Friday, 3 October 2003

From Single Market to Single Currency: Evaluating Europe's Economic Experiment

Dr Martin Holmes 

This article first appeared on the website of The Bruges Group, an independent all-party think tank.

Chapter 1 The Single Market

Origins

The EC’s Single Market is currently being hailed as a resounding success by
Euroenthusiasts of all persuasions. To supporters of this view the benefits of
Britain’s access to the Single Market by themselves preclude any deeper
discussion of other aspects of EC membership such as the CAP, the Common
Fisheries Policy, the Budgetary contributions or even the loss of
parliamentary self-governance. But how successful is the Single Market? How
can its progress since 1 January 1993 be gauged? Do its advantages really
outweigh its drawbacks? For too long these questions have not been properly
addressed: the Single Market is simply assumed to work well rather than is
proved to do so. A Eurorealist analysis of the Single Market is long
overdue.

To understand the Single Market process, it is necessary to consider its
economic background. To most observers, the European Community was considered
to be an economic success between its foundation in 1957 and the oil price
shock of 1973. In this period, all the European Community countries enjoyed
substantial economic growth, full employment, and relatively low inflation,
following the continental model of welfare capitalism. A fundamentally market
economy was supplemented by a substantial welfare state with a high level of
fiscal transfer payments. By the mid 1970s it was clear that the European
Community was more economically successful than the COMECON countries of
central and eastern Europe; it was also clear that the economic strength of
the European Community was greater than that of the EFTA countries, even
though living standards in the EFTA countries were marginally higher. Moreover
the prosperity of the European Community up to the mid-1970s was very much
dependent on Germany as an engine of economic growth. During this period the
internal EEC tariffs fell fast, a process which was largely completed by 1967.
However, the oil crisis of 1973-4, which included the quadrupling of the price
of oil and a major transfer of wealth away from the European economies towards
OPEC, created a crisis which the EC was unable to solve. The inadequacy of the
response to this crisis ultimately led to the Single market economic revival
plan of the mid-1980s.

Many of the European countries initially tried to reflate their economies
when the increase in oil prices occurred. They believed that if they increased
the level of aggregate demand, this would enable them to avoid the effects of
higher unemployment and lower growth. In virtually every case, the outcome was
higher inflation. The level of European inflation increased markedly from the
mid-1970s onwards. Similarly there was a marked increase in unemployment and a
lowering of the European level of economic growth. The levels of unemployment
which had been between 2% and 4% up to the mid 1970s subsequently increased to
between 4% and 9%. Additionally, the whole system of welfare provision in
Europe was always based on a high level of government revenue, which in turn
was dependent on a high level of economic growth. 1 As soon as the oil crisis hit the European
economies, their growth rates fell, precipitating a considerable revenue
shortfall; the result was budget deficits and a greater difficulty financing
the welfare state. The European Community countries reacted to the oil price
crisis and to the transfer of wealth to the OPEC countries with less skill
than was the case either in the United States, or in Asia Pacific. By the
early 1980s, the European Community countries could no longer boast an
unbroken period of economic growth, a European economic miracle. Consequently
in terms of overall economic performance they began to fall behind the global
competitors especially the tiger economies of Asia Pacific. Indeed, most
Europeans in the early 1980s had little knowledge of Asia Pacific, did not
regard it as economically significant, and were slow even to understand the
strength and resilience of the Japanese economy.

By the mid 1980s, however, the truth had dawned. The EC became aware that
the decade between 1973 and 1983 had seen a comparative slippage in economic
performance in relation to the rest of the world. Herein lies the origin of
the Single Market process which aimed to increase European competitiveness,
and to inject dynamism into the European economy without necessarily creating
a massive inflationary surge. The objective was the illusive combination of
economic growth while maintaining stable prices and stable monetary policies.
It may be argued, with much justification, that the EC should have responded
by reducing labour costs, curbing welfare expenditure, accelerating
privatisation, resisting external protectionist temptations, and dismantling
the “industry policy” network of subsidies. But such solutions were too
politically painful for countries which lacked a free-market tradition. The
Single Market had the advantage of being politically non-controversial as well
as advancing the cause of European integration which was now being pursued
with the greatest intensity since the 1950s under the interventionist
leadership of Jacques Delors.

The Single Market process was therefore devised in the mid-1980s as a
supply side measure. Its principle creators, Paolo Cecchini 2 and Lord Cockfield, 3 argued that if Europe would reduce its
non-tariff barriers such as the waiting time at borders, the result would be a
beneficial increase in the internal mobility of labour, goods and capital. The
Single Market process was therefore aimed at the reduction of all non-tariff
barriers to complement the corresponding reduction in internal tariffs.
According to Cecchini and Cockfield, this would give a massive boost to the
European economy, creating 1.8 million new jobs, and increasing by up to 4.5%
the level of economic growth within the European Community.

The obvious way to realise such an objective was through ‘mutual product
recognition’, or MPR. The idea of MPR was that if a product is on sale or is
manufactured in any of the member states, it can then be sold in all the
others. Danish beer, for example, could not be sold in Germany because of
brewing laws dating back to the fourteenth century; according to MPR, the
Germans would have to remove those laws, enabling Danish beer to be sold in
Germany as well as anywhere else in the European Community. The concept of MPR
was to remove national laws and standards which discriminated against products
by prohibiting their sale. The advantage of MPR was its simplicity. All the
European Commission had to do was to identify each barrier and remove it. MPR
would not involve harmonisation; it was not a common standards scheme. It was
a way of preventing standards in any one country from obstructing trade
between member states. MPR aimed to maximise European trade by removing all
the barriers to trade which national standards had hitherto erected.

The British government supported the Single Market based on MPR, believing
that the Single European Act would work to this effect. This author chaired a
meeting in London in 1989 at which Mrs Thatcher’s Secretary of State for Trade
and Industry, Lord Young, said that the Single Market meant the
“Thatcherisation of Europe”, because MPR would remove the internal non-tariff
barriers. But this initial enthusiasm did not live up to expectations. By 1994
Lord Young was attacking the ‘… Brussels principle of equal misery otherwise
known as harmonisation’. 4 The reason for
his disillusionment was obvious. The version of the Single Market preferred by
the continental countries, and particularly by the European Commission,
including its ubiquitous President, Jacques Delors, was standardisation,
better known in Britain as harmonisation. It led to the opposite approach to
MPR. With harmonisation, the task of the Commission was to establish standards
for each product, and to ensure a uniform system of compliance. The Single
Market was channelled into setting standards for health, safety at work,
product size, product quality, and ensuring that each national manufacturer
changed its products accordingly. The EC Commission gleefully promoted common
standards throughout Europe, not least because Commission power and
responsibility rapidly expanded. The consequences of this approach have even
been attacked by the former EC Commission Vice-President Lord Tugendhat who
told a Chatham House audience that:

I believe, a major component of the widespread
disillusion [with the EC] stems from the legislation needed to bring the
Single Market into being. That legislation has proved to be unprecedentedly
intrusive. Partly, there is the question of sheer scale – 282 individual items
of European legislation required to bring it into effect. Partly too it is a
result of so many existing national rules and regulations on technical
standards, health, safety, environment and other matters being so detailed
that in order to create a level playing field EU regulations had to follow
suit. As a result it has been brought into what Douglas Hurd has described as
“the nooks and crannies” of national life all over the European
Union.

This is by no means only the result of Commission
initiatives. The Single Market has become the means by which individual member
states have sought to push their own agendas on social, environmental and
other matters. This has added to the volume of proposals the Commission has
brought forward. 5

By the time the Single Market came into view, on 1 January 1993, it was
clear that its philosophy was based upon harmonisation or standardisation: MPR
had been effectively lost, except in non-controversial areas. MPR might
prevail if there was no dispute about a product, but given the complexity of
modern industrial society, it was almost certain that the Commission at some
stage would be called upon to adjudicate in terms of the various standards
which were being applied. From the start the Single Market was being
transformed into a uniform market over which the EC Commission acted as judge
and jury. As a result the Single Market is deficient in four different areas:
harmonisation; competition policy; external tariffs and protectionism; and
Value Added Tax.

Harmonisation

Firstly, harmonisation, which, according to Douglas Hurd has penetrated the
“nooks and crannies” of everyday life. But such high level government
criticism is not new. Back in 1974 Prime Minister Harold Wilson commented that
‘There is too much talk about harmonisation … a Euro-loaf, Euro-beer… An
imperial pint is good enough for me and for the British people and we want it
to stay that way.’ 6 His successor, James
Callaghan, recalling his time as Foreign Secretary, noted in his memoirs
that:

I found myself corresponding with the Chancellor, Denis
Healey, about import levels of apricot halves and canned fruit salad, and with
Peter Shore about mutton and lamb. I recall one low point when nine Foreign
Ministers from the major countries of Europe solemnly assembled in Brussels to
spend several hours discussing how to resolve our differences on standardising
a fixed position of rear-view mirrors on agricultural tractors.7

Michael Heseltine, currently the President of the Board of Trade and
Secretary of State for Trade and Industry, in his 1987 book Where There’s
a Will
, entitled a chapter ‘Our European Destiny’. Anticipating the
benefits of the Single Market he argued:

One of Britain’s two commissioners, Arthur Cockfield,
has put forward a detailed plan for making a reality of Europe’s internal
markets. The idea of creating a European market in which goods, services,
people, and capital can move without hindrance is not a new one; it was the
core of the Treaty of Rome. But this plan is by far the most ambitious attempt
to make it a reality. The Cockfield plan seeks systematically to remove within
seven years all the physical, technical, and fiscal barriers which divide the
Community. 300 legislative proposals have been put forward to create this
great market; to encourage trade flows and reduce unacceptable administrative
costs, the physical barriers have to go. Technical barriers frustrate the
creation of a Common Market for industrial goods; as a result, manufacturers
in Europe are forced to focus on their own national rather than European
markets, with consequent increases in costs. Every day consumer goods have to
be adapted to different standards. More than 80 different types of television
sets are made to meet different national standards. 16 types of electric
shaver are made. Air fares within Europe are held artificially high by
national regulation and cosy monopolies. 8

But Michael Heseltine, as Minister of the Board of Trade said of the Single
Market in March 1994 that:

the Single Market is over regulated, overprotected,
over-centralised We now have Eurosclerosis; we burden our businesses with
extra costs, preventing labour markets from working properly, stifling the
regenerative process of the capitalist system. 9

If someone initially as enthusiastic as Michael Heseltine has expressed
such criticism it is no surprise that Eurosceptics have been even more
critical. Thus Christopher Booker in his columns in the press and in his book
The Mad Officials 10 has
catalogued many of the absurdities of harmonisation.

For instance, the Commission plans to harmonise the size of buses in Europe
by switching from double-decker to single-decker. The British, and the Germans
in Berlin, often prefer double-decker buses; but the Commission wants to
prohibit manufacture to enforce harmonisation. This approach is the opposite
of MPR: under MPR, all buses, single or double-decker, could be on sale
anywhere in the EC and the consumer would choose. Also threatened by the
directive are the bus industry exports to Asia Pacific, where there is a
preference for double-deckers. As Mr Booker points out such proposals ‘will
deal a devastating blow to British manufacturers and to our bus and coach
operators. Their costs would amount to so many billions of pounds that their
trade organisations find it hard to estimate an overall figure.’ ll Just as ludicrous is the 1800 word European
directive on the curve in cucumbers; according to the Commission, cucumbers
should not curve by more than 5 mm. It does not matter if a cucumber curves,
as generations of consumers know full well. Why should Brussels want to
regulate the curve in a cucumber unless this is regulation for regulation’s
sake? Harmonisation zeal now affects lettuces. Lettuces grown in Britain,
because of the climate, require fertiliser, unlike lettuces grown in Southern
Europe. MPR would simply permit all lettuces grown with or without fertiliser
to be sold anywhere; what the Commission has done is to issue a lettuce
harmonisation directive, preventing the production of lettuces with. Five
thousand jobs are now at risk in an industry with a £65 million turnover.
12 Equally unjustifiable is a
harmonisation directive on the emissions from crematoria and mortuaries.
Apparently all the crematoria in Europe have to standardise their emissions
from the burning of corpses. Crematoria rarely export their services; it is
not the focus of a massive European trade. People who die in Britain do not
usually have their cremations’ for example, in Greece; it does not matter if
our crematoria design is different from the Greek. Why should they all be the
same design?

Another harmonisation obsession concerns forestry as Christopher Booker has
described:

There is something called the directive on Forestry
Reproductive Materials, number 66/404. This is a very curious piece of
legislation because it was originally taken from a German forestry law of
1963, and this in turn was copied from a so-called Forestry Race Law
introduced by the Nazis in 1934 to preserve the genetic purity of forests in
the Third Reich.

The intention of that now nearly 30 year old EC
directive is the same – to preserve the genetic purity of trees. And of course
it has been translated into regulations by the authorities here in Britain,
and applied more rigorously than anywhere else in Europe.

The trouble is that British oak trees have a natural
tendency to hybridise. This means that there are only a few strands of oaks in
British woods and forests which meet the exacting purity standards laid down
by the directive. And it is now a criminal offence to sell acorns from any
other trees. 13

Other industries to suffer severe disruption because of harmonisation
include whisky distilling, herbal medicines, slaughterhouses and meat
production, cheese and milk products, l4
and retailing. In March 1995 the Sunday Express reported harmonisation plans
aimed at abolishing imperial measures with fines and prison for shopkeepers
who weigh produce in pounds and ounces. Their report illustrated the plight of
one typical shopkeeper Mrs Diane Brandon of Devon:

‘I’d rather go to jail than give up pounds and ounces
says Diane, 42. And swingeing new Euro laws mean she may have to do just that.
For Trade Minister Michael Heseltine is pushing for £5,000 fines for
shopkeepers who stick to imperial measures that have been good enough for
centuries, with prison for non-payers. Eilos and grammes are to be introduced
over a five-year period From October. But not if Diane, who runs Osmond Stores
in Uffculme, near Tiverton, Devon, with husband Michael, 46, has anything to
do with it. ‘If we don’t do something to stop this now’, she says, ‘then we
are just on a big Euro roller coaster. We serve 2,500 customers in this
village and the surrounding area and I believe most of them will want to keep
the traditional measures.’ Under the Euro rules, shopkeepers will have to
display prices of prepacked food in kilos and will not be allowed to display a
conversion chart. 15

Such harmonisation increases costs, leads to higher unemployment, and
unnecessarily increases burdens on business. Harmonisation has cut the choice
for the consumer, creating not a single market, but a uniform market. There is
a great difference between a single market where the consumer is king, and a
uniform market where the European Commission decides on product determination.
Unfortunately it is a uniform market which the EC Commission
directives are rapidly producing.

Competition Policy

The second deficiency of the Single Market concerns competition policy.
During the build up to “1992″ the European Community stated that it would be
open to investment from outside. Consequently, there was an increase in
investment from the United States and from Asia Pacific. Companies were
informed that if they invested in any one European country, they would have
access to the domestic market of all the others. However, a number of
interesting cases have shown that the rhetoric of openness has run ahead of
the reality. For example, the American company Procter and Gamble, having set
up their factory to manufacture baby products such as nappies, found that
their share of the market was increasing to such an extent that European
competitors complained to the Commission, who investigated Procter and Gamble
for obtaining an excessive market share. Procter and Gamble are not in breach
of any rule or regulation; they have not been using unfair competitive
tactics, and they are not in breach of anti-monopoly laws. They are not in
breach of a member state law or European Community law; they have simply done
well in selling their products to Europeans. Nonetheless, the Commission’s
investigation instructed Procter and Gamble to divest important parts of its
European business. As the Wall Street Journal reported:

Procter & Gamble said it was ‘surprised and
disappointed’ by the Commission’s decision to investigate its potential
domination of the feminine-hygiene sector in Germany. ‘We don ‘t understand
it, especially after our plans to divest not only the diaper business, but
also parts of the feminine hygiene business of VPS’, a Procter & Gamble
spokesman said in Brussels…

At the group’s headquarters in Cincinnati, Ohio, Procter
& Gamble Chairman Edwin L. Artz expressed frustration with the Commission’s
reservations. ‘We have done our utmost to meet possible concerns about the
impact of the sale in other produce markets by excluding the VPS
feminine-hygiene business volume’, he lamented ‘The resulting share position
for Procter & Gamble win not restrict competition in any European product
category.’ l6

The same problem has been faced by the Nissan motor car company, which
found colossal restrictions on its exports to the European Community because
of protective tariffs and voluntary export restraints (VERs). Taking advantage
of the Single Market, Nissan built a factory in Britain, with the hope of
exporting cars throughout Europe. However, France and Italy complained that
although the Nissan cars are built in Britain they are still Japanese cars and
should therefore be subjected to tariffs. The Commission is now determining
the outcome of this case. When Gillette invested in the Single Market, they
did so with the hope of being able to sell their razors in all countries; the
result has been a massive increase in the sale of Gillette products. But
domestic European manufacturers objected on the grounds that Gillette’s market
share had become too great. Yet the reality is that Gillette’s products are
much better, and better priced, than the European products. They are also more
imaginatively advertised. For these reasons Gillette is thriving; it is not
because the company is in breach of regulations or have violated laws
concerning monopolies. In all these cases, the notion of a Europe open for
business has been exaggerated. Even powerful multinationals are not immune
from spiteful restrictions on product sales and market access.

The policy of the European Community is that foreign investment is welcome
as long as it is not particularly successful. If an outside company is too
successful, and if the European consumer buys its products, the domestic
European manufacturers will soon want to erect the equivalent of trade
barriers. The result is that EC economies have been losing out to the US in
the competition for foreign direct investment, according to a study by the
Organisation for Economic Co-operation and Development in June 1995. Inflows
of foreign direct investment to the US economy nearly tripled to $60.07
billion last year from $21.37 billion in 1993. The 1994 figure also marked a
six-fold increase from the $9.89 billion of such investment into the US in
1992. The totals underscore perceptions that the US has emerged as a favoured
destination among OECD economies for multinational companies because of its
big market and its competitive cost base. Recent major investments in the US
by companies such as Germany’s Daimler-Benz AG and British Telecommunications
have sharply driven up the pool of foreign funds invested in American
industry. In Europe, Italy saw foreign-investment inflows slow 34% to $2.48
billion in 1994, while French inflows slipped 13% to $10.5 billion. German
inflows were actually negative in 1994 after slipping to $241 million in 1993
from $2.38 billion in 1992. The UK saw its inflows fall 24% in 1994 to $11.06
billion from $14.54 billion a year earlier. l7

Competition policy has thus become a barrier to customer choice rather than
an enhancement of it. This can be demonstrated by the fact that several
industries are still largely immune from competition. Air travel, accountancy,
insurance and telecommunications are not yet fully covered by the Single
Market; yet all of these industries are large and important. There is no
Single Market in ferry travel. Greece has exemption until 2004 on the
provisions for competition on ferries between its various islands. Competition
is distorted by high industrial subsidies to “national champions” which now
emerge as “European champions” – Airbus Industries, Thompson Bull, Philips,
Fiat and Renault, and most of the EC’s steel industries. Even an EC Commission
report on the Single Market in June 1995 was primarily devoted to bemoaning
obstacles to free movement of goods because of inadequate compliance with
directives. 18 But such an approach is a
tacit admission that the harmonisation philosophy has proved unsatisfactory in
practice. The final objective should not be total compliance for its own sake
but greater choice for European consumers. If MPR had prevailed as the guiding
philosophy in the mid- 1980s the consumer would now have better choice in many
products.

External Protectionism

The third defect of the Single Market is the way in which external tariffs
and protectionism has increased. 19 Many
European companies, while accepting greater internal competition, have
demanded by way of compensation greater protection from imports and external
competition. As Anthony Cowgill accurately predicted in November 1991,
‘Reducing border restrictions for example will have no effect on the
competitive edge of British manufacturing industry – in fact the EC may well
damage the international competitiveness of British companies if it persists
in becoming more protectionist and if it starts carrying out centralist social
engineering measures.’ 20 There has been
a noticeable increase in external tariff and non-tariff barriers in the run up
to, and in the operation of, the Single Market. The EC favours internal
competition, but is prone to keep out products from non-member states, 21 in particular competition from the United
States, Asia Pacific, and from Central and Eastern Europe. Many Eastern
European economies are now performing very well. The Czech Republic’s economic
miracle has become the successful model to emulate. Eastern European countries
are now able to export to Western Europe products of a fairly high quality at
a good price. But EC protectionist devices have continued to proliferate,
especially in the “sensitive” areas of textiles, coal and steel, and
agriculture. Both the 1991 GATT and IMF reports condemned such external EC
protectionism and a 1994 UNCTAD report noted that:

… in 1993, Hungary, for example, still saw 30% of its
exports to the EU subjected to some form of non-tariff trade barriers. These
barriers included such things as quantitative restrictions and minimum pricing
rules. The figure for the Czech Republic and Slovakia was 25%, for Poland
16.6% and Romania 36%. With the exception of Poland, all of these countries
are experiencing about the same level of obstruction as in 1989.

The EU’s failure to liberalise the so-called “sensitive”
sectors (i.e. iron and steel, chemicals, textiles and agriculture) is
particularly damaging to the East because of their own dependence on these
sectors. Some 50% of all of Poland’s exports to the EU last year came from
these “sensitive ” sectors. For Hungary, the figure is 54%, Romania 65% and
Bulgaria 70%. What may seem like a minor trade restriction on goods from
Central and Eastern Europe may in fact be responsible for greatly retarding
the pace of economic reform. 22

The proliferation of “anti-dumping” rules has been a favoured EC measure to
discriminate against Central and Eastern Europe even though such rules are
especially damaging to EC consumers and to companies who require Eastern
European imports as part of the production cycle. In May 1993 the EC imposed
anti-dumping duties of up to 21.7% on imports of seamless iron and non alloy
steel pipes from Hungary, Croatia and Poland after the Commission estimated
that such products had dumping margins of up to 50%. Such policies are petty,
spiteful, and lacking in any economic justification based as they are on
political considerations of placating inefficient EC producers. 23 Central European political leaders have
rightly complained. Hungarian Prime Minister Gyula Horn has stated that ‘…
the EU should realise that we live in the market too and it shouldn’t place
restrictions on the import of our goods. After all we won the Third World War
for the West’; 24 Czech premier Vaclav
Klaus told the 1994 Mont Perelin Society conference that:

the collapse of the Iron Curtain does not require
restructuring and transformation on its eastern side only. The western side
needs to adjust as well and the necessity of doing that is no less urgent.
Attempts to postpone the painful economic and social process by protectionism
and by trade discrimination [against] former communist countries can only
worsen problems on both sides. 25

No wonder that President Clinton told the EC that ‘if the Eastern Europeans
cannot export their goods they may export instability even against their own
will.’ 26

Value Added Tax

The fourth area of Single Market deficiency concerns Value Added Tax. The
European Single Market is based on a single taxation strategy for indirect
taxes rates. In July 1992 European Community countries approved a minimum
level of VAT of 15% on nearly all products and services. This high level of
indirect tax is imposed throughout the European Community on different
economies, products, direct tax systems, levels of growth and employment. The
outcome is effectively to harmonise the tax regime by harmonising indirect
taxes upwards. Such a regime creates particular problems with regard to the
assessment of levels of inflation. Treasury estimates suggest that the actual
level of inflation is up to 1% lower because of the distortions caused by VAT
(and other indirect taxes). One practical objection to VAT is that it is
difficult to collect. It transforms every business into an unpaid tax
collection agency. Large companies can perhaps cope with this; they employ
accountants in any case and can absorb the costs. But the small business
sector finds it hard to absorb the costs of collecting, assessing, and
quantifying VAT. In North America, for example, where there is no equivalent
to VAT, it is no coincidence that the small business sector is much larger and
more dynamic; the small businesses become medium-sized businesses more
quickly, partly because this burden is absent. The VAT harmonisation burden
hits the small and medium sized sector of the European economy, which is
consequently less able to expand than its competitors in equivalent economies
in Asia Pacific or in North America. According to the House of Commons Select
Committee on Public Accounts, in a report on VAT in August 1994, two billion
pounds of VAT each year goes uncollected because traders either cannot
understand the system, cannot be bothered to find out, or deliberately dodge
payment. The report painted a nightmarish picture of businessmen ensnared in a
web of rules and regulations so complex that only a minority pay their full
VAT dues. Members of Parliament noted with concern that VAT is governed by 156
main regulations, and that there have been 209 regulatory changes in the last
nine years. 27

Despite the good intentions of the Single Market, its achievements still
lag far behind its rhetoric; nor is it likely to succeed unless the emphasis
is returned from harmonisation to Mutual Product Recognition. External
protectionism based on mercantilist economics should be abandoned in favour of
freer global markets in accordance with the spirit and objectives of the World
Trade Organisation (WTO). VAT harmonisation serves no worthwhile economic
purpose and its removal would provide a supply side boost to the European
economy. And non-EC companies investing in the Single Market should not be
subject to politically motivated or maliciously inspired restrictions of their
market share. Changes along these lines will promote consumer choice and
enhance economic growth. So far however the Single Market experiment has, on
balance, done more harm than good.

References

1. In the 10 years to 1976, the EC’s growth rate
averaged 4% a year, compared with 2.6% for America Since 1976 European growth
has halved to 2.2%, while America has grown by 2.5%. Japan has had a growth
rate of nearly 4% a year over the same period.

2. The Cecchini Report, EC publication
1988.

3. Lord Cockfield, The European Union: Creating the
Single Market
, J. Wiley and Sons, 1994, gives a personal account of the
single market process which highlights the dynamism of the EC Commission in
forging the 1992 process into a frontier free harmonised Europe.

4.Lord Young, speech at IOD Convention 26 April
1994.

5. Speech at Chatham House, 14 June 1995.

6. Harold Wilson (September 1974) quoted in S. George,
An Awkward Partner, Oxford University Press, 1990, p.87

7. James Callaghan, Time and Chance, Collins,
1987, p.304.

8. Michael Heseltine, Where There’s a Will,
Hutchinson, 1987, p.259.

9. Michael Heseltine, speech 3 March 1994.

10. Christopher Booker and Richard North, The Mad
Officials
, Constable, 1994.

11. Christopher Booker, speech at the IOD, 23 February
1995.

12. Ibid.

13. Ibid.

14. Harmonisation effects on the French cheese
industry were condemned by Prince Charles at a dinner of the France-Britain
Association 3 March 1992.

15. Sunday Express, 5 March 1995.

16. Wall Street Journal – Europe, 22 February
1994.

17. Reported in Wall Street Journal – Europe
26 June 1995.

18. See EU study finds obstacles on path to Single
Market, Wall Street Journal – Europe 16 June 1995.

19. For an excellent analysis of this trend see Martin
Wolf, The resistible appeal of Fortress Europe, CPS/AEI, 1994, and B.
Hindley et al, Trade Policy Review, CPS, 1994.

20. Anthony Cowgill, British Management Data
Foundation publication 7 January 1992.

21. The Times reported, 15 July 1994, that
thousands of Mr Spock dolls will be refused entry to Britain this year because
the pointy-eared Star Trek character from the planet Vulcan is “non-human” and
falls foul of new trade quotas. The European Union is restricting toy imports
from outside the Community to protect EU manufacturers. Member states are
using a 44-year-old international agreement setting quotas for the type of
toys that can be imported – human or non-human and animals, wooden and
stuffed. It is up to Customs to decide how the rules are interpreted. Under
the system, Captain Kirk toys get the green fight, but a limit has been set on
the number of Mr Spocks from China. Any more than the allotted number will be
turned away by Customs. Customs commented that ‘Robin is safe and so is
Batman, because he is actually a human. But Mr Spock is not, and will be
subject to careful checks. We are skill considering the status of Noddy and
Big Ears, but will be as lenient as possible.’ The Department of Trade and
Industry said Mr Spock fell under regulation 950349: ‘He will have to find
some other way to beam himself in.’ The decision has infuriated British toy
traders because about a third of toys in shops originate in China. A spokesman
for the European Union said that the quotas had been fitted to a world-wide
administrative framework agreed many years ago. Similarly The Sunday
Times
noted, 31 July 1994, that under the EC’s Measures to Encourage
the Development of the European Audio-Visual Industry
thousands of pounds
worth of subsidies are to be paid to European cinemas not to show American
films but to screen European titles instead.

22. UNCTAD Report 1994 reported in the Wall Street
Journal – Europe
23 November 1994.

23. For an excellent case report against anti-dumping
policy see Sir Alan Walters, Economic Viewpoint, Evening Standard 14
October 1991.

24. Wall Street Journal – Europe 25 June
1994.

25. Ibid. 6 October 1994.

26. Speech to the French National Assembly June
1994.