European Trade Blocs and American Exports

Report Outline
Economic Division of Western Europe
U.S. Payments Deficit; Trade with Europe
American Moves to Avert Trade Conflict

Economic Division of Western Europe

United States and European Trade Rivalries

Concern over threats of damaging discrimination against American exports, at a time when the country is confronted by a large deficit in its international balance of payments, has projected the United States into the midst of European trade rivalries. At mid-January meetings in Paris of the United States and Canada with the 18 members of the Organization for European Economic Cooperation, Under Secretary of State Douglas Dillon said this country, subject to the approval of Congress, was “prepared to assume full and active membership” in a reorganized O.E.E.C. The purpose of the enlarged organization, Dillon explained on Jan. 16, would be to “facilitate cooperation between the industrialized nations of the free world in meeting the major economic problems which will face the world during the coming decade,”

The 18 O.E.E.C. nations and the United States and Canada are to meet again in Paris on April 21 to consider arrangements for setting up the proposed Atlantic consultative organization. Meanwhile, on March 29, representatives of the same countries will gather in the French capital to take up the reports of working groups that were appointed in January to study problems of commercial policy pertaining to the European Economic Community (Common Market) and the newly formed European Free Trade Association. It is the competition between these two groups, and its potential effects on other countries, that persuaded the Eisenhower administration late last year that it must take action to safeguard the liberal trading principles that have been at the base of U.S. foreign economic policy for the past quarter of a century. In the process the United States has moved to establish closer economic contacts with European countries than ever before.

Ever since the United States undertook the task of promoting European economic recovery after the war, its spokesmen have extolled the advantages of a large trading area unencumbered by tariff barriers. American support was naturally given, therefore, to developing plans for a European Economic Community of six continental nations. Great Britain's subsequent efforts to make the whole of Western Europe a free trade area, while logically unobjectionable, gave Americans pause. Although the European Free Trade Association eventually formed included only seven nations, organized into what initially at least was a rival group, the possibility of ultimate agreement between the groups intensified fears of discrimination against non-European nations.