Case Studies in European Economic Union: The Mechanics of Integration

Case Studies in European Economic Union: The Mechanics of Integration

Case Studies in European Economic Union: The Mechanics of Integration

Case Studies in European Economic Union: The Mechanics of Integration

Excerpt

This volume contains studies of three European economic unions, each of which has been in actual operation for a sufficiently long period of time for its practical working to be observed in some detail. The examination of the actual working of these unions has, however, been limited in an important manner. Our purpose has not been to assess the impact of these economic unions upon the standard of living, the rate of economic growth, or other aspects of the economic welfare of the populations included within, or of those left outside, these unions. In other words it has not been our object to consider whether each union is a desirable or an undesirable institution from the economic point of view. Our object has been the more limited one of considering the economic problems of -- as it were -- a mechanical nature which have faced the builders of these three unions. What economic arrangements must be made in an economic union in order to make it work efficiently?

In order to construct a co-ordinated and efficient system of economic institutions, it is often impossible to decide what economic policy to adopt in one part of an economic system without taking into account what is being done in other fields of economic policy. This truth is very relevant in the building of an economic union. To start with a very obvious example, the removal of commercial-policy barriers to trade (i.e. the removal of tariffs, import quotas, &c.) may remain quite ineffective if foreign-exchange restrictions on payments for imports are maintained. Many more examples could be given. If it is desired to remove customs controls over imports and exports between two countries, can different rates of domestic excise duties be simultaneously maintained? If, on the other hand, a single 'supranational' control is instituted over customs and excise duties, how much freedom is left to the national governments of the members of a union to exercise independent budgetary policies, and what is the implication of this for their other domestic policies? Or, to take another example, in the case of bulky commodities like coal, iron ore, and steel, can a true common market be built without regulating transport charges for the international movement of these products? And if transport charges for the international movement of these products are regulated by the union, is the union thereby driven to regulate transport charges for the move-

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