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Clause 2 — Addition to list of treaties

Part of Orders of the Day – in the House of Commons at 4:56 pm on 6th February 2008.

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Photo of Mark Francois Mark Francois Shadow Minister (Europe) 4:56 pm, 6th February 2008

Just before we voted at the end of our debate on the motion, Harry Cohen, who is not with us at the moment, made a point of order complaining about the relatively small number of Back Benchers who had managed to contribute. The Minister said that the Government had decided on a three-hour/three-hour split. I remind him that in our alternative proposal we argued for 18 days of consideration, which would have provided much more time to debate the treaty. In deference to the hon. Member for Leyton and Wanstead, I will attempt to keep my remarks relatively brief in the hope that the maximum number of Back Benchers can participate. I hope that the Minister will appreciate what I am trying to do.

Amendment No. 237 would prevent competition rules from becoming an exclusive competence of the European Union. That would, first, improve the treaty by removing a series of potentially damaging side-effects while allowing the UK to retain the freedom to complement the internal market where deemed necessary; and secondly, as the Minister for Europe must be getting used to hearing when we are discussing amendments, be in line with the Government's policy as laid out when debating in the European Convention. The Government's chief negotiator at the Convention, Mr. Hain, argued at the time—I know that the Minister enjoys these quotes, so I will read it slowly:

"The Community does not have exclusive competence in relation to measures to ensure free movement in the internal market...If the Community were to have exclusive competence in these areas, the Member States would have no power to take any measures (eg, in relation to the protection of health or consumer protection) which could affect free movement, nor to establish rules to promote competition. Plainly, the Member States currently exercise powers in these areas. The Community has power to harmonise the rules in these areas, but authority to take action in these areas is effectively shared."

Needless to say, that amendment failed. That is not surprising because, as my right hon. Friend Mr. Heathcoat-Amory pointed out last Tuesday, of the 40 or so amendments in justice and home affairs that were tabled by the Government at the Convention, only two succeeded, one of which was to change the word "safety" to "security". Unfortunately, the Government were hardly any more persuasive at the Convention in their arguments regarding competition policy.

What are the effects of the treaty on UK competition policy of which the Government originally disapproved? For the first time, the treaty characterises

"the establishing of the competition rules necessary for the functioning of the internal market" as an exclusive competence of the EU. Where there is an exclusive competence, the treaty explains that

"only the Union may legislate and adopt legally binding acts, the Member States being able to do so themselves only if so empowered by the Union or for the implementation of Union acts."

Therefore, unlike under current treaties, the UK will not be able to legislate on its own initiative to complement Union competition rules. It would not even be able to vary rules temporarily or permanently to protect the health or safety of UK subjects. The effects of the changes are wide reaching, so it is no wonder that the right hon. Member for Neath tried and failed, not once, but twice, to carry what we agree was a measured and sensible amendment.

In practice, the treaty will mean that UK authorities will no longer be able to supplement EU competition rules if they believe that EU competition law does not go far enough. That could lead to cases where distortions in UK markets go untreated while the UK waits as it tries to push through new competition regulations in Brussels. An example of that sort of situation may be found in the UK financial services industry, which is particularly pertinent to many of my constituents who commute into the City. If the UK decided that aspects of the industry required further competition laws or regulations, it could not legislate in that area on its own because the matter would be an exclusive competence of the Union. Likewise, if our Government found that they did not have sufficient rules to encourage competition policy in, for example, the UK's airports, they would have to argue for rules at an EU level, having given up the ability to legislate in that area.

A second problem was identified by the right hon. Member for Neath—he was prescient. Once competition becomes the exclusive preserve of the EU, the ability of the Government to legislate to protect health and to engage in consumer protection will be compromised. A persuasive example given by the Government in 2004 concerned a case brought against them at the European Court of Justice by tobacco companies, which was initiated in December 2002. The case highlighted the conflict between the implementation of health standards, such as maximum tar and carbon monoxide levels in cigarettes, and the EU's competition policy. In 2004, the Government argued that had competition policy been an exclusive competence rather than a shared one, they would not have been able to influence that important area of health policy.

Given all of those factors, I have three questions for the Minister. First, the wording of the competition laws regarding the abuse of dominant positions states that it will apply in any case that

"may affect trade between member states".

Given that the legal interpretation of the word "may" is extremely wide, will the Minister explain what that wording will encompass if the treaty goes through? Secondly, what discussions have the Government undertaken with the UK Competition Commission with regard to the treaty's provisions? Thirdly, with regard to the danger highlighted by the right hon. Member for Neath concerning the inability of the UK to safeguard health and consumer protection, has the Minister received any further reassurance during his negotiations with EU partners?

Turning to amendment No. 239 on customs co-operation, under the treaty, EU laws could lay down conditions under which UK Customs could check to ensure compliance with national criminal law regarding items entering the UK. That could oblige Customs to report its compliance with such matters to the Commission. Such laws could import all of the EU's human rights general principles, such as the charter of fundamental rights, into the applications of our Customs procedures, with unknown effects. We tabled amendment No. 239 to prevent that situation from arising.

I said to the House that I would be brief, so I shall conclude speaking on our amendments as follows. Amendment No. 237 would do only what the Government wanted to achieve but failed to secure when they negotiated the European Convention. It would allow the UK to complement EU competition policy when that is necessary and protect the UK from regulation when it is not. It would strike out elements that are full of unknown consequences. It would also preserve the House's ability to promote health and consumer protection, as the Government wished to do.