Downing Street Years - Margaret Thatcher [459]
I also met M. Rocard, the new Socialist Prime Minister. I had met him before but did not know him well. He spoke disarmingly and I felt sincerely about his affection for Britain and the special understanding — inherited from wartime — between the two countries. As French Socialists go, he was moderate, pragmatic and sensible and I warmed to him. I hoped that he might come to exercise some moderating influence on France’s flirtation with European federalism.
On Saturday 18 June 1988 I flew to Toronto for the G7 economic summit. President Mitterrand had suggested optimistically to me in Paris that this being President Reagan’s last summit there might be an inclination to put off difficult decisions. I had replied that I did not think this likely and, for my part, I was determined to ensure that we used this occasion to get to grips with agriculture and the GATT. By the time I reached Toronto I had done my homework on the subject. In particular, we had devised a mythical beast known informally as ‘Howe’s Cow’ or more precisely as a ‘Producer Subsidy Equivalent’. This was the calculation of how much agricultural support, whether in direct subsidy or from protection, each country provided, divided by the number of cows. The greediest cow turned out to be Japan’s — so not surprisingly, the Japanese, with some support from the Americans, disputed our statistical approach.
I was, therefore, well armed with useful facts and figures when Brian Mulroney, the summit chairman, asked me to open the economic discussion on the Sunday afternoon. I drew attention to the success of the current second cycle of summits, now ending, compared with the first. We had seen economic growth, low inflation and more jobs in the years since the Montebello summit in 1981, because we had stuck to getting the fundamentals right rather than concentrating on demand management. But there was more to do. Above all, we must fight down protectionism. I strongly urged — and repeated in a further intervention the following day — that all of us should honour the commitments made at the start of the GATT Uruguay round in September 1986 by coming up with firm proposals at the forthcoming ‘Medium Term Review’ meeting of the GATT.
As the dispute over measuring agricultural subsidies exemplified, free trade is something which almost everyone subscribes to in principle and finds politically painful in practice. Britain always had everything to gain from a global open trading system. The United States too traditionally believed in free trade. But Britain’s own trade policy was now in the hands of the Community, which contained a majority of countries with a tradition of cartels and corporatism and a politically influential agricultural sector. We were in a minority in Europe when it came to deciding trade policy. As for the United States, its huge trade deficit had given a protectionist turn to policy which President Reagan, a convinced free trader, found difficulty resisting. For its part, Japan not only subsidized and protected its agriculture more than anyone else; it also continued to place obstacles in the way of foreign imports of nonagricultural goods and services. Consequently, I increasingly had to look to the ‘Cairns Group’ of fourteen countries (which includes Canada, Australia, and Argentina) and to Third World countries, anxious to export their agriculture and textiles, to bring pressure on this wealthy western protection racket. I always regarded free trade as far more important than all the other ambitious and often counter-productive strategies of global economic policy — for example the policies of ‘co-ordinated growth’ which led principally to inflation. Free trade provided a means not only for poorer countries to earn foreign