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WEDNESDAY 13 MARCH 2002 __________ Members present: Donald Anderson, in the Chair __________ Memorandum submitted by The Secretary of State for Foreign and Commonwealth Affairs Examination of Witnesses THE RT HON JACK STRAW MP, Secretary of State for Foreign and Commonwealth Affairs, MR PETER RICKETTS CMG, Political Director, and MR KIM DARROCH CMG, Director, European Union, examined. Chairman
(Mr Straw) Let me just paraphrase an opening statement which I have here which helps to put the context. Lisbon, which was an economic reform agenda agreed two years ago, provided for a ten-year programme. We are now two years into it. The aim is to make the European Union the most dynamic and modern economy in the world with full employment, and to do so essentially by completing the single market. You ask essentially what progress has been made in the last two years. Over the last two years the European Union has created an additional five million jobs and we would say that some of them (you cannot say precisely how many) and probably many of them have arisen because of the changes that were agreed at Lisbon. There have been some specific improvements, for example, opening up the European Union telecoms market, which has meant cheaper phone calls with the average cost having been cut by half since 1998, better connection with the Internet, nine out of ten schools now on line, the number of households with Internet access has doubled, more Europeans on line than Americans. We are helping the small business sector with a charter to small firms and action to reduce unfair subsidies and promote fair competition. You are asking is there more to be done. Yes, of course there is more to be done. We have to learn from the success of the United States economy. British citizens would be £5,000 richer if we matched American productivity. European Union firms spend 40 per cent less on R&D than in the United States. We are all aware of what happened in Lisbon and also what happened at Stockholm. What are the objectives we have set for Barcelona? The detail is spelt out in this White Paper which the Chancellor has published. They include progress on efficient labour markets where we want the commitment to welfare to work, policies for long term unemployed and older workers, a single EU financial market which should result in cheaper borrowing for firms, better returns for savers, cheaper insurance policies, action to bridge the gap between the EU and the US on research and development and to promote biotechnology; on so-called e-Europe a faster Internet, better links across borders and broadband Internet access to be available across the European Union; better regulation by cutting red tape and assessing the impact of new legislation, and progress on energy liberalisation. If you take just the better regulation, thanks to Lisbon it is already easier and quicker to form a company than it was and that is as a result of changes which have been made since Lisbon. Has progress been as fast as we would have wished in an ideal world? No, it has not. Is the situation better by a long way than it would have been without Lisbon? Yes. (Mr Straw) Of course the European Union works in the context of being a union at the moment of 15 nation states which are democracies. That is a huge strength. It also means that their elections take place in different parts of the European Union not on a scheduled timescale. At any one time, and it happens that there are a bunch of elections this year, there are elections. There we are; we have to take account of those. I defer to no-one in my respect for the leader writers of the Financial Times but if you go through the score card that is at the back of this document, which I am sure, Chairman, you will have read, you will see that there very straightforwardly are set out the operational texts in Lisbon with ticks, crosses and dashes as to whether or not progress has or has not been made or whether, as it were, the jury is out. There are many ticks, there are more crosses than we would like, but there is still progress being made. I will just say this in terms of targets. My experience over a slightly longer timescale of such a process was over the Tampere agenda. The Tampere agenda has not gone as fast as we would have wished when that was agreed in October 1999, but without the Tampere agenda we would not have made progress at all. That is the point I am making. (Mr Straw) When I was doing a lobby briefing earlier today the ever-efficient official spokesman for the Prime Minister (not Mr Alistair Campbell) had the full text of what the Prime Minister said at Sao Paolo. I do not have it here but it put that point in its context. There is not a question of breaking the Lisbon agenda at Barcelona. It is a question of making progress on it. I went back and looked at what the Prime Minister's official spokesman said and what he said was that we have already a strong package of structural reforms but we need to deliver it. Barcelona is another staging post, if you like, in that process of delivering that strong package of structural reforms. (Mr Straw) That was what the Prime Minister's official spokesman said. (Mr Straw) Is Lisbon going to be broken at Barcelona? No. There is progress being made. It is not as fast as we would wish, but ----- (Mr Straw) As I said, is Lisbon going to be broken in Barcelona? No, so with a bit of luck the Prime Minister's fears will not arise. (Mr Straw) No. It is always expected that there will be foreign policy matters discussed at these informal European councils. Of course there will be another one at the end of this Presidency in Seville, which is more likely to be dominated by foreign policy matters. There will, however, be a full discussion of the Middle East peace process on Friday evening. We will be raising the situation with Zimbabwe as well. Mr Olner (Mr Straw) I am quite sure there will be a good deal of discussion in the margins and maybe in the full sessions about the US's decision to impose tariffs on steel imports from, amongst others, the European Union. As my colleague, Patricia Hewitt, spelt out in the House last week, we regard this decision by the United States as wrong, contrary to their obligations under the World Trade Organisation texts, and also a decision which in the end will be counter productive to the interests of the United States steel industry as well as our own. Is there a linkage between the approach of the French on liberalisation of the energy market and the reposition by President Bush of tariffs against steel from the European Union? No. It is a matter of historical record that France's dirigiste approach to energy pre-dated the imposition of tariffs by President Bush. (Mr Straw) No. Look: the French have a different approach from us. We hope to persuade them otherwise. If you read the French newspapers you will see that one of the concerns of the French public is that if the energy market is liberalised it will go the way of the California energy market with browning out and all sorts of things. It does not follow that a liberalisation of the market has to be in the way in which it happened in California and where there was inadequate regulation and a browning out. I could also say to those who think that the state is seen as the very best deliverer of electricity that one could think of plenty of examples, not necessarily in France which has an efficient energy sector, but certainly in the former Soviet Union where the fact that the energy production is state run did not ensure its efficiency. We think that we can ensure that there is full coverage in terms of delivery of energy, which is one of the anxieties that the French have, whilst ensuring that the costs are cut. The costs of gas in the UK, for example, to the domestic consumer, are now a third less than they are in France and Germany as a result of liberalisation. (Mr Straw) The issue of Iraq is unlikely formally to be on the agenda. It should be seen in the context in which decisions about Iraq, as others have made clear in the last ten days, are going to take place in a slightly slower time than the next few days, to put it very mildly. We shall be talking for a much longer period. (Mr Straw) No, I never walk away. If you are asking me in terms of my own character, whether I ever walk away from an argument, no. If I cannot find anybody to argue with on a subject I will argue with myself. It is more likely to be raised in the General Affairs Council, the Foreign Ministers' Council, and then it could easily come up for discussion in Seville in the last European Council of this Presidency. Sir John Stanley (Mr Straw) With respect, Sir John, the two things are not incompatible. Border controls are simply an aspect of immigration and asylum policy and that statement, which I recall, was written in the full knowledge that everybody had of the terms of the Amsterdam Treaty which, by what is now Article 66 of the Treaties of the European Union, provided and provides that in any event in the area of asylum policy we would move from what is Pillar 3 to Pillar 1 and it could also move by a unanimous decision in the room from unanimity to QMV. That is the first point. The second point I would make is this. John Maynard Keynes said: "If the facts change so do we. What do you do?" The simple fact of the matter is that what the United Kingdom is faced with on asylum policy - and, as I say, these are not incompatible at all - is a situation where it has become clearer and clearer that the United Kingdom and a number of mainly northern European countries are disadvantaged by the fact that what are supposed to be a single set of rules applying across Europe, the obligations under the 1951 Refugee Convention, are applied very differently by domestic administrations and above all by domestic courts. That then leads to the kind of outrageous pressures that we have seen on the British system running through St Gatt. If there is a policy objective, which I hope there is, of seeking to ensure an end to asylum shopping, an end to these preposterous scenes that we see, then yes, one thing that has to happen is that France have to take their obligations more seriously for securing the rail portal on their side of the Channel but, secondly, what we also need is a common set of rules and practices for asylum under the umbrella of the 1951 Convention. If you want to achieve that, and it is very much in our interests - it is what I had in mind when I wrote that section you quoted - then you are more likely to achieve that by QMV, because if you do not have then any country which is currently advantaging itself, is pushing off the burden of asylum seekers on to other countries, is able to do so. (Mr Straw) With great respect, on the border controls, do we control those coming in at the border or do we do what other countries do, which is principally have internal controls? There is no reason at all that I can think of why that decision, which is essentially in practice whether or not we join Schengen (a position which is protected in any event by treaties and, so far as I recall, could not be the subject of QMV), so the question really does not arise. That can be a subject of what amounts to unanimity - it is actually our call and we cannot possibly be overridden on that - within the context in which, where we judged it to be in our interests, we would move towards QMV on asylum and immigration. Again, what I said was words to the effect that QMV would be the rule. I am not being casuistic here but if QMV is the rule then there can be exceptions to that rule and that too is taken full account of in the way in which the treaties are constructed. (Mr Straw) That is not the case. There is no difference between border controls and the whole gamut of asylum and immigration policy. It is not just about border controls. It is the whole issue of asylum. People claiming asylum when they do not observe the border controls is when the border controls palpably do not work and they break through them and in a sense the end effect of border controls is otiose. Then there are all the immigration rules, what rules are applied by visa posts abroad and all sorts of things which are not directly germane to border controls. What we have said about border controls will continue to be the case, but I just say this to you, Sir John, that if you look at our experience on QMV, and I am perfectly prepared to say that as a general matter over the last 15 years I have moved my own position in the light of experience of the facts, which is what I think all of us need to do, then this country has actually benefited from QMV many more times than it has lost out. I have to say that it was a real indication, sitting in the JHA Council and having texts ranging from the very important to the fairly prosaic but none the less useful being blocked by individual countries who were unwilling to shift because of some internal domestic matter when in fact they would have wished to shift had QMV applied. I can think of just one, which is the recognition of driving disqualifications - quite an important issue. If you have what amounts to a single market in terms of where you can drive it is a good idea for people not to be able to shop around in terms of driving licences and exemptions from driving disqualifications. During our Presidency, when I was in the chair, it took a huge amount of effort, and I do not think we were ever able to complete the text, to try and get unanimity round the table over the recognition of driving disqualifications. Why? Because in the minimum that we said that there should be a driving disqualification of 31 days but there was one country where they said that that constitutionally the maximum for a driving disqualification in that country was 28 days and therefore what we were proposing was going to be unconstitutional in that country. At the same time, the Justice Minister said that if there had been QMV they would have just said, "Fine". It would have overcome the blockage. It meant that what was quite an important change to make roads safer across Europe was blocked by the absence of QMV. (Mr Straw) Not on border controls, with respect, Sir John. (Mr Straw) By definition, yes. (Mr Straw) For the moment. Treaty changes, of course are intergovernmental treaties by definition, and so far as these other things are concerned, where we have got to is that for the moment that is the position. There is a convention on the future of Europe on which a representative of this Select Committee sits. That is likely to come forward with a series of proposals and from that we will make decisions. If you are asking me am I going to say to you now that whatever the arguments put forward by the Convention, and whatever the change in circumstances, we regard the current position on QMV and unanimity as fixed in concrete, the answer is no because I do not believe that would be in the interests of the British people. (Mr Straw) No. (Mr Straw) No, Sir John, I am not saying that. I am saying what I have just said, and of course of those items we have no proposals to change from unanimity over things like defence, foreign policy, taxation and so on. If you are going to go through all the details of the treaties in respect of QMV and unanimity and say it will never ever be changed, we will never even listen to the arguments, the answer is no. With great respect, it was exactly that approach which led Britain repeatedly to lose the argument and isolate itself in previous councils before 1997. What we have said and what I have said in my speech is that where key national interests apply that is the test. The most obvious one is defence and linked into that foreign policy. Of course we maintain the national veto. We do on many areas at the moment, and this was decided by the Conservative Government 30 years ago (not all of them) in respect of taxation, ditto social security. Do you close your ears and your eyes to future arguments? No. (Mr Straw) What I said was what I said, Sir John. I explained the position at the moment. I also made the point about saying that we should all, including members of your Party too, be ready to listen to the arguments that the Convention may advance. The test here, it seems to me, and there is not a religious principle around QMV, is about the national interest: how is our national interest best served. In terms, for example, of our national interest and energy liberalisation, having a free market in energy, the interests of our consumers and of our businesses, it is not served by the national veto because that would lead to some countries vetoing positive changes. It is served by QMV and with a bit of luck we will be able to overcome any blockages by other countries, including France, on energy liberalisation with QMV. (Mr Straw) No. What I am trying to do - and it may not be possible; maybe I am being naive here - is to have an intelligent discussion about where we are at the moment. That text remains the position of the Government's policy. I have explained the position on asylum and immigration and border controls. Border controls are a part, but only a part, of asylum and immigration. I am also saying that this is not a shibboleth, the national veto. What is, however, bottom line is the national interest. In many cases you have to defend the national interest by the national veto. In some cases, however, you defend it by QMV. That is a paradox which I think many have asked and the record shows. (Mr Straw) What I have said is what I have said and I am very comfortable with that. I have also made the point that there is no ways that treaties are intergovernmental matters and that provides an overarching text, that the treaty changes can be made other than by unanimity. Mr Maples (Mr Straw) On energy (and the position of the French Government and the fact that there are elections there is a matter of patent public record) we will be arguing for energy liberalisation. It will end up before the relevant Council of Ministers when QMV will apply, and that is in our judgement, as I have said, a good thing. (Mr Straw) Probably, is the answer, but we cannot be certain about that. There are different aspects of energy liberalisation, as you are aware, between industrial energy and liberalisation, non-domestic, and domestic. The other is on single skies. I am going to ask Mr Darroch to give you more detail about that. I doubt, save for anything he says, that we will make a breakthrough at Barcelona on single skies. What happened on single skies was that it was blocked for a period by Spain in respect of Gibraltar, but what was clear once that was unblocked (and that was an early part of the Brussels process over the future of Gibraltar) was that many other countries had been sheltering behind that blockage and had not really wanted to apply themselves to the issues. Mr Maples, you are entirely right to say that single sky arrangement would make a very big difference to the travelling consumer in Europe, and I think in fact due to the air industry because it has helped to improve efficiencies. (Mr Darroch) The single sky is a framework directive with other legislation beneath it and it is about a single European air traffic management system. The advantage, as the Foreign Secretary has said, is that we believe that if it existed it would cut down delays and clear up and improve air traffic management across Europe and would have significant improvement for air passengers. It does not apply to the aircraft market, to air travel markets across Europe. That is a different process which is not for discussion at Barcelona but there is activity on that both in terms of internal EU air travel and in terms of external agreements with third countries. (Mr Darroch) You are right: it is not anything like as deregulated as the American market. We have been pushing for more deregulation. There has been some progress. I think average costs for air travel across Europe have come down a bit, but nothing like to American levels. I do not think it is something where you can expect immediate breakthrough but something which we support as the UK. (Mr Straw) Personally I hope so, not only in the field of better regulation. In this speech, on which Sir John has honoured me by reading the fine details of, I also referred to an aspiration which I had not and have for some of the institutions of the European Union, including the Commission and the Parliament, and maybe a second chamber of that Parliament, having a duty (not necessarily a power) to scrutinise as it were the statute book and seeing two things: what could be jettisoned altogether, because the texts instruments had come to the end of their useful life, or cut back, and what could be passed to individual Member States. If it was the latter obviously it would then be a matter for them as to whether or not they continued to impose an excessive burden on their businesses. It ought to be a retrospective process as well as a prospective process. (Mr Straw) Yes, it is part of the United Kingdom's. Mr Darroch - I forget the job he has got - had to be able to take an unseen test of these 15,000 tariffs. He will let you know about them in a moment. It is one of the United Kingdom Government's very strong aspirations to see a removal of tariffs, particularly in agriculture and particularly against African producers. (Mr Darroch) You are right that tariffs are too numerous and too high. They can be attacked in a number of ways. They can be attacked through the WTO round which was launched at Doha; they are being attacked through a proposal on EU trade relations with the developing world. There are a number of other areas in which these issues are addressed. It is not going to happen overnight and it is not particularly part of the Barcelona agenda except in the sense that general trade liberalisation is one of the four objectives of economic reform but it is being addressed in a number of specific policy areas. (Mr Darroch) I agree. (Mr Straw) There is progress. Is progress as fast as we would have wished? No. Is it better than would have been the case without Lisbon? Yes. Chairman (Mr Darroch) It issued on Monday. (Mr Darroch) It is not just the proposals in the Foreign Secretary's speech in The Hague or the Prime Minister's letter with Mr Schröder but both feature in the report, so it is those ideas plus other ideas that have been generated from inside the Council secretariat or other Member States. (Mr Straw) We can get that done. Chairman: Thank you very much. |