The T.U.C. and Europe
By GEORGE WOODCOCK* THE Trades Union Congress has never been enthusiastic about proposals for closer politi- cal and economic association of Great Britain with the continental countries of Europe. The TUC only began to examine closely the impli- cations of Britain joining a European free trade area when, in October, 1956, the British Govern- ment had to make a decision as to whether or not it would be willing to enter into negotia- tions with other countries in the Organisation for European Economic Co-operation for the estab- lishment of a free trade area in Europe.
For the TUC, as for the Government, the de- cision was not a simple choice between a free trade area in Europe and letting things stay as they were. It seemed almost certain that the Par- liaments of the six Messina Powers—Belgium, France, Germany, Italy, Luxembourg and the .Netherlands—would ratify a treaty already signed by their•governments forming themselves into a single economic community. This would force the rest of the OEEC countries, including Britain, to decide whether to join the economic union as full members, to stay outside and ignore the whole business or to invite the countries of the economic union to join with them in a looser form of economic association, i.e. a free trade area.
The TUC agreed with the Government that it was impossible for Great Britain to become a full member of the close economic union in Europe, but that if it were formed it would be unwise for us to stand right outside and see our industries practically excluded from an important and growing export market. A few individual members of our General Council were keen on Britain joining a free trade area as a wise move in itself and also as an encouragement towards a closer political as well as economic association of Western European countries. But the official attitude of the TUC—that of the three alterna- tives the third was preferable—rested mainly on the knowledge that it was the only one practicable for Great Britain. • Since that decision was taken the TUC has -taken a closer look at the prospects. The effect of free trade with Europe on the structure of British industry may be guessed at but cannot yet be measured. The Government hopes that free trade will cause output to grow over the whole free trade area. But it is certain that in each of the countries whilst some industries will be able to expand others will be forced to con- tract. It can cause difficulties for particular firms —perhaps put them out of business altogether— even in industries which, overall, ought to come out very well. Consumers should certainly expect to benefit from the abolition of tariffs and from keener competition. But Britain (and British workpeoplc) as a whole will benefit only if on balance British industry gains more than it loses. The TUC has warned the unions that 'even our most strongly placed industries could not take advantage of the wider European markets unless they make themselves fully competitive.' On the whole, however, the TUC is cautiously optimistic about Britain's prospects, though we shall have to wait until a treaty has been drafted before we can see more clearly what the pros- pects will be. In the meantime the TUC is in regular touch with our own Government and with European trade union opinion through the Inter- national Confederation of Free Trade Unions.
The main purpose of a free trade area is, of course, to abolish tariffs among the countries of Western Europe. But there are other matters for which it will be necessary to make provision in the treaty. At this stage, when negotiations are proceeding, the TUC is naturally mainly con- cerned to urge the British Government to press for provisions in the treaty which we think will improve the prospects for Britain.
The TUC's views as to what should be put, in and what should be left out of the treaty cover matters of detail and procedure. I have dealt below only with our conclusions on some of the more important matters. To what extent the TUC will be able to persuade our own Govern- ment to press these in negotiations is still a moot point. In any case, we know from our own ex- perience of collective bargaining how much successful negotiations depend upon a willingness to compromise. Members of the TUC General Council are now attending the conference of. European industrialists and trade unionists which opened in London on February 19 and we shall be most interested to see how repreSentatives from the other European countries react to the TUC's views.
FULL EMPLOYMENT: The TUC believes that unless each of the countries concerned can main- tain a high level of employment it will be im- possible to maintain free trade between them. Our experience of bad trade in Britain between the two World Wars proves to us that national governments cannot withstand demands for pro- tection from heaVily depressed industries. The British Government agrees that it will be neces- sary for the countries of the free trade area to pursue the objective of full employment and that they should act individually and in concert to this end. The Government also agrees that the objective of full employment should be specifi- cally referred to in the treaty. But it does not think it possible or necessary to go further thait a statement of general aims similar to those set out in the OEEC Convention of 1948. We, however, suggest that the treaty should do more than assert the general desirability of full employment and that it should include a statement of the methods which the member countries would adopt individually and collectively to maintain .full employment and should also specifically oblige 'countries to draw up plans and provide for the exchange of information and consultation on the means of maintaining full employment.
INTERNAL SOCIAL AND ECONOMIC POLICIES
There will have to be provisions in the treaty re- stricting the right of governments to attempt to offset the effect of tariff reductions by direct or indirect assistance to industries—as, e.g., by sub- sidies. The TUC realises that it will be quite impossible to abolish tariffs without at the same time prohibiting a government from giving equal or greater protection to industries simply because they are unable to stand up to the competition of imports from other countries. Nevertheless, the TUC thinks that restrictions on the right of governments to aid particular industries should not be pressed so far as to prevent a government from taking 'such internal action as it considers necessary to promote particular social or economic policies.' In this connection the policies the TUC has in mind include development area policy by which a British Government can offer, inducements to influence the distribution of in- dustry; the ability to discriminate in the tax allowance for depreciation to different industries; the ability to assist industries for strategic reasons; the right to control the home price of coal and steel while leaving export prices free; and the right to give protection by quota for films on cultural grounds. Perhaps I should men- tion here that the TUC is not necessarily sug- gesting that the British Government ought to do any or all of these things. It is merely that we think that the free trade area treaty should not prevent a British Government from doing these things provided the purpose is not mere pro- tection.
TRADE DISEQUILIBRIUM : Even if free trade causes both trade and output in Europe to rise, it is fairly certain that some of its members will on occasions find themselves in balance of pay- ments disequilibrium. In the view of the TUC a member of the free trade area should be entitled to restore equilibrium without having to resort to internal deflation. It is, of course, possible for the free trade countries to arrange among them- selves for credits to tide individual countries over temporary balance of payments difficulties. It might, for example, be advisable for them to de- velop the credit-granting functions of the Euro- pean Payments Union. Failing this, or in addition, the TUC believes that 'any agreement for the establishment of a free trade area should ac- knowledge -the right of member countries to restrict imports for balance of payments reasons in accordance with the provisions of the General Agreement on Tariffs and Trade.'
HARMONISATION OF SOCIAL REGULATIONS: Some countries are anxious to write into the treaty provisions for harmonising the social regulations of the member countries—i.e. regu- lations concerning equal pay for women, holidays with pay, family allowances and so on. As an example of what the TUC believes should be left out of the treaty we think that matters of this kind should not be dealt with except by way of a 'general right of complaint for any member who thinks he is damaged by diversity in such inter- nal legislature and administrative measures.' As si,steP towards harmonisation the TUC would be glad to see in the treaty an obligation on all members to ratify ILO Conventions. We also assume that the treaty will not pre- vent Great Britain from controlling capital movements, or the movement of labour, and that it will not prohibit anti-dumping legislation. I realise that these are highly contentious [natters as to both principle and detail. I am even more keenly aware that it has not been pos- sible in a short article to describe in full the considerations which have led the TUC to the conclusions set out above. No country can expect to get into the treaty all the conditions and safe- guards it desires and at the same time be able to keep out matters that others consider all- important to them. Nor does the TUC.
But our points are not put forward for bar- gaining purposes. There is a real difference be- tween the TUC's approach to a free trade area and the approach of those who believe that com- petition untrammelled by 'artificial' restrictions will lead to the best use of the resources of the area.
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