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Evolution of the European Community

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1986
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Some 36 years after the birth of the European Community and exactly 26 years after the birth of the European Common Market with its 6 members, the Community expanded on January 1, 1986 to 12 members with the accession of Portugal and Spain. It is the largest trading group in the world.

The origins of the European Community go back to the Paris Treaty of April 1951, setting up the European Coal and Steel Community with six members: Belgium, France, the Federal Republic of Germany, Italy, the Netherlands, and Luxembourg. The Rome Treaties of 1957 established the European Economic Community and the European Atomic Energy Community. The Rome and Paris Treaties together form the constitution of the European Community.

The immediate objectives of the EEC Treaty were the establishment of a customs union (with a common external tariff, in due course) with free movement of goods between Member States, the dismantling of quotas and barriers to trade, and the free movement of persons, services, and capital among the members of the Community. The Treaty also provided for common policies on economic matters (e.g., agriculture, transport, and competition), and the harmonization of laws, social policy, and external trade policy.

Membership of the Community is open to all European democracies. It grew from the original six to nine in 1973, when Denmark, Ireland, and the United Kingdom joined the Community. Greece became the tenth member in 1981. With the accession of Portugal and Spain in 1986, the Community has grown to 12 member states. Turkey is an associate member (as was Greece before it became a full member). The Community has set up special arrangements with other international or regional groupings, notably the Yaoundé and Lomé Conventions with states in Africa, the Caribbean, and the Pacific regions. Cooperative agreements have also been signed with members of the European Free Trade Association, the Andean Pact countries, and the ASEAN countries.

Institutions and operating arrangements

The Community comprises three legal entities:

• the European Coal and Steel Community (ECSC)

• the European Economic Community (EEC or Common Market)

• the European Atomic Energy Community (Euratom)

Administration and control of all three entities is entrusted to the following institutions:

Parliament—elected through direct voting every five years, had 434 members before the accession of Portugal and Spain, which raised its membership to 518; exercises control over the running of the Community. It meets in plenary sessions in Strasbourg.

Council of Ministers—consists of ministers from each member government and is responsible for final decisions on laws to be applied throughout the Community. The ministers in the Council vary according to the subject under discussion, for instance agriculture ministers for farm policy, finance ministers for the budget. The Council is based in Brussels.

Commission—the executive of the Community, has 17 Commissioners supported by their staffs. It proposes laws, monitors compliance with Treaties, and administers common policies. It is based in Brussels and Luxembourg.

Court of Justice—includes 13 judges from all member countries and passes judgment on disputes relating to the laws of the Community. It sits in Luxembourg.

Court of Auditors—monitors the management of the Community’s finances. Also based in Luxembourg.

Economic and Social Committee—comprising 189 representatives of trade unions, employers, and other interest groups from member countries, acts in an advisory capacity.

Milestones

1950

French Minister of Foreign Affairs, Robert Schuman, proposes the first European Community (dealing with coal and steel) on May 9, celebrated as the official “birthday” of the Communities.

1951

Paris Treaty of April 18 sets up the European Coal and Steel Community.

1957

The Treaties of Rome, signed on 25 March, establish the Common Market and Euratom.

1958

The Councils and Commissions to manage the Common Market and Euratom are set up.

1961

Greece signs an association agreement.

1962

The common agricultural policy is born in January, based on the principle of a single market and common prices for most agricultural products.

1963

The Yaoundé Convention, valid for five years, is signed in January, associating 18 African states with the Community.

Turkey signs an association agreement in September.

1964

A common agricultural market is set up, with supporting marketing organizations, and uniform prices for cereals, to go into effect in 1967. The European Agricultural Guidance and Guarantee Fund begins operations.

1967

The Treaty establishing a single European Commission and one Council comes into force.

1968

The customs union is completed, abolishing all duties on trade between members. A common external tariff is set up.

1972

To control wildly diverging exchange rates among currencies of member countries, the Community establishes the “snake” to maintain the relative values of currencies within an agreed margin of 2.25 percent.

1973

Denmark, Ireland, and the United Kingdom become members, enlarging the Community to nine members.

A free-trade agreement comes into force with some members of the European Free Trade Association that are not members of the EC.

1974

The European Council is born, to supplant earlier irregular summit meetings. It is decided to hold elections to the European Parliament by direct universal vote.

1975

The Community signs the Lomé Convention with 46 countries of Africa, the Caribbean, and the Pacific (ACP) to foster commercial cooperation by giving the ACP countries free access to the Community market, and guaranteeing stable earnings for 36 commodities from those countries.

1979

The Council, meeting in Paris on March 9-10, brings the European Monetary System into operation. The EMS comprises the European currency unit (ECU), an exchange and information mechanism, credit facilities, and transfer arrangements. The United Kingdom does not fully participate in the EMS.

First direct elections to the European Parliament take place.

A new Lomé Convention is signed (Lomé II), this time with 58 ACP countries.

1981

Greece becomes the tenth member of the Community.

The ECU replaces the European Unit of Account in the Community’s general budget.

Greenland, an “autonomous region” of Denmark, opts out of the Community but is granted the same associate status as overseas countries and territories governed by member nations.

1984

Lomé III is signed, this time with 65 partners in Africa, the Caribbean, and the Pacific regions.

1986

Portugal and Spain become members.

Population

In millions

Area

In millions of square kilometers

Gross domestic product at market prices1

In billions of Purchasing Power Standard2

1 1983 figures

2 Purchasing Power Standard: a common unit representing an identical volume of goods and services for each country.

1 PPS = BF 37.2, DM 2.27, DKr 8.36, Ptas 78.1, F 6.17, £ 0.520, Dr 53.6 Lit 1036, £lr 0.585, Lux F 37.7, f. 2.45, Esc 48.0, US$0.947

Share of world trade, 1984

In percent Intracommunity trade not included

Source: Eurostat.

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