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Michael Connarty: I thank the hon. Gentleman. I know that, in trying to help me, he is trying to help the Committee. He is probably not helping me, but he might be helping some Members who do not believe such questions should be asked. I do not expect the Minister to give us a definitive answer this evening, but as I said in a debate last week, I hope that the Government are giving the matter serious thought and will give us a clearly defined answer in regulations. They must give Members on both sides of the House the confidence that in the next five years, every time an opt-in is considered that will change a relationship set out in the agreement, it will be brought to the Floor of the House.

Mr. Jenkin: I thank the hon. Gentleman for giving way. He is very generous. In my defence, the reason I did not give way to him on the previous occasion was that I was closing my remarks and we were short of time. We have more time this evening.

I point out to the hon. Gentleman that the European Defence Agency has its statute established by qualified majority voting. That statute empowers its steering board to vote by qualified majority voting. Furthermore, the Council, when establishing permanent structured co-operation, votes by qualified majority voting and can remove a reluctant member of the permanent structured co-operation in that way. My submission is simple: that the qualified majority voting arrangements in defence will inevitably put pressure on member states to agree with things with which they might otherwise not agree. That is an erosion of the veto on EU defence policy.

Michael Connarty: It is very interesting that the hon. Gentleman picked that example; we have looked at it in great detail, but I am sure that he and all other hon. Members will agree that it has nothing at all to do with the treaty. That agreement already exists under the current treaties: the European Defence Agency is up and running, and we regularly receive reports from it. My understanding—I think that this was what I would have said in the intervention on the hon. Gentleman—is that only where a group of countries decide to act together and one member wishes to leave that arrangement because it finds it too burdensome can the agency decide by qualified majority voting to let that country leave. It is not a matter of expelling someone. I am very clear about this fact; we have studied it in some detail. When a country wishes to leave, it can be given permission to leave by qualified majority voting. That is an arrangement not for all 27 countries, but only for those countries that have already agreed to act together on specific defence-related policies.

Mr. Jenkin rose—

Michael Connarty: I am not going to get into a dialogue.

Mr. Clappison: Has the hon. Gentleman seen the report of the Foreign Affairs Committee in which it found that the treaty contains five significant changes in defence, including permanent structured co-operation, to which my hon. Friend the Member for North Essex (Mr. Jenkin) has just referred? The Select Committee found that there was a change.

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Michael Connarty: I think that the Foreign Affairs Committee concluded that any such amendment should be made by primary legislation.

Later, we shall debate a number of passerelles—a procedure whereby a decision can be taken by unanimity to adopt qualified majority voting—but that is not what we are talking about at the moment; we are talking about clause 3, which is not a matter of passerelles.

Philip Davies: I want to bring the hon. Gentleman back to the point that he made earlier. I could not quite follow what he was saying, but I seemed to agree with him that clause 3 involved taking a leap in the dark—I think that he used that phrase—and that he hoped that the Minister would return with some clarification. Is the hon. Gentleman really saying that he will vote for clause 3 without that clarification, even though he accepts that we are taking a leap in the dark?

Michael Connarty: The hon. Gentleman did not follow what I was saying. I was referring to matters where qualified majority voting would result if we opted into any provision using the normal Community method, which is qualified majority voting, or when an amendment is made to something that we have already agreed to. In that case, we have the option to opt in or opt out. I have already said several times that those procedures should be explained quite clearly, so that people know how we as the Parliament, rather than the Government, will be involved in making the decisions.

My concern is not so much that such things will be done by statutory instrument—at least that would be something—but that they will be done in Council and all we will get is a report of the deed when it is done, which is often the case at the moment. That is what I am talking about. I do not find the change in terminology in the least bit offensive or difficult; it is a consequence of signing up for the treaty. I believe that the treaty is good for the UK and the people whom I represent, and even the right hon. Member for Chingford and Woodford Green said that this minor consequence is not the most important thing, but it raises the question of procedures—something that the right hon. Member for Wells did very well—and that is what I am concerned about.

Mr. Jenkin: I must first take issue with the hon. Member for Linlithgow and East Falkirk (Michael Connarty) about the European Defence Agency. He is correct that no member state can be thrown out of the agency, but there is no need to throw out a single member state, because the agency will operate on the basis of qualified majority voting. If there are dissenting voices that represent less than a qualified minority, their views can be disregarded and overridden. That creates a very large thick end of a thickening wedge in European defence. The hon. Gentleman says that the European Defence Agency is not a new institution, but it is now enshrined in the new treaty as an institution of the European Community. The high representative for foreign affairs has a leading role in the agency, according to the statute. Of course, the high representative for foreign affairs is also a member of the European Commission, thus attacking the agency’s intergovernmental nature once again.

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The European Commission has long had an ambition to create a single market in defence goods, and fundamental to clause 3 is the elimination of the obvious distinction between those matters that exist under the treaty of European Union and those that exist under the treaty establishing the European Communities. The idea that that is a technical change, as the Minister put it, is likely to be misleading—although perhaps not deliberately misleading—to those who wonder how the treaties will affect the lives of citizens in the member states.

I remind the House of what paragraph 2(b) of article 1 of the new treaty says:

that is the new name of the treaty establishing the European Community—

That was simply not the case under the previous arrangements. We will now rely on the provisions of the treaty in order to separate matters that were traditionally covered by the treaty establishing the European Community—including the single market, the common agricultural policy and the common fisheries policy—from matters such as the common foreign, security and defence policy. Hon. Members will be surprised to hear that the provisions of the treaty are subject only to the interpretation of the European Court of Justice.

Mr. Duncan Smith: My hon. Friend and I have debated such issues together many times, so he will recall that the key to the European Union’s dynamic force lies in the Court, because the Court takes control of elements and, through judicial activism, reinterprets issues and always moves things on in a single direction.

Mr. Jenkin: That is exactly right. I remember debating those matters with my right hon. Friend many years ago when the House debated the treaty on European Union, as it then was. The point is that it is impossible to foretell what matters will come before the Court. It is impossible to forecast what issues and disputes will arise on a subject as massively complex and broad as the treaties. We now rely entirely on short exclusions that are written into the treaties. Let me elaborate on that point. The hon. Member for Linlithgow and East Falkirk, the Chairman of the European Scrutiny Committee, exhorted us to read the treaties, so let me say that the exclusion concerned is in article 275 of the consolidated texts. I must say that I find the business of using the treaty of Lisbon numbering very confusing, because when people read this debate once the treaty is in force, if they open the consolidated texts they will not be able to marry up the debate that took place in the House with the treaty that is in force. I hope the House will forgive me if on this occasion I use the numbering as it would be if the treaty were ratified.

Mr. Lilley: The constitution.

Mr. Jenkin: Yes, I hear my right hon. Friend saying that the treaty is near to being the constitution. It is worth pointing out that the abolition of the term “European Community”, and its replacement with “European Union”
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throughout the treaties, was the main innovation in the constitution. That underlines one of the European Scrutiny Committee’s fundamental conclusions, which is that we are talking about a distinction that amounts to no substantive difference.

Article 275 says:

The problem is that the treaty does not define “common foreign and security policy”. The only definition is included in the provisions on foreign and security policy.

9.15 pm

The treaty continues:

If hon. Members have become confused it is understandable, because the matter is complex. Article 40 of the treaty on European Union—the European Scrutiny Committee Chairman told us to read the treaty, and I am enjoying reading it—states:

Notwithstanding the exclusion of the European Court of Justice from common foreign and security policy, anything that is included in the treaty on the function of the European Union that overlaps with common foreign and security policy is included in the jurisdiction of the Court. That includes matters such as trade, aid and, as my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) has said from a sedentary position, competition.

Article 270 on the European Court of Justice refers to the terms and conditions of employees of the European Union, and the boundaries will get blurred. Members of the External Action Service of the European Union will presumably be employees of the European Union, so that aspect of foreign policy will inevitably be tangled up with the European Court of Justice—for example, there could be an international dispute that turns on the employment conditions of an employee of the European Union in the form of the External Action Service. That is one area in which blurring is likely to take place.

Let us remember how the jurisprudence of the Supreme Court of the United States developed on matters such as tax, trade and agriculture. The Supreme Court of the United States has no explicit powers to regulate tax. There is no federal power in the United States constitution that grants taxation powers to the Federal Government, and such powers were obtained by extrapolating the right to regulate trade between the states of the United States of America. On agricultural quantities, for example, there is no federal power in the United States constitution to regulate quantitative restrictions within a state of the United States of America. However, because a court has
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argued that what is produced in one state affects trade in another, trade provisions have been used to get into another area of the law, which is how the United States became the modern federation that it is today.

The exclusions in these treaties have been expressly drafted to prevent such leakage of jurisdiction upwards to the federal institutions of the European Union, but I fear that it will be difficult to prevent that. Returning to the European Defence Agency, it is clear that many supporters of the EDA dream of creating a single market for defence manufacturers in the European Union. There are specific exclusions that exclude defence from the single market in the existing treaties, which will be carried forward into the new treaties. However, let us face it: what constitutes a defence good as opposed to an ordinary civil good? Let me give an example.

We export Land Rovers throughout the world, and a Land Rover can be a civilian or military vehicle. Many of the parts used for the civilian versions are also used for the military versions. One of the exclusions from the European Court of Justice is trade. I always thought that the application of sanctions against a third country was an act of foreign policy, but the European Union does not count it as such—the application of sanctions is a trade matter, which falls under qualified majority voting and is included in the jurisdiction of the European Court of Justice and enforceable by the Court.

Let us suppose that we had a dispute with our European partners about a major defence contract and they wanted to stop us having an arrangement with a third country. Given the provisions that international sanctions be subject to qualified majority voting, that issue could be included. Civilian parts of the order could be included, even if they were included as military hardware.

I should like to ask the Minister a question, if he will give me his attention. When there are disputes about the treaties, they are routinely referred to the European Court of Justice for resolution except in so far as they are excluded. Yet it is illegal to refer any dispute about the treaties to any body outside the European Union. By rule of the treaties, there are matters of international law that cannot be referred to the European Court of Justice, nor to any other international jurisdiction.

How would such a dispute be resolved? In the end, it is inconceivable that a dispute within the EU about the treaties would not eventually and somehow be resolved by the European Court of Justice. The Court might well exclude itself from jurisdiction, but we would be relying on that self-exclusion. In the boundary areas in which foreign and defence policy overlaps with policy on trade, aid or other issues included in the existing treaty establishing the European Community, it is easy to see how the jurisdiction of the Court could be incrementally enlarged, case by case, as we have seen it operate year after year.

Finally, I wish to return to the question of permanent structured co-operation, given that I was provoked by the Chairman of the European Scrutiny Committee. Qualified majority voting also erodes the intergovernmental character of what has traditionally been dealt with under the treaty on European Union. Permanent structured co-operation is created by a qualified majority vote of the European Council. A
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member state can be removed from the permanent structured co-operation under article 28E, paragraph 4—I am going back to the other numbering, which shows how confusing it is. The article states:

It goes on to say that such a decision will be taken by qualified majority voting.

Michael Connarty: Will the hon. Gentleman admit that these voluntary arrangements from which people wish to withdraw may not include all countries of the 27 but those that wish to become involved in such arrangements, and that if some of them then wish to withdraw from those arrangements because they do not have sufficient capacity to meet the required criteria, that is when the provision that he mentioned comes into action? This is not a question of 27 members agreeing to do something together or then being compelled to remain bound by such an agreement or being expelled if they fail to meet the necessary criteria—it is a system to allow people to withdraw from an arrangement when they do not have the support of their Parliament or Government or the resources to participate in the arrangement they had previously agreed. No one can be forced by qualified majority voting to take part in any of the actions that he is outlining.

Mr. Jenkin: The point is that a member state that chooses to exclude itself from the permanent structured co-operation or is excluded because it fails to satisfy the criteria to the satisfaction of other members ceases to have a veto— [ Interruption. ] The hon. Member for Linlithgow and East Falkirk is interrupting me—

The Second Deputy Chairman: Order. Perhaps I could say at this juncture that we are discussing clause 3 stand part; it might be useful if I reminded the hon. Gentleman of that.

Mr. Jenkin: I am most grateful for your clarification, Sir Michael.

In clause 3, the distinction between the European Community and the European Union is verbally destroyed, so the natural distinction that the Court, or any institution of the European Union, would make between the European Community and the European Union no longer exists, as they become the same organisation.

Mr. Clappison: In mitigation towards the Chairman of the European Scrutiny Committee, will my hon. Friend join me in understanding the frustration clearly felt by the hon. Gentleman and by other hon. Members about the fact that in debating this clause, which is just about names, we are trying to have the detailed scrutiny of defence matters that we have been prevented from having in relation to the rest of the Bill? We feel frustrated because we are not doing our duty.

Mr. Jenkin: I absolutely agree. I am fumbling in my treaties to try to find the relevant protocol relating to this very important matter.

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Mr. Duncan Smith: While my hon. Friend is busy with his documents, does he agree that we have been through this stuff many times over? I would reiterate this point to the Chairman of the European Scrutiny Committee. The moment that the distinction between the two institutions was broken and the courts were therefore brought in on this, we could not, as politicians, assume anything about the future direction. The point that my hon. Friend is making so well is that now, when the Government say, “Trust us”, they have no idea how the courts will rule when it comes to a clash over on which side of the argument they should fall.

Mr. Jenkin: My right hon. Friend is exactly right.

The conditions for taking part in structural co-operations are very onerous. Article 2 of the protocol says that to achieve the objectives laid down, participating member states shall undertake to

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