European Economic Community


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European Economic Community

(EEC), organization established (1958) by a treaty signed in 1957 by Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany (now Germany); it was known informally as the Common Market. The EEC was the most significant of the three treaty organizations that were consolidated in 1967 to form the European Community (EC; known since the ratification [1993] of the Maastricht treaty as the European Union). The EEC had as its aim the eventual economic union of its member nations, ultimately leading to political union. It worked for the free movement of labor and capital, the abolition of trusts and cartels, and the development of joint and reciprocal policies on labor, social welfare, agriculture, transport, and foreign trade.

In 1958, Britain proposed that the Common Market be expanded into a transatlantic free-trade area. After the proposal was vetoed by France, Britain engineered the formation (1960) of the European Free Trade AssociationEuropean Free Trade Association
(EFTA), customs union and trading bloc; its current members are Iceland, Liechtenstein, Norway, and Switzerland. EFTA was established in 1960 by Austria, Denmark, Great Britain, Norway, Portugal, Sweden, and Switzerland.
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 (EFTA) and was joined by other European nations that did not belong to the Common Market. Beginning in 1973, EFTA and the EEC negotiated a series of agreements that would insure uniformity between the two organizations in many areas of economic policy, and by 1995, all but four of EFTA's members had transferred their memberships from EFTA to the European Union.

One of the first important accomplishments of the EEC was the establishment (1962) of common price levels for agricultural products. In 1968, internal tariffs (tariffs on trade between member nations) were eliminated and a common external tariff was fixed. For subsequent developments, see European UnionEuropean Union
(EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community (EC), an economic and political confederation of European nations, and other organizations (with the same member nations)
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.

Bibliography

See A. E. Walsh and J. Paxton, The Structure and Development of the Common Market (1968); R. C. Mowat, Creating the European Community (1973); A. M. Eli-Agraa, ed., The Economics of the European Community (1985); A. Sapir and J. Alexis, ed., The European Internal Market (1989).

European Economic Community

 

(EEC, the Common Market), a state-monopoly organization of six Western European countries—France, the Federal Republic of Germany, Italy, Belgium, the Netherlands, and Luxembourg. The community was created to join the economies of the member nations into a unified “common market.”

The treaty to establish the EEC was signed in March 1957 in Rome and went into effect on Jan. 1, 1958. The formation of the EEC represents a new phenomenon, arising out of the contemporary stage of the general crisis of capitalism. It reflects an objective tendency, characteristic of the monopoly stage of capitalism, toward internationalization of economic relations and capital and elimination of narrow national boundaries. This tendency was pointed out by V. I. Lenin, who emphasized that capitalism “links all countries of the world into a single economic whole,” since “the capitalist enterprise … inevitably outgrows the bounds … of the local market, the region, and then the state”(Poln. sobr. soch., 5th ed., vol. 3, p. 57). A basic reason for the establishment of the EEC is an attempt by the financial oligarchies of the six Western European countries, relying on this objective tendency, to expand sales markets and the territorial sphere of their activities in order to create favorable conditions for rapid and crisis-free development of the productive forces of the member countries. The formation of the EEC signifies the further intensification of the conflict between the contemporary level of development of productive forces and the production relations of capitalism, as well as the attempt of the ruling circles of the member countries to solve the conflict by means of intergovernmental associations.

The creation of the EEC pursues not only economic but also political goals—unification of the forces of Western European capitalism against the world communist movement, the socialist states, and the national liberation struggle of colonial and dependent countries. The formation of the EEC also reflected the striving of specific monopolistic circles of the Six to consolidate their forces in the competitive struggle against the monopolies of other countries, primarily of the USA, for the repartition of sales markets.

The declared goal in creating the EEC was “comprehensive development of economic activity” throughout the en-tire community, “continual and uniform development, increasing stability, rapid increases in the standard of living, and closer ties between the states joined together” through the creation of a “common market.” The Common Market is viewed as an integration of national markets of member countries providing for gradual elimination of all restrictions in trade between the countries, introduction of a common customs tariff in trade with third countries, elimination of barriers for the free movement of “people, capital, and services,” execution of a common policy in transport and business, development of principles for coordinating the economic policies of the member countries, and establishment of uniform regulations for competition and amalgamation of the legislation of the member countries. Realization of these measures is to be gradual, over a so-called 12-year transition period.

In addition to the Six, Greece and Turkey participate in the EEC as associate members; the conditions of their association foresee longer periods in reduction of customs duties between them and the Six (up to 22 years). The EEC has also concluded a number of conventions on association with a total of 24 African nations, for the most part former colonial possessions of France and Belgium. This association of coun-tries that are less developed in an economic sense creates preconditions for their economic subordination to their stronger European partners.

The directive bodies of the EEC are the council, the com-mission (the Commission of the European Communities), the assembly (European Parliament), and the court. The council, the highest body of the EEC, consists of one representative from each of the member countries (usually the minister of economic affairs, finance, or trade). The commission, the chief executive body, consists of nine members appointed to four-year terms by the governments of countries that are members of the community. There are also a number of credit institutions that function within the community; their responsibility includes the financing of individual measures associated with the execution of a common economic and social policy. Such institutions include the European Investment Bank and the European Development Fund. The EEC is the most important component of the system of European communities uniting the six countries of Western Europe, a system that also includes the European Coal and Steel Community and the European Atomic Energy Community. These organizations are essentially branch associations of the Six and since July 1967 have been directed by the same bodies as the EEC itself.

The creation of the EEC was in the interests of the monopolies of the six Western European countries, since it helped to strengthen their position within the community and to expand the markets for their commodities. By early 1970 trade within the community had grown 6.3 times over the 1958 level. During the same period EEC trade with third countries increased only 2.8 times. On July 1, 1968, the last (20 percent) reduction in customs duties on mutual trade of the member countries was implemented. This marked the beginning of the functioning of a customs union within the structure of the EEC. Goals set for the EEC in other areas by the Treaty of Rome were only partially implemented by the end of 1969, as a result of continual disagreements between the partner countries, especially between France and West Germany, which were attempting to establish their hegemony in the association. Two areas of especially sharp conflict were the introduction of free movement of capital between the six countries and the execution of a common policy in the area of transport.

The conference held at The Hague in December 1969 of heads of state of the member countries adopted a proposal for further economic amalgamation of the six countries (The Hague Declaration), in conjunction with which a group of experts prepared a report that anticipated the creation of an economic and currency union of the Six during the period 1971-80 (the so-called Werner plan). From the very beginning the plan encountered great difficulties, partly because of the aggravation of the crisis of the international currency system of capitalism from 1969 to 1971.

The creation of a common market for agricultural production, the functioning of which entails supplementary budget and currency expenditures by the member countries, is a breeding ground for unceasing conflicts in the EEC.

The political-commercial measures of the EEC are aggravating interimperialistic contradictions not only within the structure of the Six itself but between the group and the remaining capitalist world. A direct result of the creation of the EEC was the formation in Western Europe of another economic and trade bloc—the European Free Trade Association (EFTA). However, from the very beginning of EFTA, its members, headed by Great Britain, have expressed a desire to enter the EEC. On January 1, 1973, Great Britain, Ireland, and Denmark joined the EEC.

The ruling circles of the United States supported the creation of the EEC, expecting with its help to strengthen the economic base of NATO and unite the forces of Western European imperialism in the struggle against the world communist movement. However the community became a strong competitor of the USA, squeezing it economically in world markets. Nor were the hopes for strengthening NATO justified.

Being essentially a state-monopoly association, the EEC has not been able to provide for crisis-free, uniform development or to ameliorate class contradictions in member countries. The working masses of the six countries openly oppose the antidemocratic character of the EEC and demand that it be given a new economic and social content, profoundly different from that which it now has, so that its activities would serve the, interests of the broad popular masses.

REFERENCES

“Dogovor ob uchrezhdenii Evropeiskogo ekonomicheskogo soobshchestva.” Mezhdunarodnaia zhizn’, 1957, no. 7.
Ekonomicheskie problemy “Obshchego rynka.” Edited by E. L. Khmel’nitskaia. Moscow, 1962.
Chumakov, M. P. Finansovo-valiutnye protivorechiia “Obshchego rynka.” Moscow, 1967.
Economicheskie gruppirovki v Zapadnoi Evrope. Moscow, 1969. Zhebrak, B. “Obshchii rynok: itogi 10 let.”Mirovaia ekonomika i mezhdunarodnye otnosheniia, 1968, no. 7.
Maksimova, M. M. Osnovnye problemy imperialisticheskoi integratsii. Moscow, 1971.
Annuaire des organisations Internationales 1966-67, llth ed. Brussels, 1966.

B. A. ZHEBRAK

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