the free trade proposals a symposium: the implications of the proposed european free trade area
TRANSCRIPT
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INSTITUTE of STATISTICSOxford
BuUetir Vol. 19 February 1957 No. 1
THE FREE TRADE PROPOSALSA SYMPOSIUMEDITORIAL NOTE
This issue contains a series of articles about the proposal that Britain shouldparticipate in the projected Free Trade Area for Europe. Mr. J. Black wasinvited to write an introductory article bringing together such readily availablestatistics as might provide a background against which the problems raisedcould be put into perspective. His article was then circulated to a number ofleading economists who were asked to comment on it and to discuss any specificaspects of the proposals which seemed to them of especial importance.
THE IMPLICATIONS OF THE PROPOSED EUROPEANFREE TRADE AREA
By J. BLACK
The purpose of this article is to provide some of the facts relevant to theimplications for Great Britain of the proposed European Free Trade Area.The proposal under discussion is that the six 'Schumann Plan' countries, whichalready belong to the European Coal and Steel Community and operate a'Common Market' for these products, should gradually over the next i 2 to 15years abolish tariffs on all trade among themselves, and have a commontariff against the goods of non-members. This plan would have the effect ofconfronting other countries, including Great Britain, with a choice betweenentering the Customs Union, making some form of special arrangement withit, or having their goods put at a disadvantage, relatively to the goods of anymember, in selling to other members of the common market. The BritishGovernment has declared itself in favour of the second alternative, and atpresent favours the setting up of a ' Free Trade Area' between the countriesbelonging to the customs union and Britain, by which Britain wouldgradually abolish tariffs on imports of non-agricultural goods from thecustoms union countries, which would do the same in return, but wouldretain her present tariff structure as regards trade with non-members, sothat Britain's present preferential arrangements, which favour trade with theCommonwealth countries, could be retained.
Although the British Government is tt present in faxpur of excludingagricultural commodities from the scope of the free trade area, it remains to
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4 THE BULLETINbe seen whether this will prove acceptable either to the other members, orto the members of the General Agreement on Tariffs and Trade. However,as Britain is not the only country whose agriculturalists are likely to jib atfree trade it seems realistic to discuss the proposals on the assumption thatthe British Government's proposals willin some form and for someconsiderationbe accepted.
It is uncertain, if the customs union and associated free trade area areset up, how many countries would wish to join such a system, whether asfull members of the customs union, or by arrangements similar to Britain'sThus in considering the advantages and disadvantages, we cannot be certainwhat the size of the new group would be; all the information given below istherefore related to two possibilities, which may perhaps be regarded as thelimits of what could happen. The smallest possible group of memberswould be the six Schumann Plan countries, which at present form theEuropean Coal and Steel Community; i.e. France, Western Germany,Italy, the Netherlands, Belgium and Luxembourg. A second possibilitywould be these plus Great Britain; but even if Britain did not join some otherEuropean countries, particularly Austria, Switzerland and Denmark, mightwell join, and if Britain did join then other countries would be encouragedto do so, notably Norway and Sweden. Thus we take as the maximumpossible group, for purposes of argument, the whole of the Europeanmembership of the O.E.E.C., plus Finland, but excluding Turkey. Somemembers of the group thus defined might well feel unable to join, e.g. Greeceor Portugal, but their share in O.E.E.C. trade and production is small.Though non-European countries might be invited to join, the prospects oftheir doing so appear to be small.
The theoretical arguments in favour of the new common market all relyon various economies it would make possible. These arise from three maincauses; the first is the possibility of increased productive efficiency in caseswhere the existing national markets do not allow of production on the opti-mum scale, or where this would be possible within national markets only atthe ost of a degree of standardisation unacceptable to consumers. Thesecond is a greater utilisation of differences in comparative costs, by havinggreater international specialisation, and locating production of each type ofgood where it is most economical, though here the proposed exclusion ofagricultural products would remove one of the greatest potential sources ofbenefit. The third is the effect of increased competition in stimulatinggreater efficiency on the part of management and labour; here the existenceof tariffs may not be the most important source of restrictionism. Some ofthe main arguments against Britain joining a European Free Trade Area aregiven below; but before going on to these let us consider some of the factsrelevant to the arguments in favour of the scheme.
To develop an adequate factual background to all these arguments wouldnecessitate a series of detailed studies of particular industries and an attemptto forecast in which of the ways mentioned above a greater measure of
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IMPLICATIONS OF THE PROPOSED EUROPEAN FREE TRADE AREA 5
freedom of trade would affect them, given the human and natural resourcesinvolved, their forms of organisation, etc. Such specialist studies cannot beimprovised, so we must perforce be content with certain macro-economicinformation concerning both the size of the proposed European market, andthe present trade in various commodity groups. While it cannot be assumedthat the benefits of freer trade within any area increase in direct proportionto its size, by any given measure, it would appear reasonable to supposethat, for some industries at least, the benefits are an increasing function ofthe size of the new European market, and to compare it with the existingindustrial giants, the U.S.A. and the U.S.S.R.
The total population of the ' Schumann Plan' Countries is i6x million:that of Britain is i million, and that of the rest of Western Europe a further51 million (including Denmark, Norway, Sweden and Finland, with imillion between them, and Austria, Eire, Greece, Iceland, Portugal andSwitzerland with 3' million between them). Thus if Britain or the otherWestern European Countries joined, the population of the Free Trade Areawould be 212 million, or if both joined, 263 million This compares withi66 million in the U.S.A. and 215 million in the U.S.SJ. Since agriculturalproducts are excluded from the proposals, it is also interesting to comparethe labour force in Mining and Manufacturing, in the various countries.Thus in Britain, in 1951, of a total force of 23.2 million, 9.5 million or 4! percent were in these occupations,1 whereas in the Schumann Plan Countries,of a total labour force of 69.5 million, 21.3 million or 30.7 per cent workedin mining or manufacturing. In the rest of Western Europe, of a totallabour force of i8.6 million, 4.9 million or 26.5 per cent worked in thesegroups. Thus if all the Western European countries were to join a FreeTrade Area, it would contain a total labour force of over j i i million with35.7 million or 32 per cent in mining and manufacturing, and Britain wouldhave access to a market containing 4.8 times her own total labour force, and3 times her labour force employed in mining and manufacturing. Thiscompares with 6o million total labour force, of whom i 7.1 million, or 28.5per cent worked in mining or manufacturing in the United States in 1951.
Not all of the countries involved are equally rich; the size of the marketthey offer is governed by their total national incomes. Their Gross NationalProducts may be compared (using official exchange rates); in 1954 Britain'sG.N.P. was 17,900 mn., the total G.N.P. of the Schumann Plan Countrieswere 40,840 mn., and those for the rest of Western Europe 9,800 mn.;thus the combined G.N.P.'s of the Free Trade Area, if Britain joined, wouldbe 68 billion or nearly four times that of Britain alone. The United StatesG.N.P. in 1954 was 129 billion, or much larger than the largest possibleEuropean marketthough it is hoped that greater co-operation between theEuropean countries would enable them to increase the rate of growth oftheir total production.
1 In 1955, of a total working force of 23,912,000, 10.068,000 or 42 per cent were inMining and Quarrying and Manufacturing.
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Sources. All except Italy; United Nations Demographic Yearbook for 1955, Table 16.Great Britain includes Northern Ireland. Western Germany includes W. Berlin and theSaar. The last column shows producers in Mining and Quarrying and Manufacturing asa percentage of total economically active population. For Italy the figure used for Manu-facturing is that given for 'Industry' in the Oxford Economic Atlas, Index. p. 84. Formining the figures for hard-coal and iron ore arise from the 41k General Report of tiseE.0 S.C. (the true figures must be higher than this).
It is not possible to treat every industry individually, but the figures forthe production of coal, steel, and electric power in the various Europeancountries tell the same story about the size of the Common Market. In x.the six 'Schumann Plan' countries produced 242 mn. metric tons of coal,and Britain produced 228 mn. tons, making a total of 470 mn. tons, or 32per cent of total world production. For comparison, the United Statesproduced 380 mn. tons (z per cent of world production) and the SovietUnion 259 mn. tons (r'+ per cent of the world total).
AreaDate ofCensusData
TotalEcon.
Active pop.
Mining Manu-6' Quar- facturing
vying
Man. &M. & Q. Percent-age of
total
1951 23,181 865 8,646 9,511 41.1Git Britain ...... 1955 23,912 862 9,206 10,068 42.1Scbtlm2nn Pisa Countries
W. Germany ...... 1950 21,379 669 7,193 7,862 36.8France ......... 1946 20.520 376 4,518 4,894 23.8Italy .......... 1947 20.080 (13) 5.977 5,990 29.8Belgium & Luxembourg 1947 3,616 195 1,351 1,546 42.7Netherlands ...... 1947 3,866 52 925 977 25.2
Total 69,461 1,305 19,964 21.269 30.7
ScandinaviaDenmark 1950 2,063 4 539 543 26.3Finland ......... 1950 1,984 6 411 417 21.0Norway ......... 1950 1,388 9 358 367 26.4Sweden ...... 1950 3,105 16 972 I 988 31.8
Total 8,540 35 2,280 2,315 27.3Other Western European
CountriesAustria ......... 1951 3,361 51 897 948 28.2Eire .........1951 1,272 10 193 203 16.0Portugal 1950 3.288 26 620 646 19.7Switzerland ....... 1950 2,156 6 823 829 38.4Total 10.077 93 2,533 2,626 26.1
Total of W. Europe includ-ing U.K. (1951) ... 111,259 2,298 33,423 35,721 32.1
British (1951) Share ofTotal W. Europe % 20.8% 37.7% 25.8% 26.6%
Compare U.S.A. includingAlaska 1950 60,104 970 16,118 17,088 28.3
6 THE BULLETINTABLE I
Working Population in Mining and ManufacturingNoie. The totals for groups of countries are figures for different dates, and can thus
be used to indicate orders of. magnitude only. Figures in 'OOOs.
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Population of other major areas in 1954U.S.A. (including Alaska) 162,617U.S.S.R.......................214,5O0 T 787Eastern Europe (excluding U.S.S.R. and Yugoslavia) 93,371 j oto
* Excluding Switzerland.Sources: Population, U.N. Demographic Yearbook for 1955, Section 1. Western Germany
includes W. Berlin and the Saar. G.N.P., E.C.E. Economic Survey of Europe in 1955,pp. 57 et seq. (Belgian figures adjusted to allow for Luxembourg), except Eire and Iceland.which are taken from 7th Report of the O.E.E.C,, Feb. 1956. However, for an alternativeand lower estimate of Soviet population, see the article by A. Nove in this issue.
In steel the situation is similar: in 1955 the Schumann Plan countriesproduced mn. tons of crude steel, and Britain produced 19 mn. tons,making a total of 63 mn. tons, or z8 per cent of the world's total steel pro-duction. This compares with 8o mn. tons in the United States (36 per centof the world total), and 41 mn. tons in the U.S.S.R. (r8 per cent of thetotal).
In 1953 Britain generated 66 billion kilowatt-hours of electric power; theSchumann Plan countries generated 153 billion, and the rest of WesternEurope 76 billion, making a total of 295 billion for Western Europe as awhole. This can be compared with 133 billion in the U.S.S.R. and, 699billion kilowatt-hours in the U.S.A. plus Canada (in '955).
Country or Group Population(000)
G.N.P.(mn) G.N.P.( per head)U.K. 51,200 17,900 350
Schumann Plan CountriesWestern Germany ......... 50,690 12,400 245France............ 43.000 15,700 365Italy ............ 47.665 7,040 148Belgium and Luxembourg 9,125 3,200 351Netherlands ... 10,615 2,500 236
Total ... ... 161,095 40,840 253
ScandinaviaDensnsrk ............ 4,406 1,420 322Finland ......... 4,190 1,290 308Norway ............ 3,392 1,140 336Sweden .......... 7,214 2,900 402
Total 19,202 6,750 351
Rest of W. EuropeAustria 6,969 1,200 172Eire ............ 2,993 513 171Greece ......... 7,901 660 84Portugal 8,693 615 71Switzerland ............ 4,923 N.A. N.A.Iceland 154 63 409
Total ............ 31,633 3,051 114m
Total of W. Europe including U.K. 263,130 68,541* 266*
IMPLICATIONS OF THE PROPOSED EUROPEAN FREE TRADE AREA 7TABLE II
Population and Gross National Product of European CountriesNote. 1954 Population in 'OOOs. Gross National Product in 1954, at current prices and
in Sterling converting at official Exchange rates.
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8 THE BULLETINTABLE III
Western Europe's Share in World Production of Coal and SteelMn. metric tons, and per cent of total world output
Source: 4th General Report of the Activities of the Community, European Coal and SteelCommunity, 1956. pp. 79 (Coal) and 52 (Steel). The latest complete year's figures are used.The totals for all Western Europe would be slightly larger than those shown for the E.C.S.C.plus Great Britain, as the output of Sweden, Austria, etc.. is not shown here.
TABLE IVProduction of Electric Power in 1953
000 mn kilowatt-hours and per cent of Western European Total
Source: E.C.E. Economic Survey of Europe in 1954, p. 208.
Thus, taking three of the basic industries essential for a modern economy,membership of the European Free Trade Area would mean that Britainformed part of a market over twice her present size measured in terms ofcoal, 3 times in terms of steel production, and 4 times her present sizemeasured in terms of electric power generated.
In considering the possibilities of benefits from freer trade withinWestern Europe we should first see how much trade is carried on even withthe present limitations, which include not only tariffs but quantitativecontrols, though these have been greatly reduced since 190 under theO.E.E.C.'s 'trade liberalisation' programme.
o,nGreat Britain 66.0 22.4Schumann Plan Countries Other Western European Countries
W.. Germany and Saar 59.5 Austria 8.8France 41.3 Eire 1.3Itsly 32.6 Greece 0.9Belgium and Luxg. 10.7 Portugal 1.4Netherlands 9.1 Switzerland 13.5
Total 153.2 52.0 Total ... ... ... 25.9 S.S
Scandinavia Total Western Europe .. 294.9 1(X)Denmark 2.4Finland 5.4Norway 19.6 Compare total U.S.S.R.... 133.0Sweden 22.4
Tntal 49.8 16.9
Country Coal (1954)mn. tons
Steel (1955>mn. tons
World Total 1,480 100.0 223 100.0Schumann Plan Countries(=Coal and Steel Community) ......241.7 16.3 43.8 19.7Great Britain ............227.9 15.4 18.8 8.4S.P. plus Great Britain .. 469.6 31.7 62.6 28.1U.S.A. 380.2 25.7 80.1 36.0U.S.S.R. 259.0 17.5 41.0 18.4
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Source: O.E.E.C. 7/h Annual Report. Feb. 1956, p. 67.* Indicates target not reached.
TABLE VIExports of Goods and Services per capita and as per cent of G.N.P. in 1954
Source: E.C.F.. Economic Survey of Europe in 1955, pp. 57 et seq., cxccpt for Eire andIceland for which O.E.E.C. 7th Annual Repe Population and G.N.P. as in Table II.
Country i'ood anafoodstuffs
Rawmaterials
Manufacturedproducts
Total
Target ... >75 >75 >75 >90U.K.......... 89.8 83.6 78.0 84.8*W Germany 81.3 98.0 95.6 91.3France ......... 63.2* 95.7 644* 775*Italy 97.6 100.0 98.9 99.1Benelux 69.0* 98.6 91.8 91.1
CountryExports of goods
and servicesExports of goods
and servicesper capita
Exports of goodsand servicesas percent of
G.N.P.Great Britain 4,200 82 23. 5Schumann Plan CountriesW. Germany ......... 2,690 53 21.7France ............ 2,380 55 15.2
Italy ............ 810 17 11.5Belgium and Lux....... 1,036 114 32.4Netherlands 1,280 120 51.2
Total ......... 8,196 51 20.2Scandinavia
Denmark ......... 460 104 32.4Finland 285 68 22.1Norway ......... 435 128 38.2Sweden ......... 622 86 21.4
Total ......... 1,802 94 26.7Other CountriesAustria ............ 286 41 23.8
Eire ............ 176 59 34.3Greece ......... 83 10.5 12.6Iceland ............ 28.5 185 45.2Portugal ......... 112 13 18.2
Total ......... 685.5 26 22.5Tf1 W ;,,-ii a is ces ce
IMPLICATIONS OF THE PROPOSED EUROPEAN FREE TRADE AREA 9TABLE V
Progress in Trade Liberalition by Britain and the Schumann Plan Counlresup to 31st December, 1955
Note. Figures refer to percentage of imports from O.E.E.C. members freed from quan-titative controls, average of types of goods currently under private trading, but weightedby their importance in trade in 1948.
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10 THE BULLETIN
We should also consider the importance of international trade to thevarious members of the Free Trade Area. Comparing total exports with grossnational product for various countries in 1954, we find that exports (includingexports of services as well as goods) in Britain formed 23 per cent or theG.N.P., or slightly more than the average for Western Europe as a whole,which was 2I per cent. For Western Germany, France and Italy the pro-portion of exports to G.N.P. was lower than in Britain, whereas for Belgiumand Luxembourg and the Netherlands it was higher. Within the SchumannPlan group the proportion ranged from t t per cent in Italy to r per centin the Netherlands.
It is also of interest to see how much of the trade of the countries ofWestern Europe was done with each other. Using an average of the propor-lions of their exports in 1951, 1953 and 1955 going to Great Britain, to theSchumann Plan Countries, and to the whole of Western Europe, includingthese and other countries, the results are as follows: of the SchumannPlan Countries, the Netherlands had the highest percentage of exportsgoing to Great Britain (I3 per cent), and Western Germany had the lowest(4 per cent). The Schumann Plan countries sent between I9 per cent(Fisance) and 39 per cent (Belgium and Luxembourg) to each other, whereasonly ta per cent of Britain's total exports went to Schumann Plan countries.The proportion of total exports going to all Western European countries,including Britain, varied among Schumann Plan countries from 4I. per centin France to 66 per cent in the Netherlands, while Britain sold 30 per centof her total exports to all Western European countries. This compares with45 per cent of British exports in the same years which went to the SterlingArea (excluding Eire).
TABLE VIIPercentage of British Exports going to Various Regions
Noie. Exports include re-exports. Eire and Iceland are included in W. Europe and
Source: U.N. Statistical Office. Commodity Trade Siaiistics (Series D. Vol. III no. 4 andVol. V no. 4). Summary Tables for 1953 and 1955. E.C.E. Economic Survey of Europe sincethe war, 1954 Table LV, pp. 300 et seq. for 1951. 1951 proportion shows shares of exports toeach region valued at 1948 prices: for Areas see notes to Table VIII.
The sources of imports show similar results. Here, on an average of1953 and Britain obtained 27 per cent of her imports from WesternEurope as a whole, and i i per cent from the Schumann Plan Countries;this compares with 39 per cent from the Sterling Area and 20 per cent fromthe Dollar Area. The Schumann Plan Countries obtained 6 per cent of theirtotal imports from Britain, and 47 per cent from Western Europe (including
excluded from Sterling Area.Region 1951 1953 1955 Average
Sterling Area 44.2 44.9 45.4 44.8Dollar Area 11.6 14.4 13.3 13.1W. Europe 28.3 30.8 30.9 30.0Other Countries 15.9 9.9 10.4 12.1
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IMPLICATIONS OF THE PROPOSED EUROPEAN FREE TRADE AREA I I
both Great Britain and each other); again the proportions taken from Britainranged from 4 per cent (Germany) to 9 per cent (the Netherlands), and theproportion from Western Europe as a whole from 31 per cent (France) to8 per cent (Belgium and Luxembourg).
In considering the possible effects on British industry of entry into aFree Trade Area, we also need to examine the composition of trade betweenBritain and Europe. In 195 1 the Schumann Plan Countries took ro per centof Britain's total exports, and the whole of Western Europe, including these,took z8 per cent of the total. A tenth of Britain's exports, both to the Schu-mann Plan countries and to the whole of Western Europe consisted of rawmaterials, which were very largely the produce of Commonwealth countriesshipped to Britain and re-exported. The same can be said of much of the6 per cent of her exports to the Schumann Plan Countries which consistedof food, drink and tobacco.
Exports of goods which were actually produced in Britain (though almostall of her exports have some imported materials in them, directly or indirectly)can be classified as follows, the percentages referring to proportions ofmanufactured exports, i.e. total exports minus raw materials, food, drink andtobacco, and 'unspecified'. The largest group was machinery, forming22 per cent of her home-produced exports to all areasas of British exportsto Western Europe as a whole and to the Sterling Area. The SchumannPlan countries, however, took a relatively large proportion (26 per cent) ofBritish exports to them in machinery.2
The next largest group was textiles, with zi per cent of the total to allareas; the whole of Western Europe took slightly less from this group (zoper cent), and within Western Europe the Schumann Plan Countries tookonly 14 per cent in textiles; 22 per cent of British exports to the SterlingArea, on the other hand, consisted of textiles.
The third major group of exports was transport equipment and privatemotor vehicles. These accounted for zi per cent of total exports, but 24per cent of exports to Western Europe as a whole fell within this group,though it accounted for only 22 per cent of exports to the Schumann Plancountries; while the Sterling Area took 21 per cent from these groups. Thesefigures however cover a major difference between private cars and otherforms of transport equipment; private cars accounted for a quarter of thisgroup, in total exports, at per cent of total exports, but whereas theSterling Area took 5 per cent of British exports to it in cars, and only15 per cent in other transport equipment, Western Europe took only 3per cent in cars, but 21 per cent in other transport equipment.
The other groups of exports were metals and metal manufactures, with13 per cent of the total, chemicals with 8 per cent and 'other manufactures'
1 1951 is in many ways a bad year to choose since German recovery from the Warwas far from complete, but it is the latest year for which the author has been able to obtainfigures classified by suitable commodity groups and destinations.
See the notes to Table XI for the limitations on the significance of these figures.
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TABL
E V
III
Expo
rts o
f Gre
at B
rifa
in a
nd th
e Sc
hum
ann
Plan
Cou
ntrie
s, by
Des
tinat
ions
Sect
ion
I-MIll
ion
$ (Se
e Note
s)
Expo
rting
Cou
ntry
Tota
l Exp
orts
To W
este
rn E
urop
e
1938
1948
1951
1953
1955
1938
1948
1951
1953
1955
Gre
at B
ritai
n............
5,18
46,
377
8,30
97,
230
8,13
51,
618
1,87
02,
350
2,22
62,
512
Wes
tern
Ger
man
y ...
......
...4,
409
701
4,03
2'4,
412
6,13
42,
681
615
2,60
82,
900
3,97
0Fr
ance
...............
2,27
92,
071
4,35
54,
019
4,79
71,
157
811
1,59
11,
655
2,21
2Ita
ly...............
1,35
81,
068
1,71
91,
488
1,85
757
444
494
178
51,
054
Bel
gium
and
Lux
embo
urg
1,85
61,
684
2,45
82,
259
2,77
91,
202
1,03
91,
536
1,41
21,
840
Net
herla
nds
............
1,65
81,
004
2,46
62,
121
2,68
71,
136
686
1,67
51,
344
1,78
6
Tota
l Sch
uman
n Pl
an......... 11
,561
6,52
715
,030
14,2
9918
,254
6,75
03,
595
8,35
28,
096
10,8
62
Sect
ion
II.Pe
rcen
tage
of E
xpor
ts to
all
Des
tinat
ions
Gre
at B
ritai
n............
100.
010
0.0
100.
010
0.0
100.
031
.229
.328
.330
.830
.9
Wes
tern
Ger
man
y ...
......
... 1
00.0
100.
010
0.0
100.
010
0.0
60.8
87.9
64.7
65.8
64.8
Fran
ce............... 10
0.0
100.
010
0.0
100.
010
0.0
50.7
39.2
36.5
41.2
46.1
Italy
.....
......
......
. 100
.010
0.0
100.
010
0.0
100.
042
.341
.654
.852
.956
.7B
elgi
um a
nd L
uxem
bour
g10
0.0
100.
010
0.0
100.
010
0.0
64.8
61.7
62.5
62.5
66.3
Net
herla
nds
............
100.
010
0.0
100.
010
0.0
100.
068
.568
.467
.963
.466
.4
Tota
l Sch
uman
n Pl
an.........
100.
010
0.0
100.
010
0.0
100.
058
.455
.155
.656
.659
.5
-
Sect
ion
i-Mill
ion
$
Sect
ion
II. P
erce
ntag
e of
Exp
orts
to a
ll D
estin
atio
ns
Sour
ces.
1938
. 194
8 an
d 19
51 fr
om E
.C.E
. Eco
nom
ic S
urve
y of
Eur
ope s
ince
the W
ar, 1
954,
Tab
le L
V, p
. 300
et se
q. T
hese
figu
res a
rein
194
8 do
llars
; the
figu
res f
or 1
938
and
1951
will
thus
und
ersta
te th
e tru
e sha
re o
f exp
orts
to an
y ar
ea if
the a
vera
ge p
rice o
fthe
se w
as h
ighe
rin
193
8 or
195
1 th
an th
e ave
rage
pric
e of a
ll ex
ports
, rel
ativ
e to
1948
; but
as th
e com
posit
ion
of ex
ports
to v
ario
us d
estin
atio
ns w
asbr
oadl
y sim
ilar (
see ta
bles X
to X
II be
low) t
his so
urce o
f erro
r sho
uld no
t be s
eriou
s.Fo
r 195
3 an
d 19
55 th
e fig
ures
are t
aken
from
Uni
ted
Nat
ions
Com
mod
ity T
rade
Sta
tistic
s, Ja
n-D
ec. o
f the
se y
ears
, sum
mar
y ta
bles
.(U
.N. S
tatist
ical P
apers
, Seri
es D,
Vol.
III N
o. 4 (
1953
) and
Vol.
V N
o. 4 (
1955
). The
se fig
ures a
re in
curre
nt do
llars:
thus
the t
able
abov
e ca
nnot
be
used
to m
easu
re th
e gr
owth
of t
rade
to v
ario
us d
estin
atio
ns. T
he S
chum
ann
Plan
Cou
ntrie
s' to
tal e
xpor
ts in
clud
eex
ports
to e
ach
othe
r. To
tal e
xpor
ts to
Wes
tern
Eur
ope
incl
ude
expo
rts to
Gre
at B
ritai
n, to
the
Schu
man
n Pl
an C
ount
ries,
and
too
ther
Wes
tern
Eur
opea
n Co
untri
es' w
hich
com
prise
s Aus
tria,
Den
mar
k, E
ire, F
inla
nd, G
reec
e, Ic
elan
d, N
orw
ay, P
ortu
gal,
Spai
n, S
wed
en,
Switz
erla
nd, T
urke
y an
d Y
ugos
lavi
a.
C) o o 'u tu o ru ru o ru ru ro ru ru ru z
Expo
rting
Cou
ntry
To S
chum
ann
Plan
To G
reat
Brit
ain
To O
ther
Wes
tern
J.ur
Ope
1938
1948
1951
1953
1955
1938
1948
1951
1953
1955
1938
1948
1951
1953
1955
Gre
at B
ritai
n...
...
713
624
842
941
1,05
2 ---
-- 9U
.1,2
46 1
,508
1,2
851,
460
Wes
tern
Ger
man
y...... 1,
093
369
1,17
2' 1,
317
1,76
729
572
236
188
245
1,29
317
4 1,
201
1,39
5 1,
958
Fran
ce ..
......
....
582
374
674
747
1,17
027
515
437
021
735
330
028
354
869
168
9Ita
ly.............
309
123
369
297
436
7585
234
108
135
190
235
338
380
483
Bel
gium
and
Lux
embo
urg
...
717
522
849
867
1,24
025
715
224
417
617
922
836
644
336
942
1N
ethe
rland
s.........
551
320
878
765
1,02
939
014
441
122
833
219
522
238
635
142
5
Tota
l Sch
uman
n Pl
an...
3,25
2 1,
709
3,94
1 3,
993
5,64
21,
292
607
1,49
591
7 1,
244
2,20
61,
280
2,91
6 3,
186
3,97
6
Gre
at B
ritai
n ...
......
13.
89.
810
.113
.012
.9 --
--- 1
7.5
19.5
18.1
17.8
18.0
Wes
tern
Ger
man
y24
.852
.729
.129
.828
.86.
710
.25.
94.
34.
029
.324
.929
.831
.631
.9Fr
ance
...... 25
.618
.015
.418
.624
.412
.17.
58.
55.
47.
413
.213
.712
.617
.214
.4Ita
ly22
.811
.621
.520
.023
.55.
58.
013
.67.
37.
314
.022
.019
.725
.626
.0B
elgi
um a
nd L
uxem
bour
g38
.631
.034
.638
.444
.613
.99.
010
.07.
86.
412
.221
.718
.016
.315
.1N
ethe
rland
s33
.331
.935
.636
,038
.323
.514
.316
.710
.712
.411
.822
.115
.716
.515
.8
Tota
l Sch
uman
n Pl
an...
28.2
26.2
26.2
28.0
30.9
11.2
9.3
10.0
6.4
6.8
19.1
19.6
19.4
22.3
21.8
-
S.P. Countries = Schumann Plan Countries.O.W.E. = Other Western Europe.Notes. Imports from Great Britain, Eire and Iceland are included under Western
Europe and excluded from Sterling Area figures. Other Western Europe = Austria,Denmark, Eire, Finland, Iceland, Norway, Portugal, Spain, Sweden, Switzerland, Turkeyand Yugoslavia.
Source: U.N. Statistical Papers. Series D, Vol. III, No. 4(1953) and Vol. V, No.4 (1955),Commodity Trade Statistics, Summary Tables.
ImportingCountry
TotalWorld
Dollar Sterling West'nArea Area Europe
(exclg. (incig.Britain Britain6. Eire) & Eire)
S.F.Coun-tres
Britain O. WE. OFher
1953 $ mn $ mn mn S mn $ mn mn $ mn mnGreat Britain ...... 9,366 1,765 3,889 2,481 975 - 1,506 1,231Western Germany 3,809 645 451 1,993 956 154 883 720France .......... 4,166 486 913 1,230 667 191 372 1,537Italy ... ... .. 2,395 389 464 1,112 529 185 398 430Belgium & Luxembourg 2,423 372 237 1,393 934 219 240 421Netherlands ...... 2,354 324 215 1,343 882 221 240 472Total Schumann Plan 15,147 2,216 2,280 7,071 3,968 970 2,133 3,580
1955Great Britain ...... 10,881 2,348 4,105 3,031 1,351 - 1,680 1,397Western Germany 5,793 1,173 663 2,927 1,502 206 1,219 1,030France ......... 4,688 571 898 1,533 930 179 424 1,686Italy ... 2,705 467 518 1,232 646 144 442 488Belgium & Luxembourg 2,844 429 263 1,677 1,168 241 268 475Netherlands ...... 3,208 594 245 1,886 1,305 273 308 483Total Schumann Plan ... 19,238 3.234 2,587 9,255 5,551 1,043 2,661 4,162
f953 % % 0' 0/ 0/ % % 0f
Great Britain ...... 100 18.8 41.5 26.5 10.4 - 16.1 13.1Western Germany 100 16.9 11.8 52.3 25.1 4.0 23.2 18.9France ......... 100 11.7 21.9 29.5 16.0 4.6 8.9 36.9Italy ......... 100 16.2 19.4 46.5 22.1 7.7 16.6 18.0Belgium & Luxembourg 100 15.3 9.8 57.5 38.5 9.0 9.9 17.4Netherlands ...... 100 13.8 9.1 57.0 37.4 9.4 10.2 20.0Total Schumann Plan 100 14.6 15.0 46.6 26.2' 6.4 14.1 23.6
'955Great Britain ...... 100 21.6 37.8 27.9 12.4 - 15.5 12.8Western Germany 100 20.2 11.4 50.5 25.9 3.6 21.0 17.8France ...... 100 12.2 19.2 32.7 19.8 3.8 9.0 36.0Italy 100 17.3 19.1 45.6 23.9 5.3 16.3 18.0Belgium & Luxembourg 100 15.1 9.2 58.8 41.0 8.5 9.4 16.7Netherlands ...... 100 18.5 7.6 58.8 40.7 8.5 9.6 15.1
Total Schumann Plan ... 100 16.8 13.4 48.1 28.8 5.4 13.8 21.6
'4 THE BULLETINTABLE IX
Sources of Imports, 1953 and 1955
-
TABL
E X
Com
mod
ity C
ompo
sitio
n of
Brit
ish E
xpor
ts, 1
938,
194
8 an
d 19
5119
48 U
.S. $
mn.
S.P.
=Sch
uman
n Pl
an C
ount
ries;
O.W
.E.=
Oth
er W
este
rn E
urop
e; T
.W.E
.='fo
tal W
este
rn E
urop
e; S
.A.=
Ster
ling
Are
a; W
.T.=
Wor
ld T
otal
.So
urce
. E.C
.E. E
cono
mic
Sur
vey
of E
urop
e Si
nce
the
War
, Tab
le L
V, p
p. 3
00 e
i seq
.Sc
hum
ann
Plan
Cou
ntrie
s' fig
ure
incl
udes
expo
rts to
E. G
erm
any-
' Oth
er W
este
rn E
urop
e' co
mpr
ises A
ustri
a, D
enm
ark,
Eire
, Fin
land
, Gre
ece,
Icel
and,
Nor
way
, Por
tuga
l,Sp
ain,
Sw
eden
, Sw
itzer
land
, Tur
key
and
Yug
osla
via.
Ste
rling
Are
a ex
clud
es E
ire a
id Ic
elan
d.
Des
tinat
ion,
193
8D
estin
atio
n, 1
948
Des
tinat
ion
1951
Com
mod
ity G
roup
S.P.
OW
E. T
.W.E
. S.A
.W
.T.
SP. O
.W.E
. T.W
.E. S
.A.
W.T
.SP
. OW
E. T
.W.E
. S.A
.W
.T.
1. F
ood,
Drin
k &
Toba
cco
...
21.4
35.0
56.4
103.
236
9.7
38.4
54.4
92.8
108.
939
5.8
54.5
40.8
95.3
168.
650
6.7
2. R
aw M
ater
ials
277.
0 25
4.1
531.
127
.892
7.0
70.9
110.
918
1.8
27.2
361.
490
.413
2.2
222.
663
.149
9.4
3. M
etal
s & M
etal
Man
ufac
ture
s33
.769
.510
3.2
262.
554
6.0
76.3
164.
324
0.6
317.
981
7.8
77.8
150.
322
8.1
418.
792
9.3
4. M
achi
nery
...
59.3
68.5
127.
833
5.0
653.
512
4.1
226.
535
0.6
590.
5 1,
314.
616
9.2
249.
541
8.7
753.
4 1,
569.
05.
Per
sona
l Car
s1.
78.
09.
728
.851
.824
.527
.652
.110
2.6
224.
525
.842
.668
.419
0.4
358.
96.
Oth
er T
rans
port
Equi
pmen
t ...
20.7
49.3
70.0
144.
729
0.3
81.4
179.
826
1.2
283.
771
4.6
120.
927
3.5
394.
450
1.6
1,12
2.9
7. C
hem
ical
s...
18.0
33.7
51.7
100.
821
6.2
33.0
63.0
96.0
135.
633
7.0
51.0
85.9
136.
924
0.7
572.
38.
Tex
tiles
...
97.6
212
.330
9.8
525.
3 1,
476.
544
.517
3.3
217.
861
2.5
1,30
8.3
90.7
286.
037
6.7
757.
8 1,
513.
09.
Oth
er M
anu-
fact
ures
...
54.5
75.4
129.
922
1.0
533.
055
.014
0.7
195.
730
7.9
743.
410
8.8
161.
927
0.7
482.
3 1,
093.
0LO
. Uns
peci
fied
...
129.
099
.122
8.1
99.4
119.
676
.010
5.5
181.
394
.215
9.5
53.7
84.5
138.
210
2.0
145.
0
['otal
...... 71
2.9
904.
9 1,
617.
7 1,
848.
5 5,
183.
6 62
4.1
1,24
6.0
1,87
0.1
2,58
1.0
6,37
6.9
842.
8 1,
507.
2 2,
350.
0 3,
678,
6 8,
309.
5
lota
l of 3
-9...
285.
5 51
6.7
802.
1 1,
618.
1 3,
767.
343
8.8
975.
2 1,
414.
0 2,
350.
7 5,
460.
264
4.2
1,24
9.7
1,89
3.9
3,34
4.9
7,15
8.4
['otal
of 1,
2, 10
... 42
7.4 38
8.281
5.6
230.
4 1,
416.
318
5.3
270.
845
6.1
230.
291
6.7
198.
625
7.5
456.
133
3.7
1,15
1.1
-
i6 THE BULLETINwith 15 per cent; there were no important differences between the SterlingArea, Western Europe, and the Schumanli Plan Countries in the proportionsthey took in these groups.
It is also possible to analyse in the same way the composition of exportsin 1951 from the Schumann Plan Countries to Britain: 37 per cent of theseconsisted of food, drink, and tobacco, and a further I3 per cent of rawmaterials: thus only a half of the Schumann Plan Countries' exports toBritain consisted of manufactures, and though some of these countries'non-industrial exports to Britain consisted of local agricultural produce, andonly part of re-exports from their dependencies or other tropical countries,both these groups, and 'unspecified ', are excluded in taking the percentagesgiven below.
The largest portion of the Schumann Plan group's remaining exports toBritain was textiles (35 per cent).' These, and two other major groups,chemicals with s 5 per cent and 'other manufactures' with 8 per centformed larger parts of exports to Britain than of exports by the SchumannPlan Countries to the world as a whole (including each other). Metals andmanufactures with 20 per cent, and machinery, with 10 per cent, thoughforming a substantial share of exports to Britain, were less important thanin these countries' exports to the world as a whole, while both private motorvehicles and other transport equipment were unimportant in both senses(this was in 1951 before the Volkswagen sales campaign became reallystrong).
One species of relevant information concerning the consequences of anabolition of tariffs is their height. This information is not readily available,since tariff schedules are of extreme complexity; thus taking an average of thead valorem duties payable on the different tariff headings in each commoditygroup involves 'weighting' the varieties of the commodities concerned inproportion to the ingenuity with which they have been sub-classified; whileweighting in accordance with trade values is difficult because publishedtrade figures do not correspond to the divisions of tariff schedules. Even ifthe latter method could be pursued the results would be of dubious signifi..canee because the weighting of any tariff on a given heading is diminishedby its very effectiveness in restricting tradeindeed where trade in an articleis effectively prevented by a tariff, its weighting in such an index is zero.Obtaining comparable estimates of the tariffs of various European countrieson even one section of a tariff (out of about s6 sections of manufacturedgoods) would thus form a considerable research project.
However, in order that readers may form some estimation of the order ofmagnitude of European tariffs, Table XVI reproduces the results of a Studypublished in 5952 by the Council of Europe, showing the proportion oftariff headings (not trade) on which the ad valorem duty payable was overso per cent, in various commodity groups for the major European countries
'Percentages in this paragraph refer to shares in manufactured exports.
-
= O
ther
Wes
tern
Eur
ope;
T.W
.E.
Tota
l Wes
tern
Eur
ope;
S.A
.St
erlin
g A
rea;
SP =
Sch
uman
n Pl
an C
ount
ries;
O.W
.E.
W.T
.W
orld
Tot
al.
Sect
ion
I. G
roup
s 1,
Food
, Drin
k an
d To
bacc
o ',a
nd 2
, Raw
Mat
eria
ls ar
e ex
clud
ed in
ord
er to
redu
ce th
e in
fluen
ce o
f re-
expo
rts,
and
Gro
up 1
0, 'U
nspe
cifie
d ', s
ince
it h
as o
bvio
usly
bee
n us
ed to
con
tain
resid
ual e
rrors
.Se
ctio
n II.
Fig
ures
giv
e, e
.g.,
U.K
. exp
orts
ot g
oods
in G
roup
I to
the
Schu
man
n Pl
an C
ount
ries a
s a p
er c
ent o
f tot
al U
.K. e
xpor
tsto
Sch
uman
n Pl
an C
ount
ries,
in e
ach
year
.B
oth
Sect
ions
. Sou
rce
as fo
r Tab
le X
, As t
he fi
gure
s in
Tabl
e X
show
val
ues a
t 194
8 pr
ices
, in
1938
and
1951
the a
bove
tabl
eunde
r-st
ates
the
rela
tive
impo
rtanc
e, a
t cur
rent
pric
es o
f exp
orts
of g
oods
who
se p
rices
rela
tive
to th
e av
erag
e of
all
expo
rt pr
ices
wer
e hi
gher
in th
ese
year
s tha
n in
194
8.
ru
Perc
enta
ge o
f tot
al e
xpor
ts of
Gro
ups 3
to 9
in ea
ch co
mm
odity
gro
upCo
mm
odity
Gro
upD
estin
atio
n, 1
938
Des
tinat
ion,
194
8D
estin
atio
n, 1
951
SP. O
.W.E
. T.W
.E. S
.A. W
.T. S
P. O
.W.E
. T.W
.E. S
.A. W
.T. S
P. O
.W.E
. T.W
.E. S
.A. W
.T.
3. M
etal
s and
Met
al ..
....
Man
ufac
ture
s...... 11
.813
.512
.916
.314
.517
.416
.917
.013
.515
.012
.112
.012
.012
.512
.94.
Mac
hine
ry ..
......
. 20.
813
.315
.920
.717
.328
.323
.224
.825
.224
.026
.319
.922
.1.
22.5
21.9
5. P
erso
nal C
ars
....... 6
1.5
1.2
1.8
1.4
5.6
2.8
3.7
4.4
4.1
4.0
3.5
3.6
5.7
5.0
6. O
ther
Tra
nspo
rt Eq
uipm
en7.
39.
58.
79.
07.
718
.518
.418
.512
.113
.018
.721
.920
.815
.015
.77.
Che
mic
als .
......
.6.
36.
56.
56.
25.
77.
56.
56.
85.
86.
27.
96.
97.
27.
28.
08.
Tex
tiles
......... 34
.341
.138
.632
.639
.210
.117
.815
.426
.123
.914
.022
.919
.922
.621
.19.
Oth
er M
anuf
actu
res
19.1
14.6
16.2
13.7
14.1
12.5
14.4
13.8
13.1
13.6
16.8
12.9
14.3
14.4
15.3
Tota
l of G
roup
s 3-9
... 10
0.0.
100
.0 1
00.0
100
.0 1
00.0
100.
0 10
0.0
100.
0 10
0.0
100.
010
0.0
100.
0 10
0.0
100.
0 10
0.0
Sect
ion
11
Shar
e of
Gro
ups 3
-9 in
tota
l oal
l Gro
ups .
......
.. 40
.057
.049
.587
.572
.770
.278
.375
.691
.185
.676
.482
.980
.590
.986
.1
Shar
es in
tota
l exp
orts
of a
lG
roup
s of:
1. F
ood,
Drin
k &
Tob
acco
3.0
3.9
3.5
5.6
7.1
6.2
4.4
5.0
4.2
6.2
6.5
2.7
4.1
4.6
6.1
2. R
aw M
ater
ials
...... 38
.828
.232
.91.
517
.911
.48.
99.
71.
15.
710
.78.
89.
511
6.0
10 U
nspe
cifie
d18
.111
.014
.15A
2.3
12.2
8.5
9.7
3.6
2.5
6.4
5.6
5.9
2.8
1.7
TABL
E X
I
Sect
Ion
1Co
mm
odity
Com
posit
ion
of B
ritish
Exp
orts,
193
8, 1
948
and
1951
-
TxE
XII
Impo
rtanc
e of
Com
mod
ity G
roup
s in
Briti
sh E
xpor
ts to
var
ious
Des
tinat
ions
, rel
ativ
e to
thei
r sha
re in
Brit
ish E
xpor
ts to
all
Des
tinat
ions
S.F.
= S
chum
ann
Plan
; O.W
.E. =
Oth
er W
este
rn E
urop
e.; T
.W.E
. = T
otal
Wes
tern
Eur
ope;
S.A
. = S
terli
ng A
rea.
Sour
ces a
s in
Tabl
es X
and
XI.
The
figur
es a
re ra
tios.
The
num
erat
or is
the
shar
e of
exp
orts
to a
par
ticul
ar a
rea
(e.g.
Schu
mann
Plan
cou
ntrie
s) tak
en by
a pa
rticu
lar co
mmod
ity gr
oup (
e.g. p
erson
al ca
rs): th
e den
omina
tor is
the s
hare
of tot
al ex
ports
to al
l area
sta
ken
by th
e co
mm
odity
gro
up in
que
tion.
To il
lustr
ate,
per
sona
l car
s in
1951
wer
e 4 p
er ce
nt o
f the
tota
l exp
orts
(grou
ps 3-
9) to
S.F.
cou
ntrie
s; pe
rson
al c
ars w
ere
5 pe
r cen
t of t
otal
expo
rts o
f the
sam
e gro
up to
all d
estin
atio
ns: t
he ra
tio is
ther
efor
e 4-5
, i.e.
80.
For g
roup
s 1 a
nd 2
. the
pro
porti
ons u
sed
are
thos
e of
Tab
le X
I, Se
ctio
n II:
for g
roup
s 3-9
, the
pro
porti
ons u
sed
are t
hose
show
n in
Tabl
e X
I, Se
ctio
n 1.
Com
mod
ity G
roup
SP.
1938
OW
E. T
.W.E
.SA
.19
48SP
.O
.W.E
. T.W
.E.
S.A
.SP
.19
51O
.W.E
. T.W
.E.
SA.
Gro
up
1. F
ood,
Drin
k &
Tob
acco
....
42.55
.49
.79
1.00
.71
.81
.68
1.07
.44
.67
.75
12.
Raw
Mat
eria
ls......
2.17
1.57
1.84
.08
2.00
1.5&
1.70
.19
1.78
1.48
1.58
.28
2
3. M
etal
s and
Met
al M
anu-
fact
ures
.....
.....
81.93
.89
1.12
1.16
1.13
1.13
.90
.94
.93
.93
.97
34.
Mac
hine
ry1.
20.77
.92
1.20
1.18
.97
1.03
1.05
1.20
.91
1.01
1.03
45.
Per
sona
l Car
s....... 43
1.07
.86
1.28
1.36
.68
.90
1.07
.80
.70
.72
1.14
56.
Oth
er T
rans
port
Equi
p-m
ent
.......... 95
1.23
1.13
1.17
1.42
1.41
1.42
.93
1.19
1.39
1.32
.95
67.
Che
mic
als
1.10
1.14
1.14
1.09
1.21
1.05
1.10
.94
.99
.86
.90
.90
78.
Tex
tiles
.......... 88
1.05
.99
.83
.42
.75
.65
1.09
.66
1.08
.94
1.07
89.
Oth
er M
anuf
actu
res
1.35
1.03
1.15
.97
.92
1.06
1.02
.96
1.10
.84
.93
.94
9
10. U
nsue
cifle
dFi
eure
s not
sien
ifica
nt b
ecau
se o
f erro
rs-
--
--
10
-
TABL
E X
IIITo
tal E
xpor
ts of
the
Schu
man
n Pl
an C
ount
ries
Sour
ce. A
s for
Tab
les X
and
XI.
The
sam
e lim
itatio
ns a
pply
to th
e fig
ures
for t
he c
omm
odity
com
posit
ion
of tr
ade
in 1
938
and
in19
51 si
nce t
hese
are g
iven
at 1
948
pric
es.
Com
mod
2iy
Gro
up19
48 $m
n.Pe
rcen
tage
s of T
otal
Perc
enta
ges o
f Tot
al o
fG
roup
s 3-9
Gro
up19
3819
4819
5119
3819
4819
5119
3819
4819
51
1. F
ood,
Drin
k an
d To
bacc
o1,
427.
892
1.5
2,40
0.0
12.4
14.1
16.0
--
-1
2. R
aw M
ater
ials
2,37
7.4
1,16
3.3
1,94
1.3
20.6
17.9
12.9
--
-2
3. M
etal
s and
Met
al M
anuf
actu
res
1,86
0.9
1,19
9.6
3,26
0.3
16.1
18.4
21.7
24.4
27.3
30.9
34.
Mac
hine
ry.........
1,11
3.3
589.
81,
629.
99.
69.
010
.814
.613
.415
.54
5. P
rivat
e Mot
or C
ars
......
113.
210
2.2
275.
71.
01.
61.
81.
52.
32.
65
6. O
ther
Tra
nspo
rt Eq
uipm
ent
446.
124
4.0
634.
73.
93.
74.
25.
95.
66.
06
7. C
hem
ical
s.........
1,01
7.0
445.
71,
284.
08.
86.
88.
513
.410
.212
.27
8. T
extil
es ..
......
....
1,74
8.8
1,19
3.7
2,14
5.3
15.1
18.3
14.3
23.0
27.2
20.4
89.
Oth
er M
anuf
actu
res
......
1,31
9.0
610.
01,
312.
711
.49.
48.
717
.313
.912
.59
10. U
nspe
cifie
d.........
137.
748
.614
5.9
1.2
0.7
1.0
.-
-10
Tota
l............ 11
,561
.26,
518.
415
,027
.810
0.0
100.
010
0.0
--
-To
tal
3-9
............
7,61
8.3
4,38
5.0
10,5
40.6
65.9
67.3
70.2
100.
010
0M10
0.0
3-9
1, 2
, 10
......
......
3,94
2.9
2,13
3.4
4,48
7.2
34.1
32.7
29.8
--
-1,
2, 1
0
-
TABL
E X
IVSc
hum
ann
Plan
Cou
ntrie
s' E
ports
to G
reat B
ritain
Sour
ce: A
s for
Tab
les X
and
XI.
o
Com
mod
ity G
roup
1948
$ mn
Perc
enta
ges o
f Tot
alPe
rcen
tage
s of t
otal
of
Gro
ups 3
-9G
roup
1938
1948
1951
1938
1948
1951
1938
1948
1951
1. F
ood,
Drin
k an
d To
bacc
o28
7.9
197.
755
6.7
22.4
32.6
37.2
--
12.
Raw
Mat
eria
ls27
1.0
110.
320
4.0
21.1
18.2
13.6
--
-2
3. M
etal
s and
Met
al M
anuf
actu
res
163.
967
.014
5.0
12.7
11.0
9.7
23.0
24.0
20.2
34.
Mac
hine
ry.........
70.3
11.4
71.7
5.5
1.9
4.8
9.8
4.1
10.0
45.
Priv
ate M
otor
cars
4.5
2.1
3.1
0.4
0.3
0.2
0.6
0.8
0.4
56.
Oth
er T
rans
port
Equi
pmen
t12
.42.
25.
91.
00.
40.
41.
70.
80.
86
7. C
hem
ical
s.........
75.7
27.5
110.
15.
94.
57.
410
.69.
915
.47
8. T
extil
es ..
......
....
181.
511
3.3
252.
714
.118
.716
.925
.440
.735
.28
9. O
ther
Man
ufac
ture
s ....
..20
6.7
55.1
130.
116
.19.
18.
729
.019
.818
.19
10. U
nspe
cifie
d.........
12.7
20.0
15.4
1.0
3.3
1.0
--
-10
Tota
l............
1286
.660
6.6
1,49
4.7
100.
010
0.0
100.
0-
--
Tota
l3-
9............
715.
027
8.6
718.
655
.546
048
.010
010
010
03-
91,
2, 1
0 ...
......
...57
1.6
328.
077
6.1
44.5
54.0
52.0
--
-1,
2, 1
0
-
IMPLICATIONS OF THE PROPOSED EUROPEAN FREE TRADE AREA 21
TABLE XVImportance of Commodity Groups in &humanss Plan Coun fries' Exports to Great Britain,
relative to their share in Schumann Plan Countries' Exports to all Destinations
Notes. Source as for Tables X and XI. The figures in this table are calculated similarlyto those in Table XII. They are ratios showing percentage of Schumann Plan Countries'exports to Great Britain in a particular commodity group divided by percentage ofSchumann Plan Countries' exports to all destinations in that group. For groups 1 and 2the figures are based on shares of these groups in total exports; for groups 3-9 they arebased on shares in the total of these groups, i.e. of exports of manufactures.
(the most important change since then has been the introduction of tempor-ary reductions of about a third on most items of the German tariff). Theresults of this study suggest that tariff levels tended to vary not only betweencountries, and between commodity groups, but also in the relative intensityof protection of different groups in the various countries.
Thus we see that even under the restrictions in force in 195 i, an importantpart of the trade of both Britain and the other Western European countriesconsisted of selling manufactured goods to each other, and there would bemore scope for this if trade within Western Europe were not subject totariffs; but as the Sterling Area accounted for more British exports thanWestern Europe in every group but raw materials (which were largely re-exports), it is equally clear that Britain should consider very carefully theeffects on trade with the Commonwealth of joining any 'European'Common Market: the Government's proposals that Britain should movetowards free trade with Western Europe in non-agricultural products, butwithout being obliged to adopt the Customs Union tariffs with othercountries, are designed to safeguard trade with the Commonwealth.
There are however several possible grounds for opposing British entryeven into a Free Trade Area in Western Europe. Whether these are strongenough to justify staying out of any European agreement on Free Trade, orwhether the difficulties they raise could be overcome can only be determinedby a much wider study of them than is possible here.
All that can be attempted here is to indicate in qualitative termswhat the objections to the Free Trade Area are. They fall under threeheads-the dangers of dislocation and unemployment in particular in-dustries, the risk of reductions in the standard of living of workers inthe richer countries if freer trade or movement of labour is encouraged,
Commodity Group 1938 1948 1951
1. Food, Drink and Tobacco 1.81 2.31 2.322. Raw Materials 1.02 1.02 1.05
3. Metals and Metal Manufactures .94 .88 .654. Machinery ......... .68 .31 .655. Private Motor Cars ...... .40 .35 .156. Other Transport Equipment .29 .14 .137. Chemicals .79 .97 1.268. Textiles 1.11 1.49 1.729. Other Manufactures...... 1.68 1.42 1.46
10. Unspecified Figures not Significant.
-
TAaL
E X
VI
Prop
ortio
ns o
f Tar
iff H
eadi
ngs w
ith D
uty
of ii
per
cen
t or o
ver i
n V
ario
us C
omm
odity
Gro
ups
Ave
rage
s for
Sch
uman
n Pl
an C
ount
ries a
re u
nwei
ghte
d av
erag
es o
f W. G
erm
any,
Fra
nce,
Ital
y an
d Be
nelu
x.A
vera
ge fo
r Sca
n-di
navi
a is
an u
nwei
ghte
d av
erag
e of
Den
mar
k, N
orw
ay a
nd S
wed
en.
Nat
iona
l Ave
rage
s are
unw
eigh
ted
aver
age
of 1
6 co
mm
odity
grou
ps (w
hich d
o not
corre
spon
d to t
he gr
oups
used
in th
e trad
e tab
les).
The
grou
ps a
re a
rrang
edin
asc
endi
ng o
rder
of t
he a
vera
geof S
chum
ann
Plan
cou
ntrie
s.Pe
rcen
tage
s ref
er to
hea
ding
s and
not
to tr
ade;
gro
ups o
ver t
heir
natio
nal a
vera
ge in
ital
ics;
* in
dica
tes
that
5 p
er ce
nt o
r mor
e ite
ms i
n th
e gro
up h
ad ta
riff r
ates
of 3
6 ne
r cen
t nr o
ver S
ourc
e, A
Low
Tar
iff C
lub,
Cou
ncil o
f Eur
ope,
193
2.
Des
crip
tion
of G
roup
sN
o.G
reat
Brit
ain
Ave
rage
S.P.
W.G
.Fr
.It.
Blu
x.A
ver
-ag
eSc
an.
Den
.N
or.
Swe.
Aus
tria
No.
Min
eral
s, Ea
rths,
Coal
, Sto
ne a
ndPe
trole
um ..
......
....
117
'16
25*
1620
23
07
327
'1
Non
-Fer
rous
Met
als
268
5140
7097
'17
51
122
64*
2Ch
emic
al P
rodu
cts .
......
..3
6959
'43
'90
91'
1230
14'
3640
24'
3R
aw T
extil
es.........
454
61'
62'
6474
4414
1312
1759
'4
Hid
es a
nd L
eath
er, L
eath
er P
rodu
ce,
Fur S
kins
and
Fur
s......
564
6156
7386
3027
4131
829
5Ti
mbe
r and
Woo
d Pr
oduc
ts6
5063
*79
'60
9022
198
4010
83*
6Ir
on, C
ast I
ron
and
Stee
l......
794
6872
8597
198
216
690
'7
Elec
trica
l App
arat
us a
nd M
achi
nery
810
069
'62
9010
0*22
346
7125
83*
8
Cem
ent,
Cera
mic
s and
Gl
ssw
are
961
72'
56*
8993
'50
2920
4720
90'
9Tr
ansp
ort M
ater
ial
.........
1081
75'
5989
91'
6041
083
3997
'10
Plas
tics,
Rubb
er a
nd th
eir P
rodu
cts
1147
76'
84'
91'
92*
3639
374
4181
'11
Tool
s, Cu
tlery
and
Pro
duct
s of B
ase
Met
als
.........
1299
7754
9999
'56
2211
477
88*
12
Opt
ical
, Pho
togr
aphi
c an
d Pr
ecisi
onIn
stru
men
ts.........
1310
080
*63
100
100*
5524
758
875
13Pa
per a
nd C
ardb
oard
1489
89*
91'
9393
788
613
578
*14
Fini
shed
Tex
tiles
.........
1593
*95
*95
*99
*98
'90
4238
4741
90'
15Ca
rriag
es, M
otor
Car
s,Tr
acto
rs,
Cycl
es a
nd L
and
Veh
icle
s.....
.16
100
97'
98'
98'
92'
100
517
7671
96'
16
Ave
rage
.....
......
. -71
68'
65'
8287
'43
2511
4221
72'
-
IMPLICATIONS OF THE PROPOSED EUROPEAN FREE TRADE AREA 23
and the risk that the adoption of free trade would mean that in decid-ing on monetary and fiscal policies (i.e. investment and governmentexpenditure) safeguarding the balance of payments might have to takepriority over maintaining full employment, and general 'deflation' might bethe only means left of cutting imports. If deflation proceeded via a cut ininvestment, or induced a decrease in investment through its effects ondemand, it would also hinder the future growth of the national income.Britain is not, of course, the only country concerned which needs to worryabout these things, nor would freer trade do more than accentuate problemswhich have to be faced in a changing world anyway, but it is as well to knowwhat the dangers are.
As regards the possibility that some British industries might be injuredby competition from Europe, we can only consider a few examples. In themotor-car industry, for example, there are very great advantages in larger-scale production; this is clearly shown by the extreme cheapness of com-parable American cars relative to British, and equally by the success of theVolkswagen, which has made up by the duration of its run of output of onebasic model for the small size, relative to the United States motor industry,of the market available to it.
TABLE XVIIProduction and Trade in Passenger Cars in 1955, in 000s
Source: E.C.E. Bulletin for Europe. Aug. 1956, P. 9. Discrepancies between total'production 'and 'consumption' ligures shown arise from changes in stocks, and incompletecoverage of countries (esp. omission of Netherlands figures).
1 Figures refer to Net Imports.
Regis-Net ex-pons as
Major Producing Pro- tration Exports Imports Net % ofCountries duction of new exports pro-
cars duction
Great Britain 887.6 500.9 373.3 11.6 361.7 40.8GB. as per cent of total of W.
Germany, France and Italy 59.6 51.2 693Western Germany ...... 705.5 377.2 357.3 16.8 340.5 48.3France ............ 552.1 440.2 132.8 10.0 122.8 22.2Italy ............ 230.9 161.6 61.2 3.0 58.2 25.2Total of W.G., F. and I.... 1488.5 979.0 551.3 29.8 521.5 35.0
Other Countries Overseas Exports of allcountries shown ... = 424.6
Sweden 127.7 Imports from U.S.A. 52.6Belgium 74.9 Net Overseas Exports 372.0Switzerland 51.2Austria 42.3Denmark1 28.5Eire ............ 23.7Finland 15.2VNorway' 14.9Total ............ 378.4
-
24 THE BULLETIN
TABLE XVIIIShares of Western Europe's Car Marhet in 1955
Source. As for Table XVII.
In 1955 total production of private cars was 89o,000 in Britain, and1,490,000 in Germany, France and Italy combined. All these countriesexported far more than they imported, with an export surplus of 360,000cars from Britain and 520,000 from Germany, France and Italy. Of these'net exports' over 380,000 went to other Western European Countries, andover 370,000 to overseas countries. Thus freer trade in cars might mean adanger of European producers capturing part of the British home market:this would worsen the present problems of the motor industry (though fullfree trade would not start at once, and under the present proposals therewould be 12 or 15 years to adjust). On the other hand, staying out of theFree Trade Area would not protect British exporters against European
TABLE XIXExports, Imports and Net Exports of Textiles in 1954
In milion U.S. $ Net Imports ve
Source. E.C.E. Economic Surcvey of Europe sn 1955, p. 25.
Country Exports ImportsNet
ExportsNet
Exports as% of Exports
Great Britain ......... 1,012 217 795 73.5
Schumann Pian CountriesW. Germany ......... 334 244 90 27.0France ............ 557 52 505 90.7Italy ............ 313 50 263 84.0Belgium and Luxg....... 327 120 207 63.3Netherlands ......... 223 187 36 16.2Total ............ 1,754 653 1,101 62.7
Other Countries .........Switzerland ......... 174 91 83 47.7Austria ............ 66 37 29 44.0Denmark ......... 16 117 101 -Norway ......... 11 98 87 -Sweden ......... 24 170 146 -Greece ............ 2 28 26 -
Total 293 541 248 -Total Western Eurobe ... 3.059 1.411 1.648 53.9
CountryConsumed &y: Supplied by:
'OOOs 0//0 'OOOs 0//0
Great Britain 500.9 22.0 887.6 36.6Western Germany, France and
Italy 979.0 42.8 1,488.5 61.3Rest of Western Europe 378.4 16.5Overseas ......... 424.6 18.6U.S.A. 52.6 2.2
Total 2,282.9 100.0 2,428.7 100.0
-
TABL
E X
XPe
r Cap
ita C
onsu
mpt
ion
and
Inve
stmen
t in
Gre
at B
ritai
n, W
este
rn G
erm
any,
Fra
nce
and
Italy
, 195
0-19
55(in
$ at
1950
Euro
pean
Price
s)
Cons
. = C
onsu
mpt
ion;
P.D
. = P
rodu
cers
' Dur
able
s; m
v. =
Inve
stmen
t; G
.B. =
Gre
at B
ritai
n.N
otes
. Inv
estm
ent =
Gro
ss In
vestm
ent.
Tota
ls' c
anno
t be
treat
ed a
s per
cap
ita n
atio
nal i
ncom
e as
they
do
not a
llow
for g
over
n-m
ent e
xpen
ditu
re o
r bal
ance
of p
aym
ents.
Sour
ce. E
.C.E
. Eco
nom
ic S
urve
y of
Eur
ope
in 1
955,
p. 4
3.
r o z ca o 'n -i z ni z o o ni z 'n ni '-I ni N
Inve
stm
ent
mv
. as
% P
D. a
sCo
ns, a
s % m
v, a
s % P
.D. a
sCo
untry
Yea
rCo
ns.
Tota
lPD
.To
tal
of T
otal
% o
f mv.
of G
.B.
of G
.B.
of G
B.
1950
699
133
8683
216
.064
.5-
--
1951
687
131
8581
816
.065
.0-
--
Gre
at19
5267
812
978
807
16.0
60.5
--
-
Brit
ain
1953
701
146
8684
717
.259
.0-
--
1954
729
153
9088
217
.358
.8-
--
1955
757
168
-92
518
.2-
--
-
1950
423
117
6254
021
.753
.060
.588
.072
.119
5144
912
667
575
21.9
53.2
65.5
96.3
78.8
Wes
tern
1952
479
129
6960
821
.253
.570
.710
0.0
88.5
Ger
man
y19
5351
814
775
665
22.1
51.0
73.9
100.
787
.219
5455
116
485
715
22.9
51.8
75.6
107.
394
.519
5559
118
910
278
024
.254
.078
.111
2.5
-
1950
529
125
7265
419
.157
.675
.894
.083
.719
5155
013
176
681
19.2
58.0
80.2
100.
089
.3Fr
ance
.19
5256
212
373
685
18.0
59.4
82.8
95.3
93.7
1953
578
123
7470
117
.660
.282
.584
.386
.019
5460
413
177
735
17.8
58.8
82.9
85.6
85.6
1955
639
140
8377
918
.059
.284
.483
.3-
1950
283
60-
343
17.5
-40
.545
.1-
1951
288
66-
354
18.6
-41
.950
.3-
Italy
1952
293
73-
366
19.9
-43
.256
.6-
1953
308
77-
385
20.0
-44
.052
.8-
1954
316
81-
397
20.4
-43
.352
.9-
1955
330
92-
422
21.8
-43
.654
.8-
-
z THE BULLETIN
competition either in Europe or in overseas markets, and inside Europe anyof the smaller countries which did join the Common Market would have togive tariff preferences to German and French cars if Britain did not join.The effects of trying to shirk the challenge of the Volkswagen might well beworse for the British motor industry than those of accepting the need tomeet German producers on their own grounds of standardisation of productsand efficient servicing. It is also worth while noting that the total productionof motor cars in Western Europe including Britain in 1955, was less than athird of that in the United States. In any industry where substantial econom-ies would result from an increase of scale of production, Britain's relativecosts would be increased by staying out of a Free Trade Area.
Another group of industries in which alarm has been expressed at theprospect of more competition is textiles. In 1954 Britain exported 284million worth of textiles more than she imported: the 'net exports' of theSchumann Plan Countries were f393 million, while the rest of WesternEurope had 'net imports' of over 89 million Obviously the maintenanceof Britain's net export position in textiles must depend chiefly on being ableto provide overseas countries with their textile needs at prices as reasonableas those of other major exporters, and staying out of a European Free Tradearea could not help with this, while as in the case of cars it would hinderBritish sales to European countries which did join.
The second fear about the impact of a free trade area concerns the effectsof competing with people with lower standards of living than in Britain.Fears on this score cannot simply be dismissed on the theoretical groundsthat, according to the law of comparative costs, absolute wage levels areirrelevant to the gains from trade available to any one country, sinceit is also agreed that the distribution of incomes can be affected bytrading with countries with different relative factor-supplies. Adducingrelevant facts on this issue is difficult because of the extreme elusiveness ofinformation on relative factor prices in different countries (owing to duff er-ences of currencies, classification of trades, etc.). All that can be done withouta special study is to give some indication of relative living standards of thepopulations of the four major Western European countries.
International comparisons of living standards are difficult to makeprecisely, but it is certainly true that consumption per head in Britain ishigher than in Western Germany or France, and much higher than in Italy.Measuring at average European prices of 1950, in 1955 consumption lerhead was 270 ifl Britain, against 228 fl France, z' i in Western Germany,and 1x8 in Italy. It is significant, however, that measured in the same way,consumption per head in Britain had increased since 1950 by only 8 per ce;rit,compared to 17 per cent in Italy, 21 per cent in France, and 40 per cent inWestern Germany: thus the relative difference in living standards has beennarrowing.' Why this has happened is in turn shown by the fact that, on the
1 It is noteworthy that a continuation of these trends for another 5 years would meanthat it would not be Britain which needed to worry about competition by cheap labour;such a continuation is unlikely, however, since much of the German rate of increase mustbe attributed to post-war recovery.
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IMPLICATIONS OF THE PROPOSED EUROPEAN FREE TRADE AREA 27
average of the 6 years from io to 1955, Western Germany invested slightlymore per capita than Britain, though her consumption was only 71 per centof the British level. It should also be noted that between 1950 and 1955consumption per capita in V ermany rose from o per cent to 78 percent of that in Britain, and investment from 88 per cent to iiz per cent ofthe British figures; though there is no means of knowing how far this wasdue to delayed recovery from the war. Italy invested 52 per cent as muchper capita as Britain in 1950-55, while consuming only 43 per cent as much,and France invested 90 per cent, while consuming 8x per cent as much percapita as Britain.
TABLE XXIRate of Growth of Investment plus Consumption in Table XX
Source. As for Table XX.
While Britain's living standards are still higher than in most otherEuropean countries, her ability to maintain them depends not on protectionfrom European competition, but on adequate investment and rises in pro-ductivity. Also, as Britain depends on overseas markets for essential suppliesof foodstuffs and raw materials, it is there rather than at home that the mainchallenge of exports from more progressive countries must be met.
The remaining major danger in entering a Free Trade Area is that theremoval of tariffs as a means of restricting imports from Europe might inter-fere with the attainment of full employment at home. This is because ifBritish prices and wages became too high relative to other countries, or ifthe effort put into organising export markets fell too low because of the ease ofselling at home, there might be no way of safeguarding the exchange reservesexcept by deflation. It is not only the Free Trade Area policy which involvesthis type of danger, of course; for tariffs are not at present a flexible means ofrestricting imports, since G.A.T.T. prevents Britain from increasing at willeither her present tariffs or the degree of discrimination between Common-wealth suppliers and others, and exports can be as effectively restricted byexcessive costs and prices as by other countries' tariffs. Freer trade wouldincrease this type of danger however, especially as it would presumably beaccompanied by either an explicit or a gentlemen's agreement that quantita-tive restrictions should be avoided as far as possible, and conversion to thenew policy might involve short-run balace of payments problems whichwere quite serious, though spreading the process over iz to 15 years wouldassist in making the necessary adjustments.
Percentage increase over previous yearAverage of
Country 1951 1952 1953 1954 1955 1953-1955
Great Britain 2 5 4. 5 5Western Germany 7 6 9 7 9 sFrance 4 1 2 5 6 4Italy 3 3 5 3 6 5
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z8 THE BULLETINThe acceptance of limitations on the right of each country to impose
direct controls on imports would also tend to accentuate the difficulty ofdealing with short-run balance of payments problems due to causes otherthan the change-over to a regime of lower intra-European tariffs. To getsome indication of the possible magnitude of balance of payments difficultiesdue to these causes, it is interesting to examine the effects of the start of theEuropean Trade Liberalisation programme on the balance of payments ofvarious European countries, as shown in the early accounts of the EuropeanPayments Union. Western Germany started with a deficit of 130 millionin the second half of 1950 and had to be helped by special credits to overcomethis: later however Germany became a persistent creditor of the other E.P.U.countries, with a cumulative credit balance of 285 million by the end of1953. Belgium, who started as a creditor, had a cumulative credit balance of290 million by the end of Great Britain, on the other hand, startedas a creditor, but developed an import surplus in i 951 which was partlyresponsible for her cumulative debit balance of 206 million by the end of1953 (though this also reflects the results of the trade of the rest of the SterlingArea with E.P.U. countries).
It cannot be assumed that the creation of a free trade area will not involvefluctuations in the balance of payments at least as serious as these; thoughjust as in the case of trade liberalisation, special arrangements could be madefor the countries concerned to give each other credit. These might well includea reduction in the E.P.U. gold-payments fraction. If such arrangements werenot made, it would imply that the deficit countries would have to try to curetheir import surpluses by means of deflation (though the existence of time-lags might render even deflation ineffective in the very short run necessitatedby inadequate exchange reserves). This makes it important to consider pos-sible forms of insurance against short-run balance of payments difficulties.
In principle, there are two ways in which the problem of deficits in thebalance of payments which might arise through a conversion to freer Euro-pean trade could be solved. The first is that the monetary and fiscal systemsof the countries concerned should be co-ordinated, so that investment andgovernment spending would be expanded in 'surplus' countries andcontracted in ' deficit' countries, to correct the balance. However, givenindependent systems of wage-bargaining in different countriesand indifferent industries within each countryand given stable exchange-rates,such a system would mean that the countries concerned were giving up I heright to be as inflationary or deflationary as they themselves chose: this wouldinvolve governments at times in policies which were exceedingly unpopular,and might be difficult to reconcile with political independence. While nocountry is in any case free from all external influences on its wage systemand investment policyand for a country like Britain it is particularly neces-sary to behave sensibly about these things in a hard world, which does notfeel it owes her a relatively luxurious living unless she can earn itfreertrade means a little less freedom to pursue independent full-employment
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TABL
E X
XII
E. P
. U. B
alan
ces o
f Sel
ecte
d W
este
rn E
urop
ean
Coun
tries
The
cum
ulat
ive
bala
nces
are
show
n as
a su
m o
f the
per
iod
figur
es a
nd d
o no
t allo
w fo
r ini
tial b
alan
ces,
spec
ial p
aym
ents,
fund
ing,
or
inte
rest
on a
ccru
ed b
alan
ces,
and
thus
do
not c
orre
spon
d to
the
actu
al, p
ublis
hed
E.P.
U. b
alan
ces.
The
figur
es b
elow
, how
ever
giv
ean
idea
of t
he o
rder
of m
agni
tude
of t
he p
aym
ents
prob
lem
s whi
ch m
ight
aris
e.(in
mn.)
N.B
.Th
e Br
itish
figu
res i
nclu
de th
e ba
lanc
es o
f oth
er S
terli
ng A
rea
coun
tries
(exc
ept I
celan
d) wi
th E.
P.U. c
ountr
ies.
Sour
ce.
E.C.
E, E
cono
mic
Sur
vey
of E
urop
e in
195
4, T
able
XX
V, p
. 217
.
Perio
d
Gre
et B
ritai
n
cum
ula
tive
perio
dto
tal
Wes
tern
Ger
man
y
cum
ula
tive
perio
dto
tal
Fran
ce
cum
ula
tive
perio
dto
tal
Italy
cum
ula
tive
perio
dto
tal
Bel
gium
and
Luxe
mbo
urg
cum
ula
tzve
perio
dto