Question

Explain Postwar Trade Integration in Europe

Answer 1

Europe in the period after 1945 has seen a clear, if gradual, shift towards cooperation over conflict. At this time, in the wake of the Second World War, nations lay in tatters and the continent was soon to be divided completely in half with spheres of US and Soviet influence. Beginning with those nations to the west of the ‘Iron Curtain’, a new environment emerged in which leaders vowed never to allow such widespread devastation as occurred in the two ‘Great Wars’.

One of the most influential theories of European integration is neofunctionalism, developed by Ernst B. Haas (1958) and further investigated by Leon Lindberg (1963). The important debate between neofunctionalism and (liberal) intergovernmentalism still remains central in understanding the development and setbacks of the European Union. But as the empirical world has changed, so have the theories and thus the understanding of European Integration. Today there is a relatively new focus on the complex policy-making in the EU and multi-level governance (MLG) trying to produce a theory of the workings and development of the EU.

Several regional integration efforts have effectively promoted intergovernmental cooperation and reduced the possibility of regional armed conflict. Other initiatives have removed barriers to free trade in European regions, and increased the free movement of people, labour, goods, and capital across national borders.

The establishment of the ECSC encouraged the supporters of European integration to intensify the integration efforts. It should be stressed that although the ECSC Member States accepted without too much trouble the fact of making joint decisions on economic and trade matters, it was harder for them to agree on common foreign or defence policy. At the period concerned the creation of two next communities was initiated: the European Defence Community (EDC) and the European Political Community (EPC).The treaty establishing the EDC was signed on 27 may 1952 by Belgium, the Netherlands, Luxemburg, the Federal Republic of Germany, France and Italy. This treaty, as was the case with the ECSC, was to be in force for 50 years.

In Europe post 1945 there remained a tension between the traditionally opposing Allied and Axis powers as well as the new issue of Russian dominance in the East. The Red Army had marched in to Berlin, which was now divided in to four spheres of influence; US, British, French and Soviet. The nations of Poland, Romania, Czechoslovakia and East Germany amongst others had all fallen beyond the control of the Western Powers and the continent was more divided than ever.

ritain, the Swiss, Austrians, Portuguese and Scandinavian nations rejected the Coal and Steel Community but instead formed a separate alliance, the European Free Trade Association (EFTA). Cooperation was seen as the most effective method of economic development and the split between ‘The Six’ and the EFTA was over the style of its implementation, not its principles.

The trade integration indicator (in terms of the credits and debits relative to GDP) shows that the economy of the EU-27 was more integrated with the international economy in 2007 than at any time in the previous five years. The average value of EU trade flows of goods corresponded to 10.7 % of GDP in 2006, a much higher ratio than the EU-25 relative low of 8.8 % in 2003, reflecting a broad upturn in economic activity. Although the volume of international trade in services is less than that for goods, the trade integration of services also rose, reaching the equivalent of 3.7 % of GDP in 2007.

In 2009 the European Council approved the EU Strategy for the Baltic Sea Region (EUSBSR) following a communication from the European Commission. The EUSBSR was the first macro-regional strategy in Europe. The Strategy aims to reinforce cooperation within the Baltic Sea Region, to address challenges together, and to promote balanced development in the Region. The Strategy contributes to major EU policies, including Europe 2020, and reinforces integration within the Region.