THE EUROPEAN ECONOMIC COMMUNITY

HL Deb 08 May 1967 vol 282 cc1197-300

3.13 p.m.

THE LORD CHANCELLOR (LORD GARDINER) rose to move, That this House approves the White Paper entitled Membership of the European Communities. (Cmnd. 3269.) The noble and learned Lord said: My Lords, to-day we debate a decision of very great importance indeed. It is a decision which the Government have not arrived at lightly or without due consideration. It has been well-weighed, and it has been taken in the conviction that an application to join the European Economic Community, and parallel applications to join the European Coal and Steel Community and Euratom, is the right course for this country to take.

The last time we debated fully in this House the question of our relations with the Common Market, getting on for a year ago now, we were pressed to make it clear that our objective was to join the European Economic Community. I hope that the House will agree that the time since then has been well spent. Her Majesty's Government devoted the summer months and the early autumn to a detailed and extensive consideration of the Treaty of Rome and of the policies and practices that had been formulated under it. We went into the subject in great depth. We then came to the conclusion that the Prime Minister and the Secretary of State for Foreign Affairs should embark on a series of discussions with the Heads of the Governments of the Community countries, for the purpose of establishing whether it appeared likely that British and Commonwealth interests could be safeguarded if Britain were to accept the Treaty of Rome and to join the European Economic Community.

These discussions were detailed, exacting, businesslike and practical. Of course, they were not themselves a negotiation with the Community. And they did not solve the various problems that we foresaw. They were not intended to do that. But the discussions enable the Government to form a much clearer view of the way in which the Community works, and how it has dealt with and overcome the many problems, small and large, that have faced it and its members over the last few years. The discussions thus gave us a better idea of what it would be appropriate and right for us to seek and a clearer understanding of the Community's processes of thought. They encouraged us in our belief that the questions in our minds were far from insoluble; and, above all, that they were not insoluble within the framework of the Treaty of Rome.

As your Lordships know, there are four major areas of discussion to which my right honourable friend the Prime Minister referred last week. They are the agricultural sector, its possible consequencies to the Commonwealth, the field of capital movement and the area of regional policy. Perhaps I may be allowed to deal briefly with each of these in turn. May I take first the common agricultural policy? There is no thought in our minds of overturning it. The policy has been established by the Community countries as a result of a great deal of hard bargaining and give and take. We should certainly not regard it as ideal; and certainly something different would have emerged if we ourselves were given a blank piece of paper and were asked to write out what we thought the nature of the common agricultural policy should be. But we have to be realistic, and, as the Prime Minister said in another place in the course of the Statement reproduced in the White Paper before the House, we recognise that we must come to terms with the policy. But the fact is that the impact on the United Kingdom of the policy, as it stands, and at the level of prices which has been decided upon or, in certain commodities, looks probable, would be substantial.

The House will be aware of the calculation which has been made that the retail price of food in the United Kingdom might be expected to rise by between 10 and 14 per cent., and thus that the cost of living would be increased by between 2½ and 3½ per cent. I do not suggest that these figures can just be shrugged off. They are the best estimate we can make of the possible consequences. But they rest on a number of assumptions. Among them is the assumption that both world prices and Community prices would remain unchanged. If world prices increased as many people think they will, and Community prices stayed as they are, then of course, although the increases I have mentioned would still be likely to take place, they would not be entirely attributable to our membership of the Community. And in any case, they would be spread over whatever transitional period it might be possible to arrange with the Community, so that even an increase of some 3 per cent. in the cost of living would be spread over a number of years.

Again, there are problems connected with the structure of British agriculture. It is our calculation that the net farm income in Great Britain would not be greatly different from its present level. But there would certainly be changes in the pattern of production if the present Community price relationships are maintained; and one might expect increases in cereals production at the expense of other types. We should hope to be able to make suitable arrangements, including an adequate transitional period, to enable the necessary adjustments to be made.

Perhaps the most substantial problem arising out of the common agricultural policy relates to the financial arrangements. As we see it, these arrangements, if applied without change to Britain, would mean that we should be bearing an inequitable share of the cost of financing the common agricultural policy. The burden which this would represent to our balance of payments—estimated, as your Lordships will know, at between £175 million and £250 million a year, at the end of any transitional period—would be a very substantial one, and we have reason to believe that most Community countries at least have sympathy for this position. But the way in which it can be overcome—and we are sure that it will be possible to overcome it by arrangements within the framework of the common agricultural policy—has not been elaborated. Of course, what we are concerned with is the net contribution that we shall be making, rather than with the manner in which it is made.

To turn now to the problems of the Commonwealth. Some of these, of course, arise out of the existence of the common agricultural policy. In particular—and this question was emphasised by the Prime Minister in his tour of Community capitals—we should wish to make arrangements to deal with the question of New Zealand, and with the special problems of Commonwealth sugar-producing countries, whose needs are at present safeguarded by the Commonwealth Sugar Agreement. These are matters with which we shall have to deal in any negotiations. Similarly, in the last negotiations arrangements were provisionally made for the Community to offer Association to dependent territories and to independent African and Caribbean countries within the Commonwealth. We should hope—and again we have reason to think that this would cause no great difficulty—that these arrangements might be carried over into any settlement emerging out of the forthcoming negotiations, together with the offer of comprehensive trade agreements to certain independent Asian Commonwealth countries. We have always said that we propose to safeguard essential Commonwealth interests. We have, of course, been in close touch with Commonwealth Governments throughout the processes leading up to the present decision, and we shall certainly remain in the closest of consultation with them during negotiations.

The House will know of the difficulties that we foresee, arising out of the Community's policy of freedom of capital movement, especially in regard to portfolio investment. We might face a situation in which private investment in this country could be channelled through the Community to other highly developed areas outside the Community without restriction. This, we feel, would be an unjustifiable use of the relatively scarce capital resources of Britain and of the Community at large. And we should certainly wish to discuss with the Community means of obviating this danger. Happily, we believe from the Prime Minister's discussions with the Community that again there should be satisfactory ways of dealing with this situation.

Finally, before the Prime Minister embarked on his tour of Community capitals we had some doubts whether it would be possible to take the necessary steps to ensure the industrial and social development of the less favourably placed areas of this country. We were considerably reassured on this point by what we were able to learn of the policies at present followed by one country or another within the Community; and the general policy and attitude of the Community to the question of development.

There has also been some doubt expressed in the past about the impact of accepting the Treaty of Rome on our sovereignty, on our procedures, and upon the role of Parliament. No doubt your Lordships will expect me to say quite a bit on that subject. In the first place, membership of the European Communities involves the acceptance of a body of law derived from the Treaties. Some of its provisions are required to be given effect to in the Member States by national legislation or other appropriate means. Much of it, however, takes effect directly as law within the Member States. The distinction between these categories of Community law is not always clear from the terms of the Treaties.

Perhaps I should explain here two difficulties which our lawyers have had. First, the Treaties and the Community laws are, naturally, published in French, German, Dutch and Italian. There is not even, again naturally, an authorised English version of the Treaty of Rome. Secondly, we have found that the Community when negotiating among themselves are very fair and very flexible. If a Community law operates unfairly to a particular member, there are a number of cases in which they have agreed exceptions for that member without altering either the Treaty or the Community law. While very sensible, this has not made the lawyers' task any easier.

Perhaps the most notable features of the Treaties are these. First, they provide powers for the Community institutions themselves to issue instruments either binding upon the Member States or taking effect as law directly within them; secondly, the Community institutions have powers to enforce and adjudi cate upon the provisions of the Community law. Thus, membership of the Communities involves a transfer of legislative and judicial powers in certain fields to the Community institutions and an acceptance of a corresponding limitation of the exercise of national powers in these fields. The powers of the Communities to create new Community law are, however, limited to the purposes set out in the Treaties, and these purposes cannot be enlarged without a unanimous decision of all the members of the Community.

Apart from the impact of Community law on our present and future national law, adherence to the Treaties would, broadly speaking, have the effect of transferring to Community institutions our power of concluding treaties on tariff and commercial matters. Adherence to the Treaties would involve a considerable body of implementing legislation. This legislation would include an enactment applying as law in the United Kingdom so much of the provisions of the Treaties and of the instruments made under them as then had direct internal effect as law within the Member States and providing that future instruments similarly took effect as law here. A number of our existing Acts of Parliament would require to be amended.

This United Kingdom legislation would be an exercise of Parliamentary sovereignty and Community law, existing and future, would derive its force as law in this country from it. The Community law so applied would override our national law so far as it was inconsistent with it. Under the British constitutional doctrine of Parliamentary sovereignty no Parliament can preclude its successors from changing the law. It is, however, implicit in acceptance of the Treaties that the United Kingdom would not only accept existing Community law but would also refrain from enacting future legislation inconsistent with Community law. Such a restraint on our legislative system would not be unprecedented. Our legislation often takes account—has to take account—of treaty obligations; for example the Charter of the United Nations, NATO, GATT, the Ottawa Agreements and the Warsaw and Guadalajara Conventions, which your Lordships were considering earlier this afternoon. Further, several Acts of Parliament have reduced for all time vast territorial areas of our sovereignty—the Statute of Westminster and the various Acts of Independence granted to India and other countries. It is the continuing incidence of legislation emanating from the Community institutions that would be without precedent.

There is in theory no constitutional means available to us to make it certain that no future Parliament would enact legislation in conflict with Community law. It would, however, be unprofitable to speculate upon the academic possibility of a future Parliament enacting legislation expressly designed to have that effect. Some risk of inadvertent contradiction between United Kingdom legislation and Community law could not be ruled out; but, of course, we must remember that if we joined the Community we should be taking part in the preparation and enactment of all future Community law and our participation would reduce the likelihood of incompatibility.

Community law would become fully available in the United Kingdom by the publication of English versions of the Treaties and subordinate instruments. The Continental origin of Community law would not necessarily make it difficult to apply in the United Kingdom. The principal matters dealt with are the subject of modern legislation in many industrialised countries, and no difficulty has been found in connection with these subjects in applying the same Statutes to England and Scotland despite the wide differenences between the two legal systems. In the task of applying Community law, the United Kingdom courts would be assisted by the European Court to whom it falls (except in the case of the European Coal and Steel Community Treaty) to give authoritative rulings on the interpretation of the Treaties on references from national courts. If we acceded to the Treaties, we should expect to be represented on the Bench of the European Court.

Community law has little direct effect on the ordinary life of private citizens. In so far as it imposes obligations, it does so mostly in relation to industrial and commercial activities and does not touch citizens in their private capacities. By far the greater part of our domestic law would remain entirely unchanged. Nothing in the Treaties would, for example, touch our criminal law, the onus of proof or the presumption of innocence, matrimonial law, law of inheritance, land law, law of tort or its Scottish equivalent, law of contract (save in relation to restrictive practices), the relations of landlord and tenant, housing, or town and country planning. Nor would there be any reason to expect the creation of future Community law in these fields without the agreement of the United Kingdom, since any enlargement of the powers of the Community to create new law would need an extension of the empowering provisions contained in the Treaties which can be affected only by unanimous consent of all the members.

The main impact of Community law would be in the realms of commerce, Customs and restrictive practices. It would also affect the operation of the steel, coal and nuclear energy industries. So far as the Community law imposes obligations, the sanctions are usually monetary penalties and proceedings for their enforcement are of a civil rather than a criminal nature. An important safeguard for the protection of those affected is that all decisions imposing penalties are subject to a right of appeal to the European Court. Even more important is the fact that the validity of any executive or legislative act of a Community institution is itself justiciable in the European Court.

Finally, may I say that I entirely agree with an observation made by the noble and learned Viscount, Lord Dilhorne, in the Common Market debate in this House on August 2, 1962, at column 420, when he said: I venture to suggest that the vast majority of men and women in this country will never directly feel the impact of the Community-made law at all. In the conduct of their daily affairs they will have no need to have regard to any of the provisions of that law; nor are they at all likely ever to be affected by an administrative action of one of the Community institutions.

I hope that after the Recess it may be possible to provide Parliament with a White Paper dealing at some greater length with the sort of considerations to which I have referred.

I have dealt, at some length, with the problems with which we would need to deal in negotiations with the Community. There will probably be other questions which the Community will wish to discuss with us, such as the international role of sterling, and what some of them see as the possibility of a fundamental change in the nature of the Community if we and some other European countries join the present Six. Perhaps I may be allowed a word on this point. It is of course clear that a Community expanded in this way could not be quite the same as the Community which has existed hitherto. But, of course, the Treaty of Rome does provide for—and indeed encourages—the accession of other members. And we have made it clear that it would not be our intention to change the nature, spirit or workings of the Community any more than would inevitably result from the fact that the number of members had been increased beyond the present figure. We certainly do not have it in mind to enter the Community with the intention of overturning the developments which have taken place; or of frustrating the Community's future development. On the contrary, we wish to enter the Community because we believe that an expanded Community offers enormous opportunities both to us and to its existing members.

From what I have said already the case for going in on economic grounds is by no means clear-cut. I have been at pains to mention some of the apparent disadvantages. Even if these disadvantages are satisfactorily mitigated, we cannot be sure that in the short term, at least, the economic outcome will be favourable. But we do believe that the long-term opportunities opened up both to us and to the Community will be immense. The chance of creating a single market approaching 300 million people is in itself one which we believe that neither we nor the rest of Europe can afford to miss. We have all been conscious in Europe over the last few years of what has come to be called the technological gap. European scientists, European industrialists and European know-how are second to none in the world. What has been lacking hitherto has been the opportunity of applying this scientific knowledge, of applying the technological advance of which we are capable, to a truly integrated market of such a scale.

I was thinking about this last August as I stood in the Parliament Building in Austin, the capital of Texas—which had been for many years an independent sovereign State. And, standing there in a State of which the Governor was kind enough to make me an Honorary Citizen, I remembered that in the 1962 debate the noble Lord, Lord Morrison of Lambeth, said that he had first formed this view about Europe on his first visit to the United States, when he had contrasted what they would have been if they had remained 49 independent sovereign States, all with their own tariff walls, as compared with what they are—the United States.

The fact is that if we are to maintain and develop advanced industries in the world today, we need a sufficient scale of operation to warrant the increasingly heavy initial investment which is involved. Our present home market, even including the markets of our EFTA associates, is about 100 million people. This is scarcely big enough. And an enlarged community would provide a dramatic increase in scale. The gross national product of all Community and EFTA countries taken together is of the order of £166,000 million. This compares with £243,000 million for the United States and about £100,000 million for the Soviet Union. This change of scale could change our entire outlook and prospects, and the prospects for Western Europe as a whole.

My Lords, may I here interpolate that we have throughout been in the closest consultation with our EFTA partners. There was a meeting with them in London before the Prime Minister's tour of the Community capitals began. We reported to them on the progress of the tour up till then at the Stockholm meeting at the beginning of March; and a few days ago we had a further meeting with them in London. Our EFTA partners recognised that if we were to seek membership of the Community this decision would open up new prospects in a solution to the question of European economic integration. It has, after all, always been one of the objectives of EFTA countries to work towards the disappearance of trade barriers within Europe; and EFTA itself was always regarded as a stepping stone on the road to a wider European market. During the meeting in London we also agreed that it would be the purpose of EFTA Governments, should it be necessary in order to give a reasonable opportunity to their partners in the Free Trade area to conclude negotiations, that sufficient transitional periods should be provided for in order to avoid disruption in European trade patterns.

But the economic consequences and advantages of an expanded Community, though important, are not the only, or even the main, reason for the Government's present decision. The need for political unity in Europe is to my mind no less urgent than the need for economic unity. I am not referring to the institutional side of the problem. Just how political unity in Europe will be achieved is a matter for the future. There are divisions of opinion both within the members of the existing Community and in this country as to what the shape of a politically unified Europe should be. And it may be well not to rush this process. On this point I would say that we in Britain have always been concerned that we should be able to play our full part in political consultations and in developing whatever form of institutional arrangements prove satisfactory to us and our partners alike.

But we have in mind something much wider than this. We believe that the great opportunities which lie ahead of us can be seized only if there is a firm basis of political unity in Western Europe. I am sure that in the years which lie ahead a thing which the world needs—and I am not sure it is not the thing the world needs most—is a stable and settled Europe with, I hope, a wide bridge from Western Europe to Eastern Europe; and I do not believe that the world will ever get a stable and settled Europe unless Britain really is visibly in Europe. We ourselves, after all, are a part of Europe. We have been engaged in two major wars as a result of European disunity. We are convinced that our membership of the Community would carry further the process of establishing a firm and permanent peace within our continent. In saying this, we do not leave out of account what is the main division of our continent at present—that between East and West. Much has already been done to overcome the antagonisms which arose after the last war. East and West are already coming closer together; and there has grown up during the last few years a greater realisation of the need for mutual co-operation and understanding. We all recognise that this is not only possible, but essential. We believe that, far from diminishing the chances of an increasing détente between East and West, British membership of the Community, leading to a united Western Europe, would facilitate this process.

Moreover, we believe that a unified Western Europe, able to put out its full economic strength and potential, would be able to contribute much more than its individual members can to what is perhaps the major problem of the world at the moment—that of ensuring the development of other countries overseas. We all know how difficult this problem is, and we all know that it is beyond the resources of one country or any limited group of countries to solve. But we are convinced that if proper progress is to be made it is essential that we ourselves should be able to combine our resources in a general pooling of European effort. Generally, in the world at large, we feel that the proper role for Britain is not one of standing on the sidelines. We should be playing our full part in the development of Europe, in order that Europe can in turn play its full part in the world at large.

We thus see enormous opportunities for Europe, both economic and political, opening up as a consequence of our own membership of the Community. It is with this vision in front of them that Her Majesty's Government have taken their decision, subject to Parliamentary approval, to apply for membership of the Community in the very near future. We have been encouraged by the response we have had so far from our potential future partners in the Community to the announcement made by the Prime Minister last week. We do not close our eyes to the fact that problems need to be overcome and difficulties solved. But we believe that they can and will be overcome, since we do not believe that Europe can afford to let slip the opportunity of developing in this way both in economic and political co-operation. Too many opportunities have been allowed to go by in the past. We in this country have been responsible for missing many. But I believe that the Parliamentary Parties in this country, and the people of this country, wish to see us move forward in the direction which we have now chosen. I hope that, in presenting the present Motion to the House, I can count upon your Lordships' support for the course on which we are at present embarked. I beg to move.

Moved, That this House approves the White Paper entitled Membership of the European Communities.—(The Lord Chancellor.)

3.48 p.m.

LORD CARRINGTON

My Lords, I wonder whether I may start by introducing a slightly controversial note. There are, I understand, 24 of your Lordships are on the list to speak this afternoon. It may perhaps be that your Lordships would agree with me that to put in front of this debate two comparatively unimportant Orders, which were expounded at some length and which took over half-an-hour, was not really very sensible. We have a very flexible procedure. Perhaps at some time we can persuade noble Lords opposite to use that procedure flexibly.

THE LORD PRIVY SEAL (THE EARL OF LONGFORD)

My Lords, may I deal with that point at once? I thought the noble Lord was well aware of the reason. It was understood that the Prime Minister would be beginning to speak in another place at about 3.30, and it seemed a little unwise for us to start our main debate before the Prime Minister began his speech.

SEVERAL NOBLE LORDS

Why?

THE EARL OF LONGFORD

I should have thought most people could understand the reason for that; and I am bound to say I had assumed that this had been arranged through the usual channels.

LORD CARRINGTON

I do not want to press it, my Lords. I must say that what has just been put forward by the noble Earl the Leader of the House is a rather novel doctrine. This is a House of Parliament; and I did not notice that the noble and learned Lord on the Woolsack said anything in his very interesting speech which made it difficult for it to have been said before the Prime Minister rose to his feet. But never mind; I have made the point, and perhaps we can have some talks about it afterwards. At any rate, we have now got down to the Common Market debate, and I do not want to waste any time in talking about procedure.

Your Lordships have listened to a most lucid speech, as one would expect, from the noble and learned Lord on the Woolsack. He has set out very clearly the Government's position, particularly on legal matters, and we shall want to read with great care what he said. Of course, there are a number of questions left unanswered, but I think that is inevitably so at this stage. I do not wish to detain your Lordships for any length of time. On a number of occasions previously we have debated the Common Market, and the advantages and disadvantages of Britain joining it. Most of us made up our minds a long time ago whether we were for it or against it, for reasons which seemed good to us, and I doubt whether anything that any of us say to-day will greatly influence the minds of those who listen to us or the course of events which will unfold in the next few months. Nor do I intend to say anything "Party political". It may be that in the past we on this side, who took the decision some years ago to try to join the Common Market, have not seen eye to eye with noble Lords opposite. But that is behind us. It seems that the large majority of both Parties are now in favour; and that must be added strength in the Government's hands.

As I said on Tuesday, we greatly welcome the Statement made by the Government and they have our blessings in their endeavours. But, of course, we cannot judge whether the timing is right or, indeed, whether the reservations which the Government made clear in their Statement and which the noble and learned Lord repeated this afternoon are the right ones. None of us, at least on this side of the House, knows what happened at the meetings between the Prime Minister and the Prime Ministers of the other six countries. We cannot tell whether he got the impression that circumstances had altered and this was the right moment to make an application, and if so, why. Nor do we know the details of the discussions which took place on the various problems which were outlined by the noble and learned Lord who sits on the Woolsack. We have not been told. Therefore these must be Government decisions. We will support them, but naturally the timing of the decisions and the conduct of the negotiations must be theirs, and theirs alone.

My Lords, it has always seemed to me that there are, broadly speaking, two main arguments for joining the E.E.C. The first is political, the second, economic. So far as I am concerned, I have been more greatly influenced by the political argument than I have by the economic, which is to me less clear-cut. There are, I know, those who sit on both sides of the House who feel, or have felt, that a perfectly viable alternative to membership of E.E.C. is a renewed and strengthened Commonwealth. It would not, perhaps, be too strong to say that some of them may feel that an application to enter Europe is a betrayal of the Commonwealth. I have never concealed from the House my support for the Commonwealth and my belief that, in spite of the very real problems which confront it, the Commonwealth can, even now, evolve into something of great significance, provided that all its members, and not just ourselves, are prepared genuinely to work to that end. But it cannot conceivably be, for Britain, a substitute for Europe.

I think that all of us twenty years ago, when the new Commonwealth emerged and India and Pakistan were formed, felt that perhaps here was the embryo of an organisation which might in the future play just such a part as we see a united Europe might play. But it did not take very long for most of us to realise that this really was not possible. With the independence of the African countries, it became increasingly obvious that the Commonwealth could no longer be considered as an economic bloc or a political bloc in the way, perhaps, that the old Commonwealth had been before the war. It may be that we should have liked to see it happen; but there is no good in pretending any more that that sort of Commonwealth exists, or is likely to exist. The events of the last few years in West Africa, in East Africa and in South Africa and the tension between India and Pakistan have shown the impossibility of that.

In the old Commonwealth, too, perfectly understandable economic forces have loosened the very strong ties which once held us together. Canada has become more and more orientated towards the United States; and Australia, as she becomes economically more powerful, can no longer find markets for all her exports in this country and has turned, in trade and in defence, more to the Pacific area. Therefore, as I say, we can no longer look to the Commonwealth either as a political or an economic substitute for Europe or as a solution to our post-war difficulties. That is not to say that we do not have obligations and residual responsibilities to our friends and allies. I shall say a little more about that later. But more and more all of us, I think, have come to realise that Britain is part of Europe and we are Europeans

One of the most remarkable phenomena since the war has been the rise of Western Europe from the ashes of its destruction in the Second World War. With the fantastically generous help of the United States through the Marshall Plan, but also by the enterprise and endeavours and genius of its own people, Europe has risen from the ruins and is now more prosperous than it has even been before. For the first time in this centre of civilisation, but also in this seed-bed of war and conflict, there has grown up a desire to unite, economically and politically, in a union which, if it remains true to its principles, can have far-reaching and beneficial effects on the world scene.

I am by no means a Gaullist in the sense that a Gaullist believes in the building-up of a Third Force to equal the nuclear capabilities of Russia and the United States and to be a rival to both. I do not believe in that, first because it does not seem to me possible that Europe would either be able or prepared to spend the vast and incredible sums of money on nuclear armoury to rival either Russia or the United States. In any event, it would take many years, even if it were possible, to achieve such a suitation. Nor do I think it at all desirable to do so. In the end, when the chips are down, you are either pro-West or pro-Communist, there is not really any other alternative. What is needed is to bring about a situation in which Europe, because of its political importance, its economic strength and unity, together with no doubt a certain nuclear capability, can influence the two, great Powers. I do not think it is a good situation when Russia and America, by reason of their economic and industrial strength, have the final say in matters of life and death over all of us within our being able greatly to influence events. I shall like it even less if and when China becomes the third major decisive factor.

It is, I am sure, increasingly obvious, whatever other people or our leaders may say, that Britain by herself is less and less able to influence the United States. The run-down of our Armed Forces, whether right or wrong, or inevitable; the dwindling of our bases; the demise of our Colonial Empire; our difficult economic situation—all these have weakened our voice. With our membership of a united Europe, Europe becomes a much more formidable and powerful voice in world affairs. We can ensure that Europe's voice is heard and that Europe's counsel is not ignored.

In saying this, my Lords, I am not in the least anti-American. I have already said that when the chips are down I am pro-American every time. But I do not think that my American friends would find what I have said offensive. They would not be averse to sharing with another like-minded democratic bloc some of the enormous responsibilities which rest upon them. This, it seems to me, is the most pressing reason for Britain's joining Europe; because a Europe which includes Britain can be a potent, an active and a beneficial force in world affairs. And I am old-fashioned enough, and perhaps conceited enough, to believe that with our experience we can bring something important to Europe from which the other Six will greatly gain.

The second argument is economic. It is now generally accepted, I think—and certainly all experience since the war shows that it is true—that size, both in markets and in manufacturing, is becoming increasingly important. It is surely because Russia and the United States have enormous markets on which to base their industry that they are able to move so rapidly in the technological field. And nothing succeeds like success. Technological success breeds more success, and because of that success it is possible to spend vast sums of money on more research and more development.

No country of 50 million people, however inventive and however resourceful, can possibly compete with the giants in that respect; and I have no doubt that, unless we find ourselves a bigger domestic market in some new arrangement, we shall find ourselves slipping further and further behind in the modern skills and research and production upon which an industrial country must rely. No country is more dependent upon its industrial know-how than we are. No country depends more for its livelihood on its exports than we do. No country's standard of life will be greater hit than ours will if we are declining relative to our competitors.

This then, my Lords, is the main economic argument for association with Europe. We shall have a larger market; we shall have bigger groupings; we shall have larger resources. There can surely be no question that this would be of immeasurable advantage to us. But, of course, there are difficulties and dangers in particular fields, most particularly, as the noble and learned Lord said, in the field of agriculture. I have read with great interest the White Paper which the Government produced last week and which sets out very clearly the problems which confront us. The two major difficulties are those of the balance of payments as a result of the E.E.C.'s agricultural and financial arrangements, and the position of the dairy farmer who I think will undoubtedly—unless some special arrangements are made—be in a position less favourable than he is at the present time. Incidentally, if the dairy farmer finds himself in a less favourable position, so also will our beef producers. I know that the Government have special regard to this problem and will be discussing it when negotiations start.

There are no doubt other industries which will be hard hit by our entry into Europe, and I am sure that exhaustive surveys have been made, both before the previous application and now, by the Board of Trade, industry by industry. I must confess that I am not knowledgeable enough to know all of those industries which are likely to be worse hit that others and those which are likely to he better off. Some, I think, are obvious, but generally speaking it is rather difficult for a layman to know these things. I think it would greatly help those of us who are keenly interested in the negotiations to have successive White Papers dealing with other industries and with difficulties which they will encounter if we are successful in our application to join Europe. I would ask the noble Earl the Leader of the House whether he would consider this suggestion, for to be forewarned is to be forearmed, and I very much hope the Government will not try to hide anything either from Parliament or from the country generally. We are all in this together, and the more we know the better it will be.

Then, my Lords, there is (and this was also touched upon by the noble and learned Lord the Lord Chancellor) the question of the sterling area and sterling as a reserve currency. There has been a certain amount of discussion about this, but it would be very useful to us to have a statement from the Government as to their attitude on this vital issue, particularly in view of the known French attitude and the recent speech (I think it was on Friday of last week), by M. Giscard d'Estaing. This problem, it seems to me, figures much more largely than some of us might suppose, and we do not know yet the views of the Government.

The Government have already said that they intend, in so far as is practicable, to safeguard our Commonwealth obligations, such as the Sugar Agreement, but there is one particular Commonwealth country whose whole economic life is at stake in these negotiations. I refer, of course, to New Zealand. My Lords, in some ways the New Zealanders are rather like ourselves, in that they have no natural resources, other than their agriculture, upon which they can rely—indeed, in many ways they are rather worse off, because they have not much coal. Their whole economy has been geared to the British economy, in that such a very large percentage of their exports come to this country, and of course almost all those exports have been in the shape of food-stuffs with an entry free of tariff.

It would surely be inconceivable that we should abandon them to the disaster which would befall unless alternative arrangements were made for them. I hope that no Government would contemplate it, let alone do it. It is, I think, true that the special problem of New Zealand was recognised during the last round of negotiations, and from what has been said this afternoon by the noble and learned Lord on the Woolsack I think that it is the view of the Government at this present time, at the start of these negotiations.

Of course there are a number of other problems, the most difficult, perhaps, being the question of the political arrangements which may eventually arise under the Treaty of Rome: the federal or confederal arguments which have raged and upon which we have been engaged these past years. Of course it is difficult; of course it is a problem; indeed, it is something which touches at the root of the misgivings of many people. But by signing the Treaty of Rome we do not commit ourselves to any particular form of political umbrella, and by joining the Community we have an opportunity to shape future plans and to make our voice heard with our friends in creating an acceptable and sensible framework.

But, my Lords, there is one aspect of all this about which I have one serious misgiving—not that it can be avoided. It is this. If once again General de Gaulle, or France, turns us down (for surely it will be France that is responsible if we are turned down) it may be that there will be a serious psychological reaction in this country. To be "black-balled" twice when you apply for membership of a club is a dispiriting experience. If this should happen—and I pray that it will not—the Government will have to make very clear what their alternative proposals are; they will have to point out to the British people that this is not the end of the world. We must keep a sense of proportion about this. Worse things have happened to us in our long history, and we must set out on a new road, undismayed but determined to succeed and to show our friends, and our enemies, what we can do.

But let us hope it does not come to that. For, my Lords, we are part of Europe. Our background, our civilisation, our heritage, our speech, our manners, our appearance, are all European. I hope that it is not too parochial of me, but I happen to think that almost everything good that man has ever done in every field of human activity has come from Europe or from the descendants of Europeans—and a great deal of what is bad, too. The vision of a United Europe, of France, Italy, Germany and Britain united in common purpose and effort, must surely be something to stir the imagination of even the most phlegmatic and placid of those of us here to-day. What splendid possibilities for the future! What a lost opportunity for us and for Europe if we are deprived of the opportunity of making our contributions!

4.9 p.m.

LORD GLADWYN

My Lords, this is a great day for "Europeans" and it is only natural if we say how pleased and gratified we are that the Government should now have taken the step, and, indeed, taken it in the way, which we have for long been recommending. I fear, however, that as a result of the debate on Defence that we had last week, the Government may perhaps take exception to the expression of such sentiments on behalf of noble Lords on these Benches. The noble Lord, Lord Chalfont, who I am glad to see in his place, said that the Liberal Party were guilty of suggesting that anybody embarking on enlightened and imaginative policies was accepting Liberal advice, a habit which, he continued, enabled the Liberal Party to propose ideal solutions for any problem, however unrealistic … or irrelevant … to current political realities."—[OFFICIAL REPORT, col. 967; 2/5/67.] Well, my Lords, what are we supposed to do when the Government, as in the case of the Common Market, are converted (I do not say converted necessarily by us, but converted by somebody) from virtual opposition to—judging from what the noble and learned Lord, the Lord Chancellor, said today—almost enthusiastic acceptance of something which, to be absolutely fair, has been one of the main planks of Liberal policy for at least ten years? What do we do? Do we apologise for having supported "unrealistic and irrelevant" policies? Do we say that the Liberal Party is staggered by the speed of the Government's conversion? We certainly have not a monopoly of wisdom, but I really think we are entitled to just a little self-praise, though I would not expect the other Parties to join in the chorus. I will say that we are overjoyed that first the Conservative and now finally the Labour Party have caught up—or nearly so—for as regards the possibility of forming some workable supranational political community, the Liberals, though their views are shared by some members of the other Parties, are still as a Party, on balance, in the lead.

Even if the Liberal Party is not allowed to pat itself on the back, I think that I might recall that two all-Party organisations over which I have the honour to preside—"Britain in Europe" and, more lately, the "Campaign for Europe"—have been consistently campaigning for our application for membership of the Community on minimum conditions and with full awareness of the political implications of any such action. It is with this background that I approach the momentous decision of the Government.

What I appreciated in the Prime Minister's explanation was that he did not lay down any "conditions" at all but referred only to the "issues" and "problems" which would have to be solved, somehow, before we could become a member of the Common Market. Nor were these "issues" very numerous. They were essentially only four—namely, those connected with the effect on our economy of the acceptance of the agricultural policy of the Community; those concerned with the special problems of New Zealand and the sugar-producing Commonwealth countries; those concerned with capital movements; and those concerned with regional policies. Moreover, the Prime Minister did not see any particular difficulties in the last two, though he repeated that they were "major" issues.

The only point which was the equivalent of a condition, apart from the Commonwealth points, was, quite rightly, with regard to an adequate transitional period for the adaption of British agriculture to the Continental system of protection, which everybody agrees to in principle. Here, the only subject for negotiation would be the length of the period, or periods. Even the greatest problem of all, which is, of course, the prospective strain on our balance of payments, is going, it seems, to be the subject of negotiation without any pre-conditions. Presumably some compromise on the actual amount which we should have to hand over to the central Agricultural Fund is what the Government have in mind. It is evident, therefore, that our negotiators are going to have a pretty free hand—subject only to the results of the negotiations being approved by Parliament.

This is all as it should be. Nobody in any of the countries of the Six could object to this formulation of our attitude, which, as far as it goes, is absolutely frank and above-board. I myself do not quarrel with it in any way as such and I sincerely congratulate the Government on having, in spite of the obvious lack of unanimity among them as to the advisability of entering the Community at all, produced a document which is an admirable basis for negotiation and to which, in itself, I think no reasonable man could possibly object. In particular, I should like to salute the constant courage and furious initiative of a very remarkable man—George Brown. There is no doubt that his enthusiasm, together with the cool political judgment of the Prime Minister, is a powerful combination, which augurs well for the success of the present initiative.

But could the general approach have been improved upon? I believe that it could have been, on one or two points, and it may be that the Government may see advantage in one or more of these. In the first place, there is no disguising the fact that not only the French but also some others of the Six believe that as a nation, and no doubt through no fault of ours or of theirs, we are too closely bound up financially with the Americans, and that this colours our thinking on many of the great political issues of the day. They may be wrong about this. We may stoutly maintain that they are wrong—and I will come to this when I make my second point—but the suspicions about the financial nexus will probably remain.

Can we do anything to overcome them? Surely, we can do something. The Government might at some convenient time announce—as, indeed, I proposed in my Report to the Western European Union last December—that if admitted to the E.E.C. they would work unreservedly towards the creation of a new European reserve currency. Of course, this would take time. First, there would have to be the beginning of some common European monetary policy, and after that there would have to be some kind of common European monetary authority. This need not necessarily mean the creation of an actual Central European Bank; it might simply be some federation of central banks. I repeat, all this would take time. But if it is really our intention, as we say, to enter into an economic union, we must obviously work towards a common monetary policy, without which no economic union could possibly work properly. Indeed, if we may believe M. Robert Marjolin, a celebrated French member of the Commission, it exists embryonically even now among the Six as a result of their adoption of a common agricultural policy. So far as we are concerned, would it not therefore be wise, as on so many diplomatic occasions, to make a virtue of necessity? It is not necessary to accept the views and the implied criticisms recently formulated by M. Valéry Giscard d'Estaing at a lunch over which I had the honour to preside, to approve in principle the idea of the constitution in Western Europe of a new reserve currency. That is my first suggestion.

My second suggestion is allied to the first and lies more on the political side. I was, I need hardly say, greatly encouraged by the Prime Minister's assertion that: …the Government's purpose derives above all from our recognition that Europe is now faced with the opportunity of a great move forward in political unity and by his subsequent brief analysis of the great advantages to be gained from European political unity in the world generally. I know that the Government—and the noble Lord, Lord Carrington, implied this, too—take the view that the exact nature of this political unity, which they now happily say they desire, is something which they cannot, and indeed should not, define, beyond saying that they will accept as much or as little as other members of the Community accept.

But surely they could express a preference? What is to prevent them from doing that? For political unity, if it is to mean anything, must surely be something more than a mere alliance, or even a confederation of the old-fashioned type. And the real—the over-whelming—advantage of the Community system, so well adapted to the needs of our modern world, is that it provides, on the economic side, techniques which can certainly be used for the gradual achievement of political unity. If we believe this—and I think that most of us do—why should we not say so?

Besides, on the political side, whatever we may now say—and I think the noble Lord, Lord Carrington, drew attention to this—there is, as we all know, a dark cloud on the horizon. It is the possibility of an eventual Gaullist veto on our entry into the Community because, in certain important respects, we are now believed to share an American rather than a European point of view. It is important to realise that some of these apprehensions are felt by other members of the Six, and not only the French. It is not only our attitude towards the liquidity problem (which I have already, in effect, touched upon), but our attitude towards the war in Vietnam, towards NATO, towards a nuclear policy generally, towards the Kennedy Round and towards the Non-Proliferation Treaty: these are all quoted as examples of a non-European attitude which shows that if we are admitted to the European Economic Community it will inevitably be in the capacity of the famous Trojan Horse.

We may think that this is all great nonsense. We may very properly, I think, hold that whatever else we might eventually agree to, we could never accept, at any rate until the whole world situation changes, the idea of a European "Third Force". I entirely agree with the noble Lord, who said that he could not accept this. Still less could we accept the conception of a Europe of entirely sovereign States extending from the Atlantic to the Urals—or even, as some say, from the Atlantic to Vladivostok. But what can we do to prove that if we enter the European Economic Community we should really like to regard world policy primarily from a European angle?

What we in the Campaign for Europe say—and I repeat that this is a non-Party organisation—and what, as your Lordships will recall, I have for so long said in this House and elsewhere, is that we should seek to form a machine in which the great problems of the day should at least be studied from the general European as opposed to a strictly national point of view, and in which, therefore, attempts would be made to arrive at a common European policy. In particular, there should, as we think, be some "European Political Commission", as we call it (it could be called something else, if that were wished) with purely advisory powers, at any rate to begin with, in which independent experts would prepare plans for submission to a Council of Ministers, or even perhaps to some kind of smaller executive committee of the Council the nature of which we are not discussing at the moment.

All I say is that any suggestion tending in this direction would, I am quite certain, go far to prove to our prospective partners, including, I think, the French, that Britain was in no way out to weaken Europe or to merge it in a greater whole, as is sometimes said, but was rather out to discover some means of determining a European will other than the machinery of the old Fouchet Plan, which simply provided for periodic meetings of Ministers or their deputies, all fully armed with national dossiers and surrounded by national civil servants. Rather than try to attempt to give Paris—and this is a dangerous possibility—the impression that they have had a change of heart on all or some of the fundamental issues on which we apparently see differently at the moment (and I can assure your Lordships that the Government would not be believed if they tried), surely it would be better for Her Majesty's Government to nail their colours to the mast of something like a Political Commission—a conception incidentally which (I say it humbly) has on my initiative now more or less been endorsed by the European Movement.

What we can do, in short, is to say that we are fully prepared to put our European allegiance first, provided that some genuinely workable means is provided of determining what Europe really thinks. It is just no good one partner saying "L'Europe c'est moi" and expecting everybody else to go along with him. Why should we not expect everybody to go along with us? It is just as reasonable. In a word, on the political side we should say that we would accept any reasonable means of taking decisions on the political side in common. But we could not tolerate in any circumstances whatever acceptance of any kind of political hegemony.

The third positive suggestion I should like to make is that, again at some appropriate stage, the Government might say, not only that we should for our part of course accept all the provisions of the Treaty of Rome as regards qualified majority voting (and we should have to do that if we signed the Treaty; we should be under an obligation to do so) but that on matters other than those on which it would be necessary to reach agreement before we could sign the Agreement—that is, those matters which would presumably be disposed of by discussions inside the Brussels machine—we would be quite prepared, in the last resort, after the thing has been virtually worked out, to accept any decisions arrived at by the new "qualified" voting procedure which will presumably come into operation as soon as we join. I do not think this is a revolutionary proposal. I think that, by and large, if we did that, we should be quite unlikely to come off second best as the result of any such arrangement: and to propose it would, at any rate, show that we were taking the Treaty of Rome entirely seriously, and might even encourage some of our prospective partners to do the same. That, then, is my third positive suggestion.

My Lords, I apologise in that I have slightly exceeded the time limit of the noble and gallant Field Marshal, Lord Montgomery of Alamein, but the subject, as your Lordships know, is one that is very near to my heart. I hope the various proposals which I have made might be thought to be constructive, and possibly even useful in avoiding the various pitfalls which still lie ahead on the path leading to our entry into Europe. Nobody can say whether we shall successfully avoid these pitfalls. Certainly, unless we can break the back of any preliminary negotiations by the spring of next year, leading to our signature of the Treaty at the latest by the end of 1968, there would be reason to be gloomy. For then, what with ratifications and so on, we should be nearing the end of the transitional period of the Treaty of Rome and entering a pre-electoral period in the United Kingdom. I think that if that happened the whole European idea really might be snuffed out. The only hope, after all, for our European lands is to come together in some real democratic union of a new type, first of all—as I think the noble and learned Lord the Lord Chancellor said—in Western Europe, and then, hopefully, in association with the countries in the East of Europe, which will preserve their personality and their ancient freedom. If this is not achieved, then, whatever General de Gaulle may say or do, we shall all lose both by becoming the satellites of the one super Power or the other. There is, I am afraid, no other future for us. But this is not the moment to be gloomy. Rather, it is the moment to "greet the unknown with a cheer!" There is no doubt, I feel, that the Government, as a whole, are completely in earnest in their desire to join the European Economic Community, and to accept the basic rules and philosophy of that Community. We wish them well. We say: "Tell the Continentals that you speak for a united Britain which truly wants, with them, to break with the past and the appalling and unnecessary wars unhappily associated with it."

4.30 p.m.

THE LORD ARCHBISHOP OF CANTERBURY

My Lords, as this debate has made clear, the issues presented in the White Paper we are discussing are primarily economic issues, and one who is, like myself, a layman in economics must travel warily. But it is certain that if Britain goes into the European Economic Community the effects will reach far beyond economics, into many aspects of our life, some of which have not yet been mentioned in our discussion to-day. Some of these effects will be exciting—and I speak as one who looks forward eagerly to seeing them happen. Some of the effects will be inevitable as a result of our closer participation in Europe; some of them will turn partly upon ourselves and our fellow members, and the part we play in determining what sort of community in the world the European Community will be.

To start with, inevitably the personal links between this country and the European countries will be multiplied. There will be far more coming and going. More of us will know European countries intimately, and more of us will speak European languages. It will be impossible to 'have the mutual involvement on the plane of trade and industry without having it on many planes of culture as well. It will affect our reading, our talking and our viewing. Will it not certainly affect the relations of universities and schools? The outcome is not altogether easy to foresee, but it will reach far beyond what can at once be negotiated or planned. My Lords, I find it a most exciting prospect, and I believe that our fellow citizens will be quick to see how exciting it is if our country enters the European Economic Community.

Of course, it will not be easy. We have been reminded that some of the economic aspects of it may, especially to start with, be painful, but with the promise of much long-term advantage. Nor will it culturally be easy for us. We do not like questioning our self-sufficiency. We do not like learning to speak other people's languages with the accuracy with which we expect them to speak ours. But I believe that we shall both gain and give immeasurably. We shall have a chance of gaining a sense of a European culture in which so much of our own culture was once rooted, as Saxon and Norman and Dane are we. And we shall, or we should, be bringing into Europe something of our own good sense. I think here of the borderland of ideas and politics. European countries often grasp both ideas and politics in doctrinaire and extreme forms. In our own country we tend to grasp the same sort of ideas and politics in forms modified by a rough-and-ready pragmatism and by common sense. Perhaps involvement with Europe will enable this characteristic of ours to have its own influence.

For, my Lords, with our country becoming more truly a part of Europe, we shall, together with the other countries, be heavily under judgment as to what sort of Europe we are trying to make of it. For instance, it must not be a Europe which allows its own growing prosperity to make it unconcerned about the parts of the world where there are poverty and hunger. But that need not be so. A Europe more united in its economic strength will be more able to give help to solving this great, terrible world problem. And, as to peace, is there not a real possibility that the European States, through their involvement with one another, can, and will, reverse their own history by becoming States from which war between themselves can never arise in the future? It is such a Europe, secure in its own peace, which, as the noble Lord, Lord Carrington, said, can so influence the peace of the world by its own identity.

I have left until last the aspect of all this on which I have as a Christian my most deep, indeed passionate, conviction. It is this. The very name, "Europe", speaks of a Christian civilisation of which we are all the heirs, a civilisation now tired, distracted and corroded from within by some of the terrible trends of modern history. And I see the entrance of Britain into the European Community as giving immense opportunity to all the Christian Churches in Europe—Roman Catholic, Anglican, Protestant—without pretending that their problems of unity are yet solved, to act together with a new vigour to rebuild the foundations of faith and morality.

It cannot be a replica of the past, because it is amid the very new conditions of our industrial and technological society that this task has to be done. Again, it cannot be a replica of the past because it is a task in which Catholics, Anglicans and Protestants know that they must work not as rivals but as allies. Something like that was the meaning of my own meeting with the Pope in Rome, in March of last year, and my more recent visit to Bec and Rouen and Paris—no more than a little piece of service to a tremendous cause. I am sure that the proposals which we are debating to-day will, if they are carried into effect, give great new scope for the Churches on the Continent and in this country to help one another in the great task which I have described.

4.38 p.m.

LORD CACCIA

My Lords, I should perhaps declare an interest or, if not an interest in the terms normally used in your Lordships' House, at least an involvement. I was Permanent Under-Secretary at the Foreign Office during the last application for our entry into the Common Market, as was my predecessor, Lord Inchyra. He, unfortunately, cannot be here to-day, but has asked me to speak for him as well as for myself in adding our modest welcome as individuals from these Benches to those of the Party Leaders for the White Paper entitled, Membership of the European Communities.

With respect, it was right in form and substance, in its faith and vision, as well as in its down-to-earth realism. The major issues about which there are difficulties were not swept under the carpet; nor were they exaggerated. They were put in proportion and set out, and they have again been referred to to-day by the noble and learned Lord the Lord Chancellor: agriculture; the budgetary and balance of-payments implications; Commonwealth issues; New Zealand; sugar; regional policies and capital movements.

The Prime Minister had also the problem that beset the Conservative Administration, of addressing two audiences, one at home and the other overseas. In my view, both should have been well satisfied with the terms now published in this White Paper. Having made my position clear in general I wish at this moment to confine myself to two points about this negotiation, as a negotiation. We should not underrate the contribution which we can make to an enlarged Community in many ways, not least those mentioned by the most reverend Primate. Equally, we should not despair if, despite our efforts, we do not succeed in this grand design.

May I elaborate briefly on these two things. On the first, I do so as we are apt nowadays to indulge in an orgy of self-depreciation. In this vein, some talk as if we were a pauper asking for charity from the Community, and thus that we should beg leave to join without any attempt to ensure that the Six make adjustments on major issues. Such an approach, even if well meant, would surely be wholly misguided. It would hardly carry conviction because the scarce disguised intention would be to try to obtain adjustments once we had been let in. What is more, negotiations between States on great matters are not to be conducted, as one of our national newspapers suggested that this affair should be conducted, in the language of love or, in the way they put it, "the normal love talk that leads to a marriage". They are and should be mutual arrangements of convenience and profit. They can still encompass great ideas. A sloppy sentimentalism, a sort of Nordic Schwermerei is not the way to success in this enterprise. One only need imagine for one minute what would be General de Gaulle's Gallic reaction. As in an insurance policy, the small print can be vital for both sides. This has always been the attitude of the Six themselves. Witness the number of times their Ministers have been ready to sit up negotiating into the small hours of the morning.

My Lords, I am not by any means advocating a vain-glorious or cheese-paring approach. For myself, in civilised negotiations as well as civilised conduct I prefer modesty, or, if you like, the rules of propriety in old China. One spoke of one's "humble family", one's "humble house" or one's "humble hospitality", and so on. But this was on the understanding that your interlocutor referred to all these things as "honourable"—your "honourable" name, and so on. Both sides could then be satisfied and there was no question of one-sided self-abasement. Nor should there be, now, for us, in pressing for adjustments in major issues, as I note the Prime Minister intends to do.

I am equally glad to note that there is no hint in the White Paper of our giving prior engagements about our attitude to third parties, particularly the United States of America. The Six themselves have not as yet worked out any specifically united European policy in defence or foreign affairs. It would strike me as grotesque if we were to be asked to make any prior commitment to one or more of the existing Community when they have none towards each other. These are things to be settled after, and not before, our joining, and when we can play our true and full part. Let us hope that we succeed, that the will and vision among the Six is as strong as that expressed in the White Paper. We shall see.

If we do not in the end succeed—and this brings me to my second point—there is no need to consider ourselves devoid of any other resource, like an orphan in the corridors of power. I would choose The Times leading article on May I to illustrate this point and show why I am personally more scared, sometimes, by many of the friends of the Community than I am by the outright opponents. Let me take two phrases. There is, wrote The Times:

no realistic alternative to joining Europe. That is false argument and feeble negotiating. It is a false argument because against our wish we may again be refused entry. The "realistic alternative" may be exactly this and we shall not exorcise it by making believe. It is feeble negotiating because it gives our interlocutors little or no incentive to come any part of the way to meet us, even on major issues.

Let me take another phrase, that to join would bring to an end a dismal period of British history". That, to my book, is bad history and, again, feeble diplomacy. It is bad history, in the first place, because in my judgment we have exerted, and are exerting, a great deal more influence in favour of law, order and contract in the world than our strict military or economic weight would warrant. It is also bad history in suggesting that during this post-war period large Powers have got more of what they wanted politically by virtue of size. Have they, despite all their wealth and overkill, capability? I doubt whether it has seemed like that to them, and I myself should think that President Johnson, for one, would be extremely pleased if he could mark up for the United States the successes that we have had in South-East Asia.

What is perhaps more germane to this debate is my further doubt whether we are not deluding ourselves if we talk as though the mere act of joining will of itself enable Europe to speak with one voice, and so, in The Times analogy, to deal with the great continental Powers "on a footing of equality". Whatever that means about the Great Powers, or is supposed to imply about the footing on which we should deal with other Powers, I have no idea. But if it heralds a sort of Third Force proposal I should be as much against it as the noble Lord, Lord Carrington, and for exactly the reasons that he set forth. May I repeat, I am in favour of this initiative, but uncomfortable about some of the arguments—I would say illusions—of its would-be supporters. Indeed, just because we may not succeed I hope that careful thought is now being given to what may be the next best course, and I should welcome anything the noble Earl the Leader of the House may be able to say on this, about which the noble Lord, Lord Carrington, has also asked.

Other possibilities have been mentioned besides "going it alone". There is EFTA—and we need not belittle that. It has had, within its limited range, great successes. It is also European. I agree that it covers only 100 million, but 100 million is not nothing; and we have not been driven out of Europe if we can retain that. Also, on this basis it has been mooted that there might perhaps be a trading association of EFTA with the Atlantic Powers, or such an association with selected Powers, to include Australia and New Zealand as well as Canada: this with or without the United States and Japan, at least in the first stage. I say this not at all to take our eye off the main game, the preferred choice, but to ensure that if we are again refused entry the Government will at least not be left breathless with nowhere to go. Once again let me say that from a negotiating point of view it would help, rather than otherwise, if the Six knew that we should face the realistic alternative to our rejection with fortitude and resource.

In conclusion, my Lords, may I return to the simple and single theme with which I started, my welcome for the White Paper of May 2 and its balance? The fine print does matter. But so, of course, does the design, and it seems to me to be fully consonant with the new world in which we live, and have lived since the war. As the noble Lord, Lord Ritchie-Calder, rightly emphasised, in a pungent phrase to your Lordships on April 25 (and with his permission I should like to repeat his words) a new Age began in 1945: the Atomic Age, followed by the Computer Age of cybernetics and automation, by the Space Age in which man first broke the gravitational forces of his planet; and the D.N.A. Age, perhaps the most portentous of all.…"—[OFFICIAL REPORT, cols. 477–8.] The Prime Minister's statement is, in my view, worthy of this new horizon, and I would respectfully wish him well in seeing it, and all of it—yes, warts and all—through to a successful conclusion.

4.50 p.m.

LORD BALFOUR OF INCHRYE

My Lords, at the time of the last negotiations I spoke in your Lordships' House in some detail—I trust not at undue length—and campaigned outside in opposition to the entry of Britain into the Common Market. It is usually a very sterile operation for oneself and rather boring for others to look back upon one's own particular words, but I must restate what I said on August 2, 1962. I then said: There is a balance of considerations that will decide whether we do or do not enter the Common Market."—[OFFICIAL REPORT, col 454.] Those words still apply. But I must say now that I feel the balance of considerations is on the side of the policy the Government are following, and I believe that change of view may be shared by others who had very genuine doubts about our proposed course of action five years ago.

Since 1962–63 much has happened. In Defence, in the cause of the Atlantic Alliance we have to draw closer to Europe. I need not elaborate that beyond one sentence. In politics it seems to me the Commonwealth has been transformed. Independence, the clothes of independence, have been granted to every old colonial territory that has asked, with the exception, I am afraid, of Rhodesia; but we are certainly not debating that this afternoon. In trade, the economic development of Commonwealth trade shows increasingly little regard for the traditional patterns of the past. I will not weary your Lordships with figures, except one set: in 1962 the Commonwealth took 45 per cent. of our exports: in 1966 I think it was between 23 and 24 per cent. The preferential system has diminished in importance.

Australia now has Japan as her biggest customer. Canada depends less and less upon the export of her agricultural products and has become an industrial nation spreading itself across the markets of the world. New Zealand, true, still presents a special problem which Her Majesty's Government have undertaken shall be treated specially. The new independent territories pay scant regard to old lines of trade, feeling that their interests must be dictated by self-interest, wherever that may lie. It is for those reasons that I have altered my view—an alteration, as I say, which I believe many others who thought like I did share to-day.

Having said that, may I say that we cannot crawl into the E.E.C. on all fours, patronised and humiliated; but we apply honestly and sincerely. I know that certain conditions must be met, conditions which the noble and learned Lord on the Woolsack enunciated with great clarity. It is no good starting out in negotiations with the idea of failing, but if we do fail let me re-echo what the noble Lord, Lord Carrington, and the noble Lord, Lord Caccia, said—and I once more refer to 1962, when I said: If we do not go in it is not disaster; there are alternatives. Those words applied then and they apply to-day. Having said that, I wish well those who are to carry the responsibility of negotiations and trust that our essential interests will be safeguarded in a determined manner, and I think the negotiations will succeed.

4.55 p.m.

LORD KAHN

My Lords, I venture to begin with an observation arising from the lucid exposition of the constitutional issues by the noble and learned Lord on the Woolsack. He referred to the obligations of this country as a member of the United Nations, NATO and other international organisations. With respect, and subject to correction, I venture to suggest that the Treaty of Rome differs in one important constitutional respect from the instruments creating those other international organisations, in that it contains no provision for withdrawal by a member.

I wish to confine myself to the economic aspects of the European Economic Community. It is, after all, called an "Economic" Community, though in the Preamble to the Treaty of Rome there is a reference to: strengthening the safeguards of peace and liberty". I am not going to touch upon the political aspects, even though the Prime Minister has stated that it is the political argument which can be decisive. I do not at all understand—I find myself unable to understand—the Government's political arguments, in spite of the help given to me this afternoon by the noble and learned Lord on the Woolsack, and, in a noteworthy statement, which if I may say so seemed for a statement on this subject to be unusually clear, by the noble Lord, Lord Carrington.

In a recent speech the Prime Minister said that he believed that the entry of Britain into the Community would create an élan of its own. I have great difficulty in attributing meaning to such a statement. It is typical of the mystique which surrounds this whole subject. One thing seems to be clear, and is admitted usually by the Government, though not with the use of the further Gallic word I wish to use; we are warned that if we join we must be prepared for several years of malaise. How the difficulties and tribulations of the transition period can be reconciled with the promotion of economic growth I simply fail to realise. But this is one further failure on my part, and I am afraid your Lordships are going to have to accept some further ones before I sit down.

On the industrial side what really is at stake? We are told that these issues cannot be quantified. But one thing can be quantified—the height of a tariff on a particular commodity, or, as I shall quote some averages, over a particular field of commodities. I am going to exclude from the figures I wish to quote agricultural products, raw materials and energy. I wish, subject to that, to give the figures for the present E.E.C. External Tariff. First of all, on capital equipment it averages 11.7 per cent.ad valorem; on semi-finished goods it averages 10.7 per cent; on other manufactured goods it averages 14.4 per cent. These figures, regarded as averages and subject to the defects of averages, represent the obstacles which we would avoid if we joined the Common Market. I must also mention the corresponding figures for the United Kingdom tariff. On capital equipment, on which the E.E.C. averages 11.7 per cent., the United Kingdom averages 19.4 per cent. For semifinished goods, the figure for the United Kingdom is 18.0 per cent. against the E.E.C. average figure of 10.7 per cent.; and for other manufactured goods, 20.4 per cent. for the United Kingdom, against the E.E.C. external tariff on the average of 14.4 per cent. Membership of the Common Market would mean abolishing these relatively rather high United Kingdom tariffs against the goods of the other members of the Community, a somewhat one-sided arrangement on the face of it. It would also mean vis-à-vis nonmembers of the Community reducing the relatively high United Kingdom tariff to the lower E.E.C. external tariff.

These tariff walls, for which I have quoted average figures, were due to be lowered in the Kennedy Round. Whether they now will be appears to be doubtful. Incidentally, in another place on November 10 last the Prime Minister said: The attitude of many people in this country towards the E.E.C. will depend to a considerable extent on the degree to which the E.E.C. proves itself outward-locking; by a forthcoming attitude on the 'Kennedy Round'".—[OFFICIAL REPORT, Commons, 10/11/66, col. 1547.] My general contention is that what is at stake on the positive side is not all that large and it is usually offset by larger offsets on the negative side. Of course, these averages which I have quoted conceal big differences, and these differences naturally run in both directions. Motor cars are a case where both the E.E.C. external tariff and the United Kingdom tariff are high. On the other hand, on optical and scientific instruments, the United Kingdom tariff ranges from 25 to 50 per cent. compared with mostly 13 per cent. for the E.E.C. external tariff. I am prepared to be told that electronic computers are an exception. I wonder, however, when it is a question of such things as electronic computers, whether relatively modest tariffs are the main issue.

This leads me to invite the noble Earl the Leader of the House to tell your Lordships, perhaps using more precise language than is used in the Statement made by the Prime Minister in another place and reproduced in the White Paper now before your Lordships' House, what is meant by an integrated strategy for technology, on a truly Continental scale. What has hitherto stood in the way of such a strategy? How has it been possible for Britain and France to co-operate over the production of aircraft? Has such cooperation been hampered by the fact that the United Kingdom has not been a member of the Community? One final question on this issue: If we were to join the Community, what would be the implications for technical co-operation between this country and the United States? The answer may be that it is all a question of these tariff obstacles to which I have referred.

Whatever the answer, I would beg leave now to address a further question to the noble Earl; namely, has there been any recent initiative on the part of Her Majesty's Government to secure a Free Trade Area embracing the members of the E.E.C. and EFTA? Would not such an arrangement give us all the advantages which are claimed for membership of the Community, and avoid all difficulties and problems, especially those associated with the intensive agrarian policy which is contrary to our beliefs and to our interests, as well as contrary to the interests of many other countries with which we are concerned—and avoid our being forced to adopt methods of controlling the economy which, notwithstanding the Government's change of attitude on July 20 last, must be regarded as obnoxious to many people in this country?

I turn to a different topic. We are told that on account of the rise in the prices of food that would follow membership of the Community by this country, the cost of living might go up by 2½ to 3½ per cent.—in other words, by 2½ to 3½ per cent. more than it would go up over the relevant period anyway. An attempt is made—it was made today by the noble and learned Lord on the Woolsack—to minimise the seriousness of this rise in the cost of living, by the device of phasing-out. A rise of 3½ per cent. spread out over seven years means a rise of only one-half per cent. a year over and above the rise that would occur anyway in each of these years.

But, my Lords, if we are asked, as we are, to look ahead several years in order to appreciate the advantages to be derived from membership of the Community, we must also look several years ahead in appreciating the detriments. This is what I should like now to do in relation to the position of the poorer citizens of this country. First of all, for such persons the cost of living, if it rose by 2½ to 3½ per cent. on the average for wage-earners, would rise by considerably more. As is pointed out in another White Paper, bread would rise by more than the 10 to 14 per cent. average rise in the price of foodstuffs, and that average is kept down by the prospective fall in the prices of fruit and vegetables. The poorer families of the country, especially the large ones, consume relatively large amounts of bread in relation to their incomes, and would benefit relatively little, by reason of their poverty, from a fall in the prices of fruit and vegetables. More generally, the poorer families, especially the large ones, spend on food a higher proportion of their income than, on the average, do wage-earners.

This is not all. The Government have left entirely out of their appreciation the consequences of substituting over a period of years a new system of indirect taxation for our present one. Article 99 of the Treaty of Rome deals with harmonisa tion of legislation concerning turnover taxes and excise duties. It is true that under this Article the proposals which the Commission have to submit to the Council require unanimity on the part of the Council for their adoption. Furthermore, under Article 100 the Assembly and the Economic and Social Committee may have to be consulted. I shall be indicating in a moment that the Council have already gone far in agreeing in general terms, on the recommendation of the Commission, to ultimate harmonisation. Detailed proposals still have to be worked out and submitted to the Council for approval. If we joined, Her Majesty's Government might try by moral suasion to modify the attitudes of the Commission and of the Council. It seems to me unlikely that they would succeed, in view of the extent to which the Council are already committed on general principles. Also, it seems to me highly unlikely that Her Majesty's Government, representing a junior member of the club, would wish to exercise their power of veto, under Article 99 of the Treaty of Rome, against application of broad principles already agreed to before they became members.

The main principle is the ultimate abolition of the need for countervailing tariffs and drawbacks on trade between member countries. This is made clear in an instrument issued by the Council on April 11 relating to turnover tax. I have to rely on a German text, and I will content myself with a few references without attempting any literal translation. It is made evident that harmonisation means not only the adoption of the value-added tax but the eventual adoption of the same rates of tax throughout the Community. There can be different rates on different classes of goods, as there are to-day in France. Complete exemption is, however, frowned on. The tax is to apply to services, and ultimately to retail trade. Agriculture is to be the subject of separate recommendations by the Commission. This will mean that a wide range of commodities largely consumed by the working classes of this country, and therefore now exempt from our purchase tax, would ultimately become subject to value-added tax. The Council's instrument to which I am referring recognises that harmonisation of turnover taxes will have substantial budgetary, economic and, indeed, social consequences.

Even more serious is the likelihood that ultimately we shall have to bring our taxes on alcohol and tobacco down to European levels. We are told in a recently published report by a committee of the Confederation of British Industry that Excise duties are currently being studied by the Commission and that proposals for the harmonisation of tax rates on alcohol and tobacco will be introduced at some stage. Last year in this country taxes on alcohol and tobacco yielded a revenue of £1,700 million—one-half of the total Customs and Excise revenue, and a considerable contribution to the total taxation revenue of the country, which amounted to £9,400 million. I do not want to dwell on the medical and moral aspects. But our tax structure, in which taxes on alcohol and tobacco loom so large, was designed partially with an eye on considerations of social justice. The married couple who are poorly paid, and who are concerned about the welfare of their children, are free to save substantially on beer and tobacco. When the ultimate objective of the Community is achieved, such restraint, if we became members of the Community, would offer little contribution to solving the problem of poverty, and those who have been practising it would be badly hit by having to pay value-added tax on other commodities in place of Excise duties on alcohol and tobacco from which their restraint has been exempting them.

Obviously, my Lords, I have covered only a small part of the ground. There is the balance-of-payments problem—which, in my opinion, is seriously understated in the Government statements—with all its multifarious manifestations. There are many other reasons, some of them concerned with the interests of distant countries, why I feel strongly opposed to the Motion before your Lordships' House.

5.15 p.m.

LORD CHAMPION

My Lords, the noble Lord, Lord Kahn, has introduced into this debate a very welcome note. Up to now, everyone has been in favour of going into the Market. The noble Lord has now told us the reasons why we ought not to join. He has submitted the economic arguments used to support the application to enter E.E.C. to a searching expert examination, and I regard this as being particularly valuable at a time when we mostly tend to use platitudinous phrases about the important decision which Parliament is about to take. Therefore, for myself, I will certainly need to study his speech and everything behind it before finally deciding; although my mind is nearly made up on which side I shall be voting if we have a vote tomorrow night.

On January 14, 1963, General de Gaulle said: Britain, in effect, is insular, maritime and linked by her trade, her markets and her suppliers to a great variety of countries, many of which are distant ones…The question is whether Great Britain can at present place herself with the Continent, and, like the Continent, inside a truly common tariff, can give up all preferences in regard to the Commonwealth, can cease claiming that her agriculture should be privileged, and still more can consider null and void her undertakings towards the countries which formed or which form the free trade area. There lies the whole question. It cannot be said that it is at present resolved. Will it be one day? Obviously, England alone can answer. It seems to me that in about 130 words, General de Gaulle summed up the problem we are facing to-day and the challenge we have to meet if we are to enter the Common Market.

Perhaps because of something in my background, I am particularly interested in his question: can we cease claiming that our agriculture should be privileged? In other words, can we fit into the structure for agriculture already devised and projected for the Six? Can we do just that without inflicting much hardship upon certain sections of our farming community? If I could bring myself to think of our application only in terms of our farming community, I should tomorrow be voting against the Motion which appears on the Order Paper. I would do this because there has been built up in these post-war years in this country a system peculiarly suited to our agricultural conditions—a system which has undoubtedly worked extraordinarily well, and which has brought to agriculture a prosperity undreamed of in the pre-193–45 years, and which has at the same time secured for the consumer cheaper food than in most of the countries of the world, the architect of which was the man whose memorial service many of us attended this morning, Tom Williams, the man with whom I had the joy to work in the Ministry.

The White Paper sums up the examination of the general effect on British agriculture, under the regulations at present prevailing and projected, in a sentence which reads: On the assumptions made in this Paper the aggregate net income of the industry might be expected to be at about the same level as if we were outside the Community. I do not doubt the validity of that conclusion. Neither do I doubt the ability, the efficiency or the enterprise of the British farmer to compete with his opposite number on the Continent. Indeed, I think we shall be starting from a higher level of efficiency generally than is to be found elsewhere in Europe.

But that overall statement about aggregate net income cloaks what appears to me to be the simple fact that the rich agricultural areas of this country will become richer, and the poor areas will become poorer. The great arable counties, and, to a lesser extent, some of the best grazing counties will come out even more prosperous than they are at present. But unless we are very careful there will inevitably be a desertion and a dereliction of the areas already most difficult from the agricultural point of view.

In this connection, I think of the hill lands of Wales in which I am particularly interested. I think, too, of the small farmer everywhere, struggling along with his reliance on the monthly milk cheque. It is easy to say that he must adapt and provide the graziers and the feeders with store cattle, which the higher prices for beef and the falling off in the supplies of stores from Ireland will demand. But somehow that adaptation will have to be achieved and, in the long run, it may be an excellent thing, for I have long been convinced that many of these farms which are at present producing milk can do so only because the price of milk is maintained at a level which hides and covers the high transport cost. In the short run, there are going to be tremendous difficulties of adjustment which will have to be faced. We must do everything in our power to ensure that the capital is found to help these people of whom I am now talking to make that adjustment which will be vital, if we are not to get the desertion and dereliction which I fear of some of these areas.

The problem of milk prices and supplies is going to be one of the biggest headaches of our negotiators. With the lower prices prevailing in the Common Market coupled with higher feeding costs there will be a mad scramble by those who can to get out of milk production and into something else. But clearly this will not be possible—certainly not into cereals—in the areas of high rainfall; it would be a tragic mistake to attempt it. The authors of the White Paper were right to tell us that we shall have to face possible shortage of supplies of liquid milk in the winter months, and perhaps in the more favourable months as well. The Common Market is geared, fortunately for us, to milk products rather than to liquid milk, and this will be our strongest bargaining counter in the negotiations which will be taking place.

That there will have to be tough negotiations is made abundantly clear in the White Paper and in the Prime Minister's Statement on Tuesday last. But I am more than a little disturbed by the sentence in his Statement, repeated this afternoon by my noble and learned friend the Lord Chancellor, which reads: As I have already made clear publicly, we must be realistic and recognise that the Community's agricultural policy is an integral part of the Community; we must come to terms with it."—[OFFICIAL REPORT, 2/5/67, col. 845.] Come to terms, yes; but we must not swallow it holus bolus. It seems to me that the transitional period must be a very long one, unless the hardships imposed on some sections of our agricultural community are going to be too great for our people to stomach. Some agonising structural changes will have to be made. True, that will also apply to much of the industry of the country and we must not shut our eyes to that fact.

It is sometimes claimed that though our food will be dearer, the taxpayer will be relieved of the subsidies at present paid to the agricultural industry, and that in course of time we shall be able to dismantle the vast machinery built up to administer those subsidies. There is something to be said for that; but if we are to be relieved of those subsidies only to find ourselves levying our vast imports of food and paying most of the sums collected into the Agriculture Guidance and Guarantee Fund, to get back perhaps a small contribution to aid our hill and marginal farmers, then the net result will be a huge loss to this country.

This, too, is a problem which we must somehow face. It is a problem because, clearly, the import of food into the Six is trifling by comparison with the import of food into this country. I was glad to hear my noble and learned friend the Lord Chancellor say that he thought the problem could be solved by appropriate adjustments within the terms of the existing Common Market regulations. I hope he is right, for if these problems are not solved there are going to be tremendous difficulties experienced by this country because of the facts which I have mentioned.

All this very brief and certainly incomplete review of the agricultural position vis-à-vis the Common Market leads me to the point at which I am bound to say—to use a phrase coined a long time ago in this connection—that we must not crawl in on our bellies. Having said that, I must go on to say that, because of the advantages which I feel will accrue to this country and, not less, to the Continent of Europe, we must be prepared to make considerable sacrifices to join. Politically, it is nonsense for us to remain a little offshore island, centre of a Commonwealth of which so many members turn more and more to the United States of America or in upon themselves. It is an unpleasant thought that this is happening, but it is one of the facts of this century and we simply have to face it, although we hate the thought of it.

Economically, the advantages of the larger unit—a unit combining resources which, properly used, could result in closing the technological gap, which is at present a growing one, between Europe and the United States of America—are obvious to us all. Here I do not accept completely what the noble Lord, Lord Carrington, said. I believe, too, that it might have the effect of halting the brain drain. Politically and economically, I believe that an enlarged Common Market with Britain as part of it could result, properly and intelligently led by the best brains to be found in all Europe—and all the countries have brains which they can contribute to this—in a Europe capable of bringing up the standards of the great underdeveloped countries. I support what the most reverend Primate said about that. We shall have a chance, I think, of making a greater contribution towards a lasting world peace, and I believe that we shall be making an advance which is essential towards a World Government. For the reasons that I have given I shall probably vote for the Motion to-morrow night, but I reserve my position, as I am sure many other noble Lords will, until such time as we see the result of the negotiations which now have to take place. In conclusion, I believe, with the noble Lord, Lord Carrington, and the noble Lord, Lord Caccia, that if we do not go in this country can survive on the qualities which it has always shown.

5.30 p.m.

LORD CLITHEROE

My Lords, I am very glad to follow my old friend Lord Champion, who has made such an admirable speech. I should like to thank Her Majesty's Government for the two White Papers that have been produced, and particularly for the one on agriculture, which has obviously been prepared with so much care. They form a useful basis for discussion, but they leave very many important questions unanswered—and some, perhaps, unanswerable. When all the leaders of all the Parties recommend a course of action about which I have some serious doubts, I feel it is my duty to express them and to ask some questions.

For forty years, except during the war when I was in the Government, I have been deeply engaged both in business and in agriculture, and I want now to declare many interests, some of which are in conflict. I am not going to deal with the timing of the application nor with the constitutional problems, which the noble and learned Lord the Lord Chancellor set out so clearly in his speech this afternoon. I think I can help most by touching on some economic aspects of the proposal that we should join the E.E.C. On the political aspect, however, I would just say this. It is essential, if we are to form new connections, that we should not desert old friends, break our word or abandon our responsibilities, whether to members or ex-members of the Commonwealth, to our friends in EFTA or to our friends in the United States of America—to whom, incidentally, we export more than twice as much as we export to any other country in the whole world. I want to try to be fair in attempting to make an appreciation of the economic consequences of joining the E.E.C., and I will illustrate it very briefly by referring to some organisations with which I am associated. As for one of the large industrial organisations of which I am chairman, we already have plants in more than one European capital, as well as in the United States, India, Turkey and South America, so we are well placed to conduct our business whether Britain and EFTA join with the Six or not. In two other industrial groups with which I am associated, the view is held that on balance they would in the long run be advantaged by our joining the E.E.C., although this does not necessarily apply to all their varied interests. I give those as illustrations.

I now come to the C.B.I. The C.B.I. has come out in favour of joining the Common Market, though it should be remembered that out of the sample inquiry of 1,700 firms only slightly more that 50 per cent. made replies. Nor have the results of inquiries from the C.B.I. Trade Association and employers' organisations yet been published. Of those who made replies—half of the 1,700–35 per cent. said that they expected a marked gain from unrestricted entry into E.E.C. markets, and 15 per cent. saw a marked loss resulting from abolition of protection against imports from the E.E.C. That is to say, half the firms replied; of that half, 35 per cent. thought it would suit them, and 15 per cent. thought it would not suit them.

But 91 per cent. of those who replied thought that there would be a balance of advantage to the country, though how individual companies were able to answer questions relating to British industry as a whole in the absence of information as to the effects on other companies I simply cannot imagine. Perhaps they were influenced by the fact that the great political Parties and their leaders, and the majority of writers in the Press, except for the Daily Express, were at that time also in favour. The Press, of course, has of late had second thoughts in some cases, and I should like to pay tribute to some very objective analyses in The Times, the Sunday Times, the Financial Times, and some other journals. By the way, the increased cost of newsprint will indeed be a tremendous headache for all newspapers except the very strongest.

So far as the City of London goes, on the whole it appears to me at present that it is in favour and, of course, all of us who work in the City have very friendly and close relations with all the countries in the E.E.C. and in EFTA—relations which we hope to maintain and develop. A crucial question for the City, of course, is the Sterling Area and the future of exchange restrictions. Will membership of the E.E.C. mean the removal of exchange control? Will not the great additional pressure on our balance of payments, which that well-informed writer in The Times of May 1 estimates at a minimum of £600 million a year, in addition to our adverse payments, force the Government to keep a tight grip on capital movements? If so, how will this be reconciled with Articles 48 to 73 of the Treaty of Rome, which deal with the free movement of capital and labour?

I trust that noble Lords have read the Treaty of Rome; or, if they have not, that they will. It has a preamble and 258 clauses, innumerable annexes, protocols, declarations and conventions. As I think the noble Lord, Lord Caccia, said, one must always read the small print; and I think the noble Lord, Lord Kahn, made much the same point. In addition, the noble and learned Lord the Lord Chancellor was good enough to tell us that at present no agreed translation of this document in fact exists. All that is something to think about.

There are some wise men in the City of London, like Sir George Bolton, with all his great experience of the Bank of England and the International Monetary Fund, who want to see Britain galvanised by the need to survive foreign competition, but who do not believe that this will be achieved by membership of the purely Western European market—and I shall return to that shortly. I should like, if I may, to follow my noble friend Lord Champion for a few moments on agriculture. The White Paper tells us that the retail cost of food will rise from 10 to 14 per cent., and the noble Lord, Lord Kahn, has pointed out quite correctly that that means a much greater rise in the cost of living of the poorer families of this country. Anybody who studies and examines the cost of living index will, I am sure, agree with what the noble Lord, Lord Kahn, said on that.

THE EARL OF LONGFORD

My Lords, simply for the Record—I am sure the noble Lord does not want to mislead anybody—the figure given for the rise in the cost of living is 2½ per cent. to 3½ per cent.

LORD CLITHEROE

I was talking about the rise in the cost of food, which will he 10 to 14 per cent.—and I think it will be more than that for the poorer families. The Prime Minister's estimate of the levy payable to the Community Agricultural Fund, which we shall have to find and pay in foreign currency, is between £175 million and £250 million. When we add that to the other costs to which I have already referred, is this really economically tolerable? Can we sustain it without another sordid devaluation of the currency, against which Her Majesty's Government have struggled so gallantly; and would that be sensible when we have recently borrowed money in foreign currency in such large amounts? I hope that the noble Earl who is to reply will tell me the answer to that question.

So far as farmers are concerned, the cereal grower will apparently gain heavily, at any rate to begin with. However, I hope noble Lords will remember that cereals represent only 12 per cent. of farm sales. The livestock section represents 65 per cent. of farm sales; and that is the section that will suffer. How can dairy farmers cope with an increased cost of feeding stuffs of some £10 a ton?—which would add at least 4d. a gallon, and in some cases more, to the cost of milk, apart from the added cost of increased wages. And we must not forget that in the Common Market so far as I am aware the only food target price which is lower than the price here is that of milk. So the milk producer will get less for his milk and will have to pay £10 a ton more for his feeding stuffs, which is an enormous additional burden.

Then, my Lords, the whole question of the Milk Marketing Board is raised. Is it not clear that the returns from the sale of liquid and manufacturing and other milk may not be pooled? It certainly is not clear that the Board will be able to continue to buy all the milk offered to them. There is also great anxiety about the future of pigs, eggs, poultry and the price of wool (which would be reduced) and, finally, the great question of New Zealand. I cannot leave agriculture without referring for a moment to sugar. I want to hear from Her Majesty's Government what are their plans for our sugar-producing friends in Mauritius, Fiji, Guiana, Swaziland and the West Indies. I once spent a year in the West Indies with Lord Citrine trying to find out what their problems were, and of course we found that sugar was the most important of them.

I conclude therefore, so far as agriculture is concerned, that if Government pledges are to be honoured, the existing regulations of the E.E.C. will have to be re-appraised and adjusted. The Prime Minister says that there must be far-reaching changes in the structure of British agriculture. But there are some things which even he cannot change. He cannot change the rainfall nor the limestone rock of the Pennines. These are the problems to be considered. In his reply, I ask the noble Earl to say what are the plans. It is important that farmers should know them, for many dairy farmers at this moment are engaged in large alterations with a view to adopting more modern methods of milk production. All this may be held up while these lengthy negotiations are going on.

My Lords, I have made a few criticisms, and I have asked some questions. I might well be asked: What is the alternative if we fail, as I personally rather think we shall, to negotiate entry into the E.E.C. on terms which we can afford and which meet Government promises? I want Britain to trade with all the world; I want her to trade with our European friends—as do they with us. Like Sir George Bolton, I want to see Britain so galvanised by the necessity to survive exposure to foreign competition as to be able to achieve a rebirth of national morale. He believes in a much wider organisation than the E.E.C., perhaps on the lines of a North Atlantic Free Trade Area (which was referred to briefly by the noble Lord, Lord Caccia), an area which the United Kingdom, the U.S.A., Canada, some of the EFTA countries, Spain and Latin America and, of course, Australasia would join—and to which the E.E.C. would ultimately adhere.

We cannot fail to recognise that the greatest industrial and financial Power in the world is the United States and that they are by far our biggest customer; in fact they buy more than twice as much as any other customer. The main argument for this plan is that it would give us better access tot the great North American markets without impairing our ability to import cheap food and raw materials as we now do. Moreover, we have a traditional preference for a free trade area rather than an economic union. This may sound too good to hope for; but there is a movement of opinion developing in America which in my view it is in our interest to foster and stimulate. The United States placed great faith in the Kennedy Round as a means of reducing the tariff discrimination of the E.E.C. At this time American frustration is very great, and it might well give us the chance of a receptive audience in Washington for a new approach.

Europe cannot stand alone, and if Britain moves behind the walls of the E.E.C. will not our future be retrogressive? We have much to learn from our friends in Europe. They have a system of taxation which encourages enterprise—instead of one like ours which checks and frustrates enterprise. In any case, we shall go on trading with Europe. Although this country has nothing but coal, we in Britain have wonderful access to the raw materials of the world. We have an overwhelming advantage here and the prospects of development in Canada, Australia, South Africa and Rhodesia (I dare hardly mention; although I pray for it) are tremendous. I believe that our future lies with the English-speaking world.

My Lords, we have lost confidence in ourselves. As the Observer said yesterday, the driving force for the demand to join E.E.C. comes from a sense of failure—but loss of self-confidence alone would hardly provide an overriding reason for taking such a momentous step. To be fair, I must say that the Observer believes that Britain after a period of very sticky and painful adjustment will benefit in the long run by joining the Common Market. The notion of sheltering behind the cosy walls of a purely Western European Community does not seem to fit in with our history or our national ambitions. The growth of the E.E.C. countries is now slowing down, and the growth of North America and Australia is increasing. The increase of our exports to the E.E.C. countries in the last few years is far less than the increase of our exports to North America.

My Lords, we are not down and out. We have seen France and Germany move from the doldrums to great power. With leadership and courage we can once again take our place—and a leading place it must be—in the great forward march of the world towards peace and prosperity and in the development of its still vast and untapped resources. I believe that honour, sentiment, history and language all point to this solution as a bolder, nobler and more stimulating challenge than that which we are now asked to endorse.

5.48 p.m.

LORD SHERFIELD

My Lords, I rise to say first of all that I personally support the course which the Government recently followed leading up to this application to join the European Communities. I think it is a good thing that the country generally, and particularly industry and business, should not be left indefinitely in suspense as to whether a further application was to be made or not, and what the outcome might be. I also venture to support the decision to concentrate on a few major points as the subject of negotiations.

There are two kinds of obstacle which exist or have been created, and which stand in the way of our membership. There are those which arise from the text of the Treaty itself and the agreed interpretations of it—and some of these obstacles have been itemised by noble Lords who have preceded me. There are much vaguer and more atmospheric points, sometimes dignified with the name of philosophical, that have been raised, such as whether the British can be good Europeans and so on. I will call these two types of obstacles (although I realise it is a gross simplification) the real fish and the red herrings. I think the Government have been quite right in their approach to concentrate on the former and to disregard the latter.

I will deal with just one of the "red herrings"—the suggestion that we do not qualify for entry because we adhere too strongly to our so-called special relationship with the United States. Personally, I never refer to a "special relationship" with the United States: I do not think it is a very useful phrase. The fact is that a great many countries have special relationships with the United States. For example, France has a very special relationship with the United States, dating from the Revolutionary War. The cry in 1917, "Lafayette we are here!" was inspired by something much more fundamental than the invention of a public relations officer—if indeed there was any such creature at that time. Since the last war, Japan and Germany, among other countries, have established special and very intimate relations with the United States. Canada has also a very special relationship with the United States, and a very special relationship with the United Kingdom, and France is cultivating a special relationship with Canada—or at least with part of it. These special relationships are different one from another, largely for historical reasons.

Our own special relationship with the United States (for of course we have a very special one) is due, first, to the common origins of our language, law and literature; and then to the fact that we have worked together so closely in the world over the last thirty years. All these special relationships are reflected at many levels, from the Governmental level to the level of public opinion. Nothing, I hope and believe—certainly not membership of the Common Market—is going to undermine our ties with the United States, which have their roots in history and in shared experience and responsibility; or, for that matter, the other ties which I have mentioned. It is the multiple strands of these special relationships which make the connection between the countries of Western Europe and North America; which hold the Alliance together; and which the evolution of wider unity in Western Europe need, and should, do nothing to sever.

My Lords, there is another aspect of this matter, just mentioned by the noble Lord, Lord Clitheroe, on which a further word might be said. Some years ago United States official opinion was strongly in favour of the concept of a United States of Europe, and of British member ship of it. This was supported by informed public opinion. While I have little doubt that the American official attitude remains in favour of our membership, my impression is that Congressional and other formative opinion has become much more neutral, while other possibilities for strengthening Atlantic unity, both in the economic and in the political field, have been getting increased attention and interest. I believe that this shift in the climate of American opinion, the reasons for which are reasonably clear—though they are too long to go into in this speech—is one element in rebutting the charge which seems to be made from time to time, that the British Government in its relations with Europe is a puppet on a string held in Washington.

Now, my Lords, in view of this change in climate we cannot take the relations between North America and Europe for granted. We have positively to cultivate them and encourage them at all levels, official and unofficial, and through non-Party and non-partisan bodies like the NATO Parliamentarians and the Atlantic Institute, on which the noble Lord, Lord Gladwyn, is the leading British representative.

These trans-Atlantic links have in my opinion an importance which is, in a sense, independent of the organisation of Western Europe itself. I think this is true in terms of the Alliance, which, in spite of the French withdrawal from NATO, remains in being, and essential. It is true in terms of trade and finance—and on finance I would remind the noble Lord, Lord Gladwyn, that any viable arrangement for international payments must be on as wide an international basis as possible and not on a regional basis. It is true in terms of co-ordinating the policies of aid to developing countries. It is true in terms of technological advance. A tremendous lot is written about the technological gap between Europe and America, and I am afraid that I think that much of it is rather wider of the mark. Certainly a larger market, if it permits greater rationalisation between national industries, should enable Western Europe to develop more rapidly in the technological field; and, by raising standards, should offer greater inducements to qualified people to stay in Europe rather than to emigrate to the United States. But this does not mean that we should not welcome the importation of American know-how and American investment in our industries in Western Europe, since this is one of the quickest ways of closing such technological gap as exists.

My Lords, I do not make these points about relations between Europe and North America because I think they are not fully appreciated and taken into account by the Government. I am sure they are; and I am sure the Government are right not to talk too much about them in the context of these negotiations, to which they are essentially peripheral. I certainly would not urge the Government to say more on the subject than they have. But there is perhaps a risk that in the course of the negotiations we may be under pressure, in the belief that it might assist at a difficult moment, to make critical or disobliging statements about the United States and United States policy; or even to give some undertaking in regard to our relations with the United States in particular, and possibly with other parts of the world. In more specific terms, some pressure might develop to shuffle and re-deal the nuclear cards. I hope—indeed I have little doubt—that any such steps would be resisted. Rather nebulous ideas are not susceptible of diplomatic negotiation and definition, and any attempt to make them so would lead only to misunderstanding.

My Lords, the points arising directly from the Treaty of Rome are difficult enough and can be resolved only if we are prepared to commit ourselves fully to the system represented by the Treaty of Rome and its interpretation, and by the European institutions. The "real fish" will be very difficult to land, for many reasons, some of which have been referred to by the noble Lord, Lord Champion; by the noble Lord, Lord Kahn and by the noble Lord, Lord Clitheroe. The "red herrings" (among which it seems to me the doubts that have been raised about the position and the role of sterling and of the London market may prove to be the most serious) represent pretexts for those who, for whatever reason, do not want us in the Community. In so far as some of these objections may appear to us to be quite un reasonable, no doubt we have to try to become less insular and more aware of the habits and thoughts of those whom we shall, we hope, shortly be joining. Here there should be just one word of warning. It is that we should realise that there are pockets of accumulated resentment built up over a longer or shorter period in certain quarters in Europe—some influential—and these may prove to be hidden reefs in the course of the negotiations. We are not, of course, in control of the time-table, and a reasonable time must be given for negotiation, which may occupy quite a long time; but in our own minds there should be a term set beyond which we will not be left dangling.

Now, my Lords, I should like, in common with other noble Lords, to wish our negotiators success. In European economic discussions since the war, techniques of negotiation have been evolved which are of a particularly arduous kind and impose a great strain on those who take part in them. Our representatives will be negotiating on a number of fronts and they will be under pressure to keep a great number of associates, as well as Parliament and the country, informed of what is going on. All this invests these negotiations with particular difficulty and requires forbearance and understanding on the part of all those not directly involved.

There is one thing more, which has been referred to by the noble Lord, Lord Carrington, and by the noble Lord, Lord Caccia. As the Prime Minister rightly said in another place, there are alternatives to our membership of the Common Market, even though those may be, or may seem to be, second best. The time when we are about to seek a preferred solution may not be the moment to air them, but it would surely be the part of prudence to continue to study, and to study in depth, the validity and implications of these alternatives.

6.1 p.m.

LORD ROWLEY

My Lords, I hope that I shall not be accused of an ambivalent attitude if I say that I warmly welcome and support the White Paper we are discussing to-day and that I stand here as a staunch and enthusiastic supporter of the Commonwealth of Nations. But we have to face up to the realities of life. I confess that I was much interested in the remarkable speech of the noble Lord the Leader of the Opposition, if I may be allowed to say so. I do not often pass compliments to the noble Lord, but I am going to do so now. I thought that he crystallised the issues that face this country and other countries in Europe to-day in a remarkably clear and concise way.

I support the White Paper because not only is it directed towards economic unity, but it is also directed towards political unity. Of course, there is nothing new in that. Thirty-seven years ago (that is going back perhaps to a time before some Members of your Lordships' House were born) the three foreign Ministers of Germany, the United Kingdom and France—Herr Stresemann, my late father and the late Aristide Briand, one of the greatest Foreign Ministers France has even produced—committed themselves to the concept of a United States of Europe. Today, with a wall dividing Berlin, with the NATO Alliance in Western Europe and the Warsaw Pact taking in the Communist countries of Eastern Europe, we are a long way from a United States of Europe. But we have to make a start.

The years I spent at Strasbourg in the British delegation to the Council of Europe only strengthened my conviction that sooner or later we should have to seek to secure a political union, first of all, in Western Europe and eventually covering the whole of Europe. My noble and learned friend the Lord Chancellor was quite frank about it. He stated that political union would not be reached easily. And I believe that the noble Lord the Leader of the Opposition shares that view. I certainly share it, too. We have a long road to follow before we secure what we believe to be so necessary.

Having said that, I would add that I do not see any inconsistency in taking the view that we must not sacrifice the Commonwealth of Nations. It has been suggested by some that it is in the process of dissolution. I cannot accept that at all. If I may make a personal reference, I have been a member of the Commonwealth Parliamentary Association for 43 years. I was the first Minister of State for Commonwealth Relations, in 1947; and I have visited most of the countries of the Commonwealth, certainly the independent countries.

I believe that we can go into Europe, we can become part of this Economic Community and eventually part of some kind of political establishment, whether it be on a confederate basis, a Europe des Patries, as General de Gaulle talks about it, or a Federation, as some others would prefer, without that being inconsistent with maintaining our Commonwealth association. After all, the Commonwealth has no constitution: it is not a federation, not even a confederation; it is an association of free and independent countries. Any of them can walk out tomorrow, though in a sense they do not walk out of anything, because there is nothing to walk out from. It is not an entity: it is a coming together of these nations from time to time to discuss matters common to all. It is an arrangement which enables them to discuss and co-operate, one with another, on matters of common interest.

I feel alarmed at times when I hear people speaking in such derogatory terms about the future of the Commonwealth. We are told that Australia is looking to Japan and America. We are told that Canada has close association with the United States and that a lot of United States capital is invested in Canada. My Lords, there is a good deal of United States capital invested in this country, but that does not mean that we are a satellite of the United States. I believe that we have to keep our attention directed towards maintaining what we call the Commonwealth of Nations.

I do not usually quote a great many figures, but if I may be allowed to do so on this occasion it may clarify the position with regard to some of our Commonwealth partners. Let me take the case of Australia. We take an enormous volume of Australia's total exports, including, for example, 68 per cent. of her dairy produce, 65 per cent. of her tinned fruit, 68 per cent. of her zinc, 50 per cent. of her lead and 48 per cent. of her sugar. In total, Australia sells to this country £194 million worth of goods a year. But we sell to Australia over £300 million worth of goods. So that I do not think that anyone can argue that Australia is entirely on the receiving end.

Then let us look at the position with regard to New Zealand. We have been told again this afternoon—and of course it is true—that New Zealand is more dependent upon us than any other independent country of the Commonwealth. I was in New Zealand two years ago for a Commonwealth Parliamentary Conference, and during the five or six weeks I was there I was able to obtain a good deal of information about the economy of the country. One does not have to be sentimental on these occasions, because this is a question not of sentiment but of reality. I was only sorry to read, as others read, that New Zealand recently preferred to buy her aeroplanes from the United States of America rather than from this country. I have flown many thousands of miles in a VC-10, and in my opinion it is the finest transport plane in the world to-day. I do not dispute the fact that if New Zealand wishes to buy her aeroplanes from the United States, then she can do so. We, too, buy aeroplanes from the United States, and we must not press this point too far. And I certainly agree with The Times when it said in a recent editorial: New Zealand cannot be sacrificed as the price of British entry into the Common Market. As we all know, New Zealand's economy depends very largely on the British market. I understand there is some suggestion that in the negotiations which are to take place an attempt will be made by Her Majesty's Government to secure a temporary or short-term arrangement, perhaps for two or three years, for the benefit of Australia and New Zealand. With great respect to the Government (and I hope that the Minister who is to reply tomorrow will give us some information on this point), I do not think Australia and New Zealand can be expected to make their way if the arrangement is only for two or three years. I should like to press for something in the nature of a permanent arrangement, and I hope that in the forthcoming negotiations the Government will seek to secure this.

There is another aspect of the economic side to which reference has been made by a number of noble Lords this afternoon, and it is the matter of sugar. I, like other Members of your Lordships' House, have some considerable knowledge of the West Indies. In my view, sugar is especially important to the Caribbean Islands, headed by Jamaica, and to Mauritius, as well as to Australia, which sends 48 per cent. of her sugar produce to us. If special arrangements are not made in respect of the sugar exports of these islands these underdeveloped countries will in my view face complete ruin.

According to a recent editorial in The Times, the Economic Community now import 500,000 tons of sugar from the former overseas French territories. The West Indian islands in the Commonwealth, headed by Jamaica, export to this country 520,000 tons of sugar each year. If special arrangements can be made for the former French territories as regards the Common Market, why cannot we have special arrangements made for the Caribbean islands, Mauritius and these other islands whose future prosperity depends upon having a British market?

There is, of course, a snag. According to The Times again, the Community pay £80 per ton of sugar, and under the preference system we pay £42 per ton. It would not be very popular in this country if we were called upon to pay £80 per ton for each ton of sugar we import from the Caribbean Islands or from Mauritius. Surely, the way out is for some sort of association similar to the association that has been formed between the European Economic Community and, for example, the former French territories. If this is not possible, then we shall have to regard this as an international problem; and some kind of international agreement should be sought covering the sugar production not only of these territories in our own Commonwealth but of territories that are associated with the Common Market; namely, the former French territories.

My final point is this. The White Paper refers to the economic strength a united Western Europe could exercise in contributing in an ever-fuller measure to the solution to the world's North—South problems and to the needs of the developing world". Surely, it is essential to the future peace and security of the world that we should raise the standards of two-thirds of the world's population who to-day are living right down on the margin of subsistence. According to the recent issue of the Monthly Bulletin of Statistics (I think it is a United Nations publication), the share of the developed countries in world exports during the past ten years has increased from 66.2 per cent. to 69.4 per cent. The share of the developing countries, on the other hand, has decreased from 24 per cent. to 19 per cent. In other words, the richer countries of the world are getting richer, and the poorer countries are getting poorer. We shall never create a stable basis for world peace so long as these conditions affecting two-thirds of the world's population exist.

In entering the Common Market, in my view, we cannot escape our responsibilities to our overseas Commonwealth partners; and those responsibilities are both economic and moral. We must not lose either their trade or their good will, or one day we may find that, by going into Europe, we have got the worst of both worlds.

6.19 p.m.

LORD HANKEY

My Lords, I should like to join those who have warmly welcomed the White Paper and, with respect, to say how impressed I was with the initial speech of the noble and learned Lord the Lord Chancellor. It seems obvious that we should join the Common Market if we possibly can, and, judging by our debate to-day, the great majority now seem to be in favour of our making another attempt. In my opinion, we should make a major effort now to see this business through, and make it as hard as possible for others to obstruct progress. What is needed is a balanced approach. I think none of us should weaken the hands of our negotiators by pressing the Government too hard to sign on the dotted line. It must be remembered that our Government have to face both ways, and they are going to need backing up. I entirely agree with those who have said, particularly from these Benches, that this time the Government ought to have an alternative; but not necessarily an alternative hidden up their sleeves.

The present auguries for the negotiation seem to me to be not too bad. Times have changed. In our century the European Great Powers have lost most of their former pre-eminence, but in this space and computer age Europe just has to move forward, and it needs a far wider economic base than it has now. Even between the Common Market and EFTA it seems to me that the existing divisions and customs barriers are becoming increasingly ridiculous, and the great industrial groups on all sides do their best to flow out across them. None of the European Powers can any longer afford to "go it alone", and a reversion to the narrow nationalism which has ruined Europe's progress in our century, and which seemed to be behind the breakdown in 1963, looks increasingly out of date. The danger is that during these negotiations an attempt will be made to separate the United Kingdom from its friends and to get us into the Common Market alone.

On the background I have mentioned, I hope it is obvious that this would not be in Europe's true interest, and far less, of course, in our own. We should not agree to it in any circumstances. Given the sogginess of the United Kingdom economy, the Six and the United Kingdom alone have not so much better prospects than the Six alone or EFTA alone. We should not in any case desert our EFTA friends and partners now. I earnestly hope there can be no question of our applying the common external tariff to EFTA goods until the whole matter has been worked out and negotiated between the EFTA countries and the Common Market. I should not have mentioned this if there had not been what seemed to me a most misleading article in a very prominent newspaper last month.

Similarly, with the essential interests of the Commonwealth: they absolutely must be protected in any settlement we make. I agree with many of the views expressed by the noble Lord, Lord Rowley, in this connection. I am glad that the Government recognise the need to take account of these interests. But I believe this really should not be impossible. The French do not apply the common external tariff to imports from Algeria or Morocco or Tunis, or to any other former colonial territory, although the status of the first three important countries as regards the Common Market is still completely obscure. The Germans do not apply the common external tariff to Eastern Germany, although it is the industrial show-piece of the Communist world. The Dutch and Italians also make exceptions for their former territories. My Lords, we cannot expect to keep the whole Commonwealth system as it now stands when we enter the Common Market, but I believe that, with the precedents which have been set, it should not be impossible to make reasonably satisfactory arrangements.

So I think it is not unreasonable for us to insist on certain concessions to meet our requirements, and I am sure the Six will recognise this so far as they can. It is not likely that we should do well in the Common Market if the result of the agreement we make were to sacrifice our very important trading interests overseas; for instance, in Australia, Canada and New Zealand. That would not be at all in Europe's interests, either, as we should have to flood Europe with our motor cars and machinery. Europe's real interest is that we should hold our overseas markets as well as we can.

There is another very important point. I hope that before we enter Europe the Government will put the United Kingdom economy in order. It seems to me that we must so organise our economic progress that our industrial production and essential communications are protected from unnecessary disruption by untimely, unreasonable and unofficial strikes, or by poor industrial relations. Our management and trade unions must be enabled to pull their weight as they should. We had a particularly interesting debate on this matter only last week. Equally, we must give our work-people the assurance that production will go on increasing, and that their co-operation in an incomes policy does not condemn them to static incomes. Without this co-operation we cannot hold inflation in check.

My Lords, I am not dragging this question out of another sphere. The history of France, Italy and Holland in the Common Market shows only too clearly that membership of the Common Market does not automatically cure inflationary trends or solve these other problems. On the contrary, the members of the Common Market regard these ills as really infectious diseases liable to be exported from one member of the Market to another. It is essential, in my view, that the Government should put our house in order, for our new partners may well be even tougher with us on these issues than they have been.

Finally, I want to say a word about the new Europe being outward-looking. Trade is more important than aid to the less developed countries. Many of them are reaching the point of economic take-off—Mexico, Venezuela, Greece, Iran. Formosa, to mention only a few outside the Commonwealth. It is crucial for these countries, and much more so for the Commonwealth, which contains 25 per cent. of the human race, that international trade should not be disrupted by the new arrangements we now make. But there is an excellent system at Brussels for the Associated Overseas Territories with a Council of Association and a powerful secretariat. I believe that that system should be further developed, and that with our great overseas experience we could help in that process, so long as we can all avoid having too many pet dogs of our own in the manger. Our own overseas relations and experience should he of inestimable value to the new Europe.

It is vitally important that the new and larger Europe should play its part in promoting the vast development of the world that is now going on, and that the agreement we now make should lay the foundations for good and fruitful relations with the less-developed countries. If we do not achieve this now, we shall certainly reap a sorry harvest of trouble later. And so I warmly endorse the Government's decision to re-open negotiations with the Common Market, and I beg them in so doing to look well to the future and not to sacrifice the wider, long-term interests of the United Kingdom and of the larger Europe itself in the broadest possible development of world trade. I also share the earnest hope expressed by the most reverend Primate the Archbishop of Canterbury in his remarkable speech, that if these negotiations can be brought to a successful conclusion we may look forward to the beginning of a new period of co-operation extending far outside economics and even politics, into a new alignment of views in the spiritual and moral sphere.

6.29 p.m.

LORD STOW HILL

My Lords, I should like to support this Motion. I have always hoped that this country would be able in due course to become a member of the E.E.C.; and I have found my thinking very greatly helped recently by what I regarded as a remarkably clear exposition by the Prime Minister in his speech to the Parliamentary Labour Party, reported in The Times, of the relevant considerations and the alternatives. The E.E.C. Treaty, the Rome Treaty, is an economic Treaty. It is a Treaty which provides for a large measure of economic co-operation between the members of the E.E.C., and also lays down the form of the machinery which is to bring about that co-operation.

The Prime Minister, in his speech, asked those who were deliberating on the answer they should give to this momentous question, really to put three questions to themselves. First, what happens if we do not go into E.E.C.? Secondly, what happens if we do? Both those questions are on the purely economic plane. The third question is: what are the longer-term political implications of entry? May I, for the moment, address myself to the first of those questions? What happens if we continue to stay out? The Chancellor of the Exchequer's 1967 Budget was based upon an estimated 3 per cent. growth rate. The Board of Trade Estimates state as a probability a decline in private investment of, I think, up to 10 per cent.

Throughout the 1950s and the 1960s one Government after another has been struggling to increase the rate of growth and to operate a policy which will permit of our economy working full out without the periodic alternation of "Stop-Go"—and I think everyone would agree that hitherto the rate of growth has been disappointing. A 3 per cent. rate of growth is linked, as I understand it, with about a 2 per cent. figure of unemployment in this country. It is not by any means a contemptible rate of growth, but it should be much faster. The National Plan was projected upon the basis of a much higher rate of growth, and all our public expenditure, the hopes in the matter of the development of our social services, and the fulfilment of our overseas defence obligations, were based on a much higher rate of growth than 3 per cent.

This Government have made prodigous efforts to stimulate growth. So far they have produced results which I think are not satisfying. They have endeavoured to operate an incomes policy on a purely voluntary basis. I cordially disagree with those who would seek to write off as pointless or valueless the efforts made by Mr. George Brown, in particular, to lay down the conditions in which a real incomes policy, relating the growth of incomes to the growth of output, could operate on a purely voluntary basis. Those efforts were extremely valuable, and I think they have pointed the only way in which a Government can seek to move towards a voluntary incomes policy. Unfortunately, the objective that was proposed was not wholly achieved, and the consequence of that was the compulsory measures which had to be operated as a result of the crisis which developed in June and July of last year.

In some way or other, therefore, we have to break out of this situation. In some way or other we have to launch ourselves upon a course which will stimulate greatly the annual growth of our gross national product and make possible the accomplishment of those dreams—as they are to some extent now—on which our hearts are all fixed, both internally and externally, covering a wide range of activities: not only the development of our social services but the full implementation of our overseas responsibilities, including in particular the aid that we should like to be able to afford in far greater measure to the less developed countries of the world.

What is said—and so far I do not quite know what is the answer to this argument—is that our industrialists are now handicapped by having far too small a home market in which to operate. It is said that in E.E.C. we have as it were a ready-made home market, almost on our doorsteps. I think the Prime Minister put it at 250 million people (presumably including the population of this country), although in the document which has just been published and which is before the House setting out guidance, I think the population figure is put at something like 183 million in the E.E.C. countries. That compares with something like 43 million in the EFTA countries.

The E.E.C. market is almost the same size as the market of the United States of America. It was said in the Prime Minister's speech, and it has repeatedly been said in articles and discussions on the matter, that if industry is to flourish and expand it must have a large home market in which to be able to write off, over a short period of time, its R. and D. expenditure. We are an inventive nation. Many of the greatest inventions of the present day have come from these shores. As has been said, the financial advantage from them is often reaped elsewhere. The argument that is put in favour of entry into the Common Market is that we shall have the tremendous advantage of the added opportunity, the added incentive, the added competition and the added possibility of maintaining a far higher rate of R. and D. expenditure which that market would afford.

I have been interested in listening to the many speeches which have been made this afternoon, and in particular to one made by someone who is perhaps particularly well qualified to speak on this—I refer to the noble Lord, Lord Clitheroe. He raised doubts and felt not altogether certain what was the attitude of industry as a whole, and the City as a whole, with regard to the proposal that we should enter the Common Market. I think he agreed that the members of the C.B.I. who had answered questions put to them and the City itself, on balance, certainly were in favour of entering.

There was a most instructive argument set out in one of the leading columns of The Times recently, which sought to relate to a most important branch of our industry the advantages and disadvantages of entry into the Common Market. The industry was that represented by the Society of Motor Manufacturers and Traders, and the figures given in The Times article were as follows. The loss of EFTA preferences would involve the motor manufacturers in this country in an extra expenditure of £13 million; and the loss of Commonwealth preferences in another £22 million. As against that they would reap the advantage of not having to pay the E.E.C. tariff, which would work out at a gain of £18 million annually.

The calculation concluded that entry would result, in the case of our motor manufacturers, in an annual extra burden in the region of £17 million. Does that daunt them? Not only does it not daunt them, but the industry is on record publicly as saying that if the United Kingdom does not enter the Common Market the prospects for British motor manufacturers are dismal in the extreme. With this vast market—the E.E.C. market—next door, with all the advantages which that enormous market provides for motor manufacturers, and across the Atlantic the United States market, the foreboding expressed by the Society was that unless that disadvantage which British motor manufacturers at the moment face is overcome, then competition will gradually grind down our motor car industry, with tremendous loss to an industry which is, after all, responsible for some £800 million of exports annually.

That is the test by reference to one particular industry; and, as the Prime Minister said in his speech, the only way in which one can try to assess the advantages and disadvantages, in purely economic terms, of entry, into the E.E.C. is by going through every industry and seeing which of them would be advantaged and which disadvantaged, and to what extent, by entry or refraining from entry. I think the balance of judgment of industry as a whole, and of the City as a whole, was that it would be to the substantial advantage of our industry that we should enter, because of the greater opportunities, the greater stimulus, the greater incentive and, in particular, the far higher level of R. and D. expenditure which our industrialists could afford. That is the argument put, and whilst I accept that there are very great difficulties to be overcome I have not yet heard the answer to that particular argument.

The difficulties obviously are very serious. Agriculture has been mentioned; New Zealand has been mentioned; and the extra burden across the exchanges, which the noble Lord, Lord Clitheroe, put at £600 million a year, and which I have seen stated in such very diverse figures as £250 million, on the low side, up to £1,000 million, on the high side. The burden is extremely difficult to quantify, as the Prime Minister pointed out. It could be to some extent alleviated if negotiations made possible the lessening of the £200 million burden which we should find on our shoulders in payments towards the common agricultural levy in the E.E.C. And we should remember this: that whereas it would have been foolhardy to undertake an additional burden of that sort in November, 1964, when we faced a £900 million deficit, the measure of the Government's achievements in the last two years is that that is a burden which, with our vastly strengthened currency and the great increase of confidence in overseas holders of sterling, we can now contemplate as within our capabilities although in the initial years it will impose strain.

I therefore answer the two questions the Prime Minister put by putting this further question. If we stay out, is there really any prospect within the near future of our drastically upgrading the annual increase in our gross national product? If there is such prospect without entering the E.E.C., I do not know in what it resides. Every effort has been made in the form of regionalisation, stimulus and so on, and it has not yet produced the desired results. Entry I should hope, not at once, but over the years, would enormously increase the economic resources and the wealth of this country. It would get us out of the bottleneck, in which for nearly twenty years we have found ourselves, of inadequate annual growth, and we should be enabled to operate our economy, without "Stop-Go" fears, at full pace. That, as I see it, is the case for going in.

What are the political implications? It is said—and if I may respectfully say so I entirely agree—that we must not be disloyal to our many friends: we must not sell the Commonwealth down the river; we must safeguard Commonwealth interests. I entirely subscribe to that view. But when one looks at that problem a little more closely, one sees the French territories to a large extent accommodated by special arrangements in their case within the E.E.C. Nigeria has already applied for Associate status; I think that, subject to ratification, Associate status is granted. I notice that the Foreign Secretary said that three other African territories (I think he mentioned Kenya, Zambia and Tanzania) had made motions towards applying for Associate status with the E.E.C. Australia has many outlets for her trade. New Zealand is in a very special category: it would be necessary to make very special arrangements to safeguard her interests, and I think everybody is agreed these particular special efforts should be made. I do not myself feel that the phrase that we are "selling the Commonwealth down the river" is in any way justified.

This is a great change in a modern changing world. I do not believe that by entering into the E.E.C. we necessarily forfeit the good will or confidence of our Commonwealth partners. I accept at once that that union of 700 million people, of all colours and all races, is something the existence of which is indispensably necessary for the peace and progress of the world. When citizens of this country travel in Commonwealth countries I believe they all feel proud of the good will and friendliness that is shown towards them, to whichever country they go to and whatever the form of its Government.

I believe that that good will does not depend on the hope that we shall be able to continue to trade with them in the same or greater measure than our existing trade with them, or that we shall be able to offer them loans or grants. I believe that it has been built up over a long period of time and is attributable to the understanding we have shown in their aspirations towards independence, their own sovereign right to manage their own affairs. It is attributable to respect for British institutions and good feeling. Especially as one finds that some of the Commonwealth countries themselves have already opted for Associate status, I do not believe we should be doing violence to those good feelings if we entered the E.E.C.: I believe they would exist as hitherto. So far as helping the underdeveloped countries is concerned, it must be remembered that a far richer United Kingdom could do far more than at the moment.

I turn to the question of the EFTA countries. Equally, we must honour our obligations to them, but they equally, some of them at any rate, are turning towards the E.E.C. Some of them would like to enter, and I dare say that more of them would. This is a matter one will have to see as the years go on.

The larger side of the picture, a very important side, is our membership of this great community of nations which is Western Europe. Many noble Lords have spoken movingly about that, including the most reverend Primate, the noble Lord, Lord Carrington, and others, and I should like, with respect, to endorse every word of what they said. If we speak the languages of the E.E.C. nations, move in and out of their countries, work more closely with them; if we welcome them more constantly as our guests; if we know their point of view, while perhaps it is too optimistic to say that there could never be a recurrence of 1914 or 1939, I am quite certain that mutual co-operation and understanding would make that sort of hideous discord far more difficult in the coming years than it has been in the past.

LORD SOMERS

My Lords, may I interrupt the noble Lord for one moment? I think it is quite possible he is right and I am wrong, but the sort of situation that occurs to me in regard to the political implications is this. Supposing the United States were to take some step and we felt, as her lifelong ally, that we should like to back her up, but the rest of our European partners did not approve and were against it, where should we be then?

LORD STOW HILL

My Lords, I apprehend that the answer to that question, hypothetical in form and not formulated with any precision, is that in the actual conditions envisaged we should be an influential member of the E.E.C.: we should have discussed that matter with our E.E.C. colleagues and should know intimately their point of view, and we should be able to put our point of view and the reasons which commended themselves to us in wishing to support the initiative the United States desired to take. I should have thought that in close collaboration and understanding between us there would be far less likelihood of friction in the sort of situation the noble Lord envisages than if we stayed aloof in our Island.

It is for this sort of reason that I think politically our entry into E.E.C. would be of the greatest value to the peace of the world. Signing the Treaty does not mean that we enter into a Federal Europe, a confederated Europe or a Europe which consists of les états. What shape Europe is subsequently to take must depend on later Treaties, later developments and on the actual experience that we undergo as a member of the Six. I personally should very much like to support the Motion.

6.50 p.m.

LORD WOOLLEY

My Lords, as a comparatively new Member of your Lordships' House I hope you will not consider it presumptuous of me to join in this debate. I should scarcely have thought it fitting to do so had it not been that agriculture is one of the chief problems, a most significant problem, in the whole issue, and this the Prime Minister put first on the list. For some years I was involved on the agricultural side in the consideration affecting the previous negotiation for entry into the E.E.C., and I was therefore perforce made to live close to the problem. I found it extremely uncomfortable so to do.

I felt then, and I feel now, that if the case that the best interests of this country towards its own people, the best prospect of contributing to the wellbeing of the world at large—and we have a proud historical place in the world—were clearly linked with our becoming members of this European economic bloc, then I should not feel it right unduly to press the case of and the conditions for agriculture. But, with the greatest goodwill in the world—and I hope I am not bigoted—I have not yet been either convinced or able to convince myself that these assumptions, these most sweeping assumptions that are so widely made and so frequently stated, have, with the greatest respect to those who make them, got the substance in them that they seem to think. There may be some deficiency in my own capacity for understanding; I may be incapable of grasping these great truths—that is quite probable—but there it is. Incapacitated and all that, that is what I feel.

Almost until the last week or two, one might say that it was the overpowering economic advantages that were pressed through all the propaganda. It was said that this country could not live without them; we were doomed to be a little offshore, diminishing State. But now suddenly the wind has changed, and even Mr. George Brown is telling us that the economic advantages are not, after all, so very great; it is the political advantages that are the real thing. So now I turn my attention to the political advantages, having long ago been convinced that the so-called economic advantages are the figment of somebody's imagination.

I try to find substance in the political advantage, but I am bound to say, with the greatest respect, having listened to some fine speeches here this afternoon and having read what the Prime Minister, who surely must know more about these things than I can ever hope to know, has said, that I still have not brought myself to that point of view. I speak as a farmer, as one who has sought these many years, the whole of my working life thus far, to earn my living from agriculture and who has, in the process, been involved in what one might call the politics of agriculture. I have seen this industry grow; I have seen it emerging, as it were, from the doldrums that persisted for so many years and gaining, with great pain and toil, higher, firmer ground.

Reference has been made to the late Lord "Tom" Williams of Barnburgh, who was the man who took on and saw this growth and who, as a miner coming from a rural area, made a tremendous contribution. I have been through all these stages. I have seen this industry develop and grow, and I have helped it, in some modest way. I have seen the statutory marketing boards emerge out of the chaos of the late 1920s and 1930s, when the late husband of the noble Baroness, Lady Elliot of Harwood, had so much to do with these things. I remember those achievements. They have not been easy achievements.

A noble Lord referred, quite rightly, to our great motor-car industry. The motorcar industry, vast as it is, is but a small brother to the agricultural industry. Agriculture has been a strong pillar through all these years when the economic edifice has been tottering. When our balance of payments has been so shaky, agriculture has been there, a steadfast rock, contributing, it is calculated (not by me), something between £300 million and £500 million a year in added value compared with what it was producing after the war. Not only has it contributed this in terms of quantum but it has done it in terms of unit cost, in productivity. This difficult, sprawling, variegated industry, to which it is so difficult and costly to apply technology and mechanisation, has been up among the leaders in the productivity increases in these recent years. Only now, with the pressure, the over-pressure, of the cost-price ratio—which the Government recognised this year, thank heavens! —do we begin to see the danger of a slow down.

LORD GLADWYN

My Lords, would the noble Lord allow me to intervene to ask whether he has no hopes of greatly increasing British agricultural production if we went into the Common Market?

LORD WOOLLEY

My Lords, perhaps I was coming on to the point the noble Lord, Lord Gladwyn, would expect me to come to if I were to be logical—which I can assure your Lordships I seldom am. But may I pursue this point about the basis on which this growth has been achieved? It has been achieved on the basis and foundation of confidence provided by the 1947 Agriculture Act, buttressed and underpinned by the 1957 Agriculture Act and by various other pieces of legislation, such as the Marketing Act, and by the Statutory Marketing Boards, which have meant that our farmers' produce has been dealt with effectively and efficiently, taking from the farmers, as producers, the impossible task of trying to be 300,000 proficient little businessmen in the selling of their products.

In answer to Lord Gladwyn's question, may I say that I believe that this confidence has inspired enthusiastic initiative, has given us the finest crop of young people in farming that we have ever had, certainly in my lifetime, and has created the confidence on which alone we have been able to get from the financial institutions the finance for an industry that is extremely difficult to finance. We cannot go to the Stock Exchange and raise £50 million by an issue, but we are investing over £200 million a year directly in farming. This money has to be found, and it has to be serviced.

We have a highly efficient industry, and if we look at what is involved I think that, given fair ground, we can compete with anybody in the world—and we are not afraid of that. We have an extremely sophisticated system, designed to serve not only the needs of British agriculture but of British agriculture as a service industry to the British community, from which Britain has reaped a great harvest of economic and social advantage, and we are concerned to see this being replaced by the best assortment of compromises that the E.E.C. have yet been able to devise.

I do not intend to dwell at length on some of the points about financial regulations, about the contribution, and so on. I agree with what was said by the noble Lord, Lord Kahn—although he did not take up agriculture as a particular instance—that we should be putting voluntarily and deliberately an enormous amount of lead in our saddle. It seems to me that it is a nice, breezy confidence which seems to think that we can do this. What shall we get, having put up our costs of production, and having put ourselves at an economic disadvantage in the competitive markets? We shall not get, as one would think from the speeches of some noble Lords, a gift of a market. We shall have to go to that market and we shall have to sell. We shall have a gate open to us, but the size of that gate will not be so wide as that which we shall have to open to our competitors to come in here. I fail to see the force of the grand, sweeping argument about the huge market which will solve all our problems. I believe that the solution to our problem lies in our own efforts, and we have it within our own competence.

There is no magic, either in a European Economic Community or any other, that will solve our problems. If we want to reduce tariffs, to create increased opportunities, surely the international mechanism and instrument already exists in the GATT; and we have found in the GATT that the real stumbling block has been the E.E.C. They have been the people who have prevented the Kennedy Round from making progress. Whether we are going to liberalise those people and convert them, I do not know. I will not delay your Lordships any longer. I simply say that were I satisfied that the case was as good as is thought by those who speak so strongly in its favour—and I am sure they are sincere in what they believe—I would be strongly in support of this Motion, but I do not see any prospect of being able to join this particular club on the sort of terms that I consider really serve the best interests of this country and the contribution of this country to the world at large.

7.5 p.m.

BARONESS GAITSKELL

My Lords, when we come to examine this White Paper to approve membership of the European Communities, it is clear from the debate in this House, and in the country at large, that there are two categories of people who find it easy to vote one way or the other. There are the fanatical anti-marketeers, who have no qualms about voting against this White Paper, and no qualms about staying out of the Community; and there are the fanatical pro-marketeers, who simply cannot wait to get in. I well remember that in 1962 they were ready to go in blindfold. I also remember that after General de Gaulle had exercised his veto and negotiations finally broke down, the faithful pro-marketeers received the news as if Mr. Heath had failed to bring back the Holy Grail. But the third category, which is really the category to which I belong (I will not call them non-marketeers; that is perhaps too final a name), is composed of people like myself who cannot equate the Market with the Millennium. We find the matter more difficult, and we have to weigh up the arguments for and against it and try to come to a balanced judgment.

The world has not stood still since 1962, and this is a great help to us. In 1962 there was a conspiracy of silence by the Press, by politicians and by economists, about the facts for and against—particularly those for—going into the Common Market. The arguments, if they were discussed at all, or where they were discussed, did not filter through to the ordinary public. Those who believed that it would be a good thing for Britain just said, "Trust in the Common Market and the Common Market will take care of your future". One had to be really gullible to swallow that.

To-day, the assessment is much more cool, clear-headed and sensible. The Press, in fact, have been engaged in a massive "teach-in" about the Common Market. However, the issues are so complicated, so impenetrable and imponderable, that one is continuously driven back against a wall of faith. I still wonder whether it is a crusade or a gamble upon which we are going to embark, and it is very difficult to get away from this evangelistic approach. This has been reflected in the newspapers up until the last minute. This week's Observer has the headline, "Look while you leap". In last week's Sunday Times, Frank Giles described the Prime Minister's conversion as "A great leap of faith". All the same, judging by the number of articles in the Press lately, a great many people have been "doing their sums", and I hope that I have learned something from their efforts. When trying to work out the economic consequences of entering the Common Market, there is only one thing that is worse than being an economist, and that is not being one. The consensus is very hard to come by so, though I have very little taste for the occult in politics, and although I find it hard to regard any Customs Union as sacred, I have been making a kind of "Pilgrim's progress" towards the Treaty of Rome, trying to untangle what it would mean for us. Incidentally, looking up the origin of the word "pilgrim" I find that it means "a resident alien in Rome".

Not only have I been trying to increase my general knowledge about the European Community, but I have also added a word to my vocabulary, a rather ugly word—"unquantifiable". It covers a multitude of queries. I find that the hitherto economic promised advantage of going into the Common Market is "unquantifiable". The long-term advantages of the European "Supermarket" are unquantifiable. How much, we begin to ask ourselves in this country, can competition take over since exhortation has failed to raise our productivity? It seems that the economic price we shall have to pay for entry is also unquantifiable.

But what has now come to the fore, as the noble Lord, Lord Woolley, has pointed out, is the political case for entry. This, we are told, is the unanswerable case, and I must say that it makes more immediate sense than the economic case. I believe that if we become a member we shall be able to influence the pattern of the kind of Europe which is desirable in the world. A tight little community, a claustrophobic Europe, is not a very attractive proposition. If we stay out, the old joke about the British weather report which said:

Fog over Continent. Continent isolated becomes a fact.

As I have said, there have been many changes since 1962 both in our own country and in Europe. The idea of the Common Market as originally conceived—that is, as a unit of Federal States—has been completely punctured by General de Gaulle's view of French nationalism. The Common Market's own institutions are being revised. Its members are giving a thought to the Eastern as well as to the Western States of Europe. Countries like those in EFTA are now reconciled to our entry, and are themselves in due course going to make application for entry. The national regional planning which we thought was threatened is apparently now no longer threatened. Commonwealth countries have been making their own adjustments to meet the event of our going in, by diversifying their trade. All these changes and considerations can be taken into account by those who, like myself, have reservations about the Commonwealth and could not instantly switch to another faith—a belief in Europe.

The changes in the Common Market itself have also eroded some of what are known as "the Gaitskell conditions", which my husband laid down when Mr. Heath was conducting the last negotiations. I make no apology for these. A condition by any other name smells just as sweet to me. Call them a problem; call them a difficulty; call them a safeguard; call them what you like: those conditions are just as valid to-day as they were then. It is simply that some of them have been got over by the Community itself.

Here I should like to mention one particular speech, the speech of the noble Lord, Lord Caccia. I agreed with every word he said. I am always impressed when I go abroad by the quality of our Diplomatic Service, and we have many examples of its members in this House. I am not surprised that when its members retire the Diplomatic Service is raided for Vice-Chancellors, Chancellors and heads of schools. My husband was never against the Common Market in principle. But he felt that it was essential, when first considering entry, to make clear the fundamental British and Commonwealth interests that were involved. I believe, as I have said, that the basic principles are as valid now as they were before, and I think that the White Paper bears this out. However, as many people have said, the answer has not yet been found.

There is another important respect in which things have changed. In 1962, though many people around him were deluding themselves that we could get into the Common Market, my husband, from all his very patient investigations, was absolutely sure that we could not—not even on the most humiliating terms. He knew that General de Gaulle was absolutely adamant about not letting us in. To-day I believe that things have changed—they have even changed for the General—and I hope that history will not repeat itself. I believe that the chances of getting in are good.

Finally, I should like to quote from a speech of Dr. Luns, the Dutch Foreign Minister—a great friend of this country and of my husband. In a speech which he made when he was awarded the prize for outstanding service to the cause of European unity, he said this:

We do not want a mere European Europe, not a mere Atlantic Europe. We want a world Europe. My Lords, it is because I believe that the Government could steer Europe in this direction that I can vote for this White Paper.

7.16 p.m.

LORD FRASER OF LONSDALE

My Lords, I spent some twenty years as a Member of Parliament for an agricultural division in Lancashire, and therefore I can never forget the kind of warnings which the noble Lord, Lord Woolley, has given your Lordships or the experiences which I had during that time with 5,000 or 10,000 farmers and their folk among by electors. Nevertheless—and I have told my farmer friends this from time to time—the strength and wealth of Britain is also, and perhaps even primarily, in her towns. Because I believe that the economic arguments for entering the Common Market are on balance sound and right, I support the Government's proposals in the White Paper and, were there a vote, would vote for them. I am glad, however, to learn from the White Paper that every possible and conceivable step will be taken to support and retain the strength of agriculture, because without a strong, buoyant and healthy agriculture Britain would not only be a less agreeable place in which to live but an infinitely more difficult place in which to live economically.

I do not propose to deal with the fundamental arguments which have been repeated so often here to-day, and elsewhere at other times, but only to deal with one aspect of the entry into Europe which seems to me to be of very real importance. It is related to the place of sterling and the balance of payments. The noble and learned Lord, the Lord Chancellor, mentioned this problem, and said that it was one which is receiving the Government's earnest attention—or words to that effect. I earnestly hope that this is true, because I think it is even more urgent than most people imagine.

I would say that the dollar is weak; indeed, I would say that it is very weak. The evidence that it is weak is that the Americans have to export large quantities of gold to maintain the dollar at its present price in relation to gold. So weak is it that they have had to abandon the gold backing for their currency—I do not know when any civilised country has done this before—in order to avoid draining themselves of all their gold in a very few years. Already their debts outweigh their gold reserves. The dollar is therefore already very weak—even weaker than the pound.

But the pound is relatively strong only because a few months ago it was so extraordinarily weak. The pound is still fundamentally weak; and it is maintained at its present level in relation to gold only by squeezes and freezes, a still relatively high bank rate and by processes of behaviour on the part of Government which are already almost unacceptable to the people. It is my case that by the autumn of this year the props which are now being used to maintain the pound and keep it where it is will be wholly unacceptable to the people. The Government have themselves had to tell large groups of our people that the squeeze, the freeze and all the trappings of control will have to begin to go towards the second half of this year, and I fear that by September we shall not be able to hold the pound at its present value.

I listened with very great interest to the speech made by the noble and gallant Viscount, Lord Montgomery of Alamein, the other day on the subject of Defence. He said that in the circumstances of our world strategy and of NATO world strategy we should engage in (I think these were his words) "a phased retirement" from certain parts of the world. I commend to Her Majesty's Government and to the Opposition thinkers to have a phased retiral from the present value of sterling in terms of gold. If we do not do it thoughtfully, plan it now and have it ready to do as the autumn comes along, certainly at any time that we enter the Market, then we shall find that we shall be forced to do it; and it is far better, whether you are a soldier or a financier, to plan what you are going to do than to be forced to do it at a time when it is most inconvenient to you. We have had two or three devaluations in my lifetime in Parliament, and they are always inconvenient. They always arise at a time when you do not want them to arise. Let us, this time, plan it so as to bring our pound into a better and a viable relationship with the European currencies, so that it will work in that environment and work properly. That is my plea.

I have more than once before in recent months spoken about this matter, and therefore I will not go on to elaborate the argument about gold. I will summarise my view about it in just two or three sentences. It is generally agreed by all bankers and most students of this matter that the world lacks liquidity; that a greater amount of liquidity would encourage and increase trade throughout the world and make for a better living for all peoples. Gold, along with the dollar and the pound, and backing both, is an essential clement in this, and to pretend, as some are trying to pretend, that you can consider world liquidity without considering gold is unreasonable. It is an important and, indeed, a very large part of the problem, and it must be considered. Incidentally, a rise in the price of gold has the advantage that it encourages trade throughout the world, that it encourages British exports and inhibits British imports—very important, whether in the Market or in the world generally—and that it thereby safeguards the balance of payments. I therefore stick to just this one point which I want to make in this debate: it is that now is the time for the Government to study the danger, which is not far distant, that we shall be driven off sterling, and to plan to go off it in a phased operation.

7.26 p.m.

LORD WELLS-PESTELL

My Lords, the decision of the Government to make an application for membership of the European Economic Community means that the debate here to-day and that in the other place amount really to little more than an academic exercise. The decision has been made; and I think I am inclined to agree with the noble Lord, Lord Carrington, who said that very few of your Lordships are likely to change your minds to-day as a result of anything you hear. I think I have quoted the noble Lord correctly. I cannot pretend to have come to your Lordships' House to-day with an open mind. I regret very much the Government's decision to make an application to go into the European Economic Community. I think it is a mistake. It may be historic, but if we go in I think it will be disastrous. And, although I made up my mind a good time ago, I am not going to disclose whether I come into the category mentioned by my noble friend Lady Gaitskell, as to whether I am a fanatic about it or not.

However, I appreciate that the Government recognise the problems involved, and I believe they are prepared to make a sincere and sustained effort to resolve them. I listened, as your Lordships did, very carefully to what the noble and learned Lord on the Woolsack said about our entry. I say, with the greatest respect, that the noble and learned Lord posed the problems, and I am hoping that my noble friend the Leader of the House, when he comes to reply, will tell the House how some of them are going to be dealt with. All that we have been told in the Press, by Government spokesmen and by certain Members of your Lordships' House to-day has dealt with the problems that we arc facing. I think the Government owe it not only to your Lordships but to the people of this country to say very clearly how these particular problems are going to be negotiated.

At this hour of the day, and with so many speakers having spoken before, there is little that can be said now that is new. Therefore, to satisfy myself, I would merely ask the Government a number of questions with regard to what is likely to happen if we go in. As I have said, a good deal has been said about the problems; very little has been said, if anything at all, about the real impact on the people of this country if we go in. This may have been deliberate in order to smooth the path of the negotiations, but as this matter is of vital concern to the people of this country I think we must know what the effect is going to be.

Several of the problems were referred to by the Prime Minister in his Statement on May 2 to Members of the other House. Although these snags are to be the subject of discussion, I find it difficult to see how we can contemplate or make provision for the payment of between £175 million and £225 million (this afternoon somebody said £250 million) in foreign currency in levies on imported foodstuffs. I think it is generally agreed that this is going to impose a very serious burden on the family. Various estimates have been given as to what the imposition will be. I think it fair to say that it may mean 25s. per week in increased food prices for a family of four.

How are they to meet this additional burden? We have to face the fact that there is a substantial number of people in this country at the present time who are living either on or below the poverty line. There are large numbers of people engaging the attention of professional social work agencies because of their poverty level. Is it likely that this matter can be dealt with satisfactorily by negotiation? I should like to ask the Government how these people—those to whom I have just referred—are to be protected. If we cannot deal with this by negotiation, how do the Government propose to deal with the matter so far as the families are concerned? I think it reasonable to ask the Government whether the families will be spared such a fantastic increase in the cost of living.

THE EARL OF LONGFORD

My Lords, in order to understand the questions that the noble Lord is putting—though I do not know whether I shall be able to answer them—may I ask whether he is talking about the cost of living for the poorest section of the community or for the whole community?

LORD WELLS-PESTELL

My Lords, I have tried to make two points. One is in relation to the increase in the cost of living so far as the whole community is concerned; the other—about which I am more concerned—is the impact which the increased cost of living will have upon the poorest of our people. I am wondering how the Government are proposing to deal with that kind of situation.

It is reported that the Foreign Secretary said very recently that a major expansion in production will provide gains in national wealth and a higher standard of living which "will more than cancel out the dearer prices of some foods". I thought that that was the goal, the object, or the aim of our National Plan. We have not succeeded in doing it at a National Plan level. I have heard nothing, seen nothing, and read nothing which leads me to believe that we shall be able to do it if we go into the Common Market. We are told—and I think this is perfectly true—that there will be difficulties at first. I should like to ask the Government to indicate for how long those difficulties will exist. Does this mean that there is to be more unemployment during the period of adjustment? It has been said that if we go into the Common Market there will be a long period of adjustment, during which there will be a substantial number of unemployed; and the figure of 4 per cent. has been estimated. I should like to ask whether we have to look forward to a much greater body of unemployment than we have at the present moment.

THE EARL OF LONGFORD

I do not know from where the figure of 4 percent. crept in. It was certainly not from the Government.

LORD WELLS-PESTELL

My Lords, I am sure it was not from the Government. What I am asking is: Would it be true, if we went into the Common Market, that we should be likely to have more unemployment than at the present moment? The answer, presumably, is "Yes" or "No", or that the Government do not know. I think it is desirable, if there is to be a long period of adjustment during which things may be worse than they are at the present moment, that we should know the extent of it.

The Prime Minister's statement included the words—and they have been referred to this afternoon by one or two noble Lords—

We must be realistic and recognise that the Community's agricultural policy is an integral part of the Community. But what is much more important so far as we are concerned are the words which follow. The Prime Minister, it is alleged, went on to say:

We must come to terms with it. I think my noble friend Lord Kahn referred to the same matter. The Prime Minister continued:

But the Government recognise that this policy would involve far-reaching changes in the structure of British agriculture. I want to say, with great respect, that that statement suggests that this is a matter for our acceptance rather than for negotiation. I should like to ask the Government whether this is so. If it is, how do the Government propose to overcome the difficulties in relation to the considerable levy on foodstuffs? I should also like to know what "far-reaching changes" are envisaged in the structure of British agriculture. I think we are entitled to know this.

My Lords, so far as I know nothing has been said about the position of the wool producers in the United Kingdom. I must confess that I saw Cmnd. 3274 only this morning, and I cannot claim to have read it word for word. But there are upwards of 123,000 wool producers in the United Kingdom. Many of them, as I am sure my noble friend Lord Woolley would tell the House, are living from hand to mouth; many of them are finding things very difficult. Do we know what membership of E.E.C. will mean to them? We are having difficulty now in selling British wool. Is it going to be easier if we go into the Common Market?

The statement also refers to:

…the creation of a single market of approaching 300 million people. Is it not true to say that as a member of the Commonwealth—and taking into account our EFTA partners—we have access to the largest single trading area in the world? Is it not true to say that we have political influence within a world-wide multi-racial association of, I should have thought, many more than 300 million? Frankly, I should prefer to see that relationship made more effective, both from the political and economic point of view, as I believe it could be.

I am not unmindful that entry into the Common Market has a great deal of support in your Lordships' House. If I may say so—and I do not say it unkindly—I think it a great pity that Members of the Conservative Party have allowed themselves to be seduced from their traditional loyalty to the Commonwealth. And bearing in mind that E.E.C. means the setting up of a common Customs tariff, I think it is regrettable that the Liberal Party, such firm supporters of the Common Market—

A NOBLE LORD

There are no Liberal Peers in the Chamber at the moment.

LORD WELLS-PESTELL

I will say it, nevertheless. I think it regretable that the Liberal Party presumably should have abandoned their belief in free trade. It may be—and I think we have to face this fact—that we should be joining an organisation that is already showing signs of running down. The industrial progress of the Six was faster between 1950 and 1955—before the Common Market came into existence—than in the following five years. Does this mean that we are going to run down for the first five years after getting into the Common Market, if we are accepted? I think we have also to face the fact that the Common Market have not been without their economic crises in the last year or two; many of them have been in much the same position as we have been for the last year or two. I feel, too, that we must bear in mind that the E.E.C. is not just concerned with matters of trade and tariffs. Many speakers have made that point already to-day. It covers a vast range of social and other matters, excluding at present only defence and foreign policy. As I understand the situation, membership of E.E.C. means accepting, as superior to our own, a court of justice; the Council of Ministers, whose decisions are binding on Member States; an executive Commission, with greater powers than those we give to our own Ministers and civil servants.

In the presence of the noble and learned Lord the Lord Chancellor, I hesitate to make any comment about the legal side, but there is a marked difference between the Continental system of jurisprudence and the Common Law of England. I should like to give one example, and I hope that the noble and learned Lord, will not hesitate to correct me if I am wrong. I think it is right to say that the Commission can impose substantial fines without a prior impartial hearing. The person fined, if he feels aggrieved, can apply to the court to establish his innocence. This seems to me quite the wrong way round, and certainly not the way in which we have been in the habit of dealing with matters of that kind. In the last four years, my Lords, the E.E.C., the Commission, has made 600 regulations, all of which are binding on member countries; regulations which cannot be altered by national Parliaments.

A good deal has been said about the surrender of our national sovereignty—and the noble and learned Lord on the Woolsack referred to this to-day. This has been acknowledged by the Leader of the Conservative Party, who was reported as saying, on November 17 last: We should frankly recognise this surrender of sovereignty and its purpose. Frankly, I do not know what that means. I am wondering whether the Government will explain what the "surrender of sovereignty" really means. Does it mean surrendering Britain's national sovereignty and Parliamentary control to unelected E.E.C. institutions?

I ask the Government whether Whitehall has yet determined the place of our Parliament in the E.E.C. My guess is that, so far, it has not. Does it mean that our first loyalty will be to the Six, at the expense of the Commonwealth, and particularly of the Australians, the Canadians and the New Zealanders, to whom we owe so much? I want to be quite frank about this, my Lords. I believe that our friends are not to be found in Europe; I believe that our friends are to be found in the West, in Canada, and to the South of us, in Australia and New Zealand.

It seems to me that the principal aim is to build, on a foundation of the Common Market, a single Political Community with a common Parliament and, I believe, eventually a common Government; in other words, the creation ultimately of a West European Federal State. Is this really what we want—a West European Federal State with a President who, presumably, must be superior to our own Sovereign? I ask the Government to say quite clearly just what this application means, and whether we are likely to go into the Common Market willy-nilly, whether or not we get the right terms and conditions. I should also like to ask them whether we are prepared to withdraw our application, if the negotiations fail to resolve to our satisfaction the problems and snags which are all too apparent.

Finally, my Lords, I should like to ask this question: Why are we so anxious to go into the Common Market? Is the reason in any way connected with a sense of failure on our part; our inability to deal with our own problems, and a feeling that the Common Market will provide a solution to our several problems, mainly economic and, ultimately, social and military? If this is so, then the solution is not to go into the Common Market: the solution is for ourselves to make a determined effort to put our own affairs in order.

I believe that the prosperity of Britain rests far more on our ability to make better use of our own resources than it does on securing tariff-free access to the Six. Entry into the Common Market will not in my view offer, let alone provide, an easy escape from our economic difficulties. The truth, as I see it, is that the growth of our economy and of our trade will depend far more on our own exertions; on sensible planning of our own economy; on reasonable restraint of incomes, based on a fairer division of wealth, and on our ability to put investment and exports before home consumption. It is for these reasons, and many others, that I cannot support the Government in this matter or approve the White Paper.

7.46 p.m.

LORD AUCKLAND

My Lords, the noble and learned Lord on the Woolsack has given a very clear and interesting exposition of the Government's White Paper on the proposal to enter into negotiations for entry into the Common Market. So far as the White Paper itself is concerned I would give it approval, subject to a number of qualifications, some of which I should like to outline. My Lords, I think that in the competitive world in which we live one thing is quite certain: that we cannot always rely on trading with our friends alone. We have to trade and we have to do business generally with those countries with whom we have political and other differences, always provided that so far as possible the results are reciprocal. For example, a great friend of mine who is chairman of a large engineering company visits China once a year, and the trade we do with China in cranes and other heavy steel manufactured components is considerable. I make that point only to stress that whether we decide to enter the Common Market or not, we must not be too insular in this matter.

The more one reads the various documents relating to the Common Market, including the Treaty of Rome, which I have tried to read over the week-end, the more difficult it becomes to make up one's mind whether this great decision is right or not. If one reads Article 48 of the Treaty of Rome relating to the interchange of workers between the countries of the Six, one finds some implications which are rather alarming at a time when, ostensibly, we are controlling immigration. There is virtually free movement of workers within these countries. Whether that is a good thing or not I am not sufficiently experienced to pronounce, but it is something which, in industry particularly, may well give rise to concern and a great deal of thought must be given to this Article in any negotiations.

I should like to say a few words about New Zealand. I have strong family ties with New Zealand and have met many businessmen and others who have been touring this country. I think it would be wrong to suppose that New Zealanders are completely against our joining the Six, but naturally they are worried, and I think with reason. It may be argued that New Zealand is a small country and that the new Commonwealth, as the noble Lord, Lord Balfour of Inchrye, said in his admirable speech, owes us a limited allegiance. It may be argued that Canada and Australia have found new markets. But New Zealand has remained very loyal to us.

I would draw your Lordships' attention to an article in the Daily Telegraph last year by Mr. R. H. Steed, in which he says that if we attempt to enter the Common Market without any provision for New Zealand, she may seek markets in the Communist countries and her defences may be weakened. He went on to say: 'God Save the Queen ' is heard more frequently in New Zealand than in Great Britain. I have heard that comment endorsed by friends from this country who have recently been over in New Zealand. This may be deemed parochial, but I believe it is something which we should consider carefully. Our exports to New Zealand are considerable and the trade balance is very favourable. New Zealand is going through a difficult time financially, but so is this country and so are other countries, including members of the Six.

At the same time we have to look at Europe of the future. I hope there will be a federation of the Six and the Seven, because countries such as Finland and Denmark have a rosy future. Our imports from Finland have increased a good deal and there is a good export potential, particularly in pharmaceutical products. An argument on the other side is that medical research could be developed if we went into the Six, because some of the German pharmaceutical companies are among the finest in the world. I make that point advisedly, because some noble Lord with greater medical knowledge than I have might well shoot it down.

So far as the cost of living is concerned, it has been estimated that it might rise by 3 or possibly 4 per cent. initially. I am not an economist and not in a position to confirm or deny these figures. That is a matter for the Government in their consultations with the countries concerned. But I am not sure that it is entirely a relevant factor, because the cost of living is bound to rise anyway when the period of restraint finishes. I do not make that as a political point. We have seen this situation since the end of the war and other countries have seen it, too. If we increase wages, prices are bound to rise, particularly if subsidies are reduced.

May I turn for a brief moment to the political side? Many people are worried about the present situation in Germany and the rise of the new Nazi Party. This development may be rather exaggerated, but I hope the Government will give some thought to it. I believe that if we go into Europe we can be a controlling and balancing factor here, because, politically speaking, this country is extremely mature and we have had many years under Governments who have had a great deal of experience in diplomacy.

I have put forward some of the items on the "for and against" table which the Government have to consider. Should Article 46 of the Treaty of Rome, on the free movement of labour among the signatory countries, be a deterrent or not? How is New Zealand going to fare if we go in? Can the Government guarantee to get at least reasonable safeguards for New Zealand? I believe that this is a vital condition and I shall be sad to see us enter if New Zealand is turned down flat. Will E.E.C. as such be powerful enough? Can EFTA and the E.E.C. be federated in a more powerful union? These are matters which the Government will have to consider. Although, like most noble Lords, I have reservations, I think that whether we agree with the Governor not, we should all wish them well in the hard task that lies ahead of them.

7.58 p.m.

LORD SEGAL

My Lords, few noble Lords who have listened to the powerful contribution of the noble Lord, Lord Woolley, could have failed to be impressed by the weight of his argument, but surely the dangers that face British agriculture through entry into the Common Market are no less than the dangers faced by Holland when it also had to enter the Common Market. These problems have not only been faced by every single country now in the Common Market, but they have also been successfully overcome. All these countries in turn came through the agonies, the headaches and the heart-searchings we are in process of going through now, and, as we have seen, all have emerged successfully.

Listening to my noble friend Lord Wells-Pestell speaking of the doubts and misgivings he has in his mind, I cannot help feeling that these are all completely unfounded. What we are afraid may happen to our country, other countries have been afraid of in the past. So far from our applying to join the Common Market out of fear, as he suggested, I would say, on the contrary, that we are determined to go into the Common Market not out of fear but out of courage; not out of uncertainty but out of confidence, because we feel to-day, as so many of the countries now firmly welded together in the Common Market have felt: that unless they were able to hang together they would all hang separately. Those common interests, arising out of common doubts and uncertainties which others have shared before us, will all, I think, tend to vanish after we have been members of the Common Market for a period of a few years, and perhaps after a decade has passed will then remain no more than mere academic arguments, with no basis of reality whatever.

There is always a natural temptation, in a debate like this, for each one of us to parade his own pet hobby-horse. It is only natural that we should express doubts about agriculture and the wool industry, or, as the noble Lord, Lord Auckland, mentioned, about the pharmaceutical industry. There are just two points that I should like to make as to some of my own doubts about our application to enter the Common Market, and these I can deal with quite briefly.

The first is on the matter of timing. The noble Lord, Lord Carrington, from the Front Opposition Bench, said that if Britain is "black-balled" twice it will he due to France. I am convinced that in 1972 the political climate of France will be vastly different from that of to-day. For by then France will have had another General Election, and one thing that is absolutely certain is that by then Gaullism will be far weaker than it is to-day. Even if General de Gaulle is still President of France, and even if he should then decide to rule without a Parliament, by 1972 Gaullism, if it still survies, will have reached a low ebb.

Let no one deny the spirit of economic and industrial regeneration that de Gaulle has brought about in France, nor even the spirit of moral regeneration that is the hallmark of his greatness. But the General Election of March 12 of this year proved that his star is on the wane. I was at that time in one of the largest industrial centres of France and, quite apart from the general apathy, everyone accepted as a foregone conclusion that the Gaullist Parties were bound to lose heavily. And so they did. But their losses were far heavier than anyone had predicted. Almost all the younger elements of the electorate have turned against him. All that is needed is for a combination of the anti-Gaullist forces to be renewed in 1972, and by then I believe the conditions for our entry into the Common Market should be much easier. The year 1972 may well be for General de Gaulle what 1945 was for Sir Winston Churchill, without any hope of his ever staging a comeback.

The point I want to make, my Lords, is this. As France is our main stumbling block to-day, I believe that we stand to gain rather than lose if the negotiations for our entry into the Common Market are as protracted as possible, even if they are drawn out until 1972. We must dispel the idea that we are in a hurry to join. Slow timing is the essence of the exercise, even if it means that an unhealthy atmosphere of doubt and uncertainty hangs over the negotiations. I sometimes fear that under various pressures we may have been dragooned into trying to join the European Community too soon. So let us be in no hurry to set the final seal upon the conditions of our entry.

The second point I wish to mention concerns the inequality of sacrifice. To bring any nations of the world closer together for peace is worth a great sacrifice on our part, and I believe that this is the mood of our country at the moment. But the burden of sacrifice falls unequally upon different shoulders. We must all think to-day of the heavy burdens that are bound to fall on the poorer sectors of our people, especially those living in County Durham and in South Wales. It is the duty of Her Majesty's Government to see that the heaviest burden does not necessarily fall on the weakest shoulders, but falls on those best able to bear it. In war time, no one counted the cost. Every section of the community had to risk suffering the supreme sacrifice. In times of peace we must avoid asking one section to make too heavy a sacrifice.

Nevertheless, my Lords, these are not times of peace: we are steadily drifting into conditions that can once again make for war. The mood of the country to-day is of a willingness to accept some degree of sacrifice that will avert the dangers of drifting into an ideological war, or even into an economic war. If the Government go into these negotiations determined to secure for this country the best possible terms obtainable, even under future conditions, then they will receive the blessing of all sections of the community.

8.8 p.m.

LORD GRANTCHESTER

My Lords, so much has been said in support of the Prime Minister's initiative that it may be appropriate to ask some questions relative to it. The Prime Minister asks for support for this application to join the European Economic Community and, at the same time, seeks to cover himself before he starts against any blame for failure should failure result. I do not think that the Prime Minister should seek to shed responsibility in this way. He alone has chosen the timing and the method of approach. He has had before him all the lessons available from the previous negotiations. I believe the real reason for the failure of the first application we made was our failure to look out on the world from the point of view prevalent on the Continent of Europe, or from the mainland, if I may so refer to it to distinguish it from the Europe of which we are a part. The Prime Minister has had time to adjust his attitude, but except for a few phrases which seem to have been suggested to him during his recent visits to European capitals he has, I think, failed to evoke any common European feeling.

We may ask what reason, other than perhaps American pressure, prompted the Prime Minister to think that the time is right for this application. Ignoring our own unsolved problems, we know that the Community is fully occupied internally with reorganisation and with the completion of its transitional period. Externally, the Community has two major unresolved problems: the reform of the international monetary system and the European contribution to defence.

On the first of these issues, the six countries of the Community have made it clear that they are unanimous in their opposition to the line that we have been taking in the Committee of Ten, and in the joint meetings which the Committee of Ten have had with the I.M.F. We have to realise that the Six, and still more the Six plus Britain, if they could agree, are entitled to a greater influence in this field. My Lords, I think I have said sufficient to make the point without going into questions of reserve currencies, changes of I.M.F. rules and liquidity. The Six are also busy preparing a harmonisation plan for taxation which would make possible a European currency, and one wonders if Her Majesty's Government really believe that their application will succeed; whether this is the moment unilaterally to decide upon a plan for decimal coinage here.

On the second of the issues I have mentioned, so far as I know no attempt has been made to clear with the Americans the discrimination which they exercise under the McMahon Act and the granting of export licences which, for instance, prevent Holland from placing an order with a private American firm for nuclear propelled machinery for a submarine, whereas such a licence is readily granted to us. The American Administration, after having ignored the wish for reorganisation of NATO for several years, now admits that reorganisation and readjustment is necessary. We could have played a role in discussions which might have avoided the sad disagreements which have undermined the effectiveness of the NATO structure.

My Lords, all the members of the Community have abandoned the idea of playing any military role in any part of the world where this might bring them into conflict with a major Power. This was accelerated under American pressure during and immediately after the last war. We also felt similar pressure, but the Americans, having realised that they are having to assume greater responsibilities, particularly in the Far East, are now seeking to delay the completion of the process they set in motion. It would be ridiculous to think that a politically united Europe could follow two policies in this matter of military obligations. I believe that preliminary agreement upon the military role and what the European contribution to defence is to be, has to be agreed as a condition precedent to any successful application to join the European Community with the idea of proceeding to any form of political union. As I indicated, I believe equally that agreement upon the monetary problems to which I have referred is also a condition precedent to any successful application to join the economic union of the Community.

My Lords, I anticipate that prior to any negotiations Her Majesty's Government may well be asked to direct their attention to these two problems, which are basic to any concept of European union, economic and political, in which this country is included. I should like to express the hope that Her Majesty's Government are preparing some new suggestions on these two subjects.

8.16 p.m.

LORD RITCHIE-CALDER

My Lords, I want to quote from the White Paper (page 5): For a Europe that fails to put forward its full economic strength will never have the political influence which … it could and should exert within the United Nations, within the Western Alliance, and as a means for effecting a lasting détente between East and 'West; and equally contributing in ever fuller measure to the solution of the world's North-South problem, to the needs of the developing world. The noble and learned Lord the Lord Chancellor drew attention to that statement in his own opening address, and I want to address my remarks now to the last point: to the North-South problem, and to the needs of the developing world. I hope that what I have to say will be reflected in the outcome of the negotiations for entry into the Common Market. I certainly feel that I do not have to underscore it too much for my right honourable friend the Prime Minister, who, of course, was the author of The War on World Poverty.

Many of us who are actively concerned in the problems of the two-thirds of the world which needs development have profound misgivings about the Common Market. It is regarded by many as a super-cartel of advanced countries which will buy cheap and sell dear, and that it will, as a manufacturing Community, tend to discourage developing countries from having the industries which will produce goods which Europe would prefer to sell to them. For example, France, within the Common Market, has imposed on the Community a fairly healthy policy of controlled prices for raw materials, higher than the producer countries might have been able to get in the free market. But it has also imposed tariffs, restrictive tariffs, heavy tariffs, on manufactured textiles, on the pretext that the French textile industry has to be protected so as to be able to use the raw cotton from the countries of the French community which, to quote something I have heard from the French, are not likely to have their own textile industry.

There is an old nineteenth century ring about that argument. Unless we are farsighted and emphatic about this, we may see a Europe emerging in which we shall be developing a situation which will be worse than it is to-day; worse, that is, in terms of the two-thirds of the world which needs developing, and on whose raw materials and resources eventually the whole industrial potential of the advanced countries depends.

According to the United Nations World Economic Survey, the first half of the 'sixties—the first half of the United Nations Development Decade—has seen the advanced countries transfer a steadily declining proportion of their national income to the developing countries. As the Survey says, the attitude is still, "Charity to a stranger", instead of regarding it, as it is, as an absolutely essential investment in the future: as the Economic Survey says, as a necessary transfusion to help the ailing parts of the body economic. As I have said, it is a sad fact that the advanced countries, including and notably the European countries, have begun to restrict the amount of funds which they are making available—that proportion of their national income—to the developing countries.

In total, in 1966 the investments from all sources—that is, grants, funds, private investments, and so on—in the 100 countries and territories which are counted by the United Nations as the developing countries—was 9,000 million dollars. Of that total, 5,000 million dollars was to pay back the interest on the loans previously borrowed; that is to say, five-ninths of the funds available were in fact paying the interest on what had been borrowed. Apparently this has now produced a curious attitude: that is, that for creditworthiness you have to stop borrowing. Since a country which acquires creditworthiness does not borrow, it cannot pay its debts. This is feeding a tapeworm. If you feed the tapeworm it grows; if you starve it you starve yourself. The only thing to do is to get rid of the tapeworm. At the moment the whole attitude—as distinct from the relatively better attitude in Britain—of the Common Market countries (including Germany, by the way, which in the beginning was very forth-coming but now seems to be discouraged by ingratitude, and a feeling that their well-meant help to the developing countries has not paid off) is to give aid to these developing countries in the form of interest-bearing loans.

The other thing which I want to emphasise, and which I am sure every one who is concerned about, is, not the next five years, in terms of getting into the Market, not the next ten years, as to how we are going to struggle through the difficulties, but the next 20 or 30 years, in which all the developing countries will be in crisis unless we recognise that those things which we now regard as charity or aid are, in fact, an investment in our future.

It is perfectly clear that, in spite of what the White Paper says, we shall have an ingrowing development in Europe unless we are very careful. We talk, and rightly so, about the need for technological advance. But, my Lords, slave electrons are much cheaper than the cheapest coolie, and therefore it is the tendency, manifest, and plainly manifest, for countries to invest in prosperity, mini-cars in exchange for Mercedes cars, or as my right honourable friend, the Prime Minister said on a previous occasion, washing machines in Dusseldorf, which is a technological form of taking in each other's washing.

Like grasping tycoons, who make a lot of money out of exploitation and then give it back, the attitude of the Common Market countries (indeed, it is implicit in this remark in the White Paper) is that we shall be extremely successful and prosperous ourselves, and then out of our wealth we shall give it back, as I have said, like tycoons who have made money and then set up Foundations. I am not at all optimistic about the altruism. I respect the sentiment of the White Paper, but I want a great deal more insight into the actual intentions. In fact I hope that we in this country who believe, as the White Paper says, in achieving a solution of the North—South problem, will receive assurances that will at least relieve the misgivings of people like myself.

8.25 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, unlike the noble Lord, Lord Ritchie-Calder, I have always been a pro-Marketeer, from the earliest days when the idea was introduced into political thinking. That may seem rather odd, because of course I was brought up in the days of the British Empire, when a great deal of the map of the world was coloured red, and I was very proud of that fact. But chiefly owing to Fabian doctrine, and for good or ill, we now no longer have a British Empire. Having come to that pass it is certainly economic common sense for us to join the Common Market. We cannot remain an offshore island with our huge population. If, like Sweden, we had a population of 6 million we probably could remain aloof, but in our situation it is only common sense to join. Anyone who has had any experience of manufacturing industry will realise that if there is an enormous home market, as the Common Market will be, of nearly 300 million people, that is a tremendous advantage in every form of technological development in connection with export trade, is the lack of such a market has always been our drawback in this country, especially in the aircraft industry.

I should just like to pick up the complaint of the noble Lord, Lord Ritchie-Calder, that the Common Market will be inward-looking to the rich European countries, and will detract from helping the poorer, developing countries. Clearly, one cannot blame the European countries for cutting down on their aid; or, for that matter, America for cutting down on hers, because a great deal of the aid that has been sent has not been wisely spent. There is great corruption in many of the developing countries, and it really has not been a particularly happy chapter. But I quite agree that we must help the developing countries.

LORD RITCHIE-CALDER

My Lords, may I ask the noble Viscount whether he will accept from me that I am talking not about charity or ingratitude but about the inevitable facts of investing in the development of the world, without which we shall not be successful.

VISCOUNT MASSEREENE AND FERRARD

My Lords, of course we have to invest in the developing countries, but we should do that by sending out experts who will have a certain amount of control over the way funds are invested. To a great extent we have just handed these new Governments large sums of money, and in many cases it has not been wisely spent. I do not want to dwell on that aspect of the matter, but I can tell your Lordships that in the last few years we have had quite a lot of American capital coming into this country. If we do not join the E.E.C. that American capital will cease coming into this country and will go to the Continent. I can assure your Lordships of that.

I entirely agree that the agricultural aspects of the Common Market are the most difficult ones. But we need not be at all alarmist about them. I am a farmer in corn and in beef. I think that a great many people in the farming community, and particularly the noble Lord, Lord Woolley, are being unnecessarily alarmist. I recognise that the Treaty provides for the establishment of a common agricultural policy—of course, in industry that is not so: the Treaty of Rome does not stand for a common industrial policy—so agriculture has a slight disadvantage there. But we must remember that when the Common Market was first being formed the Six countries laid down their special needs agriculturally, and to a great extent they have had their special needs incorporated in the E.E.C. When we go in, if we go in, it will be a greatly enlarged Community, and therefore we have a perfect right to expect that new regulations will be adapted to take account of that. When we join the E.E.C. it will not be the same E.E.C. as it is to-day. I therefore think that we are being unnecessarily alarmist over agriculture.

It was the noble Lord, Lord Woolley, I think, who made great play of the fact that if our agriculture did not have the stability of the Annual Price Review, the deficiency payments, which it has had during the past few years, it would be disastrous. But I cannot follow him in his argument. After all, under the deficiency payments agriculture has been supported by the taxpayer; under the E.E.C. it will be supported by the consumer. We must remember that once agriculture is supported by the consumer the Exchequer will be relieved of the cost of the deficiency payments, which amount on an average to about £150 million a year. Why cannot that money he applied to helping the housewife so that she does not feel the effects—and they will not be big effects—of the rise in food prices, which has been quoted this afternoon as between 10 and 14 per cent., if we join the Market? The rise in the cost of living has been quoted as 2½ per cent. to 3½ per cent., but the actual amount is, I think, 2½ per cent. Surely that money could be used to help reduce indirect taxation, taking purchase tax off things in the home, and so often any blow to the consumer of any rise in the price of food.

Perhaps I might refer to the noble Lord, Lord Clitheroe, who produced one or two figures regarding agriculture which to my mind were not quite correct. He said—and of course it is correct—regarding corn, that it will be a help to the farmers in this country who are corn farmers, but he also pointed out, in which he was also correct, that the actual sales of grain in this country are only 12 per cent. of the whole. But he forgot to say that a great deal of the grain is used by the farmers who grow it for their own livestock. Therefore to say that the amount of grain sold is only 12 per cent. does not give a true picture.

I think the noble Lord also said that the amount of meat sold in the country was 65 per cent. of the whole, and that therefore the beef farmers would have to buy their feedingstuffs at a higher price, owing to the higher price of grain, which would be a great disadvantage. But here again I think the noble Lord is probably taking the Common Market price of grain as the maximum price. The maximum price of wheat is £38 10s. a ton; and that of barley, think, £33 10s. These are the absolute maximum prices. The average price is what is called the "intervention price" which of course is a great deal lower. The intervention price is the price at which grain is delivered to the area in the Common Market which has the greatest deficiency in grain—areas like the Ruhr. If you take into consideration the intervention price and the transport of grain to the Ruhr, the actual price of grain in the Common Market will be for wheat only about £30, and for barley, £26 to £27. So the actual cost to the livestock producer will not be nearly so high as the noble Lord thought.

The other point I should like to make is that in the Common Market 17 per cent. of the population are agricultural. In the United Kingdom the proportion is only 4 per cent. When we join, our farmers will have far more power in conjunction with the 17 per cent. in the six countries. They will have a great deal of power to negotiate: in other words, it will be over 20 per cent. Some farmers rather have the idea that once they are in the Market they will have no say at all; but of course the reverse is the case. They will have a big say through the Brussels Commission, which every year fixes the prices which go to the Council of Ministers.

One point has been brought up in the debate already but it is an extremely important one, namely, the necessity for a transitional stage. The period of five years has been mentioned. If it were for five years, the rise in the cost of food, taking it at 5s. per head per week, would then amount to actually 1s. per head spread over the five years. I do not think anybody could complain about that. If we do not join the Common Market prices, anyway, will increase by that much. I do not think the housewife need really feel too worried regarding the price of food.

There is one reservation I should like to make, as I know the West Indies well. It is in relation to sugar. The Commonwealth Sugar Agreement has been mentioned. I hope that the West Indies producers can be safeguarded in some way if we join the Common Market. After all, France has safeguarded her former Colonies in regard to their sugar. I presume there is no reason why we cannot do that, and I hope that we shall. I, too, would echo the remarks of other noble Lords about New Zealand. We owe New Zealand a special duty to preserve their economy as regards agriculture. Their economy is founded upon agriculture, and we must certainly try to safeguard them, at any rate until they can stand on their feet through other connections.

There is nothing else I want to say particularly other than to comment on what the noble Lord, Lord Kahn, said in relation to the harmonisation of taxes in the Common Market. He appeared to complain that we cannot all have the same system of taxation in the Common Market. Probably we shall not. On the other hand, I can see no real harm in that. He was rather afraid for the poorer sections of the community in this country: that if there were harmonisation of taxes our tobacco and alcohol might not be so heavily taxed and therefore there might not be sufficient revenue to assist the poorer sections of the community. But all the Six countries of E.E.C. are Welfare States, and some of them have greater benefits than we have in England. I do not think that there is any great danger there. They may run their services a little better, more economically, so that the deserving cases get more; but in this respect I think that the noble Lord was "barking up the wrong tree".

Before I conclude, with other noble Lords I hope that if the worst happens and these negotiations fail the Prime Minister has some other plan worked out. I am sure he has. I have always thought that if the Prime Minister were a punter he would be the bookmakers' nightmare. I am sure that he has "hedged" his bet, so to speak, and that he has another scheme.

THE EARL OF LONGFORD

My Lords, on behalf of the Government I am grateful. Can we accept this as a sincere compliment?

VISCOUNT MASSEREENE AND FERRARD

Yes, my Lords; it is a compliment to the Prime Minister's great versatility and to his mental powers. In fact, I am extremely pleased that the Labour Party have in the last two or three years come round to the idea of the Common Market. It is a feather in their cap. Only a fool does not change his mind now and again. So they have my congratulations.

THE EARL OF LONGFORD

Credit?

VISCOUNT MASSEREENE AND FERRARD

Yes. I think that is all I want to say. As I am the last man in, I shall not keep your Lordships longer. But I foresee a great future in this move. There is a tremendous future in it. I think that the Common Market will be outward-looking. Some noble Lords have been frightened that it will be inward-looking, but I am quite sure that it will not be. It will not hurt the Commonwealth. If they so want, we can have them as Associate Members. I can see little against it. When it comes, the interchange of labour will probably be a little painful, but it will hurt only the shirkers, who are in a great minority. So I give my wholehearted support to this White Paper and I hope that the negotiations will prove successful.

LORD MCCORQUODALE OF NEWTON

My Lords, I beg to move that this debate be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.