The economists' warnings. Will the resurrection of the notion of "Community preference" have a part to play in the reflection on the future of Europe? Certain things lead me to believe that it will, particularly as seven Member States referred to it directly this week at the Agriculture Council, in the context of defining the Union's position ahead of the latest round of trade negotiations at the WTO (see our bulletin 9030). This is certainly a notion to be used with a great deal of sensitivity and cautiousness, because Europe needs a world where trade is as free as it can be. The political stances in favour of the Community preference (see this column yesterday) were not welcomed warmly, in France itself, by several economists, who warn against the temptation to use protectionism as an instrument to counter economic difficulties. Europe would have much to lose if it gave in to this temptation, for example, access to certain exterior markets and increasing purchasing power for consumers as a result of cheap imports. In a hearing before the French Senate, which was held before he took up the post he now holds within the WTO, Pascal Lamy pointed out that any renegotiation of trade concessions will be paid for in cash: importing less means exporting less. And we know how far the economic efficiency and well-being of the countries of Europe rely on their exports.
It is, therefore, vital for the political forces engaged in this debate to make it absolutely clear that there is no way that the EU will backtrack on trade liberalisation, that will it will respect all its commitments and that it will take an active part in efforts to go even further, as long as the conditions are fair. The Community preference means simply that the European internal market is "without borders", whilst there are still external borders, in the same way that all third countries keep these in place for goods and services from the EU. The "European economic identity" must be safeguarded, in the same way as there is an American, a Brazilian and a Russian economic identity. It is hard to disagree with the simple principles. The difficulties lie in applying them.
From Mario Monti to Philippe Herzog. The first open debate on the reflection on the future of Europe, which I took part in in Brussels (organised by "Confrontations Europe", see our bulletin 9029), already gave a taster of the debate on the Community preference. Mario Monti spoke out against the danger of any initiative which could give the impression that the EU was withdrawing into itself and which would lead to behaviour which would certainly be harmful to Europe itself. It is not true, in his opinion, that there is an Anglo-Saxon ultra-liberal attitude on the one hand and a more restrictive, continental one on the other; in reality, it is Germany which has been leading Europe down the path of openness and competition since the 1950s, which was beneficial to all and must be maintained. French misgivings must not imply a certain distrust towards the greater unified European market. However, Mr Monti recognised that the agricultural sector is a case all of its own, but declined to go into details. In the view of Philippe Herzog, on the other hand, the question of preferences and of a certain level of protection is "a real problem". All of the world powers are opening up and yet protecting themselves at the same time, sometimes by other means (their monetary policy, to name but one). This is not a question of protectionism, but of defending one's own legitimate interests on the world stage. Mr Herzog feels that international trade policy is a partial failure: multilateralism is required for trade but not for the rules: there are no common disciplines either in the social or the environmental plank. A "new vision" is needed to "fight unfair comparative advantages". In a previous text, Mr Herzog spoke of Europe's need for a "trade policy devoid of all multilateralism but which, like in other regions of the world, will provide legitimate protection of the European area, when this is necessary". In his view, "the free and undistorted competition we inherited from German post-war liberalism (with the objective of dismantling cartels after Nazism) needs to be rethought and re-balanced by rules and incentives, allowing the industrial, financial and network policies to blossom, as their deficiencies are harmful. These policies imply a shared social control over big finance and big business, so that these can become more European and move towards globalisation only to enrich the Community area's research and activity bases".
It seems that we are a long way from giving up all ideas of a "European economic identity", which Gordon Brown feels should be taken as read in a context of globalisation.
(F.R.)