Background Notes: European Community
PA/PC
Source: Office of Public Communication, Bureau of Public
Affairs
Date: Jan 15, 19911/15/91
Category: Country Data
Region: Europe
Country: Belgium, Germany, France, Italy,
Luxembourg, Netherlands, Denmark,
Ireland, United Kingdom, Greece,
Spain, Portugal
Subject: Trade/Economics, EC
[TEXT]
Official Name: European Community (EC). Also referred to as the
European Communities
PROFILE
Background
Headquarters: Brussels, Belgium.
Established: On April 18, 1951, when the European Coal and Steel
Community (ECSC) Treaty was signed in Paris, and on March 25,
1957, when the treaties for the European Economic Community (EEC)
and the European Atomic Energy Community (EURATOM) were signed
in Rome.
Purposes: To build foundations for peace through economic and
political cooperation and to make possible an eventual federation of
Europe.
Members: The Six-Belgium, Federal Republic of Germany, France,
Italy, Luxembourg, Netherlands. The Nine-in 1973, Denmark,
Ireland, and the United Kingdom joined the Six. The Ten-on January
1, 1981, Greece joined. The Twelve-Spain and Portugal joined the
Ten on January 1, 1986.
Official Languages: Danish, Dutch, English, French, German, Greek,
Italian, Portuguese, and Spanish.
Population (1988): 325 million.
Gross National Product (GNP) (1988): $4.71 trillion.
Average Per Capita GNP (1988): $14,500.
Organization
Principal Organs: Council, Commission, Parliament, Court of Justice.
Principal Areas of Community Competence: Internal and external
trade, common industrial and commercial policies, agriculture,
monetary coordination, fisheries, assistance, science and research,
the environment, common social and regional policies.
Budget (1990): $56 billion, financed by a customs duty, a 1.4%
value-added tax collected on the goods and services consumed in
member countries, and a percentage donation based on member
countries' gross domestic product.
Trade
Imports (1988): Worldwide-$458.6 billion. From US-$79.6 billion
(23.7% of US exports).
Exports (1988): Worldwide-$430.8 billion. To US-$84.4 billion
(19.6% of EC exports).
EC and US Officials
Commission President: Jacques Delors, France
US Representative to the EC: Ambassador Thomas M.T. Niles, 40
Boulevard du Regent, B-1000, Brussels, Belgium; Tel. 32-2-513-
4450.
EC Representative to the US: Ambassador Andreas Van Agt, 2100 M
St., NW, Suite 707, Washington, D.C. 20037; Tel. 202-862-9500.
HISTORY
Peaceful union of European countries had been a dream for
centuries, but not until the devastation of World War II was unity
perceived as a necessity. Postwar economic chaos and the descent
of what he called the "Iron Curtain" led Winston Churchill to declare
in 1946: "We must create a sort of United States of Europe."
Although they thought that unity was necessary for the
reconstruction of the continent, national governments remained
reluctant to cede any authority to a supranational body.
The primary aim of the Paris and Rome treaties establishing the
European Communities (EC) was to remove the economic barriers
that divided the member countries as the first steps toward
political unity. To accomplish this, the treaties call for members
to establish a common market, a common customs tariff, and
common economic, agricultural, transport, and nuclear policies. The
institutions and policies established by the treaties provide a
framework within which the 12 EC members have agreed to
integrate their economies and eventually consider forming a
political union.
The Brussels Pact of 1948 created the first postwar European
intergovernmental organization. Britain, France, Belgium, the
Netherlands, and Luxembourg agreed to mutual military support and
political cooperation. The military aspects of the pact were quickly
overshadowed when the five signatories joined others in the NATO
(North Atlantic Treaty Organization) alliance with the United
States.
In the political sphere, the Council of Europe was organized by the
pact members along with Ireland, Denmark, Norway, Italy, and
Sweden. The Council was designed to be more than a simple forum
for discussion, but the British and the Scandinavian Governments
thwarted federalist attempts to give the Council any supranational
powers. All decisions were to be made by unanimous agreement of
the ministers of each member state, effectively weakening the
Council.
The establishment of an administrative framework for European
economic cooperation was stimulated by US Secretary of State
George Marshall's offer of vast aid in a joint recovery program.
Federalists, led by French Foreign Minister Robert Schuman and Jean
Monnet (now considered the "father" of a united Europe), thought
that Europe would never regain its status in world affairs,
effectively solve its domestic problems, or be able to protect itself
unless national governments were integrated. They proposed a
supra-national authority to make decisions in the interest of the
whole continent. The British and the Scandinavians, again
preferring international cooperation rather than formal integration,
prevented the incorporation of a federal element in this new body,
the Organization for European Economic Cooperation (OEEC). The
OEEC, established in 1948 and transformed in 1961 into the
worldwide Organization for Economic Cooperation and Development
(OECD), was very effective in channeling US aid throughout the
continent, but it had no supranational authority of its own.
Continuing their effort to develop a federal European authority,
Schuman and Monnet proposed establishing the European Coal and
Steel Community (ECSC) in 1950 "to place the entire Franco-German
production of coal and steel under a common High Authority, in an
organization open to other European countries." The French and
German heavy industries urgently needed rebuilding, and the ECSC
would facilitate growth as well as make war between the two
countries "not merely inconceivable but physically impossible."
Ratified by the Governments of France, West Germany, Italy,
Belgium, the Netherlands, and Luxembourg (the Six), the ECSC began
functioning in 1952 and was the world's first international
organization with an integrated federal governing body. The High
Authority was empowered to act independently in the narrow but
important economic fields of coal and steel production. The ECSC
had limited financial independence, raising funds through levies on
the coal and steel industries and the sale of bonds.
With Europe's immediate defense problem solved by NATO, efforts
were concentrated on political and economic questions. Under the
direction of Belgian Foreign Minister Paul Henri Spaak, the foreign
ministers of the Six met to discuss proposals for an integrated
economic system and a common structure for the development of
nuclear energy. In 1957, the Six agreed to establish the European
Economic Community (the EEC or Common Market) and the European
Atomic Energy Community (EURATOM). The two treaties formally
establishing the new communities to work with the ECSC were
signed by the Six in Rome on March 25, 1957. The EEC and EURATOM
began operating in January 1958. The wide-reaching EEC was given
less supranational authority than the ECSC, although the economic
union was viewed as a prerequisite for eventual political
integration.
British ties to its Commonwealth and its desire to create a larger
free trade area, as opposed to a customs union consisting only of
the Six, resulted in the United Kingdom rejecting EEC and EURATOM
membership. Britain, Austria, Denmark, Norway, Portugal, Sweden,
and Switzerland later formed the European Free Trade Association
(EFTA). EFTA was designed to boost nonagricultural trade among its
members and to provide a united platform for relations with the
EEC.
In the 1960s, Commonwealth ties were becoming less important for
Britain, and UK economic growth was slower than the impressive
growth rate of the Six. The British, therefore, decided to join the
Community, even though membership would result in a substantial
increase in British food prices. A French veto temporarily blocked
British membership, but in 1973, the United Kingdom, Denmark, and
Ireland were admitted, creating the EC Nine. The Government of
Norway also had agreed to accession, but membership was rejected
in a referendum. A further enlargement took place on January 1,
1981, when Greece joined the Community, making it the EC Ten. The
most recent expansion occurred with the addition of Spain and
Portugal on January 1, 1986, creating the current EC Twelve.
INSTITUTIONS
The three communities-the ECSC, EEC, and EURATOM-had separate
executive commissions and councils of ministers until their 1967
merger into the European Communities; a joint commission and a
joint council of ministers were then established. The other major
EC institutions are the European Parliament, the Court of Justice,
and the Economic and Social Committee.
The Commission
The Commission, headquartered in Brussels, is made up of 17
commissioners appointed by common agreement of the 12
governments. Each country is represented, with the largest five-
France, West Germany, Italy, Spain, and the United Kingdom-
supplying two commissioners. According to the treaties, members
of the Commission act independently of their governments and of
the Council; they represent the interests of the Community as a
whole.
The Commission's major responsibility is to oversee the
implementation of the EC treaties. It initiates EC policy by making
proposals and steers its proposals through the legislative process.
The commissioners also conduct the EC's negotiations with
nonmember states on behalf of the Community. The collection and
disbursement of EC funds is another important Commission
responsibility. The Commission's independence and its "right of
initiation" of policy account for much of its supranational authority.
To balance that independence, the Commission is subject to censure
by the Parliament, which can force the entire Commission to resign
as a body by a two-thirds majority vote.1 A European civil service
divided into 23 Directorates-General plus Commission services
assists the Commission. The Commission president is appointed to
a renewable 2-year term by the Council.
The Council
The Council, which has its secretariat in Brussels, represents the
national governments of the 12 member states and is the primary
decisionmaking body of the Community. The foreign ministers of
the member states deal with the most important and wide-reaching
topics, while more specific decisions are made by the respective
councils of the ministers of agriculture, finance, industry, energy,
social affairs, and others. The 1987 Single European Act created a
less restrictive decisionmaking process by allowing most voting in
the Council by qualified majority, rather than unanimity..2
Exceptions include certain health and safety proposals that
individual states can veto. At the same time, the act mandated an
increased role for the European Parliament in the decisionmaking
process.
The various ministerial groups meet monthly. Formal biannual
European Council meetings discuss intra-Community and foreign
policy issues. Each country assumes the Council presidency for a 6-
month term. The Committee of Permanent Representatives,
consisting of member country ambassadors to the Community in
Brussels, assists the Council.
The European Parliament
The European Parliament (EP), the only EC institution that directly
represents European citizens, has gained a greater role in EC
decisionmaking in recent years. The Parliament has significant
power over budgetary matters (except agricultural spending)
because it can amend or reject the budget and approve its adoption.
The Parliament also considers the Commission's proposals on their
way to the Council of Ministers. Since 1987, the Parliament also
has had the right to amend or reject certain legislation approved by
the Council, which can overrule the Parliament only by a unanimous
vote. The Parliament also has gained the right to approve or
disapprove applications of nonmember countries to join the
Community, as well as new association agreements.
The 518 deputies are elected to 5-year terms. The first direct
elections were held in 1979. The Parliament was enlarged to its
present size in January 1986, when 60 members from Spain and 24
members from Portugal took their seats. The members sit in
transnational political groupings ranging across the political
spectrum, including Socialists, Christian Democrats, Liberals,
Conservatives, Communists, and Greens.
Many of the Parliament's specialized committees have emphasized
development of truly "European" policies in areas such as the
internal market, energy, industrial restructuring, and regional
development funding. Direct elections ensure full public
representation in the Community, and important tasks for the
deputies include promoting the Community's work within their
constituencies and increasing public support for an integrated
Europe.
The Parliament meets monthly in week-long sessions in Strasbourg.
The EP's Secretariat is located in Luxembourg; most Committee and
Political Group meetings are held in Brussels.
The Court of Justice
The role of the EC Court of Justice is very similar to that of the US
Supreme Court. The EC Court is the final authority for the
interpretation of EC laws, as embodied in the treaties, regulations,
and directives. Complaints about member-state treaty violations
may be lodged by other members or by the Commission. Member
governments, EC institutions, and individuals also can contest
Commission and Council actions and member state implementation
of EC legislation in the Court. The Court resolves conflicts between
Community and national laws, and the Justices have played a major
role in the process of removing barriers to the movement of goods,
services, capital, and people among members. The Court's decisions
are binding on all parties. Court decisions generally have tended to
strengthen EC institutions and promote integrated EC policies.
The 13 Justices are appointed by the EC member governments and
serve renewable 6-year terms. Court decisions are reached by a
simple majority. All decisions are announced unanimously, but
votes never are announced. The Court sits in Luxembourg.
The 1987 Single European Act introduced a new Court of First
Instance, which essentially serves as a lower court. In addition,
member state courts are obligated to directly enforce the
Community treaties, thus creating a multi-layered judicial system.
The Economic and Social Committee
This consultative body of 156 members represents employers and
unions as well as special interest groups such as consumers and
farmers. The Committee enables a broad spectrum of interested
producer and consumer groups to be actively involved in EC
decisionmaking. Through a mandatory consultation process, the
Committee submits its opinions to both the Councils of Ministers
and the Commission.
BUDGET
Initially, the EC budget was funded by member-state contributions
based on varying percentages of their gross domestic product (GDP).
In 1977, those contributions were supplemented by revenue from
agricultural levies and customs duties on EC imports. The GDP-
based contributions were eliminated in 1979, as each state began
paying 1% of the value-added tax (VAT) it collected on
manufactured goods. Starting in 1986, the VAT contribution
increased to 1.4%.
The Commission prepares the preliminary draft of each year's EC
budget. The Council discusses the preliminary report and then
issues a draft budget for EP approval. The Parliament can amend or
reject the budget and is responsible for its final adoption.
The preliminary EC budget for 1990 is about $56 billion. The
largest budget item, accounting for about two-thirds of the total, is
agricultural expenditures. Other major budget items are energy and
industrial programs, research, and development assistance to
poorer regions of the Community, central and Eastern Europe, and
Third World nations.
TRADE
The Customs Union
The authors of the EC treaties recognized that the economic
keystone of unity would be a customs union permitting the free
movement of goods, services, capital, and people within Western
Europe. In 1958, the Community began the difficult process of
eliminating all trade barriers among its members. Ten years later,
all member-to-member duties were abolished, and a common
external tariff of the Six was established. By 1977, this union was
extended to include the new EC members-the United Kingdom,
Denmark, and Ireland. Spain and Portugal, which joined in 1986,
must dismantle their customs duties with other EC members before
1992 and must abolish their quantitative restrictions on intra-EC
trade according to a timetable laid down for each.
The common external tariff is a key element in the customs union.
Each EC member charges the same duty on a given import from a
nonmember country. Agricultural imports are subject to the
Common Agricultural Policy (CAP). The CAP places variable levies
on agricultural imports to raise their prices to those of EC-
produced commodities.
Although tariffs have been eliminated within the Community,
several kinds of nontariff barriers still exist. Some member states
maintain protectionist measures that the Community has not yet
been able to eliminate entirely, such as limiting public works
contracts and adopting unilateral technical or safety standards that
restrict trade. Numerous health and safety barriers to agricultural
trade still exist. Individual firms and governments can register
trade restriction complaints with the Commission, which attempts
to eliminate the barriers through binding judicial action.
External Trade
In 1988, trade among Community members was $1.24 trillion, while
external trade was $890 billion, accounting for about 16% of world
commerce, and making the EC the world's largest trading unit. Its
total imports from third countries in 1988 were $459 billion,
roughly the same amount as that of the United States. Most EC
imports are raw materials and unprocessed goods. EC exports, most
of which are processed goods such as machinery and vehicles,
totaled $431 billion in 1988, compared with total US exports of
$320 billion.
As provided for in Article 113 of the Treaty of Rome, the
Community operates a common commercial policy adhered to by all
member states. The Community's trade policy is based on the
principles and obligations of the General Agreement on Tariffs and
Trade (GATT) to which all Community members are contracting
parties. EC countries are active participants in the current Uruguay
Round of multilateral trade negotiations, which are scheduled to be
completed with a concluding conference in Brussels in December
1990.
In 1972-73, the Community concluded free trade agreements with
the member states of EFTA-Austria, Finland, Iceland, Norway,
Sweden, and Switzerland. These agreements provide for the
elimination of barriers to trade on almost all industrial products
between the member countries of the two trading blocs. Only
products originating within the free-trade area receive preferential
treatment. EFTA members maintain quotas and tariffs on
agricultural products.
The Community has reached preferential trade agreements with
Turkey, Yugoslavia, and Mediterranean countries and separately with
68 African, Caribbean, and Pacific countries. Non-preferential
agreements have been signed with Canada, India, Romania, Sri
Lanka, Pakistan, Bangladesh, China, and major Latin American
countries. Most recently, the EC has concluded trade and
commercial agreements with Poland, Hungary, the German
Democratic Republic, the Soviet Union, and Czechoslovakia.
The Community is the United States' largest trading partner. In
1989, total US-EC trade was $171.7 billion. The 1989 trade balance
with the EC was in the US favor for the first time since 1982. In
1988, almost 24% of all US exports were purchased by the EC,
which, in turn, provided almost 24% of US imports.
The United States and the EC are each other's most significant
source of direct investment. By the end of 1988, the EC had $194
billion invested in the United States (the British are the largest
foreign investors in America), and the United States had about $127
billion in the EC.
SINGLE MARKET PROGRAM
Recently, the EC has made remarkable progress toward achieving a
goal it set for itself more than 30 years ago-a unified West
European market without national barriers to the movement of
goods, services, capital, and people. The 12 EC member states have
committed themselves to the historically important policy
initiative of creating a single market by the end of 1992. The EC is
expected to have adopted most of its single market proposals by
that time and to have made significant progress on related efforts
toward more complete economic integration.
The EC is, to a great extent, still a set of 12 separate markets, with
different regulations for banks, insurance companies, medicinal
products, lawnmowers, and cheese, to name just a few areas. The
single market program will create a single set of rules for doing
business in Europe. Where EC-wide rules are not practical, the
single market will ensure mutual recognition of other members'
regulations so that technical standards and procedures no longer
pose barriers to trade across national borders. This creates
potentially vast economies of scale and should expand the size and
wealth of the EC market.
The renewed effort to create a single market began in 1985, when
member countries approved an ambitious plan outlining almost 300
legislative proposals. The 1987 Single European Act committed
government leaders to adhere to the timetable and made passage of
legislation easier. Since then, the EC Commission has finished its
work in proposing more than 90% of the proposals (now 279), and
the EC Council has adopted more than half of them into Community
law. Member states must pass legislation to implement the
directives, usually within 2 years of final agreement at the EC
level.
Difficult areas remain in the single market program, notably in
attempting to allow the free movement of people across national
borders and in harmonizing policy on indirect taxation. However,
momentum has been sustained, largely because most of the European
public and businesses strongly support the program. When the
major proposals are fully implemented, the Commission will have
authority to control large mergers and acquisitions; will make a
European company statute available throughout the Community; will
enforce open procurement, allowing foreign participation (with
some limitations) in all sectors except defense; and will provide a
host of product and regulatory standards ranging from containers to
automobiles to biotechnology. Many, but not all, of these standards
will be based on existing international standards.
Further economic integration beyond trade and investment issues is
under consideration. The Community already has sought or will
pursue common policies on environmental protection, immigration,
labor law, monetary and fiscal issues, and law enforcement against
narcotics and terrorism. Questions of national sovereignty have
exacerbated tension among some members and EC institutions. The
debate indicates the difficult course ahead, and it is clear that
many of these issues will be decided well after 1992.
AGRICULTURAL POLICY
Instituted in 1962, the Common Agricultural Policy (CAP) has
allowed the EC to become more than self-sufficient in many
agricultural commodities and has provided stable incomes to the
European farming population. The CAP, however, consumes about
two-thirds of the EC budget and-through its complicated network of
protection, price supports, and subsidies-has created large
surpluses of many agricultural products. EC export subsidies,
traditionally used to dispose of some of these surpluses, have
helped to create a distorted and unstable market in agricultural
commodities. Over the years, EC products benefiting from the CAP
have displaced some US farm exports, particularly grains.
Since the EC already has a single agricultural market in many
respects, the 1992 program will not have as great an effect as in
other areas. The single market program aims to harmonize
agricultural health rules for animals and plants, thereby reducing
barriers that have kept the EC's agricultural markets somewhat
segmented. As the Community eliminates border controls, it must
act on the taxes or subsidies currently levied on agricultural trade
at national borders. Further monetary harmonization is likely to
result in the elimination of the special agricultural exchange rates
which also have served to protect markets from intra-EC
competition.
An EC budget package adopted in February 1988, aimed at balancing
the budget and reducing growth in agricultural expenditures over a
4-year period, to a great extent has removed agriculture as a
contentious internal EC issue. The agreement resolved short-term
budgetary problems by basically resorting to supply management
techniques. Although the package is reducing somewhat
agricultural over-supply within the EC and is helping to limit new
pressures on international agricultural markets, it does little to
increase the market orientation of EC agriculture. The global
reform of agricultural policies remains an important US objective
and a major task of the current round of multilateral trade
negotiations.
ENERGY
The European Community is sensitive to the need for reducing
foreign energy dependence, particularly on oil imports, through
conservation and other measures. In September 1986, the Council
set EC targets for 1995 which would limit oil consumption to 40%
of total energy consumption and maintain net oil imports at less
than one-third of total energy consumption. The Community has an
active program of research into alternate energy sources, including
biomass, synthetic fuel, solar, and geothermal development.
Nuclear energy also is widely used in certain EC member states, but
there is intense and growing public concern about nuclear safety
issues, particularly following the Chernobyl accident in the Soviet
Union.
EURATOM, established following the first European energy crisis in
1956, is responsible for the procurement and distribution of nuclear
fuels in the Community. It also undertakes research in nuclear
development, provides financing for nuclear energy projects, and
exercises safety and security responsibilities over member-country
facilities.
THE EUROPEAN MONETARY SYSTEM
In 1979, the Community inaugurated the European Monetary System
(EMS). The EMS replaced the "snake" in an effort to reduce exchange
fluctuations.3 The EMS provides for frequent discussions among
central bankers and for intervention in foreign exchange markets to
maintain the value of each EC currency within a narrow range vis-a-
vis the European Currency Unit (ECU) and each other currency. All
Community members belong to the EMS. However, the United
Kingdom, Greece, and Portugal do not participate in the system's
exchange rate mechanism, which represents a commitment by the
participants to maintain their exchange rates within a very narrow
band. The founders of the EMS maintained that exchange rate
stability was essential to increase trade and also would provide
impetus for better coordination of monetary and fiscal policies. In
addition to currency swap arrangements for defense of currency
parities, the EMS includes a reserve fund. The ECU, a combination of
12 member currencies, is the Community's budget and accounting
unit.4
Jacques Delors, the Commission President, has drawn up a three-
phase plan for broadening the EMS into an economic and monetary
union (EMU). Under Phase I, all EC governments are committed to
join the exchange rate mechanism, and finance ministers and
central bank governors would cooperate more closely on policy
decisions. Later phases of the Delors Plan envisage a central bank
and a common currency, but several EC members, particularly the
United Kingdom, have opposed aspects of the plan. In 1989,
Community leaders decided that on July 1, 1990, the EC will begin
implementing Phase I of the Delors Plan. An intergovernmental
conference will convene in late 1990 to consider what changes to
the EC treaties would be required for EMU. Treaty changes must be
approved by all 12 of the member countries.
POLITICAL COOPERATION
Coordination of the foreign policies of the EC members was not
included in the three treaties but was undertaken voluntarily in
1970. In 1987, European political cooperation was formalized in
the Single European Act. Recently, this cooperation has increased
to a wider range of foreign policy issues. Topics included under the
act are such key areas as Eastern Europe, the Middle East, Central
America, nuclear and conventional disarmament, and nuclear
nonproliferation. A secretariat to administer the act has been
established in Brussels.
The 12 foreign ministers meet at least quarterly to discuss
political coordination. The foreign ministers attempt at these
meetings to coordinate the broad lines of the members'
international policies and to issue joint statements of policy. In
addition to these formal meetings, the foreign ministers gather
informally twice a year, unaccompanied by staff. The ministers
also discuss political cooperation during the twice-yearly meetings
of the European Council, at which the 12 EC heads of government
meet.
The meetings of the foreign ministers are prepared for by the EC
Political Committee, comprising senior officials from the 12
foreign ministries, who meet monthly to prepare specific issues for
ministerial discussion. The Political Committee also meets in New
York in September at the opening of the UN General Assembly.
RELATIONS WITH EUROPE
The success of the European Community has encouraged other
countries to seek membership. Turkey and Austria have applied, but
the EC has indicated that it will put off consideration of new
applications until after the completion of the single market. In
addition, the EC has association agreements with Yugoslavia,
Turkey, and Cyprus. EC leaders expect to negotiate association
agreements with a number of East European countries in response to
recent developments there.
Recently, the EC has developed closer ties with the EFTA countries,
which already have many of the same industrial and technical
standards that apply in the Community. The two groups have agreed
to negotiate a closer relationship, to be known as the European
Economic Space. This may involve EFTA agreement to implement
many EC directives while the EC would give EFTA a role in the
development of future rules.
Although EC countries have long-standing political and economic
ties with the countries of Eastern Europe, the EC itself only
recently has established diplomatic relations with most states of
central and Eastern Europe. In 1988, the EC and the Council of
Mutual Economic Assistance (CEMA), an economic organization of
communist countries, agreed to recognize each other. Trade
agreements have been signed with Hungary, Poland, Czechoslovakia,
Romania, Bulgaria, and the Soviet Union.
In July 1989, the EC Commission was designated by the seven
economic summit partners to play a coordinating role for Western
assistance to Poland and Hungary. Since then, major political and
economic reforms taking place throughout Eastern Europe have
caused a reevaluation of the Community's relationship to that
region. The EC has been a major contributor of assistance to the
region and has eased access to its markets for these countries. A
European Bank for Reconstruction and Development has been
established to assist economy recovery and reform in Eastern
Europe. Trade and investment flows between the EC and Eastern
Europe are expected to increase as market forces play a greater role
in East European economies. The United States has worked with the
European Community in mobilizing economic and financial support
for the reforming nations in Eastern and central Europe.
THIRD WORLD RELATIONS
Improving relations with the Third World long has been a high
priority for the Community. In addition to its desire to contribute
to the economic and social advancement of less developed
countries, the Community seeks reliable supplies of
primary products and markets for its exports. The Community has
become one of the major providers of Third World assistance with
programs such as food aid, rural development, and refugee relief. In
1987, aid disbursements were $1.9 billion, but EC aid commitments
have been substantially higher in 1988 and 1989. The EC program is
separate from assistance programs provided by the member states.
The Community's most notable accomplishment has been the Lome
Convention, a framework for development cooperation with 68
African, Caribbean, and Pacific (ACP) countries. Signed in 1975 and
renewed in 1979, 1985, and 1989 for a 10-year period beginning in
1990, the agreement provides aid for development projects, free
access to EC markets for almost all manufactured imports from
ACP countries, and incentives to promote European investment in
the developing states. The most recent agreement (Lome IV) puts
greater emphasis on market-oriented economic reform in recipient
countries and on human rights. About 65% of EC aid goes to the ACP
states. Since 1978, 40% of ACP exports have gone to the
Community, which imports about 10% of its raw materials from the
Lome signatories.
One innovative aspect of the Lome Convention is the Stabex system.
A kind of insurance policy against poor trade years, Stabex (export
receipts stabilization system) provides currency transfers to
countries heavily dependent on a small number of commodities for
export earnings in years when export receipts drop significantly
because of poor harvests or low world prices. Lome IV is designed
to encourage diversification to other crops. The Lome Convention
provides a similar scheme, Sysmin, to cover mineral export earning
losses.
US-EC RELATIONS
The United States has supported and welcomes European efforts to
achieve economic and political integration. As Europe moves
toward its goal of a common internal market, and as its institutions
for political cooperation evolve, the link between the United States
and the EC will become even more important. The United States
wants this transatlantic cooperation to keep pace with European
integration and institutional reform.
The United States and the Community have a continuing dialogue on
all political and economic issues of mutual interest, and they
engage in direct negotiations on trade issues. The US Government is
following the progress of the EC's single market program and is
working with the European public and private sectors to ensure that
American interests are not discriminated against in post-1992
Europe. The United States seeks a European Community open to
cooperation with others.
The US Government consults with the Commission regularly
throughout the year, often at the Cabinet level. In the past there
have been annual US-EC meetings in Brussels on a ministerial level,
but there are plans to hold these meetings twice a year beginning in
1990. On February 27, 1990, President Bush and Irish Prime
Minister Haughey, representing the Community, agreed to biannual
US-EC summit meetings and to biannual meetings between the US
Secretary of State and the 12 EC foreign ministers. The United
States also is enhancing its relationship with the European political
cooperation process.
Delegations from the US House of Representatives and the European
Parliament also meet twice a year. Close relationships are further
maintained through the US Mission to the European Communities,
headed by an ambassador in Brussels, and through the Delegation of
the European Communities in Washington, D.C., headed by the EC
ambassador.
DIPLOMATIC REPRESENTATION
The US Mission to the EC is directed by Ambassador Thomas M.T.
Niles and is located at 40 Boulevard du Regent, B-1000, in Brussels,
Belgium; Tel. 32-2-513-4450; Telex 846-21336. The EC Delegation
to the United States, headed by Ambassador Andreas Van Agt, and
its Information Services Office are at 2100 M Street, NW, 7th floor,
Washington, D.C. 20037; Tel. 202-862-9500. The EC Information
Services in New York City is at One Dag Hammarskjold Plaza, 245
East 47th Street, New York, NY 10017; Tel. 212-371-3804.
1 This action has never been taken.
2 EC member states have the following votes in the Council:
West Germany (10), France (10), Italy (10), United Kingdom (10),
Spain (8), Belgium (5), Greece (5), Netherlands (5), Portugal (5),
Denmark (3), Ireland (3), and Luxembourg (2). Total=76. Qualified
majority=54; blocking minority=23.
3 The "snake" was a set of upper and lower limits of currency
exchange rates; the central banks of the participating European
countries pledged to intervene in the currency market to keep the
value of their currencies within fixed limits.
4 The ECU value against the US dollar was $1.21 at the end of
March 1990. During 1989, the average ECU value against the US
dollar was $1.10.
Further Information
These titles are provided as a general indication of material
published on the European Community. The Department of State
does not endorse unofficial publications.
Bromberger, Merry and Serge. Jean Monnet and the United States of
Europe. New York: Coward-McCann Inc., 1969.
Butler, Sir Michael. Europe-More Than a Continent. London: William
Heinemann, Ltd., 1986.
Callingaert, Michael. The 1992 Challenge from Europe: Development
of the European Community's Internal Market. Washington, D.C.:
National Planning Association, 1988.
Cecchini, Paolo et al. The European Challenge-1992: The Benefits of
a Single Market. Brookfield, Vt.: Gower Publishing, 1988.
Europe, Magazine of the European Community (monthly). Delegation
of the European Communities, Suite 707, 2100 M St., NW,
Washington, D.C. 20037.
European Community. Completing the Internal Market (1985 "White
Paper").
Harris, Simon et al. The Food and Farm Policies of the European
Community. New York: John Wiley ∧ Sons, 1983.
Hartley, T.C. The Foundations of European Community Law. Oxford:
Clarendon Press, 1988.
Hu, Yao-su. Europe Under Stress: Convergence and Divergence in the
European Community. London: Buttersworth, 1981.
Joint Economic Committee of the US Congress. Europe 1992: Long-
Term Implications for the U.S. Economy. April 1989.
Kaiser, Karl et al. The European Community: Progress or Decline?
London: Royal Institute of International Affairs, 1983.
Leonard, Dick. Pocket Guide to the European Community. London:
The Economist Publications, 1988.
Lodge, Juliet. The European Community and the Challenge of the
Future. London: Pinter Publishers, 1989.
Monnet, Jean. Memoirs. Richard Mayne (trans.). New York: Doubleday,
1978.
Moss, Joanna. The Lome Conventions and Their Implications for the
United States. Boulder, Colorado: Westview Press, 1982.
de Schoutheete, Philippe. European Political Cooperation. Brussels:
2d ed., 1986.
Simonian, Haig. The Privileged Partnership. Oxford: Clarendon
Press, 1985.
Tugendhat, Christopher. Making Sense of Europe. New York: Viking,
1986.
US Department of Commerce. EC 1992: A Commerce Department
Analysis of European Community Directives. 3 volumes. 1988-90.
US Department of State. Europe 1992: A Business Guide to U.S.
Government Resources. January 1990.
Wallace, Helen et al. Policy-Making in the European Communities.
New York: John Wiley ∧ Sons, 1983.
Published by the United States Department of State -- Bureau of
Public Affairs -- Office of Public Communication -- Washington,
D.C. April 1990 -- Editor: Jim Pinkelman Writer: Robert Coe
Department of State Publication 9155 Background Notes Series --
This material is in the public domain and may be reprinted without
permission; citation of this source is appreciated.
For sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, D.C. 20402.(###)