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Mr. Howard indicated dissent.

The Prime Minister: It is in black and white. Let me tell him what his fisheries spokesman said on Monday.
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The Conservative party's shadow Minster for Europe, when asked what he would do about the control of fisheries, said, "Let's look at what Iceland has done," and, further afield, "Let's look at what happens in the Falkland Islands."

Mr. Speaker: Order. May I gently say that we are discussing a statement, not the Conservative party's policies?

The Prime Minister: We are also dealing with choice and the choice is between being at the heart of Europe or on the margins. The idea that we could have the same fisheries policy as the Falklands Islands is an indication only of how utterly unserious the Conservative party is.

The truth of the matter is that there is a very clear choice, between going into the debates on economic reform and trade and fighting Britain's corner, or opting out, as the last Conservative Government did, leaving Britain defenceless and near the exit door. That would betray our true national interest. It is a strategy born of opportunism, it will fail, and the more it comes under scrutiny, so will the right hon. and learned Gentleman's leadership.

Mr. Charles Kennedy (Ross, Skye and Inverness, West) (LD): I, too, thank the Prime Minister for his statement on the summit. On the issue of the liberalisation of the services market and the services directive, which is important because of its 70 per cent. contribution to European gross domestic product—so reform is clearly in Britain's interests—will the Prime Minister confirm that further steps towards liberalisation would increase standards, lower costs and help generate jobs? He said:

Why would it be right to envisage a watering down of the services directive, since that would reduce the benefits of liberalisation? He must find it a little embarrassing in the historical context that Mrs. Thatcher was much firmer in pushing through the liberalisation of the single market than he has been on this issue. Will he be emboldened in his future endeavours?

On the UK rebate, will the Prime Minister acknowledge that that will always come back to the argument that France would have to accept fundamental reform of the CAP before it could make progress by being critical and carping about the UK rebate? Given the domestic referendum concerns of the President of France, which we all recognise, does the Prime Minister hold out much prospect of being able to be a little more persuasive with him than was obviously the case in the past two or three days?

The Prime Minister did not mention the ongoing troop commitment in Iraq in his statement, but it is unlikely that some discussion of it did not take place, certainly at the margins, with some of his opposite numbers in the EU. Given that several of the allies have either withdrawn their troops or have indicated a willingness or a timetable to withdraw them, did he discuss those matters with any of his counterparts at the summit? In that context, will he take account of yesterday's all-party Defence Committee report, which acknowledges an ongoing British presence in Iraq,
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perhaps even at present levels, into the next calendar year? Will not withdrawal of further European Union countries maintain that position or indeed require our troop numbers to be increased? Did he discuss those matters with any of his opposite numbers?

The Prime Minister: In relation to the services directive, of course we support it. The only issue for the European Council, which is a discussion that produces conclusions, was whether we should withdraw the directive. That was firmly rejected by the majority of countries round the table. There will be a legislative process in any event, but the Council agreed that any changes have to be made in the course of that process. There will be some amendments, but they should not touch on the essential nature of the directive, which is right and necessary and will bring benefits.

In relation to CAP reform and the services directive, the point to emphasise is the importance of qualified majority voting. There is no way we would get any of the changes—on the CAP, on the services directive or on the single market—without QMV.

In respect of Iraq, I would point out that other countries—most notably, recently, Australia—have decided to put in troops. I can assure the right hon. Gentleman that the position of myself and other European Union leaders, except those with parliamentary resolutions to which they have to adhere—although they remain fully supportive of the mission in Iraq—is that we stay in Iraq until the job is done. The job is being done. Iraq is on its way to democracy, there is a huge spirit of enthusiasm there for the future, and the security problems are increasingly being dealt with by the Iraqis themselves. However, we must ensure that the security forces are in the proper position to be able to guard the Iraqis against the terrorist threat that they face. We must also ensure that Iraq can continue to make steady progress towards democracy. That is our position and, I assure the right hon. Gentleman, it is the position of the other European countries.

Keith Vaz (Leicester, East) (Lab): Recognising that the process of enlargement may have had an effect on progress on the Lisbon agenda, the Kok report is clear that Britain has done better than its EU partners in meeting the Lisbon benchmarks. My right hon. Friend will know that this spring marks the third anniversary of the initiative that he started with Chancellor Schröder on the wider reform of the EU. Will he confirm that substantial progress has been made since his letter of 25 February 2002, and that the wider reform agenda will be a theme of the presidency?

The Prime Minister: Yes, I can assure my hon. Friend of that. There is no doubt that the direction of travel for Europe now is towards reform. There are countries that will act as a brake on that, and that is why it is important that we argue the case and try to ensure that people understand that in the world of globalisation we protect jobs through investment in skills and education and active labour market measures, rather than regulation or protection.

Mr. Iain Duncan Smith (Chingford and Woodford Green) (Con): I want to take the Prime Minister back to China. It has a terrible record, condemned by almost
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everybody, on democracy and human rights. Massive abuses take place every day. We also know that it has been hugely involved in the chain of proliferation of technology to North Korea. The Prime Minister knows that the present Government have a strong position on North Korea and are determined that it should rid itself of weapons of mass destruction, but China is behind much of their development. In the past two weeks, China has threatened Taiwan, overtly threatening to invade it if it takes decisions that China disagrees with. Why are the Government not at the very forefront of saying that we should not sell arms to China until major change has come about? We should lead on that and refuse to follow the others in Europe down a ridiculous road that will damage everybody.

The Prime Minister: It is important to emphasise that the idea in the abstract of lifting the China arms embargo has never been separate from the notion that it should be replaced with a strong code of conduct that should provide for a far more rational method of determining sales to China. I do not put the human rights considerations to the side: on the contrary, I think that they are very important. I would simply underline the fact that the debate in Europe has taken a different turn over the past few weeks. We are in the thick of that debate, trying to ensure that whatever Europe does, it does it with real sensitivity to the values in which we and our American allies believe, and that we introduce a system that is rational in the light of what is happening in China today.

Mike Gapes (Ilford, South) (Lab/Co-op): On China, may I draw to my right hon. Friend's attention the Quadripartite Committee's report, published today, in which four Select Committees express strong reservations about any premature lifting of the arms embargo? Was there any discussion in the margins of the meeting? Will my right hon. Friend be reinforced in his view by the unanimous view of all the members of those four Committees, based on our experience of talking to members of the US Congress and other discussions about the damaging impact on British companies of a premature lifting of the embargo?

The Prime Minister: I can assure my hon. Friend that we shall certainly pay careful attention to what he and his colleagues said. It was not raised either at the summit or at the margins—[Hon. Members: "Why not?"] That is of significance in itself, because there may have been countries that wanted to raise the idea of lifting the embargo at present, but they did not do so. I think that has some significance.

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