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Lord Howell of Guildford: My Lords, the noble Lord was very kind in his remarks about me but he cannot pick and mix in that way. I speak for the Conservative Party as a whole and the proposition that we are Europhobic or anti-European is completely untrue and should not be asserted, whether in relation to myself or any other member of my party.

Lord Harrison: My Lords, looking at the Benches opposite and after listening to the debate last Friday, pick-and-mix is characteristic of the party opposite.

My second point is that I support the accession of these respected countries. It will be good for them and us. My confidence in this matter is bolstered by the experience of the earlier accessions of Ireland, Spain, Greece and Portugal. For those states joining the European Union meant anchoring democracy, securing human rights and promoting market economies. Prosperity has taken root in those countries aided by the

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European regional and cohesion funds, which have succeeded in boosting their economies despite their geographical peripherality.

My confident prediction is that the new batch of accession countries will considerably benefit over time. Indeed, independent research suggests that those countries may expand their GDPs by some 20 per cent in the medium term as a result of joining while Britain's own economy will also benefit to the tune of 1.75 billion. In this Eurovision contest of expanding economies, everyone can be on song. I reject the fears of those like David Heathcoat-Amory MP, the Conservative representative on the recently completed Convention on the Future of Europe. He told BBC Radio 4 that he is very worried about enlargement when we try to absorb a lot of other countries with different cultures for which our judicial and legal systems are quite unprepared. He continued by saying that it is also going to be very expensive. What a relief that Great Britain never tried to establish an empire and that the East India Company so quickly faded.

The truth is that we all stand to gain culturally and politically and also in terms of promoting peace, improving the environment and deepening democracy. But the grouting of the Union, which binds it together, is the establishment of the world's richest and largest market which, in May 2004, will swell to about 455 million people. I make that point because all too frequently the disciples of Mr Heathcoat-Amory complain that the single market was all that Britain signed up to back in the 1970s. They scarcely acknowledge that it is the market which has been the engine of the Union and, moreover, that their constant backbiting undermines the efforts of British entrepreneurs seeking to penetrate that widening single European market. If one keeps trying to tell British business people that Europe is the home of red tape, foreign tongues and funny money, then one cannot be surprised if they stay at home. The Europhobes are the very worst ambassadors for Britain backing Europe.

That brings me to my third and final point, which is the Government's wise and intelligent decision in Clause 2 of the Bill to grant immediate free movement for workers from the accession countries to ply their trades and skills in Britain. Not only is that in conformity with the single market's four freedoms of free movement of people, capital, goods and services, but it will also allow Britain to fill the current skills gap in the British workforce. Indeed, I ask the Minister whether the Government are devising any specific strategy to welcome and place such skilled workers when accession takes place in May 2004.

There is one further point as to why the Government's move is both astute and intelligent. By offering freedom of movement to workers from accession countries right at the outset, we immediately stake our claim to be first, firm and fast friends of the accession countries. Such an act of spontaneous friendship will store up for us a pool of goodwill towards Britain, capable of being called on for many years to come as Europe new and old unites in common purpose.

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Those with the gall to oppose these beneficial changes prefer to leave Europe a divided trinity. The Bill signals their defeat and provides for a better Europe. I, for one, applaud it and encourage the Minister to proselytise for the Bill as part of the Prime Minister's campaign to promote Europe in Britain and Britain in Europe.

6.15 p.m.

Lord Dahrendorf: My Lords, like the noble Lord, Lord Williamson, I have a personal reason for wanting to say at least a few words in the debate. I cannot claim to have had any practical input into the process of the accession of new countries, but ever since the heady and memorable days of what I call the revolution of 1989, which put an end to communist rule in east-central Europe and beyond, I have been a staunch and firm advocate of enlarging the European Union and having our European friends and neighbours inside.

The result is the present slim Bill, which the Minister has rightly called momentous. It is probably more momentous—if that is not offensive to anyone—than some of the massive tomes that come our way for scrutiny every now and again, and particularly in recent months. It marks a change in the face of Europe and in the direction of peace and liberty.

I said that I had no practical input into the process this time. I had a slight practical input into an earlier process of enlargement of the European Communities, as they were then called, when I was commissioner for foreign trade and foreign affairs at the time of Britain's application for membership. Even at that time I strongly opposed a view widely held in Europe that there is a conflict between deepening European co-operation and enlarging the European Union. I do not believe that that conflict exists. Every time the EU has seen enlargement it has also seen a process of intensified co-operation within. I am convinced that enlargement this time will have the same effect.

The accession comes later than some of us—including, I am glad to observe, Her Majesty's Government—would have wished. It is also rather less generous than the new members deserved, since they nearly became net contributors to a wealthy European Union on entering it. But at least enlargement will now be a fact. Europe is, in the words of President Bush the father, "whole and free"—nearly whole, as several noble Lords have rightly emphasised, for even apart from Norway and Switzerland, much of south-eastern Europe remains outside for the moment. The question of the open borders beyond is one of the major issues ahead of us.

Still, enlargement is a fact. While the United States of America and NATO remain crucial to Europe's security, the level of political and economic co-operation achieved in the European Union puts an end to centuries of internecine struggles and establishes—indeed to some extent guarantees—the constitution of liberty over an entire continent. Apart from North America, no other part of the world has managed such a feat.

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The European Union will be different once the enlargement has happened. Even without using the language of an "old" and a "new" Europe, one can predict that what some called "core Europe"—that is, essentially France and Germany—will no longer necessarily be the engine of closer co-operation. What may geographically seem the periphery is in fact the set of countries whose governments signed the "Letter of the Eight", affirming the Western alliance in the face of the Iraq war. After 1st May 2004, their view will be the majority view of the Union, and it is one which we should welcome.

The Bill before us emphasises one of the four liberties of the single market: the freedom of movement for workers. Perhaps it needs to be stressed, as others have done—and the House seems to be largely united on this point—that there is nothing to worry about in this prospect. My own hope is that the new members, especially those in east-central Europe, will begin a process of catching up economically, following in some ways the Irish model. However, it must be said that they would engage in this process at a time when the general economic climate is less favourable to rapid catching up by any country than it was at the time of Ireland's accession.

Workers may come to the old member states in the near future and help to provide essential services, for which we should be grateful. But, judging from the Polish experience—I agree very much with the noble Lord, Lord Howell, that Poland is not only the largest new member but the most significant country among those acceding—the people who come to us are just as likely to go back before long to help to create a sustainable economy of prosperity at home.

In short, the Bill sets the seal on one of the great steps forward in European history. I, for one, support it and its implications wholeheartedly.

6.22 p.m.

Lord Kilclooney: My Lords, I also welcome the Bill and especially the principle of enlargement of the European Union. I am delighted to see that, of the 10 new member nations, two are from the Commonwealth: Cyprus and Malta. I note also that all 10 are republics and, of course, that changes the happy balance between seven constitutional monarchies and eight republics in the present membership of the European Union.

But most important is the fact that eight out of the 10 new members are former communist countries. It is great to see them now becoming integrated as free, independent sovereign nations within the European Union. They are, of course, already all members of the Council of Europe and many are already within NATO. I recall revisiting Warsaw two years ago, having been there previously when the communists were in power. The most dramatic impact for me was walking past the ministry of defence headquarters in the centre of Warsaw and finding the NATO flag flying over the building. That is the kind of impression that one receives and the impact that is made as Europe comes closer together. In trade, we are creating

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a market of 450 million people. That must be good for United Kingdom business. It must increase the opportunities for trade.

However, the EU is a political, as well as an economic, union. I hope that the 10 nations from the new Europe will be more supportive of a union of independent sovereign states than a federal European Union. Here, I shall say something that may not be welcomed. In Europe, the British—or the English, as they call us—are not particularly popular. That is not because of the behaviour of some louts who follow the English football team—far from it. It goes much deeper. For example. in France, at most levels of society, there is a jealousy of the United Kingdom. In Europe there is resentment of Britain; a perception that the English are arrogant, behave as if they are superior and claim to know better. To deny this is to avoid the reality of politics in Europe. I have witnessed this over the past 17 years in European politics, 10 years as a Member of the European Parliament and seven in the Council of Europe. This perception of the United Kingdom is totally unfair. In the European Parliament and in the Council of Europe, United Kingdom politicians—Labour and Conservative—are among the most hard working and efficient. They make a major contribution to a peaceful and better Europe.

I hope that the accession of the new European nations will strengthen the role and the respect for the United Kingdom in Europe, as the noble Lord, Lord Dahrendorf suggested. I agree that it gives us greater opportunity and support within a larger Europe. But it would be unwise to imagine that the United Kingdom will have no difficulties with old Europe so long as these perceptions exist.

With these 10 new members, the majority of the European Union, like the United Kingdom, will not have the euro as their national currency. I live in the only part of the United Kingdom having a land boundary with a euro-land country—the Republic of Ireland. I say "Long Live The Euro" so long as the Republic of Ireland has it and Northern Ireland does not. As chairman of a family business employing 250 people in five of the six counties of Northern Ireland, I know at first hand the impact of the euro.

The Republic of Ireland has suffered from one of the highest rates of inflation across Europe. In the past year it has had a 15 per cent currency appreciation against sterling, yet it is powerless to address these problems. Both industry and agriculture based in the republic are finding it more difficult to export to countries such as the United Kingdom and the United States. Businesses are being forced to close down and unemployment is increasing. This week alone, some 500 jobs in the Republic of Ireland were lost in long established companies such as Navan Carpets and Powerscreen. Both companies closed their plants and both blamed currency exchange rates—the euro—for their demise. Northern Ireland gets brisk business as a result. Thousands of Republic of Ireland citizens visit

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us each week to make purchases of food, drinks and household goods which are all much cheaper in Northern Ireland.

I am delighted that in addition to the 10 countries now joining the European Union, there is reference to Bulgaria, Romania and Turkey. I consider the accession of Turkey to the European Union to be of great importance. I despair when I see some people opposing Turkey because its citizens are Moslem. If Turkey does not move towards integration with the European Union, it will go in the other direction towards Islamic fundamentalism. Anyone who knows that country knows that over the past 30 years there has been a tremendous growth in Islam throughout that land—not just secular, but fundamentalist Islam. Mosques have appeared at almost every crossroads. Europe faces a great challenge in how it reacts to Turkey. Reforms are taking place in that country but more have to come. Interestingly, its GDP per capita is higher than some of the 10 included in this Bill. I hope that a more favourable approach towards Turkey's membership of the European Union will continue in the years ahead.

The problem of Cyprus has been mentioned. I fear that we, within the European Union and its institutions, are now about to absorb the problems of that island. With regard to the negotiations, over the past few years I have always stated that we should not have given a blank cheque to the Greek Cypriots and said: "You can join the European Union whether or not there is a settlement". By taking that approach we were not giving the Greek Cypriots any incentive to reach an agreement because they knew they were going to get in without an agreement.

It has been said that the Turkish Cypriots should have accepted the United Nations proposals—proposals which were not even submitted to them in their own language, Turkish. They were asked to accept something which was not in their language. That was not a good start. Then 100 pages in the United Nations proposals, which have been praised by some colleagues, were blank. How can one accept proposals with 100 blank pages? Of course those pages which were not blank involved the movement of 60,000 Turkish Cypriots, who would again become refugees for the second time in 30 years. They included unfair boundaries for the two new entities and, worst of all, they abandoned the idea of partnership between the Turkish and the Greek Cypriots, as was involved in the original constitution of the Republic of Cyprus. Instead, the UN proposals created majority rule of the Greek Cypriots over the Turkish Cypriots. I hope that those who praised the United Nations proposals will read the hundreds of pages in them before they reach the bland conclusion that President Denktash should have accepted those proposals. It would have been great to get a settlement, but certainly the current UN proposals in my opinion are not very fair.

However, congratulation must be given to both Turkish and Greek Cypriots for the changes which have taken place in the island in recent months. Following the decision of President Denktash to open the Green Line, there has been positive movement in

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the island. Although the Greek Cypriot Government initially opposed that initiative by President Denktash, I am glad to say that the Greek Cypriot people voted with their feet and within 24 hours were moving in their thousands into northern Cyprus.

Greek Cypriots now spend three days per week in northern Cyprus, whereas Turkish Cypriots are still only allowed to spend one day in southern Cyprus. In recent weeks there has been a retrograde step in that the Greek Cypriot authorities are seizing all purchases made by Greek Cypriots returning from the north to the south. Such petty obstacles do not contribute to improved relations between the two communities. Let us see the positive side; that is, Greek and Turkish Cypriots are now allowed to go into each other's territory and they are learning to live with each other again.

In contrast to the opening of the Green Line, however, Her Majesty's Government, after 29 years, have now decided to close the border between the Dhekelia base and northern Cyprus. So United Kingdom citizens who live in northern Cyprus can no longer enter the British sovereign base territory to the east of the island, a territory which is mostly surrounded by northern Cyprus.

Within the sovereign base area, as has been mentioned, Greek Cypriot farmers will now benefit from European Union agricultural policies. All Greek Cypriots on the base will benefit from the European Convention on Human Rights. But, at the same time as movement across the Green Line begins, United Kingdom residents in northern Cyprus resent the decision by Her Majesty's Government to stop them entering their own British territory, having had that facility for the past 29 years. It is extraordinary. I ask Her Majesty's Government to explore an alternative which would allow UK citizens in the north to enter the sovereign base but not to use it as a means of access to the Greek Cypriot territory to the south. That is the issue which must be addressed. With that qualification, I welcome the enlargement of the European Union and support the Bill.

6.35 p.m.

Lord Stoddart of Swindon: My Lords, I have listened very carefully to the debate and so far there seems to have been a unanimous welcome for the Bill. However, I fear that I shall have to shatter that unanimity, because I do not welcome the Bill. Many of your Lordships who know me will understand why. I shall explain, as briefly as I can, why I do not support the Bill.

Before I do so, I say to the noble Lord, Lord Wallace, that I regret that he criticised our debate last Friday, because I do not believe that the people who took part went outside the traditions of this House. Those are to debate freely, forthrightly, rather than to make set speeches. Last Friday's debate was in the best traditions of this House. It was the epitome of decorum, decency and good order, compared with the deplorable and insulting behaviour of the President of the European Council towards the

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European Parliament yesterday. I am glad that the noble Lord, Lord Harrison, raised that point rather than myself, because I cannot now be accused of being a Europhobe simply and solely because I mention the bad behaviour of the President of the European Council.

The noble Baroness, Lady Symons, in introducing the Bill—as she always does with lucidity and clarity—said that the Bill had far reaching implications over how we are governed, and for the institutions of Europe. She said that it was a small Bill, but the treaty involved 5,000 pages, and there was to be a White Paper. Why did we not have the White Paper before the introduction of the Bill? Would it not have been sensible to have seen the detail of the treaty, and to have had it explained to us, before we and the House of Commons were asked to pass a Bill to ratify the treaty? I wish that that had occurred. We are now being asked to agree to the Bill before we have seen that White Paper. The noble Lord, Lord Howell, supported the Bill and said that it was part of the dream to realise the union of European nations. I hope that that dream will not turn into a nightmare; I fear that it may.

I have opposed all enlargements of the European Union, because I believe that they would lead inevitably to greater centralisation and eventually to a single European super-state—a united states of Europe. Noble Lords have heard me say that before. I have always believed that and I still do so. That is why I oppose the Bill. I have taken issue with those who believe that enlargement would lead to widening but not deepening. I have always believed that widening would always lead to deepening and centralisation. In the light of developments following previous enlargements—the Single European Act and the Maastricht, Amsterdam and Nice treaties—and the new constitution proposed by the Convention on the Future of Europe, my view has been proved to be correct. Widening inevitably means deepening and centralisation. We cannot get away from that; it will not work otherwise and it is absurd to say that it will not occur. Many people who previously took a different view from mine are now coming round in the light of our experience.

So I say again: I am opposed to the Bill, first and foremost because I believe that it is the enemy of freedom and democracy, not its friend, and the friend of undemocratic centralism and the corporate state. It undoubtedly paves the way—perhaps with the best of intentions—to a destination that is bound to lead to the destruction of the nations of Europe. Many European leaders say that that is their aim; they believe that that is desirable. They are entitled to that opinion, but it is not my opinion. That would lead to the destruction of the nations of Europe as we know them and the construction of a new European empire, whose power and impact we cannot foresee at present.

We are told—we have been told this afternoon—that the people of the 10 new countries are desperate to join the European Union. The referendums that have been held so far certainly seem to show that a majority of people are in favour of joining, although one must

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temper that by saying that the turnout in some countries has not been brilliant. The people of those countries have been promised great benefits from membership of the European Union by their own leaders and by the ubiquitous propaganda machine of the European Commission.

What will happen when those people find that they must submit to the 97,000 pages of the acquis communautaire and the 104,000 regulations that must be implemented, I simply do not know. Nor do I know how they will react when the promised financial, social and economic benefits do not immediately materialise. Many of them will not be theirs for many years—or perhaps at all. The accession states may also reflect that, because they must absorb and implement that mass of regulation, especially as it applies to industry and commerce, they may find themselves much less attractive places for inward investment, which may very well adversely affect job prospects and living standards. They should concern themselves with that.

Many entrant countries have a large agricultural component to their economies. That of Poland is 20 per cent. They will be required to modernise their agricultural methods quickly, but—as I understand it; I may be wrong—not receive subsidy until 2013. So people are likely to be driven from the land into towns and cities that will have difficulty in finding jobs, housing and services for them. As the United Kingdom is allowing free movement of labour immediately, are those poor people not likely to want to come here? That must be considered.

As to any benefits to Britain of this accession treaty, they are hard to find. We already trade freely with all the accession countries. We already have that market. It is not an addition to our export market; it is already there. That is not such a great thing, especially as their combined GDP is quite modest and barely more than the Netherlands. It is unlikely to give a great boost to trade for this country, if any at all. In the short-term, accession could cause a loss of manufacturing jobs in Britain, which also has to be taken on board.

There could be adverse consequences in some areas of Britain. As it is likely that enlargement will divert EU Structural Funds to the entrant countries which are poorer than we are, it is virtually certain that the four regions of the United Kingdom at present enjoying Objective 1 status—Merseyside, South Yorkshire, West Wales and the Valleys, and Cornwall—will have to lose that status after 2006. That is a legitimate concern which the British people might have about this accession treaty.

Where do we go from here? We know that Romania and Bulgaria are now on the invitation list to join. But what about Turkey? That has been raised previously in this debate. Turkey is an Asian country—we cannot get away from geography. It is an Asian country with a large and increasing population. That population has a great propensity to grow because it is a young population at present. The projected population of Turkey by 2050 is 110 million. At the same time the population of many of the Western European countries will be falling. For example, the projected population of Germany will be 60 million. Therefore

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there are great implications in allowing Turkey to join: first, because of its population growth and, secondly, because it is an Asian country.

What are the limits of a European Union? If we go into Turkey, it will no longer be a European Union, it will be a Eurasian Union. How much further do we intend to go?

This is a very important Bill. I am only sorry that the maximum number of people in this Chamber to listen to the debate—and I have been counting—has been 18. The Bill has huge and wide implications, as was pointed out by the Minister at the beginning of the debate. Matters of such great import should not be relegated to a comparatively late hour on a Thursday evening, as the noble Lord, Lord Howell said. However, there will be other stages and no doubt we shall have further debate about it.

Finally, it would be nice if we could have the White Paper before we deliberate further on the Bill.

6.50 p.m.

Baroness Symons of Vernham Dean: My Lords, I welcome the spirit in which this debate has been conducted and hope it indicates that the new member states can be sure that this country will warmly welcome them to the European Union as our partners in future years. I am also enormously grateful to the noble Lords, Lord Howell of Guildford and Lord Wallace of Saltaire, for both speaking so forcefully on behalf of their respective parties.

Britain has prominently and consistently supported this enlargement. After the convulsions of 1989, this country—and, let it be said, under a Conservative government—was one of the first to grasp fully the implications of the emergence of liberal democracies and market economies on the borders of the Union; one of the first to understand the aspirations of peoples newly freed from authoritarian control.

John Major argued as early as 1991 that the ultimate destiny of eastern Europeans was membership of the Community. The last Conservative government, supported by us when we were in opposition, pushed hard to make that enlargement central to EU policy. Since 1997, this Government have carried forward energetically the British commitment to enlargement. Negotiations began under our presidency and we have encouraged successive presidencies to keep them on track.

Next year's enlargement of the Union is, first and foremost, a credit to the vision, energy and determination of the peoples and governments of central and eastern Europe, Malta and Cyprus, while the successful conclusion of the negotiations last year is witness to the skill of the Danish presidency and that of the Commission.

However, we should not understate our own role in this. Enlargement is a good news story for British policy in Europe. Our advocacy, under both Conservative and Labour governments, leaves us well placed to mould the shape of Europe in the years

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ahead. Our debate today has roamed around a number of issues and I shall do my best to answer the points which have been made.

I turn first to the question of freedom of movement in Europe. Although the noble Lord, Lord Howell, certainly did not oppose freedom of movement in principle, he raised some concerns about it. Other noble Lords, the noble Lords, Lord Wallace of Saltaire and Lord Williamson of Horton, and my noble friend Lord Harrison also touched on the subject. The free movement of persons is one of the Community's fundamental principles. The accession treaty grants citizens of all the new member states the right to move freely within the Union for most of the purposes envisaged by the EC treaty. We believe that it would have been quite wrong to deny citizens of the new member states such a fundamental right. While I understand that it is a difficult and sensitive issue, it was very much the view taken by the Government.

Such restrictions on free movement as the accession treaty creates relate only to freedom of movement for the purposes of work. However, as I indicated earlier, Malta and Cyprus are not covered by those restrictions.

Let me make it clear why the United Kingdom Government want to waive their right to impose restrictions on other states. We believe that it is in the interests of the United Kingdom to do so. It makes no sense to refuse to allow those who have a right to enter and reside in the UK the right to work here. Those who can work legally do so in the open market. They make a positive contribution to the national tax base and they do not undercut the decent minimum standards of statutory protection that apply to United Kingdom workers.

We took the decision on the basis of a series of independent studies which argued that free movement will not cause large influxes of people into our labour market. Those who argued that the Iberian accession in the mid-1980s would have that effect were proved quite wrong. As a result of joining the European Union, more Spaniards returned home than moved abroad.

If our expectations are confounded, we will be able to repeal or amend the regulations made under this Bill. We will retain this right—and in saying that I respond to a point specifically raised by several noble Lords. I want to make it absolutely clear: we will retain the right, through the safeguards provided by the accession treaty, until the end of April 2011. So we have retained a flexibility of approach from 2004 through to 2011. The noble Lord, Lord Williamson of Horton, was right to seek clarity on this point. I hope that what I have said reassures those noble Lords who were concerned about this.

My noble friend Lord Harrison asked whether the Government would devise a specific strategy to welcome workers from the accession countries. Employers in the United Kingdom already enjoy good relationships with workers in the new member states through schemes such as the Seasonal Agricultural Workers Scheme and the Work Permits Scheme. We

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expect those relationships to continue and to strengthen after accession. They will continue to ensure that we attract skilled workers, many of whom are very much needed in the United Kingdom to fill our vacancies. But that is not devising new schemes; it merely takes forward the schemes we already have in place.

I shall turn to the points made about the European Convention. Several noble Lords touched on this subject, although I was grateful to noble Lords for not going too far into a convention debate. However, I take the point made by the noble Lord, Lord Howell of Guildford, that he looked forward to a debate. I very much look forward to the debate. The noble Lord quoted from an article in the Economist in regard to concerns about where the convention was taking us. Let me quote from Le Monde of 29th May 2003. In contrast to the article from which the noble Lord quoted, it states:


    "The British Government is pleased with the Convention and has every right to be so. The text meets virtually all its expectations and allays most of its fears".

The noble Lord juxtaposed the position of Poland and other eastern European countries with what he described as the Paris/Berlin agenda. But, as he said, we are very much on the same side as the accession countries in the argument over Iraq. We are very much not on the Paris/Berlin agenda and have been severely criticised in many quarters for not being on it. The UK Government have taken the right decision in that regard and we have the common-sense to ensure that we will be strong allies and supporters of the rights of the accession countries to make up their own minds on where they stand on such issues in the future.

The noble Lord was concerned about the new countries not having a voice at the IGC. The new countries will be a negotiating party at the IGC and will therefore take part in deciding which of the convention proposals go forward. They are not being asked to sign up to anything upon which they will not have a say, and any of them can use their veto during the course of the IGC. It is important that I make that point to the noble Lord because I gained the impression that he was implying they would be faced with a fait accompli at the IGC that they would have to pick up as accession countries. That is not the case. They will be full participating members in the negotiations at the IGC.

I turn now to the reform of the common agricultural policy, a point raised in particular by the noble Lord, Lord Howell. Many Members of your Lordships' House have been strong critics of the common agricultural policy in its current form. The Council of Agricultural Ministers last week reached an agreement that I believe will set a new direction for European agriculture. It will simplify the common agricultural policy, reduce the burden on farmers through a single farm payment and free farmers to produce what the market wants, to optimise their production and to cut their costs. It also has the enormous benefit of giving the EU a strong negotiating position in the WTO negotiations.

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I mention this because one cannot say often enough how important this shift is on the common agricultural policy. We shall have to work very hard to ensure that it brings forward the benefits we need, but we have seen an important shift. I believe that the advent of the accession countries was one of the drivers in ensuring that we will go forward and at least reach the beginning of some of the new understandings.

The noble Lord was worried about the farmers in the new states not being able to compete without 100 per cent of direct payments. Even without direct payments, the common agricultural policy will provide guaranteed higher prices for most products, raising the incomes of those farmers. They will also benefit from lower costs, particularly in terms of land prices.

Many noble Lords referred to the issue of finances. The noble Lord, Lord Williamson of Horton, is right. The financial package for new member states is generous and very fair. It grants a significant amount of money to the new member states—some 26.6 billion between 2004 and 2006, which, as I have stated already, is 3 per cent of their GDP. The noble Lord, Lord Williamson, is also right that this has been achieved within the overall budget ceilings for enlargement which were agreed in 1999 at Berlin.

My noble friend Lord Harrison referred to the issue of economic benefits. The impact of enlargement on the existing EU member states is difficult to quantify but recent studies estimate that enlargement will add 0.2 per cent to EU GDP growth overall and that the UK's share of that will be about 14 per cent and worth about 1.75 billion. I stress that that figure is at 1999 prices.

I agreed very strongly with the remarks of the noble Lord, Lord Williamson, about trade. The economic benefits of EU enlargement arise from substantial extra opportunities for trade in goods and services, rooted in the expansion of the single market. The UK's total trade with the candidate countries has grown at a faster rate than our total trade elsewhere. Since 1990, UK trade with new member states has increased by some 400 per cent compared with a 43 per cent increase in our trade with the rest of the world. Those figures speak very ably for themselves.

The noble Lord, Lord Stoddart of Swindon, cast doubt on the economic benefits for the accession countries. The noble Lord is a clever man, a sensible man and a logical man. Does he really believe that 10 accession states in Europe have simultaneously been struck by an aberrational desire to wreck their economy? Or does he believe that, after five years of painstaking negotiations, they have not realised that other countries which have joined the European Union enjoy an increase in their living standards as a result?

Some of your Lordships spoke about future accessions. In particular, the noble Lord, Lord Wallace of Saltaire, was concerned about not achieving the target dates for Bulgaria and Romania. The Prime Minister has publicly offered our support for closure of negotiations with Bulgaria and Romania, and has offered specific

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help. We have 20 and eight consultants and pre-accession advisers assisting the Romanian and Bulgarian Administration respectively to prepare for their EU accession. We realise that there is a lot of work to be done but we are doing what we can to help.

The noble Lords, Lord Kilclooney and Lord Stoddart, raised the question of Turkish accession although, I am bound to say, from very different perspectives. Of course the United Kingdom strongly supports Turkey's EU candidature, as confirmed at the Helsinki European Council in December 1999 and subsequently at the Copenhagen European Council in 2002. Like all other candidates, Turkey must meet the political criteria for membership agreed by heads of government at the 1993 Copenhagen European Council before opening accession negotiations. These include the existence of stable institutions guaranteeing democracy, the rule of law, human rights and respect for the protection of minorities. So in answer to the points raised by the noble Lord, Lord Stoddart of Swindon, we have long been a supporter of Turkey's EU candidature, and under this Government we shall continue to be so.

Questions were raised about what could be described as wider Europe. The noble Lord, Lord Dahrendorf, touched on this point, as did the noble Lord, Lord Wallace of Saltaire. There are a number of countries which aspire to join us—Ukraine and Moldova, as European states, aspire to membership of the European Union, in line with Article 49 of the Treaty of the European Union. But we have a long way to go down the path of reform with those countries.

Albania, Bosnia-Herzegovina, Croatia, Macedonia and the Union of Serbia and Montenegro are considered to be potential candidates, and the UK Government strongly support each country's aspirations. But I stress that, like any other aspirants, they must meet the objective criteria for membership.

The noble Lord, Lord Kilclooney, raised the issue of Cyprus, as he has on previous occasions. Under the terms of the accession treaty Protocol 10, the acquis communautaire will be suspended in the north of the island if there has been no political settlement by 1st May 2004. But if a settlement is reached, the Council will decide, by unanimity, first to lift the suspension and secondly on the terms of the accession for a united island. Whether divided or not, Cyprus will accede on 1st May 2004.

The noble Lord, Lord Wallace of Saltaire, referred to the SBAs. I repeat that under the EC treaty it is clear that the SBAs are outside the EU. I recognise that that may cause him one or two difficulties. No doubt we can discuss this further.

We have a great deal of work before us. I hope that this Second Reading debate and the spirit in which it has been conducted is an indication of the way in which we will be able to take forward its Committee and further stages. Sadly, I did agree with the noble Lord, Lord Wallace of Saltaire, that today's debate has been in stark contrast to that which we had on Friday. It is not that there was disagreement on Friday—of course there is going to be disagreement in

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your Lordships' House; it is right and proper that there should be—but what I think was a little tricky was the note of somewhat sneering derision about the motives of those with whom some of your Lordships disagreed. I suggest that that was not helpful to debate and was not really in the best traditions of this House.

I should like to pick up on a point of confusion, I think, with the noble Lord, Lord Stoddart, in regard to the White Paper. I am sure that it is my fault and that I have not been clear enough. The White Paper which is being discussed is a White Paper on the IGC, not on the accession treaty. I think that they are two different issues. The White Paper that is planned is on the intergovernmental conference. I also say to the noble Lord that I understand—none of your Lordships can fail to understand—his concerns about federalism and a superstate.


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