0003230
G.F. 323
CONFIDENTIAL
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4. involves
5.
(a)
(b)
More precisely the establishment of a Customs Union
The elimination of protective tariffs and other barriers to trade (e.g. quantitative import restrictions) between the countries who are members
of the Union and
the establishment of a uniform protective wall round the outside of the Union involving
(i) a common external tariff and
(ii) a common commercial policy on such other
matters as quantitative import restrictions, anti-dumping regulations, definition of origin, export aids and commercial and trade agreements with third countries.
The position with the E. E. C. at the present time is that (a) and (b)(i) have now been achieved. With very few exceptions there are now no tariff barriers or other restrictions on trade between Member Countries, and the Common Customs Tariff has been fully established since July, 1968 (at the same time as the Community implemented the first two stages (out of five) of the tariff reductions it agreed during the Kennedy Round). The position on (b)(ii), namely the commoncommercial policy is, however, much more complicated. It is only partially established in some fields and, in particular, there has been no agreement as yet on a common import policy, includ- ing quantitative restrictions.
6.
The Community has also so far not managed to make very much progress towards the achievement of Economic Union. This involves the adoption of policies going beyond a simple customs union, partly on the grounds (as seen by some of the founding fathers and e.g. the European federalists at the present time) that the E.E.C. should only be the first step towards a much clos er political integration of the Member States and that fuller economic integration will help to bring this about. But another view which is not incompatible with the first is that economic union is also required on the more practical grounds that the customs union will be subject to severe strains and may even collapse in the long run if it is not shored up by the closer integration of economic policies and the establishment of common policies in key areas of economic affairs.
7.
Measures designed to lead towards closer economic union include provisions for the free movement of capital and persons within the Community, the right of establishment of business enterprises and professional services, measures to eliminate distortions of competition (e.g. cartels and monopolies), assistance to backward areas; and common policies in such fields as agriculture, transport and energy •
Probably more important than any of these (even the agricultural policy), however, is the increasing need being felt for a co-ordination of economic, fiscal and monetary policies between the Member States. Indeed, more and more attention is now being given to problems arising in these fields and they will undoubtedly figure largely in any future negotiations on British entry.
For instance, the divergence between the rates of economic growth, inflation and price levels between the Member Countries, particularly Germany and France, are producing disequilibria in their balances of payments. Consequently the Community faces the risk of either
/(a) changes
...
CONFIDENTIAL
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