A Handbook
on the European
PRAEGER SPECIAL STUDIES IN
INTERNATIONAL ECONOMICS
A Handbook
on the European
Economic Community
Edited by
GORDON L. WElL
Director of Research and Studies
The European Community Information Service
Published in Cooperation with
THE EUROPEAN COMMUNITY INFORMATION SERVICE
Washington, D.C.
by
FREDERICK A. PRAEGER, Publishers
FREDERICK A. PRAEGER, Publishers Ill Fourth Avenue, New York 3, N.Y., U.S.A. 77-79 Charlotte Street, London W.l, England
Published in the United States of America in 1965 by Frederick A. Praeger, Inc., Publishers
All rights reserved
©
1965 by Frederick A. Praeger, Inc.Library of Congress Catalog Card Number: 64-25594
FOREWORD
The European Economic Community is coming of age, bringing with it the unity of Europe. Six nations, Belgium, France, the Federal Republic of Germany, Italy, Luxembourg, and the Netherlands, are engaged in the complex and difficult task of shaping the new Europe. They have carried out internal tariff disarmament in advance of the timetable laid down by the Rome Treaty and are ahead of schedule in establishing a single external tariff toward non-member countries.
The EEC is to be not only a customs union but a full economic union. Full economic unification requires common policies for agriculture, social affairs, transport and energy, a common trade policy, common rules ensuring fair competition, freedom of move1nent for workers, goods, and services, and t_he harmonization of fiscal, monetary and financial policies. Now in the second of three-stages of its transition period, the Community is beginning to develop and apply these policies and practices. By January 1, 1970, the end of the transition period, these common policies and rules will be fully in force. Between now and then, it will be important that the difficulties and com-plexities standing in the way of economic union not be under-estimated. Vested interests, narrow national reactions, and outmoded economic safeguards are a heritage of the past that are obstacles to be surmounted along the way.
Politically and economically, the EEC is a vital factor on the world scene. The Community has close association with 17 African countries &nd--Madaga-s-ccn- which aids in their economic development. Association agreements provide for a customs and economic union with Greece, and economic aid and trade facilities for Turkey. The Community's first bilateral commercial agreements with Iran and Israel set the pattern for future relations with many other countries. Through tariff con-cessions, the EEC endeavors to help the export trade of develop-ing countries. Finally, in the framework of the General Agree-ment on Tariffs and Trade (GATT), the EEC has become a major participant in multilateral negotiations for trade liberali-zation. In the "Kennedy Round" of GATT, the Community, as the world's biggest trading unit, has a leading role in proposing methods for reducing barriers to trade handling the difficult
agricultural trade problem, and aiding the exports of developing countries.
Since its beginning in 1958, the EEC's activities have in-creased in scope and scale. Its institutions have faced a great variety of problems and challenges, both internal and external, which were unforeseen in 1957 when the Rome Treaty was signed. They have shouldered new responsibilities of global consequence,
The experience gained in creating a customs union and an economic union has been followed by specialists and the general public, both inside and outside the Community. EEC documents are basic for those working in the Community and those outside who follow its development closely. This handbook complements the Community's publication program, by making available a variety of detailed information on EEC activities in readily-usable form.
The economic union being created by the EEC is a step towards, and an essential part of, a politically united Europe. Robert Schuman said in 1950 that these developments should be regarded as "the first concrete foundations of the European Federation which is indispensable to the preservation of peace •••• " The documents in this handbook chronicle the movement toward that objective.
viii
Professor Walter Hallstein President of Commission of the
CONTENTS
Foreword by Prof. Walter Hallstein, President of the Commission of the European
Economic Community vii
Introduction xiii
Chapter Page
1
2
Background of the European Economic Community
\
1. 1 The Marshall Plan, 4 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9
l. 10
Convention for European Economic Cooperation, 6
Benelux Customs Convention, 10 The Schuman Plan, 11
Treaty Establishing the EuropeanCoal and Steel Community, 12
Report of the Intergovernmental Com-mittee on European Integration (Spaak Committee), 19
Treaty Establishing the European Economic Community, 30
The Second Stage, 46 The Action Programme, 51
1964 Initiative, 55
Institutions of the European Economic Community 2. 1 The European Parliament, 64
2. 2 The Council of Ministers, 67 2. 3 The Commission, 70
2. 4 The Court of Justice, 77 2.5 2.6 2.7 2.8 2.9 2. 10 2. 11 2. 12
The Economic and Social Committee, 84 The European Investment Bank, 87 Monetary Committee, 88
Transport Committee, 90 European Social Fund, 91
Overseas Development Fund, 93
Foreign Trade Committee(Article 111), 96 Legal Service of the European
Executives, 97
1
Chapter
2. 13 Press and Information Service of the European Communities, 97
2. 14 Statistical Office of the European Communities, 98
Page
3 External Relations 99
3. 1 Common Commercial Policy, 102 3. 2 Import Liberalization, 106
3. 3 Protective Measures, 109
3. 4 Bilateral Contractual Engagements, 109 3. 5 Export Policy, 111
3. 6 Agricultural and Trade Policy, 114 3. 7 Tariff Negotiations, 117
3. 8 Relations with Non-Member States, 128 3. 9 Application for Membership or
Association, 135
4 Association with European States 143
4. 1 Applications for Association, 145 4. 2 Association with Greece, 145 4. 3 Association with Turkey, 151
4. 4 Applications for Association from Austria, Switzerland, Sweden and Spain, 156
5 Economic and Financial Affairs 159
6
5. 1 Economic Policy, 163
5. 2 Structural Policy and Regional Policy,l66 5. 3 Long-term Development Policy, 170 5. 4 Co-operation in Monetary and Financial
Policy, 172
5. 5 The Community's Medium Term Economic Policy, 174
5. 6 Recommendation 64/246 to Member States on Measures for Restoring Internal and External Economic Balance, 176
5. 7 How the European Investment Bank functions, 180
5. 8 The Overall Economic Situation, 184
The Internal Market
6.1 Tariff Reduction and Adjustment, 199 6. 2 Tariff Quotas, 202
6. 3 Harmonization of Customs Regula-tions, 205
Chapter Page
7
8
6. 4 Rules for Dealing with Processing Traffic, 208
6. 5 Elimination of Quotas in the Industrial Sector, 210
6. 6 The Interpenetration of the Markets, 213 6. 7 The Common Market's Effects for the
Consumer, 216
6. 8 The Right of Establishment and Services, 220 6. 9 The First Directive on the Free Movement
of Capital, 231
Fair Competition
7.1 Council Regulation No. 17, 240 7. 2 Commission Regulation No. 27, 254
Social Affairs
, 8. 1 Regulation and Directives on the Free Movement of Labour in the Community, 259 8. 2 Regulation No.9, Concerning the European
Social Fund, 265
8. 3 Regulation on Social Security for Frontier Workers, 273
B. 4 Seasonal and Other Workers, 27 5
8. 5 Regulations on Social Security for Certain Categories of Migrant Workers, 276 8. 6 Harmonization of Social Systems, 278 8. 7 Employment and Vocational Training, 283
236
257
9 Agriculture 286
10
11
9. 1 Common Agricultural Policy- First Regulations, 290
9. 2 New Common Organizations of Agricultural Markets, 310
9. 3 Financing of the Common Agricultural Policy: The Agricultural Fund, 326
9.4 Common Grain Price, 334
Transport
/10. 1 EEC Commission Proposals for Common Transport Policy, 349
Energy
11. 1 Towards a Co-ordinated Energy Policy, 359
347
Chapter Page
ll. 2 Inter-Executive Energy Committee 1 s
Memorandum on Energy Policy Published by the High Authority of the European Coal and Steel Community, 363 ll. 3 Protocol of Agreement on Energy, 386
12 Overseas Development and Association Agreements 392
13
14
15
12, l Convention of Association Between the European Economic Community and the African and Malagasy States Associated with the Community and Annexed Docu-ments, 395
12.2 European Development Fund, 431
Administration
13. l Protocol on the Privileges and Immuni-ties of the European Economic Com-munity, 436
13.2 Budget, 438
Judicial Decisions
14, l Cases Decided(Arranged in Chrono-logical Order), 442
14. 2 Cases Pending (In order Submitted to Court), 455
14. 3 Cases Decided - Personnel Matters (Arranged in Chronological Order), 459 14,4 Cases Pending - Personnel Matters, 460
Bibliography
434
440
INTRODUCTION
The Handbook on the European Economic Community is designed to meet the ~eed for a concise compilation of the basic EEC documents.
The selection of documents was based upon the experience of the Washington Office of the European Community Information Service in providing information to lawyers, businessmen,
government officials, teachers, students, farm and labor groups, and many others. Excerpts of documents have been included rather than full texts in order to broaden the scope of the Hand-book. Documents have been included relating to every major aspect of the EEC. Brief introductory notes for each chapter include comments on matters not covered in the documents.
For many, the Handbook will be the starting point for more extensive research on the Community. All references have been left as cited in the original documents to facilitate the use of the Handbook in conjunction with the original unex-cerpted documents. An extensive bibliography of EEC docu-ments and publications is included, arranged by subject. All items listed in the bibliography are available from the European Community and may be ordered through the European Community Information Service, 808 Farragut Building, Washington, D. C. 20006. The Community offices in Washington and New York (2207 Commerce Building, 155 East 44th Street) are prepared to
provide more detailed information on any of the subjects dealt with in the Handbook.
The European Community would welcome comments on the selection of documents, the method of excerpting and other comments which would improve later editions of the Handbook.
Market. The second limitation is that the Handbook covers events and decisions in the history of the EEC through the spring of 1964, i.e. through the seventh general report of the Community.
The editor would like to acknowledge the encouragement and assistance given him by Leonard B. Tennyson, Director of the Washington office of the European Community Information Service, Mrs. Alma Dauman of that office and Mrs. Glenda Rosenthal and Miss Cheryl Stern of the New York office who prepared the typescript.
G.L.W.
CHAPTER
1
BACKGROUND OF THE EUROPEAN ECONOMIC COMMUNITY
The European Economic Community, created in 1958, provides the broad foundation for a united Europe. The develop-ment began centuries ago; the first practical steps were taken in the years following the Second World War.
In 1946, Winston Churchill called upon European states to create "a kind of United States of Europe." This initiative was followed in 1947 by the Marshall Plan which asked the European nations to draw up a joint program for the recon-struction of the devastated continent. That same year, the Benelux customs union between the Netherlands andthe Belgium-Luxembourg Economic Union, the first concrete step toward economic unity, entered into force.
The Organization for European Economic Cooperation (OEEC) was established in 1948 as a result of the Marshall Plan. It had two objectives: reconstruction of Europe with American aid and liberalization of trade among the European countries.
During the same year, the Congress of Europe at The Hague took steps toward the creation of the Council of Europe. The Council became a forum for discussing means for creating a politically unified Europe, but was unable to take any con-crete steps in this direction.
The ECSC began functioning in 1952.
Shortly after the Paris Treaty establishing the ECSC was signed, a draft treaty for a European Defense Community was prepared. The EDC was designed to solve the problem of a German contribution to European defense, but it was rejected by the French parliament.
The European unity movement took a new direction after the defeat ofthe EDC. The ''relance europeenne" in the economic sphere was the natural outcome of the success, in a limited sector, of ECSC activities. The Six members of the ECSC --Belgium, France, the Federal Republic of Germany, Italy, Luxembourg and the Netherlands -- agreed at Messina, Italy in 1955 to create a full economic union and to unite their effort in the field of the peaceful uses of atomic energy. A committee headed by Belgian Foreign Minister Paul-Henri Spaak drew up a preliminary report on the Common Market and Euratom.
Negotiations were carried on in the last half of 19 56 on the treaties for the new communities: the European Economic
Community and the European Atomic Energy Community. On March 25, 1957 the treaties were signed in Rome and ratified by the national parliaments by the end of that year. The votes in the parliaments on the EEC treaty were:
Belgium France F.R. Germany Italy Luxem-bourg Nether-lands
Chamber of Representatives Senate
National Assembly Council of the Republic Bundestag
Bundesrat
Chamber of Deputies Senate
Chamber of Deputies
Lower House Upper House
for against abstentions
174 4 2
134 2 2
341 235 231 69
Voted by a large majority on show of hands
Voted by a large majority on show of hands
311 144 54
Voted by a large majority on show of hands
46 3
144 12
46 5
The EEC Treaty entered into effect on January 1, 1958, and the institutions of the Community were immediately set up in Brussels. f, The Treaty provided for a transition period of 12 to 15
years before the Economic Community would be fully developed. On January 14, 1962, the Council of Ministers voted unanimously that the EEC should advance from the first stage of the transition period to the second. The EEC is to move into the third and final stage on January 1, 1966. The transitional period will end on December 31, 1969, twelve years after the EEC Treaty went into effect. Many of the objectives, which according to the Treaty, must be accomplished by 1970 will actually be achieved three to six years earlier. In its Action Program for the second stage of the transitional period The EEC Commission has in-dicated the ways in which this acceleration will take place.
1.1 THE MARSHALL PLAN
Speech by Secretary of State George C. Marshall at Harvard University on June 5, 1947. (excerpts)
In considering the requirements for the rehabilitation of Europe, the physical loss of life, the visible destruction of cities, factories, mines and railroads was correctly estimated, but it has become obvious during recent months that this visible destruction was probably less serious than the dislocation of the entire fabric of European economy. For the past ten years con-ditions have been highly abnormal.
The feverish preparation for war and the more feverish maintenance of the war effort engulfed all aspects of national economies. Machinery has fallen into disrepair or is entirely obsolete. Under the arbitrary and destructive Nazi rule,
virtually every possible enterprise was geared into the German war machine. Long-standing commercial ties, private institu-tions, banks, insurance companies and shipping companies dis-appeared, through loss of capital, absorption through nationali-zation or by simple destruction.
In many countries, confidence in the local currency has been severely shaken. The breakdown of the business structure of Europe during the war was complete. Recovery has been seriously retarded by the fact that two years after the close of hostilities a peace settlement with Germany and Austria has not been agreed upon. But even given a more prompt solution of these difficult problems, the rehabilitation of the economic structure of Europe quite evidently will require a much longer time and greater effort than had been foreseen.
There is a phase of this matter which is both interesting and serious. The farmer has always produced the foodstuffs to exchange with the city dweller for the other necessities of life. This division of labor is the basis of modern civilization. At the present time it is threatened with breakdown. The town and city industries are not producing adequate goods to exchange with the food-producing fa'rmer. Raw materials and fuel are in short supply. Machinery is lacking or worn out.
The farmer or the peasant cannot find the goods for sale which he desires to purchase. So the sale of his farm produce for money which he cannot use, seems to him an unprofitable transaction. He, therefore, has withdrawn many fields from
crop cultivation and is using them for grazing. He feeds more grain to stock and finds for himself and his family an ample supply of food, however short he may be on clothing and the other ordinary gadgets of civilization. Meanwhile, people in the cities are short of food and fuel. So the governments are forced to use their foreign money and credits to procure these necessities abroad. This process exhausts funds which are urgently needed for reconstruction. Thus a very serious situa-tion is rapidly developing which bodes no good for the world. The modern system of the division of labor upon which the exchange of products is based is in danger of breaking down.
The truth of the matter is that Europe 1 s requirements for
the next three or four years of foreign food and other essential products--principally from America--are so much greater than her present ability to pay that she must have substantial additional help, or face economic, social and political deterioration of a very grave character.
The remedy lies in breaking the vicious circle and resort-ing the confidence of the European people in the economic future of their own countries and of Europe as a whole. The manufacturer and the farmer throughout wide areas must be able and willing to exchange their products for currencies, the continuing value of which is not open to question.
Aside from the demoralizing effect on the world at large and the possibilities of disturbances arising as a result of the desperation of the people concerned, the consequences to the economy of the United States should be apparent to all. It is logical that the United States should be doing whatever it is able to do to assist in the return of normal economic health in the world, without which there can be no political stability and no assured peace.
Our policy is directed not against any country or doctrine but against hunger, poverty, desperation and chaos. Its purpose should be the revival of a working economy in the world so as to permit the emergence of political and social conditions in which free institutions can exist. Such assistance, I am convinced, must not be on a piecemeal basis as various crises develop. Any
assistance that this Government may render in the future should provide a cure rather than a mere palliative.
Any government that is willing to assist in the task of re-covery will find full cooperation, I am sure, on the part of the
United States Government. Any government which maneuvers to block the recovery of other countries cannot expect help from us. Furthermore, governments, political parties or groups which seek to perpetuate human misery in order to profit therefrom politically or otherwise will encounter the opposition of the United States.
It is already evident that, before the United States Govern-ment can proceed much further in its efforts to alleviate the situation and help start the European world on its way to re-covery, there must be some agreement among the countries of Europe as to the requirements of the situation and the part those countries themselves will take in order to give proper effect to whatever action might be undertaken by this Government.
It would be neither fitting nor efficacious for this Government to undertake to draw up unilaterally a program designed to place Europe on its feet economically. This is the business of the Europeans. The initiative, I think, must come from Europe. The role of this country should consist of friendly aid in the drafting of a European program and of later support of such a program so far as it may be practical for us to do so. The pro-gram should be a joint one, agreed to by a number, if not all European nations.
An essential part of any successful action on the part of the United States is an understanding on the part of the people of America of the character of the problem and the remedies to be applied. Political passion and prejudice should have no part. With foresight, and a willingness on the part of our people to face up to the vast responsibility which history has clearly placed upon our coun~ry, the difficulties I have outlined can and will be overcome.
1. 2 CONVENTION FOR EUROPEAN ECONOMIC COOPERATION
Signed at Paris on April 16, 1948. (excerpts)
The Governments of Austria, Belgium, Denmark, France, Greece, Ireland, Iceland, Italy, Luxembourg, Norway, the Netherlands, Portugal, the United Kingdom, Sweden, Switzer-land and Turkey, and the Commanders -in-Chief of the French, United Kingdom and United States Zones of Occupation of Germany:
CONSIDERING that a strong and prosperous European econ-omy is essential for the attainment of the purposes of the United
Nations, the preservation of individual liberty and the increase of general well-being, and that it will contribute to the main-tenance of peace;
RECOGNIZING that their economic systems are inter-related and that the prosperity of each of them depends on the prosperity of all;
BELIEVING that only by close and lasting co-operation between the Contracting Parties can the prosperity of Europe be restored and maintained, and the ravages of war made good;
RESOLVED to implement the principles and to achieve the aims set forth in the General Report of the Committee of European Economic Co-operation, particularly the speedy establishment of sound economic conditions enabling the Con-tracting Parties as soon as possible to achieve and maintain a satisfactory level of economic activity without extraordinary outside assistance, and to make their full contribution to world economic stability;
DETERMINED to combine their economic strength to these ends, to join together to make the fullest collective use of their individual capacities and potentialities, to increase their pro-duction, develop and modernise their industrial and agricultural equipment, expand their commerce, reduce progressively barriers to trade among themselves, promote full employment and restore or maintain the stability of their economies and general confidence in their national currencies;
TAKING NOTE of the generous resolve of the American people expressed in the action taken to furnish the assistance without which the aims set forth above cannot be fully achieved;
RESOLVED to create the conditions and establish the institutions nessary for the success of European economic co-operation and for the effective use of American aid, and to conclude a Convention to this end;
Article 1
The Contracting Parties agree to work in close co-operation in their economic relations with one another.
As their immediate task, they will undertake the elabora-tion and execuelabora-tion of a joint recovery programme. The object of this programme will be to achieve as soon as possible and maintain a satisfactory level of economic activity without extra-ordinary outside assistance, and to this end the programme will take special account of the need of the Contracting Parties to develop their exports to non-participating countries to the maxi-mum extent possible.
Accordingly the Contracting Parties pledge themselves to carry out, by their efforts of self help and in a spirit of mutual aid, the following General Obligations, and hereby set up an Organization for European Economic Co-operation, hereinafter referred to as the Organization.
PART I
General Obligations
Article 2
The Contracting Parties will, both individually and collect-ively, promote with vigour the development of production, through efficient use of the resources at their command, whether in their metropolitan or overseas territories and by the progressive
modernization of equipment and techniques, in such manner as may best assist the accomplishment of the joint recovery programme.
Article 3
The Contracting Parties will, within the framework of the Organization and as often and to such extent as may be necessary, draw up general programmes for the production and exchange of commodities and services. In so doing they will take into con-sideration their several estimates or programmes and general world economic conditions.
Article 4
The Contracting Parties will develop, in mutual co-opera-tion, the maximum possible interchange of goods and services. To this end they will continue the efforts already initiated to achieve as soon as possible a multilateral system of payments among themselves, and will co-operate in relaxing restrictions on trade and payments between one another, with the object of
abolishing as soon as possible those restrictions which at present hamper such trade and payments.
Article 5
The Co:1tracting Parties agree to strengthen their economic links by all methods which they may determine will further the objectives of the present Convention. They will continue the study of Customs Unions or analogous arrangements such as free trade areas, the formation of which might constitute one of the methods of achieving these objectives. Those Contracting Parties which have already agreed in principle to the creation of Customs Unions will further the establishment of such Unions as rapidly as con-ditions permit.
Article 6
The Contracting Parties will co-operate with one another and with other like-minded countries in reducing tariff and other barriers to the expansion of trade, with a view to achieving a
sound and balanced multilateral trading system such as will accord with the principles of the Havana Charter.
Article 7
Each Contracting Party will, having due regard to the need for a high and stable level of trade and employment and for avoid-ing or counteravoid-ing the dangers of inflation, take such steps as lie within its power to achieve or maintain the stability of its currency and of its internal financial position, sound rates of exchange and, generally, confidence in its monetary system.
Article 8
The Contracting Parties will make the fullest and most effective use of their available manpower.
They will endeavour to provide full employment for their
own people and they may have recourse to manpower available in the territory of any other Contracting Party. In the latter case they will, in mutual agreement, take the necessary measures to facilitate the movement of workers and to ensure their establishment in conditions satisfactory from the economic and social point of view.
Generally, the Contracting Parties will co-operate in the progressive reduction of obstacles to the free movement of persons.
1. 3 BENELUX CUSTOMS CONVENTION
Signed at London on September 5, 1944. (excerpts)
The Government of Her Majesty the Queen of the Netherlands on the one hand;
The Governments of His Majesty the King of the Belgians and of Her Royal Highness the Grand Duchess of Luxembourg on the other hand,
Desiring at the moment of liberation of the Territories of the Nether-lands and the Economic Union of Belgium and Luxembourg, to create the most favourable conditions for the ultimate formation of an Econo-mic Union and for the restoration of econoEcono-mic activity, have decided to further these ends by establishing a system of common duties and to this end have agreed to the following articles:
Article 1
The Netherlands and the Economic Union of Belgium and Luxembourg shall impose identical customs duties on the impor-tation of goods, according to the appended tariff which forms an integral part of this agreement.
Apart from the duties provided for in this tariff, they shall be entitled to levy excise duties--including import duties equi-valent to excise--as well as any other dues, according to the system in force in their respective Territories; they shall re-serve their right to modify the rates.
Article 2
No customs duty shall be levied on goods entering the
Netherlands from the Economic Union of Belgium and Luxembourg and reciprocally on goods entering the Economic Union of Belgium and Luxembourg from the Netherlands.
The Netherlands and the Economic Union of Belgium and Luxembourg shall be entitled to levy entry duties--including import duties equivalent to excise--as well as any other taxes, according to the system in force in their respective territories; they reserve the right to modify the rates.
1. 4 THE SCHUMAN PLAN
Declaration by the French Minister of Foreign Affairs at Paris on May 9, 1950, (excerpts)
World peace cannot be safeguarded without constructive efforts equal to the dangers which threaten it.
The contribution which an organized and living Europe can bring to civilization is indispensable to the maintenance of peaceful relations. In taking upon herself for more than twenty years the role of champion of a united Europe, France has always had as her essential aim the service of peace. A united Europe was not achieved, and we had war.
Europe will not be made all at once, or according to a single, general plan. It will be built through concrete achieve-ments, which first create a de facto solidarity. The gathering of the nations of Europe requires the elimination of the age-old conflict between France and Germany.
The first concern in any action undertaken must be these two countries.
With this aim in view, the French Government proposes to take action immediately on one limited but decisive point. The French Government proposes to place Franco-German pro-duction of coal and steel under a common High Authority, within the framework of an organization open to the participation of the other countries of Europe.
The pooling of coal and steel production will immediately provide for the setting-up of common bases for economic develop-ment as a first step in the federation of Europe, and will change the destinies of those regions which have long been devoted to manufacturing the armaments of war of which they themselves have been the most constant victims.
The solidarity in production thus established will make it plain that war between France and Germany becomes not merely
unthinkable but materially impossible. The setting-up of this powerful production unit, open to all countries willing to take part, and eventually capable of providing all the member coun-tries with the basic elements of industrial production on the same terms, will lay the real foundations for their economic unification.
This production will be offered to the world as a whole without distinction or exception, with the aim of contributing to the raising of living standards and the promotion of peaceful achievements.
Europe, with new means at her disposal, will be able to pursue the realization of one of her essential tasks, the development of the African continent.
In this way there will be realized, simply and speedily, that fusion of interests which is indispensable to the establish-ment of an economic community; and will be the leaven from which may grow a wider and deeper community between coun-tries long divided by bloody conflicts.
By pooling basic production and by setting up a new High Authority, whose decisions will be binding on France, Germany and other member countries, these proposals will build the first concrete foundations of the European Federation which is indis-pensable to the preservation of peace.
l. 5 TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY
Signed At Paris on April 18, 1951. (excerpts)
THE PRESIDENT OF THE GERMAN FEDERAL REPUBLIC, HIS ROYAL HIGHNESS THE PRINCE ROYAL OF BELGIUM, THE PRESIDENT OF THE FRENCH REPUBLIC, THE PRESI-DENT OF THE ITALIAN REPUBLIC, HER ROYAL HIGHNESS THE GRAND DUCHESS OF LUXEMBOURG, HER MAJESTY THE QUEEN OF THE NETHERLANDS,
CONSIDERING that world peace may be safeguarded only by creative efforts as great as the dangers menacing
it;
CONVINCED that the contribution which an organized and vital European can bring to civilization is indispensable to the
maintenance of peaceful relations;
CONSCIOUS of the fact that Europe can be built only by concrete actions creating a real solidarity and by the establish-ment of common bases for economic developestablish-ment;
DESIROUS of assisting through the expansion of their
basic production in raising the standard of living and in furthering the works of peace;
RESOLVED to substitute for historic rivalries a fusion of their essential interests; to establish, by creating an economic community, the foundation of a broad and independent community among peoples long divided by bloody conflicts; and to lay the bases of institutions capable of giving direction to their future common destiny;
HAVE DECIDED to create a European Coal and Steel Community.
Article 1
By this Treaty the High Contracting Parties establish among themselves a EUROPEAN COAL AND STEEL COMMUNITY, based on a common market, common objectives, and common institutions.
Article 2
The mission of the European Coal and Steel Community is to contribute to the expansion of the economy, the development of employment and the improvement of the standard of living in the participating countries through the creation, in harmony with the general economy of the member States, of a common market as defined in Article 4.
The Community must progressively establish conditions which will in themselves assure the most rational distribution of pro-duction at the highest possible level of productivity, while safe-guarding the continuity of employment and avoiding the creation of fundamental and persistent disturbances in the economies of the Member States.
Article 3
Within the framework of their respective powers and re-sponsibilities and in the common interest, the institutions of
the Community shall:
(a) ensure that the common market is regularly supplied, while taking into account the needs of third countries;
(b) assure to all consumers in comparable positions within the common market equal access to the sources of production;
(c) seek the establishment of the lowest possible prices without involving any corresponding rise either in tre prices charged by the same enterprises in other trans-actions or in the price-level as a whole in another period, while at the same time permitting necessary amortization and providing the possibility of normal returns on invested capital;
(d) ensure that conditions are maintained which will en-courage enterprises to expand and improve their ability to produce and to promote a policy of rational develop-ment of natural resources, while avoiding undue ex-haustion of such resources;
(e) promote the improvement of the living and working con-ditions of the labour force in each of the industries under its jurisdiction so as to harmonize those con-ditions in an upward direction;
(f) foster the development of international trade and ensure that equitable limits are observed in prices charged in foreign markets;
(g) promote the regular expansion and the modernization of production as well as the improvement of quality, under conditions which preclude any protection against competing industries except where justified by illegiti-mate action on the part of such industries or in their favour.
Article 4
The following are recognized to be incompatible with the common market for coal and steel, and are, therefore, abolished and prohibited within the Community in the manner set forth in this Treaty:
(a) import and export duties, or taxes with an equivalent effect, and quantitative restrictions on the movement of coal and steel;
{b) measures or practices discriminating among
pro-ducers, among buyers or among consumers, especially as concerns prices, delivery terms and transport rates, as well as measures or practices which hamper the buyer in the free choice of his supplier;
(c) subsidies or state assistance, or special charges imposed by the state, in any form whatsoever;
(d) restrictive practices tending towards the division or the exploitation of the market.
Article 5
The Community shall accomplish its mission, under the conditions provided for in this Treaty, with limited intervention.
To this end, the Community shall:
assist the interested parties to take action by collect-ing information, organi.zcollect-ing consultations and defincollect-ing general objectives;
place financial means at the disposal of enterprises for their investments and participate in the expenses of readaptation;
assure the establishment, the maintenance and the observance of normal conditions of competition, and take direct action with respect to production and the operation of the market only when circumstances make it absolutely necessary;
publish the reasons for its action and take the necessary measures to ensure observance of the rules set forth in this Treaty.
The institutions of the Community shall carry out these activities with as little administrative machinery as possible and in close co-operation with the interested parties.
Article 6
The Community shall be a legal person.
In its international relationships, the Community shall enjoy the legal capacity necessary to exercise it functions and to achieve its purposes.
In each of the member States, the Community shall
enjoy the most extensive legal capacity pertaining to legal persons in that country. Specifically, it may acquire and transfer real and personal property, and may sue and be sued in its own name.
The Community shall be represented by its institutions, each one of them acting within the framework of its own powers and responsibilities.
Article 8
The High Authority shall be responsible for assuring the achievement of the purposes stated in this Treaty within the terms thereof.
Article 9
The High Authority shall be composed of nine members designated for six years and chosen for their general competence.
A member shall be eligible for reappointment. The number of members of the High Authority may be reduced by unanimous decision of the Council.
Only nationals of the member States may be members of the High Authority.
The High Authority shall not include more than two members of the same nationality.
The members of the High Authority shall exercise their functions in complete independence, in the general interest of the Community. In the fulfilment of their duties, they shall neither solicit nor accept instructions from any government or from any organization. They will abstain from all conduct incompatible with the supranational character of their functions.
Each member State undertakes to respect this supranational character and not to seek to influence the members of the High Authority in the execution of their duties.
The members of the High Authority shall not exercise any business or professional activities, paid or unpaid, nor acquire or hold, directly or indirectly, any interest in any business re-lated to coal and steel during their term of office or for a period of three years thereafter.
Article 10
The governments of the member States shall appoint eight members of the High Authority by agreement among themselves. These eight members shall elect a ninth member, who will be deemed elected if he receives at least five votes.
Article 13
The High Authority shall act by vote of a majority of its members.
Its quorum shall be fixed by its rules of procedure. How-ever, this quorum must be greater than one-half of its members.
Article 14
In the execution of the tasks entrusted to it by this Treaty and in accordance with the provisions thereof, the High Authority shall take decisions, formulate recommendations and issue opinions.
Decisions shall be binding in every respect.
Recommendations shall be binding with respect to the objectives which they specify but shall leave to those to whom they are directed the choice of appropriate means for attaining these objectives.
Opinions shall not be binding.
When the High Authority is empowered to take a decision, it niay limit itself to formulating a recommendation.
Article 20
The Assembly, consisting of representatives of the peoples of the member States of the Community, shall exercise the super-visory powers which are granted to it by this Treaty.
Article 26
The Council shall exercise its functions in the cases and in the manner laid down by this Treaty, in particular with a view to harmonizing the action of the High Authority and that of the governments which are responsible for the general economic pol-icy of their countries.
To this end, the Council and the High Authority shall ex-change information and consult together.
The Council may request the High Authority to examine any proposals and measures which it may deem necessary or appropriate for the realization of the common objectives.
Article 27
The Council shall consist of representatives of the member States. Each State shall appoint thereto one of the members of its government.
The Presidency of the Council shall be exercised for a term of three months by each member of the Council in rotation in the alphabetical order of the member States.
Article 31
The function of the Court is to ensure the rule of law in the interpretation and application of the present Treaty and of the regulations for its execution.
Article 33
led to such decisions or recommendations, except where the High Authority is alleged to have abused its powers or to have clearly misinterpreted the provisions of the Treaty or of a rule of law relating to its application.
The enterprises, or the associations referred to in Article 48, shall have the right of appeal on the same grounds against individual decisions and recommendations affecting them,or against general decisions and recommendations which they deem to involve an abuse of power affecting them.
The appeals provided for in the first two paragraphs of the present article must be lodged within one month from the date of notification or publication, as the case may be, of the decision or recommendation.
Article 49
The High Authority is empowered to procure the funds necessary to the accomplishment of its mission:
by imposing levies on the production of coal and steel;
by borrowing.
It may also receive grants.
Article 97
This Treaty is concluded for a period of fifty years from the date of its entry into force.
Article 98
Any European State may request to accede to this Treaty. It shall address its request to the Council, which shall act by unanimous vote after obtaining the opinion of the High Authority. Also by an unanimous vote the Council shall fix the terms of accession , which shall become effective on the day the instru-ment of accession is received by the governinstru-ment acting as de-pository of the Treaty.
Basic Working Document of the Brussels Convention to Draft the European Economic Community Treaty
Convened on June 26, 1956. (excerpts)
TITLE I
THE FUSION OF MARKETS
CHAPTER 1 - THE CUSTOMS UNION
I.
Elimination of customs duties within the common market.1. The starting point for the reduction is the average duty levied during the years 1953, 54 and 55 or the scheduled duty if it
is lower. The first reduction will be applied across the board on all commodities. The following reductions will be applied to the average for groups of commodities.
2. Commodities are grouped according to the duties levied on them by intervals of 5 points for duties up to lOo/o and above 50%, and by intervals of 2 1/2 points for duties between 10% and 50%. Any two of these groups can be linked together at the choice of the Governments.
3. The average reduction applied to the groups thus estab-lished by uniting two intervals is calculated by weighting the percentage of reduction on each tariff position by the value of corresponding imports from other Community countries during the three last years for which statistical information is available.
4. During the first stage reductions take place initially at the end of the first year, and thereafter at 18 month intervals; during the second stage, they again take place at 18 month in-tervals and at the end of the eighth year. There remains 40% to be eliminated before the end of the transitional period.
5. Modifications in the system envisaged will require unanimous approval of the Council of Ministers if it is a que s-tion of reducing the time periods.
In other cases and on the proposal of the European Com-mission a majority of 2/3 of the Council will suffice. However, the delays can be extended only for three years so that the transitional period will end after a maximum of 15 years.
can still be proposed if they are recognized as necessary to prevent fundamental and persistent troubles in the economies of the member States. These derogations would come into play only within the limits fixed in the Treaty and with the agreement of the common institutions.
II. Establishment of a Common External Tariff.
A. The system for the establishment of a common external tariff will be the following:
1. The starting point for the calculation of the tariff is based either on the average of the duties levied during the years 1953-1954 and 1955 or on the scheduled duty rate if it is lower.
2. The tariff positions, classified in three categories ac-cording to a nomenclature already agreed upon, will be brought down to certain maximum levels which will differ for raw materials, semi-finished products and finished products.
3. The level of the external tariff will be established on the basis of an arithmetic average of the duties levied on each product, after the high tariffs have been brought below the maximum envisaged for each category.
4. In order to achieve the level thus defined the following schedule will be applied:
a) On items where the present unadjusted duties are not more than 15% above or below or more than three points away from their arithmetic average this average will be applied when the first decrease of 10% is made on customs duties within the common market.
b) On other items at the end of the first stage of four years each country, in its relations with third countries, will reduce by 30% the difference between its own duties and the level of the corres-ponding duties of the common tariff. A second reduction of 30% of the difference will be made at the end of the second stage of four years.
c) The application of the common tariff itself will take place at latest at the time when customs duties are completely eliminated within the common market.
d) Advance actions will have to be taken in harmonizing the
national tariffs with the common (external) tariff whenever the reduction of internal duties threatens to bring about tranship-menta, because of the difference from the external duties.
e) If the mechanisms proposed above do not permit a satis-factory formula to be determined in certain cases, a solution will have to be sought through negotiations among the member States, and facilitated by proposals of the European Commission.
The European Commission will be able to grant a country the benefit of a safeguard clause for a limited period and for tariff positions not exceeding 5% of its imports from third countries. If this(safeguard) should not be granted, the inter-ested State would be able to have recourse either to the Council of Ministers or the Court.
B. Negotiations with Third Countries.
It is the common tariff defined above which will be applied towards third countries, except for concessions obtained from them by negotiations.
The European Commission will make proposals and con-duct tariff negotiations with third countries under a mandate approved unanimously by the Council.
However, beginning with the ninth year a qualified majority will be sufficient to modify duties which do not differ by more than 30% or 5 points from the common baz;ic tariff.
Negotiations for the establishment of associations between the Community and third countries will take place as soon as possible after the Treaty comes into effect on the basis o.f pro-posals of the European Commission approved unanimously by the Council of Ministers.
CHAPTER 2 -QUOTAS
Section 1 - Import Controls
After the first lowering of customs duties, the new mechanism proposed for the Community will be as follows:
of the Community.
2. These global quotas will be increased each year on the order of 20% above the preceding year. As a result of being progressively increased, they should become inoperative, not later than a year before the time that the customs duties themselves are to be eliminated.
3. The starting point for an increase of the very small or non-existing quotas will be, at the choice of each interested State, either 1% of the national production in question or imports corresponding to the average of the Community for the products in question.
4. When the quota takes the form of a purchasing mon-opoly (governmental or business), the proposed system will be replaced by proposals of the European Commission concerning the adaptation of the existing organizations which will have either to disappear, be adapted to the common market or, where necessary, be replaced by a common organization in such a way as to eliminate progressively the discriminations among the different suppliers of the common market. This procedure will be applied equally to fiscal mon-opolies.
Section 2 - Export Controls
In relations with third countries and within the framework auth-orized by GATT, export controls for the duration of the transitional period will remain under the responsibility of each of the States to the extent that there is, in practice, a certain autonomy in the commercial policy of the member States. At the end of the last stage, export restrictions will be subject to the common commercial policy of the Community vis-a-vis third countries.
CHAPTER 3 - SERVICES
The Treaty itself will specify the principles and rules of procedure binding the member States:
common regulation. The proposals of the Commission should:
1. in the first instance deal with services directly connected with the costs of production and facilitating the free circulation of goods;
2. see to it that national regulations, as long as they are maintained, are applied without discrimination on the basis of residence and nationality;
3. determine to what extent the national regulations
correspond or not to the requirements of public order.
The proposals of the Commission will be submitted to a vote by the Assembly. In order to put them into effect a unanimous approval of the Council will be required up to the end of the second stage, and thereafter a qualified majority.
b) At the end of the transitional period, the rules proposed by the European Commission should be uniform. Only certain national rules can be maintained which, on the proposal of the Commission, are adopted by a qualified majority of the Council of Ministers.
Transport Services
On proposals of the European Commission put forward during the transitional period and to be put into effect on the same con-ditions as those indicated for services in general, discriminations on the basis of nationality should be eliminated in such a way that at the end of the last stage, all the nationals of member States will be assured the right to furnish and accept freely transportation
services over the territory of the member States as a whole.
CHAPTER 4 - AGRICULTURE
A. Establishment of the Common Market for Agriculture.
b) Definitive Arrangements
that will eventually be necessary.
For products which are not under a common organization the market within the Community will be free. Protection with respect to third countries will be assured by customs duties in preference to quotas which would be seasonal rather than permanent.
In the exceptional case in which a national economy is both so limited and so little diversified that it cannot get rid of funda-mental and persistent troubles affecting the agricultural sector, special solutions would have to be applied in order to complement, if necessary, the stabilizing mechanisms envisaged above.
B. The Common Market for Agriculture and Third Countries.
The common market for agriculture cannot be an entity pro-tected against the outside world, while aligning its prices on mar-ginal internal production. However, it will be protected against abnormal competition from third countries that employ dumping prices. This is why certain arrangements should be applied to permit producers of the Community who up to now used low-priced raw materials to continue to export at competitive prices to third countries.
C. Institutional Organization.
The European Commission within a period of two years should make proposals for a common policy and organization of the agri-cultural market. Furthermore, it should be the body to make the examination which is envisaged of existing national regulations.
The proposals of the Commission will be submitted to a vote in the Assembly and should during the first stage, be adopted by a unanimous vote of the Council of Ministers. From the second stage onward a qualified majority of the Council of Ministers will suffice.
TITLE II
RULES AND COMMON ACTIONS
CHAPTER 1 - RULES CONCERNING COMPETITION
Section I Standards Applicable to Enterprises.
At the end of the transitional period anti-dumping legislation of member countries of the common market in their relation with
third countries should be uniform.
b) Action against monopolies within the common market will be developed in conformity with the basic rules contained in the treaty. It will be limited to practices affecting in-terstate commerce which take the form of cartel organiza-tions (ententes) and monopolies using discriminatory prac-tices, dividing markets, limiting production and controlling the market for a particular product. On the basis of prin-ciples in the treaty the European Commission will establish the general executive regulations which will be submitted to a vote by the Assembly and which can be appealed before the Court.
c) The States, the enterprises and the Committee itself will be able to make complaints against infractions of the general rules. The European Commission will try to present, within a fixed period, a compromise solution with the assistance of a Consultative Committee on cartels and discriminations which should be created. In case a compromise solution fails the Commission or the States could bring the matter before the Court.
Section 2 Rules Concerning Financial Assistance Granted by the States.
1. Financial assistance, no matter in what form it is granted, is incompatible with the common market if it distorts com-petition and the distribution of economic activities by favoring certain enterprises or certain types of production.
CHAPTER 2 -CORRECTION OF DISTORTIONS AND HARMONIZATION OF NATIONAL LEGISLATION
Section l Distortions
The procedure will be the following:
proposals of the Commission will be adopted only after unanimous approval by the Council of Ministers during the first four years; after that by a qualified majority until the end of the 12th year, and finally by a simple majority after that period;
governments will be obliged only to use their good offices towards their "social partners" or recommend appropriate
legislation when the correction of distortions depends either on working conditions freely negotiated or on legislative measures;
if the proposals of the Commission are rejected, it has the right, until the end of the transitional period, to grant the benefit of a safeguard clause to industries which are harmed (protecting them in their national markets and aiding their sales in the rest of the common market and in third countries).
Section 2 Harmonization of Legislation
When the elimination of a distortion calls for the harmoni-zation of legal regulations in the different countries, the European Commission will propose the necessary decisions which will be taken only by a unanimous vote of member States during the first stage, and by a qualified majority thereafter. If agreement cannot be reached, and if there is a distortion effect, the Commission will have to grant to the interested State the benefit of a safeguard clause.
CHAPTER 3 TRANSPORT RATES AND POLICY
Section 1 Transport Rates
Discriminations which, for the same routes and for the same merchandise, result in different prices and conditions according to the country of origin or destination of products will be eliminated at the end of the first stage.
Section 2 Transport Policy
In order to prepare a common policy for transport a "port account of each nation" will be established by a group of trans-port and national revenue experts in order to bring into relief the expenditures directly borne by the transporter and also the charges borne by the Community.
CHAPTER 4 BALANCE OF PAYMENTS
I. _!_he Problem of Payments Equilibrium and Mutual Assistance.
The obligations undertaken in the framework of the Inter-national Monetary Fund, the GATT, and the OEEC bind the Six States that are members of them.
The Six States, in order to assure equilibrium in the balance of payments:
1) will establish a closer cooperation among their central banks,
2) will give the European Commission the right to grant safeguard clauses and to propose mutual assistance in order to avoid the possibility that, in spite of the rules of the IMF, devaluations might take place with the sole aim of extracting competitive advantages; and in order to prevent the maintenance or the re-establishment of restrictions and blocks in the way of the common expansion.
b. The Final Period
A State in difficulty will be able to re-establish quotas vis-a-vis third countries only in conformity with its international ob-ligations and after consultation with the European Commission. The Commission will present the alternatives to the other member States: either to take the necessary measures to prevent the
restrictions from being applied against them, or to grant credits, to the extent that the common commercial policy does not suffice to resolve these problems.
Within the common market there is reason to think that the evolution of the general system of payments will enable these difficulties to be surmounted. The granting of credits, proposed by the European Commission and decided by a simple majority of the Council, will permit the definitive renunciation of the safe-guard clauses.
II Unification of Commercial Policy.
Besides the establishment of a common external tariff, the States must employ a commercial policy which will be that of the Community as a whole when the common market has been firmly established. Within this framework the European Commission, acting in liaison with the Council of Ministers, will play a role notably in matters concerning anti-dumping measures, protective quotas, encouragement of exports, and short-term (governmental) interventions, which must also be on a common basis.
Section l
TITLE III
DEVELOPMENT AND FULL UTILIZATION OF EUROPEAN RESOURCES
CHAPTER l THE INVESTMENT FUND
Objective
Acting in cooperation with the other international financial institutions, the fund will have the objective of participating in the financing of:
l. Projects of a European character and interest whose mag-nitude and nature do not lend themselves to the financing available in each State separately.
2. Less favored regions and notably regional development plans for agriculture;
3. Reconversion of enterprises by opening up credit possibilities for them which psychological factors in the market might jeopardize. This is why it is necessary to have a division endowed with certain resources within the organization of the fund itself.
CHAPTER 2 READAPTATION
1.
In cases of:total shut-down of an enterprise,
partial shut-down through definite abandonment of certain manufacturing,
reduction of employment affecting at least 10% of the working force and at least ten employed persons,
The Fund will participate in covering:
resettlement payments if workers change their residence,
expenses for re-training of workers if they change their jobs.
CHAPTER 3 FREE MOVEMENT OF LABOR
The European Commission will propose to the States measures for the progressive elimination of all discriminatory regulations (legal, administrative, or administrative practices) which, on the basis of nationality, reserve more favorable treat-ment for nationals than that accorded foreigners with regard to access to an independent profession or the practice of that pro-fession.
This principle will also apply to regulations concerning entry and residence without prejudice to provisions governing public order and safety.
CHAPTER 4 FREE MOVEMENT OF CAPITAL
3. As soon as possible, the European Commission will make proposals to establish the free circulation of capital. These proposals will be submitted to a vote of the Assembly and their adoption will require during the first four-year period the agreement of each State on matters of concern to it, and thereafter a qualified majority of the Council.
4. The European Commission can authorize safeguard clauses which can take the form either of suspension of lib·eralization decisions already taken or the postponement of measures to be taken. Nevertheless, even after the end of the transi-tional period safeguard clauses can be introduced in order to prevent speculative movements of capital.
l. 7 TREATY ESTABLISHING
THE EUROPEAN ECONOMIC COMMUNITY
Signed at Rome on March 25, 1957. (excerpts)
HIS MAJESTY THE KING OF THE BELGIANS, THE PRES!-DENT OF THE FEDERAL REPUBLIC OF GERMANY, THE
PRESIDENT OF THE FRENCH REPUBLIC, THE PRESIDENT OF THE ITALIAN REPUBLIC, HER ROYAL HIGHNESS THE GRAND DUCHESS OF LUXEMBOURG, HER MAJESTY THE QUEEN OF THE NETHERLANDS,
DETERMINED to establish the foundations of an ever closer union among the European peoples,
