WESTERN EUROPE: Third Chance

WESTERN EUROPE

Out of the ashes and gutted cities of World War II, idealists tried to create a united Europe by means of a political idea: the Council of Europe. They failed. Then came the hardheaded soldiers and diplomats who wanted to “build Europe” through a European army in a common uniform—and in the ugly, fruitless debate over EDC, all the idealism almost went out of the European dream. Last week, somewhat to their surprise, Europeans found themselves being offered a third chance to build Europe. This time the approach was economic, and, surprisingly enough, the chances were good.

For nearly a year, in a chateau outside Brussels, a small corps of economists, technicians and bureaucrats have been at work to establish a common market (goods and workers moving as freely as between California and New York) among the six nations—France, West Germany, Italy, Belgium, The Netherlands and Luxembourg—which belong to the European Coal and Steel Community. These planners have the backing of every government involved, and they mean business. Their plan calls for:

¶Creating a common market of 160 million people.

¶Cutting tariffs between the six nations by 30% in the next four years, and gradual elimination, over a maximum period of 15 years, of all tariffs and import quotas between them.

¶Establishing, during the same period, common tariffs against outside nations at an average level lower than France’s, higher than the Low Countries’.

¶Abolishing discriminatory transportation charges, such as higher rates for goods originating in another country.

¶Permitting free movement of labor, so that labor-hungry areas such as Germany’s Ruhr can sop up some of Italy’s 2,000,000 unemployed.

¶Permitting free movement of capital, thus making it easier for European industrialists to invest their money where it will be most productive.

¶Equalizing corporate taxes and working conditions. (France, whose cradle-to-grave social security system is the most costly in Europe, is demanding that other nations “harmonize” their welfare systems, overtime rates, etc., with hers.)

Open Windows. Only a few points remain to be hammered out to make the Common Market a reality, and, barring “unforeseen catastrophes,” its sponsors hope to have the Common Market treaty ready for signing by the end of February. Last week French Premier Guy Mollet, who was cagily insisting that he must have parliamentary approval “in principle”before he signed the treaty, launched a full-fledged debate on the plan in France’s National Assembly.

Predictably, the most vocal opponents of French participation in the Common Market were the Communists (who dismissed the whole thing as a “Vatican conspiracy”) and the right wing led by ex-Premiers Antoine Pinay, Paul Reynaud, Edgar Faure and Joseph Laniel. The bitterest—and most surprising—attack was delivered by ex-Premier Pierre Mendes-France, the man who once talked boldly of “opening the windows” of the French economy. Now Mendes, whose political influence has greatly diminished, argued that opening the windows so high would drive out French capital and bring in unemployed.

Mollet was prepared to stake the life of his government on the vote he demanded. Would the French Assembly now try to undo every compromise French negotiators had made? Warned Foreign Minister Christian Pineau: “It is not necessary to travel abroad much to discover that in the last five years France has acquired a reputation for being unable to make up its mind. If we say no to the— Common Market, we will convince the entire world of our inability to say yes.”

In & Out. The likelihood of a yes from all six nations, including France, has suddenly bestirred the British, who have long kept one tentative foot in and one determined foot out of the Continent. To avoid Britain’s being frozen out completely, Harold Macmillan, when he was Chancellor of the Exchequer last fall, put forth a counterscheme, broader but less radical than the Common Market. He proposed the creation of a Free Trade Area in Europe, to take in not just the Common Market Six, but twelve other European nations besides. The Six, who have all had previous bitter experience with British delaying tactics, said fine—but we want to create the Common Market first. The Free Trade Area would:

¶Create a market of 260 million people, a bigger trading area than either the U.S. or Russia.

¶Allow specified goods—mostly manufactured items—to move between member nations free of tariff.

¶Have no common tariff against outsiders, thus allowing Britain, nearly half of whose trade is with other Commonwealth nations, to continue giving “imperial preference” to the agricultural products which make up nearly 90% of Commonwealth exports to Britain.

¶Probably include, in addition to Britain and the six Common Market countries, Austria, the Scandinavian countries, Greece, Iceland, Portugal and Switzerland —roughly the nations which, since the Marshall Plan days of 1948, have been fellow members of the Organization for European Economic Cooperation (OEEC).

Under this idea, there might be a free market all over Europe for Volkswagens, Jaguars and Fiats, while all nations outside the nucleus of the Six kept trade barriers on many other products. Thus both schemes could dovetail.

The Architects. Two dedicated men deserve most of the credit for the Common Market scheme. The idea was born to France’s Europe-minded planner, Jean Monnet, who keeps a model of the Kon-Tiki on his desk as a symbol of those who take brave risks to prove an idea in the face of skepticism and indifference. The other man is NATO’s newly chosen Secretary-General, Paul-Henri Spaak of Belgium, who has presided over the interminable treaty negotiations in Brussels. One reason why the near completion of the Common Market has burst on Europe as a surprise is that Spaak has learned from the past mistakes of would-be unifiers of Europe not to ask too much too fast, or to proclaim too soon exaggerated ambitions.

Spaak and his colleagues have even taken pains to play down the supranational features of the Common Market. But for all Spaak’s understandable reluctance to indulge in grandiose talk of supra-nationalism, it is clear that the interlocking of economies that would come with the Common Market would make another Franco-German war highly unlikely, and in time would probably lead the Six to adopt a common budget and, hence, a considerable degree of political unity.

The Thickets. Negotiating an agreement acceptable to all hands required a plunge through an incredible thicket of quotas, subsidies, double pricing and doctored transport rates in every country. German industrialists, cockily confident of their ability to outcompete anyone in Europe, were enthusiastic at the opportunity to win an even bigger share of Western European markets, but unenthusiastic at the prospect of being obliged to give French-style benefits—including three-week vacations—to their hitherto unpampered employees. The labor benefits, in turn, have great appeal to German unions, thereby vitiating German Socialism’s traditional opposition to European integration schemes.

The French demanded that the proposed Common Market investment fund contribute development capital to French colonies—something which the Germans felt would discredit the organization in the eyes of the Afro-Asian nations (this one is still not settled). The Italians wanted the investment fund to concentrate on underdeveloped areas of Europe, specifically the Mezzogiorno, or Italian South.

The Dutch were hopeful of finding new markets for their low-cost agricultural produce, but in all the countries protection of the farmer is so deeply ingrained that even after the Common Market is fully operating in 1970, national protection will still be allowed on 30 agricultural products.

Fears & Hopes. Looking in from across the Channel, the British were keenly aware that the Six offered the fastest-expanding major market in the world. (Since 1950, annual imports of the Six have increased from $11 billion to $19 billion.) The British were also aware that if they stayed out of the Common Market, the tariff wall thrown up by the Six (who now buy one-eighth of Britain’s exports) might well exclude many British goods, and that, under these circumstances, commercial and eventually political domination of Western Europe would fall into the hands of Germany.

Even so, Britain’s emotional and economic ties with the Commonwealth might well have kept Britain on the sidelines but for the coincidence that, just as the Common Market was being hammered into shape, two “good Europeans” took over the crucial jobs in Britain—Macmillan as Prime Minister and Peter Thorneycroft as his .Chancellor of the Exchequer. “Make no doubt of it, we are behind the Free Trade Area,” said Thorneycroft.

Creation of the Free Trade Area, declared Peter Thorneycroft last week, “will make us a better ally.” The U.S. State Department, though recognizing that some U.S. industry may at first suffer, is all for the two schemes—convinced that all Europe will eventually gain by them, and therefore the U.S. too will benefit.