6.1.1 National Debates in Europe

The democratisation of major companies was the most advanced in West Germany with its system of ‘codetermination’ (Mitbestimmung), in which employee representatives were involved in major decisions.⁵ This system did not concern all companies, as the first such law in 1951 only applied to companies in steel or coal with over 1,000 employees. It stipulated that nearly half of supervisory board members must be employee representatives, and provided a right of examination over a wide range of decisions. This was a far cry from worker power, since German enterprises have a two-tier board system – a supervisory board and a management board – with shareholders remaining dominant in the latter. The Social Democratic government sought to expand codetermination in the 1970s, but the law of 1976 led to difficult discussions. The German trade union DGB was disappointed by the 1976 law, which it saw as being too limited, while the employers’ association BDI challenged it before the Constitutional Court in Karlsruhe, albeit without success. Some companies circumvented the law by creating subsidiaries, or by transferring divisions to foreign subsidiaries with a view to remaining under the 2,000 employees threshold. Mannesmann, a powerful steel conglomerate from the Ruhr, wanted to benefit from the 1976 law, which was less restrictive than that of 1951. It argued that the share of steelmaking activity in its overall turnover had fallen below 50 per cent, hence the enterprise should be subject to the lighter obligations of the 1976 law. The case sparked a new and tense political debate that ended with the adoption of a law in 1981 establishing specific provisions for firms such as Mannesmann. German codetermination was quite extensive, and strongly supported by unions, but also increasingly challenged.

In contrast, there was no codetermination in Britain, France, and Italy, and no unanimous union support for this project. Some in left-wing parties and trade unions associated codetermination with shameful ‘class collaboration’, as workers would be cooperating with representatives of capitalism.⁶ In Britain, Harold Wilson’s Labour government established a committee in 1975, led by the history professor Alan Bullock, to study the extension of ‘industrial democracy’ via employee representation on management teams. The ambitious report envisioned giving significant powers to unions, but it did not pass. In 1974, the new French President Valéry Giscard d’Estaing revived this issue by appointing a committee led by the centrist Pierre Sudreau.⁷ The committee published its fairly prudent report in 1975, but the effort was ultimately abandoned due to negative reactions from both employers and unions.⁸ The idea was not abandoned by Minister of Social Affairs Robert Boulin, who established a working group including experts such as Martine Aubry, the daughter of Jacques Delors and a senior civil servant at the Ministry for Social Affairs. The French socialists advocated for some form of codetermination in the 1970s.⁹ When they came to power in 1981, the socialists strengthened the rights of employees with the Auroux laws of 1982–83 (with Aubry serving as Deputy Chief of Staff for Minister Jean Auroux), albeit without giving them genuine codetermination powers.

The democratisation of enterprises was widely discussed in Europe.¹⁰ In 1979 it was included in the platform of the two Belgian socialist parties, while in Stockholm a series of laws were passed in 1973 and 1976 strengthening employee rights with respect to occupational health and safety, and establishing employee representation on supervisory boards. In 1976 the Swedish Trade Union Confederation (LO) adopted a project, developed by a group of union economists led by Rudolph Meidner, that provided for the socialisation of profits, which would be transformed into funds controlled by employee unions. A watered-down version of this proposal was adopted in 1983, with the funds in question representing approximately 3.5 per cent of the Stockholm stock exchange’s market capitalisation in 1990.

Outside of Western Europe, the Yugoslav model based on decentralised planning and worker participation in management was cited as a model by a growing number of experts in Western Europe in the late 1960s and early 1970s, and this despite the country’s fragile economic situation. Paradoxically, the president of the European Commission, Sicco Mansholt of Holland, cited the Yugoslav model for industrial democracy as an example during his official visit to the country in 1972, even though the purpose of his visit was to provide assistance for its sputtering economy.¹¹ The idea of democratising enterprises was even raised in the US under the Carter administration, albeit in a more modest fashion. Exchanges took place between Americans and European civil servants from the Commission in 1976–77 to study worker participation measures on both side of the Atlantic.¹² The debate was revived after the appointment, in 1980, of a union representative to the board of directors of the financially struggling Chrysler, but Reagan’s rise to power profoundly changed the dynamic.

6.1.2 The Global South for a Social and Neomercantilist Globalisation

The debate also spread to international circles in support of mobilising the Global South – once referred to as the ‘Third World’ or ‘the South’ in those days – in the effort to promote a more social and neomercantilist approach to globalisation. The Global South acted via the United Nations Conference on Trade and Development (UNCTAD) created in 1964. It developed a comprehensive set of economic ideas thanks to the work of its first secretary general, the famous Argentinian economist Raul Prebisch. The aim was to revamp the international economic order not to diminish free trade, but to make it work in the interest of poorer countries.¹³ These ideas translated onto the world stage in a programme called the New International Economic Order (NIEO), which was passed by the UN General Assembly in 1974.¹⁴ This important manifesto emphasised the full sovereignty of the Global South against abuses of power by multinationals from the Global North, which was particularly evident in some Latin American countries whose governments were destabilised by American enterprises (which sometimes supported military coups). It called for organising markets to avoid sudden fluctuations in commodity prices (many poor countries were highly dependent on exporting one or two agricultural or mining products), and to redistribute funds from wealthier countries (both Western and oil-exporting countries). The NIEO explicitly sought to increase exports from the Global South to the Global North, by increasing both public and private foreign investment on the part of wealthy countries in the export industries of poorer countries. The NIEO was therefore not Marxist, but rather a combination between the approaches of liberty, solidarity, and community.

Paradoxically, it was the European Community that implemented some elements of the NIEO with its STABEX programme in 1975 (see Section 6.2.2). In 1974, the IMF created a fund financed by petroleum exporting countries, but it remained fairly modest, as the OPEC surplus was largely recycled on the private Eurodollar market.¹⁵ Solidarity among countries in the Global South thus remained very hypothetical.

In 1976, the fourth session of UNCTAD called for the systematic consultation of countries in the Global South regarding the purchasing policy of the Global North, as well as the regulation of their own exports of raw materials and agricutural products (through control over stock which would have given them leverage over prices). At the Conference on International Economic Cooperation (CIEC) in 1977, countries from the Global South created a Common Fund for Commodities, a major objective of the fourth UNCTAD in May 1976.¹⁶ The agreement was ultimately concluded in 1980, although delays in its ratification pushed its implementation back to 1984. In the end, no systematic organisation of trade emerged.

With respect to controlling multinationals, the Global South believed that multinationals in the Global North often colluded to sell their products, licences, and services via export agreements or market sharing. This allowed them to raise prices in poorer countries, all while hampering local industrial development. This concern sparked a debate at the UN.¹⁷ It translated into a first international report drafted in 1969,¹⁸ which revealed numerous restrictive agreements by Western multinationals. In 1972, Chilean President Salvadore Allende admonished foreign multinationals at the UN. At the Algiers Conference of Non-aligned Countries in 1973, the Chilean representative proposed creating joint enterprises among the non-aligned.¹⁹ Allende’s tragic death during Pinochet’s coup d’état in 1973 changed Chile’s position, but not that of UNCTAD, which established a ‘special group of experts on restrictive business practices’, and passed a resolution in 1976 calling for negotiations to establish a code of conduct for multinational corporations. A large number of issues still being discussed today were raised at the time, notably surrounding the practice of ‘transfer pricing’, or internal transactions by major corporations – especially between subsidiaries and the parent company – designed to artificially reduce the profits made in some countries in order to reduce taxes.²⁰ UNCTAD also denounced international cartels at the time. One of these studies revealed how electrical equipment multinationals from the West (Siemens, General Electric, etc.) had come to an agreement to share the Brazilian market, avoiding direct competition among themselves, and refusing to sell high value-added equipment to their Brazilian competitors, thereby stunting their development in the 1960s. The report concluded: ‘the electrical equipment industry that has been established in Brazil by the mid-1960s was decimated systematically by the early 1970s. Local manufacturers, not members of the cartel, were weakened financially, and either they were taken over by the cartel members or they went bankrupt.’²¹ This demonstrates how markets were organised according to the neomercantilist logic of community (the community here being the West and its multinationals), as opposed to liberty (free market) or solidarity.

In 1980 UNCTAD succeeded in having the UN adopt the Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restictive Business Practices (known as ‘The Set’), which was created to oversee multinational activity connected to cartels. UNCTAD nevertheless found the application of this non-binding policy disappointing, as reflected in its internal communications during the 1980s.²²

The same process was at work at the OECD, which established a first working group on multinational control in 1970, and adopted guidelines for multinational enterprises in 1976, although they were non-binding and part of a broader declaration whose objective was to strengthen international investment.²³ According to the guidelines, multinationals should not interfere with local political life. They also required the disclosure of fairly detailed information, such as the enterprise’s property, the geographic distribution of its activity (income, number of employees), accounting methods, and pricing policy. The declaration also encouraged worker representation within enterprises. None of these commitments were mandatory, and the results were consequently quite meagre. In response to an ILO study, the French employers’ association CNPF affirmed in 1983 that it was in full compliance with the OECD code, and underscored the non-binding nature of this legislation.²⁴

6.1.3 Europe as the Only Solution for Controlling Multinationals?

All of these failures led supporters of democratising enterprises to shift their attention to the European Community, the only international body with binding federal law. In the early 1970s, the German Chancellor Willy Brandt was open to the idea of Europeanising this debate, while the conservative British and French leaders, Edward Heath and Georges Pompidou, were much more sceptical.²⁵ The Belgian Prime Minister Léo Tindemans, a Christian Democrat, raised the issue in his 1975 report on the European Union commissioned by the European Council.²⁶ The European Trade Union Confederation (ETUC) revived the issue in 1974–76, and it was also mentioned in the Maldague Report.²⁷

In Brussels, the issue was revived by Henk Vredeling of the Netherlands, the new Commissioner for Social Affairs appointed in 1977. A former unionist, he played an important role promoting a social Europe and organising the left at the European Parliament in the 1960s and 1970s. He was known at the Commission for asking many questions, and was therefore nicknamed ‘Vrageling’, from the Dutch verb ‘vragen’ (to ask a question).²⁸ However, like most European unionists, Vredeling’s priority was to combat unemployment through macroeconomic action such as ‘work-sharing’ rather than to democratise companies. When he presented his priorities in 1978, it was the French Minister Robert Boulin who raised the issue of worker participation, which the commissioner had forgotten.²⁹

Finally, the proposal for a directive, which in the ensuing public debate became the famous Vredeling directive, was sent by the Commission to the Council on 23 October 1980.³⁰ It was adopted after a complicated debate at the Commission, with conservative and liberal commissioners such as Davignon, Ortoli, Brunner, and Tugendhat expressing their doubts.³¹ The directive was ambitious in three respects. First, it involved all multinationals employing at least 100 workers in the EC. Second, it imposed requirements to disclose information and to engage in consultation (but not codecision) for a wide range of strategic decisions, not just those relating to working conditions. Third, the directive had extraterritorial application via a ‘bypass’ clause: if a subsidiary did not provide the required information, workers’ representatives could initiate consultations with the parent company even if it was based outside the EEC. This provision seemed necessary from a social point of view, otherwise non-European multinationals, American and Swiss ones in particular, could avoid their obligations. This provision raised the issue of the extraterritoriality of EC legislation: to what extent could the young Commission in Brussels impose its standards on powerful foreign conglomerates? Another issue was that the directive was imperfect from a technical point of view, with a weak presentation of its arguments in the introduction; apparently the commissioner’s office rushed to present it before the end of his term.

Among member states, Thatcher’s neoliberal British government was adamantly opposed.³² France under centre-right President Valéry Giscard d’Estaing was not enthusiastic (with the Sudreau report failing to garner backing).³³ Surprisingly, Paris offered little support even after socialist President François Mitterrand came to power in 1981.³⁴ In 1983, French representatives did not discuss it in European meetings, instead emphasising the organisation of working time (the socialist government had reduced working time but had not imposed codetermination).³⁵ The archives of the French trade union CFDT show that Jacques Delors, who was the French Minister of the Economy and Finances at the time (and a former unionist at the CFTC, which split from the CFDT in 1964), took an interest in 1981. He found little support,³⁶ probably because the CFDT-CFTC had a more decentralised vision of social policy than other French unions as well as the French Socialist and Communist Parties.

In Bonn, the government was divided. The Ministry for the Economy, led by the liberal Otto von Lambsdorff, was strongly opposed to the project.³⁷ It did not want Europe to serve as inspiration for the debates unfolding at the OECD and the UN. This reluctance led to a conflict surrounding the instructions given to German representatives in 1981, with the Ministry for Labour emphasising a positive but prudent position (due to potential conflict with German law). There was the potential risk that a lax EC codetermnation law would be used by many West German companies to avoid their national obligations (similar to Mannesmann with the 1976 German codetermination law). Both ministries ultimately agreed on the need to wait for a better proposal from the Commission, a sign that it was deemed to have technical flaws.³⁸

The proposal for a directive led to a broad transnational mobilisation, with Vredeling choosing to begin negotiations with a consultation of the European Parliament, despite the institution’s lack of binding powers in the matter. Both European and American employers exerted intense pressure on European leaders to sink the project, Members of European Parliament (MEP) in particular.³⁹ The official position of the European employers’ association UNICE and the International Chamber of Commerce was to draw on the non-binding guidelines of the OECD and ILO. The archives of the Confederation of British Industry (CBI) offer an illuminating record of the various levels of employer lobbying. Beginning in 1980, the CBI developed a strategy to influence European commissioners (such as Commission President Roy Jenkins of the UK) and MEPs, sometimes in conjunction with UNICE’s efforts (targeting the powerful Belgian commissioner Etienne Davignon).⁴⁰ In February 1981, British and German employers’ representatives met with MEPs from the European Democrats group, essentially consisting of British conservatives, to explain the flaws of the proposed directive. An expert on the German situation explained the differences between the Vredeling proposal and German legislation. The British government and employers’ associations worked together to undermine the EC proposal. In 1982, UNICE formally asked for each national federation ‘to lobby’ their national MEPs before the July 1982 plenary session. The German trade union DGB published an official protest against this massive mobilisation, in which it opposed the ‘destructive campaign led by Capital (in the Marxist sense) on both sides of the Atlantic to stop this directive’.⁴¹

The European Trade Union Confederation (ETUC) was too weak to thwart this offensive, especially since its main priorities were working-time reductions and stimulus policies to combat unemployment.⁴² The Vredeling directive was rarely the subject of discussions in high-level meetings between ETUC President Wim Kok and members of the Commission working on the issue. Even when it was mentioned, as in March 1982, it did not appear in the final communiqué.

Another weakness of the ETUC was the fact that it was not accustomed to European lobbying. The meetings in December 1980 and January 1981 focusing on this issue had a positive view of the proposed directive, but ETUC representatives did not develop a coherent mobilisation strategy. The debate became tangled up in questions connected to ongoing international discussions at the OECD, the UN, and the ILO.⁴³ The ETUC did not prioritise the EC, failing to tailor its lobbying to the EC’s specific institutional features (such as influencing the European Parliament or Commission, as the CBI did). Instead, it conflated the EC with other international organisations whose institutional power was much weaker. The only measures envisioned were the creation of an ad hoc group, information campaigns, and demonstrations. Only the DGB, which also strongly supported the legislation, tried to establish an influence strategy at the European Parliament via certain German MEPs close to unions, such as Heinz Oskar Vetter, a DGB leader and former ETUC president.⁴⁴ The Germans were most likely more mobilised because they were accustomed to difficult German debates connected to codetermination.

The fight was nevertheless too one-sided. The Parliament, which was dominated by the centre-right, ultimately requested a number of amendments limiting the directive’s scope.⁴⁵ At the Commission, the conservative Commissioners Haferkamp, Narjes, and Ortoli requested changes to preserve the competitiveness of European enterprises.⁴⁶ The issue remained at a standstill until the new Commissioner for Social Affairs, the British Labourite Ivor Richard, proposed a new and watered-down version of the directive in July 1983.

In Paris, the socialist government was not particularly committed. France held the rotating presidency of the Council during the first semester of 1984, but its socialist government did not present the law for discussion at the Council of Ministers until June, at the very end of its presidency, nearly one year after it was presented by the Commission. The text was then sent to a committee of national experts for further study, with the debate once again becoming bogged down.⁴⁷ The only outcome was an agreement paving the way for voluntary agreements, which was ultimately included in the directive establishing European Works Councils in 1994.

Despite strong national, European, and global mobilisation, the effort to control multinationals largely failed. This was primarily due to lack of support among member states, including opposition from Thatcher, and tepid backing from France and Germany. The left-wing transnational coalition wielded less influence than the business community, which was more effective in its lobbying. Vredeling arrived at the Commission in 1977, but proposed a directive only in 1980. The ETUC was unable to set a coherent campaign for mobilisation, despite the effort of its German leader Oskar Vetter. The Commission did not solve the first directive’s technical flaws until 1983, which is to say eight years after the debate’s high-point in major European countries in 1975–76. In the meantime, Thatcher had risen to power, and henceforth wielded her country’s veto.

6.2.1 The European Protectionist Temptations of the 1970s

The European Community was divided between supporters of free trade, such as West Germany and the Benelux countries, and somewhat more protectionist countries, such as France, Italy, and the UK (before Thatcher’s rise to power in 1979 shifted the UK back to free trade). Despite the sharply rising price of imported energy-related products, West Germany continued to strongly support international free trade throughout the 1970s due to its regular trade surplus. In contrast, when the UK joined the EC, British customs tariffs were on average higher than the EC’s Common External Tariff, requiring London to lower them in 1973.⁴⁸

Divisions broke out into the open during the first summit meeting of leaders from industrialised countries (the future G7), held in Rambouillet in 1975. The British Prime Minister Harold Wilson affirmed that he ‘could not rule out action to protect industries threatened with or suffering from serious injury by increased imports’.⁴⁹ He was opposed by the German Chancellor Helmut Schmidt, who asserted that some European industry, textiles in particular, should disappear, and that it was illusory to ‘build a kind of zoo’ around it. Schmidt was also scathing towards the global project to reorganise North–South trade (in particular through the NIEO): ‘Less developed countries should be shaped according to market logic rather than count on gifts from industrialized countries.’ In 1976, as Schmidt ranted against the Global South: ‘Who absorbed the oil crisis? Who provided additional financial facilities for developing countries? We did. So today, we are no longer able to transfer resources, while the USSR provides no aid, and instead sells them weapons. We are transferring our resources to the benefit of the USSR. We are paying for its military interventions.’⁵⁰

Giscard d’Estaing defended North–South dialogue, if only to avoid a new spike in oil prices. In 1977, Paris defended ‘organised liberalism’ and a ‘sensible organisation of global markets’, notably for traditional manufacturing (declining industries) and cutting-edge sectors.⁵¹ In London, Callaghan cited the economic nationalism of the 1930s to convince members of his government to adopt a budget reduction programme.⁵²

The German Chancellor was contradicted in 1980 by another Social Democrat, his predecessor Willy Brandt in an international report known as the ‘Brandt report’. It recommended that the Global South be better integrated within international trade movements by stabilising commodities markets, and more specifically by eliminating restrictive business practices and reducing the North’s protectionist barriers. He included environmental concerns, as well as an ambitious proposal to tax some international flows and use the funds for developmental aid. Brandt drew inspiration from the project to tax international transactions, which had been proposed by the economist James Tobin in 1978 (what would later be called the Tobin tax).⁵³ The report clearly conveyed Brandt’s idealism, which stood in sharp contrast to the pragmatism of his successor Schmidt. When asked about Brandt’s vision, Schmidt famously replied: ‘When you have a vision, you go to the doctor!’⁵⁴

In the end, the main European response to these protectionist tensions was to preserve the free trade agreements, notably via the Commission’s closer monitoring of obstacles to free circulation within the Common Market. In 1976 for example, the Commission faced a surge in protectionist measures and had to increase its staff to deal with more than 300 cases. The tide reversed in 1977, but was nevertheless still worrying.⁵⁵

6.2.2 Managing Trade in Eurafrica

As its name suggests, Eurafrica is a concept combining Europe and Africa. In the second half of the twentieth century, it denoted attempts to combine European integration and decolonisation, namely through strong links between the EC and the former colonies of European countries. In 1957, Paris imposed the principle of an agreement between the future EEC and ‘associated countries and territories’ (colonies and protectorates) as a prerequisite to accepting the Common Market.⁵⁶ Since most of those territories were located in Africa (excluding the Maghreb), this decision marked the beginning of what was called Eurafrica, although it established only a limited form of cooperation. France and Belgium, the only two remaining colonial powers, secured the creation of a European Development Fund (EDF), which would allow the Six to fund economic development projects for the benefit of the territories that were largely under French and Belgian influence. The Yaoundé Convention in 1963 codified ties between the EEC and associated territories, which included free trade between the two groups, as well as financial transfers via the EDF. However, many EC members, Germany chief among them, were suspicious of the agreement, as it appeared neocolonial, and was also costly and not economically advantageous, since most African markets were tiny. Bonn supported it only as a concession to Paris, although German enterprises did secure a few occasional markets in Africa.⁵⁷

Paradoxically, even the Algerians were interested in Eurafrica, for while they had won their independence by arms in 1962, they were careful to maintain good relations with the EC, notably to secure funds and facilities for the circulation of Algerians.⁵⁸ However, as negotiations between Paris and Algiers quickly grew tense, the European discussions came to a halt. The Algerian government had no agency whatsoever, in what was a completely unbalanced relationship. This shows the limits of Eurafrica.

During the 1970s, the Yaoundé Convention was broadened to include some former British colonies (with the UK’s accession to the EC in 1973). In 1975, the Lomé Convention was concluded between the EC and forty-six French- and English-speaking countries in Africa, the Caribbean, and the Pacific (known as ‘ACP’). Paris and London conserved broad room for manoeuvre in managing relations with their former colonial empires, notably on the cultural and geopolitical level, although trade relations were henceforth part of an EC framework.

The Lomé Convention was innovative, as it included STABEX, a system to stabilise the export revenues of associated countries.⁵⁹ This neomercantilist tool was created at the request of countries from the Global South to compensate for high volatility in commodity prices, notably by providing additional aid when prices were low. Numerous countries in the Global South were highly dependent on exporting one or two unrefined products. Aid was granted to ACP countries if their export revenues fell below a certain level; the transfers amounted to $400 million during Lomé I (1975–79), two-thirds of which were allocated to the poorest countries (Senegal, Sudan, and Mauritania, due to the falling price of peanuts). The volumes were substantial, but modest in relation with developmental needs. The Lomé II Convention in 1979 added the SYSMIN aid system for mining, and this grew out of German concerns regarding the supply of strategic commodities. These neomercantilist tools were abandoned in the 1980s.

6.2.3 A Protectionist Trade Framework for the Textile and Automobile Industries

Protectionism took hold in the automotive and textile industries during the 1970s. In both cases the EC stepped in to negotiate compromises between protectionist and free trades states, as well as to implement a gradual liberalisation during the 1980s.

In the automotive sector, competition from Japanese cars was the primary destabilising element in the 1970s and 1980s, along with the macroeconomic context. States reacted to this challenge on a national level, with the most protectionist – the US, the UK, and France – negotiating Voluntary Export Restraint (VER) agreements with Japan during the 1970s. In short, VERs established quotas – imports could not pass a certain level. In West Germany, an informal ‘agreement’ apparently existed in the 1980s to limit Japanese penetration, without anything being official.⁶⁰ The Commission was passive at first, before strongly pushing for these VERs to be eliminated in the late 1980s, as they clashed with the negotiations underway during the Uruguay Round of the GATT. The UK under Thatcher simultaneously adopted a free trade discourse, all while defending quotas and seeking to spare the Japanese factories located on its territory. Finally, following a mandate given by member states, the Commission negotiated an agreement with Japan, which was concluded in 1991, and provided for the gradual lifting of quotas during the 1990s.⁶¹ In the meantime, European car manufacturers improved their quality to compete with the Japanese (by adopting the new production procedures precisely referred to as ‘Toyotism’). The end of quotas therefore did not translate into a massive increase of Japanese car imports.

Another important sector was textiles, which was once Europe’s leading employer. At the time it was severely affected by mechanisation and foreign competition, and employment in the sector shrank by 33 per cent between 1975 and 1985 in the EC.⁶² The textile sector included myriad companies, and its workforce was often weakly unionised, thereby complicating a coordinated policy. As a result, the primary action conducted on the European level was trade-related. On the global scale, the EC negotiated its participation in the Multi-Fibre Arrangement in 1973, which granted the textile sector an exemption from the GATT’s liberal rules. A quota system protected European producers from imports by new producers based in Southeast Asia, India, Brazil, and Southern Europe. The first MFA covered the period between 1973 and 1977. Since imports continued to rise, the French and British asked for a more restrictive agreement.⁶³ The second MFA (1977–81) was therefore protectionist, even though the Germans, the Danes, and the Dutch emphasised that it was only a temporary agreement designed to facilitate the restructuring of the European textile industry.⁶⁴ European mediation was once again important to easing tensions arising from protectionist temptations. The conclusion of the Uruguay Round in 1994 imposed a return to liberalisation.

European action was different in the sub-sector of synthetic fibres, which underwent rapid expansion during the 1960s with the success of fibres such as polyester, often based on hydrocarbons. Oil crises consequently had a strong negative impact on this sector, which employed 100,000 people in Western Europe in 1979.⁶⁵ European coordination was facilitated by the sector’s higher level of concentration compared to traditional textile production, with one or two national leaders per country. Private companies sought to establish a European crisis cartel,⁶⁶ a type of anti-competitive agreement in theory forbidden by European anti-cartel legislation. In addition, the massive aid granted by Italy to extend production in the country’s south threatened the cartel. In 1978 industrial actors asked Commissioner Davignon of Belgium to find a solution. He acted as a go-between in negotiations surrounding a crisis cartel for European and American companies operating in Europe, which consisted of a production discipline agreement involving quotas.⁶⁷

This European crisis cartel immediately sparked a hostile response from the German government. The solution of the crisis cartel as such was not rejected – it was actually provided for under German law as a possible exemption to the rules of free competition – but Bonn feared that the Commission’s intervention would lead to dirigisme.⁶⁸ This refusal was paradoxical, for many German enterprises were calling for intervention, with 35,000 German jobs in the sector under threat from ‘cutthroat competition’ from the Italians, to use the words of a German business leader.⁶⁹

The agreement between the companies was concluded on 20 June 1978, and submitted to the Commission for approval.⁷⁰ It carefully avoided the term ‘cartel’, stressing the need to regulate aid on an EC level. There was intense debate at the Commission as to whether the agreement should be accepted. Davignon defended it, and even asked for additional measures, whereas Vouel, the Commissioner for Competition, sought to prohibit it.⁷¹ The Commission dithered, but eventually tolerated the cartel. It is probable that many other crisis cartels existed, without being revealed to the public eye.

6.2.4 A Genuine EC Steel Policy (1980–88)

Steel was always central to European integration because it is the raw material for building weapons, and is produced in coal basins that are by nature transnational, and not bound by state frontiers.⁷² In 1926, the Luxemburger steel magnate Emile Mayrisch set up the Entente internationale de l’acier, a major steel cartel with his German, Belgian, and French counterparts. He explicitely linked the cartel’s creation to the need for increased coordination among European countries, with a view to promoting peace. This attempt was shattered by the nationalistic tensions of the 1930s. After 1945, member states took the place of companies in organising the European steel market. In 1951, the first semi-federal European organisation was the ECSC. However, when the ECSC High Authority sought to intervene in the Belgian coal crisis in 1959, member states refused, as they wanted to preserve their prerogative. This situation changed in the early 1980s. Since the crisis was massive and affected the entire EC (production fell by 23 per cent and staff by 44 per cent between 1974 and 1984), member states decided to coordinate their action with the Commission. The steel industry crisis began in 1975, driven by rising international competition (including from new Asian producers), oil crises, and technological innovation that reduced the need for labour. Private attempts at cartelisation, the industry’s traditional solution during the interwar period, failed because enterprises could not agree, and because anti-competitive agreements were in theory banned by competition law.

Since the Merger Treaty of 1965, the EEC Commission assumed the prerogatives of the ECSC High Authority. Davignon, who became the Commissioner for Industrial Affairs, promoted European action with respect to steel. He was unsuccessful at first, as the crisis only involved the French (Usinor, Sacilor) and British (BSC) giants, along with the Walloon and Saarland steel industries. However, all producers were affected after the 1979 oil crisis, including those in Flanders, the rest of Germany, and Italy. For the first time, the Nine voted unanimously on 31 October 1980 to implement Article 58 of the ECSC Treaty on ‘manifest crisis’, through which they granted sweeping powers to the Commission to regulate the steel industry. It devised a system of quarterly production quotas, required disclosure of deliveries, and imposed minimum prices, including for imported products. The Commission would oversee application of the agreements as well as the subdisies granted by governements, thanks to two increasingly strict aid codes adopted in 1980 and 1981. The Council agreed on the principle of a return to profitability by 1985, which meant that all aid would be prohibited after that date, with a few exceptions (research and development, environment, retraining). At the same time, the Commission strove to protect the EC market from Japanese and American offensives. The Europeans clearly pursued a policy based on the principle of community, seeking firstly to preserve the production capacity and competitiveness of European industry rather than to save jobs in the short term. Dismissals continued, and were eased by essentially national social measures.

This was the only instance of EC-level sectoral industrial policy. The exceptional decision resulted from the fact that the crisis impacted the entire EC, as well as the institutional specificities of the ECSC Treaty (which was more neomercantilist than the EEC Treaty) and Davignon’s personality. Schmidt, who was often critical of the Commission, nevertheless confided to Thatcher his esteem for the Belgian commissioner: ‘Viscount Davignon is a little too pro-French and protectionist. But he is one of the best European diplomats.’⁷³ In 1984, Thatcher supported Davignon’s candidacy for Commission President. In Paris, the French government also supported Davignon, who since 1977 had been advocating for EC discipline with respect to aid, which the Italians were using to expand their production capacity. Paris and London opposed any supranational drift, but supported the Commission’s steel policy, for it ensured the same discipline for all.

West Germany was the most reluctuant state, due to its hostility towards EC industrial policy. In 1978, the Minister of the Economy, the neoliberal Lambsdorff, sent his EEC partners an official memorandum emphasising strict control over state aid, and a refusal of both protectionism and state intervention. Bonn’s ultimate acceptance of the manifest state of crisis in 1980 can be explained by the weakening of the German steel industry after the 1979 oil crisis, and by the failure of its preferred solution, the private crisis cartel. The most competitive producers, such as Thyssen and Krupp in Germany, and the Bresciani in Italy, did not want to lower production. The least cooperative enterprise was Klöckner, which suspended its participation in the Eurofer cartel because it deemed its quota to be too low.

Lambsdorff, who was isolated, ultimately accepted recourse to the ‘state of manifest crisis’ procedure during the Council meeting on 30 October 1980. In internal debates, the German Ministry of Foreign Affairs stressed the political impossibility of a German veto. It would call into question all of West Germany’s pro-European policy, while exacerbating the considerable difficulties already faced by the EEC due to tensions surrounding the CAP and the British budget. French President Giscard d’Estaing and Prime Minister Barre also pressured Schmidt.

Lambsdorff nevertheless remained committed to limiting national subsidies to ailing firms. In the winter of 1980–81, he threatened unilateral protection measures: West Germany would no longer import massively subsidised steel unless greater oversight over state aid was implemented, thereby calling into question the Common Market. This extreme position sparked opposition from the German Ministry of Finance, out of its commitment to free trade, as well as from the German Ministry of Foreign Affairs, as it threatened European integration. In the end Schmidt’s intercession helped secure an agreement to strengthen aid control in the spring of 1981. In opposition to Belgium, Luxembourg, and Italy, West Germany was supported by the Netherlands, France, and the UK under Thatcher (despite London’s massive aid to BSC).

Bonn was very vigilant with respect to the application of the aid code. In 1983, Bonn filed a complaint against the Commission’s authorisation of aid for the steel industry in France, Italy, the UK, and Belgium. The German government’s complaint was supported by the steel industry employers’ association, which deemed the amount of aid granted excessive, and Germany’s quota too low. The Court ultimately rejected the complaint in October 1985. As the steel crisis worsened in Germany, Bonn asked for a certain amount of clemency in aid control and production cuts. Everyone now had an interest in Europe-wide control of state aid.

Liberalisation came only in 1988 with the end of aid for production, and the lifting of the quota system made possible by improved circumstances. Another problem arose at the time, namely the increase of low-cost and highly subsidised steel imports from communist Europe: the Commission concluded voluntary export reduction agreements with these countries in 1990, before concluding an association agreement in 1992.⁷⁴ This brought to a close an exceptional period running from 1980 to 1988, in which Brussels implemented EC-wide sectoral industrial policy in response to the widespread crisis. Davignon was nicknamed ‘Stevie Wonder’,⁷⁵ but was unable to reproduce this approach in other sectors, such as shipbuilding.

6.2.5 The Failure of Comprehensive Regulation in Shipbuilding

In his Wealth of Nations from 1776, the famous economist Adam Smith complained about the disruptive effects of British aid for shipbuilding, which he likened to a kind of ‘bounty’.⁷⁶ Two centuries later, aid remained widespread in Europe, all the more so with intensifying competition from Japan in the 1960s, and South Korea in the 1970s. The 1973 and 1979 oil crises drastically depressed the market: between 1976 and 1984, global production fell by a third, with the decline reaching 50 per cent in France and Germany, and even 70 per cent in the UK, long the world’s leading producer.

European states tried to solve this predicament with subsidies, but their amounts increased exponentially without solving the problem. Companies attempted to form a cartel. In 1976 the Association of European Shipbuilders offered the Japanese to divide the global market in three (one-third for each of them, and one-third for the rest of the world), but they declined the offer.⁷⁷ After this failure, enterprises asked their governments to support an equivalent agreement within the framework of the OECD – of which Japan was a member – but to no avail, as the rapidly expanding South Koreans were not yet members of this organisation.

Employers tried to constitute national cartels. In France, the shipbuilding employers’ association proposed in 1978 to adopt a ‘survival charter’ based on coordinated production, which was a cartel in all but name.⁷⁸ It was refused by profitable companies. Finally, in 1981 the left nationalised part of the sector, and brought the remaining private companies together under a single enterprise, Normed. The latter soon received an infusion of public money, and was entirely dependent on orders negotiated by public authorities. The sector was thus de facto nationalised. The UK and Sweden had already nationalised their shipbuilding industries in 1977. For lack of a private cartel, there was massive public intervention in Europe.

In the face of this failure, Davignon tried to develop a Europe-wide approach similar to the one later implemented in steel. In 1977, the Commissioner of Industrial Affairs met with companies to propose making national aid conditional on restructuring, and to emphasise the principle of European preference (subsidies would be directed only to EC ships). To enhance his expertise, Davignon initiated operational cooperation with the shipbuilding employers’ association, from which he recruited an expert in 1980 to gather statistics. These attempts nevertheless met with failure, for member states refused any binding cooperation. Another solution would have been a protectionist policy towards Japan, a solution broached by French leader Giscard d’Estaing at the European Council meeting held in Rome in March 1977. But here too the Nine were divided. Even the British, who were among the more protectionist Europeans at the time, refused, as clearly expressed in a memorandum drafted for the prime minister: ‘Because of voluntary restraint arrangements on British imports from Japan (more extensive than those affecting imports of other member states), and the Japanese initiative to increase imports from the UK, we stand to lose a good deal more from the ending of cooperation with Japan than we would gain from a relationship of retaliation and counter-retaliation.’⁷⁹ The UK was not ready to launch an offensive against Japan on shipbuilding if it stood to lose in other sectors.

In the end, the only European action came in the form of competition policy, with increased regulation of national subsidies by Brussels. EC action in this area was justified on the grounds of a specific Treaty of Rome article on shipbuilding aid (Article 92–3c), which reflected its prevalence. Even the UK under Thatcher requested and received European authorisation in 1983 to provide massive aid for the Harland & Wolff shipbuilders located in Northern Ireland (which launched the Titanic in 1912). An internal British governement note justified national subsidies by the yard’s importance to the Northern Irish Protestant community, although according to one of Thatcher’s advisors, ‘even if all the employees worked for nothing, the company would still not be viable’.⁸⁰ Overall, the chronology for regulating shipbulding subsidies was the same as that of state aid control in general: weak before 1980, more ambitious under Commissioner Andriessen (1981–85), and much more robust with Sutherland (1985–89).⁸¹ In the end, this was the only industrial policy led by the European Commnuity, and it was based on liberty capitalism rather than community capitalism.

6.3.1 A More Neoliberal Globalisation

Globalisation took a more neoliberal turn after 1979–80, shattering any projects to organise international free trade around a community-based approach. Two influential neoliberal leaders, Reagan and Thatcher, came to power in 1979–80, while the Volcker Shock increased interest rates and the value of the dollar. Indebted countries of the south had to contend with a large increase in their debt (often issued in dollars), as well as lower prices for commodities. The conference held in Cancun, Mexico in 1981 was a turning point, the last major North–South Summit of the Cold War. It was marked by the non-cooperative stance of US President Ronald Reagan.⁸³ That same year, the Berg report from the World Bank sanctioned a free-tradist transformation of development policy, recommending cuts in state expenditures, and an emphasis on free trade. During the sixth session of UNCTAD in 1983, the West was divided between those supporting the regulation of commodities markets (France, Italy, Belgium), and those defending free trade (the US, the UK, West Germany).⁸⁴

Reagan and Thatcher wanted to further liberalise international trade. The former wanted to expand liberalisation to new sectors such as agriculture, services, and investment, while the latter insisted upon a discourse based on free trade at the G7 meeting in 1980, and worried about François Mitterrand’s protectionism in 1981–82 (Chapter 3).⁸⁵ Paris could not afford to walk away from the GATT talks, because France needed to export. It also relied on its European partners to defend the CAP against the US.⁸⁶ In 1985, EEC member states adopted a declaration expressing their acceptance of a new round of GATT negotiations only after including, at the request of Paris, the need to preserve the CAP, as well as the link between trade and monetary talks (the erratic fluctuations of the dollar irritated the French government).⁸⁷ In London, internal reflections emphasised securing concessions from ‘newly industrialized countries’ – in other words countries in the South – whose exports expanded to the detriment of traditional producing countries in the North.⁸⁸ The EEC also highlighted its competitive advantages, indicating it was ready to discuss new subjects such as the liberalisation of services and intellectual property, and denouncing the closure of the Japanese domestic market.

The Uruguay Round was launched a year later at Punta del Este in September 1986. The negotiations were very difficult, especially in connection with the CAP. They did not progress until 1992, with a decisive compromise between the US and the EU, concluded simultaneously with a reform that weakened the protectionist nature of the CAP.⁸⁹ The countries that benefited the most from the CAP, such as France and the Netherlands, accepted this reform in order to preserve its key features, and because the GATT presented trade opportunities for industrial products and services, as well as better protection for industrial property rights.

The final agreement of the Uruguay Round was concluded in Marrakesh in 1994, expanding liberalisation for the exchange of merchandise, and gradually extending this to agricultural products and services. All sectoral exceptions to free trade (notably in textile and in cars) were slowly reduced.

6.3.2 Regulating Protectionist Tensions with the US and Japan

The liberalisation of international trade always came with protectionist tensions. This was true even between Western Europe and its closest ally, the US. In the 1950s, Washington supported European integration, but trade conflicts erupted as early as 1964, with the ‘chicken war’ over European poultry subsidies.⁹⁰ Conflicts occurred regularly over agricultural products. US President Richard Nixon (1969–74) was more assertive, and oversaw a major conflict over steel. The Trade Act passed in 1974 facilitated the adoption of sectoral protectionist measures, and was massively used by the US government under pressure from the most influential sectors in Washington (textiles, steel industry, automobile industry). President Reagan (1981–89) also conducted an aggressive trade policy, with regular conflicts with Europe over agriculture and steel.⁹¹ A deep rift opened between the EEC and the US regarding the construction of a Siberian gas pipeline, in which European enterprises were taking part.⁹² The contract was negotiated in 1980–81, at a time of great tension between the US and the USSR following the Soviet–Afghan War. The West Germans, who had closely cooperated with the USSR in energy since the first agreement in 1970, were the ones primarily involved. Despite American pressure, the agreement was concluded between the Soviets and Ruhrgas AG in November 1981. On 18 June 1982, the US government imposed sanctions on all European firms participating in the construction of the gas pipeline. Washington also imposed extraterritorial sanctions by prohibiting equipment produced in Europe under American licence from being exported. This reaction particularly irritated German Chancellor Schmidt, but he wanted to avoid protectionist escalation, which some of his European partners such as the French could have used to their advantage.⁹³ The British were also involved, but did not want to engage in open conflict with the US.⁹⁴ Finally, all European actors had an interest in coordinating Community action in order to maximise pressure on the US and avoid protectionist escalation. Brussels transmitted a joint memorandum to the Americans on 12 August 1982. In the end, the US government lifted the sanctions on 13 November 1982.

The same phenomenon occurred with Airbus when the Reagan administration launched an offensive against European subsidies to the consortium before the GATT. Airbus was an intergovernemental venture, but it was defended by the European Commission, in relation with member states.⁹⁵ The Commission played a useful role in balancing the position of the ‘Airbus countries’, which were keen on defending Airbus agains the US (notably by accusing Boeing of receiving massive indirect subsidies through its military contracts), and non-Airbus countries such as Italy, who wanted to avoid a trade war with Washington.

Japan represented another a challenge for Europeans from the 1970s onward. The Japanese government actively supported industrial development thanks to massive state aid and the protection of its domestic market. It also had higher productivity than Europe. At first it was primarily the British and French governments that mobilised. In 1976 they secured the dispatching of a European Commission delegation to negotiate agreements with Tokyo, with a view to preserving European industrial capacity.⁹⁶ However, the Europeans were divided, with Germany being more supportive of free trade, and numerous other countries (Benelux, the UK, Italy) being chiefly preoccupied by the bilateral trade contingents they were negotiating with Japan in multiple sectors.⁹⁷

Later on, Thatcher proposed initiating legal proceedings against Japan at the GATT in November 1982, and establishing a common European-American front against the country.⁹⁸ However, the UK also sought to attract Japanese investment, especially in the automotive sector.⁹⁹ Thatcher adopted a robust industrial strategy, convincing Nissan to establish a factory in Sunderland with large amounts of state aid, proposing five times the amount usually granted (according to the British Treasury), thereby sparking conflict with the Chancellor of the Exchequer Nigel Lawson. The Iron Lady saw it as an opportunity to reindustrialise the country, increase the productivity of British enterprises (which would emulate their Japanese competitors), and offer a new type of union relations, since Nissan imposed a single union in its factories, based on the Japanese model. Thatcher also insisted on a typical neomercantilist clause, namely that the Japanese firm include a percentage of local parts (above the 45 per cent required by EC legislation for the product to be considered European), with a view to boosting British industry in the process. The UK and Japan thus took advantage of British membership in the EC, which allowed the Japanese to circumvent the import restrictions established by certain European countries by producing directly within the Common Market. In Brussels, the Commissioner for Industry Etienne Davignon expressed his disapproval of the British strategy, which would lead to distortions in the Common Market, especially given the struggling position of European car manufacturers.

In 1983 it was ultimately decided to have the Community conduct friendly negotiations with Japan, and to abandon all legal proceedings.¹⁰⁰ Tokyo quickly accepted voluntary agreements (especially with the UK and France) to limit exports of cars, video recorders, machine tools, colour tubes, and televisions.¹⁰¹ For cars, the bilateral VER agreements with Japan were on an EC-wide basis. The Japanese challenge was thus mitigated via targeted and temporary protectionism.

6.3.3 Two Chimeras: European Preference and ‘Fortress Europe’

Translating the principle of community into European economic policy involved a preference for European products over non-European ones. This was the principle of ‘European preference’, which was sometimes evoked in the 1970s and 1980s. Commissioner Davignon mentioned it in connection with ailing sectors. The French government strongly supported it, but the principle’s application came up against practical difficulties, as demonstrated by Nissan in the UK: Were Nissan cars produced in Sunderland British or Japanese? The example of aircraft cooperation demonstrated that many European companies were enmsehed in a complex web of agreements with their US partners. Defining what represented a purely European product was therefore difficult, and risked triggering protectionist tensions.

An example of this dilemma is the European action against IBM. During the 1970s, IBM dominated the global computing market.¹⁰² US antitrust authorities targeted Big Blue (as it was nicknamed) for allegedly abusing its position as market leader. IBM won all of the trials against it in the US during the 1970s, but this did not prevent the modest Commission in Brussels from attacking the American giant. The offensive was launched in 1973–74 with the support of the Commissioner for Industrial Affairs, Altiero Spinelli. He used EEC Article 86, which prohibited abuse of dominant position, on the grounds that IBM did not allow peripheral devices manufactured by other companies to connect to its computers. Big Blue pressured the European institution, and even issued threats regarding its factory in Montpellier, France.¹⁰³ IBM enjoyed strong support from the US government; in January 1982, after dropping its charges against IBM, the Department of Justice advised the Europeans to do the same, and the US government defended IBM before Helmut Kohl (leader of the German opposition at the time) and the British House of Lords. In the words of the Commissioner in charge of the case, Frans Andriessen of the Netherlands, ‘it was truly David [versus] Goliath’.¹⁰⁴ The Commission ultimately accepted negotiating with IBM, all while preserving the threat of issuing an adverse decision. An agreement was finally concluded in 1984, under which the Commission was tasked with monitoring whether IBM effectively followed through on its commitment to allow peripheral devices from other brands. European firms were divided on the matter, but were generally favourable towards a compromise with IBM as long as it opened up its interfaces.

Another form of European preference was to give priority to EC firms in public procurement for high-technology products. Public authorities played a considerable role in launching technological innovation, as they were often the first buyers, and helped establish standards that could shape the market for decades to come. In 1968–70, the EC broached the topic of limiting public procurement for new technologies exclusively to European firms.¹⁰⁵ Discussions always faltered due to two problems: a technical one regarding what constitutes a ‘European’ enterprise, namely whether firms such as IBM and Nissan, which produced in the EC, should be included; and a political one, namely the desire not to encourage protectionism. There was also an ongoing risk of incompatibility with the GATT.

In 1982–83, as the possible opening of national telecommunications markets was being discussed, West Germany explored the idea of granting preference to ‘suppliers established in the EEC’, while France wanted to reserve it for European producers.¹⁰⁶ Bonn would accept favouring American enterprises established in the EC, something that was unacceptable for Paris. Archival records on the French government’s internal reflections regarding ‘EC producers’ show the difficulties in identifying a European enterprise, as numerous criteria could be taken into account (headquarters, nationality of shareholders, location of jobs, etc.). The note concluded: ‘it is practically impossible to find a legal definition for a producer that fulfils this goal [of being a genuine European producer]’.¹⁰⁷ Even multinationals discussed European preference in high-technology. Wisse Dekker, who served as the president of the multinational Philips as well as of the European Round Table, an association of large European enterprises, evoked opening up high-technology markets in 1985 on the basis of reciprocity.¹⁰⁸ In 1988, French Prime Minister Jacques Chirac asked French negotiators to promote ‘Community preference’ in implementing the Single Market programme.¹⁰⁹

However, the rare pieces of legislation that contained a modicum of European preference were quickly attacked by third countries. In 1988, a vigorous press campaign swept across the US and the UK against the ‘Fortress Europe’ being designed in Brussels.¹¹⁰ They feared EC legislation based on reciprocity, and singled out a single draft directive defining what type of banks could operate in the Single Market. Under the influence of the neoliberal Commissioner Leon Brittan, the final directive in 1989 included no reciprocity clause. Similarly, with respect to the free circulation of capital, the 1988 directive provided for lifting restrictions on all financial movements regardless of their origin, but even the British wanted to conserve a few restrictions for non-Europeans.¹¹¹ In this case it was the West Germans, guided by the absolute imperative of depoliticising the currency, who imposed this neoliberal conception.

The debates at the Commission in 1990 pitted Delors, who defended ‘Community interest’, especially to avoid technological dependence, against Leon Brittan, who refused such a principle, which he associated with protectionism. Brittan’s rejection in 1991 of the merger between the aviation companies ATR and De Havilland – counter to Delors – prevented the creation of a truly European leader in the sector (Chapter 5). ‘Fortress Europe’ never existed (except in agriculture), as European preference was never implemented.

6.3.4 Europe as a Normative Power: The ‘Brussels Effects’

The only tool used by Europeans to promote its industry based on the principle of community was norms. The idea of using the EC as a ‘civil power’ was suggested in 1971 by François Duchêne (a former journalist at The Economist close to Jean Monnet): to compensate for lack of military power, Europe had to exert its influence in the economic sphere.¹¹² The idea spread to official circles. When Delors spoke of ‘Europe as a power’ during his speech in Bruges on 17 October 1989, he did not mention military aspects, but instead the promotion of European values in the East. More specifically, the notion of ‘normative power’ associated with the Single Market emerged with Zaki Laïdi in 2008, and with Kazuto Suzuki in 2009 with his evocation of a ‘regulatory empire’.¹¹³ Anu Bradford later coined the term ‘Brussels Effect’ to depict this phenomenon, an expression which had a major impact.¹¹⁴ For these actors, the EC’s normative power was connected to its domestic market and regulatory clout, which stemmed from the federal nature of its law, in addition to the origin of European standards. Since European norms emerge from compromises between very different European states, they can serve as an acceptable compromise for numerous actors across the globe.

This assertive stance generated friction, for the Americans asked to be consulted regarding European standardisation efforts. The Commissioner for the Internal Market, Arthur Cockfield of the UK, categorically refused this request in 1988.¹¹⁵ In 1991, US Secretary of State James Baker went on the offensive, asking for ‘active dialogue with the EC on EC-92 [the name of the Single Market Programme] and related trade problem … We also need to ensure that harmonization of EC standards does not discriminate against US firms.’¹¹⁶ This call was not heeded, as the EC legislated on its own without consulting the US.

European normative capacity expressed itself in fields as diverse as agriculture, culture, and telecommunications. In agriculture, countries in the south (France, Italy, Spain, Portugal, Greece) supported adopting standards to protect the geographical origin of products. The French presidency of the European Community in 1989 resulted in a compromise during a meeting of agriculture ministers held in Beaune, in the heart of the Burgundy winemaking region.¹¹⁷ A 1992 regulation established ‘protection of geographical indications and designations of origin’ for agricultural products (with the exception of wines, which were protected later). The EU sought to include this protection for the geographical indication of products in its trade agreements, causing numerous conflicts with its partners in the ensuing years, with the US in particular. Regarding cultural products such as films, in 1993 the Commission negotiated a ‘cultural exemption’, which is to say the exclusion of cultural products from the GATT Uruguay Round. France pressured Brussels to grant such an exemption in order to protect its film industry from the aggressiveness of Hollywood.¹¹⁸ Paris managed to build an alliance with several countries in Southern Europe, and convinced Commissioner Brittan to support it during tense negotiations with his US couterpart, the trade negotiator Mickey Kantor. In the end, the ‘cultural exemption’ allowed European countries to maintain quotas and subsidies for their film industries.

In telecommunications, norms were needed for the new products that emerged in the 1980s, and as national and even international calls became cheaper. In the US, the dismantling by antitrust authorities of AT&T, the world’s largest industrial actor, intensified competition as earlier market-sharing agreements prohibiting AT&T from penetrating the international market were abolished. In 1982, the US pressured Europeans to open their markets for telephone terminals, which was generally reserved for national industrial actors, arguing that they had concluded an agreement of this type with the Japanese in 1981.¹¹⁹ Washington pursued bilateral negotiations with the UK (which was liberalising its market) and West Germany, before the Commission asked these two countries to suspend discussions in order to adopt a European-wide approach. In 1984, the German government supported active EEC participation in international standardisation efforts, given the risk of Europe’s marginalisation before the Americans and Japanese.¹²⁰ That same year saw the adoption of the ESPRIT programme to strengthen intra-European cooperation in research and development, as well as through the development of European standards. During the UK’s European Council presidency in 1986, Thatcher successfully included the adoption of common telecommunication standards within EC priorities. The project was initiated by her Minister of Industry Geoffrey Pattie, who pointed out in a letter to the prime minister: ‘The next generation of digital systems, coming into operation in the early 1990s, offers an opportunity to create a unified European system … But if they [European producers] are to do this against Japanese and American competition, they must have the economies of scale which a unified European market will bring.’¹²¹ The initiative led to the definition of a European mobile standard in 1987, the GSM, which was adopted by EC institutions as part of the Single Market programme, and took hold globally.¹²² Even Thatcherite Britain could support modest European industrial policy as long as it took the form of standards.