Industry and the Common Market

Abstract

THE development of the European Economic Community has been markedly uneven during the last twelve months. I have come to believe that industrial integration is already proceeding at a rapid pace, outstripping the most optimistic expectations of policy makers and the officials of the Community. My purpose, in this talk,' is to give you the reasons for this belief. This seems to be in strong contrast with what has been happening in other fields. The way the re-valuation moves by Germany and the Netherlands have been handled may arouse some suspicion about the degree of co-operation existing between the six E.E.C. countries. Article I05 of the Common Market Treaty sets up a Monetary Committee which has been meeting now fairly regularly in Brussels several times a month over the last two years; its members are Central Bank and Treasury officials of high rank. The Committee is of course not a decision-making body. Its purpose, as set out in the Treaty, is to watch closely monetary and financial developments in the member countries, with particular reference to the balance of payments situation, and to advise the Council of Ministers and the Commission on the policy to follow. It so happens that this advisory body met a few days before the German Government decided to re-value the D.mark; but it is now considered as a more or less established fact that no word was uttered about a prospective change in European parities. Now if a change of parity takes place without the prior agreement of the other member countries, and if these feel that such a change would cause unjustified hardship to them, they may decide after the event to take discriminatory measures against the country which decided to devalue or to re-value. This is stipulated very clearly in Article io8. On the other hand, there is no article in the treaty which would compel a country to give advance notice. I also believe that the German decision (and on the following day the re-valuation of the Dutch guilder) were going in the right direction, may contribute to a healthy re-distribution of international reserves, and would therefore not have been questioned by other countries. The point is, however, that all those who 'believe' in the Common Market rightly stress the necessity to co-ordinate national policies, and it is also clear that the spirit of the Treaty (if not always the letter)