§ Mr. Eric Forth (Mid-Worcestershire)
The subject for debate has not been dealt with by the House since 1978, which was the last occasion on which we had an opportunity to discuss the vital matter of the enlargement of the EEC, which will have, as I hope to show the House, very profound effects for the United Kingdom and the EEC as a whole.
Since 1978 we have had the opportunity to examine the effects of an enlargement of the Community with the accession of Greece. As a Member of the European Parliament from 1979 to 1984, I have had the opportunity to examine the effect of an enlargement of the Community and to consider at close quarters the operation of the institutions of the Community.
The rationale that is given by the Government for supporting the accession of Spain and Portugal to the EEC tends — my hon. Friend the Minister will no doubt confirm this later — to be based on three principal arguments. One could be summarised as the completion of western democratic Europe, another related to that would be the consolidation of democracy in the applicant countries — Spain and Portugal — and the third has a strategic or defence element and relates to the encouragement of Spain to take part in or to join NATO.
The completion or extension of democratic Europe is a very tempting argument, although it should be noted that my right hon. Friend the Prime Minister said as recently as 2 April — Hansard reference column 1066, perhaps appropriately:I think it likely that 12 will be the limit of the Community for a very long time." — [Offical Report, 2 April 1985; Vol. 76, c. 1066.]I regret that in a sense because, quite apart from the merits or otherwise of the case being made for Spain and Portugal to join the Community, I would be very interested in the possibility of countries such as Austria and Switzerland — were it not for their curious political position — and Norway and Sweden looking again at the Community as prospective members. Apparently that is not in the mind of my right hon. Friend the Prime Minister, which I regret.
Therefore, the argument about the completion of western democratic Europe can at best be only a rather temporary one because we are not, apparently, contemplating its full completion. In that sense, the related argument about the consolidation of democracy is somewhat dubious because we are not told in what sense mere membership of the EEC would guarantee the continuation of democracy in any member country, never mind Spain and Portugal. Nor does the Community have a satisfactory definition of "democracy", and I believe that it would be unable to judge whether a country was, in that sense, sufficienty democratic to merit membership. The Minister of State might wish to expand on that when he replies to the debate.
In relation to the argument relating to strategy, defence and NATO, an intriguing prospect emerges because the Spanish people will have a referendum next year about their membership of NATO. Are we being told that we are, in effect, bribing the Spaniards into agreeing to stay in NATO by their membership of the EEC? Or do we not 1385 welcome wholehearted membership of NATO, regardless of whether moneyes are paid or membership of other organisations is extended?
That must be considered in the context of the fact that Ireland, which is a member of the EEC, is not in NATO — indeed, Ireland declares itself to be neutral — that France is not a full member of NATO in any case, and that, more importantly, the country which is arguably the single most important member of NATO, certainly on the eastern flank—Turkey—will apparently be expected to continue to support NATO without being offered the bribe or inducement of membership of the EEC. It is beyond me why we must offer Spain, but not Turkey, that inducement.
Will the Minister comment on the position of Turkey as a loyal member of NATO and as a country which is moving rapidly towards the restoration of democracy, and say whether we would welcome Turkey as a member of the EEC? That is highly relevant to the question under consideration, which is the enlargement of the Community, in this case to take in Spain and Portugal.
Politics is, among other things, the assessment of the judgment of costs and benefits. What I have outlined so far have been the principal arguments about the claimed benefits of the enlargment of the EEC bringing in Spain and Portugal. The costs argument is much less clear than hon. Members might believe. Surprisingly little information is to hand about the costs of enlargement. The Prime Minister said:We shall, of course, put as many of the details of the costs"—of enlargement—as we can before the House". — [Official Report, 2 April 1985; Vol. 76, c. 1070.]However, she had said about the enlargement of the EEC in a written reply to me:It is not yet possible to estimate actual costs and benefits to the United Kingdom"—[Official Report, 29 March 1985, Vol. 76, C. 365.]We are left in the peculiar position of being asked to sign a blank cheque. We shall be asked by Her Majesty's Government to agree to the entry of Spain and Portugal without, I fear, being told the costs of that exercise, either to the Community or to the United Kingdom. I hope that that will be rectified before the treaty is brought to this House for ratification.
I hope that the Minister will consider several heads of cost and give the Government's position on them. Two of the main sources of benefit to Britain from the EC are the regional fund and the social fund. It would be interesting to know whether those funds will be increased in size and, if so, what other elements of the budget of the EC might be reduced as a result. In any case, it is not inevitable, given the fact that two countries which are less prosperous than the United Kingdom will join the Community, that our position in, as it were, the league table of claims on funds, such as the regional and social funds will be reduced.
Shall we not find ourselves benefiting less than we have from such funds? Either we shall benefit less, in the sense that we shall get less of an existing fund, or, if the funds are increased in size, we shall get less than we would have got were Spain and Portugal not members. I am sure that the Minister will have followed that logic—I hope that it has not been too confused—in his usual impeccable way.
1386 My first area of concern, therefore, could be put broadly as the redistribution of wealth from the richer to the poorer. It is often said that one argument for bringing Spain and Portugal into the Community is that we could help them as less prosperous countries. The honest answer to be given by those who support the entry of Spain and Portugal must be that, if that is the case, the more prosperous must inevitably pay some of the bill. It is the size of that bill that we must be told before we are expected to approve the entry of Spain and Portugal into the Community.
A much bigger issue is the common agricultural policy, and here we enter the real big money arguments of the EC. The CAP still takes by far the largest part of the resources of the Community and there is, regrettably, no sign of that changing. How much worse will it be when we get the entry of these two new countries into the Community, with their production of wine, olive oil and tomatoes, to say nothing of their other products, and the demands that they will make on the CAP?
The questions that arise from that include not only what we shall do to deal with the control of expenditure on those important items, which will be much increased in output within the Community, but what will happen to the whole orientation of the CAP. I have been asked to comment on behalf of Britain's horticultural industry. I have been sent a document by the National Farmers Union, and the extracts I quote from it show the depth of concern of the industry in this country. The NFU says:realisation of Spain's enormous agricultural potential could add to the Community's existing surplus problems with further adverse budgetary consequences. The Unions believe that EC funds should not be made available to Spain or Portugal from the Guidance Section of FEOGA if this would lead to increased production of products already in surplus.The NFU goes on to say with specific reference to horticulture:The accession of Spain and Portugal would increase EC fruit production by almost 50 per cent. and vegetable production by 25 per cent. Existing Community growers"—including those in the United Kingdom—would face a major increase in competition, as well as the possible disruption and destabilisation of sensitive and already adequately supplied markets.There is, therefore, concern among the members of the agricultural community in Britain that the effects of Spain and Portugal coming in will be far-reaching, because the southern countries—I refer to Greece, Italy, Spain and Portugal all in alliance, and France when it suited her—would be in a position to swing the whole emphasis of the agricultural policy away from the direction that it has taken in the past—dairy products, cereals, beef, sheepmeat and the like—towards the southern products.
I hope that the Minister will address himself to that difficulty because if we are to be honest with ourselves and our citizens, and particularly with our farmers, we must tell them what we estimate the effect will be of the entry of two new countries to the Community, which would form a new emphasis or power bloc to the south of the Community, when those countries would, in their own interests, want to draw more of the CAP funds towards themselves.
Again we are faced with the difficulty either that the funds will be increased overall or that the existing funds will be redistributed. One way or the other, the bill must be picked up. It is the size of that bill about which we need to hear more today. Why is it assumed that a sector as vital as our automobile industry will prosper by easier access 1387 to Spanish markets, when the Spanish automobile industry is one of the most modern and efficient in Europe and when, if anything, we shall face an increased stiffening of competition from that source?
I am aware of, and pay tribute to, the attempts by Her Majesty's Government, and in particular by the Minister of State, to try to make sense out of the institutional arrangements of the Community, particularly in terms of the position that would be created if Spain and Portugal were to join. The Minister will, I am sure, confirm that up to now our efforts in that direction have, alas, failed. We shall see an increase in the membership of the Commission of the Community from 14 to 17. There is already a problem in finding enough meaningful work for the present 14 commissioners to do. It remains to be seen what 17 members will do. That is bad enough, but I am told that the European Parliament will increase from 434 members to 518 members. There will also be two official new Community languages. The costs of travel—Madrid and Lisbon will be centres of activity in the Community, and those of us who have been Members of the European Parliament know what that involves—and of interpretation and translation of documents must impose a heavy burden on the Community's institutions. There will also be significant effects on voting in the Council of Ministers.
I add in passing, because I agree that it is only a temporary argument in a sense, that the political complexion of the two countries, but especially the larger country, Spain, which has a Socialist Government, will have a potentially profound and unfortunate effect on the political balance within the Community and its institutions. How will the political decision-making process in the Community be affected by the accession of Spain and Portugal?
I am dubious about the claimed benefits of the enlargement to bring in Spain and Portugal. I do not believe that the arguments have the strength and validity which we have been asked to accept as unarguable and beyond dispute or doubt. I am concerned that the full cost of this exercise has never been laid before us, in terms of the internal budgetary working of the Community and, more importantly, in terms of the effects on the balance of decision-making and influence within the Community and the extent to which funds will be reorientated or redirected from the northern part of the Community, of which we are a part, to the south, in which the two applicant countries will be such an important element.
I remain extremely sceptical about the benefits of this exercise. I look to my hon. Friend the Minister of State for reassurance. I hope that the House will take the opportunity that it is given, in terms of what my hon. Friend says as a background, to consider the position that it will take when the ratification of the treaty of accession comes before hon. Members later this year.
§ The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind)
My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) began his interesting comments by saying that this was the first time since 1978 that the subject of enlargement of the Community had been raised in the House. It is perhaps no coincidence that during that year Spain and Portugal applied to join the Community. The fact that it has taken 1388 a long and arduous seven years before the negotiations were satisfactorily concluded is an eloquent indication of the extent to which real problems had to be resolved and of the Community's determination to ensure that the accession of Spain and Portugal would be beneficial to the Community as a whole and would not bring in its wake some of the fundamental problems to which my hon. Friend referred.
Although the subject of the Community often divides the House in substantial ways, the enlargement of the Community has been welcomed by the overwhelming number of hon. Members from all parties. There is a deep realisation that the accession of democracy to Spain and Portugal not only benefits the people of those countries but makes an important contribution towards strengthening the Western world as a whole.
My hon. Friend mentioned the fact that both countries have left-of-centre Governments, but it is equally true that, in their first democratic elections after the return to democracy, right-of-centre Governments were elected. One hopes that, one day, the normal process of democracy will produce Governments with political complexions that are more acceptable to my hon. Friend.
My hon. Friend referred to the remark of my right hon. Friend the Prime Minister about the size of the Community and about whether, with 12 states as members of the Community, that is likely to be the end of the road. My hon. Friend said that he regretted the fact that consideration did not seem to have been given to other Western democratic countries such as Austria and the Scandinavian countries joining the Community. The position is simple. As democratic, parliamentary countries in Europe, they would be eligible to be considered for membership, if they wished to apply. They have not done so, and that is entirely within their sovereign rights. My right hon. Friend the Prime Minister was simply saying that, at present, no further applications for membership of the Community have been made. If a European country which was a parliamentary democracy applied for membership, that would obviously be a matter to be negotiated within the existing Community.
That must be my answer with regard to Turkey. At the moment, there is a European Community-Turkey association agreement which was negotiated in 1963 and which recognised the possibility of Turkey's eventual membership of the Community. The Turkish Government have not made any application to the Community, so that matter does not need to be considered at present.
My hon. Friend attached great importance to how membership of the Community could enhance the democratic credentials of Spain and Portugal. He will appreciate that, in the first instance, that is a matter for Spain and Portugal. It is significant that all parties in Spain and Portugal have supported applications to join the Community and have emphasised their belief that accession will help to strengthen the democratic structures of their countries if they can be locked into a community that is, by its very nature, essentially a community of parliamentary democracies.
We are all conscious of the fact that, for many years, Spain and Portugal were both outside the mainstream of European thinking and were experiencing dictatorial regimes. When democratic systems were reintroduced into both countries, they both attached importance to the strong belief that any hankering by some people for a return to authoritarian systems would be much more unlikely to 1389 make progress if Spain and Portugal were part of a wider community participating in the European Parliament, the Council of Ministers and the other democratic structures of western Europe.
§ Mr. Forth
Does my hon. Friend agree that there is no mechanism in the Community to judge whether a country is democratic or, more importantly, to reject from membership any country that is not democratic from time to time? I am at a loss to understand what would happen if any country that intends joining the Community or any country that is already in the Community became in some sense undemocratic.
§ Mr. Rifkind
I suggest that democracy is rather like the elephant—difficult to describe, but one knows one when one sees one. Although my hon. Friend is correct to draw attention to the theoretical possibility that an existing member of the Community may one day adopt an authoritarian system of government, and to the fact that the Community has no formal method of responding to that, there is, I believe, general acceptance of the fact that it is incompatible with full membership of the Community for a country that does not have democratic structures to participate fully. How could such a country participate in the European Parliament? How could it participate in an equal and acceptable way in the Council of Ministers? I believe that that point is widely acknowledged.
My hon. Friend asked about the implications for the regional and social funds of the accession of Spain and Portugal. Recently, it has been agreed that the regional and social funds should be significantly increased, with a view not simply to the consequences of enlargement but because of the widespread belief that agriculture should take an increasingly lower proportion of total expenditure and other Community activities should take a higher proportion. The particular quotas that will be available to Spain and Portugal from the regional development fund have not yet been decided. They will be determined later this year. The decisions that were taken at the European Council with regard to integrated Mediterranean programmes were taken firmly on the basis that additional criteria for determining entitlement to the regional fund should not be changed. One Commission proposal would have shifted regional funds towards the Mediterranean countries. That proposal has been withdrawn, and there is now no danger of such a development.
My hon. Friend referred to the institutional implications of enlargement of the Community, mentioning in particular the problems that could arise from a larger Commission of 17 members, as is presently proposed. As he knows, the British Government have been in the forefront in arguing that this is an appropriate time at which to look completely afresh at the whole question of the size of the Commission. We have said that for our own part we would find it acceptable that there should be one Commissioner per member state, rather than some of the larger states having two Commissioners, as at present.
My hon. Friend is correct in saying that there is as yet no agreement, but I have been heartened by the fact that in the ad hoc committee on institutions—the so-called Dooge committee — on which I am the British representative, I made a proposal to that effect, and there has been unanimous agreement in the final report that it would be desirable to reduce the size of the Commission. There is still continuing discussion as the exact figure, but 1390 there was unanimous agreement on the part of all the representatives on the committee—all of whom were personal representatives of their respective Prime Ministers—that the likely figure of 17, which would result from enlargement under the existing rule, would be highly undesirable and unsatisfactory, very much for the reasons referred to by my hon. Friend.
My hon. Friend properly drew attention to the cost implications of enlargement, and that clearly is an important matter. It was one of the most difficult issues to resolve in the negotiations. He may be aware that the agreement which has been proposed in regard to the traditional financial arrangements is that for Spain there should be broad financial neutrality for the first few years. If the assessments on which the proposal is based are correct, the direct budgetery costs of enlargement should be very limited in the early years at least.
With regard to Portugal, it has always been accepted by EC Governments, including the British Government, that it would be intolerable for Portugal to be a net contributor, in that it would be by far the poorest member of the Community. Therefore, there is an acceptance that, even during the transitional arrangements, there has to be some net benefit to the Portuguese economy, and that is highly appropriate.
With regard to costs, it is difficult at this stage to give any precise figures. As my right hon. Friend the Prime Minister said, we would hope to give the House the fullest details when it considers the treaty of accession. That would provide a full opportunity for a more detailed assessment and analysis of all the implications of membership, including the financial implications.
I think that the most important point to which my hon. Friend will wish to give attention is that, following the agreement reached at the Fontainebleau summit, the financial implications for the United Kingdom will be very modest — far more modest than would otherwise have been the case. As a result of the agreement, the additional cost to the Community arising from enlargement will involve the United Kingdom in paying only 7 per cent. of the costs, rather than its traditional share of approximately 21 per cent. France will have to bear 27 per cent. and the Federal Republic of Germany 32 per cent. of the total costs. Therefore, compared with either of those two countries, the United Kingdom, with only 7 per cent. will have a very modest additional burden. Obviously, that is very satisfactory for the House and the country.
§ Mr. Forth
While I accept what my hon. Friend says in this context, will he agree that there is a danger, with Spain and Portugal joining the Community, that in the future there will be much greater pressure for additional Community expenditure in total, largely as a result of the agricultural matters, on which my hon. Friend has not yet touched? Therefore, his figures, while reassuring for the immediate future, may well be under a good deal of pressure as time goes on and as the Community, with its enhanced membership, finds more and more ways to spend Community money.
§ Mr. Rifkind
My hon. Friend is correct about Spain and Portugal being likely to be beneficiaries of Community expenditure, and they may very well have an interest in pressing for greater expenditure. But my hon. Friend should bear in mind that, parallel with that development, France, which has traditionally been a net 1391 beneficiary, is now in the process of becoming a very substantial net contributor. Therefore, in future the French financial interests will be likely to be much closer to those of Britain and West Germany, so the balance will indeed be preserved. As any increase in the own resources of the Community could be agreed only unanimously, there would be a constant ability to ensure proper accountability and responsibility in matters of this kind.
With regard to agriculture, the Community has agreed that there should be a very substantial transitional period before Spain should be entitled to full membership of the Community. There is agreement on a seven-year transitional period for all agricultural produce other than fresh fruit, vegetables and olive oil. In the case of certain sensitive products such as fruit and vegetables, the period for dismantling Community tariffs will be as long as 10 years. That will give substantial protection to our horticulture—a matter to which my hon. Friend rightly drew attention.
With regard to fisheries, which was one of the most important areas of negotiation, the outcome is extremely satisfactory for the United Kingdom. One of the areas about which we were most concerned was the possibility of Spanish access to the North sea. It is agreed that there should be no Spanish access whatever to the North sea. That has been warmly welcomed by Scottish fishermen and others who have an interest in those matters.
With regard to fisheries in other parts of Community waters, the access of Spain will be based largely on the traditional access which it has enjoyed under bilateral agreements with the European Community. There have been some increased quotas in certain areas, but not in those areas which are most sensitive for British fishermen, and that is very satisfactory.
With regard to industrial tariffs, my hon. Friend mentioned that he was far from certain that British exports in, for example, the motor vehicle industry would necessarily benefit as a result of the enlargement of the Community. It is certainly the case that Spain will be able 1392 to have the same duty-free access to the United Kingdom as the United Kingdom will ultimately have to Spain, but the question is much more complicated than that.
The problem at present—it has been for the past few years—is that Spain has far higher tariffs, which have enabled it to prevent penetration by British exports to Spain, whereas that has not been the case with the export of Spanish motor vehicles to the United Kingdom. Traditionally, Spain has had very high industrial tariffs, because historically its industry was relatively weak. It was given privileged access to the Community some years ago, and the Community has been increasingly concerned at the implications and unfairness of that in terms of reciprocal trading rights.
Under the arrangements which have been agreed, the Spanish have accepted that, in the first three years after accession, they must reduce their industrial tariffs against the rest of the Community by as much as 52 per cent. The remaining tariffs will be phased out in two or three years after that. That agreement provides very important and exciting opportunity for British exports. Particularly for motor vehicles the opportunities should be significant, because the reduced duty quota has permitted larger numbers of vehicles to be imported into Spain.
When there are two such countries as Spain and Portugal joining the Community, that does not simply involve marginal changes to the Community; it is a very significant change, of which we are all conscious. It is precisely for that reason that the negotiations were long and hard on both sides, but I believe that there is widespread agreement, not just in the United Kingdom but throughout the Community and in Spain and Portugal, that western Europe will be greatly strengthened by the addition of the Iberian peninsula to the European Community, that the democratic prospects for Western Europe are enhanced, and that as a consequence, not only at the political but at the economic level, there are challenges and opportunities for the United Kingdom which should result in our welcoming this excellent conclusion to the negotiations.