Nice European Council (Hansard, 11 December 2000)

§ The Prime Minister (Mr. Tony Blair)
After five gruelling days, victory was secured—I am sure the whole House would like to send our congratulations to the English cricket team on its triumph.
With permission, Mr. Speaker, I shall make a statement on the European Council which took place from 7 to 10 December. A copy of the conclusions has been placed in the Library of the House, and a copy of the Nice treaty will be deposited as soon as the final version is available from the Council secretariat.
This summit was the culmination of a year-long conference called to deal with issues on which agreement could not be reached at Amsterdam three and a half years ago. Agreement was essential to open the door to the enlargement of the European Union, the goal of successive British Governments. An agreement was reached in the early hours of this morning which removes all remaining institutional obstacles to enlargement.
It is extraordinary to think that, a few years ago, those countries in central and eastern Europe were still under the communist yoke of the old Soviet bloc. Today, there is the real prospect of uniting western and eastern Europe for the first time in generations.
The primary objective in the negotiation has therefore been successfully accomplished. But there were also key British interests. Our first priority was to get more voting strength for the United Kingdom.
The agreement reached increases the weight of Britain's vote. It raises the threshold for qualified majority voting up, when the EU comprises 27 members, to more than 74 per cent. of votes. It adds two further tests. Any proposal must have at least a majority of states on-side, as well as crossing the 74 per cent. threshold. And a new population threshold at 62 per cent. of the EU is also introduced. So the three biggest countries will continue, even as the EU enlarges, to be able to block together.
This now can be placed alongside the changes in Britain's financial contributions. Ever since we joined the EU, Britain has made a far greater proportionate contribution to Europe's finances than France or Italy despite, until recently, being a slightly smaller economy. By 2006, on the assumption of only six new member states, we shall be making a net contribution roughly equivalent to France and Italy's, for the first time in our membership.
Secondly, on defence, the European Council agreed the arrangements for European security that we have been negotiating over the past two years. It was made plain, first, that European defence would operate only when NATO chooses not to be engaged; secondly, that it be limited to peacekeeping, humanitarian and crisis management tasks; and, thirdly, as the text puts it, that the commitment of national assets to any EU-led operation will be based on "sovereign national decisions." Collective defence will remain the responsibility of NATO.
The next step is for the two organisations, the EU and NATO, to agree on the necessary arrangements. Any significant operation will require NATO assets and any such operation will be planned at NATO by the planning staff at Supreme Headquarters Allied Powers Europe— 350 SHAPE. This underlines the EU's aim to develop a strategic partnership with NATO. So here, too, Britain's essential national interest has been protected.
Thirdly, we have retained unanimity where necessary and extended qualified majority voting where necessary. Of the articles that move to QMV, 11 deal with appointments or changes in rules of procedure. One of these is important—the nomination of the Commission President, where it is essential that, in an EU of 27 or 30, one small state cannot block the right appointment. Nine of the changes deal with freedom of movement where we—that is, Britain—have an absolute right to decide whether to take part or not, thanks to the protocol that we secured at Amsterdam. The remaining changes are primarily about the efficiency of economic management and the single market, where majority voting is in this country's national interest: financial management of the EU budget, industrial policy, trade in services. All that means new markets for Britain's financial services and the jobs and prosperity that go with them. And within even these articles, we have kept unanimity where we need it: unanimity in respect of harmonisation and anti-discrimination measures, unanimity for passports, unanimity for anything to do with taxation and social security.
There were areas where it would not have been in our interests to agree to any QMV, in particular for taxation and social security. As we undertook to the House, those matters will remain subject to unanimity. In the field of justice and home affairs, the special protocol that we agreed at Amsterdam continues to mean that we—Britain—decide where to join in co-operation in our national interest, for example, in dealing with problems of asylum. On all these issues, we said that we would protect the national interest and, contrary to the dire warnings of the Conservative party, that is exactly what we did. The House will note with some amusement the Tories claims now that those issues were never under threat.
In an enlarged European Union, there will inevitably be issues on which member states can move ahead faster than others. It is in Britain's interests, as one of the leading partners of the EU, for that to be possible. We have secured conditions for this co-operation which fully safeguard the single market, prevent discrimination in trade between member states, cannot conflict with existing agreements, and are open to all. In the field of foreign policy, the common strategies of the Union, however, will continue to be set by unanimity. Any co-operation between groups of member states has to be consistent with a prior agreement reached by all, and is therefore subject to the national veto if necessary. These enhanced co-operation agreements, incidentally, will not apply to defence—another key British objective.
On numbers of Commissioners, those are unchanged up to 2005, except for one for any applicant country. Then, from 2006, there will be one Commissioner per country, up to a maximum of 27—at present there are 20—with an agreement to reduce numbers in 2010, following a review.
Since the Amsterdam summit of three and a half years ago, we have tried to rebuild British policy in Europe to get the best out of Europe for Britain while shaping Europe's future. On each occasion, we were told that it was impossible: that Britain v. Europe was the only game in town. At Amsterdam, we were told we could not protect our borders. We did. Two years ago, in Berlin, we 351 were told we could not protect the British rebate. We did better; we put Britain's contributions on a more equitable footing for the first time. At Lisbon, we were told Europe could not accept the agenda for economic reforms. It did.
Earlier this year, at the June summit, we were told we could not win the argument on the withholding tax. It is won. The rest of Europe is now going to adopt exchange of information, not a new tax, as the way forward.
Finally, on defence, we were told that we could not improve Europe's defence capability—a vital NATO as well as EU interest—without undermining NATO, and that we would be isolated on tax and social security. We secured those objectives without its even being suggested that we were an obstacle in the way of enlargement.
It is possible, in our judgment, to fight Britain's corner, get the best out of Europe for Britain and exercise real authority and influence in Europe. That is as it should be. Britain is a world power. To stand aside from the key alliance—the European Union—right on our doorstep, is not advancing Britain's interests; it is betraying British interests.
Enlargement will now happen. British interests were advanced, but we cannot continue to take decisions as important as this in this way. That is not a criticism of the French presidency, which did well in immensely difficult circumstances, but the ideas for future reform in the European Union which Britain put forward a few weeks ago are now essential so that a more rational way of decision making is achieved. This, too, is a debate in which we should be thoroughly and constructively engaged; and we will be.
The Europe that this Government are striving for is one of nation states with their own traditions, cultures and special interests which work together in their own interests and in those of Europe as a whole. That means, on the one hand, making common decisions at a European level where that makes sense and, on the other hand, making decisions at a national or, indeed, regional level where that makes sense. It means embracing all the countries of Europe—east and west—in a way that would have been unimaginable throughout most of the troubled history of our continent. That is a goal that moved significantly forward at the Nice summit. I commend its conclusions to the House.

§ Mr. William Hague (Richmond, Yorks)
Is not the truth, when we cut through the spin, that the agreement represents three more major steps to a European superstate? First, the Prime Minister has signed away the veto in 23 new areas—in fact, one Government official put the number of new areas that could now be decided by majority vote as high as 39. By doing that, has the Prime Minister not granted European institutions the opportunity to impose further integration in future?
Will not a court that reinterpreted the working time directive as a health and safety measure now use the further loss of the veto to impose precisely the sort of regulation that could cost jobs in this country in future? Will not the loss of the veto on structural funds mean that future Governments will not be able to stop British regions losing money? Will not the weakening of the veto on the environment mean further interference in town and country planning? However much it is hemmed about by 352 ambiguous language, how does the Prime Minister think the European Court will interpret the clause allowing Europe to fund states in severe difficulties because of so-called "exceptional occurrences" now that he has signed away our veto on that?
Could it not be seriously against this country's interests no longer to have a veto over the appointment of the Commission President? Will the Prime Minister confirm that he has abandoned the veto on groups of countries integrating more closely—so-called "enhanced co-operation"—and that we cannot stop them, even when our national interest is being harmed? Can he confirm that the EU will now be able to fund European political parties directly, without a national veto?
Does not all that represent a major step toward European integration and does not the charter of fundamental rights represent the second major step toward that superstate? Everyone but the Prime Minister has been open about what the charter will lead to, irrespective of whether it is in the treaties. The European Commission says: It can reasonably be expected that the Charter will become mandatory through the Court's interpretation of it as belonging to the general principles of Community law. The Commission's website asks: Will the Charter lead to a large rise in the number of law suits … ? and answers: This cannot be excluded …, adding that the charter of fundamental rights means that the European Union has entered a new, more resolutely political stage of integration. The Charter will be a very important milestone on the road towards this political Europe. Does not the move to a Euro-army represent the third step to such a superstate? Has not the Prime Minister signed up at Nice to an independent and autonomous European identity, with only ad hoc arrangements linking it to NATO? Is it not the case that duplicate and conflicting structures are being set up? Does not annexe 7 of the draft presidency report, which has just been released, refer on defence matters to the autonomy of EU decision making, to the EU and NATO dealing with each other on an equal footing, and to the EU Council adopting strategic options with NATO … informed of developments in the situation … ? As currently constituted, the EU defence force will progressively move away from NATO. Is that not why President Chirac said that the force would be independent of the alliance's headquarters, why British Government officials said that his remarks were a statement of the obvious, and why former United States Assistant Defence Secretary Richard Perle describes the Nice agreement as "a catastrophe for NATO" and "a British defeat"?
If this is a European army—and it is—what is the point of inserting sentences in the communiqué saying otherwise? Is not the real reason revealed this morning in a German newspaper? It states that Because the advance election campaign has begun in Great Britain, the chiefs decided to insert the army secretly … to play down its establishment as much as possible … Blair and Chirac … saw to it that a real step by the Europeans towards more integration was concealed. 353 So Nice represents three major steps towards a more deeply integrated Europe. It has ended up being about integration rather than enlargement. Reweighting the votes and limiting the size of the Commission are important for enlargement, but they are not enough. Surely a summit genuinely about enlargement would have tried to reform the greatest obstacle of all to enlargement, which is the common agricultural policy. Surely a summit genuinely about enlargement would have introduced real flexibility, returning more decision making over new laws to the nation states of the EU. Surely a treaty genuinely about enlargement would have meant less integration, not more.
If the Prime Minister is worried that Europe will not be able to force through as much legislation in future, why is the answer not less legislation in future? Continuing the relentless ratchet of integration makes successful enlargement less likely, not more likely. It is not surprising, therefore, that there is no clear commitment in the communiqué to entry dates for the applicant countries, as President Chirac has made clear. It is not surprising either that, with Europe moving in this direction, the Prime Minister has agreed to yet another summit, whose purpose will be to start drafting a Euro-constitution, which in the words of the German-Italian paper on this subject, will be with a view to the further development of European integration … ? The Prime Minister emerged with a treaty that takes Europe in the wrong direction, and a Conservative Government will not ratify it as it stands. If the Government wish to sign up to the three major steps, including the charter of rights and the European army, they should first consult the people of this country in a referendum.
The Prime Minister has missed the best opportunity of his premiership to put the case for the sort of Europe that is supported by the majority of people in the United Kingdom. He has missed that opportunity because that is not the sort of Europe in which he believes. Instead, the summit has represented three more major steps on the road to a superstate. It will be up to us, the Opposition, to put the case for a different direction, for a modern, reformed and flexible Europe. It will be for us to put the case for a European Union that is right for Britain and for Europe as a whole; and to put the case for being in Europe, not run by Europe.

§ The Prime Minister
I preferred the right hon. Gentleman with the jokes. What he is saying about qualified majority voting is extraordinary. Nine of the measures relating to justice and home affairs come within our protocol protection. As for 11 of the other articles, we have, for example, the appointment of the Deputy Secretary-General of the Council, the pension arrangements for the registrar of the court and the approval of the rules of procedure of the Court of Auditors. Should we have blocked the enlargement treaty for these things? It is ridiculous.
As for what the right hon. Gentleman says about the Commission President, it is vital for our interests that we do not end up in a situation where, as the EU enlarges, that appointment can be blocked by one small member state. Did we not learn that when the Conservative party was in power and the Commission President before last was appointed? Let us just say that, as a result of the rules, 354 there were many candidates at the time whom it would have been a good idea to have had forward in the frame, but we were not able to do that.
That is a classic example of what I am saying. There are certain areas—for example, trade in services—where Britain has to take on other countries and secure unanimity. It finds that it cannot do so because another country blocks the approach, for various protectionist reasons. Qualified majority voting allows us to proceed in that way. It cannot be that QMV is always in other countries' interests but not in ours.
The shadow Foreign Secretary said a couple of days ago, which I know is quite a long time in policy-making terms: I don't have a doctrinal view that any qualified majority voting is wrong, we signed up for it to complete the single market. Presumably, the difference is simply which areas he would block—the rules of procedure of the Court of Auditors? It is absurd.
I shall deal with some of the factual points. The right hon. Gentleman said that he was opposed to moving to QMV, although the move to QMV for the social and cohesion funds—the structural funds—is not for some years to come. It is hugely in this country's interest to have QMV there. At present we cannot get a proper deal on structural and cohesion funds because there are certain interests, mainly in the south of Europe, that block it via unanimity. If we were able to move to QMV, we would get a better deal for this country. In the course of the negotiation, I was arguing that we should move to QMV quicker, because it was in our interest to move there more quickly.
The right hon. Gentleman mentioned countries in financial difficulties. That is subject to the budget ceilings that exist, and there is no bale-out in respect of the euro, because that is secured in another article under the Chancellor's negotiation.
Incidentally, the right hon. Gentleman mentioned the support for European political parties. I point out to him that that was requested by the European People's Party, which is the association of European political parties and of which his party is a member—but let us leave that to one side.
In relation to enhanced co-operation, the right hon. Gentleman says that he is in favour of a more flexible Europe, but he opposes the idea of enhanced co-operation, which means that if countries want to, they can go ahead, and other countries have a choice whether to join. Surely that is the very flexibility that he is talking about.
The right hon. Gentleman goes on about the charter of fundamental rights. The reason the Commission is asking for it to have legal status is that it does not have legal status. Our case is that it should not have legal status, and we do not intend it to. We will have to fight that case.
When the right hon. Gentleman speaks of the word "integration" being wrong in respect of any European treaty, does he not remember the Maastricht treaty and the Single European Act? One can go back to any European treaty and find the word mentioned there.
On the Euro-army, we reach the realms of the right hon. Gentleman's fantasies. As I made clear, it applies, first, where NATO as a whole chooses not to be engaged; secondly—

§ Mr. Iain Duncan Smith (Chingford and Woodford Green)
No.

§ The Prime Minister
Let me read to the hon. Gentleman from the presidency report. Is he listening? The document states: This applies where NATO as a whole is not engaged. Shall I go on? The report continues: This does not involve the establishment of a European army. The commitment of national resources by member states to such operations will be based on their sovereign decisions. As regards the member states, NATO remains the basis of our collective defence. I have an even better supporter on my side. Here is what the shadow Foreign Secretary said two days ago: If NATO decides it doesn't want to do it, then obviously this can go ahead. That is precisely what the proposal is, but the Opposition still say that they do not support it.
The Leader of the Opposition commented on the common agricultural policy, and it is right that far more reform of the CAP is needed. The difficulty is that that must be done by unanimity, so that is a problem, but none the less we did our very best, and we did get significant changes. That was the topic at the previous negotiation, in Berlin. We have achieved more in the reform of the common agricultural policy than the right hon. Gentleman ever did when he was in office.
As for the idea of a future intergovernmental conference, it will deal primarily with the issue of subsidiarity. Again, that is a major British interest, which we should support.
We have set out why we believe the treaty to be in the interests of this country and in the interests of Europe. The right hon. Gentleman has again stated firmly from the Dispatch Box today that he would block the treaty. Let me explain the full rounded idiocy of the position that the right hon. Gentleman has got himself into. He is saying that he would not have agreed any treaty unless everyone agreed to what he calls his pick-and-choose policy on future legislation. Is it not right that that is Conservative policy? I have asked the right hon. Gentleman this question before, and perhaps I can get an answer now that the European summit is over. Will he name one country that supports the proposal, when all 15 have to support it? Let us have silence, so that he can shout out the answer. The right hon. Gentleman would need the other 14 to agree, but he cannot name one. Let us try this. Will the right hon. Gentleman name one other Conservative party in Europe that supports his proposal?
The right hon. Gentleman is saying that he would go to the Council and say that, unless Britain has a pick-and-choose policy, he would block the treaty. However, he is also saying that he would block flexibility for everyone else. That would be a pretty intelligent policy, would it not? The right hon. Gentleman says that he would have no QMV at all but that, it there were any QMV, he would have a referendum in the UK. By the end of that process, he would have alienated every country in the European Union and every country waiting to come into it. If he had been negotiating, he would have come back today saying either that he had blocked enlargement—which would be a great thing for Britain to have in its history and tradition—or that he had agreed QMV on the court registrar's' pension and was going to hold a referendum on it. I am sorry, but that is the right hon. Gentleman's policy.
We did not have a referendum on the Single European Act or Maastricht. The right hon. Gentleman is not even offering the British people a referendum on the single 356 currency. However, on the question of the vital strategic interest of the pension of the court officials, we would all be trooping off to the polling stations.
Does the right hon. Gentleman want to be taken seriously by anyone in Britain, Europe or elsewhere? The true agenda of a large part of his party—and the Conservative party will stay in this position until the right hon. Gentleman confronts this—is to have this country next door to the exit sign in Europe. That would be a disaster for Britain and Europe. It is wrong, and we shall not do it. We shall win the argument, because that is in the true national interest of Britain.

§ Mr. Giles Radice (North Durham)
We have heard ludicrous hype about the slippery slope to the European superstate, and heard it again this afternoon from the Opposition Front Bench in the most extraordinary statement that I have ever heard in debate on any European statement during my time in the House of Commons. After all that, is it not the case that the Nice summit has produced important, but limited, changes that will prepare the European Union for enlargement, which is both a vital national interest and vital for the future of Europe? Is it not also the case that, once again, we have demonstrated clearly that it is possible to achieve British national objectives while at the same time making a positive contribution to Europe and its future? Does that not show that British membership of the European Union pays if it is exercised in a constructive way?

§ The Prime Minister
It is true that we have secured our interests in a way that has not left Britain isolated or marginalised, which would not be in our interest. We have to return to negotiations with other countries to get things that advance our own interests—[Interruption.] I shall make one point to those Opposition Members who are shouting at me. There was a time when the Conservative party played a constructive part in Europe. During the Single European Act preparations, it did an immense amount to improve Europe and the way that Europe worked. It is therefore important that we have enough confidence in our own ability to win those arguments, to go into Europe, and to advance British national interests.

§ Mr. Charles Kennedy (Ross, Skye and Inverness, West)
For Opposition Members who wanted the Nice summit to succeed, it is with a sense of relief, but not rapture, that we look at the outcome. It is good that an outcome was achieved; the alternative would have been a disentanglement of Europe. The Government should be complimented on maintaining the British veto in areas on which Labour and the Liberal Democrats agreed previously.
With regard to Conservative Members' responses, does the Prime Minister agree that there is a distinct sense in the Chamber that the Tory fox on Europe has been well and truly shot as a result of the agreement? Does he concur with Chris Patten that, to use his word, it would be "barking" to deny the people of Britain a referendum on a single currency while imposing one in respect of the treaty of Nice? That position is completely illogical.
357 Does the right hon. Gentleman acknowledge—he publicly commented on this point when he left the summit—that, 14 years after the collapse of the Berlin wall—

§ Mr. Denis MacShane (Rotherham)
It is 11 years.

§ Mr. Kennedy
If the hon. Gentleman will allow me to continue, the accessor countries will gain admission to the European Union 14 years after the collapse of the Berlin wall . That is an intolerable time to take to enable the developed, integrated countries of Europe to open their doors to the supplicant accessor countries. Does the Prime Minister agree that more needs to be done to speed up the process of European decision making?

§ The Prime Minister
The right hon. Gentleman says that the changes were modest. That is true in some senses, but this was an historic summit in the sense that it cleared the obstacles to enlargement. Fifteen countries were arguing their own national interests. For anyone sitting through the negotiations, the idea that national interest is not alive and well in Europe would have been a strange thought.
It is important to realise what has been achieved. All those obstacles to enlargement have been cleared, and, as for the time at which the countries enter the European Union, the reason why no specific date is given to each country—[HON. MEMBERS: "Why?"] I am about to explain why. There is an accession process, whereby the countries must meet particular economic objectives in order to enter. [Interruption.] Conservative Members are shouting that such countries have to meet too many objectives, but I remind them that their leader has just committed himself to blocking the treaty. It is necessary to recognise that those countries will have to meet certain requirements. That is why we cannot give them a precise date, but we hope that they will be there by 2004. Partly at our insistence, they will take part in the next intergovernmental conference in 2004.

§ Mr. Donald Anderson (Swansea, East)
The leader of the Liberal party has honestly recognised a national success that was achieved because we are no longer on the margins, but are seen by our European partners as a full team player. Is it not sad that the Leader of the Opposition cannot recognise such a success and cannot bring himself to say anything positive about the European Union?
Now that my right hon. Friend the Prime Minister has had a change of shirt and is less exhausted, will he tell us how the applicant countries have responded to the Nice treaty? What would be their response if the ratification process in this Parliament were blocked?

§ The Prime Minister
Essentially, those countries were delighted that the obstacles in the way of enlargement, institutionally, have been cleared. They obviously strongly support that—it is hugely important for those countries, often in terms of their own democracy. For them, the idea that they can see a future in the European Union is a spur to economic reform and to making the necessary changes. They would be absolutely horrified—as, indeed, several of them said at the press conference that my right hon. Friend the Foreign Secretary held in 358 Nice—at the prospect of any country, particularly a country with a history, as Britain has, as a friend of enlargement, saying that it would not ratify the treaty.

§ Mr. David Curry (Skipton and Ripon)
The Prime Minister was quite right to agree to the extension of qualified majority voting. That has long been the principal motive of the achievement of British objectives in the European Union. Does he agree that Britain and Germany have increasing common interests—devolved Administrations and, in our case at least, a semi-federal state—in seeking to define what is done by national Government; what is done locally; and what must, but no more than what must, be done internationally? People ask, "Where does it end?" The forthcoming intergovernmental conference gives them a chance to answer that. Will the right hon. Gentleman start work now to ensure that the answer is a convincing one?

§ The Prime Minister
I entirely agree with that. The important thing about this new debate is that it is about the issue of subsidiarity and the definition of the competencies as between the European Union and the nation state. There was a very broad acceptance around the table of the fact that there are areas in which Europe has to co-operate—indeed, co-operate more closely—but that there are also areas in which the European Union does not need to be present. There are indeed areas in which some of its powers could be returned to the nation state. Therefore, that argument is of crucial national importance for the future of this country and of Britain in Europe. As a result of what we have agreed, we should be able to participate in that process. The right hon. Gentleman was quite right to say that Britain and Germany in particular have many interests in common there.

§ Mr. Tam Dalyell (Linlithgow)
What was said about the possible role of the rapid reaction force in dealing with the chaos and murder that is taking place on the Kosovo-Serbia border, the Kosovo-Macedonia border and the Kosovo-Albania border?

§ The Prime Minister
There was a discussion not specifically on that issue but, obviously, on the Balkans and the situation in Kosovo. It is very important for us to make sure that, having fought that war against ethnic cleansing, we do not see ethnic cleansing being visited on Serbs by the other side. We are acutely conscious of that. Of course, Kosovo is not such an example—it is important to say that. The rapid reaction force is not, I repeat, a standing army; it is merely a capability that we should have. It is limited to the so-called Petersberg tasks, which are peacekeeping and humanitarian missions. It would not be used to fight, for example, the Kosovo conflict or the Gulf war. However, it could, for example, be used for peacekeeping operations in circumstances in which NATO decided that it did not wish to be involved.

§ Mr. Tom King (Bridgwater)
May I join the Prime Minister in expressing satisfaction at the opportunity that a number of former Warsaw pact countries have to join the EU, and thank him for the implicit tribute to the Governments of Baroness Thatcher and of my right hon. Friend the Member for Huntingdon (Mr. Major) for the considerable contribution that they made to bringing freedom to those countries?
359 Was anyone surprised by President Chirac's statement that he looked for an independent force? There was nothing improper about that remark. It is consistent with French policy since President de Gaulle took France out of the military structure, since President Mitterrand failed to rejoin it and since President Mitterrand refused at the beginning of the Gulf war to allow French troops to come under American command. Is it any surprise, therefore, that the French have a different objective and that, whatever might have been in the communiquéthere remain very real difficulties ahead?

§ The Prime Minister
It is right—I choose my words carefully—that France comes from a different tradition in respect of such things, especially in respect of attitudes to NATO, but that is precisely why we have made sure that the matter is absolutely bolted down with the conditions that we have stated. Let me explain why it is important that we take part, because sometimes I read that it is simply a matter of politics in the EU. The truth is—this came home to me graphically during the Kosovo conflict—that European defence capability is not nearly as good as it needs to be. It has been a constant plea from the other side of the water—from the Americans themselves—that Europe has to develop better defence capability. I believe that it is important that we develop that in a way that is wholly consistent with NATO. If we had opted out of that debate altogether, that would still have happened. After all, a common defence policy was one of the matters agreed at Maastricht. That would still have happened, but not in a way that was consistent with our proper national interests. As a result of that, it is interesting—I say no more than that, and I am not suggesting that these policies are directly connected—that 11 out of 15 EU countries will this year increase their defence budgets for the first time in many years.
If the proposal is implemented sensibly, it will work in this country's interests. Of course, there are risks, but it is precisely for that reason that we have spent the past two and a half years making sure that those risks do not materialise.

§ Dr. Phyllis Starkey (Milton Keynes, South-West)
Does the Prime Minister agree that the extension of QMV to trade is in the UK's interest? Does he also agree that the cultural exception won for the French film industry is a helpful and imaginative way of improving decision making overall while preserving cultural diversity for the benefit of everyone throughout Europe?

§ Mr. John Bercow (Buckingham)
The people of Buckingham do not write to me about that.

§ The Prime Minister
If hon. Members think that this issue is not an important national interest for France, they are wrong. My hon. Friend is right. Qualified majority voting in trade and services is very important. Obviously, we would have liked that measure to have gone further. We would have preferred even greater qualified majority voting in trade and services, because that would be in our interests, but we have none the less made considerable progress.

§ Mr. Dafydd Wigley (Caernarfon)
As the Nice summit confirmed that both taxation and social security were 360 matters for member states, will the right hon. Gentleman confirm that operating aids, such as the variation of corporation tax or national insurance, within objective 1 areas are a matter for London and the Treasury and not for Brussels, and that he will consider positively the requests made by the Lib-Lab Government in Cardiff in this respect?

§ The Prime Minister
Yes, that is right, although we must always be careful that other countries do not try to use these measures as a means of unfair competitive practice. Subject to that, the right hon. Gentleman is absolutely right.

§ Mr. Dale Campbell-Savours (Workington)
From listening to today's exchanges in the House of Commons, is it not clear that my right hon. Friend and his Foreign Secretary played a blinder in the negotiations? Indeed, they have secured everything for which the Tories asked before Nice. The Tories are now changing their agenda.

§ The Prime Minister
As we have noted before, the bandwagon is a flexible vehicle.

§ Sir Teddy Taylor (Rochford and Southend, East)
Having had the pleasure of listening to several Prime Ministers over the years reporting great victories that sadly have proved to be disappointments, to say the least, I urge the Prime Minister to consider the danger of over-confidence. Is it not the case that we cannot have enlargement of the European Union without fundamental reform of the common agricultural policy, of which there is no prospect? Does he recall previous Prime Ministers and Ministers saying that there will be reductions in our contributions? To allow us to check up on that, will he tell us what he anticipates our gross net contribution will be in 2001 and what it was the year he came to power?

§ The Prime Minister
I do not have those precise figures at my fingertips.

§ Sir Teddy Taylor
Send them to me.

§ The Prime Minister
I will certainly send them to the hon. Gentleman. He says that we have made absolutely no progress on the common agricultural policy, but that is not true. As a result of what was agreed at Berlin, the saving is about £64 a year for the average British family. However, the hon. Gentleman is right that we would have preferred to go much further. He should have the honesty to admit—in a sense he does—that he does not believe that Britain should be in the European Union. He believes that Britain should come out. That is a perfectly honourable position—it is not one that I agree with, but it is an honourable position. I am afraid that it is now obvious that the hon. Gentleman's view is shared by increasing numbers of Conservative Members. That is the real argument that we shall be having over the next few months.

§ Mr. Denzil Davies (Llanelli)
As my right hon. Friend has said, a number of national vetoes, many of which are not very important, have gone as a result of the Nice agreement, and a number of national vetoes, many of which are fundamental, have been retained. Does he agree that the time has now come to draw a line under any 361 further erosion of national vetoes? Will he give an assurance that the national veto will not be on the agenda at the next constitutional conference?

§ The Prime Minister
No, I will not, for a simple reason. The implication of my right hon. Friend's question is that we have suddenly reached a point at which we should have no more qualified majority voting. In my view, that is not the right way to approach the issue. The way in which we should approach it is to say, "There are certain areas in which it is in our national interest to retain the veto, and there are certain areas, which we should judge on a case-by-case basis, in which it is in our interest to move to qualified majority voting."
For example, suppose that we were in the situation at the moment where we had unanimity rather than QMV for agricultural policy—in fact, because of what the Conservative party, which agreed to many, many items of QMV when it was in power, agreed, it is QMV for agricultural policy—that would be an area in which I would be saying that we need to move forward. We mentioned another a moment ago, in relation to the structural fund. Where is in this country's interest to unblock the veto of others.
When people use the word "veto", one would think that only Britain had the ability to veto something. What the veto means is that something is decided by unanimity. If the European Union is extended from 15 to 20, 25, 27 or 30, it means that a country the size of, say, Estonia, Lithuania or Slovakia could block essential British national interests using the unanimity rule. It is not our veto; it is simply a consequence of the unanimity rule enjoyed by everyone.
I think that the most sensible approach is to say, as the Conservative party used to when it was in office—or at least for several years of its time in office—that we judge it on a case-by-case basis. Such matters as defence, our border controls, tax, social security and treaty change must be agreed by unanimity.
One of the statements that I made during our Council meeting was an explanation of why issues of taxation—the levels at which taxes are set—are, in my view, matters of fundamental national sovereignty, which must be dealt with by national Governments and national Parliaments. But there are other areas in which that is not the case. I think that we judge it on a case-by-case basis.

§ Sir Peter Tapsell (Louth and Horncastle)
When our Prime Minister comes back from an important international conference and clowns about at the Dispatch Box in reply to the Leader of the Opposition, as he did today, is it not a clear sign that he has a guilty conscience about the small print that is to follow in due course?
May I pursue the point raised by my right hon. Friend the Member for Bridgwater (Mr. King), a former Secretary of State for Defence? Why did the Prime Minister and his Defence Secretary repeatedly tell the House, and me personally, that France had no aim of creating a rapid reaction force separate from NATO in operational and planning matters, given that in the past two days President Chirac used exactly those words to describe the continuing aim of the French? Is it because the right hon. Gentleman was trying to conceal the reality from the House of Commons, or was he misled by President Chirac in his constituency pub?

§ The Prime Minister
As I just indicated in my reply to the right hon. Member for Bridgwater (Mr. King), 362 I understand that the French come from a different perspective. The difference between us, on this issue and on many others, is that I believe that we should argue our case and make sure that we secure our objectives, which we have done. The hon. Gentleman cannot really argue against that when it is so clear in the presidency report that the red lines that we have put around this should be maintained.
If we do not engage at all in this debate on European defence, it will not stop the debate happening. The debate will happen; Britain will not participate. That, during the last and worst years of the Conservative Government, was their habitual way of conducting diplomacy. The result was that three and a half years ago this country was marginalised and without influence—and that is not in Britain's interest.

§ Mr. Tony Banks (West Ham)
Does the Prime Minister not find it rather sad that the Leader of the Opposition clearly still prefers the handbag and the megaphone to constructive dialogue in Europe?
I congratulate my right hon. Friend on the outcome of the Nice summit. What discussions did he have with Gerhard Schröder on the preservation of the football transfer system, and what was their outcome?

§ The Prime Minister
The German Chancellor and I—and many others, certainly the main footballing nations—are wholly opposed to the Commission's proposals. I think that they are misguided and wrong, and we shall continue to make sure that we get them changed. The transfer fee system is central to the future of many clubs. We do not want smaller clubs, in particular, to go to the wall as a result of a misguided intervention.

§ Mr. John Redwood (Wokingham)
Given that the common fisheries policy has decimated our fishing fleet and the Government do nothing about it, and given that the common agricultural policy has done so much damage to our farmers under the Government and they can do nothing about it, why has the Prime Minister given away our right to our own industry policy? Does he not fear that a common industry policy with our partners, with no veto for Britain, could do to British industry what his Government and their agricultural and fishing policies are doing to our fishing fleet and our farmers?

§ The Prime Minister
As ever, the right hon. Gentleman's opportunism is extraordinary. The fishing industry is in trouble because, as he well knows, there are problems with the amount of stocks in the sea. Everyone knows that that is true. That is why not merely our fishing industry but every fishing industry throughout Europe is in trouble.
Our farming industry faces two problems, which are not to do with the operation of CAP. They are, first, the strength of the pound vis-a-vis the euro. [Interruption.] There is a Pavlovian reaction to the mention of the word "euro." The second problem is that, in the aftermath of BSE, British farmers face very high regulatory burdens. The combination of those two things, plus a collapse in world commodity prices, has meant considerable difficulties for them. That is why their position has changed.
The right hon. Gentleman knows that. I know that. It is absurd to say that the difficulties should be blamed on Europe. They are caused by a combination of the 363 circumstances that I have outlined. The answer is to do the things that we can do at a European level to help: for example, to ensure that the rules on BSE that affect our farmers are introduced throughout Europe. Again, that can be done only if other countries agree. Again, that is an argument for constructive negotiation in Europe, not withdrawal from Europe, which is his position.

§ Mr. Stuart Bell (Middlesbrough)
Will the Prime Minister confirm that the concept of ever-closer union began with the treaty of Rome in 1957; was enhanced when we joined the single market, or the common market, under the right hon. Member for Old Bexley and Sidcup (Sir E. Heath); was enhanced further when Baroness Thatcher took us through the Single European Act in 1985; and was enhanced still further, under the treaty of Maastricht, by the right hon. Member for Huntingdon (Mr. Major)? Has not the Prime Minister done well at Nice on taxation, social security and the rapid reaction force through articulation and persuasion? Has he not impressed our partners in Europe with those tactics, rather than the obduracy or recalcitrance that we might have seen from the Opposition?

§ The Prime Minister
My hon. Friend is right to say that words about closer union were in virtually every European treaty that was signed by the Conservative party in all those years, but his other important point is that there is an argument about the nature of Europe. There are people who see the future of Europe as a federal superstate. I do not believe that they are in the majority; I think that they are in the minority. In either event, it is important for us to participate in that argument. We shall participate in it, advance and win our arguments. I am confident that we can.

§ Mr. John D. Taylor (Strangford)
We on the Unionist Benches want enlargement of the European Union and greater co-operation, but we definitely do not want a federal Europe, or a movement towards a more integrated Europe. To that extent, I can welcome the Prime Minister's statement, but the detail will be in the Nice agreement.
Was the common agricultural policy discussed at all? It is fundamental to enlargement of the European Union. Was there any discussion of the size of the European Parliament—the number of Members of the European Parliament—and, if so, what was the outcome? It is not mentioned in the statement. Does the right hon. Gentleman agree that the Commission will be far too large and that the issue of the number of commissioners has been fudged in his statement?
The question of security causes anxiety to many of us in Europe. Will the Prime Minister explain why he prefers the United Kingdom to co-operate with neutral countries in a European force, rather than with European members of NATO?

§ The Prime Minister
The simple answer to the last point is that I do not. It is perfectly right that we co-operate with European partners that are members of NATO, as indeed we do. We are doing it now in Kosovo, in Bosnia and in many other parts of the world. All European defence does is give an additional string to our bow for limited operations—peacekeeping and 364 humanitarian tasks—in which NATO does not want to become involved. Anyone who studies the history of Bosnia, particularly in the early 1990s, when the United States did not want to become involved, will find that Britain and France struggled in ad hoc co-operation to try to maintain the situation. Thousands of people died as a result. European defence is important as an additional string to our bow.
I emphasise again that—whatever the French position on these issues may be—it is not a standing army and every decision on every mission will be the subject of a national, sovereign decision. Therefore, if we did not wish to participate—even if we were part of European defence—we would not have to participate.
Although the decision on the Commission is a compromise, it is not quite as great a compromise as some people are implying in their comments. Eventually, the decision will be reviewed and the number will be brought back down.
The cap on the number of Members of the European Parliament has been extended by around 40, but that number will apply when the European Union comprises 27 members. I think that, in terms of the ratio of Members to population, the proportion is still relatively good. Therefore, although the cap has been extended, it has not been extended unduly.
The common agricultural policy was discussed at Nice. However, that is a policy matter, and changing policy is the way in which it will be reformed. At Nice, we were primarily discussing treaty change.
I agree with the right hon. Gentleman on his first point—that we want a Europe of nation states and not a federal superstate. I am wholly confident that that argument can be won. However, to win it, we have to engage in it.

§ Mr. Andrew Mackinlay (Thurrock)
I congratulate the Prime Minister on the negotiations. Using his Warsaw speech as a backdrop and checklist, what progress has been made on the other issues that he raised in that speech, such as the possibility of allowing applicant countries to participate in the next European elections?
The Prime Minster has mentioned the important opportunities for British trade and the banking and financial sector, which has been extremely tardy in becoming involved in central Europe. Why have not any of the three Secretaries of State for Trade and Industry since 1997 visited Poland, Hungary, the Czech Republic, Slovenia or Estonia? [Interruption.] It is time that they did so, bearing in mind that one of them went to Australasia, one to South America and one to India.

§ The Prime Minister
In respect of the last point, my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs tells me that he has been to all those countries. As my hon. Friend will know, I have recently been to Poland. However, we shall certainly pass on his point.
What has been called the post-Nice agenda is important for us, because it allows us to mount the arguments on subsidiarity and how to involve national institutions more in the European institutions, which is very important. We also secured agreement—although it was the consensus— 365 that the applicant countries should participate in that process. The text specifically stated that it would not be right for that to be an additional hurdle to enlargement.

§ Mr. Michael Howard (Folkestone and Hythe)
Almost everyone agrees that European defence capability needs to be enhanced; the question is whether it should be done inside or outside NATO. Does not the Prime Minister understand the difference between a situation in which NATO chooses not to be engaged—which are the words that he used today at the Dispatch Box—and a situation in which NATO is not engaged, possibly as a result of the decisions of others, which were the words that he read from the presidency report? Might his failure to understand that difference be one of the reasons why he has led the country into such dangerous territory on the issue?

§ The Prime Minister
I thought that the right hon. and learned Gentleman received a very good response on that from other Conservative Members, which augurs well for the future. However, I hope that he and other right. hon. and hon. Members who have doubts about the matter will talk to those who are engaged in working it out. There is no way in which the force will be a rival to NATO or act in circumstances other than those in which NATO chooses not to be involved. The reason for that is simple: many European Union countries are, like the United Kingdom, NATO members. As I said, in each individual decision, we will all have to choose to be involved. The force will operate only in the circumstances that I have just outlined. The idea that this will be an independent standing force set aside from NATO is nonsense.
The right hon. and learned Gentleman asked whether it was better to develop our defence capability inside NATO. The whole purpose of the proposal is that it will allow us to do that inside NATO as well. That point has been made by our American allies, apart from people such as Richard Perle, who take a different point of view. [HON. MEMBERS: "Bill Cohen."] Bill Cohen did not take the opposite point of view. He said exactly what we have been saying, which is that, provided that the force is not an independent military planning capability and a rival to NATO, its establishment is in America's interest. Countries in the European Union may believe that it should be such a force; we do not. With our American allies and others in Europe who do not share that view, we shall ensure that we succeed. Over the next few months, the final arrangements will be made between NATO and the European Union. Let us debate them again then.

§ Mr. Bill Rammell (Harlow)
Given that the Conservative party has been claiming for months that the Government would be forced to concede qualified majority voting on social security and tax, is it not astonishing that we have not heard a word about that today? Does not the manner in which individual nation states defended what they perceived to be their national interests through the veto this weekend show that we are light years away from the prospect of the European superstate with which the Conservative party is trying to frighten the people of this country?

§ The Prime Minister
My hon. Friend is absolutely right. We protected our national interests in a way that 366 allowed the matter not to become the sole issue of the summit and which prevented us from being painted into a corner. That would not have been in Britain's interests either. We needed to discuss a series of issues, as well as simply to defend our own capability. It is important that we recognise that success.

§ Mr. Peter Brooke (Cities of London and Westminster)
Why does the Prime Minister continue to say that the British rebate under the European Union budget was under threat, when it can be changed only by a free-will decision by the British Government?

§ The Prime Minister
That can be said about all treaty change. The rebate was certainly under threat, because we had to argue for it fiercely at Berlin. The securing of the rebate was done on precisely the same basis, because the Council could not agree the original rebate unless all the member states agreed. I am sorry to have to remind the right hon. Gentleman, but the constant complaint of Conservative Front Benchers—although not the right hon. Gentleman—was that we would sell out on the rebate. However, a couple of days before the conference, they got worried that that might not happen, and changed their tune. They have done precisely the same on tax and social security this time.

§ Mr. Denis MacShane (Rotherham)
Mr. Speaker, before your elevation, you heard many statements from Prime Ministers on treaties and summits. There would always be one or two Labour Members—on the Opposition Benches at the time—who would welcome them. I hope that, before the statement is over, we shall hear one Conservative Member welcoming this historic accomplishment.
Has my right hon. Friend the Prime Minister seen the reports in today's newspapers that the shadow Foreign Secretary's spin doctor was sent to act as a bluebottle in Nice, spreading the unilateral disengagement from European politics philosophy of the Conservative party? Is it right to spend Short money on that?

§ Mr. Speaker
Order. The hon. Gentleman should put a question on the statement. I think that the Prime Minister has got the point.

§ The Prime Minister
I do not think that I need to comment on that, Mr. Speaker, except to say that I gather that the exchanges between my press secretary and that of the shadow Foreign Secretary, the right hon. Member for Horsham (Mr. Maude), were one of the more amusing aspects of the Nice summit.

§ Sir Michael Spicer (West Worcestershire)
Why did the Prime Minister sign up to a new tax which compensates countries suffering from being in the euro?

§ The Prime Minister
I have already explained that we did not. The articles that have been secured make it clear that the so-called bale-out provision cannot be used in respect of the euro.

§ Mr. Roger Casale (Wimbledon)
I congratulate my right hon. Friend the Prime Minister on the agreements reached in Nice in respect of the rapid reaction force, and on making it clear that the new capability will be 367 consistent with our existing defence alliances and complementary with NATO. Is it not further proof of the fundamental lack of judgment of the Conservative party—if further proof were needed—that it chooses to attack the rapid reaction force simply on the grounds that it has something to do with Europe? It has primarily to do with Britain's national defence interests. The Conservative party has demonstrated that it cannot be trusted with our nation's economy, but it will never be forgiven for this demonstration that it cannot be trusted with our nation's defence.

§ The Prime Minister
It might be helpful to read out the words of Senator Hagel, who is the leading Republican senator on the Senate Foreign Relations Committee: America supports a strong and capable Europe. Greater European military capabilities will make the Alliance stronger, lift some of the burden the United States now carries in having to act in every crisis, and make the US-European relationship a more equal partnership. I could not have put it better myself.

§ Mr. William Cash (Stone)
Will the Prime Minister explain why the annexes to the French presidency report, on which most of the questions relating to defence and European security depend, are not yet available in their current form? In relation to the contentious issue of the planning and military intelligence capability of the European Union, as compared with NATO, will he also explain why it says that in developing this autonomous capacity, there must be due regard for the decision-making autonomy of the two organisations? Does that not make it clear that there is in fact a distinct operational planning and military intelligence system? What is the Prime Minister going to do about it—will we have to wait another three months?

§ The Prime Minister
No. The report does not mean that at all. It draws the clearest distinction between decision-making capacity, which is the decision of the European Union—which is a separate body from NATO—and the military planning capability that is to be exercised in NATO. That will become clearer as the eventual terms of agreement between the EU and NATO are worked on over the next few months. In most circumstances, NATO assets will be used, even though NATO as a whole will not be engaged. All of this is being bolted down in the most careful way. It is extraordinary that Conservative Members believe that good members of NATO such as Germany, Holland and Spain, which are utterly and passionately committed to NATO and would not conceivably agree to something that undermined it, would go along with any country, whether France or any other, that wanted to achieve that objective.

§ Mr. Harry Barnes (North-East Derbyshire)
As an enlarged European Union will include a number of ex-communist nations which have been through terrible periods of bureaucratic centralism, it is important that they do not become part of creeping, bureaucratic centralist arrangements in the European Union. Is not the answer to that a healthy dose of European democracy, which goes beyond qualified majority voting?

§ The Prime Minister
I think that issues of democracy are very important to the European Union. Democratic 368 legitimacy will be an important issue for the intergovernmental conference in 2004 to consider. However, I also believe that it is time we recognised that national Governments and national Parliaments are as good demonstrations of our own democratic legitimacy, within the European Union as well as here at home, as anything else.

§ Mr. David Chidgey (Eastleigh)
On the rapid reaction force and defence budgets, the Prime Minister will be aware that the European Union already spends two thirds the total budget of the United States and yet, as Kosovo and other theatres have shown, it has only a fraction of America's capability. The Prime Minister mentioned that 11 out of 15 of the nation states have agreed to increase their budget. Britain is already a major contributor to defence spending in terms of its gross domestic product. Have those 11 nations agreed significantly to increase their budget in line with ours, and is Great Britain to increase its budget as part of the agreement?

§ The Prime Minister
As part of the comprehensive spending review we did, in real terms, increase the defence budget for the first time in many years. I do not have a list, but 11 European Union countries, including ourselves, are increasing their defence budgets this year. That is a big change, because for years they have been cutting them. However, I do not think that it is simply a matter of the amount of money that is spent: it is a matter of spending that money far better and deciding what strategic capabilities the European Union uses.

§ Mr. John Maples (Stratford-on-Avon)
The Prime Minister prayed in aid a statement by Senator Hagel. However, he has misinterpreted Chuck Hagel, with whom I had a meeting last summer. Senator Hagel said that he has considerable misgivings about the development of capability outside the NATO framework, which is what we are talking about here. The St. Malo agreement, which the Prime Minister presumably looked at very carefully before it was signed, talks about autonomous capability. Article 3 says: the European Union will … need to have recourse to … military means … within NATO's European pillar or … outside the NATO framework … Is it not absolutely clear that what has always been intended is that there will be military means available to the European Union on an autonomous basis outside the NATO framework?

§ The Prime Minister
No. Let me try to explain again. In circumstances where NATO decides that it does not want to be involved—perhaps an operation limited to the Petersberg tasks, where America decides that it does not want to be involved, for example, Bosnia in the early 1990s—then the European Union acts, but not with a military strategic capability outside NATO. That is absolutely clear from the documents that we have negotiated. For example, it was not an Under-Secretary from the 1980s, but the American Secretary of State who, just a few weeks ago, said: This EU force will be available to both NATO and the EU, in those cases where the Alliance as a whole is not militarily engaged. It offers a valuable complement to the efforts and capabilities of NATO. 369 The only people who see that as a great threat to the NATO alliance are either those in the Conservative party or—in part as a result of things that those Conservatives have said and that others have written—those who are told that the force is a rival organisation to NATO. Anyone who has studied the matter realises that that is not the case.
The point made by Chuck Nagel and others—as Bill Cohen was saying about a week ago—is that if there is the development of a rival, strategic military planning capability to NATO, then, yes, that would be a threat to NATO. But that is not what has been agreed and, as far as we are concerned, it will not be agreed.

§ Mr. Edward Leigh (Gainsborough)
We are told constantly that we should not be concerned about the European charter of fundamental rights—because it is not subject to the treaties and will not be enforceable by law—but is there not a smidgen of concern in the Prime Minister's mind that the European Court will base its future decisions on that charter? After these summits, we always hear soothing words from the Dispatch Box. Prime Ministers come and go, but the European Court stays and, remorselessly, year by year, our rule of law based on common law and parliamentary democracy is replaced by a rule of law based on a European supreme court.

§ The Prime Minister
The extraordinary thing is that the hon. Gentleman receives so much support from his own side. Presumably he is saying that we should—[Interruption.] If we withdraw from the European Court, we are withdrawing from the European Union. The European Court is there because, in order to police the rules of the EU, we need an independent European Court. That is an advantage for the EU, not a problem.
If the hon. Gentleman reads the charter, he will see that it is specifically declared to be a political declaration and not legally binding. That is why the argument—not in this place, but in the entirety of the rest of Europe—is made by some people who claim that they want it to become legally binding. They make that claim only because they accept that at present the charter is not legally binding.

Several hon. Members
rose—

§ Mr. Speaker
Order. The statement has run for an hour and 12 minutes, so we must move on.