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Baroness Jay of Paddington: My Lords, my noble friend raises an important question. It is right that the matter of the IGC should be seen along the lines developed at Lisbon. My noble friend makes more specific the general point made by the noble Lord, Lord Rodgers, about seeing the conclusions of the Lisbon summit in a broader context. The broad context of the IGC process and the applicant countries is the more precise and immediate one.

Clearly the objectives of the discussions and the proposals at Lisbon must not, as it were, take existing members of the European Union so far out in front in such matters as e-commerce arrangements that it becomes impossible for other countries to come alongside them in terms of Community regulations and understandings. My noble friend is right on that point. I am sure that that matter will be taken under the umbrella of the IGC as discussions progress. That process is only just beginning.

Lord Howell of Guildford: My Lords, can the noble Baroness help me to solve a puzzle? First, if Lisbon really is a turning-point, leading Europe in new directions of flexibility and liberalisation, why on earth was there no review of the Working Time Directive or the provisions of the Social Chapter--which everyone recognises have been a major force of paralysis in European reform?

Secondly, did it occur to Ministers assembling at Lisbon that the major explosion in recent years in e-commerce and Internet enterprise has come about in areas that are so far removed from government that they have had nothing to do with government? I refer, for instance, to enterprises in Silicon Valley and Bangalore which have prospered almost despite government, and which are in great fear of the worst slow-down on these developments--namely, too much regulation. Was that idea in the minds of leaders at Lisbon? If so, might it not have been wise for them to demonstrate a little more candidly that they understood that the e-commerce revolution lies outside the realms of government control?

Baroness Jay of Paddington: My Lords, I made it clear in my initial response to the noble Lord, Lord Rodgers, that it was understood--possibly not as explicitly as the noble Lord might have liked--that many of the matters discussed at Lisbon were indeed the prerogative of the private markets and of private enterprise. I believe that the noble Lord will agree that there are many ways in which governments, acting collectively or individually, can support much of the new investment and activity needed to stimulate, for example, small business investment in e-commerce. That was precisely the direction that was intended from the point of view of the specific arrangements made.

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In regard to directives under the Social Chapter, I am afraid that I disagree with the noble Lord. For example, I should have thought that the introduction of the minimum wage and the discussions now being negotiated about the part-time working directive were achieving precisely what the Prime Minister described in his Statement; namely, an improvement in the economic direction of Europe for the new economy while at the same time retaining the appropriate attention to social justice.

Lord Harrison: My Lords, will my noble friend agree that the Lisbon Council has been big for small businesses-- not only because of the 1 billion euros provided for small businesses through the EIB but also because of the European charter for small businesses? Will she take this opportunity to repudiate the suggestion of the noble Lord, Lord Strathclyde, that the Government are trying to snarl up the single market for small businesses? Indeed, my noble friend mentioned the minimum wage. It is the subject of a report today indicating that British businesses have demonstrated an enormous welcome for the minimum wage and wish to see the amount raised. Finally, does my noble friend agree that there is still much work to be done to complete the single European market--the inspiration of the noble Lord, Lord Cockfield--which will be the best solution and opportunity for British businesses and for jobs and prosperity?

Baroness Jay of Paddington: My Lords, I agree with my noble friend. In replying to his specific point, it may be helpful if I reply to a point made by the noble Lord, Lord Strathclyde, which I did not do in replying to his general remarks. The noble Lord asked whether the proposals would cost a great deal of money. That is not the case. The conclusions make it clear that achieving the strategic and specific goals that I have mentioned will depend on mobilising resources available on the markets. I emphasis again that this is predominantly a matter for the private sector. Naturally, the UK Government and their partners hope that, where appropriate, public/private partnerships can also be utilised.

Lord Chalfont: My Lords, perhaps the noble Baroness will allow me to return momentarily to the question of Austria. In his interesting intervention, the noble Lord, Lord Rodgers of Quarry Bank, said that he hoped we should not get into the habit of interfering in the internal economic arrangements of other countries. I should like to add that I hope we shall not interfere too much in the internal political arrangements of other countries.

In reply to the noble Lord, Lord Strathclyde, the noble Baroness said that we would keep an eye on the behaviour of the Austrian Government to see how well they did. Is that not the same as saying that the Austrian Government are assumed to be guilty until they have proved themselves innocent? If so, is that the right way to treat a sovereign government? Perhaps I may repeat the question put by the noble Lord, Lord Strathclyde: how long is this period of probation to

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last? Do we wait until the Austrian people change their government? What are the criteria? For how long is Austria to be cast into the outer darkness because of a democratic decision taken by its own people?

Baroness Jay of Paddington: My Lords, I hesitate to argue with the noble Lord on questions of international law or relative constitutionality. However, I believe that a distinction should be drawn between the internal democratic processes of a member government of the European Union, as the noble Lord suggests, and the requirement that member governments fulfil their obligations along the lines of what may be described as the values to which the European Union in general has collectively agreed. The noble Lord asks me how long the process will take. All I can do is repeat what I said in answer to the noble Lord, Lord Strathclyde. The view of our European Union partners is that sufficient time has not elapsed to ensure that there is a consistent commitment to European Union values by the new Austrian Government, and that is something that they will wish to continue to monitor.

Lord Blaker: My Lords, paragraph 50 of the Council's conclusions state:

    "The European Union ... will ... continue to support the democratic opposition [in Serbia], but will also develop a comprehensive dialogue with civil society [in that country]".

In view of the continued presence of Mr Milosevic, how is that support being given, and how will that dialogue be developed?

Baroness Jay of Paddington: My Lords, as I believe was fairly clear from the Statement, there is some disquiet within the European Union about the need for,

    "a more coherent and action-oriented strategy",

to quote the conclusions dealing with the Balkans. That means that there are ways to achieve that particular form of dialogue other than those agreed under the Stability Pact and other bilateral interventions by individual European countries. I do not have details of the specific methods of engagement with the Serbian Government. I can only express the general understanding about trying to extend the existing channels with the Serbian Government. Obviously, there is a belief within the European Council that something more pro-active must be done to establish a better situation there. If I receive any more specific information about the particular channels with the Serbian Government, I shall write to the noble Lord.

Lord Lea of Crondall: My Lords, I declare an interest as a member of the EU high level group on benchmarking. It may assist if I explain what that is, given that the noble Lord, Lord Rodgers of Quarry Bank, said that he had to look it up in a dictionary. This was an initiative taken more than a year ago by the European employers' organisation UNICE as a new half-way house between over-regulation and simply letting free markets operate. It has been widely

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welcomed by the Council as a means of introducing best practice in Europe. Does my noble friend agree that in Lisbon a new philosophy in regard to both the public and private sectors has been developed so that we can emulate best practice in different parts of Europe to try to improve the performance and competitiveness of Europe's economy? In that connection, does my noble friend also agree that that initiative has strong support? For example, the leader of my group was the chairman of Ericsson in Sweden; another member was the director-general of the organisation of small businesses in Germany. This is not a concept that is opposed by small businesses. Does my noble friend agree that the Social Chapter is compatible with that, in that minimum standards are one of the results of benchmarking? For example, one finds minimum standards in connection with the percentage of women in the labour force. Requirements in relation to such matters as the protection of those in part-time work and fixed-term contracts pro rata with men are exactly the concepts which emerge from this kind of analysis.

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