Relations With The Six ACCRA CONFERENCE RAISES PROBLEMS

Press, Volume C, Issue 29635, 4 October 1961, Page 12

Relations With The Six ACCRA CONFERENCE RAISES PROBLEMS

(Sv

"LYNCEUS"

of the "Economtet"]

(From th.« ‘'Economist" Intelligence VniV

London, September 19. This week, in London, detailed talks on the Common Market will begin between representatives of Commonwealth countries and Britain. Though the British representatives had been expecting anxious and critical views from the Commonwealth, they can hardly have looked for the bitter outbursts at last week's meeting of Commonwealth Ministers in Accra. Indeed the Common Market issue dominated this conference. The speakers at Accra attacked from different directions. They made three main criticisms of Britain entering the Common Market Canada said the preferential trade enjoyed by Commonwealth countries exporting to Britain would suffer; Australia said it was neither politically nor economically essential for Britain to join the Six; and India, Ceylon, Ghana, and Pakistan said that for Commonwealth countries the

status of overseas territories “associated" with the Common Market would be intolerable.

The speeches at Accra were, of course, meant as much for the world at large as for the immediate audience. They exemplified the obvious negotiating technique of bidding as high as possible before entry to the council chamber. Two of the most outspoken critics of Britain's move were Canada and Australia, both of which have economic problems on their hands and general elections within a year. The Canadian outburst has already provoked protests from businessmen in Canada

who feel it does not accurately reflect the general view of industry there. New Zealand, which probably stands to lose most m the short term if Britain joins the Six, was remarkably restrained at Accra. Against this background the hard bargaining will begin this week. Britain starts from the premise (accepted by Mr Macmillan after a iong interview with President Kennedy earlier this year) that from its w [to point of view it ought I |p' join the Six. The reasons aie obvious. The United States wants a united Europe and is now preparing to back the Six as tho obvious unit. This will become increasingly important politically and—as investment is switched to the Six—economically, too. Also, the economic growth of the Six has already proved to be far more vigorous than the limping performance of Britain over the last decade. Britain is in danger of being left outside a united Europe dominated by Germany; inside. she would at least be a balancing factor, and have a say in the affairs of the group. Present Flaws Again, from Britain’s selfish point of view, the economic links with the Commonwealth are by no means perfect. The sterling area is over-weighted in favour of the Commonwealth countries. Britain has not the resources or the range to satisfy the industrial needs of the primary producers. Commonwealth markets—partly because of relatively low purchasing power caused by low commodity prices—have grown more slowly than those of industrial countries. And inevitably. the position has been aggravated, for British exporters by tariff and quota barriers erected to protected local industriesBritain itself stands to gain by going into the Common Market But how to appease the Commonwealth? The one card Britain has, and—to judge from Mr Selwyn Lloyd’s remarks at Accra—the one She is going to play, is to offer the Commonwealth, in return for losing preferences into Britain, some form of entry into Europe, if only it can be obtained from the Six. Indeed, the one satisfactory aspect of the Commonwealth hostility at Accra is that it may strengthen the hand of the British negotiators in Europe this autumn. Logical Move Though “associated” status has been rejected in principle by some Commonwealth countries, it has a certain logic about it in both the short-term and the long-term interests of all three groups: Europe, the Six, and Britain. In the short run. it might provide a reasonable bargaining counter between them. But in the long-term it should be far more significant.

For Europe, the immediate economic future is rosy, with a number of countries still on the brink of the heady consumer revolution that the United States has nearly completed. But where will the growth be when the consumer revolution is over or subsides? As the United States is finding, the market becomes more and more a replacement one. In 10 years European manufacturers may well be in urgent need of a massive expanding market such as the Commonwealth. For the Commonwealth, especially the primary producers, the future is far from rosy. Faced with a basic world surplus of most commodities, plus the gradual replacement of many of them with synthetics, they have little chance of maintaining the steady growth of purchasing power. A private entree to a mass market such as Europe would be of great advantage in the years ahead. It will not be easy to obtain an entry permit from the Six, but this is no reason for shunning the attempt The perfectly - balanced trading group will never be achieved, and any pattern laid down now is bound to become distorted. But at least there is considerable logic in a European - Commonwealth bloc; and this is more than can be said for the BritainCommonwealth system in 1961. Whether logic is enough is another matter.