Burke, Richard.

English

Archive of European Integration

o/ 
european PI~ ESS I~ 1: LE/.\S E community 
EUROPEAN COMMUNITY INFORMATION SERVICE 
2100 M Street Northwest, Suite 707, Washington, D.C. 20037 Telephone: (202) 872-8350 
New York Office: 245 East 47th Street, New York, N.Y. 10017 Telephone: (212) 371-3890 
No. 5/1978 
February 1, 1978 
EC COMMISSIONER URGES ECONOMIC AND MONETARY UNION 
Richard Burke, member of the Commission of the European Communities,today 
called for economic and monetary union of the nine Community countries in a 
noon address to the Mid-Atlantic Club in Washington, D.C. Commissioner Burke, 
whose responsibilities include taxation, consumer affairs, transport and relations 
with the European Parliament, is currently on a week 1 s visit to the United States. 
The text of the address follows: 
Politicians and businessmen in the United States have a long history of 
intimate connections with their counterparts in Western Europe. Over the last 
twenty years, a new dimension of growing inportance has been added to these 
relationshipi with the emergence and development of the European Communities. In 
all of their dealings with the European Communities, successive U.S. Administrations 
have made it very clear that, while they may sometimes have disagreed violently 
with this or that Community policy, they have always taken the view that the 
development of European integration is a very positive factor in world political 
and economic affairs. 
I do not propose to go deeply into the reasons for this view. I would 
simply remark that, on the political plane, a unified Europe can be a powerful 
stabilizing force in world affairs. On the economic front, the United States 
has a very clear and obvious interest in a healthy and expanding European 
economy, not only from a trading point of view, but also as a center for investment. 
In 1976, your exports to us amounted to $25.4 bill ion, or 21.4 per cent of 
your total exports. Our exports to the U.S. amounted to $18.1 bill ion, or 14.8 
per cent of your total imports. I would note in passing that your trade surplus 
with the EC in that year amounted to $7.3 bill ion, against an overall deficit 
on trade of $6.7 bill ion (figures supplied by the Statistical Office of the EEC). 
During the first nine months of 1977, you ran a trade surplus of $3.3 billion, 
against an overall trade deficit of $20.8 bill ion. 
-2-
Economic developments in the EC are important for the U.S.; the converse 
is also the case. We have all been painfully aware of the monetary 
upheavals of recent years, and of the breakdown of the system instituted 
by the Bretton Woods Agreement. We have all seen how movements in the 
exchange rate of one currency can spark off a chain of reactions with 
significant consequences for other currencies. 
Looking at the economic background, we can quickly conclude that there 
is a significant degree of transatlantic interaction and interdependence. 
It is for this reason that I propose to talk to you today about the 
development of Economic and Monetary Union in the European Communities. 
In a sense, Washington,D.C.,is a particularly appropriate place in which 
to speak on this topic. Your own experience of the construction of a 
very powerful economic and monetary union began just over two hundred 
years ago, and Washington is the hub of its administration. Our experience 
in the European Community is of much more recent date. 
While, for obvious reasons, the two experiences are not directly comparable, 
believe nevertheless that your situation today can provide us in Europe 
with some valuable pointers. 
Let me briefly sketch the present situation in the European Communities. 
We have very largely achieved our aim of market unity. Since January 1 last, 
we have finally abolished all customs duties in our internal trade, thus 
completing the integration of the three most recent Member States into our 
customs union. There remain certain non-tariff barriers to trade, which we 
are in the process of eliminating. Trade between the Member States can be 
complicated by differences in tax systems, particularly indirect taxes and 
excise duties. I dare say that some of you will have encountered problems of 
this kind in your own country. For our part, we are making steady progress 
in dealing with this problem. Finally, we have still not achieved the desired 
level of freedom of movement for the professions. 
Each one of our Member States has suffered to some degree from the 
economic difficulties which have beset the world since 1973. In our Community, 
composed as it is of sovereign nation states, a certain tension inevitably 
arises from the apparent contradictions between the different national contexts. 
I say that these contradictions are apparent, because I believe, as do my 
colleagues in the Commission, that when the problem is looked at in a wider 
perspective than the purely national, it is abundantly clear that reactions 
based on purely national considerations run a grave risk of further destabilizing 
the situations and, in the end, of compounding the problem they are intended 
to solve. 
It is understandably difficult for some of our Member States to accept the 
practical conclusion of this kind of reflection. As you know, their economic 
situations are very divergent. 
While we have floating currencies allied to high inflation rates and 
stable currencies allied to low inflation rates, we also have the rather 
curious phenomenon of stable currencies allied to relatively high inflation rates. 
You wi 11 see, therefore, that the economic difficulties have had a differential 
impact on our Member States. The conclusion that this calls for differential 
responses is an easy one to draw, but one which we in the Commission are convinced 
is wrong, for reasons which I will outline later. 
~- ~--------~-~------------------------------------------
-3-
European industry faces a number of serious problems which, in some 
sectors, create a requirement for fundamental and rapid structural change. 
In certain sectors, particularly steel and textiles, the scale of the industry 
and the gravity of the problem are such that the only viable approach is one 
worked out at Community level. Where, in other sectors, direct local action 
is appropriate, we must nevertheless ensure unity of approach, so that the 
solutions applied in one part of the Community do not simply frustrate efforts 
undertaken in another part. 
We have our brighter spots, too, of course. In the aeronautics, data 
processing and electronics sectors, we believe that we have useful development 
opportunities, which we believe can be sustained and brought to fruition by 
a greater degree of coordination at Community level. 
You will certainly be able to appreciate our problems in the energy sector. 
We are even more heavily dependent on imports than you are. This being the 
case, the development of internal energy resources and the rationalization 
of energy use are, if anything, even more important to us than they are to you. 
We are in the middle of a large-scale public debate on nuclear energy, organized 
by the Commission. In this sector too, the scale of investment and the importance 
of the choices to be made require coordination at Community level. 
The changes which face us on the economic plane, and the movements in 
favor of greater social justice require us, at Community level, to make a 
positive response, via the means at our disposal for promoting the adaptation 
of our labor force to the imperatives of our situation, and to explore means 
of furthering the more specifically social aims proposed. 
This, then, is an outline of some of the problems we face. We in the 
Commission believe that our best response lies in a more vigorous pursuit 
of what we call Economic and Monetary Union. We presented our ideas on this 
to the European Council (composed of the Heads of State or Government of the 
Member States) last December. The response was positive, so that we now have 
a mandate to press forward along the lines we suggested. We will also do this 
on the basis of a rolling five-year plan, which will be re-examined each year 
by the European Council, and which can thus be adjusted to take account of the 
developing situation. 
What is Economic and Monetary Union? I think that the best way of answering 
this question is to illustrate EMU by reference to what we hope it will achieve. 
I do not propose to go in detail into how we hope to bring about EMU. Part of 
the reason is that we are only beginning to specify the steps we must take. 
The other, and more important part of the reason is that I believe that it will 
be more interesting for you to see the shape and reason of our ambition, rather 
than to get bogged down in the nuts and bolts. 
Let me deal first with the monetary aspects. In a Community in which we have 
removed all tariff barriers to trade, where we have made very important progress 
on non-tariff barriers, and where we are working to reduce the problems of tax 
differences, there is still a factor which can seriously hamper trade. That 
factor is, of course, exchange rate risks. We have, effectively, four currency 
areas in the Community. Germany, Denmark and the Benelux countries are in the 
••snake ... The pound ster.ling (with which, for exchange purposes, the Irish 
pound is directly linked at par) is floating; so are the French franc and the 
I tal ian 1 ira. 
-4-
As you know, the exchange risk can, at times, be very high in intra-
Community trade. The consequences of this can be quite disturbing for industry 
and commerce. Monetary Union would remove this risk, with very positive 
benefits. This will clearly involve a harmonization of exchange rate policies, 
proceeding then to a system of effectively fixed exchange rates between the 
Community currencies. The advantages of such a situation for businessmen 
within the Community are clear. So, too, are the advantages for businessmen 
and investors from outside the Community. 
Still on the monetary plane, the move to stable intra-Community exchange 
rates, and eventually to a common Community currency, would have very important 
implications for the international monetary system. The Community is the world's 
largest trading bloc; it is the world's second economic power. These factors 
have not had their full impact on the international monetary system simply 
because the Community currencies have reacted in a divided fashion. To put 
it another way, I believe that many of the problems we have faced over the last 
six years could have been avoided, or at least alleviated if the Community 
currencies moved in a way consistent with the total economic weight and strength 
of the Community, rather than on the basis of the separate conditions of each 
Member State's economy. 
A common European currency would be a major international currency. You 
have such a currency-- a situation which brings advantages as well as 
disadvantages. 
The appearance on the world scene of a major new international currency, 
which subsumed some of those which today exacerbate exchange instability, could 
bring very important benefits to the Community, to the United States and to 
the international monetary system in general. 
Within the Community, monetary union would help the Member States 
collectively to recover the control over demand and inflation which most of them 
have individually lost. When we consider that not far short of half of all 
the Member States• trade is with the other Member States, we can see immediately 
the interaction of inflationary pressures between them. On the other hand, over 
half of the Member States• total trade is with countries outside the Community, 
so that the individual Member States and Community as a whole are very open to 
the influence of economic trends elsewhere. As the world's biggest trading group, 
the Community is clearly very open to importing (and to exporting) inflation. 
Monetary stability, both internal and external, would therefore bring considerable 
advantages to the Community and to its trading partners. 
The competition of our Economic Union would give a further stimulus to 
the level of economic activity in the Community. As I have already pointed 
we have made substantial progress in removing non-tariff barriers to trade. 
policies on tax harmonization are well under way. We have made progress in 
relation to the freedom of establishment in the professions. 
out, 
Our 
Much, however, remains to be done. I have a particular personal interest 
in this aspect of EMU since, as the Commissioner responsible for Taxation, it is 
my job to specify the fiscal measures which our progress toward EMU will require. 
The creation of a single European currency and the creation of an integrated 
European economic system cannot be carried out without harmonization of the 
structure of indirect taxation and perhaps approximation of the rates of Value-
Added-Tax and the major excises. 
-5-
Whether, in order to abolish fiscal frontiers, we shall need a complete 
harmonization of tax rates or whether -- as in the USA-- sizeable variations 
from one Member State to another can be tolerated, is a question for further study. 
In carrying out this study, we will have to bear in mind the fact that true 
econom1c union requires that those factors in the formation of manufacturing costs 
which are determined by public pol icy, including taxation, will have to be 
broadly equalized. This implies broad equalization of tax burdens which will, 
in turn, dictate the need for Member States to adapt their taxation systems 
towards a common pattern. 
The achievement of EMU in conditions which satisfy the aspirations of our 
people will require a better regional distribution of work and wealth in the 
Community. The poorer regions will need assurance that their economic difficulties 
will not be aggravated. The richer regions will need the assurance of more stable 
and secure markets. We will therefore need measures to accelerate the flow of 
pub! ic finance between regions. 
At the political level, the achievement of EMU will require us to take a 
new look at the institutions of the Community. 
The process which I have described will evidently create the need for 
greater centralization in some areas of economic pol icy. On the other hand, 
there is a clear movement of opinion in all our Member States toward a greater 
decentralization of power. We will have to examine each area of public pol icy, 
and particularly of public finance. We should, in my view, give the Community 
institutions those functions which can manifestly best be performed by it. For 
the rest-- which wi 11, however, constitute a very important part of public pol icy-
we must aim at a dispersal of power to respond to the need for efficiency and 
to the need, felt more and more urgently, for decision-making to come closer 
to the people in their everyday Jives. This is an aspect of our endeavor with 
which you, I am sure, will identify and sympathize. 
There is more to the story than this. Economic and Monetary Union, 
desirable though it is, and difficult as it may be to achieve, is not an end in 
itself. Rather, it is a means of securing for our people a greater degree of 
economic stability and security. Against this background, we can more confidently 
continue and develop our action to improve the quality of our society and to 
ensure the respect of the individual •s economic and social rights and obi igations. 
The ultimate of Economic and Monetary Union was wei I expressed by Mr. Roy 
Jenkins, the President of the Commission, when he said in the European Parliament 
last January: 
11 1 believe that no proposal for political union can make 
practical sense without the underpinning of economic 
and monetary union.•• 
It was indeed appropriate that he should have said this in the European 
Parl lament. As you know our Parliament will, next year for the first time, 
become a directly-elected Parliament. This will bring that institution 
closer to the people, and will inevitably result in a greater degree of popular 
pressure on our other institutions. 
Let me admit, in conclusion, that I have been selective in my treatment 
of our topic today. There is a very simple reason for this, which I hope you 
will appreciate. I said at the beginning that successive U.S. Administrations 
have taken the view that the development of European integration is a very positive 
factor in world political and economic affairs. The reason for my selectivity is 
that I wished, in describing what we mean by Economic and Monetary Union, to indicate 
to you how a further deepening and enrichment of European Unity could justify a 
continuation of that view. 


EC Commissioner urges economic and monetary union. Richard Burke, Member of the Commission of the European Communities. Washington DC, 1 February 1978

o/ european PI~  ESS  I~ 1: LE/.\S E  community EUROPEAN  COMMUNITY INFORMATION SERVICE 2100 M Street Northwest, Suite 707, Washington, D.C. 20037 Telephone: (202)  872-8350 New York Office: 245 East 47th Street, New York, N.Y. 10017 Telephone: (212) 371-3890 No.  5/1978 February  1,  1978 EC  COMMISSIONER  URGES  ECONOMIC  AND  MONETARY  UNION Richard  Burke,  member  of  the  Commission  of  the  European  Communities,today called  for  economic  and  monetary  union  of  the  nine  Community  countries  in  a noon  address  to  the  Mid-Atlantic  Club  in  Washington,  D.C.  Commissioner  Burke, whose  responsibilities  include  taxation,  consumer  affairs,  transport  and  relations with  the  European  Parliament,  is currently on  a  week1s  visit to  the  United  States. The  text of  the address  follows: Politicians  and  businessmen  in  the  United  States  have  a  long  history of intimate connections  with  their counterparts  in  Western  Europe.  Over  the  last twenty  years,  a  new  dimension  of  growing  inportance  has  been  added  to  these relationshipi with  the emergence  and  development  of  the  European  Communities.  In all  of  their dealings  with  the  European  Communities,  successive  U.S.  Administrations have  made  it very clear  that,  while  they  may  sometimes  have  disagreed  violently with  this or  that  Community  policy,  they  have  always  taken  the  view  that  the development  of  European  integration  is  a  very  positive factor  in  world  political and  economic  affairs. I  do  not  propose  to  go  deeply  into  the  reasons  for  this  view.  I  would simply  remark  that,  on  the  political  plane,  a  unified  Europe  can  be  a  powerful stabilizing  force  in  world  affairs.  On  the  economic  front,  the  United  States has  a  very  clear  and  obvious  interest  in  a  healthy  and  expanding  European economy,  not  only  from  a  trading  point of  view,  but  also  as  a  center for  investment. In  1976,  your  exports  to  us  amounted  to  $25.4  bill ion,  or  21.4  per  cent of your  total  exports.  Our  exports  to  the  U.S.  amounted  to  $18.1  bill ion,  or  14.8 per  cent  of  your  total  imports.  I  would  note  in  passing  that  your  trade  surplus with  the  EC  in  that  year  amounted  to  $7.3  bill ion,  against  an  overall  deficit on  trade of  $6.7  bill ion  (figures  supplied  by  the  Statistical  Office of  the  EEC). During  the first  nine  months  of  1977,  you  ran  a  trade  surplus of  $3.3  billion, against  an  overall  trade deficit of  $20.8  bill ion. -2-Economic  developments  in  the  EC  are  important  for  the  U.S.;  the  converse is  also  the  case.  We  have all  been  painfully aware of  the  monetary upheavals of  recent  years,  and  of  the  breakdown  of  the  system  instituted by  the  Bretton  Woods  Agreement.  We  have  all  seen  how  movements  in  the exchange  rate of  one  currency  can  spark off a  chain of  reactions with significant consequences  for  other currencies. Looking  at  the  economic  background,  we  can  quickly  conclude  that  there is  a  significant degree of  transatlantic  interaction  and  interdependence. It  is  for  this  reason  that  I  propose  to  talk to  you  today  about  the development  of  Economic  and  Monetary  Union  in  the  European  Communities. In  a  sense,  Washington,D.C.,is  a  particularly appropriate  place  in  which to  speak  on  this  topic.  Your  own  experience of  the  construction of  a very  powerful  economic  and  monetary  union  began  just over  two  hundred years  ago,  and  Washington  is  the  hub  of  its administration.  Our  experience in  the  European  Community  is of much  more  recent date. While,  for  obvious  reasons,  the  two  experiences  are  not  directly comparable, believe nevertheless  that  your  situation  today  can  provide  us  in  Europe with  some  valuable  pointers. Let  me  briefly  sketch  the  present  situation  in  the  European  Communities. We  have  very  largely achieved  our  aim of  market  unity.  Since  January  1  last, we  have  finally abolished  all  customs  duties  in  our  internal  trade,  thus completing  the  integration of  the  three most  recent  Member  States  into our customs  union.  There  remain  certain non-tariff barriers  to  trade,  which  we are  in  the  process  of eliminating.  Trade  between  the Member  States  can  be complicated  by  differences  in  tax  systems,  particularly  indirect  taxes  and excise duties.  I  dare  say  that  some  of  you  will  have  encountered  problems of this  kind  in  your  own  country.  For  our  part,  we  are making  steady  progress in  dealing  with  this  problem.  Finally,  we  have  still  not  achieved  the  desired level  of  freedom  of movement  for  the  professions. Each  one of our  Member  States  has  suffered  to  some  degree  from  the economic  difficulties which  have  beset  the world  since  1973.  In  our  Community, composed  as  it  is of  sovereign  nation  states,  a  certain  tension  inevitably arises  from  the apparent  contradictions  between  the different  national  contexts. I  say  that  these contradictions are apparent,  because  I  believe,  as  do  my colleagues  in  the  Commission,  that when  the  problem  is  looked  at  in  a  wider perspective  than  the  purely  national,  it  is  abundantly  clear that  reactions based  on  purely  national  considerations  run  a  grave  risk of  further  destabilizing the situations and,  in  the  end,  of  compounding  the  problem  they  are  intended to  solve. It  is  understandably difficult  for  some  of our  Member  States  to  accept  the practical  conclusion  of  this  kind  of  reflection.  As  you  know,  their economic situations are  very  divergent. While  we  have  floating  currencies  allied  to  high  inflation  rates  and stable currencies allied  to  low  inflation  rates,  we  also  have  the  rather curious  phenomenon  of  stable currencies allied  to  relatively  high  inflation  rates. You  wi  11  see,  therefore,  that  the  economic  difficulties  have  had  a  differential impact  on  our  Member  States.  The  conclusion  that  this  calls  for  differential responses  is  an  easy  one  to  draw,  but  one which  we  in  the  Commission  are  convinced is  wrong,  for  reasons  which  I  will  outline  later. ~- ~--------~-~-------------------------------------------3-European  industry  faces  a  number  of  serious  problems  which,  in  some sectors,  create a  requirement  for  fundamental  and  rapid  structural  change. In  certain sectors,  particularly steel  and  textiles,  the  scale of  the  industry and  the  gravity of  the  problem  are  such  that  the only  viable approach  is  one worked  out  at  Community  level.  Where,  in  other  sectors,  direct  local  action is  appropriate,  we  must  nevertheless  ensure  unity of approach,  so  that  the solutions  applied  in  one  part of  the  Community  do  not  simply  frustrate efforts undertaken  in  another  part. We  have  our  brighter  spots,  too,  of course.  In  the aeronautics,  data processing  and  electronics sectors,  we  believe that we  have  useful  development opportunities,  which  we  believe can  be  sustained  and  brought  to fruition  by a  greater degree of  coordination at  Community  level. You  will  certainly  be  able  to appreciate our  problems  in  the  energy  sector. We  are even  more  heavily  dependent  on  imports  than  you  are.  This  being  the case,  the  development  of  internal  energy  resources  and  the  rationalization of energy  use  are,  if anything,  even  more  important  to  us  than  they  are  to  you. We  are  in  the  middle of  a  large-scale public debate on  nuclear energy,  organized by  the  Commission.  In  this  sector  too,  the  scale of  investment  and  the  importance of  the choices  to  be  made  require  coordination at Community  level. The  changes  which  face  us  on  the  economic  plane,  and  the movements  in favor  of greater social  justice require  us,  at Community  level,  to make  a positive  response,  via  the means  at our  disposal  for  promoting  the  adaptation of our  labor  force  to  the  imperatives  of our  situation,  and  to explore means of  furthering  the  more  specifically social  aims  proposed. This,  then,  is  an  outline of  some  of  the  problems  we  face.  We  in  the Commission  believe  that our  best  response  lies  in  a  more  vigorous  pursuit of what  we  call  Economic  and  Monetary  Union.  We  presented our  ideas  on  this to  the  European  Council  (composed  of  the  Heads  of State  or Government  of  the Member  States)  last  December.  The  response  was  positive,  so  that  we  now  have a  mandate  to  press  forward  along  the  lines we  suggested.  We  will  also do  this on  the  basis of a  rolling  five-year  plan,  which  will  be  re-examined  each  year by  the  European  Council,  and  which  can  thus  be  adjusted  to  take account  of  the developing  situation. What  is  Economic  and  Monetary  Union?  I  think  that  the  best way  of  answering this question  is  to  illustrate  EMU  by  reference  to what  we  hope  it will  achieve. I  do  not  propose  to  go  in  detail  into  how  we  hope  to  bring  about  EMU.  Part of the  reason  is  that we  are only  beginning  to  specify  the  steps we  must  take. The  other,  and  more  important  part of  the  reason  is  that  I  believe that  it will be  more  interesting  for  you  to  see  the  shape  and  reason  of our  ambition,  rather than  to get  bogged  down  in  the  nuts  and  bolts. Let  me  deal  first with  the  monetary  aspects.  In  a  Community  in  which  we  have removed  all  tariff barriers  to  trade,  where  we  have  made  very  important  progress on  non-tariff barriers,  and  where  we  are working  to  reduce  the  problems  of  tax differences,  there  is  still  a  factor  which  can  seriously  hamper  trade.  That factor  is,  of  course,  exchange  rate  risks.  We  have,  effectively,  four  currency areas  in  the  Community.  Germany,  Denmark  and  the  Benelux  countries  are  in  the ••snake ...  The  pound  ster.ling  (with which,  for  exchange  purposes,  the  Irish pound  is directly  linked  at  par)  is  floating;  so are  the  French  franc  and  the I tal ian  1 ira. -4-As  you  know,  the  exchange  risk can,  at  times,  be  very  high  in  intra-Community  trade.  The  consequences  of  this  can  be  quite disturbing  for  industry and  commerce.  Monetary  Union  would  remove  this  risk,  with  very  positive benefits.  This  will  clearly  involve  a  harmonization of exchange  rate policies, proceeding  then  to  a  system of effectively  fixed  exchange  rates  between  the Community  currencies.  The  advantages  of  such  a  situation for  businessmen within  the  Community  are clear.  So,  too,  are  the  advantages  for  businessmen and  investors  from  outside  the  Community. Still  on  the monetary  plane,  the  move  to stable  intra-Community  exchange rates,  and  eventually  to  a  common  Community  currency,  would  have  very  important implications  for  the  international  monetary  system.  The  Community  is  the world's largest  trading  bloc;  it  is  the world's  second  economic  power.  These  factors have  not  had  their full  impact  on  the  international  monetary  system  simply because  the  Community  currencies  have  reacted  in  a  divided  fashion.  To  put it another  way,  I  believe  that  many  of  the  problems  we  have  faced  over  the  last six years  could  have  been  avoided,  or at  least alleviated  if  the  Community currencies  moved  in  a  way  consistent with  the  total  economic  weight  and  strength of the  Community,  rather  than  on  the  basis of  the separate conditions  of  each Member  State's economy. A common  European  currency would  be  a  major  international  currency.  You have  such  a  currency-- a  situation which  brings  advantages  as  well  as disadvantages. The  appearance on  the world  scene of  a  major  new  international  currency, which  subsumed  some  of  those which  today  exacerbate  exchange  instability,  could bring  very  important  benefits  to  the  Community,  to  the  United  States  and  to the  international  monetary  system  in  general. Within  the  Community,  monetary  union  would  help  the  Member  States collectively  to  recover  the control  over  demand  and  inflation which  most  of  them have  individually  lost.  When  we  consider  that  not  far  short of  half of all the  Member  States•  trade  is with  the other  Member  States,  we  can  see  immediately the  interaction of  inflationary  pressures  between  them.  On  the other  hand,  over half of  the  Member  States•  total  trade  is  with  countries  outside  the  Community, so  that  the  individual  Member  States and  Community  as  a  whole  are very  open  to the  influence of  economic  trends  elsewhere.  As  the world's  biggest  trading  group, the  Community  is  clearly  very open  to  importing  (and  to  exporting)  inflation. Monetary  stability,  both  internal  and  external,  would  therefore  bring  considerable advantages  to  the  Community  and  to  its  trading  partners. The  competition of our  Economic  Union  would  give  a  further  stimulus  to the  level  of  economic  activity  in  the  Community.  As  I  have  already  pointed we  have  made  substantial  progress  in  removing  non-tariff  barriers  to  trade. policies on  tax  harmonization are well  under  way.  We  have  made  progress  in relation  to  the  freedom  of establishment  in  the  professions. out, Our Much,  however,  remains  to  be  done.  I  have  a  particular personal  interest in  this  aspect  of  EMU  since,  as  the  Commissioner  responsible  for  Taxation,  it  is my  job  to  specify  the  fiscal  measures  which  our  progress  toward  EMU  will  require. The  creation of  a  single  European  currency  and  the creation of  an  integrated European  economic  system  cannot  be  carried out without  harmonization  of  the structure of  indirect  taxation  and  perhaps  approximation of  the  rates of  Value-Added-Tax  and  the  major  excises. -5-Whether,  in  order  to abolish  fiscal  frontiers,  we  shall  need  a  complete harmonization  of  tax  rates or whether  -- as  in  the  USA-- sizeable variations from  one  Member  State to another  can  be  tolerated,  is  a  question  for  further  study. In  carrying  out  this  study,  we  will  have  to bear  in  mind  the  fact  that  true econom1c  union  requires  that  those  factors  in  the  formation  of manufacturing  costs which  are determined  by  public  pol icy,  including  taxation,  will  have  to  be broadly  equalized.  This  implies  broad  equalization of  tax  burdens  which will, in  turn,  dictate the  need  for  Member  States  to adapt  their  taxation  systems towards  a  common  pattern. The  achievement  of  EMU  in  conditions  which  satisfy  the  aspirations of our people will  require a  better  regional  distribution of work  and  wealth  in  the Community.  The  poorer  regions  will  need  assurance  that  their economic  difficulties will  not  be  aggravated.  The  richer  regions  will  need  the  assurance of more  stable and  secure markets.  We  will  therefore  need  measures  to accelerate  the  flow of pub! ic  finance  between  regions. At  the  political  level,  the  achievement  of  EMU  will  require  us  to  take  a new  look at  the  institutions of  the  Community. The  process  which  I  have  described will  evidently create  the  need  for greater centralization  in  some  areas  of  economic  pol icy.  On  the other  hand, there  is  a  clear movement  of opinion  in  all  our  Member  States  toward  a  greater decentralization of  power.  We  will  have  to  examine  each  area of public  pol icy, and  particularly of public finance.  We  should,  in  my  view,  give  the  Community institutions  those  functions  which  can  manifestly  best  be  performed  by  it.  For the rest-- which  wi  11,  however,  constitute a  very  important  part of  public  pol icy-we  must  aim  at a  dispersal  of  power  to  respond  to  the  need  for  efficiency and to  the  need,  felt more  and  more  urgently,  for  decision-making  to  come  closer to  the  people  in  their everyday  Jives.  This  is  an  aspect  of  our  endeavor  with which  you,  I  am  sure,  will  identify and  sympathize. There  is  more  to  the  story  than  this.  Economic  and  Monetary  Union, desirable  though  it  is,  and  difficult as  it may  be  to  achieve,  is  not  an  end  in itself.  Rather,  it  is  a  means  of  securing  for  our  people  a  greater degree of economic  stability and  security.  Against  this  background,  we  can  more  confidently continue and  develop our  action  to  improve  the quality of our  society and  to ensure  the  respect of  the  individual •s  economic  and  social  rights  and  obi igations. The  ultimate of  Economic  and  Monetary  Union  was  wei I  expressed  by  Mr.  Roy Jenkins,  the  President of  the  Commission,  when  he  said  in  the  European  Parliament last January: 11 1 believe  that  no  proposal  for  political  union  can  make practical  sense without  the  underpinning of economic and  monetary  union.•• It was  indeed  appropriate  that  he  should  have  said  this  in  the  European Parl lament.  As  you  know  our  Parliament will,  next  year  for  the first  time, become  a  directly-elected  Parliament.  This  will  bring  that  institution closer  to  the  people,  and  will  inevitably  result  in  a  greater degree of popular pressure on  our other  institutions. Let  me  admit,  in  conclusion,  that  I  have  been  selective  in  my  treatment of our  topic  today.  There  is  a  very  simple  reason  for  this,  which  I  hope  you will  appreciate.  I  said at  the  beginning  that  successive  U.S.  Administrations have  taken  the  view  that  the  development  of  European  integration  is  a  very  positive factor  in  world  political  and  economic  affairs.  The  reason  for  my  selectivity  is that  I  wished,  in  describing  what  we  mean  by  Economic  and  Monetary  Union,  to  indicate to you  how  a  further  deepening  and  enrichment of  European  Unity  could  justify  a continuation of  that  view. 

EC Commissioner urges economic and monetary union. Richard Burke, Member of the Commission of the European Communities. Washington DC, 1 February 1978

Abstract

Similar works

Full text

Available Versions

Archive of European Integration

Archive of European Integration