To the Preston and District Chamber of Commerce, Barton, Preston

23rd September, 1971

There are serious signs that commerce and industry in Britain are being ‘taken for a ride’, or, to be more accurate, are ‘taking themselves for a ride’, in the matter of the European Economic Community and British entry into it. When I use the abstract, collective words ‘commerce’ and ‘industry’, I think not only of individual firms and people in commerce and industry; I think also of the bodies, both local, like this Preston Chamber of Commerce, and national, like the exalted Confederation of British Industry itself, whose business is to represent the opinion as well as the interests of the myriad firms and individuals comprised within ‘commerce’ and ‘industry’, All representation is a complex idea (as Members of Parliament well know), and I am sure that the officials and hierarchy of these organisations conscientiously and diligently seek to ascertain a certain consensus or general view among the membership. Nevertheless, the natural mode of speech and thus of thought which equates, for example, the CBI with ‘British industry’ is a fearsome leap, which can be vastly misleading.

I believe that the source of the error into which organisations and individuals have fallen is not to appreciate that the nature of the EEC is political. This fact about it is concealed both by the word ‘Economic’ in its official title and by the synonym ‘Common Market’ so frequently used in preference. Consequently the question which firms and industrial organisations have asked themselves, and indeed to which they have thought it right to restrict their view, has been whether a single, tariff-free market, comprising the Community in its enlarged form, would foreseeably be favourable, or otherwise, to the operations and profitability of the British firm or industry concerned. By thus narrowing the question, and eliminating the political dimension, the whole act of judgment is falsified; for the Community is essentially a political creation and its aims and intentions are essentially political. To quote the French Foreign Minister a month or two ago, ‘Economic Europe is already a political Europe, simply because it is irreversible.’ It is a saying as profound as it is striking, and it deserves to be pondered. Those in commerce and industry, therefore, can no more contract out of answering the political question first than can the remainder of the British public. That question runs as follows: ‘Do I prefer that my firm or my industry should operate within a political community comprising the British Isles and most of Western Europe, of which the economic life and policy will increasingly be determined centrally?’

Let there be no misunderstanding: this is not a visionary hypothesis; it is what is meant by those not only on the Continent but in this country who advocate British membership.

In an important speech in Switzerland recently Mr Heath foreshadowed that, as a matter of urgency, the enlarged Community should ‘speak with one voice on matters of international trade and payments’, Perhaps it is not realised how far-reaching are the consequences of common policy on international trade and payments. It means, of course, common decisions on tariffs – that goes without saying – but it also means common decisions on all that affects the pattern of trade between the Community and the outside world. In recent years this country and the various continental countries, inside and outside the Community, have taken widely divergent views and actions on international payments. They have done so in response to the internal social and economic policies which they considered right for their respective peoples, and to what they regarded as their respective national interests. There cannot be – and the last few months, let alone years, have proved it – a common monetary policy without far-reaching co-ordination, or ‘harmonisation’, of social and economic policies generally. An instant’s recollection of all that Britain has done and suffered in the last twenty years to protect the external value of the pound sterling will bring this home.

The same recollection will show that fiscal policy too is a part of this, since it cannot be divorced from the management of trade and money.

Already, in one important respect besides tariffs, the British Parliament, if the UK joined the Community, would be obliged automatically to enact the common policy – I refer, of course, to VAT. A large part of the decisions on indirect taxation would, not in the distant future but at an early stage, cease to be national decisions and become Community decisions. It follows that membership means ipso facto that British firms and industries must look to operating in an economic environment, internal and external, predominantly and increasingly determined by Community decisions and policy.

Naturally Britain, like any other member, would have an influence, a ‘voice’, as it is called, in these common decisions; but so far as it was Britain’s voice, it would be a minority voice. Despite any reservation about the right of veto in matters of vital national interest, it is obvious that overwhelmingly the Community’s policies and decisions would reflect a majority point of view and majority interests, and that that point of view and those interests would be predominantly continental. The essential question for British industry can therefore be re-expressed in a more precise form: ‘Do I prefer that my firm or industry should operate in the context of economic life and policy determined increasingly by the views and interests of the continental countries of Western Europe?’ Faced with the question, I would not expect British businessmen to be so sentimental or deluded as to imagine that Britain’s competitors are going to have Britain’s interests at heart or that Britain is likely to dominate or, as it is more choicely expressed, to ‘lead’ the Community.

They are hard-headed enough to know otherwise: the policies and outlook of the Community (no blame to it!) will be determined by a continental outlook and continental interests, and nine times out of ten, or ninety-nine out of a hundred, Britain would have to go along.

If the question of entry into the Community were one of economic freedom – freer trade and wider trade – I have no doubt that British commerce and industry would be right to welcome it; for greater freedom in trading opportunity and economic choice is a fundamental interest of Britain, as a wholly industrial and insular and oceanic country. But that is not the question. The real question indeed is the opposite, a political decision to enter an increasingly tight continental structure. The right answer for British industry to that question is just as surely No.