europe and the world without

8/7/2019 Europe and the World Without

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EUROPEand the world w ithout

ROBIN SHARPandCLAIRE WHITTEMORE

OXFAM PUBLIC AFFAIRS UNITParnell House, Wilton Road

London SW1Tel: 01-828 0346


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Reports in this series are intended as a contribution topublic debate on issues of world development and it ishoped that policy-makers and planners will take theminto account. They reflect Oxfam's concern for humanrights and a belief that new policies are needed to meetthe challenges o f a rapidly changing world .

ISBN 0 85598 027 3Copyright Oxfam 1977

This book converted to digital file in 2010


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CONTENTSONE:

T W O :

THREE:

FOUR:

FIVE:

ANOTHER EUROPEThe story so far the global dimension European dimensionThird Worlddimensionwhat the planet can afford

Page5

STRUCTURING THE FUTURE nThe art of the possible concerting economic policy information and forecasting lateral linkingFINANCE: THE MARKET PRICE 16Spending money what helps most? aid for developmentTRADE: IS IT A DEAL? 21Tariffs, quotas and preferences associatesand partners from the ACP angle widertrading links aims for the '80sFOOD AND AGRICULTURE:JACOUES AND THE BEANSTALK 28Europe and world food needs her mountainsand her lakes food as aid agriculturalresearch the case for reform

SIX: PEOPLE AND WORK:THE SHAPE OF THINGS TO COMEBeyond the industrial age a focus forrenewal what work for the workers? industry and development stresses of migrationSEVEN: CONCLUSION AND RECOMMENDATIONSReferencesAdditional bibliographyList of abbreviations

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"It's easy to say: 'Europe must do that, and that, andthat,' but when in the meantime we all as citizens takeno action . . . when we just sit around and say 'it shouldbe' and are not willing to work for it; so long as wecontinue in this way, Europe will never have the forceto be a power in the world that can shoulder itsresponsibilities..."The time is urgently upon us to review our system, inorder to avoid the collapse of the Third W orld and per-haps the collapse of our part of the world as well. Andbasically it is a question of distribution on an equal basisof the last resources of earth. Not only between theliving today, but between us and the coming generations.In this light we have to see our responsibility in theworld."

Dr Sicco Mansholt, formerPresident of the EuropeanCom mission. Extracts from theGilbert Murray Memorial Lec-ture for Oxfam, at the OxfordUnion, October 1973.


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This report is addressed to the membergovernments of the Eu ropea n Com munity a ndto the Com mission in Brussels as a con tribu tionto the continuing debate on Europe's role inworld deve lopment.

ONE: ANOTHER EUROPEWith the noise of its new industry resounding acrossthe continent, Europe 100 years ago was busy multi-plying the world's wealth on an unprecedented scale.In the process our forbears were sowing the seeds ofwhat has today become the most politically explosiveand morally challenging issue of world affairs: thedeep ening gulf between rich countries and poor.Europe in the mid-19th century, even after the firstphase of the industrial revolution, was still notdramatically richer than the rest of the world. Theindustrial nations then, with 26 per cent of the earth'spopulation, accounted for 35 per cent of its income. It has since take n a mere four generations to reach thepoint at which a citizen of the European Communitynow earns on average 40 times as much for his dailytoil as a man or wom an in In dia.Having accumulated such an embarras de richesses,Eu rop e's most urgen t and critical task today is to findways of restoring something closer to the pre-indust-rial equilibrium in the wealth of nations. For we m ustrecognise that without it the continuing polarisationbetween have and have-not presages almost certaindisaster.This essential reformation is not something that canbe accomplished by the nine nations of the EuropeanCommunity alone. Together, however, they can andindeed should provide the political vision, the leader-ship and a commitment to practical measures for re-


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structuring the world economy. The purpose of thepresent report is to identify some answers to thequestion, How?The story so farIt is now exactly 20 years since the leaders of France,Germany, Italy and the Benelux countries put theirsignatures to the Treaty of Rome establishing theEuropean Economic Community (EEC).* Looking fora new Europe, they renounced a whole history of proudempires and bloody wars, opting instead for thepassionless pleasures of commercial partnership as anavenue towards unity.In two decades the six original member states haveincreased their wealth by leaps and bounds, the com-mercial union is complete and three more countriesi have been added to the membership roll. On the otherhand there has been little or no progress towardsunion on other levels political, economic ormonetary.In the same 20 years, ever more rapid scene-shifting on the world stage has upset many assump-tions about the kind of Europe which would be bestfitted to face the future. Until recession struck in 1974the Community had amply fulfilled the objectiveenshrined in Article 2 of the Treaty of Rome, namelyto promote continuous economic expansion and "anaccelerated raising of the standard of living." But inthe meantime new concerns have arisen whichchallenge the primacy of economic growth as anobjective in itself. Concerns about the preservation ofour human and physical environment, for example,and about the need to accomm odate the peoples of theThird World in the future development of our globalvillage. There is a need for economic strategies whichwill enhance rather than diminish the quality of life,as recognised by the Belgian Prime Minister, M. LeoTindemans, in his report on the prospects forEuropean Union.2 The Brussels Commission has itselfalso come to realise that an uncritical pursuit ofgrowth will no longer suffice.

* In this report the term 'Euro pean Com munity' is used subsequentlyto denote the member states of the EEC, the European Coal andSteel Community and Euratom, which together form the EuropeanCommunities.


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8 These new problems are essentially political or social,not commercial, and as such they pose a challengewhich the mercantile EEC at its present stage ofdevelopment is poorly equipped to meet. The challengecan be seen in three dimensions:The global dimension

9 The Europe of the Nine is the world's biggest tradingbloc and also the largest governmental source ofdevelopment aid to the low-income countries ofAfrica, Asia and Latin America. The member statestherefore have a special responsibility towards theworld community to concert their policies in thisdimension, to exercise an influence on internationalaffairs commensurate with their economic size andweight and to seek ways of bridging the differencesbetween other developed countries and the ThirdWorld. In particular, it is incumbent upon the Nine toexercise their collective authority in favour of substan-tial trade and monetary reforms making fair pro-vision for the participation of the developingcountries.

The European dimension10 The divergent extremes of wealth and poverty at worldlevel are precisely mirrored within the EuropeanCommunity. While standards of life overall have risenwithin the Nine, the disparities between the industrialheartland and the peripheral regions have becomeincreasingly acute. Unchecked they will threaten theCom munity's future development and also its achieve-ments to date, but how to check them is a realdilemma.11 Equally problematical is the Community's ability toabsorb the new applicant members who are expectedto be knocking at the door in the near future. Spainand Portugal will probably follow Greece, whichappears set to become the 10th member of the clubdespite thorny problems which an extension into theeastern Mediterranean will present.

12 With the accession of one or more of these less-developed countries on its southern flank, theCommunity will lose any remaining resemblance to aclub of the rich. Their entry will also dilute the benefit


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of redistributive policies to the pre sent po orer m em berstates, Britain, Ireland and Italy. Except in theimp robab le event of governments subo rdinating theirnational interests to the wider public good, it will besignificantly harder than today for the Community toreach any worthwhile consensus on external policiesand harder to draw a line between the interests of thepoorer member states and those of the Third Worldbloc. It will also be more difficult to reconcile (a) theneed for a better spread of economic activity betweenEurope and the developing world with (b) the sameneed within Europe.

13 O ne possible coun terforce could be the influence fromnext year of a directly-elected European Parliament.While a great deal will depend on the extent of thepowers accorded to the new legislature, it can be ex-pected to follow the present Parliament in givingparticular priority to social objectives, seeking greaterefforts to reduce the contrasts of wealth among itselectorate and reminding member governments oftheir responsibilities tow ards the world withou t.

14 Th e new Eur ope an Pa rliame nt may also prove thebest forum in which to air the increasingly felt need atmany levels of society for a future less dependent onmaximising economic growth. There is a growingconstituency demanding that ways be explored inwhich our society might get itself off the hook ofconsumerism without provoking a total economiccollapse.* The search is for a sustainable lifestylewhich, responding to concern for the quality of life,will also generate a surplus sufficient for us to helpothers meet their basic needs. At present, thoughthere are models showing how such alternatives togrowth might function once established, there is yetno credible scenario to get us there from here withoutan intolerable degree of disruption. Nevertheless, asthe view gains ground that reliance on economicgrowth is likely to compound rather than cure the illsof western society, it begins to appear that some alter-native, if it does not exist, will have to be invented.

*The Commission, in the draft of its Environment Programme for1977-81, observes that "growing sections of the population arerejecting . . . the scale of values implicitly suggested by theconsumer society and signs of saturation are appearing."


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The Third World dimension15 While maintaining an impressive solidarity in theinternational arena , the Third World is less and less ahomogeneous group. Its members are now spread overmany rungs of the development ladder, with someclimbing fast and others unable to lift themselves offthe bottom. The challenge to the European Communityin this dimension (as to the other industrialised nations)is a complex one: the prime requirement is a coherentglobal strategy to which all policies and programmescan be made to conform, while at the same timeensuring sufficient flexibility to respond to needs thatvary widely in description and degree.

16 The Lome Convention, which represents the Nine'sprincipal commitment to development co-operationwith the Third World, will be due for replacement orrenewal in 1980. That same year will mark the startof the United Nations' Third Development Decade. Ifthe revised Lome" treaty is adequately to reflect inter-national objectives for the 1980s, the Community mustnow start to show a greater sense of urgency in itsefforts to agree a global development strategy. Sucha strategy, it should be stressed, does not implyrenunciation of the historical ties with certaincountries or regions which can be a special attribute inwestern Europe's partnership with the developingworld: it implies only that we should make the best ofthese links by viewing them in a wider context.

17 In qualitative term s, a global strategy of developmentmust do more than simply set criteria for the geogra-phical distribution of trade preferences and aid funds.Perhaps even more importantly it must be global inthe sense of embracing all areas of our own nationaland Community policies which impinge on theinterests of the Third World. At the same time,quantitatively, there will have to be a very dramaticincrease in direct resource transfers before theCommunity's commitment to meeting mankind'sbasic needs is remotely consistent with the scale of thetask.W hat the planet can afford

18 Before it can advance further on solid ground, theEuropean Community must find an adequateresponse to the challenge in all these dimensions. So


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what is needed? First and foremost, a consensusamong the peoples/governments of Europe about thekind of Community they want for themselves withinthe world community. This consensus must take intoaccount the fact that no single member state can anylonger determine its future course in isolation, and itmust recognise the massive effort required over thenext 25 years to meet even the rudimentary humanrights of people in the poor developing countries.

19 In defining its objectives Europe must consider all theresources, human and material, available to meet theworld's needs. And this means more than justtrimming our sails to the immediate constraints andopportunities; it means matching our long-termaspirations to what the planet as a whole can afford.20 Following from this, the second requirement is for amedium to long-term strategy within which day-to-daypolicy-making can be oriented towards the agreedobjectives. The following chapters examine theprincipal elements in any such strategy as they wouldaffect and hopefully reinforce the Third World'sprogress towards self-reliance: finance, trade, agri-culture, employment, industry and migration policies.

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TWO: STRUCTURING THE FUTURE21 The possible destinations of any journey are governedby one's choice of vehicle. To admit a wider selectionof futures and to deal seriously with the issues out-lined in the previous chapter will require someimportant modifications to the European machine.22 Even before this, though, the nine member statesbadly need to defrost their communal windscreen inorder to see where the present road is leading and to

be able to read the signposts. The start of 1977, withBritain occupying the Presidency of the Councilof Ministers for the first time, found morale inBrussels at a low ebb. The Nine have no sharedconcept of the kind of Community they want to build,complained M. Gaston Thorn, Prime Minister ofLuxembourg, on ending his presidential term sixmonths earlier. And the European Commission hasobserved glumly that "the idea of Europe seems tohave lost much of its strength and initial momen-tum . . . deprived of its inner driving force, theCom munity has been unable to keep up effectivelywith changes in European society."3

23 Defrosting the comm unal windscreen is perhaps aneasy metaphor for a task which in practical terms isanything but easy to define. Two things it must surelyembrace, however, are a more wide-angle view ofpolicy options than that presently admitted and also amuch wider dissemination of information to stimulatepublic awareness of the alternatives available tochoose from. In the latter context it is important that11 the Commission should seek approval at an early date


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for a budget to support development education workby independent bodies in the member states. If able toharmonise the content and orientation of theseactivities, such a programme could prove immenselyvaluable in sowing the seeds of a 'Communityconsciousness' towards the issues of world develop-ment.24 As for the European machine itself, proposals forreform of the Commission are already thick on theground. It is not within the scope of this report toconsider the various proposals in detail, neverthelessthere are four institutional functions which needattention if the vehicle is to respond to any changes ofdirection we may wish to make. The functions inquestion are (i) co-ordination of foreign policy, (ii)concerted economic planning, (iii) provision ofadequate research/forecasting inputs at policy leveland (iv) co-ordination between policy sectors,especially where domestic and foreign interestsconverge or collide.The art of the possible

25 The Commission itself laments tha t efforts to harmon-ise the foreign policy of the Nine have "seldom led toanything more than the Community reacting toevents." The only areas clearly defined are thoserelating to trade, Euratom and the Lome group ofdeveloping countries, and even these, says theCommission, tend to be narrowly interpreted,confining Community policy "within bounds which donot permit coherent action." 426 In the past three years, under pressure at the UnitedNations, UNCTAD, the North-South talks and otherinternational fora, the Nine have attempted on anad hoc basis and not always with success a greatermeasure of political co-operation.s This has beendone mostly through direct inter-governmentalcontacts. It has therefore unfortunately been at theexpense of the Commission, which by virtue of itsfreedom from electoral constraints is much better ableto see issues in their medium or long-term contextthan national administrations which are usually pre-occupied with their reflections in a close-up mirror.The development of these informal channels betweengovernments, together with the powers reclaimed bythe nine heads of state sitting as the European Council, . 2have tended increasingly to eclipse the authority of the


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Commission. The most surprising of these 'channels'is the 1,500-strong Council Secretariat, a body quiteapart from the Commission and one which is strictlyinformal in the sense that there is no legal basis for itsexistence at all.627 A common strategy in the fields of foreign and econo-mic affairs is clearly essential to provide the direct-ional thrust for European advancement. And thecastration complex of some governments, fearful of aloss of national sovereignty, cannot be allowed toobscure the obvious case for having both functionsprovided within the Commission. Pressure is alreadybuilding up for a much closer degree of foreignpolicy co-operation to deal with the complex politicalaspects of the economic relationships that the

Community has entered into. Some new structure isclearly needed for this purpose. Dressing up theDavignon Committee the consultative forum fortop officials of the nine foreign ministries with apermanent staff of its own would not be an approp-riate substitute.Concerting econom ic policy

28 As argued earlier, forward movement by thecommunity must depend on an effective and pro-gressive Europolitique vis-a-vis the outside world andupon the reduction of social inequalities in our ownsociety. This should be sufficient to m ake the case fora concerted, medium-term economic strategy. It doesnot necessarily mean trying to apply the kiss of life toEconomic and Monetary Union (EMU). What it doesrequire is a degree of co-ordination which, for ex-ample, will avoid any repetition of the economictroubles of 1973/74 when member states compoundedtheir difficulties by failing to take due account of theeffect their individual measures of retrenchmentwould have on each o ther.

29 Moreover, changes occurring or impending in theworld economyparticularly between the industri-alised and the developing countriescannot be effec-tively planned or assimilated as long as responsibilityfor the Community's medium-term economic pro-gramme is confided to the Economic Policy Com mittee,a competent body of men but one perforce preoccupiedwith short-term, day-to-day problems. This pro-, gramm e needs a much wider range of inputs than canbe provided by a single Directorate of the Commis-


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sion, and it should be subject to approval not only byMinisters of Finance but those concerned with Socialand Development policies.30 The choice for Europe is, on the one hand, to apply itseconomic might with a little will, imagination andforesight to the urgent task of reshaping the worldeconomy, or, on the other, to let things slide, continu-ing to play out its post-colonial end-game and livingoff the leftovers of the industrial age. In less apocalyp-tic terms, one senior Commission official puts theproblem like this: "As long as the member govern-ments see the Community m a one to two-year timeframe we'll never get any forward planning andwithout tha t the whole thing will fold up."

Information and forecasting31 "Many of the Community countries are now, even inthe higher reaches of politics and administration,extremely poorly informed about the rest of theworld." Such was the considered judgment of a high-powered committee called Europe Plus Thirty in itsrecent report, exhaustive but highly readable, settingout the case for a European futures research institute

or 'think-tank'.7 Perhaps because governments areafflicted with a special kind of myopia when asked tolook at their own weaknesses, the Europe Plus ThirtyReport has not received the attention it deserves.Individual governments have done a certain amountof work in this area, it is true, but even if EuropePlus Thirty aimed rather high in it proposals for aCommunity think-tank , the function is one that needsto befilled n some form.Lateral linking

32 At national level, the deficiencies of governmentstructures now frequently prevent adequate co-ordination, for example between domestic and over-seas departm ents where the ramifications of policy areno longer discrete. These deficiencies are equallyevident in Brussels, where Commission officials willreadily admit there is not enough horizontal orlateral co-ordination between the various Director-ates, even in the case of a clear overlap of interestsbetween, say, imports from developing countries and 14


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incentives granted to competing industries within theNine.33 This lacun a was underscored the the Eu rope PlusThirty Report, which observed: "We have in factreached a situation where the inter-actions are so

important that it is difficult even to identify discreteproblems, let alone to apply discrete solutions. Y et themachinery of our governments, designed for earlierand simpler days, is still organised sector by sectorand can only with difficulty assess interpolicyconflicts . . . " 8 The problem is generally well under-stood, at least in Brussels, and the Commission hasput forward proposals to help correct it. More needsto be done, however, possibly along lines suggested bythe Netherlands government.* As things stand, thelack of horizontal co-ordination seriously diminishesthe impact which the Community's funding agenciescould have if wielded in concert. It can also produceconflicts such as the notorious case of a Social Fundgrant to Ireland for the setting-up of textile and shoeproductiongoods certain to be in direct competitionwith developing country exp orts. By the time this gra ntcame to the attention of other Directorates it was toolate, despite their pro tests, to get it rescin ded .

34 In sum ma ry, then , the organisationa l task is to get thetwo strategic shafts of foreign and economic policybolted to the front end of the Community cart andstrapp ed to a harness of high-quality information andforecasting inputs. This should be evidence enough ofthe formidable assignment facing the new team ofBrussels Commissioners under Roy Jenkins. And ifthey then want to go somewhere, there's the maverickPolitical Will still to be ca ug ht an d h itched up .

* In a mem orand um to the Council of Ministers in Septemb er 1976(docum ent S/13 80/7 6), the Nether lands proposed (i) joint m eetingsof Foreign and Development Ministers, (ii) a statement of'development implications' to be attached to every proposalsubmitted by the Commission to the Council, and (iii)implementation of the Commission proposal for an ad hoc workingparty to seek greater consistency between the Community's internal15 and external policies.


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THREE: FINANCE:THE MARKET PRICE35 How people spend their money is usually a goodreflection of their interests, values and aspirations. Onthis reckoning, Europe would seem obsessivelyconcerned with its stomach, devoting no less thanthree-quarters of the Community budget to food. Of

course, if one creates an animal in which most otherorgans are absent or atrophied, this state of affairs isscarcely to be wondered at. And such is the anatom i-cal deformity of the European Community at presentthat no better budgetary share-out could really be ex-pected. The unbalanced distribution of Communityspending simply reflects an unbalanced policy mix, as aresult of which the whole thrust of the Commission'sactivities is badly lopsided. As one observer has re-markedechoing many others"it is not a com-munity of peasants, after all." 9 But the weighting offunds is bound to remain skewed until the ninegovernments can agree on a more balanced package ofcommon policies and programmes to embody theirobjectives.Spending money

36 Even within the present limitations, some govern-ments must bear responsibility for having resisted anoverdue reform of Community spending, especiallythat of the Agricultural Fund (FEOGA). The Com-mission, it must be said, can do virtually nothing toimprove the distribution of existing resources and, in 16


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quantitative terms, its budget is minuscule when setagainst the tasks which the Nine are or ought to betackling at Community level. Consider, for instance,that the 1977 Commission budget of 8,800 millionunits of account* (about 3,670m) is less than thesum controlled by any one of four or five Depart-ments in the British government alone.37 The potential impact of the European budget begins tolook very small indeed when one recognises, on top ofthat, that only a tiny fraction of its disposable incomecan be deployed at the Commission's discretion infavour of communal rather than purely national objec-tives. Britain, for instance, has been getting back morethan it nominally contributesindeed a large partnever leaves the country except as ink on a balancesheet. Setting aside guarantee payments under theAgricultural Fund, the clawback by national govern-ments renders largely futile any attem pt by the Com-mission to exert a coherent influence on the nineeconomies overall. Furthermore, the illusion of largesums being channelled through Brussels makes it pro-portionately harder to establish the case for increasesrequired, particularly when the public who actuallybenefit from these funds are seldom made aware oftheir origin.What helps most?38 Turn ing to the deployment of Community funds as itaffects world development, there are a number ofpoints to be made. In the first place, as the Commis-sion has declared in its proposals for a globalCommunity policy towards the developing world, newforms of commercial co-operation (implying morespending to liberalise trade) should over time "enablethe countries concerned to build their own future bytheir own efforts and progressively to reduce theirfinancial dependence on foreign aid."10

39 The message to be drawn from this and similar state-ments is that the commitment to international* The unit of account (u.a.) is used by the Community to express inspecific terms the sums involved in its activities and policies. Thegold-parity unit of account used for the Community budget has afixed value of 0.4166. Since 1971 several variants have had to be

introduced to cope with fluctuating foreign exchange rates, notablythe European Unit of Account (EUA) calculated on a basket of thecurrencies of the nine member states. For details see Commission17 press release ISE C/B 33 /76 of June 29,19 76.


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development co-operation by the industrial countriescan today be measured by their domestic spending onindustrial conversion, employment and regionalpoverty as much as by direct transfers of financialassistance. Conventionally, the percentage of acountry's GNP devoted to overseas aid has been theyardstick of its political will to help the less-developed countries. On its own this criterion is nolonger valid. There is now a growing awareness thatfor some (not all) of the intended beneficiarycountries, a given sum of money spent judiciouslythrough instruments such as the European SocialFund may in the long run do them more good than theequivalent grant or loan. On these grounds thepresent report must take into account areas of policywhose relevance to overseas development might nototherwise be immediately apparent.

40 That said, it should be emphasised tha t for some timeto come aid programmes will continue to be a centralfeature of the western world's development co-operation effort. The European Community's recordon this front is a bit of a mixture, as we shall now see.Aid for development

41 With the Lome Convention and a much-improvedtrade preference scheme to their credit, the Nine haveso far done better in the field of trade than they havein concerting their global aid policies. True, theEuropean Development Fund (EDF) is to make grantsand loans totalling 3,000 million u.a. to the African,Caribbean and Pacific (ACP) countries in the Lometreaty. But the EDF is slow in disbursing its cash andmany of its projects are likely to run well beyond thetreaty's five-year span, so that spending by 1980 willhave averaged something well below the projected600 million u.a. per year. In any case, important as itis, the EDF represents only about a fifth of the totalaid budget of the member states. Co-ordination of theremainderan annual sum in the region of $4billionis thus of more than passing significance.

42 Hannonisation: Unfortunately, if the governments ofthe Nine have a hard enough time agreeing how tospend money on themselves, agreeing how to spend iton someone else seems quite beyond them. As aiddonors they can muster an impressive diversity of 18


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opinion about what is best for the recipients. TheDanes have their doubts about food aid, theGermans about almost all kinds, the British andDutch want more for the poorest countries outsideLome', while the French, Belgians and Italians cautiontha t aid shou ldn't be spread too thinly (which may betaken as a tacit admission that if it were spread anyfurther it would look very thin indeed). Despiteagreement in principle to harmonise their b ilateral aidefforts, the Nine have so far m ade little or no progresson this score.

43 Aid to non-associates: The 'non-associate' lobbyi.e.those member states which favour moving towards aglobal aid policy by increasing Community assistanceto the poorest countries outside the Lome" Convention have recently found themselves held to ransom bythe 'harmonisation' lobby. Or is it the other wayround? In any event, until settled at the eleventh hour,the squabble raised a titillating prospect of the Com-mission taking the Council of Ministers to court forthe first time over their refusal to release 20 millionu.a. approved last year for aid to the non-associates.Hardly a munificent sum, the 20 million u.a. was whatremained after the Council wielded its axe on theCommission's proposal for five times that much. Thisyear the budget request is for 120 million u.a.,spread over the next three years.44 Third world debts: Talks with the ACP states on thevexed question of the developing countries' massivedebt burden have been suspended because theCommunity declines to accept the principle ofgeneralised relief. The Nine argue, reasonably enough,that across-the-board relief would favour those coun-tries sufficiently well off to have incurred debts inthe first place and, am ong them, the ones which haveborrowed beyond their means. Still on the table is a1975 Dutch proposal for a moratorium on loan re-payments to member governments by the very poorestcountries and those hardest hit by events since the1974 energy crisis. In view of the magnitude of theproblem the Council of Development Ministers shouldallocate time for detailed discussion of this proposal atan early da te.45 Food aid: The obduracy of one or two countries in the

Council of Ministers has thwarted every attempt bythe Commission to raise food aid commitments to a19 level that would meet the international targets agreed


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more than two years ago at the World Food Confer-ence. One modest advance has been a recent commit-ment to three-year forward planning of food aid, butthe Community is the only major donor which hasdone nothing to increase the amount of cereal food aidit gives. Nearly all the experts agree that this form ofaid is crucial to many developing countries while theyare working towards greater self-reliance in foodsupplies, but one or two of our governments evidentlythink they know better. Either that or they say theycan 't afford it, which is a value judgm ent more than astatement of fact. It means that a million lives are ifnecessary more 'affordable' than the few hundredthousand extra tons of grain Europe is being asked togive an amount representing only a small fractionof annual carryover stock. Oh no, they'll say, that isemotive and untrue. But it isn't.46 Co-financing with voluntary agencies: A recent inno-vation in the Commission's development policy hasbeen co-operation with non-government organisations(NGOs), particularly the aid agencies such as inBritain Oxfam and War on Want. Last year abudget of 2.5 million u.a. was approved for jointfinancing of NGO development projects and morerecently 10,000 tons of food aid has been earmarkedfor distribution free of cost through the voluntaryagencies. Given the Commission's concern in linewith current international thinking about develop-ment objectives to find projects capable of tacklingpoverty at its roots, the co-financing scheme holds outpotential advantages for both sides and, hopefully,most of all for the beneficiaries.

47 In conclusion, probably the best judgment one canmake on the Community's aid programme at presentis that it could be better and could be worse. Butthat's already more than can be said about the overallshape of Community spending, which this chapter hasbeen about. Just look at the 1976 figures: whileappropriations under every other budget head wentup by an average of 20 per cent, development aidfunds were slashed by the Council of Ministers to alevel six per cent below the previous year. At constantprices this represented a cut of nearer 20 per cent. Sothe Nine deserve at best a quizzical response to theirclaim to be outward-looking and aware of the newforces abroad in the world. They're entitled to theclaim, but it does look at times to be leaning ratherheavily against the facts.


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FOUR: TRADE:IS IT A DEAL?

48 Trade is the lifeblood of Europe. To the Nine it isworth 362,300 million u.a. a year, representing aquarter of their gross domestic product. Since thedays of the great sailing ships, which scoured theoceans to bring back tea, sugar, spices and otherexotic cargoes, the nations of the northeast Atlanticseaboard have thrived and grown rich on their foreigncommerce. Over the past 300 years this trade hasdramatically changed European habits of eating anddrinking: our way of life wouldn't be the same withoutsugar and bananas from the Caribbean, coffee andcocoa from Africa, tea and spices from India and theEast.

49 Today, nearly half the European Community'simports come from the developing world, which inturn takes about one-third of all our exports.* Thesefigures evidence the degree to which Europe and theThird World are now dependent upon each other fortheir future growth the developing countriesneeding our industrial and other manufactured goodsto accelerate their economic progress, and Europeneeding the raw materials and the expanding marketswhich only they can offer.50 It is this interdependence more than anything tha t hasmade the European Community "the necessary point

*Of Community imports and exports in 1974 the developing world21 accounted for 47 per cent and 31 per cent respectively.


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of contact and the natural mediator between rich andpoor countries," in the words of M. Jean Durieux,leader of the European Commission delegation to the1976 United Nations Trade Conference (UNCTADIV). "This gives the Community a heavy responsib-ility," he added , "which it cannot in future refuse, andwhich it will have to undertake most consciously,deliberately and determinedly."11 The governmentsof the Nine and not least Britain and Germany,given their unhelpful stance at UNCTAD will needreminding of this eloquent commitment on theirbehalf to ensure that they fulfil their obligation to theworld community in the various negotiating fora nowpiecing together a new framework for internationalrelations.Tariffs, quotas and preferences51 The countries of the European Community livebehind a protective wall called the Common ExternalTariff (CET), which some regard as the principal load-bearing structure in the whole European edifice. Thewall is buttressed at various points by an assortmentof quotas and other non-tariff barriers. Applied at anaverage rate of about six per cent, however, theCom munity's tariffs now being extended to encirclemost of the rest of western Europe in a single commonmarket are lower than those enforced by themajority of industrial countries. And in practice, whilequota restrictions remain a major barrier, hardly anyof the developing countries' trade with Europe issubject to the CET, due to concessions granted underthe Generalised Scheme of Preferences (GSP), theLome Convention and other trade agreements.

52 Responding to an earlier UNCTAD initiative, theCommunity in 1971 became the first trading bloc tointroduce a Generalised Scheme of Preferences, underwhich semi-manufactured and manufactured goodsfrom the developing world, as well as some processedagricultural products, can be imported duty-free.The Nine have a good record for progressively extend-ing the coverage of their GSP, particularly in the fouryears since Britain's entry, and the European schemeis the only one to date which includes textiles. For1976 the value of GSP concessions was estimated at4,600 million u.a., compared with 900 million u.a. in1973. For a variety of reasons, however, little morethan half of the granted preferences have actually 2 2been taken up .


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53 One problem in this regard is the system of non-transferable quotas on sensitive products, whichmeans that it is difficult for an exporting country tomake full use of them. In addition, according to theWorld Bank, "procedural complexities and a lack ofinformation have prevented many developingcountries from fully utilizing the possibilities offeredby the GSP"12To overcome this constraint, the Com-munity is now making funds available to assist thedeveloping countries in marketing their export goods.

54 As a further extension of GSP, the European Parlia-ment has proposed that more generous preferences bedesigned for the exclusive benefit of" the poorestnations, bearing in mind that the benefits of thepresent scheme go mainly to the middle and higher-income Third World countries. If these materialise itis important that a degree of transferability should beincluded in any quota arrangements.

Associates and partners55 Until the enlargement of the Community in 1973 re-quired an accommodation for the developing count-ries of the British Commonwealth, the original six

members had maintained free trade arrangementswith their 18 associated African states and Madagas-car all former French colonies through theYaounde Conventions of 1963 and 1969. Similar tradeterms were granted to Kenya, Uganda and Tanzaniain the Arusha Agreement of 1970.56 Both these treaties were superseded when in February1975, after 18 months of hard bargaining and a lotmore concessions than it had originally envisaged,the Community signed the Lome Convention with amuch-enlarged group of 46 African, Caribbean andPacific states (ACP).57 Lome is an important achievement. For the first timea large and heterogeneous group of developingnations bargained cohesively and successfully with agroup of wealthy states to regulate their mutualeconomic relations. A five-year agreement, it providesmost African states south of the Sahara , much of theCaribbean archipelago, and the three island groups of

the Pacific with free access for 99.2 per cent of theirexports to the European Community. (Since then23 thre e m ore coun tries have been add ed to the member-


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ship* and a further three were expected to join early in1977. t )58 A significant innovation in the Lome Convention is itsscheme to stabilise the export earnings of the ACPstates on a range of products by making them lessvulnerable to market fluctuation. Known as Stabex,the scheme covers agricultural raw materials and ironore and provides that if a country's earnings on any ofthese products fall significantly below the average ofthe four preceding years, the shortfall is met by a loanor a grant. Although rightly hailed as a breakthroughin international trade co-operation, Stabex has arelatively small budget 375 million u.a. to be spreadover the five-year period.

From the ACP angle59 Welcoming the Lome agreement as a move in theright direction, the ACP countries on the wholebelieve that the European Community is beginning toshow a greater awareness of their problems and thatthe continuing dialogue will bring added benefits inthe future. They nevertheless have some specificreservations about the way the agreement has operatedin practice. Their criticisms are mainly in the areaswhere ACP trade will continue to be vulnerable: beef,sugar, dairy products, tobacco and vegetable oils.60 With regard to beef, for example, the ACP groupbelieve tha t it was unreasonable for the Community tointroduce cuts in imports last year without taking intoaccount how this would affect developing countryproducers, particularly Botswana, for which beef isthe only major export earner. While accepting that theCommunity was entitled to make such cuts, the ACPgroup felt that Botswana should have been given pre-ferential treatment over other exporters who were lessdependent on beef sales. As it was, Botswana had tonegotiate a special agreement with the Nine after theannouncem ent of their beef import embargo.61 Critics of the Lome Convention suggest that somerecipient countries do not really need the benefits

* Surinam, Seychelles, Comoro Islands.f Cape Verd e, Sao Tom e and Principe, Pap ua New Gu inea. 24


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it provides, since they have far stronger economiesthan others within the treaty. In an ideal worldEurope might be expected to concentrate its develop-ment co-operation effort exclusively on the most needycountries, but the demands of realpolitik dictateotherwise. For instance, account must be taken of theregional integration which Lome has helped toencourage in black Africa. And exclusion of thebetter-off countries from the Convention would havetaken away the leadership and negotiating strengthwhich they were able to lend to the weaker. Somepurists to the contrary, it is difficult to fault theEuropean Community for arranging that the tradebenefits under the Stabex scheme do not exclude anyACP member state but are apportioned on a slidingscale corresponding broadly with need. It must beremembered, too, that Lom was designed not somuch for the poorest, but for those countries mostheavily dependent on Europe for their export trade.

62 The ACP group, not surprisingly, looks askance at theCommunity's progressive liberalisation of GSP, whichin effect erodes their free access advantages. However,on balance GSP has the greater benefit ofspreading trade concessions more widely across thedeveloping world.Wider trading links

63 In fact, though overshadowed by Lome", th e Commu-nity now has tra de treaties with many other developingcountries. Commercial co-operation agreements havebeen concluded with India, Sri Lanka, Bangladeshand Pakistan and in the export of manufacturedgoods India is able to save more through concessionson the European market than all the African countriesin th e Lome" treaty. Most of the developingcountries of the Mediterranean basin also have tradeagreements with the Community. T h e MaghrebAgreement with Algeria, Morocco and Tunisia allowsfree access for their non-agricultural goods except fo rpetroleum products and cork, and tariff concessionsof 20 to 100 per cent on most of their agriculturalproduce. The Mashraq Agreement is a similar multi-lateral treaty with Egypt, Jordan, Lebanon and Syria.With Latin America, th e Nine have a more limitedrelationship through bilateral and regional2 5 agreements.


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64 All in all, the Community's trading relationships withthe Third World are more broadly based than it issometimes given credit for. But they do need pullingtogether: at present, due to widely varying scope andterms, they are not coherent and the distribution ofbenefits is consequently uneven.Aims for the '80s65 This year the Commission is expected to set up a smallinternal planning group to consider the shape of a newConvention for when Lome expires in 1980. It is to behoped that this group will seize the opportunity toshift the Community towards a global developmentpolicy in both aid and trade and ensure that this isreflected in a renegotiated agreement. The fact mustbe acknowledged that extending Lome" to a muchwider membership, with benefits on anything like thepresent scale, would be economically and politicallyout of the question for the Nine. However, effortsshould be made to secure a distribution of benefitsbetween Lome and non-Lome countries which betterreflects their relative needs.

66 Among the many more specific questions which theLome II planning group should consider is the extentof developing country needs for economic diversifica-tion and structural adjustment. Diversification willbecome increasingly important for those countrieswhich seek to implement a 'basic needs' strategy andto become more self-reliant in their domestic foodsupplies.

67 Another potentially valuable approach would be forthe Community to extend a modified form of theStabex provisions to countries intentionally reducingtheir exports of a given commodity, at least wherealternative supplies are available to the Nine fromother developing countries and where compensationcan be applied to effective adjustment measures. Thiscould be important in countering an undesirableeffect that Stabex might otherwise have namely,tha t of rigidifying production patterns by taking awayan incentive to diversify.

68 Without the collaboration of other industrialisedcountries there is limited scope for extension of thepresent Stabex scheme by the Community alone. TheNine, after all, cannot be expected to offer guaranteesin respect of products whose price is determined by


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and figums. . . a brief guide to the history andinstitutions of the European Community


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HOW THE COMMUNITY WORKS..,,The Community's governing body is the Council of Ministers, onwhich all the member states have an equal voice. According tosubject, the Council may be convened as a meeting of ForeignMinisters, Agriculture Ministers, Ministers of Development Co-operation, etc. Political decisions at the highest level may be takenby the European Council, consisting of the nine heads of state orgovernment, which meets twice a year.The Council of Ministers normally acts on proposals from theEuropean Commission, the policy-planning body which is dividedinto 18 Directorates General {see below). The Commission is run by13 Commissioners who are nominated by the member states butunder oath to act independently in the interests of the Communityas a whole.The Commission is answerable to the 198-member EuropeanParliament, which is empowered to vote it out of office. Parliamentalso has limited powers in relation to the Community budget. Untilthe direct elections scheduled for 1978, its members are MPsdelegated from the national parliaments.Disputes involving Community law are referred to the EuropeanCourt of Justice, where cases are heard by a bench of nineindependent judges one from each member country.

The Commission's 18 Directorates General (DGs) operate in the same way as nationalgovernment departments and their responsibilities are divided as follows: I External Relations.II Economic and Financial Affairs.III Industrial and Technological Affairs(now merged with DG XI InternalMarket).IV Competition.

V Social Affairs.VI Agriculture.VII Transport.IX Personnel and Administration.

X Information.XII Research, Science and Education,XIII Scientific and Technical Informa-tion and Information Management.XV Financial Institutions and Taxation,XVI Regional Policy.XVII Energy.XVIII Credit and Investments.XIX Budgets.XX Financial Control.


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. . AND HOW IT PAYS THE BILLSThe Corrwnuntty now works on what it calls an "own resources"system. Instead of each country contributing a set sum to theCommunrty budget, as was the case up to 1974, the member statesnow transfer to the Community purse all revenue from customsduties and levies on imports from non-member countries, plus aproportion of tfi&k value-added tax. This revenue is then distributedbetween the vatfous departments and programmes, as indicated inthe following tafete:

COMMISSIONOperating appropriations:StaffAdministrative expenditureInformationAids and subsidies

Intervention appropriations:AgricultureSocialRegionalResearch, technology, industry, energyCo-operation and developmentContingency reserve

Repayment to the member statesOTHER INSTITUTIONS

1976Budget(million unitsof account*

242.978,36,334.35,493.0

452,6300.0172.3237.23.0429.2127.8

% change fromprevious yetr

+ 19.01+ 22,01+ 0.63+ 104.17+ 20,19+ 20.53+200.00+ 31.64- 6,16+ 9.18+ 26.00

Total 7,576.9 + 20.88

Populatiorland wejalth inthe member states

GermanyUnited KingdomItalyFranceNetherlandsBelgiumDenmarkIrelandLuxembourg

Population Gross National(in millions, Product per capita1974)62,056.055.452.513,59.75,03.10.3

(in $ US, 1973)5,3203,0602,4504,5404,3304,6605.2102,1505,197


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HISTORICAL HIGHLIGHTS1947 The Benelux economic union Belgium, Netherlands and Luxembourg is established.1948 Treaty establishing the Organisation for European Economic Co-

operation to administer American aid for a collective European recoveryprogramme.1951 Treaty establishing the European Coal and Steel Community (ECSC), thefirst major commitment by governments to European unity, with JeanMonnet, the 'father of Europe' as its first President.1954 Treaty of association between ECSC and the United Kingdom ,1957 Rome Treaties signed, setting up the European Economic Communityand the European Atomic Energy Community (Euratom). Both treaties

came into force on January-1,1958.1958 First session of European Parliament.1961 First negotiations for British membership begin, Broken off in 1963 afterintervention by President de Gaulle.1963 First Yaounde Convention signed, associating 18 independent states inAfrica and Madagascar w ith the Comm unity.1965 Member states sign treaty merg ing the executive institutions of the EEC,ECSC and Euratom Into a single 14-member Commission. This came into

effec t in Ju ly, 1967.1968 Customs union completed; alt remaining industrial tariffs between theSix abolished.1967 Britain, Ireland and Denmark submit forma) applications for mem bership.Blocked again by President de Gaulte.

Arusha association agreement signed with Kenya, Uganda andTanzania. Came into force 1971.1969 Second Yaounde Convention signed.1970 Common policy on foreign trade comes into operation.

Foreign Ministers of the Six meet for the first time to concert their viewson foreign policy.1973 Br itain , Ireland and Denmark Join the Community.1975 European Commission proposes a global policy of developm entco-operation.

Lome Convention signed between the Community and 46 African,Caribbean and Pacific states.


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market forces beyond their control. To provide such ascheme for Asia's rubber exports, for instance, wouldmake Europe liable to pay for a drop in demandprovoked by the United States or Japan, which take alarger share of the trade. For many commodities likethis a multilateral Stabex system will be the onlyanswer, and it is for this that the Community shouldbe pressing in negotiations such as those in GATT,UNCTAD and the North-South talks.

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FIVE: FOOD AND AGRICULTURE:JACQUES AND THEBEANSTALK

69 In the beginning, the founding fathers decided tha tEurope should have an agricultural policy designed toserve a number of laudable aims. As enshrined in theTreaty of Rome, the Common Agricultural Policy(CAP) was given the following objectives:to increase agricultural productivity; to ensure afair standard of living for those employed inagriculture; to stabilise markets; to guaranteesecure supplies and to ensure reasonable prices forconsumers.

70 To achieve all these aims the CAP walks abetween the consumer and the farmer. When worldprices are high (as in 1974) it benefits the consumermost; when world prices are low, the farmer is pro-tected by a system of support which keeps him inbusiness. The Community thus tries to provide asteady supply of food at reasonable prices.

71 The CAP was seen from the start as a little help fromhis friends for farmer Jacques, a nice chap, not tooefficient but with a wife and two kids to support likeeveryone else. From tha t seed the CAP has now grownto become a great, gangling mile-high beanstalkwhich is taking far too much budgetary sunlight fromthe rest of the plants in the Community garden. Thegardeners stand around at the bottom of it, gazing upin awe and agreeing that they really ought to prune itdrastically, but nobody quite knows how.


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72 Agriculture is the only field in which the Communityhas real supranational authority and for this reason(see paragraph 35) it accounts for more than 70 per centof the Community budget. The common market foragricultural produce was established in order to takeover from the member states their individual pricingpolicies and to provide more support for the farmingpopulation.

73 To achieve the desired income level for Communityfarmers, official prices are fixed annually for anumber of important agricultural products and formthe basis of the market support mechanism. Thismaintains market prices to farmers in two ways: avariable levy system at the Community frontierensures that imported food from world markets doesnot undercut internal market prices; and interventionarrangements prevent prices being depressed if over-production should occur within the Community. If theCommunity has to export agricultural surpluses atprices above the world level, export subsidies or resti-tutions are paid by the Agricultural Fund* to makethe produce competitive on the world market.

74 What the European consumer gets from all this is arelatively expensive but essentially secure supply offood. By 1970 all the expenses of the Community pricesupport arrangements were being met from the Agri-cultural Fund. From the beginning of 1971 theproceeds of levies on food imports and customs dutiesaccrued directly to the Community budget, instead offunds being contributed to the Community bynational exchequers. The member states still have to'top up' the fund, however, by contributing a fixedproportion of value added tax.Europe and world food needs75 For all the refinements of its farm support system,Europe still takes and devours very large quantities offood from the world outside. The European Com-munity is the world's biggest importer of agriculturalproduce, while the developing countries as a group arefinding themselves less and less able to meet their ownfood needs. Major efforts are needed to increase the

*The European Agricultural Guidance and Guarantee Fund, usually29 known by its French acronym, FEO GA .


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purchasing power of the poor so they can buy the foodpresently beyond their means, but a very large andsustained increase in world production will also berequired to meet their demand without putting asevere squeeze on Europe's imported supplies. Thesize of the problem is indicated in a recentCommission report13 citing projections that thedeveloping countries' overall cereal deficit could reach200 million tons a year by 1985.

76 One approach to the daunting problem of futureworld food needs is to look at the globe as a singlegigantic farm and to seek a reallocation of land use sothat every bit of earth can be devoted to the growing ofcrops or anim als for which it is best suited. With someallowance for energy and transport costs between thepoints of origin and consumption, this would theoreti-cally produce an optimal pattern of world foodoutput. Only theoretically, because no country will beprepared to sacrifice much of its internal security ofsupplies to the vagaries of world trade and politics.Moreover, as explained in a recent paper for theEuropean Economic and Social Committee, a moreappropriate location of farm production has not beenachieved under the CAP because "sociological andeconomic contingencies have often made it necessaryto maintain an extremely wide range of farm outpu t inalmost all areas of the Community."* It is in thisdirection nevertheless that some progress must besought, in order to increase efficiency and maximiseworld production.

77 Looking at European agriculture in the context ofworld needs, the disadvantage of the CAP pricingmechanism is that it supports farmers producinghigh-cost foods (particularly grain-fed meat and dairyproduce which use up large quantities of food suitablefor direct human consumption) just as much as itsupports those producing low-cost foods. Animals fedon grain in the rich world are effectively competing* Document CES 45 8/7 6 final, which notes that "every timecompetition has forced a certain division of labour (in the case ofcereal crops, the threat of a crisis in Germany; in the case ofwine-growing, the crisis in France), corrective mechanisms have had

to be introduced and these have in fact impeded progress towards abetter division of labour. That is the price that has had to be paidfor maintaining social and political equilibrium within theCommunity." 30


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with people in the developing countries who needgrain to survive.78 So what can be done? As a first step in the direction ofworld farm planning, the European Commissionshould formulate medium-term proposals for re-ducing the output of beef and dairy products so as tolower demand pressure on the world grain market.The eventual aim would be to limit livestock produc-tion to tha t which could be sustained for the most parton grass.79 Before it can be seen to make sense, this proposal hasto overcome three major objections: that consumerswould not accept a sudden change of diet, that itwould badly hurt many small farmers and that in anycase it wouldn't really do the food-deficit Third World

countries much good.80 To take the consumer argument first, it is true mostpeople would object to a sudden, forced change ofdiet especially a reduction in meat. In the long termmuch more could be done through nutrition educa-tion to make people aware of alternatives to grain-fedmeat which are better for their health, but this is notthe point at issue. What is suggested is that by pro-gressively reducing its own production of grain-fedbeef the Community could increase its importation ofbeef from countries raising their cattle mainly onpasture or rangeland and therefore requiring little inthe way of cereal feed or concentrates. This wouldbenefit New Zealand and Australia, but it would alsogreatly help several developing countries whichalready export some beef to the Community and itcould potentially benefit many more.

81 As for the effect on European farmers, those operatingon a small scale would probably suffer most from in-creased imports of rangeland beef because they lackthe capital to move into alternative types of farming.Instead of providing what amounts to severance pay toencourage such farmers to leave the land, what theCAP should be doing is to provide them with grants asan incentive for restructuring into other more com-petitive crops or livestock. This would also have thesocial benefit of sustaining employment in the country-side, rather than placing an additional burden ofdemand for housing and jobs in urban areas.82 So much of the Agricultural Fund is absorbed in1 guaranteeing prices tha t less than 10 per cent is left


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over for the Guidance section to assist therestructuring of agriculture. Adding in the nationalfarm budgets of the member states, which areweighted the other way, a better balance can be seenbetween expenditure on market support and therestructuring of the agricultural sector. This means,however, that the job of reorganising Europe'sfarmyards is being done on the basis of nationalcriteria and not necessarily in line with the correctpriorities for the Community as a whole. The Nineshould hand over this responsibility to Brussels, butnot before another problem has been solved.According to the former European Commissioner forregional policy, Mr. George Thomson, funds from theGuidance section of FEOGA have gone "inexorably tothe better-off regions and less to the poorer regions." 14This is one aspect of the CAP urgently in need ofreform.

83 With respect to the third argument, a reduction ofEuropean demand on world grain markets will notbenefit the developing world if a consequent pricedecline simply prompts farmers in North America tolower their output. But this objection will lose its forcewhen an agreement on stockpiling comes into effect aspart of a new International Grains Agreement, hope-fully next year. By establishing a satisfactory floorprice, the new agreement should ensure that anydecrease in demand in the rich countries, rather thandeterring production, will result in the building up ofstocks and this in turn will enable the developingcountries to estimate better their future purchasingcapacity.Her mountains and her lakes

84 Whenever the CAP is discussed, questions areinevitably raised about the notorious mountains offood and lakes of wine. Unfortunately, occasionallarge surpluses are unavoidable in products for whichthe Community is seeking to sustain a level of outputclose to self-sufficiency. The problem is what shouldbe done with such surpluses when they occur. It isgenerally accepted that quotas are not the solutionsince they restrict competition and therefore "tend toenable production to be continued in firms or inregions where costs are higher."15 The Commission isnow proposing a scheme of co-responsibility for milkunder which farmers will pay a tax on surplus output. 3 2


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A similar mechanism could well be applied to beefproduction.85 In the past food aid contributions, other than cereals,have tended to be dictated by what was in surplus, andwere given as much to reduce stocks as to alleviate

need. For instance, some critics have charged tha t theCommunity's use of dried skim milk (d.s.m.) as aid hasoften been little more than dumping. In the past, theCommission has even argued that Europe should tryand produce surpluses of d.s.m. and butter as a con-tribution to nutrition in the developing world.'6 This isquite inappropriate because if a donor countryintends to give away food it should give the grain,instead of wasting it by first processing it through acow. The Commission has now accepted that it shouldnot pursue this line17and is also being more cautiousin where it sends d.s.m. as food aid.Food as aid

86 Food surpluses and food aid should b e treated asseparate subjects an d surpluses should only b eutilised as aid when that particular product isrequired by the intended recipient country. Improvedmeans should b e sought to distribute surpluseswithin th e Community to needy groups, such aspensioners, and to institutions such as hospitals,schools an d prisons (all of which are noted fo rnutritionally sub-standard food) since they areprobably best able to absorb unplanned surpluseswithout depressing the market. We might even take aleaf from th e Chinese commune which, confrontedwith an unexpected milk surplus, converted it to ice-cream and distributed it free to the people.

87 Food aid can be a disincentive to increasing foodproduction in a recipient country; used in the rightway, however, it can be a positive factor in develop-ment planning. It can be particularly valuable in'food-for-work' programmes, while agricultural pro-ductivity is being increased. Given the will for change,a developing country with a food deficit needs guaran-teed supplies of food aid on a reducing scale over asmuch as 5 or 10 years. When the food required is notin surplus in the Community, the possibility should b econsidered of buying in supplies from outsidemarkets, although realistically there's little chance of33 money being allocated fo r this purpose in th e currenteconomic climate. Not long ago, Thailand suggested


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that some of its wheat be purchased for theCommunity's food aid programme to nearby Vietnam,rather than Brussels having to ship it half way roundthe world. But this idea was turned down; the Thaiswere told that "the Community is not doing this kindof thing at the moment."88 In terms of over-all distribution, the Community'sfood aid programme is much more in line with thegeography of world needs than the benefits of theLome Convention or other aid. India and Bangladesh,the most populous of the poorest countries, rightlyreceive the biggest allocations, while the Lome group,accounting for 14 per cent of the Third World popula-tion, receives only a little more than this proportion.As to the distribution within the recipient countries,much stricter surveillance by the Commission isessential to ensure that it reaches the people for whomit is intended. The present resources of the Food AidDepartment are totally inadequate for this task.

Agricultural research89 Much more money should be put into agriculturalresearch at the European level. To date this has beenleft essentially to the individual member states, with

additional work sponsored directly by the Commis-sion filling in some of the gaps. Now under study arepossible developments such as the use of treatedcellulose (e.g. straw treated with urea) for winteranimal feed. Other possible areas of research forinstance the manufacture of protein from oil or gasproducts could significantly alter the shape ofEuropean agriculture in the next few decades. Butbecause resources at the European level are small,results are slow in coming through and potentiallyimportant changes in production are held up.90 One problem in the food sector which has been giveninsufficient attention is that of waste. In the ninemember states overall, food waste must amount tomany millions of tons a year. In Britain alone, whichimports more food per capita than any other countryin the world, it has been estimated th at anything up to25 per cent of all food goes to waste. The developmentof effective methods for the bulk collection and pro-cessing of food waste from institutions and privatehomes would permit the much wider use of swillinstead of intensive grain-feeding for pigs andchickens. Work is also urgently needed on the ex-


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tended costs of other forms of waste in the foodsystem notably pollution of the environment andexcessive or inappropriate uses of energy.91 Research is one thing, bu t resources must also bemade available to help and encourage farmers to take

advantage of thefindings.W hat is true in the develop-ing countries is no less true in Europe tha t convinc-ing and well-chosen incentives are necessary to obtainany significant change in farming methods.The case for reform

92 Whatever its virtues and defects, the prolific adminis-trative foliage of the CAP beanstalk has become agigantic entanglement. Yet it is the roots of the CAP,probably more than any other policy, which holdEurope together, so it continues to be fed andwatered to keep it going.

93 In the long term a major rethink of the CAP would beto the advantage of all member states. At present, theintervention system continues to create unwantedsurpluses and some governments regard the Policy aslittle more than a target for exploitation. The Frenchhave used it as a prop for inefficient farming methods,while the British are currently squeezing it tothe last drop to subsidise themselves through theovervalued green pound. But no new overall strategyfor the CAP is being developed by the Commission atpresent, the fear being that a root and branch reformwould be too painful in the transition period to beacceptable to either consumers or farmers. Althoughthe policy is cumbersome, the argument goes, to makeradical changes would now be insuperably difficult.

94 On balance , while these problems are acknowledged,the case for a major reorganisation of the CommonAgricultural Policy should prevail. More food isneeded for the world and whatever means are used todistribute it, it must first be made available. Europecan contribute to this by reshaping its farmproduction and modifying the profile of itsagricultural imports.

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SIX: PEOPLE AN D WORK:THE SHAPE OF THINGSTO COME

95 How Europe shapes its own future for the next 10 or20 years will determine to an important degree howthe developing countries are able to shape theirs. Inparticular, the priority given to industrial policy,manpower and migration, employment and socialservices in the European Community will influenceacross a broad front the nature of the problems to betackled by the Third World and our own capacity toassist them.Beyond the industrial age

96 To confront the challenge posed in Chapter One, thefirst imperative for Europe must surely be to devise anoverall strategy for the transition to a new, post-industrial development. The Nine are collectively thelargest power among the industrialised nations of theworld, yet at Community level they have nothingresembling an industrial policy. Proposals for overallco-ordination in this field were put up by the Commis-sion five years ago but disappeared in the quicksandsof the Council. Since then efforts have been concen-trated on individual sectors of industry, but somesenior officials believe they are reaching the limits ofwhat can be achieved in this direction.97 The Community has an assortment of industrial pro-grammes, separately administered by four funds anda bank. In grant terms the biggest of these agencies is 3 6


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the European Regional Development Fund (ERDF),charged with reversing the decline of the Com munity'spoor regions and assisting the massive job of industrialrenewal all on a paltry 500 million u.a. per year.Then there's the European Social Fund, whichpresently distributes about 440 million u.a. a yearfor industrial training and resettlement. The EuropeanInvestment Bank (EIB) a lending agency whichlikewise concentrates the major part of its resourcesin the less-favoured regions of the Community granted loans in 1975 totalling more than 1 billionu.a., a full three-quarters of this sum going to Britainand Italy alone. In addition, the European Agri-cultural Fund hands out more than 300 million ayear for modernisation and restructuring in theagricultural sector, while the European Coal and SteelCommunity in 1975 disbursed 52 million in conversionloans to develop new enterprises in mining and steelareas.

98 Quite an impressive array of financial weaponsandone which (to the direct or indirect benefit of thedeveloping countries) could begin to make a signifi-cant impact on the economic and industrial life ofEurope if they were all pointed in the same direction.That they have not been up to now is at least partly thefault of the Commission, which has failed to achievethe necessary degree of horizontal co-ordination. Butthe Council of Ministers must bear a share of theblame for taking decisions in one sector withoutreference to other aspects of internal market policy,let alone external/developm ent policies.

99 The concerting effect of Community policies in thisfield is also heavily circumscribed by procedureswhich largely ensure that the funds go where therecipient governments want them, leaving little scopefor the Commission's influence. For example, whilenot doubting the need for sewers and access roads onindustrial sites and the refurbishing of some Welshhotels both of which figure prominently on a recentlist of British grants from the ERDF one might ininnocence ask whether such schemes are getting to theheart of industrial and regional renovation.

A focus for renewal100 It is now widely recognised that some realignment of37 the various financial inst rum ent s is essential when the


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Social and Regional Funds come up for renewal at theend of 1977. There is a compelling case for puttingboth under the same administrative umbrella,possibly with a high-level committee to oversee, guideand ensure the compatibility of all Communitydisbursements.*101 These Funds should also be given a wider develop-ment dimension. In its recent memorandum to theCouncil of Development Ministers, the Netherlandsgovernment noted that the Community has "not yetdeveloped any policy designed to restructure industrialundertakings or sectors which in the long term willhave to be considered uneconomic in the light of thepotential of developing countries." Given the in-creasing interdependence of rich and poor countries,

the memorandum added, the interests of thedeveloping countries should be taken into account inthis policy from the start. One specific line of actionconsistent with the Dutch recommendation would befor the Social and Regional Funds to focusadjustment assistance to industry on those productslisted as 'sensitive' in the Community's GSP.102 This machinery for the progressive restructuring ofEurope's industrial economy, as well as being in need

of realignment, needs oiling with a lot more moneybefore it can hope to be fully effective. As the ERDFasserted in its first annual report, "the fund alone,especially at its present size, cannot bring about thestructural changes necessary to bring the regionalimbalances in the Community within acceptablelimits."18And if it cannot do that it's hardly likely toachieve its other aim of "creating the conditions for afurther liberalisation of imports from the developingcountries."19The Nine should commit themselves to asubstantial and steady growth of resources devoted toindustrial renewal, manpower training and relatedactivities.

The division of responsibilities in the new Jenkins Commission,annou nced at the time of going to press, meets this po int positivelyby giving the Commissioner for Regional Policy a brief whichincludes co-ordination of spending by all the agencies mentioned inparagrap h 97. 38


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W hat work for the workers?103 With six million of its workers ou t of jobs, there h asbeen plenty of Community activity on the employmentfront in the past year. Two sessions of the TripartiteConference (governments, employers a n d t radeunions), meetings of the reconstituted Standing Com-mittee on Employment and debate in the EuropeanParliament have all grappled with the problem of howto re-absorb th e large numbers of unemployed backinto the economy.104 This is again a field in which th e Nine have no con-certed policy. The best the Commission has been ableto do is to start work on harmonising national statis-

tics and employment forecasting. What's reallyneeded is a dynamic employment programme which,among other things, could respond to the EuropeanParliament's resolution of June 1976 calling on theCommunity to pursue an active labour market policyand to give 'utmost priority' to job creation.105 Anothe r object of a Community employment pro -gramme would be to counter th e danger pointed

out to the Commission by a study group of indepen-dent experts2 0 that member countries might resortto an "economic equilibrium of under-employment."The study group report warned that " a society whichis not in a position to offer jobs to those who arelooking for work should not be surprised if one daythe very role of work as a social value is questioned."And there is the further consideration t ha t acceptanceof continued high unemployment in Europe as theprice of controlling inflation would inevitablydemand, by extension, a tolerance of the far graverlack of employment in the developing countries.

106 At the same time, care must b e taken to ensure thatpressures for th e largest possible reduction of unem-ployment in the shortest possible time do no t distractfrom more basic considerations what kind ofeconomic future we want to construct an d what Tcindof employment will be appropriate and sustainablewithin i t . The Tripartite Conference has to someextent prejudiced debate on both these questions bydeclaring its conviction that sustained growth is th e3 9 only way to achieve 'further social progress.'


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Industry and development107 Assistance to industrial development in the ThirdWorld, as provided for in the Lome Convention,includes help for diversification, for manufacturingand processing of raw materials, the transfer andadaptation of technology, and marketing assistance.A joint. EEC/A CP Committee on Industrial Co-operation has recently been set up to pursue co-operative efforts in the fields of research and develop-ment, information exchange and the establishment ofcontact between firms, etc. The signs so far suggestthat Brussels is not too sure what to do with thisCommittee, partly no doubt because the memberstates are less than enthusiastic about it, having no

joint industrial policy of their own. In this area muchwill depend on the success of the new Centre forIndustrial Development (also a product of Lome) inwinning the co-operation and support of privateindustry as well as that of the member governmentsthrough the Committee.108 In any industrial/m anpower strategy which takescognisance of the need to evolve a new internationaldivision of labour, the issues involved will be many

and complex. Some of them have been considered inan earlier report in this series,21 but one general con-clusion relevant here is that for any prospect ofsuccess it will be imperative to have a satisfactory,inter-sectoral 'concertation' of policies both atnational and European level.Stresses of migration

109 This brings us, finally, to the many-sided problem ofmigration, in which the interests of the Communityand the developing countries indeed most of thebasic questions discussed so far in this report collide. Migrant workers in the European Community,numbering with their families about 12 million, havecome mostly from developing countries, in particularthose situated around the Mediterranean seaboard.About one-third are from within the Communityitself. All are the product of a massive wave of migra-tion which occurred largely in response to the labourshortages brought on by Europe's sustained economicboom in the 1950s and 60s a phenomenon nowrequiring the Community not only to declare but to 40


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manifest its intentions on inter-related aspects ofeconomic policy, international relations and socialaffairs.110 The imm ediate challenge is the social one of ensuringequal opportunities and services for migrant commu-nities in order that they do not become a sub-proletariat alienated from the mainstream ofEuropean life. For most migrants, a job abroad issimply better than no job at home, but the price ishigh. Too often families are broken and theworker, if he returns home, finds himself socially andculturally deracinated.111 In February 1976 the Council of Ministers passed aweak resolution in response to the Action Programm esubmitted to them by the Commission more than ayear earlier.22The Commission had pointed out that"after more than a decade of benefit from migrantlabour, the Community finds itself with a large un-assimilated group of foreign workers, who sharealmost all the obligations of the society in which theylive and work but, more often than not, have a lessthan equal share in its benefits and rights. Thissituation is in the long term intolerable degradingfor the migrant and dangerous for the Community."112 A num ber of specific measures were thereforeproposed by the Commission to deal with some of themain problems in the fields of job training, socialservices, housing, education, health and public infor-mation. In the light of these identified needs it is hardto justify the slow rate of progress being made in theCouncil of Ministers.113 More fundamental to the aims and objects of theCommunity, however, is the issue of future migration

policy. Here the key question to be faced before thenext major economic boom will be how much of anincrease in wealth we are prepared to forego in orderto avoid the social stresses which accompany anysudden increase in population. For it has been clearlyshown that migrant workers made possible a fasterrate of economic growth in Europe and a greater flexi-bility in industrial development than could have beenachieved without them.114 For developing countries, though it can be a signifi-cant source of income,* the m igration of their workers

41 *T he earnings of Turk ish mig rant workers have been estimated for1973 at more tha n half the value of Turkey's impo rts.


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to Europe is generally regarded as a necessary evil.But it is by no means an unqualified economic benefitto Europe, either. The pattern of migratory flows isnow seen to have aggravated the regional imbalance inthe Community and, as a relatively cheap source oflabour, to have acted as a disincentive in the searchfor improved methods of production.115 In the global context, a Commission working party in1974 concluded that migration had slowed downefforts to achieve a more rational division of labourand establish a more equitable balance in the worldeconomy.23 Responding to the implications of thisanalysis, the Commission's Action Programmedeclared that EEC policy should aim to ensure theeconomic competitiveness of the developing countriesby, among other things, "the transfer and thecreation of certain industries and services in thesecountries, according to the principle of a morerational international division of work." Seeking, inother words, a new balance between the mobility ofcapital and the mobility of labour. But the in-adequate resolution eventually put together by theCouncil of Ministers did no more than 'take note' ofthis recomm endation.

116 The need for a common strategy in this field is clearand urgent. For its part, the Commission hasemphasised this with commendable bluntness: "Thelack of co-ordination at Community level of themigration policies of member states has proved amajor factor in the haphazard and ill-planned use ofmanpower . . . There are at present no safeguards, atCommunity level, against conflicts between nationalmigration policies and Community policies in social,regional and industrial affairs nor in the field of devel-opment aid p o l i c y .. . " Governments must be pressedto deal with these basic issues instead of con-tinuing to brush them under a threadbare carpet ofwords and good intentions.

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SEVEN: CONCLUSION& RECOMMENDATIONS

117 The future of Europe, more than that of other indus-trialised states, is bound up with the nations of thedeveloping world. In many ways their development isinseparable from our own. The European Comm unitytherefore has special reason and responsibility to givethe world a lead in promoting the reforms needed fororderly one-world co-operation.118 Th is rep ort ha s soug ht to indic ate the lines of actionupon which such a strategy of co-operation should bebuilt. Its principal recommendations may besummarised as follows:119 Th at the Eu rope an Com munity, as far as possiblewith the collaboration of other industrialisedcountries, should provide the leadership and politicalvision necessary to devise measures for the essentialres ha pin g of th e world econom y which will provide for

the full participation of the developing countries onfair terms . (Paragraphs 1-9).120 T ha t the Nine com mit themselves to working out aconcerted foreign and economic strategy, which isessential not only to the above task but also to that offurther European advancement. (Paragraphs 1-9,25-30).121 T ha t the Comm ission subm it to the Council ofMinisters a medium-term plan in which progress

towards the closer alignment of national policies islinked with redistributive programmes on a suffi-4 3 ciently enlarged scale to reverse the trend of widening


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disparities of wealth within the Community.(Paragraphs 10-13).122 T ha t the Comm ission be given a brief to explore thepossibility of alternative strategies for the future ofEurope, in which social concerns for the quality of life

and the environment are not subordinated to theexigencies of economic growth, and in which theutilisation of resources in Eu rop e is geare d to w hat theplanet as a whole can afford. (Paragraphs 14, 18-20).123 T ha t the Nine com mit themselves to a global policyof developm ent co-operation in which the distribu tionof benefits whether through trade, investment oraid is proportionate to the needs of the recipientcountries. (Paragraphs 15-17,41-43,65-68).124 T ha t the Com mu nity tak e an entirely fresh look atthe scale of its resource transfers to the developingworld, relat ing commitments not to how much wasdo ne last year bu t to the real scale of needs. (Paragraph125 Th at provision be m ade at the Eu rope an level forresearch, analysis and long-term forecasting of worldtrends as an essential input for policy-making.(Para grap hs 21-23,31-34).126 Th at the Comm ission seek approval at an early da tefor a budget to support development education workby non-governmental organisations in member states.(Parag raph 23).127 Th at the mem ber governments should ma kestrenuous efforts to achieve a better balance ofcom mo n policies, in order tha t the Comm ission's workand resources should more adequately reflect theCommunity's overall priorities. (Paragraphs 35-37).128 Th at the Euro pean Commission exert pressure onother major trading powers to collaborate in ex-

europe and the world without

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