Prime Minister
May I read out a statement first? I am afraid it has not yet been fully typed so I hope I can read some bits in my own writing.
This has been a very tough European Council but I am glad to say that we have achieved some of our major objectives; mainly on agricultural stabilisers and the continuation of the Fontainebleau mechanism for as long as the new Own Resources continue.
We have been setting in place, across the board of agricultural production, the mechanisms necessary to get that production expenditure under control and what is more—which is particularly important to us—under effective and legally binding control. That has been one of our major objectives ever since the last negotiation. And the longer we went on, the more I became convinced that we needed this control now and not at some uncertain time in the future.
All the forecasts coming in show that we need to put the brakes on agricultural production and spending now. We are going to do so by means of automatic and cumulative price cuts which will bite on output and spending; and for Britain we have achieved this as I indicated with a system agreed at Fontainebleau; 66%; of the gap and the 66%; comes through for compensating us for our excessive [end p1] contribution to Community funds and it is absolutely intact.
This system of rebates has saved the British tax payer £3,000 million over the last three years. It will continue to operate in precisely the same way and with similar beneficial results.
Now on the substance of negotiation, there really are some very tough results especially for example on cereals and oilseeds.
On cereals, depending on the harvest, we have got cumulative price cuts of 3%; a year for four years as soon as the harvest passes the 160 million tonnes threshold which will trigger the first 3%; price cut.
On oilseeds, the price cuts will be triggered at 70%; of the 1988 forecast production for rapeseed and at 75%; of the forecast production for sunflower and soya. This could lead to price cuts of up to 8%; on top of a price cut of 10%; on the 1987 crop and there will be further automatic price cuts in later years if production increase anymore.
We also have the examples of milk and beef which we dealt with under our Presidency in 1986 to show that stabilisers can achieve results. In both cases we have cut production, are reducing stocks so we are saving at both ends and we know therefore that stabilisers work.
Now I have made it clear that we were not prepared to reach agreement unless we had stabilisers that mainly involved price cuts.
Some stabilisers which we had expected to confirm here are being held up by the French. You know that in addition to the main stabilisers on cereals and oilseeds, there were a whole raft of [end p2] other—seven or other—stabilisers on things like olive oil, wine, sheepmeat—very important to us—tobacco, about seven of them which, frankly, we had expected to confirm here without any difficulty at all. We were amazed when the French refused to confirm them and said that instead of being confirmed at the European Council they must go to a meeting of Foreign Ministers.
Now I did point out that we had all Foreign Ministers here and if they could agree in two or three weeks time we could have had a special meeting here tonight so that they could have agreed then. This obvious factor did not escape them; they merely refused to have it. [Turns to Sir Geoffrey Howe
You were ready to go, weren't you?
Absolutely—I cannot tell you. Only a Frenchman could have done that. It is absolutely unbelievable.
Geoffrey HoweForeign Secretary
I would not have had to go very far.
Prime Minister
You would not have liked it would you? Never mind. But the Dutch and ourselves, so what happened? You know we got them all sorted out. We know exactly what they are to be and each of us has said we will agree to them all but if anyone moves on any, then we each unstitch our own. And this is why I expected it to be absolutely agreed without any trouble.
Now it has got to go back to Foreign Ministers so the Dutch and ourselves have made our agreement to this package here at Brussels conditional on the adoption of those seven/eight stabilisers in their present form. So it is on that basis that we [end p3] have agreed in principle to an increase in the Community's resources.
At present, 1.4%; VAT in theory but actually spending at 1.6%; VAT, I regret to say, up to—we changed the measure—1.2%; GNP. You will want to know what that is in VAT. It is up to 1.9%; abatement inclusive, 1.72%; not counting our abatement. This and the rest of the agreement is subject to its all being translated into proper legal instruments and parliamentary approval.
So we therefore achieve control over agricultural production and Community spending, continuation unchanged of the United Kingdom rebate for as long as the new Own Resources decision continues; that is the critical factor. So it cannot be changed without our permission, as it were, if ever we come to a new increase in own resources and also to a realistic increase in the Community's own resources.
The way is now clear for the Community to concentrate on its development, not least the completion of the single internal market by 1992; a development which is of great importance to our industry and commerce. They are at last moving forward. Now questions.
Question (John Dickie, Daily Mail)
It has been very confusing for us here today. At one stage of the afternoon you were being blamed no doubt by ill-informed people for the deadlock because of your so-called inflexible attitude. Later in the evening you are now being accused of ‘giving in’ by accepting the figure of 160 million tonnes as the cereal limit advocated by the French when you have said repeatedly in London that 155 million was your figure and nothing above it was [end p4] justifiable. How would you account for the change from deadlock to, in fact, agreement?
Prime Minister
Well I can tell you on the 160 million tonnes, on the new arrangement the price cut is triggered the moment you go one tonne above 160, it is an immediate trigger and therefore it triggers a 3%; cut—not the first year; it is 2%; the first year—a 3%; cut. The older maximum guaranteed quota either of 155 or 158—and we were on different ones, different people there—was not triggered immediately but there was a 3%; increase over and above that ceiling before the trigger operated. If you take into account those differences, you will find that the actual point at which it is triggered is not really very different.
Question (John Palmer)
Prime Minister, about twenty minutes ago, President Mitterrand said that at a certain stage in the negotiation you were presented with an ultimatum by the other eleven that if there was not an agreement in principle, the other eleven were willing to go ahead with an Inter-Governmental agreement and finance the Delors package themselves. Was that germaine to your decision to agree the 160 instead of the 150 cereals; a rate of growth for agricultural expenditure which in Copenhagen you described as “extravagant” and a bigger envelope for the total growth from the Community budget than you thought was prudent only a few weeks ago? Is that the reason why you made those concessions?
Prime Minister
The Inter-Governmental agreement did not come until very late [end p5] this evening. What took a very long time this evening was the sudden realisation that France was calling into question all of the minor stabilisers. Can I just tell you how it arose?
We had assumed that they would be agreed. So had everyone else. All of a sudden I heard a rumour, in the way rumours sweep this place. When we were having supper—now that was about half past seven—that the French were not going to agree and there had been some elliptical allusion to that at drinks before lunch. I was not there so I do not know. So I dashed off to see if this was true and we did not know and it would not have come to light—and this is what made me really rather concerned and feeling that we had not been treated straight—it would not have come to light had I been prepared to agree on a very sketchy note with multiple changes in ink and pencil and everything else and not very clear. So I said we were not prepared to agree on that. We simply had to have a detailed manuscript prepared. It took about an hour and a half. Then when it came back, we started to go through it and the first point was that the seven other stabilisers were agreed [sic]. Now at that point we knew for the first time. Now my concern was this: had I been prepared to agree on the sketchy note, we might never have found out that the seven stabilisers were not actually agreed and it was only insistence that we had a detailed, properly typed, properly updated, prepared note of what was in issue that we found out about this other thing. Now we were discussing that for three hours. Now the Inter-Governmental agreement did not in fact come up until the end of those three hours which can only have been about an hour and a half ago, perhaps two hours ago. It was right [end p6] towards the end. Now an Inter-Governmental agreement does not bother me at all. I was not in that particular one but in fact if you agree on Own Resources—and only if you agree—you have got to have an Inter-Governmental agreement until the Own Resources come into place. You see between approving it—and we cannot do that until we know about the stabilisers—between approving it at one of these meetings and getting it ratified by each and every Parliament, there are many many months gap and unless you fill those months with an Inter-Governmental agreement, you just will not have the amount to carry on.
So assuming that we get the stabilisers, we would be in on this Inter-Governmental agreement. Agricultural expenditure; 27.5 billion Ecu base plus 74%; GNP increase
Aside Comment
Compared with the 60%; you …
Prime Minister
Yes, compared with the 60%;. Now I do not know whether you have looked at the difference. It is comparatively small; 60%; of growth in GNP is about 60%; of something like 2½%; and the difference between 60%; and 75%; and 2½%; or 3%; GNP growth is very very small. I have not got the table here with me but it is not—this is why, because I came out to have a look at it to see what the difference was. [end p7]
Geoffrey HoweForeign Secretary
Could I just say one thing on Mr. Palmer 's question as he was asking about some alleged threat which he attributed to President Mitterrand, that the other eleven might go ahead with an inter-governmental agreement leaving us on one side?
The Prime Minister replied by explaining the routine, as it were, intergovernmental agreement, that will be necessary to bridge the gap between now and these decisions coming into force because, in fact, neither the Prime Minister nor I have heard, until you just mentioned it now, of any such threat. It therefore played no part whatsoever in our decisions.
Prime Minister
There was no threat at all. I must tell you, rather more, they were trying to persuade me to go further! But I cannot emphasise the stumbling block—over three hours discussing whether we could agree on stabilisers, over three hours discussing whether the Foreign Ministers could go and agree now and it being quite clear they could not, and it is absolutely crazy that we are fit in this Council to discuss three main stabilisers, but totally unfit to decide seven or eight minor ones. It is a Gilbertian situation, but there you are. I never did understand men! [end p8]
Question (TV/AM)
Prime Minister, is there any part of this deal which you are still dissatisfied with?
Prime Minister
One would have preferred, I think, to have got the amounts down, particularly the oil seed one which is quite expensive, but when you actually go into it a bit more closely, as we did between Copenhagen and here, you find that it is quite the toughest stabiliser of all by far.
What is more, although it is gripping at 4.5 million tonnes, forecast production this year is about 6.3 million tonnes, so it is gripping at a rate, as I said, well below forecast production.
The first year is a price reduction, on top of the 1987 percentage reduction of 10%;, of a further 8%;. The following year, that stabiliser goes up from 0.45%; price reduction to a bigger price reduction to 0.5%;—it will take it up yet another 2%;, and so if you look at it cumulatively it is a very very tough stabiliser and already gripping at a level of production well below that which is forecast. It is the most efficient stabiliser of all, because there is no ceiling to it. The more your production goes up, your price reduction automatically operates in the second year of half—0.5%;—quite the toughest, but one would have liked to have got the actual 4.5%; down a bit until you looked at the consequences of doing it. [end p9]
Same Questioner
On the structural fund, was any progress made there?
Prime Minister
It is about an 80%; increase on the structural fund.
The Commission had, in fact, put in a separate line of an extra 100 million for Portugal over and above the structural funds and we said we could not have it. We had borne in mind very much the needs of Spain and in particular Portugal in that increase in the structural funds and we could not take 100 million in addition, so that has been put back to within the structural fund increase.
Question
Prime Minister, I think it is true that originally you had said that the structural funds increase must be no more than 50%;, so on the structural funds and on the agricultural guideline and on cereal stabilisers, if I can go back to this point, we do seem to have stepped away from earlier positions.
I believe you reminded the Summit that it must bear in mind its responsibilities to tax-payers. Could you perhaps outline for us how what this deal does for European tax-payers in general and for the British tax-payer in particular?
Prime Minister
I have given you various VAT figures. Let me tell you that our net contribution is equal to an overall 0.5%; VAT. Now that shows you the extent of the rebate as things go up. No, I did [end p10] not tell my colleagues. It is actually 0.5%; VAT—that is with the rebate—so for the British tax-payer it is not too bad.
We have to take into account there are now twelve of us and yes, certainly, we do have to help Spain and Portugal, so on the structural funds my main concern was it did not go through 1½%; maximum non-obligatory expenditure unless we could fit in place some controlling discipline, because the moment you get above 1½%; maximum non-obligatory expenditure it looked at first as if we had no control over Parliament increasing it.
What we have agreed—you will find it in the text—is an increase of structural funds only which would go above that, but we have agreed among ourselves the maximum to which it can go and we are attempting to make that binding in what looks like a highly complicated amendment.
Jon Snow (ITN)
Prime Minister, deadlocked summits have been a bit of a way of life recently and tonight's news may come as a bit of a shock to the system for some.
I wonder whether you could put this into some sort of perspective. How do you view what has been struck today?
Is it the end of the threat of bankruptcy, as we know it, end of mountains? How would you set it in context? [end p11]
Prime Minister
Well don't get too cheerful! Don't forget we have got those other seven stabilisers to come through exactly as they are before we actually agree, and that is a hurdle to go through, but what we have tried to do, all of us, is make it absolutely clear that if they are changed at all then the whole agreement is cancelled, so there is still that hurdle to go. I think it was better to try to strain for agreement today.
What happened today was very similar to what happened at Fontainebleau several years ago. Remember then, we had previously had a European Council at which we disagreed, and then we went to Fontainebleau with President Mitterrand in the Chair, and at that time we got the financial settlement.
At Copenhagen this time, we did not agree, as you know, and all of a sudden, when the Presidency compromise came out some delegations—or one in particular—exploded and said that it could not possibly be a basis for agreement. There was then gloom and doom all over and one head of government made a very very dismal speech and I said: “Well look! Cheer up! Don't you remember what happened before? It was after a deadlock that we went to the next European Council and agreed!” That, in fact, has been the precise pattern that has obtained here.
Dismal gloom and doom Copenhagen, everyone very concerned except those of us who had seen it before were not too concerned. I said at the end of it: “Cheer up! We shall probably do the same at Brussels as we did at Fontainebleau!” and that is how it has turned out to be. [end p12]
Question
Prime Minister, I wonder if I might for a moment, with your permission, ask you to change tack slightly?
If I could ask you about your bilateral meeting with the Irish Government, Mr. Haughey said afterwards that he felt that the British present position was not satisfactory and that Anglo-Irish relations were at an impasse.
Could I ask you for a reaction that please?
Prime Minister
No, I would not say they are at an impasse. I listened very carefully and courteously in a very dignified meeting to what Mr. Haughey had to say, of course I did—I owed that to him—and then, at the end, he knows full well that the legal system in Britain is totally impartial and politicians rightly cannot interfere with it. Decisions on prosecution are not for politicians—they are for the prosecuting authorities—and the Appeal Courts, of course, are totally impartial, so there is nothing I can do or would seek to do or would wish to seek to do about that independence of the total legal system, but I did say that I thought it very important—and both of us did—that the Anglo-Irish Agreement continues. I think therein lies hope for the future and I think it very important, and in both our interests that security cooperation continues, because both of us are liable to terrorism and in that way we parted.
Mr. Haughey had perhaps hoped for something which was unattainable, but there will be an Anglo-Irish Council under the Agreement next week—one of the regular councils. [end p13]
Question (same man)
Do you feel the Agreement is damaged by this current difficulty in your relations with the Irish Government?
Prime Minister
I do not think it is damaged because I think we both know the importance of it continuing.
John Simpson (BBC)
Prime Minister, your public statements over a matter of years have rather led people to expect that the end of this process would be a clear control over agricultural spending in the Community. This is clearly a very complex agreement that you have reached. There are a great deal of extremely complex figures in the whole thing, but it does seem to have the air of a compromise. It does not seem to be quite the clear-cut decision that you have led people to expect.
Prime Minister
Well, first, you have stabilisers based on price to an extent that we have not had before. It was very important to get some of our other colleagues on to a price reduction as the main mechanism for holding down production. That has not been easy, as you know, particularly on cereals.
Secondly, we refused to agree unless these were turned into effective and legally-binding regulations, because on previous [end p14] occasions I have taken the Minute of the European Council. That has never turned out to be legally binding, although we had hoped it would be, so these are being turned into legally-binding regulations, and will have to be approved by Parliament. So that is much more bite than we ever had before.
The third thing is that we have always wanted the growth in agricultural expenditure well below the growth in own resources. What we have got now is, as I indicated, 74%; growth of GNP, so it is well below the growth of GNP, which gives you some headroom in an own-resources decision, based upon a percentage GNP, so that is quite useful as your agricultural expenditure is growing very considerably less than the own-resources based on GNP.
John Simpson
I have got to explain this to a really large audience tomorrow, Prime Minister, and I really do not think they would understand necessarily all of that answer!
Prime Minister
No, I should not think they would, especially on a Saturday morning!
Look! What we have agreed in previous days was not enforceable because it was not legally binding. This time we are turning it into regulations, so that we can enforce what we have agreed. [end p15]
Second, agricultural spending should not go up as fast, because we have got it much lower than the growth of national income. That is the simplest way in which I can put it. It might not be technically correct.
Geoffrey HoweForeign Secretary
I think the point is that it is the detail that makes it difficult for you to explain that makes it effective! (laughter)
Question
My question is to the Foreign Secretary! I am just thinking about the events in the Occupied Territories, which seem to be as bad as in the past week. There has been a declaration in Bonn that there has been a plan which seems to be new from the USA. There has been no response yet from the Community.
Did you have any contact with other foreign ministries on that subject? Have there been talks and can you say anything about the response of the Community?
Geoffrey HoweForeign Secretary
No, I cannot say anything about that this evening. There has been no discussion of it at all here in the last two days, because we have had other things to concentrate on.
As you know, we did discuss it at the meeting of foreign ministers in Bonn last Monday, expressed our opinion then, and there is nothing more I can add on it tonight. [end p16]
John Fraser (IRN)
Prime Minister, we have been coming to two summits at which you were prepared to go away with a failure rather than a fudge. We heard before you came to the Brussels Summit again that you were seeking a deal that would effectively control Common Market farm spending. You were not prepared to have a fudge; you were prepared to go away with a failure instead.
The problem is, Prime Minister, you do not look happy enough! Is this what you have been striving for for a whole year, for maybe nine years, or is this going to be yet another deal that is going to come apart in two or three years? Have we got the food mountains under control? Are we going to see more food mountains?
Prime Minister
Look! I think if you were a farmer and you were told that on top of a 10%; price reduction you were going to have a further 8%; this year on crops already in the ground, you would not think that this was anything other than a very tough settlement. I mean, you just imagine it, you know, on your own income! It would be quite tough, wouldn't it? (laughter) Yes? Well, you see!
Question
Prime Minister, I would just like to return to Anglo-Irish relations. You have said that you do not believe that Anglo-Irish relations have in fact been damaged. [end p17]
Mr. Haughey clearly believes that they have. I would like to ask you, do you believe that some new measures are required to restore confidence in the Anglo-Irish Agreement within the Irish Government, within the Irish people and within, particularly, the nationalist people in Northern Ireland, after the so-called Stalker affair?
Prime Minister
No. I think the main thing is to continue with meetings under the Anglo-Irish Agreement. Tom KingThe Secretary of State for Northern Ireland will, in due course, be making a statement about the matters that fall within his jurisdiction, on discipline and any structural changes in the RUC, and I hope that that will be before too long.
Question (same man)
(inaudible)
Prime Minister
Do you know, I asked today how long the Irish problem had been going on. I have always thought 400 years. I was told 700 years, so you know, you have to have quite a long perspective.