the cheshire cat and the pond: eec and the mediterranean area

THE CHESHIRE CAT AND THE POND: EEC AND THE MEDITERRANEAN AREA

BY JOHN LAMBERT

OF the seventeen countries that border on the Mediterranean (other than France and Italy), the European Community today has agreements in force (or negotiations under weigh) with all except three: Albania, Lybia and Syria. The Community has never been able to agree on, still less carry out, an active Mediterranean policy, and the very varied commitments it has contracted to its fourteen southern neighbours are the fruit of over a decade of compromise and ad hoc negotiation. As a result, and also no doubt because the north European countries that are candidates for membership have less instinctive concern for the Medi- terranean then some at least of the membcr countries, this whole area of policy has passed virtually unnoticed in the debate on the enlargement of the Community. Yet Britain, Denmark, Norway and Ireland, on joining EEC, will automatically share responsibility for this part of the Community’s policy. (Indeed, in formal terms, some of the Six’s Mediterranean associates have to be consulted about the admission of new members.) It is clear, too, that the economic weight of the Community of Ten will be such as to increase its importance for the poorer countries around the shores of the Mediterranean-and the pressure to develop a coherent policy, going beyond the existing piece- meal arrangements, will undoubtedly increase. Compared with the relationship which the enlarged Community could well develop with the Mediterranean area over the next decade, in terms of trade, aid, status of migrants, technical assistance and, finally, political influence, the Six’s present network of trade arrangements is about as material as the Chesire Cat’s smile. And as with the Cat, the tantalizing question remains as to whether the rest of the beast will ever in fact take shape.

The immediate political interest of hs Mediterranean dimension of the Community lies in the fact that very many of the agreements will be coming up for renegotiation within a year or so of enlargement- thus constituting a first test of how the Community of Ten is going to handle its cxternal relations. For students of the integration process and of European politics, the Community’s relations with the area con- stitute an ideal case study of all the problems of an emergent external policy : the limitations imposed by the Treaty, the rivalry between

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Commission and Council, the importance of conflicting national interests or allegiances. For the future, this promises to be an area where the Community may have incentives to test new formulae for policy- making in the years after enlargement, and perhaps before the two major foreign policy issues of its relations with the U.S.A. and the U.S.S.R. come to be ripe for significant developments.

In principle, all the countries along the northern shores of the Medi- terranean, being European countries, qualify for full membership of the Community under the terms of Article 237. In practice, this will remain a dead letter for a long time to come, since their level of develo ment

All Mediterranean countries could apply for association under Article 238-an option specifically left open to Morocco and Tunisia when the Rome Treaty was signed. Greece, Turkey, Algeria, Malta, Cyprus and Portugal have all a proached the Community under Article 238.

tions with the countries of the area is Article I 13 on commercial policy (during the transition period, Article 111 served this purpose). But despite these distinctions, the Community’s relations with all its neighbours are in fact virtually limited to the field of commercial policy. Even the Greek and Turkish assoGiation agreements have so far led to little except a free trading area, with limited amounts of financial aid. Finally, the scope for Community action has been further limited by the fact that oil trade, commercially significant and politically crucial, falls within the field of energy policy and on this score there has been no effective move towards joint action. So it has been with only a frail Treaty basis that the Community has had to face up to the demands of its neighbours. No wonder the Smile has been faint.

But if the Six as a group have concentrated so far on commercial problems, it is also true that the area has become a source of manpower indispensable for the continued functioning and future growth of their economies. And given the Community’s sheer riches, and its status as an advanced technological and industrial unit, it is natural that the poorer countries crowded on its doorstep should look to it for technical assistance and economic aid. Whatever their position on the moral imperatives for granting such assistance, the Six cannot fail to see their interest in social and political stability in the countries concerned-a stability which may be best ensured by a chance to overcome the worst problems of development. Lastly, the Mediterranean is the pond in the Community’s back yard, and to those who traditionally consider it a European sea-and there are two such countries inside the resent EEC, and a third about to join-there cannot fail to be somet R ing at once disturbing and provoking in the sight of the American and Soviet

and in most cases also their political rigimes rule out that so f ution.

Otherwise, the only P egal basis for the Six to act as a unit in their rela-

THE CHESHIRE CAT AND THE POND 39

fleets playing hide-and-seek in it. If the Cat ever took shape, with the full weight of an enlarged Community operating a coherent trade and aid policy and exercising the political influence that would inevitably accompany it, it might come to resent these intruders on its Pond.

That there are some in Washington who perceive this long-term potential has been demonstrated by the United States’jittery sensitivity within GATT over the steady extension of the Six’s preferential relations with Mediterranean area countries. American reactions have clearly not been dictated either by a pious concern for the gospel of the General Agreement (after all, there was once a US.-Canadian treaty on free trade in automobile parts, which GATT had no option but to swallow), nor by any substantial threat to their trading interests: the share of the whole Mediterranean area (minus France and Italy) in total U.S. exports was less than 6 per cent in 1969, its share as a source of U.S. imports just over 3 per cent; equivalent figures for EEC were 16 per cent and 1 3 3 per cent. What is disturbing to the Americans in the short run is the rate of growth: over the 1960-69 decade EEC imports fiom the area rose by an average of 10.9 per cent a year, and exports to the area by 6.9 per cenr p.a.: U.S. exports, by contrast, grew only by a total 12.5 per cent over a six-year period 1963-69. What matters to them in the long run is not the Smile, it’s what the Cat might do.

*So far, however, the Community of Six has been busy enough just responding to advances from its southern neighbours. For it was not equipped to do so rapidly or in any coherent manner. There may have been a few far-sighted individuals on the staff of the European Commis- sion who saw the need to use what the Treaty offered to build up a network of trade relations, in the firm belief that one day that could serve as a foundation for more intense and politically significant link- ups. But it was not the Commission that decided policy, even in the cases where it was specifically charged with the negotiations. Even mere commercial policy is a part of the sacred domain of foreign policy, and the member states were determined to keep their eye on everythmg that happened. The result was a double handicap on the Community’s ability to deal with applicants: on the one hand the Commission had to return at each stage to the Council with a report and seek a new mandate (and negotiate with the Six’s representatives breathing down its neck); on the other, the conflicting economic interests and political preferences of the Six were bound to give rise to stalemates. Thus there have been a whole series of variants on the exact negotiating pattern (and on the ticklish theme of who actually signs the agreement once concluded). And unspoken bargains have tied the progress of one country’s negotiations to equivalent movement in the talks with another.


The Dutch have seen themselves as the gallant opponents of political favours to nondemocratic countries (backed in the case of Spain by those Italian governments which included Sig. Pietro Nenni, who after all did fight in the Civil War); the French, by contrast, have been defenders of the interests both of their former colonies (at least until recently) and of those countries, especially Spain, for which their rulers felt special affinities. The Italians have reacted as a Mediterranean country lucky enough to be inside. When France was turning away &om the door the northern and Nordic countries that were potential con- sumers of Mediterranean produce, the Italians saw no reason to make trading concessions to countries which are their direct competitors in areas where the Italians had hoped to sweep the board within the EEC area. For years the Italians stuck to an oflicial declaration made in the Council of Ministers to the effect that Italy opposed any solution that was not either a full association of a European country under Article 238, leading on to full membership with full obligations, and non-preferential trade agreements. Italian opposition on the principle waned as time went on-just as did Dutch opposition on political grounds to an arrangement with Spain: but in the detailed bargaining the Italians made sure they suffered no substantial disadvantage; and the Dutch made sure the Spaniards could get no better deal, and not move’on to association, without a change of government.

Just to add to the complications, what the countries around the Mediterranean have to offer the Six is essentially the same. With partial exceptions, they are agricultural countries and backward economies, seeking to sell their commodities in order to buy advanced industrial products. With all of its clients watching each other jealously, the Com- munity has had to make sure that the concessions made to one neither harmed the position of another nor guaranteed excessive advantages. Like a careful mother dishing out goodies, it has had to follow the policy of ‘one for each of you, or nothing at all’. Again, this is essentially passive. Acutely aware of the structural orange glut foreseen by the United Nations Food and Agriculture Organization for the eighties, Dr. Mansholt toyed at one time with the idea of an overall Community policy on citrus fruit, to bring the Mediterranean area countries to concert their policies and avoid cut-throat competition and the resultant hardship in the years ahead. But it was a forlorn hope, and would have needed institutions capable of elaborating and following a coherent line. Instead the Six have merely accepted watch-dog clauses in their various agreements-so that the Israelis, for instance, can make sure that Spain gets no unfair advantages for her citrus fruit. Despite all these complexi- ties, the Community has gone on from year to year, gaily at first, more cautiously later, letting its network of relationships develop, never


taking the initiative, but not (with rare exceptions) turning down any of the requests that have flooded in. An outline of die present status of its relations with all these various partners reveals what a subtle mosaic its relations with the area have become.

Greece was among the first come-as soon as it became clear that she would find herself outside not only EEC but also EFTA-and was thc first served. Were it not for the effects of the 1967 corip d’etut, Greccc would indeed now be almost halfway to full membership. What the Grccks obtained, from a Coinmunity whosc desire to prove its opcn- ness outweighed its negotiating caution, was a full association undcr Article 237, with full tariff cutting by the Six, and Greek tariffs towards them down by 60 pcr cent for some products, 20 per cent for others. But they soon found that thc Six were going to turn a deaf ear to any suggestion of bringing theiii in on the coninion farin policy. When the Colonels took over, the association agreement was morc or lcss frozcn. The European Commission, in one of its rare moments of political courage, blocked any further loans from the European Invest- ment Bank. Since 1967 thc Grcek ambassador to the Comniunitics has remained in Brussels, often unashamcdly active, and the Couiicil of association still meets at niinisters’ deputies level. Oficially nothing is doiic to develop the association, but it is maintained. hi practicc, thc Six went on extending their tariff cutting to the Greeks. In 1970 tlic European Commission, reviewing the situation, opted for the niain- tenance of the stutris qrio rather than the suspension or denunciation of thc association which was bcing recoinmended by some as a rcsponse to tlic continuing failure to restore dcmocracy. Such a inove reniains unlikely -though the enlargenicnt of the Coinniunity could furnish an occasion for calling the association in question.

Turkey, also an early applicant, found the Six already rcndcrcd more cautious by thcir expericnce with tlic Greek negotiators. Although she too obtained full association undcr Article 238, to takc cffcct two ycars after the Grcek om, on Dcccniber I , 1964, she was given a ‘prcparatory’ period of five years (which could be extended to nine) bcforc tlic tran- sitional pcriod (which wasalso 12-22 ycars, as for the Grccks), arid coultl thcn go on to full mcinbership. During this first pcriod, which will in fact have lasted just ovcr six ycars, Turkey cnjoycd tradc prcferciicc on thc Coiiiiiiiinity markct for hcr main exports to the arca : tobacco, raisins, dried figs, stone fruits, quality wines, fish and seafood, and cer- tain tcxtilcs. An agrccmcnt signed in Novciiibcr 1970, which caiiic into cffcct aftcr ratification, in July 1971, initiated the sccond phase. Tlic gradual tariff- cutting will last bctwecii 12 and ‘ 2 ycars according to tlic products conccrncd. This tinic tlic Six liavc avoided all niisuiidcr- stailding by ruling out frcc iiiovcinciit of agricultural producc until

4 JOURNAL OP COMMON MARKET STUDIES

after the 22 years, though there will be ad hoc preferentiaI treatment in the meantime. Turkey will get a further $195 m in investment aid over 5 years, in addition to the $175 m given during the first phase, and the chance of $25 m worth of loans Gom the European Investment Bank.

Morocco and Tunisia waited some time after independence before taking up their option on an association with the whole Community to replace their former preferred status uis-rf-uis France. A full and far- reaching association did not fall within the bounds of practicality, both because of Italian sensitivity and because of the pattern of their economies. Out of li -service to the GATT’s Article XXIV, which requires

ment leading to full free trade, the five-year arrangement which took effect for both countries on September I, 1969, is known as the first stage of an association. Renegotiation is in fact due to start in September 1972. The basic pattern of the two agreements is that the Community grants free entry for industrial goods (save some sensitive ones), and cuts of 50 per cent, 80 per cent or 100 per cent in protection on some farm products. Morocco and Tunisia grant limited tariff and quota advantages.

Algeria, then part of France, was not covered by the offer of association to the two other countries. After independence a complex and unsatisfactory situation resulted where Algeria was treated as part of EEC by France and as a non-member country by others of the Six. Negotiations have been going on since shortly after the other two North African countries approached the Six, but have been held up by suc- ccssive Franco-Algerian quarrels. Algeria feels that the agreement offered the other two would not be acceptable to her as a potential industrial country. She also has an acute interest in what the Com- munity decides in the area of energy policy.

Three other countries have so far approached the Community for an association under the terms of Article 238. Malta, which would have obtained a rather special status as part of the Community if the British negotiations of 1961-63 had succeeded, made an independent application, after the 1967 rebuff to Britain, which led to the conclusion of an Association which took effect on April I, 1971 for five years. It covers trade advantages in areas of particular interest to the island. Cyprus made a similar request, but was asked by the Six to await the outcome of the British negotiations; and in July 1971 the Commission sought a mandate from the Council of Ministers to start negotiations. Lastly Portugal formally evoked Article 23 8 when approaching the Community at the same time as the other EFTA countries, but can certainly not obtain a more favourable settlement than Spain.

Although Spain, too, would have liked an association-and the

any preferentia P tariff cutting to be within the Gamework of an agree-


French pushed for t h i s under de Gaulle-the only basis for a compromise giving her any relationship at all was Article 113 of the Treaty. The preferential trade agreement which took effect finally on October I, 1970 was concluded for ‘at least six years’. A clause stating simply that a move to a second stage requires the agreement of both parties covers the Dutch refusal to envisage any further development without a shift to a democratic regime in Spain. But the real scope of the agreement is considerable: the Community’s tariff cuts will reach 60 to 70 per cent after six years, while Spain will cut tariffs on industrial oods

lists. Agricultural concessions were negotiated product by product. Relations with Spain were always linked, by an unspoken political

deal between the Six, with the terms to be granted to Israel. Israel has been particularly ersistent in her search for a close and beneficial relationship with i e Community. To the pull of cultural ties must be added the considerable dependence of the Israel economy on s ecialised

of an association as early as 1969, but was requested to moderate its enthusiasm. The Community then accepted negotiations for a non- discriminatory trade agreement, but this took place on the eve of the Kennedy Round, and for very many Israeli exports another country, often the U.S.A., was the Community’s princi a1 supplier, with which

subheadings finally included in the agreement was such that it had virtually no effect on Israeli trade-as the Six confirmed when they maintained the concessions unilaterally without negotiation after the expiry of the agreement three years later. Meanwhile Israel had again sought an association, and again been persuaded to negotiate for some- dung less: a preferential agreement. This took effect on October I, 1970, the same day as the Spanish one. The Community is cutting industrial tariffs, again with a few sensitive products excluded, by 50 per cent over 4 years, and reducing tariffs on Israel’s main agricultural exports (citrus fiuits, grapefruits, spices, etc.) by 30 per cent or 40 per cent. Israel’s cuts range from 10 to 40 per cent for four lists of industrial and agricultural products. Altogether the agreement covers 80 per cent of trade on the basis of 1968 figures. There is a specific reference to the scope for renewal on a broader basis.

In the subtle chain reaction which marks the Community’s Mediter- ranean relationships, the Israeli agreement (itself already bargained against the Spanish deal) could not be concluded without a commit- ment by the Council of Ministers to start negotiations with the United Arab Republic and with Lebanon for a similar preferential trade agreement. Thcse talks began in 1970 and were continuing in early 1971.

from the Six by 25, 30, 60 or 70 per cent for goods on four se f ected

export to the advanced economies. Israel originally launche dp the idea

concessions could be traded in the multilatera P talks. The list of tariff


Lebanon had in fact had an earlier agreement with the Six, at about the same time as the first Israeli agreement, covering not trade but technical assistance. The Six had agreed to coordinate their technical assistance to make it more effective. This largely abortive agreement was evidence that the Community was not in a position to venture into the technical assistance field. Once the Egyptian and Lebanese agreements are concluded, it would be open to Syria to seek a similar settlement, but no approach has so far been made.

The other Arab country that has not solicited the Six is Libya- although Italy had originally obtained the same offer of association that France had written in in 1968 for Morocco and Tunisia. Her oil-based riches, and lack of trade with the Six, have not made a settlement seem necessary. Only a deal with Algeria that included oil might incite Libya to want a simiIar arrangement.

Finally, on the northern shores of the pond, there remain Gibraltar (which as a dependent territory will be covered in the terms of British membership), Yugoslavia and Albania. Albania has not so far approached the Six, although it was included in the terms of Council decisions in 1970 and 1971 on commercial policy towards eastern Europe. Yugo- slavia, while showing marked reserve about the whole concept of regional economic integration, and at no time envisaging an association, which would be seen as a limitation upon her independent status between East and West, has sought to come to terms with the Com- munity where its development threatened to have adverse effects on Yugoslav trade. All member countries reacted positively, and unofficial trade talks with the Commission, mainly about the evolution of trade, led to a mandate for official negotiations on a non-preferential trade agreement, which took effect on May I, 1970 for a three-year period.

It is worth emphasizing that all of these agreements have been negotiated, on behalfofthe Community, by the European Commission, acting on each occasion under a mandate from the Council of Ministers. The Commission has become accustomed to the double negotiation : the one between the Six around the exact terms of its mandate at each stage-or about the timing of the mandate-and the one with the candidate for association or for a trade agreement. Compared with any national foreign ministry the Commission has affronted its task throughout with phenomenally small resources in terms of staff, less people working on relations with the whole area than would be covering relations with any one country in the foreign ministry of a large country. There has never been a single administrative unit with responsibility for policy towards the whole of the Mediterranean area; from 1967 to 1970 it actually fell under two separategeneral directorates responsible to different members of the Commission (external relations

I


and trade policy), and even after the merger there remained an overlap in the case of Portugal.

It is clear that a Commission with a clear, long-term policy, acting according to pre-established economic goals and political criteria, would have very wide scope for establishing a greater degree of cohcrence in the mandates given by the Cowicil, and in the terms finally negotiatcd. This potential, deriving from the pattern laid down in the Roinc Trcaty and practised since then, is important for tlie futurc.

What emerges from this survey is that thc Six havc ciigagcd the Conimunity to a considerable extcnt on the way towards a free trading area, at lcast on industrial goods, with Spaiii (though there is a security clause about further development), Morocco, Tunisia and Isracl-with thc iiiiplicit promise of similar terms for Egypt. Secondly, they havc establishcd, as a result of their pieceiiical approach, ciiibryonic institti- tioiis in the framework of their agreenicnts with Greccc, Turkcy, Morocco, Tunisia and Malta: in each case a Council of Associatioii a t ministerial levcl meeting at least once a ycar, aiid a coiiiiiiittcc inccting iiiore frcqucntly. Negotiations on rcncwal of all tlic existing agrcciiiciits (cxccyt tlie ones with Grcecc and Turkcy) arc due to start in 1973, 1973 or 1974, At tlic very least, there can be expcctcd to be a gradual, cautious development, still limited to commercial rclatioiis.

Yct this ncw roundof talks, committing tlie Community (in all proba- bility the ciilargcd Community) through luitil thc latc I ~ ~ O S , could still furnish the occasion for building up a iiiorc cohcrciit and far- reaching approach to tlic area. Certainly tlic Commuiiity of Tcn would bc rich and powerful cnough to niakc mcaiiiiigfiil ofkrs of aid and tcchnical assistaiicc. It has a political rcsponsibility to niakc tlic first niovc to extend to workcrs froin all the couii trics of tlic Mcditcrrancan arca who are contributing to its yrospcrity tlic sanic guaraiitccs that it offcrs Coiiiiiiunity nationals. What is pcrliaps iiiorc doiibtful is wlicthcr tlic vision of such a gcncrous Mcditcrralicnii scttlcmcnt will be fortli- coming. It sliould by rights cnianatc froiii tlic Euroycan Conimission, aiid tlic iiiciiibcr with rcsyoiisibility for policy towards tlic arca, Rolf Dahrciidorf, is midoubtcdly aware of tlic scalc of tlic problcni : but lic sccs tlic scope for his initiative as liinitcd by what tlic ~ovcrniiiciits will acccpt. Evcii supposing hc wcrc to conic forward with far-rcadiiiig proposals, above all olics that covcrcd tho arca as a wholc, to crid the country-by-comitry haggling, it is uncertain whetlicr tlic Community is cqtiippcd iiistitutionally to carry tliciii through. To do so it would liavc to givc a 61r-rcncliitig maiidatc to tlic Europcm Coiiimisstcrii. Nor is it ~ c ~ . t a i i i tli.it tlic countries coiiccriicd would takc kindly to bciiy dcalt with 3 s a group, pcrliaps &cling thcir owii iiitcrcsts arc bcst scrvcd in oiic to oiic talks with thc Corii1i1~11iity-tl1oug1i it iiitist bc rccogniscd

D


that they are the weaker partner, and the bargaining of clashing interests between the Six tends to work to their disadvantage.

Yet another question mark and potential obstacle would concern the political rCgimes of the countries concerned. There have been hints that France has not entirely abandoned de Gaulle’s dream of having Spain admitted as a member-especially since France has given way over Britain. One at least of the new members-Norway under its Labour government-and perhaps others, will be even less keen than the Dutch to see the Community of which they are members linked closely with the countries of the Fascist periphery. There could indeed be a skirmish on this issue, if not an all-out clash, even before Britain joins. In becoming members, the four candidate countries will be taking up the same relationship as the Six to its present associates-including Greece. But since the association Treaty with Greece specifically covers the present Six countries, there would be scope for a stand on the part of some or all of the candidates, refusing to be arty to the Association (or

was concluded when Greece was a democracy, and that neither they nor the six would conclude it today. A second unavoidable problem con- cerns Portugal. The other candidates (except Ireland) are handicapped by the anomaly that Portugal has been accepted as a partner in EFTA, despite her dictatorial regime at home and the atrocities of her colonial war against the. peo le of her ‘territories’ in Africa. Possible opponents

there would be scope for a tough line towards the Portuguese, at least through diplomatic channels, to make clear that a link-up with the enlarged Community is not a sign of support for the regime, or for its colonial warfare. That there is a third element weakening this case, in practical support for the war from the Federal Republic and other NATO allies, should not deter opponents.

So the way to a real Community policy towards the Mediterranean area is not an easy or an obvious one. It is a headache of a scale to match the potential of the enlarged Community. For the migrants from the Mediterranean countries, for the peoples in them who depend on outside aid and technical assistance for their future development, a lot will depend on whether the present diffident, well-meaning but reticent Smile ever turns into a Cat with the ability to help them and the goodwill to do so.

else making it a condition that it be suspen B ed), on the grounds that it

inside the Six have a 7 so sold the pass with the agreement with Spain. Yet

the cheshire cat and the pond: eec and the mediterranean area

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