Post-War Initiatives
The United Kingdom has had a significantly different history and experience to that of its close European neighbours. In contrast to the latter’s experience in the First and Second World War, it has never suffered invasion or occupation.
After World War II the UK’s power and prestige were undoubtedly diminished but it still retained substantial colonial territories and a network of relationships with its dominions and other former colonies.
The United Kingdom was invited to participate in the negotiations for the establishment of the European Coal and Steel Community. It was a basic premise from the outset that the Community would establish a supranational high authority controlling coal and steel resources. Ultimately the authority acted by a simple majority and the institution rules were subject to adjudication by an independent court of justice.
The UK was not willing to participate in the negotiations. The post-war Labour government had nationalised many strategic industries including the coal industry. Surrender of control of this key strategic industry to a supranational body of largely right-wing governments was not appealing to the Labour government which was still in power when the negotiations commenced. The proposals for common external tariffs would run contrary to the existing Imperial preference for colonies dominions and associated territories.
The ill-fated European Defence Community would have involved supranational governmental structures similar to the ECSC. The UK was supportive but was not willing to join, due once again, to the ceding of sovereignty that would be involved. Instead, the UK entered a cooperation treaty with the Community at the same time the treaty was signed by the governments. Ultimately the Defence Community was never established as the treaty to establish it was not ratified by the French parliament.
Proposals for an Economic Community
By the mid-1950s, The OEEC had largely succeeded in securing the removal of quantitative restrictions and currency exchangeability. The proposal for a European customs union with common tariffs and a common external commercial policy was promoted by several parties in particular by the Netherlands.
Following the failure of the European Defence Community, the foreign ministers of the six ECSC countries established a committee to study a common market in goods and a nuclear energy Community. A supranational authority with fixed powers and a fixed programme for the elimination of tariffs was contemplated.
The UK was invited to participate and took part in the initial discussions. The UK favoured a free-trade area over a customs union. A free-trade area reduces or removes tariffs in trade between members. However, it does not create a common commercial policy as regards imports from and exports to non-members (third countries).The six ECSC members opposed free trade agreement (as opposed to a customs union) as it would leave significant obstacles to trade in place, in particular, border controls to verify the origin of goods from within the free-trade area.
The supranational authority with decision-making powers with a time-bound commitment to eliminate customs duties and the requirement for a single trade policy, undermining the UK’s Commonwealth preference were well beyond anything that would be acceptable, and the United Kingdom withdrew from discussions in late 1955.
Treaty of Rome
The Treaty of Rome establishing the European Economic Community and Euratom were signed on 25 March 1957. The first meetings took place in 1958 and liberalisation commenced at the start of 1959. The elimination of customs duties was achieved over a scheduled period completed in 1968.
Major policies were instituted, including particular, the common agricultural policy in 1962. The common agricultural policy was seen as an important concession in particular for French farmers in the context of trade liberalisation with the other EEC members.
OEEC
Ireland and the UK were members of the OEEC as set out in another section. The OEEC did not have supranational institutions and acted unanimously. The UK favoured the OEEC as the engine for future development. The rapid progress towards the formation of the EEC customs union and common commercial policy was greeted with concern by the remaining OEEC members. They would be at a competitive disadvantage and subject to potential discrimination in exporting to EEC members.
The common agricultural policy protected EEC farmers by raising market prices with a system of price supports, external tariffs and other import controls. The UK system involved more direct subsidies which did not necessitate the same level of tariffs and import controls.
UK put forward proposals to the OEEC in 1956 which were perceived by some to be an attempt to undermine the progress towards the formation of the EEC customs union. The proposals involved governmental cooperation requiring unanimity and a free-trade area in industrial products only. Agricultural products were excluded.
EFTA
The OEEC Council decided to enter negotiations to establish a European free trade area in February 1957 just before the establishment of the EEC. Ultimately the EEC members of the OEEC, in particular, France saw no benefit in a proposal which seemed designed to protect UK interests and it was rejected.
Almost immediately, six other members of the OEEC, United Kingdom, Austria Denmark Finland Portugal and Sweden commenced negotiations of a free trade area between them. The Treaty on the European Free Trade Area (EFTA) was signed in Stockholm in 1960.
The remaining OEEC members took different paths Norway and Switzerland acceded to the treaty in 1960. Greece and Turkey entered association agreements with the EEC. Ireland entered a free-trade agreement with the United Kingdom in 1965. Iceland acceded to EFTA in 1970. Later the principality of Lichtenstein acceded to EFTA in 1991.
The EFTA agreement sought to create an industrial free-trade area by 1970. There was no common external trade policy so that countries were free to retain their external tariff arrangements. The organisation acts by unanimity. There is a council of ministers supported by a small secretariat.
UK Applies to Join EEC & De Gaulle Veto
To some, EFTA appeared to be a UK attempt to maintain a Europewide free-trade area. It was therefore surprising when the United Kingdom appeared to reverse policy and applied for EEC membership in 1961. Ireland, Norway and Denmark also applied to join the EEC but would do so only with the United Kingdom.
The UK traded more with the EEC area than EFTA, and the EEC members’ economies were performing strongly. Commonwealth trade was becoming less important as many former empire and Commonwealth countries achieved independence in the late 1950s and early 1960s.
There was also a fear that remaining outside EC would adversely affect the UK’s standing in the world. With the continuing Cold War, the USA was supportive of the political and economic cooperation and potential integration offered by the EEC institutions.
The proposal was controversial in the United Kingdom. It was opposed by some sections of the Conservative party and a greater part of the Labour Party. The ageing Winston Churchill made clear his preference for standing by the Empire and the Commonwealth over Europe.
The EEC members themselves were divided regarding the application. Ultimately French president De Gaulle effectively rejected the application in 1963. This gave an impetus to EFTA, which decided to accelerate its time frame for the elimination of tariffs between members.
In May 1967, the United Kingdom Ireland, Denmark and Norway again applied for membership. A second British application was made and was again vetoed by President de Gaulle in May 1967. In December 1967 the European Commission announced that it was not proceeding with Ireland’s application.
1969 and the Path to Joining
President De Gaulle was forced from office in 1969. Later that year at the 1969 Hague Summit, the six EEC heads of state and government agreed to open negotiations with the United Kingdom and three other applicant countries, Ireland, Norway and Denmark.
The Labour Prime Minister Harold Wilson had not been enthusiastic about membership but was persuaded by others in his cabinet that it was in the United Kingdom’s interest. He lost power in the 1970 general election, and the accession negotiations were conducted under Conservative Prime Minister Ted Heath, a strong Europhile.
The House of Commons voted in favour of the proposal to join the European Communities on the basis negotiated. However, one-fifth of the Conservative government’s MPs voted against proposed accession together with the majority of the Labour Party’s MPs. But for the support of a substantial block of Labour Party MPs, UK accession would not have taken place. No referendum was held to ratify UK accession.
Ireland and Denmark supported accession by referendum. The proposal was narrowly rejected in Norway which did not join.
The Remaining EFTA Countries
At the same time, the EEC negotiated and entered a bilateral free-trade agreement in most industrial goods with the remaining EFTA countries (Austria Switzerland Norway Iceland Portugal and Sweden) and with Finland, which was an associate member. Ultimately Portugal joined the EEC in 1986. Austria, Finland and Sweden joined the EU in 1995. Norway once again narrowly rejected negotiated entry into the EU by referendum in 1994. Fisheries were one of the major issues again.
Switzerland rejected the European Economic Area agreement which took effect in 1995 between the other EFTA countries, Norway Iceland and Liechtenstein the EU. A proposal for a Swiss referendum to join the EU was withdrawn in 2001. Switzerland’s relationship with the EU now rests on over 120 distinct trade agreements in selected areas; this includes large elements of the EU single market but no customs union.
Iceland has not sought to join the EU and has remained in EFTA. It also contributes funds to the social and economic cohesion programs in the EU. It is a member of the Schengen area. The importance of the fishing industry and the perception that the common fisheries policy would have an adverse effect on the fishing industry has been an important consideration. Other factors include the potential impact on agriculture and ties with the United States.