United we fall?

LONDON-Elections for the European Community parliament, due to be held on June 15, are stirring up conspicuously more interest in Britain than previous European Parliament elections, in 1979 and 1984. The heightened interest is substantially due to the EC's plan to create a single European market (SEM) in 1992, and the argument that this has provoked between Prime Minister Margaret Thatcher and the European Commission president, Jacques Delors, about the future shape of Europe.

For a generation, the preponderant support in Britain for the European Community has come from the Conservative Party, and the major reason has been economic advantage. The Community would provide a larger industrial market and more competition. This, it is argued, would offset the disadvantages of the EC's protectionist Common Agricultural Policy (CAP).

Inevitably, Conservatives' attitudes have evolved in the twenty years or so since Britain joined tbe EC. The achievements of the British government since 1979 and the style and leadership of Margaret Thatcher have both left their mark. Exchange control has been abolished and a free exchange rate has helped bring about major changes in the British economy as older industries have been replaced by new skills and technologies. Trade-union laws have been reformed and competition laws have been strengthened. A British social market economy has been established, based upon competitive free enterprise and widespread ownership. Europe had no hand in this. It has been achieved by the national government and national leadership.

Furthermore, actual membership in the EC has not worked out the way those Conservatives who support free trade and free-market policies had hoped. European growth rates of the 1960s have not been maintained. Whilst EC tariffs have been removed, many other trade barriers remain-notably the CAP, which increasingly threatens trade relations with the United States. The European Court has recently decided what activities should be subject to British value-added tax-and the British are quite unused to having judges rather than politicians fixing taxation. Finally, the expansion of the Community to include Spain, Portugal, and Greece has made resolving budgetary and agricultural issues still more difficult.

The Community could have decided that the diversity of 12 members ranging from Greece to Ireland required a looser form of union. It decided the reverse. The objective now, as we have seen, is to speed the integration of the Community rather than to accommodate the great variations within its membership. The single European market has become a slogan for all political seasons. Its more limited objectives-the dismantling of remaining frontier barriers, the freedom for the professions to practice Communitywide, and the policy of open public purchasing-cause no great dissent. But the SEM, at least by implication, can go a good deal further than this, particularly in the area of finance. It can mean that Community exchange rates would be fixed and interlocked. Initially this would mean that all EC countries would be members of the European Monetary System (EMS); subsequently there would be a common currency with a European central bank. Indeed, Herr Kochler of the West German Bundesbank has argued that such a European central bank should be "independent" of the various national governments. Finally, there are growing arguments from the European Commission, the powerful secretariat that initiates policy proposals, that the SEM implies broadly common indirect taxes. The plan for EC harmonization of value-added taxes could possibly lead to member states having less autonomy in indirect taxation than individual states in the United States.

There are many who want EC government substantially expanded, and the SEM commitment provides a handy pretext. Foremost in this argument is President Delors, who recently told the European Parliament"in ten years' time, 80 per cent of economic legislation, and perhaps even fiscal and social legislation, will be of Community origin."

THE DIRECTIONS in which Community government might expand are reasonably clear. Last year, Delors came to Britain to recommend a social policy to the annual trade-union conference. Such a policy would use EC laws to secure much more worker involvement in industry, awakening controversies about union nominees sitting on company boards. There is also the prospect of a Community industrial policy. This would use Euro-tax and banking funds to secure a restructuring of industry, providing aid for both smokestack and sunrise industries. And it will be argued that EC industry needs shelter ftom U.S. and Japanese high technology andfrom low-cost manufactures of the developing world.

It is against this background that the Tory Party is again examining its association with the EC. The successes of "Thatcherism" lie in the dismantling of government, not its expansion. The Delors vision offers just the opposite: eighty per cent of government from Brussels-and within the decade. Even communitaires Tories recollect the French adage, "C'est ne que le premier pas qui coate." The initial hesitant step toward continental integration will become a brisk jog.

These are all hard-headed and tangible issues for Conservatives. They are given sharper focus by the fact that British socialists are increasingly reconciled to the EC on the very terms commended by Delors. Beyond that is the wider issue of the extent to which national economic decision-making will be lost once Brussels sets the taxes, and once national exchange rates are hidden within a common European currency and a European central bank.

The British debate over the European elections has been dominated by a major row between Margaret Thatcher and her predecessor, Edward Heath, whom she ousted as party leader in 1975. Memories are long and passions high. Mrs. Thatcher wants an opentrade Europe with minimum political and social integration. She warns against the "European superstate." Mr. Heath denounces her and insists that European union, as prescribed in the founding treaty, means economic and political integration. It is a noisy family row. Labour, enjoying a somewhat contrived harmony, is vastly amused.

This debate is most unlikely to deflect the Conservative Party from its thirty-year commitment to a European partnership. It is, however, requiring the Conservatives to seriously question what kind of Community will serve their economic and national loyalties.