COMMENTS EEC

A New Crisis In Sight The

French G o v e r n m e n t seems d e t e r m i n e d to coo p e r a t e in t h e r e m o v a l of the last i n t e r n a l customs b a r r i e r s w i t h i n the E E C - - d u e to t a k e place on J u l y 1 ---only o n o n e c o n d i t i o n : t h e C o m m o n M a r k e t agreem e n t s o n b e e f a n d milk m u s t b e c o m e effective at t h e same time. T h e C o m m u n i t y is thus t h r e a t e n e d w i t h a n e w crisis, q u i t e a p a r t from t h e still s m o u l d e r ing c o n t r o v e r s y a b o u t the e n t r y of G r e a t Britain a n d o t h e r states. T h e still u n i m p l e m e n t e d a g r i c u l t u r a l a g r e e m e n t s - - s o the French G o v e r n m e n t points o u t - s h o u l d h a v e come into effect b y April, 1, 1968. Strong l a n g u a g e h a s b e e n u s e d b y the French w h o s e e k to e s t a b l i s h a n i n d i s s o l u b l e link b e t w e e n the C o m m o n M a r k e t for industrial goods a n d t h a t for farm produce, a n d t h e s e h a r s h w o r d s lead o n e to e x p e c t o n e of t h o s e c o n t r o v e r s i e s b e t w e e n F r a n c e a n d t h e five o t h e r c o u n t r i e s which b y n o w h a v e come to b e a f e a t u r e of t h e p a r t n e r s h i p . N a t i o n a l a d v a n t a g e s e e m s to b e the sole d e t e r m i n i n g c o n s i d e r a t i o n , a n d e v e r y b o d y , b u t F r a n c e in particular, b e l i e v e s t h a t c o n c e s s i o n s m u s t a l w a y s b e m a d e b y t h e o t h e r side. R e g a r d i n g t h e EEC F r a n c e h a s c l e a r l y the b e t t e r tacticians, if n o t the b e t t e r a r g u m e n t s , which its p a r t n e r s a r e u n a b l e to match as far as t e n a c i t y of p u r p o s e a n d n e g o t i a t i n g skill are c o n c e r n e d . The uny i e l d i n g m a n n e r in which h a r s h d e m a n d s are insisted o n w i t h o u t r e g a r d for t h e i n t e r e s t of o t h e r s h a s l a t e l y d o n e n o t h i n g to p r o m o t e a c o m m u n i t y spirit a m o n g the Six. It has, o n the c o n t r a r y , s t r e n g t h e n e d t h a t p o l i c y of m u t u a l o b s t r u c t i o n which m u s t u l t i m a t e l y kill the idea of a U n i t e d Europe. re.

Association

Spain in Front of a Closed Door N e g o t i a t i o n s h a v e b e e n g o i n g on s i n c e 1962 o n S p a i n ' s a p p l i c a t i o n to join t h e EEC as a n a s s o c i a t e m e m b e r . T h e o n l y r e s u l t h a s b e e n so far t h a t S p a i n no l o n g e r insists o n a formal association, which is b e i n g o p p o s e d p a r t i c u l a r l y b y t h e B e n e l u x countries, b u t w o u l d b e c o n t e n t w i t h a p r e f e r e n t i a l t r a d e agreem e n t . N e g o t i a t i o n s for a w i d e r a g r e e m e n t b r o k e d o w n b e c a u s e of Spain's far-reaching demands. The Span160

lards b e l i e v e t h a t the big deficit in t h e i r t r a d e b a l a n c e with t h e EEC c a n be w i p e d o u t o n l y t h r o u g h a drastic i n c r e a s e in t h e i r exports. T h e y t h e r e f o r e insist o n a n i m m e d i a t e a b o l i t i o n of EEC customs duties o n i n d u s t r i a l goods a n d on those farm p r o d u c t s which are not s u b j e c t to a n y m a r k e t regulations, w h i l e r e s e r v i n g t h e r i g h t to p r o t e c t t h e i r o w n e c o n o m y b y e r e c t i n g customs barriers. Failure to c o n c l u d e a p r e f e r e n t i a l t r a d e a g r e e m e n t b e t w e e n S p a i n a n d the EEC is d u e to two causes: For o n e thing, t h e r e is t h e r e j e c t i o n for political r e a s o n s of the Franco-r~gime b y t r a d e u n i o n s a n d all left-wing parties, a n d for a n o t h e r , t h e r e is t h e s e e m i n g impossibility of reaching a g r e e m e n t on farm produce. 60 p e r cent of Spain's a g r i c u l t u r a l exports consists of citrus fruit, the d e m a n d for which is c o v e r e d w i t h i n the EEC b y Italy a n d o t h e r M e d i t e r r a n e a n countries. M o r e o v e r , M o r o c c o a n d T u n i s i a h a v e also s u b m i t t e d a p p l i c a t i o n s for a s s o c i a t e memb e r s h i p - - c o u n t r i e s w h o s e e x p o r t s t r u c t u r e is similar to t h a t of Spain a n d w h o s e w i s h e s m u s t l i k e w i s e be given consideration. A s o l u t i o n to t h e s e p r o b l e m s c a n n o t b e e x p e c t e d in t h e f o r e s e e a b l e future. T h e p r e s e n t r o u n d of talks b e t w e e n S p a i n a n d the EEC is u n l i k e l y to l e a d to a n y t h i n g m o r e t h a n a r e n e w e d c o n f r o n t a t i o n of res p e c t i v e p o i n t s of view. ri.

Middle East

Complicated OII Deals T h e r e are o c c a s i o n s w h e n e v e n t h e wiliest of foxes is c o m p e l l e d to r e c o g n i s e t h a t s w e e t g r a p e s h a v e the a w k w a r d h a b i t of h a n g i n g r a t h e r high. T a k e t h e case of F r a n c e for i n s t a n c e : T h e fifty M i r a g e f i g h t e r s which Israel o r d e r e d as long as two y e a r s ago h a v e b e e n s u b j e c t e d to a n e m b a r g o t h o u g h t h e y h a d b e e n a l m o s t fully p a i d up o n l y s h o r t l y before. Reason? Israel was o n e of t h e b e l l i g e r e n t parties i n v o l v e d in the N e a r - E a s t e r n conflict. O n t h e o t h e r h a n d , no e m b a r g o w a s i m p o s e d o n the 52 M i r a g e aircraft which w e r e o r d e r e d only a few w e e k s ago b y Iraq a n d which h a d b e e n b o m b i n g Israel. T h e m a c h i n e s in q u e s t i o n are b y no m e a n s t h e same, b u t are different types. The r e a s o n s for this are to b e f o u n d less in m o r a l scruples as to w h o was a c t u a l l y t h e a g g r e s s o r in INTERECONOMICS0 No. 6, 1968

last y e a r ' s l i g h t n i n g w a r b e t w e e n Israelis and Arabs, but in c o n c r e t e e c o n o m i c facts. F r a n c e h a d b e e n h o p i n g t h a t Iraq w o u l d r e c i p r o c a t e b y allowing it to exploit t h e rich oilfield of N o r t h R u m a i l a - the oilfield which Iraq h a d t a k e n o v e r from the Iraq P e t r o l e u m C o m p a n y (IPC) b y w a y of expropriation. But a n a t i o n a l l y conscious Iraq h a d o t h e r ideas, a n n o u n c i n g t h a t its o w n oil c o m p a n y , the Iraq N a t i o n a l Oil C o m p a n y , w o u l d u n d e r t a k e the e x p l o i t a t i o n of the oil field. T h e s t r a n g e s t aspect of t h e deal, which h a d b e e n i n t e n d e d as a reciprocal a r r a n g e m e n t , is h o w e v e r the fact t h a t t h e French p a r t n e r , t h e C o m p a g n i e F r a n c a i s e des P6troles, t h o u g h itself m e m b e r of the W e s t e r n IPC syndicate, was t r y i n g to gain p o s s e s s i o n of oil deposits of which the IPC still r e g a r d s itself as the rightful owner. But Iraq, too, is faced w i t h a dilemma. T h e r e is little d o u b t b u t t h a t t h e Iraq N a t i o n a l Oil C o m p a n y will b e able to exploit t h e s e oil deposits w i t h o u t difficulty. To do this it o n l y h a s to m a k e a r r a n g e m e n t s w i t h W e s t e r n , i n c l u d i n g French oil c o m p a n i e s w h o will b e o n l y too glad to len
Austria

The Battle Against Stagnation The

A u s t r i a n F e d e r a l G o v e r n m e n t held a special m e e t i n g t o w a r d s t h e e n d of April, at which a n e w economico-political c o n c e p t w a s formally adopted. This is the "Koren-Plan", n a m e d a f t e r its author, the A u s t r i a n M i n i s t e r of Finance, Professor Stefan Koren. It h a s as its c e n t r e p i e c e a n u m b e r of m e a s u r e s which a r e d e s i g n e d to h a v e two effects: a c c e l e r a t e d g r o w t h and, in the l o n g run, a change in t h e c o u n t r y ' s econ o m i c structure, for t h e a u t h o r i t i e s in V i e n n a a r e n o l o n g e r willing to c o m b a t the p e r s i s t e n t s t a g n a tion w i t h n o t h i n g but the t r a d i t i o n a l m e a n s of inf l u e n c i n g t h e e c o n o m i c trend.

O n l y t h e future c a n s h o w w h e t h e r the chosen m e a n s will p r o v e effective in achieving b o t h t h e s h o r t - t e r m a n d t h e l o n g - t e r m o b j e c t i v e of the plan, i.e. e c o n o m i c growth. W h a t s e e m s c e r t a i n is t h a t in p l a n n i n g to raise t a x a t i o n t h e a u t h o r i t i e s h a d t r a d i t i o n a l a n d p u r e l y fiscal c o n s i d e r a t i o n s u p p e r m o s t in t h e i r minds. By i n c r e a s i n g t a x e s the i n c o m e s a v a i l a b l e to p r i v a t e h o u s e h o l d s will b e d i m i n i s h e d w i t h t h e r e s u l t t h a t a d a m p i n g effect o n d e m a n d m a y b e e x p e c t e d from this side. But if t h e i n c r e a s e d t a x r e v e n u e w e r e to b e s p e n t w h o l l y b y the state, the effect of f u r t h e r cont r a c t i n g d e m a n d on a n a l r e a d y s h r i n k i n g m a r k e t w o u l d b e l a r g e l y avoided. W h a t w o u l d s e e m deINTERECONOMICS, No. 6, 1968

cisive is w h a t i n f l u e n c e the e c o n o m i c policy as a w h o l e will e x e r c i s e o n t h e decisions of b u s i n e s s men. A fact t h a t a n y policy a i m i n g at s t i m u l a t i n g e c o n o m i c g r o w t h m u s t t a k e into a c c o u n t is t h a t t h e e n t r e p r e n e u r s ' p r o p e n s i t y to i n v e s t is the most unp r e d i c t a b l e factor w h e n it c o m e s to a s s e s s i n g economic prospects. H o w e v e r , n o t o n l y s h o r t - t e r m influences a r e at stake, t h e r i g h t e c o n o m i c decisions m u s t b e t a k e n t o d a y which will d e t e r m i n e the future, a n d in this r e s p e c t t h e " K o r e n - P l a n " w o u l d seem to a n s w e r b o t h p u r p o s e s i n a s m u c h as it s h o u l d s t r e n g t h e n t h e e n t r e p r e n e u r s ' p r o p e n s i t y to i n v e s t w h i l e at t h e s a m e time p r o v i d i n g t h e m w i t h b e t t e r o p p o r t u n i ties to do so. pl.

Scandinavia

Nordic Integration The r e p r e s e n t a t i v e s

of Denmark, Finland, N o r w a y a n d S w e d e n m e t at C o p e n h a g e n in A p r i l for a Nordic S u m m i t C o n f e r e n c e . T h e c o u r s e a n d the result of t h e s e n e g o t i a t i o n s s h o w c l e a r l y t h e i n t e r e s t s of the S c a n d i n a v i a n bloc, o n t h e o n e hand, a n d t h o s e of t h e i n d i v i d u a l p a r t i c i p a t i n g countries, o n the other. T h e Nordic s t a t e s are a g r e e d o n t h e n e e d for a comm o n m a r k e t e m b r a c i n g all Europe as a l o n g - t e r m aim. W h a t t h e y are c o n c e r n e d w i t h is to find a w a y tow a r d s t h a t a i m - - a w a y t h a t offers t h e m the g r e a t e s t a d v a n t a g e s . C o n f r o n t e d as t h e y are w i t h t h e "allp o w e r f u l " EEC t h e y a r e n o t s t r o n g e n o u g h e i t h e r as i n d i v i d u a l c o u n t r i e s or as EFTA m e m b e r s to h o p e to d e r i v e from such a m e r g e r the g r e a t e s t p o s s i b l e benefit. For this r e a s o n t h e y are t r y i n g to b r i n g a b o u t a S c a n d i n a v i a n p o w e r bloc, c a p a b l e of t a k i n g u p a s t r o n g p o s i t i o n in the n e g o t i a t i o n s w i t h " t h e rest of Europe". This t h e y s e e k to achieve, to b e g i n with, t h r o u g h c o o p e r a t i o n a n d t h e n b y a step-bystep approach t o w a r d s full i n t e g r a t i o n . But t h e r e a r e o b s t a c l e s in the w a y of t h e s e e n d e a v ours. For o n e t h i n g t h e y m u s t h a v e r e g a r d for t h e i r e x i s t i n g o b l i g a t i o n s as m e m b e r s of ETFA a n d for a n o t h e r n o t all the four S c a n d i n a v i a n c o u n t r i e s h a v e a n e q u a l l y s t r o n g i n t e r e s t in i n t e g r a t i o n . W h i l e Denm a r k a n d S w e d e n c o u l d e x p e c t to b e n e f i t from Nordic c o o p e r a t i o n in t h e a g r i c u l t u r a l a n d i n d u s t r i a l sectors, respectively, N o r w a y a n d F i n l a n d a d o p t r a t h e r a w a i t i n g a n d critical a t t i t u d e t o w a r d s a r a p i d a n d far-reaching ]iberalisation.

A t C o p e n h a g e n , e v e r y step in t h e d i r e c t i o n of coo p e r a t i o n a n d i n t e g r a t i o n w a s h o t l y contested. The u l t i m a t e aim of a g r e a t E u r o p e a n market, which w o u l d include S c a n d i n a v i a as well as G r e a t Britain, w a s h o w e v e r firmly k e p t in mind, for o n l y t h r o u g h closing t h e gap t h a t at p r e s e n t divides Europe econ o m i c a l l y c a n its political p o s i t i o n vis-a-vis o t h e r world e c o n o m i c p o w e r s b e s t r e n g t h e n e d , wti. 161