The Common Market … The Economic Situation … Berlin

Mrs. THATCHER SPEAKS ON GOVERNMENT POLICY

For almost two hours on Monday evening, before a Conservative audience at Headquarters, Mrs. Margaret Thatcher, member of Parliament for the Division, with facts, figures and political logic, summarised current political highlights. Questions were numerous—the majority on economic problems. Mrs. Thatcher's views on this, and other major topics are recorded here:—

EUROPEAN COMMON MARKET

After nine months preliminary discussions with the countries of the European Economic Community, the stage has been reached where further progress could not be made without entering into formal negotiations about the detailed conditions on which we could join. By Article 237 of the Treaty of Rome application to join the Common Market is necessary before these formal negotiations can begin. Whether or not Britain finally joins E.E.C. will depend upon the terms we can obtain from these negotiations to suit our special needs.

In discussing this problem the following points must be considered:

A change of scale has come about in world affairs. This applies to weapons and to economics. If we join the Six there would be a European community with a population a good deal larger than that of Russia or America.

THE COMMONWEALTH AND EUROPE

To pose this as a choice between Europe and the Commonwealth is to put it falsely. Insofar as the Commonwealth is held together the essential link is the strength of the mother country; if we cease to be a strong country, economically, and cease to be a source of capital, the threads that bind the Commonwealth to the central link are bound to disintegrate and break. The new Commonwealth requires capital to develop its resourses and if it cannot get it from us there are already signs that it will turn for it to other countries, including Russia. We can only supply the capital out of a flourishing and expanding trade of the kind that exists in Europe now.

It has been suggested that a Commonwealth Free Trade Area is a possible alternative to a European Free Trade Area. This idea found no favour at all with our older Dominions, particularly with Canada and Australia.

Most Commonwealth countries are determined to become industrialised in order to raise their standard of living. Their infant industries demand protection against many of our own exporters. We are in a position where many Commonwealth countries get free entry here for their own goods, but have raised heavy tariffs against our goods.

The import of raw material from the Commonwealth into the Common Market would present no great difficulties as most raw materials—cotton, tin, rubber, jute, wool and oil seeds enter all the Common Market countries duty free. The real difficulty lies in food imports, particularly from Canada, Australia and New Zealand. There already exist in the Treaty of Rome special protocols, to take account of the particular needs of member nations, for example both France and Luxemburg have separate protocol. Moreover the former French Dependencies in Africa are associated with the Common Market and their produce enters it duty free. It should be possible to negotiate similar terms for some of our Dominion produce.

In considering our traditional ties with the Commonwealth we should remember that it now differs greatly from the entity which existed 20 or 30 years ago. Many of us do not feel quite the same allegiance to Archbishop Makarios or Doctor Nkrumah or to people like Jomo Kenyatta as we do towards Mr. Menzies of Australia.

AGRICULTURE

On the question of agriculture, a common policy has not yet been worked out for the European Community. We all have this much in common—all agricultural systems require support or assistance of some kind from the Government. In this country we subsidize our farmers by the system of guaranteed prices which involves the tax-payer in a bill of something like £250 million a year. European farmers are protected by tariffs and quotas. If we join the Common Market fairly soon we have some chance of working out an agricultural policy which will be suited to our own needs. In any event we ourselves shall have to reconsider the amount of support the taxpayer gives to agriculture as the total subsidy bill looks like being nearly £300 million this year.

SOVEREIGNTY

Some fears have been expressed that if Britain joins the Common Market she will cease to be able to formulate her own foreign policy and will lose her separate identity. Looking at the European Community at present, it does not appear that its separate members have lost either their identity or their sovereignty. Most people when they talk of sovereignty mean the effective control over the destiny of the nation by Parliament. But today we have entered into many Treaties and military alliances which limit our freedom of individual action. More and more we are becoming dependent for our future, on action in concert with other nations. To enter into commercial obligations and treaties is an exercise of sovereignty, not a derogation from it. Under treaties we accept obligations which we ourselves help to formulate. Sovereignty and independence are not ends in themselves. It is no good being independent in isolation if it involves running down our economy and watching other nations outstrip us in both trade and influence.

We should be failing in our duty to future generations if by refusing to negotiate now we committed this country to isolation from Europe for many years to come. Moreover unless our own economy flourishes we shall be unable to hold the Commonwealth together and its members will then turn increasingly towards Europe or America or Russia for help. On the political side we should remember that France and Germany have attempted to sink their political differences and work for a united Europe. If France can do this so can we.

BERLIN

There is no need for “panic stations” over the Berlin Crisis. Until the recent closing of the frontier in Berlin the arrangements for the city worked very well. Each day 40,000 people from East Berlin travelled to West Berlin to work, and 7,000 from West Berlin travelled to East Berlin. Hundreds of East Berliners travelled to West Berlin each day to read the Free Press, while hundreds of West Berliners went to East Berlin at night to attend the cheap theatre. Even two of the deputies who sit in Bonn resided in East Berlin. It has been an open gateway between East and West through which a quarter of a million refugees from East Germany annually flee to freedom. On the other hand in 1959 some 50,000 of those same West Germans returned to the Eastern Sector. This division between East and West in fact works when the Communists allow it to do so. It is clearly, however, a festering sore in the Communist world for it is a living emblem of life in the free world and its superiority over life under dictatorship. Some will claim that this situation cannot go on indefinitely. On three occasions we and our allies have made detailed proposals about the future of Berlin and Germany as a whole. These were in 1954, 1955 and again in 1959. The Soviet Government has so far steadily refused to entertain these proposals. To retreat from Western Berlin now would be to abandon our main outpost of freedom and turn over 2,000,000 people, many of whom have fled from Communism, over to the Communist system. I do not believe however that Russia desires to enter into hostilities over Berlin. We ourselves are present in Berlin as a result of Treaty right concluded at the end of the war and to which Russia was a signatory. The situation now is a test of will between the Communist world and the Western world in which we are not the challengers but the defenders; we are not flouting treaty rights, but are acting in accordance with them.

ECONOMIC SITUATION

There has been some criticism that the measures taken by the Government are not sufficiently strong or far seeing to deal with the situation. In fact the measures are of an almost unprecedented severity. The combined effect of a 7%; Bank Rate, a Budget with an over-all deficit of only £60,000,000, special deposits at 3%; and increases in Purchase tax and excise duty will within three months produce a situation in which money is very tight and the home market much more difficult. Of these measures the high Bank Rate is the one I dislike most, but it is necessary as the Radcliffe Report acknowledged to convince other nations that we are serious in our determination to hold the value of the £. The Bank Rate will be the first measure to be relaxed in my view. But that will not mean that other measures can be similarly relaxed.

In the sphere of Government expenditure it is not difficult to get general agreement on the broad principles. Most people would agree with the Plowden Report that the total of public expenditure must be properly aligned with prospective resources and must be kept so aligned. In any particular case, however, everyone seems to take the view that he himself must not be adversely affected by any measures, it is the other chap who must make the sacrifice. The Selwyn LloydChancellor is determined to contain Government expenditure and is at present making long term decisions to see that it does not rise above a previously determined level. He has shown great wisdom in maintaining investment in productive industry at a high level. Hitherto cuts have fallen on such investments. I am glad that the Pay Roll tax was not invoked.