With the permission of the Ceann Comhairle, I should like to make a statement to the House about the European Council of Heads of Government, accompanied by their Foreign Ministers, which met in Rome on 1st and 2nd December, 1975.
As Deputies know, it was decided in Paris last December that there would be three meetings each year of heads of government of the countries of the European Community, accompanied by their Foreign Ministers. The purpose of these meetings is to enable Governments to co-ordinate, at the highest level, their attitudes and policies on variou matters affecting the Community. It is basic to the purpose of these meetings that they should be conducted with a minimum of ceremony and a maximum of purpose. Generally speaking, they give orientations to the Community, which are implemented in accordance with normal Community practice. Under these arrangements, there is no formal conmunique, as such. However, it is also customary that there should be a short statement or statements of the conclusions. I shall arrange to have the statements issued on this occasion laid before the House shortly.
Deputies will be aware of the background against which the meeting was held. The suggested agenda covered an extremely wide and complex range of subjects, including a review of the economic and social situation, present arrangements for financing the Community and its Budget, direct elections to the European Parliament, the report being prepared by the Belgian Prime Minister, Mr. Tindemans, the question of a single passport, separate British representation at the forthcoming Conference on International Economic Co-operation, and the Common Agricultural Policy. On a number of these items, there are proposals by the German, British and Irish Governments, which were circulated before the meeting to the heads of government of the Community.
On many of these issues, our position in the Community could have been seriously affected if the wrong decisions or orientations were taken. For this reason, we considered it important to submit for consideration by the meeting a formal memorandum of our views.
Before I deal with the items discussed at the meeting I should like to say a few words on the general principle affecting our attitude. We believe that the Community is now at a critical stage in its development. Progress is being slowed by the tendency of member States to by-pass its procedures and institutions. Faced with the present world crisis, the countries of the Community have been visibly moving apart. There are many examples of this—the manner in which the recent Rambouillet meeting was arranged is one of them and the fact that the solidarity of the Community on the vitally important Conference on International Economic Co-operation was, before the meeting, in doubt, is another.
I spoke at the opening of the meeting on these issues and urged strongly on the other heads of government the necessity for a thorough appraisal of the measures needed to achieve the development of the Community in the way envisaged by the Treaties. We must, before we look at the individual items, such as those making up the suggested agenda for the Rome meeting, make up our minds as to whether we are serious about the concept of European union, and, if we are, on the ways in which it is to be achieved. I was pleased that, in fact, the meeting concerned itself during the two days largely with this type of fundamental question and in its results demonstrated the strength of support of the heads of government represented there for the concept of European integration for the concept of European integration, as it is developing.
This concern was demonstrated beyond all possibility of doubt by the amount of time and the vigour which went into the discussion of the British proposal for a separate seat at the forthcoming Conference on International Economic Co-operation. The discussion on this subject was robust —taking up most of the second day of the meeting. It showed beyond all possibility of doubt the strength of feeling of the member Governments on the subject.
The way in which the problem was resolved was an indication of the spirit of the Community. There is provision that during the Ministerial Conference, the President of the Community delegation may ask two additional Community members to present statements in the light of their experience provided that the statements are in conformity with the mandate approved by the Community. The understanding is that, in fact, the United Kingdom and Luxembourg will be invited to speak in this way. The achievement of this understanding that the Community will speak with one voice at the Conference is a great step forward in the development of the Community, as such. It is not so long since we would have considered it utopian to believe that the countries of Europe would, at a vital international conference of this sort, speak with one voice.
Apart from the question of separate action by countries of the Community on issues which affect us all, there is the second major difficulty which faced us in Rome, in relation to the development of the Community, in the attitude which appears to have been developing of questioning the growth of the Community budget as a whole. It is well that we should get this into perspective. The budget of the Communities for 1975 is of the order of 1 per cent of the combined public expenditure of the member States of the Communities. I know that on other definitions, this percentage is higher but the difference is not material to my point. The proportion of the public expenditure of the countries of the Community represented by the budget is minute. The budget could be doubled or trebled and it would still represent only a small percentage of what the Governments and public authorities of the member States of the Community spend in or through their own budgets.
With a budget equivalent to so small a share of the public expenditure of the member countries, we cannot expect to fulfil our hopes for economic and monetary integration— to get adequate regional and social policies going—through the institutions of the Community. We cannot achieve our professed aims if we are not prepared to provide the means. We cannot advance integration if each Government chooses or is left to cope as best it can with its own problems, within its own territories, with little or no reference to the aims and procedures of the Community.
The criticism voiced of the increases in the preliminary draft budget for 1976 are, perhaps, symptomatic of this approach. I would be more receptive of these criticisms if it were demonstrated that the previous level of Community expenditure was sufficient to achieve the aims we have set out. I doubt if this has been done. The conclusions in Rome did not, in fact, damage, as we had feared, the prospects of the further growth of national resources to be committed to the Community.
The monitoring of Community expenditure so as to ensure that it is properly spent and that value is obtained for money is a related aspect of this same problem. The proposals made by the United Kingdom, German and Irish Governments— and by the Commission—to secure more effective financial control over Community expenditure were accepted by the Council, with an indication that they should be examined expeditiously. This means that the European Parliament will be asked to examine, with the Council of Ministers and the Commission, the role which Parliament might play in controlling public expenditure by means of a committee or subcommittee—perhaps similar, in many ways, to the Public Accounts Committee. We also hope that the European Court of Auditors will be able to commence activities during 1976.
The Council also noted with satisfaction the strengthening which had taken place in the powers of the member of the Commission responsible for finance and the budget— without prejudice to the principle of the collective responsibility of the Commission, as laid down in the treaties.
Criticism of the budget often centres on the amount spent by the Community under the common agricultural policy. Agriculture absorbs more than 70 per cent of the total Community budget. On this subject, there is a great danger that a double standard will be applied. The Community have, for practical purposes, achieved a common market in industrial goods. This is of immense benefit to the countries with a large industrial base.
When we look to agriculture the picture is completely different. There exist in the Community controls which are contrary to the concept of free trade. The unity of the market which has been achieved or is in course of achievement for industry, is nowhere near being achieved in agriculture. The disruptive and protective effects of the monetary compensation amounts system are only too apparent to us all.
The slow rate of progress in developing other common policies is, in part, responsible for the high proportion of the Community budget devoted to agriculture. It is inevitable that expenditure on the most developed of Community policies should represent a significant proportion of total Community expenditure. Nevertheless, the amount we, as a Community, spend on agriculture, is equivalent only to about 0.4 per cent of the total gross national product of the countries of the Community. Further, this expenditure largely replaces national expenditure on agriculture. I made these points briefly at the meeting. The current position is that the report of the Council of Agriculture Ministers will be the basis for the examination of the admitted defects in the operation of the CAP—but without, in any way, affecting the principle of that policy. I regard this outcome as satisfactory to us.
An obvious way to strengthen the institutions of the Community is through the direct involvement of the peoples of Europe in the selection of members of the European Parliament and the enlargement of the Parliament's powers. Proposals on this were discussed in Rome at some length on both the first and second days of the meeting. The conclusion is that elections to the European Parliament will be held on the same day in May or June in 1978—as I proposed originally at the Paris Summit last year.
As Deputies know, the present position is that we are represented in the European Parliament by ten members or just over 5 per cent of the total. Under proposals at present being considered we would be given 3.6 per cent of the membership of Parliament. We would not regard this reduction in our proportionate representation as acceptable. There was considerable debate on this subject at the Rome meeting, with great stress being placed by some members on the need to observe strict proportionality as between membership and population. This question is referred back for further consideration to the Council of Ministers.
Other questions affecting the future and institutions of the Community were deferred until a later date. The report to be presented by Mr. Tindemans, taken together with the proposals by the German and Irish Governments and the Commission, will provide considerable material for debate and discussion in the not-too-distant future.
The meeting heard a report from those who attended the Rambouillet conference on the economic and social situation. The need was stressed for close co-ordination between the economic policies of the member States in order to consolidate the recovery which seems to have begun and to improve the present level of employment. My impression was that for most of the countries represented at the meeting the lowest point in the present depression had been reached, if not passed. This could have particular significance for us—with our high dependence on exports, but its effect will not be felt in a significant way before the end of 1976.
It is particularly noteworthy that the rate of inflation in Germany in the year to November, 1975 was of the order of 5 or 6 per cent. Our figure is more than three times that level. I cannot emphasise strongly enough the conclusions, reinforced by the discussions in Rome, that we will have no prospect of being able to benefit by the upturn in world trade if we cannot sell what we produce; and this we will most certainly be unable to do unless we can make our prices competitive. Growth, employment and the prosperity of our country depend on this.
When I came back from Brussels last July I was impressed by the strength of pessimism among the heads of government of some of the most powerful countries in the world as to economic prospects then existing. This time the meeting was more optimistic but, for us, this optimism must be tempered by the knowledge that there is a great deal to be done before we can provide a firm basis for a recovery in employment and economic growth. The community here must make a contribution in the short term to safeguard our future.
In conclusion, I would regard the meeting in Rome as having been a success in that some dangers which had been threatening us were staved off and advances were made in the further strengthening of the concept of a single Community: but I think that this success is still limited by the longer term dangers, some of which I have suggested in these comments. A Community which does not progress must go backwards. There can be no such thing as a standstill in the development of Europe. There is still a long way to go before we establish economic and monetary union envisaged in the Treaty of Rome and elsewhere.