THE COMMON MARKET HAVE TERMS FOR BRITAIN’S ENTRY CHANGED SINCE 1962?

Press, Volume CV, Issue 31032, 12 April 1966, Page 14

THE COMMON MARKET HAVE TERMS FOR BRITAIN’S ENTRY CHANGED SINCE 1962?

[By the Common Market Correspondent of the ‘'Financial Times ’*./ ( Reprinted from the "Financial Times” by arrangement > Britain's last attempt to join the Common Market was well on the way to success when General de Gaulle intervened. But how would we fare today? Would the stern men of Europe see the United Kingdom with different eyes, and would the terms be harder or more lenient than last time ?

A labour negotiating team i might press for more favourable transitional arrangeintents, and quite possibly get | them. Since 1962 the Six have made many departures from the strict letter of their farm philosophy to cope with special cases. Mr Wilson should also benefit from the Kennedy Round efforts to free world trade in sueh items as aluminium and pulp which figured prominently on the list of Commonwealth imports for which Mr Heath asked special treatment. But in the end. Common Market membership still means the replacement of Commonwealth by Community preference and the phasing out of Britain’s traditional farm support system. Less Formidable Of course many problems look less formidable to-day than they did three years ago. The growing economic strength of the white dominions makes it easier for Britain to part company from them, while the Six now recognise that New Zealand would need special arrangements. By asking for association off their own bat Nigeria and East Africa have paved the way for the rest of the African Commonwealth, while the Common Market has never withdrawn its trade treaty offer to India and Pakistan.

However, no agreement was reached last time on Hong Kong, which the Six refused to treat on the same footing as the Asian Commonwealth on account of its diversified manufacturing industry and greater economic strength. Discussions on central Africa were also blocked by the imminent breakup of the Federation, though it is safe to say that Malawi and Zambia would today qualify for the same treatment as East Africa. Rhodesia's white ruling class created political problems in 1962 which have not yet been resolved, while her light industrial economy and the conflict between her tobacco interests and those of Greece and Turkey would also raise difficulties today. Today it is taken for granted that British membership would mean full membership for Ireland. Denmark and Norway as well. An association agreement with Austria this year should ease the passage for the other European Free Trade Association neutrals. and Portugal might be offered an association agreement on the same lines as Greece, though without the development aid. The major stumbling block is seen clearly as the common agricultural policy and the in-

| crease in United Kingdom I domestic food prices that ; would follow its adoption. ! Current estimates of what this might amount to vary between 4.5 and 7 per cent., spread over a transitional period of several years. But all calculations are largely -meaningless so long as much of the common policy and the precise membership terms are unknown, while the entry date is also an important factor if the gap between world and Community price levels continues to narrow.

The Six are certainly less in love with the reality of their farm policy to-day than they were with the prospect of it at the time of the last negotiation, and Britain might find them more supple on points that were troublesome Ikst time, or at any rate discover new precedents and fears to exploit.

The member countries have been unable to avoid setting extremely high internal farm prices, which threaten some countries with inflation and others with astronomic bills for surplus disposal. In many instances they have backed away from the full rigours of a policy regulated by market prices alone. Deficiency payments have already been adopted or envisaged for hard wheat, oranges, vegetable oils, and tobacco..

Deficiency Payments Whether the Six would actually welcome a negotiation with Britain as a chance to unravel a policy they are now having second thoughts about is open to doubt Deficiency payments remain as impracticable as ever for the major products, in which they are largely self-sufficient.

Furthermore, it is most unlikely that the Six would ever agree to lower their common cereal prices which are the kingpin of the whole single price system and are responsible for the high levels being adopted for other products. However, they might find British membership an ad-

vantage where financing the common policy is concerned. As a net food importer. Britain would certainly find itself paying much more into the Community farm fund (FEOGA) than it drew out in export subsidies or improvement grants. And if Britain could be per suaded to take more food from the Continent, the total cost of dumping surpluses on a low priced world market could be reduced for the rest of the member States. In any case, Germany and Italy, the Community’s other two major food importers, would gain a natural ally where farm finance questions were concerned. For a country already plagued with balance of payments difficulties the common farm policy clearly has its own terrors, for whether through paying higher prices for imported food or in contributions to the farm fund, the outflow of gold from the British Treasury would be increased under it. Indeed the question of Britain’s short term economic position and the future of her currency, though scarcely mentioned in 1962 are now recognised as an important new problem that would have to be faced in a negotiation tomorrow. At the moment the Community’s machinery for assisting members in payments difficulties is in too embtS'onic a stage of development to be of much help. Some senior Commission officials doubt whether Britain could afford to enter under these circumstances without a devaluation designed both to satisfy the other members that they were not taking on a chronic debtor and to improve Britain’s own competitive position with panicking. Continental rivals. In any case they point out that it would be a question of now or never, for once inside and with the farm policy in force a change in the sterling parity would be either impossible or ineffective.