Britain’s Choice WHAT IF BRUSSELS TALKS COLLAPSE?

Press, Volume CII, Issue 30042, 29 January 1963, Page 12

Britain’s Choice WHAT IF BRUSSELS TALKS COLLAPSE?

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London, January are the alternatives for Britain if it is excluded from the Common Market? Many persons in London stiti cling to the hope that Preeideot de Gaulle will relent, or that the otter members of tbs Six will persuade him to let Britain into the Market; but few give Britain much more than an outside chance. The alternative course widely favoured among Conservative opponents of EXC. membership even before President de Gaulle s speech was a “strengthening of Commonwealth trading links.” It was suggested that all barrier* to interCommonwealth trade should, as far as possible, be removed, and that the margin* of imperial preference should be increased against non-Commonwealth countries. In addition, it was suggested, members of the European Free Trade Association—the Scandinavian countries, Switzerland. Austria, and Portugal, should be brought inside this strengthened Commonwealth trading system. Objections Many objections have been advanced against this proposal; and it is hard to see that their force would in any way diminish with the collapse of the negotiations in Brussels. Any increase in Commonwealth preference margin* would be contrary to the rules of the General Agreement on Tariff* and Trade. And—more serious—there has been little evidence to date of Commonwealth willingness to contemplate free trade; indeed, both Australia and Canada, have, in the last three years, substantially increased tariffs against Commonwealth imports, while India has been forced by balance-of-payment* troubles to tighten up on import quota controls. Commonwealth free trade would imperil infant industries in such countries as Canada, Australia, and New Zealand, and create further problems for the textile industries of Lancashire and Dundee. Finally, unless and until the prices of basic foodstuffs and raw materials in the world market can be improved, the Commonwealth is bound to suffer seriously as a trading entity compared with the Europeen Common Market. A rather different case has been presented by British Labour Party opponents of Common Market membership. They have suggested that the Government should take advantage of the United States Trade Expansion Act, and co-operate with the United States and Canada to bring tariffs down on both sides of the North Atlantic for the benefit of everyone. This is something which will have to be attempted. But the prospects are uncertain. The most important part of the Trade Expansion Act comes into effect only if Britain joins the Common Market. Congress could, of course, now delete this precondition. Even so. with the British outside the Common Market, the willingness of the Community to participate in a reduction of tariff barriers will be very much in doubt —though, admittedly. General de Gaulle’s highhanded treatment of his partners in recent week* will hardly encourage them to listen to the demands of French protectionism. Free Trade Are* One other proposition has been canvased in Washington in recent month* as the prospects for the negotiations in Brussels darkened. That is for a free trade area embracing the existing EF.T.A. countries, plus the United States and Canada The immediate attraction of this idea i* that it would provide an important psyetiological reassurance to

Br i„m ud UW Kromvun countries on th* mocrowot the ooUapea in . Moreover, M ha* traction* for ■ British SSJSS-Pt which Fft. relations with the United states before til elee. Yrt this idra. too to oten to objection*, ft would in no sense be a marriage of equal*. Tte overwhelming preponderance of the United State* would be such a* to make it more n®ariy akin to a take-over bid. >™rthermore. it rune counter to the whole philosophy of United State* trading poticy. whteh i* based on the principle of complete non-diecrimination. But th* biggest objection to all thesa idea* 1* that, with tte best will to the world, they would take long month* of negotiation to work out Tte great danger now facing the British Government ie that of a hiatus after tte breakdown in Brussel*. If this did occur, it la unlikely that anything much could be don* to reduce industrial tariff* between Britain and Europe. The result could very well be a stampede of investment by British firms, a* well aa by American and other foreign firm* with subsidiaries in Britain, to get inside the European tariff wall This could not only bring grave pressure on the pound, but also, in all probability, a further substantial increase in the already emberraasingly high level of unemployment in Britain. Ne Sabetitato Hence, no scheme for reducing tariff barrier* outside Europe can possibly be a substitute for free trade between Britain and the Continent. Thia is where General de Gaulle's reference to some kind of association between Britain and Europe in hi* apocalyptic pres* conference is relevant Nobody knows what the General had in mind. But there is at least a chance that he might have been thinking of a phased reduction and eventual elimination of industrial tariffs. If so, this would take car* of the immediate danger facing Britain, and provide a bridge across which a fresh atempt to attain full membership of the European Community could be made when the climate is more propitious. Therefore, the first imperative for the British Government, if it becomes clear that full membership of the Common Market is not possible at th* moment, is to find out what General de Gaulle really ha* in mind. One other point must be made. The failure of the Common Market talks would increase, not diminish, the need for cut* in British tariffs—-unilateral cuts if need be. For in a difficult trading world there would simply be no room for the sort of British firm* that require the feather-bedding ot high protection.