunwoody (Crewe)

I should like to take up some of the points of the hon. Member for Cardiff, North (Mr. Grist) on the problem of Greek accession, but before doing so I want to deal with some of the problems as I see them in the Common Market today.

I say to my right hon. Friend the Member for Fulham (Mr. Stewart) that many of those who were not in favour of entry into the Common Market nevertheless feel that we have a very real rôle to play at the present time, not only in the European Parliament but also in this House of Commons, in submitting to very close scrutiny the directives, the decisions and the moves taken by the Common Market institutions. I hope that my right hon. Friend will accept that this does not arise from a simple desire to wreck or to destroy an existing institution.

It arises out of a very simple fear, that if we create an enormous power bloc, and that power bloc arrogates to itself the powers normally vested in democratic institutions—without developing a means of at least reporting back to the people of the Nine countries the decisions being taken and the reasons behind them—we create the very opposite of a democratic and efficient State. We do not in this way create a federation, but something close to an international bureaucracy. That would be a most dangerous thing for us to do at this stage of world politics.

I find the past six months that we are discussing rather frightening because of the way matters have developed. The Common Market seems to me to have lost any sense of where it actually wants to go. We have this afternoon been discussing very briefly some of the major policies and the way in which the finance of the Nine is divided between those policies. I should like to address myself to some of the difficulties that I think arise, not only in terms of internal policy but also in regard to particular political questions, such as the accession of the other Mediterranean States and the Maghreb countries.

First I turn my attention to the agricultural policy of the Common Market. There is a great deal of discussion on the need to reform the CAP. We look at the amount of money being spent and are frequently told by our partners that Britain constantly benefits from the monetary compensation amounts. We are told that we are now, three-quarters of the way through the accession period, still benefiting from the fact that other people are actually subsidising some of our food. I do not believe that it is wholly true. My hon. Friend the Member for Southampton, Test (Mr. Gould) dealt with many aspects of that policy this afternoon.

There is no doubt in my mind that, unless the basic dichotomy of the CAP is dealt with, and quite rightly, we do not need to worry whether Britain stays in the Common Market, because I do not believe there will be a Common Market in existence in 10 years' time.

My reasons are very simple. The CAP developed over a period of time when it suited the agriculture of the existing member States. After 16 years since its inception there is still a large majority of small farming units. They are utterly dependent on 10 or fewer cows and on the production of milk and milk products, for their basic income.

The CAP in that time has done very little in real terms to change that structure. When the hon. Member for Saffron Walden (Sir P. Kirk), who speaks for the Opposition, talks about the need for structural change, I agree with him absolutely, but perhaps he will try to convince the Commissioners who have to apply these policies, and the Agriculture Ministers who sit in the Council, that it is really not good enough to say that the EAGGF has within it some means of assisting structural change, when at the same time the bulk of the moneys of the CAP are still being paid to the farming community to enable it to maintain its traditional methods of production. This is really what is happening.

It does not matter whether it is milk, butter or beef, the traditional patterns of agriculture inside the Common Market, because of the intervention system and the attempt to get common product prices, are continually creating unwanted surpluses. The surpluses then become a political embarrassment to the Commission. The Commission then comes forward—almost invariably at the last moment before the price review—with a number of ad hoc measures meant to deal with the surpluses in such a way that each individual Council member can return to his own State and defend the deal he has made in Brussels.

The result can be seen not only in the total fiasco of the skimmed milk powder but of the sort of decision, debated in the House this week, on the problem of creating two different levels for wheat prices and being able to distinguish which wheat is which only by creating a test which, everyone accepts, is not workable, has not been accepted by the member States, and cannot really be defended. It is an open invitation to fraud.

Some of my hon. Friends are keen on telling us that the Europe of tomorrow must be built immediately, but it is that sort of inconsistency and nonsense that will tear apart the fabric of the Common Market, not the carrying of a common passport and not a common decision on continental time. The major decisions of policy important for everyone day after day are concerned with food and unemployment. There is no realistic political target for changing either the financing of the Common Market or the way in which it reaches political decisions.

I sometimes despair. Some of my European colleagues are almost federalists. They say that, when there are direct elections, the European Parliament will be able to reach conclusions the present Parliament is unable to reach. Yet we are given no evidence for believing that. They do not tell us which powers are to be arrogated from this House to the European Parliament. After the direct elections will the European Parliament have fiscal powers? Will it be able to pass new laws? If it is to be an effective body after direct elections it must have other powers. I should strongly resent the stealing from this House of more basic powers. The only safeguard for the British people lies within the House of Commons, as it has done for many hundreds of years.

If there is to be structural reform it must be in the areas on which the Common Market spends most of its money. I have already quoted the draft European budget for 1977 which shows conclusively that agriculture is at the head of the list. Very little attempt has been made inside the EAGGF to change the existing structure of the industry.

We find on examining the Tindemans Report that Leo Tindemans has endeavoured to be pragmatic and to produce a document that will meet with the approval of all the member States. Yet he has nevertheless committed himself to certain decisions which should be fully debated in the House before they are agreed by anyone, let alone by the Council of Ministers. For instance, he says of a common foreign policy: The co-ordination of policies, which is important during a transitional period, must therefore gradually make way for common policies, which means that our States must be able to draw up a common policy and act together". He goes on to say that the Council will have the obligation to reach a common decision. When he talks of a new economic world order he says that decisions must be taken to strengthen the instrument of our common action by gradually transferring to the Community a substantial part of national appropriations intended for development co-operation (major development projects, food aid. financial aid), and in co-ordinating the remainder of our activities in this field". He goes on to talk of a common nuclear policy, a subject that has never been debated. He says that we should create a nuclear regulatory commission exerting control over the siting, construction and operation of power stations. When he speaks of the institutions of the Common Market, he says that recourse to majority voting in the Council should become the normal practice.

Mr. Tindemans is saying that we should move much more actively towards a federal State. [HON. MEMBERS: "Hear, hear."] If that is the view of some of my hon. Friends they should spell out the full implications to the people of this country. They carefully omitted to do so.

Mr. Roderick MacFarquhar (Belper)

I did.

Mrs. Dunwoody

I do not believe that there was ever any attempt to explain that what the federalists envisaged was the creation of a European State with fiscal and legislative powers, control being taken away from the elected Parliament of this country.

Mr. MacFarquhar

My right hon. Friend the Minister of State will back me up when I say that, whatever other hon. Members said in the referendum campaign, I maintained throughout that that was my view of the future Europe, and I spelt out the implications for my voters.

Mrs. Dunwoody

My hon. Friend did it so silently that we did not hear it.

Mr. MacFarquhar

My hon. Friend should have come to Belper.

Mrs. Dunwoody

My hon. Friend may hold that view but it is not one that I hold. The Common Market is undergoing such stresses and strains that we need to be clear in our minds whether we are prepared to go along with that view.

The hon. Member for Cardiff, North had considerable doubts about the accession of Greece to the Common Market. Were I a pro-Marketeer, which I am not, I, too, would have considerable worries—[Interruption.] My hon. Friend the Member for Lewisham, West (Mr. Price) displays the lack of appreciation of democratic institutions which is common among those of his ilk. He believes that those who sit in the European Parliament should be wholly committed to an idea which is very limited in its application. The full implications of the accession of Greece have not been spelt out. The initial decision to allow Greece to apply for membership was taken with astonishing ease. I am worried that that decision was taken on the assumption that the period of negotiation will be so long that there will be time for the Greek economy and political institutions to change fundamentally.

In its "Opinion on Greek application for membership" the Commission has this to say of agriculture: While the area under cultivation in a Community enlarged to include Greece will increase by close to 10 per cent. and the farming population by a little over 12 per cent., the number of farm units will increase by 19 per cent. The output per person engaged in agriculture in Greece is about 40 per cent. only of the Community average. Agriculture contributes 16 per cent. to the gross domestic product at market prices in Greece, and employs 36 per cent. of the population. Greece will be faced with considerable difficulties during the transitional period. The strains and stresses on the average Greek will be so great that they could contribute to the destruction of Greece's exceedingly shaky democracy. I should like to have some reassurance that Common Market Ministers have considered the trauma to which the Greek economy will be subjected in the transitional period.

Mr. Sydney Bidwell (Ealing, Southall)

I asked my right hon. Friend the Minister of State a Question on this matter some time ago. I have received no reply. One problem which does not seem to have been taken into account is the question of migrant labour from Greece, or even from Turkey.

Mrs. Dunwoody

I think my hon. Friend must accept that there will be these inconsistencies, because the Greeks will be able to work wherever they wish in the Community. There is no conceivable way to stop them, nor should we seek to stop them if they were full members.

The difficulties which will arise in the transitional period will be very great. If this is so for the Greeks, it is even more so for Spain. I do not believe that there is yet any real evidence that the Spanish authorities have taken on board the fact that a democracy is not a place in which people can be imprisoned for following normal trade union practice, or incarcerated for objecting to the political system in their own country.

I believe, unlike some of my hon. Friends, that as we are in the Common Market we must seek to alleviate the difficulties which arise for this country in membership. I believe that our entry into the EEC was wrong, and I would have liked the people to have come to a different decision, but what I am most worried about now is the total lack of long-term planning and the fact that lip service is paid to the need for a change in policy but is not backed up by the decision-making process.

The dangers for Britain are very considerable indeed, but the dangers for a democratic Europe from this rickety, ramshackle and singularly inappropriate organisation which we call the EEC are far greater, and are growing greater every day.

7.11 p.m.

Mr. John Davies (Knutsford)

In listening to the speeches throughout this debate as I have done, my view about the White Paper would approximate more closely to what has been said by the right hon. Member for Fulham (Mr. Stewart) than to the lugubrious Jeremiah speech to which we were treated by the hon. Member for Southampton, Test (Mr. Gould) or the somewhat complacent view given by the Minister of State at the outset.

We can only recognise that the achievements of the Community in the six-month period described do not give great satisfaction and cause us real concern. I think that this debate will serve as a means of expressing our views as to how satisfied we are or are not with what has been done in the past and the way we see the future developing.

I think that the Community needs to change its sense of direction in many ways. It seems to me as I look back and as I am drawn more than most into the specific detail of Community activity; that this activity arises too largely as a result of the chance evolution of projects. Things simply happen—they emerge at the appropriate moment, then they are fielded for the Community to deal with. I do not think that is the right way to go on. When one looks at the diverse propositions which pass one's horizon, it seems to me that there is no serious pattern of any major kind. This is very worrying, and it is represented today in the White Paper before us.

I cannot subscribe to the thought that being a life-long believer in future development of a much more integrated pattern on this Continent should debar me from objecting to or criticising matters in the EEC which I feel have not been dealt with properly. I believe that a framework of strategy for the Community should be concentrated upon in the same terms as you, Mr. Speaker, would concentrate upon a request for Standing Order No. 9 debate. You would have to decide whether the matters raised had been shown to be specific, important and urgent.

That should also apply to EEC matters. There should be a real realisation that these things should rivet the attention of the Community and condition its development. It is essential that the Community should devise a framework of action for assessing these things and deciding whether they are things which no individual member State alone could achieve. In these circumstances, the Community itself would be the essential vehicle to bring about changes which could not by any other means be embraced. That would be a more valid move, and a way of devising its strategy which I would welcome.

That would include such things as institutional change, although I do not believe that institutional change in itself is any more desirable than harmonisation for harmonisation's sake. It must lead to a purposeful objective. This would be embraced by the criteria I have mentioned—whether the matter is of an urgent, important and specific character, coupled with whether it is something that the Community would have the sole capability of dealing with.

The real underlying requirement here is that the organisations of the Community should work far more in concert to devise the framework with which I am concerned. The hon. Member for Southampton, Test mentioned an external event which came across our horizon yesterday in the Scrutiny Committee when we heard evidence from the Minister of Agriculture. This was concerned with devising a new market organisation for potatoes in the Community. There was no consultation with the Government Department in this country, and as far as the Minister knew there had been no consultation with any organisations in this country which have a real interest in the matter. We are incapable of saying whether such consultation took place in every available department or organisation in other member countries. This highlights my anxiety.

It is essential to try to bring about a realisation that the important thing in Community terms is that there should be a degree of understanding of the relevant problems from a technical standpoint by those who evolve them and those who have the political task of ensuring that they are acceptable to their own people and that the people will abide by them. That is an essential part of the organisational structure of the EEC, and I doubt very much whether it is working this way at the moment.

We have had in the Scrutiny Committee innumerable cases before us where the consultation activity in the Community was very suspect, to say the least. This issue is very worrying when one is concerned with getting a proper framework and strategy for the future.

Mr. Frank Hooley (Sheffield, Heeley)

Would not the right hon. Member agree that this is a basic disease which has infected the whole Commission? It is justifying its existence all along the line by meddling in every direction. This makes no sense at all.

Mr. Davies

It is very dangerous to generalise too greatly. I would rather concentrate on the experience we have had with inadequate consultations which result in patently incompetent proposals. To say that this is true across the whole range of the Commission's activities is erroneous. But the cases I have instanced demonstrate the lack of purposeful structure to achieve things which the Community alone can achieve.

I shall not talk any further about such matters as direct elections or the relationship with Greece, important as they are. I tend to agree with the comments made by one or two hon. Members that the Commission's views were too abruptly swept aside by the Council of Ministers; but that can happen.

It is vital that the Community should address itself in the most profound manner—I recall that the former Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), was strongly of this opinion some time ago—to the extremely difficult problem of the future access to world-wide raw materials resources for a Community which disposes of none, or very few, of its own.

It is essential that this matter should be regarded as of fundamental importance to the development of the Community. It has an important correlation, too, in the relationships of the Community with the rest of the trading world, particularly the developing world. Therefore, it is an area which no individual nation State can itself deal with adequately and where a central unitary organisation is needed to overcome the problems, not least in relation to energy and in many other materials essential to our welfare and the maintenance of our industrial competence, and ensure that they are adequately catered for in the future.

Here is a specific, important and urgent area where action needs to be taken but where it cannot be taken by individual countries. It must be a joint operation. I therefore believe very strongly that it should be regarded as a primary task of the Community.

I turn to industrial policy. More and more we are confronted inside this House and outside by the fact that we have industries throughout the Community which are in serious danger of complete extinction. The shipbuilding industry and even the steel industry are at very serious risk of going under. There are many others. There has been reference to the fishing industry. These are industries in which individual action by individual countries will not preserve the earning and employment capacity of these industries. Here some common action is possible. There should be a definite intention of the Community to deal with these issues. This, therefore, is an area of precise and specific importance which can be dealt with by the Community.

Mr. Marten

I take the point my right hon. Friend is making. He mentioned shipbuilding. Surely that is a world-wide problem. Would it not be better to deal with that problem through something like OECD? There is shipbuilding capacity all over the world which must be reduced.

Mr. Davies

That is true, but there are rival problems which exist in the trading relationships covering such matters. There are countries trading with the Community which have serious shipbuilding problems. I think of Spain, for example. I have had something more than an entirely happy exposure at times to the problems of this industry and I therefore feel about it deeply. Europe must try to concert a common understanding of what this industry with its great growth potential needs and how to procure it in the face of the most ruthless and absolute competition of a totally non-respecting kind from the extremities of the world.

The problem must be dealt with by organisations like the Community and not by an organisation, however intellectually competent, like OECD with its incapacity ultimately to administer any kind of sanction. That again is an area of quite fundamental importance to the Community about which the Community should be concerned.

In trade I am concerned very much with the continuous development of relationships between European States and the developing world. A lot has been done. Europe has shown the ability to concede through generalised preference arrangements and the Lomée Convention the most imaginative proposals. Much more has yet to be done, however. There is the whole problem of the stabilisation of export receipts in developing countries. That is still a fundamentally difficult task. We have not reached the end of the road yet.

I refer particularly to the matter of sugar. There is a recent agreement, which, because it seems to be so unpopular to all the parties involved in it, must be just about right. There is not the slightest question about the potential threat to our industrial and trading position of the enormous industrial power of Japan, which I do not believe subscribes to conventional world-wide trading norms. It is impossible to imagine that individual countries can cope with the immense power involved in that area.

I look at the internal markets of the Community and I am sure that, although there are still curious distortions of competition, there is not a great unease about competition within the Community itself. I do not believe that is an area where immense effort needs to be exerted in order to procure some kind of sanity which does not already exist. I think, however, that more needs to be done on cartels and monopolies. Again, that is an area where a major Community activity must be performed which should have the general agreement of the member States. I believe that that also goes for the multinational problem. I am not one of those who subscribes to the generally emotive reaction to the multinationals. My perception in the developing countries has been that the one thing that is more welcome than the arrival of a member State is the arrival of a multinational.

I come now to the difficulty of economic policy. Here I echo comments which have been made earlier, but I take the matter from a slightly different angle. The various facilities of the Community, through the CAP, the Regional and Social Funds, and the funding operations of the European Investment Bank and Euratom could all be directed to the single purpose of improving the structure of the Community. There should be a master plan, but there is not. These various elements of Community activity operate independently of one another and in total ignorance from time to time of what is going on alongside them. This can happen in a single area. For instance, in atomic power, borrowing and lending undertaken by one of the Community institutions was totally unknown to institutions responsible for another part of that subject. That is the wrong approach to the problem. There must be a proper correlation of such matters.

Therefore, in improving the economic structure of the Community the nine member States, with the Commission and the other institutions, must outline an objective and say how it is to be attained long before instruments of a more or less imprecise fashion and incomprehensible nature are implemented.

On monetary policy, I can only say that I am sure it is true that the chances of improving monetary relationships are still very distant from us. They are equally distant from us in the world outside. We all realise that the existing state of monetary policy world-wide is in the most deplorable condition and can give rise to the kind of external explosion that occurred recently with sterling. But the Community must clearly be prepared to seize opportunities, because that is what is required, and one of the opportunities which it has seized is acting as a banker on borrowing and lending. The Irish and Italian Republics have been the subject of substantial effort.

There has been reference to agriculture. I do not subscribe to all the extreme critcism of the CAP. I think it has a very sensible purpose to perform and I support it strongly. Of course, it is beset with dilemmas. With the member States the Commission certainly has a problem to try to eliminate some of the extraordinary and ridiculous elements which so befoul the performance of the policy itself.

I do not disagree with the hon. Member for Crewe (Mrs. Dunwoody) regarding the over-contribution of funds to intervention and the under-contribution to structure. There is a purpose to be achieved, but it needs to be achieved not by the totally unaligned and independent activity and thinking of the Commission but by discussion with member States.

I believe that there is a vast area of work to be tackled and that the approach to it has not been as it should be. Evidence is to be found in the White Paper that the Community can contribute immensely to our welfare as a country and as a continent, but unless it changes its method of approach to the evolution of policies it will continue to arrive at what is at best a disappointing White Paper and six-month review.

7.31 p.m.

Mr. Roderick MacFarquhar (Belper)

I hope that the right hon. Member for Knutsford (Mr. Davies) will forgive me if in this wide-ranging debate I do not take up all his points, many of which I agree with entirely. My objective is to try to discuss briefly one problem—namely, Greek entry—and to relate it to the political development of the EEC.

I am in favour of the fullest possible unity within Europe on the basis of democratic institutions. I hope that Spain, Portugal, and perhaps one day Czechoslovakia, Poland and others, will want to join and will be able to join the European Economic Community, or whatever it may be at that stage.

I agree with my right hon. Friend the Minister of State that, bearing in mind the great contribution it has made over the centuries to the development of democratic ideas, Greece has a special call upon our consideration when it applies for membership of the Community. I realise that it ill-behoves a member of a late-entry country to seem to cast doubts on the forthcoming membership of an even later-entry country, but perhaps I might be forgiven on that score as I have supported British entry into the Community for far longer than the years we have been a member.

I have no objetion to the entry of Greece into the Community on the ground of cost. I am sure that my hon. Friend the Member for Southampton, Test (Mr. Gould) is wrong in his allegations that those of us on this side who cast some doubts upon the immediate need for Greek entry are attempting to preserve a rich man's club. As my right hon. Friend the Minister of State said, the arguments for Greek entry are not really economic. I am prepared to pay the economic cost. I believe that the arguments are political. It is on that level that I wish to discuss the problem of Greek entry.

It seems that there is a fundamental illogicality in suggesting that an organisation that is primarily a group of nine independent nations united for certain economic purposes, as my right hon. Friend was at pains to emphasise, would be able to act as a bulwark for the internal political institutions of a tenth member. We know that in the spirit of good community relations the German Government have on occasions provided financial backup to the Italian Government, and even to the British Government, but what is any Community Government, or all Community Governments acting in concert, going to do if the Greek colonels, captains, generals or whoever manage to carry out another coup? I am not suggesting that another coup is likely, and I am sure that all hon. Members devoutly hope that such a thing will never take place, but I make the point that while an economic community can take economic rescue actions to support one of its members, it is not fitted to take political rescue actions.

I ask hon. Members to consider what steps they think any other member of the EEC could have taken in 1958 or 1968 if political developments in France had gone in a direction other than that in which they did go. Nor are the dangers of Greek entry purely internal political ones within Greece. When the Greeks put forward their application a Greek official spokesman was quoted in The Economist as saying: Turkey would think twice before attacking a member of the EEC. If Turkey does think that way, it might be because it considers that it would be putting a definite black mark on its own proposed entry. There are no other reasons for the Greeks being confident that membership of the EEC will protect them militarily against the Turks.

Does any hon. Member think that if there were to be an outbreak of hostilities between Greece and Turkey the EEC, as the EEC, would be able to do anything about it? If there were hostilities and Turkey were to get the upper hand and Greece were to lie helpless in the face of a Turkish invasion—we must all hope and pray that such developments will not take place, but we must consider possibilities—I think everyone would agree that it would be a tremendous blow to the solidarity of the Community.

Some argue that if the Turks were also to come into the EEC there would be no problem. That is an argument that does not have much force. Both countries were members of NATO, but that did not prevent the recent crisis arising. I believe that Turkish entry poses more serious problems to the EEC and perhaps may not take place even in the distant future.

I regard the EEC as a model for similar moves towards regional unity in other parts of the world, and it is to be hoped that in the long run some beneficial results will stem for world unity, but the Community will not be able to provide such a model if its eyes are bigger than its stomach and it attempts to go beyond the word "Europe", a title that firmly and succinctly reflects the common cultural heritage which provides the basis for the gradual growth and expansion of the EEC. That is a common heritage which is not shared by Turkey. If it is felt that Greek entry obliges us later to admit Turkey, I regard that as a further argument against Greek entry at this stage.

I regret that my hon. Friend the Under-Secretary of State is not on the Front Bench as I wish to take this opportunity of congratulating him on what I think will be his first appearance at the Dispatch Box in a debate. I hope that he will say whether the Government believe that Greek entry places any moral obligation—not a contractual one—upon the other EEC countries to admit Turkey at a later date.

How should we face the problem of Greek entry? As the motives for accepting it and for Greece wanting to come in seem to be primarily political, the problem can be considered only in political terms. The first requirement is time. There must be time for the wounds that Greek democracy has suffered in recent years to heal so that we can be reasonably confident that Greece can solve its own political internal problems.

Secondly, I believe that the Turko-Greek problem should be solved so that the EEC is not likely to be faced in future with a situation in which it will inevitably have to sit back and watch helplessly while one of its members becomes sucked into mortal conflict.

Thirdly, I believe that Greek democracy can be supported by politicians in the EEC if and when they are able to work as European politicians in an elected European Parliament, strengthening European institutions both at the European level and the national level by their joint endeavours.

Mr. Christopher Price

Does my hon. Friend realise that, by laying down the condition that there must be a solution to the differences between Turkey and Greece before Greece is allowed entry, he is giving Turkey, in the negotiations between that country and Greece, it already having overwhelming and masive military superiority and other superiorities, such power that he is almost ensuring there will never in those circumstances be a signed solution to such differences as Cyprus and those that exist between the two countries?

Mr. MacFarquhar

My hon. Friend has made a valid point. I suggest that the Turks have certain interests in Europe. If the Turks have interests in Europe—interests on which other people in the Community may have different views from the ones that I have expressed—they will not want to try to blackball Greece by the various methods mentioned, but will be more anxious to obtain a solution to the problem.

I should like to end by urging my right hon. and hon. Friends who have responsibility for these matters to help in every possible way, to use their best endeavours to press on with the programme for direct elections by the spring or early summer of 1978. The Minister of State emphasised the pragmatic progress that we have achieved and the pragmatic way in which we may hope to make further progress.

My right hon. Friend did not say very much in the five matters that he listed about direct elections. I accept, and I am sure that all those whom my right hon. Friend might regard as dewy-eyed accept, the need to work on sensible programmes in a constructive way, but my right hon. Friend and other Ministers with responsibility must accept and, I hope, to some extent share the belief that over and above these concrete steps we all hope that he and others will be able to take there must be the goal of a growing European unity. A directly elected European Parliament will be a milestone on the route towards that unity. Not to achieve it by the date that has long been announced and worked for will be not just a passing setback, as my right hon. Friend seemed to suggest, but a major defeat. It will give encouragement to those who, even today, have not accepted the result of the referendum and the reality of British membership, to try, yet again, to get Britain to withdraw from the Community.

7.42 p.m.

Mr. Roger Moate (Faversham)

The hon. Member for Belper (Mr. MacFarquhar) referred to two subjects to which I wish to turn later. At this stage I merely say that I disagree with him on both counts. I found it hard to understand—he was not very convincing—his proclaimed belief in a wider Europe and his reasons for not admitting Greece to membership of the European Community. I shall return to those matters later.

I should like to begin by adding to the complaints that have been made about the nature of the debate. I mention this matter now not to repeat the points that have been made, but to urge that at a future date it should never be argued that any of these 22 documents could be regarded as having been properly discussed in a debate of this nature. Many hon. Members have referred to the Greek application. It could be argued that that subject has been fairly widely considered, but when we recognise that many of these 22 documents have not been mentioned—I make no complaint; it would not be possible to refer to all of them—to suggest that the House has taken note of any of them would be wrong.

The debate covers documents dealing with the bread-making quality of wheat, European union, the Greek application, New Zealand butter, and so on. We have such a vast variety of documents that I am surprised that the Leader of the House should have thought it possible to put them all together in a one-day debate. I call this a dustbin day. The right hon Gentleman has put in as many things as he conveniently could. It may be that many of these documents will be consigned to the dustbin of history and that that is the appropriate place for them.

I welcome the Government's acceptance of the amendment moved so eloquently by the hon. Member for Southampton, Test (Mr. Gould).

I also welcome the speech made by the Minister of State. I hope that it will not embarrass him if I say that I agreed with almost everything that he said. If he feels that he must rewrite his speech, I can understand that; but it was a sensible and pragmatic speech.

I welcome what the right hon. Gentleman said about the Government being prepared to reject the Commission's opinion on European union. I was hopefully awaiting a similar statement by my hon. Friend the Member for Saffron Walden (Sir P. Kirk) on behalf of the Conservative Party, but that was not forthcoming. That, too, is a point to which I should like to revert later.

The Minister said that a belief in a pragmatic, practical and prosaic approach was entirely acceptable. The only trouble with a pragmatist is that, welcome though that approach is to these matters, one is not sure what he will be saying tomorrow. The right hon. Gentleman is one of those whom we used to regard as dewy-eyed idealogues. Therefore, we are suspicious that tomorrow or the day after he may be back with that same class of people.

The Minister said that we wanted a clear and precise indication of where we are going. He gave a clear rejection of federalism on behalf of the Labour Government. I think that is right. We need a clear indication of where we are going and where we are not going. One of our national problems is that we have had so much woolly talk about the future of this country in Europe that there is now no sense of national destiny. The whole situation is so blurred that it is necessary, particularly now with our national fortunes in such a state, that a clear idea be given by the Government of what they see as being our national destiny. I ask this even more from the next Government—namely, my right hon. and hon. Friends on these Benches. We have not yet had from the Government a clear and precise indication of where we are going. When our national fortunes are so low—we all understand that we can only revive our national fortunes by a restoration of national self-confidence—it is vital to give a clear indication of what our future is likely to be.

Some hon. Members passionately believe that our future lies in a federal Europe. I understand their arguments, but I disagree with them. I admire those who are frank enough to admit it clearly, and many have done so over a long time.

I admire the frankness and consistency of my hon. Friend the Member for Saffron Walden, who is a self-confessed federalist. I am sorry that he is not present to hear these remarks. But I question that he is speaking for the Conservative Party as the official spokesman on this matter. Is he saying that the Conservative Party holds a federalist position? It clearly does not. There must come a time when, frankly and clearly, we say what we see as our national destiny. We cannot speak with so many confusing voices. My hon. Friend is welcome to his personal view. However, there comes a time when personal views must be put aside and we must speak for the party.

I hope that my hon. Friend the Member for Mid-Oxon (Mr. Hurd), when winding up for the Opposition, will make it clear that we support the amendment that the Government have accepted. That amendment lays stress on the importance of adhering to the pledges made to New Zealand and the rejection of the Commission's opinion on European union. There is no point in going over this matter in detail as the amendment has been accepted.

However, I should like to point out why the Commission's opinion is felt to be so alien to the beliefs of the people of this country. For example, on page 17 it states: The ultimate objective should be for monetary resources to be an exclusive field of competence of the Union". Nothing could be clearer than that. If there is total and exclusive monetary control over the affairs of all the members of the union, it will, in effect, be either a federal or a unitary State.

The document says earlier, on page 14: The Union should therefore continue to aim for the main Community objective: economic and monetary union. This entails giving it competence, powers, and means of action in five main fields: monetary policy; budgetary expenditure; budgetary revenue; improving economic structures so as to help reduce imbalances; social affairs. I do not think that economic and monetary union has been spelled out in quite that form to the House. We are told that that is already a commitment into which we have entered. Clearly this document is one which would lead us to an integrated European federal State—call it what one will—and it is right that this should be rejected by the House. I hope that my hon. Friend the Member for Mid-Oxon will make it clear that he and the Conservative Party, too, reject the rather woolly federalist ideas that have so often caused us confusion and sometimes quite unnecessary ill feeling and uncertainty in the whole debate on the European argument.

I turn next to the question of direct elections. This was also touched on by the hon. Member for Belper. If we are being pragmatic, practical and prosaic I cannot believe that in practical terms the abandonment of direct elections would make one scrap of difference to the fortunes of Europe or of the United Kingdom. No one has really suggested how we shall be any better off through having a directly elected European Assembly.

We are told quite precisely by the Government spokesman that the powers of a directly elected European Parliament would be precisely the same as those of the present Assembly. That is the statement. On the other hand, we have heard many statements by the protagonists of direct elections to the effect that following upon direct elections there would be a fairly rapid accretion of legislative power to such a directly elected Assembly. That must be the objective. The hon. Member for Belper nods, but it is not helpful for him to admit that, because we know that he wants that. I wish him well, and wish him ministerial office in the short period left to the present Government. However, it is the Minister on the Front Bench I want to hear admitting that consequent upon a directly elected Assembly would be the passing of legislative power to such a body.

The Tindemans Report makes it quite clear. I am not sure whether the Government are rejecting that report at the same time as they are rejecting the Community Opinion. The Tindemans Report says: A consequence of the Parliament's new authority will be an increase in its powers, which will take place gradually in the course of the progressive development of the European Union, notably through a growing exercise of the legislative function". How is it to gain that legislative function, which so many supporters of direct elections regard as inevitable? It can come only through amendments to the Treaty of Rome—which are not so difficult to obtain; there have already been at least two, although they are not fully ratified yet—which will involve further supra-national powers. However, if we are saying that we do not wish to proceed to greater supra-nationalism and that we do not want federation, why are we proceeding to direct elections, unless it is to give more supra-national power?

We could happily do without a directly elected Assembly in the context of the Community as it is today and in the context of its operating within the present Treaty of Rome. It is only if one goes further than that into the supranational federalist field that there is a case, and a strong case, for a directly elected Assembly. I can well understand that for the passionate pro-Marketeers it represents a virility symbol designed to compensate for the self-evident impotence of the Community in its relevance to the major problems facing Britain and Europe today.

However, there will be further opportunities to discuss direct elections. It is my hope that we shall never see the advent of such direct elections. It should not be taken for granted that the British Parliament will pass the necessary legislation to allow them to proceed.

This is a wide ranging debate covering a number of points. There are two others that I wish to discuss. The first concerns Greece. It is absolutely consistent for those of us who opposed membership of the Common Market to believe quite sincerely that a wider Europe would be beneficial to the whole of Europe. It would not be damaging to Europe. However, the concept of a wider Europe is much more in the interests of Britain. It saddens me that hon. Members have been speaking so strongly against the admission of Greece. Obviously one does not rush into allowing all and sundry to join. These matters must be considered carefully. I thought, however, that the Commission's response to the Greek application was mean-minded, un-European and rather curmudgeonly. Some of the arguments that have been put forward today are very odd, coming from a country such as ours with its economic problems, a country which has been securing great benefits, apparently, from regional funds, and so on and now turning round and saying "We are in, but we shall not allow anyone else in".

I was pleased that the Council of Ministers took a very positive step and said that it would commence negotiations for Greek entry as soon as possible. What worries me is the Commission, because while the Council of Ministers is saying positively "We want the Greeks in", the power of the Commission to drag its feet on this matter is very considerable. I suspect that it is within the power of the Commission to ensure that these negotiations drag on over a very long period.

One should look at the document to realise why the Commission is likely to have that attitude. I should like to quote one or two remarks from the consultative document on the Commission's opinion on the Greek application. This will make my point. It says, The Community is preparing to take some important new steps on the road towards European Union comprising a whole range of political (e.g. direct elections to the European Parliament) and economic (e.g. Economic and Monetary Union) questions. Again, it assumes that we are already going to take that step. I do not think that it is a view that we all share. It continues: On some of these matters, decisions of principle have already been taken. This ongoing integration process must not be delayed by further enlargement. That is the crux of it. The Commission does not want to let any new members in because that might slow down the process of integration and the creation of a more tightly-knit European Community. I suspect that if that is what it believes, there will be endless foot-dragging in these negotiations and that it will be very hard to ensure that Greece becomes a member in due course.

Mr. MachFarquhar

As the hon. Gentleman has mentioned my contribution, may I ask him whether he accepts that he has not answered the points I made, which were political points? He has attempted to suggest that the arguments against Greek entry are economic. I said that this is not so—certainly not with me—and that I would be prepared to pay the cost of Greek entry. There is no problem there. However, the hon. Gentleman has to answer the political problem.

Mr. Moate

The hon. Gentleman is right in respect of his own arguments, but others were saying—my hon. Friend the Member for Cardiff, North (Mr. Grist) was one—that the rest of the Community was rather tired of beggars and that it saw us in that light, and that there would be less money in the kitty for us if Greece were to join. I cannot think of a less attractive argument than that, but it was so proposed.

The arguments about poverty and about agricultural standards in Greece are not very convincing. If the Community is arguing that it needs only rich members and cannot help the poorer parts of Europe, I should have thought that, too, unconvincing, and totally out of line with the type of arguments advanced by passionate marketeers for rectifying regional imbalances. Therefore, I do not think that the economic arguments stand up.

The hon. Member for Belper argued that this would, perhaps, be importing political dynamite into the Community. I believe that the Cyprus factor is important. I suspect that many hon. Members who have argued on this point have done so only because they have a particular partiality to the Turkish or Greek case on Cyprus. I hope that what is a transient dispute will not be allowed to stand much longer in the way of the creation of a wider Europe. That wider Europe should ultimately contain Spain, Portugal and Greece.

One wonders about Turkey, because in my mind it has never been "Europe". However, I believe the wider the better, and the more the European Community will conform to the type of Europe most suitable to this country.

I should like to comment on New Zealand because it is dealt with in the amendment, which has been accepted. One needs to say little at this stage because we know that new proposals have been made. We have the Government assurance that they will fight and fight again to honour the pledge given to New Zealand in the Dublin Agreement. It is alarming that, even at this stage, with a fairly tightly drawn agreement, already the Community is expressing doubts about the position of New Zealand. Already we have the French Minister saying that he is fed up with non-EEC members making their case in this way.

What will happen in 1980? We are arguing now about the ability of the British people to buy some of the best and cheapest butter in the world for the next two or three years. I can understand the Community's point of view, that, if one is truly a full member of the Community one should accept the principle of Community preference. Following that argument we should buy French and Danish butter instead of New Zealand butter. But what are the chances of securing the position of New Zealand after 1980? The answer is pretty bleak.

I find that a depressing situation. The British people were told that membership of the Community would not involve breaking these vital links with the English-speaking world. We are now seeing the truth. Of course it involves severing those links, and the giving of preference to the Community over traditional suppliers. Although there may be interim arrangements to satisfy us for two or three more years, at the end of that period there is little prospect, if the Community survives in its present form, of maintaining those links which are of such importance to the British people.

It has been said in this debate that the last six months have been dull, depressing and disappointing for the Community. Certainly for Britain they have been a very bad period. Economically, we have been through a tremendous crisis, sterling has fallen at an unprecedented rate, and we are facing an enormous balance of payments deficit as well as mounting unemployment. Against this picture we have only to think back to the argument used in the referendum when we were told that we could not afford to pull out because there would be catastrophic consequences. I am not arguing now about membership of the Community. That is something to be left to the course of history. But I believe the British people feel that if membership of the Common Market has any signifinance, it has possibly damaged our position and, indeed, made our position worse. At the very least, it has been a monumental irrelevance to Great Britain at this time of great economic difficulty.

That is the way it is, and the way, I suspect, it always will be. We have to recognise that if our future is in Europe, it is part of a Europe of nation States. Our national fortunes will depend on national efforts. Success can only be achieved if we stress that our future lies in a Europe des patries and not a federal Europe. Once and for all we must rid our political system of the notion of federalism.

8.5 p.m.

Mr. Neville Sandelson (Hayes and Harlington)

I hope that the hon. Member for Faversham (Mr. Moate) to whose views we all listen with respect in a debate on Europe, will forgive me if I do not take up his arguments. I could be tempted to speak on some of the wider issues and problems that face Europe. We have heard about some of the anxieties felt by pro-Europeans and those who have not been in favour in the past of this country going into Europe. We had a memorable contribution by the right hon. Member for Knutsford (Mr. Davies) who articulated some of the anxieties which many of us pro-Europeans on this side of the House feel. It would be wrong for any hon. Member to assume the worst about us on these matters. It must not be assumed that we are totally blind to the other side of the case and that we are incapable of understanding the problems as they present themselves to this country.

However, although I am tempted to join in the debate on those questions, I shall, nevertheless, confine myself this evening to making a few comments about the Greek application for membership. Because I warmly welcome that application, I appreciate the way in which my right hon. Friend the Minister of State expressed the Government's wholehearted and unreserved support for Greek accession to the EEC. We all realise that the application presents difficulties for the Community. Indeed, every new application and every new accession to the Community presents new and special difficulties, as did our own accession. Certainly there will be special problems to be resolved economically and politically.

However, in my view too much weight is given in these matters to economic considerations. Assuming that there is no fundamental bar to membership, those considerations should not be allowed to play too great a part in determining the outcome of applications from nations which have a good deal to offer in other ways and which have a need to be sustained for the benefit and well-being of Western Europe as a whole. For the purpose of this debate I have only Greece in mind in that context, although consideration may have to be given to other applicants in due course. Those applications will have to be examined on their own merits and according to well-established criteria.

I do not share the views expressed by my hon. Friend the Member for Belper (Mr. MacFarquhar), who seemed to exclude completely the possibility of Turkey coming into the European fold. I take a contrary view. I hope that in due course Turkey will apply to join the Community. One of the greatest achievements in the Community has been to reconcile ancient enmities. We have seen this happening closer to our shores with the bringing of once warring nations into peaceful and fruitful compact. Is it inconceivable that Greece and Turkey, too, will possibly before long, as members of the Community, resolve their traditional differences by looking outward within the wider European context and will escape the narrow confines of their local animosities? That, after all, is a major purpose of the Community and one very good reason for enlarging its boundaries.

I do not accept that the accession of Greece, with its special problems in the field of external relationships, will have a weakening effect on the political cohesion of the Community. On the contrary, it could be said that the present EEC, within the existing geography of the Community, is playing too narrow a rôle and failing to serve the fundamental purpose of creating political unity in Europe as well as promoting the economic strength of all its members. Surely the creation of political unity on the wider plane can be achieved only by extending the Community's frontiers to embrace nations such as Greece which qualify for membership.

Something has been said about Cyprus and the special difficulties that might be posed for the Community in the event of Greece becoming a full member. That cannot be an accurate approach to the question of membership because it would seem to have only one consequence, and that is to exclude Greece permanently from membership of the Community however proper the conditions might be for her joining. That may indeed place too much strength in the hands of one antagonist in the dispute as against the other.

I would put the argument on a somewhat different plane—that the world abounds in political disputes. Nearly all the member nations of the EEC have their external political problems, and it is surely fallacious to suppose that all those existing problems present any special difficulties for the Community. I do not think that Cyprus, and its present unwanted political problem, is something which the EEC will necessarily have to take on board when Greek accession to the Community comes about.

Mr. MacFarquhar

Does my hon. Friend have an optimistic view that the Cyprus problem will be solved and that, therefore, we do not need to worry about it, or does he believe that, if the Cyprus question rears its head again and there is the possibility of Greek-Turkish hostility, the EEC will simply be able to ignore it even if Greece were a member of the Community?

Mr. Sandelson

I take the view that it is, unfortunately, an ongoing problem. It would be highly optimistic to suppose that it is capable of an immediate political solution. I have already indicated that membership of the EEC on the part of Greece, and even on the part of both the antagonists in the Cyprus affair, might ease the path towards a peaceful solution in Cyprus. I do not believe in the likelihood of an outbreak of further military hostilities between those two countries. I think that Greek membership of the Community would in itself be a deterrent to an outbreak of a military character.

Some people would argue that the relative economic weakness of Greece must act as a detriment and a disadvantage to other beneficiaries within the Community, approaching this as if it were a dilution of the Community funds. I was glad to hear what the hon. Member for Faversham said about that a few moments ago. I was also glad, in that context, to hear the Minister stress the distributive factor from the richer to the less well-off members of the Community. Increased economic benefits all round is what is needed. Of course, it has been said ad nauseam in debates over the years—this was mentioned by some of those most hostile to Britain's entry into the Community—that we were joining a rich man's club. We do not hear so much about that these days, certainly not since the referendum and the decision taken by the overwhelming majority of the nation a year or so ago. It is not a rich man's club. It would fail in its purpose if it sought that kind of exclusivity. If that had been so, Britain herself would not have qualified for membership.

Greece's application should be viewed in a similar light. It is true that Greece needs the economic promotion that membership brings. It would be the height of selfishness and international folly for beneficiaries like Britain to deny the same opportunities and benefits to others because of their relative weakness.

The Commission's report makes it abundantly plain that, while much will have to be done in terms of economic restructuring in Greece before the obligations of full membership can be undertaken, nevertheless there are no insuperable problems or impediments. I listened with some surprise to hon. Members who seemed to give the impression that in respect of Greek accession the opinion of the Commission should convey a contrary view. The impression that it conveyed to me was that the opinion of the Commission, on both political and economic grounds, was favourable to Greek accession to the Community while being sensitive to the very obvious and real problems that the application poses.

In any event, the Commission's report clearly took into account the enormous economic progress in Greece since 1962 and the association agreement. A cursory study alone of the statistics governing the relevant economic factors in the country shows tremendous change in that period, bearing in mind the limitations of population, the relative weakness, which we all appreciate, of the industrial base in Greece, and the dependence on earnings which have been badly hit by external factors familiar to all of us over the last two or three years and which have affected all of us equally.

There are already the conditions for considerably increased growth and for economic balance which would be greatly accelerated by the outside investment reasonably to be expected from full Greek membership of the Community. Therefore, while it is true that Greek membership, which in the fullest sense cannot be brought to fruition without an intensive preliminary programme to bring its structure into line with the Community as required by the agreement of association, may have a temporary diffusive effect and may lead to some political uncertainty arising out of Greece's own external relationships, in my view there is no reason to fear adverse long-term consequences in either the economic or political fields.

I was glad to hear the Minister express a similar view on behalf of the Government. In my view the political considerations in this instance greatly outweigh any economic doubts in regard to Greek accession. The primary consideration—indeed, the sine qua non—of Greek membership must be the extent and quality of democratic parliamentary government in that country.

I am merely one of a number of hon. Members who actively and continuously expressed political protest at the tyranny of the former régime in Greece. The overthrow of that evil régime and the restoration of democracy over the last two years are events of great significance for Western Europe. The Greek achievement in so short a time has been momentous and dynamic. It has had our wholehearted support during this brief period—or such support as, at a distance, we have been able to give—and it now deserves all our support in this concrete long-term form.

Some of us have friends in Greece who fought courageously against the dictatorship and suffered for it. One remembers the importance which they attached during those grim times to the prospect of ultimate membership of the Community as an encouragement to the fight for the renewal of democracy in their country. That has been achieved, and Greek democracy now needs all the support and encouragement that other Western democracies can give it. It is in Britain's own interests, from every point of view, that Greece should gain economic strength and political stability. That will be brought about only by bringing Greece into close union with the Community.

Less than three weeks ago a group of hon. Members, including myself, from both sides of the House visited the British war cemetery on Crete. It was a moving occasion and, not least, a vivid reminder of the part played by Greece in the war against Fascism in Europe. It spoke eloquently of her democratic past as well as of her democratic renaissance and of the historic friendship between our two countries.

There is no less a need today to bind together all democratic European nations in a mutual defensive bond, and Greece has a vital contribution to make in that direction too. It is for all those reasons that we should welcome the widening of the Community.

Mr. Tindemans says in his report, somewhat depressingly: Europe today is part of the general run of things. It seems to have lost its air of adventure. There are possibly many reasons for that, and I do not accept the pessimism generated by many whose hostility to the Community is well known. We see them, of course, on both sides of the House. In any event, I believe that, in its own small way, Greece will reactivate our own European impulses and add a new impetus to the Community adventure.

8.23 p.m.

Mr. George Reid (Clackmannan and East Stirlingshire)

I hope that the hon. Member for Hayes and Harlington (Mr. Sandelson) will forgive me if I do not take up his points. As a member of the SNP, I want to confine my remarks to my own country and to the possibility of independent Scottish membership of the Community.

It is a little curious that the House should give consideration to European union when the whole future of the British Union is itself in considerable doubt. If our present unitary state is about to be unscrambled, as I hope and believe it is, that inevitably has considerable repercussions for the future of the Communities. Put simply, there will no longer be a Community of nine because one of the component parts, the United Kingdom, will have ceased to exist as a political entity.

Even if, by the early 1980s, Scotland has progressed no further than a devolved Assembly, that too will bring about new relationships with the Community, in terms of which Ministers—whether Assembly Ministers or London Ministers—go to Brussels, in terms of dual and distinctive legal systems within one country and in terms of contacts between Brussels and Edinburgh.

Mr. Ortoli, in his report of July 1975 to the Taoiseach, Liam Cosgrave, the President of the European Council, dealt in detail with what he called "basic democratic rights". Mr. Tindemans in his report emphasises what he calls the "fundamental human freedoms". It is a basic democratic right that if the Scottish people choose independence they should have it. It is a fundamental human freedom that if Scotland wishes to exercise the same responsibilities and privileges as other nations through a Parliament entrusted with the sovereign rights of the Scottish people, she cannot be denied that freedom within the European Communities.

The aim of my part is perfectly plain. It is self-government for the Scottish people and the restoration of Scottish sovereignty by the establishment of a sovereign Scottish Parliament, within the Commonwealth, whose authority will be limited only by such agreements as may be freely entered into by it with other nation States and international organisations for the purpose of furthering international co-operation and peace.

It therefore follows, in our view, that the ultimate relationship between the European Communities and an independent Scotland can be determined by the Scottish people only in the circumstances obtaining at the time of independence. We are, of course, a member of the EEC at the present time, and I believe that our links with Europe can be significantly strengthened.

When the Patijn Report advances the suggestion of 17 Members of the European Parliament for Denmark, it is politically unacceptable that Scotland, with the same population and GNP, should have only seven. My party takes the view that Scotland's history as one of the oldest nations in Europe, her distinct legal and administrative identity, her location at the northernmost periphery of the European Communities, the economic importance attached by the EEC to marine and energy resources, her regional diversity and the scattered distribution of her population entitle Scotland to parity of representation within the Communities with Denmark.

It is totally unacceptable that Luxembourg, with half the population of Scotland's capital city of Edinburgh, should have six Members, a Commissioner and veto powers and that Ireland, a country substantially smaller than Scotland, should have representation across the board when Scotland does not.

Mr. Dalyell

The hon. Member should remember—I say this not in an unfriendly fashion—the evidence that Mr. Patijn gave to the Select Committee in answer to questions last week, when he talked of having a bargain. If one of the existing States breaks up like this, we should be faced not with a Europe of 10 but with a Europe of 26, including Alsace-Lorraine, Schleswig-Holstein and Brittany. The main European countries will not agree to that.

Mr. Reid

Comparing Scotland with Schleswig-Holstein and Alsace-Lorraine shows a poor sense of history and political realities. Mr. Patijn probably regrets his remark about 26 or 27 Members which he made when he was last in Edinburgh.

There are differences in the degree of commitment to the European Communities within my party as there are in the Labour and Conservative Parties. I see the referendum as the great constitutional divide in Britain—for the English, the formal and final abdication of imperial pretensions; for the Scots, a simultaneous reawakening of our rôle as a small North European nation. I am not talking about nineteenth-centry nation-State sovereignty because no one, with the possible exception of the Soviet Union and the, United States, and possibly China, is sovereign these days. I am talking about the qualified independence which is possible to any small country in the Communities.

In that respect, I note with approval the remark by Mr. Tindemans on page 10 of his report: A return to selfish national attitudes, to national barriers and to the antagonisms which they frequently engender would be seen as a historic defeat—the collapse of the efforts of a whole generation of Europeans. I accept that. I have absolutely no sympathy for the old racist nationalism which smeared the face of Europe in the 1920s, 1930s and 1940s. I am seeking the interdependence which is achievable these days among small nations. It is only by being outward-looking and by getting rid of the parochialism which has dominated so much of Scots society that we can begin to participate in solving the real problems of Europe—the inequalities in the distribution of wealth, the exhaustion of resources and the consequences which that has for all industrial societies, and the recognition that internationalism of economic life makes a system of production ever more dependent. All these can only be faced in the Communities as a whole. To put it bluntly, no one can go it alone.

But even if some of my colleagues are largely committed to Scotland's future development along the lines of Norway, with associate status, we all agree on one matter. Exactly as my party comes at present to a Parliament which we hope to leave at speed, so we are represented in the EEC and will strive to make the existing institutions work. But we all view with concern certain developments in the Communities. We would oppose any development towards a Euro-State, with power drifting from member States to an embryo government based on the Commission and the Assembly. We agree about the need for a confederal Europe—a partnership of self-governing nations in no way subordinate to one another. The SNP believes that democratic control is best encouraged on a decentralist basis.

I have some friendly advice for our friends in Europe. In the last year, my colleagues and I at Westminster have had the pleasure and privilege of talking to representatives from most of the other member States in the European Community at both diplomatic and political level. They, too, have their minorities. The French have their Bretons, their Alsatians and their Corsicans. The Italians have their South Tyroleans and their Sardinians. There are the Basque and the question of what happens to Catalonia if Spain ultimately gains membership of the Community.

I give the hon. Member for West Lothian (Mr. Dalyell) two answers to his question. First, there is a difference of degree in that no one else in Europe at present among the minorities has the degree of distinctive administrative and legal identity which Scotland has. If these small peoples within Europe want institutional change, it is up to them to effect that change through the ballot box, as the people of Scotland have done. The SNP has no part in the so-called Bureau of Unrepresented Nations in Brussels.

I want to give this message to the representatives of other member States in the Community—it is the same message as that which the SNP has put to the two majority parties in this House: in the same way that talk of devolution to the English regions should not be allowed to hold up the transfer of government to Scotland, so a preoccupation in the member States with their own minorities must not stop the adhesion of Scotland to the Communities if she so wishes.

Lastly, I deal with the intermediate phrase—the Assembly phase. The Commission has said that it hopes significant steps will be taken towards union by the early 1980s. Within that period there will be equally significant constitutional changes in the British Isles. They are already happening, and I wonder whether they are understood by some people in Europe.

I note, for example, that Mr. Tindemans refers in his report to his meetings with the Scottish Labour Party. Such an animal did not exist at the time. He saw the British Labour Party north of the border. Giving evidence on behalf of the British Labour Party north of the border was a certain Alec Neil, who is now General Secretary of the Scottish Labour Party. He and the hon. Member for South Ayrshire (Mr. Sillars) came out of the British Labour Party because they recognised that one of the great determinants of Home Rule in Scotland is the adhesion to the European Communities. They recognise the need to establish a new link between Edinburgh and Brussels—a fact admitted by Lord Kilbrandon, who, when asked what constitutional model he saw for the future of his country, described a new link being established between Edinburgh and Brussels with the Westminster link fading away.

So I deal with the intermediate period of an Assembly. I suggest, first, that it is well nigh inconceivable that any Assembly can lack powers in health, agriculture, transport, education, social policy and so on. That implies that the Scots Assembly from the very start will have substantial dealings with the EEC, from which flows a growing stream of regulations pertaining to those very areas of government. From the start, the EEC dimension in Edinburgh will be an integral and inescapable part of the work of all Assembly committees, and it should be recognised as such.

In the long term, the evolution of the Assembly towards full independence will resuscitate the whole question of Scotland's relationship with the European Communities. But in the short run, in the Assembly phase, it makes sense to attempt Scottish representation in the EEC on a basis equal to that of the other member nations.

For the benefit of the hon. Member for West Lothian, let me explain what I mean. The most important step is to obtain Scottish representation, where possible, on the Council of Ministers, which is the key decision-making body in the Communities. Scotland cannot be a full member until she is a fully sovereign State.

But there is scope for upgrading Scotland's present rôle in the United Kingdom delegation. Scottish Ministers have been to the Council of Ministers on five or six occasions. I hope that it will be an immediate Assembly objective to ensure that Scotland is represented at all meetings of the Council of Ministers as part of the United Kingdom delegation. I hope that the Ministers representing Scotland will be Assembly Ministers, because that will facilitate the involvement of the Assembly in European affairs. The Assembly should have a Minister of European Community Affairs who can attend all Council of Ministers' meetings. The Assembly should also have the power to appoint an official who would be attached to the United Kingdom permanent representatives' department and who should have ambassadorial rank. The hon. Member for Crewe (Mrs. Dunwoody) may smile, but I wonder whether she is aware of the political realities in Scotland at present and how close the rôles of our two parties are to being reversed.

Mrs. Dunwoody

Having listened with respect to the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), I am astonished that he should be so totally unaware of the political realities of Europe. If he was not so unaware, he would not favour the House with such rubbish.

Mr. Reid

I am all too aware of the political realities of Europe and that Scotland will not get a fair deal in Europe until it is an independent nation.

A perceptive article appeared in today's Scottish Daily Express by its political editor, who is just back from Brussels. Talking of devolution, he said that he found that Europeans know and understand a great deal more about Scotland's quest for devolution than a bunch of ignorant and hostile English Labour and Tory MPs I met last month. Frenchmen, Germans and Italians know all about the Government's proposals for a Scottish Assembly as well as about the SNP and the astonishing thing for me is that none of them is worried. Separatism" is a purely English, unionist word. It is a concept that worries Europe not one whit. … Their very sensible view is that Scotland is so closely linked to Europe economically and culturally that the precise form of government we have is a pretty academic point. Any kind of Scotland would still be an intrinsic part of Europe, obliged to trade and co-operate with her neighbours. The article goes on to explain how the writer was told: Sorry, the top table is for nation states only. And remarkably often this was followed by the matter-of-fact question: 'Why don't you become a nation state? We would be happy to have you.'". Scotland should be in Europe on the same basis as the Danes. Nothing less will do.

8.38 p.m.

Mr. Max Madden (Sowerby)

We have been told that this is a Common Market dustbin day because we are discussing a mountain of paper proposals. That is true, but it is also uniquely refreshing that we have been given the opportunity in daylight to discuss Common Market matters that affect the United Kingdom. That is a by-product of the unusual combination of Sir John Foster and the all-out war being waged against the Government by the official Opposition. It has allowed the business to be transacted at a reasonable hour and at reasonable length. For that we must be grateful.

We must also be grateful for some of the excellent contributions to the debate, which, for a change, may appear in the national newspapers, to be seen and read by the public whom we seek to represent.

I hope that the newspapers will report at length the excellent speech by my hon. Friend the Member for Southampton, Test (Mr. Gould) who traced the harmful developments of the Common Market as they have affected the United Kingdom since we became a full member. In his critical analysis he showed the damaging effects which membership is having on the British people.

My hon. Friend also mentioned, as did my right hon. Friend the Minister, the effect of our business today on the British textile industry. My hon. Friend warned the industry and those of us who represent textile constituencies of the dangerous effect the Common Market will have on our industry because we shall relinquish opportunities to reform our dumping legislation. That is just one matter of importance to the industry which flows from our membership of the Common Market.

Today we are considering five lengthy documents from Brussels concerning the textile industry. Their effect is to give a green light to more cheap textile goods from Macao, Singapore, Malasia, Korea and even Japan. It will be another blow to British textile and clothing manufacturers and the workers in those industries, whose grave problems have been echoed in this Chamber over the past two years by hon. Members on both sides of the House.

Stripping away all the verbiage on which the Common Market and its bureaucrats flourish, we see that these documents reveal that, despite all the enormous difficulties the British industry faces, still more imports into the United Kingdom have been authorised under these Common Market agreements, which contain page after page of increased quotas for suits, trousers, shirts and all the rest. So far a I can see there is not one reduction in any quota affecting the United Kingdom. Some of the increases are substantial.

All this has been agreed—or, I would suspect, plotted—under the so-called burden sharing agreement within the Common Market. Many of us have suspected that under this agreement Britain is shouldering most of the burdens and missing out on most of the sharing. That has been so all along, and this series of agreements is no exception.

It is no good Ministers saying, as they probably will again tonight, that other Common Market countries are shouldering a fair proportion of imports from low-cost countries. The base year figures for the Multi-Fibre Arrangement are taken from a time when the United Kingdom was importing an exceptionally large quantity of textiles from lost-cost countries. This has meant that the United Kingdom has faced, and still faces, a much bigger problem than other Common Market countries as a result of imports from low-cost countries. These agreements do not help that situation. Indeed, by removing certain restrictions they could result in the position deteriorating still further. I challenge my right hon. Friend, who referred to the beneficial effects of the agreements on the textile industry, to wait and see. I do not believe that their effect will be beneficial for the British industry.

I draw attention to statements made by leading members of the textile industry only yesterday, when Mr. Bill Barnes, Chairman of the British Man-Made Fibres Federation, said that unless radical changes were made to the MFA the complete disappearance of the industry, sector by sector, was assured. If that is not significant enough for the Minister and the Government I also draw their attention to the remarks of Mr. Edmund Gartside, President of the British Textile Employers' Association, reported in The Guardian and The Times yesterday. He warned that there was an urgent need for radical changes to the MFA to protect Britain, and, says The Guardian, drew attention to the fact that: The import proportion in the UK was higher to start with and with the same growth rate as that of the US the consequences for Britain were startlingly more destructive'. Since the mid-1960s business had dropped in the UK by 40 per cent. compared with 10 per cent. in the US. If a growth rate of 6 per cent. was allowed to continue the figure for UK penetration by imports from outside Western Europe in this sector by 1984 would be 71 per cent—compared with a US figure of 17 per cent. We know also from replies I have received this week from Ministers in the Department of Trade that, between 1st January and 11th June, 83,000 import licences for textile commodities have been issued. For some strange reason the Department processes them on an American-made computer. It is not surprising that there are some hold-ups in the processing of those figures, but the trend is there.

I am astonished that the Government, despite the onslaught they have faced from hon. Members representing textile constituencies, still steadfastly stick to the same story that the measures they are taking are helping the industry. I agree that there has been some help, but it has been extremely limited, and we are looking for radical reform and protection of the British industry if it is to be saved. That is not an exaggeration. Mr. Barnes was again drawing attention yesterday to the extent to which certain countries are dominant in the flow of cheap textile imports into the United Kingdom. Between 1970 and 1974 Hong Kong, South Korea and Taiwan were responsible for $4,000 million worth of textile exports to this country. That is 60 per cent. of all the textile exports from developing countries. Clearly, under the Multi-Fibre Arrangement, not enough protection is going to the really less developed countries, as opposed to these more developed countries.

It is to the British textile industry that the Government must talk tomorrow and the day after tomorrow, for that industry, all of us who represent it, and its workers, are bitterly resentful at the foot-dragging that has taken place over the introduction of measures to help the industry overcome the threat of unfair competition which it faces.

In view of the deep problems of British industry, it is only fair and proper to ask why these problems have not been recognised in the agreements we are discussing tonight. Why is there not one category where the quota for the United Kingdom has not been reduced, and reduced substantially? It is significant to note that negotiators for other countries have been successful, but not the United Kingdom, where the textile industry is suffering from the biggest recession.

In view of the importance of the textile industry in Britain, in terms of the economy and employment, its regional significance, and the enormous social problems which flow from the decline of the industry which has already taken place, why were British negotiators prepared to put their names to this agreement? What consultation took place on these agreements with British textile employers and trade union representatives, and with Members of Parliament, before these agreements were reached? What were the views of the respective parties in those consultations if, in fact, consultations took place?

I conclude by asking what hopes there are of an early review of these agreements and of reducing the quotas to a level which reflects more accurately the problems which confront the British industry. That industry is perplexed, angry and bewildered at the situation it faces.

Many of us do not expect very much from the Common Market or from Brussels. We expect much more, however, from a Labour Government, whatever the difficulties they face in Brussels. Very clear proposals have been made by Mr. Gartside and others, and the Government are being asked to consider them. They are very specific and very urgent. We are asking for reforms of the Multi-Fibre Agreement to protect the British textile industry and the workers in that industry. They have faced an enormous recession, short-time working and redundancy. I ask the Government tonight to recognise those problems and to tackle them before it is too late for all of us.

8.49 p.m.

Mr. Nicholas Winterton (Macclesfield)

I am delighted to follow the remarks made by the hon. Member for Sowerby (Mr. Madden). I fully endorse the pressure that he and his colleagues on the Government side are putting upon the Government to recognise the unique situation facing the British textile industry.

I also join my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) in the tribute he paid to the hon. Member for Southampton, Test (Mr. Gould) for the very fluent and interesting speech he made towards the beginning of this important debate. I believe that he did a service to the House and to a much wider audience. I look forward with great interest reading his speech in Hansard tomorrow, to remind myself of the way he presented his case. Although I did not agree with it, I think that the case he expounded needs to be put to the House and to the Government.

I quote now from the annual report for 1974 of the British Textile Confederation. The textile industry supported our entry into the EEC. I quote from the president's report of that year: British membership of the community has considerable commercial and industrial advantages for the British textile industry. Our industry needs a larger and more dynamic home market to remain viable at anything like its present size. Only membership of the Community can guarantee us such a market. The industry also needs protection from increases in low cost imports, which would be possible outside the Community only if the United Kingdom were exempt from the provisions of the Multi-Fibre Arrangement, which gives developing countries a right to increased access to the markets of the developed countries. Any such exemption would be a severe blow to the expectations of the Third World, and it is by nomeans certain that the British Government would wish to renegotiate the MFA in this way even if it could do so. The British Textile Confederation is representative of both sides of industry, trade unions and employers.

I preface my remarks about the textile industry and Europe, with a few statistics. The United Kingdom textile and clothing industry employs 870,000 people. This represents 11.5 per cent. of the total employment in manufacturing and 20 per cent. of the female employment. The industry is among the four largest United Kingdom export earners, with sales last year of £1,150 million. The capital intensity of the industry is remarkable. Modern textile processing is highly capital-intensive. New machine installations in the main processing sectors, for example, typically require investment of between £15,000 and £30,000 per employee. Since 1966 the industry has invested more than £1,400 million in fixed assets, 8.5 per cent. of all manufacturing investment in this period. In the past three years investment has averaged nearer 10 per cent. of that in manufacturing as a whole and has been roughly 25 per cent. greater than that of the vehicle industry.

I am sorry that there is not a major Government Minister on the Front Bench because the Government do a great deal for the vehicle industry. I hope that they will recognise the importance of the textile industry and act accordingly.

Major disputes in textiles and clothing are rare. The incidence of days lost through strikes in the past decade has been under one-third of the national average.

Here we have a fine industry which makes an excellent contribution to the economy and has a fine industrial relations record, but what is happening? The industry is suffering severely from unfair competition. I am sure that Government supporters who sit with me on the all-party group for the textile industry will admit that the textile industry remains a favourite candidate for emerging countries, despite its capital intensity. The shift of the world's fibre and processing capacity towards the developing nations has gathered momentum during the past few years. The problems of reconciling the demands of developing countries for export growth with the absence of violent disruption in the recipient market has long been recognised throughout the world.

The first world-wide attempt to ensure orderly growth in trade in textiles was the GATT long-term Cotton Agreement in 1962. This culminated in the Multi-Fibre Arrangement introduced on 1st January last year and which will remain in being until the end of 1977. This is all-important in the European context. The MFA products include wool, manmade fibre goods and cotton, whether woven or knitted. Quotas may be imposed only where a real threat of market disruption exists. Most quotas introduced under the MFA carry a minimum growth factor of 6 per cent. a year.

What are the drawbacks for the European and United Kingdom textile industry in this situation? I believe that in normal circumstances the European textile industry could live with a 6 per cent. annual growth rate if this were applied comprehensively to all low-cost imports, especially since the largest importers, such as the United Kingdom, can be expected to incur lower rates of growth as a result of the EEC burden-sharing formula.

However, there should be some mechanism for relating the flow of imports to the prevailing market conditions. For this reason the industry has pressed the Government time and time again over this matter, explaining that while import growth is tolerable in times of reasonable trade it may be catastrophic in a recession. Thus we now have a situation where the new quota of Indian cotton goods is equivalent to 140 million square metres a year, similar to the previous quota level. I would remind the Government, however, that this is 30 per cent. higher than average arrivals from India in recent years.

As the hon. Member for Sowerby said, the quotas have been pitched far too high. The quotas of Malaysia and South Korea are, respectively, 77 per cent. and 40 per cent. higher than the 1974 imports, as a result of these countries' efforts to build a substantial performance in the months immediately prior to the negotiations. There is nothing to prevent either the established supplying countries turning to products not covered by the quotas or the emergence of new entrants into the market. This may be splendid for the developing countries, but it makes a total myth of the 6 per cent. growth factor and falls short of providing conditions in which the United Kingdom industry, or the European industry for that matter, can plan and invest with confidence in the years ahead.

The hon. Member for Sowerby mentioned the President of the British Textile Employers' Association, Mr. Gartside. I am pleased he did, because Mr. Gartside has made many forthright, positive and correct statements in recent days. He said that the present MFA arrangements had been effective for Japan and the United States—I hope that the Minister will take this message on board—largely because of the vigour with which those countries had implemented the particular proposals. However, our own Government's attitude towards imports from the developing countries tends to be excessively liberal.

Mr. Gartside also said that the United States had a particular advantage in starting from a low base of less than 10 per cent. import penetration compared with a United Kingdom figure of over 50 per cent. The United Kingdom industry's severe disadvantage was startlingly illustrated by a prediction that with present growth rates the United Kingdom's import ratio to final consumption would rise by 1984 to 73 per cent. import penetration as against the United States figure of only 17 per cent. This is a very serious situation.

It is worth mentioning that a Cometextil Report showed that the increase in exports of textiles by developing countries between 1970 and 1974 totalled some $4,000 million. Of this total, three countries—Hong Kong, Korea and Taiwan—were responsible for 60 per cent. of the increase. How right Mr. Gartside was to emphasise that in the renegotiation of the MFA attention should be paid to this imbalance to ensure that genuinely less-developed countries were able to benefit.

Unfortunately, the shortcoming of the international arrangements for controlling low-cost imports have been compounded—and here I think I have the support of Labour Members—by the lack of a decisive and consistent industrial policy in the United Kingdom towards textiles. The attitude of successive United Kingdom Governments towards the textile industry appears to have been determined much more by short-sighted political policy than by serious economic considerations and a real understanding of the industry.

For 20 years, a large sector of our manufacturing industry has been sacrificed to duty-free entry. I remain to be convinced that official thinking has changed very much, in spite of the occasional movement by the present Government. It is surely time that our Government and administrators woke up. The United Kingdom can no longer afford this kind of unrestricted liberality. It can no longer afford the luxury of cheap imports when they have to be paid for increasingly by a further erosion of our already dwindling industrial assets and employment.

I come from a textile area and I know what the problem means to the people in my constituency. Yet, too often the Department of Trade seems concerned to assist the importer who is generally responsible for little fixed investment or employment than to promote the interests of an important home-based industry. The Departments' recent letter seeking to fill the yarn quota for Turkey is a case in point. Generosity and fair play are admirable if we are winning or if everyone abides by the rules. But we are not winning and not everyone abides by the rules.

The November issue of Textile Asia reports that goods are now being shipped through the Philippines and Indonesia, whose textile exports are still not subject to quotas within the EEC. I shall be pressing the case very hard with the Govment during the next few months. I believe that global quotas should be introduced for textile and clothing imports to prevent a further erosion of the United Kingdom market by the arrival on the scene of new producers not covered by existing bilateral agreements. In this I refer in particular to Portugal and the EEC associate States.

Second, believe that a flexibility clause or regulator should be introduced to provide for a downward revision of growth rate in a time of grave and severe recession. Third, I believe that a fall-back clause should be provided or that there should be some means of allowing countries like the United Kingdom which have a high import penetration level to adopt special measures to protect their own production capacity for sound strategic and economic reasons.

Fourth, I think it is important that an extension of the base period for determining quota size should be increased to two years to prevent a build-up of trade by exporting countries as a negotiating device. Lastly, I believe that there should be an extension of the period of the Multi-Fibre Arrangement and that it should be at least five years to allow for better forward planning by the industry.

I shall be pressing these points upon the Government over the coming months. I realise that ultimate acceptance or rejection depends upon the EEC as well as the signatories of GATT. In the first instance, however, my task and that of Labour Members is to convince the Government in this country. There are faint glimmerings that they might be a little receptive. But the action they have taken so far has not been the action required by an industry that makes a growing and important contribution to our economy.

9.5 p.m.

Mr. Mike Noble (Rossendale)

Tonight, as on other occasions when we have debated textiles—I was glad to see that at 8.35 p.m. we managed to get round to the textile industry—we have heard a united voice from both sides of the Chamber speaking on behalf of the textile industry. I shall take up some of the points made by the hon. Member for Macclesfield (Mr. Winterton), and my hon. Friend the Member for Sowerby (Mr. Madden).

I must begin by expressing my amazement at the comments of my right hon. Friend the Minister of State, when he announced, almost with triumph, the arrangements that have been made with the under-developed countries through the MFA. I can only say that he must have watched carefully the England performances against Scotland and Brazil recently when England were beaten 2–1 and 1–0 respectively, when Mr. Don Revie said that he thought they were promising performances. I hope that those performances are not examples of the way in which the Government will move in future.

Mr. Hattersley

England won 4–1 after that.

Mr. Noble

Actually, we did not win 4–1 in the next match because we were still in the United States, but that is by the way.

We must judge the Government's performance on results. If they can express such confidence, can we look forward to their returning with the goods when they negotiate on the textile market?

We are talking not only about the British textile industry but textiles internationally. It is about the largest industry in the world. It is estimated that it employs about 100 million people. As we all know, it attracts in the underdeveloped countries the first form of industrial development. It is against that background that the hon. Member for Macclesfield mentioned the developments that have taken place in the past in an attempt to control textile imports.

I gave the MFA a cautious welcome when it was first introduced, but the advantages of the scope which it covers, the range of products which it covers within textiles, and the fact that there is international agreement and not unilateral imposition are largely lost because of the failure of the Government to negotiate realistic quota levels.

In the circumstances faced by the British industry it is ridiculous that any growth of imports should be considered. Import penetration is now above 60 per cent. The general levels are too high. It is burden sharing in terms of sharing for the future but sharing none of the burdens of the past. As the hon. Member for Macclesfield said, there is an absence of any regulator.

The agreement we are discussing tonight has demonstrated the weaknesses all too well. If we take the examples of Macao, Malaysia and Singapore, three of the five countries involved, we find that the agreement states that restrictions on cotton yarn and other cotton textiles are to be phased out as there is no evidence that they are causing or threatening market disruption. I should like my right hon. and hon. Friends to go to my constituency, or any area in the North-West, and make that statement. The fact is that any cotton yarn or cotton textiles imported into this country threaten disruption in circumstances where we have such a high amount of short-time working and unemployment. The Government must come to terms with that fact.

On 7th May I received a letter from my right hon. Friend the Prime Minister, and in it he said, when talking about the MFA and negotiations for the next round, that We can expect some very hard bargaining". I am delighted to hear that, as we have seen no such bargaining from this country hitherto. The agreements, when we talk about the dustbin of the Common Market, are the rubbish in the dustbin.

When we talk about Malaysia—the agreement says that there is no need for the restrictions on cotton yarns or cotton textiles to continue—what do we find? Malaysia attracts investors by offering tax-free holidays, tariff protection and low wages. We must take a new look at the under-developed low-cost countries.

I have a copy of a report of a seminar held in Djakarta of the International Textile Garment and Leather Workers' Federation. Some of our trade unions are members of the federation. In page 92, in dealing with Malaysia, it states Textile and clothing industrialists joined other industrial groups to participate in these profit-making projects with the first giant companies in Malayan Weaving Mills Limited and Textile Corporation of Malaya in Johore, followed by Tiaping Textiles Berhad and Kamunting Textiles Limited in Perak. Incidentally, this is an industry in which we are told there is no threat. That has happened over two years. The report continues: In Selangor, spinning mills were set up by Kima Textiles Berhad and Sharikat Fu Yuen Berhad. Over the years many textiles and spinning mills were opened and knitting and garments companies soon joined in the race to exploit to the fullest the generous tax incentives and cheap labour. By September 1974, Malaysia had more than 120,000 spindles whereas nearly 3.500 weaving looms and about 1,200 knitting machines are used in the textile industry, not including another 30,000 spindles in the new companies just opened in the Free Trade Zones in Butterworth and Bayan Lepas in the Province of Penang. All in all, about 25,000 people are engaged in 35 companies operating in Peninsular Malaysia producing textiles and other related products like cloth, furnishings, stockings and ready-made garments. All these companies including the multinational corporations bring in foreign experts who are seconded here on a contract basis and are paid high salaries. … Young school-leavers and migrant workers between 16 to 25 years are the raw recruits who also become easy victims of exploitation as trade union consciousness and workers' education is relatively unheard of, particulary by workers who come from rural backgrounds with simple ways of life. Taking the 100 largest institutions or organisations in the world in budget terms, 50 are multinational corporations—a large number of which are Japanese—and they have moved textiles into South-East Asia and, indeed, Indonesia, as was indicated by the hon. Member for Macclesfield. That is because those areas provide cheap labour and a means of sending their textiles into Western Europe, particularly this country.

Till we appreciate that the ball game has changed we are helping, not the low-paid, under-privileged and over-exploited workers of the Far East, but the multinationals to recoup from exploited cheap labour profits for return to Japan and other areas. That is the situation with which we have to come to terms.

These multi-national corporations are unscrupulous in the way that they exploit the movement of capital and take advantage of tax concessions, and so on. Ultimately, together with the workers in the Far East, we shall be the sufferers.

Many of these multinationals are joint ventures, but some have budgets bigger than those of Governments of the countries in which they are situated. Therefore, they are in a position to dominate those Governments and in some circumstances, I should guess, to control to a large extent the negotiations that take place through the MFA.

Most workers in the countries concerned are not union-organised. I believe that through the next round of the MFA we can do ourselves and those countries a good turn by accepting the recommendation of the International Textile, Garment and Leather Workers' Federation for an international labour code to be negotiated and attached to these agreements and to be policed the countries concerned. Only in that way shall we be able to protect and improve the standards of our own workers and the workers in those countries.

My right hon. Friend said that one of the five objectives should be aid to the under-developed world. I am sure that all hon. Members share that objective, but a handout in the form of cash is not the answer. I suggest that a hand out in the form of access to markets alone is not the answer if we take account of the role of the multinationals in those countries, particularly in the textile industry.

What is the answer? It is to work through these agreements and through the international trade union movement to establish in those countries the kind of collective bargaining machinery that we should like to see set up, but which is frequently prevented by law, and a system of social security payments. In that way we can raise the standards of workers and make competition fair. The definition of "competition" in international agreements is such that fair competition is not comparing like with like. We are comparing workers with free collective bargaining in Britain and Europe with workers in the Far East who are little more than highly exploited wage slaves. Till we can come to terms with that situation, they are going to lose, and so are we.

I hope that my right hon. Friend the Minister of State will have taken note of this point and that when the MFA is renegotiated, in the next round, all the improvements suggested by my hon. Friend the Member for Sowerby and the hon. Member for Macclesfield will be taken into account. I hope that the Government will take into account the need for an international labour code, and do themselves, the countries in the Far East and the international labour movement a service.

9.15 p.m.

Mr. Douglas Hurd (Mid-Oxon.)

It is probably fair to say that we have had a more enterprising and useful debate than might have been expected from the ragbag of documents that have been thrust at us. It is right that I join with several of my right hon. and hon. Friends in protesting at the form of the debate, which illustrates the difficulty we still face in this House. The fact is that there is now a European Community dimension to almost every sphere of our own policies in Britain. In some spheres it is greater, in some it is less. However, the European dimension to each policy should be discussed alongside that policy and not put together in a ragbag of things lumped together simply because they have a European origin.

There is no clearer proof of that than the last three speeches we have heard on the subject of textiles. It is nonsense that such speeches, particularly the practical and powerful speech of my hon. Friend the Member for Macclesfield (Mr. Winterton), should be delivered to a Front Bench of Ministers who are in no way responsible for these matters. It is the Ministers who are responsible for trade and industry who should listen to such speeches which have the European dimension built into them, and they should reply in the whole context of textile policy, including the European aspect.

Hon. Members have made a powerful case for radical changes in the FMA. My hon. Friend the Member for Worthing (Mr. Higgins) has often spoken on these matters and on the need to preserve the balance between protecting our own industry and avoiding a spiral downwards into protectionism in a world in which our other industries—and, indeed, the textile industry in some of its forms—would be among the first to suffer.

The EEC must strike exactly the same balance as British Governments have had to strike in the past. There is no real difference. As we are constantly reminded from the Government Benches, the EEC has its responsibility towards the Third World and towards the industries of the Community. I do not think that Labour Members who have spoken in this debate have established any case for supposing that the EEC was less successful, with its much greater bargaining power, in striking the right balance between these interests than the British Government would have been by themselves.

However, once again one must return to the practice of lumping these matters together. It is wrong and unhelpful. The Leader of the House shakes his head, wrings his hands and says that it is all very difficult. However, the more one listens to these debates the more one is forced to the sad conclusion that the last institution in Britain that will develop this European dimension successfully is probably the House in which we sit. Unless we spend even more time and ingenuity than we have had under the guidance of my right hon. Friend the Member for Knutsford (Mr. Davies) hitherto, this lack of a proper working European dimension to our days and nights will be our loss and a failure on our part adequately to represent our constituents.

The hon. Member for Southampton, Test (Mr. Gould) has chosen two disparate points to cover in his amendment. The Opposition find no difficulty in accepting the amendment, either as regards New Zealand butter or as regards the Commission's view on the future form of the European Community—to which I shall return shortly.

There is one separate matter which it is right to consider alongside the Tindemans Report and the Government's White Paper. That is the question of Greece and possibly Greek accession. We have had an interesting discussion on that point which has cut across both party lines and the ordinary divisions for and against membership of the Community. I quite see the force of the argument advanced by my hon. Friend the Member for Cardiff, North (Mr. Grist) about the difficulties associated with Greek entry, and I appreciate the reasons why he supported the line taken by the Commission on that point.

I regard the arguments the other way as powerful. Given the Community to which we belong, its history, its origins and the inspiration from which it started, it is not possible to say to the Prime Minister of a democratic Greece "Greece is not eligible to join the European Community", particularly when for several years she has been party to an association agreement with the Community which looks directly towards full membership. That is not a possible line to take. My right hon. Friend the Member for Chipping Barnet (Mr. Maudling) has several times in this House reasserted our support for the entry of Greece.

Mr. Budgen

Is my hon. Friend saying that entry into the Community should be based on being a good democratic boy rather than on some form of community of interest?

Mr. Hurd

I suspect that that community of interest lies in being a European State—a State which is not democratic but which excludes itself by that process.

One would have to be totally lacking in a historical sense if one could bring oneself to argue to a democratic Greek Prime Minister that Greece was not eligible. There is one point that follows from that and which has been reflected in the speech of my hon. Friend the Member for Cardiff, North—namely, that in admitting Greece, whenever that is possible, we should take considerable care not to admit the Cyprus question to membership of the EEC as well.

Mr. Dalyell

The hon. Gentleman is seeking to have his cake and eat it.

Mr. Hurd

I hope that the hon. Gentleman will allow me to develop that point. In the time that elapses between now and the entry of Greece, which I support, the EEC has a duty to exert itself more than it has done in the past to try to find a solution to this essentially European problem. It is not enough simply to say that we are in favour of inter-communal talks. Let us seek out an experienced statesman in the Community and say to him "For six months or a year, you will be the Community representative on the Cyprus question". Let him go around and talk to the people concerned, as Ambassador Jarring used to do for the United Nations and in so doing made considerable progress by quiet, effective diplomacy. Let us see whether in that way we can reach an agreement. It may not succeed, but it would be better to make an attempt than simply to drift into a situation in which the Cyprus dispute became embedded inside the Community. I put forward that suggestion for serious consideration by the Government.

The Minister of State, in an interesting speech, said that where the Community had spoken with one voice on foreign affairs it had spoken with great effect. I am not sure that that can be sustained by the record. There have been occasions when it has spoken with one voice. For example, it spoke with one voice on the declaration of principles on Angola and again on Rhodesia, but we cannot say that it spoke with great effect on those matters. We are in an intermediate situation. Obviously we are exchanging information effectively on foreign policy. We have got to the stage of occasionally issuing declarations of principle, but we have not developed the back-up to enable those principles to be effective in terms of world diplomacy.

The Community does not have armies and navies but it possesses substantial civilian power. However, it has not yet organised itself to use that civilian power to back up the principles on which it agrees. It is particularly important vis-a-vis the Soviet Union and Eastern Europe. It may be right to suggest the setting up of a political secretariat, as was suggested by my hon. Friend the Member for Cardiff, North. I believe that we need to develop a European foreign policy going beyond a simple exchange of information and declaration of principle but providing a continuous back-up so that points that are agreed are reinforced in our dealings with the outside world.

It follows that Mr. Tindemans is right in saying that in that respect, the Foreign Ministers should accept an obligation to reach a common view. That does not mean removing the veto by some constitutional piece of surgery. It means creating the habit of agreement such as ought to exist, and usually does exist, in the British Cabinet when one goes into the room and expects that by lunchtime it will have reached agreement on this or that. The question of vetoes or voting does not usually arise. It is that habit of agreement which, so far, the Community does not entirely have, to put it mildly, and which it needs rather than any constitutional change if it is to make progress in this field. To that extent, I am not sure whether Mr. Tindemans in his report was suggesting an institutional change. I think that what is require dis more a change of mood and habit.

In respect of the Tindemans Report and the view of the Community, I broadly agree with the comments of my right hon. and learned Friend the member for Hertfordshire, East (Sir D. Walker-Smith). Mr. Tindemans has been rather crudely criticised in some quarters in this country as if he had produced a federalist report. Of course he is a federalist, but he is one who in his report deliberately and expressly renounced the federalist approach as the immediate way of discharging the duty which he had been given. He concentrated on making practical suggestions, starting from the present situation rather than trying to present a kind of federalist blueprint.

I do not believe that in my lifetime, perhaps not even in the lifetime of my hon. Friend the Member for Faversham (Mr. Moate), we shall see the nation States of the Community fade away. I do not believe that we shall see national Governments or national Parliaments submerge their identity in a European executive or European Parliament which will take over the competence of national Parliaments. I do not believe that that is a likely development, and I think that this was realised 10 or 15 years ago.

If that is so, it leaves us with the Council of Ministers as the decision-taking organ of the Community. This means bargaining and wheeling and dealing. My hon. Friend the Member for Banbury (Mr. Marten) interjected earlier and used the phrase "wheeling and dealing" as a complaint against the way the Community operates. One cannot have it both ways. If there is a veto, and if every country retains the power to exercise a veto when it thinks its own interests are in danger, one will have wheeling and dealing.

The question to which the House needs to address itself seriously is whether we are adequately equipped to make the most of our own bargaining position in our own interest and that of Europe. I agree with the hon. Member for Southampton Test—enlightened self-interest. Having listened to his speech, although it was very powerful, I feel that the hon. Member's view of "enlightened" is a great deal darker than mine. A great deal more accent needs to be put on the word "enlightened" before we can get self-interest.

I am worried about the way the Government set about getting the best bargain for this country. Of course they used up a lot of credit in the renegotiations, and we understand that. I do not want to go into that argument again, but there are worrying signs that the Government are still not equipped to get the best bargaining for this country, and for Europe, in the Council of Ministers. A classic example of how not to do it was the present Prime Minister's exercise in applying for a separate seat at the Conference on International Economic Co-operation. It went down well in this House. I remember the cheers he got from below the Gangway—[Interruption.]

Mr. Sandelson

Rubbish.

Mr. Hurd

The hon. Gentleman says, "Rubbish". Maybe he sat ostensibly silent at that point.

Mr. Sandelson

I did not refer to anything at all that the hon. Gentleman said. In fact, I was agreeing with what he was saying.

Mr. Hurd

Was it an internal argument on his own Benches?

What the Prime Minister did was a political success, momentarily, in this House, and such political success comes fairly cheap and easy. But in fact it was damaging for this country. It was a mistaken tactic and it undermined the credit of this country in future dealings with the Community. In retrospect, that is not controvertible.

It is no good shouting at the Community from a distance and expecting it to listen when we are a member. It is the experience of history that, if one wants to win an argument, one must couch it in Community terms and accept a Community objective. That is what the French have done consistently. They have, of course, pursued and achieved their national aims, but they have always tried to put them in terms of a Community argument. That is what we must do and what we do not yet do.

The Minister of State was perfectly correct, looking to the future, to identify the common fisheries policy as the next area where there is an important national interest which we need to protect in this way. When the Government set about this major test of bargaining skill, I hope that they will do so not by shouting at the Community from this side of the Channel but by entering into what our partners are trying to do, balancing what we need to achieve in this field against what they want to achieve in other fields. Unless we think ahead that far, we shall simply become involved in a series of shouting matches. Out of that the interests neither of this country nor of Europe will be served.

While I am dealing with bargaining power, I would say that the intervention of the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), who is no longer present, was amazing. It was a completely unreal analysis of where power lies in the Community and how it is exerted. If anyone wanted to weaken the influence of Scotland and the Scots in the Community, there is no more effective way of setting about it than by working for the disruption of the United Kingdom. The influence of Scots, as anyone who goes to the capitals of Europe can see at a glance, is already very powerful. If they simply became the representatives of a small nation State, their influence would be substantialy reduced.

I have one final comment on the question of bargaining points. I want to be gentle about this because it does not apply to the Minister of State who opened the debate or the Under-Secretary who will reply to it. But it is no good Ministers of the Crown associating themselves with documents of this kind if, in the next breath, or the next week they want to go to Europe to strike a good bargain for this country.

I am thinking here of the Labour Safeguards Committee policy document "Promises and Reality", which was launched at a Press conference by the Secretary of State for Energy. He has a right to these opinions and to express them, but if he does so from within the Government neither he nor his colleagues can expect their arguments on behalf of Britain to be taken too seriously. It will always be said on the other side "These arguments from the British Ministers are not real arguments based on their real national needs as a member of the Community; they are simply a reopening of the argument which continues within the British Cabinet."

It would therefore be advisable, before we get into these difficult and dangerous negotiations on matters of vital interest to us, such as the fisheries policy, that this kind of exercise, as affecting and involving members of Her Majesty's Government, should be brought quietly to a conclusion.

There is a general feeling that over the last six months the Community has suffered a disappointing loss of momentum in comparison to its tasks, particularly in the economic sphere which my right hon. Friend the Member for Knutsford described so vividly. What he said about lack of correlation, particularly in the Commission, is a warning which we should all take seriously.

A lot of work has been done particularly in establishing relations with the outside world. This is less understood within the Community than it is outside. It is only when one listens to people concerned with business outside the Community, with New Zealanders or Japanese, that one finds that they have a far greater interest in and respect for the Community as a bargaining power and a pole of attraction than many of our own citizens—a power which does 40 per cent. of world trade and is just beginning to understand how that influence could be used.

The right hon. Member for Fulham (Mr. Stewart) quoted the experience of what is happening in Spain and Portugal. That is a vivid illustration of how the Community is beginning to make a sensible and constructive use of its power. It is a polar attraction, it is a civilian power and, in my view, it is a prime national interest of this country. Looking at it from the point of view of our enlightened self-interest, we in this House and in this country should do our utmost to help forward this process and make it succeed.

9.35 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson)

I begin by picking up two matters raised by the hon. Member for Mid-Oxon (Mr. Hurd). The first concerns the procedural problem to which he referred at the beginning of his remarks and to which a number of other right hon. and hon. Gentlemen referred. There is a great deal of sympathy with the views which have been expressed about it, but this is basically an issue which has to be resolved by the Lord President following representations to him. Obviously, it is not a matter for which the Foreign Office can be answerable in a debate of this kind.

The hon. Member for Mid-Oxon went on to criticise the hon. Member for Clackmannan and East Stirlingshire (Mr. Reid), and I agreed with him very much. I fully endorse his comments about the hon. Gentleman's contribution to the debate. It would be a process of self-delusion if the hon. Member for Clackmannan and East Stirlingshire continued to lead people to believe that a devolved Assembly would be able to have separate representation for Scotland. This monstrous process of self-delusion has to be exposed every time it comes forward, and it has to be accepted for the nonsense that it is.

Mr. Dalyell

Having had to put up with this nonsense weekly, cannot the Foreign Office set out the facts of the case and outline the nonsense which is put forward week after week not only by the SNP but also by the hon. Member for South Ayrshire (Mr. Sillars) and his colleagues these days?

Mr. Tomlinson

If I tried to take that task on board I should be left with no time to do anything else, but certainly I take note of my hon. Friend's comments.

Our debate today has been not only a very wide-ranging one on a diversity of issues, but it has produced a very much better debate than many of us anticipated when we saw the array of different matters which which we had to deal. It has been a debate of immense diversity, ranging from the Commission's opinion on the Greek application, to the problems of textile imports, about which we heard from a number of hon. Members. At times, the debate has, perhaps, lacked cohesion, but the opportunity for a wide-ranging discussion of these many important issues is no less valuable for that.

Before I attempt to reply to the many matters raised in the debate perhaps I might say a few words about two documents in respect of which not a great deal has been said. I also want to refer to the arrangements for Community imports of New Zealand butter. I want to comment briefly on the food aid programme in dried skimmed milk. Then I want to discuss briefly the Ministry for Overseas Development report on Food Aid.

In opening the debate my right hon. Friend the Minister of State said that I would be referring in some detail to New Zealand butter. This is a subject in which the House has always taken a keen interest. At the outset I wish to pay tribute to the Scrutiny Committee for considering so quickly the information which my right hon. Friend the Minister of Agriculture put to it only last week about the latest proposals likely to emerge from the Commission. Moreover, I am sure that the House welcomed this early opportunity to examine the questions to which these proposals give rise.

The House will know that the Commission carried out a review in the wake of the agreement in Dublin by the Heads of Government in March last year and that this review was presented to the Council in Document R/2099/75. That document recommended that we should be allowed to import from New Zealand 129,000 tonnes of butter in 1978, 121,000 tonnes in 1979 and 113,000 tonnes in 1980. The House knows that this subject has been discussed in the Council of Ministers in an effort to reach agreement.

There is general recognition in the Council that exports of butter are a matter of crucial importance for New Zealand. However, there is also quite natural concern about the prospects for the Community's producers in a situation where Community production of butter is increasing at the same time as the consumption is decreasing. To take account of these considerations the Commission has now proposed that New Zealand should be allowed to export to us 125,000 tonnes for 1978, 120,000 tonnes for 1979 and 115,000 tonnes for 1980.

A certain proportion of those quantities can be sold for uses other than direct consumption; for example, for the manufacture of other foods. The part that would go for manufacture would depend on market developments, but it would be that amount by which our authorisation to import New Zealand butter in any year exceeded 25 per cent. of the total quantity sold for direct consumption in the United Kingdom in the preceding year. Butter diverted in that way for manufacture would have to be sold at a lower price than that for direct consumption because it would be competing with vegetable oils. I know that that is a complex matter and hon. Members will want to study the text in order clearly to assimilate it.

The Commission proposal envisages that the special levies chargeable on New Zealand butter should be varied and differentiated to bring prices down to an appropriate level. However, the intention is that the cif price for the whole quantity of butter would be negotiated periodically as originally envisaged, and that it would apply on average to the entire quota each year.

Arrangements for the maintenance of imports of butter after 1980 are to be made in the light of a report by the Commission before the end of 1978. We recognise the importance that New Zealand attaches to the commitment which would give her the continued assurance of being able to find an outlet for butter exports.

Mr. Jay

My hon. Friend will remember that the Government's White Paper on the renegotiation stated: In March 1975, the Heads of Government, meeting in Dublin, issued a Declaration of Principle which provides for the annual imports of butter for the next 3-year period 1978/1980 to remain close to deliveries in 1974 and 1975. Can he assure us, as I understand that he can, that the arrangement that he is now describing honours that wording?

Mr. Tomlinson

Yes. I believe it does honour those words.

Mr. John Davies

Will the Minister say what the New Zealand reaction is? If we felt that New Zealand was happy about the proposals it would be of considerable help to the House.

Mr. Tomlinson

As my right hon. Friend said when he opened the debate we have not had an opportunity of discussing the latest document with the New Zealand Government.

These are clearly complex proposals which the House will want to consider carefully, but they might provide an agreement with our partners in the Community, which respects their interests whilst honouring the commitment in Protocol 18. That is the confirmation for which my right hon. Friend is waiting.

I now turn to the speech made by my hon. Friend the Member for Southampton, Test (Mr. Gould) which was contentious but interesting. He has apologised for not being able to be here in the Chamber at this time. He raised the question of the principle of digressivity as applied to New Zealand butter. We have already secured a considerable improvement in the latest Commission proposal and digressivity has been considerably reduced. On the post-1980 arrangements we will continue to press for New Zealand's interests. I hope that my assurances will satisfy both my hon. Friend the Member for Southampton, Test and the hon. Member for Faversham (Mr. Moate).

Mr. Nicholas Winterton

rose—

Mr. Tomlinson

I am sorry that I cannot give way. I have only 15 minutes, and there is still much to cover.

We are maintaining close contact with New Zealand and we will assure ourselves that the compromise proposals have the support of the New Zealand Government before we consider agreeing to them.

I turn now to the Commission communication outlining the Community's food aid programme in skimmed milk powder for 1976. As a result of a decision by the Council of Agricultural Ministers on 2nd and 3rd April, the programme has been increased from 55,000 tonnes to 200,000, 95,000 of which are to be delivered in 1976 and 50,000 in 1977. A further programme detailing the distribution of the extra 95,000 tonnes is under consideration by the Commission and will be made available to the House in due course.

I turn to the report prepared by the Ministry for Overseas Development, which gives detailed returns up to 31st December 1975 of food aid shipments to countries in need under the Community food aid programmes, for 1975 in the case of dairy products and for 1974–75 for cereals. The report does not include shipments made in 1975 under earlier programmes. In giving priority to the poorest and neediest countries, the Community food aid programme is consistent with the objectives set out in the aid White Paper "More Help for the Poorest" and in line with the resolutions adopted by the World Food Conference in 1974, which we supported.

The hon. Member for Saffron Walden (Sir P. Kirk) raised a number of questions which need to be answered. I in no way agree with the hon. Gentleman that the most disappointing area in the development of the Community over the past six months has been political co-operation. The hon. Gentleman cited Angola. I agree that it was unfortunate that the Nine were not able to agree on recognising Angola at the same time, but that is a single episode that caught the headlines. When the hon. Gentleman says, basing himself on that one case, that we had disappointments in the area of political co-operation, he ignores the fact that since then the Nine have agreed a major statement on policy towards Southern Africa. That statement of 23rd February was laid before the House. Similarly, the Nine have given their support to British policy on Rhodesia. The statement of the Heads of Government on Rhodesia was similarly laid before the House.

The two statements on Rhodesia and Southern Africa are only a beginning. They constitute the broad framework of policy which demonstrates that the Nine are already making efforts to develop further. The issues involved are not trivial. I hope that a common position on this and other areas of important policy will develop.

Political co-operation has been functioning well in other areas, too. The General Commission of the Euro-Arab dialogue, to which the hon. Gentleman referred, met recently in Luxembourg, I believe with a satisfactory outcome.

The Nine continue to consult one another on matters such as the CSCE. I believe that this co-operation will be of developing importance as we progress towards the Belgrade review conference next year.

Political co-operation is, therefore, very much alive and well. The lack of headline-catching activity in this area does not mean that nothing is happening.

The hon. Gentleman made an issue of the question of a political secretariat, to which his hon. Friend the Member for Mid-Oxon also referred. The House is well aware that this proposal caused the greatest difficulty in the past, and there is no substantial evidence that the positions taken up among the Nine have changed significantly. I see no reason for adding gratuitously to the catalogue of current problems within the Community, which is what we should be doing if we resurrected the question of a political secretariat now.

Perhaps the hon. Gentleman is suggesting that a political secretariat is necessary in order to galvanise political cooperation. I do not believe that to be the case. I believe that the secretarial facilities provided and the work done by the Luxembourg presidency have been exemplary. I take this opportunity of conveying Her Majesty's Government's congratulations to Luxembourg on what has been achieved during the past six months.

We should at the same time acknowledge that, if Luxembourg can shoulder the burden, there is no reason why it should be intolerable for any other nation holding the presidency. Indeed, it is something this Government looks forward to being able to take on for the six months beginning 1st January 1977.

I should like briefly to refer to the common transport policy. This is another item to which the hon. Gentleman referred. He did not indicate what sort of developments he would like to see in a common transport policy, but much of our concern has in fact been with pre-accession agreements on such matters as tachographs and drivers' hours which were accepted under the Treaty of Accession. We want to sort these out before we go any further. We are, of course, resisting the understanding reached among the Six on lorry weights; no new agreement is yet in sight.

I have already mentioned the specific question of my hon. Friend the Member for Southampton, Test in relation to New Zealand butter. Whereas we could go a long way in agreeing with many of his views on other subjects—for example on the headlong rush towards federalism, and harmonisation for its own sake—there is a serious divergence between us when we look at his views on trade.

To try to attribute to our membership of the Community the trade imbalance which at present exists is as monstrous a distortion of the facts as that to which I was referring earlier from the hon. Member for Clackmannan and East Stirlingshire. The deficit with the Community is much larger than we would wish, but it has to be clearly established in the debate that the figures for 1976 show a very strong improvement and that our exports to the Community during the present period—are expanding very strongly indeed. I hope that Members of the House, whatever view they take on the EEC, will welcome this as being necessary for the economic salvation of this country.

I now refer briefly to the points raised by my hon. Friend the Member for Crewe (Mrs. Dunwoody). During her interesting speech she asked about the reports of a Commission proposal to abolish marketing boards. I state very clearly that I know of no such proposal and that the Government's objective is to ensure the continuation of the boards, which are important for the orderly marketing of our farm produce. Indeed, I understand that on a recent visit members of a delegation from the European Assembly were very impressed by the operations of the Milk Marketing Board, which they saw.

Mrs. Dunwoody

They were so delighted that on their return they told their colleagues in the EEC that the boards should continue, only to learn that a decision of the European Court made it impossible.

Mr. Tomlinson

That is not the understanding of the Government, but if my hon. Friend cares to write to me about it we shall be happy to look at it.

I now turn briefly to the speech of my right hon. Friend the Member for Fulham (Mr. Stewart). I should like to take two points from his speech. First, he asked a very blunt and direct question. He asked why Ministers cannot make early progress on direct elections, pointing out that this is not a Herculean problem. I say to my right hon. Friend and to the House that I am reasonably optimistic that the outstanding problems on the numbers and allocation of seats can and will be overcome in the very near future.

I personally have a great deal of sympathy with my right hon. Friend's plea concerning passports. If we spend too much time over the shape, size and colour of a passport, we shall not be able to maintain the necessary progress.

A great many hon. Members spoke about the Greek application for membership of the EEC. I can see no reason why Greece's application should in any way alter the Community's attitude in the Cyprus dispute. We cannot reasonably expect prospective members of the Community to enter the Community free of outside disputes. We were not ourselves in that position. We had disputes, for example, about Icelandic fishing, both before and after entry into the Community, and it would be unreasonable to say that any country which had an external dispute should not be considered.

I thank my hon. Friend the Member for Belper (Mr. MacFarquhar) for his kind personal remarks. In reply to his specific question, Greek membership will not be allowed either by the Commission or by member States to prejudice the Community's relationship with Turkey. The association agreement of the EEC with Turkey and the provision for eventual Turkish membership will stand. Spain, Portugal and Turkey have not applied for membership and may not be in a position to do so for some time. As and when they are in a position to apply, there is no reason why their applications should not be sympathetically received.

The question of textile imports was raised forcefully by my hon. Friends the Members for Sowerby (Mr. Madden) and Rossendale (Mr. Noble) and the hon. Member for Macclesfield (Mr. Winterton). There are signs of a growing recovery of the industry. I accept that the recovery is patchy, but it is most pronounced in the spinning and weaving sectors. I note the warnings of hon. Members with constituency interests in the textile industry. I equally note the industry's concern that the improved demand may be met by imports and thus be of no advantage to the home industry.

Under Article 4 of the GATT Multi-Fibre Arrangement, the EEC has negotiated 11 bilateral textile restraint agreements, five of which are relevant to the debate. Four further bilateral agreements are being considered and talks on another two may begin. The EEC is also taking unilateral steps in relation to Taiwan. The Multi-Fibre Arrangement review will take place this summer and the Whitehall preparations for the review have been begun. The GATT Textile Committee, we hope, will be looking at the review proposals by the end of this year.

All the points made in the debate about textiles will be given most careful consideration in the Whitehall preparations that have begun, and there is a prospect of the inclusion of proposals that are accepted in the GATT multi-fibre review taking place this summer.

This wide-ranging debate has been distinguished by a series of well-informed speeches. The debate has acknowledged that we are in the Community and that the Community has sought to deal with the problems of our membership. To the residual minority of hon. Members who still insist on fighting the battle that was so comprehensively lost in the referendum they demanded a year ago, let me say that we are in the Community, we are part of it and it is part of us.

Let those who still have doubts and reservations accept the challenge of using their energies towards the attainment of the objectives listed by my right hon. Friend the Minister of State at the conclusion of his opening remarks, so that together we can go forward in developing Britain's membership of the European Economic Community.

Amendment agreed to.

Main Question, as amended, agreed to.

Resolved, That this House takes note of the Report on Developments in the European Communities, November 1975—April 1976 (Command Paper No. 6497), calls on the Government to ensure that the EEC fully honours the Dublin Agreement of March 1975 on imports of New Zealand butter into the United Kingdom, and disagrees with the Commission Report on "European Union" (R/1815/75).