Prime Minister
As you know, the Council has had to grapple with some very difficult issues affecting the future of the Community. We have made as much progress as we can at this stage while leaving longer-term issues for further discussion. Throughout the last six months and particularly at this meeting, we had the benefit of an excellent Spanish Presidency.
Britain has played a very active part in arriving at Conclusions which we can all accept. Let me take you quickly through the main issues:
We have had a very good reaffirmation of the priority importance of completing the Single Market with the emphasis on the areas of particular interest to the United Kingdom—financial services, technical standards, transport and public purchasing.
It is accepted that there will not be a Withholding Tax which some had tried to make a condition for the abolition of foreign exchange control. You will recall that the main countries are committed to abolition by 1 July 1990. [end p1]
We have wide acceptance of the need to keep checks at frontiers, against drugs, terrorism and criminals, expressed in the report of the Coordinator's Group which the European Council accepted, while making free movement for law-abiding citizens a greater reality.
On the political side, we have all expressed our utter condemnation of what has happened in China and set out a number of measures which we all agreed to take.
We have also reached conclusions on the Middle East and on the Lebanon.
Of course, the main issues have been economic and monetary matters and the social dimension.
On the economic and monetary matters, the main practical achievement of the Council has been to agree on the early implementation of Stage 1 of the Delors Report. This involves completion of the Single Market, abolition of all foreign exchange controls, a free market in financial services and strengthening of competition policy, which of course means reducing subsidies. These are all things for which the United Kingdom has campaigned strongly and where we are well ahead of other members of the Community.
It also draws attention to the importance of all member states joining the European Monetary Exchange System of the EMS. I made a statement on that which was received positively.
We have also agreed to do further work on what might eventually follow Stage 1, but we have reached no conclusion about that. [end p2]
We have accepted the Delors Report as a good basis for this further work but not the only basis. It will be possible to bring in other ideas and other approaches for the progressive realisation of economic and monetary union, but let me emphasise that there is absolutely nothing automatic about going beyond Stage 1. All that is for future decision.
This further work will of course be difficult. There are substantial differences of view. We shall, of course, set out Britain's views clearly and vigorously.
On social matters, of course we accept that there is a social dimension to the Single Market.
The Conclusions contain a very satisfactory recognition that the highest priority is creating conditions for more jobs. We do not believe that the proposed Social Charter would help job creation and that is why we could not accept the Conclusions of the June Social Affairs Council and we have confirmed that refusal here.
We believe that by imposing extra burdens on business, it would make the Community less competitive. There are very different traditions of how we handle these things in different member states and we do not accept the need to have it all determined from the centre.
The Conclusions do bring out a very important point, namely, that national legislation and voluntary agreements have an important role in achieving the Community's social dimension. We shall be putting this viewpoint very strongly in the further discussions which will take place. [end p3]
To sum up: we have agreed at this Council on what can be done now and we have set the scene for further discussion of other issues over the next months and years ahead.
Yes, there are very difficult issues to be resolved on which views differ widely. Let me just remind you how much Britain has contributed to shaping the Community over the past few years: reform of the Common Agricultural Policy; establishing the Single Market; and getting the budget under control. We shall be just as active and just as vigorous in fighting Britain's corner in future discussions.
May I have your questions, Ladies and Gentlemen, please! [end p4]
John Dickie (Daily Mail)
It seems that you have conceded at least one point on accepting the need for an inter-governmental conference which might involve changing legislation in the United Kingdom.
Are there any other concessions you have made and how do you balance the pros and the cons?
Prime Minister
With regard to an inter-governmental conference, a decision will have to be taken when it is thought that one should be convened. I have been through this before. Let me tell you what it is: A decision to convene an inter-governmental conference can be taken by a simple majority vote. So we may vote in the minority, but it will not stop an inter-governmental conference from being called. The Conclusions of that inter-governmental conference have [end p5] to be reached by unanimity and it is quite clear from round that table that they would have a simple majority very very easily, so in fact one is conceding nothing, but of course one has not been convened and our task was to get in words which meant there must be full and adequate proper preparation long before any inter-governmental conference could be called.
I have not the slightest shadow of doubt we shall vote against it at that time; I have equally not the slightest shadow of doubt that we shall be in the minority.
George Jones (Daily Telegraph)
In the House of Commons in May, you said that the Delors Report would effectively mean political union and a United States of Europe and that the Government did not believe there could be future treaty amendments based on that. Is that still your view?
Prime Minister
Yes. As the Delors Report is on Stages 2 and 3, yes, the number of fundamental issues that will be transferred from national parliament to a rather amorphous group of people whose duties and rights are not specifically defined but who are not publicly accountable, that transfer would be very considerable indeed. It [end p6] would be the biggest transfer of national sovereignty that we have ever had and I do not think it would be acceptable at all to the British Parliament that we should transfer certain fundamental rights over the Budget, over the Budget Deficit, over economic structure and over monetary policy to another group.
But I think we have to remember—and it is brought in on me very vividly every time I come to these European Councils—that Parliament plays a very central position in the accountability of the Government to the people. I will go and make a statement on Thursday about what happened here. I will be cross-examined on it for about an hour. That does not happen in many other places. I think Mr. Gonzalez goes down to his Parliament about three times a year to make a statement and is not cross-examined. So we really are the Mother of Parliament and Parliament is central and, of course, central to Parliament itself is control over the Executive as far as finance is concerned, so that goes to the heart of the Delors Report.
Question
Prime Minister, do you think that your reformulation of our position on the Exchange Rate Mechanism at least allows the possibility of us entering before the next general election? [end p7]
Prime Minister
I cannot give you a date at all. What I know is that we are ahead of many of our partners in the Community in doing certain things. We have free capital movement; we have abolished exchange controls; we are anxious to get on with the Directives on freeing-up investment services and we are very pleased with the recent Banking Directive.
We are very anxious to have freer trade. For example, ships from the continent of Europe can pick up business in our ports—cabotage business—we cannot automatically pick up business in their ports. We are much freer on shipping cabotage than they are. In fact, we have not been able to get reciprocal treatment at all so in the Merchant Shipping Act we have taken provision not to allow freedom of cabotage because they are not doing it.
On transport cabotage, which both Ruud Lubbers and I were very keen to have so you go across Europe and you can pick up loads, say, from Rome, across Europe as you come back. We cannot do it at the moment. They will not allow that kind of freedom, so we are way ahead of them in many of the freedoms and what we can do about joining the Exchange Rate Mechanism will to a large extent depend upon how much further they are prepared to go in freeing things up so that we have a fair basis upon which to join. [end p8]
Question
Prime Minister, could I ask you a two-part question on Anglo-Irish relations after your meeting with Mr. Haughey and the review of the operation of the Agreement?
Do you foresee any political developments in Northern Ireland in the near future and secondly, what is your present position on the issue of extradition?
Prime Minister
My position on the use of extradition has not changed. There are some extradition cases which go ahead but we obviously would like more to go ahead.
Secondly, with regard to the Anglo-Irish Agreement, the review is completed as to its working. The review went very well and I do not think there is anything fresh to report at the moment.
I am afraid that does not make very big news for you but it makes good news for the people.
Jeff Mead (Press Association)
In the context of this Summit, it has been suggested that you no longer command wide public support in the wake of the Euro-elections. Would this help to explain your softened tone and your positive approach, particularly on the KMU question? [end p9]
Prime Minister
Bearing in mind that we in fact were instrumental in reforming the CAP, we were instrumental in getting a sound budget, I would not say that my approach has differed at all. On the European Monetary text that we spent such a long time considering, it was not I who was isolated—it was President Mitterrand.
Question
Prime Minister, you have spoken about the possibility—indeed the probability—that you would be in a minority when a decision comes to be taken convening an inter-governmental conference.
Are there any circumstances in which you might refuse to participate in such a conference if you felt the preparations were not full and adequate?
If I could just add to that, why do you think it was you were not able to secure the support of a single other member state on the question of the social dimension and the Social Charter?
Prime Minister
With regard to your first question, I think it is never right to leave an empty chair because in fact, last time this happened we went along and took part in the discussion. To leave an empty chair means you have no influence over the discussion. You are right in one respect: it would of course mean that you could not get unanimity from an inter-governmental conference if you did not go, but I think it is bad policy to leave an empty chair. [end p10]
On the social dimension, it is extraordinary how much support you get for the ideas which you put—extraordinary how much support. Speech after speech made the point that we are all at different stages of development, we all have a different history with regard to trade union matters or which social service we have encouraged and I think you will find that the text which has come out says that all of these differences must be taken into account and that the principle of subsidiarity must be observed which means, of course, that many things are not suitable at all for the Commission and should be left to the national countries. And so one got in fact in the speeches quite a good deal of support and it was quite clear that some people thought that it was only a solemn declaration which as you know it is not—it is the basis for many Directives.
Some of those nations there have not yet ratified this Charter which, of course, is the European Social Charter of the Council of Europe. We have and implemented it, and so, just to make certain that we were not taken to task about our social policy, I brought ours along because of course it is very much more advanced than some countries. In other respects, some others have advanced in different things. So there is ours—available for everyone. It is an extremely good one. And what emerged from the definition and from the discussion was that many people take a similar view to what we do and I think that because of the view we have taken that [end p11] there is not unanimity. We might find that our view will prevail and it is a very good principle that you leave most of your social services to your national countries and do not have them dominated by Directives from the Commission.
When it comes to employment which of course is part of the social dimension, we actually have created more jobs—three million jobs since 1986—than anyone else in the Community. So we are actually, on practical achievement, well ahead of most.
Question
Last year, after the Hanover Summit, you mentioned no need for a single currency in Europe. Do you still think so?
Prime Minister
I think there is no need for a single currency in Europe. You can have your monetary policy by many other means and on the whole, we have gone with monetary and economic policy towards convergence by voluntarily adopting the same sound policies. I do not think there is any need for a single currency.
Peter Jenkins (The Independent)
Prime Minister, do you have any vision of your own of an economic and monetary union but beyond Delors Phase 1 and different to his vision of it? [end p12]
Prime Minister
I think that we shall probably hope to have further papers put in to the further study. I think this week's “Economist” had a very good article pointing out that there had been no discussion at all of precisely what an economic or monetary union was—the various different models.
Normally, if you are asking for a study to be done, you would say: “Look! I want a study of various different models of economic and monetary union, the steps that have to be taken, what can be achieved from each, the drawbacks to each!” None of that was done at all. They did not even consider how to define it, let alone the steps which should be taken towards different models. It was, I thought, a very good article and there have been quite a large number of articles recently which have been much more critical of that Report and which would consider alternative ways.
We shall have to pursue this fairly closely to see if we can get different models put in for a further stage because clearly, Stage 2 is pretty well open and the Delors Report is only one basis on which Stage 2 has to be considered.
I might say straightaway that there are some things in Stages 2 and 3 which most of those people simply would not have. One thing which occurs readily is that one of the Stages says that you have to go absolutely to parity, to a rigid exchange rate—no latitude at all. Well some of them just would not be in it on that basis and also it seems to be quite absurd. You build in a rigidity like [end p13] that then you are building in enormous distortions elsewhere. I come from the Bretton Woods period. I remember only too well in Parliament many times when we just simply could not hold the parity any more and down came Ministers to the House of Commons—we must out public expenditure, we must out various social services, we must have a prices and incomes policy, and of course with your interest rates you lose a good deal of latitude the more rigid you become and I think that many people would not agree to that straightaway. In fact, I think once we get the discussion you will find a lot of people will disagree with what it proposes and we might try to find a new model. It is an interesting intellectual exercise, economic exercise, monetary policy exercise, but we will have to embark upon it. If you have got any ideas, let us know!
Michael Jones ( “Sunday Times” )
Prime Minister, how do you react to being described as “a brake on Europe” and bearing in mind who said it, how do you look forward to the French Presidency of the Council?
Prime Minister
It is a bit rich isn't it, someone who has not got freedom of capital movement and has not abolished exchange controls and who wants to put more taxes in order to do it, calling me a brake on Europe? François MitterrandHe has scarcely got into the car yet! (laughter) [end p14]
Charles Grant ( “The Economist” )
Prime Minister…
Prime Minister
I hope you heard what I just said! I shall watch your articles with the greatest possible interest! There were three articles—it was one I was referring to.
Charles Grant
From your kind comments on our article, would I be right in imagining that having committed yourself today to the long-term goal of economic and monetary union, you would favour it so long as it did not involve central control of budget deficits and other sorts of political superstructure—you would favour a minimilist goal of monetary union?
Prime Minister
Yes, that is correct but the commitment comes from a phrase in 1972 before we actually joined. The phrase is: “The progressive realisation of economic and monetary union.” It goes right back to that.
That particular phrase was repeated in the preamble to the Single Act and what we are committed to is not economic and monetary union but to the progressive realisation and I say the difference, because one has the meaning of stages, namely that you kind of see [end p15] the necessity for each next stage and absorb that next stage without going pell well for something which describes itself as “economic and monetary union” which might not suit the twelve member states.
So it comes from that 1972 agreement before we joined.
Raymond Lloyd (The new Internationalist)
The Queen has just installed Juan Carlos as a Knight of the Garter. Is Britain taking any initiative to invite Spain to become a member of the G7 at the Paris Summit next month?
Prime Minister
The short answer is: No. It was a marvellous ceremony; we were all delighted with the honour. We have no proposals at the moment to enlarge G7. If and when we ever do, there are a whole lot of people who would like to be considered as the next candidate.
Question (Channel 4 News)
Prime Minister, you spoke earlier of President Mitterrand being isolated in the Community. Does this herald a new era in relations within the Community? [end p16]
Prime Minister
No. Let us be accurate! I spoke about François Mitterrandhim being isolated for a time on the text of Economic and Monetary Union and the real point of battle, if you want to know and if you go and look at it, was 4b of the communique. That was the real point of battle and we went on that for a very long time and he was isolated and said that he could not agree with it unless we changed it.
In the end, we only did one minor change and then he agreed, but it was not I who was isolated. But do not say he was isolated altogether. Of course he was not, but on that point it was really rather nice for me to sit back and say I could accept the text and see other people not being able to!