Getting in Step

When Europe's six-nation Common Market went into business last New7 Year's Day amid acclaim as the harbinger of European unity, some of Europe's most vigorous and ubiquitous traders-notably the British--were conspicuously and wistfully left outside. Preferring its Commonwealth and U.S. customers, traditionally hesitant to subordinate its own island independence in any Continental supranational scheme, Britain had failed to persuade the Common Market to adopt a free-trade system that would have more loosely linked 17 European nations.

The dispute was sharp and bitter, and for a time the British, having lost, darkly muttered threats of trade-war reprisal. But as the Common Market showed every sign of flourishing, with once-reluctant French and West German industrialists delighted by the prospect of a tariff-free market of 168 million people, the stakes became too high for sniping. And the British decided that if they couldn't lick 'em, and wouldn't join 'em, they would try another tack. With the inspired doggedness that characterizes British diplomacy at its best, the British set to work to stave off the prospect of a European economy permanently divided.

High Walls. The fruits of British efforts were evident this week in the little

Swedish seaside resort of Saltsjoebaden, near Stockholm, as 79 delegates from seven nations--Britain, Norway, Sweden, Denmark, Switzerland, Austria and Portugal--gathered to put the finishing touches to their own free-trade association, known familiarly as the "Outer Seven" (though some of its members think the name invidious). Recognizing, in the words of one British official, that "we simply cannot let the Common Market Six build up walls we may never be able to scale," the Outer Seven have decided to get their commerce into step with the Common Market. Thus their draft plan envisions a tariff reduction of 20% on July 1, 1960, the date on which the Common Market takes its own second 10% reduction.

Dangerous Medicine. All this aims at an easy economic meshing of the Outer Seven and the Common Market inner six if the day of political rapprochement ever arrives. For it is politics, not economics, that led to the bifurcation of Western Europe's trade, particularly politics between England and France, part of their centuries-old struggle for hegemony in modern Europe. It was France, with its history of narrow economic nationalism, that vetoed Britain's hopes for a free-trade area with the Common Market, and it was Britain's reluctance to give up its freedom of action that kept it from joining the Common Market as a full member. Economically, West Germany prefers the British free-trade area; politically, it treasures France's offer of close partnership in unifying Europe. Unlike the Common Market, the Outer Seven arrangement has no supranational institutions and leaves each nation to negotiate tariffs with nonmember nations as it sees fit. This is much to Britain's liking, but it has paid heavily to get it--chiefly in agricultural concessions to Denmark.

Denmark symbolizes the uneasy position of most of the Outer Seven nations and their fundamental long-range desire to join the Common Market proper. Much of Denmark's food exports go to Common Market countries, 25% to Germany. (As a whole, the Outer Seven nations trade more with the twice-as-large Common Market than with each other.)

While British farmers cried out in dismay, their government promised to guarantee a market for Danish bacon, blue cheese and other dairy products to offset Denmark's loss in joining the Outer Seven. This gesture will cost Britain nearly $20 million a year in tariff revenue alone.

Germany's Economics Minister Ludwig Erhard. sympathetic to the cause of freer trade everywhere, promised Denmark not to discriminate against it for joining the Outer Seven. Germany hopes in time to put pressure on France to widen the Common Market club. But as Erhard points out, the Outer Seven is "dangerous medicine," even though "chances are good that it will work." And, as one of Erhard's aides adds: "Separate groups tend to form habits, generate loyalties, encourage parochial thinking. On the other hand, they can produce creative friction."

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