European Economic Area

HC Deb 17 February 1992 vol 204 cc41-77

[Relevant documents: Fourth report from the Trade and Industry Committee (House of Commons Paper No. 347 of Session 1989–90) on trade with EFTA and the Government reply contained in the Committee's third special report (House of Commons Paper No. 666 of Session 1989–90).]

4.34 pm

The Minister for Trade (Mr. Tim Sainsbury)

I beg to move, That this House takes note of the proposals described in the unnumbered Explanatory Memorandum submitted by the Department of Trade and Industry on 30th December 1991, relating to the draft Agreement on the establishment of a European Economic Area; and supports the Government's view that the Agreement should be entered into by the Community and its Member States subject to agreement on amendments to the draft necessary to deal with incompatibilities between the draft and the Treaty of Rome identified by the Court of Justice in its Opinion 1/91. The creation of the european economic area is a major step forward for the Community. It will bring significant economic gains to British industry and British consumers. The Government very much welcome this major agreement and look forward to signature within the next few weeks. What we shall be signing is the most ambitious and wide-ranging agreement entered into by the Community. It will extend the main principles of the single market to the seven European Free Trade Association—EFTA—countries. I remind the House that those are Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland.

A single market of 19 west European Countries stretching from the Arctic to the Mediterranean will be created. It will cover the "four freedoms"—free movement of goods, capital, services and people. It will also cover related matters, ranging from agriculture to co-operation in research and development.

This debate is particularly timely. Last Friday, the Commission and EFTA negotiators made a declaration that the EEA negotiations had been successfully concluded. The next step will be formal initialling of a text by the negotiators this week. We expect the final text to be ready for signature by member states and the EFTA countries next month, allowing their Parliaments to ratify by the end of the year.

The declaration by the negotiators was made in the light of agreement last week on amendments necessary to meet the concerns about the EEA expressed by the Court of Justice. Those amendments affected the competition and institutional provisions of the EEA—I will describe the new version of those provisions in some detail later.

I know that it is not ideal to debate the agreement when we do not have a text before us. I hope that the full explanatory memorandum that I submitted will go some way towards making good the absence of a text.

It might help if I first describe the contents of the agreement and the benefits that the Government believe that it will bring to the United Kingdom and to the Community. I will then describe the institutions of the EEA, referring briefly to some of the amendments that were agreed last week to deal with the problems arising from the opinion of the Court of Justice on the agreement.

The first and perhaps the best known of the four freedoms is free movement of goods. When the United Kingdom left EFTA to join the Community in 1973., the Community established free trade agreements with the remaining EFTA members. Under these free trade agreements, there is already tariff-free trade between the Community and EFTA in industrial goods and processed agricultural products. The EEA improves free movement of goods in a number of important respects.

There will be common technical regulations. The community and EFTA already work together in creating common European standards, but each side maintains its own technical regulations for purposes such as health and the environment. Those different regulations amount to a significant barrier to trade, as the Select Committee on Trade and Industry recognised in its report.

The Community and EFTA technical regulations have much the same objectives, but they achieve those objectives by different means. Under the agreement, EFTA will adapt to follow the methods used in community measures.

Manufacturers in the EEA will therefore have to follow only one set of regulations instead of a possible eight sets now. A major barrier to trade with the EFTA countries will be eliminated.

The agreement also eliminates other important non-tariff barriers to trade. Perhaps the most significant of those are the prohibition of discriminatory taxation on goods, the application within EFTA of rules on open public procurement based on Community legislation and the adoption of common rules on intellectual property. Those provisions will tackle some of the main potential types of discrimination against exporting companies. In addition, customs procedures and rules of origin are to be streamlined. That will make the task of the exporter of goods simpler and cheaper.

With those measures on the free movement of goods, the EEA will improve significantly the ability of exporters to trade throughout the 19 countries of the Community and EFTA. There will be a significant advance on existing free trade agreements. British companies will have greater export opportunities, and British consumers will benefit from lower prices and more choice.

For a market to be truly open, it must have rules that ensure fair competition. One of the most important parts of the agreement is that on competition and state aid. The EFTA countries will take on competition and state aid rules based on those of the Community. Those will include rules on restrictive practices and monopoly abuse. In addition, the EC merger regulations will cover the Community and EFTA.

The competition and state aid rules will be enforced by the Commission and a new independent EFTA surveillance authority with powers based on those of the Commission, with appeals going to the European Court of first instance or the EFTA court.

The adoption of similar rules by the Community and EFTA, which will be enforced by two independent authorities, will be a crucial element of the EEA. The conditions for competition throughout the 19 countries will be substantially improved. That will obviously benefit consumers. It will also help companies, which will no longer have to face a wide range of substantially different rules, and the agreement will lead to an open and competitive market throughout western Europe.

Unlike goods, services are not covered in the existing free trade agreements between the Community and EFTA. The agreement will lead to the free movement of services. The rules on services will be based on article 59 of the treaty of Rome and the related secondary legislation. So the agreement will eliminate restrictions on the freedom to provide services within the EEA by nationals of the Community and EFTA who are established within the EEA. The services covered include transport, telecommunications, audio-visual services and financial services.

That freedom to provide services throughout the area is a major achievement. It will create new opportunities for businesses in which Britain, in particular, has traditionally been strong. That is so especially in financial services, where the EEA will adopt rules based on Community legislation on insurance, banking and securities. For example, British banks will enjoy a single "passport" to carry out business throughout the area.

The agreement also goes beyond the existing free trade agreements in providing for the free movement of capital. There is already comparatively free movement of capital between the Community and EFTA. The main advantage in enshrining the current practice in rules based on Community law will be that most restrictions by EFTA on inward investment will be lifted.

The fourth and final freedom provided for by the agreement is the free movement of persons. The agreement creates the right of EC and EFTA nationals to work throughout the EEA.

An essential element of the free movement of persons is the right of establishment, which will apply within the extended European area.

Dr. Norman A. Godman (Greenock and Port Glasgow)

Will the Minister outline the position of immigrant workers long domiciled in the European Community? Would gastarbeiter in Germany, for example, be given the privilege of free movement throughout all the countries incorporated in that economic area?

Mr. Sainsbury

I was referring to the right of establishment, which applies essentially to Community and EFTA nationals who will be able to operate as self-employed persons anywhere within the area covered by the agreement. They will be able to set up and manage undertakings under the same conditions as local nationals and they will be able to establish branches and subsidiaries.

There will be mutual recognition of professional qualifications throughout the EEA. Professionals such as lawyers, doctors and accountants will be able to practise in another country within the EEA without the need to re-qualify.

Those elements will form the basis of an area throughout which people will enjoy considerable freedom of movement—to work, establish businesses and carry out their professions. That will be to the advantage of British nationals who wish to move within EFTA.

Mr. Denzil Davies (Llanelli)

Is the Minister saying that nationals of Finland, Sweden or one of the EFTA countries will now be able to arrive at Heathrow and be allowed in with no restrictions or inquiries, provided that they have a passport for the country in which they are living?

Mr. Sainsbury

No, that is not what I was saying. I was referring to the right to carry out one's profession, the mutual recognition of professional qualifications and the right for self-employed persons to set up in business. We are dealing with economic activity, not travel as such.

In addition to provisions essential to the four freedoms to which I have referred, the agreement also covers many related provisions. Examples are those on consumer protection, environment, statistics and company law.

There will also be increased co-operation between the Community and EFTA in Community programmes in a number of fields, such as research and development; information services; education, training and youth; small and medium-sized enterprises; tourism; and the audiovisual sector.

EFTA has also agreed to adopt measures to assist the poorer regions of the Community. The most important of those measures is a fund that will be set up and financed by EFTA. It will consist of 500 million ecu in grants, which will be given during a five-year period. In addition, EFTA will provide an interest rate subsidy of 3 per cent. on 1.5 billion ecu of loans.

The regions that will benefit from the fund will be Northern Ireland, Greece, Portugal, the Republic of Ireland and specified areas of Spain. The Government fought hard to ensure that Northern Ireland would be a recipient of assistance from the fund.

Mr. Denzil Davies

How are "poorer regions" to be defined? Why is a region like Wales, with gross domestic product per capita almost as low as Northern Ireland and the lowest in Britain, excluded?

Mr. Sainsbury

The right hon. Gentleman will be aware that there is an agreement within the Community on the areas that qualify. Those areas qualify under the agreement, as under other Community arrangements.

Ms. Joyce Quin (Gateshead, East)

Did the Government make out a case to the European Commission and EFTA to include help for other areas that have experienced industrial decline, such as Wales, north-east England and Scotland?

Mr. Sainsbury

During the negotiations, the argument was whether the same areas should qualify under those special arrangements for the European economic area agreement as qualified under other European Community arrangements. We fought hard to ensure that Northern Ireland was included in the "cohesion arrangements". They are not meant to cover small areas where there may be a problem—Interruption.] I am not referring to Wales as a small area, but the hon. Lady seemed to suggest that a town where a major employer had closed should be included in the agreement.

Ms. Quin

Will the Minister give way?

Mr. Sainsbury

If the hon. Lady will excuse me, I must get on, because this is a time-limited debate. I expect that she will have an opportunity to catch your eye, Mr. Deputy Speaker, and make her point then.

One of the most important subjects covered by the agreement is fish. The EEA does not extend the common fisheries policy to EFTA, but the agreement and separate exchanges of letters that have been negotiated in parallel will provide for reductions to tariffs on fish and fish products and for increased access for British and Community vessels to EFTA waters.

Tariff reductions will apply to a very wide range of fish species on a progressive basis. This will clearly benefit British consumers and processing companies. It is important to note, however, that tariffs on three species of particular sensitivity to United Kingdom producers will not be affected. These are herring, mackerel and salmon. The Government fought hard and successfully against strong demands from EFTA that tariff reductions should also apply to those species.

Dr. Godman

Will the Minister give way?

Mr. Sainsbury

I hope that the hon. Gentleman will be brief.

Dr. Godman

I shall be brief. Under the terms of the agreement about fish, Spain and Portugal are given access to grounds in which they have no history of fishing. Why is that?

Mr. Sainsbury

I suspect that the hon. Gentleman knows that that was the result of long and hard negotiations and formed part of the cohesion aspect of the negotiations under which the poorer countries of Spain, Greece, Portugal and the Republic of Ireland sought compensation for admission to the agreement of the relatively rich EFTA nations. Part of that cohesion consisted of the loans and grants to which I just referred, and part was in the form of fish. The important point for the House is that British fishermen will benefit from greater access to Norwegian and Icelandic resources.

The Community share of the total allowable catch for north Norway cod under the existing EC-Norway agreement will be increased from 2.14 per cent. to 2.9 per cent. The United Kingdom receives about two-thirds of that share. On current estimates of the total allowable catch—the hon. Member for Greenock and Port Glasgow (Dr. Godman) is knowledgeable on this subject—the United Kingdom will receive more than 6,000 tonnes in 1993, which is nearly double the 1991 quota.

In addition, fixed amounts of cod in Norwegian waters will be allocated to Spain, Portugal and Ireland as part of the EFTA package for the poorer regions. Iceland will provide a small additional quantity of red fish. The allocation of this will he decided by the Community in due course. The United Kingdom has made it clear that it wants its fair share of this Icelandic fish.

The arrangements on fish were extremely difficult to settle. The industry is of special importance to a number of EFTA and Community countries, including, of course, Britain. Given the sensitivity of the sector both here and in other countries, I believe that the deals struck on tariffs and resources are good for Britain. We have protected from tariff reductions the species that are most vulnerable to increased competition from EFTA, and we have obtained a guaranteed share and an increase in the resources available to our fleet.

Before leaving the main sectors covered by the agreement, I should mention agriculture. Under the agreement, the EFTA countries will not participate in the common agricultural policy, but there will be a number of tariff reductions on agricultural products. Some of those reductions will be reciprocal. Others will be unilateral reductions by the EFTA countries on products from the poorer regions of the Community as another part of the EFTA measures for poorer regions.

This account of the main contents of the EEA makes it clear that it covers a wide range of sectors. For the EEA to lead to a level playing field across these sectors, or as near a level playing field as can be achieved, it is necessary to have an adequate institutional structure. The main political body of the EEA will be the EEA council. The council will consist of Ministers of the Community member states and the EFTA Governments plus the Commission. It will be responsible for political direction of the EEA.

Under the EEA council, there will be an EEA joint committee consisting of officials of the Commission, member states and EFTA countries. The joint committee will be the main forum for day-to-day co-operation between the two pillars. The two main functions of the joint committee will be to adopt new EEA rules and to settle disputes.

New EEA rules will be based on new Community legislation. There will be informal consultation between the Community and EFTA during the passage of Community measures. The aim will be to ensure that these measures are adopted in such a form that EFTA can accept the measures as EEA rules, but the Community will retain the ultimate right to legislate as it sees fit.

Mr. Barry Porter (Wirral, South)

Does my right hon. Friend agree with Mr. Edward Morton, a gentleman whom I have not had the pleasure of meeting but who writes learnedly in the Financial Times? Mr. Morton states: The EEA offers them"— EFTA countries— a consultation process so that they can be under no illusion that the actual decisions will be taken anywhere else than in the EC Council of Ministers with such input from the European Parliament as the Maastricht summit might allow." That is right, is it not?

Mr. Sainsbury

My hon. Friend is correct, and I suspect that it is for that reason that some EFTA countries have applied to join the European Community.

The original intention of the Community and EFTA was that an EEA court would play a key role in settling disputes between the two sides. The Court of Justice ruled that such a court was incompatible with the treaty of Rome. There was agreement last week that, instead, the joint committee should settle disputes.

If a dispute concerns interpretation of an EEA rule, the two sides can agree to have the matter resolved by the Court of Justice. The Joint Committee will be able to take other measures to deal with the problem, including possible suspension of the relevant part of the agreement, or rebalancing measures. It will also be possible for certain limited procedural matters to be referred to arbitration.

EFTA will create two new independent bodies to ensure the good functioning of the agreement by EFTA states. There will be an EFTA surveillance authority with enforcement functions and powers similar to those of the Commission. There will also be an EFTA court, which will be responsible for matters such as infraction proceedings brought by the EFTA surveillance body and competition cases arising within the EFTA pillar.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Does the fact that the European Parliament has called for the new agreement to be again submitted to the Court of Justice make any difference?

Mr. Sainsbury

I hope that it will not be submitted and that all 19 countries will be able to ratify the agreement in time for it to come into force on 1 January 1993, which is the firm intention of the participating parties. We would not want anything to obstruct that arrangement, which is clearly to the benefit of Britain.

As within the Community, it is not enough simply for the EEA states to agree to adopt common rules. If the extended market is to have value, the rules must be implemented and enforced properly. The EFTA surveillance authority and the EFTA court will ensure that that happens.

I opened by saying that the EEA was perhaps the most ambitious and wide-ranging agreement to be entered into by the Community. The agreement will create a market of 380 million consumers, responsible for almost half the world's trade. It will lead to benefits for consumers and companies throughout the 19 countries. It will provide for closer co-operation between the Community and its closest European neighbours. For Britain, it will provide new opportunities for our exporters and benefits for our consumers. It will bring more fish to our fishing fleet and new funds to Northern Ireland.

The creation of the European economic area is a substantial contribution to the Government's objective of developing a Community that is open, outward looking and market oriented. It will facilitate accession to the Community by the growing number of EFTA countries that wish to apply, and it will ensure that trade within western Europe is based upon the principles of an open market economy that we hope will extend one day throughout the whole of Europe.

4.58 pm

Ms. Joyce Quin (Gateshead, East)

On behalf of the Opposition, I welcome the progress that has been made towards the establishment of the European economic area. We strongly approve of ever-increasing co-operation between the countries of the European Community and the countries of EFTA. That seems to me and others to make great sense in today's world and it will help to solve some of the trading—and other—difficulties between the two groups.

As the Minister pointed out, a huge market is hereby created—the biggest in the world. About 380 million people are involved in the wider European area; a tremendous amount of trade is also involved. There is great interdependence between the two trading blocs. Trade with the European Community amounted to some 56 per cent. of all EFTA exports last year, and EC exports to EFTA amounted to about 60 per cent. of EFTA's imports. So the two blocs are closely linked, and this agreement will promote further co-operation and trade between them.

We are talking about countries with which we have much in common and with which we have had a great deal in common for many years. Particularly pleasing to the Labour party is the fact that there are countries in EFTA with very good social and environmental records, as well as good economic performance. The countries concerned are wealthy, and their wealth will certainly be to our mutual benefit. All the countries involved have higher per capita GDP than the average in the EC itself. Perhaps this agreement will finally bring to an end the economic divisions which used to be described as "Europe at sixes and sevens" in the days when the European Community numbered six and EFTA seven.

I pay tribute to the Norwegian Prime Minister, Mrs. Brundtland, for the work that she has done in promoting the agreement. She was involved in discussions with the Commission president in 1988–89, and those discussions were one of the important stimuli for the conclusion of this agreement.

Mr. Ian Taylor (Esher)

Would the hon. Lady also like to praise the excellent work of the Conservative party in Norway, which has done a great deal to ensure that the negotiations have continued successfully?

Ms. Quin

I understand that there has been quite a degree of cross-party support in Norway, but for various reasons I especially wanted to mention Mrs. Brundtland.

I am glad that the legal difficulty which seemed so prominent a few weeks ago now seems capable of resolution. It would have been a tragedy if the political and economical desirability of such an agreement had foundered on the legal niceties about which members of the European Court of Justice were concerned. I understand that an unofficial European Commission paper provided the basis for agreement last week. Rather oddly, the paper was called a non-paper—I believe that that is the official description of an unofficial paper in Community parlance. Perhaps another term should have been used.

Be that as it may, I hope that that non-paper has resolved the outstanding difficulty, although I accept the point made a few minutes ago by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) that the European Parliament may want to express concern about the legal arrangements, and that that might prolong the discussions throughout the course of this year. If the European Parliament wants to refer the matter back, I hope that the Governments, the European Commission and the European Parliament will be able to agree to a satisfactory compromise so that the agreement can go ahead and come into operation at the beginning of 1993. Certainly, by far the best time for this agreement to come into force would be the beginning of 1993, when the completion of the internal market is also supposed to take place. It seems only sensible that the two should go hand in hand.

Obviously, the world trading strength of Europe which this agreement represents gives Europe a position of considerable trading and economic power, but I believe that that position also carries with it considerable responsibilities. The Community and EFTA combined need to ensure that their actions promote world trade and do not result in a fortress Europe of the kind that many people, particularly outside Europe, still worry about. Perhaps at the end of this debate the Government will spell out in a little more detail how they see the implications of the agreement for world trade. It remains as important as ever it was that there should be progress on a firm agreement within the framework of GATT. We hope that this agreement will help, not hinder, the progress that must be made towards a successful conclusion of the GATT round.

Dame Elaine Kellett-Bowman (Lancaster)

While I very much agree with the hon. Lady that it is important to avoid building a fortress Europe, does she agree that the agreements will assist countries such as Czechoslovakia, Hungary and Poland which have been at such a disadvantage for so long and will smooth their eventual entry into the Community—an entry which, although delayed, will be welcome when it occurs?

Ms. Quin

The hon. Lady is anticipating our debate later this evening, when we shall consider the agreements with the countries of eastern Europe, but I certainly agree that helping the countries of eastern Europe and forming trading relationships with them is vital. I certainly hope that nothing in this agreement with EFTA will delay agreement with the countries of eastern Europe—an agreement to which we must attach a high priority, not just for economic reasons but for political reasons and reasons of world peace.

I wish to express some reservations about the Government's attitude to GATT. The Government seem to speak with two voices: the Department of Trade and Industry says that we must reach agreement within GATT as soon as possible, but the Minister of Agriculture, Fisheries and Food has been defensive about the Community's common agricultural policy and seems to have played little part in agreeing with some of the criticisms of the CAP advanced by the United States and by the Cairns group. If the Government had not antagonised their European partners with their double opt-out at Maastricht, they might have had more success in persuading their European partners to make further progress towards a successful outcome of the world trading negotiations which are so important for our economic future.

Mr. Barry Porter

The hon. Lady is usually extraordinarily fair. On reflection, would she agree that objections to the reform of the common agricultural policies—a reform which is essential if we are to get any agreement on GATT—have come largely from the Germans and the French? I have not noticed United Kingdom Ministers causing any trouble—they are entirely trouble-free people—so will the hon. Lady apologise for what she has just said?

Ms. Quin

I was thinking of the many newspaper articles which appeared a few months ago criticising the Government for their over-loyal attachment to the European negotiating position, especially on agriculture. I should be happy to pass the hon. Gentleman the various press clippings that I have to that effect—they are well substantiated, and they certainly show that the Government have been somewhat over-zealous in their defence of the common agricultural policy, and have not done as much as they should to promote a worldwide agreement.

We need to assess how the agreement bears on the likelihood of EFTA countries which want to apply for full membership of the Community succeeding in obtaining it. There are suspicions that some countries may be unsure about enlarging the Community and may prefer to deepen rather than widen it at this stage. They may feel that this agreement satisfies the countries of EFTA so that we do not have to make progress in accepting into the Community those EFTA countries which have applied for full membership. Will the Government make their position on that clear?

The agreement should not be allowed to slow up the applications of countries which want to become full members of the European Community. As they meet the criteria for full membership, they have every right to submit their applications and to have them dealt with sympathetically and speedily. That applies also to the countries in eastern Europe which at this stage are applying for associate membership but which eventually want to become full members of the European Economic Community.

When the Minister winds up, I hope that he will give us a few more details about what the agreement means in terms of benefits to the EFTA countries and what changes the EFTA countries may, as a result, have to introduce. We know that certain EFTA countries have rules regarding outside investment that make it difficult for companies in Britain and other parts of the European Community to invest there. I hope that the Minister will supply a few more details about whether there will be any remaining hurdles. I am thinking of the rules in Norway and in other EFTA countries, such as Finland.

We must also think about what the agreement means for us in Britain, particularly in our present parlous economic state. I believe that the Government made a tragic mistake at the European summit at Maastricht last December in opting out of both economic progress and the social chapter. It worries me, therefore, that the EFTA countries—which hope, with the European Community countries, to create this large economic area—may see the United Kingdom as a semi-detached member of the European Community, and may therefore regard this country as a less attractive country in which to invest and as a less certain member of the European Community in future. I hope that the Minister will deal with that issue in much more detail than we have heard up to now.

Mr. John Butterfill (Bournemouth, West)

Surely the hon. Lady recollects that President Delors said that the contents of the social chapter were likely to increase costs in this country and that it was the absence of those costs that led President Delors to say that we would become more attractive for inward investment. Is not the hon. Lady standing logic on its head?

Ms. Quin

I have often agreed with many of the things that President Delors has said in the past, but I do not agree with him about this issue. It is totally hypocritical of the Government to argue for a level playing field and then seek to distort it by means of unequal social conditions which put British workers at a disadvantage.

I hope that the Minister will provide a few more details to supplement those which appear in the explanatory memorandum, which does not clarify the position as much as it ought to do, regarding the different sectors of the British economy and how they are likely to be affected by the agreement.

The Minister rightly mentioned the importance of the agreement to the service sector. I agree that it is important. We may find that our service industries are able to expand in the EFTA countries more easily than they have been able to expand in certain existing member countries of the European Community. As for financial services, great opportunities will open up for us, but I hope that the Government will press the case for the implementation of the consumer directive and consumer safeguards when it comes to financial services within the European Community—something that they have failed to do tip to now.

Have the Government carried out a sector by sector survey of what the effects on our beleaguered industries are likely to be? I understand—perhaps the Minister will confirm it—that certain sectors are not included in the agreement. I understand that coal and steel are excluded sectors. Does the Minister believe that that will be a problem for Britain's coal and steel industries? The shadow Secretary of State for Energy said that British coal is the most economically and efficiently produced coal in the European Community. If the agreement included coal, would it not be possible for our coal industry to look at the EFTA countries as possible future markets? Have the Government carried out any studies or held consultations with the coal industry, both management and work force, about any opportunities that would be available to the coal industry in the EFTA countries?

Can the Minister tell us about the growth areas for our industry as a result of the agreement'? Will he comment on the worrying lack of preparedness for the single market that a survey published last week illustrated? Can he say whether the Government intend to look at that lack of preparedness in terms of the agreement with the EFTA countries? It will be important for our industry to be properly prepared not just for the internal market but for the European economic area when it comes into force.

The Select Committee on Trade and Industry made specific recommendations to the Government about helping our industry to prepare for the European economic area. I hope that the Minister will return to that important matter when he winds up the debate.

The Minister rightly referred to agriculture and fishing. Agriculture is not included—happily, the EFTA countries are to be spared having to adopt the common agricultural policy, but fishing is included to a certain extent. When those difficulties between the European Community and EFTA were at their height, it was described as a cash and cod dispute. I am pleased that the United Kingdom is to have increased cod allocations and that its fishing opportunities will be increased somewhat, but I am a little concerned about what rights Spanish vessels may have. They will be fishing in areas where traditionally they have not fished before. Many of us are worried about the huge catch potential of Spanish fishing vessels, particularly if proper conservation measures are not introduced at the same time.

Dr. Godman

Spanish fishing vessels going into Norwegian waters will encounter a kind of policing that they do not encounter in European Community waters. The Norwegians are very tough policemen when it comes to their fish stocks. I suggest to my hon. Friend that little or no fish in Icelandic waters will he offered to United Kingdom fishermen.

Ms. Quin

I accept what my hon. Friend says. It is important that whatever fishing agreement is reached should be properly policed. I regret the fact that policing of our own waters is often inadequate and that that has led to the over-exploitation of certain fish stocks.

My hon. Friends have asked in interventions what the agreement means for people. We have heard that it will promote the free movement of people and the right of establishment between EFTA and European Community countries. My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) referred to the position of gastarbeiter, which was not satisfactorily dealt with by the Minister. I should like him to give an absolute assurance that none of our ethnic minorities, who have sometimes experienced practical difficulties in travelling to other European countries, will be disadvantaged by anything in the agreement and that their interests will be looked after carefully when the agreement comes into force.

As for what the agreement means to the regions of the United Kingdom, the Minister was dismissive of our concerns regarding the cohesion funds and how they might be used to help the regions of the United Kingdom, apart from Northern Ireland. We very much welcome the fact that the cohesion funds will be used to benefit Northern Ireland. I feel strongly about that. None the less, the Minister did not say whether the Government had even put forward the needs of what are recognised in the European Community as regions in need of support: the objective 2 areas, as they are called—the traditional industrial regions that have the experienced economic decline in recent years.

We are not talking about small regions, and I was surprised when the Minister seemed to dismiss my comments as though I were talking about towns and villages. We are talking about Wales, Scotland, the northern region, the north-west, Yorkshire and Humberside, and the west midlands. We are talking, therefore, about a large proportion of the United Kingdom.

Mr. Barry Porter

There is not an awful lot left.

Ms. Quin

In terms of territory, that is true. A large part of the United Kingdom has suffered industrial and economic decline under this Government. We very much want measures to be taken to rectify the regional imbalances.

I believe that the agreement could also represent a great potential for some of our regions, particularly those fortunate enough to face eastward, which will therefore find themselves in a geographically advantageous position in relation to the new combined market of the European Community and EFTA. The north-east hopes to be a bridge between the European Community and EFTA, as it is so well positioned geographically. The same is true of Yorkshire and Humberside, and of eastern Scotland. I hope that the Government will work with those regions to ensure that they make the best use of their economic potential. As the agreement will come into force at the beginning of January 1993, I am comforted by the fact that a Labour Government, committed to regional measures, will work with those regions, to their economic advantage.

What discussions has the Minister held with local authorities and the regions about the potential of the agreement? It may change the geography of Europe and make regions that have become accustomed to thinking of themselves as being on the periphery feel that they are more central to European developments in the future, which I welcome.,

The Minister mentioned research and development, which is important. I am glad that, under the auspices of the agreement, there will be joint initiatives between the European Community and EFTA, but the Minister gave few details, and there is little in the explanatory memorandum.

One crucial question which always arises when we debate European affairs is how level the playing field will be. I am still worried about the nature of the playing field, even as a result of the agreement. State aid varies widely throughout the Community. On the whole, state aid in EFTA countries is lower than in Community countries, but the playing field is far from level. One thing that has worried me—I hasten to say that I am not a subsidy junkie —is that we have reduced subsidies to industry unilaterally rather than within a framework agreed in the European Community. We must seek to correct that if our industry is not to suffer a disadvantage, as it has in recent years.

Mr. Christopher Gill (Ludlow)

Is the hon. Lady saying that EFTA countries, which have lower state subsidies, have been less successful than EC countries?

Ms. Quin

No. I am saying that state aids can sometimes have a good or bad effect. Britain has much to learn from the supportive system in the European Community and EFTA countries—for example, the German regional Ender network and the similar system in Austria, an EFTA country which is applying for European Community membership.

I should like the Government to consider export credits, for which a level playing field has not been created in recent years. The Government have increased export credit premiums to industry, whereas industry in other countries, including in EFTA countries, has not been disadvantaged in the same way.

Do the Government feel that the institutional arrangements being set up to govern the agreement can work effectively? It seems that the institutional set-up of the European Community of 12 is already becoming unwieldy. What will he the consequences for administration, languages and so on when the Community consists of 19 or more countries?

Do the Government have any views on the simplification and streamlining of European institutions, or on something that Labour Members have traditionally been worried about—the democratic deficit and the difficulty that national and European parliamentary institutions experience in influencing what is going on in the secret conclaves of the Council of Ministers and the council of EFTA Ministers?

Mr. Butterfill

Will the hon. Lady assist us from her considerable expertise on the procedures of the European Parliament? She said that the Parliament wished to refer the agreement back to the European Court of Justice. I understand that it voted to do so last week, but that the Commission is saying that such further reference is not necessary. Can the Parliament reverse that vote, can it fudge it, or is it landed with it?

Ms. Quin

The European Parliament has given its view, as expressed in the vote, and it is for the Commission to respond. Other hon. Members may have more information, but my understanding is that the Commission could disregard the Parliament's views. However, in practice it is unlikely to do so. Therefore, I think that we are in for a period of further protracted negotiations on the subject. As the Minister has been party to the negotiations, perhaps he will comment on that when he replies to the debate.

Sir Russell Johnston

Picking up what the hon. Member for Bournemouth, West (Mr. Butterfill) said, is not the European Parliament supposed to ratify this treaty? Is that not one of the consequences of Maastricht?

Ms. Quin

Indeed. If the Commission has not responded to the European Parliament, the Parliament may refuse to ratify the agreement. Although theoretically the Commissison is able to disregard what the Parliament says, in practice it is rather unlikely to do so.

The agreement is good, and the Opposition support it. It certainly makes sense for it to come into force at the beginning of 1993. The Government's overall approach to European policy has been to marginalise us in important areas, especially the economic and social areas. For that reason, the agreement will have much greater benefit to this country if a Labour Government bring it forward at the beginning of next year.

5.26 pm

Mr. Kenneth Warren (Hastings and Rye)

The Select Committee on Trade and Industry welcomes this opportunity for a debate on the Floor of the House. We recommended such a debate when we studied trade with EFTA nations in 1990, and I thank my hon. Friend the Minister and my right hon. Friend the Leader of the House for having the good sense to allow hon. Members the chance to debate the agreement before a decision is taken on the form of the alliance with the European economic zone.

The agreement is a remarkably sound proposal and represents a remarkable achievement by all parties to the negotiations. In our 1990 review, we visited each of the EFTA nations with the exception of Liechtenstein. They were all eager to take part in an arrangement with the European Community, but none of us expected that it would be possible to hold a debate such as this only 18 months after they began to turn to the opportunities of the European Community in such a cross-party fashion.

Business men and the majority of parliamentarians throughout the nations that we visited were unanimous in their wish to be part of the European Community in some form or another. The Conservatives in Norway were leading the drive in that country. Our mission to those countries was slightly more newsworthy than our visit to each of the east European countries. Within six months, each of those countries had had a revolution. It has been suggested that we should adopt the title of the remarkable congressional committee in the United States, of Select Committee on Assassinations.

I am concerned that there should be no hold-up in the negotiations brought about by members of the European Parliament dancing around on the head of a pin as they usually do. I was concerned to read in the Financial Times and The Times last Saturday—I quote from the former— The European Parliament has further muddied the water by calling this week for any new EEA draft treaty to be resubmitted to the court"— the European Court— for its opinion. I know that it has to find a way to justify its existence, but I trust that it will not stand in the way of this remarkable opportunity to bring about the creation of a market of 40 per cent. of all world trade.

I deal now with a problem which faces us in the European Free Trade Association as it has faced us in far too many parts of the world. We have problems with a consistently poor balance of payments record, and I regard the opportunity of these barriers coming down and of getting free access into EFTA, which has a consistently larger gross domestic product per head, as unique, especially for quality exporters from the United Kingdom market. The GDP per capita in the free trade areas is between 15 per cent. and 50 per cent. greater per head of the population, and our attention was drawn to the opportunity for quality goods exports into the markets of Sweden, Switzerland and Austria.

With regard to the recommendations made in the Select Committee's report, I was pleased to hear my right hon. Friend talk about the harmonisation of technical regulations and the mutual recognition of technical standards in the EEA. However, may I be assured that we shall not require those countries to lower their standards but that we shall try to rise to some of their standards—especially in terms of environmental protection—and especially of those set in Austria and Finland? I commend them to my right hon. Friend as worthy of further study. There is always a need to try to raise the quality of life which could be a major contribution to the negotiations.

The hon. Member for Gateshead, East (Ms. Quin) wondered whether there would be level playing fields. We always call for level playing fields, but I have never found them anywhere in the world. We should not count on them at any time. We must make do with the best opportunities we have to get into a game, whatever the quality of the pitch.

On the free movement of services and financial services in particular, will my right hon. Friend give some guidance on where the negotiations have got so far in terms of foreign ownership of companies, including banks? At the moment, there are severe restrictions within EFTA countries on ownership by foreign companies. May I also ask him about preferential public procurement? As he remarked, there are many state organisations in those countries and we want to be assured that there will be right of access, especially in those concerned with transportation and energy.

On transportation, what progress will be made in the negotiations—which we hope will soon be successfully resolved—to give the European Community access to a single and liberalised market for scheduled air transport services? As my right hon. Friend knows, Scandinavian air transport costs are about the highest in the world, and they are a great deterrent to exporters to go about their business there. Within the agreement that already exists between Swissair, KLM and the Scandinavian Airlines System, I hope that air transport liberalisation can be achieved more quickly than has been the case in relations across the European Community.

Fishing has already been mentioned. I must declare an interest in respect of Hastings and Rye. I regret that our boats will not be able to get as far as Icelandic waters even on a calm day, but we never give up trying. When the Select Committee visited Iceland and Norway, we were conscious of the point that has already been made about the need for those countries to be assured of not only the protection but the conservation of their fish stocks. I must speak up strongly for the people of Iceland, for whom they are the sole major resource. It is ridiculous to think of the likelihood of the Spaniards ravishing their fishing grounds.

Mr. Nicholas Soames (Crawley)

My hon. Friend makes an extremely important point, and I wholly endorse what he said about the conservation of fish stocks. Is he aware—he will undoubtedly have seen this when he was there—that the Icelandic Government have instituted by far the most rigorous and impressive programme of conservation of fish stocks of any country which has those interests at heart? Will he draw the attention not only of my right hon. Friend the Minister but of my right hon. Friend the Minister of Agriculture, Fisheries and Food to that, because our fisheries—as my hon. Friend knows—are coming under the same pressure, especially on the east coast?

Mr. Warren

I am very glad that I gave way to my hon. Friend the Member for Crawley (Mr. Soames), because he makes a very sound point. The conservation measures that we saw in Iceland were of a world calibre of leadership. The question that occurs to me is, what is the advantage to the Spaniards in terms of the European market of scouring the fish stocks of, for example, Iceland, when they will merely sell on into the same market in which the Icelanders are trying to sell? I hope that we shall stand up vigorously for the Icelanders having forgotten—I hope—the cod wars of the past, and that we shall regard them as allies in wanting to share the market.

I know that a number of hon. Members want to contribute to the debate, so I shall conclude. I am conscious of the United Kingdom's identity of political interests with EFTA, especially with those of the northern tier of countries with which we share many common values. One advantage to the United Kingdom of such an extension would be that we would no longer be on the perimeter of the European Community—our centre of gravity would be more towards the centre of the combined interests of EFTA and the European Community.

As we move towards agreement, another remarkable step forward will be that neutrality and the balance with those who want to form military alliances are no longer a division or a problem. Ireland has been the only neutral within the European Community, but we shall, within the agreement which is being negotiated, bring in the interests in neutrality of Austria, Sweden and Finland and also of Iceland. We have here not only a major trade opportunity but a major political opportunity of important dimensions to this country.

As this agreement is being forged, may I ask my right hon. Friends and his colleagues in government—as they will be after the general election—to raise their eyes to new horizons and to consider the opportunities of incorporating the nations of eastern Europe as rapidly as possible into an economic zone, not merely the association agreements now being made? As chairman of the British-Russian parliamentary group, may I ask that the Commonwealth of Independent States is not forgotten, because we must offer it the possibility of being able to join the prosperity of western Europe as quickly as possible.

I am delighted to have had this opportunity to lend my support to the agreement which is commended to the House by my right hon. Friend.

5.38 pm

Mr. Denzil Davies (Llanelli)

Like the other hon. Members who have spoken, I welcome the draft agreement and hope that it will be accepted.

I recollect the Minister saying that the countries of the European Free Trade Association would not have to bear the burden—perhaps those were not the words that he used—of the common agricultural policy. The thought crossed my mind that it was a very good agreement for EFTA and that perhaps we could consider applying for membership of EFTA so that we could have the benefit of not having to contribute to the CAP, but no doubt that is not possible.

I will raise two matters which are not connected. The first is the cohesion fund. The Minister did not deal with the matter thoroughly and was extremely brief, although it is important. The Minister said that the EFTA countries will contribute 500 million ecu in grants over five years to what is described in the jargon of the Community as a "cohesion fund". Perhaps that contribution is the danegeld that they have to pay for not being part of the common agricultural policy. The Minister then told us that Northern Ireland is the only region in the United Kingdom that will be able to benefit from the cohesion fund. The Republic of Ireland will also benefit, and we have no objection to either Northern Ireland or the Republic benefiting.

I make no apology for mentioning Wales, because it is the poorest region in Britain. On European Community figures for last year, and taking the average as 100, gross domestic product per head for Wales is 85. Scotland is exactly 100. The north-west, the north-east, Yorkshire and Humberside are slightly higher. The south-west, the east midlands and the west midlands are all higher. Wales has the lowest GDP per head in the whole of Britain.

Wales is located in the west of Britain. The hon. Member for Hastings and Rye (Mr. Warren) said that the agreement shifted the centre of gravity of the Community. As a result of what has happened in eastern Europe over the past few years, the centre of gravity has moved eastwards and, as a result of this agreement, it is now moving slightly northwards. The western areas of Britain will suffer. The whole of Ireland will be compensated to some extent, whereas Wales and the other western parts of Britain are in danger of falling between two stools.

The same is true of the Maastricht agreement, which set up a cohesion fund and an infrastructure fund. Both are based on the same definition of the poorer regions of Britain.

Rev. Ian Paisley (Antrim, North)

Is it not a basic feature of the Maastricht agreement that Northern Ireland is excluded because it is part of the United Kingdom?

Mr. Davies

I hope that the Minister will answer that question. It has never been clear to me whether the rules that apply to the cohesion fund under the European economic area agreement also apply to the cohesion fund under the Maastricht agreement. I understood that the Maastricht agreement dealt merely with national GDP per head. As the United Kingdom's GDP per head is higher than 100, Northern Ireland and Wales are excluded. This cohesion fund may be slightly different. I am sorry that the Minister hardly dealt with that point. I hope that he will tell us why Northern Ireland was included—there is no objection to its inclusion—whereas Wales, for example, was not included. Is Northern Ireland included in the Maastricht cohesion fund? If it is, why is not Wales included? Perhaps Wales is included. We must deal with that matter because it is extremely important.

It may take some time to attain economic and monetary union; but, as we move towards it, the centralisation of currency and the fact that we shall not be able to control our own currency or, to a considerable extent, our public expenditure will mean that the areas on the periphery—which, if Ireland is to be an exception, will be mainly those in the west of Britain, especially Wales, the north-west of England and parts of the west of Scotland—will not get the attention or benefit that they deserve. I hope that the Minister will give us a more adequate and a clearer explanation of the cohesion funds when he winds up the debate.

The second matter may sound esoteric and may not seem to be connected with the first point. I refer to the legal opinion of the European Court on the original draft agreement. My hon. Friend the Member for Gateshead, East (Ms. Quin)—I do not criticise her for this—spoke about legal niceties. That is one way in which to describe the matter, but I believe that the court's opinion goes far further than legal niceties. The court set out clearly its view about what the European Economic Community, or European union as it will be called, is all about. I understand that the European Parliament may wish to send back to the court even the cobbled-up compromise reached as a result of the court's condemnation of the original agreement. If that happens, we may again come into conflict not with the court, but with the way in which the court interprets the basic purposes of the European Economic Community or European union.

Paragraph 17 of the court's opinion says that it follows, among other things, from certain articles of the treaty that "that treaty"—that is, the treaty of Rome— aims to achieve economic integration leading to the establishment of an internal market and economic and monetary union. The opinion refers to the original treaty of Rome to which we adhere as a result of a vote in the House on the royal prerogative in 1972. Let us he under no illusion. Despite all the things that we were told in 1972, adherence to the treaty meant adherence to economic and monetary union, and not merely to a free trade area.

The opinion continues: Article I of the Single European Act makes it clear moreover that the objective of all the Community treaties is to contribute together to making concrete progress towards European unity. The Single European Act was about European unity.

When one listened to some members of the Cabinet who now criticise the Act, it seemed as if the Act was just about the free movement of goods. Of course it was not. As the court has said and as the preamble to the Act says, the Act is about concrete progress towards "European unity".

The court also said: It follows from the foregoing that the provisions of the EEC Treaty on free movement"— the free movement of goods— and competition, far from being an end in themselves, are only means for attaining those objectives. That was the fundamental dilemma in respect of the EFTA-EC agreement. The court says that the articles on the free movement of goods and competition rules, and all the directives linked to them, must be interpreted on the basis that they lead to European unity.

I do not know what European unity is. Nobody has defined it and nobody seems to have a clue what it is. Is it a federal or a confederal union? It is a serious matter that the court interprets directives on the basis of a goal called "European unity" which it is not prepared to define.

I digress a little by mentioning briefly the problem of Sunday trading. The Torfaen borough council case, which went to the European Court, was decided on the basis that any restriction on Sunday trading was a limitation on article 30 on the free movement of goods. I suppose that it is. If anyone closes a shop anywhere in the EC, it is a restriction on the free movement of goods. A sensible court which did not have a great goal of European union which it wanted to achieve would have said, "It is de minimis. Let us not bother about it." The European Court could not do that. In the court's view, a restriction under article 30 meant that the goal of European unity would somehow be affected. There was a nonsense decision.

There is a fundamental question here about the nature of the Community. It is no good our going to Maastricht, or the Foreign Secretary managing to have the word "federal" removed from that treaty, if the fundamental proposition advanced by the court is that we are talking in the EC about progress towards European unity. I do not know what European unity means, and it is a strange court of law that says that everything must be interpreted in the light of European unity and does not have a clue what that means.

That brings me to my final point, which is that we appoint judges to the court. I have never believed that there is too much wrong with the way in which our system of justice operates, with the Lord Chancellor appointing judges to the courts of England and Wales. There may be a case for a small committee of senior judges to advise him, and I have an open mind on that. The European Court is an entirely different matter. It is a political court whose goal is European unity and which interprets directives and treaty agreements in accordance with that political goal.

One of these days, we will have to look at the views of those appointed. Apparently, one judge was appointed recently and another is about to be appointed. There is also the Advocate-General. In the United States, which has a similar constitution, judges are asked their views on matters such as federalism and jurisdiction of the court. Apparently, we do not ask the judges whom we appoint to the European Court their views on European unity. Do they have a clue what it means? Have they ever thought about it? Those are matters which, some say, we should discuss.

The problem with EFTA and the EC highlights that difficulty. It was the EC's legal people who eventually said that the matter had to go to the European Court because they could see that there was a fundamental conflict in the development of the Community. The Community cannot develop as a free trade area, including all those other countries—which the Government seem to want and about which we are all in agreement—if we have the court saying that everything must be geared towards European unity, whatever that may mean.

We shall have to wait to see what happens with the cobbled-up agreement. Perhaps it will be all right. I do not know; I suspect that it may not be all right. I repeat that this is not a legal nicety but a fundamental problem, to which the House will have to return before too long, concerning the development and eventual nature of the Community to which we belong.

5.52 pm

Mr. John Butterfill (Bournemouth, West)

I find myself in a slightly strange position. I am usually somewhat critical of the Commission and support the concept of redressing the democratic deficit. On this occasion, however, I support the position that the Commission has taken and am rather critical of that which the European Parliament has adopted.

We owe a debt of gratitude to Frans Andriessen, who has persisted with this matter despite having been obstructed by the European Parliament and the European Court. We need to take a broad view of these matters. We are talking about a dramatic development, in that the European economic area will comprise 19 European countries. Most important, it will take within itself a group of countries—primarily the Nordic countries—that have an enormous contribution to make to the concept and development of European democracy. The Nordic countries have one of the longest established democratic traditions in Europe. They have much to teach Europe about parliamentary democracy. We have made our own important contribution, but the more countries with such traditions we have in Europe, the better, and a step that will almost inevitably lead to the enlargement of the Community is extremely welcome.

It is rather sad that juridical minutiae seem to be preventing that from happening. It is not particularly edifying to see lawyers and the European Parliament arguing over such minute matters. The Commission itself believes that, under article 238, we could proceed as it had originally proposed. As I understand it, the only issue regarding the competence of the court was that the court felt that its competence would not extend throughout EFTA and that a compromise arrangement would therefore need to be made.

I hope that the arrangement that we have now reached will mean that the matter can now proceed quickly and that the St. Valentine's day decision will lead to a swift consummation of the love affair between the 19 nations of the European economic area. The draft treaty ought to be endorsed as quickly as possible. If 19 European Governments can agree that they wish to follow a particular course of action, it seems to me thoroughly undesirable that the institutions of the EC should seek to prevent them from doing so on purely technical grounds. It will be a sad reflection on the European Parliament if, the first time that it exercises its enlarged powers under the Maastricht treaty, it uses them so as to obstruct the agreement that has been worked out.

The agreement is enormously important to the whole European Community. In particular, in relation to Maastricht, the cohesion fund that has been established will mean that there will be considerable additional resources to help with the convergence of the economies of the European Community. The importance of that should not be underestimated. Inevitably, considerable problems will arise in achieving the degree of convergence envisaged under the Maastricht treaty, and, unless additional funding is available, that convergence could be long delayed.

The creation of the EEA, with the additional funds that the wealthier countries from the northern fringe and Switzerland and Austria will bring, will help that process considerably. In that regard, can the Minister tell us the extent to which the cohesion fund as proposed will meet the likely level of contribution that would be required from the EFTA countries had they been applying now for full membership of the Community?

This marvellous opportunity should be grasped by the whole Community. If it is necessary to interpret treaties in more flexible ways, I hope that we shall do so, and I hope that the European Parliament, in particular, will not stand in our way.

5.57 pm

Sir Russell Johnston (Inverness, Nairn and Lochaber)

As always, I found the speech of the hon. Member for Bournemouth, West (Mr. Butterfill) most interesting. I do not know that I agree with him that the referral of the treaty on the EEA to the European Court was legally insignificant and a technicality—I shall return to that in a minute—but I strongly support the paean of praise that he uttered for Nordic democracy. As he will know, Nordic democracy is non-confrontational, consensual and founded on proportional representation. I hope that we shall be infected with it very soon.

Mr. Ian Taylor

They have Conservative Governments in Nordic countries.

Sir Russell Johnston

Proportional representation does not preclude Conservative Governments.

The Liberal Democrats support the establishment of the European economic area, which, as several hon. Members have said, is clearly the prelude to the extension of the European Community. It also sounds the death knell of the alternative concept of a loose economic grouping, put forward by those who argued first against the establishment of the EC and then against moves to make it more effective by more effective integration.

EFTA was the only alternative to the European Community. That was why the British Government of the day, in their short-sighted fashion, were unwilling to work with the then six and took a leading role in establishing EFTA as the alternative. We abandoned that, along with Denmark and Ireland, in 1973, and it is now set to be wound up altogether. Therefore, we should recall the fact that those who took that "have our cake and eat it" attitude were wrong. Some, sadly, like the right hon. Member for Llanelli (Mr. Davies), are still wrong.

I will not prolong this short debate, as many hon. Members wish to speak. Three hours is an absurdly short time to examine such a width of issues with any thoroughness. The Minister himself called it the most ambitious agreement so far signed by the Community. That highlights the great difficulty facing the House in dealing collectively in the Chamber with European Community issues.

The fourth report of the Trade and Industry Committee is full and detailed, and the Committee and its Chairman, the hon. Member for Hastings and Rye (Mr. Warren), from whom we have already heard, deserve much credit. However, the report is a year and a half old, and it has not been debated. In any event, the views of a Committee do not necessarily reflect the opinion of the House as a whole. The Government's reaction appeared in October 1990 and, to my knowledge, it has not been debated either.

I do not believe that such a procedure can be considered an adequate representation of Parliament's views on European Community negotiations or legislation. We should have full and suitably timed debates.

Mr. Warren

I am grateful to the hon. Member for referring to our report. However, I assure him that the report was unanimous, and included the full support of a member of the Liberal Democrats.

Sir Russell Johnston

I was not suggesting that it was not unanimous. As the hon. Member for Hastings and Rye said, the Committee was not divided, but that does not mean to say that that is always the case in Select Committees. If the principle is that it is adequate parliamentary consultation for a Committee to deal with an issue, I do not agree with that principle.

Mr. Warren

indicated assent.

Sir Russell Johnston

Obviously the hon. Member for Hastings and Rye agrees with me about that. We need suitably timed debates that take place well in advance if we are to exert influence on the Minister before negotiations or Council of Ministers meetings.

There is another alternative: that the House should no longer seek to duplicate what is done in the European Parliament, but should leave detailed representations to that body and confine itself to debates on general issues —while of course always retaining the right which any Member or group of Members have of raising specific matters with Ministers. The present position is neither one thing nor the other. There is a pretence of exercising influence without the reality.

However, across the piece, the Community has conducted a good negotiation, and the Committee has produced a good report. I suspect that the replies to this debate will be truncated because of the number of hon. Members who wish to participate. If the Minister cannot answer all my points, I would appreciate it if he would drop me a wee note.

As several hon. Members have said, the arrangements on fish represent an advance in terms of access on what exists under the common fisheries policy at present. However, as the existing CFP agreement relates to estimates of available fish, have those been changed? The previous agreement was based on what could be fished properly and safely on conservation grounds, but is that now to be extended? On what basis is it being carried out?

The hon. Members for Gateshead, East (Ms. Quin) and for Greenock and Port Glasgow (Dr. Godman) referred to policing. If the hon. Member for Greenock and Port Glasgow is right—I think he is—there will be two levels of policing in fishing areas. There will be tighter control in Norwegian waters and less tight control elsewhere. That is very unsatisfactory, and the House and the Government, through the Council of Ministers, should do more about Community policing in Community waters.

The Minister referred to exclusion of fish species, and specifically mentioned salmon. Was he referring to wild salmon running in the sea, or did his comments include farmed salmon? The Minister will be aware that there has been a great deal of concern among fish farmers who produce salmon. That is an important industry in my constituency, especially in Lochaber, where Marine Harvest has just been put up for sale by Unilever. There is much employment in the industry in respect of processing in Fort William and in the farms on the west coast, where there is little alternative employment. The concern related to the blatant dumping of farmed salmon by Norway. There was much negotiation and to-ing and fro-ing about that, and I wonder whether that was affected by the agreement.

Recommendation 4 of the Trade and Industry Committee indicated that the creation of the EEA would provide an opportunity for further progress on discrimination against United Kingdom alcohol, which of course includes Scots whisky and related Scots whisky-based liqueurs. As the Government have said that they hoped that there would be opportunities for further progress, I should like to know what further progress has been achieved.

With regard to recommendation 7, I would like to know the up-to-date position on competitive public procurement. As hon. Members will be aware, our construction industry is currently under-used and could well have competitive opportunities opened up to it.

Recommendation 9 relates to the promotion of direct flights from United Kingdom regional airports, and what the DTI called "innovative fares". That will be most welcome if it happens. However, considering the current war of words between British Airways and Virgin Airways, and recalling the fate of Mr. Laker, who certainly went in for innovative fares, I confess to being somewhat sceptical about that. Perhaps the fact that Lord King went into a huff and stopped paying money to the Conservative party might give the Government a freer hand—who knows?

Finally, I do not believe that it is that helpful for the hon. Member for Hastings and Rye to make abusive remarks about the European Parliament, satisfying though that might be. It is always very satisfying to make abusive remarks, but the European Parliament was simply defending the position of the court, which EFTA sought to circumvent. It is not unreasonable that the Parliament should wish to be assured that the new arrangements will make the position of the courts secure.

In response to the right hon. Member for Llanelli, the court is in reality a federal court. In reaching the new agreement, I hope that there has been contact between the institutions—the Commission and the Council—and the court so that there will be no delay. I agree entirely with the hon. Member for Gateshead, East, that that would be most undesirable. I hope that the European Parliament will not hesitate about ratification.

Mr. Butterfill

I hear what the hon. Gentleman says, and I am sure that that is the technical position that the European Parliament has taken. However, in practice, surely it did not like the idea of a separate court with enhanced jurisdiction over a wider area. Surely it wanted to reinforce the position of the total competence over all Community matters of the European Court of Justice. That was a narrow-minded outlook, in view of the magnitude of the events that it was being asked to consider.

Sir Russell Johnston

I agree entirely with the definition that the hon. Member has spelt out. However, I do not agree that that was a small-minded approach. I do not see the point of having two separate courts, given the short life of the agreement between today and the eventual adhesion of most of the members involved in it, with the possible exception of Iceland and, later, Norway.

In conclusion I entirely agree that this is a great step forward for all Europe. It was slow in coming, but it is all the more welcome for that.

6.9 pm

Rev. Ian Paisley (Antrim, North)

There was a time when we were told that none of the EFTA countries would survive the Common Market. In fact, when this country had the opportunity of having a referendum, we were told that it would be the demise of those countries. One has only to look at the progress that EFTA has made, its balance sheet, and the eagerness of the EC now to make peace with it to realise that the prophets who prophesied doom were false prophets and that their prophecy was entirely wrong. We need to face up to that fact. It would be interesting to read the speeches of right hon. and hon. Members who were prepared at that time to read an obituary notice to EFTA and all its deeds. But EFTA still exists.

The widening of the European Community is to the good. I should rather see the EC widened than deepened, and I should like to see the possibility of it being a real European Community in which the whole of Europe is included. I am not arguing for federalism—everybody knows my views—but I am arguing for a unity amidst the diversity, and I am also urging for that interdependence which does not destroy independence. That is the way in which Europe should develop.

The new cohesion fund has the same objective as the Maastricht cohesion fund—to help people in the less-favoured areas of the Community who need to be cushioned because of progress made toward more prosperity in the more prosperous parts of the European Community. One would have thought that the same ground rules would adhere to this cohesion fund and the Maastricht cohesion fund, but they do not. This cohesion fund seems to take into consideration objective 1 areas of the EC. The Maastricht fund does not do that. For example, Wales, which is an objective 2 area, is completely left out. I should have thought that all parts of the European Community which are to be hit, and hit hard economically by what is going on in Europe, should be included in the cohesion fund.

I am glad that Northern Ireland, the only United Kingdom objective 1 area in the Community, is included. However, I do not think that other parts of the United Kingdom which are equally entitled to help should have been excluded. However, in the Maastricht deal, Northern Ireland alone is an objective 1 area and it is excluded. Three Northern Ireland Members of the European Parliament met the Prime Minister and drew his attention to that subject. He has argued that the criterion is different, that we are dealing with the United Kingdom as a whole and that, therefore, the objective 1 argument does not come into it.

I do not know how one can have two agreements, one arguing on one set of principles and the other arguing on another set. If the objective of the European Community is to be achieved, objective 1 and 2 areas in the United Kingdom should be included. I trust that, even now, the Government will have second thoughts on this matter and I hope that the Minister will spell out exactly what the cohesion fund under this agreement will be in comparison with the cohesion fund under the Maastricht agreement.

The other matter which I should like the Minister to develop relates to fish. We are not getting the full story on fish. The measure deals with cod. I am not suggesting that the Minister is acting the cod, but someone is certainly not telling us the full facts. How much will United Kingdom fishermen benefit? May they have a firm figure?

I congratulate the Minister on the good document— one can read it. One cannot read the other documents that we are to discuss later. Perhaps it is another conspiracy of the Government to keep us from reading them. How can one read such documents? One cannot make them out. Even when I went back and said, "Give me another copy," the second one was almost as bad as the first. If I came from Aberdeen instead of Ballymena, I would go back even for a third copy that I could read.

The document tells us that the EC will have greater access to fishing grounds. It states: The EC share of the total allowable catch for North Norway cod will increase from 2.14 per cent. to 2.9 per cent. It is said that we will do very well out of that because of the two-thirds of the total. Will the Minister tell us what the total is and what the term "two-thirds of the total" really means? The document goes on to refer to France and Germany and states: Norway will also grant the EC separate fixed quantities of cod to be allocated to Spain, Portugal and possibly Ireland". Those countries never fish in those fishing grounds. We are told that that does not alter the treaty, but the document is making a change in what was tightly negotiated by all those countries which had an interest in fishing and which were attempting to safeguard their fishing grounds. We now have a new fishing arrangement that includes Spain, Portugal and possibly Ireland.

Ireland is mentioned in the paper as the Republic of Ireland. How does the Republic of Ireland come into it? The paper says "possibly Ireland". Perhaps Ireland is excluded. Knowing the Republic of Ireland, I know that, if there is anything going for nothing, it will be in on it, all right. I should have thought that it would be in on this deal.

We need to know what will happen to those fishing grounds. Why does this agreement interfere with already agreed principles on fishing? Is it because Spain and Portugal opposed the treaty and that they had to be bought off? Is this the way that they were bought off? The Minister should tell us the truth. Is there a real benefit to our fishermen? If there is, I welcome it, because we in the United Kingdom have had a raw deal on fishing.

One of the things that we need to tell Europe over and again is that there would be no large fishing grounds but for the United Kingdom. The United Kingdom has given liberally to Europe. We are often told that the British are little Englanders, but that is certainly not the case in respect of fishing, because we have given liberally to establish a common fishing policy. I ask the Minister to tell us exactly how much we are to benefit. The document states: The Agreement can be expected to afford financial benefit to the UK by virtue of the increased opportunities for UK business as described above. Northern Ireland will be a beneficiary of the EFTA cohesion fund. Of course I welcome that, but other parts of the United Kingdom which suffer unemployment and an economic plight such as that of Northern Ireland should also be included in that cohesion fund.

6.19 pm

Dr. Norman A. Godman (Greenock and Port Glasgow)

The hon. Member for Antrim, North (Rev. Ian Paisley) said that years ago the EFTA countries were reluctant to associate with the European Community. I remind him that Norway voted against membership of the European Economic Community in the referendum because of the understandable fears of many Norwegians, particularly in fishing communities in the north of Norway, about the common fisheries policy. There is no doubt that attitudes have changed but there was a deep fear about the CFP and open access to northern Norwegian waters.

I see that the Minister is away for the moment. I welcome the agreement, but some elements of it give rise to some concern. In my brief speech I wish to ask some questions which could perhaps be relayed to the Minister.

My first question is about the free movement of persons. Paragraph 11 of the explanatory memorandum published by the Department of Trade and Industry says: The Agreement prohibits discrimination between EC and EFTA nationals in respect of employment". The Minister spoke about self-employment and the creation of businesses. But the same paragraph also says: this embraces the right to accept offers of employment actually made, to stay in an EC or EFTA country for that purpose and to remain there afterwards. I ask the question that I asked earlier: what is the position of immigrant workers long domiciled in European Community countries? I refer, for example, to the North African immigrant workers in France or those known as gastarbeiter in Germany? It seems that the EC countries have reached some sort of tacit agreement about such European Community residents. By that, I mean that such people will be confined to the countries in which they reside now.

We are talking about several millions of people. Tacitly or otherwise, the European Community has affixed to those people second class-status as citizens. I do not believe that they will be allowed to move around the 12 EC countries, let alone the EFTA countries. I would like an answer to that critical point. We talked about the problems of immigration into the European Community, but we also have a serious problem of migration of people such as I have described, many of whom have lived for years and years in, say, France or Germany. They seem to have second-class status as citizens.

I promised to be brief, but I wish to ask some questions about fishing. I listened intently to the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), who is knowledgeable on the subject—as, of course, he needs to be—and to the hon. Member for Antrim, North. I agree with the Minister that the agreement will benefit some of our distant water trawlers with regard to north Norway cod.

I should perhaps declare an interest here. I am not a fisherman myself, but I have a brother who is the mate of a big freezer trawler. He and his comrades will undoubtedly benefit from the agreement because that trawler is one of the few which has the capability to fish in such dangerous waters. For reasons of safety, not all the trawlers that one sees in Ulster or the Republic of Ireland should go out to those dangerous grounds. The same holds true for Icelandic waters, which are equally dangerous for small vessels.

The Minister mentioned a figure of 6,000 tonnes for the amount of cod coming to United Kingdom fishermen. The hon. Member for Antrim, North asked the Minister to give us a definitive figure. I should like the same information. The information that I have been given is that the figure for 1993 is 1,600 tonnes. Is the latter figure the increase in the amount that our fishermen will be able to catch or is it the total catch figure for 1993? I know that it is not the Minister's responsibility, but the responsibility of the Minister of Agriculture, Fisheries and Food and of the Department of Agriculture and Fisheries in Scotland. Does the figure refer to fish fillets or to whole fish as it comes over the side of the trawler? There is an important difference.

Paragraph 25 of the Minister's explanatory memorandum says: Iceland will provide a small additional quantity of fish, the allocation of which is still to be determined. Did I hear the Minister aright? Did he mention red fish when he talked about the unknown Icelandic allocation? If that is the case, I wonder whether perhaps the United Kingdom and Germany could do a swap of allocations of red fish and Norway cod. Traditionally, United Kingdom trawlers do not fish for red fish. Would there be any chance of an agreement between Germany and the United Kingdom?

Despite the Minister's eminently reasonable comments about cohesion in relation to access for Spanish vessels to fishing grounds, I still believe that to give Spanish and Portuguese vessels access to grounds that they have never fished before bodes ill for the mid-term review of the common fisheries policy. There is no doubt that the Spanish, with their huge, over-large fleet, will seek access to United Kingdom grounds, from which at present they are rightly and properly excluded. That exclusion must remain. Now that the Spanish have won a significant concession on grounds that are not traditional to them, they will be heartened about their bargaining position in the mid-term review of the CFP. If the common agricultural policy is important, especially to Conservative Members, I can tell the House that the CFP is very important to our fishing communities in Scotland and, of course, elsewhere.

I am worried about the agreement which allows Spanish vessels to fish in new waters, because it will strengthen the position of the Spanish when they come to negotiate the mid-term review. We are almost upon it—it is literally months away. Now that they have the agreement to fish, perhaps in Icelandic waters and certainly in Norwegian waters, they will say that the derogation given to the United Kingdom protecting our inshore waters should be examined.

By the agreement, the United Kingdom is stirring up problems for our fishing industry in the mid-term review. I am aware that it is not the responsibility of the Minister, but it is the responsibility of Her Majesty's Government and he is the ministerial representative of the Front Bench now. We are heading into danger.

Mr. Butterfill

Does the hon. Gentleman agree that it is possible to take the reverse view? The very fact that the Norwegians have been prepared to grant access will relieve some of the pressure on us to grant access in the review. It is entirely helpful that the EFTA countries are prepared, through the cohesion fund and fisheries extensions, to take some of the burden of introducing a level of convergence between the economies of the Community. The principal Spanish argument is an economic one. Spain says that it needs economic assistance. Whether that comes through the extension of fishing areas or other economic assistance is unimportant: the important principle is that the wealthier northern countries are giving more assistance to the poorer southern countries.

Dr. Godman

I am sure that the fact that the European Fisheries Commissioner, Mr. Marin, is Spanish has no bearing on what has happened. I trust the man that far. The Spanish will not catch much fish off northern Norway, but they have achieved a breakthrough in the negotiations between the European Community and third countries in terms of access to the waters of those third countries. That breakthrough is important to the Spanish Government and their negotiators, as will be seen when we come to the mid-term review.

Everywhere, there are far too many fishermen chasing too few fish. We all know that, and we are arguing for a decommissioning scheme for our fleet, which is too big for the stocks upon which it exists. The Spanish must face up to the same problems. They must halve their distant water fleet instead of coming into our waters.

Policing of waters has already been mentioned. Scottish and English fishermen going into northern Norwegian waters to fish tell us that the policing is much tougher than anything that they encounter in the European Community. The Norwegian coastguard knows exactly where every foreign vessel is fishing. Boardings are frequent and the penalties for infringement of rules are savage. Licences are taken away and huge financial penalties are inflicted on miscreants. That has always been the case in Norwegian and Icelandic waters. The hon. Member for Inverness, Nairn and Lochaber is right: we are talking about two systems of policing.

I hope that I do not sound too chauvinistic when I say that the Spanish are among the worst when it comes to breaking rules on the catching of fish, not just in our waters but in Irish waters. They have a shocking record, but they will come adrift in Norwegian waters if they try such games with the Norwegian coastguard.

The Minister spoke about red fish, and I should like to know the precise figures on northern Norway cod. Paragraph 33 of the explanatory memorandum refers to the creation of An EEA Joint Parliamentary Committee, composed of MEPs and EFTA parliamentarians". Was any thought given to placing on that committee of Members of Parliament from the 12 national legislatures of the European Community? If the purpose of that committee is to promote mutual understanding through dialogue and debate, I should have thought that Members of Parliament from EFTA countries would benefit enormously from meeting fellow Members of Parliament as we are the ones in the parliamentary front line when matters of this kind are debated.

I hope that, as this relationship develops, Iceland and Norway will give up the barbarous activity of whaling. They do not need to catch whales—they are both affluent north Atlantic countries—and I hope that, as a humane gesture, they will renounce whaling altogether. Such a decision would be welcomed throughout the other 17 countries.

I hope that the restrictions on the dumping of Norwegian farmed salmon will be maintained. I seek an assurance from the Minister on this because dumping of such salmon has caused serious problems to our communities, which are largely dependent on the still young industry of sea fish farming. Although I have some reservations about the agreement, I think that in general it is a fine thing.

6.24 pm

Mr. David Howell (Guildford)

There can be no doubt that this is an important day for the changing shape of Europe, with the creation of a gigantic single market with a gross national product of £4,000 billion. It is much the world's largest single free trade area, being bigger than Canada and the United States together, and even when those two countries are joined with Mexico. Clearly, this change should be unreservedly welcomed as an advance in free trade which will bring prosperity to all peoples, provided that the lawyers and the European Parliament allow that to happen.

I must confess some sympathy with the comments made by the right hon. Member for Llanelli (Mr. Davies) about the workings of the European Court of Justice and its tendency always to find in favour of the treaty and the union in its most narrow sense. No doubt we shall come to those matters when the House debates the ratification of the Maastricht accords, particularly in the light of the subsidiarity item, item 3b in the draft Maastricht treaty. Presumably the judicial figures in the European Court of Justice will have to take account of that in the future.

In the meantime, we have this fabulous area of free trade, which we must strongly welcome and support. I have three quick points to make about it. First, this is all very temporary. We are looking at an arrangement that, almost before it comes into being, will be out of date and irrelevant, for the simple reason that several of the countries involved in it want to move on, as rapidly as possible, to full membership of the European Community. Austria and Sweden already have their applications in and hope that they will be under discussion as from June this year. Finland is reaching the decision that it wants to join, on certain terms. Switzerland will have a referendum in September, and I think that it will want to join, as will Norway.

The whole idea that the European economic agreement, creating economic space, would provide a new arrangement that would satisfy the EFTA countries has backfired. Far from satisfying them, it has disturbed the relationship that they had with the Community before and has led to the strong view that they must have membership. That is what is coming and, inevitably, this will lead to a pattern that is entirely different from the one that we are discussing today.

Secondly, what we are looking at today is part of the enlargement process that is about to sweep forward and will include not merely the five EFTA countries but the eastern European troika whose association agreements the House will discuss later, and perhaps the three Baltic states. Malta and Cyprus are also on the list, with Turkey at the end of it. There are also the new states of Slovenia and Croatia, and heaven knows what other states will emerge out of the Balkan stew. All may want to become full members of the European Community.

The European economic agreement is just the first step in the gigantic drama of enlargement of the European union. We still speak of the European Community but, from the moment of ratification of the Maastricht document by all Parliaments, we shall have something which is quite different and which is moving in a different direction—the European union of the 1990s.

My third point relates to some remarks made by the hon. Member for Gateshead, East (Ms. Quin) who spoke clearly and comprehensibly from the Opposition Front Bench about the changing nature of the Community institution. She is right to say that this step, and even more the further steps that follow inevitably from it through enlargement, are already changing the structure, character and nature of the European Community arrangements and the traditional or classic Community of which we have been a member for some years and which began in 1957, before our membership, with the original Six, under the aegis of the treaty of Rome.

We are now seeing the beginning of a huge change in the institutional structure. The document that we are discussing proposes that the 19 members should operate in a system that will give the new "Eftans" some kind of observer status, and a part-time relationship with parts of the Community structure and parts of the new union structure. It is difficult to see how that will work. We need only consider the problems—a positive tower of Babel— that will result from translation and interpretation requirements.

All that, however, is just another element of change in a European union that is already changing before our very eyes. What emerged at Maastricht—we shall discuss that further—was not just a system involving the Community, the old federal bit of Europe, but a system involving the intergovernmental or confederal bit in balance or alongside it: the pillars of common foreign security policy, interior policy, justice policy and so on. The EFTA countries will be associated with those pillars in a mild way through the agreement, and will want to be fully associated with them when they seek full membership of the Community, as they will do over the next two or three years.

I welcome what has taken place, and congratulate my right hon. Friend the Secretary of State on the work that he has done in setting up such a gigantic free trade structure. We as a House of Commons, however, should realise that we are viewing what is merely a passing scene —a brief photo-shot of European development. Everything will change radically; soon, we shall be debating the development of a European union totally unlike the Community that we have known in the past and institutionally different from that Community. What we are debating this evening represents only one step in that direction.

6.41 pm

Mr. Derek Enright (Hemsworth)

It is most unsatisfactory that we should have to take part in such a truncated debate on a very practical and important matter within the European Community. It is particularly unsatisfactory for those who must speak at the tail end of the debate. Speakers constrained by the time limit, as was the right hon. Member for Guildford (Mr. Howell), find it impossible to develop points that I consider important.

It is an extraordinary experience for me to congratulate the Government twice in one afternoon: first, on apologising to Commissioner Millan and putting right the whole RECHAR business; secondly—without reservation —on the EFTA achievement. A very good job has been done, which will benefit both the Community and the EFTA countries. I feel that the Commission's officials should be congratulated as well; we tend to forget that they have been working on this for a very long time.

Let me issue a warning. It seems to me, from what I have read and from talking to continental colleagues, that some member countries wish to postpone full membership. As has been mentioned, Austria and Sweden have already applied for full membership, and it is certain that Finland will do so in the next few weeks. We know, however, that some member countries wish to block that development. I hope that the Minister will assure us that the Government are eager for EFTA countries to gain full membership as and when they apply.

I found the statements by the hon. Member for Antrim, North (Rev. Ian Paisley) quite extraordinary. I first heard him speak on Europe in 1979, when we were together in the European Parliament. It struck me then that the hon. Gentleman had an imperfect grasp of what the Community was about, and I am sorry to note that he has regressed further since coming to the House.

Is it not clear that the EFTA countries—far from being satisfied with their current status, and far from considering themselves self-sufficient—seek the Community's help on two grounds? First, they wish to improve their own prosperity; secondly, there is a certain idealism involved in their application for full membership. That certainly did not apply in the 1970s.

May I advance a small defence of the European Parliament, in relation to its dealings with the European Court of Justice? During the negotiating process, there was considerable dispute about what legal rights were contained in the treaty, and whether they could be put in place while still fulfilling the Community's rules. The Parliament, very properly, placed them before the Court of Justice, which—far from behaving in the way described by my right hon. Friend the Member for Llanelli (Mr. Davies) —responded very positively, as anyone can see who reads the whole judgment.

The Court gave certain advice about how the treaty could be changed so as to fulfil the obligations that exist as a result of the various treaties that make up the Community. All that the Parliament is doing now is announcing a "holding position": it is saying, "Let us consult the Court of Justice to make sure that everything is right." Both Conservative and Labour MEPs, and people from all the countries concerned, have strongly backed the negotiations. The odd rogue elephant on either side has bucked them, but, on the whole, they have fought very hard for those negotiations. To suggest that MEPs are being obstructive is nonsense, and a failure fully to understand the proper custodial duties they have.

Much has been said this evening about eastern and central Europe, and the possible acceptance of those countries into full membership. I urge caution: it seems to me that merging central and eastern Europe with the west has become very much the flavour of the month, but that no practical thought has been devoted to how the process should take place.

For instance, it is no good the Government saying to the Community—as they have said—"We must give all possible assistance to eastern Europe's move towards democracy and its attempts to reform its economies," and then saying, "But, Mr. Commissioner"—or "Mr. Delors", perhaps—"we will not let you spend any money on it." That, in effect, is what the Government did, and that is what is being attacked now. That is nonsense: either practical assistance is to be given to eastern Europe or it is not. The Government really should make up their mind.

With the advent of EFTA countries to the European Community, the social chapter will clearly become much more important, because it is an important part of their institutions. Where do the Government stand in that regard? How did they talk to those countries? What negotiating stance will the Government take when those countries are entering the Community, and—eventually —pushing for what the other 11 are already demanding?

While we are talking about cohesion, let me say that I have great sympathy for Scotland, Wales, Northern Ireland and all parts of the Community that have problems. We should remember, however, that the northern regions of England have the same problems; but, because we are not put together—although we have a sense of cohesion—we do not benefit from the cohesion funds. We have only recently begun to benefit from RECHAR, and we hope that that money will arrive very soon.

I must leave the Minister time to reply, but there has been no chance in this short debate to discuss external affairs. The relationship between the ACP—African, Caribbean and Pacific—countries and the EFTA countries is important.

The European Community has fishing agreements with third countries, particularly in Africa, where it has agreements with Senegal, Guinea-Bissau and a number of others. Has consideration been given to those African countries? It has not been mentioned in any document that I have seen, but are any EFTA countries asking for entry into such agreements?

The Government, in a first, faltering step, have done a very good job, and I congratulate them on it.

6.50 pm

Mr. Barry Porter (Wirral, South)

I, too, shall be brief. I add my voice to that of the right hon. Member for Llanelli (Mr. Davies) as I, too, want to know what European unity means in the context of the treaty and, in common with my right hon. Friend the Member for Guildford (Mr. Howell) I want to know about the moving panorama. It has taken a long time to reach this stage, with more countries wishing to become part of the Community or to have some relationship with it. In the meantime, the world is changing around us.

If we are to join the European railway train, I have two questions for the Minister. First, where is the train going? If I get on a train at Euston, I would like it to go to Liverpool. Otherwise, I have made a mistake and I end up somewhere else. Generally, I do not get that wrong. If I get on a train for European unity, where do I and the United Kingdom think that it will go?

I travelled with the Select Committee on Trade and Industry to the EFTA countries, and they had some idea of where they wanted to go. Business men, bankers and financiers all wanted to join the Community, but there was little mention of idealism. They realised, however, that there was a huge market that would be beneficial to their importers and exporters. That is why they wished to join.

I refuse to be stampeded by people to whom the word "Europe" involves almost a political orgasm. That cannot be right. Europe is or will have to be something, but we do not yet know what. If we were in a station waiting room, it would be helpful if all the people waiting for the train decided where they wanted to go and if they wanted to go together. If they want to go to the same place, all well and good. If they do not, let them make some other arrangements.

I make no pretensions to be president of Mensa, but I can read the odd document. I become dubious about things if they cause 57 questions to be asked of the Minister—I gave up counting after that. Perhaps the Minister will give his own brand of reply. Let us not dwell in a fantasy land, because, as Humpty Dumpty said in "Through the Looking-Glass", When I use a word … it means just what I choose it to mean—neither more nor less. I am getting off that train for the moment.

Mr. Enright

To have an orgasm.

6.53 pm

Mr. Ian Taylor (Esher)

I shall not follow up that invitation while I am in the Chamber.

I, too, welcome this historic agreement, which has been negotiated over 20 months with great skill, patience and no few difficulties. It represents a great achievement if one considers that 380 million people will be part of a European free trade economic area. I am interested in this issue because, between 1969 and 1970, I was chairman of the European Union of Christian Democratic and Conservative Students, which covered the then EC and EFTA countries. I particularly remember that many of the countries that are now involved in this agreement were very concerned about the European Community because of their neutrality.

Times have changed. The Swedish Government have almost officially dropped neutrality and Austria does not talk about neutrality or its treaty obligations, because of its relationship with the Soviet Union. The changes right across Europe, from the Atlantic to the Urals, have led to a further dramatic impact, because countries such as Sweden, Finland and Austria feel that they no longer have to pay lip service to their position as neutral powers.

I was delighted that the agreement made its final leap forward under the Portuguese presidency of the EC. Portugal was the last member of EFTA to join the EC. It therefore understood the interests of its more recent partners. The agreement underlines the vitality of the European Community as a series of institutions. Let us not evade that fact. It is an agreement whereby EFTA countries have entered into a series of complex negotiations and accepted the "Acquis Communautaire" and the regulations in the areas in which the agreement has been formed, which were agreed by members of the Community—not them.

They have also accepted a remarkable series of commitments to be developed by the Community. They have done that not just because they want to have access to an enlarged free trade area—important though that is —but because they understand why they wish to be part of the political union which the European Community represents. As Carl Bildt, the Conservative Prime Minister of Sweden says: Now we are heading full speed to the EC. EFTA members understand that it is important to be part of the most vibrant political bloc in the world today. What sort of Community will it be if EFTA members join, as I hope that they will be able to do quickly?

There are important questions that we shall have a chance to debate in the House—certainly the British Government will have a chance to consider them in more detail during our presidency of the Community, starting on 1 July. How will the enlarged Community cope with subsidiarity? How will institutions be streamlined? Up to 19 countries could be trying to make decisions at once.

For example, if all the countries made opening statements to the council of Ministers, it would take more than three hours before they could commence the meeting. That is implausible. There would be enormous complications for the European Parliament, given the number of extra nations and their delegates. There would be great difficulties if the Commission were expanded beyond its current base. Those matters must be tackled quickly. Obviously, they will be tackled in ways which mean that certain concessions must be made by nation states. We must think carefully about what we would like those concessions to be.

This country is at the forefront of those wanting the Community to be widened. As I have said before—I repeat it now, because it is essential to appreciate this point—widening is not necessarily a way of avoiding deepening, closer integration. Widening will involve deepening. We must ensure that we understand clearly what the process entails and that we appreciate the difficulties. In the course of pursuing a policy to widen the Community, we must be prepared to accept deepening integration.

There are 13 official languages, giving 156 combinations for translation. It is clear that the broadened Community could grind to a halt. As the House knows, I am a good European and I obviously expect the Community to make the most sensible decision and to adopt English as its sole language. However, Scottish accents will be encouraged.

Institutional change is inevitable. We should think carefully about what that should be. As soon as possible we should welcome into the great Community those members of EFTA that have signed the European economic area agreement. When they become part of the Community, the Community and free trade will be strengthened, there will be a decline in the protectionist attitudes present in certain parts of the Community and the European union will be made much stronger.

6.59 pm

Ms. Quin

I shall be brief, because I had an opportunity to raise a good many issues in my opening speech and I am sure that the Minister is waiting eagerly to answer in full the many questions that have been addressed to him.

The Minister said that the debate was timely. I somewhat disagree with that. Indeed, following the comments made by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), I feel that we are being presented with an agreement that is virtually complete, and that it would have been helpful to have a wider and perhaps longer discussion at an early stage in the proceedings. None the less, many useful points have been made during the debate and I hope that the Minister will give a full response.

Reference has been made to the legal considerations and the views of the European Court and the European Parliament. My right hon. Friend the Member for Llanelli (Mr. Davies) took me to task slightly because he felt that I was downgrading some of the legal aspects of the case. I did not intend to do so. I realise their importance, but I also believe that the vital political and economic considerations that the agreement represents should not be overlooked. That was the danger to which I referred.

I am not surprised that many hon. Members spoke about their respective regions and the issues and industries in their parts of the United Kingdom; nor am I surprised that some hon. Members feel that their regions have been short-changed by the agreement and that it would have been a good idea to include the interests of some other regions in the agreement, not simply restricting it to the objective 1 areas in the European Community. In that respect, the Government are the victim of their own propaganda. They have made many dubious claims about economic miracles but they are not prepared to accept the real economic situation of our regions and the country as a whole.

I hope that the Minister will respond to the questions raised by my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) about the gastarbeiter and immigrant workers in the European Community, and the real danger that they may be consigned to second-class status.

I hope also that the Minister will respond to the important question raised by my hon. Friend the Member for Hemsworth (Mr. Enright), who urged that the EEA agreement should not be used by certain members of the European Community as an excuse to block progress on applications for full membership submitted by certain EFTA countries.

I believe that the United Kingdom can derive considerable benefit from the agreement, but I still have grave doubts about the Government's priorities in Europe and their overall strategies. It is simply not credible for the Prime Minister to say that he wants us to be at the heart of Europe yet, through the double opt-out at Maastricht, do his best to consign us to the periphery.

The hon. Member for Wirral, South (Mr. Porter) said a good deal about trains. In many aspects of European policy, we are in danger of missing the train altogether unless we act to ensure that we do not lose the opportunities available to us. We need to make a success of our membership, both of the Community and of the European economic area, and ensure that our industries and regions can benefit to the full, not just in the Europe of the Twelve but in the wider Europe that we all want to see created.

7.5 pm

Mr. Sainsbury

The most important part of this short debate has been the general welcome that has been given to the agreement on the European economic area by both sides of the House. As my right hon. Friend the Member for Guildford (Mr. Howell) said, it should be unreservedly welcomed. However, reservations, or should I say questions, about the agreement rained down upon me. Like my hon. Friend the Member for Wirral, South (Mr. Porter), I too lost count of the number of questions that I was being asked. I must take advantage of the suggestion put by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) that I should send "a wee note", as he so charmingly put it, to those hon. Members whose questions I could not answer in the short time available to me. I shall scour the pages of Hansard to ensure that everyone who has asked a question receives such a wee note.

I agree, at least on one issue, with the hon. Member for Gateshead, East (Ms. Quin). It is sensible that the agreement comes into force on 1 January 1993 at the same time as the completion of the single market.

The resolution of the European Parliament was referred to by a number of hon. Members, including my hon. Friends the Members for Hastings and Rye (Mr. Warren) and for Bournemouth, West (Mr. Butterfill). The recent amendments made to the agreement take account of the court's opinion last December. I am aware that the European Parliament has made a resolution that a further opinion should be sought. However, as the amendments take account of the court's earlier opinion, it seems to me that no further opinion is necessary and we should be able to go ahead with ratifying the agreement.

Another issue that attracted attention from a number of quarters, including the hon. Members for Greenock and Port Glasgow (Dr. Godman) and for Antrim, North (Rev. Ian Paisley), was fish. That is a particularly difficult and complex issue. As the hon. Member for Greenock and Port Glasgow recognised, it is primarily a responsibility for the Ministry of Agriculture, Fisheries and Food.

I was asked precisely how much extra fish would be available to British fishermen. I am not capable of answering that question, because it depends on the total allowable catch. The good news part of the agreement for United Kingdom fishermen is that the European Community's share will be increased from 2.14 per cent. of the total allowable catch to 2.9 per cent. It is impossible to quantify that precisely, because it is a percentage of the total allowable catch.

My hon. Friend the Member for Hastings and Rye asked about another important matter—public procurement. I assure him and the House that EFTA has agreed to implement fully the directives on public procurement. That is one of the major advantages to be derived from the agreeement.

The right hon. Member for Llanelli (Mr. Davies) and various other hon. Members asked about cohesion. The House will appreciate that reaching an agreement on that part was difficult. Some objective 1 areas in France, Germany and Italy will not be beneficiaries of the cohesion aspects of the agreement. It will be appreciated that, if they are excluded, there will be no question of bringing in objective 2 areas. Indeed, it was only through the Government's strenuous efforts that we had Northern Ireland included as a beneficiary.

I emphasise that the agreement will facilitate EC membership for any EFTA countries that want to join. Through the agreement, they will already have adopted most single market provisions, and negotiations have covered much of the ground of an accession negotiation. That is a positive aspect of any EFTA country that wants to join.

The issue of the so-called gastarbeiter was raised by the hon. Member for Greenock and Port Glasgow. The new freedoms of movement for persons and of establishment for individuals and the self-employed apply to nationals of the European Community. Therefore, there is no discrimination. The new freedoms are specifically intended for nationals.

Dr. Godman

Will the Minister give way?

Mr. Sainsbury

Perhaps the hon. Gentleman will forgive me if I do not give way. I shall send him one of the wee notes which I mentioned earlier. Time is limited.

The hon. Member for Gateshead, East spoke about the steel industry. I emphasise that the EEA will broaden the opportunities available to United Kingdom steel makers, and that EFTA steel producers will be brought under the competition and state aid rules governing European Community industry. Some of the export restrictions which have protected the market for scrap and alloys in some EFTA countries to the advantage of their local producers will end. That is another positive point.

My hon. Friend the Member for Wirral, South wondered where we are going. I emphasise that the agreement is worth while even if it is, as my right hon. Friend the Member for Guildford suggested, short-term. Not least among the reasons why it is beneficial is that it will help the entry of EFTA countries that seek to join the Community. There is no question of the agreement in any way blocking applications.

The House has recognised that this is an excellent agreement. It is a substantial achievement by the Government. It will provide new opportunities for British business men, bring benefits to consumers, and help in the development of the new Europe.

Question put and agreed to.

Ordered, That this House takes note of the proposals described in the unnumbered Explanatory Memorandum submitted by the Department of Trade and Industry on 30th December 1991, relating to the draft Agreement on the establishment of a European Economic Area; and supports the Government's view that the Agreement should be entered into by the Community and its Member States subject to agreement on amendments to the draft necessary to deal with incompatibilities between the draft and the Treaty of Rome identified by the Court of Justice in its Opinion 1/91.