EUROPE

§ The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan)

I welcome this debate. I think that it will be a chance for me not only to state the position which the Government have taken up but to listen to the views of the House, because it is very important that in the difficult months that lie ahead I should be sustained by most of the House—indeed, by a critical House and, I hope, by an informed House. f shall, therefore, begin by discussing the role of Parliament, where it stands in this matter, where it should stand, and what is the rightful place that we should ask it to assume.

First, a number of changes have already been announced but may not have engaged the attention of every hon. Member. There are to be more debates on the subject both of the renegotiation itself and of the European Economic Community's progress in general, naturally according to the wishes of the House as to when they should take place.

Secondly, there is to be a slot at Question Time in which Questions will be able to be addressed specifically to Ministers on this matter. I understand that the first of these slots will be on 26th June.

Thirdly, I have assumed the responsibility of making a prior announcement in the House of the forthcoming business of the Community and of the Commission in the month ahead, so that, subject to the whims of changing business, 1 should, for example, on 26th June be able to tell the House of the business that is likely to take place in the Commission and the Community in the month of July. If I am unable to do it personally, my hon. Friend the Minister of State will assume the responsibility.

Fourthly, the Government intend to produce six-monthly reports on affairs inside the Community and the Government's attitude and reactions to them. We hope to produce the first one in the 1426 autumn so that it will be available for debate when we return after the Summer Recess.

I am glad to see the right hon. Member for Knutsford (Mr. Davies) here because he, as Chairman, has undertaken a most responsible and important task in accounting to the House through the Scrutiny Committee which has been set up. This was announced by my right hon. Friend the Leader of the House some time ago, but perhaps I might remind the House of what the Committee's task is.

The Committee contains a number of doughty warriors on both sides who will be scrutinising the affairs of the Community. I do not think that the right hon. Member for Knutsford will have an easy time as Chairman of the Committee, and I am grateful to him for undertaking the task. I think that he and the Committee need the support of the whole House, because they will be undertaking one of the major responsibilities that this House has of scrutinising the proposals which are to be made and which would, in due course, become binding upon us.

I want to say what the Government's approach to this matter is and to make one or two comments on the work of the Committee itself. As soon as the Government receive texts from the Commission on its proposals, we shall try to transmit them to the Committee within 48 hours so that the Committee will know what it is that the Commission is proposing to do. That will be followed as quickly as possible by a memorandum, either stating the Government's view or giving information to the Committee on a purely factual basis about the nature of the proposals so that the Committee itself can take this into account when it is deciding on whether to call Ministers or persons before it. That memorandum will be the responsibility of a Minister, either my hon. Friend the Minister of State or one of the Departmental Ministers responsible for the particular business concerned.

So the Committee will have the information on which to make up its mind about whether issues are important before those issues reach the stage of decision in the Commission, and it will be for the Committee to advise the House. I hope that the House and the House authorities will give the utmost assistance 1427 to the Committee in the matter of staffing and other requirements that it has.

Because of the lapse of time, the Committee already has a substantial backlog of proposals. I do not know how it will get through them all, but once it has overcome the backlog, although it will mean continuing hard work for the members of the Committee, it will be in a position, if it is provided with the services, to be able to report to the House on any matter that the Commission proposes to take a decision upon and that it thinks the House should know about. Obviously, there will be a number of small matters, but the Committee will, I am sure, develop its experience and will not necessarily trouble the House with them. But the principle is important if the sovereignty of this House is to be maintained in the areas in which we want to see it maintained.

As I dare say the right hon. Member for Knutsford will tell us if he catches your eye, Mr. Speaker, the Committee has recommended one of the draft decisions as an important matter for discussion by the House. It is a draft decision on guidelines for economic policy. It is not for me to speak for my right hon. Friend the Leader of the House, but there is a moral obligation on the Government to ensure that the matter is discussed. Already, since the Committee has recommended the draft decision as an important matter for discussion, my right hon. Friend the Chancellor of the Exchequer has put a heavy reserve on the subjects in the Council of Ministers so that no decision will yet be taken about it. This is the sort of way in which we should be approaching these matters. It combines common sense with a proper degree of supervision, and it may be that the Committee will want to develop its own policy and its own methods in various ways.

For myself, I am open to listen to this kind of representation, because one of the things I am determined upon is that the Commission, which is at the moment accountable to no one, shall be brought indirectly into account to the House through this kind of procedure, and it will be our fault if we do not pronounce on these issues before decisions are taken on them.

Perhaps I may say something in passing as a result of the three months' ex- 1428 perience I have had of this subject. One of the interesting things is the way in which the Council of Ministers proceeds by consensus. Apparently, a "Luxembourg compromise" was reached as a result of President de Gaulle adopting what I think is called a blustering and hectoring attitude—language which would never pass my lips, of course. As a result, there is now an attitude that the Council of Ministers cannot reach conclusions on these matters unless there is a consensus, so our position is covered on that aspect.

We must give the right hon. Member for Knutsford all the support we can. I look to him and the Committee—both sides of it—to warn, advise and tell the House, allowing us to reach conclusions on these matters before they come up for decision. That is giving Parliament its proper place.

§ Mr. Neil Marten (Banbury)

If the Foster Committee, as we call it, decides that something should be referred to the House, can we have an assurance from the Government that no Minister at the Council of Ministers or anyone else in the Commission will finalise anything until the House has had a chance to discuss it?

§ Mr. Callaghan

I hope that that will normally be the case. It would be against the policy we are following that it should not be in the case. If there is an urgent matter about which we know the Council wants to take a decision in, say, a fortnight or so, the House will probably feel it would not be improper if the Minister got in touch with the Committee and said "This issue is urgent; will you please consider it urgently and tell the House whether you regard it as of importance that it should be held up or not?" Then we shall have to consider it again. It is possible to put a reserve on. That would have to be the case. We do not want to put on reserves unnecessarily on small issues that are not of particular concern.

§ Dr. J. Dickson Mabon (Greenock and Port Glasgow)

To take this a stage further, the Committee held three meetings. Its first report recommends two major debates. It would not be unreasonable to imagine that the Committee would be reporting regularly. Therefore, it would seem that the Lord President of 1429 the Council and Leader of the House would be the man to tell whether we should have a debate once or even twice a month on these very important matters. Is that what my hon. Friend envisages, with the Lord President—that we shall hold these debates regularly once or twice a month?

§ Mr. Callaghan

That depends on what the Committee reports. It depends on the amount of work it gives us. If it says there are a number of issues of importance, clearly they must come before the House. The House ought to reach a conclusion on the issues before Ministers go to the Council. It will not be automatic but it should be the normal and general rule. If the House wishes to do it this way I would envisage that a lot more time will be spent on discussing these issues than has been the case so far.

§ Mr. Dennis Skinner (Bolsover)

That may well be. Has my right hon. Friend had a look at the people who are represented on that Committee? Has he taken into account the factor, as I have done, that some of us can have little faith in its composition in view of the fact that it is heavily weighted pro-Common Market? If we are to pay any attention to its findings we must change its composition. We must also change the Chairman.

§ Mr. Callaghan

That is a matter for the House, not for me.

I know that any Committee on which my hon. Friend is not represented clearly cannot be a representative committee.

Before I spell out our attitude on renegotiation I want to make one or two further points. One matter has borne on me day after day; namely, the concern of the British people to be consulted about this issue. This was the biggest mistake made by the Leader of the Opposition during the course of the discussions and negotiations he held. He never secured the full-hearted consent of the British people in this matter. I do not know now what is the attitude of the Opposition but I should like to ask the right hon. and learned Gentleman the Member for Hexham (Mr. Rippon), who is to speak, whether he agrees that the British people should be consulted about this matter at the end of the negotiations. Does the Conservative Party believe that this issue should be put to the people, or 1430 not? It would be valuable this afternoon if we were to have a clear indication of its view on this matter. It cannot be said too often that with this Government—

§ Mr. Edward Health (Sidcup)

If the Foreign Secretary will cast his mind back to the 1970 General Election, the present Prime Minister said he would not support a referendum of the people on this matter. He did not believe the referendum was a proper constitutional device in this country. In 1971 he agreed with me, as Prime Minister, that it was not right to have a referendum.

Second, so far as the election was concerned, we made it plain that we were going to negotiate and that if we were successful in the negotiations we would put it to Parliament to carry the necessary legislation. When the right hon. Gentleman says there was no consent, there was a majority, whether he likes it or not, of 112 in this Parliament in favour of entering the Community. Those are the facts of the case.

§ Mr. Callaghan

It is a well-known feature of defeated generals that they always insist on fighting the last war. I have no doubt that the reminiscences of the Leader of the Opposition will appear in due course and will be fully annotated and textually correct. I am now asking a question about the future. Is it his view that the British people should be consulted at the end of the renegotiations about the result, whichever method is adopted, in whichever way it is done? If the right hon. Gentleman wishes to express his view, let us hear it, first, on the question of principle: should the British people be consulted or not?

§ Mr. Heath

Will the Foreign Secretary say what he wishes the British people to be consulted about? They have been consulted at a General Election about entry into the Community, and this Parliament sanctioned it by a majority of 112. Sixty-nine of his own party supported it, and 20 abstained. They are sitting on that fence. One of his distinguished colleagues, the Secretary of State for the Home Department, supported it wholeheartedly. What are the British people to be consulted about in this case?

§ Mr. Callaghan

The right hon. Gentleman clearly does not wish to answer the 1431 question. I fully understand his embarrassment about it, but I promise him the question will be asked many times between now and the time when the country is again consulted. The question is very simple. This is now a period of renegotiations in the Common Market. I do not know whether they will be successful or not. I hope they will be successful, for many reasons. At the end of the day, when the conditions are known and published, does the right hon. Gentleman believe that the British people should be asked to express their view about the result as to whether we should remain in the Common Market? That is a simple question. [HON. MEMBERS: "Answer."] The answer is clear.

§ Mr. Speaker

Order.

§ Mr. Callaghan

I fully understand that the hon. Member for Sevenoaks (Sir J. Rodgers) should be the Leader of the Opposition, but he has not got there. When he has I shall be glad to give way to him on this point.

§ Mrs. Winifred Ewing

Does not the Minister agree that the trouble with this question and non-answer is the word "consult" and that the whole trouble is that the British people are disillusioned about the word "consult"? They have been told that they would be consulted, with propaganda, paid for by the taxpayers, issued through the post offices. There is disillusionment. Cannot the Minister say what he means by "consult"?

§ Mr. Speaker

Before the Minister answers, may I say that if hon. Members wish to catch my eye later on, these interventions do not improve their chances.

§ Mr. Callaghan

Is that an encouragement not to give way?

The answer to the hon. Lady has been given many times. The form of consultation will take the form of a referendum, as stated by my right hon. Friend the Prime Minister, or of a General Election. We shall have to wait and see how the circumstances develop on this issue.

1432 I am sure the Opposition want to cover the embarrassment of their Front Bench. I do not blame them for cheering. In my first speech I spelt out the major objectives in our renegotiations. In a later speech I clothed them with more detail, with the exception of European union, economic and monetary. If it is the concern of some of my hon. Friends, I shall return to these points later.

Let us see what points I covered and match them against the manifesto and the programme on which we fought the General Election. First, the election address said that there must be: irer methods of financing the Community budget". I said in my speech that the impact of the present system is unfair on the United Kingdom, and that the negotiation terms of entry were fundamentally inequitable. It is in the interests of every country to find a solution that takes account of the economic differences between States. If an essential requirement of our renegotiation is to be met we must ask the Community to find such a solution. I said that because our estimate is that by 1980 the net contribution of Britain to the Community will be between 700 million and 800 million units of account. The unit of account is based on the dollar, and that could mean £300 million plus, depending on the rate of exchange.

§ Mr. Peter Kirk (Saffron Walden)

With great respect, the unit of account is the exchange rate for the old dollar at $280 to the pound.

§ Mr. Callaghan

I am much obliged to the hon. Gentleman, but he will find that it still comes out at about £300 million.

The basic principle on which we insist in these negotiations is that it is not right that resources should be transferred from the less well off to the better off in the Community. At this stage in the Community's development, the Government are not asking that net resources should be transferred from the better off countries to the less well off countries, but we are certainly not intending to accept the reverse; namely, that there should be a net transfer from the less well off to the better off countries. That is what is happening. Whether the exchange rate is $280, $2.40 or $2.20 to the pound, the result is the same. There will be a net 1433 transfer to countries which are better off than ourselves. That is a fundamentally inequitable position. It is one that was accepted, but we cannot accept it now. It has to be renegotiated.

Now I turn to the common agricultural policy. What did we say in the election address? We said: Major changes in the common agricultural policy, so that it ceases to be a threat to world trade … and so that low-cost producers outside Europe can continue to have access to the British food market. Let us watch prices. Let us see where they are. If the right hon. Gentleman thinks that prices will remain at their present level I shall be surprised.

I said that criticism of the CAP has been particularly strong in Britain both because we are a large importer of food and because membership of the EEC has weakened our ties with traditional suppliers. The major areas in which the United Kingdom wishes to secure improvements are in the cost of the CAP, which should be reduced in real terms, and there should be speedy improvements in the marketing regimes for some major commodities. It does not make sense to take a large quantity of British beef off the market, freeze it, put it in store and then watch the price of the remainder go up, to be followed in turn by a reduction in the amount the housewife buys. Those were the simple unadulterated truths that I was trying to utter to the Council of Ministers last week.

The changes we propose would do much to ensure that the CAP is not an instrument of excessive protectionism or a threat to world trade. There is a strong case for improved terms of access for many kinds of foodstuffs from countries outside the Community. We need satisfactory and continuing arrangements with New Zealand, and I spelt them out.

As regards sugar, we remain firmly committed to the offer of access on fair terms to 1.4 million tons of sugar from the developing countries of the Commonwealth after the Commonwealth Sugar Agreement expires. It is our view that everything I have suggested is compatible with the basic principles of the CAP and with the treaties.

Let us match that against the words of the manifesto. Is there any disagreement or quarrel? Is there anything wrong with it?

§ Mr. Callaghan

I do not think criticism is coming from the hon. Gentleman but from another quarter.

Let us see what we said in the election address. We said: The economic interests of the Commonwealth and the developing countries must be better safeguarded. That is partly dealt with, and my right hon. Friend the Minister of Agriculture, Fisheries and Food will be dealing with it in the Agricultural Council.

Apart from those major changes that affect Commonwealth countries, what else? I called for an extension of tariff quotas for a small number of products of importance, for example, some canned foods. Then, as a permanent solution in the forthcoming multilateral trade negotiations we could include an offer to make substantial reductions of tariffs on these products as well as on certain industrial products of importance to those countries.

As regards the developing countries in the Commonwealth, attention is concentrated at present on the group known as the associable countries or ACP countries —African, Caribbean and Pacific States. Negotiations have been going on between them and the Community for some time to make a new agreement. There is likely to be later next month a meeting of Ministers of the Community and the ACP countries in which we shall certainly take part. What I call for is the need for free entry for their industrial products and the need for generous treatment for their agricultural products, including, if necessary, tariffs on levy-free quotas. There is a need for evolution of Community burdens of aid. That view has already been put forward in the Development Council by my right hon. Friend the Minister of Overseas Development. We need to take into account all the developing countries, not just the ACP countries, and to have a more balanced distribution of trade on a world basis.

For the countries of South Asia we need to improve the Community's generalised preference scheme and to implement the Declaration of Intent. We need special regimes for Bangladesh and India in respect of jute and coir.

I ask any hon. Member who wishes to criticise whether he thinks that list 1435 matches up to safeguarding the economic interests of the Commonwealth and developing countries.

§ Mr. Churchill

The right hon. Gentleman referred to the Labour Party's election manifesto, which contained the words— low-cost food producers outside Europe". Will he name two or three of them?

§ Mr. Callaghan

No, sir, because they do not exist. Time marches on, a factor which we take into account even if the Leader of the Opposition does not recognise it. As the result of the combination of drought and bad harvests world prices have moved up.

§ Mr. Callaghan

Let me deal first with the hon. Member for Stretford (Mr. Churchill). It would be foolish and shortsighted for the Opposition or anyone else to assume that world prices will always remain at their present level. On the other hand, we shall not have a continuation of droughts and bad harvests. In that case the difference between world prices and Community prices will become more important.

We should not try to shelter behind droughts and high prices. The principle to be followed is that there should be alteration in the regime and structure of the Community along the lines.I indicated earlier. In that way, whether world prices are high or low, we should avoid excessive protectionism in the Community and benefit the consumer as well as the producer. That is what we are trying to do, and those are the changes that should be made in the CAP.

I come now to regional and industrial policy. The election address referred to: The retention by Parliament of those powers over the British economy needed to pursue effective regional, industrial and fiscal policies. What did I ask? I said that we required powers to be able to pursue effective regional and industrial policies. We recognise the value of rules within the Community to ensure that one country in attempting to solve its own problems does not create problems for the others. We 1436 fear that our plans for British industry, including the steel industry, may be hampered by unduly restrictive interpretations of the treaties, and as part of the renegotiation we shall seek assurances on this score.

I turn to regional aid—and I am summarising what I said on all these matters. We said that the co-ordination of rules on regional aid had a useful part to play. The rules must be broad enough in scope to cover all types of aid that may be required. It will be necessary from time to time, arising out of our past experience in this country, for us to vary the level of aid and the definition of areas where particular problems arise, such as steel closures. We may also need to exceed whatever ceilings are agreed. These matters are essential to us as an element of the renegotiation.

That is the situation on those issues. 1 ask any hon. Member who cares to do so to get up and say whether that is inconsistent with the policy put forward by the Labour Party at its annual conference and by that party at the General Election, the party for which the people of this country voted.

§ Mr. Callaghan

Before I give way, may I ask whether either of my hon. Friends is seeking to raise the question of capital movements or harmonisation of VAT or issues of that sort? I said that I should come back to those matters.

§ Mr. Atkinson

And the treaty?

§ Mr. Callaghan

I shall come back to that.

§ Mr. Atkins

I thought that my right hon. Friend had given me my cue. He is now trying to take it away again. Why did he say so little about the sovereignty of the British Parliament, which has always been a matter of importance for the Labour Party?

§ Mr. Callaghan

I thought I began my speech by outlining a series of proposals, which were challenged only on the ground of composition of the Committee and not 1437 because of the way in which these matters were to be carried out. To look at these matters fairly—I say this to all those who do not want to get out of the Common Market at any price—it is up to the House to probe them. By using the procedure and arrangements laid down by the Lord President, the House can take control of these matters. [Interruption.] I shall be very surprised if I am now to be told that that warrior, my right hon. Friend the Member for Battersea, North (Mr. Jay), has finally deserted and has given up his position on the Committee and has been "bought" and tainted.

§ Mr. Douglas Jay (Battersea, North)

Can my right hon. Friend answer one simple question? Does he stand by everything he said in his speech on 1st April?

§ Mr. Callaghan

Yes. Certainly there is no contradiction between the two matters, except in the minds of commentators. I fear that some hon. Members and some members of the public are more concerned with the headlines than they are with the content. I have gone through the content and I defy anybody to point out to me where there is any difference between the two.

One of the difficulties—this is a matter to which the Community should turn its attention—is that the Press does not attend the meetings. All that happens is that after the meeting one is asked about these matters in the lift and one tries to give an impression of what has gone on during the brief journey from the thirteenth floor down to the ground floor. That is no way to report these matters. I see the difficulties, but I ask commentators to study the text.

I turn to the question of how this work is to be carried out. First, as regards the common agricultural policy my right hon. Friend the Minister of Agriculture will be taking on board these important changes and will be handling these matters in the Agricultural Council. As regards trade and the negotiations with the Protocol 22 countries, those matters will be dealt with in the Council of Ministers. The question of aid will be dealt with in the Development Council by my right hon. Friend the Minister of Overseas Development. She is to attend a meeting on Thursday. Regional assistance and the 1438 rules in regard to regional aid will be dealt with in the working party which has already been set up and which is now beginning to move ahead. All those issues will be brought together in the months ahead as the procedure goes through.

There is one matter which I should mention, and that is the budget. I have already said that this arrangement is inequitable. Because the Council proceeds on a consensus, it would have been possible for an amendment to be tabled to stop any reconsideration of this matter. But that reconsideration was not stopped. The Commission has been asked to make an inventory of what has been happening to Community finances in the past and also to look ahead to Community finances between now and 1980. It will report back on the facts as it finds them and the Council of Ministers will discuss this matter to see what solution can be arrived at. I do not know whether we shall get a solution. I do not know whether a veto will be imposed. All that has happened so far is that we have made a minor piece of procedural progress which is worth while. The Commission has not said "No". It has not said "Yes", either, and there is no euphoria on my part in terms of the tough months of negotiation that lie ahead.

The only thing that could wreck proper consideration would be the prospect of the Tories being returned to power at a General Election, when these matters would be quietly forgotten. The Conservatives are regarded in Europe as a soft touch. Anybody can get anything they like out of that lot on the Conservative benches. If there is an incentive to the British people to ensure and stabilise the support of the Labour Government, then this is it.

I promised that I would deal with one or two other matters. I refer first to the harmonisation of VAT, which has caused concern among some hon. Gentlemen. The first stage is under discussion in the Community and there are draft proposals about coverage. We take the line that provided the Community accepts zero rating for food and other items, we would consider favourably the harmonisation of coverage. I must say that no agreement is yet in sight and there are no proposals for harmonisation of rates. I have no intention of yielding on the point relating to zero rating. It is not conceivable and 1439 would not be in accord with what we said in our manifesto which was carried into our election programme. That is the position on harmonisation. The proposals have been put forward and we are not yielding on the matter of zero rating for particular items. I hope that the situation is covered for the moment.

It may have escaped the attention of some of my hon. Friends and others that the question of capital movements was covered by my right hon. Friend the Chancellor of the Exchequer in his Budget speech on 26th March. My right hon. Friend said that he had altered the arrangements for investment in the European Economic Community. Arrangements had been made in the 1972 Budget under which firms were able to obtain a ration of £1 million of official exchange for a project in any one year. My right hon. Friend altered that situation. He said that for the time being such investment must be financed, in the main, without official exchange. The existing rules for investment in the non-sterling area will therefore apply to the EEC also. We have informed the Commission of the European Communities and the other EEC Members of what we are doing. "—[OFFICIAL REPORT, 26th March 1974; Vol. 871, c. 287.] Articles 109 and 108 both provide for action of this kind to be taken. The Chancellor took such action and it has been discussed in the Commission. Therefore, in terms of capital movements, in so far as we are dealing with either direct or indirect investment, there need be no concern. If the reference is to the flows of oil moneys which are now saturating the markets and overflowing all our boundaries, nobody has yet found an answer how to control that situation. That is one of the big problems that face us at present.

§ Mr. Atkinson

I do not want unnecessarily to delay my right hon. Friend, but he will appreciate that in this debate we shall be taking up many of the points which he is now making. One of the points relates to the flow of capital. Does he not accept that the Treasury has already indicated that the arrangements announced by the Chancellor of the Exchequer come to an end at the end of December this year? This has been confirmed by Conservative Members who attend meetings in Europe. 1440 But there are other difficulties, underlined by the fact that my right hon. Friend said that the Labour Government had no intention of amending the treaty. This is an important matter, which we are now discussing.

§ Mr. Callaghan

It seems to me that my hon. Friend is making his speech now. What we said on the matter of capital movements is set out in the manifesto: We need an agreement on capital movements which protects our balance of payments. I imagine that my hon. Friend does not assume that our balance of payments will be in balance by the end of the year. If they are not, I can assure him now that there will be no likelihood of these restrictions being lifted.

§ Mr. Atkinson

We do not yet know the Commission's conditions.

§ Mr. Callaghan

We do not know the Commission's conditions because we do not need to know them. We inform the Commission of what is required under our balance of payments situation and what we shall do under Articles 109 and 108. There can be no doubt about that, and that will remain the position. I hope that my hon. Friend will look at the matter fairly and not raise scares which do not exist. When a country is in balance of payments deficit to the extent that we are, there is no doubt of its powers to restrict flows. That is a power that we require. It is a power that my right hon. Friend the Chancellor of the Exchequer has taken without challenge. It is a power that he will continue to have.

§ Mr. Atkinson

Does not my right hon. Friend accept that it is within the Commission's power to issue directives on the terms under which we would then manage our economy in these circumstances, and that, when the Opposition join in the debate, they will contradict some of the things that my right hon. Friend has said?

§ Mr. Callaghan

I do not accept that. What I am ensuring is that the procedure does not go ahead in this way. I do not accept the fears that my hon. Friend expresses.

I turn now to some more general reflections. It is true that we do not propose 1441 to renegotiate the treaties. We did not say that we would. This was not a hare raised by us. It will not be found in the Labour Party manifesto, and it is that that I clutch to my heart, whatever anyone else may say. I can promise the House that I know this section of it better than anyone else in this Parliament, and I shall continue to adhere to it.

We are not renegotiating the treaties. When I started out on this road, I thought that we might have to. I thought that it would be necessary to propose some amendments. To cover myself and some of my more sceptical right hon. and hon. Friends, I put in a reservation saying that I might have to propose some alterations to the treaties. It stands in my second speech. I said that the basic document was that of 1st April, 1974. That is the basic document in which we say that I may have to propose changes in the treaties. But why should we go out of our way to make trouble if our objective can be secured without it? I have never believed in making trouble for anyone. I am the mildest and most conciliatory of Members when dealing with these issues.

If we have to renegotiate, why should we adopt a process requiring the ratification of nine Parliaments, including our own, with all the prospects which might ensue, if it can be done without? [An HON. MEMBER: "Let us just get out." I must rebuke my hon. Friend. He is a worthy upholder of party policy. He would not have me depart one inch from it. He knows the party policy, and I shall stick to it.

I turn to some further general reflections on the issue, and the first of them relates to the Commonwealth. When we debated these issue in 1970 and 1971, we said that the result of entry into the Community would be to weaken the links with the Commonwealth. That has happened. There is no doubt that, as a result of our entry, the Commonwealth has succeeded in diversifying its markets. It has found different markets, and it is for that reason, among others, that New Zealand for example has not been able to deliver her full quotas to this country— —

§ Mr. Edward Milne (Blyth)

Before my right hon. Friend leaves the Commonwealth—

§ Mr. Callaghan

I have not yet finished with the Commonwealth. I will strike a bargain with the hon. Gentleman. If he is willing to wait until I have completed what I have to say about the Commonwealth and I have not dealt with the matter that he wishes to raise, I shall gladly give way to him then.

I have endeavoured to consult all the members of the Commonwealth on this. We have sent out telegrams and messages, and we have their reactions. A number of members of the Commonwealth feel that the spread of diversification has gone so far that not much can be pulled back. Others have ties of blood, sentiment and history with us and would like to see a pulling back if it could be secured. Others, frankly, are more concerned to see their relations with the Community broadened than to keep a market with Britain.

All these factors have moved on since we discussed these issues in 1970. I regret that the Commonwealth has diversified in this way—[HON. MEMBERS: "Why?"]—but we forecast that it would.

I am asked why I regret the diversification. I regret it because I believe that the Commonwealth is a force for good and that its ties should be maintained as closely as possible. Since being at the Foreign Office, I have tried and I shall continue to try to strengthen the ties with Commonwealth countries.

§ Mr. Milne

My right hon. Friend has made precisely the point about which I wanted to ask him. If it is possible to renegotiate with the Community in the way that he has outlined, despite the changes in Commonwealth trading arrangements, it is equally possible surely to renegotiate these matters with the Commonwealth. The purpose of renegotiation is on that basis.

§ Mr. Callaghan

Yes, it is possible. We are discussing with the Commonwealth countries, and we will continue to do so, whether they are willing to re-enter into long-term arrangements with us or with the Community as a whole, and at what level of prices they will be willing to do so. That is an essential part of our discussions.

As to whether the views of the Commonwealth have been properly repre- 1443 sented and as to whether I have done the job that I was given, I make one quotation in my own defence: The New Zealand Prime Minister Mr. Norman Kirk said … he was pleased that Britain was seeking satisfactory 'continuous' arrangements for New Zealand trade with Europe. Commenting on the statement made by the British Foreign Secretary, Mr. James Callaghan, in Luxembourg "— that is the speech— on the renegotiating of British terms of accession, Mr. Kirk said it was the first time that New Zealand's case had been put so clearly and emphatically. 'It was all the more emphatic because it was coupled with renegotiation'. So he is in no doubt, and Mr. Chirac is in no doubt—

§ Mr. Raphael Tuck (Watford)

He is.

§ Mr. Callaghan

He is in no doubt about the fundamental questions that we are raising and about the difficulties that we shall find.

§ Mr. Raphael Tuck

May I raise with my right hon. Friend one matter which has been worrying many of us? Mr. Chirac said on 5th June that the French regarded the common agricultural policy, which my right hon. Friend wishes to renegotiate, as "untouchable". What answer has my right hon. Friend to that?

§ Mr. Callaghan

My right hon. Friend the Minister of Agriculture has already altered the basis of the CAP by what happened within a month of going back. The Italians themselves put on import deposits on agricultural produce. I do not rejoice in any of this because it means that there could be nationalist solutions for problems stretching over a wider area.

I say to my hon. Friend the Member for Watford (Mr. Tuck) that if the political will is there, we can get these changes. If the political will is not there, we cannot get them. That is what the party said that we should set out to try to find. At the end of my voyage of exploration, I do not know the answer with which I shall come back. But it will be a fair answer, because I shall not say one thing to the Council of Ministers and another thing to my right hon. and hon. Friends. My hon. Friends think that I never budge. They should hear what I say to the Council of Ministers. We must 1444 be absolutely honest and straight about this matter. There is nothing that I have said this afternoon that has not been said in another place.

Finally, I return to the point made by my hon. Friend the Member for Watford. We have a new President in France— President Giscard D'Estaing. We also have a new Chancellor in Germany— Chancellor Schmidt. They are new men. I believe that there is a growing realism about what is possible. The phrase-making of the last few years—the kind of words that went into such phrases as "European Union" and so on—will be abandoned. The people will begin to try to find practical solutions to common problems. Heaven knows, there are enough of them—problems of inflation, monetary markets, Euro-Arab dialogue, United States-European relations, and relations between Europe and the USSR. Canada is asking for discussions with the Community. Yesterday, in the Council of Ministers, I was able to ask that they should examine their own records in relation to sanctions against Rhodesia in order that we may try to get some common approach on them and to make sure that the sanctions are uniformly applied, especially in view of the developments taking place in Southern Africa. In all these issues it is important that we should regulate our relations with Europe.

The Government are working for successful renegotiations. We are not working to fail. I do not know whether we shall succeed. I have never made a secret about that. I do not know with what answer we shall eventually return. I believe that it would be in European interests if we succeeded. It would be in our interests if we succeeded. If we cannot succeed we shall have a hard decision to take and the British people will have to be put fully in the picture about it. I believe that it is on this basis that we must conduct the whole of our discussions.

It would be a great blow to Europe if we were unsuccessful. As to whether it would be a blow for us economically, that is a dubious question. I am not wholly convinced about that. Politically, however, it would be a blow for Europe as well as our relations with Europe. It is in that political sense that it is probably 1445 as important to work for success as it is in the economic sense. As my right hon. Friend the Secretary of State for Trade pointed out yesterday, the financial benefits of our trade last year have not been clear to be seen so far. We shall have to see how that matter goes. As to the small change of gossip—as to whether they want us out, and the reports of anger, and hopes that we leave, and so on—we can dismiss all of them.

There are big issues at stake and big prizes to be won. I do not know whether we can succeed. We shall do our best. But, on the basis of the negotiations conducted so far, if anyone were to vote against the basis on which we started them, he must be either deaf or just plain cussed. We have been putting our position very fully and clearly. We have stood by what we said we shall do and we have continued to do that. If we succeed we shall do what, in our manifesto, we said we would do—namely, join in building a new and a wider Europe.

§ Mr. Geoffrey Rippon (Hexham)

The Foreign Secretary's speech at Luxembourg was generally recognised as constructive and statesmanlike. I am afraid that there were times this afternoon when his performance was not exactly what one would expect of a Foreign Secretary reporting to Parliament. We, as a House, ought to take note that there are grave dangers in entangling weighty issues of foreign policy in party-political disputes of the kind with which the Foreign Secretary was manifestly dealing this afternoon.

The Foreign Secretary asked to be sustained by the House in his negotiations. I assure him that he will be, provided that he makes it clear at every stage of the negotiations that what he is concerned with is the defence of British interests and Commonwealth interests, and not simply party interests.

I think that the whole House will, however, be grateful to the Foreign Secretary for what he told us about the arrangements that the Government propose for debates. Questions and reports. In that regard, he is following the procedures which the previous Conservative Government introduced and contemplated for the future. We would also all want to pay a warm tribute to what we may collo 1446 quially call on this occasion the Foster Committee.

What the Foreign Secretary made clear was that there already exist the safeguards for Parliament that we always said were there throughout the long discussions on the European Communities Act. We said then that arrangements could be made for ensuring that Parliament would know about and could express opinion on any matters that came before the Commission or the Council of Ministers and could express a view before final decisions were taken. It is rather extraordinary, after all those long debates, to hear the Foreign Secretary saying that he has now discovered the Luxembourg Agreement and can assure the House that sovereignty is not an issue in this regard. One of his hon. Friends intervened to say that what we are concerned about is the sovereignty of Parliament. That is really relevant to the question of consultation with the people.

In our election manifesto in 1970, in which we said that we had a commitment to negotiate, no more, no less, we said that after the negotiations, provided that we were satisfied that the terms negotiated were fair, we would put them to Parliament. It is interesting that at that stage—whether there was a Labour Government or a Conservative Government—the present Prime Minister, whether as Prime Minister or Leader of the Opposition, always said then that Parliament was the proper forum for these discussions and that he was against even a consultative referendum and would hold to that view no matter if there were even 20 public opinion polls against him. In the result we had a majority of 112 in the previous Parliament in favour of entry on the terms then negotiated, and 69 members of the Labour Party voted on that basis, including two members of the present Cabinet.

Now the Foreign Secretary says "What of the future?". The consultation with the people through Parliament must be a continuous process. It is not sufficient to have just one consultation about one stage in the negotiations. The Foreign Secretary would not say whether there was to be a referendum or a General Election. He said that we should wait and see how the situation developed. That was probably the best answer that anyone could give, because it is the Government who 1447 will have to come forward at the appropriate stage and say what they think should be done. We are probably closer to a bipartisan view of this matter than we have been for a very long time. Perhaps we shall be all agreed on what to do and there will be a unanimous recommendation to the British people. But in any event, this particular matter on the form of consultation with the British people through Parliament continuously is a matter which we shall no doubt debate further.

When the Government have made up their minds whether they are to consult through a General Election, in the more conventional way, or through a referendum, they will have to tell Parliament what sort of legislation they contemplate. We shall have to consider, as the Prime Minister always said that we should have to consider, the constitutional implications of importing the referendum into our constitution and the effect that it would have on the sovereignty of Parliament. The Italians have referenda, but not for taxes or treaties. The French have a referenda system because the President said that being directly elected he had the right to consult people over the heads of the French Parliament. We shall have to consider this matter. What sort of questions would be covered? Would the Foreign Secretary say that the British people ought to be consulted about nationalisation or about capital punishment, or a whole range of other issues? We would have to consider the matter, and it is for the Government to make proposals about the way in which questions to the people must be put.

For our part, we on the Opposition side of the House have always made it clear that we stand for the sovereignty of Parliament and that, I hope, must always be sustained by consultation in the appropriate way with the electorate.

§ Dr. Mabon

I do not understand the right hon. and learned Gentleman's last remark. If the Conservative Party—it is a perfectly respectable position to take— by saying that it respects the sovereignty of Parliament, means that it does not believe in referenda, does that mean that there would be opposition from the Conservative Party to a referenda Bill produced by the Government?

§ Mr. Rippon

We must await the Government's proposals. This matter raises very serious constitutional issues, which have been recognised on both sides of the House and were the subject of debate and a vote in the previous Parliament. But one Parliament cannot bind another. Equally, no referendum could be final and binding, and if it was consultative the final decision would rest with Parliament. The sovereignty of Parliament rests upon the will of the people and the expression of that from time to time in a General Election. If we import some new concept into our constitution we shall have to discuss it very carefully in the House. We can only do it, as the Foreign Secretary said, if we wait and see how circumstances develop. At present, the chances are that things may go very well, if the right hon. Gentleman sticks to the views he expressed in Luxembourg last week.

The Government's attitude, as far as one can now judge, can be put simply. They remain in favour of the principle of entry. They want the Community to succeed, to grow and to develop, but they are not satisfied about some of the terms. They now say "We can negotiate within the framework of the treaties". In other words, the negotiations now in hand are exactly those that the treaties contemplated.

I find it encouraging, as there are 1,500 pages of treaties, 650 relating to the Act of Accession and the protocols and all the other documents, that the Foreign Secretary can say that he can see no reason why all that negotiation—and it took a long time- should not be left intact. He says that there are only four or five issues —we can ignore one which he said for the moment we could put on one side, because it was still a matter for future discussion—which represent the limits of the negotiations that he has in mind. That is a great step forward.

It is now clear that in the Government's judgment, which must be a collective view binding not only the Foreign and Commonwealth Secretary but the Secretary of State for Trade and the Secretary of State for Employment, the proposals put forward, if accepted, would not require changes in the treaties. Therefore, it is not possible to negotiate in good faith unless one is proceeding on the principles 1449 which the House accepted when the Prime Minister spoke in the House on 8th May 1967. One cannot negotiate in good faith unless one accepts the basic principles of those treaties, because otherwise one would have to say "I believe only in withdrawal, and there are no terms which could be found acceptable."

That is a great advance in the view of some of those who took part in the debates in the last Parliament. What we are really talking about now is basically how we can ensure the implementation of the terms on which we joined. That is true even of the Community budget proposals. The Foreign and Commonwealth Secretary now says—this was perhaps his toughest point—that in respect of the Community budget the negotiated terms of entry were fundamentally inequitable, and that experience has reinforced that judgment. Quite apart from the fact that large numbers of his party voted for entry on the basis of the terms then negotiated, there is a misunderstanding of what was negotiated and what the treaty provides. Our contribution to the budget was one of the central features of the negotiations leading up to our accession. Our purpose then was to settle what was described in paragraph 43 of the Labour Government's 1970 White Paper, which referred to the transitional arrangements under which we approach paying our full share of the recently agreed Community financing arrangements". We were concerned that the application of those arrangements should be equitable.

We said in paragraph 91 of our own 1971 White Paper: From the outset the Government recognised, as did their predecessors, that it would not be possible to seek to make fundamental alterations in the system of providing funds for the Community. That is why I say that even the fresh look which it has been agreed should be taken at the Community budget, and at the burden which it imposes on individual countries, cannot be regarded as a renegotiation of the terms of entry, as those terms themselves include the very safeguards needed to take account of continually changing circumstances, whether in relation to capital movements, balance of payments or whatever.

Apart from the express provisions of Articles 6, 108 and 109 of the Treaty of 1450 Rome, under which the late Italian Government were proceeding, provisions which relate to action that can be taken to deal with the balance of payments and similar problems, it was always understood during our own negotations that estimates of our contribution to, and receipts from, the Community budget in future years were necessarily tentative and depended on a large number of unpredictable factors.

That was a great difficulty in the conduct of the negotiations—trying to assess what the position might be even through the transitional period, let alone the years thereafter. We set out in the White Paper the nature of the difficulties that arose, and the way in which the Community budget was likely to change. In paragraph 95 we said: it is impossible to foresee the likely size of our VAT contribution. The size of this contribution (if any), would be a function of the size of the Community budget and of aggregate receipts of levies and duties from all member countries. We also said that there might be changes in activities as a result of industrial and regional policies. We concluded: Thus, in the Government's view, neither our contribution to, nor our receipts from, the Community budget in the 1980s are susceptible of valid estimation at this stage. It was for that reason that the Community declared to us during the course of the negotiations that if unacceptable situations should arise the very survival of the Community would demand that the institutions find equitable solutions. This arose because when I put forward our estimates as to what would happen in the future the Community representatives said "You have underestimated the benefits and exaggerated the cost. You have underestimated the receipts. This is all very difficult." They put this phrase into a Commission document, and I seized on it and said "I am prepared to agree with you that, as it is very difficult for all of us to see what the likely position will be as far ahead as the 1980s, there must be procedures to ensure equity at any point in time between one member of the Community and another, to ensure the balance of advantage."

The Foreign and Commonwealth Secretary says that experience has proved that the terms were fundamentally inequitable. 1451 In fact, the experience of the first two years shows that the Commission was right and that we had exaggerated the burden on our balance of payments. The Financial Secretary to the Treasury said yesterday that the figure of net cost in 1974 would be £80 million. I think that it was £75 million to £80 million in 1973. But in our White Paper and in our negotiations we contemplated a 1973 net cost of £100 million and a 1974 net cost of £115 million. That was partly because we underestimated the amount we would receive from the Social Fund, which amounted to £24 million last year, or one third of the total amount available.

We also based our figures, as we could only do then, on what was our percentage of the Community's total gross domestic product, which then stood at about 19 per cent.

The idea was that we had a key by which we moved up to our full contribution, based on our notional GDP, assuming it remained the same. We had the five years' transitional arrangements and a further two years, and then we would make our full contribution. We always envisaged that as the Community developed there would be other purposes on which Community funds would be spent, such as the industrial and regional policies, from which Britain could expect to receive back money commensurate to our contribution to the Community's budget. We were not saying that there should be a just retour—that everything we put in must automatically come back out—but we said that those factors would have to be taken into consideration when we framed the budget, and that we should have a continuing British interest and concern in the size and shape of the budget.

A great deal of what the Foreign and Commonwealth Secretary says about the industrial and social policies and the size and shape of the budget is not in dispute. What we did not envisage, and what will no doubt be a matter of some dispute and discussion not only in the Community but in the House, is that the Socialist Government would suggest to the Community that by 1977 our share of the Community GDP would be about 16½ per cent., and by 1980 be 14 per cent., even after taking North Sea oil into 1452 account—that in effect our individual standard of living would be so far below the average for the rest of the Community. Indeed, an estimate that the British GDP per head of population will decline from 80 per cent. of the Community average in about 1977 to 65 per cent. in 1980 is a savage comment on declining British prosperity.

I, for one, am not prepared easily to assume that, even supposing that the Community is prepared to agree that that is a correct figure. In effect it means that the Government are saying, "We assume in our estimate that by 1980, considering that some people will be below as well as above the average, the average British citizen will be little more than half as well off as his German or French counterpart". That is a very severe assumption.

If it were true we would be entitled to say that this was an unacceptable situation, of which the Community would have to take account in framing the budget. There may be something to be said for the solution which the Foreign Secretary put forward, of taking account in the budget of the special problems of countries which have a below-average gross domestic product per head of population. That is a fair point to make. I was glad that the Foreign Secretary made it quite clear that he was not talking about a system just for this country but that it had to be a system for the Community as a whole, applying to all members. That is the right Community approach.

It allows for the changing circumstances not only of ourselves but of other countries too. As I told the House on 25th October 1971: The balance of advantage between the nations in those Communities is constantly changing. That is why we cannot make estimates of what the position will be, in mathematical terms, in the 1980s."—[OFFICIAL REPORT, 25th October 1971; Vol. 823, c. 1251.] 1 always stood firm by the assurance we were given by the Community that it would have regard to changing circumstances as we moved forward. The Chancellor and the Foreign Secretary can give their views about the cost of remaining within the Community but I hope that they will also give the House the cost of withdrawing. We must set the present cost of our contribution to the budget— about 06 per cent, of our total national Budget—against the undoubted benefit 1453 of permanent unrestricted access for our exports to a market of 300 million people. That is what we have called the dynamic effect from which we would benefit. It could not be quantified because it would not take place in the early stages. That is why we had to have these transitional arrangements.

§ Mr. E. Fernyhough (Jarrow)

The right hon. and learned Gentleman has spoken so many times about the "dynamic effect". When will this be witnessed by the people of this country?

§ Mr. Rippon

That is what I was explaining and what I have often explained in earlier debates. One of the reasons why we asked for the special transitional arrangements was that we said that whatever the dynamic benefits would be we could not make a quantitative estimate. They were quantified as being possibly equal to ½ per cent. increase in the gross domestic product, which would bring us £1,100 million a year. That does not necessarily affect the balance of payments except in so far as it is an export-led movement.

We assumed that the benefit would come later and that it would be a growing benefit. What the Foreign Secretary and the Government can do is to consult industry and ask for its views. ICI, for example, increased its exports to Europe last year by some 98 per cent. Industry can give the figures to the Government and the Government must tell us what they think of the value of the opportunities of exporting to this important and growing home market. If we were to withdraw we should have no guarantee of an offer of association on the basis of a free trade area. We could be faced with tariff barriers or quota restrictions. There is no reason to suppose that if we behaved badly the Community would necessarily be prepared to treat us as a special case, like Norway. We cannot just go back into EFTA. It has its own association arangements with the Community.

Whatever the effect on the balance of payments according to the recent report by the National Institute for Economic and Social Research none of the United Kingdom's balance of payments difficulties can be attributed to EEC membership. There is no simple answer there. If we contemplate within the Community this declining standard of living what. 1454 then, is the Government's estimate of the position if we were to move outside it?

The Foreign Secretary spoke about consultations with the Commonwealth countries and I hope that we will hear more of that. I trust that that will be put in a document and the House will be kept fully informed as to whether the Commonwealth wants us to withdraw, to negotiate particular agreements within the framework of the treaties or whether it wants us to see that the treaties are implemented. We shall want information about the views of industry and agriculture on the developing position.

The second point emphasised by the Foreign Secretary was the common agricultural policy. No one has ever taken the view that that should remain unchanged forever. There must be here, as elsewhere, this constant process of negotiation within the treaty. This is the problem 1 find with this so-called renegotiation exercise. It assumes that it is possible to start a renegotiation within the framework of the treaty and then to reach some final solutions which will last until the 1980s. I do not believe that is possible.

The position now is as it was stated by the Prime Minister on 8th May 1967 when he said that the common agricultural policy was not negotiable. We have to come to terms with it, he said. We could only influence it if, but only if, we were inside the Community.

The whole House will be glad that the Foreign Secretary has recognised and acknowledged this. I quote from his statement in Luxembourg, when he said that: it can provide an assurance of supplies at known prices in a world where both prices and availability can be unpredictable. In consequence, what the Government are now proposing, in their own words, are: actions consistent with the broad principles on which the policy is based. That is no more than we negotiated and no more than is in the treaties which Parliament ratified by passing the European Communities Act.

As we made clear in the debate of 19th March, my right hon. Friend the Member for Grantham (Mr. Godber), when he was Minister of Agriculture, had already proposed modifications to the 1455 Community to take account of this need for a proper return to efficient producers as well as taking account of the impact of the policy on taxpayers and consumers alike. These are complementary considerations. There is no dispute between us on that.

My right hon. Friend had emphasised to the Community the same points as the Foreign Secretary. He dealt with what we would need to discuss in our future negotiations, including action to contain the costs of the common agricultural policy and to deal with surpluses. On this question of costs, although we may have a key for our contribution, and it may be a certain percentage of the budget, there are advantages in being a net con tributor. Then we do not have the same incentives as the recipients to agree the total amount that is to be distributed. 1 have never thought that a British Government would be without resources in saying that before the budget was agreed the terms of the treaty and the undertakings given to us about industrial, regional and social policy should be honoured.

The Foreign Secretary talked about whether the Community would veto us. There is another side to this. We are now members of the Community. We are not like people trying to join a club from which one blackball excludes. We are members of the club and we can say something about the way we think it ought to be run. I hope that the Foreign Secretary will be doing that, but not for one renegotiating period. I hope that he will do it during the brief time he holds his office and then, when he hands over the torch to this side of the House, I have no doubt that our Foreign Secretary, whoever he may then be, will carry on the same process of defending British and Commonwealth interests.

We have the same feeling that the right hon. Gentleman has expressed about farm surpluses, but it is worth bearing in mind that the so-called 100,000-ton beef surplus is, for this large Community, no more than three days' supply.

§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Does my right hon. and learned Friend not think that it might be a good thing to renegotiate the transitional period for British agriculture now? It would not only be of benefit to British 1456 farming but might actually halt the price rises on food which are in the pipeline now that European food is a good deal cheaper than food in the rest of the world?

§ Mr. Rippon

That is a good example of the way in which circumstances change. I was pressed by agricultural interests to have as long a transitional period as possible. They wanted seven years. When I settled for five I was accused of betraying them. Now they wish they had not had a transitional period at all. That is an indication that the process of negotiation—once the treaties are accepted, and the Government accept them—is a continuous process in which regard must be had to changing circumstances.

There is a great deal in what the Foreign Secretary said in Luxembourg about the need for securing speedy improvements in the marketing regime of some major commodities. We might start with our own farmers, because unless the Government do something to improve their position then surely the danger is of a beef shortage rather than a beef surplus. The Minister of Agriculture conducted the current round of negotiations, and there will be a round each year, not just one renegotiated round which will take care of everything. At the moment the Government have opted out of the intervention system. The urgency at the moment is to reintroduce some form of guarantee for our beef producers. Next year the problem may be different, but the Government have a wholly false conception of what the negotiations are all about.

§ The Minister of Agriculture, Fisheries and Food (Mr. Fred Peart)

The right hon. and learned Gentleman will know that the problem in Europe is that the intervention policy has not succeeded.

§ Mr. Rippon

The Government have opted out, and all we are saying is that there is an urgent need for action to help our producers. Next year it may be different, but the matter could be dealt with within the framework of the treaty and the common agricultural policy because the Foreign Secretary has just told us so.

Here again, what if we withdraw? It is a dangerous illusion to think that we can ever revert to the era of free access 1457 to cheap food from the Commonwealth and the rest of the world. There was an article recently in a publication called West Africa in which the authors said that the Labour Government were proceeding on the wrong basis and that the era of cheap food from the Commonwealth had gone out with neo-colonialism. If the Labour Government withdrew from Europe, they said, they would find they had cut themselves off from the countries of Africa rather than forming a new and closer association with them. There is no quarrel with the Foreign Secretary's concern to ensure that the terms of entry are fully implemented according to the needs and wishes of the Commonwealth countries, but there is a risk of undermining existing firm agreements reached under the treaty if it is suggested that those agreements are not firm.

We have to see that agreements we made for primary products and sugar and for New Zealand are implemented. British representatives at the European Assembly have been pressing the Commission about this and about the safeguarding of the quantities. They have made a great deal of progress. I wish they could have had the support of Labour Members. In the Assembly we can also influence what the Commission does. The Foreign Secretary talked about the harmonisation of valued added tax. We talked in the White Paper in 1971 about a contribution from the value added tax fund, but we certainly got nowhere near harmonising it. We always said that we would not impose the tax on food and we never did. The Chancellor of the Exchequer has weakened that argument by imposing it on food. As a result the Foreign Secretary went to the Community in April and said that we did not want harmonisation of value added tax on necessities. We would press for the clarification that that does not mean harmonisation on food. We are entitled to press for that as a country.

§ Mr. Callaghan

I think I misunderstood the right hon. and learned Gentleman. I made clear in my speech that we have no intention of departing from that principle in any way.

§ Mr. Rippon

I was not intending to press the Government on that, but we are entitled to press the Community on it as 1458 part of our case. There is nothing to suggest that we have to renegotiate things which are already contemplated by the treaties. We should be doing everything we can to ensure that the Commonwealth developing countries get association agreements under Protocol 22 of the Treaty of Accession. As the Foreign Secretary said at Luxembourg that is the best way of meeting the interests of those countries.

Protocol 22 not only set out the options for association, but stated clearly that an enlarged Community would have as its firm purpose the safeguarding of developing countries dependent on primary products, particularly sugar. The Conservative Government, both during and after the 1970-71 negotiations gave an assurance that it would be our firm policy to ensure that the Community proposal would be implemented so as to provide a secure and continuing market in the enlarged Community, on fair terms, for the quantities covered by the Commonwealth Sugar Agreement in respect of all its developing member countries. We said we would regard that as a specific and moral agreement and we expect the Foreign Secretary to insist that it is implemented. On some of these matters I should be a little rougher than the Foreign Secretary, who was like a cooing dove.

As for the Asian Commonwealth, there was a declaration of intent. We did not expect there to be any problems for at least two-thirds of their exports to Britain, but we attach great importance to the assurances by the Community that it would not only strengthen but extend trade with the Asian Commonwealth. India has an agreement and we hope that Bangladesh will reach an agreement about its jute. I think we can best serve the Commonwealth by seeing that those agreements are implemented.

On the developing Commonwealth countries it was recognised before the negotiations began that there would be no particular problems. Those countries had other markets in the world, particularly in their own parts of the globe. Nevertheless, quite apart from the special and crucial arrangements for New Zealand we took steps to ensure dutyfree entry into Britain for a whole range of exports from Australia, Canada and 1459 the rest of the developed Commonwealth. We negotiated in Protocol 16— this is relevant to what the Foreign Secretary said in Brussels—arrangements to deal with problems that might arise in specific cases concerning agricultural products. A footnote to the protocol notes that these specific cases so far as can be foreseen at present will be confined to butter, sugar, bacon and certain fruit and vegetables but the provision is not limited in any way. This concept, which is built into the treaties, of not attempting to foresee the future in every detail, is at the heart of what the Foreign Secretary is now arguing on our behalf in Luxembourg. I would say that the terms of entry were right on the assumptions that could then be made, and given that we had to join the Community as it then existed. The treaties provide for a continuing process of negotiation, a process which would have been impossible had we been outside.

Finally, the House will have noted, I hope with satisfaction, the concluding passage of the speech in Luxembourg by the Foreign Secretary on 4th June. He said: Quite distinct and separate from the problems I have been discussing is the feeling that there exists among Community members a diminished unity of purpose, a growing divergence in our economies and a readiness to seek nationalist solutions to problems which demand common and joint action. That is why I agree that the Foreign Secretary was right to say that with the Budget and everything else there had to be solutions which maintained a fair balance of mutual advantage between all members as circumstances developed. As the German Chancellor is reported today as saying, with all the dangers of inflation which beset us isolationism is no solution for any country in Europe today. It follows from what the Foreign Secretary said that it is all the more important for Britain to try to bring a renewed sense of urgency to the development of the Community and to work within the Community for that purpose. This is a tremendous advance on the attitude the then Opposition were taking when we were negotiating entry and when we were debating the terms of the treaty in the House.

1460 We must welcome the Foreign Secretary's assurance that in addition to proposing solutions which can be reached without disrupting the treaties the Government have chosen to play a full part in the ongoing work of the Community. That is a considerable advance on some of the things which have been said before. I hope they will extend in due course to sending a full delegation to the European Assembly where we can exercise a British influence on the development of European affairs.

Above all, let us never forget how right our present Prime Minister was when he said in Strasbourg in 1967, Over the next year, the next 10 years, the next 20 years, the unity of Europe is going to be forged and geography, history, interest and sentiment alike demand that we play our part in forging and working it". That is as true today as it was in 1967.

§ Mr. Douglas Jay (Battersea, North)

One fact which has clearly emerged from the debate is that the Conservative Party still has no intention of allowing a final decision on this issue to be taken by the British electorate. In fairness, however, I say to my right hon. Friend the Foreign Secretary that his speech in Luxembourg on 4th June will have to be spelled out in much more detail than we had today before he will convince the House or the electorate—or indeed, the Labour Party—that the speech faithfully carries out the party's election manifesto, as I am sure he is sincerely anxious it should.

For instance, in his speech on 4th June my right hon. Friend said virtually nothing about the legislative sovereignty of the British Parliament, though he did today. Yet at this moment—although it would not be thought so from the speech of the right hon. and learned Member for Hexham (Mr. Rippon)— regulations, directives and decisions are being promulgated every week by the EEC Council and the bureaucratic Commission in secret, without approval by any elected body, which claim the force of law in this country. In some cases, indeed, they claim to be legally in force before they are even published.

This is legislation by decree by the Executive, and this has never been accepted by the electorate and ought not, 1461 in my view, to be accepted by the House—

§ Mr. Atkinson

And not by the Labour Party.

§ Mr. Jay: Nor are these decrees all on purely trivial matters

. Lord Denning— not I—has just said that the Treaty of Rome is like an oncoming tide; it flows into estuaries and rivers, it cannot be held back. Compare that, incidentally, with what I regard as one of the most glaring falsehoods of all by the Leader of the Opposition's 1971 White Paper in which it was stated that there would be no surrender of essential national sovereignty. Let me give an example. The Council of Ministers of the EEC has just promulgated one of those authoritarian decrees. It is, for those hon. Members who are interested, R 1253/74 (FIN. 306), which covers the main lines of economic, budgetary, monetary and fiscal policy in this country in 1974. I have it here and I should not have thought that there are many hon. Members who have even read it so far. I am advised that this directive claims the force of law, and that if my right hon. Friend the Chancellor of the Exchequer introduces the wrong sort of Budget later this year he could be hauled before the Common Market Court at Luxembourg. That nonsense is wholly contrary to the election manifesto, which binds the Government. The relevant passage here will be well known to my right hon. Friend the Foreign Secretary, because he quoted it in his 1st April speech and quoted some of it again today. The manifesto said that one of our main objectives was the retention by Parliament of those powers over the British economy needed to pursue effective regional, industrial and fiscal policies.

That is wholly inconsistent with the directive with which we are now threatened. That pledge in the manifesto cannot be carried out unless the new settlement for which we are negotiating contains a clear declaration that the Brussels decrees have no force of law in this country unless approved by the British Parliament.

My right hon. Friend the Foreign Secretary spoke today about the so-called Scrutiny Committee of this House, of which I have the honour to be a member. But nobody should complacently 1462 imagine that this legislative torrent from Brussels is being happily and smoothly unravelled by this Committee dealing with European secondary legislation. The Committee is doing its best, but there are dozens of these legislative decrees pouring out of the Brussels sausage machine week by week at a rate which makes it extremely difficult, at any rate with existing resources, to deal adequately with them, unless the House gives far more attention than it has done to the fundamental problem. I give as an example the fact that regulations and directives of the Commission, which are far more numerous than those of the Council, are not yet being examined at all.

I am sure that the efforts by my right hon. Friend the Foreign Secretary are well-meant; but they will not satisfy the British people if he continues to assume, as he almost seemed to be assuming on 4th June, that the Budget payment to the Brussels farm relief funds is the main prospecti