EEC

• The ECSC was so successful that it was extended into the EEC, created by the Treaty of Rome in 1957 and including Italy in its membership. The initial purpose was a free trade zone with common economic policies and a possible goal of political union at some point in the future.
• EEC = The European Economic Community
• The EEC was dominated by the FRG and France due to them being the largest member states with the 2 largest economies. The FRG in particular pressed for closer European integration and freer trade with the outside world. This was in its national interests as one of the world's largest trading nations, with a balance of payments surplus of more than DM100 billion by the late 1980s.
• It can be argued that the FRG was the leader of the EEC because:

  • it had clear knowledge of how it wanted the EEC to develop through greater integration
  • it was the 'honest broker' in inter-EEC disputes - the FRG was always ready to pay more and make compromises to reach an agreement
  • it supported the interests of the smaller member countries, so that it was trusted more than, for example, France or Britain who wanted to put their own interests first
• As the wealthiest member country, the FRG paid the largest share of the EEC budget - often as much as 25% of the total. It also invested the most in other EEC states: almost DM57 billion by the late 1980s. In return, it had 25% of the GDP of the EEC.
• The FRG was a prime mover in the developments for greater economic integration which were achieved in 1992 with the creation of a fully integrated internal market with free trade and free movement of workers from member state to member state.
• The FRG supported development aid to less developed countries though EEC agreements with 70 'associate states' throughout Africa, the Caribbean and Pacific regions. While these countries were given free access to EEC markets except for agricultural produce, the payoff for the FRG was increased markets for its exports - so FRG goods were often paid for by the grants offered by the EEC.
• One of the biggest common economic problems in Europe during the 1970s was the control of inflation. While man of the economic infrastructures of the EEC member states had merged by this time, the currencies were still independent of each other and subject to fluctuating exchange rates. In 1978, Schmidt supported the creation of a European Monetary System (EMS). This organisation would fix exchange rates within the EEC. This meant the Deutschmark replaced the US dollar as the key European currency in the setting of exchange rates and it was hoped this would keep inflation down across Europe.