TIME: Almanac 1995

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<text id=93CT1936> <title> The European Economic Community:Foreign Relations </title> <history> Compact ALMANAC--World Organizations </history> <article> <source>CIA World Factbook</source> <hdr> The European Economic Community International Relations </hdr> <body> POLITICAL COOPERATION The original EC treaties give the Community wide economic powers but little political authority. As the Community has begun to consolidate economic and monetary union, it also has re-examined its political responsibilities. The Single European Act underlined the commitment of Community members to achieving "European Union." At a landmark summit held in Maastricht, Netherlands, in December 1991, the Heads of State and Government agreed to further amendments in the EC treaties to move the Community toward greater political union, including more unified foreign and defense policies. The Maastricht treaty increased the scope of the Commission's authority to include the areas of environment, consumer and health protection, education, and culture. It established a "citizenship of the union," giving an EC citizen the right to live anywhere in the Community and vote in local and European elections. It committed member states to work for common rules regarding immigration and asylum policy and to exchange information on terrorism and drug trafficking. The treaty also proposed an economic "cohesion" fund to channel re-sources to poorer countries and expanded language on protection of workers' rights. Although coordination of foreign policy was not included in the original EC treaties, it has been undertaken voluntarily since 1970, when a limited form of European political cooperation, based on regular meetings of foreign ministers, began to occur. The 12 foreign ministers now meet regularly to coordinate broad lines of members' international policies. These meetings take place in the context of European political cooperation, which also includes regular meetings of EC political directors, who oversee numerous working groups made up of officials from all EC states, responsible for geographic and functional areas of foreign policy. Under the Maastricht treaty, the Council of Ministers, after consultation with member states, the Parliament, and the Commission, would approve common foreign policy and security measures by unanimous vote. A new defense dimension will be added to the scope of the Community's activities by expanding the role of the Western European Union (WEU), an alliance of 10 EC countries (Denmark and Ireland are not members), to provide for a European defense alliance. The WEU will implement EC decisions with defense implications. The Maastricht treaty must be approved by all EC countries prior to implementation. Ratification ran into difficulties when the treaty was rejected by the Danes in a referendum in June 1992. Ratification in the United Kingdom has been delayed until Danish objections are overcome, unlikely before mid-1993. An intergovernmental conference scheduled to take place in 1996 will evaluate progress toward political union. THIRD WORLD RELATIONS Improving relations with developing countries in Africa, the Caribbean, and the Pacific area has been a high priority for the Community since its creation. The Community has concluded cooperation agreements with more than 100 Third World countries. In addition to its desire to con-tribute to the economic and social advancement of less developed countries, the Community seeks reliable supplies of primary products and markets for its exports. The EC has become one of the major providers of Third World assistance with programs such as food aid, rural development, and refugee relief. In 1991, assistance was about $7.3 billion. (The EC program is separate from assistance programs provided by member states.) The Community's most notable accomplishment has been the creation of a series of conventions creating a framework for development cooperation with more than 60 African, Caribbean, and Pacific (ACP) states, most of which were former colonies of the EC states. Launched in Yaounde in 1963 and 1968 and expanded at Lome in 1975, the agreements provide aid for development projects, free access to EC markets for almost all ACP manufactured imports, and incentives to promote European investment in the developing states. The conventions were renewed in 1979, 1985, and in 1989 for a 10-year period be-ginning in 1990. The most recent agreement (Lome IV) puts greater emphasis on market-oriented economic reform in recipient countries and on human rights. About 40% of EC aid is directed to the ACP states. Since 1978, 40% of ACP ex-ports have gone to the Community, which imports about 10% of its raw materials from the Lome signatories. Community exports to ACP markets enjoy most-favored-nation treatment. One of the most important and innovative aspects of the Lome Convention is Stabex (export receipts stabilization system). A kind of insurance policy against poor trade years, Stabex provides currency transfers to countries heavily dependent on a small number of commodities for export earnings in years when export receipts drop significantly because of poor harvests or low world prices. Lome IV is designed to encourage diversification to other crops. The Lome Convention provides a similar export receipts stabilization system, Sysmin, to cover mineral export earning losses. The EC has been an active participant in the multilateral side of the Middle East peace process. It is a co-organizer of working groups on economic development, water resources, refugees, and the environment. The Community is linked with almost all the countries of the Mediterranean by a network of agreements which provide duty-free access for industrial products and some agricultural products as well as direct grants and loans from the European Investment Bank. Turkey, Cyprus, and Malta have applied for EC membership. The Community's ties to the developing countries of Asia and Latin America are less structured. These usually take the form of bilateral agreements, which allow for preferential trade treatment under the Community's Generalized System of Preferences and certain types of development aid. RELATIONS WITH EFTA COUNTRIES Relations with the group of countries participating in the European Free Trade Association (Sweden, Norway, Finland, Iceland, Switzerland, and Austria) are strongly influenced by the progress of the single market program. Founded in 1960 as an alternative to the Community, EFTA is now the Community's largest trading partner. Free trade agreements were concluded between the Community and each of the EFTA countries in 1972-73, after two EFTA members, Denmark and the United Kingdom, joined the EC (Portugal followed in 1986). The EC and EFTA countries signed an agreement to create a European Economic Area (EEA) in February 1992. The agreement will create an enlarged single market in which goods, services, capital, and persons move freely between all member states. EC and EFTA countries also will expand cooperation in research and development, environmental issues, education, and social policy. EFTA states will have to adopt certain EC regulations relating to the single market but will not be able to participate in the EC legislative process. The treaty also contains provision for the establishment of an EEA court, council of ministers, and joint committee. Once it is ratified by all 19 national parliaments and by the European Parliament, the EEA will create a trading zone of 495 million people. It was scheduled to enter into force on January 1, 1993. However, in a December 1992 referendum, Switzerland rejected participation in the EEA, requiring the other countries to adjust the conditions of the agreement. Austria, Finland, Norway, Sweden, and Switzerland have applied for membership in the EC. Accession negotiations with all except Switzerland will start on February 1, 1993. RELATIONS WITH CENTRAL AND EASTERN EUROPE Between 1988 and 1990, the EC established limited economic and cooperation agreements with all the countries of Central and Eastern Europe. Since then, the Community has designed a new type of association agreement which goes beyond economic cooperation. In addition to a phased approach to free trade between the EC and each nation (whereby the Community will reduce its tariff and other import barriers more rapidly than association countries), these agreements consist of industrial, technical, and scientific cooperation; financial assistance; and political dialogue. In December 1991, association agreements were signed between the EC and Czechoslovakia, Hungary, and Poland. As a result of the dissolution of Czechoslovakia on January 1, 1993, the Czechoslovak agreement is being renegotiated with the successor states, the Czech Republic and the Slovak Republic. Agreements with Bulgaria and Romania were concluded in late 1992. Pending ratification of these agreements by the parliaments of all participants and the approval of the European Parliament, the Community's generalized system of trade preferences has been extended to these countries on an ad hoc basis. The EC also signed trade and cooperation agreements with Albania, Estonia, Latvia, and Lithuania in May 1992. These agreements provide for reduction of quantitative trade restrictions, reciprocal most-favored-nation treatment, and economic cooperation. In November 1992, the EC concluded a similar pact with Slovenia. The Commission provides substantial assistance to the countries of Central and Eastern Europe. Grant technical assistance is provided through the PHARE program (Poland and Hungary--Assistance with Restructuring the Economy), which has been extended to Albania, the Baltics, Bulgaria, the Czech Republic, the Slovak Republic, Romania, and Slovenia. Its aim is to strengthen the process of political and economic reform, with special emphasis on developing and improving the private sector. In addition to the Community's bilateral efforts, after the economic summit of industrialized countries in 1989, the EC Commission began coordinating aid to Central and Eastern Europe by the Group of 24 (G-24) countries--the EC, EFTA, US, Canada, Japan, Australia, New Zealand, and Turkey. The Community also was instrumental in the creation of the European Bank for Reconstruction and Development, a multilateral endeavor to support investment and development of market economies in these countries. RELATIONS WITH THE NEW INDEPENDENT STATES In January 1992, the Community announced its plan to negotiate partnership and cooperation agreements with the states of the former Soviet Union to replace the trade and cooperation agreement signed by the EC and the Soviet Union in 1989. This agreement had included most-favored-nation status as well as financial aid and was prompted by the introduction of efforts at political and economic reform. The new agreements would provide for close political and economic relations, including trade, economic, and financial cooperation, political dialogue, and cultural cooperation. Negotiations will begin first with Russia, Belarus, Ukraine, and Kazakhstan. EC officials have indicated that assistance to the new independent states in their transition to democratic institutions and free market economies is an important priority, and the Commission ranks among the top donors to the new states. US-EC RELATIONS The United States continues to support European efforts to achieve economic and political integration. The United States and the Community maintain a continuing dialogue on political and economic issues of mutual interest and engage in direct negotiations on trade and investment issues. While the US has expressed its support for the EC's efforts to develop an integrated market, it is concerned that the economic and business opportunities offered by the single market not be offset by the introduction of new trade barriers. The US holds regular meetings with the EC to discuss aspects of the Single Market program and to resolve differences, many concerning agriculture. The "Declaration on US-EC Relations" of November 23, 1990, identifies common goals and principles of the US-EC partnership. It institutionalizes regular consultation and cooperation on economic, scientific, educational, and cultural matters and establishes a framework for regular and intensive consultation. Biannual consultations between the US President and the President of the European Council and the President of the Commission take place every 6 months. The US Secretary of State and the 12 EC Foreign Ministers also meet on a biannual basis to discuss foreign policy issues; ad hoc consultations between the foreign minister of the presidency country or the foreign ministers of the Troika (the current presidency country and its immediate predecessor and successor) and the US Secretary of State are scheduled as necessary. Delegations from the US House of Representatives and the European Parliament meet twice yearly to discuss US-EC relations. Close consultation is further maintained through the US Mission to the European Communities, headed by an ambassador in Brussels, and through the delegation of the European Communities in Washington, DC, headed by the EC ambassador. The US has an important economic relationship with the EC. As a bloc, the EC is America's largest trading partner. Total US-EC trade exceeded $190 billion in both 1990 and 1991. In 1991, US imports from the EC were $86 billion and represented 18% of total US imports. US exports to the EC were $103 billion and represented 24% of total US exports. In 1991, the US trade surplus with the EC rose to $17 billion, up from $6 billion in 1990. EC exports to the United States consist mainly of machinery, precision equipment, iron and steel, and other manufactured products. US exports to the EC include machinery and transportation equipment, agricultural products, chemicals, and mineral fuels. The US and the Community also have significant ties in the area of direct investment. By the end of 1991, the EC had invested $232 billion in the US, while the US had invested $189 billion in the EC. The United States and the Community cooperate closely in several multilateral organizations, including GATT, OECD, and the "Quadrilaterals" (periodic meetings of the EC, US, Japan, and Canada). The US is hopeful that progress will continue in the GATT multilateral trade negotiations and that both sides will succeed in resolving differences on agricultural policies. The Community's CAP has allowed the EC to become self-sufficient in many agricultural commodities and has provided stable incomes to the European farming population. However, through its complicated network of protection, price supports, and subsidies, it has created large surpluses of many agricultural products, displaced some US farm exports, and increased prices to European consumers. The global reform of agricultural policies, including the CAP, remains an important US objective. The need to provide financial and technical aid to the new emerging democracies in Eurasia led to a new phase of cooperation between the Community and the US. Through the G-24 process, the 1992 coordinating conferences on assistance to the former Soviet Union, and the international financial institutions (the International Monetary Fund, the Inter-national Bank for Reconstruction and Development, and the European Bank for Reconstruction and Development), the EC and the US assist those countries committed to achieving democracy and market reform. Diplomatic Representation. The United States maintains close relations with the Community through its mission in Brussels. The US Mission is directed by Ambassador James F. Dobbins and is located at 40 Boulevard du Regent, B-1000, Brussels, Belgium; Tel. 32-2-513-4450; Telex 846-21336. The EC Delegation to the United States is headed by Ambassador Andreas Van Agt. Its Press and Public Affairs Office is located at 2100 M Street, NW, 7th floor, Washington, DC, 20037; Tel. 202-862- 9500. The EC Press and Public Affairs Office in New York City is at Three Dag Hammarskjold Plaza, 245 East 47th Street, New York, NY 10017; Tel. 212-371-3804. FUTURE DEVELOPMENTS Since its foundation as a customs union, the EC's authority and influence have expanded greatly as its role in managing the process of integration has evolved. The possibility of a united Europe, once only an ideal, is now closer to reality than ever before. Spurred by revolutionary political change and the continued success of its efforts to achieve economic and monetary integration, the Community now faces a new agenda, quite different from the challenges it has confronted in the past. Of the measures required to complete the internal market, some of the most complicated issues--such as tax harmonization, border controls, and social policy--have not yet been reviewed by the Council of Ministers, and many have not yet been ratified by member states. Meeting the 1992 deadline and implementing the reforms outlined in the Single Act will test the commitment of EC members to the principle of true integration. Austria, Sweden, Switzerland, Finland, Malta, and Cyprus have applied for EC membership. No decision has been reached on Turkey's long-standing application for EC membership. Possible enlargement of the Community to 16 or more members may require reform of EC institutions, especially the Presidency and the Parliament. The eventual expansion of the Community to include the countries of Central and Eastern Europe and possibly some of the new independent states of the former Soviet Union also must be considered, although no decision is expected before the end of the decade. A major intergovernmental conference scheduled for 1996 will evaluate progress in economic and monetary union and consider greater coordination of foreign policy and security matters. Source: U.S. Department of State, Bureau of Public Affairs, April 1993. </body> </article> </text>