1 FEBRUARY 1963, Page 26

No Surrender to De Gaulle

By NICHOLAS DAVENPORT THg gentlemen in Throgmor- ton Street, who had taken the failure of the Brussels nego- tiations very badly, need to be reminded that General de Gaulle cannot destroy the economic livelihood of Great Britain. We are a world- trading nation and only about 16+ per cent, of our total ex- ports go directly to the EEC (nearly as much goes to the rest of Western Europe). As Mr. Maudling said recently, `If we keep our costs under control, and in particular the level of incomes [TUC please note], the prospects of winning our full share of world trade in 1963 are good.' The fact that in the first nine months of 1962 the British share of the world trade in manufactures stopped declining seems to indicate that British goods have become more, not less, competitive. This could well follow from the steep rise in wages on the Continent. Last year wage rates in Ger- many and France rose 8 per cent. and in Italy about 12 per cent. against under 4 per cent. in the UK. Bearing in mind that the continental industrialist has to bear a higher share of the

cost of welfare services than his opposite num- ber in Britain, labour costs in the EEC are approaching and will soon be exceeding those in this country. What else would you expect if the Common Market pursues its mad policy of keep- ing up the prices of its food and feeding stuffs?

There is no country in the world which enjoys such favourable terms of trade as the UK. By the end of last year the index of our terms of trade, which is the import price index expressed as a percentage of the export price index, had fallen to 85—against 101 in 1955. (This was really too favourable, for if the overseas suppliers of our food and raw materials had been getting better prices they would have been able to buy more of our manufactures.) It is this favourable trading position which angers General de Gaulle, for he would like our workpeople to buy dear food, in particular dear wheat, from the French farmer. Indeed, he has said that we must give up our unique and favourable system of feeding, which he described as 'the importa- tion of foodstuffs bought cheaply in the two Americas and in the former [sic] Dominions.' This was incompatible, he said, 'with the system which the Six have established quite naturally for themselves.' (But what a tussle they had to get the Five to accept this French farm racket, which means making them pay to the common

fund for farmers 'any saving they would achieve in fetching their food from outside instead of eating what the Common Market [i.e., mainly the French farmer] has to offer.') Fortunately, as long as we retain our economical way of feeding and trading at competitive prices, we should be able to earn a living in the markets of the world.

I am sure that General de Gaulle has no desire to destroy our economic livelihood—pro- vided we keep outside the EEC. That is not his way of avenging Waterloo. What he was attack- ing in his famous press conference of January 14 was not the trading position of Great Britain, but the trading policy of President Kennedy which is based on the Atlantic community. The General will have none of the Atlantic com- munity. His objection to the entry of Great Britain into the EEC was because it would make an altogether different Common Market—'one which would be taken to eleven and then thirteen and then perhaps eighteen . . and ultimately appear as a colossal Atlantic community under American dependence and direction, which would quickly have absorbed the community of Europe. It is a hypothesis which, in the eyes of some, can be perfectly justified, but it is not at all what France is doing or wanted to do.'

President Kennedy must have bristled when he read the transcript of this remarkable declara- tion of war on the Atlantic partnership. From the beginning he had realised the dangers of a European Common Market which turned in- wards and not outwards, which composed its trading affairs like a huge cartel. American ex- ports of wheat and feeding stuffs would suffer, not to mention important American manufac- tures. It was to prevent the development of a restrictive trading group in Europe that the President induced Congress to pass the Trade Expansion Act enabling him to cut and eventu- ally abolish tariffs on a range of manufactures in which America and the EEC account for 80 per cent. of the world's trade. In his State of the Union message of 1962 he declared he wanted `to build in partnership a new trading community in which all free nations may gain from the productive energy of free competitive effort.' This was the logical development of the con- structive aid and trade which was begun in the great Marshall plan and saved Europe from ruin after the war. Failure to construct this Atlantic partnership could, as the President said, affect the unity of the West and the course of the cold war.

If General de Gaulle sets his lace against the Atlantic trading community he must expect trade reprisals from Congress. The great American market will not be opened to EEC manufactures if the EEC shuts out American wheat and feed- ing stuffs. But it could be opened to the UK and EFTA. The significant fact is that trade in the manufactures common to the US and EEC covers $2,000 million of goods if the UK is inside the EEC and only $500 million if the UK is outside. When the great European invest- ment boom is over—it is already fading visibly —and unemployment is rising sharply in Ger- many and Italy, there will be a howl of rage in the EEC against the short-sighted policies of General de Gaulle. It is doubtful whether the Common Market as an institution could survive a real slump. But if President Kennedy offered the tariff cuts in common manufactures to the UK and its partners in the EFTA there would be no doubt about the survival of the trading community of these offshore islands.

There is, of course, much more to the de

GaulIg opposition to the Atlantic trading com- munity than meets the trading eye. Of this others are more competent to write than I, but it seems fitting for me to put the economic case for British survival—indeed, for British export revival—in print before the Stock Exchange concedes vic- tory to Le Roi Soleil.