§ 3.32 p.m.
§ THE PARLIAMENTARY UNDERSECRETARY OF STATE, FOREIGN AND COMMONWEALTH OFFICE (THE MARQUESS OF LOTHIAN)My Lords, I should like to repeat a Statement that is being made by my right honourable friend the Chancellor of the Duchy of Lancaster in another place. This is the Statement:
" With your permission, Mr. Speaker, and that of the House, I should like to make a Statement about the meeting with the European Community which I attended in Brussels on the 12th of July.
" We discussed three issues: harmonisation of capital movements, transitional arrangements in the field of the Common Commercial Policy, and fisheries.
" Our object in negotiation on capital movements was to secure the agreement of the Community to an adequate transitional period which would allow us to make the necessary adjustments to our present exchange control restrictions progressively and in reasonably even stages.
" Our proposals were briefly outlined in paragraph 130 of the recent White Paper.
" I am glad to be able now to report that the Community have accepted our proposals in relation to capital movements in full.
" The main transactions affected, and the stages of the proposed changes, are as follows:
" First, from the date of our accession, restrictions on financial transactions necessary to facilitate the free movement of labour will be removed, 363 and there will also be a substantial relaxation in the rules affecting financing of direct investment, both ways.
" Secondly, remaining restrictions on the financing of direct investment will be removed not later than the end of the second year.
" Thirdly, restrictions on movements of personal capital, among which the most important are those affecting emigrants and those affecting house purchase, will be removed by the middle of the transitional period. The main impact of this change is likely to be a once-for-all cost to our reserves probably spread over about two years.
" Finally, arrangements will be made to cover dealings in quoted foreign currency securities by the end of the transitional period. If circumstances permit, any of these timings may be accelerated at Her Majesty's Government's discretion.
" The negotiation itself has of course been concerned only with this question of transition. Her Majesty's Government have throughout accepted the obligation ultimately as a Member State to conform with the Community's rules regarding capital movements. At the same time, it is worth recalling that the Treaty of Rome itself provides for all Member States important safeguards, particularly Articles 109 and 70(2).
" The directives explicitly leave members free to verify by appropriate exchange control measures the nature and reality of transactions or transfers, for example to ensure that a direct investment in the Community is in truth what it purports to be. This gives protection against the exploitation of freedom within the Community as a channel for movement of funds outside it.
" There is provision also for special action by Member States to take protective measures in the face of any actual or prospective damaging balance of payments situation.
" Her Majesty's Government are satisfied that the phased transition which has been negotiated will spread the unavoidable impact on our reserves as evenly as possible and over a period which will delay the 364 main burden until it is likely to be increasingly offset by income return, and an expected growth of inward investment.
" We also reached agreement on a number of transitional measures in the field of the Common Commercial Policy, in particular in relation to anti-dumping and the gradual phasing out of certain import restrictions against state trading countries.
" Finally, fisheries. As I reported to the House on the 24th of June, we have explained fully to the Six the great difficulties that would arise for the United Kingdom, as indeed they would for the other applicants, from the extreme nature of access provisions of the Common Fisheries Policy and the need to modify them to take proper account of the circumstances of an enlarged Community.
" In an attempt to find a permanent solution which would be fair and reasonable for everyone, we proposed that waters within a six-mile limit, measured from the usual base lines, should be reserved for vessels genuinely belonging to the ports from which such waters are now being fished.
" We still consider that our proposal is in all the circumstances a reasonable basis for a common settlement that would be sensible and equitable for all the parties concerned.
" The House will recall that at the Ministerial meeting at Luxembourg between the 21st and the 23rd of June, it was not possible to reach a substantive solution to the problem. But there was an important advance in that the Community put formally on record its recognition that the access provisions of the Common Fisheries Policy would need reconsideration in the different circumstances of the enlarged Community. It was agreed that the matter should be taken up at the Ministerial meeting which has just taken place. Recognising that this is a matter of great political, social and economic concern to all the applicants and that a satisfactory settlement could be therefore worked out only on a multilateral basis, we proposed that the other applicant countries should also be invited to join in these discussions.
365 " In the event it did not prove possible to arrange this. In those circumstances we could not hope to find an effective and equitable way of reconciling the interests of all four applicant countries and the existing Community at the meeting on Monday.
" Against this background and given that there must be agreement regarding the Common Fisheries Policy in the Treaty or Treaties of Accession, I proposed to the Community that we should seek to reach an interim agreement. This would mean that if the negotiating conference was unable in the time available to reach a final agreement satisfactory to all, everyone's legitimate interests would be protected until we had done so.
" Under such an agreement the applicant countries would maintain the status quo pending further reconsideration of the regulations and the achievement of a detailed and definitive agreement after enlargement of the Community. None of the applicant countries would be called upon to give up anything at this stage nor be put at any disadvantage in discussing more permanent arrangements. In particular it would avoid the unacceptable situation in which any of the applicants would be expected to agree unconditionally to a permanent solution for themselves without knowing what the final outcome of the Common Fisheries Policy would involve for the enlarged Community as a whole.
" The Six have taken note of this proposal and have indicated that they now feel the need to study the matter in greater depth.
" We shall take up the question again after the Summer Recess. I am convinced that together we shall be able to find a way through this complex problem to a satisfactory solution.
" This is a matter in which it is more important to get the right answer than the quick one. In the meantime our interests are fully safeguarded."
§ 3.40 p.m.
§ LORD SHEPHERDMy Lords, I am most grateful to the noble Marquess for repeating this Statement. I think most of us would agree that to deal with an important subject like this by question and answer on the contents of a Statement 366 is very difficult, and particularly this afternoon, when we have two other Statements and a good deal of other business, it is not easy or perhaps right for us to pursue too much in depth the Statement before us. In the past when we have had Statements we could always rely upon having a White Paper at the end which would enable us to consider and review the situation clearly and calmly. Therefore I would ask the noble Marquess whether he would consider on behalf of the Government issuing, not necessarily in White Paper form, some form of Government document setting out the background and the conclusions reached, in order that it may be in the hands of noble Lords before we have our debate in about ten days' time. I hope the noble Marquess will meet us on this matter because it is a very important Statement.
I think it must be a matter of regret that a solution was not found for this vital subject of fisheries. It may be better that we should get a right answer in preference to a quick one, but I hope the noble Marquess will be aware of the deep anxieties within the fishing industry and within the community generally. Therefore one should seek to get a settlement as quickly as possible. I hope the noble Marquess will give the House an assurance that in the mind of Her Majesty's Government the settlement must be on the basis of parity between all the countries involved, and that the suggestions that have already been made by Her Majesty's Government about the six-mile limit will be the minimum acceptable to Her Majesty's Government.
The important subject of the Commercial Policy and anti-dumping, I should have thought, was worthy of more than just some six lines in the Statement. I wonder whether the noble Marquess can say whether the existing regulations will continue during the transitional period and, if not, what protection there will be in the event of any dumping by other E.E.C. countries into our markets. As to the transfer of capital, this, clearly, is a most important subject and one that we shall need further time to consider, particularly having in mind the economic situation at present in this country and that, if there is too big a relaxation of the movement of capital, our regional areas might well suffer, especially as we 367 all know that no regional development policy has as yet been agreed upon by the E.E.C. The Statement refers to removing the restrictions on personal capital and suggests that the main impact will fall on our reserves over two years. Can the noble Lord give us any assessment of what effect this particular provision would have on our reserves? My Lords, I will leave my comments on the Statement to be developed more fully when we have our debate.
§ LORD GLADWYNMy Lords, we on these Benches likewise very much appreciate and are grateful for the Statement read out by the noble Marquess, which is keeping us posted on the latest phase of the negotiations. It is obvious, we think, that if we do join the European Economic Community we shall have to agree to some measures for harmonising capital movements and that this may naturally place some strain on our balance of payments, at any rate during an initial period. That being so, it seems to us, on a first hearing, that the Government have got the Six to agree to what, on the face of it, appear to be reasonable terms, though we shall naturally, in common with the Labour Opposition, like to have further time to study them before concluding that they are entirely satisfactory.
My Lords, I would just say a word on fisheries. It is not surprising that further time is necessary before we can negotiate a satisfactory settlement. In the meantime, however, could the noble Marquess perhaps answer two questions, one of which I think has been more or less formulated already by the noble Lord, Lord Shepherd? In the first place, are we to assume that a settlement satisfactory to us must be reached before we sign the Treaty of Rome, or may we take it that it will be possible to sign the Treaty first and then to negotiate a settlement within the Community, with the aid, naturally, of the Brussels Commission? The second question is, can the noble Marquess say whether the Government believe that we ought not, in any case, to be placed in a less favourable position than Norway, or at any rate in no less favourable position as regards the Shetlands than Norway, always assuming, of course, that Norway becomes a member eventually of the European Economic Community.
§ THE MARQUESS OF LOTHIANMy Lords, may I answer the two noble Lords who have spoken. I am grateful to the noble Lord, Lord Shepherd, for his welcome to the Statement and I will certainly undertake to consider his suggestion that some Government documents of some sort might be issued, although he will realise that I cannot promise that to him to-day. I also entirely agree with him that on the whole we have got to the stage now when these matters are probably best left until our debate in ten days' time. I would assure him that so far as the fisheries question is concerned it is hoped that this matter will be dealt with at the next ministerial meeting, which is towards the end of September—I think on September 21—and certainly it is our aim that parity should be the guiding principle in any agreement that comes out of it. I hope that that to some extent answers the noble Lords.
§ LORD SHEPHERDMy Lords, the noble Lord used the word"aim "; that may be"intention ". What I ask the noble Marquess is, will this be the standing point of Her Majesty's Government?
§ THE MARQUESS OF LOTHIANMy Lords, I think I can say that it will be. What I cannot tell the noble Lord at the moment is what the reaction of the Six to our proposal is going to be. So far as capital movements are concerned, I am afraid I cannot to-day give him any estimate of the figures for the first two years. All I can say is that it is firmly our conviction that any losses in this period, and indeed over the following few years, will be more than offset by the economic advantages, as the Statement I think has made clear. The noble Lord, Lord Shepherd, raised a question about dumping. I would assure him, on the anti-dumping point that was raised, that it was agreed that during the transitional period we should be able to take anti-dumping action against third countries, under our own anti-dumping legislation. I think that I have answered Lord Gladwyn's question about fisheries. We very much hope that we shall get a settlement before we come to the signing of the Treaty. That is the firm purpose of Her Majesty's Government.
§ LORD GLADWYNMy Lords, the noble Marquess has not really answered my question. Supposing that we cannot 369 get agreement, is it conceivable that we could then negotiate within the Community?
§ THE MARQUESS OF LOTHIANYes, my Lords; it is conceivable. But we hope to get agreement.
§ LORD SHINWELLMy Lords, is it not obvious that the euphoria which followed the return of the Chancellor of the Duchy recently and the decision taken by Her Majesty's Government was hardly justified in view of what the noble Marquess has said this afternoon? Therefore I venture to ask three questions. First, having noted that the noble Marquess stated in connection with the balance of payments, et cetera that there would be"a once-for-all cost to the reserves ", may I ask whether he can kindly state what is the estimated cost to our reserves? Or do Her Majesty's Government regard that as a matter of minor importance? Secondly, the noble Marquess spoke about the pending commercial agreements—because apparently there is nothing definitive about the commercial agreements—being offset by increased incomes. Would he be good enough to give us an estimate of the increased incomes? Or is this merely a vague, nebulous statement without any justification? Finally, is it not obvious by now that this fishing impasse is almost insoluble? Would it not be proper, in the circumstances, before any measures are taken, to consult with the countries concerned, and in particular with Norway, who for centuries has been an ally and friend of this country?
§ THE MARQUESS OF LOTHIANMy Lords, I entirely agree with the noble Lord's third point, on the need to keep in step with Norway on these matters, and naturally we are consulting them fully about this. Regarding his first two questions, I do not feel that I can this afternoon answer questions which are really in the province of my right honourable friend the Chancellor of the Exchequer. But I have no doubt that the noble Lord will return to this matter during the debate, and I am sure he will not receive the satisfaction that he would like, because I sometimes have the feeling that the noble Lord will not be satisfied on any matter.
§ LORD SHINWELLMy Lords, I must protest, and I think I am justified in protesting. My opinions are my own, just as those of the noble Marquess are his own. And I am justified in holding opinions, unless somebody in your Lordships' House wants to prevent me from holding opinions—and they had better not try! I want to ask the noble Marquess: is it fair to your Lordships' House that a Statement should be made of the kind that the noble Marquess has made this afternoon, and, when he is asked questions, he passes the buck to the Chancellor of the Exchequer? Does it not mean that the noble Marquess does not understand the position at all?
§ LORD SHEPHERDMy Lords, before the noble Marquess replies, I hope he will accept that in this House Ministers speak on behalf of Her Majesty's Government. I know it is a difficult task, but that is the situation. I asked the noble Marquess a specific question. I can understand the difficulty of the noble Marquess on the wide range of questions put by my noble friend Lord Shinwell; but here in the Statement we have a special reference to one item against the balance of payments, and a clear statement that the full effect of this will be felt during the first two years. If that is in the Statement, there must be some figures available. If the noble Marquess has not got them, let him be honest and say so, but not, frankly, to dodge the issue.
§ THE MARQUESS OF LOTHIANMy Lords, the last thing I want to do is to dodge the issue, or to question the sincerity of the noble Lord, Lord Shinwell, on these matters. I realise that he feels strongly and genuinely about them, as indeed do a great many other noble Lords. Regarding the point put by the noble Lord, Lord Shepherd, I have not got the information with me this afternoon, but I will undertake to procure it. I feel certain that these and a great many other matters will be developed during the course of the debate.
§ LORD SHEPHERDMy Lords, in the light of that reply, surely it is clear that we should have a full document available to Members of your Lordships' House in order that we can consider it before we have our debate?
§ LORD ROBBINSMy Lords, is the noble Marquess aware that any attempt at precision in regard to the matter under discussion would be received with complete incredulity by many of us who realise that precision in these matters is absolutely out of the question?
§ THE EARL OF LAUDERDALEMy Lords, would the noble Marquess come back to the question of fisheries? He used the word"hope"when he said that we hope to get an agreement before signing the Treaty of Rome. Are we to understand from that that a situation might arise in which the Government would invite Parliament to support the signature to the Treaty of Rome in advance of a fisheries agreement?
§ THE MARQUESS OF LOTHIANMy Lords, I do not think I can give the noble Earl a categorical answer to that question. My right honourable friend is striving very hard to get a fisheries agreement, he hopes at the next ministerial meeting. I cannot tell at this stage whether he will be successful or not. Therefore I think the second part of the noble Earl's question must await the result of this next meeting.
§ LORD DAVIES OF LEEKMy Lords, the House is grateful to the noble Marquess for the Statement, but is he aware that we are not asking for precision, nor are we asking for nebulous statements which no human being can understand in a brief Statement like this one. This House is not even in a position to ask constructive questions about this nebulous Statement. Consequently, will the noble Marquess please see, as my noble friend on the Front Bench requested, that a statement is in the hands of all noble Lords at least 12 hours before the debate? Why all the secrecy about a decision which is the most important in a thousand years of British history? This is a foolish way to discuss such a vital matter.
§ THE MARQUESS OF LOTHIANMy Lords, I would accept the last part of the noble Lord's remarks. I think that we have reached the stage now where we must discuss this question in the debate in 10 days' time.
§ LORD GLADWYNMy Lords, would not the noble Marquess agree that, if it 372 is a question of harmonising capital movement, this may result not only in an outflow of capital, but also in an inflow of capital? It is impossible to say how much; but surely that is possible?
§ THE MARQUESS OF LOTHIANMy Lords, that is true, certainly.
§ LORD PARGITERMy Lords, can the noble Marquess say whether or not the agreement on the movement of capital will in any way affect our movement of capital within the Commonwealth?
§ THE MARQUESS OF LOTHIANMy Lords, I do not think so. I cannot give a categorical answer to that question, because the negotiations on Monday were, and the Statement is, entirely concerned with capital movements within the Community.
§ LORD LEATHERLANDMy Lords, can the noble Marquess clear up one small point about which I am in some doubt; namely, does this relaxation of capital movement mean that if a British millionaire wants to go and live in France or Italy he can take all his capital with him?
§ THE MARQUESS OF LOTHIANMy Lords, that is what it will ultimately mean; and it will also ultimately mean that if a French millionaire wants to come and live here, he will be able to bring all his francs with him.