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European Communities (Amendment) Bill [H.L.]

11.39 a.m.

Lord Pearson of Rannoch: My Lords, I beg to move that this Bill be now read a second time.

It is a very great privilege to introduce this Bill in your Lordships' House today. As far as I know, this is the first time that a European House of Parliament has debated a Bill which could lead to its nation leaving the European Union. This debate is timely. It is now 25 years since the United Kingdom joined what we were told was a European Common Market and four years since our first debate about the Treaty on European Union, which had just been signed at Maastricht. It is time to take stock.

As I look down the long list of 37 distinguished speakers who are to follow, I confess to a feeling of vertigo. But I also cannot help wondering whether so many of your Lordships would have put their names down to speak in the Second Reading of a Bill such as this if it had been introduced even two years ago. I think not. I submit that the interest and disquiet which so many of your Lordships are thus showing today are a reflection of the growing antagonism to our continued membership of the European Union which now exists in the country.

Clause 1 of the Bill would remove the mechanism by which Community decisions are incorporated into UK law. It would also remove the superior jurisdiction over British courts of the Luxembourg Court of Justice.

Clause 2 would allow the Government, subject to parliamentary approval, to repeal or amend any legislation from which we suffer as a result of the sections repealed by Clause 1. I am aware that many of your Lordships will regard this as a fairly massive Henry VIII clause, and I share your Lordships' well-known dislike of Henry VIII clauses. But I do not see Clause 2 of the Bill as a Henry VIII clause so much as what I would prefer to call a "Moses" clause. I call it that because it would allow the Government to lead our people out of the captivity of the Treaty of Rome and to regain the sovereignty of this Parliament, that priceless right to self-governance for which the British people have sacrificed so much over the centuries, but

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which we have so wantonly thrown away. Yet only the prescient few foresaw this outcome 25 years ago, and so perhaps it is worth remembering how we got into this frightening predicament in the first place.

By way of background, we should remember that, even in its earliest days, the European Common Market--that forerunner of the EU--was never a healthy market which grew up between people who were freely trading together, with its political structures developing to reflect and strengthen that shared interest. It was devised after the war by European politicians for two principal reasons. First, the six founding nations wished to build a block which was capable of standing up to the growing menace of the Soviet Union; secondly, they wanted to dilute Germany into their new-fangled cocktail and thus prevent her from going to war with her neighbours yet again. These raisons d'etre were entirely honourable at the time, but they do not stand up today, however much our Europhile friends may pretend that they do.

From our perspective it was understandable in the early 1970s that Britain, bedevilled by industrial strife, should have looked enviously at German and other European industrial success, and want to be part of it. Many British Conservatives, too, saw our membership of "Europe" as a safeguard against this country being taken over by the far Left, which remained a possibility until the 1979 general election. But neither of these reasons hold good today, either. The German miracle is turning sour and, as Mr. Roy Hattersley has so helpfully pointed out, "Labour started to support Europe when Europe went socialist".

So all four of these main inspirations for the Treaty of Rome are now redundant, yet the bureaucratic juggernaut which they spawned rumbles on. Those who wish to defend its continued existence seem to me to be reduced to slogans, or "Euro-slogans" as I call them, having lost the rational arguments. I have time to consider only four of these Euro-slogans today.

The first and most important slogan would be: "The Union has kept the peace in Europe since 1945, and is essential to preserve it in future". If that were so it would, of course, be worth putting up with almost any bureaucratic interference and economic disadvantage; but it is not so. NATO has kept the peace and NATO will continue to do so. The EU's first foray into peacekeeping, on its borders in the former Yugoslavia, was not a conspicuous success, and I am aware of no successes elsewhere. Yet Herr Kohl seems to be in good faith when he says, "European integration is in reality a question of war or peace in the 21st century". Indeed, it is this belief which appears to drive the German Chancellor more than any other. The trouble is that he is wrong. Democratic bourgeois nations such as the modern Germany do not provoke wars, whereas forced conglomerations of disparate nations do, especially when the lid is eventually forced off.

So the Government are surely right when they wish to avoid Herr Kohl's vision of a federal Europe, preferring their vision of a "Partnership of Nations". The Government's difficulty is that a majority of the other

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European countries are indeed prepared to sink their sovereignty into that "ever closer union of the peoples of Europe" which the Treaty of Rome clearly requires.

My second Euro-slogan--and perhaps the most widely chanted and deceptive Euro-slogan of all--is this: "We must be in the EU for our commercial survival. Inward investment would disappear if we left". But rational analysis shows that that is also untrue. The Government steadfastly refuse to carry out an objective cost-benefit analysis of our membership of the EU. It is therefore like the foolish businessman who negotiates the future of his company with a powerful predator without knowing the point at which he should get up and leave the table. The Government say that the benefits are self-evident and that leaving would be too ghastly to contemplate.

But there are now at least three highly respectable academic studies that show that we would be better off outside the EU, especially if we could negotiate a new relationship which gave us reasonable access to the single market. And why should we not do just that? Only 9 per cent. of our trade takes place with it against 11 per cent. with the rest of the world and 80 per cent. within the UK itself. We trade in deficit with our European competitors so they need us much more than we need them. So we ought to be able to do at least as good a deal with the single market as Switzerland has done in a bilateral free trade accord. That would free us from the socialist level playing field of Europe to pursue our wider interests in our domestic and world markets.

My third Euro-slogan would be: "We must get into Europe wholeheartedly, and persuade the others to see things our way". The trouble with this one is that most of the others want something very different. They want a federal superstate, and the treaty is written in terms which ensure that they will get it. I have wearied your Lordships before about how the treaty works, and so I hope that I will be forgiven if I do so again on this important occasion. Any change to the treaty wording requires the unanimous consent of all the 15 member states. The guiding light of the treaty and the court is clearly the "ever closer union of the peoples of Europe" in Article A. The others believe that that means the ever closer political union of the peoples of Europe. They do not agree with the Government when they suggest that means more inter-railing, more student exchanges and, no doubt, more cocktail parties around the embassies of Brussels.

If noble Lords have any doubt about the difficulty of achieving unanimity for any changes to the treaty which we might require, they should consider our failure to carry our views even in those large areas of our national sovereignty which we have, alas, ceded to the qualified majority vote. I refer here to all of our industry and commerce (thanks to the single market legislation), our environment, our transport, "European" culture (whatever that turns out to be), and the workings of the common agricultural and fisheries policies. There are 87 such qualified majority votes, of which 62 are required to carry a motion and 26 to block one. We have only 10 votes, and we are often alone.

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This is the system which makes us powerless to defend so many British interests, such as our art market, the impending destruction of which your Lordships debated on 11th December last year and which the other place debated only two days ago. It is this system which also makes us powerless to preserve the independence of our world famous system for company takeovers, which the Commission wishes to improve by subjecting it to the Luxembourg Court, as your Lordships debated on the 14th of this month. The single market is not working as we hoped that it would.

I suppose I should say something about economic and monetary union (EMU). Personally, I do not believe that that is a bird which will ever fly, but if it is pushed off the top of the cliff by ignorant politicians I fear that it will do much damage when it crashes to the ground. The immobility of labour which exists in Europe will lead to such massive transfers of resources that I believe that civil unrest will become a real probability. At the very best, the Euro will be a hopelessly weak currency, and I cannot see how even Chancellor Kohl can sell it to the German people. Nor can I see how any serious political party in this country could commit the economic suicide of taking us into it ever--and that is about the only good news that I can see on the entire European horizon.

I suppose that I should also mention the hopeless fraud of subsidiarity, which we were assured during our Maastricht debates would be our shield against any further loss of self-government and against the mess we find ourselves in today with the single market, but which has proved to be the abject failure that some of us forecast at the time.

Then there is Community fraud itself, amounting to at least 10 per cent. of the budget or £7,000 million per annum and against which it is now clear that the Community has no intention of acting despite four excellent reports from your Lordships' House.

Looming on the horizon is the Committee of the Regions, which is the blueprint in the Treaty of Rome for bypassing national parliaments completely. I gather that it is about to start financing propaganda for EMU via local authorities. I fear that we shall hear more of that creature in the future.

I leave your Lordships with one last Euro-slogan. It is this: "Sovereignty doesn't really exist any more, so we have lost nothing to Europe". Those who peddle this one often point out that we share our sovereignty in NATO, or that international factors affect our exchange rates and interest rates. But we could leave NATO if we wanted to. The Treasury can and does respond to our unique economic cycles--and recently has been doing so very successfully.

It is not so with the Treaty of Rome, which we have signed for what it charmingly calls an "indefinite period". Under the doctrine of the acquis communautaire, enshrined in the Treaty, the Community never gives up a power which it has acquired. So the European Union is therefore a quicksand, a quaking bog which we have entered at our peril. It is politically redundant and for us it is commercially crazy, but there is no way out short of

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complete withdrawal. Only when all the others are convinced that we really are prepared to go might they agree to the changes that we need. But by then it will be obvious that we should go it alone anyway, and leave them to their grand but risky design. We would go in friendship, and they would heave a huge sigh of relief.

I am very grateful to all noble Lords who are to speak. If we can give the Bill a Second Reading today that may be the first small step on the road back to self-government and to freedom. I commend the Bill to the House.

Moved, That the Bill be now read a second time.--(Lord Pearson of Rannoch.)

11.52 a.m.

Lord Taverne rose to move as an amendment to the Motion that the Bill be now read a second time, to leave out ("now") and at end insert ("this day six months").

The noble Lord said: My Lords, frankly, I am surprised that this Bill has been introduced. Given the views of the noble Lord, Lord Pearson of Rannoch, about the European Union, I would not have been surprised if he had introduced a Motion that we should discuss the possibility of withdrawal. However, the Bill in effect repeals the European Communities Act, which gave effect to the Treaty of Accession. The European Communities Act was masterminded by the late Lord Rippon of Hexham, whose untimely death a few days ago has been such a loss to this House. If this Bill is passed, we shall unilaterally renounce our obligations under the treaty. In fact, we would tear up the treaty which we solemnly signed in 1971 and which was later confirmed and approved overwhelmingly in a referendum. But there is no question of a referendum under this Bill.

For all its shortcomings, this House plays an important part in our constitution. It is not a school debating society, yet we are now seriously being asked to behave like a banana republic or the Soviet Union in the days of Stalin, and to scrap a treaty which it is said no longer suits us. What next? Are we next to tear up the Treaty of the Western European Union because we wish to distance our defence from the French and the Germans, scrapping treaties one after another?

How are the mighty fallen! Britain has a proud history of upholding the rule of international law. But now we are being asked to regard one of the most important treaties to which we are a party as a scrap of paper that we can discard unilaterally by a simple Act of Parliament. That alone will, I hope, make your Lordships reject the Bill.

I turn now to the substance behind the Bill. What would be the effect on our fortunes if the Bill were passed? It would end our membership of the single market because we would no longer accept any obligation to observe the rules which are an essential part of the single market.

Many Conservatives have boasted that the Single European Act and the single market was their great triumph. In that, I think they exaggerate their role, but they do deserve credit for the part that they played. The noble Baroness, Lady Thatcher, helped to create the

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single market by signing the Single European Act. I see that the noble Baroness is here today. There was a rather mischievous report in the Sunday Telegraph which also appeared yesterday in the Sun that the noble Baroness would be here to give silent support to the Bill. To introduce an oxymoron into the debate, the noble Baroness positively exudes audible silence.

However, I cannot believe that that story was right because the Bill would have us withdraw from the single market, which was partly the achievement of the noble Baroness. Sometimes it has been hinted that the noble Baroness did not fully understand the implications of the Single European Act. That is an absurd suggestion. Indeed, it is an insulting suggestion and I have far too much respect for the noble Baroness, who is the most formidable Prime Minister we have had since the war, to believe that she did not understand the full implications of what was one of the most important signatories of her premiership. The noble Baroness helped to create common rules which have to be adjudicated upon and enforced by an independent tribunal, the European Court of Justice, and we have greatly benefited from its rulings. Indeed, we have won most of our cases before the European Court. So much has the Court helped our cause that during the Maastricht negotiations it was the British Government who proposed that the powers of the Court should be strengthened and that it should have the right to impose fines. Its power to impose fines results from a proposal of the British Conservative Government.

Again, through the Single European Act the noble Baroness extended the system of qualified majority voting. Contrary to what the noble Lord said, that has greatly benefited this country. Perhaps I may give one example which in itself contradicts the economic case for leaving the European Union. Without qualified majority voting, Europe would never have been able to adopt a common stance in the negotiations for the Uruguay Round. We would never have been able to reach an agreement for a vast extension of free trade throughout the world which is greatly to our benefit and that of other nations. So, I am sure that the noble Baroness will oppose any Bill which seeks to destroy her admirable handiwork.

I turn in slightly more detail to the damage that would be done if the Bill were to be passed and we were to leave the European Union. It has been argued that we would save substantial costs. There is no doubt that the common agricultural policy is a minus and we would be saved the cost of that--or part of the cost--if we left the Union. But the costs of the common agricultural policy are declining. They were reduced by the MacSharry reforms and they will be further reduced on the enlargement of the Community. Everyone wants to see an enlargement of the Community and everybody recognises that it cannot be enlarged without further major reform of the common agricultural policy. On the other hand, the costs of leaving the Union would far outweigh the costs of the common agricultural policy--and they are mounting costs.

First, let us look at the question of foreign investment. This week we heard that Toyota was seriously worried about the possibility of our not being part of the single

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currency. Not long ago the head of Siemens made a statement that Siemens would never have invested what it has invested, and certainly would invest no more, if there was any question of our not belonging to the single currency. However, what is being suggested now is that we should leave the European Union. The worries of Toyota, Siemens and others would be multiplied in spades. Our departure from the Union would have a devastating effect on those foreign investors who come here for the good reason that we provide a solid base inside the single market.

Even more important would be the impact on our exports. The noble Lord suggested that we would not be deprived of free access to European markets. That would be a very rash basis on which to proceed. Already they have complained about the unfair competition from devaluation by those outside the monetary system. If one kicks people in the teeth, one cannot expect them to be very accommodating. If the European Union were to take a more protectionist line, we would not be inside the Union to fight against it, as we have in the past. So far as concerns discrimination, a barrier against us would affect 58 per cent. of our manufactured exports. Quite apart from the obstacles that they would have to face, it would be a huge upheaval for all those companies that had reorganised their operations to take advantage of the single market.

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