The EU has only one route left. It must move the GATT from the periphery to the centre of its trade policies.[76]
If this does not happen — and worse if, as I have suggested, it moves further towards protectionism — Britain will be the worst affected. That is why it is so important that we should work to establish special arrangements between the European Community and the North American Free Trade Area.
What we need here is something like a North Atlantic Free Trade Area, which would incorporate the emerging market democracies of Central and Eastern Europe as well as the EU itself. It would have a number of important economic and political benefits. First, it would provide unimpeded access for Britain and other European countries to the rapidly expanding markets of the Americas. All the same arguments used to justify our entry into the EEC in the early 1970s and then the creation of the Single Market in the mid to late 1980s — namely the expansion of trade opportunities — apply here. Secondly, by involving the Americans, with their tradition of free enterprise and open trade, in the new transatlantic trading framework we would shift the balance away from the Continental European emphasis on subsidies and protection — to Britain’s advantage. Within such a grouping we would be less likely to be a lone voice for free markets. Thirdly, the establishment of closer economic relations between Europe and America would help underpin NATO, whose raison d’être has been called into question by the end of the Cold War. A North Atlantic Free Trade Area would help create the conditions for a continued American commitment to Europe’s defence, while reassuring other European countries concerned about the predominance of Germany. Finally, the new Free Trade Area would be the most powerful — but also the most liberal — bloc within the GATT. As such, it would be able to insist that the global trend was towards free trade rather than protectionism. Britain is well placed to argue on both sides of the Atlantic for such an approach; moreover, our particular interests and identity as an outward-looking, open trading nation with a traditional commitment to strong links with America would be well served by it.
Finally, in planning the route to 1996 we cannot continue to ignore the erosion of our parliamentary sovereignty. As Lord Denning has said:
No longer is European law an incoming tide flowing up the estuaries of England. It is now like a tidal wave bringing down our sea walls and flowing inland over our fields and houses — to the dismay of all.
How precisely the British Constitution — which is what is ultimately at stake — can be protected against this ‘tidal wave’ needs now to be considered. Certainly, it can only be done by the explicit exercise of parliamentary sovereignty; moreover, the sooner the initiative is wrested from the European Court so as to clarify British judicial thinking, the better. There is a strong case for amending the 1972 European Communities Act to establish the ultimate supremacy of Parliament over all Community law, making clear that Parliament can by express provision override Community law.
Britain would not be alone among Community countries in protecting the ultimate supremacy of its domestic law. Germany, for example, does not acknowledge the power of Community law to override its constitutional law, as the Federal Constitutional Court made clear in the Maastricht Treaty case. France likewise maintains the ultimate supremacy of its constitutional law, and its conseil d’etat evolved doctrines and procedures which limit the practical application of Community law in cases where the interests of the French state so require.[77]
We in Britain should also set out rules relating to conflicts between Community law and Acts of Parliament which unintentionally arise (as in the Factortame case), and establish a procedure whereby an Act unintentionally in conflict with Community law can be suspended by Order in Council where necessary rather than by the courts, so discouraging the drift in court decisions and judicial thinking towards narrowing the scope of parliamentary sovereignty. There should be a reserve list of protected matters where Parliament alone can legislate, to include our constitutional arrangements and defence. Finally, we should take reserve powers, exercisable by Order in Council, to enable us in the last resort to prevent specific Community laws and decisions taking effect in the United Kingdom.[78] These various powers would, one imagines, be used very sparingly; but their very existence would act as a disincentive to European encroachments. But the debate about how rather than whether such actions should be taken is overdue.
It is not possible to predict precisely where this process of negotiation would end. Whether Britain would be part of an outer tier Community membership, whether we would have some kind of association agreement similar to that enjoyed for years by the European Free Trade Area (EFTA) countries, and later by the European Economic Area (EEA) countries, or whether the European Union would be transmuted into a series of bilateral or multilateral agreements between countries under new treaties in some version of ‘variable geometry’ — all of these are possibilities.
In any case, it is not the form but the substance which is important. What is clear is that a point has been reached — indeed it was reached even before Maastricht — at which the objectives and perceived interests of the different members of the Community radically differ. A clear understanding that this is so and that our strategy for 1996 must be planned accordingly is the essential foundation for success.
Nor do I believe that such an approach is incompatible with the long-term interests of other European countries. If it is allowed to continue on its present course the European Union will fail at all levels. It will exclude the post-communist countries of Central and Eastern Europe by imposing conditions for entry which they will not be able to fulfil. It will condemn the south European countries to debilitating dependency on hand-outs from German taxpayers. It will be a force for protectionism and instability in the wider world.
If the Franco-German bloc decides to go ahead with the recreation of a modern equivalent of the Carolingian Empire, that is its choice. The consequences will almost certainly be traumatic. In a world of re-awakened nationalism it is hard to imagine Frenchmen accepting in perpetuity their country’s relegation to being a German satellite — any more than it is easy to conceive German taxpayers providing ever greater subsidies for failing regions of foreign countries, as well as housing, health and other benefits for immigrants driven by economic necessity across Germany’s borders, and losing the assurance of the Deutschmark to boot. All this against the background of a shrinking share of world trade and wealth, as investment and jobs moved away from Europe. At some point, the electorates of those countries will rebel against policies which condemn them to economic disruption, rule by remote bureaucracies and the loss of independence.
There is only a limited amount that Britain can do alone to prevent these unwelcome developments. But it is not inappropriate to quote the aspiration of Pitt the Younger to the effect that Britain ‘has saved herself by her exertions, and will… save Europe by her example’. In the meantime, the best service which can be done by those committed to the ideals I set out at Bruges — of freely cooperating nation states which relish free enterprise and welcome free trade — is to gather together all those politicians, jurists, economists, writers and commentators from the different European states to relaunch a movement for transatlantic cooperation including a wider Europe and the Americas. As I urged at the end of the Bruges speech:
76
Patrick Messerlin, ‘Why such Blindness? European Union Trade Policy at the Crossroads’, in
77
For example, in the Cohn-Bendit case (1978), 1 CMLR 543, where the
78
I am indebted to Martin Howe both for these suggestions, made in his pamphlet