55TH FINANCIAL SURVEY
Britain and the Common Market • Domestic Banking • Votes for Shares • The Company Report • Life Assurance Funds • State Pensions • Building Society Operations • The Unit Trust • SIR ROBERT BOOTHBY, MP DAVID BIRMINGHAM ROBERT HELLER A. N. MARLBOROUGH F. S. JAMIESON G. F. MENZIES GILBERT J. ANDERSON P. N. WISE
Britain and the Common Market
By SIR ROBERT BOOTHBY, MI'
THE ratification of the Rome Agreements by a substantial majority in the French National Assembly has turned the project for a Common Market from an aspiration into an imminent reality. It is now going to happen, and at no distant date. The consequences can be disastrous or immensely beneficial. Disastrous if it results In the exclusion of Britain, Scandinavia and other member countries of the European Payments Union from a closely knit international economy within Western Europe under the leadership of Germany; and therefore in the deeper division of an already truncated Continent. Beneficial if it leads straight on to the creation of a comprehen- sive trading area comprising the whole of Western Europe and its associated oversea terri- tories.
We are about to. enter upon negotiations with the six Common Market countries primarily in order to discover where we come in; and in so doing we should be well advised to bear in mind the walls of prejudice and suspicion we have succeeded in building up against ourselves on the Continent of Europe during the past ten years. Our best friends think that we would never have Put forward the plan for a Free Trade Area if it had not been for the threat of the Common Market. Our enemies think that we are out to destroy it. And the record unfortunately provides ample justification for their apprehensions.
Western Europe, in the aftermath of the war, afforded a splendid opportunity. for united action In the economic field. Productive capacity was low: Vast reconstruction was necessary. The co- ordination of investment plans, combined with the division of labour, industrial specialisation and a flexible exchange system, might have stimulated productivity in general, and mass pro- duction in particular, to the point at which the basic requirements of the modern world would have been met. Britain, at that time by far the Most powerful economic unit in Western Europe. should have taken the lead. Alas, we did nothing. We helped to sabotage the whole con- ception of planned investment when the Marshall Plan in launched, and refused even to partici- Pate n the discussions which led to the formation
of the Coal and Steel Community. Finally, when some of us produced a plan at Strasbourg de- signed to graft the preferential system of the Commonwealth and Sterling Area upon a com- parable system in Western Europe, and to pursue co-ordinated policies of economic expan- sion, it was ruthlessly rejected by a Common- wealth Conference on the recommendation of the British Chancellor of the Exchequer. So, for the time being, we are back in the old international struggle for external markets; and the dream of building a trading area which could stand on its own feet in face of the overwhelming economic might of the United States and the Soviet Union remains a mirage.
In the forthcoming negotiations we should ex- plain precisely why all this happened. It hap- pened not because we wanted to destroy the European economy and to live permanently upon the charity of the United States; but be- cause the doctrine of laissez-faire dominated the thinking of the 'experts' who decided the eco- nomic doctrines of the free world in 1945, and whose frantic efforts to revert to the classical ideal of free multilateral trade and a gold standard, which belongs to a world that no longer exists, have led inevitably to an endemic eco- nomic disequilibrium, accompanied by a per- manent and desperate shortage of dollars. Keynes himself became a victim of this 'one- world illusion'; and those of us who resisted the folly of indiscriminate liberalisation and con- vertibility were denounced as restrictionists and anti-Americans.
This accounts for the strong bias, especially in the United States, against discrimination in any form and against the formation of groups of countries for the pursuit of common economic objectives. It accounts for the American dislike of the Sterling Area and for the negative attitude of the International Monetary Fund towards the European Payments Union. It is also the reason why we are now trying to operate an inter- national currency system established at Bretton Woods, and an international trading system established by GATT, both of which are quite unworkable. Today we have another chance. But we shall not be able to take it unless we emancipate our- selves from the mercantile mentality of the nineteenth century and remember that no purely mercantile society has ever survived in history. The reduction of tariffs within a given area is good in so far as it stimulates competitive enter- prise: but, by itself, it is not the answer to the problems that now confront us. For example, so long as we fight inflation as separate economic units, on the basis of non-discriminatory trade, uncoordinated monetary policies and fixed ex- change rates, we are bound to lose the battle.
We need a conscious policy of international economic expansion, based on the co-ordination of monetary policies and investment plans, a far more flexible currency system, and the automatic provision of credits for countries in temporary balance-of-payment difficulties. This will require radical revision of the functions and powers of the OEEC and the EPU, which must be aligned with those of the Common Market; and also the rationalisation of the various functional authori- ties to which increasing executive power is bound to be confided by legislatures already staggering under the load of public business amidst the complex ramifications of our modern planned society. It is fantastic that, as we enter an era when major decisions of economic policy have to be taken at international level not twice a year but twice a week, the OEEC should be situated in Paris. the Coal and Steel Authority in Luxembourg, the Common Market in Brussels, and in all probability Euratom at Nice. They should immediately be brought together. Above all, we need to harness the industrial resources and expanding market of Western Europe to the raw material resources of our oversea territories in order to increase the production and trade of the whole. Britain alone no longer possesses the reserves, or the investing power, or the market necessary for the continued economic expansion of the Commonwealth on the scale now required; and it is essential to forge closer economic links between the countries of the Sterling Area and those of the European Payments Union if either organisation is to develop its full potentialities- or, indeed, to survive as economic units in the world that is now rapidly taking shape.
In this connection it is a pity that we should have gone off the deep end about agriculture, thus intensifying European suspicions, before discovering precisely what the intentions of the Common Market countries are. It is absurd to talk about the exclusion of all foodstuffs from the Free Trade Area when our own agricultural import policy is far more liberal, in the accepted sense of the term, than that of the Messina Powers; and when the latter have not the slightest intention of embarking on free trade in agricul- tural products. We have already subscribed to the first report of the OEEC Ministerial Com- mittee for Agriculture and Food, in which the main objectives of agricultural policy are set down as a rise in the living standards of the agri- cultural population, a reduction of price fluctua- tions, the stimulation of production in order to save imports, and a minimum level of home pro- duction. On this basis it should be possible to enter into negotiations, commodity by com- modity, with the object of increasing the produc- tion and consumption of food everywhere, and without jeopardising either the existing Common-. wealth preferences or the security of our own farmers. The truth is that we cannot enter the arrangements envisaged by the Common Market for agriculture, not because they are too liberal, but because they are too restrictive in character. Wheat and sugar are both ruled out on this account. What we can do is to consider various commodities on their merits, including special arrangements designed to promote stability and orderly marketing. In the case of butter, for example, where price fluctuations have been most severe, Australia and New Zealand would be just as anxious as Denmark and the Netherlands to participate in any scheme for regulating supplies to the London market; and should be invited to do so.
Let me conclude with a prophetic paragraph from Barbara Ward's book The West at Bay: `The British, the French, and the Low Countries, all assumed that the inter-war world could be a recognisable version of the nineteenth century with a gold standard, with free trade, with national sovereignty, with liberal ideas and capi- talist economies. The possibility that the first war had torn a gaping hole in the old fabric was not considered. . . . Over these days the last light of the Victorian sun still streamed, the light of a safe world of order and progress, the light of great certainties and greater wealth. But the illusion cannot be re-created after this struggle. For this time, it seems, all the pillars have fallen. The last ray of the old sun has been extinguished and if we of the Western world do nothing but look backwards, then "we are for the dark."' Have we, at long last, had a real change of heart? We shall soon find out.
Previous page
