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Lord Grenfell: My Lords, I am grateful to my noble friend for giving way. Does he not agree that the maintenance of the veto would deter France and Germany from closer co-operation on their own? If that veto were removed, surely one would have a better chance of France and Germany continuing to co-operate within the terms of the treaty. If one keeps the veto, it will be such a deterrent to them that they will then co-operate outside the treaty. That is what needs to be avoided.

Lord Shore of Stepney: My Lords, there is not the slightest worry in the minds of France and Germany about the present veto. What they want is to have a freedom of manoeuvre, which they certainly will not have under the existing rules and as long as we have the veto. It is our major bargaining chip. If we want to get changes to the treaty, which does not seem to have arisen in the minds of those taking part in the debate, it is indeed a major card to play.

The whole game will change with 15 or more applicant states. The present system cannot work. One cannot have an ever closer union of some 30 European states. One will have something more like the United Nations. We had better start looking at the institutions of the United Nations--a representative council, made up partly of permanent members and partly of elected members, with some no doubt having the right of veto. That would make far more sense than thinking that one could manage with 30 or more states voting on every issue affecting us. We should be calling for a very different agreement at Nice in order to help the countries outside. There is no reason why they should not be allowed a two-stage negotiation. In stage one, they should be allowed free access to trade with the European Union. That is what they need and it is the greatest help that we could give them in terms of

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economic co-operation. In addition, I would make the only initial requirement that they conform to the Copenhagen principles in terms of democratic life and commitment. We would then have the time seriously to consider all the constitutional implications, which no one has yet done, of doubling the membership of the European Union.

A number of people have referred to the French and German initiatives--the Fischer initiative and the Chirac initiative. We would be very foolish indeed if we did not understand their seriousness. Perhaps I may remind colleagues of the actual proposals put forward by President Chirac when he made his historic address to the Bundestag in Berlin a couple of months ago. First, he called for a pioneer group, which simply reflected what Foreign Minister Fischer had sought for Germany. We are talking about the two most powerful states in the European Union. Secondly, he called for the setting up of a secretariat to promote the thrust towards this much "closer co-operation". What words those are! He then called for the European Union to launch what he called a process--an IGC or a special forum such as that assembled for the charter of fundamental rights--which would then consider it. It would be something to carry forward all the remaining constitutional issues affecting Europe's government in the future--even the frontiers of Europe are to be defined. When the IGC or forum had finished reporting--in, he would hope, around 2004--he would then,

    "present the results as the first European constitution to the governments and peoples of Europe for adoption".

Is that just rhetoric? They come from the second or perhaps the first most influential man in continental Europe. No, that is self-delusion on our part. That is what is for real, and it will start the moment the Nice treaty has been launched. We have to widen our horizons and think far more deeply about all the issues involved.

That brings me to my final point which I cannot stress too strongly. I am committing the deadly sin of running over time, but it will be my very last point. What has been brought out so clearly is that we have to have a two-tier or multi-tier Europe. We are faced with countries with different objectives. The original six had their objective of an ever closer union. The neighbours of Germany had a special reason for getting ever closer together. They are creating a quasi-state. We blind ourselves if we do not recognise it. The idea that everyone else should be forced against their will, against their interest and against their history to climb in with the French and the Germans in that arrangement is wholly repugnant and we should reject it.

12.58 p.m.

Lord Williamson of Horton: My Lords, it is an excellent tradition in your Lordships' House that those who have had first-hand experience in various fields should make their contribution to the general debate. I do myself have such experience of at least the last three inter-governmental conferences and thus have

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some practical knowledge of how they work and, in the graphic phrase of the noble Lord, Lord Tordoff, where some of the bodies are buried.

First, I should like to express my appreciation of the Select Committee's report. It is indeed excellent. I agree with a great deal of it; not quite all of it but a great deal of it. I agree also with almost all the points made in evidence by the noble Lord, Lord Brittan, on the basis of his long experience at the highest political level and, in particular, as a distinguished vice-president of the European Commission. I very much endorse his view that certain issues at this inter-governmental conference are "politically necessary" for the enlargement of the Union. That point was made with great force by the noble Lord, Lord Tomlinson. In my view, it is the crux of the matter. Technical and administrative matters do not count as much as the political necessity to move forward.

However, there are of course certain technical and administrative reasons for improving the working of the Union, as is now being discussed in the IGC and in its margins; but above all, it is politically important to demonstrate to the applicant countries that we have settled questions such as the voting weights and the number of commissioners which will affect them as well as the rest of us. Furthermore, we must demonstrate that the enlargement process is not being held up on those grounds.

Despite what is often said, the heads of states and governments were close to settling these points at Amsterdam. Let us hope that they can settle them satisfactorily at Nice.

Secondly, I should like to emphasise that, whatever the content of the matters discussed, every inter-governmental conference is important. Frankly, I am not too sure that the public and the media have fully understood that an IGC is fundamentally different from a meeting of the European Council or the Council of Ministers discussing political proposals or policies which can of course be changed when circumstances change. An inter-governmental conference is quite different. It is directed to possible amendments of the treaties which determine the allocation of powers and responsibilities between the national member states and the European Union. Only the member states can decide on such changes. They decide by unanimity. They submit the changes for ratification to their own parliaments or to their people. It is an exercise of sovereignty by the member states.

Various references have been made in the report to the agenda of the current Inter-Governmental Conference. I very much hope that this IGC will stick to and decide a number of points which have already been identified, but we need to treat the word "agenda" with a certain caution. These are meetings of sovereign governments and any member state can propose any amendment of the treaties and ask for it to be discussed. The agenda is not fixed; these are sovereign governments in a meeting. Past experience has shown that new proposals from member states can suddenly appear like leaves in autumn. They fall to the ground and then coalesce into packages and the results

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are not necessarily for the best. I hope that we have learnt this lesson and that the number and nature of the amendments of the treaties at this Inter-Government Conference will be prudent.

The contrast with practice in the United States is indeed interesting. Speaking from memory, I believe that the United States constitution has been changed 13 times since the abolition of slavery. However, within the last few years, IGCs in the European Union have produced massively more changes in the founding treaties of the Union.

I shall turn now to the substance of the IGC. First, the voting weights. This is an issue where clearly we need to promote our national interest--and what could be of greater national interest than the number of votes we hold within a union? It is self evident. Viewed from the perspective of national populations, at the present time the voting weights are of course more favourable to small member states. In practice, I do not think that this has proved to be a significant problem in the current Union--apart from one famous episode in agriculture some decades ago. I was present in the Council at the time. When is the United Kingdom outvoted in the Council? The answer is: practically never. But we have to bear in mind that enlargement of the Union will bring in many more small member states, so we should make some correction now in order to take better account of national populations.

We should also bear in mind that many votes are taken at levels below that of the Council. We tend to discuss only debates and votes in the Council. When I was a Deputy Director-General in Brussels in the 1970s, I presided over many such votes and authorised many hundreds more. Indeed, I believe that I authorised over 900 votes in total during my period in office. When we approach the matter of voting, we must think "national".

The Select Committee has rightly identified that there is more than one way of amending the voting system better to reflect population. This point is important as regards the United Kingdom. I have never forgotten that, before German reunification and based on demographic trends at the time, the United Kingdom was expected, in the fairly near future, to be the largest member state by population in the European Union. We are an extremely large member state, although of course Germany has now increased as a result of reunification. The simplest way to deal with the issue, as the Government hope to do, is to amend the voting weights in a straightforward manner--by adopting a straightforward British approach to the issue. That is one way and I have no difficulty with it. We would then carry that approach through into the post-enlargement situation.

However, if that cannot be negotiated--I am not too sure that it can be--we should at the least establish a second and additional voting requirement which states that at least 50 per cent of the Union's population must be in favour if a qualified majority vote is to succeed. Perhaps we could even consider the possibility of following the example of the Danes and

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set the minimum majority at 53.1 per cent. In this as in other matters, we need to be conscious, not only of the defensive element--we are always keen on that in this country; namely, the capacity of the United Kingdom to block a decision--but also of the offensive element, because many cases arise where we would like to see the United Kingdom in a position to achieve a majority for the decisions it wants to see in its own interest.

Secondly, I turn to the number of commissioners. This question has been discussed at great length, perhaps even over-discussed. That is not surprising because it is apparently so simple. I believe that the best solution would be to form a Commission of, say, 15 members. As an aside, it may have been forgotten that at the Amsterdam Inter-Governmental Conference, the French proposed only 10 members. However, that is most unlikely to happen. We are left, therefore, with a situation where the first step will be the "five in, five out" proposal; namely, the replacement of the second commissioner of each of the five biggest member states, including the United Kingdom, by a commissioner from each of the first five new acceding countries. In that case the total number of commissioners will remain unchanged.

Then comes the problem: either the number of commissioners goes up to perhaps 27 as further new member states accede; or we establish a revolving system, as is used in some other international organisations, with member states taking turns. For myself, I would not object to a system by which some of the member states might agree that a commissioner from their country would serve for two-and-a-half years; namely, for half of their term. Incidentally, this would help to reshuffle some portfolios after the two-and-a-half year term. When I have suggested this idea in the past, the general reaction has been that it is an idiotic idea. This leads me to believe that its chances of success can only improve.

I should say that, for myself, I am not in favour of increasing the number of vice-presidents. Indeed, I recall that we decided to decrease their number during a past inter-governmental conference. After profound reflection, and over time, other member states agreed to ratify that proposal. I am of the view that more vice-presidents tends to devalue the currency.

Perhaps I may turn briefly to the question of qualified majority voting. The member states went as far as they were able at Amsterdam and I do not see any significant change in their negotiating positions. I expect that the extension of qualified majority voting will be very small, but in my view it is important that the United Kingdom negotiators should give particular attention to those cases where it may be proposed--and I believe that it will--to revise certain articles so that part of them may be subject to unanimity and part to qualified majority voting. That kind of tinkering with long-established texts is not always a formula for clarity. This point will require careful attention.

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Finally, I turn to flexibility--or whatever may be the latest term. In general I endorse the conclusions of the Select Committee. The texts are new, only recently ratified after Amsterdam by all member states, and there is no reason to consider them unsatisfactory.

I shall now give joy to the noble Lord, Lord Shore--which I do not often do but I shall do so today--because, unlike the Select Committee, I do not see any reason to remove the so-called "emergency brake". There are two reasons for that. The first is that it is, if I may say so, a part of a deal on a past occasion not very long ago; it gives assurance to some member states and was their condition for agreement to the present text. The second reason is that it is genuinely an emergency brake. It is not a brake; it is not something that will operate time and time again. Only in circumstances where a member state has a peculiar or particular difficulty will it launch this method of blocking action--and, of course, there could be discussions at the highest levels in the European Council in such circumstances.

Finally, I turn to the charter on human rights. It is difficult to say that one is not in favour of charter rights--I am in favour--but the question is whether it is the right way forward at the moment when the European institutions are not subject to the European Convention on Human Rights. I share the view of the Select Committee that that would be the best way forward. I do not think that the European institutions will object to it. I cannot understand why we do not bring them within the European Convention on Human Rights and take a little more time to examine the other question of a separate charter on fundamental rights, perhaps outside the context of the general discussions in Nice.

1.11 p.m.

Lord Harrison: My Lords, the forthcoming IGC at Nice is just that--an inter-governmental conference; one where sovereign governments decide what advances are to be made under the umbrella of the European Union. I make this point--which has just been better made by the noble Lord, Lord Williamson of Horton--to remind ourselves that nothing has been done in the name of the European Union which has not received prior agreement in principle from ours and from all other member states' governments. The notion of a European superstate is the figment of the overwrought imagination of Eurosceptics, who divine in every sensible step forward made by nations working together for their mutual advantage, evidence of a conspiracy to undermine the British state.

Yet every British government contemplate each succeeding IGC as unwelcome as a phone call from the undertaker. Even our current Government, who have demonstrated such intelligence in affairs European, understandably recoil at the thought of the misrepresentation of the issues and the Eurosceptic heckling they will receive from certain parts of the media for their policy of constructive engagement on Europe.

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It is time for a revolt of common sense; a time for us to assert that not only is nothing underhand being envisaged by the Government in their IGC preparations, but that failure to develop the European Union and its institutions will represent a crashing betrayal of British interests. In making that case shortly, as I hope to do, perhaps I may congratulate the Select Committee on its report, which I believe represents the quintessence of the sensible way forward for Britain.

How then to prevent the debate at Nice becoming internecine? How can we make some Nice bubble and squeak out of the Amsterdam leftovers: the questions on the size of the Commission, on the reweighting of votes and on the extension of QMV?

Perhaps I may start with qualified majority voting. Does the existence of 14 separate vetoes held by the other 14 countries of the European Union present an advantage or an obstacle to Britain? I suggest that it is the latter. Anyone who has impartially examined the working of the single European market will note that it is still an imperfect market-place. Obstacles remain which clog up the free movement of goods, people, capital and services, concealing protectionist positions by our neighbours and competitors and restricting British entrepreneurs from successfully operating new markets. An example is the European companies statute which has had Methuselahian longevity in gestation. German intransigence prevents the smooth setting-up of cross-border companies benefiting British enterprise. Yet, by clinging on to the nurse of the British veto because we fear something worse, we lose countless gold medal chances for Britain. It is time to veto the veto as an instrument of protectionism. Its sole purpose should be to defend vital--I emphasise "vital"--national interests.

I refer secondly to the size of the Commission. It goes without saying that the UK should trade off the reduction of two Commissioners to one, with a reform of weighted voting, ensuring that countries with large populations such as Britain receive proportionately increased voting powers. If that happens, radical changes in the number of Commissioners can take place to sharpen up the workings of the Commission. We are grateful to the noble Lord, Lord Brittan of Spennithorne, for his insights into the intricacies of the debilitating tour de table method of debate practised by the current college of 20 commissions.

I make two further points. First, it is time for us to dispense with the fiction that the Commissioners have no national representative function. They do--tacitly, and often explicitly. Moreover, applicant countries will hardly contemplate their voices being excluded from the Commission's Wednesday debates unless they feel that their national interests are protected at the top table.

Secondly, the Commission is already too large at 20. It needs to be reduced. My suggestion is that natural groupings such as the Benelux countries, the Scandinavians, the Iberians and, yes, even the British Isles, might provide the basis for identifying the

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single Commissioners who could combine de jure impartiality with de facto territorial responsibilities. In Britain's case, working with the Irish Republic might give some practical expression to the concept of the Council of the Isles foreshadowed in the Good Friday agreement. The advantage of this formulation is to create a commission that is small and capable of being both efficient and effective in its working habits while avoiding the introduction of first and second-class Commissioners, which would be anathema to smaller member states and to applicant countries. I hope that my noble friend the Minister will be able to respond to this idea when she replies to the debate.

Perhaps I may say a word about the applicant countries. Many of them have worked extremely hard to ready themselves for EU membership, not only in preparing to embrace the acquis communautaire but also to conform to the Maastricht convergence criteria with respect to adopting the single currency. Those who revel in last night's Danish referendum should be reminded that a further 12 European countries are applicants to join the European Union with the ambition of joining the single currency.

I wish that I could report a matching urgency demonstrated by the EU 15 in reforming ourselves so that the rest of Europe can fulfil their legitimate ambition of joining us. The Nice IGC has as its central purpose the theme of reform to prepare for the admission of the central and east European states. I wonder whether your Lordships share with me an anxiety that the EU 15 need to come clean with the applicants about welcoming them in. With the honourable exception of the current British Government, who showed great warmth to applicant states during the 1997 British presidency--including, rightly, encouragement to Turkey about eventual membership--other states and commentators have shown a diffidence bordering on hostility concerning the broadening of the EU. This is manifestly unfair to the applicant countries. Let us say now and in clear tones that the Union welcomes with open arms the rest of Europe.

Of course, in this process of incorporating new member states, it will be vital, as in all earlier examples, to have a period of transition. The principle of all member states adopting in time the complete acquis communautaire is the bedrock of the development of the Union. I mention this because another item that may feature on the agenda of the

Nice IGC is the question of so-called reinforced co-operation and flexibility. Indeed, as mentioned by the noble Lord, Lord Tordoff, an amendment was moved by the noble Lord, Lord Lamont, in Select Committee, the effect of which would have been to create a "jungle Europe", making the EU a banana republic where each country would slip on the banana skins of its own choosing and making, as the laws of the Union were flouted, ignored or bent.

Thankfully, that bad idea was roundly defeated. It is interesting to observe that, in moving his permissive amendment, the noble Lord, Lord Lamont, nevertheless wanted the rules of the single market to

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remain intact. As I suggested earlier, British interests are being diluted by the failure strictly to enforce the rules of the market. This ambition will hardly flourish if we attempt to adopt a free-for-all in the workings of the European Union as the permissives want. I believe that the Select Committee is right, in upholding Community law, to support the approach of derogation, not dereliction.

Perhaps I may conclude with one final thought. Just as it is important to observe the rules of any club that you join, it is equally crucial to be enthusiastic members of that club--otherwise, why join it? What is the point of being semi-detached? Yet, for too long under the previous administration, Britain maintained that stance with Europe: in it, but not of it. We were season ticket holders, renewing our membership on an annual but qualified basis. Too often, as with the reprehensible behaviour of English football fans on the Continent over summer, we have suggested that we are here only for the beer. For too long we have been ready to party but not to participate in fashioning a dynamic Europe serving all its people.

The current Government recognise only too well the penalties that this country suffers for exhibiting such nationalistic arrogance towards our EU partners and competitors. Nothing is better constructed to put off British business from engaging energetically in the single market than the pall of anti-EU sentiment cast by large sections of the media and the Official Opposition; nor should we be surprised that, in indoctrinating some young Britons with a diet of anti-Brussels sentiment in this country, such youngsters behave so disgracefully on the Continent. The thugs of Brussels' bars and Eindhoven's streets were made here in Britain.

This IGC is a turning point for Britain and Europe. With it, we can take one more step on the way to deepening peace in Europe, securing the rule of law, promoting free and fair markets, improving our environment and observing the highest standards of human rights, while preserving, enhancing and celebrating the unique cultural diversity of Europe that is its most enduring characteristic. I encourage the Government to continue down the road that they have set themselves to achieve that practical and noble goal.

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