Today, two great projects-both begun in the mid-1980s-are on the edge of success. They are vital to economic recovery and the future of Europe. One is the effort by the European Community to make, out of its economic jigsaw, a single, open, free market for all its businessmen and all its consumers. The other-a worldwide task-is the Uruguay Round trade negotiations: the most ambitious ever undertaken under the General Agreement on Tariffs and Trade.
Both come at a crucial moment. We sorely need the stimulus of free trade. The Single Market is a great opportunity for European business and a beacon for would-be members of the European Community among the newly-emerging democracies to the east. They know that prosperity brings stability and that prosperity follows trade.
Britain has played a key part in the Single Market project from the beginning. Now, during our six-months Presidency of the Community, we have had the opportunity to see it through to success. And both as Chairman of the Group of Seven last year, and now as President ofthe European Community, I have fought hard to keep the GATT negotiations on track.
The GATT round and the Single Market complement each other. We want to bring all trade barriers down, not reconstruct the world into warring trading blocks. We don’t want to sit in a “Fortress Europe,” eyeing a “Fortress America” across the water. That’s why we have fought as hard for success in the GATT negotiations as in the struggle to dismantle our own internal frontiers. The European Community must remain open to world business and investment; ready to admit new members; and willing to play its full part in liberalizing world trade.
The achievement of a Single Market is an historic moment for the Community: the fulfillment of one of its original objectives. Since 1985, over 500 measures have been agreed which contribute to this success. Despite all our differences, all the rough edges and loose ends, we have come an astonishingly long way. And we have done so by clinging to our faith in the power of free markets to deliver personal liberty, prosperity and willing cooperation. Those who question Europe’s future should look at this success of the present.
The GATT round-involving not 12 but 108 countries-is not yet complete. But after a dangerous stalemate, a breakthrough has been achieved. I believe the world owes a debt of gratitude to those European Commissioners on the one hand, and President Bush’s negotiators on the other, who last month broke the transatlantic farm trade deadlock. Dismal echoes of the 1930s had sounded with the threat of a trade war. Now the rusty weapons of retaliation have been returned to the armories of Washington and Brussels. And there they must remain.
Such negotiations have never been easy. As the 19th century English historian Thomas Macaulay wrote, “Free trade, one of the greatest blessings which a government can confer on a people, is in almost every country unpopular.” Yet since the Second World War, the Western world has shared a common understanding of how free trade kindles wealth. In round after round of GATT negotiations, tariffs have been brought down and quotas abolished. People have gained more choice and industries wider horizons.
There is always a temptation, at times of economic difficulty, to turn inward and put up the shutters. But that is when we need free trade most. During the first real postwar recession, in the mid-1970s, the leaders of France and Germany bravely brought other heads of the world’s most advanced industrial democracies together to forswear protectionism. That meeting was the first of what became the series of annual economic summits of the Group of Seven. We must keep that sense of purpose.
Figures can do no more than illustrate the huge potential that could be released by a successful GATT round. But a conservative guess is that over the decade it might add perhaps $200 billion to annual world output. The Uruguay Round is more ambitious than its predecessors, because the nature of trade is developing and changing. This time, the world is working to free up trade not just in goods but also in services, in which more and more people in Europe and America earn their living. The Brussels Commission has estimated a GATT round might increase Europe’s income from services dramatically. In this round, too, negotiators are tackling such abuses as the pirating of “intellectual property” anything from books to computer software-in so many Third World countries.
But we cannot expect to open new markets to Western businessmen without opening our own to developing countries. Nor is it only the Third World that knocks at the gate. We have shown the Eastern Europeans the advantages of free markets, and they want the opportunity to compete in them.
These nations are a vital part of my vision of Europe’s future. They are no longer hidden behind concrete and barbed wire. We must not replace those physical barriers with invisible tariff walls and a tangle of trade restrictions. If we do, we put at risk not just prosperity but also peace. When they are ready to join us in the European Community, we must be ready to let them in.
At the Edinburgh summit this week, I hope the Community will agree to set enlargement in train. We can start talking seriously about a wider Europe-with future members not only from our neighbors in Western Europe but from the new democracies as well.
We have-of course-other issues on the agenda. The Danish vote against the Maastricht Treaty demonstrated a widespread fear that Brussels might try to centralize too much-a concern about which Britain had frequently warned its partners. I took care to protect Britain with exemptions from the Social Chapter and the single currency. We now have to help Denmark to meet the genuine concerns of its citizens. If Community solidarity is to mean anything, Denmark has to be supported, not abandoned, by its fellow members.
This does, however, make me all the more determined to ensure Brussels responds to the growing desire of all the peoples of Europe to limit intrusions into their national affairs. This has lately been the subject of much heated controversy in Britain, and I expect there will be a lengthy debate in the House of Commons. But I am confident we will ratify the Maastricht Treaty during this session of Parliament. The treaty gives us a way of limiting these intrusions into purely domestic matters. Under the clumsy title “subsidiarity,” it offers a new basis for defining the Commission’s role.
At Edinburgh, we will be discussing what else we can do to promote economic recovery. We have all learned how vital it is to control inflation. We cannot spend our way out of recession, nationally or internationally. But we can target expenditure where it will do most to help growth. We can deregulate our economies. And we can keep down costs and encourage investment. That is the approach Britain has followed: a prudent approach which enabled us to cut our bank base rates to 7 percent.
Fiscal prudence is important at the Community as well as the national level. The European Community’s finances are under review. But we must resist extravagant notions of future spending. Britain, which is a generous net contributor to the Community, has the right to speak firmly on this-and to maintain the-abatement which modestly reduces the disproportionate financing burden we carry.
The bleak but simple certainties of the cold war have gone. It will take time for freedom and the free market to fill the vacuum: time when the new democracies of Europe are vulnerable to extremism and unrest. We have now seen how easily dispute can turn to tragedy in Yugoslavia; how hard peace is to restore once it has been destroyed. Britain has led the international community in the search for a settlement-and men and women in our armed forces have been risking their lives bringing relief to those in need. Trucks, winter shelter, medicines, food and clothing-all desperately needed, all being delivered in desperately dangerous circumstances.
Individually and as a nation, the British have never shirked their international responsibilities. That remains true as we live through a fundamental reappraisal of the world order. Britain is at the center of the overlapping groups of nations that struggle for order and prosperity in the world affairs.
We are a permanent member of the U.N. Security Council, a member of the Commonwealth, NATO, the Conference on Security and Cooperation in Europe. We are a founder-member of the Bretton Woods institutions and a full member of the European Community. And we value a transatlantic link older than these institutions, yet as strong as ever: our special relationship with the United States. Our growing role in Europe has not weakened that relationship but brought added value to it. In my two years as Prime Minister, I have seen that demonstrated time and again.
I cannot mention those years without paying special tribute to President Bush. For all its present dangers and tragedies, the world is a safer place today than it was when George Bush took office; and much of that change reflects his values and his leadership.
President-elect Bill Clinton inherits a relationship of mutual trust with Britain. He will be the first post-cold-war leader of the United States. He faces the continuing challenge of defining America’s role in a much more complicated but also more hopeful world. I welcome his commitment to that task. I congratulate him on his victory. I respect his clear sense of responsibility. And I look forward to working together with him for the peace and prosperity of Europe, and the success and stability of the wider world.
