Rome, Treaty of

Rome, Treaty of, treaty signed on March 25, 1957, establishing the European Economic Community (EEC), also known as the Common Market, as an economic association of western European countries. The original signatories were France, Belgium, Luxembourg, the Netherlands, Italy, and West Germany, followed in January 1973 by the United Kingdom, Denmark, and the Republic of Ireland, after reforms of 1967 that merged other European treaty entities with the EEC to create the EC (European Community). After restoration of their democratic institutions, Greece was admitted to the EC in 1981, and Spain and Portugal in 1986. Sweden, Finland, and Austria joined the European Union (EU) in 1995, the name having been changed again following the Treaty of Maastricht of 1992, followed by Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia in 2004.

The original purposes of the Treaty of Rome were to bring about the removal of trade barriers between member nations; to establish a common commercial policy towards non-member countries; to bring about the coordination of transport systems, agricultural policies, and economic policies; to remove public and private measures whose effect was to restrict free competition; and to ensure the freedom of movement of capital, labour, and entrepreneurship across borders.

The Community came into operation on January 1, 1958. Its four primary structures included the Commission, the Council of Ministers, the Court of Justice, and the European Parliament; the last two also served the European Coal and Steel Community (ECSC) and the European Atomic Energy Community. A further treaty was signed in 1965 to merge the Commission and the Council of Ministers with the ECSC and Euratom, leading to the creation of the EC. The Treaty of Rome allowed for a transitional period before full economic union, which was set at December 31, 1969. A common agricultural policy was established in 1962, providing for a system of common guaranteed prices to protect against imports from lower cost markets and ensure that farmers of member states would survive. However, this costly system, whereby manufacturing sectors had in effect to subsidize inefficient agriculture, has been a subject of constant controversy ever since.

As to the general provisions of the Treaty of Rome for economic coordination, a shared system of value-added taxation was decided in 1967 and put into operation in 1972. Restrictions on the movement of labour have been removed, but the integration of capital markets has yet to be fully achieved.