May 17th was also the day (some years before) that my parents first visited the House of Commons. While they were watching, the Lord Privy Seal made an important speech. [This began a family tradition of being in the gallery when important announcements were made - I was there the evening that the news of the surrender of the Falklands came through].
The speech contained the announcement that the UK would seek to enter negotiations to enter the EEC (which has evolved into the EU). 52 years later it is worth re-reading. (and certainly it is relevant to some of the claims we frequently hear about what we joined)
"I wish to turn now to the question of Europe. The problem with which we have to deal in Europe is a fundamental one. It is the question of what are to be the relations of ourselves and the Commonwealth and the E.F.T.A. partners with the new Europe that is emerging. This I believe to be a most fundamental question and I propose to devote the rest of my speech to it.
After the war, Europe was weak. It was disunited, its buildings destroyed, and its economies in ruin. Over the next ten years it slowly and gradually made its recovery, economically with the help of Marshall Aid and O.E.E.C. militarily through N.A.T.O., and politically through such organisations as the Council of Europe. Throughout that period we played our full part in all these organisations—and when I say "we" I refer to Governments of both sides of the House. We played our full part in working for the recovery of Western Europe.
Today, Europe is strong. The pattern has changed and a fresh relationship has to be established between ourselves and the other countries of Europe and the six countries of the Economic Community. What is that relationship to be? This is one of the major problems of our time and it confronts us with decisions of immense importance to ourselves, to Europe and to the Commonwealth. It is only right that these decisions should be taken with as full a knowledge as possible of all that is involved. There must be no misunderstandings. We must weigh all the factors carefully, but, above all, we must set them in the right perspective.
The Government are often urged to enlighten the House and the country about these issues. That is perfectly right, but it is not always easy to do so on an issue of this kind. Our own tradition of parliamentary government is one in which the Government take a decision, submit it to the House and await its verdict. But in a situation like this, which is evolving, in which one is trying to establish relations with a number of other countries, and in which, later, it may be necessary to undertake negotiations, it is by no means easy to enlighten the House and the country to the extent which is being asked at the moment and to the extent to which we should like to do. Nevertheless, as this is one of the great issues of our time I believe it right to try to set before the House, as fairly as I can, what the issues are and what we are trying to do to reach a solution to them.
We see today in Europe a powerfully developing group of nations in the European Economic Community. Its strength is shown by its size of over 170 million people compared with 50 million in the United Kingdom and rather under 90 million in E.F.T.A. as a whole. Their reserves of manpower are much greater. In ten years' time the populations under the age of 45 in France and Germany alone will be double that of the United Kingdom. The gross national product of the Six is two and a half times that of the United Kingdom. Their rate of industrial growth is much higher. The internal trade of the Six rose by 30 per cent. in 1960 compared with 16 per cent. for the internal trade of the Seven.
The Six have a strong balance of payments position and large resources. Their prospects are already attracting increased investment both from the United States and from the United Kingdom. In the past, over 50 per cent. of the investment in Europe from the United States came to the United Kingdom. In 1960, it was down to 41 per cent., and in 1961 over 50 per cent. of the United States' investment in Europe is expected to go to the Six.
I give these facts to the House as an indication of the strength and the size of the new group which has emerged in Europe. It has established itself, and it is showing every sign of future success.
What, then, we must ask ourselves, is to be the impact of this group on ourselves, on our Commonwealth and on our partners in E.F.T.A.? We now see opposite to us on the mainland of Europe a large group comparable in size only to the United States and the Soviet Union, and as its economic power increases, so will its political influence.
Throughout our history—I am trying to put these facts before the House because I think that they are necessary for making a balanced judgment—we have recognised the need to establish a relationship with the other countries on the mainland. Usually, it has been because we feared their military hostility. Our relationship has been part of the balance of power. Today, that is certainly not the case. It is the great blocs of the Communist world and the Western Powers which confront each other. But the problem remains for us to establish a relationship with the new and powerful group on the mainland of Europe.
In the political sphere we see the growth of political consultation between the countries of the Six. There is regular consultation at the level of Foreign Ministers. There is frequent and regular consultation between Ministers of other kinds at other levels, and between, for example, the governors of the State banks; and proposals are being considered for more formalised consultation at the level of heads of Government.
This is not in any way blameworthy, as is sometimes suggested. It is the perfectly natural development of the cohesion of a group such as we see now developing in Europe. From the point of view of political consultation, we have consultation in Western European Union, in which the Six and the United Kingdom sit. At the last meeting of Western European Union the members of the Six told me that they had postponed some of their political consultation from their own meeting the day before until we were present, so that we could take part in it. That was, I think, an indication of their desire that we should take part in some form of permanent political consultation with them. Western European Union is being used meantime as a substitute until more permanent arrangements can be made
This development poses for us and the rest of Europe considerable political problems. I am talking now not only of the next six months, or the next two or three years, but of a much longer period. We can then see the danger which faces us of a decline in political influence in the world at large and in our Commonwealth. So the first point that I want to emphasise is the political factor involved in this new arrangement of the European countries which has come about since Europe recovered from the after-effects of the war. That is the political background to this problem.
What will be the economic consequences for us of its development? Until the creation of the Economic Community our trade with Europe was increasing. It amounted to 15 per cent. of our trade. During the past five years our exports to the Six have increased at nearly twice the rate of our total export trade. This trade is bound to be affected by the creation of the common tariff round the markets of the Six and the gradual abolition of their internal tariffs.
This will be particularly the case, first, because most of our trade with them is in industrial products, and, secondly, because our markets were in those countries such as the Federal Republic of Germany, which have to raise their tariffs to reach the common tariff level. The creation of a group of this kind means, in any case, that they have all the advantages of mass production with a large market. This, again, poses economic problems for us of competition. More than that, it also means that the Six will be better able to compete in third markets of the world. This will be a challenge to our export trade as a whole. What I have already described also means that the Six will prove a continuing attraction for investment on both sides of the Atlantic. I am not telling the House that our trade is in immediate danger. What I am trying to do for the House is to look into the future over a longer period and see how these things may well develop.
Those are the consequences of the division today between the European Economic Community and the rest of Western Europe. The results of a closer unity between the group and ourselves and our partners in E.F.T.A. would, of course, be the reverse. It is not only that we would together be able to share the benefits and advantages of this new development. We would also be able to contribute very much to it ourselves. On the political side, one of the major political achievements of the Six has been to create a Franco-German rapprochement which is invaluable. Our presence would undoubtedly consolidate this and contribute towards the balanced development of the Community.
These, then, are most powerful reasons why we should use all our strength and energy to find a solution to the problem of a closer relationship between ourselves and our partners and the European Economic Community. It is against these political factors that we should place the very real difficulties of finding a solution in the economic and commercial field.
Of course, if we examine these, we shall find some things which we do not like—some individual things which maybe disadvantageous to us and some things which they do differently from the way to which we are accustomed. But, against this, we must weigh the very formidable political and material advantages to be gained from a closer association, and we must weigh it all in the context of the future position of our country and the Commonwealth, and of the future position of Europe as a whole and its influence throughout the world.
I would now like to tell the House something of what has been done since we started a new approach to this problem nine months ago. At the meeting then between Chancellor Adenauer and my right hon. Friend the Prime Minister it was decided that we would explore through diplomatic channels, by official and ministerial talks, to see whether a basis for negotiations could be found.
Two things were necessary. The first was to create the will on both sides in Europe to find a solution. The second was to find the technical means whereby the differing interests could be reconciled. On the question of creating a will to find a solution, I believe that there is now a greater will in Europe than ever before to find a means of settling this problem. We have many friends in Europe, and all of them are anxious that these things which now divide us should be removed.
We have made good progress with the technical talks and have covered a lot of ground. Some hon. Members—and I can quite understand it—may ask why it is that this work has still to be done. The reason is that the earlier solutions which were proposed to this problem, in particular, the Free Trade Area, by their nature excluded the sort of problems which we have been closely examining with great energy over the past few months. The Free Trade Area solution excluded by its nature anything to do with agriculture and Commonwealth trade, and institutional problems. Therefore, it is only since we made the new approach last September that this work has been done.
At the meeting of W.E.U. Ministers at the end of February, I was able to report on the progress which had been made. Again, hon. Members may ask why this should be done in W.E.U. It was done there, first, because the Union has as its object to help create closer unity in Europe, and, secondly, because it is the only forum in which members of the Six and ourselves together meet as of right.
I reported our view of the political position in Europe. Briefly, it was this: discussion amongst the Six themselves about their own problems is a matter for the Six. We have no desire to force our way into it. On the other hand, if an arrangement is made between the two groups, or in some other way there is political discussion, then, of course, we will play our full part in it. If there are political discussions on Europe of a nature outside the domestic affairs of the Six, about Europe's influence in the world, then we believe that we should be present, that we have long played our part and have much to contribute. Lastly, as my right hon. Friend the Prime Minister has told the House, if he was invited to attend a conference of heads of Government he would be disposed to accept.
That statement made our political position, as far as Europe is concerned, absolutely plain to all its members, and I am sure that there is no doubt about it today. As far as the economic position is concerned, all I put forward was a report. It was not a series of proposals for negotiation which were to be accepted or rejected. It was a report on the way things had been going in the talks so far and the position that we had reached. I told the members of the Six that if they were able to meet our problems with regard to the Commonwealth and to domestic agriculture, we could then consider a system based on a common or harmonised tariff on raw materials and manufactured goods imported from countries other than the Six, the Seven or the Commonwealth. This was an important change on our part, because it meant that over that sector, excluding the Commonwealth and E.F.T.A., we were accepting the common tariff and its implications. That is the context in which we have been working.
I now want to mention to the House four matters which we are very concerned about. The first is our trade with the Commonwealth. The second is our domestic agriculture. The third is our E.F.T.A. partners. The fourth is the institutional question. We have always made it plain—and I repeat it now—that we shall keep in close touch throughout with other Commonwealth Governments, and will have full consultation with them before we decide on the course to follow.
We have been examining imports from the Commonwealth under four heads—raw materials, tropical products, manufactured goods and temperate foodstuffs. Very few raw materials present any difficulty since, with a few exceptions—I think that there are five main ones—they are imported duty free both into the E.E.C. and into the United Kingdom.
Tropical products present a more complex problem which is, indeed, world wide. It vitally affects the interests of countries outside Europe, including those which have no links with European countries. This must be borne in mind. I have good hopes that progress can be made as far as tropical products are concerned.
The difficulties lie with manufactured goods and temperate foodstuffs. Together, they represent about half our imports from Commonwealth countries, and we have been and still are studying the complex problems involved. But I must tell the House that we cannot yet see clearly what can be done. In our talks with the Six we have naturally been asked what we think should be done, in the context of an overall settlement, in regard to the preference at present enjoyed by United Kingdom exports in some Commonwealth countries. We have replied that we should see no difficulty of principle in the way of discussions between the Six and the Commonwealth countries concerned about possible reductions in tariff preferences, as part of a satisfactory overall settlement so as to put it in general balance.
This has helped confidence. This is where we showed, in our desire to reach an arrangement, that we are not trying to get the best of all worlds and that we are not putting forward the Commonwealth as a reason why we should not have an arrangement with the Six.
Our second main concern is domestic agriculture. If a settlement is to be reached, all the E.E.C. countries now consider that agriculture cannot be excluded altogether. In trying to place the position fully before the House, I must make it plain that that is their view. There must be further discussion before a clear picture emerges, but I want to make three points about it today.
First, while the Rome Treaty lays down the general scheme for a common agricultural policy—a scheme which is different from ours—its detailed implementation has not yet been decided. Secondly, there are indications—and these have come since my statement to the W.E.U. ministerial meeting—that the Community might be ready to consider the possibility of modifications in its present proposals for a common agricultural policy in order to go some way to meet us.
Lastly, while there might be difficulties in one or two commodities—just as there would be problems in industry—British agriculture as a whole, as its post-war record shows, is in a sound state to contemplate participation in a common agricultural policy, provided that that participation is on equal terms as part of an enlarged European Economic Community. The British farmer is efficient and competitive.
The next point I want to make is that the Common Market in agriculture will be introduced gradually, and it will be a long time—perhaps eight years or more—before it comes into full effect. We have, of course, given firm pledges to our farmers, and any change in the method of support we consider would have to take full account of them.
Thirdly, I want to talk about our E.F.T.A. partners. I am very glad that it was possible to reach agreement about the association of Finland with E.F.T.A., and it is also very pleasing to us that so soon after reaching this agreement it was possible for the President of Finland to visit this country. A shadow has been cast over our memories of his visit by the sudden death, shortly after his return to Helsinki, of the Finnish Foreign Minister, with whom I had talks last week in London. That is a matter of great regret to us.
In these exploratory talks we have been speaking only for ourselves. We have always made it plain that the interests of E.F.T.A. must be safeguarded. We have kept the member countries of E.F.T.A. fully informed of all stages of the ideas that have been put forward and examined. We shall continue to do this, and we shall also consult them before we take any final decisions. Some anxiety has recently been expressed by the Press of some of the E.F.T.A. countries that the United Kingdom, or another E.F.T.A. country might suddenly decide "to go it alone without consideration for its partners. This would break up E.F.T.A., and leave the other countries in a weak position in which to make their own arrangements.
The United Kingdom will not abandon its E.F.T.A. partners in that way. We all wish to find a solution—
Mr. A. C. Manuel (Central Ayrshire) In what way?
Mr. HeathI was referring to the allegations that have been made in the Press that we would "go it alone". We are not prepared to abandon our E.F.T.A. partners in any way in trying to find a solution, which may not be the same one for each of us, but we should all help each other to find a solution
That was the original purpose for which E.F.T.A. was formed. If E.F.T.A. were to disintegrate because some members were looking for solutions on their own without thought of their partners, that would be deplorable. If, on the other hand, E.F.T.A. eventually disappears because we have each found an arrangement that suits us in a wider Europe, E.F.T.A. will have achieved its purpose.
We have also been examining the question of institutions, and this ought to be faced frankly and openly. It is necessary that we should understand what is involved in them. The Treaty of Rome set up a permanent commission under a Council of Ministers. What I wish to emphasise is that the activities are limited to commercial and tariff policy on behalf of the Council of Ministers which takes the decisions in these matters.
The operations of the Community affect two particular aspects of national sovereignty and, again, there should be no misunderstanding, in looking at these problems, as to what is involved. First, the power to make commercial agreements passes to the Commission when it is that sector. Secondly, an appeal from commercial decisions lies to the international court. It is only right that those two things should be mentioned; they are both important, and we should face them frankly and openly.
I now wish to deal with the particular point mentioned in the Amendment standing in the name of the Leader of the Liberal Party—[HON. MEMBERS: "Where is he?"] This is an important matter which is constantly brought before us. He suggests that we can make progress in solving this problem only by first announcing that we propose to sign the Treaty of Rome and then start to negotiate such derogations as may be possible.
I do not believe that to be the case. The signature of the Treaty of Rome does not, of itself, solve any of the difficulties that I have been describing to the House. They would still remain to be resolved. If it were necessary to do this to convince Europe that we were genuine, there might be some argument for it, but that, I am quite convinced, is not the case. Neither have any of the members of the Six, in our talks, asked us to follow this procedure. They realise that it is reasonable that we should see the broad lines of a settlement before any request is made to start negotiations——
Mr. Arthur Holt (Bolton, West)
Neither the Leader of the Liberal Party nor any other leader has stated what the right hon. Gentleman has ascribed to my hon. Friend. To say that we should apply is quite different from saying that we should sign before commencing negotiations. We have only said that we should apply for entry first, and negotiate later.
Mr. Heath
It is only reasonable, and is accepted by Europe as reasonable, that we should first see what the broad lines of a possible settlement are, and that is the procedure that we have been following——
Mr. Harold Davies (Leek)
We have listened to a quite important speech, to a very dramatic statement. Would the right hon. Gentleman let the House know whether or not his party and the Government would take a dramatic and major step like this without first discussing it with the British electorate? This problem is of such magnitude that the whole life of our people might be changed by it. The issue is one which should be put forward in a General Election programme—not pushed through Parliament without discussion at the polls.
Mr. Heath
I am putting forward these points today so that the House might consider the great issues involved; and I am sure that the country, too, will be the better able to do so. I am sorry if, perhaps, from some points of view in the House, I am devoting so much time to this issue, but I think that it is right to do so. [An HON. MEMBER: "On this Motion?"] Yes, on this Motion, because this matter of European unity is of the greatest possible importance.
I have tried to describe the European position and I now want to say a brief word about the United States position, because its trading arrangements may well be affected by any solution we may reach. The new Administration in Washington have made their attitude quite clear. The United States is prepared to accept additional discrimination against its goods provided that the arrangement reached can be shown to strengthen the political unity of Europe. It does not feel itself obliged to accept further discrimination from a purely trading arrangement which carries no political advantage. This is a position we can all understand and appreciate. At the same time, it is for the countries of Europe themselves to decide what action they want to take in those circumstances.
As to the attitude of the Six, there is now evidence of a desire throughout the Community that we should reach a settlement. M. Couve de Murville, with whom I had most useful talks last October, which were followed by talks between the Prime Minister and President de Gaulle, has now publicly stated that it is open to us to accede to the Treaty of Rome, which is what the French Government would prefer, or to form some kind of association with it. This view is shared by France's partners in the Community. I therefore submit to the House that what remains is for us to pursue as vigorously as we can our discussions with the members of the Six about the nature of any settlement that is possible, and the means of dealing with our particular problems.
There are really four courses that are open. The first is to abandon the search for a solution. That would be a counsel of despair. The second course is to try to make an economic arrangement between the two separate groups, which will continue to retain their identity. We have, of course, been exploring this, and exploring it fully. It would mean some additional discrimination against the outside world without the corresponding political advantages necessary to offset it. As far as we can see at the moment, it is not a solution that particularly commends itself to the members of the Six.
The third course is for the United Kingdom, and other members of E.F.T.A.—not as a group, but individually—to make a form of association with the Community. In that course, one has to consider the degree of political participation which would be involved, which I emphasised at the beginning of my speech. One would also have basically to consider the influence of an association on the economic policies of the group. On this, again, there is much exploratory work to be done because the first form of association between the Economic Community and another country, that with Greece, has only just been made and has not yet been published.
The fourth course is that of full membership, provided that proper arrangements are made for Commonwealth trade and for our agricultural system to reconcile them with trade and agriculture in Europe, and proper arrangements for our E.F.T.A. partners. If we are to reach agreement there must be give-and-take on both sides. We shall not secure all we would like, but we shall share in great benefits which are not now available to us. To be lasting, any settlement must be fair to both sides.
This is an urgent matter. As the Community develops and its policies crystallise so it will become more difficult to fit into the arrangements which are made. So long as uncertainty exists, businessmen and those engaged in industry and commerce cannot make their plans, either for sales promotion or for investment. On the political side consultations cannot fully develop until this problem is solved. Nevertheless, it is bound to take time, in a matter as complex and as difficult as this, to find a solution to these problems
As we have so often repeated, we are resolved not to start negotiations until we can see the prospect of a successful outcome from them.
Mr. Woodrow Wyatt (Bosworth)
Negotiations have started.
Mr. Heath
We have not started negotiations, but have been carrying out exploratory talks without any commitment of any kind.
I have tried to put as fully as I can the aspects of these European matters, the political and economic aspects of the problem. We recognise that there are for the people of this country very deep human feelings involved in great matters of this kind. Those are feelings which sometimes are buried. They survive from times long ago but today they often colour, perhaps subconsciously, our attitude towards these things. After a point, human beings come to dislike change. Working out a new relationship with Europe involves major decisions and changes. It would be much easier if none of these developments had come about and if no decisions had to be made about them in future, but no nation which allowed that attitude to govern its actions could survive in the world today.
For all of us it is perhaps the Commonwealth which most permeates our thoughts on this problem. Our love for the Commonwealth is deeply bred within us and the question immediately raises itself: will our connection with the Commonwealth in any way suffer if we establish a new relationship with Europe? We must face this situation frankly and openly. Those who have been handling this matter have thought long and deeply about it. I believe that we can maintain our close connection with the Commonwealth and I believe that is what Europe itself desires. The personal ties which link individuals within the Commonwealth and the channels of trading which are so well established, the network of consultation which has grown up over the years, the Prime Ministers' conference, all these can be maintained.
Indeed, with the strengthening of our economic position we should be more able to help in developing the Commonwealth and to strengthen the ties which bind its members together. These then, are the issues which are involved.
Sir Harry Legge-Bourke (Isle of Ely)
I am very sorry to interrupt my right hon. Friend, but could he say whether Her Majesty's Government have yet come to any view as to the likelihood of the Common Market countries going on to a common currency? If so, what are likely to be the consequences of that for sterling?
Mr. Heath
I could have dealt with the individual matters concerning the institutions. There are a number of other matters of Article III of the Treaty of Rome, of which financial and investment questions are one. On those other questions the members of the Six are only beginning to formulate policies and they are in the early stages. These are matters we shall have to explore in our talks.
I hope that hon. Members will realise the complexities and difficulties of finding a reconciliation between these matters and policies in the different countries. This is the problem that we are discussing in Europe today. I believe that it is one of the greatest which confronts our generation. It is technical and complex and its aspects must be kept in perspective. Above all, I think that the technical and commercial matters I have mentioned must be set among the great political issues I have described. They must be set in the context of the unity of Europe and the contribution they can make towards the freedom of Europe, on the unity and freedom of which peace depends.
