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Mr. MacShane: As not many Members are queueing up to speak, perhaps the right hon. Gentleman and I can have some exchange of views while he is grappling intellectually with these problems. Is he not a little nervous about making those rather wide generalisations? Each European economy is distinct, with growth rates ranging from between 7 and 8 per cent. at the top to less than 1 per cent. at the bottom. Spain has cut unemployment by half over the past five years. Poland's economy is growing at 6 per cent. annually. Perhaps he was talking about Germany, France and Italy, but car plants from Asia are springing up all over eastern Europe. That is a good thing, as a middle class is coming into being in that area.
At present, we trade as much with Catalonia as with China. I want our trade with China to grow as much as I want UK-Catalonia trade to grow. We must be careful
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not to dismiss the varied economic developments in Europe by setting out a generalised position that is not true of every country.
Mr. Dorrell: I accept that the position is varied in different parts of Europe; the Minister is right about that. But it really is not good enough to say, "Of course, it's bad in France, Germany and Italy, but it's not bad in Catalonia". Good for Catalonia. However, in Europe as a whole, France, Germany and Italy—the three countries that the Minister seemed to be asking me to set quietly on one side—account for 70 per cent. The core statistic, on which I invite the Minister to reflect, is that current broad trends appear to suggest that the growth rate in north America is more than double that of continental Europe.
The point about China is not simply that our bilateral trade is relatively small, albeit growing strongly, but the effect that the arrival of China and India in the world marketplace will have in driving the process of change that affects every country; it is way, way beyond the effect of the bilateral trade between that country and India or China.
Mr. Hendrick: Does the right hon. Gentleman accept that, economically and politically, the European Union is the biggest experiment that the world has ever seen? We have 20 languages across 25 countries and to expect so many diverse and different cultures to come together and form a market that is almost as homogeneous as those of north America, China or India is to stretch credibility a little.
Mr. Dorrell: I accept that what is being attempted in the EU has no historical precedent and, as I said, I am supportive of the principle because I believe that it is something important and that it needs to be made to work. With respect to the hon. Gentleman, however, it is no good contemplating the world I described, where those markets are being opened and there is nothing we can or should do to try to stop it, because the only effect will be the impoverishment of somebody somewhere on the planet, and call for the process to be slower because it is the first time that it has ever happened. We have created a set of circumstances that are overwhelmingly benign but whose effect is to demand of us a process of fast economic change in our own interests. All I am doing is pointing out that, having created that set of circumstances and those opportunities, we cannot now wish away the consequences: we must be prepared to change as fast as our competitors in north America at the very least.
Sometimes, when people in this country consider the high unemployment rates in France and Germany and the fact that they have emerging problems, there is a tendency for their reactions to be tinged with schadenfreude, but our reaction must be much more adult; it is much more dangerous than that. Those countries are among our largest customers. They are also our political neighbours, so opening their markets, making their markets work more effectively and ensuring that they are politically stable is as much in our national interest as it is in theirs. That is the core; that is why I am supporter of the EU. However, I am also a strong supporter of the proposition that the EU needs to
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take a step back and understand how it needs to change to serve the people who live in it, in the world as it is now, rather than the world as it was in 1958.
All that background is the reason why I was so pleased when the Laeken declaration appeared to provide the opportunity for a complete rethink of the EU institutions. I hoped that setting up the European Convention would provide us with the opportunity to stand back, to look at the world as it is now—which is fundamentally different from the world of 40 years ago—and to reassess what those institutions now need to look like and what their objectives now need to be to deal with the world as it now is.
Against that background, it seems inescapable that the EU needs to have a much more limited set of competences than it has had historically. It needs to focus much more accurately on its core priorities, including signing up to what the hon. Member for Luton, North would describe as neo-liberal values, because unless we sign up to them we are presumably adopting the Albanian alternative.
Mr. Hopkins: Is the choice in the world seriously between neo-liberalism and Albania? Is there not something called social democracy, which worked extremely well after the second world war?
Mr. Dorrell: All I was seeking to do, with a throwaway line, was to reinforce the point that the EU that we joined—and I am strongly in favour of our continuing to remain an active member, and I want it to be taken forward for the next 40 years—is an EU built on the principle of open, free markets. That is how, in the world that I have described, we will be able to provide improving living standards for our people.
Mr. Redwood: My right hon. Friend is making a powerful speech with which I entirely agree, but does he agree that the EU institutions do not seem to have recognised that there are seven times as many people in China and India as in the enlarged EU and that their populations are growing and the EU's is falling, so that when they reach a third of our income per head, which they will do in the not-too-distant future, they will be twice as important as an economic group as the EU? We do not seem to have recognised that or made ourselves competitive to handle it.
Mr. Dorrell: My right hon. Friend uses another statistic to make the same point: not today, but in the foreseeable future, those countries have the potential to be the most important trading blocs in the world if they get their domestic policies right. For the EU to focus on its own domestic arguments, rather than considering what the world looks like when under the influence of those drivers of economic change, is massively short-sighted.
I forget which American coined a vogue expression that was used a few years ago, but he talked about the need to reinvent government. I know of no institution with responsibility for exercising political power that is now in more urgent need of reinvention than the European Union. As the treaty that is on the table signally fails to do that, I am strongly of the view that we should reject it.
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I talked about Laeken and the kicking off of the Convention process. I mean no disrespect to Giscard d'Estaing, who is a man with a long and distinguished career behind him, but, given the nature of the challenge that Europe faced, it was extraordinary that an octogenarian former President of France, who learned all his political instincts in the world of the 1960s, was chosen to lead the process of reinventing the European Union. The result of the process was regrettably all too predictable: it was more of the same. There was no serious attempt to reinvent the European Union, and huge tracts of the text reflect 1960s thinking. I suspect that the charter of fundamental rights is one of the bits of the text that could easily have been drafted by the hon. Member for Luton, North. It was more likely to have emerged from the Trades Union Congress than from No. 10 or even No. 11 Downing street because it reflects old-fashioned thinking.
There is something slightly emblematic about the fact that discussions on the constitution, including considerations of the evolution of a common foreign and security policy, were taking place at exactly the same time that our Prime Minister and the French President were barely on speaking terms on the subject of Iraq. How could people be so unreal as to talk about the development of a common foreign policy when the Prime Minister and the President could barely stand to be in each other's company?
The European foreign aid programme has not taken note of the development of the Washington consensus of 10 years ago. Not only China and India, but the rest of the developing world, have learned a set of market disciplines that has not impinged on the programme. We are still talking about developing European culture, education and health policies, despite the fact that none of those should be anywhere near the heart of what we should be trying to do at EU level to respond to the huge economic challenge that I described.
A specific bugbear of mine is the fact that a set of legislative provisions has grown up in Europe that we now describe as the acquis communautaire. Most of the provisions were brought forward from the political environment of the 1960s and 1970s. It is considered to be somehow un-European, or anti-communautaire, to propose a set of repeals and reforms for that body of legislative arrangements, although we would think it normal to have a debate to revisit such matters in our domestic political environment.
I am delighted about one thing: the Prime Minister has accepted our case for a referendum on the constitution before it comes into effect. It is vital that the constitution is thrown out, so if the Government will not do that, I am delighted that all the evidence shows that the voters will. When the Giscard constitution is dead, I shall strongly support a second attempt to reinvent the European Union. I hope that the second attempt will meet the challenge because that certainly did not happen first time around.
5.24 pm
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