View from City Road: Case for European unity in Malaysian dispute

Quite how Lord Palmerston would have handled the Malaysian imbroglio one can only guess. But it may be time to start dusting off the files.

Malaysia is not the only fast- growing Asian economy to threaten discrimination against British companies. Yesterday, China rattled a few sabres as well. British businesses face the prospect of being undermined in two of the world's fastest-growing markets.

The Government cannot, and should not, take this lying down. It should begin to explore what the European Union might do on our behalf. As Sir Leon Brittan made clear in China yesterday, a fundamental principle of the Treaty of Rome is that member states are parts of the same trading unit. It is entirely contrary to the spirit of European law to single out one member for retaliatory action.

In time the European Union could no doubt find a legal means of hitting back, although most episodes of sanctions stem from votes in the United Nations and rely on UN enabling legislation. But it would be sad - and foolish for Malaysia - if the matter ever went as far as retaliation by the European Union.

Malaysia runs a trade surplus with Britain, which means that an embargo would hurt it more than us. Moreover, Malaysia's exports to Britain are a far higher proportion of its output than our exports to Malaysia are of ours. For Europe as a whole the arithmetic is even starker. If Dr Mahathir Mohamad has any sense he will let the whole issue die.