the making of a world trading power

The Making of a World Trading Power

Lucia Coppolaro

The European Economic Community (EEC) in the GATT Kennedy Round Negotiations (1963–67)

The Making of a World Trading PoWer

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The Making of a World Trading Power

The european economic Community (eeC) in the gaTT kennedy round negotiations

(1963–67)

luCia CoPPolaroInstitute of Social Sciences – University of Lisbon

XV

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British Library Cataloguing in Publication DataCoppolaro, lucia. The making of a world trading power : the european economic Community (eeC) in the gaTT kennedy round negotiations (1963-67). -- (Modern economic and social history) 1. european economic Community--history. 2. kennedy round (1964-1967 : geneva, Switzerland) 3. foreign trade regulation--history--20th century. 4. european union countries--Commercial policy. i. Title ii. Series 382.9'4-dc23

Library of Congress Cataloging-in-Publication DataCoppolaro, lucia. The making of a world trading power : the european economic Community (eeC) in the gaTT kennedy round negotiations (1963-67) / by lucia Coppolaro. p. cm. -- (Modern economic and social history) includes bibliographical references and index. iSBn 978-1-4094-3375-0 (hbk.) -- iSBn 978-1-4094-3376-7 (ebook) 1. european economic Community countries--foreign economic relations. 2. european economic Community countries--Commercial policy--history. 3. europe--Commercial policy--history. 4. europe--foreign economic relations--united States. 5. united States--foreign economic relations--europe. 6. european economic Community--history. 7. general agreement on Tariffs and Trade (organization) 8. kennedy round (1964-1967 : geneva, Switzerland) i. Title.

hf1532.5.C67 2013 382'.9209409046--dc23

2012034225iSBn 9781409433750 (hbk)iSBn 9781409433767 (ebk – Pdf)iSBn 9781409474449 (ebk – ePuB)

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Contents

List of Figures and Tables ixAcknowledgments xiKey to Archives xiiiAbbreviations and Acronyms xvGeneral Editor’s Preface xvii

Introduction 1

1 Kennedy’s Initiative for a New GATT Round: Liberalizing International Trade and Strengthening the Atlantic Alliance 15

2 The EEC’s Answer to the U.S. Proposal: Accepting the Round While Defending its Regionalism 39

3 Devising the Rule of the Kennedy Round 65

4 The Regional Crisis in a Multilateral Context 93

5 The EEC and Negotiations in the Industrial Sector: Enhancing Freer Trade 119

6 Negotiations in Agriculture: In the Shadow of the Common Agricultural Policy 149

7 Final Bargain: Setting the Tone of European Regionalism in Global Trade 177

Conclusions 205

Bibliography 215Index 231

List of Figures and Tables

Figures

1.1 U.S. exports to the Six, 1954–62 27

2.1 EEC exports by area of destination as a percentage of the total 472.2 EEC imports by area of origin as a percentage of the total 47

Tables

1.1 GATT rounds and their main results 231.2 U.S. exports 1954–62 281.3 U.S. trade balance 1954–62 29

2.1 Average ad valorem percentage incidence of import duties of the Six in 1958 44

2.2 EEC member states’ exports 1954–63 by destination 452.3 Trade of the Six with the United States, 1954–63 55

3.1 Comparison of EEC, U.S., and UK Tariff Rates 70

5.1 EEC exports to major areas, 1959, 1962 and 1964 1205.2 Composition of total exports of the Six in 1964 1205.3 Exports of the Six in machinery and transport equipment

(SITC Classification 7, in percentages) in 1964 by destination 1215.4 Index of growth of EEC member states’ exports in SITC 7,

machinery and transport equipment 1215.5 Index of growth of EEC member states’ exports in SITC 5,

chemicals 1215.6 Index of growth of EEC member states’ exports in SITC 6,

manufactured goods classified chiefly by material 1225.7 Composition of U.S. trade balance with the EEC in 1964 1235.8 Tariff lines excluded from the linear cut, for each sector

(Commission proposals), as a percentage of total number of tariffs 1255.9 Exceptions as a percentage of the EEC’s total imports and dutiable

imports by sector and in total in 1963 1255.10 Exceptions proposed by the Commission and further exceptions

approved by the Council of Ministers 135

ThE MAKInG oF A WoRLd TRAdInG PoWERx

5.11 Categories of U.S. imports affected by EEC exceptions list 138

6.1 Composition of U.S. agricultural exports to the EEC, by commodity 153

6.2 U.S. exports by destination in 1965 (thousands of metric tons) 1536.3 Imports of cereals by EEC members, excluding France, in 1964, by

country of origin (in tons) 1546.4 Rate of EEC members’ self-sufficiency in cereals in 1964 1556.5 French exports of cereals by destination in 1964 (in tons) 156

7.1 EEC average ad valorem percentage incidence of import duties before and after the Kennedy Round 198

7.2 U.S. average ad valorem percentage incidence of import duties before and after the Kennedy Round 199

7.3 UK average ad valorem percentage incidence of import duties before and after the Kennedy Round 199

Acknowledgments

This book originated in a Ph.D. dissertation submitted to the European University Institute (EUI) in Florence in December 2006. Throughout the writing of the thesis and then of the book, I was fortunate to receive precious help, support, and encouragement from many people, without which the process would have been much more difficult. All have contributed in different but crucial ways.

At EUI I was fortunate to have Professor Alan S. Milward as supervisor. His confidence in me was a great support during the entire period of writing. I consider it a privilege to have had such an outstanding scholar as a guide and interlocutor in discussing the topics of this book.

The preparation of the manuscript has entailed a fascinating journey in the Iberian peninsula during which my debts have accumulated. I am, first of all, indebted to Fernando Guirao. For nine months beginning in September 2006 he gave me the opportunity to visit the Universitat Pompeu Fabra in Barcelona as a postdoctoral researcher. During this period he carefully and patiently read my dissertation, and his incisive comments and criticisms helped to improve the argumentation of this book. Moreover, he gave me the opportunity to make my debut as a teacher at this very stimulating university. I am most grateful to Fernando for all this and also—let’s be frank—for allowing me to enjoy the terrific city of Barcelona.

In 2008, I started a postdoctoral program at the Institute of Social Sciences of the University of Lisbon. This position provided the opportunity to continue my research on international trade and European integration and to complete the writing of this book in an intellectually inspiring environment. I benefited from the scholarly advice of Pedro Lains—and enjoyed his mild but very acute sense of humor and irony—and that of José Luís Cardoso on countless matters, and from their constant support. I am most grateful to both. I would also like to express my gratitude to my friend and colleague Nina Wiesehomeier, with whom I enjoyed many lunch breaks. My thanks go also to Maria Eugénia Rodrigues for general administrative support.

Several people have read parts of the thesis and of the book and proffered useful criticism. I wish to record my thanks to David M. Andrews, Michael J. Geary, Ann-Christina Lauring Knudsen, N. Piers Ludlow, Francine McKenzie, Sigfrido Manuel Perez Ramirez, Pascaline Winand, Thomas W. Zeiler, and Hubert Zimmermann. I am indebted especially to Piers Ludlow for being available whenever I needed good advice.

I wish to thank Ashgate for assistance through the publishing process and for having recruited two anonymous reviewers who gave thoughtful advice. I

THE MAKING oF A WoRLD TRADING PoWERxii

acknowledge with gratitude the assistance provided by Richard Isomaki in the proofreading of the book manuscript.

The revision and proofreading of this manuscript were financed by the Portuguese Foundation for Science and Technology and the Institute of Social Sciences of the University of Lisbon. I am grateful to both institutions for their financial support.

Finally, I am thankful to my family—my parents and my sisters—for their support and to Davide for his outstanding help with computer problems. I must also mention Fabrizio, who during the writing process patiently suffered my stress and tension. During the latter preparations of the book, he bore my commuting and was always eager to visit me first in Barcelona and then in Lisbon. I suspect that the beauty of the cities and the local football teams were a great incentive. His indifference to the finer points of international trade, GATT, and European integration was a stabilizing influence throughout this endeavor.

Lisbon, June 2012

Key to Archives

AAPD Akten zur Auswärtigen Politik des Bundesrepublik DeutschlandAECB Archives European Commission, BrusselsAN Archives Nationales Contemporaines, Fontainebleau (France)CM EC Council of Ministers, BrusselsDDF Documents Diplomatiques FrançaisEM Personal Paper Edoardo MartinoFRUS Foreign Relations of the United StatesHAEC Historical Archives European Community, FlorenceJFKL John Fitzgerald Kennedy LibraryJM Personal Paper Jean MonnetLBJL Lyndon Bains Johnson LibraryMAE Ministero Affari Esteri (Italy)MAEF Ministère des Affaires Etrangères (France)NARA US National Archives and Records Administration College Park, MAOW Personal Paper Olivier WormserPPJR Personal Paper Jean ReyPRO BT Public Record Office, Board of TradePRO CAB Public Record Office, CabinetPRO FO Public Record Office, Foreign OfficePRO PREM Public Record Office, PremierPRO T Public Record Office, TreasuryWHCF White House Central Archives

Abbreviations and Acronyms

ASP American Selling PriceBLEU Belgium and LuxembourgBTN Brussels Tariff NomenclatureCAP Common Agricultural PolicyCCP Common Commercial PolicyCET Common External TariffsCOREPER Comité des représentants permanents (Committee of Permanent Representatives)EC European CommunityEEC European Economic CommunityEFTA European Free Trade AssociationEPU European Payments UnionEU European UnionGATT General Agreement on Tariff and TradeIMF International Monetary FundIWA International Wheat AgreementITO International Trade OrganizationLDC Less-developed countriesLTA Long-term Agreement on Cotton TextilesMDS Montant de soutienMFN Most-favored nationNATO North Atlantic Treaty OrganizationNTB Nontariff barrierOECD Organisation for Economic Co-operation and DevelopmentOEEC Organization for European Economic CooperationQMV QualifiedMajorityVoteQR Quantitative restrictionRTA Regional Trade AgreementSITC StandardInternationalTradeClassificationSSR Self-sufficiencyrateTEA Trade Expansion ActTNC Trade Negotiation CommitteeUGPs UnifiedGrainsPricesUNCTAD United Nations Conference on Trade and DevelopmentUSDA U.S. Department of AgricultureUS SRTN U.S. Special Representative for Trade NegotiationsWTO World Trade Organization

Modern Economic and Social History Series

General Editor’s Preface

Economic and social history has been a flourishing subject of scholarly study during recent decades. Not only has the volume of literature increased enormously but the range of interest in time, space and subject matter has broadened considerably so that today there are many sub-branches of the subject which have developed considerable status in their own right.

One of the aims of this series is to encourage the publication of scholarly monographs on any aspect of modern economic and social history. The geographical coverage is world-wide and contributions on the non-British themes will be especially welcome. While emphasis will be placed on works embodying original research, it is also intended that the series should provide the opportunity to publish studies of a more general thematic nature which offer a reappraisal or critical analysis of major issues of debate.

Derek H. AldcroftUniversity of Leicester

Introduction

The Role of the EEC in Trade and Beyond

On 9 May 1967, Jean Rey, the Belgian member of the European Commission and chief negotiator for the EEC during the Kennedy Round of trade negotiations, and William W. Roth, the U.S. special trade representative, met in an attempt to bring the round to a conclusion. Bargaining had dragged on since 1963 under the aegis of the General Agreement on Tariffs and Trade (GATT). In the last days of the talks, the discussions between the two sides were stalled on, among other issues, duties on canned ham, canned peaches, and organic chemicals. The meeting between Rey and Roth went on into the night, and mediation by the GATT executive secretary, Eric Wyndham White, failed to narrow the differences between the parties. By four o’clock in the morning, the discussions had deadlocked on all fronts, and a final agreement was nowhere in sight.

The following day, Nils Montan, the Swedish diplomat representing the Scandinavian countries, organized a lunch at a Geneva restaurant for Rey, Roth, and W. Michael Blumenthal, his deputy, hoping that the EEC and the United States could find common ground on which to salvage the negotiations. “There, over a lunch of smoked salmon, filet mignon, and numerous glasses of wine,” the three men were able to establish a schedule they would follow to conclude the round, a schedule the negotiators in fact adhered to in reaching the final agreements.1

This luncheon is telling, not just because of the crisis atmosphere, which commonly surrounds the final phase of such negotiations, or the mundane subject—canned peaches and ham—of an international bargain on tariffs, or the role a congenial meal can play in smoothing out differences that have blocked major trade talks. The meeting over food and wine is, above all, revealing about the status of the EEC. It shows that, for the first time in its history, the Community was bargaining with a single voice in the final phase of far-reaching negotiations. Moreover, the European Commission, the EEC’s supranational institution, through its representative, Jean Rey, was able to speak on behalf of the member states. Equally important, the EEC was able to bargain as an equal partner with the United States.

The Kennedy Round was of major importance in the history of world trade, as the climax of post-World War II international cooperation and reduction of trade barriers. The round slashed duties by 35 percent on average, with about two-thirds of the cuts reaching 50 percent, substantially more than had been achieved

1 Steven Dryden, Trade Warriors: USTR and the American Crusade for Free Trade (New York, 1995), 107.

ThE MAKING Of A WORlD TRADING POWER2

in any previous GATT round.2 The participation of the EEC in these momentous negotiations is the topic of this book, which provides the first historical account of the Community’s behavior in major trade talks. I argue that the negotiations were a critical process in the history of the Community, marking its emergence as a world trading power, and shaping its stance in world trade. This, in barebones outline, is the story told in this book. My approach is a means to understand how the EEC became a powerful actor in international trade and its impact as a regional trading area on the multilateral system. I believe that such an analysis is essential if we are to understand the actual stance of the European Union in world trade and in the World Trade Organization (WTO) and to grasp its economic diplomacy.

Trade has played a fundamental role in European integration and in the evolution of the EU. In the first place, the EEC was established with a customs union as its basis. Second, trade policy was the initial field where the original members chose to pool their sovereignty, delegating to the EEC the authority to wield it. This decision was a major accomplishment in itself, transferring to the Community a crucial aspect of national independence, that is, the capacity to use trade policy to regulate the economy. Third, it was in the field of world trade that the EEC established itself as a single actor and acquired international status. Even now, more than four decades after the conclusion of the Kennedy Round, international trade is one of the few fields where the EU is able to speak with a united and powerful voice. All these considerations make the trade policy and policymaking of the EU and its stance in the world regime fundamental to understanding the EU, international trade, international trade negotiations, and the GATT/WTO system.

Despite the relevance of these topics, the literature in this field is relatively small, and only recently has theoretical and empirical research been developed. Moreover, the scholarship that exists is dominated by political scientists and economists, while historians have been relatively inactive.3 While two excellent historical studies have been dedicated to the commercial background to the establishment of the EEC and the tariff policy of the Western European countries

2 for the relevance of the Kennedy Round for world trade see Ronald findlay and Kevin O’Rourke, Power and Plenty: Trade, War and the World Economy in the Second Millennium (Princeton, NJ, 2007), 491. for an assessment of the Kennedy Round tariff cuts see Bela Balassa and Mordechai E. Kreinin, “Trade Liberalization Under the Kennedy Round: The Static Effects,” Review of Economics and Statistics 49, 2 (1967), 125–37 and J. Michael Finger, “Effects of the Kennedy Round Tariff Concessions on the Exports of Developing Countries,” Economic Journal 86, 341(1976), 87–95.

3 See among, the others, Sophie Meunier, Trading Voices: The European Union in International Commercial Negotiations (Princeton, 2006). Mark A. Pollack, The Engines of European Integration: Delegation, Agency, and Agenda Setting in the EU (Oxford, 2003), has analyzed the functioning of the EEC/EU in international negotiations. Vinod K. Aggarwal and Edward fogarty, in EU Trade Strategies: Between Regionalism and Globalization (Basingstoke, 2004), illustrate the EU’s role in world trade, focusing on the logic of the interregionalism pursued by the EU.

INTRODUCTION 3

in the 1950s,4 historians have given scarce attention to the development of the EEC’s trade relations and policies.5 Several books on the Kennedy Round have been written, but none of them analyze the stance of the EEC, considering instead the U.S. or British point of view.6 Providing an account of the EEC’s participation in these talks, this book examines a hitherto unsketched component of the history of both EU and international trade.

This is not a study, however, of trade and tariffs alone. My narrative of the EEC’s participation in the Kennedy Round reveals new aspects of the development of the Community in the 1960s. The GATT talks were intertwined with other events critical to the EEC, among them the British applications in 1963 and 1967 to join the Community and the French vetoes in response, the definition and settlement of the Common Agricultural Policy (CAP), the crisis of the Empty Chair and the luxembourg Compromise of 1965–66, the role of the European Commission in European integration and, broadly, tensions among the six member states over the agenda and development of the Community. These occurrences influenced and, at the same time, were influenced by the GATT talks, an international context that historians have often overlooked but is essential to the EEC’s evolution. The internal development of the EEC dictated the rate and timing of progress at the Kennedy Round, but the need to make progress at the GATT talks led EEC members to move forward with the elaboration of the CAP and the common commercial policy (CCP) in Brussels. GATT was used as a lever to enhance the

4 Alan S. Milward, The European Rescue of the Nation-state (london, 2000) and Wendy Asbeek Brusse, Tariffs, Trade, and European Integration, 1947–1957: From Study Group to Common Market (New York, 1997).

5 The exceptions are N. Piers Ludlow, “The Emergence of a Commercial Heavy-weight: The Kennedy Round and the European Community of the 1960s,” Diplomacy and Statecraft 18, 2 (2007), 351–68; and Ynze Alkema, “Regionalism in a Multilateral framework: The EEC, the United States and the GATT Confronting Trade Policies, 1957–1962,” thesis, European University Institute, Florence, 1996, dedicated to the EEC and GATT from 1957 to 1962.

6 The following books investigate the Kennedy Round from an American perspective: Ernest h. Preeg, Traders and Diplomats: An Analysis of the Kennedy Round of Negotiations under the GATT (Washington, DC, 1970); John W. Evans, The Kennedy Round in American Trade Policy: Twilight of the GATT (Cambridge, MA, 1971); Thomas B. Curtice and John R. Vastine Jr, The Kennedy Round and the Future of American Trade (New York, 1971); Thomas W. Zeiler, American Trade and Power in the 1960s (New York, 1995); Steven Dryden, Trade Warriors: USTR and the American Crusade for Free Trade (Oxford, 1995); Alfred E. Eckes Jr, Revisiting U.S. Trade Policy: Decisions in Perspective (Athens, Oh, 2000); and francine McKenzie, “GATT–EEC Collision: The Challenge of Regional Trade Blocs to the General Agreement of Tariffs and Trade, 1950–1967,” International History Review 33, 3 (2010), 229–52. Donna lee, Middle Powers and Commercial Policy: British Influence at the Kennedy Round (New York, 1999) is dedicated to the British stance. Gian Paolo Casadio, Transatlantic Trade: USA–EEC Confrontation in the GATT Negotiations (farnborough, 1973) analyzes the EEC’s position; however it is not based on historical archives.


internal developments. An analysis of the adoption of the CAP from the point of view of the Kennedy Round shows that this policy was not elaborated and adopted in isolation in Brussels. first, Germany, the Netherlands and Italy considered the effect of this policy on third countries, not because they were concerned about the trade balance of these countries, but because they hoped to maintain their flow of cheap imports from outside the EEC thanks to the Geneva talks. Second, the CAP was negotiated under the pressure of the Kennedy Round. The Germans had to resign themselves to the fact that, to attend Kennedy Round as they wished to, they also had to permit a faster elaboration of this policy than they had hoped.

The importance of the Kennedy Round, in sum, extends well beyond trade. The EEC’s participation in the round sheds new light on the development of the Community in the 1960s and on the political and economic history of European integration.

Argument and Plan of the Book

This study has three domains of analysis and overriding argument. The first is the bargaining among the EEC’s members (“the Six”) in Brussels for the purpose of establishing a common position in the Geneva negotiations. here I describe the preferences of the member states and how their divergent interests were reconciled in a common position on trade. My argument is that the member states had a critical stake in attending the round as a regional unit, an interest driven by the same factors that had led to the creation of the Community, with a customs union as its foundation. Unity had been considered essential to export-led economic growth through the liberalization of trade in a regional area protected from international competition. Thus the Six responded to the internationalization of trade by means of a regional agreement, fostering a new form of international cooperation, that is, integration. National governments pooled their sovereignty over trade and blended six national commercial policies in one common commercial policy. This approach required the maintenance of EEC regionalism within GATT and, consequently, negotiating as a unit in the new round. Crucially, member states were spurred to compromise over their conflicting trade interests so as to converge on a CCP that could be deployed in the GATT round. Equally important, their ability to maintain regionalism in the Kennedy Round permitted the EEC’s member states to speak with one voice and so become an international actor and a world trading power. Significantly, they were able to sustain their unity during negotiations despite quarrels over other crucial matters, such as the enlargement of the Community and the establishment of the CAP. This solidarity shows the fundamental role trade integration played in the politics and economics of the member states, an impetus historians have often underestimated.

The second domain of analysis is the EEC’s trade policymaking. here my focus is the role of the member states and the EEC’s institutions in formulating the common position in Brussels and in conducting negotiations with other countries

INTRODUCTION 5

in Geneva. This topic has previously been investigated primarily by political scientists, and it can be useful to begin with their conclusions in framing this topic. Among many other aspects of trade policymaking, scholars have analyzed the role of the Council of Ministers and the Commission, the two institutions most closely involved in settling on policy. Researchers have asked whether one institution outweighed the other, or the two shared equal influence over the outcome of negotiations. Aggarwal and fogarty, De Bièvre and Dür, Meunier, and Moravcsik, highlighting the instruments member states have at hand to control the Commission, underline its relative weakness. These scholars note that member states nominate the commissioner responsible for trade, set the mandate under which the Commission negotiates with other countries, and monitor it through the national experts’ committee during such talks. In addition, member states must ratify agreements negotiated with other countries. They thus wield a number of tools through which they can rein in the Commission. These scholars conclude, therefore, that the sovereign states determined the policy outcome.7 By contrast, Coleman and Tangermann, Woll, and Zimmermann stress the relative autonomy of the Commission, pointing out that negotiating with other countries gives it access to information unavailable to member states. Moreover, the Commission is able to determine strategy and use its right of initiative to present member states with proposals and package deals that correspond to its own preferences. Given these powers, these latter researchers conclude that the Commission is fully able to influence policy.8 While historians have studied the actions of the Commission and the Council of Ministers in other fields, such as the enlargement of the Community or the elaboration of the CAP, they have neglected trade policymaking.9 Only ludlow has dealt with it, siding with those who regard the ministers as the

7 Aggarwal and fogarty, EU Trade Strategies; Dirk De Bièvre and Andreas Dür, “Constituency Interests and Delegation in European and American Trade Policy,” Comparative Political Studies 38, 10 (2005), 1271–96; Meunier, Trading Voices; Andrew Moravcsik, The Choice for Europe: Social Purpose and State Power from Messina to Maastricht (Ithaca, NY, 1998).

8 William D. Coleman and Stefan Tangermann, “The 1992 CAP Reform, the Uruguay Round and the Commission: Conceptualizing Linked Policy Games,” Journal of Common Market Studies 37, 3 (1999), 385–405; Cornelia Woll, “The Road to External Representation: The European Commission’s Activism in International Air Transport,” Journal of European Public Policy 13, 1 (2006), 52–69; hubert Zimmermann, Wege zur Verhandlungen um die Aufnahme Chinas in die WTO, 1985–2001 (Baden-Baden, 2007). for a complete review of the literature see Andreas Dür and hubert Zimmermann, “Introduction: The EU in International Trade Negotiations,” Journal of Common Market Studies 45, 4 (2007), 771–87.

9 On the enlargement see Michael J. Geary, The European Commission and the First Enlargement of the European Union: Challenging for Power? (london, forthcoming); on the CAP see Ann-Christina L. Knudsen, Farmers on Welfare: The Making of Europe’s Common Agricultural Policy (Ithaca, NY, 2009).


predominant power within the dyad, and concluding that “Commission autonomy was … strictly framed by a variety of Council controls.”10

The focus of this book is on the role of the Commission relative to that of the member states, and my analysis will support a robust view of the institution’s capacities. I consider two distinct moments: the negotiations in Brussels over a common stance in the Kennedy Round and the bargaining in Geneva between the Commission and the other participants. My aim is to assess the Commission’s role in order to understand in what respects and under which conditions it can influence policy outcomes. The analysis, first, considers whether the Commission was decisive in reaching an agreement in Brussels and later in Geneva, and, second, ascertains whether the final outcome incorporated the Commission’s proposals and preferences.

I will argue that the Commission had its own preferences, which in some cases differed from those of its constituents, and advanced them through its right of presenting proposals and its role as negotiating agent in Geneva on behalf of member states. Yet there were clear limits to its freedom to act and capacity to determine the final outcome. Member states made the final decisions. The Commission could realize its preferences only when they appealed to the Council of Ministers, and it could act only within the constraints posed by the member states’ preferences. Moreover, the Council of Ministers defined the limits of the Commission’s room for maneuver in Geneva. Within this general arrangement, however, there were evolutionary changes, and during the progress of the Kennedy Round the Commission gained new capacities. Whereas from 1963 to early 1967 member states strictly controlled the Commission, in the last phase they enlarged the discretion of their negotiating agent in order to improve the efficiency of the decision-making process and conclude the round. Thus, the autonomy of the Commission varied considerably over time as a function of the phase of the negotiations in Brussels and in Geneva. The member states pragmatically set limits to the actions of their agent, guided by the goal of enhancing their own trade interests. Ultimately, member states allowed the Commission to strengthen its role and become the sole negotiating agent even in sectors for which it lacked legal authority under the Treaty of Rome. They did so because this greater power aligned with their self-interest—evidence that the Commission was instrumental to the aims of the member states.

The third focus of analysis here is the history of the GATT and international trade, and the role of the EEC in their development. This book explains the conditions under which the EEC reduced its trade barriers and its contribution, by means of this streamlining, to the liberalization of international trade. In so doing, this study also ascertains the circumstances in which trade is more generally liberalized in the GATT and the impact a regional trade agreement can have on the multilateral trading system.

10 Ludlow, “Emergence of a Commercial Heavy-weight.”

INTRODUCTION 7

As findlay and O’Rourke note, after World War II, the only countries that did not follow protectionist policies were the northern Atlantic economies of Western Europe and North America. here, under U.S. leadership, governments slowly started to lower barriers within the framework of the GATT and of European regional institutions.11 The U.S. decision to propose a new round of GATT negotiation and the EEC’s agreement to join it confirmed this policy of liberalization in the Atlantic economies. I argue that the formation of the EEC encouraged the Kennedy administration to propose a far-reaching reduction of tariffs and provided the decisive push towards genuinely multilateral, across-the-board negotiations. For the first time since 1947, on the other side of the Atlantic there existed a credible negotiating partner for the Americans, capable of making valuable counter concessions thanks to the size of its market. Thus, the very existence of a regional bloc made possible the decisive step towards a sweeping reduction of tariffs with genuinely multilateral negotiations, giving impetus to the GATT itself.

In taking a position on Kennedy’s initiative, the EEC had to delineate its international trade policy and define its role in the world trade regime. With regard to the industrial sector, members agreed to attend the round in order to reduce protectionism and increase their exports. To this end, they were ready to reduce the Common External Tariff (CET) so as to obtain reciprocal reduction of duties imposed by the United States and the European free Trade Association (EfTA). Improvements in European competitiveness made liberalization on a multilateral scale bearable. The growth of the EEC’s exports to the United States and the rest of Western Europe guided the Six to complementary tariff reductions at regional and multilateral levels, in order to sustain the flow of exports. While concerned to protect certain sectors, member states were disposed to reduce tariffs to enhance the outward flow of goods to the EFTA countries and the United States. The EEC aimed to maintain the CET at a level that would defend the region, but it was in members’ best interests to reduce barriers so as to increase exports. from behind the wall of the CET, even such traditionally protectionist countries as france and Italy were ready to compete worldwide and reduce tariffs multilaterally. Moreover, negotiating with a single voice gave the EEC the power to bargain as an equal partner with the United States and to question U.S. trade policy, a capacity the Europeans had lacked in the 1950s.

The Six’s behavior in the agricultural sector was totally different from their approach to industrial products. An analysis of the way agriculture was treated in the round is of crucial importance, for the issue still has contemporary resonance: agriculture remains a stumbling block in the Doha Millennium Round, initiated in 2001 and still in process. The Six had decided to set up a strictly protected and regulated regional agricultural market, supporting the sector as a kind of welfare policy. Thus they refused to reduce protections in this area. As a result, the EEC ended the round as a liberal actor in the industrial sector, contributing to freer trade, but as an obstacle in agriculture, a role the EU plays to this day, troubling the Doha Round.

11 findlay and O’Rourke, Power and Plenty, 392.