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(a) changes in rates of exchange between the Frano and Mark, perhaps other currencies as well, which could produce serious consequences for e.g. the common system of agricultural prices or (b) the reimposition of restrictions on trade for balance of paym m ts reasons, which could well break up the Community if applied
a wide area of trade. Some persons involved in the Community are therefore arguing that its future will not be guaranteed until there is a much closer co-ordination of internal economic policies, involving supervision by the common institutions and perhaps leading eventually to a common currency (and a concomitant common monetary policy), as well as common policies on taxation and government spending. However, if this were to come about, institutions of a federal character would be required to formulate and administer such policies.
Common Commercial Policy
8.
Paragraphs 3
23 of T.I.A.B. M/17/66 described the
progress, or rather the lack of progress, in the development of an E. E.C. common commercial policy as at March, 1966. Since then there has been some progress made in certain subsidiary aspects of the policy, such as anti-dumping regulations and the definition of origin of imports, but there has been very little further advance in the vital sector of quantitative import restrictions. The reasons for this are complex but are essentially as follows. In the first place the Treaty of Rome laid down no precise timetable for the gradual achievement of a common commercial policy, as it did for the dismantling of internal tariffs and the establishment of the common customs tariff, although it did provide that such a policy should be established by the end of the transitional period (31st December, 1969). It has been the Community's experience that, in areas where a relatively fixed timetable is not laid down, it is more difficult to make progress because of the need to obtain the agreement of all the Member States to each step involved (the only area where this has not been true has been agriculture, but progress in that area has been due largely to the heavy political pressures exerted by France, including threats to hold up work in other areas of E.E.C. activity and even to break up the Community altogether, if she did not get her way over agriculture). It was true that there was originally a provision for qualified majority voting in the determination of the common commercial policy as from the beginning of the third stage of the transitional period in 1966. If this had been operated in the way provided it would probably have been easier to establish a common commercial policy. But, since the "Luxembourg compromise" in January, 1966, which settled the Community crisis after France refused to participate in the business of the Council following her disagreement with the Commission and the Five over control of agricultural finance, the significance of qualified majority voting has been attenuated in practice by the tacit agree- ment that it will not be pushed to a conclusion if the country or countries being outvoted claim that their vital interests are at a stake.
It is thus now possible for a country which is placed in a minority to hold things up by refusing to agree to proposals accept- able to the others.
9.
A further point, however, and the reason why the E.E.C. has been able to get by so far without a fully formulated common commercial policy, is that the elements of this policy which need to be completed only concern a relatively minor part of the Community's total trade. Thus, in practice, there is already a common policy covering trade in all agricultural products subject to the common agricultural policy. As regards non-agricultural products, trade
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CONFIDENTIAL
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