European Free Trade Area

– in the House of Commons at 12:00 am on 12th February 1959.

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3.53 p.m.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I beg to move, That this House takes note of Command Papers Nos. 648 and 641 relating to Negotiations for a European Free Trade Area. This is the first opportunity that the House has had for a long time of a full-dress debate on the problems of European economic relations. The negotations in Paris lasted over a year and I should like to express my gratitude to the Opposition for not pressing for earlier statements or debates, and my gratitude to the House as a whole for the forbearance it has shown us in these matters.

Because the negotiations were, by common consent, of a confidential character, and the documents involved were equally of a confidential character, it was not possible for us to publish them. As the House may have observed in the Blue Book, when I made my report to the Council of Ministers of the O.E.E.C., in December, I suggested that, for the information of our national Parliaments, we should derestrict the documents so that we could publish them and give the full story. My suggestion was accepted, and in the Blue Book there is full publication. I saw it suggested in one journal that the Blue Book was merely an edited selection of documents. That is not true. We have published all the main documents which were derestricted by O.E.E.C., with one or two exceptions, which, as the note on page 5 explains, are either documents already published or documents that arrived too late to be included in the Blue Book.

This subject has always been treated as a matter on which there has not been party controversy. There has been an ample measure of agreement not only between all parties in the House, but in the country at large, among employers and trade unions, on what is the true interest of the United Kingdom in these matters. I hope that that state of affairs will continue, because it is of considerable importance to the national interset.

The right hon. Member for Huyton (Mr. H. Wilson) burst loose on 9th December last, when he accused me of, on the basis of a document he had, misleading the House. As he has not responded to my invitation to produce the document, I take it that that little episode has now passed into limbo. I hope that we shall be able to treat this subject today, as we have in the past, as one where the broad national interest needs to be sought and examined by the House as a whole.

Looking at the documents and at the story they tell, it is very tempting to rake over the embers of the old controversies of the last year or two. For those engaged in the negotiations, and, I think, for everyone who has the cause of Europe at heart, this has been a time of disappointment and frustration. I am sure that we must not allow that fact or the emotions it creates to divert us from the major problem, namely, what do we do now? Certainly, we should look at the past history of the negotiations, not to recriminate or apportion blame or anything like that, but to see why the negotiations failed, and, from the facts of frustration and disappointment, to learn the necessary lessons for the future and what we are to do now.

What was the position from which we started? There was a broad measure of agreement in Europe at our starting position. We had all seen how, over a period of ten years since the foundation of the O.E.E.C., Europe had prospered and steadily grown stronger. We all wanted to maintain, expand and develop the sort of European relations and principles of non-discrimination, and so on, on which the O.E.E.C. had been founded and which had made such a contribution to our affairs.

At the same time, we had in the Treaty of Rome an entirely new factor to be taken into account. Here, may I deal with an argument that is often advanced and which we always seek to refute? It is sometimes said that the British purpose has been to undermine the Treaty of Rome. That has always been quite untrue. It will be utter folly on our part to try and do anything of the sort. I can give two simple reasons. First, in the free world, prosperity, in the long run, is indivisible. Anything which make our friends and neighbours richer and stronger is bound, in the long run, to be a good thing for us. Secondly, in the Common Market our continental friends hope to bury those squabbles, quarrels and troubles that for so many years have bedevilled Western Europe.

We in this country, who have suffered so much in the past fifty years from the troubles and wars of Europe, have every cause to welcome an organisation which is designed to promote the cohesion and the unity of the major Western European countries. We have never sought to undermine the Treaty of Rome. We have recognised that it opens new possibilities of expanding prosperity and expanding progress.

At the same time, we and other countries have always felt that the Treaty of Rome, standing by itself, has two inherent dangers. In the first place, the Common Market powers, by themselves, might pursue policies of what is called an inward-looking, protective and restrictionist nature. The growth of restrictionism in one important part of the free world might well lead rapidly to the extension of similar restrictive regional groups to other parts of the free world. The consequences of that for the trade of the free world as a whole could be quite serious.

Secondly, the development of the Treaty of Rome, unaccompanied by wider association, is, in the view of many countries concerned, liable to lead to a division of Europe between the six countries and the eleven, and that division, we feel, could not fail in the long run to have tragic consequences, not only economic but political.

Therefore, the point of view we have always supported is that we welcome the Treaty of Rome in the prospects which it holds out, not only for the increased prosperity of our neighbours, but also for the increased prosperity of Europe as a whole, if the same principles can be applied throughout Western Europe. We also feel that in the Treaty of Rome and the Common Market, if not accompanied by something like a Free Trade Area, there will be considerable dangers both for Europe and the whole free world.

I believe that this view has always been shared even by the members of the Common Market themselves. In fact, the idea of complementing the Common Market with a Free Trade Area was first suggested in the Spaak Report of 1956, which was the foundation of the Treaty of Rome. Subsequently, in July, 1956, the Council of the O.E.E.C. set on foot a study into the possibilities of a multilateral association among the six countries and the other eleven, and that study culminated in February, 1957, with the report of Working Party 17, an agreed report to the effect that it was technically possible to establish a Free Trade Area.

Thus, when, in October, 1957, we started on the negotiations, having formed the Inter-Governmental Committee, everyone was perfectly aware of what was meant by a Free Trade Area. Everyone knew that that meant an area within which there were no internal barriers to trade in the form of quotas or tariffs, but where, unlike the Common Market, there was no common, harmonised external tariff. So we reached, in the beginning of the negotiations, a position in which the whole problem had been studied in immense detail and in which there was general determination, expressed in the resolution of the 0.E.E.C., to establish a Free Trade Area in parallel with the Treaty of Rome, a situation in which everyone concerned knew what were the basic principles of a Free Trade Area.

We started on the negotiations in the Inter-Governmental Committee. The House will have seen set out in detail in the White Paper and the Blue Book the degrees of agreement and the points of disagreement. The Report of the Secretariat which was circulated, analysing the position reached at the end of the negotiations, picks out three points of disagreement. They are, perhaps, not the points which everyone would have expected.

For example, on agriculture, where it has often been thought that there was a major clash of opinion, a good deal of progress was made, and I had always been confident that, could we solve the broad problems, a suitable agreement on agriculture, satisfactory to both the House and our European neighbours, could be found. The three problems to which the Secretariat referred are set out in paragraphs 38 and onwards of the White Paper.

The first is the question of external tariffs and external commercial policy. Her Majesty's Government have always believed that the problem of the absence of a single external tariff could be solved by a system of certificates of origin and code of general good conduct. We have been fortified in that view, to which we still adhere, both by our own practical experience of the working of this system in the Commonwealth and by the fact that so many countries early in the negotiations, as the White Paper points out, were quite happy to fall in with that point of view. We are still convinced that it is the right solution to the problem of origin.

The White Paper points out, in paragraph 39, that there was hope for agreement on commercial policy generally between us and the European Economic Community on the basis of the so-called Ockrent Report, to use that phrase for the Memorandum presented to the Inter-Governmental Committee, in October. Reference has often been made, particularly in public comment and in the Press, to the question of Commonwealth Preference. It is of interest that this matter was not formally raised in our negotiations until a very late stage.

As paragraph 41 of the White Paper makes clear, our attitude has always been that Commonwealth Preference is no more a barrier to the development of a Free Trade Area than it has been a barrier to the development of the liberalisation policy of O.E.E.C. We have endeavoured to explain to our friends on the Continent that the preferences which we enjoy with other members of the Commonwealth are not solely in our gift, but are matters for our sovereign friends within the Commonwealth, and that the preferences which we enjoy are things for which we pay in the course of mutual negotiation.

I think that it would be as unfair for our friends to ask for the benefits of preference without sharing in the sacrifices as it would have been for us to ask to share in the benefits of the Treaty of Rome without sharing in the sacrifices. That accusation, which is sometimes made, is an accusation which I hope later to show to be inaccurate.

Photo of Mr Arthur Holt Mr Arthur Holt , Bolton West

This has been repeatedly said by members of the Government. Would the right hon. Gentleman say what are the sacrifices which the United Kingdom makes in Commonwealth Preference in exchange for the benefits received?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

A whole range of political and economic contacts within the sterling area; an open door to Commonwealth products; access of the Commonwealth to the London capital market—

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

—it may be a benefit in the hon. Member's view, but in the view of a number of friendly Governments on the Continent the free access of Commonwealth foodstuffs would not be a benefit. That is a matter of practice and perhaps not necessarily a matter of economics.

That is the view which we have upheld on the question of Commonwealth Preference, but, as will be seen from the White Paper, we agreed willingly to consider any particular points which might he raised by the Community in the course of negotiations where Commonwealth Preference, or any other preference—because we are not the only people with preferences—might be held to be a difficulty in the establishment of a Free Trade Area.

The second outstanding point mentioned by the Secretariat was the question of internal economic and social policies, where we still believe that the compromise we suggested as long ago as January. 1958, should provide a satisfactory basis for agreement. The other outstanding point was that of institutions, where, once again, in the long run a solution would not have been impossible.

The fact is that the negotiations failed not because of any particular argument or any particular point. They failed because the will to agree failed and because the determination to succeed faltered. The basic premise upon which we started, that all of us wished to establish a Free Trade Area, no longer remained true.

There have been criticisms of the form of the negotiations, and there is a great deal in many of those criticisms. A committee of 17 nations is certainly a cumbersome body for such a detailed negotiation, but working, as we rightly were, on the basis of the O.E.E.C., and maintaining the unity of Western Europe, we could not exclude some countries from negotiation. I do not see bow there could have been any alternative.

Another practical difficulty was that the six countries of the Common Market, as a matter of principle, always spoke with a single voice. That meant two things: first, that before any of them could speak they had to agree their point of view, which often took a very long time; and, secondly, once they had agreed their point of view, by mutual concession and negotiation, their negotiating position was frozen and they could not make any concessions very easily in negotiation—another genuine difficulty in all our proceedings.

The Government have been criticised for not realising soon enough the strength of the opposition, and particularly the French objections to the Free Trade Area. I want to deal with those criticisms, because I can show that it is unfounded and that we were entitled to take seriously the assurances which we had received from our friends about the establishment of a Free Trade Area. As late as October, 1958, the six countries confirmed in the Ockrent Report their determination to seek a multilateral association with the other members of O.E.E.C.

In the early summer of 1958 I was seriously contemplating reporting to the Council of the O.E.E.C. that the negotiations were at a deadlock. At that time, I consulted a number of my colleagues on the committee who represented countries both inside and outside the Six, and all unanimously asked me not to do that but to continue with the negotiations. I therefore suggested, and it was agreed that at the July meeting, we should concentrate on the vital question of certificates of origin and all that goes with them, because this would be a test whether there was an opportunity to continue.

We met in July and had a very successful meeting. We agreed on the principles for solving the problem of origin and passed it on to the Steering Board to settle the details. At that time, more than one member of the Six told me that there had been a break-through, that the situation had changed radically for the better, and that we could expect to make rapid progress. I am afraid that that did not happen.

Between July and October very little progress was made in the Steering Board, despite the agreement on principle which had been reached in July. We agreed in July that particular problems of particular industries affected by internal competition —a thing about which the French Government expressed much concern— should be considered urgently by the Steering Board. By October, not one example of such a difficulty had been put forward. It was, therefore, difficult, in fact impossible, to make any progress between the months of July and October.

At the October meeting, it seemed to me that it was essential to make one last effort to get agreement by 1st January. I had two reasons for that. First, I believed that there was no doubt that the best thing for Europe was the Free Trade Area scheme, and that we should not abandon it until we were forced to abandon it. Secondly, we received in October the Ockrent document from the Six, in which they confirmed their desire that a Free Trade Area should start on 1st January, 1959.

In those circumstances, I thought in October that we must make a final effort to get something agreed by the end of the year. We set up a new committee which would meet in continuous session to solve the problems of origin and worked out a timetable for the committee which would, I think, start about 20th November. I was influenced in making the suggestion by experience in this House. I have found that with a lengthy piece of legislation where any number of problems can be raised, and when there is no question of a closure, one must continuously sit and try to get an agreed timetable because it is the only practical way of getting agreement. We decided to do that in October and would possibly have reached agreement by the end of 1958.

Unfortunately, just after our November meeting the French Government announced that it could no longer support the idea of the Free Trade Area, and, as I told the House at the time, it appeared necessary to suspend the negotiations for the clear reason that the basis upon which we were working no longer existed.

That is the history of the negotiations, which, I hope, I have kept as compressed as possible. No doubt many points of detail can be raised during the debate. I thought it better to compress what I had to say about what is past and use that as a basis for considering the present and future.

The problem now is twofold. We must work out a modus vivendi

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

We are grateful to the Paymaster-General for his very lucid and helpful explanation of the history. Will he say whether, at any time any subject was put forward on behalf of one or all of the Six, they were prepared to work out some other system of association with the non-Six countries which would give us some guarantee against the trade discrimination which we all feared on 1st January? Was that either formally put forward, or was any attempt made to raise that point? What was the right hon. Gentleman's attitude at that time?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I think I know what the right hon. Gentleman has in mind. The formal position of the Free Trade Area was this. In January, the French Government said that they had many reservations which they would combine in the form of a positive alternative. That French suggestion was taken over by the Six as a whole and finally emerged in October as the official statement of the Six of the basis on which they would agree to a Free Trade Area.

At one of the meetings in the summer —I forget the exact date—the European Commission raised the question of a provisional agreement; it did not propose a provisional agreement. The Commission said that it thought that it might be a good idea to start thinking about a provisional agreement and wanted to know whether any other country had any suggestions to make as to the form which the agreement might take. Every member who spoke in the committee felt it premature to start talking about a provisional agreement, but that we should continue to concentrate on an agreement by 1st January, 1959.

It was left that the matter could be raised at our October meeting. At the October meeting one country raised the question of a provisional agreement. The representative of the Six again said clearly that, in their view, it was still too early to think in terms of a provisional agreement. I am grateful to the right hon. Member for Huyton for raising that point, because there has been confusion about it. I assure him that those are the facts of the matter, which I have looked up again with considerable care.

The first problem now is to get a working agreement. Discrimination has begun. The Treaty of Rome is in effect, and there is no Free Trade Area. There is, in practice, within Europe discrimination in matters of tariff and quota which we and the other countries outside the Six have always thought was a thoroughly bad thing and contrary to all the principles of the O.E.E.C. The matter of discrimination is not a matter about which only Her Majesty's Government feel strongly. It is a matter to which the Scandinavians, Swiss, Austrians and all the other Governments outside the Six attach equal importance.

In December, the Six put forward an offer designed to mitigate the effects of discrimination. That was a spontaneous move on their part. The principle of such a move we welcome. We did not feel—indeed, I do not think that anyone felt—that the offer went far enough, because it left discrimination in the field of tariffs and quotas. The tariff field is complicated by the existence of the G.A.T.T. and the most-favoured-nation rule. In quotas, we felt that it should be perfectly easy to have an arrangement whereby discrimination in quotas among members of the O.E.E.C. would not arise.

My right hon. Friend the President of the Board of Trade put forward a suggestion. Here, I should explain that the President of the Board of Trade is stricken with influenza and will not be able to wind up the debate this evening. The idea which my right hon. Friend put forward of treating these quotas on a seventeen-nation basis, which would involve our reciprocating anything which the Six did, would, in our opinion, not cost the Six any more by way of expanding quotas, because they would not have to increase the quotas. They would merely have to spread the quotas among all 17 countries. On the other hand, the opening of more quotas in the United Kingdom, for example, would give them expanded opportunities for trade here which they otherwise would not have. We have always felt, and continue to feel, that our solution is without doubt the best for the trade of Western Europe.

As the House is aware, that point of view is not universally accepted and negotiations are going on at present. The purpose of the negotiations is not to reach a bilateral solution but to find in bilateral discussion a principle which can be multilaterally applied. The Government feel very strongly that it is of fundamental importance to the O.E.E.C. and to its unity that we should proceed on the basis of multilateral principles and not break everything up into a series of bilateral settlements.

Photo of Mr John Edwards Mr John Edwards , Brighouse and Spenborough

Is this clear to the French and to our partners in O.E.E.C.? I had formed the impression that at least one of the Governments with which we are connected held the view that when we had finished there would be a round for various other Governments and that we were merely the first in a series of bilateral discussions.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I am glad to confirm that we have done our best to keep everyone in the picture. That is not our view. We do not consider it right for us to come to an agreement with the French bilaterally unless we know that principles similarly acceptable would be generally available. The objective must remain a multilateral solution, and that we have tried to make clear to our European friends.

Photo of Mr George Chetwynd Mr George Chetwynd , Stockton-on-Tees

Are we dealing solely with the French, or with the Common Market countries as one bloc? Are any other O.E.E.C. countries doing anything individually at the same time?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

The reason that we are talking to the French is that the problem is much bigger for France than for the others, but anything that the French would like us to agree to with them would also have to be agreed with their partners, in the Six. That is the principle upon which we are all working.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

It is important for us to understand what the right hon. Gentleman is telling us. When he says that these bilateral talks are aimed at achieving a multilateral and not a purely Anglo-French solution, we understand that that is very desirable. If we are talking with the French about the motor car quota—as I understand we are, according to this morning's newspapers —are the Government aiming at a result under which there will be a kind of generalised multilateral agreement, such as that proposed by the President of the Board of Trade, or does the right hon. Gentleman mean that if Britain gets a bigger whack of the French import quota for motor cars we should not get it on our own, but other countries would also be given a separate and larger share of the French import quotas?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I hope that the right hon. Gentleman will not press me too much on this matter while negotiations are in progress, but whatever form the agreement takes our purpose would not be to come to a bilateral settlement with the French, but to discuss principles which might have a multilateral application, which would be satisfactory both to us and to them—and, we hope, to all the other European countries concerned. We are aiming at multilateral principles which are bilaterally acceptable.

So much for the short-term situation. Our next problem is to resume negotiations for a long-term solution, and we must aim at a system of European economic co-operation which maintains, continues and expands the principles and the work of O.E.E.C., makes provision for the association of the Community with the other 11 countries, and does all this within the world-wide framework set up by G.A.T.T.—because we must never forget our obligations to the free world as a whole, both in G.A.T.T. and in the International Monetary Fund.

At the December meeting there was unanimous agreement on these principles, and also unanimous agreement that the negotiations must be continued under the authority of the Council of O.E.E.C., which, no doubt, will meet in the not too distant future to determine the way in which the negotiations should be resumed. In the meantime, we understand that the Commission is working on some new ideas, and Her Majesty's Government are similarly considering their own position and consulting other countries who have similar interests and problems

We very much welcome this debate, because in the formulation of policy from now on it will be of tremendous assistance to be able to have the views of both sides of the House of Commons to assist us in an extremely difficult problem. The situation is urgent, but it is not one that calls for haste. The problems that we are facing are of a momentous character and may shape the whole future course of Europe, but it would be quite wrong to take any action based either on pique or panic. We must start from a careful re-examination of the basic facts of our position in Europe and in the whole world.

I can now turn my attention to these main problems.

Photo of Mr John Cronin Mr John Cronin , Loughborough

Can the Minister say whether he envisages Commonwealth countries being brought within these negotiations, and to what extent he thinks that they will be concerned in future?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I shall have to weary the House with a long speech, and I am also trying to answer all the interruptions. The question that is often put to us by our friends in Europe is, "Do you think that Britain is part of Europe?" The answer is, "Yes, by tradition, strategic interest, culture, and everything else. We are part of Europe." But that is not the whole answer, because we are more than just part of Europe. We have interests, duties, ties and obligations which stretch far beyond Europe. Merely in terms of trade, only one quarter is with Europe and, above all, we have our economic, political and family links with the Commonwealth.

This is a matter which everyone recognises as being of fundamental importance for the United Kingdom. We could not contemplate any system of working with Europe which was at the expense of our ties with the Commonwealth. It would be bad for us; it would be bad for the Commonwealth, and I think that it would be bad for the whole free world, if Britain were ever forced to choose between Europe and the Commonwealth. That choice must not be forced on us, because it is a choice which can bring good to no one who believes in or is the friend of democracy.

Secondly, we must understand that there is no general public support in this country for the idea of political federation with Europe. Quite apart from its implications for the Commonwealth, I do not believe that there is any body of support for it. It is wrong to look at European economic problems solely from the point of view of their economic implications, and in what we have been considering the political are even more important than the economic implications. We must not advocate courses or make suggestions that we are not prepared to follow through to their ultimate consequences. If we do that we shall be rightly earning the title of perfide Albion. We will examine the various possibilities which are being canvassed for action at present.

If I appear to be raising many objections and to be more negative than positive, I make no apology, because it is of the first importance for us to face the real difficulties and consequences of any new solution. In the long run it may be that we shall arrive at a new solution, and I do not think that our minds should be closed to any possibilities, but while keeping our minds open we must not neglect the true facts, consequences and implications of any suggestion which is advanced.

I see that it is suggested by the Liberal Party that we should join the European Economic Community. The consequences of this suggestion are not always fully understood. Let us consider what would happen if we became signatories of the Treaty of Rome. In the first place, we should have agreed to a common commercial policy, settled ultimately by a system of majority voting in which we should be in a minority. As, of our total trade, only about one quarter is with Europe, and as not more than half of that quarter is with the Six, it would not be easy for us to have our commercial policies with the whole world determined by agreement with our friends in the Six, who are concerned with only a fairly small proportion of our trade. That is a considerable difficulty. I must make it clear that I am referring to difficulties and not impossibilities.

Secondly, we must recognise that to sign the Treaty of Rome would mean having common external tariffs, which, in turn, would mean the end of Commonwealth free entry, and I cannot conceive that any Government of this country would put forward a proposition which would involve the abandonment of Commonwealth free entry. It would be wrong for us and for the whole free world to adopt a policy of new duties on foodstuffs and raw materials, many of which come from under-developed countries, at present entering a major market duty-free.

As for agriculture, to sign the Treaty of Rome would be to accept a common policy which would once again be subject to majority voting. I do not see how that could be reconciled with the policy accepted by hon. Members on both sides of the House in recent legislation. In the economic and social field there would also be other provisions, such as the completely free movement of workers, and the imposition by the Government of equal pay—matters which I do not think this country would accept as subjects for settlement by the Government, when they are at present generally left to free negotiation between the individual interests concerned.

Finally, we must recognise that the aim of the main proponents of the Community is political integration. We can see that in Article 138 of the Treaty, which looks towards a common Assembly, directly elected. The whole idea of the Six, the Coal and Steel Community and Euratom is a movement towards political integration. That is a fine aspiration. but we must recognise that for us to sign the Treaty of Rome would be to accept as the ultimate goal, political federation in Europe, including ourselves. That, as I have said, does not seem to me to be a proposition which, at the moment, commands majority support in this country, so we must, in thinking about the possibilities suggested by the Liberal Party. of joining the Community, be absolute realists about what signing the Treaty of Rome would involve for us.

Then it is said, why do we not state the terms upon which we would join the European Economic Community? Here again, we must be careful. If we said, "We will join you, on certain conditions," and the conditions were such that, in fact, it would mean either breaking up the Community or turning it into a Free Trade Area, it would be wholly and utterly disingenuous. We would then, without doubt, be accused of trying to break up the Community in a subtle way by trying to join it. If we look at that, we have to ask what is involved in the Treaty of Rome. We must decide upon what conditions we would have to make before joining, because they might be so far spreading and so fundamental that it is difficult to see how any mere amendment of the Treaty of Rome could encompass those conditions.

Moreover, we must recognise that, during the negotiations of the last year or so, we have been doing very much the same thing as is now suggested. It is sometimes said that these are negotiations about a British plan, but if we look in the Blue Book at the agenda on which we were working, we see that on most points we started from the Treaty of Rome. We said, "Can it be accepted? If not, what variations will have to be made?" The various studies that have been taking place have been concerned with the question as to what variations of the Treaty of Rome would be necessary to make it into a European economic association.

The next suggestion, to which the hon. Member for Loughborough (Mr. Cronin) referred, is that we should bring the Commonwealth into these negotiations. I feel that here, also, we must face the real difficulties. It is of great importance to all of us that trade between the Commonwealth and Europe should expand, as it has been expanding rapidly in recent years, but I do not see how there are real possibilities of negotiation between the Commonwealth and Europe for a Free Trade Area or Common Market or anything of that kind.

There are two problems. In the first place, there is the problem of the Colonies, where the consensus of opinion among the dependent territories has been against participation in an industrial Free Trade Area. We have asked their opinion. Moreover, there are very real difficulties about treating the Colonies, many of which are advancing towards self-government, differently from the independent members of the Commonwealth. When one looks at the independent Commonwealth countries, the difficulties are even greater, and can be put in this way. The European countries wish to expand their sales of industrial products, but to continue to protect their agricultural markets, while the independent Commonwealth countries wish to expand the sales of their agricultural products and continue to protect their domestic industries.

These are the two basically different interests and purposes, and it is very difficult indeed to see how negotiations of the type suggested could become a practical proposition. Again, I am not ruling it out. The Government do not rule out any suggestions in these circumstances, but they are concerned that the real difficulties involved should be well known.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

Would my right hon. Friend have a look at page 193 of Cmd. Paper 641, and tell me why, in the Paper which he put in with a covering note on 6th January this year, in Article 7 (a) tariffs are in square brackets, but nothing is said about them at all?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

This is the Paper which we put in on agriculture in January, 1958, and we left tariffs out for a very simple reason, of which I think my hon. and gallant Friend will approve. We said that if, as part of an agricultural agreement, the European countries were to agree on something like the Treaty of Rome for the reduction or abolition of tariffs, that would be a reasonable objective, but that we must make it quite clear that the United Kingdom could not accept such an obligation, first, by reason of our undertaking to the Commonwealth to maintain their preferential position in our markets.

We said, on tariffs, that we could not undertake the abolition of the Commonwealth preferential position, but, if we could be given a waiver, we could not expect to participate in the greater freedom from tariffs on agricultural products. Nor could we ourselves give such tariff freedom to the European countries. We hoped, by this provision, by mentioning tariffs and excluding any detailed provisions, to say that we ourselves, for the reasons I have stated, would have to be excluded from any multilateral tariff exercises in the agricultural field. I have always felt that although this is difficult it is not by any means insoluble, in the general context of European agricultural interests.

The next suggestion is that there might be a two-tier system of preference, whereby, for example, French goods went into Germany duty-free, British goods at 15 per cent., and goods from the rest of the world at 30 per cent. I feel that there are difficulties here again which we must recognise in this policy. In the first place, it does not abolish discrimination; it merely reduces it. In the second place, it is clearly contrary to G.A.T.T., and I cannot believe for a moment that it would be accepted by the other countries of G.A.T.T., and, particularly, I feel that it would be opposed by the Commonwealth members. That is very important for us to bear in mind.

Photo of Mr Ronald Russell Mr Ronald Russell , Wembley South

Would my right hon. Friend agree that the suggestion was passed by the Council of Europe, in 1952, without any objections then. How is it that, if it was agreed by the Council of Europe then, it would not be acceptable now?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I do not recall the actual occasion in 1952. I can only state what are the very definite disadvantages of such a suggestion at present.

Next, it is being said, I believe in the newspapers, Could not the problem of tariffs be solved within G.A.T.T.?" That is one of the main purposes of G.A.T.T.—to reduce tariffs throughout the world by mutual negotiation, and there will be negotiations between the Community and other countries in the world in the course of time for mutual tariff reductions, on the basis of what has always been done under G.A.T.T.

The difficulties are twofold. First, it would be a very slow process indeed, and, secondly. it is not a European solution, which I think it is important to emphasise. The idea of treating tariff problems involves the principle that the six countries in the Community would deal in precisely the same terms with their European neighbours as with all other countries throughout the free world. Certainly, that is a possible solution to the problem, though not a European solution. It certainly seems to have abandoned the principle of O.E.E.C. and regional Europeanised trade, which has been so effective in recent years.

It is said, "Should we not turn back to the Commonwealth?" There is one reason why that is not possible. That is because we have never turned away from the Commonwealth, and we cannot, therefore, turn back. In meeting after meeting with the Commonwealth, at the conferences in Canada, we have kept them informed, to have them marching step by step with us in our proposals for European free trade. We would never have put forward a scheme for trading with Europe which would involve severing our connections with the Commonwealth. There is nothing in consistent between the two. The Commonwealth needs Europe, and Europe needs the Commonwealth, and we must never accept the proposition that there is some inconsistency between the two. We cannot turn back to the Commonwealth, because we have never turned away. We have always done, and always intend to do, all we can to expand trade with our Commonwealth partners.

Finally, it is suggested that we might discuss a getting closer together with some other countries in Europe outside the Six. This idea is being canvassed a good deal in public, and a number of industrial organisations are studying it at some length. Of course, it has its attractions. If we fear, as we rightly do, that we shall lose trade in one area we are entitled to look for opportunities of expanding trade in other areas. It is possible to argue that the development of some association among some European countries outside the Six might help to pave the way towards a final and total European settlement. There are attractions in this idea, but I think that there might also be disadvantages. All I would say about it now is that it is a matter on which the Government will certainly keep an open mind, and all suggestions of this kind we shall be very glad to examine.

In the second half of what I have said I have endeavoured to state what seemed to us to be the principles on which we must operate, our desire to have European unity and to perpetuate and strengthen the principles of the O.E.E.C., and our determination to maintain our links with the Commonwealth, our belief that there is nothing in any way inconsistent between our Commonwealth connections and closer and more intimate connections with Europe and, finally, our belief that any solution must be fitted in with the world-wide trading picture set by G.A.T.T. and the International Monetary Fund.

It is said that many of the solutions put forward present very real difficulties. I was interested to read, in a leading article in The Times, the sentiment, with which I fully agree, that The debate will be more useful if it recognises that the way already tried is, though now blocked, the only way ultimately worth taking. The more we examine the problem the more it seems to me that the principles upon which we have been working, and which have commanded some very wide agreement, are undoubtedly the best principles. There may be variations in approach and variations in detail. Many adjustments can be made once we can negotiate, but I emphasise that negotiation is not a process for one party only. It is quite impossible to negotiate unless there is a mutual will to agree. Otherwise, the only effect is that one party makes a lot of concessions and sacrifices and makes no progress at all towards ultimate agreement.

I cannot help but feel that the serious nature of what is arising in Europe, which is generally recognised, will put such a compulsion on European statesmen that we shall have to find a solution. I cannot believe that the solution we find will be so very different in principle from what we have been working on up to now. I emphasise that Her Majesty's Government remain ready to negotiate generally on the basis which I have been discussing, and we recognise, as everyone else recognises, that negotiation involves concessions. The two processes march together.

But we must be absolutely clear that our principle is to establish multilateral association among all 17 countries of Western Europe which will not threaten or undermine the Treaty of Rome but will enable the Community of Six to get the fullest possible value from their Treaty, which, in practice, they will not be able to do in a divided and disunited Europe.

Finally, I should like to say a few words about the sentiment in this country for European unity and for European co-operation. I believe that this is rather a tender plant. It has grown gradually and thrived and prospered in recent years. A great deal of that, I believe, is due to the support given by distinguished Members on both sides of the House and distinguished figures of all political points of view. There has been a definite and successful effort in this country to increase, sustain and strengthen European sentiment in British public opinion. I believe that to be a good thing, but it is still a delicate plant. It could wither and die back.

I fear that if we appear to receive too complete a rebuff in these matters this European sentiment may weaken. That would be a bad thing, not only for us but for all the free world. The difficulties are very great. We gain nothing by minimising them, but the compulsion upon us all to agree is so great and so historic that I feel sure that, in the end, we shall succeed.

4.44 p.m.

Photo of Mr John Edwards Mr John Edwards , Brighouse and Spenborough

We have listened, as we expected, to a skilful defence by the Paymaster-General of the Government and of the work done in the O.E.E.C., but in this debate we are asked by the Government to do no more than to note the two White Papers. Therefore, we on this side of the House regard the debate as essentially exploratory, as a preliminary to a series of debates in due course on this very important matter of our relationship to Western Europe. It is the occasion to find out if we can more about what has been happening, to ascertain what the Government have in mind, and to air certain ideas, without taking up any final positions at this stage.

If I understood the right hon. Gentleman aright, he is confirmed in his belief that the way he has gone already is the way to go again in due course. If I take issue with him on that point later in my speech, I am sure that he will understand. Obviously, one cannot deal with everything. I hope I shall not be reproached for what I leave out. I am already aware of the points which my hon. Friends want to make, and my right hon. Friend the Member for Huyton (Mr. H. Wilson), if he catches your eye, Mr. Speaker, will deal with certain matters, particularly issues concerning the Commonwealth and sterling.

Let us not, however, under-estimate the magnitude of the failure of the free trade negotiations. After a crash of this kind, it is just as well to give time for the dust to settle, for mopping-up operations to be carried out, and for the asperities of the right hon. Gentleman the President of the Board of Trade to be forgotten. I see little point in recriminations, and no point whatever in talk about reprisals; for while the failure of negotiations may be thought to be a disaster, no great harm has yet been done to our industries, and the immediate need is for measures to tide us over for the time being and to strengthen the O.E.E.C.

The future is pretty obscure. Let us consider only a few of the things which we do not really know about. Does anyone know the intentions of the new French Government? When the French Prime Minister said, as he did in his inaugural speech last month, that European solidarity cannot base itself on the repudiation of the national idea, was he talking the same language as Professor Halstein and M. Rey of the European Economic Commission? I rather doubt it. It is common knowledge, also, that there are different views about Europe to be found in the German Government. So far, Dr. Adenauer's view has prevailed, but it may not always prevail. Moreover, if there were any considerable change in relationships between East and West Germany, the whole situation would be different.

Again, the European Economic Commission itself has already built up a very large staff, but, by all accounts, there is a good deal of heart-searching going on at the moment. No one can even assert that the relationships of the Commission with the Council of Ministers have been firmly established. There are also very many matters left open in the Treaty itself. In general, we have to ask ourselves how the political resolution of the Six will face the trials that lie ahead. It will certainly be very severely tested in the months and years to come.

I would conclude, therefore, that the countries of the Six and this newly-born European Economic Community need our understanding. No one in his senses could want anything other than that the Six should succeed. If they were to fail and their enterprise were to come to grief, it would be a disaster without parallel in post-war Europe, and very bad for all of us. If, as I hope, the Six and the Community increasingly recognise their wider responsibilities to Europe and to the world, and if, as I also hope, in due course a wider association is established with other countries in Western Europe, the Six will have pioneered the way to a new and better pattern of living and working together than we have ever known. I should therefore plead with the House to put an end to the carping, niggling, begrudging attitude which still characterises things said sometimes even in this place about the common institutions of the Six.

It is a long time ago since we had our debate on 26th November, 1956, when the Government first put before us the idea that they should seek to negotiate with their O.E.E.C. partners on an industrial Free Trade Area. At the time, we gave our conditional approval to that idea. We thought it right then; we still think it was right. We should not fail to appreciate that, however limited the concept was, it was without precedent for the United Kingdom to be willing to go so far. It is true that on this side of the House we put forward a number of reservations, a number of conditions, and we made a number of suggestions.

My right hon. Friend the Member for Huyton, opening the debate for us, stressed among other things the need for policies of international full employment and rising living standards. He stressed the need for more automatic credits and not less, and when I wound up the debate I insisted that competition and the single system of natural liberty was not enough; that, indeed, success would depend on how far we were able to depart from ordinary free trade principles. I said we wanted free trade, but free trade with such a difference that a new name would be needed for it. [Laughter.] I could not think of a name at the time, and I should be interested to hear it.

Since then, the silence of the Government on this subject has only been broken, first, by the publication of the White Paper in February, 1957, by a debate we had on the initiative of a private Member, and by a few Parliamentary Questions from which we had very little addition to our knowledge. I have felt, and the Paymaster-General knows this, that the Government could have given us much more information over this period if they had so wished. As one reads these documents, it is clear that no harm would have been done if some of them had been made available to us. Let us take, for example, the agenda document prepared by the right hon. Gentleman. This was exactly what we were asking for in November, 1956. We asked the Government to let us know the range of the problems that were likely to be discussed.

It is true that it has been possible for some of us to follow what has been going on. Those of us who are privileged to represent this House in the Council of Europe and in Western European Union are able, nearly always, if not to see the documents, at least to know what is in the documents that are being discussed at O.E.E.C. The generality of Members, however, has not been in this position, and now for the first time we have the White Paper and the Blue Book giving us an account of what has been happening. They are, of course, among other things a record of the industry of the Paymaster-General, and I have heard on all sides tributes paid to his patience and his unfailing good humour. Indeed, I know very many of the people with whom he has been working, and they give nothing but praise for the way in which the right hon. Gentleman has done his work, even when, as quite often, they may have thought he has been wrong in what he has been doing or saying.

These documents, unfortunately, do not bring us completely up to date, and I wish the Paymaster-General had spent more time in explaining to the House the state of affairs following the proposals of the Six and the counter-proposals made by the President of the Board of Trade on behalf of the United Kingdom, and presumably the other associated countries as well. Perhaps when the right hon. Gentleman replies to the debate he will give us more information on this matter, which I do not believe is clear.

As one looks at the documents one cannot but be struck by the extent to which the Government have departed from their original view. The two White Papers scarcely seem to have come out of the same administration. The earlier notion that here was a concept related primarily to the removal of restrictions on trade has been replaced by a document which contains a number of other things as well.

There is, for example, the matter of agriculture. When we debated this subject in November, 1956, the attitude taken by the Government then was virtually this: we do not mind talking about agriculture in the way we have been doing in O.E.E.C., but we do not want to talk about it in the context of the Free Trade Area. It was suggested by one of my hon. Friends at the time that this was probably a mistake, and the Government later produced a document on the subject, reproduced in the Blue Book. I must say that the distinction between what the Government proposed and what is laid down in the Rome Treaty and what might follow from the policy of confrontation is by no means clear to me. This again is a matter on which it would be helpful if the Paymaster-General would say more when he replies to the debate. Or, if we take the question of the co-ordination of policies, in the early documents the Government recognised that— … co-operation in the field of economic policy is of great and continuing importance. By the time we get to the new document, Her Majesty's Government have reached the point where they are even prepared to say that they … have always recognised that a closer co-ordination of internal economic policies would be a necessary accompaniment of a free trade area. All I can say is that in November, 1956, or in the earlier White Paper, they did not imply anything of the kind; in fact, they were anxious to insist that it was possible to do almost everything needed solely by the removal of restrictions on trade, and they have departed from that considerably. Or let us take a matter to which the right hon. Gentleman referred, the question of the free movement of labour. In the 1956 debate, we understood that the Government were not going to agree to the free movement of workers and the Trades Union Congress document published about that time states: There is no reason to believe that the scheme for a free trade area will involve the free movement of labour between the participating countries; the Government have given an assurance that the United Kingdom would keep control of its own policy in this respect. If one turns to the progress report of the Secretariat of O.E.E.C., one sees on page 75 of the Blue Book a reference to the question of the free movement of persons, services and capital. It is there indicated that the Italian delegation, supported by the Greeks, said that unless the principle of the free movement of manpower was accepted, they would not be able to join the Free Trade Area. The Austrians, Danes, Norwegians and Swiss, however, pointed out that this principle would raise difficulties for certain countries. Where did the United Kingdom stand on this? I suspect that the United Kingdom has moved from the original position it took up. If not, it would be as well for this to be made plain.

So, too, with the movement of capital. We had understood in 1956 that the Government would keep complete control over capital movements. The Paymaster-General has said nothing about it. I should like to know whether at any time this point has been conceded. I would also say—I trust with appropriate modesty—that the Government do not seem to have taken much notice of the things that were said in November on this side of the House. I have searched in vain for any proper reference to things like full employment, expanding economies, investment funds, credit facilities—things. that is to say, on which we on this side of the House always set great store.

Moreover, we made a great deal of reference in 1956 to Commonwealth matters. No one would ever suppose for one moment just by reading this Blue Book that the United Kingdom was a leading partner in a great Commonwealth; nor would they suppose that the other partners had any interest in Europe; nor would they suppose that 40 per cent. of the trade of the world was carried on in sterling.

When the right hon. Gentleman referred just now to the possibility of the parts of the Commonwealth being associated with Europe. he seemed to me almost inclined to suggest that they had no interest in Europe. This is nonsense. The Dominions and Colonies, of course, have a great interest in Europe precisely because it has been a rapidly expanding market. Unless Her Majesty's Government in any negotiations speak for the Dominions and other parts of the Commonwealth, I am quite sure that in due course they will find that they will want to speak for themselves. Indeed, I would think that there were some of them that were inclined to say that already.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I said in my opening remarks fiat we kept the Commonwealth Governments informed of every single thing that took place in the Committee. On two occasions in Canada in the Conferences of 1957 and 1958 the Common- wealth Finance Ministers reaffirmed their support for the line we were taking.

Photo of Mr John Edwards Mr John Edwards , Brighouse and Spenborough

That is very reassuring. Would it not have been a good thing for the United Kingdom in those negotiations to have behaved as though it were part of the Commonwealth? Is it not rather surprising that this does not cone up in the documents? I would quite honestly have expected it to do so. I think that there must be something wrong if one can have negotiations extending for so long in which issues of this kind are not in fact brought up at all.

On the face of it, and in accordance with what the right hon. Gentleman himself has said, it would seem that the negotiations failed because of widely differing viewpoints on three main topics. First, on the external tariff, problems of deflection of trade, Commonwealth preferences, general commercial policy and the like; secondly, on problems concerning harmonisation in the social field; and thirdly, institutional problems where it would appear that some countries preferred rules and procedures while others wanted more and stronger institutions.

My own feeling in the light of very many conversations in Europe is that the dividing issues went deeper than that, and, indeed, there were some times when the contending parties appeared to be living in almost entirely different worlds. We can understand why this should he so. After all, the representatives of the Six had been immensely preoccupied in starting a great new venture which they saw mainly in political terms. We were taking a step forward in the commercial field unprecedented but, nevertheless, essentially economic in character.

For my part, I do not believe that the Rome Treaty would ever have been drafted, let alone ratified, on economic grounds alone. Nor do I believe that the unity of the Six would have been maintained through these difficult negotiations if purely commercial considerations had prevailed. I think that we have never properly understood this. When we withdrew from the discussions at the time of the Spaak Report, the Government's view—I hope that T do them no injustice—was that the Common Market was not likely to come off. It seems to me that the right hon. Gentleman went a little too far today in that there was at least an implication in what he said that Her Majesty's Government had always positively wanted and encouraged the Common Market. That is not true. Everyone knows what happened after the publication of the Spaak Report. Everyone knows that, whatever we may have said in public, in private we were going around Europe casting doubts on the project.

I am constantly being reminded when I meet leading representatives of the Six of some of the things that were said in private at that time. When it looked as though the Messina initiative would come to something, we produced the good idea, in my opinion, of an industrial Free Trade Area, but even that was not likely to be well-received at the time since to some it appeared to have been brought forward on the ground that we could not afford to be left out in the cold.

I think it was Le Monde that said, at certain stages in those negotiations, that it was rather like the deaf talking to the deaf. The Six have their own private world just as we have. One of the myths of their world is that they have established an open community. It is perfectly true that Article 237 lays down the procedure to be followed if one wants to join the European Economic Community. It also lays it down that any changes need to go through the ordinary processes of ratification, but unless we are very naïve politically we know perfectly well that the Rome Treaty is not just a blueprint for a Common Market; it is a register of bargains that have been made, it is a record of national reservations, and it is a list of a number of matters to be settled hereafter, some perhaps never to be settled at all.

Therefore, if anyone wants to join the Common Market, nothing less than the re-negotiation of the Treaty is involved. If it were just a club that one joined, with everyone treated exactly alike, it would be simple. But it is not that. It is a highly-complicated matter and would, I believe, take a very long time. My own private opinion for what it is worth is that nothing would embarrass the European Economic Community more at this moment than to receive an application for membership. I should be interested to hear the other side on this. I think we would be wrong to suppose that the solution of our difficulties is to be found by some precipitate action of that kind.

I think, too, that we have been prone to blame the French overmuch. I was myself particularly distressed by the way in which the negotiations ended last December. What I should like to say on this matter is perhaps limited by the fact that the President of the Board of Trade is away ill. I was in O.E.E.C. the morning after the fatal meeting. I met a number of people who had been at the meeting. There is no denying that there was dismay and despondency. There is no denying, although most people thought that nothing short of a miracle could save the negotiations, they were all really disturbed by the way in which they ended. I cannot for the life of me believe that there was any justification for the acrimony of the final stages of these negotiations. I believe that it did nobody any good. and it has made life difficult for a number of people.

I disagree with the Paymaster-General on one point, as regards the timing of his negotiations. He told us very frankly that he had toyed with the idea last summer of reporting progress so to speak. [An HON. MEMBER: "No progress."] I should have said "no progress". I was using the term "progress" in our sense, which quite often means no progress. I think it was absolutely clear by July last, certainly by October last, that it was quite impossible to negotiate an agreement which would be effective by 1st January, or, indeed, to reach an agreement by 1st January. I thought so at the time, and I still think so. I believe that turning on the heat at that moment was absolutely the worst thing we could do in relation to the Six. I feel that if we had given ourselves more time to go into the whole question of the interim arrangements we might not be in the jam we are in now. If we had had six months, perhaps, or five, or even three or four, that would, I think, have been a help.

The right hon. Gentleman, in answer to an interruption by my right hon. Friend the Member for Huyton, said that nobody really wanted to talk about these interim proposals. I must say that his account does not exactly square with the account which I have been given. It has been said to me—perhaps the right hon. Gentleman will confirm or deny this—that, whatever other delegations may have wanted, the United Kingdom delegation did not think it a good thing at that point of time to take up the question of interim arrangements.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I said earlier that, in July, no one wished to respond to the invitation to propose a provisional arrangement. It was left open to anyone who wanted to do so to do it at the October meeting. No one did.

Photo of Mr John Edwards Mr John Edwards , Brighouse and Spenborough

I am not denying that, but, of course, the real question is, what was the attitude of the chairman of the committee? Was the chairman of the committee saying, "This is something you had better not bring up at this point", or was he saying, on the other band, "I think it is a jolly good idea"?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I certainly welcomed the fact that it should be raised. I said that everyone agreed—and we were part of everyone—that it was premature.

Photo of Mr John Edwards Mr John Edwards , Brighouse and Spenborough

We will leave it at that.

Next, I wish to press the right hon. Gentleman a little further about quotas. He told us that bilateral negotiations are going on now, the hope being to establish certain, as it were, multilateral principles which will inevitably be applied bilaterally. I think that that is what he said. I interrupted him and asked him whether he was satisfied that proper co-ordination was taking place, for I know certainly of one Government who are worried about this. As recently as only yesterday I heard that they had supposed that there would be a series of bilateral discussions in Paris, almost as though nothing multilateral would be left. Perhaps the right hon. Gentleman will come back to that point or, at least, satisfy himself that everybody is really being informed.

The other matter in relation to quotas is this. What have the Government in mind for the next O.E.E.C. Council meeting, which will presumably be in March? He told us of what has been going on, but he has not told us anything of the Government's ideas. There has been no suggestion about what policy Her Majesty's Government will follow.

The second matter about which I wish to ask, which is a little technical, perhaps, relates to tariffs. When I go about Europe and talk to representatives of the Six, they all talk about harmonisation. It is their magic word. It is the "Open Sesame". Then, when I talk to representatives of the United Kingdom and others. I find that this word "harmonisation" is anathema. I remember a conversation I had with the then chairman of the Council of Ministers of the Six some time ago. When I asked him what ought to be in any research programme that any one was conducting in the United Kingdom on these matters, he said there was nothing more important than a study of the harmonisation of tariffs.

I have thought a good deal about this, and I wish to ask the right hon. Gentleman what are the real difficulties or obstacles to our aligning our tariffs over as wide a field as possible. Would it not be a very great psychological advance if we were able to have a common tariff, if not over the whole field, over a substantial part of the field? Certain commodities which are imported into the United Kingdom free of duty will bear no duty on import into the Common Market. I have seen estimates which suggest that about 30 per cent. by value of our imports of basic material come under this heading. If one takes list B of the Rome Treaty, the European Economic Community duty is not to exceed 3 per cent. It looks to me as though over half of our basic materials are within this 3 per cent. margin. Commonwealth Preference, of course, is not at all unimportant in connection with our basic material imports.

I will not elaborate the point, but it seems to me that it would be an immense step forward if we could clear out of the discussion a great section of trade. It is probably true that, in our industrial products and manufactured goods, there may be areas where it would be quite possible to contemplate a common tariff. I will put a tentative view in the following way and invite the right hon. Gentleman to comment when he comes to reply.

First, the final Common Market tariff will be lower for many products than our own is today. Second, our tariff, if it remains where it is today when the European Economic Community has established its common tariff, will proably be the highest in Western Europe, with the possible exception of Austria. Third, our tariff in very many cases is nearer the final Common Market tariff than the tariffs of the Six are at present. I wonder, therefore, whether it is possible to contemplate, over quite a wide range, the harmonisation of tariffs—over a period of time, of course. Then we should be left with a number of difficult cases. The Paymaster-General's Committee spent a great deal of time working out all kinds of ways to deal with such matters—certificates of origin, definitions of processes, difinitions of percentage of materials, Carli proposals and other compensatory schemes which might be used for what was left. Should we really not make progress if we were able to say that, over 60 per cent. or 70 per cent. of the field, whatever it is, the difficulties of harmonisation are not insuperable? I invite comment on that.

Finally, I wish to speak more positively about the way forward. Quite apart from any mopping-up operations now, whatever they may be, what else have the Government in mind? I do not think that we should dismiss the idea of establishing a closer relationship with countries other than the Six. The less developed areas of Europe are a special problem, but what of Scandinavia? Is it not possible to contemplate a closer Uni-Scan group? We have many interests in common with Scandinavia. We are complementary in many ways. Any such grouping need not be thought to be against the Six. It might, indeed, in the end be a help. What do the Government think about our relations with Austria and Switzerland? What have they to say about our relations with the less developed areas like Turkey and Greece?

Taking, however, the main problem, it is clear that at the end of the day there must be some association between those members of the O.E.E.C. other than the Six with the Six. If we dare to look forward to a time when we can again try to build a wider unity in Europe, we on this side would suggest a rather different approach. The Paymaster-General quoted the leading article in The Times today to the effect that the way we had already tried was the only way. I do not believe it. Indeed, if it is the only way, there is little hope for us.

We have to try to find, in the words of the Manchester Guardian, a unifying idea. Clearly, that unifying idea is not the idea of political federation; the right hon. Gentleman was perfectly right The concept of a Free Trade Area, however, is not a unifying idea either. Indeed, the chances are that that concept in its original form is dead. In its original form, it has already been abandoned by the Government and that is perfectly proper.

To base the new unity of a wider, bigger Europe merely on the removal of restraints to trade would be simply to have an economy erected on the principle of "To him that hath shall be given". We have to try to take a different approach and to start from a different point of view. We cannot do better than to start from some of the things that have already been done in O.E.E.C. and some of the things which O.E.E.C., had it been given greater powers, would have wanted to do already.

I speak in the sense of a recent declaration made by a conference of the Socialist International meeting in Brussels which my right hon. Friend the Member for Huyton and I were privileged to attend. A good unifying principle is to go to Europe, not saying "Let us get rid of restraints on trade", but saying, "Let us see how we can work together to make of this area one that is really dynamic in economic and social terms".

We believe that the European Economic Association should aim, above all else, at promoting over as wide an area as possible a grouping whose basic objective should be economic expansion, full employment and social progress, in which all the parties to the undertaking should commit themselves in unequivocal terms to pursue economic, financial and monetary policies directed to these ends. Any treaty should, in our opinion, provide for measures of industrialisation, the modernisation of agriculture and the rapid expansion of development areas to bring the standards of living in those areas closer to that prevailing in other parts of Europe.

The treaty should ensure effective control over cartels and trusts and other forms of economic power and should contemplate comprehensive credit facilities and the mobilisation of long-term investment funds for economic development and for the re-adaptation of both workers and industries. We further think that we should try, so far as possible, to associate the Commonwealth in some way with such a great enterprise.

I recognise that this would involve a degree of political commitment for which we are, perhaps, not yet ready, but can anyone deny that the rate of expansion in free Europe is of the first importance, not only to all of us who live here, but to the Free World as a whole, not least to the less developed countries of the world? If there is stagnation in Europe, or even if our rate of progression slows down, no amount of economic aid that is likely to be forthcoming can make up for the loss of purchasing power.

I think I know the leaders of public life in Europe sufficiently well to assert that if we spoke in such terms, we should not be talking to the deaf. I believe that such an approach would make the commercial and tariff problem so much easier. At least, it would be worth trying. The time may not be yet, but even in our own economic interests we cannot indefinitely delay in deciding what our relationship to Europe should be.

This is not exclusively, or even primarily, a commercial matter. It should concern those in the House who are interested in foreign affairs or in defence matters as much as those who are interested in economic questions. We are concerned with nothing less than the strength and security of Europe and we are today challenged as we never have been before to do in freedom what some nations accomplish by other means.

5.27 p.m.

Photo of Mr Basil De Ferranti Mr Basil De Ferranti , Morecambe and Lonsdale

In addressing my first words to this House and in asking for the indulgence of hon. Members, I am conscious of my inadequacy to follow in the footsteps of my predecessor in Morecambe and Lonsdale. His great personal courage in overcoming his affliction of blindness and his devotion to public service won him the respect and admiration of all hon. Members, and of his constituents and of members of the British Legion and those many thousands of blind people whom he has done and is doing so much to help.

A tremendously important key to the question that is being discussed this afternoon is the reason why France backed out of the negotiations in November. There seem to be three possible reasons. The first is that in view of the constitutional crisis which the French had suffered so recently, they were not prepared to continue with the negotiations until they had further time to make up their minds exactly what they wanted. If this is the reason, there is great hope in future negotiations.

A second possible reason is that the French did not, and do not, have the slightest intention of allowing the United Kingdom to join the "club" and of allowing the United Kingdom, as well as Germany, to compete in their home market. If this is true, it raises serious problems for British industry. I speak as an industrialist. I have an interest in and a day-to-day knowledge of the electrical industry. If that is the reason, it will be necessary for us as an industry, and. presumably, necessary for other industries also, to take action to protect themselves in third markets. Such action could possibly not be in the interests of the freedom of world trade, and possibly not in the interests of the freedom of German or French trade either.

A third possible reason may have been an attempt on the part of the French to drive a harder bargain. I am particularly alarmed if this should be the case, because in future negotiations we may find ourselves making concessions which possibly we might regret. One possible concession which we could make would be to provide French overseas territories with development capital. That would be all right, if we could afford it. But another possibility could be that, through the working of the managed agricultural market, we might permit France to export agricultural products to this country.

I hope my right hon. Friend the Paymaster-General will never consider such a concession. Let us get it in the right perspective economically. The Economist intelligence unit showed that the effect of a European Free Trade area would be to increase the gross national product to £28 million, instead of £27 million if we had no such area. I have a great many farmers in my constituency, and I do not think that their livelihood should be jeopardised to achieve a gain of this order.

If there is or if there is not to be a Free Trade Area in Europe—I hope there will be— inevitably British industry will face severe competition in third markets. This may mean that there will have to be certain rather uncomfortable attempts at co-operation between British firms in an attempt to rationalise production and attain some economies of scale in order to do that. I hope this will come about as smoothly as possible and that the Government will give assistance where and if they can. We in industry must face the fact that this is a tremendous time in our history. It is not only our duty to safeguard the interests of our shareholders, we must also safeguard the interests of the many thousands of employed people and ensure that we continue to provide them with expanding employment.

A breakdown of these negotiations presents a tremendous danger to us all. It presents a danger to the tourist trade in Morecambe and to farming in Lonsdale. Whether one is a pensioner or an industrialist, the challenge has to be faced. On the other hand, it would seem that there is no doubt that freer trade in Europe, more or less on the lines which my right hon. Friend has been following in the past, is highly desirable both politically and economically. It is certainly a politician's dream, and it is also an economist's dream. Speaking as a practical man, I am always afraid that the dreams of economists may turn into nightmares. But I know that my right hon. Friend will bear in mind the particular problems which people face.

I hope that he will not be discouraged or dismayed by the difficulty of the negotiations. I think the country owes him a great debt for all he has done in the difficult and perhaps sometimes extremely depressing negotiations described in the White Paper. But I say to him that he should go out and try again, secure in the knowledge that the country knows he has the interests of everyone in mind, and that he will continue to do a good job on their behalf.

5.34 p.m.

Photo of Mr Frederick Bellenger Mr Frederick Bellenger , Bassetlaw

As I expect the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti) knows by now, it is the custom of this House for an hon. Member making his maiden speech to be congratulated by the speaker who follows him. I willingly do that on this occasion, particularly as the hon. Member paid a tribute to his illustrious predecessor, whom many of us have known for many years both in this House and outside, particularly in connection with the British Legion.

The hon. Member spoke with a great deal of assurance, which is a welcome sign of what is to come when he takes part in debates on future occasions. I should like to take up one or two points which he mentioned, but I feel that I ought to observe the pleasantries of this occasion; so I pass to the Minister who, on this occasion, and indeed on all occasions, is fair game for criticism, whereas today the hon. Member for Morecambe and Lonsdale is not.

Every hon. Member must be conscious of the complexities of the subject we are discussing. Indeed, the Paymaster-General spoke almost in the style of a Second Reading debate on a Bill. He went into the matter clause by clause, and the more he discussed it the more we felt—even those of us who are most closely connected with affairs of this kind —how difficult it is on such an occasion as this to speak in a helpful manner about the future. I wish to attempt to do so.

I can well understand that it was difficult for the right hon. Gentleman, in the year at his disposal, to secure some sort of agreement with the Six; more particularly because of the attitude taken by the French, to which I wish to refer later. I consider that the Government are to a certain extent to blame for their lack of foresight. It is not a question of two years or one year from the time when the Rome Treaty was signed; this matter goes back to 1951 when the Coal and Steel Community came into being. The Government had plenty of time to observe what one might call a little European Confederation at work. They have had their observers at Luxembourg where the Coal and Steel Community has its headquarters and they ought to have foreseen the general trend in European affairs towards the political and economic integration of certain nations.

When I consider the ignorance of the Government about matters which occurred in Cuba, for example, or even—when we know all the facts—in Cyprus, I wonder whether they are conscious of the way the world is going. As the Government, the party opposite have access to all the information available; we in the Opposition have only a limited knowledge of what is happening. But these issues are too serious to be treated merely in a partisan manner. The essential feature of our debate must be —the right hon. Gentleman referred to it—that both sides of the House are in general agreement about the objective which the Government must try to pursue. In that they have been supported by large industrial organisations, like the Federation of British Industries, and the large trade unions.

I do not wish to attempt to examine the speech of the Paymaster-General point by point. I wish to deal with the matter in a much broader aspect; to go back to the position which obtained immediately after the war which, I think, has given rise to this tremendous drive on the Continent, particularly in Germany, for European integration—if I may call it such. It is a remarkable thing—I have no doubt that hon. Members will know about it—that in Germany since the end of the war, and especially among the younger people, there has been an intense desire to be associated with other countries. There is no doubt that the policy of Dr. Adenauer, the German Chancellor, has been to try to induce France to come into the German camp.

As time goes on and if the E.E.C. remains as it is, Germany will be the dominating partner. There is no doubt that the Rome Treaty would never have been signed or ratified if Germany had not promised France considerable financial concessions and investments in French industry, both in the metropolitan area and in its overseas possessions. We have to recognise these facts if we are to get some sort of agreement in the future, and agreement we must get. I agree entirely with the Paymaster-General that the negotiations must not stop as they have stopped. They must go on until some sort of compromise is found. Compromise it will be, and not entirely to our complete satisfaction.

When the war ended, Germany, Italy and France were completely prostrate. Germany, particularly, was devastated, and there seemed to be no hope for them at all. Small wonder, therefore, that they turned to some of their nearest neighbours in similar difficulties. France had not been devastated to the same extent, physically at any rate, as Germany, but France herself was a defeated nation, defeated in 1940. I do not believe she has entirely recovered since then.

These nations, Germany, Italy and France have an inferiority complex vis-à-vis the two great Powers, Britain and the United States of America, which had saved some of their assets and, in the case of the United States, had increased those assets as a result of the war. They were grateful, of course, for Marshall Aid and the aid Great Britain advanced to rehabilitate their countries. That fact in itself created an outlook in the minds of the nations I have mentioned, particularly France and Germany, which made them want to be independent, if possible, of the aid which was given them by America and ourselves.

Therefore, there grew up this European movement which we now see in the E.E.C. and which I think will develop as time goes on into something more tight and powerful in the political sphere. The interesting thing is that before Her Majesty's Government came into office in 1951 they seemed to be running on parallel lines to the European countries I have mentioned. We heard wonderful speeches by the right hon. Member for Woodford (Sir W. Churchill) and, of course, by the present Minister of Defence, encouraging this idea, but, once the Conservative Party came into government, they seemed to recede from the position they had helped to promulgate while in Opposition. Since then there has been something happening in Government circles which has contributed to some extent to the impasse at which we have arrived.

I have said that the object of the German Chancellor was to get a political agreement with France. The Rome Treaty, which was not fully accepted in all its details by the industrial organisations in Germany, nevertheless was put into effect mainly by the German Chancellor, who has tremendous power in Germany, although I believe it is waning a little now under the impact of certain matters which will culminate in May. I am sure that the whole history of Dr. Adenauer, right back to the First World War, prompted him to get a political understanding with France at all costs. What is the effect of that? Part of it is seen in the E.E.C. Make no mistake, the two dominant partners there are France and Germany. The other nations come in in agreement, but I am afraid they have not either the same financial or economic force as Germany has today.

What is to be done now? We cannot allow matters to stay as they are. I do not know whether I misunderstood my right hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards) or not when he talked about the mobilisation of the other Eleven. That I do not think would be possible, even if it were desirable. Indeed, I should say we should not belabour France too much. The speech of the hon. Member for Morecambe and Lonsdale gave me the impression that he was criticising France unduly for being, as it were, the nigger in the woodpile and bringing these negotiations to an end. There is no doubt that France prefers bilateral negotiations to negotiations on the basis of the Six. I believe her whole policy is directed to that end, but, if we cannot get the whole Six to join in as they have done so far, I should not be averse to coming to an arrangement with France bilaterally in the hope that it might be extended, as I think possibly it would be, by her partners.

I understand that great pressure was brought to bear on France by her German partner to get her to liberalise up to 90 per cent. of her imports. If that is possible, it might be possible in reverse, first to get an agreement with France, and then to have it translated into a wider agreement among the Six and, eventually, among the whole Seventeen. At any rate, Her Majesty's Government have to do something and I should say the best thing they can do is to go on talking. I hope the right hon. Gentleman will continue to be in charge of these negotiations, because I prefer him to the President of the Board of Trade, who has a habit sometimes of dropping a brick or two in delicate negotiations.

Time is not so urgent as I think my right hon. Friend said. It will take two or three years before we begin to see the effect of the Rome Treaty. We have a little more time to spare now in order to continue from where we left off. I thought the right hon. Gentleman was right to bustle about and try to get the Free Trade Area to come into operation, if that were possible, at the same time as the E.E.C. started on 1st January this year, but we now know—he at any rate knows—that was impossible for one reason or another.

This year in political affairs will be a very serious one. We shall need to stand shoulder to shoulder in the West if we are to withstand the cold blast which seems likely to come from Russia. Therefore, I say it would be in the interests of France to compromise as well as this country. I am bound to say to the Government that I think we have shown readiness to give concessions particularly with reference to agriculture. Agriculture is not, as many of us thought, the main stumbling block to an agreement in the Free Trade Area. It seems that all these questions—country of origin, quotas, tariffs, harmonisation of social policies—could be overcome with a little give and take on both sides.

There are difficulties; everybody knows them. For example, there is the difficulty of defining the country of origin. Everybody knows the difficulties that might occur, especially hon. Members from Lancashire constituencies, if imports of cheap goods from Hong Kong flooded into some of the low-tariff countries in Europe and were then spread widely over the whole of Europe. That would create chaos. Obviously some proper definition has to be found for "country of origin". I do not believe that it is beyond the bounds of possibility to find something that will satisfy France.

I do not want to say anything more or to go into details tonight. We have had a survey of the matter. I have mentioned Dr. Adenauer as being the driving force behind what is more or less a Franco-German alliance, not militarily but economically, and certainly politically too. I have nothing to say against that. It is all to the good that Germany and France, who have been bitter enemies for nearly 100 years, should come together. They cannot come together and live in a stable Europe if they ignore Great Britain who, though she may not be physically a part of Europe, is certainly a European country as much as she is a world Power.

I hope that my words may go further than the House of Commons. Dr. Adenauer, with all his faults, is a great statesman but, not only in this country but in his own country, he has critics: even, I understand, in his own party.

He has shown in the post-war years that he is a great statesman—and there have been very few great statesmen at any time. We have been lucky in Germany, which might have gone into anarchy, to have had somebody who was able to raise the German people up again so that they could play a part in European and world affairs.

I believe that the Germans are trying to play a democratic part, and again that is all to the good. The German people have a great admiration for us and we have many friends in industry in Germany. Indeed, from what I know about the matter, considerable pressure has been brought to bear by the D.B.I., as it is called in Germany, on their Government to get a settlement on a wider basis than that of E.E.C. I think that the Paymaster-General knows to what I am referring.

I therefore hope that it might be possible for this statesman, as I claim Dr. Adenauer to be, although he is quite different in politics from myself and my hon. and right hon. Friends, to write a concluding chapter to the book which he has been writing now for many years. In the normal course of events he will not have too long to continue his book. If he could write the chapter which would bring France, Britain and Germany together—I do not ignore the other countries but I look upon those three as the most important, economically and politically, in Europe—we should get enough stability in Europe to create the strength which we shall badly need when we are faced, as we shall be faced at no distant date, by a big push from those who are making their takeover bids in different strategic parts of the world.

I have nothing further to say at the moment. I do not want to criticise more than I have done Her Majesty's Government—not today—although one must recognise that they have failed, or have not been successful, in their negotiations. I am not referring to the Paymaster-General himself. I do not know whether Ministers are tired and listless, but there seems to have been a lack of drive in many respects, and not only in the matter that we are discussing. Therefore, it would be all to the good if the Prime Minister made up his mind at an early date to have a General Election and to let the people give their verdict. Perhaps they, with their wider outlook than Her Majesty's Ministers, might be able to give a message not only to Britain but to Europe and to a wider field. At least, I hope so.

5.54 p.m.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

With one point in the speech of the right hon. Member for Bassetlaw (Mr. Bellenger) I find myself in full agreement. It was when he congratulated my hon. Friend the Member for Morecambe and Lonsdale (Mr. de Ferranti) on what was an excellent maiden speech. The speech was sufficiently provocative to be interesting and sufficiently short not to be too provoking.

With the rest of the right hon. Gentleman's speech I could not find myself in full agreement. He gave a picture of no great urgency in time. We have to go along—in the words of The Times—trying to force our way down a blocked road and, in his view, go on talking. That was an unfortunate approach to the problem.

Whatever views we may hold about the Paymaster-General, or even of some of the views expressed in his speech, I am certain that there is no one, either in the House or outside, who is not full of admiration for the diligence with which he has pursued those views and for the clarity with which he has always expressed them in the House and in Europe. There can be no question about that.

In these matters one can only wonder what the Government have been pursuing. Is it a shadow rather than a substance? After all, I would remind my right hon. Friend that nearly half of the trade of this country is with the Commonwealth and that the portion of trade that he claims to be placed in jeopardy by the Rome Treaty amounts to just about 13 per cent. Had we spent the two years negotiating and planning how to expand our Commonwealth trade I believe that at the end of the time we should have had a greater measure of agreement and we would have improved rather more our trading position. That is why it is probably a good time now to appraise our position.

I cannot believe that the second leading article of The Times is right when it talks about the only policy for this House to take being to approve Her Majesty's Government's efforts to pursue their path down a road that is blocked. The trouble is that some of us in the House and in the country find the arguments of Her Majesty's Government and of Her Majesty's Opposition rather hard to understand. Let us consider the Government's position.

We read in the communiqué after the Montreal Conference that the Government approved of the system of discrimination practised in the system of Commonwealth Preference. It said that it had been of mutual benefit and, in the view of the Government, should not be discarded or weakened. Then we come to the Rome Treaty. I gather that it is the view of the Government and of the Opposition, expressed by the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) that the method of the common tariff is to be welcomed in the interests of Europe. They also go on to say that the problems that arose from the system of Commonwealth preference and the system of common tariff must be solved by overlaying a non-discriminatory system of multilateral trade over that position. That seems to me to be the difficulty in which the Government are placed. They are mixing discrimination and non-discrimination and approving both at the same time.

This is where I disagree with the right hon. Member for Bassetlaw, as I disagree with many other points which he made. He asked why we should not have done all these things a long time ago. We must watch the calendar and see what is happening in the world. At the time of Bretton Woods, in 1945, we all talked in terms of establishing a system of multilateral non-discrimination. The whole world is now changing to move discriminatory methods. For example, the United States, the big advocate of nondiscrimination, gets rid of her surplus agricultural products through bilateral agreements and barter deals.

Not only in the Common Market in Europe but all over the world we see attempts to form common markets—Latin America, Scandinavia, and even the Arab countries. There is this movement towards bilateral agreements and barter deals. Hon. Members should consider how Russia and Red China are planning their economic war. Again, they are doing it by bilateral trading and by forms of barter. It is discrimination which we face today and that is why I think we need a re-appraisal of the situation.

It seems to me that the danger is that all are paying lip-service to multilateral trading and, at the same time, we are finding that everybody is quietly but actively discriminating and helping each other by those means. I agree that it is quite wrong to blame the French for failing to understand Britain's point of view, because there is this inherent dichotomy in our policy. As the right hon. Member for Brighouse and Spenborough said, the French are not in this Common Market for economic reasons but for political reasons. I am certain that when he goes up to bed at night every French industrialist shivers and thinks of German competition. Nevertheless, it is a great advantage to have that political unity. Our action, therefore, ought to have been to recognise the economic advantages to Europe and to Germany from the Rome Treaty and to try to build our policy on what is in the interest of our trading position and the Commonwealth as well as the interest of our position in Europe

That must make us ask: what is the strength of Britain? I know that many people do not share my views on these subjects, but I think that there will be unanimous agreement in the House when I say that Britain's industrial strength depends upon the fulcrum of her Commonwealth partnership. The raw materials which we use for our industry come from the Commonwealth. They are processed here, and having been so processed, they largely go back to the Commonwealth countries. Our trade with the Commonwealth is complementary.

Our trade with the Common Market countries, the Six, is of a very different nature. We take from them the wines which are produced in competition with our Commonwealth. The agricultural products which we take from them are produced in a climate much the same as our own. Turning to the manufactured goods, we send to the Common Market countries goods where we can win markets by our skill and inventiveness, and, on the other hand, where they can undercut our prices by lower wages or worse conditions, they get their products in here. It is a perfectly good example of competitive trading.

That being so, we ought to be thinking of ways in which we can improve our industrial strength by increasing the volume of Commonwealth trade, not merely for the selfish advantage of this country but also for the advantage of the Commonwealth and to expand Commonwealth trade with Europe. One of the unfortunate facts, as I see them, is that during the period in which we have been having this bargaining with Europe, the Commonwealth share of world trade and our share of Commonwealth trade has been declining. That is chiefly due to the fact that we have not done sufficient to try to raise the position of primary producers by finding out methods of stabilising commodity prices. Sometimes there is a mistaken notion that this country gains from low commodity prices or from fluctuating commodity prices, and I am sure that there is no more shortsighted economic appreciation of the position.

We ought now to be seeking ways of stabilising and raising commodity prices and keeping them remunerative while at the same time making our own discriminatory system of Commonwealth preference effective and up to date. If there is to be discrimination throughout the world, let us at least see that we are using up-to-date methods of discrimination. Unfortunately, by some of these commitments, such as G.A.T.T., we have been prevented from keeping those methods up to date.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I am sure that the whole House agrees with much that the right hon. Gentleman has said about commodity prices, but I hope he will bear in mind that the reduction in the proportion of our trade with the Commonwealth ante-dates the fall in commodity prices. There was a sharp reduction even before 1956–57. After all, G.A.T.T. allows us to use modern methods of encouraging trade with the Commonwealth, such as longterm contracts and bulk purchases, and it also encourages the creation of long-term international commodity agreements about which the Government have been very backward.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

It is true that this started before the fall in commodity prices, but I had in mind not only the fall in the proportion of our trade with the Com- monwealth but also the fall in the Commonwealth share of world trade. We have all been concentrating so much on Europe that we have forgotten how important it is to check these falls and to ensure that the primary producing and semi-industrialised countries have an increasing standard of living through trade. That is why we should be seeing now how we can help them.

Let us remember that in the course of this year, in our efforts to please Europe, we have made very considerable sacrifices. In his maiden speech, by hon. Friend the Member for Morecambe and Lonsdale said that we must not admit all these French agricultural products. It is only in the last two years that France has been allowed to replace Australia as the third largest importer of wheat into this country. In our efforts to please the Dutch vegetable growers we have had to reject applications for horticultural tariffs. It will be found that in the last offer which the President of the Board of Trade made in the course of negotiations with the Six he offered to open out markets which have been safeguarded in this country for thirty-seven years.

We have made very great sacrifices, and got very little out of them. I ask the Government not to under-rate the value of the British market to the exporters of the Six. That is our great mistake of the last two years. If one talks, as I have, and as the right hon. Gentleman the Member for Bassetlaw has, with some of the leading German politicians and economists, one finds that they are fully aware of the value of this British market to the Six.

The great difference between our Commonwealth trade and our trade with the Six is that, with the Commonwealth—with the exception of Canada, which is a dollar country—we had, last year, a favourable balance of trade of £46 million, while with the Six we had an adverse balance of visible trade of £74 million.

We should have said to the Six two years ago, and should still say now, "We welcome your efforts to get political unity in Europe, and we welcome, and will help and support the Rome Treaty, but please remember that you, the Six, are our Allies. We have been an important import market for you. We wish to maintain that position, but we cannot unless you, the Six, not only continue to take our exports of manufactured goods but also guarantee that you will continue to take an expanding share of the products of the British Commonwealth."

That should have been said very long ago. More than eighteen months ago, certainly, we should have invited the Six to sit round a table and, to use the words of Ernest Bevin, place their cards on that table, face upwards. At that table we should now negotiate bilaterally what can be of common advantage to the Six and to the British Commonwealth. It is most dangerous for the right hon. Gentleman to say, as he did today, that he will contemplate bilateral negotiations only in the context of multilateral agreements.

That is where I disagree most with the Government. Realising that the world of today is a world that is discriminating, we should get back to honest, open, bilateral agreements, and then, I believe, we will be saved a great deal of bitterness and Ministers will be saved many bitter words and much unnecessary worry.

6.14 p.m.

Photo of Mr George Chetwynd Mr George Chetwynd , Stockton-on-Tees

Following the right hon. Gentleman the Member for Thirsk and Malton (Mr. Turton), I would say that it is not much use for people to sit round a table putting their cards face upwards if they are not playing the same card game. I am not absolutely sure that over the last few years we have all been playing the same game. It may have been rummy on the one part, and pontoon on the other, but I do not think that we have always understood the game we have been playing.

I do not see any incompatibility in our trying to expand our European trade and, at the same time, stepping up our Commonwealth trade. What we really want is expanding world trade, in which we get an increasing share. In the time of the Labour Government we achieved expanding Commonwealth trade while we were making good the losses we had sustained in the European markets.

I regret the breakdown, in November last, of the negotiations on the Free Trade Area. I was then attending a N.A.T.O. Parliamentarians' conference in Paris, and the atmosphere there was very difficult. The French were concentrating on their coming election, and seemed to have a could-not-care-less attitude to what happened to the negotiations. They were also under their new régime, beginning to feel their feet; and to throw in their hand, as it were, in the negotiations was a sort of demonstration of strength with them—a gesture of new birth.

On the other hand, I do not think that we made it any easier for them to work with us. Despite all the praise showered on the Paymaster-General, it might have been wiser not to have had him as Chairman of the Inter-Governmental Committee. Had he not been coordinating the arrangements, he could, perhaps, have put the British case, and that of the Eleven, more strongly. It might be worth bearing in mind in future negotiations not to have a spokesman acting as chairman as well as putting the case for one party to the negotiations.

At the time of the breakdown of the negotiations, the atmosphere was not at all improved by the headline—"France The Wrecker" —that appeared in The Times of 18th November. It certainly made the French more acrimonious, and led them to blame us for insisting upon a Free Trade Area which we all know was of common concern.

Another thing that probably helped the whole affair to go wrong was that we seemed to be seeking an agreement by a fixed date. We were obsessed with 1st January. We had the obsession that certain things would happen on that date, and that unless we had an agreement before then we should be in real difficulty and, perhaps, in great danger from then on. We are now in a happier and better position to get a considered agreement, because we are no longer working against a set date. There is a more leisurely attitude, but we should guard against prolonging the period too long. If there is too long a gap, attitudes on both sides may harden, which would make it more difficult to find a compromise later.

At the present time, I regard the political consequences of the breakdown as being more important than the economic difficulties. The breakdown signified the first open breach in the Western Alliance since the inception of N.A.T.O.

More damage was done to our arrangements with our Western Allies in the last two months of 1958 than all the Russian propaganda had been able to do in ten years.

The real problem of N.A.T.O. still exists—how can we be a real unity when we are composed of so many diverse units? Nevertheless, we must remember that this was a new type of coalition among Atlantic Powers, and one that had never before taken place in peace time. Never before had so many groups of States committed themselves to a common policy over such a wide range.

Unless a compromise can be found, and found fairly quickly, this present economic concept will strike at the whole basis of the alliance. N.A.T.O. is a defensive military alliance. It depends on our willingness to co-operate in the economic sphere, and so give the stability and expansion of our economies upon which the whole basis of our defensive strength must rest. We are now faced with a major crisis that threatens our collective economic security. There is a real danger of rival economic blocs being created, and that could have only bad repercussions on our defensive and political arrangements.

How has this come about? Basically, it is due to the British position. For reasons given so well by the Paymaster-General we are unable to join the Common Market. For very much the same sort of reasons, we are unable to join the European Coal and Steel Community. Yet we face a real economic danger if we keep aloof. We have sold the Free Trade Area on the unsound proposition that it is the lesser of two evils. The major selling point to industrialists and politicians was: "We do not want to go in, but we cannot very well stay right out and we have brought forward the free trade association idea as the lesser of two evils".

That is not a very enthusiastic approach to the problem. It did not convince the French that we meant business. It appeared to them and to the Common Market countries that we were more concerned with economic nondiscrimination than with European integration. I am not saying that it is wrong, but it is a basic difficulty which we have to overcome.

On the other hand, French policy in regard to the Free Trade Area has been very equivocal indeed. It has been dictated the whole time by their high protectionist policy at home. They have never felt sufficiently strong economically to absorb all the implications of the Common Market and, at the same time, add on to them free trade with the Eleven. They have never been willing to accept the principle of a Free Trade Area complementary to the Common Market. They have been more concerned with political constitutional integration that with the economic well-being of the Western Powers.

Emphasis at this time in November was on the disadvantages under which industries would labour in competing from outside with six European countries tightly linked in a common market. Recent changes in French internal economic policy should make it somewhat easier for them to accept the idea of association. They should be now in a much more competitive position than they were last year. Even so, there is still little sign of any accommodation being reached between the Six and the rest of the Eleven. It is true to say that what France decides as regards the Common Market countries, the rest of them, out of loyalty to France, will accept.

Let us consider for a moment the economic consequences of the failure to arrive at an agreement. That failure has had a serious repercussion on those industries in this country which were organising their policies and were attempting to be more competitive and dynamic on the Continent in the belief that the Free Trade Area would come about. Because of the choice of the lesser of two evils, they believed that serious disadvantages would flow if we were not in association. Now there is a rebound from that position. Where do we go from here? What do we do next? Are we facing the worst of all trading situations in which a tight group of six will oppose us in world trade as well as European trade?

It is already apparent to many people that, unless there is an agreement, the European market will not be so good for our products as was anticipated. As a consequence, many of our industrialists will not put all their drive and selling acumen into competing in a European market, but will look elsewhere. That is not altogether desirable.

I should like to mention in passing that it is already having some effect, although just how directly it can be attributed to the breakdown of the arrangement I do not know. A small firm of woollen spinners situated in my constituency has been closed down. The argument has been put forward that, since the Common Market has come into being a number of inquiries from third countries are not going to the firm in my constituency, but are going to France. As a result, the firm has had to close down. It may be only a small matter, but it seems to be a straw in the wind and the position may get worse unless it is tackled energetically.

The concessions so far made to the European countries in the Six are not revolutionary or earth-shaking, but they are real. The real disadvantage to our economy and industries at home comes, not from the automatic 10 per cent. cut in tariffs between the six countries, but in the quota relaxations within the Six.

Are we taking real steps to secure the advantage of the reciprocal arrangements which have been offered to us as an interim measure by the Common Market? From what the Paymaster-General said earlier in the debate I was not sure if we were getting some kind of agreement, bilateral though it may be, on this basis. The real discrimination against us at present is the increase in quota which each country must permit to the other member countries up to 3 per cent. of its own national production. That is the discrimination upon which we ought to concentrate our efforts.

In order to make my point more real and concrete let me take the position of the motor industry. It is quite clear from present quota arrangements that German car sales will benefit in France and French car sales will benefit in Germany, whilst British car sales cannot increase at all in the Common Market countries. The Common Market takes 7½ per cent. of British car exports, and it is one of the most rapidly growing motor markets in the world. Discrimination means that, although our sales may not decline, they certainly will not grow, whereas the sales between Common Market countries will increase. That means that our exporting agencies will not put so much effort into the selling of our cars in this market, but will try to divert them elsewhere.

A political campaign might easily be run on the lines of "Buy in the European Common Market", just as we used to say, "Buy British". That may react against sales of British goods in the Common Market countries.

Therefore, the car firms—and it applies to other firms as well, such as electrical firms—in the Common Market will get a double benefit from these quota concessions. First, they will reap the benefit of an increase of trade with countries within the Common Market area. Secondly, the extra volume of production which they get will enable the Common Market countries to compete more cheaply and strongly in world markets. Also, concessions within the Common Market will lead to increased market investment in Common Market countries as against investment in Britain. It will be more attractive for American capital to find an outlet in the Common Market countries than in this country.

The motor, electrical engineering, wool, general engineering, rubber and steel manufacturing industries will not get the expected increase hoped for if the Free Trade Area had been established.

We need not anticipate any drastic cut in our exports this year, but if there should be a continued recession in Europe the harmful effects of the discrimination will be very much greater in the future. The Six have gained a terrific boost to their economy and political ideals by the success of the Common Market.

Those are the dangers which face us. Our alternatives have been very widely canvassed and we are still not sure what we ought to do. At this stage we must not indulge in any trade war against Common Market countries. We must be prepared to re-open negotiations. It is not yet the time for planning rival groups or political retaliation. It would be exceedingly shortsighted to make the present difficulties an occasion for threatening to turn away from Europe.

I understand that Common Market countries are drawing up proposals to submit to their organisation at the beginning of March. When is it likely that we shall be in touch with them again to find out the basis of those proposals? How can be meet them? It would be a good idea, I think, if this time the proposals could be made public so that we could have debate and discussion on them before they break down rather than wait until a breakdown occurs before we know what they are.

What use are we making of O.E.E.C. in this matter? I feel that it is the ideal organisation for conducting operations. The Secretary-General is a first class man to take charge. I hope that through O.E.E.C. we can secure a resumption of talks. In this connection, we must bear two principles in mind. First of all, we on our side must make it clear to the continental countries that we accept that the Common Market is here and here to stay and that we shall work with it. Secondly, we must try to convince the members of the Common Market that we are really sincere in our desire to have a closer association politically and economically with them, and we shall not insist upon all the privileges without any of the responsibilities. We must remember also that the overriding need is to keep intact and inviolate the broad basis of European economic co-operation, inspired in the beginning by the Marshall Plan and carried through more recently by O.E.E.C.

It would be better not to go into the errors in our negotiations during the past year and say that it would be fruitless to do so were it not for the fact that consideration of them might lead us to avoid making the same mistakes again. I believe that we underestimated the ability of the six Powers to weld themselves into a political and economic entity. I am quite sure that we thought that the Common Market was an unrealisable pipe-dream of a few idealists in Europe, and it was not until we woke up one day to find it already there that we began serious attempts to have some association with it.

We underestimated the power and influence of the French with the other five continental countries. It is quite clear that, when it came to a choice for Germany as to whether she should go in with France and support France against us or should use her strength to try to persuade the French to be more reasonable, Germany preferred to go in with France on the political side and not put her weight on the side of non-discrimination. This misinterpretation on our part of the divergent views of the Common Market Powers was a serious mistake. We really believed until quite recently—and some people may still do—that the Six would fall apart. It is quite clear that the Six are determined to overcome their problems. We must remove their suspicions that the British were originally aloof. Those suspicions have never been dissipated.

This is not an exclusively British-French problem. It really affects us in many ways less than it affects Austria, Switzerland and the Scandinavian countries. Whereas only 13 per cent. of our exports go to the Common Market, 50 per cent. of Austria's exports go to the Common Market. In Switzerland the proportion is over one-third and the Scandinavian proportion is nearly one-third. Their future is much more closely bound up with having some arrangement than is ours.

I believe, however, that we can take the lead. We can make a joint approach together with our Commonwealth partners. We can revive the European idea through O.E.E.C. and we can break the deadlock. The problem is very acute. The question really is whether there is to be one Europe or two, whether the whole of Europe will become an outward-looking trading area, or whether the Common Market will exist as a small Europe with an inward-looking bloc designed to increase its internal trade against the rest of Europe.

I do not despair. We have the time now. It may be that something along the lines of the suggestion made by my right hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards) in his concluding remarks will have to be applied. We must be far more enthusiastic about it and go into it with a real will to succeed.

6.35 p.m.

Photo of Mr Hendrie Oakshott Mr Hendrie Oakshott , Bebington

I find myself in a position similar to that of my hon. Friend the Member for Morecambe and Lonsdale (Mr. de Ferranti), because I feel very much as though I were making a maiden speech all over again. Having submitted quite voluntarily for more than seven years to the silence imposed upon a Government Whip, I find it rather strange to be trying to address the House again. I should like to think that I can, perhaps, count on just a little of the traditional generosity of hon. Members if I stumble and hesitate.

The history of all these matters which is presented in the White Paper and the Blue Book has become involved almost beyond belief. I congratulate my right hon. Friend the Paymaster-General on having been so well able to keep a clear head in finding his way through the labyrinth. Certain things, do, however, emerge from the history. First, there is the part he himself has played and the lead he has given. Secondly—I was not sure that I correctly understood the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) on this— it shows the efforts that Her Majesty's Government have made to keep the negotiations flowing on and to give them a lead whenever they could by modifying their attitude and making concessions where they could.

The right hon. Gentleman said that we had departed from our original idea. We did. We did that to try to accommodate the people with whom we were negotiating. There were many examples of that, and I shall not detain the House by detailing them. There was our agreement that the scope of the negotiations should be much wider than was originally intended. There was the Paper on agriculture put forward by my right hon. Friend, and various other things.

What has happened since in the breakdown in the negotiations makes disappointment all the keener, especially for my right hon. Friend himself, after all the energy which he put into the work on the Inter-Governmental Committee and as our representative. But, even so, it would be wrong to imagine that no progress has been made in the work of that committee. Considerable progress was made. Agreement was reached on certain points. Differences were narrowed on others. I hope that we shall not have to tear up the results of all the work which has been done, but that we shall rather try to build on it again in the future.

My right hon. Friend referred to the second leader in The Times today, and other hon. Members have referred to it. I must confess that I differ from my right hon. Friend the Member for Thirsk and Malton (Mr. Turtan) on this, because I thought that there was a good deal of common sense in it. I think that at this time we should not begin to involve ourselves in alternatives or in courses of action which may prove rather foolish or even impossible to carry out. It would be better to concentrate on the way which many of us regard as the right way.

I suggest that what my right hon. Friend the Member for Thirsk and Malton himself said about the Commonwealth would be one way to find a new approach to the problem. The right hon. Member for Brighouse and Spenborough ended his speech by talking about a unifying influence; and that is another way of trying to find a new approach.

As the Blue Book makes clear in the note to which my right hon. Friend the Paymaster-General referred, there were three really significant issues upon which no agreement could be found. In the first one mentioned lies the root of the problem. It concerns questions of origin and deflections of trade—that hideous new expression which has crept into international negotiations—and it raises also the matter of relations between a Free Trade Area and our Commonwealth system.

The problem of origin is not really a strictly political one at all. It is a technical problem. As my right hon. Friend said, this is where we came in. We had to deal with this ourselves in the arrangements which followed the Ottawa Conference of 1932. I shall not bore the House by giving my own experience, but I can remember very well, as a trader at that time, how all shipments from the Colonies and Dominions had to be accompanied by a certificate of origin. I remember how difficult and complicated it was at first and how we soon got used. to it. It worked perfectly well. So, I am very glad to see from the White Paper that we have made our experience available on this to the other O.E.E.C. countries.

In spite of the deadlock between July and October—and I disagree with the right hon. Member for Brighouse and Spenborough that it was a mistake, as he put it, to "put the heat on" then—is there not a way by which discussions on the origin problem, which admittedly is very difficult and of limited scope, could be continued now on a technical level? That might help. For the rest, I would merely throw out one suggestion. It is not easy at this moment—and hon. Members have made this clear—to point to any dramatic dèmarche that can be made, and the thing that we must avoid is any move that savours of panic.

The greatest difficulty arises out of our relationship with the Commonwealth, which, as the White Paper rightly points out—and I hope that our continental friends w ill note this—involves for us obligations as well as rights. Few people in this country will accept full membership of the Common Market for us for, apart from any other difficulties, that would force us to exercise discrimination against Commonwealth countries, and that is quite unacceptable.

I suggest—and here I come a little nearer to what my right hon. Friend the Member for Thirsk and Malton said—that discussions should be held now. I do not suggest that we should necessarily have a Commonwealth conference—something less formal perhaps would be satisfactory, something without the glare of publicity—but discussions should be held to see whether we could not between us hammer out ideas by which those countries and we could be associated in a multilateral arrangement in Europe. Although I appreciate the difficulties which were described by my right hon. Friend this afternoon, he will forgive me if I say that I am not convinced and that I should like this suggestion to be explored to see whether something can be done. I think that it is possible, under the terms of the Report of the Montreal Conference, and if something like this can be done I believe that it would give us the opportunity of a new initiative in Europe.

At the moment, it seems that there is a force among the Six which says, "The Common Market; take it or leave it", and the sticking point, the final break, in the negotiations, as has been said this afternoon, came with what I thought was the most unfortunate Press announcement by the French Government when my right hon. Friend's Committee was sitting. That was a sad day, but in spite of that I would still hope that all contact is not lost, and that, even if only informally, my right hon. Friend will continue discussions with his former colleagues in the Inter-Governmental committee and perhaps within O.E.E.C. itself. That is the right forum.

I was relieved to hear from my right hon. Friend that discussions of some sort are going on now. I want to see the door kept open, because I am most disturbed about the political side. I agree entirely with one or two things said by the hon. Member for Stockton-on-Tees (Mr. Chetwynd). The political side is desperately important at present.

I also agree with the very last words of the right hon. Member for Brighouse and Spenborough as to what is at stake. Many right hon. and hon. Members, during the last few years, have tried to take a share in creating and preserving unity in Europe—at Governmental level in N.A.T.O. and the O.E.E.C. and other agencies and at a different level in the meetings of members of the N.A.T.O. Parliaments, the Council of Europe and the Western European Union. I can now see on both sides of the House hon. Members who worked in that cause. Out of their efforts good results have been attained, some of them far-reaching and important, others not so dramatic but none the less substantial. Hon. Members who, like myself, have tried to play a part, however small, are today haunted by the thought of the loosening of these ties and of a Europe divided and weakened by dissension.

It is true that in the situation which confronts us now it is the duty of the Government to take all proper steps to protect British interests by arrangements, temporary ones I hope, with the other Ten, or even with some of them or by other means, but, at the same time, we must surely strain ourselves to find an acceptable way in which we and the other Ten can be associated with the Six.

I hope that I am not exaggerating, but again I come to the political side which worries me so much. If no such way can be found we shall have two Western Europes; we shall have a division, an economic division, which will mean a political division as well. We shall have such a conflict of interest that it would be difficult to see how O.E.E.C. would continue to function effectively: some other institutions, perhaps even N.A.T.O. itself, may be threatened and that can please nobody but those who wish to see the strength of Western Europe dissipated.

The economic and commercial dangers are bad enough, but I believe that the political dangers are very much worse. We must keep on trying, and I hope that this debate will not be regarded merely as an inquest on a dead body. It may be that the Free Trade Area, under its old title and as originally envisaged, is dead, but we must look forward. I refuse to accept that it is impossible to inject new life into a project for multilateral association, which would be to the advantage of the Six as much as it would be to our advantage and our other friends. Lack of it would be just as dangerous for them as it is for us.

6.47 p.m.

Photo of Mr Mark Bonham Carter Mr Mark Bonham Carter , Torrington

I think that the extent to which agree with the hon. Member for Bebington (Mr. Oakshott) will become fairly clear from my speech. However, I disagree with him when he says that he does not feel that it is necessary for us to take any alternative course of action. My own feeling, and the feeling of my right hon. and hon. Friends, is that we must take an alternative course of action, and that we have to take it fairly soon.

The right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) said that he would not adopt any final position and warned hon. Members on both sides against being precipitate or doing anything quickly. It must be said, however, that the idea of the Common Market has been in the air since 1955, and the possibility that negotiations in which we have been engaged might break down has been a possibility for eight or nine months. Therefore, I do not think that any of us is being precipitate if we think about what we should do next.

Several hon. Members have mentioned, generally with horror, the prospect of federalism and appeared to suppose that closer links with Europe imply an acceptance of Federalism. It seems to me that since the accession to power of General de Gaulle the fear of federalism has considerably decreased. I do not believe that General de Gaulle is the kind of man who wants to see the national political rights of France integrated closely with other countries. Very much the reverse, and I therefore feel that the bogy of federalism is not quite as real as some of those who have mentioned it suppose.

I also disagree with the hon. Member for Bebington when he says that the idea of a Free Trade Area is not dead. I must admit that I agree with the Economist, which stated last week that the dream of a Free Trade Area has been shattered. This seems to me the only conclusion at which one could arrive at the end of the negotiations last year. All of us, on both sides, would agree that when the Paymaster-General was given the responsibility of undertaking these negotiations he was not given an easy or a light task. It was a task requiring a gynaecologist rather than a midwife, someone who could take fundamental decisions and who would help to lead this country into a closer and more intimate relationship with Europe.

It must be said that time and again since the war Europe has looked to this country for a lead. What happens when we respond was shown when the late Mr. Ernest Bevin seized on the Marshall Plan and transformed the history of Europe in the post-war years. It was seen again when the right hon. Member for Woodford (Sir W. Churchill) started the united Europe movement with his speech at Zurich. As one hon Member has said, it is unfortunate that when he returned to office his party, for some reason or other, was able to force him from the position he had then adopted and to turn his eyes from what seemed to many Europeans to be a constructive solution of genius. In spite of the opportunities offered when Europe has turned to this country, we have failed to respond.

Having persuaded the Europeans in the years after the war to abandon a federalist approach and to adopt a functional one, we in this country have on almost every occasion refused to perform any function that was asked of us. The initiative has generally come from France. Whether the Conservative Party or the Labour Party was in office, we found it impossible to associate ourselves fully with either the European Defence Community, the Coal and Steel Community, Euratom, or the Common Market. Therefore, it is hardly surprising that Europeans should have considered our suggestion for the Free Trade Area with suspicion, suspecting that we were trying to get the best of both worlds and suspecting that the Minister of Defence was right when, speaking of the Coal and Steel Community in 1955, he said that it was out of the question that Britain should become a full member of a supranational organisation such as was then proposed."—[OFFICIAL REPORT, 21st February, 1955; Vol. 537, c. 881.] As many hon. Members have said, Europeans probably suspected that the British Government did not realise, or did not wish to realise, that for the Six the political idea was more important than the economic idea although flowing from it.

I should like to make one or two comments on the course of the negotiations. The first refers to the part played in them by the Prime Minister. By the time that the Prime Minister visited Dr. Adenauer in Bonn, in April, 1958, the negotiations had been going on for long enough to cause anxiety. By that time, there was already some knowledge of the French memorandum to the other Common Market countries which was a severe attack on the British plan. The Free Trade Area was certainly one of the topics discussed at that meeting, for it was mentioned in the communique published in The Times on 19th April.

Probably those conversations were regarded by the Prime Minister as a reconnaissance, but, concerning the Free Trade Area, it would appear that the information gathered was meagre, if not misleading. It is difficult to suppose that the Prime Minister was made aware by Dr. Adenauer of the strength of the support which he intended to give to the French in this matter. If he had been made aware, surely the Government would have felt bound to make an agonising reappraisal of our position during the subsequent months.

One can only hope that the Prime Minister will be more successful in plumbing the intentions of Mr. Khrushchev than he was those of Dr. Adenauer. In view, however, of the Prime Minister's failure to see the necessity for any drastic move at that time, I do not see that we can very well blame the Paymaster-General for taking the same view.

There are one or two points in the negotiations which I should like to mention. I could never feel altogether happy about the complaints procedure which the British used to put up on almost every occasion when a difficulty arose. It seemed to me to be rather like offering workers a suggestion box when they were asking for joint consultation or even co-partnership. I, with other hon. Members, wonder whether it was altogether wise to release the President of the Board of Trade on Paris with threats of retaliatory action at the end of the conference. To the Europeans, it must have seemed like letting loose an extremely well-heeled, well-groomed bull into their china shop. If anybody wanted to end a meeting on rather had terms with everybody, that was an ideal way of doing it.

More important, however, than asking what went wrong, is to try to see what we can do to put it right. I, too, agree that the problem is fundamentally a political one. I also believe that once the political problem has been solved, the outstanding problems mentioned by the Paymaster-General— external tariffs, the harmonisation of social policies and the institutional system—can probably be solved. I am, however, convinced that the initiative must come from us. The Prime Minister and the Foreign Secretary frequently emphasise the greatness of this country. That is well and good, but one of the responsibilities of greatness is leadership. We are asking the Government to give a lead, not only to this country, but to Europe, to the Commonwealth and to the other O.E.E.C. countries, and to give it before it is too late.

I am convinced that the majority of the countries in the Common Market would like to see us in it. I also believe that there is a large body of opinion in France which would like to see us in it. We should not, however, suppose that the countries in the Common Market regard it as their duty to find a way in for us. Rather naturally, they regard it as our responsibility to find our way in. We should try to fulfil it before Professor Hallstein and his commission make their suggestions.

Unless we take the initiative, the Common Market countries must make their suggestions on the basis that our position is unchanged. If our position changes, so also will their conclusions.

It is, therefore, the view of the Liberal Party that the Government should state that they are willing to consider joining the Common Market and that, with that end in view, they are initiating conversations at once with the Commonwealth and with the other O.E.E.C. countries. That is the line that we would like the Government to take.

The arguments against the case for our joining the Common Market have been summarised this afternoon by the Paymaster-General and I hope that hon. Members will forgive me if I deal with one or two of them briefly. Basically, they boil down to a question of sovereignty and the position of the Commonwealth and of the other O.E.E.C. countries. I am not unduly perturbed concerning sovereignty. If the West is to survive, the various States which compose it must progressively pool their sovereignty. In fact, they have been doing this steadily and gradually ever since the war. They should do it rather less gradually and rather more quickly, because I do not believe that time is on our side.

The fear that we would be unduly bossed around in the Common Market, which is apparent in some places, seems to me to be exaggerated, and, what is more, we are being bossed around outside the Common Market. We are bossed around by the United Nations, by the United States, and we are now bossed around by Dr. Adenaeur, Mr. Averoff and Mr. Menderes, and even by Mr. Black, so that, so far as being bossed around goes, I do not think that our condition will alter very much.

Even if the Free Trade Area was going to work, it would have had to have a fairly strong committee to operate it. This was freely admitted, both in the course of the negotiations and by an associated body, the Industrial Federation of the other Six, which included the Federation of British Industries, in a statement to this effect in their report in April, 1958. Finally, the principle of a supra-national institution, which the present Minister of Defence denounced a few years ago, now seems to have been accepted by him in the debate of 4th December, 1958, from which I have the quotation here.

In point of fact, however, the Commonwealth is the second thing, apart from this question of sovereignty, which is worrying people. I must say, on reading paragraphs 40 and 41 of the White Paper, that if I was a European and had read it, I would have said that it had been pulled out from a very old, dusty pigeon-hole, and would have regarded it as a statement by the British Government that they had no intention of moving. I believe that in this respect a new initiative must be made, for I agree with what hon. Members on both sides of the House have said, that we cannot join the Common Market if it means slamming the door on Commonwealth exports. I believe that such an initiative should come from us, and that, if it came from us, it would be welcomed by the Commonwealth.

It is often suggested that the Commonwealth is against this idea, though I must say that, with the exception of Lord Beaverbrook, that is not the impression I have ever received. After all, in 1956, if we take Commonwealth exports of manufactures, which may not be very important, we find they amounted to £128 million in terms of exports to this country, whereas to the Six they amounted to £742 million. Four-fifths of our total imports from the Commonwealth are duty free, both to the Common Market and to the United Kingdom, and, therefore, the problem of how it is to be done is really one of how to deal with the remaining one-fifth.

Innumerable suggestions have been made, but the most positive, and I think the most simple, was that made by my hon. Friend the Member for Bolton, West (Mr. Holt), when he said on two occasions that the preferences which the Commonwealth gives to the United Kingdom products should be extended to Europe. It seems to me that the attractions of associating the Commonwealth with the Common Market are so great that unless we take the lead in doing it it is extremely likely that the individual countries will do it for themselves.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I am following the hon. Gentleman with great interest. Would he expect, in that case, the continental countries to extend to Commonwealth agricultural products the same freedom of entry as they have into the United Kingdom?

Photo of Mr Mark Bonham Carter Mr Mark Bonham Carter , Torrington

I think that the problem of entry of Commonwealth agricultural products into the Common Market is clearly one which we should have to negotiate, but I would hope that it would be possible, and it certainly is something which we should work towards. What has to be borne in mind is that, once we accept a European approach to these problems, I believe that a solution will become considerably easier. I think that, in the discussions on the question of origin which went on, this point was made in the Free Trade Area negotiations by the Steering Committee, that if we have an agreed outlook questions of origin can be more loosely interpreted.

Another point that I should like to make about the Commonwealth is that the Ottawa preferences have, in fact, diminished in significance both because of inflation and because of the wish of the Commonwealth countries themselves. There was a recent example in the agreement between New Zealand and Japan, and another example was in the remarks made by Mr. McEwan, the Australian Minister of Trade, when he announced certain tariff reductions which affect United Kingdom preferences. He said: The reduction would mean important savings to broad sectors of the Australian industry using imported user goods. Benefit would reach industry in two ways; the landed cost of foreign goods would be reduced and British exporters would he obliged to bid more competitively. The second great problem which is raised is the harmonisation of social policies. I wonder whether this is such an obstacle. Equal pay, the maintenance of the existing equivalents of paid holiday schemes, the payment of overtime rates at levels corresponding to those existing in France in 1956—with the exception of the first, which we should have to introduce, and. in my view, high time, too. I do not think that we would find any difficulty in conforming.

Photo of Captain James Duncan Captain James Duncan , South Angus

Is there not something about the free movement of workers, which means simply the export of unemployment? Is that the hon. Gentleman's policy?

Photo of Mr Mark Bonham Carter Mr Mark Bonham Carter , Torrington

Bearing in mind that we allow the migration of people from the Commonwealth to this country absolutely free, and that people from Asia, Africa and the West Indies come here, the prospect of Europeans entering this country, and of English, Scottish or Welsh people being allowed to go into Europe also, does not seem to me to be so deeply alarming.

In any case, if the obstacles to our joining the Common Market do not seem to be altogether insurmountable, I think that the consequences of our being left out will be indeed very serious. Quite apart from the economic consequences, which will grow with the years, the fact is, as hon. Members have already mentioned, that the unity of Europe, which is vital to the unity of the West, will be threatened, and a Europe without Britain is far less likely to pursue policies that are liberal, economically and politically, or be strong or wise, than a Europe of which Britain is a member.

There is certainly irony in the idea that, thirteen years after the end of the war, we should now he handing over the economic and political leadership of Europe to Germany. That will be the result if we do not take effective steps, and I cannot believe that the alternative is retaliation or that, if we did retaliate we would benefit by it. Nor, on the whole, it seems to me, does the association of other groups of countries as counter-blocks appear to me to be enormously impressive.

At the same time, we must face the fact if we are excluded from a huge, rich, growing market, when Commonwealth Preference is dwindling and when competition for trade is increasing, that we will he weakened, both in the fight for exports and also as a country in which to invest. So, if the dangers of exclusion seem to me to be great, I would add that the advantages of joining seem to me to be even greater—a huge market, inhabited by the most talented, inventive and skilled people in the world, peoples whose vitality has been undimmed by two world wars, as the recovery of every single country of West Europe testifies.

Of course, there would be sacrifices. A price would have to be paid for so great a prize, but if we do not make the attempt, I would hope, as other hon. Members have done, that we shall not blame our failure to make the attempt, or the consequences of our failure to make it, on the French. Too often, it seems to me, in the last few years, when things have gone wrong, we have found a scapegoat—either Colonel Nasser, Archbishop Makarios, Mr. Mintoff, and, more recently, France, the wrecker. If we do not try to join the Common Market we have ourselves to blame. I only hope that this will not happen.

I only hope that the Government will take this opportunity to bring this country into closer and more intimate political and economic association with Europe, of which we are, by nature of our geographical position, by nature of our history and by nature of our culture, a member. I can think of no more exciting prospect. I only wish that we had with us here the right hon. Member for Woodford, 20 years younger, to put to the House the opportunity which lies before the country today.

7.10 p.m.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

The hon. Member for Torrington (Mr. Bonham Carter) said that one of the responsibilities of greatness was the provision of leadership. I notice that his own Leader rapidly disappeared from the Chamber the moment I rose to speak. I thought that leadership at least required one having somebody to lead, and I can see the hon. Member's embarrassment in that context.

I should like to begin by paying tribute to a very great leader, Abraham Lincoln. He was born 150 years ago today and he enunciated that great theory of government: …government of the people, by the people, and for the people… I sometimes wonder how he would regard some of the ideas which are now being put forward about how Europe should be governed and how we should be governed. He might not find himself altogether in tune with the idea of government of our people by a supranational authority for the benefit of our trade competitors.

Those ardent federalists who believe that the only answer to the problem which we are discussing today is federation are, perhaps, unaware of some of the appalling difficulties into which that would lead us. My right hon. Friend the Paymaster-General, when it was suggested from the Liberal benches today that we might join the Common Market, at once pointed out the many difficulties which would emerge from that. I believe that all of us have tended to become much too fearful of what possible damage the Common Market Powers might do to us if we did no more in promoting the European Free Trade Area.

Some people have taken the trouble to investigate what would happen if they were to set up an economically run factory today in a Common Market country and what the situation would be a few years hence, as far ahead as they could see, with the Common Market in full operation. The deduction which they have drawn is not that the Common Market would have brought down their costs, but that it would have raised them. Therefore, I say, "Nil desperandum". Do not let us become too gloomy about the fact that these negotiations have not come to fruition.

I should like to pay tribute to another great American, President Eisenhower. We might remember that, speaking to Canada, in July last year, he said: …We both recognise a design of aggressive Communist imperialism which threatens every free nation.Both of us face a military threat and political attacks. Our system of free enterprise is challenged throughout the world by a State directed and State controlled economic system. Indeed, this could well be the area in which the competition will be most bitter and most decisive…

Photo of Mr Henry Hynd Mr Henry Hynd , Accrington

What is the relevance of that quotation?

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

If the hon. Member will let me make my own speech, instead of trying to make it for me in his own mind, it will become much clearer to him.

Another American, Mr. Herschel Johnson, the United States representative on the Security Council when it was first established, told a former Member of the House, a great friend of mine, that the countries of Europe would never allow Britain to take the lead in Europe, and he warned this country that the Americans were determined to drive Britain into a federation of Europe in order to destroy the Commonwealth.

A dilemma hangs over the world. We do not know whether our great preparations by way of defence will make war more likely or whether they will strengthen our ability to keep the peace. We pray that it is the latter. But, at the same time, we have to deal with the causes of war. It seems to me that not enough cognisance has been taken in our debate of the fact that if we muff this European development we might make war more likely. That is why I mentioned what President Eisenhower said. There can be no question whatsoever that, militarily, the American alliance is absolutely essential to us. But we must ask questions about each major Power in the world.

Are the Americans out to smash the British Commonwealth as a trading organisaion, or are they determined to make their military alliance work with us really effectively? We hope that it is the latter. I say without hesitation that if they think that they can do both at the same time they will only endanger themselves in the end. We can have the finest military alliance with them, but, unless we somehow enable them to see that a federal system in Europe will not necessarily work just because it works in the United States, we shall not have the alliance which we ought to have, and peace will be unnecessarily endangered.

Two problems have been rightly emphasised throughout the debate. There is a political problem, and there is an economic problem. I agree entirely with what my right hon. Friend the Paymaster-General said on that score, but the politics are quite as important as the economics here. We cannot separate the two. What is the Soviet Union doing? Are the Russians at the old Czarist game, expanding the Russian frontiers strategically whenever they can? Or are they more insistent upon the spreading of international Communism? I strongly suspect that there is something more important to them than either of these two. It is to enable an enormous expansion of their industry by finding raw materials and finding markets.

The Prime Minister is shortly going to Russia. I was glad to see that he hopes that in going there he will be able to do something about expanding East-West trade. I do not believe that we shall keep the peace of the world simply by making Europe prosperous. It is perfectly true, as my right hon. Friend said, that European prosperity is indivisible, but that prosperity without consideration of what is happening outside the frontiers of Europe will make little sense for long. If we are to avoid whatever happens in Europe, or whatever the Americans may do, eventually leading to war, if we are to avoid an eventual collision between the system of the West and the system of the East, we must find some common ground.

I believe that the only common ground at present is trade. The only way in which we can break through the Iron Curtain or, let us hope, one day melt it away, is by finding some common ground where we can talk on more or less equal terms with the Soviet Union. I believe that there is only one sphere in which we can do that, and that is in the sphere of trade.

It is useless for us to suppose that we shall get anywhere along those lines if we talk multilateralism to them. The only hope of coming to any trade agreement with the Soviet Union in my belief is to adopt a policy of discrimination as soon as possible. I have always felt that the four freedoms of the Atlantic Charter left out one important one, and that was freedom of choice to do the right thing. That has been emphasised recently by no less a person than Lord Montgomery, on television. I believe that it is the most important freedom of all and if it does not mean discrimination, what does it mean?

Discrimination is rapidly being turned into a dirty word by economists, and. I regret to say, sometimes by spokesmen of Her Majesty's Government. Personally, I think that it is a most honourable word. I like to be able to choose with whom I do business. I like to be able to have a preferential arrangement with somebody. Why should I not do so if he is agreeable and if it does no harm to anyone else? That last phrase is perhaps the crux of the matter—whether it does harm to anyone else.

In this enormous book of documents, Cmd. 641, the following words appear under the heading of Imperial Preference on page 199: There is a danger that these privileged markets may disturb conditions of competition for the partners of the Association. When I read those words they reminded me of some others I once heard read. I know now what they were. They were the words of Mr. Sumner Welles, on 6th May, 1943. He said: The whole history of British Empire preference is a history of economic aggression…Other countries found their markets throughout the vast stretches of the Empire restricted and the prosperity of their people correspondingly impaired. That is absolute drivel and it is the drivel which so many Americans have believed for far too long.

I suggest to Her Majesty's Government that, as my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) so aptly put it, they have been chasing a shadow for too long. It is not a question of keeping something alive, because this idea has never been alive. We are not dealing with a living organism. No obsequies are being observed today, because it has never been alive. We have been pursuing a shadow and now the sun has gone in.

What we must do is what we as a party reserved the right to do through that wise and beloved counsellor the late Oliver Stanley when the General Agreement on Tariffs and Trade was first signed by the Labour Government. At the Conservative Party Conference at Llandudno which followed that decision of the Labour Government, Oliver Stanley reserved the right to our party to abrogate G.A.T.T. when we came back into power. That opportunity was, unfortunately, allowed to slip away when we returned to power. We have tried in every possible way to find an alternative to taking that step, but I believe the time has now come when the step must be taken. In the last thing I wish to say, I will try to explain why.

In 1932 we had the Import Duties Act which merely consolidated the Ottawa Agreements that set the level of preferences we were to offer to our Commonwealth. At that time the Commonwealth was largely a primary producer. It is no longer only a primary producer, it is now a great manufacturing Commonwealth as well. Yet the General Agreement on Tariffs and Trade, into which the Labour Government led us, has cemented the level of preference of 1932 between the Commonwealth countries unless we can get a sufficient majority of people who have nothing to do with the Commonwealth to allow us to alter it.

I am convinced, and the more I study this matter the more convinced I become, that there is now only one course the Government can take if they really mean business. [HON. MEMBERS: "Resign."] There is only one course if they really mean to avoid the American system leading to a headlong conflict with the Soviet Union sooner or later. That course is to announce that they will reassert their right to discriminate in trade, and that they are prepared to renegotiate all the Ottawa Agreements and to apply the principle embodied in those Agreements, not only to Commonwealth countries but to any other countries which would like to do business with them.

If the Government want to know how to go about that, I suggest that they study the five principles of Panch Shila, which the Indians and Russians have worked out together, and which, I believe, could form a basis upon which the future trade of this country could be conducted to the mutual benefit not only of Britain and the Commonwealth, not only of the Commonwealth as a whole and Europe, but also of the United States and ourselves and the free world and the East, too.

7.26 p.m.

Photo of Mr Fred Mulley Mr Fred Mulley , Sheffield Park

I think we were all pleasantly surprised when the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke) began his speech with a quotation from Abraham Lincoln, even if he did insert it into an argument which was the opposite of what Abraham Lincoln would have used. It is refreshing to recall that the speech in question, which in my view is the best speech in the English language, was uttered by way of a vote of thanks after the main orator on that occasion had finished his address. We on this side of the House were also pleasantly surprised to find that we had such strong support for our views about the extension of East-West trade in the unexpected quarter represented by the hon. and gallant Gentleman.

As to the rest of his speech, unless I were now to make the speech which I should like to make next Wednesday in the unlikely event of catching your eye, Mr. Speaker, in the Foreign Affairs debate, I had better ask him to excuse me from commenting further on it except to say that the hon. Gentleman made me a little more charitably inclined towards the Paymaster-General and the Government Front Bench, because one appreciates the extra difficulties they have to contend with behind closed doors as well as elsewhere.

Unlike the hon. and gallant Gentleman, and also, I suspect, a number of other hon. Gentlemen opposite, I am frankly sad that this debate has had to take place in the present circumstances. Even the party opposite is now beginning to realise that in the military, political and now even in the economic sphere, we can no longer in this country be complete masters of our own destiny. That is the lesson we should try to drive home in this debate.

I agree with the Postmaster-General—I beg the right hon. Gentleman's pardon, perhaps I have been reading the wrong novels lately. I agree with the Paymaster-General that we should not rake over the embers of all the negotiations during the last few years, and that we should try to concentrate on lessons to be drawn for the future. I submit to the right hon. Gentleman, however, that the Government have not learned the lesson over the last two or three years of our relations with Europe in the preceding period. I want to make it clear that I do not make any personal reservations about the diligence, good humour and ability of the Paymaster-General himself in these negotiations. I rather see him in the position of a junior barrister with a brief drawn up by a senior solicitor who has rather restricted his scope. If I do not follow the Paymaster-General in his discussion of the harmonisation of tariffs, questions of origin and matters of that sort, it is because I think that we have today to concern ourselves with the real stumbling block in our progress towards a Free Trade Area. I do not believe that there are any technical problems which cannot be overcome. Were we able to lock up the experts of all the countries concerned, on the understanding that they would not be let out until they had arrived at a solution to all the technical difficulties, I am pretty certain that in 24 hours or so they would have found one.

I think the difficulty goes deeper than that, although what I may think is probably a small matter, because the views of back benchers do not appear to count with the Government. It is surprising that in a debate such as this, where four major Government Departments are concerned, the only Minister sitting on the Government Front Bench at present is one of the Law Officers of the Crown. While I have every reason to respect the judgment of the right hon. and learned Gentleman in these matters, one does feel that part of the purpose of having debates in this House is so that Ministers may pay attention to the views which are expressed. It may be that the Government are getting a little tired of office and find the customary courtesies to the House rather trying. But I think we should draw the attention of the Government to the fact that, not just today but frequently, they have disregarded the debate after six o'clock in the evening until the time comes for the winding-up speeches.

The Government are open to serious criticism regarding the whole of the negotiations which have taken place on this matter. I believe, as does the hon. Member for Torrington (Mr. Bonham Carter), that the whole initial approach was wrong. The Government put forward this idea of an industrial Free Trade Area which was patently designed to enable them to get the best of all worlds from the British point of view. That would have been a very good thing had it come off, but clearly it could not. Perhaps I may say this with a little more force, because I said the same thing in November, 1956, in a debate in this House before the negotiations were under way.

I said then that the proper thing to do was to accept the principle that, either by way of a Free Trade Area or in some other way, we should he associated with the Common Market on any arrangement which could be negotiated. I also said on that occasion that it was pointless to take the line that only industrial products could be the subject of discussion. In the negotiations the Government have had to move very far from their original intention. But how much better it would have been had they not gone forward and given the impression in Europe that we would join the Free Trade Area, as it were, as a favour to the continental countries.

The second point which I wish briefly to make, and without in any sense trying to produce a party political argument, relates to the terrible damage which was caused in the middle of these negotiations by the Suez fiasco. No one with any contacts at all in France will challenge the statement that a good deal of the fervent anti-British feeling in France in the last 18 months has come about because of the complete mishandling of the Suez affair. At the same time it was a complete disregard of our association with Europe and with doing things in common. It was, as it were, the last flash of imperialism, of "going it alone". It was wrong to go into Suez in the first instance, and clearly we left the French in a difficult position when, having gone there, we stopped in the middle of the operation—[interruption.] The hon. Member for Lanark (Mr. Patrick Maitland) laughs, but the whole future of Europe has been jeopardised by that adventure.

Photo of Hon. Patrick Maitland Hon. Patrick Maitland , Lanark

Was it not the case that this was an operation conducted with the French?

Photo of Mr Fred Mulley Mr Fred Mulley , Sheffield Park

It was not. It was because we did not continue with the French that they are very upset now, and that is a consideration which is germane to our present discussion.

The result of Suez was that Colonel Nasser owes his position to the present British Government. But for our stupid intervention, undoubtedly he would have been swept away—

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

Order. There are a number of hon. Members who would like to speak on the European Free Trade Area, and I think that the hon. Member should confine his remarks as well as he can to that issue.

Photo of Mr Fred Mulley Mr Fred Mulley , Sheffield Park

With respect, Mr. Speaker, I do not wish to waste further time by addressing a long point of order to you. But one reason why the Free Trade Area concept has failed is because the French do not like it, and it is important to understand why this view is held in France. I will not go further into the matter, but it does restrict an hon. Member from expressing his views adequately if he cannot go a little behind the printed document.

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

I can allow the hon. Member a reasonable amount of latitude, but I do not want a repetition of the debates on the Suez question on this Motion.

Photo of Mr Fred Mulley Mr Fred Mulley , Sheffield Park

I think you are quite right, Mr. Speaker, and you may recall that I did not trouble you on any of those occasions. But it is clear that that is a factor in the present European situation, and anyone who has crossed the Channel is well aware of it.

My third criticism is that the Government have not conducted their case very well; I mean in the wider sphere than the actual secret meetings of the negotiating committees of which details have only recently been disclosed. It is apparent that the embassies and the Foreign Office have not done a proper job in putting over the British point of view. After all, in these days public relations is one of the main jobs which embassies should perform. Equally the Government have not been very well informed, judging from what one hears from Ministers, about the real point of view on these matters in the countries concerned. It may be that part of the difficulty is that we are served by professionals as ambassadors in these key countries.

In particular, the Commonwealth point of view has not been put over effectively by the Government. We were all taken rather by surprise when the overseas territories were included in the Treaty of Rome, which obviously put a rather different angle on the whole approach of the Commonwealth to the problem. I do not think it is widely known on the Continent that Commonwealth Preference to us amounts on average to 6 per cent. I do not think it is widely appreciated that, despite Commonwealth Preference, the trade with the British Commonwealth by members of the Six has increased in the last seven years very much more than has the trade of the United Kingdom with our own Commonwealth countries. From 1950 to 1957, whereas United Kingdom exports to Canada went up by 56 per cent., exports from the six Common Market countries to Canada went up by 265 per cent. Equally with the rest of the sterling area; while our exports went up by 46 per cent., the exports of the Common Market countries to the sterling area went up by 205 per cent. It is clear, therefore, that Imperial Preference has not been a bar to the expansion of exports from the Common Market countries to the British Commonwealth.

On the other hand, I am sure it is not widely known on the Continent that, as part of the bargain of Imperial Preference, wheat and meat are admitted here free of duty and—properly so—we have very low duties on cocoa, at 1 per cent.; coffee, at 2 per cent., and butter at 5 per cent. To put the matter in a phrase, I do not think the French realise that the price of being able to sell their Dauphine cars in Australia on the same terms as British cars is that they must let New Zealand butter come into France on the same terms as it comes here. That point has not been put over in Europe by the Government. For that reason there has been misunderstanding about the position of the Commonwealth.

One gets the extreme view as to the association of the Commonwealth and ourselves with Europe: No solution to our troubles is practical unless it touches the hearts and minds of the millions of men and women here in Europe and in the overseas associates and territories. Nothing less than a proposal to amalgamate free Europe and the Sterling Area will do this. This is an object at once simple and superb, something which the people can grasp as the light at the end of the tunnel. That is perhaps going the whole way. The House may be surprised to hear that that was an extract from a speech made by the President of the Board of Trade at Strasbourg, on 2nd September, 1949. It contrasts rather sharply with the fireworks at the Chateau de la Muette just before Christmas.

That brings me to my final and, in a sense, my main criticism of the Government in all these European negotiations, and that is the great damage that has been done to our association with Europe by the speeches and the great enthusiasm that members of the present Government showed when in Opposition and their attitude since they have had positions of responsibility. That quotation from the speech by the President of the Board of Trade is one of my examples.

I have had the rather amusing but perhaps rather sad experience of looking through some of the debates that took place in the Council of Europe between 1949 and 1951 and seeing how time and time again the British Conservative Party was commited there to almost complete integration with Europe; and then to read the completely different attitude when the Conservative Party took over government and right hon. Gentlemen opposite me became Ministers of the Crown. I do not think Europeans quite understand that it has been the custom of the Conservative Party for many years to say one thing when in Opposition and do something quite different when it becomes the Government.

For example, the then Opposition divided the House because the Labour Government of the day refused, as soon as negotiations began, to commit themselves to join the Coal and Steel Community; yet it took it nearly three years after the Conservative Party became the Government to conclude a most modest treaty of association with that Community. I think they only arrived at that decision after prodding by hon. Members on this side. The great imaginative concept of the European Army, which derived from a speech in Strasbourg by the right hon. Member for Woodford (Sir W. Churchill) on 11th August, is another example. He said: We should make a gesture of practical constructive guidance by declaring ourselves in favour of the immediate creation of a European Army under a united command, and in which we should all bear a worthy and honourable part. What is the history of this negotiation under the present Government? They tried to make a desperate attempt at the last minute to save E.D.C., and they failed. We had the Treaty of Brussels, and the situation in which the Minister of Defence—another of those Strasbourg European enthusiasts—was censured by the Western European Union for withdrawing British troops so that we could not fill our Brussels Treaty obligations. Over the whole field, at every stage the present Government have done too little, and what they have done has been too late to make the proper impact on European opinion.

The whole matter is very well summed up by a speech which is not too long for me to quote. It is not for me to apportion blame. No doubt there were mistakes and misunderstandings on both sides, but I must allow myself this comment: when I read the published pages of telegrams between London and Paris, the notes, the aide memoires, the démarches and all the rather rusty weapons in the diplomatic armoury solemnly deployed between Britain and France I felt some surprise and real sorrow. Surely, after an alliance of half a century, after so many sorrows and sufferings together, after such triumphs shared together, we might act more as partners and as brothers and less as performers in a diplomatic minuet.Why were there no personal contacts? Why were there no intimate talks? After all, it is not necessary to swim the English Channel in order to cross it. Nevertheless, it is more important to explore the possibilities of the future than to deplore the failures of the past. We still deplore the absence of British representatives from the talks. We think that they might have added something, that they could have contributed something, to the common fund, to the pool … That is a pretty fair description of the Blue Book that we have in front of us. It happens to be the observations of the right hon. Gentleman who is the present Prime Minister, referring in Strasbourg to the failure of the Labour Party at that time immediately to give carte blanche to enter the Coal and Steel Community.

When the Paymaster-General said, "Let us forget about the mistakes that have happened and let us concentrate on learning lessons for the future", I began to wonder whether Government supporters and those responsible for Conservative conduct in these great matters have learned anything from the past at all.

The most important thing necessary for the future is for right hon. Gentlemen in the Government to recover a little of their ardour for the European cause that they displayed so blatantly in Strasbourg and in other places two or three years before they had their present responsibilities. Nobody who has taken any part in international discussions recently has failed to realise that there is cynicism among the leaders of all Continental parties when we say we want to be committed to action with European countries and that we shall stand by what we say. That is probably the most important thing to do.

I would ask the Solicitor-General to suggest to the President of the Board of Trade—we are sorry that he is in bed suffering from influenza—that better than participation in today's debate would be his re-reading the speeches he made between 1949 and 1951.

We are in a certain difficulty in trying to advise on the best course for this country, because we do not know whether the future developments of the Common Market will be mainly political or economic. I took the view that we could not join the Common Market in its full effect because it would only make sense if it became a blueprint for federation between the countries concerned. Recent events in France have made it clear that that is not the view either of the President or of his Prime Minister. If the Common Market is to be purely an economic and commercial activity their attitude towards it may be a little different from ours.

The hon. Member for Torrington, who spoke on behalf of the Liberal Party, after quite rightly rapping the Government for seeking to get the best of all possible worlds, went on to suggest a solution which would manage to get us the worst of all possible worlds. The Treaty of Rome is not a model for a Common Market. It is a register of all kinds of bargains and so on that have been struck between the Six. The proper thing if we were going into the Common Market would have been to take part in those discussions so that our priorities and difficulties would be on the register.

To join now, after the rules have been carefully drawn up to suit the six countries that are participating, would be difficult. It might be that the great imaginative approach would be that which has been suggested many times in the Council of Europe by the hon. Member for Salford, West (Mr. Royle), that we should, since the Treaty of Rome covers overseas territories of the European countries, join as a full Commonwealth member, assuming that the independent members of the Commonwealth agreed to that course. That, after all, was the view of the President of the Board of Trade as long ago as 1949, the amalgamation of free Europe and the sterling area.

It may well he that we should give the six countries the chance to turn that down. I am quite sure they would turn it down, because the implications of permitting Commonwealth food and raw materials to come into their countries at the same rates as we permit them here would be overwhelming. I think also we have to act in a way that if the worst happens and the Common Market continues without a Free Trade Area or a similar device, we have to make it clear that the responsibility for dividing Europe is that of the Six and not of this country. That is extremely important. It is true that we have lost a great opportunity.

The failure of the Government to negotiate a Free Trade Area means that it is going to be even more difficult to get a satisfactory arrangement in the future.

I agree with the Paymaster-General that we have to have a lot of patience. In particular, we have to be patient with France, because after the honeymoon period with their new régime the French are now realising that economic and military problems are not solved merely by changing the constitution and getting a new set of faces in the French Parliament. Anyone who has visited France knows that one has only to go into a French departmental store to see one thousand and one reasons why the Free Trade Area is not immediately attractive to French industry, or, indeed, that the Common Market itself is likely to become a very great problem.

Since the beginning of this year there has been evident a real intention in France to approach their economic and financial problems in a realistic way. It may well be that as a result of the measures announced in January, France will be in a position in a year or two to take a rather different view from what she takes now.

The other thing which I think is urgent and which, if the Paymaster-General were here I would appeal to him to try to achieve, is that we should try to avoid immediate discrimination. This, perhaps, is a more serious matter for Denmark, Austria and Switzerland than for ourselves. I have not given up hope that perhaps we shall yet achieve a Free Trade Area provided we play our cards rather more skilfully than the Government have done in the past. At all costs, we must try to avoid the division between Europe into the Common Market countries and those outside which, apart from creating this economic rivalry, would largely undo the political cooperation which has been so painfully and successfully built up over many years, because it is obvious, although it needs saying, that this quarrel may do what the Soviet Union has failed to do over many years—divide instead of unite Europe.

7.54 p.m.

Photo of Mr James Hutchison Mr James Hutchison , Glasgow Scotstoun

The hon. Member for Sheffield, Park (Mr. Mulley), as well as my hon. and gallant Friend the Member for Isle of Ely (Major Legge-Bourke), introduced at the beginning of their speeches quotations from Abraham Lincoln. I would follow this fashion of quoting American statesmen by reminding the House that it was Benjamin Franklin who said that there was nothing so tragic in life as the murder of a beautiful ideal by a gang of brutal facts. That, in fact, has happened.

Whether we like it or not and whether we try to revive it or not—and probably we should be wasting time in doing so—the original Free Trade Area conception as we worked for it for so long is dead. Here I find myself in the excellent company of the hon. Member for Torrington (Mr. Bonham Carter) and the Economist. I hope I have put them in their right order of importance. There has been such unusual agreement in this debate that it enables me to cut out, so as not to repeat what has been said already, great chunks of my speech. That, no doubt, will be welcome to my hon. Friends and perhaps to hon. Members opposite, but it leaves me with one or two things to say and I shall try to say them as quickly and briefly as I can.

There is a great deal in what the hon. Member for Sheffield, Park said about the attitude of mind of continentals concerning Britain's seriousness in European matters. I am afraid we must recognise, whether it is well-founded or not, that schemes put forward by us now start by being suspect. They quote, as the hon. Member quoted, the magnificent idea of my right hon. Friend the Member for Woodford (Sir W. Churchill), with his European unity meeting at The Hague and the early days in Strasbourg, and they say, "How far things have fallen short of that conception". They remember that the European Defence Community had our blessing and help until it was about to collapse and was revived in the form of Western European Union, where we at once offered, and the offer was accepted, four divisions and a tactical air force. They see us now year by year reducing those four divisions. I feel very uncomfortable when I go to Strasbourg or Paris and try to justify what has been going on.

I think, too, that it was a pity that we did not take a more important part in the early Messina talks. I think it a pity now that the Euratom Agreement is as nebulous as it is. It might mean a lot, but it could mean very little and I should like to see this country much more closely connected with that latest development. It has been said, and I thoroughly agree, that we have to embark on a new analysis, to take fresh stock of how we would stand if we were excluded and how we would stand if we managed to build up a competing organisation of the other Six.

I think it worth saying that at a meeting the other day in Paris which I and some friends had with some very senior members of the European movement it was made perfectly clear that it is the question of institutions and political aspects which dominates their thoughts. Economic arguments have lost their weight. They said, "Discrimination is the essence of the Common Market and the essence of your Commonwealth Preference. It is the essence of Benelux and the Free Trade Area which you are proposing. Let us hear no more about discrimination". I was reproached for wanting to have my cake and to eat it.

When I said that it was true that we wanted to get into their market, they said we did not accept the sacrifices which they made in loss of sovereignty. That is what dominates their thoughts. We should make no mistake, Little Europe is on the march; they are immensely proud and jealous of what they have achieved. Let us recognise that what they have achieved is something very remarkable. If it had been predicted ten years ago, how many of us would have imagined that it would come about? I believe that as time passes that achievement will grow and solidify.

I also wish to pay tribute to my right hon. Friend the Paymaster-General for what he did in the frustrating talks he had, owing entirely, I think, to a change of front by the French, who started by being as enthusiastic as anyone but who, as time passed, were overborne by their own conceptions of a protectionist country and succumbed to the great pressure the patronat brought to bear on the politicians. I wish to pay tribute to what my right hon. Friend was able to do, and it is important that it should be realised that the talks which are now going on between France and Britain are not bilateral talks. France is talking for the Six and Britain for the Eleven.

Various ideas have been circulating about what could be done now, including how either we, or we and the Commonwealth, by creating some form of flexible union, could join the Common Market, bringing the Commonwealth in with us in some form. It has also been pointed out that 50 per cent. of our trade is with the Commonwealth, that 25 per cent. of it is with Europe and that of that 25 per cent. only half is with the Common Market countries. But 13 per cent. of the total trade of Great Britain is a very important item. We must examine extremely carefully and in great detail the movements of Commonwealth exports and imports. The more that we do so, the more we find how much the area of disagreement and difficulty narrows. To allow the conception of Europe united to fall to the ground because we have found no solution about cocoa from Ghana, or grey cloth from Hong Kong, would be letting the tail wag the dog with a vengeance.

My right hon. Friend said that all along the Commonwealth has been kept informed of what was proceeding. I have no doubt that this is so, but the members of the Commonwealth were being kept informed at a time when the prospect of the Free Trade Area materialising was still alive. That prospect has disappeared, and I wonder whether they think exactly the same as they thought then. I wonder whether the time might not soon come, as my hon. Friend the Member for Bebington (Mr. Oakshott) said, for there to be Commonwealth talks. Let us go into the whole question of what our Commonwealth friends intend to do.

The opportunity is open to important members of the Commonwealth to make bilateral agreements with the Common Market. I wonder whether any of them are contemplating that. I wonder whether they realise what a big sacrifice it is to Britain to cut ourselves adrift from 13 per cent. of our outgoing trade and from the Common Market. Can they and will they do something to compensate us? I believe that these talks ought to take place soon, not, as has been suggested, in a glare of publicity, but quietly. Let us try to assess the situation together. I am all against panic measures, but I am in favour of trying to analyse the situation afresh under the new set of circumstances which we face.

The second point I want to make to my right hon. Friend concerns agriculture. All through the conception of the Free Trade Area it has been realised by the continentals and by ourselves that agriculture needed special treatment. The Treaty of Rome talks about special arrangements, escape clauses and a special agreement. My right hon. Friend said that considerable progress had been made in this respect. Where do we stand now? If he found that the area of disagreement was less than on the bigger conception of the Common Market in general terms and the Free Trade Area, could we not use agriculture as a stepping stone?

I do not want in any way to prejudice agriculture in favour of industry, but cannot we use this as a new approach and as a method of reopening negotiations which would lead to greater things? I think that separate talks on agriculture might well be beneficial now. Perhaps my right hon. Friend can tell me what point these discussions have reached and whether they are likely to make more progress.

Finally, if we are not wanted in any association with the Common Market—and that may well now be the case—the gauntlet has been thrown down with a vengeance, and we shall have to look to our own interests and see to our own defence.

8.5 p.m.

Photo of Mr Charles Royle Mr Charles Royle , Salford West

am very happy indeed to follow the hon. Member for Glasgow, Scoutstoun (Sir J. Hutchison) because of our present relationships in matters relating to the institutions of Europe, he in his exalted position as President of Western European Union and myself through my very humble contributions in the Assemblies of both the Western European Union and the Council of Europe. I think that he will find that as I make my speech I shall be in general agreement with what he said and in very close agreement with many of his expressions.

One of the dangers in a debate of this character and on such an important subject is that of indulging in recrimination. I assure the Paymaster-General that if there is any form of recrimination in what I say, it will not be against him, because, while mistakes may have been made in very difficult circumstances, I bow to no one in my admiration for the efforts which he has made as Chairman of the O.E.E.C. Committee. From time to time I have had the opportunity to watch him in action, and I have been amazed by his very firm grasp of the situation. I want to pay him that tribute, though that is not to say that I do not think that some mistakes have been made from time to time.

It is impossible to study the White Paper and the Blue Book without being tempted to indulge in recrimination. On the other hand, it is impossible to approach this subject without an examination of history. My concern is lest the great European idea should in any way be impaired by the present situation of the Free Trade Area. Like World Government, a united Europe was, and still is, a dream for the future arising from a determination that the horrors of two world wars shall not be repeated.

When we first started, in the House and in Europe, to discuss a more united Europe, the question of misunderstandings with Eastern Europe was not one of the considerations. It became a very serious consideration later, but in the first discussions and considerations the idea, in the main, was one of European domestic understanding. To a greater degree than ever before that understanding has been attained, and those of us who have been to Strasbourg, in whatever capacity, must take great pride in the attainments of those European Assemblies.

Very much has come out of the Council of Europe which, I believe, will ultimately redound to the good of Europe and of the world. Great unity has been achieved in social, political and economic ideas. The fear today is that the economic disagreement, while bad in itself, might endanger the political and social ideals, too. What has taken place could easily lead to Great Britain and the other 10 States being left out of the political considerations of Europe, regarding Europe in a sense as the Little Europe.

The Liberal Party Amendment has not been called. In that Amendment and, if he will allow me to say so, in the very able speech of the hon. Member for Torrington (Mr. Bonham Carter), a claim is made for full membership of the Common Market. It must be very much more difficult to contemplate joining the Common Market at the moment than it was, for example, at the time of the Messina talks. While I have great sympathy for what the Liberal Party says an this matter, for the life of me I cannot see that it is possible now for Great Britain, and Great Britain alone of the other twelve nations, to work her way back into the Common Market, for reasons which my right hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards) gave in the debate this afternoon. That does not prevent me from believing had we gone in at that time we could have become a very useful member of the Common Market.

The difficulty is not limited to the Common Market. I have always believed that it was our fear and our instinct of self-preservation that lay at the roots of our trouble, and prevented us from going more fully into European affairs, and from joining these European institutions. The question is often asked: is it possible to be a good Briton and a good European at the same time? I know that when considering these deep economic matters such doubts do arise, but I believe with all my heart that it is possible to be both and that the more we accept that idea the better we shall be working for the benefit of mankind.

When the Coal and Steel Community was set up we shied. I do not seek to make party political points here. My own party was in power at that time, but it was not just a matter of my own party—there was not a great deal of enthusiasm for the Coal and Steel Community shown by the Opposition of the day. The industrialists were afraid of losing their independence. The trade unions were worried about their newly-nationalised industries being absorbed into European capitalistic machines.

It is very easy to be wise after the event, but I believed then, as I shall continue to believe, that had we then participated in the Coal and Steel Community we should have followed it up by being members of Euratom; we should have been in the European Parliament and in the European Economic Community, and the present impasse would never have arisen. I am quite sure that that is right. We should have been among it. We should have been greater Europeans from the outset.

We have not a lot of time left for the debate, so I will not go in detail through the story of the negotiations as set out in the White Paper. We know of the problems of co-ordination, institutions, customs union, sovereignty, codes of good conduct, country and certificates of origin, less-developed countries, the G.A.T.T., Commonwealth Preference and difficulties over agriculture.

Since the O.E.E.C. Working Party reported, little or no progress has been made, and although the French political position made things very bad it was not quite the whole story. For example, France was not responsible for the fact that Great Britain is not in the Common Market. Probably, it was fear of customs unions that prevented us from going in fully.

Thinking of Customs unions, I remember an experience that I had late last summer, when driving in France, Belgium, Germany, Austria and Italy, and back into France. The only time that I was asked for a carnet was by the R.A.C. man on the boat as I was about to arrive at Dover. The Government might do something about that.

We face the immediate future with the Six bound together in a quota system—to our detriment. Let us be quite sure of that. As long ago as last summer, I heard a distinguished international civil servant of O.E.E.C. say that if there was no possibility of a Free Trade Area on 1st January, 1959, the prospects were very serious indeed. The problems are both short-term and long-term.

On the short-term aspect, how can we avoid the institution of the Common Market in Brussels creating serious difficulties for us in 1959 and 1960 by differential treatment of the Six and the others? So far, the Six have extended tariff concessions—which might, to some extent, help to dispel the idea of discrimination —and certain quota arrangements have already been made. None the less, there are already signs of difficulty and discrimination, even if unintentional. We may be facing a very awkward period in continental trade.

On the long-term aspect, all kinds of ideas are floating around—Britain and the rest of Europe; Britain with Scandinavia, and so on. I do not believe that any of those schemes will work—but now I want to complicate matters by coming back to the Commonwealth.

My hon. Friend the Member for Sheffield, Park (Mr. Mulley) very kindly referred to an idea that I have pressed on two or three occasions at Strasbourg. Time and time again today the question of some kind of join-in between Europe and the Commonwealth has been discussed, bat I want to do it more enthusiastically, and in a fuller and wider context.

The negotiations for a Free Trade Area for Europe have been difficult—the idea appears to be on the rocks; so I ask the right hon. Gentleman and the House, as I have had the temerity to ask the Council of Europe: why not begin anew? I want to see negotiations opened for the formation of what, for want of a better term, one could call a Free Trade Area which would embrace all the O.E.E.C. countries and their dependent territories, and the Commonwealth.

I know that that would mean drastic revision of the G.A.T.T. and of Commonwealth preferences. I know all about the fear of throwing open the Commonwealth to German engineering, for example, but these things have a way of producing a quid pro quo. I believe that by this concept there could be created the greatest economic unit in the world. I can see nothing in our Commonwealth economic ambitions that could not be applied to this greater union.

Perhaps I may be permitted, very briefly, to quote from the Report of the Commonwealth Trade and Economic Conference held last year in Montreal, Cmnd. 539. After pointing out that the Commonwealth has a population of 660 million people and covers an area of 12 million square miles, it stresses the fact that the Commonwealth unites … countries of almost every race and at almost every stage of economic development. It goes on to say that … the progress of each is affected … by prosperity of the others. In particular the rapid advancement of the less developed countries is a matter of major concern to their more prosperous partners.Commonwealth countries all hold a number of economic objectives in common. They all wish to see rapid economic growth in the world as a whole since this is a condition for their own betterment. They all have a direct stake in the growth of world trade. They are all concerned that sterling, in which the trade of most of them is financed, should be strong. They all realise that these objectives call for close collaboration both between themselves and with other like-minded countries. For these reasons the central theme that has run through our discussions in Montreal has been an expanding Commonwealth in an expanding world. We have traced the implications of that theme in the fields of trade, of finance and of economic development. Apart from the reference to sterling, I cannot think of anything in these objectives that could not apply to the general idea of a close economic relationship between the Commonwealth of Nations and Europe, as we know it today. I can envisage applying all that to a Commonwealth and Western European Free Trade Area. What happiness that could bring to under-developed countries. What opportunities it would provide for the commerce of many nations. What understandings it could create. What improvements it would bring about in the standards of living of millions of people and what higher rates of employment there would be. What an influence such an economic union could have on world politics and on world peace.

My desire is that at this time of impasse in European economic affairs statesmen shall look further and wider and try to make that great step forward. Towards the end of his speech this afternoon the Paymaster-General used these words, "Europe needs the Commonwealth. The Commonwealth needs Europe. We cannot turn back to the Commonwealth, because we have never left it." Why not bring the Commonwealth and Europe very close together? We could start with talks with our Commonwealth friends and brethren and note their reactions. I do not believe such a concept to be beyond the wit of man at this stage in history.

8.23 p.m.

Photo of Mr David Webster Mr David Webster , Weston-Super-Mare

I listened with great interest to the understanding and non-partisan speech of the hon. Member for Salford (Mr. Royle). I have traced, with him, the negotiations for the Coal and Steel Community and Euratom. Unlike him, I have never been on the floor of the Council of Europe, but I have watched it working from the gallery. I have also listened with great interest to his suggestions as to how we shall meet the tremendous challenge with which we are faced today.

When we are debating any form of negotiation in the House one of the difficulties is that when the negotiation is taking place, what we say might be prejudicial to its development. If a debate occurs, as this has, after negotiations have finished a major stage, we are to some extent faced with a fait accompli. I hope that this occasion will be an exception to the rule.

I listened with great interest and hope to my right hon. Friend the Paymaster-General when he said that negotiations were still quietly in progress. Having read of the increased co-operation between ourselves and the French over the European Monetary Agreement, I hope that that is a great sign that we might still get down and tackle not only currency problems, but the trading problems that face both countries.

We also saw, at the end of last year, indications that the great French nation is taking her obligations and responsibilities to the O.E.E.C. very seriously and getting down to tackling these problems. Further, we saw certain concessions on tariffs which are mildly encouraging, though I would place much greater reliance on concessions in the matter of quotas. There, I agree with the hon. Member for Stockton-on-Tees (Mr. Chetwynd) that the quota situation is graver and more far-reaching.

Everyone in the House who has spoken has referred to France with great sympathy. Indeed, that nation has very great problems. She is faced with a budget deficit of £500 million, which is a very considerable amount. Whereas, at the time of Napoleon, she suffered from the drain on her resources of what was then called "the Spanish ulcer", possibly today she is afflicted by what I might call "the Algerian hæmorrhage", which has made a great drain on her resources. In addition to that, she has undertaken Common Market obligations which are very considerable. One cannot but sympathise with her that she should be very reluctant to increase those obligations. One also notices how close she has become to Germany with the industry that the Germans have, which is so vast, widespread and diversified and, for those reasons, so increasingly powerful. Further, she does not have the drain of having a vast armament industry or output to sustain.

Unlike the right hon. Member for Bassetlaw (Mr. Bellenger), I consider our task today to be urgent, but not a matter for panic. We must avoid the creation of two separate trading groups in Europe, possibly two Zollvereinen, which might start to discriminate against each other.

One can see the development of a trade war in Africa. One can see the dissipation of the economic resources of both these groups. One will also see a reduction of their ability and of our ability to advance the backward nations. This would give Communist encroachment into those countries great stimulus and impetus.

Since the original inauguration of the Committee under Baron Snoy, in 1957, the scope of the negotiations between six European countries of the E.E.C. and the remaining eleven has expanded from being simply a matter of tariffs and quotas to cover food, commercial policies, and social harmonisation, which includes votes for women. I notice various other concessions which have had to be considered. There has also been the very tricky matter of definition of origin. We might make certain concessions upon these subjects. We have made certain concessions in the past in negotiations about definitions of origin.

It has distressed me very much to note that, although these are not acceptable to the French, they are now starting a similar system in their own negotiations and trading with the African Continent. If that is a practical and viable method for dealing with these things in Africa, we could surely have equally satisfactory arrangements.

While I hope that we shall make concessions, I also hope that we shall not make the concession of accepting what is proposed in the Liberal Amendment. The Common Market is, in fact, a Customs union, a restrictive group, and when the hon. Gentleman invites this country to join it, he brings to my mind what was said by Disraeli, either in "Sybil", or in "Endymion"—I am not sure which—that the Liberals were getting more Conservative or the Conservatives were getting more Liberal. The proposal my right hon. Friend is putting forward is considerably more liberal than the Liberal Amendment.

But I must not be partisan. One of the great things about today's debate is that we have had very little of a partisan nature.

It has been suggested that we should take up bilateral negotiations. If we started to negotiate bilaterally with the Common Market of the Six there would be a risk that others would do it as well and the whole thing would become an auction with people trying to get in at the highest price. It would be a very risky business and would bring about the type of restrictive common market which, I hope, we shall not enter upon.

We should dispel any thought that this country has been against a European Common Market. I was interested to hear what was said about that by the right hon. Gentleman the Member for Brighouse and Spenborough (Mr. J. Edwards) and by the right hon. Gentleman the Member for Bassetlaw (Mr. Bellenger). We are certainly not against it, but it is true that not only hon. Members on both sides of the House but public opinion outside did not expect the Treaty of Rome to be negotiated quite so promptly. Not many years ago, we experienced disappointment over the European Defence Community, and that type of disillusionment makes one doubt whether negotiations such as these could be carried through, particularly when one remembers that the French were drawing so close to a German economy which cannot do anything but dominate them in due course.

Suggestions have been bandied about in the Press for dealing with the certificate of origin problem. This, also, has been dealt with already by the French, so perhaps they can co-operate in that connection under their new regime. There have been suggestions about the development of escape clauses for countries which are having difficulties in their balance of payments and also for developing countries. We might be quite glad to see the former if right hon. and hon. Gentlemen opposite should ever have control of the economy of this country. There are the problems concerning economic and social institutions. It is not helpful, I think, to adopt too many public attitudes on matters of detail when the best thing that can happen is that these negotiations should go on quietly. In that way negotiations are most likely to be successful.

It is too glibly said that we can give up our Commonwealth privileges. With these privileges go considerable Commonwealth obligations. It is not a unilateral advantage. It should be remembered that we have resisted the increasing of imports from Australia and New Zealand very recently. Europeans should be reminded that we are an importer of agricultural and food products to the tune of £300 million from the O.E.E.C. alone. We import these products to the tune of £140 million from the European Economic Community. We are a considerable customer of those countries.

The Commonwealth is prepared to concede a 10 per cent. preference on British imports, but it should be remembered also that a Free Trade Area is not for this country a matter of … Roses, roses all the way". Anyone in the paper industry, in the watch-making industry, in the photographic equipment industry, or in certain textile industries is aware of the very great perils that they might run. In this country, we have considered this matter long and seriously. We have not said that it is the best of two bad jobs. We have decided that there are considerable obligations which we owe to Europe.

I am convinced that we shall rise to the challenge. Under the new impetus that the challenge will bring us we shall come again to negotiations quietly and behind the scenes, because we know that it is not only a matter of protecting the economy of this country, of the Commonwealth or of Europe, but that there are far graver considerations than that. There are the political aspects of the whole subject, and, fundamentally, there is the protection of the whole free world.

8.34 p.m.

Photo of Mr Christopher Boyd Mr Christopher Boyd , Bristol North West

On the last occasion when the Member for Weston-super-Mare (Mr. Webster) and I were debating together we were both Parliamentary candidates. We were arguing under the auspices of a local newspaper, the idea being that each should do his utmost to bring out as clearly as possible the difference between the two parties in their approach to foreign policy. Today, the hon. Gentleman seems to be very anxious to avoid being partisan. I am not sure that a little more forceful debating and controversial discussion, with less squeamishness about each other's feelings, would not be useful in clearing the air of the cobwebs of past ideas and positions taken up. All of us, perhaps, need to do some rethinking in the present situation.

The hon. Member was right when he said that this is rather a challenging situation. We are now in a new situation and we need to bring a fresh approach to bear upon it. First we must face the fact that there has been a failure for which, may be, responsibility is widely shared. We in this country have certainly underestimated the political movement towards unification of the countries of Europe. We have underestimated the practical possibility of the great Franco-German reconciliation which has been proceeding at a quite astonishing speed and with success as far as can now be seen.

What is the reason for this great failure in negotiation? More recently, quite a number of hon. Members have come to the conclusion that we have overestimated the economic side. There has been a gradual shifting of position in the minds of many of us through the realisation of this, but I doubt whether we have gone far enough yet. As has been said by the hon. Member for Glasgow, Scotstoun (Sir J. Hutchison), in the minds of people on the Continent the Common Market is much more of a political than an economic concept. That ought to provide us with a way out of our present impasse.

Neither the phrase "Free Trade Area" nor the phrase "Common Market" precisely describes the difference between them, because both mean the same thing and both propose the same thing if we merely think in terms of tariffs, as the British have tended to think of them so far; but there is an immense difference in the political content of the ideas. A Free Trade Area simply implies that we are breaking down a few boundaries, whereas the Continental conception is the construction of a community. Undoubtedly those most determined behind it have all along been aiming at a community which will in effect become a super nation.

One of my hon. Friends wondered whether it is possible to be a good Britisher and also a good European. I would have thought that we British have more reason to believe in that possibility than perhaps anybody. Four distinct nations are represented in this House, yet they all belong to a super nationhood which also includes Canada and Australia. It can be said that at least seven nations can all belong to one nation and feel themselves to be one community and even one nation. The concept of being a European has begun to have almost that sense of being a kind of super nation —like the British by comparison with England, Scotland and Wales—in the minds of Continentals.

In recent years we have found it necessary to commit ourselves militarily to the defence of Western Europe and the Continent. We have committed our forces there. We have also shown signs, now and again, of "ratting" on our undertakings there. And there have been signs of recognition that we cannot "rat" very much further. We know from our experience in this century and from the changing forms of warfare and the changing political shape of the world that we cannot be safe without taking a military interest in Western Europe. We cannot be separated either from the forms of political development on the Continent.

The safety of this country depends very much on whether a new form of military dictatorship will emerge at some future date on the Continent. None of us can feel so sure about France. If a similar idea were to be attempted in Germany, we cannot rule out that possibility. The danger, however, would be much less if this country were much more closely associated with Europe, and, in particular, if some way could be found by which the British were able at least to play a full part in the political institutions of what is called the Common Market.

If we were in practice taking part in Parliamentary debates, more than is possible merely at the Council of Europe in Strasbourg, in the much more effective and potentially strong European Parliament which is being set up by the Common Market, and leading on to a directly elected assembly in course of time, we could look after our political interests in the future shape of Europe much more effectively than we can from outside.

First, therefore, if we could find a way of doing so, we ought to be in on at least the political institutions of the Common Market or to construct a wider economic grouping in such a way that the political institutions at least would be extended. The tariff problem has been our difficulty and has caused the whole thing to break down because we have talked about nothing else. I understand that when one looks at the actual lists of commodities there is not all that difficulty about assimilating our tariff to that of the Common Market for a great many commodities. It is not all that difficult to accept a part of the Common Market tariff list. All that we need is a few escape clauses about Imperial Preference.

When one remembers that it is the political and not the economic which is uppermost in the minds of the Continent, surely it becomes clear that they would respond more favourably if they could find us saying, not that we want to stay out of the Common Market, but that we wanted to come in in a big way—if we said that we wanted to come into the Treaty of Rome but that we had certain reservations on trade matters which are relatively trivial to them. It might seem that it is a difficult jump psychologically for us, because we have all committed ourselves in the past by saying that it was not practicable for us to join the Common Market. That is because we have looked at it literally. We have followed the British way of thinking: we cannot accept a grandiose concept but rather like to nibble away at something in little bits.

But we have now to argue with the Government of General de Gaulle and to understand the Gaullists' way of looking at things. There is no doubt that General de Gaulle and his supporters like the idea of doing things in big, dramatic jumps. They do not nibble at something. That is the idea which appeals to the military mind when everything is settled by a battle. Quite a lot is settled by one battle, but nothing is settled until the battle is fought. It seems to me that if we could be seen making a big jump such as I have described it would be easier for General de Gaulle to make the big and dramatic expansion of the Common Market which is necessary to enable us to come in.

France has been undergoing a difficult process, and it has been difficult enough for French industrialists to accept the widening of their market as much as is involved in the Treaty of Rome. It is natural, therefore, that they are resisting hotly any further expansion of it, and it will be a big tussle for any French Government that is to agree to a widening.

On the other hand, General de Gaulle is an old ally of ours and his supporters are still conscious of their need for British interest in the Continent of Europe, especially from the military angle. If they can see it much more as a cementing of the Anglo-French military entente, with the economics loft in the background as a relatively subsidiary detail, simply as something that is needed to bind Britain more to the Continent, to give Britain an interest in the Continental market, so that we will be more keen about defending it with our armed forces, that is the line of approach which seems to me to have much more chance of succeeding.

Therefore, I want to suggest that we should now seriously consider making that kind of dramatic change of our approach from the past, in the light of what has happened, recognising that we have, in fact, failed, and that we are at present locked out of the Continental market. We should now say that we should like to join the Common Market, should like to join especially in all its political institutions, and would like to go in for as much as possible of it, but that we hope that in return it will be possible to avoid some of the worst dangers on the tariffs side by a few little escape clauses. That has been arranged, after all, for France, and for each country which has some trouble or another. We might even put it in a temporary form, by saying that we do not know how long Imperial Preference will last, anyway.

Therefore, let us have a few escape clauses about Imperial Preference, while we are negotiating with the Commonwealth countries and they are negotiating with the Common Market countries, to see in what way we can all be dovetailed together. Meanwhile, we need to work out a way of carrying on and getting into the Common Market and to find a fresh way, which will give the best chance of success.

8.46 p.m.

Photo of Mr Robert Elliott Mr Robert Elliott , Newcastle upon Tyne North

I am very pleased indeed to follow the hon. Member for Bristol, North-West (Mr. Boyd), though I feel that possibly he will forgive me if I do not adopt his suggestion, made earlier in his speech, that I might apply more heat to the debate. I feel that it was a reasonable enough suggestion, but I think the hon. Gentleman will appreciate that I am left with very little time for doing that sort of thing.

I should like to briefly comment on what he has said. I am sure we all hope sincerely that we shall have the maximum possible political co-operation with the countries of the Common Market and with the bloc as such. When the hon. Member for Bristol, North-West suggests that we should say that we want to go into the Treaty of Rome politically but that we have several trade reservations, surely that has been more or less what we have been saying all along and the point on which the trouble has arisen.

I think that probably I am the final speaker from the back benches on this side of the House. Much has been said today about failure, but I suggest that we have not had a failure. After all, the concept of the Free Trade Area was very new. It was a post-war idea, and the very fact that we have at this moment had to pause does not mean that we have failed. I would say that we have had a period of exciting exploration which can lead on to great things in the future.

The lengthy negotiations on the possibilities of the Free Trade Area have been followed very closely indeed by industrialists in areas such as my own. In the North-East of England, where ships are built, where a trading estate established in very difficult days produces a wide variety of goods for export, and for export to Europe in many cases, where extensive coalfields can only have a limited future, the possibilities and the risks of the Free Trade Area have been very fully considered. For this country, exporting as it does 28 per cent. of our total exports to Europe and importing some 25 per cent. of our total imports from Europe, there can be no safe policy, and that should be fully appreciated.

Certainly, Tyneside has appreciated this, and Tyneside, after weighing the possibilities of new competition, and dangerous competition in some cases, against the very real possibilities of wider markets, decided to support the concept of freer trade. Competition is, after all, the essence of business, and I have certainly found in recent months, on making inquiry of North-East industry, that there was a spirit of determination to compete. Throughout my industrial area there was a belief, which was rather concisely expressed by a leading shipbuilder when he said, that, however powerful foreign competition might become, "British built," and all that that phrase has meant and continues to mean will ensure that we shall prevail as an industrial nation.

The present situation does give cause for anxiety. The erection of tariff barriers round these Six—rich and highly productive countries—could have very serious effects on North-East England. Tyneside must continue to trade with Europe and Tyneside, in common with other industrial areas, is most anxious to avoid contributing to the formation of a second trade bloc. Such discriminatory trade blocs can only weaken the economies of individual countries and of the Continent as a whole.

If I may return to the remarks of the hon. Member for Bristol, North-West, I do not believe we can divorce the economic considerations of the problem from the political. They invariably go together. I should like to add my plea to the Government to do all that is humanly possible to effect that economic co-operation in Europe which will be in line with our political aims.

The President of the Common Market Commission suggested yesterday that a completely new approach is needed to the Common Market's external relations. There is much to commend in the success of the six countries. The Common Market is definitely workable. I do not think anyone doubts that. Its immediate advantages to the participating countries are obvious—not least being that there shall be improved standards of living.

I believe that when our friends in Europe are prosperous it is bound in the long run to be good for us. Without doubt, one of the principal reasons for the breakdown of the Free Trade Area discussions has been the fear of the Six that the Free Trade Area would prevent the Common Market from working. I have great hope now, as a Member representing an industrial area, that our industrial areas are ready to have a new look at the idea and the conception of freer trade in Europe.

I feel that industrial Britain and the Government can together re-examine the position. Now that the pressure of constant negotiations has been lifted, mutual suspicion may well recede. New thoughts may well now emerge, and the great experiment of the Free Trade Area may yet be possible. On the other hand, new avenues for export may well be possible.

I should like to put to my right hon. Friend that in areas such as my own there is considerable concern as to the possible immediate effects of a Common Market on our exports. We should like to be assured that every effort will be made to determine the immediate effects of the Common Market on our local exports. Finally, I should like to pay tribute to the Government for the efforts already made, and possibly still to be made, in what is undoubtedly a great endeavour.

8.54 p.m.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

This has been a quiet but an interesting debate. It has provided quite a contrast to the debate we had on the Free Trade Area on 26th November, 1956. That was a debate full of panache. The Prime Minister himself insisted on having the debate, on commending his brilliant new conception of the Free Trade Area to the House even at a time when not only this country but the rest of Western Europe was reeling from the economic consequences of the Suez operation. The right hon. Gentleman had not even begun to arrange the borrowings of gold and dollars with which to pay for that operation, but he felt that the Free Trade Area was a subject of such importance that we should have a debate on it at that date.

Today's debate has been in a much more minor key, fitting, I think, to the situation which has developed as a result of all these negotiations. It has, however, been enlivened by a number of speeches. I think that all of us would wish to congratulate the hon. Gentleman the Member for Morecambe and Lonsdale (Mr. de Ferranti) on his maiden speech. I played my small part, on the eve of his by-election poll in trying to prevent him from coming here, but the odds were rather too heavily against us so he arrived, and now that he has done so I am sure that the whole House will wish to congratulate him on his speech this afternoon.

I think it will be agreed that this debate has been long postponed and that the Opposition has shown the greatest patience in not pressing for a full-scale debate while the negotiations were in progress. While they were continuing, for obvious reasons we were not able to get a great deal of information about their progress, and then, before Christmas, when it had become clear that the negotiations had broken down, I think that we were right in insisting that the Government should issue a White Paper containing the necessary documents before we could adequately debate what had been occurring.

I well recognise the difficulties of the Paymaster-General at that time. They were confidential documents and it was not until he could get the clearance of the O.E.E.C. meeting that it was possible to make them available. Now we have two White Papers, one of them a formidable document of over 230 pages. Many hon. Members would have liked a little more time to study the documents in detail before this debate was thrust upon us. Yet we did not raise any objection. We agreed to the debate on the understanding, as my right hon. Friend the Member for Brighouse and Spenborough (Mr. J. Edwards) made clear earlier, that we regard this as an interim debate, perhaps the first in a series, so that we could spend today in examining the Government's record in negotiations as far as is possible from the information available to us, and in asking the Government where they think we stand now, what is to be their next step, and whether they really feel that there is any chance of a Free Trade Area.

When the Paymaster-General replies to the debate, he will require the permission of the House to speak again, but I am sure we shall all want to give him that permission. I hope that he will be a little more frank than he was this afternoon, in telling us not only that the Government are making a Free Trade Area their aim and objective, but whether they really feel confident that they will succeed, If not, if there is not to be a Free Trade Area, we would like to know more about what they offer as a means of dealing with this new problem of discrimination against British goods, about which a number of hon. Members on both sides have spoken this afternoon.

As the House will be aware we have not tabled an Amendment of censure and we certainly do not intend to vote against this rather innocuous Motion, which calls upon the House to "take note" of these two documents. However, I think we are entitled to offer a few comments on the handling of the negotiations. I will begin by repeating what I said in the exchanges which followed the statement made by the Paymaster-General after the breakdown of negotiations before Christmas. I am glad that my right hon. Friend underlined what I said on that occasion by paying tribute to the Paymaster-General's patience, good humour and indefatigable hard work in the conduct of those negotiations. I think that criticism can be levelled at the right hon. Gentleman, or rather, as I prefer to put it, at his colleagues and political supporters; though, of course, under the principle of collective responsibility, the right hon. Gentleman cannot escape from the criticisms which we have to offer.

The first basic criticism is that the Government had actually thrown away their defences in advance by the successive steps which they have taken over the last seven years to weaken the trading links with the Commonwealth. The right hon. Member for Thirsk and Malton (Mr. Turton) made an eloquent plea this afternoon in support of putting the cards on the table face upwards. He was quoting the late Mr. Ernest Bevin. I think that the comment of my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) was a fair one when he said, "Yes, but if we are to put the cards on the table let us agree on what game is being played."

It is clear—and the Paymaster-General will ruefully admit this—that some of the countries with whom he has been negotiating have been playing a different sort of game from that which the right hon. Gentleman thought was being played. As was said by my hon. Friend, it was like trying to play a game of rummy and a game of pontoon at the same time and using the same pack of cards.

However that may be, I think that the Paymaster-General went into this card game—whatever game it was—with far fewer cards, and less valuable cards, than he ought to have had or than he would have had if the Government had not been weakening the links of trade with the Commonwealth since 1951. This afternoon the right hon. Gentleman said that it was nonsense to talk about turning back towards the Commonwealth, because we had never turned away from the Commonwealth. But in saying that he is not correct. In fact, as the whole House will know—although I do not wish to weary hon. Members with figures—from 1945 to 1951 the percentage of our total trade conducted with the Commonwealth rose steadily year by year, whereas the percentage of our trade with the dollar area fell steadily year by year. We were substituting Commonwealth sources of supply for dollar sources of supply, which, I am sure, gladdened the heart of the hon. and gallant Member for the Isle of Ely (Major Legge-Bourke).

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

I must take up the right hon. Gentleman on that point. Because I want to expand Commonwealth trade, it does not mean that I wish to reduce dollar trade.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I did not say that dollar trade was reduced; it was not. I said that there was a higher proportion of trade from the Commonwealth and a lower proportion of trade from the dollar area. I am sure that it is in the interests of this country—it was then and I think it is still—to raise the proportion of our trade with the Commonwealth and to substitute Commonwealth imports for dollar imports wherever that may be possible.

But since 1951 the hon. and gallant Member's own Government have, as the result of various policy decisions—particularly the ending of bulk purchase and long-term contracts, and also by the freeing of the speculative commodity market and in various other ways including the removal of quotas on dollar manufactures —sharply increased the proportion of our trade from the dollar area with a corresponding decrease in the proportion of goods coming from Commonwealth sources. Over the last three or four years the actual volume of trade coming from the Commonwealth has remained the same while the volume of trade coming from the dollar area has increased by 30 per cent.

We say that the Government ought to have maintained discrimination in favour of trade with the Commonwealth over these past few years. I entirely agree with what was said by the right hon. Member for Thirsk and Malton about the importance to the Commonwealth of stable and reasonable commodity prices. Certainly, the reduction in Commonwealth trade over these last years has been very much associated with the collapse in primary prices. I think I may claim that in the debate in the House on 29th October, 1957, which was a debate on the crisis associated with the 7 per cent. Bank Rate, and so on, spokesmen from this Bench drew attention in strong terms to the collapse in primary prices and to the fact that world trading conditions had fundamentally changed as a result of that collapse in commodity prices—and at a time when the Government were still obsessed with the problem of inflation.

We tried to explain that the situation was changing very rapidly and that the urgent need was for international measures to provide stability in commodity prices. I remember pressing that in the debate. We did not get an answer from the President of the Board of Trade, so we put down a series of Questions to the right hon. Gentleman. He categorically rejected the proposal for international commodity agreements. It was only a few months afterwards, when the pressure came from Commonwealth countries, at the Montreal Conference and elsewhere, that the Government, rather idly, toyed with the idea. This could have been pushed with greater vigour over the years, and then the job of the Paymaster-General in these negotiations would have been much easier.

It was, of course, the present Government who withdrew from the International Wheat Agreement. They have never taken the lead in trying to promote commodity price stability. Although it is true that over the last year or so a reduction in Commonwealth trade has been very much associated with the collapse in commodity prices, it is also true, as I pointed out to the right hon. Gentleman when he courteously gave way to me in the middle of a speech, that this switch of our trade from Commonwealth sources to other sources had already taken place before the reduction in commodity prices. All this in our view weakened the hands of the Paymaster-General and, to use a phrase which has perhaps become familiar in another context, "sent him naked into the conference room". I think it is too late for the cartoonists to pick that up for what they might make of it.

My second criticism of the negotiations is that which was first stated by my right hon. Friend this afternoon, that the Government were too slow to realise that the Free Trade Area concept, as the Paymaster-General understands it, was simply not a starter. They were far too slow to realise that that rabbit was not going to run at all. For this reason, perhaps, the right hon. Gentleman himself missed the opportunity of working out earlier a realistic and constructive form of association with Common Market countries.

The right hon. Gentleman told us this afternoon that no one wanted to seek such a solution. I must ask him: Did he at any time formally or informally seek to discourage any discussion of it on the ground that he felt that if they were to pursue this admittedly second-best form of association, this admittedly pis aller—I suppose that phrase would be used—he was afraid that it would deflect attention and energies from what he regarded as the task of prime importance, the negotiation of a pure Free Trade Area, as he saw it, by the critical date, 31st December. I had the impression that there might have been one or two countries who suggested earlier, when they saw the way the wind was blowing, that they might start other negotiations, and that the right hon. Gentleman said to them, "For goodness' sake don't press that or we shall lose what impetus we have got."

I think that the right hon. Gentleman will realise the spirit in which I am putting these criticisms. It is not done censoriously, because they are not, in our view, sufficient to justify a Motion of censure against the Government. I think it can be said that the right hon. Gentleman spent too much time trying to negotiate with Common Market countries as separate countries. He would not recognise, or did not recognise early enough, that they regarded themselves as a community. Perhaps it would have been better to negotiate with their representative. That is what he will have to do from now on.

A fourth criticism of the handling of these negotiations by United Kingdom Ministers has already been made by my right hon. Friend and concerns the oafish and ill-judged intervention of the President of the Board of Trade in Paris on 15th December. I am sure that I am expressing in words which the Paymaster-General will never be able to utter publicly his inmost thoughts on that occasion. We all sympathise with the position in which the right hon. Gentleman was put, after his years of patient negotiation by that ill-judged intervention by his right hon. Friend. We all regret the illness of the President of the Board of Trade tonight and that he cannot take part in this debate, but most people who have heard the reports of that meeting in Paris will agree that it was an extremely unfortunate intervention.

I hope the Paymaster-General will regard this as a genuine tribute, perhaps a little double-edged, when I say it was a tragedy for the outcome of these negotiations that, at a critical point, his position as Chairman of the Inter-Governmental Committee precluded him from representing this country, rather than the President of the Board of Trade on 15th December.

Speaking very generally on the policy adopted by Her Majesty's Government, as opposed to the conduct of their negotiations, I think—again I am following a point made by my right hon. Friend—there is good reason to criticise the Government for their failure to listen to the good advice given to them from this bench in the debate on 26th November, 1956. Opposition speakers then emphasised, when we gave our qualified support to the Government for going ahead with the negotiations, that the Government ought not to conceive of the Free Trade Area as a purely limited, negative, liberal, tariff free European economy, but that it ought to be positive, expanding and based, not merely on the doctrine nor theory of full employment, but with provision written into the Treaty binding each country individually and the group as a whole to take all steps necessary to maintain full employment on the basis of an expanding economy.

Of course, we can understand the reluctance of the Government to accept that kind of notion for the Free Trade Area because it is not the kind of notion they accept in respect of our internal national economy. It would have meant more interference by the Community as a whole, by the Free Trade Area as a whole. It would have meant greater coordination and harmonisation of economic policies in an expansionist sense. It would have meant a harmonisation of social welfare policies to prevent politically and socially backward areas undercutting the rest. There is provision in the Common Market Treaty for this kind of safeguard.

It would have meant positive measures to prevent there being under-developed areas within the Free Trade Area. I think this one of the important things and a point which the Government have not adequately taken yet. We underlined it in the debate in terms of greater credit facilities and even suggested an investment bank for the Free Trade Area as a whole. It is important to notice that the original dreamers and idealists who drew up the Common Market and the European Economic Community have put in these highly realistic ideas for investment banks, social funds, greater credit and the rest. Unless we are to have them, if we are to have a Free Trade Area covering countries with widely differing economic and social standards we shall run into a very serious danger that two or three countries will scoop the pool.

The hon. and gallant Member for Isle of Ely, in the course of an interesting speech, quoted Abraham Lincoln. Perhaps I may quote him as well. Lincoln once said No nation can survive half slave, half free. That is certainly true, but it is equally true and history has shown that no Free Trade Area, no customs union, can survive half rich and half poor, particularly if, as in Europe today, there are partly built-in forces making some nations, such as Germany, richer all the time and widening the gap. I think this a legitimate criticism of the Government that they have pursued the Free Trade Area as a mere system of removing impediments to trade instead of being a positive instrument for the expansion of European production and commerce.

On the general issues, on the failure of the negotiators to secure a Free Trade Area, I think we shall probably make a mistake if we try to over-simplify it into a clash between Britain and France putting a II the blame on to the French. I was very glad that the Paymaster-General did not seek this afternoon in any way to do that. He had his temptations and they have certainly been extremely tiresome, but I do not think it would have been an entirely fair kind of negotiation nor helpful nor conducive to future success in negotiations going on if he had taken that rather easy way out to explain what had happened.

We value our Paymaster-General and we do not want him to turn into a kind of Minister of Transport, blaming everything on the weather, or, in this case, on the French. As he said this afternoon—and I very much agree with him—we get nowhere at all on the basis of recrimination or pique or, worse still, reprisals. In all this, his speech this afternoon would, I think, give satisfaction not only on both sides of the House but on both sides of the Channel.

Again, I doubt whether there is any advantage in trying to assess the prospects by over-simplifying the attitude of any European nation. There are some who say that the French are protectionist. The right hon. Member for Thirsk and Malton said that the average French industrialist probably goes to bed at night shivering at the thought of competition with Germany. I think that the right hon. Gentleman is right. The industrialist would probably shiver twice if he thought the British would export to France, either in a Free Trade Area or through British adherence to the Common Market.

The right hon. Gentleman went on to say that the French approach to this is not dominated by protectionism or by cynicism, and undoubtedly he is right. Undoubtedly, the political argument and the federalist argument have been paramount, at any rate, among those who, at an early stage, were associated with the development of the Common Market, however much they may have been replaced as individuals and however much the system of Government in France may have changed over the past twelve months.

It is perhaps a fair criticism of the Government—and I am not over-stressing any of these points—that throughout they have tended to underestimate the political motivation behind the European Common Market and the political attitudes of some of the countries with whom they have been dealing. It is not unfair to say that their attitude has been a little too much like one greengrocer bargaining with another, instead of taking more account of the political realities. Whatever our man in Havana may have done, our men in Paris have rather misled the right hon. Gentleman about the attitude of some of the continental countries with whom he has had to deal. As a consequence, he has had too little regard for the political aspects of the problem and for political aspirations.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

We have allowed the other greengrocer to sell all his vegetables here.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I should not like to join issue with the right hon. Gentleman on either the agricultural or the horticultural aspects of these negotiations. We hope to hear a little more on that subject from the Paymaster-General tonight.

The right hon. Gentleman has perhaps tended to think, right to the bitter end, that blueprints and documents of the kind which we have read with such interest in the Blue Book, eased along with judicious bits of horse trading from time to time, would do the trick, and I do not think that he has sufficiently recognised the power of the arguments in the minds of the people with whom he has been dealing. Perhaps it could best be summarised—although it is a little dangerous to over-simplify it to this extent—in the words which so many of the Common Market countries' spokesmen tend to use in private discussions, "You cannot expect to have all the benefits of the club unless you are prepared to pay the subscription."

It appears that whatever economic arguments there might be, whatever degree of reciprocation the Paymaster-General, or even the President of the Board of Trade in his own peculiar way, might offer, the countries with whom he was dealing said that that was not enough. The French, in particular, seem to have insisted on discrimination for the sake of discrimination, to show that there was a club from which we were being excluded. They might offer concessions on tariffs and on the general quota position but they held something back to maintain the difference between those who were inside the club and those who were outside it.

What is the present position? Discrimination has started. The Common Market countries expressed a readiness to generalise tariff reductions to all G.A.T.T. countries. They were willing to generalise the quota easements to all O.E.E.C. countries, but one of the biggest problems comes from the so-called nil quotas—the 3 per cent. problem. The Common Market countries have not been willing to offer this 3 per cent. generalisation to the non-Six countries. They did not even accept the proposal of the President of the Board of Trade for a mutual exchange of this 3 per cent. concession, and I would like, Mr. Speaker, to spend a few moments in giving one or two figures to the House to show what this discrimination means.

As the House knows, where quotas either do not exist at all or are so small that they account for less than 3 per cent. of the national indigenous production of the commodity in question, the Common Market arrangements provide, under the Treaty, a quota equal to 3 per cent. of the national production. Let us take Italian motor cars. Up to now, the Italians have been taking £800,000 worth a year from Germany, £350,000 worth from France, and rather less than £750,000 worth from Britain. Under the quota, presumably, Britain now gets a 20 per cent. increase, so that that £750,000 goes up to £900,000—an increase of about £150,000. Under the 3 per cent. rule, however, Italy will now increase her imports from the other five Common Market countries from about the present £1,150,000 to £2½ million a year. Therefore, whereas our exports to Italy will go up only by, at most, 20 per cent., Germany and France will much more than double their exports, because they will share between them, not £1,150,000 but £2½ million.

Similarly, the French market for miscellaneous industrial goods—high quality wool, engineering goods, consumer durables, radio and television sets, office machinery and furniture, motor-cycles, toys, pottery, clothing, and the like—is one in which we have an important stake. At present, France imports from the other Common Market countries about £50 million worth. We might increase our trade by 20 per cent., but, in fact, it rather looks as though, on this group of goods, the O.E.E.C. countries outside the Common Market will only have the opportunity—between them—of increasing their total trade by £10 million.

We shall have to fight hard to get a share of that additional £10 million, whereas, under the nil quotas, the other five Common Market countries will increase their trade by £30 million. I have no doubt that these figures have been given to the Paymaster-General at various times. The five countries will increase their trade by £30 million, and the other 11 countries will have to scramble for about an additional £10 million on the miscellaneous goods market.

Let us take French motor cars. In 1957, home production in France was 725,000. Under the 3 per cent. rule, France will now have to import 22,000. Up to now, we have been exporting 1,600, which we can increase to about 2,000, but the Germans and the rest will go up from 8,000 to 22,000. In other words, they will practically treble their exports.

What this proves—and this underlines the point made by the right hon. Gentleman the Member for Thirsk and Malton —is that this is not a question of French protectionism at all, because whether Britain or Germany is to sell more cars to France cannot really affect the fortunes of the French motor car manufacturers. The total import is fixed at 22,000 this year. There is, therefore, no issue of protectionism. It is not the fate of the French motor car manufacturers, but whether there is to be discrimination in favour of Italy and Germany, or whether Britain is to have a fair crack at the trade. For that reason, I think that the sticking point for the French is not protectionism but the argument that one cannot have the advantages of the club unless one pays the subscription.

Where do we go from here? The Paymaster-General, of course—and, perhaps, quite rightly—has not discussed alternative schemes, and on behalf of the Opposition we are not ourselves putting forward alternatives to the scheme so far considered at this present time. That may amuse some hon. Members opposite, but it is realistic to decide that while negotiations go on we should not put forward, from one side of the House or from the other, schemes, which, by their very nature, are less satisfactory than that on which so much time and thought has been expended.

We are giving thought to certain alternatives, as I am sure the right hon. Gentleman is. I will mention three of them. There is a proposal for a Free Trade Area for those countries outside the Common Market—Austria, the Scandinavian countries and Switzerland. The right hon. Gentleman will remember that I put a supplementary question to him about this in December. All of us recognise that that would be a vastly inferior substitute and would perpetuate the division of Europe into two markets. I am extremely doubtful how far Austria would feel free to join such a Free Trade Area, in view of her very heavy reliance on trade with Germany. It is almost equally doubtful whether Switzerland would wish to join. Scandinavia might be a different proposition.

Another proposal, rather more original, would be to invite Scandinavia into a Commonwealth preferential system. There would be difficulties about that with G.A.T.T., because the G.A.T.T. provisions relate to certain named countries, but in many ways it might be an attractive proposition. Scandinavian production is, on the whole, complementary to ours, but we all recognise that it would raise some formidable agricultural problems so far as Denmark is concerned, with the old problem of Danish and New Zealand butter.

A third possible alternative would be some form of closer association with the Common Market. Hardly an hon. Member today, apart from the Liberal Member, has suggested full membership of the Common Market. As my right hon. Friend fairly said this afternoon, there is some doubt whether Britain would be welcomed into the Common Market. I presume we have not had an invitation. If we made an application—and I am not recommending that to the Government—there is some doubt whether it would be accepted.

There are other variants or halfway houses. There is the suggestion of the two-tier arrangement referred to by the Paymaster-General, the swopping of preferences and opening the European market to Commonwealth countries, which the Commonwealth countries might welcome, and opening Commonwealth markets to European exporters.

There are obvious advantages in that proposal, but I am bound to say that I see a lot of disadvantages in a proposal to allow Germany into our Commonwealth markets on a basis of equal preference with ourselves. I am sure that many hon. Members in all parts of the House will share my reservations and anxieties about that kind of proposal, but obviously it is one that needs very careful examination, as does the proposal put forward by my right hon. Friend this afternoon to bring in some sectors of trade, where external tariffs and Common Market tariffs are reasonably in line.

I have not dealt with some of the specialised problems this evening, and I am quite sure that the Paymaster-General will be relieved. He has probably heard enough of some of these questions over the last two years. However, it is important to refer, as my right hon. Friend did, to the special problem of cartels. However idealistic were the motives of those who created the Common Market, there is some reason to believe that there is a movement for the closer development of cartels and cartelism in Western Europe.

I have said that we regard this as only the first debate, a probing debate, but we hope that as soon as the situation clarifies we shall be able to discuss this subject again. Particularly if the Free Trade Area concept finally founders, we shall need to discuss alternatives. I hope, therefore, that the Government will keep the House as fully informed as it can and not drift on month after month, year after year, with meaningless, face-saving communiqués issuing from some of these Paris committees.

Whatever else has emerged from the debate today, I am sure that at any rate one thing is clear. Whatever the fate of the Free Trade Area on the lines of the original White Paper, there is a strong desire for a really effective and intimate basis of association between Great Britain, Scandinavian countries and others, on the one hand, and the community of Common Market countries on the other. I am sure that that is the general view of the whole House. We may have different ideas as to how this should be achieved, although the differences which have been expressed today have certainly not been on straight party lines.

Where there is a difference between the parties is in our emphasis on such matters as expansion, full employment, freer credits, on harmonising social policies, and on positive and specific action to stimulate industrial development in the underdeveloped parts of Europe, in contrast with the more liberal, simple removal of such impediments to trade as quotas and tariffs.

I know that it is too much to expect hon. and right hon. Gentlemen opposite to accept our approach on this broad question, but I hope that the right hon. Gentleman, when he comes to wind up the debate will take the debate as giving him a mandate to renew the negotiations with increased vigour, for bringing about a new and effective system of association between this country and our colleagues, on the one hand, and the community of Common Market countries, on the other.

9.31 p.m.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I am not quite sure whether I have to ask formally the leave of the House to speak again. In any case, I am sure that I should crave the forbearance of hon. Members for doing so. The reason is that, as the House knows, the President of the Board of Trade, who was due to wind up the debate, was taken ill this morning and could not take any part. Had he done so, he would have had some sturdy things to say. I shall try to say them on his behalf in reply to the right hon. Gentleman the Member for Huyton (Mr. H. Wilson).

Everyone will agree, I am sure, that this has been an extremely valuable debate. One of the purposes which the Opposition had in mind, which the Government shared, was that we should take counsel together and produce all the ideas we could on how to tackle the situation we now face, which we all agree is a formidable, important and difficult one. I shall not be able to answer in detail all the points which have been made, because that would take far too much time, but I assure right hon. and hon. Members on both sides that all the suggestions they have made will be very carefully studied.

I wish to make it clear, also, that if, in my first speech, and if again now, I refer to many difficulties which arise in certain solutions, that is not because the mind of the Government is closed. In answer to the right hon. Member for Huyton, I will say at once that we still believe that something on the lines of the Free Trade Area conception is the best thing for the whole of Europe. We are still flexible in our outlook. I have been interested to note that there has been no criticism of the Government for having been too inflexible in the course of the negotiations. I am glad that that has been so.

While we still think that something on the lines of the original Free Trade Area is the right solution, I agree with hon. Members who have said that the name "Free Trade Area" is an inadequate one. It certainly is inadequate to the total concept of European unity which we have in mind, but it was originally adopted from Article 24 of the G.A.T.T., which is the provision of the G.A.T.T. which permits one to form a common market.

I will deal, first, with the short-term problem to which the right hon. Gentleman referred, namely, the question of the 3 per cent. quotas. I thought that he did rather confuse that with the long-term problem. The question of the 3 per cent. quotas is really directed to the point about how we could mitigate discrimination in the immediate future pending the resumption of the long-term negotiations. The right hon. Gentleman rightly pointed out that the 3 per cent. quota proposal will mean a serious measure of discrimination against our exports. Going back to mid-December, we must recognise, first, that there was a threat of this serious discrimination and that it appeared likely to take place in circumstances which would involve a breach of the code of O.E.E.C.

That was the situation facing my right hon. Friend the President of the Board of Trade, about whom the right hon. Gentleman was extremely offensive, when he made his statement, a statement which his colleagues had agreed beforehand, which we all fully supported and support at present. I want to read my right hon. Friend's actual words, because there have been so many suggestions and criticisms about acerbity on our part, and I think that people should know exactly what he said. My right hon. Friend said: In the view of Her Majesty's Government, whatever the Code of Liberalisation may mean for members who have liberalised 90 per cent., or more of their trade with other members of O.E.E.C., a country which has not liberalised 90 per cent. is not entitled to discriminate at all. That is our view of the case, and if, therefore, contrary to our view of the Code of Liberalisation, any member of the Six were to institute trading arrangements in the non-liberalised sector which produced discrimination, the United Kingdom Government would feel it necessary to make corresponding adjustments in their commercial policy towards that country in order to defend British trade. I cannot see how any British Government faced with that situation, could have said anything less and I hope that there will be an end to some of the attacks delivered against my right hon. Friend.

We are at present having discussions with the French Government. This was suggested to us by some other countries and we thought it a good suggestion, because we were the people putting forward an alternative proposal and because the French Government could not accept our alternative proposal for the reasons which have been mentioned. Those discussions are still going on. It is our hope that they will result in an agreement which will be acceptable to all parties.

I should like to make it clear that we do not intend to come to an agreement with the French solely taking into account our own interests. We must be clear that there will be a solution satisfactory to all concerned and we do not intend in any way to pursue a solely selfish policy in the matter. We hope very much, however, that by some means or other we shall be able to work out a modus vivendi to enable us to resume long-term negotiations.

I should now like to deal with one or two main points raised in the debate. I emphasise once again the great and consistent support which the Commonwealth has given to the idea of a Free Trade Area. The Commonwealth countries see the great importance to them, both economically and politically, of the unity of Europe and the development of the European economy. There has never been in their mind or in our mind any conflict between the idea of a Free Trade Area and the expansion of trade within the Commonwealth. They asked for and obtained from us assurances as to the maintenance of their position in our market in foodstuffs, drink and tobacco. On the basis of this assurance they have supported our ideas throughout the course of the negotiations.

I thought that the right hon. Member for Huyton rode his usual hobby horse about the effect on Commonwealth trade with even less dexterity than usual. He was blaming us for throwing away our defences in advance. He complained that we were not discriminating enough against the dollar area. He talked in terms of not discriminating in favour of the Commonwealth. What he really means is, not discriminating against the dollar. He forgets that the dollar area includes Canada. It is with Canada that we have a current account deficit, because we have a surplus with the United States. We have been bound for many years by international agreements which his party rightly concluded to ease our discrimination on dollar goods in step with the strengthening of our balance of payments situation. In carrying out the policy of which the right hon. Gentleman now complains we have merely been honouring the obligations which he undertook.

Photo of Mr Harold Wilson Mr Harold Wilson , Huyton

I should like to draw the right hon. Gentleman's attention to the distinction between the maintenance or removal of discriminatory quotas—and I agree with what he said on those—and, on the other hand, positive measures for expanding Commonwealth trade—for instance, the long-term contracts which we had in force for a number of raw materials and foodstuffs.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

The right hon. Gentleman is trying to get out of the difficulty with one of his usual devices. It is true that there is nothing in G.A.T.T. against long-term contracts, but long-term contracts of a discriminatory character would be a back-door form of discrimination, the same as State purchase of Hong Kong textiles. Those devices would be open to challenge, and I assure the right hon. Gentleman that the policy which we have been pursuing is the policy accepted by his own party.

My right hon. Friend the Member for Thirsk and Malton (Mr. Turton) developed a most powerful thesis on the subject of discrimination on the principle that discrimination is now the way the world is going and that discrimination in itself is a good way of organising trade. Clearly, there is a strong argument to support that view. The Government continue to hold the opposite point of view. We believe that discrimination is a bad thing in principle in world trade. It would be very convenient at times to discriminate against other people, as my hon. and gallant Friend the Member for the Isle of Ely (Major Legge-Bourke) would like to do. It is convenient to keep out other people's goods, but not so convenient when other people do the same thing to us. We must do as we would be done by.

I have always felt that, more than any other great trading nation, we stand to suffer if there is a contraction of the total volume of world trade. The growth of discrimination would bring about such a contraction.

Photo of Mr Robin Turton Mr Robin Turton , Thirsk and Malton

Does my right hon. Friend say that so long as the rest of the world uses discrimination, we will continue to be non-discriminatory? Is that the position now? Do we believe in free trade if the whole of the rest of the world is protectionist?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

No, certainly not. If the whole world turns in that direction, we should certainly have to revise our policies, but it is always our intention to try to prevent that happening.

My second point to my right hon. Friend is that the adoption of a policy of discrimination by us would be thoroughly bad for our relations with the Commonwealth. I do not believe that the Commonwealth would in any way accept this policy. As I said before, the Commonwealth has always, through successive meetings over many years, backed the policy of non-discrimination and a freer system of world-wide trade and payments.

Discrimination is a very bad thing for European unity. Several hon. Members this afternoon, including the hon. Member for Stockton-on-Tees (Mr. Chetwynd), the hon. Member for Salford, West (Mr. Royle) and my hon. Friend the Member for Bebington (Mr. Oakshott), have referred to the inter-connection of the economic and political factors in this problem. It seems undeniable that a Europe that is divided in terms of trade and economics cannot be a Europe fully united in terms of politics, strategy and all the other things that we wish to see.

The O.E.E.C. has been based on the principle of non-discrimination. The policy of the O.E.E.C. for ten years has been to remove trade barriers and to remove them on the basis of non-discrimination. It has not entirely eliminated discrimination, but it has been moving in that direction. The arrival of the Treaty of Rome without a Free Trade Area means setting back all the progress which has been made, reintroducing the principle of discrimination and reintroducing it in circumstances in which it is clearly bound to expand over the next fifteen years. This is a matter on which strong feelings are held by all the other eleven countries who are members of the O.E.E.C. I reiterate once again that this is not merely a British Government point of view. It is something to which all the Governments, particularly of some of the smaller countries, who see themselves suffering seriously as a result of discrimination, attach great importance.

That was one reason why we were under such pressure to get agreement by 1st January. Two hon. Members this afternoon have referred to it and the right hon. Member for Brighouse and Spenborough (Mr. J. Edwards) referred to what he thought was our error in trying to speed up negotiations at the latter end of last year. The point about the date of 1st January was that it was the date fixed in the Treaty of Rome, the date at which discrimination would start within Europe. That was a matter to which great importance, possibly symbolic importance, was attached by all members of O.E.E.C. outside the Treaty of Rome. Indeed, the Six countries themselves have said time and again that they wished to avoid discrimination in that form and that they wished to see the Free Trade Area coming into being on 1st January, 1959.

That very statement was included in their memorandum which they submitted to the Inter-Governmental Committee as late as October. Therefore, we have been absolutely committed to do all that we could, not only in our own interests, but in the interests of all members of O.E.E.C., to try to get an agreement that would, in the words of our terms of reference, take effect in parallel with the Treaty of Rome". A number of right hon. and hon. Members have suggested that we in this country were in error in underestimating at an earlier stage the impulse among the six countries towards political cohesion and ultimate federation. I cannot deny that there is a great deal of truth in that. It is true of both sides of the House. As has been pointed out, there is not only the Common Market. There was the Coal and Steel Community. There was a failure in this country to realise the tides that were moving forward on the Continent. On the other hand, there has been equally great failure on the Continent to recognise the change of opinion which has taken place in this country.

One of the great services that this debate will do will be to give further evidence of two facts. The first is that we wish to promote the real political as well as economic unity of Western Europe. The second is that it is neither in our interests nor in our ideas to do anything to undermine the unity of the six countries in the Treaty of Rome.

The Liberal Party have an Amendment on the Order Paper, which was not moved, but the hon. Member for Torrington (Mr. Bonham Carter) spoke on those lines, recommending that we should now make a move to join the Treaty of Rome. I should like to repeat once again the very real practical difficulties that would be involved if Her Majesty's Government were to ask to become a signatory of the Treaty of Rome. There is, it is true, an accession clause in the Treaty, and we have often been told—I do not say formally—that our friends would welcome the possibility or prospect of us joining, but it is equally true, as has been said by several hon. Members, for us and the others now to join the Treaty of Rome would mean the complete re-negotiation of the Treaty.

The Treaty, as the right hon. Gentleman said, is a very nice balance of the interests, problems and difficulties, including the weighted voting, the structure of the Commission—all of which are very delicately balanced. It would not be possible to bring in a lot of other countries, and particularly a country as large as the United Kingdom, without altering that balance and calling for large renegotiation. I would have thought that that was the very last thing which the Commission would want at this delicate early stage in its development.

Quite apart from that, the difficulties from our point of view are very serious.

There is, first, the problem of commercial policy. As I said earlier, only a quarter of our trade is with Europe, and it is difficult to see how we could bind our hands, in our commercial policy with the whole world, to what is decided by a group which comprises only a relatively small proportion of our trade. Then there is the problem of the Commonwealth and the harmonised tariff, about which the right hon. Gentleman asked me a question. He asked why it is so difficult to harmonise the tariffs.

In the first place, to abandon our freedom in these matters of commercial negotiations is a very big problem, but, secondly, the range of things we import from the Commonwealth is so large and so important that we could not combine Commonwealth free entry with a harmonised tariff. The Government take the view, which is fairly widely accepted, that it would be quite wrong to contemplate placing duties on Commonwealth imports. Unless we did that, there could be no harmonisation of our tariffs with European countries. Raw materials are also very important matters, and a very wide range of raw materials will be subject to duties under the Treaty of Rome. Admittedly, in some cases, the duties will be low, but a lot of them, such as those on List G, which is not yet settled, will be high.

Then there is the problem of semi-manufactures. To take chemicals, I do not see how we could harmonise our tariffs with the Community on chemicals without imposing duties on Canadian chemicals, which are imported in large quantities and over a big range. There is considerable difficulty here, and it would be almost disingenuous of us to suggest that we could go into the Treaty of Rome and ask for a little escape clause dealing with the small matter of Commonwealth preferential entry. It is really a fundamental point, and to arrange for free entry of Commonwealth products must mean a system of certificates of origin; otherwise, the tariffs of member countries of any association would be undermined. We think, and have always believed, that a system of certificates of origin is both feasible and practicable, but harmonised tariffs are impossible.

In agriculture, which is of such importance to the Commonwealth, signing the Treaty of Rome would mean breaking our agreements with the Commonwealth. We have undertaken to maintain their position in our markets in foodstuffs, drink and tobacco, and by signing the Treaty of Rome we should be committing ourselves to a common agricultural policy inconsistent with free entry of Commonwealth foodstuffs.

There is also the difficulty of the conflict of the signing of the Treaty of Rome with our own obligations to our own farmers and farming community, and still underlying the Treaty of Rome there is this impulse towards political federation, which I think means that, unless we intend ourselves to move towards political federation, we would once again be rather disingenuous if we thought that we could join it in the letter of the Treaty while ignoring the underlying spirit of it. I feel that we must reject the possibility of signing the Treaty of Rome. To sign that Treaty would involve consequences for us and the Commonwealth relations which I do not think that the House as a whole would wish to see.

I was asked several questions by the right hon. Member for Brighouse and Spenborough. One was about the free movement of labour. We have not made any change in our position on that. We have said that, after consultation with the trade union movement, we are prepared to consider better arrangements within Europe for the movement of labour, with various countries, based on the appropriate article of the O.E.E.C. code.

As for the free movement of capital, we have not made any change in our position. We accepted that it would be necessary to arrange for free movement, in so far as it was an inherent part of freeing trade in goods and services; but the freeing of capital movements per se is not a matter on which we have changed our thoughts, and it was not taken into consideration at all by the Inter-Governmental Committee.

The right hon. Gentleman also asked for more information about agriculture. The facts about that are well-known to the House. In answer to a Question in October, 1957, we circulated a speech which I made to the Inter-Governmental Committee on this matter. Our principles have been set out clearly in the Blue Book, in the draft Agricultural Agree- ment, which we circulated. The point which we must bear in mind is that, apart possibly from Denmark, I know of no country in Europe which would advocate freedom of trade in agricultural commodities. All countries intend to go on protecting their agriculture in one form or another.

Therefore, the problem was not to arrange a free trade system but to arrange a means of co-operating in agricultural matters which would provide the rules of fair trade and more opportunities for trade in agricultural products. That is in line with the developments which took place in the Committee of Agricultural Ministers of the O.E.E.C. The proposals which we made in detail were set out in the form of the draft Agricultural Agreement which will be found somewhere in this terribly voluminous Blue Book.

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

It was suggested by the right hon. Member for Brighouse and Spenborough that we should have negotiated not individually with the countries of the Community but with their representatives. The negotiation was a seventeen-country negotiation. The Six normally spoke with one voice. It was accepted that that would be their procedure, but it was for them to say whether they wished the speaking for them to be done by the Commission or by the Chairman of the Council of Ministers. That was a matter in which we would not like to intervene. When the right hon. Gentleman says that we have neglected their advice in so far as we have left our conception of the Free Trade Area to remain too negative, he is doing less than justice to the developments of the last year.

The right hon. Gentleman talks about positive action to develop underdeveloped countries. A great deal was done in Working Party 23 to find means of helping underdeveloped members of the Free Trade Area with their problems. The right hon. Gentleman also possibly failed to observe that there has been considerable development of our thought on the whole question of economic co-operation. We would agree with him that the removal of barriers to trade within Europe must also remove barriers to the spreading of difficulties, dangers and problems.

We have never failed to recognise that, and we have laid considerable stress upon the importance of coordinating economic policies and maintaining, as far as possible, a coordinated attitude towards the great economic developments that take place. It was generally agreed by everyone, though I do not think that it appears on any document, that there must be, as one of our articles of association, a statement on economic policy which would refer not only to full employment as one of the great objectives but also to the maintenance of financial and monetary stability.

The importance of the major objective of a developing and expanding prosperity was by no means neglected in our discussions. But while we talk and ponder about what the right hon. Member for Brighouse and Spenborough referred to as how to make an area that is really dynamic in economic and social terms—which is a good objective—the problem is to solve the definite problems of on what basis British motor cars will go into Holland, and Italian vegetables will go into Norway. These are the practical problems which have to be solved and which we tried to solve, unavailingly, in the negotiations last year.

There are many other points that were raised with which I cannot deal owing to the shortness of the time available, but I will finish by saying again that I believe that this debate has been of great value, both in enabling us in the House and the country to clear our minds about where we stand and where we must go from here. Also, it has been of great value in giving a clearer impression to people throughout Europe of the determination of the House to find some way of asso- ciating the six countries with the other eleven. As I said earlier, our objective is to find the means of associating the six and the eleven countries within the principles and practice of the O.E.E.C., and to do this within the framework of the G.A.T.T., to which we attach so much importance.

Photo of Mr Frederick Bellenger Mr Frederick Bellenger , Bassetlaw

Would the right hon. Gentleman please tell the House now what practical steps Her Majesty's Government will take to continue these discussions, apart from those taking place on an official level with France?

Photo of Mr Reginald Maudling Mr Reginald Maudling , Barnet

I have no proposal to make at the moment. We are discussing the modus vivendi with the French and we are hoping to solve that problem first. We are having consultations among ourselves and with some friendly countries about the next move. At the moment, I cannot make any definite pronouncement because we particularly want to have in mind the views expressed by the House today.

I cannot finish without referring to the maiden speech of my hon. Friend the Member for Morecambe and Lonsdale (Mr. de Ferranti), to whom we listened with great pleasure. It was a brief, practical and effective speech and we shall look forward to hearing from him often.

I will close by saying that the Government have taken note of the wish of the House that we should resume the task of trying to solve the economic problems of Europe.

Question put and agreed to.

Resolved,That this House takes note of Command Papers Nos. 648 ad 641 relating to Negotiations for a European Free Trade Area.