---

European Communities (Finance) Bill

I am rather tempted by the new clause. As I said in the clause stand part debate, there was a major failure in the negotiations to establish a link between the rebate and agricultural policy. It seems in principle, unless the Minister can persuade us to the contrary, that the new clause provides a mechanism for retrieving the situation. Let us look carefully at what the Prime Minister said about the review in his statement to the House in December last year, when he brought back the agreement. He clearly thought that he had extracted a major concession in return for the negotiations on the rebate. He said:"““Alongside this agreement on… the modernisation of eastern Europe, we also agreed on a fundamental review of all aspects of the EU budget, including the common agricultural policy… with the recommendation that it begin in 2008.””" The two subsequent sentences are crucial. The Prime Minister said:"““As the language in the European Council conclusions makes… clear, it is then possible for changes to be made to this budget structure in the course of this financing period.””" Of course it is possible, but why should the Governments who resist reform of the common agricultural policy agree? What possible incentive is there for them to do so? The French Government will almost certainly refuse to renegotiate. What possible leverage do the British Government have in carrying through the Barroso recommendations? The following sentence is even more substantial. The Prime Minister continued:"““This will also allow us to take account of any changes agreed in the World Trade Organisation round””.—[Official Report, 19 December 2005; Vol. 440, c. 1564.]" That is terribly important, because we keep being reminded—rightly—that if the negotiations fail, there will be disastrous consequences for the world economy, for Europe and for the United Kingdom. During the last few weeks, Mr. Mandelson has been ominously quiet. There is a real and growing worry that the negotiations may fail, primarily because of difficulties in the American Congress but also because of the intransigence of agricultural interests in Europe. In the next few months, we may well be faced with disastrous circumstances in which our negotiations fail for the first time since the second world war, opening a Pandora's box of protectionism. The British Government should be, and according to much of its rhetoric will be—and we hope it will be—in the vanguard of efforts to prevent that from happening. However, what negotiating clout do they have in making other EU members come to an agreement with the Americans at the World Trade Organisation? There is no leverage; there is no negotiating position if it has already been conceded.