The European Economic Community, Past and Present

The prospect of a united Europe has been in the minds of people since ancient times. The Romans, during their heyday, desired to conquer the entire European continent, and nearly succeeded. Between then and now, there have been other attempts to unify the European continent under one ruler - people such as Charlemagne, Napoleon and Hitler. It is only now that the unification of Europe seems to be possible, but in such a way as has never been thought of in the history of civilized man. No longer is the move towards a single ruler or a conquest of land. Today's unification is one of political and economic borders, in which the "conquered" nations gain a seat in an international High Authority and all people involved prosper. At least, this is the goal of the growing organization in Europe called the European Economic Community (EEC), or the Common Market. Officially established in 1958 with six member countries, the Common Market has been touted as being the best thing to happen to Western Europe (excepting, of course, the defeat of Hitler and the decline of Communism). On the other side of the coin, the EEC has not realized many of it's goals that were set back in 1958 - it seems that even a slight recession has the capacity to undermine the Community and threaten it's existence. While the nations of Europe try to work together towards this common goal of a unified Europe, it is necessary to look at the situation and ask if the EEC is truly having an effect on Europe. The facts are that most of the "prosperity" of Europe can be as easily blamed on normal economic practices than on the "integration" of Europe by the members of the Common Market, and while it is impossible to determine what Europe would have been like without the EEC, it is completely probable that it would be no worse off than it is now. Following World War II, Europe was in disarray, both economically and physically. Germany had been divided into an East and a West, and Communism was creeping into the Eastern nations. In 1947, the United States began offering financial aid to any European country which so desired it to aid in rebuilding after the war - the Marshall Plan. Many of the Western European nations accepted the gift, which the United States gave without expectation of direct reimbursement, while the Soviet Union and most of the countries it had influence over declined. This was the pump that primed the post-war revival in Europe. The United State's main condition for the Marshall aid was that the recipient nations set up a joint organization to manage the funds given them and to set up a common economic policy.1 This the nations of Western Europe did this, and the OEEC (Organization for European Economic Co-operation) was born. While not a predecessor of the Common Market, it did give Europe a taste of what working together would be like. In Europe in the late 1940's was still the fear of another war. Germany had been demilitarized, but France was still unsure of its safety. On May 9, 1950, the foreign minister of France, Robert Schuman, approached West Germany with a plan.2 The plan was to unite certain elements of German and French production under a single multi-national organization to control the resources. In this case, the resources were coal, steel, and iron - without which, it was believed, it was impossible to go to war. Italy, Belgium, Holland, and Luxembourg were also invited to join the organization. In 1951, the six signed the Treaty of Paris, which established the following: the six member nations gave all control over their steel, iron, and coal industries to a multi-national High Authority that would control prices and production, and a small parliamentary body, a court of law, and a Council of Ministers was created to see that the rules set down by the Authority were followed and that each nation had a limited say (at least an opinion) in the actions of the High Authority.3 This organization was the predecessor and model for the Common Market, and was known as the European Coal and Steel Community (ECSC). Under the ECSC, France, Germany, Belgium, Holland, Italy and Luxembourg pooled their coal, iron, and steel resources quite successfully. Trade barriers and tariffs on coal and steel between the member nations were gradually eliminated by the High Authority by 1955.4 Production of steel and mining of coal (now under the command of the High Authority) increased, and the six member nations seemed to be getting along with each other in a common effort for the first time. Because of the apparent success of the ECSC, there were advocates within Europe to take the idea a step (or three) further - instead of merging only the production of coal and steel between nations, why not merge the nations themselves (their economies, anyway)? There were a few very outspoken proponents for a unified European economy, among them Jean Monnet, Konrad Adenauer, and Robert Schuman. The six member countries of the ECSC began in 1955 to listen to proposals for the further unification of Europe. In 1956, the High Authority commissioned a committee to investigate the possibility of an integrated European economy.5 The committee, headed by the prime minister of Belgium, Paul-Henri Spaak, gave their conclusions to the Authority. Negotiations between the six members ensued, and climaxed in the signing of the Treaty of Rome in 1957. The Treaty of Rome was to the EEC what the Treaty of Paris had been to the ECSC. As the goal of the ECSC had been to join the coal and steel production of the six member nations, the goal of the EEC was to join the economies of the six in order to create a single economic nation. In 1958 the EEC was under production. In style, the EEC was identical to the ECSC - there was a Council (the equivalent of the High Authority), made up of elected delegates from each of the member countries, there was the larger Assembly (also known as the European Parliament) which had very little actual power, and there was the European Court of Justice to handle disputes between member nations and to enforce the laws made by the Council.6 Also similar between the two was the idea of eliminating trade barriers and tariffs. While in the ECSC, the only tariffs were those on coal and steel, the EEC had to deal with all tariffs, taxes, and barriers. The EEC, upon its birth, had several goals for its members. The most important was the gradual elimination of tax barriers and tariffs within and between the member nations. The idea was to turn the six original members into a customs union, with free trade between themselves and a uniform trade with the rest of the world - many entities acting with one economy. Another factor of the EEC was to equalize the tariffs and taxes on imports for all member countries. Without these two steps, there would be too much competition between members, and the EEC would loose it's competitiveness with the rest of the world - without a world market, there was no point of even attempting such a union as the EEC wanted. Other goals of the Common Market involved a type of social unity of member states - the ability of any citizen of one member to work in any other member for equal pay, conditions and benefits as compared to a citizen of that member, and the right of any business established in one member to operate in any other member and receive equal judicial rights and taxation as any firm local to that member nation. Also important were rules forbidding member governments unfairly helping local businesses or citizens over foreign (but member) businesses or citizens. Finally, the EEC desired (and still does, as it has yet to be a practical application in Europe) for a single EEC currency, to be valid and used in all member nations. These were, and are, the main goals and aspirations of the EEC. Great Britain refused to be a part of the EEC at this time, as it had avoided the ECSC a few years earlier. In 1959, she teamed up with Austria, Denmark, Portugal, Norway, Sweden, and Switzerland to form the European Free Trade Area (EFTA). The EFTA was designed to be a looser confederation of nations than the EEC, yet to compete with the EEC by having its members reduce intra-member customs on manufactured goods. The EFTA had hoped, and still does, to merge with the EEC at some time in the future. In 1962, apparently unimpressed with the advancement of the EFTA, Britain applied for membership in the EEC. Charles de Gaulle was president of France at the time, and, fearing an English takeover of the EEC (which France had largely been in control of), he vetoed Britain's application (decisions had to be unanimous between the member nations, and the other five members had agreed to let Britain enter). Britain again applied in 1967, and was again rejected by de Gaulle. In 1969, the Community merged what had been the three branches of the EEC - the ECSC (which had been a separate entity from the Common Market), the EEC, and Euratom, a combined agency designed to research atomic energy and share its results with the rest of the EEC - into a single entity - the new European Community (EC).7 When Britain re-applied in 1970, de Gaulle was no longer in control, the new president of France was Georges Pompidou. Negotiations began in earnest for the admittance of Great Britain and Scotland (the United Kingdom), Ireland, Denmark, and Norway, the latter three having decided to join Britain in the attempt. In 1973, Denmark, Scotland and the UK became full members of the EC, Norway's population having recalled their application. Greece was admitted without complication in 1981, and Spain and Portugal in 1986. There have been no other admittances since 1986, although Austria has applied for membership and agreements are pending with the Eastern European nations of Czechoslovakia, Poland, and Hungary that should pave the way towards admittance.8

The goals of the EEC have been described above - free movement of labor and goods between member nations, a unified economy (with unified import tariffs, inflation, and taxes), and a movement towards political unity for the member nations. These goals were set in 1959, and to date, only a few have become reality. While the idea of free movement of goods and labor between nations seems easy to visualize, there are more problems associated with it than have been currently solved. Such hindrances as: to whom does a laborer pay taxes - where he is a citizen, or where he works and receives social benefits from (such as social security or a retirement benefit) - because, as of yet, there is no common taxation plan for the EEC; what can be done to make buying and selling more fair in the EEC - some nations can simply produce more for cheaper, and without the tariffs that used to be put on the cheaper, foreign-made goods, local manufacturers will be put out of business; products that are produced in one country and shipped to another to be sold are not necessarily made with the same standards or ingredients that the receiving country expects (this is especially true of foodstuffs). Another obstruction to European unity is the ever-present nationalism of each member. The complete unification of the member nations of the EEC (which was one of the hopes of the Treaty of Rome) means eliminating all nationalism as it exists today in Europe. While some nations are capable of saying that they are willing to lose their national identity to the promise of a greater good for Europe, it is only necessary to look at the slight recession that hit the world in 1982-84.9 The EEC was well established in Europe, and had just admitted Greece as a full member. Yet, when the recession hit, each country turned inward instead of outward to try to remedy the problem. The prospects of the EEC faded as each nation was faced with economic trouble - which was exactly what the EEC was supposed to help with. Unfortunately, no organization works well when its members flee, and the member nations quickly forgot about the potential advantages of working together through the recession. Unemployment in Europe rose to the highest in recorded history, and the EEC slowly lost its funding until the Community almost went bankrupt.10 The Community has since slowly revived, and has regained at least the position and strength it held before the recession. With challenges such as these, it is doubtful that there will be further unification of the member nations of the EEC in the next ten years. One final note about the apparent prosperity of the EEC and its members was brought up by Alexander Lamfalussy in an essay published in the Lloyds Bank Review in 1961.11 In the essay/report, Lamfalussy examines and analyzes the performances of the individual Western European nations as they existed before the EEC was introduced to Europe, and after. (Because there was a war being fought before the creation of the ECSC, Lamfalussy disregards findings that are related to the ECSC, such as the development of iron and coal mines and the production and export of steel from his analysis.) His conclusion is that the EEC has neither hampered nor accelerated the development of Western European nations, and his argument is so well documented that it is impossible not to give it some thought and perhaps credit for an alternative explanation of the European situation. While it is true that things do change in thirty years of history (from 1961 to 1991), the EEC seems to have had more problems as the memory of World War II drifted into the past than it has had economic or political advancements. Simple evolution of the workplace can explain much of the EEC's "progress" in the last decade, and even now it is becoming doubtful of the competitiveness of the EEC in the future world market.12 The EEC began as a plan to stop the ability of six major Western European powers to wage war (the ECSC), and has developed into a twelve-member intra-continental customs and economic union. It is now being opened up to the recently Soviet-controlled Eastern Europe - something that would have been unthinkable 30 years ago. Yet, after over 30 years of existence, there are problems that existed from the beginning that remain unsolved - mainly, the people problem. And while the European Community had previously been viewed as a possible giant in the world market, this view is changing, gradually lessening the probable degree of importance of the EEC in the future. Now, a complete economic union seems to be an unlikely prospect, with a political union (as per the ambitions of the Rome Treaty) even less plausible. Still, non-member European nations are interested in what the EEC has begun, and slowly the EEC's membership will continue to grow (with Austria likely to be the next member), despite the reports that there is no advantage to joining. At least, yet. It is possible that the EEC will turn themselves around, but there have yet to appear any signs of this happening. The EEC began as an organization, the biggest of its kind, and that is what it remains today - an organization. For the Common Market to not only succeed but to prosper, it will be necessary in the future for a more complete collaboration on the parts of the member nations towards working together through thick and thin, not only when the going is easy and the seas are calm.

ENDNOTES

1. Kerr, Anthony J C, The Common Market and How it Works, p 5.
2. Ibid p 5.
3. Ibid p 6.
4. Stern, Robert M. "EEC." Groliers Electronic Encyclopedia, 1990.
5. Armitage, Paul, The Common Market, p 10.
6. Kerr, op. cit., p 7.
7. Ibid p 10.
8. Francis, David R. "East European Shift Accelerates West European Union." The Christian Science Monitor, (8 may 1991), p 7, c 2.
9. Cooper, Mary H. Common Market in Disarray. (Pamphlet) Vol 1, no. 21, p 411.
10. Ibid p 411.
11. Krause, Lawrence B, ed. The Common Market: Progress and Controversy, pp 90-107.
12. LaFranchi, Howard. "European Unity Drive Falters." The Christian Science Monitor, (20 May 1991), p 4, c 1.

BIBLIOGRAPHY

Armitage, Paul. The Common Market. New Jersey : Silver Burdett, 1978.

Cooper, Mary H. Common Market in Disarray. (Pamphlet) Washington, DC: Editorial Research Reports, 1984, vol 1, no. 21.

Francis, David R. "East European Shift Accelerates West European Union." The Christian Science Monitor, (8 may 1991), p 7, c 2.

Kerr, Anthony J. C. The Common Market and How it Works. New York : Pergamon Press, 1986.

Krause, Lawrence B., ed. The Common Market : Progress and Controversy. New Jersey : Prentice-Hall, Inc., 1964.

LaFranchi, Howard. "European Unity Drive Falters." The Christian Science Monitor, (20 May 1991), p 4, c 1.

Stern, Robert M. "EEC." Groliers Electronic Encyclopedia, 1990.

Tyler Jones, May 28, 1991