Europe

OEEC: 72 years after first step over economic cooperation in Europe

Economic cooperation started with preferential trade agreements, opened doors of European Economic Community and EU, expert says

By Gokhan Ergocun and Tuba Sahin  | 16.04.2020 - Update : 16.04.2020
OEEC: 72 years after first step over economic cooperation in Europe

ISTANBUL / ANKARA

The Organisation for European Economic Co-operation (OEEC), the initial version of the Organisation for Economic Co-operation and Development (OECD), came into being on April 16, 1948, to promote cooperation and reduce tariffs and barriers in intra-European trade with 18 member countries.

Following the destructive effects of the World War II, the OEEC was formed as a permanent organization to control the distribution of aid, based on the Marshall Plan and the Conference for European Economic Co-operation, according to the OECD.

The cooperation was established by Austria, Belgium, Denmark, France, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, the U.K., and Western Germany.

The OEEC's goals were to promote cooperation between members, provide the reconstruction of Europe by production, reduce tariffs and remove barriers to expand intra-European trade, study multilateralization of payments, create a customs union or free trade area, and ensure better conditions for the labor force, the OECD explained in its website.

Developing Europe to create market for US exports

Sabri Burak Arzova, visiting lecturer at Long Island University in New York and lecturer at Marmara University in Istanbul, said the Marshall Plan played an important role to restructure the capitalist system on a global scale after World War II.

The establishment of the organization based on the Marshall Plan especially means the U.S. created its market for selling its goods, he argued.

"The OEEC was a kind of coordination organization of the Marshall Plan. It was a way of creating a market for American goods by ensuring the economic development of Europe," he asserted.

Arzova also said many institutional structures, mechanisms, and regulations have been created that affect a wide range of countries as part of the plan, from capital accumulation processes to their daily lives and economic policies.

Economic cooperation, which started with preferential trade agreements, opened the doors of the European Economic Community and the European Union, he observed.

OECD is 'more functional'

Touching on the current Customs Union, Arzova said: "Customs Union is the last point to be reached in trade. But the biggest contradiction is accepting Turkish industrial and agricultural products with zero tariffs while implementing travel restrictions and claiming visas from these goods' producers.

"The fact that this is not seen by Europe as one of the biggest obstacles to trade poses another problem."

He recalled that the OEEC, after serving for 13 years, was transformed into the OECD, which is a more functional structure.

Arzova stressed that the OECD was founded by 20 countries, including Turkey, and has 30 members currently, but it has relations with over 70 non-member countries.

The OECD, with its main working groups, produces projects on several topics such as environment, food safety, agriculture, finance, and sustainable development, and provides various suggestions and supports, especially to member countries, he said.

"I strongly believe that the OECD is an important and effective organization."

GATT: Initial WTO

Meanwhile, the General Agreement on Tariffs and Trade (GATT), was signed on April 15, 1947, and served as the World Trade Organization of its era until 1995.

After World War II, the United Nations' members decided to establish the International Trade Organization (ITO) during the Bretton Woods Conference in the U.S. to ease international trade and reduce or remove tariffs.

During the ITO negotiations, 23 countries decided to sign the GATT in Geneva as a temporary agreement until the establishment of the organization.

Despite the temporal position of the agreement, it has been used for almost half a century as the ITO could not be established.

The GATT aimed to reduce customs tariffs on industrial goods, which was around 40%, and the agreement achieved to drop it to around 6%.

In 1995, after several multilateral meetings, it was decided that the ITO could be establish under the name of WTO.

World needs reinforced GATT

Arzova stressed that one-sided trade is one of the biggest obstacles to the development of countries.

Today, it is clearer that economic prosperity is based on trade balance between countries, he said.

Price restrictions, tariffs, and other barriers pose major problems for countries that cannot produce some goods, he highlighted.

Arzova pointed up: "There is certainly a need for reinforced GATT, which has a more sanctioned power and offers a structure where trade rules cannot change easily.

"With its current structure, the GATT is far from removing barriers to global trade and preventing non-tariff barriers."

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