European Union: ECC Report

HL Deb 21 October 1985 vol 467 cc863-901

5.23 p.m.

Debate resumed.

Viscount Rochdale

My Lords, I take it that we may now return to the subject of European union. I had the privilege of being a member of the ad hoc committee under the skilful and very perceptive chairmanship of the noble Lord, Lord Kearton, which examined this very difficult and complex subject of European union. We greatly admired the way in which the noble Lord conducted our deliberations. I should also like to thank him for the way in which he has introduced the debate this afternoon.

One of the earliest problems we came up against in the report, and which the noble Lord himself mentioned today, was the exact definition of what was meant by European union. Every noble Lord who has spoken this afternoon mentioned that point. I shall not dilate upon it except to say that I agree with those who believe that the best definition is to be found in the words of the Treaty of Rome: an even closer union among the European peoples, With due respect to my colleagues, I believe that we dodged the issue: we did not pursue that point further. What we did was to emphasise that whatever the title and whatever its scope and competence, a major ingredient in achieving ever closer union and a really effective Community, with its potential worldwide impact, was completion of the internal market, so that it really did operate as a common market.

I agree with the importance of achieving a common market. My own limited experience, based on having been a member of a number of inquiries set up by the Select Committee covering several different issues, and of proposals which have emerged from Brussels, has led me and others to reach the rather depressing conclusion that so often, however good the various proposals were in a commercial or practical sense, they were—if I may use a colloquialism—bogged down by the lack of union and crusading fire which in the early days brought the Community—with its intended but never achieved common market—into being.

The problem of a common market, with all the various components which contribute towards it, really epitomises the lack of union; the lack of willingness of member states to give as well as to take. I conclude from this that important as the completion of the market is (and I certainly will not say that it is other than extremely important), the failure to achieve it is a symptom of a far deeper problem and not the main problem itself.

Perhaps your Lordships will allow me to cite one or two examples. I have particularly in mind an inquiry that we held earlier this Session and debated this spring; that on airline policy, where it was clear that industrial and commercial progress was all too obviously being frustrated by national political fears and interests. So much for union. Again, the inquiry of 1984 into the distribution and servicing of motor cars pointed in exactly the same direction. Indeed, the Select Committee's own report on internal markets in 1982 also pointed to the fact that it was lack of union and not necessarily the proposals themselves which posed the difficulty. Those inquiries all had the same lessons to teach.

The whole situation, as has been mentioned by the noble Lord, Lord Kearton, has changed enormously since the Community was first launched. Membership has doubled. The United Kingdom has joined with its very special problems. World trade patterns have changed significantly. There has been a prolonged economic crisis and recession. All of this has surely tended to make union more difficult and to encourage member states when in difficulty to draw back into their national shells.

So while the institutional framework of the Community may have been adequate in the earlier days, stimulated no doubt by the inspiration and enthusiasm of many, stemming from great expectations and the problems of history, today it can hardly be surprising that the framework is perhaps no longer adequate for the case.

Some important institutional changes and adjustments are clearly needed. It is encouraging to feel that such a need is becoming more widely recognised throughout the Community. I was very glad to hear my noble friend on the Front Bench making precisely the same point; that some adjustments were definitely needed. Had that not been so, and had that fact not been recognised, surely the draft treaty of February 1984 or the Dooge Committee could never have emerged at all. It was the recognition of need that brought them both into being.

I should now like to make three points. Firstly, I believe it would be quite wrong—and indeed ungracious to the efforts of many devoted individuals in the Commission and elsewhere—to overlook the very real successes that the Community has in fact achieved in many directions—and often, as the report points out, with very limited resources at their disposal. I hesitate to mention the subject which is to be debated later this evening but the common agricul-trual policy has been, in effect, a real success even though at the moment it has run into difficulties. But there have been other successes which need to be acknowledged; so we build on a lot of good but need change.

My second point is that I do not believe that the importance of the United Kingdom being seen today to be totally committed to the Community can be over-emphasised. However difficult some of our rather special problems in relation to the Community may sometimes appear to be, in this context—as I think has been mentioned—the Select Committee totally rejected the idea of a two-tier or two-speed Community. If that suggestion were to be pursued it would, I believe, put the United Kingdom in an impossible position and at the same time be extremely damaging to the Community as a whole.

My third point concerns the question of the treaty. I was very interested to hear what the noble Lord, Lord Kennet, had to say on that. The question we considered was whether an entirely new treaty should be considered or should the line taken be for amendments to be made to the existing treaty. I entirely agree with my colleagues on the committee that the latter course—amendments to what there is already—should be adopted, however that may best be arrived at.

I remember very clearly on one occasion when we met that a witness said to us that he had been present years ago when the original treaty was being discussed. He had first-hand experience of the problems of arriving at a treaty. The way in which he put it convinced me that any attempt to embark now on a totally new treaty might be expected to be long, drawn, frustrating and possibly a disruptive exercise that could well be counter-productive to the main objective of closer union. He certainly recommended otherwise. I was very impressed by that point, as I believe we all were.

I have not in my brief remarks—and I intend to be very brief—pursued some of the particular points that loomed so large in our inquiries: the use of the veto, majority voting, the Luxembourg Compromise, greater expedition in the decision-making and execution of business and the proper distribution of responsibility as between the different institutions of the Community. These are of course all immensely important matters and must be put right if the day-to-day working and the monitoring of projects, once they are in motion, are to go ahead smoothly and effectively. These are issues which I think are all covered in the recommendations in our report and with which I fully agree.

However, there is just one conclusion on which I want to say a few words: that is, paragraph 103 dealing with the European Council. As the report points out, and to use its words: The European Council has 'emerged'. It now has the vital role in the Community system. But it has no Treaty status. If it really is to be, ultimately responsible for coordinating and directing policy". surely, as a matter of priority, it must be brought within the treaty institution. Without it, surely the Community will be like a ship without a rudder. Might it not be that this weak link underlies so many of the problems we are here to discuss this afternoon?

5.35 p.m.

Lord Gladwyn

My Lords, I well remember during the war writing papers in the Foreign Office on the possibility of forming some kind of Western European association after it. When the war was over I even found myself soon negotiating, under the direction of Mr. Bevin, the famous Treaty of Brussels which set up what was called the Western Union, on the council of which I then represented Her Majesty's Government. After that, I actually drafted a great deal of the charter of the Council of Europe. When I arrived in Paris as ambassador I witnessed, at close range, the sad collapse of the European Defence Community which, on reflection, was no doubt too idealistic in conception. I witnessed also, with expressed dismay, our own failure to associate ourselves with the negotiations for what eventually led to the European Community.

After retirement from the Foreign Service I sat for some years on the parliamentary delegation to the Western European Union and the Council of Europe, ending, after we joined the Community, as representative of my party on the European Parliament when I became the rapporteur, at the end of 1975, of a report of European security or defence. I am still, of course, associated with the European movement. So I suppose I could say that over some 40 years I have been in the forefront of the many efforts to achieve some form of European Union. It is in the light of that experience that I venture to make a few reflections regarding the report now before us and on the production of which—with the possible exceptions of the paragraphs relating to the powers of Parliament—I congratulate the authors most sincerely.

Well, over all these years, although I may have changed my mind in certain minor respects, I have consistently held to one principle: that it is no use—indeed, it is positively counter-productive—to propose the constitution in this part of the world of a federation in the usual sense of that term; namely, a union with a directly-elected president, a sovereign parliament, federal armed forces, a federal police and a federal foreign service under a federal Minister of foreign affairs.

Federations of this type have been formed elsewhere, of course, notably in the United States of America, and have functioned satisfactorily. However, the 13 original American colonies had a common language, religion, law, history and social practices. In Western Europe these conditions, or anything like them, do not exist. So a federal union in this part of Europe of the type described is almost inconceivable. It might possibly be considered by some of the democracies concerned—notably the Italian—but if it or anything like it actually came before the various parliaments for ratification it would, I feel sure, certainly be rejected by the majority of them.

Wherein, then, does the unifying principle lie, the adoption of which will result in that closer European union which in the opinion of, I think, most Members of this House is essential if we are not, individually, to sink into the position of impoverished client states of one or other of the super powers? It lies, as we all know, in the acceptance by all concerned of certain supra-national obligations involving the taking by a Council of Ministers, usually by a qualified majority vote, of decisions on the recommendations of an independent commission—the brilliant notion which Jean Monnet succeeded in grafting into the Treaties of Rome—all with the advice and, increasingly, the consent of a directly-elected European Parliament.

There is no reason why this genial conception should not have worked reasonably well and have resulted by now in a Community which, though necessarily less effective than a full-blown federation, would have been an economic entity capable as such of playing a role in the world not much less significant than those of the super powers. The reason why as yet it has not so resulted is very simple, in my humble opinion. It lies in the adoption in 1966, at the instance of General de Gaulle, of the so-called Luxembourg Compromise, which, I think cannot be denied, permitted and indeed encouraged the indiscriminate use or threat of the famous "veto" and which has thus seriously delayed the general progress of the European idea. At last, after 20 years, no doubt with the prospective arrival of Spain and Portugal, this truth is largely accepted and a drastic revision of the so-called Luxembourg Compromise is thus perhaps the principal recommendation of the sub-committee which we are now considering.

It is also in effect the chief recommendation of the admirable, as I think, Dooge Report, the full text of which has happily been produced by the committee, though of course both the Dooge Committee report and our report which we are now considering to some extent have been overtaken by events, owing to the progress of the negotiations now going on for a European Union. Though the committee does not say so, it would seem that, with a couple of exceptions that I shall refer to later, it approves of the Dooge Committee as a whole. I speak subject to correction, but that seems to emerge from the report. Certainly Dooge's proposals, in my own view, offer far better grounds for advance than those contained in the draft treaty, approved by a considerable majority of the European Parliament at the instance of its originator, Mr. Spinelli, which even if approved by all the parliaments, I feel could hardly function without the application of further frankly federal measures.

However, the Spinelli report contains some interesting ideas; for instance, the distinction between "common action" and "co-operation", and I am a little surprised that such short shrift was given to it in the report that we are now considering. But even Spinelli contemplates, for a provisional period of 10 years, some sort of national veto. So let us get back to what is that essential point.

It looks as if (Spinelli excepted) we were confronted by three different proposals for reform. First, there is the Select Committee's conclusion that,

a Member State should be entitled to invoke only a vital national interest"— and "vital" is underlined, which must only be used in the most exceptional circumstances; and that, the Head of State or Government must explain to his colleagues on the European Council why such an interest is at stake". Next, there is the opinion of the majority of the members of the Dooge Committee; namely, that, decision (in the Council) must be taken by a qualified or a simple majority. Unanimity will still be required in certain exceptional cases … the list of such cases being restrictive"— I am not quite sure what is meant by that. The Presidency must call a vote if the Commission or their Member States so request. The vote must be taken within thirty days". Finally, in the Dooge Committee a minority, consisting of the representatives of the United Kingdom, Denmark and Greece, think that, more use will need to be made … of the majority voting provisions of the treaty", and that, after a reasonable time, the President should call for a vote", but that—and this is the crucial point— when a Member State considers that its very important"— that is my emphasis— interests are at stake, discussion should continue until unanimous agreement is reached". If I heard aright the noble Baroness, Lady Young, I think that is a formula which is accepted now by Her Majesty's Government.

It will be seen that the most radical proposal is probably that of the majority of the Dooge Committee, the next most radical proposal is that of the Select Committee, and the least radical, which really does not depart very much from the Luxembourg Compromise, is that supported by Mr. Rifkind with the not unexpected support of Denmark

and Greece, neither of which states has shown any enthusiasm for the idea of any meaningful European Union at all.

I do not know how many of your Lordships will be prepared to accept the formula proposed by the majority of the Dooge Committee which I have read out. I need hardly say that I myself have accepted it, along with many committed Europeans in this country I believe, but if it should not be acceptable to the Government, then at least I hope that on consideration and in accordance with what I hope will also be the majority in this House they will prefer the proposals of the Select Committee to that which they presumably instructed Mr. Rifkind in the recent negotiations to plump for. Cannot they possibly have a change of heart?

I have one further general observation to make which concerns European defence—or security, which perhaps is a word more palatable to some people. The whole of Section C in Part II of the Dooge Com-mittee's report—which, incidentally, except as regards the veto, unless I am wrong appears to have been approved by Mr. Rifkind—is devoted to political co-operation, in which defence necessarily plays an important, and indeed an essential part. However, unless I am wrong, it is not referred to at all again in the Select Committee's report, apparently on the grounds that defence, or security, is not covered by the treaties. Of course it is not, but it is or should be part and parcel of the machinery of political co-operation which has now been functioning for many years. In practice it cannot be totally differentiated from the machinery set up under the Treaty of Rome. Consequently, I shall only ask whether Section C of the Dooge Report, which happily embodies various proposals made as long ago as 1975 in a resolution which, with great difficulty, I myself managed to get through the European Parliament, is now broadly acceptable to Her Majesty's Government? I suppose it is, but I should like it confirmed.

A second question follows. Even if such proposals are not accepted by certain other members of the Community—and how could they possibly be accepted by Ireland, which is officially neutral?—would we be prepared to see them accepted and applied by such members of the Community as are prepared to do so? So far as political co-operation is concerned, it is evident that this would result in a sort of two-tier Europe; but why not? The arguments against a two-tier Europe advanced by the committee in respect of the machinery of the EC itself are no doubt valid, and I would not dispute them, but there is no apparent reason why decisions taken in the vital realm of defence outside the treaty should necessarily apply to members who, for one reason or another, cannot accept them. After all, they only need to abstain. Surely, if the veto of a small country such as Denmark is to apply in this highly important and vital sphere, the whole future progress of the projected Union on the political side will be vitiated?

There is, of course, still a general danger. I suppose it is possible that what might be called the "core" of the EC—namely, Germany, France, Italy and the Low Countries—may decide to go ahead on the basis, not so much of Dooge as of some more federal plan, which is perhaps not very different from the essential points made by Spinelli. If this were to happen, then I repeat that I agree with the sub-committee. Since I do not think our Parliament would approve of any federal plan, a two-tier EC, as I have already said, would be unlikely or even impossible to work in that respect. Perhaps if the Government see fit to accept the Dooge proposal on majority voting, the danger, which is a real one, might be averted. Therefore, I finally ask the Government whether they think that there is any foundation for such apprehensions as these?

I said at the beginning of my remarks that there were two points on which apparently Mr. Rifkind differed from his colleagues. The first was on decision-making, which I have already dealt with. The second was on the power of the parliament. I very much hope that the Government will eventually rally to the proposals of the majority of the Dooge Committee in this respect also. The difference between what Mr. Rifkind was suggesting at the instance of the Government and what the Dooge Committee report suggested, if read with attention, did not seem to me to be totally irreconcilable. I have no doubt that if the Government went as far as that it might again help to avert the danger of a split in the EC, which would clearly be a disaster for all concerned. I wonder whether the noble Baroness when she winds up the debate will be able to deal with this point also.

5.50 p.m.

Lord Rodney

My Lords, I start by congratulating the noble Lord, Lord Kearton, on his excellent speech, which gave an admirable resumé of our report. I should also like to compliment him on the expert way in which he directed our inquiries in the subcommittee.

The European Community is a ready target for the media. It is all too easy to point to its shortcomings, but, regrettably, the advances that have been made and the advantages that derive from membership are seldom newsworthy. It has to be admitted that in recent years progress along the road to implementing the Treaty of Rome has been painfully slow. But is it not remarkable that politically we now have a situation in Western Europe where conflict among the countries of that area is unthinkable, whereas only some 40 years ago we were emerging from the most horrendous world war that mankind had ever known and in which the majority of the protagonists were those very same countries?

Then again on the economic front all customs duties for the six founder members were abolished in 1968, and the same process is applied to all new members within three or four years of their joining the Community. In conjunction with that a common external tariff for imports has been established for all members, thus forming the basis for the largest single market in the world. We can add to that the magnificent strides which were made up to 1973, with an increase in internal trade of some 600 per cent, whereas world trade for the same period grew by only 250 per cent.

It cannot be denied that initially significant progress was made, but that is where the good news ends. Since then the internal market has, if anything, declined. There has been a logjam of proposals submitted by the Commission to the Council of Ministers, and indecision and disenchantment have replaced the original enthusiasm. There is no doubt that the world recession has played a large part in the stagnation which set in, but it went beyond that. The idealism faded away and narrow national interests took its place.

The aims of the Treaty of Rome can for convenience's sake be classified under two headings: first, the political dimension; and secondly, the internal market. I would not want to say that one is more worth while than the other or that they are unrelated and can each be put into their own pigeon-hole, but I believe that steps to achieving the internal market are clearly definable. In fact, the recent White Paper did just that. Therefore, given resolve and good will, that is an attainable goal. The political dimension is much more difficult to define and consequently that much more difficult of attainment. I agree that the major effort should go into achieving a genuine internal market with all the advantages that will accrue in improved employment possibilities, a higher standard of living for Europeans as a result of greater wealth creation and a more prestigious standing for the Community in the world.

There is a spin-off from that which I consider most important. At the present time the attitude to Community membership is lukewarm, public interest is minimal and proposals emanating from Brussels are for the most part unwelcome. But might not the whole climate of public opinion change if a thriving internal market could be achieved, creating the largest single market in the world, larger than either the United States or Japan; and might not the approach to closer political integration be greatly facilitated with the creation of a spirit of Europeanism rather than of nationalism?

If one reads the brave words uttered at successive summit meetings and compares them with the little progress made, is it surprising that cynicism and disbelief have crept in? Many of your Lordships will remember the report on the internal market debated in your Lordships' House on 13th December 1982. In it were listed the main obstacles to a common market, among which were border delays, administrative barriers, documentation requirements, statistical collections, transport quotas, VAT procedures, and so forth. Incredible as it may seem, three years later the list is almost identical. Is it a wonder that the business community views all ministerial pronouncements with scepticism? They have heard it all before.

But I believe that there is a glimmer of hope for the future; and here I must say how impressed I was by the atmosphere of optimism among the people we met at the Commission in Brussels. Some of them have been there for very many years but they have managed to retain their enthusiams and dedication in spite of the evident frustrations to which they must have been subjected.

Apart from that, I suggest that hope stems from an economic climate which is much more conducive to progress; and the unemployment situation is, I believe, a powerful political incentive to action rather than words. The Heads of State and Government pledged themselves (granted, once more) in Brussels in March of this year to the completion of the internal market by 1992. In June in Milan the Commission's White Paper was welcomed (granted, with some reservations) and instructions were given for the establishment of a precise programme. That has been followed very rapidly by a draft directive issued by the Commission in July.

I think that here it is appropriate to commend the achievements of the noble Lord, Lord Cockfield, in Brussels. He has certainly proved a happy choice as our senior Commissioner. If he can maintain the momentum that he has achieved in his first 10 months, I think the grounds for optimism will not have been misplaced.

But most important of all, there is just the possibility that the political will to achieve a true internal market is being rekindled; and I submit that in the final analysis that will be the factor which will decide whether or not the 1992 target date is achieved.

5.58 p.m.

Lord Broxbourne

My Lords, the concept of European union belongs to that considerable category of concepts which as generalisations win universal assent and acclaim, only to encounter difference and disagreement when practical effect is sought to be given to them. I think that today we must concentrate on the practicalities of this matter, and that to some extent means a dichotomic debate—on the one hand, Spinelli; on the other, other and perhaps more practical approaches.

To reject many of the proposals of Spinelli, as I feel constrained to do, does not imply any disrespect. It may seem perhaps a poor return for the Herculean labours involved, but so far as the authors of the report and the treaty are concerned, I recognise the high purpose which animated their endeavours and respect the conscientious industry which they devoted to their task. Nevertheless, I do not believe that the product of these protracted labours, three years of work and four years since the committee was set up, is something which can give practical effect to the generalised concept of European union.

I am reminded of the phrase sometimes applied by my headmaster to my efforts to translate Thucydides, "ingenious, but incorrect"—not altogether surprising, I think, considering the provenance of the report and the draft treaty. As your Lordships know, it is the product of the Committee on Institutional Affairs of the European Parliament. This committee did not exist before 1979. In those days in what I suppose we must now call the unreformed parliament, although it had the advantage of being in closer touch with the national parliaments and the member states—I am glad that my noble friend with all his great experience agrees with that—these matters were dealt with ad hoc by the political committee and the legal committee of that Parliament. Of course, to set up a specialist committee with grandiose terms of reference is an invitation to produce a grandiose and imprecise report. That is one of the political laws of nature, and has happened in this case. The difficulties and weaknesses of committee drafting are well known, but in this case they are aggravated by special difficulties.

My Lords, we get an indication of the climate and content of the committee discussion from the memorandum on Page 307 of the Report of the Select Committee by my respected friend Derek Prag, MEP for Hertfordshire where he says that the main struggle was between advocates of an ideal federal constitution versus pragmatists. The inevitable result is a draft lacking in precision and practicality. In reading some of its provisions I am reminded of the dictum about a document emanating from Lloyd George's Cabinet: "Only God and the Cabinet knew what this was intended to mean, and now only God". I find much cogency in the objections spelt out in the Foreign Office memorandum. In my view, these proposals are unsatisfactory in three fundamental respects; first, the relationship of the suggested union with the existing Community; secondly, the provision regarding legislative procedures and decision-making in Article 38, and, thirdly, the provision for the taking effect of the proposed treaty in Article 82.

On the first of these matters, Article 7 of Spinelli provides that the union shall take over Community patrimony. That is not phraseology easily comprehensible to British lawyers at any rate, nor do I think the phrase from which it is translated, acquis communautaire, is much more explicit. The article goes on to preserve the basic provisions of the EC treaty where they are not explicitly or implicitly amended by the new treaty. Implicit amendment by so complex a document may well give rise to considerable doubt and dispute.

Finally, Article 7 preserves the other provisions of the existing treaty in so far as they are not incompatible with the proposed new treaty—if anything even more open to doubt and difficulty in its interpretation than the provisions regarding implicit amendment in Article 7.

The second weakness is in regard to the provision for legislative procedures and decision-making, and the importance of this is clear from Article 42, whereby the law of the union once established would become directly applicable in member states and take precedence over national law. Unfortunately, the evolution and enactment of such laws is less clearly stated than their effect when enacted. The voting procedures and resolution of disagreement dealt with in Article 38 are complex, lengthy and difficult, and hardly constitute a reassuring basis for laws so far-reaching in their application and so absolute in their effect. On the provisions for taking into effect, the objections are succinctly stated in Paragraph 11 of the Foreign Office memorandum, and I need not seek to gild the lily.

The necessary rejection of some of the grandiose proposals in Spinelli does not imply, and should not dictate, a negative approach. On the contrary. In my view, it reinforces the need for a positive approach giving effect as fast and fully as possible to existing treaty requirements in what is, after all, an economic community. That involves practical steps for establishing the internal market, as was said by several noble Lords in this debate, steps specified and recommended in the report of the Dooge Committee and the Cockfield White Paper: free circulation of goods, free movement of capital, common transport policy and the like—all excellent objectives.

I refer specifically to only two matters. First, for what my view is worth, I accept the conclusion of the Select Committee. I should like to join in with my tribute to the members of the sub-committee, and to the noble Lord, Lord Kearton, for his admirable chairmanship thereof. I accept for what my view is worth its conclusion that the United Kingdom should participate in the exchange rate mechanism of the European Monetary System. I say "for what my view is worth" because I am bound to tell your Lordships that in matters of high finance and taxation my first instinct is to call for an accountant or an aspirin, or sometimes both simultaneously. But it does appear to me, as very much a layman in that sphere, that this mechanism seems a natural and necessary ingredient of an economic community, and participation would seem to be both helpful and appropriate.

There is one other matter in the economic sphere of which little or no mention has been made, certainly not in this debate: what has happened to the projected European company and the related subject of the two-tier board and workers' participation? These were matters keenly canvassed in the European Parliament and its Legal Committee in the early days of British entry. We had high hopes of them, particularly in the context of workers' participation with representation on the supervisory board and through the workers' council. This would have advantages nearer home than the European scene. Worker participation, influencing and advising management but not obstructing or usurping its functions, could help to replace the concept of two opposing sides in industry by a constructive approach to what should be the common objectives of all. I believe it could be an emollient influence in a troubled world and could inject new strength and spirit into our industrial and commercial endeavours. So I ask the question, to which I hope my noble friend will have a reply: are these possibilities now lost sight of, or is there some hopeful progress that she can report?

May I briefly say a final word on political cooperation and institutional matters? Of course, political co-operation between like-minded European nations is desirable in a difficult and dangerous world, but it is not constitutionally appropriate that it should be sought through the mechanics of an economic structure like the EEC. I am doubtful if it requires any treaty provision at all, since it is a matter for political agreement and goodwill. If further machinery is required beyond the existing NATO procedures and in a less formalised context, it should be formed outwith the Treaty of Rome, whose objectives do not extend to this.

On institutional matters, as your Lordships know, the Treaty of Rome divided decision-making into three categories: the simple majority, the qualified majority and unanimity for certain important articles like Articles 100 and 235. Then, the Luxembourg compromise qualifies majority decision by postponing decisions where very important interests are involved until unanimous agreement is reached. Of ourse, this does not constitute an ideal instrument in the eyes of lawyers. But, on the whole, it works, not so much perhaps in its actual operation as in its background and influence. Spinelli would, by Article 23, phase out the veto after 10 years during which the postponement of vote would depend on matters of vital national interest. The Select Committee, at Paragraph 48 of its report, while retaining the veto in principle, suggest the replacement of "very important" interests by "vital" interests and also that the head of state or government must explain to colleagues on the European Council why such an interest is at stake.

I have two reservations about these well-intentioned proposals. The change from "very important " interests to "vital" interests might well turn out to be a matter of semantics. A nation that wishes to veto on the grounds of very important issues will have no difficulty in envisaging those same interests as vital. Secondly, is it not rather naïve to suppose that the obligation to explain will embarrass or deter national statesmen in making their case? Can one really envisage the majestic presence of President de Gaulle or indeed, in contemporary terms, the elegant presence of our own Prime Minister abashed and crestfallen conceding their case and abandoning their veto under such a requirement? There may be those among your Lordships who think that such a consummation is devoutly to be wished. I must ask you to believe that in terms of reality the prospect is remote.

Therefore, I conclude by saying this: the better course is the practical one. Retain the principle of the veto as a necessary fact of political and national life but continue to explore ways and means of extending and improving majority voting. This, on the institutional side, combined with measures to improve the internal market within the ample scope and provisions of the Treaty of Rome, will be work enough for statesmen without involving themselves in visionary aspirations and unrealistic endeavours outwith the structure and beyond the contemplation of the Community of which we are part.

6.13 p.m.

Lord Ezra

My Lords, there is no doubt about the timeliness of this debate. At the present time, the intergovernmental conference, set up as a result of the meeting of the European Council in Milan, is deliberating and preparing its report to be submitted to the next meeting of the council in December. According to informed or normally informed newspaper reports, such as that in the Financial Times of 14th October, all the proposals from governments have not yet been received or considered by this inter-governmental conference. We are therefore in a position, with the presence here of the noble Baroness, Lady Young, to make suggestions as to what the United Kingdom Government's proposals might be, if they have not already been submitted.

I believe that a degree of consensus is already emerging in our debate this afternoon, with some differences of emphasis. We have been helped in developing that degree of consensus by the admirable report presented by the noble Lord, Lord Kearton, and his colleagues. What we all feel, I believe, is that a priority objective is the completion of the internal market and that, in addition, we should seek to consolidate and build on the progress made in political co-operation among member countries.

The question arises, however, as to how we are most effectively to achieve these objectives as a further step towards union among the countries of Western Europe as defined in the treaty. I believe that in order to achieve these desirable objectives, based upon the proposals put in the report and in the other documents emerging from the Community, three orders of action need to be taken. The first is that there has to be a clarification of the institutional framework of the Community. For a start, there is defacto a new institution; namely, the European Council. That needs to be brought within the scope of the treaty, and its rights, duties and obligations need to be clearly defined.

The Council of Ministers has been referred to a number of times in the debate. There is little doubt that it has gone beyond, in its practical operation in recent years, what was originally intended in the Treaty of Rome. It meets in no less than 17 different formations. It is tending to do more and more the work that most of us who have been concerned with the European Community thought should have been reserved for the Commission. So the Council of Ministers needs to be brought back to what it was originally intended to do and concern itself with major issues of policy in the different spheres of action rather than in their detailed implementation.

The Commission correspondingly needs to be given back its original powers. The Commission was there to make proposals to the Council of Ministers, which would deliberate on a collegiate basis and then, according to the methods of voting laid down in the Treaty of Rome, decide what needed to be done. This, in practice, has not worked particularly well. So we need to give the Commission back its original powers and authority.

So far as the European Court is concerned, I believe that the report of the sub-committee has made some very useful suggestions. I feel that these would be well worth following up. Finally, so far as the parliament is concerned, this is the one area where I feel that the Select Committee report has been perhaps inadequate. I was very impressed with the remarks made by the noble Baroness, Lady Elles. We had the good fortune of having her speak in this debate as someone who is a member of that parliamentary institution. I believe that her view that that institution, now that it is directly elected, should be given progressively enhanced powers was a very cogent one, and that we should be looking carefully at that issue. For a start, I believe that the whole process of consultation needs to be firmed up and taken much more seriously.

Secondly, we ought to consider whether some form of legislative role of a limited nature might not be entrusted to the parliament. If that cannot be done, then at least its consent should have to be sought on certain specific occasions. The parliament has indeed been given powers—very extreme powers. It can get rid of the whole Commission; and it could hold up the budget. But in my opinion these powers are much too extreme to be the only powers that it possesses. We need some intermediate powers to make it a more effective body.

If we could have that degree of clarification of the institutional framework, then we come to the second major issue which has to be dealt with and which has been referred to throughout this debate; namely, the problem of the Luxembourg Compromise and the veto. Here I should simply like to say that I believe that the recommendation made in the report of the Select Committee is a very reasonable one. If we can get the European Council to become part and parcel of the institutional framework of the Community, then it seems to me to be right and proper that where vital interests are involved and a government wish to impose a veto then they should have to do that in writing to the top level within the Community, which would be the European Council. Those are two of the issues which I feel need to be addressed in order to achieve our objectives; namely, clarification of the institutions and dealing with the question of the veto.

Thirdly, I think that we need to incorporate within the treaty the whole question of political co-operation which has developed very effectively alongside the main treaty activities and has served the Community very well to an increasing degree. However, here again we need to bring that matter within the ambit of the treaty.

There is another development which I feel has to be introduced within the ambit of the treaty and that is the European monetary system. That, again, has developed on the side but needs to be integrated within the treaty. Here I must say that I fully join with my noble friend Lord Kennet, the noble Baroness, Lady Elles, and the noble Lord, Lord Broxbourne, in proposing to the Government that the time is indeed now ripe for us to join the exchange rate mechanism. It is particularly ripe because if we are committed to the objective of introducing a complete internal market within the Community—and I am very impressed with what my noble friend Lord Broxbourne said a few moments ago—it is inconceivable that that could work effectively unless we also try to make sure that there is some greater stability of exchange rates, which the other members have achieved but on which so far we have been reluctant to take the final step.

Whether all this could be done as a series of amendments, or whether the matter needs to be looked at as a new treaty, I feel should be left an open question at this stage. We do not yet know what the other countries would like to propose. We do not yet know the extent to which the European Council will agree that there should be amendments of greater or lesser importance. Therefore, I feel that we should leave the matter open. I am in favour of doing it whichever way is likely to be the more effective. It sounds as if amendment rather than a new treaty negotiation would be more effective. On the other hand, if there are amendments of such importance and of such an extent, it might be simpler to introduce a new instrument altogether. So I hope that that question can be left reasonably open.

To sum up, in order to achieve the things which we want to achieve as a next step in the development of the European Community we need to ensure that the procedures are brought up to date. We need to.ensure that there is clarification about the rules and regulations affecting the institutions. Above all, I should like to associate myself particularly with what the noble Lord, Lord Rodney, had to say: underlying all these changes there must be a common political will to make progress.

6.25 p.m.

Lord Reay

My Lords, I should like to start by joining with other Peers in congratulating the Sub-Committee on European Union under the chairmanship of the noble Lord, Lord Kearton, for having introduced an admirably sensible and succinct report. They received outstanding evidence. I was not a member of that sub-committee, but I had the good fortune to be present on one occasion to hear a brilliant contribution from Mr. Christopher Tugendhat, who had recently retired as commissioner and was therefore able to combine experience with, for the first time, independence.

I should next like to say how pleased I am by the constructive approach which has been taken recently by Her Majesty's Government towards the intergovernmental conference. Speaking in another place on 24th July the Foreign Secretary said: Our objective throughout is to achieve effective changes in the decision-making procedures of the Community because we believe that it is an essential British interest for the Community to be able to function more effectively and for the United Kingdom to be in the mainstream of developments to that end".—[Official Report, Commons, 24/7/85; col. 1061.] Speaking in Bonn earlier this month the foreign Secretary, in a speech to which my noble friend Lady Elles has already referred, deliberately contrasted a failure on Britain's part to appreciate the significance of the Community in its early days with our attitude now. He said: There is no such failure to understand the importance of the changes that are taking place in Europe today. In Britain we are in no doubt about the significance of today's European agenda". In other words, the Foreign Secretary has been at great pains to explain that we are not to be regarded as Europe's odd-man-out.

I have one central point which I wish to make, which is this. I think that Her Majesty's Government should make it their strategic priority throughout the conference until it finishes towards the end of the year, a determination not be isolated from France, Germany and Italy, as they were at Milan. I think that the Government made a mistake in voting against holding the intergovernmental conference, even though I know that the Government had good arguments and that the vote was sprung on a council which was largely taken unawares. Nevertheless, the consequence of this impulsive vote, with its isolating result, has been, and must continue to be, a long and dedicated deplomatic repair job to ensure that our partners do not spend their time preparing a special side road for us to follow, off the beaten track, together with perhaps the Greeks who, in the words of a recent Financial Times editorial, seem to treat the Community as nothing more than a source of development finance, and the Danes, while the remainder forge Europe's future.

When France proposed last week that member states should be excluded from new EC policies if they cannot approve them, one cannot but suspect that she had Britain in mind. We must not forget that our refusal to join the exchange rate mechanism of the EMS marks us out as a reluctant Community member, however good the reasons may be for us to have remained out orignially, and however difficult it is to judge the right moment to step into the system. I should like to add here in parenthesis that I think the right moment to do so is probably not today, owing to a considerable underlying difference in the rate of inflation between us and our Community trading partners as a result of rising unit labour costs in this country. But if this country is not to be pushed out of the mainstream of Community life during the course of the conference, what might we have to be prepared to put up with?

For one thing there is the question of treaty amendment. Her Majesty's Government do not believe that treaty amendment is necessary to achieve improvements in Community decision-taking. Accordingly, they have not laid any proposals before the conference which they had not already Iaid before the summit in Milan. But this is probably a minority view; otherwise, there would not have been a favourable vote for calling the conference, the purpose of which, after all, is the consideration of treaty amendments. Therefore, the Government are wise not to rule out treaty amendment absolutely; but they may find that they have to go further and eventually accept it, whatever their own preference.

Then there is the question of rhetoric. In the past the Government and government officials have shown an almost passionate contempt for the concept and the phrase of "European union". On 2nd July in another place, at col. 199, the Prime Minister said: I wish that we could drop the phrase 'European union' ". However, now an attempt seems to be being made by the Government to swallow the phrase after all. The Foreign Secretary, in the excellent speech which he made in Bonn on 3rd October, went out of his way to give the impression that the Government will try to live with the phrase. He quoted Churchill on a united Europe; and he quoted the Treaty of Rome, to which the Treaty of Accession commits us, on an ever-closer union. He quoted past summit communiqués signed by British Prime Ministers, including the Solemn Declaration of European Union signed at Stuttgart in 1983 by the Heads of Government. He then concluded: It should be obvious from all this that Britain is not afraid of European union". Those words were repeated this afternoon by my noble friend the Minister. The Foreign Secretary went on to say: Such a union exists now today and I have no doubt it will be stronger tomorrow". In view of all this, if there were to be an amending treaty I think it would be inconsistent—and it certainly would be seen as being inconsistent—for the Government to refuse to accept in its title the words "European Union".

Then there is the question of powers for the European Parliament. The Germans, Italians and French last week all submitted proposals concerning an extended role for the European Parliament. The Italians appear most enthusiastic for increasing its powers. On the face of it, however, an expansion of the role of the Parliament—certainly anything like the joint decision-making with the council which was proposed by the Dooge Committee—seems hardly compatible with the goal of speeding up the Community's own decision-taking procedures.

However, this point cannot be lost on the French and Germans. Like Her Majesty's Government, I am sure that they will want the last word to remain with the council. In fact, the German proposals for extending consultation procedures between the council and Parliament seem in principle not too far removed from that which the United Kingdom has supported in the past. They involve an extension of the present consultation procedure.

In any case, something will have to be done to increase the role of the European Parliament. To do nothing, I submit, would be to break faith with the decision to proceed to direct elections. I suggest that it would also be seen as an inappropriate response to the European Parliament's own role, by means of the Spinelli Treaty, in having sparked off the whole process of institutional stocktaking which has led to the intergovernmental conference, as was described by the noble Lord, Lord Kearton, and by my noble friend Lord Broxbourne. On this question I think that Her Majesty's Government should try to stay in the middle of the pack and, as my noble friend Lady Elles said, not be the one to block progress.

Although views about the means and the degrees differ, all parties agree that there needs to be more voting by qualified majority in areas defined in some way, either by subject, as they are in certain specific articles of the treaty, or perhaps more hopefully by policy area where the mainline of action has been taken by a unanimous decision. It is generally accepted that curbs must be imposed on the persistent abuse of the Luxembourg compromise, although its retention, perhaps in some other form—at present it does not even have legal status—will I am sure be upheld. I accept the point that, whereas the unanimity requirement has resulted in failure by the council to take decisions on hundreds of Commission proposals, as has been pointed out this afternoon, nevertheless by the same token it has meant that many of the proposals have not been voted out but still lie on the table for possible adoption in the future.

On the question of the number of commissioners, if I understood my noble friend the Minister correctly, I think that the Government should think again as to whether they really want one commissioner for each country. As Mr. Tugendhat pointed out in his evidence to the sub-committee, this would give a built-in bias in favour of the small country; that is to say, in favour of the big-spending country. I wonder whether the Government really want that. I think that they should reconsider the possibility that there could be 17 commissioners for a Community of 12. I wonder whether, in fact, that would necessarily be excessive for a Community stretching, as it will, from Elsinore to Cape St. Vincent. There could perhaps be senior and junior commissioners. I would prefer the Government to re-open their mind on this subject.

There is a great need for the Community to make progress again. Unless it moves forward it will break apart, particularly with the accession at the end of the year of Spain and Portugal, and the approach once again of a financial crisis caused by the apparently unstoppable excesses of the agricultural policy. Politically it must move forward in order to help prevent Germany falling for the dangerous illusions of reunification. Nor will the United States put its own population at risk to defend a Europe in the process of Balkanising itself. And what an irresistible provocation for Soviet expansion would also be provided by such a development!

Therefore, the stakes are very high. Economically, it is widely realised that the continental-size market of the EEC must be made into a single market if all European countries are not be be relegated to second-rate industrial and commercial status.

For all of this a joint effort of will is required. Yet sometimes this country behaves as if it does not appreciate what is involved in nurturing a friendly relationship with a continental neighbour. I should like to ask rhetorically: what was the point of offering New Zealand assistance at the very moment when it was France which had fallen to a nadir of embarrassment over the Greenpeace affair? My noble friend Lord Bruce-Gardyne has already, quite rightly, used his column in the Sunday Telegraph to rebuke the Government on this matter. To borrow a French phrase, it was an opportunity lost to keep quiet.

Too often we spoil things by rudeness. There is no point in always loudly insisting that we know how to do things best; in demolishing everyone else's arguments before constructing our own, which often, after a lot of ill-will has been caused, produce a remarkably similar conclusion; in particular in praising our own pragmatism—which is not pragmatism if it succeeds only in arousing animosity between us and our friends and allies—at the expense of others' so-called dreams. A truly pragmatic approach has to include a pragmatic assessment of its own diplomatic consequences.

Let me conclude by suggesting that there is no reason for failure at the intergovernmental conference. Most countries want progress, and have an interest in progress. There is no reason why the conference should not succeed, and can then be used to build a rapid development of Europe's political and economic unification. What is required is a constant eye on the main goal. Let us hope that this time the governments of the Community will not lose their way in philosophical sterilities or national or personal animosities, but collectively see the immensely important task they have set themselves right through to the end.

6.41 p.m.

The Earl of Bessborough

My Lords, we must all be grateful to the noble Lord, Lord Kearton, for having produced his admirable report, introducing it so lucidly, and inspiring what so far has been a fascinating debate. I must say that I agree with the report and conclusions—that is to say, that there is no need for a new treaty. We are not keen on precise, written constitutions in this country. I agree nonetheless that more majority voting in the Council is essential, even if an ultimate right of veto is retained in some form.

As I have explained in considerable detail on more than one occasion in your Lordships' House over the past seven years I believe, with my noble friends Lady Elles and Lord Broxbourne, and I think with my noble friend Lord Reay, and certainly with the noble Lord, Lord Ezra, we should join the exchange rate mechanism of the European Monetary System, in the not too far distant future.

Having said this, I must admit that, speaking entirely personally, ever since Count Coudenhove Kalergi's pre-second world war thoughts about a United States of Europe, and certainly after Sir Winston Churchill's advocacy of it after that war, I have been something of a loose confederalist. ! think this is partly due—and here I suppose I should declare a kind of multiple interest—to the fact that 1 had a French mother, close ties and knowledge of the working of the Canadian confederation, to say nothing of a Greek son-in-law, an Italian nephew whom my noble friend Lord Thorneycroft knows well, and of course many close friends and relations in all the present and indeed future Community countries (that is my multiple interest) and even an American wife, in whose country citizens of every European stock seem to be reasonably happily united. All this has had some influence on my thinking.

I was sad therefore to read the somewhat depressing article by Mr. Apple of the New York Times in the Sunday Times yesterday that European unity remained a distant vision, and that typical Britons feel little sense of identity with their continental cousins. That depressed me yesterday. I realise that western Europe is different from the United States, or even the People's Republic of China, which is also a federal state, and it is to those two great countries to which I have been travelling most in recent years. It is there in the United States as well as in China where I have found, and still find, so many people asking me why we have not in western Europe achieved a greater degree of integration and union; not only an economic and a genuine internal common market which begins to exist, but also a greater degree of political union as well as a European industrial and energy policy as effective as—or perhaps I should say more effective than—the kind of wasteful, common agricultural policy which for good or ill exists and which is to be debated later tonight. That is why I have been sympathetic to the idea of creating a loose confederation, perhaps somewhat on the lines of Canada, with each member state nonetheless retaining its own sovereign or presidential head.

I recognise however that this is not practical at present, and also that there seems little support in this country even for the relatively modest terms of the proposed Spinelli Treaty and the Dooge Report, to which I think every other noble Lord has referred. Therefore in recent years I have tried to be severely practical—like my noble friend Lord Broxbourne—in this sense and have urged, as indeed I am glad to see that Her Majesty's Government are doing, a breaking down of existing technical barriers to travel and trade; and of course I strongly support the views of my right honourable and learned friend Sir Geoffrey Howe in his recent speeches, as well as the admirable proposals of my noble friend Lord Cockfield, vice-president of the European Commission. All these are good steps in the right direction.

As your Lordships know, I have always—certainly for some 25 years—been advocating greater scientific and technological co-operation in Europe. This has to some extent been achieved not only through the European Torus at Culham which we discussed last week, but also through ESPRIT, the European Strategic Programme for Research in Information Technology, which was referred to by my noble friend Lady Elles. Indeed, I would support EUREKA too, even if I believe that we should also join the United States in their strategic defence initiative.

I am glad to say that western European co-operation in space seems to be effectively achieved through the European Space Agency. But I have for many years thought that we should achieve greater unity in defence, which has more or less been achieved through NATO. Like the noble Lord, Lord Gladwyn, I greatly regret the collapse of the European Defence Community in the 1950s.

Here I might add that when as an MEP I used to have meetings with NATO in Brussels, I would find considerable support for the proposition that the Community should have its own defence policy, even if this is not recognised in the Rome Treaty. I then also at that time also found positive support in NATO for debating defence in the European Parliament, and we debated this on more than one occasion during my period in that Parliament. But it has always seemed to me that we should not only have greater unity defencewise but also industrially, expecially when European firms are trying to increase their trade with such a vast country as the People's Republic of China. I regret that the EEC-China Trade Treaty, which was signed in the late 1970s, has not been implemented to the extent that I hoped it would be.

I greatly regret that the kind of sectoral industrial working parties contemplated in that trade agreement have not been set up, and that in our trade negotiations with China we have not—certainly individual firms have not—been able to present a united front in assisting the People's Republic to develop its own high technology in a way in which I know they wish to do.

As my noble friend Lady Young knows, I had the good fortune to lead a science and technology mission to China almost exactly a year ago in the company of the noble Lord, Lord Kearton, who opened this debate so effectively. The main object of that visit was to show the Chinese that it was not only the Japanese and the Americans who were capable of assisting China to develop its new technologies, but that we in Britain and the European Community could also help them. I hope that the Government will give some thought—it will not be easy for them—to the possibility of setting up such joint Sino-European industrial working parties.

Finally, in so far as political union is concerned, political co-operation, as has already been said this afternoon, is working reasonably well; but I hope very much that the European Parliament might develop more on the lines of your Lordships' House as a forum for the scrutiny and revision of European legislation. Having been a member of that Parliament for six and a half years I believe that the European Parliament could play a greater revising role in this respect. I am glad to learn, as I understand it and as I understood it more or less from my noble friend Lady Young at the beginning of this debate (I hope she can confirm this) that Her Majesty's Government are prepared to see the European Parliament more fully involved in discussions and deliberations with measures considered by the Council, as well as the introduction of procedures which would enable the Parliament to express its views before the Council comes to a conclusion. In this respect I used to play my part in the conciliation procedure between the Council and the Parliament over the budget.

I should like to see this kind of procedure extended to other fields and other departments. I think the report of the noble Lord, Lord Kearton, is along the right lines for the present, but that perhaps we must think rather more deeply about what out ultimate long-term aims in Western Europe should be, bearing particularly in mind that both the United States and the People's Republic of China would like to see us more effectively united, not only politically and defence wise, but also industrially.

The Times leader of 1st August on the day after the publication of the report of the noble Lord, Lord Kearton, referred to the possible extension of the competence of the Community to cover high technology and some other areas in which it is increasingly important for Europe to pursue a common policy to enable it to compete effectively with Japan and the United States. I thank the noble Lord, Lord Kearton and the members of the Committee for their remarkably comprehensive and indeed fascinating report.

6.54 p.m.

Lord Beloff

My Lords, my excuse for rising so late is to add my congratulations to the noble Lord, Lord Kearton, and his sub-committee for a report which, considering the timetable imposed, impresses one with the thoroughness with which these issues were examined. However, it leaves open questions upon which, had I been a member of that sub-committee, I would have liked to press the witnesses further—especially the degree of support which exists in our partner countries in the Community for the changes now being advocated and whether the difference that appears to exist between the citizens of this country and those of our partners is not to some extent an illusion based on different modes of political discourse.

I rise also because, like the noble Lord, Lord Gladwyn, I have long been concerned with these issues—though I hasten to add that I have never, like the noble Lord, been in the forefront of them. In 1957 I was the author of a report commissioned by the Council of Europe, on the basis of the work of a study group, to examine the general range of questions from politics and economics to science and culture which were involved in the development of European institutions. That committee met between "Messina" and "Rome". The shape of the future was beginning to reveal itself. Since the report was translated into German, Italian, Spanish and Portuguese, though not I hasten to add into French (they never are), it provided at that time some material for discussion.

It is interesting now, and revealing of some of our problems, to look back at what we then thought. The most striking point is that my economics colleagues, who were considerable professional economists, were unanimous in believing that agriculture would be the last major economic activity to be integrated—it was so difficult to think of integrating European agriculture—and that transport, industry and energy would long precede it. That shows that one can be wrong.

On the other hand, the difficulties that have accumulated and which are the cause of our discussion today and of this report were foreseen. That is to say, although the European countries had had the shock of a war and had jumped the first hurdle, in the Coal and Steel Community, of successfully bringing together the previous warring powers—that, as other noble Lords have said, was Jean Monnet's principle intention—it was already evident that the Common Market, the European Economic Community, would be less centrally directed than the Coal and Steel Community, that the Commission would have less power than the High Authority and that individual governments would have more. In that sense we were responding to an observation that in Europe the necessary degree of public popular consent for allowing important issues affecting people's employment and income to be transferred to an international or supranational body would be lacking. It would be lacking for a very good reason; namely, that many of the countries concerned had taken centuries to attain even their existing measure of national unity and the idea of a European Union based on some kind of pan-European feeling would, if it were to happen at all, take centuries more.

Indeed, this has been illustrated in the course of our discussions this afternoon. Why is Denmark the odd man out on the Dooge Committee? Because Denmark is the only Scandinavian country in the Community and naturally is unwilling to be tied more closely into an institution from which its closest friends are excluded. Greece, as has been pointed out, is a part of what before the days of Lord Byron we used to call the Near East; it is not a part of Europe in the sense in which Belgium, Holland or even Spain are parts. So one could go on.

Therefore, one is left with what can be done to make these European countries function better to their own advantage. Much has been said, and rightly, to the effect that the original impulse towards setting up a single common market for things other than agricultural products, which achieved the first goal of a single tariff area, has now been baulked. It has been illustrated by the number of permits which a German lorry requires to go to Italy, and we have had a vivid illustration in the report, and referred to by the noble Baroness, to prove that point. This starts me thinking again whether we are right to say that it is possible to do this kind of thing without a much greater departure from sovereignty than even the committee, which admits some derogation of sovereignty is required, is prepared to accept.

Perhaps I may remind your Lordships that the common market of the United States, which is, after all, the model that we have, the model with which we wish to compete, is based not on a commission and a treaty and a series of institutions but on 15 words in a constitution: the Congress shall have power to, regulate commerce with foreign nations and among the several States and with the Indian tribes". That is all. The entire wealth, prosperity and unity of the American system is based upon 15 words in a written constitution interpreted by a court. If we are to consider the kind of institutions that we need, ought

we not perhaps to think of whether a strengthened central point and, above all, a strengthened court might not be the root?

Instead of that, the people who are willing to have new treaties, new assemblies, new organisations, cannot bring themselves to tackle the fact that their existing Court is undermanned and overworked and badly requires internal reform, just as they apparently cannot tackle the problems which the Commission faces. One has the feeling, with matters like the Spinelli initiative, that what one does when one finds an obstacle is not to think of ways of tackling it but to think of ways of getting round it and pretending it is not there.

This may be impossible. If it is impossible, then ought we not to reconcile ourselves to the fact that what we have in Europe is not in fact a supranational organisation except in very limited respects? What we have, and what we appear to deplore, is increasing consultation between sovereign governments. There were, in the first six months of this year, no fewer than 36 ministerial meetings. It may be said, and it has been said, that this all shows that we are becoming hopelessly bogged down with their specialists, their experts and their officials. However, may we not look on this as a hopeful sign? If, say, before 1939 or before 1914 there had been regular and constant meetings of Ministers concerned with industry, agriculture, technology and education, would we not have thought that Europe was making rather considerable progress towards managing its affairs?

Similarly, ought we not to look at the reasons, not only why the parliament is disgruntled (I can imagine that intelligent and public spirited persons in an assembly which appears to have restricted powers should be disgruntled) but also why their powers are, and are likely to be, restricted? The reason seems to me to be this. All our countries, though their constitutions are different in many ways, have in common today a strong aspect of democracy in its strictest sense. That is to say that people look to their legislatures, look to their elected representatives, or heads of state if they happen to be directly elected persons, and make demands upon them in their capacities as consumers, as producers, as members of particular parts of the community with specific interests. Until they feel that they can equally well go to my noble friend Lady Elles (who I am sorry could not stay for the rest of this debate) equally with the members of the other place who are elected from that area, then the European Parliament cannot expect to receive major powers. If it did, it would fly in the face of the expectations of ordinary people.

I am not sure that, on the whole, direct elections were a very good idea, for the reason which has been alluded to; namely, that it made a bigger gap between members of that assembly and the members of the national parliaments. If there is to be a greater role for the European Parliament, then certainly greater consideration must be given to the interlocking of its activities with those of the national parliaments which the peoples themselves still regard as their major voice.

Therefore, it seems to me to be quite reasonable for the committee to have put forward the conclusions that it has, provided it does not believe that they will make a very major difference. Whatever is said about the veto, so long as a Minister for whatever it may be—agriculture, energy or whatever—is more susceptible to the pressures, electoral or otherwise, from an interest in his own country, the veto will be there. Ought we not therefore always to be looking at ways in which we can strengthen the existing mechanism?

This is virtually my last point because I have spoken for too long. It is interesting to note that much of the discussion about the number of commissioners—whether there should be one for every country or whether they should be grouped and reduced in number—has all along assumed that the commissioner is in some sense linked to and an exponent of his own country. Otherwise, if they are to be chosen entirely as European citizens of major competence, why should not all the commissioners be German, French, Italian or whatever? In other words, there are, even in the Commission, which we have not yet tackled, inbuilt national differences.

Finally, speaking as a member of the Law Sub-Committee of your Lordships' European Communities Committee, it very much strikes me, as one sees the people who come from the Commission and from the Court, that there are still major gaps in the understanding of each other's legal systems, habits of thought and ways of looking at constitutional commitments, and a long dialogue will be necessary before that situation changes in the way in which all of us in the end would like to see.

7.10 p.m.

Lord Thomas of Swynnerton

My Lords, when I first read this powerful report I recalled the advice of a Cambridge don to one of his undergraduates some years ago, suggesting that he should read The History of the English People by Mr. J. R. Green. He said: This book is short, it is interesting and it is usually true. I must say that one of the great benefits of this report—and it must have taken a very great deal to ensure it—is its brevity. That is a great achievement, on which the noble Lord, Lord Kearton, and his colleagues should be congratulated, particularly since there is almost no aspect of European affairs which it does not illumine by its terse and sharp prose.

Naturally, like other noble Lords, I have found much with which to agree in the recommendations. I agree it is useful to be reminded that, contrary to the views even of some Englishmen, Britain is a good deal more communautaire—a difficult word for us, I agree—than some of our colleagues suppose. I agree that we and the European cause in general suffer from an exaggerated idea of the size of the Commission. I think it is obvious that the Parliament must sit in the same place and not travel around in the way that one of my noble friends so graphically described. I certainly agree that the number of commissioners should not go up as far as it might otherwise do, although I would agree with the noble Baroness, Lady Young, in suggesting that the final figure might be something like 12.

I support with more qualifications two of the recommendations. First, like other noble Lords, I now believe that we should join the European Monetary System as soon as reasonably possible, but I do not think it should be done in order to make a concession or a gesture to our partners. I think it should be done as a quid pro quo of the realisation of a full internal market in financial services.

I also think that the role of the European Council must obviously, if it is going to go on being important, be defined, although how exactly that is to be done is a different matter. I must confess that any institution which consciously takes a name which is so close to the name of another institution in the same undertaking—and, after all, there is a Council of Ministers—causes one to wonder whether it deserves to survive. Certainly, whoever christened it the "European Council" showed plainly that he did not care at all if confusion was created in the public's mind. And, as a matter of fact, while I am on the question of words, there is no doubt whatever that the public at large in all countries is always confused by the fact that every institution in the European Community seems to have the same name. If this is going to be a vital enterprise, as I hope it will be, something should be done about that by some committee, somewhere, soon.

I have two or three doubts about the report, and the fact that I mention them obviously does not mean in any respect that I did not enjoy and profit from reading the rest of it. First, the implication is left—I am sure it was not intended—by paragraph 1 of the report that the Select Committee thought that Europe equalled the European Community. That is a dangerous implication to leave behind since after all the grandiose words "European Union" are words which affect countries like Switzerland and Austria, which are not part of the Community but are part of the West, and also countries east of the Iron Curtain, which are never mentioned at all in this report. Of course they should be, at least by implication, since we all hope that in the end Europe can once again really comprise those European peoples.

My second doubt concerns the point which others have made about the distinction between "vital" and "very important". In an age of euphemism, I cannot believe that that distinction is the right one to insist upon.

Thirdly, I question whether the report, in paragraph 22, is right to say that one of the original aims of the European Communities was to try to ensure that Western Europe faced the super powers on the same footing. I cannot believe that was one of the original aims, even though there may have been many people who worked towards that through other ways.

Finally, and much more important, is the doubt that I have about the Select Committee's understandable reluctance to become involved in a discussion of what these two words "European Union" actually mean. It seems to me that they refused the fence, so to speak, of defining those words or of becoming involved in a serious and profound argument such as is needed as to what those words imply. It is understandable that the Select Committee, being composed of rational Members of this House, had a natural reluctance to become too involved in bland, high-sounding words which might turn out not to mean very much, and so they concentrated on the practical details. But in this respect, and in this respect alone, I confess that I found the report a little disappointing because to cut through the "guff' and expose the real choices which face us in respect of Europe and the European Community as a whole is not only essential but is now very appropriate, considering that the process of integration which brings Spain and Portugal at long last into the Community is now done.

The words "European union" remind me rather of the phrase which was used earlier this afternoon during QuestionTime by the noble Lord, Lord Soper, in relation to the Book of Revelation, in which he said that the Book of Revelation could be interpreted to mean anything or nothing. Her Majesty's Government, obviously, from the words of the noble Minister, favour the concept of European union although my noble friend Lady Young rightly pointed out that the two words related to a rather elusive concept. My noble friend Lady Elles also favoured the concept of European union and my noble friend Lord Reay even likes the phrase itself. But although my noble friends Lady Elles and Lord Reay sit on the same side of the House as the noble Minister Lady Young, my noblefriend Lord Broxbourne and myself, there is, I submit, a difference between us as big as there is on normal occasions between this side of the House and the other side.

The fact is that, if European union is going soon to be what my noble friend Lady Elles said it should be—she quoted the present Foreign Minister of Belgium, Mr. Tindemans, saying that the aim was to achieve a united front to face the outside world as well as to achieve economic and monetary unity within the Community—and if that is what she believes and the whole enterprise is to remain democratic, then of course the European Parliament should have the powers which my noble friend says are necessary. My noble friend Lady Elles—and I regret that she is not here to comment at the moment—said she is not a federalist, but if in fact she is looking forward soon to a united front to the outside world and if she is not a federalist surely she must support the idea of a unitary European state. These are some of the sorts of questions which should be discussed, and I believe it is a pity they were not raised in the report.

I do not think we should "despair"—this is a word used in paragraph 18—if at the moment we can say that all we have achieved is a sophisticated customs union. That is a very remarkable achievement. It is realised in the report itself, because in paragraph 29 it is stated that this is a "unique and experimental" way of achieving co-operation without major concessions of sovereignty. This idea of economic unity without political unity is one that could well attract, and that has indeed already attracted, nations in other continents who are desirous of economic collaboration without substantial concessions of sovereignty.

My noble friend Lord Rochdale said in a powerful speech that perhaps the failure to achieve a full internal market was due not so much to failure of negotiations as to political failure. If he is right, then the European Community will, oddly enough, then cease to be that unique and experimental undertaking which the report claims it to be and will simply become—if I may suggest it in a rather exaggerated way—what the German Zollverein became in the end in 1870, rather than remaining a successful Zollverein, such as did not, after all, occur in Germany in the last century. I think it is much more interesting to support the Government's plan of trying to achieve a full internal market by 1992, without the complete collapse of all national sovereign distinctions.

So, again, I regret that the report did not explore this foggy marshland which was explored in their excellent and powerful speeches by my noble friends Lord Broxbourne and Lord Beloff—a marshland across which, inevitably, some kind of line is drawn and must be, for the foreseeable future. If we manage to achieve by 1992 an internal market of the sort envisaged that would be the time to see what further stages would be needed or desired. Perhaps we should then consider Tindemans, Spinelli and, to put it in rough terms, Elles, Bessborough or, indeed, Rochdale.

I have two further points to make and the first is about political co-operation. The report touches on this only twice and on the major occasion in two paragraphs, Nos. 82 and 83. Those paragraphs are interesting not for what they say, but for what they do not say. Is this modest attention due to some kind of scepticism about its benefit? If so, I, like my noble friend Lord Broxbourne, share that scepticism. Political co-operation should surely stick, as was originally intended, to considering the political issues arising from European economic problems and should not consider questions arising from political anxieties throughout the world, from Nicaragua to South Africa. There are certain occasions when these meetings of foreign ministers seem to be under the aegis of political co-operation, and in danger of confusing statesmanship with journalism. After all, statesmanship of that sort is concerned with power and not with fashionable crises.

The second point that I have to make is that we should have liked in this report a few more words about culture. It is true that the report reminds us in paragraph 85 that education is specifically excluded from the competence of the European treaties, save when it is dealing with the movement of persons. Even so, in a report with such a grand title it would have been pleasant to have known for sure that the committee members realised that what makes us Europeans is not basically a common policy towards sheepmeat, but a common recollection of Shakespeare and other masters of European art. This is specially important at the present time, when British educationists are, interestingly enough, trying to see how they can integrate Asian cultures into what they call British culture. That is important, because we should realise that British culture has always been a part of European culture.

7.25 p.m.

Baroness Robson of Kiddington

My Lords, I must first pay tribute to the way in which the noble Lord, Lord Kearton, introduced this report this afternoon, but, above all, to the way in which he conducted the committee. He was faced at the beginning by a number of people on that committee who had widely divergent views about what European union meant, and he managed by skill and by leadership to make us agree to the report that your Lordships have in front of you. There are many of us who advocated Britain's entry into Europe long before we ever achieved it. To many, this report will probably not sound particularly revolutionary. That commitment to Europe is the commitment that Spinelli has—an ever-closer union among the peoples of Europe, as in the preamble to the Treaty of Rome. Those words obviously have a much wider implication than a purely economic union, which is what we have concentrated on over the years.

The noble Lord, Lord Thomas of Swynnerton, suggested that the committee should have spent more time trying to define their ideas for European union. I think that those ideas would be very diverse among the members of the committee, but I believe that we could have come together on a definition of what we mean by "European union".

The noble Lord, Lord Rodney, referred to the miracle that has happened in Europe since the end of the last world war; the fact that we cannot envisage another war breaking out among the member states of the European Community. The noble Lord, Lord Beloff, referred to the fact that it has not managed its affairs too badly since the end of the war. But we must also look back and think how much greater the influence of the European nations could have been on peace and on détente between the super-powers if union in Europe had existed in foreign affairs and defence. My noble friend Lord Gladwyn talked about the need for a unified defence in Europe, and the noble Lord, Lord Reay, talked about the same thing. As long as Europe is not united we shall be played off against each other. We had an example not so long ago, when Mr. Gorbachev visited France. He tried to play off President Mitterrand against our Foreign Secretary, and he succeeded up to a point. Their answers were not united.

Attempts have been made in the past by different nations in Europe to influence the super-powers, and because there has not been unity within the nations we have failed. Chancellor Brandt's attempt to create the Ostpolitik failed because there was not enough support from all the rest of the countries in Europe. Also, there is no doubt about the fact that Britain would have been a member of the Community a lot earlier if it had not been for the claim that we have a special relationship with the United States and for the Polaris agreement, which took place at the same time as President de Gaulle said "No."

I am using these examples only to show that there is a lot more to European unity than just the Economic Community. On the other hand, having been a member of this committee I visited these institutions and listened to all the expert evidence that was presented to us. I came to the conclusion that without an improvement in the European Community and without a true free market and free movement of people, goods and services within Europe, we could not achieve any of these other aims. I believe that if that was achieved we would really be in a position to move forward to the much greater issues that challenge us.

The majority of Members of the House who have spoken have approved of the report and its recommendations. There was absolutely no dissension from the recommendation that this country should join the European monetary system now. There were some doubts about the recommendation to change the expression "important national interest" to "vital national interest". I agree: on the surface there does not seem very much difference between the two words. But the main recommendation is that this "vital national interest" should be presented by a Minister to his peers. What we did discover in our visits to Brussels was that it is not the use of the veto that is barring advance: it is the threat of the use of the veto by people much lower down the scale. The committee felt, and I felt in particular, that a Minister having to present his case to his fellow Ministers would not use it on an issue which was not of vital importance. He would hope that his fellow Ministers would consider that if he raised it at that level it really was vital. I do not believe, for instance, that a British Minister would raise a minor issue and pretend that it was vital—but neither would any of the others. I believe that this would improve the speed with which agreement might be achieved.

I turn now to another recommendation which I wholly support. I would prefer to see an amendment or amendments to the present treaty rather than a new treaty. There is a tremendous risk that getting involved in talking about a completely new treaty could be completely divisive among the nations and could detract from the need to concentrate on completing the free market in Europe, which would drop even further back. I am not a lawyer but I should have thought that the recommendations we have made could certainly be included as amendments in the Treaty of Rome.

We have made important recommendations about the European Court. They may appear minor in the report, but the only basic safeguard of nations, organisations and individuals under Community law is an appeal to the European Court. It seems to me a tragedy that the court should be saddled with having to adjudicate on staff questions at the Commission. It is not making the right use of the people working there, who are being overworked. Secondly, it is creating a backlog of cases which take too long to come before the European Court. I should like to see private individuals have greater access to the European Court if they feel aggrieved in any way.

Those are the main points I wanted to mention. In accepting this report—I hope that the Government are going to accept its recommendations—if the recommendations are implemented and we move forward at a slightly faster speed in creating the European market we must never forget that this is only a step, though an important one, towards European union. We must keep the aim of much closer co-operation in Europe always in front of us.

7.37 p.m.

Lord Oram

My Lords, this report is not a dramatic report: still less the revolutionary report to which the noble Baroness pointed in her opening sentences. Indeed, it would not be so good or so useful a report if the sub-committee had tried to make it dramatic and had tried to catch the headlines by putting forward radical proposals. I very much agree with its somewhat cautious but nevertheless very constructive approach. Like other noble Lords, I congratulate the noble Lord, Lord Kearton, both on the achievement of the report and on the lucid way in which he presented it to us at the beginning of the debate.

In particular, I welcome the fact that it rejects the Spinelli draft Treaty. It seems to me that that proposal was altogether too formal, too legalistic, too intricate and certainly untimely for it to get any general acceptance. I agree, perhaps not surprisingly, with the evidence given to the committee by the two witnesses from the Labour party, my honourable friends Mr. Foulkes and Mr. Robertson. In discussing the Spinelli report they went so far as to suggest that the proposals, though they may have been a useful stimulus to debate about the future of the European Community, may nevertheless have done more harm than good. The proposals have diverted people's attention away from the real problems of Europe, notably massive unemployment, and have engaged too many people chasing what I would call the will-o'-the-wisp of constitutional perfection. I welcome the fact that in this debate this evening most if not all of those who have contributed have not sought a perfect constitutional solution.

Let us remember that it is only 30 years since the Common Market started. Surely, in the span of human history, that is all too short a time for any set of institutions to be properly tested or to be subject to fundamental amendment. Having regard to Europe's complex history and geography, 30 years is surely much too short a time in which to have expected to reach complete satisfaction in constitutional terms. But as the noble Lord, Lord Rodney, pointed out, a great deal has been achieved in international relations and in internal organisation within the existing institutions.

If we make comparisons and consider, for instance, the timetable of the evolution of constitutions—our own included—and if we think of the constitutions of the United States of America, the United Nations and the Commonwealth, no one can reasonably suggest that root and branch constitutional changes should have been brought into effect in those cases after such a short period of testing. It is surely too soon for anything like the Spinelli proposals to be adopted.

It is in my view not a question of devising new constitutions. It is a question of making the existing institutions work more effectively. This, as the report before the House suggests, can be done pragmatically and mainly within the limits of the existing treaties. The report recognises, as I am sure we all do, that changes in the treaties will be necessary from time to time because of changes in the European scene—economic or political. But the report is wise to suggest that we should in meeting those changes build on and improve the existing treaties rather than attempt root and branch reformation, as Spinelli proposed.

Relationships between member states are bound to change over time and modifications of the treaties are needed to meet those changes. The noble Viscount, Lord Rochdale, listed many of the changes which have taken place since the formation of the Community. I would add just two others. First, there is the increase in the number of states, which obviously raises questions about representation on the Commission or voting rights within the Commission. That is one change that neeeds to be met—but it does not take a new treaty to meet the kind of situation.

To take another example, on the economic front there has been a considerable change in this country's degree of self-sufficiency in relation to food production. I believe that we are now something like 75 per cent. self-sufficient. Certainly at the time when the Common Market was formed we were in a very different situation compared with our continental neighbours in that particular respect. This is something that must have an effect on the constitutional arrangements.

It is developments such as those which must be constantly assessed and reassessed. That is the reason why I have always said that the issue of British membership of the Common Market has never been, as some would have it, a question of high principle—of black and white. It has always been a grey situation and a developing situation. Opinions and attitudes can change according to those changing situations. Indeed, we can say that we have now reached the point where those who 10 or 15 years ago were enthusiastic advocates of European unity are now perhaps less enthusiastic; and where those who were vigorous opponents of European union are now less inclined to oppose it.

It is for all those reasons that I believe it would be wrong to force the pace of constitutional change as Spinelli proposes. Let us rather be cautious; prepare to change but not make too much change too soon. Let us remember also that institutional changes—especially those of a radical nature—must stand the test of public opinion and of the democratic process in all member states.

I noticed from the minutes of the committee's proceedings that the MEPs who gave evidence, and who attended in their capacity as members of the European Parliamentary Institutional Affairs Committee, were of the opinion that there was an upsurge of feeling in Europe in favour of closer European union. I believe they were deluding themselves. As I have explained, there are questions of change—but I do not believe that they are prompted by any upsurge of opinion in favour of union, as some suggested. It was perhaps wish fulfilment on their part. I am glad that this was pointed out to them by my noble friends Lord Gallacher and Lord Ardwick, who stressed the difficulty that would face us if we adopted the Spinelli proposals.

With all this in mind I would point to three of the committee's conclusions in Part 6 of their report which are in my view particularly wise. I have already dealt with the first of them; the committee's rejection of the Spinelli proposals. Secondly, and as other speakers have said, I agree wholeheartedly with paragraph 99 concerning the Community's failure to establish an effective internal market. Several speakers have pointed to that aspect as being a most crucial issue and I thoroughly agree.

I refer now to an earlier report by the European Select Committee of this House which dealt specifically with the problem of the internal market. I was privileged to serve on that particular subcommittee, and under the chairmanship of the noble Lord, Lord Greenhill, in drawing up that report. I recall the very impressive evidence we received about the folly of barriers preventing the flow of goods freely from one country to another within the Community. The noble Baroness, Lady Young, made mention of the horrific list of documents listed on page 301 of the report which have to be dealt with before a lorry can move. The noble Lord, Lord Rodney, also referred to this point.

I remember that in the sub-committee of three years ago to which I have referred we received an estimate that the cost of delays to lorries which were being kept standing still at frontiers while complicated documentation was being processed was anything up to 10 per cent. of the value of the goods. It is perhaps worth quoting the main conclusion of the sub-committee which dealt with the internal market. We said: It is only by a general understanding by governments and peoples of the advantages to be gained from an integrated Community market that the 'political will' needed to achieve it will be created. At the present time the Committee"— that is, the committee of three years ago— regretfully conclude that this will is absent". Reading through the evidence which the subcommittee of the noble Lord, Lord Kearton, has received, time and again it seems the finger was pointed at the lack of political will. As I have said before, it is not so much a question of whether the constitution would allow an internal market to be created; it is more the need to get on with the job within the confines of the present constitution.

The third issue to which I refer—and again is one which has been well debated today—is the question of decision-making. The Committee has dealt very fully and helpfully with the questions of the veto, majority voting, the Luxembourg Compromise and the excessive use of that Compromise. I believe, as the noble Baroness, Lady Robson, pointed out, that the recommendation contained in, I think, paragraph 102 of the report, about what should be done with the veto deserves the closest attention. Indeed, I think that the noble Lord, Lord Kearton, and his colleagues are to be congratulated on the formulation of a feasible solution to this vexed series of problems connected with the veto.

They propose that if the use of the veto is to be confined it could be done by the head of state who wants to exercise the veto having to explain at the European Council why it is a vital issue for his or her country. I believe that that is a very sound recommendation but I take up the point that I believe three or four speakers have taken up—first, by the noble Baroness, Lady Elles. We all noticed that the Minister in her opening speech used the phrase "very important" rather than the word "vital". Was that deliberate, my Lords? If so, I hope that she will explain why the Government stick to that formulation rather than adopt the suggestion of the Committee headed by the noble, Lord, Lord Kearton, that the word should be "vital". In the report the word "vital" is printed in italics which shows that the committee was concerned about that. I am concerned that the Government may not have taken this recommendation properly on board.

For instance, take the last occasion when the veto was used. Germany was protesting about a proposed increase in food prices—or perhaps it was the other way round; I am not sure. Can we imagine that Chancellor Kohl would have stood up in the European Council and said that this 1 per cent. difference in food prices was vital to Germany's wellbeing? I think he would have seen the absurdity of the position. I believe that that is the right method in order to confine the use of the veto to the issues for which it should be used.

It is the series of similar commonsense proposals which commend this report very much to me. I believe it to be a very valuable report. I hope it will have a lasting effect. I noticed a reference in one of the early paragraphs of the report to the Spinelli proposals being one of a long series of initiatives applauded at the time but soon forgotten. I hope that this report will not have that fate. We can certainly applaud it, as we have been applauding it, but I hope it will not be soon forgotten.

7.54 p.m.

Baroness Young

My Lords, we have had a most useful and, I believe, constructive debate and I am grateful to your Lordships for providing the opportunity to consider this important report. The Government will take careful note of what has been said today. I am sure that the report will attract much attention in Europe.

The European Community Treaty rightly talks about ever closer union among the peoples of Europe. In other words, the process has to be real and of measurable value to ordinary men and women. That is why the Community, and the Government in particular, have focussed on the steps needed to break down barriers. Many more people now have first-hand knowledge of Europe through greater opportunities for travel. Barriers to trade are being pulled down. Europe speaks with an increasingly powerful voice to the rest of the world as a result of the continuous growth of political co-operation—the regular consultation process between governments on foreign policy issues which is one of the most remarkable developments in Europe. This debate has, I think, helped to emphasise the fact that, although much has yet to be done to achieve a real common market, the picture is not the one of stagnation which some would have us believe.

New opportunities have opened up for collaboration and for joint endeavours for European businesses and firms, contributing to growth and jobs. I should like to assure my noble friends—in particular my noble friend Lord Beloff, my noble friend Lord Rodney and my noble friend Lord Broxbourne—that we shall continue to press on with our determination to liberalise the internal market: a view which I think is shared by all of your Lordships who have spoken today and one also shared by the noble Lord, Lord Oram. There is a common awareness that the frontiers of technology are better tackled on a European, as opposed to a national, scale if the challenges of the 1980s and 1990s are to be faced and the risk of domination by the United States and Japan is to be avoided.

We are not just talking about the goals of the Community but of real achievements—a point made by my noble friend Lord Rochdale. In the past two years we have created the Esprit programme; agreed on the general research programme for the next five years; revised the regional and social funds; made a big advance on standards; agreed on the single administrative document of custom clearance; negotiated the accession of Spain and Portugal; started to tackle the problem of CAP surpluses; agreed on a common fisheries policy; agreed on a mechanism for budget discipline; and dealt with the problem of budget imbalances. I do not think that that is too bad a record.

I am glad that a number of your Lordships have referred to what my right honourable and learned friend said in Bonn about European Union, which I repeated today. Indeed, I am grateful to my noble friend Lord Thomas for adding to our understanding of European Union by correctly expanding on authoritative descriptions of it by others, including Mr. Tindemans in his report on European Union in 1976. The European Council, commenting on that report, declared that: European Union will be built progressively by consolidating and developing what has been achieved within the Community". That seems to me to be a further admirable description.

At this hour there is not time to answer all the important points that have been raised in the course of the debate. Therefore, I shall focus on two or three areas which have been the subject of much discussion and try to answer one or two other important matters. The first area is what has come to be known as the Luxembourg Compromise. The noble Lord, Lord Kennet, my noble friend Lady Elles and the noble Lord, Lord Oram, asked that the term "very important", which I used in my opening remarks, should be changed to the "vital" interests referred to in the committee's report and that the justification of a veto should be published—a point raised by the noble Lord, Lord Ezra.

We recognise the need to prevent the abuse of the Luxembourg Compromise but the wording is not simply a question of semantics. We are not sure that change of usage from the words "very important"—which dates from the birth of the Compromise in 1966—to "vital" would achieve any of the results that we all wish to see. However, I can confirm to the noble Lord, Lord Ezra, and others, that we have proposed that there should be a special procedure of the Council under which a member state should explain its use of the veto fully and formally.

The noble Lord, Lord Gladwyn, said that the United Kingdom delegate on the Dooge Committee should have joined the majority view as regards voting; that is to say, that the general rule should be majority voting and the unanimity should be required only in exceptional cases. The present treaties have many articles—over 40—which provide for majority voting, yet relatively few of these are used in practice. The Community has always been able to take decisions where the political will exists whatever the voting rules may say. We continue to believe, as we argued in the Dooge Committe, that more use should be made of the many majority voting provisions already in the treaty, but we see no point in tinkering with voting procedures in the hope that this alone will bring about a real common market or a technologically strong Europe. The starting point has to be for member states to demonstrate that they really are committed to the early achievement of these objectives.

My noble friend Lord Broxbourne asked whether the obligation to explain the veto would stop its abuse. Like the noble Lord, we recognise the political reality that member states may sometimes have to invoke a very important interest to request postponement of a vote, but we do not consider that there is any validity in the distinction between a vital or a very important national interest. The principle is the same. We have made two linked proposals, that the Presidency call a vote once a full discussion has been held, and then that the veto be explained. These measures together could introduce more clarity into an area over which the possibility of a veto may be unjustifiably casting a shadow.

Many of your Lordships referred to the legislative role of the European Parliament, in particular my noble friend Lady Elles, to whom I think we all listened with great interest. The Government have made proposals at the Milan European Council to increase the European Parliament's involvement in the legislative process. We particularly want the Council systematically to take account of European Parliament resolutions and to consult the European Parliament at an early stage on Commission proposals for legislation, and indeed, as my noble friend Lord Bessborough pointed out, we should like to see the European Parliament more involved in legislation. But the European Parliament must use its powers responsibly and make sure that its resolutions are targeted for action.

Both the noble Lord, Lord Kennet, and my noble friend Lady Elles commented on the seat of the European Parliament and here the Government believe that the solution lies in the European Parliament's own hands. We should be glad for the Parliament itself to make clear what specific seat it would desire, as the noble Baroness, Lady Elles, has recognised.

Nearly every noble Lord who spoke in the debate has commented on the question of the ERM. Could I say that the United Kingdom keeps the question of membership of the ERM constantly under review. We have always said that we would join the mechanism when the circumstances were right and it is no easy matter to judge when those circumstances are right. Sterling and the Deutschemark are both major trading currencies. At present the ERM only holds one major trading currency. The addition of a second could put the system under strain, especially when the dollar is volatile. The market's perception of sterling as a petrocurrency is also an important factor. Developments in the oil markets tend to cause sterling to move one way and other countries' currencies the other way, for reasons beyond the control of any ERM participant. Expectations of future oil prices are also likely to have an important effect on the exchange rate. Against this background we need to give consideration to the implications of ERM membership for the operation of domestic policy. We have always believed that one of the most significant steps towards strengthening the EMS would be the abolition of exchange controls. Most of our partners retain such controls, and they are a serious impediment to the creation of the internal market for which we have been pressing.

A number of your Lordships commented on the whole question of political co-operation, and I should like to make clear the Government's position on a new political co-operation treaty. We are taking an active part in negotiations. The text of a new treaty on political co-operation has been proposed, but we are convinced that it should be free-standing alongside the Treaty of Rome. Foreign policy is a matter for co-operation between member states. It is not to be confined within the sort of legal regulation which incorporation into the Treaty of Rome would entail.

The noble Lord, Lord Ezra, and my noble friend Lord Rochdale commented on the European Council. It may be helpful if I say that the idea behind the European Council was to offer strategic guidance to the Community, not as a sort of court of appeal on the day-to-day business of the Community, which is for Foreign Ministers; we favour a return of the European Council to that strategic role. If it were to be incorporated into the treaty structure, the temptation would be strong to delay decisions even more than happens at present, so that Heads of Government could be consulted. That would not improve the decisionmaking process, which is something that we all want to see improved.

A number of your Lordships commented on the role of the commissioners and particularly on the Committee's proposal that there should be only nine commissioners. My noble friend Lord Reay asked about the Government's position on this matter where we have proposed that there should be 12 commissioners. Our proposal is based on the principle that commissioners are not representatives of their countries but impartial servants of the Community; and in any case we are not convinced that there would be substantial portfolios for all 17 commissioners. Thirdly, the Commission's decision-taking would be very cumbersome if there were 17 commissioners. We are therefore persuaded that we should press for a smaller Commission, but, for the reasons which I gave, we feel that each country should have a commissioner.

There were a number of quite specific issues which were raised, of which perhaps the most important was the one raised by my noble friend Lord Bessborough and also by the noble Lord, Lord Gladwyn, on defence. I am glad indeed that this was raised in the context of European Union. By our membership of the NATO Alliance we are committed to the defence of Europe and by our membership of the European Community we are committed to its prosperity. But it would be wrong to think that the institutions of the one could be superimposed on the institutions of the other. They were built for different purposes. There is, however, scope for the co-ordination of positions in matters of security, for example, and we shall continue to be on the look-out for other matters on which the Ten can pool their resources.

My noble friend Lord Broxbourne asked about the progress on the European company. Progress has been made on the discussions on a European economic interest grouping, but there has been no recent substantive discussion in the Council on the Vredeling proposal on worker participation. We believe that matters of this kind are better left to individual member states.

My noble friend Lady Elles referred to the 763 proposals that have piled up before the Council, and we agree with my noble friend that some proposals spend some considerable time in the Council before being decided. However, over the long term the picture is not quite so sombre. According to the Council Secretariat the Commission has submitted 3,481 proposals to the Council over the past six years and the Council has adopted 3,235 of them. If we ask why some proposals have to wait, this may often be because of the Community's habitual search for consensus despite the provisions of majority voting.

I began by speaking of the importance which the Government attach to the full implementation of the internal market and I should like to conclude by saying something on the very important question of technology that has been raised particularly by my noble friend Lord Bessborough but also by other speakers. There are proposals before the Intergovernmental Conference for new Treaty articles which recognise the degree to which technological co-operation has already become part of Community activity. Technology was high on the agenda of both the European Councils held earlier this year. The Community is the world's largest industrial grouping, yet we supply only 10 per cent. of the world market in information technology. In 1983 eight out of every 10 personal computers sold within the Community were manufactured in the United States.

The heart of that challenge is commercial competitiveness. Europe is not lagging behind America and Japan in pure science, and our development of new technologies has been fully equal to theirs. Where we have failed, and where the United States and Japan have conspicuously succeeded is in the development and marketing of products based on those new technologies. For the Community the essential task must be to create the conditions in which our high technology companies can collaborate together and exploit their expertise. That requires us to drop the philosophy of European national champions and move towards open competition throughout the Community. It requires us to promote collaborative ventures between European enterprises aimed at the development of products designed to secure a substantial share of the world market. That is where the completion of the common market becomes so vital.

I should like to end with a quotation from Sir Winston Churchill—something already referred to by my noble friend Lord Reay. Sir Winston Churchill summed up the vision of a Europe united and powerful in a famous speech in Zurich in 1946, at a time when Europe was still devastated by the aftermath of the war. He described the task as being: to recreate the European family and provide it with a structure in which it can dwell in peace, in safety and in freedom.' Our membership of the European Community has brought us closer to that goal. The committee's report is a timely pointer to the right way forward towards the ever closer union described in the Treaty of Rome—a perceptive analysis of what that term ought to mean and of the consequences for action in the Council of the European Community now. The Government are most grateful to the noble Lord, Lord Kearton, and to his committee for the contribution they have made to their thinking and for the observations made by your Lordships today.

8.12 p.m.

Lord Kearton

My Lords, I can be brief. I should like first to thank once again the members of the subcommittee, who must be very pleased that the report has given rise to such an interesting, wide-ranging and comprehensive debate. I should like to thank all noble Lords and Baronesses who have taken part in the debate. Speeches have been powerful and eloquent. Finally, let me say how much I appreciated the concluding speech of the noble Baroness, Lady Young. I think that she covered an immense amount of ground and was most positive and constructive. What she said, together with the speeches of Sir Geoffrey Howe over the past 12 months, have convinced me that the Government are moving forward towards a closer European union—I say this to the noble Lord, Lord Thomas of Swynnerton—however one defines that phrase. I think that we are getting there, and I can only say that I hope we get there quickly.

On Question, Motion agreed to.