The European Economic Community (EEC), also known as the Common Market, was established by the Treaty of Rome among France, Italy, West Germany, Belgium, Luxembourg, and the Netherlands. It was the core of what would become the European Community in 1967 and the European Union after the ratification of the Maastricht Treaty (1992). The EEC aimed to create a single economy among its members. Its acts were devised to achieve free labor and capital mobility; the abolition of trusts; and the implementation of common policies on labor, welfare, agriculture, transport, and foreign trade.
The idea of a united European market has its roots in the aftermath of World War II. After Europe had been divided and ravaged by two brutal world wars, politicians such as German chancellor Konrad Adenauer, Italian prime minister Alcide De Gasperi, and French foreign minister Robert Schuman agreed on the necessity of securing a lasting peace among previous enemies. They believed that European nations should cooperate as equals and should not humiliate one another. In 1950 Schuman proposed the creation of a European Coal and Steel Community (ECSC), which was established the following year with the Treaty of Paris. France, Italy, West Germany, Belgium, Luxembourg, and the Netherlands consented to have their production of coal and steel monitored by a High Authority. This was a practical and a symbolic act at the same time: Steel and coal, the raw materials of war, became the tools for reconciliation and common growth.
These first years of cooperation proved fruitful, and ECSC members started to plan an expansion of their mutual aid. Negotiations between the six countries making up the ECSC led to the Treaty of Rome (1957), which created the European Economic Community, a common market for a wide range of services and goods. The process of integration continued during the 1960s, with the lifting of trade barriers between the six nations and the establishment of common policies on agriculture and trade. Denmark, Ireland, and the United Kingdom joined the EEC.
As the EEC grew, its leaders realized that European economies needed to be brought in line with one another. This persuasion, reached during the 1970s, was the starting point of the tortuous path that would finally lead to monetary union in 2002 with the circulation of the euro. To stabilize the fluctuations of European currencies caused by the breakdown of the Bretton Woods system, the European Monetary System (EMS) was created in 1979. The EMS helped to make exchange rates more stable and promoted tighter policies of economic solidarity and mutual aid between EEC members. It also encouraged them to monitor their economies.
The monitoring of the members’ economies became vital during the 1980s, when membership in the EEC rose to 12, with the entries of Greece in 1981 and Spain and Portugal in 1986. The first Integrated Mediterranean Programme (IMP) was launched with the aim of making structural economic reforms and thus reducing the gap among the economies of the 12 member states. With the enlargement of its membership the EEC also started to play a more relevant role on the international stage, signing treaties and conventions with African, Caribbean, and Pacific countries.
The worldwide economic recession of the early 1980s seemed to endanger the process of market integration. However, the commission, led by the French socialist Jacques Delors, gave new impetus to European incorporation. It was under Delors’s leadership that the Single European Act, the first major revision of the Treaty of Rome, was signed, setting a precise schedule for the removal of all remaining barriers between member states by 1993. The Delors Commission also worked to create a single currency for the European Common Market. The single currency option was chosen with the creation of a Central European Bank aiming to unify monetary policies and create a common currency. The choice was made explicit in the Treaty of Maastricht (1992), which set up a timetable for the adoption of a single currency. With the Maastricht Treaty, the European Economic Community was simply renamed the European Community, and the process of European integration was completed with the creation of the EU. Austria, Finland, and Sweden joined the union in 1995. Ten more countries (Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia) joined in 2004, making the EU the world’s largest trading power. Bulgaria and Romania joined in 2007.
In some countries the introduction of the euro was marked by controversies and heated debates. Yet economists have shown that the European Common Market has much to benefit from the euro. Frankel and Rose suggest that being part of a single currency tends to triple the country’s trade with other members of the singlecurrency zone, leading to increases in the country’s per capita income.