HL Deb 13 December 1999 vol 608 cc20-34

3.33 p.m.

The Lord Privy Seal (Baroness Jay of Paddington)

My Lords, with the leave of the House I shall repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

"Accompanied by my right honourable friends the Foreign Secretary and the Chancellor of the Exchequer, I attended a meeting of the European Council in Helsinki on 10th and 11th December.

"The key decisions of the Helsinki Summit were far-reaching. It increased to 12 the number of countries involved in accession negotiations with the EU and gave candidate status to Turkey for the first time. That presages a hugely enlarged EU and, over time, with the membership of Turkey now formally on the agenda, an EU with its borders stretching as far as the Middle East. In addition, it has significantly pushed forward European defence co-operation, allowing the EU for the first time to build the capability of acting where NATO is not engaged. These are truly historic decisions for the EU.

"Before the start of the summit, we learned of the decision of the French Government to refuse to abide by the decision of the EU and lift the ban on British beef. As I said in this House on 10th November, it was always preferable to settle this through discussion and clarification; but failing that we would have to go to law. We worked hard to reach an understanding with France. In the end, the Commission tabled a summary of our response to French questions which we and the Commission believed should have satisfied reasonable concerns. Unfortunately, the French Government were unable to agree them. The Commission is now taking France to court, and it will issue its formal legal opinion tomorrow.

"There were some who said that we should have tabled this issue at the Helsinki Summit. I can think of nothing more counter-productive or misjudged. At present, British beef can be sold in 13 out of the 15 EU countries. The Commission is completely on side with us. The beef ban is in law lifted. To have reopened the entire issue—and given all 15 countries an obligation to debate an issue the vast majority regard as closed—would have been tactical ineptitude on a grand scale. Neither do I think it is sensible to threaten a trade war with France. We have trade with France worth billions of pounds. To break the law ourselves, while seeking to have it upheld against France, would be folly. We will not do it.

"To return to the summit, the main issue was the enlargement of the European Union, which this Government strongly support. Democracy and the market economy are now firmly established in the majority of central and eastern European countries, and they are increasingly ready to join the European Union. We al so owe an obligation to those countries who stood by us in the Kosovo conflict earlier this year.

"Six countries—Poland; Hungary; the Czech Republic; Estonia; Slovenia and Cyprus—began negotiations last year. The European Council decided to open negotiations early next year with six more: Latvia; Lithuania; Slovakia; Malta; Bulgaria and Romania. The process is lengthy and detailed, but it is now firmly under way.

"On Cyprus, the European Council welcomed the negotiations under way in New York between the Cypriot leaders. Successful conclusion of these talks would r of only bring a welcome end to a long-running dispute, but also facilitate Cyprus's accession to the EU, and we urge all those involved to make every effort to reach agreement. But at Helsinki, Heads of Government endorsed our view that Cyprus's accession was a matter for decision by the member states of the European Union and that there should be no pre-conditions.

"The European Council also opened a new and much more positive chapter in its relations with Turkey. This has long been a preoccupation for Britain; Turkey is of great strategic importance, and an ally in NATO. A more constructive relationship between Turkey and the EU is overdue. But we have now secured that. Turkey is now a candidate country, destined to join the European Union on the same basis as the other candidates. It will enjoy all the benefits of other candidates, including financial assistance, even though accession negotiations are unlikely to begin for some time. It is an excellent outcome.

"The intergovernmental conference next year is aimed at preparing the Union for the impending enlargement. The Helsinki Council confirmed that the conference should focus on the size and composition of the European Commission, the weighting of votes in the Council and the possible extension of qualified majority voting, in certain limited areas. The conference will begin in February and complete its work by the end of next year.

"On security and defence, the European Council endorsed our view that the top priority is for European nations to strengthen their military capabilities. At Helsinki, we agreed that member states should, by 2003, be able to deploy and sustain for at least one year military forces of up to 50,000 or 60,000 troops, capable of a range of tasks essentially defined as humanitarian and rescue missions, peacekeeping or peace enforcement.

"There have been suggestions that this agreement to increase the options open to us in future crises has adverse implications for NATO, or that the European Union is creating a European army. This is the opposite of the case. The European Council made clear that the EU will launch and conduct military operations only where NATO as a whole is not engaged. The process will involve full consultation and transparency with NATO. The six non-EU allies will be involved and consulted before decisions are taken, and will be able to take a full part in resulting operations. The EU will avoid unnecessary duplication with NATO.

"Final decisions on whether to involve troops will remain firmly with national governments. These arrangements do not imply a European army, as the Helsinki Council made explicitly clear.

"But it would be a tragic mistake, repeating mistakes of British European policy over the past few decades, if Britain opted out of the debate on European defence and left the field to others. This is a debate we must shape and influence from the start, because our vital strategic interests are affected by it. As a result of our participation, it is moving in a clear direction reinforcing NATO, not in opposition to it. I completely reject the view of those who would have us opt out of this issue.

"The conflict in Chechnya was much on our minds at Helsinki. Our relationship with Russia is a vital one, above all for the security and stability of our continent. We want Russia to continue on the path of democracy, market economy and the rule of law and will continue to support the transition process. But business as usual is not possible while human rights are being comprehensively abused in a corner of the Russian Federation. The EU called for a political solution to this issue and adopted a series of actions designed to back up the words of strong condemnation.

"On the withholding tax, the Council agreed a sensible way forward. We will continue to work for a solution to the issue of tax evasion that rightly concerns some of our EU partners, Germany in particular. But this cannot be done at the expense of a major European financial market based here in London. I have made it clear that we will not permit that. We also have genuine concern about the efficacy of the measures proposed. So we have also insisted that, in debating the way forward, the Chancellor of the Exchequer's proposal for an exchange of information on a basis that involves more than just EU countries should be examined. There is increasing recognition that it is no good adopting measures in the EU if the only impact is that the market in savings moves outside the EU. The rest of the tax package we can support, although of course other countries have difficulties with parts of it.

"The Helsinki Summit dealt with pressing issues of the day, but also had a vision for the future. We made the historic decision that the Europe of the future would be one that embraced countries in eastern Europe that 10 short years ago were only just emerging from totalitarian communist rule. This enlarged Europe is one that would have been unimaginable until the very recent past and it is one that we should embrace. We also made the decision that our continent of Europe, which twice this century has lost millions of its citizens in the two most bloody wars in human history, should now co-operate in defence where the object is to help to keep the peace. A bigger European Union, a union committed to embracing countries committed to democracy, a Europe of nations determined to use their collective strength to advance our values—that is our vision and I commend it to the House."

My Lords, that concludes the Statement.

3.42 p.m.

Lord Strathclyde

My Lords, perhaps I may say at the outset how grateful I am to the Leader of the House for repeating the Prime Minister's Statement. But will she agree with me that it was strong on generalisation but weak on any details?

On a more helpful note, I concur with her on the gravity of the situation in Chechnya. Is she aware that we support the measures agreed at Helsinki, including the diversion of TACIS funding, but that we also need to ensure that we do not undermine democratic forces in Russia? Is she concerned that, strongly as we condemn the unacceptable and brutal Russian action, the bombing of Belgrade and other cities by NATO may have provided a pretext—but certainly no excuse—for the Russian action? Does she agree that we need to think very carefully about the application of the Blair doctrine on armed military interventions in other countries' internal affairs?

I turn to the substance of the summit. Is the noble Baroness aware that we on this side strongly support the expansion of the European Union to the states to the east? In particular, does she recall that we have on repeated occasions deplored the offensive attitude taken by some EU members towards Turkey? Will she accept our support for inclusion of Turkey in the process of enlargement? But is she aware that we do not believe that admission to the Union must invariably be on the basis of the acquis communautaire? Is it not important to campaign for greater flexibility within the Union? Was it not regrettable that at the recent WTO conference the EU was adopting protectionist positions, when it is clear that free trade has been the greatest creator of prosperity in the world in the past two centuries? Do the Government remain unequivocally committed to the principles of free trade? Did the Prime Minister urge that position on our EU partners? In particular, did he oppose any requirement on aspirant members of the EU that they should regulate their labour markets and industries in order to qualify for EU admission? Would it not be bizarre for states like Estonia, which have just escaped central regulation and freed their economies, to have to re-regulate to join the EU? I hope that the noble Baroness will be able to assure the House that that will not be the case.

This brings me to the reality of the Helsinki conference. Do the Government regret that after their unilateral abandonment of the previous government's hard-won positions on the Social and Employment Chapters they have received precisely nothing? Are the Government ashamed that up and down this country as we speak there are millions of businesses—some of them small traders—wrestling with form after form, and regulation after regulation, that have been imposed on British business under the Social Chapter and various employment directives? Are they not concerned that our competitiveness is being sapped and the enthusiasm of entrepreneurs destroyed by such regulation? What was it all for? What has the Prime Minister achieved for small businesses in Britain?

In 1997 the Prime Minister preened himself, cycling around Amsterdam as a great European. No more bicycles now, my Lords. Instead, he has found himself being railroaded towards imposing a disastrous tax on the City of London. He was greeted with contempt and ridicule when he tried, far too belatedly, to speak up for our farmers. Does not this summit represent the complete failure of the Prime Minister's strategy on Europe? Will the Leader of the House tell us one thing that he has achieved by his willingness to sign away the interests of British business in Amsterdam? Has not his whole policy on Europe been exposed as utterly naive? We were told by the Prime Minister on 14th July that, the decision to lift the beef ban has come about because the government have a constructive attitude to Europe. That is why we got the beef ban lifted and it is another example of new Labour working". Was that not utterly naive? Should not the Prime Minister, and in his absence the noble Baroness, apologise to our beef farmers who were misled in this way? Will she tell us precisely when Germany will lift the ban on our beef and when she expects the law case against France to be concluded? Does she regret not pressing on her colleagues the need to respond earlier to the unequivocal call from this House to end the beef on the bone ban? Was the vote on that not an example of this House working—and of New Labour failing to listen? Would the position of Ministers arguing for our beef abroad have been much stronger had they spoken up for it at home? Is it therefore not an insult to our farmers to be told that the Prime Minister did not raise this issue at the summit and that—I quote from the briefing—he, was so angry he didn't even mention the crisis when he met with Lionel Jospin last night"? Why did he not mention it? Was he just weak? Was he temporarily embarrassed? Had he forgotten his French? My French is not on a par with the much-vaunted French of the Prime Minister, but is not the phrase he was looking for, "C'est inacceptable"? Is not the handling of the withholding tax another example of the foolishness of the Prime Minister? Time and again at the Dispatch Box the noble Lord, Lord McIntosh of Haringey, no less, has been asked by the House to make clear to our partners that this country would veto a withholding tax. Would it not have been better if the Government had taken the advice of this House and made that clear from the outset? Will the Leader of the House make it clear that the Government will veto any withholding tax and that if any effort is made to impose it on Britain under any legal basis from without, we will not pass it into law? Will she declare unequivocally that a vital national interest is involved here and that the Luxembourg compromise will be invoked? Will she make it clear that Britain will reject the view, implicit in the Helsinki communiqué, that all savings in the EU should be taxed? When the Prime Minister says that he can, accept the rest of the tax package", does that mean that he accepts the principle of tax harmonisation in Europe?

Turning to some other issues, was there any discussion at Helsinki of the proposed new takeover directive? If so, did the Prime Minister make it clear that we would r of accept any dilution of the freedom and flexibility of the Takeover Panel rules?

On the question of a European army, what will be the common language of such an army? Will commands be given in English? Does the Minister agree with the warning of the US Deputy Secretary of State that, America would not want to see an ESDI that comes into being first within NATO and finally grows away from NATO"? Is it the view of the UK Government that our prime strategic interest remains first, last and always the preservation of the NATO alliance? When the Prime Minister says that he will avoid unnecessary duplication with NATO, should he not mean "no duplication" with NATO?

Was there any discussion of transport matters at the Helsinki Summit? If so, did the Prime Minister inform his colleagues of the new division of responsibilities within the DETR? Will the Minister join these Benches in congratulating the noble Lord, Lord Macdonald of Tradeston, on his promotion? Can she confirm that in all future EU Councils on transport it will be the noble Lord who will speak up for Britain?

In conclusion, is it not clear that, far from moulding a new Europe, the Prime Minister has limped along behind an old integrationist agenda? Is that not why he agreed at Helsinki to open-ended discussion on abolishing our veto, to taxing savings and to the creation of a new Euro-army? Has he not carried off an unbelievable double—to sign up to the Euro—federalist agenda while simultaneously being isolated in Europe?

Does the Minister recall that, when my noble friend Lady Thatcher was isolated, she won the British rebate; and that when my right honourable friend Mr Major was isolated, he won the UK opt-outs from the Social Chapter and the single currency? Is it not the truth that the Prime Minister is the first to return from a European summit both isolated arid empty-handed? Over the past two and a half years he has given away vital British national interests and achieved precisely nothing. That is a humiliation for the Prime Minister, but it is also a tragedy for Europe and a tragedy for Britain.

3.52 p.m.

Baroness Williams of Crosby

My Lords, I, too, want to add my congratulations to the noble Baroness the Leader of the House on the Statement that she has repeated. First, with regard to the French attempt to ban British beef, will she confirm that under the European Union there is a clear resort to legal action? Will also she confirm that in the case of other countries, such as the United States which has maintained a ban on British beef for many years, there is no such resort and no way in which that country can be legally obliged to take British beef, whereas that is not the case with France?

Secondly, will the Minister confirm that, in rejecting a proposal for a withholding tax, the United Kingdom agrees that there are serious problems of evasion and money-laundering which must be dealt with and proposes to set up a working party under the European Union to investigate the problem and see how it might best be met?

Thirdly, will the Minister confirm that in discussions with the United States on the issue of the European strategic and defence initiative, it was made clear by Mr Strobe Talbott and others that the United States welcomed such a development providing that there was proper consultation with the American administration; and that, in addition, the United States has made it plain that in some cases it would be willing to support, logistically and with intelligence information, those particular foreign policy initiatives that it supports but was never selfish enough to be directly engaged in? Given that, is it not the case that, at the summit, Europe has taken another step forward to a genuine and balanced partnership between the western nations?

Does the noble Baroness agree that the ambitious and historic programme for a major enlargement, now to include a further six countries and Turkey, places heavy responsibilities on the existing member states to achieve a reasonable timetable? Is it the view of the noble Baroness and her right honourable friend the Prime Minister that we can be sure that the IGC will take place, and that it will deal with the major outstanding institutional issues, including a simplification of a European Union constitution?

We commend the Prime Minister and the Government on their wider vision of where Europe should be and the efforts that they are making towards that. Does the Minister appreciate that there is an unbelievable double in respect of the Opposition, with half the party wanting to get out of Europe and half the party wanting to stand on the fence—an uncomfortable and physically impossible position to sustain?

3.56 p.m.

Baroness Jay of Paddington

My Lords, I am grateful to the noble Baroness, particularly for the vivid metaphor at the end of her remarks.

On the general points raised by the noble Baroness and the noble Lord, Lord Strathclyde, about enlargement of the European Union and the terms of the acquis, I am sure that the noble Lord had read the extremely well-informed and authoritative debate that took place in this House last week, to which my noble friend Lady Scotland of Asthal replied, and the Private Notice Question relating to Chechnya, to which she also responded at the end of last week. I can add nothing helpful to what was said on that occasion, particularly as regards the flexibility that the UK Government seek to adopt on the acquis and the transition measures being taken with the other candidate states. However, we shall want to return to those points. The same applies in relation to Chechnya. I have taken advice as to whether anything further can be added regarding the preservation of the safe corridor that we all hope will be achieved to maintain the flow of refugees. The situation remains similar to that reported to the House by my noble friend at the end of last week.

Both the noble Lord and the noble Baroness raised questions relating to the European defence situation and whether it might lead inevitably to Europe being in conflict with NATO and in particular with our American allies. The noble Baroness rightly quoted one American expert in this area. Perhaps I may quote the US Defense Secretary. At the NATO ministerial meeting on the 2nd and 3rd of December, he said that for many years the United States Congress had been asking the Europeans to assume a greater burden. To précis his remarks, he said that the United States welcomed the arrangements that would be discussed at Helsinki and understood that it would be done in the context of having a European capability that would strengthen NATO. He added that there was no ground for speculation that somehow it would lead to a division between Europe and the United States. Noble Lords who have had a chance to examine the conclusions of the Helsinki Summit will have seen that at paragraph 27 there is an explicit undertaking spelling out clearly that this is in no way leading to the formation of a European army. Therefore, the noble Lord's question as to the language in which commands would be given is, frankly, irrelevant.

In passing, perhaps I may say to the noble Baroness that the IGC is scheduled to take place, and will end, by this time next year. Its primary concerns will, we hope, be focused on the reform of the structures that we have discussed several times in this House, particularly with a view to the arrangements that will be necessary when we come to examine the wider application of the candidate state.

On the question of beef, I agree entirely with the noble Baroness. There is little more to be said given that the Prime Minister did not speak to the French Prime Minister on the subject. The noble Lord's understanding of the Prime Minister's private conversations with the French Prime Minister is slightly better informed than is mine, but I know that this subject was not included on the formal agenda—for the simple reason that, as was said in the colloquial language of last week's press statements, the time for diplomacy has ended and the only thing left now is to see the French in court. That is certainly the intention. There is no question but that the Government have been anything but precise in their decisions all along the line on making the best possible progress. As to the remarks of the noble Baroness, Lady Williams, about the effectiveness of the situation in Europe, rather than dealing with the United States or British Commonwealth, the latter are in exactly the same position in refusing British beef imports, but there would be no legal redress because there would be no legal framework within which to work.

I relate this anecdote in contrast with the assumptions of the noble Lord, Lord Strathclyde, that nothing changes in Europe and everything is the worst of all possible worlds. I speak rarely in this House about my role as Minister for Women but it is appropriate to recall something that entirely demonstrates the step change in the relationship between this country and our European partners since the present Government came to power.

During exactly the same period as the Helsinki conference was in progress under the full spotlight of the international media, I was chairing in this country a meeting of European Union Ministers on women's and equality issues, at which there was practical discussion of arrangements between our different countries on some of the issues that most affect the everyday lives of our population. Although those discussions did not lead to any concrete or universal decisions, they produced a useful and important exchange of views, which can be taken forward. I shall take them forward tomorrow at a meeting with my right honourable friend David Blunkett and his counterpart the Portuguese Minister for Employment on issues relating to women's employment in this country and the wider European Union.

Such practical exchanges and detailed discussions by Ministers at a policy level contribute to the thickening and organisation of European issues. They are not in the glare of the media spotlight during a ministerial summit, but illustrate precisely what we are achieving in terms of our different relationships with Europe.

The noble Lord, Lord Strathclyde, was determined to display the Prime Minister as being isolated in a way that led to this country being undermined and mocked. A columnist writing in the Daily Telegraph this morning stated that, flying solo on certain questions at any given time being inherent in the process of continual negotiation that is the hallmark of intergovernmentalism". I accept that, and I agree with the noble Baroness's concluding remark that this is about a different vision of Europe and a practical working arrangement, which I hope that I have illustrated with the anecdote about my own responsibilities.

4.30 p.m.

Lord Tordoff

My Lords, I ask for clarification on the presidential conclusions. The noble Baroness spoke about the intergovernmental conference's rather focused agenda. Two phrases seem to open the floodgates of possible extra activity that might not be in the interest of concluding matters by December next year. The conclusions refer to, other necessary amendments to the Treaty arising as regards the European institutions in connection with the above issues…The incoming presidency will report to the European Council and may propose additional issues to be taken on the agenda of the conference". Does that not suggest that the floodgates could easily be opened by the new presidency, in putting on the agenda all sorts of exciting and interesting but delaying matters?

Baroness Jay of Paddington

My Lords, it was made quite clear that the basic agenda items would be those originally agreed at Cologne. I am sure that I do not need to remind the noble Lord of the size and composition of the Commission, the weighting of the votes in the Council and the possible extension of qualified majority voting.

As I understand it, the noble Lord refers to the fact that a few additional items may be added later. They would be in the context of enlargement and reform, not extending the scope of the IGC. It is clear that the new conference is not a big policy opening. It will be about practical matters: to make more effective and efficient the institutions that were thought this time last year to be rather less than accountable.

Lord Boardman

My Lords, does the noble Baroness accept that the main reason for member states requiring the withholding tax is their failure to collect taxation from their own members? If they would remove the secrecy imposed on banking accounts, their problem would be made much easier. Does the noble Baroness accept that the Government's practice of suggesting compromises and further conferences on that question merely delays the day when they will be forced to make some concession? Would it not be more sensible to say to those pressing for some withholding tax to be imposed, "Get lost. Put your own house in order; do not leave us to be your tax collector"?

Baroness Jay of Paddington

My Lords, that is probably exactly what the Chancellor of the Exchequer said, in diplomatic language, at the ECOFIN discussions at the end of last week. The group will look at the whole package of tax arrangements proposed and discussed at Helsinki. The UK Government have made it absolutely clear that there is no question of any change that would prevent use of the City eurobond market, which we are determined to protect.

Lord Stoddart of Swindon

My Lords, is my noble friend aware that there are many more important issues in relation to the European standing force than whether or not English will be the working language? Annexe 4 announces that there will be a new standing political and military committee of the European Council that could or would act as the command authority for the standing force. How will that new body be accountable to heads of government and national parliaments?

What would constitute a European army? The communiqué says that the new force will not constitute a European army. We need further explanation. Also, my noble friend referred to a union of nations. Is she aware that many of our continental partners take the view that the nation state is an anachronism and is just about dead? Can she say how the Government will make it absolutely clear to other countries and leaders that Britain continues to believe in the nation state and will progress that belief within the European Union?

Baroness Jay of Paddington

My Lords, I cannot authoritatively explain the position because I have not asked the specific question that my noble friend asked of me. I imagine that the new political and security standing committee would report through precisely the same mechanism as previous committees with that status. If I am mistaken, I will write to my noble friend.

The idea behind the common defence arrangements is to provide a more flexible rapid response force in certain situations, particularly where there are humanitarian crises or difficulties of the type that Kosovo might produce—although in that example, NATO was involved. As I told the noble Lord, Lord Strathclyde, it is explicit in the conclusions of the summit that it cannot in any language or understanding be remotely regarded as an army.

My noble friend Lord Stoddart invites me to into an area that is almost one of political philosophy. I am sure that the Government will at every opportunity make perfectly clear that the concept of the nation state is one that we in this country completely understand, will continue completely to support, and wish to see embraced within the context of the wider European Union.

Lord Biffen

My Lords, perhaps I may reinforce as best I can the points made by my noble friend Lord Boardman concerning the withholding tax. Does not the whole protracted debate on it and its complexity underline the value of the veto as part of the negotiating process? In that context, what does the noble Baroness believe to be the prospects at Helsinki of an enlarged European Union of 28 nation states comprising 540 million people? In that situation is there not a danger of our legislative identity being swamped, and what proposals do the Government have to deal with it?

Baroness Jay of Paddington

My Lords, as to progress on discussions relating to the withholding tax, in reply to the noble Lord, Lord Boardman, I did not make explicit that the conclusion of the ECOFIN Council in December 1997 was that the discussions should not apply to eurobonds and similar instruments. In a sense, although this debate may have been going on for two years, we have always made clear our bottom-line position which we are determined to protect.

As to the wider point raised by the noble Lord., Lord Biffen, about whether these issues will become more complex with the increase in the number of member states, some of which perhaps have an understanding of government arrangements and democratic institutions which is different from that in western Europe, without repeating what my noble friend Lady Scotland said in the debate last week, that is why it is important to have a flexible transition period. That is also why, as I said in reply to the noble Lord, Lord Tordoff, these issues are absolutely crucial to the arrangements which are built up during progress of the IGC.

Lord Bruce of Donington

My Lords, in view of the fact that some little time will elapse before the next intergovernmental conference, will my noble friend ensure that the public generally are made aware of the precise attitude of Her Majesty's Government towards the findings and recommendations of the so-called "three wise men"? Will she ensure that the substance of those proposals, which are likely to have an enormous effect on Europe's institutions, is thoroughly debated? Will my noble friend also ensure that steps are taken to acquaint the public and Parliament with any independent proposals of the Government before the IGC, bearing in mind that there should be a constructive contribution originating with ourselves?

Baroness Jay of Paddington

My Lords, as to my noble friend's final point, the Government will publish a White Paper early next year on their approach to the principle of the IGC and the issues that it raises, which may well cover some of the points raised this afternoon. I am not in a position to give my noble friend precise information on whether that will also embrace the specific response to the committee of three wise men. If I become aware of it, I shall let him know. From previous experience, I am aware that my noble friend probably has better and more exact channels of information on these matters than I do. As to broader public debate on the issues, it was made explicit in the conclusions at Helsinki that this matter should be more widely discussed. I am aware that my noble friend is always assiduous in pursuing these matters in your Lordships' House, and I doubt that we shall be in ignorance for long.

Lord Avebury

My Lords, what does the definition of Turkey as a candidate for membership of the European Union add to what was said at the Luxembourg Summit? Are not the conditions then laid down—that Turkey should align herself with human rights and the treatment of minorities that are common in the rest of Europe—to be upheld, plus the condition relating to Cyprus which, as far as I know, does not affect any other candidate? Does the role of Turkey as a candidate member make any difference to the conditions that that country must fulfil?

Baroness Jay of Paddington

My Lords, it probably makes the noble Lord's concerns more precise; that is, the criteria against which Turkey's performance with regard to human rights and democracy are to be judged are easier to benchmark (if I may use that expression) than without formal candidate status. I am sure that the noble Lord welcomes, as I do, the extremely important lever which the European Union has on what happens in Turkey in a wider context. Clearly, Turkey does not yet meet the criteria on human rights, on the political status of minorities or on the general development of some of the democratic institutions. As to the relationship with Cyprus, although the membership criteria are the same for Turkey as for every other candidate, Greek and Turkish relations in this context are clearly of specific interest. Those will be covered in the political dialogue with Turkey about the procedures that are to be undertaken. If there were a settlement within Cyprus, that would facilitate its accession and might ease the whole situation.

Lord Pearson of Rannoch

My Lords, I notice that the noble Baroness did not answer the question put by my noble friend Lord Strathclyde about the takeover directive. I wonder whether she can do so. The noble Baroness will be aware that this directive subjects the speedy findings of the Takeover Panel to the interminable delays of the Luxembourg Court and thus completely destroys hostile take-overs in the British economy. While she is at it, will the noble Baroness be so good as to say whether we are able to save the art market upon which we have also been outvoted on the question of droit de suite? Finally, I do not believe that she noticed the vitally important matter of corpus juris in the context of the European legal system which your Lordships debated on 25th November at which time the Government were unable to assure me that we had a veto. They merely said that we would have to pass primary legislation. Therefore, was any progress made at Helsinki on the takeover directive, the art market and the legal system?

Baroness Jay of Paddington

My Lords, I apologise to the noble Lord, Lord Strathclyde, for not dealing with the takeover situation. To be absolutely honest, I had forgotten that the noble Lord had mentioned it. Now I look at my notes, I see that I have no detailed briefing on it. I shall write to both noble Lords who have raised the matter. I can only apologise.

As to the question of droit de suite, the proposal was put to the Internal Market Council, as I am sure the noble Lord is aware, on 7th December. Our position remains that we can accept only proposals which adequately protect the London art market. It was not placed on the formal agenda at Helsinki, but I believe that my right honourable friend the Prime Minister had what are described as discussions in the margins and was not discouraged by the responses of his counterparts with whom he discussed the matter. I also understand that the Minister of State, Mrs Liddell, will have further contacts on this question on the basis of those exchanges.

As far as concerns corpus juris, I am unable to take the matter any further than the report to the House following discussion on that particular subject at Tampere. If anyone within the Foreign Office or Home Office has had discussions on this matter in the autumn post-Tampere, I hall write to the noble Lord.

Lord Barnett

My Lords, perhaps I may ask a question on the withholding tax. I ask my noble friend to ignore the customary xenophobic stance of those whose reaction would be the same whatever was said about the European Union, including my noble friend. Does my noble friend agree that, whether or not the present proposal is accepted, we all want tax evasion to be stopped and that it is better to do it through international co-operation? Very often we ourselves would be unable to achieve it if we just told the EU to get lost. Will my noble friend assure me and the House that we shall enter the suggested discussions in a better frame of mind than some of the opposition we have heard today?

Baroness Jay of Paddington

My Lords, I am grateful to my noble friend for his trenchant summary of some of the questions and comments which have been made. Of course he is right and I believe that he will know that the UK has been at the forefront of international discussions on fighting tax abuse and evasion, whether they have been in the OECD or elsewhere. The Government believe that the single most effective way of tackling those issues is through exchange of information on as wide an international basis as possible. In that respect it is not helpful that some countries, including some in the European Union, still maintain an outdated attachment to the kind of banking secrecy to which my noble friend referred. I am sure that we agree that that is where the real problem lies. The Government will certainly take the issue forward in the new round of discussions.

Lord Tebbit

My Lords, will the Minister agree that it was a piece of great good fortune that the disorders and fighting in Yugoslavia did not spill down through Macedonia and into Greece, as a member state of the Community? Does she further agree that the further the boundaries of the Community are expanded towards the Balkans and the East, the more at risk we become from such disorders? Will she say whether there are any legal barriers, or whether any legal barriers are proposed, to the use of the European defence force internally within the EU in support of the civil power?

Baroness Jay of Paddington

My Lords, at the time of the Kosovo crisis, we spoke on several occasions in your Lordships' House about the potential threat described by the noble Lord. I remember discussions being labelled along the lines of the so-called "domino theory"—an expression much used when the same sort of potentially difficult situation existed in South-East Asia 20 to 25 years ago. The noble Lord should perhaps be reassured by the fact that the stability pact is now taking root in the western Balkans and that organisations of that kind will, I hope, reduce the potential for conflagration, which he identified as a possibility as the boundaries of Europe spread, although I do not believe that that would necessarily create such a situation.

I turn now to the question of the European rapid reaction force. I hope that we may call it by that name because I am trying to avoid any suggestion that it is a European army, as several noble Lords have tried to suggest. As I have made clear before, that idea is explicitly refuted in the conclusions of the summit. The noble Lord is not right to raise the spectre of that being a possible way of dealing with the situation. As I said when replying to an earlier question from a noble Lord, the situation is such that if, for example, there was a humanitarian crisis and NATO was not fully engaged, there might be a possibility of that happening. However, as the noble Lord will know, the organisation of, and the mandate for, that kind of force is in its early days. Although it is theoretically possible that some type of internal humanitarian crisis might prompt that kind of action, it is difficult to respond to a hypothetical situation.