recent fabian pamphlets research series 297 Della Adam Nevitt 298 Jim Skinner 299 S. F. Kissin 300 Christopher Foster 303 Felicity Bolton, Jennie Laishley 304 Tessa Blackstone 305 0 . Kahn-Freund, Bob Hepple 306 Nicholas Deakin ( ed) 307 Paul Singh 308 Peter Coffey, John Presley309 Brian Showier 310 Jim Skinner 31 1 Deepak Lal tracts 399 409 410 411 412 414 415 416 417 418 419 420 421 422 423 R. H. S. Crossman Wayland Kennet and others Anthony Crosland Dennis Marsden Jeremy Bray ten Fabian task forces Evan Luard an informal group Trevor Fisk, Ken Jones Geoffrey Hawthorn Stephen Hatch ( ed) Colin Jackson ( ed) Malcolm Wicks David Lipsey Wayland Kennet young fabian pamphlets ~ 17 24 29 30 31 32 33 34 books Colin Crouch ( ed) Elizabeth Durkin Russell Lansbury James Bellini James Goudie Tony KlugLarry Hufford Graham Child, John Evans R. H. S. Crossman and others Margaret Cole Brian Abel-Smith and others Peter Townsend and others Peter Townsend and others George Cunningham ( ed) P. Townsend and N. Bosanquet (eds) Fair deal for householders 251{ Collective bargaining and inequality 20p Communists : all revisionists now? 40p Public enterprise 30 Education for a multi-racial Britain 20p First schools of the future 25p Laws against strikes 85p Immigrants in Europe 40pGuyana: socialism in a plural society 25pEurope: towards a monetary union 25~ Onto a comprehensive employment service 30p Fair wages and public sector contracts 201 New economic policies for India 40 Paying for the social services Sovereignty and multinational companies Towards a Labour housing policy Politicians, equality and comprehensivesThe politics of the environment Towards a radical agenda The United Nations in a new era Emergency powers : a fresh start Regional development Population policy: a modem delusion Towards participation in local services Labour in Asia: a new chapter? Rented housing and social ownership Labour and land Still no disarmament Students today Hostels for the mentally disordered Swedish social democracy British entry: Labour's nemesis Councils and the Housing Finance Act Middle East conflict: a tale of two peoples Sweden : the myth of socialism Britain, Europe and the law 20] 30] 20] . 30] 25 50f 25] 30] 401 30 50] 4025. 20 25 30 15 25 25 30 40 40 60 New Fabian Essays The story of Fabian socialism Socialism and affiuence Social services for all? The fifth social service Britain and the world in the 1970s Labour and inequality cased £1.1 paper £0.1 paper £0.~ paper £Q.'jcased £1.: cased £3.( paper £2.2 recent fabian pamphlets research series 297 Della Adam Nevitt 298 Jim Skinner 299 S. F. Kissin 300 Christopher Foster 303 Felicity Bolton, Jennie Laishley 304 Tessa Blackstone 305 0 . Kahn-Freund, Bob Hepple 306 Nicholas Deakin ( ed) 307 Paul Singh 308 Peter Coffey, John Presley309 Brian Showier 310 Jim Skinner 31 1 Deepak Lal tracts 399 409 410 411 412 414 415 416 417 418 419 420 421 422 423 R. H. S. Crossman Wayland Kennet and others Anthony Crosland Dennis Marsden Jeremy Bray ten Fabian task forces Evan Luard an informal group Trevor Fisk, Ken Jones Geoffrey Hawthorn Stephen Hatch ( ed) Colin Jackson ( ed) Malcolm Wicks David Lipsey Wayland Kennet young fabian pamphlets ~ 17 24 29 30 31 32 33 34 books Colin Crouch ( ed) Elizabeth Durkin Russell Lansbury James Bellini James Goudie Tony KlugLarry Hufford Graham Child, John Evans R. H. S. Crossman and others Margaret Cole Brian Abel-Smith and others Peter Townsend and others Peter Townsend and others George Cunningham ( ed) P. Townsend and N. Bosanquet (eds) Fair deal for householders 251{ Collective bargaining and inequality 20p Communists : all revisionists now? 40p Public enterprise 30 Education for a multi-racial Britain 20p First schools of the future 25p Laws against strikes 85p Immigrants in Europe 40pGuyana: socialism in a plural society 25pEurope: towards a monetary union 25~ Onto a comprehensive employment service 30p Fair wages and public sector contracts 201 New economic policies for India 40 Paying for the social services Sovereignty and multinational companies Towards a Labour housing policy Politicians, equality and comprehensivesThe politics of the environment Towards a radical agenda The United Nations in a new era Emergency powers : a fresh start Regional development Population policy: a modem delusion Towards participation in local services Labour in Asia: a new chapter? Rented housing and social ownership Labour and land Still no disarmament Students today Hostels for the mentally disordered Swedish social democracy British entry: Labour's nemesis Councils and the Housing Finance Act Middle East conflict: a tale of two peoples Sweden : the myth of socialism Britain, Europe and the law 20] 30] 20] . 30] 25 50f 25] 30] 401 30 50] 4025. 20 25 30 15 25 25 30 40 40 60 New Fabian Essays The story of Fabian socialism Socialism and affiuence Social services for all? The fifth social service Britain and the world in the 1970s Labour and inequality cased £1.1 paper £0.1 paper £0.~ paper £Q.'jcased £1.: cased £3.( paper £2.2 ·fabian tract 425 Europe: the way back .I contents 1 introduction 2 the experience so far 4 3 can we break free? 12 4 the strategy for re-negotiation 18 5 an alternative future 26 · this pamphlet, like all publications of the Fabian Society represents not the collective view of. the Society but only the view of the individual who prepared it. The responsibility of the Society is limited to approving publications it issues as worthy of consideration within the Labour movement. Fabian Society, 11 Dartmouth Street, London SW1 H 9BN. October 1973 ISBN 7163 0425 2 1. introduction This pamphlet sets out to do four things : to assess the British experience of Common Market membership so far-and the outlook now before us : to answer · , the question whether it is still open to us, if such be our wish, to change not only the negotiated terms but the nature of our Telationship with the EEC : third, to outline a strategy for achieving the r objectives of the radical renegotiation to which the next Labour Government is committed; finally, to consider the alternative role for Britain on the assump, tion that we shaH, within the next Parlia. ment, cease to be a member of the EEC. A great wave of disillusionment is now sweeping., the country over the EEC. The majority of public opinion, according to all the polls, has been opposed to entry · consistently since the start of the June ' 1970 negotiations. And this majority has notably increased since our actual entry · this year began. But it is among the 1 protagonists of entry-in industry and business, in the higher levels of the civil · service including those in Brussels, even among ministers in the Government-that a new, significant and painful reappraisal is taking place. The reason is plain. Few will now dispute that membershiphas plunged, or has helped to plunge, · this country into a profound and pervasive crisis. Not only is our prosperity, indeed our viability, desperately at risk, but we face a political crisis without parallel in our modem history : a crisis that threatens to engulf both our democracy and our very existence as an independent state. These great problems confront the great mass of our people- regardless of political party, outlook or interest. But for the Labour Movement. • with its spec~ial commitment to democracy and socialism, there is a separate . and additional dilemma that membershipof the EEC inescapably presents. of Labour's dilemma It is that while the central purpose of the Labour Movement has been to bringeconomic forces within the ambit of democratic control and decision, the central aim of the European Communities is to create a Common Market and thus to remove economic decision making from the authority of the member states. For the one, public control of economic decision making is essential for the achievement of socialist ends; for the other, the destruction of the power to make such decisions is essential for the construction of Europe. That is the special problem for Labour. It has not been invented by mischief makers. It will not go away if we pretend it is not there. Mthough many seek to evade it, the hard truth is that the purpose of the EEC is, and must be, to destroy the greater part of the economic power acquired by modern democratic states only in the post-war period-a power to help end the appalling unemployment and inequality that were the bitter fruits of the pre-war, "free" economy. In part this reflects the neo-Federalism of the Treaty's authors but it mirrors still more the dominant pro-business and laissez-faire philosohpy of the 1950s in which the Rome Treaty was grounded. It is this that gives the pronounced free enterprise tilt to the EEC-a tilt that can be recognised not only in the main provisions of the Rome Treaty but in the particular powers of its institutions and in the policies and iaws which it has subsequently produced. It follows therefore, that those British socialists who wish for continued and deepening membership of the EEC must connive in the dismantling of the state power, and at the steady erosion of democratic power in Britain. Yet, it is precisely the build-up of counter market economic power, the development of state agencies and policies to bring private business and private capital under human and democratic control, that is the main justification of democratic socialism itself. What makes the Common Market so inherently difficult for socialists is of course what makes it so attractive to their opponents. Looked at from the standpoint of business enterprise, the Rome Treaty is a contemporary MagnaCarta of business freedoms, liberating commerce and industry throughout the Community from state intervention and public control. Not only is trade free of tariffs and quotas between the countries of the Common Market, but labour and services and above all capital and firms are set free to move across national frontiers, according to the pull and pushof market forces and the dictates of private profit. There is therefore no problem here for those whose economic and politicalphilosophy leads them to believe that it is inherently desirable that the forces of production should be released from state control and that positive benefits ensue when market forces are unleashed. But clearly, no such thoughts can comfort democratic socialists. For them t!he prob~ em posed by the EEC can only be resolved, in theory and in practice, if there exists or can be created, a Europeandemocratic and socialist power able to operate upon the Market economy ; able to do, on the European level, what we shall cease to be able to do within the territory of the UK. But the fact that the pro-entry democratic socialists must wish for such a power on the level of the Community, does not mean that such a power actuaUy exists, or even that it is reasonable to expect that it can be created. And, certainly, what power of Common Market decision making there is, ·falls right outside the control of the Strasbourg Assembly. Strasbourg Assembly When Commissioner Dahrendorf wrote of " a powerless parliament " which does not " control the phony Government in the Commission," he wrote the truth. Nor is it possible seriously to disagreewith his judgement that, " a democrat can only feel shame when he sees adult and in their own countries, properlyelected members of parliament playing out .the farce that they have to put on 10 times a year for a week at a time in Strasbourg or Luxembourg." This is not because of any personalinadequacies of those who sit in the Straslbourg Assembly but because that Assembly was deliberately designed by the architects of the Rome Treaty not to be a parliament-not to have any of the powers that parliaments everywhere possess : the power to make laws, to raise taxes, to make decisions, to appoint ministers. It was designed instead to give" opinions," when asked, to the real masters of the EEC, the Council of Ministers and the Brussels Commission. True, the Assembly at Strasbourg could becmne an elected body : that is, its members could be elected by the peoples of the EEC rather than, as now be nominated by the party managers and the chief whips from selected MPS in national parliaments. But election itself would change little. The powerlessness of the EuropeanAssembly can only be changed if the Rome Treaty itself can be changed : only if there is an unanimous wish to so amend it. Today no such unanimity exists-nor has it existed at any stage in the 15 years of the Strasbourg Assembly's existence. But there are still deeper reasons whythe problem of democratic control in the EEC is in truth, insoluble. A real EEC parliament presupposes an EEC government and an EEC state-whether it be federal or unitary, presidential or parlimentary, in its governmental form. Such a state does not exist. Nor is it likely to exist, for it in turn presupposes what is conspicuously absent : an over ridingnecessity ; a willingness by existing EEC states to transfer major additional powers to European institutions and the prior ex·istence of a genuine sense of political community, a stTong desire among the 250 million people in Western Europe to become one nation. Clearly the creation of a new West European state is not a realistic objective. Nor, in my view, is it even a desirable one. We must stop confusing the internationalist creed of socialism, the obligation that arises from the recog mtlon that we are involved one with · another in the whole of mankind with the desire to create a " West European " super state. ' And we must stop the worship of bigness. Neither equality nor liberty, nor fraternity : and certainly not effective democracy; would be served by constructing a giant " political conglomerate of 250 million people. A major element in the current crisis of political democracy is the growing size of institut.ions and its concomitant, .the remoteness of government from the the governed. If the usA has 1 anything to teach us here, it is that-with i all its special historica1 advantages- democracy on a continental scale faces e problems of the most formidable kind. It is idle therefore to follow the will'o the wisp of an unborn and hypothetical .. EEC democracy. Instead we must turn to the task of strengthening, defending ~ and improving what already exists : democracy in Britain. ' :y in lj ne BC n· b! li· d tc i! n~ fl( er~ ior ca. 25C tc 2. the experience so far The Treaty of Accession which binds Britain to the Common Market was signed on the 22 January 1972-18 months ago. The European Communities Act which gives the Treaty's provisions the force of law in the UK received the Royal Assent on the 17 October, 1972. Heralded by the ill-judged fanfare celebrations, Britain's membership of the EEC formally commenced on the 1 January 1973. Clearly, these dates allow only an interim verdict to be given. While the political, legal and constitutional implications of membership can be assessed with rather more confidence, the time scale for its economic and industrial effects is obviously short. It is, in reality, however rather longer than the dates mentioned above suggest. For Britain's entry can realistically be dated from May 1971 when, following the Heath/Pompidoutalks at the Elysee Palace, the President of France formally lifted his country's veto on Britain's membership. From that moment on, the major uncertainty ended. The decision makers in industry and government, already strongly influenced by the wish to join and the hope of success, knew that they were in -and began to plan and act accordingly. the impact effects What has happened to the economy in the two years since the Heath/Pompidou talks is all too clear. We have suffered the worst bout of inflation in living memory. Prices generally have risen by 16 per cent while food prices have shot up by no less than 22t per cent. Not all of this should be attributed to the EEC. Domestic inflation due to mismanagement of both cost and demand factors has operated strongly on prices at home, while world prices particularly those of some of our major foods following widespread and prolonged crop failures in both the Northern and Southern Hemispheres, have been a major cause of higher food prices in Britain. But while it would be wrong to attribute rising prices in Britain wholly or even predominantly to the EEC, it would be equally foolish to pretend as Mr Heath so peversely does, that the EEC has had no measurable effect. The price of manyfoodstuffs including bacon, sugar and butter have risen as a direct consequence of Britain's entry and the Treaty requirements to raise our prices in five installments, the first in 1973, to those ruling in the EEC-and to the requirement that existing British subsidies on sugar and bacon be rapidly phased out. Beef prices too, have undoubtedly been affected bythe inability or refusal of the Government to check the massive export of British beef to the Common Market when shortage developed there last year and where much higher prices can be obtained. Outside of food, the price of steel which is a major factor affecting co~ts in most of our metal using industries was raised by 10 per cent in April 1973 at the direct request of the Brussels Commission and will rise again by at lea t a further 7 per cent in the autumn. Further, the introduction in Britain of VAT on the 1 April 1973, a tax tha:t we are required to operate under the Treaty of Accession, is already exerting a strong, new and predictable upward pressure on prices. Finally, the almost unbelievable increase in farm land prices, an increase between March 1972 and M·arch 1973 of no less than 100 per cent, is mainly due to the massive further increase in guaranteed prices under the CAP which will be paid to farmers by 1978. The effect of these inflationary developments felt increasingly since the signatureof the Treaty of Accession in January1972 would have made it impossible to hold the pound for long ~at its previous parity. But, with incredible folly and in advance of membership, the Government joined the Six in its rigid " snake in the tunnel " currency arrangements, whereby, exchange rates have to be supported by central banks if they depart from the narrow 1.25 per cent margin around their parities. Weeks later in June 1972, the pound was blown out of the tunnel- but not before £1 ,000 million had been lost from our reserves in a single week- and began its unilateral float. As events have demonstrated, the float has become a steady sink and the pound now stands a full 18 per cent below its Smithsonian level of December 1971. Britain's annual contribution to the Community's budget, fixed by the Treatyof Accession at 8t per cent in 1973, rising to 19 per cent in 1977, was supposed to cost us only £125 million gross and £65 million net of receipts in Year One of entry. Although this is not yet a majorfactor, our net contribution has been raised this year to nearly £100 million as a result of a vast supplementary estimate of £400 miUion presented by the Brussels Commission to finance its swollen stoc~piles of Community butter and Community wheat. Worse still, our trade balance with the Six, as manufacturers both on the continent and in Britain prepared for the rapid rundown jn their respective tariffs, has been disastrously upset. From a deficit of a mere £17 million in 1970 and £181 million in 1971, Britain's trade deficit with the Six leapt to £499 million in 1972, and is running, in the first half of 1973 at not less than £1 ,000 million a year. The argument about the vast home market that British industry would enjoy once we were in can already be seen to be illusory. The modest corrective to Euro- euphoria made by those cr-itics who insisted that while we should be able sell more to the Six, they equally, would be able to sell more to us and that there was no reason to believe that the balance would be to our advantage, has been more than justified. In ~ddition, the first step towards freeing cap1tal movements has been taken. Directly anticipating entry, firms have b~en, since the budget of March 1972, VIrtually free to make direct investments • in the Europe of the Six-just as Come mon Market firms have been free not only to invest in Britain, which has long been the case, but to borrow money on the British market to assist them. But the results have been hardly encouraging. In 1970, the last wholly pre-entry year, UK investment in the Six totalled · some £100 milHon and EEC investment in Britain some £50 million. In 1971, when Britain's entry became assured, UK in vestment in the Six rose to £300 million while EEC investment in Britain was £100 nlillion. Thus, in the first year, the adverse balance on capital account increased from minus £50 million to minus £200 miHion. In 1972, the adverse trend became more strongly marked. Outward investment reached some £450 million while inward investment from the Six, taking the centre of the range of figuresprovisionaUy available, reached £115 million-a net deficit of £335 million. Clearly the impact effect of entry has been extremely unfavourable. There maybe hope, but there is cer.tain:J.y no convincing reason to believe tha:t the bal1ance of trade and capital movements will improve in the years ahead. Such evidence as there is suggest the contrary, for the inflationary impact of continental food prices and continental taxes are bound to he felt in addition to all other factors for some years ahead, while Britain's contr-ibution to the Community rises year by year on minimum estimates from the net £65 million in 1973 to £230 million in 1977, to the intolerable and unbearable £400 million by 1980. CAP reform? Still more cogent than our experience of the short term economic effects of entryis the evidence that the last two years has offered on the Vialidity of the claims, long advanced by marketeers, that once Britain became a member of the EEC we could, " from within " bring about changes in the existing policies of the Six and introduce new policies which in their combined effect. would stronglybenefit the British interest. In fact, in recent years, there has not been any real reason to believe that "£rom with~n " Brtitain could significantly change the major features of the CAP. It was possible to hold this view during the 1961-63 Macmillan negotiations, when the CAP itself was onlypartially formed. It was still possible to believe this when Mr. Harold Wilson made his application in 1967,-.for although the CAP was by then closely defined, the crucial questions of its future financing and whether the policy itself wa:s to be permanent had st,iJl to be decided. Indeed, under the Treaty of Rome, itself, it was not until the 1 January 1970. when the long twelve year transitional peri:od .that the Six set themselves in 1958 f.inally expired, that the CAP could be permanently agreed. But, as all serious students of Europeanaffairs know, it was precisely the possibility of change " from within " duringthe trans,ition period that made certain the French veto on the British application, first in 1963, and again in 1967 ~and which prevented any new negotiation before January 1970 when the policy at last became permanent and the method of financing it was agreed in the separate Treaty of Luxembourg signed in February of that year. Britain's accepbance both of the CAP and the method of financing it-as indeed of all other EEC policies and laws-was the first demand made by the Six uponBritain when the Heath negotiationsbegan in June 1970. The British negotiators capitulated and their acceptance of the CAP is one of the major chapters in the Treaty of Accession. How then could the possibility of majorchange "from within" still exist? It springs from the fact that the policy itself has been frequently criticised not just in Britain but in continental Europe ; that many proposals have been made for changing it ; that it is so damaging and indeed, ridiculous in its effects that it cannot help but make enemies for itself. All this is true and many schemes for reform have been prepared by authors as distinguished and as varied as M. Pisani, a former Minister of Agrkulturein France, and Dr. Sicco ManshoH, the Dutch member of the Commission who for so long held the responsibility for agricultural affairs. His successor in the Brussels Commission, M. Lardinois, said as recently as the 8 June 1973 that if the crippling Community f.ood surplusescould not be contained, it could be " a deaTh blow to the institutions of the Community, including the Commission, the Parliament and the Council of Ministers.'' But what distinguishes all their efforts has been their total failure to make any impact on the policy itself. Over the years European farm populations will continue to decline but it win be very many years before, in most mainland countries, the farm population ceases to be a major political force, one that can be over ridden by the national governments concerned. And in addition, the national interests of two countries, France and Holland is strongly served by the · policy in its present form. Now they have been joined by two of the three new member states. Ireland and Denmar!Q who have major agricultural industries and who are also bound to benefit from the existing CAP. No ; the truth is that far from changing the CAP "from within," far from accelerating the gradual social and historical changes taking place in European agriculture, Britain's membership of the EEC ; will have the very opposite effeot. By ' providing a large new food market and by paying a wholly disproportionate share : of the CAP's costs, Britain will postpone · for many years the crisis of over production and insupportably costly dumping which the Six had already reached. Britain under the Treaty is indeed a , " second stomach " for Europe-althoughfilling it from the Continent will grievously affect our standard and cost of living, our balance of payments, our political connections with Commonwealth and other food producers and be a major blow to world trade in argicultural produce as countries in the " new worlds " of Australasia, North and . South America are forced to adjust to a wholly new and much reduced pattern of agricultuval trade. But, if changing " from within " is unrealistic is there not the possibility, in ·. the GATT trade talks that are to start in , Tokyo this Autumn, of negotiating away ; major features of the CAP in a manner helpful to our own interests? After all, should we not find our own interests in combatting a highly protectionist dear food policy inside the Community, joined with those of the usA, Canada, Australia, i New Zealand and aU the other food supplying countries who are seriously at risk through Community policy? Unhappily this is not to be. The originaldrruft negotiating mandate that the Brussels Commission submitted to the Council of Ministers in April 1973, in saying little on this matter, left openthe possibilities for wide ranging negotiat- ions. But the revised version producedunder direct French pressure, explicitlystated in May 1973: "The Community, faithful to the guidelines laid down for its own development and to its own responsibilities, will take part in these negotiations on the basis that those elements basic to its unity, thrat is, the customs union, and its common policies, in particular, the Common Agricultural ·Policy, cannot be called in question." On 26 June, the Council of Ministers went still further : not just the principles of the common agricultural policy but also its mechanisms were placed out ide 1 the GAIT negotiations. ' There can be no doubt that that is what the Common Market means. Sir Chris- 1 topher Soames, the Commissioner in . charge of the trade negotiations has said explicitly in reply to a question on the very point ; " we have said all along that the principles of the CAP and the mechanis·ms that make these principlesva'lid are not for negotiation ; they are ·what Europe needs for herself." a common regional policy? But what of the other great hope of the ,marketeers, a Community RegionalPoli'cy, one that would in its composition, its method of finance and in its prinoiples of expenditure ~Cl!rgely if not wholly, offset . the great burdens on Britain of the CAP? Here aga!in there is the susta:ining mythfor popular consumption and the debili- tating truths of the real world. To be sure • regional policy features in the summit communique of October 1972, and Mr. Commissioner Thompson has been given special responsibiUty for regional policy and a community regional fund is to be 7 set up. Surely here there is to be found promise of progress of the right kind? Alas, it is not so. The fact that the Com- munity of Six in the first twelve years of its life, a:dvanced in so many directions, but not at all towards a regional policy should in itself strike a warning note. For the truth is that Southern Italy apart, the Community of Six has no serious regional problems of the kind that we are familiar with in the United ~ingdom : that is to say, the problem of continuing u11ban unemployment of industrial workers. The regional problems of the Six are concerned with poverty on the land and the continuing drift of farm workers to the towns and to in- dustry. To meet some at least of the problems of the poor peasant farmer, a separate agnicultural fund has been set up under the CAP with a budget of some three hundred million dollars a year. That apart, under the Treaty of Paris which set up the European Coal and Steel Community, funds have been avail- able for rehousing and retraining miners where pits have been forced to close. Following the sharp contraction of the 1960s and the emerging new energyshortages, in Europe as in Britain, the period of large scale rundown is over. Far from there being any powerful pres- ure for developing any regional policy in the Six, the one major change affect- ing regional pol,icy agreed by the Six as recently as July 1971, was in the interests of so-called " fair competition "-to limit their own national regional expenditures and to submit them to a common disci- pline under the control of the Brussels Commission. The Community system draws a roughand ready line between so-called central (prosperous) areas and peripheral (declin- ing) areas and lays down limits to the amount and kind of aid that national Governments can grant industry in central areas. The peripheral areas are broadly, Southern Italy, Western and South-West France and the Eastern bor- der areas of West Germany. The main aim, it must be stressed, is i New Zealand and aU the other food supplying countries who are seriously at risk through Community policy? Unhappily this is not to be. The originaldrruft negotiating mandate that the Brussels Commission submitted to the Council of Ministers in April 1973, in saying little on this matter, left openthe possibilities for wide ranging negotiat- ions. But the revised version producedunder direct French pressure, explicitlystated in May 1973: "The Community, faithful to the guidelines laid down for its own development and to its own responsibilities, will take part in these negotiations on the basis that those elements basic to its unity, thrat is, the customs union, and its common policies, in particular, the Common Agricultural ·Policy, cannot be called in question." On 26 June, the Council of Ministers went still further : not just the principles of the common agricultural policy but also its mechanisms were placed out ide 1 the GAIT negotiations. ' There can be no doubt that that is what the Common Market means. Sir Chris- 1 topher Soames, the Commissioner in . charge of the trade negotiations has said explicitly in reply to a question on the very point ; " we have said all along that the principles of the CAP and the mechanis·ms that make these principlesva'lid are not for negotiation ; they are ·what Europe needs for herself." a common regional policy? But what of the other great hope of the ,marketeers, a Community RegionalPoli'cy, one that would in its composition, its method of finance and in its prinoiples of expenditure ~Cl!rgely if not wholly, offset . the great burdens on Britain of the CAP? Here aga!in there is the susta:ining mythfor popular consumption and the debili- tating truths of the real world. To be sure • regional policy features in the summit communique of October 1972, and Mr. Commissioner Thompson has been given special responsibiUty for regional policy and a community regional fund is to be 7 set up. Surely here there is to be found promise of progress of the right kind? Alas, it is not so. The fact that the Com- munity of Six in the first twelve years of its life, a:dvanced in so many directions, but not at all towards a regional policy should in itself strike a warning note. For the truth is that Southern Italy apart, the Community of Six has no serious regional problems of the kind that we are familiar with in the United ~ingdom : that is to say, the problem of continuing u11ban unemployment of industrial workers. The regional problems of the Six are concerned with poverty on the land and the continuing drift of farm workers to the towns and to in- dustry. To meet some at least of the problems of the poor peasant farmer, a separate agnicultural fund has been set up under the CAP with a budget of some three hundred million dollars a year. That apart, under the Treaty of Paris which set up the European Coal and Steel Community, funds have been avail- able for rehousing and retraining miners where pits have been forced to close. Following the sharp contraction of the 1960s and the emerging new energyshortages, in Europe as in Britain, the period of large scale rundown is over. Far from there being any powerful pres- ure for developing any regional policy in the Six, the one major change affect- ing regional pol,icy agreed by the Six as recently as July 1971, was in the interests of so-called " fair competition "-to limit their own national regional expenditures and to submit them to a common disci- pline under the control of the Brussels Commission. The Community system draws a roughand ready line between so-called central (prosperous) areas and peripheral (declin- ing) areas and lays down limits to the amount and kind of aid that national Governments can grant industry in central areas. The peripheral areas are broadly, Southern Italy, Western and South-West France and the Eastern bor- der areas of West Germany. The main aim, it must be stressed, is not to promote regional policy but in the interests of a more perfect market, in the interests of compebition policy, to limit possible " distortions " through state aids to industry for regional ends. This policy of limiting state regional aids is of course much more in tune with the basic structure and doctrine of the Rome Treaty which stresses the free movement of resources-trade, money, fir·ms and people to where expenditures are most profita;ble-ra:ther than the reverse process of taking work to the workers in disadvantaged regions. And this policy is now to be applied to Britain. The country with the most developed national regional policy is now to be disciplined and limited in its policies and expenditures in the interests of Community competition policy-notlater than at the end of 1974. What then lies behind the most recent talk about a common regional policy in the EEC? The Communique issued at the end of the summit conference in Paris last October makes absolutely plain what the purpose is, and what kind of policyit is to be. It is to make possible the formabion of an economic and monetaryunion in Europe and it is to be developed, step by step, with other measures that serve the same end. In case one should miss the point, the introduction to the Commission's report on regional problems, submitted to the Council of Ministers on 3 May 1973, begins by quoting the summit communique as follows : "The heads o.f state agreed that a high priority should be given to the aim of correcting within the Community, the structural and regionaf imbalances that ·might affect the realisation of economic and monetaryunion." So, fron1 its start, the new Communityregional policy is seen not primarily as a policy to be undertaken in its own rightand on its own merits-certainly not as a counter to the heavily unbalanced British contribution to the CAP--ibut only as part of a package involving further concessions on tax, interest rates, public expenditure and other fields of policy necessary to achieve economic and monetary union by 1980. What in detail these conditions will be have yet to be decided as indeed, has the regional policy itself. The latter however, which has now been agreed by the Commission-but which has yet to obta;in approval, the unanimous approval of the Council of Ministers-envisages a1 regional fund with an initial budget of 500 million units of account (£1 = 2.40 units of account) a year, rising to a 1,000 units a year in Year Three. These are substantial sums. But even Year Three expenditure, if and when it is approved, amounts to only 25 per cent of this year's expenditure on the CAP. So any belief that the 'One can offset the other cannot be sustained. More important however, no discussion has yet been held, no public proposal made on how the sums involved should be raised. But if, as is possible, they take the form of an increased contribution of VAT and if, as seems reasonaJbly certain, the areas to be assisted are characterised by low incomes and depopulation, as wen as byhigh unemployment and decLining industries, not only are Southern Italy and the whole of Ireland by far the most needy recipients of regional aid, with areas of Britain a poor third, but it is by no means clear that we should receive back any more than we contribute through increased VAT. It may be right for EEC irrcome to be redistributed in that waybut it would be folly for Britain to expect any thing more than a modest, even cosmetic contribution in the years ahead. Indeed, we shall do well if the net effect of the new Community regional policy and the new Community controls over our own regional policies gives us anyadvantage at all. a second Rome treaty It is at this point that we must look more closely at the goals and content of economic and monetary union or the still broader European union to which the heads of state of the rune govern ments pledged themselves at the Paris summit conference last October to . achieve by 1980. Clearly the Community is far from static. Having achieved most of the economic goals laid down in the Rome Treaty ; hav1ng that is, established an area in which trade, capital, firms and , people are free to move, an area in which certain common policies have been worked out for agriculture, coa11, steel and transport, an area, which for trade purposes acts towards the rest of the · world as a simple unit ; having in short achieved a customs union by 1970 the Common Market has set itself the aim of becoming an economic union in which all major powers of independent econo, mic action now residing with member states will vanish-at which point the third and final stage of a new West · European state will be entered. Specifically in the seven years that lie between Britruin's entry to the EEC and the achievements of its European union, the Community seeks to extend the area of com,mon policy so that it will cover all , · indirect taxes ; so that we shall have not only a common VAT on goods and ·services, but common excise duties on spirits, wines, beers and tobacco and of course a common tax policy for corporate profits. Whether other taxes will need to be harmonised before the avowed goal . of the " abolition of fiscal frontiers " can be reached, is not yet clear, but those , , mentioned are certa:inly the main objec tives. This will mean for Britain the end of our existing zero .rating of food and other necessities under VAT and certainly an increase in its rate-at present the lowest in Europe. It will have majoradverse effects on the dist.flibution of , income, most of all for the poorest section of our community. . But economic union means more than a common fiscal area. It means specifically the abandonment of the right of member states to decide the exchange rates of their own currencies. There will be no more devaluations or revaluations and a common EEC currency will emerge together with a progressive merging of the gold and foreign currency reserves of member states. On all the evidence that we have, not only of post war trends in productivity and competitiveness but of forseeable future developments, the loss of this economic weapon would put this country in the utmost peril. We have only to recall what would have happened if, say in 1967, we had not been able to devalue by 14 per cent and again to devalue, through the mechanism of a downward float since June 1972 by a further 18 per cent, to realise the gravity of such a step. Painful as currency devaluations have proved to be, they have at least enabled us to pay our way in the world and to restore price competitiveness in British industry. Without such paritychanges industry would have been forced to shut down on a massive scale, unemployment would have become endemic and an ever increasing number of British people driven from their homes and their country in search of work. Against this danger no conceivable regionalpolicy, no pooling of reserves, could hope to protect us. Finally, economic union means the common determination of macro-economic policy-including counter inflation policy, monetary policy, interest rates, budgetdeficit or surplus as well as the rule of Brussels on state interventions in both regional and industrial policies. It may well be that the EEC will not in the event achieve all these goals by 1980, but significant advances will undoubtedly be made and control of British Governments over the affairs of this countrywill correspondingly diminish. why is Britain so disadvantaged ? But why, it will be asked, does Britain appear to be so uniquely disadvantaged? Why is it that other member states who will be experiencing broadly the same developments, can contemplate them 10 with equanimity-in some cases with relish? The answers are to be found in the Treaty of Accession itself ; in the mechanism for decision making that are built-in to the Community and, at the very core, the special characteristics of Britain, that have emerged fro·m our own history and situation. On the first point, the Treaty of Acces- sion is not just a bad treaty, not just a bad bargain for Britain in that its net effects, the balance of loss against gain, is heavily adverse. It is in fact a disaster. Leave aside the continental dear food policy with all its direct effects on livingstandards in Britain and the size of our import bill and the pace of our inflation. The payments that we have to make to the Community budget alone-£700 million net in five years, £2,000 million in ten year.s---1ake us out of the realm of ordinary dealings between equal, let alone friendly, staltes. It takes us into an area of surrender on the one hand, dictat on the other ; into something akin to reparations pay- ments of the kind which Prussia imposed upon France in 1870 and which the victorious allies imposed upon Germany at Versailles in 1919. But the Treaty is not just about payments, however heavy. Many other matters of great moment to Britain and her friends are deliberately left in abeyance under its terms-to be decided in two, three, four, five years time-matters on which Britain will inevitably be in a minority. The comm·on regional policy still to be formed is just one example of this. Another, is the arrangement to be made for Commonwealth sugar by 1975, for New Zealand by 1977, for British fisheries by 1980. On all these questions Britain has been allowed transition periods in the Treaty of Accession to continue her presentarrangements. All are in conflict with the settled policies and interests of the Six. So, if Britain wants to be able to buy suga:r from the West Indies after 1974-and not buy instead surplus beet sugar in Europe-she has to persuade her partners to allow her to do so. W G rna y succeed, but there will be a price to be paid, a concession to be ef{.acted somewhere else. Again, if New Zealand is to be able to go on seUing us butte.r after 1977 while cold stores of con· tinental Europe burst open with the volume of surplus Community butter! we will have to persuade our Community partners to allow us to go on importing1 It will not be easy. Meanwhile BritJish diplomacy is para- lysed. F{'ance proceeds with its out- rageous testing of nuclear devices in the atmosphere of the South Pacific agains the vehement protest of New Zealand, Australia, Fiji and Samoa, against the interim ruling of the International Court, and in defiance of the 1961 Test Ban Treaty. And Britain? An embarrassed public mutter of protest from Heath and Home, offset no doubt by private assur- ances to President Pompidou. But what else can they do? France has , made it clear, brutally so, that if New Zealand does not toe the line, if she will , not gag her protests, then her hopes of · selling dairy products to Britain after 1977, will be dim indeed. This brings us to the process of decision making in the Community. What few people have understood is that the pro- cess itself, the national veto on community decisions guarantees the continuation of the great disadvantages thalt we suffer from the Treaty of Accession and from the main community policies agreedbefore our entry. The CAP and those other policies that are so injurous. to us can a only be changed if there is unanimous agreement among the member states. Each member has a veto on changing what has already been agreed. In the glast resort, Britain-even if backed by all gthe other member states-could not · r change the CAP from within if one mem- ber state failed to agree. Neither France nor Holland are likely to permit it. c p ' lcBut just as the veto prevents changes in existing policies, so equally it prevents · ~ Britain from working out and imple- menting new policies, which might be to u 10 with equanimity-in some cases with relish? The answers are to be found in the Treaty of Accession itself ; in the mechanism for decision making that are built-in to the Community and, at the very core, the special characteristics of Britain, that have emerged fro·m our own history and situation. On the first point, the Treaty of Acces- sion is not just a bad treaty, not just a bad bargain for Britain in that its net effects, the balance of loss against gain, is heavily adverse. It is in fact a disaster. Leave aside the continental dear food policy with all its direct effects on livingstandards in Britain and the size of our import bill and the pace of our inflation. The payments that we have to make to the Community budget alone-£700 million net in five years, £2,000 million in ten year.s---1ake us out of the realm of ordinary dealings between equal, let alone friendly, staltes. It takes us into an area of surrender on the one hand, dictat on the other ; into something akin to reparations pay- ments of the kind which Prussia imposed upon France in 1870 and which the victorious allies imposed upon Germany at Versailles in 1919. But the Treaty is not just about payments, however heavy. Many other matters of great moment to Britain and her friends are deliberately left in abeyance under its terms-to be decided in two, three, four, five years time-matters on which Britain will inevitably be in a minority. The comm·on regional policy still to be formed is just one example of this. Another, is the arrangement to be made for Commonwealth sugar by 1975, for New Zealand by 1977, for British fisheries by 1980. On all these questions Britain has been allowed transition periods in the Treaty of Accession to continue her presentarrangements. All are in conflict with the settled policies and interests of the Six. So, if Britain wants to be able to buy suga:r from the West Indies after 1974-and not buy instead surplus beet sugar in Europe-she has to persuade her partners to allow her to do so. W G rna y succeed, but there will be a price to be paid, a concession to be ef{.acted somewhere else. Again, if New Zealand is to be able to go on seUing us butte.r after 1977 while cold stores of con· tinental Europe burst open with the volume of surplus Community butter! we will have to persuade our Community partners to allow us to go on importing1 It will not be easy. Meanwhile BritJish diplomacy is para- lysed. F{'ance proceeds with its out- rageous testing of nuclear devices in the atmosphere of the South Pacific agains the vehement protest of New Zealand, Australia, Fiji and Samoa, against the interim ruling of the International Court, and in defiance of the 1961 Test Ban Treaty. And Britain? An embarrassed public mutter of protest from Heath and Home, offset no doubt by private assur- ances to President Pompidou. But what else can they do? France has , made it clear, brutally so, that if New Zealand does not toe the line, if she will , not gag her protests, then her hopes of · selling dairy products to Britain after 1977, will be dim indeed. This brings us to the process of decision making in the Community. What few people have understood is that the pro- cess itself, the national veto on community decisions guarantees the continuation of the great disadvantages thalt we suffer from the Treaty of Accession and from the main community policies agreedbefore our entry. The CAP and those other policies that are so injurous. to us can a only be changed if there is unanimous agreement among the member states. Each member has a veto on changing what has already been agreed. In the glast resort, Britain-even if backed by all gthe other member states-could not · r change the CAP from within if one mem- ber state failed to agree. Neither France nor Holland are likely to permit it. c p ' lcBut just as the veto prevents changes in existing policies, so equally it prevents · ~ Britain from working out and imple- menting new policies, which might be to u our advantage and thus offset the adverse effects of the CAP, unless we can obtain the unanimous--consent of the other 8. Thus, in theory, it is possible to devise a regional policy which concentrates on helping poor industrial areas rather than agricultural areas ; one thl!Jt was financed in such a way that what Britain paid in was massively outweighed by what the fund paid out in Britain's regions. But such a policy would need not just an agreement by a majority of countries in the EEC-and in most of these countries the regional problem is mainly agricultural- it would need the consent of them all. One nation would be able to limit, by its veto the size of the fund, the method of financing it and the criteria for deciding its expenditure. An advantageous common regional policy might have been negotiated before Britain joined as part of the terms of entry in exchange for accepting the CAP-but it is idle now to imagine that anything more than a token benefit will come forth ; or if more than a token, that it will not have to be paid for by us in some fresh but equivalent concession. And this brings us to the heart of the matter. The formation of a customs union, let alone an Economic Union in Western Europe was always bound to be of peculiar difficulty for Britain. The reason lies in the fact that for 400 years, our interests in commerce, the flow of our money, our trade and our people has been oceanic not continental ; Europe, for us, has been only one of five continents with which we are linked as closely as we are to Europe itself. So it was only possible from the start for Britain to join if a serious and genuine effort was made to close the gap between Britain and the Continent that history itself had opened up. Otherwise, if we were simply to conform or be compelled to conform to Continental policies, we should suffer great and lasting damage. This is what has happened ; that is why the Treaty and the arrangements are so disastrous. In imposing their will on Mr. Heath's Government, the Six have done something more : they have shown that the EEC itself is not a "community," that it is only a market. For they have treated us, in the terms they have exacted, not as a friend to be helped, but as a rival to be weakened and disadvantaged. 3. can we breal< free? To argue and to conclude that 1t is in the vital interest of the British people to be rid of a large part of the Treaty of Acces- sion, that the disadvantages of EEC membership have been 1immediate and heavy and are likely to grow ever more burdensome in the years ahead--this is only a prelude to posing the first of manycrucial questions : can we, have we still the right and the power, to insist upona fundamental renegotiation of the terms of our membership and-because it is inseparably l1inked-if we fail. in that endeavour, have we still the right to withdraw from the BEe? the right to secede It used to be said that Parliament was sovereign : that there was nothing that, within the territories of the United King- dom, it could not by law accomplish ; equaHy, that there was no other authority either inside the United Kingdom or out- side which had powers superior to the British Parliament. When Britain made treaties with other countries, their obligations and limitations were accepted, but Padiament always retained the right to disown those treaties or to modifythem whenever it had reason to do so. On this basis, therefore, one might assume that no constitutional obstacle existed to our withdrawing from a treaty such as the Treaty of Accession, although of course, political and economic con- sequences would need to be carefullyconsidered. But to assert this Parlia- mentary right, without further examin- ation, is to ignore the special nature of of the Treaty of Accession and the under- lying Paris and Rome treaties and the transfer of Parliamentary power that they specifically env1isage. For the treaties contain two special characteristics : first, they contain no provision for with- drawal; no provision whereby-as is usual in international treaties-either n.otice of withdrawal can be given by signatory states if the treaty itself is indeterminate in length or, frequently, whereby renewal is needed after a set period of years. (The Treaty of Rome says neither that secession is possible nor that it is impossible. There is therefore real room for doubt whether legallysecession would involve a breach of Treaty). Second and still more important, the Treaty of Accession transfers to the institutions of the European Communi- ties, to the Council of Ministers and its Commission, acting together or separ- ately, the right to make laws in the United Kingdom and throughout the Community ; the right to raise taxes and spend monies in the United King- dom ; the right to determine disputes in the European Court that may f!ise on! questions .of interpretation and juris- diction between a British government and other Community governments or be- tween Britain and the other institutions of the Community. In short, signature of the treaties and membership of the Commun1ities impose on Britain, something akin to a written constitution which seeks to seriously cur- tail the previously unlimited sovereignty of Parliament. The nature, extent and form of the transfer of power that is involved was compressed into the bitterlycontested Olause 2 (1) of the European · Communities Act of 1972, which says: · " All such rights, powers, lia!bilities, obligations and restrictions from time to time created or arising by or under the treaties . . . as in accordance with the • treaties are without further enactment to · be given legal affect or used in the United Kingdom, shal]l be recognised and available in law, and be enforced, allowed and fotlowed accordingly." l.lhe rights and powers transfered are not limited to those under the present treaties of the BEe-not only the Rome, ' Paris and Luxembourg treaties but the dozens of additional and secondarytreaties that have been spawned in the past 12 years-but extend to further rights and powers " from time to time created" and similarly transferred under ·. future EEC treaties. I It will a!lso be noted that the rights and powers, thus transfered by Parliament and which can henceforth be exercised . by the institutions of the BEe in the form of " regulations " and " decisions, need no " further enactment " here, do not · 3. can we breal< free? To argue and to conclude that 1t is in the vital interest of the British people to be rid of a large part of the Treaty of Acces- sion, that the disadvantages of EEC membership have been 1immediate and heavy and are likely to grow ever more burdensome in the years ahead--this is only a prelude to posing the first of manycrucial questions : can we, have we still the right and the power, to insist upona fundamental renegotiation of the terms of our membership and-because it is inseparably l1inked-if we fail. in that endeavour, have we still the right to withdraw from the BEe? the right to secede It used to be said that Parliament was sovereign : that there was nothing that, within the territories of the United King- dom, it could not by law accomplish ; equaHy, that there was no other authority either inside the United Kingdom or out- side which had powers superior to the British Parliament. When Britain made treaties with other countries, their obligations and limitations were accepted, but Padiament always retained the right to disown those treaties or to modifythem whenever it had reason to do so. On this basis, therefore, one might assume that no constitutional obstacle existed to our withdrawing from a treaty such as the Treaty of Accession, although of course, political and economic con- sequences would need to be carefullyconsidered. But to assert this Parlia- mentary right, without further examin- ation, is to ignore the special nature of of the Treaty of Accession and the under- lying Paris and Rome treaties and the transfer of Parliamentary power that they specifically env1isage. For the treaties contain two special characteristics : first, they contain no provision for with- drawal; no provision whereby-as is usual in international treaties-either n.otice of withdrawal can be given by signatory states if the treaty itself is indeterminate in length or, frequently, whereby renewal is needed after a set period of years. (The Treaty of Rome says neither that secession is possible nor that it is impossible. There is therefore real room for doubt whether legallysecession would involve a breach of Treaty). Second and still more important, the Treaty of Accession transfers to the institutions of the European Communi- ties, to the Council of Ministers and its Commission, acting together or separ- ately, the right to make laws in the United Kingdom and throughout the Community ; the right to raise taxes and spend monies in the United King- dom ; the right to determine disputes in the European Court that may f!ise on! questions .of interpretation and juris- diction between a British government and other Community governments or be- tween Britain and the other institutions of the Community. In short, signature of the treaties and membership of the Commun1ities impose on Britain, something akin to a written constitution which seeks to seriously cur- tail the previously unlimited sovereignty of Parliament. The nature, extent and form of the transfer of power that is involved was compressed into the bitterlycontested Olause 2 (1) of the European · Communities Act of 1972, which says: · " All such rights, powers, lia!bilities, obligations and restrictions from time to time created or arising by or under the treaties . . . as in accordance with the • treaties are without further enactment to · be given legal affect or used in the United Kingdom, shal]l be recognised and available in law, and be enforced, allowed and fotlowed accordingly." l.lhe rights and powers transfered are not limited to those under the present treaties of the BEe-not only the Rome, ' Paris and Luxembourg treaties but the dozens of additional and secondarytreaties that have been spawned in the past 12 years-but extend to further rights and powers " from time to time created" and similarly transferred under ·. future EEC treaties. I It will a!lso be noted that the rights and powers, thus transfered by Parliament and which can henceforth be exercised . by the institutions of the BEe in the form of " regulations " and " decisions, need no " further enactment " here, do not · require even the opinion of, let alone the consent of the British Parliament. The question of conflict between Com- munity law and British law was sub- sequently dealt with in Clause 2 (4) of the same European Act. When such con- £1ict arises, it is the Community law, not the British law, which has precedence and the British courts, faced with rival claims, must rule accordingly. Needless to say, the question of such conflicts and more seriously the right to secede were raised and pursued during the debate on the BilL At first, uncertainly and then reluctantly, minister after minti- . ster was forced to concede that al~hough the intention of the Act was faithfullyto enact the powers conceded to the Com- . munrity in the Rome and other treaties, that although to change it would mean a breach of our treaty obligations, that : although Olause 2 (4) gave primacy to the Community in any inadvertent clash be- tween English and Community law, yet, nevertheless, Parliament, provided its intention was clear, had, and would retain, the sovereign right to repea:l the Act, to break the treaties-and that the British · courts of law would rule as Parliament directed. Thus, in spite of aU the great anxieties that were felt, there can be no doubt that, on the authority of the Lord Chancellor downwa,rds, the sovereignty of Padia- , ment has been retained. While no analogy . can properly be drawn because there is nothing remotely comparable in scale and nature to the transfer of Parlia- mentary power that membership of the EEC involves, the position is still basically 1 that of PaJ!liament leasing its powers as it frequently does to various authorities inside the United K!ingdom-and retain- ing its power to call in that lease when it decides to do so. The matter was finatly and decisively settled early this year during the Counter Inflation Bill which imposes price restraint on all manu- • facturing industries, except steel, whioh comes under the special provisions of Community law, when it was pressed to a point of definition and precision. For the Government, the Chief Secre- 13 tary to the Treasury, Mr. Patrick Jenkin said : " I accept that it would be open to those in any subsequent Parliament to pass legislation . . . that would have the effect of contravening ·our Communityobligation and overriding the provisions of Clause 2 of the European Co,mmunities Act. All one can say about that is that having regard to the provisions, parti- cularly to section 2 ( 4) that would require the most positive clear and express pro- vision," It is important to stress this point, not just because doubt existed in the UK and in Parliament itself until the very end of the debates upon the Euro- pean Communities Bill, but because of the still greater confusion and doubt that exists on this matter in the EEC. It would be unwise to generalise about the traditions of Continental parliaments in their very different constitutions, but it seems clear from speeches made byDr. Mansholt, when President of the Brussels Commission that he did not understand what may be a peculiar fea- ture of the British Constitution : the absolute sovereignty of Parliament and the inability of one Parliament to bind its successors. Moreover, his own misunder- standing seems to be widely shared by other Community spokesmen. To assert then, that we have the right or power to amend or repeal the European Communities Act and to prevent the operation of the Treaty and its laws and policies in the UK is undoubtedly correct. Before turning no the practical questions that would at once arise if we were to exercise this option, it is important to cons,ider the morality of repeal, the morality of breaking a treaty which has no provision for a withdrawal by a member state. No one in public life in any C1ountry should lightly embark upon treaty breaking. In Britain respect for the rule of law is particularly strong and is a ~major bulwark of the internal stabilityof our society and our external relations with other states. But it is precisely because treaties which are far reaching in their soope need the broad acceptance of HM Government and HM Opposition if they are to be sustained require even the opinion of, let alone the consent of the British Parliament. The question of conflict between Com- munity law and British law was sub- sequently dealt with in Clause 2 (4) of the same European Act. When such con- £1ict arises, it is the Community law, not the British law, which has precedence and the British courts, faced with rival claims, must rule accordingly. Needless to say, the question of such conflicts and more seriously the right to secede were raised and pursued during the debate on the BilL At first, uncertainly and then reluctantly, minister after minti- . ster was forced to concede that al~hough the intention of the Act was faithfullyto enact the powers conceded to the Com- . munrity in the Rome and other treaties, that although to change it would mean a breach of our treaty obligations, that : although Olause 2 (4) gave primacy to the Community in any inadvertent clash be- tween English and Community law, yet, nevertheless, Parliament, provided its intention was clear, had, and would retain, the sovereign right to repea:l the Act, to break the treaties-and that the British · courts of law would rule as Parliament directed. Thus, in spite of aU the great anxieties that were felt, there can be no doubt that, on the authority of the Lord Chancellor downwa,rds, the sovereignty of Padia- , ment has been retained. While no analogy . can properly be drawn because there is nothing remotely comparable in scale and nature to the transfer of Parlia- mentary power that membership of the EEC involves, the position is still basically 1 that of PaJ!liament leasing its powers as it frequently does to various authorities inside the United K!ingdom-and retain- ing its power to call in that lease when it decides to do so. The matter was finatly and decisively settled early this year during the Counter Inflation Bill which imposes price restraint on all manu- • facturing industries, except steel, whioh comes under the special provisions of Community law, when it was pressed to a point of definition and precision. For the Government, the Chief Secre- 13 tary to the Treasury, Mr. Patrick Jenkin said : " I accept that it would be open to those in any subsequent Parliament to pass legislation . . . that would have the effect of contravening ·our Communityobligation and overriding the provisions of Clause 2 of the European Co,mmunities Act. All one can say about that is that having regard to the provisions, parti- cularly to section 2 ( 4) that would require the most positive clear and express pro- vision," It is important to stress this point, not just because doubt existed in the UK and in Parliament itself until the very end of the debates upon the Euro- pean Communities Bill, but because of the still greater confusion and doubt that exists on this matter in the EEC. It would be unwise to generalise about the traditions of Continental parliaments in their very different constitutions, but it seems clear from speeches made byDr. Mansholt, when President of the Brussels Commission that he did not understand what may be a peculiar fea- ture of the British Constitution : the absolute sovereignty of Parliament and the inability of one Parliament to bind its successors. Moreover, his own misunder- standing seems to be widely shared by other Community spokesmen. To assert then, that we have the right or power to amend or repeal the European Communities Act and to prevent the operation of the Treaty and its laws and policies in the UK is undoubtedly correct. Before turning no the practical questions that would at once arise if we were to exercise this option, it is important to cons,ider the morality of repeal, the morality of breaking a treaty which has no provision for a withdrawal by a member state. No one in public life in any C1ountry should lightly embark upon treaty breaking. In Britain respect for the rule of law is particularly strong and is a ~major bulwark of the internal stabilityof our society and our external relations with other states. But it is precisely because treaties which are far reaching in their soope need the broad acceptance of HM Government and HM Opposition if they are to be sustained that the convention has grown up-andhas hitherto been strongly adhered to, in the post-war period---'that major Treatycommitments are not embarked uponwithout bi-partisan support of the majorparties. This was the case with the North Atlantic Treaty, with the Brussels Treaty, with the test ban and non-proliferationtreaties, with the treaty establishing EFfA. With the Treaty of Accession, bipartisan support was more importantstill-for as we have seen, it not onlyinvolves far reaching obHgations and agreements affecting directly eight other countries in the EEC and indirectly manymore, including our erstwhile partners in EFfA and the Commonwealth, but unlike other treaties, it transfers major law and policy making powers from Parliament to the Council and Commission in Europe. Her Majesty's Opposition did not consent to this treaty or to the European Communities Bill and voted against it not just on second and third readings but on every clause and on every serious amendment on which a vote was allowed. To go ahead in these circumstances was to break a strong constitutional convention that no major changes, unless they are ~greed between Government and Opposition affecting the Consitution shall take place without the people voting uponthem. From the day the Treaty was signed on 22 January 1972, the Government has known and the governments of Europe have known that the official Opposition is determ·ined to change the Treaty and to put the whole issue orf membershipbefore the British people. There can be no q~estion therefore of Labour acting uneth1~ally or unconstitutionally in repealmg the European Communities Act -or in breaking the Treaty of Accession itself. the price of freedom To assert that we can change the Treaty, that we can come out to establish that constitutionally and legally the power remains with the British Parliament and people is to surmount only the first hurdle. Next are the political and economic obstacles that lie ahead. Of course there will be a price to pay. . To assess it however, is difficult-and not least because the tangible component is probrubly less important than the intangible. In particular, it is undoubtedly true that the hopes and ambitions of a large section of the British establishment, in the universities, in politics, in the foreignand domestic service of the state are increasingly centred on Britain in Europe-and that the reversal or removal of this central assumption about our future would be a source of great disturbance to them. But equally, it is true that the capture of the British establishment by the Market cause has been relatively · recent, and that disenchantment is already setting in. Far more important, the appealof the Common Market has been narrowly confined to a small but highly . influential minority while the majoritysentiment and instinct of the British people has been-and is-powerfullyopposed. Any estimate therefore of the 1 loss of elan that the minority might feel, . must be weighed against the great sense . of relief that the majority will un-1 doubtedly share. the timetable of the treaty In the short term the tangible and measur-. able costs of withdrawing in whole or in part from the Treaty's provisions would be small. The main reason is plain. Even if the election is delayed until the last day of the last month of a full five yearParMament, Britctin will only be half way through its five year transitional period of entry. And the fact is that the serious commitments and the more onerous effects can be ~expected in the second rather than the first part of the entry · period. The Treaty of Accession laysdown a basic 5 year period of adjustmentbeginning on the 1 January 1973, duringwhich Britain is to harmonise and adjust its policies and practices with those of the Six. This is the period allowed for the abolition of tariffs between the UK and the Six as well as for the adjustment of the UK tariff with other countries, including Commonwea!lth countries, to .ithe levels set by the common external tariff ( CET). Again, five years is the period 1 allowed for the upward adjustment of Britain's main food prices so that they are aligned with those of the Six. On some of the more sensitive matters • covered in the Treaty negotiations, separate timetables were agreed. Some are lengthier than the basic five years, others are shorter. Thus New Zealand butter bought by Britain is to be reduced . by 20 per cent in volume and cheese by 80 per cent between 1973 and 1978 and thereafter the Community as a whole is to decide rfor how long-and how much ~e shall rbe allowed to import New Zealand butter. Again, the agreement on fisheries is to rlast until 1980 when new rules will come into effect. On t!he other hand, new arrangementshave to be made for Commonwealth sugar ·on a much shorter time scale- well within the first two years. The supplyof cane sugar, the 1.4 million tons a year that Britain imports from the West Indies, Mauritious, India and elsewhere · under the Commonwealth Sugar Agree- ment will continue until that Agreement1 expires in February 1975. But, before then, the future sugar policy of the Community is to be decided rand decided collectively-including of course the crucial question of for how long Britain can continue to import the 1.4 million tons involved. The timetable for liberalising capitalmovements is more flexible ; substantial liberalisation took place in advance of membership in the Budget of March 1972 . for direct company investment. Personal capital movements, the transfer of per- sonei!l wealth in all. its forms from the UK to the Continent, whether or not the per:son concerned is emigrating, must be rfreed tby the 1 July 1975. Portfolio investments however do not need to be freed until. 1978. Most important, the arrangements yetto be negotiated between the developing Commonwealth countries in Africa and 15 the Carrrbean and the EEC and the arrangements rbetween Britain and the 1exMsbing AOTS, the signatories of the Yaounde Convention, will not take effect, if at all, before 1975. The British gener- alised preference scheme however is due to 1be merged with that of the Communityby 1974. One ·of the eadiest and most damaging effects of the Treaty, the control of Britain's own ·regional policy by Com- munity decision, scheduled under Article 154 of the Treaty of Accession for the 1 July 1973, has, through fear of an explosion of .British resentment, been postponed until the beginning of 1975. Although it is true that in politics, econo- mics and industry, decision making inevit- ably takes account of agreements already reached and tries to anticipate the next steps, it is certain that the interminglingof the UK economy with that of the Community, ~he change in our patternof trade and investment, the new move- ments orf labour in and out of EEC, the ·historic switch in the sources of our food supply-all the great changes that are involved in EEC membership have only just begun and we sha!ll not have reached the half way point in our basic trans~itional period before, at the latest date, the next general election intervenes. In short, by the time the next election comes, very little that is irreversible will have been achieved. We shall still be eating New Zealand butter, cheese and lamb; stirring cane sugar in our cupsof tea ; still according and receiving pre- ferences in our t·rade with other advanced Commonwealth countries; still. con- trolling our own regional, monetary and capital policies. Above all, we shaH still have the ·outlook and expectations of an independant and sovereign democracy. Five years iater it could well be a different story. Not only would Britain be fully harmonised with all the existing policies of the Six, but we would be still more deeply enmeshed in the Economic Union, towards which the EEC leaders are urgently pushing. Thus no serious industrial and commer- of the UK tariff with other countries, including Commonwea!lth countries, to .ithe levels set by the common external tariff ( CET). Again, five years is the period 1 allowed for the upward adjustment of Britain's main food prices so that they are aligned with those of the Six. On some of the more sensitive matters • covered in the Treaty negotiations, separate timetables were agreed. Some are lengthier than the basic five years, others are shorter. Thus New Zealand butter bought by Britain is to be reduced . by 20 per cent in volume and cheese by 80 per cent between 1973 and 1978 and thereafter the Community as a whole is to decide rfor how long-and how much ~e shall rbe allowed to import New Zealand butter. Again, the agreement on fisheries is to rlast until 1980 when new rules will come into effect. On t!he other hand, new arrangementshave to be made for Commonwealth sugar ·on a much shorter time scale- well within the first two years. The supplyof cane sugar, the 1.4 million tons a year that Britain imports from the West Indies, Mauritious, India and elsewhere · under the Commonwealth Sugar Agree- ment will continue until that Agreement1 expires in February 1975. But, before then, the future sugar policy of the Community is to be decided rand decided collectively-including of course the crucial question of for how long Britain can continue to import the 1.4 million tons involved. The timetable for liberalising capitalmovements is more flexible ; substantial liberalisation took place in advance of membership in the Budget of March 1972 . for direct company investment. Personal capital movements, the transfer of per- sonei!l wealth in all. its forms from the UK to the Continent, whether or not the per:son concerned is emigrating, must be rfreed tby the 1 July 1975. Portfolio investments however do not need to be freed until. 1978. Most important, the arrangements yetto be negotiated between the developing Commonwealth countries in Africa and 15 the Carrrbean and the EEC and the arrangements rbetween Britain and the 1exMsbing AOTS, the signatories of the Yaounde Convention, will not take effect, if at all, before 1975. The British gener- alised preference scheme however is due to 1be merged with that of the Communityby 1974. One ·of the eadiest and most damaging effects of the Treaty, the control of Britain's own ·regional policy by Com- munity decision, scheduled under Article 154 of the Treaty of Accession for the 1 July 1973, has, through fear of an explosion of .British resentment, been postponed until the beginning of 1975. Although it is true that in politics, econo- mics and industry, decision making inevit- ably takes account of agreements already reached and tries to anticipate the next steps, it is certain that the interminglingof the UK economy with that of the Community, ~he change in our patternof trade and investment, the new move- ments orf labour in and out of EEC, the ·historic switch in the sources of our food supply-all the great changes that are involved in EEC membership have only just begun and we sha!ll not have reached the half way point in our basic trans~itional period before, at the latest date, the next general election intervenes. In short, by the time the next election comes, very little that is irreversible will have been achieved. We shall still be eating New Zealand butter, cheese and lamb; stirring cane sugar in our cupsof tea ; still according and receiving pre- ferences in our t·rade with other advanced Commonwealth countries; still. con- trolling our own regional, monetary and capital policies. Above all, we shaH still have the ·outlook and expectations of an independant and sovereign democracy. Five years iater it could well be a different story. Not only would Britain be fully harmonised with all the existing policies of the Six, but we would be still more deeply enmeshed in the Economic Union, towards which the EEC leaders are urgently pushing. Thus no serious industrial and commer- cial dislocation would be involved in any decision made to reverse the course of entry at the next general election. This however is not to say that there will not be any reprecussions at all. There would be nervousness and uncertainty in the capital market and some danger of substantial outward movement of money. At other times in our post war history, such possibilities might have loomed large in our national consciousness but today, with the partial defence of a floatingpound, the risks are much diminished. Still more, they are quite outweighed by the much greater threat of pegging the pound and rejoining the " snake in the tunnel" arrangements of the EEC, the inevitable consequences of continued membership. And against these uncertain losses, there are the clear, massive and measurable savings that withdrawal from the majoreconomic commitments of our Treaty of Accession will bring. In the first five years, assuming the period 1975-79, we shaH save on our net contribution to the BEe's Budget at least £1000 million and in the following five years at least £1,500 million more. In addition the resumption of stricter control over capital movements would, if the past three years are anyguide, save us something of the order of £300 million a year in foreign exchanges. isolation? But would not Britain, by re-asserting her independence lose friends, perhaps even make enemies and be increasingly isolated in world affairs? Would we not become as Lord Jellicoe once said, " a mere feather in the scale of events?" Most of the fears of political and economic isolation are pure fantasy. To begin with only 25 per cent of our trade and much less of our investment is with the countries of the Community. Marginal losses in the Western EuropeanMarket, if they occurred at all, could certainly be compensated for by gains in those other markets where 75 per cent of our trade is transacted. But, in any event, world trade is still increasing and the trend, despite repeated alarms, is still towards more free and open trade. Moreover, we should of course remain a full member of GAIT, the IMP, the OECD, the Commonwealth Preference System and it would be open to us-and almost certainly acceptable to its existing members-to rejoin the EFTA. Exaggerated fears are also expressedabout the possible and hostile reaction of multi-national corporations if Britain was to withdraw from the EEC. The fact is that our market is much too large for any firm, however large to ignore, and we shall continue to attract substantial investment from multi-national companies whether in or out of the EEC. Further, the capacity of such firms to exercise pres-· sure on a British Government or even upon their own work force by threats of closure or non-investment have in three recent test cases, Ford, Chrysler, and Perkins been shown to have a large . element of bluff about them. If it is argued that their policies require , action by a number of states acting to-. gether, then that is a weak argument for staying in the EEC which in fifteen years has done nothing whatever about them, but a strong argument for an international convention on the lines of the GAIT, as recommended in the recent UN Report. Such a convention would include the United States and the other main countries of the OECD where the headquarters of most multi-nationals are situated, and would be concerned both to concert national policies and to work out an agreed code of practice. As for defence and security, in spite of the astonishing claim in the 1971 White Paper that membership was essential to Britain's security, the EEC has, as every one knows no role in these matters- and is unl,ikely to have one, in spite of Mr. Heath's secret yearning for an Anglo-French nuclear deterent, for many years ahead. Meanwhile we are and will remain members of NATO and will continue to play our part in this and other security systems just as long as they are needed. There is therefore no prospectof Britain being isolated either politically or economically if we withdrew from the EEC. Of course there are those who take the view 'that in the world of today and tomorrow only political entities of 200 miH.ion 01" more people can hope to survive. This is the conclusion that superficial minds have drawn from the earlypost-war pre-eminence of the USA and ' the ussR and, too from the emergingnew powers of Ohina and Japan. In the long and complex unfolding of history, no one can be sure. But if they are right, if mankind has ·really to 1be grouped into blocs of 200 million or mnre then, the process should start with the 120 other sovereign nations that exist, much smaller, much poorer, much iess powerful than Britain, and who apparently have no wish or intention of ceasing to exist. But equally, such assessments may proveprofoundly wrong. It may well. be that size will lead not so much to increased power but to inoreasing difficulty in achieving effective policies abroad and coherence at home. Indeed from what we know of the internal strains in the USA, the ussR and China in recent years, who can doubt that the late seventies and eighties will prove to 1be a " time of trouble " for the super powers. But what matters above all., as states as different and as small as Fin'land, ~ugoslavia Vietnam and Israel, have shown is tJhe will. of a nation to be self governing, the desire of a people to be free. ' There is no need for socialists to apologise for such sentiments. Indeed nothing is more extraordinary in this long argument about Europe than that so manypro-marketeers, who have themselves for the previous 25 years passionatelyespoused the cause of self-governmentthroughout the world, should now dis·miss as without value for Brita·in what they stifil regard as the greatest prize for the rest of mankind! And it is sheer mudcNe f headedness for such people to fail to distinguish between the legitimate and praiseworthy desire ~by a people to rule themselves in freedom with the reprehensible and illegitimate desire of one nation to rule and dominate another. One ·of the ironies of the past two years, the period that has elapsed since tJhe notorious White Paper on EEC membership was issued, in the two years since the pro-Market chorus reached its crescendo of gloom about the continued separate existance of Britain, is that two major linked events have occurred that have greatly enhanced the basic strength of the UK-Jand have ·gready weakened the position of lboth the EEC and the usA. One, is the emergence of a chronic oil shortage in the Western world whi·ch has made the heavily oil-based economies of both continents crucially dependent on Middle East supplies. The other is the discovery, mainly inside the British half of the continental shelf, of massive oil reserves, which within a decade, according to the Secretary of State :for Trade and Industry, will save Britain up to £1 ,000 million a year on her balance of payments and will supply us with no less than two-thkds of our total o.ii needs. Along with independent Norway, Britain culready favoured with its huge reserves of coal and its large supply of natural gas will be the only European nation to be substantially self -sufficient in oil supply. WitJh t!he generation soon of over 20 per cent of our electricity supply from nuclear plants and the discovery, again within the past two years, of major uranium deposits withln the UK itself, the energy outlook for Britain has been transformed in 1:he decades ahead. 4. the strategy for re-negotiation If then we retain constituVional, legal, economic and political power to reassert our independence; if, as is :surely the case, we have the strongest reasons for so doing, how in fact do the British people and the next elected government go about their task? How do we halt and reverse the growing momentum of membership? How do we force upon a reluctant and resistant elite (backedoverwhelmingly by the media where the marketeers have gaJined such an ascendancy), in the Foreign Office, ·in the Cabinet Office, in industry and in the professions, policies which they deeply opposed. And how do we set about renegotiating with eight other reluctant European governments? How do we do it successfully and in time, knowing as we must that the effective span of the average government is no more than four years? It is a iformida:ble task for which careful and advance preparations must be made. In approaching it, three factors must be constantly in mind. First, the existing members ·of the Community will be hostile to any serious negotiations at a:ll. That has already been made clear, particularly by European s'Ocia:list leaders, who feel that they can speak more freely to the fraternal British Labour Party, than do other non-socialist Europeans. Chancellor Brandt of Germany, M. F~rancois Vals, Ohai•rman of the Socialist Strashourg G.roup, Dr. Mansholt as President of the Commission have been only the most prominent of those who have .publicly asserted that the Treatyof Accession cannot be re-negotiated, meaning that they, and the other .parties to the Treaty, are not prepared to change it. So this is the first most important faotor ; the second is that with every month that goes by, Britain will 'be travelling further and further into the Community as the provisions of the Treaty, on its pre-set timetable, successively take effect. At the same time, there will continue to flow out of Brussels, out of the Commission, the Council of Ministers and the European Court, laws, regulations, decisions, judgements and rulings, which will auto matically take effect and will have the force of law here in B:ritain. It is then these considerations-the unwillingness to negotiate plus the continuing operation of the Treaty in Britain- that indicates the basic problem that politica!l strategy has to meet. What the new Government has to do and without delay is to put such pressure on the Community as to force immediate and serious negotiations. phase one There is in theory nothing to preventBritain from