On July 31, 1961, Parliament was informed by the Conservative cabinet of Harold Macmillan that Britain would seek entry into the European Community. Though having only formally existed for three and a half years, the EC had already shown itself to be a viable project. Britain made it's ill-fated first application to the Community after having made the mistake of not signing onto the Treaty of Rome in the first place.
But one must question Britain's motives for joining the Community, and decide if they were mostly economic or political. It can be illustrated that political motives were most prevalent on all sides, although the whole matter was portrayed as an economic issue to the British public at large. One must first deal with the economic criteria for EC entry, then examine the more important political aspects of the decision to enter the EC: the Anglo-American relationship, the Commonwealth, and Britain's domestic problems.
In examining the economic reasons behind the first British application, it is necessary to investigate the failure of EFTA versus the success of the EC, the currents of trade, and the poor health of the British economy.
The much-ballyhooed Plan G, which went on to become the European Free Trade Area
(EFTA), signed in Stockholm in November 1959, was Britain's hopeful answer to the EC. It
met the criteria for cooperation that it wished, and it was a dominant partner in the
enterprise. EFTA was designed to break down tariffs between various European countries; it
did not include a common external tariff, as the EC did, nor was there any supranational
body to run it. To boot, agriculture was exempted from the free trade. In effect, it was a
...the British government had bound itself to an economically inferior grouping, which lacked any political cohesion. The EFTA connection became increasingly embarrassing as its members failed to keep in step with the EEC acceleration of tariff reductions... (footnote 1)
The EC's internal tariffs had been cut by 40 percent by the beginning of 1961, and it was in the midst of "harmonizing" its external tariffs. (footnote 2) The market which EFTA encompassed was small, and the tariffs between EFTA members were already minimal. As such, it was of little use to Britain.
Currents of trade were definitely undergoing a noticeable shift at the time. Britain had for some time upheld what was called an Overseas Sterling Area, which encompassed the empire and the Commonwealth. It had been put in place following the breakup of the international financial system in 1931, when the world had broken up into mercantilist trading blocs. It accompanied the Imperial Preference system. What the OSA entailed was a commonly held gold reserve and a common monetary unit, the British pound sterling. Britain was in a position to control the supply of money, and thus trade, to a good portion of the world. The arrangement in general was beneficial to all parties: Britain received cheap food and raw materials; and the Empire and Commonwealth got inexpensive industrial goods. But this also made it more difficult to trade outside of the area, because they had to change currencies, and had much less control.
The external trade of the UK in the 1950's well reflected this situation. "Britain had more trade... with the Commonwealth... than with the whole of Western Europe right through until 1962." (footnote 3) Economists began to realize this as a cause of many of Britain's economic problems in the late fifties, since it was in a time when "the fastest growth in world trade was between industrialized states." (footnote 4) Britain's trade was gradually moving towards Europe, but being denied access to the EC would hinder that growth. To refute shifting trade as a major factor in the decision to enter, note that it would undoubtedly hurt or destroy the OSA and the preferences, causing at least short-term economic dislocation.
Britain's economy at the time was in poor shape. In 1960, Great Britain had its worst balance of payments deficit for a decade. Taking into account capital payments, the deficit amounted to 450 million pounds. (footnote 5) The imbalance was a chronic problem faced by Britain, along with a low growth rate, and general stagflation. To top it off, Britain was ravaged by a Sterling crisis in 1961.
Many saw solutions to Britain's economic doldrums in her entry. Sir Frank Lee of the Treasury advised that entry would provide "British industry a much-needed competitive impetus". (footnote 6) Other offerings included economies of scale, technological cooperation, and an increased market.
Britain's decision to apply for entry to the EC is best understood, however, not from an economic standpoint, but from a political one. This may be depicted most thoroughly by considering the Anglo-American `special relationship', the Commonwealth, and domestic politics.
Although the world recognized two global powers in the post-war period, the UK insisted that it was one as well. Its wishes to be treated as such were dashed most specifically in 1956, as a result of the Suez crisis. Britain and France seized control of the canal from Egypt, in direct violation of international law. World opinion was resoundingly hostile, and the US intervened. Making a show of force in the region, and then instigating a run on the pound, the Americans made the British back down and retreat.
In April of 1960, Britain canceled the Blue Streak missile program, ending her attempt to develop a wholly independent nuclear force. Macmillan's hopes of being the mastermind of an East-West dtente at the turn of the decade were shattered by the U2 incident and the failure of the 1960 conference he had orchestrated in Paris.
It was becoming obvious that the US either had a different interpretation of the
`special relationship' or simply wanted to deny it altogether. (footnote 7) Originally one
of the reasons Britain had cited as a reason for not joining the EC, the relationship
developed into a prime reason in favor of entry. On visiting London in 1959, Douglas
Dillon, the American Under-Secretary of State, frankly expressed to Macmillan
that the US government would continue to support the EEC for political reasons whereas the EFTA was regarded as a purely economic grouping which involved considerable discrimination against the US. (footnote 8)
Joining the EC then seemed the only possibility of maintaining or improving the relationship. If perhaps Britain could join the EC and become a leader of the grouping, then she might regain her status with the US. The US hoped that British membership "would strengthen the EC against the internal threat of German revanchism and the external threat of communism." In addition, the Americans believed that Britain would be able to steer the EC towards more liberal trading policies, which would helped to correct the US balance of payments deficit. (footnote 9) As an outsider, however, her future would be one of isolation from both Europe and the US.
The status of the Commonwealth was a second important political motivator of Britain's
decision to enter the EC. The Commonwealth was originally made up mostly of emigrated
Britons; there was a socio-cultural link which, above most other ties, kept the Dominions
tied to Britain and to each other, but it quickly eroded. The affection for the
Commonwealth as a socio-cultural unit was widespread in the UK. It
gave a continued extra-European flavor to the national consciousness even when the bases of its political power had gone.... it helped obfuscate the realities... (footnote 10)
By the 1960's, it had changed dramatically. The post-war era saw the granting of independence to numerous Third World countries, most of whom agreed to remain within the Commonwealth. This significantly modified the composition of the group by adding a large and growing non-white populace. There was also a much more anti-imperialist sentiment amongst the new arrivals, particularly India, whose ambitious leader, Nehru, would join Nkrumah, the leader of Ghana, in founding the Non-Aligned Movement (NAM).
Following the Suez crisis, Britain's prestige and influence within the Commonwealth deteriorated rapidly, with most of the members denouncing the UK for its actions in one way or another. Its position was to be further hurt by the debate over South Africa's expulsion from the Commonwealth in the early 1960's.
Thus did the British people begin to slowly yield to the concept that the Commonwealth no longer belonged to them. Having seen it transformed from a "white man's club into a multi-racial group," a good many Tories turned away with disdain. (footnote 11) Thus was the body politic less resistant to an effectual distancing from the Commonwealth.
Members of the Commonwealth were consulted before the application was made, and their interests were dealt with to a certain extent in the negotiations that followed. But it was peripheral to the more important goal of joining the EC, and Britain's already low status in the Commonwealth sunk even further.
Finally, Domestic politics weighed rather heavily on the decision to apply for
membership. Note that the Treasury
was increasingly anxious that ministers should not choose accession to the EC as an easy escape route to avoid implementing any unpopular but necessary domestic measures to cure what was seen as the British economic disease of perpetually recurring stagflationary periods. (footnote 12)
This was precisely what the government hoped to do. It was definitely preferable to shift responsibility from London to Brussels for "the inevitable, hopefully temporary discomforts which would accompany Common Market membership." (footnote 13) Decisions on how to go about the modernization and expansion of the British economy could be forced upon the EC, taking touchy domestic political issues off of the shoulders of the government. The EC could, in this way, make a perfect scapegoat for domestic ills which would otherwise be taken out on the government at the ballot box.
Entry to the EC provided a differentiation from the Labor party at a time when the two parties were converging on the center of British politics, becoming increasingly similar. As an issue, it might give a leg up to the Tories in the approaching General Election in 1963-4.
The largest manufacturers and industrial companies tended to be in favor of the application, and a good portion of the smaller businesses were following their lead. A startling example is that of the cotton textile industry, which, though usually highly protectionist, was whole-heartedly in favor of entry to the EC. It believed that the high tariffs in the Community on textile imports would save it against the massive tide of cheap global textiles. The British Textile Action Group even met with the textile leaders of the Common Market and "advised them to oppose British entry unless Her Majesty's Government agreed to full protective textile tariffs." (footnote 14) In this manner, by simply attempting to enter the EC, the Tories had lined up major support among domestic industry.
A Cabinet directive issued on June 22, 1961 found that "the most effective way of securing our political objectives in the world, and of averting the dangers of continued division in Europe which we foresee, lies in full United Kingdom membership of the EEC." (footnote 15) Whether or not the statement was true, it belied the true motives of the administration.
In applying for membership, Harold Macmillan was proving to the pro-Europeans in Britain that he intended to take Britain into the Community, while sidestepping the issue of the Commonwealth in order to keep the anti-Europeans at bay. If the application failed, the pro- forces would know that he had pressed for it, and the political consequences would be easier to manage for him than a prolonged row over Britain's European policy. (footnote 16)
In conclusion, though the economic situation appears to be important in Tory decision making, it can be seen more clearly to hinge upon politics. The administration was mostly acting upon the desire to save the special relationship with the US, to assuage and avoid the Commonwealth, and to find a way out of numerous domestic political difficulties.
There was also a grander political vision involved in the decision. Macmillan said that
it was in the interest of the Western World as a whole to create a truly united Europe. If there was an economic price to be paid in the short run by going in, nevertheless, a much higher forfeit would have to be paid in the long run by our staying out. (footnote 17)
1"To Join or Not to Join", 146
2Britannia Overruled , 219
3Britain and European Integration Since 1945, 46
4An Awkward Partner: Britain and The European Community, 28-9
5Steering the Economy: The Role of the Treasury , 157
6 The Treasury Under the Tories 1951-1964 , 213
7 Western Europe Since 1945: A Poltical History , 211
8 "To Join or Not to Join", 152-3
9The Politics of the Anglo-American Economic Special Relationship , 187
10 The Realities Behind Diplomacy, 336
11The Realities Behind Diplomacy, 335
12"To Join or Not to Join", 145
13 Britain Faces Europe , 75
14 British Politics and European Unity , 101-2
15At the End of the Day , 134
16"To Join or Not to Join", 154-5
17 At the End of the Day , 6
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The Treasury Under the Tories 1951-1964 . Harmonds-worth: Penguin Books, Ltd., 1964.
Western Europe Since 1945: A Political History . Essex: Longman Group Ltd., 1991.
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