Examination of Witnesses (Questions 320
- 325)
MONDAY 15 OCTOBER 2007
Mr Peter D Sutherland
Q320 Lord Haskel: Certainly
the biggest triumph of the Single Market has been the Single Market.
You say that you think it is the rule of law which is the way
to liberalise the market more and to liberalise services. The
problem with that is that it takes a long time; it is not very
imaginative as far as the public are concerned and it is not very
inspirational. Each side has smart lawyers. Do you not think there
is another way of doing it? For instance, making sure that everybody
in the European Union knows what benefits they have had from the
Single Market already; explaining to people how many of the things
that they take for granted about the European Union are, in fact,
products of the Single Market. I just wonder whether we could
not be doing an awful lot more to look at the Single Market in
other ways so that we can achieve the objectives of liberalisation
and more prosperity through competition across borders by other
than just legal means.
Mr Sutherland: I have to agree with you and
I agree with you entirely but when you have seven out of every
eight newspapers in this country apparently stridently anti-European
as far as I can see it is very difficult to see the organ one
will find to make this presentation of the positive benefits clear.
I just do not see the evidence that that can be done. We have
been talking about this for years, we have had reports set out
the details of the benefits that would be received. Now I fear
that it is difficult to do what you would wish. I am not saying
that this should be driven by law because law, after all, can
only become law if it is adopted by the Member States themselves.
Directives and regulations are part of it and it is a narrowed
ground on which to try to foster positive reaction, I agree with
you entirely. I am merely saying that it has to be the base on
which you build and has to be an essential thing that you believe
in. If you do not believe in that then you lose the base which
is necessary to support the whole edifice, but I agree with you
that it would be much better if we could have a popular tide of
support based up a recognition of the full benefits that have
been obtained through the Internal Market, and other things. Free
movement, for example, the Erasmus programme—I claim no
credit for it but I had one year as Education Commissioner and
it went through in that year in 1986 thanks to a Welshman, Harold
Jones, who had an important role in its creation as my Director
General—which enabled millions of students to spend a year
abroad since then in different countries in Europe which is again
part of the Internal Market free movement and so on. There are
a lot of things that could be solved far better than they have
been which would never have happened without the European Union.
Q321 Lord Whitty: This is
partly on the same point, but in terms of public support for the
Single Market the citizens do have to see their lives as consumers
and as workers improve as a result of the Single Market. You are
obviously quite right to say that a lot of benefit has already
been achieved, but it has mainly been achieved by the effect of
the Single Market liberalising individual national markets, breaking
up monopolies and allowing establishment in different markets.
As far as the individual consumer is concerned, the markets are
still national and the amount of trans-border trading that takes
place, except in limited circumstances, is pretty small considering
we have been allegedly a Single Market for some time. My first
question really is how far do you think the next phase could actually
make it easier for consumers to access in various sectors markets
outside their national area so they were actually feeling as if
they were part of a Single Market as distinct from indirectly
getting the benefits of it? Secondly, whether in their role as
workers you need a stronger social dimension to the market to
make it realistic to citizens?
Mr Sutherland: First of all the practical economic
effects of the Internal Market across borders—not as far
as consumers are concerned perhaps and their perception of it—are
already self-evident. All you have to do is to look at, for example,
the current situation with regards to RBS and ABN AMRO or many
others cases. There are national champions and companies across
borders or, for that matter, Abbey National and Santander there
are cross-border mergers taking place at a rate which would have
been inconceivable without the European Union. If the European
Union and what it has provided had not been around we would be
living in a Balkanised Europe today with protectionist enclaves
virtually everywhere. With regards to the benefits and the knowledge
of the benefits, I am not trying to score cheap points and go
back to what I said at the beginning but if you look, as I did,
over the last couple of days, at the Eurobarometer reports over
30 years and the British perception of the benefits received from
the European Union, it has been consistently at the bottom. The
Dutch are referred to as having rejected the European Treaty recently
and yet 84 per cent of the Dutch people take the view that the
European Union is a good thing and has brought them benefits.
It has not happened here. I must say that the real problem is
a more general political problem which is over to you, gentlemen,
because it seems to me that either the political facts sell the
issue or it is not going to be sold. The fact that you are buying
products in shops that have come in because we are part of the
European Union may not be as relevant here as it may be in other
places because Britain was and is an open economy. I can see that
from the outside, but I think the problem about the popularity
of the European Union is a much deeper issue than the consumers
saying that they get something out of it. On the social dimension
of the European Union it seems to me that the social dimension
of the European Union of the Single Market has been the provision
of a vast number of jobs which I do not think otherwise would
have existed because of the integration of the economic activities
of different countries. I do not think it has challenged jobs,
it has created them. In a sense it is the argument about globalisation
in embryo and indeed it is the embryo of globalisation because
if there had not been—and I should put this on the record—in
my opinion, having been Director General of GATT and the WTO,
there would be no WTO and there would be no globalisation as we
know it if there was not a European Union not merely because we
would never have had an agreement in the Uruguay Round which created
the WTO in the first place and there are social elements included
in that, but also because if the Europeans had been negotiating
separately there never would have been an agreement. I can name
a few that would have blocked the agricultural package from the
start off before you went any further.
Q322 Lord St John of Bletso:
Mr Sutherland, you mentioned the main driver behind the Single
Market was economic. I spend a lot of my time in Romania, Bulgaria
and Poland, how successful do you believe enlargement has been
for the Single Market and on your issue of the enforcement to
what degree have the chapters of the Acquis Communautaire been
enforced that ought to enable joining but one wants to see some
continuity of adherence to those chapters?
Mr Sutherland: In regard to the enlargement?
Q323 Lord St John of Bletso:
Yes.
Mr Sutherland: I do not think anyone would say
that there is perfect compliance in the enlargement restraints.
I think a political decision was taken that you could have a very
much prolonged negotiation and accession process to reach a more
perfect situation and by having a longer process to have a bigger
stick with which to induce the conformity with laws or alternatively
to move it more rapidly for political reasons. The United Kingdom
favoured the latter course and I think on balance they were probably
right to do so, but there is another case. One should say that
the same argument could be advanced in regard to the whole Turkish
accession issue. The second point that one needs to make is that
the enlargement countries in aggregate only may up between five
and ten per cent of European GDP so we are dealing with something
which is marginal in its economic importance to the functioning
of the internal Market. I think it has had a more profound effect,
actually, in terms of migration and the impacts of migration which
I think have been overwhelmingly positive to the countries which
have been open to that migration as opposed to those who declined
for the interim period. I think that whilst you are absolutely
right that the conformity with rules and regulations has not been
universally respected as it might have, that there is still evidence,
for example of corruption in some quarters, that there was a political
choice made and on balance I think it was the right one. I think
people knew when that enlargement actually took place that it
was not going to work perfectly. The danger of it of course is
that if you get breaches of the law you end up in a situation
where the law itself can come into disrepute because it is not
being applied equally.
Q324 Lord Geddes: Mr Sutherland,
this may be particularly appropriate for yourself, given the service
that you did in Brussels, do you think that the original goals
of the Single Market have been changed? If so, why and to what
extent—if they have been changed or have themselves changed—is
that to do with the enlargement?
Mr Sutherland: It seems to me that the initial
goal of the Single Market, the four freedoms—free movement
of goods, capital, services and people—has not changed since
the creation of the Single Market, however the environment and
the scope in which the Single Market operates has changed dramatically
in the interim. The Single Market has moved from being a mass
manufacturing market to one which is dominated by services and
that is particularly the case in the UK. Enlargement has also
fostered a cultural diversity and greater competition, has fostered
greater innovation amongst market participants. The scope I think
has also changed from national markets to European markets to
globalised markets and I think now we have a situation where the
change of focus of the Single Market from removing internal borders
has now become a focus on how the EU can compete with the rest
of the world. It is necessary to get to the final stage to have
the first stage. If we do not have internal competition we have
no hope for the rest of the world. We have big social issues at
the end of the day about this which I do not know how we will
ultimately address. Our only chance is by having a competitive
market as a base. The big social questions are the ones I have
already mentioned, the question about us working probably 25 per
cent fewer hours than even the Americans, even fewer than some
of our Eastern friends; we have big problems in labour participation
amongst women and older people and so on and so forth, much lower
than elsewhere. These are legitimate societal choices that we
have decided on and we are not prepared to do any more. We are
all the same in Europe on these. The last one is the demographic
and the demographic ties into the migration. The demographic is
the third big challenge. Those are the challenges to Europe. We
have to recognise that our competitiveness is enhanced by a functioning
Internal Market immeasurably from what it otherwise would be,
it gives us some chance. But the other issues are issues which
we have to address in our own way. There are differing views about
it. The only other point I would make about that is that I do
not actually think it is a left/right debate because some of the
countries that are most effective and efficient in the competivity
area of Europe, over a reasonable period of time, are the Swedes,
the Danes and the Finns. They are spending a lot on research,
they are doing a lot on the Internal Market, three or four times
more PhD students than here or in some other countries in the
EU. I am going into a much wider area but that seems to me to
be the issue. I may have missed your basic point.
Q325 Lord Geddes: You said
the four basic premise still stand. One of those of course is
the movement of people. Do you think that within the EU it was
foreseen what "problems" the enlargement would have
vis-a"-vis the movement of people?
Mr Sutherland: I think it was. For an example
let me take Turkey and the Turkish enlargement. The political
involvement in Europe, the Commission, Council, Parliament and
so on is one thing. The other issue is 71 million people with
a GDP per capita at X as opposed to Y as the average. I am in
favour of enlargement and in favour of dealing with the difficult
issues of migration that follow from it, but if you are going
to have a debate about it you have to accept that that is part
of the debate. You cannot debate enlargement whether it is to
Turkey or to Romania or anywhere else and ignore that implication
and say, "This is all a problem about Islam and Christianity
or NATO or something else". Whether they knew it or they
did not, I think that there were some politicians who actually
wanted to enlarge to dilute and possibly to destroy. I think that
there were others who wanted to enlarge because they felt, as
I feel, that there is a certain moral obligation to those who
are separated through no fault of their own from democratic Western
Europe and that we should move and take the risks and the problems,
including migration. There were some who deliberately did not
discuss the migration issue and therefore if it comes as a surprise
to people now it was because they were not properly informed.
It was evident that it had to happen. We had a situation after
all where the difference in GDP per capita between some parts
of the newly enlarged Europe and the old were so dramatic that
it inevitably meant that there would be a greater flow of people.
I think it has greatly enhanced our society, at least in my experience
of it here in London and in my own home country. I find them enlivening,
positive and the diversity is something I enjoy.
Chairman: Mr Sutherland, thank you very
much indeed for your evidence. We said we would finish at 4.30,
it is now 4.30 and this part of the hearing is closed. Thank you.
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