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European Council
3.32 pm
The Prime Minister (Mr. Tony Blair) rose--[Interruption.]
Madam Speaker: Order. Will Members who are leaving please do so quietly?
The Prime Minister: With your permission, Madam Speaker, I wish to make a statement. Together with my right hon. Friends the Chancellor of the Exchequer and the Foreign Secretary, I attended a meeting of the European Council in Feira, Portugal, on 19 and 20 June. A copy of the Council's conclusions is available in the Library of the House.
I also had a series of meetings in the margins of the Council, with the Prime Minister of Belgium on illegal trafficking in people and football hooliganism, with the Prime Minister of Greece, Mr. Simitis, in the wake of the appalling killing of Brigadier Saunders, with the Spanish Prime Minister on economic reform, and with the French Prime Minister on French plans for their presidency.
The most contentious issue at the Council itself was the question of how best to tackle the problem of cross-border tax evasion within the European Union. For many years, the Commission, and indeed most member states, have argued that the best way to deal with that issue is through tax harmonisation--by requiring all countries to introduce a withholding tax on savings income paid out to non-residents. For our part, we have argued consistently that an EU-wide withholding tax would not only be seriously damaging for the City of London, but would be completely ineffective in tackling tax evasion. However, we have also made it clear through the long and complex negotiations that we fully agree with the objective of fighting international tax abuse caused by banking secrecy.
The outcome that my right hon. Friend the Chancellor and I achieved at Feira was fully in line with the principles and objectives we set out. It was, as I said yesterday, a personal triumph for the Chancellor. This is a comprehensive agreement, which fully protects the competitiveness of the City. All 15 countries have now agreed to accept exchange of information, not a withholding tax, as the way forward for the EU, and implementation of the European Union regime will depend on the progress made in agreeing similar measures with third countries and dependent territories. Even in the transitional period, only two of the 15 countries have said that they will definitely retain a withholding tax. This is an excellent agreement for Britain and for Europe, and it shows once again how the strategy of positive engagement in Europe both protects and indeed enhances the country's national interest.
That was also demonstrated at the last European Council at Lisbon, where we agreed a radical 10-year programme of economic reform for Europe. Since Lisbon, there has been progress in taking this agenda forward, including directives on electronic commerce and electronic money, agreement in respect of copyright, and new proposals on public procurement. At Feira, we agreed a charter for small enterprises, a new strategy on scientific and technological research and a hugely ambitious action plan on electronic Europe which will underpin efforts to
create a dynamic knowledge economy in Europe. At the same time, we invited the Commission to accelerate work on the single market in financial services, energy liberalisation and aviation.Heads of Government discussed the proposed charter of rights. I made clear my view that the charter should pull together in a single document the rights that European citizens enjoy, that it should be political in nature, not legally binding, and that it should not impose new legal obligations on member states. The House will welcome the fact that there was a good deal of support for that approach from other Heads of Government. The charter will be one of the main issues for discussion at the Biarritz European Council in October.
On enlargement, we agreed on the need to keep up the momentum in negotiations with the candidate countries.
On the European Union's preparations in the intergovernmental conference, we heard a progress report from the Portuguese presidency, setting out the options for re-weighting votes in the Council of Ministers in favour of the larger member states such as the UK, for reforming the size and structure of the Commission and for looking again at which issues should be decided by qualified majority voting.
We also discussed the arrangements agreed at Amsterdam to allow closer co-operation among a group of member states. Such arrangements of course already exist, for example in Schengen. We will need more such flexible co-operation in an enlarged European Union, but, in this context, the Council reaffirmed in its conclusions the need for coherence and solidarity in an enlarged EU.
We also made further progress on European defence. Close working links between the European Union and NATO are being put in place, together with special consultation arrangements with those European allies who are not in the EU. The priority now is on how Europe will deliver on the headline goal that we set ourselves at Helsinki, and that will be the focus of work in the next six months. We also adopted targets for the civilian aspects of crisis management, such as the provision of police officers.
Finally, we discussed a range of international issues--Russia, the Balkans, the middle east peace process, and Africa on which President Thabo Mbeki of South Africa addressed the Council.
The summit was, again, a successful one for Europe and the United Kingdom. I have no doubt at all that it is vital for British industry, British jobs and British influence that we continue the policy of constructive partnership with the European Union and, under this Government, that is precisely what we shall do.
Mr. William Hague (Richmond, Yorks): I start by welcoming several elements of the communique, including the commitment to the internal market and greater co-operation on tackling drugs. I congratulate the Prime Minister on one particular diplomatic triumph: after many years of difficult negotiation, carefully crafted compromises and repeated isolation, he finally got the Foreign Secretary and the Chancellor to talk to each other. Having said that he will not fight over every headline any more, he is leaving the job to those two, and they are extremely good at it.
I offer the Prime Minister our strong support for his reported attempts to stop incorporation into the treaties of the charter of fundamental rights. Must he not also ensure
that it is not attached, even as an annexe, to the treaties; that it is not adopted in any way that could lead to it later becoming politically binding; and that it does not contain any new rights from those already discussed? Can he give all those assurances today? Will he comment on the fact that, while he has been trying to prevent it becoming legally binding, his Members of the European Parliament voted on 16 March to make it legally binding? When will he get an increasingly divided Labour party under control on this subject?On the withholding tax, the Prime Minister has claimed success for the Chancellor over resisting something which, of course, he could have stopped at the very beginning. Has not a Commission spokesman said of the Government's comments that their "relentless spin" is "grossly misleading"? What a surprise.
Was it not a great mistake to continue at the summit down the path of an EU security and defence policy that is increasingly autonomous of NATO? The Prime Minister's assurances on the matter seem to be undermined by the comments of the French Minister responsible for European affairs, who said last week in connection with defence policy:
- We don't agree with the "Americanisation" of the world . . . We are saying that together we can build a new superpower . . . and its name will be Europe.
Will the Prime Minister comment on reports this morning that Turkey has indicated its intention not to allow NATO to lend weapons or equipment for the automatic use of the EU, and its statement that the decision taken at Feira is not the final one? Is there not a danger that the initiative is beginning to drive a wedge between members of NATO, of which we have always warned?
Midway through the crucial intergovernmental conference, was it not a unique opportunity to put the case for the type of Europe that the British people want to see? Was it not the ideal time to set out a comprehensive vision of a Europe that is more flexible, outward looking and reformed? Why did the right hon. Gentleman not stand up at Feira for the vision of a more flexible Europe in which nation states can work together? Is it not time that he put the case for greater flexibility, given that he was apparently ambushed by President Chirac and Chancellor Schroder, who told him that they would proceed with closer integration themselves, whether he liked it or not? Why does the Prime Minister instead continue to be carried further down the alternative, integrationist route? Why, after Feira, is a further loss of the British veto on European legislation still on the cards? Why is the French presidency still poised to launch an ambitious so-called social agenda, as it has promised? Why will rights and powers continue to be lost from our national Parliament?
Why, after the summit, is there still no specific timetable for enlargement? The Prime Minister claimed yesterday that the IGC agenda was focused on the reforms necessary for enlargement, so why is he not pressing for reform of the policy which, more than anything else, is holding up enlargement--the common agricultural policy? Why, after all the talk, is real CAP reform still not on the agenda?
One issue was noticeable by its absence from the statement: the single currency. The Prime Minister has now issued a helpful clarification, saying that he is in
charge of the Cabinet; now that he is in charge, let him tell the country where he stands. Does he agree with the Foreign Secretary and the Secretary of State for Trade and Industry that the Government should be putting the case now for the euro; or does he agree with the Chancellor and the Minister for Europe that they should not? Does he agree with the Chancellor's assertion that the Treasury is the guardian of the so-called five tests, or with the Deputy Prime Minister, who immediately contradicted that assertion? Perhaps he agrees with the Secretary of State for Northern Ireland, who is reputed to have told friends that the Chancellor has a territorial fetish about the euro. All those Ministers agree that they want to scrap the pound, but they cannot agree on whether to do it openly or by stealth.In the meantime, the cases for real reform in the EU and for flexibility are not being put, so the case for ever-further European integration is winning by default. While the Cabinet is busy tearing itself apart, Europe continues to move in the wrong direction.
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