European Economic Cooperation

Abstract

The first step toward postwar European economic cooperation was the “Benelux” customs union among Belgium, The Netherlands, and Luxembourg, created in 1944. Four years later the Organization for European Economic Cooperation, composed of sixteen (later eighteen) nations, cut quota restrictions on trade and set up a European Payments Union to facilitate transfers. Then in 1951 Belgium, France, Italy, Luxembourg, The Netherlands, and West Germany signed a treaty (ratified in 1952) joining them together in a European Coal and Steel Community. It was created in response to an apparent over-capacity in steel, but, rather than restricting production as was done in the 1920’s, it sought to utilize production fully and even to expand it by eliminating trade barriers and co-ordinating production. By 1955, the success of the ECSC in increasing trade in steel led to discussions between the member nations for further cooperation. The Treaty of Rome, signed in March, 1957, created a European Economic Community, generally called the Common Market. Its first goal was to create a large trading area through a customs union, free of internal tariffs and presenting a uniform tariff to nonmember states. But it also provided for broader economic cooperation in the shape of free movement of capital and labor and in uniform institutions and integrated economic policies.