A Greater Europe

October 26, 1991

For two years the change in Eastern Europe threatened to slow down the movement toward consolidation in Western Europe. Many thought "Europe" could grow outward or more centralized but not both. Now the 12-member European Community (EC) and the 7-member European Free Trade Association (EFTA) have agreed to join as of Jan. 1, 1993, in a common market of 380 million European consumers and producers from Lapland to Crete. It will be the largest market in history or imagination since the Roman Empire. The markets of Japan or North America pale before it.

The expansion is a deal of 1,000 pages plus 12,000 pages of appendix. Basically, it will join Iceland, Norway, Switzerland, Finland, Sweden, Austria and tiny Liechtenstein to the EC in everything but decision-making. A host of special arrangements, from Spanish fishing in Norwegian waters to Swiss delays in liberalizing immigration, made it possible. The resulting conglomeration will give Europe a new set of initials, European Economic Area (EEA), but not for long. Half the EFTA countries are applying for EC membership anyway and will get it in a few years, putting pressure on the other half to follow. EEA is only a transition.

EFTA countries were Western in spirit and economy but stayed out of EC for reasons of neutrality or political sensitivity rendered moot by the Soviet transformation. For Finland, the need to substitute Western trade for Soviet markets is desperate. For Swedish industry, access through EC to all Europe is crucial. EEA will be a single banking market and labor market.

The gravitational pull on Eastern Europe, especially those countries hoping to substitute Western protection for Soviet domination, will increase.

For the United States, this agglomeration, along with the greater integration of the EC by the end of next year, presents challenges. One is for American business to be inside it. Another is for the U.S. through the General Agreement on Tariffs and Trade (GATT) to negotiate a free-trading climate between the super blocs. And still another is to expand the North American Free Trade Area of the U.S. and Canada to Mexico and perhaps others.

There will be grumbling in EC and EFTA countries by opposition clinging to greater nationalism than their governments do, but in all probability EEA will be ratified by all. It is a vision of Europe dull and prosperous, which American diplomacy has advocated for years. Now the U.S. has to learn to live with -- and profit from -- it.

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