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EU: Internal Market

Volume 693: debated on Tuesday 3 July 2007

asked Her Majesty’s Government:

Whether the proposed revision to the European treaties agreed at the Brussels European Council on 22 June to remove a reference to undistorted competition will affect the achievement of a fully functioning internal market.

My Lords, we succeeded at the European Council in obtaining a legally binding protocol to the reform treaty, which confirms that the internal market includes a system ensuring that competition is not distorted. This means that there is no substantive change to the legal position under the existing EC treaty. Removing barriers to competition in the internal market, along with stopping uncompetitive mergers, fighting cartels and using strong state aid rules to tackle illegal subsidies, will all remain a fundamental part of the EU’s task.

My Lords, I thank the Minister for that Answer. He has done his best to convince us that, despite the removal of the phrase “undistorted competition”, there is no threat to the free market. He does not mention the insertion in the text of the phrase advocating a “social market economy”. Would he care to define that phrase?

My Lords, I am not able to define that phrase, but I can reassure the noble Baroness that things remain precisely the same as far as competition goes. That is confirmed by two senior figures. Neelie Kroes, the European Commissioner for Competition said:

“The Internal Market and Competition Protocol is a legally binding confirmation that a system of ensuring undistorted competition is an integral part of the Internal Market”.

Secondly, Michael Petite, the director-general of legal services, said:

“It is also worth recalling that, from a legal point of view, a protocol forms an integral part of the Treaty to which it is annexed and has the same legal value as Treaty provisions”.

My Lords, does my noble friend agree that one of the notable achievements of the noble Baroness, Lady Thatcher, was to get an absolute commitment to the development of the internal market? That was done in 1992, 15 years ago. It was an absolutely correct objective, the attainment of which has not always been helped by all our European partners, particularly the French. Does he further agree that, if we are to get a fully functional internal market, we should not allow the majority to be held to ransom by the odd member state that wants to be against? This is one area where we should resist the use of national vetoes and encourage the development of qualified majority voting.

My Lords, as usual, I agree with practically every word my noble friend said. We must remember that the important matter of undistorted competition was under threat. The British Government fought and won a battle on this issue. We therefore do not need to worry about having proper competition within the EU.

My Lords, does the Minister agree that it is quite understandable that the noble Baroness has been confused about the results of the Brussels European Council of 22 June, particularly on this issue? She has undoubtedly taken the view she expressed on this Question having read the reports on the Council in what I like to refer to as the foreign-controlled press. Will the Minister confirm that, under the new Government, attention will no longer be paid to what appears in the Sun, the Times and the rest of the Murdoch press on matters such as this?

My Lords, I very much hope that the noble Lord is correct. There are substantive issues relating to the EU that need to be discussed in a proper and adult way. We should take no notice of tittle-tattle in the totally popular press.

My Lords, will the Minister confirm that the words to which President Sarkozy objected have never appeared in any Community treaty, that they were not in the original founding treaties, and that the extremely successful competition policy that the European Union has operated for 50 years now was based on other provisions in the treaties which have been applied and will continue to apply? Will he also confirm, as the noble Baroness the then Leader of the House did, that the protocol that has now been negotiated has the same effect as the treaty and therefore makes the situation slightly better than before? Personally, I regret the disappearance of the phrase to which President Sarkozy objected, but then it was in the constitutional treaty, which I am not sure all those speaking on this Question in this House supported.

My Lords, I am grateful to the noble Lord for those two points. I can confirm that he is accurate in both his conclusions. We must recognise that the French president was playing a game of internal politics. It was clear that he did not manage to get his way, and it is encouraging that so many other countries in the EU and the European Commission, the guardians of the treaty, endorsed this Government’s view.

My Lords, thank you very much. I will keep it short. Does the noble Lord really imagine, on advice that he receives about the omission of some crucial words from Articles 85 and 88 of the Rome treaty as implemented by Regulations 17 and 27, which, alas, I was involved in drafting before we acceded to the European Community, that the Commission and the European Court of Justice will pay no attention to a fundamental amendment of the text?

My Lords, I am advised that the words,

“a system ensuring that competition in the internal market is not distorted”,

were removed from the original treaty, but the protocol negotiated by the Government and supported by many other countries and the Commission is legally safe and will not be challenged. That point was made by Mr Michael Petite in the Financial Times:

“To avoid any risk of uncertainty as to settled law and to make fully clear that competition will continue to be one of the main policies aiming at the good functioning of the internal market, the European Council decided to provide for the protocol referred to”.

I reassure the noble Lord that the European Commission is more than satisfied that this will not be open to legal challenge.

My Lords, recognising that to remove a reference to “undistorted competition” will affect the achievement of a fully functioning internal market, can my noble friend advise the House on the extent, if any, to which that will have an impact on employment opportunities within the European Union?

My Lords, as far as I know, it will not have an impact on employment opportunities because, as I said, the negotiation of the protocol, which will be annexed to the reform treaty, will provide precisely the same results as the original article ensuring that competition in the internal market is not distorted.

My Lords, outside the Sun and the Times, has the Minister read yesterday’s Le Soir in Belgium, in which the Prime Minister of Luxembourg stated that the revised treaty involves major transfers of sovereignty but we must not tell the British?

My Lords, the noble Lord will be more than surprised to hear that I have not read yesterday’s Le Soir. There is a lot of chatter in several EU countries. Belgium wishes to have a referendum; we do not; and all these matters are open for discussion.

My Lords, is the Minister aware that one of the articles of the presidency’s conclusions following the summit explicitly states that all the innovations contained in the 2004 agreement will be carried forward to the new treaty? Incidentally, those innovations include the passerelle clause, making it possible to change competencies from national Governments to European level without the sanction of parliamentary ratification. As it was those innovations that, in the Government's view, required a referendum in the first place, how can the Minister possibly justify not having one now?

My Lords, this has gone some distance from the Question on the Order Paper.

The Government would not countenance a referendum because this is an amending treaty not a constitutional treaty. There is a long tradition of these matters being subject to parliamentary process rather than a referendum: the Single European Act, Maastricht, Amsterdam and Nice. In the words of my noble friend the right honourable Lord Blair, people who ask for amendment really wish to get out of the EU.

My Lords, does my noble friend agree that, while it is absolutely right to welcome the development of the European single market, it is about time that the Government organised a campaign to enlighten the people of Scotland, Wales and Northern Ireland, as well as those of England, that we have been members of the most successful single market in the world; namely the United Kingdom?

My Lords, I propose to answer that. My noble friend is absolutely right, but we are talking about another enormously successful market that goes beyond the enormously successful market of the United Kingdom. We should take delight and pleasure that this country is part of those two vibrant and important markets.

My Lords, coming back to the original Question, the Minister has attached himself to the negotiation of a protocol that he describes as the result of a successful rearguard action by the British Government after certain words were removed. We all know that those certain words were removed at the insistence of the French president. How come that happened without the British Government knowing about it or objecting to it when it happened?

My Lords, the noble Lord is quite wrong. This was part of the discussion at the European Council. The British Government realised what was happening, did not take a rearguard action and actually intervened. With the help of the Commission and many other European countries, they managed to get the result that this country and many of our fellow European countries wanted: to make absolutely sure that competition in the internal market is not distorted. I quote that phrase to bring us back to the actual Question that I was asked what now seems like two hours ago.