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Groeben, Hans

Article — Digitized Version The EEC is now a Union

Intereconomics

Suggested Citation: Groeben, Hans (1968) : The EEC is now a Customs Union, Intereconomics, ISSN 0020-5346, Verlag Weltarchiv, Hamburg, Vol. 03, Iss. 8, pp. 226-229, http://dx.doi.org/10.1007/BF02930556

This Version is available at: http://hdl.handle.net/10419/137998

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The EEC Is Now a Customs Union

Interview with Hans yon der Groeben, Member of the Commission of the in Brussels

The Customs Union among the member states of the European Economic Community has come into force on July 1, 1968. Its main effect has been the eradication of the ultimate 15 per cent that had remained of the original internal rates of on industrial products between member states and the complete application of the joint of the Community to industrial coming from outside the area. Farm produce, which is not subject to import duty but to "Absch~pfungen" (levies) will in future be governed by a unified system of import control. Recently, it has not always been a true com- munity spirit that ruled the fate of the EEC because, in many countries, national selfish- ness seems to recover ground. This renders more indispensable than ever for the Com- munity a successful completion of the Customs Union, which is thought to be the first big step towards closer political cooperation in Europe.

QUESTION: Herr vonder Groe- months later, which means that it of a tariff system, has led to ben, in contrast to the predictions has become a reality more rapid- vigorous growth of business. We of some pessimists, the European ly than foreseen. Admittedly, we expect that all Common Market Customs Union has become oper- met with obstacles occasionally countries wilt obey the decision ative on July 1, 1968. Which were in such countries as France and of the Council of Ministers and the main difficulties that had ham- Italy, where people had been used dismantle all internal tariffs, whilst pered the carrying out of this de- to relatively high tariff protection, at the same time adopting the com- sign? but such difficulties referred only mon unified external tariff. Even France has declared its willingness ANSWER: Strictly speaking, the to individual branches of produc- to do so, and we hope that our path towards the Customs Union tion. But broadly speaking, all French partner will be able to do was not strewn with major difficul- member countries have been able away with the remaining tariff ties. As you know, we had original- to observe that free barriers and to put into practice ly planned to bring the customs within the Community, free espe- the tariff adjustments. union into being at a date eighteen cially from the distorting effects Agrarian Market Regulations: Subject of Heated Disputes HANS VON DER GROEBEN QUESTION: We all hear nego- was born in East Prussia in i907. Now a member of the Commis- tiating common market regulations sion of the European Communities, he contributed to the drafting and concluding these talks on of the fundamental treaty of the EEC. In the Commission, which May 29, 1968, were supposed to he entered in 1958, he was in charge of the policy for the - be the last step before the Six ing of competition within the EEC. He played a decisive part in entered the Customs Union. What the carrying-out of the EEC's principles for the marketing policy. connection is there, in your view, between agrarian market regula- In the present-day Commission yon der Groeben's many respon- tions and the Customs Union? sibilities are in the field of unifying the national law, harmonis- ing the systems, of securing the liberty of domicile for citizens ANSWER: There is indeed a link and companies within the EEC area, and of regional policy. His between agrarian market regula- was the initiative towards a common added-value-tax. He is also tions and the tariff system for in- responsible for the spadework in laying down the statute for a dustrial goods. There is not one European Company Law, among the member countries where there is a completely free and

226 INTERECONOMICS,No. 8, 1968 competitive market for farm prod- fixed by our Ministers of Agri- tional frontiers but a whole series uce. All of them operate systems culture have put a premium on of taxation laws, currency regula- of state control. For this reason, certain production, especially on tions, and the differences in tech- it would not have been sufficient all dairy products and animal and nical definitions and procedures. to dismantle all tariffs and other vegetable fats. Some critics of our A market in which goods are obstacles, but it was neces- farm price controls demand price completely free to circulate will sary, in addition, to set up unified cuts in order to eradicate all in- not come into being before the market controls for the major prod- centives for increased production. frontiers between different systems ucts of the Common Market area. On the other hand, influential and rates of taxation and other Because of the considerable dif- voices are raised, among them trade obstacles have all been done ferences between individual EEC that of my colleague, Sikko Mans- away with and member states give members both in the fields of farm holt, against using interference up customs inspections. In order and of industrial production, there with the price mechanism as the to reach these targets, a big po- have not only been close economic only instrument of controlling farm litical effort will still he required, but also political links between output. They advocate an overall which will have to be sustained setting up unified controls of farm structural and regional treatment over a number of years. produce markets and building a of European farming. I believe QUESTION: As taxation will re- customs union. Some of our mem- that it will be necessary to think main different in different coun- ber states were more keenly in- over afresh all the questions that tries, do you not think it conceiv- terested in obtaining access to wide- are in any way connected with able that by taxation open markets for their farm prod- these problems, and to find so- might replace national protective uce, in others the salient interest lutions, so that our farmers will tariffs? was focussed on dismantling im- be enabled to adjust themselves port duties levied on industrial gradually, and not hastily, to liv- ANSWER: No, I do not believe products. And this was the reason ing in our Common Market, whilst that, for it would be rather diffi- why the ultimate step which we at the same time not forming a cult to use taxation for protec- were able to do in the agricultural burden preventing industrial pro- tionist purposes on a very broad sector was an indispensable prior gress to higher productivity. front. Moreover, I do not believe condition for overthrowing the last that any member state of the Com- remnants of protective internal Not Yet a "Home Market" munity is aiming at such protec- tariffs in the field of industry. tionist policies under the guise of QUESTION: Everybody seems to Politically speaking, it may there- national taxation. There remains, talk about a completion of the fore be stated that the last ob- of course, the question whether Customs Union. Is it a fact, or is stacle on our march towards a member states are able fully to it not, that now there are no longer customs union was overcome on any import duties to be paid? resist the temptation to grant tax May 29. preferences to individual branches ANSWER: Apart from a few of industry. Such measures are al- QUESTION: Do you personally agricultural products, for which no ways feasible, and it will never believe that agricultural market market control system has yet been be possible to prevent them com- controls as they have now been worked out, there is indeed a com- pletely. What matters is rather to introduced represent a final and plete customs union in force. On keep such preferential taxation genuine solution to your problems, the other hand, completely free within strict limits, so that this or do you think that they will movements of goods will only be could not falsify competition be- have to be reviewed and adjusted guaranteed after certain rules and tween the industries of member at a later date? regulations of tariff law, and def- states. Limited differences in tax- ANSWER: Agricultural market initions of dutiable value, are ation between member countries controls have just now become the harmonised. We cherish hopes that will even be acceptable under subject of fierce debates in all are not unfounded, of being able the Common Market. It will be member countries. Farmers de- to arrive at such harmonisation. the Commission's responsibility to nounce them as too weak, whilst The Council of Ministers has al- prevent such differences from op- people actively interested in for- ready adopted a number of new erating to the disadvantage of in- eign trade charge them with be- decrees, and after national legis- dividual national industries or of ing far too protectionist, and con- lation in the member countries has entire regions. sumers in general are always in- incorporated them--a process that clined to accept price reductions may take another few months-- European Industries are Competitive the customs union will be com- as a matter of course, whereas they QUESTION: Setting up a cus- will always blame the Common pletely in force. toms union does not only mean Market for any price increase. In But even this will not mean that the suppression of all internal tariffs addition, there have already been Common Market area will already but also the introduction of a com- growing difficulties through over- be an enlarged home market, since mon external tariff. The alterations production of individual branches it is not only tariffs which hamper in the rates of duty will be dif- of agriculture, because the prices the movement of goods across ha- lerent from one member country

INTERECONOMICS, No. 8, 1968 227 to another. Do you expect these arithmetic mean between all the clined to preferring a different type differences in the size of adjust- rates of duty actually charged, not of explanation: that crop raising ments to affect adversely certain between those laid down ~heoreti- and animal husbandry carried on industries of member countries? cally on paper. From the time of in the context of a highly indus- creating the European Common trialised economy will evolve to ANSWER: Countries that were Market, these external rates of very high levels of productivity used to a relatively high degree duty have been twice reduced-- and thus be able to repel compet- of tariff protection will of course once through the Dillon Round, ing imports. This situation will not feel it to be more difficult to intro- with an average reduction of 7 to change before underdeveloped duce the , 8 per cent, and the second time countries which themselves need because the necessary tariff cuts in the Kennedy Round, which re- large quantities of farm produce will be larger in their cases against sulted in an average cut of between gain the capacity to buy more, those of other countries. In ad- 35 and 40 per cent. These are the which means not before their in- dition to the adoption of the com- true facts--and they do not spell ternal economies grow more vig- mon external tariff, we intend to protectionism. It is, of course, cor- orous and self-reliant. go through the first two stages rect that third-party countries are of the Kennedy Round, which also not quite as favourably placed in France Is Able provide for cuts to our tariffs. The trade with the members of the to Maintain Stability possibility of certain difficulties customs union as these members arising from such a big single drop QUESTION: Do you believe that one against another. But it is just the state of economic and political in external duty rates cannot be this which causes rapid progress completely excluded. In some coun- instability from which France is of trade within the Common Mar- tries, industries may be exposed now suffering may endanger the ket, and this effect will be multi- Customs Union and the progress to competition even more strongly plied within the Customs Union. than up to now. But I do not see made towards integration in the However, we are also justified in a dangerous risk in all this. Eor EEC? underlining the fact, with proud ten years, we have been prepar- satisfaction, that trade with third- ANSWER: I am of the opinion ing for such a situation, and by party countries likewise develop- that a project of such difficulty--- and large, European industry has ed in an extremely favourable way to integrate six member states eco- shown great competitive strength. over the same period. There is no nomically and politically, and Inter, Naturally, this does not mean that question of having barred any it is to be hoped, also the United there will never be any difficulties d,oor. On the contrary, the Customs Kingdom and other applicants for of adjustment in some branches of Union has had an enormous pro- membership--requires as an in- industry, nor in some districts or motion effect on . dispensable qualification a certain regions. But the necessary adjust- And this is even true of most farm measure of stability. The tasks ment ought not to be postponed-- produce. which we have set ourselves are which would be the case should completely new, and they could high tariff protection be maintain- QUESTION: And you really do not be tackled without a certain ed. It should rather be facilitated not believe that the high import measure of continuity and stability by foresight, special assistance duties and equalisation payments in the economic and political de- through credits, through aiding a charged on imports of farm prod- velopment of all the states taking change of economic structure, and ucts of third-party countries will part in this great experiment. The through financing and helping in not have a considerable effect of Commission, as it has recently the redeployment of redundant repelling imports? stated again, holds the view that labour. Prance owns the economic and cur- ANSWER: I incline to the view rency basis in order to be able that this effect, of which the Cus- No Doors Have Been Locked to maintain future stability and to toms Union is accused, is hardly QUESTION: Is it not possible play its full part in the Common due to the strength of agricultural that the common external tariff Market. protection, though it is true that may strengthen the effect of which equalisation payments, as a system, it has been accused, namely to QUESTION : What comment have have the effect of variable import bar the entry of certain goods even you, if any, in regard to specula- duties and thereby do exclude more tightly, and thus provoke tions that one ought to use the certain imports more effectively measures of retaliation from third- currently weak French position in than fixed rates of duty. But a far party countries? order to press the French for con- more effective force of protection cessions, e.g. regarding further po- ANSWER: No, I do not believe is based on the relatively favour- litical integration of Europe, or the in such effects. The charge that able growth of farm production admission of new members to the has often been levelled against within the Common Market area. EEC? the external tariff of the EEC of Naturally, there is the assertion being highly protectionist has no that this has only been due to ANSWER: I do not think it com- basis in fact. The very strong protection surrounding patible with the spirit and purpose provides for the adoption of the the European farms, but I am in- of our Community to exploit the

228 INTERECONOMICS, No. 8, 1968 difficulties of individual member Secondly, during the further combining all these proposals in states. On the contrary, what is evolution of the Common Market, an effective economic programme, needed in such situations is soli- national currency policies, so I be- and for pressing the Council of darity. It is naturally clear that lieve, must be more closely co- Ministers for a decision that these strengthening the Common Market ordinated. What is above all in- measures are to be introduced till it becomes a fully integrated dispensable is the setting-up of a within a given period. economic and is a European capital market, which problem which is inseparably ought to be achieved as quickly The Community bound up with political questions. as possible, in order to enable na- Must Be Speedily DemocraUsed But solidarity ought not only to tional industries to cooperate across QUESTION: The consist of assistance now but also national frontiers and to provide towards which you are now setting of joint work, voluntarily under- them with sufficient finance for your course marks an important taken and not under pressure, for this purpose. step towards a future . Have you any idea about the future evolution of the EEC. Lastly, I think it inevitable that the shape and forms of such a I am fully convinced that economic we must come to a common policy political union? and political solidarity within the on economic structures and region- Community will be of advantage al development, even though this ANSWER: I believe that, by pres- to every single member state and may begin only with coordination sing on towards transforming the could make a contribution to- along the grand lines of action, Common Market into an economic wards overcoming their individual leaving the hammering out of de- and currency union, we are act- difficulties. tailed guidelines to a later date. ing in a highly political way. But we must be clear that such polit- More Common Policies are Required Measures Towards ical progress will not be possible QUESTION: Do you believe that an Effective Programme unless the Community is at the completing the Customs Union may QUESTION: Have you already same time being democratised to bring forth more joint actions and elaborated a list of priorities which a certain degree. The main prob- will push into the background con- are to be observed on your way lem is how to obtain democratic frontations of opposing national towards a complete economic cooperation in the legislative pro- interests? union? cesses of the Community, e.g. as a first step, when drafting and ANSWER: In order to promote ANSWER: We have already sub- voting the budget. If we run our further developments of the Com- mitted a number of proposals to economic and trade policies pro- mon Market, stronger orientation the Council of Ministers. Among gressively as a community task, towards common interests will he them are proposals for transform- we must not blind ourselves to the indispensable. We cannot mark ing the Common Market into a fact that this will inevitably also time and leave it at that, that we true home market, for abolishing mean increased consultation on have now a customs union and a fronti.ers between national taxation foreign and defence policies, in farm market union. The Common systems, for harmonising indirect order to act in closer agreement. Market is a constantly evolving taxation and technical definitions I do not believe that you can make process, whose aim is a complete for fiscal purposes, and for ad- a clear cut between economic pol- economic and currency union. To justing food control rules and reg- icies and policies in general, be- reach this target, we need more ulations, and veterinary precau- cause there is an inseparable con- and not fewer common policies, tions. All these measures are re- nection between all the important and in the main, these should deal quired for doing away with fron- questions. The results of all our with three bundles of problems. tiers and lifting all frontier con- work, to date, have only laid the trols. Firstly, in the framework of first foundations for a more com- general economic and cyclical pol- In the second instance, the Com- prehensive political community. icies, we must provide for over- mission has laid before the Min- Over and above that, I believe all demand in the member states isters of Finance a number of def- it to be imperative that we tell being in equilibrium with the pro- inite suggestions for a common the general public and especially duction potential. Such overall, currency regime, which more or the younger generation that we macro-economic management is no less follow the ideas publicly are in the Common Market not longer possible on a national basis presented at several occasions by only for pure economic gain, for only, since the national economies the Prime Minister of Luxembourg, what we can get out of it material- of EEC member states have be- Herr Werner. During the next few ly, but that it will help us to come so closely interdependent. weeks, we intend also to bring out solve vast political problems. The Economic events in any one of new proposals about the taxation Community could play a big part the member states will cause de- of the capital market and about in the relationship between East velopments in the other member simplification of fiscal treatment and West, and any European se- states as well, and also the eco- in cases of multi-national coopera- curity system could not dispense nomic policies of these six states tion of companies. I am of the with a large and unified economic influence one another strongly. opinion that the time has come for potential.

INTERECONOMICS, No. 8, 1968 229