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Lord Shore of Stepney: Before the noble Baroness resumes her seat, would she answer one question? Does she accept that there is a difference of fundamental aim between some of the countries of the European Union and ourselves in their objective of establishing a genuine union, a new state, which we do not wish to pursue? Is the noble Baroness in favour of the pursuit of a new state in Europe? If so, surely it makes sense for us, in the interests of good relations with our neighbours, not to deceive them that we can go along, not to stand constantly in their way, but to reach an accommodation.

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10.30 p.m.

Baroness Williams of Crosby: I believe that every question that is asked seriously of me, as this has been asked, by the noble Lord deserves a reply. I can give him a reply based only on my recent impressions. They are that there has been a considerable switch in mood within the Continent of Europe towards a greater degree of what one might describe as "confederation" and away from the concept of tight federalism.

One only has to look at the way in which the Federal Republic of Germany, and not least its separate Lander, has moved towards a greater emphasis on subsidiarity and the right of self-determination over a very wide range of issues to see that we are moving towards a closer Union but not a closer Union that involves the kind of tight federalism that many people, like the noble Lord himself, fear.

Lord Stoddart of Swindon: It was interesting to hear from the noble Baroness, Lady Williams, that Europe is moving towards confederation rather than tight federalism. I must confess that I had not noticed it myself. Indeed, Herr Kohl and many others are still talking about a united Europe and they see the single currency as a further move in the political direction of a country called Europe.

That is what I am hearing from them and that is what is reported in the British newspapers. If the noble Baroness has better information, I am pleased to hear it. We had Professor Wilhelm Hankel to speak to some of us over the weekend. Professor Hankel is one of the four professors who is challenging Euro economic and monetary union, the single currency, in the German Federal Court. I do not think that it was his view that the German Chancellor was moving in the direction in which I should like him to move; that is, towards a more confederal Europe rather than a federal Europe. However, things may develop and I hope that the noble Baroness is correct in what she says.

I take it from that--and I stand to be corrected--that the Liberal Democrat Party is not in favour of federalism itself. Again, I have always understood that that was its aim. If it is not, I should be pleased to hear it. But everything that I have heard so far leads me to believe that that is true. Does the noble Baroness wish to comment?

Baroness Williams of Crosby: I thought that I had explained myself in my previous response to the noble Lord, Lord Shore of Stepney, and I do not want to delay the debate further.

Lord Stoddart of Swindon: We may have to return to that later on. But there are one or two questions that I should like to ask. I should like to say a lot more but the time is getting on. I should like to know whether nations which have agreed co-operation under K.12 will be able to withdraw at some later stage if they believe that that co-operation is no longer of any use to them, or, as under the acquis communautaire, will they be obliged to continue such co-operation for all time? I should certainly like to have an answer to that.

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If that is not so, if they can withdraw, what will be the procedure for withdrawal? That certainly is not clear in any of the articles under Title VI, so I should like to know about that.

The other matter that I simply cannot understand is why the administrative and operational costs of those new co-operative ventures should be paid for by the Community as a whole; that is, those who do not take part in the co-operation ventures will be subsidising those who are taking part. I should like further explanation of that and to ask my noble friend whether he believes that to be fair. I certainly do not think that it is fair. If those people who are co-operating--and, presumably, getting the benefits of that co-operation--feel that it is worth while, surely they should pay the cost.

I also hope that my noble friend will be able to answer a question put to him by my noble friend Lord Bruce as regards Article K.7(6), which appears to undermine the British constitution. In fact, we will have the opportunity later to discuss the matter more fully, because I intend to table an amendment which will make it absolutely clear that this treaty can in no way undermine our basic constitution which, as I understand it, is that one parliament may not bind its successors. Indeed, we shall have the opportunity later to discuss that whole issue.

I turn, finally, to Amendment No. 31 which calls on the Government to produce a report. It says:

    "No later than one year after the passing of this Act, and at annual intervals thereafter, a Minister of the Crown shall lay before both Houses of Parliament a report containing details of--

    (a) the participation of the United Kingdom in any measures adopted under Articles K.15 and K.16 of the Treaty ... [and]

    (b) any decision of the United Kingdom not to participate in any measures mentioned in paragraph (a), and the reasons for such decision".

It seems to me that that is a reasonable request to make. I hope that my noble friend will be able to tell me that the Government accept the amendment, especially as Article K.17 provides that the,

    "Council and the Commission shall regularly inform the European Parliament of the development of closer cooperation established on the basis",

of that particular title. Under those circumstances, as the European Parliament is to have a report, I do not understand why we in this Parliament cannot have a report from our own Government about matters which affect our country.

Lord Swinfen: I should like, very briefly, to return to a point raised by both the noble Lord, Lord Bruce, and the noble Lord, Lord Stoddart of Swindon. I do so because there is quite a large number of people in this country who are very happy with what I would describe as the "Common Market", but who are not at all happy with a single state of Europe. Indeed, some people think that that is coming.

In his reply, can the Minister confirm that, should a government in the future wish to leave the EC, there is nothing in the Treaty of Rome, the Maastricht Treaty and, indeed, the Amsterdam Treaty, which will prevent us from so doing? I ask that question particularly and would like confirmation. Someone who knows far more

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about the European Union--the EC--than I do, and is a much greater expert on the relevant documents, has suggested to me that once the Amsterdam Treaty is ratified an attempt to leave would be an act of rebellion against the EC. That would mean that we had become one state in Europe. That is what we are being told is not happening; we are told that it is a collection of independent states.

Therefore, when replying, can the Minister confirm that, should a government in the future decide to take the United Kingdom out of the EC, there is no obstacle to doing so? I believe another noble Lord also asked how that could be done. I do not expect an answer to that question at the moment because it will probably be quite a complicated and drawn-out affair. However, I believe that this Chamber should be given that information some time before the Bill passes.

Lord Moynihan: I am sorely tempted to reply to the comments made by the noble Baroness, Lady Williams of Crosby, which in my opinion were a wholly misguided assessment of the position that John Major took on opt-outs. But I hope she will forgive me if I return to them at a later stage.

For now, suffice it to say that our position is to welcome the inclusion of the concept of flexibility into the treaty on the basis that we have always advocated the concept that a flexible Europe is essential if the European Union is to be enlarged successfully. A diverse, enlarged Europe simply cannot be forced into the rigid strait-jacket of uniformity.

However, we take the approach that, although the concept of a flexible Europe is essential if the European Union is to be enlarged successfully, it should be introduced following certain key principles; namely, any arrangement which allows groups of fewer than the 15 member states to use Community institutions must be agreed by all and open to all and must not force any member state into further integration; such arrangements must also be consistent with the single market; and proposals that Community institutions could be used by vanguard groups if one or more states were actively opposed are simply not acceptable. However, sadly, under the Amsterdam Treaty, a group of member states can decide to go ahead with further integration in any area without the support of the full European Union, which undermines the fundamental principle that flexibility should be open to all and agreed by all.

In my few remarks this evening I wish to be specific, albeit technical. I ask the Minister some questions in relation to Articles K.12 and K.15 together with new Article 5a. Had the noble Lord, Lord Bruce of Donington, spotted that, it would have been open to the very same questions that he raised in relation to the article that he focused upon.

These provisions enable member states to pursue a form of fast track integration on the basis of a qualified majority, if they wish to do so, and they are drafted in similar vocabulary to the national veto/emergency brake clause for common foreign and security policy, to which I shall return in detail in a subsequent debate.

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I emphasise that the reason we on these Benches welcome in principle the introduction of the concept of flexibility in the treaty is that it is an indication that the whole of Europe now agrees with an effective reform pioneered by the previous government. These provisions provide a basis for a different approach by different member states that reflects the differences which inevitably arise as a result of different national circumstances.

However, there is clearly a paradox when it comes to the question of flexibility. On the one hand, for the European Union to fulfil its potential, it must adhere to certain core disciplines and obligations which must not be undermined by the introduction of flexibility. On the other hand, Europe's strength is in its diversity and some flexibility must not only be allowed but encouraged, particularly as the Union enlarges. Our former opt-out of the Social Chapter and Economic and Monetary Union, as well as other member states' decision to go ahead with the Schengen provisions are examples of this type of flexibility. One thing is clear in this paradox. Whatever jargon is used to describe it, be it variable geometry, differentiated integration, Europe a la carte, multi-speed Europe, enhanced co-operation, concentric circles, flexibility must not be the foundation for a two-tier Europe, whereby an exclusive fast-track hard core of member states lay claim to a privileged status over which the rest have no real check. For this reason I would like to ask why the Government did not insist on a straightforward, watertight veto, so that the instigation of such projects of "closer co-operation" outlined by the noble Lord, Lord Bruce of Donington, could be decided by unanimity, irrespective of which member states then implemented them. This would have meant that flexibility was open to all and agreed by all, which is surely the most sensible way forward.

As the Minister will be aware, the previous government always insisted that the decision as to whether such action should and could proceed should be taken on the basis of unanimity. The provisions in the treaty on this question are to me oddly circuitous and not at all clear. I should appreciate the Minister's clarification on whether or not Article K.12 and Article 5a were intended to provide for unanimity. Was it the intention that decisions taken under the provision of these articles should be taken on the basis of unanimity? If so, why is there not a straightforward provision to that effect rather than the roundabout route of paragraph 2 of K.12, repeated in Article 5a? That states that:

    "The authorisation"--

to establish closer co-operation--

    "referred to in paragraph 1 shall be granted by the Council acting by a qualified majority at the request of the Member States concerned and after inviting the Commission to present its opinion; the request shall also be forwarded to the European Parliament. If a member of the Council declares that, for important and stated reasons of national policy, it intends to oppose the granting of an authorisation by qualified majority, a vote shall not be taken. The Council may, acting by a qualified majority, request that the matter be referred to the European Council for decision by unanimity".

I have a number of questions to put to the Minister on this point. Is the action of a member state which wishes to oppose the granting of an authorisation,

    "for stated and important reasons of national policy",

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subject to the jurisdiction of the European Court of Justice? Could the Court rule that the reason relied on by the member state was not in fact "important"? What framework is there to determine what constitutes,

    "important and stated reasons of national policy",

and who will be the arbiter of this?

I wish also to ask whether it is indeed the case that both paragraph 1 of Article K.12 and paragraph 5 of Article 5a enable groups of EU states to use European Union institutions for what amounts to purposes for which there is no explicitly stated treaty provision? Is it not a fundamental British position that access to European institutions should be agreed by all, since they are paid for by all? Furthermore, will fast track countries be entitled to European Union funds for their projects?

I should also like to ask the Minister why the provision for a veto appears in the text of the treaty and not as a Council declaration? Since it has been incorporated in the treaty, can the Minister confirm that the door is now open to rulings from the European Court of Justice, which has the power to overrule the use of the veto?

I shall not further detain the Committee by responding to some of the wider issues that were raised. I hope that the Committee will forgive me for having concentrated narrowly on some important issues raised in this context of flexibility. But on these Benches, we believe that they are extremely important. If clear answers cannot be delivered today--I fully respect the fact that the Minister is not in a position to have answers whisked from the Box to assist him, despite his admirable knowledge of the subject--perhaps he will write to me on the subject with answers that I can share with other colleagues who have stayed until this late hour. That would be much appreciated.

10.45 p.m.

Lord Grenfell: Before the noble Lord sits down, perhaps I may ask him this. The noble Lord would like to see the veto put up front. Does that not open the whole process to abuse by any single member state which is against flexibility as a matter of principle? Therefore before any countries could get together to co-operate in the manner described under this title and articles, they would be prevented from doing so from the very beginning. Surely it is far better to have what may seem to be a rather complex procedure with the Council being the final arbiter so that one can be sure that those who are serious about co-operating will not be frustrated at the beginning by one single country which happens not to like the idea of flexibility.

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