BRITAIN AND THE EUROPEAN COMMUNITIES

HL Deb 17 March 1970 vol 308 cc998-1016

2.50 p.m.

THE LORD PRIVY SEAL (LORD SHACKLETON) rose to move, That this House takes note of the White Paper, Britain and the European Communities: An Economic Assessment (Cmnd. 4289). The noble Lord said: My Lords, in rising to move the Motion that stands in my name on the Order Paper. I feel that it is important to emphasise at the outset that Her Majesty's Government's policy remains the same as it was when we applied for membership of the Communities in May, 1967. My right honourable friend the Prime Minister made this clear on February 10 when, to quote his words, he said: There are no options open at all in respect of the decision to open negotiations and to approach them in the determination that they should succeed if the price is acceptable ". We are ready for negotiations as soon as our negotiating partners are ready to meet us; and, fortunately, it now seems clear that this will be by July at the latest.

My Lords, in my view this will not come a moment too soon, and it is encouraging that the Opposition leaders in another place did not dissent in the recent debate there from the view that this is the right time for negotiations. Indeed, it is in many respects a better time than ever before because of Britain's greatly improved economic position, which makes it clear, even to some who were previously sceptical, that we should be a strong and desirable partner in the enlarged Communities. The fact that we can now look forward confidently to the early opening of negotiations of course reflects a new situation, and a very strikingly new situation. Prospects for progress in Europe are to-day greater than they have been at any time since our application. All the Governments of the Six have made it plain that they regard enlargement and British membership as desirable—and, of course, so have the Commission. The way in which they have been conducting their business lately shows that their intention to achieve practical results is serious.

I have said that our policy remains the same and that the publication of the White Paper does not affect it. I should like to stress that the White Paper is not a policy document but an information document, just as the other White Papers, published in 1967, on the Common Agricultural Policy and on Legal and Constitutional Implications of our Membership, were also information documents. The Government have always taken the view that the British public have a right to be informed of these matters, and that is why, in response to public demand and the fact that there have been a number of significant developments in the Community and here, including the devaluation of sterling, we felt it right to set out again what the economic consequences might be. Indeed, I believe we had no option in fact but to proceed as we have done.

Of course, the White Paper is not a full response to the questions that have been asked about the economic consequences of entry into the Communities. A full response is impossible. It covers only the economic costs, and these only in the short teen. These limitations are very clearly stated in the Introduction to the White Paper, but as the White Paper itself shows it is quite impracticable to make any one really reliable and quantified assessment of even the short-term effects. Some people have complained about this, but none, so far as I know, has shown how it could be done. My Lords, it is clear, as the White Paper says, that: Any assessment of the effects of adopting the Common Agricultural Policy must depend on a whole range of assessments and be subject to a substantial range of possibilities ". But this is true not only of the Common Agricultural Policy but of almost all other aspects of Community membership.

Over and above this central uncertainty there are two main problems. First, we cannot make reliable estimates of Britain's position in the late 1970s if we are not a member; but it is this position and not our present one whch, in the end, must be the real criterion for comparison. Secondly, the White Paper deliberately takes no account at all of changes which might be agreed upon in negotiations. I have already reminded the House of the position which we have adopted as the basis for negotiations, and that was made public in the speech by the former Foreign Secretary in July, 1967, which was published as Cmnd. 3345. But noble Lords will understand how damaging it could be if we attempted to forecast the outcome of the negotiations or provided a basis for conclusions to be drawn about the detailed terms which this country might seek. But quite apart from these major uncertainties it is inevitable that calculations of this kind involve a variety of separate and interrelated assumptions even when strictly economic criteria can be used—which, incidentally, they rarely can be.

The magnitude of the sums involved means that quite small variations in assumptions can lead to a huge range of answers. As I point out again—it has been pointed out several times already— a 1 per cent. error in forecasting the balance of overseas trade in Britain alone next year, if applied to both exports and imports, would mean a difference of over £150 million. But the White Paper attempts to look much further ahead and over a much more complicated field even than that with which I have been dealing. It is of course possible, as some of our more determined critics have done, to adopt a grossly simplified assumption about our future and that of the Community, and thereby arrive at the precise figure which they themselves hope to find. It is possible, but unrealistic and highly misleading. This White Paper covers a wider range, and attempts to do so in greater detail than the estimates made in 1967. In the highly important agricultural field, there have been two main changes since 1967. First, there is now a higher level of expenditure by the Communities' Agricultural Fund; and, secondly, devaluation has raised Com-munity prices in sterling terms.

The White Paper does not attempt to quantify the dynamic effects of membership, although I shall be talking about these in a little while. The C.B.I., in their admirable report, Britain in Europe, published last December, tried to quantify some of this by assuming that the United Kingdom can obtain a substantial increase in its share of the Community market; and it is clearly right that those who are engaged in industry and trade, and who will have to carry the burden and take the responsibility of day-to-day decisions which entry into the Communities would entail, should attempt such an assessment. But although these independent studies have employed different methods and adopted different assumptions, noble Lords will be aware that their overall conclusions are not dissimilar.

I should like to say something about the food prices since the sections in the White Paper dealing with these have perhaps attracted more public attention than any other. This is perfectly understandable. But, of all the tables in the White Paper, probably the one which has been most misused and most misinterpreted is Table 7, which sets out some of the retail prices of the main foodstuffs in the countries of the Six and in Britain. Those of our critics who feel that their arguments need some horrific backing have presented this table as proof positive that British food prices will leap overnight to the highest levels visible in that table. It is nothing of the kind. Table 7 certainly shows that the average price in the E.E.C. countries of the foodstuffs concerned is higher than in Britain, but, equally, it illustrates the extraordinarily wide range of retail food prices within the present Community.

My Lords, what do we conclude from this? We must conclude that there are at present no uniform retail food prices in the Six and that food prices in this country, if we join the Community, will be determined not only by the Common Agricultural Policy but also by the efficiency and adaptability of our processing and distributive systems—a field in which we should not be nervous of competition.

Again, the White Paper figure of an increase of from 18 to 26 per cent. in food prices has received selective and indeed misleading treatment. There are two important points that I should like to make here. First, the range we have given, of 18 to 26 per cent., represents our assessment of the maximum range within which the increase in retail food prices is likely to lie. It is based, as the White Paper makes clear, on the assumption that present price differentials at the wholesale stage would apply if we stayed out of the E.E.C. and therefore would have to be closed if we joined. But in fact the pressure of surpluses within the Community which has produced proposals by the Commission to cut some prices—of butter, for example; and of wheat and of sugar—makes it quite possible that this gap will in any event narrow significantly. Prices in the United Kingdom, if we were to remain outside the community, might rise relatively to those within it, thus reducing the gap still further.

The second important point is that we are not talking here of an increase which would burst upon us overnight. The rise would be spread over a period of years, with the full effect being felt only after that transitional period. Let us therefore be quite clear about what the White Paper actually says. It certainly forecasts an increase in overall retail food prices if we join the Community. This, in isolation, obviously is rather unattractive; no one wants to pay more for food than he has to. But what must be understood is that food prices, past, present or future, do not in themselves give anything approaching a fair idea of the standard of living of the community concerned, or even of the real cost of food to the consumer. In short, they should not be taken in isolation.

I have already said that food prices are obviously important. But there are some other important figures which we have to take into account. I should like to look at these other figures, both our own and those of the present Community. The most important figure of all is that of wages. Over the years 1960 to 1968, the average hourly earnings in this country increased by 61.8 per cent. The Community figures are as follows: Germany, 82.3 per cent.; France, 79.8; Italy, 87.9; Netherlands, 106.6; Belgium, 74.3, and Luxembourg, 63. These are significant figures, and against a background of in-crease in consumer prices in the Community below, or no higher than, our own (in only one did the increase exceed our own over the years 1961 to 1968) their wages increased a very considerable amount more than ours did in comparison to the average run of retail prices which, both here and in the Community, was something of the order of 30 per cent.

I do not suggest that our own performance was a poor one: this country is substantially better off than it was eight years ago. But it is equally clear that the Community countries are becoming better off a great deal faster than we ourselves are. The prospects are better in terms of current trends. This is not only a matter of their wages; it is reflected also in the level of their social services. This adds up quite simply to a higher standard of living and a faster increase in that standard. That is the context in which we must look at the likely increase in food prices—an item of expenditure, incidentally, which accounts for a declining proportion of individual expenditure as incomes rise in an economically developed country. Ten years ago the proportion in Britain was 30 per cent.; it has since declined to about 25 per cent.

My Lords, the White Paper makes no attempt to evaluate the dynamic effects of entry. It makes a fundamental distinction between impact and dynamic effects. The impact changes relate to given condi-tions—for example, supply and demand; reactions to tariff changes and higher prices. In these cases projections and assumptions are necessary because we are dealing with a future situation; but information exists, however imperfect, on which to base estimates. The dynamic effects, however, consist in changes in the underlying conditions of supply and demand resulting from rationalisation, large-scale investment and more rapid technological development arising from membership of a wider and faster growing market. The fact that we have not been able to evaluate the dynamic effects does not mean that they will be less real than the effects which we have tried to quantify.

There is no doubt that the benefits of joining the European Communities— benefits for our economic structure, our growth and our competitive power— could be much more substantial and significant than the short-term disadvantages, the impact effects, provided that fair terms can be obtained in negotiations and that our industry responds to the opportunities offered to it. I should mention at this point that the word "impact" give a rather misleading impression, because almost all the costs of joining, as I have explained in the case of the Common Agricultural Policy, and as all members of the present Community recognise, will be spread over a substantial period of years.

I should like now briefly to say something about the opportunities for dynamic growth which the Community affords us. So far as trade is concerned, the last ten years have shown that the markets of Western Europe, and more particularly of the Community countries, are of crucial importance to this country. Our trade— and we know that this country trades to live—with the Community countries has shown the most rapid increase of any of our trading sectors, while the proportion of our trade with the Commonwealth has very considerably declined. The Community is a market of vital importance to us and one, moreover, with a high marginal propensity to import; greater, in fact, than the United States market and with the greatest potential for future growth. This potential is illustrated by the fact that although the E.E.C. has long been our fastest growing market and our trade with Community countries has multiplied by two and a half times, intra-Community trade has multiplied by four times.

While on this question of trade I should like to make clear that we are not as some have tended to suggest, faced here with a choice between EFTA and the European Community. Our membership of the Community will lead to other EFTA countries joining or seeking arrangements with the Community. It will be a question of adding one market to the other, not of choosing between the two. I do not want to make too much of the effects, favourable and adverse, of tariff changes. In recent years the average level of tariff, following the Kennedy Round, has been quite low, and the scope for further reduction is limited. Of much greater importance to us is the need to create, as the C.B.I. Report so clearly shows, a harmonised environment in which industry can operate effectively on a European scale and in the setting of an enlarged Community throughout which uniform legal, fiscal and financial regulations will apply. My Lords, this is a theme on which one could talk at great length and I do not doubt that a number of noble Lords will refer to it; in particular my noble friend Lord Brown, the Minister of State, Board of Trade, will have more to say about it to-morrow.

I should like now to consider the question which I have raised at various points, about what would be the effect on this country of staying out of the Community. I have, of course, no doubt about Britain's ability to survive, and even to prosper, outside the Community. Our people are always capable of responding to challenge, and during the past twelve months we have shown to the world our capacity for economic discipline and recovery. But our decision to remain outside the Community would not mean that the rest of the world would stand still. For example, we could not expect that Commonwealth preferences would remain as they are to-day. The Community has already begun to act as a magnet of economic attraction to some Commonwealth and to many non-Commonwealth countries, and the system of trade preferences is already being eroded. Of course, our trade with the Common-wealth and the rest of the outside world will remain of vital importance, but we should note that the Community has, in recent years, been more successful in trading with the outside world, including the Commonwealth, than we have; and I see no reason why the British economy, operating from a wider and more dynamic base, should not preserve and expand Commonwealth trade.

I have said that the rest of the world would not stand still, and Community Europe would not stand still either. The Communities are definitely on the move and the Hague Communiqué has shown the range of their ambitions. They have expressed their serious intention to work for economic union—for example, by the harmonisation of company law and fiscal arrangements—and we must expect far-reaching moves in the field of monetary integration. Nor do I expect their actions to be limited to furthering their own prosperity. The Prime Minister and the Leader of the Opposition have made two very notable speeches. I think that if noble Lords have not read those speeches, they should do so. Both rejected the charge that the European Communities were likely to develop on an inward-looking basis and they paid tribute to the remarkable record of Community countries in the fostering of aid to a large part of the developing world.

Britain would have its own great contribution to make in all these fields, and, to my mind, that makes it all the more important that we should take advantage of the opportunities offered by membership to play a full part in shaping the integrated Europe which the Communities are determined to construct, and which they will go on to construct even if we do not join. Nor should we underestimate their determination to make progress in the political sphere. Indeed, Her Majesty's Government have always regarded the political aspects as decisive. The Prime Minister said in another place, in May, 1967, when he announced the Government's intention to apply for membership: …whatever the economic arguments, the House will realise that, as I have repeatedly made clear, 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 that we can—and indeed must—play our full part in it."—[OFFICIAL REPORT, Commons, 2/5/67; col. 313–4.] My Lords, it would be contrary to the whole weight of history of this island to concentrate just on internal affairs. It would also be contrary to our national character to be satisfied with expressing opinions about the great problems of the world in the knowledge that we can help less and less with their practical solution. No doubt we can all interpret history to suit our own ideas, but if there is one recurrent theme it is the story of missed opportunities for wider associations and co-operation between communities and States.

Many noble Lords, those who followed classical studies in their youth, will remember the tragedy of the Greek cities, which came together, as have other communities and nations, in the face of an aggressor and then, when the threat was removed, fell apart and paid the price of disunity. To-day, my Lords, we are faced, not with a threat of that kind, but with an opportunity. Something more than conventional alliances and co-operation is required if the momentum towards greater unity is to be maintained, and the Communities have shown us the way. There is, of course, no automatic obligation to any political federation or any particular kind of political unity in adhering to the Treaty of Rome. But many of us—I certainly do—feel that there is a case for developing institutions towards political unity in Europe. We believe that geography, history, the emergence of the super-Powers, trends in world trade and in technology, indicate that our common interest is increasingly with our neighbours in Europe. As a member of the Community we can shape the definition of that Community. We can play a leading part in Europe which can, in turn, play a leading and constructive part in the world as European countries have done since history began to be recorded. My Lords, I beg to move.

Moved, That this House takes note of the White Paper, Britain and the Euroean Communities; An Economic Assessment (Cmnd. 4289).—(Lord Shackleton.)

LORD BARNBY

Before the noble Lord sits down—

SEVERAL NOBLE LORDS: Order!

LORD BARNBY

My Lords, could the noble Lord, the Leader of the House, give some interpretation of his sentence about complete economic and financial integration? Does that include a common unit; and also, if so, how long is is contemplated that that would take to evolve?

3.20 p.m.

EARL JELLICOE

My Lords, as I seem, according to the Daily Express, to be among the minority of 19 per cent. in this country at the present time, I feel that I should straightaway declare myself. I have for two decades or so believed, and believed with passion, that perhaps the greatest challenge and the greatest opportunity facing our country in the post-war world was to play a leading part in the creation of a more united Europe. I well remember my frustration twenty years ago at what I held to be the lack of imagination and insight of my elders and betters when, as a young diplomat in Washington, I heard of our failure to seize the opportunity presented by the Schuman Plan. I recall, in Brussels, still as a youngish diplomat our failure to accept what Europe was then, in the late 'forties and early 'fifties offering us, and offering us on a plate—namely, the leader-ship in creating a more united Western Europe. That failure, if it was a failure, was a failure of imagination and insight not only of officials but above all on the part of our two great historic political Parties.

That is why I so warmly welcome the conversion of these two great Parties— and it was a pity, I think, looking back that that conversion was not simultaneous —to the belief that, provided the terms were acceptable, it was in the interests of Britain, of Europe and indeed of the world that Britain should enter the European Economic Community as a full member. I believed in the early 'sixties, when our application was first made, as I believed in 1967, when it was renewed, that in the light of all the great post-war changes that we had seen, this was in fact the right path for our country to seek to tread in the changed circum-stances of the time. I still hold to this belief and do so for very much the same reasons given by my noble friend Lord Carrington in a notable speech last autumn on the humble Address.

In economic terms our industry needs the wider opportunities which only a great internal market—in this case a market of up to 300 million people—can provide. In terms of technology, neither Britain nor Europe will be able over the long term to begin to keep pace with the United States and indeed with the Soviet Union unless we can together achieve a far higher degree of integration. It is clear, in any event, that this is the era of wider economic groupings, and there is no economic group, in my view, into which this country can really fit which can serve the economic interests of our country as can the Community of the Six, if we can but find the right key to the door and if the guardians of that Community are prepared to unlock it.

By the same token, I should wish to identify myself with the view just now expressed by the noble Lord the Leader of the House that the case for our entry into the Common Market is as compel-ling, other things being equal, on political as it is on economic grounds. I should like to revert briefly to this subject in conclusion. For that reason I would myself on reflection have wished that this Motion, which we are discussing over the next two days, had been cast rather more widely. On reflection I think that it would have been more helpful if, in-stead of running over much the same ground as was covered in the two days of very full debate in another place only two or three weeks ago, we had been able to address ourselves not so much to this specific White Paper but to some of the more general considerations which we should have in mind in our stance towards Europe. However, it is the White Paper to which this Motion is addressed and it is to the White Paper I now wish to turn.

The difficulty which all of us hitherto have faced was that while it seemed possible to quantify the shorter-term disadvantages to Britain's economy of joining the Common Market, it was totally impossible to quantify the no less certain but much more intangible longer-term advantages. Some of us, perhaps rather naively, may have expected that the White Paper would have been able to throw some real light upon the more tangible balance of advantage. But, that of course, is far from the case. In fact, far from being able to be more specific about the longer-term advantages, the authors of the White Paper have honestly confessed that it is quite beyond their capacity to make even an approximate estimate of the shorter-term costs. I must frankly confess that in many respects I think the White Paper's treatment of this whole subject matter, honest and above board though it doubtless is, compares pretty unfavourably with the admirable report of the C.B.I. to which the noble Lord referred. The C.B.I. report is a more convincing document, a deeper document, particularly because it makes clear the assumptions on which many of its estimates are based. That is not clear in the White Paper itself.

Be that as it may, we are confronted in the White Paper with an estimate of the adverse impact on our balance of payments of joining the Common Market, ranging from the low figure of £100 million per annum up to £1,100 million. The range is so wide—indeed, it is so absurdly wide—that one is inclined to throw up one's hands in despair. Given this spread, we are all bound to paint with a pretty broad brush in this debate. Nevertheless, there are a number of specific queries which I should like to pose to noble Lords opposite and a number of glosses on the White Paper which I should like briefly to make.

As the noble Lord, Lord Shackleton, has remarked, it is the cost of living which has most caught the public eye, and for the British housewife, faced with an insidious and persistent rise in prices at the counter, the White Paper's rather bleak and naked predictions about the impact of joining on the cost of living must seem to her to be something of a final straw. I very much agree with what the noble Lord said about this matter in opening our discussion. But I must confess that I was surprised when I read the White Paper estimate of the price tag, in terms of retail food prices, which the authors of it had placed before us—an increase of 18 to 26 per cent. in retail food prices, amounting to a cost of living increase of some 5 per cent. I was surprised, since these estimates are so much higher than those which have been made by the Commission itself— 12 to 15 per cent. for food prices and something like 3½ per cent. for the increase in the cost of living—and by the C.B.I. also.

I should like to ask the noble Lords who are replying if they can account for these wide discrepancies. Can they to some extent be explained by the fact that the C.B.I., unlike the White Paper, have made allowances for a possible decline in the price of manufactured goods? Be that as it may, all these predictions point to substantial increases in the cost of food and in the cost of living. I am glad that the noble Lord in opening this debate did not burke them. He rightly pointed out that these increases are unlikely to fall upon us and upon the housewives in any one fell swoop.

More important (and I think that this is not a point to which the noble Lord specifically referred) no account is taken in these estimates of the possibility—I would put it no higher than that, but I think that most people feel that this is probable—that the gap between world prices and Community prices of food is likely to close over the next decade. And of course there is also the essential point, clearly made by the noble Lord, that we cannot consider the cost of living in isolation. The essential point is the relationship between the cost of living of all of us if we join the Common Market and our standard of living if we join. And on this point the C.B.I. Report was quite specific. In the words of the report: Increases in the cost of living should be more than compensated for by increases in income. Next, there is the likely impact of joining on agricultural production in this country. The White Paper estimate is that the increased prices paid to the producer mean that our farmers may be able to produce between 3 per cent. and 10 per cent. more per annum. All I can say here is that observers far more experienced and informed about agriculture than I am hold this estimate to be pessimistic. If, as they suspect, our farm production is likely to rise more steeply following entry, this will, of course, lessen the adverse impact on our balance of payments.

Again, I am inclined to feel that the estimate in the White Paper on the effect on the United Kingdom's visible trade—an adverse effect of between £125 million and £275 million—is also unduly pessimistic. The noble Lord referred to the fact that the White Paper—and it makes no bones about this—makes it clear that its calculations are based solely on the so-called impact effects. There has been no attempt in this area to quantify by estimate the effect on the visible trade balances of the more intangible element, the dynamic effects of membership. Here again the C.B.I.'s approach was far more satisfactory. They drew our attention to the so-called import effect; the tendency of prosperous countries to spend more proportionately on imports; and they came to the conclusion that this tendency in the Six might well be of considerable benefit to our trade. In fact, they calculated that the benefits were likely to outweigh the adverse impact effects of the tariff changes by the late 'seventies. And they and others have drawn our attention to another trend; that is, the tendency of smaller markets to expand more rapidly than big markets when those smaller markets are merged with bigger markets. This will be the case, of course, if we succeed in joining the Six on acceptable terms. Our entry will in-crease the home market of the Six by some 30 per cent., but for us entry will mean that our home market is increased by 300 per cent.

Finally, in this context, there is the 64,000 dollar question—or rather the £670 million question: the cost of our contribution if we join the Community budget. Here we find the widest variations among many other wide variations in the White Paper estimates. Here, again, I frankly find the White Paper's treatment of the matter a litle curious. In paragraph 42, for example, we are told that £670 million—this horrific figure—is a theoretical upper limit, but further on, in paragraph 101, we are told that this theoretical maximum is in fact substantially over-stated. Why then state it in the first place? The C.B.I.'s estimates of £400 million in the late 'seventies, falling to £200 million to £300 million there-after, seem, at least to this lay eye, to afford a rather more solid footing. I accept that here again there must be imponderables, and this is likely to be one of the crucial areas of negotiation.

LORD SHACKLETON

Perhaps I may interrupt the noble Earl. His reactions are very similar to those of a large number of people, which is quite understandable. But it is necessary to recognise that this White Paper is based on a series of econometric studies of a fairly complex kind. When you have them, you either publish them, or you do not. The Government felt that it was right to publish them, and to do so without attempting to import too much judgment in what was essentially a statement of conclusions from the econometric study. In this case it was necessary to point out that the totality of these sums came to this figure. The Government could be criticised, perhaps, for saying that it was unlikely to happen. This is one of the cases where some judgment was expressed.

EARL JELLICOE

I am grateful to the noble Lord for his painstaking explanation of these econometric processes. The conclusions that I should like to draw from these estimates are in fact quite simple ones. In the first place, it is quite clear to me, and I think to all of us, that the higher figure for the short-term costs of joining, albeit econometrically respectable, is quite unacceptable. It would impose a crippling burden on our balance of payments, and negate the growth of our economy which as I see it is the whole point of this economic exercise. Secondly, I candidly feel that those figures give us very little to go on. Whether we are anti-Market or pro-Common Market, we can all find seams to explore and exploit in this particular quarry. My third conclusion follows; namely, that the only sensible course is to negotiate as soon as we can, positively but firmly, with a view to determining whether the cost that we are being asked to bear is acceptable or not.

The balance cannot be struck merely by totting up the short-term economic advantages and disadvantages. There are other longer-term economic factors which our negotiators will have to weigh when they come to their final determinations. There is, of course, the heavy question of whether the cost of entry in terms of our balance of payments can be balanced by a substantial accretion in our national wealth. The White Paper has pointed out that even the balance-of-payments cost, at the highest estimates, would involve a claim on our annual rate growth of something less than I per cent. of our gross national product: and the Chancellor made it clear that even at our present rate of growth we can look to an increase of some £6,000 million in our national income by 1975.

But this may not suffice. We may still find ourselves caught in the familiar straitjacket where growth is held back by the balance of payments, and the balance of payments is fragile through lack of growth, unless we can look for some real and substantial increase in the rate of economic growth as a result of joining the Community—in sum, unless we can look for some forced draught here as opposed to natural growth. It is my belief that in all probability we can. I do not wish to argue an inevitable link between membership of the Community and an enhanced growth rate, but I believe that the figures in Table 14 are of particular significance. Even more significant—and this is implicit in those figures—is the post-war economic history of a country not entirely dissimilar to ours in economic structure, Belgium. In the mid'fifties, the Belgian growth rate was 2.8 per cent., the rather sluggish sort of growth to which we have become only too accustomed. But in the 'sixties Belgium's growth had spurted to 48 per cent. An increase of even half this amount by us would mean that we could carry with comparative ease even the heaviest burden which the authors of the White Paper would seek to lay upon us.

There are other purely economic considerations which our negotiators will need to weigh in the balance when they come to their final determinations. They bear on the effects of exclusion on Britain's international economic standing. The Six are already a powerful economic unit when it comes to international negotiations: the Kennedy Round has shown how formidable they are. Spain has recently concluded an agreement, and I understand that Japan may follow suit reasonably soon. And the magnetism of the Community for the developing countries is already evident. Exclusion from the Community carries with it the risk for us that vital international negotiations affecting vital economic interests will be carried on and decided over our heads. This is a factor which certainly our negotiators must weigh.

Again, one of the most significant trends in the Community at the present time (and it is one to which the noble Lord alluded) is the momentum which is being generated towards closer economic integration over a very wide front. There is the mounting attack within the Community itself on barriers other than tariffs to intra-Community trade There is the move towards a far closer harmonisation of economic policies between the member countries. And, most important of all, there is the gathering momentum behind the move towards closer monetary union leading, perhaps, in the not too distant future, to the formation of a European Reserve Fund into which the various European reserves would be poured. From the Community's point of view we cannot but rejoice at this gathering wind behind their economic sails. Nevertheless, if these trends are consummated, and if at the same time we are excluded from the Community, or exclude ourselves, there is a growing risk that vital decisions within Europe on vital economic matters affecting our vital economic interests will be taken over our heads. By the same token, inclusion, as Professor Triffen, for example, has pointed out in a recent paper, would hold very great advantages for us.

As in so much else here, inclusion would be good for us and would be good for the Six; and exclusion would be bad for both. I trust, therefore, that when we come to strike the economic balance we shall do so with these wider economic considerations in mind. By the same token, and given especally the growing solidarity and confidence of the Community itself, I think we can be confident that the Six will not seek to exact too high a price for our entry, because it cannot be in their long-term interests to seek to bring in to the Community a Britain so plucked that it is bound to be a lame and limping partner for the Six themselves.

I had wished to say something on the political aspects, which I believe to be equally important. But since there are many speakers to follow in this long debate. I will confine myself on the political front to these few words. There are many signs that we are entering upon a new and more flexible era in international relations at the present time. Some of the familiar landmarks may be disappearing, and some of the old ice packs are breaking up. The world we are entering may not in any way be a safer world than the one which we appear at the pre-sent time to be leaving. For a whole host of reasons I believe that it behoves us to do all we can, in that new and rather uncertain world, the era into which we may be moving, to reinforce the political unity of Europe. It behoves Europe, in the interests of the Continent itself, that there should never be a war which would once again disrupt Western Europe. It behoves us, in view of the looming menace or question mark of a third great super-Power just over the horizon, China, joining the other two great super-Powers, the Soviet Union and the United States, to work and seek that greater political unity, if only to endeavour to restore the shattered unity of Europe itself.

I believe that a politically more coherent Western Europe will act as a powerful but peaceful magnet on the oppressed nations of the East. It behoves us to pursue a greater political unity in Europe when we bear in mind the drift of American policy to-day—in fact that in the near future we in Europe may well be asked to bear a greater weight of the burdens of the Free World. It behoves us, not least, to promote that greater political unity as we contemplate that other great division of the world in which we live at the present time, perhaps the most serious division of all: the growing gap between the living standards and future expectations of the North—the rich, industrialised, predominantly white nations, mainly in the Northern Hemisphere—and those of the Southern Hemisphere, mainly the poor, developing and, for the most part, coloured nations.

I am convinced that a more united Europe may have a very great role to play in closing that gap in the next decade or so. And that role can be far better and far more effectively discharged by a Europe, the kernel of which is a prosperous, responsible and outward-looking European Economic Community, with Britain as a full member. These my Lords, are some of the political issues —the more intangible but none the less real political issues—which will be at stake in those vastly important forth-coming negotiations. Let the economic balance fall as it may. But these are some of the reasons why I believe that it is so much in the interests of ourselves, of Europe and of the wider world beyond that those negotiations should not once again fail.