1. The Background
A shiver of apprehension is running through the national press as cabinet ministers and captains of industry set about the task of preparing the public for what to expect if Britain’s application to join the Common Market should be accepted. Mr. Macmillan calls it “a bracing cold shower we shall enter, not a relaxing Turkish bath” and one of the industrial bosses thinks it will rather be “an icicled channel swim at nought degrees Centigrade.” Prophecy is dangerous, but the chances are that within 15 months from now this country will be part of the European Economic Community.
What reasons do the British ruling class put forward for having to join the Common Market? Why should Britain shift the traditional centre of gravity of her economy from the Commonwealth to Europe? Why should she wish to wind up the European Free Trade Area (EFTA) she had only recently been instrumental in creating? And what effects will this have upon the British working class?
Weakened and impoverished by the ravages of World War II, the rump of continental Europe lay prostrate in front of the Iron Curtain, useless to the bloc of Western powers dominated by the United States of America as a profitable market, useless in the game of power politics as a defence against the rival bloc grouped around the Soviet Union. Only an economically healthy Europe would offer reasonable guarantees of safety to the American world of finance and industry. And so from the dust and ashes there arose new life, frantic activity, a giant mesh of scaffolding throughout Western Europe, factories, banks, stores, communications shot up at breakneck speed—financed by a massive programme of American aid and investment. The Marshall Plan of which the sole condition was that the countries of Europe must band together and agree upon a joint recovery programme.”
British industrialists watched with consternation ultramodern plant swinging into action across the channel. But with both the home market and the Commonwealth, with its established system of preferential duties, crying out for manufactured goods after the shortage and wastage of the war years, profits were still secure in spite of outdated plant and methods.
Powerful vested interests were haunted by the fear of a resurgent Germany, the spectre of Krupp and Thyssen—the giants of the Ruhr and the power behind the expansionist militarism both of Prussia and Nazi Germany. German industry was not to be permitted to swallow all the plums in the new Europe. Markets, capital, labour and raw materials were to be divided fairly between the power groups. By 1953 the European Coal and Steel Community (ECSC) was a going concern comprising the coal and steel industries of Federal Germany, France. Italy and Benelux (Belgium, Netherlands and Luxemburg). The Origins of the Common Market.
There was one weak link; Belgian coal was too expensive. Throughout the mining belt across the south of Belgium mines were shut down and miners were out of work in their thousands. But the Belgian mine owners had been helped over the critical period with massive subsidies from the international High Authority administering ECSC. Capitalism had pulled a new card from its sleeve. For coal and steel, ECSC meant larger markets, bigger production, better exploitation of capital and labour, fewer irksome administrative barriers, discriminations and quotas. Why not extend the idea to the economy as a whole?
By March, 1957, there was signed the Treaty of Rome which launched the six participants in ECSC on the road towards the Common Market. Its object was:
“To permit goods to travel freely without Customs Duties or quota restrictions, throughout the area of the Six and thus to permit manufacturers to invest on the scale that modern technology makes possible and necessary.”
Customs duties between the Six were to be whittled down progressively in three successive phases of four years each. At the same time a uniform external tariff wall was to be erected around the Six. Allowance was made for differences between the Six in terms of industrial development and efficiency or productivity, for differences in wage levels between member countries. It was obvious that the impact of a progressive crumbling of Customs duties would have serious effects on certain industries and even countries. To soften the impact the Six adopted a device successfully tried out by the Benelux countries from the start of their Customs Union almost immediately after the last war—a Compensation Tax. Being flexible, this tax can be used to ensure, in the interest of the ruling class of the Six as a whole, that individual national groups of an industry do not cause too much of a disturbance in any specific field.
Big industry and banking seized the opportunity with both hands; American capital poured into the Six. Displaced Persons, human flotsam, waiting to be employed as cheap labour, were overflowing in German refugee camps. Italy, where starving millions were considered a potential communist threat, had been given a major blood transfusion of U.S. dollars and was starting a massive programme of industrialisation with huge reserves of agricultural labour waiting to be drawn off the land in Southern Italy and fed onto the new industrial treadmill.
Developments were rapid. Before the end of the first four-year period the programme of whittling down of Customs Duties had been exceeded by 18 months. Inter-Common Market tariffs are now 30 per cent, below their 1957 level and may be 50 per cent, down by the end of this year. The process may be completed by 1965 if not before.
In the meantime the British ruling class was taking only a modest interest in the Common Market. How modest will be seen from the fact that that even as late as 1960 British private direct investment within the Six (excluding oil and insurance) amounted to no more than £21 million as compared with £208 million invested in the Sterling Area outside the United Kingdom during the same period. In a good many fields British industry was not even interested in exports of any kind. These were the people who could sell all they could manufacture in the home market behind the cover of a high protective tariff wall and in the expectation that the halcyon days were here to stay. Their plant was being amortized at a comfortable rate and foreign competition could not touch them. To break into the fiercely competitive outside world meant hard work, expense, lower profit margins. Why bother?
But in the Commonwealth things had been happening. Preferential treatment of British goods had disappeared under a great many headings in the Customs Tariffs of Commonwealth countries which are fast building up a market for their products in Europe.
Nonetheless certain Commonwealth countries, notably New Zealand, still depended largely on the British market for their livelihood and raised vociferous objections to any thought of a British commitment with the Six unless their special interests were safeguarded.
Powerful British interests also disliked intensely the possibility of a political entanglement with the Six.
It was all too complicated. Couldn’t the remaining uncommitted countries of Europe (Denmark, Norway, Sweden, Switzerland, Austria, Portugal) be brought into some form of association more to the liking of the British ruling class, without the embarrassment of. political implications and interference with existing Commonwealth trade? Their 97 million people (including the United Kingdom) would not compare with the home market of 170 millions of the Six, but it was better than nothing. And it would strengthen Britain’s hand in any later approaches to the Six. Thus was born the European Free Trade Association (EFTA) or “The Seven.” Finland has since joined making EFTA “The Eight.” Its purpose was to be strictly limited to the progressive reduction of Inter-EFTA Customs Duties and quantitive restrictions.
Now the prospect of an enlarged Common Market of 250 million people or more discriminating against U.S. goods is beginning to alarm the American capitalists. Already pressure groups are at work promoting a direct U.S. participation in the Common Market. This, to quote, the Herter report, “with its highly developed industrial and technological complex and its disciplined workers, would comprise the most efficient workshop in the world” where since 1958 trade among the Six had risen by about 50 per cent. . . .
What is involved in the British application to join the Six, for industry and finance, and what does it mean to the British working class?
If agreement should not be forthcoming, British industry could well find itself faced across the Channel with a fast-expanding, highly efficient and ultramodern competitor of great striking power. Many British manufactured products may disappear from the markets of the world which would entail a major re-alignment of industry. The usual flow of capital from the weak to the strong will be accelerated. The harder it became to export finished goods, the more British capital might have to seek investment abroad for overseas manufacture, albeit in return for smaller profits.
Designed to fit the present requirements of Western capitalist society, the Common Market has, like any other capitalist institution, no permanence. It will be discarded when it ceases to be profitable. To the British worker it reinforces the constant threat for the worker under capitalism of insecurity and unemployment,
T1SSERAND.