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Mr. Spearing: We were open to negotiation by the Conservative party and the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) before we joined. Does my hon. Friend agree that, unhappily, despite the known characteristics of fishing as a competitive but hunting economy, the common fisheries policy has been disastrous for almost all concerned and it has not yet been resolved?

Ms Quin: One can make telling criticisms about the common fisheries policy. I tend to support the fish in that battle because they do not have much of an opportunity these days. Fish conservation is certainly vital.

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Our constructive programme, which I have explained to the House this evening, is fully in line with the domestic policies that we shall put at the next election. If we argue for high environmental standards at home, we also argue for high environmental standards in the European Union. If we argue for good working conditions at home--as we do--we must argue for good working conditions in European discussions. If we are arguing for decentralisation and greater openness at home, we must also favour a decentralised and open system in the European Union.

With our constructive programme of European policies and its consistency with our domestic policies, we have every confidence that we can convince the electorate that, far from being a sell-out, our European policies are firmly in the interests of the British people and will give them a better deal from their EU membership than the deal given to them through the Government's ineffectiveness and marginalisation. Far from being intimidated by the European issues, we believe that they will be part of a winning platform of ideas that the British people will support.

Yesterday we were struck by the calls from Tory Members for their Chancellor to resign. I conclude by calling on the whole Government to resign--the sooner the better, so that British interests can be properly represented in the European Union.

9.40 pm

The Minister of State, Foreign and Commonwealth Office (Mr. David Davis): Tomorrow the European Council will meet in Dublin and discuss the intergovernmental conference, enlargement and a number of other matters relating to the European Union.

As the hon. Member for Gateshead, East (Ms Quin) said, we have had an excellent debate today, much of it on monetary union. I know that I will disappoint several of my right hon. and hon. Friends when I tell them that of necessity I must focus on IGC matters. For a junior Foreign Office Minister to wander around the economic and monetary union debate is probably sufficiently hazardous to health to warrant a European directive against it.

I shall comment briefly on the excellent contributions to the debate. I was impressed by the powerful arguments of my hon. Friend the Member for South Staffordshire (Sir P. Cormack) on a hard ECU. I was much taken with the comments of my right hon. Friend the Member for Worthing (Sir T. Higgins) on the difficulties engendered by EMU. I know that my right hon. and learned Friend the Chancellor answered questions on that in yesterday's debate.

I was extremely impressed by the persuasive and forceful exposition from my right hon. Friend the Member for South Norfolk (Mr. MacGregor), who put the Government position and the reasons for the Government position in pursuit of the national interest as well as anyone could. I remind all those who spoke on the matter that the Chancellor said that the assessment of the national interest takes into account not just economic but constitutional matters, as all Conservative Members recognise.

Throughout the debate today and yesterday, I have been amazed by the hypocrisy of the Labour party, which voted against the EMU opt-out in the Maastricht treaty and since then has been hiding behind it. That sheds light on Labour's policies.

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The Dublin discussions will engage on different visions of the future of Europe encompassed in the Irish presidency document on the IGC, which is tagged for today's debate. There can be no doubt that the debate is fundamental to the future of this country, the new democracies and the whole of Europe.

On one side is the centralising federalist vision, which seeks to arrogate power away from the nation state to the institutions of the union; which insists that, in the jargon, wider must mean deeper; which has led to a progressive loss of faith in the union by the peoples of the union. We reject that vision.

The British vision was set out in the White Paper, "A Partnership of Nations", presented to the House by my right hon. and learned Friend the Foreign Secretary. Britain's agenda for Europe concentrates on the real issues--job creation through competitiveness, encouraging enterprise, scrapping unnecessary regulations and making an effective effort to tackle the fraud and waste that damage public respect for the union. It concentrates on enhancing Europe's internal and external security through practical measures, rather than through doctrinal Euro-theology.

The key challenge facing the union is enlargement. It is probably the most important vocation for the EU in this half of the century. We have to do a great deal to prepare the Union for enlargement. That is, in part, what the intergovernmental conference is about: creating a Union that is capable of meeting the challenges of the accession of up to 13 new countries. However, the IGC will not be enough--arguably, it may not even be the most important issue in the context of enlargement. We shall also need policy reform--particularly of the common agricultural policy and the structural funds. I suspect that that will prove at least as difficult to conclude as the IGC, but just as important. Candidate countries also have much to do to prepare for accession.

Sir Roger Moate (Faversham): My hon. Friend mentioned the difficulty of securing agricultural reform and the way that enlargement makes it fundamentally necessary. What is the mechanism for securing progress on reform of the common agricultural policy, as there seems to be a distinct lack of will in Europe to make any progress in that area?

Mr. Davis: The principal recipients will oppose reform. One of the important primary driving agents will be the timetable for the general agreement on tariffs and trade reforms at the turn of the century. The issue will be addressed in the next few years.

We need a flexible Europe that builds on intergovernmental structures instead of trying to dismantle them. We need a European Union that recognises that the structures that work well for a single market would not work for foreign security policy or for a number of other policies. The Prime Minister pioneered the concept of flexibility in his speech in Leiden more than two years ago--a proactive action which I am sure would please my right hon. Friend the Member for Enfield, North (Mr. Eggar). Since then, others have taken up the idea.

We do not agree with all subsequent proposals. Indeed, I am reminded of Ernest Bevin's comment:

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    While I would not quite describe the Franco-German proposals as a Trojan horse, they clearly have a different aim from ours. Our view is straightforward: the Union has already developed flexibility in important areas, such as the social protocol, to which I shall return in a moment; the EMU, where Britain can exercise its opt out; and defence, where we are part of the inner majority and others are more reticent about their commitments.

We are faced with a choice that the hon. Member for Thurrock (Mr. Mackinlay) mentioned in his speech, which I enjoyed. We must choose either to introduce new treaty clauses to facilitate flexibility or to continue with ad hoc arrangements. If flexibility is not to prove divisive or to undermine the achievements that it is designed to accommodate, any new treaty language must be very clear. In the jargon that my right hon. Friend the Member for Wokingham (Mr. Redwood) and my right hon. and learned Friend the Chancellor have developed between them, it must be cast-iron and copper-bottomed.

If others wish to co-operate together outside the institutions--as with the Schengen agreement--that is fine. However, if a small group is to use the institutions and the budget--which are the common property of all member states--all should have a say about how it should be done. The United Kingdom will not allow others to use flexibility to circumvent the veto by the back door. Flexibility should not allow countries to form exclusive inner groups--arrangements should be open to all--and, importantly, it must not compel countries to join groups, even over time. In the jargon, the model is multi-track, not merely multi-speed.

I turn now to the IGC negotiations, and particularly the Irish presidency document outlining the options facing the Union. Over the years, many game-playing analogies have been drawn regarding the negotiation process in the IGC--some have likened it to poker and some to a 15-dimensional game of skill. In truth, its rules fall somewhere between chess and rugby league. To follow the chess analogy, the European Council tomorrow marks the mid-game of the IGC: it is complex and there are many tactical threads that make exact prediction difficult. However, we can see some clear lines developing.

A degree of consensus has grown around some major issues that we have championed. The hon. Member for Clydesdale (Mr. Hood) raised the question of national Parliaments. In the spirit of Christmas, I thank him and the European Legislation Committee for their good work in that area. One of the Government's main objectives at the IGC is to reinforce the role of national Parliaments, which are the source of the Union's democratic legitimacy. I will not outline again the details of those proposals, but I am confident that that section of the British proposal will form part of the revised treaty in June.

Britain also has a proposal for regular Council reports on the second and third pillars, which we shall pursue in the next few months.

Similarly, we have long argued for the entrenchment of subsidiarity in the treaty. Since the birth of article 3b at Maastricht, the principle has started to work. We want it to work better, and that is why we want to put a protocol into the treaty. I am confident that such a protocol will be attached to the treaty next June.

On common foreign and security policy, my right hon. and learned Friend the Foreign Secretary laid out our proposals in some detail. They have attracted a great deal

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of support. It is not quite unanimous. There is still some discussion to go, but proposals for improving the operation of CFSP are broadly accepted. Discussions are still under way about how we make decisions on CFSP. We regard unanimity as the only realistic basis for decision making in important policy.

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