On March 25, 1957, France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg sign a treaty in Rome establishing the European Economic Community (EEC), also known as the Common Market. The EEC, which came into operation in January 1958, was a major step in Europe's movement toward economic and political union.
By 1950, it was apparent that centuries of Western European world supremacy was at an end. The national markets of Europe, isolated from each other by archaic trade laws, were no match for the giant market enjoyed by the United States. And looming over Europe from the east was the Soviet Union, whose communist leaders commanded vast territory and economic resources under a single system. Many European leaders also feared the resumption of conflict between traditional European antagonists such as France and Germany, which would only diminish the European economies further.
As a means of improving Europe's economic climate and preventing war, some influential statesman and political theorists suggested economic integration. The first major step in this direction was taken in 1951, when France and West Germany formed the European Coal and Steel Community (ECSC), integrating their coal and steel industries. French leaders proposed the organization primarily as a means of monitoring German industry, and West German leaders immediately agreed, to allay fears of German militarization. To supervise the ECSC, several supranational bodies were established, including an executive authority, a council of ministers, an advisory assembly, and a court of justice to settle disputes. Italy and the three nations of the Benelux Economic Union--Belgium, the Netherlands, and Luxembourg--soon joined. The groundwork for the EEC was laid.
On March 25, 1957, representatives of six European nations signed two treaties in Rome. One created the European Atomic Energy Community (Euratom) for the common and peaceful development of Europe's nuclear resources. The other created the EEC. In the Common Market, trade barriers between member nations were gradually eliminated, and common policies regarding transportation, agriculture, and economic relations with nonmember countries were implemented. Eventually, labor and capital were permitted to move freely within the boundaries of the community. The EEC, the ECSC, and Euratom were served by a single council of ministers, representative assembly, and court of justice. In 1967, the three organizations were fully merged as the European Community (EC).
Britain and other European nations initially declined to join the Common Market and established the weaker European Free Trade Association (EFTA) in 1960 as an alternative. By the early 1960s, however, the Common Market nations showed signs of significant economic growth, and Britain changed its mind. Because of its close ties to the United States, however, French President Charles de Gaulle twice vetoed British admission, and Britain did not join the EC until January 1973, when Ireland and Denmark also became EC members. Greece joined in 1981, Portugal and Spain in 1986, and the former East Germany as part of reunified Germany in 1990.
In early 1990s, the European Community became the basis for the European Union (EU), which was established in 1993 following ratification of the Maastricht Treaty. The treaty called for a strengthened European parliament, the creation of a central European bank and common currency, and a common defense policy. In addition to a single European common market, member states would also participate in a larger common market, called the European Economic Area. Austria, Finland, and Sweden became members of the EU in 1995. As of early 2007, there were twenty-seven member states in total, and further growth was expected.