EFTA’s ambitions and its structures were simpler from the start than those adopted by the EEC. It was essentially designed to ‘build a bridge’ to the EEC, thereby obtaining through bilateral negotiations en bloc what the previous multilateral negotiations had failed to deliver. The differences can be summarized as follows:
* The EEC wanted a customs union, EFTA did not.
* The EEC had to build a common external tariff, EFTA did not, but did require instead a ‘certificates of origin’ regime. The common external tariff meant that the EEC needed a common commercial policy, whereas EFTA did not.
* The EEC wanted to eliminate the cause of trade distortions at source and required the machinery to do so; EFTA instituted a procedure to deal with complaints if and when different national practices were felt to have distorted trade.
* The EEC wanted a common agricultural policy; EFTA excluded agriculture but relied instead on bilateral agreements to expand agrarian trade.
In a way, EFTA was almost designed to disappear in the form in which it had been cast. It was only the subsequent failure of the ‘bridge-building’ strategy that forced it to assume the identity of an individual trading organization in its own right.5
Even before the establishment of EFTA, the Macmillan government had begun to consider applying for full membership of the European Community. By late 1959, it had become increasingly apparent that the UK would be unable to negotiate a settlement which aimed at a parallel removal of barriers within the EEC and EFTA and between the two blocs. The ‘Hallstein Report’ of 1959 which outlined the EEC’s foreign policy perspectives left little room for a purely commercial settlement in Europe. Moreover, the United States, faced with a mounting balance of payments problem, made clear that it would not accept the discrimination implied by an interim settlement unless it conformed with GATT rules. That meant that any solution ended in a forseeable time and according to a fixed schedule, with the complete abolition of trade barriers. At the time the most that was on offer was a Benelux plan for the mutual exchange of the next scheduled tariff cut.6
Throughout 1960, the number of voices from the press, business circles, and certain politicians calling for a reappraisal of the UK’s relations with the Six, grew considerably. However, the strongest statement seeking a drastic change in course came in May 1960, from an interdepartmental committee headed by Sir Frank Lee. It advanced the view that Britain should abandon attempts to negotiate loose economic agreements with the Six and instead seek full membership of the EEC. The Committee’s arguments, based more on political than economic considerations, can be summarized as follows:
* The offer of a purely commercial ‘bridge’ between the EEC and EFTA would never be acceptable to the Six.
* The UK would face a relative decline in its political significance if it remained outside the EEC.
* The danger of a European federation would be mitigated if the UK joined while de Gaulle, who was notoriously anti-federalist, was still in power in France.
* Special arrangements for UK problems, such as Commonwealth trade and domestic agriculture, could be negotiated.
Macmillan was anyway predisposed to accept these arguments. Although he had been its victim, he had been impressed by the power and influence of France and Germany within the EEC. He saw in it the reinforcement of traditional great power diplomacy within which Britain could easily function, somewhat missing the point that the attraction of these arrangements to both Adenauer and de Gaulle was their exclusivity. Yet it was more than a year later before a formal application was made. This was primarily because of the daunting array of individuals and organizations which had to be persuaded of the desirability of EEC membership (from the party to the parliament, the press and public, not to mention the Commonwealth and EFTA). Macmillan also faced the ‘presentational difficulty of explaining why a policy which had been repudiated inflexibly since 1948 had now become both desirable and necessary’.7
In July 1960, Macmillan appointed Edward Heath as lord privy seal, with special responsibilities for Europe. His major task in the ensuing year was to appraise the attitude of the Six, and France in particular, to the prospect of British entry. There would be little point in even considering a membership application if the French remained determined to keep Britain out. However, by summer 1961, it was evident that the French would not discuss possible concessions to UK interests prior to a formal commitment to negotiate. Indeed many, including President Kennedy, felt that de Gaulle had no desire whatsoever to share French leadership of the Six with Britain.
This placed the Macmillan government in an extremely difficult position. Speculation in the press and business circles had already anticipated an announcement on Britain and Europe. Thus, rather than make an open commitment to EEC membership, it was decided to open negotiations with the Six to see whether suitable arrangements could be made. It was hoped that this fine distinction would put an end to public uncertainty, and keep Britain’s options open in Europe. The formal announcement was made in the House of Commons on 31 July 1961.8
The three major problem areas of negotiation with Brussels were the Commonwealth, EFTA, and British agriculture. In each case, Britain held outstanding commitments which, in the absence of special arrangements, were incompatible with EEC membership. The negotiations that opened in October 1961 proceeded extremely slowly due to a mutual unwillingness to offer concessions. It was not until May 1962 that the first specific agreement was reached on Commonwealth industrial goods. By the end of July, arrangements for most Commonwealth countries had virtually been finalized, although these often fell short of Commonwealth demands. However, it was the issue of agriculture which finally brought the negotiations into deadlock. The British system of guaranteed prices and deficiency payments to farmers was manifestly incompatible with the artificially inflated prices of the Common Agricultural Policy (CAP). Disagreement on the best means to reconcile the two dragged on into December 1962, when the EEC Commission appointed a committee under the direction of Commission vice-president, Sicco Mansholt, to explore possible solutions.
In the meantime, de Gaulle had become increasingly concerned about the political consequences of British membership. Although Macmillan was aware of these views, neither he nor any of the delegations in Brussels anticipated de Gaulle’s unilateral statement, at a press conference on 14 January 1963, that Britain was not yet ready for the full commitment of EEC membership and that therefore there was no point in prolonging the negotiations. De Gaulle referred to the deal with the United States on Polaris nuclear weapons as evidence of Britain’s ‘special links’ outside the Community structure. However, it is now clear that such objections were used to mask underlying fears of a British challenge to French leadership of the Six. The veto came as a monumental blow to British aspirations in continental Europe and the wider world. It also generated considerable illwill and mistrust between the Six, which in turn impaired the prospects of further political initiatives. Finally, it also served to repudiate the approaches of other states for membership or association with the EEC.
The applications of Denmark, Norway and Ireland9 for EEC membership had been essentially a reaction to Macmillan’s decision to negotiate with the Six. Denmark was the strongest supporter of this decision, as it provided the opportunity to bring its two largest customers, the United Kingdom and West Germany, together in a single market. The breakdown of the British negotiations was crucial to the Danish position. Although de Gaulle had offered prime-minister Otto Jens Krag membership for Denmark separately, this was turned down after consultations with the British.
Norway was somewhat less enthusiastic in applying for EEC membership. Einar Gerhardsen’s goverment was uneasy about opening Norwegian fisheries and agriculture to foreign competition but the simultaneous application of important trading partners like Denmark and Britain led many to the view that Norway could not afford to remain outside. Before any application could be made, the constitution had to be amended to provide for the transfer of sovereign powers to an international organization. This amendment was passed without difficulty by the Storting in March 1962, followed soon after by the EEC announcement opening negotiations. Only one meeting at ministerial