Journal of European Integration History – Revue d'histoire de l'

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18Wolfram Kaiserularly in Scandinavia. It accelerated the decision in favour of EFTA. 46 Once Britain,Sweden and Norway were agreed on the principle aim of a small FTA, theDanish government had little choice but to adhere to this group. Speaking to Macmillan,the Danish Prime Minister Hans Christian Hansen emphasized his fear thatthe creation of EFTA might actually lead to a trade war between the two blocsinstead of facilitating a wider settlement. 47 However, as the Danish Foreign MinisterJens Otto Krag explained to German ministers in Bonn in June 1959, even if theSocial Democrat leadership in Denmark were to decide in favour of joining theEEC, they could not hope to get the necessary five-sixths majority in the Folketing,which was constitutionally required for the delegation of sovereignty. At the sametime, remaining outside both blocs would be quite impossible. 48 The government inVienna also saw no real alternative to EFTA membership despite growing doubts –especially of the reformers in the ruling Christian Democrat ÖVP and of manyindustrialists – as to the economic rationale of Austrian participation in a smallFTA. 49 As early as the summer of 1958 the Austrian government had reached theconclusion that if Switzerland was to participate in a small FTA, Austria wouldhave to follow suit, because it had agreed three years previously to follow the Swissexample in its neutrality policy. According to the dominant Swiss interpretation,their neutrality excluded the possibility of membership in a customs union. 50IIWith the creation of EFTA the outer Seven proved that an industrial free trade areawas technically feasible and could operate in a loose institutional framework.Moreover, the gradual reduction and eventual abolition of internal tariffs in EFTAdid lead to increased trade. 51 During 1959-69, EFTA's trade with the EEC grew by130 per cent, while intra-EFTA trade grew by 186 per cent. EFTA's greatest economicsuccess was arguably to foster the economic ties between Sweden, Norwayand Denmark, as intra-Scandinavian trade rose by 284 per cent during the same46. See also the report of the Stockholm conference of the outer Seven in von Stechow (Copenhagen)to Auswärtiges Amt: Politisches Archiv des Auswärtigen Amtes (PA AA) 353/Ref. 200-I A2 (25March 1959).47. PRO PREM 11/2642 (12 June 1959).48. Aufzeichnung Emmel: Bundesarchiv Koblenz (BA) B 136/1298 (26 June 1959).49. On the changing attitudes to European integration of the reformers in the ÖVP see H. SCHNEIDER,Alleingang nach Brüssel. Österreichs EG-Politik, Bonn 1990, pp.61-4.50. For an overview of Austrian European policy after 1945 see also M. GEHLER, “Zwischen Neutralitätund Europäischer Union. Österreich und die Einigungsbestrebungen in Westeuropa 1955-1994”, in: Geschichte in Wissenschaft und Unterricht 45/7 (1994), pp.413-33 and the contributionsto M. GEHLER and R. STEININGER, Österreich und die europäische Integration 1945-1993, Vienna-Cologne-Weimar1993.51. The trade effects of integration are analysed from an EFTA perspective in EFTA, Die Auswirkungender EFTA und der EWG auf den Handel 1959-1967, Geneva 1972.
Challenge to the Community 19period. 52 At least as long as EFTA's aims – in contrast to the EEC – remainedessentially limited to trade liberalisation and bridge-building, its weak intergovernmentalinstitutional structure did not reduce its effectiveness in challenging theEEC over the trade conflict in Western Europe after de Gaulle's veto against anOEEC-wide FTA. Instead, EFTA's four main weaknesses – as the internal debatesover tariff acceleration and possible EEC membership or association showed in1960-1 – were its low degree of economic cohesion, its lack of political consensuson the best approach to the EEC, Britain's weak economic and political leadership,and the opposition of the United States to a trade settlement between the two blocs.In addition to its overall lack of geographical coherence, two factors chieflyaccounted for EFTA's low degree of economic cohesion. The first was the inclusionof two peripheral states with a very weak industrial base, Portugal and Finland.Unlike in the comparable case of Greece and the EEC, Portugal became a memberof EFTA straight away and thus participated fully in the decision-making process.Finland became an associate member only, to avoid antagonizing the Soviet Union,but de facto participated fully in EFTA deliberations. 53 Both states required substantialderogations and transitional periods and thus complicated EFTA business,especially over the thorny issue of tariff acceleration. Scandinavian pressure largelyaccounted for the favourable association conditions of Finland, which was heavilydependent on its timber exports to the EFTA states, especially to Britain. 54 Finnishagreement to grant imports from the Soviet Union EFTA treatment on a mostfavoured-nationbasis had temporarily called into question whether the British, whostrongly believed that under GATT rules the EFTA obligations would supersedeany bilateral Finnish obligations vis-à-vis the Soviets, would sign the associationtreaty. However, the Swedish Trade Minister, Gunnar Lange, insisted in a meetingwith Edward Heath, the Lord Privy Seal with responsibility for European Affairs,in Stockholm in December 1960 that while “the Finns had been ill-advised in theirtactics with the Russians and (...) had misled all their friends in EFTA”, it wasnonetheless crucial to allow them “to retain one foot in the Western camp”. 55The second factor in EFTA's low degree of economic cohesion was that theEFTA Treaty was widely regarded as an uneven agreement that gave greater advantagesto the industrial export nations and did not provide for sufficient compensationsin agriculture and fish. Norway and Denmark had been content in 1959 withBritain's concessions. On this basis, they had agreed on the initial timetable for the52. A. IVEROTH, “Die kommerzielle Bedeutung der EFTA”, in: EFTA Bulletin 11/4 (1970), pp.12-19(18).53. On Finnish neutrality and European policy see T. MUOSER, Finnlands Neutralität und die europäischeWirtschaftsintegration, Baden-Baden 1986.54. Of Finland's exports in 1958-9, 30.3 per cent went to EFTA states, 26.8 per cent to the EEC and 24.9per cent to Eastern Europe, mainly to the Soviet Union. Cf. Overbeck (Helsinki) to AuswärtigesAmt: PA AA 354/Ref. 200-I A2 (3 November 1959).55. Talks Heath-Lange: PRO PREM 11/4535 (1 December 1960). For British policy on Finland's EFTAassociation see also Bishop to Macmillan: PRO PREM 11/4535 (22 March 1961) and W. KAISER,“Neutral, nicht neutral, auch egal: Großbritannien, die Neutralen und die europäische Integration1945-72”, in: GEHLER and STEININGER, Die Neutralen (forthcoming).
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