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European Community

Volume 978: debated on Wednesday 13 February 1980

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Council Of Foreign Ministers

35.Mr.

36.

asked the Lord Privy Seal when next he expects to meet his EEC counterparts.

37.

asked the Lord Privy Seal when his noble Friend expects to meet his European Economic Community counterparts.

39.

asked the Lord Privy Seal when he next expects to meet his EEC counterparts.

My right hon. and noble Friend and I will meet our Community colleagues at the next meeting of the Foreign Affairs Council in Brussels on 17 and 18 March.

Will the Lord Privy Seal confirm that he received no satisfaction on his recent tour of the European capitals and chancelleries in his effort to gain support for the United Kingdom's attempt to reduce its grotesquely excessive contribution to the European budget? Does he agree that in the last couple of days the French have been characteristically unhelpful? Does he accept that, if the Prime Minister is not to be grossly humiliated at the forthcoming summit, Britain will have to take action on its own? Will the Minister comment on the article by the European editor of The Guardian today which suggests that we could legally withhold VAT contributions?

The hon. Member's language is, to use his word, "excessive". I agree that our net contribution to the European budget is, indeed, excessive. I cannot confirm that I received no satisfaction on my recent tour. It was helpful. There was a general desire to see our problem solved. I hope that it will be. It is not for me to comment on articles by the European editor of The Guardian.

Order. I hope that the Member will ask his question, because time is short.

I am sorry, Mr. Speaker. I was put off my stroke by hon. Members. Is the Minister aware that many of us are deeply concerned by the report in The Guardianand by the Lord Privy Seal's reply? Can he confirm or deny that the Government are considering cutting off VAT payments if we receive no satisfaction in the negotiations?

I cannot comment on the article by the European editor of The Guardian. That is normal practice and it is particularly true on this occasion since I have not read the article.

I appreciate that some progress has been made towards achieving a common position among the Nine on the Soviet invasion of Afghanistan, but does my right hon. Friend expect that further progress will be made at the meeting to reach a unified EEC approach to the problem?

I am sure that that will happen. Further progress was made in Brussels last week at the meeting attended by my hon. Friend. This is not a matter that can be settled overnight. There is an undoubted process of convergence in train.

What response will the Government make to the application by Turkey for membership of the Common Market? Is not that worthy of a statement before we go any further?

No, because Turkey has not yet made a formal application. Turkey has made it clear that that will be the ultimate result of the 1963 association agreement. It is far too early to make a statement.

Has my right hon. Friend any comments to make on the statements by Mr. Jenkins about the approaching bankruptcy of the EEC?

The President of the European Commission pointed out the general economic difficulties facing Europe. I do not think that he said anything new.

Does the Lord Privy Seal agree that the approaching bankruptcy of the EEC will not occur in time to rescue the Government from their public expenditure problems in 1980–81 since the £1,000 million which was to be agreed to be refunded to Britain at Dublin played such a significant part in the Government's plan?

May I take for granted that the Government will not be in any way deterred from their pursuit of a broad balance by a French Finance Minister reading his brief at the last Council of Finance Ministers? We know that it was negative, but the French frequently are. The Minister must make it plain that the Government are still absolutely determined to achieve the broad balance which they set out to achieve and that they will not—

Order. I am sorry to interrupt the right hon. Geneltman but he must ask questions. This is not a time for debating.

I can confirm that, so far as is known, there is no question of the 1 per cent. limit being penetrated this year and that it does not have any immediate application to our budget problem. The House is aware of our approach to these matters. My right hon. Friend the Prime Minister said after the Dublin conference that progress had been made—[Interruption.] Well, it had. The inhibitions have been taken off the 1975 mechanism which was negotiated by the Labour Government and which was singularly ineffective. The Commission was invited to make proposals for increasing expenditure in the United Kingdom. It has now done so. After Dublin the Prime Minister said that our objective was a genuine compromise but she pointed out that we had little room for manoeuvre. That is still the position.

38.

asked the Lord Privy Seal when he last met his EEC col- leagues; and what was the outcome of the meeting.

I last attended a meeting of the Foreign Affairs Council on 15 January. My right hon. and noble Friend went to the most recent meeting of the Council on 5 February. I reported the outcome to the House on 7 February in reply to a question from my hon. Friend the Member for Nelson and Colne (Mr. Lee). I also attended an informal meeting of Community Foreign Ministers on 8 February.

Will the Lord Privy Seal make it clear to his EEC colleagues that the House will not allow the Prime Minister and the Foreign Office to shuffle out of their commitment to reduce the British contribution to the EEC budget by £1 billion?

I have no reason to remind my colleagues of that because they are well aware that neither the Prime Minister nor the Foreign Office are in the habit of shuffling out of anything.

At all the recent meetings have not the French and the Germans in particular proved much more intransigent than was originally expected about reducing Britain's contribution? Is it not wiser to start reducing expectations in Britain about the possibility of repayments being made?

I do not think that my hon. Friend is right to say that the German and French Governments have been more intransigent than was expected. It will not have escaped his notice that the French economic Minister made some remarks on Monday about the effect of oil on the United Kingdom economy. He has been rather seriously misled on the matter, and we shall seek to correct him.

When the Lord Privy Seal discussed with his EEC colleagues the concept of broad balance, did he indicate that it should apply to all countries of the Community, including Germany?

The hon. Gentleman will be aware that we began by using the term "broad balance". That was widely misunderstood to mean juste retour on the Continent. As I have indicated already to the House, the position is that we are seeking a genuine compromise.

If the Lord Privy Seal will not cancel VAT payments, will he at least accept my suggestion that, until the French remove the levy on British lamb imports, we should impose an import levy on French cars?

I do not think that the implication of the right hon. Gentleman's suggestion is one that he really wishes to pursue. He is trying to say that illegality should be met with illegality. I do not believe that that is right.

When those responsible for either research and development or science and technology meet their colleagues in the EEC to discuss such subjects as the Davignon report on information and technology, who represents the United Kingdom?

That is a very good question. I think that it is the Secretary of State for Trade, but I shall confirm that to my hon. Friend.

Spain And Portugal

40.

asked the Lord Privy Seal when he expects Spain and Portugal to become full members of the EEC.

The negotiations with Portugal and Spain are proceeding as planned. It is too early to forecast precisely when they might enter the Community, but it is the hope of the Government that this will not be delayed.

Does the Lord Privy Seal agree that, before Spain becomes a full member of the EEC, there ought to be a settlement of the dispute between Spain and Gibraltar, and a reopening of the boundary between those two countries?

I have made my view and that of the Government plain to the House. There should be an end to the restrictions as soon as possible, straight away. They should have been ended already. I have also made clear that it is not feasible that, if Spain becomes a member of the Community, there should be two frontiers between two members of the Commity both of which are clsed.

Will my right hon. Friend confirm that in the negotiations careful consideration will be given to the possible effect of the Spanish and Portuguese textile and footwear industries on Britain's home domestic industries which are already suffering from a flood of cheap foreign imports?

I can confirm that. As my hon. Friend knows, there is a provision dealing with this in the Greek accession treaty. The same will occur in the other treaties.

What is the Lord Privy Seal's calculation of the effect that the accession of Spain and Portugal will have on our own resources system? Will it not be that these agricultural-based countries will speed the decline in the funds of the Common Market? What effect will that have on Britain?

I do not see how they can reduce Common Market funds. They are bound to increase the funds of the Common Market. However, if nothing is done about our budget contribution—the hon. Lady is quite right—it would make our problem even more acute than it is now.

Council Of Foreign Ministers

41.

asked the Lord Privy Seal when next he expects to meet other EEC Ministers.

43.

asked the Lord Privy Seal when next he intends to meet his EEC counterparts.

44.

asked the Lord Privy Seal when he next expects to meet his European counterparts.

I refer the hon. Gentlemen and my hon. Friend to the reply that I gave earlier to the hon. Member for Newham, North-East (Mr. Leighton).

If the Lord Privy Seal fails to obtain a broad balance of the payments, and if we are still contributing a net £1 billion plus to the EEC, what action does he propose to take? If the EEC refuses to curtail cheap imports of textiles from America and Romania, what action do the Government propose to take, or do they not care about the loss of textile jobs in Lancashire and Yorkshire?

The hon. Gentleman will know that my right hon. Friend the Secretary of State for Trade told my hon. Friend the Member for Rossendale (Mr. Trippier) on 7 February that the United Kingdom had submitted an application to the Commission for safeguard action. The Commission is due to respond in five working days, which is by 15 February. On 5 February the Council of Ministers accepted that the United Kingdom was facing special difficulties. In spite of the hon. Gentleman's jibe, I do not have to tell the House that the Government are fully aware of the difficulties involved.

When the Lord Privy Seal next meets his counterparts, will he inform them of the rising tide of dissatisfaction and antagonism towards the EEC on the part of people in this country who believe that they are being bled white by the Community and are being pushed to the sidelines by the Franco-German axis?

I do not think that that is the right way to approach the problem. We have made it clear that the present position on the budget is totally inequitable. My right hon. and learned Friend the Chancellor of the Exchequer said the other day that our case is open and shut. We shall continue to argue that case to the Community. I am confident that it will accept our argument.

Does my right hon. Friend recognise that there are continuing important issues other than the question of the budget? Will he impress on his colleagues in the EEC the importance of concluding the new co-operation agreement with Yugoslavia, taking into account the ailing health of its President?

I agree entirely with my hon. Friend. He will be aware that the last two Foreign Affairs Councils gave considerable impetus to the matter. It was made clear that it was a matter of the utmost urgency and priority. I hope that negotiations will be concluded soon.

When the Lord Privy Seal meets the other Foreign Ministers, will he discuss with them the dangerous position that is developing in Southern Lebanon? Will he discuss what initiative should be taken, within the United Nations, to strengthen the United Nations peace-keeping effort in that part of the world, since otherwise we may face an explosive situation?

The hon. Gentleman will be aware that the Nine made a statement on the matter last September. It is a dangerous position, but I cannot guarantee that it will be discussed at the next meeting. I shall certainly bear the hon. Gentleman's remarks in mind.

When my right hon. Friend is negotiating reductions in the United Kingdom contribution to the EEC budget, will he make it clear that he will not be fobbed off by back-to-back grants for Government projects that would, in fact, entail increased public spending in this country to match them?

I am not quite certain what my hon. Friend means by back-to-back grants. He will be aware that the problem has, essentially, two components. The first is the excessive contribution as such, and that will be dealt with largely by what was virtually agreed at Dublin. The second component, and it is by far the greater part of the problem—at least 60 per cent. of it—is that our receipts from the European Community are well below average. They are less than half of the Community average. That is by far the greater part of our problem.

Will the Lord Privy Seal reconsider the reply that he has given to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) about the European response to the position in the Lebanon? He referred to a meeting last September. As another bloody civil war is about to begin in the Lebanon, surely speedier action than he is proposing is required.

I did not think that the hon. Member for Sheffield, Heeley, was proposing speedy action. I said that I could not guarantee that the matter would be discussed at the European Council.

Community Budget

42.

asked the Lord Privy Seal if he will make a statement on the outcome of his visits to other EEC member Stales in connection with the United Kingdom contribution to the Community budget.

My tour of European Community capitals was useful. As I informed the House on 31 January I discovered a general desire to get this problem solved. Following talks between my right hon. Friend the Prime Minister and Mr. Cossiga, the Italian Presidency is also taking an active part in finding a solution. We shall be having further talks with our partners in advance of the next European Council.

Dos the Lord Privy Seal now take the view that, in retrospect, the Prime Minister was singularly indiscreet in refusing the £350 million that was on offer at Dublin? Will he now say whether it is the considered view of his Department that it is legal or illegal to withhold VAT payments?

I cannot agree in any way that my right hon. Friend the Prime Minister was indiscreet, as the hon. Gentleman describes it, in refusing the £350 million. The hon. Gentleman does not seem to be aware that that sum was on offer only in full settlement of our problem. I am sure that the whole House would agree that £350 million is totally inadequate.

On the second part of the hon. Gentleman's question, as I said in reply to an earlier question, we are intent on finding a solution. We have not considered properly any measures that might be taken if we did not reach a solution.

Has any preparatory work been undertaken in any Government Department in connection with the possible unilateral withholding of our budgetary contribution?

I cannot answer that question, because I do not know what goes on in other Departments.

What is the Government's attitude to the Commission's proposal for spending in the United Kingdom? If the Government accept that proposal with few qualifications what additional mechanism does the right hon. Gentleman imagine would help us to get the matter settled?

As the right hon. Gentleman appreciates, we naturally think that the Commission's proposal is a useful step on the road to a solution. It contains a number of ideas for increasing the level of Community spending in this country. We continue to believe that—not in substitution for the Commission's proposal, but in addition to it—a receipts mechanism to control the amount of Community spending in this country in future years is the right approach.

Order. I propose to call one more question from each side and I shall add on the extra time at the end of Question Time.

Does my right hon. Friend agree that it is essential, as soon as possible, to eliminate the United Kingdom's excessive contribution to the budget? Has he pointed out to other member States that, adjusted to present-day prices, our contribution represents one-tenth of what the previous Labour Government spent on useless, wasteful nationalisation leading to the destruction of key industries such as the steel industry?

I agree that this problem should be solved as soon as possible. It is in the interests of all. It is a Community problem, and it is in the Community's interests that it be solved as soon as possible. That is all the more true in view of what is going on in the rest of the world. I have no doubt that my hon. Friend is right in saying that the previous Labour Government committed a lot of wasteful acts of expenditure. The fact is that our projected contribution to the Community budget is grossly excessive.

The House knows that the Lord Privy Seal has been spending a substantial amount of time on political philosophy as well as on his departmental duties in recent weeks. I should like to press him further on the reply that he gave earlier, when he said that he did not know whether any serious thought was being given to possible counter-measures that the British Government might take if we failed to reach a satisfactory solution on the broad balance of the budget. Is he, in effect, saying that no studies are being made inside the Foreign Office? If so, will he start them forthwith?

I said that I could not give an undertaking on what my hon. Friend the Member for Faversham (Mr. Moate) put to me, because I did not know what was going on in other Departments. As the right hon. Gentleman knows, the Foreign Office always takes all possible contingencies into account, and that is what we are doing.