ABSTRACT
As noted in chapter 2, in the neo-mercantilist project of European integration, the internal market programme was about creating a European home market as a bulwark against global competition:
According to the mercantilist view, a strong home market, allowing for the early achievement of economies of scale, and securing a solid profits base, is the key to success in international competition. ‘Non-Europe’, national rivalries and the fragmentation of Community market, have, in this view, deprived European companies of a key element in competitive success, which the 1992 programme will correct. (Grahl and Teague 1990: 172)
Although neo-liberals also saw the internal market as enhancing competitiveness, they believed this because of the market liberalisation resulting from deregulation rather than, as in the neo-mercantilist view, because it would favour European companies over their US and Japanese competitors. In terms of the solution they offered, the fundamental incompatibility between the neo-liberal and the neomercantilist projects concerned the fact that the latter implied going beyond the mere free movement of goods, services and capital, towards a supportive supranational political framework for the pursuit of interventionist and protectionist policies. Thus, although, as we shall see with the case of the ERT, the neomercantilist orientation at least partly shared neo-liberal ideas on the necessity of labour market flexibility, welfare state reform, etc., it did not share the neo-liberal commitment to global laissez-faire. As Pearce and Sutton argued, it was a debate between ‘Europrotectionists’ on the one hand and ‘liberals’ on the other: both groups shared the goal of lowering trade barriers within Europe, but were at loggerheads about the question of whether to raise them externally (Pearce and Sutton 1986: 4-5 and passim). In the latter (neo-mercantilist) strategy, such an external trade protection would be complemented with a European industrial policy centred around ‘strategic sectors’.
