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Dr. Julian Lewis (New Forest, East): I applaud the robust way in which my right hon. Friend is standing up for the role of NATO, but does he agree that a problem that our party faced in government is faced by the new Government? No sooner are people appointed President of the Commission than they proceed to outline a very different perspective on the defence of Europe--Mr. Santer did so originally and Mr. Prodi is doing so now--and announce straight away that they would like a common defence organisation, in which case this country could be outvoted in respect of its ability to defend itself by the other members of the European Union.
Mr. Dorrell: I also saw the remarks of Mr. Prodi and I have set out--with some clarity, I hope--why I disagree with them. Before Mr. Prodi referred to it, the Prime Minister was off to St. Malo talking about a European defence identity, but I would have hoped that, far from edging in such a direction, the Government would have drawn a distinction between defence, which is properly dealt with by NATO, and the huge agenda of liberalisation issues, which ought to be an urgent priority for handling through the European Community institutions.
Mr. Gapes: The right hon. Gentleman has referred to his commitment to the Maastricht treaty. Does not that
treaty talk in terms of a common defence policy that might, in time, lead to a common defence? Therefore, the Government's St. Malo declaration, which was made with the French and supported by the Germans, is entirely consistent with the Maastricht treaty, which he says he supports. Why does he have such a problem with it?
Mr. Dorrell: I am not saying that the declaration is inconsistent, or that it is illegitimate for the Government to pursue their ambition; I am simply saying that it is wrong. Let me articulate the set of priorities that are in the mainstream of the economic agenda and which I think ought to be handled through the European Community and the Brussels-based institutions.
First, and most obviously, the exclusion of central and eastern Europe from participation in the single market of the old western Europe is becoming a stain on the modern history of Europe. It is worth reflecting on the fact that, this autumn, it will be 10 years since the collapse of the Berlin wall, and we have made virtually no progress in the inclusion of the countries of central and eastern Europe as full members of the European Union.
We were told that the Berlin summit would be the opportunity to confront the questions faced by the current European Union and the implications of the extension of Europe to the east, but we all know--it is a matter of history--that the Berlin summit funked the main issues that were placed before it. That is the first test that the Government have failed.
The second test--never mind the people in central and eastern Europe who are excluded from the benefits of a successful liberal economy--applies to the 10 per cent. of the people who live in the current member states of the European Union who are excluded from the benefits of liberal economics because of high unemployment. It is not a mystery why those countries suffer from high unemployment. We can see from our own experience, and from that of the United States and New Zealand, which has been repeated all around the world, that there is a direct relationship between labour market flexibility and low unemployment.
In some moods, the Prime Minister likes to align himself with that argument, but, looking at what the Government do rather than at what they say, they are resolutely going in the wrong direction in terms of policy here in Britain and the initiatives that they support within the European Union. They introduced the social chapter as a basis for new regulation of our domestic labour market, despite the fact that we had negotiated a situation in which it did not apply to Britain. Now we are told that, within the European socialist agenda, they propose to develop a pact for employment, the purpose of which, whatever the Foreign Secretary said earlier, is made explicit. It is to introduce
I think that not because I am against sharing the success of a successful liberal economy widely through the Community, but because I am in favour of that. Such regulation, wherever it has been used around the world, has undermined living standards and excluded less advantaged people from the benefits of a successful economy. It is something that we in this country should vehemently oppose.
Ms Rachel Squire (Dunfermline, West):
Does the right hon. Gentleman believe that the way for this country to compete successfully in Europe is to drive down pay and conditions of employment? Why has so much money from European structural funds had to come into this country to deal with the unemployment that was created by the previous Government, of whom he was one and who promoted the free market approach that he is espousing?
Mr. Dorrell:
The hon. Lady should consult her pager. Her Government believe in liberal labour economics. All the rhetoric uses the language that I have just used. The hon. Lady's problem is that she looks at what the Government do and likes that, whereas Ministers hope that people will hear what they say and like that. The difficulty is not between the hon. Lady and me; it is between the hon. Lady and her colleagues on the Front Bench, who say one thing that she does not like and do another that, apparently, she does.
It is not just in the context of the labour market that the European socialist manifesto refers to steps in the direction of extra regulation. We see the same in its commitment
Nor is this debate just about internal structures. The hon. Member for Hornchurch was right to say that, too often in the past, the European Union--like, it must be said, the United States--has been a protected market, excluding imports from the developing world. I believe that the EU remains damagingly protectionist, from the point of view of not only the developing world, but European countries themselves. While I cannot agree with much of what the hon. Gentleman said, I hope that we may make common cause on the desirability of a commitment within Europe to put Europe in the vanguard of the liberalisation of world trade, and promote the idea of new round of liberalisation talks.
Sir Leon Brittan has promoted the idea of a millennium round of tariff reduction talks. When I compare the benefit that such talks, if successful, could confer on mankind with all the meretricious trash surrounding the millennium that we are invited to welcome, I can think of no better celebration than the launching of a meaningful process of
reducing tariffs that have excluded most of mankind from the richest markets in the world for the larger part of the century.
Mr. Wells:
Are not sugar and textiles two products that the EU could gainfully consider in its efforts to reduce its protectionism in relation to the third world? If it offered that, we might indeed get some liberal economics going throughout the world.
Mr. Dorrell:
As my hon. Friend will know, if I am drawn into a discussion of textiles, I shall have to declare an interest. Let me put it on the record that I am a director and shareholder of a family textiles business. As it happens, however, I wholeheartedly agree with what my hon. Friend says about both textiles and sugar.
"agreed reductions in working time negotiated between the social partners".
Either the Labour party believes that reduced working time is part of the European social obligation and a necessary step towards the introduction of a socially just Europe, or it does not. It has put that proposal in its manifesto, but then says, "Oh no, it does not apply really." That is an unsatisfactory state of affairs, to put it politely, particularly because, elsewhere in that same manifesto,
there is a commitment to a stronger social chapter,which will make worse precisely the kind of regulation that is leading to high unemployment in parts of continental Europe and which needs to be put into reverse.
"to avoid harmful tax competition".
We debated that issue in the House some months ago, and I do not propose to repeat everything that I said then. Let me simply reassert my belief that tax competition is one of the best available disciplines to limit the ambitions of the political parties, and that it should be made as vigorous as possible. I am suspicious of any party whose manifesto states that it wants to limit harmful tax competition.
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