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# THE FUTURE OF THE EUROPEAN ECONOMIC COMMUNITY

The position and responsibilities which the EEC should have taken in the world were apparently not borne in mind by the statesmen who met at Messina in June 1955 for the so-called "relaunching of Europe." The fundamental reconstruction of Europe had to be made, and as the Beyen memorandum, constituting a European common market, already had a difficult objective, the policy to be followed outside Europe was of little concern at that time.

During the long negotiations which took place in Brussels in 1955 and 1957, the question arose of which attitude the EEC should take with respect to the rest of the world. Two contrasting opinions were the result: that of Germany and Benelux, who requested the lowest possible customs rates and a wide open market for raw materials, semi-finished products and finished products from third countries and that of France, backed by Italy, which reflected the traditional and in-grained protectionism of the two economies.

The Dutch and the French represented the major extremes. (This is still true in many circumstances of the EEC's life). The Dutch finally yielded after considerable protest, trying, together with the German delegates, to leave at least a sign of their liberal concessions in the Treaty.

Let us now glance at the Treaty which is the constitutional law of the EEC. Which clauses establish the policies regarding the rest of the world? In the lengthy preface of the Treaty, the Heads of State, Kings and Presidents of Republics proclaim their sovereign power before authorizing their plenipotentiaries to sign the Treaty. They state that they desire to contribute to the progressive repression of restrictions on international exchanges. This indicates that when EEC will have the indispensable common commercial policy it will serve to, "contribute to the harmonious development of world commerce and to the gradual abolition of custom barriers in the world," (Art. 110 of the Treaty).

To guarantee that this will actually be the common commercial policy, the Treaty contains a series of articles which promise the widest cooperation with several world or European organizations, also interested in the same ends; i.e. the United Nations, the General Agreement on Tariffs and Trade, better known as GATT, the European Council and the Organization for European Economic Co-operation, (O.E.E.C.). Since the end of the war these organizations have grouped together the European countries in an effort of better coordination for an economic organization.

The Treaty indicates, (Art. 237 and 238 which are well known because appealed to by numerous countries), that the EEC is not a closed community. Every European country can request to become a member and every non-European country can request to become associated with the community.

When the copies of the Treaty were ready to be signed in Rome, the Heads of Government and Foreign Ministers decided to issue another declaration relative to the cooperation with other countries, and in particular with those at that time members of international organizations in which

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the founder countries of the EEC participated. This declaration was principally directed at Great Britain. Interesting was the assurance of the first six countries that the cooperation among them should contribute to their prosperity as well as that of other countries and that to the latter should be offered the possibility of association to the expansion prospects deriving from the EEC.

The Brussels negotiations and consequent Treaty of Rome, show that the little concern for foreign reaction was slowly increasing as the month passed. This is easily explained keeping in mind that while discussions were still under way in Brussels, Great Britain proposed a rival project named European Economic Association to the new born EEC. Following this move a strong political controversy developed, having as its aim a dispute against the closed economic block which was then under formation. If this block was a thesis which communist propaganda was spreading mainly in Asian and Latin-American countries, Great Britain on her part was accusing the EEC of dividing Europe economically and politically. Consequently, all the Western governments joined in attacking the outside tariffs of the EEC, accusing that it was too high. The EEC Countries justly replied that their tariffs were no higher than the average already in existence, adding that they certainly were not higher than the British or American custom rates.

In reality the attack was directed against the preferential zone which inevitably forms as a consequence of a customs union. Previously, within the territory of each of the participating countries, products from third countries were given equal competitive conditions. Now, products originating from EEC countries were given preference to those from non-participating countries. The larger the preferential zone the greater the prejudice. However, the countries who complained could not lawfully or politically oppose this as GATT had acknowledged the customs union. That which was really feared was not the high European custom rates but the constitution of a new economic and commercial power.

It is debatable if on the formation of an economic power a high customs protection is necessary. I am of the opinion that a large industrial and therefore a world power does not need this high protection. It would only diminish the vitality of the industries which would come to rely on the customs barrier. I must admit however, that a community of the type founded with the Rome Treaty, which still has to form a common commercial policy, cannot in the first years of its existence abandon its only distinguishing mark: an outside customs rate which guarantees some preferential advantages.

The world took notice when EEC quietly sought to enter on the scene. Outside reaction was stronger than expected and it was an open fight which eventually created the spirit of unity which otherwise would have taken longer to develop. This took place in December 1958, when EEC resisted against an attack by Great Britain and Paris in the negotiations for the creation of the so-called Free Exchange Zone. The six countries had conflicting opinions as to the attitude to be taken against the British, but when it became clear that all had to follow one decision, the six countries agreed and for the first time the rest of the world sensed that they were dealing not with a temporary alliance of six countries, but with something far more essential: a real community.

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The surrounding conditions in which the new-born EEC found itself were delicate. The organization had just been set up in Brussels but no-one was quite sure as to how it should function, much less how to deal with foreign matters. National, economical and above all political interests were of much concern. There was reason to doubt that EEC could manage to overcome the tasks put to them. Today these problems have been brilliantly solved and in the space of five years, EEC has established itself as one of the largest commercial powers in the world.

It is interesting to summarize the motives and reasons of this rapid success. A harmonious relationship has always existed among the members, especially between France and Germany. The establishment and development of the community received constant support from the U.S.A. (It is to be noted that support was given because the U.S.A. preferred to concentrate their efforts in Europe in the military and political fields rather than the economical.)

The world situation was at its best in 1959/61 and this helped the first steps toward the economic union of Europe, and consequently permitted a more rapid development of the EEC than had prudently been anticipated by the authors of the Treaty. Following this, two EEC political agreements were made which served to confirm the vitality and solidity of the community. One of these agreements established a policy in the agricultural field while the second was concluded with African countries which had previously been French colonies, and therefore, at one time been associated with EEC. The fact that all of these countries, except Guinea, renewed their contract of association with EEC was one of the major successes achieved by the Community.

While the EEC was becoming known throughout the world and projects and experiments were being prepared in Africa and Latin America, an upheaval was taking place in Europe. The British government, who previously had tried to absorb the EEC in a PanEuropean free exchange zone and then had counter-proposed a smaller zone which united only the European peripheral countries, now requested admission to the EEC. With this, every Government hastened to Brussels with requests to join or be associated with the Community, some of which even tried to obtain better conditions for their country's commerce through special agreements.

It is correct to observe that this race for agreements with EEC started when it seemed as Great Britain would be included in the Community. The EEC's union with a nation of 50 million population, with a high cost of living and great industrial capacity, would have made it the largest commercial power in the world, second only to the U.S.A. This development was immediately noted by the Soviet Union and U.S.A., however, it seems that only recently have the Soviet Powers given sufficient importance to the Community. It is not quite clear what the Kremlin's reaction will be, but it seems possible that an armistice or a certain amount of cooperation can be expected in the economical field.

On his part, the young President of the U.S.A. and his advisors have shown their usual rapidity for perception and decision. The risk that Europe's economic policy could oppose that of America and result in a political contrast between the two countries, is still not evident to this date, however it could come about through the years. Kennedy's reply to this was to request a law, (passed in Congress), named The Trade Expansion

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Act, in which the old and new worlds should work toward a commercial co-
existence.

We now find the EEC at the center of a net of new problems, fears
and hopes, emanating from all parts of the world, particularly because of
repercussions due to Great Britain's eventual participation in EEC. Should
this come about, the system existing in the Commonwealth would undergo a
change.

The commercial bonds which for many years tied Canada, Australia,
New Zealand, India, Pakistan, Ceylon and some African countries to Great
Britain, would in the space of a few years be broken off. Will they be
substituted with ties to the EEC and under what form? In some cases as
in those of India, Pakistan and the African countries, special agreements
are anticipated. Other Commonwealth territories will take a third country
position. Whatever the final arrangements one thing is certain: Europe
will acquire direct political responsibilities which were left up to
Great Britain. The destiny of countries like India, Pakistan, Nigeria,
Tanganyika and New Zealand will be an important factor. They will have
to become conscious of their responsibilities as the American population
had to do not so many years ago.

It would not be correct to say that there has been a revolution in
world affairs due to EEC. The problem which no one thought of in 1955
and which today in the formative years of the Community is given little
consideration, is what relation should exist between the EEC and the rest
of the world and what political policy it should follow. The questions
and offers received by Europe from all parts of the world are such that
they present EEC with a grave political problem. At this point I would
like to draw attention to the necessity of distinguishing the political
from the economical problem.

The EEC must follow an "open" economic policy. Many think that this
is the best way in which it can face its responsibilities towards under-
developed countries. These countries must reach a level of modern economy,
not through government financing or private investment, but through the
opening of rich European and American markets for their new industrial
products.

A political question now arises: till what point does EEC have to
follow through in the endeavour to establish an open world commercial
system, longed for at the end of World War II and which caused the draw-
ing up of the Havana Treaty. By working toward a system of this type
would the Community not be running a grave risk? The answer to me is
obvious. Our EEC is still too young and subject to internal tensions
and outside pressures to be immediately exposed to additional international
problems which would endanger its own entity. This is what was feared
in 1958 when the British project for a Free Exchange Zone in Europe was
proposed and this is what must be kept in mind if plans for a world con-
ference on rates for an Atlantic Economic Community should develop too
quickly.

The decision to aim for a partnership with the U.S.A. based on
Europe's development seems justified, however, we must not in accepting
forget that there could be developments leading in different directions.

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It is correct to reinforce the EEC's individuality which is a qualification necessary for the making of a political Europe, however does this mean that through capable commercial politics we must protect every sectorial interest backed by an influential group? Must we, for the rural classes, develop European agriculture without considering the difference in international agricultural prices? Must we protect European coal which is three times more expensive as American coal, or give preferential treatment to crude oil from the Sahara, even if it's price is above that which can be obtained from the Middle East and the Soviet Union? Must we continue to use and protect our modest resources of industrial raw materials which are to be found in Italy as we have been tempted to do with sulphur, lead and zinc? What importance must be given to protests and pressures from various industrial sectors, who ask, as if to compensate for the disappearance of customs barriers within the Community, that a higher barrier be kept around the boundaries?

Should we maintain every production sector, even those which are outdated and require high labour costs or would an intelligent division of the work and distribution of revenues between countries which are highly progressed and those which are under developed be more favourable in order to establish an impartial relationship for raw material prices and the purchase of agricultural products from countries who have no other means of paying for our industrial products?

In a community of many nations it is not easy to achieve a balance among contrasting interests, in which it is also necessary to discover a medium. The policy of a community tends to be none other than the lowest common denominator of the interests at heart. The risk is therefore, that all weak points of each economy must be added and each of these be completely supported to render the entire system completely protected as in a single state.

I have indicated some risks which present themselves as a result of the chosen policy which the EEC will follow during the first years of it's existence. Certainly the type of economical policy to be adopted will depend on the combined internal political powers of the Community. Keeping this in view it is hoped that Great Britain will become a part of the Community. Holland and Belgium have always had a liberal tradition as countries in which secondary industry has played a major part. In the period following World War II that saw Germany's economic miracle, the field was strengthened for those who did not believe that a closed commercial state was the best solution for Europe's problems.

It is difficult to say if this political and practical position can survive the loss of power of the German Christian-Democratic Party, which is fiercely liberal in its economy. France is a nation which for many centuries has had protectionist ideas and, I would also say, a self-sufficient doctrine. There is no prejudice in this definition: the economic condition of each country has a corresponding doctrine. France has not followed a policy of self-sufficiency more than the Soviet Union and in a certain sense the U.S.A., but the French protectionist doctrine can bring about too large a distortion if applied to Europe.

Between these two extremes is Italy, which almost lacking in energetic resources and generally in raw materials, is not too inclined to accept a self-sufficient policy in these two sectors but maintains a deep protectionist feeling as far as industrial production is concerned: a psychological left-over of the period when non-employment was the major Italian scourge.

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In this group of nations, liberal tendencies will be strengthened by Great Britain, not because British industry is not also protectionist but because for more than a century their economy has been organized on the basis of being supplied with industrial raw materials and food from the rest of the world under the best possible conditions.

It is therefore forecast that the EEC's future economic policy regarding the rest of the world will not be excessively open or too rigidly inspired by ambitions for self-sufficiency. It is clear however, that the EEC, more so if joined by Great Britain will constitute an enormous centre of economic power.

Economic power in the long term means political power and it would seem strange that the economic means now grouped together in this new Europe should not be taken advantage of by those who could use them for political reasons. I admit that the experiment for European unification is forced ahead by the aim for better living conditions for the European population, but it will certainly be the means of a greater drive for the ambitions of some political classes who wish to use a much greater mass of power than that which is now supplied by the present system of national states.

It is easy enough to indicate which choice we Europeans are facing in these years. It is that between responsibility and irresponsibility. We can accept irresponsibility in several different ways, the first being to follow the old policy born in 1947/49 of a Europe that left her defense against external aggression and internal subversions up to American military power. This policy justified in the first years after the war was in reality an evasive one. It was this which helped to bring about the economic miracle in the old world but also to make us forget the other phenomenon: that which caused Europe for the first time to be object and not subject to history.

The Cuban crisis should have opened everyones eyes, certainly the British, convincing them that there was little difference between England and Luxembourg. I do not know how much the Italians were made aware, since many still pampered the illusion that there could still be a policy based on the U.N. and this right at the end of a crisis in which the U.N. was put aside in order to let the "big" powers work.

I will not spend many words on the second manner in which to subside to irresponsibility: it is to trust the so-called "working class" represented by Nikita Khrusciov and to follow their "general line of order" being careful to make amendments should it change. Lastly, the third way is to take a neutral stand. This attitude, respected if for nothing else because it includes the names of Mahatma Ghandi and Bertrand Russell, always reminds me of the Shakespearean Mercutio, who fallen fatally wounded invokes on Montecchi and Capuletti, "A plague on both your houses." The unreality of this attitude could not be better revealed than by the Cuban crisis during which, the political leaders of neutralism, Tito, Nasser, Kreisky, Erlander, 'N Kruma and Soekarno, remained crouching in their corners, trembling with the thought that radioactive clouds would not be halted by customs barriers of neutral states. It is left to their spiritual leader, Lord Russell, whose telegrams blamed Kennedy's attitudes and praised Khrusciov, to demonstrate that one can be a great philosopher, have a good spirit and soul, but at the same time be unpractical.

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As against the many ways of being irresponsible there is only one
in which to follow a responsible European policy. This consists in seeing
that Europe does not become an American or Soviet Union satellite nor a
weak and crumbling group of states, divided and disarmed. It consists in
the unification of the largest possible part of Europe under a political
federal power in order to enable the citizens of Europe to assume that
part in world affairs which could not be undertaken as citizens of an
individual nation.

It is not easy to make a choice: irresponsibility is so comfortable,
responsibility is hard and never-ending, but to facilitate this choice is
is the evidence that part of the work has already been completed. For the
past five years, we have seen EEC working and expanding. It is now more
than ever necessary to clarify and sharpen our ideas about the nature of
this community and its aims. It we believe that this is purely a com-
mercial operation directed at the advantages of additional free exchange
and the better division of labour, then this task is nearly accomplished.
If instead we consider EEC as a political operation and wish to direct it
along these lines, then we must play politics, which as everyone should
know is the play for power.

This was explained to Italians by Nicolò Machiavelli over four
centuries ago but without our having understood then and even little now,
or rather, that we understood and today understand his point very well
but only concerning our own internal disagreements.

Which forces can we and should we use? Against which forces should
we fight in order to achieve a unity for Europe and to what use should
this European force be put? That is another and longer subject.