What Happened to the Free Market?

It is the least cited passage in the Treaty of Rome – so at odds with the rest of the text, in fact, that when I quote it, my fellow Eurocrats usually think I am making it up. It comes in the Preamble as one of the founding objectives of the European Economic Community, and it reads as follows:

Desiring to contribute, by means of a common commercial policy, to the progressive abolition of restrictions on international trade.

Of course, if this objective were ever fulfilled, the EU would have no raison d’etre. In a world without tariffs, there would be no need for customs unions. Indeed, for many Euro-enthusiasts, the whole purpose of integration is to give the EU clout against its trading rivals, and to protect Europe’s social model from lower cost economies.

Hence Peter Mandelson’s preposterous decision to slap a punitive tariff of 5 per cent, rising to 20 per cent in the coming months, on shoes from China and Vietnam – a ruling that will add around £7.00 to the price of a pair of shoes. The Trade Commissioner argues that this is an anti-dumping measure, which is what the EU invariably says when it wants to protect inefficient industries within its borders. But let us give Mr Mandelson the benefit of the doubt, and assume that the Chinese really are subsidising their cobblers. If so, the more fool them. It means that, every time we buy a pair of their shoes, we are picking up a subsidy from the Chinese taxpayer.

No British interest is served by this protectionism. Again and again, our consumers are expected to suffer for the sake of backward producers on the Continent. EU tariffs are highest in the fields of agriculture, textiles, steel and road vehicles – all areas where, in effect, British shoppers are being asked to prop up hopeless Continental manufacturers.

You might regard this as unfortunate; but your opinions don’t count. Britain has had no commercial policy since 1 January 1973, when our trade was wholly contracted out to Brussels. The entire show has been removed from our elected representatives and placed in the hands of an unelected functionary who, when he was a politician, twice had to resign in disgrace. You might have very strong views about commercial policy. You might want us to open our markets to struggling African producers. You might, for all I know, have been one of the millions of people who jumped up and down at the Live8 concert. But there is absolutely nothing you can do about it as long as we are in the EU. Some democracy.

Foreign houses

For British citizens this could mean, for example, losing easy access to foreign housing markets in notably Spain and France.

Why? Are there laws in those countries saying that non-EU people can't buy houses? Anyway, Bulgaria is flavour of the month with UK house buyers now. Spain and France are so last year.

Its foundation, economic integration, is undisputably positive.

I would dispute that. Therefore it's disputable!

And hey, guess what! The whole issue of metrication has been raised again in the UK in the past few days. Some cranky organisation said we should scrap miles on our roadsigns. They were met with pitying looks and a resigned shrug of the shoulders. I bet the powers-that-be didn't expect us still to be using in 2006 miles for our journeys, miles-per-gallon for our cars, pounds and ounces for our babies' weight, feet and inches for our height and fahrenheit for our chats about the weather - "It's in the nineties again!". You can take the stubborn British mule to the water, but you can't make it drink!! People now say, "I want three slices" when they buy ham from the deli counter, because they haven't a clue how many millilitres it weighs. Or whatever......

Bob Doney

UK metrication

AFAIK we were assured that the mile would stay as well as pints for beer and milk. Yes it is inconsistent with wine and spirits in centilitres but who cares? We are British and inconsistent, not uniform Europeans.

But did you notice the complete bias of the BBC promoting this metrication? The only people given publicity were those in favour.

As they say, if God wanted us metric, Jesus would have had ten disciples.

France certainly had laws to that extend

Especially in the countryside agricultural bodies had the power (sometimes by law and otherwise by coordinated response from establised owners) that made foreign ownership of land and houses more difficult than it had to be. Poland still has such laws and is only allowed to keep them on the books because of a negotiated agreement upon joining the EU.

But restrictions work sometimes in unpredictable ways. For example the boom in British ownership of Spanish houses is also partly due to the arrival of low cost aircarriers. Those in turn only came about because of the extensive liberalisation of the flying industry, something in which the EU has had a pivotal role.

Saying you are going to dispute something is not enough : you also need to actually do it. But let me first explain a bit more what I mean by economic integration : it is basically a concerted effort that strives to maximalise (international) trade by eliminating various barriers. Important barriers can be infrastructural (for example differing container and pallet sizes), economical (risks associated with international trade makes companies pay a premium) but most often as a result of policy (protectionism, trade tarrifs and preferential treatment of 'local' champions)

Now how would you dispute doing away with those barriers is a bad thing?


Saying you are going to dispute something is not enough : you also need to actually do it.

Sorry, Bart. I was being flippant!

But let me first explain a bit more what I mean by economic integration : it is basically a concerted effort that strives to maximalise (international) trade by eliminating various barriers.

I entirely agree. But my view is that a lot of the prime movers of the European project always had a "fortress Europe" in mind in terms of trade policy. That is, if you make your internal market big enough, you don't need to worry too much about trade with the rest of the world, and indeed you can afford to be protectionist. As events have turned out the real game is globalisation, and in order to win in that game Europe is going to need a very light touch on the regulatory tiller. I don't see much sign of that.

So we are going to have to keep a close eye on the protectionists in Europe AND the USA.

Bob Doney

Agree on the objective, not on the conclusion

Agreed that abolishing trade tariffs should be a cornerstone of any economical policy. I also agree that the EU is often not making a lot of progress towards that goal. However I cannot accept the conclusion that pulling out of the EU or restricting its scope in economical matters would be a good alternative, even for Britain.

Leaving the EU will not make public support for trade barriers magically disappear. In fact pressure on local officals to enact such measures is likely to increase. For British citizens this could mean, for example, loosing easy access to foreign housing markets in notably Spain and France. Given the size and monetary value in that trade it is something not entirely trivial.

The EU is fundamentally a good institution. Its foundation, economic integration, is undisputably positive. Instead of throwing that away we should try to focus the EU again on its original goals.