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Management of industrial surplus capacity in the European Community

Published online by Cambridge University Press:  22 May 2009

Loukas Tsoukalis
Affiliation:
Research Fellow in European Studies at St. Catherine's College, Oxford, and editor of the Journal of Common Market Studies.
António da Silva Ferreira
Affiliation:
member of the research group at St. Catherine's College, Oxford, working on the project “The Second Round of Enlargement of the European Community.”
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Extract

In a recent article for this journal, Susan Strange analyzed the political consequences of surplus capacity in three industrial sectors: steel, textiles, and shipbuilding. As she has shown, the emergence of serious problems of surplus capacity has accelerated protectionist trends in governmental policy in Europe and North America. The rhetoric of liberalism now is frequently accompanied by the reality of quotas, cartel agreements, subsidies for domestic firms, and discrimination against particularly dynamic producers.

Type
Articles
Copyright
Copyright © The IO Foundation 1980

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References

This is a revised version of a paper presented at a conference organized by the International Political Economy Group (IPEG) at Cumberland Lodge, Windsor Park (England) in May 1979. It is based on research undertaken for the project “The Second Round of Enlargement of the European Community” financed by the British Social Science Research Council (SSRC). We would like to thank Robert Keohane for his helpful advice

1 Strange, SusanThe management of surplus capacity: or how does theory stand up to protectionism 1970s style?”, International Organization, 33, 3 (Summer 1979): 307CrossRefGoogle Scholar.

2 See also Everling, Ulrich, “The possibilities and limits of European integration,” Journal of Common Market Studies (03 1980)Google Scholar.

3 For a study of the Schuman plan and the creation of the ECSC, see Diebold, William Jr, The Schuman Plan (New York: Praeger for Council on Foreign Relations, 1959)Google Scholar; Haas, Ernst, The Uniting of Europe (London, Stevens, 1958)Google Scholar.

4 See Tsoukalis, Loukas, The Politics and Economics of European Monetary Integration, (London: Allen and Unwin, 1977) pp. 5159Google Scholar. For the development of industrial policy at the Community level, see Hodges, Michael, “Industrial policy: a directorate-general in search of a role” in Policy-Making in the European Community, Wallace, Helen, Wallace, William, and Webb, Carole, eds. (Chichester: Wiley, 1977)Google Scholar.

5 Source: Office Statistique des Communautés Européennes, Annuaire Sidérurgie.

6 Calculations made on the basis of data provided in an internal report of the Commission.

7 Walter, Ingo, “Protection of industries in trouble—the case of iron and steel” The World Economy (05 1979): 172Google Scholar.

8 Soenens, , Sidérurgie, p. 78Google Scholar.

9 CECA, Les Investissements dans les Industries du Charbon et de I' Acier. Rapport sur I'enquête 1978 (Brussels, 10 1978), Table 69, p. 116Google Scholar.

10 The concept of “national champion” was used by Vernon, Raymond, “Enterprise and government in Western Europe” in Big Business and the State, Vernon, R., ed. (London: Macmillan, 1974CrossRefGoogle Scholar). See also J. Hayward “Steel” in Vernon, op. cit.

11 Woolcock, Stephen, “Industrial Adjustment: The Community Dimension,” in Economic Divergence in the European Community, Wallace, William, ed. (London: Allen & Unwin, forth-coming)Google Scholar.

12 Le Monde, 18 March 1976.

13 Le Monde, 23 September 1976. For a very critical analysis of the role played by cartels in the process of adjustment, see Tumlir, Jan, “Salvation through cartels? On the revival of a myth,” The World Economy (10 1978)Google Scholar. For a comparative study of Eurofer and the International Steel Cartel of the interwar period, see Jones, Kent, “Forgetfulness of things past: Europe and the steel cartel,” The World Economy (05 1979)Google Scholar.

14 The first important decision, which formed part of what came to be called the Davignon plan, was taken in May 1977 (Official Journal, L/l 14, 5 May 1977). This referred to the introduction of minimum prices for reenforcing bars. Almost all internal and external measures were taken before the end of 1977.

15 Italian steel producers have been accused, for example, of breaking minimum price rules by accepting 20 percent penalties for late delivery and then quoting a delivery period which was im-possible to meet (Financial Times, 23 April 1979). See also Jones, op. cit., pp. 149–51.

16 Walter, , op. tit., p. 166Google Scholar.

17 Ibid, pp. 184–86.

18 See Commission of the European Communities, General Objective Steel 1980, 1985, and 1990 (Brussels, 07 1978)Google Scholar.

19 Quoted in Metal Bulletin, 7 December 1973.

20 Quoted in Metal Bulletin, 11 December 1979.

21 Woolcock, op. cit.

22 Financial Times, 5 May 1979.

23 The Economist, 22 December 1979.

24 The Observer, 20 May 1979.

25 Calculated on the basis of data found in OECD, Statistics of Foreign Trade—Trade by Commodities, Series B.

26 Commission of the European Communities, “Enlargement of the Community—General Considerations,” Supplement to Bulletin of the European Communities, 1/78, p. 7Google Scholar.

27 Commission of the European Communities, General Guidelines for a Textiles and Clothing Industry Policy (Brussels, 20 07 1978)Google Scholar, Annex I, Tables VIII and IX.

28 Commission of the European Communities, Report of the Group of Experts on Sectoral Analysis: Sectoral Change in the European Economies from 1960 to the Recession (Brussels, 01 1978), Table 6, p. 72Google Scholar.

29 Farrands, Chris, “Textile diplomacy: the making and implementation of European textile policy, 1974–1978,” Journal of Common Market Studies (09 1979)Google Scholar.

30 We have relied upon information obtained in a yet unpublished piece by José de la Torre and Michel Baccheta on European clothing industries.

31 Financial Times, 18 May 1979.

32 The Economist, 29 July 1978.

33 We have relied upon information obtained in a yet unpublished article by Geoffrey Edwards on man-made fibers.

34 See Farrands, op. cit.

35 Based on data found in General Guidelines for a Textiles and Clothing Industry Policy, Annex I.

36 Financial Times, 18 May 1978.

37 OECD data.

38 Prospects for the World Shipping Industry. A Forecast of New Building Requirement to the late 1980s. Survey No. 20 (London: HPD Shipping Publications, 1979)Google Scholar.

39 Commission of the European Communities, Reorganisation of the Community Shipbuilding Industry (Brussels: 12 1977)Google Scholar.

40 Ibid, Annex, p. 19.

41 House of Lords Select Committee on the European Committees, Shipbuilding (London: HMSO, 13 06 1978)Google Scholar.

42 Haas, Ernst, Beyond the Nation-State (Stanford: Stanford University Press, 1964), p. 111Google Scholar.

43 The role of the Community budget and the need to increase the financial resources available to Community institutions have become a major issue in discussions about the future of European integration. The spark came from the MacDougall Report. See Commission of the European Communities, Report of the Study Group on the Role of Public Finance in European Integration (Brussels, 04 1977)Google Scholar.

44 For a discussion of alternative strategies open to trade unions, from a radical point of view, see Bienefeld, M., Godfrey, M. and Schmitz, H. “Trade unions and the ‘new’ internationalization of production,” Development and Change (10 1977)Google Scholar.

45 This argument is also made in Pinder, John, Tsoukalis, Loukas, “Economic and Monetary Union Policy: the need for a medium-term goal” in The European Alternatives, Ionescu, G., ed. (Alphen aan den Rijn: Sijthoff and Noordhoff, 1979), pp. 477–81Google Scholar.

46 A plaidoyer for a Community industrial policy can be found in Jacquemin, Alexis and de Jong, Henry, European Industrial Organization (London: Macmillan, 1977), especially pp. 243–54Google Scholar.