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European Community Policies

Volume 81: debated on Tuesday 18 June 1985

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16.

asked the Secretary of State for Foreign and Commonwealth Affairs what further proposals he intends to place before his European Community partners for the development of Community policies.

We have made several positive proposals, including ideas for the completion of the internal market by 1992, improvements in decision-making, the development of political co-operation between the Ten, and other matters, which we look forward to discussing at the European Council in Milan.

Can my hon. Friend explain how Community economic policies can be developed while Britain remains outside the exchange rate mechanism of the European monetary system?

The United Kingdom has not been a member of the exchange rate mechanism of the EMS for several years, and I do not believe that that has significantly held back the development of Community policies. Indeed, it is significant that the use of the ecu is more freely available in the United Kingdom than it is in many states which are members of the exchange rate mechanism of the EMS.

Will the Minister ensure that, in Milan, the Foreign Secretary or the Prime Minister raise the serious problems that are developing in southern Sudan? Food is being held up at the ports, and there are no means of getting it through by road. Is there not a great need for a European initiative to try to achieve an air lift? An EC initiative in this area would be much welcomed.

I cannot say whether that item will be on the agenda at Milan, but I assure the right hon. Gentleman that the Community has a deep and abiding interest in Sudan and hopes to make a constructive contribution to that problem.

At Milan, will the Prime Minister be discussing Lord Cockfield's plan for 304 changes to achieve harmonisation? May we have a clear assurance that no British Government, until they have put the case to the people, will concede any such harmonisation involving the imposition of VAT on food, and that they will not restrict their right to decide internal taxes?

Although we agree with the broad thrust of Lord Cockfield's proposals, we have made it clear, as have several other Governments, that the case for tax harmonisation has not been proven. We do not believe that the achievement of an internal market requires the harmonisation or approximation of taxes, and we have pointed to the example of the United States, many of whose 50 states have different direct and indirect taxes, which in no way impedes the operation of a free internal market there. I assure my hon. Friend that the Government have no intention of introducing VAT on food.