union demonstrate that the process of softening up has already begun — though, as I shall suggest, the concept of a ‘two tier’ Europe should certainly not be dismissed out of hand. In the detailed negotiations it will be important to combine tactics and toughness in order to achieve the best outcome for Britain. But even at this stage it is important to spell out just what such an outcome would be.
All but a small minority of convinced Euro-federalists recognized that Britain’s entry to the European Economic Community involved a balance of advantages and disadvantages. Although strategic considerations were not without weight when the frontier of communism cut through the centre of Europe, this balance was essentially economic, as the EEC’s name suggests. On the one hand, we gained unhindered access to a large Western European market which we envisaged would develop both as our economies grew and as policies of internal free trade prevailed. On the other side of the ledger, we would be large net contributors to the Community budget which reflected the disproportionate costs of the Common Agricultural Policy. We were aware that France’s inclination towards subsidies and protection threatened to push the EEC in the wrong direction; but we blithely thought that these could be restrained and perhaps reversed. More seriously, we did not foresee the impulse towards centralized decision-making as a result of the ambitions of the Commission, nor the spread of interventionist social regulation from Brussels, nor the scale of the challenge to parliamentary sovereignty and to the law of the United Kingdom. How can the balance of advantage be tilted back in Britain’s interests?
The initial step requires only the bare minimum of consultation or negotiation with our European partners and should not be delayed. It is not good enough to say that the issue of whether we are prepared to abandon the pound sterling and sign up to a single European currency is simply one for the future. To make such a decision at any time would be to take the heart out of democracy by removing (in theory at least ‘irreversibly’) the central aspects of economic policy from the control of the British Government. Certainly, such a far-reaching decision should not be contemplated without a referendum. Still better, if the Government were now to declare against a single currency, that would both reassure the public and demonstrate our principled dissent from the federalist objectives of most other European governments. Similarly, it should be made clear that there is no question of sterling’s return to the ERM or any successor system. To make such statements now would both lead the rest of the Community to take us more seriously and increase the pressure for other governments to reveal their hands to their electorates. It would also do no end of good in restoring support for the Conservative Party.
It is also necessary to clarify our attitude towards the project of a ‘two tier’ Europe in which the inner bloc embraces economic and monetary union, a high degree of social regulation and common foreign, security and defence policies. The immediate reaction in Britain to this project was hostile, but for a variety of sometimes confused and even mutually contradictory reasons. Some critics view it as a further unacceptable step towards a federal Europe whose agenda is dominated by the Franco-German axis. But others oppose it because they hanker after Britain being part of that ‘hard core’, for example on defence matters. In neither internal nor external European relations, however, is it in our interests to subordinate our autonomy further; in fact the reverse. There should certainly be no question of placing our defence decision-making under European control. The proper — indeed the only militarily practicable — international framework for this is NATO.
But the new situation also provides us with an opportunity. It is essential to make clear that if we were to permit amendments to the existing treaty framework which would allow the proposed development to go ahead, then our own interests would have to be accommodated. If there were an attempt to construct such a ‘hard core’ without respecting our fundamental views and interests, then we should be fully justified in pursuing every measure of obstruction and disruption open to us. An absolutely essential requirement would be to ensure that the ‘hard core’ countries were not able to impose on other members their own priorities on questions, like the operation of the Single Market, where their interests might well turn out to be different from ours. The price of our agreement to changes which those countries seek might further include the unbundling of a number of provisions in existing treaties which work to our disadvantage and, incidentally, to that of other member states.
An obvious priority involves addressing Britain’s financial contributions to the European Union. In any case, it is difficult to see how the present Common Agricultural Policy (CAP) could continue if the Central and Eastern European countries where agriculture remains of considerable importance are admitted to full membership, as is eminently desirable. The CAP is not only a financial drain; it also significantly increases food prices above general international levels and so increases labour and business costs. It would be open for debate what, if anything, should be put in its place to support British farming. Similarly, the so-called ‘Cohesion Fund’ designed to compensate the weaker economies for the financial and monetary rigours envisaged by Maastricht should be another target for revision.
Secondly, we should try to reverse the growing protectionism of the European Community, which almost derailed the GATT round, and significantly reduced its scope, and which costs Britain wealth and jobs. Unfortunately, the protectionist mentality is only likely to grow as increased costs, resulting from Community social policy and lack of labour market flexibility, reduce the ability of industries in Europe to compete successfully. Yet the European Union can afford such protectionism less than ever because of the shift of advantage from Europe to the Americas. This has been well observed by Professor Patrick Messerlin:
Until recently, the US had no serious alternatives to a trade policy based on GATT disciplines… The situation will be reversed in the decades to come. The US — with South American countries opening their borders and boosting their growth- will enjoy the relaxation that regional opportunities can offer. By contrast, the EU has exhausted its capacity to expand regional trade in a significant way for a long time to come. The EU — bordered on its southern and eastern flanks by countries unconvinced of the gains from freer trade, or too small to bring substantial benefits to the EU — will be in the same position, in this respect, as the US in the 1950s and 1960s.
The EU has only one route left. It must move the GATT from the periphery to the centre of its trade policies.[76]
If this does not happen — and worse if, as I have suggested, it moves further towards protectionism — Britain will be the worst affected. That is why it is so important that we should work to establish special arrangements between the European Community and the North American Free Trade Area.
What we need here is something like a North
Finally, in planning the route to 1996 we cannot continue to ignore the erosion of our parliamentary sovereignty. As Lord Denning has said:
No longer is European law an incoming tide flowing up the estuaries of England. It is now like a tidal wave bringing down our sea walls and flowing inland over our fields and houses — to the dismay of all.
How precisely the British Constitution — which is what is ultimately at stake — can be protected against this ‘tidal wave’ needs now to be considered. Certainly, it can only be done by the explicit exercise of parliamentary sovereignty; moreover, the sooner the initiative is wrested from the European Court so as to clarify British judicial
