2 - Trade and Protection

Summary

According to one leading European economist, the foundation of European integration is internal trade liberalization. Indeed the whole theory of economic integration has developed in the postwar period out of international trade theory. It therefore seems the obvious starting point for a consideration of British business and European integration. The two questions lying at the heart of this chapter are: How did Britain's trading relations with the rest of Europe develop after the Second World War until Britain joined the European Community (EC) in 1973 and, reflecting this, was British business slow to move into European markets? What is clear is that the period marked an enormous turnaround in Britain's trading relations but there has been a school of thought that this happened too slowly and that British business preferred the relatively protected markets of the Commonwealth to the more open and competitive markets of the EC and that EC membership came as a severe competitive shock in 1973. Broadberry is the chief proponent of this view: Interwar concentration on the Empire and imperial preference left an “unfortunate legacy” after the Second World War. The need for a reorientation of export markets was “hampered by the anti-competitive culture of much of British industry at this time. After decades of avoiding head-to-head competition with producers from other industrialized countries through international cartels, British firms were reluctant to break with the old market-sharing agreements.”