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Baroness Williams of Crosby: My Lords, I listened with great attention to both the noble Baroness,

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Lady Rawlings and the noble Lord, Lord Howell. I do not want to detain the House for more than a few moments, but I do believe that the interpretation of the noble Lord, Lord Howell was somewhat too pessimistic. Also, while I accept many of the comments made by the noble Baroness, Lady Rawlings, I do not believe that the amendment would be helpful in bringing about enlargement at the earliest possible date.

Perhaps I may say a few words about each of those matters. The process of enlargement is a process of iteration between the existing members and the would-be new members, and it is a process which is continuous and ongoing. It does not have to be wholly sequential; it can be conducted at the current time. Obviously, there are elements in the Treaty of Amsterdam that become part of the acquis once the treaty is ratified by all member states. That, in turn, becomes one of the preconditions of membership. Therefore, with respect to the noble Baroness, Lady Rawlings, I agree here very much with the noble Lord, Lord Grenfell, that it would only delay the process of enlargement if the acquis in concluding the Treaty of Amsterdam were to be delayed, as the amendment suggests, until a resolution had been passed on each of these complex areas of reform, probably for a number of years. It would simply mean that the negotiation of the new member countries in accepting the acquis was put off until such time as all those reforms were completed. I do not believe that that would be helpful to the potential new members.

Secondly, among the list of issues that the resolution of the noble Baroness raises, at least one of the proposed changes is already being initiated--I refer by that to the reform of the regional and structural funds. It is my impression that the reform involved in extending these to the new members and in passing through the political difficulties associated with reducing the present scope of the structural funds has already been embarked upon with considerable political courage.

The appropriate director-general of the Commission responsible for regional policy has already indicated that regional assistance must be more concentrated on the poorer parts of the European Union, and has indicated that there should be a reduction in the recipients from about 49 per cent. of the population of the existing European Union to about 31 per cent. in order to reduce the claims on the funds sufficiently to allow a substantial sum to be targeted towards the new would-be candidate countries.

That involves painful political choices because, as the noble Baroness implied--and she was right to so imply--nobody is suggesting a substantial increase in the proportion of the gross national product that is to be spent on the European budget, which continues at the relatively modest sum of 1.27 per cent. of GNP. Incidentally, in my view, that is a figure that is not consonant with some of the wilder charges about moving towards federalism and may be compared to something like a 30 per cent. figure for the US federal budget in comparison to the budgets of the states. This 1.27 per cent. is not going to allow huge generosity with

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regional funds. Therefore, it does involve a redirection of regional funds and it is quite clear that this process is being embarked upon.

It is understandable that countries that will lose as a result are fighting very hard against that, including, incidentally, our own Government--that is what one would expect and in no way would I criticise or censure them. But it is worth saying that this process has been embarked on and that the Commission has been clear about the change in targeting involved. It will be of great benefit to the new members to receive the approximately 19 billion ecus a year which will emerge should these proceedings continue and succeed.

Secondly, in the area of institutional change, we all recognise that there was a deep reluctance at the Amsterdam Treaty negotiations to address this issue. That deep reluctance--I in no sense try to defend it--was not assisted by the fact that the United Kingdom herself was going through a difficult period of change, from one government to the other. Neither the government who were leaving, nor the government who were coming, were particularly anxious to grapple with this extremely difficult issue. We all understand that the issue has to be addressed before enlargement can take place because we simply could not run the Union on the basis of the present institutional structures. That has to come. But there is no need to delay the rest of the process until the institutional changes have been completed. Indeed, in many ways, continuing the process will speed up the pressures for institutional change.

I turn to the common agricultural policy. This is where I found the remarks of the noble Lord, Lord Howell, to which I always listen with great care and attention--it is always worth doing so--to be more pessimistic than they needed to be. Surely we already know that the common agricultural policy, for good or for ill, will not be extended to the new candidate countries. That has been made plain. It is also clear that in consequence of that there have to be substantial changes in the common agricultural policy, moving towards systems of rural management rather than systems for protecting prices. I would suggest to the House--and here I may differ from other noble Lords--that the pressure on the common agricultural policy to change arises precisely out of enlargement. Enlargement has actually spearheaded the difficult process of reform of the common agricultural policy and that process would not have gone so far unless enlargement had been embarked upon. It is an instance of what one might call constructive synergy, which I believe has occurred as a result of enlargement.

Finally, with regard to that, perhaps I may turn to one aspect of the acquis that is not in the field of economics, which the noble Lord, Lord Howell, so clearly described, but rather is in the sphere of politics. It seems to me that the central achievement of the Amsterdam Treaty, which was to put respect for human rights back at the centre of the whole of the unrolling European Union development, is of crucial importance to the new countries. The single most important political contribution we can make to them is to put this at the core of their constitutions as much as at the core of the

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European Union's own structures. In that respect I believe that the extension of the acquis to these areas of human rights, including Article F.1, which says that a country that does not accept fully human rights cannot continue to be a full member of the Community, is a wholly constructive development.

Perhaps I may say a few words about Turkey. I happen broadly to share the views of the noble Lord, Lord Howell, on the issue of the importance of Turkey, which plays an increasingly significant part in central Asia, in the former republics of the Soviet Union and well beyond. Turkey is a key player in a very unstable part of the world. She has been consistently friendly towards Europe, towards the West and towards the United States, and she is a member of NATO. We have to consider carefully not to alienate her. However, it is not unreasonable that one might expect and hope that Turkey could evolve somewhat further in respect of her attitude towards human rights and her attitude towards constitutional and democratic practices. That, to my mind, although certainly not to all members of the Union, is the major difficulty and one we would be more than ready to see overcome. We would do everything we could to encourage Turkey were she to address those issues.

Baroness Park of Monmouth: My Lords, I would like to add my support to the amendment for rather different reasons. I am concerned about two things. The first is that it seems to me that the priorities have gone wrong. An organisation which is working out a common defence policy and planning to have an operational one, as well as contemplating administrative costs in that regard, and also intending to work with and through the WEU, will cause great confusion to the unfortunate people who are to join under enlargement.

They are already dealing with the question of joining NATO, and that is well worked out: everybody knows where they stand. If they are also to find themselves members, without quite knowing where they stand, of a new defence organisation (for lack of a better phrase) which is going to be responsible for peace-making and humanitarian tasks, essentially that is going to require a military organisation and troops. I cannot see where they are coming from at the moment except from us.

It is unfortunate. There should be a sense of priorities. It is important to get the institutions clear first. Until it is quite clear what the relationships are going to be in the end between NATO the WEU and the new defence organisation and how that will affect the new entrants to the Union, there is everything to be said for reforming the institutions first and getting that aspect of it quite clear before enlargement can proceed.

I support enlargement and believe that it is one of the most important things that we are considering. It is even more important that there should be a new set of priorities in the European Union. It should begin by sorting out exactly how everything is going to work before plans are made for "adventures"--I can only call them--in the military sphere.

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Lord Whitty: My Lords, a wide range of interesting points has been made in the course of this debate on enlargement, many of which are apposite to the subject. But I am not entirely clear that they are apposite to the amendment. I shall pick up points which noble Lords have made, but I believe that I should address the amendment.

It is slightly bemusing. Possibly it has been overbilled: the slightly ambiguous title calls it "Conditions for enlargement of the Union". As I recall, a similar amendment at Committee stage did indeed refer to preconditions for enlargement, but this amendment does not deal with that but with preconditions for the ratification of the Amsterdam Treaty on the CAP. As my noble friend Lord Grenfell pointed out, we should not ratify the treaty until we have resolved the problems on the CAP, the structural funds and the institutions.

It would have been strange if this House, of all places, had tried to put preconditions on enlargement in order to slow down the process. I believe that we were all moved by the first intervention this evening by the noble Lord, Lord Howell of Guildford, in particular in describing the challenges of enlargement. The whole process of the reunification of Europe is the most important political challenge and difficult project for this generation of politicians. It would have been wrong to put a brake on the progress of enlargement as a result of consideration of this treaty. Therefore, I am grateful that, by and large, noble Lords have not quite said that.

Nevertheless, the almost retrospective preconditions for ratification of the treaty which this amendment raises are unacceptable. This new clause would prevent the United Kingdom from ratifying the treaty for some years. Surprisingly, the new clause has been tabled by the noble Baroness speaking for the official Opposition. I confess that I find it highly disingenuous coming from the party which was in government for the vast majority of the time we were approaching the intergovernmental conference.

I accept that there is genuine disappointment for noble Lords of all parties as regards subsection (c) of the amendment; namely, the failure to secure full agreement on the question of institutional reform, specifically on the reform of the Commission and on the re-weighting of votes in the Council. The House will address those issues on Thursday when it turns its attention to Amendment No. 12.

The Government believe that these issues can be resolved in a relatively simple IGC process, not one that re-opens the whole range of institutional questions as the noble Baroness appeared to imply or involves a changed relationship between the EU and NATO, as the noble Baroness, Lady Park, suggested. We have made quite clear--it is reflected in the treaty--that NATO remains the bedrock of the security of Europe. That will not change in the period that we are considering before enlargement.

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We do not believe that a whole range of institutional rearrangements must be faced, but obviously the issues left over from Amsterdam about the Commission and the reweighting of votes in Council must be addressed. I was slightly bemused by some of the implications raised by the noble Baroness. For example, she referred to the appointment of the president of the central bank. She appeared to advocate by implication a significant extension of QMV. I recall that that was not exactly the position of the previous government about senior appointments. They caused a degree of discomfort among our partner member states when as a minority of one they vetoed the appointment of a widely supported candidate for the presidency of the Commission. I was interested and slightly bemused by the change of tack of the Conservative Party on this matter. However, I welcome its openness to the extension of QMV, if that is what it represents.

It is breathtaking for the Opposition to suggest that we should not ratify the treaty until we have delivered reform of the agricultural policy and structural funds. At this time of night it is probably not sensible to go into great detail on the problems that face us on both fronts. In responding to this point I simply ask the noble Baroness to set out for the information of the House the detailed steps that her party took when in power to secure policy reform of this kind in the context of the Intergovernmental Conference which ended in Amsterdam.

The reality is that in the run-up to the election last year the Conservative Party made all kinds of conditions on the signing of the Treaty of Amsterdam. They threatened to veto the treaty in a number of areas ranging from reform of the European Court of Justice to resolution of the issue of BSE, quota-hopping, which the House will again debate on Thursday, amendment of Article 118a in relation to working time and opposition to any extension of qualified majority voting or the powers of the European Parliament. Those threats were made all the way through the approach to the Intergovernmental Conference and we deplored most of them. But at no time was any mention made by the previous government of a condition to secure reform of the CAP and the structural funds before the treaty could be agreed. As the noble Baroness and her colleagues in government at that time are aware, that was never part of the run-up to the Intergovernmental Conference.

In the context of enlargement and the problems faced by the European Union in the coming years, the House will be aware that the Government are fully committed to reform of the key policies that have been mentioned. This is imperative if enlargement is to be successful. But that process must proceed in parallel with the negotiations for enlargement, as the noble Baroness, Lady Williams, has said. It cannot proceed retrospectively in parallel with the negotiations on the Treaty of Amsterdam. The United Kingdom Government favour radical reform of the CAP, in particular the reduction of supports. That will need to

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be done not only in preparation for enlargement but also as a result of the WTO negotiations in the year 2000. We are also in favour of some of the proposals which the Commission has already tabled, but they do not resolve the problem of the full reform of the common agricultural policy. We are in favour of reform of structural and cohesion funds which are fair both to existing EU states and to future EU states and are affordable and durable.

As the noble Baroness, Lady Williams, has already pointed out, the Commission has made proposals some aspects of which are acceptable to us, but we have severe reservations about others. We are also in favour of providing help during the Agenda 2000 rejigging of the budget in order to provide for applicant countries. The noble Baroness, Lady Rawlings, raised the question of whether we were damagingly differential in our support for potential applicant countries. The disparity between payments to those who are in the first wave and those who are in the second wave is relatively small when measured in terms of the relative wealth of the two waves of applicants, and that is logical. There are real limits to the ability of relatively poor economies to absorb large sums of assistance. But the big disparities which I think she was calculating only arise when you take into account post-accession transfers to the first wave. We are continuing to meet the continuing problem of all the applicants--the first wave and the second wave--through the transfer of funds which the Commission includes within the Agenda 2000 programme.

We too are in favour of tight control on total EU spending in the coming period 2000-2006. We will also attempt, as I have said, to make progress on as many as possible of these issues, including institutional reform, in the coming year. We hope to make some progress on budgetary changes by the Cardiff Council. But the reality is that no significant improvement in these budgetary areas will take place at least until we are into the Germany presidency next year. Some of the fundamental issues, particularly relating to the CAP, will go well beyond that.

We are therefore, as noble Lords have said from various points of view, engaged in a quite lengthy process. We are engaged in a process which runs in parallel: improving the situation on institutions, on the budget and on the way the budget is allocated by the existing members of the EU, while at the same time helping the applicant members to meet the acquis, to improve their economies and, in some cases, as the noble Baroness indicated, to enhance the democracies of those applicant countries over that period.

I shall not, tonight, put a timescale on these negotiations. My noble friend Lord Grenfell was right in saying that some of those negotations will take considerably longer than has perhaps been suggested by the rather heightened expectations in some of the applicant countries. Nevertheless, we are committed to an intensive period of negotiation over that time.

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We have already started that during the British presidency. We held the successful European Conference on 12th March of all the applicant countries; we have secured agreement to the accession partnerships; we have launched the accession process and we have launched the formal accession negotiations with the six first wave countries on 31st March.

The noble Lord, Lord Howell of Guildford and others referred to Turkey. It is our intention that as far as possible Turkey, through all diplomatic efforts, should be persuaded to rejoin the European Conference process as early as possible, recognising all the difficulties. However, I have to say, in agreement with the noble Baroness, Lady Williams of Crosby, that before Turkey becomes a serious candidate for formal negotiations to join the EU, there are certain severe human rights problems which have to be addressed within that country. Turkey is not being judged by different criteria from the other applicants but the human rights problems are more deep seated in that country than they are with any of the other 11 countries.

The launch of the enlargement process has represented real progress. Those negotiations will take some years. So will the negotiations on the CAP, although there may be some decisions in time for the year 1999 or 2000. The full reform of the allocation of the budget will also take some years to negotiate.

The amendment, if it were passed, would set back the process not only of enlargement but also of budgetary and institutional reform. If we were at this point required before we ratified the treaty to achieve significant progress on CAP reform, on the structural funds and on the institutional areas which were not dealt with by Amsterdam, we would be setting back all these ambitions considerably.

The Treaty of Amsterdam made a number of institutional reforms which help the enlargement process. We should not dismiss the Treaty of Amsterdam as failing to provide for enlargement, as I think was the implication of some of the comments from the noble Lord, Lord Howell of Guildford. It did not make sufficient institutional changes, but, as I have said, I believe those institutional changes can be made relatively easily and certainly in time for the medium-term period of negotiations over enlargement.

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Given our commitment to enlargement and to a positive future for the European Union, I hope that the noble Baroness recognises the problems which her amendment raises and will feel able to withdraw it.

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