From d.hayes@genie.geis.com Mon Aug 29 19:17:51 1994
Date: Sun, 28 Aug 94 19:20:00 UTC
From: d.hayes@genie.geis.com
Reply to: act@zilker.net
To: act@zilker.net
Subject: GATT

A good summary of the problems with the GATT. Reposted with minor typos
corrected.
 
------------------- Begin Repost _________________________________
 
 
Subject: Goldsmith on GATT - reformatted
To: uwsa@shell.portal.com
Date: Sat, 27 Aug 94 11:31:56 PDT
From: "Karl P. Platt" 
Re:     GATT
 
"GLOBAL FREE TRADE AND GATT"
 
 
       JAMES GOLDSMITH
 
 
Extract from the book "Le Piege" by James Goldsmith, updated and
translated into English
 
 
James Goldsmith is a Member of the European Parliament, President of the
Parliamentary group `L' Europe des Nations',and a member of the
Parliamentary Committee concerned with global trade: Committee on External
Economic Relations.
 
 
Q - You are opposed to global free trade and therefore to GATT. Why?
 
 
Global free trade has become a sacred principle of modern economic theory,
a sort of moral dogma. That is why it is so difficult to persuade our
politicians and economists to reassess its effects on a world economy
which has changed radically.
 
I believe that GATT and the theories on which it is based are flawed and
that, if they are implemented, they will impoverish and destabilize the
industrialized world whilst at the same time cruelly ravaging the third
world.
 
 
Q - Please remind us of the economic theory on which GATT is based.
 
 
The principal theoretician of free trade was, of course, David Ricardo,
the British early 19th century economist.' He believed in two interrelated
concepts: specialization and comparative advantage. According to Ricardo
each nation should specialize in those activities in which it excels, so
that it can have an advantage relative to other countries. Thus, a nation
should narrow its focus of activity, abandoning certain industries and
developing those in which it has a comparative advantage. The results
would be that international trade would grow as nations export their
surpluses and import those products that they no longer manufacture,
efficiency and productivity would increase and prosperity would be
enhanced. But these ideas are not valid in today's world.
 
 
Q - Why?
 
During the past few years, four billion people have suddenly entered the
world economy. They include the populations of nations such as China,
India, Vietnam, Bangladesh, and the countries that were part of the
ex-Soviet empire among others.  These populations,are growing fast.
Subject to catastrophes they are forecast to reach over 6.5 billion in 35
years.2 They have very high levels of unemployment and those people who do
find jobs offer their labor for a tiny fraction of the pay earned by
workers iii the developed world . For example, 47 Vietnamese or 47
Filipinos can be employed for the cost of one Frenchman.3
 
Until recently, these four billion people were separated from our economy
by their political systems, usually communist or socialist, and because of
a lack of technology and of capital.  Today all of that has changed. Their
political systems have been transformed, technology can be transferred
instantaneously anywhere in the world on the back of a micro-chip, and
capital is free to be invested worldwide wherever the anticipated yields
are highest.
 
The principle of global free trade is that anything can be manufactured
anywhere in the world to be sold anywhere else. That means that these new
entrants into the world economy are in direct competition with the work
forces of the developed countries. They have become part of the same
global labor market.  Our economies, therefore, will be subjected to a
completely new type of competition. For example, take two enterprises, one
in the developed world and one in Vietnam. B 6th make the identical
product destined to be sold in the same market, say France or the USA;
both can use identical technology; both have access to the same pool of
international capital. The only difference between the two is that the
Vietnamese enterprise can employ 47 people for the cost of only one
Frenchman . You do not have to be a genius to understand who will be the
winner in such a contest.
 
In France, as in most developed nations, an average manufacturing company
pays its employees, including social costs, an amount equal to about 30%
of volume . If such a company decides to maintain in France only its head
office and sales force, and to transfer its production to a low-cost area,
then it will save about 20% of volume. Thus, a company with volume of 500
million dollars will increase its pre-tax profits by 100 million dollars
per year. if on the other hand, it decides to maintain its production in
France, the enterprise will be unable to compete with low-cost imports and
will perish.  It must surely be a mistake to adopt an economic policy
which makes you rich if you eliminate your national work force and
transfer your production abroad, and which bankrupts you if you continue
to employ your own people.
 
 
Q - But if the companies that move offshore are those which employ large
labor forces. Surely new compensating jobs will be created by the high
tech industries of the future.
 
High tech industries can, indeed, survive and prosper under these
circumstances. That is because they are highly automated and therefore
employ only few people. So labor is a minor item in the overall cost of
the products that they make. But obviously the fact that they employ very
few people means that they are incapable of employing very many. As soon
as they need to employ many, they will be forced to move offshore. For
example, IBM is moving its disk drive business from America and Western
Europe to low labor cost countries. According to the Wall St. Journal l4
"IBM plans to establish this new site as a joint venture with an
undetermined Asian partner and use non-IBM employees so that it will be
easier...to move to an even lower-cost region when warranted...Moving from
higher-cost regions to Asia cuts in half the cost of assembling a disk
drive..." Mr. Zschau of IBM "admitted that the moves will put IBM on only
even footing with its competitors." Boeing has also announced that it will
transfer to China production of parts of certain of its planes.
 
 
In France, proponents of global free trade constantly say that exporting
of such high tech products as very fast trains, airplanes and satellites
will create jobs on a large scale. Alas, this is not true. The recent two
billion one hundred million dollar contract selling very fast French
trains to South Korea has resulted in the maintenance for four years of
only 800 jobs in France: 535 for the main supplier and 265 for the
subcontractors. Much of the work is carried out in Korea by Asian
companies using Asian labor. What is more, following the transfer of
technology to South Korea, in a few years time Asia will be able to buy
very fast trains directly from South Korea and bypass France . As for
planes and satellites, the numbers employed in this industry in France
have fallen consistently.  Over the 5 years from 1987 to 199 2, they have
fallen from 123,000 to 111,000 and are forecast to fall to 102,000 D in
the short term.
 
One of the big mistakes that we make is that when we talk about balancing
trade we think exclusively in monetary terms . If we export one billion
dollars of goods and import products of the same value, we conclude that
our overseas trade is in balance .  The value of our exports are equal to
that of our imports. But this is a superficial analysis and leads to wrong
conclusions .  The products that we export must necessarily be those which
use only a minor amount of labor . If not they would be unable to compete
with products manufactured in low labor cost countries .  The number of
people employed annually to produce one billion dollars worth of high tech
products in the developed nations could be under l ,000. But the number of
people employed in the low-cost areas to manufacture the products that we
import would amount to tens of thousands of people because these are not
high tech products but are goods which are produced with normal levels of
employment. So our trade might be in balance in monetary terms, but if we
look through the monetary figures, we find that there is a terrible
imbalance in terms of employment. That is how we export jobs and import
unemployment.
 
 
Q - But many believe that the growth of the service industries will
compensate for the lost jobs in manufacturing.
 
 
I am afraid that even service industries will be subjected to substantial
transfers of employment to low-cost areas. Today through satellites you
can remain in constant contact with offices in distant lands. That means
that companies employing large back offices can close them and shift
employment to low-cost areas.
 
Swissair has recently transferred a significant part of its accounts
department to India.
 
 
Q - But certain services cannot be transferred overseas such as health and
education .
 
A nation's economy is split into two broad segments, one which produces
wealth and the other which dispenses it. That in no way means that the
latter is inferior. It includes such vital activities as health and
education. But one cannot reduce that part of our economy which produces
wealth and expect to be able to maintain the other part which dispenses
it. You must earn what you spend.
 
 
Q - Presumably, the exchange rates between various currencies also have a
substantial impact on the power to compete.
 
Of course. When Ricardo calculated comparative advantage, he did so in
money terms. If a product costs X French francs in France and Y U.S.
dollars in America, all you need to do is to convert dollars into francs
at the going rate of exchange, to be able to work out where the advantage
lies. In other words, whether the product is cheaper in France or in
America or, in Ricardo's do 's terminology, which nation has the
comparative advantage.
 
But this calculation can be brutally and suddenly transformed by a
devaluation or a revaluation of one of the currencies. In 198l, one dollar
was worth 4.25 French francs; by 1985, the dollar had risen sharply and
was worth 10 French francs; but in 1992, it had fallen again and was worth
only 4.8 0 French francs.  So take a product which in 1981 had the same
cost in America and in France. Four years later, in 1985, it became more
than twice as expensive in America as in France. This was no more than a
reflection of the changing value of the dollar relative to the franc. Yet,
according to Ricardo, you are supposed to specialize in those products
which you can make more cheaply, and in which you have a comparative
advantage. If you followed this reasoning, industries on which you would
have concentrated in America in 1981 would have had to be abandoned in
1985. And the reason would have been that the comparative advantage would
have disappeared purely for monetary reasons. Then as the dollar fell
again, the theory would have required that you recreate the industry in
the United States in 1992. All that is obvious nonsense. How can you
sacrifice and recreate industries merely to be in rhythm with fluctuations
in exchange rates.
 
 
Those who believe in global free trade obviously reject your arguments.
Let me put to you some of the objections that they make. Firstly, they
cite the joint study published by the OECD and the World Bank which states
that the application of the GATT proposals would increase world income by
213 billion dollars a year. How can we turn do wn such growth?
 
If you study the facts, you will find that the increase is forecast to
come about in 10 years time. 213 billion dollars is a large sum of money,
but to assess its significance you must compare it to the world's GNP as
it is forecast to be in 10 years time. 2 13 billion dollars is no more
than 0.7% of the world's anticipated GNP. What is more, the General
Secretary of the OECD described the report as being "highly theoretical."
 
Q - Another objection is that global free trade means that consumers will
benefit from being able to buy cheaper imported products manufactured with
low-cost labor.
 
Consumers are not just people who buy products, they are also the same
people who earn a living by working, and who pay taxes.  As consumers they
may be able to buy certain products cheaper, although when Nike moved its
manufacturing from the U.S. to Asia, shoe prices did not drop. Profit
margins rose. But the real cost of apparently cheaper goods will be that
people will lose their jobs, get paid less for their work and have to face
higher taxes to cover the social cost of increased unemployment. Consumers
are also citizens many of whom live in towns. As unemployment rises and
poverty increases, the towns will grow even more unstable. So the benefits
of cheap imported products will be heavily outweighed by the consequent
social and economic costs.
 
Q - I understand your argument about increased unemployment, but why
should earnings be reduced?
 
According to figures published by the U .S. Department of Labor, since
1973, in inflation-adjusted dollars, real hourly and weekly earnings in
the United States have already dropped by an average of 16.4% and that was
before the most recent GATT negotiations known as the Uruguay Round. If
populations of 4 billion people enter the workforce and are willing to
offer their labor at a fraction of the price paid to workers in the
developed world, it is obvious that such a massive increase in supply will
reduce the value of labor. Also, it will take away practically all
negotiating power from organized labor. When trade unions ask for
concessions, the answer will be: "If you put too much pressure on us, we
will move offshore where we can get much cheaper labor, which does not
seek protection, long holidays, and all the other items that you want to
negotiate."
 
You must understand that global free trade will brutally shatter the way
in which value-added is shared between capital and labor. Value-added is
the increase of value obtained when you convert raw materials into a
manufactured product. In a mature society such as our own, we have been
able to develop a general agreement as to how it should be shared between
labor and capital. That agreement has been reached through generations of
political debate, elections, strikes, lockout s and other conflicts.
Overnight that agreement will be destroyed by the arrival of huge
populations willing to deeply undercut the salaries earned by our
workforces. The social division that this will engender will be deeper
than anything envisaged by Marx in the 19th century.
 
It is interesting to note that many U.S. economists believe that the
inflationary forces which normally follow a period of lax monetary policy
will not occur in the same way on this occasion. They believe that the
continued lowering of earnings resulting from global free trade, including
the first effects of NAFTA, will restrain inflation despite the fact that
the Federal Reserve has maintained a loose monetary policy for one of the
longest periods of time on record. In other words, the workforce will bear
the brunt of the consequences of a prolonged policy of easy money.
 
 
Q - Who will be the losers and who will be the winners under a system of
global free trade?
 
The losers will, of course, be those who become unemployed as a result of
production being moved offshore. They would also be those who lose their
jobs because their companies do not move offshore and are not able to
compete with cheap imported products. Finally, they will be all those
affected by the reduction in their earning capacity following the shift in
the sharing of value-added.
 
The winners will be those who can benefit from an almost inexhaustible
supply of very cheap labor. They will be the companies who move their
production offshore to low-cost areas; the companies who will benefit from
paying lower salaries at home; and those who have capital to invest
offshore, and who will receive larger dividends as a result of the very
low-cost labor.  But they would be like the winners of a poker game on the
Titanic. The wounds inflicted on their societies would be too deep to be
acceptable without brutal consequences.
 
It should also be remembered that one of the characteristics of developing
countries is that a small handful of people control the overwhelming
majority of their nation's resources. It is these people who own the major
part of their nation's industrial, commercial and financial enterprises
and who assemble the cheap labor which is used to manufacture products for
the developed world. Thus, it is the poor in the rich countries who will
subsidize the rich in the poor countries. This will have a deep impact on
the social cohesion of nations.
 
 
Q - Do the developed nations not have a moral responsibility to open their
markets to the third world?
 
Let me start by quoting an extract of a report by Herman Daly and Robert
Goodland, published by the World Bank.
 
"If by wise policy or blind luck, a country has managed to control its
population growth, provide social insurance, high wages,reasonable working
hours and other benefits to its working class (25 September 1992, The
World Bank) (ie. most of its citizens), should it allow these benefits to
be competed down to the world average by unregulated trade. This levelling
of wages will be overwhelmingly downward due to the vast number and rapid
growth rate of underemployed populations in the Third World."
 
But the application of GATT will also cause a great tragedy in the third
world. Modern economists believe that the definition of efficient
agriculture is one that produces the maximum amount of food for the
minimum cost, using the least number of people. That is bad economics even
in purely mathematical terms. When you intensify the methods of
agriculture and substantially reduce the number of people employed on the
land, those who become redundant are forced into towns. Everywhere you
travel in the world you see those terrible slums made up of people who
have been uprooted from the land. Even in one-dimensional economic terms,
you should add to the direct cost of producing food by intensive methods,
the cost of building infrastructure and paying welfare to those who have
as a consequence been uprooted. But, of course, the hurt is deeper.
Families are broken, the countryside is deserted and social stability in
the towns is destroyed. The slums in Brazil, known as favelas, did not
exist before the Green Revolution was applied to agriculture in Brazil and
chased people off the land.
 
It is estimated that there are still 3.1 billion people in the world who
live from the land. If GATT manages to impose worldwide the sort of
productivity achieved by the intensive agriculture of nations such as
Canada and Australia, then it is easy to calculate that about two billion
of these people will become redundant. They will be uprooted and will move
to urban slums. But a large part of the GATT refugees will be forced into
mass migration. Today, as I answer these questions, there is much concern
about the tragic events in Rwanda where 2 million refugees have been
chased into,neighboring countries, and about the boat people leaving Haiti
to seek safe haven in the United States. But GATT, if it "succeeds," will
create mass movements of refugees on a scale of about l,000 times greater.
We will have profoundly and tragically destabilized the world's
population.
 
Q - But why do third world nations themselves support global free trade?
 
You must distinguish between the populations on the one hand and their
ruling elites on the other. As I explained earlier, it is these elites
which are in favor of global free trade. It is they who will be enriched.
Visit India and you will find that there have been demonstrations of up to
one million people opposing the destruction of their rural communities,
their culture and their traditions. In the Philippines several hundred
thousand farmers protested to oppose GATT because it would destroy their
agriculture.
 
Go and talk to the Indian philosopher and physicist, Vandana Shiva. She is
a Director of the Research Foundation for Science, Technology and National
Resource Policy, Dehra Dun, and the Science and Environment Advisor of the
Third World Network. She will give you a clearer view of the devastating
effects GATT would have on India's people.
 
 
Some would say that Europe's and more particularly France `s employment
problem is not GATT , but just the result of the old- fashioned diseases
that one finds in uncompetitive, inflexible and spoiled societies. The
welfare state is out of control; social costs borne by employers
discourage the creation of new jobs; high government expenditure and
taxation stifle the economy; state intervention is paralyzing; corporatism
blocks remedial action, etc.
 
Q - Is that not true?
 
All that is partially true. And those diseases must be treated forcefully.
But even if the treatment is successful, it would not solve the problems
that I have described. Imagine that the French were able to reduce at a
stroke social charges and taxation so as to diminish the cost of labor by
a full 33% . All that would mean is that instead of being able to employ
47 Vietnamese or 47 Filipinos for the price of one Frenchman, you could
only employ 31.
 
In any case, you must remember that France, over the past 20 years, has
produced spectacular economic growth. During that period her GNP has grown
by 80%. And yet during the same period, unemployment has grown from
420,000 people to 5.l million (the official figure is 3.3 million, but the
government's own figures show that various categories consisting of 1.8
million people have been omitted and should be added). 5.1 million
unemployed in France is equivalent to about 25 million in the USA. This
growth in unemployment has taken place while France has progressively
opened her market to international free trade.  How can we accept a system
which increases unemployment from 420,000 to 5.l million during a period
in which the economy has grown by 80%?
 
You must understand that we are not talking about normal competition
between nations. The four billion people who are joining the world economy
have been part of a wholly different society, indeed, a different world.
It is absurd to believe that suddenly we can create a global free trading
area, a common market with, for example, China, without massive changes
leading to consequences that we cannot anticipate.
 
Q - Why is it not possible to repeat our successes in enriching
countries,like Taiwan, Hong Kong, South Korea and Singapore?
 
The combined population of these countries is about 75 million people. So
the scale of the problem is quite different. The U.S.  might be able to
achieve a similar success with Mexico and, progressively, Western Europe
could accommodate Eastern Europe. But attempting to integrate four billion
people at once is blind utopianism.
 
In any case, each of the countries that you mention has been the
beneficiary of the Cold War. During that period, one or other of the
superpowers sought to bring every part of the world into its camp. If one
failed to fill the void, the other succeeded.  That is why very favorable
economic treatment was granted by the West to South Korea after the Korean
war, and to Taiwan, Singapore and Hong Kong while China was considered a
major communist threat.
 
Special economic concessions combined with their cheap labor and innate
skills made them rich. Over the past thirty years the balance of trade
between these countries and the Western world has resulted in a transfer
of tens of billions of dollars from us to them. The West has been
hemorrhaging jobs and capital so as to help make them rich.
 
 
Q - So what do you recommend?
 
We must start by rejecting the concept of global free trade and replacing
it by regional free trade. That does not mean closing off the regions from
trading with the rest of the world. It means that each region is free to
decide whether to enter into bilateral agreements with other regions when
it is to their mutual economic benefit. We must not just open our markets
to any and every product whether or not it benefits our economy, destroys
our employment, and destabilizes our society.
 
 
Q - Does that not mean that we will cut ourselves off from innovation in
other parts of the world?
 
No. Freedom of movement of capital should be maintained. If a Japanese or
a European company wishes to sell its products in North America, it should
invest in America. It should bring its capital, its technology, its
products, build factories in America, employ American people, and become a
corporate citizen of America. The same is true for American and Japanese
firms wishing to sell their products in Europe. Think about the difference
between the GATT proposals and those I have just described.  GATT makes it
almost imperative for enterprises in the developed world to close down
their production, eliminate their employees and move their factories to
low-cost labor areas.  What I am suggesting is the reverse: that to gain
access to our markets foreign corporations, would build factories, employ
our people and contribute to our economy. It is the difference between
life and death.
 
Q - But won't that reduce competition?
 
 
Competition is an economic tool which is necessary to promote efficiency,
to apply downward pressure on prices, and to stimulate innovation,
diversity and choice. Vigorous competition needs a free market that is
large and in which cartels and other limitations on competitive forces are
forbidden. The idea that Europe or NAFTA, the two largest free trade areas
ever created in history are not able to be thoroughly competitive is, of
course, nonsense. They are vast and open and free and competitive and
welcoming to innovations from anywhere in the world. Every significant
corporation worldwide would have to come and compete, because no
corporation could afford to bypass them. The markets are much too big and
prosperous. But such competition would be constructive, not destructive.
But many will answer you by saying that you cannot export to other regions
if you maintain a regional economy?
 
Take a look at Japan and see whether she has been able to export over
these decades during which she protected her economy.  And in any case, as
I have already pointed out, there would be bilateral trade agreements
allowing for the exchange of products in a way which suited all parties.
And our corporations would be free to invest and compete throughout the
world.
 
Q - What other recommendations do you have?
 
I totally reject the concept of specialization. We need the contrary, a
diversified economy. Only such an economy will allow our populations to
participate productively in our society.  Specialization inevitably leads
to chronic unemployment and to lower wages. Growth in GNP has not solved
the problem. Usually it creates part-time, lower-paid jobs. That has been
the trend in the developed world during the past decades. In addition to
the large corporations, we need a society based on a multitude of small
and medium-size businesses and craftsmen covering a wide range of
activities, and we need a decentra lised economy. We must encourage local
activity rather than urban centra lisat ion.  Everything must be done to
return life and vig our to the small towns and villages throughout our
nations.
 
It is extraordinary to read economists commenting on the state of the
nation. They believe that the profitability of large corporations and the
level of the stock markets are the reliable guide in assessing the health
of the society and the economy. A healthy economy does not exclude from
active life a substantial proportion of its citizens.  In Europe you face
a difficult problem in converting the British to these ideas. Britain has
a long tradition of almost unconditional belief in free trade.
 
The origin of Britain's belief in free trade goes back to the early 19th
century. It was in Britain, at that time, that the industrial revolution
was born. The new industrial barons, whose power was growing in step with
the expansion of British industry, needed ample and low cost labor to
populate their factories. The idea was that by importing cheap food from
the colonies, British farms would be unable to compete. This would result
in an exodus of farm workers to the cities . At the time, 8 0% of the
British population lived outside the urban areas _. Once the farmers who
had lost their livelihood, reached the towns, they could be employed
cheaply because cheap food was imported from the colonies. What is more,
the money that left Britain to go to the colonies to buy the food was
recycled to Britain to buy manufactured goods. At that time, Britain had a
quasi-monopoly of manufacturing. Those were the dynamics which led to the
repeal of the Corn Laws in 1846 .
 
Today the circumstances are precisely reversed. Now only 1.1 % are
employed in agriculture; instead of needing ample labor in the towns,
there is chronic unemployment; and the money that leaves Britain to pay
for imports no longer returns to buy British manufactured products. It
goes to Japan or Korea or anywhere else in the world. The result is that
Britain has a trade deficit in practically every major category of
manufactured goods. And even though some of the large companies make good
profits, 25% of all households and nearly one child in three in Britain
live in poverty.
 
One of the greatest fallacies in the thinking of some leading economists,
is that the funds that flow away from a nation as a result of a negative
balance of trade or of capital outflows, will automatically be recycled.
They believe that the money that goes out must return, usually in the form
of inward capital investment.
 
But that is a very naive idea. When funds leave a nation, those who
receive them are free to invest anywhere in the world. And they will
invest wherever the anticipated yields on capital are highest. They will
not necessarily choose societies which are bleeding to death.
 
It must be probable that a system which is valid for one set of
circumstances is not necessarily valid when those circumstances have
changed by 18 0 degrees. One can hope that this alone would prompt the
British political and economic elites to reassess their economic doctrine
with an open mind.
 
We seem to have forgotten the purpose of the economy. The present British
government is proud of the fact that labor costs less in Britain than in
other European countries. But it does not yet seem to understand that in a
system of global free trade its competitors will no longer be in Europe
but in the low cost countries. And compared to labor in those countries,
Britain's labor will remain uncompetitive no matter how deeply the British
government decides to impoverish its people.
 
In the great days of the U.S.A., Henry Ford stated that he wanted to pay
high wages to his employees so that they could become his customers and
buy his cars. Today we are proud of the fact that we pay low wages. We
have forgotten that the economy is a tool to serve the needs of society
and not the reverse. The ultimate purpose of the economy is to create
prosperity with stability.
 
Q - What do you mean by stability?
 
It does not mean ossification nor standing still. A stable society can
accommodate necessary change without social breakdown. A stable society
can benefit from responsible economic growth without destroying itself.
 
Q - How would you convince Germany of the merits of regional trade?
 
The Germans should understand that by far their largest customers are the
nations of the European Union. About 70% of Germany's exports are sold
within Europe. How can Germany want its principal customers to become
impoverished as a result of hemorrhaging jobs and capital. Surely, one day
the Germans will wake up to the fact that their prosperity depends on the
prosperity of the other nations of Europe; that their social stability
will be deeply influenced by that of its neighbors; and that no matter her
industrial skills, she will suffer from the transfer of production to
low-cost areas, just like the remainder of the developed world. And what
is more, she will have to share her residual markets with imports from
Japan, Korea and others.
 
 
Q - How would you sum up the effects of regional free trade?
 
Let us imagine that Europe returns to the original concept of the Treaty
of Rome, which was the basis for the creation of Europe.
 
Economically, its purpose was to establish the largest free market in the
world. Within Europe, there would be no tariffs, no barriers and a free
and competitive market. Trade with nations outside Europe would be subject
to a single tariff. This concept was known as community preference. In
other words, priority would be given to European jobs and industry. About
20 years ago, quietly, the technocrats who run Europe started to alter
this fundamental principle and move progressively towards international
free trade. Ever since, unemployment in Europe has swollen despite growth
of its GNP. The Treaty of Maastricht en shrines this change and makes
global free trade one of the fundamental principles on which the new
Europe is to be built.
 
 
 
=END=