Great Decisions 1963; 1; Common Market: Blue Print for a New Europe

... ... ... ... ... ... ... This is a major American steel mill along the banks of the Mananga Hila in My City, Pittsburgh. I am John Coleman of Carnegie Institute of Technology. There's much land and still more water between me here and one of the most exciting developments in the 20th century, the rise of the European common market. And yet, those developments in Europe have much to say about the way we're going to live here in Pittsburgh and the way we're going to live in the United States.

This is a political story with strong possibilities for our impact in the whole area of peace in the world. But it's also an economic story, the city where we have more than the national average of unemployment. And so while we look at the European common market with great hopes, we've also got some fears and some questions in our minds. How does an American steel worker feel about the European common market? I am Bernard Lally. I have worked in the Pittsburgh steel mills for 15 years. I do feel that this challenge, which the European common market is putting into the United States, will be such, but unless the United States can overcome this price barrier and really produce more steel per man hour, they are going to find that they will run into economic hard times.

My name is Ronald Zroyer. I work in the steel mill Jones and Lockwood Pittsburgh division. I'm a little disappointed that the United States buys more steel from foreign countries now than they export in the last several years. Since the United States has always been a leader in this field. Now the common market is even causing more problems than this. It's going to be up to us and the steel companies to get on the ball if we want to remain competitive. Americans have a vital stake and a vital interest in the European common market and in its possible contributions to world peace and perhaps to prosperity too.

But when we begin to try to understand this common market, we bring to it a particular advantage. If we will just remember that in one sense, the story of the building of the European common market is something which comes very close to home. For we too, on this side of the ocean, are a common market. We have one great common market from the Atlantic to the Pacific without tariff barriers across the land. If the European common market can be said to have any one single father, surely that man would be that remarkable Frenchman, Monsieur Jean-Monnaie. Monsieur Monnaie comments on this theme of parallelism between our common market and the market now in the making in Europe. What is beginning to happen in Europe is what's happened in your country for a very long time. I think one of the sources of greatness of the United States is that it is a common market. California and New York are not two separate states.

There are sources that the New York manufacturer went back from California he can, from the transportation differences between California and Pennsylvania, but there's free access to resources and there are free access to consumers. A key question then for the 1960s, how does one great common market, the United States, react to another one in the making? In order to tell the story of the European common markets, we have to go back before the days of March 1957 when the Treaty of Rome was concluded. We have to go back to the Europe that existed for centuries, a Europe divided by walls that crisscrossed across the man-made, the natural landscape of Western Europe. These were walls which changed from one century to another, but the walls were invariably high.

They were walls which divided men from one another with animosities on both sides and occasionally of course with shells flying across those walls. They were walls that divided men from one another in terms of the trading activity of Europe and they were walls built on the whole idea of fear. Each individual nation behind its own walls determined to pursue its own economic destiny. So a country like Western Europe, biggest of the countries which was to come into the European common market, has less than one third the population of the United States, yet it was pursuing its own course, and this meant, and the course of the other countries in Western Europe meant retaliation, it meant fears of one another. For a long time men have talked about the idea of unifying Europe, of putting an end to the causes of dissension among these European nations and of building a common market, but for a long time it remained simply talk. Perhaps the one single event which pushed men faster than anything else towards the day of building a common market was the Second World War.

As men looked at the devastation of the Second World War, many men were saying this has happened before, still more men were saying it must never happen again, but somehow there must be a way to unify people so that they would no longer destroy everything which they had built in the years before those. Out of the ruins then, it may be said there came a new determination to try to build a senior and a more sensible structure in Western Europe. For now for the first time they were talking about a new attack on the problem, now they were saying let's not discuss political unification first, let's talk about economic unification and see what happens politically. The particular event that began the movement towards the common market was the establishment of the European coal and steel community, go back to the map for a minute. Still have vast resources for making of iron and steel including great coal mines lying along the area between Germany and France including the area of Luxembourg and part of Belgium.

Man had built his separate walls cutting through the various fields here and cutting through these resources. The result was nations were saying to one another in effect we defy you to get our resources and use them for productive purposes. At the end of the Second World War in this desire to rebuild a new kind of Europe, the idea was developed by Monsieur Jean-Lenet and others of integrating these facilities, of having a common pool of the productive resources with coal and steel able to cross and recross man's artificial lines along the way. And so there was foreign, the European coal and steel community and what a dramatic result there was to be as a result of this. Let's look at some of the figures as to what happened as a result of this. If we look for example at the steel production which was to be possible in there, measured in millions of tons we see a dramatic story. Back in 1951 at the beginning of this community, 37 and almost 38 million tons of steel, but

the number was to go higher, 41 dropped a little in 53 and then began its steady climb upwards going up to 1957, 58, 59, 60 until by 1961 the production was 73 million tons almost twice what had been back in 1951 and this only 10 years later. The record of the United States steel industry is nothing in comparison with this dramatic growth during this one particular decade. But at the same time that this was happening, it was a rather high degree of stability on the price side. If we go back to 1953 and we call the price of one type of steel in the European economic community or the common market 100, then we would say for a comparable type of steel in the United States, the price was around 87. But the United States price was to go very high after that, dropping a little after 1958 but still remaining at a high level.

In contrast, the common market countries have had a remarkably stable price structure in the steel industry. But the whole story of what happened in the coal and steel community is much more than simply a story of economics. It's a political story as well. The man who was mainly responsible for carrying forward the idea of the coal and steel community was the French Foreign Minister Robert Schumann. Robert Schumann said as he looked at this integration that this would make any future war between France and Germany not only unthinkable but more importantly would make it materially impossible. Make it materially impossible because neither country would have full control over these resources for war making. It's against that background then that the parties came to Rome in 1957 to talk about something bigger than a coal and steel community, something that was to become the European common market. And who was it that went to Rome? Let's go back to our map once again.

First of all, there were the representatives of Germany, a great industrial giant here, strong in machinery and autos and in chemical, a nation which had used its industrial and might twice against most of the other countries in the common market and against the United States. And there was Italy, industrially rich in the North but agriculturally impoverished throughout the southern part of the country. There was France again with great industrial resources but they tended to be in the North for the rest a large part of the agricultural land of what was to become the common market. In the North of this Belgium and the Netherlands and tiny Luxembourg, these three countries which had already begun to find their own way towards economic integration before the common market came along. But of course in Rome there were men as well and the men who were there were carrying forward visions which had existed in a number of these countries for years. These were the men who were carrying forward ideas of a man like Jean Monet, a France or

a man like Robert Schumann, the French Foreign Minister, a man like a C.D. de Gasparie, the prime minister of Italy, men like Conrad Adenauer, of West Germany, and men like Paul Henry Spock, the foreign minister of Belgium. What these men did when they met in Rome was to negotiate a treaty. It's a long, it's an involved treaty as some 240 different clauses in it. All we can do here is to try to extract out of all of this involved language what we see as being the economic core of the treaty itself. And here we can do this I think by looking at three major points that have particular economic significance. One of these points has to do with tariffs and here the parties were agreeing that there would be no tariff rolls among the countries themselves and that they would in time build a common tariff while at vis-a-vis the rest of the world.

Secondly they were saying that there should be economic reconstruction, that the economies of Western Europe should be rebuilt and that there should be, for example, free resource movement from one country to another and that there should be competition as the basic theme in industrial structure. And finally they were agreeing upon a structure which would carry forward these very ideas and a timetable to which they would try to adhere in the whole process of implementing the common market. Suppose we take each of these and look at it in turn. If we talk first of all about this custom union, we must stop by recognizing that exports are far more important part of the life of these Western European countries than they are in our life. Take the Benelox countries, Belgium, Netherlands, Luxembourg, for example, they export about 40% of the annual production of their country. We in the United States export about 5%. And yet with all of this, all of this importance of exports still had been these tariff rolls.

The countries traded with one another but they traded with one another in an inefficient way and everybody buying goods in one country from another one paid an extra high price. That is, they had built these walls dividing themselves one from the other. And what they were saying when they met in Rome in effect was that these walls which had cut themselves off from one another would now have to go and that the walls would disappear and that goods would now be free to move among the nations as dictated by the desires of consumers in one area or another. This is a remarkable story then. What they were doing in effect was trying to create the same kind of open market that we have. Our goods flow freely from east to west, so too now they were to be free to move in time throughout this common market area. What was their particular interest in doing so? Listen to the words of Walter Holstein. Walter Holstein was the president of the Common Market Commission, the implementing body

for the whole common market, Mr. Holstein. One day, European statesmen decided to make the economic unification a project which goes beyond the simple sphere of liberalizing commerce. This is the reason why the Treaty of Rome provides for, first, a customs union. That means that between the six member countries there will not be any more frontiers which consist of customs. There will not be any more quantitative restrictions, quotas. And that in the relationship of this whole area towards the outside world there will be

only one single tariff, customs tariff. What this again is not enough. In economic history, states have developed quite a number of means to protect their own economies against competition coming from outside. To quote simply a few, they can discriminate in the sphere of transportation or there can be legislation or there can be administrative practices which make it difficult for a competitor coming from outside to enter into true competition with the inside economy. Therefore, we added when we drafted their own treaty to this chapter dealing with the customs union of the chapters, the purpose of which is no less than a merger of economic

policies of the six countries. But however desirable free trade might be, men aren't going to move to it overnight. That is, they aren't going to root out the inefficiencies which have grown over the past. And for this reason there had to be a timetable that was agreed to. A timetable is one which said that the tariffs would go down, step by step, over the years, until finally by 1970 there were to be no tariffs at all. When one talks about the miracle of the European common market, he's saying in part they've beat their own timetable. Instead of the 1970 schedule, they've been moving along one which is accelerated. And if present events continue in the future as they have up to this point by 1967, the last of the internal tariff walls would be gone three years ahead of the schedule. Economic miracle, yes.

And when that happens, what a market there's going to be inside of Europe. Suppose we compare this market with the United States on a number of important consumer items. Suppose we look at autos, for example, and ask how many per thousand are there in each of these areas. In the European economic community, the common market area, there are 76 per thousand in 1960 compared with 339 in the United States. Or if we look at television sets, 50 in the European common market countries, 297 per thousand in the United States. And if we look at radios, the same story is told in radios 225 in the common market, 948 in the United States, telephones, 93 in the common market, 397 in the United States. But it's this kind of a picture that Americans have in mind when they say here are potentialities for American products to be sold. This is not to say the Europeans are going to demand exactly the same kind of consumer

products that we want, these are only samples of products. But this is only to say that here is a market in the making. And Americans are saying here is a chance for us to sell new products to sell in this ever richer and richer market. But then another thought comes quickly to mind. Because remember there were two kind of walls back on that map. There were the walls that were torn down and thrown away. But there was also an agreement made in Rome that there would be common tariff walls now against the rest of the world. And so now the question is, how high is this wall going to be that rings the common market? To what extent are American goods going to be able to cross over into this area and sell competitively in this rich inside market? It's too early to answer that question. To know to what extent these people are going to be committed to free trade in the whole world. And the base of really signs one can be optimistic. Above all one can be optimistic because of an important political event at the United

States in 1962. The United States Congress gave to the President of the United States greater power than he never had before to negotiate tariff cuts. It gave him the power to go to the common market and in effect to negotiate for cutting their walls at the same time that we cut our walls. And in those areas where the common market of the United States dominate real trade, it may well be that the walls can come down to a considerable extent. But this whole story of what's happening in Europe, we've said, is much more than simply a story of a custom union. It's a story also of trying to build another kind of Europe. To hear about that kind of Europe, let's listen once again to the President of the Common Market Commission, Mr. Walter Haasstein. So-called economic community is not only economic, it is political as well. By this I want to indicate that this second part of the contents of the essence of the wrong treaty, what we call not a simple custom union, but a economic union, means that in

the fields of economic policies, and this is politics, part of the political sphere, there is already a political unification in the making. This of course is only one first step into the real political unification. Other steps have to follow. This whole procedure has to be completed by another process of unification, the purely political unification. It's important for Americans to remember that the economic traditions of recent Europe history have been quite different from those that we have known in this country, that there have been restrictions, for example, of movements of capital and labor throughout Western Europe. That if, for example, it was a shortage of labor in one country, in a surplus in another, there was no way of bringing those two developments into balance except with prolonged and sometimes

painful negotiations. No could capital move. Nor was the whole idea of competition as a spurred of the efficiency of industry deeply rooted in some of these countries. Instead there was the idea of the cartel, the cartel which divided up the available markets and said, this market shall belong to these companies, and no one else will come into that particular market. One of the whole idea of the common market, the Treaty of Rome, arises the idea now of trying to recreate a market situation in Europe which will allow resources to move freely where they can be most effectively employed and to develop competitive spirit in industry. Just take this idea of movement of labor, for example. Italy is a country which in recent years has had a chronic labor surplus. Germany on the other hand, again and again, has felt a labor shortage. It has now begun becoming possible for surplus laborers in Italy to move into Germany, to take their place in building up the industrial production of the whole Western Europe area.

And so too capital can flow. And this means that there will be specializations developing throughout Europe, that will be possible for the European economy to march ahead in a way that was not possible so long as the walls were there. That in turn means there's a new kind of a boom throughout this European area. If there's a spur to individual industries, but old industries have an opportunity now to get capital, to rebuild themselves, make more efficient units than existed before. But also means that new industries will be growing up. Some of the industries will be moving from one place to another in order to take advantage of the new facilities. Branch plants will be growing up, and all of these kinds of activities then there will be a forward thrust, a kind of a thrust which will enable Europeans to look not to a glorious past, but ahead instead to a glorious future. This then is the meaning of the economic impact or the boom that is sweeping throughout the Western European industrial nations, and the production of these countries is shooting

upwards. But there's a cost that's paid for this. This cost is a cost in terms of movements of individual people, people who are unable to adjust themselves to these particular changes, because the faster the changes come, the more some people are going to be hurt by this whole process. And if, for example, you were to go down into the southern part of Belgium and visit the so-called Borinage region, you would find there that some people are feeling dislocation in a very strong fashion. And for them, the European boom is real enough for other people, but so is distressed in their particular corner of Europe. The story of their dislocations then is a story which is perhaps hidden from the headlines, but it is also a part of change in Europe, and the more the change, the more dislocation there will be along the way. To try to get some feeling of dislocation means for individuals, it's best to listen to our native of the Borinage area, Monsieur J. Jonas, who's lived here for some time and

who knows at first hand what the European common market has come to mean for the people and his particular region. This is our Borinage, which for many years wasn't the foremost coal mining area of Belgium. In fact, there is still plenty of coal left in our soil. The creation of the European coal and steel community, which brought the less expensive coal from the German rule, area into Belgium, free of import duties, was the final straw that broke the back of our coal industry. Today, our mines are deserted. Railroad stations stand in use for sale, like this one, where grass and weeds are covering the trees. There are plenty of people left here who would like to work the mines. People who have come here from Greece, from Italy, from Poland and elsewhere.

Both of them were received here with open arms shortly after the war when lots of coal were needed in the post-war reconstruction period. Obviously, the European coal and steel community is not the only cause of our depression. Yet, many people here do not particularly ride the community. Can you blame that? The men who negotiated the Treaty of Rome were aware of this possible problem, and they took special steps to try to cushion the impact for those who would be dislocated. That is, they set up a social fund to which each of the nations was to contribute. These were funds that would then be available for resettlement of workers from one part of Europe to another and retraining of people. The parallel, of course, is very close to what we did when we passed the Trade Expansion Act of 1962, and when we said there would be adjustment assistance to those Americans who would be hard hit by an increase of imports into this country. Another aspect of this whole negotiation, though, was the idea of trying to build a more

competitive Europe to destroy the idea of restrictionism dividing up markets, the cartel idea out of the past, and to create instead the idea of competition. Section 85, the Treaty, covers this particular topic. Again, it's early to tell just how much the parties mean by this. The words suggest that there is a commitment to a more competitive structure, an insistence that individual firms act independently in the marketplace. But, and there's a very big bar attached to it, there's also an explicit recognition that parties shall be allowed to make agreements, individual firms with other firms, if this is in the interest of technical efficiency in the industry, and if the gains are shared with the consumer. This suggests then a less rigorous approach to the whole problem monopoly, and we have taken in the United States with our particular legislation. Out of all of these developments, new resource movements, new patterns of competition that are already being felt, it's possible for the American now to go back and take a second look at that market.

His first look said, on the tariff walls are gone, there is a big market for us to compete in. His second look now says, but will there be a new kind of efficiency in Western Europe? Is it possible that the Western European firms are going to be able to outsell us in many areas where we have traditionally been good? In this sense, then, a new kind of a challenge is offered by this new spirit of competition throughout the Western Europe. We'll pick that theme up again in just a minute, but at this point, it's well to stop and take a look at the whole growth record in the common market to see just how much has in fact been accomplished. I suggest that the best way to do that is probably to just take an index, such as the index of industrial production, to measure what has been happening in Western Europe and to compare it with what we're familiar with, the American production record in the same period. And it tells a very dramatic story indeed. If I call the industrial production in both the European common market of the United States in 1953, 100.

Then by 1962, the USA figure would be 129. This has not been our fastest decade of growth by any means. In the European common market, on the other hand, the figure would be 193 by 1962, and this tells only part of the story. Because while the Netherlands and Belgium have lagged behind that average figure, France, Germany, and above all Italy have gone past it. Resultant is a story of a great increase in industrial production and a new kind of a confidence which is created as a result of this. But you know, you can't tell an economic story solely with using statistics. There's much more to it than that. And in this case, those who have visited Europe say that some of the biggest changes that's taking place is a change in man's attitudes. Listen, for example, to the words of an outsider as he looks at these developments. Here is Mr. NH Fisher of the Financial Times of London, commenting on what he sees as

the new changes in the growing Europe market. Of course, the removal of tariff and quota restrictions have already had their effects. But what is really at work is the knowledge that in a few years' time Europe will be one market. And businessmen are making their plans accordingly. They are investing on a scale which is commensurate with that of an all-European market. And also in their sales and purchasing habits, they are adapting themselves to the circumstances which will be fully operative in say six years' time. I can give you two examples. If you take motor cars, for example, French motor companies have set up very extensive distribution networks in Germany, in Italy, because they know that very soon this will be in extension, these countries will be an extension of their home market.

For British manufacturing, gentle, recent play, who did not know whether in a few years' time he would have to pay a 30 percent tariff or not, it was obviously much more difficult to undertake that sort of investment in distribution and servicing facilities. Now, in truth, everything isn't on the plus side here, and the European common market is beginning to feel some problems even as we fail them. For example, there are shortages of labor still in a number of parts of Europe, and that means there is an upward pressure on wages. Many European workers are looking at those consumption goods that the Americans have and they are saying we want these too, and they are seeing the way to get that by putting pressure on the employer for higher wages. There are also shortages of capital here and there, and the shortages of both labor and capital mean that some costs are going up now more rapidly than Europeans would like to see them go up. And yet out of all risk comes the idea that there still is a miracle. There is still an abundant feeling of optimism and are looking ahead to still better things

that lie in the future. At this point, we want to ask the key question, what does all of this mean for the United States? What's the impact of these developments likely to be for us in the years immediately ahead? We've always had a very strong interest in this idea of economic and political unification in Western Europe. In order to understand the reasons for this, listen to the words of a former Secretary of State, and now special representative of the President of the United States for trade negotiations, the Honourable Christian A. Hutter. Trade and the releasing of trade barriers between countries is a very strong, integrating force from a political point of view. We have wanted to see a stronger Europe, not only because there are partners, but because we wanted to see the whole free world strengthen by a rejuvenated and strengthened Europe. This is really something that brings into play the whole concept of the Atlantic community

becoming a great bulwark in the free world, not only for the sake of maintaining its own prosperity, but from the point of view of being able to be of greater assistance to the rest of our area of the world. There are three areas in which we might look for possible economic impact. One of these is investment opportunities, a second is exports, and a third not surprisingly is imports. On investment opportunities, here the question is, to one extent, our American firms going to find it more attractive to build branched plants over inside the common tariff wall of the European common market, rather than building new plant facilities in the United States employing American workers here and then shipping goods overseas. Obviously, the answer to that one is going to depend in part on the tax laws here and there. It's going to depend upon the particular incentives there will be. It's going to depend on how high those tariff walls are, and whether one has to go behind the tariff wall in order to take advantage of this new kind of a market.

So the part of the answer to that is within our own control, in our tax laws, in our successful negotiations in getting tariff walls down. The second area is a more vexing one, the whole question of exports, and here the question is, to what extent are we going to be able to export more than we have up to this present time? We might ask ourselves the question, why are exports so important to us at this particular time? Again, the President's Special Representative for Trade Negotiations, Christian A. Hurtler. Well, as you know, as of this moment, we have a favorable trade balance that is in exports over imports. As far as the world is concerned, roughly $5 billion, but that is more than eaten up by our expenditures for other purposes. So he prepped the most important one or our military establishments overseas, our tourist expenditures overseas, our investments overseas, and to a lesser extent, of our neighbor programs.

Those have not become so important since the Bay of American policy went into effect. But unless we can maintain a balance of payment over the years, we are going to have to either cut down on all of these other items, which are very important for the security of the free world. Or we are going to have to increase our exports so to make our trade balance larger so that we can afford these outlays in not only Europe, but other sections of the world that are terribly important to the point of view of security. At the end of the Second World War, a number of Western European countries were saying export or die. That was not the choice before the United States. But perhaps our choice can be summed up as export or give up some of those commitments we have made to the underdeveloped countries in the world, for example. And I suspect that today most Americans are prepared to say, well, let's export more. And the question is, can we export more?

Can we really compete effectively in these growing markets? One American who feels very strongly that we can do so is Mr. Edward Locke, the president of the Union Tank Car Company, Mr. Locke. I believe there are some practical answers to that question. First of all, the head of the company ought to get on an airplane and go aboard to explore export possibilities. I say the head of the company because unless the top man does it himself valuable time may be lost. The best way to uncover an export market is for an executive with full authority to get in to direct contact with buyers in other countries and do it soon. Equally important, the company ought without delay to find means of reducing its costs. Many people mistakenly think that our high labor rates put us at a hopeless disadvantage

in world trade, but right now thousands of American companies are competing successfully against foreign products. One reason is that they have introduced more efficient methods of production and have squeezed the fat out of distribution and management. That is the best way for any concern to make itself more fully competitive at home as well as in the world market. Finally, I would advise every business interested in foreign trade to work closely with the U.S. Department of Commerce. The Department offers the cooperation of commercial specialists located here and all over the world. One of the Commerce Department's services that are proving of great value to export is the display of American products in foreign countries through trade fairs. These fours can play a large part in assisting American industry to gain the favorable attention

of buyers in many key markets abroad. To sum up then, I am convinced that any company whose tap man gets into action in the export field that reduces its costs and that takes advantage of the cooperation offered by our government is likely to do well in foreign trade. The future economic growth of this country in the years immediately ahead will be safeguarded and advanced by tens of thousands of individual American businessmen who aim their initiative and drive at the world market. Thank you. Not all American industrialists will be as optimistic as Mr. Locke is because in truth the picture does vary from one industry to another. There are some industries where we can expect tougher and tougher competition world markets. There are other industries where the very growth of the European market, the growth of

consumption there, is bound to have a favorable effect upon our economy. Look at some of these industries. Here are some where the impact of the European market on our export is going to be very heavy indeed and we will have tough sledding machinery industry, electrical equipment, instruments, wheat, in finished chemicals, in animal fats and oils. There is another kind of an in-between group where it is hard to tell just what the effect is going to be. But then there are others where there will be a slight impact and where we may well sell even more aircraft, scrap metal, metal ores, basic chemicals, cotton and soybeans. But all that says is here are some opportunities to you American businessmen. The real question is will we take advantage of those opportunities? The answer to that when I suspect is going to lie in a number of different areas. It is going to lie in our concern for our own price and wage policies here at home. Our willingness to restrain price and wage increases so that we can become increasingly

competitive with the European common market and with growing markets elsewhere. I suspect the answer also lies in our willingness to develop more funds and we have devoted up to this time to modernizing our plant and equipment and also to conducting research on a more aggressive basis than we have yet done. And for example, to the words of Mr. AR Edwards, who is the president of UNCO International in the American steel industry. Mr. Edwards. One can think, for example, of a recent development that comes from Europe. From Austria comes the greater use of oxygen and the manufacture of steel, a great development that has occurred in recent years and is spreading across the world and reducing the cost and increasing the efficiency of making steel. So while we are proud of the developments that we have in this country and we have led the procession and I think we still shall continue to lead the procession by the very fact that throughout industry and especially the steel industry, typically again, ARMCO

is doubling its research facilities this year and so are many other of the major steel users. ARMCO, with research, come new products, better ways of making older products and generally improve skills in every aspect of manufacturing steel. But by the same token, the British also are greatly developing their research facilities. The United Steele's, for example, at Rotherham have a tremendous development that is more than doubling their facilities with respect to research and doing outstanding work. And so the Germans and the French and the Italians all are beginning to look at this question of research for developing and originating new ideas, new methods, new products so that we have no monopoly on it here. More exports will require more of us than simply restrain prices and better capital equipment. More exports require more export know-how.

More understanding of what kinds of goods and services we manufacture here in the United States are likely to be in demand in that growing European market and that means some on-the-spot studies by American businessman on the scene. Another aspect of the possibility of selling more exports abroad is our ability to negotiate lower tariffs in the European common market. This is where the role of each one of us comes in and getting behind the President in negotiations for lower tariffs. But once you mention lower tariffs, you're brought to the third of the possible economic impacts because there's also the business of more imports. If we're going to export more, there's every likelihood that we're going to import more as well. That the Europeans in order to buy our goods and services are going to have to sell to us as well. And the meaning of imports, the same meaning that they found in the European common market in Bernage, it means there's dislocation for some people inside the American economy. And our policy question ahead of us is, to what extent are we going to cushion the

people who are hurt as a result of these new imports coming in? In the 1962 legislation, we did provide for some adjustment assistance, how aggressively will we use it? But there's another way of putting that same question. To what extent will we let the small number of people who are hurt as a result of imports stand in the way of free or trade in the world? And back to the common market. One of the most interesting aspects of the success of this common market, up to this point, is the very fact that the outsiders are now looking in, in some cases, rather end-visually, that those countries that ring around the common market are, in many cases, anxious to become full members. Certainly, the most important of those countries is the United Kingdom. And if the United Kingdom were to come into the common market, this would have strong economic impact simply because of the greatness of the British economy that also would have great political implications, a new power force would be brought inside the common market

area. When I asked the question right in the United Kingdom Committee in the first place, the answer here, I think, is largely because the United Kingdom felt commitments not so much to Europe as to the Commonwealth countries. And she didn't see how she could continue the preferential tariffs for the members of the Commonwealth if she were, in fact, a member of the European common market. But all of this is beginning to change now. Listen, for example, again to the correspondent of the Financial Chronicle of London, Mr. A. H. Fisher. Of course, we can afford to stay out of the common market provided that we, by ourselves, take all of the actions which are necessary in order to make the British economy competitive in world markets. This means that we will have to look very carefully at some of these structural weaknesses in the economy and British industry, I would perhaps mention, say, shipbuilding, coal mining

and cotton take-stars as three industries where changes would have to come. In fact, these changes being made would depend on a succession of governments prepared to be really pretty tough with the British public and with the British economy as a whole. And I think the changes which will have to come will be less painful if we make them in the context of a wider and fast-growing European market. Especially on the other hand, I believe that the time when Britain can pursue a policy of isolation is definitely pass. And I believe that the political case for our going into Europe is pretty well overwhelming. Possibly on Britain's entry into the common market, there hang the entries of so many of the other Western European countries, the Scandinavian nations, for example, in Spain. Therefore, the negotiations now going on involving Great Britain have necessarily attracted

a great deal of attention in Europe and in America as well. What this will do to the political structure within Europe is to introduce a new force. France and Germany now represent two of the major political forces Britain would represent still another force in that picture. And this may be why the smaller countries, the Benelux countries, are so anxious to see Britain come in. But this whole story has been told up to this point mainly in economic terms. We need to look more closely at the political side because it's long been a hope of men that there might be some kind of a political unification. And certainly the architects of the European common market were saying quite explicitly that they hoped in time this would lead to a political unification in Western Europe. But when you begin to talk about the political problems and economists such as myself realizes he's over his death right away. And for this reason, I've turned for some expert assistance to Dr. Hans J. Morgenthau, who is professor of history and of political science at the University of Chicago.

Dr. Morgenthau, does this economic unification that is beginning to take place in a part of Europe necessarily mean that there will be political unification coming afterwards? It can mean it, but certainly it doesn't necessarily mean it. There is no exact correlation between economic and political developments. And I would rather say that a present, you see economic unification has gone much farther than the political unification. And that's the political unification is much more ten years than the political unification. The sense the economic one. First of all, we have to consider that the political unification is based primarily upon the personal understanding of two old leaders of the major European powers, Ardenauer and the goal. Nobody can tell what is going to happen when either a born or both of them have disappeared. But secondly, you see entrance or non-entrance of Britain into the common market will certainly

make an enormous political difference, especially in suffice relations between the common market and the United States are concerned. So we should not jump to the conclusion that because economic unification is far advanced in Europe, political unification is bound to follow, it may or it may not. I would rather guess that political unification would have to follow economic unification soon because we have now a momentum in Europe for a overall unification which is conducted by strong nationalistic tendencies if the present momentum is not going to be used, it is most likely that the nationalistic tendencies will become stronger rather than weaker. Look at Germany, which one of its main objectives is unification, but no other European country

has an interest in unification of Germany, quite as a country, they are all afraid of it. Look at Britain, if Britain should try and see common market, it has very strong interests in the rest of the world, in the dominions in its relations with the United States. Look at France, which has very strong nationalistic tendencies, especially under the surprising leadership of the goal, so we cannot take political unification for granted. And if the present momentum is not used for that purpose, one will have to create another momentum much later on or have to wait for circumstances favorable to pose such a momentum in order to achieve a political unification. Well, these are some rather formidable obstacles to getting unification in the Western Europe, Dr. Moriathar, what state do we have in the United States in such political unification? Well, this is an easy question to answer.

In our midst, there is a kind of mystique about unification, which is that unification is better than no unification, but from the American point of view, it is a very open question indeed, whether the political unification of Europe will be advantageous to us or not. For, in order to be advantageous for us, there is the policies of a united Europe must confirm with our policies, or it is a very least, it must not be opposed to ours, but a unified Europe politically and militarily unified is going to be a genuine third power, as powerful, actually and potentially as either the United States or the Soviet Union. And whether or not such a very powerful third-name force is going to stand always, or even

only regularly, it is a side of the United States, or will pursue an independent policy, or even will oppose the foreign policy of the United States. It is a question to answer to which one cannot take for granted. But what extent do these countries have the same position as we do now on major political issues? That is a very good question. Take a look at the outstanding issues, and you will find that with regard to virtually all of them, our position is different from the position of either one or the other all of the European nations. Look at the Congo, look at the Far East, look at Cuba, look at Berlin, look at the nuclear policy, where do we have a common policy with all the nations of Europe? We have a common policy with them only in one respect, and that is your position to

communism, aggressive or subversive, but with regard to any of the concrete outstanding issues, we are divided from either one or the other or all of the European nations. And this is the first task of our statesmanship and of the statesmanship of the individual European nations, or a politically united Europe, to create a community or at least a complementary character of our and European interests upon which then a broader community can be based. It may well be then that the political challenge of the European common market can be less sharply defined for us in the United States than can the economic challenge, because on the economic side we have seen a rather clear cut challenge. It's a challenge to look again at the way we've been doing business here in the United States, at our whole attitudes towards competition, our whole attitudes towards efficiency in business, our whole aggressiveness in the whole area of exporting and developing marketing procedures

which will enable us to sell our goods and services abroad. This economic challenge, however, is more than simply one of looking out for our own well-being in this rapidly changing world, because the economic implications of this European common market stretch far beyond the Atlantic community, far beyond ourselves and our allies on the other side of the ocean. For sure, the nations in the underdeveloped countries of the world are going to be looking at this common market experience very closely, and at some point, the question is going to be asked for Africa, how about a common market for Africa? And the same question for Latin America, maybe someday a question of similar report, will be asked in Asia. In those countries, the lines are still fluid between the countries. The tariff walls are still not rigidly built, like those that had to be torn down slowly and painfully in Europe. It may be then that there's time to maneuver, time to introduce a new concept before the other lines get hardened.

On the political side, Professor Morgan Thar suggests that it's not clear whether we have much to gain or to lose particularly from unification by itself, and certainly he's suggesting that unification in and of itself isn't going to solve our problems, that we're still going to be faced with the same questions we worked with for a long period of time, particularly the question of trying to preserve freedom arcacies in a world where freedom is a relatively new story and still a story which is adopted by a small number of people. But for our people, we're more optimistic about unification coming along than Dr. Morgan Thar or the many other Americans, for example, back in 1859, Victor Hugo said there should be a United States of Europe to crown the world just as the United States of America crowns the new. And now with more cautious optimism, perhaps in the 1960s, yet perhaps with a more meaningful optimism, we hear the words of the father of the modern Europe, Jean-Monnaie. I don't say that political progress will not be made, they will be made, and they are

being made concurrently with the creation of economic unity. But the final organization, political organization of Europe, whether a confederation or a federation, I believe we can be a reality once the economic progress will have gone further than the end of the day. We're back then where we started at the steel mill. We've been talking about a new power in the making, a new power with which we have the closest of ties economically, politically and culturally. It's a new power to which we must adjust in this rapidly changing world. This is a power for which we hope to provide a part of the model. It's a power which we hope to build through our own encouragement and our own resources devoted to building a new Europe.

That it will change our lives seems absolutely inevitable. The question is, are we prepared to accept a competition which that new market offers to us? In some senses, our economy in the United States has come to a resting point. We're still growing, but our growth in the last few years doesn't match what we knew five, six, and seven years ago. One asks, is the European common market likely to be the next thrust that pushes us ahead to the higher growth rate of which we are capable within the American economy? We've sung the virtues of current competition for a long time. Now we're being asked, are we really willing to live up to competition when we're put to the test? This has been one of eight television programs concurrent with great decisions 1963,

a nationwide educational project during which Americans in more than a thousand communities study and discuss leading issues of foreign policy. And topics have been selected by the Foreign Policy Association. This is NET, National Educational Television.