Orchestrating Europe (Text Only)

Within the Netherlands, the EDC had created problems of a different nature. The European army had been accepted only reluctantly and the government was not interested in increasing its entanglement with premature experiments in political federation. Thus, when the EPC was launched, the Dutch made their acceptance conditional on its being given specific economic tasks. Their foreign minister, Jan Willem Beyen, attempted to get the EPC treaty to include provisions for the automatic creation of a customs union. In the subsequent inter-governmental talks on the EPC, which lasted from the autumn of 1953 until the summer of 1954, the Beyen Plan received only qualified endorsement. In theory, it was acceptable to Belgium and Germany only if it were widened to embrace a complete common market and only if provisions were added for economic policy coordination. The Italians, however, were willing to accept the idea that the creation of a common market was one of the tasks of the EPC (which left open the option that the EPC might do nothing) but were not willing to countenance it as a separate protocol. But the French were unwilling to accept it at all. With an economy lurching into deficit because of colonial wars, while government abandoned many of the ‘liberalization’ measures that had previously been adopted, the time was evidently not ripe for discussing the automatic removal of protectionism.25

The EDC was never a very stable construction. It was also utterly inadequate to carry either the ambitions of the European federalists or Dutch designs for a permanent and fair removal of trade barriers. When the EDC collapsed in August 1954 on the French refusal to move to ratification, it seemed at the same time to dash all hopes that the Six might move towards further integration.

In the wake of the EDC’s collapse, there was an intense surge of diplomatic activity to resolve outstanding sources of Franco-German conflict. One success of this was the decision, based on a British initiative, to create a German army under the umbrella of NATO and under the auspices of the Western European Union (WEU) which was now to embrace all six ECSC countries, as well as the UK itself (ironically, this was a solution that could have been reached almost four years earlier). Another potentially thorny issue in relations between the two countries had been the disputed status of the Saar, pre-War German territory under French administration, later incorporated into a customs union with France. The French government had wanted to give this area ‘European’ status but, under a new agreement, France accepted that it would be bound by a plebiscite to be held in October 1955. In the event, the populace rejected the European option and the territory was transferred back to Germany in January 1957.

Another source of inconvenience, if not tension, had been the French desire to secure markets for its agricultural produce in Germany. This question had become trapped into the so-called ‘green pool’ negotiations for the creation of some form of European agricultural organization but, after their failure and the transfer of the agricultural brief to the OEEC in January 1955, the first bilateral agreement to emerge was the Franco-German wheat agreement. Among the other agreements dating from this period, possibly the next in importance was that to canalize the Moselle river, thereby improving trade between the two countries. France’s partners reacted to this flurry of activity with some ambivalence. Whilst they could see the potential gains in easing relations between the two countries, they could also see the danger that if France no longer needed ‘integration’ to control Germany, their own interests could easily be ignored in the ensuing rounds of bilateral dealing. Under these circumstances, the Benelux governments began to consider ways of relaunching the ‘European agenda’.

At the headquarters of the ECSC in Luxembourg, Jean Monnet was also concerned at the drift in events. Unaware that the French government was indifferent to his fate, he decided to make his continuance as chairman of the High Authority contingent upon progress on the European front. Rather than start afresh, or pick over the wreckage of the EDC disaster to see what could be salvaged, he considered that the best approach would be to build outwards from the existing community. This could be extended into inland transport in general, into other classical energy forms (particularly electricity generation) or, and this was to be the key to its success, into atomic power. Nuclear energy was seen as an exciting new prospect where there had been little time for entrenched interests to emerge; yet the costs of developing it were too heavy for a single country to bear. This last consideration, however, had not prevented most industrial nations from embarking on experimental programmes of their own. The French government, especially, was extremely keen on developing nuclear cooperation and particularly wanted jointly to construct an isotope separation plant, a necessary but expensive component in developing enriched uranium for future reactors and nuclear bombs. Unknown at the time, it was in December 1954 that the French nuclear energy agency began to implement a five-year programme to manufacture a French nuclear bomb.26

The question of a nuclear community, EURATOM, was one of the items on the agenda when the foreign ministers of the Six met in Messina in June 1955 and it was adopted for further study alongside a patchwork of other initiatives (the main one of which was a common market, which we will return to below). The first results of this study envisaged that EURATOM would acquire a monopoly of all nuclear material and its transformation into products for fission. EURATOM would also build and control its own nuclear installations, including an isotope separation plant, financed from a common budget. Finally, it would administer a common market in all these materials and equipment. The one point it did not touch on was the relation of this structure to national military programmes, such as the one already underway in France. At this juncture the French suggested a moratorium on the manufacture and testing of nuclear weapons for five years, which did not affect the French programme because it would not be ready for such tests until after this period. The military problem was part of a wider one that, mid–way through the negotiations, was beginning to sap EURATOM’s rationale. It was never envisaged that EURATOM would be the sole European nuclear programme, merely that it would assist and facilitate (and to some extent control) parallel national programmes.27

EURATOM’s future was further enfeebled by the intervention of the United States. Back in 1946, the McMahon Act had tried to limit the spread of nuclear technology by classifying the fruits of US atomic research as secret. Paradoxically, by prohibiting collaboration of any kind, it had effectively prevented the Americans from exercising any control over developments that were already taking place. In his famous ‘atoms for peace’ speech to the United Nations in December 1953, Eisenhower had signalled a change in US policy which held out the prospect of the United States providing ‘fissionable material’ for projects designed to promote the peaceful use of nuclear energy. In February 1956, it offered 20 tons of enriched uranium to EURATOM at half the cost at which any European venture could hope to supply it. Aside from the noble aim of promoting peace (and deflecting attention from the fact that the ‘new look’ strategy could turn much of central and western Europe into a nuclear battlefield), the offer would displace UK competition and provide an outlet for the surplus of three US separator plants. It would also demonstrate American backing for a new supranational initiative. Finally, it would ensure that EURATOM would not build its own separation plant.

If EURATOM was not to build a separation plant (and right to the bitter end France tried to ensure that it should), then the French were determined to retain a separate national programme, keeping both peaceful and military options open. Moreover, France was only willing to surrender the sovereignty necessary to run a parallel operation, which in reality was not very much. The only limitation on its freedom of action was a four-year moratorium on testing. Parallel to these developments was a move in the OEEC for nuclear cooperation. Thus when EURATOM was formed, robbed already of most its substance and denuded of much supranational responsibility, one of its first acts was to pay the subscription of the six for joining the OEEC’s ‘Dragon’ scheme, to build an experimental reactor, an act which also absorbed much of its operational budget.

EURATOM had carried all the hopes of – and been the target of favourable propaganda by – the Action Committee for a United States of Europe, founded by Monnet in October 1955. It was only a ‘success’ in the sense that a treaty was signed at all. The other treaty signed in Rome in March 1957 was that establishing the European Economic Community (EEC). It was lucky to get onto the Messina agenda in the first place and, ironically, it was EURATOM that helped keep it there.

During the EDC negotiations, the Beyen Plan for the creation of a customs union had received varying degrees of support from five of the six governments. The Beyen Plan had at its core the creation of a customs union according to a rigid timetable over a period of 10–12 years. In order to accommodate countries in economic difficulties, the plan contained provisions for temporary escape clauses whose implementation and execution rested with the institutions of the EPC. There would also be an adjustment fund to assist countries with structural problems. Although the Beyen Plan failed because the French Assembly rejected the EDC treaty, the discussions about its merits had served to test the range of political opinion and to anticipate many of the technical problems. Firstly, the step-by-step approach to tariff cuts was condemned as too inflexible, making it more likely that countries would have difficulties in following the schedules. A less rigid programme, albeit with intermediate and final targets, was preferable. Secondly, the safeguard clauses were thoroughly disliked, by Germany and Belgium in particular. They argued that repeated backsliding followed by justification and appeals procedures would eventually destroy the community. Instead they urged far-reaching measures of policy coordination to prevent economies moving too far out of step, thereby removing the occasions for invoking these clauses. Thirdly, although the Dutch were heavily preoccupied with commodity trade, it became apparent to all that progress would be impossible unless capital and labour mobility were also dealt with. These were valuable insights, and all would eventually find their way into the Treaty of Rome. But there was one more factor in the summer of 1954: French politicians were implacably opposed to the idea of the EEC in whatever shape or form.28

The Dutch government was inclined, rightly or wrongly, to ascribe trenchant French opposition to the complexion of the government then in power. Once the Mendès-France cabinet had fallen, the Dutch considered that the main obstacle to persisting with the initiative (or indeed to expanding it by incorporating agriculture) had been removed. Thus, when the idea of a ‘relaunch’ of European integration gathered momentum, the Dutch government made its support for the Benelux memorandum conditional upon the inclusion of a customs union in the list of demands presented at Messina. However Monnet, especially, was reluctant to risk a prompt rejection of a new European initiative because it introduced an immediate challenge to French protectionism. Curiously, the German government had had similar reservations and its delegation to Messina came armed with negative instructions on the customs union in order not to isolate the French. In the event, after a particularly indecisive meeting, an agreement was reached to establish study groups, under the overall direction of Henri Spaak, to investigate all the components of the Benelux memorandum.29

Once the talks commenced, it became obvious that the French were primarily interested in atomic energy. However, the Germans, having been willing to back the French at a critical moment, entered the common market negotiations with conviction, as did the Belgians. Various pointers to the moment at which France decided to take the common market issue seriously have been offered by historians, but the most credible seems to be January 1956, when a new Socialist coalition led by Guy Mollet came to power. To dispel any tendency towards backsliding, from that moment the German delegation insisted that, whenever it was appropriate, there should be a ‘Junktim’ between the common market treaty and that for atomic energy.

The second revelation during this early phase of negotiations concerned the position of the United Kingdom. Surprised at having been invited at all, the UK had joined the initial talks without a prepared position, other than to express a loose preference for a free trade area over a customs union. Opinion within the cabinet soon afterwards veered towards a rejection of a closer European entanglement and when, in November 1955, Spaak announced that the talks had proceeded sufficiently to start preparing a final report, the UK delegation elected not to take any further part, but to judge the report when it appeared. In reality, the decision had already been taken to reject the common market option and, at the prompting of the Americans (and to avoid being saddled with any blame when the negotiations failed), the announcement was made the following month. But the common market negotiations did not collapse.30

The ‘Spaak Report’ was approved by the ministers of the Six in May 1956 and negotiations proper were then able to start. But the French government’s conversion to the common market did not mean that it did not have to placate significant parliamentary opposition when the treaty came up for ratification. Thus a great deal of time and emotion was expended on what were ultimately peripheral items in the treaty. For example, France demanded that elements of its own expensive social legislation (equal pay for men and women, overtime pay for work beyond forty hours a week) be incorporated into the treaty to equalize competitive conditions. Once these demands had been conceded, the French delegation returned with a proposal for sharing some of its current colonial development costs in return for access to these countries’ markets. Even with such concessions in place, the government negotiated special provisions to allow France to commence lowering its tariff barriers later than the rest whilst still enjoying the benefits of market access elsewhere. None of these provisions added to the elegance of the treaty, but they all helped to condition acceptance by the French Assembly.

A second circumstance also helped to shape the negotiations, although not as decisively as some authors have suggested. In October 1956, together with the British and in collusion with the Israelis, the French launched an attack on Egypt in order to wrest control of the Suez canal from Arab nationalists. The invasion outraged public opinion and attracted the condemnation of both the USSR and the USA. On the brink of achieving their military objectives, the British cancelled operations, leaving both powers tasting the bitter ashes of political defeat. In a gesture loaded with symbolism, Adenauer travelled to Paris for talks with Mollet in the course of which both leaders announced the outlines of the compromise (largely agreed before the Suez crisis) that would set the common market treaty back on its tracks. Suez did not rescue the common market, nor did it finally convince the French government to accept it, but it did convince Spaak that the days of the current French government were numbered. If any treaty were to be certain of ratification, it had to be concluded and presented quickly. As a result, many questions that had not been resolved or that looked unlikely to be resolved quickly were left for the community itself to work out later. This accounts for the odd mixture in the treaty between detailed provisions on some issues and more procedural outlines on others.

At the core of the common market treaty lay the creation of a customs union in three steps, each of four years, with the possibility of a three-year overrun. Spelled out in precise detail, each phase would be marked by the completion of part of the removal of tariffs on intra-area trade and the erection of a common external tariff. With the exception of some troublesome items (list G), the new tariff schedule had also been calculated. By contrast, the details of the agricultural clauses concerned the way in which the steps towards a common policy were to be achieved but said little about the shape of the policy itself. This reflected a realization by the Dutch that if they pressed for more concrete clauses, they would be unlikely to be happy with the outcome. Yet the move was also viewed favourably by federalists, who saw the entrusting of future tasks to community institutions as a positive step towards supranationality. Few at the time paid much attention to the clause at the beginning of the treaty linking progress towards a common agricultural policy at each stage to further progress towards the common market. Yet this link was to form a ‘Junktim’ of its own and to underpin the implementation of both elements in the treaty.

In order to manage the community and steer its future development, the Treaty of Rome modified the supranational structure agreed for the ECSC. A European Commission, headed by independent commissioners chosen by the member states, would have sole rights of initiative across a wide range of policy issues. Only when these had been approved by the European parliament could the Council of Ministers take decisions. Moreover, after the second stage, the Treaty foresaw that the ministers would reach decisions by majority vote rather than by unanimity.

The Treaty of Rome, signed in March 1957, was the product of a society that had already reduced many of the cruder barriers to international trade, that wished to get rid of them altogether and that wanted to ensure they would not re-emerge in the event of a subsequent recession. In addition it reflected an ambition to deal with other competitive distortions (state aid to industry, restrictive practices and other invisible trade barriers) by eliminating them at source. This required a more sophisticated institutional structure than previous inter-governmental organizations. This implication was willingly accepted because the Treaty was seen as more than a simple economic agreement; for some, at least, it carried the hopes for a future federal European state.

2

1958–73 1

The explicitly federal implications of the EEC made it superficially unattractive for the rest of Europe.2 A variety of political, economic or security reasons confined the supranational course initially to a limited group of countries, albeit a group that comprised more than half of western Europe’s output and foreign trade. Nonetheless the outsiders still constituted a sizeable market of considerable sophistication, one that had shared with the Six the same pan-European movement towards commercial liberalization and growing interdependence. Among these smaller trading economies, in particular Denmark, Sweden and Switzerland, there existed the same drive towards a further relaxation of protectionism that had motivated the Benelux countries, and this drive was reinforced by the fear of what might happen once the mutual preferences, implied by the formation of the customs union by the Six, began to take effect. The government of the United Kingdom was particularly concerned about the possibility of an economic division of Europe and, at the end of 1956, tried to neutralize the effect of EEC preferences with a proposal for a wider industrial free trade area to be constructed inside the OEEC.

The initiative was launched at a particularly testing moment for the Six, since the common market negotiations had still to be concluded and then ratified by national parliaments. The Commission of the EC itself did not begin work until January 1958. If the free trade area offered non-member states a solution to their dilemmas, for the Six it posed a distinct threat. Distrust of British motives suffused the following negotiations but there were more prosaic reasons why the Six were reluctant to embrace the UK initiative. For example, the French, in the final stages of the common market negotiations, obtained a set of favourable conditions and safeguards that they could not replicate in the free trade area. Moreover, the French, Italians and the Dutch had obtained some ‘compensation’ for the opening of their industrial markets through the prospect of a common agricultural policy, but agriculture was exempted from the British plan. Finally, those who hoped that the Community institutions would rapidly develop in a federalist direction were worried that their energies might be dissipated by the Free Trade Area.

The Free Trade Area negotiations dragged on for nearly two years, before finally being terminated by the French in November 1958. Under de Gaulle, France had decided to embrace the Treaty of Rome without recourse to its opt-out provisions. This commitment was worth infinitely more to Adenauer than the dubious prospect of a free trade area and thus the move received German acquiesence, if not support. The Commission, especially under its first president Walter Hallstein, had never liked the British plan and was generally pleased to see the back of it. Indeed by the end of the year, among the Six, only the Dutch government and the German economics minister, Ludwig Erhardt, could be numbered amongst its supporters. In the face of the opposing coalition there was little they could do.3

The failure of the free trade area negotiations left the UK without any coherent strategy towards the Common Market. In the absence of an alternative, the idea of forming a smaller free trade area amongst the ‘outer Seven’ (Britain, Denmark, Norway, Sweden, Switzerland, Austria and Portugal) rapidly took over. With the exception of Austria and Portugal, these were already relatively low tariff countries which shared a desire to maintain tariff autonomy towards third countries. They therefore preferred the concept of a free trade area to solve Europe’s trading problems, rather than the more restrictive principle of a customs union. Formal negotiations started in June 1959 and culminated, in January 1960, in the Stockholm Convention establishing the European Free Trade Association (EFTA).4

EFTA’s ambitions and its structures were simpler from the start than those adopted by the EEC. It was essentially designed to ‘build a bridge’ to the EEC, thereby obtaining through bilateral negotiations en bloc what the previous multilateral negotiations had failed to deliver. The differences can be summarized as follows:

* The EEC wanted a customs union, EFTA did not.

* The EEC had to build a common external tariff, EFTA did not, but did require instead a ‘certificates of origin’ regime. The common external tariff meant that the EEC needed a common commercial policy, whereas EFTA did not.

* The EEC wanted to eliminate the cause of trade distortions at source and required the machinery to do so; EFTA instituted a procedure to deal with complaints if and when different national practices were felt to have distorted trade.

* The EEC wanted a common agricultural policy; EFTA excluded agriculture but relied instead on bilateral agreements to expand agrarian trade.

In a way, EFTA was almost designed to disappear in the form in which it had been cast. It was only the subsequent failure of the ‘bridge-building’ strategy that forced it to assume the identity of an individual trading organization in its own right.5

Even before the establishment of EFTA, the Macmillan government had begun to consider applying for full membership of the European Community. By late 1959, it had become increasingly apparent that the UK would be unable to negotiate a settlement which aimed at a parallel removal of barriers within the EEC and EFTA and between the two blocs. The ‘Hallstein Report’ of 1959 which outlined the EEC’s foreign policy perspectives left little room for a purely commercial settlement in Europe. Moreover, the United States, faced with a mounting balance of payments problem, made clear that it would not accept the discrimination implied by an interim settlement unless it conformed with GATT rules. That meant that any solution ended in a forseeable time and according to a fixed schedule, with the complete abolition of trade barriers. At the time the most that was on offer was a Benelux plan for the mutual exchange of the next scheduled tariff cut.6