' 19501960: reacting to the first Communities entering EFTA

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. 1950-1960 reacting to the first Communities
entering EFTA
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In the news today dying for Reykjavik?

• Norways FM Thorvald Stoltenbergs report,
  February 9th
• The Nordic countries should tighten diplomatic
  and military ties by pooling resources and
  issuing a mutually binding security guarantee
• "The Nordic governments should issue a mutual
  declaration of solidarity in which they commit
  themselves to clarifying how they would respond
  if a Nordic country were subject to external
  attack or undue pressure"
• Has been especially mentioned air surveillance
  over Iceland
• Keflavik base in Iceland founded in 1951,
  evacuated by American soldiers in 2006
• Problem for Iceland Nordic co-operation as the
  solution?
• Differences in interests
• With Norway, similarities
• Changes in NATO France got commands, the
  alliance is changing, what if it concentrates on
  peace-keeping operations and forgets area
  defense, what if the US mitigate their
  commitment, etc
• Air and sea safety are important problems with
  Russia in Arctic waters
• Thus Stoltenberg proposes to populate the
  Keflavik base with Nordic forces
• Solidarity?
• Finlands FM Alexander Stubbs answer
• Blog I consider the report a valuable input in
  the discussion of further development of Nordic
  cooperation. The importance of Nordic cooperation
  in foreign, security and defense policy is also
  stressed in Finlands newly released security and
  defense policy report.
• Press "Me pidämme esityksiä mielenkiintoisinaMuk
  ana on varmaan myös epärealistisia hankkeita.
  Halusimme nimenomaan villejä ehdotuksiaTätä ei
  kutsuta puolustusliitoksi. Suomi on edelleen
  sotilaallisiin liittoutumiin kuulumaton
  maaArktinen yhteistyö on myönteinen porkkana.
  Suomelle ja Ruotsille se on pelkkää plussaa"
• Differences in visions, cautious reactions. Wait
  and see Between NATO, EU, Nordics

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The Community track

• A new project supranational, normative,
  political
• 1949 Frances frustration
• Need for economic growth? how to control a
  US-enforced reborth of West-Germany? how to
  support national policy? discrepancies with
  London
• The immediate issue what to do with the end of
  the International authority for the Ruhr, created
  in 1949, scheduled to disband in December 1951?
  How to control German coal with a reborn
  West-German state?
• Supranational institutions as a solution for
  France and Europe?
• The sectorial integration plans of Jean Monnet
  first coal and steel, then other sectors
• The Schuman declaration, May 9th, 1950 to create
  a pool of coal and steel markets, with
  supranational institutions
• The treaty of Paris and the ECSC April 18th.
  1951
• The failure of the European Army August 1954
• Relaunch and the treaties of Rome
• EEC and Euratom March 22-23rd, 1957

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The Communities and the EFTA

• 1955 sees a relaunch of the Communities effort
• The conference of Messina, June 1955
• Great-Britain out
• Britain withdraws already in November 1955 from
  the study group created at Messina
• London proposes at the OEEC a less normative, non
  political free-trade area, July 1956
• These negotiations in the OEEC amount to nothing
  the EEC Rome treaty is signed, Charles de Gaulle
  becomes president of France in 1958, rejects the
  British plan
• London favors the creation of the EFTA treaty of
  Stockholm 1960
• A holding operation for London, an ad hoc
  association
• Main questions today
• In 1958, the Nordic countries have a project for
  extensive Nordic economic co-operation in 1960,
  they join the EFTA project why abandon their
  Nordic project?
• The first Communities are created in the 1950s
  what are the reactions of the Nordic countries?

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A Nordic perspective on the Community method

• Important reservations
• Supranationality and the political purpose
• Socio-economic paradigms
• Liberalization
• German-inspired deficit and inflation control,
  wage restraints
• Fear of big states
• Domestic divisions the Communities as a liberal,
  restrictive, anti-neutrality project, that would
  make social policy more difficult and question
  the role of the state
• Yet, the necessity to adapt
• Access to markets (Germany, Great-Britain)
• Contacts with the core of European economic and
  political relations

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The creation of the Nordic Council

• In the background, the negotiations for a Council
  of Europe 1946-1949
• Denmark, Norway, Sweden associate with the
  Council of Europe, and develop a regional version
• A symbolic organization, Nordic
  inter-parliamentary and technical co-operations
• Creation in 1952
• Finland can join in 1955, after the death of
  Stalin
• The Nordic Council rejuvenates Nordic technical
  and economic contacts
• Technical issues and advances in the beginning of
  the 1950s
• 1953 a common Nordic market for labor
• 1955 Common social legislation
• The January 1950 preliminary report of the Nordic
  Committee for Economic Co-operation
• Praise co-operation in Annecy in the GATT
  negotiations emphasizes the need for more
  industrial and trade co-operation and the
  long-term advantages of said co-operations

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The Committees final report, 1954

• November 1950 the Committee is given its
  instructions by 3 Scandinavian governments
  Norway, Denmark, Sweden
• Iceland out because of fishing, Finland out
  because of the USSR
• February 1953 the Nordic Council recommends that
  the Nordic governments study the possibility of a
  Nordic customs union
• March 1954 final report of the Committee, that
  changes its name to Nordic Economic Co-operation
  Committee
• Proposes the abolition of customs, tariffs and
  non-tariff barriers
• A common market would increase competition on the
  short-term but also foster growth and
  specialization at the regional level, favor
  Nordic-wide investment, and the emergence of
  industries able to operate at the regional level
  (domestic markets too small, Nordic market ok,
  adaptation to world competition)
• A Nordic EEC? Not quite

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The problem with Norway

• Two conclusions to the 1954 final report
• The Norwegian conclusion
• Free competition would cause problems to a
  backward Norwegian industry
• Inability to compete in Sweden and Denmark
  Swedish and Danish products would invade the
  domestic market
• Political problems unwillingness to open
  militarily sensitive industries to Swedish
  competition
• Norway would be interested in a Nordic common
  market 1. for certain goods, 2. if Norway would
  get long-term Nordic loans to adapt its industry
• A common market to help modernize Norways
  industry without jeopardizing Norways control
  over its home market
• The Danish and Swedish conclusion
• Removing tariffs and other barriers in 21
  products over a 10-year transition period
• Long-term loans would be given to Norway to
  modernize
• Sweden reluctant to put money in Norway
• Too little on the second point, too quick and too
  much on the first point Norway will remain a
  problem till the end
• Nordic divisions!

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A new round of negotiations, 1954-1958

• New talks
• August 17th 1954 session of the Nordic Council
  recommends new negotiations
• 30-31st October 1954 meeting in Stockholm
• Inspiration from the South?
• June 1955 officials from Denmark, Sweden, and
  Norway go to study the experience of the Benelux
• The Nordic Council as an arena of dialogue
• June 1955 six technical committees to advance
  negotiations under the coordination of the
  Committee (investments, rationalization, etc)
• Finland is associated to the talks after August
  1956
• Preliminary report July 8th 1957
• Final report September 5th 1958, given to the
  Nordic Council for political approval by Nordic
  governments

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The 1958 final report

• The 1958 final report
• Officials have been able to agree on the
  establishment of a common market on 80 of
  inter-Nordic trade
• According to the report, it would solve the
  problem of future expansion, with domestic
  markets too small to sustain the kind of economic
  growth required in the future
• Creating a 20 million people Nordic market
• Not big, but a good step
• Doubling Nordic GDPs in 20-25 years
  industrialize
• More markets for each country, a common voice in
  international negotiations, and a new place in
  international division of labor
• Ability to attract more easily international
  investments
• Adaptation to the hardening of European trade
  conditions
• Use the regional level to improve national
  positions
• A parallel with French or Italian position in the
  Communities
• The high-water mark of Nordic collaboration
• In September 1958, three possible free-trade
  areas discussed in Europe
• The EEC (January 1959 is the scheduled date for
  the beginning of liberalization, before that
  nothing is played even if the treaty is signed)
• The British-inspired FTA project
• The Nordic customs union and trade area
• In 1960, only 2 the EFTA, and the EEC what
  happened?

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Nordic divisions?

• Bo Stråth the preconditions for success were
  never there
• Inter-Nordic trade was too small
• The Illusory Nordic Alternative to Europe -
  Cooperation and Conflict, 1980
• Lasse Sonne
• Little inter-Nordic trade in the 1950s, and the
  industrial base is inadequate in Denmark, Finland
  and Norway
• Yet inter-Nordic trade grows in the 1960s, and
  the structures were sound
• Example Norway, exports
• 1950-1952 to Nordic countries 1829 kr. to
  Great-Britain 2194
• 1966-1968 to Nordic countries 9239 kr. to GB
  7174
• For all the Nordics
• Growth of total volume of foreign trade
• Growth of Nordic share in this trade
• For Sonne, a potential lost
• Nils Andren
• the Nordics could develop co-operation and
  integration within smaller policy areas It
  remained a good weather policy and left open
  cooperation with Europe
• When an OEEC-led FTA project failed in 1957-1958,
  and the EEC was created, the Nordic countries
  were attracted by the London-led EFTA project

• Vibeke Sørensen on the nature of Nordic economic
  co-operation
• The perceptions of the need for larger scale
  industrial development together with the
  importance of providing a certain protection of
  industry had already persuaded Social Democrats
  and trade unions early in the post-war period to
  consider Nordic cooperation. The many plans to
  create a Nordic Customs Union between 1947 and
  1957 were to a large degree a Social Democratic
  project constructed for the international
  advancement of this industrial objective,
  although wrapped in ideological clichés about
  Scandinavian unity. In 1948/1949 the project had
  been couched in integrationist terms to please
  the American Marshall plan administration, but
  the institutional arrangements planned for
  projected Scandinavian customs union were wholly
  intergovernmental.

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External pressures and the EFTA

• No political decision
• 10-12th July 1959 Meeting in Kungälv, Sweden
  Nordic governments let the Committees report on
  the table
• Meanwhile
• The OEEC talks fail in 1958, and the EEC starts
  as scheduled in January 1959
• Trade discrimination the Inner Six and the
  others
• London decides to use the Uniscan solidarities to
  bring the Nordic countries and other outsiders
  in a free-trade area project
• The European Free-Trade Association a less
  integrationist, more flexible approach access
  to the British market
• Nordic divisions make the Nordic project seem
  unfeasible
• February 1959 preliminary talks in Oslo between
  Denmark, Norway, Sweden and the UK
• 10-20th July 1959, meeting in Saltsjöbaden,
  Sweden decision to establish an EFTA
• Calendar?
• January 4th 1960 convention is signed in
  Stockholm

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The failure of a Nordic common market

• Why this decision after 10 years of negotiations?
• Internal divisions and incapacity to support a
  Nordic project
• Unwillingness to associate with EEC
• Attraction of the British project
• Liberalization and growth of inter-Nordic trade
  will be realized inside the EFTA, not inside a
  dedicated Nordic scheme, and without the
  increased co-operations and integration the
  committees report contained
• RIP Nordic co-operation?
• Nordic co-operation as one card in the Nordic
  countries game

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The Finnish case

• Finland left in the cold by the end of Nordic
  negotiations
• FINN-EFTA Finland becomes an associated member
  in 1961, a full-fledged member in 1986
• Necessity to stay in the core of economic
  relations in order to sustain liberalization and
  development of the FInnish economy
• At the same time, domestic and international
  pressures
• Soviet pressure
• The balancing act of Urho Kaleva Kekkonen,
  president in 1954
• Times article in April 1961 Now, the Seven and
  a half
• Nikita Hrutshev in Finland, September 1960
• Hrutshev and Kekkonen negotiate on an association
  possibility with the EFTA
• EFTA better than EEC for the USSR
• Soviet Union gets the most favored
  nation-clause
• Finlands economic developments first step
  Finland will grow economically from a rather
  backward rural country to a globalized industrial
  economy in two generations, largely thanks to
  external markets open with EFTA, then the
  Communities
• Finland retains political freedom of action
• 1973 Finlands free-trade agreement with the
  European communities