FRANCE AND THE E.E.C. MIXED FEELINGS IN FRENCH INDUSTRIES ABOUT U.K. BID

Press, Volume CVII, Issue 31530, 18 November 1967, Page 12

FRANCE AND THE E.E.C. MIXED FEELINGS IN FRENCH INDUSTRIES ABOUT U.K. BID

(By

PAUL LEWIS

in the "Financial Times", London!

(Reprinted by arrangement)

What General de Gaulle thinks about Britain’s Common Market application is clear enough, though what he intends to do about it may be somewhat less certain. French industry, on the other hand, which has an obvious interest in his decision, has been noticeably reticent about taking any public position on the question this time round.

Usually, the French employers’ organisation, or Patronat, is one of the first into the fray when industry’s fortunes are at stake. And in the last few weeks its President, Mr Paul Huvelin, has been anything but bashful about airing his views on everything from the Government’s economic policy to General de Gaulle’s pet pro-fit-sharing scheme—on everything, in fact, except British membership, where the record shows only a few cautious comments earlier this year after a visit from the Confederation of British Industries.

Behind Closed Doors In reality, there has been a good deal of discussion on the topic behind closed doors in the Patronat’s spacious headquarters on the Avenue Pierre ler de Serbie and it is not too difficult to discover what industrial leaders are thinking underneath their stony exterior. What these talks seem to show is that while the greater part of French industry takes a position that is somewhere between neutral and positive on the British application, a number of powerful sectors are more strongly opposed than ever. Moreover, in both camps some interesting new qualifications and arguments have made their appearance since 1962. The most hostile sectors are paper, textiles, car and steei The position of the first two is easily explained: French paper manufacturers are already a protected race and have few illusions about their future with the Scandinavians inside the Common External Tariff. For the textile industry, it is not so much the prospect of competition from Manchester which is frightening as of being sacrificed to the low-cost Commonwealth countries like Hong Kong, India and Pakistan. Both these sectors are already problematical ones, however, whose long-term future is bound to be difficult whatever happens to the Common Market. Their opposition is, therefore, inevitable and for this reason of only limited importance.

Car Manufacturers The appearance of the car manufacturers on the list is at first sight rather more curious. For leaving to one side such traditional British specialities as Minis and sports cars, it might well seem that the French industry would find an enlarged Community to its advantage. Certainly many people In the trade believe that British manufacturers would have to raise their standards quite a bit in the Common Market, and last year was in fact a record one for the French producers with output topping the 2m mark for the first time and exports increasing 25.6 per cent. By all accounts, however, the French motor producers are more hostile to the idea of British membership this year than ever before. They make a lot of play with the Trojan Horse argument—warning that Britain would become a launching pad for their American rivals though seemingly oblivious to the fact that Chrysler is already in their midst under the guise of Simca and that from next July onwards there will be no tariffs between France and German subsidiaries of Ford and General Motors.

One explanation may be that car makers like Citroen and Renault have substantial interests in the lorry industry where any increase in competition would be serious. But the principal factor is probably a general disinclination on the part of the French auto industry to take on any new risks with the six-nation customs union just coming to fruition, coupled to the fact that home sales have been on a platform since the spring while the foreign share of their domestic market has risen from 13.9 per cent last year to 15.3 per cent during the first eight months of 1967. The Steel Masters Just recently the French steel masters have decided to abandon every semblance of discretion on the British question, and in its latest annual report their Federation comes out in unqualified opposition to the whole idea. It argues that any enlargement of the Community at the present time would threaten the slow and painful efforts of the Common Market Commission to find common solutions to the problems of over-capacity and falling prices that plague them all.

A further apprehension is that the nationalised British steel groups will not be allowed to compete freely with one another and that where the Community is concerned at any rate the temptation for the British industry to act as a bloc will be irresistible. Of course, Mr Wilson still has his natural allies inside the Patronat—though, unfortunately, neither the wine lobby nor the manufacturers of pate de foie gras carry much weight in its deliberations. Indeed, the sectors best disposed towards a larger Common Market, such as the electronics industry and the machine-tool makers, are also the least well organised: while conversely, those least

enamoured by the prospect are dominated by a few very large and well-connected companies. To this extent, therefore, the opponents of British entry are better positioned for propaganda purposes than the partisans. Fear Of Veto One curious change of attitude among French industrialists since 1963 is that almost all of them, whatever their basic position on the British application, are nervous about the consequence of a second veto. What they ffear is that the reaction this would set up among the other Five would kill any immediate hope of carrying out the complementary legislation to the customs union on fiscal harmonisation and company law reform. Another new argument favouring the British case that carries some weight with French industrialists now is that since the Kennedy Round has left the Community inadequately protected, it would be better to have Britain a member and subject to all its fair competition rules than free to trade as it likes from outside. For these and other reasons, Mr Huvelin has recently informed the French Foreign Minister that the Patronat is opposed to another veto without necessarily saying that it is in favour of British entry. He has also pointed out

that the very worst thing from his organisation’s point of view would be a devaluation of the pound. Finally, he has argued that since membership negotiations—if they occur—are likely to be short and general this time, there is a case for airing some of the technical questions of interest to industry (for instance, the position of Commonwealth exports), in pre-negotiation talks between the Commission and the British Government A Favourable Line In practice, this boils down to the Patronat taking a favourable line on the British application whatever the reserves of some of its members. Indeed, were it ever to make a formal statement there is little doubt that it would have to be favourable simply because the Brussels Confederation of Common Market industrial associations (U.N.1.C.E.), to which it belongs, is committed to enlarging the Community. This, of course, is precisely why the Patronat has been so discreet. For having roundly criticised the Government’s economic policy it is not anxious to alienate General de Gaulle further by taking bim to task publicly on foreign affairs. Besides, as its officials are quick to point out. it wouldn’t make the slightest difference.