European Common Market Is Established

Date March 25, 1957

Building on the already visible success of the European Coal and Steel Community, six Western European states committed themselves to the long process of economic integration and greater political union.

Locale Rome, Italy

Key Figures

• Charles de Gaulle (1890-1970), president of France, 1959-1969
• Jean Monnet (1888-1979), leader in economic planning in postwar Europe, staunch believer in European integration, and the first president of the ECSC High Authority
• Robert Schuman (1886-1963), French foreign minister widely credited with creating the European Coal and Steel Community
• Paul-Henri Spaak (1899-1972), Belgian foreign minister, who chaired the committee that developed the details for creating the Common Market

Summary of Event

One of the founders of the European Community often remarked that during the early days following World War II, the best Europeans were Americans. The statement was an exaggeration: Individuals such as Paul-Henri Spaak, Robert Schuman, and Jean Monnet needed no transatlantic prodding to visualize Western Europe’s future as united, rather than as a continuation of the squabbling rivalries of nation-states that twice during the twentieth century had turned Europe into the central theater of a global war. Still, the point was well taken in one sense. In urging the European states to plan their postwar recovery in a unified framework as part of the Marshall Plan package, the United States provided a catalyst to and support of integrative efforts, making the selling job much easier for Schuman and the others.

The domestic and international situation in Europe in the postwar period demanded creative institutional arrangements. Internally, the situation of most of the countries on the continent was one of badly damaged economic and social systems. Nationalism was a repudiated ideology in many quarters, leading to the success of Communist Parties—with their message of international communism as an antidote to ruinous nationalism—in the early postwar elections in France and Italy. Externally, there was another Communist menace, the Soviet threat. By 1950, the Cold War had resulted in the partitioning of Germany. Czechoslovakia, Poland, and Hungary had fallen behind what Winston Churchill called the Iron Curtain. In this setting, European unification emerged as an alternative to both excessive nationalism and international communism. Cooperation among the Western democracies had a double allure. It could serve not only as a means of accelerating the process of economic recovery but also as a means of creating a web of interdependency among old rivals that would make future wars less likely.

The problem was thus not one of building consensus on the desirability of greater cooperation among the states of Europe but finding a means of engineering it. The problem increased daily as France and other states began to recover economically, return to their overseas empires, and see themselves as their former, sovereignty-drenched, nationalistic selves. By the early 1950’s, the idea of creating a “United States of Europe” by means of a constitutional convention was no longer an option. Distrust and the reassertion of historical rivalries between France and Germany already foreclosed that approach. Advocates of integrating Europe had to seek other plans.

The path to union that ultimately emerged was neofunctionalism, something of a backdoor approach to unification. Neofunctional theory placed its hopes on the divisibility of political functions, the promise of task-oriented international machinery, and the functionalist “spillover” thesis. Highly sensitive political areas such as military and foreign policy were to be uncoupled from less sensitive ones, and task-oriented European institutions were to be charged with policy-making responsibilities in select areas that were less sensitive. The dynamics of the integrative process were expected ultimately to pressure states into increasing the scope of integration in order to better reap its benefits. The free movement of goods and labor, for example, would be enhanced by—and therefore lead to—the free movement of capital and the creation of a common currency. In the short and middle term, each nation-state would retain its own identity while collaborating on those goals better achieved cooperatively through international machinery. In the long term, a supranational system would evolve incrementally and gradually to replace the state as the central political unit in Europe.

Adding appeal to the thesis was the hope that the emergence of an integrated Europe would make the continent not only more prosperous but also more peaceful. This nexus between economics and politics was made explicit in the Treaty of Paris, which spoke of the need for “a broader and deeper community among peoples long divided by blood” in establishing the European Coal and Steel Community (ECSC) in 1951. The linkage can also be deduced from the sites selected for the institutions of an integrating Europe: Brussels and Luxembourg, the capitals of two states long overrun by wars in Europe; and Strasbourg, France, the central city in the Alsace-Lorraine region that was such a powder keg in Franco-German relations between 1870 and 1945.

Aside from activities of such immediate postwar agencies as the Organization for European Economic Cooperation (which was created to administer the Marshall Plan and evolved into the developed world’s central meeting ground, the Organization for Economic Cooperation and Development), the integrative process in Western Europe can be seen as formally beginning with the 1950 declaration by French foreign minister Robert Schuman of his country’s intent to pursue a cooperative arrangement with Germany in the policy areas of coal, iron, and steel. The areas themselves had been carefully chosen. The industries traditionally had been kept under tight national supervision because of their importance to the production of the weapons of war. The following year, four other countries (the Netherlands, Belgium, Luxembourg, and Italy) joined Germany and France in this venture. With the signing of the Treaty of Paris on April 18, 1951, Europe’s first supranational entity, the ECSC, was born.

Although the ECSC’s immediate tasks were limited to removing tariffs and reaching cooperative agreements regarding coal and steel, the fact that the ECSC was intended to be a stepping-stone to further political integration prompted the United Kingdom to reject joining. The same desire to avoid compromising the sovereignty of its Parliament and its special relationship with the United States also prompted Britain to remain apart from the even more ambitious supranational machinery created six years later by the signing of the Treaty of Rome on March 25, 1957: the European Economic Community (the EEC, or Common Market). The following year, the European Atomic Energy Community (EURATOM) emerged as well, bringing the number of supranational community structures in Western Europe to three.

Of these, the EEC was from its inception the most important. It established the foundations for free trade in most goods among member states and created a full-fledged customs union with a common external tariff against the outside world and a free flow of labor, services, and capital within. It carried the promise of some day evolving into an economic, monetary, and perhaps political union.

In the meantime, each of the supranational agencies was to have its own directing commission, composed not of national politicians but of bureaucrats, and council of ministers, representing the restraining hand of member states, without whose approval further integration could not occur. The overall system was also to be served by a parliament, the members of which were elected indirectly by the state legislatures until 1979, and the European Court of Justice, established to adjudicate cases arising under the treaties and acts establishing and empowering the EEC, ECSC, and EURATOM.

Significance

The creation of the European system, particularly the Common Market, represented a major benchmark in the history of twentieth century Europe and Western civilization. It was a movement away from the nation-state toward larger problem-solving political processes endowed with their own decision-making and executive authority. Moreover, it soon proved to be an extraordinarily successful venture in the economic field. The prospect of a larger, free market in Europe accelerated the movement of investment capital into the EEC area, and the falling barriers to trade allowed member states to accelerate their economies on the basis of their comparative advantages in a market not much smaller in population than that of the American states. However, the three communities were neither especially European nor community-like in nature for much of their first quarter century of operation.

The six charter members of the ECSC represented only the core of Western Europe. Mediterranean states (unless one counts southern Italy), the Iberian peninsula, and Scandinavia were all absent, as were such important neutral countries as Switzerland and Austria, which chose to join Britain in not seeking membership.

The mechanics of making the system work complicated matters. In 1962, five key pro-Europe ministers including Schuman resigned from the French cabinet in protest of a speech opposing integration delivered by France’s president, Charles de Gaulle. De Gaulle would soon dampen EEC integration efforts by delaying an agricultural accord through boycotting the negotiation process as long as possible and twice rejecting Britain’s belated applications to join Europe (in 1963 and again in 1967), on the grounds that Britain was so closely tied to the United States that its admission to the EEC would corrupt the development of a united, independent Europe.

With de Gaulle’s resignation from office in 1969, a major barrier to the enlargement of the community was removed, and gradually it became more European. Britain, Ireland, and Denmark joined in 1973. Greece, providing representation to the southern Mediterranean, was added in 1981, and the Iberian peninsula countries of Spain and Portugal joined in 1986. At the same time, community spirit continued to suffer despite the official merger of the ECSC, EEC, and EURATOM into the European Community (EC) in 1967, itself delayed by internal politics for two years following the 1965 agreement to do so.

Further enlargement was preceded by the Single European Act of 1986, which changed the consensus voting system on the EC Council to permit weighted voting and variable tracks toward more intense integration and the Maastricht Treaty of 1992, which changed the name of the EC to the European Union (EU), mapped out a path to monetary union, and reorganized EU policies into three major pillars of activity. After these initiatives, both more fast-paced integration and enlargement became possible.

The 1971 enlargement of the EC from six to nine members was important, but the goal had been ten. The enlargement process itself slowed the integration process at the time. Not only did Norway opt not to join, but also, shortly after, Denmark joined its “province” of Greenland in choosing to break away rather than stay in the EC. Britain almost immediately began to flirt with the idea of withdrawing from the community.

The energy crisis of 1973 initiated a dark decade of economic stagflation (economic stagnation combined with inflation) that paralyzed further integrative efforts in community states. Worse, beginning with the sometimes acrimonious Copenhagen Conference of December, 1973, the energy issue drove a wedge between the EC members in Northern Europe that had access to the oil and gas fields of the North Sea (Britain, Denmark, the Netherlands, and West Germany) and the remaining, energy-importing, states of the EC. Even the growing geographical diversity of the community often worked to derail the spillover effect, upon which functional theorists depended for the growth of Europe’s supranational political system.

The new states not only came from different areas but also had quite different economic profiles in terms of the mix of their industrial, agricultural, and service sectors. The agricultural economies of the later members, for example, challenged French and Italian farmers, who aggressively pressed their governments to protect their competitiveness. Each new step toward integration thus came to involve more complicated bargaining and side deals as the price of prying additional concessions to their sovereignty away from the member states. This was true of the decisions involved in the Single European Act and the Maastricht Treaty.

The process of growth and integration, thus, has been marked by fits and starts throughout the life of the EU, with a large degree of political integration occurring along with its successful economic integration. The citizens of the EU’s member states enjoy some of the highest standards of living in the world and live in a political structure unique in the contemporary world. However, problems continue to plague European economic and political life, and thus the progress of the EU itself, as the rejection of the EU constitution by France and the Netherlands suggests. High rates of unemployment, unrest among non-European immigrants, rapid depopulation of native Europeans, the increasing age of the population (which will soon strain generous social welfare programs), and lagging economic productivity present major challenges to what nevertheless has been one of the most unique and successful efforts at integration ever attempted.

Bibliography

Haas, Ernst B. Beyond the Nation-State: Functionalism and International Organization. Stanford, Calif.: Stanford University Press, 1964. A lengthy exposition of the theory underpinning integrative efforts in Western Europe. The developments in Europe, however, are not explicitly treated.

Keesing’s Research Report. The European Communities: Establishment and Growth. New York: Scribner, 1975. An excellent short introduction to the early years of the European Coal and Steel Community, the European Economic Community, and the European Atomic Energy Community, written at approximately the moment of the enlargement of the community. Appendixes include the Treaty of Rome.

Leonard, Dick.“The Economist” Guide to the European Union. 9th ed. London: Profile Books, 2005. This revised work is an excellent starting point for those interested in the history and workings of the European Union, which includes the former EEC.

Lindberg, Leon N., and Stuart A. Scheingold. Europe’s Would-Be Polity: Patterns of Change in the European Community. Englewood Cliffs, N.J.: Prentice Hall, 1970. An excellent study of the EEC’s first dozen years, organized around the principal issues confronting the member states, including agriculture, transportation, and the British application for admission. Also a good interim assessment of how integrative theory was doing in practice.

Pryce, Roy. The Politics of the European Community. Totowa, N.J.: Rowman and Littlefield, 1974. Focuses on the politics of making supranationalism function. Publication was timed to coincide with the EC’s enlargement in 1973-1974. The book remains one of the best short accounts of the enlargement process and its effect on EC policy dynamics.

Spinelli, Altiero. The Eurocrats: Conflict and Crisis in the European Community. Translated by C. Grove Haines. Baltimore: Johns Hopkins University Press, 1966. An intriguing study of those persons who guided the machinery of the EEC and European Coal and Steel Community during their formative decade, and of their evolving relationships with both national bureaucracies and national interest groups.

United Nations Treaty Collection. Treaty Handbook. Available at http://www.untreaty.un.org. An excellent resource on the international treaty process. An online handbook provided by the treaty section of the U.N. Office of Legal Affairs.

Urwin, Derek W. The Community of Europe: A History of European Integration Since 1945. 2d ed. New York: Longman, 1995. An outstanding history of the development of the European Community, with an excellent mix of historical narrative, data, and political analysis.

Vanthoor, Wim F. V. A Chronological History of the European Union, 1946-2001. Cheltenham, England: Elgar, 2002. Provides a useful time line of the history of the European Union, and its predecessors, the European Economic Community and other entities.

Wallace, Helen, William Wallace, and Carole Webb, eds. Policy-Making in the European Communities. New York: Wiley, 1977. An exceptionally fine collection of essays on policy issues, policy action, and progress toward cooperation and integration in the EEC, written primarily by British analysts on the occasion of the twentieth anniversary of the Common Market’s birth.