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The whole point of being in this club is to maximise its economic success by promoting open market competition. The French may take a different view, but that is what has been incorporated in the treaty. It is regrettable and disappointing that the Government, who are so committed to the treaty, did not fight somewhat harder. I hope, if only to find out just how split a personality the Liberals are, that my noble friend presses his amendment to the vote so that we can see the names in the Lobby.

Lord Grenfell: It might be helpful to the Committee if I quote from the report, because this has not been mentioned. It says in paragraph 9.14:

That is an addition to what is in the legally binding protocol.

Lord Williamson of Horton: I thank the noble Lord, Lord Hunt of Wirral, for putting these amendments together into one block—a great advantage—and for using the old English word “zeal”, which I have not heard from the opposition Benches for some time. I also support what the noble Lord, Lord Lamont, said, about the incredible importance of this part of the responsibilities of the European Union. I accept that Amendments Nos. 29A and 29B are not wrecking amendments; none the less, they put up quite a big hurdle, in the sense that Amendment No. 29B would require an affirmative resolution of both Houses before the Act could come into effect.

I shall speak about the competition rules because they are an area we should be careful about changing, and the amount of work put into that sector by the European institutions, particularly the European Commission, is important. It is not just the big issues; there are a large number of small issues about subsidies to individual companies and so on where we urgently need the Commission to continue the sort of work it has carried out over many years. We cannot afford to lose them because we cannot play our European matches without a referee, and obviously we do not want to give the referee a red card—although some teams sometimes wish that would happen in European competitions.

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This is an important area for the United Kingdom. I stress that in any one period there are a large number of decisions, not just the important ones on competition issues that we need to have taken in order to protect the free market. The consequence of the large number of decisions, many of which are directed to one country only, is that they are mostly short-lived because action is taken, but generally there are six to 10 times more decisions in a year than there are directives in the European Union. In consequence, a large number of them are withdrawn. Those who quote figures about legislative Acts might bear in mind what a large number are withdrawn; for example, in 2006, 943 European legislative Acts—that is, directives, regulations and decisions—were repealed, withdrawn or expired, and 532 of those were decisions. As a matter of interest, because I am sure we can put anything into the debates here, in 2006, 264 Council decisions were adopted while 296 decisions expired or were withdrawn or repealed, so the net effect in 2006 was minus 32 decisions from the Council. We have to be careful how we handle this issue to continue benefiting from the competition rules, and we want to see those fully carried forward in the Lisbon treaty.

Lord Blackwell: A number of the amendments in this grouping relate specifically to the single market and the customs union. Those, at least in the shape of the Common Market, have been part of the European Union since its foundation. Before we nod these changes in the treaty through, however, we need to consider whether they take those two institutions in the right direction and whether we are close to the point where they may no longer be acting in our best interests. One has to compare anything that is bound up in these treaty structures with the alternatives of simply adopting a system of free trade and free capital movement. We may be moving in the wrong direction because the treaty—as we have heard from its objectives, which introduce the objective of a social market economy—is moving the regulations and apparatus of the single market further away from free trade and free competition and closer to the objectives of a protectionist, high-cost, uncompetitive market structure that may not be in our best interests.

We no longer have dedication to liberal markets in the European Union. The movement towards a social market, as opposed to a liberal market, is an explicit adoption of a political philosophy that ends up producing harmonisation by legislation and regulation that is not always intended to achieve the most competitive outcome for our businesses and our competitive standing in the world. The alternative is to have harmonisation driven by market forces, by businesses adopting those standards and regulations that they believe it is in their interests to adopt to be able to sell in those markets that they want to sell in. Increasingly, those markets are not in the European Union but, by selling into those markets, our businesses are now burdened by the costs and regulations imposed by this protectionist market in Europe. We are reaching the point where the balance of costs from the single market, as it has evolved, is too high. A number of noble Lords have mentioned aspects of that. The City of London is an

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important example of the single market being used in ways not necessarily in our interests. We are reaching the point where we need to take stock of whether further moves in the direction that this treaty takes us in, towards a social-market view of the single market, are in our interests.

Similarly, the customs union has increasingly become a protectionist vehicle, where deals which we might have done and supported to open up free trade to benefit third-world countries as well as our own economy have been blocked because of the CAP hostage that the European Union has put as a blockage to any further trade liberalisation. Again, this is not necessarily in our interests. While I understand the point that will be made—that the customs union and the single market are, in essence, part of the foundation of the European Union and are not introduced by this treaty—we need to consider that the changes this treaty is bringing about, and the objectives that it puts into the European Union in the operation of those aspects of the Union, are taking us in the wrong direction. It is, at best, a missed opportunity for the Government not to use this treaty to try to get those reforms. At worst, it takes us in a direction that may be very damaging for the UK.

Lord Pearson of Rannoch: Would my noble friend agree with a point that I forgot to make in my recent brief intervention? The overregulation from Brussels applies to 100 per cent of our economy, including the 80 per cent that takes place in the domestic market. It also hits the 10 per cent of our vital trade with the emerging super-markets of the East, and so on. Is that not another important consideration when we consider our relationship with Brussels?

Lord Blackwell: I am happy to endorse the comments of my noble friend.

Lord Hunt of Chesterton: This has been a very surprising debate. We have heard from the other Side about a world of economics that I do not recognise. I know I am a professor, but I also sit on the advisory board of EDF Energy and I have a small company that operates around Europe. The changes that have taken place in Europe from the European science and technology programmes, through regulatory software from the UK now being used in France, Germany and other countries, are extraordinary. When I began in this business 30 years ago I never thought it would be possible for UK governmental regulatory software to be used by the French Government. Such things are quite normal now. They are stimulated by the EU. Talk to businesspeople, scientists and technologists across Europe about this world we are in, and the difference in attitudes is extreme.

Lord Forsyth of Drumlean: As the noble Lord mentioned EDF, could he tell us what he thinks the prospects are for access to provide utilities in France, compared to the opportunities for French and Spanish companies to provide utilities in Britain?

Lord Hunt of Chesterton: I think it will happen slowly. We are benefiting. We had a debate on nuclear energy when many colleagues from the noble Lord’s

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Side quite rightly welcomed the idea of the development of nuclear energy, wherever it came from, in the UK. You have to go to the United States; you will see far more restrictive policies in many areas. We have a combination of science, technology and an emerging free market. This would not happen if we went back to a more old fashioned kind of Europe.

Lord Dykes: I think we all agree that there has been substantial progress from the tone of the noble Lord, Lord Hunt of Wirral, when he moved his amendment. We are grateful for what he did in the clustering of the amendments, because the clustering was re-formed, if I remember rightly, following the change in the list. We are also grateful for the fact that the Conservative Opposition are withdrawing amendments, or reducing their number occasionally, to try to speed up the process, which we need to do in Committee. It is necessary to register that point.

The noble Lord, Lord Williamson, or another noble Lord, may have said that this was not a wrecking amendment. In a way, it is the first one of this kind. We understand the natural enthusiasm of the Conservative Benches for open competition and free markets. That is axiomatic. Indeed, an aspiration to, and affection for, that philosophy is shared in all parts of the Committee. The tone has changed and I welcome that. The previous kind of amendment was not so much in that category. As the noble Lord, Lord Hunt of Wirral, quite rightly said, the Liberal Democrats proposed a particular amendment because the anxiety over President Sarkozy’s intervention was enormous at the time, and it was necessary to make sure that that was clarified. It has been partly clarified in quite a positive way, but perhaps not quite enough. We need further clarification when the noble Baroness the Lord President has time to refer to it tonight.

Coming to the main point of the amendments, I do not find it easy to understand the anxieties that have been expressed by certain Members. The noble Lord, Lord Hunt of Wirral, in his own words, referred to Mario Monti as one of the people who was, perhaps, a bit difficult on this score, from the general British viewpoint in this area. We remember a previous, far nobler episode when, at the time the Labour Government were new, Mario Monti was the Commissioner who insisted that duty free be abolished. There was ferocious opposition from British sources, including large corporations in Kent and elsewhere, who said that 100,000 jobs would be lost in Kent if duty free was abolished. Germany supported from behind with less strength. The British led that campaign to keep duty free. A more restrictive practice I cannot think of. We proudly did that and many people supported it. The Conservative Party was enthusiastically trying to make sure that Mario Monti was defeated. With enormous courage, he stuck to his guns and insisted that duty free be abolished. We saw the benefits of that process. It did not in any way dent the ability of each member state to charge its own indirect taxes, levies and duties on alcohol and other goods.

It goes to show that there is always a package of aspirations and impressions, does it not? Some countries have good examples and bad; we all have good examples and bad. The other countries quite

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rightly regard our failure to join the single currency as one of the greatest restrictions on a genuine single market. British Ministers in the previous Conservative Government used to say repeatedly that one could not, in essence, have a real single internal market without a single currency. That is the reality for those counties that had the courage to join the euro, which they have done with increasing success. You can tell because it is mentioned less and less in British newspapers, which is always the yardstick of success.

On these Benches we recognise that, in practice, the primacy of Community competition law inevitably restricts the ability of member states to legislate for additional competition and controls. In cases where those controls may directly or indirectly affect interstate trade within the market, that is an important part of the panoply of the European Commission’s powers. I hope that the British national Parliament, in both its Houses, will make sure that it continues to support the Commission in creating that Europe-wide competition and, indeed, in ensuring that international competition spreads beyond the boundaries of the EU itself. After all, we are the major supporter of this much more active and effective competition policy under Wim Kok, and Lisbon mark 1 and mark 2, which are reinforced.

I agree with the noble Lord, Lord Hunt of Chesterton, that the idea that the European economy is not successful is absurd. It is very successful in many ways. Unfortunately we only have 110 kilometres of high-speed track. Even Spain is now aiming for 10,000 kilometres by 2014. France already has 7,000. There are many examples either way, some initiated by the state sector. The first very successful people carrier on the Continent was the French Renault Espace, which was produced by a public sector corporation. So the idea that one has to be ideological about all these points is incorrect. However, we need a very strong internal market and we welcome the opportunity for the noble Baroness the Lord President to explain the Sarkozy syndrome to us again.

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Lord Forsyth of Drumlean: Before the noble Lord sits down, will he indicate whether—perhaps I missed this—he will support the amendments which were tabled in the other place by Vince Cable, and which my noble friend has tabled here tonight?

Lord Dykes: Speaking from memory, the Vince Cable amendment was accepted on its own by the Speaker of the Commons. We were not supported then—again, I speak from memory—by the Government or the Tories. We put forward the amendment on our own and we lost the vote.

Lord Brooke of Sutton Mandeville: I promised the Lord President that I would be extremely brief. I am delighted that the speeches which succeeded that of my noble friend Lord Hunt afforded enough time for the noble Lord, Lord Dykes, to receive instructions on how he should play this debate, given the turn of events.

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I am a bear of very little brain but late at night on the first night in Committee I revealed that I had served on the Budget Council of the European Union for four years. During those four years we knew when we had won an argument and when we had not. I agree that some victories are not clear cut. In the War of the Spanish Succession, Ramillies and Bleinheim were clearly profound victories, Oudenarde and Malplaquet were more doubtful. But nobody has ever suggested that the Battle of Waterloo was other than a victory, even if Prince BlĂ1/4cher sought to persuade Wellington in the picture that looked down on President Sarkozy when he made the speech to which my noble friend Lord Lamont referred, that the title should be changed to the name of the pub, the Belle Alliance, in which Napoleon ran his campaign during the battle and which is in the background of the picture. Nobody has suggested that it was other than a clear victory.

The question which we have to ask the Lord President from these Benches is, notwithstanding what the noble Lord, Lord Radice, said about the legal protocol, why was the Sarkozy amendment allowed to go through, given the pride that he self-evidently took in the matter at the meeting in the Royal Gallery, to which reference has been made? How can the position which we were defending as we went into that meeting—like the Duke on a ridge in front of the village of Waterloo—have been reinforced by making the concession that we did?

Baroness Ashton of Upholland: I am extremely grateful to the noble Lord, Lord Hunt of Wirral, for bringing together this group of amendments to enable us to have a broader debate although noble Lords have inevitably focused on the President Sarkozy issue, particularly as regards customs, which I shall come to, and other issues. I shall try to deal with each of the amendments, albeit it somewhat briefly in some cases, so that they are dealt with by the Government Front Bench.

The noble Lord, Lord Brooke, always gives me the benefit of a classical education. I was not trying to suggest that he should be brief. I seem to have gained a reputation for insisting that noble Lords should be brief. The noble Lord, Lord Forsyth, nods, which suggests that I might be trying to beat noble Lords into submission. Heaven forfend. I was merely trying to ensure that I noticed everybody who wished to speak. I had not noticed the noble Lord, Lord Brooke, for which I apologise.

I shall deal with the amendments in order to ensure that I cover them all. Amendment No. 29A has two parts. The first relates to the confirmation that the Union has exclusive competence to establish competition rules. Noble Lords will know that this competence is not new; it simply confirms the current position. By definition, rules necessary for the operation of the internal market—an EU-wide market regulated at EU level—must be an exclusive competence of the EU. If rules necessary for the operation could be set aside, it is hard to see how it would function effectively. The reason there has not been a change in terms of the single market in this amending treaty is because we believe that the arrangements and the rules that are staying in force are appropriate and good and there is

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no need to tinker with them. We believe that our access to the single market makes the UK such an attractive destination for investment. With that access comes certain common rules that are necessary for the functioning of the single market. Competition rules are among the most fundamental of such essential rules. As noble Lords will know, that does not mean that the whole area of competition law is an exclusive competence. The UK can, and does, set additional competition rules for other purposes that do not obstruct the operation of the EU’s rules.

Lord Pearson of Rannoch: This is one of the central planks in the economic debate about our relationship with Europe. Can the noble Baroness tell us why we would be any worse off if we had a simple free trade agreement with the single market as opposed to being in the customs union that is a single market? Why would we be less attractive to foreign investment? Why would we suffer at all if we merely had a free trade arrangement instead of all the baggage that goes with membership of the EU?

Baroness Ashton of Upholland: The EU is not just about a free trade agreement, important though that is. From his perspective the noble Lord sees that that is an adequate and appropriate relationship with other member states. That is his opinion. In the opinion of the Government and, I think, that of the Conservative and Liberal Democrat Front Benches, and probably that of many Members who have had the privilege and pleasure of being involved in the European Union, it is much more than that. The noble Lord believes that that is as far as he wishes to go and, indeed, his political party would say so. That is for them to put forward. The Government’s contention is that the EU brings much greater benefits, not least, as we mentioned in earlier discussions and will do so again, in terms far beyond simply trade; for example, in terms of how we tackle some of the big issues that face our countries such as climate change. The noble Lord and I differ on that principle.

The second part of the amendment concerns the publishing of the report. The European Commission publishes its annual report on competition policy which we ensure is deposited with explanatory memorandum for scrutiny by the relevant European Committee of both Houses of Parliament. We do not as a matter of policy comment on the competition enforcement activities of independent competition authorities, be they at national or European Union level. It is important that they are able to carry out their function free from political interference. I hope that the noble Lord will consider that I have addressed that amendment.

Amendment No. 86, which refers to the protocol on the internal market and competition, goes to the core of much of the discussion that we have had on this group of amendments. Noble Lords identified the importance of President Sarkozy’s position in this regard and the importance of the change that was made within the treaty. First, negotiations are negotiations. Many noble Lords present this evening and in the House overall have been involved in negotiations and will know that they are a give and take process in which it is often important to look at the domestic

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situation of those trying to put forward a proposition. The second element to a negotiation is to look at what would be the impact of that negotiated position. As I said in response to an Oral Question by the noble Lord, Lord Campbell of Alloway, I cannot read President Sarkozy’s mind but I know that in putting forward his own negotiating position he will be very mindful of his domestic position. That is what heads of government must always be aware of. Therefore, I presume that the President of France put forward a proposition that he felt would find favour, and which he has subsequently said does not have legal force. I believe those were his words. I promised that I would not quote overseas leaders but I think that is a particularly relevant symbolic comment. I believe that the President of France made a symbolic gesture without legal force that was important in terms of his domestic circumstances.

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