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Mr. Maude: The Minister claims that Luxembourg was also part of that great phalanx. That may or may not be true, and it is marginal in its importance.
However, a change took place, and in the diplomacy that led up to the Iraq conflict one could see the same movement in the tectonic plates inside Europe. Rather oddly, as a result of enlargement, the further east the EU extends, the more Atlanticist becomes its outlook. The physical centre of gravity has moved east, but in a way the political centre of gravity has moved west. I regard that as a benign outcome. The idea that Europe should turn itself into a countervailing superpower against America is absurd, wrong and dangerous. We are all on
the same side. We should be part of an Atlanticist network and alliance. It is more likely that the EU will fall into that category now as a result of the enlargement that has taken place than was the case before. That is one of the implications of enlargement that seems to be unquestionably positive.This is a good debate to be having and it is right that it should range widely in a relatively non-partisan way across the issues. These issues will have implications for decades to come. I have no doubt that in 20 years' time we shall be looking at a European Union that is looser, more diverse, more flexible and more of a network Europe than anything that we can now envisage. This may turn out to be the point at which that development began to happen.
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Denzil Davies (Llanelli): I, too, welcome the Bill. Most of the 10 countries that are the subject of the accession treaty have had more than their fair share of war and tyranny, certainly during the past century. The hope must be that the new century will bring peace, stability and some prosperity to their peoples.
It would be trite to say that most major decisions involving the European Union are political. Decisions by accession countries to apply to join and the decision by the EU to accept their applications were major political decisions, as we have heard in the debate. One does not have to be a Marxist to believe that politics cannot be isolated from economics. The accession of the 10 countries will have economic consequences both for themselves and for the other countries of the EU. The hope must be that the consequences will be benign.
It has been said that there will be another 105 million consumers coming into the EU as a result of the treaty. That could well create, at least in the short term, a boost to trade. However, I suspect, looking back, that the EU is rather like those companies in the 1960s that grew through acquisitions. After a while, the growth fell off. There were then more acquisitions and then there was again some growth. The fear is that although there may be some growth at the beginning, it will then fall off.
As has been said, almost all the applicant countries are perhaps of a different order from most of the countries that applied previously. I think that this is the fourth accessions Bill debate that I have attended during my time in the House. The first one was in 1972, when the United Kingdom and other countries joined the EU. I think that it is fair to say that with the three previous Bills, most of the countries, although not all—we had Portugal and Spain—were relatively well off. Now we have 10 countries, or possibly nine—perhaps Cyprus can be excluded, for instance—but eight, anyway, that are of a different order in terms of their economic development.
The average income levels of the applicant countries stand at about 28 per cent. of the present EU level. As has been said, the population of the EU will grow by about 20 per cent., but only 4 per cent. will be added to the gross domestic product. If we consider GDP per head and take that of the United States as 100, the present EU countries reach about 62 per cent. of the US GDP. With the accession countries, that figure will drop to about 58 per cent. Those on the continent—I do not think there are many in the House—who see the
European Union as an economic rival to the United States may not be too happy about that. On that basis, it will take a considerable time for the EU to catch up, if it ever does, with the US in terms of GDP per head.The present accession countries are applying to a European Union that is quite different from the one that existed in 1972. The structures have changed. There has been more integration, certainly on the economic side. Whereas in 1972 and later, countries would have been able to adapt their own economies to try to fit into the EU, that opportunity gets less and less as economic integration continues.
We heard about the acquis. The right hon. Member for Wells (Mr. Heathcoat-Amory) said that it consisted of 97,000 pages. I obviously did not count correctly—I got to 80,000 and decided to give up, but I accept the figure of 97,000. Those poor, unfortunate accession countries have to swallow the lot whole. Much of the acquis entails legislation of which we would approve, on employment rights, health and safety, the environment and social cohesion. We, as the wealthier countries of western Europe, might be prepared or able to live with such legislation, although the pressures of globalisation on the European economy and the EU are such that I am not sure whether the present members of the EU can live easily with some of the acquis and some of the legislation.
The newer countries, such as Poland, the Czech Republic and Slovakia, are coming into a system and they will have to take it all. That allows them less flexibility to try to increase their rates of growth so that they can come up to the levels of the existing member countries. It will be a difficult problem for the accession countries. They will not be able to be as entrepreneurial—the Poles, in particular, are extremely entrepreneurial—as they might wish. They will find that to some extent their economy is hamstrung by the dead hand of some of the acquis communautaire.
In 1971 there was no monetary union. I do not think that there was monetary union at the time of the two following accession treaties, but it exists now. As I understand it, the new countries will not join the monetary union immediately. They do not have an opt-out, but they have something called a derogation. I am not quite sure what that is, but as I understand it, they have to work very hard towards becoming members of the monetary union. I do not know whether there is a time limit; I suppose not. It is not for me to give advice to countries like Poland, Hungary and the Czech Republic, but as regards monetary union, I would say to them, "Keep on derogating. Take your time. Don't rush it, not only for the sake of your own countries, but for our sake and for the sake of the euro area and the euro 12."
If the accession countries are to move towards a common monetary policy, they will first have to conform to the Maastricht criteria. We all know what that means, so there is no need to repeat it. They will have to bring down their public borrowing—their public expenditure, in effect—to the Maastricht limits. If they have to go even further, to the wretched growth and stability pact, they will have to bring their borrowing down even further. Over the past four or five years, the growth and stability pact has had a deflationary effect on the European Union. It is not the only factor causing
deflation in the EU—globalisation, the acquis communautaire and the inflexibility of the system are also causing deflation. Germany and the Netherlands are probably in recession and Italy is approaching it. Deflation is taking hold in the European Union. I am sure that the countries that we are considering want to be part of the greater whole, but if they start to depress their economies to reduce derogation or approach a common monetary policy, that will affect not only them but us, although we are outside the euro area.It is therefore a problem, and genuinely worrying, that any attempt by those countries to apply the growth and stability pact and the Maastricht criteria will have a deflationary effect in Europe, where we currently need inflation. Instead, we have deflation and high unemployment. My hon. Friend the Member for High Peak (Mr. Levitt) said in an offhand way that unemployment in Poland is currently approximately 20 per cent. It is almost 10 per cent. in Germany. If it is 20 per cent. in Poland now, what will it be when that country begins applying the growth and stability pact and the Maastricht criteria? I do not know the percentage of unemployment in the other accession countries. As I said earlier, I hope that they will keep on derogating.
If those countries move towards monetary union, they will have to fix their exchange rates. I do not know what the Polish zloty is worth and I have no idea how one converts it into euros. However, experience shows that after exchange rates are fixed, everybody knows that the rate was wrong, although at the time, everybody agreed that it was right. It is extremely difficult—indeed, almost impossible—to fix exchange rates. Will the accession countries be encouraged to move towards monetary union and fix their exchange rates? I know that their currencies are perhaps not as tradeable or negotiable on the international markets as others, but such a move will affect those countries, and if they get it wrong, not only Lithuania, Estonia and Poland will suffer. We, too, will suffer, and so will trade with those countries.
Mr. Andrew Tyrie (Chichester): The right hon. Gentleman should know that many of those countries have fixed their exchange rates to the euro. Indeed, they have been fixed for many years. Estonia is already effectively in a currency union with the eurozone. The problems are surmountable. We need to devise ways of enabling those countries to join more quickly, not obstacles.
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