TCS Daily

Little USSR

By Sylvain Charat - April 7, 2005 12:00 AM

Just like big cities often have their own peculiar neighborhoods -- Little Italy, Chinatown, Greek Town, etc. -- the EU has its own Little USSR. It's called France.

In my country, anti-free-trade policies are up front and collectivist dogma is repeated ad nauseam. Consider the statement made by French Prime Minister Jean-Pierre Raffarin at the EU's spring economic summit on March 22: "The French society as a whole rejects the Anglo-Saxon financial model since its main feature lies in an excessive hold of markets on economic life and does not pay enough attention to human being and social cohesion."

Recently, Jean-Marie Cavada, a well-known French MEP from the center-right who was formerly a popular TV presenter, went so far as to proclaim that Europe needs a "social economy for the market". This echoes French President Jacques Chirac vilifying economic liberalism by saying, at the end of the summit, that this system cannot be possibly sustained.

Remember: this is how the political Right speaks in France. You can imagine what the Socialists sound like.

This is especially worrying given France's leadership role in the European Union. And it must not be underestimated, since it threatens the very fundamentals of market-based economy. This counterproductive leadership was shown twice in recent weeks.

First, in March, France shot down the Bolkestein directive, which aimed at liberalizing services. Paris was eager to protect a sort of monopoly since it is the most important service exporter in Europe. The directive would have established competition among countries. In this free market, France would have lost its dominance because of its heavy costs and bureaucracy. This was not acceptable for Chirac, who prefers market control. We know the rest of the story: the 24 other members yielded to French anger.

And in February, there was another development that got less attention but is just as important: EU Trade Commissioner Peter Mandelson had proposed granting preferential tariffs to Asian countries that suffered from the tsunami, to help their textile industries to enter the European market. But this met resistance from French and Italian textile interests. As for the French, a specific order came from the presidency to diplomats to refuse any compromise. This position was fully backed by Guillaume Sarkozy, brother of the famous Nicolas, and president of the Textile Industries Union.

France is defending high tariff barriers for its industry; that is protectionism. Again, because it is unable to sustain competition, France hinders free trade and leads a group of European countries that share the same fear. Among them are Italy, Portugal, Spain, Greece and Poland. But this is not surprising, given that France recently placed 23rd of 25 EU member states in the Index of Economic Freedom 2005, published by the Heritage Foundation.

France has no interest in promoting free trade. So it promotes its own collectivist agenda, based on market control and the welfare state, as being the inspiration for the European social model. In this light we must look beyond the European Constitution or any other similar treaties. In politics, lawmakers are not important, nor laws themselves. What matters are those who use power and the rules provided by legislation. That is why it is not a question of Old Europe versus New Europe. The correct economic and political analysis of the European Union now turns on the struggle between free traders who are striving for freedom and market controllers who are looking for equality.

In this political fight, France is a pivot because of its leadership. That is why, as Alain Madelin, former French minister of finances and historical leader of French classical liberals, would say, what France needs is a Perestroika. It is in the interest of Europe, and only free traders can start such a movement.

Sylvain Charat is director of policy studies in the French think-tank Eurolibnetwork.


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