European integration

The foundations of European integration were laid immediately after the end of the Second World War. Economic, military and political interests lay behind the US aid programme for European countries (the Marshall Plan), which made the aid conditional on effective cooperation between European governments and the gradual liberalisation of trade and payments in Europe.

European economic cooperation, originally sparked by US action, strengthened with the establishment of the European Coal and Steel Community (ECSC) in 1951 and expanded further with the Treaty of Rome of 1957, which established the European Common Market and the European Atomic Energy Community (Euratom) between Italy, France, Germany and the Benelux countries (Belgium, the Netherlands, Luxembourg).

The Common Market was more (but not much more) than a customs union. It provided for the lowering of internal duties and the setting of a single customs tariff for countries outside the Market (the common external tariff, CET), a set of common policies, notably in agriculture and transport, and competition legislation. In addition to the pragmatic need to introduce European-wide policy coordination gradually, the limited scope of the initial approach to integration was prompted by the liberal extraction of the founding fathers of Europe. The concept of microeconomic market failures had not penetrated the political sphere, while the years in which the Common Market was born were also years of rapid growth, with falling unemployment against a background of price stability and balance of payments surpluses for nearly all European countries.