As the American diplomat and historian Benjamin Grob-Fitzgibbon emphasizes in a stimulating recent book, many British political leaders in 1945 thought of their country as being both European and imperial. As he also points out, there was nothing particularly unusual about this, since ‘From the seventeenth century onwards, European-ness and imperialism became synonymous. To be European was to be imperial.’1 European states had in the past fought each other for control of territory in other continents, but their shared colonial experience now gave them a common identity which might, perhaps, help in forging a shared future. Even better, the resources of the British, French, Dutch, Belgian and Portuguese empires might, if combined, enable Europe to maintain its geopolitical status in a world that would otherwise be dominated by the two rising superpowers, the United States and the USSR. In the minds of many Britons there was no need to choose between Europe and the British Empire, and several reasons to think that greater European unity was essential in the aftermath of a devastating conflict.
As early as 1940 there had been proposals in Britain for sharing sovereignty with another European country, namely France. Jean Monnet was yet again working to coordinate the economic efforts of the two allies, and convinced the British government to seek political union with his native country. On 16 June de Gaulle transmitted the offer to Paul Reynaud’s French government in Bordeaux, but Reynaud lost power to Marshal Pétain on the same day. Pétain, who favoured an armistice with the Germans, asked why France would wish to ‘fuse with a corpse’.2 And so it is perhaps not so surprising that Winston Churchill emerged after the war as one of the leading champions of a united Europe. Out of power since July 1945, in September of the following year he gave a speech in Zurich in which he called for the construction of ‘a kind of United States of Europe’. ‘The first step in the recreation of the European Family must be a partnership between France and Germany. In this way only can France recover the moral and cultural leadership of Europe … In all this urgent work, France and Germany must take the lead together.’ (At this stage, it must be said, the French doubted the wisdom of giving the Germans such a role.) Over the next two years Churchill tirelessly advocated for a united Europe, which he regarded as being fully compatible with Britain’s imperial commitments. Indeed, Britain’s claim to continuing great-power status lay precisely in the fact that the country, uniquely, lay at the centre of ‘three interlinked circles’: the first and most important was the British Commonwealth and Empire, the second was the English-speaking world, and the third was a united Europe.3
How closely did Churchill want the UK to become involved with such a united Europe, and how united did he think Europe should become? On the one hand, the Zurich speech talked of Britain and her Commonwealth becoming ‘friends and sponsors of the new Europe’ alongside the United States and (hopefully) the Soviet Union, suggesting that the UK would be keeping a certain distance from it; on the other, at a meeting to launch his United Europe Movement in May 1947 he argued that ‘If Europe united is to be a living force, Britain will have to play her full part as a member of the European family.’4 On the one hand, Churchill advocated the creation of a Council of Europe and a ‘uniform currency’: ‘Luckily coins have two sides, so that one can bear the national and the other the European superscription.’5 On the other, he wanted ‘a European assembly without executive power … The structure of constitutions, the settlement of economic problems, the military aspects – these belong to governments.’ He argued in favour of a European Army, but felt that ‘a Parliament of Europe [was] quite impracticable’. Not surprisingly, historians have disagreed about his true feelings on the subject: a contemporary complained that on Europe ‘Churchill decided to have it both ways.’6
The Labour government in London was certainly not in favour of a system in which a European Parliament – which would inevitably contain many German and Italian members, at least in the long run – would be able to take decisions that would be binding on the United Kingdom. The British Foreign Secretary, Ernest Bevin, eventually came to accept that there was a need for ‘some sort of federation in Western Europe whether of a formal or informal character’, given the challenges posed by an aggressive Soviet Union, but he ‘hoped it would not be necessary to have formal constitutions’ – the British Commonwealth provided a more flexible and desirable model.7 As already noted in Chapter 1, a resistance to supranational political institutions that would have the ability to impose policies that Britain did not want soon became a defining characteristic of British attitudes towards European integration. Others elsewhere took a different view.
Despite such differences in opinion, the late 1940s saw a burst of institutional innovation in Western Europe. By the end of the decade three major international organizations had been created, in the economic, security and political spheres. All three included the UK as a leading founder member, and all three operated on essentially intergovernmental lines: they involved cooperation between governments rather than the creation of supranational institutions. At the same time, future battle lines were already being drawn between federalists and ‘intergovernmentalists’.
The origins of post-war European economic cooperation are largely American.8 When the US decided in 1947 to provide Marshall Aid to Europe, one of the things that it insisted on was that the aid programme be administered by the Europeans themselves. A Committee for European Economic Co-operation was set up for this purpose in 1947, and was made permanent and re-baptized the Organization for European Economic Co-operation (OEEC) in April of the following year.9 The OEEC involved seventeen European countries which would be the key players in the manoeuvres and counter-manoeuvres of the succeeding decade.10 It is helpful to classify these countries into three groups. First, there were ‘the Six’: the three Benelux countries, France, Germany and Italy. Second, there were the ‘Other Six’: the three Scandinavians (Denmark, Norway and Sweden), the two neutral alpine states (Austria and Switzerland), and the UK. Third, there were five peripheral and less industrial countries: Greece, Iceland, Ireland, Portugal and Turkey. In accordance with the wishes not just of Britain, but of the Scandinavians and the Low Countries as well, the OEEC was strictly intergovernmental in nature – contrary to the wishes of France.11 Decisions were taken by the Council of Ministers and required unanimity (meaning that no country could ever be made to accept a decision that it did not agree with).
In addition to organizing the distribution of Marshall Aid, the OEEC had a remit to advance European economic integration: it was supposed not only to lower trade barriers, but also to study the feasibility of creating a European customs union. The British Foreign Secretary was keen on the idea, and the UK participated in the study group set up to examine the issue. Early on, however, it became clear that membership of a customs union would be difficult for Britain, given its policy of imperial preferences and commitment to the Empire. A customs union, as the name suggests and as we saw in the previous chapter, implies by definition a common external tariff policy for all member states. If Britain joined a European customs union it would be unable to set its own, preferential, tariffs on goods arriving from the Commonwealth. Unless the customs union as a whole did the same, or some means were found of merging a Commonwealth customs union with a European one, imperial preference would have to go – and there was absolutely no sign that the Dominions were willing to become involved in a customs union with each other, let alone in one involving European countries also. On the other hand, if the rest of Europe were to form such a customs union, and Britain remained outside it, its industries would find themselves being discriminated against in continental markets. A British expert committee appointed in 1947 to study the issue concluded that ‘a continental customs union had little economically in its favour other than the damage which would be caused by being excluded from it’.12 A more succinct statement of a certain British view of Europe would be hard to find. Once a customs union was on the table, it would become difficult if not impossible to avoid choosing between Europe and the Empire, and neither option was appealing.
The OEEC did not make much headway on the question of a customs union, but it was otherwise largely successful in pursuing its objectives. One of its main achievements was to restore multilateral trade within Europe, which in turn required the re-establishment of convertible currencies (that is to say, currencies which could be freely exchanged with each other on international currency markets). Absent convertible currencies, it was difficult for a country (let us say France) to run a trade deficit with a second country (let us say Germany), and to pay for these excess imports by running a trade surplus with a third country (let us say Britain): for this would require being able to convert the surplus British pounds that had been gained from the trade with the UK into German marks, to enable French importers to buy goods from across the Rhine.
Without convertible currencies there was thus a tendency to seek balanced trade, not with the world as a whole, but with individual trading partners. This was needless to say extremely inefficient, in much the same way as barter is inefficient (since as generations of economics undergraduates have learned, barter relies on a mutual coincidence of wants); and just as barter is what inevitably happens when you do not have an acceptable domestic currency, so the tendency to bilateral rather than multilateral trade arose from the lack of internationally convertible currencies that could serve as an international means of payment.13 Under the auspices of the OEEC, and with the active assistance of the United States, the European Payments Union was therefore established in 1950. This was extremely successful in facilitating the re-establishment of a multilateral European trading system and the resumption of convertible currencies. Without these achievements the adoption of more ambitious free trade proposals in Europe would have been strictly impossible.14 The OEEC also made considerable progress in removing non-tariff barriers to trade among its members such as quotas (quantitative restrictions on the amount of goods that can be legally imported).
NATO was another organization where American input was crucial by definition. In 1948 the three Benelux countries joined France and Britain in signing the Treaty of Brussels, a 50-year collective security agreement that also called for ‘collaboration in economic, social and cultural matters’.15 The Brussels Treaty soon became redundant, due to Western European weakness and growing fears about the Soviet Union. The Berlin blockade, which began just three months later, highlighted both the gravity of the Soviet threat, and the reliance of Western Europe on American military support. The result was the signature of the Atlantic Pact, establishing NATO in 1949, by twelve countries: the five Brussels Treaty countries, three Nordics (Denmark, Iceland and Norway), Italy and Portugal, and Canada and the US. Greece and Turkey were admitted three years later.
Finally, in 1949 the Council of Europe was established as a two-tier structure, involving both a European assembly, meeting in public, which is what the federalists wanted, and a ministerial committee meeting in private, and making decisions on the basis of unanimity, which is what the British wanted. The Consultative Assembly, as it was called, and which met in Strasbourg, became a focal point for pro-federalist politics during the 1950s. However, the structure of the Committee of Ministers ensured that the Council of Europe would become an organization based on intergovernmental cooperation. Its major contribution was in the area of human rights, with the European Convention for the Protection of Human Rights and Fundamental Freedoms being opened for signature in 1950, and the European Court of Human Rights established in 1959.
A British politician surveying the European scene at the start of 1950 would probably have felt quite pleased. Western Europe was being stabilized, economically and politically, with the active support of the US. A web of interlocking institutions had been created in order to facilitate this, in particular the OEEC and NATO, with Britain a leading member of both. And while the federalists had obtained a European assembly, the organizational framework that had been erected to date was intergovernmental rather than supranational.
Events were soon to take a new and very different turn. In May 1950 the French foreign minister Robert Schuman announced a proposal to pool Western Europe’s coal and steel industries, and have them administered by a new supranational authority. His declaration stated that ‘this proposal will lead to the first concrete foundations of a European federation indispensable to the preservation of peace.’17 The plan had been devised by Jean Monnet, who had collaborated with British economic planners during two world wars, advocated an Anglo-French union, and was certainly no Anglophobe. Indeed, after the war he retained the hope that Anglo-French cooperation could be the basis for a new Europe. The British general election of February 1950 was however a disappointment to him – it focused on purely British themes, notably the future of the Empire, at a time when European integration was the major issue elsewhere. Monnet concluded that France needed to take the lead in pushing for greater European integration, and that a Franco-German alliance, rather than an Anglo-French one, needed to be at the heart of this.18
News of the Schuman Plan came as a complete shock in London. The Foreign Secretary was informed of its existence only hours before it was publicly announced, in contrast to the Americans, whose approval for the proposal had already been sought and received (for the American Secretary of State Dean Acheson it was ‘manna from heaven’).19 All European countries, including Britain, were invited to participate in the venture, but had to first agree to the establishment of the supranational High Authority and to the pooling of coal and steel production. The British protested that they could not reasonably be expected to agree to all of this before entering talks: these were matters that needed to be decided during negotiations, not before them. To no avail. In addition, the Labour government had just nationalized the British coal industry, and party members were reluctant to commit to pursuing the same economic policies as right-wing continental governments. Finally, a coal and steel community would require common tariffs, which would interfere with Britain’s imperial preferences. Guy Mollet (then the French Minister of State with responsibility for the Council of Europe, in effect the Minister for European Affairs) suggested to the British Foreign Secretary that Schuman had devised both the plan and the preconditions attaching to talks regarding it with the specific intention of making it impossible for the British to become involved.20 Whether or not that is true, they did not feel able to do so.
The British were not alone in taking this attitude, and only ‘the Six’ were willing to negotiate on the basis of the French preconditions. The result was the Treaty of Paris, establishing the European Coal and Steel Community (ECSC), signed in 1951. Ratification was completed the following year. The ECSC was committed to establishing a common market in coal and steel, without tariffs, quotas, restrictive practices, discriminatory subsidies or other measures, and with a common tariff on imports from the rest of the world. It also took on functions in areas not directly related to trade, such as investment, research, health and safety, and the housing and resettlement of workers.
The ECSC established an ambitious supranational institutional framework. Four institutions were created: the High Authority, the Council of Ministers, the Court of Justice and the Common Assembly. The High Authority administered the Community and had decision-making power. In addition, it had the power to fine firms in breach of the treaty, and to collect production levies. The Authority had nine members, and decisions were made by simple majority voting. It was thus a clearly supranational institution. The purpose of the Council was to coordinate the actions of the High Authority and of member states. It was composed of one minister representing each state. In some matters its consent was needed, and it made decisions on the basis of either unanimity or weighted majority voting. The Court of Justice was charged with making sure that the treaty was respected, and had the power to annul the actions of the other institutions. Finally, the Common Assembly was a purely advisory body, which did however have the power to dismiss the High Authority.
Recent historical scholarship has not been particularly kind to the ECSC.21 One of Monnet’s major aims was the decartelization of German heavy industry, and the High Authority was given widespread powers to bring this about. The attempt proved a failure, partly because the needs of the Korean War implied that a costly reorganization of German industry could not be contemplated. Nor did the ECSC succeed in creating a single market for coal and steel. Domestic coal subsidies and price controls remained, given the importance of coal prices for ordinary families as well as industry, while steel tariffs were not eliminated. German exports to European countries outside the ECSC grew more rapidly than those to the ECSC.22
The ECSC did provide the institutional blueprint for future European institutional development, at least superficially. The four institutions it established – the High Authority, Council of Ministers, Court of Justice and Common Assembly – correspond well to the Commission, Council, Court of Justice and European Parliament of our own day. Indeed, the Court of Justice and Assembly became institutions of all three Communities (the ECSC; the European Economic Community, or EEC; and the European Atomic Energy Community, or EURATOM) in 1958. The Court of Justice in particular has played a crucial role, ensuring that the Communities developed on the basis of the rule of law. It was thus essential in maintaining the supranational character of the Communities, although obviously it would not have had the influence that it did had member states not agreed to be bound by its rulings. (The fact that they did was crucial for subsequent developments, but ex ante they might not have.) Similarly, the High Authority and Council were merged with the corresponding bodies of the EEC and EURATOM in 1967, becoming the Commission and Council of what henceforth became known as the European Communities (EC). (You may be more used to the term ‘European Community’, but the EEC, ECSC and EURATOM in fact jointly constituted the ‘European Communities’ and I am going to be pedantic and use the phrase from now on.) However, as we will see, the EC would become a much less supranational, and much more intergovernmental, organization than the ECSC.
Nevertheless, the ECSC was an important development. For the historian John Gillingham its crucial contributions were: first, to permit the reintegration of Germany into Europe as a state which could sign treaties with others on the basis of equality; and second, to provide politicians and negotiators with valuable lessons on the process of negotiating and implementing experiments in integration.23 It also provided the political framework within which German heavy industry could be allowed to revive without threatening Germany’s neighbours. Of even greater importance to our story, however, is the impact that it had on Britain’s relationship with the process of European integration. Until May 1950 Britain had been at the heart of the process; after May 1950 it would become increasingly peripheral.
The second major development during this period had Asian and American origins. The outbreak of war in Korea in June 1950 prompted an increasingly overstretched US to call for West German rearmament within NATO. This prospect horrified the French and other victims of Nazi aggression. The solution, proposed by the French government in October, and known as the Pleven Plan, was to set up a common European army, so that Germany could contribute to NATO without doing so under a separate German command. This was to be done within a European Defence Community (EDC) that was to involve similar supranational institutional structures as the ECSC. The Americans were supportive. The UK did not wish to join the EDC because of the organization’s supranational nature, but was also supportive of the initiative in both words and deeds. In particular, when the Dutch government stated that it would not be willing to enter such a system of collective defence without the UK being involved, the British government agreed that it would enter into a mutual defence agreement with the new body. On this basis the European Defence Community Treaty was signed in May 1952, with the new Anglo-EDC treaty coming into force on the same day.24 Britain was still capable of playing a constructive and even decisive – if semi-detached – role in the process of European integration.
In turn, the EDC sparked negotiations on an overarching European Political Community (EPC) to which both the EDC and ECSC were to be subordinate. However, the French had always viewed the Pleven Plan as the lesser of several evils, and remained opposed to German rearmament. Eventually, in August 1954, the French National Assembly rejected the EDC treaty, and with it the EPC fell as well. The problem of how to handle German rearmament was therefore solved by expanding the 1948 Brussels Treaty to include Germany and Italy, while removing the anti-German language of the original. The treaty establishing the resultant organization, the Western European Union (WEU), was signed in October 1954. The WEU came into being, and Germany joined NATO, in May of the following year.
For federalists this sequence of events must have seemed a debacle. However, the debates surrounding the EDC led ultimately to the Messina process and the creation of the EEC.25 As a low-tariff country, the Netherlands was not particularly happy with the trade liberalization programme of the OEEC, which emphasized the removal of quotas but left tariffs unaffected. This meant that a country like the Netherlands was obliged to scrap its quotas, retaining only low tariffs to protect its domestic industry. Larger, high-tariff countries like Britain and France also abolished their non-tariff barriers to trade, but since their tariffs were much higher than those of the Netherlands, the net impact was to liberalize their trade by much less. As a result, it was difficult for the Dutch to expand their manufactured exports, while agricultural exports, which were very important to the country, were excluded from the OEEC’s liberalization efforts.
The solution was to engineer a reduction in tariffs in the Netherlands’ major export markets, but it seemed difficult to envisage progress being made within the context of either the OEEC or GATT. On the other hand, the Dutch had found that their interests had been well protected in the negotiations leading to the formation of the ECSC. By a happy coincidence, two of the ECSC’s members (Belgium and Germany) were the Netherlands’ biggest export markets, and a further two were large high-tariff countries (France and Italy). It was therefore logical for the Netherlands to propose, in 1952, that the European Defence and Political Communities should form a customs union. Discussion of the Beyen Plan, named after the Dutch foreign minister who proposed it, was wide-ranging and covered many of the issues that would eventually be tackled in later negotiations. One notable feature of the Plan, on which the Dutch insisted, is that there would be no scope for national governments to determine the pace of trade liberalization – rather, a precisely defined schedule would be written into the treaty. This would become a central part of the Treaty of Romefn1 bargain. Dutch doubts regarding whether their partners could be relied upon to deliver on their promises led to the development of supranational institutions designed to lock in the concessions that countries had made to each other. In turn, those supranational institutions were valued by other participants in the negotiating process for their own sake.
As soon as the Mendès-France government that had been responsible for the defeat of the EDC fell from power in France, in February 1955, Beyen revived his customs union proposal. In June 1955 the foreign ministers of the Six met at Messina and agreed to set up a committee, headed by the Belgian Paul-Henri Spaak, to study the establishment of a common market and a nuclear energy community. The Spaak Committee became a treaty-drafting committee in May 1956.
The OEEC was still the basic building block of Western European economic integration – even though it had become much less important after the ending of the Marshall Plan in 1952, and was becoming a victim of its own success in dismantling quantitative restrictions on trade and moving European currencies towards convertibility. Moreover, Britain remained a leading European power, and several members of the ECSC hoped that Britain might join with them in moving towards a customs union and common nuclear community. Indeed, Britain had signed an association agreement with the ECSC in 1954. The Six therefore invited Britain to participate in the work of the Spaak Committee, and the British accepted the invitation. They were present at the first meeting of the Committee in July 1955, and participated for the next five months.
There were two main differences between the British position and that of the Six.26 The first, and most important, was the British preference for a free trade area rather than a customs union. Since this is a crucial distinction that matters hugely in the current Brexit negotiations, but whose implications are often ignored, it is worthwhile emphasizing the key differences between the two arrangements, already encountered in Chapter 2. In a free trade area member states agree not to impose tariffs on goods originating in other member states. They are however free to pursue whatever trade policies they like with third countries. In other words, the fact that Canada, Mexico and the United States are all members of the North American Free Trade Area does not prevent Canada from signing free trade agreements with other countries, or indeed with the European Union as happened in 2016.
There is an obvious problem with such arrangements, however. Let us hypothetically imagine that two countries, call them Britain and France, agree to form a free trade area. France will therefore not impose tariffs on British goods. Let us also imagine that Britain has a free trade arrangement not only with France but with New Zealand. Under the terms of the hypothetical Anglo-French free-trade agreement France has agreed not to impose tariffs on imports of British lamb. It has not, on the other hand, agreed to treat New Zealand lamb in the same way. Imagine that France imposes 10 per cent tariffs on imports of New Zealand lamb to protect its farmers. France will obviously not accept that New Zealand lamb be imported duty-free into Britain, under the terms of the Anglo-New Zealand free trade arrangement, and from there be exported duty-free to France. It will therefore have to check all imports of lamb coming from Britain to ensure that only British lamb is admitted duty-free into France, and that New Zealand lamb pays the tariffs that are due. If the good in question is not lamb, but a complex industrial product such as cars, it is less easy to define the good as being British or non-British – since the car may be assembled in Britain, but be made of components largely produced elsewhere. Modern trade agreements therefore specify ‘rules of origin’ that define whether goods are (in this example) British or not, and are therefore exempt or not from tariffs under the free trade arrangement concerned.
All of this obviously requires customs inspections at frontiers, which cost time and money. An alternative solution is therefore for the countries concerned to form a customs union, which not only prohibits tariffs between member states, but also requires them to impose a common external tariff vis-à-vis the rest of the world (i.e. it requires them to run a unified trade policy). If in our example both Britain and France impose the same tariffs on New Zealand lamb (say 5 per cent), then border controls are no longer needed to verify the origin of lamb traded between the two countries. If British lamb is imported into France, this can be done duty-free, just as in a free trade area. If New Zealand lamb is imported from Britain into France, this is perfectly fine, since the lamb has paid the common 5 per cent tariff anyway. In other words, customs unions do away with the need for customs inspections at internal frontiers, but imply that member states can no longer run their own independent trade policies.
In 1955 the Six opposed a free trade area precisely on the grounds that it would require the maintenance of internal border controls to monitor compliance with the rules of origin, something that they wished to avoid ‘for psychological and political as well as for practical and economic reasons’. The common external tariff would also have a ‘unifying effect’, and ‘be useful in GATT negotiations’.27 For the British, on the other hand, a customs union was problematic precisely because of the common external tariff, with the difficulties that this implied for maintaining Britain’s traditional preferences vis-à-vis the Commonwealth.
The second key difference between Britain and the Six had to do, predictably enough, with institutions. Following the collapse of the EDC, there was scepticism among several continental countries regarding the desirability of new supranational institutions, and indeed the word ‘supranational’ was scrupulously avoided by Spaak in the course of the negotiations.28 On the other hand, the Six agreed that some new institutional structure was required, whereas the British favoured continuing to work within the framework of the OEEC.
Eventually, in November 1955, the British withdrew from the Spaak Committee, and for the next two or three months displayed a hostile attitude towards the work of the Six. The British Foreign Secretary, Harold Macmillan, sent letters to both Germany and the US, attempting to dissuade them from supporting the common market project on the grounds that it would be both economically and politically divisive. Similar arguments were made at an informal meeting of OEEC delegates that had been convened by the British for the purpose – angering the governments of the Six.29 The US, as always strongly in favour of European integration, made it clear to Britain that it did not approve of this attitude, and supported the creation of both EURATOM and a European common market. By January or February 1956 initial hostility was being replaced by a realization that the Six might well succeed in forming a customs union, and that Britain needed to find a way to work with it. However, British attempts to sabotage the customs union project, and the fact that these had been abandoned largely because of US pressure, helped to create a climate of suspicion among the Six regarding British intentions, which made it much more difficult for Britain to achieve her subsequent objectives.30
On 25 March 1957 the Treaty of Rome was signed, establishing the European Economic Community. The economic ambitions of the treaty were considerable: the EEC was supposed to be not only a customs union, but a common market. The term is not precisely defined, but Articles 2 and 3 of the treaty allow us to infer what is meant by it:31
Article 2
The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it.
Article 3
For the purposes set out in Article 2, the activities of the Community shall include, as provided in this Treaty and in accordance with the timetable set out therein
(a) the elimination, as between Member States, of customs duties and of quantitative restrictions on the import and export of goods, and of all other measures having equivalent effect;
(b) the establishment of a common customs tariff and of a common commercial policy towards third countries;
(c) the abolition, as between Member States, of obstacles to freedom of movement for persons, services and capital;
(d) the adoption of a common policy in the sphere of agriculture;
(e) the adoption of a common policy in the sphere of transport;
(f) the institution of a system ensuring that competition in the common market is not distorted;
(g) the application of procedures by which the economic policies of Member States can be co-ordinated and disequilibria in their balances of payments remedied;
(h) the approximation of the laws of Member States to the extent required for the proper functioning of the common market;
(i) the creation of a European Social Fund in order to improve employment opportunities for workers and to contribute to the raising of their standard of living;
(j) the establishment of a European Investment Bank to facilitate the economic expansion of the Community by opening up fresh resources;
(k) the association of the overseas countries and territories in order to increase trade and to promote jointly economic and social development.
As Chapter 1 suggested, dismantling trade barriers, instituting common agricultural and competition policies, and harmonizing social policies, logically went together. It was not enough to build a common market: that market had to take account of the political needs of the day. These included improving agricultural productivity and living standards, and preventing destructive regulatory races to the bottom. Achieving all of this required supranational institutions to make collective decisions and put them into effect.
Furthermore, not only was the free movement of goods to be promoted, but so was the free movement of ‘persons, services and capital’. Given the importance of migration for the Brexit debate it is important to underline this fact, although what the treaty later guaranteed was in fact the free movement, not of all persons, but of workers. Article 48 states that
Freedom of movement for workers shall be secured within the Community by the end of the transitional period at the latest … Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment … It shall entail the right, subject to limitations justified on grounds of public policy, public security or public health:
(a) to accept offers of employment actually made;
(b) to move freely within the territory of Member States for this purpose;
(c) to stay in a Member State for the purpose of employment in accordance with the provisions governing the employment of nationals of that State laid down by law, regulation or administrative action;
(d) to remain in the territory of a Member State after having been employed in that State, subject to conditions …
Contrary to what is sometimes suggested, free movement of workers is not a recent invention of the European Union: the principle (if not always the practice) was there right from the beginning.
The institutional structure of the EEC differed in one crucial respect from that of the ECSC. In the ECSC the supranational High Authority made the decisions, although it had to consult with the Council on certain issues. In the EEC, it was the Council – that is, the intergovernmental body representing the member states – which had the power to make decisions, while the Commission could formulate proposals that the Council of Ministers then discussed. The Treaty of Rome thus established a new Community that was far less supranational than the ECSC, although it retained the Court of Justice. On the other hand, the treaty also envisaged a gradual transition from unanimity or weighted majority voting to simple majority voting by 1966. No sooner did that date arrive, however, than de Gaulle effectively reinstated unanimity as the basic decision rule of the European Communities: the so-called Luxembourg Compromise accepted that member states could veto policies when ‘vital national interests’ were at stake. The treaty was seen at the time as a victory for those governments who believed in an intergovernmental, rather than a supranational, Europe, and de Gaulle’s subsequent actions further strengthened that intergovernmental reality.
That was not how British politicians saw the Treaty of Rome at the time, however. As a result, they had excluded themselves from a customs union that included the three largest continental European economies. Britain was no longer at the heart of Europe, or at the forefront of European integration, as she had been in the late 1940s. How would the British political system react?