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Another Look at the Common Market

Published online by Cambridge University Press:  26 March 2020

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Extract

It is generally recognized that membership of the EEC would almost certainly mean for the United Kingdom the acceptance on the balance of payments of a substantial burden through the working of the Common Agricultural Policy. Part of this cost would take the form of higher import prices, as a result of buying food from other members rather than from cheaper sources outside the Community, and of direct contributions to the Community's Agricultural Fund; and part would result from the effects of higher prices for food on the general cost structure of the economy and hence on the competitiveness of exports. In addition, allowance must be made for the so-called ‘impact’ effects of tariff changes. Apart from the mutual reductions in tariffs between the United Kingdom and the Community's present members, the United Kingdom would in all probability forfeit the preferences over those countries which it now receives in the Commonwealth, EFTA, and the Irish Republic.

Type
Articles
Information
National Institute Economic Review , Volume 54 , November 1970 , pp. 29 - 43
Copyright
Copyright © 1970 National Institute of Economic and Social Research

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Footnotes

This article was prepared by R. L. Major and S. Hays, assisted by Miss A. Grunberger, of the National Institute.

References

Notes

note (1) in page 29 ‘Britain and the European Communities: An economic assessment’, Cmnd 4289, HMSO, February 1970. Throughout the article references to ‘the White Paper’ are to this document.

note (2) in page 29 The main components are—£85 million to +£255 million for the additional cost of food imports, £50-£620 million for contributions, net of receipts, to the Agricultural Fund, and £125-£275 million for adverse ‘impact’ effects on the balance of trade in non-food items as a result of cost and tariff changes.

note (3) in page 29 R. L. Major, ‘The Common Market: production and trade’, National Institute Economic Review no. 21, August 1962.

note (4) in page 29 The Six are in fact treated as five throughout the article, the Belgium-Luxemburg Economic Union being regarded as a single unit. For the sake of convenience, and because Luxemburg accounts for less than 4 per cent of its gross national product, the Union is referred to throughout as Belgium. For similar reasons of convenience the German Federal Republic is referred to as Germany.

note (1) in page 30 While there were various exceptions, the Community tariff changes (based on the rates effective on 1 January 1957) were in the main as follows: internal tariffs were reduced to 90 per cent at end-1958, 80 per cent at mid-1960, 70 per cent at end-1960, 60 per cent at end-1961, 50 per cent at mid-1962, 40 per cent at mid-1963, 30 per cent at end-1964, 20 per cent at end-1965, 15 per cent at mid-1967, and nil at mid-1968; differences between national external tariffs and the common external tariff were reduced to 70 per cent at end-1960, 40 per cent at mid-1963, and nil at mid-1968.

The first 10 per cent cut in internal tariffs was applied also to imports from most members of GATT and the second 10 per cent to imports from some non-members of the Community. Independent tariff cuts on a non-discriminatory basis were also made by Germany in 1957 and, on a smaller scale, by France in 1961. The effect of the French measures and of the German reductions in tariffs on imports from Community countries was to bring forward cuts which would otherwise have been due at later dates under the Community schedules. But special arrangements were made to align German external tariffs with the common external tariff. For example, at end-1960 half the 1957 reduction in these tariffs was withdrawn.

note (2) in page 30 For the purposes of the article ‘world’ trade in manufactures means the exports in sections 5-8 of the Standard Inter national Trade Classification (SITC) of the Six, Japan, Sweden, Switzerland, the United Kingdom, and the United States, apart from ‘special category’ exports from the United States to undisclosed destinations.

note (1) in page 31 With the exception of Italy, the Six all devoted a much higher proportion of GNP to investment in 1967/68 than before integration. Moreover, since the Community was formed the share of investment in GNP has risen faster there than in most other OECD countries (though this was happening also before 1958 and in some cases the disparity appears to have been reduced since then).

note (2) in page 31 K. H. Oppenländer, ‘Industrial change in the European Economic Community’ included in ‘Changes in the industrial structure’.

note (1) in page 33 ‘The European Economic Community: Trade creation and trade diversion’, Yale Economic Essays, Spring 1969, vol. 9, no. 1. Professor Truman kindly gave us a detailed account of his methods of calculating sales to final buyers to help us with our own estimates for 1968.

note (1) in page 34 ‘Trade creation and trade diversion in the European Common Market’, Center Paper no. 103, Yale University Economic Growth Center, 1967.

note (1) in page 38 There is little point in carrying the comparison further back, as countries' relative growth rates have varied greatly over long periods. In particular the effects of the two world wars, the depression of the late ‘twenties and early’ thirties, and their immediate aftermaths were extremely uneven (see Miss D. C. Paige, ‘Economic growth: the last hundred years’, National Institute Economic Review no. 16, July 1961, pages 29-33).

note (1) in page 41 N. Kaldor, ‘Causes of the slow rate of economic growth of the United Kingdom’, Cambridge University Press, 1966. The relevant equations are E = —1·028 + 0·516X and Y = 1·142 + 0·550X, where E represents employment in manufacturing, X manufacturing output, and Y non-manufacturing output (all in terms of annual rates of increase).

note (1) in page 43 ‘The effects of EFTA on the economies of member states’, January 1969, page 161.